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Fall 2015Project Planning and Formula RatePartners in Business Meeting
Welcome
Keith EylerStakeholder Relations
Safe Harbor Language and Legal Disclosure
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ITC MidwestFacility and Meeting Accommodations
• Registration for meeting: Sign in…
• Refreshments – Relax, enjoy and ask questions
• Rest Room/Emergency/Safety/Facility Locations
• Lunch
• Partners in Business: Web site located atwww.itctransco.com
• Introductions
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ITC Midwest Meeting AgendaMorning:
• Kick-off – Mike Dabney-Keith Eyler
• Welcome/ITC Update – Krista Tanner, ITC Midwest President
• Reliability Update- Janice Yen, Operations
• Maintenance Performance Update- Amy Murray, VegetationManagement; John Stallman, Asset Management
• Federal Regulatory Update- Nathan Benedict, Regulatory
• State Regulatory Updates- Tim Tessier, Regulatory
Lunch:
Afternoon:
• 2016 Formula Rate-Dave Grover, RTO Affairs
• Project Planning Overview- Dan Barr/Robert Walter/Jeff Eddy,Planning
• Map Review and Planner Discussions
Fall 2015Project Planning and Formula RatePartners in Business Meeting
Welcome and ITCUpdate
Krista TannerPresident, ITC Midwest
Fall 2015Project Planning and Formula RatePartners in Business Meeting
SystemPerformance
Janice Yen,Senior Engineer
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OutlineSystem Performance• SGS
— Study Changes— Results
• System Impact• 34.5 kV Performance
Trends• System Maintenance• Summary
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ITC participated in the 2015 SGS Transmission Reliability Benchmarking Study
2015 is the twenty-first year for the SGS Study
14 systems participated, comprising over one-third of US/Canada bulk power circuitmiles (>200kV)
― Same number of participants as 2014 study but different set of utilities
― General comparability between study-years but changes in the participant pool will resultin some changes to boundary values
― Year-to-year comparison of system rank should be avoided
Common rules are applied to all systems to ensure the highest level of integrity ofanalysis and comparisons
ITC Midwest submits all raw circuit outage data occurring on circuits at the 69kVand above voltage level, ITC Transmission and METC submit 100kV and above
Reliability
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SGS ResultsSustained Outage Performance
Source: 2015 SGS Study Table 3.5.1
• Study results shouldbe viewed as asnapshot in time
• ITCM’s 69kV systemis the primary driverof overall systemperformance
• ITCM’s performanceshould be viewedagainst comparablesystems and / orvoltage classes
Lower isbetter
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Source: 2015 SGS Study Table 3.5.2
Comparing the ITCMsystem to ITCT, or METCor other transmissionprimary systems providesan inaccurate assessmentof performance
• The 69kV systemmakes up nearly 65% ofthe total ITCMtransmission system
• The characteristic ofITCM is long lines inrural area
• Many multiple tappedlines
SGS ResultsSustained Outage Performance
Lower isbetter
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Source: 2015 SGS Study Table 3.5.8
When examiningthe ITC Midwestsystem by voltageclass for 100kVand above, thesystem performswell
Second Quartile
SGS ResultsSustained Outage Performance
Lower isbetter
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Historical Outage Performance
Including all voltage classesand outage types, momentaryand sustained, the systemcontinues to improve
There has been a substantialdecline in average number ofcircuit outages experiencedsince inception
Approximately a 45%decrease in averageoutage events from 2008to 2014
The best method of assessing system performance is over time
Systematic Approach to Outage Reduction
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External outages - Outages outside the control of thetransmission system. Examples include foreign utilities,customer equipment, generation, instability or under-frequency, distribution through-faults, etc.
Identify and document cause of eachsustained outage• On average, < 5% of sustained outages are
recorded as “unknown” cause for all ITC systemscombined
Committee of operations, engineering, planningand stakeholder relations reviews each outage• Identification of system
planning/maintenance/operating improvements orlarger scale projects
• Initiate additional inspections, special maintenanceor study projects
Track performance trends• Circuits with repeat outages are identified and
given extra attention
Separate committee performs an after actionreview for all human performance events
Outage cause analysis provides feedback for both the maintenance plan and capital improvements
Systematic Approach to Outage Reduction69 KV and Above
15 circuits were identified as“Poor Performers”
From 2011-2014 thesecircuits accounted for over25% of all system outages
The circuits were assessedto determine the best solutionto improve performance
Implementation of thecorrective actions beganearly 2015
― Results through August showsnearly a quarter of events ascompared to year end 2014
Identify problem areas and develop the appropriate corrective actions
The data on 2015 is just YTD (8 months)
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Weather and System Performance69 KV and Above
Yearly Outage TrendsSummary of outage trends:• Weather has been a
strong influence onsystem performance
• Despite weather patternsat or above averagelevels, outageperformance is showingimprovement
— Capital andmaintenanceactivities
Weather and System Performance: SAIFI
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Yearly Outage TrendsSummary of outagetrends:
• Improved systemperformance trenddeveloping in 2010despite weatherconditions
• 2014 precipitation levelsabove average butSAIFI performance wasthe best in recent history
• Beginning to seeconsistent performancetrends
— 2009-2011— 2012-2014
*http://www.ncdc.noaa.gov/sotc/drought/2012/13
Weather and System Performance: SAIDI
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Yearly OutageTrends
Summary of outagetrends:• Consistent improved
performance trendsdeveloping— 2009-2011— 2012-2014
• Coordination with IPL touse nearest crew asfirst responder
• Allowing Rural ElectricCoops to operate ITCpole top switches
Weather and System Performance: Historical
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Yearly Outage TrendsSummary of outage trends:
— Improved outageperformance for threeconsecutive years
— 2012 and 2014 showthat weather volatility notas impactful on systemperformance
— 57% increase inprecipitation
— 8% decrease inaverage circuitoutages
— Overall downward trendin average circuit outages
Summary
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Our Cause process and Operations Committee provide a systematicapproach to outage identification and reduction
• Investigate and identify cause for every sustained and momentary outage onthe 100 kV+ system
• Investigate and identify cause for every sustained or repeated momentary onthe 69 kV system
• Track poor performing circuits including momentary and sustained events atall voltage levels
Outage tracking feeds our maintenance and capital projects, resulting in:
• Downward trend in non-weather related outages on the 69 kV+ systems
• Consistently strong year-to-year system performance on the 34.5 kV systemdespite weather trends
Questions?
