NEPOOL Participants Meeting

May 3, 2002

Boston, MA

Stephen G. WhitleySenior Vice President & COO

2

• System Operations

• Energy & Congestion Uplift

• Summer 2002 Capacity Update

• Drought Update

• May 1st Implementation of Patton Reforms

• SW CT Update

• Load Response Update

• SMD Readiness

• Back-up Detail

Discussion Points

3

System Operations

4

April Operation’s Highlights

• Boston & Hartford weather pattern: – Monthly temperatures above average with below normal

precipitation.– A heat wave hit the Eastern States, including New England, on April

16, 17, & 18. April 17th recorded a temperature of 95°.• Earthquake - April 20, 0653 hours

– USGS reports 5.1 magnitude quake occurred at 0653• location 15 miles S.West of Plattsburg, NY

• Peak Load – April 17, 2002, 18,438 MW, HE 15

• M/S#2, OP #4, Generator Posturing not implemented during April.

• 5% Voltage Reduction test run on Friday, April 19. Results pending.

• Simulated Manual Load Shed test held on April 30.• Requests for Reserve Sharing

– 4 occurrences in April.• Excess Generation:

– April 1 - 3.5 hours, April 12 - 1 hour, April 14 - 5.5 hours, April 15 -5 hours– April 22 - 4 hours

5

April Operation’s Highlights

• NPCC/PJM SAR Availability: – April 1 - 300 MW’s maximum due to NY Central East - 10 hours– April 3 - “ 8 hours– April 5 - “ 5 hours– April 10 - “ 24 hours– April 12 - “ 2 hours– April 13 - “ 12 hours– April 15 - “ 2 hours– April 16 - “ 16 hours – April 17 - “ 16 hours – April 25 - “ 3 hours – April 27 - “ 6 hours

• Solar Magnetic Disturbances (SMD) – April 17 to 23 - Geological Survey of Canada or NERC SCIS- predict

K-7 or K-8 magnitude storms of various duration. No actions were required due to system configuration and external tie line loading.

– April 20, 23 - HQ reporting major SMD activity

6

Energy and CongestionUplift Reports

7

Energy Uplift Comparison by Month2001 & 2002

(January through March Energy Uplift Reduction $11.8

million) Comparison of Energy Uplift

MWH & Dollars 2001 to 2002

0

2

4

6

8

10

12

14

16

18

20

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Mill

ion

s o

f $o

r 1

00

00

0s

of M

WH

Uplift $ ' 01Uplift $ ' 02MWH ' 01MWH ' 02

8

Congestion Uplift Comparison by Month 2001 & 2002

(January through March Congestion Uplift Reduction $18.0 Million)

Comparison of Congestion Uplift MWH & Dollars

2001 to 2002

0

3

6

9

12

15

18

21

24

27

30

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Mill

ion

s o

f $o

r 1

00

00

0s

of M

WH

Unmit. Uplift $ ' 01Unmit. Uplift $ ' 02MWH ' 01MWH ' 02

9

Cause of Congestion by Category

Congestion by CategorySept '99 - Mar '02

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

CT Area NEMA/Boston AreaArea

MW

h

Transmission ConstructionGeneration ConstructionMaintenanceVARSArea

10

Summer 2002 Capacity Update

11

Summer 2002 Reference Case Capacity Assessment Week beginning June 1, 2002 - which has Least Operable Capacity Margin

MW

Projected Peak 24,200*

Operating Reserve Required 1,700

Total Operable Cap. Required 25,900

Projected Capacity 27,510

Assumed Outages 2,600

Total Capacity 24,910

Operable Capacity Margin (990)

*Peak Loads from the preliminary 2002 CELT Report.

12

• Capacity margins, especially in high demand areas of SW CT and Boston, could be adversely affected by:– Delays in new generation

– Maintenance over-runs

– Increased number of forced outages

– Transmission

– Extended heat waves

• Potential drought impact on Generation– Hydro facilities (5.8% of system) and generators that

use water for cooling and emission purposes

– Survey results indicate up to 1200 MW within New England could be affected if drought conditions persist

Summer 2002June to September

13

Comparison of Summer 2001 & 2002

Reference* Actual** Reference* Extreme* Reference* Extreme*

Projected Peak 23,650 25,158 24,200 25,530 24,200 25,530Operating Reserve Req'd 2,100 2,078 1,700 1,700 2,080 2,080Total Operable Cap. Req'd 25,750 27,236 25,900 27,230 26,280 27,610Projected Capacity 28,019 28,757 27,510 27,510 28,924 28,924Assumed Outages 2,700 3,010 2,600 3,400 2,600 3,400Total Capacity 25,319 25,747 24,910 24,110 26,324 25,524Operable Capacity Margin (431) (1,489) (990) (3,120) 44 (2,086)OP-4 Relief 1,489Installed Reserve Margin 18.5% 14.3% 13.7% 7.8% 19.5% 13.3%

*Represents Forecast for the first week of June**Represent Actual Data from August 9, 2001, Hour Ending 15

HQ Imports includes 1,500 MW, similar to the FEC, over Phase II and 225 MW over Highgate

2001 2002 2002 HQ Imports at 1,725 MW

14

New Generation

• No new generating resources were added in April.

