1. December 14, 2015 TEP & SWTC 2 nd Quarter Stakeholder Meeting 1 4 th Quarter Stakeholder Transmission Planning Meeting December 14, 2015 Unisource Energy Headquarters 88 E. Broadway Tucson, AZ 9:00 a.m. – 11:00 p.m.

2. 1) Welcome, Introductions, and Meeting Overview 2) Review of action Items from 2015 2 nd Quarter Meeting 3) SWAT and WestConnect Overview 4) SWTC 2015 Study Update 5) TEP/UNSE 2015 Study Update 6) WECC Update 7) Stakeholder Questions/Comments 8) Review of 2015 4 th Quarter Meeting Action Items December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting2

3.  Welcome  Introductions  Meeting Overview December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting3

4.  To provide for stakeholder input into the transmission planning process by: ◦ Facilitating open, transparent, and coordinated transmission planning with all affected stakeholders as required by FERC (OATT Attachment K) ◦ Describing the 10 Year transmission planning process ◦ Presenting 10 Year Transmission Plans ◦ Supporting and coordinating stakeholder participation in Regional Planning Efforts (SWAT, WestConnect, and WECC) ◦ Accommodating Economic Study Requests December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting4

5.  For example, joint planning sessions with Pima County jurisdictions  Today, time is needed to meet FERC requirements to involve Stakeholders in the regional transmission planning process December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting5

6.  There were no action items. December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting6

7.  Planning Groups in Western Interconnection  SWAT Footprint  Website information  WestConnect Update December 14, 2015 7 TEP & SWTC 4 th Quarter Stakeholder Meeting

8.  The Southwest Area Transmission (SWAT) is a sub- regional planning group within the Western Interconnection  It is comprised of transmission regulators/government entities, transmission users, transmission owners, transmission operators and environmental entities  The goal of SWAT is to promote regional planning in the Desert Southwest. It includes transmission planning subcommittees, which are overseen by the SWAT Oversight Committee  SWAT is governed by a Charter December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting8

9.  WestConnect is composed of utility companies providing transmission of electricity in the United States  Its members work collaboratively to assess stakeholder and market needs and to develop cost- effective market enhancements to the western wholesale electricity market  WestConnect is committed to coordinating its work with other regional industry efforts to achieve as much consistency as possible in the Western Interconnection December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting9

10. December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting10 CCPG NWPP Area WECC (PCC & TEPPC) CAISO CTPG Others LADWP CRT RETI Col.Grid SWAT NTTG SSPG WestConnect NTAC WGA & CREPC NMRETA

11. WestConnect Footprint with Sub-Regional Planning Groups SWAT – http://www.westconnect.com/planning_swat.php SSPG – http://www.westconnect.com/planning_sierra.php CCPG – http://www.westconnect.com/planning_ccpg.php WestConnect – http://www.westconnect.com SSPG Sierra Subregional Planning Group SWAT Southwest Area Transmission CCPG Colorado Coordinated Planning Group December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting11

12. December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting12

13. December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting13

14.  SWAT Oversight Committee Meeting Held 11/18/15 ◦ SWAT/SWAT-AZ Recent Efforts:  Started the process of putting together the study plan for the upcoming Biennial Transmission Assessment (BTA). Types of studies that will be in the plan are:  Extreme Contingency Study  Snapshot Study  RMR Studies  EE/DG Study ◦ Presentation on CAISO 2015-2016 Study work ◦ Presentation on North Gila to Imperial Valley #2 ◦ Presentation on Ten West Project, Delaney to Colorado River ◦ Presentation on SunZia ◦ Presentation on Southline ◦ Presentation on Arizona Renewable Energy Build-Out Study ◦ NERC/WECC Standards Update  TPL-001-WECC-CRT-3 draft out for comment  TPL-007 spreadsheet being created to collect data needed for GMD Study December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting14

15.  Information on SWAT can be found at the WestConnect website: ◦ www.westconnect.com/planning.php www.westconnect.com/planning.php  WestConnect Site contains information about sub-regional planning groups within SWAT, planning calendars, and documents  Chair: Patrick Harwood, Western  Vice Chair: Chris Fecke-Stoudt, APS December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting15

