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AES Trans-Elect Presentation to WIA Board & State Transmission Authorities July 1-2, 2008 Independent Transmission Development in Independent Transmission.

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Presentation on theme: "AES Trans-Elect Presentation to WIA Board & State Transmission Authorities July 1-2, 2008 Independent Transmission Development in Independent Transmission."— Presentation transcript:

1 AES Trans-Elect Presentation to WIA Board & State Transmission Authorities July 1-2, 2008 Independent Transmission Development in Independent Transmission Development in Support of State Transmission Authorities

2 1 Mission Statement Trans-Elect, with the support of AES, is committed to expanding America’s electric transmission grid in the furtherance of public policy, increased reliability, and access to remote resources. As an independent transmission owner, Trans-Elect promotes the regulatory objectives of open, non-discriminatory access to the nation’s electricity system, while providing cost-effective, reliable service and electric grid expansion.

3 Introduction to AES Trans-Elect AES TE – The Partnership Company –Path 15 with Western Area Power Administration and PG&E –Wyoming Colorado Intertie with Wyoming Infrastructure Authority –High Plains Express with 9 public and private stakeholders TE – Financed over $1 billion in transmission projects TE – Owned and/or Operated nearly 13,000 miles of high voltage transmission

4 Trans-Elect Development Company LLC The nation’s 1 st independent transmission company 2002: Acquired METC (Michigan) and an interest in AltaLink (Alberta) 2004: Developed Path 15 in California 2005: Wyoming-Colorado Intertie Public/Private Partnership –Wyoming Infrastructure Authority & Western Area Power Authority 2006: Partnership with AES to develop/acquire transmission 2007: High Plains Express Project: WY-CO-NM-AZ Current Projects: –Wyoming-Colorado Intertie –High Plains Express –Other unannounced projects focused on renewable development Active in public policy development: WREZ, CREZ, WGA Offices in Bethesda, Chicago, and Denver

5 Path 15 Project Summary Public-private partnership with Western (DOE), PG&E, and Trans- Elect 83-mile, 500-kV line to eliminate a long-standing transmission constraint between N-S California Total development cost $250 M for a new 500-kV transmission line and substations FERC approved ROE 13.5% and CAISO is sole customer Construction started in September 2003 with commercial operation December 2004 Trans-Elect’s share of project costs of $194 million were under budget 4 Tesla Oregon California Lake Malin Captain Jack COTP AC INTERTIE Tracy DC Vincent Olinda Table Mountain Round Mountain Los Banos Gates Path 15 INTERTIE Midway Tahoe San Francisco

6 Michigan Electric Transmission Company 5 Purchase price - $288 million May 1, 2002 Assets - 5,400 miles of transmission lines in Michigan Investors - Trans-Elect as general partner with equity investment from GE Capital. Debt raised by Deutsche Bank and CIBC Seller’s rationale - Strengthen balance sheet and use sale to focus strategy

7 AltaLink Summary Purchase price - $570 million (C$860 million) on April 29, 2002 Assets - 7,200 miles of transmission lines in Alberta, Canada Investors – Trans-Elect and SNC-Lavalin as 50/50 general partners with equity investments from Ontario Teacher’s Pension Plan Board and Macquarie Bank Seller’s rationale - Become a pure generating company (previously divested distribution assets) 6

8 Trans-Elect’s Partner: AES Corporate Overview 28 countries on 5 continents 121 generation plants 13 utilities Alternative Energy leader 30,000 people worldwide 25 years of project development experience Diverse technologies and fuel mix Entrepreneurial learning culture

9 AES 2006 Financials Revenues Gross margin Net cash from operating activities $12.6 billion$3.6 billion$2.4 billion

10 28 countries 5 continents The capacity to serve 100 million people 116 generation plants 13 distribution businesses 42,000 MW installed generation capacity annual distribution sales of over 73,000 GWh Broad global footprint Broad Global Footprint

