1. EVP, Chief Administrative Officer
New England Electricity Restructuring Roundtable The Electric Utility of the (Near?) Future
David R. McHale
EVP, Chief Administrative Officer
Northeast Utilities
June 27, 2014 1

2. NU Overview
NU serves 525 cities & towns throughout New England; Massachusetts, Connecticut and New Hampshire
Providing reliable electric and natural gas service to 3.6 million electric and natural gas customers
Comprised of:
Four electric companies
Two natural gas companies
One three-state electric transmission business

3. Current State
Delivering
Reliable Energy
Superior
Customer Service

4. Utility of the Future
The “utility of the future” will evolve to support an environment of clean energy, an integrated grid and customer engagement
Cleaner, more sustainable energy
Distributed energy resources
Energy security and independence
Competitively priced
Generation
The Grid
More resilient
Smarter
Integrated
Customers
Knowledgeable
Empowered
Self-reliant
Business Model
More sustainable
Decoupled and repriced
Incentivized

5. Utility of the Future Drivers
Utility of the future is driven by a convergence of energy policies, market shifts, technology advancements and rising customer expectations
Increasing customer expectations
“Utility of the Future” Drivers
Emerging disruptive technologies and digital strategies
Shifting end-user consumption patterns
Market changes that will require a “two-way” modern grid
Rising energy prices and delivery constraints
Clean energy mandates and subsidies

6. U.S. Electricity Demand Trends
One key driver is the projected low growth in electricity consumption in New England and the rest of the US
U.S. Electricity Demand — Rate of Growth
Source: EIA Annual Energy Outlook

7. The Quest for Cleaner Generation
The quest for low-carbon and renewable energy resources is driving significant change throughout New England power markets
CT & MA Greenhouse Gas Emission Targets Millions of tons of CO2
Massachusetts and Connecticut have statutes which call for a reduction in carbon emissions of 80% by 2050 (from 1990 baseline)
Equally, the States have aggressive renewable portfolio standards; 22.1% by 2020 for MA and 27% by 2020 for CT
There exists a significant gap between installed renewables in the region and longer term requirements
20% reduction
125
111
75% reduction 28 CT MA

8. Attributes of the Modern Grid
Development of a modern grid will require investments to make it resilient, smart and integrated
Resilient Smart Integrated
Asset hardening to protected against weather- related events, particularly flooding and severe winds
Pro-active vegetation management and tree clearing
Protected from physical and cyber threats
Self-healing, line and substation automation
Situational awareness during outages and “blue sky” events
Enterprise-wide outage management capabilities
GIS asset and locational mapping; mobile workforce technology solutions
Two-way power flows
Distributed energy resources and micro-grids
Advanced metering capability
Electric vehicles
New products, services, market entrants
Underlying goal of increasing system and capital investment efficiency

9. Engaging and Empowering Customers
Leading-edge customer engagement capabilities through tailored solutions, data analytics and digital/social media channels
The Launch of New Customer Engagement Platforms
Generate Actionable Customer Insights
Personalize Inbound Customer Interactions
Personalize Outbound Communications
Resulting in…
“Personalized Ways to Save” and an Improved Customer Experience
Continuous Customer Engagement and Satisfaction
Increased Energy Efficiency Program Participation

10. Regulation of the Future
The “utility of the future” will require “regulation of the future” to ensure alignment among policy makers, customers and investors
“Utility of the Future”
“Regulation of the Future”
Modern Grid
Operating Environment
Re-examine cost allocation, subsidies, rate-making principles
Rate design and pricing
Metering policies
Cost recovery
Performance incentives and metrics
Alignment
Modest sales growth
Price pressures
Higher reliability demands
Increasing expectations
New market entrants
Grid independence
Security threats
Smart Technologies
Integrated Solutions
Customer Centric

11. NU’s Solutions for the Future (and Today)
Investments in additional transmission capacity to enable low-carbon and clean energy sources
Investment in additional gas pipeline capacity and related infrastructure
Advance and modernize the electric grid to drive reliability and situational awareness
Continued investment in energy efficiency with emphasis on innovation, financing and tailored customer solutions
Engage and empower customers through innovative partnering, tools, analytics and social media
Explore new regulatory business models and approaches, including pricing alternatives
Future State Mission – Reliable Energy and Superior Customer Service