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FORECAST SUBJECT TO CHANGE - SEE SLIDE 2

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ISO-NE Load Forecast Methodology April 2003 Forecast of Energy and Seasonal Peaks For NEPOOL, States, and RTEP03 Sub-areas Presentation to the MA DTE David J. Ehrlich Principal Analyst Load Forecasting, System Planning June 19, 2003

DISCLAIMER

"This presentation is intended to describe ISO-NE's load forecasting process. As this process is conducted on an ongoing basis, depending upon a variety of factors and data which may be updated from time to time, any specific forecast values included in this presentation represent only the current and best estimate by ISO-NE at this time and may be changed in the future.

Finally, ISO-NE cautions that this presentation may be misleading if read out of context of explanations provided, statements made, and questions addressed, at the June 19 Technical Conference."

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ISO-NE Load Forecast Review: NEPOOL Load Forecast Committee New England Utility Load Forecasters Professional & Collegial Review Assumptions, methodologies, and forecasts Frequent meetings NEPOOL Reliability Committee Review of NEPOOL forecast by broader audience NEPOOL Transmission Expansion Advisory Committee Open to all Stakeholders Assumptions, methodologies, and forecasts


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New England Long-Run Energy Forecast

Overview

The regional energy forecast for New England, representing participants in the New England Power Pool (NEPOOL), is derived by summing the results fromEnergy forecasts for the six New England states.

The six state energy models published in April 2003, are based on regressing historical Energy Per Household (1980-2002) against a variety of variables thatgenerally include annual Degree Days, real Price in Cents/kWh and Real PersonalIncome per Household. Depending on the model, the independent variables may beLagged and ARMA (Auto-Regressive Moving Average) terms may be added. Resultsfrom the long-run models are reconciled to the weather-normalized results of the short-run forecast prior to being published.


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MASSACHUSETTS State Energy Model

Independent Variable Statistics

3.4700.650AR(1)

13.2470.168rPINC/HH[-1]

-4.481-35.275rPrice[-1]

13.58213.293Constant

t-StatCoefficientsVariable

3.4700.650AR(1)

13.2470.168rPINC/HH[-1]

-4.481-35.275rPrice[-1]

13.58213.293Constant

t-StatCoefficientsVariable

Variable DefinitionsrPrice[-1] = One year lag on Real Price in Cents/kWhrPINC/HH[-1] = One year lag on Real Personal Income per HouseholdAR(1) = Autoregressive process on Dependent Variable (Y) with one period lag

and the general form Y(t) = a * Y(t-1) + e(t), where e = error.


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NoDSM NEL Forecast forStates & New England Indexed to 2002

0.90

0.95

1.00

1.05

1.10

1.15

1.20

1.25

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Ind

exe

d to

20

02

CT ME MA NH RI VT NE


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Basecase NEL Forecast forStates & New England Indexed to 2002

0.90

0.95

1.00

1.05

1.10

1.15

1.20

1.25

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Ind

exe

d to

20

02

CT ME MA NH RI VT NE


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Net Energy For Load Indexed to 1991Actual 1991-2002, WthrNrml 2002, and Forecast 2003-2012

1.00

1.05

1.10

1.15

1.20

1.25

1.30

1.35

1.40

1991 1993 1995 1997 1999 2001 2002 2004 2006 2008 2010 2012

MASS NEPOOL


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4/03 DSM Impacts on Net Energy for Load (GWH)

500

1500

2500

3500

4500

5500

6500

7500

8500

1990 1993 1996 1999 2002 2005 2008 2011

MASS NEPOOL


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ECONOMY.COM ECONOMIC & DEMOGRAPHIC DRIVERS

1999 2000 2001 2002 2003 2012

MASSACHUSETTS Population 6322.6 6360.4 6380.7 6393.9 6411.6 6528.3Households 2425 2445 2455.7 2458.7 2469.4 2590.1NonMan Emp 2594.3 2675.8 2698 2679.7 2709.7 2996Manu Emp 433.8 437.4 423.4 403.7 405.1 404Real GDP 251482 269308 268625.3 272046.6 281805.8 365930.9Real Income 204766 217720.3 217614.4 217665 220313.1 260350.4RealInc/HH 84.4 89 88.6 88.5 89.2 100.5Percent Changes Population 0.6 0.3 0.2 0.3 0.2Households 0.8 0.4 0.1 0.4 0.5NonMan Emp 3.1 0.8 -0.7 1.1 1.2Manu Emp 0.8 -3.2 -4.7 0.4 0Real GDP 7.1 -0.3 1.3 3.6 3.3Real Income 6.3 0 0 1.2 2RealInc/HH 5.5 -0.5 -0.1 0.8 1.4

