ISO-NE CONE and ORTP Analysis - ISO New England

ISO-NE CONE and ORTP Analysis - ISO New England

ISO-NE CONE AND ORTP ANALYSIS AUGUST 16, 2016 ISO-NE PUBLIC Concentric Energy Advisors, Inc. 2016 Discussion Topics for CONE & ORTP Resource Screening General Assumptions Technology Specifications Energy & Ancillary Services Revenue Calculation Financial Model Inputs Financial Model Mechanics 2 ISO-NE Public Concentric Energy Advisors Screening Criteria: CONE/Net CONE and ORTP CONE/Net CONE technology screening criteria: Must be likely to be economic for merchant entry under long-term equilibrium conditions Must have reliable cost information available to calculate a CONE value using a full bottom up analytical approach ORTP technology screening criteria: Represent technologies that have been installed in the region and participated in recent FCAs

Have reliable cost information available to calculate an ORTP using a full bottom up analytical approach Have a first year revenue requirement below the FCA starting price 3 ISO-NE Public Concentric Energy Advisors Resource Screening: CONE/Net CONE 4 ISO-NE Public Concentric Energy Advisors CONE: Resources Screened and Recommendations Gas-fired resources that pass the screening criteria for a full bottoms up evaluation: Simple cycle gas turbine(s) GE 7HA.02 GE LM6000 GE LMS100 Combined cycle gas turbines GE7HA.02 1x1 Other technologies and manufacturers were considered but will not be fully evaluated

5 ISO-NE Public Concentric Energy Advisors Projects in Development in New England P ower P lant T echnology Generation Type Technology M onth Unit in Service Year Unit Turbine in M anufacturer Service Turbine Type Dispatching ISO Zo nal Location C o-fired / Fuelswitching Unit? A pprox.

Nameplate C apacity (M W) C urrent Operating Status C ombined C ycle C ombustion Turbine 6 2017 General Electric C ompany 7F 5-Series NEM A 674 Under C onstruction Gas Turbine Gas Turbine 4 2018 GE Energy

LM S100P A + NEM A 200 A dvanced Development C ombined C ycle C ombustion Turbine 5 2018 GE Energy 7HA .01 C onnecticut 785 Under C onstruction Wallingford Energy Gas Turbine Gas Turbine (LS P ower) 6

2018 GE Energy LM 6000 C onnecticut 90 Early Development B ridgeport Harbor Statio n C ombined C ycle P roject 6 2019 GE Energy 485 Early Development 6 2019 GE Energy

7HA .02 SEM A 333 Early Development Not announced Not finalized G, H, or J C lass R hode Island 1000 Early Development Salem Harbor Gas P roject West M edway II Towantic Energy C enter C anal 3 (C T) C lear R iver Energy

C enter C ombined C ycle C ombined C ycle C ombined C ycle C ombined C ycle Gas Turbine Gas Turbine C ombined C ycle C ombined C ycle 6 2019 C onnecticut Switching Switching Source: SNL Energy 6 ISO-NE Public

Concentric Energy Advisors CONE: Resources Screened and Recommendations (contd) Economic For Merchant Entry On-Shore Wind Higher cost than other CONE alternatives without a contract for output Reliable Cost Information for a Full Bottoms Up Approach Inconsistencies in project size and arrangement that differentiate projects. A Standard Design more than likely would not fit multiple projects. Off-Shore Wind Since no projects are in commercial operation in the US, the economics for merchant entry are unknown Coal

Unlikely to be developed in New England Nuclear Unlikely to be developed in New England Solar Higher cost than other alternatives due to low solar irradiance and high land cost Current significant differences in costs and incentives result in inconsistent data Large-Scale Battery Since no projects are in commercial operation in the 7 US, the economics for ISO-NEare Public merchant entry

unknown Since no projects are in commercial operation in the US, there is insufficient data to Concentric Energy Advisors perform a full analysis Since no projects are in commercial operation in the US, there is insufficient data to perform a full analysis CONE Analysis: General Assumptions 8 ISO-NE Public Concentric Energy Advisors Assumptions: Approach and Preliminary Recommendations Location Approach Identify locations where power infrastructure already exists including electric and gas transmission, and where retirements are scheduled, preferably in reasonable proximity to load centers or nodes. Locations analyzed in detail - Southeastern Connecticut and Bristol County Massachusetts fulfilled requirements. Connecticut and Massachusetts fulfilled the approach with Bristol County having more retirement MWs and fewer current development projects. Recommendation - Bristol County Massachusetts is a location where it is reasonable to assume there will be development in the next three to five years. 9 www.kiewit.co m

