TECHNICAL REPORT Analytical Basis for Critique of Impacts from New England Clean Energy Connect (NECEC) Prepared by: Energyzt Advisors, LLC May 2018 Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) DISCLAIMER Energyzt Advisors, LLC ("Energyzt") is a global collaboration of energy experts who create value for our clients through actionable insights. Combining deep industry expertise with state of the art analytical capabilities, we help companies make informed business decisions. This report is an independent assessment that was prepared by Energyzt and is based, in part, on publicly-available information which was not originated by or within the control of Energyzt. As such, Energyzt has made reasonable efforts to apply standard industry practice in assessing the applicability of the information for its proposed use, and has checked the veracity and completeness of such information to the best of its ability, but makes no claims as to its accuracy and has not performed an independent audit of data procured from the public domain. Where such information is relied upon, the source or sources are referenced. In conducting the analysis, Energyzt has made certain assumptions with respect to conditions, events, and circumstances that may occur in the future. Where applicable, these assumptions and source materials are stated and described in the report. The methodologies used in performing the analysis are based on public projections and follow generally accepted industry practices. While we believe that such methodologies as summarized in this report are reasonable and appropriate for the purpose for which they are used, depending upon conditions, events, and circumstances that occur but are unknown at this time, actual results may differ materially from those embedded in the public projections and Energyzt’s scenarios that use those projections. Accordingly, Energyzt makes no assurances that the projections or forecasts will be consistent with actual results or performance. Neither this report, nor any information contained herein or otherwise supplied by Energyzt in connection with this report, shall be used in connection with any proxy, proxy statement, and proxy soliciting material, prospectus, Securities Registration Statement, or similar document. Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) TABLE OF CONTENTS 1. INTRODUCTION............................................................................................................................ 1 2. BACKGROUND .............................................................................................................................. 2 2.1. The Request for Proposal Process ........................................................................................... 2 2.2. The NECEC Proposal ............................................................................................................... 3 3. UPLAN MARKET ANALYSIS ....................................................................................................... 4 4. ENERGY MARKET CONDITIONS ............................................................................................... 7 4.1. Electricity Prices ....................................................................................................................... 7 4.2. Capacity Prices ....................................................................................................................... 10 4.3 Ancillary Services.................................................................................................................... 11 4.4. Natural Gas Prices.................................................................................................................. 13 4.5. Carbon Prices.......................................................................................................................... 17 5. TRANSMISSION CONGESTION ................................................................................................ 18 6. IMPACT ON ENERGY PRICES ................................................................................................... 24 7. IMPACT ON MAINE’S POWER PLANTS ................................................................................. 25 7.1. Dispatch and Plant Output.................................................................................................... 26 7.2. Operating Margins ................................................................................................................. 29 8. MAINE PLANTS AT RISK OF RETIREMENT ........................................................................... 31 8.1. Key Indicators ........................................................................................................................ 31 8.2. Lost Property Taxes ............................................................................................................... 33 8.3. Lost Jobs .................................................................................................................................. 35 9. DEFERRED INVESTMENT IN MAINE RENEWABLES ........................................................... 37 9.1. Maine Renewables in the Interconnection Queue ............................................................. 37 9.2. Maine’s Offshore Wind Projects .......................................................................................... 43 10. CARBON EMISSIONS................................................................................................................... 44 10.1. Section 83D Contractual Obligations .................................................................................. 45 10.2. Analyzing UPLAN Results.................................................................................................. 46 11. CONCLUSION............................................................................................................................... 47 Appendix A: Assumptions Appendix B: Bibliography Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) LIST OF FIGURES Figure 1: Representation of Supply Curves for Each Scenario.......................................................... 6 Figure 2: Energy Prices in Maine ......................................................................................................... 8 Figure 3: Historical Price Differentials between Maine and New Hampshire ................................ 9 Figure 4: Components of Historical Average Real-time Price Differentials..................................... 9 Figure 5: Forward Capacity Market Demand Curves and Clearing Prices.................................... 10 Figure 6: Daily 30-Minute Reserve Requirements versus Estimates .............................................. 12 Figure 7: 10-Minute Reserve Requirement and Units Committed.................................................. 13 Figure 8: Maine Citygate Natural Gas Prices ................................................................................... 14 Figure 9: EIA Annual Energy Outlook Natural Gas Price Projections ........................................... 15 Figure 10: Henry Hub Natural Gas Price Futures ............................................................................ 16 Figure 11: Historical RGGI Prices ...................................................................................................... 17 Figure 12: Map of Proposed NECEC Pathway ................................................................................. 19 Figure 13: Map of ISO-NE Interfaces ................................................................................................ 20 Figure 14: 2017 Flows at Surowiec-South Interface with NECEC................................................... 21 Figure 15: 2017 Flows at Maine-New Hampshire Interface with NECEC ..................................... 22 Figure 16: Number of Hours Congestion is Projected (2023) .......................................................... 23 Figure 17: Congestion on ME–NH Interface: Daymark Assumptions ........................................... 23 Figure 18: Congestion on ME-NH Interface: Current Conditions .................................................. 24 Figure 19: NECEC Impact on 2023 Wholesale Energy Prices ......................................................... 25 Figure 20: Maine Generation Fleet .................................................................................................... 26 Figure 21: Historical Dispatch of Maine Generators ........................................................................ 27 Figure 22: Comparison of Maine Generation Output by Scenario ................................................. 28 Figure 23: Comparison of New York to Maine Natural Gas-fired Generation .............................. 29 Figure 24: Change in Operating Margins by Fuel Type .................................................................. 30 Figure 25: Maine Steam Generating Units at Risk of Retirement ................................................... 33 Figure 26: Maine Generating Candidates for Early Retirement under CASPR ............................. 34 Figure 27: Summary Statistics of Contractors at a Combined Cycle Plant ..................................... 36 Figure 28: Maine Generation Queue ................................................................................................. 38 Figure 29: ISO-NE Queue Positions compared to NECEC .............................................................. 38 Figure 30: Number of Projects and Capacity behind NECEC ......................................................... 39 Figure 31: Levelized Cost of New Entry of Different Generation Technologies............................ 42 Figure 32: Economic Impacts during Construction – NECEC vs. Aqua Ventus ........................... 43 Figure 33: Economic Impacts during Operations – NECEC vs. Aqua Ventus............................... 44 Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved TECHNICAL REPORT Analytical Basis for Critique of Impacts from New England Clean Energy Connect (NECEC) 1. INTRODUCTION New England Clean Energy Connect (NECEC) is a proposed transmission line chosen under the Massachusetts Section 83D Request for Proposal process to deliver clean energy from existing hydroelectric energy from Québec into Massachusetts. The proposal was submitted jointly by Hydro-Québec and Central Maine Power (“CMP”). CMP is responsible for building and operating the 145-mile portion of the transmission line within Maine that would bring energy from Hydro-Québec’s system at Windsor, Québec to Lewiston, Maine under a twenty-year contract with Massachusetts electric utilities. The proposed transmission line requires a Certificate of Public Convenience and Necessity from the Maine Public Utility Commission (“Maine PUC”) for purposes of siting. As part of the its submission requesting a certificate, CMP submitted two reports pertaining to the benefits of the proposed transmission project to Maine: • Daymark Report: Daymark Energy Advisors, “NECEC Transmission Project: Benefits to Maine Ratepayers, Quantitative and Qualitative Benefits,” dated September 27, 2017 • MCBER Study: Maine Center for Business and Economic Research, University of Southern Maine, Charles Colgan and Ryan Wallace, “The Economic and Employment Contributions of the New England Clean Energy Connect” This technical report analyzes and critiques the claimed benefits described in those reports. Section 2 provides a brief background on the context and proposed design of the project. Section 3 describes the UPLAN scenarios and cases run to assess the impact on Maine. The basis for the assumptions used in the scenario reflecting Current Conditions is summarized in Section 4. Section 5 presents the results of the model runs with respect to transmission congestion. Section 6 quantifies the impact on energy prices due to NECEC under each scenario. Section 7 quantifies the impact on Maine generators. Section 8 identifies Maine plants at risk of retirement. Section 9 discusses Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) how NECEC will impact potential renewable investment in Maine and Section 10 summarizes the impact on carbon emissions. Section 11 presents a conclusion. Appendix A provides more detail on the assumptions incorporated into the UPLAN analysis. Appendix B provides a list of documents and data sources relied upon. The conclusion is that NECEC’s claimed benefits are illusory, would be less than what was calculated, and would come at a significant cost to Maine’s in-state generators and renewable resource industry. Faced with lower energy prices, congestion and displacement, Maine’s generation industry will face early retirements and deferred renewable investment with associated lost jobs, lost property taxes and lost opportunities. 2. BACKGROUND This section provides a brief summary of the NECEC project in order to provide context for the subsequent discussion on the potential impacts of the project on Maine residents. 2.1. The Request for Proposal Process In August 2016, Massachusetts passed legislation signed by the Governor, that requires the Commonwealth’s electricity distribution utilities to engage in a competitive Request for Proposal (“RFP”) process for procurement of clean energy. The procurement process includes solicitations for up to 1,200 MW of base load hydroelectric power and/or a combination of hydroelectric power and Tier 1 renewables such as onshore wind (section 83D). The legislation also allows for up to 1,600 MW of offshore wind to be procured (section 83C). The distribution companies would enter into the power purchase agreements only if the Massachusetts Department of Public Utilities found the terms to be cost-effective long-term contracts for clean energy. If the contracts are entered into at their maximum capacity, nearly one-third of Massachusetts load would be supplied by contracted energy for 20 years. 