New Clear Free SOLUTIONS. Transitioning To A Low Carbon Economy Carbon Tax and Investment Plan 2017 Integrated Resource Plan

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1 New Clear Free SOLUTIONS Transitioning To A Low Carbon Economy Carbon Tax and Investment Plan 217 Integrated Resource Plan The purpose of New Clear Free Solutions is to: Provide energy oversight to the public and official decision makers using objective scientific, regulatory and financial information. The objective of New Clear Free Solutions is to: Ensure safe, affordable, and sustainable energy solutions for the public and environment. IF YOU FOCUS ON THE PROBLEM, YOU CAN T SEE THE SOLUTION. NEVER FOCUS ON THE PROBLEM.

2 216 Hydro 219 Wind 222 Solar 225 Geothermal 228 Natural Gas 231 Hydro 234 Geothermal 237 Bio 24 Natural Gas 243 Wind 246 Solar 249 Geothermal 252 Wind 255 Wind 258 Bio Mwh/Year Year-Technolgy Type Carbon Tax $/Year $2/Ton Economy Wide Carbon Tax $2-3/Ton Revenue From Investments (O&M+Fuel) $/Year Reinvestment ROI-O&M-Fuel-Dividend Total Investment $/Year 216 Hydro $3,, $ $3,, 217 Hydro $3,, $28,691, $328,691, 218 Wind $3,, $6,125,911 $36,125, Wind $3,, $13,258,78 $43,258,78 22 Wind $3,, $151,557,743 $451,557, Natural Gas $3,, $25,641,552 $55,641,552 Public Investment Through NB Power Dividend 222 Solar $3,, $27,44,231 $57,44, Bio $3,, $234,443,8 $234,443,8 $3,, 224 Bio $3,, $232,451,644 $232,451,644 $3,, 225 Geothermal $3,, $23,477,194 $33,477,194 $2,, 226 Geothermal $3,, $284,71,813 $384,71,813 $2,, $ $ Fuel Shift Efficiency Adaptation $ $ Jobs Displaced Cost + Increased Sales From Fuel Shift=ROI Priority Uncertainty Summary $ $ Social Policy Economic Policy Stage 1 Renewable Portfolio Standard Stage 2 Renewable Portfolio Standard 14,, h/year By 24 45,, h/year By 26 % Generation Capacity % Generation Capacity Wind 3% 1,199 45% 5,779 Hydro 25% 999 1% 1,284 Solar 5% 32 15% 3,82 Geothermal 3% 533 2% 1,142 Bio 5% 32 5% 1,27 Natural Gas 5% 1,749 5% 6,235 Storage Tesla Power Wall NA 4 NA 2, Green Energy h Environmental Policy Integrated Resource Plan Stage 1 RPS 14,, h Year-Technology Stage 2 RPS 45,, h IRP Financial Details Year Stage 1 RPS 24 Stage 2 RPS 26 Lifespan 3 3 Annual h 14,, 45,, Total System Rate (PPA) $/h $1. $1. Total System % Interest $/h $46.2 $49.11 Total Revenue $/Year $1,4,, $4,5,, Total System Capital Investment $/Lifespan $1,519,2,664 $38,649,355,23 Average Capital Investment $/Year $35,633,422 $1,288,311,834 Total Fixed O & M $/Year (Generation) $19,299,2 $655,488,139 Total Fuel $/Year $51,73, $166,275, Total Transmission Cost $/h $3.69 $3.69 Transmission Cost $/Year $51,66, $166,5, Total O & M $/Year $241,959,2 $821,538,139 Total Annual Expense $/Year $644,322,442 $2,276,124,973 Total Net Earnings (Interest) $/Year $755,677,558 $2,223,875,26.64 Total Net Profit/Interest $/Lifespan $22,67,326,743 $66,716,25,799 Total Dividend $/Lifespan $4,31,, $27,374,153,558

