1. 1 Resurrecting A Load Research Program Susan Romer NSTAR 2006 AEIC Load Research Conference September 2006

2. 2 NSTAR Territory NSTAR Electric NSTAR Gas Combined Gas & Electric Massachusetts’ Largest Investor-owned Electric And Gas Utility Transmitting & Delivering Electricity & Natural Gas For More Than 100 Years Serve @1.4 M Residential & Business Customers In Over 100 MA Communities @ 3,200 employees ElectricGas Residential970,000160,000 Business225,000 20,000 Total1,195,000180,000

3. 3 NSTAR - Electric Three Electric Operating Companies –Boston Edison Company (BECO) –Commonwealth Electric (COMM) –Cambridge Electric (CAMB) 4,959 MW – Peak Load (08/02/06-4 PM) 23,236 GWh – 2005 Annual Energy 17% Share of ISO-New England Load Load And Customers Served by 13 Competitive Suppliers as of July 2006 –47% of load (Industrial – 77%; Commercial – 28%; Residential 16%) –18% of customers (Industrial – 59%; Commercial – 26%; Residential 17%)

4. 4 Where’s Load Research 1993-1998 Homeless 1993 Dismantled 1999 Sales?? Load Research 1980-1993 Rates PURPA Baby 2005 Load Services 2000 Energy Supply Finance & Accounting > Energy Supply > Load Services > Load Research – 1 Analyst > Load Settlement & Load Response – 3 Engineers

5. 5 Detour Impact  Loss of employees with knowledge  No senior management sponsor  No field commitment  “Those Meters Are Only Used For Research”  Data not available when needed  Load data gateway shifted to others Load Research 1992 - 10 Year Rate Freeze 1993 - MA Electric Deregulation 1999 - Merger 2000> - Management Changes

6. 6 Regulatory Requirements Continuous Load Research Meet 95/10 Sample Results Accuracy Levels Most Northeast Utilities Perform Load Research At 95/5 Accuracy Levels Many Northeast Utilities Use Same Month Profiles For Settlement Month

7. 7 Opportunities 2004 Rate Case and No Load Research Data Awareness of ISO Settlement Dispute B/W Two Other Parties Understanding of How Interchange Point Malfunction Can Impact the Calculation of System Loads 2005 Energy Policy Act DST Change Senior Management Sponsorship Fear of Financial Exposure =

8. 8 Load Research Supports Estimation of Competitive Supplier Loads and ICAP Values Development of Rates Charged to Customers Unbilled Energy Sales And Unbilled Revenues Balances Billed/Unbilled Sales & Substation Forecasts Accrual Of Purchased Power Expense As Compared to Actual Development of Rates Charged to Customers Local Network Service Billing for Wholesale Customers Regional Network Transmission Billing for ISO Development of Engineering Loss Studies

9. 9 Load Settlement & Load Research Determine suppliers’ load obligations from load research for the purposes of ISO-New England energy market settlement A contributing factor to unaccounted for energy (UFE)  Metering Error – Meter Failures  Load Profiling Error** – Sample Estimates  Accounting Error – Billing Estimates  Distribution Loss Estimation Error – Incorrect Loss Factors  Theft  Un-metered Energy – Company Use Revenue  Annually @$2 Billion Profiled Loads 55% TOU Loads 45%

10. 10 Load Research Program Assessment Observations Age of the Samples - Over 9 Years Old Significant Data Loss – 47% for BECO Sample Sizes All Less than 30 Per Stratum Sample Bias Caused By Installation Procedures –Over 50% Indoor Meters –“Don’t Really Need THOSE Meters” Relative Precisions Averaged from 20-30%

11. 11 Sample Augmentation Plan We Need To Consider Options To Improve The Sample Results Until The New Samples Are Installed. Techniques Ratio Estimation –Takes Advantage Of The Correlation Of The Variable Of Interest With Another Variable To Increase Precision Post Stratification –Can Be Used Within A Sample Study, But Can Also Be Utilized To Post Stratify Transferred Data From Another Utility With Similar Population Characteristics Load Data Transfer –A Transfer of Load Data From One Distribution Company To Another Distribution Company For Certain Samples. Can Utilize Post Stratification To Fit The Transferred Data To The Sample

