Public Utility Commission of Texas Project No' 28971

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Public Utility Commission of TexasProject No.
28971

• Readiness of the El Paso Area for retail
  competition in electricity

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El Paso Electric Company

• RTO Development in the Southwest

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EPE is a Member of the WECC (formerly WSCC)
El Paso Electric
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WECC

• EPE is physically interconnected to the Western
  Electricity Coordinating Council (WECC), also
  known as the Western Interconnection
• WECC encompasses all of the western contiguous
  states, including 14 US states, portions of
  northern Mexico, and two Canadian provinces
  serving approximately 71 million people
• WECC also includes 18 investor-owned utilities,
  19 municipal utilities, 23 public power entities,
  23 independent power producers, 23 marketers, 4
  federal agencies and 8 foreign entities

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WECC Retail Activity by State

• Arizona 1 (not active)
• California - 2
• Colorado - 3
• Idaho 3
• Montana 1 (not active)
• Nebraska - 3
• Nevada - 3
• New Mexico - 3
• Oregon 1 (not active)
• South Dakota - 3

• Wyoming 3
• Washington 3
• Texas 1 (active)
• Utah - 3
• Key
• 1 Framework for
• retail competition
• in place
• 2 Suspended
• 3 No Activity

Sources www.eei.org www.eia.doe.gov
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WestConnect RTO Footprint
Eastern
Wyoming
Colorado
New
Arizona
Mexico
West
Texas

• WESTCONNECT FACTS
• Approximately 25,000 MW of load 6 million
  customers
• Covers nearly all of the regions transmission
  lines
• Jurisdictional and non-jurisdictional entities
  plan to participate
• Non-participating transmission owner rights will
  be honored

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History of WestConnect RTO

• Discussions on the formation of Desert Star ISO
  (DSTAR) started in early 1997
• In 2001, DSTAR Transmission Owners investigated
  the FERC-approved GridSouth RTO structure
• DSTAR changed to WestConnect in September, 2001
• El Paso Electric Company is a charter member of
  WestConnect
• El Paso Electric Company load ratio share of
  WestConnect is approximately 9

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WestConnect Participants

• Arizona Public Service Company
• El Paso Electric Company
• Public Service Company of
• New Mexico
• Tucson Electric Power Company
• Salt River Project
• Nevada Power Company
• Western Area Power Administration
• Southwest Transmission Cooperative
• Tri-State GT Association

Filing Entities
Funding Entities
Participating Entities
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WestConnect RTO Phased-in Approach
Starting 2004
Start TBD
Start TBD
Phase 1 New Regional Common Market Interface
Phase 3 RTO,LLC
Phase 2 Grid-wide Tariff

• Parallel Path Flow
• Mitigation-WECC
• Regional Planning
• Participation-SWAT
• Planning Committee
• Auditing of ATC
• calculations
• transmission
• service requests
• Interregional Seams
• Coordination-SSG-WI

• Common OASIS
• Bulletin Board
• Secondary Market
• for transmission
• rights
• Bulletin Board
• Energy Related
• Services
• Congestion
• management
• ancillary
• services.

• Establish tariff
• with zonal rates
• Form small
• organization to
• administer tariff/
• business
• practices
• Remove pan-
• caking
• Competitive
• procurement of
• balancing
• energy

• Establish
• Independent
• Board
• TOs transfer
• operational
• authority
• Consolidate
• Control Areas
• Real-time energy
• ancillary
• services market

Note Timing and Activities may change based on
Cost/Benefit Study
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WestConnect RTO Current Activities

• Cost/Benefit Study for Phased-in Approach
• Common OASIS and Bulletin Board
• Regional Planning
• Inter-Regional Coordination

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WestConnect RTO Current Activities

• Cost/Benefit Study for Phased-in Approach
  performed by Tabors Caramanis Associates
• Purpose
• Determine potential costs and potential benefits
  of phasing in the RTO for Desert Southwest Region
• Determine costs and benefits of each RTO function
• Provide results to regulatory authorities

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WestConnect RTO Current Activities

• Cost/Benefit Study for Phased-in Approach
  (contd)
• Participants
• Sixteen Participants consisting of Transmission
  Owners, Public Power System, Federal Power
  Systems/Agencies, Municipal Power Systems
• Study Completion date
• Estimated 3Q 2004

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WestConnect RTO Current Activities

• Common OASIS Project
• EPEs current OASIS service
• SWOASIS located at and managed by Salt River
  Project
• Six entities share this site and its costs
• New OASIS Plan
• Vendor is Open Access Technology International,
  Inc. (OATI)
• Status
• Currently in final testing stages
• Planned operation date is March 30, 2004

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WestConnect RTO Current Activities

• Common OASIS (contd)
• Participants
• 19 Transmission Owners on OASIS from Southwest
  (EPE/PNM/APS) to Northwest (Puget Sound
  Energy/Portland GE) and California (LADWP)
• Benefits
• One-stop shopping for transmission capacity over
  a wide area
• Establishment of a secondary transmission market
  to buy or sell purchased but unused transmission
  capacity
• Establishment of an Ancillary Services Market

