rmats economics economic comparisons preliminary: distribution of gains and losses

Rocky Mountain Area Transmission Study RRocky ocky MMountain ountain AArea rea TTransmission ransmission SStudytudy

RMATS EconomicsEconomic Comparisons

Preliminary: Distribution of Gains and Losses

RMATS Steering Committee

July 15, 2004

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


Comparative Economics


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


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


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

LMPt

p

For a given area, excludes import/exports:

No

Con

stra

ints

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

Con

stra

ints


Distribution of Economic Gains & LossesRecommendation 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

Change in Load Cost

Change in Generator

Gross MarginRocky Mountain States (1,066) 391NWPP- US (448) (476)NWPP- Canada (173) (170)Mexico- CFE (23) (27)California (495) (425)AZ, NM & S. NV (326) (454)Total (2,530) (1,161)

2004 Dollars in Millions


Distribution of Economic Gains & LossesRecommendation 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

Change in Load Cost

Change in Generator

Gross Margin

Rocky Mountain States (1,821) 272NWPP- US (901) (948)NWPP- Canada (360) (354)Mexico- CFE (42) (50)California (1,087) (636)AZ, NM & S. NV (603) (840)Total (4,813) (2,555)

2004 Dollars in Millions



Distribution of Economic Gains & LossesState summary

Change in Load Cost

Change in Generator Gross

MarginChange in Load

Cost



Cost


Margin

Rocky Mountain StatesColorado

Colorado- East (373) 25 (691) 160 (317) 134Colorado- West (32) (87) (59) (129) (27) (42)Laramie River (21) 17 (44) (65) (23) (83)

subtotal (427) (45) (794) (35) (367) 10Idaho

Goshen (KGB) (36) 10 (61) 5 (25) (5)Idaho- West (90) (38) (157) (66) (67) (28)

subtotal (126) (29) (218) (61) (92) (33)Montana

Broadview (9) 96 (21) 238 (12) 142Colstrip (3) (13) (7) (94) (4) (81)Montana- West (32) 30 (59) 57 (27) 27Yellowtail (0) (5) (0) (17) (0) (11)

subtotal (44) 108 (88) 185 (43) 77Utah

Bonanza (8) (22) (13) (38) (5) (15)Utah- North (321) (48) (452) (65) (131) (17)Utah- South (43) 13 (60) (67) (17) (80)

subtotal (372) (58) (525) (170) (153) (112)Wyoming

Big Horn Basin (22) 40 (49) 33 (27) (8)Black Hills (37) (33) (78) (69) (41) (36)Jim Bridger 0 54 0 (53) 0 (107)SW Wyoming (25) 167 (41) 145 (17) (23)Wyoming- Central (13) 185 (28) 298 (14) 114

subtotal (96) 414 (196) 353 (99) (61)

Rocky Mtn. States Sub-total (1,066) 391 (1,821) 272 (755) (119)

2004 Dollars in Millions 2004 Dollars in Millions 2004 Dollars in Millions

Recommendation 1 Recommendation 2 Incremental savings due to export

Delta from Reference Case Delta from Reference Case



Distribution of Economic Gains & LossesRecommendation 1 & 2

Change in Load Cost



Cost



Cost


Margin

Rocky Mtn. States Sub-total (1,066) 391 (1,821) 272 (755) (119)

NWPP- USNorthwest (387) (432) (802) (882) (415) (450)Sierra (61) (44) (98) (66) (37) (22)

subtotal (448) (476) (901) (948) (452) (472)

NWPP- CanadaBC Hydro (131) (126) (272) (263) (141) (137)Aquila (8) (9) (17) (19) (9) (10)Alberta (34) (34) (71) (72) (37) (38)

subtotal (173) (170) (360) (354) (187) (184)

Mexico- CFEMexico- C (23) (27) (42) (50) (19) (22)

subtotal (23) (27) (42) (50) (19) (22)

CaliforniaImperial (8) (6) (16) (12) (8) (6)San Diego (39) (25) (81) (47) (42) (22)So. California (182) (93) (371) (187) (189) (94)LADWP (53) (10) (105) (18) (52) (8)IPP 0 (101) 0 81 0 182PG AND E (213) (191) (514) (454) (301) (263)

subtotal (495) (425) (1,087) (636) (592) (211)

