rmats economics reference cases economic comparisons distribution of economic gains and losses

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

RMATS EconomicsReference Cases

Economic Comparisons

Distribution of Economic Gains and Losses

RMATS Steering Committee

August 5, 2004

2 RMATS Economics (08/06/04)

Overview

Finalize IRP-based reference case• Modeling issues with excessive cycling – distorts

distribution of gains and losses• Three solutions considered:

1. Reduce wind dispatch2. Relocate Wyoming wind resources3. Medium build transmission

Finalize economic comparisons • Revised reference cases: IRP-based and All-gas• Original reference case now gone

Finalize distribution of economic gains & losses


Finalized IRP Reference Case


Jim Bridger & Naughton Dispatach

0

500

1000

1500

2000

2500

1/1/13 2/1/13 3/1/13 4/1/13 5/1/13 6/1/13 7/1/13 8/1/13 9/1/13 10/1/13 11/1/13 12/1/13

Time

MW

Jim Bridger (IRP Light Build) Naughton (IRP Light Build)

IRP–based Reference CaseThe problem: excessive cycling of JB & Naughton coal resources

91.1% CF

92.2% CF (MAX)

88.8% CF

89.9% CF (MAX)

Bridger cycling

12% of timeNaughton cycling

9% of time

Solutions to prevent plant cycling in ABB Market Simulator:1. Reduce wind output - recommended2. Relocate wind – but this deviates from IRPs, and requires additional analysis on transmission to

integrate wind3. Add transmission – but this is uneconomic if only for wind


Wind at Miners (141MW existing + 925MW new)

0

200

400

600

800

1000

1200

1/1/13 3/1/13 5/1/13 7/1/13 9/1/13 11/1/13

Time

MW

Remaining Wind Suppressed Wind

Wind Reduction at Miners (SW Wyoming)To minimize excessive cycling on thermal units

Capacity factor change from 38.7% to 25.9%

Modifications:

• No more than 100MW from 1/1/2013 – 3/1/2013

• No restrictions from 3/1/2013 - 6/24/2013

• No more than 100MW from 6/24/2013 - 9/15/2013

• No restrictions from 9/15/2013 – 11/15/2013

• No more than 300MW from 11/15/2013 – 12/31/2013

Full wind output is equal to Blue + Yellow


Wind at Pleasant Valley (144 MW existing + 250 MW New)

0

50

100

150

200

250

300

350

400

450

1/1/13 3/1/13 5/1/13 7/1/13 9/1/13 11/1/13

Date

MW

Remaining Wind Suppressed Wind

Wind Reduction at Railroad (N. Utah)To minimize excessive cycling on thermal units

Capacity factor change from 33% to 22.5%

Modifications:

• Reduce wind output by 200MW from 6/15/2013 – 10/15/2013

Full wind output is equal to Blue + Pink


Jim Bridger & Naughton Dispatach

0

500

1000

1500

2000

2500

1/1/2013 3/1/2013 5/1/2013 7/1/2013 9/1/2013 11/1/2013

Time

MW

Jim Bridger (Suppressed Wind) Naughton (Suppressed Wind)

Cycling results in the modelingExcessive cycling is greatly reduced by suppressing wind dispatch

92.1% CF

92.2% CF (MAX)

89.8% CF

89.9% CF (MAX)

Bridger cycling 3.5% of time

Naughton cycling 1% of time


Coal - Wind Integration

Issues Observations

Wind farm sizing

Location of wind farms

Wind farm output variability and coal plant ramp rate

IRP-based reference case: wind operation is at 22 – 25% capacity factor

Capacity factor of ~30% is perhaps breakeven

Coal plant ramp rate is 5-15 MW/min


System Cost Changes

$ millions

IRP- based case (light tx build)

IRP- based case (light tx build - with wind suppressed)

Difference

WI Production Costs $19,988 $20,046 $58

Rocky Mountain Area Load Cost delta from Rec 1

$132 $5 ($128)

Rocky Mountain Generator Margin delta from Rec 1

$475 $294 ($181)


