1. “DRAFT” RMATS 2008 Base Case (To be presented at the RMATS Stakeholders Meeting) March 17, 2004

2. RMATS 2 RMATS 2008 Base Case- March 17, 2004 Overview  Modeling Approach  Purpose & Scope – Base Case  Key Assumptions  Base Case Results

3. RMATS 3 RMATS 2008 Base Case- March 17, 2004 Modeling Approach  Modeled with ABB Market Simulator Production cost model West-wide scope with a particular focus on the RMATS region Detailed transmission representation Calculates nodal / bus prices (LMPs) Hourly resolution  LP dispatch optimization is based on:  Treatment of hydro and wind generation  Single test year – 2008

4. RMATS 4 RMATS 2008 Base Case- March 17, 2004 LMPs: Marginal Costs at the Nodal Bus Level  The cost of delivering the next 1 MW of power to a particular location, or the savings from reducing load by 1 MW at that location (sometimes called shadow price)  In concept, transmission congestion (bottlenecks) an losses cause differences in marginal prices at the nodal/bus level  LMPs are calculated separately for loads and generation  LMPs tend to decrease as relatively low cost resources are added High wind capacity sensitivity is an example  Targeted transmission investments levelize/stabilize marginal prices because congestion is relieved but the investment cost may outweigh the benefit

5. RMATS 5 RMATS 2008 Base Case- March 17, 2004 Modeling Limitations  Modeling assumes a single, seamless west-wide market with no rate or loss pancaking  LP optimizes dispatch on a west-wide basis (perfect knowledge)  Not modeled: Must-run generation Unit commitment Transmission wheeling and loss charges Generator forced outages Contractual / tariff constraints Bid behavior Sub-hourly operations Actual heat rate curves- approximate only

6. RMATS 6 RMATS 2008 Base Case- March 17, 2004 Implications of Modeling Approach  Tends to make fuller, more optimal use of transmission than operations currently allow Analogous to a seamless, single RTO world  Tends to mask the tariff and contractual constraints of today  Makes wind appear more economic because fewer constraints lead to greater dispatch  Fifteen percent planning margin used may be conservative Margin is calculated off nameplate Covers generator forced outages and operating reserves that ABB MS does not model

7. RMATS 7 RMATS 2008 Base Case- March 17, 2004 Base Case Objectives  Focus on congestion and congestion costs  Assess the current system Include existing system, plus new, viable investment already in progress Identify incidence and duration of congestion Estimate the resulting congestion costs Include several load, gas price, and hydro sensitivities Review plant performance  Illuminate opportunities for cost-effective projects Estimate the incremental value of expansion on congested paths 2008 Load 2008 Load w/ additional wind High Load* $4 GasXXX $5 GasXXX * 2013 loads applied to 2008 resources and transmission Base Case Runs

8. Key Assumptions

9. RMATS 9 RMATS 2008 Base Case- March 17, 2004 Key Assumption Summary http://psc.state.wy.us/htdocs/subregional/home.htm

10. RMATS 10 RMATS 2008 Base Case- March 17, 2004 System “Balloon” Diagram

11. RMATS 11 RMATS 2008 Base Case- March 17, 2004 Loads – 2008 Base Case Based on WECC L&R Forecast issued in 2003, with updates for Rocky Mountain States NWPP-Canada NWPP-US Rocky Mt. States AZ, NM & S. NV California Mexico - CFE Summer: 58.4 Winter: 44.8 Annual GWh with Coincidental Summer & Winter Peaks (GW) Summer: 16.6 Winter: 20.3 Summer: 24.1 Winter: 30.8 Summer: 24.6 Winter: 21.4 Summer: 31.2 Winter: 24.7 Summer: 2.5 Winter: 2.2 165,719 309,324 14,425 156,763 143,595 130,743 Load: 920,569 GWh Summer Peak: 157 GW

12. RMATS 12 RMATS 2008 Base Case- March 17, 2004 Resource Additions- 2008 Base Case 2008 Rocky Mountain Area Total Resources (MW) Total Capacity 29,121 MW All plants in service by 2006 Does not include additional wind capacity of 1750 MW Incremental Additions

13. RMATS 13 RMATS 2008 Base Case- March 17, 2004 Hydro, DSM, Wind – 2008 Base Case  Hydro Hydro generation is simulated for median water conditions Used SSG-WI hourly shapes for Canada and the Northwest  DSM For the 2008 Base Case, efficiency and DSM programs are decremented against loads in the WECC forecast  Wind High wind sensitivity - added 1742 MW nameplate to the 508 MW in the base case, bringing the total to 2250 MW of wind in the Rocky Mountain Area Did not consider transmission impacts other than on monitored interfaces (feasibility may require significant transmission additions)

