1. Transmission Expansion in the Western U.S. Transmission Policy, Incentives, and Expansions in the Western States Marcus Wood Stoel Rives LLP 900 SW Fifth Avenue, Suite 2600 Portland, OR 97204 503-294-9434 mwood@stoel.com May 21, 2007

2. 2 Frontier Line Palo Verde – Devers II Navajo Transmission Project John Day- McNary Northern Lights TransWest Express TOT 3 MT-AB Intertie Tehachapi Green Path Sunrise Powerlink Seabreeze Miracle Mile-Ault Robinson Summit- Harry Allen TransBay Tucson-Nogales) Colorado-New Mexico Interconnection Project Northwestern AMPS High Plains Express N. CA to Canada Sun Zia Proposed Transmission Projects Map prepared by Doug Larson and John Carr

3. 3 Frontier Line Palo Verde – Devers II Navajo Transmission Project John Day- McNary Northern Lights TransWest Express TOT 3 MT-AB intertie Tehachapi Green Path Sunrise Powerlink Seabreeze Miracle Mile-Ault Robinson Summit- Harry Allen TransBay Tucson-Nogales) Colorado-New Mexico Interconnection Project Northwestern AMPS High Plains Express N. CA to Canada Sun Zia Proposed Transmission Projects

4. 4 Frontier Line Palo Verde – Devers II Navajo Transmission Project Northern Lights TransWest Express TOT 3 MT-AB intertie Tehachapi Green Path Sunrise Powerlink Seabreeze Miracle Mile-Ault Robinson Summit- Harry Allen TransBay Tucson-Nogales) Colorado-New Mexico Interconnection Project Northwestern AMPS High Plains Express N. CA to Canada Sun Zia John Day- McNary Proposed Transmission Projects

5. 5 Frontier Line Palo Verde – Devers II Navajo Transmission Project John Day- McNary Northern Lights TransWest Express TOT 3 MT-AB intertie Tehachapi Green Path Sunrise Powerlink Miracle Mile-Ault Robinson Summit- Harry Allen TransBay Tucson-Nogales) Colorado-New Mexico Interconnection Project Northwestern AMPS High Plains Express N. CA to Canada Sun Zia Proposed Transmission Projects Seabreeze

6. 6 Frontier Line Palo Verde – Devers II Navajo Transmission Project John Day- McNary TransWest Express TOT 3 MT-AB intertie Tehachapi Green Path Sunrise Powerlink Seabreeze Miracle Mile-Ault Robinson Summit- Harry Allen TransBay Tucson-Nogales) Colorado-New Mexico Interconnection Project Northwestern AMPS High Plains Express N. CA to Canada Sun Zia Northern Lights Proposed Transmission Projects

7. 7 Frontier Line Palo Verde – Devers II Navajo Transmission Project John Day- McNary Northern Lights TransWest Express TOT 3 MT-AB Intertie Tehachapi Green Path Sunrise Powerlink Seabreeze Miracle Mile-Ault Robinson Summit- Harry Allen TransBay Tucson-Nogales) Colorado-New Mexico Interconnection Project Northwestern AMPS High Plains Express N. CA to Canada Sun Zia Proposed Transmission Projects

8. 8 Palo Verde – Devers II Navajo Transmission Project John Day- McNary Northern Lights TransWest Express TOT 3 MT-AB intertie Tehachapi Green Path Sunrise Powerlink Seabreeze Miracle Mile-Ault Robinson Summit- Harry Allen TransBay Tucson-Nogales) Colorado-New Mexico Interconnection Project Northwestern AMPS High Plains Express N. CA to Canada Sun Zia Frontier Line Proposed Transmission Projects

9. 9 Frontier Line Palo Verde – Devers II Navajo Transmission Project John Day- McNary Northern Lights TransWest Express TOT 3 MT-AB intertie Tehachapi Green Path Sunrise Powerlink Seabreeze Miracle Mile-Ault Robinson Summit- Harry Allen TransBay Tucson-Nogales) Colorado-New Mexico Interconnection Project Northwestern AMPS High Plains Express N. CA to Canada Sun Zia Proposed Transmission Projects

10. Title Goes Here Subhead Goes Here Presenter Goes Here Date Goes Here Key Characteristics of WSCC Grid That Impact Transmission Expansion Grid is a “donut” with a very weak east side Transmission system is a “hub and spoke” system Transmission ownership is fragmented Most of the WSCC is outside of RTO control Outside of California, path ratings must be negotiated Outside of California, there is no agreement on transmission line cost allocation Major expansions require siting in multiple states Most Western land is not privately-owned

11. Title Goes Here Subhead Goes Here Presenter Goes Here Date Goes Here Transmission Ownership is Fragmented In WSCC, there are at least 58 owners of bulk transmission Bonneville Power Administration owns 75% of the high- voltage transmission in the Northwest Western Area Power Administration is a major transmission owner in the Rocky Mountain/Southwest areas Substantial transmission is owned by generation cooperatives and municipalities Why dealing with other transmission owners is important –Siting –Condemnation –Path ratings –Cost allocation

12. Title Goes Here Subhead Goes Here Presenter Goes Here Date Goes Here Outside of California, Path Ratings Must Be Negotiated Description of “path,” “cut plane,” “nomogram” Paths have nothing to do with actual flow of electricity Basics of path rating determination

13. Title Goes Here Subhead Goes Here Presenter Goes Here Date Goes Here Pacific Northwest Cut Planes

14. Title Goes Here Subhead Goes Here Presenter Goes Here Date Goes Here Major Expansions Involve Siting in Multiple States TOT 3 example –Wyoming siting –Colorado siting HVDC Line: What is the benefit to intervening states?

15. Title Goes Here Subhead Goes Here Presenter Goes Here Date Goes Here Most Land in WSCC Area Is Not Privately-Owned Example for Transwest Express proposed path –Crosses: 20 BLM resource management areas 2 national monuments 1 Department of Defense area 4 Indian reservations 8 national forests Significance of non-private ownership –No condemnation rights –“Off-limits” areas –Environmental Impact Statement requirements –Negotiations with Indian Nations

16. Title Goes Here Subhead Goes Here Presenter Goes Here Date Goes Here Transmission Cost Allocation Four potential allocations of cost of a transmission line –State government entity (Wyoming Infrastructure Authority) –RTO –Retail utilities –Generators Outside of California, no agreement on allocation Complex mix of allocation factors If retail utilities are to share costs, all affected retail regulatory commissions must agree If generators are to bear costs, who pays until full capacity signed up?

17. Title Goes Here Subhead Goes Here Presenter Goes Here Date Goes Here Conclusion WSCC transmission grid is seriously inadequate for WSCC needs Well-planned transmission additions, especially on the east side, could greatly improve reliability and resource choice and reduce overall cost of power Successful sponsorship of major WSCC transmission requires –A deep understanding of WSCC institutional relationships –A sophisticated and knowledgeable negotiation with and accommodation of a large number of interested parties –A heightened understanding of global warming rulemaking –Great political savvy

18. Title Goes Here Subhead Goes Here Presenter Goes Here Date Goes Here Conclusion TO BUILD WSCC TRANSMISSION, ONE FIRST NEEDS TO NEGOTIATE WSCC TRANSMISSION