Prepared by the Division of Market Development October 24, 2001

1. Western Infrastructure Assessment Prepared by theDivision of Market DevelopmentOctober 24, 2001 Team Members Scott Miller, Director Bryan Craig, Advisor Jim Caruso, Team Leader David Bailey Meesha Bond Bob Czarick Ken Kohut Lyle Hanagami Brian Harrington Bradley Johnson David Lengenfelder Thanh Luong Camilla Ng Cynthia Pointer

2. Table of Contents • Part I – Demand • Part II – Supply • Electric • Gas • Part III – Markets • Part IV – Transmission

3. Table of Contents • Part I – Demand • Part II – Supply • Electric • Gas • Part III – Markets • Part IV – Transmission

4. State Population and Consumption Percentage within the United States WSCC Region for Year 2000 9.6% 1.5% 15.1% • Total states’ population percentage within the WSCC Region (total population for the WSCC region = 61.4m). 1.9% 7.9% 1.4% 5.6% 2.1% 8.6% 3.7% 0.8% 5.5% 1.6% 2.1% 1.7% • Total states’ electric consumption percentage within WSCC Region (total consumption for the WSCC region for the year 2000* = 615 GWhs). 3.3% 3.6% 7.0% 4.6% 3.8% 7.0% 4.7% 3.5% 55.2% 7.9% 40.1% • Total states’ gas consumption percentage within WSCC Region (total consumption for the WSCC region for the year 2000* = 3,893 Bcf). 3.0% 8.4% 57.7% 3.1% 10.0% 3.3% 4.8% Sources: 1. Electric Sales and Revenue; EIA Table 6 from 1990-1998 for Millions of Kilowatts Purchased (Consumption). 2. *Data for 1999 and 2000; Electric Power Annual 2000 Volume I; EIA Tables A21, A22, A23, and A24 were used for preliminary totals for the year 2000 and actuals for 1999 (includes power marketing data). 3. Electric Sales and Revenue Table C1 for 1997 and 1998 for power marketing data. 4. Power market data for 1996 came from EIA Electric Sales and Revenue 1996, Table B1. 5. US Census Bureau @ http://www.census.gov/population/estimates/statesst-99-3.txt for population figures. 6. EIA Most Recent Monthly Data, http://www.eia.doe.gov/emeu/states/_states_ng.html

5. Western United States Population and Total Consumption Increases or (Decreases) from 1990 – 2000 • State population increase (decrease) 1990 – 2000*. • State increase (decrease) in electric consumption from 1990 – 2000* (including residential, commercial, industrial, and other [street lights, etc.]). • State increase in gas consumption from 1990 – 2000 (including residential, commercial, industrial and electric utilities. • State electric consumption per capita for the year 2000 in KWhs (including residential, commercial, industrial, and other [street,lights, etc.]). +21.1% +12.9% +2.2% 15,786 +93.9% (10.7)% 12,988 +44.8% +20.4% +28.5% +23.6% 15,520 +27.0% 17,668 +8.9% +112.5% +59.0% +8.8% 25,937 +48.8% +66.3% +71.8% 14,057 +29.6% +30.6% +50.3% 10,367 +184.0% +40.7% 10,072 +43.0% +43.9% +13.6% +16.8% 7,282 +23.3% +40.0% +20.1% Total electric consumption from 1990 to 2000 in the WSCC region grew approximately 21.6% while population grew 19.9%. Gas consumption grew 40.3% +48.2% 11,978 +37.1% 10,419 +84.1% +33.5% Sources: 1. Electric Sales and Revenue; EIA Table 6 from 1990-1998 for Millions of Kilowatts Purchased (Consumption). 2. *Data for 1999 and 2000; Electric Power Annual 2000 Volume I; EIA Tables A21, A22, A23, and A24 were used for preliminary totals for the year 2000 and actuals for 1999 (includes power marketing data). 3. Electric Sales and Revenue Table C1 for 1997 and 1998 for power marketing data. 4. Power market data for 1996 came from EIA Electric Sales and Revenue 1996, Table B1. 5. US Census Bureau @ http://www.census.gov/population/estimates/statesst-99-3.txt for population figures. 6. EIA Historical Natural Gas Annual-1930-1999 and Most Recent Monthly Data, http://www.eia.doe.gov/oil_gas/natural_gas/data_publications/nat_data_publications and html http://www.eia.doe.gov/emeu/states/_states_ng.html

6. WSCC (U.S.) Electric Consumption by Sector from 1990-2000* Sources: 1. Electric Sales and Revenue; EIA Table 6 from 1990-1998 for Millions of Kilowatts Purchased (Consumption). 2. *Data for 1999 and 2000; Electric Power Annual 2000 Volume I; EIA Tables A21, A22, A23, and A24 were used for preliminary totals for the year 2000 and actuals for 1999 (includes power marketing data). 3. Electric Sales and Revenue Table C1 for 1997 and 1998 for power marketing data. 4. Power market data for 1996 came from EIA Electric Sales and Revenue 1996, Table B1. 5. US Census Bureau @ http://www.census.gov/population/estimates/statesst-99-3.txt for population figures.

