northwestern energy

>> D R A F T << FERC Order 890 NWE Local Transmission Planning Attachment K Posted September 14, 2007 SUBMISSION OF COMMENTS NorthWestern Energy will consider written comments from stakeholders on the DRAFT Attachment K. Written comments may be emailed or faxed to NorthWestern Energy as follows: John Leland Electric Transmission Planning Manager NorthWestern Energy john.leland@northwestern.com Fax: (406) 497-3393 DISCLAIMER NorthWestern's Attachment K, including all supporting documents and attachments thereto, posted September 14, 2007 (DRAFT), is a DRAFT for discussion purposes only and is offered expressly for the limited purpose of soliciting comments from interested stakeholders. NorthWestern reserves the right to alter, amend, revise, or otherwise change the Draft or its position on any matter therein in its sole discretion until formal filing as provided in Order No. 890 is made on December 7, 2007. Nothing in the Draft should be construed as binding upon NorthWestern or a definitive final statement of policy, procedure, or any other matter therein. Further NorthWestern reserves the right in its sole discretion, unless otherwise prohibited by applicable law or regulation, to accept or reject the comments of stakeholders on the Draft in whole or in part. 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 1 >> D R A F T << Table of Contents Preamble ......................................................................................................................................... 5 I. NorthWestern Energy’s Local Attachment K (K1) ..................................................................... 6 Introduction ................................................................................................................................. 6 Principle 1 – Coordination .......................................................................................................... 8 FERC Order Requirement Summary ...................................................................................... 8 NWE’s Actions to Comply ..................................................................................................... 8 NWE Stakeholder Coordination ............................................................................................. 8 Stakeholder Involvement Simplified ...................................................................................... 8 NWE Contact Information ...................................................................................................... 9 Comparable Stakeholder Involvement .................................................................................... 9 Types of Planning Meetings ................................................................................................... 9 Meeting Information ............................................................................................................. 10 Announcements and Communications: ................................................................................ 11 Sub-Regional/Regional Coordination ................................................................................... 11 Principle 2 – Openness.............................................................................................................. 13 FERC Order Requirement Summary .................................................................................... 13 NWE’s Actions to Comply ................................................................................................... 13 NWE’s Open Planning Process ............................................................................................ 13 Public Meetings .................................................................................................................... 13 Standards of Conduct and Critical Energy Information ....................................................... 14 Confidentiality ...................................................................................................................... 14 Sub-Regional and Regional Planning ................................................................................... 15 Principle 3 – Transparency ....................................................................................................... 16 FERC Order Requirement Summary .................................................................................... 16 NWE’s Actions to Comply ................................................................................................... 16 Technical Analyses Transparency ........................................................................................ 16 Consistent Application .......................................................................................................... 17 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 2 >> D R A F T << Data Access ........................................................................................................................... 17 Opportunity For Review and Comment ................................................................................ 17 Replication of Planning Studies ............................................................................................ 18 Sub-Regional/Regional Transparency .................................................................................. 18 Principle 4 - Information Exchange .......................................................................................... 19 FERC Order Requirement Summary .................................................................................... 19 NWE’s Actions to Comply ................................................................................................... 19 Information Request.............................................................................................................. 19 Schedule ................................................................................................................................ 21 Procedure For Data Submission............................................................................................ 21 Data Use In Planning Process ............................................................................................... 21 Confidentiality ...................................................................................................................... 21 Customer Responsibility ....................................................................................................... 22 Principle 5 – Comparability ...................................................................................................... 23 FERC Order Requirement Summary .................................................................................... 23 NWE’s Actions to Comply ................................................................................................... 23 Ensuring Comparability ........................................................................................................ 23 Principle 6 - Dispute Resolution ............................................................................................... 24 FERC Order Requirement Summary .................................................................................... 24 NWE’s Actions to Comply ................................................................................................... 24 NWE Dispute Resolution...................................................................................................... 24 Sub-Regional and Regional Dispute Resolution................................................................... 25 Principle 7 - Regional Participation .......................................................................................... 26 FERC Order Requirement Summary .................................................................................... 26 NWE’s Actions to Comply ................................................................................................... 26 Sub-Regional Participation ................................................................................................... 26 Sub-Regional Plan and Data Coordination ........................................................................... 27 Regional Participation ........................................................................................................... 28 NWE and Sub-Regional Planning Process Differences........................................................ 28 Simultaneous Plan Feasibility ............................................................................................... 28 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 3 >> D R A F T << Principle 8 - Economic Planning Studies.................................................................................. 30 FERC Order Requirement Summary .................................................................................... 30 NWE’s Actions to Comply ................................................................................................... 30 High-Priority Study Requests ............................................................................................... 31 Requesting A High-Priority Economic Planning Study ....................................................... 31 Valid NWE Request .............................................................................................................. 31 Economic Planning Study Classification .............................................................................. 31 Number of NWE High-Priority Studies ................................................................................ 31 Prioritizing NWE Economic Study Requests ....................................................................... 32 Clustering Study Requests .................................................................................................... 32 NWE Economic Planning Study........................................................................................... 34 Customer’s Obligation To Share Data .................................................................................. 35 NWE Obligation ................................................................................................................... 35 Cost to Conduct NWE’s Two High Priority Economic Studies ........................................... 35 NWE Economic Planning Study Timeline and Process ....................................................... 35 Additional Economic Studies ............................................................................................... 36 Process for Additional Economic Planning Studies ............................................................. 36 Sharing of Study Results Between System Planning and Economic Studies ....................... 37 Sub-Regional Economic Study Coordination ....................................................................... 38 Economic Planning Study Posting ........................................................................................ 38 Principle 9 - Cost Allocation for New Projects ........................................................................ 39 FERC Order Requirement Summary .................................................................................... 39 NWE’s Actions to Comply ................................................................................................... 39 Projects Not Covered Under Existing Cost Allocation Rules .............................................. 39 NWE Local Allocation Methodology ................................................................................... 40 Sub-Regional and Regional Cost Allocation ........................................................................ 41 Recovery of Planning Costs ...................................................................................................... 42 II. NTTG Sub-Regional Planning Process (K2) ........................................................................... 43 III. WECC Regional Planning Process (K3)................................................................................. 46 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 4 >> D R A F T << Preamble The Federal Energy Regulatory Commission (FERC) issued its Order No. 890 on February 16, 2007 (Order). The Order provided amendments to the regulations and the pro forma Open Access Transmission Tariff (OATT) adopted in Orders 888 and 889. The Order became effective May 14, 2007, which is 60 days following the date the Order was published in the Federal Register. One objective of the Order is to limit undue discrimination in planning the transmission system by requiring coordinated, open, and transparent transmission planning on both a local and regional level and by involving stakeholders in the early stages of transmission planning. FERC outlined the need for reform in transmission planning through Order No. 890. Accordingly, each public utility transmission provider is required to submit, as part of a compliance filing, a proposal for a planning process that complies with the planning principles and other requirements in the Order. The Order requires a more inclusive transmission planning process incorporating the following nine principles: (1) Coordination, (2) Openness, (3) Transparency, (4) Information exchange, (5) Comparability, (6) Dispute resolution, (7) Regional participation, (8) Economic planning studies, and (9) Cost allocation for new projects. Section I of this Attachment K is NWE’s Local Attachment K (K1) that address the Order’s nine principles. Sections II and III are the NTTG Sub-Region Planning Process (K2) and the WECC Regional Planning Process (K3), respectively, that address the Order’s nine principles from a sub-regional and regional perspective. DISCLAIMER NorthWestern's Attachment K, including all supporting documents and attachments thereto, posted September 14, 2007 (DRAFT), is a DRAFT for discussion purposes only and is offered expressly for the limited purpose of soliciting comments from interested stakeholders. NorthWestern reserves the right to alter, amend, revise, or otherwise change the Draft or its position on any matter therein in its sole discretion until formal filing as provided in Order No. 890 is made on December 7, 2007. Nothing in the Draft should be construed as binding upon NorthWestern or a definitive final statement of policy, procedure, or any other matter therein. Further NorthWestern reserves the right in its sole discretion, unless otherwise prohibited by applicable law or regulation, to accept or reject the comments of stakeholders on the Draft in whole or in part. 