Introduction Customer-Facing Subcommittee MA DPU Grid Modernization Subcommittee January 9, 2013 Tim Woolf | ©2013 Synapse Energy Economics Inc. All rights reserved.

MA Grid Modernization Background Documents MA Grid Modernization Website: – Many background documents will be available soon. EPRI DOE FERC States International Annotated bibliography available. –With table of contents and short summaries. Please submit additional documents that would be useful for this Working Group. Tim Woolf – Customer Facing Subcommittee Slide 2

FERC Staff Report Tim Woolf – Customer Facing Subcommittee Slide 3

Penetration of Advanced Meters - Nationwide Tim Woolf – Customer Facing Subcommittee Slide 4

Penetration of Advanced Meters – by Region Tim Woolf – Customer Facing Subcommittee Slide 5 Massachusetts penetration in 2012 was two percent. 39 states had higher penetrations. Ten states have penetration of 50 percent or higher.

Demand Response Program Types Tim Woolf – Customer Facing Subcommittee Slide 6

Demand Response Potential Peak Reduction Tim Woolf – Customer Facing Subcommittee Slide 7

Demand Response Peak Reduction by Class Tim Woolf – Customer Facing Subcommittee Slide 8

Most DR Comes From Incentive-Based Programs Tim Woolf – Customer Facing Subcommittee Slide 9

Summary of Recent State DR Activities –Arizona –California –Maryland –Arkansas –Oklahoma –Illinois –Idaho –Colorado –Connecticut See pages 43 – 49 of FERC 2012 Assessment. Tim Woolf – Customer Facing Subcommittee Slide 10

RAP Report on Time-Varying Rates Tim Woolf – Customer Facing Subcommittee Slide 11

Useful Context for Time-Varying Rate Design Tim Woolf – Customer Facing Subcommittee Slide 12

Summaries of Recent Pilots in Other States Tim Woolf – Customer Facing Subcommittee Slide 13

Blueprint for Offering Time-Varying Rates 1.Understand the impacts of current rates. 2.Develop a consistent and comprehensive set of ratemaking objectives. 3.Identify the menu of potential new rate options. 4.Perform preliminary assessment of potential impacts. 5.Conduct preliminary market research. 6.Conduct Pilots. 7.Full-scale deployment of innovative rates. Tim Woolf – Customer Facing Subcommittee Slide 14 From RAP 2012, pages 38 – 40.

MA Utility Smart Grid Pilot Programs Required by Green Communities Act – Section 85. Smart Grid Pilot plans filed with the DPU for review & approval. Utilize advanced technology to operate the grid more efficiently. Requirement to cover at least 0.25% of customers with Time of Use or hourly pricing. Pilot should seek to achieve at least 5% reduction in peak and average load in pilot area. Costs recovered in basic service rates. Utilities allowed to earn incentives. Report due to legislature, including recommendations for modifications to the programs and further implementation. Tim Woolf – Customer Facing Subcommittee Slide 15

Contact Information Tim Woolf Vice President Synapse Energy Economics Slide 16 Tim Woolf