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Ron Gerwatowski, Presentation for: Friday, October 21, 2016 1 Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues

Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

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Page 1: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

Ron Gerwatowski, Presentation for:

Friday, October 21, 2016

1

Practical Implications of the Mass. Omnibus Energy Bill and Other

Energy Market Issues

Page 2: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

Massachusetts: Leadership in Climate Action

• The Legislation was a very positive and giant step toward addressing

Climate Change in the Energy Sector

• Main Objectives: • Meet the Global Warming Solutions Act Targets • Open the door to an Offshore Wind Industry in the Commonwealth • Procure Firm Clean Resources such as Large-scale hydro to replace retiring

generation (hydro probably the lowest cost clean energy alternative)

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Page 3: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

A Neutral Analyst’s Dilemma

• When analysts talk positively about certain climate action initiatives,

they are often unfairly criticized for not caring about the cost and the economy

CONVERSELY: • When analysts talk about the cost of certain climate action initiatives,

they are often unfairly criticized for not caring about the environment

• Navigating a middle course is a hazardous path these days!

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Page 4: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

Key Features of the Bill

Chapter 188 of the Acts of 2016 – An Act Relative to Energy Diversity

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Page 5: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

Large Scale Clean Energy Procurements •

• Section 83C – Offshore Wind Procurement • Requires solicitations for 1,600 MWs of offshore wind • Staggered procurements allowed • Beginning in 2017, through 2027 • Minimum of 400 MW increments

• Section 83D – Clean Resources Procurement • Requires solicitations for 9,450,000 MWs of clean resources • Equates to approximately 1,200 MW at a 90% capacity factor • Clean Resources defined as large-scale hydro and/or class I Renewable energy • Beginning in 2017, through 2022

• Altogether – equates to almost over one-third of Massachusetts Consumption

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Page 6: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

Other Provisions • Energy Storage

• Authorizes DOER to establish energy storage targets for utilities • Targets met by 2020 • DOER now seeking comments on significant study – a veritable “tome” on storage http://www.mass.gov/eea/energy-utilities-clean-tech/renewable-energy/energy-storage-initiative/

• Expanded Gas Leak Repair Mandate • Designed to address non-hazardous leaks that still have significant environmental impact on

GHG emissions • Other Provisions

• Small hydro net metering • PACE program • Other provisions as well

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Page 7: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

Main Objective – Addressing Climate Change by Achieving GHG Emissions Reductions to Meet GWSA Targets

• Clean Energy and Climate Plan update published by the Administration in January of 2016

• Relies heavily on large-scale hydro or similar clean resources, among many other intitiatives, to achieve a 25% reduction below 1990 levels by 2020 http://www.mass.gov/eea/docs/eea/energy/cecp-for-2020.pdf

• The Legislation sets in motion a plan to procure what is needed, and more

• When fully implemented by 2027, it could equate to as much as 8% in GHG emissions reduction potential, assuming Massachusetts can take credit for 100% of the regional emissions reduction created by the new resources

• A challenge to meet the 2020 target

• But the Commonwealth had to start somewhere. . . .

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Page 8: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

So What Will Whey Do with All that Procured Energy

and RECs?

Who Pays? Where Does it Go? The RECs? At What Price?

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Page 9: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

Who Pays for it?

• All customers taking delivery service from investor owned utilities – Eversource, National Grid, and Unitil

• Municipal Electric Light Plants (MLPs) in over 40 communities are exempt • Citizens served by MLPs are not responsible for paying any share of the costs of this

important statewide GHG emissions-reduction initiative • Responsibility placed only on citizens taking service from the investor-owned utilities

• Net costs will be billed on the “delivery” side of the electric bills by the

utilities; not the “commodity” side. Why???

• Above market costs need to be covered • The last customer standing problem – if charged in Basic Service, most customers would

leave the service to take supply from retail suppliers who have no obligation to pay for the power

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Page 10: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

What Happens to All this Energy?