1 On March 31, 2017, Massachusetts issued a request for proposal under section 83D for Ron Gerwatowski, “Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues,” October 21, 2016, http://www.greenribboncommission.org/wp-content/uploads/2016/10/PracticalImplications-of-the-Mass.-Omnibus-Energy-Bill-and-Other-Energy-Market-Issues.pdf 1 Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) “Incremental Clean Energy” to be delivered to Massachusetts.2 On July 27, 2017, proposals from 46 bidders were submitted, many of which included more than one option for consideration. The options for clean energy include wind, wind with hydroelectric firming, and 100 percent firm hydroelectricity options.3 The first quarter of 2018 included determination of the winning projects and contract negotiations. After initially selecting Northern Pass Transmission (NPT),4 failure of the New Hampshire Site Evaluation Committee to approve the application caused the Section 83D evaluation committee to offer the award to the second choice, NECEC. 2.2. The NECEC Proposal The NECEC bid is composed of three components to be delivered by three different entities: • Maine Transmission: HVDC transmission line constructed in Maine from Québec to Lewiston, Maine to be built and operated by CMP at an estimated cost of $950 million. • Québec Transmission: Transmission upgrades and lines located in Québec, Canada to be built and operated by Hydro-Québec’s transmission subsidiary, TransÉnergie. 5 Massachusetts Clean Energy website, https://macleanenergy.files.wordpress.com/2017/03/83d-rfp-andappendices-final.pdf 2 3 Ibid., https://macleanenergy.com/83d/83d-bids/ The original winner, Northern Pass Transmission, was a proposal submitted by Eversource and HydroQuébec to deliver 1,200 MW of transmission capacity and 1,090 MW of associated energy, from existing hydroelectric resources in Québec via a 192-mile HVDC transmission line from the Canadian border through New Hampshire to Franklin, NH for conversion to a new AC transmission line that would deliver the energy to an existing substation in Deerfield, NH (http://www.northernpass.us/projectoverview.htm). After Massachusetts negotiated and approved the project, the New Hampshire Site Evaluation Committee unanimously voted to deny the application for Northern Pass for failing to meet the burden of showing that the line would not interfere with the development of the region. 4 Hydro-Québec separated its generation, transmission and distribution functions into three separate entities following the passage of FERC Order No. 888. Although Québec is not subject to FERC jurisdiction, FERC Order No. 888 contains a reciprocal clause which allows for open access to transmission lines in the United States only if the other jurisdictions that would like to sell into the U.S. 5 Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) • Energy Supply: Firm energy supply to come from Québec’s system mix supplied by Hydro Renewable Energy, Inc. (“HRE”), a subsidiary of Hydro-Québec Power. The request for a Certificate of Public Necessity and Convenience before the Maine PUC focuses on the transmission project that would be located in Maine. According to the NECEC Section 83D Application Form, the NECEC Transmission Project consists of approximately 199 miles of overhead transmission line, 145 miles of which will be within existing transmission rights-of-way, and 53.5 miles of newly developed rightsof-way.6 The line would deliver up to 1,200 MW of energy from hydroelectric generation resources in Québec. According to the NECEC section 83D submission, addition of a new tieline between New England and Québec allows for new transmission delivery capacity into the region. No capital investment in new hydroelectric generation or upgrades is contemplated as part of the proposal.7 The purported benefits associated with the project, however, would rely upon the energy to be supplied via that transmission line from HRE. Therefore, a critique of NECEC benefits cannot ignore the energy supply component of the proposed transaction. 3. UPLAN MARKET ANALYSIS In order to understand the impact of NECEC on Maine, Energyzt directed the Calpine UPLAN modeling team to update assumptions for 2023, the first full year in which NECEC is proposed to be operational. Using 2023 allows for insight into potential impacts of NECEC under different market conditions without the uncertainty associated with longer-term projections. The Calpine modeling team includes six people with advanced degrees in technical fields. The group supports key commercial functions including: trading, origination, markets operating in accordance with the open access rules to provide the same FERC, FERC Order No. 888, https://www.ferc.gov/legal/maj-ord-reg/land-docs/order888.asp 6 NECEC Section 83D RFP Application Form, p. 101. 7 Ibid, pp. 62 and 82. Although new hydroelectric generation units may be added to the HQ Hydropower Resources portfolio in the future, no new facilities or capital investments for hydroelectric generation units are required as part of this Proposal. Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) development, market policy and regulatory affairs across Calpine’s North American footprint. The groups’ primary tool for price and congestion forecasting is the production cost model UPLAN. The group uses UPLAN to forecast prices and congestion from one month to several years into the future. UPLAN was used to run three scenarios to illustrate the impact of NECEC under different market conditions: 1) Current Conditions: Using up-to-date projections on supply, demand, renewable build-out and natural gas prices based on futures, this scenario in 2023 reflects current conditions and expectations. Carbon prices are assumed to be $15 per ton for Massachusetts and $5 per ton for the rest of the New England states, reflecting recently-traded RGGI prices.8 2) Daymark Assumptions: The Daymark Assumptions reflects key assumptions in the Daymark model runs, including a slightly higher renewable build-out than what is assumed by Calpine, natural gas prices at the assumed Daymark level (i.e., 2016 EIA Annual Energy Outlook reference prices), and an assumed carbon price of $15 per ton. The analysis does not attempt to match Daymark’s projection specifically for 2023, but does reflect the longer-term assumptions incorporated into Daymark’s analysis. 3) Daymark Assumptions with Lower Gas Prices: This scenario reflects the key assumptions used by Daymark, changing only the natural gas price to reflect current expectations from market futures used in the Current Conditions case. The difference in these assumptions results in different supply curves for New England. Figure 1 provides an approximation of how these supply curves compares between Current Conditions and the Daymark Assumptions. Current Conditions represent a flatter supply curve with the majority of the marginal cost of production around $40/MWh. The Daymark Assumptions, which have higher natural gas and carbon prices, results in a steeper curve that is positioned at a higher price level with the majority of the units marginal cost of production ranging from $40 to $60 / MWh. The Massachusetts has taken a more aggressive approach to in-state carbon reductions which includes mandatory carbon emissions reductions from in-state fossil-fuel generators. These new rules promulgated under under 310 CMR 7.74 has resulted in a near-term shortage that drive prices above $15 / ton. 8 Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from$15 RGGI, $5 Gas New England ISO Supply Stack New England Clean Energy Direct (NECEC) third scenario, which simply adjusts the natural gas price lower in the Daymark Assumptions, is not shown, but falls in between the other two scenarios. Figure 1: Representation of Supply Curves for Each Scenari9 Current Conditions (Flatter Supply Curve) $5 RGGI, $5 Gas New England ISO Supply Stack Daymark Assumptions (Steeper Supply Curve) $15 RGGI, $6 Gas New England ISO Supply Stack Source: Energy Velocity Suite, Ventyx Supply Curves with natural gas and carbon New England ISO Supply Stack prices as assumed in the alternative UPLAN scenarios $15 RGGI, $5 Gas UPLAN models a topography that includes key portions of the Eastern Interconnect, including New England and key markets such as New York, Mid-Continent ISO (MISO), PJM Interconnect, Ontario and their surrounding areas. Québec’s transmission system, which is asynchronous to the Eastern Interconnect, is represented as interties with scheduled energy flows based on a five-year average of historical flows that is used by Calpine as part of its normal modeling assumptions. For purposes of modeling the Québec interties with U.S. markets in 2023, hourly flows New England ISO Supply Stack were established as follows: $15 RGGI, $6 Gas • Base Case: Calpine’s standard assumptions. • NECEC Incremental Case: Base Case intertie flows with hourly flows from These supply curves provide a representation of the relative supply curve assumed in each scenario based on the Energy Velocity Suite supply curve function. In the UPLAN model, the actual supply curve used for each hour varies according to plant outages (planned and unplanned), assumed level of renewables available in each hour, imports and fossil fuel heat curve assumptions. 9 Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) NECEC added at Lewiston, Maine in each hour at 981 MW per hour. • NECEC Constant Exports Case: Base Case flows with NECEC hourly flows of 981 MW per hour and the total annual Hydro-Québec exports into the United States held constant with the Base Case by reducing hourly flows from New York based on the lowest priced hours first.10 The assumption of 981 MW per hour is consistent with Daymark’s assumptions, and reflects around 8.6 TWh per year, slightly above the minimum annual contractual requirement of 8.5 TWh per year, but below the maximum contracted amount of 9.4 TWh per year.11 Market sales from the remaining capacity on the intertie were set at zero. 4. ENERGY MARKET CONDITIONS In order to assess the reasonableness of market model assumptions and outputs, it is important to understand market conditions and industry trends. Historical conditions also can be used to test the accuracy of the model. Calpine performs its own backcasts and calibrations to ensure that UPLAN reflects historical outcomes when historical assumptions are applied. 12 This section describes recent energy market conditions, which serve as the basis for the scenario representing Current Conditions, and provides a comparison with UPLAN results to ensure consistency with actual experience. 4.1. Electricity Prices Wholesale energy prices in Maine correspond to natural gas prices and tend to spike in the winter when natural gas prices increase. For the past three years, however, winters have been fairly mild and real-time electric energy prices have averaged around $32.81 / 10 No changes were assumed for the New Brunswick Interties. 11 Section 83D RFP Application Form, submitted by HRE as part of the NECEC bid. As market models project further out, especially when a market is in transition or significant changes in assumptions need to occur, backcasts provide increasingly limited value. For near-term projections (e.g., within five to ten years), the ability to replicate historical results provide assurance that projections are consistent with recent experience. 12 Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) MWh, which includes a reduction for congestion and losses.13 During this time period of 2015 – 2017, congestion charges occurred in roughly 12 percent of the hours. Figure 2: Energy Prices in Maine Maine's Historical Real Time Energy Prices 2013-2018 $200 Monthly Energy Price ($/MWh) $175 $150 $125 $100 $75 $50 $25 $0 Source: Energyzt Analysis of ISO-NE data, https://www.iso-ne.com/isoexpress/web/reports/pricing/-/tree/zone-info In general, energy prices in Maine tend to be lower than energy prices in New Hampshire (Figure 3). This average price consists of an energy price of $34.50 / MWh, a reduction for line losses of $0.78 / MWh and congestion charge reduction of 0.91 / MWh, but varies by year. 13 Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) Figure 3: Historical Price Differentials between Maine and New Hampshire Source: Energyzt analysis of ISO-NE data Negative price differentials between Maine and New Hampshire reflect differentials in losses and congestion between the two states. Over the past five years, the congestion charge component has been an increasing portion of the real-time price differential between Maine and New Hampshire. In 2017, congestion accounted for more than half of the difference in real-time prices (Figure 4).14 Figure 4: Components of Historical Average Real-time Price Differentials Component Locational Marginal Price Energy Charge Congestion Charge Losses Charge % Congestion Charge 2013 (1.92) (0.24) (1.69) 2014 (2.43) (0.54) (1.89) 2015 (0.97) (0.19) (0.79) 2016 (0.79) (0.18) (0.61) 2017 (1.40) (0.75) (0.64) 12% 22% 19% 23% 54% Real-time prices are indicative of actual congestion. Day-ahead prices reflect locational dispatch and transmission constraints modeled by ISO-NE under assumed conditions based on the day-ahead bids. 14 Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) 4.2. Capacity Prices In New England, ongoing changes to market rules have resulted in a steady decline of capacity market prices over the past three years. Forward Capacity Auction (”FCA”) prices have fallen from $9.551 per kw-month during FCA9 to only $4.613 per kw-month in the most recent FCA12. In general, lower prices in capacity markets signal that the market does not need to attract new capacity. However, nearly all of this difference can be attributed to ISO-NE’s adoption of different demand curves; use of the same demand curve throughout the period would have resulted in a slight increase in market clearing prices (Figure 5). Figure 5: Forward Capacity Market Demand Curves and Clearing Prices Source: Energyzt analysis of ISO-NE Forward Capacity Market demand and prices, https://www.iso-ne.com/isoexpress/web/reports/auctions/-/tree/fca-results The Forward Capacity Market differentiates the market geographically, often clearing different prices by zone and at the interties. For example, during the most recent auction FCA12, the New England Interties required an additional round to clear and Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) settled at lower prices of $3.701 / kW-month at the Phase I/II HQ Excess Interface and at $3.155 / kW-month at the New Brunswick Interface in Maine. 