LOOKING NORTH NEW ENGLAND CANADA OPPORTUNITIES FOR GROWTH

LOOKING NORTH: NEW ENGLAND &CANADA OPPORTUNITIES FOR GROWTH PANEL ON CANADA - INNOVATION, ENERGY, AND FINANCE THE FEDERAL RESERVE BANK OF BOSTON JUNE 9 TH, 2016

New England & Canada Opportunities for Growth Market Response Need • • New England carbon reduction objectives Diversify generation resources Stable pricing Mitigate winter price spikes • • New clean energy resources under development in Canada Transmission projects proposed 2 Economic Model • • New England legislation proposed/passed to enable new clean energy resources FERC Order 1000 to pay for new transmission

NECPL – Project Need New England Cooperation • New England Governors and Eastern Canadian Premiers issue Sept. 2013 resolution on Energy (37 1), recognizing the need to increase Canadian Hydro in New England • Governors and Eastern Canadian Premiers have reaffirmed their commitment to increased renewable imports at Meetings in April, 2015 (CT) and August, 2015 (Newfoundland) Power Plant Retirements • ISO NE states more than 4, 200 MW of generation will retire by 2019 including 1, 280 MW of nuclear and 2, 770 MW of oil and coal • Another 6, 000 MW at risk of retiring ISO-NE: Fuel Diversity & Regional Power / Capacity Prices Climate Change Objectives • All six New England States are within the top 11 nationally in the price of electricity • New England is moving to increase Canadian hydro and wind imports as a counterweight to natural gas, which in 2015 comprised nearly 50% of the region’s electricity production • Overdependence on Natural Gas resulted in approximately $3 billion in additional electricity costs to Region during 2014 winter • All six New England State have aggressive Renewable Portfolio Standards • 2016 MA EOEEA report stated imported hydro is needed to meet GWSA 2020 goal • Nuclear retirements are resulting in regional emission increases for first time in years 3

Older Power Plants Will/Are Retiring Source: ISO New England 2016 State of the Grid 350 generators; 31, 000 MW of generating capacity 7 4

Growing Use of Natural Gas In New England Source: ISO New England 2016 State of the Grid 5

Quebec Energy Policy (2006 -2015) 6

Hydro-Quebec Response to the Energy Policy Hydro-Québec’s La Romaine Complex is expected to increase exports by an additional 1, 550 MW by 2020 • HQ has followed through on commitments from Quebec’s 2005 Energy Policy (2006 2015) to accelerate the development of its hydroelectric potential with the implementation of 4, 500 MWs of new export focused projects • In November 2008, Quebec announced that an additional 3, 500 MW of renewable energy would be added by 2035 to the capacity already called for through the Northern Plan (Plan Nord territory) Hydro-Québec Production obtained the necessary approvals to build a 1, 550 -MW hydroelectric complex on the Rivière Romaine, north of the municipality of Havre. Saint-Pierre on the north shore of the St. Lawrence. The complex will consist of four hydropower generating stations with average annual output of 8. 0 TWh. 7

Quebec 2016 -2030 Energy Strategy Wind Energy The government intends to support Québec firms so that they can take advantage of the opening of new markets stemming from growing worldwide demand for wind power. The Québec government’s perspective of wind power development is in keeping with this context and it hopes that certain wind farms built in Québec can respond to business opportunities and export all of their electricity to North American markets. The government’s objective is to take advantage of the wind power option without affecting the electricity rates of Québec consumers, through production planning, when Hydro. Québec needs energy. 8

Newfoundland & Labrador Opportunity Under Construction 9

Newfoundland & Labrador Opportunity Proposed 10

Proposed Transmission Projects Sources: ISO New England & public information 11

New England Clean Power Link Overview New England Clean Power Link (“NECPL”) Overview 1, 000 MW buried HVDC transmission project 154 mile route from Canadian border to Ludlow, VT $1. 2 B estimated project cost Target in service of 2019; 40+ year expected operating life Experienced management team currently also developing the Champlain Hudson Power Express project in New York Business Model NECPL is a merchant transmission project regulated by FERC that will sell transmission rights at negotiated rates through an Open Solicitation process Regulatory & Siting Expected to have all major permit decisions by Q 3 2016 Permitting advancing with little public opposition Project is viewed as having very minimal environmental impacts All required land for route under control Support from local communities and state leaders Environmental & Economic Expected to reduce up to 3. 3 millions of tons per year of CO 2 Low impact footprint – submerged and underground installation on established ROW’s and through Lake Champlain Significant economic benefits in Vermont and New England 12