AZ, NW & S. NVNew Mexico (53) (42) (103) (87) (51) (45)Arizona (208) (310) (380) (569) (172) (260)Nevada (60) (61) (109) (108) (49) (47)WAPA- LC (6) (41) (12) (76) (6) (35)

subtotal (326) (454) (603) (840) (277) (386)

Total (2,530) (1,161) (4,813) (2,555) (2,283) (1,394)

2004 Dollars in Millions 2004 Dollars in Millions 2004 Dollars in Millions

Recommendation 1 Recommendation 2 Incremental savings due to export

Delta from Reference Case Delta from Reference Case

Rocky Mountain Area Transmission Study RRocky ocky MMountain ountain AArea rea TTransmission ransmission SStudytudy

Appendix


Production Cost (VOM) Comparison

avg

Western Interconnect Production Costs (VOM) ($Millions)

$21,306

$19,988

$19,974

$19,780

$18,458

$18,000 $18,500 $19,000 $19,500 $20,000 $20,500 $21,000 $21,500

Reference Case

Alternative 1- Light Tx Build

Alternative 1- Medium TxBuild

Recommendation 1

Recommendation 2

$ Millions


Antelope Mine

Dave Johnston

LRS

Cheyenne Tap

Ault

Green Valley

MinersJim Bridger

NaughtonBen 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 Gas 500 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


Antelope Mine

Dave Johnston

LRS

Cheyenne Tap

Ault

Green Valley

Miners

Jim Bridger

NaughtonBen Lomond

Midpoint

Recommendation 1 Transmission Projects Montana Upgrades (less gray)

Broadview

Colstrip


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


C Wyoming to LRS

TOT 3

TOT 7

TOT 4A

West of Colstrip

West of Broadview

Montana to NW

500 Wind

210 Gas 500 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


Antelope Mine

Dave Johnston

LRS

Cheyenne Tap

Ault

Green Valley

Miners

Jim Bridger

NaughtonBen Lomond

Midpoint

Broadview

Colstrip


Taft

Montana Upgrades

Bridger Expansion

New WY- CO lines

Treasureton



Garrison

Townsend

Borah West

Path C

West of Naughton

West of Bridger


C Wyoming to LRS

TOT 3

TOT 7

TOT 4A

West of Colstrip

West of Broadview

Montana to NW

500 Wind

210 Gas 500 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)


Antelope Mine

Dave Johnston

LRS

Cheyenne Tap

Ault

Green Valley

Miners

Jim Bridger

NaughtonBen Lomond

Midpoint

Broadview

Colstrip


Taft

Montana Upgrades

Bridger Expansion

New WY- CO lines

Treasureton



Garrison

Townsend

Borah West

Path C

West of Naughton

West of Bridger


C Wyoming to LRS

TOT 3

TOT 7

TOT 4A

West of Colstrip

West of Broadview

Montana to NW

500 Wind

210 Gas 500 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)


Area Production Costs (VOM) Recommendation 1

Area Costs ($Millions)

ID AreaReference

CaseNo Tx

Additions

If No Transmission Constraints

Build All Tx & Gen (Rec 1)

Montana Gen & Tx Only

JB Gen & Tx Only

WY/CO Gen & Tx Only

(a) (b) (c) (d) (e) (f) (g)1 New Mexico 482 447 470 451 465 462 459 2 Arizona 4,243 3,949 4,292 3,945 4,109 4,072 4,053 3 Nevada 1,226 1,239 1,215 1,170 1,170 1,144 1,208 4 WAPA- LC 503 461 513 458 482 478 469 5 Mexico- C 887 876 942 879 884 883 882 6 Imperial 22 19 15 18 19 19 19 7 San Diego 895 776 645 778 836 830 825 8 So. California 1,687 1,450 1,016 1,469 1,547 1,549 1,538 9 LADWP 357 300 199 287 318 304 310 10 IPP 253 253 253 253 253 253 253 11 PG AND E 3,595 3,531 2,807 3,312 3,447 3,405 3,502 12 Northwest 2,331 2,181 2,186 2,165 2,220 2,245 2,267 13 BC Hydro 585 548 554 532 555 556 563 14 Aquila 33 32 34 32 32 32 32 15 Alberta 1,453 1,435 1,743 1,432 1,442 1,444 1,445 16 Idaho- West 14 1 0 4 5 4 4 18 Montana- West - - - - - - - 19 Sierra 305 233 253 238 260 254 258 20 Wyoming- Central 50 69 76 76 50 50 76 22 Bonanza 69 68 69 68 69 69 68 23 Utah- North 213 147 173 162 180 172 178 24 Utah- South 370 403 461 430 446 446 435 25 Colorado- East 932 817 867 758 855 839 777 26 Colorado- West 200 200 200 200 200 200 200 28 Black Hills 77 64 66 61 68 64 64 29 LRS 83 76 83 83 83 83 83 30 JB 261 262 307 307 261 307 260 32 Broadview 17 34 37 37 37 17 17 33 CRSOVRCO 165 167 177 177 177 165 165