15 NECEC’s section 83D application form claims that it would be able to qualify for 1,200 MW in the Forward Capacity Market.16 For purposes of modeling the impact of NECEC on ISO-NE’s capacity market, Daymark assumed that a substantial amount of this capacity would qualify. The Testimony of William S. Fowler, however, explains why none of NECEC would qualify to bid into the Forward Capacity Market and, if it did, he believes that the equivalent amount of capacity would have to be retired in Maine. Section 8.1 of this report analyzes which plants would be most likely to retire under New England’s Competitive Auctions with Sponsored Policy Resources (CASPR) construct. 4.3. Ancillary Services ISO-NE operates a number of ancillary services markets, such as reserves and regulation. These services ensure system reliability by having generation and other resources available to cover system issues such as a power plant failure or transmission line outage. Ancillary services are bought and sold in ISO-NE’s wholesale electricity markets and generally are provided by generators or demand resources that are placed in standby, ready to cover system events. For the most part, NECEC itself would not provide ancillary services – it is meant to deliver firm energy.17 However, Daymark claims without quantifying the impact that NECEC would displace other generators, thereby increasing potential supply for ancillary services and lowering prices. Historical data indicates that the impact is likely to be negligible. Furthermore, to the extent NECEC results in plant retirements, that would offset the benefit as those plants no longer would be available to offer ancillary services. 15 https://www.iso-ne.com/static-assets/documents/2018/02/fca_12_result_report.pdf 16 NECEC Section 83D Request for Proposal Application Form, pp. 39, 187. These upgrades ensure that the NECEC Clean Energy Generation will meet the Forward Capacity Auction Qualifications (FCAQ) and will be deliverable to the New England Control Area, as required in the RFP (p. 39). The remaining capacity that is available for use by HRE could be used to bid into energy or ancillary services markets. However, the Daymark analysis focuses on the contracted portion of NECEC capacity. 17 Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) Figure 6 illustrates the oversupply of daily 30-minute reserve requirements as reported in ISO-NE morning reports. Figure 6: Daily 30-Minute Reserve Requirements versus Estimates ISO-NE 30-Minute Reserve Requirement and Reserve Estimates (2015 - 2017) 5,000 4,500 Reserves (MW) 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Thirty Minute Reserve Requirement Thirty Minute Reserve Estimate Source: Energyzt analysis of ISO-NE Morning Reports The same argument applies to spinning reserves which has hovered between 1,500 MW and 2,000 MW the past few years (Figure 7). Generally, there are enough spinning reserves on the system that incremental units do not need to be committed, and the number of days when that occurs has been declining over the past three years. The small size of this market would make any impact by NECEC negligible, and possibly more than offset by plant retirements. Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) Figure 7: 10-Minute Reserve Requirement and Units Committed ISO-NE 10-Minute Reserve Requirement (2015 - 2017) Reserves (MW) 5,000 4,500 10 Minute Reserve Requirement 4,000 Units Committed to Meet Minimum Operating Reserve and Replacement Reserve Requirements 3,500 3,000 2,500 2,000 1,500 1,000 500 0 33 days 19 days 12 days Source: Energyzt analysis of ISO-NE Morning Reports 4.4. Natural Gas Prices Natural gas prices drive energy prices in New England. They also affect the slope of New England’s supply curve and therefore the impact that NECEC would have on energy prices. Greater New England is located at the end of the primary natural gas pipelines serving the eastern United States. Maine is in an even more challenging location vis a vis gas pricing since Maine is unable to import any south-to-north supplies from the Tennessee and Algonquin pipeline systems. Surrounded by water to the east, New England relies on liquified natural gas (LNG) as one of its sources for natural gas. As a result, New England and Maine have experienced winter price spikes in natural gas which tend to translate into a steeper supply curve and higher energy prices. As a result of being unable to access gas via New England’s legacy pipeline infrastructure, Maine natural gas prices tend to be higher than prices in other New England states (Figure 8). Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) Figure 8: Maine Citygate Natural Gas Prices HISTORICAL CITYGATE NATURAL GAS PRICES Maine versus Rest of New England 2008 - 2017 Natural Gas Price ($/MMBtu) $25 $20 Maine Rest of New England $15 $10 $5 $0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: U.S. EIA, Historical Citygate Natural Gas Prices, https://www.eia.gov/dnav/ng/hist/n3050me3m.htm The projection of natural gas prices will be a key driver of how NECEC will impact energy prices. Since 1977, the EIA has issued an AEO each year projecting energy usage, supply and trends. 18 The natural gas price projections include a number of alternative scenarios and a reference case. For purposes of its benefits analysis, Daymark uses the U.S. EIA’s 2017 Annual Energy Outlook (AEO) reference case assumptions of natural gas price indices for the energy market benefits analysis; the economic analysis performed by MCBER assumes the 2014 AEO natural gas prices.19 Both projections already are outdated. The recently-issued 2018 Annual Energy Outlook Report’s 18 By law, the projection is based on existing laws and regulations. 19 Daymark Report, p. 44 of 98. Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) reference case is around $1/mmBtu lower than the basis for Daymark’s assumption (Figure 9). Figure 9: EIA Annual Energy Outlook Natural Gas Price Projections Source: EIA, 2018 Annual Energy Outlook, p. 63, https://www.eia.gov/outlooks/aeo/pdf/AEO2018.pdf The AEO 2018 Reference price is higher than where the market currently is projecting prices to be. Future natural gas prices would depend on a number of factors, including the number of LNG export facilities that become operational and the price of oil which impacts the level of oil production and associated natural gas supply. Futures prices for natural gas are trading at around $3/mmBtu, lower than the 2018 Reference Price, aligning more closely with the projection assuming “High Oil and Gas Resource Technology.” Given currently high oil prices, market expectations seem to anticipate high levels of natural gas production (and therefore lower natural gas prices) going forward (Figure 10). Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) Figure 10: Henry Hub Natural Gas Price Futures PROJECTED NATURAL GAS PRICES Monthly Futures Prices for Henry Hub 2018-2025 Natural Gas Price Futures ($/MMBtu) $5.00 $4.50 $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 Jan-25 May-25 Sep-24 May-24 Jan-24 Sep-23 May-23 Jan-23 Sep-22 May-22 Jan-22 Sep-21 May-21 Jan-21 Sep-20 May-20 Jan-20 Sep-19 May-19 Jan-19 Sep-18 May-18 $0.00 Source: CME Group, http://www.cmegroup.com/trading/energy/natural-gas/natural-gas.html Given the dominance of natural gas-fired generating units in the New England system mix, the higher natural gas prices are, the steeper the supply curve would be. The supply curve shift caused by NECEC would have a greater impact on energy prices with a steeper supply curve, and a lower impact with a flatter supply curve (e.g., lower natural gas prices). For purposes of understanding the impact of natural gas prices on Maine residents, the UPLAN analysis incorporated two different natural gas price projections: 1) Current Conditions: Natural gas prices used by Calpine as part of its regular market modeling efforts, which are based on futures markets and anticipated basis differentials; and 2) Daymark Assumptions: The AEO 2017 Reference price averaged over the period Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) of Daymark’s analysis.20 Each of these high-level assumptions were adjusted to reflect basis at local hubs and incorporated into the model on a monthly basis. New England details for each set of natural gas price assumptions are provided in Appendix A, Section A.2. 4.5. Carbon Prices The assumed carbon price also affects the slope of the New England energy supply curve. The higher the assumed carbon price, the steeper the supply curve for fossil fuel units, and therefore the bigger the impact of NECEC on energy prices. Alternatively, a lower carbon price would result in a lower impact. Figure 11: Historical RGGI Prices Regional Greenhouse Gas Initiative (RGGI) Historical Prices Allowance Price ($/ton CO2) $10.00 $8.00 June 2013 - March 2018 Average = $4.39 / ton CO2 = $4.84 /MT CO2 $6.00 $4.00 $2.00 $0.00 Source: RGGI, https://rggi.org/Auctions/Auction-Results/Prices-Volumes By using the natural gas price averaged over the period of analysis, the analysis can estimate what the overall impact would be if Daymark were to adopt a lower natural gas price. 20 Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) Maine is part of the Regional Greenhouse Gas Initiative (RGGI), a 9-state collaboration which establishes a cap for emissions. In 2014, RGGI established the cap at 91 million short tons (82.55 million metric tons), which declines 2.5 percent each year through 2020. The cap represents a budget for the electricity sector. For the past five years, RGGI prices have been trading at around $4.39 / short ton (i.e., $4.84 / metric ton), with a range of between $2.50 and $7.50 / ton (Figure 11). Daymark assumes that the New England states would continue to participate in a carbon cap and trade program that establishes a price for carbon in the electricity industry. In contrast to historical trading levels, Daymark assumes a carbon price of $15 / short ton in 2022, escalating to $30 / short ton in 2042 (2016$).21 For purposes of the UPLAN analysis in 2023, carbon was priced at $15 / ton in 2023 for the Daymark Assumptions. The assumed price for the Current Conditions scenarios correspond to RGGI prices traded over the past five years and assumes $5 / ton the price for all states except for Massachusetts, which is set at $15 / ton.22 5. TRANSMISSION CONGESTION The proposed NECEC transmission line would traverse from the lower part of the northwestern border of Maine south to Lewiston (Figure 12). Daymark Report, p. 49 of 98, footnote 5, Synapse Energy Economics, Inc. Spring 2016 National Carbon Dioxide Price Forecast. March 16, 2016, 21 http://www.synapse‐energy.com/sites/default/files/2016‐Synapse‐CO2‐Price‐Forecast‐66‐008.pdf Massachusetts has taken a more aggressive approach towards carbon reduction that focuses on carbon reductions within the state. Calpine, which operates a gas-fired power plant that is affected by the regulation (310 CMR Part 7.74), projects that MassGHG allowances will trade at this approximate range once the program’s auction platform is established. 22 Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) Figure 12: Map of Proposed NECEC Pathway Source: NECEC, https://www.necleanenergyconnect.org/map At Lewiston, the HVDC line would interconnect into the CMP transmission system north of the Surowiec-South Interface and below the Orrington-South Interface (Figure 13). There are at least three interfaces before NECEC energy can be delivered into Northeastern Massachusetts, four interfaces between NECEC and Boston, and six interfaces between NECEC and Southeastern Massachusetts (SEMA). Each of these interfaces represents a potential point on the ISO-NE transmission system where NECEC energy can create congestion. Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) Figure 13: Map of ISO-NE Interfaces Source: ISO-NE The Surowiec-South Interface represents a transmission point on the Maine system that currently has only 1,500 MW of transfer capacity going south. It is an interconnection point that has been studied extensively for purposes of understanding the potential impact of new Maine wind generation on transmission transfer capability. 