120815_BV_TransCapCost - Western Electricity Coordinating Council

August 15, 2012WESTERN ELECTRICITYCOORDINATING COUNCILTRANSMISSION AND SUBSTATION CAPITAL COSTS

AGENDA• Project Overview, Team, Approach• Transmission Line Cost Updates• Substation Cost Updates• Right-of-Way Requirements and Land Costs• AFUDC/Overhead Cost Assumptions• Scenario Analysis• PacifiCorp - Gateway Central (Populus-TerminalSegment)• NV Energy – One Nevada• BPA – McNary-John Day• Xcel Energy – Comanche-Daniels Park2

PROJECT OVERVIEW• Develop estimates of installed costs of transmission andsubstations for use by WECC in long-term planning studies• Grid-level lines – 230 kV and above• State-specific and terrain-specific multipliers• Include siting considerations• Develop process to implement with WECC GIS analysis andreview of new transmission lines• Sanity check estimated costs to actual line costs3

APPROACH & PROCESS• Aggregate current costs and projections from variety of sources• Utilities• Private developers• Engineering estimates /market prices• Focused webinars to develop assumptionsDate Agenda Meeting Materials6/21 Transmission cost data • WREZ transmission• B&V –proposed capital cost assumptions• Utility cost estimates (as available)• Recent Tx. Line costs (breakdown as available)• Identify cost adders• Proposed methodology for cost addersWeek of7/23Week of7/30Substation cost • Updated capital costs and transmission information• Matrix of substation costs• Example transmission/substation cost calculationComplete discussion ofsubstation costs and presentscenario analysis• Updated land costs and substation information• Scenario analysis to test transmission/substation costassumptions against actual project costs4

TEPPC REVIEW TEAM• Thanks to all for providing information/review!Bill PascoeBill HosieCarl ZichellaGrace AndersonScott CauchoisJeff BillintonJim FeiderKeith WhiteMarv LandauerNick SchlagRic CampbellStan HollandSteve EllenbeckerBrad NickellKeegan MoyerByron WoertzArne Olson5

TRANSMISSION LINE COSTS –NEW AND RE-CONDUCTORED LINESLine Description New Line Cost ($/mile) Re-conductor Cost ($/mile)230 kV Single Circuit $927,000 $324,450230 kV Double Circuit $1,484,000 $667,800345 kV Single Circuit $1,298,000 $584,100345 kV Double Circuit $2,077,000 $1,142,350500 kV Single Circuit $1,854,000 $1,019,700500 kV Double Circuit $2,967,000 $1,928,550500 kV HVDC Bi-pole $1,484,000 $816,200• New Line Cost Assumptions• Aluminum Conductor Steel Reinforced (ACSR)• Tubular (230 kV) / Lattice (345 KV and 500 kV)• Longer than 10 miles• Escalated from 2008 WREZ values6

TRANSMISSION LINE BASE CAPITAL COSTS ANDMULTIPLIERSEquipment230 kV SingleCircuit230 kVDouble345 kV SingleCircuit345 kVDouble500 kV SingleCircuit500 kVDoubleCosts based on recentCircuitprojects locatedCircuitin Western U.S.Circuit500 kV HVDCBi-poleBase Cost $927,000 $1,484,000 $1,298,000 $2,077,000 $1,854,000 $2,967,000 $1,484,000MultipliersConductorACSR 1.00 1.00 1.00 1.00 1.00 1.00 1.00ACSS 1.08 1.08 1.08 1.08 1.08 1.08 1.08HTLS 3.60 3.60 3.60 3.60 3.60 3.60 3.60StructureLattice 0.90 0.90 1.00 1.00 1.00 1.00 1.00Tubular Steel 1.00 1.00 1.30 1.30 1.50 1.50 1.50Length> 10 miles 1.00 1.00 1.00 1.00 1.00 1.00 1.003-10 miles 1.20 1.20 1.20 1.20 1.20 1.20 1.20< 3 miles 1.50 1.50 1.50 1.50 1.50 1.50 1.50AgeNew 1.00 1.00 1.00 1.00 1.00 1.00 1.00Re-conductor 0.35 0.45 0.45 0.55 0.55 0.65 0.557