ISO-NE Public www.gemmapower. com Concentric Energy Advisors Assumptions: Approach and Preliminary Recommendations (contd) Plant Size and Configuration Based on likely anticipated market drivers such as baseload, peaking, fast to market, and flexible operation Plant capacity based on the market history of specific technologies utilized to address market needs Interconnection Assumptions Gas 2 mile interconnection plus metering station Electrical - 2 mile interconnection to the 345kV system plus network upgrades Dual Fuel Assumptions Liquefied Petroleum Gas (LPG), Liquefied Natural Gas (LNG), and No. 2 oil were considered No. 2 oil is by far the most commonly installed backup fuel utilized, and public cost estimates are available 10 ISO-NE Public Concentric Energy Advisors Assumptions: Approach and Preliminary Recommendations (contd) Environmental Assumptions Based on ease of permitting and proven methods for New England project development All technologies include:

Selective Catalytic Reduction (SCR) devices Combined Cycle also includes a Carbon Monoxide (CO) catalyst Cooling System Assumptions All plants utilize dry cooling systems to ease permitting Dry cooling is a well proven method for development projects in New England 11 ISO-NE Public Concentric Energy Advisors CONE Specifications: Simple Cycle Gas Turbine 12 ISO-NE Public Concentric Energy Advisors Simple Cycle Gas Turbine GE 7HA.02 Characteristics of the 7HA.02 Technology Size Large Frame machine designed with latest materials and combustion technology available Highest capacity available for a simple cycle machine Efficiency High simple cycle efficiency

Flexibility GT has a low minimum load point and high ramp rates for flexible operation Basis for a combined-cycle If arranged properly can become the basis for a future combined cycle Reference: GE 13 ISO-NE Public Concentric Energy Advisors Technology Specifications: Simple Cycle Gas Turbine GE 7HA.02 Turbine model 7HA.02 Configuration Simple cycle frame machine 338 Net plant capacity (MW) Bristol County, Massachusetts Location

Fin fan coolers Cooling system Evaporative coolers Power augmentation 9,220 Net heat rate (Btu/kWh) Selective catalytic reduction Environmental controls Natural gas w/ No. 2 oil backup Duel-fuel capability Black start? No On-site gas compression? No Gas interconnection Onsite connection Electrical interconnection

Onsite connection Plot size (acres) 14 ISO-NE Public 8.1 Concentric Energy Advisors Capital Costs: Simple Cycle Gas Turbine GE 7HA.02 Cost Component 2016 $$ Total Civil/Structural and Architectural $/kW 16,899,000 50 130,210,000 385 27,482,000 81 174,591,000 517

Total Construction Management 3,866,000 11 Other Project Costs including Freight, Startup Spares, A/E support and Startup Testing 9,055,000 27 187,512,000 555 10,751,000 32 198,263,000 587 13,878,000 41 212,141,000 628 10,607,000 31

222,748,000 659 Total Mechanical Costs Total Electrical Instrumentation and Controls Cost Total Major Equipment and Construction Cost Subtotal Project Cost Project Contingency - 5% on Major Equipment 7% on Balance Subtotal Project Cost with Contingency EPC Contractor Fee Total Project Cost Owner's Contingency Total Owner Project Cost Working Capital (approximately 1% of EPC Costs) 2,200,000 Financing Fees (approximately 4% of total costs financed by debt) 8,000,000 Fuel Inventory - 1,400K gal @ $3/gal 4,200,000 Source: Data is based on Mott MacDonald confidential estimating database 15 ISO-NE Public Concentric Energy Advisors O&M Costs: Simple Cycle Gas Turbine GE 7HA.02

Fixed O&M Proposed Values O&M. Labor, Materials, Contract Services, A&G $26/kW-yr Site Leasing $20,000/acre/yr Property Taxes 3% Insurance 0.6% of installed costs 16 ISO-NE Public Concentric Energy Advisors Aeroderivative Gas Turbine LM6000 Characteristics of the LM6000 History Huge installed base

One of the largest installed bases of any gas turbine Based on GE jet engine technology with millions of hours of operation Speed to Market One of the fastest turbines to engineer, procure, construct, and operate above 20MWe in capacity One of the most widely installed machines in ISO-NE Basis for a Combined Cycle If arranged properly can become the basis for a future combined cycle Reference: GE 17 ISO-NE Public Concentric Energy Advisors Technology Specifications: Aeroderivative Gas Turbine LM6000 Turbine model LM6000 Configuration Two SC Aeroderivative GTs 94 Net plant capacity (MW)

