1. Rhode Island GHG Stakeholder Group June 14, 2007
Least Cost Electricity Procurement in Rhode Island Options for Standards
Rhode Island GHG Stakeholder Group
June 14, 2007
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2. What portion of the electricity supply market is met from SOS and LRS?
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3. How is the regulatory framework changing?
Current regulatory framework
SBC charge of 2 mills applies to all consumption
RES applies to all supply service providers
EDUs provide SOS from conventional supply and LRS from market. Charge for SOS is regulated and includes a true-up.
New regulatory framework
SBC charge of 2 mills applies to all consumption (no change)
RES applies to all supply service providers (no change)
EDUs to continue providing SOS through 2020.
EDUs to provide SOS using mix of separate, but complementary, portfolios of conventional supply and LCP resources.
LCP resources are energy efficiency and system reliability (diverse, DG, DR).
EDUs to submit plans for LCP resources every 3 years and to recover LCP resource costs as part of the charge for SOS. SOS has true-up.
Mix of LCP and conventional supply must meet electrical energy needs of customers in manner that is "…optimally cost-effective, reliable, prudent and environmentally responsible".
PUC to establish standards governing EDU selection of LCP resources
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4. What new standards may be needed?
Cost-effectiveness standard for individual LCP resources (i.e., ee, diverse resources, dg, dr)?
Standards for mix of LCP and conventional supply
Reliability
Prudence
Environmentally Responsible
Cost-Effectiveness.
Stranded Costs
stranded supply costs (due to customer switching).
“stranded” distribution costs (due to usage decline between rate cases)
| ©2006 Synapse Energy Economics Inc. All rights reserved.

5. What new standards may be needed?
Cost-effectiveness standard for individual LCP resources
Energy Efficiency
Avoided costs. (include uncertainty)
Cost-Effectiveness test. (TRC test)
Achievable Potential.
Annual Targets.
Maximum energy efficiency at minimum costs.
Align EDU financial incentives with energy efficiency.
System Reliability Resources
Procurement to achieve an optimal portfolio for SOS
| ©2006 Synapse Energy Economics Inc. All rights reserved.

6. What new standards may be needed?
2. Standards for mix of LCP and conventional supply
Optimally reliable, prudent, cost-effective and environmentally
responsible
Cost-effective
Measure of Cost-Effectiveness
Measure of Cost Risk.
Length of planning horizon.
Environmentally responsible
All Environmental externalities, or
Dominant Environmental Externality (egCO2)
Optimal
| ©2006 Synapse Energy Economics Inc. All rights reserved.

7. What new standards may be needed?
Stranded Costs
stranded supply costs (due to customer switching).
“stranded” distribution costs (due to usage decline between rate cases)
| ©2006 Synapse Energy Economics Inc. All rights reserved.

8. Synapse Energy Economics (617 661 3248) www.synapse-energy.com
Contact Information
Synapse Energy Economics
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Rick Hornby (ext 243)
Bruce Biewald (ext 222)
| ©2006 Synapse Energy Economics Inc. All rights reserved.