**UNITED STATES SENATE**

**Committee on Energy and Natural Resources**

***Transmission for Renewable Electricity Resources:***

***Challenges and Solutions***

**June 17, 2008 Hearing**

**Dirksen Senate Office Building**

**Room 366**

**Washington D.C.**

**Testimony by**

**Bryce Freeman**

**For the**

**Wyoming Infrastructure Authority**

Good morning Mr. Chairman, Ranking Member, Senator Barrasso from my home
state of Wyoming, and members of the Committee. My name is Bryce
Freeman. I am the Administrator for the Wyoming Office of Consumer
Advocate and also serve on the Board of the Wyoming Infrastructure
Authority. In both capacities, I am appointed and serve at the pleasure
of the Governor of Wyoming. I am delighted to appear before you this
morning on behalf of the Wyoming Infrastructure Authority.

The WIA was created in 2004 to diversify and grow the state's economy
through the development of electric transmission infrastructure.  If the
market alone was sufficient, there would be no need for an entity such
as the WIA to exist. However, in light of the uncertainty that presently
exists in the electric industry, the WIA was created by the Wyoming
State Legislature to promote transmission and advanced generation
development in the state and throughout the region.

The Legislature provides the WIA with bonding ability and other powers,
and the WIA participates in planning, financing, constructing,
developing, acquiring, maintaining and operating electric transmission
facilities and their supporting infrastructure.

The topics for this hearing are the challenges and possible solutions in
developing transmission for renewable electricity resources. For the
past four years the WIA has been in the forefront of these very issues,
and I look forward to sharing with the Committee some of our
transmission projects and cutting-edge business models employed to get
lines built to facilitate the expansion of renewable resources in the
West.

In keeping with the theme of today's hearing I would like to highlight
some of the challenges that we are facing in the West regarding
transmission development and offer some suggestions that you might
consider in helping us and other western states to overcome those
challenges.

As a consumer advocate I am both personally and professionally concerned
about the future availability and affordability of energy resources. In
today's uncertain environment many traditional generating resources have
limited application due to adverse environmental impacts, but new
alternative generation resources are not yet commercially viable. But,
no matter what the future holds in the way of new generation resources,
it is certain that new transmission infrastructure will be needed to
facilitate those choices.

Through public/private partnerships the WIA has been working on
transmission projects over the last four years that will enable
Wyoming's abundant, low-cost resources to be delivered to markets where
they are needed. Wyoming has one of the highest quality and prolific
wind resources in the lower forty-eight states. (See Appendix I). With
pending carbon legislation, increasingly stringent renewable portfolio
standards, and growing loads throughout the west, there is an urgent
need to bring this resource to market in the near term.

**[Background on the Authority]{.underline}**

Wyoming has very abundant, diverse energy natural resources, including:
wind, coal, oil, natural gas and uranium. For many years Wyoming has had
an objective to add value to the extraction of these resources --
particularly wind and coal -- by generating electricity and shipping the
power to growing markets throughout the west.

In 2004, under the leadership of Governor Dave Freudenthal and
then-Governor Mike Leavitt of Utah, the region completed a year-long
planning process to better understand the opportunities for producing
power in the rocky mountain region and shipping that power to western
markets. This Rocky Mountain Area Transmission Study (RMATS) produced a
regional consensus that, if new transmission lines could be sited and
built, the benefits of accessing Rocky Mountain resources would
translate into lower costs for consumers and a more diverse resource mix
in the western interconnect. The RMATS study also pointed out a number
of institutional challenges that at the time were impeding the
development of transmission lines.

In response, the Wyoming Legislature created the Infrastructure
Authority in 2004, charging it with the challenge of furthering the
recommendations of the RMATS report. At the heart of the WIA's mission
is to diversify and grow the state's economy through the development of
electric transmission infrastructure. The Authority may issue revenue
bonds to help finance these facilities, including the ability to extend
up to \$1 billion of these bonds to the private sector.

Since the formation of WIA, six states have created transmission
authorities along the Wyoming model, including: Colorado, Idaho, Kansas,
New Mexico, North Dakota, and South Dakota. We are working closely with
most of these states on both legislative and project initiatives.

**[WIA's Current Transmission Projects]{.underline}**

The WIA was created as an innovative problem-solving organization and
our approach to transmission development reflects our innovative roots.