Thank you!
…Our Vision Forward
Fall 2015Project Planning and Formula RatePartners in Business Meeting
PreventativeMaintenance forSafety, Reliabilityand Value
Preventative Maintenance for Safety,Reliability and Value
Managing Vegetation
Amy MurrayMaintenance Specialist
ITC Transmission Systems and Projects
ITC Midwest = about6,600 circuit miles
ITC Holdings = roughly15,000 miles
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Vegetation Management:Conversion to Transmission Compatible Plants
Operational andValue Goals:
• System Preparedness= Reliability
• Proper Prioritization
• Work Levelization
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System Preparedness andReliability Improvements
Trends:
• Safety
• Vegetation –Caused Outages
• Work volume
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Prioritizing Work
Inspections:
• Foundation of theprocess
• Biannual aerialinspections
Annual Schedule:
• “Flexible Cycle”
• Minimize hotspotting
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Value to System and Consumers
• Reliable energy
• Reliable productivity
• Cost controls
Principles of Excellence:
• Long-term contracts
• Agency partnerships
• Budget consistency
• Long-term corridor management strategy
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ITC Vegetation Management –Taking it to the Next Level
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Communities
StewardshipCollaborations
Conclusion
Preventative maintenancefor safety and reliability
provides value forcustomers and communities
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Questions?
Thank you!
Preventative Maintenancefor Safety, Reliability and
Value
ITC Midwest Preventative
Line Maintenance
John Stallman,Manager, Maintenance and Equipment
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ITC Midwest Preventative LineMaintenance Process
• ITC Midwest operatesand maintainsapproximately 7,455 milesof lines in Iowa,Minnesota and Illinois.
• This mileage includes theCIPCO integrated system.
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Preventative Line Maintenance Process
• ITC Midwest performs detailed span-by-span patrol on 20% ofthe system per year. This route is called OH Regulatory Patrol
• Criteria used to generate annual line patrol schedule:
• Date of the last regulatory patrol
• Line reliability and performance
• Line age and condition
• Factors which may increase reliability requirements, system rebuilds,voltage conversions etc.
• Input from regional field employees; “boots-on-the-ground folks”
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Preventative Line Maintenance Process
• Lines not included in span-by-span patrol are patrolledannually. This route is calledAnnual Visual Patrol.
• Less-detailed patrolperformed by several methodsincluding aerial, driving/ATV,and foot depending on linelocation and conditions.
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Preventative Line Maintenance Process
• ITC Midwest has two dedicated linepatrollers
• Line patrollers use handheld device tocapture the line deficiencies electronically
• Handheld has preset buttons to representcommon line deficiencies
• Patroller has ability to add text to theproblem description of each deficiency
• Handheld captures GPS coordinates foreach line deficiency
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Preventative Line Maintenance Process
• When entire line has been patrolled, data for eachdeficiency uploaded into Asset Sentry maintenancedata base
• Each deficiency creates an “exception” in AssetSentry
• Each exception has problem detail, accounting,location
• Asset Sentry users can query system to generatework packets and maps from exceptions
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Preventative Line Maintenance Process
• Three assets related to lines which exceptions can becreated for:
• A line or circuit
• Pole top switches
• Capacitor banks
• Exceptions created against line or circuit forlockouts/momentary operations
• Patrols, called routes, may be queried in data base
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Preventative Line Maintenance Process
YEARLine Exceptions
GeneratedLine Exceptions
Completed% Complete
2009 4180 4179 99.9%
2010 5853 5844 99%
2011 6096 6069 99%
2012 6522 5826 89%
2013 4450 4050 91%
2014 3448 2618 75%
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Capital Line Maintenance
• Poles: 4,177
• Cross Arms: 2,402
• Guy Strain Insulators: 4,940
• Insulators: 27,319
• Pole Top Switches (69kV): 59
• Arresters (34.5kv – 69Kv): 2,103
Assets replaced through the MaintenanceProcess since 2010
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Poor Performing Circuits
ITCMW tracks its 10 worst performing circuits
• Every circuit is patrolled and evaluated for outage causes
• A detailed plan is put together to lower the number of outages,potentially including:
• wildlife protection,
• static bonding,
• round rod additions,
• insulator replacements,
• pole replacements,
• switch replacements, etc.