Distribution of Economic Gains & LossesIRP-based reference case

TWh LMP ($) Cost ($MM) TWh LMP ($)Revenue

($MM) VOM ($MM)Gross Margin

($MM)Rocky Mountain States 0 0.82 132 5 1.06 434 (41) 475NWPP- US 0 (0.31) (60) (1) (0.32) (94) (24) (71)NWPP- Canada 0 (0.13) (19) (0) (0.12) (28) (10) (18)Mexico- CFE 0 (0.02) (0) (0) (0.02) (1) (1) (0)California 0 (0.17) (59) (4) (0.12) (211) (107) (104)AZ, NM & S. NV 0 0.01 2 (1) 0.04 (18) (25) 7Total 0 (0.00) (4) 0 0.08 81 (208) 289

Load GeneratorBefore:

After:

TWh LMP ($) Cost ($MM) TWh LMP ($)Revenue

($MM) VOM ($MM)Gross Margin

($MM)Rocky Mountain States 0 0.03 5 5 (0.20) 191 (103) 294NWPP- US 0 (0.34) (65) (1) (0.35) (109) (31) (78)NWPP- Canada 0 (0.14) (20) (0) (0.13) (31) (12) (20)Mexico- CFE 0 (0.04) (1) (0) (0.04) (2) (1) (1)California 0 (0.16) (54) (3) (0.14) (207) (97) (110)AZ, NM & S. NV 0 (0.06) (9) (0) (0.03) (31) (22) (9)Total 0 (0.14) (145) 0 (0.19) (189) (266) 77

GeneratorLoad


Economics


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


Economics Comparison Table

(2004 Dollars in Millions)

Initial InvestmentRepresentative

Year Initial InvestmentRepresentative

Year Initial Investment Representative Year Initial InvestmentRepresentative

Year1 Production Costs (Fuel & Other VOM) 21,018 20,046 19,780 18,458 2 Change from All Gas Case [Column A] - (972) (1,238) (2,560) 3 Change from IRP- Based Case [Column B] 972 - (266) (1,588) 4

5 Resource Costs:6 RM Resource Additions Capex 7 Wind 1,957 2,246 3,766 8 Gas thermal 2,204 444 198 373 9 Coal thermal 3,453 3,985 7,857

10 Incremental Transmission Integration Capex 53 159 175 311 11 RM Resource Capex Sub Total 2,257 6,012 6,604 12,306 12 Adj. Outside RM Resource Additions Capex (2,257) 13 Other RM Costs14 Incremental Capital Charge @ 10% 226 601 660 1,231 15 Incremental Fixed O&M 28 116 128 245 16 Wind "wear and tear" - 39 56 94 17 Subtotal Other RM Costs 254 756 845 1,570 18 Adj. Other Costs Outside RM - (254) 19 Total Resource Costs 2,257 254 6,012 756 6,604 845 10,050 1,316 2021 Transmission Costs:22 Incremental Line Capex 777 3,872 23 Customized Equipment Capex 193 393 24 RM Transmission Capex Sub Total 970 4,265 2526 Incremental Fixed O&M 19 85 27 Incremental Capital Charge @ 10% 97 427 28 RM Transmission Costs 970 116 4,265 512 2930 Annualized Costs 254 756 961 1,828 3132 Total Initial Investment 2,257 6,012 7,574 14,315 33 Annual Net (Savings)/Cost from All Gas Case - (470) (531) (986) 34 Annual Net (Savings)/Cost from IRP- Based Case 470 - (61) (516)

Key Assumptions:

Transmission Capital Charge 10.0% Real Levelized depreciation, interest, ROE, taxes, G&A. All Gas Case IRP-Based CaseGeneration Capital Charge 10.0% Real Levelized depreciation, interest, ROE, taxes, G&A. Recommendation 1 5.0 7.2 Transmission Fixed O&M 20.0% 20% of TX Capital Charge Recommendation 2 5.5 6.2 Wind "wear and tear" $/MWh 5.50

Wind Fixed O&M $/kW/yr 17.50Coal Fixed O&M $/kW/yr 25.00 NWPCC assumptionsGas Fixed O&M $/kW/yr 7.25 NWPCC assumptionsAll cases include Amps line phase shifter, Flaming Gorge transformer and the Midpoint to Boise 230 kV line.

