Local Area Planning Update to TRANSAC – March 15, 2017 20pt Font – bold for presentation name, regular for date Local Area Planning Update to TRANSAC – March 15, 2017

Describe problem conditions Decision Rule - Matrix Decision Rule Matrix Problem: Identify the Problem or event Mitigation: Briefly describe the mitigation proposed   Raw Rank Units Data Factor Comment Consequences of Event MW Affected Load Note 1 Describe load lost, voltage or thermal problems, etc Risk of Event None Describe problem conditions Note 2 Describe under what conditions the problem occurs: normal, outage, load level, seasons affected, etc Overall Risk Conseq X Risk = Result Cost TPV Rev Req $ Cost -- List major cost components Solution Duration Years Cost/Duration = $/year Discussion Any other notes or comments on problem or proposed mitigation. Note 1: Calculate and enter consequences factor per details on priority matrix Note 2: Calculate and enter risk factor per details on priority matrix Title, 24pt font, bold, white Body Copy/Bulleted Text, 22pt font, black (adjust as necessary)

Occurs now under normal and outage conditions at peak loads Decision Rule - Example Decision Rule Matrix - Example Problem: Low Voltage Helena - Three Rivers Area 100 kV System Mitigation: Option A: Cap Banks at E Helena, Three Rivers, Broadwater   Raw Rank Units Data Factor Comment Consequence of event MW Affected 53 105 No risk of lost load, but voltages below FERC 715 minimums under normal system conditions, peak load. Risk Prob, Freq of event Occurs now under normal and outage conditions at peak loads 0.25 Because problem occurs now under normal system conditions, but only at peak load, risk factor is 25%. Con. X Risk None 105 X .25 26.3 Cost TPV Rev Req $2.1M -- 50 MVAR E Helena, 25 MVAR Three Rivers, 10 MVAR at Broadwater @ $25K/MVAR Solution Duration Years 15+ Cost/Duration = 2.1/15 = $0.14M/year Discussion Installation of these cap banks provide a valid solution through 2023. E Helena and Three Rivers subs well developed and should accommodate cap banks, but new sub may be required at Broadwater or close vicinity. Solution could be staged in over time. Title, 24pt font, bold, white Body Copy/Bulleted Text, 22pt font, black (adjust as necessary)

Prioritizing Critical Problems Consequence Factors Consequences Factor = (Stability + Thermal + Voltage Problems Factors) X Peak Load Affected Consequences Rating Factors Stability and Thermal Problems Voltage Problems Compliance Factors Extreme – Interconnection wide Impacts, Widespread Outages 10 Outage Yes NERC TPL 1.5 Severe – Division Wide Impacts, multiple outages 5 Very Low < 80% No NWE 1 Moderate – Localized Impacts, single outages 2 Low < FERC 715 2 - 3* Voltage factor is 2 for violation of continuous limits; 3 for violation of emergency limits. Minor – Small Impacts, no outages High None – No problems observed None 0  Note, compliance factor included in ranking calculation

Prioritizing Critical Problems Risk & Likelihood Factors Risk Factor = TPL Category Factor X Seasonal Cond. Factor X Other Cond. Factor Risk and Likelihood Factors TPL Category Seasonal Other Timing Factor P0 Normal 0.99950 S Peak 0.12 1 Occurs under N-0 Planning Horizon (Yr) Weight P12 T Line 0.00050 W Peak Major Long Line > 30 miles 5 P13 XFMR 0.00010 SWPeak 0.25 Moderate 0.5 Med Line, 10-30 miles 3 P22 Bus Fault 0.00005 Light Minor 0.1 Short Line < 10 miles 10 P23/P24 PCB Fault 0.00001 Average 0.75 Sub 0.033 Substation Equipment 15 P6 TL-TL All 1.00   Note, timing factor included in ranking calculation

Consequences Factor X Risk Factor X Compliance Factor X Timing Factor Ranking Score Ranking Score Ranking Score = Consequences Factor X Risk Factor X Compliance Factor X Timing Factor Ranking Score (referred to as Expected Consequences in past plans) is used to rank and prioritize problems found. Additional factors have been added to weight the ranking score, taking into account: NERC compliance requirements (rank higher) Timing of a problem (far into the future could be ranked lower) Different contingencies that create the same problem (a problem that could occur due to two different outages is ranked higher…risk is greater). Additional Seasonal variations or other factors.

Uncertainty Scenarios Suggestions: High Renewable Resources System Wide Existing Projects dispatched to capacity Extreme Localized Growth Bozeman area extensively studied in 2016 Other? Loss of Thermal Plants heavily studied already Loss of Hydros studied recently as well

Next Steps Quarters 6 & 7 Finalize Mitigation Plans under review or in progress Run Uncertainty Scenarios Perform Reactive Resource Assessment Quarter 8 Send out Draft of “The Book” for stakeholder review Conduct Public Meetings Finalize “The Book” and close out the 2016/2017 Local Area Planning Cycle

Questions? Text, 60pt font, white

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