NEW ENGLANDPopulation 13851.5 13954.8 14030.2 14088.7 14139.5 14492.4Households 5341.5 5391.8 5426.9 5444.4 5472.3 5777.2NonMan Emp 5408 5568.8 5609 5611.3 5669.3 6310.9Manu Emp 1017.7 1015.1 980 934.7 938.4 933.3Real GDP 517222 549372 552828.6 564437.2 583285.2 753895.6Real Income 432626.7 453233.2 454002.9 455493.6 461585.2 552797.9RealInc/HH 81 84.1 83.7 83.7 84.4 95.7Percent Changes Population 0.7 0.5 0.4 0.4 0.3Households 0.9 0.7 0.3 0.5 0.6NonMan Emp 3 0.7 0 1 1.3Manu Emp -0.3 -3.5 -4.6 0.4 -0.1Real GDP 6.2 0.6 2.1 3.3 3.2Real Income 4.8 0.2 0.3 1.3 2.2RealInc/HH 3.8 -0.5 0 0.8 1.5


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The NEPOOL short-run forecast of seasonal and monthly peaks are derived from forecasts of weekly distributions of typical daily peak loads. These are based on: The changes in response to temperature/humidity (CLI/HLI) and economic/demographic factors (CBLI/HBLI). The relationship of daily peaks to temperature/humidity and economic/demographic factors given the changes in system response…over 10 years of historical daily peak loads. Historical weekly temperature/humidity at time of peak distributions (over 35 years of data).


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COOLING LOAD INDEX COMPARISON

1.00

1.25

1.50

1.75

2.00

2.25

2.50

1992 1995 1998 2001 2004 2007 2010 2013

TREND-MA OBSERVED-MA TREND-NE OBSERVED-NE


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COOLING BASE LOAD INDEX COMPARISON

0.96

1.01

1.06

1.11

1.16

1.21

1.26

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

OBSERVED-MA TREND-MA OBSERVED-NE TREND-NE


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Base and CoolingLoad As Percent of Total Summer Peak LoadCooling Grows from 34 to 44 % of Peak, a 30% Increase (Base -15%)

30

40

50

60

70

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Base-MA (in 2002 6340MW) Cooling-MA (in 2002 4880MW) Base-NE Cooling-NE


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NEPOOL Summer Peak Load FactorEnergy / (8760*Summer Peak)

56

58

60

62

64

66

68

70

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002

Actual WeatherNormal


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Regression Results from Short-run Forecast Model

Seasonal May June July August September

Coefficients:

MASSBaseLoadNel 1.65 1.68 1.59 1.58 1.47 1.82Tempr/Humi Index 3.81 2.78 3.81 4.05 4.2 3.36

NEPOOLBaseLoadNEL 1.68 1.62 1.69 1.55 1.56 1.83Tempr/Humi Index 7.92 5.80 7.76 8.65 8.70 6.79Monday 53.9 82.5 45.4 150.0 27.5 10.8Friday -87.8 -22.3 -116.2 -17.9 -171.5 -116.3Constant -647.1 -152.2 -736.9 253.2 255.1 -1761.0May -144.3Early July -238.3Late July 214.5August 167.6September 73.9

R Squared 0.90 0.92 0.95 0.95 0.96 0.94


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4/03 NEPOOL CELT FORECAST Reference Case: 50% Chance of Being Exceeded

