1. Rocky Mountain Area Transmission Study RMATS Economics Economic Comparisons Preliminary: Distribution of Gains and Losses RMATS Steering Committee July 15, 2004

2. 2 RMATS Recommendations Modeling since Steering Committee call  Refined the resource assumptions used in project- specific economics Removed wind resources associated with MT Upgrades and WY/CO Expansion projects when valuing stand-alone projects  Modified interface capacities for Bridger West, West of Naughton, Path C and TOT 4A  Preliminary analysis: Distribution of economic gains and losses  Preliminary analysis: Implications for state tax revenues

3. 3 RMATS Recommendations Comparative Economics

4. 4 RMATS Recommendations Comparative Economics

5. 5 RMATS Recommendations Distribution of gains and losses  A first look at spatial distribution of net savings/costs  Key driver: LMPs. Also loads, generation, and fuel/other VOM  As modeled in ABB MS for 2013 test year  Results: geographic, by load and generator category  Substantially greater net benefits for Rocky Mountain states

6. 6 RMATS Recommendations Background info... Locational Marginal Prices (LMP)  LMP: Represents the cost or savings from supplying the next MW at a given node (bus) on the grid  If there were no transmission losses or constraints (perfect liquidity), all LMP’s would be equal and they would be the same as the cost of the unit on margin  In the case of a low cost generator with no available transmission (bottled up), the LMP would be that generator’s marginal cost  LMPs are transitory, arguably insufficient for predicting where benefits will fall Driven by congestion, loads, generation, gas and other fuel prices

7. 7 RMATS Recommendations Why are Load Savings and Generator Gross Margin so different?  In concept, if there were no losses or congestion (perfect transmission liquidity), then LMPs at any given hour would be the same across the Western Interconnect  Load costs and generator revenues would be the same for the system as a whole, but different by area because load and generation quantities would be different Load costs: the sum of hourly loads X hourly LMP Generator revenues: the sum of hourly generation X hourly LMP Generator gross margin: generator revenues less annual fuel & other VOM  Congestion leads to changes in the type and location of plants that are dispatched Changes generation (MWh) Changes fuel costs  This in turn affects LMPs - the price paid by load and the price received by generators Generation (MW) Load (MW) t q LMP t p For a given area, excludes import/exports: No Constraints Assumes that load is not sensitive to price (LMP), no price elasticity Generation (MW) Load (MW) t q LMP t p For a given area, excludes import/exports: With Constraints

8. 8 RMATS Recommendations Distribution of Economic Gains & Losses Recommendation 1 Reflects the changes in load cost and generator gross margin between the Reference Case and Recommendation 1. This distribution assumes that pricing is on an hourly, LMP basis. Reflects fuel and other VOM modeling, and does not include capital & fixed O&M costs Load Cost is hourly demand (MWh) at each load node x hourly LMP ($), summed for 2013 Generator Gross Margin is hourly generation (MWh) at generation node x hourly LMP, summed for 2013 (generator revenue), less annual fuel & other VOM costs NOTE: Idaho & Montana state totals do no include areas covered in the Northwest Power Pool

9. 9 RMATS Recommendations Distribution of Economic Gains & Losses Recommendation 2 Reflects the changes in load cost and generator gross margin between the Reference Case and Recommendation 2. This distribution assumes that pricing is on an hourly, LMP basis. Reflects fuel and other VOM modeling, and does not include capital & fixed O&M costs Load Cost is hourly demand (MWh) at each load node x hourly LMP ($), summed for 2013 Generator Gross Margin is hourly generation (MWh) at generation node x hourly LMP, summed for 2013, less annual fuel and other VOM costs NOTE: Idaho & Montana state totals do no include areas covered in the Northwest Power Pool

10. 10 RMATS Recommendations Distribution of Economic Gains & Losses State summary NOTE: Idaho & Montana state totals do no include areas covered in the Northwest Power Pool

11. 11 RMATS Recommendations Distribution of Economic Gains & Losses Recommendation 1 & 2