***Wyoming-Colorado Intertie***

The growing electric markets most proximate to Wyoming in the western
interconnect are the city of Denver and the rapidly growing communities
along the Front Range. In 2005 the WIA entered into a development
partnership with TransElect, an independent transmission company, and
with the Western Area Power Administration (WAPA), to explore the
commercial viability of a transmission line from eastern Wyoming to the
Denver area.

We have now completed the feasibility, technical, and corridor studies
for a line that would be designed as a 345 kV facility from the Colorado
substation of Pawnee north to the Laramie River Station (LRS) in
Wyoming, with a potential segment at 230 kV from LRS to the Dave
Johnston coal plant further north in Wyoming.

We are now in the middle of a very exciting and possibly
precedent-setting process by offering capacity in the line to third
parties using a FERC-sanctioned open season and auction. The bidding
application and credit approval steps have been finalized and the list
of qualified bidders has us very optimistic that the auction will
successfully allocate the capacity. The bidding process began this week;
the results of the auction are scheduled to be announced on August 4.

What may make this open season precedent setting is that most of the
bidding activity is from parties that want capacity in the line to
support their development of wind power farms in eastern Wyoming. For
example, the Wyoming Colorado Intertie is a project that will access up
to 900 megawatts of class six and seven wind in eastern Wyoming and
deliver it to the Colorado front-range beginning in 2013. It is only the
second project I am aware of in the west to employ an open season
auction as means of committing capacity on the project.

***TransWest Express***

The TransWest Express project is designed as a direct current line
originating in south central Wyoming, with a route through Utah that
terminates at a point just south of Las Vegas. As designed, the project
would allow 3,000 megawatts of new generation to develop in Wyoming and
reach markets in the desert southwest, including Las Vegas, Phoenix and
southern California. The goal is to bring this line into service in
2015.

The TransWest Express concept was first explored by Arizona Public
Service (APS), a large load serving entity for the very rapidly growing
Phoenix area. APS published a promising feasibility study in 2006.

The WIA entered into a development partnership to further the
development of this project by joining with APS and with NationalGrid,
an independent transmission company. Subsequently the three development
parties entered into an interim co-development agreement with
PacifiCorp, and work on the project has been coordinated with
PacifiCorp's proposed Gateway South project. The two projects would
likely share common corridor along much of the route, and applications
for federal permits are pending for both projects.

Marketing efforts led by NationalGrid to secure commitments to the line
from load serving entities have not been successful due to a number of
factors. As such, we are now exploring the use of an anchor tenant
approach to subscribe the capacity of this line in order to assist in
the attraction of development capital. If approved by FERC, this would
be the first time that the anchor tenant approach has been used to
further the development of a transmission line. I am optimistic that we
will successfully realign the project with a new partnership, likely
including anchor tenant commitments from large wind developers
interested in building wind farms in Wyoming and shipping the power to
hungry renewable markets in the desert southwest.

***High Plains Express***

We are also actively engaged in the development of the High Plains
Express project which is a double circuit 500 kV AC line linking
Wyoming, Colorado, New Mexico and Arizona. A feasibility study was
completed in 2007, and the project sponsors are currently working on an
agreement to further the development. This project is a longer-term
opportunity, with a planned in-service date of 2017. The sponsors
include TransElect, an independent transmission company; six utilities
(Tri-State G&T, Colorado Springs Utilities, Public Service Company of
New Mexico, Salt River Project and Xcel Energy); three States with
transmission authorities (Colorado, New Mexico and Wyoming) and the
WAPA.

See Appendix II for more details on WIA's three pending transmission
projects, including depictions of conceptual routing.

**[Regional Challenges and Solutions]{.underline}**

While the WIA has been focused on the economic development opportunity
available to Wyoming, we recognize this is part of a bigger regional
picture. The western interconnect has a number of features that make it
unique, and these regional characteristics and challenges will need
tailored solutions.

The western electric interconnected system is a vast synchronized
machine involving eleven states, two Canadian provinces and parts of
Baja, Mexico. There are very long distances and very significant land
holdings controlled by federal agencies and Native American tribes. With
the exception of California and Alberta, there is no regional system
operator or transmission organization to manage congestion, build
transmission, and broadly allocate costs. The west is dominated by
vertically integrated utilities serving balkanized service territories,
with many functional control areas. The largest and highest quality
renewable resources are typically not located close to the cities where
the demand is highest. This is especially true with wind resource
potential. As this committee clearly recognizes by holding this hearing,
transmission infrastructure is the critical linchpin to successfully
developing and integrating renewable electric generation in the West.

