New England Economic Partnership James Daly Vice President Energy Supply Energy Market Perspectives Reliable Energy, Competitive Prices and Satisfied Customers June 2, 2015

Energy Markets Perspectives New England energy prices are on the rise, increasing customer bills and threatening the competitiveness of area businesses . . . It’s time to act! Electric prices up due in large part to delivery constraints on natural gas pipelines Costs to comply with the state’s clean energy targets are rapidly increasing New energy infrastructure investments necessary to reverse course and reduce energy costs Significant investments needed to transform the region’s electric grid, making it more resilient, smarter and truly integrated Utility of future will provide cleaner, more reliability, competitive prices, interactive and information based

Evolving New England Energy Policy Early electric market restructuring and deregulation gave rise to competitive markets and customer choice. Today we face a new task of balancing mounting policy initiatives and customer energy costs. Pre Year 2000 Vertically Integrated Utilities Early to Mid-Decade Competitive Markets and Customer Choice Wholesale Markets Competitive Generation Distribution Companies Customers Suppliers Current State Market “Constructs” to Support Policy Initiatives Renewable portfolio standards (RPS) Climate change and carbon reduction initiatives Energy efficiency goals Distributed generation and grid independence Grid modernization Utility of the future

Rising Electricity Prices As of January 1, 2015, the Eversource Massachusetts energy rate climbed 60%, from 9.4 cents/kwh to 15 cents/kwh, driven by winter gas prices and RPS requirements. Other New England utilities are experiencing the same. Eversource Massachusetts Residential Energy Rates by Component (cents/kWh) 2015 Rate Components Cents /kWh 1H 2H Wholesale Rate 13.30 8.16 RPS Requirement 1.62 1.76 Other* 0.05 0.13 Total Energy Rate 14.97 10.05 * Other bill items include administrative energy charges. 3

Natural Gas Prices Causing the Problem High winter natural gas prices driven by pipeline delivery constraints, have resulted in escalating electricity prices. Delivered Natural Gas Prices Boston Compared to Chicago - Weekly Average $/MMBtu New England Wholesale Electricity Prices Average On-Peak $/MWh Jan 2014 April 2015 Jan 2014 April 2015

Ambitious Clean Energy Goals Will Impact Regional Prices Carbon Emission Goal 80% CO2 reduction by 2050 RPS Goal 22.1% RPS by 2020 (Solar generation of 1,600 MW) Massachusetts Emission Targets Millions of tons of CO2 Massachusetts RPS Targets % of Required Renewable Energy Class I and II

Significant Renewable Resources Have Been Added to the Energy Mix In terms of capacity additions, significant wind and solar resources have been added to the mix, but the price comparison hugely favors wind power. Massachusetts Wind and Solar Power Total MW of Capacity Unit Cost of Wind and Solar Power $/Mwh

Renewable Resources are Adding Over $1 Billion to Customer Bills Between the years 2013 and 2018, cost to customers will triple, driven in large part by the cost to comply with solar targets. Massachusetts Clean Energy Costs $ Millions Total Payment Rate 2015 (cents/kWh) 60.0 Green House Gas Costs Solar Subsidies 14.0 Renewable Energy Costs 9.0 8.0 1.0 1.2 2.1 2.3 Conventional Gas-fired Generation Wind Power with Contracts Wind Power without Contracts Subsidized Solar Power Cents/kWh

Access Northeast Pipeline Direct connection with Northeast generators Takes advantage of existing infrastructure Built to handle the peaks Timely Scalable for future growth Multiple supply options Potential to lower the region’s energy cost by $1 billion annually Serves over 70% of New England generation – will provide fuel for 5,000 MW of electric generation 8

Northern Pass Transmission Line 1,200 MW of clean energy $1.4 billion HVDC line, terminal and AC facilities Expected to provide significant benefits to the region: Energy and capacity value through reduced wholesale market prices – more than $300 million per year for New England Environmental value through carbon emissions reductions – annual reduction of up to 5 million tons of CO2 Economic value through construction jobs and new tax base – 1,200 jobs and $1.1 billion over 40 years in property taxes Reduces growing dependence on natural gas generation In Service 2019 9

Eversource’s Integrated Solutions The integrated solutions of energy efficiency, regional infrastructure, competitive forces, transparent pricing and modernizing the electric grid will move the state towards lower prices and the utility of the future. Keep energy efficiency at the forefront and invest in technologies and programs Energy Efficiency Customer Satisfaction Invest in the Access Northeast Pipeline to lower prices and enhance reliability Regional Reliability More efficient use of electricity for residential and business customers More reliable energy; less outages Cleaner sources of energy Lower prices and less volatility Well understood pricing More customer options to manage their bills Invest in the Northern Pass Transmission project to access competitive priced clean energy; pursue additional regional solutions Renewable Energy and Carbon Reduction Bring competition, equitable and transparent pricing to the solar markets Competitive Solar Markets Modernize the electric grid, further automation, enhance integration of distributed generation and promote policies to evolve the utility of the future Utility of the future