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 5 >> D R A F T << I. NorthWestern Energy’s Local Attachment K (K1) Introduction NorthWestern Energy (“NWE”), with input from stakeholders, developed the nine principles of NWE’s Attachment K. NWE’s Attachment K (i.e., “NWE Attachment K DRAFT Sep 14 2007”) and supporting documents can be obtained on NWE’s OASIS website at http://www.oatioasis.com/NWMT under the Transmission Planning/Draft Attachment K folder. NWE’s Draft Attachment K document (this document) and the supporting documents represent NWE’s local transmission response to FERC Order 890 Attachment K nine principles. The supporting documents are listed below. 1. NWE Anti-Trust and SOC 2. NWE_Local_Transmission_System_Planning_Discussion 09-14-07 3. Frequently Asked Questions 4. How to contact us 5. TRANSAC Charter 07-19-07 6. Calendar 7. NWE Confidentiality Agreement 8. WECC_Non-Member_Conf_Agmt_Rev7-June2_2006 9. NWE Economic Planning Study Request Form 9-14-07 10. NWE Local Cost Allocation Methodology Projects Outside OATT 9-14-07 11. “NTTG” 9 13 07 Updated Planning Committee Charter - draft 12. “NTTG” planning_agreement_final_final_8-15-07 13. nttg_cost_allocation_principles_and_process_to_post_052907(1) 14. transmission_use_charter_-_northern_tier_transmission_group 15. “WECC” TEPPC-Planning-Protocol_V1-3(Clean) The NWE local transmission system provides regulated electric transmission services to approximately 295,000 electric customers. Figure 1, below, provides a graphical overview of NWE’s transmission system. NWE’s electric transmission system consists of over 7,000 miles of transmission lines and associated terminal facilities. This system, with voltage levels ranging from 50,000 to 500,000 volts, serves an area of 97,540 square miles, which is equivalent to twothirds of Montana. The system has interconnections to five major transmission systems1 located in the Western Electricity Coordinating Council (WECC) area and one DC interconnection to a system that connects with the Mid-Continent Area Power Pool (MAPP) region. NWE is registered as a Balancing Authority, Planning Authority and Transmission Planner. NWE does not currently own generation used to serve retail customer load. 1 The five interconnected systems are Idaho Power Company, Avista Corporation, Bonneville Power Administration, WAPA and PacifiCorp. 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 6 >> D R A F T << Figure 1: NWE Local Transmission System Peace River British Columbia Alberta Seattle Portland Area Pacific Ocean Washington Canada Montana Celilo Oregon Idaho Malin Midpoint Colstrip Wyoming Borah Jim Laramie Bridger River Round Mountain Nevada San Francisco Area Las Vegas Area Salt Lake City Area Utah Four Corners Denver Area Colorado New Mexico California Market Place Los Angeles Area San Diego Mexico Phoenix Area Arizona Tucson Area Albuquerque El Paso The following Attachment K principles were developed in collaboration with interested stakeholders in an open, transparent forum. 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 7 >> D R A F T << Principle 1 – Coordination FERC Order Requirement Summary The Commission Determination is found within paragraphs 451 – 454 of the Order. The Coordination principle requires appropriate lines of communications among transmission providers, transmission-providing neighbors, State authorities, customers, and other stakeholders. Transmission providers are allowed to craft coordination requirements that work for those providers, their customers and stakeholders. NWE’s Actions to Comply NWE’s local transmission system plan will be coordinated in two ways. First, during the development stage of the local transmission system plan, NWE will have an open public process to allow two-way communication with stakeholders and interested parties. Second, NWE’s local transmission plan will be coordinated with the Northern Tier Transmission Group’s (“NTTG”) sub-regional planning and the Western Electricity Coordinating Council’s (“WECC”) regional planning organizations. See the “NTTG Sub-Regional Planning Process (K2)” and the “WECC Regional Planning Process (K3)” presented in sections II and III, respectively. NWE Stakeholder Coordination NWE’s local transmission system planning coordination is an open public process that allows and promotes customers, interconnected neighbors, regulatory and state bodies and other stakeholder participation in a coordinated nondiscriminatory process for local transmission system plan development. To accomplish this coordination, NWE will have an open meeting policy and a transparent process that will afford stakeholders an opportunity to regularly meet with NWE and to provide input on content, methodology, process and other elements used in the development of NWE’s transmission plan. Furthermore, NWE has a permanent planning committee called the Transmission Advisory Committee (“TRANSAC”) that will be involved in developing the local transmission system plan, from the beginning of the process where the goal of the plan is developed, to the end of the process where the report is written. See “NWE’s Local Transmission System Planning Discussion” document that reduces to writing NWE’s basic methodology, criteria, and process for a detailed discussion of NWE’s process and how stakeholders are involved. This document is posted on NWE’s website (http://www.oatioasis.com/NWMT under the Transmission Planning/Draft Attachment K folder). Stakeholder Involvement Simplified To simplify stakeholder involvement and understanding of NWE’s planning process, NWE Transmission Planning has an area on NWE’s OASIS website dedicated to Transmission Planning (http:/www.oatioasis.com/NWMT). On this website, stakeholders can learn about NWE planning activities including:    Past meeting information and minutes, Future meeting announcements, Review NWE calendar of events, Page 8 746150cb-213d-43a3-befa-6b51a0690d9b.doc >> D R A F T <<   Review reports and meeting material, and Obtain NWE contact information. In other words, stakeholders will have access to all information and material presented or discussed at the open public TRANSAC meetings. As will be described below, stakeholders will be able to participate in the TRANSAC meetings by attending the meeting in person or call into the meeting by phone and using a GoToMeeting conference service established for the meeting. A list of Frequently Asked Questions is also posted on NWE OASIS website (http://www.oatioasis.com/NWMT under the Transmission Planning/Draft Attachment K folder) to simplify stakeholder understanding of NWE’s local area planning process. NWE Contact Information In addition to the open public process, interested parties can also provide comment or contact NWE directly by following the directions provided in the “How To Contact Transmission Planning” folder on NWE’s OASIS website (http://www.oatioasis.com/NWMT under the Transmission Planning/Draft Attachment K folder). NWE will seek input during the development of the electric transmission plan by encouraging interested parties to participate in the public meetings, becoming a member of the Transmission Advisory Committee (TRANSAC) or by contacting NWE through email or written comments. Comparable Stakeholder Involvement NWE’s planning process is designed to avoid discrimination in planning and will involve all stakeholders on a comparable basis. The process will open appropriate lines of communication between transmission providers, transmission-providing neighbors, affected State authorities, customers, and other stakeholders as described below. NWE will make its stakeholder meetings open to the public, except when Standards of Conduct (SOC) concerns require portions of the meeting to be closed to some participants. NWE’s open process will allow participation by stakeholders, including, but not limited to, the Montana Public Service Commission, the Montana Consumer Council, transmission customers (network and point-to-point), generators, cooperatives, interconnecting utilities, the Governors Office, transmission-providing neighbors and other stakeholders. Types of Planning Meetings NWE will have two types of planning meetings to involve stakeholders in the planning process and to facilitate and coordinate stakeholder input and involvement in NWE local transmission system planning. These planning meetings are the Transmission Advisory Committee (“TRANSAC”) meetings and Open Public meetings. TRANSAC Meeting: NWE has formed a permanent planning committee, TRANSAC, that will be actively engaged in the early stages of developing NWE’s local transmission system plan. TRANSAC was formed during the development stage of NWE’s Strawman to solicit input from a broad range of stakeholders. The TRANSAC Charter is posted on NWE’s website (http://www.oatioasis.com/NWMT under the Transmission Planning/Draft Attachment K folder). The purpose of this advisory committee will be to provide input to NWE on its local transmission system plan during the development stage. TRANSAC will not make decisions or 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 9 >> D R A F T << implement the plan. The ultimate responsibility for the transmission plan will remain with NWE. TRANSAC membership is open to anyone and will be established through self-nomination. If the membership is either too small or too large, NWE will work with the committee to determine whether adjusting the size is appropriate and, if so, what mechanism should be used to accomplish the adjustment. NWE will encourage membership from neighboring transmission providers, affected state authorities, regulators, customers and other stakeholders. All TRANSAC committee meetings will be open to the public and will allow open and transparent dialogue on all aspects of the transmission plan to the maximum extent allowed without violating Standards of Conduct (“SOC”) information and Critical Energy Infrastructure Information (“CEII”). Members on this committee will be encouraged to be involved in each meeting and to be actively engaged in the process. TRANSAC is a stand-alone committee that will provide input into NWE’s transmission plan. TRANSAC may determine that it needs to form a sub-committee to address a specific issue or task. Participation on this sub-committee will be open to anyone. The responsibilities of the sub-committee and its structure will be determined by TRANSAC. If a sub-committee is to be formed, NWE will consult with TRANSAC before formation and an announcement of the formation of the sub-committee, its responsibilities and who to contact for more information or to join will be posted on the Transmission Planning portion of NWE’s OASIS website. Open Public Meeting: NWE will hold open public meetings to allow a two-way communication on NWE’s transmission plan and to be a forum for public input to the plan. NWE held its first open public meeting on May 3, 2007, to solicit input for the development of NWE’s Strawman. Thirty individuals participated in the meeting to review, discuss and modify NWE’s Strawman. All of these participants will receive an email invitation to the next open public meeting, which will be held this fall. Future open public meetings will be scheduled by TRANSAC at different geographic locations in Montana and will allow stakeholder input throughout the development of the transmission plan. Meeting Information The number of meetings, scope, notice requirements, and the format for these two types of meetings is described below. Number of Meetings: TRANSAC: TRANSAC will meet regularly in an open forum. NWE will encourage TRANSAC to meet as often as needed to provide meaningful input into NWE’s transmission plan, including but not limited to the times during data gathering and customer input into study development; review of study results; review of draft transmission plans; and coordination of draft plans with those of neighboring transmission providers. NWE would anticipate that TRANSAC could meet monthly, but would meet at least quarterly. Open Public Meeting: NWE will work with TRANSAC to schedule and hold open public meetings to communicate information about its transmission plan and to receive input on its transmission plan. TRANSAC may adjust the number of public meetings as needed, but NWE anticipates one or two meetings per year. Scope of Meetings: 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 10 >> D R A F T << The meetings will be open to discuss all aspects of transmission planning activities including, but not limited to methodology, study inputs, criteria, and study process and results. The intent is to provide a forum that allows stakeholders to have meaningful input at the beginning of NWE’s