Bristol County, Massachusetts Location Fin fan coolers Cooling system Evaporative coolers Power augmentation 9,774 Net heat rate (Btu/kWh) Selective catalytic reduction Environmental controls Natural gas w/ No. 2 oil backup Duel-fuel capability Black start? No On-site gas compression? No Gas interconnection Onsite connection

Electrical interconnection Onsite connection Plot size (acres) 18 ISO-NE Public 4.5 Concentric Energy Advisors Capital Costs: Aeroderivative Gas Turbine LM6000 Cost Component 2016 $ $ $/kW Total Civil/Structural and Architectural 11,696,000 124 Total Mechanical Costs 78,496,000 831 Total Electrical Instrumentation and Controls Cost

17,132,000 181 107,324,000 1136 Total Construction Management 3,392,000 36 Other Project Costs including Freight, Startup Spares, A/E Support, Startup Testing 8,230,000 87 118,946,000 1,259 6,981,000 74 125,927,000 1,333 8,815,000 93

134,742,000 1,427 6,737,000 71 141,479,000 1,498 Total Major Equipment and Construction Cost Subtotal Project Cost Project Contingency - 5% on Major Equipment 7% on Balance Subtotal Project Cost with Contingency EPC Contractor Fee Total Project Cost Owner's Contingency Total Owner Project Cost Working Capital (approximately 1% of EPC Costs) 1,400,000 Financing Fees (approximately 4% of total costs financed by debt) 7,000,000 Fuel Inventory - 300K gal @ $3/gal 900,000 Source: Data is based on Mott MacDonald confidential estimating database 19

ISO-NE Public Concentric Energy Advisors O&M Costs: Aeroderivative Gas Turbine LM6000 Fixed O&M Proposed Values O&M. Labor, Materials, Contract Services, A&G $60/kW-yr Site Leasing $20,000/acre/yr Property Taxes 3% Insurance 0.6% of installed costs 20 ISO-NE Public Concentric Energy Advisors Advanced Aeroderivative Gas Turbine LMS100PB Characteristics of the LMS100PB

Hybrid design Based on GE jet engine technology and GE Frame Gas Turbine technology Efficiency Highest simple cycle efficiency of any gas turbine Flexibility Has a very fast startup times and ramp rates for flexible operation Combined Cycle Gas turbine is so efficient, exhaust gas is cold, so not the best option for combined cycle Reference: GE 21 ISO-NE Public Concentric Energy Advisors Technology Specifications: Advanced Aeroderivative Gas Turbine LMS100PB Turbine model LMS100PB Configuration

SC advanced aeroderivative 97 Net plant capacity (MW) Bristol County, Massachusetts Location Fin fan coolers Cooling system Evaporative coolers Power augmentation 9,105 Net heat rate (Btu/kWh) Selective catalytic reduction Environmental controls Natural gas w/ No. 2 oil backup Duel-fuel capability Black start? No On-site gas compression?

No Gas interconnection Onsite connection Electrical interconnection Onsite connection Plot size (acres) 22 ISO-NE Public 5.7 Concentric Energy Advisors Capital Costs: Advanced Aeroderivative Gas Turbine LMS100PB Cost Component 2016 $ $ $/kW Total Civil/Structural and Architectural 10,792,000 112 Total Mechanical Costs

76,026,000 786 Total Electrical Instrumentation and Controls Cost 14,929,000 154 101,747,000 1052 Total Construction Management 3,392,000 35 Other Project Costs including Freight, Startup Spares, A/E Support, Startup Testing 7,645,000 79 112,785,000 1,166 6,577,000 68 Total Major Equipment and Construction Cost

Subtotal Project Cost Project Contingency - 5% on Major Equipment 7% on Balance Subtotal Project Cost with Contingency 119,362,000 EPC Contractor Fee 8,355,000 Total Project Cost 127,717,000 Owner's Contingency 6,386,000 Owner Project Cost 134,103,000 Working Capital (approximately 1% of EPC Costs) 1,350,000 Financing Fees (approximately 4% of total costs financed by debt) 6,500,000 Fuel Inventory - 300K gal @ $3/gal 1,234 86 1 321 66 1,387

900,000 Source: Data is based on Mott MacDonald confidential estimating database 23 ISO-NE Public Concentric Energy Advisors O&M Costs: Advanced Aeroderivative Gas Turbine LMS100PB Fixed O&M Proposed Values O&M. Labor, Materials, Contract Services, A&G $55/kW-yr Site Leasing $20,000/acre/yr Property Taxes 3% Insurance 0.6% of installed costs 24

