memo

To: NECPUC

From: Eric Johnson, Director, External Affairs, ISO

Date: March 31, 2021

Subject: Update on Recent and Upcoming Regional Activities

The ISO’s External Affairs Department prepares this memo to provide updates on regional energy issues. It includes stakeholder and industry meetings that may be of interest.

• Federal Affairs Updates • Federal Energy Regulatory Commission Updates • FERC Order 2222 – ISO New England Compliance Efforts Update • 2021 Regional Energy Outlook Published • Pre-Summer 2021 OP4 Training for Government Contacts Scheduled for May 25 • FCA #16 Permanent Delist and Retirement Bids Submitted • ISO Releases Final 2021 PV Forecast • Markets Committee Updates • Planning Advisory Committee Updates • Environmental Advisory Group Update • Consumer Liaison Group Update • Cold Weather Drives Natural Gas Prices, Loads, and LMPs Significantly Higher • Upcoming NEPOOL Committee Meetings and NECPUC Call Schedule • External Conferences and Meetings of Interest

ISO-NE Public ISO New England Inc. One Sullivan Road, Holyoke, MA 01040-2841 www.iso-ne.com T 413 540 4515 F 413 535 4379

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Federal Affairs Update Congress Examines Texas Blackouts, Broader Electric Grid Reliability Issues In March, several Congressional panels convened hearings to examine the February load-shedding events in Texas and several neighboring states. Witnesses highlighted that extreme weather is not unique to Texas and that other regions in the country — including New England — experience impacts to electric reliability during harsh winter conditions. A few of the more notable hearings included: • March 10: Senate Environment & Public Works • March 11: Senate Energy & Natural Resources, including testimony from PJM Interconnection and the North American Electric Reliability Corporation (NERC) • March 18: House Science, Space, & Technology • March 24: House Energy & Commerce, including testimony from the Electric Reliability Council of Texas and NERC

Government Accountability Office Releases Report on Climate Change and Electric Grid Resilience On March 5, the U.S. Government Accountability Office released a report, Electricity Grid Resilience: Climate Change Is Expected to Have Far-reaching Effects and DOE and FERC Should Take Actions. The study concludes with a pair of recommendations: “(1) [U.S. Department of Energy] should develop a department-wide strategy to enhance grid resilience to climate change, and (2) [Federal Energy Regulatory Commission] should identify and assess climate change risks to the grid and plan a response.” BACK TO TOP

Federal Energy Regulatory Commission Update ISO New England’s President & CEO Participates in FERC Technical Conference on Wholesale Markets On March 23, ISO New England President & CEO Gordon van Welie participated in a technical conference convened by the Federal Energy Regulatory Commission (FERC) on Resource Adequacy in the Evolving Electricity Sector.

The first panel on March 23 included van Welie, CEOs from NYISO and PJM Interconnection, and representatives from the Public Utilities Commission and the Department of Energy and Environmental Protection. Subsequent panels focused more narrowly on the capacity market in the PJM Interconnection. Additional, yet-to-be-scheduled technical conferences will focus on capacity markets in New York and New England.

During the panel and in the ISO’s filed comments, van Welie stressed the importance of the Forward Capacity Market for electric reliability while acknowledging that wholesale markets need to evolve to meet the region’s reliability and public policy needs.

FERC Plans Technical Conference on Climate Change, Extreme Weather, and Electric System Reliability The Commission recently announced that it will conduct a technical conference on June 1 and 2 regarding the impact of climate change on electric system reliability.

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FERC Sets Schedule for Additional Upcoming Technical Conferences on Wholesale Markets, Grid Electrification, and FERC Office of Public Participation The Commission has recently announced that it will conduct several technical conferences in the coming months. The schedule includes (but is not limited to):

• April 16 & 19: To discuss the upcoming establishment of the Commission’s Office of Public Participation. FERC is in the midst of a series of public sessions soliciting feedback and recommendations, with April 19 session taking place from 6-9 p.m. • April 29: FERC will hear from panelists to discuss Electrification and the Grid of the Future. The Commission will focus on “the shift from non-electric to electric sources of energy at the point of final consumption (e.g., to fuel vehicles, heat and cool homes and businesses, and provide process heat at industrial facilities).” • September 30: This annual technical conference focuses on an array of issues affecting reliability of the bulk power system, and often includes participation from the North American Electric Reliability Corporation as well as ISOs and RTOs.

