THE POSEIDON PROJECT LONG ISLAND’S ENERGY FUTURE BEGINS WITH TRANSMISSION.

May 30, 2012 May 30, Request For Information Request For New York Energy Highway's York New Poseidon Transmission LLC's Response to Transmission Poseidon POSEIDON PROJECT POSEIDON BEGINS WITH TRANSMISSION. BEGINS WITH LONG ISLAND’S ENERGY FUTURE LONG ISLAND’S THE LONG ISLAND’S ENERGY FUTURE BEGINS WITH TRANSMISSION. THE POSEIDON PROJECT

2 THE POSEIDON PROJECT LONG ISLAND’S ENERGY FUTURE BEGINS WITH TRANSMISSION. 3

Poseidon’s development team includes many of those who Poseidon’s System (RTS) Transmission brought the Neptune Regional joined by Exelon Corporation. to Long Island five years ago, Many of the concerns that led to development of Neptune – enhancing diversifying generation sources, easing constraints, costs – have controlling protecting the environment, reliability, the Poseidon Neptune, Like only gained importance since then. line brings these many benefits. York major impact on downstate New The Poseidon Project’s increased diversity of power – eased electricity constraints, reliable power supporting economic lower cost, generation, and substantial positive net environmental and development, job creation benefits – make this a valuable infrastructure now and Yorkers investment for Long Islanders and all New long into the 21st Century. The Project also provides ratepayers with great value: ratepayersThe Project also provides with great value: capacity i.e. substantial benefits at a highly competitive cost, and energy on Long Island. prices well below new-build costs state-of-the art cable and converter stations offer The Project’s availability factors upward of 97% and virtually unsurpassed and reliability combine with electric availability, Cost, reliability. and environmental attributes to make this off-island cable development link a compelling part of a long-term economic strategy.

POSEIDON PROJECT POSEIDON

discharges, preserves landscapes and vistas, and reduces preserves landscapes and vistas, discharges, protecting the net emissions and discharges on Long Island, ecosystem as well as its aquifer. Island’s meet the State’s ambitious RPS targets of 30% by 2015. ambitious RPS targets of 30% by 2015. meet the State’s The Poseidon line itself creates no air emissions or water high-emission power plants to close. It enables Long Island high-emission power plants to close. affordable and growing ample, customers to access PJM’s thereby positioning the region to renewable resources, discounts to new or re-powered on-Island generation, discounts to new or re-powered on-Island generation, aging, and allows bypasses existing constraints on capacity, each of these challenges. It increases the long-term reliability each of these challenges. of the Long Island grid by securing diverse generation sources. Capacity on this line can be made available at substantial urgency of accessing new sources of power. On the other urgency of accessing new sources of power. and brings difficult to permit, new generation is costly, hand, Poseidon Project addresses The environmental challenges. the Island’s ability to obtain additional capacity is limited. ability to obtain additional capacity is limited. the Island’s Planned retirements of local generation only increase the challenges: it sits at it sits the end of natural gas and oil delivery challenges: systems and has little ability to cope with fuel supply interruptions; surrounded by congested lines and water, fortifies the reliability of Long Island’s – and all of downstate’s – and all of downstate’s fortifies the reliability of Long Island’s many Long Island faces electrical – transmission grid. sources supplying Long Island. This controllable tie between the PJM and NYISO regions reduce congestion within Nassau and Suffolk counties and and enhance the diversity of generation the downstate region, it into the Ruland Road substation, one of Long Island’s of Long Island’s one it into the Ruland Road substation, this For decades to come, strongest interconnection points. grid-to-grid connection – at of each system – will the heart the heart of Long Island’s T&D network. This 200 kV system- This 200 T&D network. the heart of Long Island’s substation, to-system link withdraws power from the Dean’s and injects strongest interconnection points, one of PJM’s The Poseidon Project is a 500MW submarine HVDC The Poseidon Project grid bulk power to the heart of PJM’s interconnection from THE EXECUTIVE SUMMARY SUMMARY EXECUTIVE LONG ISLAND’S ENERGY FUTURE BEGINS WITH TRANSMISSION. THE POSEIDON PROJECT

4 THE POSEIDON PROJECT LONG ISLAND’S ENERGY FUTURE BEGINS WITH TRANSMISSION. 5 11 18 23 6-9 12-17 19-21

Financial Information - Capacity Performance and Process with Development Schedule Approval Permit and Conclusion CONTENTS Project Justification and Overview Respondent Information Project Description PROJECT JUSTIFICATION AND OVERVIEW Poseidon Transmission LLC is delighted to provide the following EASED POWER FLOWS TO AND WITHIN THE DOWNSTATE REGION information about its proposed Poseidon Project to the The Poseidon Project's core-to-core grid interconnection offers members of the New York Energy Highway Taskforce. the ideal points for power to flow from the PJM bulk grid into Long Island’s transmission and distribution network. There The New York Energy Highway’s Request For Information will be no congestion on the new line and by adding 500 recognized that Long Island experiences high demand for MW of supply to Zone K, it will relieve bottlenecks within the electric power but that most of the low-cost electricity that downstate grid. From an electrical power flow viewpoint, this it needs is not produced on the Island and is subject to interconnection to the PJM bulk grid anchors Long Island to LONG ISLAND’S ENERGY FUTURE BEGINS WITH TRANSMISSION. transmission constraints. the core of the PJM grid and offers its ratepayers unequalled security and reliability of electricity supply. The interconnection The Poseidon Project targets this need. point at Ruland Road, in the heart of the Long Island Power Authority (“LIPA”) service territory, optimizes deliverability, It provides Long Island with 500 MWs of capacity, energy, and helps meet Long Island’s formidable locational reserve as well as black start and other ancillary services from a requirements. Finally, with the Poseidon Project’s expected substation at the core of PJM’s 500 kV bulk power grid

