# Presentation: 663881

## MULTI SYSTEM TRANSMISSION RATE

- Fifth Informal Customer Meeting
- 			Jack Murray

## Meeting Agenda

- Discuss reasons for MSTR
- Review of model Pros and Cons
- Presentation of MSTR w/ latest financial data and assumptions
- Update on losses/CRSP transmission
- Next steps

## MSTR Background

- Why are we here?
- _Customers_  requested DSW look at single system rate
- Mitigate need to reduce Firm Transmission capacity at conversion of FTS contracts to OATT agreements
- Align rate structure with integrated operation of control area resources.

## Background-cont’d

- Advantages of switching to a MSTR
- Additional Contract Capacity
- Focused Upgrades
- Eliminate Pancaked Rates
- Facilitates Customer Financing

## MSTR Background

- Initial look—MSTR only
- MSTR w/convergence to a target rate
- Converge w/ MSTR available in 5th Year
- Converge w/ MSTR available in 1st Year
- Customer choice model – “circular” issues
- “OATT 1st” – customer choice model until contract terminates

## Pros & Cons-MSTR Only

- _Pros:_
- Additional ATC (78 MW) available immediately
- Pancaking eliminated effective with rate implementation
- Reduce administrative processes
- Simplify West Wide OASIS posting

## Pros & Cons MSTR Only-Cont’d

- _Cons:_
- Largest immediate cost shift to single system customers
- Immediate rate fluctuations
- Higher rate in 5th year than convergence methods

## Pros & Cons-Convergence Model

- _Pros:_
- Allows for full implementation & benefits of MSTR in five years
- Minimizes yearly cost shifts to Single System customers

## Pros & Cons-Convergence Model(cont’d)

- _Cons:_
- Increased costs for some non-pancaked FTR Customers
- Increased administrative processes during 5 year implementation period

## Pros & Cons-Convergence Model

- Differences between 1st Yr and 5th Yr
- _5__th__ Year_
- Additional capacity not available until 5th year
- Pancaking continues until 5th year
- _1__st__ Year_
- Additional capacity available in 1st year
- Pancaking eliminated 1st year
- MSTR rate higher in 1st 4 years

## Pros & Cons Customer Choice(Western Model)	

- _Pros:_
- Customer Choice
- _Cons:_
- Customer choice negated by circular problem.
- “Circular” problem
- Start point determines MSTR Only or
- SSTR Only

## Pros & Cons- OATT 1st

- _Pros:_
- Allows customer choice for some
- Minimizes cost shift for some
- _Cons:_
- Disparate treatment issues
- Initial MSTR rate significantly higher than other methods.
- Delays full implementation of MSTR for more than 10 years

## MSTR Rates Using Current Data

## Table 1:  MSTR Only

| Proposed Rates (kW/Mo) |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- |
|   | P-DP | CAP | IP 230/345  | IP 500 | MSTR Only |
| FY05 | $1.11 | $0.82 | $1.00 | $1.44 | $1.20 |
| FY06 | $1.11 | $0.82 | $1.00 | $1.44 | $1.20 |
| FY07 | $1.11 | $0.82 | $1.00 | $1.44 | $1.20 |
| FY07 | $1.11 | $0.82 | $1.00 | $1.44 | $1.20 |
| FY08 | $1.11 | $0.82 | $1.00 | $1.44 | $1.23 |

## Table 2:  MSTR w/ConvergenceApply MSTR 5th Year

| Proposed Rates (kW/Mo) |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- |
|   | P-DP | CAP | IP 230/345 | IP 500  | MSTR |
| FY05 |  $1.11  |  $0.82  |  $1.00  | $1.44  |  n/a  |
| FY06 |  $1.12  |  $0.90  |  $1.04  | $1.37  |  n/a  |
| FY07 |  $1.13  |  $0.99  |  $1.08  | $1.30 |  n/a  |
| FY08 |  $1.14  |  $1.07  |  $1.11  | $1.22  |  n/a  |
| FY09 |  $1.15 |  $1.15 |  $1.15 | $1.15  |  $1.15  |

## Table 3:  MSTR w/ConvergenceApply MSTR 1st Year

| Proposed Rates (kW/Mo) |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- |
|   | P-DP | CAP | IP 230/345 | IP 500  | MSTR |
| FY05 |  $1.11  |  $0.82  |  $1.00  | $1.44  | $1.65 |
| FY06 |  $1.12  |  $0.90  |  $1.04  | $1.37  | $1.51 |
| FY07 |  $1.13 |  $0.99  |  $1.08  | $1.30  | $1.38 |
| FY08 |  $1.14  |  $1.07  |  $1.11  | $1.22  | $1.26 |
| FY09 |  $1.15  |  $1.15  |  $1.15  | $1.15  |  $1.15  |

## Table 4: OATT 1st

| Proposed Rates (kW/Mo) |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- |
|   | P-DP | CAP | IP 230/345 | IP 500  | MSTR |
| FY05 | $1.11 | $0.82 | $1.00 | $1.44 |    $1.69  |
| FY06 | $1.11 | $0.82 | $1.00 |   $1.44 |    $1.69  |
| FY07 | $1.11 | $0.82 | $1.00 |   $1.44 |    $1.65  |
| FY08 | $1.11 | $0.82 | $1.00 |   $1.44 |    $1.50  |
| FY09 | $1.11 | $0.82 | $1.00 |   $1.44 |    $1.40  |

## Rate Assumptions

- “Single System Use Credit”
- Applies to FES and Priority Use Customers
- If power taken ONLY on P-DP, payment for TX component reduced by difference between MSTR and P-DP only rate.
- MSTR required for FES who choose to use multiple systems

## Rate Assumptions, cont’d

- Assume no loss of transmission reservations-
- _EITHER_
- Existing contracts would be extended beyond their expiration dates through the end of the rate evaluation period.
- _OR_
- Western would market that reservation to another customer through the end of the rate period.

## ASSUMPTIONS (Continued)

- New Firm Transmission Service Sales for the AC Intertie 500-kV; 10 year phase-in process as part of rate implementation (FRN 3April1998).
- Western currently on track for projections.

## ASSUMPTIONS (Continued)

- Additional Firm Transmission Service Sales resulting from implementing a Multi-System Transmission Service Rate.
- Capacity that would become available from South of Mead path
- 		10/04 to 9/09 - 78,000 kW

## Assumption Used in Rate

- How are rates effected by the assumptions?
- (Ask Tony if willing to be in meeting and discuss sales outlooks?)

## Losses	 Issues

- New DSW loss rate:  3% - all systems except Mead Phoenix (calculated via contract)
- No pan-caking of losses within DSW
- Effective June 1, 2004 – official notification 30 days prior
- CRSP system loss rates remain separate and distinct.
- Continue to probe alternatives to “unpancake” CRSP losses.

## CRSP Transmission

- CRSP FES deliveries on PDP
- Continue to pay both systems
- PDP FES deliveries on CRSP
- Continue to pay both systems

## Next Steps	

- Western proposal:  Convergence in Year 5
- Draft Federal Register Notice announcing rate process
- Public Information Forums and Comment Forums summer of 04
- MSTR effective fall ’04/winter 05