ISO-NE Public Concentric Energy Advisors Questions 25 ISO-NE Public Concentric Energy Advisors CONE Specifications: Combined Cycle Gas Turbine 26 ISO-NE Public Concentric Energy Advisors Assumptions: Combined Cycle Diagram Basic Design 27 ISO-NE Public Concentric Energy Advisors Technology Specifications: Combined Cycle Gas Turbine GE 7HA.02 Turbine model 7HA.02 combined cycle Configuration

Combined cycle w/ frame GT Net baseload capacity (MW) 491 Net capacity w/ duct firing (MW) 533 Bristol County, Massachusetts Location Fin fan coolers Cooling system Evaporative coolers Power augmentation Baseload net heat rate (Btu/kWh) 6,381 Duct firing net heat rate (Btu/kWh) 6,546 Environmental controls SCR and CO catalyst Natural gas w/ No. 2 oil backup

Duel-fuel capability Black start? No On-site gas compression? No Gas interconnection 28 ISO-NE Public Electrical interconnection Onsite connection Concentric Energy Advisors Onsite connection Capital Costs: Combined Cycle Gas Turbine GE 7HA.02 Cost Component 2016 $ $ Total Civil/Structural and Architectural $/kW 49,885,000 102

250,493,000 510 58,309,000 119 358,687,000 730 Total Construction Management 12,531,000 25 Other Project Costs including Freight, Startup Spares, A/E Support, Startup Testing 26,507,000 54 397,725,000 809 23,758,000 48 421,483,000 858 29,504,000

60 450,987,000 918 22,549,000 46 473,536,000 964 Total Mechanical Costs Total Electrical Instrumentation and Controls Cost Total Major Equipment and Construction Cost Subtotal Project Cost Project Contingency- 5% on Major Equipment 7% on Balance Subtotal Project Cost with Contingency EPC Contractor Fee Total Project Cost Owner's Contingency Total Owner Project Cost Working Capital (approximately 1% of EPC Costs) 7,000,000 Financing Fees (approximately 4% of total costs financed by debt) 16,800,000 Fuel Inventory - 1,400K gal @ $3/gal 4,200,000

Source: Data is based on Mott MacDonald confidential estimating database 29 ISO-NE Public Concentric Energy Advisors O&M Costs: Combined Cycle Gas Turbine GE 7HA.02 Fixed O&M Proposed Values O&M. Labor, Materials, Contract Services, A&G $39/kW-yr Site Leasing $20,000/acre/yr Property Taxes 3% Insurance 0.6% of installed costs 30 ISO-NE Public

Concentric Energy Advisors Questions 31 ISO-NE Public Concentric Energy Advisors Energy & Ancillary Services 32 ISO-NE Public Concentric Energy Advisors E&AS Overview Single 20-year forecast of Locational Marginal Prices (LMPs) based on expected value conditions Used to estimate revenues for the reference technology (CONE) and each technology type (ORTP) LMPs are based on a simulation via AURORAxmp Optimal commitment and dispatch model that forecasts hourly zonal prices Unit-specific dispatch, imports/exports, hourly loads, transmission constraints, etc., for New England and surrounding regions Finer resolution of forward contract data for modeling operating hours and margins

LMPs are used to develop revenue estimates (CONE and ORTP) and are calculated outside of the simulation model All revenue calculations will be based on the same price forecast Recommended price curves will be available at the September meeting 33 ISO-NE Public Concentric Energy Advisors Key forecast drivers Delivered fuel prices Retirements New additions Demand growth Topology changes 34 ISO-NE Public

Concentric Energy Advisors Fuel Price Forecast Gas price forecast simulation via GPCM Industry-standard model of North American production, delivery, prices, imports/exports, LNG, etc., using detailed network model RBAC Base Case Key pipeline projects included: Connecticut Expansion (Tennessee), AIM (Algonquin), Access Northeast (Algonquin), Atlantic Bridge (Algonquin) Projects excluded: Northeast Energy Direct (Tennessee), Constitution Pipeline Oil price forecast econometric model based on historical relationship between distillates and crude Simple and transparent, robust statistical results

Crude curve from NYMEX Settlements on NYMEX through 2024, linear extrapolation thereafter 35 ISO-NE Public Concentric Energy Advisors Delivered Fuel Price Forecast 36 ISO-NE Public Concentric Energy Advisors Retirements (for E&AS modeling purposes) Retirements for purposes of modeling E&AS revenues only Based on public data Announced retirements (early in forecast) and retirements based on economics (later years) Major Retirements list is not exhaustive Plant Date Fuel type

Capacity (MW) Brayton Point 2017 Coal/Oil 1,516 Middletown 2019 Oil 760 Pilgrim 1 2019 Nuclear 681 Mystic 2021 Oil 560 Canal 1 & 2

