1. Southwest Power Pool, Inc.
July 21, 2011
Cost Estimates
Katherine Prewitt
Director, Planning
Authorization to Plan (ATP)
For more information please contact Katherine Prewitt - Director, Planning ,
2011 ITP10 Inputs, Assumptions & Analyses

2. RSC Motions (Oct 2010)
MOTION 1: RSC recommends that SPP review what is the best manner to address significant cost increases and/or overruns of transmission projects that are regionally funded.
MOTION 2: RSC recommends that SPP review the Novation Process and report to the RSC by April 2011.
MOTION 3: RSC recommends that SPP consider establishing design and construction standards for transmission projects at 200 kV and above that are regionally funded.
MOTION 4: SPP evaluate how cost estimates are established for transmission projects before Cost Benefit Analysis are performed.
MOTION 5: CAWG to study various methods on how costs that exceed some standard can be addressed with different cost allocation mechanisms and recommend strategies to RSC. 2

3. Cost Estimation Improvements
Standardized Cost Estimate Reporting Template (SCERT)
All cost estimates
Quarterly reporting
Conditional Notification to Construct (CNTC)
> $20 Million
> 100 kV
Establish Project Estimate baseline
CNTC Project Estimate (CPE)
NTC Project Estimate (NPE) 3

4. Cost Estimation Improvements
Southwest Power Pool, Inc.
July 21, 2011
Cost Estimation Improvements
Project Cost Working Group
Deviates or is expected to deviate +/- 10% from established baseline cost
Report monthly
Deviates or is expected to deviate +/-20% from established baseline cost
Provide detailed cost variances via updated SCERT with explanations regarding the variances 4
2011 ITP10 Inputs, Assumptions & Analyses

5. Project Cost Working Group (PCWG)
Oversee a quarterly report
Study Estimate Design Guide (SEDG)
Review estimation variances
Regionally funded project >300 kV and >$20 million
Explanation for the cost estimate variances as well as
Reasons why the project should or should not move forward
Develop business practices 5

6. Stages of Cost Estimation
Conceptual Estimate (Staff)
prepared by SPP from historical data
used for screening purposes only
Study Estimate (DTO)
submitted by DTO if project passes Conceptual screening and requires more refined estimate
NTC Project Estimate (NPE)/CNTC Project Estimate (CPE) (DTO)
submitted by DTO in response to CNTC/NTC issuance
established as baseline for project cost variance
Design/Construction Estimate (DTO)
submitted by DTO in quarterly tracking process for cost estimates as engineering and construction for project is underway/completed

7. Cost Estimate Stage Definition
Estimate Name
Stage
Level of Project Scope Definition
End Usage
Precision Bandwidth
Projects > 100 kV & > $20 Million
All other BOD Approved Projects
Conceptual 1
0% to 10%
Concept screening for ITP20/ITP10
-50% to + 100%
Study 2
10% to 20%
Study of feasibility and plan development for ITP10/ITPNT
-30% to +30%
CNTC Issued
NTC Issued
CNTC Project (CPE) 3
N/A
20% to 40%
Final baseline (CNTC)
-20% to +20%
NTC Project (NPE)
Final baseline (NTC)
Design & Construction 4
40% to 100%
Design after NTC issued and build the project

8. Conditional Notification To Construct (CNTC)
Projects within the financial commitment window
Study Estimate > than $20 Million and > 100 kV
Additional time and cost recovery for DTO to refine estimate
SPP re-evaluates project if CNTC Project Estimate (CPE) outside accepted bandwidth
NTC issued
Cost variance is acceptable
BOD approves the refined cost analysis

9. Conditional NTC (CNTC)Project Estimate Variance
CPE bandwidth exceeds Study Estimate bandwidth
Re-evaluate project
Make a recommendation to the BOD
Possible SPP staff recommendations:
Accept the cost variance and approve as is
Modify the project
Replace the project with new solution
Cancel the project 9

10. CPE Evaluation Illustrations
Study Estimate: $100 Million + 30 % - $
100 M
130 70
$84 M
$105 M
$126 M
CNTC Project Estimate:
$105 Million
Action:
SPP Issues NTC to DTO
If the +/-20% precision bandwidth of the project’s CPE is within the accepted range, an NTC will automatically be issued

