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Mountain States Transmission Intertie (MSTI) Open Season Update Meeting Mountain States Transmission Intertie (MSTI) Open Season Update Meeting Wednesday,

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Presentation on theme: "Mountain States Transmission Intertie (MSTI) Open Season Update Meeting Mountain States Transmission Intertie (MSTI) Open Season Update Meeting Wednesday,"— Presentation transcript:

1 Mountain States Transmission Intertie (MSTI) Open Season Update Meeting Mountain States Transmission Intertie (MSTI) Open Season Update Meeting Wednesday, December 5, :00 am to 11:00 am SOCC South Conference Room Butte, MT

2 2 Agenda MSTI Project Update MSTI Project Update »MFSA - Siting, Permitting, and Environmental »State and Federal Agency Agreements »Engineering Public Outreach Process Public Outreach Process WECC and NTTG Planning Processes WECC and NTTG Planning Processes FERC Tariff Development FERC Tariff Development Indicative Pricing Indicative Pricing Project Schedule Project Schedule Next Steps Next Steps MSTI Development Cost Sharing Concept MSTI Development Cost Sharing Concept

3 3 MSTI Project Update Siting, Permitting, and Environmental Siting, Permitting, and Environmental »SF 299 Applications Filed with BLM and USFS »Cost Recovery Agreements Completed Separate Agreements with BLM, USFS, and State Agencies Separate Agreements with BLM, USFS, and State Agencies »Baseline Studies 50% Complete Inventory Done in February Inventory Done in February Impact Assessment / Mitigation Planning in March Impact Assessment / Mitigation Planning in March »MFSA / Environmental Report in 2 nd Quarter 2008 MFSA for Montana Only MFSA for Montana Only ER with Studies Similar to an EIS that Covers Idaho ER with Studies Similar to an EIS that Covers Idaho Engineering Engineering »Design Criteria Development Underway

4 4 Public Outreach Process Public Comment Importance Public Comment Importance »To comply with the MFSA requirements and to identify preliminary issues and concerns Open House Meetings Open House Meetings »Ten Public Open House Meetings Held since June »Montana – Whitehall, Townsend, Ennis, Dillon, Anaconda »Idaho – Arco, Idaho Falls, Shoshone, Carey, Aberdeen Elected Officials Meetings Elected Officials Meetings »Meetings with county commissioners and other elected officials in counties potentially impacted by the project Recording Public Comments Recording Public Comments »Input received will be considered during the planning process to identify project alternatives »Interactive GIS

5 5 WECC and NTTG Planning Processes WECC Regional Planning Process update WECC Regional Planning Process update WECC Path Rating Phase 1 update WECC Path Rating Phase 1 update NTTG Fast Track project update NTTG Fast Track project update

6 6 WECC Planning Process Calendar Calendar » N-1 Screening » N-2 Screening » Load-ability Tests » Angle Stability » Draft Comprehensive Progress Report: 15-Dec-07 » Final CPR: 31-Dec-07

7 7 FERC Tariff Development NWE Engaged CRA International NWE Engaged CRA International Tariff Pricing Alternatives Tariff Pricing Alternatives White paper being developed – eventual pleading to FERC White paper being developed – eventual pleading to FERC Request flexibility in pricing based on 10 Merchant Line criteria Request flexibility in pricing based on 10 Merchant Line criteria Allow multiple rates based on different terms of contracts Allow multiple rates based on different terms of contracts Allow for contribution/development cost sharing Allow for contribution/development cost sharing

8 8 Indicative Pricing Process Process »Several scenarios were analyzed. The following illustrates three projects based on varying transmission capacity size and construction cost estimates. »Capital construction cost estimates were developed based on Power Engineering consultants in association with NWE personnel. »Pricing is based on a traditional FERC revenue requirement and return on rate base analysis. »Return on rate base plus operating expense, depreciation expense, property and other taxes, and income taxes combine to determine the net revenue requirement. »Pricing ranges are stated in terms of dollars per MWh. »Change from June meeting: pricing is based on levelized revenue requirements over specific contract periods ranging from 10 to 30 years, and a sliding ROE scale based on varying subscription levels. During the June meeting we illustrated a 30 year levelized rate and 10 year step rate, which was the first year revenue requirement, and a stable ROE.

9 9 Indicative Pricing Assumptions Assumptions »Rate base is the total of construction capital, AFUDC (8.9%), mitigation required capital, Idaho sales and use tax (6%) for the portion of the investment assumed in Idaho (50%), working capital, and depreciation reserve. »Each scenario assumes a sliding return on equity, depending on the subscription percentage, ranging from 13% to 10%. The debt rate is assumed at 6.794% with a capital structure. »O&M costs are assumed at 3.5% of the capital construction cost and escalate 3% per year over the 30-year period. »Depreciation is based on 30-year straight-line for book, and 20-year MACRS for tax purposes. »Property taxes assume 50% MT at 3.132%, and 50% ID at 1.025%. »The plan and pricing could also be considered conservative, as we are reviewing current legislation based on House Bill 3 and other potential impacts and savings regarding property tax rates or other state/federal incentives associated with new generation and related development.

10 10 Indicative Pricing

11 11 Project Schedule File MFSA Application – Spring 2008 File MFSA Application – Spring 2008 MFSA Accepted – Summer 2008 MFSA Accepted – Summer 2008 NEPA / MEPA EIS Scoping – Summer 2008 NEPA / MEPA EIS Scoping – Summer 2008 Draft EIS Published – Spring 2009 Draft EIS Published – Spring 2009 EIS Record of Decision – Late 2009 to Early 2010 EIS Record of Decision – Late 2009 to Early 2010

12 12 Next Steps Select Preferred Route and Two Alternatives Select Preferred Route and Two Alternatives File MFSA Application and Obtain CEC File MFSA Application and Obtain CEC Prepare MOU for Third Party Contractor to Prepare EIS Prepare MOU for Third Party Contractor to Prepare EIS Refine Project Costs and Indicative Rates Refine Project Costs and Indicative Rates Present Pricing Mechanisms to FERC for Approval Present Pricing Mechanisms to FERC for Approval Develop Long-Term Transmission Contracts Develop Long-Term Transmission Contracts Continue Public Outreach Process Continue Public Outreach Process Keep Open Season Participants Informed of Project Progress and Status Keep Open Season Participants Informed of Project Progress and Status Schedule Next Meeting Schedule Next Meeting

13 13 MSTI Development Cost Sharing Concept NWE Exploring Mutually Beneficial Cost Sharing Process with Participants NWE Exploring Mutually Beneficial Cost Sharing Process with Participants Need Commitment from MSTI Customers as Project Proceeds Need Commitment from MSTI Customers as Project Proceeds Risk Sharing Upfront in Exchange for Potential Reduction in Transmission Rates Risk Sharing Upfront in Exchange for Potential Reduction in Transmission Rates Will Need Necessary Regulatory Approvals Will Need Necessary Regulatory Approvals Include Milestones and Off Ramps for Customers as Project Advances Include Milestones and Off Ramps for Customers as Project Advances Following is a Development Cost Sharing Example for Discussion Purposes Only Following is a Development Cost Sharing Example for Discussion Purposes Only

14 14 MSTI Development Cost Sharing Concept

15 15 QuestionsAndDiscussion


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