1. Reliability Must-Run Analysis 2006 – 2015 4 th BTA Presentation Bob Smith Manager Transmission Planning June 6, 2006

2. 4th BTA 2 Outline of Presentation  2006 RMR Study Process  Description of network and constraint  SIL/MLSC determination  RMR - demand, energy and duration  Economic impact of transmission constraint  Observations  Comparison of RMR Studies to FERC SIL Studies

3. June 6, 2006 4th BTA 3 2006 RMR Study Process  Transmission Provider Coordination January 21, 2005 meeting to coordinate plan Decision to study 2008 and 2015  SSG-WI cases to be developed Basic Case Development  SWAT Involvement Approve study plan May 4, 2005 Update on study August 23 and October 25 Preliminary results presentation Jan 17, 2006

4. June 6, 2006 4th BTA 4 RMR Economic Analysis  ABB GridView production-cost simulator  Entire WECC modeled  Hourly least cost dispatch with transmission constraints  Annual cost to serve area load determined  Study repeated ignoring local import limit  Difference is the RMR cost  Environmental impact determined for each generator using emission rates

5. June 6, 20064th BTA 5 Phoenix Area Load 2008 Critical OutageLimiting Element Jojoba-Kyrene 500kV Kyrene-Corbell 230kV West Phoenix- Lincoln Street 230kV Agua Fria- Glendale 230kV

6. June 6, 2006 4th BTA 6 2008 Phoenix Load Serving Capability

7. June 6, 2006 4th BTA 7 2008 Phoenix Load Duration and RMR Conditions 10042 MW

8. 8 2008 Phoenix Area Energy Phoenix Area Total Load = 56,651 GWh $0M incremental cost

9. June 6, 20064th BTA 9 Phoenix Area Load 2015 Critical OutageLimiting Element Jojoba-Kyrene 500kV Voltage Instability

10. June 6, 2006 4th BTA 10 2015 Phoenix Load Serving Capability

11. June 6, 2006 4th BTA 11 2015 Phoenix Load Duration and RMR Conditions 13289 MW

12. 12 2015 Phoenix Area Energy Phoenix Area Total Load = 72,083 GWh $0M incremental cost

13. June 6, 2006 4th BTA 13 Expected Phoenix Reserves

14. June 6, 2006 4th BTA 14 Phoenix RMR Observations  APS load is expected to exceed import capability for 845 hours in 2008, and 548 hours in 2015. RMR energy represents approximately 1% of the total energy.  The projected reserves in both 2008 and 2015 are greater than the 99% reliability reserve requirement of 865 MW.  Cost to run local generation outside of economic dispatch is less than $1M in both 2008 and 2015.  Expected RMR costs do not justify Construction costs to relieve RMR requirements.

15. June 6, 20064th BTA 15 2008 Yuma Transmission System Critical Outage: Hassayampa-N.G. 500kV Limiting Element: Pilot Knob-Yucca 161kV

16. June 6, 2006 4th BTA 16 2008 Yuma Load Serving Capability

17. June 6, 2006 4th BTA 17 2008 Yuma Load Duration and RMR Conditions

18. 18 2008 APS Yuma Energy APS Yuma Area Total Load = 1,892 GWh $1.3M incremental cost

19. June 6, 20064th BTA 19 2015 Yuma Transmission System Critical Outage: Cocopah-Riverside 69kV Limiting Element: Riverside-10 th Street 69kV

20. June 6, 2006 4th BTA 20 2015 Yuma Load Serving Capability

21. June 6, 2006 4th BTA 21 2015 Yuma Load Duration and RMR Conditions

22. 22 2015 APS Yuma Energy APS Yuma Area Total Load = 2,492 GWh $0M incremental cost

23. June 6, 2006 4th BTA 23 Expected Yuma Reserves

24. June 6, 2006 4th BTA 24 Yuma RMR Observations  Yuma load is expected to exceed import capability for 1,703 hours in 2008, and 553 hours in 2015.  The projected reserves in both 2008 and 2015 are greater than the 99% reliability reserve requirement of 138 MW.  Cost to run local generation outside of economic dispatch is $1.3M in 2008 and less than $1M in 2015.  Addition of 100mw of generation in Yuma in 2008 and a new 500kV line from the PV area to North Gila and a 230kV line from North Gila into the Yuma load area effectively manage RMR conditions.

25. June 6, 2006 4th BTA 25 Overall RMR Observations  Benefits of local generation Increase reliability  Local voltage support  Contingency response  Operating flexibility Reduced losses Lower transmission investment

26. 26 ACC RMR Studies Compared to FERC SIL Studies SELIGMAN ROUND VALLEY POWER PLANT 115KV & ABOVE SUBSTATION (EXISTING) LEGEND NORTH SAGUARO N.GILA PALO VERDE- HASSAYAMPA YUCCA GILA BEND TO CALIF. 500KV REDHAWK JOJOBA GILA RIVER RUDD LIBERTY KYRENE SANTA ROSA DESERT BASIN WEST WING YAVAPAI VERDE PINNACLE PEAK PREACHER CANYON CHOLLA TO CALIF. TO CRYSTAL TO MEAD / MARKETPLACE MOENKOPI NAVAJO FOUR CORNERS TUCSON 5/23/06 Transmission Planning COCONINO Substation locations and line routings depict an electrical connection only and donot reflect any assumed physical locations or routing. CASA GRANDE TAT MOMOLI KNOX GAVILAN PEAK FLAGSTAFF GLEN CANYON EXISTING 500 KV LINES EXISTING 345 KV LINES EXISTING 230 KV LINES EXISTING 115 KV LINES NUCLEAR POWER PLANT CORONADO BROWNING SILVERKING RMR Load Pockets APS control area used for FERC SIL

27. June 6, 2006 4th BTA 27 ACC RMR Studies Compared to FERC SIL Studies  ACC RMR Studies Load Pockets  Phoenix - Combined APS/SRP  Yuma SIL  Load Pocket import capability with no generation  FERC SIL Studies Control Area simultaneous import limit  Decrease internal control area generation  Increase external control area generation  Stop when reach reliability limit

28. June 6, 2006 4th BTA 28 ACC RMR Studies Compared to FERC SIL Studies  FERC SIL Studies (cont.) Issues  FERC methodology not consistent with operations in Western Interconnection TTC calculation Oasis posting  Scaling of generation Uniform vs. maximize imports RMR limits for Phoenix & Yuma used in SIL Study  FERC did not have issues with Phoenix & Yuma RMR limits