1. SEPTEMBER 29, 2014 | CONCORD, NH Eric Johnson DIRECTOR, EXTERNAL AFFAIRS New Hampshire Energy Summit Lessons Learned from Winter 2014 and How the ISO Is Preparing for Winter 2015

2. Dramatic Changes in the Energy Mix 2 Percent of Total Electric Energy Production by Fuel Type (2000 vs. 2013) Source: ISO New England Net Energy and Peak Load by SourceNet Energy and Peak Load by Source

3. Region Has Not Developed Gas Infrastructure to Keep Pace With Growth of Gas-fired Generation 3 Cumulative New Generating Capacity in New England

4. Region Is Losing Non-Gas Resources Salem Harbor Station (749 MW) – 4 units (coal & oil) Vermont Yankee Station (604 MW) – 1 unit (nuclear) Norwalk Harbor Station (342 MW) – 3 units (oil) Brayton Point Station (1,535 MW) – 4 units (coal & oil) Additional retirements are looming Major Retirement Requests: 4

5. 5 Proposed Generation Is Primarily Gas and Wind

6. Lessons and Observations from Winter Operations Operational options are very limited and becoming more constrained Gas pipelines are severely constrained when weather is cold, limiting gas generation to minimal levels Oil-supply chain is fragile and unable to respond quickly during adverse weather conditions and/or when demand is high Imported Canadian hydropower is limited during very cold weather (because Québec is a winter-peaking system) The region is very vulnerable to the loss of large non-gas generators during cold weather (e.g., nuclear units) 6

7. Current Pipeline Infrastructure is Inadequate to Serve Region’s Natural Gas-fired Generation Of the more than 11,000 MW of gas-fired generation with a capacity supply obligation, only about 3,000 MW were generating during the peak hour. 7

8. High Gas Prices Drove Wholesale Electricity Prices to Record Levels Over the Past Two Winters 8

9. Pipeline Constraints Last Winter Resulted in a Shift to Coal and Oil Resources and Higher Emissions SO 2, NO X, CO 2 from Power Generation, Winter 2013 - 2014 Source: US EPA Continuous Emissions Monitoring System 9

10. Preparations for This Winter, and Beyond Winter reliability program will improve fuel security Better alignment between gas and electricity markets will improve performance of gas-fired generators Recent market rule changes will drive resources to make secure fuel arrangements over the long term 10

11. Challenges Ahead We are in a precarious operating position for several winters due to inadequate gas pipeline infrastructure and retirements that have already taken place Further non-gas generator retirements and/or outages will exacerbate reliability concerns Changes to ISO’s electricity markets will strengthen resource performance and seek the most economic market solutions, but these changes alone won’t spur long-term investment in natural gas infrastructure The region needs to find a way forward to secure the natural gas infrastructure it needs to ensure a reliable electric system 11