3 Carbon Tax and Investment Plan Features Taxes the Problem and invests in the solutions Fully integrated plan for all sectors Creates much needed jobs in a multi-decade construction boom Compound interest is fueled with savings from displacing fossil fuels and purchased power and increased sales from fuel switching of the industrial heat and steam and automotive sectors to electricity. Lowest cost policy option and not dependant on the technology mix (Technology Neutral) Freezes electricity rates well into the future and is less than the current business as usual rate increases being proposed by NB Power (lower cost than doing nothing) Transition to debt free NB Power (Currently 95% in debt) No early retirement for existing power plants (No Premature Job Losses) Focuses on displacing fossil fuels not fossil fuel capacity. (Capacity doesn t emit CO2 and fixed O and M is a small cost) This also addresses what happens when the wind doesn t blow. Significant new source of revenue for province. ($1 to $2 Billion Per Year for NB) Prioritizes Investments over subsidises/incentives Focuses on the efficiency gains in the transition of industrial heat and steam and transportation sectors. Reducing electricity usage has little environmental impacts and significant detrimental economic consequences. Minimal behavioural changes, focuses on transition from dirty energy to clean energy Fuels economic growth during multi decade construction boom Guaranteed to work if the policy is adhered too. All variables affect only when the objective is achieved not if the objective is achieved

4 Carbon Tax and Investment Plan UNBSJ Professor of Economics, Dr. Rob Moir. The concept of reinvesting in environmentally-friendlier energy production and energy efficiency to create a compound interest effect is founded economic theory. As such this policy should be considered by all provinces and not only New Brunswick. NB Power System Planning Engineer Darren Clark: We reviewed Mr. Rouse's model and functionally I believe the majority of what he is setting out to do, the model is accomplishing.

5 Modeling Objectives The general purpose of the modeling is to reasonably demonstrate using todays technology and todays costs and todays rates that New Brunswick can reasonably transition to a low carbon economy by investing the carbon tax into renewable energy and fuel switching technologies such as electrode boilers and electric cars. Stage 1 Renewable Portfolio Standard (Green The Grid) The objective of this renewable portfolio standard (RPS) is to green the current electricity consumption to 95% renewable by was used as the test year for comparison to the business as usual. Stage 2 Renewable Portfolio Standard (Fuel Shift or Electrification) The objective of this renewable portfolio standard is shift all remaining fossil fuel usage to 95% green energy by 26 at the same or less cost than the fossil fuel equivalent. Stage 2 does not require the completion of stage 1 before commencing. The transition to stage 2 can begin as long as the fuel switch has a net carbon reduction. This is essentially the electrification of our transportation and industrial heat/steam.

6 216 Hydro 217 Hydro 218 Wind 219 Wind 22 Wind 221 Natural Gas 222 Solar 223 Bio 224 Bio 225 Geothermal 226 Geothermal 227 Natural Gas 228 Natural Gas 229 Hydro 23 Hydro 231 Hydro 232 Solar 233 Solar 234 Geothermal 235 Geothermal 236 Bio 237 Bio 238 Wind 239 Wind 24 Natural Gas 241 Natural Gas 242 Natural Gas 243 Wind 244 Solar 245 Wind 246 Solar 247 Solar 248 Hydro 249 Geothermal 25 Bio 251 Natural Gas 252 Wind 253 Wind 254 Solar 255 Wind 256 Solar 257 Geothermal 258 Bio 259 Wind Annual h The Solution = Renewable Energy The Solution to Climate Change is fuel shifting from Fossil Energy to Renewable Energy Current Energy Usage Efficiency determines the size of the solution needed Fossil Fuel Profits Problem=Fossil Energy Solution=Renewable Energy Renewable Energy Profits Accumulated h/year Stage 2 RPS Efficiency Year-Technology Type

7 Technology will only get better with time Supply Side Hydro Wind Solar Geothermal Biofuels Smart Grids Storage Thermal/Battery High Capacity Very Low Capacity Factor FF plants Enough Resources Technical Barriers? NO Demand Side At Least 3% efficiency Gain in Electric Car and Electrode Boilers Electrode Boilers Electric Cars Electric Trains Electric Busses Electric Arc Furnace Heat Pump Cost $5-$6 to Charge