• The utilities likely will sell all the energy in the regional market at market prices, incurring a loss or gain, depending upon market prices

• Why??? They are delivery companies. They only provide power supply through “Basic Service” under a specific set of rules that require short term bids every six months

• The purpose of the procurements is to reduce GHG emissions by displacing fossil generation – not to buy power on behalf of end-use customers

• SURPRISE !! All that electricity may not even be consumed in Massachusetts

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Page 11: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

What about the RECs from Offshore Wind? Getting Credit for Emissions Reductions under the GWSA

• One of the main purposes of the procurements is to achieve incremental GHG emission reductions that are credited toward the GWSA GHG reduction targets

• In order for the procurement to be credited, the RECs must be retired in Massachusetts

• The GWSA emissions inventory accounts for RECs by assuming the reduction occurs within the state that the REC is “settled” or “retired”

• If the RECs are not ultimately retired in Massachusetts, then the procurement will not meet the objective

• There are three different alternative treatments of the RECs

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Page 12: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

Method 1: Utilities Use for Basic Service

• Utilities have an RPS obligation that pertains solely to their Basic Service supply

• Basic Service represents approximately half the volumes of electricity delivered to their customers. For the other half, the retail suppliers have their own RPS obligation

• Method 1: utilities retain the RECs for RPS compliance associated with Basic Service by “virtually” selling them at imputed market prices to the Basic Service customers (retiring them in MA)

• In this scenario, Basic Service customers pay the cost for the RECs at the imputed market value (“virtual sale”), and the above market cost is passed along to all distribution customers

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Page 13: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

Method 2: Retiring Excess RECs Not Needed for RPS compliance, But Are Needed for GWSA • When the utility ultimately has more RECs acquired under the long-

term contracts than needed for RPS compliance for Basic Service, a determination needs to be made by DOER if the RECs are needed for GWSA compliance

• If needed for GWSA compliance to hit the emissions reduction target, the utility will retain the excess RECs and retire them in Massachusetts

• Full cost passed on to all distribution ratepayers

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Page 14: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

Method 3: Excess RECs Not Needed for either RPS compliance or GWSA compliance • When the utility ultimately has more RECs acquired under the long-

term contracts than needed for RPS compliance for Basic Service, AND • They are not needed for GWSA compliance to hit the emissions

reduction target THEN • The utility will sell the excess RECs in the regional market at the

prevailing market price

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Page 15: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

The Contract Price

• What will the bundled price be for energy and RECs? “I don’t know, BUT . . . .”

• Offshore wind likely will be substantially above-market in the initial tranches • Delaware study projects 16¢ per kWH in near term, decreasing to approximately 12.8¢ by 2028 https://www.ceoe.udel.edu/File%20Library/About/SIOW/MA-Offshore-Wind-Future-Cost-Study-FINAL-14-Mar-16.pdf

• Compare to average wholesale energy price of 4¢ to 6¢ per kWH in 2015 and 2014, respectively; but offshore wind would be a purchase of both energy and renewable energy certificates (RECs)

• Large-scale hydro more difficult to project, but likely to be above-market when transmission infrastructure cost is included in PPA price (for example: Northern Pass estimated at $1.6 billion), with no RECs

• Any cost impacts will not be seen for 4 to 6 years, as we wait for associated infrastructure to be built 15

Page 16: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

Bill Impacts are Contingent on Many Unknown Factors • Measuring potential bill impacts 4 to 6 years is always imprecise and

speculative.

• Net impact depends upon: • Energy market value each year in which energy is resold • Time when energy is produced • Market value of RECs that are retained or resold • Design of the rates that recover the above-market costs • Forecasted kilowatt-hours over which the costs are recovered • How many customers avoid contributions by self-generating

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Page 17: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

Illustrative Example of How Annual Aggregate Cost to Ratepayers would be Calculated (slide 1 of 3)

========================================================== ASSUMPTIONS for this 1-Year Example: (i) 400 MW of Offshore Wind (ii) Fixed price per MWhr of $150 (i.e., 15¢ per kWH)

(iii) Capacity factor of 45% = 1,576,800 MWhrs produced (iv) Average market price of energy = $50 MWhr (v) Average market price of RECs = $60 MWhr (vi) Cost spread to ratepayers over 48 million MWhrs for the year REMEMBER! This is only Illustrative, it’s NOT a forecast!

