6.Economic Assessment Terms and Definitions

Revision / Issue Date / Description of Revision
0 / 5/18/09 / Posted on Oasis

Supplement – South Louisiana Bulk

Table of Contents

1.Executive Summary

2.Purpose

3.Basis

4.Background

5.Models

6.Economic Assessment Terms and Definitions

7.Supplemental Study Results

8.Conclusions and Recommendations

APPENDIX A:2017 System Flowgate Congestion

1. Executive Summary

This report is a supplement to the ICT Strategic Expansion Plan (ISTEP) phase II report dated February, 2009. The study identifies additional upgrades that may have possible economic benefits as a solution to the Webre-Wells contingency constraint. The results indicate that a new Wilbert – Moril 230kV may provide a beneficial solution and should be considered for further study by Entergy and its stakeholders.

1. Purpose

Subsequent to the ISTEP Phase II report, the ICT believed it was in the best interest of Entergy and all stakeholders to continue to search for solutions to the Webre-Wells contingency constraint. This report provides additional data supporting the need for further study, as well as recommended possible solutions.

1. Basis

a.Nine Planning Principles

The FERC identified nine planning principles in Order No. 890 that must be satisfied for a transmission provider’s planning process to be considered compliant with that order. According to principle eight, study procedures must be provided for economic upgrades to address congestion or the integration of new resources, both locally and regionally.

b.FERC Order 890

Also in Order 890, the Commission directed transmission providers to ensure that customers may request studies that evaluate potential upgrades and other investments that could reduce congestion or integrate new resources and loads on an aggregated or regional basis.

c.Entergy OATT, Attachment K

Attachment K provides some guidance in the development of transmission expansion projects. An ICT function, as outlined in Section 14 of Attachment K, is that of identifying potential economic upgrades. Section 14 of Attachment K states:

“The ICT will identify such upgrades based on screening criteria, which may include considerations such as frequent transmission loading relief events, frequently constrained flowgates in the Available Flowgate Capability process or the Weekly Procurement Process (WPP), flowgates with high congestion costs as identified in the WPP process, and commonly invoked must-run operating guides.”

d.ISTEP

The ICT Strategic Transmission Expansion Plan was a product of the above and is a vehicle used to promote transmission expansion on the Entergy transmission system. It identifies and develops economic projects that address transmission constraints through power flow and economic studies with stakeholder input. The focus is on creating new, higher-voltage transmission in order to address potential issues on the Entergy transmission system, as opposed to upgrading the underlying lower-voltage system. The ISTEP studies should be considered as high level initial screenings upon which subsequent, more detailed studies should be built. It should be noted that the results of ISTEP studies are not related to reliability, are not used for cost allocation, and construction of these projects by Entergy is not mandatory.

1. Background

The loss of the Webre-Wells 500kV transmission line in South Louisiana, depending on system conditions, can result in the overloadof multiple underlying lines in the area. Additionally, since this is the only EHV line across the Atchafalaya basin, bulk power transfer to the WOTAB area in southwest Louisianacan be severely limited.

a.Constrained Service

The service limitations associated with the Webre-Wells contingency constraint were initially discussed and outlined in the Webre-Wells Economic Study Scope dated 03/03/2008 (see Economic Study ICTES-2008-002 at the Economic Planning Studies link on Entergy’s OASIS). Table 1 summarizes those as well as more recent limitations associated withthe Webre-Wells constraint.

