1. New England Economic Partnership James Daly Vice President Energy Supply Energy Market Perspectives Reliable Energy, Competitive Prices and Satisfied Customers June 2, 2015

2. Energy Markets Perspectives
New England energy prices are on the rise, increasing customer bills and threatening the competitiveness of area businesses It’s time to act!
Electric prices up due in large part to delivery constraints on natural gas pipelines
Costs to comply with the state’s clean energy targets are rapidly increasing
New energy infrastructure investments necessary to reverse course and reduce energy costs
Significant investments needed to transform the region’s electric grid, making it more resilient, smarter and truly integrated
Utility of future will provide cleaner, more reliability, competitive prices, interactive and information based

3. Evolving New England Energy Policy
Early electric market restructuring and deregulation gave rise to competitive markets and customer choice. Today we face a new task of balancing mounting policy initiatives and customer energy costs.
Pre Year 2000
Vertically Integrated Utilities
Early to Mid-Decade
Competitive Markets and Customer Choice
Wholesale Markets
Competitive Generation
Distribution Companies
Customers
Suppliers
Current State
Market “Constructs” to Support Policy Initiatives
Renewable portfolio standards (RPS)
Climate change and carbon reduction initiatives
Energy efficiency goals
Distributed generation and grid independence
Grid modernization
Utility of the future

4. Rising Electricity Prices
As of January 1, 2015, the Eversource Massachusetts energy rate climbed 60%, from 9.4 cents/kwh to 15 cents/kwh, driven by winter gas prices and RPS requirements. Other New England utilities are experiencing the same.
Eversource Massachusetts Residential Energy Rates by Component (cents/kWh)
2015 Rate Components
Cents /kWh 1H 2H
Wholesale Rate
13.30
8.16
RPS Requirement
1.62
1.76
Other*
0.05
0.13
Total Energy Rate
14.97
10.05
* Other bill items include administrative energy charges. 3

5. Natural Gas Prices Causing the Problem
High winter natural gas prices driven by pipeline delivery constraints, have resulted in escalating electricity prices.
Delivered Natural Gas Prices
Boston Compared to Chicago - Weekly Average $/MMBtu
New England Wholesale Electricity Prices
Average On-Peak $/MWh
Jan April 2015
Jan April 2015

6. Ambitious Clean Energy Goals Will Impact Regional Prices
Carbon Emission Goal 80% CO2 reduction by 2050
RPS Goal 22.1% RPS by (Solar generation of 1,600 MW)
Massachusetts Emission Targets Millions of tons of CO2
Massachusetts RPS Targets % of Required Renewable Energy Class I and II

7. Significant Renewable Resources Have Been Added to the Energy Mix
In terms of capacity additions, significant wind and solar resources have been added to the mix, but the price comparison hugely favors wind power.
Massachusetts Wind and Solar Power Total MW of Capacity
Unit Cost of Wind and Solar Power $/Mwh

8. Renewable Resources are Adding Over $1 Billion to Customer Bills
Between the years 2013 and 2018, cost to customers will triple, driven in large part by the cost to comply with solar targets.
Massachusetts
Clean Energy Costs $ Millions
Total Payment Rate
2015 (cents/kWh)
60.0
Green House Gas Costs
Solar Subsidies
14.0
Renewable Energy Costs
9.0
8.0
Conventional Gas-fired Generation
Wind Power with Contracts
Wind Power without Contracts
Subsidized Solar Power
Cents/kWh

9. Access Northeast Pipeline
Direct connection with Northeast generators
Takes advantage of existing infrastructure
Built to handle the peaks
Timely
Scalable for future growth
Multiple supply options
Potential to lower the region’s energy cost by $1 billion annually
Serves over 70% of New England generation –
will provide fuel for 5,000 MW of electric generation 8

10. Northern Pass Transmission Line
1,200 MW of clean energy
$1.4 billion HVDC line, terminal and AC facilities
Expected to provide significant benefits to the region:
Energy and capacity value through reduced wholesale market prices – more than $300 million per year for New England
Environmental value through carbon emissions reductions – annual reduction of up to 5 million tons of CO2
Economic value through construction jobs and new tax base – 1,200 jobs and $1.1 billion over 40 years in property taxes
Reduces growing dependence on natural gas generation
In Service 2019 9

11. Eversource’s Integrated Solutions
The integrated solutions of energy efficiency, regional infrastructure, competitive forces, transparent pricing and modernizing the electric grid will move the state towards lower prices and the utility of the future.
Keep energy efficiency at the forefront and invest in technologies and programs
Energy Efficiency
Customer Satisfaction
Invest in the Access Northeast Pipeline to lower prices and enhance reliability
Regional Reliability
More efficient use of electricity for residential and business customers
More reliable energy; less outages
Cleaner sources of energy
Lower prices and less volatility
Well understood pricing
More customer options to manage their bills
Invest in the Northern Pass Transmission project to access competitive priced clean energy; pursue additional regional solutions
Renewable Energy and Carbon Reduction
Bring competition, equitable and transparent pricing to the solar markets
Competitive Solar Markets
Modernize the electric grid, further automation, enhance integration of distributed generation and promote policies to evolve the utility of the future
Utility of the future