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

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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 Tuesday,"— Presentation transcript:

1 Mountain States Transmission Intertie (MSTI) Open Season Update Meeting Mountain States Transmission Intertie (MSTI) Open Season Update Meeting Tuesday, September 23, :00 am to 11:00 am NWE GO Auditorium 40 East Broadway Street Butte, MT

2 2 Agenda  MSTI Project Update »Preferred and Alternative Route Selection »Siting and Permitting – MFSA / ER Application Filings »EIS Process »Engineering Status »Project Schedule »Public Outreach  WECC and NTTG Planning Processes  MSTI Regulatory Work Plan  Indicative Pricing  Need for New MSTI Open Season  Next Steps

3 3 MSTI Project Update  Purpose » Meet requests for new transmission service » Provide transmission for new generation  Benefit » Provide energy diversification and market competition » Provide positive economic impact  Need » Improve system performance and flexibility » Meet regional electrical demand

4 4 MSTI Project Update  Siting, Permitting, and Environmental »MFSA / Environmental Report Filed July 2008 ♦ MFSA for Montana Only ♦ ER with Studies Similar to an EIS that Covers Idaho ♦ MDEQ Sufficiency Review Expected Late September 2008 »EIS Schedule Updated After Agency Scoping Process ♦ Initial Comment Period Ends October 10 th »Third Party EIS Contractor Selected – PBS&J

5 5 MSTI Project Update  BLM Lead Agency with MDEQ in Montana  No Siting Law in Idaho – Governed by NEPA, Local, and State Requirements  Cooperating Agencies – USFS, DOE, INL, and USDA Sheep Experiment Station

6 6 MSTI Project Update  Environmental Impact Statement »Process Initiated July 2008 »Anticipate 20 Month Review Process »Agencies Select Preferred Location After Public Comment

7 7 MSTI Project Update  Preliminary Engineering Complete »Detail Project Schedule Complete »Preliminary Design Criteria Developed »Detailed Project Estimates Complete

8 8 MSTI Project Update  Preliminary Engineering Complete »Initial Structure Type Analysis »Preliminary Substation Layouts

9 9 MSTI Project Update  Preferred and Alternative Routes Selected by NWE  Characterized as the Proposed Action in the MFSA – ER document  The I-15 corridor is strongly preferred by the Federal agencies.  EIS Process will determine the final route

10 10 MSTI Project Update  Detail Project Schedules Developed

11 11 Project Schedule  NEPA / MEPA EIS Scoping – Sept 2008  Record of Decision – Late 2009 to Early 2010  Start Detail Design 2009  Start Construction Mid 2010  Target Energization Late 2013

12 12 Public Outreach Process  Public Comment Importance »To comply with the MFSA requirements and to identify preliminary issues and concerns  Open House Meetings »Ten Public Open House Meetings Held since June »Montana – Whitehall, Townsend, Ennis, Dillon, Anaconda, Butte »Idaho – Arco, Idaho Falls, Shoshone, Carey, Aberdeen  Elected Officials Meetings »Meetings with county commissioners and other elected officials in counties potentially impacted by the project  EIS Scoping Meetings »Montana: »September 9, 2008 – Butte »September 10, 2008 – Three Forks »September 11, 2008 – Dillon »Idaho: »September 16, Twin Falls »September 17, Arco »September 18, Idaho Falls  Recording Public Comments »Input received will be considered during the planning process to identify project alternatives »Interactive GIS

13 13 WECC Path Rating Process  Phase 1 of the WECC Three Phase Path rating process was completed  Phase 2 is currently moving forward: »Study Plan has been finalized, study work has begun »Projected completion date of Q1 2009

14 14 NTTG Biennial Planning Process  MSTI is included in the Northern Tier Transmission Group (NTTG) Biennial Planning Process  This is a sub-regional 10-year transmission study that will focus on moving power from developing resources to growing loads.  The following lines are included in this study:

15 15 NTTG Proposed Transmission Projects

16 16 Indicative Pricing  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 and dollars per kW-month. »Change from December 2007 meeting: In the December meeting we illustrated pricing based on a sliding ROE scale depending on varying subscription levels. We are now reflecting pricing based on a constant 13% ROE regardless of subscription level.

17 17 Indicative Pricing  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 constant return on equity, regardless of the subscription percentage, of 13%. 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.

18 18 Indicative Pricing

19 19 Indicative Pricing

20 20 MSTI Project Update

21 21 Regulatory Plan and New MSTI Open Season  Retained FERC Counsel Specific for this Project  Develop and file at FERC a request for a declaratory order to establish incentive rate principles for the project  Transition MSTI from the current Open Season to an updated process  FERC has provided additional guidance on Open Season processes for electric transmission development  Invite additional participants into the process in a transparent FERC approved manner » Maintain Existing Participants Queue Position » Need for Separate MSTI OATT » Formation of MSTI, LLC » Midpoint vs. Borah / Brady  Hold new open season  File open season report and tariff at FERC  Make 205 filing to implement rates in anticipation of service

22 22 Next Steps  Filed MFSA Application – July 2008  MFSA Accepted – Fall 2008  Refine Project Scope and Details  NEPA / MEPA EIS Scoping – Summer 2008  Draft EIS Published – Summer 2009  FERC Filings – Late 2008  EIS Record of Decision – Late 2009 to Early 2010  Continue Public Outreach Process  Develop Long Term Transmission Contracts  Develop Substation and Line Design Criteria  Develop Contractual Relationships with Vendors and Contractors

23 23 QuestionsAndDiscussion


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