WthrNormal Forecast2002 2003

NEL 126329 127840

Summer PeaksMonthly Regression 24590 25120

10% case 26750Seasonal Regression 24390 24900

10% case 26280

Winter Peaks 21490 21730

10% case 22600

4/02 CELTNEL 126193 128300

Summer Peak 24200 2476010% case 25530 26150

Winter Peak 21470 2176010% case 22620


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Nepool Summer Peak Loads

14000

16000

18000

20000

22000

24000

26000

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002

Actual + OP4 WeatherNormal


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2002 Summer Peak Load Weather Normalization MASSSorted Weather Normalized Daily Peaks June - August

10250

10450

10650

10850

11050

11250

11450

11650

11850

12050

12250

1 5 9 13 17 21 25 29 33 37 41 45 49

Daily Median 11302 Upper 11510 Low er 11094 WthrNrml 11224


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Nepool Temperature & WTHI & THI at Time of Summer PeakTHI : Temperature & Humidity Index

75

80

85

90

95

100

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002

Temperature THI WTHI Expected 90


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New England Weather at the Time of the Summer PeakA Three Day Weighted Temperature-Humidity Index

75

77

79

81

83

85

1 4 7 10 13 16 19 22 25 28 31


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New England Summer Extreme Weather DistributionA Three Day Weighted Temperature-Humidity Index

75

77

79

81

83

85

1 11 21 31 41 51 61 71 81 91 101


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DAILY WEATHER AT TIME OF 50/50 PEAK LOAD DISTRIBUTIONSWinter:Temperature Summer:Temperature/Humidity

1

11

21

31

41

51

61

71

81

1 5 9 13 17 21 25 29 33 37 41 45 49

Weeks of Year

NEW ENGLAND SOUTHERN NORTHERN


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MASS Weekly Peak Load DistributionsReference Forecast: 50/50 Seasonal, 20/80 Monthly

7000

8000

9000

10000

11000

12000

13000

20/80 (Monthly) 50/50 (Seasonal) 80/20 90/10


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The NEPOOL long-Run forecast of

Seasonal peaks use long-run energy forecast and last year of short-run forecast seasonal load factor Monthly peaks based on last year of short-run Monthly to seasonal peak relationship Hourly load forecasts are “constructed” with a historical load profile (1995) and the seasonal and monthly peak forecasts.


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4/03 CELT Reference Forecast: States and NEPOOL as Sum of States

Percent Changes CAGR LOAD FACTOR2002 2003 2004 "02-03" "03-04" 2012 "03-12" 2002 2004+

Energy (GWH) NEPOOL 126329 127841 129743 1.2 1.5 145098 1.4

CT 32749 33191 33477 1.3 0.9 36994 1.2ME 11400 11317 11555 -0.7 2.1 12799 1.4MA 57217 58149 59118 1.6 1.7 66172 1.4NH 10716 10862 11074 1.4 2.0 12936 2.0RI 8148 8216 8336 0.8 1.5 9246 1.3

VT 6099 6106 6183 0.1 1.3 6951 1.5

Summer Peak (MW) NEPOOL 24589 25121 25690 2.2 2.3 28709 1.5 58.6 57.7

CT 6774 6915 7040 2.1 1.8 7721 1.2 55.2 54.7ME 1842 1849 1897 0.4 2.6 2098 1.4 70.7 69.6MA 11224 11498 11768 2.4 2.4 13221 1.6 58.2 57.1NH 2056 2113 2177 2.8 3.0 2533 2.0 59.5 58.3RI 1695 1734 1774 2.3 2.3 1969 1.4 54.9 53.6

VT 998 1012 1035 1.4 2.3 1163 1.6 69.8 68.2

Winter Peak (MW) NEPOOL 21730 22011 22296 1.3 1.3 25166 1.5 67.2 66.8

CT 5857 5928 5972 1.2 0.7 6671 1.3 64.7 64.3ME 1856 1881 1905 1.4 1.2 2114 1.3 69.6 70.1MA 9773 9907 10065 1.4 1.6 11372 1.5 67.9 67.3NH 1892 1921 1952 1.6 1.6 2302 2.0 65.5 65.6RI 1335 1348 1363 1.0 1.1 1534 1.4 70.3 69.8