CONDUCTOR SIZE ASSUMPTIONS• 230 kV AC Single• 1 conductor/phase• ACSR – 1272 kcmil• 400 MW Capacity• 345 kV AC Single• 2 conductors/phase• ACSR – 795 kcmil• 750 MW Capacity• 500 kV AC Single• 3 conductors/phase• ACSR – 1590 kcmil• 1500 MW Capacity• 500 kV HVDC Bi-Pole• 3 conductors/phase• ACSR – 1780 kcmil• 3000 MW Capacity8

“RE-CONDUCTORING” DEFINITION• No pole replacement• No insulator replacement• Same configuration• Only conductor replacement• This is typically completed with higher ratedconductor of similar or less weight and size, e.g.ACSR re-conductor with ACSS9

“RE-CONDUCTORING” DEFINITION• 230 kV Transmission Conductors• 1 conductor per phase (3 per line)• Conductor assumed to be 35% of total capital cost• 345 kV Transmission Conductors• 2 conductors per phase (6 per line)• Conductor assumed to be 45% of total capital cost• 500 kV Transmission Conductors• 3 conductors per phase (9 per line)• Conductor assumed to be 55% of total capital cost• 500 kV Bi-Pole Transmission Conductors• 3 conductors per phase (6 per line)• Conductor assumed to be 55% of total capital cost10

TERRAIN MULTIPLIER ASSUMPTIONSTerrain PG&E SCE SDG&E WREZ Average BV Rec.Desert 1.00 1.10 1.00 - 1.03 1.05Scrub / Flat 1.00 1.00 1.00 1.00 1.00 1.00Farmland 1.00 1.00 1.00 1.10 1.03 1.00Forested 1.50 3.00 - 1.30 1.93 2.25Rolling Hill (2-8% slope) 1.30 1.50 - - 1.40 1.40Mountain (>8% slope) 1.50 2.00 1.30 - 1.60 1.75Wetland - - 1.20 1.20 1.20 1.20Suburban 1.20 1.33 1.20 - 1.24 1.27Urban 1.50 1.67 - 1.15 1.44 1.592012 PG&E Per Unit Cost Guide - http://www.caiso.com/Documents/PGE_2012FinalPerUnitCostGuide.xls2012 SCE Per Unit Cost Guide - http://www.caiso.com/Documents/SCE_2012FinalPerUnitCostGuide.xls2012 SDG&E Per Unit Cost Guide - http://www.caiso.com/Documents/SDGE_2012FinalPerUnitCostGuide.xls11

B&V RECOMMENDED TERRAINMULTIPLIERSTerrain Low High RecommendationDesert 1.00 1.10 1.05Scrub / Flat 1.00 1.00 1.00Farmland 1.00 1.00 1.00Forested 1.50 3.00 2.25Rolling Hill (2-8% slope) 1.30 1.50 1.40Mountain (>8% slope) 1.50 2.00 1.75Wetland 1.20 1.20 1.20Suburban 1.20 1.33 1.27Urban 1.50 1.67 1.59• Flat/Barren Land used as the basis (set at 1.00)• PG&E, SCE, and SDG&E adders from Per Unit Cost tables• B&V recommendation is average of range from per unittables12

TRANSMISSION LINE COST METHODOLOGYTotal Transmission Line Cost =[(Base Transmission Cost) x (Conductor Multiplier) x(Structure Multiplier) x(Length Multiplier) x (Age Multiplier) x (Terrain Multiplier) +(ROW Acres/Mile) x (Land Cost/Acre)] x(# of Miles of Segment)13

