1. 2001 & 2002 Energy Preparedness Tucson Electric Power February 16, 2001 Michael Flores, Manager Control Area Operations David Hutchens, Manager Wholesale Marketing

2. Load Growth

3. Generation Capacity 1520 MW of Base load Coal 255 MW of Intermediate Gas Steam 125 MW of Combustion Turbines 75 MW new Combustion Turbine (June 1, 2001) 25 MW new Combustion Turbine (permitting in progress, May 1, 2001) 2000 MW Total Generation Capacity Note: TEP receives 110 MW from SCE during summer period

4. Fuel Supply Gas transportation availability affects TEP’s ability to generate from its local power plants New plants in Arizona & demand for gas in California could have an impact on gas deliveries to TEP Contract with Southwest Gas (SWG) will expire May 31, 2001 TEP and SWG negotiating a contract to start June 1, 2001 Capital upgrades to Diesel fuel delivery system at the Irvington site (sustainable alternate fuel)

5. Coal & Gas Consumption

6. Loads and Resources, 2001

7. Loads and Resources, 2002

9. Import Limits Four EHV lines supply remote power to Tucson Voltage Stability constrained Minimum level of local generation must be on- line to guard against voltage collapse Transmission capability is approximately 1050 Mw (No local generation on)

10. Tortolita South Vail Greenlee Westwing TEP Service Area 500 kV 345 kV North Loop Irvington Voltage Remote Generation + Firm Purchases + Economy Power (all local generation on) Limit of 1,268 MW Current TEP Import Paths Springerville

11. Reserve Margins (Peak Day) Year 2001 2193 MW (total resources) minus 2064 MW (load+firm sales) = 129MW Year 2002 2193 MW (total resources) minus 2088 MW (load+firm sales) = 105 MW

12. Reserve Requirements TEP is a member of the Southwest Reserve Sharing Group (SRSG). The SRSG is required to carry operating reserves based on the larger of projected group load or the groups largest single hazard. Barring any major transmission or generation outages the SRSG expects to meet its reserve requirement for 2001 and 2002.

13. Reserve Requirements TEP's provides spinning reserve through it's own resources. TEP provides non-spinning reserve through contract based interruptible loads, economy energy sales, and TEP owned Gas Turbines

14. Transmission Capacity TEP has adequate transmission capacity to serve its retail and wholesale load obligations in 2001 and 2002 Occasional transmission scheduling difficulties during extreme high loads and transmission outages TEP is currently studying transmission upgrades and additions in conjunction with other Arizona Utilities New 138kV line added in 2001

15. Preparedness Remedial Action Scheme (RAS) mitigates the impact from multiple transmission outages on TEP’s electric grid Under frequency Load Shedding mitigates the impact from multiple generation outages on the Western grid TEP will inspect all 345kV and 138kV substations before Summer peak TEP will test all 345kV and 138kV breakers before Summer peak

16. Preparedness TEP and the Forest Service have coordinated operations to manage forest fires near TEP’s transmission facilities TEP and the Pima County Office of Emergency Management have coordinated operations to manage major electric outages in TEP’s service territory