THE POSEIDON PROJECT 97.5% operational availability, the power supply is secure. through a controllable, high voltage, direct current (HVDC) At the request of New York State decision-makers, this undersea and underground transmission cable. The Project, interconnection can be configured to offer bi-directional flow of now under development, is led by a nationally-recognized energy, which could realize further efficiencies and economies independent transmission company, which has already in the operation of the downstate grid. participated in two similar transmission projects in the New York/New Jersey area, now joined by one of the country’s GREATER DIVERSITY OF POWER GENERATION RESOURCES largest energy companies with an extraordinary reputation The link with PJM provides Long Island with the substantial and an unrivalled balance sheet. New York State decision- diversity of power generation resources that only a system-to- makers and Long Island ratepayers can be confident that the system interconnection can offer. Comparably sized on-Island project will provide the benefits described below and can be generation or even off-Island generation with a generator completed on time, on budget, and with minimal risk to the lead line would tether the region to a single plant and its fuel public. source for decades. A system-to-system interconnection, on the other hand, offers Long Island the full range of resources The members of Poseidon Transmission LLC, Anbaric Poseidon found in PJM, the world’s largest and most diverse wholesale Holding LLC (“Anbaric”) and Exelon Transmission Company power market. With PJM’s diverse generation base, the ability LLC, (“Exelon Transmission”), describe below the compelling to hedge risk, contract with a range of suppliers, and access benefits of the Poseidon Project, in response to the “Request traditional and renewable sources of power is unequaled. For Information” issued by the New York Energy Highway on April 11, 2012.

6 THE POSEIDON PROJECT LONG ISLAND’S ENERGY FUTURE BEGINS WITH TRANSMISSION. 7 network, respectively the PSE&G Deans substation in South network, New Jersey and the Ruland Road substation in Brunswick, Transmission’s Based on Poseidon York. New Huntington, we know of no better withdrawal point in PJM experience, have already We and no better injection point on Long Island. By adding 500 MW of supply to the heart of Long Island, By adding 500 MW of supply to the heart of Long Island, energy the ability planners to York’s Poseidon gives New First energy and economic goals. meet many of the State’s reliable source by providing a cost-effective, and foremost, Poseidon will relieve congestion of capacity and energy, Long Island’s Secondly, York. into Zone K from upstate New power demands are met in part by aging and inefficient units. Poseidon would enable the replacement of these polluting units and would create no additional without threatening reliability, provides unrivalled Poseidon local air or water emissions. access to a range of capacity resources long-term flexibility: wind hydro, cycle natural from combined units, gas in PJM, and solar fields – and contracts with any combination of farms, these helps the State meet its renewable energy or other policy goals. ROBUST INTERCONNECTION POINTS This project offers electrically robust interconnection points. The Poseidon Project offers electricity withdrawal and injection 500 kV bulk power points that are at the heart of PJM’s 138 kV transmission and distribution grid and Long Island’s take steps to close old, high-emitting power plants in Long high-emitting take steps to close old, line will reduce local air and waterThe emissions on Island. residents with substantial net positive Long Island and provide The environmental benefits at a highly attractive pricing. converter station near Ruland Road offers attractive capital assets that will be part of the tax base for local authorities for years to come. AND GOALS FLEXIBILITY TO MEET FUTURE ENERGY NEEDS emissions, with negligible impact on landscape or views, but with negligible impact on landscape or views, emissions, State to decision-makers York the line will also enable New exceptional environmental benefits. Not only is the line itself exceptional environmental benefits. with no air or water benign from an environmental viewpoint, allows the Long Island customer to benefit from the different dynamic pricing model. pricing possibilities set by PJM’s The electricity delivered by the Poseidon Project will offer contracts with a host of PJM generators to purchases of and energy at the day-ahead LBMP at the Deans substation, the Poseidon Project offers a very attractive economic value. the Poseidon Project offers a very attractive economic value. State select from customer to York But it also enables its New from long-term a range of purchasing options for energy, of capacity in PJM has been and will remain much lower than In these terms alone, it is on Long Island long into the future. AFFORDABLE, ENVIRONMENTALLY RESPONSIBLE ELECTRICITY AFFORDABLE, ENVIRONMENTALLY A foundational assumption of the Poseidon Project is that the all-in cost Island, owing to high construction costs on Long and existing transmission transfer capability. It is difficult to and existing transmission transfer capability. imaginea project offering greater reliability benefits. might have on operating reserve requirements, locational might have on operating reserve requirements, circuit compliance, thermal and short capacity requirements, grid. Finally, the capacity of the cable and its interconnection Finally, grid. point at Ruland Road have been chosen to optimize the benefits that introduction of a large transmission resource converter (VSC) black start and reactive power capabilityconverter (VSC) black start and reactive bulk power Island’s further strengthen the backbone of Long eased power flows, and step-up in diversity of generation, and step-up in diversity of generation, eased power flows, the Poseidon Project offers Long Island ratepayers increased The HVDC voltage source reliability long into the future. a buried HVDC cable have lives of fifty years and useful points, Because of the unsurpassed interconnection beyond. ENHANCED RELIABILITY FOR DECADES ENHANCED RELIABILITY infrastructure are realized over The benefits of transmission assets like Transmission an unusually long time horizon. PROJECT JUSTIFICATION AND OVERVIEW

