1. 2015 NARUC Winter Meeting Nick Wagner – Iowa Utilities Board 1

2. Acknowledgement and Disclaimer Acknowledgement: This material is based upon work supported by the Department of Energy, National Energy Technology Laboratory, under Award Number DE-OE0000316. Disclaimers: This report was prepared as an account of work sponsored by an agency of the United States Government. Neither the United States Government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product, process, or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply its endorsement, recommendation, or favoring by the United States Government or any agency thereof. The views and opinions of authors expressed herein do not necessarily state or reflect those of the United States Government or any agency thereof. The information and studies discussed in this report are intended to provide general information to policy-makers and stakeholders but are not a specific plan of action and are not intended to be used in any State electric facility approval or planning processes. The work of the Eastern Interconnection States’ Planning Council or the Stakeholder Steering Committee does not bind any State agency or Regulator in any State proceeding. 2

3. EISPC – What is it? EISPC = “Ice Pick” States in the Eastern Interconnect Request ARRA (stimulus) funding: facilitate “development of regional transmission plans” “conduct a resource assessment and an analysis of future demand and transmission requirements” $14, 000, 000 award National Association of Regulatory Utility Commissioners (NARUC) => funding administrator EISPC => own staff EISPC Council: Two voting representatives per state One Staff - support States act in own interest – while recognizing collective action may be the best outcome for all 3

4. Study and Whitepaper Long-term Electric and Natural Gas Infrastructure Requirements in the eastern Interconnection Commissioned by EISPC ICF International Released September 2014 Comprehensive analysis 3 Step Process 3 scenarios (BAU,RPS,Combination) Copies here or online at www.naruc.org/eispc 4

5. Natural Gas Traditionally used for peaking and some intermediate generation needs Changing customer base Not storable on site Gas infrastructure has not kept pace with areas of production 5

6. Gas and Electric 6

7. Markets 7 Comparison of natural gas and electricity days (Source: ISO New England)

8. Gas and Electric Regulatory environment is different Purchase options for gas vs. generation needs Build it and they will come vs. come and they will build it Regional market coordination (ISO/RTO) Infrastructure planning Information sharing 8

9. Electric Generation with Gas 18% in 2002 to 34% in 2013 and projected even higher From smallest to largest gas consumer 9 Natural gas consumption by end use for 2000-2013 (Source: U.S. Energy Information Administration)

10. Electric Generation with Gas Electric Generation with gas likely will increase Lower, stable gas prices 111(d) Characteristics of gas generation make it a compliment to renewables Increased use in serving base load due to renewable generation addition and plant retirements 10

11. What keeps us up at night? Gas supply Some regions may not offer firm gas supply due to capacity/supply constraints Gas generation demands high pressure, high volume with load swings Gas Capacity – in some regions Loss of natural gas leading to electric grid problems Gas can’t be stored on site Offsetting peak seasons – unless extreme conditions Fuel switching – is it possible 11

12. Study results Increased gas use in the Eastern Interconnect 12

13. Study Results Increased daily demand 13 Eastern Interconnection Daily Gas Load by Sector Gas Use in BAU (MMcfd)

14. Study Results When does infrastructure make sense? 14

15. Study Results 15

16. Study Results 16

17. Study Results 17 U.S. Lower 48 States Regional Natural Gas Infrastructure Investment Expenditures by Scenario

18. Study Results Fuel infrastructure needs between 2014 and 2030 in the U.S. portion of the Eastern Interconnection are projected to total $121.9B in the Combined Policy Scenario, $83.3B in the RPS Scenario, and $101.1B in the BAU Scenario Much of the capacity increases will occur over the next 10 years “Optimum” infrastructure vs risk‐reward imbalance Infrastructure must hit the right spot 18

19. Recommendations Companion Illinois Institute of Technology White Paper Harmonize Natural Gas and Electricity Infrastructures Align Daily Market Schedules Create a coordinator in the natural gas industry (ISO) Expand inter-industry communication protocols under extreme system conditions Ensure sufficient flexibility in the electricity system to mitigate the added uncertainties pertaining to natural gas availability 19

20. Recommendations (con’t.) Integrate the natural gas availability into national and regional reliability valuations Improve the generator availability data system to identify issues related to natural gas availability Investigate cyber security issues in the coordinated systems Reinforce education and workforce training 20