Conceptual Plans for Electricity Transmission in the West

1. Conceptual Plans for Electricity Transmission in the West

2. Agenda • Decision factors • Study characteristics • Study method/results • Policy considerations

3. ? What Factors Influence the Nature of Inter-regional Transmission Plans

4. Decision Factors • Load and load diversity

5. Winter Peak System Winter =10,000 MW Summer = 5,000 MW Installed MW = 12,000 MW Load and Load Diversity

6. Installed Generation = 26,400 MW Summer Peak System Summer = 12,000 MW Winter = 6,000 MW Installed MW = 14,400 MW Winter Peak System Winter =10,000 MW Summer = 5,000 MW Installed MW = 12,000 MW Load and Load Diversity

7. Installed Generation = 22,400 MW Summer Peak System Summer = 12,000 MW Winter = 6,000 MW Installed MW = 12,400 MW Winter Peak System Winter =10,000 MW Summer = 5,000 MW Installed MW = 10,000 MW Load and Load Diversity 2,000 MW

8. Decision Factors • Load and load diversity • Reliability

9. Installed Generation = 26,400 MW Summer Peak System Summer = 12,000 MW Winter = 6,000 MW Installed MW = 14,400 MW Winter Peak System Winter =10,000 MW Summer = 5,000 MW Installed MW = 12,000 MW Reliability 2,000 MW

10. Installed Generation = 22,400 MW Summer Peak System Summer = 12,000 MW Winter = 6,000 MW Installed MW = 12,400 MW Winter Peak System Winter =10,000 MW Summer = 5,000 MW Installed MW = 10,000 MW Reliability 1,000 MW 1,000 MW

11. Installed Generation = 24,400 MW Summer Peak System Summer = 12,000 MW Winter = 6,000 MW Installed MW = 13,400 MW Winter Peak System Winter =10,000 MW Summer = 5,000 MW Installed MW = 11,000 MW Reliability 1,000 MW 1,000 MW

12. Decision Factors • Load and load diversity • Reliability • Fuel source location

13. Summer Peak System Summer = 12,000 MW 2,000 MW 10,000 MW Fuel Source Location 2,000 MW

14. Decision Factors • Load and load diversity • Reliability • Fuel source location • Economics

15. Generation Displacement $100M/year Annual Cost 100% % Usage 0% Unit Cost Lower Higher Economics Usage Factor

16. Study Characteristics What study does • Provides broad base conceptual plans • Provides insight into issue “trade-offs” • Suggests principles for expansion guidance • Suggests financing mechanisms • Identifies alternatives to conventional transmission expansion

17. Study Characteristics What study does not do • Evaluate plans through 2004 • Study expansion of natural gas pipeline system • Consider generation capital costs – least cost plan • Provide definitive actionable construction plan

18. Method of Study & Results

19. Base Study Characteristics • Two generation expansion scenario’s • “Gas scenario” • “Other than gas scenario” – OTG Base Year = 2004

20. Base Study Characteristics • Simulated 2010 • 2% per year load growth • 25% generation reserve margins • Performance analysis • Production cost model • Spreadsheet • Gas price variance • Hydro availability Base Year = 2004

21. Fig 14A - Estimated Cost = $2.1B Gas Scenario – New Lines

23. Gas Scenario – New Capacity Fig 14B

25. Other Than Gas – New Lines Fig 15B - Estimated Cost = $8B - $12B

27. Other Than Gas – New Capacity Fig 15C

29. Next Technical Steps • Evaluate alternate load growth scenarios and natural gas pricing • Incremental transmission analysis including DC options • Evaluate market power issues • Include emerging technology-based transmission applications

30. Five Recommended Principles Principle 1 Any expansion of the transmission system must maintain reliability, support both load and resource diversity in the Western Interconnection, and enable an efficient wholesale electric market.

31. Key policy issues • 1. What is the value of increasing diversity in the fuels used to generate electricity? • 2. What is the value of transmission to mitigate generation market power?

32. Principle 2 • Transmission pricing and cost recovery should provide incentives for regionally beneficial expansion and system improvement.

33. Transmission financing alternatives • Spread the costs of new transmission across all users of the transmission system. • Provide that a portion of the difference in electricity prices between two delivery points (congestion costs) is used to pay for new transmission to mitigate congestion. • Implement an “open season” model like that used for natural gas pipeline expansion.

34. Principle 3 • A forward-looking Western interconnection-wide transmission planning process should be established.

35. Key policy issues • How can a proactive transmission planning process be instituted in the Western Interconnection? • How will new transmission technologies and non-transmission alternatives (load-based generation, energy efficiency and demand reduction) alternatives be considered?

36. Principle 4 • Transmission should enable access to more economical and less-polluting resources, thereby minimizing environmental impacts on both a local and regional basis.

37. Principle 5 • All siting review processes must be streamlined and coordinated. State review processes should address both local and interconnection-wide needs, and federal agency review processes must be coordinated internally as well as with state, tribal and local authorities.

38. ? Questions