Preventative Maintenancefor Safety, Reliability and
Value
ITC Midwest Preventative
Substation Maintenance
John Stallman,Manager, Maintenance and Equipment
ITC Midwest Preventative SubstationMaintenance Process
ITCMW operates and maintains:
• 1,206 circuit breakers
• 54 circuit switchers
• 201 power transformers
• 227 batteries and battery chargers
• 85 capacitor banks
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Preventative Substation Maintenance Process
General substation preventative maintenance
• Every substation with ITC assets is inspected everyother month by a substation operator
• All results recorded digitally in Asset Sentry and areavailable for review
• Every device in the substation is given an annualinfrared scan
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Preventative Substation Maintenance Process
Circuit breaker and circuit switcher maintenance
• Major maintenance performed every five years for oildevices and every 10 years for SF6 devices
• To meet requirements of PRC-005-2, trip coil testingnow will be performed on a five-year cycle
• Annual maintenance also performed
• ITC Midwest has replaced around 209 devices
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Preventative Substation Maintenance Process
Transformer Maintenance
• Dissolved gas analysis (DGA) taken from each oilcompartment once a year
• Within next year or two, ITC Midwest will add atransformer major maintenance activity, conductedonce every 10 years
• ITC Midwest has added or replaced about 20 units
Preventative Substation Maintenance Process
Battery and battery charger maintenance
• Annual maintenance conducted to meet therequirements of PRC-005-2
• ITC Midwest has replaced almost 60 battery sets andchargers
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Relay Maintenance
Relay Testing
• Relay calibration testing every five years
• Complete periodic scheme-based testing every 10years
• New testing requirements for PRC-005 (Lockout relaytesting, Transformer Sudden Pressure relay testing)
• ITC Midwest has replaced approximately 600 relayschemes
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ITC Midwest Capital Maintenance Process
Capital replacement projects determined byAsset Management at ITC Midwest
• To increase system performance, ITC Midwestreplaces assets that cause reliability issues
• Assets at the end of their useful life are replaced
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ITC Midwest Capital Maintenance Process
0
10
20
30
40
50
60
70
80
90
100
0-5 Yrs 5-10 Yrs 10-15 Yrs >15 Yrs
Battery Age 2008-2015
2008 2015
0
100
200
300
400
500
600
0-10 Yrs 10-20 Yrs 20-30 Yrs 30-40 Yrs > 40 Yrs
Circuit Breaker Totals 2008-2015
2008 2015
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ITC Midwest Capital Maintenance Process
0
10
20
30
40
50
60
70
0-10 Yrs 10-20 Yrs 20-30 Yrs 30-40 Yrs >40 Yrs
Transformers 2008-2015
2008 2015
ITC Midwest Preventative Maintenance ProcessRelated to Large Industrial Customers
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• IPL provides ITC with a large industrialcustomer shutdown schedule on monthlybasis
• ITC uses schedule to plan maintenance andproject work related to transmission assetsthat feed these customers
ITC Midwest Preventative Maintenance ProcessRelated to Large Industrial Customers
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ITC follows an internal process (called N-1) if >50 MW of load or aknown critical load is to be placed on a radial feed due to an ITCproject
• Critical ITC assets are identified by Operations Engineering
• A review of open exceptions for critical assets is performed
• Additional patrols or inspections of critical assets may begenerated
• ITC project will be delayed if critical assets can’t be repaired orare not deemed reliable
Questions?
Thank you!
…Our Vision Forward
Fall 2015Project Planning and Formula RatePartners in Business Meeting
Federal RegulatoryUpdate
Nathan BenedictRegulatory Analyst
Self-Funding of Network Upgrades
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FERC denied Otter Tail Power’s request to revisetwo pro forma Facility Construction Agreements toself-fund network upgrades:
• FERC also instituted a Section 206 proceeding to determinewhether MISO’s pro forma Generator InterconnectionAgreement, which allows self-funding, is just and reasonable
• Several MISO TOs (including ITC) filed a rehearing request
Self-Funding of Network Upgrades
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MISO made an informational filing on Aug. 17agreeing to adopt proposed FERC language thatwould allow transmission owners to elect the self-fund option only when the interconnectioncustomer agrees:
• Several MISO TOs (including ITC) filed comments on Sept. 1arguing that FERC should terminate the Section 206proceeding and, at a minimum, retain the self-fund option
Generator Interconnection
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American Wind Energy Association (AWEA)proposed reforms to the pro forma GeneratorInterconnection Agreement and Procedures
• The June filing alleges the current process is unjust andunreasonable (delays, costs, rates, terms and conditions)
• Responses were filed on Sept. 8
• ITC commented that AWEA failed to establish that the currentprocedures need revision and that a rulemaking is needed, andthat AWEA’s proposed modifications would degrade fairnessand efficiency
MISO Base ROE Case
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First Complaint:
• Hearings were held during the week of Aug.17
• Initial post-hearing briefs were filed Sept. 21
• Initial decision is due from the ALJ Nov. 30
MISO Base ROE Case
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Second Complaint
• On July 20, the MISO TOs requested rehearing of FERC’sOrder accepting the second ROE complaint and establishinghearing procedures
• Initial testimony is due this fall
– Sept. 2: Complainants
– Oct. 20: Respondents
– Nov. 23: FERC Staff
• These dates lead to an initial decision by the ALJ in June 2016
Order 1000 Update
60
MISO now fully compliant with the regionalrequirements of Order 1000. MISO and its neighbors(PJM, SERTP, SPP) made filings to comply with theinterregional requirements of Order 1000:
• MISO-PJM: second filing made July 31
• MISO-SERTP: second filing made June 22
• MISO-SPP: second filing made Aug. 18
Activity on the Seams
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ITC filed responses in:
• Each interregional compliance filing on the MISO seams
• The NIPSCO complaint against the MISO-PJMinterregional planning process
The filings address the regions’:
• “Triple hurdle” of interregional and regional approvalcriteria
• Arbitrary cost and voltage thresholds
• Limited consideration of benefits
Petition for Declaratory Order
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On July 28, ITC Grid Development requestedguidance on cost recovery for competitively bidprojects pursuant to Order 1000. Asks FERC toconfirm:
• Whether the revenue requirement provided in a selectedbid will be deemed just and reasonable
• Whether binding, full revenue requirement bids areprotected from further rate challenges unless review isrequired in the public interest
2014 Formula Rates True-Up
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On June 1, 2015, the ITC Companiesposted 2014 true-up adjustments on theirrespective OASIS sites:
• 2014 true-up adjustments are reflected in 2016rates
Projected rates for 2016 were posted onSept. 1
Questions?
Thank you!
Fall 2015Project Planning and Formula RatePartners in Business Meeting
State RegulatoryUpdate
Tim TessierManager, Regulatory Strategy andState Regulatory Affairs – Iowa
State Regulatory Activities
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• Major capital projects
• Distributed generation
• Cyber security
• Clean Power Plan
Fall 2015Project Planning and Formula RatePartners in Business Meeting
2016 Attachment O -Projected FormulaRate
David GroverDirector, RTO Affairs (MISO)
Agenda• Timeline and mechanics of the
MISO Attachment O FormulaRates process
• 2016 projected Formula Ratesposting
• 2016 projected ratescalculations and key drivers
• Next steps
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2016 RATE1/1/16 – 12/31/16
Projected 2016 RR+/- 2014 True-Up with
Interest
2015 RATE
1/1/15 – 12/31/15
Projected 2015 RR+/- 2013 True-Up with
Interest
2014 RATE
1/1/14 – 12/31/14
Projected 2014 RR+/- 2012 True-Up with
Interest
Forward Looking Attachment O Timeline
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1/1/13 1/1/14 1/1/15 1/1/16 1/1/17
9/1/2015Post
ProjectedRates for
2016
6/1/2016Post
Actual2015
True-Up
FormulaRatePostingDates*
AnnualCustomerRate
9/1/2013Post
ProjectedRates for
2014
6/1/2014Post
Actual2013
True-Up
9/1/2014Post
ProjectedRates for
2015
6/1/2015Post
Actual2014
True-Up
9/1/2016Post
ProjectedRates for
2017
* Preliminary True-Ups and Projected Rates are posted or before 06/01 and 09/01 respectively;(or the following business day when dates fall on a weekend or a holiday
ITC Midwest2016 Projected Formula Rates – Documents Posted
On August 31, 2015, the 2016 projected rates and supporting documentswere posted to misoenergy.org and MISO’s OASIS website.
