Parker Davis and Intertie Formal 10-Year Plan Meeting FY2019-2028 - - PowerPoint PPT Presentation

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Parker Davis and Intertie Formal 10-Year Plan Meeting

Oct 04, 2018 Desert Southwest Region

BLM National Training Center 9828 N 31st Avenue, Phoenix AZ 85051

FY2019-2028

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WELCOME & INTRODUCTION

Desert Southwest Region – 10-Year Plan

Welcome!

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• Today’s meeting will be used to present the Formal

10-Year Plan for the Parker Davis and Intertie Projects in preparation for the December prepayment vote

• The 10-Year Plan should not be subject to further

changes between now and the prepayment vote

• This year’s 10-Year Plan is part one of our two-part

Pivot Process, which will conclude with the prepayment vote held in December 2019

Desert Southwest Region - 10-Year Plan

AGENDA

• 1. Pivot Overview
• 2. Seed Funding Explained
• 3. FY2019 Seed Project - Bouse Upgrade
• 4. 2018 Prepayment Funding Vote

a) Bouse-Kofa 161kV (Phase I and Phase II) b) FY2018 Seed Project – Gila – Dome T ap c) FY2018 Seed Project – Kofa – Dome T ap d) FY2018 Seed Project – Coolidge-Valley Farms

• 5. 10-Year Plan/Rate Impacts
• 6. Next Steps
• 7. Break
• 8. Southline Transmission Project Update

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Desert Southwest Region – 10-Year Plan

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PIVOT OVERVIEW

Desert Southwest Region - 10-Year Plan

See Page 7 of Handout Book

Pivot Goals

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• The Pivot is a two part process which will align the

10-Year Plan with the budget formulation schedule

• Federal budget formulation occurs two fiscal years in

advance of the current year

• After the Pivot is complete, prepayment funding

will be voted on for projects that occur two years

• ut from the current year
• This differs from the historical prepayment voting

schedule, which involved voting on projects for the current fiscal year

Desert Southwest Region - 10-Year Plan

Pivot Schedule

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• The Pivot will be conducted across two 10-Year

Plan annual cycles

• The Pivot began January 2018 and will conclude

with the prepayment vote in December 2019

• The December 2018 and December 2019 votes are

anticipated to fund prepayment projects proposed through FY22

Desert Southwest Region - 10-Year Plan

Pivot Benefits

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• Improved budgeting and execution of prepayment

dollars

• More opportunity for customer engagement in the

Analysis of Alternatives (AOA) Study Process

• Customer engagement will include:
• Input on identifying mission critical projects
• Input on the alternatives to be analyzed in the study
• Input on the selected alternative
• The Pivot provides customers additional
• pportunities to review and discuss projects in

advance of the prepayment vote in 2019

Desert Southwest Region - 10-Year Plan

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SEED FUNDING EXPLAINED

Desert Southwest Region - 10-Year Plan

See Page 8 and 9 of Handout Book

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Desert Southwest Region - 10-Year Plan

Seed Funding Explained

• Historically projects utilized an estimate generated during the AOA Study

Phase

• Higher accuracy estimates are generated in the Seed Funding Phase
• The Seed Funding Phase has the benefit of detailed engineering design

and preliminary environmental/geological assessments

• The objectives of seed funding are to:

 Produce a design package to 50%-75% completion  Fund the project through the first year of preconstruction  Refine the scope, schedule and estimate from the AOA Study Phase  Advance an AOA Study Phase design through preliminary design

Seed Funding Explained

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• Each project scope is unique and the amount of

seed funding required to produce the first year design varies

• Any funds (prepayment or appropriations)

designated for the Seed Funding Phase, but not spent, will be retained and utilized on the project as it progresses

Desert Southwest Region - 10-Year Plan

Seed Funding Explained

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• Each project scope is unique and the amount of

seed funding required to produce the first year design varies

• Any funds (prepayment or appropriations)

designated for the Seed Funding Phase, but not spent, will be retained and utilized on the project as it progresses