transmission plan development. Dissemination of market sensitive information or critical infrastructure information must follow FERC Standards Of Conduct (SOC) requirements and Critical Energy Infrastructure Information (CEII) requirements. Notice: TRANSAC: There will two forms of meeting notice: (1) A list of participants (name, organization, phone and email) will be maintained and notice for each meeting will be provided to prior participants by email; (2) Notice of a TRANSAC meeting will be posted on NWE’s OASIS website at least ten days prior to the meeting and the meeting material will be distributed prior to the meeting. The Transmission Planning section of NWE’s OASIS website will include a file containing the names, addresses and phone numbers for NWE’s point of contact (i.e., “How To Contact Transmission Planning”) document and a Calendar of Events (“Calendar”) spreadsheet. Open Public Meeting: There will three forms of meeting notice: (1) A list of participants (name, organization, phone and email) from prior open public meetings will be maintained and meeting notices will be provided to prior participants by email or by mail if email is not available; (2) Local media (radio, newspaper, etc) may be used as appropriate to announce the open public meetings; (3) Notice of an open public meeting will be posted on NWE’s OASIS website at least thirty days prior to the meeting. Format: NWE will retain a neutral moderator to help plan and moderate the meetings. These meetings will be designed to provide opportunities for information exchange about NWE’s transmission plans, methodology and processes. NWE will present and seek input into its local transmission system plan. Notes taken at the meetings and other information from the meetings will be posted on NWE’s OASIS website, http://www.oatioasis.com/NWMT, under the Transmission Planning tab. TRANSAC: TRANSAC meetings will be held either face-to-face or by conference call. The face-to-face meetings will also include a phone connection and a GoToMeeting connection for those who cannot attend in person. Open Public Meeting: The Open Public Meeting will be a face-to-face meeting between NWE and the public. NWE will use the moderator to facilitate the meeting and will encourage the TRANSAC membership to participate in the Open Public Meeting. Announcements and Communications: Announcements and communications will be posted under the Transmission Planning folder on NWE’s OASIS website. Information regarding NWE public meetings will be posted and emailed to interested parties as described under the Notice discussion above. Sub-Regional/Regional Coordination NWE is a member and actively engaged in the Northern Tier Transmission Group (“NTTG”), which is a permanent planning committee. NWE will coordinate its biannual transmission plan 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 11 >> D R A F T << with NTTG and with other planning entities as required. NTTG membership includes PacifiCorp, Idaho Power, NorthWestern, Deseret Power Electric Cooperative, and Utah Association Municipal Power Systems. NTTG has participation of state commissions, including the Montana PSC. NTTG will coordinate its planning proposals with WECC and other subregional planning groups (e.g., Northwest Power Pool (“NWPP”), ColumbiaGrid, WestConnect, etc.). NTTG is an open stakeholder process that has formal stakeholder meetings. See the “NTTG Sub-Regional Planning Process (K2)” in section II below 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 12 >> D R A F T << Principle 2 – Openness FERC Order Requirement Summary The Commission Determination is found within paragraph 460 of the Order. The Openness principle requires that Transmission planning meetings are open to all affected parties, including all transmission and interconnection customers, state commissions and other stakeholders. If subgroups are used, the overall transmission plan and planning process must remain open. NWE’s Actions to Comply NWE’s local transmission system plan will be open to all stakeholders and interested individuals to provide comments and input in the development of NWE’s transmission system plan. These principles are described below. Figure 2: Planning Process NWE’s Open Planning Process NWE’s local transmission system plan process will be open to all stakeholders 1. Goal & Scenario during the plan development. Stakeholders will have the opportunity NWE through TRANSAC to review in detail 2. Technical Study Transmission and comment on NWE’s transmission Advisory plan throughout the entire development Committee 3. Decision of the plan, from data collection to report Input to Plan writing. See Figure 2: Planning Process to the right. This process is described in 4. Reporting Principle 3 - Transparency and the “Local Transmission System Planning Discussion” document that is posted on NWE’s OASIS under the Transmission Planning tab (http://www.oatioasis.com/NWMT under the Transmission Planning/Draft Attachment K folder). Once the plan is developed, NWE will work with TRANSAC to write a report that is clear and understandable. Public Meetings NWE’s TRANSAC and the Open Public Meetings will be open to public participation and input. These meetings will be designed to foster an open transparent two-way communication between NWE and its stakeholders and affected parties. These communications will allow stakeholders that choose to participate to have an opportunity to provide effective input into NWE local transmission system plan development. NWE has retained a coordinator for these meetings to ensure that the Openness principle is achieved. The TRANSAC and the Open Public Meetings will be announced on NWE’s OASIS website and relevant data and information will be posted. Announcement of the open public meeting will use the OASIS website posting and other appropriate communications such as email notice to prior attendees, and local media. NWE’s OASIS website also includes information about contacting NWE by phone, email or through normal mail. 746150cb-213d-43a3-befa-6b51a0690d9b.doc Overview Local Transmission System Planning Process Page 13 >> D R A F T << Standards of Conduct and Critical Energy Information Protection of Critical Energy Infrastructure Information (CEII) and market sensitive information covered by FERC Standards Of Conduct (SOC) will be observed. NWE’s Anti Trust and SOC documents are posted on NWE’s OASIS website (http://www.oatioasis.com/NWMT under the Transmission Planning/Draft Attachment K folder). Confidentiality Access to confidential data by a stakeholder will require a confidentiality agreement. There are two confidentiality agreements that apply – NWE confidentiality agreement for NWE confidential data and a WECC confidentiality agreement for confidential WECC basecase data.  Access to NWE confidential data will require signing NWE’s confidentiality agreement. A copy of NWE’s confidentiality agreement has been developed and posted on NWE’s OASIS website (http://www.oatioasis.com/NWMT under the Transmission Planning/Draft Attachment K folder). Stakeholders shall have an opportunity to submit comments on the form of confidentiality agreement. Confidential information shall be provided only to those participants in the planning process that require such information and that execute the confidentiality agreement; provided, however, any such information may be supplied to (i) federal, state or local regulatory authorities that request such information and protect such information subject to non-disclosure regulations, or (ii) upon order of a court of competent jurisdiction. Access to WECC load and resource data and WECC basecase data will require signing a WECC confidentiality agreement. It should be noted that a confidentiality agreement is not required for WECC members to obtain access to basecase data. In addition, access to load and resource forecast data beyond three (3) years into the future is not confidential and does not require a confidentiality agreement to gain access. A copy of the WECC non-member confidentiality agreement is posted in NWE’s OASIS website (http://www.oatioasis.com/NWMT under the Transmission Planning/Draft Attachment K folder).  NWE will apply equal protection to NWE confidential information and to confidential information received from customers. In the event that a party claims that their planning-related information is confidential, any party seeking access to such information must agree to adhere to the terms of a confidentiality agreement. It is recognized that certain data may not be available to certain participants, even though a confidentiality agreement is signed, due to their relationship to the market. Disclosure of confidential data to state commissions, FERC and other regulatory bodies will be governed by the appropriate protective order. Before confidential data is released to regulating bodies, NWE will seek protection of that data through a protective order. Access to confidential information through NWE’s OASIS website will be protected by controlling access to the information. On NWE’s OASIS website, a button under the Transmission Planning tab is the gateway to a password-protected site on NWE’s computer. Access to confidential information must be approved by NWE and anyone who is granted access will receive a login ID and a password from NWE. 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 14 >> D R A F T << Sub-Regional and Regional Planning With respect to sub-regional and regional planning entity openness, NWE will coordinate and provide NTTG, WECC and other planning entities with NWE’s local transmission system plan, associated assumptions and other information as requested. Confidential data will be protected through NWE confidentially requirements and/or the confidentiality requirements of the subregional and regional entities. 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 15 >> D R A F T << Principle 3 – Transparency FERC Order Requirement Summary The Commission Determination is found within paragraphs 471-479 of the Order. The Transparency principle requires disclosure of basic methodology, criteria, assumptions, process and data that underlie transmission system plans. Methodologies, criteria and processes must be published and consistently applied. The Standards of Conduct (SOC) compliance to the release of certain information is critical. NWE’s Actions to Comply NWE will disclose its basic methodology, criteria, process and data used to develop its local transmission system plan. NWE’s written document, NWE Local Transmission System Planning Discussion, describing its electric transmission system planning basic methodology, criteria and process is posted on NWE’s website (http://www.oatioasis.com/NWMT under the Transmission Planning/Draft Attachment K folder). The planning process described in that document is summarized in Figure 2: Planning Process previously discussed under the Principle 2 – Openness. See Principle 7 - Regional Participation, and Appendices 1 and 2 for regional and sub-regional transparency. As described in the Local System Planning Discussion document, NWE’s local transmission system plan will cover a fifteen (15) year time period and will be completed every two years. To keep NWE process transparent, NWE has developed and will update as need a list of frequently asked questions. See the list of Frequently Asked Questions that is posted on NWE OASIS website (http://www.oatioasis.com/NWMT under the Transmission Planning/Draft Attachment K folder). Technical Analyses Transparency NWE’s Local Transmission System Plan2 technical analyses will use different engineering studies to evaluate the system performance. Transparency of the technical analysis will be foremost in the planning process and will be achieved through regular communications with TRANSAC. The technical studies are designed to use different engineering perspectives to ensure system reliability is maintained. These methods will include, but are not limited to, the following types of analyses.      Steady-State Powerflow Analyses Post Transient Steady-State Powerflow Analyses (or Steady-State Post Fault Analyses) Transient Stability Analyses (or Dynamic Analyses) Short Circuit Fault Duty Analyses Reactive Margin Analyses 2 These studies are for expansion planning within NWE’s balancing area. For sub-regional or regional congestion studies, See the “NTTG Sub-Regional Planning Process (K2)” and the “WECC Regional Planning Process (K3)” presented in sections II and III below. 