2001 & 2002 Energy Preparedness

Tucson Electric Power

February 16, 2001

Michael Flores, Manager Control Area Operations

David Hutchens, Manager Wholesale Marketing

Load Growth

2000 2001 2002 Retail Sys. Peak Demand(MW)

1,862 1,901 1,949

Residential Sales (MWh) 2,965,274 3,060,095 3,149,493

Industrial Sales (MWh) 2,051,145 2,053,400 2,059,919

Commercial Sales (MWh) 2,598,049 2,645,069 2,689,689

Retail Sys. Peak Demand 2.10% 2.54%

Residential Sales 3.20% 2.92%Industrial Sales 0.11% 0.32%

Commercial Sales 1.81% 1.69%

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

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)

Coal & Gas Consumption

Coal (000’s tons) 2001 2002 Springerville 3,214 3,267Irvington 328 279San Juan 1,434 1,450Navajo 547 572

Gas (MCF)

All Plants 12,252 12,642

Loads and Resources, 2001

-

500.0

1,000.0

1,500.0

2,000.0

2,500.0

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Interruptible & Load Management

Combustion Turbine

Firm Imports

Steam - Gas

Steam - Coal

Retail, Firm & Operating Reserves

Retail Load & Firm Exports

Retail Load

DMP Addition75 MW CT

Loads and Resources, 2002

-

500.0

1,000.0

1,500.0

2,000.0

2,500.0

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Interruptible & Load Management

Firm Imports

Combustion Turbine

Steam - Gas

Steam - Coal

Retail, Firm & Operating Reserves

Retail Load & Firm Exports

Retail Load

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)

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 PathsCurrent TEP Import PathsSpringerville

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

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.

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

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

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

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