AES TransElect Presentation to WIA Board

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AES Trans-Elect Presentation to WIA Board
State Transmission Authorities
Independent Transmission Development in
Independent Transmission Development in Support
of State Transmission Authorities

• July 1-2, 2008

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Mission Statement
Trans-Elect, with the support of AES, is
committed to expanding Americas electric
transmission grid in the furtherance of public
policy, increased reliability, and access to
remote resources. As an independent
transmission owner, Trans-Elect promotes the
regulatory objectives of open, non-discriminatory
access to the nations electricity system, while
providing cost-effective, reliable service and
electric grid expansion.
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Introduction to AES Trans-Elect

• AES TE The Partnership Company
• Path 15 with Western Area Power Administration
  and PGE
• Wyoming Colorado Intertie with Wyoming
  Infrastructure Authority
• High Plains Express with 9 public and private
  stakeholders
• TE Financed over 1 billion in transmission
  projects
• TE Owned and/or Operated nearly 13,000 miles of
  high voltage transmission

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Trans-Elect Development Company LLC

• The nations 1st independent transmission company
• 2002 Acquired METC (Michigan) and an interest
  in AltaLink (Alberta)
• 2004 Developed Path 15 in California
• 2005 Wyoming-Colorado Intertie Public/Private
  Partnership
• Wyoming Infrastructure Authority Western Area
  Power Authority
• 2006 Partnership with AES to develop/acquire
  transmission
• 2007 High Plains Express Project WY-CO-NM-AZ
• Current Projects
• Wyoming-Colorado Intertie
• High Plains Express
• Other unannounced projects focused on renewable
  development
• Active in public policy development WREZ, CREZ,
  WGA
• Offices in Bethesda, Chicago, and Denver
• www.trans-elect.com

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Path 15 Project Summary

• Public-private partnership with Western (DOE),
  PGE, and Trans-Elect
• 83-mile, 500-kV line to eliminate a long-standing
  transmission constraint between N-S California
• Total development cost 250 M for a new 500-kV
  transmission line and substations
• FERC approved ROE 13.5 and CAISO is sole
  customer
• Construction started in September 2003 with
  commercial operation December 2004
• Trans-Elects share of project costs of 194
  million were under budget

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Michigan Electric Transmission Company

• Purchase price - 288 million May 1, 2002
• Assets - 5,400 miles of transmission lines in
  Michigan
• Investors - Trans-Elect as general partner with
  equity investment from GE Capital. Debt raised
  by Deutsche Bank and CIBC
• Sellers rationale - Strengthen balance sheet and
  use sale to focus strategy

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AltaLink Summary

• Purchase price - 570 million (C860 million) on
  April 29, 2002
• Assets - 7,200 miles of transmission lines in
  Alberta, Canada
• Investors Trans-Elect and SNC-Lavalin as 50/50
  general partners with equity investments from
  Ontario Teachers Pension Plan Board and
  Macquarie Bank
• Sellers rationale - Become a pure generating
  company (previously divested distribution assets)

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Trans-Elects Partner AES Corporate Overview

• 28 countries on 5 continents
• 121 generation plants 13 utilities
• Alternative Energy leader
• 30,000 people worldwide
• 25 years of project development experience
• Diverse technologies and fuel mix
• Entrepreneurial learning culture