11 DC Ties (all ~ 200 MW except 600 MW) Interconnection Boundary

12 Transmission Authorities fill Gaps in RTO Coverage

13 WECC Transmission Projects Under Development Palo Verde–Devers II Green Path Project IV-San Felipe Indian Hills - Upland Sunrise Powerlink En-ti (Ely-Harry Allen) Harry Allen- Robinson Summit Montana Alberta Tie Line TransWest Express Project Northern Lights West Coast Cable Canada –Northwest - California (CNC) Project Juan de Fuca Cable White Pine-Midpoint Lake Elsinore Advanced PSP Palo Verde – North Gila II Project Navajo Transmission Project Segment 1 Miracle Mile-Ault SunZia High Plain Express Colorado-New Mexico Interconnection Project Wyoming-Colorado Intertie Project Eastern Plains Mountain States PacifiCorp Energy Gateway Hemingway to Boardman BPA transmission Tehachapi Project Central California Clean Energy Transmission Project Southern Crossing

14 (courtesy of the Wyoming Infrastructure Authority) Wyoming Transmission Projects Including Two Public/Private Partnerships involving Trans-Elect

15 WIND New Lines Under Development Existing Lines Wyoming-Colorado Intertie (WCI) Project 180 miles 345 kV 850 MW 75 miles 230 kV 425 MW Recommended by RMATS –TOT3 Constraint –6 Lines w/ 1,600 MW Capacity Public/Private Partnership –Wyoming Infrastructure Authority, Trans-Elect & WAPA Feasibility Studies Complete –Phase 1 WECC path rating Open Season Process –July 31 Auction Date ~2013 on-line date

16 WCI Bidding Concept FIRM TRANSMISSION CAPACITY (MW) 1 st Round 2 nd Round 3 nd Round 4 nd Round 5 th Round 6 th Round 7 th Round 8 th Round 9 th Round Capacity Available 850 MW BID PRICES ($/KW-MO)

17 PR for WCI

18 SOLAR WIND WCI (TE/WIA/WAPA) EPTP (Tri-State/Xcel/WAPA) NM Wind Collector (PNM) SunZia High Plains Express SOLAR MOU involving 6 utilities, 3 State agencies & Trans-Elect –Co-Managers: Xcel & Trans-Elect Feasibility study completed –Stage 2 Feasibility Underway Major renewable component 3,500 MW – 500 kV AC –$5 billion 1,300 miles across favorable terrain from Wyoming to Arizona Improved reliability in Eastern WECC Benefits to participating states, including consumers

19 Transmission – A Snapshot After years of under-investment, there’s a resurgence in interest in transmission expansion, driven by... –Replacement of aged infrastructure/improved reliability –Accessing remote resources, especially renewables –Availability of low-cost money Impediments –Absence/inconsistent public policy & regional planning –Utility/regulatory focus on serving native load –Cost allocation & recovery uncertainties –Long permitting timelines & complications

20 Solutions for Regional Transmission Expansion Public Policy –National: siting/routing, financial incentives, open access protocols –Regional & State: multi-state cooperation, transmission authorities Professional Transmission Development –Independent transmission’s exclusive focus on transmission development Commitments needed to build transmission –Traditional Model: Utilities to own and/or contract for capacity –Emerging Model: Renewable developers, transmission authorities, and customer beneficiaries › Facilitated by supportive public policy & regionalized power markets

21 Perfect Storm Change in Fundamentals –Rapid inflation in energy prices –Carbon-constrained energy economy –Price-competitive renewables –Utilities have few incentives for expanding transmission Change/Chaos = Opportunity –Transmission authorities are uniquely positioned to effect change –Multi-state cooperation in non-RTO areas › Western REZ process –Take the lead in facilitating transmission expansion › Supported by independent transmission developers & public policy

22 Shared Risk for Transmission Development State Transmission Authorities –Focused on renewables –Bonding & eminent domain authority –Seeding transmission development Business Model –State Authorities: political support –Trans-Elect: lead development efforts –Shared funding and risks, with funds repaid (with uplift) upon project financing Opportunities –Short-Term: generator leads & collector systems –Longer-Term: trunk lines & regional lines

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