memo

To: NECPUC

From: Eric Johnson, Director, External Affairs, ISO

Date: May 28, 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.

• ISO Releases Summer 2021 Forecast; Expects Adequate Electricity Supplies for Upcoming Season • Final 2021 Forecasts Released for Energy Efficiency, Solar/PV Investment, and Transportation and Home Heating Electrification, as Part of the ISO’s Annual Forecast Report • Federal Affairs Update • Federal Energy Regulatory Commission Update • ISO New England Reviews Updated 2021 ISO Work Plan • Markets Committee Update • Pathways to the Future Grid Analysis Continues • Planning Advisory Committee Update • Consumer Liaison Group to Meet June 17 • Environmental Advisory Group Update • ISO New England to Present Preliminary 2022 Budget to State Agencies • Behind-the-Meter Solar Data to be Added to ISO Express Dashboard • Milder Weather and Lower Natural Gas Prices Drive Lower LMPs • 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

NECPUC Update May 2021 Page 2 of 9

ISO Releases Summer 2021 Forecast; Expects Adequate Electricity Supplies for Upcoming Season On May 24, ISO New England released its summer 2021 electricity forecast, and noted that “New England should have the resources necessary to meet consumer demand for electricity under both average and above-average temperatures this summer.” Under typical weather conditions (the 50/50 forecast), the ISO predicts a peak electricity demand of approximately 24,810 megawatts (MW); however, that peak would rise to 26,711 MW during a stretch of above-average summer weather (the 90/10 forecast).

The ISO expects in excess of 31,000 MW of capacity to be available this summer, and incorporates the effect of more than 2,600 MW of non-dispatchable energy-efficiency measures into the summer forecast. The ISO’s forecast also includes the expected effect of more than 800 MW in peak-load reduction from the region’s behind-the-meter photovoltaic installations.

The seasonal forecasts do not account for unprecedented, extreme conditions. The ISO is currently assessing ways to plan and prepare for these types of low-probability, high-impact events.

The ISO has also released a two-page 2021 Summer Outlook at-a-glance.

ISO Conducts Summer Communications and Outreach Training On May 20, the ISO held its biannual training for federal and state government officials on the ISO’s communications plan for power system emergencies. The plan is triggered by various ISO operating procedures, including actions during a capacity deficiency (shortage of operating reserves) and during an emergency (implementation of controlled power outages). The training serves as a reminder of the outreach the ISO will undertake during system emergencies. (In late fall the ISO conducts a similar training that looks ahead to the coming winter.) The May 20 session also included a presentation from the Northeast Power Coordinating Council to review its summer forecast.

The ISO also reminds the various agencies and organizations on the call to provide the ISO with updated contact information so the relevant personnel receive information during these types of events. BACK TO TOP

Final 2021 Forecasts Released for Energy Efficiency, Solar/PV Investment, and Transportation and Home Heating Electrification, as Part of the ISO’s Annual Forecast Report Recently, ISO New England finalized and released four, 10-year forecasts for various investments in technologies affecting demand for electricity on the bulk power system.

• The 2021 Energy Efficiency Forecast captures current and expected investments in a variety of energy efficiency technologies in New England. After netting out expiring efficiency measures, the ISO forecasts an average annual energy savings of 763 gigawatt (GWh) hours in New England through 2030 due to these investments. • The 2021 PV (Photovoltaic) Forecast estimates the growth in solar/PV resources in the region. The ISO develops the forecast with stakeholder input through the Distributed Generation Forecast Working Group. The most recent forecast predicts that by 2030, New England will boast 10,032 MW (nameplate) of solar/PV resources, a substantial increase from just under 4,000 MW (nameplate) in 2020.

