1. New Yorks Energy Challenges 2010 Gordon Boyd, EnergyNext, Inc. For Municipal Electric and Gas AllianceSM www.megaenergy.org April 16, 2010

2. Energy Priorities 2010 Good News and Bad News 1.Historic low energy prices…today. 2.Regional differentials penalize consumers 3.Cap and Trade: upside for NY. 4.Energy infrastructure agenda. 5.Energy market trends. 6.Consumers have the responsibility to choose.

3. Energy Priorities 2010 Why are prices low? Demand destruction: The Great Recession (Bad news) Speculators out of market (Good news) Natural gas supplies are up. Unconventional, shale gas. (Good news)

4. Energy Priorities 2010 Wholesale Power Prices at Historic Low in 2009 (NYISO) LoadAv.Electric Av.NatGas GWh$/MWh$/MMBtu 2000 428 $58.26 $5.52 2001 430 $51.22 $4.54 2002 435 $49.90 $3.85 2003 433 $62.58 $6.48 2004 438 $62.80 $6.80 2005 458 $93.83 $10.01 2006 444 $76.45 $7.36 2007 458 $80.29 $8.50 2008 452 $95.31 $10.13 2009 435 $48.63 $4.87

5. Energy Priorities 2010 Wholesale Electricity Price Trend 2000-2009 (Average, NYS)

6. Energy Priorities 2010 Wholesale Natural Gas Price Trends 2000-2009 (Average, NYS)

7. Energy Priorities 2010 Total Electric Demand NYS 2000-2009

8. NYMEX Natural Gas Prices

9. Energy Priorities 2010 Natural gas storage trend, last 24 months (USEIA) ((CAUSE))

10. Energy Priorities 2010 Another form of NGas storage ((Cause))

11. Energy Priorities 2010 Growth of Unconventional NGas ((Cause))

12. Energy Priorities 2010 US shale activity picks up (www.rigzone.com) Index to 100 Jan08www.rigzone.com

13. Energy Priorities 2010 Electric fixed price trend 4/15/2010 ((Effect))

14. Energy Priorities 2010 January 3, 2010, 1 p.m.

15. Energy Priorities 2010 January 6, 2010, 9 a.m.

16. Energy Priorities 2010 Upstate NY Pricing Factors Transmission congestion, East-West Supply: Adequacy of nearby generation Demand: Stability, growth or decline

17. Energy Priorities 2010 3 Congestion Points Projected cost: 2009 - 2018 Leeds-Pleasant Valley Zones F-G: $1,307,000,000 Mohawk Valley Zones E-F $567,000,000 West-Central Zones B-C $230,000,000

18. Energy Priorities 2010 Historic Cost of Congestion (NYISO) 2004: $833,000,000 2008: $2,613,000,000 2009 (1Q): $233,000,000

19. Energy Priorities 2010 Recent projects November 2009 Linden transmission, GE developer, 300 MW between PJM and NYISO Dover, 1,000 MW nat gas. Advance Power AG 345KV underwater connection Bayonne, NJ to Gowanus-Brooklyn Stephentown 20MW flywheel, Beacon Power. Smart Grid Tech.

20. Energy Priorities 2010 Champlain-Hudson Power Express 2,000 Megawatts Under water, underground 355 miles to NYC/NE Hydropower and wind sources Outside existing energy routes

21. Energy Priorities 2010 Cap and Trade: Impact on New York ratepayers Carbon tax will raise price of coal- fired generation. Other states are more dependent on coal than New York. Electric prices will normalize.

22. Energy Priorities 2010 New York vs U.S. New York State 15.27 cents/kwh U.S. average 8.90 cents/kwh

23. Energy Priorities 2010 Pennsylvania Electric generation fuel mix, Nov. 2009

24. Energy Priorities 2010 Ohio Electric generation fuel mix Nov. 2009

25. Energy Priorities 2010 NY State Electric generation by fuel source Nov. 2009

26. Energy Priorities 2010 New York wind resources

27. Energy Priorities 2010 Renewables by 2015 (NYS Energy Plan) Wind (1,280MW as of 2009): On shore 7,993 MW Off shore 534 MW Solar PV: 100 MW (14.6MW as of 2006) Total NYS peak electric demand 2008: +/- 38,720 MW (USEIA)

28. Energy Priorities 2010 Wind Power Challenges Balancing, storage and ramping Need for energy storage technologies Coordination among regional grid operators to manage variable flow

29. Energy Priorities 2010 Private Investment in renewables Energy price hedge On-site, behind the meter, PPAs Bi-lateral deals between consumers and developers Green marketing Renewable Energy Credits (RECs)

30. Energy Priorities 2010 …Whats next? NYS Energy Plan encourages 1.New capacity, both Generation and Transmission. 2.Fuel diversity, especially renewables. 3.Clear signals to consumers from energy markets to induce efficiency.

31. Energy Priorities 2010 Other policy initiatives under way Smart metering – Installations began 2008. Net metering – Customer sited generation banking. Article 10 - One-stop permitting expired 2002. Is renewed effort in store? Federal ARRA funding, block grants

32. Energy Priorities 2010 Consumer Choices and Responsibilities Shop for energy supplies, price, rate, tax savings. Pay less. Energy efficiency, SCR, NYSERDA programs. Use less. Federal incentives, tax credits for efficiency and renewables

33. Energy Priorities 2010 QUESTIONS? www.megaenergy.org