16.  WestConnect Regional Planning Process: ◦ Develop Study Plan ◦ Model Development ◦ Indentify Regional Needs ◦ Define Regional Alternatives ◦ Evaluate and Select Alternatives ◦ Identify Benficiaries and Allocate Costs ◦ Issue Regional Transmission Plan  The 2015 Regional Transmission Needs Assessment did not identify any regional needs. A draft of the report was distributed on 11/20/15 and posted on the WestConnect website http://www.westconnect.com/ Stakeholder Comments were accepted until by 12/4/15.http://www.westconnect.com/  WestConnect will move to a full 2-year planning cycle. Upcoming Cycle will be for 2016/2017 ◦ Base Power Flow Models for 2026 Heavy Summer and 2026 Light Spring are being created in addition to a 2026 Cost Allocation Model ◦ A draft Scenario Submittal form is available to submit scenarios for the 2016/2017 cycle December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting16

17.  WestConnect Planning Management Committee (PMC): ◦ Since the last meeting, Energy Strategies has been selected as the Planning Consultant to PMC.  Ron Belval is the Chair of the PMC  Bob Smith is the Vice-Chair of the PMC ◦ PMC has held numerous meetings to begin regional and interregional compliance efforts as mandated by FERC Order 1000. ◦ PMC began interregional coordination with the other Regions on February 26,2015. ◦ PMC Committees:  Planning Subcommittee:  Tom Green, Chair  Gary Trent, Vice-Chair  Cost Allocation Subcommittee:  Jeff Hein, Chair  Legal Subcommittee:  Jennifer Spina, Chair  Contract & Compliance Subcommittee (CCS):  Stephanie Copeland, Chair December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting17

18.  Planning Subcommittee (PS): ◦ Met frequently in 2015 to receive updates on and review the studies conducted for the 2015 abbreviated planning cycle study. ◦ Currently developing Study Plan for the 2016/2017 study cycle ◦ Scenario submittal window is open until December 31, 2015.  Cost Allocation Subcommittee (CAS) Meetings: ◦ Met periodically during 2015 ◦ Developed plan for determining cost allocation ◦ No cost allocation was necessary in 2015 since no regional needs were identified  Contract and Compliance Subcommittee is working on a charter. December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting18

19.  SWTC Planning Calendar & Methodology  2016-2025 Ten-Year Plan Review  Interconnection Requests and Transmission Service Requests  Economic Study Requests of SWTC  Stakeholder comments/questions on study plan  Stakeholder submittal of requests for additional transmission studies December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting19

20. December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting20

21.  NERC Planning Standards  WECC System Performance Regional Business Practices  Internal planning criteria ◦ SWTC Planning Guidelines are posted on the SWTC OASIS at http://www.oasis.oati.com/swtc/http://www.oasis.oati.com/swtc/ December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting21

22.  The 2016-2025 Ten Year Plan will be submitted to the ACC by the end of January 2016. It contains minor changes from last year’s plan: ◦ SWTC is currently involved in discussions with various entities on projects that may be advanced for consideration in future Ten Year Plans. These are discussed in the Ten Year Plan.  On-going discussions throughout the year at the Class A Operating Committee (CAOC) Meetings will necessitate minor changes to this plan in the future.  As changes are approved by the SWTC Board, they will be incorporated into the next filing at WestConnect and the ACC. December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting22

23. Ten Year Plan Projects in Northern Area: None December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting23

24. Ten Year Plan Projects in Southern Area: Capacitor Bank Additions planned at: Butterfield (2016) San Rafael (2016) December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting24

25. Ten Year Plan Projects in Western Area: Capacitor Bank additions planned at: Three Points (2015 – In-Service) Bicknell (2016) Sahuarita (2015 – In-service) December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting25