ISO-NE Public

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• The 2021 Heating Electrification Forecast seeks to identify the increase in load due to the electrification of home heating technologies, specifically air-source heat pumps (ASHP). The forecast predicts that during the upcoming decade New England will see the installation of 1.17 million heat pumps. Because of this investment, the ISO estimates that by 2030 the region will experience an increase of 2,526 GWh in annual electricity demand. • The 2021 Transportation Electrification Forecast captures the effect of charging light-duty cars and trucks on the bulk power system. Within ten years, it is expected that the over 1 million light-duty electric vehicles in New England will increase peak load in the winter by 916 MW (Winter 2030/2031).

The ISO incorporates the results of these studies in the gross and net load forecasts contained in the ISO’s annual Capacity, Energy, Loads, and Transmission (CELT) Report, released on April 30. The CELT report presents a range of data about the bulk power system in New England – data used as assumptions in power system planning and operations reliability studies. The 2021 CELT Report reflects demographic, economic, and market information available from 2021 through winter 2030-2031, including the scheduled and proposed transmission changes, project listings, and summaries of future resources.

In order to illustrate the impact of electrification and other emerging trends on the bulk electric system over time, the ISO has created a new prototype Excel file to accompany the CELT report. The first iteration includes the impact of heating and transportation electrification on summer and winter seasonal peaks, broken down by state and the region.

The file is available on the Load Forecast page of the ISO’s website. BACK TO TOP

Federal Affairs Update

Committee Action Continues in Congress • The Director of the Bureau of Ocean Energy Management (BOEM) testified during a May 14 hearing before the Senate Energy & Natural Resources Committee on offshore energy development, highlighting the Administration’s goal to develop 30 gigawatts of offshore wind by 2030 and BOEM’s leasing activities along the East Coast. • The House Energy & Commerce Committee held a wide-ranging hearing on a variety of energy- related topics while discussing the upcoming budget for the U.S. Department of Energy (DOE) on May 19. The House Appropriations Committee heard from U.S. Energy Secretary Jennifer Granholm as well on DOE’s annual budget request on May 6. BACK TO TOP

ISO-NE Public

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Federal Energy Regulatory Commission Update Commission Holds Technical Conference on Resource Adequacy in New England On May 25, the Federal Energy Regulatory Commission (FERC) held a full-day technical conference on ISO New England’s wholesale energy markets – specifically, how New England ensures resource adequacy through the Forward Capacity Market (FCM) and the efficacy of the Minimum Offer Price Rule (MOPR). As part of its focus on the future of the MOPR in several ISO/RTO regions, FERC has already held a similar technical conference focused on resource adequacy in the PJM Interconnection and anticipates scheduling a session for the New York ISO as well. ISO New England filed a pre-conference statement available on the ISO website.

Several senior members from ISO New England, including ISO President & CEO Gordon van Welie, participated in the session. ISO participants highlighted the importance of the Forward Capacity Market (FCM) as critical to maintaining a viable fleet of capacity assets, as well as the need to account for the adverse impact on regional reliability if the MOPR is eliminated without addressing the uncertainty and increased risk to existing and new merchant resources in the FCM. Several weeks before the technical conference, ISO New England announced that it has asked the ISO’s External Market Monitor to help provide a framework to assess and quantify the effect on new or existing resources in a market without a MOPR. The ISO plans to take the proposal to eliminate the MOPR through the regional stakeholder process in anticipation of a planned filing with the Commission in the first quarter of 2022 (in time for any changes to be in place for FCA #17, planned for February 2023).

On May 17, the ISO released a memo to the New England states providing additional background, as well as outlining a tentative work schedule for the coming months. The memo notes that the NEPOOL Markets Committee will begin a substantive discussion about the MOPR elimination during its meetings on June 8-9. The May 17 memo also noted “the ISO believes further changes will be needed in the FCM” and that “a key FCM enhancement is related to accurately reflecting the contribution of all resource technologies to resource adequacy. Discussions related to these changes will also begin in June; however, given the relatively early stage of this effort and the scope of work, these changes will not be included in the MOPR package for FCA 17.”

