Michael I. Henderson ISO New England Inc. NERC’s 2007-2016 Long-Term Reliability Assessment (LTRA) Workshop: Natural Gas Dependency in New England Michael I. Henderson ISO New England Inc.

New England’s Electric Power Grid 6.5 million customer meters Population: 14 million 350+ generators 8,000+ miles of high voltage transmission lines 12 interconnections to three neighboring systems: New York, New Brunswick, Quebec 31,000 megawatts (MW) of installed generating capacity 300+ market participants Summer peaking system Summer: 28,130 MW (8/06) Winter: 22,818 MW (1/04) ISO and Local Control Centers Natural Gas Dependency In New England

New England’s Capacity – Summer 2007 System Planning information as of February 2007 (winter ratings): Gas-only units: 8,600 MW Dual-fuel units: (two categories) Natural gas as primary fuel/oil as secondary fuel: 4,600 MW Oil as primary fuel/natural gas as secondary fuel: 3,700 MW Gas-only to dual-fuel generation conversions already completed Pre-Winter 2005/06 ~ 1,550 MW Pre-Winter 2006/07 ~ 825 MW Generation capacity mix by primary fuel type, 2007, summer ratings, MW and percentage. Note: “Non-Hydro Renewables” include biomass, refuse, landfill gas, and wind. Natural Gas Dependency In New England

New England’s Energy Production - 2006 System Planning information as of February 2007 (winter ratings): Gas-only units: 8,600 MW Dual-fuel units: (two categories) Natural gas as primary fuel/oil as secondary fuel: 4,600 MW Oil as primary fuel/natural gas as secondary fuel: 3,700 MW Gas-only to dual-fuel generation conversions already completed Pre-Winter 2005/06 ~ 1,550 MW Pre-Winter 2006/07 ~ 825 MW New England electric energy production by fuel type, 2006, in 1,000 MWh. Note: “Non-Hydro Renewables” include biomass, refuse, landfill gas, and wind. Natural Gas Dependency In New England

New England’s Gas-Fired Fleet Potential Concerns: “Just-in-time” delivery of fuel source Unplanned outage or closure of the regional LNG facility LNG shipping disruption or embargo Loss of natural gas pipeline or compressor stations Wholesale electricity’s exposure to natural gas price volatility Actual Experience: Temporary shutdown of regional LNG facility – Post 9/11 Greater Northeast Cold Snap – January 14-16, 2004 Hurricanes Katrina & Rita - Fall of 2005 Natural Gas Dependency In New England

Regional Response Developed robust rules and operating procedures to manage the electric system through short or long-term fuel supply or delivery constraints: Appendix H of Market Rule #1: “Operations During Cold Weather Conditions.” Operating Procedure No. 21: “Action During an Energy Emergency.” Added provisions in new markets to promote resource availability at time of need: Forward Capacity Market (FCM) Locational Forward Reserve Market (LFRM) Created the Electric/Gas Operations Committee (EGOC) Increased communications and coordination with the regional natural gas sector via the Northeast Gas Association (NGA) Natural Gas Dependency In New England

Regional Response – cont’d Dual fuel conversions of single-fuel, gas-only power stations Newly proposed LNG terminals and expansion of regional natural gas grid Confirm existing practices are compliant with FERC Order 698: (electric & gas sector communications) Natural Gas Dependency In New England

Inter-Regional Response 3 ISO/RTO MOU on Natural Gas: Transfer of knowledge between ISO-NE, NYISO & PJM Coordinated operations & planning Continuous pre & post-seasonal discussions Sharing of information, studies & methodologies Refinement of communications protocols and contact lists Direct communications between Control Room and Gas Control Table-Top exercises Natural Gas Dependency In New England

Long-Term Outlook ISO-NE Regional System Plan: Annual 10-year plan Loads, generation, transmission & demand-side Fuel diversity, availability, deliverability ISO-NE’s Scenario Analysis: New England will continue to depend on natural gas Interconnection queue predominately gas-fired Relatively low air emissions Renewable Portfolio Standards (RPS) Natural Gas Dependency In New England

Long-Term Outlook – cont’d NERC LTRA Resource adequacy assessment Fuel supply & delivery assessment NPCC Triennial Review of Resource Adequacy 5-year resource adequacy review (LOLE) Comprehensive review every three years Interim review every year Emerging Issue: LNG Interchangeability Natural Gas Dependency In New England

Operable Capacity Analysis New England’s total installed capacity: 33,425 MW (winter) 16,733 MW (50%) are capable of burning natural gas (as either a startup, primary, secondary or stabilization fuel) 8,587 MW (26%) are single-fuel, gas-only stations 8,146 MW (24%) are fully functional, dual-fuel stations (gas/oil) 2007 Regional System Plan – Assessed the amount of gas-only resources required under winter peak conditions: 50/50 load: 2007/08 ~ 450 MW 2011/12 ~ 1,650 MW 90/10 load: 2007/08 ~ 1,400 MW 2011/12 ~ 2,700 MW Natural Gas Dependency In New England

Market Rules and Operating Procedures Appendix H of Market Rule #1: “Operations During Cold Weather Conditions” 7-Day Forecast Projects Cold Weather Conditions Cold Weather Watch, Warning & Event Cold Weather Event triggers rollback of wholesale electric market timelines to align with natural gas nomination deadlines Operating Procedure No. 21: “Action During an Energy Emergency” Triggered by fuel supply shortage or deliverability constraint Requests fuel switching to non-constrained fuels Allows collection of fuel inventory data from generation fleet Dispatch system to manage and preserve fuel inventories Natural Gas Dependency In New England

New Natural Gas Infrastructure Source: Northeast Gas Association (NGA) Natural Gas Dependency In New England

New Natural Gas Infrastructure Source: Northeast Gas Association (NGA) Natural Gas Dependency In New England

Conclusions New England will continue to rely heavily on natural gas-fired generation (primary finding from ISO-NE’s Scenario Analysis) Close coordination between electric and gas industries is required Markets promote unit availability at time of need Dual fuel & firm fuel purchases Renewable Portfolio Standards (RPS) and demand-side resources will assist in diversifying the region’s fuel supply Newly proposed LNG terminals and expansion of the regional natural gas grid will improve the amount of natural gas supply Natural Gas Dependency In New England

Appendix 2007 Regional System Plan: ISO-NE’s Scenario Analysis: http://www.iso-ne.com/trans/rsp/index.html ISO-NE’s Scenario Analysis: http://www.iso-ne.com/committees/comm_wkgrps/othr/sas/index.html NERC LTRA http://www.nerc.com/~filez/rasreports.html NPCC Triennial Review of Resource Adequacy: http://www.npcc.org/adequacy.cfm Natural Gas Dependency In New England

Appendix – cont’d Appendix H of Market Rule #1: Cold Weather Operations http://www.iso-ne.com/regulatory/tariff/sect_3/mr1_appendix_h_11-27-06.pdf Operating Procedure No. 21: Action During an Energy Emergency http://www.iso-ne.com/rules_proceds/operating/isone/op21/index.html Northeast Gas Association: http://www.northeastgas.org Natural Gas Dependency In New England

Director – Regional Planning and Coordination QUESTIONS Michael I. Henderson Director – Regional Planning and Coordination ISO New England Inc. (413) 535 – 4166 mhenderson@iso-ne.com Natural Gas Dependency In New England