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PLANNING AND EXPANSION October 1, 2002

PLANNING AND EXPANSION October 1, 2002. FERC’s RTO West Order September 18, 2002. RTO West’s planning and expansion provisions, with the following modifications, meet Order No. 2000 requirements:

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PLANNING AND EXPANSION October 1, 2002

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  1. PLANNING ANDEXPANSION October 1, 2002 10/01/02 CREPC Meeting

  2. FERC’s RTO West OrderSeptember 18, 2002 • RTO West’s planning and expansion provisions, with the following modifications, meet Order No. 2000 requirements: • Clarify that when RTO West shares planning responsibility with a Participating Transmission Owner (“PTO”), RTO West still has “ultimate responsibility for both transmission planning and expansion within its region” consistent with Order No. 2000 • Further clarify the nature of RTO West’s planning authority over Certain Distribution Facilities 10/01/02 CREPC Meeting

  3. FERC’s RTO West OrderSeptember 18, 2002 • FERC suggests that the Filing Utilities “discuss with regulators their participation in the planning and expansion process” • Filing Utilities still analyzing order and determining next steps • RRG meeting on October 3rd to discuss order 10/01/02 CREPC Meeting

  4. RTO West Planning and ExpansionSummary of Provisions in March 2002 Filing • RTO West will have an open, proactive planning process that: • Involves all interested parties, including an active role for states • Considers non-transmission solutions and other least-cost considerations • Provides information and analysis regarding the entire RTO West system (both with respect to current and projected transmission adequacy and congestion) • Develops annual plan 10/01/02 CREPC Meeting

  5. RTO West Planning and Expansion Summary of Provisions in March 2002 Filing • RTO West has ultimate planning and expansion authority over RTO West Controlled Transmission Facilities • RTO West planning encompasses Certain Distribution Facilities but PTO, in consultation with appropriate state entities and customers, retains ultimate authority for local distribution planning 10/01/02 CREPC Meeting

  6. RTO West Planning and Expansion Summary of Provisions in March 2002 Filing • PTO, in consultation with appropriate state entities and its customers, has planning authority for non-RTO West Controlled Transmission Facilities • If the PTO or customer is not satisfied with results of the PTO and state planning processes, it can access RTO West dispute resolution process before taking concerns to FERC 10/01/02 CREPC Meeting

  7. RTO West Planning and Expansion Summary of Provisions in March 2002 Filing • Planning process distinguishes between “transmission adequacy” and “congestion relief” • Transmission adequacy assures that, irrespective of the cost of energy, there is sufficient transmission to deliver energy to serve load • PTOs have front-line responsibility for complying with Transmission Adequacy Standards • RTO West will make every effort to encourage and support market-based expansion for congestion relief, including providing a forum for an open subscription process to facilitate construction of market-sponsored projects 10/01/02 CREPC Meeting

  8. Backstop Authority Summary of Provisions in March 2002 Filing • RTO West will have backstop authority to require expansion when a PTO does not satisfy its obligations under the Transmission Operating Agreement to: • Ensure compliance with Transmission Adequacy Standards • Provide sufficient Congestion Management Assets • Restore appropriate levels of Total Transmission Capability 10/01/02 CREPC Meeting

  9. Backstop Authority Summary of Provisions in March 2002 Filing • RTO West will have additional backstop authority to require cost-effective transmission expansion if the RTO West Board, in consultation with the Market Monitor, demonstrates that specific instances of market failure have precluded cost-effective mitigation of chronic, significant, commercial congestion 10/01/02 CREPC Meeting

  10. Cost Allocation Summary of Provisions in March 2002 Filing • RTO West has authority to allocate costs of expansion in the following instances: • When it has exercised its backstop authority • When a project sponsor requests an allocation and can demonstrate that its project conferred a transmission adequacy benefit on a PTO • When it has determined that upgrades to Certain Distribution Facilities are necessary to support or improve Total Transmission Capability or for regional reliability 10/01/02 CREPC Meeting

  11. Cost Allocation Summary of Provisions in March 2002 Filing • RTO West cost allocation will be discussed in public process • Need for state participation • All RTO West allocations will be subject to dispute resolution 10/01/02 CREPC Meeting

