1. 2010-11Study Plan Development & Approach May 5, 2010 Conference Call & Webinar “To ensure efficient, effective, coordinated use & expansion of the members’ transmission systems in the Western Interconnection to best meet the needs of customers & stakeholders.”

2. We are here Biennial Planning Calendar 2

3. Economic Study Process Study outlined by April 14 Planning Committee webinar Work to be performed by Economic Studies Team –Jamie Austin of PacifiCorp will use the GridView model –Ron Schellberg of Idaho Power will use PROMOD –Steven Wallace of CPS will coordinate, assist & report –Study requestor [NorthWestern] will provide guidance, data –Planning Committee will provide review and direction The EST has developed a proposed work plan –Very short timeline – just four weeks –Base case, three expansion cases, some sensitivities –Review, modifications and final report by June 30 th. Page 3 of (##)

4. Economic Study Details Base case will be WECC TEPPC’s 2019 PC1A case –Under development, to be available first week of May –Need conversion by ABB to run in GridView –Add 1,500 MW of wind-powered generation at the Townsend bus –Simulation models will provide re-dispatch for power flow models Three separate expansion cases –Increase capacity of the AMPS line (Path 18) from 337 to 401 MW –Increase rating of Montana-Northwest path (Path 8) by 600 MW –Add Mountain States Transmission Intertie (MSTI) project Proposed sensitivity case –Investigate methods to reduce any ‘excessive’ cycling of coal-fired generators caused by wind-powered generator output variability Page 4 of (##)

5. Economic Study Outputs Outputs to be recorded and summarized include: –Variable production costs of thermal generation –Hourly output, in MWh, for relevant plants and generator classes –Hours of congestion on NTTG-relevant paths Measured at 75%, 90% and 99% of path ratings Paths including Path C, Bridger West, Mona-Oquirhh, Idaho-Montana and others External interfaces, including Montana-Northwest, Pacific Interties, Idaho- Northwest and others A draft report describing details of cases, summarizing outputs, and providing observations and conclusions, will be provided to the Planning Committee for review. Page 5 of (##)

6. Economic Study Timeline May 7Obtain, install, verify TEPPC PC1A case May 14Establish and run core cases * Base case, three expansion cases May 21Extract and share model outputs May 27Draft analysis, graphics, observations and conclusions for review June 4Draft report to Planning Committee June 5-29Additional analysis, report revisions June 30Adoption by Planning Committee Page 6 of (##)

7. Study Plan Development From the Northern Tier Transmission Group’s Planning Committee Charter: Quarter 2: Study plan development and assumptions – The identification of the loads, resources, transmission requests, desired flows, constraints, etc. to be included and monitored during the study period. –The methodology, criteria, assumptions, databases, and identification of the analysis tools will be established and posted for comment and direction by stakeholders and Planning Committee members. 7

8. Objectives of the Study From the Planning Committee Charter: –The planning group will biennially prepare a long-term (10 year) bulk transmission expansion plan, while taking into consideration up to a twenty year planning horizon. –The plan will provide strategic transmission options (economic and reliability projects) and specific alternative plans for reinforcing the transmission system. –The plan is also intended to help coordinate the integration of new generation into the system and to reduce transmission congestion. –The work is intended to be completed primarily by the transmission owners in the footprint utilities with input from all interested stakeholders. Page 8 of (##)

9. Objectives of the study Specifically, the comprehensive transmission plan and/or planning process will: 1.Identify transmission needs of transmission customers (e.g., point-to-point, network, and retail native load), as they are identified and provided to the transmission provider. The transmission provider shall consolidate this information for their respective system to include in the sub-regional planning process. a.Native load needs will be incorporated by input from the various integrated resource planning (IRP) processes where they exist. Network transmission customers will be asked to submit information on their projected loads and resources on a comparable basis (e.g., planning horizon and format). The intent will be to plan for all end-use loads on a comparable basis. b.Each transmission provider’s existing point-to-point customers will be asked to submit any projections they have of a need for service over the planning horizon and at what receipt and delivery points. 2.Identify transmission congestion that is an impediment to the efficient operation of electricity markets. Congestion on the existing and planned system will be reviewed and evaluated. In addition, the impacts on congestion of potential new generation facilities or new transmission projects will be considered. This will include production simulation studies on a sub-regional and regional level, and historical use analysis as provided by the Northern Tier Use Committee and TEPPC subcommittees. 3.Work with TEPPC to include the needs of other sub-regions and support WECC transmission planning. Page 9 of (##)