The Poseidon Project follows in the Long Island.” in the City, improved modeling of footsteps of, is electrically similar to, •“Operation of the Neptune cable has local transmission constraints, and and offers many of the same benefits helped push down energy prices, operation of the Neptune cable.” as the Neptune RTS line. In its particularly in Long Island.” •“The Neptune Cable, which began “2007 State of the Market Report,” •“Price differences between Long Island operation in July 2007, dramatically the Independent Market Advisor and East Upstate NY decreased from reduced congestion into Long Island to the NYISO made the following about $27 in 2006 to $16 in 2007. and, to a lesser extent, within NYC.” observations about Neptune: The most significant cause of the •“The newly installed Neptune cable, decrease was the installation of the which has reduced the need to run •“The Neptune line began operation Neptune cable in July 2007.” GTs in Long Island”

in July 2007, substantially reducing •“The reduced congestion into New York See “2007 State of the Markets Report New York ISO” congestion in East NY, particularly into City was due to capacity additions by Potomac Economics, Ltd., Independent Market Advisor to the New York ISO.

filed interconnection requests in the PJM and NYISO queues1, of one completed HVDC line and another currently under and while the final ISO study results are not yet available, we construction. This successful, recent, and directly relevant LONG ISLAND’S ENERGY FUTURE BEGINS WITH TRANSMISSION. expect that each system operator will recognize Poseidon’s experience indicates that the Project’s developers and their benefits and that the total required system upgrades will be team understand the difficult, nuanced, and challenging issues well within a manageable range for a project of this size. ahead.

STATE-OF-THE-ART TECHNOLOGY Poseidon Transmission has commissioned an environmental The Poseidon Project offers commercially proven, cutting edge firm that worked on the Neptune and Hudson lines, ESS Group, and reliable transmission technology linked to a substation with Inc., to conduct a fatal flaw analysis of one anticipated route of THE POSEIDON PROJECT negligible supply risk. The Project employs the most advanced the Project. ESS concluded that “there are no apparent critical transmission technology commercially available, Siemens flaws related to environmental, cultural, or historic resources HVDC Plus converter stations coupled with approximately 76 for the proposed route and converter stations.”2 miles of Prysmian XLPE cable. Siemens HVDC Plus design Poseidon Transmission will deploy Siemens’s HVDC Plus includes reactive capability providing Voltage Support Service voltage source converter technology with one converter station (VSS) and black start capability. The benefits of VSC technology on property accessible to the 138kV Ruland Road substation include black start capabilities, reactive power support, and a in Huntington, NY and the other on a ten-acre parcel close smaller footprint relative to conventional HVDC. to the Deans 500kV substation located in South Brunswick, Poseidon Transmission expects to work again with Siemens New Jersey. The transmission line will extend to the Raritan and Prysmian, who as the EPC contractors on the Neptune RTS River and then run beneath the Raritan, under the Outer New line, the TransBay cable project in California, and the Hudson York Bay and the Atlantic Ocean, make landfall near Jones line now under construction, bring directly relevant, recent, and Beach, and then run underground north along various public unrivalled experience to the Poseidon Project. and private rights of way to the Ruland Road substation. This route is similar to Neptune’s and therefore should be familiar RECENT EXPERIENCE IN PERMITTING AND CONSTRUCTION to regulators and less obtrusive than other proposed cable Poseidon Transmission and its development team have connections between Long Island and PJM. participated in the successful permitting and construction

1 PJM queue position X1-078; PJM is currently conducting the System Impact Study. NYISO queue position 363; Poseidon’s technical consultants are preparing the Feasibility Study for NYISO. 2 Poseidon Transmission Project Route Feasibility Study, ESS Group, Inc., January 16, 2012 at 10.

8 PROJECT JUSTIFICATION AND OVERVIEW THE POSEIDON PROJECT

Long-term benefits of a system- is anchored to a diverse, efficient to-system interconnection like the generation fleet; Poseidon Project, in contrast to on- • Competitive benefits as Long Island Island generation or a generator lead- accesses energy and capacity from the line, include: world’s largest and most competitive wholesale power market; and LONG ISLAND’S ENERGY FUTURE BEGINS WITH TRANSMISSION. • Diversification of fuel supply; • Environmental and smart-growth • Planning flexibility as state policy makers benefits as inefficient, older power plants and system operators can meet virtually retire, local air and water emissions any policy objective with system-wide decline, and Long Island positions itself contracting freedom; to obtain affordable, renewable energy • Enhanced reliability, as Long Island from PJM sources.

POLICY CONSIDERATIONS community groups, businesses and labor organizations. With Poseidon Transmission has been developing this Project for net positive environmental impacts, great electrical benefits, almost two years. Owing to the overwhelming success of substantial economic development consequences, a small the Neptune RTS line, the developers believe there is strong geographic footprint, and public support, the members of the support for a second intertie between PJM and Long Island. development team respectfully submit that development of the We will continue our open and collaborative approach with Poseidon line would be a responsible policy choice. federal, state and local agencies, advocacy organizations,

NEW YORK

HUNTINGTON PENNSYLVANIA NEW JERSEY

MARYLAND WEST DELAWARE VIRGINIA VIRGINIA

HAMPSTEAD BAY

RARITAN BAY 1 PJM queue position X1-078; PJM is currently conducting the System Impact Study. NYISO queue position 363; Poseidon’s technical consultants are preparing the Feasibility Study for NYISO. ATLANTIC OCEAN 2 Poseidon Transmission Project Route Feasibility Study, ESS Group, Inc., January 16, 2012 at 10.

