1. Geographic Eligibility Under GIS and RPS
External Renewable Generators
Value or Threat?
Chris Bursaw – PG&E National Energy Group
Round Table – December 13, 2002

2. Take away Slide Larger markets benefit all market participants:
Suppliers have more liquidity
Buyers have more choice
Regulators obtain better price transparency
Imports do not threaten existing market – they help it.

3. GIS Import Policy Criteria
Renewable resources in adjacent areas must be registered in the GIS to participate;
Attributes must cross the inter-ties bundled with energy from that resource;
Transactions must follow system operator rules and be settled in the MSS;
Attributes cannot be resold elsewhere.

4. GIS Import Rule 2.7
Rule currently necessitates hourly matching for renewable import energy.
Imports are held to a different standard than internally sited renewable generation.
In-system intermittent generators may schedule hour ahead but true up monthly and face no economic penalty for mismatches between scheduled and delivered power.
Imports (NY) must schedule 75 minutes ahead, obtain NERC tags for each transaction, and are exposed to hourly mismatch of schedules.

5. Estimated Import Costs
Scheduling risk associated with hourly matching raises import costs an estimated $6.00/Mwh.
Imports from NY have an economic hurdle of $9.00 ($2.00 NY-NE basis + $7.00 exit fee).
Total barrier to entry is $15.00

6. Renewable Import Impacts
Pluses:
Allows for greater competition;
Provides a larger market for renewable energy;
Displaces resources that pollute;
Does not burden system with added regulation requirements.
Minus:
Perception that imports could “flood” the market and reduce certificate value.

7. Characteristics of Wind Resources
Wind generation: function of the cube of wind speed
An increase from 4 m/s to 5 m/s will approximately double production.
Most facilities are unmanned.
Low capacity factors (less than 30%)
Peak generation is during off peak months.
Land based wind facilities are relatively small (NY largest is 30 MW)

8. Madison County 11.0 MW

9. NY Wind Energy Projects
Owner
Date Online MW
Power Purchaser
Madison
PG&E NEG
Sept. 2000
11.0
Merchant
Wethersfield
CHI Energy
Oct. 2000
6.6
Niagara Mohawk
Fenner
Dec. 2001
30.0
NY Power Pool
Total
47.6

10. Conclusions
Relaxing the temporal restrictions improves the playing field but imports will still face a significant economic hurdle.
Proposed Import Rule change does not go against policy, it helps make the policy on imports work.
Open markets foster competition which is to the benefit of ratepayers.
The New England GIS is setting an example for the rest of the country. Protectionist policies should have no part in its design.