11. CPE Evaluation Illustrations
Southwest Power Pool, Inc.
July 21, 2011
CPE Evaluation Illustrations
Study Estimate: $100 Million + 30 % - $
100 M
130 70
$96 M
$120 M
$144 M
CNTC Project Estimate:
$120 Million
Action:
SPP Re-evaluation and BOD Review
If the +/-20% precision bandwidth of the project’s CPE is outside the accepted range, SPP Staff will re-evaluate the project and submit updated analysis to BOD for review
2011 ITP10 Inputs, Assumptions & Analyses

12. Study Estimate Design Guide12

13. Study Estimate Design Guide
Study Estimate Design Guide (SEDG)
Establish Study Estimate Design Guide to be used by the SPP’s Transmission Owners (TOs) in developing Study Estimates for SPP footprint projects rated at voltages at 100 kV and greater.
These SEDGs are intended to ensure consistency in TO Study Estimates. 13

14. Transmission Lines
Minimum Conductor Sizing for normal ratings is specified, e.g., 1,200 Amps for 230 kV and 3,000 Amps for 345 kV
Reconductoring should consider advanced conductors if possible
Reactive Compensation costs should be included in project costs estimates 14

15. Reactive Compensation
Voltage (kV)
Reactive Compensation
(MVAR / mi)
0.1
230
0.3
345 1
500 2
765
4.5

16. Substations Substations should be designed with :
Accommodations for future expansion
Suggested bus configurations by voltage class and number of terminals
Minimum terminal equipment ratings
Minimum bus ratings 16

17. Southwest Power Pool, Inc.
July 21, 2011
Protection/Controls
Protection and control designs should include:
Redundancy
PMUs or Intelligent Electronic Devices (EIDs) for 230 kV and above
SCADA and RTUs 17
2011 ITP10 Inputs, Assumptions & Analyses

18. Southwest Power Pool, Inc.
July 21, 2011
SCERT Questions
Is there an instruction manual?
Should there be a confidentiality statement on the estimate or documents?
How should the forms be submitted? PDF or hard copy?
Do ROW/Land Rights cost need to be broken down in more detail than one-line?
Is there an instruction manual?
Currently there is not one available, but one will be developed for use with the online tool.
Should there be a confidentiality statement on the estimate or documents?
If a member indicates that it is private, SPP will protect it. PCWG will develop confidentiality guidelines within Business Practice.
How should the forms be submitted? PDF or hard copy?
Forms should be submitted in Excel spreadsheet and . A suggestion mentioned both PDF and Excel to prohibit unauthorized authorizations.
Do ROW/Land Rights cost need to be broken down in more detail than one-line?
PCTF decided not to break out details because of desire for high level estimates.
2011 ITP10 Inputs, Assumptions & Analyses

19. Southwest Power Pool, Inc.
July 21, 2011
SCERT Questions
Will NTC be issued on a program or project basis?
Under Line Assumptions – Structure, are Tangents and Dead Ends the number of assumed structures and Underbuild?
For Station Assumptions – Breaker Scheme, are you looking for information on substation arrangement?
How should or who should questions be submitted?
Will NTC be issued on a program or project basis?
NTC’s will be continued to be issued on a ‘project’ basis (including all upgrades associated with the project). There will be a different SCERT for each ‘upgrade’ (Upgrade ID). Variances will be measured at the ‘project’ (Project ID) level.
Under Line Assumptions – Structure, are Tangents and Dead Ends the number of assumed structures and Underbuild?
Yes.
For Station Assumptions – Breaker Scheme, are you looking for information on substation arrangement?
Yes. The configuration field should indicate the arrangement (e.g. ring bus, breaker-and-a-half).
How should or who should questions be submitted?
Contact Cary Frizzell or use the Project Tracking Exploder
2011 ITP10 Inputs, Assumptions & Analyses

20. SCERT Question – Nominal vs Current $
Costs should be in current dollars
Unless a project is considered ‘multi-year’
1st year cost should be in current dollars regardless of start date
Estimated as if they started today
All multi years projects calculated with escalation rate chosen by DTO

21. SCERT Question – Nominal vs Current $
Example: Year 1: $100,000 Year 2: $200,000 Year 3: $100,000 Total $400,000 Using a escalation rate of 2%/yr Year 1: $100,000 = $100,000 Year 2: 2% = $204,000 Year 3: 2% = $104,040 Total: = $408,040

22. Southwest Power Pool, Inc.
July 21, 2011
SCERT Form
SPP provided
SPP Project Name
Project ID
Upgrade ID
RTO Determined Need Date
Estimate Request Date added (New)
DTO provided
Estimate Provider
Point of Contact
2011 ITP10 Inputs, Assumptions & Analyses