Slide 1

Presentation to

Montana Transmission
Advisory Group (MTAG)
September 8, 2004


Slide 2

Chaos…
• The Chicken or the Egg conundrum
 Transmission and generation historically has been built concurrently

• RTO development
 An uncertain future

• Constraints/path ratings
 The transmission grid was not designed for the type of interstate
commerce we experience today

• August 14, 2003 Eastern U.S. outage — a call for action
 Increased pressure on reliability by NERC and FERC — May further
reduce path ratings

• Stranded generation
 New projects on the drawing board are seeking markets

• Regional politics
 Regional system studies: RMATS, SSG-WI, NCAT
 State governors involvement

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Slide 3

Opportunities

Potential
generation
development
in the West

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Slide 4

Potential Generation Capacity in Montana
3500

3000
3000

Capacity (MW)

2500

2162

2000

1309

1500

1000

511

330

500

13
0
Wind

Coal

Natural Gas

4

Other

Total

MT Existing
Generation


Slide 5

NorthWestern’s Unique Position
• Located between suppliers and markets

• Not a generation owner
 Not seen as a competitor by proposed project
developers

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Slide 6

Opportunities

Path
development
opportunities

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Slide 7

Low Hanging Fruit?
RMATS Study
• Recommendation #1
 Phase shifter in the AMPS line
 Increase the capacity of the 500 kV system from Montana
to the Northwest through additional 500 kV substations,
additional series compensation and a 500/230 kV
transformer at Colstrip

• Recommendation #2
 Either a new 500 kV line from Broadview to the Mid-C or
a new 500 kV line from Broadview to Borah, Idaho

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Slide 8

Montana to Idaho Path
• The Montana to the Southwest path (WECC Path 18)
includes the 230 kV “AMPS” line and the 161 kV “Jefferson”
• Owned by NorthWestern Energy, Idaho Power Company
and PacifiCorp
• Path capacity to be reduced from 337 MW to 324 MW
southbound during the summer of 2004 when BPA removes
65 MVAR caps at Anaconda
• NorthWestern Energy Southbound AMPS line capacity fully
utilized long term
• NorthWestern Energy Southbound Jefferson line capacity
fully utilized long term

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Slide 9

Montana to Idaho – Some Options

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Slide 10

Load Growth South of Montana –
One Example
• Idaho IRP process –
 2004 - 2013 add 800 MW and 940 MW capacity
 Expected Portfolio to include 500 MW coal, 350 MW wind

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Slide 11

NorthWestern’s Open Season Process
• Phase 1 – Expression of Interest (EOI)

• Opportunity for generators/suppliers/load serving
entities to come together to help NorthWestern
define the market for transmission capacity
• NorthWestern will use EOI to determine if sufficient
interest to continue with Open Season

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Slide 12

Phase 1 –
Expression of Interest (EOI)
• Interested parties to respond with:
 Capacity requested – 25 MW blocks
 Direction of capacity request
 Start date for capacity needs
 Term of agreement for capacity (minimum term
requirement)
 Expression of interest dates: October 1 – 31, 2004
 NorthWestern Energy EOI forms posted on OASIS

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Slide 13

Phase Two –
Capacity Open Season “Preview” Period
• NorthWestern evaluates expressions of interest
to determine most likely capacity addition(s)
• Mid-November 2004 – NorthWestern will post
on OASIS the start and end dates to accept
transmission service requests that will qualify
for the open season process (likely Dec. 1 - 31,
2004)

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Slide 14

Open Season Elements
• Open Season is for Transmission Service Requests
with MT-SW (AMPS) as POR or POD ONLY and for NEW
(not existing) capacity
• Same process for making Transmission Service Request
(TSR) as described in Section 17 of NorthWestern’s Open
Access Transmission Tariff with these important
modifications:
1. Completed Application for Transmission Service will
temporarily be considered complete without the deposit of
approximately one month’s transmission service (OATT
section 17.3); the deposit will be DELAYED
2. System Impact Study and associated study fee will be waived
(NorthWestern will absorb cost of System Impact Studies)
As always, date/time stamped OASIS Transmission Service
Request will determine customer’s position in Transmission
Service QUEUE

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Slide 15

Open Season – Current Customers
• Current transmission customers with completed
applications for new capacity requests for
transmission service on MT-SW path will be
deemed to be part of Open Season (with QUEUE
positions already established with reservation on
OASIS)
• NorthWestern will work with these current
customers on treatment of deposits and study
fees

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Slide 16

Open Season Elements –
System Impact Study Results
• Upon Open Season capacity request date closing,
NorthWestern will require approximately a 60-day
period to evaluate total transmission requests and
physical options to serve such requests
• Results of study work will be provided to each
Open Season Participant and posted on
NorthWestern’s OASIS
• Participants will be given 30 days to review results
of studies and then will be provided a Facilities
Study Agreement by NorthWestern to execute in
order to continue

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Slide 17

Phase 3 –
Facilities Study
• Facilities Study Agreement must be executed and
returned to NorthWestern within 15 business days
together with Facilities Study Fee AND Deposit
approximating one month’s Transmission Service
(at this point, each Open Season Participant has
returned to normal Transmission Service Request
Procedures)
• Failure to comply with above will result in OASIS
reservation deemed withdrawn

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Slide 18

Open Season Benefits
• Brings generators/suppliers/load serving
entities together
• Allows “preview” of system impacts prior to
significant financial commitment
• Potentially eliminates “lumpiness” in transmission
planning and construction (Ex. 200 MW expansion
that no single party can commit to)
• All parties cooperate, including the transmission
provider, to solve regionwide problem of “what
comes first, transmission or generation”

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Slide 19

Potential Funding Options
• More to come…

• Dependent upon capacity requested and market
participation
• Funding options:
 NorthWestern Energy
 Current path owners
 Subscribers
 Project financing if adequate subscription
 Others

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Slide 20

Questions

and
Comments

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