1. EPSA REGULATORY AFFAIR CONFERENCE 2006 Washington, DC October 25, 2006 Garry Brown Vice President, External Affairs New York ISO

2. 2 NYISO Overview  NYISO was formed December 1, 1999.  Utility generation divestiture rate makes it one of the most divested markets in nation.  NYISO market volume - $11 billion in 2005 and over $40 billion since inception.  Unique challenge: New York City is one of the world’s biggest and most complex load pockets. It is also a world finance and communications capital.

3. 3 Ontario IESO 27,005 MW* Hydro Quebec 34,850 MW* ISO - New England 28,021 MW* New York ISO 33,939 MW* PJM / PJM West 131,330 MW* PJM 144,796 MW* * = Peak load Located at a Crossroads

4. 4 NYISO’s Markets ♦Energy: Real-Time and Day-Ahead (based on LBMP) ♦Ancillary Services: RT and DA ♦Co-optimized with energy in both RT and DA ♦Spinning and non-spinning reserves with scarcity pricing ♦Regulation ♦Installed Capacity (ICAP) – locational markets ♦Transmission Congestion Contracts (TCCs) ♦Virtual trading for both supply and demand ♦Demand Side Resources may participate in the energy and capacity markets (ancillary services under development) NYISO also offers several Cost-Based Products:  Voltage Support  Black Start

5. 5 Megawatts of New Generation* by NYISO Zone 1999 thru 2005 * Built or Under Construction A C 33 MW D 210 MW F I J H B E G K 43 MW 7 MW 1,715 MW 2,143 MW 801 MW

6. 6 Transmission New Transmission Lines (Proposed or Operational) Con Ed Upgrades CSC (330 MW) (660 MW) Neptune

7. 7.... EFORd

8. 8 Managing Higher Peaks Increased Regional Communication and Generation Availability NY Historic Peak Loads YearPeak Load (MW’s) 199625,578 199728,700 199828,166 199930,311 200028,136 200130,983 200230,664 200330,333 200428,433 200532,075 200633,295 forecasted 200633,939 actual

9. 9 Load/Demand Response Programs Special Case Resources & Emergency Demand Response Programs Estimated performance by Zone: A – 328 MW (300 MW SCR, 28 MW EDRP) B – 60 MW ( 59 MW SCR, 1 MW EDRP) C – 94 MW ( 80 MW SCR, 14 MW EDRP) J – 429 MW (334 MW SCR, 95 MW EDRP) K – 261 MW (174 MW SCR, 87 MW EDRP) 1172 MW Total Load Reduction August 2, 2006 - SCR and EDRP resources were activated in Zones J&K 1 pm to 7 pm, and Zones A, B &C 2 pm to 7 pm.

10. 10 8/2 NYCA Load Effect of Demand Response Added Back Total 1172 MW

11. 11 Retail ¢/kWh and Percent Coal Generation ¢ ¢ ¢ = average retail price ¢/kWh 1/06 – 7/06 % = percent coal generation 1/06 – 7/06 Source: Energy Information Administration ¢ 8.5¢39% ¢ 7.0¢55% ¢ 7.7¢64% ¢ 10.2¢36% ¢ 7.4¢87% ¢ 5.2¢95% ¢ 6.7¢57% ¢ 8.4¢41% ¢ 9.2¢24% ¢ 6.0¢93% ¢ 7.8¢72% 5.9¢61% ¢ 6.4¢45% ¢ 5.9¢94% 5.8¢4% ¢ 6.4¢41% 12.6¢ 1% 1% ¢ 5.0¢ 1% 1% 6.9¢70% ¢ 7.3¢49% ¢ 4.5¢46% ¢ 6.3¢85% ¢ 7.6¢76% 6.9¢62% ¢ 8.0¢66% ¢ 7.0¢47% ¢ 6.5¢95% ¢ 7.7¢86% 6.8¢48% ¢ 7.5¢60% ¢ 64% 7.0¢ 64% ¢ 5.3¢92% ¢ 6.9¢39% ¢ 10.4¢ 29% 29% ¢ 8.6¢55% ¢ 13.5¢ 16% 16% ¢ 10.9¢ 2% 2% ¢24% MA15.4¢24% ¢12% CT14.3¢12% ¢17% NH14.2¢17% ¢ 0% RI14.1¢ 0% ¢ 0% VT11.5¢ 0% ¢17% NJ11.3¢17% ¢60% MD 8.9¢60% ¢71% DE 8.8¢71% ¢ 8.2¢25% ¢ 5.0¢98% ¢ 8.3¢61%

12. 12 Competitive Markets  Efficiency  Innovation  Risk Shifting