23 Studies have been performed that assess which transmission upgrades would be required to allow for an incremental 1,200 MW of capacity to be injected at that point. 24 Without upgrades, NECEC would create significant congestion problems. Figure 14 illustrates the flows at Surowiec-South in 2017 compared to the 1,500 MW interface limits. Although flows consistently were below the limit, adding 1,200 MW from NECEC would result in flows above those limits a substantial portion of the time. NECEC’s proposal to include transmission investments that, in effect, add 800 MW of See for example, ISO-NE presentations attached to SCG Engineering, LLC memo on impact of Bryant Mountain, August 8, 2016, 23 https://www1.maine.gov/dacf/lupc/projects/wind_expedited_area/substantive_review/milton_twp/Public _Hearing/Requestor_Developer_Submission/SubRev_PubHearingComments.pdf CMP has proposed a number of transmission upgrades that extend beyond the investments identified in the Maine Resource Integration Study (MRIS) needed for an incremental 1,200 MW of clean energy in Western and Northern Maine (NECEC Section 83D Application Form, p. 39). 24 Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) transfer capability would serve to relieve most, but not all, of those exceedances (see top line on chart to the right). However, there would be very little headroom left for future renewable resources to be built in Maine without substantial investments in transmission upgrades. If NECEC were to increase transfer capacity by 800 MW or even the 1,000 MW as assumed by Daymark, the transmission project effectively consumes the transfer capability that currently could be used by new renewable resources that otherwise could be built in Maine with little net impact on the interface. Figure 14: 2017 Flows at Surowiec-South Interface with NECEC25 4,500 3,500 3,500 2,500 2,500 Hourly Flows (MW) Hourly Flows (MW) 4,500 2017 Surowiec-South Flows Actuals Versus Limit 1,500 500 1,500 500 -500 -500 -1,500 -1,500 SUR_SOUTH_Limit SUR_SOUTH_Actuals 2017 Surowiec-South Flows Actuals + NECEC 1,200 MW Versus Old and New Limits SUR_SOUTH_Actuals + 1,200 MW SUR_SOUTH_Limit SUR_SOUTH_Limit with NECEC Source: Energyzt analysis of ISO-NE Interface Flows Further south from the Surowiec-South Interface is the Maine-New Hampshire Interface representing 1,900 MW of transfer capacity near the border of Maine and New Hampshire. The Maine-New Hampshire Interface currently has a substantial amount of available capacity during most hours under 2017 conditions, illustrated by the hourly energy flows across that interface. 26 The addition of NECEC’s 1,200 MW of baseload energy, however, would add a substantial amount to total flows, most likely resulting in congestion (Figure 15). Potential exceedances would be resolved by lowering energy ISO-NE Website, https://www.iso-ne.com/isoexpress/web/reports/load-and-demand/-/tree/historicalhourly-flows-and-limits 25 As illustrated in the UPLAN runs, changes in market conditions can change the availability of transmission capacity if changes in fuel prices impact where the more cost-effective generating units that would be dispatched first are located. 26 Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) prices in Maine to the point where Maine generators would not be dispatched, resulting in lower generation output by in-state generators. Using historical flows to estimate potential congestion is informative but limited. Holding all other factors constant, other than the historical flows and new energy injections, does not account for the dynamics of a competitive wholesale electricity market. Depending on how energy injections impact the supply curve, market conditions, dispatch, and associated congestion across other interfaces, the ultimate impact could be different. Based on this simple analysis of historical flows at the MaineNew Hampshire Interface, however, one would expect to see an increase in congestion and decrease in dispatch of in-state Maine generators as a result of NECEC.27 Figure 15: 2017 Flows at Maine-New Hampshire Interface with NECEC 4,500 3,500 3,500 2,500 2,500 Hourly Flows (MW) Hourly Flows (MW) 4,500 2017 Maine to New Hampshire Flows Actuals + NECEC 1,200 MW versus Limit 2017 Maine to New Hampshire Flows Actuals Versus Limit 1,500 500 1,500 500 -500 -500 -1,500 -1,500 MENH_limit MENH_Actuals MENH_limit MENH_Actuals + 1,200 MW Source: Energyzt analysis of ISO-NE Interface Flows The UPLAN model incorporates interface limits into the transmission representation. In the LMP representation, dispatch of New England generators is subject to these transmission constraints. Figure 16 performs a count of the number of hours in 2023 that the Maine-New Hampshire Interface is projected to be at or within 5 percent and 10 percent of interface limits under Current Conditions and the Daymark Assumptions scenarios. It is possible that other market conditions could resolve the congestion in other ways, especially if Maine generators were less competitive in the base case and already were being displaced by more economic resources located in states south of Maine. 27 Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) Figure 16: Number of Hours Congestion is Projected (2023) Maine-New Hampshire Interface Maine-New Hampshire Interface At Limit Within 5% of Limit Within 10% of Limit CURRENT CONDITIONS With NECEC With NECEC (Constant Base - No NECEC (Incremental) Flows) 0 369 392 0 773 803 0 1,157 1,218 DAYMARK REPRODUCTION With NECEC Base - No With NECEC (Constant NECEC (Incremental) Flows) 0 263 332 0 505 586 0 664 817 Source: Summary of UPLAN results In all cases, NECEC increases congestion on the Maine-New Hampshire Interface, with congestion being worse during conditions with low natural gas prices and low carbon prices. Although the number of times flows approach the limits under the Daymark Assumptions is less than Current Conditions, UPLAN still projects congestion at the Maine-New Hampshire Interface under Daymark’s assumptions (Figure 17 and Figure 18). Figure 17: Congestion on ME–NH Interface: Daymark Assumptions 2,500 2,000 Maine - New Hampshire Interface Hourly Flows with NECEC Daymark Assumptions ME-NH Limit = 1,900 MW 1,000 500 0 1/1/2023 1/11/2023 1/22/2023 2/1/2023 2/12/2023 2/23/2023 3/5/2023 3/16/2023 3/27/2023 4/6/2023 4/17/2023 4/27/2023 5/8/2023 5/19/2023 5/29/2023 6/9/2023 6/20/2023 6/30/2023 7/11/2023 7/21/2023 8/1/2023 8/12/2023 8/22/2023 9/2/2023 9/13/2023 9/23/2023 10/4/2023 10/14/2023 10/25/2023 11/5/2023 11/15/2023 11/26/2023 12/7/2023 12/17/2023 12/28/2023 Hourly Flows (MW) 1,500 Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) Figure 18: Congestion on ME-NH Interface: Current Conditions 2,500 Maine - New Hampshire Interface Hourly Flows with NECEC Current Conditions ME-NH Limit = 1,900 MW 2,000 Hourly Flows (MW) 1,500 1,000 500 1/1/2023 1/11/2023 1/22/2023 2/1/2023 2/12/2023 2/23/2023 3/5/2023 3/16/2023 3/27/2023 4/6/2023 4/17/2023 4/27/2023 5/8/2023 5/19/2023 5/29/2023 6/9/2023 6/20/2023 6/30/2023 7/11/2023 7/21/2023 8/1/2023 8/12/2023 8/22/2023 9/2/2023 9/13/2023 9/23/2023 10/4/2023 10/14/2023 10/25/2023 11/5/2023 11/15/2023 11/26/2023 12/7/2023 12/17/2023 12/28/2023 0 Source: Energyzt analysis of UPLAN results It is important to note that the UPLAN results assume that only 981 MW of energy is flowing in each hour. If the full capacity of NECEC were being utilized, the number of hours in which there was congestion, and the magnitude of that congestion, would be higher. Therefore, these results provide a conservative view of the potential impact of NECEC on transmission congestion out of Maine. 6. IMPACT ON ENERGY PRICES In general, as energy prices decline, the lost revenue should be made up in other markets such as the Forward Capacity Market. The net impact over the long-run, should be zero as electricity market prices equilibrate to the long-run marginal cost of production or the levelized cost of entry. Therefore, over the long-run, NECEC’s impact on total wholesale energy costs should approach zero. In 2023, however, NECEC projected to reduce wholesale energy prices in Maine. The magnitude of the price reduction, however, depends on market conditions. Under Daymark’s Assumptions, the impact is greater than under lower natural gas and carbon prices (Figure 19). Whether this translates into a direct savings for Maine ratepayers is subject to regulatory rates and competitive retail market decisions. Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) Figure 19: NECEC Impact on 2023 Wholesale Energy Prices Change in Energy Price Energy Losses Congestion Total Change in Price Daymark Assumptions ($1.78) ($1.35) ($0.10) ($3.21) Current Conditions ($1.18) ($0.99) ($0.13) ($2.30) Source: UPLAN results Changes to the market and the shape of the supply curve would determine the magnitude of the impact that NECEC has on wholesale energy prices over the long-run. Over time, the market should balance to a long-run equilibrium where total revenues from electricity markets approach the cost of new entry and NECEC is replaced with an alternative energy supply resource. In Daymark’s models, that occurs in the capacity market within eight years. Assuming the case with and without NECEC has the same cost of new entry, energy markets should follow a similar timeframe. 28 In addition, there are a number of state policy initiatives underway that would flatten the supply curve, decreasing the impact of NECEC. These policy initiatives include decarbonization of the grid and out-of-market subsidies for new and existing generators. Therefore, over time, the impact of NECEC on energy prices should diminish and prices in the scenarios with and without NECEC should converge. 7. IMPACT ON MAINE’S POWER PLANTS Maine’s generation fleet is among the cleanest and most diverse in New England. Maine has more than 100 generating units with capacity ranging from the Caribou Generating Station hydroelectric facility of less than 1 MW to the William F. Wyman Station (“Wyman”) at above 800 MW. It includes numerous small hydroelectric facilities, biomass plants, wind turbines and fossil fuel generating units that run off natural gas and oil. The vast majority of Maine’s generating units are less than 200 MW The fact that Daymark’s analysis continues to show a relatively constant impact from NECEC over time indicates that the scenario without NECEC is not building out zero emissions resources required to achieve the state carbon objectives (Figure 4, p. 18 of 98). 28 Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) of capacity (Figure 20), with the largest fossil fuel units being Bucksport Generation, LLC, Maine Independence Station, Rumford, the Westbrook Energy Center and Wyman. Figure 20: Maine Generation Fleet Maine Generating Units Based on Capacity Factor and Nameplate Capacity By Fuel Type 100% 90% 80% Capacity Factor 70% 60% Westbrook Energy Center 50% 40% 30% Rumford 20% Maine Independence Station 10% Wyman Bucksport Generation 0% 0 100 200 300 400 500 600 700 800 900 Plant Nameplate Capacity (MW) Fossil Fuel Units Biomass/Other Hydroelectric Units Wind Turbine Source: Energyzt analysis of EIA Form 923 and 860 data Totaling around 5,100 MW of capacity and net generation of around 11.5 TWh in 2016, the impact of NECEC’s 1,200 MW of baseload capacity and 9.5 TWh of energy on Maine’s system would significantly change Maine’s generation industry. As a result of higher supply, lower market clearing prices and congestion, all generating plants in Maine experience lower energy operating margins. These lower energy operating margins occur due to lower energy prices and, for the fossil-fuel units, less output. Estimated impacts on Maine generating plants are described below. 7.1. Dispatch and Plant Output Maine traditionally has been a generation pocket, with more power production than load. Since 2010, however, Maine generators have experienced a decline in output from about 16 TWh to around 11 TWh, with the reduction occurring primarily among the Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) natural gas-fired generators and oil-fired units (Figure 21). As a result, a number of Maine generators are operating at low capacity factors and, combined with low energy prices and higher in-state natural gas prices, face shrinking operating margins. Figure 21: Historical Dispatch of Maine Generators Total Generation in Maine by Fuel Type 2008-2017 Total Generation (GWh) 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 2008 2009 2010 2011 Natural Gas Wood/Wood Waste/Black Liquor Coal Wind Solar 2012 2013 2014 2015 2016 2017 Hydro Petrolium Products Municipal Solid Waste/Landfill Gas Other Biomass Other Source: Energyzt analysis of https://www.eia.gov/electricity/data/eia923/ and https://www.eia.gov/state/print.php?sid=ME NECEC would only make this situation worse. Fossil fuel units in Maine would be hit particularly hard by NECEC as they generally have the highest marginal cost of production and therefore would be the first to be displaced. However, biomass plants also would experience lower output with NECEC, holding all other factors constant. Figure 22 illustrates the impact of NECEC on Maine’s generation fuel mix as a result of NECEC under Current Conditions and Daymark Assumptions. Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) Figure 22: Comparison of Maine Generation Output by Scenario Maine Generation Fuel Mix With and Without NECEC 2023 25,000 Maine Generation Output (GWh) Current Conditions Daymark Assumptions Wind 20,000 Water 15,000 Maine Imports 10,000 Maine Imports with NECEC Maine Imports Maine Imports with NECEC Biomass/Other Natural Gas Fuel Oil - FO6 5,000 Imports Without NECEC With NECEC Without NECEC With NECEC (Constant Exports) (Constant Exports) Source: Energyzt analysis of UPLAN output The UPLAN runs for 2023 show that under Current Conditions, Maine’s natural gasfired generators are competitive with the rest of New England, but there is very little oil-fired generation. With NECEC, total output from natural gas-fired generators in Maine declines by 34 percent and oil-fired generation nearly shuts down, with output reduced by 94 percent. Under the Daymark Assumptions, natural gas-fired generators in Maine have a more difficult time competing with biomass plants and the rest of New England due to higher natural gas and carbon prices which place Maine’s older units at a disadvantage. With NECEC, output of natural gas-fired generators falls by 31 percent and oil-fired units decrease total output by nearly half. In both cases, biomass units decrease output by 12 percent (Current Conditions) and 14 percent (Daymark Assumptions). While Maine’s natural gas-fired generators are shutting down due to NECEC, however, fossil-fired generators in other markets would be firing up as Hydro-Québec diverts its excess energy sales from those markets to NECEC in the constant exports case. Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) Figure 23: Comparison of New York to Maine Natural Gas-fired Generation Comparison of Incremental Natural Gas-fired Generator Output 4,000 2,000 New York New York - Maine Maine (2,000) (4,000) Rest of New England Rest of New England (6,000) Lower Gas-fired Generation Output Generation Output (GWh) 6,000 Increased Gas-fired Generation Output 8,000 (8,000) Current Conditions Daymark Assumptions (Constant Exports) Source: Energyzt analysis of UPLAN output Figure 23 illustrates the stark contrast between the increase in New York gas-fired generator output and New England’s natural gas-fired generator decline in output. Holding Hydro-Québec’s exports to the United States constant simply shifts carbon emissions from New England into other markets such as New York that need to replace the lost sales from Hydro-Québec’s diversion of energy supply to NECEC. 7.2. Operating Margins Although biomass and fossil fuel units in Maine experience the greatest impact on generation output, all units experience lower energy prices. However, the combination of lower energy prices and less output creates a more adverse set of conditions for Maine’s biomass and fossil fuel generation fleet. UPLAN output includes information that can be used to derive operating margins associated with the sale of energy (i.e., energy revenues less marginal costs of production such as fuel and carbon emissions). These operating margins take into account energy prices, plant dispatch, and costs of production. Figure 24 summarizes the impact of NECEC on different types of generating units in Maine. Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) Figure 24: Change in Operating Margins by Fuel Type Without NECEC Fuel Type Fuel Oil Natural Gas Other / Biomass Water Wind Total Margins ($1000) (798) 6,506 23,223 64,724 136,631 230,286 Current Conditions With NECEC Margins ($1000) (53) 3,064 18,578 60,123 130,715 212,427 Difference Margins Percentage ($1000) Change 745 -93% (3,442) -53% (4,645) -20% (4,601) -7% (5,916) -4% (17,859) -8% Without NECEC Margins ($1000) (3,199) 3,870 30,107 84,668 174,768 290,214 Daymark Assumptions With NECEC Margins ($1000) (2,064) 736 24,449 78,417 166,193 267,731 Difference Margins Percentage ($1000) Change 1,135 -35% (3,134) -81% (5,658) -19% (6,251) -7% (8,575) -5% (22,483) -8% Source: Energyzt Analysis of UPLAN results excluding units identified as cogeneration A comparison between Current Conditions and Daymark Assumptions indicates that, even though energy prices are higher, operating margins are lower for natural gas-fired units and oil plants in the Daymark Assumptions. In contrast, biomass, water, and wind enjoy the benefit of higher energy prices due to carbon emissions, without the associated cost. The Daymark Assumptions also have more total revenues for wind due to a slightly higher assumption regarding renewable build-out compared to Current Conditions. In both cases, NECEC has an adverse impact on operating margins for all fuel types except the oil units which simply shut down and no longer incur the start-up and standby costs: • Wind generates lower operating margins by about 5 percent on average with NECEC due to lower energy prices • Hydroelectricity operating margins fall by 7 percent with NECEC due to lower energy prices • Biomass plants have a reduction of around 20 percent with NECEC due to a combination of lower energy prices and less output as it gets squeezed out when it is on the margin • Natural gas plants are harmed the most, with operating margins falling by more than half under Current Assumptions and nearly falling to zero with NECEC. Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) The magnitude of declining operating margins also is insightful. Maine recently granted its in-state biomass plants interim assistance in the form of proposed contracts for an incremental $13.4 million above market prices. Under Daymark’s Assumptions, that amount is partially recovered compared to Current Conditions due to rising prices and higher output. Nearly the entirety of the gain, however, is reduced by NECEC. 8. MAINE PLANTS AT RISK OF RETIREMENT There are two ways to perform a high-level assessment of which plants in Maine would be at risk of retirement.29 The first is to examine operating margins and how they compare to fixed costs; the second is to assess key indicators of low revenues and high costs. The prior section examined changes in operating margins as a result of NECEC and determined that the thin operating margins would place all but the most efficient units at risk of retirement. This section examines key indicators and the associated tax and job losses associated with the Maine generating units most likely to retire using the second approach. 8.1. Key Indicators One way to examine which Maine generators are at risk of retirement is to compare plants by capacity factors and size. Low capacity factors indicate low revenues; small size (in terms of capacity) indicates higher average costs. The combination of low revenues and high costs can be a powerful predictor of which plants would be most likely to delist and retire. This analysis can be particularly useful in understanding which Maine plants would need to retire under ISO-NE’s Forward Capacity Market rules (i.e., CASPR) in order for NECEC to produce lower capacity market prices. The most likely candidate for retirement under the CASPR construct would be Maine’s largest oil-fired peaker, Wyman, which has a nameplate capacity of 811 MW (846 MW reported by EIA) and operated only 1 percent of the time in 2016 per EIA’s Form 923 data. Wyman is owned by FPL Energy (NextEra Energy Resources) and employs 53 people. A few years ago, NextEra considered selling 57-year old Wyman, but took it off Although it is possible to perform a plant-by-plant analysis of which have insufficient cash flow to cover costs, these two approaches provide a rough estimate that approximates what the results of a more detailed analysis would be. 29 Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) the market following a cold winter. 30 Barely operating, Wyman depends disproportionately on revenues from ISO-NE’s capacity market (and more recently the now defunct Winter Reliability Program), which has seen prices decline by more than half over the past three years (previously shown in Figure 5). Low capacity market prices and low capacity factors which minimize energy revenues make Wyman a prime candidate for retirement due to a substitute with NECEC. Yet, 800 MW would not be enough to cover the full 1,200 MW of capacity NECEC claims it could offer. If Wyman were to delist, it could create a reliability issue tied to fuel diversification. Wyman is the largest and only oil-fueled unit with on-site fuel storage in Maine. Following the example of ISO-NE’s recent offering of a reliability contract for fuel diversity contract to Mystic, which receives liquified natural gas, Wyman also might be a candidate to receive an out-of-market contract, which could prevent NECEC from clearing ISO-NE’s capacity markets. To the extent Wyman cannot retire, the other way NECEC could clear in ISO-NE’s Forward Capacity Market would be if it replaced a number of Maine’s other units as part of CASPR. Figure 25 charts Maine’s other steam units (which include fossil fuel plants as well as biomass) by plant nameplate capacity and capacity factor. Those with the smallest size and lowest capacity factors would be the most at risk of retirement. Tux Turkel, “Owner pulls plug on sale of Maine’s largest power plant.” Portland Press Herald, August 12, 2014, https://www.pressherald.com/2014/08/12/owner-pulls-plug-on-sale-of-maines-largest-power-plant/ 30 Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) Figure 25: Maine Steam Generating Units at Risk of Retirement MAINE STEAM GENERATING UNITS Units at Risk Based on Size and Capacity Factors 100% 90% 80% Capacity Factor 70% 60% 50% 40% 1,442 MW 1,087 MW 30% 246 MW 20% 10% 88 MW 0% 0 50 100 150 200 250 300 350 400 450 500 Plant Nameplate Capacity (MW) Source: Energyzt analysis of EIA Form 923 and 860 data. Specifics around the units in the shaded square representing 1,087 MW is provided in the next section. 8.2. Lost Property Taxes Of the 1,087 MW with a capacity below 200 MW and capacity factor below 40 percent, a number are smaller biomass facilities (e.g., Indeck Jonesboro Energy Center, Indeck West Enfield Energy Center and MMWAC Resource Recovery Facility). Others such as Cape Gas Turbineand S.D. Warren Westbrook are small peaking oil units that provide fuel diversity. Removing these type of units results in a short-list of seven fossil-fuel units in Maine that are prime candidates for retirement if NECEC were to clear ISO-NE forward capacity markets. These seven units represent 943.5 MW of capacity and generated only 0.8 TWh in 2016, along with $5.5 million in property taxes that would be lost if those plants were to retire (Figure 26). If more capacity was required to substitute for the 1,200 MW of capacity that NECEC claims it could qualify in the Forward Capacity Market, Maine would have to sacrifice either another large natural gas-fired unit or its biomass plants. Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) Figure 26: Maine Generating Candidates for Early Retirement under CASPR Nameplate (MW) Plant Name Mead Rumford Cogen Bucksport Generation LLC Bucksport Generation LLC Androscoggin Energy Center Maine Independence Station Rumford Power, Inc Rumford Power, Inc 2016 Net Reported 2016 Property Capacity Generation Prime Taxes Factor (MWh) Mover TOTAL 12.5 111.6 186.8 163.5 194.6 179.4 95.1 943.5 $ 524 $ 8,720 170,341 $ 222,129 $ 263,928 $ 149,305 814,947 $ INCREMENTAL AT RISK Cape Gas Turbine Anson Abenaki Hydros - Oil Peaker Maine Independence Station S D Warren Westbrook Indeck Jonesboro Energy Center Indeck West Enfield Energy Center MMWAC Resource Recovery Facility TOTAL 17.5 3.0 355.6 62.5 27.5 27.5 5.0 498.6 471 $ 329,058 ** 71,995 $ 34,819 47,291 $ 16,697 500,331 $ 367,084 110,567 ** 1,580,573 188,739 3,285,287 ** 5,532,249 0% 0% 1% 12% 13% 17% 18% ST ST GT GT CA CT CA NA 609,000 0% 2% 11% 13% 14% 20% 38% GT ST CA ST ST ST ST 229,197 NA 5,630 NA 843,826 NextEra looked to sell Wyman and Cape Gas Turbine in 2013, 31 pulling them off the market following the winter price spikes and announcement of large plant retirements. Maine Independence already delisted all but 100 MW of their units for FCA12, which is only in effect for the 2021-2022 delivery year. 32 The Indeck Jonesboro Energy Center and West Enfield Energy Center recently received over $1 million in subsidies from Scott DiSavino, “NextEra to sell its oil-fired power plants in Maine,” Reuters, April 30, 2013, https://www.reuters.com/article/utilities-nextera-maine/nextera-to-sell-its-oil-fired-power-plants-inmaine-idUSL2N0DH26U20130430 31 Herman K. Trabish, “Previously put up for sale, NextEra takes Maine’s biggest power plant off the market,” Utility Dive, April 12, 2014, 32 https://www.utilitydive.com/news/previously-put-up-for-sale-nextera-takes-maines-biggest-power-plantoff-t/297172/ Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) Maine regulators.33 Clearly, many of these plants already are at risk of retirement, but have not yet made the announcement that they will retire. If NECEC proceeds under Current Conditions, they will put over the edge. 8.3. Lost Jobs Each power plant employs individuals directly and supports contractors that are used to perform maintenance and other support services. Any plant that has a steam boiler is required to have two people on-site at all times. Given shifts and time off, plus administrative and management, a fossil-fuel power plant would have at least 12 employees, all of whom are highly qualified power plant specialists that may earn well above state averages.34 Combustion turbines vary, ranging from 13 employees at Bucksport Generation LLC to around 53 full-time employees at Wyman. A combined cycle plant such as Westbrook employs between 20 to 30 people. Given these estimates, the seven units at risk would represent at least 100 to 200 jobs that would be lost at Maine power plants due to plant retirements under CASPR if NECEC were to clear ISO-NE’s capacity markets, not including contractors. Many of these plants employ contractors. To understand the potential impact on supporting contractors, Calpine provided a list of contracting companies and the number of hours billed each year at the Westbrook Plant. A summary of the number of contractors required by a combined cycle natural gas-fired power plant is summarized below. Based on Westbrook’s experience, the number of contracted personnel varies from year to year, but can more than double the full-time equivalents employed by a power plant. Tux Turkel, “Maine regulators approve partial subsidy to keep biomass power plants alive,” Press Herald, April 4, 2018, https://www.pressherald.com/2018/04/04/puc-votes-to-approve-biomass-subsidy/ 33 Based on conversation with Holly Bragdon, plant manager at Calpine’s Westbrook Power Plant in Maine. She also provided a list of contractors representing 100 to 150 companies. 