FERC Releases 2020 Wholesale Market Report At FERC’s March 18 Open Meeting, Commission staff presented the 2020 State of the Markets report. The annual report addresses “key trends in electricity and natural gas markets, important topics, and notable developments in 2020” including the impact of the pandemic and extreme weather on energy markets.

The report highlights that New England, along with several other regions experienced a reduction in wholesale electricity prices (as well as both coal- and nuclear-powered generation) in 2020. FERC highlights that the Forward Capacity Auction conducted in 2020 (FCA #14) resulted in the “lowest price in the market’s history.” Discussing the importance of liquefied natural gas (LNG) imports, the study highlights that “[b]ecause constrained pipelines may be unable to fully meet market demand on peak winter days, New England accesses additional supply from the Everett LNG import terminal near Boston, as well as the offshore Northeast Gateway and from the Canaport terminal in eastern Canada.” BACK TO TOP

FERC Order 2222 – ISO New England Compliance Efforts Update The ISO continues to work with stakeholders on compliance efforts in support of FERC Order No. 2222, Participation of Distributed Energy Resource Aggregations in Markets Operated by RTOs/ISOs. On March 22, the ISO notified stakeholders of its intention to seek an extension of the compliance filing deadline for FERC Order 2222. The current filing deadline is July 19, 2021, and the ISO plans to request an updated compliance filing deadline of February 1, 2022. The extension will allow more time for stakeholder engagement and formulation of market participation models that allow DERs to participate in the wholesale markets, to the greatest extent possible, through aggregations. The ISO continues its work with stakeholders on order compliance through various NEPOOL committees:

• Markets Committee (MC): At the March 9 MC meeting, ISO staff discussed the ISO’s high-level design approach to enable participation of Distributed Energy Resource Aggregation (DERA) in the Forward

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Capacity Market and other refinements to the ISO’s high-level DERA participation models. Materials from the meeting are available on the ISO’s MC Webpage. • Transmission Committee (TC): At the March 23 TC meeting, ISO staff discussed operational coordination, interconnection, and market participation service agreements. Materials from the meeting are available on the ISO’s TC webpage. • Meter Reader Working Group (MRWG): The MRWG met on March 12 and 24 to discuss agenda items, including FERC Order 2222. Materials from these meetings are available on the ISO’s MRWG webpage. (The Markets Committee referred several Order 2222 related metering topics to the MRWG for discussion and requested observations and recommendations by April 7, 2021.) BACK TO TOP

2021 Regional Energy Outlook Published The 2021 Regional Electricity Outlook (REO), an annual report that examines the challenges and trends affecting New England’s power system, is now available. The REO explains the innovative solutions the ISO and regional stakeholders are pursuing to ensure reliable electricity for the region. The REO is also one of many ways the ISO informs stakeholders about the current state of the grid and issues affecting its future. Download a PDF of the REO in its entirety or read the press release. BACK TO TOP

Pre-Summer 2021 OP4 Training for Government Contacts Scheduled for May 25 The ISO has scheduled its pre-summer training for government contacts for May 25, 2021. The purpose of this meeting is to review the summer capacity outlook and the ISO's communications protocol for OP4 events and other system emergencies in advance of the summer peak period in New England. The session will be conducted by the ISO’s Corporate Communications, External Affairs, and Operations Departments and will cover the types of system events that trigger communications with government officials, as well as when and how the ISO would initiate such communications. BACK TO TOP

FCA #16 Permanent Delist and Retirement Bids Submitted Requests by resources to exit the ISO’s Forward Capacity Market (FCM) for Forward Capacity Auction (FCA) #16 were due in mid-March and the ISO has posted related information to the FCM webpage as aggregate figures. The information on the site pertains to retirement and permanent delist bids that would take effect with the Capacity Commitment Period starting June 1, 2025.