• ISO New England continues to hold weekly conference calls with new generators to expedite interconnection, testing, and commercial operation.

• Approximately 350 MW of new generation is expected to be commercial by June 1, 2002. Another 3,400 MW’s is expected during the Summer Period, and approximately 1,675 MW by the end of 2002.

15

Drought Update

16

Drought Survey - Status UpdateResults of ISO Hydraulic Survey indicate Potential Reductions if:

Unit Type: Moderate (Drought) Severe

Fossil: 1,100 3,500Run-of-River: 50 100Pondage Hydro: 50 200-------------------------------------------------------------------Total Potential: 1,200 MW 3,800 MW

Current Outlook:• Recent precipitation is just under seasonal norms• Total rainfall still far below accumulated averages• Hydro-electric reservoirs at/near traditional levels• Water supply reservoirs still below traditional levels

17

Drought Survey

18

May 1, 2002 Implementation of

Patton Reforms

19

May 1st Implementation of Patton Reforms• Market System Updated April 30th

– Two problems noted and repaired • External Transaction Notification time

returned to 90 minutes from 75 minutes• TMNSR/TMOR bids >$2.52 rolled over to May

1st if new bids were not entered

• SPD/EMS– Two problems noted. Analysis &

corrective action in progress.• TMOR and TMNSR 5 minute prices over $2.52 may have

an LOC cascading error.

• External contract price setters not going into SPD until 5-10 minutes after the hour starts.

– Energy & Reserve prices are reviewed every hour and flagged as necessary

20

SW CT Update

21

SWCT Update

• Connecticut Department of Public Utility Control(DPUC) Hearing– April 18, 2002, DPUC gave notice of public hearing to

investigate “possible shortages in Southwest Connecticut during Summer periods of peak demand.”

– Purpose is to “investigate and seek short-term remedies to ameliorate potential electricity shortages.”

– DPUC requested written comment from selected, and interested, parties by May 1, 2002

• ISO submitted written comments on May 1, 2002.

– DPUC will conduct a public hearing on May 8, 2002• Steve Whitley will testify at hearing.

– DPUC may conduct additional hearings and/or require additional

written filings.

22

SWCT Update

• Connecticut Siting Council (CSC) Hearing on 345-kV Transmission– The CSC has scheduled hearings in late May and early

June to review Connecticut Light & Power Co.’s application for a Certificate to construct a 20 mile 345-kV transmission line from Plumtree Substation (Bethel) to Norwalk Harbor Substation (Norwalk).

– ISO has previously filed written testimony to the Siting Council and will provide oral testimony at these hearings about existence of problem in Southwestern Connecticut and need for transmission upgrades.

23

SWCT Update• NEPOOL RFP to Commit Additional Load

Reduction and/or Install New Peaking or Emergency Generation– Resources selected pursuant to the RFP would receive

compensation provided by the FERC-approved 2002 Load Response Program and and a Supplemental Bid-Based Capability Payment.

• On March 27, 2002, NEPOOL filed RFP with FERC to approve supplemental bid-based capability payment.

• On April 12, 2002, FERC approved the NPC’s proposal “to allocate costs associated with the LRP for southwest Connecticut is approved, effective June 1, 2002 through September 30, 2002, subject to NEPOOL filing tariff sheets to reflect the proposed allocation methodology.”

• ISO is near completion finalizing terms and conditions of contractual commitments with RFP awardees.

24

Load Response Update

25

Load Response Summits Held

• Targeted New England load pockets -- SW Connecticut and Metro-Boston

• Two separate events were held:– April 24 - Stamford, CT (in conjunction with SW

CT press conference)– April 29 - Waltham, MA (before NE summer

capacity press conference)• Partnered with state business associations• Total attendance for the two events was

>200 persons• Most were commercial and industrial end-

users

26

Format and Objectives

• Policy, provider, and end-user perspectives presented

• Need for Load Response underscored as important components of reliable and competitive markets

• Presentations and informal Q&A

• Networking opportunity

• GOAL: increase consumer awareness of load response and generate interest in participation

27

Notable Participants & Speakers

Stamford• CT Attorney General

Blumenthal• Kenneth Decko - CBIA• Joe McGee - SACIA• CT DPUC Chairman Don

Downes• CT DEP Director Chris James• Jerry Luke - Grubb & Ellis (for

IBM)• RETX• NGS• CMEEC• UI; CL&P

Waltham• MA DOER Commissioner David

O’Connor

• MA DTE Commissioner Paul Vasington

• Bob Ruddock - AIM

• NEDRI Policy Director Cowart

• Mass. Water Resources Auth.

