1. Massachusetts Electric Restructuring Roundtable
“Price, Reliability, & Environmental Impacts of Fuel Diversity Trends & Low-Income Ratepayers Under Restructuring”
Friday, December 1, 2000
PG&E National Energy Group and any other company referenced herein which uses the PG&E name or logo are not the same company as Pacific Gas and Electric Company, the California utility. These companies are not regulated by the California Public Utilities Commission, and customers do not have to buy products from these companies in order to continue to receive quality regulated services from the utility.

2. IN BRIEF
New England is becoming over-reliant on a single fuel source
Reliability of electricity supply is at risk
Threat of price shock is real
We need a balanced approach

3. TURBINE-BASED PLANTS BY YEAR ONLINE
Announced Gas-Fired Power Plants in New England By Planned Year of Online Operation
TURBINE-BASED PLANTS BY YEAR ONLINE
7,000
Dual Fuel
6,000
Natural Gas Only
4,752
5,000
4,000
3,441
3,330
Capacity, MW
3,000
2,420
1,866
2,000
1,000 -
1999 or Prior
2000
2001
2002
2003
Note: Includes only power plants with a likelihood rating of '4' or better.

4. Two Future Scenarios For New England
Note: Percentage Share of Net Power Production.

5. Compressor Station Failure Scenario

6. Compressor Failure Scenario

7. Pipeline Customer Types
Qualitative Ranking of Gas Pipeline Customer Types and Their Required Degree of Pipeline Reliability
Degree of Pipeline
Electric
Reliability Required
System
Grid
Electric CC
Reliability
without
Dual Fuel
Electric CC
with Dual
Fuel
Residential
Commercial
with Limited
Industrial
Alternatives
Load
Pipeline Customer Types

8. Electric Price Volatility: Example

9. Comparison of Price Volatility
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
($/MMBtu)
Hurricane
Andrew
March 1993
Blizzard
January 1994
Mild Winter
Opal
January 1996
Massive Cold Front and
Well Freeze Off
Early Winter
1996/97
Danny
Technical
Factors
Georges
Excess Storage and
Source: NGW
December 1989
Cold Spell
S.T. Demand >
S.T. Supply
Reduced Drilling &
Technical Factors 5 10 15 20 25 30 35 40 45
1967
1972
1977
1982
1987
1992
1997
($/BBL)
1973/1974
OPEC oil embargo
Iranian oil prices
peak at $45/BBL
1986 price crash
excess OPEC production
Gulf War, supply
restricted
Excess supply due to
Asian economic crisis
and over production
Source: DOE & Bridge/CRB
1999 OPEC
Production Accord
HENRY HUB:
WTI:
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
($/MMBtu)
Note: Northeast includes CT, MA, ME, NH, NJ, NY, PA, RI, and VT.
Source: FERC Form 423
COAL:

10. Fuel Diversity Study
“Relying Mainly on Natural Gas for Power Supply Will
Likely Result in a Host of Negative Consequences on
the “Reliability and Price of Power and Gas ……….”
15, 809 MW of New Combined Cycle By 2003
9,040 MW Already Under Construction
67% Growth
40% Growth

11. Fuel Diversity Study (cont.)
Only 1/2 of All New Generation Has Alternate Fuel Capability
Few, If Any, Facilities Have Contracted for “Long Haul” Gas Transportation
77% of the Region’s Pipeline Capacity Would Be Consumed for Power Generation
The Coming Competition: “LIGHTS OR PILOT LIGHTS”