9 SOUTH BRUNSWICK 10 POSEIDON TRANSMISSION LLC’S RESPONSE TO RFI THE POSEIDON PROJECT THE POSEIDON PROJECT LONG ISLAND’S ENERGY FUTURE BEGINS WITH TRANSMISSION. 11

) ) www.anbarictransmission.com www.exeloncorp.com summer of 2007 and operates at almost a 98% efficiency rating -- a degree of operational obtained efficiency by only the most efficient transmission lines. Transmission Krapels was also a founder of Hudson Mr. Transmission the developer of the Hudson LLC, Partners, City and PJM York link between New a 660 MW Project, It will provide which began construction in December 2011. Power York a new source of electric power for the New City customers and will offer them York New Authority’s Hudson includes access to renewable resources in PJM. major upgrades to the bulk power grid in New Jersey. principal, Edward N. Krapels, was a founder of Atlantic Atlantic was a founder of Krapels, Edward N. principal, line. developer of the Neptune RTS the Energy Partners, Atlantic Energy Partners team developed Krapels and the Mr. a 660-MW (500 kV) HVDC submarine the Neptune Project: electric transmission cable that connects power generation consumers resources in the PJM system to electricity It achieved commercial operations in the on Long Island. Exelon Corporation, through subsidiaries and affiliates, through subsidiaries and affiliates, Exelon Corporation, is operates more than 6,400 miles of transmission lines, 765 kV line project 400+ mile, developing a $1.6 billion, and just and Ohio, Illinois, (The RITE Line) linking Indiana, completed a $170 million reliability upgrade to Chicago’s Exelon Corporation is one of the nation's electric largest grid. companies with more than $18 billion in annual revenues and is a participant in the organized markets administered by the NYISO. • The Hudson Transmission Project (www.hudsonproject.com): Project (www.hudsonproject.com): Transmission The Hudson • Anbaric has seven other transmission projects representing $5 billion in infrastructure investment in early-to-mid stage Hawaii and the Mid-Atlantic, development in the Northeast, Europe. EXELON ( ANBARIC ( Anbaric’s The Neptune Project (www.neptunerts.com): • ,

, a subsidiary of Anbaric

Edward Krapels Edward Exelon Transmission Exelon Transmission 781-683-0707 [email protected] and LLC Company, Exelon Corporation. The contact person for this response is: Manager Krapels, N. Edward Anbaric Poseidon Holding LLC suite 650 Place, 401 Edgewater MA 01880 Wakefield, Poseidon Transmission’s Transmission’s Poseidon members are Poseidon Holding LLC managed by RESPONDENT INFORMATION RESPONDENT PROJECT DESCRIPTION

PROJECT DESCRIPTION The Poseidon Project incorporates and improves upon the best of the Raritan River and then will be buried in the ocean bed attributes of the Neptune RTS line, which has been reliably in the New York Bight and the Atlantic Ocean until it reaches serving Long Island’s power needs for the past five years, central Long Island. The line will continue underneath Jones saving ratepayers tens of millions of dollars annually and, Beach and then follow a buried path along rights of way to a according to the New York ISO’s Independent Market Advisor, converter station to be built near the Ruland Road substation in “dramatically reduced congestion into Long Island and to a Huntington in central Long Island. lesser extent, New York City.”3 Below we provide a description of the Poseidon Project’s: (1) interconnection profile; (2) route Poseidon intends to acquire or enter into lease agreements LONG ISLAND’S ENERGY FUTURE BEGINS WITH TRANSMISSION. and real estate requirements; (3) state-of-the-art technology; with New York and New Jersey property owners for property (4) construction team; (5) operational plan; (6) environmental for the converter stations, project-owned attachment facilities, responsibility; (7) community engagement commitments; (8) and required service and storage buildings. Each converter RFP Status; and (9) social and economic benefits. station with its surrounding buffer will have a footprint of six to ten acres. On Long Island, Poseidon has identified two suitable 1. INTERCONNECTION PROFILE properties near the Ruland Road Substation and believes that

THE POSEIDON PROJECT Poseidon Transmission proposes a controllable HVDC the owner of the closer property would be very interested in transmission facility transmitting 500 MW of capacity and a long-term lease or sale to Poseidon’s developers. In New energy from the PSEG Deans Substation 500 KV bus (Point of Jersey, Poseidon has begun negotiations with property owners Withdrawal) to Long Island’s Ruland Road Substation 138 KV who have sites adjacent to the Deans substation and along bus (Point of Injection). Poseidon has requested 525MW of rights of way north to the banks of the Raritan. Several owners Firm Transmission Withdrawal Rights (FTWRs) for energy and have expressed their interest in a long-term lease or sale capacity from PJM at the Deans substation and 500 MW that to Poseidon’s developers. Poseidon Transmission intends to can be used as Unforced Deliverability Rights (UDRs) from the negotiate easement rights with federal, state and local officials NYISO. The combination of FTWRs from PJM and UDRs from and local utilities for the installation of the underground and NYISO provide a path for 500 MW of unforced capacity and submarine routes HVDC cable. associated energy to be delivered to the heart of Long Island’s electricity grid. 3. STATE-OF-THE-ART TECHNOLOGY Poseidon anticipates using a 500MW HVDC Plus system 2. ROUTE AND REAL ESTATE REQUIREMENTS to provide a fully controllable electrical link between Long The estimated length of the transmission facility is 76 miles Island and the PJM grid in New Jersey. Siemens’ HVDC Plus (43 miles underwater and 33 miles on land underground). utilizes Self-Commutated Voltage-Sourced Converter (SCC / The AC and DC electric cables associated with the VSC) technology. HVDC Plus can provide independent control transmission facility will be buried along the entire 76-mile of active power, reactive power providing VAR support to the route except where the facilities surface at the converter network as an ancillary service (Voltage Support Service), station and the substation. In New Jersey, the HVDC line will black start capability, and the ability to build up a three-phase run north-northeast along existing rights of way to the bank AC voltage via the DC voltage, thus eliminating the need