ISO-NE Files Answer Regarding FCA #16’s Offer Review Trigger Price On May 13, ISO New England filed comments with the Commission to provide additional support on the merits of its determination of an appropriate Offer Review Trigger Price (ORTP) for Forward Capacity Market #16 scheduled for February 2022. On April 7, the ISO and NEPOOL filed separate proposals on ORTP-related values for FCA #16. The ORTP is primarily applicable to renewable resources, such as offshore wind, seeking to clear the FCA for the first time.

ISO Underscores Key Issues on Offshore Wind Development in Post-Technical Conference Comments On May 10, the ISO sent the Commission additional comments following the ISO’s participation in a FERC technical conference in October 2020 on the development of transmission infrastructure to accommodate offshore wind generation. In part, the ISO highlighted the extensive study work underway – and already completed – by the ISO focused on the integration of offshore wind resources. The ISO also noted the region’s ability to study a cluster of proposed projects in the generator interconnection queue and the ongoing discussions regarding potential changes to the region’s traditional transmission planning processes to study transmission investments required to meet state public policy goals.

ISO-NE Public

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Commission Requests Comments on Electrification Technical Conference Following its technical conference on April 29 regarding the growing electrification of the overall economy, FERC has opened a period for post-technical conference comments. Comments on the conference and issues related to expanded electrification and the “grid of the future” are due in July.

FERC Commissioners Comment on Security Standards Earlier in the month, FERC Chair Richard Glick and Commissioner Allison Clements released a statement in the wake of the cyberattack (and subsequent outage) of the Colonial pipeline. In the statement, they called for the establishment of “mandatory pipeline cybersecurity standards similar to those applicable to the electricity sector.” The statement continued: “Simply encouraging pipelines to voluntarily adopt best practices is an inadequate response to the ever-increasing number and sophistication of malevolent cyber actors. Mandatory pipeline security standards are necessary to protect the infrastructure on which we all depend.” BACK TO TOP

ISO-NE Reviews Updated 2021 ISO Work Plan ISO New England Chief Operating Office Vamsi Chadalavada presented an updated version of the ISO’s 2021 work plan at the May 6 meeting of the NEPOOL Participants Committee.

He noted several additions from earlier versions of the 2021 work plan, including efforts to eliminate the Minimum Office Price Rule (MOPR) in the Forward Capacity Market and the 2050 Transmission Study request from the New England states. The work plan already included commitments to continue ISO-NE efforts on the Future Grid Reliability Study and the Pathways to the Future Grid evaluations – the ISO expects both discussions to yield reports in the first quarter (Q1) of 2022. Also expected in Q1 2022 is a filing to FERC on a proposal to eliminate the MOPR. The work plan update also includes additional information on the beginning of a regional dialogue on various resources’ capacity contributions to resource adequacy as New England’s generation fleet evolves. BACK TO TOP

Markets Committee Update At its May 11 meeting, the Markets Committee endorsed a proposal to revise several rules governing the treatment of behind-the-meter generation. The proposal was developed in response to an issue related to the treatment of behind-the-meter generation in the Regional Network Load calculation that the ISO’s Internal Market Monitor raised in the Spring 2020 Quarterly Markets Report. The proposal would exclude certain behind-the-meter generation from the calculation of Monthly Regional Network Load. The matter is expected to next be taken up by the Participants Committee at its June 3 meeting.

Continuing the region’s ongoing efforts to address FERC Order 2222, ISO staff discussed a number of design elements and outlined the anticipated future stakeholder process and meeting dates. Additional information on the ISO’s Order 2222 compliance efforts is available on the Order 2222 Key Project Webpage.

Earlier this month, the Federal Energy Regulatory Commission granted New England a compliance filing deadline extension until February 2, 2022. BACK TO TOP

ISO-NE Public

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Pathways to the Future Grid Analysis Continue On May 13, the NEPOOL Participants Committee held a working session on the Pathways to the Future Grid study that the ISO has undertaken in collaboration with stakeholders and Analysis Group. The study seeks to evaluate two market-based approaches: A forward clean energy market (FCEM) and net carbon pricing.