Desert Southwest Region - 10-Year Plan

Seed Funding Explained

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• Each project scope is unique and the amount of

seed funding required to produce the first year design varies

• Any funds (prepayment or appropriations)

designated for the Seed Funding Phase, but not spent, will be retained and utilized on the project as it progresses

Desert Southwest Region - 10-Year Plan

Seed Funding Explained

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• Each project scope is unique and the amount of

seed funding required to produce the first year design varies

• Any funds (prepayment or appropriations)

designated for the Seed Funding Phase, but not spent, will be retained and utilized on the project as it progresses

Desert Southwest Region - 10-Year Plan

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FY19 SEED PROJECT BOUSE UPGRADE

Desert Southwest Region - 10-Year Plan

AOA Study Phase: September 2018 Seed Funding Phase: October 2018 See Page 11 of Handout Book

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Desert Southwest Region - 10-Year Plan

• The Bouse Upgrade Project is WAPA’s next seed funded project
• The seed funded design phase will begin in October 2018 and

concludes in September 2019

• This project will be proposed for prepayment funding in December

2019

• Appropriations have been secured for FY19 to begin the Seed

Funding Phase for preliminary design

• The details of the Bouse Upgrade Project were shared during

previous 10-Year Plan Meetings

• The purpose of the project is to resolve the ongoing delays and

issues encountered on the Parker-Headgate/Parker-Bouse Project (PAD-HDR/PAD-BSE)

• For detailed information regarding this project please see your

handbook on page11

• You can also visit WAPA’s 10-Year Plan website at:

https://www.wapa.gov/regions/DSW/Pages/10-year-capital- program.aspx

Bouse Upgrade Project Overview

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2018 Prepayment Funding Vote

Desert Southwest Region - 10-Year Plan

See Page 19 of Handout Book

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Desert Southwest Region - 10-Year Plan

2018 Prepayment Funding Vote

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Desert Southwest Region - 10-Year Plan

2018 Prepayment Vote

There are two “types” of projects proposed for prepayment funding this December

• Seed Funded Projects
• These projects have completed a seed funded design phase and

reached a 50%-75% design

• The scope, schedule and estimate of these projects has been refined
• The use of prepayments to fund the projects is being voted on in

December

• Pivot Project
• This project is being funded in order to align with the budget

formulation

• The scope, schedule and estimate are based on the AOA study that

was completed in 2016

• The project estimate has been updated with current labor rates
• As the project moves through preliminary design the estimate

accuracy improves and will be shared in detail with the customers

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BOUSE-KOFA 161-KV REBUILD PHASE I & II

Desert Southwest Region - 10-Year Plan

AOA Study Phase: September 2016 Prepayment Vote: December 2018 See Page 19 of Handout Book

Bouse-Kofa 161-kV AOA Study

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Desert Southwest Region - 10-Year Plan

Project Overview

• The AOA study was completed in the summer of 2016
• The study has been revalidated in anticipation of the

upcoming prepayment vote

• The original study encompassed an 84 mile segment of

the Parker-Gila transmission line, which was built in 1943

• The transmission line is comprised of 82 wood H-Frame

structures and 211 light duty steel H-frame structures

• In 2006, an 8.4 mile section of the line was rerouted

around the town of Quartzite with 954 ACSR on steel monopoles

• This portion of the line is not included in the project

Bouse-Kofa 161-kV AOA Study

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Desert Southwest Region - 10-Year Plan

Project Justification

• 106 NERC/NESC violations require

corrective action

• Significant deteriorated and unsafe

wood structures

• Vintage 1943 300 kcmil hollow core

copper conductor experiencing significant sag

• Access roads and Right Of Way (ROW)

require rehabilitation

• 20-30% of wood poles require

replacement immediately

• Additional communication bandwidth

is required via fiber optic ground wire to meet current and future protection, control, communication, and security requirements

Checking / Heart Rot Lineman Climbing Safety Concerns

Bouse-Kofa Approximate Phasing

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Desert Southwest Region - 10-Year Plan