3 NYISO Independent Market Advisor, 2007 State of the Market Report , page 107. 12 THE POSEIDON PROJECT LONG ISLAND’S ENERGY FUTURE BEGINS WITH TRANSMISSION. 13 TO PILGRAM TO PILGRAM TO PILGRAM PROJECT DESCRIPTION PROJECT POI Substation Ruland Road 138 kV LONG ISLAND X/R=55 200/138 TRANSMISSION SYSTEM (three 1- units) Z1=12% @ 550 MVA TO STERLING TO NEWBRIDGE RD TO NEWBRIDGE RD TO NEWBRIDGE RD via switchable modules; stacks of IGBT power electronic the PC-based including and protection equipment, communication systems with ties to ISO control centers; The following figure shows a one-line of the proposed facilities: • The valve hall where the AC-to-DC conversion takes place AC-to-DC conversion takes The valve hall where the • containing required control The control building, • AC switchyard containing high voltage power An • transformers and typical circuit breakers and switches found in high voltage power substations Converter Station Poseidon 500 MW, +/- 200 kV, HVDC Plus +/- 200 kV, Converter Station Poseidon 525 MW, +/- 200 kV, HVDC Plus +/- 200 kV, POI POI PJM X/R=55 500/200 (three 1- units) Z1=12% @ 550 MVA Deans 500 kV Substation TRANSMISSION SYSTEM TO SMITHBURG TO E. WINDSOR TO BRANCHBURG Key components of each converter station include: Key components of each converter station include: to local needs, and the design can favor either a converter hall to local needs, with a small footprint or a building with a low profile. The highly modular construction in the power section and in thatcontrol and protection produces a system has excellent stations The converter can be adapted scalability and flexibility. restoration capacity of a large system impairment in the event in the Long Island system. for any “driving” system voltage. These additional ancillary voltage. system “driving” for any system services attributes and Poseidon Project’s enhance the State of the Market Report , page 107. State of the Market Report , NYISO Independent Market Advisor, 2007 Advisor, NYISO Independent Market

3 PROJECT DESCRIPTION

4. CONSTRUCTION TEAM permitting near-shore and offshore submarine cable systems Poseidon has assembled a seasoned, skilled team of in the Northeast and a 100% permitting success on each equipment vendors, general contractors, and other experts, submarine cable project it has worked on in this region since many of whom have worked together with one another 1995; and on the Neptune and Hudson Transmission projects. They • PowerGEM (Power Grid Engineering & Markets), a leading have successfully completed some of the most technically transmission consulting firm which has conducted multiple challenging and complex regulatory projects in the United interconnection and planning studies in PJM and New York. States on schedule and on budget. LONG ISLAND’S ENERGY FUTURE BEGINS WITH TRANSMISSION. 5. OPERATIONAL PLAN Poseidon Transmission anticipates that the Siemens/Prysmian Poseidon Transmission anticipates entering into an Operation team will provide the components of the HVDC system & Maintenance agreement with Siemens before achieving and construct the Poseidon Project under an Engineering, commercial operation. Siemens will provide complete O&M Procurement and Construction (EPC) contract pursuant to services for the New Jersey and Long Island portions of which they will engage all subcontractors. the transmission facility. Poseidon Transmission will retain

THE POSEIDON PROJECT management oversight responsibilities while Siemens will Siemens is a world-wide technology provider in a several key provide daily operations & maintenance consistent with industries, including energy. Siemens Power Transmission prudent utility practices. Poseidon will maintain and operate and Distribution was responsible for manufacturing the high the facility in full compliance with regulatory, legal and voltage conversion system for the Neptune RTS line and environmental requirements and will ensure that the facility is simultaneously building Neptune’s two converter stations on staffed 24 hours a day 365 days per year for its efficient and Long Island and in Sayreville, New Jersey. safe operation, including real-time communications with the ISOs. Either PJM or NYISO can exercise operational control of Prysmian is a world-wide supplier of cable systems for energy, the Poseidon transmission system. telecommunications, and fiber optics, with a specialization in the manufacture and installation of undersea cable. Prysmian Planned & Maintenance Outage Schedule supplied 65 miles of high-voltage cable for the Neptune line State-of-the-art technology employed by Siemens via its HVDC and installed the cable – 50 miles of which was buried under Plus converters includes a high level of component redundancy the sea – as well. For the Hudson Project, Prysmian will be at all stages of the design to assure industry-leading levels installing land-based AC cable in railroad rights of way and of reliability and availability. Redundant modules employed New York City streets, as well as several miles of 345 kV in the conversion process allow for in-service failure without underwater cable in the Hudson River. impacting transfer capacity. Duplicate, hot-standby protection, control and communication systems provide security to avoid Complementing this manufacturing and construction team temporary and brief interruption of services and offer the ability are: to conduct in service repairs. A comprehensive catalog of • The ESS Group, Inc. with over 15 years of experience in spare parts will also be stored on site to reduce single element

