1. 1 Local Area Planning Update to TRANSAC – Sept 16, 2015 Mitigation Update, Uncertainty Scenarios, VAR Margin Study

2. Loss of Missoula #4 to Hamilton Heights 161 kV lines (N-2) –Ranked #4 in current planning cycle. –Convert portions of the 69 kV system from Missoula to Hamilton to 161 kV; Add a 161/69 kV Switchyard at Stevensville. –Stevensville substation site selection complete, construction 2015 - 2016 –Missoula 4 – Stevensville line conversion now scheduled for completion in 2019. –Stevensville – Hamilton Heights 69 kV conversion 15+ years out. Update: –The N-2 event that creates this problem has never occurred since second line was completed over 30 years ago. Though possible, likelihood is very remote. –A line conversion project is very expensive, and justifying the expense is very difficult when the event has never occurred. Capital funds could be put to better use mitigating other more likely system deficiencies. –Other NERC compliant mitigation is now under consideration (selective and controlled load shed); line conversion deferred for now, switchyard still go. 2 Mitigation Update for Highest Priority Problem #4

3. NWE considered uncertainty scenarios regarding high wind generation, loss of thermal plants, or loss of hydro facilities under unusual system conditions, but decided that study work done on these scenarios in the past study cycle were still valid. Also, more recent studies on loss of thermal facilities have been performed and reported at TRANSAC. NWE decided to focus effort on two new scenarios not recently studied, and timely: –Fires in forested/beetle kill areas resulting in loss of multiple facilities in a common corridor. –Accelerated localized growth in Bozeman and Billings areas. 3 Uncertainty Scenarios Update

4. 2015 – One of the worst forest fire seasons on record. –Fortunately, few NWE facilities were affected: –Multiple structures in a 100 kV line north of Three Forks area were lost due to fire…approximately 5 miles of line. –Structures in several 100 kV lines in the Taft area were lost due to fire. –Structures in a 161 kV line north of Missoula were lost due to fire. –All customers remain in service while lines are being rebuilt. NWE considered concurrent outages in forested areas with and without significant beetle kill, and also grassland areas, all with significant transmission line facilities. Sequential loss of all facilities in these areas was considered under heavy summer (fire) conditions. 4 Uncertainty Scenarios Update: Fire Related Outages

5. Five areas around the system were studied: –A common corridor near Garrison Switchyard. Forested areas include two 500 kV lines, four 230 kV lines, and one 161 kV line (another 161 kV line to the east is outside the forested area). Some are BPA facilities. –A common corridor north of the Anaconda Mill Creek area. Forested areas include two 230 kV lines and two 161 kV lines. Some are BPA facilities. –A common corridor are south of the city of Broadview. Many transmission lines pass through this grassland area, including one 500 kV line, one 230 kV line, and four 100 kV lines in close proximity. Other 500 kV lines further south, not in close proximity, were excluded from this study. –A common corridor east of Thompson Falls. One 500 kV line and two 230 kV lines owned by others, and two 115 kV lines pass through this forested corridor. –A common corridor north of Missoula near Evaro. One 230 kV line (BPA) and two 161 kV lines pass through this forested area. 5 Uncertainty Scenarios Update: Fire Related Outages

6. Garrison Area Results –Low voltage conditions could be widespread and loss of load due to under voltage is possible in the course of this event, but with operator intervention as lines are lost in sequence, and advance planning/preparation, adverse voltage conditions can be avoided. –Automatic protection schemes should curtail Colstrip area generation for loss of 500 kV facilities. Transfers to the west would be significantly curtailed. –Local generation (Mill Creek, Butte) may be needed to help support area voltages. –All available shunt capacitors in area (Mill Creek, Dillon) may be needed for voltage support. –South bound power transfers to Idaho will need to be curtailed to minimums at Mill Creek. Anaconda Mill Creek Area Results –Same as for Garrison area, except curtailment of Colstrip generation would not be required with the 500 kV system intact. 6 Uncertainty Scenarios Update: Fire Related Outages

