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March 29, 2019 | Worcester, MA

March 29, 2019 | Worcester, MA. Norman Sproehnle. (413) 540-4755 | NSPROEHNLE@iso-ne.com. FCA 14: Fuel Security Review of Retirement De-List Bids. Forward Capacity Auction 14 (FCA 14): Fuel Security Review Inputs Development.

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March 29, 2019 | Worcester, MA

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  1. March 29, 2019 | Worcester, MA Norman Sproehnle (413) 540-4755 | NSPROEHNLE@iso-ne.com FCA 14: Fuel Security Review of Retirement De-List Bids Forward Capacity Auction 14 (FCA 14): Fuel Security Review Inputs Development

  2. At the March 11 Reliability Committee meeting, the ISO reviewed the inputs to the FCA 14 fuel security reliability review and stakeholders provided feedback on several inputs • Following the meeting, additional feedback was received from stakeholders • At today’s meeting, the ISO will address the stakeholder feedback and highlight updates to the inputs • The ISO will propose changes to PP10-I at the next scheduled RC meeting • Pursuant to Tariff Section III.13.2.5.2.5A(f), participants that have submitted a Retirement De-List Bid will be notified by the ISO if their resource is needed for fuel security reliability reasons by June 6, 2019

  3. Continued Discussion OF fuel security reliability review: Static INPUTS TO FCA 14

  4. Comparison of Static Inputs from FCA 13 to FCA 14 • Below is a summary of some of the changes to the static inputs from FCA 13 to FCA 14, further details on these changes are discussed in the upcoming slides *Value has changed since March 11 RC discussion of FCA 14 inputs to fuel security review **Between updated FCA 14 inputs and FCA 13 inputs

  5. Winter 2023/2024 Peak Load and Energy Profile • As noted at the March 11 meeting, the hourly demand levels from winter 2014/2015 will be adjusted* to the 2019 CELT winter net peak load forecast, which is in its final stages of development • Based on the draft winter peak demand forecast that has been provided to the Load Forecast Committee, the winter 2023/2024 90/10 net peak load forecast is projected to be 20,385 MW** (to be used for the FCA 14 fuel security reliability review) and the winter 2023/2024 50/50 net peak load forecast is projected to be 19,654 MW** (provided for informational purposes) *The projected forecast ratio used to create the energy profile load shape was0.9904 **Values have changed since March 11 RC discussion of FCA 14 inputs to fuel security review, these values represent the 2023/2024 net forecasted 90/10 and 50/50 load as provided to the Load Forecast Committee

  6. Local Distribution Company (LDC) Gas Demand • Stakeholders noted that it would be helpful to have additional background on the methodology used by ICF to develop the LDC gas demand forecast, clarification on changes from past practices used to develop this forecast, and further details on the forecast itself • The methodology ICF used to generate the LDC gas demand forecast has not changed from previous studies • ICF reviewed the public utility/service commission (PUC/PSC) websites for each of the six New England states to locate the most recently filed Integrated Resource Plans (IRPs) for each utility • The IRPs provide projections for both annual gas demand and peak winter day (design day) gas demand for the utility’s firm customers • Below is a table comparing FCA 13 and FCA 14 ICF supplied peak winter demand values

  7. Gas Source Capacity from PipelinesBaseline Natural Gas Infrastructure as of March 2019 • Based on ICF’s analysis of each pipeline’s Index of Customer (IOC) data from the first quarter of 2019, the firmly contracted pipeline capacity into New England on existing pipelines currently totals 3.75 Bcf/d *Total may not equal sum due to independent rounding

  8. Gas Source Capacity from PipelinesProjected Natural Gas Infrastructure Expansions • ISO is also accounting for the following pipeline expansion projects based on ICF’s research: • Atlantic Bridge • Increases Algonquin Transmission System overall capacity to 1.91 Bcf/d • In service by November 2019 • Portland Xpress Project Phase 2 and Phase 3 • Increases Portland Natural Gas Transmission System overall capacity to 0.28 Bcf/d • In service by November 2020 • Westbrook Xpress Project Phase 1 • Increases Portland Natural Gas Transmission System overall capacity to 0.32 Bcf/d • In service by November 2020

  9. Gas Source Capacity from PipelinesProjected Natural Gas Infrastructure Expansions, cont. • The capacity additions from the Atlantic Bridge, Portland Xpress and Westbrook Xpress expansions increase the overall capacity into the region to 3.92 Bcf/d *Total may not equal sum due to independent rounding

