Thomas Carr Western Interstate Energy Board Joint SWAT/CCPG/Sierra Meeting Westminster, CO August 20, 2008

1. Thomas Carr Western Interstate Energy Board Joint SWAT/CCPG/Sierra Meeting Westminster, CO August 20, 2008 Western Renewable Energy Zone (WREZ) Project Update

2. WREZ Background • June 2006 – WGA Clean and Diversified Energy Initiative recommendations • Sept. 2007 – WGA/NWCC/GEA Renewables and Transmission Summit in Ft. Collins recommendation to identify REZs in Western Interconnection that incorporate all renewable fuels • Dec. 2007 – Governors’ proposal to Secretary Bodman for a WREZ project • May 28, 2008 – WREZ kick-off meeting in Salt Lake City 2

3. Overview of WREZ Phases • Identification of WREZs • Technical analysis • Stakeholder “ground truthing” • Conceptual transmission from WREZs • Coordinated procurement for renewables (beyond current budget period) • Institutional options to facilitate interstate transmission for renewables (beyond current budget period) 3

4. Organization of REZ Project Steering Committee (Governors, PUC Commissioners, Premiers, Federal ex-officio members) NREL technical support Technical Committee (states, provinces, work group chairs) LBNL Technical Support Zone Identification/Technical Analysis Generation/ Transmission Modeling Environment, Land Use and Permitting Ad Hoc Work Group?

5. Interaction among work groups Technical Committee Resource zone identification work group Environment, land use permitting work group Generation/ transmission modeling work group Economic assumptions in supply curves Areas to be excluded and minimum elements an area must have to be considered Areas of concern Mitigation measures and cost Conceptual transmission plans Model for LSE evaluation of interest in REZs Area requiring close collaboration

6. Technical Committee • Chairs • John Savage, OR PUC • Tom Darin, Western Resource Advocates • Developing coordinated work plans • Meetings • First meeting May 29 in SLC • Webcast meeting Aug. 21 • Next meeting on Oct. 15-16

7. Zone Identification Technical Analysis (ZITA) • Chairs • Lisa Szot, NM Renewable Energy Transmission Authority • Amanda Ormond, Ormond Group • Identifying criteria for zones: • Completed calls on wind, solar, geothermal criteria; next hydro • Future meeting Sept. 22-23 in Denver

8. Environment and Lands • Chairs • Brian Weber, PacifiCorp • Carl Zichella, Sierra Club / Pam Eaton, Wilderness Society • Identify areas of concern for REZs and mitigation measures • Collection of data and wildlife maps • Dec. 31 date to submit maps

9. Generation and Transmission Modeling Work Group • Chairs • Jerry Vaninetti, TransElect • Paul Smith, APS • Two Primary Tasks • Model Development • WECC and Subregional Transmission Planning • Webinar July 24, 2008 • Review of existing models • Outline issues in model development • Solicit feedback from stakeholders • Create 3 workgroups • Model Development • Transmission Segments • Transmission Costs/Operations

10. Review of Previous Analyses and Models • ERCOT CREZ Analysis • Wind Deployment System (WinDS) • E3 Greenhouse Gas Calculator • B & V Renewable Energy Transmission Initiative • Frontier Line Economic Assessment Screening Tool (FEAST) • Northwest Transmission Assessment Committee: Canada–Northwest–California Transmission Options Study

11. Summary

12. Objectives of REZ Analysis Tool • Assist resource planners and regulators to evaluate the relative attractiveness of geographically broad renewable resource options at a screening level • Estimate “delivered cost” of both in-state and out-of-state RE options from REZs to LSE load areas • Highlight potential and benefits of collaboration between LSEs to build transmission lines • Highlight potential for competition for limited renewable resources

