SD Energy Infrastructure Authority“Transmission 101”

June 9, 2006

SD Energy Infrastructure Authority“Transmission 101”

June 9, 2006

Mike RisanSenior Vice President, TransmissionBasin Electric Power Cooperative

Mike RisanSenior Vice President, TransmissionBasin Electric Power Cooperative

ConstraintsConstraints

ofof

RulesRules ofof ManMan

Nature

Nature

RulesRules

Rules of NatureRules of Nature

Laws of Physics Regional Characteristics

Laws of Physics Regional Characteristics

Laws of Physics

Power

GenerationLoad

Power

ContingenciesLightning

Contingencies

Power

Power

Overload?

Low Voltage?

Power

Transient Stability?

Power

Weakest LinkWeakest Link

OverloadOverload LowLow

VoltageVoltage

TransientTransient

StabilityStability

Transfer Capability

Power

Limit

Natural CharacteristicsNatural Characteristics

Coal Hydro Wind Location Load

Coal Hydro Wind Location Load

CoalCoal

HydroHydro

OaheOahe BigBendBigBend

FortRandall

FortRandall

Gavins PointGavins Point

Fort PeckFort Peck GarrisonGarrison

WindWind

50m (164ft)PowerClass

Wind Power(W/m2)

Speed*(m/s)

LocationLocation

LoadLoad

Load

Generation

Limit

LoadLoad

NDEX

WNE WKSWNE WKS COOPERSCOOPERS

FTCALSFTCALSGRIS LNCGRIS LNC

GGSGGS

NDEXNDEXMWSIMWSI

MHEXMHEX

Rules of Nature SummaryRules of Nature Summary

Complex Regional problem Need regional solution Technically feasible

Complex Regional problem Need regional solution Technically feasible

Rules of ManRules of Man

Regulatory Rules/Processes More Problematic In a state of flux Deregulation

Regulatory Rules/Processes More Problematic In a state of flux Deregulation

Regulatory Rules/ProcessRegulatory Rules/Process Federal Energy Regulatory Commission

Regulates jurisdictional utilities directly,others indirectly

Interstate transportation Leading restructuring initiatives

Federal Energy Regulatory Commission Regulates jurisdictional utilities directly,

others indirectly Interstate transportation Leading restructuring initiatives

FERC

States Transmission line permitting & siting Eminent Domain authority Rate Recovery

States Transmission line permitting & siting Eminent Domain authority Rate Recovery

PUC

FERCRestructuring Initiatives

FERCRestructuring Initiatives

Orders 888/889 – 1996 Order 2000 – 1999

Orders 888/889 – 1996 Order 2000 – 1999

Orders 888/889Orders 888/889

Open Access Pro-Forma Tariff Standards of Conduct Electronic reservation system (OASIS) Tariff Process (FIFO) Consider all requests sequentially Correctly assign costs

Open Access Pro-Forma Tariff Standards of Conduct Electronic reservation system (OASIS) Tariff Process (FIFO) Consider all requests sequentially Correctly assign costs

Cost ProvisionsCost Provisions

Rate =

Expansion uses “OR” Pricing Incremental Average

Rate =

Expansion uses “OR” Pricing Incremental Average

CostUsage

$100,000,000+ $100,000,000+

Confirm Service

Tariff ProcessTariff ProcessRequest

TransmissionRequest

Transmission

Impact StudyImpact Study

Facility Study

Decision PeriodDecision Period

RR

TTOO

Order 2000Order 2000

Regional Transmission Organizations Regional pricing to eliminate pancaking Coordinated operations for reliability

improvement Regional transmission planning

Regional Transmission Organizations Regional pricing to eliminate pancaking Coordinated operations for reliability

improvement Regional transmission planning

Same goals as the IS!

Rate IssuesRate Issues

RTO rate License Plate Postage Stamp

Bottom line = Who Pays?

RTO rate License Plate Postage Stamp

Bottom line = Who Pays?

No Cost/BenefitNo Cost/Benefit

BenefitsBenefits CostsCosts

Other Impedimentsto New TransmissionOther Impediments

to New Transmission

Opposition and litigation Siting across multiple jurisdictions Impacts vs. benefits? Who has responsibility to build? Uncertain cost recovery Risky – Who will invest?

Opposition and litigation Siting across multiple jurisdictions Impacts vs. benefits? Who has responsibility to build? Uncertain cost recovery Risky – Who will invest?

Rules of Man SummaryRules of Man Summary

Regulatory arena in a state flux Process in gridlock Much uncertainty Who pays?

Regulatory arena in a state flux Process in gridlock Much uncertainty Who pays?

SolutionSolution

Expand Bulk Transmission System System Wide Average Rate (HV only) Common Rate Zone (IS) Cost Effective/Efficient Least Cost Planning Allow Immediate Recovery for Investments Incentives Unnecessary

Expand Bulk Transmission System System Wide Average Rate (HV only) Common Rate Zone (IS) Cost Effective/Efficient Least Cost Planning Allow Immediate Recovery for Investments Incentives Unnecessary

SolutionSolution

This will promote: Economic Development Energy Independence Competition Reliability

This will promote: Economic Development Energy Independence Competition Reliability