The Role of Hydro-Québec in New England Electric Markets The New England Electricity Restructuring Roundtable June 14, 2013 Stephen Molodetz, Vice President of Business Development, HQUS

Hydro-Québec: A Snapshot 40,000 MW of hydropower generation 175 TWh of energy storage 20,000 miles of transmission 6,000 MW of export capacity

Significant New Development and Investment . Significant New Development and Investment Hydroelectric Projects: 4,000 MW (2005-2020) Northeast US Transmission Proposals: 2,200 MW

Large Hydropower: Multiple Benefits Reliability Secure, non-gas fuel source Controllable On and off peak deliveries Price Cost competitive Unaffected by fuel markets Reduced volatility Cost-effective renewable Environmental Renewable Low-carbon Flexibility to balance intermittent renewables Reduced fossil dispatch

Outlook for New England Market: Value of Hydro-Québec Power Increasing Aggressive RPS targets Supports renewable commitment Balance greater quantities of wind Source: ISO-NE RSP 2012 Gas reliance creates reliability/price risk Urgent need for non-gas resources Source: Connecticut IRP 2012 … near term need to replace “at risk” generation is also aligned with HQ development projects

Contributing to New England’s Need for New Capacity: Northern Pass Transmission Project 1200 MW HVDC link between Quebec and Deerfield, NH HQ funded project Would offer a large amount of capacity, in a single project Ensures that replacement resources will not be all natural gas

Issues to Consider New England is facing a significant transformation of the power system Should the region proactively seek solutions to mitigate current risks and advance public policy goals? If so, what role should the states play? What is the evaluation of consumer cost ? What is the appropriate forum for a discussion of regional projects such as NPT ? If the status quo continues, will existing risks be exacerbated? HQ hydropower offers multiple attributes to the New England power system Non-gas, flexibility and controllability are all attributes that the power system needs -- and should be pursued in the development of new capacity In addition, the states seek renewability and low-carbon attributes for the power system Dilemma: There is currently no market mechanism to ensure that these attributes are delivered or to increase imports of these attributes HQUS believes that the region has a unique opportunity to consider appropriate mechanisms that can ensure the continued development of NPT as a promising project that can provide additional capacity with all of these attributes Solicitations for 4000 MW of wind (Hydro Quebec Distribution) Shut down of nuclear generating facility (Gentilly-2)