34 Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) Figure 27: Summary Statistics of Contractors at a Combined Cycle Plant Contractor Metrics 2015 2016 2017 Hours Worked During Year 12,956 29,856 52,821 Full-time Equivalents (FTE) 6 14 25 Number of Listed Contracting Companies 114 121 135 Contracting Companies with Hours 64 62 72 three years: 99 Number of Companies Providing Contractors: Over the Source: Energyzt analysis of spreadsheet provided by Calpine The list of contractors that Westbrook uses is extensive. For any given power plant, there could be between 100 and 150 companies that would be affected by a plant’s closure. According to the Westbrook plant manager, many of these contracting companies are based in Maine and rely upon the Maine generation fleet for business. If Maine power plants were to retire, these companies would be adversely impacted and their employee pool could be downsized unless they could be deployed to other industries. The multiplier effect of potential job losses tied to the lost income of Maine’s generation sector would have a much bigger impact. In addition, there is an extensive ecosystem around Maine’s generating plants that would be adversely impacted by NECEC. According to the University of Maine’s website, “The University of Maine, the Maine Community College system and Maine Maritime Academy have coordinated training and research functions covering all aspects of Maine's renewable energy economy.”35 Describing its program in Power Engineering Technology, the Maine Maritime Academy states:36 Maine Maritime Academy, https://mainemaritime.edu/academics/undergraduateprograms/engineering/pet/ 35 36 Ibid. Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) Co-op Training: Power Engineering Technology students are required to participate in approved industrial co-op programs in shore-side power plants to gain hands-on training in industrial settings nationwide. Along with work experience comes exposure to: current practices in your area of study, management organizations, diverse equipment and machinery, people and geographical locations. Adversely affecting Maine’s generating plants has extenuating impacts on Maine’s economy and institutions. 9. DEFERRED INVESTMENT IN MAINE RENEWABLES NECEC would block the development of significant wind resources in Maine. This section reviews in-state renewable projects in ISO-NE’s interconnection queue as well as Maine’s nascent off-shore wind industry. 9.1. Maine Renewables in the Interconnection Queue The ISO-NE interconnection queue has more than 5,000 MW of proposed generation, most of which consists of wind turbines (Figure 28). Although Governor LePage has issued a moratorium on wind development, projects remain in the queue and have been bid into the Massachusetts Section 83D process. NECEC would block these Maine wind projects both as a competitor in the Section 83D bids as well as due to the increased congestion on the Surowiec-South Interface and Maine to New Hampshire Interfaces described in Section 5. According to the NECEC Application Form, ISO-NE accepted an Elective Transmission Upgrade (ETU) request for the NECEC Transmission Project on April 19, 2017. 37 Although the queue number is redacted in the application form, ISO-NE assigned queue position number 639 to an application for a 1,200 MW ETU received on that date.38 37 NECEC Section 83D RFP Application Form, p. 79. 38 Interconnection Requests for New England Control Area, https://irtt.iso-ne.com/reports/external Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) Figure 28: Maine Generation Queue Active Generation Queues in Maine as of 3/22/2018 5,165 MW 1.50% 0.55% 0.58% 13.12% 84.25% Solar Wind Wind Battery Storage Water Natural Gas Source: Energyzt Analysis of ISO-NE Queue Since the initial analysis on March 22, 2018, a number of projects that previously were ahead of NECEC have now moved to the back of the queue. In addition, a few new projects have been added (Figure 28). Figure 29: ISO-NE Queue Positions compared to NECEC ISO-NE Interconnection Queue Positions Queue Position on 5/11/2018 800 700 Behind NECEC's position in the queue 600 500 In front of NECEC's queue position 400 400 500 600 700 800 Queue Position on 3/22/2018 Source: Energyzt Analysis of ISO-NE Interconnection Queue data, https://irtt.iso-ne.com/reports/external, data pulled 3/22/2018 and 5/11/2018 Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) There are now 25 projects in queue behind NECEC, most of which are wind projects representing close to 3,000 MW (Figure 30). Unless NECEC drops down in the queue, all new projects requesting interconnection would be behind NECEC’s queue position. Any projects that are behind NECEC in the queue would face higher costs to connect as they would be responsible for paying for upgrades associated with the congested transmission lines. Among the projects behind NECEC is 1,200 MW of new wind capacity in Aroostook County, which presumably is the Nine Kings Wind Farm bid by Pattern Energy and EDP Renewables.39 Figure 30: Number of Projects and Capacity behind NECEC Count of Projects Fuel Source Solar Hydroelectric Wind Wind Battery Storage Natural Gas TOTAL As of 3/22/2018 As of 5/11/2018 Ahead of NECEC Behind NECEC Ahead of NECEC Behind NECEC 7 2 7 4 2 1 24 10 11 19 4 2 4 2 1 38 14 23 25 Net Capacity (MW) As of 3/22/2018 As of 5/11/2018 Fuel Source Ahead of NECEC Behind NECEC Ahead of NECEC Behind NECEC Solar 555 123 555 185 Hydroelectric 28 Wind 3,471 881 1,077 2,887 Wind Battery Storage 77 77 Natural Gas 30 TOTAL 4,162 1,003 1,710 3,072 Source: Energyzt Analysis of ISO-NE Interconnection Queue There also are a number of projects ahead of NECEC in the queue, including 500 MW of wind and battery storage, that are likely to be squeezed out by NECEC’s HVDC interconnection at Larabee Road Substation.40 39 Massachusetts Clean Energy Section 83D Bids, https://macleanenergy.com/83d/83d-bids/ There is close to 500 MW of wind turbines and corresponding battery storage proposed for development in Franklin County. 40 Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) NECEC explicitly recognizes this possibility, noting that although NECEC is not being studied as part of ISO-NE’s proposed cluster study, Avangrid has modeled its analysis on the preliminary ISO-NE MRIS study for western Maine for interconnecting up to 1,200 MW of western Maine generation projects in the ISO-NE queue.41 By following the same methodology and incorporating many of the proposed upgrades that had been anticipated for wind generation in Western Maine, NECEC clearly is intending to replace those projects in the queue. In fact, NECEC has explicitly indicated that it expects them to drop out of the queue or go behind NECEC in the queue position.42 Should each of these projects decline to commit to fund the necessary transmission upgrades in order to participate in the cluster study, they will drop down in the queue (or drop out entirely), thereby significantly reducing the number of projects holding queue positions before the NECEC Transmission Project and expediting the timeline for ISO-NE to complete the required system impact studies for the NECEC Transmission Project. Even if the projects do fund the cluster study, NECEC indicates that the cluster study process itself would move NECEC to the front of the queue: 43 These other generation projects are instead being evaluated as part of the ISO-NE MRIS in a “clustered” basis. As discussed in Section 6.9, CMP believes that these projects will fall below the NECEC Transmission Project in the queue through the cluster study process that ISO-NE is seeking to implement, thereby leaving the NECEC Transmission Project only behind the three queue projects included in the NECEC system impact study performed by the Avangrid transmission planning group. In effect, NECEC anticipates that it would jump to the front of the line. Whether those projects in Western Maine that currently are in front of NECEC drop down in the queue because of the Governor’s moratorium on siting wind farms, an outcome from the cluster study process, or because they are not awarded a contract under the Section 83D bids, the opportunity to connect at currently estimated costs would have passed once 41 NECEC Section 83D Application Form, p. 84. 42 NECEC Section 83D Application Form, p. 85. 43 Ibid., p. 83, footnote, 21. Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) NECEC connects to the system with the upgrades that had initially been proposed for the renewable generators in Western Maine. This would be a problem for Maine’s renewable industry whether the projects would be implemented under power purchase agreements or as merchant facilities. Under Current Conditions, most of these projects which are being developed without power purchase agreements would need to procure a long-term contract in order to finance construction. Current market prices simply are not high enough to support merchant wind. Under these conditions, NECEC would inhibit development of these projects because they would be more expensive compared to suppressed market prices and would have to incur higher interconnection charges due to the congestion created by NECEC. Indeed, NECEC expects this to happen, as indicated in its Section 83D Application Form:44 Based on public statements by several generators and other information shared during the ISO-NE stakeholder process, CMP believes that very few, if any, of the eligible projects would make this commitment and pay the significant deposits required, because they do not have binding PPAs or other agreements in place to finance their projects. Under Daymark’s assumptions for natural gas prices and carbon prices, however, market prices for energy and capacity could be high enough to cover the levelized cost of new entry for onshore wind. The U.S. EIA projects onshore wind generation to be at parity with a new combined cycle gas turbines by 2022 at around $48/MWh ($2017), and would cost less with estimated tax credits at around $37/MWh ($2017) (Figure 31).45 Adjusting the EIA’s number’s to reflect a 32% capacity factor for New England (assumed in the ISO-NE Net CONE proceedings),46 the levelized cost of onshore wind with tax credits in 2022 would be $50/MWh, close to the cost of entry for a new combined cycle unit, and $65/MWh without. It is important to know these relative costs and compare them to Daymark’s projected prices in order to understand how NECEC could impact renewable build-out in Maine. 44 Ibid. 45 U.S. EIA, https://www.eia.gov/outlooks/aeo/pdf/electricity_generation.pdf See ISO New England Inc. Filing of CONE and ORTP Updates, Transmittal Letter at p. 6, Docket No. ER17-795-000 (filed January 13, 2017). 46 Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) It also is important to understand what Daymark is assuming for new builds. Daymark indicates that it allows its capacity planning model chooses either combined cycle or simple cycle combustion turbine plants as the long-run marginal unit.47 The energy price level determines which type of capacity addition is built; when energy prices are high, more combined cycles are built and when prices are low, combustion turbines are added. Regardless of which technology is added, however, if prices and energy margins are high enough to support a new gas-fired power plant in the face of $15/ton carbon prices, wind turbines also will be economic. Figure 31: Levelized Cost of New Entry of Different Generation Technologies ESTIMATED LEVELIZED COST OF ENTRY New Generation Entering Service in 2022 by Estimate Year $120 Estimated LCOE ($/MWh) $100 $80 $60 $40 $20 NG CC NG CT 2016 Nuclear Biomass 2017 2018 Offshore Onshore Adv. Con. Adv. Con. $- Wind Solar Hydro 2040* Source: U.S. EIA Annual Energy Outlook, 2016 – 2018. According to the 2016 Wind Technologies Report issued by the U.S. EIA, Merchant Wind projects accounted for 22 percent of the capacity built in the U.S. in 2015 (p. vi). 48 Although merchant wind is not yet viable in Maine, it could become a reality under the 47 Daymark Report, p. 76 of 98. U.S. EIA, 2016 Wind Technologies Report, https://www.energy.gov/sites/prod/files/2017/08/f35/2016_Wind_Technologies_Market_Report_0.pdf 48 Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) market conditions projected by Daymark without NECEC, and experience in other jurisdictions has shown that once economic fundamentals support renewables, they would be built. Daymark’s escalating energy prices due to rising natural gas and carbon prices would make wind projects economic to build in Maine even if they did not have a power purchase agreement. Under the Daymark Assumptions, however, Maine’s potential for merchant renewable generation would decline. The economics of new renewable investment would be challenged due to lower energy prices, Daymark’s claimed impact on capacity prices, and higher interconnection costs created by NECEC. 