• The original study was performed under the

assumption that the project would be pursued as a single construction project

• During revalidation of the study it was decided

to split the project into 2 separate phases

• As a result of this phasing transmission rate

impacts are moderated

• Phase I
• ~31 miles of rebuild from Kofa Substation

heading north

• Phase II
• ~44 miles of rebuild from Bouse

Substation heading south

Bouse-Kofa Rebuild Scope

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Desert Southwest Region - 10-Year Plan

• Reconductor with 336.4-kcmil ACSS to reduce sag, eliminating

the majority of the NERC/NESC violations

• The existing copper conductor has an estimated salvage

value of ~$1.7M, which was taken into account in the estimate

• Upgrade the remaining 82 wood structures to light duty steel

H-frames

• ~5-10 replacements will be dead-end structures
• Additional steel structures may be needed to correct any

remaining NERC/NESC clearance issues

• Add Optical Overhead Ground Wire (OPGW)
• Repair/Reclaim ROW access

Bouse-Kofa Rebuild Cost Estimate

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Desert Southwest Region - 10-Year Plan

• During preliminary design, the funds will be allocated between Phase I

and Phase II

• Once preliminary design has been completed, total line miles within

each project will be determined and the individual project phasing budgets will be adjusted accordingly

Bouse-Kofa Rebuild Schedule

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Desert Southwest Region - 10-Year Plan

PHASE I

• Customer Vote – DEC 2018
• 100% Design – SEPT 2019
• Begin Construction – NOV 2021
• Complete Construction – APR 2022
• Financial Closeout – OCT 2022

PHASE II

• Customer Vote – DEC 2018
• 100% Design – SEPT 2019
• Begin Construction – NOV 2021
• Complete Construction – APR 2022
• Financial Closeout – OCT 2023

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GILA– DOME TAP UPDATE

Desert Southwest Region - 10-Year Plan

Seed Funding Phase: September 2018 Prepayment Vote: December 2018 See Page 26 of Handout Book

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• 7.5 mile transmission line from Gila Substation to

Dome Tap

• This project will replace 17 wood structures with light-

duty steel

• Upgrade the conductor from 300-kcmil copper core to

336.4-kcmil ACSS

• Replace one OGW with OPGW
• Replace second OGW with new OGW
• 3 light-duty steel structures will be replaced with new

taller structures to rectify NESC/NERC clearance issues

• The two structures inside Dome Tap (one on GLA-DME

line, one on KOF-DME) support each other. Replacing both at same time would be more efficient and less costly.

Desert Southwest Region - 10-Year Plan

Project Scope

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Desert Southwest Region - 10-Year Plan

Project Financials

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• 75% Design – OCT 2018
• Customer Vote – DEC 2018
• 100% Design – MAR 2019
• Begin Construction – NOV 2019
• Complete Construction – MAY 2020
• Financial Closeout – NOV 2020

Desert Southwest Region - 10-Year Plan

Conceptual Schedule

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KOFA – DOME TAP UPDATE

Desert Southwest Region - 10-Year Plan

Seed Funding Phase: September 2018 Prepayment Vote: December 2018 See Page 28 of Handout Book

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• 7.3 mile transmission line from Kofa

Substation to Dome Tap

• This project will replace 7 wood structures

with light-duty steel

• Upgrade the conductor from 300-kcmil

copper core to 336.4-kcmil ACSS

• Replace one OGW with OPGW
• Replace second OGW with new OGW
• 3 light-duty steel structures will be replaced

with new taller structures to rectify NESC/NERC clearance issues

Desert Southwest Region - 10-Year Plan

Project Scope

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Desert Southwest Region - 10-Year Plan

Project Financials

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• 75% Design – Oct 2018
• Customer Vote – Dec 2018
• 100% Design – Mar 2020
• Begin Construction – Nov 2020
• Complete Construction – May 2021
• Financial Closeout – Nov 2021

Desert Southwest Region - 10-Year Plan

Conceptual Schedule

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COOLIDGE-VALLEY FARM RMS UPDATE

Desert Southwest Region - 10-Year Plan

Seed Funding Phase: September 2018 Prepayment Vote: December 2018 See Page 29 of Handout Book

Project History

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• The Coolidge – Valley Farms project was shared for

prepayment vote to in September 2017

• The scope of the preferred alternative was to replace

all structures on the line with light-duty steel, restring with new conductor and install OPGW