SUBSTATION COST MATRIXEquipment 230 kV Substation 345 kV Substation 500 kV SubstationBase Cost (New Substation) $1,648,000 $2,060,000 $2,472,000Cost Per Line/XFMR Position $1,442,000 $2,163,000 $2,884,000Ring Bus Multiplier 1 1 1Breaker and a HalfMultiplier1.5 1.5 1.5500 kV HVDC Converter Station - - $445,000,000Shunt Reactor ($/MVAR) $20,000 $20,000 $20,000Series Capacitor ($/MVAR) $50,000 $50,000 $50,000SVC Cost ($/MVAR) $85,000 $85,000 $85,000Transformer Cost ($/MVA)115/230 kV XFMR $7,000 - -115/345 kV XFMR - $10,000 -115/500 kV XFMR - - $10,000138/230 kV XFMR $7,000 - -138/345 kV XFMR - $10,000 -138/500 kV XFMR - - $10,000230/345 kV XFMR $10,000 -230/500 kV XFMR $11,000 - $11,000345/500 kV XFMR - $13,000 $13,00014

SUBSTATION COST ASSUMPTIONS• Base Substation• Includes land, substation fence, control building, ground grid, etc.• Excludes breakers, transformers, etc.• Assumes flat, barren land with relatively easy site access• Line/Transformer Positions• Includes switches, bus work, and circuit breakers• Transformer• Includes foundation and oil containment• DC Converter Station• Includes DC Converter, harmonic filtering equipment, 500 kV DCand AC switchyard, reactive equipment, etc.• Excludes ground electrode• Static VAR Compensator, Shunt Reactors and Series Capacitors• Turnkey installation costs15

SUBSTATION COST METHODOLOGYTotal Individual Substation Cost =[(Substation Base Cost) +(High-Side Line/XFMR Position Base Cost) x (# of Line/XFMRPositions) x (RB or BAAH Multiplier) +(XFMR Cost/MVA) x (XFMR MVA Rating) x (# of XFMRs) +(Low-Side Line/XFMR Position Base Cost) x (# of Line/XFMRPositions) x (RB or BAAH Multiplier) +(SVC Cost/MVAR) x (# MVARs) + (Series Cap. Cost/MVAR) x (#MVARs) + (Shunt Reactor Cost/MVAR) x (# MVARs) +(HVDC Converter Station Cost)]If existing substation, remove (Base Substation Cost)16

RIGHT-OF-WAY WIDTHS• Survey• NERC and FERC Documents (example below)• Utility Requirements/Estimates• Actual Project ROW WidthsFERC Utility Survey Results (2004)http://www.ferc.gov/industries/electric/indus-act/reliability/veg-mgmt-rpt-final.pdf17

RIGHT-OF-WAY WIDTHSSourceFERC Nation-wideUtility Survey230-kVSingleCircuit230-kVDoubleCircuit345-kVSingleCircuit345-kVDoubleCircuit500-kVSingleCircuit500-kVDoubleCircuit500-kV DCBi-Pole100 ft. - 125 ft. - 175 ft. - -DRECP(SCE/LADWP)100 ft. - - - 200 ft. - -SDG&E - 300 ft. - - 200 ft. - -PG&E 75 ft. - - - - - -PacifiCorp 125/150 ft. - 150 ft. - 250/300 ft. 300 -BPA 125/225 ft. - - - 150 ft. - -Idaho Power - - - - 250 ft. - -Xcel Energy - - - 225/250 ft. - - -WREZ 150 ft. 150 ft. 160 ft. 160 ft. 175 ft. 175 ft. 200 ft.WECCAssumption125 ft. 150 ft. 175 ft. 200 ft. 200 ft. 250 ft. 200 ft.Acres/mile 15.14 18.17 21.20 24.23 24.23 30.29 24.2318

RIGHT OF WAY LAND COSTSROW land cost approach appropriately captures therelative cost difference for ROW in states and differentland use areas• Consistent data across all states• Transparent and public information• Costs designed for ROW leases• Use BLM Linear Right-of-Way Rent Schedule for Year2015 (43 CFR Parts 2800, 2880, and 2920)• Converted Rent to Capital Costs Land Value19