A BReference Cases

All Gas Case Gas resources and no new

transmission additions in Rocky Mountain States

DRecommendations

C

Includes "wear and tear" on non-wind resources due to wind

NWPCC assumptions (a range of $12.5/kW- $17.5/kW was tested resulting in negligible impact)

Recommendation 2Recommendation 1

Initial Investment/ Net Savings, excluding capital charges (Δ Line 32/ [Line 2:3 + Δ Line 15, 16, 26, 18 (O&M only)] ) Shown as difference from each reference case

IRP- Based Case IRP resources and no new

transmission additions in Rocky Mountain States (Suppressed

Wind)


Production Cost (VOM) Comparison

Alt 1- “light” Tx build

All Gas Reference Case

Original Reference Case

Western Interconnect Production Costs (VOM) ($Millions)

$21,018

$20,046

$19,780

$18,458

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

All Gas Reference

IRP Based Case

Recommendation 1

Recommendation 2

$ Millions


Distribution of Economic Gains & Losses

Recommendation 1 vs IRP-Based Reference Case

Recommendation 1 vs All-Gas Reference Case

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

TWh LMP ($)Load Cost

($MM) TWh LMP ($)Revenue

($MM) VOM ($MM)

Generator Gross Margin

($MM)Rocky Mountain States 0 0.03 5 5 (0.20) 191 (103) 294NWPP- US 0 (0.34) (65) (1) (0.35) (109) (31) (78)NWPP- Canada 0 (0.14) (20) (0) (0.13) (31) (12) (20)Mexico- CFE 0 (0.04) (1) (0) (0.04) (2) (1) (1)California 0 (0.16) (54) (3) (0.14) (207) (97) (110)AZ, NM & S. NV 0 (0.06) (9) (0) (0.03) (31) (22) (9)Total 0 (0.14) (145) 0 (0.19) (189) (266) 77

GeneratorLoad



($MM) VOM ($MM)


($MM)Rocky Mountain States 0 (0.76) (123) 7 (1.48) 45 (939) 983NWPP- US 0 (0.66) (128) (2) (0.71) (245) (84) (161)NWPP- Canada 0 (0.26) (37) (1) (0.22) (58) (24) (35)Mexico- CFE 0 0.04 1 (0) 0.03 (1) (1) 1California 0 (0.27) (91) (3) (0.25) (215) (139) (76)AZ, NM & S. NV 0 0.00 0 (1) 0.04 (51) (51) 0Total 0 (0.37) (377) (0) (0.52) (526) (1,238) 712

GeneratorLoad



All Gas CaseIRP- Based Case

(Suppressed Wind) All Gas CaseIRP- Based Case

(Suppressed Wind)

Rocky Mountain States (1,106) (290) (1,742) (926)NWPP- US 32 13 52 33NWPP- Canada (2) (1) (4) (3)Mexico- CFE 0 0 3 4California (14) 56 (396) (326)AZ, NM & S. NV (0) (0) 109 109Total (1,090) (221) (1,978) (1,110)

Recommendation 1 Recommendation 2

$ Millions


Economic Gains & LossesRecommendation 1 vs IRP- Based Case

Load GWh Load Cost Load LMP Gen GWh

Gen Revenue

Generator LMP

Generator VOM


Rocky Mountain StatesColorado

Colorado- East 0 18,273 0.31 (6,257) (272,879) 0.60 (16,535) (256,344)Colorado- West 0 1,308 0.21 32 5,526 0.26 439 5,087Laramie River 0 1,142 0.29 1,749 82,201 0.13 (1) 82,202subtotal 0 20,723 0.30 (4,476) (185,152) 0.36 (16,097) (169,055)

