1. New England Roundtable
Fuel Diversity Issues in New England
ISO-NE Phase II Report
April 12, 2002
Richard Levitan
Levitan & Associates, Inc.

2. Historical Energy Production by Fuel Type
1990
1995
2000
33.4%
37,489 GWh
Nuclear
31%
35,715 GWh
26.8%
34,345 GWh
15%
16,876 GWh
Coal
15.5%
17,892 GWh
19,769 GWh
5.5%
6,128 GWh
Gas
17.9%
20,596 GWh
18.5%
23,710 GWh
30.9%
34,689 GWh
Oil
10%
11,426 GWh
12.9%
16,485 GWh
112,500
Total
115,400
127,500
ISO-NE
** “Other” includes hydro, pumped storage, and net interchange.

3. Age of New England Conventional Steam Units (Winter)
Old plants:
Blackstone 1, constructed in 1930, 9 MW
West Springfield 1, constructed in 1949, 49 MW
Holyoke/Cabot 6, constructed in 1949, 6 MW
Holyoke/Cabot 8, constructed in 1949, 9 MW
In 1952, 261 MW were added with West Springfield 2, Salem Harbor 1 and 2, and Schiller 4.
The 1960s and 1970s saw the addition of over 4000 MW of new generation each decade.
ISO-NE CELT Report 2002

4. Average / Peak Loads in New England
30,000
25,000
20,000 MW
15,000
Peak Load
Average
New England’s peak electricity demand in the summer of 2001 shattered previous record electricity use. The summer peak demand of 24,967 MW eclipsed the prior record of 22,544 MW set in July 1999.
[As shown in later slides, New England’s power plant building boom is expected to result in total generation additions of 10,766 MW (Reference Case) and as much as 12,542 MW (High Case) over the period to meet this growing demand.]
Load
10,000
5,000 -
Feb-01
Apr-01
Jun-01
Aug-01
Oct-01
Dec-01
Feb-02

5. Average / Peak Loads in New England
30,000
25,000
20,000
Peak Load MW
15,000
Average
Load
NEPOOL Capacity, Winter
Coal Steam = 2709 MW +
Hydro = 1389 MW +
Nuclear = 4395 MW
8493 MW +
NUGs = MW (non-participant hydro & thermal)
12,441 MW
Oil-fired and oil generation (steam units) = 7,409 MW
10,000
5,000 -
Feb-
Mar-
Apr-
May-
Jun-
Jul-
Aug-
Sep-
Oct-
Nov-
Dec-
Jan-
Feb- 01 01 01 01 01 01 01 01 01 01 01 02 02

6. Net Interchange in ISO-NE

7. 5 x 16 Spark-Spreads in New England
Spark Spread = Power Markets Weekly On Peak index
Monthly Boston City Gate
Monthly Boston City Gate=average of Bloomberg weekly
Volatility increased after market opening in April ’99
New CC’s would have been in the money for 5x16’s except in Jan and Dec. 2000
Existing steam plants (Heat Rate > 10,000) have material margins (spark spread > 12,000) only about 1/3 of the 5x16 blocks since market opened
Power Markets Week, Bloomberg

8. Recent Natural Gas and Residual Fuel Oil Prices
10.00
9.00
8.00
7.00
6.00
$/MMBtu
Gas (Henry Hub)
5.00
RFO 0.3% (NYH)
4.00
At its maximum, the Henry Hub price was $9.13 in Jan. ’01; the price of oil at that time was $4.74. The price of oil hit its peak in Sep. ’00, at $5.70.
3.00
2.00
1.00
0.00
Jan-
Mar-
May-
Jul-
Sep-
Nov-
Jan-
Mar-
May-
Jul-
Sep-
Nov- 00 00 00 00 00 00 01 01 01 01 01 01
Natural Gas Week

9. Forecast of Energy Production by Fuel Type
2002
2006
2010
Nuclear
25%
21%
20%
Coal
15%
13%
Gas
32%
50%
55%
Oil
10% 1% 3%
** All nuclear units have applied for license renewals, so none will be going offline through 2010.

10. ISO-NE Phase II Gas Study
Study time frame:
Winter ; Winter ; Winter
Incorporate new pipeline projects in supply mix
Revise Reference and High Case natural gas demands
Quantify amount of “at-risk” gas-fired generation
Conduct steady-state and transient electric and gas system contingencies

11. Merchant Plant Capacity Additions

12. Merchant Plant Entry in New England

14. Phase II Steady-State Modeling Results
Winter 2002 Peak Day At-Risk  1,352 MW
Winter Peak Day At-Risk  3,101 MW
Winter Peak Day At-Risk  2,814 MW
No delivery constraints in any summer thru ‘05
Mitigation through distillate oil, in particular

15. Contingency: Postulated Line Break on Algonquin
Transient Analysis
4 hours
Fore
River
IDC Bellingham
 ANP Bellingham
NEA Bellingham
5 hours
BURRILLVILLE
Cleary
Conclusions:
Increasing reliance on gas is a logical market response to technology improvements, stringent emissions requirements, and plentiful gas resource base.
Intra-day transient effects appear manageable.
Lake Road
 Dighton
Manchester 
2 hours
Canal
 Tiverton