7. Gas Consumption in the WSCC (U.S.) by Sector 1990-2000(1990-1999 actual figures, 2000 figures to be finalized)

8. Monthly Electric Peak Total Capacity and Load in the WSCC (U.S.)(From 1990-2000 are Actual Figures; 2001-2005 Figures are Projected) Source: NERC Electric Supply and Demand Database (EIA Form 411 Data). 1990-2000 are actual figures, year 2001-2005 are estimates. Demand Projections from Peak Demand and Energy Bandwiths, 2001-2010 Projections, Load and Forecasting Working Group of the Planning Committee, NERC, July 2001.

9. Electric Reserve Margin in the WSCC Region (U.S.)(From 1990-2000 are Actual Figures, 2001-2005 are Estimates) Source: NERC Electric Supply and Demand Database (EIA Form 411 Data). 1990-2000 are actual figures, year 2001-2005 are estimates.

10. Table of Contents • Part I – Demand • Part II – Supply • Electric • Gas • Part III – Markets • Part IV – Transmission

11. Year 2000 Demonstrated Capacity U.S. West By State By Fuel Type Net Generation U.S. West By StateBy Fuel Type 47,50 MW – 34% 138,600 MW Total Western Capacity 25,400 MW – 18% State Net Generation (Terawatt Hours) Demonstrated Capacity MW0 178 TWh – 27% 650 TWh Total Western Net Generation (1 Terawatt hour = 1,000,000 Megawatt hours) 107 TWh – 16% 89 TWh – 14% State

12. Western States Capacity & Generation Output • Just 20 entities (10%) own 73% of total western capacity and 20 entities produced 71% of the generation • From 1996 through 2000, gas-fired generation increased 221%, while hydro decreased 17%, and all other generation increased only 20%, all this, while installed capacity changed very little

13. U.S. West (WSCC)Interrelationship of Hydro, Natural Gas & CoalAs Percentages of Their Combined Generation Year 126% 118% 110% 85% 82% 119% 110% 126% 95% 90% SOURCE: Resource Data International, Inc. POWERdat, Data Version P3.1, Data Set July 01 RDI Modeled Production Cost–Ownership Based Note: We adjusted 1998 figures for gas-fired generation due to an EIA reporting problem. See “Definitions, Assumptions & Other Information” at the end of Part II.

14. Current and New CapacityWestern States Projected to the Year 2003 (as of August 2001) 228 MW 4,889 MW 3,183 MW 24,564 MW 1,951 MW 10,461 MW 270 MW 2,869 MW 390 MW 6,543 MW 1,847 MW 9,272 MW 1,997 MW 7,405 MW 110 MW 5,773 MW 12,968 MW 56,218 MW 8,324 MW 16,609 MW 600 MW 5,170 MW * Includes 500 MW “New” and 809 MW “Current” of WSCC portions of South Dakota and Texas. SOURCE: Resource Data International, Inc. POWERdat, Data Version P3.1, Data Set July 01 Utility/Non-Utility Unit Ownership RDI Consulting, NEWGen Release: 8/2001

15. Current and New Capacity • 21% increase in capacity from current levels (Aug 01) through 2003 • Not surprisingly, the three states with the most capacity (CA, WA, AZ) are planning the most new capacity • 24,000 MW is either under construction or in the advanced development stage • For the sake of conservatism, the 8,000 MW still in the early development stage represents only 50% of what was actually reported by the companies