IdahoGoshen (KGB) 0 4,756 0.72 0 1,003 0.74 0 1,003Idaho- West 0 18,684 1.13 (4,550) (215,048) 0.39 (69,394) (145,654)subtotal 0 23,440 1.01 (4,550) (214,045) 0.45 (69,394) (144,651)

MontanaBroadview 0 (3,147) (1.64) 2,771 121,374 (2.02) 19,430 101,944Colstrip 0 (929) (1.60) 2,051 58,948 (1.90) 12,070 46,878Montana- West 0 (7,677) (0.94) 195 3,433 (1.24) 0 3,433Yellowtail 0 (1) (0.65) 1 (750) (0.71) 0 (750)subtotal 0 (11,754) (1.10) 5,018 183,005 (1.81) 31,499 151,506

UtahBonanza 0 (214) (0.19) (6) (437) (0.05) (119) (318)Utah- North 0 (30,693) (0.84) (172) (8,414) 0.00 (4,808) (3,606)Utah- South 0 (1,507) (0.29) (2,519) (137,751) (0.56) (103,927) (33,824)subtotal 0 (32,414) (0.76) (2,697) (146,602) (0.41) (108,855) (37,747)

WyomingBig Horn Basin 0 137 0.03 0 (350) (0.39) 0 (350)Black Hills 0 1,340 0.21 19 3,132 0.42 1,990 1,142Jim Bridger 0 0 0.00 4,590 239,228 1.43 45,802 193,426SW Wyoming 0 2,315 0.60 1,959 80,824 (2.61) 0 80,824Wyoming- Central 0 745 0.34 5,011 230,954 (0.05) 11,574 219,380subtotal 0 4,537 0.28 11,579 553,788 0.51 59,366 494,422

Rocky Mtn. States Sub-total 0 4,532 0.03 4,874 190,994 (0.20) (103,481) 294,475

NWPP- USsubtotal 0 (64,883) (0.34) (781) (109,492) (0.35) (31,303) (78,189)

NWPP- Canadasubtotal 0 (20,393) (0.14) (243) (31,432) (0.13) (11,643) (19,789)

Mexico- CFEsubtotal 0 (712) (0.04) (17) (1,871) (0.04) (934) (937)

Californiasubtotal 0 (54,334) (0.16) (3,354) (206,794) (0.14) (96,672) (110,122)

AZ, NW & S. NVsubtotal 0 (8,957) (0.06) (478) (30,565) (0.03) (21,729) (8,836)

Total 0 (144,747) (0.14) 1 (189,160) (0.19) (265,761) 76,601


Economic Gains & LossesRecommendation 1 vs All Gas Case

Load GWh

Load Revenue

($000) Load LMP Gen GWh

Gen Revenue

($000)Generator

LMPGenerator

VOM ($000)


($000)Rocky Mountain States

ColoradoColorado- East 0 (45,889) (0.77) (3,972) (222,447) (0.66) (376,191) 153,744Colorado- West 0 (4,067) (0.66) (199) (28,529) (1.26) (9,631) (18,898)Laramie River 0 (5,394) (1.38) 1,749 60,371 (1.75) (1) 60,372subtotal 0 (55,350) (0.80) (2,422) (190,605) (1.03) (385,822) 195,217

IdahoGoshen (KGB) 0 (1,199) (0.19) 318 15,489 (0.07) 0 15,489Idaho- West 0 7,212 0.44 (2,081) (120,604) (1.86) (99,840) (20,764)subtotal 0 6,013 0.26 (1,763) (105,115) (1.68) (99,840) (5,275)

MontanaBroadview 0 (5,116) (2.66) 2,767 119,106 (3.24) 19,388 99,718Colstrip 0 (1,654) (2.84) 2,044 34,341 (3.25) 12,018 22,323Montana- West 0 (16,525) (2.03) 832 27,551 (2.82) (8,064) 35,615Yellowtail 0 (2) (1.64) 0 (2,497) (2.33) 0 (2,497)subtotal 0 (23,297) (2.19) 5,643 178,501 (3.19) 23,342 155,159