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 16 >> D R A F T << See NWE written document, Local Transmission System Planning Discussion, posted on NWE’s website (http://www.oatioasis.com/NWMT under the Transmission Planning/Draft Attachment K folder) for additional discussion of these studies. Consistent Application The Transparency Principle requires a discussion as to “how they treat retail native loads, in order to ensure that standards are consistently applied.” The openness and transparency of NWE’s planning process will ensure consistent application of the NWE’s methodology, criteria, and process to all balancing area customers’ data (i.e., retail, network and point-to-point). All customers will be treated on an equal and comparable basis using the local transmission system planning process, methodology and criteria described herein. All valid customer data will be included in the planning analysis without regard to their classification. NWE’s local transmission system planning process is designed to be transparent, open and understandable. The methodology used to develop the transmission, generation and demand response resource data is provided in NWE’s Local Transmission System Planning Discussion document that is posted on NWE’s OASIS website. The consistent application of standards will be vetted through NWE’s advisory committee, TRANSAC. Data Access Interested persons can obtain access to NWE’s data used in the transmission planning process by contacting NWE directly if this data is not available on NWE OASIS site. NWE’s contact information is provided in the “How To Contact Transmission Planning” folder on NWE’s OASIS (http://www.oatioasis.com/NWMT under the Transmission Planning/Draft Attachment K folder). Access to confidential information will follow the process described in Principle 2, Openness. Opportunity For Review and Comment Stakeholders, through the TRANSAC meetings, will have full opportunity to review, discuss and comment on NWE’s initial assumptions. See NWE’s Planning Process diagram, Figure 2: Planning Process and NWE’s Local Transmission System Planning Discussion document posted on NWE’s OASIS website (http://www.oatioasis.com/NWMT under the Transmission Planning/Draft Attachment K folder). NWE will seek input during the data development stage of the electric transmission plan by encouraging interested parties to participate in the public meetings, becoming a member of TRANSAC or by contacting NWE through email or written comments. See the “How To Contact Transmission Planning” folder on NWE’s OASIS website. In addition to the written documentation, NWE will use its planning meetings (i.e., TRANSAC meetings and the Open Public meetings) to communicate basic information and to receive comments that may improve the methodology, criteria and process. NWE will use OASIS website postings and its meetings, described previously in Principle 1 - Coordination, to disseminate information to help achieve the objectives of the Transparency principle. Stakeholders will have access to information through the Transmission Planning area on NWE’s OASIS website. Expanding this folder reveals the information that is posted for download. NWE will post non-confidential data, study results and other information in this transmission planning area of NWE’s OASIS website (http://www.oatioasis.com/NWMT). Confidential information can be accessed through the NWE’s OASIS website, but access must be granted and a login ID and password issued by NWE must be used. 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 17 >> D R A F T << Changes or updates to databases will be presented to TRANSAC and posted on NWE’s OASIS website. Interested parties can comment on these changes or updates by participating in TRANSAC or Open Public Meeting or by contacting NWE directly by email or by letter. Presentation of the planning information and study results through the planning cycle will be continuous through TRANSAC meetings and its associated meeting material postings. Study results will be presented in a manner that is clear to stakeholders. The Transmission planning report will be designed to provide a clear understanding to stakeholders and will include technical sections to present engineering results. NWE will obtain input from TRANSAC in writing this report. NWE will take necessary precautions to protect CEII and SOC information using appropriate mechanisms. See Principle 2 – Openness for additional discussion. Replication of Planning Studies Using this information with appropriate basecase data and the PTI PSS/E software, will enable customers, stakeholders or independent third parties to replicate the results of NWE power-flow planning studies and associated economic studies. Replication of NWE’s transient stability studies is possible, but will require NWE’s non-proprietary software that must be used with the PTI PSS/E model. A confidentiality agreement will be required for stakeholders who are not members of WECC to obtain WECC basecases. WECC members can obtain the basecase powerflow data directly from WECC. Sub-Regional/Regional Transparency In the region, NWE will participate in and rely on transparency of the NTTG and WECC for subregional and regional planning process. See the “NTTG Sub-Regional Planning Process (K2)” and the “WECC Regional Planning Process (K3)” presented in sections II and III, respectively. 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 18 >> D R A F T << Principle 4 - Information Exchange FERC Order Requirement Summary The Commission Determination is found within paragraphs 486-488 of the Order. The Information Exchange principle requires transmission customers to submit information on projected load and resources. Network, native load and point-to-point customer’s information is to be supplied on a comparable basis. Transmission providers must develop guidelines and a schedule for load data submittals from network and point-to-point customers. The information collected by transmission providers to provide transmission service to their native load customers must be transparent, and equivalent information must be provided by transmission customers to ensure effective planning and comparability. NWE’s Actions to Comply NWE's guideline and schedule for the exchange of information is as follows. Information Request NWE’s will determine the load and generation information needed from customers that will be used to meet its transmission planning requirements and to meet the requirements of FERC Standards, FERC Order 890 and NWE’s Open Access Transmission Tariff. NWE will tailor its request for information from Load Serving Entities (“LSE”) and/or customers (e.g., network and point-to-point) after the annual WECC Loads and Resources Data Request and the WECC Power Supply Assessment data request. NWE will augment the WECC data requests with requests for other transmission planning data as necessary to study the local transmission system. NWE will gather the following types of data.   Historical Data: NWE's request will ask for one year of monthly historical energy and peak data for the last calendar year. Load Forecast Data: NWE will request fifteen (15) years of energy and peak load forecast data from network and point-to-point transmission customers. Other load data reporting requirements (e.g., monthly energy, peak capability, etc.) will follow the WECC Loads and Resource Data Request and WECC Power Supply Assessment data requirements. Generation Forecast Data: NWE will request fifteen (15) years of data from generators. Generators will be asked to provide technical engineering data for their generator and interconnection facilities. Data reporting requirements (e.g., monthly energy, peak capability, fuel type, etc.) will follow the WECC Loads and Resource Data Request and WECC Power Supply Assessment data requirements. Conservation and DSM: NWE will ask for demand response resource savings, conservation savings, and other customer load reduction alternatives that would reduce or alter their load forecast. Interruptible and Other: Customers who are on an interruptible load tariff will be asked to supply a peak load forecast with and without the interruptible portion of the forecast data applied. Page 19    746150cb-213d-43a3-befa-6b51a0690d9b.doc >> D R A F T <<    Number of Years of Data: NWE will request fifteen (15) years of data. Type of Peak Load Data: The monthly peak load forecast should be based on an average (i.e., 1-in-2 or 50% probability of being exceeded) temperature assumption. Peak Load Forecast Temperature Adjustment: NWE will request the temperature adjustment methodology to adjust the 1-in-2 winter and summer peak load forecasts to an alternative probability assumption (e.g., a 1-in-10 and 1-in-20 temperature probability). The alternative to providing this methodology, the MW peak forecast for a 1-in-10 and 1-in-20 methodology can be provided. Narrative Requirements: To fulfill the narrative requirements for the WECC Load and Resource Data Request and WECC Power Supply Assessment data request submittals, NWE will also request other information such as: 1. 2. 3. 4.   Discussion of reasons for significant increases or decreases in load or generation forecast Source and vintage of load forecast and generation resource information Interruptible tariff loads and controllable demand response Weather assumptions associated with load forecast  Comparability: The same type of data request for generator forecast data and load forecast data will be sent to generators and customers within NWE’s balancing area, respectively. Use and Confidentiality: The data received will be used to develop NWE’s transmission plan and for reporting purposes. Market sensitive and customer specific data will be confidential. Confidential data will be administered according to SOC and CEII requirements. 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 20 >> D R A F T << Schedule Figure 3: Typical Timeline NWE will request forecast data annually during the fall time period (Sep-Dec). This annual schedule will be merged with the biannual transmission planning cycle as shown in Figure 3: Typical Timeline. This data collection timeline is linked to WECC Load and Resource Data Request submission in December of the calendar year. This schedule may be adjusted if WECC changes its data request response time frames. NWE will provide as much advance notice as possible. Typical Timeline - NWE Transmission System Planning Cycle Data Collection To Include In Study Quarter Planning Steps Open Optional Outside Prior Cycle Qtr 5 Qtr 6 Qtr 7 Qtr 8 Qtr 1 Goal & Scenario Definitions x x x x x Technical Study x x x Decision Reporting x x Current Planning Cycle Qtr 2 Qtr 3 Qtr 4 Qtr 5 Qtr 6 Qtr 7 Qtr 8 Data that is collected will fall into one of three time periods for inclusion into NWE’s planning process - “Open”, “Optional” or “Closed”.   All valid data collected during the Open time period will be included in the study assuming the data is complete. Data obtained during the Optional time period may or may not be included in the study because the data isn’t complete or the Technical Study has progressed to a point where including this information is not practical. NWE will consult with TRANSAC in making this determination. Data collected during the Closed time period will be compared to the data used in the technical analysis and any notable changes will be discussed in the local transmission system planning report.  Procedure For Data Submission NWE will provide an Excel workbook and instructions to the responsible party for the data collection. This workbook will be sent by email to all of the responsible parties. Data Use In Planning Process All appropriate customer forecast data will be used in NWE’s database. For additional information on NWE’s methodology, criteria and process, see the Local Transmission System Planning Discussion document stored under the Transmission Planning tab on NWE OASIS website (http://www.oatioasis.com/NWMT under the Transmission Planning/Draft Attachment K folder). Confidentiality NWE will keep all customer specific data confidential. Critical Energy Infrastructure Information and WECC basecase data are confidential, but can be obtained by signing the appropriate confidentiality agreement. However, some confidential data may not be available to marketing entities/individuals because of the market sensitive nature of the information (e.g., 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 21 >> D R A F T << generator or line maintenance outages). For additional information also see Principle 2, Confidentiality section. Customer Responsibility Customers will be asked to provide NWE with generation, load forecast, and demand response resources to the maximum extent practical and consistent with protection of proprietary information. Customers should also provide timely written (email) notice of material changes to information previously provided relating to its load, its resources, or other aspects of its facility or operations affecting NWE’s ability to provide service. 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 22 >> D R A F T << Principle 5 – Comparability FERC Order Requirement Summary The Commission determination is found within paragraphs 494-495 of the Order. The Comparability principle requires the Transmission Provider to develop a transmission plan, after considering the data and comments supplied by customers and other stakeholders, that: 1) meets the specific service requests of its transmission customers; and 2) provides comparable treatment to similarly situated customers (network and retail native load). Customer demand resources should be considered on a comparable basis to the service provided by comparable generation resources. NWE’s Actions to Comply Once NWE has received the data, NWE’s local transmission system plan will be developed after considering and including appropriate comments on the data, process and methodology received from stakeholders. The customer and generator data will augment and replace NWE data that has historically been used to develop the transmission plan. Ensuring Comparability Comparability will be achieved in NWE’s local transmission system plan in developing NWE’s local transmission by including all valid data that is received from generators and customers in the database used in the reliability assessment. Combining the forecast load and generation information received from the customers with NWE’s transmission line and equipment data for the desired year to be studied develops the basecase used in a technical reliability assessment. The load forecast and/or generation dispatch patterns are varied independently, within appropriate ranges, to depict a specific operating condition such as the summer peak period. Varying the load and generation patterns in this manner causes the flows across the transmission lines to vary. Because this assessment is reliability3 based which is focused on identifying load and generation dispatch patterns that stress the system, there is no discrimination to customer type or generation dispatch pattern analyzed. By following this process the resulting plan will have treated similarly situated customers in a comparable manner. See NWE’s Local Transmission System Planning Discussion document for a complete discussion of methodology, criteria and process used to evaluate NWE’s electric transmission system for NWE’s customers’ future needs. This document is posted on NWE’s OASIS website (http://www.oatioasis.com/NWMT under the Transmission Planning/Draft Attachment K folder). 