NE-GIS: A New Scorecard for Attributes and Electricity

1. NE-GIS: A New Scorecard for Attributes and Electricity Roundtable Presentation December 13, 2002 Presented by: Stephen L. Cowell CEO Conservation Services Group, Inc.

2. Overview: What is the NE-GIS? Simple: • Read Andy Greene’s Article in Public Utilities Fortnightly

3. CSG’s Role • Member of NEPOOL/GIS working group • Represent Solar Industry with MTC support to promote effective GIS and incorporate small and behind the meter resources • Owns and operates solar ‘PV’ power plants in 9 states • Aggregates renewable resources representing generation suppliers • Completed 47% of all NE transactions for RPS RECs • Creates Green Power products-delivered and attribute based.

4. NE- Generation Information System (GIS) Simplifies: Accounting and tracking of generation attributes Platform for a new market for Attributes in addition to energy, capacity etc. Lower Cost compliance with regulatory rules Allows Value Added (Green Power) suppliers to create products Incorporation of ‘Behind the Meter’ Resources into attribute market

5. GIS System: A New Approach to Energy Accounting • OLD WAY: ATTRIBUTES (Emissions, Renewable, Fuel Type) contracted with power. Power was dumped into grid and ISO settled at the end. Attributes needed a contract path between buyer and seller. Attributes lost their value. • NEW WAY: Attributes put into the grid via the GIS System and allocated via transactions between generators and suppliers

6. The New Way - GIS • ALL electrons are the same, NO differentiation in the Power Supply Market to maximize efficiency of power markets to function • GIS creates the Certificate market to brand the electrons with their respective attributes and allows attribute markets to function efficiently • Parallel and equal markets allow for full value and information to reach the consumer without excess administrative costs

7. GIS will:Enhance the ability of energy products to incorporate environmental attributes • Increases the viability of retail energy markets • Expands choice for consumers (recent survey by MTC indicates that up to 51% of consumers willing to pay more)

8. GIS will: Increase the value of Renewable/Clean Energy Sources • Ability of renewable energy sources to sell their attributes in addition to the electrons to the highest value user • Encourage fuel diversity • Helps achieve the objectives of system benefit funds such as MTC, RI REC etc. to meet objectives

9. Issues and Challenges • Price Transparency: needed? • Integrity of the Market • Transport of RECs between ISOs • One national GIS or regional GIS • Financing REC through added market value • Splitting up the REC into components

10. Price Transparency • All exchanges are bilateral contracts • Most contracts include price confidentiality • REC market prices are based on rumor and innuendo rather than fact • Price transparency difficult with very few market players • Value to confidentiality of bilateral contracts

11. Integrity of the Market • Who polices claims and/or incorrect information? • What is the accuracy of price claims? • How to ensure allocation of RECs among multi retail products and RPS • May need additional systems in the long run if there are problems

12. Transport policy of NE GIS links attributes with power imports from specific facilities Requires matching between import and generation Reduces the ease of REC imports Increases the value of REC generation inside NE ISO area Should this policy change to allow easier movement? Transport of RECs into NE

13. National GIS vs. Regional GIS • National system would allow for attributes to move anywhere in the country independently from power • Regional systems would maintain the link between aggregate generation/transport and aggregate consumption in an ISO • National system does not work without all regions using the same GIS system and may be hard to police and explain to consumers

14. Financing and the REC Market • REC transactions are quarterly based on production 6 months previously • Uncertain market based on RPS compliance and length of the contracts for LSEs • Without 5-10 year contracts for RECs with a ‘bankable’ entity; developers cannot finance new projects

15. Splitting up RECs • Attributes may have separate and distinct values: fuel source vs. emissions offsets • Does one REC that includes all attributes restrict market flexibility? • Implications for the integrity of the REC: Does green power include the environmental benefits? Does RPS mean fuel source only without the emissions benefits?

16. Conclusion • GIS represents a potential revolution in the ability to link power generation to its impact on the environment • GIS can provide a tool to stimulate the growth in robust retail markets • GIS is working and more regions should use this approach • Provides verification system for multiple claims

17. Price transparency possible with an expanded market and more participants Keep current transport policy until market evolves and NE resources expand Keep RECs together but allow for business transactions that sell more than one component if there are no conflicts Financing: market maturity will help solve this with some gentle support from public benefit funds. More Conclusions