RIGHT OF WAY LAND COST APPROACHConvert linear land lease rates to Land Market Value to be consistent withcapital cost approachLand Market Value =Land Rental Value - Land TaxesCapitalization Rate• Land taxes = 1% of rental rate• Capitalization rate = 10%where:• Land Rental Value is the annual fee individuals are willing to pay for the exclusive right to use a land site for a periodof time.• Land Taxes is the portion of the land rental value that is claimed for the community.• Capitalization Rate is a market determined rate of return that would attract individuals to invest in the use of land,considering all of the risks and benefits which could be realized.• Land Market Value is the land rental value, minus land taxes, divided by a capitalization rate.http://www.blm.gov/pgdata/etc/medialib/blm/wo/MINERALS__REALTY__AND_RESOURCE_PROTECTION_/cost_recovery.Par.47392.File.dat/RentLinearRentSchedule2009-2015-NoHighlight.pdf20

LAND COST APPROACH• BLM develops Linear LandRental Rates for all countiesin US• Cost differences populationbased so thy reflectrelative developmentintensity of land(i.e San Francisco prices are$25,000/acre-year whileBoulder, CO is $6,111 andMineral, NV is $154.)• Counties split into 12 peracrecost zones• Consistent data source forall of WECC that representsrelative land costs at asufficient level ofgranularityBLM Land ValuesCost CategoryRental Rate($/acre-year)Land Market Value($/acre)1 $ 8.62 $ 85.342 $ 17.24 $ 170.683 $ 34.49 $ 341.454 $ 51.73 $ 512.135 $ 68.97 $ 682.806 $ 103.46 $ 1,024.257 $ 172.43 $ 1,707.068 $ 344.86 $ 3,414.119 $ 689.72 $ 6,828.2310 $ 1,034.58 $ 10,242.3411 $ 1,724.30 $ 17,070.5712 $ 3,448.60 $ 34,141.14http://www.blm.gov/pgdata/etc/medialib/blm/wo/MINERALS__REALTY__AND_RESOURCE_PROTECTION_/cost_recovery.Par.47392.File.dat/RentLinearRentSchedule2009-2015-NoHighlight.pdf21

AFUDC/OVERHEAD COST ASSUMPTIONS• AFUDC (Allowance for Funds Used During Construction)• Represents the cost of funds (debt and equity) used tofinance construction projects• Accrued during construction and capitalized as part of totalproject cost• AFUDC/overhead costs vary widely by project—somerepresentative values are shown in the table below:Project Name Independent Developer IOU Public UtilitySource B&V Estimate NV Energy/PacifiCorp BPAAFUDC Cost Assumptions 10.0% 8.6% 4.1%Overhead Cost Assumptions 10.0% 6.2% 23.0%Assumption forAFUDC/Overhead Cost7.5% (AFUDC) + 10.0% (Overhead) = 17.5%• B&V will apply generic AFUDC/overhead cost adder of 17.5% tototal transmission line and substation costs22

TRANSMISSION LINE COST CALCULATOR23

SUBSTATION COST CALCULATOR• Must perform this calculation for eachsubstation individually24

COST CALCULATOR – COST TOTALS SHEET• Enter individual substation cost totals on thissheet to calculate total project costs25

SCENARIO ANALYSIS• PacifiCorp - Gateway Central (Populus-Terminal Segment)• NV Energy – One Nevada• BPA – McNary-John Day• Xcel Energy – Comanche-Daniels Park26

SCENARIO ANALYSIS – TERRAIN SEGMENTS(all valuesin miles)GatewayCentral(Populus-Terminal)OneNevadaMcNary-John DayComanche-DanielsParkForest-edScrub/FlatWetlandFarmlandDesert/Barren LandUrbanRollingHill (2-8%Slope)Mountain(>8%Slope)0.3 49.3 0.6 29.8 0.5 23.7 17.7 11.70.9 189.0 0.0 0.0 0.9 0.0 40.1 1.20.0 31.5 0.0 28.1 0.0 2.4 9.1 0.76.1 111.6 0.0 3.1 0.0 0.2 0.0 0.027

