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The National Transmission Grid Most Major Paths are Congested Colorado is Transmission-Isolated

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The National Transmission Grid Most Major Paths are Congested Colorado is Transmission-Isolated

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  1. The Role of the Independent Transmission DeveloperJerry Vaninetti, Trans-Elect, Inc., Denver, CO(303) 790-0513 jvaninetti@trans-elect.comBill Pascoe, Consultant to Trans-Elect(406) 494-2075 pascoeenergy@aol.com Task Force on Reliable Electricity InfrastructureDenver, ColoradoOctober 5, 2006

  2. The National Transmission Grid • Most Major Paths are Congested • Colorado is Transmission-Isolated

  3. Congested WECC Path Constraint Area

  4. Impediments to New Transmission* • Regulatory uncertainties have stalled transmission investments, particularly in the West • Gas-at-load used to be a competitive alternative • Projects must be fully-subscribed to proceed • Incumbents burdened by the OATT system • Incremental additions do not allow aggregation • Allocation of capacity and costs, and cost recovery • Costs commonly approach $1 million per line-mile • Justifying development cost & merchant risk • Role of rate-based IOUs & public power? * i.e., not network upgrades

  5. The Role of Independent Transmission • Filling any voids left by transmission stakeholders • Solely focused on transmission • Reconciling diverse agendas: coal and wind • Ability to aggregate demand: the “Open Season” process • Marshaling support: public and stakeholder • Appetite for appropriate development & merchant risk • Structured financing provides adequate returns without impact to customers’ rates • Different business models: partnerships, transcos, etc. • Conclusion: Independent transmission is a new mechanism for jump-starting the expansion process

  6. Aggregating Customers & Merchant Capacity(“filling the pipeline”)

  7. Transmission Development Cumulative Dollars Spent 1 Year 2 Years >2-3 Years 4-7 Years Identification of Prospect Initial evaluation and assessment Phase I: Feasibility studies; aggregation of participants; public policy & support; admin/regulatory issues; business structures Phase II: Permits and engineering, finalize revenue; financial options; finalize business structure & participants; cost recovery Phase III: Finalize financing, ROW acquisition, select EPC Contractor Phase IV: Construction to meet COD; ~$1 MM/mile

  8. Public Policy Plays a Major Role in Western Transmission Planning • Utility Stakeholders • Western Electricity Coordinating Council (WECC) • Transmission Expansion Planning & Policy Committee (TEPPC) • Colorado Coordinated Planning Group (CCPG) • Rocky Mountain Area Transmission Study (RMATS) • Southwest Area Transmission (SWAT) • Governmental & Advocacy • Western Governors Association (WGA) • Western Interstate Energy Board (WIEB) • Clean & Diversified Energy Advisory Committee (CDEAC) • State Government • Wyoming, New Mexico, Colorado • National Wind Coordinating Committee (NWCC) • Western Business Roundtable (WBRT)

  9. Colorado Project Recommended by RMATS (TOT 3 Expansion) TOT 3 Project $318 mm 250 miles 345 kV Line 750 MW

  10. Trans-Elect’s TOT 3 Partnership with WIA & WAPA COAL Phase 2: Line to tap Powder River Basin coal resources (~2013) Existing 230 & 345 kV Lines WIND Wind 230 kV Radial Lines (on-line in 2007) Phase 1: Line to tap SE Wyoming wind resources (~2009)

  11. TOT3 Project Development Process • Market Assessment - ongoing • Colorado utilities need new resources • Wyoming coal and wind very cost competitive • Planning Studies – in progress • Determine project configuration and capacity • Corridor Assessment – beginning soon • Identify any siting challenges • Select preliminary route(s) • Preliminary Engineering – early 2007 • Estimate project costs • Open Season – Summer 2007 • Secure market commitments

  12. North America’s First Independent Transmission Company (1999) with $600 mm in assets Independent Transmission Owner/Operator METC (Michigan): 5,400 miles of lines AltaLink (Alberta, Canada): 7,200 miles of lines Path 15 in California: Resolved a long-standing transmission constraint; partnership with WAPA & PG&E; 83 miles, 500 kV line; $325 mm project completed for $250 mm and ahead of schedule in late-2004 First to partner with a state transmission authority TOT 3 partnership with WIA & WAPA Malin Captain Oregon Jack California Round Mountain Olinda Table Mountain DC AC INTERTIE COTP INTERTIE Lake Tahoe Tracy Tesla San Francisco Los Banos Path 15 Gates Midway Vincent Sylmar Trans-Elect Overview

  13. Recommendations • State support for transmission • Clarity on cost recovery • Policies that support transmission projects that are in the public interest • Reinforcement of regional grid • Accessing remote and/or renewable resources • Financial/tax incentives • State participation in planning and permitting new transmission lines (i.e., not network upgrades) • Objective: eliminate redundancy in projects and processes • Build on CCPG process (Colorado Long-Range Plan) • Coordination between state and local permitting processes

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