7. Broadview Area Results –Low voltage in Roundup area systems may occur under heavy load conditions, in particular on the area 50 and 69 kV systems normally supported by the 100 kV system in this area. –Curtailment of load in the area would likely be required until facilities are restored to service. Thompson Falls Area Results –No problems are encountered for generation or loads served from the NWE 115 kV system. –Loss of 230 and 500 kV transmission lines owned by others could result in altered scheduling or curtailment of hydro generation owned by others. Missoula Evaro Area Results –No new system problems encountered. Loss of one 161 kV line could cause minor overload on transformers on second 161 kV line under heavy load conditions, mitigated with small generation curtailment. Mitigation is scheduled for small overload on area BPA line. 7 Uncertainty Scenarios Update: Fire Related Outages

8. Fire Scenario Summary –None of these extreme events caused cascading outages. –Some events could result in low voltages or small transformer overloads, but with proper preparation and response nearly all problems can be mitigated. –Worst case scenarios may require some curtailment of load or generation in an area. 8 Uncertainty Scenarios Update: Fire Related Outages

9. NWE has noted accelerated growth in the Billings and Bozeman areas. –New connects and load additions have returned to pre-recession levels in these areas, and load is growing more rapidly than other areas in the system. –Loss of the Corette generation facility in the Billings area could limit our ability to serve new load as well. Using 2019 Heavy Summer and Heavy Winter cases: –Load was grown to forecasted 2029 levels in the Bozeman and Billings metropolitan areas, accelerating anticipated growth by approximately 10 years. –System Normal and Contingency case power flows were performed to determine sensitivity to accelerated growth in these areas. 9 Uncertainty Scenarios Update: Accelerated Local Growth

10. Results: –As expected, heavy summer conditions governed the Billings area studies, while heavy winter conditions governed the Bozeman area studies. –Under system normal conditions, no voltage or thermal problems were observed, no new problems, good news. –Under outage conditions, very little change in voltages was noted comparing the accelerated growth cases to the normal cases. A few new minor voltage problems in outlying areas were observed in the accelerated growth cases. –Under outage conditions, no new thermal problems were observed, but some known problems became worse, all involving transformer overloads. 10 Uncertainty Scenarios Update: Accelerated Local Growth

11. Results continued: –230 kV line faults in the Billings area illustrate an increase in overloads on Steamplant and Rimrock auto transformers by 10 – 15%. All such overloads remain below the emergency/trip ratings of the transformers. –161 and 50 kV line faults in the Bozeman area illustrate an increase in overloads on the Trident Auto transformer, up to 120% thermal under heavy winter conditions. In all cases for line faults, loading is less than the emergency/trip rating (and up to 125% is permitted in winter conditions). –Loss of a 230/100 kV autotransformer at Steamplant could increase an overload on the remaining transformer by approximately 15% (but less than emergency/trip levels) and overload the autotransformers at Rimrock beyond their emergency ratings under heavy summer conditions, up to 128%. Though less likely, this contingency requires further consideration for accelerated mitigation. 11 Uncertainty Scenarios Update: Accelerated Local Growth

12. Results continued: –Bus faults at Clyde Park or East Gallatin could load Trident Auto to over 160% of its thermal rating under heavy winter conditions with accelerated growth. Because this transformer has a very small thermal rating (16 MVA), small changes in system load can result in large % loading changes in this autobank. Though less likely, this contingency requires further consideration for accelerated mitigation. Mitigation is planned with the addition of Belgrade West 161/50 kV substation and the rebuild of the East Gallatin 161 kV bus, and Trident Auto would be removed. Uncertainty analysis is “Informational” and not the primary driver for mitigation. –Results of this analysis may influence timing of planned mitigation however. 12 Uncertainty Scenarios Update: Accelerated Local Growth

13. VAR Margin Study –NWE is working with a consultant, to get a fresh opinion on this important study. –Unfortunately study results are not yet available, but will be included in “the book” when complete. VAR Margin Assessment 13

14. Public Meetings have been scheduled as follows: –Billings: Thursday October 8 th at 7 PM at the NWE Billings Service Center –Missoula: Wednesday October 14 th at 7 PM at the NWE Missoula Service Center –All are welcome to attend Public Meetings 14

15. Quarter 8 Complete VAR Margin Assessment Send out Draft of “The Book” for stakeholder review Conduct Public Meetings – Billings and Missoula Finalize “The Book” and close out the 2014/2015 Local Area Planning Cycle Next Steps 15

16. Questions? 16

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