• The project received a no vote in December 2017
• After internal review and customer correspondence

WAPA proceeded to seed fund the project to explore a less costly alternative

• The scope for seed funding was to replace all C and D

rated structures on the line like-for-like with wooden structures, restring with new conductor and install OPGW

Desert Southwest Region - 10-Year Plan

Project Scope

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• Design encompasses approximately 6.1 miles from

Coolidge Substation to the Valley Farms Substation, along with possible minor substation work

• Replace existing deteriorated wood poles in-kind
• 39 structures that are not going to be replaced as part
• f this effort will require steel reinforced wood

crossarms to be installed

• Upgrade the conductor from 4/0 copper (88 MVA) to

Cardinal 954 kcmil ACSR and add OPGW

• Where possible, the new wood poles will be installed in

the same location to avoid environmental and access challenges

• Reduced environmental requirements based on

modified scope and construction footprint of project

• Existing 4/0 copper has a salvage value of ~$91k and

has been accounted for in the estimate

Desert Southwest Region - 10-Year Plan

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Desert Southwest Region - 10-Year Plan

Project Financials

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• 50% Design – SEPT 2018
• Customer Vote – DEC 2018
• 100% Design – FEB 2019
• Begin Construction – OCT 2019
• Complete Construction – MAR 2020
• Financial Closeout – OCT 2020

Desert Southwest Region - 10-Year Plan

Conceptual Schedule

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10-YEAR PLAN / RATE IMPACTS

Desert Southwest Region - 10-Year Plan

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Desert Southwest Region - 10-Year Plan

10-Year Plan

1. Cost in Thousands of Dollars 2. Cost to Date 08/01/2018

See Page 33 of Handout Book

10-Year Plan Changes From Draft

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Desert Southwest Region - 10-Year Plan

• All future projects have been revalidated based on

improvements made to the AOA and seed funding

• The 20% cost contingency has been removed
• The most current labor rates have been incorporated

into the estimates

• The 10-Year Plan has seen an overall cost reduction of

~$9.75M from the Draft Presentation shared July 31

• A rate analysis has been performed to reflect these

changes

• The Bouse-Kofa project is proposed to be fully funded but

executed as two individual projects

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Desert Southwest Region - 10-Year Plan

• Finance, Maintenance, and Power Marketing

continue working together to smooth (flatten) the 10-Year Plan

• Smoothing was achieved by optimizing:
• Funding- Expenditures per year and cash

flow

• Constructability- Schedule and available

resources

• In-Service Date- Total project cost at close out

10-Year Plan Smoothing Effort

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Desert Southwest Region - 10-Year Plan

Rates Impacts Timing

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Desert Southwest Region - 10-Year Plan

Rates Impacts Timing

Rates Overview/Design

• Parker-Davis Project and Intertie rates and charges are

forward looking, meaning they are determined based

• n projections of future costs
• Expenses include O&M, PPW, and repayment of capital
• Repayment of capital includes existing unpaid

investments (assets) as well as projections of future investments

• Repayment of capital is independent of how the

investments were or will be funded

• All investments are repaid whether they are funded by

appropriations or alternatively financed

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Desert Southwest Region – 10-Year Plan

See Page 31 of Handout Book

Rate Impacts

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Desert Southwest Region – 10-Year Plan

• Projects become repayable the year after placed

in service

• Project costs include Interest During Construction

(IDC)

• Different repayment methodologies
• Parker-Davis Project: 5-year rate window using an

average of future capital costs

• Intertie: 50-year rate window, pinch-point (highest

year of costs)

Parker-Davis Project Rate Impacts

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Desert Southwest Region – 10-Year Plan

See Page 34 of Handout Book

Intertie Project Rate Impacts

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Desert Southwest Region – 10-Year Plan

See Page 35 of Handout Book

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NEXT STEPS

Desert Southwest Region - 10-Year Plan

Prepayment Voting Schedule

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Desert Southwest Region - 10-Year Plan

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Desert Southwest Region - 10-Year Plan

