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Patterns of Current Investment Historical & Current Barriers Regulatory Hot Topics Prognosis

TRENDS IN ELECTRIC TRANSMISSION INFRASTRUCTURE DEVELOPMENT & REGULATION James J. “ J im” Hoecker Husch Blackwell LLP Counsel to WIRES (www.wiresgroup.com) 12 th Annual Beaver Creek Energy Conference Beaver Creek, Colorado February 5, 2013. Patterns of Current Investment

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Patterns of Current Investment Historical & Current Barriers Regulatory Hot Topics Prognosis

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  1. TRENDS IN ELECTRIC TRANSMISSION INFRASTRUCTURE DEVELOPMENT & REGULATIONJames J. “Jim” HoeckerHusch Blackwell LLPCounsel to WIRES (www.wiresgroup.com)12th Annual Beaver Creek Energy Conference Beaver Creek, ColoradoFebruary 5, 2013

  2. Patterns of Current Investment • Historical & Current Barriers • Regulatory Hot Topics • Prognosis

  3. EHV Transmission Growth (300 kV +)

  4. EHV Transmission Growth (300 kV +)

  5. TRANSMISSION INVESTMENT

  6. Investment Projected Through 2015

  7. DRIVERS

  8. Source: EEI

  9. EAST AND WEST

  10. Business Models Source: EEI

  11. Probable Projects In-Service 2014 (By Region)

  12. Benefits of AdequateTransmission Investment • Reduced transmission congestion and generation costs • Increased system reliability; operational benefits; “insurance” benefits • Reduced system-wide production costs • Increased electricity market competition and liquidity; reduced integration costs from larger balancing areas • Reduced emissions and fossil fuel consumption • Tax benefits to states and local jurisdictions • Jobs and economic stimulus • Implementation of state renewable portfolio standards

  13. Barriers to Transmission Infrastructure Development • Lack of established regional and inter-regional transmission planning processes • Unresolved cost allocation and recovery for multi-state and inter-regional projects • Largely uncoordinated and uncertain state-by-state permitting • Uncoordinated state public policy requirement • Nationally, climate is challenging for independent transmission • Lack of coherent national policy toward transmission infrastructure

  14. Positive Regulatory Outlook • Order No. 1000 • Cost allocation • Planning, including bilateral markets • Compliance – 3 years • Merchant capacity allocation • Natural Gas/Electric Coordination • Overdue Focus on Infrastructure Needs

  15. NegativeRegulatory Outlook • State law pushback: • Public Utility Status • Rights of First Refusal • Federal lands permitting processes • Pressure on FERC Equity Returns; evolving incentives policies

  16. Mixed Regulatory Outlook • State and Federal Siting Laws • Western Energy Imbalance Market • Possible regional compacts

  17. PROGNOSIS • Transmission investment remains lumpy; fate of renewables important; use of existing ROWs and smart technologies • Order No. 1000 implementation: lengthy & uncertain; first look at non-RTO planning, seams • 2013: worry about returns, federalism run amok • Big projects toughest; no mega-project overlays • Demand growth moderated by load reduction, DR, DG; • Incumbency still powerful; most IOUs’ focus within their footprint; transmission spin-offs not certain

  18. Transmission Policy is Not for Sissies (Source: NREL)

  19. Contact InformationJames J. “Jim” Hoecker Husch Blackwell LLP Former Chairman, Federal Energy Regulatory Commission Counsel to WIRES (WWW.WIRESGROUP.COM)James.hoecker@huschblackwell.com 202-378-2300

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