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Page 18: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

Illustrative Example of How Annual Aggregate Cost to Ratepayers would be Calculated (slide 2 of 3)

========================================================= All the RECs Used for Basic Service: 1,576,800 MWHrs sold at $150 = $236,520,000 Less proceeds from energy sold in the market at $50 = $ 78,840,000 Less proceeds from RECs retained and sold virtually at $60 for Basic Service = $ 94,608,000 Net ABOVE MARKET Cost = $ 63,072,000 Net Cost Recovered over 48 million MWhrs = $1.31 MWhr Hypothetical Charge on the electric bill = $0.00131 per KWhr

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Page 19: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

Illustrative Example of How Annual Aggregate Cost to Ratepayers would be Calculated (slide 3 of 3)

========================================================== RECs not needed for Basic Service, but are needed for GWSA Compliance: 1,576,800 MWHrs sold at $150 = $236,520,000 Less energy sold in the market at $50 = $ 78,840,000 Net ABOVE MARKET Cost = $157,680,000 Net Cost Recovered over 48 million MWhrs = $3.29 MWhr Hypothetical Charge on the electric bill = $0.00329 per KWhr

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Page 20: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

What about the Large Scale Hydro? Getting Credit for Emissions Reductions under the GWSA

• Large scale hydro does not produce eligible RECs in Massachusetts

• But the purchase still achieves incremental GHG emission reductions in the region

• The utilities will obtain a right to all “environmental attributes,” even if not tradeable

• As long as they are held in Massachusetts, the emissions credit presumably can be accounted for under the GWSA

• It is like “method 3” and the last illustrative example for the sale of Offshore wind.

• The energy is sold in the market and the proceeds netted against the contract price

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Page 21: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

Illustrative Example for Large-scale Hydro (slide 1 of 2)

========================================================== ASSUMPTIONS for this 1-Year Example: (i) 9,450,000 MWhrs of Large-scale Hydro (ii) Fixed price per MWhr of $80 (i.e., 8¢ per kWH)

(iii) Average market price of energy = $50 MWhr (v) Cost spread to ratepayers over 48 million MWhrs for the year REMEMBER! This is only Illustrative, it’s NOT a forecast!

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Page 22: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

Illustrative Example for Large-scale Hydro (slide 2 of 2)

========================================================== 9,450,000 MWHrs sold at $80 = $ 756,000,000 Less energy sold in the market at $50 = $ 472,500,000 Net ABOVE MARKET Cost = $ 283,500,000 Net Cost Recovered over 48 million MWhrs = $5.81 MWhr Hypothetical Charge on the electric bill = $0.00581 per KWhr

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Page 23: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

What is the REC Market Effect?

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Page 24: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

Surplus of RECs

• Surplus position for the next three to four years, with more RECs eligible in the region than needed in Massachusetts

• Not necessarily a bad result, because a surplus keeps REC prices lower, which leads to lower electricity costs for Massachusetts ratepayers during the interim

• REC market will continue in over-supply at lower cost to ratepayers, unless the RPS is increased

• Should the RPS be increased? Consider the market issues . . . .

Page 25: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

Magnet Effect of Higher ACP in Massachusetts • The regional REC market not a true “regional” market; lack of uniformity

• The Alternative Compliance Payment (ACP) for Massachusetts and Rhode Island is $67 (escalating

each year), compared to Connecticut ACP that is fixed at $55 and NH at $56 (escalating)

• Older vintage projects are drawn first to the Massachusetts market; when RPS increases, more out-of-state, older-vintage projects sell RECs to Massachusetts

• Is the RPS increase really causing lower GHG emissions for Massachusetts?

• Buying more RECs from existing projects does not necessarily result in incremental GHG emissions reductions

Page 26: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

What Drives New Projects?