Webre –Wells Contingency / 2007 / 2008
# OF LONG TERM SERICE REQUESTS LIMITED BY THE WEBRE-WELLS CONTINGENCY (TSR/GIR) / 43/7 / 35/4
# OF TLR-3 EVENTS / 28 / 34
# OF TLR-4 EVENTS / 37 / 14
# OF TLR-5 EVENTS / 3 / 12
# OF MWH OF NON-FIRM SERVICE CURTAILED / 464,960 / 1,695,259
# OF MWH OF FIRM SERVICE CURTAILED / 131,528 / 159,877
# OF TIMES IDENTIFIED AS THE CONTINGENCY ELEMENT IN AN AFC LIMITING FLOWGATE / 2,058 / 1,399

Table 1Ongoing Webre-Wells Contingency Problems

b.ISTEP Phase I

ISTEP Phase I included 20 potential projects. The ICT, through stakeholder input, narrowed the number of projects to 5. The South Louisiana Bulk project was selected as one of these projects for further study. It should be noted that the South LA bulk project was initially examined as part of the Acadiana Load pocket study; however, it was later removed due to the cost allocation concerns.

c.ISTEP Phase II

The ISTEP Phase II report was published in February, 2009. The South Louisiana Bulk project was studied at a high level,from botha thermal and an economic perspective. The results indicated that a new Wilbert-Champagne-Wells 230 kV line, along with the Acadiana Load Pocket project would provide the best economic benefit while eliminating the Webre-Wells contingency constraint, and should be considered for further study.

1. Models

Subsequent to the ISTEP Phase II report, updated powerflow models indicated that significant topology and load changes had occurred since the ISTEP study. Consequently, the ICT used the updated power flow model for its engineering study and re-developed its Gridview model. Among the significant changes were:

a.Powerflow models

• A new series 2008, Update 0A was used. This model included significant topology changes
• Only 2009 approved Construction Plan Upgrades included

b.Fuel Price forecast

• 2017 Natural gas price forecast increased by 53%
• 2017 Coal price forecast increased by 25.4%
• 2017 Fuel oil price forecast increased by 112%

c.Powerflow model loads

• 2017 loads in the powerflow model were reduced by 9%

d.SPP Load Forecasts

• New peak load and energy forecasts for SPP were included in the Gridview model.

1. Economic Assessment Terms and Definitions

The Gridview tool used to perform the economic assessments provides output in many forms. In the Phase II report, as well as this supplement, results are given in terms of congestion costs and payback period, which are defined below. It should be noted that these congestion costs are reported for Entergytransmission lines only. However, any transmission upgrade based on these economic assessments would likely benefit other stakeholders. Further study is needed to quantify the benefits to each stakeholder, including Entergy.

a.Shadow Price

The shadow price is a by-product of the linear program’s optimal solution, and is defined as the production cost savings when a transmission element’s limit is raised by 1MW while maintaining theoptimal solution. For example, a shadow price of $100 for a particular hour means that a $100 savings in production can be realized during this hour by increasing the limit of this branch by 1MW.

When the power flow on a transmission element is equal to its limit, the simulation changes the system generation to maintain the limit. This usually results in less economical generation being dispatched than would otherwise be used. The shadow price is zero when the power flow is below the element’s limit.

b.Congestion Cost

There are two components to a branch’s congestion cost:

• Flow (MW) on the binding constraint for a particular hour
• Shadow Price ($/MWH)

A branch’s congestion cost is simply the product of the above components. As described in paragraph a., when the flow is equal to its limit, the constraint is considered to be “binding” and the shadow price is non-zero and a non-zero congestion cost is realized. Conversely, if the flow is below the branch’s limit, the shadow price is zero and there is no congestion cost. As an example, a shadow price of $100/MWH for a particular hour on a branch whose limit (flow) is 200 MW will produce a $20,000 congestion cost for that hour. All congestions costs for all 8760 hours for that particular branch are summed to get the annual congestion cost. Since results are reported for Entergy’s transmission elements only, these congestion costs apply to Entergy.

c.Penalty Factor

The simulation applies a $1000/MWH penalty factor to the constraint when the program can find no optimal solution without violating the constraint. This implies that there is no redispatch that will fully mitigate the constraint. The $1000/MWH is considered to be conservative since higher figures are normally used within the industry.

d.Simple Payback

Simple Payback is the period of time to recoup the cost of a transmission upgrade.