3 Reliability includes adequacy and security considerations. Adequacy evaluates whether or not there is sufficient transmission capacity to serve the load without violating criteria. Security evaluates whether or not the transmission system response will meet appropriate criteria (voltage, thermal, frequency, reactive margin, etc.) after a transmission element(s) becomes unavailable for service (e.g., a forced outage of a transmission line). 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 23 >> D R A F T << Principle 6 - Dispute Resolution FERC Order Requirement Summary The Commission Determination is found within paragraphs 501-503 of the Order. The Dispute Resolution principle requires an Alternate Dispute Resolution (ADR) process be available to manage disputes that arise from the planning process. ADR must address both substantive and procedural planning disputes. Three steps should be included in the ADR process: 1) Negotiation, 2) Mediation, and 3) Arbitration. Existing ADR procedures can be used if appropriate. NWE’s Actions to Comply Several dispute resolution processes exist – NWE's process dispute, sub-regional and regional dispute. NWE Dispute Resolution 1 If the dispute arises from NWE’s Local System Planning, Dispute Resolution process set forth below will be followed. 1.1 Parties agree to use the following dispute resolution process. The use of this process will be limited to general and specific issues arising from NWE’s local electric transmission system planning. Disputes in all matters will be raised timely; provided, however, dispute raised after a decision is made by NWE after presentation to TRANSAC in the study process or the posting of a milestone document will be prohibited. NWE’s Local Transmission System Planning process will continue to the extent possible through the duration of the dispute resolution process. Before filing a complaint directly relating to transmission planning to FERC, Parties shall complete the process set forth below: 1.1.1 Step 1 - Direct negotiation between representatives who have authority to settle the controversy and who are at a higher level of management than the persons with direct responsibility for the matter. Step 2 - If Step 1 is unsuccessful at reaching a consensus agreement to resolve the dispute, the next step shall be mediation, as defined in Appendix C of the Western Electricity Coordinating Council (WECC) bylaws. Step 3 - If Step 2 is unsuccessful at reaching mutual agreement among parties to the dispute, the next step shall be binding arbitration, as defined in Appendix C of the Western Electricity Coordinating Council (WECC) bylaws. 1.1.2 1.1.3 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 24 >> D R A F T << 1.1.4 Step 4 - All negotiations and proceedings pursuant to this process are confidential and shall be treated as compromise and settlement negotiations for purposes of applicable rules of evidence and any additional confidentiality protections provided by applicable law. 1.2 The basis of the dispute and final non-confidential decisions will be made available to stakeholders upon request. Sub-Regional and Regional Dispute Resolution NWE will follow the NTTG sub-regional dispute resolution or the WECC regional dispute resolution process for sub-regional and regional planning disputes, respectively. See the “NTTG Sub-Regional Planning Process (K2)” and the “WECC Regional Planning Process (K3)” sections II and III, respectively. 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 25 >> D R A F T << Principle 7 - Regional Participation FERC Order Requirement Summary The Commission Determination is found within paragraphs 523-528 of the Order. The Regional Participation principle requires Transmission Providers to coordinate with interconnected systems to: 1) share system plans to ensure they are simultaneously feasible and otherwise use consistent assumptions and data, and 2) identify system enhancements that could relieve congestion or integrate new resources. The existing regional processes may be used if they are open and inclusive, address both reliability and economic considerations, and coordinate these issues across the region. Sub-regions must have adequate scope and coordination. NWE’s Actions to Comply Figure 4: NTTG Footprint NWE’s participation in regional and sub-regional planning activities will be broad, ranging from providing data to providing NWE's local transmission system plan to participating in subregional and regional studies and committees. NWE’s electric transmission system data, assumptions and plan will be shared with interconnected transmission systems, sub-regions and region entities as required or requested. NWE’s basecase data and NWE local transmission system plan will be provided when appropriate and with the confidential data protected. Sub-Regional Participation In the sub-regional context, NWE is an active member of the Northern Tier Transmission Group (“NTTG”). NTTG’s footprint is shown in Figure 4: NTTG Footprint. NTTG will develop a coordinated Sub-Regional Transmission Plan and will respond to requests for Economic Planning Studies. NWE is a member of NTTG, and uses the NTTG process for sub-regional planning, coordination with adjacent sub-regional groups and other planning entities, and proposals to WECC Transmission Expansion Policy and Planning Committee (“WECC TEPPC”) for regional planning. See the “NTTG Sub-Regional Planning Process (K2)” in section II below and the WECC TEPPC Planning Protocol that is posted on NWE OASIS website (http://www.oatioasis.com/NWMT under the Transmission Planning/Draft Attachment K folder). 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 26 >> D R A F T << The NTTG Planning Agreement and the NTTG Planning Charter govern the relationship between NWE local transmission system planning and the NTTG sub-regional transmission planning. These documents are available on NWE’s OASIS website http://www.oatioasis.com/NWMT under the Transmission Planning/Draft Attachment K folder. The FERC 890 principle obligations are met by NTTG providing an open forum to coordinate transmission plans of its members with those of other sub-regional transmission groups within the Region. NTTG will also have a cost allocation committee that will determine cost allocations for qualifying system additions where agreement on cost allocation has not been reached. NWE will actively participate in the NTTG planning process to ensure data and assumptions are consistent and represented in the NTTG sub-regional plan. The NTTG sub-regional plan will be coordinated by NTTG with neighboring sub-regional entities (e.g., ColumbiaGrid). Once the NTTG’s sub-regional plan is developed, it will be shared with WECC, and the WECC process will coordinate the NTTG sub-regional plan with all of the other sub-regional plans within the WECC region. NWE will continue providing its local transmission system plan, data and assumptions to WECC regional committees4 that are responsible for building databases. Regional committees use these data for database development, load and resource assessments, operating studies and planning studies. Customers can be directly involved in NWE’s planning, which will regularly discuss the regional planning efforts by participating in NWE’s TRANSAC. Customers can also be directly involved in NTTG sub-regional regional planning. See the “NTTG Sub-Regional Planning Process (K2)” in section II below. Sub-Regional Plan and Data Coordination Figure 5: Local And Sub-Regional Planning NWE will coordinate and Data and Plan Coordination submit its data, assumptions and WECC Regional Planning & Basecase Development local transmission system plan NTTG Sub-Region to NTTG for inclusion in the Trans Plan NTTG sub-regional transmission plan. See Figure Data & Database Other Sub-Region NTTG Sub-Regional Planning Coordination Plan Coordination 5: Local And Sub-Regional Trans Plan Planning. As the figures shows, Coordination data and plan information will Econmic Planning be coordinated between the NWE Local Planning Study Results local planning process, the NTTG sub-regional planning process and the WECC regional planning process. NTTG will coordinate with other subregional planning process within the northwest. 4 For example: WECC System Review Work Group (SRWG) and WECC LRS Subcommittee. 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 27 >> D R A F T << Customers can be directly involved in NWE’s local planning through participation in NWE’s TRANSAC, be involved in NTTG sub-regional planning and be involved in WECC regional planning. Regional Participation NWE will participate in regional transmission reliability and economic planning studies as appropriate to ensure data and assumptions are coordinated. The footprint of the study and how NWE is affected by the request will guide NWE’s participation in the study. See the “NTTG Sub-Regional Planning Process (K2)” and the “WECC Regional Planning Process (K3)” in sections II and III, respectively. Customers can be directly involved in NWE’s planning, which will regularly discuss the regional planning efforts by participating in NWE’s TRANSAC. Customers can also be directly involved in the WECC regional planning. See the “WECC Regional Planning Process (K3)” in section III below. NWE and Sub-Regional Planning Process Differences The processes used by NWE and NTTG to develop its local and sub-regional plans are different in two ways. First, NWE’s process will focus on developing a transmission plan to service its balancing area loads whereas the NTTG sub-regional plan will focus on evaluating transmission projects that move power across the sub-regional bulk transmission system to serve load. Second, NWE’s planning process is a build up of the NWE’s transmission balancing area customer’s need for transmission service. The NTTG sub-regional planning process will rely on input from the transmission provider’s plan and/or customer requests forwarded by NWE for sub-regional plan evaluation. Sub-regional planning will be done by the NTTG membership with oversight by the NTTG Planning Committee. The basecase data used for local NWE planning and NTTG sub-regional planning will be coordinated. See Figure 5: Local And Sub-Regional Planning. In addition to using coordinated basecases for plan development, NWE’s resulting plan will be coordinated upward to NTTG. The merging of NWE’s plan with the NTTG sub-regional plan will not be a problem since NWE’s 15-year planning horizon is longer than NTTG’s 10-year planning horizon. Once the NTTG sub-regional plan study is complete, NWE will have an opportunity to review the plan results. Since NWE is a member of the NTTG Planning Committee, NWE will have opportunity for input. Customers will have opportunity for input into the sub-regional plan development by participating in the open NTTG Planning meetings or can be kept informed of the sub-regional plan through participation in TRANSAC. The TRANAC agenda will include a report on the sub-regional plan development. The NTTG Steering Committee will approve the NTTG sub-regional transmission plan that is developed by the NTTG Planning Committee. The NTTG sub-regional plan will be forwarded to WECC TEPPC. Simultaneous Plan Feasibility The simultaneous feasibility of local, sub-regional and regional plans will be achieved in two ways. First, NWE’s plan will be coordinated with the NTTG sub-regional plan. The NTTG subregional plan will be coordinated with neighboring sub-regional plans. Finally, WECC will 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 28 >> D R A F T << coordinate NTTG’s sub-regional plan with all other sub-region plans. Because these plans are vertically and horizontally coordinated, simultaneous feasibility will be known. Second, WECC also requires new project(s) or upgrades to existing paths with potential subregional or regional impacts to follow the WECC Regional Planning Process and the WECC Path Rating Process requirements. The WECC processes may proceed after the NTTG/WECC planning process or be coincident to the NTTG/WECC processes. Proceeding through the WECC processes requires that the feasible project(s) have a sponsor. The WECC processes require that the non-simultaneous and simultaneous interactions between the proposed transmission project(s) and existing transmission and other proposed projects5 be identified and problems resolved. At the completion of WECC’s Three Phase Rating Process, the simultaneous operation of the proposed line(s) within the bulk system is possible and the proposed line path rating is known. NWE is also a member of the Northwest Power Pool’s Transmission Planning Committee (TPC), that coordinates transmission-engineering issues between its members, and Transmission Assessment Committee (NTAC), that does forward looking transmission planning and development for the Northwest Region of WECC. This allows NWE to coordinate with others who have not joined either NTTG or Columbia Grid. 5 Only projects achieving Phase 2 status in the WECC path rating process are required to be evaluated in this process. 