SunZia Transmission project moves forward

July 24, 2012

Project Definition
SunZia is a 500 kV transmission project consisting of approximately 500 miles of two separate 500 kV alternating current (AC) transmission lines in mainly parallel corridors, including up to five substations. These EHV facilities will be constructed between south-central New Mexico and south-central Arizona (see SunZia Project Study Area Map).

In addition to originating and terminating substations, three intermediate subs are planned to interconnect SunZia to the existing 345 kV transmission grid in both states, and to allow installation of series compensation. The project also includes the option to construct and operate one of the 500 kV circuits as a bipolar direct current (DC) facility, depending on the demand for transmission capacity over SunZias path. SunZias AC configuration will create 3,000 MW of transfer capacity, or 4,500 MW under the hybrid AC/DC option.

The project is owned by MMR Group and its wholly-owned subsidiary, Southwestern Power Group, Salt River Project, Tri-State Generation & Transmission Assn., Tucson Electric Power and ShellWind Energy, Inc. Southwestern Power Group of Phoenix is responsible for project management of SunZias development activities, including siting, permitting, licensing, preliminary engineering and design and environmental studies. The owners will also be directly involved with right-of way acquisition, final engineering and design, procurement, construction and operation of the project.

Regional Planning Origins
SunZia was conceived to provide a cost-effective transmission alternative for stranded renewable energy resources, particularly wind and solar generation in New Mexico and Arizona, for delivery to markets in California, Arizona and Nevada. The high-quality wind energy resource in central New Mexico has been estimated at over10,000 MW.

The original concept for the project emerged in 2006 from the transmission planning efforts of the Southwest Area Subregional Transmission Planning Group (SWAT). SWATs assigned subcommittees conducted power flow studies to find ways to increase total transfer capacity and mitigate transmission congestion between southern New Mexico and southern Arizona. With primary EHV interconnections between the two states being associated with large base load generation in the Four Corners area (e.g. WECC Paths 22, 23 and 48), along with increasing load growth in the southern areas of both states, the need to improve power flow capability over WECC Path49 became increasingly important to regional reliability. The Department of Energys National Electric Congestions Study (2009) confirmed this to be an area needing additional transmission capacity.

Searching for Partners
In an effort to attract investors and development partners, Southwestern Power Group initiated the equivalent of an open season in December 2006 seeking participants interested in jointly developing the SunZia Project. Solicitations of interest went out to over 100 parties involved in transmission planning, project development and operations. By January 2007, 34 formal responses had been received, with 16 indicating strong interest to participate in the projects developmentas owners. Following a series of organizational meetings beginning in February of that year, a smaller group of 12 parties continued to discuss investing in the project.

By the end of April 2008 the project sponsor group had formed and consisted of five owners that included load-serving utilities, an equity investment group, a major wind energy company and Southwestern Power Group. Since that time, the owner group has changed but continues to reflect a very similar blending of interests and participation. The development of SunZia has proceeded in an orderly manner under a board of directors and a project management company, Southwestern Power Group, which oversees all of the projects preconstruction development activities, work scope, schedules and budgets.

Obtaining the Permits
SunZias interstate nature and the fact that its proposed and alternative alignments traverses lands managed by the federal government ensured that it would be the subject of an examination under the National Environmental Policy Act (NEPA). SunZia filed an SF-299 ROW application with the Bureau of Land Management (BLM) in September 2008. In late May 2009, the BLM published a Notice of Intent in the Federal Register to announce that an environmental impact statement would be initiated. Since then, preparation of the EIS has included over a year of scoping, public meetings, evaluation of comments from the public and the commitment from 13Cooperating Agencies (at state and federal levels) to review the EIS. Environmental resource impact studies, field inventories, review of general plans and land use plans, resource management plans and consultation activities, particularly with Native American Tribes as required under Section 106 of the National Historic Preservation Act of 1966 (16 USC 470 et. seq.), as amended, have all been underway.

The BLM estimates that the Draft EIS will be available for public review and comment by mid-April. This review period is expected to last at least 90 days and will be followed by analysis of comments submitted to the BLM, leading up to compilation and issuance of a Final EIS, hopefully, sometime this summer. A Record of Decision will then follow the publication of the availability of the Final EIS.

State siting permits are also required for the project in both New Mexico and Arizona. Although those separate processes will not likely begin until the Final EIS is completed, SunZia should have all of its siting permits obtained by the end of the first quarter of 2013. Construction activity will begin when:
Rights-of-way and land leases are completed;

Design and engineering of the lines, towers and substations are completed;

SunZias Construction, Operations and Maintenance Plan is completed, approved and filed with applicable state and federal agencies;

The ECP contract has been awarded and procurement activities are completed; Construction and term financing facilities are fully syndicated and undertakings finalized; and

Notice(s) to Proceed are issued by the BLM and state trust land agencies in both states.

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