Simple Payback = Cost of Upgrade/Yearly Congestion cost

The simple payback is a simplified estimate of economic benefit and should not be used for planning purposes. Further examination of economic costs, benefits, and risks should be performed before any construction project is approved for construction.

1. Supplemental Study Results

Three options were examined in combination with the ALP upgrades.

a.Study Options

1.Wilbert (new) – Champagne – Wells 230kV

The Wilbert-Champagne-Wells Option (WCW) involvesthe construction of a new 230 kV line from Wilbert to Champagne to Wells at an estimated cost of $142.1 million.

Figure 1:Wilbert – Champagne – Wells 230kV

2.Audubon – Richard 230kV

The Audubon-Richard Option (AR) involvesthe construction of a new 230 kV line from Audubon to Richard at an estimated cost of $154.4 million.

Figure 2:Audubon - Richard 230kV

3.Wilbert – Moril 230kV

The Wilbert-Moril Option (WM) involvesthe construction of a new 230 kV line from Wilbert to Moril at an estimated cost of $124.5 million.

Figure3:Wilbert - Moril 230kV

b.Study Results

1.Thermal Analysis

A thermal analysis was performed to analyze transfers from Southeast Louisiana (SELA) to WOTAB and Southern Company regions for each of the three proposed solutions. The study identified the following underlying system upgrades that would benecessary to permit at least 250 MW of transfer capability.

Upgrade / Cost Estimate
(millions) / WCW / AR / WM
BP09-003 Rayburn-Jasper 138 kV
- Upgrade to at least 143 MVA / $8.1 / X / X / X
BP09-045 Mossville-Nelson 138 kV
- Upgrade to at least 303 MVA / $2.0 / X / X / X
Tezcuco-Waterford 230 kV
- Upgrade to at least 711 MVA / $18.3 / X / X / X
BP09-007 Addis-Cajun 230 kV (Cajun-Wilbert portion)
- Upgrade to at least 608 MVA / $29.4 / X

Table 2Required Underlying System Upgrades

The Thermal analysis determined the First Contingency Incremental Transfer Capability (FCITC) for each of the three options and the Base Case. FCITC can be used as a measure of Available Transfer Capability (ATC). The FCITC values are shown in Table 3.

Case / FCITC
(MW) / Difference (MW)
Base Case (w/ALP) / -380
WCW / 251 / +630
AR / 291 / +670
WM / 275 / +654

Table 3FCITC Results

2.Economic Analysis

The economic analysis was performed on the base case and all upgrade cases to determine congestion costs on all Entergy AFC and IDC flowgates. Appendix A shows all Entergy flowgates with non-zero congestion costs and hours. The data for the Webre-Wells constraint was extracted from Appendix A to determine the congestion costs for this constraint, and is shown in Table 4.

2017 BASE CASE / BASE + ALP / BASE + ALP + WCW / Base + ALP + AR / BASE + ALP + WM
WW FLOWGATE / (K$) / (Hrs) / (K$) / (Hrs) / (K$) / (Hrs) / K$) / (Hrs) / (K$) / (Hrs)
TBOGRN_WEBWL_ENT / 27,446 / 1,094 / 8,547 / 801 / 55 / 30 / 148 / 26 / 130 / 28
WILLVB_WEBWL_ENT / 2,226 / 148 / 1,325 / 77 / 0 / 0 / 0 / 0 / 0 / 0
LASWIL_WEBWL_ENT / 620 / 54 / 1,001 / 61 / 0 / 0 / 0 / 0 / 0 / 0
MOHTB_WBWL_D_ENT / 170 / 11 / 226 / 17 / 0 / 0 / 0 / 0 / 0 / 0
LASTHM_WEBWL_ENT / 158 / 21 / 255 / 47 / 0 / 0 / 0 / 0 / 0 / 0
TOTAL / 30,619 / 1328 / 11,355 / 1003 / 55 / 30 / 148 / 26 / 130 / 28

Table 4Webre-Wells Flowgate Congestions

The data in table 4shows that nearly all Webre-Wells congestion is eliminated for the three upgrade cases. It should also be noted that the Base + ALP case reduces congestion from $30,.6M to $11.4M, indicatingthat considerable congestion remains.