26.  SWTC currently has several projects under consideration, and these are included in the 2016-2025 Ten Year Plan Filing These include: ◦ Apache/Hayden to San Manual 115 kV Line ◦ Saguaro to Thornydale 115 kV Line ◦ Thornydale to Twin Peaks 115 kV Line ◦ CAP 115 kV Line Tap to SWTC Sandario Sub ◦ Valencia to CAP Black Mountain 115 kV Line ◦ Tombstone Junction Project ◦ Move one of the 50MVAr Capacitor Banks from Morenci to Dos Condados December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting 26

27.  Generation interconnection requests: ◦ None  Transmission interconnection requests ◦ None  Currently involved in transmission study work with the following entities: ◦ Tucson Electric Power Company ◦ Arizona Public Service Company ◦ Western Area Power Administration December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting27

28.  Currently no Economic Study Requests have been received by SWTC December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting28

29.  Any Questions? December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting29

30.  Open Discussion ◦ Stakeholder submittal of requests for additional transmission studies:  Requests can be made at any time to:  swtctransmission@swtransco.coop swtctransmission@swtransco.coop December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting30

31.  TEP/UNSE Planning Calendar & Methodology  2014-2023 Ten Year Plan Review  Interconnection Requests and Transmission Service Requests  Economic Study Requests of TEP  Stakeholder comments/questions on study plan  Stakeholder submittal of requests for additional transmission studies December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting31

32. December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting32

33.  NERC Planning Standards  WECC System Performance Regional Business Practices  Internal planning criteria ◦ TEP Planning Guidelines are posted on the TEP OASIS at http://www.oasis.oati.com/tepc/http://www.oasis.oati.com/tepc/ December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting33

34. December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting34  2015-2024 Ten Year Plan was submitted to the ACC on January 31, 2014  Proposed 2015-2024 Ten Year Plan was submitted to WestConnect in December 2014

35. December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting35  Completed Projects ◦ Pinal Central – Tortolita 500kV Line ◦ Tortolita 500kV Expansion ◦ Springerville – Vail 345kV Line Series Capacitor Replacement at Vail ◦ Winchester – Vail 345kV Line Series Capacitor Replacement at Vail ◦ Springerville – Greenlee 345kV Line Series Capacitor Replacement at Greenlee  Planned Projects ◦ South 345kV Substation Conversion (2016) ◦ Greenlee 345kV Substation Conversion (2017) ◦ Hassayampa-Pinal West Loop- in to Jojoba (2017)

36. December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting36  Conceptual Projects (TBD) ◦ Vail to Irvington 345kV ◦ Irvington to South 345kV ◦ Tortolita to Winchester 500kV ◦ Vail to South #2 345kV ◦ Springerville to Greenlee #2 345kV ◦ Tortolita to South 345kV ◦ Westwing to South #2 345kV

37. December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting37

38.  Completed Projects ◦ North Loop 138kV Reconfiguration ◦ DMP – Tucson 138kV Line ◦ DMP – Northeast 138kV Reconductor ◦ North Loop – DMP 138kV Reconductor ◦ Northeast – Rillito 138kV Reconductor ◦ West Ina – Del Cerro 138kV Reconductor ◦ North Loop – Rillito 138kV Reconductor ◦ North Loop – West Ina 138kV Reconductor ◦ Rillito 138kV Capacitor Bank #1 Upgrade ◦ South Loop 138kV Capacitor Bank #1 Upgrade December 14, 2015 38 TEP & SWTC 4 th Quarter Stakeholder Meeting

39.  Planned Projects (2016) ◦ Toro Switchyard  Loop-in of South Loop – Green Valley 138kV ◦ Rosemont 138kV Line ◦ North Loop Capacitor Banks #1 & #2 Upgrades December 14, 2015 39 TEP & SWTC 4 th Quarter Stakeholder Meeting

40.  Planned Projects (2017) ◦ Tortolita – Rancho Vistoso Reconfiguration  Tortolita – North Loop #5  North Loop – Rancho Vistoso ◦ Orange Grove Substation  Loop-in of La Canada – Rillito 138kV ◦ Canoa Ranch 138kV Capacitor Bank ◦ Roberts 138kV Capacitor Bank December 14, 2015 40 TEP & SWTC 4 th Quarter Stakeholder Meeting

