New Hampshire Energy Forum William T. Sherry Executive Vice President New Hampshire Public Affairs National Grid June 23, 2006
National Grid’s Service Territory 2
National Grid: Who We Are International energy delivery company based in UK � � High voltage transmission system in England & Wales � 11 million natural gas distribution customers in UK Electric and gas distribution company in NY, MA, RI and � NH � Created by merger of NESS, EUA, NIMO � 3.3 million electric customers � 565,000 gas customers in NY In process of acquiring KeySpan Energy and New England � Gas � 2.8 million additional gas customers in NY, MA, RI & NH 3
National Grid’s Service Territory 4
National Grid Average Residential Rates Power Supply Costs Stranded Costs Delivery Charges 15.0 14.5 14.0 13.0 11.9 11.5 11.5 12.0 11.3 11.2 11.1 11.1 - - 10.3 11.0 8.6* 9.8 9.8 9.5 10.0 filed 9.0 5.8 5.3 4.9 3.2 5.0 5.4 5.1 (¢ per kWh) 3.2 8.0 3.8 3.5 7.0 6.0 0.7 1.4 0.6 0.5 0.2 0.2 0.7 2.8 0.6 0.8 1.1 5.0 4.0 3.0 5.7 5.7 5.6 5.6 5.6 5.4 5.4 5.2 5.2 4.9 4.3 2.0 1.0 - Jan-98 Jul-98 Sep-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 May-06 Note: Granite State Electric Company is now referred to as National Grid. January 1998 is the bundled rate prior to restructuring. Power Supply Costs include the base 5 transition service charge and the transition service adjustment factor. May 2006 is the filed rate and has not received PUC approval. Delivery charges include transmission, distribution, taxes, and the SBC for purposes of this chart.
Average Monthly Electricity Clearing Prices Commodity Costs have Risen Throughout the Northeast 120.00 100.00 80.00 $/MWh 60.00 40.00 20.00 0.00 Feb-00 May-00 Nov-00 Feb-01 May-01 Aug-01 Nov-01 Feb-02 May-02 Aug-02 Nov-02 Feb-03 May-03 Aug-03 Nov-03 Feb-04 May-04 Aug-04 Nov-04 Feb-05 May-05 Aug-05 Nov-05 Feb-06 Aug-00 New England New York PJM 6 Source: ISO New England Monthly Market Reports, Hourly Real-Time Energy Price Summary, and Monthly Summary of Load, LMP, and Weather Data. Comparison data for New York and PJM is only available through December 2005.
New England Electric Generation Fuel Mix, 2004 All Other Renewables Petroleum 7% 9% Total = 133.5 Billion kWh Utility Plants = 6% Independent Power Producers and Combined Coal Heat & Power Plants = 94% 14% Nuclear Hydroelectric 27% 6% Natural Gas 37% 7 Source: Energy Information Administration, Form EIA-906, "Power Plant Report."
Average Monthly Clearing Prices, Electricity v. Gas January 2000 - February 2006 12.00 $16.00 $14.00 10.00 $12.00 8.00 Natural Gas ($ per MMbtu) $10.00 Electricity (cents/kwh) 6.00 $8.00 $6.00 4.00 $4.00 2.00 $2.00 0.00 $0.00 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 New England Electricity Henry Hub Natural Gas 8 Source: ISO New England Monthly Market Reports, and Natural Gas Weekly Updates, Energy Information Administration, Office of Oil & Gas
Regulated Generation Business Model � Customers bore supply cost risk � Inefficient price signals to customers � Shareholder returns disconnected from performance Regulated generation model had problems. 9
Competitive Generation Business Model � Generators bear supply cost risk � Efficient price signals to customers � Shareholder returns linked to performance � Reduced air emissions � Lower fuel-adjusted wholesale prices Competitive generation model is better. 10
Complete the Transition � Wholesale Market � Implement forward capacity auction (LICAP settlement) � Transmission � Platform for competitive markets � Continue infrastructure expansion � Retail Market � Continue energy efficiency programs � Expand real-time pricing 11
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