In total, more than 250 MW of resources submitted requests to retire and about 2 MW submitted permanent delist bids. A delist bid is a request to withdraw from the FCM, and a retirement bid is a request to leave all of the ISO’s markets. A breakdown by load zone is available on the ISO’s website. BACK TO TOP

ISO Releases Final 2021 PV Forecast On March 22, the ISO presented its final 2021 PV Forecast to the Distributed Generation Forecast Working Group (DGFWG). The ISO also presented the stakeholder comments that it received on the

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draft 2021 PV Forecast and the ISO’s response. The Final 2021 PV Forecast will appear in the 2021 Capacity, Energy, Loads and Transmission Report (CELT), which the ISO plans to publish by May 1, 2021. BACK TO TOP

Markets Committee Updates Parameters for Forward Capacity Auction 16 (FCA #16) At its March meetings, the Markets Committee discussed and voted on updated values related to the parameters that govern activity in the ISO’s annual Forward Capacity Auction (FCA #16.) The ISO had asked for an opportunity to update its Offer Review Trigger Prices (ORTPs) based on stakeholder input and further review. In addition, prior to the March MC, the ISO received a deficiency letter from FERC on the FCM parameter values filed in December, 2020. As the ISO planned its response to the FERC letter, it identified an inconsistency in the earlier calculations for CONE/Net CONE and the Performance Payment Rate. The new values were reviewed and discussed at the MC. There was also discussion regarding increased flexibility in certain bidding requirements for FCA #16 given the timing of these changes. For more information, see the Markets Committee page on the ISO’s website.

The items were then considered by the Participants Committee at its March 24 meeting. The ISO filed its response to FERC’s deficiency letter and a separate filing on the ORTP values will follow. BACK TO TOP

Planning Advisory Committee Updates The Planning Advisory Committee (PAC) met on March 17 via WebEx to discuss the draft 2021 Capacity, Energy, Loads and Transmission (CELT) Report, as well as a variety of ongoing, long-term studies.

Draft 2021 CELT Load Forecast Update The ISO’s load forecasting staff presented information related to the forthcoming 2021 CELT Report, including the gross energy and summer demand forecasts, and the energy efficiency, photovoltaic, transportation electrification, and heating electrification forecasts. These items will be discussed in more detail at the April 14, 2021 PAC meeting, along with the regional gross forecast and the net winter demand forecast.

Energy Storage in Transmission Planning Studies ISO transmission planning staff presented an overview of the ISO’s approach to transmission planning assumptions for battery storage to be used in future transmission planning studies, such as those conducted for needs assessments, requests for proposals, and public policy transmission studies. Because different study goals necessitate the use of different assumptions, the presentation did not address studies for solution studies, transmission service and resource qualification, system impact studies, or the ISO’s Transmission Planning for the Clean Energy Transition.

Cape Cod Resource Integration Studies ISO staff presented preliminary results of the Cape Cod Resource Integration Study (CCRIS), which was initiated by the ISO and first presented at the October 2020 PAC meeting. Initial results demonstrated that, through the completion of a new 345 kV transmission line on Cape Cod, 2800 MW of offshore wind could be interconnected without the need for significant new transmission infrastructure beyond Cape Cod. Cost estimates related to the CCRIS are anticipated to be ready in May.

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ISO staff also presented a preview of a Second Cape Code Integration Study (Second CCRIS), which is expected to begin in May. The Second CCRIS will build on the First CCRIS described above and will address matters including the addition of offshore wind greater than 2800 MW in the Cape Cod Area.

Forward Capacity Auction #16 Transmission Transfer Capabilities & Capacity Zone Development ISO system planning staff presented a review of interface transfer capabilities and the proposed capacity zone construct for Forward Capacity Auction #16 (FCA #16), which will be held in February 2022 for the 2025‒2026 capacity commitment period. The results of the potential capacity zone boundaries tests will be presented at the May 2021 Power Supply Planning Committee meeting.

2021 Regional System Plan Kick-off ISO staff presented background on the ISO New England Regional System Plan (RSP) and discussed highlights of the upcoming 2021 RSP (RSP21), which is currently under development. ISO staff also highlighted the planned released of the draft RSP21 in July and the final version after a public meeting in October.