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 29 >> D R A F T << Principle 8 - Economic Planning Studies FERC Order Requirement Summary The Commission Determination is found within paragraphs 542-551 of the Order. The Economic Planning Studies are studies provided to all parties with information on future transmission needs. These studies are separate from those performed for requests for transmission service and generation interconnection. This Economic Planning Studies principle requires planning to address both reliability and economic considerations. Stakeholders are given the right to request a defined number of high priority studies annually to address congestion or integration of new resources or load. The rule does not obligate Transmission Providers to fund economic projects and it does not “assign cost responsibility for those investments or otherwise determine whether they should be implemented”. The rule also requires customers, stakeholders and merchants to provide economic data. NWE’s Actions to Comply This principle embraces two types of studies – a study of significant and recurring congestion and a study to consider whether transmission upgrades or other investment can reduce the overall costs of serving native load. Collectively, these studies are called Economic Planning Studies. The Order allows customers to choose the studies that are of greatest value to them. An Economic Planning Study differs from an Interconnect Study in several ways.  Economic Planning Study: An Economic Planning Study is a transmission production cost study, which is not a system impact study or facilities study that is requested by regional stakeholders and submitted to NWE. NWE will forward the sub-regional and regional requests to the Northern Tier Transmission Group's Transmission Use Committee if the request is not a local economic study. The study will result in (i) an overall non-binding high-level estimate of the estimated cost to increase transmission capacity for a request, and (ii) a value associated with this capacity based upon anticipated resource production cost savings to the extent that the requestor supplies adequate information to do so. The output of each completed study will be posted on NWE’s OASIS, and will not assign cost responsibility for those investments or otherwise determine whether they should be implemented in any transmission plan. Interconnection Study: An Interconnection Study is a reliability study, which shall mean any of the following studies: the Interconnection Feasibility Study, the Interconnection System Impact Study, and the Interconnection Facilities Study. The purpose of an Interconnection Study is to study the transmission system with the proposed facility to identify the transmission fixes, if any, that are required to maintain acceptable transmission system reliability performance with all lines in service and with one or more lines forced out of service.  746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 30 >> D R A F T << High-Priority Study Requests Stakeholders will have the right to submit a request in writing to NWE asking NWE to conduct a high-priority Economic Planning Study. A study request that is confined to NWE’s transmission and does not affect the interconnected transmission system outside NWE’s transmission will be classified as an NWE Economic Planning Study. NWE will conduct this study and will coordinate assumptions and results with its customers, stakeholders and interconnected neighbors. All other economic study requests affecting the sub-region or region will be forwarded to NTTG for sub-regional study. NTTG will prioritize the economic planning studies it receives and will either conduct the study, send the study request to WECC or return the study to NWE. Because NWE’s balancing area has significantly more generation than load, it is anticipated that most economic planning studies will be forwarded to NTTG for study. Requesting A High-Priority Economic Planning Study A request for a high-priority economic planning study can be made by completing, signing and returning to NWE the “NWE Economic Planning Study Request Form”. This economic planning study request form can be found under the Transmission planning tab on NWE’s OASIS site at http://oatioasis.com/NWMT. Processing requests will follow the procedure described in the “NWE Economic Planning Study Timeline and Process” section below. NWE reserves the right to request additional information, information that is in addition to the required information provided in the original request form, if that information is needed to complete the study. Valid NWE Request A valid request will be a request that supplies all the data in NWE’s Economic Planning Study Request Form (i.e., Required Data). Requests that are not valid will follow the procedure described in the “NWE Economic Planning Study Timeline and Process” section below. Economic Planning Study Classification Valid requests will be classified as either a NWE Economic Planning Study request or a SubRegional/Regional Economic Planning Study request. Sub-Regional/Regional Economic Planning Studies that are received by NWE will be forwarded to NTTG for study. A study request that is confined to NWE’s transmission and does not affect the interconnected transmission system outside NWE’s transmission will be classified as an NWE Economic Planning Study. All other economic study requests will be classified as a Sub-Regional/Regional Economic Planning Study and will be forwarded to NTTG for study. The process by which NTTG processes economic studies is described. See the “NTTG Sub-Regional Planning Process (K2)” in section II below. Number of NWE High-Priority Studies NWE will study up to two high-priority NWE Economic Planning Studies annually to address congestion or the integration of new resources or loads. As described below, additional studies may be studied, but the customer making the request will fund these additional studies. 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 31 >> D R A F T << Prioritizing NWE Economic Study Requests If more than two valid NWE Economic Planning Study requests are received, and if after clustering the requests (described below) more than two distinct studies remain, then NWE will prioritize the studies identifying the two highest priority studies. The studies in excess of the two highest priority studies will be called Additional Studies. NWE will coordinate the prioritization in an open public process by consulting with its advisory committee, TRANSAC. Sponsors of the Economic Study Request are invited to participate in the open TRANSAC meeting. The prioritization methodology will focus on the spirit of economic study as stated by FERC. That is, “any such studies conducted pursuant to this principle … would be for the purposes of planning for the alleviation of congestion through integration of new supply and demand resource into the regional transmission grid or expand the regional transmission grid in a manner that can benefit large numbers of customers, such as by evaluating transmission upgrades necessary to connect major new areas of generation resource (such as areas that support substantial wind generation). Specific requests for service would continue to be studied pursuant to existing pro forma OATT processes.”6 Request that do not meet the spirit of this statement may not be studied. Clustering Study Requests Clustering of requests for an NWE Economic Study will be triggered by the following conditions.    NWE will consult with TRANSAC in making clustering decisions. No request is exempt from being included in a cluster study if appropriate. Figure 6: NWE Internal Paths Requests will be clustered in a manner that makes the study process efficient. Efficiency may be determined by the location of the requests and whether or not there is a common or a potentially common transmission system problem created by the requests. For example, as shown in Figure 6: NWE Internal Paths, requests in the Great Falls area (north central Montana) and requests in the Billings area (south east Montana) Internal Paths & External Paths Hot Springs Burke South of Great Falls Great Falls MT- Northwest Taft West Of Broadview West Of Crossover Garrison Townsend Broadview West Of Colstrip Mill Creek Billings Crossover Colstrip Miles City MT - Idaho Miles City DC MT- South East Yellowtail Jefferson IDAHO Borah, Brady or Midpoint 6 Paragraph 549, FERC Order 890, OATT Reform. 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 32 >> D R A F T << would not have a common transmission problem. However, a group of requests in the Billings area and the Crossover area moving power to the west may have a common transmission problem.  All information and data resulting from the study will be provided to NTTG and other regional entities. If a request is to move power into or out of NWE’s balancing area or if the regional transmission system is affected by the study request, then the request will be classified as a SubRegional/Regional Economic Study and will be forwarded to NTTG for study. If appropriate, individual study requests will be clustered into a single request before sending to NTTG by using the following principles.     NWE will consult with TRANSAC in making decisions. No request is exempt from being included in a cluster study. Request to move power into or out of NWE balancing area may be clustered. Requests within NWE balancing area that have regional impacts when clustered will be included in a regional study. Figure 7: NWE External Paths  Requests will be clustered in a Montana Paths Non-Simultaneous Path Ratings manner that makes the study Not Operating Transfer Capability process efficient. Efficiency may be determined by the Path 8 location, if the requests 1350 MW Path 80 originate (or terminate) in 2,200 MW NWE’s balancing area and MT-NW 600 MW terminate (or originate) outside Cut Plane 2 - 500 kV 337 MW NWE’s balancing area, and if Path 18 600 MW 5 - 230 kV there is a common or a 3 - 115 kV MT-SE potentially common Cut Plane 3 - 230 kV transmission problem (e.g., 351 MW 1 - 161 kV MT - Idaho congestion point). For Cut Plane example, in Figure 7: NWE 1- 230 kV External Paths, requests in 1 - 161 kV NWE balancing area moving power from NWE system to Idaho would have a common transmission problem; that is, there not sufficient transmission capacity between NWE and Idaho for the requests. A Sub-Regional/Regional Study may require a study of NWE’s local transmission system to accommodate the request. For example, a request to move power from Montana to Idaho may require NWE’s local transmission system to be enhanced to move the power from the source in Montana to the northern terminal of the MT-ID line congestion.  746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 33 >> D R A F T << NWE Economic Planning Study Once a valid request is received and clustered, if appropriate, NWE will proceed with the NWE Economic Planning Study. NWE’s Economic Planning Study will be conducted, including appropriate sensitivity analysis, in a manner that is open and coordinated with the affected stakeholders and TRANSAC. With respect to a NWE Economic Planning Study, NWE will analyze and report on the following elements. Location and Magnitude of Congestion: The location of the congestion will be made known through examination of historical path performance, past studies or through limited powerflow and transient stability study. To the extent hourly data is available and applicable to the request, NWE will evaluate historical records to assess the historical duration and magnitude of congestion across the congested path. Several years of data will be analyzed if it is available to make this assessment. Once NWE’s studies identify the location of a future congestion, NWE will obtain that path’s historical hourly flows and extrapolate the flow data to the year when congestion occurs. Additional factors such as load growth need, potential future generation, and transmission service requests needs are examples of adjustments that may be added to historical flows to make this assessment. This extrapolated data may provide an example of the congestion hourly profile. Extrapolation of the hourly data will be completed for pre-defined assumptions about the relevant adjustments. It should be noted that information developed in this manner may or may not provide a valid example of future congestion across a path, unless the path is “radial” interface between two areas, because flows across the path may not be linear (i.e., onefor-one) due to other network transmission paths offloading and generation or load growth patterns. Possible Remedies: NWE will define the transmission mitigation options that could relieve the congestion in whole or in part. NWE transmission planning will likely need input from NWE’s Default Supply and/or the customers making the request to define the non-transmission mitigation measures that could relieve the congestion in whole or in part. The robustness of the possible remedies may be affected by failure of customers to provide information. A plan will be considered acceptable only if it meets all reliability criteria. Associated Cost of Congestion: The cost of congestion will be the most difficult for NWE to evaluate since NWE is a transmission company only and does not have knowledge of generation dispatch costs unless the customer making the request provides the information. If NWE does not obtain this data from the customers making the request, NWE will not be able to complete this portion of the economic study. NWE’s Default Supply will be required to submit relevant data as appropriate. Confidential information and CEII data will be protected as appropriate. NWE will not be able to complete this portion of the economic study internally because the study requires an economic dispatch model such as PROMOD. NWE will likely consult this portion of the study request to NTTG, WECC or to a consultant. Cost to Relieving Congestion: Once the mitigation measures are identified, NWE will be able to define the cost to relieve the congestion. NWE will be able to define the costs for transmission mitigation measures, but may need help from the customers making the request or NWE’s Default Supply to define the costs of the non-transmission solutions. 