12. 12 Preliminary Test Results 2 Primary Goals –To Improve the Current Sample Results in the Interim –To Use Ratio Estimation as an Expansion Methodology Tested 2 Samples for July 2005 –Commonwealth Residential R-1 –Commonwealth Small General Service G-1 Looked At Relative Precisions –Ratio Estimation Versus Mean-Per-Unit –Ratio Estimation Versus Ratio Estimation Post-Stratified Did Not Look At Load Data Transfer, Yet

13. 13 Residential R-1 Relative Precisions MPU Vs. Ratio Estimation Improved Average Relative Precision From 16.33 to 13.10

14. 14 Small GS G-1 Relative Precisions MPU vs. Ratio Estimation Improved Average Relative Precision From 25.72 to 11.17

15. 15 Post Stratification Assignment Distribution StrataOriginal Assignment Post Stratified Assignment 12021 22523 32530 42521 StrataOriginal Assignment Post Stratified Assignment 12836 22421 32726 42824 Residential R-1 Small General Service G-1

16. 16 Residential R-1 Relative Precisions Ratio Estimation Post-Stratified Improved Average Relative Precision From 13.10 to 10.97

17. 17 Small GS G-1 Relative Precisions Ratio Estimation Post Stratified Improved Average Relative Precision From 11.17 to 9.83

18. 18 Relative Precision Ranges ResidentialSmall General Service Mean Per Unit10.4 - 34.317.9 - 38.3 Ratio07.9 – 29.205.9 – 30.8 Ratio Post Stratified06.5 – 20.206.5 – 25.0 Reduction in Variability in the Precision Values

19. 19 New Sample Designs Objectives Achieve Design Accuracy Of +/- 5% At The 95% Confidence Level For All Hours Of The Year Stay Within Budget Constraints Use Stratifying Variables That Will Achieve The Targeted Accuracies For All Hours Of The Year Utilize A 100% (Certainty) Stratum In The Design Process When Feasible Have Longevity Of At Least Five Years Represent Target Populations Optimally Have A Minimum Of 30 Sample Points In Each Stratum Minimize Sample Bias In The Installation Procedures

20. 20 Current and Proposed Program Do We Need A Separate Sample For R-1 Water Heating (WH)? No Do We Need A Separate Samples For R-2? Yes Do We Need Separate Samples For BECO’s G-2 Commercial And G-2 Industrial? No Proposed 13 Sampled Rates –@2002 Sample Meters 11 100% Monitored Rates (TOU) –@4400 Meters @ 225 Interchange Meters Current Samples BECOCOMMCAMBTOTAL R-1109100140349 R-1-WH102 R-299 R-31389064292 G-0 0 G-1115120124359 G-2 0 G-2C90 G-2I90 7433103281381 New Samples BECOCOMMCAMBTOTAL R-1220176160556 R-2828880250 R-3161165 491 G-1200165198563 G-2160 8235946032020

21. 21 Program Objectives Have a quality, compliant, and maintainable load research program Lower risks of disputes in regulatory proceedings and in ISO settlements Minimize loss of data Improve the predictability of costs of operations, maintenance, & future capital expenditures

22. 22 Load Research Roadmap Re-Engineer To Monthly Production Redesign and Install New Samples Build Sample Tracking System Load Research Recast Analysis Use Same Month Profiles For Settlement

23. 23 Next Steps Sharing Performance Metrics –Between Metering, Meter Data Management, & Load Services –Sample Installation Rate; Data Retrieval Rate; Interval Meter Check Installing The New Samples – 2006 and 2007 Build a Sample Tracking System Improve Data Validation Procedures Re-Engineer Load Profile Production to Monthly For Settlement Implement A Process Of Load Study Cycling And Replacement Cross Training – Cloning the Old Fashion Way

24. 24 Now, Who’s Driving the Bus? Load Research Data Heaven