• RETX

• AES and TCPM

• NSTAR and NGrid

28

SMD Readiness

29

SMD Readiness/Awareness Presentations for NEPOOL PC

• Schedule of Topics– Today- FTR’s/ARR’s– June - Customer Business Implications– July - TBD– August - TBD

• Other Subjects - Energy Market, etc.

30

Back-Up Detail

31

NEMA/BostonArea Detail

NEMA/BOST Unmitigated Congestion Uplift May '99 - Mar '02

$0

$3,000,000

$6,000,000

$9,000,000

$12,000,000

$15,000,000

$18,000,000

Month-Year

Up

lift

$

0

50000

100000

150000

200000

250000

300000

350000

400000

MW

H

Uplift $MWH

32

Total Congestion Costs May 1999-January 2002

Complete

Incomplete

Month Yr

MWH UnmitigatedPreliminary Mitigated/ Negotiated

May-99 83,884 $591,921 $591,986Jun-99 58,875 $2,013,482 $949,917Jul-99 18,872 $360,195 $360,195

Aug-99 39,160 $1,074,022 $1,074,022Sep-99 262,302 $5,341,772 $5,341,772Oct-99 277,601 $11,766,934 $8,336,042Nov-99 242,222 $7,637,389 $7,145,172Dec-99 516,136 $18,901,616 $14,281,049Jan-00 233,245 $7,246,965 $7,233,688Feb-00 411,164 $14,816,772 $10,964,144Mar-00 626,950 $25,172,728 $22,054,491Apr-00 726,885 $25,463,464 $20,108,005May-00 770,019 $25,582,536 $20,360,601Jun-00 581,195 $15,188,263 $13,103,347Jul-00 455,352 $9,976,806 $7,867,807

Aug-00 520,071 $15,076,803 $10,748,095Sep-00 450,646 $15,701,102 $9,144,011Oct-00 335,904 $14,437,152 $8,619,674Nov-00 304,499 $5,890,163 $4,523,461Dec-00 388,653 $19,741,699 $10,847,823Jan-01 262,231 $19,509,168 $7,798,665Feb-01 377,908 $8,470,039 $7,972,980Mar-01 370,494 $12,027,073 $8,919,682Apr-01 179,591 $6,263,876 $5,445,918May-01 269,312 $7,405,593 $7,136,197Jun-01 561,428 $14,782,592 $11,667,200Jul-01 327,712 $4,835,845 $4,610,850

Aug-01 438,940 $9,695,340 $6,921,513Sep-01 247,795 $7,222,559 $4,998,449Oct-01 177,896 $4,255,394 $4,032,318Nov-01 391,657 $15,189,787 $14,493,237Dec-01 353,600 $9,611,453 $9,536,563Jan-02 299,088 $7,804,785 $7,797,854Feb-02 300,000 $7,187,957 $8,543,658TOTAL 11,861,287 $376,243,245 $293,530,386

33

Transmission Congestion Data File Revisions Mitigated/Negotiated - Status

• Current Status terms - Final, Preliminary or Projected

• Future Status terms for Mitigated number:– Complete: for May 1999 through June 2001,

months where negotiations with Participants who have contested mitigated prices regarding congestion compensation have been completed.

– Incomplete: Negotiations with Participants who have contested mitigated prices on congestion compensation are incomplete.

• Beginning with July 2001, a Participant must seek review of a mitigated bid within the time limits provided by Section 18.8.2 of Market Rule 18 for billing adjustment requests (see MRP 17.7.1).

34

Estimated Unsettled Congestion UpliftMarch 2000 - June 2001

Estimated Unsettled Congestion Uplift Mar '00 - Jun '01

$22.1

$20.1 $20.4

$13.1

$7.9

$10.8

$9.1$8.6

$4.5

$10.9

$7.0

$8.0$8.5

$4.8

$7.0

$12.4

-$0.5

$3.5

$0.8$0.2$0.5

$0.0$0.8

$0.0$0.0$0.0$0.1$0.2$0.6

$0.2$0.0$0.0$0.5

$174.9

-$1

$1

$3

$5

$7

$9

$11

$13

$15

$17

$19

$21

$23

Mar

-00

Apr-0

0

May

-00

Jun-

00

Jul-0

0

Aug-0

0

Sep-0

0

Oct

-00

Nov-0

0

Dec-0

0

Jan-

01

Feb-0

1

Mar

-01

Apr-0

1

May

-01

Jun-

01

TOTA

L

Milli

ons

of D

olla

rsEstimated Outstanding Claims in Mitigation

Preminary Mitigated/Negotiated

For the period there is 1.99% that is currently unsettled. This represents an estimated $3.5 million in additon to the current Preliminary Mitigated/Negotiated amount of $174.9 million.

