1. New England Resource Adequacy
Massachusetts Electricity Restructuring Roundtable
September 23, 2005
Gordon van Welie
ISO New England, Chief Executive Officer

2. ISO New England Overview
Real improvements to the region’s electric system
Over $1.5B in long-needed 345 kV transmission projects in four states have siting approval
Massachusetts, Connecticut, Vermont, Maine
Approximately $6B in private investment
30% increase in new, cleaner generation
Over 9,000 MW of new generation
Significant reductions in regional air emissions
Wholesale market efficiencies: Savings  $700M/yr ( )
Congestion cost reductions:  $170M/yr
Single, independent point of control over management and outage scheduling of regional transmission system have reduced congestion costs  $40M/yr ( )
© 2005 ISO New England Inc.

3. Ingredients of Successful Power System1
Four pillars of a balanced and reliable power system:
Supply: Resources to meet peak demand
Transmission: Adequate power delivery system
Conservation and Demand Response: Incentives for reduced use
Market Structure: Accurate price signals to promote efficient operation and investment
Comprehensive planning provides a roadmap to achieve the four pillars
© 2005 ISO New England Inc.

4. Resource Adequacy: System Needs
Ten-Year Plan

5. Planning For A Reliable Power System: Regional System Plan (RSP)
ISO-led regional system planning process since 2001
Comprehensive assessment of power system needs annually
Ten-year planning horizon
Information for market responses
Regular stakeholder meetings
Transmission plan to ensure a reliable system
Backstop to market solutions
Basis for transmission projects eligible for regional funding
Independent analysis informs state siting
Process recognized as one of best in nation (US DOE)
© 2005 ISO New England Inc.

6. Recent Operational Experience
New, all-time peak demand record set on July 27, 2005 (26,921 MW)
Operable Capacity Margin of 739 MW
Led to OP4 Actions 1-5, 7-10, and 12 in SWCT
Load Relief actions estimated at 220 MW
Led to high Real-Time LMPs in NEMA/Boston and CT
Highest Saturday peak load on August 13, (24,038 MW)
Had it been a week day, it would have likely been our all-time summer peak
Prices driven by:
Weather and demand
Fuel costs
© 2005 ISO New England Inc.

7. Key Findings – RSP05
Transmission upgrades must be completed on schedule
Major 345 kV projects and other upgrades
Greater Connecticut is short of resources now under high-demand conditions
Additional capacity required to reliably meet system-wide demand as early as 2008, and no later than 2010
Addition of 1,100 MW of incremental quick-start resources needed now (in Boston and Greater Connecticut) to satisfy CT and systemwide needs
Without increasing dual-fuel capability of gas-fired capacity, system reliability is at risk
Convert 400 MW by winter 2006/7; 250 MW more each year through winter 2008/9; 500 MW more in winter 2009/10
© 2005 ISO New England Inc.

8. Resource Adequacy: Transmission Solutions

9. RSP05 Projects in Massachusetts
Northeastern Massachusetts (NEMA)/BOSTON
345 kV project under construction
Voltage-control issues being addressed
North Shore improvements under construction with long-term plans being finalized
Projects in other parts of Massachusetts
Central Massachusetts Project and Auburn Projects under construction
Improvements made to Cape Cod load pocket (2nd Canal-Bourne project) and studies for long-term reliability are underway
Springfield and Western MA improvements are needed
Reduce Springfield dependencies on single 345kV line and two generators
Reduce CT dependencies on Springfield capabilities
© 2005 ISO New England Inc.

10. Transmission Solutions: Status of Major Projects
Progress since 2004
18 projects placed in service
36 new projects added
272 projects needed
Major 345 kV projects
Southwest Connecticut Reliability Project – under construction
Southern New England Reinforcement Project – under study
NSTAR 345 kV Transmission Project – under construction
Northwest Vermont Reliability Project – under construction
Northeast Reliability Interconnect Project – permit applications under review
2005 Transmission Project Plan Grand Total: $2.4 - $4.3 Billion
© 2005 ISO New England Inc.

11. Resource Adequacy: Market Solutions

12. Wholesale Market Plan Goals
Efficiently price products and services needed to reliably operate power system
Enable efficient short-term consumption and production decisions
Ensure sufficient long-run investment decisions
Complete the wholesale market design
Capacity Market reform
Ancillary Services Market
Fully integrate demand response
Updated Wholesale Market Plan available in October 2005
© 2005 ISO New England Inc.

13. Criteria for Resource Adequacy Solutions
Objectives
Retain and attract appropriate resources to ensure reliability in all areas of the region
Reduce or eliminate Must-Run contracts that dampen market signals
Continue cap on generator offers in energy market that protect against market power
Ensure that consumers do not pay for bad investment decisions
Ensure resource availability in times of greatest need
Encourage customer participation (demand response)
© 2005 ISO New England Inc.

14. New England Needs Action
Completion of Transmission Projects
Reliability of Fuel Supply
Dual fuel capacity in Boston and Connecticut now
LNG supplies
Assurance of Resource Adequacy
Connecticut needs additional resources now
Connecticut and Boston need quick-start generation now
Region needs new resources between 2008 and 2010
Need market-based, long-term, resource adequacy solution
© 2005 ISO New England Inc.