The final economic results are shown below in two forms. Form 1 is identical to that of ISTEP Phase II, which does not include the ALP projects in the base case. Form 2 shows the data with the recently approved ALP upgrades in the base case. Tables 5 and 6 illustrate the results.

Upgrade Cost Estimate $MM / Base 2017 Congestion Cost $MM / Base +Upgrade Congestion Cost $MM / Congestion Cost Reduction from Base $MM / Simple Payback (Years)
Base 2017 / 1229.94 / ______ / ______ / ______
Base+ALP / 200 / ______ / 997.42 / 232.52 / .86
Base+ALP+WCW / 399.9 / ______ / 999.92 / 230.02 / 1.74
Base+ALP+AR / 382.8 / ______ / 997.61 / 232.34 / 1.65
Base+ALP+WM / 352.9 / ______ / 995.22 / 234.72 / 1.50

Table 5Economic Results - Form 1 – Including the Benefits of ALP

Upgrade Cost Estimate $MM / Base 2017 Congestion Cost $MM / Base +Upgrade Congestion Cost $MM / Congestion Cost Reduction (Increase) from Base $MM / Simple Payback (Years)
Base (incl ALP) / 997.42
Base+WCW / 199.9 / ______ / 999.92 / (2.50) / None
Base+AR / 182.8 / ______ / 997.61 / (0.19) / None
Base+WM / 152.9 / ______ / 995.22 / 2.20 / 69.5

Table 6Economic Results - Form 2 – Assuming ALP as Part of Base Case

1. Conclusions and Recommendations
2. The Webre-Wells constraints are long-standing problems which affect multiple transmission customers both inside and outside of Entergy’s transmission system, including Entergy’s generation affiliate.
3. The ICT’s ISTEP and other economic studies are high-level screens with planning-level cost estimates and are intended to spur further study and discussion among the affected parties.
4. Wilbert – Moril 230kV Upgrade shows the most promise from both thermal and economic standpoints.
5. The end result of this study is a high-level assessment of specific upgrades which may have an economic benefit to users of Entergy’s transmission system.
6. Parties, including Entergy, that are interested in pursuing these projects further may want to undertake additional studies on their own to fine-tune the assumptions made by the ICT to their individual situations, and to verify and determine what, if any, economic benefit would accrue to them.
7. The ICT expects that a party wishing to proceed with construction of an upgrade would engage Entergy to determine a more precise cost estimate and timeline for construction of the upgrades and to execute an agreement to do so.

