TEP’s Power Generation FutureTEP’s Power Generation Future

Erik BakkenErik Bakken DirectorDirector

Corporate Environmental Services & Land ManagementCorporate Environmental Services & Land Management DirectorDirector

Corporate Environmental Services & Land ManagementCorporate Environmental Services & Land Management

June 2013

TEP Generation and Transmission Resources

1

Navajo

Sundt

Moenkopi

Peacock

Marketplace

Kayenta

Tucson

Generating Station

Coal Mine

Interconnection With Other Utility

Substation

Solar Station

TEP 404,000 customers

UNS Gas 148,000 customers

UNS Gas & Electric

UNS Electric 91,000 customers

High Voltage Transmission Lines

San Juan Ship Rock

Four Corners San Juan

Mine Navajo

McKinley McKinley

Mine

Coronado

Springerville

Luna

Hidalgo

Greenlee

South

Vail

Valencia Nogales

Davis

Mead

Black

Mountain

Kingman Kingman

Black

Mountain

Griffith Griffith

N. Havasu Lake

Havasu

City Parker Parker

Saguaro

West Wing

Liberty

Palo Verde

Phoenix Pinal West

Cholla Flagstaff

Lee Ranch

Yavapai Prescott

MEXICO

NEVADA

UTAH COLORADO

CALIFORNIA NEW MEXICO

Lake

Havasu

City

Pinnacle

Peak

Service Areas / Customers

Source: IRP Page 60

Environmental Regulatory Challenges

2

Air

Climate

Water

Land & Natural Resources

Waste & Chemical

Management

Coal Ash

PCBs in Electrical

Equipment

HazMat Transport

Transmission Transmission Siting and Permitting

Avian Protection

Endangered Species

Vegetation Management

316(b)

Effluent Effluent Guidelines Limitations

Waters of the United States

NPDES NPDES Pesticide Permits

New & NSPS- New & Modified Sources

NSPS-Existing Sources

BACT Permitting

International Negotiations

Utility MACT

Interstate Transport

(CAIR/CSAPR)

Regional Haze/Visibility

Ozone NAAQS

New Source Review (NSR)

Waterbody- Specific

Standards

Regional Haze Goal

1998 2008 2018 2028 2038 2048 2058 2064

Dec

ivie

w H

aze

Ind

ex (

dv)

Planning Period

Reasonable Progress

only (SGS)

Uniform Rate of Progress

Natural Conditions

BART and Reasonable

Progress (NGS, FCPP, SJGS, Sundt)

3

2.00

2.25

2.00

1.75

1.50

1.25

1.00

0.75

0.50

0.25

0.00

Ch

ange

in V

isib

ility

Cost Deciview Change

0.47

0.70

Humanly Perceptible Change in Visibility

Costs to Achieve

Incremental Visibility Improvements (NGS)

October 19, 2009 ACC Special Open Meeting - Glen D. Reeves

Low NOx Burners Selective Catalytic Reduction

Regional Haze Costs at

TEP Remote Plants

5

San Juan Generating

Station Navajo Generating Station

Four Corners Power Plant

$200M $85M

$35M

SCR Required on all units?

?

Springerville Generating Station

BART for Sundt Unit 4

• Sundt Unit 4 ordered by DOE to convert to coal in 1980s

• February 2011 - Arizona regional haze plan – Units reconstructed outside

of BART time frame (1962-1977) are not BART eligible

• December 2012 - EPA disapproved decision regarding Sundt Unit 4

– Sundt Unit 4 is BART eligible

• EPA regional haze proposal for Arizona due September 6, 2013

– Will include BART determination for Sundt

– Final rule due February 6, 2014

6

$130M

Regional Haze Controls

7 U.S. Chamber of Commerce, EPA’s New Regulatory Front: Regional Haze and the Takeover of State Programs, July 13, 2012,

EPA - Potential Ozone Nonattainment Areas

8

Industry - Potential Ozone Nonattainment Areas

9

Generation Portfolio

10

Four Corners Generating

Station (APS) Navajo

Generating Station (SRP)

San Juan Generating

Station (PNM)

Coal Facing Potential Early Retirement

Springerville Unit 1 (TEP)

Springerville Unit 2 (TEP)

Sundt Unit 4 (TEP)

40% of TEP’s Coal Capacity

Facing Potential Early

Retirement

20122012 2014 2016 2018 2020 2022 2024 20262014 2016 2018 2020 2022 2024 2026

170 MW

75 MW

250 MW 325 MW 500 MW

120 MW 170 MW 250 MW

Utility Scale Renewables

Distributed Generation

Future Support for Intermittent Resources

Renewable Resource Integration

Combustion Turbines

Demand Response

Energy Storage

Fully Compliant with Arizona Energy

Efficiency Standard 22% by 2020

Fully Compliant with Arizona Renewable

Energy Standard 15% by 2025

Energy Efficiency - Commercial

Lighting

Mechanical

Refrigeration

And more!

Energy Efficiency - Residential

Wind Resources

15

Macho Springs, Western New Mexico

50 MW

Solar Test Yards

16

Irvington Test Site 1Irvington Test Site 1

Irvington Test Site 2Irvington Test Site 2

Irvington Test Site 3Irvington Test Site 3

DMP Test SiteDMP Test Site

AREVA Project

17

TEP’s Distributed Solar Resources Sites

18

Rev 6.1.12