New Mexico Electricity An Industrial Perspective Melissa A Trevino – Manager Energy June 28, 2017 – New Mexico EnergyPlex Conference – Hobbs, New Mexico

Discussion Topics New Mexico Electricity Market Overview Why is Electricity Important Electric Service and Cost Considerations Industry Involvement in Electric Matters Questions

New Mexico Electricity Market Overview Investor Owned Utilities IOUs have an opportunity to earn a return on equity for their investors Rate increases require a rate case filing with the New Mexico Public Regulation Commission (“NMPRC”) Rate cases require the utility to be accountable in its requests for rate increases and provide a mechanism for end-use consumers to determine if they are paying a fair rate for the utility’s cost to serve them. Electric Cooperatives Many customers in New Mexico are served by non-profit member owned rural electric cooperatives Rural Coops purchase power from generation and transmission cooperatives (G&Ts). G&Ts are owned by the rural coops they serve. Budgets, planning and rates are developed by each coop’s Board of Directors Rate cases of member-owned coops can only be triggered by a certain percentage of a coop’s customers. Rates cases of G&Ts can only be triggered by a protest of at least 3 rural coop members. New Mexico Electricity Market Overview

Why is Power Important to Industry? For Oil & Gas, and many other industries, available electricity is vital to continue and expand their operations. Electricity is a significant cost for Oil & Gas producers which directly impacts their bottom line. Access to low-cost reliable power for growing operations spurs economic development in New Mexico! Why is Power Important to Industry?

Electric Service and Cost Considerations What are the components of my electric bill? Demand? Energy? Other? Planning for future rate changes Is there transparency in the ratemaking process? Is the electricity supply reliable? What options do I have if I concerns or questions? Electric Service and Cost Considerations

Industry Involvement in Electric Rates State and Federal Utility Dockets Ex: Ensuring fair and reasonable rates Regional Transmission Organizations Ex: Stakeholder Participant Communication with Utilities Ex: Load Forecasting Participation in Legislative Sessions Ex: New Mexico Senate Memorial 127 and House Memorial 95 Industry Involvement in Electric Rates

ANY QUESTIONS?