APPENDIX A:2017 System Flowgate Congestion

2017 BASE CASE / BASE + ALP / BASE + ALP+ WCW / Base + ALP + AR / BASE + ALP + WM
FLOWGATE / Cost (K$) / Hours (Hrs) / Cost (K$) / Hours (Hrs) / Cost (K$) / Hours (Hrs) / Cost (K$) / Hours (Hrs) / Cost (K$) / Hours (Hrs)
SLIFB_DANMCK_ENT / 351,371 / 7183 / 359,748 / 7401 / 366,677 / 7383 / 366,970 / 7440 / 365,841 / 7402
CONCO_PLHGRN_ENT / 273,550 / 1514 / 275,718 / 1518 / 275,247 / 1513 / 274,489 / 1518 / 275,190 / 1520
MCADXF_LAKOV_ENT / 74,099 / 2275 / 84,251 / 2654 / 73,441 / 2341 / 78,979 / 2426 / 72,776 / 2278
MCAD_LAKOV_D_ENT / 71,508 / 2312 / 67,958 / 2125 / 84,514 / 2579 / 78,724 / 2479 / 83,838 / 2592
LCHTOL_GRICR_ENT / 35,732 / 2322 / 35,463 / 2099 / 36,294 / 2201 / 35,963 / 2209 / 36,781 / 2193
BONCECRICCOL_SPP / 70,209 / 720 / 162 / 4 / 1 / 1
SCBSEM_WLPNT_ENT / 64,435 / 2970
BONCEC_RICCO_ENT / 57,563 / 715 / 1,085 / 69 / 1,022 / 94 / 974 / 63
SCBSEM_PNTBO_ENT / 33,495 / 531
MORGL_ARKMAB_ENT / 30,136 / 202 / 30,610 / 199 / 30,194 / 199 / 30,444 / 202 / 30,690 / 206
TBOGRN_WEBWL_ENT / 27,446 / 1094 / 8,547 / 801 / 55 / 30 / 148 / 26 / 130 / 28
SAGMEL_ISDEL_ENT / 20,403 / 1132 / 19,599 / 1117 / 19,734 / 1107 / 19,507 / 1098 / 19,482 / 1095
MARHRS_NEWIN_ENT / 18,930 / 152 / 18,730 / 153 / 19,017 / 153 / 18,952 / 153 / 18,896 / 155
FLOWGATE 10003_TVA / 16,672 / 2061 / 15,947 / 2022 / 15,761 / 2009 / 16,243 / 2036 / 16,042 / 2015
VEPPG_PPGROB_ENT / 16,041 / 6060 / 2,706 / 887 / 16,442 / 5740 / 16,529 / 5768
BVRJ_MCKFR_D_ENT / 9,397 / 410 / 5,336 / 269 / 7,856 / 355 / 6,136 / 292 / 6,822 / 327
SCBSEM_BOCEC_ENT / 5,608 / 42
MONALC_SGAAC_ENT / 4,915 / 581 / 6,920 / 685 / 6,235 / 662 / 6,787 / 694 / 4,918 / 529
BAGSUN_WGWAT_ENT / 4,268 / 362 / 3,666 / 357 / 3,075 / 284 / 3,466 / 331 / 3,256 / 294
PPGROS_HBNEL_ENT / 4,259 / 1043 / 3,119 / 861 / 3,101 / 864 / 3,053 / 845 / 3,128 / 910
JONHE_JONJOS_ENT / 4,001 / 33 / 4,481 / 33 / 4,369 / 36 / 4,340 / 41 / 4,338 / 36
GEOHEL_SACHI_ENT / 3,750 / 1166 / 4,738 / 1346 / 4,412 / 1252 / 4,527 / 1291 / 4,711 / 1310
DELTAL_BAXPV_ENT / 2,877 / 132 / 2,794 / 126 / 2,743 / 133 / 2,440 / 133 / 2,708 / 133
AACLIC_WATXF_ENT / 2,576 / 280 / 2,765 / 334 / 2,486 / 375 / 2,518 / 351 / 2,950 / 423
WILLVB_WEBWL_ENT / 2,226 / 148 / 1,325 / 77
NECSB_NECCAR_ENT / 2,194 / 423 / 1,569 / 358 / 1,848 / 386 / 1,782 / 386 / 1,812 / 385