• Original Rational for RPS • Provide additional revenue for projects to get financing

• 2008 Financial Crisis:

• No longer can finance large-scale projects without long-term commitment that supports the financing

• Rationale for Introducing long-term contracting: • The RPS is not enough to finance large-scale renewables, we need long-term commitments or special RPS

carve-out obligations to finance those projects

• It doesn’t work both ways: • It is not consistent to maintain that an increase in the RPS will result in many more new renewable generation

projects – while at the same time saying that projects need long-term commitments • It is the long-term commitments and special carve-outs that are driving the addition of large-scale renewable

projects, not increases in the RPS

Page 27: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

Massachusetts: 2014 RPS Class I Compliance Source: MA DOER http://www.mass.gov/eea/docs/doer/rps-aps/rps-aps-2014-annual-compliance-report.pdf

2014 Compliance by Generator Location -- Massachusetts acquired 76% of RECs out-of-state -- Of the 24% in-state, HALF of that was solar PV (SRECs)

NMISA 1.5%

PEI 4.1%

VT 8.8%

QC 8.6%

RI 0.2%

CT 0.2%

NY 19.0%

NH 11.0% ME

22.4%

MA 24.1%

Page 28: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

Massachusetts: 2014 RPS Class I Compliance Source: MA DOER http://www.mass.gov/eea/docs/doer/rps-aps/rps-aps-2014-annual-compliance-report.pdf

Compliance by Generator Location, 2003-2014

5,000

4,500

QC

PEI 4,000

NY

Outside ISO-NE

3,500 NMISA

3,000 VT

2,500

NH

RI

2,000 MA

1,500 ME

1,000 CT

500

0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Compliance Year

Page 29: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

Should the RPS be Increased? If so, When?

• Senate version of bill proposed an increase in escalation rate to 2% per year; ultimately did not get included in final bill

• OBSERVATION: If the RPS had been raised in the bill for 2017, it likely would have increased RPS compliance costs to ratepayers for next 3 to 4 years, without any material decrease in GHG emissions reductions until the new projects were built

• Should the State commission a study to do a market and emissions analysis before the Legislature considers increasing the RPS? (ok, I admit this one is my personal view . . . .)

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Page 30: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

Wholesale Markets

What is the impact on the operation of the wholesale markets?

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Page 31: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

Future Impacts on Generation

• It will take another three to six years before we see the effects of high volumes from the clean energy procurements

• But when they enter the market, it will have a significant impact on the revenues of other

generation resources (including nuclear), that rely on energy revenues to stay in business

• As zero fuel cost generation bids in the market at zero, it knocks out the bids of the more expensive units, lowering the market price for all generation

• Over time, there may be a revenue shift to the capacity market, as generators realize they need more revenue to make up the loss of energy revenue

• But there is significant concern that it will not be enough for existing fleet 31

Page 32: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

Risk of Loss of Remaining Nuclear Units

• Concern is within the next ten years, low energy revenues will have an impact on the nuclear units in New Hampshire and Connecticut (Seabrook & Millstone)

• The loss of these nuclear units could cause GHG emissions to rise, if these zero GHG emissions units shut down and are inevitably replaced by natural gas and dual fuel generation

• Could wipe out all the emissions reduction gains from the clean energy procurements

• Also a perceived need to send further price signals beyond RGGI to incent lower

emissions resources

• Efforts now underway to consider changes in the wholesale market

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Page 33: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

Looking ahead at Market Risks Generally

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Page 34: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

Cost Convergences in View

• Risk of higher winter prices during colder winters after Pilgrim and Brayton Point Stations close

• Higher capacity prices beginning in mid 2017 through 2019

• When the clean energy resources finally commence service beyond 2019, they could temper the wholesale price trajectory

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Page 35: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

Wholesale Energy Prices Continue to Track Natural Gas Prices Source: U.S. Energy Information Administration, based on SNL Energy

https://www.eia.gov/todayinenergy/detail.php?id=25672#

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Page 36: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