2018 10-Year Plan Customer Meetings

DECEMBER 2018  Prepayment Voting Meeting Q1 2019  Active Projects Update Meeting Q2 2019  Draft 10-Year Plan Meeting Q3 2019  Final 10-Year Plan Meeting Q4 2019  Prepayment Funding Meeting

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BREAK SOUTHLINE PRESENTATION FOLLOWING

Desert Southwest Region - 10-Year Plan

Southline Transmission Project

Parker-Davis Project Customer Update

October 4, 2018

10-Year Plan Meeting

Desert Southwest Region Phoenix, Arizona

Purpose of Presentation

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• Provide background information
• Project updates from August 2017 customer meeting
• Current Efforts
• Construction Phases
• Commercial Activity
• Anticipated timeline
• Keep customers informed and obtain feedback

Southline Project October 4, 2018

Background – Project Overview

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Two segments, totaling 370 miles

– New Build — 345-kV double-circuit Afton-Apache, 250 miles – Upgrade — 230-kV double-circuit Apache-Saguaro/Tortolita, 120 miles

Southline Project October 4, 2018

Background – Project Overview

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• Bi-directional capacity WECC Phase 3 accepted rating*
• Afton to Apache:

1,037 MW

• Apache to Saguaro/Tortolita:

1,000 MW

• Tortolita/Saguaro to Apache:

430 MW

• Apache to Afton:

971 MW

• Multiple interconnections to existing transmission system
• Maintains existing Parker-Davis Project (P-DP) 115-kV contract paths
• Federal Record of Decisions issued and state siting complete in AZ and NM
• ROW on approximately equal parts BLM, state and private land
• Upgrade existing system and follow existing corridors to minimize

environmental impacts *Assumes full project build out in service

Southline Project October 4, 2018

Background – Project Proposal

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Southline Project October 4, 2018

WAPA Upgrade Segment New Build Segment Assets included

 Rebuild of existing Apache-Tucson and Tucson-Saguaro 115kV lines to 230kV DCTL  Improvements to currently interconnected stations  New Build Segment: ~250 miles of 345kV DCTL  Upgrade Segment: New interconnection lines (~5 miles) to interconnect additional stations to existing WAPA line

Ownership

 WAPA continues ownership  Southline owns

Funding

 Southline funds  Southline funds

Capacity Rights

 WAPA retains existing rights  WAPA and Southline obtain capacity rights commensurate with contributions  WAPA and Southline obtain capacity rights commensurate with contributions

Construction

 WAPA constructs  Southline or designee constructs

Operation & Maintenance

 WAPA continues to operate  Expenses shared in proportion to capacity rights  Southline or designee operates  Expenses shared in proportion to capacity rights

Lands

 WAPA manages  WAPA Co-manages

Note: Ownership exceptions for new interconnections and facilities within the Upgrade Segment; non

• WAPA owned

facilities within Upgrade Segment included within “New Build Segment “ above.

Project Update – Current Efforts

• Tailoring scope, schedule, and approach to current

commercial support

• Refinement of construction phases (“A” and “B”)
• Considerable contract negotiations
• Evaluating extension of project to ED5
• Coordinating with interconnected utilities technical

configurations, operational assumptions, and joint access as necessary

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Southline Project October 4, 2018

Project Update – Scope, Schedule, and Approach

• Substantial interest in utilizing project to access high quality NM wind
• Production Tax Credit step downs create significant economic incentives to achieve transfer

capability as soon as possible. Anchor tenant demand focused on 2021 delivery.

• Phase A was scoped to provide initial transmission service to meet current off-taker interest

in the desired timeframe at the lowest cost.

• Southline is working to finalize agreements necessary to finance Phase A. Construction

timing for the rest of the project, “Phase B,” will be contingent upon Southline sufficiently advancing further commercial interest, which will continue to be developed in parallel with Phase A execution.

