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    Town of Canton

    Hydroelectric Project

    January 27, 2016

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    Current Conditions

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    Upper Powerhouse

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    How Does Hydro Work?

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    Typical Hydro Facility

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    History Collins Company 1837- Collins Company built a timber dam nearsite of upper dam to provide hydro mechanicalpower to the factory.

    1867-Present upper dam constructed of stonemasonry to replace timber dam.

    1935-Upper powerhouse constructed.

    1965-Collins Company closes and eventually thedam and hydro related facilities are given to the

    State of Connecticut.

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    History -

    Post Collins Company 1986 MDC receives license from FERC (Federal EnergyRegulatory Commission) to construct and operate 1,500kw facility at upper and lower dams.

    1988 MDC surrenders license stating project is noteconomically feasible

    1989 Summit Hydropower files application with FERCto operate both upper and lower dams

    2001 FERC issues Summit final license

    2007FERC terminates Summits license due toinactivity

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    Town of Canton

    1979 Funded a feasibility study

    2008 Town applies for preliminary license to securerights for development and priority for filing for apermanent license.

    2009 FERC issues preliminary permit to the Town ofCanton for the Upper and Lower dams.

    2009- Board of Selectmen appoint Hydro Project

    Advisory Committee which then becomes the EnergyCommittee.

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    Issues Hydro facilities are owned by the State ofConnecticut

    Cost, time and expertise of applying for apermanent FERC License

    Profitability

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    State Legislation

    The Town of Canton sought State legislation that wouldauthorize the Department of Energy and EnvironmentalProtection to allow the Town to use the hydro facilities.

    Public Act 09-7states the Commissioner of DEEP shallenter into an agreement allowing the Towns of Canton,Burlington or Avon to utilize the hydro facilities on the

    Farmington River.

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    Federal LegislationTown of Canton sought Congressional legislation to transfer theprior existing FERC license directly to the Town in lieu of having togo through a lengthy permitting process.

    Representative Murphy got the House of Representatives to pass theCollinsville Renewable Energy Act in 2010 and 2012 only to have it

    stall in the Senate.

    In 2014, the bill was introduced by Representative Esty in the Houseand then Senator Murphy assisted in getting it passed in the Senate.

    On June 22, 2014, a reconciled bill passed the house by a vote of

    379-3.

    President Obama signed the bill on June 30, 2014.

    Legislation directs FERC to reinstate license pending a commentperiod and environmental study.

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    Profitability Virtual Net Metering

    Virtual Net Metering In2011,the state legislature passed a bill thatprovided for virtual net metering.

    Net metering states that electric suppliers must give a credit tocustomers who install renewable generating systems and generates

    more energy than the customer can use.

    Virtual Net Metering PA 11-80allows municipalities to go one stepfurther and generate clean renewable energy for themselves inmultiple locations and receive a credit for the energy produced.Allows municipalities the flexibility to produce power in an optimallocation and assign the credits to specific locations (Schools, TownHalls, etc.)

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    Profitability Zero Emission

    Renewable Energy Credit (ZREC)Connecticut passed the Energy Act (Public Act No. 11-80)into law in July 2011, which established the Zero Emissions

    Renewable Energy Credit Program. This Program requiresthe two public utilities, Connecticut Light & Power(CL&P) and United Illuminating (UI), to purchaseZRECs from the owners of renewable energy systems in

    Connecticut. The utilities are required to pay a fixed ZRECprice to system owners for 15 years.

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    ProfitabilityVALUE OF ELECTRICITY AT WHOLESALE RATE

    Current wholesale energy value (est.) $0.046 kwh

    4,361,139 kwh x $0.046 =$200,612

    VALUE OF ELECTRICITY WITH VNM AND ZRECS

    Virtual Net Metering Rate 0.117 $/kwh

    Renewable Energy Credit 0.045 Total value of both VNM and ZREC is 0.162 $/kwh

    4,361,139 kwh x 0.162 $/kwh =$706,504

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    Expertise

    Private /Public Partnership In May 2015, the Town publicized a Request for Project Development Proposals.The Town was looking for a private company to partner with the Town in licensing,constructing and operating a hydro-electric facilities on the Farmington River.

    There were three (3) responses.

    Natel Energy

    2175 Monarch Street

    Alameda, CA 94501

    Maier, Moehrle and Scully Group

    P.O. Box 338North Bennington, VT

    Pioneer Valley Renewables, LLC

    39 Pokeberry Ridge

    Amherst, MA

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    Maier, Moehrle and Scully Group

    Principals

    William Scullyis a principal in the company and is operating asmall hydro facility in Vermont and is in the process of constructingothers.

    Armin Moehrlehas degrees in Systems Planning and Design and adegree in Urban Planning.

    Claus Maieris a Structural Engineer.

    After being selected they formed

    CANTON HYDRO, LLC.

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    What's occurred over the past

    three months

    Reviewed Draft Agreements

    o State Lease

    o

    Comprehensive Development Agreemento Power Purchase Agreement

    Structural Review and Equipment Selection

    FERC Regulatory Requirements

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    Structural Review and Equipment

    SelectionOne Kaplan turbine with a 785 kw capacity

    Capacity Factor is 63.42%

    Annual Capacity is 785 x 24 hours x 365 days x .6342

    = 4,361,139 kwh 4,361,139 kwh / 8,760 kwh (av. Ct. home) = 498 homes

    2 foot 11 inch Flash Boards

    Would include both pine boards and a bladder type

    system

    Fish Passage Facilities

    Denil Ladder located on the northeastern (Axe Factory)

    side of the dam

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    New Site Improvements

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    FERC ProcessJanuary 8, 2009FERC issues a three year preliminary

    permit to CantonJuly 6, 2012FERC Issues a successive preliminary permitto Canton

    June 30, 2014Collinsville Renewable Energy Production

    Act passes authorizing FERC to transfer prior license May 2015Canton files for a two year extension of thesuccessive preliminary permit.

    June 2015Canton files for transfer of license pursuant to

    Federal Act FERC denies two year extension but allows applicationfor transfer of license no need for successive license iftransfer is being pursued.

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    Non-Capacity AmendmentOnDecember 30, 2015the Town filed a Non-Capacity letterAmendment to the License Reinstatement applicationwhich outlines the specifics of the new proposal includingnew turbine and generating equipment, flashboards, fish

    passage and dam flows.

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    Next Steps

    Complete Agreements

    CDA

    PPA

    State Lease

    Increase Cap on Virtual Net Metering and apply forVNM credits and ZRECs.

    Complete Filings with FERC and begin Comment Period

    Complete any necessary additional studies

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    Virtual Net Metering Cap

    Total Amount of VNM credits are capped at $10 million, ofwhich Eversources share is $8 million.

    Out of the $8 million, no more than 40% or $3.2 million canbe used for municipal projects.

    14 towns that have viable projects (all solar) that cannotmove forward without legislative action to raise the cap.

    Senator Kevin Witkos has stated that he will offerlegislation that will double the cap for municipalities.

    Considering the additional benefits created by the fishladder, a set aside for hydro should be considered.

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    Benefits

    Source of Clean Renewable Energy.

    Fish ladder will allow fish to by-pass the dam.

    Flashboards will increase the water level in the upperimpoundment area enhancing recreation possibilities.

    Possible financial benefits to the Town.

    Take active control and responsibility of facilities that arecurrently underutilized.