14. Base Case Results

15. RMATS 15 RMATS 2008 Base Case- March 17, 2004 Base Case Observations  The top 5 congested paths in the Rocky Mountain sub-region are also export-related paths: Idaho to Montana TOT 2C Bridger West IPP DC TOT 3

16. RMATS 16 RMATS 2008 Base Case- March 17, 2004 LMP Prices Average Annual Load LMPGeneration LMP $4 Gas/ 2008 Load $4 Gas/ High Wind $4 Gas/ High Load $5 Gas/ 2008 Load

17. RMATS 17 RMATS 2008 Base Case- March 17, 2004 January 2008 Monthly Average LMP $4 Gas No congested paths!

18. RMATS 18 RMATS 2008 Base Case- March 17, 2004 June 2008 Monthly Average LMP $4 Gas Northwest to Canada Congested Paths: COI Idaho to Montana Bridger West Significant N-S Congestion

19. RMATS 19 RMATS 2008 Base Case- March 17, 2004 June 12, 2008 hr 06 $4 Gas Significant S-N Congestion

20. RMATS 20 RMATS 2008 Base Case- March 17, 2004 June 12, 2008 hr 12 $4 Gas Significant N-S Congestion

21. RMATS 21 RMATS 2008 Base Case- March 17, 2004 June 12, 2008 hr 15 $4 Gas Significant N-S Congestion

22. RMATS 22 RMATS 2008 Base Case- March 17, 2004 Key RM Transmission Constraints $4 gas, 2008 loads, base wind InterfaceLocation [Direction] Forward limit (MW) Reverse limit (MW) Opportunity cost of next MW % hours congested Idaho to MontanaE. Idaho to W. Montana [S – N] 337 $28,3245% TOT 2CS. Utah to S.E. Nevada [N – S] 300 $11,70615% Bridger WestS.W. Wyoming to S.E. Idaho & to Northwest [E – W] 2,200N/A$10,74919% IPP DCC. Utah to S. California [NE – SW] 1,920300$10,14172% TOT 3S.E. Wyoming to N.E. Colorado [N – S] 1,424N/A$5,6498% SW Wyoming to Bonanza* S.W. Wyoming to E. Utah [N – S] 200 $2,5903% * $4 Gas- H load- $26,325; 12%

23. RMATS 23 RMATS 2008 Base Case- March 17, 2004 Key Transmission Constraints $4 gas, 2008 loads, base case wind Top Congested Paths

24. RMATS 24 RMATS 2008 Base Case- March 17, 2004 Western Interconnect Impact for 2008 $4 gas, 2008 loads, high wind Interface limitation Annual VOM ($000) Delta from Base Annual VOM ($000) Annual average LMP Delta from base annual average LMP Load ($/MW) Generator ($/MW) Load ($/MW) Generator ($/MW) Base Case13,683,64637.9737.24 All interfaces unconstrained 13,562,347(121,299)38.0938.08.12.84 Only internal RM interfaces are unconstrained 13,642,615(41,031)38.0137.41.04.17 Only top 5 congested interfaces are unconstrained 13,691,688(8,042)38.0337.41.06.17

25. Evaluation of Potential Solutions

26. RMATS 26 RMATS 2008 Base Case- March 17, 2004 Idaho to Montana ($4 gas, 2008 loads, base case wind) Potential solution  Potential Solution Added phase shifter at Peterson Flats to Amps  Results System-wide “VOM” cost decreases by ~$5 million in 2008 Decreases binding congestion to 1% from 5% of the time Path loading increases by 1,673 MWh 1,102,119 MWh 1,103,792 MWh 5% 1% S N BEFORE AFTER

27. RMATS 27 RMATS 2008 Base Case- March 17, 2004 IPP DC ($4 gas, 2008 loads, base case wind) Potential solution  Potential Solution Increased line rating by 500 MW NE to SW (Forward limit ~ 2400 MW)  Results System wide “VOM” cost decreases by ~$4.6 million Line loading increases by 2,863,577 MWh Decreases binding congestion to 57% from 72% of the time 14,952,799 MWh 17,816,376 MWh 72% 57 % NE SW BEFORE AFTER

28. RMATS 28 RMATS 2008 Base Case- March 17, 2004 SW Wyoming to Bonanza ($4 gas, 2008 loads, base case wind) Potential solution  Potential Solution Increased line rating by 100 MW (increase line limit to 300 MW from 200MW); this can be accomplished by adding a transformer and possibly line compensation.  Results System wide cost decreases by ~$4.3 million; hydro model does not allow hydro redispatch. Line loading increases by 7,170 MWh Alleviates binding congestion, which now occur 3% of the time 902,434 MWh 909,604 MWh 3% N S BEFORE AFTER