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AES 2006 Financials

• Net cash from operating activities

• Gross margin

• Revenues

12.6 billion
3.6 billion
2.4 billion
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Broad global footprint
Broad Global Footprint
The capacity to serve 100 million people
28 countries 5 continents
116 generation plants 13 distribution businesses
42,000 MW installed generation capacity annual
distribution sales of over 73,000 GWh
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DC Ties (all 200 MW except ERCOT-E _at_ 600 MW)
Interconnection Boundary
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Transmission Authorities fill Gaps in RTO
Coverage
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WECC Transmission Projects Under Development
Juan de Fuca Cable
Northern Lights
BPA transmission
Montana Alberta Tie Line
Southern Crossing
Mountain States
Canada Northwest - California (CNC) Project
PacifiCorp Energy Gateway
Hemingway to Boardman
TransWest Express Project
West Coast Cable
White Pine-Midpoint
Wyoming-Colorado Intertie Project
Harry Allen- Robinson Summit
En-ti (Ely-Harry Allen)
Miracle Mile-Ault
High Plain Express
Central California Clean Energy Transmission
Project
Eastern Plains
Tehachapi Project
Colorado-New Mexico Interconnection Project
Lake Elsinore Advanced PSP
Navajo Transmission Project Segment 1
Green Path Project IV-San Felipe Indian Hills -
Upland
SunZia
Palo VerdeDevers II
Sunrise Powerlink
Palo Verde North Gila II Project
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Wyoming Transmission Projects Including Two
Public/Private Partnerships involving Trans-Elect
(courtesy of the Wyoming Infrastructure Authority)
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Wyoming-Colorado Intertie (WCI) Project

• Recommended by RMATS
• TOT3 Constraint
• 6 Lines w/ 1,600 MW Capacity
• Public/Private Partnership
• Wyoming Infrastructure Authority, Trans-Elect
  WAPA
• Feasibility Studies Complete
• Phase 1 WECC path rating
• Open Season Process
• July 31 Auction Date
• 2013 on-line date

WIND
75 miles 230 kV 425 MW
180 miles 345 kV 850 MW
New Lines Under Development
Existing Lines
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WCI Bidding Concept
Capacity Available 850 MW
9th Round
8th Round
7th Round
BID PRICES (/KW-MO)
6th Round
5th Round
4nd Round
3nd Round
2nd Round
1st Round
FIRM TRANSMISSION CAPACITY (MW)
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PR for WCI
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High Plains Express
WCI (TE/WIA/WAPA)
EPTP (Tri-State/Xcel/WAPA)
NM Wind Collector (PNM)
SunZia
WIND

• MOU involving 6 utilities, 3 State agencies
  Trans-Elect
• Co-Managers Xcel Trans-Elect
• Feasibility study completed
• Stage 2 Feasibility Underway
• Major renewable component
• 3,500 MW 500 kV AC
• 5 billion
• 1,300 miles across favorable terrain from Wyoming
  to Arizona
• Improved reliability in Eastern WECC
• Benefits to participating states, including
  consumers

WIND
WIND
WIND
WIND
SOLAR
WIND
WIND
SOLAR
SOLAR
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Transmission A Snapshot

• After years of under-investment, theres a
  resurgence in interest in transmission expansion,
  driven by...
• Replacement of aged infrastructure/improved
  reliability
• Accessing remote resources, especially renewables
• Availability of low-cost money
• Impediments
• Absence/inconsistent public policy regional
  planning
• Utility/regulatory focus on serving native load
• Cost allocation recovery uncertainties
• Long permitting timelines complications

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Solutions for Regional Transmission Expansion

• Public Policy
• National siting/routing, financial incentives,
  open access protocols
• Regional State multi-state cooperation,
  transmission authorities
• Professional Transmission Development
• Independent transmissions exclusive focus on
  transmission development
• Commitments needed to build transmission
• Traditional Model Utilities to own and/or
  contract for capacity
• Emerging Model Renewable developers,
  transmission authorities, and customer
  beneficiaries
• Facilitated by supportive public policy
  regionalized power markets

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Perfect Storm

• Change in Fundamentals
• Rapid inflation in energy prices
• Carbon-constrained energy economy
• Price-competitive renewables
• Utilities have few incentives for expanding
  transmission
• Change/Chaos Opportunity
• Transmission authorities are uniquely positioned
  to effect change
• Multi-state cooperation in non-RTO areas
• Western REZ process
• Take the lead in facilitating transmission
  expansion
• Supported by independent transmission developers
  public policy

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Shared Risk for Transmission Development

• State Transmission Authorities
• Focused on renewables
• Bonding eminent domain authority
• Seeding transmission development
• Business Model
• State Authorities political support
• Trans-Elect lead development efforts
• Shared funding and risks, with funds repaid (with
  uplift) upon project financing
• Opportunities
• Short-Term generator leads collector systems
• Longer-Term trunk lines regional lines