Documents posted Include:
• Attachment O Formula Rate Template
• Attachment GG, and Attachment MM
• Schedule 1 Projected Expense Recovery
• Relevant Workpapers (supporting Attachment O, GG and MM)
• Accounting Narrative
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ITC MidwestSteps to Derive 2016 Projected Formula Rate
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Step 2
Step 12016 Projected Rate Base Weighted Average Cost of Capital =
Allowed Return* Operating Expenses + Income Taxes =
2016 Projected Gross Revenue Requirement*(Before Revenue Credits/Offsets)
Revenue Credits/Offsets
=
Step 3
2016 Projected Revenue Requirement(After Revenue Credits/Offsets)
2014 True-Up Adj. + DiscountUnder/(Over) Recovery
2016 Projected Net Revenue Requirement*(Includes 2014 True-Up adj. & Customer Discount)
2016 Projected Network Load
∑12 CP Load (kW-Mo)
Step 4
Step 5=
$ 2,023,184,581 9.14%
$ 184,990,036 $ 234,676,718
$ 419,666,755 $ 64,870,574
$ 354,796,181 $ (8,547,201)
$ 346,248,980
2016 Projected Network Rate**
35,340,000
=
Step 6$9.798/kW-Mo
* Totals may not reconcile due to rounding** Represents only the ITC Midwest portion of the ITC Midwest joint zone network rate. Schedules 1, 26, & 26A are billed separately by MISO.
ITC MidwestSummary of Key Drivers of 2016 Projected Formula Rate
72* Totals may not reconcile due to rounding
Descriptions2016
Projected2015
ProjectedIncrease/
(Decrease)
Return on Rate Base $ 184,990,036 $ 165,823,459 $ 19,166,578
Operating Expenses 234,676,718 217,429,752 17,246,966
Credits/Offsets (Sch. 26, 26A, PTP, rents) (64,870,574) (46,810,464) (18,060,110)
True-Ups (4,422,201) (10,110,355) 5,688,154
Customer Discount (4,125,000) (4,125,000) -
Projected Net Revenue Requirement $ 346,248,980 $ 322,207,392 $ 24,041,588
2016 Projected Network Load (based on 12 CP) 35,340,000 34,776,000 564,000
Projected Rate ($/kW-Mo) $ 9.798 $ 9.265 $ 0.532
73
ITC MidwestWaterfall – 2016 vs 2015 Projected Formula Rate
Represents increases from 2015 to 2016 Projected ratesRepresents decreases from 2015 to 2016 Projected rates
* Total may not reconcile to 2016 projected rate change due to rounding
2016Proj.Rate
2015Proj.Rate
ITC Midwest’s 2016 Projected Networkrate is $9.798/kW-Mo, and it is
effective January 1 through December31, 2016.
All values are shown in $/kW-Mo
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OperatingExpenses +Income Taxes
True-Up Impact
RevenueCredits andOffsets
Return on RateBase
ITC MidwestKey Drivers of 2016 Projected Formula Rate
2016 projected operating expenses are higher than 2015 projections by ~ $ 17.2 million, primarily due to:
Higher Operations & maintenance expenses Higher depreciation expense due to an increase in gross plant in-service Higher property taxes due to capital additions Higher income taxes as a result of larger rate base, partially offset by Lower administrative and general expenses
The change in the True-Up Adjustment (over-collection) accounts for ~ $5.7 million higher revenue requirement in2016 relative to that of 2015
2016 projected revenue credits and offsets were higher than 2015 by (~ $ 18.1 million), primarily driven by:
Higher overall Multi-Value and regionally-Shared project (Schedule 26 and 26-A) revenue requirements
Higher revenues associated with Facilities Services Agreements for Network Upgrades
Higher credits from Point-to-Point revenues and
Higher rental revenues
Overall 2016 Projected return on rate base is higher than 2015 projection by ~ $ 19.2 million, primarily driven by:
Higher projected plant in-service, partially offset by a corresponding increase in accumulated depreciation,deferred taxes and lower materials and supplies
ITC Midwest’s 2016 Projected Rate increased by ~53 cents/kW-Mo. Key drivers for the increase are described below.
ITC MidwestNext Steps
Information Exchange Process:
• Requests for information must be submitted in writing [email protected]
• Requests must be received no later than December 1,2015
• Good faith effort to respond within 15 business days
• All questions and answers will be distributed via emailto the requesting party and posted on the MISO andOASIS websites
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Questions?
Thank you !
ITC Midwest
APPENDIX
* Totals may not reconcile due to rounding78
ITC MidwestCalculation of 2016 Projected Rate Base
Rate Base Components 2016 Projected Amount 2015 Projected AmountIncrease/
(Decrease)
Gross Plant in Service $ 2,637,489,042 $ 2,338,522,000 $ 298,967,042
- Accumulated Depreciation 432,639,086 400,069,000 32,570,086
Net Plant in Service* $ 2,204,849,956 $ 1,938,453,000 $ 266,396,956
+ Deferred Income Taxes (222,634,131) (190,225,000) (32,409,131)
+ Materials & Supplies 30,128,044 32,649,346 (2,521,302)
+ Prepayments 2,270,974 2,049,000 221,974
+ Working Capital 8,569,739 8,596,884 (27,144)
= Total Rate Base* $ 2,023,184,581 $ 1,791,523,230 $ 231,661,352
ITC Midwest2016 Planned Capital Additions: Process Overview
• The development of the annual Rate Base begins with aforecast of planned capital additions.
