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Mead Transformer and Intertie Rate Customer Meeting July 31, 2013

Mead Transformer and Intertie Rate Customer Meeting July 31, 2013. Agenda . Manufactured by General Electric in 1964 Installed in 1965 600 MVA 345/230/24.5-kV Part of the Intertie System. Brief History . Current Condition & Maintenance History.

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Mead Transformer and Intertie Rate Customer Meeting July 31, 2013

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  1. Mead Transformer and Intertie RateCustomer MeetingJuly 31, 2013

  2. Agenda

  3. Manufactured by General Electric in 1964Installed in 1965600 MVA 345/230/24.5-kVPart of the Intertie System Brief History

  4. Current Condition & Maintenance History

  5. Transmission Services & OperationsRequirements and Opportunities • Existing Contract Commitments 755 MW managed by the use of counter schedules • Operations Reliability and Flexibility Higher probability of extended outage of the transformer versus the transmission line • NERC Transmission Planning Standards Unavailability of equipment with long lead time • Additional Transmission Service Revenue Increase the transformer capacity

  6. Transmission Services & OperationsEras of Mead Transformer Operation 1. Before Mead-Phoenix Project (MPP) (1965-1995) • Frequent Liberty phase-shifter use for Navajo Transmission System • Estimated average flow about 50% of rating • MPP – Peacock (PCK) / Griffith (1995 – 2000) • Infrequent Liberty phase-shifter use • Estimated average flow about 25% of rating • After PCK / Griffith (2000 – Present) a) Infrequent Liberty phase-shifter use b) Estimated average flow about 50% of rating

  7. Transmission Services & OperationsRequirements and Opportunities

  8. Construction - Conceptual Design

  9. Construction Options • Option 1 – Change out existing transformer and associated equipment. Will require a 90-day outage, and will remain as single point of failure to the system. $8,700,000 • Option 2 – Change out the existing transformer and install a second new transformer parallel to the existing; install switches and associated equipment. Will require 14-18-day outage. Transformer delivery and installation will be staggered approximately eight months apart. $23,400,000 • Option 3 – Perform extensive Preventative Maintenance (PM) and change bushings on existing transformer; install new transformer parallel to the existing; install switches and associated equipment. Outage will be 45 days for PM, and 14 days to install new. Replace old transformer in 6-7 years. $14,700,000, plus $11,000,000 in seven years for the second transformer. Note: Construction estimates do no include interest during construction.

  10. Intertie Rate Impact Disclosure Notice This information is for general purposes only and not intended nor considered to be any part of Western’s formal public rate adjustment process.

  11. New Provisional Rates • Effective May 1, 2013 • Firm Transmission Service • $19.32 /kW-year • $1.61 /kW-month • Non-firm Transmission Service • 2.21 mills/kWh

  12. Provisional Rate Calculations • Included $63.4M of capital project costs from DSW’s FY 2012 Ten-Year Capital Program • $29.8M of the $63.4M was for the Mead Transformer Replacement Project • This investment was scheduled to enter repayment status in FY 2017 at 4.125%

  13. FY 2014 Rate Calculations • Includes $57.6M of capital project costs from DSW’s FY 2013 Ten-Year Capital Program • $24.5M of the $57.6M is attributable to the Mead Transformer Replacement Project • This investment is now scheduled to enter repayment status in FY 2015 at 4.00%

  14. Calculation Differences Even though the capital project was accelerated by two years, the lower cost and interest rate allowed the provisional rates to maintain sufficiency.

  15. Rate Impacts for the Mead Transformer Options • This analysis was completed with the current repayment study used for the FY 2014 rate calculations • These results are not indicative of any future rate adjustment action by Western

  16. Replace Transformer Option • Replace the existing $24.5M of capital project costs with $9.8M (includes IDC) • Schedule investment (replacement) to enter repayment status in FY 2017 at 3.00% • This option results in a rate decrease of $0.14 or $19.18 /kW-year

  17. Replace Existing & Add Second Transformer Option • Replace the existing $24.5M of capital project costs with $25.5M (includes IDC) • Schedule investments (replacement & addition) to enter repayment status in FY 2017 at 3.00% • This option results in a rate decrease of $0.02 or $19.30 /kW-year

  18. Replace Existing (Delayed) & Add Second Transformer Option • Replace the existing $24.5M of capital project costs with $27.6M (includes IDC) • Schedule investments (replacement & addition) to enter repayment status in FY 2017 and 2027 at 3.00% • This option results in a rate decrease of $0.08 or $19.24 /kW-year

  19. Comparison of Options

  20. Submit Questions or Comments no later than August 22, 2013 DSWPWRMRK@WAPA.GOV Presentation will be posted on Western’s DSW Region Website Thank you

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