9.2. Maine’s Offshore Wind Projects Maine has been home to a leading demonstration project for offshore wind called New England Aqua Ventus I. Only 12 MW, this floating offshore wind project is meant to be a precursor to a 500 MW offshore wind farm. The University of Maine estimated the potential economic development benefits of this project in 2013. A side-by-side comparison of the Aqua Ventus study to the Daymark Report makes it clear that instate renewable resources offer Maine better economic development opportunities and sustainable job creation than NECEC (Figure 32 and Figure 33). Figure 32: Economic Impacts during Construction – NECEC vs. Aqua Ventus 400 3500 3000 300 250 Aqua Ventus OSW 200 NECEC Transmission 150 100 Number of Jobs per Year $ millions per year ($ 2017) 350 2500 Aqua Ventus OSW 2000 1500 NECEC Transmission 1000 500 50 0 0 Total Output Income Employment Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) Figure 33: Economic Impacts during Operations – NECEC vs. Aqua Ventus 300 1800 1600 1400 200 150 Aqua Ventus OSW 100 NECEC Transmission 50 Number of Jobs per Year $ millions per year ($ 2017) 250 1200 Aqua Ventus OSW 1000 800 NECEC Transmission 600 400 200 0 Total Output Income 0 Employment Source: Aqua Ventus OSW Project: Gabe, Todd M., University of Maine, School of Economics, ECONOMIC IMPACTS OF THE NEW ENGLAND AQUA VENTUS (PHASES I AND II) OFFSHORE WIND POWER PROGRAM IN MAINE, August 30, 2013, pp 16-25. http://maineaquaventus.com/wpcontent/uploads/2017/05/Gabe-Report-Dec-4.pdf ; New England Clean Energy Connect Transmission Project (NECEC): New England Clean Energy Connect and Central Maine Power Company, Connect and Central Maine Power Company Request for a Certificate of Public Convenience and Necessity for the Construction of the New England Clean Energy Connect (NECEC) Transmission Project, Volume I. Under the Daymark Assumptions, the economics of new renewable investment in Maine would be challenged. Would it be possible for Aqua Ventus to proceed once NECEC is in place? It is unlikely. With NECEC increasing the Maine-based generation fuel mix to be up to 90 percent renewables, there would not be much more room for incremental renewable additions to the Maine system. As the Section 83D RFP process has made clear, Canadian hydroelectricity and in-state wind developments are competitors. 10. CARBON EMISSIONS In New England, ISO-NE generates and distributes for trading Generation Information System certificates (“GIS Certificates”) that reflect the characteristics of the power plant that generated the energy associated with those certificates. GIS certificates include information on fuel, emissions and other characteristics of the generator that produced the energy. Without ownership of the certificate, a load-serving entity cannot claim Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) energy attributes other than the system mix, which is calculated as the residual of the certificates held by other entities. 49 This section reviews how environmental attributes associated with energy delivered via NECEC would be treated and the impact that would have on Maine. 10.1. Section 83D Contractual Obligations The template for Section 83D procurement of hydroelectricity would convey environmental attributes associated with the energy to the purchasing utility. • Definition of “Products” includes Environmental Attributes. • Definition of “Environmental Attributes” includes (b) any Certificates issued pursuant to the GIS in connection with Energy generated by the Facility. • Section 4.7(c) requires the seller to engage with the tracking systems required to establish and convey the environmental attribute property right: Seller shall comply with all GIS Operating Rules including without limitation such Rules relating to the creation, tracking, recording and transfer of all Environmental Attributes to be purchased by Buyer under this Agreement. In addition, at Buyer’s request, Seller register with and comply with the rules and requirements of any other tracking system or program that tracks, monetizes or otherwise creates or enhances value for Environmental Attributes, which compliance shall be at Seller’s sole cost. Therefore, any zero emissions credits associated with firm hydroelectricity conveyed via NECEC under Section 83D contracts would accrue to Massachusetts electric distribution companies and not to Maine. Maine electric distribution companies would not receive any rights to claim environmental attributes associated with energy flowing through NECEC that is contracted to Massachusetts. Other than contracts for renewable energy that also 49 http://www.nepoolgis.com/ Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) convey the associated rights to claim specific attributes associated with that energy, Maine utilities would receive its share of the system mix for New England. 10.2. Analyzing UPLAN Results Production cost models can estimate the amount of carbon emissions that would be produced by specific generation plants under specified market conditions. The output of those models generally total the carbon output by power plant located in each state or region to calculate the total carbon emissions under different scenarios. The same is true with respect to UPLAN. Although this can provide insight into total emissions, there is a challenge to taking these results and applying those outputs to how much carbon would be allocated to specific load-serving entities. As discussed in Section 10.1, New England has a Generation Information System that tracks attributes and issues certificates so as to ensure that specific attributes associated with energy generation is not counted twice. Similarly, New York has a Generation Attribute Tracking System that purports to do the same. These certificates are defined property rights that can and are traded, as illustrated by the Massachusetts Section 83D template that includes such environmental attributes as part of the products. Market models do not track ownership of such attributes, and therefore cannot be used to determine what the impact of new generation would be on the system mix net of claimed attributes. Therefore, caution should be used in using market model results to estimate the impact on a specific state or utility. Daymark seems to recognize this dilemma and applies a proportion of Maine load to total New England load times total carbon reductions for New England. 50 This clearly ignores the fact that Massachusetts would receive the vast majority of generation attributes associated with NECEC and Maine would be left with a system mix that has a higher carbon emissions content than the total New England generation pool. Although Maine’s fossil fuel fleet would have less output and therefore less carbon emissions, Maine would not receive the full credit associated with this reduction in carbon as it would accrue to the system mix and be allocated to load that does not have specific generation attributes via GIS certificates. Daymark Report, p. 15. Daymark’s approach calculates a 10 percent reduction in carbon emissions for Maine electric load or 264,000 fewer metric tons. 50 Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) 11. CONCLUSION Maine has a clean, diverse set of in-state generators that produces an energy mix that was two-thirds renewable in 2016. Recent market conditions, however, have challenged its biomass plants and diminished operating margins for its natural gas-fired generators. NECEC would create an even greater challenge, decreasing energy operating margins for wind and hydroelectric plants by 5 to 7 percent and biomass by around 20 percent, regardless of the scenario. Maine’s natural gas-fired generators are hit even harder, with operating margins declining by more than half under current conditions and by more than 80 percent under Daymark Assumptions. Ironically, the higher priced conditions that Daymark Assumptions create are driven by higher natural gas prices and higher carbon emissions prices, two cost factors for natural-gas fired generators that would squeeze their margins beyond what they currently face. NECEC only makes conditions worse. NECEC obviously provides no energy “benefits” as a stand-alone transmission facility; its energy market impacts depend on the energy it delivers. One of the key issues is that Maine simply is too small to accept 1,200 MW of baseload supply that would be almost equivalent to the current generation output of in-state Maine generators. Although much-needed transmission upgrades would be made at the Surowiec-South Interface, congestion would simply shift to the Maine-New Hampshire Interface. Maine, a generation pocket, would face even greater congestion due to NECEC and higher losses, reducing the price and dispatch of existing in-state generators. The impact extends beyond existing generators, promising to defer, delay and even cancel renewable projects that currently are being developed in Maine. Under Current Conditions, those projects would find it more difficult to compete for power purchase agreements. Under Daymark Assumptions, which could support merchant investment, the impact of lower prices and congestion would postpone realization of in-state jobs and property taxes, while displacing the revenues and opportunities from existing generators. Early retirements of fossil-fuel plants would challenge the ecosystem that has been built to support those facilities, including the Maine Maritime Academy, the University of Maine and a number of service providers who contract to power plants. Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) The website for the Governor of Maine boasts about local power production, 51 “Production of power from local sources maximizes Maine jobs adding value to Maine's economy.” NECEC would result in lower wholesale energy prices by some amount for the near term, but most of the other claimed benefits are illusory. Furthermore, those lower wholesale energy prices may or may not translate to lower consumer costs, depending on retail market conditions and other factors, but would come at a cost to Maine’s existing and anticipated energy industry. Maine’s existing hydroelectric generators would suffer from lower energy prices while NECEC would displace biomass and fossil fuel units. New renewable investment will be deferred or delayed. The outcome would be lost jobs, lost property taxes and lost opportunities for existing Maine businesses. Website of the Governor of Maine, http://www.maine.gov/energy/initiatives/economicdevelopment.html 51 Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved APPENDIX A Assumptions This appendix provides additional detail on the assumptions incorporated into the UPLAN analyses. A.1 SCENARIOS AND CASES The UPLAN analysis examined nine scenarios representing three cases (Figure A.1): Figure A.1: Cases and Scenarios Case Description Current Conditions Case Name Case_1 Daymark Assumptions Case_2 Daymark Assumptions with Lower Gas Case_3 Scenario Description Base NECEC with incremental energy NECEC with constant HQ export Base NECEC with incremental energy NECEC with constant HQ export Base NECEC with incremental energy NECEC with constant HQ export Scenario Name Scenario_1_1 Scenario_1_2 Scenario_1_3 Scenario_2_1 Scenario_2_2 Scenario_2_3 Scenario_3_1 Scenario_3_2 Scenario_3_3 A.2 NATURAL GAS PRICES The following two sets of natural gas prices were assumed for key locations in New England for each of the natural gas price scenarios (Figure A.2): Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) Appendix A - Assumptions Page A-2 Figure A.2: Natural Gas Prices Current Conditions Forecast Group NG_NE_CT NG_NE_ME NG_NE_NEMA NG_NE_NH NG_NE_RI NG_NE_SEMA NG_NE_VT NG_NE_WCMA NG_NE_CT_P NG_NE_ME_P NG_NE_NEMA_P NG_NE_NH_P NG_NE_RI_P NG_NE_SEMA_P NG_NE_VT_P NG_NE_WCMA_P Year 2023 2023 2023 2023 2023 2023 2023 2023 2023 2023 2023 2023 2023 2023 2023 2023 Jan 11.32 10.91 10.91 10.91 11.32 11.32 10.91 10.91 14.32 13.91 13.91 13.91 14.32 14.32 13.91 13.91 Feb 9.25 9.09 9.09 9.09 9.25 9.25 9.09 9.09 12.25 12.09 12.09 12.09 12.25 12.25 12.09 12.09 Mar 5.99 6.42 6.42 6.42 5.99 5.99 6.42 6.42 6.49 6.92 6.92 6.92 6.49 6.49 6.92 6.92 Apr 3.16 3.34 3.34 3.34 3.16 3.16 3.34 3.34 3.66 3.84 3.84 3.84 3.66 3.66 3.84 3.84 May 2.86 2.89 2.89 2.89 2.86 2.86 2.89 2.89 3.86 3.89 3.89 3.89 3.86 3.86 3.89 3.89 Jun 2.84 2.87 2.87 2.87 2.84 2.84 2.87 2.87 3.84 3.87 3.87 3.87 3.84 3.84 3.87 3.87 Jul 2.99 3.02 3.02 3.02 2.99 2.99 3.02 3.02 3.99 4.02 4.02 4.02 3.99 3.99 4.02 4.02 Aug 3.01 3.04 3.04 3.04 3.01 3.01 3.04 3.04 4.01 4.04 4.04 4.04 4.01 4.01 4.04 4.04 Sep 2.84 2.88 2.88 2.88 2.84 2.84 2.88 2.88 3.34 3.38 3.38 3.38 3.34 3.34 3.38 3.38 Oct 2.93 2.96 2.96 2.96 2.93 2.93 2.96 2.96 3.43 3.46 3.46 3.46 3.43 3.43 3.46 3.46 Nov 3.88 4.51 4.51 4.51 3.88 3.88 4.51 4.51 6.88 7.51 7.51 7.51 6.88 6.88 7.51 7.51 Dec Average 7.75 4.90 8.00 4.99 8.00 4.99 8.00 4.99 7.75 4.90 7.75 4.90 8.00 4.99 8.00 4.99 10.75 6.40 11.00 6.49 11.00 6.49 11.00 6.49 10.75 6.40 10.75 6.40 11.00 6.49 11.00 6.49 Nov 5.95 6.85 5.95 6.85 5.95 5.95 6.85 5.95 6.84 7.74 6.84 7.74 6.84 6.84 7.74 6.84 Dec Average 8.03 5.95 8.93 6.54 8.03 5.95 8.93 6.54 8.03 5.95 8.03 5.95 8.93 6.54 8.03 5.95 8.92 6.84 9.82 7.43 8.92 6.84 9.82 7.43 8.92 6.84 8.92 6.84 9.82 7.43 8.92 6.84 Daymark Assumptions Forecast Group NG_NE_CT NG_NE_ME NG_NE_NEMA NG_NE_NH NG_NE_RI NG_NE_SEMA NG_NE_VT NG_NE_WCMA NG_NE_CT_P NG_NE_ME_P NG_NE_NEMA_P NG_NE_NH_P NG_NE_RI_P NG_NE_SEMA_P NG_NE_VT_P NG_NE_WCMA_P Year 2023 2023 2023 2023 2023 2023 2023 2023 2023 2023 2023 2023 2023 2023 2023 2023 Jan 10.59 11.49 10.59 11.49 10.59 10.59 11.49 10.59 11.48 12.38 11.48 12.38 11.48 11.48 12.38 11.48 Feb 12.14 13.04 12.14 13.04 12.14 12.14 13.04 12.14 13.03 13.93 13.03 13.93 13.03 13.03 13.93 13.03 Mar 8.93 9.28 8.93 9.28 8.93 8.93 9.28 8.93 9.82 10.17 9.82 10.17 9.82 9.82 10.17 9.82 Apr 5.36 5.71 5.36 5.71 5.36 5.36 5.71 5.36 6.25 6.6 6.25 6.6 6.25 6.25 6.6 6.25 May 3.27 3.62 3.27 3.62 3.27 3.27 3.62 3.27 4.16 4.51 4.16 4.51 4.16 4.16 4.51 4.16 Jun 3.42 4.02 3.42 4.02 3.42 3.42 4.02 3.42 4.31 4.91 4.31 4.91 4.31 4.31 4.91 4.31 Jul 3.42 4.02 3.42 4.02 3.42 3.42 4.02 3.42 4.31 4.91 4.31 4.91 4.31 4.31 4.91 4.31 Aug 3.42 4.02 3.42 4.02 3.42 3.42 4.02 3.42 4.31 4.91 4.31 4.91 4.31 4.31 4.91 4.31 Sep 3.42 3.77 3.42 3.77 3.42 3.42 3.77 3.42 4.31 4.66 4.31 4.66 4.31 4.31 4.66 4.31 Oct 3.42 3.77 3.42 3.77 3.42 3.42 3.77 3.42 4.31 4.66 4.31 4.66 4.31 4.31 4.66 4.31 A.3 EMISSIONS PRICES Figure A.3 provides the assumed emissions prices for Current Conditions versus Daymark Assumptions. Current Conditions are lower for states other than Massachusetts which is set at $15/metric ton, the price in the Daymark Assumptions. Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) Appendix A - Assumptions Page A-3 Figure A.3: Emissions Prices ($/MT) Current Conditions Year Month 2023 2023 2023 2023 2023 2023 2023 2023 2023 2023 2023 2023 Daymark Assumptions RGGI CO2 1 2 3 4 5 6 7 8 9 10 11 12 MA_CO2 4.95 4.96 4.96 4.97 4.98 4.99 5.00 5.01 5.01 5.02 5.03 5.04 CS_NOX 15.00 15.00 15.00 15.00 15.00 15.00 15.00 15.00 15.00 15.00 15.00 15.00 Year 3.35 3.35 3.36 3.37 227.71 228.09 228.47 228.85 229.23 3.40 3.40 3.41 Month 2023 2023 2023 2023 2023 2023 2023 2023 2023 2023 2023 2023 1 2 3 4 5 6 7 8 9 10 11 12 RGGI CO2 15.00 15.00 15.00 15.00 15.00 15.00 15.00 15.00 15.00 15.00 15.00 15.00 A.4 CHANGES TO THE NEW ENGLAND GENERATION FLEET Figure A.4 lists the additions to and retirements from the generation fleet in New England by 2023. Behind-the-meter renewable assumptions are provided in Section A.7 on load. Figure A.4: Changes to the Generation Fleet in New England Unit Name ADDITIONS Salem Harbor-CC1::BOSTON Salem Harbor-CC2::BOSTON PPL Wallingford Energy LLC-CTGT6::SWCT PPL Wallingford Energy LLC-CTGT7::SWCT Towantic Energy Center-CC:A:SWCT Towantic Energy Center-CC:B:SWCT West Medway Station-GT4::BOSTON West Medway Station-GT5::BOSTON Canal Plant-CC1::SEMA Bridgeport Station-CC::SWCT Clear River Energy Center-CC1:A:RI Clean Energy Connect MR Clean Energy Connect BID RETIREMENTS Pilgrim-1::SEMA Bridgeport Station-3::SWCT Unit Size Technology Inst. Date Retirement Date 376 376 50 50 395 395 96 96 370 526 542 1084 116 CC CC LM LM CC CC LMS LMS CC CC CC Imp Imp 6/1/2018 6/1/2018 6/1/2018 6/1/2018 6/1/2018 6/1/2018 6/30/2018 6/30/2018 6/1/2019 6/30/2019 6/1/2022 1/1/2023 1/1/2023 12/31/2050 12/31/2050 12/31/2050 12/31/2050 12/31/2050 12/31/2050 12/31/2050 12/31/2050 12/31/2050 12/31/2050 12/31/2050 12/31/2050 12/31/2050 683 385 NP ST 12/1/1972 8/1/1968 5/31/2019 7/31/2021 Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) Appendix A - Assumptions Page A-4 Unit Name Unit Size Technology Inst. Date Retirement Date RENEWABLES 1,300 MW of energy and FCM PV (not behind-the-meter) is modeled in ISONE in 2023, with different levels depending on the case A.5 TRANSMISSION Two new transmission lines are assumed to be built in New England before 2023 (Figure A.5): Figure A.5: New Transmission by 2023 Name SCOBTEWK001A WOBUWAKE001A Start Bus SCOBIE POND WOBURN End Bus TEWKSBURY WAKEFLD JCT Start Voltage 345 345 End Voltage 345 345 Start Date 1/1/2018 6/1/2019 A.6 INTERFACE LIMITS IN NEW ENGLAND Key interface limits and assumptions pertaining to the proposed NECEC SurowiecSouth Interface are provided in Figure A.6. Figure A.6: Interface Limits in 2023 Name HRI_NYISO-ISONE FCI_NE_CT-IMP FCI_NE_MENH FCI_NE_BSTN FCI_NE_SWCT FCI_NE_E-W FCI_NE_ORR-SO FCI_NE_WESTCT FCI_NE_SURO_S FCI_NE_NOSO FCI_NE_SEMARI FCI_LS-ERI Forward Cap Rating A 2023, MW 1400 3400 1960 5700 2940 3500 1175 4137 1500 in Base scenarios, 2200 in scenarios with NECEC 2800 1280 1000 Reverse Cap Rating A 2023, MW 1400 3400 2200 5700 2940 2200 1175 4137 1500 in Base scenarios, 2200 in scenarios with NECEC 2800 1280 1000 Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) Appendix A - Assumptions Page A-5 A.7 LOAD Load assumptions are based on ISO-NE’s 2017 CELT Reports. Hourly curves based on historical patterns are applied in UPLAN. Figure A.7: Monthly Peak Load by New England Zone for 2023 Year 2023 2023 2023 2023 2023 2023 2023 2023 2023 2023 2023 2023 NE_CT NE_ME NE_NEMA NE_NH NE_RI NE_SEMA NE_VT NE_WCMA BTM-PV + Month Peak (MW) Peak (MW) Peak (MW) Peak (MW) Peak (MW) Peak (MW) Peak (MW) Peak (MW) PDR (MW) Jan 4,835 1,819 3,775 1,894 1,089 2,359 950 2,506 3,393 Feb 4,669 1,523 3,821 1,885 1,132 2,410 874 2,526 3,393 Mar 4,446 1,510 3,677 1,811 1,090 2,299 842 2,428 3,393 Apr 3,712 1,477 3,022 1,550 929 1,917 744 2,007 3,797 May 4,296 1,162 3,710 1,758 1,165 2,316 655 2,444 4,756 Jun 5,574 1,351 4,760 1,911 1,564 3,016 758 3,131 4,758 Jul 6,203 1,542 5,088 2,415 1,737 3,229 842 3,344 4,760 Aug 6,532 1,560 5,286 2,493 1,794 3,377 861 3,485 4,763 Sep 5,195 1,314 4,355 1,986 1,444 2,760 725 2,885 4,766 Oct 3,744 1,190 3,285 1,548 988 2,035 680 2,139 3,797 Nov 4,208 1,675 3,327 1,718 987 2,090 870 2,213 3,797 Dec 4,908 1,874 3,911 1,935 1,140 2,422 973 2,579 3,659 Figure A.8: Monthly Load by New England Zone for 2023 Year 2023 2023 2023 2023 2023 2023 2023 2023 2023 2023 2023 2023 Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec NE_CT Energy (GWh) 2,639 2,262 2,384 1,728 2,126 2,346 2,844 2,981 2,341 1,878 2,185 2,571 NE_ME NE_NEMA Energy Energy (GWh) (GWh) 1,100 2,036 875 1,840 945 1,988 916 1,426 791 1,826 831 1,959 970 2,328 970 2,399 778 1,835 795 1,601 944 1,693 1,063 2,017 NE_NH Energy (GWh) 1,056 937 1,001 825 944 881 1,183 1,205 891 824 913 1,029 NE_RI NE_SEMA Energy Energy (GWh) (GWh) 590 1,246 546 1,133 587 1,217 455 935 598 1,171 650 1,246 802 1,465 821 1,532 637 1,194 490 997 497 1,044 581 1,229 Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved NE_VT NE_WCMA Energy Energy (GWh) (GWh) 536 1,342 439 1,206 459 1,300 393 987 348 1,242 355 1,329 416 1,547 421 1,594 337 1,235 359 1,066 469 1,118 535 1,306 APPENDIX B -- Bibliography Articles: • Michael Cousineau, “Northern Pass ‘shocked and outraged’ by application denial,” New Hampshire Union Leader, February 1, 2018. • Scott DiSavino, “NextEra to sell its oil-fired power plants in Maine,” Reuters, April 30, 2013, https://www.reuters.com/article/utilities-nextera-maine/nextera-to-sell-its-oilfired-power-plants-in-maine-idUSL2N0DH26U20130430 • Ron Gerwatowski, “Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues,” October 21, 2016, http://www.greenribboncommission.org/wp-content/uploads/2016/10/PracticalImplications-of-the-Mass.-Omnibus-Energy-Bill-and-Other-Energy-Market-Issues.pdf • Herman K. Trabish, “Previously put up for sale, NextEra takes Maine’s biggest power plant off the market,” Utility Dive, April 12, 2014, https://www.utilitydive.com/news/previously-put-up-for-sale-nextera-takes-mainesbiggest-power-plant-off-t/297172/ • Tux Turkel, “Maine regulators approve partial subsidy to keep biomass power plants alive,” Press Herald, April 4, 2018, https://www.pressherald.com/2018/04/04/pucvotes-to-approve-biomass-subsidy/ • Tux Turkel, “Owner pulls plug on sale of Maine’s largest power plant.” Portland Press Herald, August 12, 2014, https://www.pressherald.com/2014/08/12/owner-pulls-plug-on-saleof-maines-largest-power-plant/ Biomass Studies • Analysis of the Energy & Environmental Economics of Maine’s Biomass Industry, Prepared for the State of Maine GOVERNOR’S ENERGY OFFICE, October 2017, http://maineforest.org/wp-content/uploads/2017/12/Biomass-Report-to-Maine-GEO10.2017-INRS-and-MCG.pdf • Report to the Joint Standing Committee on Energy, Utilities and Technology and the Joint Standing Committee on Agriculture, Conservation and Forestry on Maine’s Biomass Industry, December 2016, http://lldc.mainelegislature.org/Open/Rpts/hd9502_5_b543m2_2016.pdf Data CME Group, Henry Hub Natural Gas Futures Quotes, http://www.cmegroup.com/trading/energy/natural-gas/natural-gas.html Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) Appendix B - Bibliography Page B-2 Energy Velocity Suite Ventyx Supply Curves with natural gas and carbon prices as assumed in the alternative UPLAN scenarios Economic Studies • Aqua Ventus OSW Project: Gabe, Todd M., University of Maine, School of Economics, ECONOMIC IMPACTS OF THE NEW ENGLAND AQUA VENTUS (PHASES I AND II) OFFSHORE WIND POWER PROGRAM IN MAINE, August 30, 2013, pp 16-25. http://maineaquaventus.com/wp-content/uploads/2017/05/Gabe-Report-Dec-4.pdf • Daymark Energy Advisors, NECEC Transmission Project: Benefits to Maine Ratepayers, Docket No. 2017-00232, September 17, 2017 • Maine Center for Business and Economic Research, University of Southern Maine, Charles Colgan and Ryan Wallace, “The Economic and Employment Contributions of the New England Clean Energy Connect,” Docket No. 2017-00232 • Maine Resource Integration Study (MRIS), Scope of Work: https://www.iso-ne.com/staticassets/documents/2016/03/a2_maine_resource_integration_study_scope_of_work. pdf Additional Scenarios and Cluster Formation, https://www.iso-ne.com/staticassets/documents/2017/09/a3_maine_resource_integration_study.pdf Federal Energy Regulatory Commission FERC Order No. 888, https://www.ferc.gov/legal/maj-ord-reg/land-docs/order888.asp ISO-New England • Generation Information System, http://www.nepoolgis.com/ • ISO New England Inc. Filing of CONE and ORTP Updates, Transmittal Letter at p. 6, Docket No. ER17-795-000 (filed January 13, 2017). • Presentations attached to SCG Engineering, LLC memo on impact of Bryant Mountain, August 8, 2016, https://www1.maine.gov/dacf/lupc/projects/wind_expedited_area/substantive_review Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) Appendix B - Bibliography Page B-3 /milton_twp/Public_Hearing/Requestor_Developer_Submission/SubRev_PubHearing Comments.pdf • Forward Capacity Auction Results, https://www.iso-ne.com/staticassets/documents/2018/02/fca_12_result_report.pdf • Generator Interconnection Queue, https://irtt.iso-ne.com/reports/external • Historical Hourly Flows and Limits, https://www.isone.com/isoexpress/web/reports/load-and-demand/-/tree/historical-hourlyflows-and-limits • ISO-NE Pricing Reports, https://www.isone.com/isoexpress/web/reports/pricing/-/tree/zone-info • Forward Capacity Market Demand and Prices, https://www.isone.com/isoexpress/web/reports/auctions/-/tree/fca-results • Maps and Diagrams, https://www.iso-ne.com/about/key-stats/maps-and-diagrams/ MA Clean Energy Website • Hydro Renewable Energy, Section 83D Request for Proposal Application Form, https://macleanenergy.com/83d/83d-bids/ • NECEC Section 83D Request for Proposal Application Form, https://macleanenergy.com/83d/83d-bids/ • New England Clean Energy Connect, Project Benefits, https://www.necleanenergyconnect.org/benefits/ • Public Version of Section 83D bids, https://macleanenergy.com/83d/83d-bids/ • RFP Template, https://macleanenergy.files.wordpress.com/2017/03/83d-rfp-andappendices-final.pdf Massachusetts Regulation, 310 CMR 7.74 New England Clean Energy Connect New England Clean Energy Connect, Map, https://www.necleanenergyconnect.org/map New England Clean Energy Connect Transmission Project (NECEC): New England Clean Energy Connect and Central Maine Power Company, Connect and Central Maine Power Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved Analytical Basis for Critique of Impacts from New England Clean Energy Direct (NECEC) Appendix B - Bibliography Page B-4 Company Request for a Certificate of Public Convenience and Necessity for the Construction of the New England Clean Energy Connect (NECEC) Transmission Project, Volume I. RGGI The Regional Greenhouse Gas Initiative, Auction Results, Allowance Prices and Volumes, https://rggi.org/Auctions/Auction-Results/Prices-Volumes U.S. Department of Energy, Energy Information Agency, • Historical City Gate Natural Gas Prices in Maine, https://www.eia.gov/dnav/ng/hist/n3050me3m.htm • 2016 Wind Technologies Report, https://www.energy.gov/sites/prod/files/2017/08/f35/2016_Wind_Technologies_Marke t_Report_0.pdf • Annual Energy Outlook, 2018, Levelized Cost of New Entry, https://www.eia.gov/outlooks/aeo/pdf/electricity_generation.pdf • Annual Energy Outlook 2018, https://www.eia.gov/outlooks/aeo/pdf/AEO2018.pdf • Annual Energy Outlook 2017, https://www.eia.gov/outlooks/aeo/pdf/0383(2017).pdf • Annual Energy Outlook 2016, https://www.eia.gov/outlooks/aeo/pdf/0383(2016).pdf • Form EIA-923, https://www.eia.gov/electricity/data/eia923/ • Form EIA-860, https://www.eia.gov/electricity/data/eia860/ • Maine State Energy Profile, https://www.eia.gov/state/print.php?sid=ME Websites Governor of Maine, http://www.maine.gov/energy/initiatives/economic-development.html Maine Maritime Academy, https://mainemaritime.edu/academics/undergraduateprograms/engineering/pet/ Northern Pass Website, http://www.northernpass.us/project-overview.htm Copyright © 2018 Energyzt Advisors, LLC All Rights Reserved