10. Objectives of the Study The objective of the 2010 Northern Tier transmission study effort is to perform a Conceptual Study that examines, given a limited number of forecasted and assumed load and resource portfolios, what generic transmission additions are required to provide a feasible system operation at forecasted stress times, ten years in the future. In 2011, more detailed analyses will be undertaken, to determine the effectiveness of alternative sets of proposed transmission projects, suggested by the conceptual study. These analyses will contribute to a refined plan, which will be prepared, discussed and approved by the end of 2011. 10

11. General Schedule & Deliverables The broad timing of the transmission plan development process and the work products to be delivered are presented in the NTTG Planning Committee Charter. –Quarters 3 and 4: Draft plan analysis – The modeling of the system loads, resources, improvements, etc. to be considered. Technical screening studies using power flow analysis will be used to evaluate preliminary feasibility of and reliability of the system. Addition or modification of transmission elements considering past economic studies, and to meet performance and study criteria established in the study plan will be identified, resulting in a draft transmission plan for public and stakeholder comment. –Quarter 5: Draft study results (and detailed evaluation of specific projects) –Quarter 6: Economic studies (and detailed evaluation of specific projects) –Quarter 7: Final plan report –Quarter 8: Final plan approved by NTTG Steering Committee 11

12. Methodology Study Horizon Selected System Conditions to Study Base Scenarios Selected Expansion Alternatives Assessed 12

13. Methodology Time Frame a.10 years in the future –From the NTTG Planning Committee Charter (Comprehensive Transmission Plan): The planning group will biennially prepare a long-term (10 year) bulk transmission expansion plan, while taking into consideration up to a twenty year planning horizon. b.Calendar year 2019 –Align with current WECC TEPPC study horizon. c.Broad-spectrum Survey, with One ‐ hour focus –NTTG studies will examine congestion in the Northern Tier transmission footprint using production cost simulation across one year, looking for individual hours of system stress. – Identified hours of system stress will be addressed using DC power flow solvers to test conceptual solutions. Page 13 of (##)

14. Methodology System Conditions to Study Northern Tier Transmission Group studies will examine a limited number of defined load and resource scenarios. –Based on aggregation of local providers’ planning data –With alternatives provided through first quarter data submittals –And other agreed alternatives to test reasonable futures Page 14 of (##)

15. Methodology Base Cases Selected The year 2019 will be the focus of Northern Tier conceptual studies in 2010. –Allows work to be based on WECC TEPPC study foundation. –TEPPC PC1A case is based on WECC 2012 Heavy Summer, with additions for load growth and reliability in 2019. –NTTG base analysis will remove projects not currently committed. Northern Tier may shift to a 2020 focus for studies in 2011. –Depends on WECC TSS development of a 2020 Base Case, –And timely incorporation by TEPPC in 2020 cases in late 2010. Page 15 of (##)

16. Conceptual Planning Page 16 of (##) PowerWorld diagram of simplified network

17. Schedule & Milestones Q2: Develop and publish Study Plan –Specific tasks, milestones and resources Q3: Preparation, initial studies –Define load & resource scenarios, prepare model –Develop ability to export power flow cases from hourly simulation models –Use simulation models to define load, resource dispatch Q4: Develop draft Transmission Plan –Perform DC power flow analysis on scenarios –Reduce set of scenarios to those to be studied in detail in Q5 –Prove capability to export power flow cases Page 17 of (##)