Total 21,306 20,039 19,654 19,780 20,470 20,345 20,409

- (1,268) (1,653) (1,526) (836) (961) (897)1,268 - (385) (258) 431 306 371

Delta from If No Tx Constraints 1,653 385 - 127 817 691 756

Delta from Reference CaseDelta from No Tx Additions


Interface Performance Recommendation 1

Opportunity Cost ($)

% Time at Capacity


% Time at Capacity


% Time at Capacity


% Time at Capacity


% Time at Capacity

1 Black Hills to C Wyoming 260,628 84% - 0% - 0% - 0% - 0%2 TOT 3 234,016 73% 5,292 6% 5,643 7% 11,991 10% 525 1%3 BRIDGER WEST 229,411 74% 13,907 10% 7,380 10% 1,863 2% 41,353 26%4 WEST OF BROADVIEW 164,911 49% 7,353 6% 85 0% 288 0% 1,961 1%5 West of Naughton (E-S&W) 95,225 31% 617 0% 1,336 1% 187 0% 6,348 3%6 ALBERTA - BRITISH COLUMBIA 53,192 73% 48,445 70% 51,196 73% 51,456 73% 52,807 74%7 TOT 2C 45,734 27% 50,392 26% 17,579 18% 19,655 18% 37,686 24%8 North of Miguel 45,655 60% 42,370 64% 43,014 62% 43,538 64% 44,241 62%9 WOR -n- El Dor to Lugo 41,899 53% 44,122 60% 43,830 56% 46,553 59% 47,732 59%10 MONTANA - NORTHWEST 34,278 11% 17,343 10% 1,303 3% 1,878 3% 137 0%11 PATH C 26,309 10% - 0% 17,500 5% - 0% 16,613 6%12 BONANZA WEST 22,345 16% 12,619 9% 3,765 4% 968 2% 18,709 11%13 SOUTHERN NEW MEXICO (NM1) 18,680 26% 18,694 22% 15,942 18% 16,753 19% 16,957 20%14 Laramie River to C Wyomong 16,685 10% - 0% 170 1% 339 1% 1 0%15 Combined PACI & PDCI 11,133 19% 11,068 21% 7,812 18% 7,443 18% 6,521 17%16 NW to Canada, East BC 9,817 8% 12,740 9% 12,396 9% 13,459 9% 12,666 10%17 COI 6,587 52% 3,112 26% 1,653 19% 1,837 18% 1,863 23%18 East of Bridger 5,319 6% 4,283 2% - 0% 74 0% - 0%19 ARIZONA - CALIFORNIA 5,203 5,611 5,642 6,162 5,702 20 PACIFIC DC INTERTIE (PDCI) 5,105 1,952 3,576 2,222 3,091 21 CA INDEPENDENT - MEXICO (CFE) 5,047 5,427 6,528 6,369 6,168 22 IDAHO - NORTHWEST 4,365 8,328 10,109 8,184 7,569 23 TOT 1A 4,318 1,652 994 325 4,404 24 TOT 7 4,268 - 333 369 - 25 TOT 2B2 4,209 8,319 2,016 2,566 4,862 26 NORTHWEST - CANADA 3,591 3,304 1,383 1,467 1,292 27 IDAHO - MONTANA 3,178 3,630 5,455 3,248 4,330 28 Southern CA Imports 3,020 3,198 2,632 2,641 2,448 29 BROWNLEE EAST 2,815 6,896 10,210 6,871 8,535 30 Imp.Valley to Miguel 2,499 2,423 1,891 1,922 1,811 31 Montana - Southeast 2,332 1,150 49 4,743 5,225 32 NORTH OF SAN ONOFRE 1,755 1,760 2,520 2,480 2,546 33 MIDPOINT - SUMMER LAKE 1,669 4,473 7,001 7,580 8,624 34 TOT 2B1 1,480 - 1,996 64 3,389 35 INYO - CONTROL 115 KV TIE 1,440 1,374 714 308 2,071 36 SW Wyoming to N Utah 1,405 - 584 - 746 37 NORTHERN - SOUTHERN CALIFORNIA 1,351 1,132 599 1,004 620 38 TOT 2A 904 376 3 - 277 39 PAVANT, INTRMTN - GONDER 230 KV 433 352 686 621 649 40 SOUTHWEST OF FOUR CORNERS 414 413 - - 53 41 EOR - HASSYAMP- N.GILA 378 433 280 276 231 42 PG&E - SPP 319 1,305 1,184 1,454 1,238 43 TOT 2B 316 - 1,937 - 2,425 44 TOT 4A 261 - - - 141