In May, the group reviewed a presentation by ISO staff (page 17 of meeting materials) and continued discussions of key design elements (discussed at the April meeting as well), including frameworks for the straw FCEM and net carbon pricing, the integration of an FCEM with existing state policies, and the treatment of storage resources.

The ISO plans to study both frameworks simultaneously and issue a final report in the first quarter of 2022 that discusses the market impacts of both approaches.

The next working session is scheduled for June 11. BACK TO TOP

Planning Advisory Committee Update

ISO Releases Memo on Order 1000/Boston 2028 RFP Lessons Learned On May 3, the ISO released a memorandum to the Planning Advisory Committee summarizing the comments received on lessons learned from the Order 1000/Boston 2028 RFP and changes the ISO plans for future transmission solicitations.

The ISO expects to start discussions of tariff changes at the July NEPOOL Transmission Committee meeting for many of the lessons learned related topics discussed at the April PAC meeting.

PAC Monthly Meeting The ISO’s Planning Advisory Committee (PAC) met on May 19.

Draft First Cape Cod Resource Integration Study Report, Presentation, and Next Steps On May 17, the ISO released the Draft First Cape Cod Resource Integration Study Report. The draft report documents the findings of the Cluster Enabling Transmission Upgrade (CETU) Regional Planning Study (CRPS) and identifies the Interconnection Requests, by queue position, that are eligible to be included in the second-phase study; the transmission upgrades required to enable interconnection; and the cost allocation for eligible projects if they elect to proceed to the second phase of clustering.

The ISO is accepting comments on the report until June 11. In addition to releasing the draft report, ISO system planning staff presented cost estimates for the identified CETU and an overview of the process to fill the cluster for the First Cape Cod Resource Integration Study (First CCRIS).

ISO-NE Public

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ISO staff also provided an overview of next steps in the First CCRIS process. Following the completion of the comment period for the Draft First Cape Cod Resource Integration Study Report, the ISO expects to issue a Final First CCRIS Report in mid-June. After publication of the Final CCRIS Report, the ISO will open the window for eligible projects to proceed into the Cluster System Impact Study (CSIS). Eligible projects must meet entry requirements, including submission of Cluster Participation Deposits (CPDs), within 30 days from the posting of the Final CCRIS report.

Notice of Initiation of the Second Cape Cod Resource Integration Study ISO system planning presented the Notice of Initiation of the Second Cape Cod Resource Integration Study (Second CCRIS). The Second CCRIS is being initiated to identify upgrades to enable the interconnection of additional offshore wind interconnection beyond the 1600 MW of generation with completed System Impact Studies and 1200 MW enabled by the First CCRIS (2800 MW). Preliminary results of the Second CCRIS are anticipated by the end of 2021.

2021 Economic Study and Assumptions ISO staff continued a discussion on the 2021 Economy Study and the assumptions that will underpin the study. The ISO is conducting the first phase of the Future Grid Reliability Study as this year’s economic study on behalf of New England stakeholders. Staff presented supply modeling assumptions, including solar photovoltaic, offshore wind, energy storage, and emissions allowance assumptions. Staff also presented demand-modeling assumptions including load, energy efficiency, and electrification assumptions. Preliminary production costs results for certain scenarios defined in the study are expected in June 2021 with further results expected in Q3/Q4 2021.

This discussion was a continuation of the ISO’s first presentation on the 2021 Economic Study Assumptions that was given at the April 14 PAC meeting. BACK TO TOP

Consumer Liaison Group to Meet June 17 The quarterly meeting of the Consumer Liaison Group (CLG) will take place on June 17 via WebEx. The topic of the panel discussion will be, “Does Our Energy System Serve Consumers, or Energy Companies? Have We Privatized a Public Good?” Panelists include:

• Dr. Erin Camp, Senior Associate, Synapse Energy Economics • Dan Dolan, President, New England Power Generators Association • Peter Fuller, Principal, Autumn Lane Energy Consulting, LLC • Moderator: Mary Smith, The Energy Consortium

The meeting will also feature an update from ISO New England. To register for the June 17 WebEx, please visit the ISO New England website.

