"The Price, Reliability, and Environmental Impacts of Electricity- Related Fuel Diversity Trends in New England" Alan Nogee Energy Program Director Union of Concerned Scientists www.ucsusa.org Massachusetts Restructuring Roundtable Boston, MA December 1, 2000

Oil and gas prices are volatile Oil prices are up 150% since first quarter 99 Gas prices up more than 200% Source: EIA, Short-Term Energy Outlook, 10/2000

Renewables can increase diversity and restrain gas price increases RPS reduces demand for natural gas Gas price lower by $0.23/mmBTU (7.5%) in 2010 Source: EIA, Annual Energy Outlook 2000 RPS: 7.5% renewables by 2010, no cap or sunset case

Gas savings offset electricity costs of RPS 8 Change in Consumer Electricity Costs 6 4 Billion 98$ Net Cost 2 When you put the two together a national RPS becomes even more affordable to consumers. EIA results show that gas savings to consumers offsets a large portion of the higher electricity costs and even produces a net savings after 2015. Change in electricity costs = 3.2% higher in 2010 and 1.4% in 2020. Incremental cost falls over time as the incremental cost of renewables falls. 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 -2 Change in Consumer Gas Costs Source: EIA, Annual Energy Outlook 2000; RPS: 7.5%, no cap or sunset case -4

N.E. renewables can reduce electricity prices Renewables = 50% of new generation Assumes gas increases to 25% of generation by 2010 Gas projected by some to equal 50-67% of generation by 2003 Business as usual Increased renewables Source: Assessing New England's Energy Future, New England Governors' Conference, December 11, 1996, p. V-6

RPS “options”? "Regarding the RPS a retailer has three options. It can have the RPS relegislated and eliminated. It can try in good faith to sell renewable energy but the supply may not exist. Or it can not try to sell it and say it did.” A T&D company moving toward integrated energy provision (Generation, T&D and retail) Source: Bain & Co. for Mass. Technology Collaborative

Renewables potentially eligible for MA or CT RPS Renewables under development can meet standards through 2008 Source: Sustainable Energy Advantage survey for UCS

Renewable energy standards and funds Standards only = 4 states Standards+funds = 8 states Funds only = 6 states Restructured, no policy = 8 states

Renewables expected from state standards and funds 18,000 8,550 MW new renewables 7,800 MW existing renewables Other* 16,000 CO2 reduction equivalent to * 1.2 billion more trees * 3.9 million less cars 14,000 California 12,000 Nevada 10,000 Megawatts Arizona New Mexico 8,000 Texas Iowa Minnesota Wisconsin New Jersey Connecticut Massachusetts Maine CO2 reduction = 800 million more trees 2.7 million less cars 6,000 4,000 2,000 2000 2002 2004 2006 2008 2010 2012 *Includes Illinois, Montana, New York, Oregon, Pennsylvania and Rhode Island.

Coal generation to continue to grow Electricity generation by fuel (Billions of kWh) Source: EIA, Annual Energy Outlook 2001, Early Release

Carbon emission reductions Sources: States - UCS; Green market, Hi - EPA; Jeffords - ACEEE