Southwest Renewable Energy Transmission Conference May 21, 2010 Jeff Mechenbier Director Transmission & Distribution Planning and Contracts

Barriers to Development of Interstate Transmission For Renewable Generation  Few PPAs are being inked, projects are very slow to move forward with signed agreements  No Clear Federal Policy on RES, Cost Allocation, Siting  State regulators limit cost recovery to transmission that benefits state jurisdictional utility customers  Inconsistent State RPS policies –West wide REC Trading cumbersome  In-State preferences for renewable energy development  Lead time for transmission is much longer than generation development  Poor economics due to low capacity factor of renewable resources and high incremental cost of new transmission  Existing FERC Pro forma generation interconnection procedures are inefficient  Sequential processing results in suboptimal expansion plan for transmission system  Developer decisions “in process” at each offramp impact projects behind them in the queue. Restudies paralyze the process.  Interconnection does not result in deliverability. The process for interconnection is a different business line from the delivery business. FERC regulations do not allow utilities to combine them.  Non-viable projects clogging queue

How Best to Collaborate?  State and Federal agencies need to establish clearly defined transmission corridors to minimize ROW and permitting hurdles for renewable energy zones.  Collaboration needs to begin at the federal/state level to address conflicting goals of governments. Federal and state policies are not aiming at the same targets.  States need to establish standard renewable products to allow for trading of RECs.  Pricing Policy needs to allow for rational grid expansion to ensure costs are equitably shared.  Transmission is a regional issue - All stakeholders in the region need to cooperate in solution (Continue regional transmission provider sponsored transmission group collaboration).

Transmission Lines Not To Scale Major Conceptual Transmission In and Around New Mexico SunZia (500 kV) HVDC Tres Amigas