• The ITC Midwest Planned Capital Addition slides identifyexpected line, substation, and other construction projects asthey are currently known
• The projects identified represent our best estimates for projectsto be initiated and completed
• Note that many factors such as regulatory approvals,construction resources, availability of materials, weather andother unforeseen events, could alter projections and schedules
79
ITC Midwest - Step 12016 Planned Transfers to Plant in Service
80
* Totals may not reconcile due to rounding
MISO ID Project NameProjected
Amount
Reliability - Infrastructure Improvements
3053 Keokuk Hydro-Mess-Carbide 69kV Rbld 13,985,814$
3627 Chariton-Corydon 69kV Line Rebuild 8,179,618
3628 Nettle Switchstation 3,268,561
3639 Rebuild Chariton Substation 7,329,841
3642 Chariton Melrose 69KV Rebuild 33,506
4103 N Burlington to N Burlington Tap 6,081,671
4122 Miscellaneous - Reliability ITCMW 8,030,816
4123 Breaker Replacements 7,969,588
4126 ITCMW Pole Top Switch Replacement 2,479,116
4127 ITCMW Relay Betterment Project 1,644,469
4128 Communication Addition Program 2,247,212
4128 BES Communication Addition Program 1,665,695
4129 Wood Pole Replacement Program 3,066,542
8042 Burlington South Sub Bus and Line 389,070
8048 Control Relocations 1,710,627
8049 NERC Compliance Mitigation Upgrades 698,677
8051 ERUC-Reactionary Capital Work 1,776,463
8053 Poor Performing Circuit Replacement 4,543,960
8057 ITCMW SCADA Program 720,844
8058 ITCMW Tower/Pole Signage 340,727
8093 Prairie Creek Industrial - Install 3,313,910
8157 Marshalltown Substation 161kV Expan 10,898,402
34.5kV to 69kV Conversion Phase 1 45,437,070
ITCMW Road Move Projects 562,929
ITCMW Right of Way Acquisition 2,021,949
Albany Substation 161kV Breakers 1,456,082
Cerro Gordo Wind Farm 161kV Switch 282,690
Total for Reliability - Infrastructure Improvements 140,135,849$
81
ITC Midwest - Step 1 (Cont.)2016 Planned Transfers to Plant in Service - Continues
* Totals may not reconcile due to rounding
Grand Total for ITCMW's Planned Transfers to Plant in Service $293,285,043
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ITC Midwest - Steps 1 & 2Calculation of 2016 Projected Formula Rate of Return & Allowed Return
* Totals may not reconcile due to rounding
Cost of Capital Weight Projected Cost2016 Projected
WACC2015 Projected
WACCIncrease/
(Decrease)
Equity 60% 12.38% 7.427% 7.427% 0.000%
Debt 40% 4.29% 1.716% 1.828% -0.112%
Rate of Return 9.144% 9.256% -0.112%
Allowed Return 2016 Projected Amount 2015 Projected Amount Increase/ (Decrease)
Rate Base $2,023,184,581 $1,791,523,230
x Rate of Return (above) 9.144% 9.256%
= Allowed Return* $ 184,990,036 $ 165,823,459 $ 19,166,578
ITC Midwest - Steps 2 & 32016 Projected Operating Expenses & Total Gross Revenue Requirement
83* Totals may not reconcile due to rounding
Operating Expense2016 Projected
Amount2015 Projected Amount
Increase/(decrease)
Operation & Maintenance Expenses $ 33,893,615 $ 32,430,000 $ 1,463,615
Administrative & General Expenses 34,664,298 36,345,069 (1,680,771)
Depreciation Expense 47,671,459 42,893,000 4,778,459
Taxes Other Than Income Taxes 12,196,861 11,609,000 587,861
Income Taxes 106,250,486 94,152,684 12,097,802
Total Operating Expenses $234,676,718 $ 217,429,752 $ 17,246,966
Actual Gross Revenue Requirement 2016 Actual Amount
2016 Actual Allowed Return (from previous slide) $ 184,990,036+ Actual Operating 234,676,718
2016 Actual Gross Revenue Requirement before Revenue Credits & Offsets $ 419,666,755
ITC Midwest - Step 42016 Projected Revenue Requirement after Credits & Offsets
84* Totals may not reconcile due to rounding
Revenue Requirement & Revenue Credits/Offsets2016 Projected
Amount2015 Projected
AmountVariance
Revenue Requirement before Revenue Credits & Offsets $ 419,666,755 $ 383,253,211 $ 36,413,544
Less: Attachment GG Revenue Requirement (Sch. 26) 27,199,120 27,139,943 59,177Less: Attachment MM Revenue Requirement (Sch. 26A) 22,012,922 10,944,521 11,068,401Less: Rental Revenues 2,412,973 1,729,000 683,973Less: Point-to-Point 5,425,346 5,246,000 179,346Less: Self Funded GIP Revenue Credits 5,862,360 1,189,000 4,673,360Less: Other Transmission Service Revenues 1,957,853 562,000 1,395,853Subtotal Credits/Offsets 64,870,574 46,810,464 18,060,110
Revenue Requirement after Revenue Credits/Offsets $ 354,796,181 $ 336,442,747 $ 18,353,434
ITC Midwest - Step 52016 Net Revenue Requirement – after 2014 True-up
85* Totals may not reconcile due to rounding
Net Revenue Requirement
Projected 2016 Gross Revenue Requirement after Revenue Credits & Offsets $ 354,796,181
+ 2014 True-up Adjustment under/(Over) Recovery (4,422,201)
Customer Discount (4,125,000)
Projected 2016 Net Revenue Requirement (including 2014 True-up) $ 346,248,980
Load Divisor 35,340,000Network & P-to-P Rate ($/kW/Mo) $9.798
Fall 2015Project Planning and Formula RatePartners in Business Meeting
MVP Update
Daniel Barr, PEPrincipal Engineer, Planning
87
Multi-Value Projects (MVP)
• Portfolio of projects studied and designated“Multi-Value Projects” (MVPs) by MISO(Midcontinent Independent SystemOperator)
• 17 projects, warranting cost-sharing acrossentire MISO territory of 11 states
• MISO identified multiple project benefits:― Improved reliability
― Improved system efficiency
― Support state and federal energy policy mandates
― Job creation and investment
• ITC Midwest is building 4 of the 17 MVPs― MVPs 3, 4, 5, and 7
Note: ITC Midwest is designated to build segments ofprojects in blue.