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WestConnect RTO Current Activities

• Common OASIS (contd)
• Benefits (contd)
• Establishment of an Energy Bulletin Board to buy
  and sell energy products

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WestConnect RTO Current Activities

• Regional Planning
• EPE is a member of the newly formed SouthWest
  Area Transmission (SWAT) Planning Committee
• Purpose of SWAT Planning Committee
• To provide a forum where all interested parties
  can participate in the planning, coordination,
  and implementation of a robust transmission
  system in the Arizona, southern Colorado, New
  Mexico, West Texas and southern Nevada area.
• Inter-regional coordination of existing plans

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RTOs and SSG-WI
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WestConnect RTO Current Activities

• Seams Steering Group-Western Interconnection
  (SSG-WI) formed as a Seams discussion forum for
  the Western RTOs
• SSG-WI Purpose
• To facilitate a seamless market structure for the
  Western Interconnection
• Representation
• WestConnect, RTO West and CAISO
• El Paso Electric is a member of the SSG-WI
  Planning Work Group

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El Paso Electric Company

• Market for Power in the Southwest U.S.

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EPE Generation Sources

• EPE owns and operates generation (approx. 800 MW)
  in the El Paso area
• EPE has ownership (approx. 600 MW) in the Palo
  Verde Nuclear Generating Plant near Phoenix,
  Arizona
• EPE has ownership (approx. 104 MW) in the Four
  Corners Power Plant in northwest New Mexico

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El Paso Electric Interconnections

• EPE is NOT physically interconnected to ERCOT
• EPE is physically interconnected to the Southwest
  Power Pool through a single HVDC tie
• As a result of its primary interconnection to
  WECC, EPEs business contacts are to the west
  rather than the east (Eastern Interconnection and
  ERCOT)

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EPE-Operated Transmission

• EPE is the Control Area Operator for the southern
  New Mexico and west Texas area
• EPE has ownership in and operates the 345 kV
  transmission system connecting Arizona and
  Albuquerque to El Paso/Las Cruces
• EPE has ownership in and operates the HVDC
  interconnection and 345 kV line from SPS to El
  Paso
• EPE owns and operates the 115 kV and 69 kV
  transmission system and distribution system in El
  Paso and Las Cruces

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EPEs Connections to Mexico

• EPE has long had two 69 kV interconnections to
  CFE to allow sales of non-firm economy energy
• The EPE/CFE interconnection is an asynchronous
  arrangement
• When EPE sells non-firm capacity and energy to
  CFE, CFE islands part of its system load to the
  EPE system
• EPE upgraded its long-standing Presidential
  Permit for an interconnection of 200 MW
  (bi-directional)
• EPE has a DOE Export Permit for 200 MW

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EPE System Details

• Control Area Size 10,000 square miles
• 2003 Peak Loads
• Native Load 1308 MW
• System Load 1315 MW
• Percentage of Native Load Demand Energy
• New Mexico 24.67 21.67
• Texas 74.60 77.60
• Total Number of Customers (1/1/04) 321,181
• New Mexico 75,304 (23.52)
• Texas 244,875 (76.48)
• Wholesale 1 (0.00001)

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EPE Generation Details

• Total EPE Generation Resources 1501 MW
• Local Generation Total 797 MW
• Newman Power Plant (gas/oil) 486 MW
• Rio Grande Power Plant (gas/oil) 243 MW
• Copper Station (gas/oil) 68 MW
• Remote Generation Total 704
  MW
• Palo Verde (nuclear) 600 MW
• 15.8 Ownership
• Four Corners (coal) 104 MW
• 7 Ownership

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EPE Transmission Details

• Miles of Transmission 1,799 miles
• 500 kV (in Arizona) 165 miles
• 345 kV lines 942 miles
• 115 kV lines 435 miles
• 69 kV lines 257 miles
• Miles of Distribution (all voltages) 7266 miles

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EPE Transmission Rights

• Maximum Firm SNMI Rights 925 MW
• El Paso Electric Company 645 MW
• Texas-New Mexico
• Power Company 110 MW
• Public Service Company of
• New Mexico 75 MW
• Tri-State Generating
• Transmission Assoc. 95 MW
• HVDC Interconnection Rights (66.7 ownership)
• El Paso Electric Company 133 MW
• Texas-New Mexico Power Company 67 MW

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EPE Historical System Load

• The Load served by El Paso Electric Company is a
  combination of retail and wholesale loads
• EPE is a summer-peaking system and experiences
  its heaviest load in the May to September time
  frame

EPE Native System Historical Peak
Loads 1999 1159 MW 2000 1159
MW 2001 1199 MW 2002 1282
MW 2003 1308 MW
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Number of Customers and Sales in 2003 By Revenue
Class
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Contact Information

• El Paso Electric Websitewww.epelectric.com
• John A. Whitacrejwhitacr_at_epelectric.com(915)
  543-5888
• Corporate CommunicationsHenry Quintanahquintan_at_e
  pelectric.com(915) 543-5824