Arizona Corporation Commission Summer Peak 2000 Preparedness Workshop May 17, 20009

5/17/00 ACC Summer Peak 2000 Preparedness Workshop 2 Agenda Arizona Transmission Provider Preparedness –Arizona Public Service Company –Salt River Project –Tucson Electric Power –Western Area Power Administration –Arizona Electric Power Cooperative Regional Supply and Delivery Consideration

5/17/00 ACC Summer Peak 2000 Preparedness Workshop 3 Regional Supply & Delivery A Western Interconnection Perspective –WSCC –NWPPC –CEC/CAISO –Desert Southwest Is a Regional Response Need ?

Reference: NERC Reliability Assessment

5/17/00 ACC Summer Peak 2000 Preparedness Workshop 5 History of Reserve Margins Per Dan Nix of CEC 5/17/00

5/17/00 ACC Summer Peak 2000 Preparedness Workshop 6 CEC: Is There a Problem? The Summer of 1998 –Record High Temperatures throughout West –Record High Electricity Demand –Four Stage Two Emergency Alerts in CA The Summer of 1999 –Cool Summer… But –Record High Electricity Demand Per Dan Nix of CEC 5/17/00

5/17/00 ACC Summer Peak 2000 Preparedness Workshop 7 CA ISO Daily Peak Load Per Dan Nix of CEC 5/17/00

5/17/00 ACC Summer Peak 2000 Preparedness Workshop 8 Per Dan Nix of CEC 5/17/00

5/17/00 ACC Summer Peak 2000 Preparedness Workshop 9 California ISO Forecast Per Dan Nix of CEC 5/17/00

5/17/00 ACC Summer Peak 2000 Preparedness Workshop 10 The Northwest Power System A little bit different… –58 % energy and 70 % capacity is hydro –Hydro output extremely variable -- Limited ability to store water year to year 8000 aMW swing from driest to wettest years But also similar… –Part of diverse West Coast system –New generation -- typically gas-fired combined cycle units developed by non-utility entities in response to market Per Dick Watson of NWPPC 5/17/00

5/17/00 ACC Summer Peak 2000 Preparedness Workshop 11 NWPPC: Key findings There is a problem -- over next few years without new resources, probability of being unable to meet needs at some level during winter is 24 percent –Problems could be energy and/or capacity; big or little –New resources means new generation and/or reliable, voluntary, economic load reduction Potential Consequences –Least -- violation of operating reserve req. –Medium -- rolling brown-outs or black-outs –Worst -- possible widespread outages Per Dick Watson of NWPPC 5/17/00

5/17/00 ACC Summer Peak 2000 Preparedness Workshop 12 Illustrative Sub-daily Operation: January, 2003 Per Dick Watson of NWPPC 5/17/00

5/17/00 ACC Summer Peak 2000 Preparedness Workshop 13 Winter 2003 Achieving a Loss of Load Probability of 5 % Per Dick Watson of NWPPC 5/17/00