16. Definitions, Assumptions & Other Information • Advanced Development indicates that two or more of the following criteria are met: • A power purchase agreement (PPA) for a large portion of the output has been signed with a marketer that is not an affiliate of the developer. • Financing has closed. • Turbines for the project have been secured. • The siting permit (often called the Certificate of Public Need and Necessity) and the air permit have been obtained, or the acquisition of these licenses is imminent. • Strong local support is indicated. • The project involves repowering with no emissions increase (such as nuclear repower projects or air inlet cooling). • Early Development covers a range of projects, from those that have been recently announced to those that have taken beginning steps in the permitting process. • For purposes of analyzing planned capacity, it is assumed that only 50%of planned capacity in the early development stage will actually be built. • Nameplate Capacity refers to the manufacturer’s capacity rating of generating equipment. • Demonstrated Capacity refers to the peak rating of generating equipment measured as the hourly output at which generating equipment is capable of supplying to system load. In plain words, it is a unit’s highest hour of production for a given year. • 1998 Data Adjustment for Gas-fired Units. Complete plant statistics for the year 1998 were not available. This was because many Western utilities sold generating units in that year, especially gas-fired units in California, and the non-utility buyers of those units were not required to report plant statistics to EIA. EIA subsequently required non-utility owners to begin reporting plant statistics, but not until 1999. To correct for this reporting lapse, we adjusted 1998 capacity and net generation amounts for gas-fired units to reflect an average of the figures reported for the years 1997 and 1999.

17. Table of Contents • Part I – Demand • Part II – Supply • Electric • Gas • Part III – Markets • Part IV – Transmission

18. WSCC • Gas Supply Basins • Receipt/Delivery Pts. • Storage Facilities • Pipe Lines Material on this page is consider Non-Internet Public (NIP) You would like a copy of this slide, please contact: Public Reference RoomTelephone: 202-502-8371Toll-free 1-866-208-3676Email: public.referenceroom@ferc.gov Source: RDI PowerMap

20. Western U.S. Natural Gas Supply Resources and Basins Proven reserves are those located in basin where wells are currently in production. Potential reserves are located in regions where analysis and testing indicate that natural gas can be economically produced but where there is no production underway. Reserve growth accounts for changes in the economic recoverability of proven reserves. Source: California Energy Commission, California Energy Outlook, Staff Draft, Sep 2001

21. Table of Contents • Part I – Demand • Part II – Supply • Electric • Gas • Part III – Markets • Part IV – Transmission

22. Part III: MARKETS Market Activity • Western Market Hubs & Trading Volumes • Western Electric & Natural Gas Prices • NYMEX Electric Futures • Estimated Cost of New Baseload Capacity • Estimated Prices

23. Western Trading Hubs & Activity • High prices persisted in the Western electric and gas markets from June 2000 through June 2001. • Prices in both markets subsided significantly by August 2001. • The decline in prices is attributable to • Mild weather throughout the summer of 2001 • Plentiful generation • Reduced demand • Electric conservation programs • Lower natural gas prices • FERC imposed electric wholesale price mitigation • Western electric markets have lighter trading volumes when compared to PJM-West. • Western electric markets have less liquidity and therefore prices are more susceptible to volatility.

24. Electric & Gas Prices in the West Electric & Gas similarities • Before Summer 2000: • < $50/MWh • < $3/mmbtu • Minor variance between hubs, prices are very uniform • Summer 2000: • Prices begin to rise • Hub prices higher but fairly uniform • Winter 2000/2001 • Prices skyrocket in Dec 2000 • Significant price variances between hubs • Summer 2001 • < $60/MWh • $5-$15/mmbtu • Prices trending lower

25. NYMEX Electric Futures • March 2001, COB 12-month futures index continued to reflect WSCC market conditions. • COB 12-month futures index tracked seasonal patterns, but exhibited greater volatility versus PJM. • August 2001, COB 12-month futures index subsided to reasonable levels, significantly lower than previous months. • COB 12-month futures index currently exhibit less volatility and begin to converge with PJM Futures index in March 2002. SOURCE: Megawatt Daily, March 1, 2001 through April 2, 2001.

26. Table of Contents • Part I – Demand • Part II – Supply • Electric • Gas • Part III – Markets • Part IV – Transmission

27. 345 kV and above Transmission Lines in WSCC Material on this page is consider Non-Internet Public (NIP) You would like a copy of this slide, please contact: Public Reference RoomTelephone: 202-502-8371Toll-free 1-866-208-3676Email: public.referenceroom@ferc.gov Source: RDI PowerDat version 3.1, PowerMap

28. WSCC Transmission Projects To Improve Interconnected System Operation Material on this page is consider Non-Internet Public (NIP) You would like a copy of this slide, please contact: Public Reference RoomTelephone: 202-502-8371Toll-free 1-866-208-3676Email: public.referenceroom@ferc.gov Refer to next slide for key Source: Western Interconnection Biennial Transmission Plan, July 2000

29. WSCC Transmission Projects to Improve Interconnected System Operation

30. The End