Together with our development partners, we have enjoyed much success
over the last four years. We have also encountered many challenges. We
don't see any of those challenges as insurmountable but we would welcome
your assistance in a few specific areas.

***Tax-exempt Bonding by State Authorities***

One of our biggest challenges is convincing the load serving utilities
whose customers would pay for the transmission capacity that
transmitting intermittent renewable resources over long distances is
economically viable. We believe that reducing the cost of capital
financing through the State Authorities' use of tax-exempt bonding would
provide a significant incentive to developers and investors and lower
costs to consumers.

We need federal legislation to put this tool in place. For the past few
years, in common cause with the other states that have created
transmission authorities, we have been working with the Senate Finance
Committee toward language that would in a limited way allow tax-exempt
bonds to be used by these authorities. The language, which is included
in the tax title to the Senate energy bill that is stalled in this
Congress, would allow State transmission authorities to utilize --
within each State's existing volume cap -- tax-exempt industrial
development bonds.

***FERC Needs to Allow Experimental Business Models***

The WIA and its partners are deploying innovative business models on our
transmission projects. Especially in the West, with some of its
characteristics summarized above, I believe we need to stretch beyond
the vertically integrated utility ownership and control of transmission
facilities. The FERC sanctioned process that governs transmission
service requests is cumbersome at best. The WIA has worked to include
independent transmission companies in our partnership mix for this very
reason. We have also embraced innovative development tools, such as open
seasons and anchor tenant models, to stretch past some of these
institutional sticking points. We will ultimately be looking to FERC to
be receptive to approving these experimental models.

***National Interest Corridor Designations***

The Energy Policy Act of 2005 created a back-stop siting protocol that
could become a critical tool for facilitating the siting and permitting
of transmission lines to facilitate renewables. We believe that there is
a significantly expanded role to be played by the DOE in identifying and
designating prospective National Interest Electric Transmission
corridors. Together with the WGA's recently announced Western Renewable
Energy Zone initiative this would significantly enhance our ability to
identify and develop low cost, high quality renewable energy resources
in the west.

**[Conclusion]{.underline}**

In closing Mr. Chairman, let me again thank you and the Committee for
the opportunity to appear here today and let me reiterate that my focus
remains on utility consumers. We should not forget that at the end of
the day they are the ones who will be expected to pay the freight
regarding the policy decisions of federal, state and local policy
makers. We have an obligation to serve their interests to the best of
our ability. I believe that the transmission development work that the
WIA is engaged in supports that high public interest standard. These
investments will eventually find their way into utility bills that
customers pay and, as Governor Freudenthal reminds us, we should be
square with utility consumers about the cost of these investments. There
are, however, costs associated with inaction. Those costs are real and
in the long term could prove to be much higher than the costs of the
transmission investments I have discussed today. With that I would
welcome any questions you might have.

**[APPENDIX I]{.underline}**

[Wyoming's Abundant Wind Resource]{.underline}

-   According to NREL, Wyoming has over 2/3 of the Class 7 and over 1/2
    of the Class 6 "developable" onshore wind in the U.S. In addition,
    Wyoming has more Class 5, 6 and 7 developable wind than all western
    states combined.

-   NREL data reflects "developable" Class 5 and higher wind potential
    for the State is in excess of 100,000 MW's and Class 3 and higher
    wind potential in excess of 500,000 MW's (see attached spreadsheet).
    To provide some relativity to those numbers, the peak demand for the
    entire WECC grid is estimated to be 175,000 MW's.

-   Over the last eighteen (18) months, the WIA has been actively
    identifying generation projects in support of the six (6)
    transmission projects in the State. To-date, we have identified over
    20,000 MW's of wind generation projects; nearly 2,000 MW's of
    natural gas-fired projects and 110 MW's of power relative to a
    planned coal-to-liquids facility. These projects represent possible
    future power which is currently un-dedicated. The capacity factors
    of the wind projects identified range from 35% to 50% with a
    weighted average in excess of 43%.

