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Mountain States Transmission Intertie (MSTI) Open Season Update Meeting

Mountain States Transmission Intertie (MSTI) Open Season Update Meeting. Tuesday, September 23, 2008 9:00 am to 11:00 am NWE GO Auditorium 40 East Broadway Street Butte, MT. Agenda. MSTI Project Update Preferred and Alternative Route Selection

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Mountain States Transmission Intertie (MSTI) Open Season Update Meeting

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  1. Mountain States Transmission Intertie(MSTI)Open Season Update Meeting Tuesday, September 23, 2008 9:00 am to 11:00 am NWE GO Auditorium 40 East Broadway Street Butte, MT

  2. Agenda • MSTI Project Update • Preferred and Alternative Route Selection • Siting and Permitting – MFSA / ER Application Filings • EIS Process • Engineering Status • Project Schedule • Public Outreach • WECC and NTTG Planning Processes • MSTI Regulatory Work Plan • Indicative Pricing • Need for New MSTI Open Season • Next Steps

  3. MSTI Project Update • Purpose • Meet requests for new transmission service • Provide transmission for new generation • Benefit • Provide energy diversification and market competition • Provide positive economic impact • Need • Improve system performance and flexibility • Meet regional electrical demand

  4. MSTI Project Update • Siting, Permitting, and Environmental • MFSA / Environmental Report Filed July 2008 • MFSA for Montana Only • ER with Studies Similar to an EIS that Covers Idaho • MDEQ Sufficiency Review Expected Late September 2008 • EIS Schedule Updated After Agency Scoping Process • Initial Comment Period Ends October 10th • Third Party EIS Contractor Selected – PBS&J

  5. MSTI Project Update • BLM Lead Agency with MDEQ in Montana • No Siting Law in Idaho – Governed by NEPA, Local, and State Requirements • Cooperating Agencies – USFS, DOE, INL, and USDA Sheep Experiment Station

  6. MSTI Project Update • Environmental Impact Statement • Process Initiated July 2008 • Anticipate 20 Month Review Process • Agencies Select Preferred Location After Public Comment

  7. MSTI Project Update • Preliminary Engineering Complete • Detail Project Schedule Complete • Preliminary Design Criteria Developed • Detailed Project Estimates Complete

  8. MSTI Project Update • Preliminary Engineering Complete • Initial Structure Type Analysis • Preliminary Substation Layouts

  9. MSTI Project Update • Preferred and Alternative Routes Selected by NWE • Characterized as the Proposed Action in the MFSA – ER document • The I-15 corridor is strongly preferred by the Federal agencies. • EIS Process will determine the final route

  10. MSTI Project Update • Detail Project Schedules Developed

  11. Project Schedule • NEPA / MEPA EIS Scoping – Sept 2008 • Record of Decision – Late 2009 to Early 2010 • Start Detail Design 2009 • Start Construction Mid 2010 • Target Energization Late 2013

  12. Public Outreach Process • Public Comment Importance • To comply with the MFSA requirements and to identify preliminary issues and concerns • Open House Meetings • Ten Public Open House Meetings Held since June • Montana – Whitehall, Townsend, Ennis, Dillon, Anaconda, Butte • Idaho – Arco, Idaho Falls, Shoshone, Carey, Aberdeen • Elected Officials Meetings • Meetings with county commissioners and other elected officials in counties potentially impacted by the project • EIS Scoping Meetings • Montana: • September 9, 2008 – Butte • September 10, 2008 – Three Forks • September 11, 2008 – Dillon • Idaho: • September 16, 2008 - Twin Falls • September 17, 2008 - Arco • September 18, 2008 - Idaho Falls • Recording Public Comments • Input received will be considered during the planning process to identify project alternatives • Interactive GIS

  13. WECC Path Rating Process • Phase 1 of the WECC Three Phase Path rating process was completed • Phase 2 is currently moving forward: • Study Plan has been finalized, study work has begun • Projected completion date of Q1 2009

  14. NTTG Biennial Planning Process • MSTI is included in the Northern Tier Transmission Group (NTTG) Biennial Planning Process • This is a sub-regional 10-year transmission study that will focus on moving power from developing resources to growing loads. • The following lines are included in this study:

  15. NTTG Proposed Transmission Projects

  16. Indicative Pricing • Process • Several scenarios were analyzed. The following illustrates three projects based on varying transmission capacity size and construction cost estimates. • Capital construction cost estimates were developed based on Power Engineering consultants in association with NWE personnel. • Pricing is based on a traditional FERC revenue requirement and return on rate base analysis. • Return on rate base plus operating expense, depreciation expense, property and other taxes, and income taxes combine to determine the net revenue requirement. • Pricing ranges are stated in terms of dollars per MWh and dollars per kW-month. • Change from December 2007 meeting: In the December meeting we illustrated pricing based on a sliding ROE scale depending on varying subscription levels. We are now reflecting pricing based on a constant 13% ROE regardless of subscription level.

  17. Indicative Pricing • Assumptions • Rate base is the total of construction capital, AFUDC (8.9%), mitigation required capital, Idaho sales and use tax (6%) for the portion of the investment assumed in Idaho (50%), working capital, and depreciation reserve. • Each scenario assumes a constant return on equity, regardless of the subscription percentage, of 13%. The debt rate is assumed at 6.794% with a 50-50 capital structure. • O&M costs are assumed at 3.5% of the capital construction cost and escalate 3% per year over the 30-year period. • Depreciation is based on 30-year straight-line for book, and 20-year MACRS for tax purposes. • Property taxes assume 50% MT at 3.132%, and 50% ID at 1.025%. • The plan and pricing could also be considered conservative, as we are reviewing current legislation based on House Bill 3 and other potential impacts and savings regarding property tax rates or other state/federal incentives associated with new generation and related development.

  18. Indicative Pricing

  19. Indicative Pricing

  20. MSTI Project Update

  21. Regulatory Plan and New MSTI Open Season • Retained FERC Counsel Specific for this Project • Develop and file at FERC a request for a declaratory order to establish incentive rate principles for the project • Transition MSTI from the current Open Season to an updated process • FERC has provided additional guidance on Open Season processes for electric transmission development • Invite additional participants into the process in a transparent FERC approved manner • Maintain Existing Participants Queue Position • Need for Separate MSTI OATT • Formation of MSTI, LLC • Midpoint vs. Borah / Brady • Hold new open season • File open season report and tariff at FERC • Make 205 filing to implement rates in anticipation of service

  22. Next Steps • Filed MFSA Application – July 2008 • MFSA Accepted – Fall 2008 • Refine Project Scope and Details • NEPA / MEPA EIS Scoping – Summer 2008 • Draft EIS Published – Summer 2009 • FERC Filings – Late 2008 • EIS Record of Decision – Late 2009 to Early 2010 • Continue Public Outreach Process • Develop Long Term Transmission Contracts • Develop Substation and Line Design Criteria • Develop Contractual Relationships with Vendors and Contractors

  23. Questions And Discussion

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