New England’s Power System: At a Crossroads – Again! Stephen Rourke VICE PRESIDENT, SYSTEM PLANNING NECPUC Symposium: Governors’ Infrastructure Initiative Panel JUNE 16, 2014 | STOWE, VT

Overview of Presentation Historical Perspective Strategic Planning Initiative Update Recent Planning Tools Integrating Renewables Resource Performance and Flexibility Retirements Gas Dependence 2

Familiar Doctor’s Office Pain Chart Will Help Us Assess Grid Challenges Today Choose the Face that Best Describes How You Feel No Pain Distressing Pain Unbearable Pain 0 No Hurt 2 Hurts Little Bit 4 Hurts Little More 6 Hurts Even More 8 Hurts Whole Lot 10 Hurts Worst 3

Difficult Grid Conditions Are Not New New England’s system faced and overcame painful times 1970s & 1980s: Oil embargos 1980s: Rapid load growth plus resource performance issues and capacity shortages 1990s: Nuclear shutdowns and emergency actions 2000s: Southwest CT reliability problems, gap RFP and reliability agreements; cold snap 4

ISO New England’s Strategic Planning Initiative Focused on developing solutions to the region’s top reliability risks Reliability requires a flexible, high-performance fleet: Natural Gas Dependency – “Just-in-time” fuel delivery presents an immediate risk to reliability Power Plant Retirements – New England will need new ways to meet peak demand as aging plants close Renewable Resource Integration – Balancing variable generation with reliability will require changes in system operations 5

6 EE Flattens Annual Energy UsePV Forecast Shows Significant Growth ISO Forecasting Solar and Energy Efficiency Anticipating impacts of state policy priorities

ISO is Implementing Enhancements to Modeling of Capacity Zones 7 Maine Rest of Pool (NH, VT, WCMA) NEMA SEMA/RI CT ISO will model up to 5 capacity zones in the next Forward Capacity Auction (FCA 9), in February 2015 – CT, NEMA and SEMA/RI will be evaluated as potential import-constrained zones – Maine will be evaluated as a potential export-constrained zone

Market Resource Alternatives ISO conducted studies analyzing alternatives to transmission Studies looked at a mix of generation, load reduction and transmission upgrades Vermont and New Hampshire (2011) – About 900 MW of supply-side resources needed to resolve thermal issues in six of the nine NH/VT study sub-areas Greater Hartford (2012) – The supply-side MRA analysis shows that approximately 950 MW of generation is required to resolve all the identified thermal needs Southeastern Massachusetts and Rhode Island (2014) – Approximately 941 MW of generation/load reduction would be required to resolve all the identified N-1 thermal needs – Process updated to utilize a hybrid of small transmission fixes along with generation and demand resources 8

Variable Resources are Trending Up 9 Nameplate capacity of existing wind resources and proposals in the ISO-NE Generator Interconnection Queue; megawatts (MW) Final Interim ISO-NE Solar PV Forecast, based on state policies. MW values represent nameplate ratings Interconnection Issues: Wind resources often interconnect in remote areas, on weak transmission lines, and must grapple with congestion State PV interconnection standards and lack of control or visibility are concerns for ISO

Gas Units Fell Below Their Capacity Obligations This Winter System ran with only 3,000 MW of gas-fired generation out of 11,000 MW with obligations in the capacity market Assuming winter 2013/14 weather, this condition existed on 20 days 10

Generator Non-Price Retirement Requests Almost 3,400 MW of generation plan to retire within the next five years Salem Harbor Station (749 MW) – 4 units (coal & oil) Vermont Yankee Station (604 MW) – 1 unit (nuclear) Norwalk Harbor Station (342 MW) – 3 units (oil) Brayton Point Station (1,535 MW) – 4 units (coal & oil) Total MW Retiring in New England* Connecticut348 MW Maine37 MW Massachusetts2,360 MW New Hampshire1 MW Rhode Island13 MW Vermont634 MW Total3,393 MW 11 Major Retirement Requests: *Megawatts based on relevant Forward Capacity Auction (FCA) summer qualified capacity (NOTE: total includes full and partial generator Non-Price Retirement (NPR) requests for Capacity Commitment Period (CCP) through CCP ; does not include NPRs for demand response (DR) resources) Source: Status of Non-Price Retirement Requests; October 23, 2013 Other Retirements Looming

Generator Proposals in the ISO Queue Almost 7,000 MW By Type By State Note: Some natural gas include dual-fuel units (oil) 12 Source: ISO Generator Interconnection Queue (April 2014) FERC Jurisdictional Only

Conclusions Some good news State policies are bringing energy efficiency and renewables onto the system A lot of activity in the interconnection queue Transmission for reliability helps ease some retirement concerns New England has a proven history of overcoming energy and capacity challenges Some not so good news New England has a growing reliability problem due to natural gas availability constraints and declining resource performance Expected non-gas retirements will increase demands on an already constrained natural gas system Major market enhancements and energy infrastructure improvements are years away 13

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