41.  Planned Projects (2018-2019) ◦ None December 14, 2015 TEP & SWTC 2nd Quarter Stakeholder Meeting41

42.  Planned Projects (2020) ◦ Harrison Substation  Loop-in of East Loop – Roberts 138kV ◦ Irvington – Tucson 138kV Transmission Line #2  Loop-in at Kino Substation ◦ Irvington 138kV Substation Conversion December 14, 2015 42 TEP & SWTC 4 th Quarter Stakeholder Meeting

43.  Planned Projects (2021) ◦ Craycroft-Baril Substation  Loop-in of Northeast – Snyder 138kV ◦ Hartt Substation  Loop-in of Green Valley – Future Toro December 14, 2015 43 TEP & SWTC 4 th Quarter Stakeholder Meeting

44.  Planned Projects (2022) ◦ Marana Substation  Loop-in of a Tortolita – North Loop 138kV circuit December 14, 2015 TEP & SWTC 2nd Quarter Stakeholder Meeting44

45.  Planned Projects (2023) ◦ Naranja Substation  Loop-in of North Loop – Rancho Vistoso 138kV December 14, 2015 TEP & SWTC 2nd Quarter Stakeholder Meeting45

46.  Planned Projects (2024) ◦ Corona Substation  Loop-in of Irvington – South Loop 138kV December 14, 2015 TEP & SWTC 2nd Quarter Stakeholder Meeting46

47.  Planned Projects (2025) ◦ None December 14, 2015 TEP & SWTC 2nd Quarter Stakeholder Meeting47

48.  Conceptual Projects ◦ Irvington – 22 nd Street 138kV Line #2 (TBD) December 14, 2015 48 TEP & SWTC 4 th Quarter Stakeholder Meeting

49. 1) Griffith-North Havasu Transmission Project (TBD) December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting49

50. 1) No Projects December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting50

51. Activity Since 4 th Quarter Stakeholder Meeting  New Interconnection Requests –  Completed Feasibility Studies -  Completed System Impacts Studies –  Completed Facility Studies –  Projects Interconnected –  Interconnection Projects Withdrawn –  New Long-Term Firm Transmission Service Requests requiring SIS –  Long-Term Firm Transmission Service Requests Withdrawn - December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting51

52. Currently involved in scoping/feasibility study work for the following entities: ◦ Western Area Power Administration - DSW ◦ Salt River Project December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting52

53.  Currently no new Economic Study Requests have been received by TEP December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting53

54.  Any Questions? December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting54

55. Open Discussion – Stakeholder submittal of requests for additional ◦ transmission studies Requests can be made at any time to:  Transcoord@tep.comTranscoord@tep.com December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting55

56.  June 24, 2015 Board Meeting (minutes excerpts): ◦ Presentation on WECC activities, priorities and plans ◦ Presentation reviewing compliance process improvements ◦ Presentation on the activities and recommendations of the Member Advisory Committee (MAC) ◦ Presentation on Market Interface Committee (MIC) discussions of the Section 4.9 review work and the activities and concerns of the MIC. ◦ Presentation on Operating Committee (OC) activities and goals and reported that the committee is working to bring its goals into alignment with WECC’s strategic goals ◦ Presentation summarizing the Section 4.9 Review Summit held earlier in the week A complete draft of the WECC board minutes can be found at: https://www.wecc.biz/Administrative/2015-06-24%20Draft%20Board%20Minutes.pdf https://www.wecc.biz/Administrative/2015-06-24%20Draft%20Board%20Minutes.pdf  November 18 2015 Update from Section 4.9 Review Work Group: ◦ Section 4.9 Review Work Group provided a summary of feedback received during the Sept/Oct public comment period on the draft of Section 4.9 Review Report to the WECC Board of Directors. The Work Group reviewed the comments received and modified several recommendations to reflect member input ◦ The full Section 4.9 Work Group report can be found at https://www.wecc.biz/Administrative/Final%204%209%20Report%202015-12-02.pdf https://www.wecc.biz/Administrative/Final%204%209%20Report%202015-12-02.pdf December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting56

