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NEPOOL Reliability Committee MPRP Update Upcoming PPA revisions and TCA December 18, 2008

NEPOOL Reliability Committee MPRP Update Upcoming PPA revisions and TCA December 18, 2008. Agenda. Introduction: MPRP Needs & Alternatives & Proposed N5 & S1 Elm MPRP Scope changes since January 2008 PAC and June 2008 PPAs. 

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NEPOOL Reliability Committee MPRP Update Upcoming PPA revisions and TCA December 18, 2008

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  1. NEPOOL Reliability Committee MPRP Update Upcoming PPA revisions and TCADecember 18, 2008 MPRP December 2008 Reliability Committee

  2. Agenda • Introduction: MPRP Needs & Alternatives & Proposed N5 & S1 Elm • MPRP Scope changes since January 2008 PAC and June 2008 PPAs.  • Major: Three Rivers, Section 254, Heywood/Section 83, Rumford area • Other: Maxcys & Larrabee, Belfast, Browns Crossing, Middle Street, Spring Street, Maine Yankee, Section 160, and others  • Cost estimating overview (details in January 2009)

  3. Phase 1 Progress • Needs Assessment Published June 2007 • Transmission Alternatives Assessment Published May 2008 • PPA Report Published June 2008 • Maine Public Utilities Commission Certificate of Public Convenience & Necessity petition filed July 2008 • PPA Addendum Analysis for scope changes, expected December 2008 MPRP December 2008 Reliability Committee

  4. Needs Assessment • 2017 Peak Load Forecast • Multiple Maine Generator Dispatch Scenarios • Various Interface Flow scenarios with NB and NH • Hundreds of Outage Events • Nearly 5000 Cases Simulated • Published June 2007

  5. Transmission Alternatives Assessment • Developed 5 Northern Solutions • Designated N1 – N5 • Dropped N4 - Weakest Electrical Performance; Highest Cost • Analyzed 4 Solutions • Developed 3 Southern Solutions • Designated S1 – S3 • Dropped S3 - Weakest Electrical Performance; Highest Cost • Analyzed 2 Solutions, each with a Moshers & Elm St. option MPRP December 2008 Reliability Committee

  6. N5 Best electrical performance Best longevity Best operability Best loss savings Highest transfer capabilities N1 Less robust electrical performance higher cost for operability equivalence to N5 Lowest estimated initial cost Fewer dwellings within 300ft Preferred Alternative: N5 MPRP December 2008 Reliability Committee

  7. S1 Best electrical Performance Highest transfer capability Lowest Cost Preferred Alternative: S1 MPRP December 2008 Reliability Committee

  8. MPRP December 2008 Reliability Committee

  9. Three Rivers vs. NewingtonMPRP southern termination MPRP December 2008 Reliability Committee

  10. MPRP Interconnection with PSNH Southern Alternative S1 PSNH interconnection option was re-examined: 2017 Summer Peak with Gosling Road 345/115 kV Project Needs & Alternatives Analyses base cases used 2012 Summer Peak without Gosling Road Project Proposed Plan Analysis base cases used Two previously considered options New 345 kV Three Rivers Substation Interconnect with 345 kV Section 307 Build new 345 kV substation – 6-breaker switchyard Existing 345 kV Newington Substation Extend the new line 6.33 miles from Three Rivers Includes 0.75 mi Piscataqua River Crossing

  11. MPRP Interconnection with PSNHConclusions Based on System Studies Performance between a Three Rivers & Newington Interconnection Negligible difference in losses between Three Rivers and Newington interconnections Newington had higher NH-to-ME transfer capability Newington had reduced N-1-1 generation restrictions Newington had slightly better system voltage and reactive performance Newington had lower 115 kV line loading in Seacoast area Three Rivers interconnection showed lower loading on 115 kV R169 Line (Dover-Three Rivers) for one outage and contingency combination

  12. Cost & Other Factors, and Determination • NH Seacoast Area needs reinforcement per NH Needs Assessment (whether Gosling Road or elsewhere) • If Three Rivers is constructed, a new line could be built from Three Rivers to Newington or another station in the future • Preliminary cost estimates provided by NU and CMP show the Newington interconnection to be approximately $22M more: • S1 to Newington ~$362M • S1 to Three Rivers ~$340M • MPRP is proceeding with alternative termination at Three Rivers, as NH Alternatives Assessment proceeds

  13. Orrington-Coopers Mills (Maxcys)Section 254

  14. Discussion of Section 254 Construction N5 includes a new 115 kV line between Orrington and Maxcys ISO initially recommended constructing the line at 345 kV and operating it at 115 kV Based on cost information from other projects – assumed the additional cost to be on the order of 10% This issue was discussed at the November 2007 PAC The only concern raised was whether or not other 115 kV lines in the MPRP should also be constructed for 345 kV This issue was also discussed at the November 2008 PAC Updated costs provided. Comments were due December 4

