Commercial Structure For Independent Transmission June 11, 2012 Bringing Energy Forw ard
LS Power Pow er Transm ission Acquisition Generation Over 25,000 MW of 235-mile, 500 kV ON Line Over $4 billion in private development, construction, Transmission Project under equity capital dedicated or operations experience construction to energy sector Active development of 235-mile, 2-345 kV Cross Acquired ~ 17,000 MW of renewable and fossil Texas Transmission facilities power generation generation resources under construction Recent Owner of DeSoto Advanced development of Generating Plant in Florida 275-mile, 500 kV Southwest Intertie Project Functional Expertise Project Licensing & Regulatory & Power Project Construction & Development Environmental Transmission Marketing Finance Operations Bringing Energy Forw ard 1
Project Portfolio Bringing Energy Forw ard 2 * One-third ownership interest in Safe Harbor
ONE NEVADA TRANSMISSION LINE PROJECT Bringing Energy Forw ard 3
ON Line Project Overview Phase 1 – One Nevada Transmission Line or ON Line (Red) • Currently Under Construction • 75% Ownership by affiliates of LS Power/ 25% Ownership by affiliates of NV Energy • 100% Capacity to NV Energy Phase 2 – SWIP – North (Blue) and SNIP (Green) • Not yet in construction • 100% Ownership by affiliates of LS Power • Once in service, capacity of entire line shared according to formula (includes exchange of Phase 1 capacity for Phase 2 capacity) Transmission Use and Capacity Exchange Agreement • Complex transaction • Addresses Joint Ownership Issues • Addresses Capacity Exchange Issues • Focus on Transmission Use related provisions (some provisions arise from joint ownership) Bringing Energy Forw ard 4
Regulatory Treatment • Nevada is in a non-RTO region, similar to Florida • Project was submitted as preferred plan in NV Energy Integrated Resource Plan and approved by Public Utilities Commission of Nevada • Transmission Use and Capacity Exchange Agreement was filed with • Federal Energy Regulatory Commission (Docket ER10-3317) • Public Utilities Commission of Nevada • Transmission line falls under Utility Open Access Transmission Tariff • Transmission capacity for utility customers and third parties arranged through utility OATT • New interconnection requests to transmission line processed under utility OATT Bringing Energy Forw ard 5
Rights and Obligations – Transmission Use Agreement Generally • Project Developer Responsible For • Development of facility • Permits • Rights of Way • Design • Procurement • Financing of facility • Construction of facility • Ownership of facility • Developer Turns Capacity Over to Utility for Incorporation Into Overall Transmission System • Utility has rights to all transmission capacity created by facility • For use for native load customers For resale to transmission customers under utility ’ s OATT • • Utility pays developer payments for capacity and operating costs • Analogous to power purchase agreement for generating capacity • Analogous to a lease • Responsibilities Could Vary Under Joint Ownership Bringing Energy Forw ard 6
Operations • Transmission line operated within utility Balancing Area • Operated within utility control center • Maintenance and emergency response performed by utility • NERC Compliance Bringing Energy Forw ard 7
Takeaways • The ON LINE structure is a structure that facilitated the interests of an incumbent transmission owner, a new entrant, state public utility commission, and FERC • The ON LINE structure is a structure that leads to a financeable project • The ON LINE structure is a structure that resulted in needed transmission built at a just and reasonable cost to ratepayers • Specific FRCC applications to FRCC Order 1000 Filing and FRCC Tariff Bringing Energy Forw ard 8
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