The Fort McMurray West 500 kV Transmission Project An AESO Competitive Process Project

Transmission Requirements in the Fort McMurray Area

Alberta’s industrial base is a major driver of the Alberta economy and currently consumes about 63 percent of the power generated in our province. In the Fort McMurray area, oilsands development is driving up the demand for power and putting a strain on the existing transmission system.

Spring 2013

The Fort McMurray West 500 kV Transmission Project will allow more power to flow into and out of the area by increasing transmission capacity (the amount of power that the grid can carry).

As a part of the AESO’s responsibility for planning the transmission system in Alberta, it monitors increases in the amount of power consumed (also known as “load”) and also monitors plans for building new generation facilities (also known as “generation”) to supply that load. In the Fort McMurray area, both load and generation are growing and so new transmission is needed to accommodate this growth.

How do we know tHat load and generation are growing in tHe Fort McMurray area?

n We continuously monitor changes in the economy, industrial projects and customer connection requests as part of our forecasting process to plan improvements to the transmission system.

n We’ve monitored various industry announce ments and consulted directly with oilsands developers about their plans.

n We’ve received requests from both load and generation customers to connect to the grid.

n We’ve gathered information from distribution facility owners (the companies that build, operate and maintain the distribution parts of the electric system).

n We’ve studied the transmission system in this area (e.g., modeling power flows under different conditions).

Our work shows that the current capacity of the transmission system to handle load and generation in the Fort McMurray area is at its limits. Over the last 10 years peak load (the highest demand for power) in the Fort McMurray area has more than doubled, growing from 855 MW in 2003 to 1,735 MW this year (2013). This means that the amount of power consumed in the Fort McMurray area is now about the same as the amount of power used in either Calgary or Edmonton.

According to the latest AESO forecast, load in the Fort McMurray area is expected to more than double again over the next ten years, rising from 1,735 MW in 2013 to 3,905 MW in 2022. Between 2022 and 2032, load in the Fort McMurray area is anticipated to grow another 765 MW to reach 4,670 MW.

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Approximate area where potential transmission system developments may occur.

The map indicates the approximate start, middle and end points (Thickwood, Livock, and Sunnybrook, respectively) for the Fort McMurray West 500 kV Transmission Project. The successful bidder will propose specific substation sites and transmission line routes in their Facilities Application to the AUC.

16

2

16

1818

33

32

663

63

2

69

Thickwood Hills (951S)

Livock (939S)

Sunnybrook (510S)

Fort Saskatchewan

Edmonton

Leduc

St. Albert

FortMcMurray

Approximate ProjectConnection Points

Historically, new transmission projects are applied for and built by the Transmission Facility Owner (TFO) that operates in the area where the project is needed. However, the AESO has recently developed a procurement process (the Competitive Process) which will be used to select a successful bidder to develop, design, build, finance, own, operate and maintain the Fort McMurray West 500 kV Transmission Project. The Competitive Process was developed to:

n Minimize life-cycle costs through the use of competitive pricing;

n Create opportunity for maximum innovation throughout the life cycle of the facilities;

n Allocate risk to most efficiently and effectively mitigate risk and reduce costs;

n Foster efficient investment, operation and maintenance of assets across the life cycle of the facilities;

n Ensure facilities are designed to meet standards for performance, and to ensure the reliable operation of the Alberta interconnected electric system; and

n Facilitate timely completion of the project.

The AESO was mandated by the Alberta government to develop the Competitive Process and to then have it approved by

Introducing CompetitionA new approach to meeting the need for transmission

the provincial electricity regulator, the Alberta Utilities Commission (AUC), prior to implementing the process. The AESO received the AUC’s approval for the Competitive Process on February 14, 2013. As such, the Fort McMurray West 500 kV Transmission Project will be the first project to which the AESO’s Competitive Process will be applied.

The Competitive Process is comprised of three stages:

n A Request for Expressions of Interest (REOI) where parties have an opportunity to indicate their interest in participating in the Competitive Process. The purpose of this stage is to create awareness of the project and to assist the AESO in gauging the level of interest in the project.

n A Request for Qualifications (RFQ) where interested parties submit their qualifications to deliver the project. The purpose of this stage is to identify a short-list of up to five respondents to move forward as proponents into the Request for Proposals (RFP) stage of the Competitive Process.

n An RFP where short-listed proponents develop and submit a proposal to undertake the project. The purpose of this stage is to identify the qualified proponent who can deliver the project at the lowest cost.

About the Alberta Electric System OperatorThe AESO is responsible for the safe,

reliable and economic planning and

operation of the electric system in

Alberta. We are an independent,

not-for-profit organization acting in

the public interest of all Albertans,

with no financial interest or

investment of any kind in the

power industry.

