Presentation to FERC’s Northeast Energy

Infrastructure Conference Electricity Infrastructure

in New EnglandStephen G. Whitley

Sr. Vice President and Chief Operating Officer

ISO New England Inc.

January 31, 2002

2

Overview of Remarks

• ISO New England - Who we are and what we do• Supply outlook• Natural gas issues• Regional transmission planning process• Southwest Connecticut• Conclusions

3

ISOAgreement

Who is ISO New Englandand what do we do?

• INDEPENDENT system operator based in Holyoke, MA

• Private, not-for-profit corporation created according to FERC principles in 1997

• Responsible for system reliability and administration of the wholesale electricity markets and the regional transmission tariff

• ISO operates under an agreement with NEPOOL

4

Supply Additions Appear Strong in Relationship to Demand Growth

0

5,000

10,000

15,000

20,000

25,000

1999 2000 2001 2002 2003 2004 2005 2006

Projected CumulativeSummer Supply

Additions over 1998

CumulativeIncrease in Summer

Peak Demandover 1998

MW

5

Gas Pipelines Have InsufficientCapacity for Power Plant Use

• Shortfalls in deliveries to electric generation sector could begin as early as this winter.

• No impacts to traditional gas LDC operations/customers.

• Potential gas contingencies assessed for impacts on electric generation sector.

• Dual fuel units switching to oil mitigates any potential delivery shortfalls.

0

1,000

2,000

3,000

4,000

MW

2001/2002 2002/2003 2004/2005

Phase I High Phase II Reference Phase II High

Gas-Fired MW at Risk

6

Regional Transmission Expansion Plan (RTEP)

• ISO-NE-led effort involving both New England transmission

owners and a diverse group of stakeholders• First phase (RTEP01-Oct. ‘01) represents initial assessment

of reliability and economics of New England system• Goals of analysis:

– Assess system adequacy both regionally and sub-regionally– Identify transmission constraints– Communicate the status of planned transmission upgrades– Estimate costs of congestion to consumers– Attract a market response (generation, transmission, load response)

7

-$100

$100

$300

$500

$700

Mil./

Yea

r

CT ME MA NH RI VT NewEngland

High Case$600M

High Case$600M

Low Case$125M

Low Case$125M

Transmission Bottlenecks are IncreasingProjected Annual Costs of Congestion RTEP01, 2002-06

8

Priority One: SW ConnecticutTransmission System History and Background

• 345 kV loop originally proposed in 1970s postponed due to:– Fluctuations in economy and load growth– 115 kV system improvements– High coordination of local generator and transmission maintenance

• Loads increased 25% in 1990s• Sale of existing generators resulted in loss of control of optimum

coordination of local generator and transmission maintenance• More uncertainty surrounding future availability and performance

of local generation• Cross Sound Cable (Trans-Energie merchant facility) approved by

Connecticut Siting Council; 300 MW connection to Long Island

9

345kV Transmission Proposal

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10

In closing...• Supplies in New England are adequate, however,

‘deliverability’ is at issue– Transmission bottlenecks are increasing the cost and

decreasing the reliability of electricity production and delivery

• Natural gas requirements for power generation

increasing; current pipeline system cannot supply all

power plant requirements on coldest days• Regional transmission planning is key to success of the

regional marketplace• Southwest Connecticut requires action NOW

11

Background Information

13

MW Cuml.• Generation installed in 1999 355 355• Generation installed in 2000 1,738 2,093• Generation installed in 2001 1,570 3,663

• Expected 2002 & beyond

(under construction) 6,120 9,783• Planned 2002 & beyond

(NOT under construction) 1,584 11,367

Generator Construction is Robustas of 1/1/2002, Summer Ratings

Supply Outlook

14

History and Background

• Formation of the New England Gas/Electric Discussion

Group in 1991 to examine regional coordination issues

between the gas & electric industries– Examine operational reliability of the gas/electric

infrastructure– Increase coordination between the industries– Educate industry participants and observers

• 1993 EPRI report includes the modeling of the loss of a

major gas & non-gas fired generator, under projected 1995

system conditions• Seven years pass with no similar analysis

Gas Study

15

Why a Gas Study?