SCENARIO ANALYSIS TRANSMISSION LINES - DETAILSProject Voltage Length(miles)PacifiCorp -Gateway Central(Populus-Terminal)NV Energy - OneNevadaBPA – McNary-John DayXcel Energy –Comanche-Daniels Park345-kVDoubleCircuit500-kVSingleCircuit500-kVSingleCircuit345-kVDoubleCircuitConductorTypeStructure135 ACSR TubularSteelNew or ReconductorROWLocationNew 25% ID, 75%UTTotal Cost PerMile$6,046,000235 ACSR Lattice New 100% NV $2,168,98179 ACSR Lattice New 100% OR $1,835,443125 ACSR TubularSteelReconductor100% CO $1,215,600• Sources: WECC transmission project portal, regulatoryfilings, other project documents28

GATEWAY CENTRAL (POPULUS-TERMINALSEGMENT) PROJECT MAP29

SCENARIO ANALYSIS RESULTS – GATEWAY CENTRALCost ComponentActual CostB&V EstimatedCostDifference (Actual –Estimated Cost)Line Cost (including wires, poles, etc.) $ 498,439,614.00 $ 443,071,335.00 11%ROW Cost $ 70,183,253.60 $ 2,774,370.26 96%Substation Cost $ 126,054,613.20 $ 187,689,000.00 -49%AFUDC/Overhead Cost $ 122,152,660.00 $ 110,868,573.42 9%Total Cost $ 816,830,140.80 $ 744,403,278.68 9%• Sources: regulatory filings, other project documents, B&Vcapital cost calculator30

ONE NEVADA PROJECT MAP31

SCENARIO ANALYSIS RESULTS – ONE NEVADACost Component Actual Cost B&V Estimated CostDifference (Actual –Estimated Cost)Line Cost (including wires, poles, etc.) Unknown $ 463,873,675.03 N/AROW Cost Unknown $ 2,226,191.23 N/ASubstation Cost Unknown $ 131,404,000.00 N/AAFUDC/Overhead Cost Unknown $ 104,563,176.59 N/ATotal Cost $ 509,710,592.00 $ 702,067,042.85 -38%• Sources: regulatory filings, other project documents, B&Vcapital cost calculator32

MCNARY-JOHN DAY PROJECT MAP33

SCENARIO ANALYSIS RESULTS – MCNARY-JOHN DAYCost Component Actual Cost B&V Estimated CostDifference (Actual –Estimated Cost)Line Cost (including wires, poles, etc.) $126,814,842 $ 143,288,287.26 -13%ROW Cost Unknown $ 265,993.70 N/ASubstation Cost $17,484,816 $ 14,420,000.00 18%AFUDC/Overhead Cost $39,105,207.32 $ 27,645,499.17 29%Total Cost $183,404,865 $ 185,619,780.13 -1%• Sources: regulatory filings, other project documents, B&Vcapital cost calculator34

COMANCHE-DANIELS PARK PROJECT MAP35

SCENARIO ANALYSIS RESULTS – COMANCHE-DANIELS PARKCost Component Actual Cost B&V Estimated CostDifference (Actual –Estimated Cost)Line Cost (including wires, poles, etc.) Unknown $ 191,146,222.65 N/AROW Cost Unknown $ 1,188,954.28 N/ASubstation Cost Unknown $ 12,978,000.00 N/AAFUDC/Overhead Cost Unknown $ 35,929,805.96 N/ATotal Cost $ 151,950,000 $ 241,242,982.90 -59%• Sources: regulatory filings, other project documents, B&Vcapital cost calculator36

THANK YOU!Tim MasonMasonT@bv.com415-693-9552, ext. 15Dan WilsonWilsonRD@bv.com949-788-4295Trevor CurryCurryTG@bv.com415-693-9552, ext. 2137