AESO Long-term Transmission Plan FILED JUNE 2012 Table of Contents EXECUTIVE SUMMARY 1 1.0 INTRODUCTION 13 2.0 BACKGROUND 15 2.1 Role of the AESO 15 2.2 Value of transmission 20 2.3 Planning for uncertainty 25 2.4 Transmission planning scenarios and sensitivities 27 3.0 AESO PLANNING PROCESS 29 3.1 Stakeholder consultation process 30 3.2 Determining need 33 3.3 Load forecast process 35 3.4 Generation forecast process 39 3.5 System planning and reliability standards 42 3.6 Additional key considerations 47 3.6.1 Interties 47 3.6.2 Transmission technologies 49 3.6.3 Environmental considerations 51 3.6.4 AESO system operations 51 3.6.5 Ancillary services 52 3.6.6 Market evolution 55 3.6.7 Transmission Constraints Management (TCM) 56 3.6.7.1 Impact of transmission constraints on the wholesale electricity market 58 3.6.8 Telecommunications 59 Table of Contents AESO Long-term Transmission Plan 4.0 AESO ANALYSIS AND PLANNING RESULTS 61 4.1 Overview 61 4.2 Load forecast – Future Demand and Energy Outlook (2009-2029) 61 4.2.1 Overview 61 4.2.2 Summary of key inputs 62 4.2.3 Anticipated trends 66 4.2.4 Uncertainties and concerns looking forward 67 4.3 Generation forecast 69 4.3.1 Gas-fired generation 71 4.3.2 Coal 72 4.3.3 Wind 72 4.3.4 Other renewable projects and new technologies 73 4.3.5 Large projects 73 4.3.6 Baseline generation scenarios 73 4.4 Bulk transmission system including CTI 76 4.4.1 Overview 76 4.4.2 Transmission technology alternatives 78 4.4.3 Project status 79 4.4.3.1 Edmonton to Calgary transmission system reinforcement 79 4.4.3.2 Heartland transmission system reinforcement 82 4.4.3.3 Fort McMurray transmission system reinforcements 85 4.4.3.4 Southern Alberta Transmission Reinforcement (SATR) 86 4.4.3.5 Foothills Area Transmission Development (FATD) 89 4.4.3.6 South Calgary transmission system reinforcements 91 4.4.3.7 Northwest transmission system reinforcements 93 4.4.4 Bulk projects cost estimates and timelines 95 4.4.5 Unique considerations and uncertainties on the bulk system 96 4.4.6 Bulk transmission system post-2020 99 Table of Contents AESO Long-term Transmission Plan 4.5 Regional transmission system projects 102 4.5.1 Northwest region 102 4.5.1.1 Overview 102 4.5.1.2 Status of projects 105 4.5.1.3 Unique challenges, uncertainties and concerns 107 4.5.2 Northeast region 108 4.5.2.1 Overview 108 4.5.2.2 Status of projects 110 4.5.2.3 Northeast region transmission projects 112 4.5.2.4 Unique challenges, uncertainties and concerns 113 4.5.3 Edmonton region 114 4.5.3.1 Overview 114 4.5.3.2 Status of projects 117 4.5.3.3 Edmonton region transmission projects 118 4.5.3.4 Unique challenges, uncertainties and concerns 119 4.5.4 Central region 120 4.5.4.1 Overview 120 4.5.4.2 Status of projects 122 4.5.4.3 Central region transmission projects 123 4.5.4.4 Unique challenges, uncertainties and concerns 123 4.5.5 South region 124 4.5.5.1 Overview 124 4.5.5.2 Status of projects 126 4.5.5.3 South region transmission projects 127 4.5.5.4 Unique challenges, uncertainties and concerns 127 4.6 Long-term Transmission Plan costs 128 4.6.1 Project cost estimates 129 4.6.2 Transmission rate impact 132 4.6.3 Reconciliation of costs 135 5.0 CONCLUSION 139 Table of Contents AESO Long-term Transmission Plan APPENDICES 141 Appendix A Glossary of Terms 141 Appendix B 24-Month Reliability Outlook (2010 – 2012) 151 Appendix C 2010 Annual Market Statistics 179 Appendix D Part 1 – FC2009 Overlay 207 Appendix D Part 2 – Future Demand and Energy Outlook (2009 – 2029) 219 Appendix E Generation Outlook 2009 – 2029 283 Appendix F Interties 323 Appendix G Advancements in Transmission Technology 337 Appendix H Ancillary Services Participant Manual 349 Appendix I Alberta’s Wholesale Electricity Market Design 401 Appendix J 2011 Long-term Telecommunications Plan 415 Appendix K Part 1 – The Value of Transmission 439 Appendix K Part 2 – Impact of Transmission Constraints on the Wholesale Electricity Market 453 Table of Contents Executive Summary The Long-term Transmission Plan (filed June 2012) – also referred to as the LTP or the Plan – is the Alberta Electric System Operator’s (AESO) vision of how Alberta’s electric transmission grid needs to be developed to support continued provincial economic growth. Transmission is a key enabler of Alberta’s $300 billion economy. The safe and reliable delivery of electricity is essential to ensuring Alberta’s long-term growth and continued standard of living. Alberta has had minimal major transmission system upgrades since the early 1980s. This LTP builds on the AESO’s 2009 Long-term Transmission System Plan (2009 LTP) and incorporates the most recent information available. This LTP sets out a blueprint that identifies constraints or limitations, and recommends when and where the transmission