Multi-Value Projects (MVP)
88
MVP #3
• Lakefield to Huntley to MN/IA Border– Certificate of Need and Route Permit issued in
November 2014
– Easement acquisition in progress.
– Begin construction by November 2015.
– Expected In-Service Date is June 2017
• MN/IA Border to Ledyard to KossuthCounty
– Continue Iowa regulatory process
– Filed petition with IUB in July 2015
– Over 95% easement acquisition
– Franchise decision expected around June 2016
– Expected In-Service Date is September 2017Note: ITC Midwest designated to build segments ofprojects in blue.
Multi-Value Projects (MVP)
89
MVP #4
• Ledyard to Colby– Continue Iowa regulatory process
– Filed petition with IUB March 2014
– 96% easement acquisition
– Franchise decision expected
around June 2016
– Expected in-service date
November 2018
• Colby to Killdeer
– Construction complete
Note: ITC Midwest designated to build segments of projects inblue
Multi-Value Projects (MVP)
90
MVP #4 (Continued)
• Killdeer to Hampton Tap
– Iowa regulatory processcomplete
– Franchise received June 2015
– Begin construction by April 2016
– Expected in-service dateNovember 2016
• Blackhawk to Hazleton
– Construction complete
Note: ITC Midwest designated to build segments of projects in blue
Multi-Value Projects (MVP)
91
MVP #5
• Hickory Creek to Cardinal
– ITC, ATC and DPC jointly developedproject
– Currently working with multiple stateand federal agencies, including stateDNR and USF&W, to obtainnecessary approvals
– Begun public outreach in Wisconsin
– Expected in-service date December2020
Note: Final line routes will be determined throughrouting studies and regulatory processes
Multi-Value Projects (MVP)
92
MVP #7
• Ottumwa to Zachary
– ITC will own portion from Ottumwasubstation south to a change ofownership point with MEC
– MEC will own portion from changeof ownership to the Iowa/Missouriborder
– ITC and MEC currently performinga route study
– ITC and MEC will participate jointlyin the Iowa regulatory process
Note: Final line routes will be determined throughrouting studies and regulatory processes
Questions?
Thank you!
…Our Vision Forward
Fall 2015Project Planning and Formula RatePartners in Business Meeting
GeneratorInterconnectionsUpdate
Daniel Barr, PEPrincipal Engineer, Planning
Generation Connected
95
ITC Midwest has connected24 projects representingapproximately 2,650 MW ofwind generation since 2008
Wind accounts forapproximately 45% of thegenerating capacityconnected to ITC Midwest
Restudy of Existing ITCM Projects
Restudies completed late 2014 for most of ITCMprojects connected between 2009 and 2013
- Iterative studies required due to projects dropping fromqueue and changes to initial study assumptions
- Amendment of 11 interconnection agreements requiredfor ITCM projects
- Two new GIAs also issued
- MISO Queue reforms to reduce restudies are in progress
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Network Upgrades for In-Service Projects
Project H021 NetworkUpgrade• 128 MW wind project connected to
Wellsburg 161kV• Replacement of 69 kV breaker
#5760 and terminal equipmentrequired
• Network upgrade will becoordinated with Traer 161 kV ringbus upgrade
Network Upgrades for In-Service Projects
98
Project H009 Network Upgrade
• 150 MW wind project connected toAbbott 161kV
• Rebuild of approximately 4 mileJasper to Aurora Heights 69 kVrequired
• Upgrade also needed for Project J233at Marshalltown
• Expected in service by end of 2016
Network Upgrades for In-Service Projects
99
Project G870 Network Upgrade• 201 MW wind project connected to
Freeborn 161kV• Rebuild of ~38 miles of
Winnebago to Freeborn 161 kVrequired
• Line will become Huntley toFreeborn to 161 kV in conjunctionwith MVP work
• Completes much-needed upgradeof 60 year-old Winnebago toHayward 161 kV corridor
J233 – 635 MW Combined CycleGas Plant at Marshalltown
• Provides much-needed capacity to the system
• Upgrades required for J233 based on an assumed future year2023 system topology including:
― MVPs
― 34.5 to 69 kV conversions
― Marshalltown-Toledo-Belle Plaine-Stoney Point 115 kV to 161 kV conversion
• Coordination of construction of Network Upgrades andplanned, approved projects challenging
100
J233 Network Upgrades
Network Upgrades:
• Expand Marshalltown substation
• Three 150 MVA, 161/69 kV transformer replacements
― Fernald, Jasper and Newton substations
• Line Uprates
― Marshalltown to Blairstown Jct 115 kV from 80 MVA to 90 MVA
― Jasper to Laurel 161 kV – conductor replacement
― Jasper to Newton 161 kV – sag mitigation
• Newton to Prairie City 69 kV rebuild
• Network upgrades expected to be in service by J233’s requestedcommercial operating date
101
J233 Network Upgrades
102
Questions?
Thank you!