UtahBonanza 0 (1,141) (1.05) (177) (14,171) (1.71) (7,943) (6,228)Utah- North 0 (22,325) (0.61) (4,504) (222,208) (0.17) (197,614) (24,594)Utah- South 0 (2,510) (0.48) (4,009) (211,163) (0.60) (315,028) 103,865subtotal 0 (25,976) (0.61) (8,690) (447,542) (0.64) (520,585) 73,043

WyomingBig Horn Basin 0 (7,197) (2.00) 885 40,205 45.42 0 40,205Black Hills 0 (10,050) (1.60) (281) (24,446) (1.98) (12,710) (11,736)Jim Bridger 0 0 0.00 4,565 202,006 (0.68) 45,423 156,583SW Wyoming 0 (3,828) (0.99) 3,592 155,287 (5.38) (14,673) 169,960Wyoming- Central 0 (3,297) (1.49) 5,358 236,369 (1.79) 26,206 210,163subtotal 0 (24,372) (1.53) 14,119 609,421 (1.52) 44,245 565,176

Rocky Mtn. States Sub-total 0 (122,982) (0.76) 6,887 44,660 (1.48) (938,660) 983,320

NWPP- USsubtotal 0 (128,287) (0.66) (2,041) (244,896) (0.71) (84,205) (160,691)

NWPP- Canadasubtotal 0 (36,517) (0.26) (528) (58,341) (0.22) (23,508) (34,833)

Mexico- CFEsubtotal 0 734 0.04 (28) (568) 0.03 (1,210) 642

Californiasubtotal 0 (90,550) (0.27) (3,062) (215,389) (0.25) (139,035) (76,354)

AZ, NW & S. NVsubtotal 0 201 0.00 (1,230) (51,084) 0.04 (51,303) 219

Total 0 (377,401) (0.37) (2) (525,618) (0.52) (1,237,921) 712,303


Tesla

Table Mtn.

Grizzly

Ashe

Bell

Taft

Missoula

Great Falls

Broadview

RinglingColstrip

Ant MineDave Johnson

LRS

Cheyenne Tap

Ault

Green Valley

Miners

Jim Bridger

Naughton

Grand JunctionEmery

MonaIPP

Red Butte

Ben Lomond

Borah

KinportMidpoint

Crystal

Market Place

500 kV

345 kV

Adelanto

Option 1

Option 2

Option 4

Option 3

Recommendation 2Longer-term export options

Added Phase Shifter

Noxon

Hot Springs

This recommendation requires two 500 kV lines

for export

Inc. DC

Options 2-4

Option 1 Only

Consistent with Rec 1



Recommendation 2 vs IRP-Based Reference Case

Recommendation 2 vs All-Gas Reference Case

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



($MM) VOM ($MM)


($MM)Rocky Mountain States 0 (4.64) (750) 27 (5.55) 51 (124) 176NWPP- US 0 (2.68) (517) (6) (2.64) (808) (257) (550)NWPP- Canada 0 (1.45) (207) (2) (1.43) (292) (88) (204)Mexico- CFE 0 (1.00) (20) (0) (0.96) (36) (13) (23)California 0 (1.92) (646) (9) (2.44) (973) (652) (321)AZ, NM & S. NV 0 (1.76) (286) (10) (1.66) (849) (454) (395)Total 0 (2.39) (2,427) 0 (2.86) (2,906) (1,588) (1,318)

GeneratorLoad



($MM) VOM ($MM)


($MM)Rocky Mountain States 0 (5.43) (878) 29 (6.83) (95) (959) 864NWPP- US 0 (3.01) (581) (7) (3.00) (943) (310) (633)NWPP- Canada 0 (1.57) (224) (2) (1.52) (319) (100) (219)Mexico- CFE 0 (0.92) (18) (0) (0.88) (35) (13) (22)California 0 (2.03) (683) (8) (2.54) (981) (694) (287)AZ, NM & S. NV 0 (1.70) (277) (11) (1.59) (869) (484) (386)Total 0 (2.62) (2,660) (0) (3.19) (3,242) (2,560) (682)

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