1. Pat Wood III, Chairman Federal Energy Regulatory Commission New Englands Platform for Infrastructure Development Boston September 13, 2004

2. Pat Wood, III: Federal Energy Regulatory Commission 2 Stable platform for growth

3. September 13, 2004 Pat Wood, III: Federal Energy Regulatory Commission 3 Infrastructure status Healthy generation supply Needed closer to load New gas supply needed LNG facilities could satisfy this demand Transmission improvements generally in progress Need to ensure progress in certain areas

4. September 13, 2004 Pat Wood, III: Federal Energy Regulatory Commission 4 Other Oil Nuclear Hydro Coal Gas New England New York 27,956 34,521 (+ 23%) 38,018 (+ 7%) 35,625 Source: RDI PowerDat. New England generation capacity increased 23 percent from Jan. 2000 through May 2004

5. September 13, 2004 Pat Wood, III: Federal Energy Regulatory Commission 5 Large increase in gas-fired generation

6. September 13, 2004 Pat Wood, III: Federal Energy Regulatory Commission 6 Generation increased overall gas demand

7. September 13, 2004 Pat Wood, III: Federal Energy Regulatory Commission 7 Algonquin Gas Transmission Co. Iroquois Gas Transmission System, L.P. Maritimes & Northeast Pipeline, Llc Portland Natural Gas Transmission System Tennessee Gas Pipeline Co. Joint Maritimes/PNGTS 0.25 Bcf/d 0.4 Bcf/d 0.95 Bcf/d 0. 57 Bcf/d 0.03 Bcf/d 2.7 Bcf/d No additional pipeline capacity is projected to serve the New England region through 2005. The last approved expansion of the DOMAC LNG facility will provide some additional LNG volumes. Source: EEAs April 2004 Base Case Gas supply options limited

8. September 13, 2004 Pat Wood, III: Federal Energy Regulatory Commission 8 New England Source: EEAs April 2004 Data Base adjusted Demand close to pipeline capacity

9. September 13, 2004 Pat Wood, III: Federal Energy Regulatory Commission 9 Source: Compiled by FERC Staff 1 2 3 4 5 6 7 8 9 10 12 11 1.Fall River, MA: 0.8 Bcf/d (Weavers Cove Energy) 2.Somerset, MA: 0.65 Bcf/d (Somerset LNG) 3.Providence, RI: 0.5 Bcf/d (KeySpan & BG LNG) 4.Offshore Boston, MA: 0.8 Bcf/d (Northeast Gateway) 5.Pleasant Point, ME: 0.5 Bcf/d (Quoddy Bay, LLC) 6.Quebec City, QC: 0.5 Bcf/d (Enbridge/Gaz Met/Gaz de France) 7.Riviere-Du Loup, QC: 0.5 Bcf/d (Cacouna Energy) 8.St. John, NB: 1.0 Bcf/d (Irving Oil & Canaport) 9.Point Tupper, NS: 1.0 Bcf/d (Access Northeast Energy) 10.Goldboro, NS: 1.0 Bcf/d (Keltic Petrochemicals) 11.Belmar, NJ Offshore: N/A (El Paso Global 12.Logan Township, NJ: 1.2 Bcf/d (Crown Landing LNG-BP) Planned Terminals Existing Import LNG Everett, MA: 1.035 Bcf/d (Tractebel) Potential LNG terminals may provide 8.5 Bcf/d by 2010

10. September 13, 2004 Pat Wood, III: Federal Energy Regulatory Commission 10 Transmission grid is strengthening Orrington – Point Lepreau New Haven – W. Rutland Plumtree - Norwalk Bergen - NY Sayreville – New Bridge Rd. New Scotland - NYC Holbrook – K Street Canal – Oak St Middletown - Norwalk Millbury - Card Glenbrook - Norwalk New Scobie - Tewksbury Source: NERC ES&D 2003 version 1, NYISO Power Trends: New Yorks Success & Unfinished Business, ISO- New England: NEPOOL Transmission System Project Listing and PowerMap. 345 kV Line DC Line

11. September 13, 2004 Pat Wood, III: Federal Energy Regulatory Commission 11 Test of platform during cold snap Gas and power systems delivered despite record low temperatures and record load Gas capacity limits reached Behavior was competitive Gas moved from electric generation to retail heating based on price signal Gas generation was not appropriately valued, and oil units could have been used Stress exposed a need for better market integration

12. September 13, 2004 Pat Wood, III: Federal Energy Regulatory Commission 12 ISO-NE Achieves the Wholesale Power Market Platform Regional independent grid operation Regional transmission planning Fair cost allocation for new and existing transmission Market monitoring and market power mitigation Spot markets (real time and day ahead markets) Transparent efficient congestion management Firm transmission rights (financial rights) Resource adequacy (capacity obligations and markets)

13. September 13, 2004 Pat Wood, III: Federal Energy Regulatory Commission 13 Market tests of the platform SW Connecticut still stressed Pricing/investment signal is distorted NYC capacity prices > $100 per kW-year, but next door: NE capacity prices < $2 per kW-year, including SW Conn Which is the correct capacity value given their similar supply-demand balance? Boston congestion largely resolved Proper pricing signals work

14. September 13, 2004 Pat Wood, III: Federal Energy Regulatory Commission 14 Further Progress Expected 1) Finalize RTO status Independence Tariff filing rights Liability & indemnification 2) Regional State Committee (NESCOE) 3) Seams with NYISO Elimination of import/export fees with NYISO Virtual regional dispatch 4) Resource adequacy