MONTANA WIND WORKING GROUP January 24, 2008

Larry Flowers presented an update of Wind Powering America activities including the projected implications for Montana from reaching a 20% wind power goal nationally. Achievement of the goal targets 2030. The Power Point presentation can be found at http://www.eere.energy.gov/windandhydro/windpoweringamerica/pdfs/wpa/wpa_update.pdf. Larry also reported progress toward establishing a Wind Application Center at Montana State University. Larry indicated he has had a number of productive meetings recently with representatives of various schools of engineering and school administrators in Bozeman. The Wind Application Center is designed to train wind power professionals who obtain practical, applied experience as part of the Montana State University undergraduate engineering curriculum. The Wind Application Center would also support the Wind for Schools initiative within Montana. The wind industry strongly supports this effort since it is hiring at unprecedented levels and needs well trained professionals. Larry reported that the Board of Directors of the American Wind Energy Association spent much of its annual meeting discussing and encouraging this effort. Larry noted that, ironically, the weak dollar has spawned new foreign investment in the United States for wind turbine, tower, blades and parts manufacturing.

Mike Cashell – The transmission system was built in a certain way which is how we find it. Bulk transmission developed where there was hydro first and than thermal. Mike recounted the move in Montana to power markets and the return, through re-regulation, to vertically integrated utility systems again. Within Montana, 333MW have been added to the system in the 2.5 years between 2005 and 2007. Currently, NorthWestern Energy is considering two publicly announced proposals to add bulk transfer capacity to their transmission network – upgrading the 500kv system by adding a new substation and installing series capacitors and the Mountain States Transmission Intertie 500kv line, http://www.msti500kv.com/. MISTI – NorthWestern Energy is working on permitting this 500kv line from Townsend into Idaho. There are a number of potential routing options. Montana Alberta Tie Ltd. (MATL) – NorthWestern Energy has been working with MATL to interconnect their 230kv line to the network. The necessary paperwork was filed with FERC in December. Mike suggested consideration should be given to overbuilding certain lines since significant economies of scale can be captured. For example, it only costs 17 percent more to build a 230kv line rather than 115kv line. The increases in transfer capacity are many times greater. Mike reported that NorthWestern Energy’s regulation costs are 4 times higher this year compared to last year. In addition, NorthWestern Energy has only been able to secure them under a one year contract. NorthWestern Energy’s integration resource costs now exceed $100 million dollars and their regulation capacity requirement has grown to plus or minus 60MW to 65MW. Some of the attendees questioned what these costs might be for small wind power projects. Colstrip 500kv upgrade - NorthWestern Energy and its Colstrip partners have had discussions about adding capacity to the Colstrip 500kv line through the measures outlined above.  The partners were quite interested initially, but some of the partners backed away because they felt coal-fired generation is out of favor and can not be purchased or placed into rates in some of the larger western utility service areas.  The perceived lack of coal-fired transmission users was viewed as detrimental to the project's fundamental economics.  This reticence caused discussions to stall, at least temporarily. Mike reported that while NorthWestern had experienced starts and stops on the 500 kV upgrade with the other Colstrip owners, it has never stopped pursuing it and still views the project as very attractive. The other Colstrip owners have recently expressed renewed interest so NorthWestern Energy is working with them again.  Finally, Mike indicated the Colstrip partners are discussing various ways to allocate the potential transmission capacity that would result from the proposed upgrades to the 500kv Colstrip line - nothing is set in stone at this point. Mike said there is an existing contract between the partners which will need to be considered (Colstrip Transmission Agreement) and may have an impact on the parties’ rights and obligations going forward.  Various allocation schemes have been discussed including divvying up the increased transfer capacity based on each partner’s financial support of the upgrades.  Nothing final has been worked out yet.

Bill Rhoads and John Fitzpatrick reported on NorthWestern’s announcement to construct, own and operate a natural gas plant to regulate their loads and integrate wind projects - http://www.northwesternenergy.com/OurCompany/NewsCenter/displaynews.aspx?Page=Site_Selection_for_Proposed_Electric_Generation_Plant_Announced&article=6684&Item=20. The proposed natural gas plant would be located near the Mill Creek Substation. Bill and John noted that interconnection and transmission service cost and availability is strongly influenced by location and NorthWestern Energy was fortunate to have found the Mill Creek location.

Representatives of the Montana Alberta Tie Limited (MATL) updated the Wind Working Group on its progress toward obtaining all of the permits and approvals needed to build their proposed 230kv transmission line. MATL representatives indicated that they would like to be able to build the proposed power line in 2008, but having construction pushed back another year would not doom it or apparently any of the wind power developments tied to it. Construction \of the MATL 230kv transmission line would represent a 10% increase in Montana’s intertie capacity. Naturener is the only specified shipper participating in the project. Invenergy and Wind Hunter have subscribed but haven’t yet specified project from which deliveries would be made to the line. MATL’s Power Point presentation can be reviewed by clicking the following hypertext link. (DEQ should have the MATL Power Point on its laptop.)

Peggy Beltrone reported that she and Gary Siefert with the Idaho National Energy Laboratory are working with officials at Malmstrom to resolve potential impacts local wind projects might pose to the antiquated radar system installed at the base.

Bill Pascoe indicated NorthWestern Energy had announced at its last Transmission Advisory Committee meeting that they would be willing to complete two economic planning studies each year for free. Bill suggested this was an opportunity the Montana Wind Working Group should explore. The Wind Working Group agreed requesting an economic study to evaluate the transmission implications of future wind power projects would be useful. The Wind Working Group agreed to have interested members work together to develop and submit an economic planning study proposal. Bill reminded the Wind Working Group that the deadline for submitting projects is February 29^th which makes time critical. In fact, the Montana Wind Working Group did submit an economic study request by the deadline.