The CLG is a forum for the exchange of information between ISO New England and electricity consumers. Meetings are free and open to the public. Attendees include consumers and consumer representatives, state business and industry associations, chambers of commerce, individual businesses, trade groups, nonprofit organizations, and other end users. BACK TO TOP

ISO-NE Public

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Environmental Advisory Group Update The ISO’s Environmental Advisory Group (EAG) met on May 25 to discuss several environmental and greenhouse gas regulatory updates. ISO staff provided an Environmental Update and a Greenhouse Gas Regulatory Update to the EAG, covering:

• Regional energy usage, weather, emissions, and pollution monitoring trends; • Updated impacts from the COVID-19 pandemic on the region; • Federal environmental policy changes; and • Regional Policy updates

In addition, the EAG recently published the 2020 Winter & Spring Environmental Report. The report summarizes the environmental performance of the ISO system and regulations affecting generators and the bulk electric power system for January 1-June 30, 2020.

All presentations and reports from the EAG are available on the EAG webpage. BACK TO TOP

ISO New England to Present Preliminary 2022 Budget to State Agencies On June 1 at 10 a.m., ISO New England is scheduled to present its preliminary 2022 operating and capital budgets to the New England states via WebEx. This session will be held in lieu of the customary budget briefing at the NECPUC Symposium.

A follow-up meeting with state agencies is scheduled for August 6 at 1 p.m., with the same information that will be presented to the NEPOOL Budget & Finance Subcommittee. The New England states have the opportunity to submit questions and comments on the proposed budget. The ISO will submit its final 2022 operating and capital budgets to the FERC for review by the end of October. The ISO’s budget year follows the calendar year. BACK TO TOP

Behind-the-Meter Solar Data to be Added to ISO Express Dashboard in June In June, the ISO expects to begin including estimates of solar/photovoltaic (PV) resource performance on ISO Express dashboard. This data will include both grid-connected PV resources and the more than 200,000 private solar installations now producing over 4,000 megawatts for New England homes and businesses. BACK TO TOP

Milder Weather and Lower Natural Gas Prices Drive Lower LMPs The Average Day-Ahead and Real-Time energy prices for April were $26.14/MWh and $25.99/MWh; respectively. Real-time prices were 23% lower than the previous month’s average (March 2021) and 44% higher than the previous year’s (April 2020). Year-over-year, Average Real-Time Load was 1% higher, while Peak Real-time Load was 3% higher.

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The average natural gas price in April was significantly higher (45%) than the previous year (April 2020). The average price of natural gas in April was $2.43MMBtu, down 31% from $3.51/MMBtu in March 2020. Average Natural Gas Price represents the volume-weighted average price of four ICE indices: Algonquin, Algonquin non-G, Portland, and Tennessee.

vs. Month Ago: vs. Year Ago: April 2021 Compared to Compared to March 2021 April 2020 Average Day-Ahead LMP (hub) $26.14/MWh -25% +42%

Average Real-Time LMP (hub) $25.99/MWh -23% +44%

Average Natural Gas Price $2.43/MMBtu -31% +45%

Peak Real-Time Load 14,651 MW -17% +3%

Average Real-Time Load 11,566 MW -9% +1%

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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 June 3, 11, 24 8, 9 15 16 10 11 July No mtg 7, 8 13 22 14 16 August 5 10, 11 17 18 24 TBD

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External Conferences and Meetings of Interest

June 2, 2021 June 17, 2021 Power and Energy Society: Update on Consumer Liaison Group Meeting the ISO’s 2021 PV Forecast Virtual Virtual ISO Speaker: Anne George, Vice President, ISO Speaker: Jonathan Black, Manager, Load External Affairs & Corporate Communications Forecasting BACK TO TOP

ISO-NE Public