1 Smart Grid Vision Electric Grid Modernization Steering Committee Grid Facing Technology Subcommittee January 14, 2013

2 Overview KEY OBJECTIVE BENEFITSBENEFITS FUTURE VISION COMPANY ACTIVITIES KEY CONCERNS

3 Key Objective Provide safe, reliable, cost effective electric distribution service to all customers (load and generation)

4 Smart Distribution Grid Key Benefits ADVANCED ASSET MANAGEMENT IMPROVED SYSTEM EFFICIENCY & POWER QUALITY IMPROVED RELIABILITY Reduced outage duration Reduced number of customers impacted by outages Enhanced knowledge of customer outages & restoration status Protection against overload conditions Timely and accurate restoration information for customers Reduced maintenance expenses Reduced associated failure expenses Deferral of replacement capex EFFECTIVE DG INTEGRATION Safe and reliable interconnection capabilities Reduced operational impact from distributed resources (power quality, reliability, utility system integrity) Opportunities for improved resiliency Reduced line losses Reduced total energy usage Elimination of power quality impacts experienced by customers

5 Asset Management and On-Line Equipment Monitoring Optimization and Improved System Efficiency Distributed Generation & Alternate Energy Sources Self-Healing Wide-Area Protection The Smart Grid Benefits All Stakeholders Source: Adapted from EPRI. The Smart Grid will create a digital energy system that integrates new tools and technologies from generation, transmission, and distribution all the way to consumer appliances and equipment.

6 CHARACTERISTIC FUTURE STATE Loading Real time load data monitoring drives recognition of overload condition in advance of problem and self corrects allowing for full utilization of assets. Equipment Remote monitoring and control of key equipment enables predictive response to problems and creates operational efficiencies. Fault Response Immediate identification and isolation of fault location to smallest possible circuit segments, restoring all others. Future State of the Grid – Systems

7 CHARACTERISTICFUTURE STATE Power Status Ability to identify customer status during an outage event enables faster restoration at the final stages of the event. Power Quality Status Voltage data collected from multiple points allows for identification and correction of problems before customers experience negative impacts. Distributed Generation and Storage Safe and reliable interconnection of DG and Storage is widespread. All generation and storage is continuously monitored in support of system power quality and grid resiliency is enhanced. Future State of the Grid – Customers

8 Investment ConsiderationsSystemsSecurityCommunications

9 Smart Grid Experience to Date Improved reliability > Installed more than 2,000 switches throughout service territory > Over 5,000 sensors monitoring the electric grid > Expanding DA program and capabilities as part of $20MM US DOE ARRA Project ›Moving towards full Auto-Restoration > Automated Vacuum Fault Interrupters (VFI) allowing for automation on underground switches > DigitalGrid Network Reporting using power line carrier communications ›Monitors 100% of the transformers (~1,500 total) on underground secondary network in Boston & Cambridge to provide near real-time data to SCADA system. ›Technology is installed and enabled at every network transformer in our secondary network > Transmission Sensors and SEECO Switches > Digital communication system and high speed fiber-optic rings NSTAR > Overhead System Automation via reclosers and recloser loop schemes ›New radio infrastructure installed 2008 allowed for wide spread DSCADA deployment ›Approximately 53% of customers served by the overhead system are a part of a loop scheme > Motor operated switches with advanced remote terminal units (RTUs) > New Packet Radio System WMECO

10 Smart Grid Experience to Date Effective DG Integration > $10MM Urban Grid Monitoring & Renewables Integration (US DOE ARRA Pilot) ›Enhances visibility into status of underground secondary network in downtown Boston ›Improves reliability and ultimately allows for testing the integration of inverter-based renewable generation onto the secondary network grid ›Direct Transfer Trip using Distribution Automation, lowers installation cost NSTAR > “Power Tag” pilot project underway to test the feasibility of a lower cost solution to detect an islanding condition > WMECO’s 4.1 MWs of solar generation provide opportunity to study the impact of distributed generation on the utility grid WMECO

11 Key Concerns on the Path to Smart Grid Investment prioritization (costs versus benefits) Current smart grid investment plan Optimal speed and pace of deployment of new technologies Timeline of technology obsolescence Beneficiary pays Differences among utilities (e.g. rural versus urban, size, system design, planning processes, regulatory constructs)

12 Summary Smart Grid’s central purpose is to cost effectively improve the reliability, efficiency, and security of the electrical system Maintaining reliability continues to be a major focus area as distributed resources and electric vehicles become more commonplace Deployment of grid modernization programs must be conducted with a focus on capturing efficiencies and long- term value for customers Pilots of new technologies represent a valuable opportunity to quantify costs and identify potential benefits in order to inform implementation decisions Excellent communication and shared objectives among all stakeholders is critical to the success of grid modernization programs