The AESO operates the provincial

transmission system so that all

Albertans can count on safe and

reliable electricity to power our

homes, businesses, industry

and farms. The AESO also carefully

plans upgrades to the system to

ensure infrastructure keeps pace

with Alberta’s growing demand

for power.

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tHe Fort McMurray west 500 kV transMission Project

The AESO has studied a number of potential solutions to meet the need in the Fort McMurray area. We have determined that the capacity issues in the area are most effectively addressed by adding more transmission. The Fort McMurray West 500 kV Transmission Project includes:

n A 500 kV AC single circuit transmission line, approximately 100 km in length, running from a new substation in the Thickwood Hills area 25 km west of Fort McMurray, to the existing Livock 939S substation (in the Wabasca area); and

n A 500 kV AC single circuit transmission line, approximately 400 km in length, running from the existing Livock 939S substation to the approved Sunnybrook 510S substation (in the Wabamun area).

Both the RFQ submissions and RFP submissions will be evaluated by three independent selection panels with expertise in finance, technical requirements, environmental issues and stakeholder consultation. The selection panels will provide their recommendations to the AESO Board. The AESO Board will approve the list of short-listed proponents and the successful bidder.

obligations oF tHe successFul bidder

The successful bidder will be required to develop, design, build, finance, own operate and maintain the project in accordance with the terms of agreements executed between itself and the AESO. These agreements require the successful bidder to meet Alberta’s regulatory standards pertaining to electricity transmission facilities. The successful bidder will become the owner of a transmission facility as defined in the Electric Utilities Act (Alberta). As a TFO the successful bidder will be required to apply to the AUC to have the detailed routing for the project approved. (This is called a facilities application.) The successful bidder must demonstrate through the Facilities Application process that it consulted with stakeholders adequately to determine the most appropriate route for the project. This requirement is no different than the requirement faced by existing TFOs today.

stakeHolder engageMent

We believe all stakeholders should be informed about the AESO’s plans and decisions in a timely manner. As this project moves forward, the AESO will update stakeholders regularly. Additionally, as part of their RFQ submissions, respondents must include their plans for consulting with stakeholders. The AESO will then coordinate opportunities for stakeholders to engage with proponents during the RFP stage.

anticiPated tiMelines

The REOI is the first stage of the Competitive Process. It is expected to run approximately six weeks. During this stage the AESO will solicit interest from prospective bidders to determine which organizations plan to participate in

Alberta government mandates AESO to develop Competitive Process

October 2010

AESO stakeholder consultation on Competitive Process

October 2010 – September 2011

AESO files Competitive Process application with AUC

September 2011

AUC approves AESO’s Competitive Process application

February 2013

Future dates (anticipated)

REOI Stage May 2013

RFQ Stage July – December 2013

RFP Stage December 2013 – December 2014

subsequent Competitive Process stages; namely the RFQ stage and RFP stage.

Below is the anticipated schedule for the Competitive Process. The AESO will provide regular schedule updates throughout the process.

Power lingoThe electricity industry has a language all its own.

transMission systeM

The transmission system comprises the high-voltage lines, towers and equipment (generally 69 kV and above) that transmit electricity from generators to lower voltage systems that distribute electricity to cities, towns, rural areas and large industrial customers.

substation

Substations are the connection point between high-voltage transmission lines and the lower voltage power lines that connect directly to homes and businesses.

alberta interconnected electric systeM (aies)

The system of interconnected transmission power lines and generators managed by the AESO, that ensures the supply of electricity matches the demand for power every second.

reliability

Electric system reliability is the ability of a system to respond to the changing demand for power from consumers. It also describes a system’s ability to withstand sudden disturbances, like bad weather or unanticipated equipment failure.

REV 0513

Further InformationTo learn more about the AESO’s Competitive Process and the Fort McMurray West 500 kV Transmission Project, please visit:

www.aeso.ca/cp

If you have any questions or concerns regarding the Competitive Process or the Fort McMurray West 500 kV Transmission Project, please contact us:

BY EMAIL: stakeholder.relations@aeso.ca BY PHONE: 1-888-866-2959IN WRITING: 2500, 330 – 5th Avenue SWCalgary, Alberta T2P 0L4

Alberta’s quality of life and economic well-being, especially the maintenance and creation of jobs, depends on an adequate and reliable supply of electricity to all Albertans, now and well into the future. To learn more, please visit:

www.poweringalberta.ca

kilowatt (kw) and kilowatt Hour (kwH)

Power is measured in watts. One kilowatt equals 1,000 watts. Imagine 10 lamps lit with 100 watt bulbs for one hour. At the end of the hour, you will have used one kilowatt hour of electricity. Electricity retailers typically bill households in kilowatt hours.

congestion and constraint

A congested transmission system is one that cannot serve the needs of customers even when running at full capacity because the path between generators and consumers is constrained. Constraints restrict the fl ow of electricity.