1. IRP in Vermont Docket 7081 Workshop Sept. 13, 2005

2. IRP in VT What are IRP’s and How are they developed?What are IRP’s and How are they developed? DUP – How does it impact VELCO’s Transmission PlanningDUP – How does it impact VELCO’s Transmission Planning How do Distribution Utilities use VELCO Transmission Planning?How do Distribution Utilities use VELCO Transmission Planning? Alternatives to Transmission – Analysis and SelectionAlternatives to Transmission – Analysis and Selection

3. What are IRP’s and How are they developed? A plan for meeting electric energy needs over twenty years at lowest cost by combiningA plan for meeting electric energy needs over twenty years at lowest cost by combining –Power supply (central & distributed) –Transmission and distribution –End-use efficiency IRPs are developed separately by each utilityIRPs are developed separately by each utility –Power supply is company-wide –Transmission & distribution is location specific –End-use efficiency affecting each utility

4. Legal Basis for IRP Under 30 V.S.A. 218c. an IRP is a plan for meeting the public’s need for energy services, after safety concerns are addressed, at the lowest present value life cycle cost, including environmental and economic costs, through a strategy combining investments and expenditures on energy supply, transmission and distribution capacity, transmission and distribution efficiency, and comprehensive energy efficiency programs.Under 30 V.S.A. 218c. an IRP is a plan for meeting the public’s need for energy services, after safety concerns are addressed, at the lowest present value life cycle cost, including environmental and economic costs, through a strategy combining investments and expenditures on energy supply, transmission and distribution capacity, transmission and distribution efficiency, and comprehensive energy efficiency programs.

5. Principal Criteria of Solution Societal costSocietal cost –Fuel –Capital (construction & financing) –Environmental (Externalities) StabilityStability –Solution must be flexible –Robust across scenarios –Avoid rate shocks Financial viabilityFinancial viability –Rates must maintain utility’s investment grade credit rating and access to capital markets

6. Scenario Development

7. Portfolio Development

8. Analysis of End-use Efficiency Potential

9. Ranking Portfolio Performance

10. T&D Reliability & Efficiency Comprehensive multi-year study of T&D system efficienciesComprehensive multi-year study of T&D system efficiencies Prioritize all right-of-way clearing on areas with greatest needPrioritize all right-of-way clearing on areas with greatest need Monitor delivery system reliability indicesMonitor delivery system reliability indices Use line patrols and infrared scans to find and correct problems before they cause outagesUse line patrols and infrared scans to find and correct problems before they cause outages Address capacity constraints consistent with DUP planning guidelinesAddress capacity constraints consistent with DUP planning guidelines –Consider all feasible alternatives including joint facilities with neighboring utilities, on-site generation and DSM –Consider environmental impacts, societal costs and other public concerns Work with VELCO in support of the Northwest Reliability ProjectWork with VELCO in support of the Northwest Reliability Project

11. DUP – How does it impact VELCO’s Transmission Planning Southern Loop as an exampleSouthern Loop as an example –Local reliability issue post contingency with existing loads (CV DUP Docket 6805) –Regional reliability problems S. Vt/SW NH RTEP S. Loop; Monadnock;post-NRPRTEP S. Loop; Monadnock;post-NRP –Potential local capacity needs (CV DUP Docket 6805) –Future regional/state capacity needs (RTEP) –All will be examined in CVPS DUP Docket 6805

12. How do Distribution Utilities use VELCO Transmission Planning? DU Utility Planners work with VELCO continuously (+ VUPG)DU Utility Planners work with VELCO continuously (+ VUPG) VELCO considers DU power supply plansVELCO considers DU power supply plans –e.g.. 1987 VELCO Plan revised in 1992 after Phase I/II multi-terminal and NW VT cogen plans changed Transmission projects and Power Supply interact for least-cost solution, e.g., Northern Loop/ VJO deliveryTransmission projects and Power Supply interact for least-cost solution, e.g., Northern Loop/ VJO delivery

13. Alternatives to Transmission – Analysis and Selection DUP analysis looks at least-cost societal NPV to compare solutions – does not differentiate between public and private benefits/costsDUP analysis looks at least-cost societal NPV to compare solutions – does not differentiate between public and private benefits/costs Risk of complex implementation plans and reliability of long-run performance are factorsRisk of complex implementation plans and reliability of long-run performance are factors ISO-NE adopted transparent planning to allow entry by merchant G/T/DR providersISO-NE adopted transparent planning to allow entry by merchant G/T/DR providers Viable financing plans are critical: Vt may add alternatives without regional cost supportViable financing plans are critical: Vt may add alternatives without regional cost support