Electric Transmission System Development in Alberta

1. Electric Transmission System Development in Alberta Neil J. Brausen, P. Eng., Director System Planning APEGGA Calgary Branch Luncheon March 17, 2004

2. Electric Transmission System Development in Alberta • Industry Background and Structure • AESO Core Business Functions • Transmission Planning Process • Transmission System Development • Questions

3. Industry Background and Structure

4. Alberta’s Electric Industry • single control area of 660,000 km² • 20,000 km transmission; 450 substations • B.C. & Sask. interconnections • 8,570 MW system peak • over 130 generating units • 10,515 MW internal capacity net to grid • over 200 market participants BC Alta Sask

5. Alberta’s Electric Market TransAlta/ATCO/EP Existing Generating Units New Generation (IPPs) Balancing Pool Marketer Market Transmission Transmission Facility Owners Distribution Wire Service Provider Retailer Retailer F F H

6. Industry Model Post-Restructuring Vertically Integrated Utility Functional Separation competitive forces Generation natural monopoly Transmission natural monopoly Distribution competitive forces Retail

7. AESO Core Business Functions

8. Who Is the AESO? • Statutory organization: integration of previous Power Pool and Transmission Administrator functions • Not-for-profit • Revenue generated from trading charge and transmission tariff • Hold no assets • Impartial - no affiliation with industry players • Regulated by the Energy and Utilities Board • Governed by board of directors appointed by the Minister of Energy

9. Industry Structure (June 2003) Electric Utilities Act Minister of Energy Appoints Board members , MSA & EUB Chair Balancing Pool Alberta Electric System Operator Alberta Energy & Utilities Board (EUB) Regulates AESO’s Transmission business Market Surveillance Administrator (MSA) Wholesale Energy Market Load Settlement Transmission Real-time Alberta Electric System Operator

10. Transmission Planning Process

11. Transmission Planning - The Process • Determine the inputs. • Identify the anticipated problems. • Develop the alternatives. • Analyse the alternatives. • Choose the preferred solution. • Initiate the project(s).

12. Transmission Planning - The Inputs • Load - forecast, location, timing, peak vs. off-peak • Generation - size, location, timing, merit order • Existing system - capacity, equipment ratings, operating constraints • Planning criteria - bulk system, subtransmission, load supply stations • Externalities - siting and routing considerations, planning horizons for other stakeholders, other jurisdictions

13. Transmission Planning - Project Initiation • AESO determines need for system expansion or upgrade. • AESO prepares Need Application and files with Energy and Utilities Board (EUB). • EUB considers application and makes decision. • Following receipt of EUB approval AESO “procures” project from a transmission facility owner (TFO). • TFO prepares and files Facility Application with EUB. • EUB considers application and makes decision. • Following receipt of EUB approval TFO proceeds with construction of project.

14. Transmission System Development

15. AESO Transmission Strategy Objectives • To define a transmission system development strategy that will enable the timely approval and construction of transmission facilities so as to: • Provide adequate transmission facilities that will meet defined reliably and performance criteria and provide efficient service • Facilitate the development of new generation in the system • Facilitate the competitive wholesale electricity market so as to allow market forces to minimize the overall delivered wholesale cost of electricity to consumers • Strategy Deliverable: The “Conceptual Plan”

16. The Conceptual Plan • Objectives: • 20 year outlook for system development • primary focus on 500 kV development • Better understanding of the implications of alternative generation and export scenarios on the development of the transmission system • Preliminary evaluation of the impact on the overall costs of generation and transmission costs of the alternative generation and export scenarios • 3 generation scenarios - Ft. McMurray, Edmonton area, southern Alberta area • 3 export scenarios - 0, 1000 and 2000 MW • 2 load forecast scenarios - expected, high

18. North - South Upgrade FM 1. Convert the south Keephills to Genesee to Ellerslie circuit to 500 kV operation by 2006, estimated cost $32M 2. Build 1st north - south 500 kV cct from Genesee to Langdon by 2009; estimated cost $300 M 3. Acquire right-of-way for 2nd north - south 500 kV cct from Keephills to Langdon; estimated cost $11 M 4. Acquire right-of-way for +/- 500 kV HVDC line from Fort McMurray area to Calgary area; estimated cost $45 M KH EL 1 GN 3 4 2 LD

19. Southwest Alberta - Staged Development, Triggers and Cost Estimate

20. Proposed Development - Southwest Alberta

21. Other Transmission Constraints • To northwest Alberta • Into southeast Alberta, including tie to Sask. • Local Edmonton and Calgary areas • Other regional and local upgrades

22. Questions?

23. Contact Us… Current Prices and Market Statistics Historical Reports News, Announcements Market and Transmission Access www.aeso.ca