57.  May 6-7 th Quarterly Meeting: ◦ There are currently eight positions on the Scenario Planning Steering Group (SPSG) that require appointments ◦ An update was provided on the WECC Board of Directors’ Section 4.9 Work Groups activities ◦ To more effectively incorporate the Integrated Reliability Assurance Model, the WECC Reliability Planning and Performance Analysis Department has been reorganized. The new structure consists of five teams within the RPPA division: Performance Analysis, Event Analysis, Situational Awareness, Reliability Planning and Standards Development ◦ An update was provided on the Reliability Planning Department’s proposed work priorities for 2015. ◦ An Update was provided on the 2015 Study Program ◦ An Update was provided on the 2024 Common Case and 10-year Study Cases ◦ WestConnect requested that its current three seats on TEPPC (Colorado Coordinated Planning Group, Southwest Area Transmission and Sierra Subregional Planning Group) be consolidated into a single seat represented by WestConnect December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting57

58.  August 12 th -13 th Quarterly Meeting ◦ A summary of the Final Clean Power Plan was presented. There are interim compliance targets between 2022 and 2029. Mandatory reductions will now occur in that time frame with a three-step implementation approach ◦ There was a discussion about the future of the Base Case Coordination System (BCCS). It is an online resource for information to produce base cases. The contract for developing the system was awarded to Siemens, and is now three and a half years behind schedule. The System Review Work Group (SRWG) has been fully involved in testing and voted to give BCCS a six- month extension. The Technical Studies Subcommittee (TSS), SRWG’s parent committee voted later the same day to recommend terminating the BCCS Information can be found at the following link: www.wecc.biz/TEPPC/Pages/Default.aspx www.wecc.biz/TEPPC/Pages/Default.aspx December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting58

59.  August 11th-12th Meeting: ◦ Members recommended adding additional functionality WECC’s Environmental Data Viewer that would allow users to analyze their transmission line against WECC’s Environmental Risk Data. ◦ Members reviewed the Energy-Water-Climate Change Scenario to determine the extent to which potential changes to the climate might pose significant risks to the reliability and efficiency of the electric system in the Western Interconnection  Information can be found at the following link: https://www.wecc.biz/teppc/Pages/spsg.aspx https://www.wecc.biz/teppc/Pages/spsg.aspx December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting59

60.  Vijay Satyal, Senior Energy Policy Analyst, Reliability Planning at WECC, is the staff liaison to the RPCG. He is assisted by Colby Johnson, Associate Staff Engineer, System Adequacy.  Chair is Gary DeShazo, CAISO and Vice Chair is Jeff Hein, Excel Energy  RPCG meetings happen every other year depending on the needs of WECC members. RPCG is not a “formal standing WECC Committee,” but is a member-driven effort to guide and assist WECC staff in their planning efforts.  An RCPG–CCTA Process Meeting was held on April 28, 2015: ◦ Purpose of the RPCG is:  To solicit input on potential transmission projects with probability of being in-service in the next 10 years.  To assist with best-estimates on transmission topology.  Be stakeholder driven to reflect diversity of views. ◦ 2024 CCTA Process:  Critical for WECC Interconnection-wide planning  Criteria-driven process (quantitative & subjective)  Stakeholder input before submittal to TAS  Valuable for future planning for Regional Planning Groups  Valuable for resolving inaccurate data/assumptions on transmission projects; inconsistency in modeling assumptions and potential under/over estimation of transmission utilization/congestion levels.  Process results - 2400 miles of regionally significant transmission ◦ 2026 CCTA Process:  Project kick-off in April 2015.  April – August 2015: Develop and revise CCTA Assumptions  September – December 2015: 2026 Common Case Kickoff  The documents can be found at this link: www.wecc.biz/TEPPC/Pages/RPCG.aspx December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting60

61.  Open discussion December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting61

62.  Review of action items  A status update of the action items to be provided during 2016 2 nd Quarter Stakeholder Planning Meeting December 14, 2015 TEP & SWTC 4 th Quarter Stakeholder Meeting62