14 THE POSEIDON PROJECT LONG ISLAND’S ENERGY FUTURE BEGINS WITH TRANSMISSION. 15 PROJECT DESCRIPTION PROJECT media have become more important, we will also make sure media have become more important, that a significant component of our outreach listening and as well as communication effort includes these resources, and group and brochures/fliers, mail, traditional telephone, individual meetings. project in Long Island and in New Jersey. project in Long Island and in New Jersey. and environmental economic, communicate the reliability, To to understand and address benefits of the Poseidon Project, on the concerns of the communities and constituencies to ensure that planning and Long Island and in New Jersey, and to make certain that the construction goes smoothly, Transmission Poseidon project has broad public support, and listening, will develop a comprehensive outreach, modeled after similar efforts during communication initiative, and Hudson lines. development of the Neptune RTS will begin our efforts early in the We Proper timing is vital. development process to make sure that key stakeholders are aware of our plans and community issues are identified and then gradually broaden and deepen our initiative Poseidon as development plans become more defined. plans outreach efforts through meetings with Transmission business, school district, civic association, key government, and community groups and stakeholder organizations. And as electronic Face-to-face meetings are essential. effort and ecosystem directly to identify each species affected Based and/or operationduring construction of the Project. we the Neptune and Hudson lines, on our experience with anticipate that our mitigation and protection efforts will result we encountered when in an environment as healthy as the one we began development. 7. COMMUNITY ENGAGEMENT COMMITMENTS of the Poseidon Community support is essential to the success Poseidon Transmission is aware that the anticipated route of Transmission Poseidon the Project crosses sensitive ecosystems and will make every greenhouse gas emissions. greenhouse gas emissions. of buried cable along its entire length. Poseidon produces no of buried cable along its entire length. the Project and at the direction of its customer, visual impacts, helping reduce can access renewable resources within PJM, environmental profile. During operation, it produces no air or it produces no During operation, environmental profile. and virtually no noise because it consists water emissions, and water emissions on Long Island and thus improve the health and well being of those living in the immediate area project itself has a benign The of those older power plants. while easing the retirement of older and dirtier on-Island power the Project will result in lower net air Consequently, plants. 6. ENVIRONMENTAL RESPONSIBILITY 6. ENVIRONMENTAL principal environment benefit is enabling Long The Project’s Island to continue to meet its locational reserve requirements no question exists about fuel availability or fuel infrastructure there. ratings. Because the Poseidon Project is a system-to-system Because the Poseidon Project is ratings. it offers available the fuel sources in PJM and interconnection, The Project’s HVDC Plus converter station technology and The Project’s HVDC cable are cutting-edge and commercially proven transmission technologies with 97% or higher reliability possible. possible. maintenance, not during peak usage, i.e. from May 15 through i.e. during peak usage, not maintenance, will be performed simultaneously at the New September 30, Jersey and Long Island facilities to the maximum extent Converter stations will have planned outages annual 90 of Planned outages. hours and 40 hours of annual maintenance contingencies or outage time. This redundant concept also This contingencies or outage time. reduces the duration of annual scheduled outages. PROJECT DESCRIPTION

At a minimum, our methods will include: • Holding public meetings before milestones in the planning and development process; • Issuing broad updates and notifications to the community about project developments through newsletters, mailings, email, and appropriate electronic communications; • Preparing and updating brochures and/or web pages that address project developments, details, plans and benefits; • Securing public input through telephone, e-mail, website, and other communication technology and disseminating news about the process, links to groups that can provide additional information, and a direct e-mail link to Poseidon; • Sending Poseidon representatives to meet with community organizations; and • Establishing a local presence during the planning phase to insure access and availability to all interested parties.

This interaction is a dialogue: we will inform stakeholders about what is planned and we will listen to them about their concerns – large and small – and determine whether and how those concerns may be addressed. During permitting and construction, we will remain in contact with stakeholders make sure that we continue to keep them informed about goals, logistics, timetables, and to make sure that we are aware of any problems or concerns that may arise.

8. PROJECT CONTRACT/RFP STATUS An earlier and different version of the Poseidon Project was submitted as a response to the request for proposals issued by the Long Island Power Authority on August 20, 2010 and amended December 17, 2010 (“LIPA RFP”). The earlier version of Poseidon incorporated a generation component, in accord with the terms of the LIPA RFP. On September 19, 2011, LIPA notified the developers of the Poseidon Project that due to issues unrelated to the transmission portion of the proposal, it