• Phase A extended operation review items:
• Ensure system stability & reliability for interim state
• Evaluate reduced capacity yield
• Establish rating methodology
• Assess adjusted project cost/benefit

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Southline Project October 4, 2018

Project Update – Construction Phase A

*Subject to minor changes prior to construction Phase A generally consists of:

• Upgrade Segment:
• Upgrading WAPA’s 115-kV line from existing Apache to ED5 substation to 230-kV

standards; operated at 115-kV out of existing Apache with connections to the existing 115-kV substations.

• Addition of a new 230-kV substation (SLT-Pantano) near existing Pantano.
• Adding an additional 230-kV circuit operated at 230-kV out of SLT-Apache with

connections to Vail, SLT-Pantano, and Tortolita.

• Upgrades at Vail, Tucson, Marana, Tortolita, and DeMoss Petrie substations to enable

interconnection.

• New Build Segment:
• Addition of a new 345-kV substation (SLT-Afton) near the existing Afton substation.

Upgrades to the existing Afton substation and an interconnection line between these substations.

• Addition of a new 345/230-kV substation (SLT-Apache) near the existing Apache

substation.

• A new double circuit 345-kV transmission line between SLT-Afton and SLT-Apache.

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Southline Project October 4, 2018

Phase A Technical Sketch

*Subject to minor changes prior to construction

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Southline Project October 4, 2018

Project Update – Construction Phase B

*Subject to minor changes prior to construction Phase B generally consists of:

• Upgrade Segment:
• Upgrades to the existing Apache substation to provide for New Build interconnection.
• Energization of the 115-kV circuit to 230-kV.
• Move existing 115-kV connection at existing Apache substation over to a 230-kV

connection into the SLT-Apache substation.

• Upgrades to Adams Tap, Nogales*, Del Bac*, Rattlesnake, Marana/Sawtooth

substations to 230-kV.

• New Build Segment:
• Additional upgrades to the SLT-Afton substations.
• Addition of a new 345-kV substation (SLT-Hidalgo) with interconnection loop into the

existing Hidalgo substation and the Southline circuit.

• Additional upgrades to the SLT-Apache substation.
• 230kV Interconnection line between SLT-Apache and existing Apache substations.

*If needed, potential for decommissioning Nogales and Del Bac substations

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Southline Project October 4, 2018

Phase B Technical Sketch

*Subject to minor changes prior to construction

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Southline Project October 4, 2018

Project Update – Contract Negotiations

Since execution of the Participation Agreement in January 2018, WAPA and Southline have been negotiating the following Key Agreements:

• Construction Agreement – Roles, responsibilities, and expectations of constructing

the project.

• Ownership Agreement – Delineation of which entities will hold title to which assets,

equipment, structures and hold rights to specified amounts of capacity or capacity rights.

• Operations, Maintenance, and Replacements Agreement – Listing of all equipment

associated to the project and which entity owns, operates, maintains, replaces, and has financial responsibility of the equipment.

• Lease Agreement – Western’s lease of land and/or facilities as needed.
• Communications and Security Agreement – Communication sharing arrangements

between Western, Southline, and any sub-leases to include data security and compliance.

Targeting final drafts ready for execution by Spring 2019

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Southline Project October 4, 2018

Anticipated Timeline

November 2018 – Finalize scope of work per phase March 2019 – Executable contractual drafts Q3 2019 – Phase A Funding Q3-Q4 2019 – Commence Phase A construction 2021 – Initial transfer capabilities 2022 – Complete Phase A construction TBD – Complete Phase B construction

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Southline Project October 4, 2018

Contacts

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Southline Project website www.southlinetransmissionproject.com

Doug Patterson (415) 787-4209 doug@blackforestpartners.com Project Manager Bill Kipp (415) 787-4211 bill@blackforestpartners.com Project Manager Matt Virant (214) 978-8926 mvirant@huntpower.com Project Manager Josh Johnston (602) 605-2662 JJohnston@wapa.com DSW System Planning Mike Simonton (602) 605-2675 Simonton@wapa.gov DSW Power Marketing Matt Schmehl (602) 605-2784 schmehl@wapa.gov WAPA Project Manager Mark Wieringa (720) 962-7448 wieringa@wapa.gov HQ Environment

Southline Project October 4, 2018

Questions / Comments

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Southline Project October 4, 2018