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REVIEW of the COST STATUS of MAJOR TRANSMISSION PROJECTS in ALBERTA from the Transmission Facilities Cost Monitoring Committee

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REVIEW of the COST STATUS of MAJOR TRANSMISSION PROJECTS in ALBERTA from the Transmission Facilities Cost Monitoring Committee REVIEW OF THE COST STATUS OF MAJOR TRANSMISSION PROJECTS IN ALBERTA From The Transmission Facilities Cost Monitoring Committee DECEMBER 2016 REPORT Review of the Cost Status of Major Transmission Projects in Alberta | 1 REVIEW OF THE COST STATUS OF MAJOR TRANSMISSION PROJECTS IN ALBERTA - DECEMBER 2016 ISBN 978-1-4601-3469-6 (Print) ISBN 978-1-4601-3468-9 (PDF) The Review of the Cost Status of Major Transmission Projects in Alberta - December 2016 is available online at: https://ucahelps.alberta.ca/regulatory-reporting.aspx This report was created by the Transmission Facilities Cost Monitoring Committee (TFCMC). Photos in this report, as well as previous semi-annual reports, are of Alberta transmission facilities. The TFCMC can be reached at [email protected] This publication is also issued under the Open Government Licence and will also be posted to and retained at https://open.alberta.ca/publications/review-of-the- cost-status-of-major-transmission-projects-in-alberta-transmission-facilities 2 | Review of the Cost Status of Major Transmission Projects in Alberta Table of Contents Message From The Chair......................................................................................... 3 1. Transmission Projects Covered Under The TFCMC’s Mandate ................ 4 2. TFCMC Observations To Date ...................................................................... 6 3. TFCMC Results To Date | Recommendations ........................................... 12 Appendix A: About The TFCMC ............................................................................ 16 Appendix B: The Transmission Projects At A Glance ......................................... 20 Appendix C: Previously Monitored Projects ........................................................ 41 Appendix D: TFCMC Working Documents ........................................................... 44 Appendix E: Transmission Facility Owners Responses ...................................... 53 Industry Abbreviations Commonly Found In This Report Alberta Electric System Operator ...........(AESO) Facility Application .........................(FA) Alberta PowerLine L.P. ................... (APL) General Tariff Application .................. (GTA) Alberta Utilities Commission ................(AUC) High Voltage Direct Current ................(HVDC) Allowance for Funds Used In-Service Date ...........................(ISD) During Construction ................... (AFUDC) Long-Term Plan ...........................(LTP) AltaLink Management Ltd. .............. (AltaLink) Needs Identification Document ...............(NID) ATCO Electric Ltd. ......................(ATCO) Permit and Licence ........................(P&L) Critical Transmission Infrastructure ............(CTI) TransAlta Corp. ..................... (TransAlta) Direct Assign Capital Deferral Account .....(DACDA) TransAlta Utilities ..........................(TAU) Distribution Facility Owner .................(DFO) Transmission Facilities Cost ENMAX Power Corp. ...................(ENMAX) Monitoring Committee ................. (TFCMC) EPCOR Distribution and Transmission Inc. ....(EDTI) Transmission Facility Owner ................ (TFO) EPCOR Utilities Inc. ....................(EPCOR) Transportation Utility Corridor ...............(TUC) Review of the Cost Status of Major Transmission Projects in Alberta | 3 Message From The Chair This is the twelfth report from the Transmission Facilities Cost Monitoring Committee (referred to in this report as the “TFCMC” or the “Committee”) to its stakeholders. The report provides a detailed and structured summary of the cost, scope and schedule information of the transmission projects monitored by the Committee on a monthly basis for the period of May 1, 2016 to November 30, 2016. During this period, the Committee examined the progression of nine major transmission projects, with the total cost of these projects estimated at just under $3.647 billion1. A listing of these projects can be found in Section 1, while details for these projects are contained in Appendices B and C. Section 2 of this report contains several key learnings and observations made by the Committee while monitoring the progress of the transmission projects. The Committee appreciates the information provided by AltaLink on their internal value engineering process and the quality issues on spacer dampers. Through the TFCMC’s work in monitoring transmission project costs, it has and continues to identify opportunities to minimize costs. Since its inception, the Committee has made recommendations to take advantage of these opportunities. No new recommendations are