8 In Province Generation % Generation Capacity Other Fossil Fuels X Other X Biomas Capacity Factor Stage 1 RPS Investment Details Capital Cost $/ Total Capital Cost $ Stage 1 RPS Hourly Generation Stacked Hourly April 214 To March 215 Total h/year Fixed O & M $/kw Total Fixed O & M $/Year Fuel Cost $/h Wind 3.% 1,168.4 $1,664, $1,944,372,63 4,94, $53,727,315 $ Hydro 25.% $2,411, $2,347,697,489 3,412, 14.7 $14,314,41 $ Solar.%.25 $2,48, $ $ $ Geothermal 3.% $2,687, $1,423,918,864 4,94, $61,535,34 $ Total Fuel Cost $/Year Bio 5.% $3,765, $1,242,761, , $35,856, $23,884, Natural Gas 5.% 1,64.5 $664, $1,64,792, , $1,663,964 7 $47,768, Hydro Quebec 5.% 1, NA NA NA 682,4 NA NA 38.9 $26,545,36 Storage Tesla Power Wall II 8 NA $1,6, $1,28,, NA $ Dividends (Energy Efficiency,Conservation,Fuel Switching, Adaptation) $4,77,, Other X HQ Wind X Hydro X Baseload X Overgeneration/Curtailment

9 Business As Usual Comparison Assumptions Year Stage 1 IRP NB Power Annual Report Based on US Gov EIA Annual Energy Outlook 216 Lifespan 3 NA NB Power Annual Report Annual h In Province 13,648, 13,648, NB Power Annual Report Annual h Export 4,575, 4,575, NB Power Annual Report Total Generation 18,223, 18,223, Stage 1 RPS Mix No Capacity Value for Wind or Solar Firm Capacity 4,237 NA NB Power Annual Report Firm Capacity Requirment 4, 4, Does not include Interconnects Total In Province Capacity 5,46 NA Total Annual In Province Revenue Divided by Annual In Province h Generation Total System Rate (PPA) $/h $1.67 $1.67 Total Annual Export Revenue Divided by Annual Export h Generation Export Rate $/h $75.63 $ NB Power Annual Report Annual Export Revenue $346,,. $346,, NB Power Annual Report Annual In Province Revenue $/Year $1,374,,. $1,374,, NB Power Annual Report Total Revenue $/Year $1,791,, 1,791,, Total Revenue/Year * Lifespan Total Revenue $/Lifespan $53,73,, NA Calculated Annual Export Cost Divided by Annual h Export Export Total Cost $/h $62.3 $ NB Power Annual Report Annual Export Cost $285,,. $285,,. Difference between revenue and cost Export Margin $61,,. $61,,. Total Annual Expense Divided By Total h Production Over Lifespan Total System Cost $/h $77.7 $91. Total Capital Investment Stage 1 RPS Total System Capital Investment $/Lifespan $9,33,543,531 NA Straight Line Amortization Over Life of the assets Depreciation and Amortization Expense $/Year $31,118,118 $239,, US Gov EIA Annual Energy Outlook 216 and Energy Mix Total Fixed O & M $/Year (Generation) $176,97,556 NA CTIP uses US Gov EIA Annual Energy Outlook 216 fuel cost and NB Power Annual Report Total Fuel and Purchased Power Including Exports $/Year $383,197,36 $826,, Based on Total Fuel Cost/Year * Lifespan Total Fuel $/Lifespan $11,495,92,8 NA Approximate cost based on working papers provided by NB Power Total Transmission/Distribution O&M Cost $/h $14. NA Approximate cost based on working papers provided by NB Power Transmission And Distribution O&M Cost $/Year $191,72, NA Based on Total Fixed O & M (Generation)+Transmission Cost/Year Total O & M $/Year $367,169,556 $477,, Based on Total O & M/Year * Lifespan Total O & M $/Lifespan $11,15,86,676 NA Based on Total O &M/Year + Total Fuel/Year + Average Capital Investment/Year Total Annual Expense $/Year $1,6,485,34 NA Based on Total Annual Expense/Year * Lifespan Total Expense $/Lifespan $31,814,551,6 NA It is assumed that all of the debt will eventually be paid off, but may not be untill after the transition is complete. Debt to Equity Ratio :1 96:4 Based on 215 NB Power Annual Report Financing Cost/Interest $ $229,, NB Power Annual Report Taxes $37,, $37,, It is assumed that all of the debt will eventually be paid off, but may not be untill after the transition is complete. Net Debt $ $4,913,, CTIP does not include infationary Increases, while the NB Power 1 Year Plan does. Rate Increases 4-5% Once 2% Annually Forever Based on Total Revenue/Year - Total Annual Expense/Year Total Net Earnings (Interest) $/Year $693,514,966 $73,, Based on Total Net Earnings * Lifespan Total Net Profit/Interest $/Lifespan $2,85,448,994 NA Based on Integrated Resource Plan. Total Dividends Paid during IRP $4,77,, NA

