1. 1 Case Study: New England Clean Power Link _______________________ Presented to PLATTS Transmission Planning and Development Conference by Vincent Musco 1100 New York Avenue NW Suite 490 East Washington, DC 20005 202.296.5520 vmusco@bostonpacific.c om _____________________ June 23, 2016

2. About the New England Clean Power Link 2 The New England Clean Power Link is a 1,000 MW, HVDC merchant transmission project with an estimated in-service date of 2019 The developer of the $1.2 billion project is TDI New England, an affiliate of Transmission Developers, Inc. Equity financing is being provided by Blackstone (NYSE: BX) The 154-mile project will be buried for 97 miles under Lake Champlain starting at the Canadian border and continue underground for 54 miles through Vermont

3. Rationale for New England HVDC Investment 3 10,000 MW capacity retiring or at-risk  Represents approximately 30% of total New England generating capacity Lagging Gas Infrastructure  In 2014, 44% of ISO New England’s electricity came from gas-fired plants  Reliant on LNG Imports, which are 4 to 5 times more expensive than Marcellus gas Strong Demand for Renewables  All six states have RPS  RFPs for renewables issued (Tri-State RFP) or expected (MA Legislation) Highest power prices in the U.S.  In 2015, prices averaged 16.51 cents/kWh, 58% above the national average (10.42 cents/kWh)

4. New England’s HVDC Gold Rush 4 There are six proposed HVDC projects worth a combined $8.9 billion under development that would bring Canadian power to New England Northern Pass  1,000 MW  $1.6 billion  Eversource Energy  Pittsburg, NH to Deerfield, NH Northeast Energy Link  1,100 MW  $2 billion  Emera, National Grid  Orrington, ME to Tewksbury, MA Vermont Green Line  400-800 MW  $600 million  Anbaric, National Grid  Under Lake Champlain Maine Green Line  1,000-2,000 MW  $1.5 billion  Anbaric, National Grid  Under Atlantic Ocean Maine Power Express  1,000 MW  $2 billion  Loring Holdings, Natural Resources Energy, TDI  Northern Maine to Boston Harbor New England Clean Power Link  1,000 MW  $1.2 billion  TDI New England  Under Lake Champlain to Ludlow, VT

5. New England Clean Power Link’s Head Start 5 The New England Clean Power Link has achieved more milestones than competing HVDC projects. Examples include: Received all necessary permits in host state Secured 100% of equity financing Received conditional FERC approval to charge negotiated rates

6. How FERC Regulates Merchant Projects 6 FERC allows merchant transmission developers to charge negotiated – or market-based – rates as long as they pass FERC’s Four Factor Analysis Factor One Justness and reasonableness of rates Factor Two Potential for undue discrimination Factor Three Potential for undue preference Factor Four Regional reliability and operational efficiency requirements FERC offers two options for selling transmission rights that help merchant developers pass the Four Factor Analysis Open Season Open Solicitation

7. Open Seasons vs. Open Solicitations 7 Open Season Open Solicitation  Section 205 filing submitted for FERC approval received in advance  Anchor customer(s) offered up to 75% of capacity  Must offer at least 25% of capacity at the same rates, terms, and conditions as anchor contract in an open season  Broad notice must be given before open season begins (but not before anchor negotiations)  Independent evaluator required  Ex post informational report filed at FERC after open season disclosing results  FERC conditional approval received in advance  Anchor customer(s) offered up to 100% of capacity at rates, terms, and conditions that may vary between customers based on material differences  Broad notice must be given before negotiation with anchor customer(s) begins  Independent evaluator not required (but useful)  Section 205 filing submitted at FERC after open solicitation disclosing results

8. Role of the Independent Evaluator 8 Boston Pacific is the third-party Independent Evaluator for the New England Clean Power Link Open Solicitation. In this role we: 1.Conduct the Open Solicitation 2.Evaluate and rank all Expressions of Interest in conjunction with TDI 3.Ensure that the Open Solicitation follows FERC- established guidelines and is fair, transparent, and not unduly discriminatory 4.File an independent attestation at FERC

9. New England Clean Power Link’s Open Solicitation 9 Step 1 Receive FERC order authorizing Open Solicitation (March 10, 2014) Step 2 Launch Open Solicitation with broad notice (October 15, 2015) Step 3 Webex Information Session (November 10, 2015) Milestones Completed to Date Step 5 Selection of Parties for Bilateral Negotiations (December 18, 2015) Step 4 Expressions of Interest Submitted (December 4, 2015)

10. Evaluation Methodology of Expressions of Interest 10 Interested parties that submitted Expressions of Interest were evaluated across six criteria. Capacity  More is better Term  Longer is better Financial strength  Greater is better Start date  Earlier is better Public Policy Contribution  Greater is better Creditworthiness  Higher is better

11. Results of Open Solicitation (So Far) 11 7 Suppliers Mix of Canadian and U.S. electricity suppliers 3,200 MW Suppliers indicated interest in up to 3,200 MW of capacity on the 1,000 MW project In December 2015, TDI New England announced strong demand for capacity rights on the New England Clean Power Link.

12. Open Solicitation Milestones Left to be Completed 12 Three steps remain for TDI New England to complete the Open Solicitation process. Step 6 Finalize negotiations with selected parties and execute transmission service agreements Step 7 File results of Open Solicitation pursuant to Section 205 (within 30 days of end of Open Solicitation) Step 8 Receive FERC approval

13. About the Speaker 13 Vincent Musco is a Managing Director at Boston Pacific Company, Inc., a consulting and investment services firm in Washington, D.C. He has fourteen years of experience in electric industry policy and market design. Vincent consults on behalf of the Southwest Power Pool board of directors, several state regulatory commissions, and leads Boston Pacific’s merchant transmission practice. He has served as an expert witness on a variety of electricity policy and market issues for both private and public clients. Prior to Boston Pacific, Vincent was an economist at the FERC working primarily on U.S. organized market design and rules, including ISO New England, New York ISO, PJM, and the California ISO, as well as on merchant transmission policy. Vincent earned a Master of Arts in economics from American University and a Bachelor of Science in economics from James Madison University, with distinction. For more on Vincent and a complete list of his testimonies and publications, visit http://www.bostonpacific.com/personnel/vincent-musco/. http://www.bostonpacific.com/personnel/vincent-musco/

14. About Boston Pacific 14 Founded in 1987 and located in Washington D.C., Boston Pacific is a specialized consulting firm serving the electricity and natural gas sectors. We have worked in over 30 states and the District of Columbia, three Canadian provinces, and over 20 other countries. We are the Independent Evaluator for the New England Clean Power Link Open Solicitation. Services  Expert Witnessing  Competitive Procurements  Electricity, REC Auctions  Merchant Transmission  RTO/ISO Market Design  Strategic Planning  Utility Audit Clients  State Public Utilities Commissions  RTOs/ISOs  Trade Associations  Energy Consumers  Government Agencies  Electric Utilities  Competitive Electricity Suppliers Expertise  Resource Choice (Renewable and Fossil- fired Generation, Energy Storage, Distributed Generation)  Auction Design  Market Design  Antitrust  U.S. Electricity Policy  U.S. Environmental Policy