2023 Oil 1,094 Yarmouth 2024 Oil 822 Stony Brook CTs 2025 Oil 336 Millstone 2 203537 Nuclear 875 ISO-NE Public Concentric Energy Advisors Additions (for E&AS modeling purposes)

Additions for purposes of modeling E&AS revenues only Known additions (early) and generic additions to maintain reserve margins (later), plus wind and PV to meet regulatory mandates Major Additions list is not exhaustive Plant Date Fuel type Capacity (MW) Footprint 2017 Gas 650 CPV Towantic 2018 Gas 724 Canal 3 2019

Gas 321 PSEG Bridgeport 2019 Gas 467 Next Gen CC 2019 Gas 768 Medway 2019 Gasof PV added over 188the forecast period - Approx. 2,000 MW of wind capacity and 150 MW Peaker 38 ISO-NE Public Concentric Energy Advisors

Demand Outlook 2015 CELT Report 39 ISO-NE Public Concentric Energy Advisors Key Transmission Topology Changes Key changes are imports via new Canadian projects Model includes approx. 1,000 MW of import capacity from Canada Imports dispatched based on marginal economics Transmission inputs are still under review and subject to change prior to the September meeting 40 ISO-NE Public Concentric Energy Advisors Unit Revenues Framework needs to support both CONE and ORTP Endogenous calculation of revenues not practical

Revenue calculation steps: 1. Develop LMP forecast (see above) 2. Develop fuel forecast 3. Assumptions re heat rate (if any), Variable Operating and Maintenance (VOM) costs 4. 4-hour block dispatch algorithm Divide each day into 6 four hour blocks If spark spreads are positive in two or more hours within a block, unit is assumed to run for the entire block Provides more detailed revenue modeling than on-peak/off-peak pricing coupled with a static capacity factor Constraining dispatch to 4-hour blocks provides an approximation of plant operating constraints Transparent approach that can be reviewed by participants and used for ORTP 41 ISO-NE Public Concentric Energy Advisors Financial Model Inputs 42 ISO-NE Public Concentric Energy Advisors Inflation

Blue Chip Long Term Consensus Forecast, March 2016 Consumer Price Index (for all urban consumers), 10-year average (20182027), 2.3% Treasury Inflation-Protected Securities (TIPS) Implied Inflation Daily Treasury Yield Curve Daily Treasury Real Yield Curve 30-day average of 20-year: 1.37% Recommendat ion: 2.0% 43 ISO-NE Public Concentric Energy Advisors Depreciation 15yr 20yr MACRS MACRS Modified Accelerated Cost Recovery System (MACRS) 8.750% 6.563% 7.000% Capitalized cost of tangible property is recovered over9.130% the specified 8.210% 6.482% life by an annual depreciation allowance 7.390% 5.996% Allows for faster recovery of asset 6.650% 5.546% 5.990% 5.130% 5.900% 4.746% MACRS 15 or 20 year by technology type 5.910% 4.459% 5.900% 4.459% IRS Publication 946 5.910% 4.459%

Table B-2 5.900% 4.459% 5.910% 4.460% Mid-quarter convention; placed in service in Q1 5.900% 4.459% 5.910% 4.460% 5.910% 4.459% 0.740% 4.460% 0.0% 4.459% 0.0% 4.460% 0.0% 4.459% 0.0% 4.460% 0.0% 0.565% 44 ISO-NE Public Concentric Energy Advisors Property Taxes Property taxes will be equal to the product of the assessed value and the appropriate municipal C&I tax rate C&I rate in Massachusetts has ranged from approximately 0.2-4% in last three years Attlebo ro Fall River Taunt on

New Bedford 2013 2.05% 2.54% 3.06% 2.95% 2014 2.16% 2.67% 3.12% 3.11% 2015 2.13% 2.81% 3.32% 3.36% Recommendat ion: 3.0%

Federal and State tax rates will be reflected in the ATWACC 45 ISO-NE Public Concentric Energy Advisors Production Tax Credits / Investment Tax Credits PTC and ITC both being phased-down in coming years Phase-down schedule for ITC: Technology All solar except hybrid lighting Hybrid lighting, fuel cells, small wind Geothermal pumps, microturbines, CHP Geothermal electric Large wind 12/31/ 16 12/31/17 12/31/18 12/31/19 12/31/20

12/31/21 12/31/22 Future 30% 30% 30% 30% 26% 22% 10% 10% 30% N/A N/A N/A N/A N/A N/A