10 Integrated Resource Plan Blue=Calculated Yellow=Policy Grey=Cost and Performance Data US Government 216 Energy Outlook. Year-Technolgy Type Accumulat ed h/year Carbon Tax $/Year $24/Ton Accumulated Reinvestent $/Year Total Investment $/Year Dividend/Inves tment Energy Efficiency/ Mitigation Technology Type Stage 1 Capacity Factor In Service Capital Cost Fixed O & M $/kw Fuel Cost $/M Wh Capacity h Total Fixed O & M $/Year Total Fuel Generation Income From PPA Income Minus Cost $/Year h/year Investment $/h (O & M + Fuel) 216 Hydro $37,, $ $37,, Hydro.4 $2,411, $2,255,91.41 $ 537,735 $26,349,34 49 $24,93, Hydro 537,735 $37,, $24,93,123 $394,93,123 Hydro.4 $2,411, $2,42,87.51 $ 572,751 $28,64, $25,661, Wind 1,11,486 $37,, $49,755,17 $369,755,17 $5,, Wind.34 $1,664, $1,217, $ 661,826 $32,429, $22,212, Wind 1,772,312 $37,, $71,967,434 $391,967,434 $5,, Wind.34 $1,664, $1,83,927.6 $ 71,584 $34,377, $23,546,69 22 Wind 2,473,896 $37,, $95,514,124 $415,514,124 $5,, Wind.34 $1,664, $11,481, $ 743,73 $36,442, $24,961, Natural Gas 3,217,627 $37,, $12,475,336 $34,475,336 $15,, Natural Gas.4 $664, $3,49,881. $12,577,77 179,673 $8,83, $7,183,4 222 Geothermal 3,397,299 $37,, $113,292,332 $293,292,332 $19,, Geothermal.9 $2,687, $12,674, $ 86,557 $42,167, $29,492, Bio 4,257,856 $37,, $142,784,857 $212,784,857 $3,, Bio.25 $3,765, $6,139, $4,331, ,771 $6,64, $4,46, Wind 4,381,627 $37,, $138,378,261 $28,378,261 $3,, Wind.34 $1,664, $5,757, $ 372,977 $18,275, $12,517, Wind 4,754,65 $37,, $15,896,184 $217,896,184 $33,, Wind.34 $1,664, $6,2, $ 39,13 $19,11, $13,89, Geothermal 5,144,618 $37,, $163,985,878 $333,985,878 $2,, Geothermal.9 $2,687, $14,433,36.7 $ 979,957 $48,17, $33,584, Bio 6,124,575 $37,, $197,57,414 $567,57,414 $ Bio.25 $3,765, $16,375, $12,842,468 33,141 $16,176, $13,41, Wind 6,454,715 $37,, $184,528,958 $354,528,958 $2,, Wind.34 $1,664, $9,796, $ 634,573 $31,94,65 49 $21,297, Hydro 7,89,288 $37,, $25,826,63 $56,826,63 $69,, Hydro.4 $2,411, $3,9, $ 736,591 $36,92, $33,2, Hydro 7,825,879 $37,, $238,829,43 $539,829,43 $69,, Hydro.4 $2,411, $3,291, $ 784,555 $38,443, $35,151, Hydro 8,61,434 $37,, $273,981,23 $574,981,23 $69,, Hydro.4 $2,411, $3,55, $ 835,643 $4,946, $37,44, Natural Gas 9,446,77 $37,, $311,422,24 $381,422,24 $3,, Natural Gas.4 $664, $3,819, $14,89,638 21,281 $9,862, $8,46, Geothermal 9,647,357 $37,, $33,375,168 $73,375,168 $6,, Geothermal.9 $2,687, $3,17, $ 215,292 $1,549, $7,378, Natural Gas 9,862,649 $37,, $31,753,537 $18,753,537 $5,, Natural Gas.4 $664, $1,81, $6,676,992 95,386 $4,673, $3,813, Geothermal 9,958,35 $37,, $36,94,182 $26,94,182 $65,, Geothermal.9 $2,687, $1,164, $ 79,46 $3,873,25 49 $2,79, Bio 1,37,81 $37,, $39,649,199 $79,649,199 $6,, Bio.25 $3,765, $2,298,85.66 $1,621,543 46,33 $2,27, $1,649, Bio 1,83,411 $37,, $37,999,731 $227,999,731 $45,, Bio.25 $3,765, $6,578, $4,641, ,621 $6,498, $4,721, Geothermal 1,216,32 $37,, $33,278,47 $623,278,47 $5,, Geothermal.9 $2,687, $26,935, $ 1,828,777 $89,61,79 49 $62,674, Wind 12,44,89 $37,, $365,952,865 $435,952,865 $3,, Wind.34 $1,664, $12,46, $ 78,314 $38,235, $26,189,3

