Transmission Expansion in the Western U.S.

1. Transmission Expansionin the Western U.S. Transmission Policy, Incentives, and Expansions in the Western States Marcus Wood Stoel Rives LLP 900 SW Fifth Avenue, Suite 2600 Portland, OR 97204 503-294-9434 mwood@stoel.com May 21, 2007

2. Proposed Transmission Projects MT-AB Intertie John Day- McNary Northern Lights Northwestern AMPS Seabreeze N. CA to Canada TOT 3 Frontier Line Miracle Mile-Ault TransWestExpress Robinson Summit- Harry Allen High Plains Express Navajo Transmission Project TransBay Colorado-New Mexico Interconnection Project Tehachapi Palo Verde – Devers II Green Path Map prepared by Doug Larson and John Carr Sun Zia Sunrise Powerlink Tucson-Nogales)

3. Proposed Transmission Projects MT-AB intertie John Day- McNary Northern Lights Northwestern AMPS Seabreeze N. CA to Canada TOT 3 Frontier Line Miracle Mile-Ault TransWest Express Robinson Summit- Harry Allen High Plains Express Navajo Transmission Project TransBay Colorado-New Mexico Interconnection Project Tehachapi Palo Verde – Devers II Green Path Sun Zia Sunrise Powerlink Tucson-Nogales)

4. Proposed Transmission Projects MT-AB intertie John Day- McNary Northern Lights Northwestern AMPS Seabreeze N. CA to Canada TOT 3 Frontier Line Miracle Mile-Ault TransWest Express Robinson Summit- Harry Allen High Plains Express Navajo Transmission Project TransBay Colorado-New Mexico Interconnection Project Tehachapi Palo Verde – Devers II Green Path Sun Zia Sunrise Powerlink Tucson-Nogales)

5. Proposed Transmission Projects MT-AB intertie John Day- McNary Northern Lights Northwestern AMPS Seabreeze TOT 3 N. CA to Canada Frontier Line Miracle Mile-Ault TransWest Express Robinson Summit- Harry Allen High Plains Express Navajo Transmission Project TransBay Colorado-New Mexico Interconnection Project Tehachapi Palo Verde – Devers II Green Path Sun Zia Sunrise Powerlink Tucson-Nogales)

6. Proposed Transmission Projects MT-AB intertie John Day- McNary Northern Lights Northwestern AMPS Seabreeze N. CA to Canada TOT 3 Frontier Line Miracle Mile-Ault TransWest Express Robinson Summit- Harry Allen High Plains Express Navajo Transmission Project TransBay Colorado-New Mexico Interconnection Project Tehachapi Palo Verde – Devers II Green Path Sun Zia Sunrise Powerlink Tucson-Nogales)

7. Proposed Transmission Projects MT-AB Intertie John Day- McNary Northern Lights Northwestern AMPS Seabreeze N. CA to Canada TOT 3 Frontier Line Miracle Mile-Ault TransWest Express Robinson Summit- Harry Allen High Plains Express Navajo Transmission Project TransBay Colorado-New Mexico Interconnection Project Tehachapi Palo Verde – Devers II Green Path Sun Zia Sunrise Powerlink Tucson-Nogales)

8. Proposed Transmission Projects MT-AB intertie John Day- McNary Northern Lights Northwestern AMPS Seabreeze N. CA to Canada Frontier Line TOT 3 Miracle Mile-Ault TransWest Express Robinson Summit- Harry Allen High Plains Express Navajo Transmission Project TransBay Colorado-New Mexico Interconnection Project Tehachapi Palo Verde – Devers II Green Path Sun Zia Sunrise Powerlink Tucson-Nogales)

9. Proposed Transmission Projects MT-AB intertie John Day- McNary Northern Lights Northwestern AMPS Seabreeze N. CA to Canada TOT 3 Frontier Line TransWest Express Miracle Mile-Ault Robinson Summit- Harry Allen High Plains Express Navajo Transmission Project TransBay Colorado-New Mexico Interconnection Project Tehachapi Palo Verde – Devers II Green Path Sun Zia Sunrise Powerlink Tucson-Nogales)

10. Key Characteristics of WSCC Grid That Impact Transmission Expansion Title Goes Here • Grid is a “donut” with a very weak east side • Transmission system is a “hub and spoke” system • Transmission ownership is fragmented • Most of the WSCC is outside of RTO control • Outside of California, path ratings must be negotiated • Outside of California, there is no agreement on transmission line cost allocation • Major expansions require siting in multiple states • Most Western land is not privately-owned Subhead Goes Here Presenter Goes Here Date Goes Here

11. Transmission Ownership is Fragmented Title Goes Here • In WSCC, there are at least 58 owners of bulk transmission • Bonneville Power Administration owns 75% of the high-voltage transmission in the Northwest • Western Area Power Administration is a major transmission owner in the Rocky Mountain/Southwest areas • Substantial transmission is owned by generation cooperatives and municipalities • Why dealing with other transmission owners is important • Siting • Condemnation • Path ratings • Cost allocation Subhead Goes Here Presenter Goes Here Date Goes Here

12. Outside of California, Path Ratings Must Be Negotiated Title Goes Here • Description of “path,” “cut plane,” “nomogram” • Paths have nothing to do with actual flow of electricity • Basics of path rating determination Subhead Goes Here Presenter Goes Here Date Goes Here

13. Pacific Northwest Cut Planes Title Goes Here Subhead Goes Here Presenter Goes Here Date Goes Here

14. Major Expansions Involve Siting in Multiple States Title Goes Here • TOT 3 example • Wyoming siting • Colorado siting • HVDC Line: What is the benefit to intervening states? Subhead Goes Here Presenter Goes Here Date Goes Here

15. Most Land in WSCC Area Is Not Privately-Owned Title Goes Here • Example for Transwest Express proposed path • Crosses: • 20 BLM resource management areas • 2 national monuments • 1 Department of Defense area • 4 Indian reservations • 8 national forests • Significance of non-private ownership • No condemnation rights • “Off-limits” areas • Environmental Impact Statement requirements • Negotiations with Indian Nations Subhead Goes Here Presenter Goes Here Date Goes Here

16. Transmission Cost Allocation Title Goes Here • Four potential allocations of cost of a transmission line • State government entity (Wyoming Infrastructure Authority) • RTO • Retail utilities • Generators • Outside of California, no agreement on allocation • Complex mix of allocation factors • If retail utilities are to share costs, all affected retail regulatory commissions must agree • If generators are to bear costs, who pays until full capacity signed up? Subhead Goes Here Presenter Goes Here Date Goes Here

17. Conclusion Title Goes Here • WSCC transmission grid is seriously inadequate for WSCC needs • Well-planned transmission additions, especially on the east side, could greatly improve reliability and resource choice and reduce overall cost of power • Successful sponsorship of major WSCC transmission requires • A deep understanding of WSCC institutional relationships • A sophisticated and knowledgeable negotiation with and accommodation of a large number of interested parties • A heightened understanding of global warming rulemaking • Great political savvy Subhead Goes Here Presenter Goes Here Date Goes Here

18. Conclusion Title Goes Here • TO BUILD WSCC TRANSMISSION, ONE FIRST NEEDS TO NEGOTIATE WSCC TRANSMISSION Subhead Goes Here Presenter Goes Here Date Goes Here