![](media/image1.wmf){width="6.749305555555556in"
height="4.022222222222222in"}

**APPENDIX II**

**Summary of WIA's Transmission Projects under Development**

1.  **Wyoming-Colorado Intertie Transmission Project (WCI)**

-   New 345 kV AC Transmission line between Wyoming and the Front Range
    of Colorado delivering wind generation in Wyoming to Colorado

-   Capacity: 900 MW

-   Length: 180 miles

-   In-service Date: 2013

-   Cost: \< \$300 Million

-   Developers: Trans-Elect; Western Area Power Administration; Wyoming
    Infrastructure Authority

-   WECC Path Rating Process: Phase I complete; currently in Phase II

-   ROW & Permitting Status: Waiting on the awarding of capacity via
    Open Season

-   Status:

    -   FERC-sanctioned Open Season is underway with a start date of
        3/31/2008

    -   Project has been entered into the WECC, CCPG regional planning
        group

-   Business Model, re: Market(s): LSE's in Colorado

-   Complementary Projects:

    -   High Plains Express

    -   PSCo's expansion of their system in N/E Colorado

-   Links: <http://www.wyia.org/wci>

2.  **TransWest Express Transmission Project (TWX)**

-   New 500 kV DC line between Wyoming and Las Vegas

-   Capacity: 3,000 MW

-   Length: \>800 miles

-   In-service date: 2015

-   Cost: \>\$2.5 Billion

-   Developers: As of March 2008, the participants were National Grid
    (lead developer); Arizona Public Service; PacifiCorp; and Wyoming
    Infrastructure Authority (WIA). Currently, the participants are
    being redefined.

-   WECC Path Rating Process: Phase I

-   ROW & Permitting Status: Formal application has been filed with the
    BLM in 2007; RFP for 3^rd^ party contractor for NEPA compliance has
    been issued. Working; and a common EIS with GWS has been tentatively
    required by the BLM

-   Status:

    -   Project is being co-developed with the GWS project to mitigate
        costs

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-   Initial feasibility studies completed;

-   Other utilities are interested in participating including Salt River
    Project, Tucson Electric Power, and Southern California Edison

    -   Stakeholder meetings have been held in Utah, Wyoming, Arizona
        and Nevada

    -   Actively involved in the identification of generation developers
        to support the project

    -   Project has been entered into the WECC, NTTG regional planning
        group

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-   Business Model, re: Market(s): LSE's in Arizona, Nevada and Southern
    California

-   Complementary Projects: see Gateway South project below. Also:

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-   Palo Verde -- Devers #2 -- 500 kV line (on hold)

-   EOR 9300 Project

-   Palo Verde -- North Gila #2 -- 500 kV line

-   Gateway West -- 2 500kV lines

-   Gateway South

-   Mona-Terminal -- 2 500 kV lines

-   Populus-Terminal -- 2 345 kV lines

    -   Links: <http://www.wyia.org/projects>

3.  **High Plains Express Transmission Project (HPX)**

-   New 500 kV AC transmission lines between Wyoming and Arizona with
    on-ramps and off-ramps in Colorado and New Mexico and related
    facilities

-   Capacity: 3,500 MW

-   Length: 1,280 miles

-   In-service Date: 2017

-   Cost: \>\$5 Billion

-   Developers: Trans-Elect Development Company; Western Area Power
    Administration; and Wyoming Infrastructure Authority; Tri-state G&T;
    Colorado Springs Utilities; Public Service Company of New Mexico,
    Salt River Project; and Xcel Energy (Public Service Co of CO); New
    Mexico Energy, Minerals and Natural Resources Department; New Mexico
    Renewable Energy Transmission Authority; and Colorado Clean Energy
    Development Authority

-   WECC Path Rating Process: Project is scheduled to enter the Phase I
    process in 2009

-   ROW & Permitting Status: Some activity is scheduled to occur in late
    2009

-   Status:

    -   Feasibility studies continuing

    -   Executive committee has been formed to transition the oversight
        of the development process from the planners

    -   Project has been introduced into the WECC, CCPG and SWAT/West
        Connect regional planning groups

        -   Business Model, re: Market(s): LSE's in Colorado, New Mexico
            and Arizona

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-   Complementary Projects:

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-   WCI Project

-   Eastern Plains Project

-   New Mexico Wind Collector (Path 48)

-   Sun Zia Project

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-   Links: <http://www.rmao.com/wtpp/HPX_Studies.html>

> <http://www.tristategt.org/RP/Transmission.cfm>
>
> <http://www.wyia.org/projects>

**Project Maps**

![](media/image2.wmf){width="8.459722222222222in"
height="6.284722222222222in"}

![](media/image3.wmf){width="8.501388888888888in" height="6.3875in"}

![](media/image4.wmf){width="8.503472222222221in"
height="6.358333333333333in"}