The Green Communities Act: WMECO perspective

1. The Green Communities Act:WMECO perspective 9/12/2008 Boston, MAJim Robb Senior Vice PresidentEnterprise Planning & Development

2. MA policy goals are laudable Build on technology heritage with clean tech focus Drive economic development and create green collar jobs Expand energy efficiency and renewables Timing is perfect Energy prices CO2 “realities” and will Supply security and fuel diversity Demand growth increasingly “on peak” New supply limitations Customer needs /desires for “control”

3. Top 5 List • Expansion of Energy Efficiency Market* • Utility Investment in Distributed Resources* • Green Power Product Offering • Broader Access to Renewables* • Smart grid technology evaluation * Discussed further

4. Drive implementation through the utilities and leverage their scale economies, branding, and low cost customer access Move forward with decoupling utility revenues from sales volumes Develop a new funding and incentive mechanism Over time, migrate from “kwh saved” to “CO2 avoided” focus and capture increasingly feasible tradeoffs among Good old fashioned energy efficiency investments and behavior incentives Maturing technologies (AMI, renewables, distributed generation) Emerging end use fuel switching opportunities (PHEV, electric heat pumps, etc.) Restructuring generation fuel mix (swap high carbon for low carbon generation) Achieving our energy efficiency goals:

5. Solar economics: need to get the “flywheel” turining Program Design Concept Economic Impact • 100 KW units • Deploy 1000 KW/year for 3 years • Utility owns and unit rate based with a generation ROE • Power supplied to grid – simplifies billing and likely interconnections and socializes costs amongst all customers – “public good” • Customer receives lease payment for roof • Third party likely will perform actual installation Several solar panel providers projectcosts approaching “grid parity” within next 2-3 years; until then subsidy and social support will be key * may need special investment vehicle to capture Federal ITC

6. Germany: ~1,000 MW in 2006 United States: ~100 MW in 2006 Solar programs are all about will, not the resource Source: EPRI

7. Renewables: Great potential; remote from load Class 6 & 7 Potential Source: Levitan & Associates

8. The “Pickens Plan” Develop midwestern wind Develop long distance high voltage transmission to wheel power to load centers Replace natural gas generation with wind Use displaced gas to fuel natural gas vehicles Reduce dependence of foreign oil Where should we go from here? FROM …

9. Where should we go from here? …TO The “Robb Plan” • Expand funding and create the right incentives for conservation to reduce load growth • Develop local renewables and transmission to wheel renewables and hydro power from northern New England and Canada to southern load centers to meet growth and displace fossil generation • Develop smart infrastructure (PHEV, DG and AMI) • Substantially reduce carbon emissions and improve air quality

10. Where should we go from here? …OR TO The “Raab Plan” • Expand funding and create the right incentives for conservation to reduce load growth • Develop local renewables and transmission to wheel renewables and hydro power from northern New England and Canada to southern load centers to meet growth and displace fossil generation • Develop smart infrastructure (PHEV, DG and AMI) • Substantially reduce carbon emissions and improve air quality