Massachusetts Electric Restructuring Roundtable New England Regional Transmission Expansion Planning Process By Thomas J. Gentile National Grid October 28, 2004

Transmission Planning[1] Identify [Plan] a Flexible, Robust, and Implementable Transmission System Reliably Facilitates Commerce [Markets] Serves all Load in a Cost Effective Manner [1] Eric Hirst & Brendan Kirby, Transmission Planning for a Restructuring US Electricity Industry, June 2001

Necessary Components for a Reliable and Efficient Electric Network Generation Adequacy Transmission Infrastructure Demand Response Correct Market Signals

New England RTEP Principles [2] Provide for coordination with existing transmission systems and with appropriate interregional and local expansion plans Properly account for market responses including generation, merchant transmission and demand side responses [2] ISO-New England “Current RTEP Process” RTO-NE Stakeholder Working Group, April 15, 2003

Overview of New England ISO Regional Planning Process Region-wide Annual Planning Process Open Process Allows for Stakeholder Input Includes Market Solutions Transmission Owners provide “Backstop” Input and Coordination with Other Areas Addresses Market Efficiency

Overview of New England ISO Regional Planning Process Planning process recognizes that any Market Proposals can go forward at anytime Planning process addresses both reliability and economic needs Planning process retains the TOs obligation to provide “Backstop”

New England ISO Regional Planning Process Develop Range of Solutions Work Collaboratively with TOs Stakeholder Input Regulatory Input Regional Expansion Plan

Industry Entities Independent (Merchant) Generators Power Marketers Merchant Transmission Developers Independent Transmission Companies End Users The traditionals remain Vertically Integrated Utilities Municipals Federal Public Power entities

NERTO System Planning Process Flow Diagram (High Level) NO YES Needs Assessment 5-10 Year Horizon Reliability, Economic, and Inter-Area Inform Stakeholders Request for Solutions in Consultation with Advisory Committee Market Responses Generation Distributed Resources Merchant Transmission Regulated Responses TO(s)/ITC(s) Proposals Backstop Board Approval of NSP NO NERTO/ITC Evaluates Regulated Responses YES NERTO issues GAP RFP for Non-Transmission Solutions NERTO Evaluates GAP RFP Solutions Meets System Needs Is an Interim Need Identified? NERTO Evaluates Market Responses to System Needs If Any Needs Remain NERTO System Planning Process Flow Diagram (High Level) NERTO Formulates NSP to Maintain System Reliability and Economically Justify Congestion Reduction and Address Inter-Area needs

Challenges Defining Role of Regulators More Hands in the Planning “Pot” Changing Planning Process Balancing Market Rules and Reliability

QUESTIONS