16 THE POSEIDON PROJECT LONG ISLAND’S ENERGY FUTURE BEGINS WITH TRANSMISSION. 17 PROJECT DESCRIPTION PROJECT and in New Jersey. PILOTs are anticipated to be similar and in New Jersey. to those provided by the Neptune project. State certified Minority and York to contract with New for work Owned Business Enterprises and, Women with New Jersey certified M/WBEs. in New Jersey, considerableThe Exelon team member has received recognition for in this area and its accomplishments In 2010 Exelon M/WBE initiative. will lead the team’s accounting spent $408 million with certified M/WBEs, for industry 6% of its expenditures -- minus excluded per the corporate guidelines from the expenditures, National Council. Minority Supplier Development easing retirement of older, dirtier oil-fired heating older, easing retirement of systems. be createdconstruction jobs will and a smaller number and maintenance, operation, of similar permanent management jobs will be created following completion Its low-cost energy will increase the long- of the line. businesses. term competitiveness of Long Island’s and other tax agencies on Long Island school districts, • Poseidon Transmission will make substantial efforts will Transmission • Poseidon • Substantial numbers of highly skilled, locally-sourced of highly • Substantial numbers skilled, The project anticipates paying PILOTs to local towns, • fired generation, this line will enable this existing natural gas fired generation, resources to be used by local residents and businesses, oil tanks and gas pipelines, and the barges, trucks and the barges, oil tanks and gas pipelines, and other equipment required to deliver the fuel. natural gas- with on-island, compared Furthermore, to mar the Island’s views. views. to mar the Island’s will be spared additional Long Island requirement, preserves local vistas by burying cables underground – no new transmission towers will be required – and new transmission by its nature brings no new smoke stacks footprint necessary for an on-Island generating resource It of similar size and by using existing rights of way. which are expected to continue. It conserves land by requiring a fraction of advantages. on Long Island. Energy prices in PJM have historically on Long Island. because of PJM’s been lower than those on Long Island both lower costs and intense wholesale competition, and substantial relief to consumers and businesses and substantial relief to consumers and sources from PJM which will ease the retirement of sources from PJM which will ease the high-emission oil and gas-fired generators on Long old, Island and reduce pollution in the region. • Because this transmission facility has no fuel • The facility provides substantial smart growthThe facility provides • • The Project’s low-cost energy low-cost will provide welcome The Project’s • New Jersey. These benefits include: New Jersey. The ability to access a range of off-Island generation • Island ratepayers and businesses and to the residents surrounding the Deans Substationin Middlesex County, 9. SOCIAL AND ECONOMIC BENEFITS offers Project tremendous Transmission The Poseidon benefits – beyond benefits – to Long its direct electricity long-run interest of its electric ratepayerslong-run interest of its to continue to move long and complex permitting process. the Project through the team has continued to develop the Project with the conviction to develop the Project with the conviction team has continued that and it is in the thatit is the best project for Island, Long would conduct no further review of the Project. The Poseidon The review of the Project. would conduct no further FINANCIAL INFORMATION Posiedon Transmission is comprised of a development team consistently access the capital markets. It is worth noting with substantial experience, capability, and financial backing. that Exelon maintained its investment grade credit ratings throughout the recent financial crisis. Exelon is an investment grade-rated company and has the financial resources to support the proposal through its Poseidon Transmission developers are involved in discussions development, construction and operation. In addition, Anbaric, in other jurisdictions about the methods of structuring Public through its participation in the Neptune RTS and Hudson Private Partnerships to maximize project benefits while Transmission Projects, has demonstrated the ability to raise minimizing public costs. We would welcome the opportunity to LONG ISLAND’S ENERGY FUTURE BEGINS WITH TRANSMISSION. capital and credit to support the development, construction and discuss these issues with New York State decision-makers. operation of an HVDC project.

Development phase equity funding for the Poseidon Project will be provided by Exelon. Permanent financing is expected to be provided through 70-80% debt and 20-30% equity. Following

THE POSEIDON PROJECT the experience with Neptune and Hudson, with the backing of a power purchase agreement with a creditworthy counterparty, we expect that debt financing will be available through the commercial bank markets, the public debt markets, private placement institutional markets, or a combination of these sources.

The combination of strong EPC contractors with a well-known provider such as Siemens and a long-term Firm Transmission Capacity sales agreement with a creditworthy counterparty should allow the project to readily raise its debt financing.

Exelon Corporation through its wholly-owned subsidiary Exelon Transmission has the capacity to be the Guarantor for the project. Details on Exelon’s financial performance are available at: www.exeloncorp.com/performance/investors/financialreports.aspx

Exelon’s commitment to maintaining its investment grade credit rating enables the company to capitalize on business opportunities, to honor its liquidity requirements, and to

18 THE POSEIDON PROJECT LONG ISLAND’S ENERGY FUTURE BEGINS WITH TRANSMISSION. 19 2017 2016

2015 2014 The chart below indicates the complete development schedule from commencement of contract negotiations through COD. (4) an approved SRIS (approved by Transmission Planning Planning Transmission (4) an approved SRIS (approved by Advisory and the Operating Subcommittee Committee of included as an exhibit in the application. the NYISO) must be energy company or York Upon selection by a suitableNew VII pre-application Article Poseidon will begin the formal entity, early in the planning phase of a project, will, Poseidon process. as is encouraged begin to consult informally with stakeholders, State Public Service Commission. York by the New 2013 2012 2011

Requests with both the NYISO and PJM. Completion of these Requests with both the NYISO and PJM. VII process. Article State York studies is required for the New NYCRR 88.4(a) pursuant to 16 As part of that process, permitting schedule required to meet a COD potentiallypermitting schedule required to meet a COD as early as mid-2017 including completion of the studies Interconnection Transmission flowing from the already-filed Before then, Poseidon will commence several important Poseidon will commence several Before then, pre-award activities necessary to support the licensing and contract with a credit-worthy counterparty on or beforecontract with a credit-worthy March 2013. 31, The development schedule forThe development schedule Project is set forth the Poseidon is based on execution of a The schedule in the following chart. PERMIT AND APPROVAL PROCESS AND APPROVAL PERMIT SCHEDULE WITH DEVELOPMENT

Construction Financing and Review NJ State Permit Preparation and Review NYS Permit Preparation