Pricing Patterns in Futures Market: 2017-2021

Source of Market Data Used to Produce Graph: CME Group (Oct. 12, 2016)

http://www.cmegroup.com/trading/energy/electricity/nepool-internal-hub-5-mw-peak-calendar-month-day-ahead-swap-futures.html

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0

10

20

30

40

50

60

70

80

90

Nov

-16

Jan-

17

Mar

-17

May

-17

Jul-1

7

Sep-

17

Nov

-17

Jan-

18

Mar

-18

May

-18

Jul-1

8

Sep-

18

Nov

-18

Jan-

19

Mar

-19

May

-19

Jul-1

9

Sep-

19

Nov

-19

Jan-

20

Mar

-20

May

-20

Jul-2

0

Sep-

20

Nov

-20

Jan-

21

Mar

-21

May

-21

Jul-2

1

Sep-

21

Nov

-21

New England -- Energy Futures Market Prices ($MWhr)

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Capacity Prices Rising 2017-2019

• With the retirements of Pilgrim, Brayton Point, and other older units, the forward capacity auctions have yielded much higher capacity prices

• Beginning in 2017, capacity prices will rise by over $1 billion

• Every $1 billion roughly equates to approximately $0.008 per kWH (almost 1 cent)

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Page 38: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

Annual Value of Wholesale Markets Source: ISO-NE https://www.iso-ne.com/about/key-stats/markets

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Future Estimated Forward Capacity Market Costs Source: ISO NE https://www.iso-ne.com/static-assets/documents/2016/09/clg_meeting_nuara_iso_update_presentation_september_15_2016_final.pdf

$1.110 $1.220

$2.317

$3.633 $3.424

$1.249

$4.0

$3.5

$3.0

$2.5

$2.0

$1.5

$1.0

$0.5

$0.0

$ (in

bill

ions

)

Annual Forward Capacity Market Costs Based on Capacity Resources Clearing in Recent Forward Capacity Auctions (in billions)

2015 2016 2017 2018 2019 2020* * The Forward Capacity Market cost for 2020 only accounts for the capacity resources that cleared in FCA #10; it does not account for the costs associated with the capacity resources that will clear in FCA #11 (needed for the 2020-2021 capacity commitment period).

NOTE: Annualized Forward Capacity Market costs include the costs associated with two capacity commitment periods. These values may fluctuate before and during the relevant capacity commitment period if resources seek to buy or sell their Capacity Supply Obligations through annual and monthly reconfiguration auctions.

Page 40: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

And while we’re on the subject of wholesale markets . . . . • What about that gas capacity controversy? • Very respectable industry participants with views on both sides of this question

• ISO New England has issued strongly worded warnings recently:

• Gordon Van Welie, 9/28/16: “We currently have a precarious operating situation in the winter time and we're worried about it becoming unsustainable beyond 2019.”

http://www.snl.com/web/client?auth=inherit#news/article?id=37939124&cdid=A-37939124-10289

• Other energy industry players believe the concern may be too conservative

• Fear that new capacity would prolong natural gas dependency to the detriment of reaching GHG emissions reduction goals

• ISO may eventually try to take action on its own to require more stringent fuel security commitments, which would lead to inevitable litigation at FERC

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Page 41: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

But don’t worry!

Other than all that . . . reducing emissions should be easy and the markets will be just fine . . . sort of . . . .

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Page 42: Practical Implications of the Mass. Omnibus Energy Bill ......Practical Implications of the Mass. Omnibus Energy Bill and Other Energy Market Issues. Massachusetts: Leadership in Climate

Additional Information Available

• Information on IMAPP can be found at: http://www.nepool.com/IMAPP.php

• See also the following articles by yours truly : http://commonwealthmagazine.org/environment/the-inconvenient-truth-of-energy-policy/ http://commonwealthmagazine.org/environment/are-municipal-light-firms-doing-enough/ http://commonwealthmagazine.org/environment/assessing-risk-in-the-states-energy-debate/

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