contained in this edition of the TFCMC report. Section 3 provides an update on the status of all previous recommendations. The Committee received a letter from the Minister of Energy responding to the Committee’s recommendations with respect to the COM Pilot follow-up and the need to maximize the value of the existing transmission grid when implementing the Renewable Electricity Program. The Committee is encouraged by the appreciation expressed in her letter for the work of the Committee and its focus on mitigating transmission project costs. The Alberta Electric System Operator (AESO) is continuing its work on enhancing and strengthening ISO Industry Abbreviations Commonly Found In This Report Rule 9.1 in the areas of cost estimating, cost reporting and procurement. In addition to issuing a limited quantity of hard copies of this semi-annual report, the report will be posted on the Utilities Consumer Advocate’s website for access by any interested parties. Thank you for your continuing support. The TFCMC’s next semi-annual report is scheduled for release in the fall of 2017. Your comments to improve the report will be much appreciated. Please email your comments to [email protected] Henry Yip Chair, Transmission Facilities Cost Monitoring Committee 1 This figure does not include costs for Project 1590 – Fort McMurray West Area 500 kV Transmission Bulk System Reinforcement (FMACW) – as this project falls under a competitive procurement process. If the cost of Project 1590 is included, the projects would be valued at just under $5.08 billion. 4 | Review of the Cost Status of Major Transmission Projects in Alberta 1 Transmission Projects Covered Under The TFCMC’s Mandate The TFCMC has the authority to review records relating to the cost, scope and schedule of transmission facility projects expected to cost more than $100 million. These transmission projects include all lines and substations, which make up the transmission facilities required to transfer power between generators and loads. Monitored Projects The TFCMC monitored nine projects during the period covered by this report. The nine projects have a combined Authorized Budget of just under $3.647 billion2 (as detailed in Appendix B). The monitored projects, in alphabetical order, are: COMPLETED CENTRAL EAST AREA TRANSMISSION DEVELOPMENT (CETD); PROJECT 811 – Transmission development in Wainwright, Lloydminster, Provost, Vegreville and Cold Lake. | Current Estimated Cost: $342.2 million | NEW DOWNTOWN CALGARY TRANSMISSION REINFORCEMENT PROJECT (DCTRP); PROJECT 1456 – 138 kV transmission system reinforcement to alleviate identified constraints and to contribute to the long-term reliable operation of the 138 kV transmission system in the downtown Calgary area. | Current Estimated Cost: $144.48 million | COMPLETED EDMONTON REGION 240 KV LINE UPGRADES (ERLU); PROJECT 786 – Upgrading 240 kV lines in the Edmonton area and adding one 240 kV phase shifter at Livock substation to gain more capacity out of the existing 240 kV network. | Current Estimated Cost: $197.3 million | FORT MCMURRAY WEST AREA 500 KV TRANSMISSION BULK SYSTEM REINFORCEMENT (FMACW); PROJECT 1590 (formerly Project 838) – Construction of a West 500 kV transmission line from the Edmonton region to the Fort McMurray area. | Current Estimated Cost: $1.433 billion | NORTHWEST (OF) FORT MCMURRAY TRANSMISSION DEVELOPMENT (NW FMM); PROJECT 1180 – To provide service and connect future industrial customers in areas northwest of Fort McMurray where there are no transmission facilities. | Current Estimated Cost: $235.1 million | RED DEER REGION TRANSMISSION DEVELOPMENT (RDTD); PROJECT 813 – 240/138 kV transmission system reinforcements in the Red Deer area. | Current Estimated Cost: $408.2 million | SOUTH AND WEST OF EDMONTON TRANSMISSION DEVELOPMENT (SWEATR); PROJECT 850 – Transmission system reinforcement to the 138 kV systems south and west of the City of Edmonton. | Current Estimated Cost: $304.3 million | SOUTHERN ALBERTA TRANSMISSION REINFORCEMENT (SATR); PROJECT 787 – To accommodate wind generation in southern Alberta. | Current Estimated Cost: $1.866 billion | THICKWOOD HILLS 240 KV TRANSMISSION DEVELOPMENT AND REACTIVE POWER REINFORCEMENT (THTD); PROJECT 1186 – To connect the Fort McMurray West 500 kV transmission project to the existing transmission system in the Thickwood Hills area, west of Fort McMurray. | Current Estimated Cost: $149.2 million | 2 This figure does not include costs for Project 1590 – Fort McMurray West Area 500 kV Transmission Bulk System Reinforcement (FMACW) – as this project falls under a competitive procurement process. If the cost of Project 1590 is included, the projects would be valued at just under $5.08 billion. Review of the Cost Status of Major Transmission Projects in Alberta | 5 6 | Review of the Cost Status of Major Transmission Projects in Alberta 2. TFCMC Observations To Date As the Transmission Facilities Cost Monitoring
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