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 34 >> D R A F T << Customer’s Obligation To Share Data The customers’ obligation to share information is critical to completing an economic planning study. NWE cannot be obligated to study the cost of congestion if it does not have the information to do so. Any customer requesting an economic study must supply all relevant information that it has in its possession for the study. If critical study information is missing, NWE will work with the customer to determine how the data can be obtained or estimated. NWE will contact NWE Default Supply to obtain its relevant information for the study. If critical data cannot be obtained or estimated, the study cannot be completed. All confidential data will be protected by SOC and CEII concerns. NWE Obligation This Principle does not require an economic planning study to be completed by NWE unless requested by customers, nor does it obligate NWE to fund economic projects, or to assign cost responsibility for investments nor to determine whether the investment should be implemented. Cost to Conduct NWE’s Two High Priority Economic Studies The cost to conduct the two high priority NWE’s Economic Planning Studies will be tracked and included in NWE’s next FERC filing for recovery as part of the overall pro forma OATT cost of service. NWE Economic Planning Study Timeline and Process Figure 8: Economic Planning Study NWE will follow the process shown in Figure 8: Economic Planning Study to complete NWE’s Economic Planning Study. The following process steps will be used. 1 Requests Received: Economic study requests will be received from customers during a predetermined 60-calendar day Request Window. 1.1 The start and close of the Request Window will be posted on NWE’s OASIS website (http://www.oatioasis.com/NWMT) under the Transmission Planning tab. Requests that are not valid will be returned to customer for revision. Revised requests that are not returned to NWE within 15 calendar days will be deemed withdrawn. NWE Economic Planning Study Mth * 1 2 3 4 5 6 7 8 9 10 11 12 Activity Receive Requests Cluster & Prioritize Study 1.2 Report Results Meeting * NWE will use reasonable efforts to meet these time frames. 2 Cluster and Prioritize: The studies will be clustered, if appropriate, and prioritized during the next 30 calendar days. 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 35 >> D R A F T << 2.1 2.2 2.3 3 Studies will be classified as either NWE Economic Planning Study or Sub-Regional (Regional) Economic Planning Study. Sub-Regional (Regional) Economic Planning Studies will be forwarded to NTTG. Customers will be notified of their study request classification. Study: NWE will use reasonable efforts to compete the study within 210 calendar days. 3.1 3.2 NWE will establish a pre-study conference call with the customer(s) to discuss the details of the study. The progress of all NWE Economic Planning Studies will be discussed at TRANSAC. The customers will be informed of these TRANSAC meetings and are encouraged to participate in these meetings. If the study will not be completed within the 210-calendar day study time, NWE will inform the customer in writing of the delay, the reason for the delay and an estimated time for completion. 3.3 4 5 6 7 Report: NWE will furnish the customer with a study report within 30 days of completion of the study. Study Results Meeting: NWE will schedule a study results meeting, which may be coordinated with the next scheduled TRANSAC meeting. Posting: The report will be posted on NWE’s OASIS website under the Transmission Planning Tab. The Economic Planning Study result will be available for reference and appropriate consideration into NWE’s Local Transmission System Planning Study. Additional Economic Studies Economic study requests that are not prioritized as one of the two highest priority studies will be called Additional Studies. See Prioritizing Studies above for a discussion of how Economic Study requests will be prioritized. Sponsors of Additional Study requests will be given the option to pay for consulting services to complete the study or to withdraw the study. The sponsor may re-submit the economic study request for study consideration in the next economic planning cycle. The process that will be followed for Additional Studies is discussed below. If NWE’s Economic Planning Study will not be completed by the end of the study period, NWE will inform the requestor(s) in before the end of the study period of the study delay, the reasons for the delay and an estimated completion date. NWE will make reasonable efforts to complete the two high priority studies within the allotted study time. Process for Additional Economic Planning Studies The following process will be followed for conducting an Additional Economic Planning Study. 1. Once the customer’s economic study request has been determined to not be one of the two high-priority studies describe above, NWE will notify the customer within 15 calendar days of that determination. An Additional Economic Planning Study Agreement will accompany the notification. 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 36 >> D R A F T << 2. Upon receipt of the Additional Economic Planning Study Agreement, the customer must sign and return the Agreement with a study deposit within 30 calendar days of receipt of the Additional Economic Planning Study Agreement.    The study deposit is $75,000. If NWE does not receive the signed study agreement and deposit within 30 calendar days, the Economic Planning Study request will be deemed withdrawn. Withdrawn study requests may be re-submitted by the customer for consideration during the first three months of the next NWE Economic Planning Study cycle. 3. Customer will be responsible for all actual costs to complete the economic planning study.    Actual costs less than the $75,000 deposit will be refunded to the customer. The customer will be invoiced for actual study costs greater than the $75,000 study deposit. The customer must pay the invoiced amount within 30-calendar days of receipt. 4. Once NWE receives the signed study agreement and deposit, NWE will follow the NWE Economic Planning Study Process starting with step 3. Sharing of Study Results Between System Planning and Economic Studies The Local Transmission System Planning Study (for retail load service) and the Economic Planning Study (for customer economic study requests studies) are distinct and separate studies. They examine the transmission system from different perspectives (reliability evaluation vs. economic dispatch evaluation). Even though these studies are distinct and separate studies, the applicable study results from one study will be made available to the other study for consideration. See Figure 9: Sharing System and Economic Study Results. Figure 9: Sharing System and Economic Study Results Study Result Sharing NWE Transmission System Planning Study Quarter System Planning Steps Prior Cycle Results Qtr 1 Goal & Scenario Definitions Qtr 2 Consider Qtr 3 Prior & Current Yr Qtr 4 Technical Study Economic Qtr 5 Results Qtr 6 Qtr 7 Decision Qtr 8 Reporting Future Planning Cycle NWE Economic Planning Study Quarter Activity Prior Year Results Qtr 1 Receive Requests Qtr 2 Prioritize & Begin Study Qtr 3 Study Qtr 4 Finish Study & Report Qtr 1 Receive Requests Qtr 2 Prioritize & Begin Study Qtr 3 Study Qtr 4 Finish Study & Report Sys Planning Cycle Year 1 Year 2 For example, an economic study for large-scale generation projects development in a specific area may identify a system enhancement that is economically supportable, that is the development of new transmission is economically better than re-dispatch of generation. Even though the results from this study are not binding to NWE and do cause construction, it is appropriate to consider the economic result as one of the potential scenarios and/or as a mitigation measure to be evaluated in the Local Transmission System Planning Study. 746150cb-213d-43a3-befa-6b51a0690d9b.doc Year 2 Year 1 Page 37 >> D R A F T << Sub-Regional Economic Study Coordination Figure 10: Sub-Regional Economic Coordination The process for sub-regional Expected Economic Study Process and regional economic studies coordination is shown in Figure Study WECC Regional Requests 10: Sub-Regional Economic WECC Coordination. Regional/SubRegional Requests Report Regional Economic Planning Study SubNTTG Studies that are received by Regional Requests NWE will be forwarded to NTTG Sub-Regional & Regional Requests Report NTTG for study. A study request that is confined to Alternative Study Local NWE Path Requests NWE’s transmission and does not affect the interconnected NWE Customer Request Report transmission system outside NWE’s transmission will be Customer classified as an NWE Economic Planning Study. All other economic study requests will be forwarded to NTTG for study. NTTG Transmission Use Committee (see NTTG Transmission Use Committee Charter posted on NWE’s OASIS website at http:/www.oatioasis.com/NWMT/Transmission Planning/Draft Attachment K) will prioritize the economic planning studies it receives and will either retain the request for NTTG study, send the study request to WECC for study or return the study to NWE. Also see the “NTTG Sub-Regional Planning Process (K2)” and the “WECC Regional Planning Process (K3)” in sections II and III, respectively. Economic Planning Study Posting NWE will post a listing of all Economic Planning Study requests received by NWE. This list will include the following information.        Date received Whether or not the request is valid Type of study (NWE high-priority study, additional study, sub-regional study) Cluster status (none or cluster group number) Request status (received, in study, study complete, withdrawn) Date the study request forwarded to the sub-region, if appropriate Expected completion date This listing will be posted on NWE’s OASIS (http://www.oatioasis.com/NWMT) website under the Transmission Planning tab. Interested persons can contact NWE for copies of the economic planning study reports shown on this listed posting. 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 38 >> D R A F T << Principle 9 - Cost Allocation for New Projects FERC Order Requirement Summary The Commission Determination is found within paragraphs 557-561 of the Order. The Cost Allocation for New Projects principle requires the planning process to address cost allocation for joint projects, economic projects, and projects that do not fit into existing OATT cost allocation principles. Examples of new projects requiring a cost allocation principle are projects involving several transmission owners or economic projects that are identified through the study process described in Principle 8 – Economic Planning Studies. The rule does not specify a particular allocation method, but the method should provide for fair allocation to beneficiaries, adequate incentives to construct transmission, and should have the support of state authorities and regionwide participants. NWE’s Actions to Comply Principle 9 states that “t[T]he proposal should identify the types of new projects that are not covered under existing cost allocation rules and, therefore, would be affected by this cost allocation principle. … We will not impose a particular allocation method for such projects, but rather will permit transmission providers and stakeholders to determine their own specific criteria which best fit their own experiences and regional needs.” Projects Not Covered Under Existing Cost Allocation Rules The following are examples of projects not covered under existing cost allocation rules and would be affected by the cost allocation principle.  