1. Status Report on 2007–2016 Long-Term Reliability Assessment Mark Lauby August 16, 2007

2. 2007 LTRA Schedule ● Drafting LTRA ● Open Meeting  Goals:  Increased Transparency  Identify Enhancements ● Finalize Draft ● PC Review ● Board Approval ● Release  Ongoing  August 16  August 31  Sept. 11-12  Mid-October  October 15

3. 2007 LTRA Emerging Issues

4. Key Observations Time Capacity Margin Target Level Firm Commitments? Fuel Supply? Transmission? Regulatory? ? ? ? ? ? ? ? ? ? ?

5. General Observations ● Difficulty evaluating resource adequacy, especially in organized markets ● Reluctance to commit to long-term resource plans ● Difficulty judging impact/effectiveness of renewables and demand-side programs ● Dependence on gas still high; interruptible transportation contracts a big issue ● More transmission projects announced, but concerns whether they will be built

6. Specific Observations ● Margins tight in:  New England  MRO-US  ERCOT ● A significant increase in wind farms,  Only 1,800 MW in 2007-2016 peak generation  The remainder is considered energy-only ● 11,621 MW of new nuclear power capacity:  ERCOT (6,176 MW)  FRCC (1,125 MW)  SERC (4,320MW) WECC – RMPA WECC – CA-MX WECC – AZ-NM-SNV

7. Key Observations ● The U.S. DOE has identified two draft National Interest Electric Transmission Corridors (NIETC)  Some States have expressed objections ● More Transmission Projects proposed (2007–2011)  Transmission/ancillary services to accommodate wind energy ● Investments in Connecticut improving reliability

8. Key Findings & Conclusions ● Continued Dependency on Natural Gas in New England, Florida & California ● Bulk Power System Expansion Plan Uncertainty makes Long-Term Reliability Assessment Opaque ● Grid Investment Needed to Integrate Intermittent Resources ● Regulatory Action impact Reliability Projects

9. High-Level Scenarios Reliability Impacts of … ● Significant penetration of wind energy ● High integration of demand response ● Natural gas unavailability due to supply or delivery limitations ● Possible reductions in capacity as a result of emissions restrictions

10. Questions and Suggestions ● Any issues or concerns not being addressed? ● Additional scenarios to be considered? ● Other suggestions?