VT 1017 1025 1040 0.9 1.4 1180 1.6 68.6 68.2


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SECTION I - SummariesSeasonal Peak Load Forecast Distributions for 2003-2012

Reference Forecast at Expected

Peak Load Forecast at Milder Than Expected Weather Weather Peak Load Forecast at More Extreme Than Expected Weather

Summer (MW)2003 24090 24300 24490 24810 25120 25420 25680 26100 26630 27070

2004 24620 24830 25040 25370 25690 26000 26270 26710 27260 27710

2005 24910 25130 25330 25670 26000 26310 26580 27030 27590 28050

2006 25190 25410 25620 25960 26290 26610 26890 27340 27910 28370

2007 25510 25730 25940 26290 26620 26940 27220 27680 28260 28730

2008 25860 26090 26300 26650 26990 27320 27600 28060 28650 29130

2009 26250 26480 26690 27050 27390 27720 28010 28480 29080 29560

2010 26660 26890 27110 27470 27820 28150 28450 28930 29530 30020

2011 27080 27320 27540 27910 28270 28610 28900 29390 30000 30500

2012 27510 27750 27980 28350 28710 29060 29360 29850 30470 30970

WTHI (1) 78.8 79 79.3 79.7 80.1 80.5 80.8 81.4 82 82.5

Dry-Bulb Temperature (2) 88.5 88.9 89.2 89.9 90.4 91.2 92.2 92.9 94.2 95.4

Probability of Forecast Being 90% 80% 70% 60% 50% 40% 30% 20% 10% 5%


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MA SUMMER AND WINTER PEAKSACTUAL 1991-2002 AND WthrNrml FORECAST 2002-2011

7894

8894

9894

10894

11894

12894

SUMMER WINTER


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4/03 DSM Impacts on Summer Peak Load (MW)

200

400

600

800

1000

1200

1400

1600

1800

2000

1990 1993 1996 1999 2002 2005 2008 2011

MASS NEPOOL


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Load Response programs: Interruptible Load & Distributed Generation Economic (Price) or Reliability (Demand) Based As of June 1, 2003 228/82/21 Active Assets 95/36/28 MW of Economic Based 120/23/8 MW of Reliability Based Experience has shown only a small percentage of enrolled have participated (Economic) Reliability LRP were not called in Summer 2002 (but reserves for operational contingencies) Load Forecasting will track enrolled/participating LRP Issue of “behind the meter” DG – cogeneration – large installations generally known – potential for small customer unknown – major load forecast project in 2004,2005


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ISO-NE Sub-Area Forecast Methodology Based on: ISO-NE: State 2003-2012 seasonal and monthly peak forecasts State and Operating Company 2002 weather normalized seasonal peaks Operating Company 1995 hourly loads FERC 715: Operating Company 2003 and 2008 seasonal peak forecasts by bus


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ISO-NE Sub-Area Forecast Methodology For Each State: Sum FERC 715 Operating Company bus seasonal peak forecasts Calculate the FERC 715 Operating Company seasonal peak growth rates (annualized) Apply FERC 715 Operating Company growth rates to ISO-NE weather normalized seasonal peaks Sum ISO-NE Operating Company forecasts and calculates Operating Company proportions of total Share ISO-NE seasonal and monthly peak forecasts using ISO-NE Operating Company proportions


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ISO-NE Sub-Area Forecast Methodology For each Operating Company: Calculate FERC 715 Operating Company 2003 and 2008 bus seasonal peaks as proportions of sum of FERC 715 Operating Company busses Interpolate for 2004-2007, use 2008 proportions for 2009-2012 Apply FERC 715 Operating Company bus proportions to ISO-NE Operating Company seasonal and monthly peaks


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ISO-NE Sub-Area Forecast Methodology For each Sub-Area: Identify which FERC 715 busses are in each Sub-area Aggregate ISO-NE bus seasonal and monthly peak forecasts to Sub-areas Develop ISO-NE Sub-area shares by Operating Company using ISO-NE bus seasonal peaks Develop ISO-NE Sub-area 1995 hourly loads using ISO-NE Operating Company 1995 hourly loads and ISO-NE Sub-area shares Create ISO-NE Sub-area hourly load forecasts by adjusting 1995 hourly loads using ratio of forecasted to 1995 seasonal/monthly peaks