N/A 10% N/A N/A N/A N/A N/A N/A N/A 10% 10% 10% 10% 10% 10% 10% 10% 30% 24%

18% 12% N/A N/A N/A N/A 46 ISO-NE Public Concentric Energy Advisors Cost of Capital Weighted Average Cost of Capital Return on Equity Cost of Debt Debt to Equity Ratio WACC = ROE * Weight of Equity + COD * Weight of Debt Preliminary Recommendat ion Input Return on Equity 13.4 Cost of Debt

7.75 Debt to Equity Ratio 60/40 WACC 10.0 47 ISO-NE Public Concentric Energy Advisors Peer Group Cost of Capital Cost of capital inputs should reflect risk of future cash flows over the life of the project No PPA reflected in revenue streams Generally, project-specific costs of capital are not publicly available Appropriate cost of capital for the CONE resource is bounded by publicly available data subject to reasonable adjustments Peer group: Pure-play merchant generation companies Publicly traded 48 ISO-NE Public Peer Group Talen AES Dynegy Calpine

NRG Energy Concentric Energy Advisors Cost of Debt Generic corporate bond yields Recommendation: 7.75% Generally consistent with B rating 12.0 Recommenda tion 10.0 8.0 6.0 % 2016 Average B BB 8.12 5.59% % 7.75% 4.0 B B B 2.0 0.0

49 ISO-NE Public Concentric Energy Advisors Return on Equity Reflects investors willingness to take equity stake in ownership Capital Asset Pricing Model (CAPM): where common equity investors are deemed to measure their required return based on a risk free rate of return plus compensation for the relative risk of a specific security in relation to the broader market. This model may be expressed as: Re = Rf + (R (Rm Rf) Recommendat ion: 13.4% where: Re = the required return on equity Rf = the risk free rate of return Rm = the return required for the market as a whole (R = Beta, a measure of the covariance between the returns (dividends plus capital gains) of the market average and those of a specific security. Rf 2.2 4 Current 30-day average of 30-year U.S. Treasury bond yield Rm

9.5 Duff & Phelps, 2016 (R 1.5 3 Peer group average, Yahoo Finance & CEA calculation (TLN) Re 13. 4 = 2.24 + 1.53 ( 9.5 2.24 ) 50 ISO-NE Public Concentric Energy Advisors Debt to Equity Ratio Four year average weight of debt for peer group Results: 64% Debt/36% Equity Current D/E ratios are higher than historical levels Observed increase in debt weighting is due in 100 part to: Relatively low costs of debt

Declining market value of equity 90 Recommendati on: 60/40% Weight of Debt 80 70 60 % Public statements indicate merchant developers may begin to deleverage 50 40 30 CPN TLN AES DYN NRG 20 10 0 51

ISO-NE Public Concentric Energy Advisors Recommendation CONE Cost of Capital ISO-NE (2013) PJM (2013) NYISO (In progress) Preliminary Recommendat ion Return on Equity 13.8 13.8 13.4 13.4 Cost of Debt 7.0 7.0

7.75 7.75 Debt to Equity Ratio 60/40 60/40 55/45 60/40 WACC 9.7 9.7 10.3 10.0 Input 52 ISO-NE Public Concentric Energy Advisors Resource Screening: ORTP 53

ISO-NE Public Concentric Energy Advisors Technology Type vs. ORTP Screening Criteria Technology Type Installed In New England and Participated in Recent FCAs * Reliable Bottom Up Cost Data 1st Year Revenue Requirements < FCA Starting Price Simple Cycle Gas Turbine Yes Yes Yes Combined Cycle Gas Turbine

Yes Yes Yes On-Shore Wind Yes Yes Yes Solar Yes Yes Yes Biomass Yes No N/A Off-Shore Wind No No

N/A Batteries No * Does not include resources exempt fromNo IMM cost N/A review 54 ISO-NE Public Concentric Energy Advisors ORTP: Resources Screened and Recommendations Resources passing the screening criteria Gas-fired resources that pass the screening criteria for a full evaluation consistent with CONE calculation: Frame simple cycle gas turbine selected over Aeroderivative, and Advanced Aeroderivative Recommended Size: 338 MW Recommended Location: Bristol County, MA Combined cycle gas turbine is designed around Frame over Aeroderivative gas turbine Recommended Size: 491 MW Recommended Location: Bristol County, MA 55 ISO-NE Public Concentric Energy Advisors

ORTP: Resources Screened and Recommendations (contd) Resources passing the screening criteria On-Shore Wind Onshore Wind has been installed in New England Data is available on the different ways to construct these facilities Facilities do have site specific details, but commonalities exist Projects are not anticipated to significantly increase in capacity from recent installations The location of the project is based on wind resource and transmission interconnection Recommended size: 52 MW facility with 3 MWe wind turbines Recommended location: central New Hampshire 56 ISO-NE Public Concentric Energy Advisors ORTP: Resources Screened and Recommendations (contd) Resources passing the screening criteria Solar Solar facilities have been constructed in New England although most are 10 MW or smaller. A limited number of facilities have been constructed over 20 MW Primary market to this point has been commercial and residential not industrial in NE Solar irradiance is limited and real estate is expensive, which also limits project area and thus the size of the facilities.

