Agenda. 1:00 PM to 5:00 PM Wednesday, December 7, Welcome & Opening Remarks

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2 Agenda Northeast Power Coordinating Council, Inc General Meeting Reliability Challenges Hotel Omni Mont-Royal 1050 rue Sherbrooke Ouest Montreal, Quebec H3A 2R6 Tel. (514) :00 PM to 5:00 PM Wednesday, December 7, 2016 Welcome & Opening Remarks Sylvain Clermont, Director, Reliability Standards and Regulatory Compliance, Hydro-Québec TransÉnergie Harvey Reed, NPCC Chairman of the Board Edward A. Schwerdt, NPCC President & CEO Distributed Energy Resources Integration Brian Evans-Mongeon President and CEO, Utility Services Inc. Vice Chair, NERC Planning Committee BREAK Cyber & Physical Security Resiliency Brian Harrell Director of Security and Risk Management Navigant Energy 2016/2017 Natural Gas Outlook Stephen Leahy Vice President, Policy Northeast Gas Association Closing Remarks Philip A. Fedora, Assistant Vice President of Reliability Services NPCC NPCC 1 December 7, 2016

3 Northeast Power Coordinating Council, Inc. (NPCC) Antitrust Compliance Guidelines It is NPCC s policy and practice to obey the antitrust laws and to avoid all conduct that unreasonably restrains competition. The antitrust laws make it important that meeting participants avoid discussion of topics that could result in charges of anti-competitive behavior, including: restraint of trade and conspiracies to monopolize, unfair or deceptive business acts or practices, price discrimination, division of markets, allocation of production, imposition of boycotts, exclusive dealing arrangements, and any other activity that unreasonably restrains competition. It is the responsibility of every NPCC participant and employee who may in any way affect NPCC s compliance with the antitrust laws to carry out this commitment. Participants in NPCC activities (including those participating in its committees, task forces and subgroups) should refrain from discussing the following throughout any meeting or during any breaks (including NPCC meetings, conference calls and informal discussions): Industry-related topics considered sensitive or market intelligence in nature that are outside of their committee s scope or assignment, or the published agenda for the meeting; Their company s prices for products or services, or prices charged by their competitors; Costs, discounts, terms of sale, profit margins or anything else that might affect prices; The resale prices their customers should charge for products they sell them; Allocating markets, customers, territories or products with their competitors; Limiting production; Whether or not to deal with any company; and Any competitively sensitive information concerning their company or a competitor. Any decisions or actions by NPCC as a result of such meetings will only be taken in the interest of promoting and maintaining the reliability and adequacy of the bulk power system. Any NPCC meeting participant or employee who is uncertain about the legal ramifications of a particular course of conduct or who has doubts or concerns about whether NPCC s antitrust compliance policy is implicated in any situation should call NPCC s Secretary, Ruta Skucas at

4 Distributed Energy Resources Brian Evans-Mongeon Utility Services, Inc. Vermont, USA

5 Some upfront facts: DSOs don t exist per se, but do they? 2000 public power entities 900 cooperatives 300 investor owned Control Areas by any other name: 275 Balancing Areas 100 Reliability Coordinators Jurisdictional enterprises 48 States 7 Provinces TSOs: Ten (7 in US, 3 CA) NERC: 8 Reliability regions 4 Interconnection Areas Federal Governments Two And a partridge in a pear tree (Baja California of Mexico)

6 Seeking to ensure: Culture of Reliability Culture of Resiliency Culture of Security

7 Culture of Reliability

8 Essential Reliability Service Fundamentals Reliability Building blocks Accentuated by resource changes Partly covered through ancillary services Accommodate local/regional needs Resource Adequacy Essential Reliability Services Reliability Page 5

9 Changing Mix Typical Some Regions % 90 90% 80 80% 70 70% 60 60% 50 50% 40 40% 30 30% 20 20% 10 10% % Coal Nuclear Gas Hydro Other Coal Nuclear Gas Hydro Other Page 6

10 12,000 Estimated Behind the Meter Solar PV Build-out through ,000 8,000 MW 6,000 4,000 2, BTM Solar PV 3,695 4,903 5,976 7,054 8,146 9,309 10,385 Page 7

11 Frequency Support 3.4 x 105 Kinetic energy, MWs at max wind penetration, historic at max wind penetration, projected based on SGIAs at max wind penetration, projected based on SGIAs and FCs Page 8