13. Proposed Tool Outline (under review) • Delivered Cost: • Tool calculates delivered cost of each renewable resource type from each REZ to an LSE within a load zone Delivered Cost = Bus-Bar Cost + Interconnection Cost + Transmission Cost + Local Delivery Charges • Relative Ranking: • Tool will provide market value adjustments to the delivered cost to determine the relative attractiveness of resources Adjusted Delivered Cost = Delivered Cost +/- Market Value Adjustments • Potential for Collaboration and Competition: • Tool highlights resources that are well-ranked for multiple load zones • Collaboration: User can modify default assumptions to evaluate benefits of shared lines • Competition: User can choose which resources to include in analysis. A user may decide to exclude a resource that they expect to not be available due to competition for a limited resource (or other reasons) • Tool Output: • Reports including the relative ranking of REZs and the underlying data used to generate relative ranking (Delivered cost, transmission cost, market value adjustments, etc.) • Reports will highlight resources that are well-ranked for multiple load-zones

14. General Tool Functionality • Excel-based tool • Tool is provided with default assumptions • User can evaluate relative ranking of resources to each load zone based on default assumptions • Tool includes considerable flexibility for user to change default assumptions • Users can evaluate user-defined “what-if” scenarios • User can examine impact of their own view of the future

15. Aggregate REZ Resources Example REZ and load hubs • Core data of tool: • REZ list • Bus-bar and interconnection cost by renewable resource type • Primary assumption: • REZ interconnection cost based on new high-voltage substation within REZ • User defined assumptions: • User can change bus-bar cost • (specific bus-bar cost modeling TBD)

16. Load Zone Arizona Load Zone – LSEs are represented within nearest load zone • Each LSE will be represented within a Load Zone worksheet (e.g. APS and SRP in Arizona Load Zone) • On the order of 20 load zones • Tool will have empty placeholders for user to define non-REZ resources to include in relative ranking (e.g. distributed photovoltaics or CCGT sited at load) • Tool will allow user to select which REZs and resource types within REZs to include in analysis

17. Delivered Cost Tool will calculate total delivered cost from selected resource types in selected REZs • Tool will calculate delivered cost for each resource type in each REZ to the load zone • Primary Assumptions: • Distance from interconnection point to load zone hub: • Distance will be based on routing via existing rights-of-way to the appropriate extent (from GTM sub-group) • Incremental transmission additions – assume no existing transfer capability

18. Relative Ranking Tool will rank resource types and REZs to highlight most attractive options • Tool will determine the relative ranking of resource types from each REZ based on the delivered cost adjusted for market valuation factors • Important market value adjustment factors: • Capacity value • Time-of-Use Energy Value • Integration costs • Externalities (e.g. Carbon taxes if comparing to load-based CCGT) • More detail on assumptions and methods will be provided in a Market Valuation White paper by LBNL

19. Comparison to other Load Zones Similar ranking process will be done for each load zone on separate worksheets • Separate worksheets will be used for each load zone • The same ranking cost process will be performed simultaneously for each load zone

20. Collaboration and Competition Benefits of collaboration can be modeled by users in “what-if” scenarios • After determining the well ranked resources for different load zones, a user can modify default assumptions to determine the benefits of collaboration in “what-if” scenarios • For example, a user could model a shared line by changing default assumptions for utilization and line distance • Tool, as proposed, may be able to accommodate this type of investigation, but it would require significant amount of external analysis.

21. Transmission Work Tasks • Model Development Sub-Group • Model design & features • Matrix of desired input from ZITA Workgroup • Transmission Segments Sub-Group • Mileage and routes • Existing corridors and to link/access REZs • Build on prior work: Frontier, BC-CA & NTAC • Transmission Costs & Operations Sub-Group • Voltages and capacity ratings: AC & DC • Configurations: single & double circuit • Line losses • Line-mile and associated costs • Financial and operating costs

22. Modeling Group Schedule

23. Estimated Phase I Timeline • May 28-29 kick-off meeting in Salt Lake City • September - Identify “candidate study areas” • January • Initial cost curve analysis completed • Technical Committee meets to review candidate study areas, wildlife overlays and cost curve analysis • Study request to WECC/TEPPC • February • Technical Committee publishes proposed renewable energy zones (REZ) • Public comment and outreach • Begin use of LSE Model • June 1 • Wildlife mitigation applied • Cost curve analysis updated • June – Steering Committee meets to approve REZ report