  15. Merits of Construction at 345 kV 345 kV between Maxcys and Orrington May be desirable with the potential for new resources to be developed north of Orrington May be desirable for HVDC proposals which terminate in Maine – may facilitate power movement across the system to the HVDC terminal May support HVDC proposals which parallel this line – better system performance following loss of the HVDC line Significantly reduces cost and outage duration if the line needs to be converted to 345 kV in the future Smaller line impedance results in marginally lower real and reactive losses – not significant

  16. Merits of Construction at 115 kV HVDC proposals which terminate at Orrington or other points north might (or might not) reduce the need to convert to 345 kV Cost Built to 115 kV standards = $59 million Built to 345 kV standards = $103 million Difference of approximately $43 million If originally built at 115 kV, but later rebuilt to 345 kV later cost = $117 million (after the initial 115 kV construction cost = $59 million)

  17. MPRP Approach MPRP scope for PPA & TCA presently assume 345 kV construction, pending ISO recommendation

  18. MPRP & Heywood RoadSection 83 Sensitivity Analysis

  19. Heywood & MPRP Sensitivity Analysis Issue Heywood Road (formerly Benton) Project (PPA CMP-06-T13) includes an increase of the sag-limited rating of Section 83 between Wyman Hydro & Section 83C tap Detailed design [using Light Distance And Ranging (LiDAR) data] has indicated that re-rating is expensive, nearly $10 million A new 115 kV line parallel to Section 83 between Wyman Hydro and the Section 241 (Rice Rips) tap would be $19.6 million – there is room on the existing Right-of-Way (ROW) for a new line Heywood Road Substation will enter service this winter 19

  20. Preliminary Analysis pre-MPRP Conclusions, June 2008 A new 115 kV line parallel to Section 83 would reduce line losses by 4 to 6 MW under peak load conditions Northern Hydro export capability will be increased with a new 115 kV line parallel to Section 83 MPRP Conclusions, Fall 2008 MPRP system upgrade requirements are less in the Waterville/ Winslow/Skowhegan area with a new 115 kV line & Maxcys (Coopers Mills) 115 kV with breaker-and-a-half configuration The following system upgrades will no longer be required for MPRP 30 MVAR additional capacitors at Heywood 25 MVAR of capacitors at Winslow New 115 kV Section 245 (Albion to Winslow) Rebuild of 115 kV Section 259 (Albion to Heywood) Heywood & MPRP Sensitivity Analysis 20

  21. Combined Results of Heywood Road and MPRP analyses Estimated cost savings of not building these MPRP facilities = $12.8 million Net cost savings of building a new parallel 115 kV line from Wyman Hydro to Section 241 = $3.6 million New 115 kV line will reduce losses New 115 kV line will increase Wyman Hydro area export capability MPRP scope now excludes the upgrades no longer needed with the new 115 kV line Heywood & MPRP Sensitivity Analysis 21

  22. MPRP Rumford area Sensitivity Analysis

  23. MPRP & Riley-RumfordSensitivity Analysis • MPRP Approved PPAs • The MPRP Alternatives Assessment recommended the following upgrades in the Riley-Rumford Area: • New 115 kV line parallel to Section 89 (Livermore Falls-Riley) • New 115 kV line parallel to Section 229 (Rumford IP-Riley) • Expand Rumford IP & Riley to terminate the new lines • New 2nd 25 MVAR capacitor at Rumford IP • MPRP Alternative • Due to space constraints in the area, the following changes have been proposed as an alternative : • New 115 kV line from Livermore Falls to the Rumford, bypassing the Riley and Rumford IP Substations • Construct a new 115 kV tap to terminate the new line from Livermore Falls on Section 243

  24. MPRP & Riley-Rumford Sensitivity Analysis • Results: • After modeling the proposed changes, all reliability criteria is still satisfied • Bus faults and stuck breakers were modeled near the new Rumford area termination, without violations of reliability criteria • Recommendation: • Existing & planned area substations have little/no expandability, and are within 2 miles of each other • The reduction in scope of this option represents a $13 million savings for MPRP • MPRP is proceeding with alternative Rumford area design