12 Ramping 8,000 18,000 16,000 6,000 14,000 12,000 4,000 10,000 8,000 Hourly Net Load Ramps, MW 2, ,000-4,000-6,000 Hourly Net Load Ramps, MW 6,000 4,000 2, ,000-4,000-6,000-8,000-10,000-12,000-8,000-14,000 Yearly 1-Hour Ramp Distribution Yearly 3-Hour Ramp Distribution Page 9

13 Voltage Voltage Control & Reactive Support - Maintain voltage within tolerable range - More local Page 10

14 Where are we and what s next? This year: Final Report on DERTF Next: PC and OC Acceptance NERC MRC Endorsement NERC BOT Approval Page 11

15 Culture of Resiliency

16 Distributed Energy Resources Distribution Levels of Gen increasing: DG and Storage Solar and Wind Demand Response and DSM Aggregators Shifting power transfer between Distribution and Bulk Power System TDI Transmission Distribution Interface Sourcing vs. Sinking Modeling capabilities exist within current standards Page 13

17 Permission granted by Holger Weichmann, EnBW

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20 Culture of Security

21 What are the risks/benefits? System integrations Internet of Things Third Party Aggregators Page 18

22 Final Touches Pendulum swinging back to distributed localized planning Need to assure continuity of the essential reliability services to maintain grid integrity Look for opportunities and working solutions in rural environments Need to balance localized and central facilities Build in protections to ensure customer safety After all, we are here to have people plug things in and turn the lights on

23 Brian Evans-Mongeon President and CEO Utility Services, Inc. (802) Waterbury & Stowe, VT home of world renown ice cream, beer, chocolate, maple syrup, cheese, apples, coffee, and NERC compliance.

24 PHYSICAL AND CYBERSECURITY RESILIENCE IN NPCC GENERAL MEETING MONTREAL 2016 BRIAN HARRELL, CPP DIRECTOR OF SECURITY AND RISK MANAGEMENT 1 / 2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED

25 AGENDA 1. A Look to the Near Future 2. Cybersecurity Predictions Ransomware Removable Media and the Dreaded USB Drive Protecting Data Through Awareness Low Impact Compliance Date 3. Physical Security Predictions Beyond CIP-014 The Good, Bad, and Ugly Drones Non-Nuclear Generation Protections Security Convergence A Rising Tide Lifts All Boats 2 / 2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED

26 The Real Challenge (physical) SECURING REMOTE AND URBAN ASSETS 3 / 2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED

27 Over 55,000 Substations over 100 Kv in size! 4 / 2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED

28 The Real Challenge (Cyber) LIMITING REMOTE ACCESS AND SCADA (IN)SECURITY! 5 / 2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED

29 CYBERSECURITY 6 / 2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED

30 Ransomware CROWN JEWELS Malicious software designed to block access to a computer system until a sum of money is paid Ransomware is a growth industry Paying the Ransom? Business continuity vs. security Prevention Patches and updates Avoid falling victim to phishing s Regular backups 7 / 2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED

31 CROWN JEWELS Removable Media and the Dreaded USB Drive Do not trust! Don t plug or insert untrusted media into your computer Throw away the conference freebie Think of USB sticks like toothbrushes If you must, use encrypted devices * A U.S. study earlier this year found that nearly half of 297 USB sticks placed randomly around a university campus were picked up and inserted into computers 8 / 2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED

32 CROWN JEWELS Protecting Data Through Awareness Employees, contractors and vendor partners will become more aware that the data on their computers and mobile devices are valuable and vulnerable Automate a cybersecurity awareness program Direct benefit to your overall security posture 2015 Data Breaches Report CIP-011, V5 9 / 2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED

33 Low Impact Compliance CROWN JEWELS Date April 1, 2017, is the effective date that Low Impact Assets are required to meet compliance Over 1,000 new entities will be required to comply with the new CIP-003 requirement that mandates policies in cyber security awareness, physical access controls, electronics access controls and cyber security incident response Most of these entities have never had to comply with NERC CIP 10 / 2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED

34 PHYSICAL SECURITY 11 / 2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED

35 Beyond CROWN CIP-014 JEWELS CIP-014 will target approximately 1,000-1,500 critical substations across North America As new substations are brought on, security protections should be implemented as a forethought Any physical attack will be propelled into media scrutiny Substations that don t meet the criteria for CIP-014 compliance, but are system or business critical, will start to receive threat and vulnerability assessments and added security mitigation measures designed to deter, detect and delay potential attackers 12 / 2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED

36 The Good, Bad, and Ugly CROWN - Drones JEWELS Applications continue to evolve at an exponential rate Have many legitimate and cost effective uses for many industries, including electricity Have been utilized by terrorist organizations Are being the subject of intense manipulation and invention for both commercial and sinister use killer drones 13 / 2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED

37 CROWN JEWELS Non-Nuclear Generation Protections April 16, 2013 What if? Add security mitigation measures designed to deter, detect and delay potential attackers Ready for the knee-jerk reaction? Utilities recognize non-nuclear generation is a soft target 14 / 2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED

38 Security Convergence Bringing together different security silos into one combined Org A significant number of breaches are occurring due to internal threats Physical security technology uses IT systems and platforms Departments should collaborate to ensure physical access is linked closely with logical access to computers and network resources A company s cyber infrastructure, NERC CIP program, and industrial control systems rely on physical security mitigation measures to keep systems inaccessible to physical threats Security Convergence requires leadership and political will The need to make risk-based decisions dictate an integrated approach to security management 15 / 2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED

39 A Rising Tide Lifts All Boats Investor owned utilities (IOU), with help from industry trade associations, will push the industry towards greater physical security protections at critical sites GridEx IV Government will look towards the Electricity ISAC for industry subject matter expertise Renewed interest from the US Department of Homeland Security Do you have a utility neighbor program? The two-minute elevator speech Be mindful of reputational risk, talking points at the ready We know threat actors are coming! Success will be determined by how we proactively look at these threats and defend against them 16 / 2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED

40 17 / 2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED Closing

41 CONTACT BRIAN HARRELL, CPP Director of Security and Risk Management Blog: Securing the Spark navigant.com 18 / 2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED

42 December 7, 2016 Montreal, Quebec 2016/17 Natural Gas Outlook The Northeast Power Coordinating Council General Meeting Stephen Leahy Northeast Gas Association 1.

43 About NGA Non-profit trade association Local gas utilities (LDCs) serving New England, New York, New Jersey, Pennsylvania Several interstate pipeline companies LNG importers (Distrigas, Repsol) and LNG trucking companies Over 250 associate member companies, from industry suppliers and contractors to electric grid operators 2.

44 Objective NGA S ANTITRUST COMPLIANCE PROCEDURES Adopted by the NGA Board of Directors on June 4, 2003 The Northeast Gas Association (NGA) and its member companies are committed to full compliance with all laws and regulations, and to maintaining the highest ethical standards in the way we conduct our operations and activities. Our commitment includes strict compliance with federal and state antitrust laws, which are designed to protect this country s free competitive economy. Responsibility for Antitrust Compliance Compliance with the antitrust laws is a serious business. Antitrust violations may result in heavy fines for corporations, and in fines and even imprisonment for individuals. While NGA s attorneys provide guidance on antitrust matters, you bear the ultimate responsibility for assuring that your actions and the actions of any of those under your direction comply with the antitrust laws. Antitrust Guidelines In all NGA operations and activities, you must avoid any discussions or conduct that might violate the antitrust laws or even raise an appearance of impropriety. The following guidelines will help you do that: Do consult counsel about any documents that touch on sensitive antitrust subjects such as pricing, market allocations, refusals to deal with any company, and the like. Continued on NGA web site 3.

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46 PNGTS TransCanada M&NE National Fuel & Empire Iroquois Tennessee Dominion Millennium Stagecoach Algonquin Columbia Transco Texas Eastern Copyright: Northeast Gas Association Prepared by: Novara March

47 Winter Outlook Storage levels in positive position U.S. gas production bit lower this year while Marcellus continues high output LNG imports to region higher Commodity price higher than last year but still in $3/Mcf range Looking ahead, weather, as always, is the biggest variable in supply/price dynamic 6.

48 Storage is Strong U.S. natural gas storage levels as of November 12 were Tcf, 9% above the 5-year average U.S. gas production levels up about 2.5% in 2010 U.S. natural gas storage levels are just under 4 Tcf, 6% above 5-year average. Source: U.S. EIA, Source: U.S. EIA, data released Source: U.S. EIA, data released , through Aug. 2010

49 Price: Recent History Source: U.S. EIA, EIA,

50 Source: U.S. EIA, 7-14 Nearby Production U.S. natural gas production in 2015 set new all-time record: ~75 Bcf/d. Marcellus Shale currently producing 18 Bcf/d. PA is now 2 nd largest gas producing state in U.S

51 Marcellus: Largest U.S. Gas Resource Base Source: U.S. EIA,

52 Canadian Gas Exports to Region 1200 Canadian Natural Gas Exports to Eastern U.S., Bcf * Source: National Energy Board, Canada. *2016 data through Sept. 11.