NECPL – Permitting Summary VT State Permitting Certificate of Public Good (Section 248) • The Vermont Public Service Board must find that an electric transmission facility project promotes the general good of the State of Vermont pursuant to V. S. A. Title 30 Section 248 • Application filed December 8, 2014 • Public hearing held February 24, 2015 • Agreements reached with all active parties, including State Agencies • Technical hearing on October 20, 2015 • Three VT Environmental Permit hearings held with no comments • Eight VT Environmental Permits received on November 24, 2015 Federal Permitting Presidential Permit • A Presidential Permit must be issued for electric transmission facilities at the international border • U. S. Department of Energy (“DOE”) issues the Presidential Permit and is the lead Federal agency for the environmental review Federal Permitting Army Corps of Engineers • ACOE Sections 10 and 404 permits required to ensure compliance with Clean Water Act and Rivers and Harbors Act • Application filed November 7, 2014 • Application supplemented April 2015 • Application filed May 20, 2014 • Application deemed complete and noticed to the public in July 21, 2015 • Draft Environmental Impact Statement (“EIS”) released May 31, 2015 • Public notice period ended August 21, 2015 with minimal comments • Seven comments received on DEIS during 60 day comment period • No public hearing required • Concurrence received from Departments of State and Defense, U. S. Fish and Wildlife Service, and VT Historic • On January 29, 2016, the ACOE issued its permits allowing the NECPL project to be placed in U. S. waterways along the proposed route • FEIS released October 29, 2015 VT State Siting Permit issued January 5, 2016 Presidential Permit decision expected in Q 3 2016 13 Army Corps Permits issued January 29, 2016

Economic Model – Long Term Agreements • The Commonwealth has recent experience and success with clean energy solicitations • These solicitation are viewed to have provided positive value to MA ratepayers • • • Section 83 (2011): 5 clean energy contracts representing 150 MW Section 83 A (2013): 2 clean energy contracts representing 334 MW CT, MA, RI currently have a long term solicitation process underway (Clean Energy RFP) 14

2015 Energy Procurement – “Tri-State” • 5 TWh/yr solicitation for clean energy under long term contracts • Approximately 35 bids received representing approximately 5, 500 MW of capacity • All large wind and hydro generation require new transmission solutions • 6 large transmission projects submitted bids Location ISO-NE Project Developer(s) Maine J Renewable Energy Interconnect Emera, CMP, Wind Developers Wind Maine I Clean Power Connection CMP, Avangrid, Wind Developers Wind Evergreen Express Next. Era Wind, Solar, Battery Maine Supply NY / VT G Green Line Anbaric, Ngrid, Everpower, HQ Wind, Hydro NY / MA H Clean Energy Connect Everource, Brookfield, Wind Developers Wind, Hydro Que / NH A Northern Pass Eversource, HQ Hydro 15

Massachusetts Clean Electricity Partnership • Partnership of clean energy suppliers and transmission developers • Seeking competitive long term contracting opportunities through legislation ─ 18. 9 TWh of hydro & onshore wind ─ Utilities must solicit proposals, but do not have to execute contracts if not cost effective ─ Urgency to pass legislation due to GWSA goals and complexity of projects ─ Proposed legislation only addresses approximately 25% of expected retirements ─ Stem regional trend toward overreliance on gas 16

MA – Legislative Update & Process • 4 Bills have been filed regarding an energy solicitation – a single bill has emerged on May 23 rd, 2016 • Legislation must be enacted by July 31, 2016 or it will likely be delayed until 2018 • Bills likely require MA Utilities to run an RFP process by Jan 1 st, 2017 to solicit bids for energy from various sources. Legislation is needed for long term contracts. • Recent Court decision legally mandates emission reductions in MA • Bill has pass the House on June 8 th, 2016 (154 1) • RFP process under the MA legislation is expected to take one year to complete so contracts would be signed in 2017 17

Conclusions • New England Eastern Canada have a long, mutually economic relationship as its pertains to electricity • Stakeholders on both sides of the border see a clear need to increase imports of clean power into New England build the required infrastructure • Long term power contracts in New England, for capital intensive clean energy supply, have numerous benefits and have/will be procured through a competitive process (RFP) to ensure they provide value to the region 18