Mike Hachey Director, Power Marketing TransCanada Power Marketing Ltd. Interrelationship Between Gas and Electricity Markets in New England

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Mike HacheyDirector, Power MarketingTransCanada
Power Marketing Ltd.Interrelationship Between
Gas and Electricity Markets inNew England A
Generators PerspectiveRestructuring
RoundtableMay 21, 2004
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Power Generation Assets
TransCanada Power, L.P.7 plants 328 MW
TransCanada 20 plants 4,700 MW (including LP and
plants in development)
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Natural Gas Transmission Assets
Alberta System
Trans Québec Maritimes
Canadian Mainline
Foothills
BC System
Portland
Great Lakes
Iroquois
Northern Border
Tuscarora
24,000 miles of wholly owned pipeline 12 Bcf/day
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Issues List

• Available Information
• Pipeline Nomination Schedule vs. NEPOOL Market
  Schedule
• (Straw proposal 1)
• Intraday Market
• (Straw proposal 2)
• Fuel Switching and Regional Energy Policy

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Available Information

• Numerous Gas Fired Generators Not Scheduled in
  DAM
• ISO Morning Reports of 1/14-1/16 Showed Surplus,
  No OP4
• OP4 on 1/14 Posted 5PM, 2 HR Duration, 108 MW
  Relief
• Gas Market Signals Strong Tenn Z6 Mid 19/50/20
  /MMBTU
• Now we know
• DAM understated due to bid load, virtual
  generation
• Severe electric scheduling uncertainty at ISO

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Pipe Nominations vs. NEPOOL Mkt Schedule

• Today, gas pipeline nominations due 1230,
  electric DAM schedule issued 1600, physical
  dispatch schedule issued
• 2200
• Straw Proposal 1
• Extreme days only
• Provide firm electric schedule before pipeline
  nominations are due

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Intraday Market

• On extremely cold days, intraday gas difficult to
  impossible to find
• Straw Proposal 2
• On extreme days, ISO to assume gas-fired units
  not scheduled by 1200 unavailable unless told
  otherwise
• Levitan, Jan 02 ISO-NE should not rely upon
  gas-fired merchant power plants to provide
  operating reserves during OFOs

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Fuel Switching and Regional Energy Policy

• Substantial amount of gas-fired capacity in
  NEPOOL cannot switch to light oil unless no gas
  available
• Expensive to maintain oil burn capability for
  once in a blue moon
• Limited oil burn during extreme cold relieves
  price pressure on gas and electric markets,
  improves reliability
• 90s vintage plants burning low S 2 cleaner
  than 60s and 70s vintage plants burning 6 oil

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• Thank you!