  10. Gas Source Capacity from PipelinesIncorporating Natural Gas Entitlements • As noted at the March 11 meeting, Iroquois pipeline has contract entitlements moving gas through Algonquin to Long Island, NY of 0.33 Bcf/d, which the ISO has observed over past winters • These firm contracts have a receipt point of Brookfield (AGT to IGT interconnect) and associated delivery points on Long Island / New York City • Have been in place since the 2008 Brookfield interconnection project was brought into service • Upon further scrutiny and recent verification from ICF, the ISO has confirmed that these ‘pass-through’ contracts should be netted from supply to New England • This ‘pass-through’ out of New England lowers the overall pipeline gas capacity total to the region to 3.59 Bcf/d* *Value has changed since March 11 RC discussion of FCA 14 inputs to fuel security review

  11. Satellite LNG Injection • Stakeholders requested additional information on the changes to the calculation of satellite LNG injections, especially the change in the HDD trigger • The winter 2017/2018 actual non-power gas demand data was collected from publicly available bulletin boards and compared to the ICF LDC gas demand curve • Satellite LNG injection will commence at 40 Heating Degree Day (HDD)* as displayed in the graph to the right *Value has changed since March 11 RC discussion of FCA 14 inputs to fuel security review

  12. Satellite LNG Injection, cont. • ISO, in collaboration with ICF, expanded the number of observations for satellite LNG injection to include the last six winters to develop a better fit of the observed data • Because satellite LNG injections are not reported, they have to be derived (e.g., implied injection) through surveys and actual non-power gas demand data • Satellite LNG Vaporization = 0.4355*(HDD)^2−3.113*(HDD) −572.3 * *Value has changed since March 11 RC discussion of FCA 14 inputs to fuel security review

  13. Utilization of Gas Supply vs. LDC Demand • At the March 11, 2019 RC meeting, a stakeholder requested an update to the graph below to better understand gas supply versus gas demand utilized within the model

  14. Oil Unit Inventory and Replenishment Levels • Several stakeholders requested that the ISO give further consideration to the oil unit inventory and replenishment level assumptions given the Interim Compensation Treatment project (WMPP ID: 133) and the infrastructure utilized by facilities to replenish their fuel supply • Based on this stakeholder feedback, Residual Fuel Oil (RFO) resource inventories will be updated to 69.6%* of maximum inventory levels • This percentage of maximum inventory is consistent with the beginning of winter inventories 2017/2018, which was the last year of the winter reliability program • ISO will continue to replenish oil-only resources at a proxy rate of one tanker truck per hour when the reorder level is reached *Value has changed since March 11 RC discussion of FCA 14 inputs to fuel security review

  15. PV Forecast and Profile • At the March 11 meeting, the ISO noted that the 2019 photovoltaic (PV) forecast would be utilized in this analysis once the details were presented to the Planning Advisory Committee (PAC) • The 2019 PV forecast was presented at the March 21 PAC meeting • The PV forecast-nameplate is 5,513.8 MW* as presented to the March PAC meeting (sum of the Forward Capacity Market, Energy only resources and the Behind-the-meter values) • An additional 268.9 MW of nameplate PV will be added to account for resources backed by state contracts • The total PV nameplate to be utilized will be 5,782.7* MW *Value has changed since March 11 RC discussion of FCA 14 inputs to fuel security review

  16. Onshore Wind Nameplate and Profiles • A stakeholder requested including in the wind resource nameplate of a recently commercial onshore wind facility in Johnston, RI • The Johnston Landfill Wind facility consists of seven turbines with a nameplate of 3 MW each • The 21 MW nameplate from these assets will be added to the onshore wind total MW nameplate *Value has changed since March 11 RC discussion of FCA 14 inputs to fuel security review

  17. Offshore Wind Nameplate and Profiles • A stakeholder requested that the method for determining whether to include a resource in the fuel security study be revisited in light of recent developments for several offshore wind facilities • A further discussion of this consideration is covered in the Certifications of Contractual Commitment section of this presentation • Based on stakeholder feedback, ISO will simulate three scenarios displaying the sensitivity of offshore wind • The first scenario will simulate 197 MW of offshore wind and will be utilized for the fuel-security reliability review • The second scenario will simulate 829 MW of offshore wind, to account for additional capacity of a new offshore wind facility that has not yet cleared in a capacity auction • The third scenario will simulate 1,529 MW of offshore wind, which reflects the additional of the uncleared capacity of a second new offshore wind facility • The second and third scenarios will be informational

