Charlottesville, Virginia (Platts)--22Jun2007

No matter what the scenario, New England is likely to find it hard to
meet upcoming greenhouse gas and renewable portfolio standard requirements,
according to an ISO New England analysis released Friday.

     This finding comes from a draft of the New England Electricity Scenario
Analysis, an eight-month investigation into the tradeoffs the region faces as
it chooses future resources. Gordon van Welie, ISO president and CEO, is
scheduled to present the study Friday in Boston.

     The study is designed to help policymakers and investors understand how
their decisions will effecte on future power markets, the environment and
reliability. It looks at what it will mean if the region chooses to meet its
next 8,000 MW of demand with the same mix of resources it now uses, or relies
more on demand-side resources, nuclear, clean coal, gas, renewables or
low-emission imports.

     Almost all of the scenarios spell trouble for meeting upcoming
environmental requirements, such as the Regional Greenhouse Gas Initiative and
state renewable portfolio standards, Kathleen Carrigan, ISO senior vice
president and general counsel, said in an interview Thursday.

     "We are concerned we will have a hard time meeting the renewable
requirement and we are concerned about the RGGI requirement. RGGI will
definitely add costs and unless we start building renewables soon, [the RPS]
will increase costs," she said.

     The analysis offered only one clear path to meet RGGI, which requires
that 10 Northeast states cap carbon emissions 10% by 2018. And that is the
addition of 5,400 MW of energy efficiency resources, a formidable undertaking
on a six-state system projected to have a demand of only 35,000 MW between
2020 and 2025.

     Using more renewables and nuclear power also would help New England meet
RGGI, but at a significant expense--capital costs of $1,000/kW to $6,000/kW,
according to the study.

     Another option is to build transmission and import renewables from Canada
and New York. But again the expense is high. The study estimated transmission
costs of $3.1 billion to $8.9 billion for the New England?Canadian routes, and
$1 billion to $2.4 billion to the New York border. The estimates did not
include Canada?s costs to build transmission on its side, which also could be
a large expense if the renewables need to be transported from hundreds of
miles north of the Canadian border, Carrigan said. 

     The ISO is now seeking stakeholder comments on the draft report. A final
version is due out in August.