• Since 1997, ISO-NE has received applications for

interconnection System Impact Studies for

almost 55,000 MW of new merchant generation

capacity• Virtually all of this newly proposed capacity is

advanced combined cycle technology or peaking

capacity fueled exclusively by natural gas• There is a need to review the natural gas pipeline

infrastructure in New England and its ability to

reliably meet the increasing demand of the

power generation sector (deliverability study)

Gas Study

16

Scope of Study

• Study time frame: 2001 - 2005• Analysis of existing pipeline infrastructure (Phase I)• Analysis of expected pipeline infrastructure additions (Phase

I & II)• Develop a steady state hydraulic engineering model of the

pipeline systems serving the NEPOOL region (Phase I & II)• Analyze impacts of Reference and High Case natural gas

demand consumption (Phase I & II)• Conduct sensitivity analysis and transient analysis (Phase II)• Summarize results and issue report with recommendations

Gas Study

17

Phase I Steady-State Modeling ResultsIssued February 2001

• No pipeline delivery constraints on a peak day in Winter 2000-01• No summer peak day pipeline deliverability constraints through 2005• Gas delivery constraints become apparent in Winter 2003

– Shortfall in gas requirements 1,755 MW out of 7,550 MW assumed

• Gas delivery constraints intensify by Winter 2005– Shortfall in gas requirements 3,226 MW out of 11,500 MW assumed

• Theoretical mitigation potential thru back-up fuel:• Winter 2003 - 71 gas-fired units totaling 16,000 MW

- 51 dual fueled totaling 9,250 MW• Winter 2005 - 75 gas-fired units totaling 18,650 MW

- 54 dual fueled totaling 11,500 MW

Gas Study

18

RTEP

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NY-NE - 1400w/o Cross

Sound Cable

SEMA - 1000

Norwalk-Stamford - 1100

Surowiec South - 1150ME-NH -1400

North-South - 2700

Boston - 3600

SEMA/RI - 1600

NBOrrington South - 1050

NB-NE - 700HQHighgate - 225 Phase II - 1500

CSC -330

S-MELoad 5751493 MW

MELoad 11561093 MW

BHELoad 376874 MW

SEMALoad 23293346 MW

RILoad 20585419 MW

W-MALoad 20413654 MW

CMA/NEMALoad 1548

243 MW

Peak Load and Installed Capacity MW by Area - 2006

VTLoad 1353

879 MW

NY

NHLoad 19143590 MW

BOSTONLoad 52573984 MW

CTLoad 33194359 MW

SWCTLoad 26622112 MW

NORLoad 1129

463 MW Under Construction

Other Studies Required

RTEPLoad

Capacity

KEY:Connecticut - 2500Regional Transmission Expansion Plan Sub-area

Priority Studies Required

South West CT - 1700

East-West - 2150

RTEP

20

Transmission Alternatives

• Various scenarios upgrading 115 kV lines from Frost Bridge,

Southington and East Shore• 115 kV Plan

– Upgrade Devon to Norwalk 115 kV, Circuit 1– Upgrade Devon to Norwalk 115 kV Circuit 2– Upgrade Peaceable to Norwalk 115 kV– Build new Devon to Norwalk 115 kV– Build new Pequonnock to Norwalk 115 kV– Reconfigure Norwalk - Norwalk Harbor - Glenbrook 115 kV System

• Case 2 with Plumtree 115 kV Phase Angle Regulator• Case 3 with with Beseck to Devon 345 kV• 230 kV Loop: Plumtree - Norwalk - Beseck

SW Connecticut

Long Mountain

FrostBridge

Southington

BeseckJunction

Devon

PequonnockNorwalk

Plumtree

Proposed‘345 kV Loop’

1-Line

NOR-STAMNOR-STAM

SWCTSWCT

115 kV345 kVProposed 345 kVInterfaceInterface

Key:

7

SW Connecticut

22

Recommended Solution: 345-kV Loop

• Plumtree - Norwalk - Pequonnock - Devon - Beseck 345kV– 2005 / 2006 in-service date; $500-$600 million– ~100 miles - mostly on existing right-of-way– Includes associated 115kV improvements

• Meets study objectives:– Formulate long-term transmission solution for SW Connecticut that:

• Satisfies reliability criteria• Eliminates operating difficulties• Eliminates first contingency (including double circuit) overloads• Eliminates threat of voltage collapse

– Mitigates congestion by increasing SW CT and Norwalk-Stamford

transfer limits

SW Connecticut

23

Improvement Associated With Recommended Solution

• Preliminary planning transfer limits– SWCT: > 2,900 MW (up from 1,700)– Norwalk-Stamford: > 1,300 MW (up from 1,100)– May eliminate the need for the

Norwalk-Stamford interface definition

• Construction sequencing– NU has proposed a phased approach– ISO is currently investigating impacts

SW Connecticut

24

Other Associated Work

• Add new 345kV Substations at Plumtree, Norwalk, Pequonnock,

Devon, & Beseck Junction• Add new 345kV loop from Plumtree to Beseck Junction• Add (2) 3-150MVA auto transformers at Norwalk, (1) at

Pequonnock, and (1) at Devon• Add (1) 3-200 MVA auto transformers at Pequonnock to shift

Bridgeport Energy output to 345kV• Rearrange / add to 115kV between Norwalk, Norwalk Harbor

and Glenbrook• Establish new 115kV substation adjacent to Devon (East Devon)• Other 115kV work a/w new 345kV structures

SW Connecticut