5/17/00 ACC Summer Peak 2000 Preparedness Workshop 14 Otay Mesa Power Plant Size: 510 megawatt Location: San Diego County Proponent: PG&E Generating AFC filed Aug. 2, 1999 (99-AFC-5) Blythe Energy Power Plant Project Size: 520 megawatt Location: Riverside County Proponent: Summit Energy Group AFC filed Dec. 9, 1999 (99-AFC-8) High Desert Power Plant Project Size: 678 or 720 megawatt Location: San Bernardino County Proponent: Inland Energy and Constellation Energy AFC filed June 30, 1997 (97-AFC-1) Three Mountain Power Size: 500 megawatt Location: Shasta County Proponent: Ogden Power Pacific AFC filed March 3, 1999 (99-AFC-2) Long Beach District Energy Facility Size: 500 megawatt Location: Los Angeles County Proponent: Enron AFC expected 2000 Los Medanos Energy Center (Formerly Pittsburg District Energy Facility) Size: 500 megawatt Location: Contra Costa County Proponent: Calpine AFC filed June 15, 1998 (98-AFC-1) Metcalf Energy Center Size: 600 megawatt Location: Santa Clara County Proponent: Calpine & Bechtel AFC filed April 30, 1999 (99-AFC-3) Moss Landing Size: 1,090 megawatt Location: Monterey County Proponent: Duke Energy AFC filed May 7, 1999 (99-AFC-4) Pastoria Power Project Size: 750 megawatt Location: Kern County Proponent: Tejon Ranch Co. AFC filed Nov. 30, 1999 (99-AFC-7) Midway-Sunset Cogen West Size: 500 megawatt Location: Kern County Proponent: Midway Sunset Cogeneration Co. AFC filed Dec. 22, 1999 (99-AFC-9) La Paloma Generating Project Size: 1,048 megawatt Location: Kern County Proponent: PG&E Generating AFC filed August 12, 1998 (98-AFC-2) Sunrise Cogeneration & Power Project Size: 320 megawatt Location: Kern County Proponent: Texaco Global Gas and Power AFC filed Dec. 21, 1998 (98-AFC-4) Elk Hills Power Project Size: 500 megawatt Location: Kern County Proponent: Sempra & Oxy AFC filed February 24, 1999 (99-AFC-1) Antelope Valley Size: 1,000 megawatt Location: Kern County Proponent: AES AFC expected 2000 (98-SIT-8) Sutter Power Project Size: 500 megawatt Location: Sutter County Proponent: Calpine AFC filed Dec.15, 1997 (97-AFC-2) Power Plant Licensing Cases Currently Before the Commission Expected Power Plant Licensing Cases CALIFORNIA ENERGY COMMISSION Current, Expected and Approved Power Plant Licensing Cases March 23, California Energy Commission South City Project Size: 550 megawatt Location: San Mateo County Proponent: AES AFC expected 2000 (98-SIT-7) Newark Energy Center Size: 500 megawatt Location: Alameda County Proponent: Calpine & Bechtel AFC expected 2000 (99-SIT-4) Contra Costa Size: 530 megawatt Location: Contra Costa County Proponent: Southern Energy AFC filed Jan. 31, 2000 (00-AFC-1) Potrero Size: 520 megawatt Location: San Francisco County Proponent: Southern Energy AFC expected March 2000 Delta Energy Center Size: 880 megawatt Location: Contra Costa County Proponent: Calpine & Bechtel AFC filed Dec. 18, 1998 (98-AFC-3) Mountainview Power Project Size: 1,056 megawatt Location: San Bernardino County Proponent: Thermo Ecotek AFC filed Feb. 1, 2000 (00-AFC-2) Power Plant Approved by the Commission TOTAL PROJECTS: Approved Projects = 4 Current Projects = 13 Expected Projects = 7 Fuel type for all projects will be Natural Gas Redondo Beach Size: 700 megawatt Location: Los Angeles County Proponent: AES AFC expected 2000 Morro Bay Size: 530 megawatt Location: San Luis Obispo County Proponent: Duke Energy AFC expected 2000 Nueva Azalea Size: 550 megawatt Location: Los Angeles County Proponent: Sunlaw Cogen Partners I AFC filed March 8, 2000 (00-AFC-3)

5/17/00 ACC Summer Peak 2000 Preparedness Workshop 15 Projected Reserve Requirements (MW) Reference: WSCC May ,

5/17/00 ACC Summer Peak 2000 Preparedness Workshop 16 Generation Additions

5/17/00 ACC Summer Peak 2000 Preparedness Workshop 17 Thirteen AZ Plant Additions Griffith Energy 530 Desert Basin 500 South Point 500 W. Phoenix 500 Red Hawk 2,120 Harquahala 1,040 Arlington Valley 580 Gila River 2080 Big Sandy 720 Mesquite 1265 Gila Bend 750 Kyrene 825 Santan 825 TOTAL MW 12,225

5/17/00 ACC Summer Peak 2000 Preparedness Workshop 18 WSCC EHV Transmission

5/17/00 ACC Summer Peak 2000 Preparedness Workshop 19 What Actions Are Needed? Prepare a coordinated load reduction strategy –Voluntary reduction / Price induced ? – Emergency response Encourage distributed resource solutions Encourage new EHV transmission to accompany plant additions

5/17/00 ACC Summer Peak 2000 Preparedness Workshop 20 Questions ?