Row JB Gen & Tx Only Wyo/Col Tx & Gen OnlyInterface Name

Add Gen, Add All TransmissionAdd Gen, No Tx Additions Montana Gen & Tx Only


Capacity Factors Recommendation 1

Capacity (MW)

If No Transmission

Constraints

Add Gen/ No new

TransmissionBuild All

Tx & Gen

Montana Gen & Tx

OnlyJB Gen & Tx

OnlyWY/CO Tx &

Gen OnlyNew CoalColorado 500 90.7% 90.7% 90.7% 90.7% 90.7% 90.7%Broadview 250 86.8% 86.8% 86.8% 86.8% 0.0% 0.0%Colstrip 250 87.7% 87.7% 87.7% 87.7% 0.0% 0.0%Utah 575 90.4% 90.4% 90.4% 90.4% 90.4% 90.4%Wyoming 700 87.4% 67.7% 87.4% 0.0% 0.0% 87.4%Jim Bridger 575 91.2% 91.2% 91.2% 0.0% 91.2% 0.0%

Existing CoalBonanza 420 89.9% 88.8% 89.3% 89.8% 89.9% 89.3%Cholla 995 89.9% 89.9% 89.9% 89.9% 89.9% 89.9%Colstrip 2,094 89.9% 84.1% 89.7% 89.9% 89.9% 89.9%Commanche 660 91.1% 91.1% 91.1% 91.1% 91.1% 91.1%Craig 1,264 89.9% 89.6% 89.8% 89.8% 89.9% 89.7%DJ 2 666 89.9% 88.7% 89.8% 89.9% 89.9% 89.9%DJ 1 106 89.9% 87.6% 89.8% 89.9% 89.9% 89.8%Hunter 1,315 89.9% 89.9% 89.9% 89.9% 89.9% 89.9%Huntington 895 89.9% 89.9% 89.9% 89.9% 89.9% 89.9%Intermountain 1,710 91.1% 91.1% 90.8% 91.1% 91.1% 91.1%Jim Bridger 2,110 92.2% 76.2% 92.0% 92.2% 92.2% 91.8%LRS 1,100 89.9% 81.7% 89.9% 89.9% 89.9% 89.9%Naughton 700 89.9% 86.9% 89.8% 89.8% 89.9% 89.8%Pawnee 495 89.9% 89.9% 89.9% 89.9% 89.9% 89.9%Wyodak 335 89.9% 89.9% 89.8% 89.9% 89.9% 89.8%

GasCurrant Creek* 665 92.3% 68.3% 79.5% 86.2% 86.2% 81.8%Nebo 147 100.0% 70.8% 90.5% 96.2% 96.1% 93.8%Colorado East 210 100.0% 87.6% 85.6% 93.6% 93.5% 85.9%West Valley 215 19.6% 12.8% 15.2% 21.8% 19.1% 21.7%Bennett Mountain 167 0.2% 1.5% 3.8% 4.8% 4.5% 4.0%ManChief 310 0.1% 4.4% 1.1% 2.4% 2.6% 0.7%Front Range 480 85.0% 51.9% 64.0% 71.8% 71.5% 65.5%

* (includes new S. Utah Unit)

rmats economics economic comparisons preliminary: distribution of gains and losses

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