12. Rocky Mountain Area Transmission Study Appendix

13. 13 RMATS Recommendations Production Cost (VOM) Comparison avg

14. 14 RMATS Recommendations Antelope Mine Dave Johnston LRS Cheyenne Tap Ault Green Valley Miners Jim Bridger Naughton Ben Lomond Midpoint Recommendation 1 Transmission Projects Broadview Colstrip Added Series Compensation Only Taft Montana Upgrades Bridger Expansion New WY- CO lines Treasureton Garrison Townsend Borah West Path C West of Naughton West of Bridger Black Hills to C. Wyoming C Wyoming to LRS TOT 3 TOT 7 TOT 4A West of Colstrip West of Broadview Montana to NW 500 Wind 210 Gas500 Coal 500 Wind 1150 Wind 700 Coal 359 Coal 50 Wind 250 Coal 280 Wind 125 Wind 575 Coal 100 Wind 575 Coal 140 Gas 250 Wind Added 345 kV Line Modified Interface Added Resource Bridger E

15. 15 RMATS Recommendations Antelope Mine Dave Johnston LRS Cheyenne Tap Ault Green Valley Miners Jim Bridger Naughton Ben Lomond Midpoint Recommendation 1 Transmission Projects Montana Upgrades (less gray) Broadview Colstrip Added Series Compensation Only Taft Montana Upgrades Bridger Expansion New WY- CO lines Treasureton Existing Ben Lomond to Borah 345kV is now looped in at Treasureton Amps phase shifter, Flaming Gorge transformer, Midpoint to Boise 230kV are included in all runs Garrison Townsend Borah West Path C West of Naughton West of Bridger Black Hills to C. Wyoming C Wyoming to LRS TOT 3 TOT 7 TOT 4A West of Colstrip West of Broadview Montana to NW 500 Wind 210 Gas500 Coal 500 Wind 1150 Wind 700 Coal 359 Coal 50 Wind 250 Coal 280 Wind 125 Wind 575 Coal 100 Wind 575 Coal 140 Gas 250 Wind Added 345 kV Line Modified Interface Added Resource

16. 16 RMATS Recommendations Antelope Mine Dave Johnston LRS Cheyenne Tap Ault Green Valley Miners Jim Bridger Naughton Ben Lomond Midpoint Broadview Colstrip Added Series Compensation Only Taft Montana Upgrades Bridger Expansion New WY- CO lines Treasureton Existing Ben Lomond to Borah 345kV is now looped in at Treasureton Amps phase shifter, Flaming Gorge transformer, Midpoint to Boise 230kV are included in all runs Garrison Townsend Borah West Path C West of Naughton West of Bridger Black Hills to C. Wyoming C Wyoming to LRS TOT 3 TOT 7 TOT 4A West of Colstrip West of Broadview Montana to NW 500 Wind 210 Gas500 Coal 500 Wind 1150 Wind 700 Coal 359 Coal 50 Wind 250 Coal 280 Wind 125 Wind 575 Coal 100 Wind 575 Coal 140 Gas 250 Wind Added 345 kV Line Modified Interface Added Resource Recommendation 1 Transmission Projects Bridger Expansion (less gray)

17. 17 RMATS Recommendations Antelope Mine Dave Johnston LRS Cheyenne Tap Ault Green Valley Miners Jim Bridger Naughton Ben Lomond Midpoint Broadview Colstrip Added Series Compensation Only Taft Montana Upgrades Bridger Expansion New WY- CO lines Treasureton Existing Ben Lomond to Borah 345kV is now looped in at Treasureton Amps phase shifter, Flaming Gorge transformer, Midpoint to Boise 230kV are included in all runs Garrison Townsend Borah West Path C West of Naughton West of Bridger Black Hills to C. Wyoming C Wyoming to LRS TOT 3 TOT 7 TOT 4A West of Colstrip West of Broadview Montana to NW 500 Wind 210 Gas500 Coal 500 Wind 1150 Wind 700 Coal 359 Coal 50 Wind 250 Coal 280 Wind 125 Wind 575 Coal 100 Wind 575 Coal 140 Gas 250 Wind Added 345 kV Line Modified Interface Added Resource Recommendation 1 Transmission Projects WY-CO Expansion (less gray)

18. 18 RMATS Recommendations Area Production Costs (VOM) Recommendation 1

19. 19 RMATS Recommendations Interface Performance Recommendation 1

20. 20 RMATS Recommendations Capacity Factors Recommendation 1