State tax structures and incentive plans differ from state to state Recommended size: 10 MW solar facility Recommended location: Bristol County, MA Energy Efficiency [to be reviewed at the September Meeting] Demand Response [to be reviewed at the September Meeting] 57 ISO-NE Public Concentric Energy Advisors ORTP: Resources Screened and Recommendations (contd) Resources that do not pass the screening criteria Biomass The fuel utilized in Biomass plants is specific to each location. Every source of wood, waste, sludge, biomass, etc. is different Different fuels mean that the combustion process must be changed for each kind of fuel. Sawdust is different than bark, which is different than pellets, which is different than sewage sludge, which is different than grass. This means the design is customized for each site, so data is not applicable for a standard design across the entire New England region 58 ISO-NE Public Concentric Energy Advisors ORTP: Resources Screened and Recommendations (contd) Resources that do not pass the screening criteria Off-Shore Wind Insufficient data; "top down" cost data will not provide the IMM with sufficient confidence to effectively implement buyer-side mitigation Estimates from other regions of the world are based on different: wind, underwater geotechnical data, currents, waves, labor rules rates and productivity, maintenance practices,

rules where transmission comes ashore, etc. Do not all apply in offshore New England waters www.ainonline. com www.boem.go v 59 ISO-NE Public www.scottishenergynew s.com Concentric Energy Advisors ORTP: Resources Screened and Recommendations (contd) Resources that do not pass the screening criteria Batteries No stand alone largescale battery storage installations have been installed in New England Insufficient data; "top down" cost data will not provide the IMM with sufficient confidence to effectively implement buyer-side mitigation Technologies including lithium ion, sodium-sulfur, redox, flow etc. technologies are still being developed The criteria of how capacity is to be measured (MW vs. MWH) and how the systems are to operate has not been agreed to, duration and sustainability of discharge is of particular focus. www.aesenergystora ge.com 60 ISO-NE Public www.dukeenergy.com

Concentric Energy Advisors Questions 61 ISO-NE Public Concentric Energy Advisors ORTP Specifications: Gas Turbines 62 ISO-NE Public Concentric Energy Advisors Technology Specifications: Simple Cycle and Combined Cycle Continuing to evaluate cost components that have a material range in values Low end of the competitive range Preliminary areas of further analysis: Labor Contingency Interconnection Taxes Insurance Other 63 ISO-NE Public Concentric Energy Advisors Questions

64 ISO-NE Public Concentric Energy Advisors ORTP Specifications: On-Shore Wind 65 ISO-NE Public Concentric Energy Advisors Assumptions: Approach and Recommendations, On-Shore Wind Location Approach Onshore has two primary focal points: wind and transmission Altitude improves wind resources in general; northern New England has the advantage Transmission to market was the final differentiator Locations analyzed included Vermont, Maine, and New Hampshire Central New Hampshire has wind and transmission to market Plant Size and Configuration Assumptions Land area is a significant expense in New England, therefore we do not anticipate large installations in the NE region Based on recent NE project trends we are using a 52MW wind farm size based on 3 MW turbines for ORTP Interconnection Assumptions New wind farms will interconnect with existing transmission along the corridor

66 ISO-NE Public Concentric Energy Advisors Technology Specifications and Cost Ranges: On-Shore Wind Specification Turbine Size Preliminary Review 3 MWe Net Plant Capacity 52 MW Location Central New Hampshire Electrical Interconnection Onsite, along the wind farm field or line Plot Size Property will be leased for the duration of the project. Most land can still be utilized for farming, commercial, industrial, or even residential purposes while the farm is producing power. An acre or so will be required for a switchyard near the interconnection point Overnight Capital

Costs 1250-2000 $/kW Fixed O&M Costs 30-45 $/kW-yr Capacity Factor 30-40% 67 ISO-NE Public Concentric Energy Advisors Questions 68 ISO-NE Public Concentric Energy Advisors ORTP Specifications: Solar 69 ISO-NE Public Concentric Energy Advisors Assumptions: Approach and Recommendations, Solar Location Approach Identify a standard size solar facility that would be considered typical over the next three to five years for New England