system needs to be expanded or reinforced to ensure the Alberta Interconnected Electric System (AIES) continues to meet the province’s current and future electricity needs. In developing this LTP, the AESO is guided by the Province of Alberta Electric Utilities Act (EUA), the Transmission Regulation (T-Reg), and public policy such as the direction articulated in the Government of Alberta’s 2008 Provincial Energy Strategy. The AESO’s LTP projects system conditions for at least the next 20 years. Transmission investment is needed to reliably and efficiently serve expanding demand, reduce transmission congestion and related congestion costs and facilitate a competitive market. The AESO plans for a system that is free of congestion1, meets Alberta reliability standards, and is in the public interest. Stock photograph. 1 See s. 10(1)(a) of the T-Reg for a full listing of requirements for the LTP. Executive Summary PAGE 1 AESO Long-term Transmission Plan The AESO is required to make arrangements for the construction of transmission facilities in advance of forecast need due to long project development timelines. Building in advance of need and planning for an unconstrained grid provides certainty to investors in new generation projects that they will have the ability to deliver electricity to Alberta households and businesses. Further, it gives those in other industries the confidence to do business in the province, knowing that power will be there when they need it. Alberta’s future prosperity depends upon a reliable transmission system, and a competitive electricity market. This LTP was developed by experts whose role is to plan the transmission in the interest of Albertans. This LTP utilizes inputs from various sources including stakeholders, market participants, public information sessions, third party experts and internal expertise. AESO system planning does not stop with the publication of a particular version of the Plan. Continuous planning and testing is essential to ensure the development of a robust, flexible and efficient transmission system. A comprehensive planning regime involves a rigorous analysis of a variety of public policy, economic and transmission scenarios, as well as related sensitivities. Economic scenarios provide forecasts of future demand for electricity and the anticipated generation development to meet that demand. Transmission scenarios ultimately establish the need for transmission projects, projected in-service dates (ISDs) and staging of projects when appropriate. The AESO is continually assessing inputs and circumstances to test the effect they may have on the LTP, its project components and Alberta’s transmission system. Since filing the 2009 LTP, the AESO has updated load and generation forecasts, customer connection requests and the Alberta economic growth outlook. The AESO also revalidated the need for the four Critical Transmission Infrastructure (CTI) projects identified in the 2009 LTP and reconfirmed the need for substantial transmission upgrades. This LTP identifies specific projects and related cost estimates, technology to be employed and in-service dates, and considers the opportunity for staging projects where practical and prudent. This LTP recognizes the Alberta economy has emerged from the recent global recession, reinforcing the long-term growth prospects for the province. Economic fundamentals are strong for Alberta and long-term Gross Domestic Product (GDP) growth is forecast to be in the range of 3.0 to 3.2 per cent annually for the next 20 years. The key driver of the economy continues to be investment in oilsands, as evidenced by third party forecasts and confirmed by customer connection requests in the Northeast region of the province. Successful oilsands development relies on the availability of significant electrical infrastructure. The AESO’s objective is to continue to evolve the LTP content to include information on additional, integral non-wires elements thereby increasing the comprehensive nature of the LTP for future filings with the Alberta Utilities Commission (AUC). PAGE 2 Executive Summary AESO Long-term Transmission Plan KEY HIGHLIGHTS FROM THE LONG-TERM TRANSMISSION PLAN (FILED JUNE 2012) n The Plan analysis reconfirmed the need for the four CTI projects and major egionalr transmission projects identified in the 2009 LTP. This LTP has incorporated modifications, in part in response to stakeholder consultation, to mitigate costs and meet adjusted growth profiles. LTP projects have been reviewed and reflect updated cost estimates as filed by transmission facility owners (TFOs) with the AUC as well as changes to ISDs where appropriate. Changes to ISDs are consistent with the updated forecasts of demand growth. n No new CTI projects are being proposed.