11 Sensitivity Analysis Sensitiviity Case Base Case Net Earnings Business As Usual Net Earnings Plus 1%-Net Earnings Minus 1%-Net Earning Plus 1% Difference From Base Case Minus 1% Difference From Base Case Captial Cost $693,514,966 $73,, $662,53,155 $724,526,778 -$31,11,812 $31,11,812 Wind Capacity Factor $693,514,966 $73,, $74,291,36 $68,343,885 $1,776,34 -$13,171,82 Fixed O and M $693,514,966 $73,, $675,95,211 $711,124,722 -$17,69,756 $17,69,756 Fuel Cost $693,514,966 $73,, $683,695,23 $73,334,72 -$9,819,736 $9,819,736 Lifespan $693,514,966 $73,, $721,77,523 $659,57,398 $28,192,556 -$34,457,569 Demand $693,514,966 $73,, $762,28,949 $624,781,97 $68,693,982 -$68,733,869 Rates $693,514,966 $73,, $83,894,486 $556,23,766 $137,379,52 -$137,491,2 Best/Worst Case Scenario $693,514,966 $73,, $514,259,696 $863,11,68 -$179,255,271 $169,496,11 Demand and Rates have the largest effects on the plan. Reducing Demand has significant impacts on the financial health of NB Power and generally lower demand = increase in rates. We strongly disagree with the reduce part of the RASD program at this current time.

12 Other Fossil Fuels X Other X Biomas Stage 1 RPS Hourly Generation Stacked Hourly April 214 To March 215 Other X HQ Wind X Hydro X Baseload X Overgeneration/Curtailment Total Demand BAU Hourly April 214 To March 215

13 Baseload X Baseload X Hourly April 214 To March , 4, 35, 3, 25, 2, 15, 1, 5, April May June July August Sept Oct Nov Dec Jan Feb March Mothly April 214 March Hydro X 7, 6, 5, Hydro X , 3, 2, 1, Hourly April 214 To March 215 April May June July August Sept Oct Nov Dec Jan Feb March Mothly April 214 March 215

14 Other X HQ 8, 7, 6, 5, Other HQ X 6 4 4, 3, 2 Hourly April 214 To March 215 2, 1, April May June July August Sept Oct Nov Dec Jan Feb March Mothly April 214 March Wind X 5, 45, 4, 35, 3, 25, 2, 15, Wind X 2 Hourly April 214 To March 215 1, 5, April May June July August Sept Oct Nov Dec Jan Feb March Mothly April 214 March 215

15 Other X Biomas 25, 2, 15, 1, 5, Biomass X Hourly April 214 To March 215 April May June July August Sept Oct Nov Dec Jan Feb March Mothly April 214 March Other Fossil Fuels X 35, 3, 25, 2, 15, 1, Other Fossil Fuel X 2 Hourly April 214 To March 215 5, April May June July August Sept Oct Nov Dec Jan Feb March Mothly April 214 March 215

16 Wind Power Hourly Change Other X Hourly Change Hourly April 214 To March Hourly April 214 To March 215 Hydro X Hourly Change Other Hourly Change BAU Hourly April 214 To March Hourly April 214 To March 215

17 NB Solar VS Wind 3,, 2,5, 2,, 1,5, 1,, Total Demand BAU Solar 1% Wind 1% 5, April May June July August Sept Oct Nov Dec Jan Feb March Mothly April 214 March 215 The above graph uses actual monthly Wind and Solar profiles scaled up to be 1% of our current usage. Please note that wind power closely matches our current energy usage while solar is opposite. It is much easier to integrated resources who s profiles closely match our usage. Hot climates generally will use more solar while colder northern climates more wind.