Max installed facility size in New England is 50 MW, with a few facilities making it to 20 MW in Vermont Multiple 10 MW installations exist across the region Locations analyzed Location criteria was most dependent on available land area and connectivity Recommended location: Bristol County Massachusetts Plant Size and Configuration Assumptions Standard size is assumed to be 10 MW Interconnection Assumptions Site will have local onsite access to transmission 70 ISO-NE Public Concentric Energy Advisors Technology Specifications and Cost Ranges: Solar Specification Preliminary Review Net Plant Capacity 10 MW Location Bristol County, MA Electrical Interconnection Onsite

Overnight Capital Costs $1400-1800 Fixed O&M Costs $9-13 / kW-yr Capacity Factor 14% 71 ISO-NE Public Concentric Energy Advisors Questions 72 ISO-NE Public Concentric Energy Advisors E&AS Revenues ORTP Based on same LMP curves as Net CONE except in a case where a PPA is assumed Method for dispatch will vary For fossil units, similar approach to Net CONE PV and wind will be based on output expectations

DR/EE will be dispatched based on a strike price Approach to E&AS still under development, to be finalized by September meeting 73 ISO-NE Public Concentric Energy Advisors Cost of Capital ORTP PPA-backed non-capacity revenues WACCORTP < WACCCONE Low end of competitive range for merchant generation Adjust ROE using a higher risk free rate in CAPM calculation Adjust COD using BB rated debt costs Maintain debt to equity ratio Preliminary Recommendation: ROE 12.4 COD 6.5 D/E 60/40 WACC

8.9 74 ISO-NE Public Concentric Energy Advisors Next Steps To be reviewed at September meeting: Pay for Performance approach and recommendations Energy & Ancillary Services revenues by resource type Methodologies for energy efficiency and demand response ORTP calculation Recommended CONE/Net CONE values Recommended ORTP values for wind, solar, combined cycle, simple cycle generating resources 75 ISO-NE Public Concentric Energy Advisors

Recently Viewed Presentations

  • About OMICS Group OMICS Group is an amalgamation

    About OMICS Group OMICS Group is an amalgamation

    OMICS International Conferences. OMICS International is a pioneer and leading science event organizer, which publishes around 500 open access journals and conducts over 500 Medical, Clinical, Engineering, Life Sciences, Pharma scientific conferences all over the globe annually with the support...
  • Professional Development to Practice Preparation Keys to Creating

    Professional Development to Practice Preparation Keys to Creating

    Her performance is consistent with the expectations for a student at the end of third grade. Katie's problems with oral reading fluency affect comprehension skills in all academic areas of the general curriculum. She is improving in the areas of...
  • Query by Singing (CBMR)

    Query by Singing (CBMR)

    Amplitude Phase Freq= Parameter Identification How to identify coefficients of the basis functions: Solving simultaneous linear equations Integration (which take advantage of the orthogonality of the basis functions) Fast Fourier transform (FFT) A fast algorithm with a complexity of O(N...
  • ORLY AVIATION AVRIL 2006 - modelisme-racer.fr

    ORLY AVIATION AVRIL 2006 - modelisme-racer.fr

    Initialement 1 vol hebdomadaire faisait escale à Orly sur la ligne entre LONDRES et l'Australie. A partir de 1980, le vol hebdomadaire en 747 de QANTAS devenait terminal à Orly au terme d'un très long trajet multi escales au départ...
  • CHAPTER 7 FINISHING OPERATIONS ME596: Powder-based Manufacturing 7.1

    CHAPTER 7 FINISHING OPERATIONS ME596: Powder-based Manufacturing 7.1

    (Selective laser sintering of metal powders is being used and further developed for rapid prototyping. (Metal injection molding and P/M hot forging becoming viable production processes. (Small, high-strength steel P/M parts are being made in imact-forging hammers at rates higher...
  • Discovering the Real You - Clover Sites

    Discovering the Real You - Clover Sites

    "Search me, O God, and know my heart; test me and know my anxious thoughts" Psalm 139:23 2 Chronicles 30:1-2 Hezekiah sent word to all Israel and Judah and also wrote letters to Ephraim and Manasseh, inviting them to come...
  • Rural Accounting Done Right

    Rural Accounting Done Right

    Financial statements to General Ledger. ODOT invoices to Transit source documents. Sample of transaction (revenue and expense) ... Should be recorded even when in City, County, or Agency Cash on deposit. ... Rural Accounting Done Right
  • Student Art Contest Virtual Exhibit

    Student Art Contest Virtual Exhibit

    Statement: My artwork encourages people to be Superheroes and use Personal Protective Equipment. We need to be Superheroes because when we are Superheroes, we protect families, both ours and others, from the dangers of the items we work with whether...