On July 16, 2009, the Western Area Power Administration (“WAPA”) and an LS Power affiliate, Great Basin Transmission LLC (“Great Basin”), announced that they have entered into a memorandum of understanding (“MOU”) where WAPA may partner with Great Basin to develop the Southwest Intertie Project (“SWIP”). While the MOU will not affect Great Basin’s current open season for SWIP, a partnership with WAPA could allow construction to start while arrangements for the sale of capacity to third-party shippers are being negotiated.

Under the American Reinvestment and Recovery Act, WAPA was allocated $3.25 billion to invest in “shovel-ready” transmission projects. WAPA has been reviewing over 200 projects based on their readiness, economic impact, and project developer’s financial stability. For the SWIP project, WAPA has the option to lend money, take on an equity stake, become a customer, or agree to any combination of these three options.

SWIP is a proposed 500-mile, 500 kV transmission line that will run from Southern Idaho, through eastern Nevada, and into the Las Vegas area. Current plans may allow construction to begin later this year and have the first phase of the project, which runs from Las Vegas to northern Nevada online in 2011. A second phase to extend the line into Idaho could be finished sometime in 2012. Great Basin’s open season for long-term transmission capacity has already generated more interest than initially expected.

LS Power is also applying for permits for its Southern Nevada Intertie, a 60-mile line that would connect the southern end of SWIP to the Eldorado substation, which allows interconnections to both Arizona and California. LS Power currently plans on having the Southern Nevada Intertie in service by 2012.

WAPA previously funded the 214-mile, 230 kV Montana-Alberta Tie transmission line. While the Montana-Alberta Tie transmission line costs $220 million, SWIP is estimated to cost between $750 million and $1 billion.