Draft RSP Transmission Projects and Asset Conditions Update A presentation on Regional System Plan (RSP) transmission projects and asset conditions included updates from ISO Transmission Planning staff covered highlights of the Regional System Plan (RSP) project list update, the March 2021 RSP project list update, the status of major transmission projects, and a March 2021 asset-condition list update.

Updates on System and Transmission Planning Studies ISO system planning staff presented an update on the Western and Central (WCMA) 2029 Solution Study scope of work. All related reports and materials are available on the ISO’s WCMA Key Study Area webpage.

ISO system planning staff also presented the results of the Lower (LME) 2030 Needs Assessment. All related reports and materials are available on the ISO’s Maine Key Study Area webpage. BACK TO TOP

Environmental Advisory Group Update At the February 19 EAG meeting, ISO staff presented an overview of the draft 2019 Draft ISO New

England Electric Generator Air Emissions Report, as well as global CO2 policy development, regional CO2 trends, shifts in regional resource mix, and the impact of emissions pricing on regional energy costs. Materials and presentations from the EAG meeting are located on the EAG webpage. The EAG’s next meeting is scheduled for May 4. BACK TO TOP

Consumer Liaison Group Update March 11, 2021 Consumer Liaison Group (CLG) Meeting The first CLG meeting of 2021 was held via WebEx on March 11. The meeting included a panel discussion focused on the impact of the Biden Administration’s energy policy on energy consumers. The meeting also included a regional update from ISO New England. Both a recording and a written summary of the event are available on the CLG page on the ISO New England website.

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Other CLG meetings are scheduled for June 17, September 9, and December 1.

2020 Report of the Consumer Liaison Group Now Available On March 10, the CLG Coordinating Committee and ISO New England released The 2020 Report of the Consumer Liaison Group. The report includes a statement by the CLG Coordinating Committee on future goals and initiatives; a summary of CLG activities in 2020; an update on ISO New England activities and initiatives; and information on wholesale electricity costs and retail electricity rates in New England.

The CLG is a forum for the exchange of information between ISO New England and electricity consumers in New England. Meetings are free and open to the public. Attendees include consumers and consumer representatives (e.g., state consumer and ratepayer advocates), state business and industry associations, chambers of commerce, individual businesses, trade groups, nonprofit organizations, and other end users. For more information on the CLG, please visit the CLG webpage. BACK TO TOP

Cold Weather Drives Natural Gas Prices, Loads, and LMPs Significantly Higher The Average Day-Ahead and Real-Time energy prices for February were $73.12/MWh and $71.45/MWh; respectively. Real time prices were 63% higher than the previous month’s average (January 2021) and 252% higher than the previous year’s (February 2020). Year-over-year, Average Real-Time Load was 217% higher, while Peak Real-time load was 26% higher.

The average natural gas price in February was significantly higher (273%) than the previous year (February 2020). The average price of natural gas in February was $8.59/MMBtu, up 78% from $4.83/MMBtu in January 2021. Average Natural Gas Price represents the volume-weighted average price of four ICE indices: Algonquin, Algonquin non-G, Portland, and .

vs. Month Ago: vs. Year Ago: February 2021 Compared to Compared to January 2021 February 2020 Average Day-Ahead LMP (hub) $73.12/MWh +71% +217%

Average Real-Time LMP (hub) $71.45/MWh +63% +252%

Average Natural Gas Price $8.59/MMBtu +78% +273%

Peak Real-Time Load 21,353 MW +13% +26%

Average Real-Time Load 14,498 MW +1% +6%

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Upcoming NEPOOL Committee Meetings and NECPUC Call Schedule All upcoming meetings are now teleconferences, please see committee webpages for more information. Planning NECPUC Participants Markets Reliability Transmission Month Advisory Conference Committee Committee Committee Committee Committee Call April 1, 15 6, 7 13 14 27 23 May 6, 13 11, 12 18 19 27 14 June 3, 11, 22-24 8, 9 15 16 10 11

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External Conferences and Meetings of Interest There are currently no scheduled meetings to report. BACK TO TOP

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