A new project confined to NWE balancing area not for load service. For example, this project could move power across a future internal transmission constraint and be the result of a NWE Economic Planning Study. This project may have little or no regional impact, but would be a proactive look to relieve future transmission congestion. WECC Regional Planning Process and Path Rating Process may be required, but sub-regional coordination would be required. A new project extending beyond NWE’s balancing area. A project from a regional economic planning study could be a major transmission line that has sub-regional or regional consequences. An example would be a new transmission line starting in Montana and terminating in Phoenix. This study would traverse a large geographic area and would impact the transmission systems of at least one other utility. This project would have sub-regional impacts and would require sub-regional coordination through NTTG. The WECC Regional Planning Process and the Path Rating Process would also be required. A new project involving several transmission owners. An example of this would be a new transmission line, sponsored by several entities, built to move power out of NWE’s balancing area to the Northwest. This project could have sub-regional and regional impacts and would require sub-regional coordination through NTTG. The WECC Regional Planning Process and the Path Rating Process would also be required. Page 39   746150cb-213d-43a3-befa-6b51a0690d9b.doc >> D R A F T <<  A new project resulting from an Open Season Solicitation. This type of project could be a major transmission line that has sub-regional or regional consequences. An example would be a new transmission line starting in Montana and terminating in Idaho. This study would traverse a large geographic area and would impact the transmission systems of at least one other utility. A joint study would be required and would be facilitated by NTTG. This project could have sub-regional and regional impacts and would require sub-regional coordination through NTTG. The WECC Regional Planning Process and the Path Rating Process would also be required. NWE Local Allocation Methodology For new local projects that do not fit into NWE OATT cost allocation principles, NWE will follow the “NWE Local Cost Allocation Methodology Projects Outside OATT” that is posted on NWE’s website (http://www.oatioasis.com/NWMT under the Transmission Planning/Draft Attachment K folder) unless a mutually agreeable cost allocation method can be reached between NWE and the project participants or sponsors. In developing alternative cost allocation methods, NWE will seek input from its stakeholders, through TRANSAC. Cost allocation will be discussed and agreed to on a case-by-case basis with project participants or sponsors. It is possible that the cost allocation principles for economic projects will be different from the cost allocation methods for projects involving multiple owners. The cost allocation developed from this methodology for a Project falling outside NWE’s OATT are not binding and are intended to represent an example of the cost allocation that could be agreed to by the sponsors of the study request. The actual cost allocation for a project will be determined once the project is committed to and the cost allocation is negotiated and agreed to by the committed project sponsors, which may be different than the sponsors making the study request. The actual cost allocation will be specified in the contract between the committed project sponsors. There are various methods to assign costs for new projects within NWE's balancing area that do not have a regional impact and do not fall under NWE’s tariff. One methodology is the principle based on cost-causation as shown in “NWE Local Cost Allocation Methodology Projects Outside OATT” that is posted on NWE’s website (http://www.oatioasis.com/NWMT under the Transmission Planning/Draft Attachment K folder). The costs that are allocated to customers are all appropriate costs for the system mitigation (i.e., upgrades, enhancements, etc.) that eliminate the unacceptable system performance. Through this principle, the customer whose request caused the problems is the customer that benefits most through the elimination of the problem and the quantification is based on the relative contribution to the problem being eliminated. Other methods that could be used for cost allocation include, but are not limited to, the following.     An open season to determine ownership share; Open season for allocation of capacity without ownership; and Share prorated on MW use. Any of these methods may be the appropriate method for a particular situation. 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 40 >> D R A F T << Sub-Regional and Regional Cost Allocation The NTTG sub-regional cost allocation and the WECC regional cost allocation are described in the “NTTG Sub-Regional Planning Process (K2)” and the “WECC Regional Planning Process (K3)” in sections II and III, respectively. The NTTG cost allocation principles are posted on the NTTG web page and on NWE’s OASIS website at http://www.oatioasis.com/NWMT under the Transmission Planning/Draft Attachment K folder. 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 41 >> D R A F T << Recovery of Planning Costs NWE does not have a specific mechanism under the OATT or other funding sources for the recovery of the planning-related costs. NWE will capture the planning costs for NWE OATT using traditional test period requirements in the next FERC tariff filing. No specific allocation to specific customers is contemplated. TRANSAC will be NWE’s vehicle to discuss if any other entities are in need of cost recovery for planning related activities. 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 42 >> D R A F T << II. NTTG Sub-Regional Planning Process (K2) Subregional Planning Process (K2) Introduction Transmission Provider is a member of Northern Tier Transmission Group (“NTTG”), and uses the NTTG process for sub-regional planning, coordination with adjacent sub-regional groups and other planning entities, and proposals to Western Electricity Coordinating Council’s Transmission Expansion Policy and Planning Committee (“WECC TEPPC”) for regional planning. Participants in NTTG have committed to working with one another and with affected stakeholders and state officials, to increase efficient use of the grid and to develop the infrastructure needed to deliver new renewable and thermal power resources to consumers. Transmission Provider, as a member of NTTG, has committed to support the sub-regional planning process through funding NTTG and providing employee support of NTTG planning and administration efforts. Stakeholders may participate in NTTG’s activities and programs at their discretion. Eligible Customers and stakeholders may participate directly in the NTTG processes or participate indirectly through the Transmission Provider via development of the local transmission plan. For additional information, including a map containing the current geographic footprint of NTTG, please see http://www/nttg/biz. 1. Transmission Provider Coordination with NTTG Transmission Provider will collect customer data and consolidate load service and other transmission service requests through the local planning process described in Section A above. Transmission Provider will provide NTTG with its local transmission plan incorporating all of the transmission service forecasts for its transmission system. NTTG will conduct its planning process to identify needs, least cost expansion project alternatives, technical benefits and projected costs. NTTG will select beneficial expansion sub-regional projects and address cost allocation among participating Transmission Providers. Specifics of the NTTG planning process are available on NTTG’s website www.nttg.biz. Subject to appropriate Critical Energy Infrastructure Information restrictions, Transmission Provider will post planning criteria and assumptions adopted by NTTG, and all NTTG study results on Transmission Provider’s OASIS. 2. Study Process 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 43 >> D R A F T << Transmission Provider will support the NTTG processes as a member of NTTG to establish a coordinated sub-regional study process, involving both economic and reliability components, as outlined in the NTTG planning committee charter, which is approved by the NTTG Steering Committee. The current NTTG planning committee charter is available on NTTG’s website www.nttg.biz. Transmission Provider shall post the dates of the current NTTG study cycle on its OASIS, along with notices for each upcoming sub-regional planning meeting which is open to all parties. Results of sub-regional and regional planning efforts will be considered in future local transmission planning study cycles. 3. Stakeholder Participation Eligible Customers and stakeholders may participate in the NTTG sub-regional planning process pursuant to the requirements of NTTG. NTTG’s planning committee is open to membership by Transmission Providers, any providers of transmission services, any Eligible Customer, and any state utility commission. NTTG has developed rules governing access to, and disclosure of, subregional planning data by members. Members of NTTG are required to execute standard nondisclosure agreements before sub-regional transmission planning data are released. Eligible Customers and stakeholders may comment on NTTG study criteria, assumptions, or results at their discretion either through direct participation in NTTG or by submitting comments to Transmission Provider to be evaluated and consolidated with Transmission Provider’s comments on the sub-regional plan, criteria, and assumptions. 4. Economic Congestion Studies Transmission Provider, as a member of NTTG, will participate in the NTTG processes to prioritize and complete up to two (2) sub-regional economic congestion studies per NTTG planning cycle, as outlined in NTTG’s standardized process for congestion studies. The subregional economic congestion studies will address those requests submitted by Eligible Customers and stakeholders to member Transmission Providers that require analysis across multiple NTTG member transmission systems. NTTG may submit requests for regional economic congestion studies to the WECC TEPPC pursuant to NTTG developed processes. Within each study cycle any Eligible Customer or stakeholder may request additional Economic Congestion Studies, or Economic Congestion studies that were not prioritized for completion by NTTG, to be paid for at the sole expense of the requesting party. Such requests shall be made by the Eligible Customer or stakeholder to the Transmission Provider. Transmission Provider will tender a study agreement that addresses, at a minimum, cost recovery for the Transmission Provider and schedule for completion. 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 44 >> D R A F T << 5. Dispute Resolution Transmission Provider will participate in the NTTG dispute resolution process to resolve disputes related to the integration of Transmission Provider’s local plan with the sub-regional Expansion Plan and associated cost allocation. The NTTG dispute resolution process may be initiated to enforce compliance with the NTTG study process, or to challenge a decision within a milestone document. Eligible Customers and stakeholders participating in the NTTG planning committee may also utilize the NTTG planning agreement dispute resolution process. Disputes over any matter shall be raised timely; provided, however, in no case shall a dispute be raised more than 30 days after a decision is made by the planning committee in study process or the posting of a milestone document, whichever is earlier. 6. Cost Allocation Transmission Provider will support the NTTG to prepare and submit recommendations for cost allocation associated with the NTTG sub-regional plan to the NTTG Cost Allocation Committee and process, and ultimately the NTTG Steering Committee for approval. This Steering Committee approval will represent a non-binding sub-regional consensus of cost allocation formed with direct state commission involvement and support. 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 45 >> D R A F T << III. WECC Regional Planning Process (K3) Regional Planning Process (K3) Introduction Transmission Provider is a member of the Western Electricity Coordinating Council (WECC) and supports the work of WECC Transmission Expansion Planning and Policy Committee (TEPPC). NTTG may utilize WECC TEPPC for consolidation and completion of congestion and economic studies, base cases, and other regional planning. NTTG may coordinate with other neighboring sub-regional planning groups directly, through joint study teams, or through the regional process. Eligible Customers and stakeholders may participate directly in the WECC processes, pursuant to participation requirements defined by WECC TEPPC, or participate indirectly through the Transmission Provider via development of the local transmission plan or through the NTTG process as outlined above in Section B. 1. Transmission Provider Coordination with WECC TEPPC Transmission Provider will coordinate with WECC TEPPC for regional planning through its participation in NTTG. Transmission Provider will also use NTTG to coordinate with neighboring sub-regional planning groups including the CAISO, WEST Connect, NWPP and Columbia Grid. The goal of NTTG’s coordination on a regional basis on behalf of Transmission Provider is to (1) share system plans to ensure that they are simultaneously feasible and otherwise use consistent assumptions and data, and (2) identify system enhancements that could relieve congestion or integrate new resources. 2. Study Process WECC TEPPC’s Transmission Planning Protocol, TEPPC-Planning-Protocol_V1-3(Clean), is available at the WECC TEPPC website and posted on NWE’s OASIS website at http://www.oatioasis.com/NWMT under the Transmission Planning/Draft Attachment K folder. 3. Stakeholder Participation Stakeholders have access to the regional planning process through NTTG’s public planning meetings, other sub-regional planning groups, and WECC at their discretion. 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 46 >> D R A F T << 4. Economic Congestion Studies Transmission Provider will support, directly and through its participation in NTTG, the WECC TEPPC processes to prioritize and complete regional economic congestion studies requested by customers and stakeholders to each member transmission provider in each calendar year within the Western Electricity Coordinating Council’s footprint as outlined in the standardized mechanism. 5. Dispute Resolution Regional dispute resolution will be pursuant to the process developed by WECC. 6. Cost Allocation A Western Interconnection regional cost allocation methodology does not exist, therefore cost allocations for regional transmission projects, will be addressed on a case by case basis by parties participating in the project. 746150cb-213d-43a3-befa-6b51a0690d9b.doc Page 47