DANMAG_FTARK_ENT / 2,177 / 226 / 2,021 / 194 / 1,846 / 195 / 1,913 / 201 / 1,909 / 199
NRCSCB_WLPNT_ENT / 2,164 / 10
LEWPAT_GRICR_ENT / 2,027 / 249 / 1,932 / 212 / 2,130 / 245 / 2,126 / 229 / 1,973 / 223
NELLC_NELLCB_ENT / 1,274 / 287 / 4,690 / 897 / 3,704 / 774 / 3,694 / 779 / 3,621 / 757
NEL500_CARBT_ENT / 952 / 325 / 1,511 / 504 / 959 / 395 / 1,116 / 418 / 1,072 / 399
BATBS_LSPXFR_ENT / 819 / 338 / 817 / 387 / 838 / 398 / 879 / 396 / 824 / 398
PPGROB_VEPPG_ENT / 0 / 0 / 15,160 / 5342 / 918 / 384 / 17,547 / 6151 / 824 / 356
MABXF1_MAXF2_ENT / 646 / 18 / 576 / 17 / 632 / 18 / 799 / 20 / 580 / 17
LASWIL_WEBWL_ENT / 620 / 54 / 1,001 / 61
GYPFAV_FSMIC_ENT / 470 / 23 / 1,033 / 28 / 617 / 23 / 897 / 25 / 917 / 24
NELLC_RICNEL_ENT / 256 / 20 / 327 / 42 / 428 / 39 / 760 / 58 / 564 / 44
SCBBON_WLPNT_ENT / 195 / 24
VKBVKW_BWSEV_ENT / 181 / 22 / 209 / 20 / 240 / 24 / 290 / 27 / 203 / 19
MOHTB_WBWL_D_ENT / 170 / 11 / 226 / 17
MCADXF_CHWP_ENT / 168 / 11 / 128 / 9 / 129 / 9 / 178 / 12 / 166 / 10
FLOWGATE 90017_TVA / 162 / 31 / 234 / 36 / 207 / 35 / 181 / 32 / 192 / 33
LASTHM_WEBWL_ENT / 158 / 21 / 255 / 47
BVRJE_MCKFRK_ENT / 121 / 13 / 50 / 6 / 145 / 15 / 30 / 2 / 114 / 9
SHEWHB_MABWR_ENT / 116 / 7 / 134 / 8 / 197 / 11 / 117 / 7 / 178 / 12
ARKPLHL_ARKM_ENT / 99 / 3 / 76 / 3 / 128 / 3 / 121 / 3 / 136 / 3
FLRJAX_SLHEB_ENT / 94 / 3 / 70 / 2
SABPN_SABLI_ENT / 92 / 13 / 322 / 55 / 299 / 46 / 243 / 45 / 274 / 49
CLDXF_CLKMON_ENT / 72 / 68 / 72 / 75 / 69 / 72 / 80 / 79 / 84 / 68
WATGYP_WATGP_ENT / 56 / 4 / 1 / 1
SHEWHBMABWRI_EES / 43 / 4 / 62 / 4 / 58 / 5 / 130 / 8 / 101 / 5
DAYNLJ_JACCH_ENT / 35 / 7 / 20 / 2 / 21 / 2 / 19 / 2 / 32 / 3
SABOILL_HAMP_ENT / 27 / 4 / 488 / 78 / 244 / 44 / 355 / 60 / 271 / 52
JAKFL_JAKGE_ENT / 12 / 2 / 48 / 1 / 5 / 1
WHBSHE_MABEL_ENT / 10 / 3 / 8 / 3 / 38 / 33 / 6 / 32 / 6
SCBSEM_WELXF_ENT / 5 / 1
SWFWAL_INDEL_ENT / 4 / 1 / 7 / 2 / 2 / 1
SGAAC_CLYVIG_ENT / 16 / 6 / 19 / 7 / 3 / 1
NELXF_SABGTN_ENT / 25 / 7 / 11 / 4 / 5 / 3 / 3 / 3
CLYWIG_WGWAT_ENT / 20 / 1 / 20 / 3 / 7 / 1 / 15 / 2
NELXF_HBCYP_ENT / 24 / 3 / 114 / 11 / 6 / 1
WHBSHEMABSHE_EES / 17 / 2
JSFL_BGFRK_D_ENT / 72 / 4 / 0 / 1
SUMHE_BULSLD_EES / 9,058 / 374 / 8,665 / 352 / 8,893 / 361 / 8,786 / 361 / 8,841 / 357
WEBRERICHARD_EES / 2,563 / 113 / 714 / 35 / 1,373 / 74
TOTALS / 1,230 / 38,040 / 997 / 33,907 / 1,000 / 32,927 / 998 / 32,995 / 995 / 32,727

May 14, 20091