  12. Cost Allocation Summary of Provisions in March 2002 Filing • Transmission Adequacy Backstop • Costs of either wires or non-wires solution will be allocated to the PTO or PTOs that are being brought into compliance 10/01/02 CREPC Meeting

  13. Cost Allocation Summary of Provisions in March 2002 Filing • Congestion Management Assets Backstop • Costs of wires solution will be allocated to PTO or PTOs whose congestion management assets are being supplemented • If construction confers transmission adequacy benefit, RTO West will allocate a portion of the construction costs to the PTO that receives the transmission adequacy benefit • Transmission adequacy benefit received only if construction avoids or defers the need to implement transmission adequacy solution during planning horizon • Costs that can be allocated are capped by avoided costs the benefiting PTO(s) would have paid to implement least-cost alternative required to satisfy Transmission Adequacy Standards 10/01/02 CREPC Meeting

  14. Cost Allocation Summary of Provisions in March 2002 Filing • Total Transmission Capability Backstop • Costs of wires solution will be allocated on a fair, just, and reasonable basis, based upon what caused the reduction in aggregate capacity and who benefited from the upgrade or expansion • If construction confers transmission adequacy benefit, RTO West will allocate a portion of the construction costs to the PTO that receives the transmission adequacy benefit • Transmission adequacy benefit received only if construction avoids or defers the need to implement transmission adequacy solution during planning horizon • Costs that can be allocated are capped by avoided costs the benefiting PTO(s) would have paid to implement least-cost alternative required to satisfy Transmission Adequacy Standards 10/01/02 CREPC Meeting

  15. Cost Allocation Summary of Provisions in March 2002 Filing • Chronic, Significant, Commercial Congestion Backstop • Costs of wires solution will be allocated based upon principle that costs should follow benefits • RTO West will: • Identify the benefits • Transmission Adequacy Benefit • Area Benefit • System-wide Benefit • Congestion Relief • Determine the beneficiaries • Allocate the costs to the beneficiaries proportionately to the benefits received 10/01/02 CREPC Meeting

  16. Cost Allocation Summary of Provisions in March 2002 Filing • Project Sponsor Requests Allocation • If construction confers transmission adequacy benefit, RTO West will allocate a portion of the construction costs to the PTO that receives the transmission adequacy benefit • Transmission adequacy benefit received only if construction avoids or defers the need to implement transmission adequacy solution during planning horizon • Costs that can be allocated are capped by avoided costs the benefiting PTO(s) would have paid to implement least-cost alternative required to satisfy Transmission Adequacy Standards 10/01/02 CREPC Meeting

  17. Disposition of Rights Relating to New Transmission Capability Summary of Provisions in March 2002 Filing • New Facilities • Entity seeking new transmission rights through expansion describes to RTO West the nature of rights needed • RTO West analyzes entity’s needs and identifies possible upgrade and expansion alternatives and defines specific rights, financial options, and cost responsibilities • If entity opts to build and assume cost responsibility, receives resulting rights 10/01/02 CREPC Meeting

  18. Disposition of Rights Relating to New Transmission Capability Summary of Provisions in March 2002 Filing • New Facilities • Project sponsor of new facilities built for other purposes receives transmission rights and financial options created by facility • Prior to commencement of construction, project sponsor and RTO West will negotiate specific rights to be received 10/01/02 CREPC Meeting

  19. Disposition of Rights Relating to New Transmission Capability Summary of Provisions in March 2002 Filing • New Transmission Capability on Existing Facilities • For two-year period, PTOs have the right to participate in construction that creates added capability on their RTO West Controlled Transmission Facilities and, in exchange for an appropriate cost sharing responsibility, receive a portion of resulting RTO West transmission rights and financial options • After two years, PTOs only have right to participate with respect to new capability on their facilities that have been identified on their Pending Project List 10/01/02 CREPC Meeting

  20. Transition • Transitional planning will be addressed in the context of the SSG-WI planning work group • The filing utilities do not intend that regional planning be put on hold until RTO West becomes operational 10/01/02 CREPC Meeting

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