35

Week Beginning, Saturday

Year Month Day

Installed Seasonal Claimed

Capability (SCC)

[Note 3]

Interchange (NYPP, NB,

HQ, Highgate,

Block Load)

No

te

Net Capacity

Peak Load Exposure [Note 1]

Operating Reserve

Requirement [Note 5]

Total Known Maintenance

Allowance for

Unplanned Outages

Operable Capacity

Margin (+/-)

Extent of OP 4 Actions That May be Necessary (OP 4

Actions up to and including) [Note 2]

(MW) (MW) (MW) (MW) (MW) (MW) (MW) (MW)

2002 May 4 28,158 530 28,690 18,280 1,600 3,400 2,000 3,410

11 28,158 530 28,690 19,130 1,600 3,900 2,000 2,060

18 28,158 310 4 28,470 19,920 1,600 3,400 2,000 1,550

25 28,158 530 28,690 20,790 1,600 2,300 2,000 2,000 2002 June 1 26,966 540 27,510 24,200 1,700 200 2,400 (990) Actions 6 - 11

8 26,966 540 27,510 24,200 1,700 200 2,400 (990) Actions 6 - 11

15 26,966 540 27,510 24,200 1,700 200 2,400 (990) Actions 6 - 11

22 26,966 540 27,510 24,200 1,700 200 2,400 (990) Actions 6 - 11

29 28,077 540 28,620 24,200 1,700 100 2,400 220

2002 July 6 28,077 540 28,620 24,200 1,700 100 2,400 220

13 28,077 540 28,620 24,200 1,700 100 2,400 220

20 28,077 540 28,620 24,200 1,700 100 2,400 220

27 29,566 540 30,110 24,200 1,700 200 2,400 1,610

2002 August 3 29,566 540 30,110 24,200 1,700 200 2,400 1,610

10 29,566 540 30,110 24,200 1,700 200 2,400 1,610

17 29,566 540 30,110 24,200 1,700 200 2,400 1,610

24 30,354 540 30,890 24,200 1,700 200 2,400 2,390

31 30,354 540 30,890 22,250 1,700 200 2,000 4,740

2002 September 7 30,354 540 30,890 21,050 1,600 1,500 2,000 4,740

14 30,354 540 30,890 20,730 1,600 2,900 2,000 3,660

21 30,354 540 30,890 20,650 1,600 4,900 2,000 1,740

28 33,208 230 33,440 17,110 1,600 4,800 2,000 7,930

2002 October 5 33,208 230 33,440 17,150 1,600 6,500 2,000 6,190

12 33,208 230 33,440 18,050 1,700 4,200 2,000 7,490

Notes:

1. Peak Load Exposure per the preliminary April 2002 CELT Report. 2. Relief from certain OP 4 Actions varies, depending on system conditions. 3. Installed Capability per April 1, 2002 SCC Report and adjusted for known generator additions.4. Highgate Maintenance Scheduled.5. Operating Reserve Requirement based on the first Contingency (Generator at 1156 MW) plus 1/2 the second Contingency (Generator at 1136 MW)

ISO NEW ENGLAND 2002 OPERABLE CAPACITY ANALYSIS

Please note that the information contained within the Capacity Analysis is a deterministic projection of system conditions which could materialize during any given week of the year.

April 15, 2002 - WITH KNOWN EXTERNAL CONTRACTS - REFERENCE CASE

36

NEW ENGLAND SUMMER 2002 LOAD PROFILES

16,000

17,000

18,000

19,000

20,000

21,000

22,000

23,000

24,000

25,000

26,0004/

28/0

2

5/5/

02

5/12

/02

5/19

/02

5/26

/02

6/2/

02

6/9/

02

6/16

/02

6/23

/02

6/30

/02

7/7/

02

7/14

/02

7/21

/02

7/28

/02

8/4/

02

8/11

/02

8/18

/02

8/25

/02

9/1/

02

9/8/

02

9/15

/02

9/22

/02

Week Beginning

MW

Reference

Extreme

Historical (1980-2001)

New England Summer 2002Load Profiles