…Our Vision Forward
Fall 2015Project Planning and Formula RatePartners in Business Meeting
34.5 kV to 69 kVSystem UpdateRobert Walter, PESenior Engineer, Planning
105
• Rebuild outdated 34.5 kV lines to 69 kV standards
― 34.5 kV lines are in poor physical condition and do not provide lightning protection
― Most 34.5 kV lines have small conductor which limits system voltage and loading capabilities during system contingencies
• Rebuilt lines have larger wire and lightning protection
― Larger wire provides additional capacity for loading and reduces voltage drop
― Rebuilt lines have a shield wire which provides lightning protection
• In addition to these benefits, ITC made a commitment made to Iowa UtilitiesBoard for rebuilding the 34.5 kV system
― 12-year time frame for rebuilding 34.5 kV lines that will be converted to 69 kV in 18 years
Benefits of 34.5 to 69 kV Rebuild
106
Benefits of 34.5 to 69 kV Rebuild
• Convert 34.5 kV lines to networked 69 kV operation
― Converting to 69 kV increases capacity on a line which helps provide for future load growth
― Networked 69 kV operation allows updated relaying which provides faster restoration after an outage event
― Conversion allows retirement of lines not rebuilt and without a shield wire when converting to 69 kV operation reduces exposure to all lines in agiven area
• In addition to these benefits, ITC made a commitment to the IowaUtilities Board for converting the 34.5 kV system to 69 kV operation
― 18-year time frame for converting the system to 69 kV operation
34.5 kV Rebuild/Conversion Plan
• Rebuild Progress
― Since 2008, 369 miles will be rebuilt by the end of 2015 with 254 miles converted to 69kV (conversionmiles include both ITC and CIPCO 34.5 kV linemiles)
• Miles of 34.5 kV Rebuilds Planned
― 41 rebuild miles in 2015
― 53 rebuild miles in 2016
― Rebuild 235 miles in 2017 and beyond
107
34.5 kV ReliabilityITC continues to prioritize system reliability in theplanning process
• Consider stakeholder impacts, both financial and operational,when scheduling rebuild and conversion projects
• Ongoing discussions between Planning and Maintenance todetermine level of maintenance required on assets planned to berebuilt or retired in future
• Overall 34.5 kV breaker operations have been trendingdownward
― Breaker operations includes both momentary and sustained outages
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109
34.5 kV Reliability
1000
1100
1200
1300
1400
1500
1600
1700
1800
1900
2000
2100
2200
2011,3rd
2011,4th
2012,1st
2012,2nd
2012,3rd
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Total Operations (All Circuits Combined)
Total Operations (All Circuits Combined)
110110
34.5 kV Study Areas
Study Areas
Vinton-Hazelton Area
2015 Projects• Center Point–Troy Mills–Lafayette Rebuild
• Urbana–Center Point
Future Projects• Palo –Toddville New Line (2016)
• Blair's Ferry Rd 69 kV breaker station (2016)
• Hiawatha – Coggon 69 kV conversion (2016)
• Hiawatha – Vinton 69 kV conversion (2016)
• Conversion of the area planned to be completed by end of 2016
111
Vinton-Hazelton Area Rebuild
2016 ProjectFuture RetirementConstructed to 69 kV
Vinton-Hazelton/Cedar Rapids Area Conversion
2015 Conversion2016 Conversion
Cedar Rapids Area
2015 Projects
• 29th Street–Louisa Rebuild
• Radio 69 kV breaker station
Near-term Future Projects
• Marion–Emerald Isle–Hiawatha conversion(2016)
• Marion–Radio–Hiawatha conversion (2016)
• PCI–Oak Hill (2017 rebuild, 2018 substation and conversion)
• Emerald Isle–Beverly (2017 rebuild, 2018 conversion)
114
Cedar Rapids Area Rebuild
2017 Project2018 Project2019 ProjectFuture RetirementConstructed to 69 kV
115
Eastern Iowa Area
2015 Projects• Radio 69 kV breaker station• Hiawatha – Echo Hill REC 69 kV
conversionNear-term Future Projects• Springville–Amber Creamery Rebuild
(2016)• Radio – Coggon 69 kV conversion (2016)• Traver REC – city of Mt Vernon (2016)• Sale – Cascade – Sand Springs 69 kV
conversion (2016)
116
Eastern Iowa Area Rebuild
2016 ProjectFuture ProjectFuture RetirementConstructed to 69 kV
Eastern Iowa Area Conversion
2016Conversion
118
Toledo-Belle Plaine-Williamsburg
2015 Projects• North English - South English Rebuild• Sigourney – What Cheer 69 kV conversion
Near-term Future Projects• Williamsburg South Jct – Parnell 161/69 kV
double circuit (2016/2017)
• Vining REC Tap – Tama East rebuild (2016/2017)• Marengo Eastern 69 kV substation (supports new IPL distribution
substation, 2016)• Belle Plaine Junction – City of Belle Plaine re-build (2017)
119
Toledo-Belle Plaine-Williamsburg Rebuild
2016/2017 ProjectFuture ProjectFuture RetirementConstructed to 69 kV
120
121
Grand Jct.-Ames-Marshalltown
2015 Projects
• Doud–Clear Lake REC Tap
• Marshalltown–East Nevada StreetRebuild
Near-term Future Projects
• Doud–Squaw Valley 69 kV conversion (2016)
• Ames Mine Tap–Ames NADC Rebuild (2016)
• Timber Creek–East Nevada St Rebuild (2016)
• NADC–Ames Mine 69 kV conversion (2016)
122
Grand Jct.-Ames-Marshalltown
2016 ProjectFutureProjectFutureRetirementConstructedto 69 kV
Grand Jct.-Ames-Marshalltown Conversion
2016 Conversion
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Anita-Grand Jct.
2015 Projects
• Menlo – Thompson Rebuild
• Perry Willis 161 kV substation (supportsnew IPL 161/24.9 kV substation)
• Anita – Exira REC Rebuild
Near-term Future Projects
• Grand Junction–Jefferson WCC Rebuild(2016/2017)
• Redfield – Panora new 69 kV line (2017)
• Guthrie – White Pole Rd – Redfield – Panora 69 kV conversion (2017)
• Anita – Anita Muni – Adair - White Pole Rd Rebuild (2017)
Anita-Grand Jct. Rebuild
2017 ProjectFuture ProjectFuture RetirementConstructed to 69 kV
Anita-Grand Jct. Conversion
2016 Conversion2017 Conversion
Northwest Iowa Area
Future Projects• Rebuild from new Corn Belt
161/69 kV substation to Fenton(2020)
• New line and rebuild to connectBurt 69 kV to Fenton 69 kV(2020)
• Retire 138 miles of ITC 34.5 kVline in Northwest IA area
127
Northwest Iowa Area Rebuild
Future ProjectFuture RetirementConstructed to 69 kV
128
Questions?
Thank you!