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ISO Forecasting MethodologyStates to Operating Companies to Busses to Sub-areas

States Operating Co. Busses Sub-AreasISO ISO Levels FERC715 Sum of Busses

FERC715 Growth Within CompanyDistribution

Bus1 N-CTCLP Bus2

CT UI Bus3 SW-CTCMEEC Bus4

BusN NorStME

MA

NH

RI

VT


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Summer Peaks for States & Selected Operating Companies

ISO: State peaks & Operating Company 2002 Weather Normal

FERC715: Operating Company 2003 & 2008 Forecasts

2003 2008 CAGR%

CONNECTICUT: 6900 7253 1.0CMEEC 328 343 0.9UI 1367 1460 1.3CLP 4682 4880 0.8

MAINE: 1970 2114 1.4BHE 316 308 -0.5CMP 1833 1804 -0.3

MASSACHUSETTS: 11510 12468 1.6BECO 3233 3563 2.0EED 691 729 1.1MECO 3980 4277 1.4WMECO+HWP 773 803 0.7

NEW HAMPSHIRE: 2110 2326 2.0UNITIL 260 306 3.3GSE 182 202 2.1PSNH 1472 1508 0.5

RHODE ISLAND: 1730 1851 1.4BVE 343 354 0.7NEC 125 137 1.9NECO 1334 1418 1.2

VERMONT: 975 1020 1.9VELCO 975 1102 2.5


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2003 RTEP03 Summer PeaksReference Case and MW Increment of High case (10%)

0

1000

2000

3000

4000

5000

Increment 13 39 21 126 72 299 102 116 150 142 210 144 79

Reference 312 956 533 1617 1203 5222 1634 1963 2550 2266 3350 2263 1251

BHE

C-ME

S-ME

NH

VT

Bosto

CMA/

W-MA

SEMA

RI

N-CT

SW-

NORS


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NY-NE – 1550w/o Cross

Sound Cable

SEMA – 2300

Norwalk-Stamford – 1100

Surowiec South - 1150ME-NH – 1400

North-South – 2700

Boston – 3600

SEMA/RI – 3000

NBOrrington South – 1050

NB-NE - 700HQHighgate - 210 Phase II - 1500

CSC -300

S-MELoad 5331516 MW

MELoad 956956 MW

BHELoad 312942 MW

SEMALoad 25503356 MW

RILoad 22665140 MW

W-MALoad 19633681 MW

CMA/NEMA

RTEP03 Peak Load and Installed Capacity MW by Sub-Area – 2003

(Peak Loads – 50/50 F/C)

VTLoad 1203 839 MW

NY

NHLoad 16174006 MW

BOSTON

CTLoad 33504437 MW

SWCTLoad 2263 2036 MW

NORLoad 1251

444 MW Under Construction

Other Studies Required

RTEPLoad

Capacity

KEY:Connecticut Import– 2200 Regional Transmission

Expansion Plan Sub-area

Priority Studies Required

South West CT – 2000

East-West – 2400

Load 52223613 MW

Load 1634 206 MW


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4/03 RTEP Reference Summer Peak Load Forecast

MASS Utilities in RTEP03 BOSTON Sub-area BOSTON Sub-area

NEPOOL MASS BECO COMEL MECO MUNI-6 MUNI-7 Boston Northshore

2003 25121 11498 3309 1202 3901 442 269 4109 11132012 28709 13221 3910 1408 4403 565 329 4831 1302

CAGR 1.5 1.6 1.9 1.8 1.4 2.8 2.3 1.8 1.8

% Boston 74.3 8.6 14.0 2.7 0.0

% Northshore 0.0 0.0 63.0 27.5 3.6


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BostonReference Summer Peak Load Forecast

5091

5291

5491

5691

5891

6091

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

RTEP03 RKtoMADTE


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NorthshoreReference Summer Peak Load Forecast

1085

1135

1185

1235

1285

1335

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

RTEP03 RKtoMADTE


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