1. THE POWER OF POSSIBILITY Electric Transmission System Development in Alberta Neil J. Brausen, P. Eng., Director System Planning APEGGA Calgary Branch Luncheon March 17, 2004

2. THE POWER OF POSSIBILITY Electric Transmission System Development in Alberta Industry Background and Structure AESO Core Business Functions Transmission Planning Process Transmission System Development Questions

3. THE POWER OF POSSIBILITY Industry Background and Structure

4. THE POWER OF POSSIBILITY Alberta’s Electric Industry single control area of 660,000 km² 20,000 km transmission; 450 substations B.C. & Sask. interconnections 8,570 MW system peak over 130 generating units 10,515 MW internal capacity net to grid over 200 market participants BC Alta Sask

5. THE POWER OF POSSIBILITY Existing Generating Units TransAlta/ATCO/EP  Market Retailer Marketer  Balancing Pool Distribution Wire Service Provider Retailer Transmission Facility Owners Alberta’s Electric Market New Generation (IPPs)

6. THE POWER OF POSSIBILITY Industry Model Post-Restructuring competitive forces competitive forces natural monopoly Generation Transmission Distribution Functional Separation Vertically Integrated Utility natural monopoly Retail

7. THE POWER OF POSSIBILITY AESO Core Business Functions

8. THE POWER OF POSSIBILITY Who Is the AESO? Statutory organization: integration of previous Power Pool and Transmission Administrator functions Not-for-profit Revenue generated from trading charge and transmission tariff Hold no assets Impartial - no affiliation with industry players Regulated by the Energy and Utilities Board Governed by board of directors appointed by the Minister of Energy

9. THE POWER OF POSSIBILITY Electric Utilities Act Minister of Energy Appoints Board members, MSA & EUB Chair Market Surveillance Administrator (MSA) Balancing Pool Wholesale Energy Market Transmission Alberta Electric System Operator Real-time Alberta Electric System Operator Alberta Energy & Utilities Board (EUB) Regulates AESO’s Transmission business Load Settlement Industry Structure (June 2003)

10. THE POWER OF POSSIBILITY Transmission Planning Process

11. THE POWER OF POSSIBILITY Transmission Planning - The Process Determine the inputs. Identify the anticipated problems. Develop the alternatives. Analyse the alternatives. Choose the preferred solution. Initiate the project(s).

12. THE POWER OF POSSIBILITY Transmission Planning - The Inputs Load - forecast, location, timing, peak vs. off-peak Generation - size, location, timing, merit order Existing system - capacity, equipment ratings, operating constraints Planning criteria - bulk system, subtransmission, load supply stations Externalities - siting and routing considerations, planning horizons for other stakeholders, other jurisdictions

13. THE POWER OF POSSIBILITY Transmission Planning - Project Initiation AESO determines need for system expansion or upgrade. AESO prepares Need Application and files with Energy and Utilities Board (EUB). EUB considers application and makes decision. Following receipt of EUB approval AESO “procures” project from a transmission facility owner (TFO). TFO prepares and files Facility Application with EUB. EUB considers application and makes decision. Following receipt of EUB approval TFO proceeds with construction of project.

14. THE POWER OF POSSIBILITY Transmission System Development

15. THE POWER OF POSSIBILITY AESO Transmission Strategy Objectives To define a transmission system development strategy that will enable the timely approval and construction of transmission facilities so as to: Provide adequate transmission facilities that will meet defined reliably and performance criteria and provide efficient service Facilitate the development of new generation in the system Facilitate the competitive wholesale electricity market so as to allow market forces to minimize the overall delivered wholesale cost of electricity to consumers Strategy Deliverable: The “Conceptual Plan”

16. THE POWER OF POSSIBILITY The Conceptual Plan Objectives: 20 year outlook for system development primary focus on 500 kV development Better understanding of the implications of alternative generation and export scenarios on the development of the transmission system Preliminary evaluation of the impact on the overall costs of generation and transmission costs of the alternative generation and export scenarios 3 generation scenarios - Ft. McMurray, Edmonton area, southern Alberta area 3 export scenarios - 0, 1000 and 2000 MW 2 load forecast scenarios - expected, high

17. THE POWER OF POSSIBILITY

18. North - South Upgrade 1.Convert the south Keephills to Genesee to Ellerslie circuit to 500 kV operation by 2006, estimated cost $32M 2.Build 1st north - south 500 kV cct from Genesee to Langdon by 2009; estimated cost $300 M 3.Acquire right-of-way for 2nd north - south 500 kV cct from Keephills to Langdon; estimated cost $11 M 4.Acquire right-of-way for +/- 500 kV HVDC line from Fort McMurray area to Calgary area; estimated cost $45 M 1 2 34 FM GN ELKH LD

19. THE POWER OF POSSIBILITY Southwest Alberta - Staged Development, Triggers and Cost Estimate

20. THE POWER OF POSSIBILITY Proposed Development - Southwest Alberta

21. THE POWER OF POSSIBILITY Other Transmission Constraints To northwest Alberta Into southeast Alberta, including tie to Sask. Local Edmonton and Calgary areas Other regional and local upgrades

22. THE POWER OF POSSIBILITY Questions?

23. THE POWER OF POSSIBILITY Contact Us… Current Prices and Market Statistics Historical Reports News, Announcements Market and Transmission Access www.aeso.ca