  18. Equivalent Forced Outage Rate Demand (EFORd) • A stakeholder requested that the methodology for EFORd application be better described • ISO will utilize unit specific EFORd as applied in the calculation of the Install Capacity Requirement (ICR) • The asset specific EFORd is derived from GADS data and will be utilized to reduce the asset’s winter SCC in the fuel-security reliability review *Values have changed since March 11 RC discussion of FCA 14 inputs to fuel security review

  19. Pumped and Battery Storage • A stakeholder requested further background on how the Seasonal Claimed Capability value is represented for battery storage facilities • The current observed behavior of battery storage facilities on the system is as a regulation market participant • To reflect that battery storage will provide a broader range of services (energy, reserves, capacity) and will operate as limited energy resources (LERs), they are being modeled using the method applied to pumped storage facilities (which also operate as LERs)

  20. Conventional Hydro-electric Generation • A stakeholder requested consideration for shaping the output of the conventional hydro-electric generation • ISO has created a hydro-electric generation hourly profile to match the observed resource pattern from the 2014/2015 winter • The SCC of the hydro-electric generation will be applied to the hourly profile in a similar manner as PV and wind resources *Value has changed since March 11 RC discussion of FCA 14 inputs to fuel security review

  21. Certifications of Contractual Commitment • A stakeholder requested that the method for determining whether to include a resource subject to a contract under a state procurement be revisited in light of recent developments for several offshore wind facilities • An executed contract is necessary to provide reasonable assurance that future projects will be completed • Therefore, consistent with current requirements, a binding and enforceable contract to be in-service by December 1 of the associated Capacity Commitment Period is required Return to Offshore Wind Nameplate and Profiles section

  22. Continued Discussion OF fuel security reliability review: variable INPUTS TO FCA 14

  23. Imports • A stakeholder requested that the ISO examine what the import levels were during the past six winters at times of high prices and consider an alternative methodology for the import levels associated with when the average temperature at Bradley airport was 17 degrees or less • ISO has reviewed tie-line imports as compared to New England HUB LMP on cold days and there is not a conclusive correlation between the variables • ISO will continue to use tie-line import values as described in PP-10, Appendix I, Section 3.B Variable Inputs

  24. Tie-Line Schedules for 1/31/2019 with a HDD of 62 • Parentheses are imports into New England • Yellow highlight is peak hour of the day • Green highlight is maximum import for the day

  25. Tie-Line Schedules for 2/1/2019 with a HDD of 58 • Parentheses are imports into New England • Yellow highlight is peak hour of the day • Green highlight is maximum import for the day

  26. Combined Cycle Dual-Fuel Resource Tank Inventory • Several stakeholders requested that the ISO give further consideration to the multipliers used for the onsite fuel-storage tank given the Interim Compensation Treatment project (WMPP ID: 133) • The Distillate and Residual Fuel Oil units winter replenishments: • 2016/2017 was 3.3% of maximum inventory • 2017/2018 was 25.2% of maximum inventory • 2018/2019 was 5.3% of maximum inventory • This replenishment is well below the modeled 1.25 and 2.0 multiplier of onsite fuel-storage • ISO will continue to use dual-fuel resource tank inventory values as described in PP-10, Appendix I, Section 3.B Variable Inputs

  27. Conclusion • Several variable changes from FCA 13 to FCA 14 improve system fuel security • Lower winter LDC gas demand forecast • Increase Seasonal Claimed Capabilities • Increase in total PV, onshore and offshore wind nameplate • Increase in Demand Response • Lower EFORd • Increase to pumped storage capability • The ISO will propose changes to PP10-I at the next scheduled RC meeting • Pursuant to Tariff Section III.13.2.5.2.5A(f), participants that have submitted a Retirement De-List Bid will be notified by the ISO if their resource is needed for fuel security reliability reasons by June 6, 2019 • If committee members have a potential amendment they would like to discuss at the upcoming RC meeting, please contact the committee Secretary (mlyons@iso-ne.com) to request time on the agenda

  28. Stakeholder Schedule

  29. Norman Sproehnle (413) 540-4755 | NSPROEHNLE@iso-ne.com

  30. APPENDIX Regional Pipeline Map

  31. Regional Pipeline Map • The regional pipelines are comprised of: • Maritimes and Northeast Pipeline • Algonquin Gas Transmission Pipeline • Tennessee Gas Pipeline • Iroquois Gas Transmission System • Portland Natural Gas Transmission System • The Maritimes and Northeast pipeline is considered internal to the region and not included in the overall capacity • The Algonquin, Tennessee, Iroquois, and Portland Natural Gas Transmission pipelines remaining pipelines supply New England with natural gas

  32. LDC Demand

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