  25. MPRP Other scope changes

  26. Minor Scope Changes to PPA • Larrabee Road (formerly Gulf Island 2 and Merrill Road) • Will connect existing area 115 kV lines now connected to Gulf Island Possible elimination of Gulf Island from BPS List • Coopers Mills (formerly Maxcys) • Reconfiguration at existing yard not practical - new 115 kV yard will be breaker-and-a-half, per PP-9 • Belfast Substation • Move 10.8 MVAR capacitor bank from 115 kV to 34.5 kV bus • Two 115 kV breakers added, consistent with Alternatives Analysis • Spring Street Substation • Bus-tie breakers and line re-terminations to prevent overloads under N-1-1 conditions, per Alternatives Assessment • Browns Crossing Substation • Remove 115 kV distribution substation and establish 34.5 kV supply, to reduce scope and cost in area • Maine Yankee • 345 kV re-terminations and breaker additions

  27. Minor Scope Changes to PPA • Raven Farm (formerly Elm Street) • Eliminate the 345 kV K3039-1 breaker • Days Corner • New 115/34.5 kV and 115/12.47 kV distribution substation • Necessary to retire 34.5 kV transmission line and two substations to make room for 345 kV line in right-of-way • Section 160 (Cape to Hinkley Pond) • Reconductor about 1 mile to prevent overloads under N-1-1 conditions, per Alternatives Assessment • Wyman Hydro • Remove 25 MVAR capacitor, since addition of two 18 MVAR capacitors is now underway • N133 Line Rebuild • Remove 115 kV rebuild Schiller-Bolt Hill-Three Rivers (associated with Gosling Road) • Middle Street Substation • 115/34.5/12.47 kV substation required for both area reliability needs and MPRP 115 kV Lewiston Loop

  28. N5 & S1 Elm Map Updates

  29. Separate DCT New 345 kV New 115 kV Rerate 345 kV Rerate 115 kV New Capacitor Bank New Autotransformer Transmission Alternative N5 (Current Scope) LAKEWOOD ORRINGTON SAPPI (HINCKLEY) RICE RIPS ALBION ROAD BUCKSPORT WINSLOW HEYWOOD ROAD RUMFORD IP LIVERMORE FALLS BELFAST 115 AUGUSTA EAST SIDE COOPER’S MILLS LARRABEE ROAD HIGHLAND LEWISTON LOWER NEWCASTLE HOTEL ROAD MASON MAINE YANKEE SUROWIEC

  30. Scope Changes to N5 Map • Removed Capacitor Banks at: • Wyman Hydro • Winslow • Heywood Road • Riley • Changed Substation Names: • Maxcy’s to Cooper’s Mills • Benton to Albion Road • Gulf Island to Larrabee Road

  31. New 345 kV New /Rebuilt 115 kV Rerate 345 kV Rerate 115 kV New Capacitor Bank New Autotransformer Transmission Alternative S1 – Elm (Current Scope) SUROWIEC RAVEN FARM PRIDES CORNER EAST DEERING CAPE SO GORHAM HINKLEY POND MAGUIRE RD THREE RIVERS

  32. Scope Changes to S1 Elm Map • Removed 345 kV and 115 kV lines from Three Rivers to Newington • Added 115 kV line Re-rate Cape to Hinkley Pond • Changed Name: Elm Street to Raven Farm

  33. Statistical Model for Estimating Costs

  34. Overview • Numerous transmission and substation projects • Most project estimates are deterministic, based on point estimates for all variables • Any point estimate is bound to be wrong and cannot be known with any certainty • Combined error of any construction project has the potential of varying significantly from its original point estimate • Volatility in manufactured costs, availability of labor and project schedule

  35. Deterministic Estimate 54 transmission line and 24 substation projects Utilizes a “bottoms-up” approach Based on detailed design information Unit price data compiled from vendors, contractors and past projects Incorporates “Lessons Learned” from recent project overruns 35

  36. Cost Uncertainty & Handy Whitman • Utility Plant cost indices back to 1912 • Transmission Plant Information Utilized • Total Transmission Plant • Station Equipment • Poles & Fixtures • Overhead Conductors & Devices • Historical volatility, mean reversion and correlations • Basis differential between transmission escalation and inflation

  37. Transmission vs. CPI Inflation 0.5% Basis 4.5% Basis

  38. Model Organization • The key focus areas are time and cost • The simulation will allow for the development of thousands of real-life outcomes • Instead of a point estimate it will consider every possible outcome and the likelihood of those outcomes

  39. How the Model Runs

  40. Representative Observations of Total Project Cost • Each bar of the histogram represents the number of scenario runs that were observed in a specified range of total project cost. • More observations around a mean value and less observations at extreme lower and higher levels • Intuitive picture of the possible outcomes of the total project cost

  41. MPUC CPCN Filing

  42. MPUC CPCN Filing

  43. Summary • Path Forward • Scope changes are being reviewed by task forces, PPA Revisions forthcoming • Formal TCA Submittal - January 2009 • Presentation to January 20, 2009 RC Meeting • Presentation to Stakeholders, January 29, 2009 Meeting

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