53 Bcf/year LNG Volumes Imports by New England-Based Terminals LNG Imports, NE Terminals, Distrigas NE Gateway Neptune * Source: U.S. Dept. of Energy/Fossil Energy, * 2016 data thru Sept. 12.

54 Canaport LNG Deliveries Chart: Repsol, based on Repsol and Ventyx. Gas volumes in Dth. 13.

55 LNG Developments Gaz Métro is tripling its liquefaction capability at its E. Montreal plant from 3 to 9 Bcf/yr project expected to be completed this month. Eversource proposing to increase LNG storage capacity in southeastern MA from 0.5 Bcf of storage to 6.8 Bcf, as part of the Access Northeast project Northeast Energy Center (NEC) is a FERC regulated LNG liquefaction, storage and vaporization project proposed to be located in central MA and connected to Tennessee Gas Pipeline. The project sponsors are affiliates of Liberty Utilities and Northstar Industries. State of Maine issued RFP this fall for proposals to increase LNG storage to enhance electrical and natural gas reliability in the State. As of Sept. 2016, for this current year the U.S. has exported 106 Bcf of LNG, imported 64 Bcf. 14.

56 Northeast States Lead U.S. in Gas Efficiency Investments 9 Northeast states = $544 million investment in 2015 Equal to 39% of U.S. total of $1.4 billion Source: ACEEE, 2016 State Energy Efficiency Scorecard, released Sept

57 Gas Customer Base in Region Continues to Grow Natural Gas = +1 million Heating Oil = -1.4 Million 16.

58 New Sendout Records Set in Mild Recent Winter New England gas LDCs set a new sendout record of 4 Bcf on Feb. 14, 2016 (a Sunday) New York State set a new record for gas demand on Feb. 13, 2016 of 6.6 Bcf Gas utilities experiencing rising design day demand 17.

59 Projected Power Sector Additions by Fuel Type GENERATOR PROPOSALS IN THE ISO NEW ENGLAND QUEUE Percentage, Sept NEW YORK ISO SYSTEM, 2016 Proposed Power Projects by Fuel Type Megawatts 6,000 Wind, 40 Natural Gas, 53 5,000 4,000 3,000 Gas = approx. 65% Other, 7 2,000 1,000 0 Natural Gas Dual Fuel Wind Other PJM, 2015 Queued Capacity by Fuel Type, Percentage 18.

60 Coordination with Power Systems NGA maintains joint Electric-Gas Operating Committee with 3 ISOs in region Good communication between ISOs and pipeline control rooms Firm vs. non-firm transportation arrangements well-understood at this point 19.

61 Constraints 20.

62 Growing Opposition to Energy Infrastructure 21.

63 Pipeline Reversals Fall 2015: U.S. government denies permit for Keystone oil pipeline from Canada April 2016: Kinder Morgan suspends Tennessee s proposed Northeast Energy Direct project in New England market April 2016: NY Dept. of Environment denies water permit for Constitution Pipeline (proposal approved by FERC in 2014) August October 2016: MA Supreme Judicial Court rules against EDCs contracting for gas pipeline capacity; RI PUC puts proposal on hold; NH PUC rules against it is an approach that, in practice, would violate New Hampshire law following the restructuring of the electric industry Fall 2016: U.S. government temporarily halts construction on Dakota Access oil pipeline 22. in North Dakota

64 Source: Bloomberg News article,

65 Proposed Projects in Region 24.

66 Delays at the State Review Process Dominion s New Market Project: To serve National Grid gas utility in upstate NY; received FERC certificate, awaiting permits from NY DEC Tennessee s CT Expansion: To serve three natural gas utilities in CT, approved by FERC, awaiting permits from MA DEP 25.

67 Comments Gas utilities in region continue to see growth on systems and to plan infrastructure investments to meet that growth. Natural gas continues to be essential part of region s power system and will balance / enable increasing renewable additions. Additional pipeline infrastructure needed to meet demand; projects in development; siting challenges on the increase. 26.

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