Fall 2015Project Planning and Formula RatePartners in Business Meeting
Infrastructure andCapacity UpgradesNew in MTEP
Jeff Eddy,Manager, Planning
BGS Substation Upgrades
Benefits• Resolve numerous protection and operational issues due
to outdated design of the substation.• Enable NERC PRC-005 maintenance testing of the BGS
relaying schemes without extensive substation outages• Relocate protection systems from inside plant control
room
Proposed Work:• Add breakers• New control house and relaying
131
BGS Substation Upgrades
132
Wapello County Substation Reliability Rebuild
Benefits• Resolve numerous protection and operational issues due to outdated design
of the substation.• Enable NERC PRC-005 maintenance testing of the substation relaying
schemes without extensive substation outages• Upgrade substation to breaker and ½ which provides added reliability at the
substation near the larger power plant (OGS)
Proposed Work:• Add breakers and replace old oil circuit breakers• New control house and relaying• Upgrade substation from partial ring bus to breaker and 1/2
133
Wapello County Substation Reliability Rebuild
Red = newfacilitiesBlack = existingfacilities
134
Cedar Rapids – North Liberty – Hills Upgrades
Benefits• Resolve numerous planning criteria violations in area, both voltage and thermal
loading• Provide ability to serve added load growth in area• Provide higher voltage backbone system between Hills and Cedar Rapids
Proposed Work:• Build new substations and new 161 and 69 kV lines between Hills, Iowa, area
and Coralville/North Liberty• Rebuild and build new 161 and 69 kV facilities between North Liberty and
Cedar Rapids area (Fairfax substation)• Projects part of joint area plan with Central Iowa Power Cooperative; projects
shared between both companies
135
Cedar Rapids –North Liberty –Hills Upgrades
Original Plan
Green Cloud =facilities changed inrevised plan
Cedar Rapids –North Liberty –Hills Upgrades
Revised Plan
Red Cloud = facilitieschanged in revised plan
Mt. Ayr 69 kV Substation Rebuild
Benefits• Resolve existing issues at the substation including:
• Switch inoperability due to swaying with wood structure• Increased reliability due to reduced risk of equipment failure
• Address planning criteria voltage violations with new and increased capacitorbanks
Proposed Work:• Rebuild wooden box structure with new steel structure• New control house and relaying• Add additional stages of capacitor banks and increase existing
capacitor bank size
138
Mt. Ayr 69 kV Substation Rebuild
139
Appanoose County 161 kV Substation Rebuild
Benefits
• Adding a transformer with LTC helps with existing voltage issues in the area
• Expanding the bus from a straight bus to a ring bus provides additionalreliability to the area
Proposed Work:
• Install 100 MVA transformer with LTC
• Existing transformer to be re-used here
• Upgrade substation from straight bus with 1 breaker to ring bus
140
Appanoose County 161 kV Substation Rebuild
141
Summit – Dovray – Fulda – Heron Lake Rebuild
Benefits
• Address galloping issues with the existing line
• Due to galloping, this line has frequent operations
• This long line is one of the worst performing circuits
• Upgrade to add lightning protection on line section without shield wire
Proposed Work:
• Rebuild existing 69 kV line sections due to age and condition
• Summit to Dovray (Phase 1)
• Dovray to Fulda (Phase 2)
• Fulda to Heron Lake (Phase 3)
142
Summit – Dovray – Fulda – Heron Lake Rebuild
143
Newhall – Williamsburg 161 kV Rebuild andNewhall 161 kV Breaker Station
Benefits
• Provide an additional 161 kV line into the Parnell 161/69 kV substation
• Facilitate 34.5 to 69 kV conversion of area between Parnell and Williamsburg
• Provide additional voltage support to the area
Proposed Work:
• Rebuild Blairstown – Williamsburg 115 kV to 161 kV
• Build new 161 kV between Blairstown and north 161 kV line
• Build a new 161 kV breaker station at Newhall
144
Newhall –Williamsburg
161 kV Rebuildand Newhall
161 kV BreakerStation
Newhall – Williamsburg 161 kV Rebuild andNewhall 161 kV Breaker Station
146
Amber Creamery Capacitor Bank
Benefits
• Address near term voltage issuesin the area until full 69 kVconversion has been completed
• Provide additional VAR support tothe area long term
Proposed Work:
• Add a new 7.2 MVAR 69 kVcapacitor bank at the AmberCreamery substation
147
Columbus Junction Breaker Addition
Benefits• Increased reliability to customers served from substation
due to the existing configuration of only one breaker atColumbus Jct.
Proposed Work:• Add second breaker to substation
148
Columbus Junction Breaker Addition
149
Huntley 69kV Maintenance
Benefits• Project replaces major maintenance identified for Winnebago Substation,
including replacement of control house, breaker, switches, and equipment.
• Project replaces antiquated substation design of Winnebago Sub.
• Replaces need to route 161kV lines from Huntley to Winnebago.
• Project costs roughly equal or less than required maintenance upgrades androuting costs.
Proposed Work:• Relocate 69kV Substation at Winnebago Sub to Huntley Sub
• Relocate transformers, replace equipment.
150
Huntley 69kV Maintenance
151
Traer 161kV Ring Bus
Benefits• Increased reliability.
• Currently, the 161kV bus does not have line breakerprotection and load is dropped for a fault on 161kV line fromeither Abbott or Dysart.
• For fault on 161kV lines, restoration times to customersdelayed until faulted line is sectionalized.
Proposed Work:• Add three position 161kV ring bus at substation
152
Traer 161kV Ring Bus
153
Questions?
Thank you!
We appreciate your time and effort to participate in today’sPartners in Business meeting
For copies of today’s ITC presentations please visit ourweb-site at: www.itctransco.com, click on ITC Midwest,click on Partners in Business, click on Meeting and EventsWe appreciate your feedback on our meetings, so we cancontinue to bring you value
Mike Dabney Keith [email protected] [email protected]
www.itctransco.com
Thank You!
Upcoming Partners inBusiness Meetings:
–2016 Spring Partners inBusiness-OperationsExcellence Meeting TBD
Buckle Up andTravel Safely
…Our Vision Forward