Federal Permits Interconnection NYISO Interconnection PJM 20 THE POSEIDON PROJECT LONG ISLAND’S ENERGY FUTURE BEGINS WITH TRANSMISSION. PERMIT ANDAPPROVAL PROCESS consultations expected for a proposed submarine cable project aproposedsubmarinecable expectedfor consultations environmentalapprovals,federal andstate permits, andagency A chartdescribingtherequiredpermitsfollows. Itliststhekey activities. construction andotherpermit-dependentdevelopment in multiplejurisdictions, enoughtocoordinate timedclosely approvals permitsandregulatory numerous federalandstate Following thisdevelopmentschedulerequiresobtaining inter-agency requiredtocommenceconstruction. approvals reviews,application withanother9to12monthscomplete ofpermit technical studiesandinitiation months ofintegrated 12 intoapproximately translates This timeframetypically arereceivedfromNYISO. approvals frame onceappropriate to New York, a24monthpermittingreviewtime weestimate electrictransmissionprojectfromNewJersey submarine cable experience onplanning, designing, andpermittingthistypeof process isprovidedintheGanttchart. Based onourrecent simultaneous completionofeachenvironmentalpermitting landfalls andinterconnections). timelinefor An estimated andNew with NewJersey York jurisdictions(including State PERMIT AND APPROVAL PROCESS THE POSEIDON PROJECT

AGENCY REGULATION APPROVAL OR PERMIT CONSULTATIONS & REVIEW FEDERAL

U.S. Army Corps of Engineers Department of the Army Permit under (New York & New England District) Rivers & Harbors Act Section 10 Permit

U.S. Army Corps of Engineers Clean Water Act Department of the Army Permit under (New York & New England District) Section 404 Permit LONG ISLAND’S ENERGY FUTURE BEGINS WITH TRANSMISSION. U.S. Fish & Wildlife Service Endangered Species Act Section 7 Consultation

Endangered Species Act Section 7 Consultation

National Marine Fisheries Service Magnuson-Stevens Fishery Conservation and Management Act Essential Fish Habitat Review

Consultation regarding construction U.S. Coast Guard related general navigation issues NEW YORK STATE Submittal of Interconnection Request Feasibility Study New York ISO System reliability Impact Study Facilities Study and Cost Allocation Interconnection Agreement Article VII of New York Public Service Certificate of Environmental Law Compatibility and Public Need

NY Public Service Commission Clean Water Act Section 401 Water Quality Certification

Article VII of New York Public Service Environmental Management & Law Construction Plan Approval NYS Department of State Division of Coastal Resources Coastal Zone Management Act Federal Consistency Determination NYS Department of State Division of Coastal Resources Article 42 of State Executive Law State Consistency Determination NY Office of Parks, Recreation, and New York State Historic Review of Historic and Archaeological Historic Preservation Preservation Act Resources

NYS Office of Parks, Recreation, and Section 106 of the National Historic Review of Historic and Archaeological Historic Preservation Preservation Act Resources

NY Natural Heritage Program Review of Threatened and Endangered Species NYS Department of State Office of General Services New York Public Lands Law Underwater Land Easement

NY Department of Environmental Clean Water Act and New York State General Permit for the Discharge Conservation of Stormwater Associated with Division of Water Environmental Conservation Law Construction Activities (GP-0-10-001).

NEW JERSEY

Waterfront Development Act Waterfront Development Permit Coastal Area Facility Review Act CAFRA Individual Permit (CAFRA) New Jersey Department of Tidelands Act Tidelands One-Fee Utility License Environmental Protection (NJDEP) Coastal/Tidal Wetlands Permit Freshwater Wetlands Protection Act Land Use Regulation Program Flood Hazard Area Control Act 401 Water Quality Certification Federal Consistency Determination Wetlands Act of 1970 NJ Water Pollution Control Act Dredging Permit

New Jersey Pollutant Discharge NJDEP Division of Water Quality Elimination System Construction Activity Stormwater Permit Regulates soil disturbance greater than County Soil Conservation District 5,000 square feet

NJ Historic Preservation Office Section 106 of the National Historic Review of Historic and Archaeological Preservation Act Resources 21 LONG ISLAND’S ENERGY FUTURE BEGINS WITH TRANSMISSION. THE POSEIDON PROJECT

22 THE POSEIDON PROJECT

CONCLUSION LONG ISLAND’S ENERGY FUTURE BEGINS WITH TRANSMISSION. The Poseidon Project offers downstate New York and Long Island the technologically advanced infrastructure necessary to support the region’s continued economic growth. This HVDC transmission project realizes many of the New York Energy Highway’s goals: it reduces constraints on the flow of electricity down to and within Long Island and the downstate region while increasing the grid’s reliability for decades to come; it increases the efficiency of power generation downstate, by allowing older, dirtier plants to close and incorporating distant, more efficient generating units; it reduces local air and water emissions; and it brings construction and high-tech operations, maintenance, and management jobs to the region while its lower cost electricity enhances the competitiveness of downstate’s businesses and tempers its high cost of living.

Poseidon Transmission respectfully submits that this project captures the Governor’s vision of bringing “reliable, affordable power to New York’s homes and businesses for the next half century while creating jobs, energizing private-sector investment, and protecting the State’s environment and the well-being of its citizens.” We look forward to continuing to develop this project in collaboration with policy makers across New York State.

23 THE POSEIDON PROJECT LONG ISLAND’S ENERGY FUTURE BEGINS WITH TRANSMISSION.