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AES Trans-Elect
Presentation to
WIA Board & State Transmission Authorities
July 1-2, 2008
Independent Transmission Development in Independent Transmission Development in Support of State Transmission Authorities
Independent Transmission Development in Independent Transmission Development in Support of State Transmission Authorities
2
Mission Statement
Trans-Elect, with the support of AES, is committed to expanding America’s 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 nation’s electricity system, while providing cost-effective, reliable service and
electric grid expansion.
Introduction to AES Trans-Elect
• AES TE – The Partnership Company
– Path 15 with Western Area Power Administration and PG&E
– 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
Trans-Elect Development Company LLC
• The nation’s 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
Path 15 Project Summary
• Public-private partnership with Western (DOE), PG&E, 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-Elect’s share of project costs of $194 million were under budget
5
Tesla
Oregon
California
Lake
MalinCaptain Jack
COTPAC
INTERTIE
Tracy
DC
Vincent
Olinda
Table Mountain
Round Mountain
Los Banos
GatesPath 15
INTERTIE
Midway
Tahoe
San Francisco
Michigan Electric Transmission Company
6
• 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
• Seller’s rationale - Strengthen balance sheet and use sale to focus strategy
AltaLink Summary
• Purchase price - $570 million (C$860 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 Teacher’s Pension Plan Board and Macquarie Bank
• Seller’s rationale - Become a pure generating company (previously divested distribution assets)
7
TAUC
APL
EP
TRANSALTA UTILITIES
ALBERTA POWER
TAUC
APL
EP
TRANSALTA UTILITIES
ALBERTA POWER
Mildred Lake
Deerland Marguerite Lake
Whitefish Lake
Louise Creek
Mitsue
Sturgeon
Lamoureux
E. Edmonton
Jenner
Metiskow
Empress
AC-DC-AC Link
Mc Neill
Ware Jct.Brooks
LethbridgePeigan
LangdonJanetSarcee
Bickerdike
Benalto
Red Deer
Ellersie
Genesee
Sagitawah
Barrhead
KeephillsBrazeau
ALBERTA
ALBERTAPOWER
TRANSALTAUTILITIES
Mildred Lake
Deerland Marguerite Lake
Whitefish Lake
Louise Creek
Mitsue
Sturgeon
Lamoureux
E. Edmonton
Jenner
Metiskow
Empress
AC-DC-AC Link
Mc Neill
Ware Jct.Brooks
LethbridgePeigan
LangdonJanetSarcee
Bickerdike
Benalto
Red Deer
Ellersie
Genesee
Sagitawah
Barrhead
KeephillsBrazeau
ALBERTA
ALBERTAPOWER
TRANSALTAUTILITIES
Trans-Elect’s Partner: AES Corporate Overview
28 countries on 5 continents28 countries on 5 continents
121 generation plants • 13 utilities121 generation plants • 13 utilities
Alternative Energy leaderAlternative Energy leader
30,000 people worldwide 30,000 people worldwide
25 years of project development experience25 years of project development experience
Diverse technologies and fuel mixDiverse technologies and fuel mix
Entrepreneurial learning cultureEntrepreneurial learning culture
AES 2006 Financials
Revenues Gross marginNet cash from operating activities
$0
$4,000
$8,000
$12,000
$16,000
2004 2005 2006
Dollars in Millions
$0
$1,000
$2,000
$3,000
$4,000
2004 2005 2006
Dollars in Millions
$0
$400
$800
$1,200
$1,600
$2,000
$2,400
$2,800
2004 2005 2006
Dollars in Millions
$12.6 billion $3.6 billion $2.4 billion
28 countries5 continents
The capacity to serve 100 million people
116 generation plants13 distribution businesses
42,000 MW installed generation capacity annual distribution sales of over 73,000 GWh
Broad global footprintBroad Global Footprint
DC Ties (all ~ 200 MWexcept ERCOT-E @ 600 MW)
Interconnection Boundary
Transmission Authorities fill Gaps in RTO Coverage
WECC Transmission Projects Under Development
Palo Verde–Devers II
Green Path ProjectIV-San Felipe
Indian Hills - Upland
Sunrise Powerlink
En-ti (Ely-Harry Allen)
Harry Allen-Robinson Summit
Montana AlbertaTie Line
TransWest Express Project
Northern Lights
West Coast Cable
Canada –Northwest - California (CNC) Project
Juan de Fuca Cable
White Pine-Midpoint
Lake ElsinoreAdvanced PSP
Palo Verde – North Gila IIProject
Navajo TransmissionProject Segment 1
Miracle Mile-Ault
SunZia
High Plain Express
Colorado-New MexicoInterconnection Project
Wyoming-Colorado Intertie Project
Eastern Plains
Mountain States
PacifiCorp Energy GatewayHemingway to Boardman
BPA transmission
Tehachapi Project
Central California CleanEnergy Transmission Project
Southern Crossing
(courtesy of the Wyoming Infrastructure Authority)
Wyoming Transmission ProjectsIncluding Two Public/Private Partnerships involving Trans-Elect
WIND
New Lines Under Development
Existing Lines
Wyoming-Colorado Intertie (WCI) Project
180 miles 345 kV 850 MW
75 miles230 kV 425 MW
• 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
$3.00
$3.50
$4.00
$4.50
$5.00
$5.50
$6.00
$6.50
0 500 1,000 1,500 2,000 2,500 3,000
WCI Bidding Concept
FIRM TRANSMISSION CAPACITY (MW)
1st Round2nd Round
3nd Round4nd Round
5th Round
6th Round
7th Round
8th Round
9th Round
Capacity Available 850 MW
BID
PR
ICE
S (
$/K
W-M
O)
PR for WCI
SOLAR
SOLAR
WIND
WIND
WIND
WIND
WIND
WIND
WIND
WCI (TE/WIA/WAPA)
EPTP (Tri-State/Xcel/WAPA)
NM Wind Collector (PNM)SunZia
High Plains Express
SOLAR
• 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
Transmission – A Snapshot
• After years of under-investment, there’s 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
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 transmission’s 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
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
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