Transmission Joint Action in the Upper Midwesta presentation to the

APPA Joint Action Workshopby David A. Berg, P.E.

Principal

December 7, 2004

Background

Public power has a strong presence in the upper Midwest

There is a rich tradition of municipal joint action in our region

Transmission has become a critical issue in our region and across the country

Transmission Access Policy Study Group (TAPS) June 2004 White Paper

"Effective Solutions for Getting Needed Transmission Built at Reasonable Cost"

Examines problems and proposes policy solutions for transmission investment needs

TAPS White PaperProblems Identified

Transmission investment needed to improve reliability

Competitive wholesale market requires added transmission infrastructure

Commonly proposed solutions not working Increased return and accelerated depreciation Participant funding

TAPS White PaperStructural Solutions

Inclusive Stand-Alone Transmission Companies

Shared System Model

TAPS White PaperRegulatory Solutions

Ratemaking devices Reduce investment risk Attract capital at reasonable cost

Spread cost across broad regions Regional planning to achieve cost-

effective and efficient solutions Performance-based rates to hold

transmission owners accountable

Midwest Independent System Operator (MISO)

MISO Issues

Understanding Membership Congestion Management Ownership Incentives Regional Planning

Why Joint Action?

Single Small Municipal Utility

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2

4

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12

Small Municipal

MW

Small & Large Municipal Utilities

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50

100

150

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250

300

Small Municipal Large Municipal

MW

Individual Municipals & Agency

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100

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Small Municipal Large Municipal Agency

MW

Individual Municipal Regional Presence

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2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

SmallMunicipal

LargeMunicipal

Agency Basin Electric Great RiverEnergy

MidAmerican Alliant We Energies Xcel

MW

Collective Municipal Regional Presence

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

Small M

unici

pal

Large

Mun

icipa

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Agenc

y

Basin

Electric

Great R

iver E

nergy

MidAmeri

can

Alliant

We E

nergi

es Xcel

Upper

Midwes

t Mun

icipa

ls

MW

Midwest Municipal Transmission Group (MMTG)

January 2002 formal announcement 120 Iowa & Minnesota municipals (1300 MW) Intervened in TRANSLink filing Goal - get municipal transmission recognized in

TRANSLink Goal - invest in new regional highway transmission

projects Successful in initial goals Continuing participation in regional transmission arena

MISO Investment opportunities

Super Joint Action in the Upper Midwest

Idea has been brewing for a while Joint Action Workshop held July 13, 2004 Joint Action Working Group formed

Existing agencies "Independent" municipals 6 states

Transmission identified as proper focus for expanded joint action

Upper Midwest Regional Focus

Transmission System Planning and Investment

Champion TAPS approach Municipals want a seat at the table Investment = Influence

Expanded or Super Joint Action can not only get municipals to

the table, it can get them to the head of the table

Current Approach

Examining expansion of MMTG Interaction between MMTG Operating

Committee and Joint Action Working Group

MMTG Benefits Existing organization Multi-state Track record of success

Next Steps

Conduct 2-day strategic planning meeting (early 2005)

Prepare plan of development Mission Organizational structure Staffing Funding Development timeline Investment strategy

Move Forward?

Questions and Discussion