New Mexico Transmission System Overview TRANSMISSION SYSTEM OVERVIEW NETWORK OPERATING COMMITTEE

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New Mexico Transmission System Overview TRANSMISSION SYSTEM OVERVIEW NETWORK OPERATING COMMITTEE November 8, 2006 1

PNM Transmission System Uses Retail-PNM native load customers represent about 60% to 65% of system use On 1/1/2007 PNM will merge TNMP s NM facilities and customers Wholesale-Transmission customers represent 35% to 40% of system use Network transmission customers include: Tri State, WAPA, LAC, NEC, NTUA, City of Aztec and PNM Point-to-point transmission customers include: EPE, TNMP, WAPA and PNMM 2

A Few System Facts 2006 PNM System Load 1855 MW July 17, 2006 at 3 PM Represents new all time peak, up 4.3% over 2005 Control Area peak load is about 2500 MW Line mileage (incl. jointly owned lines) 165 miles of 500 kv (Outlet lines from Palo Verde) 1556 miles of 345 kv 180 miles of 230 kv 1000 miles of 115 kv Backbone transmission lines are 150 to 200 miles in length. Majority of transmission lines built in late 1960s through the mid 1970s 3

System Limit Determinations NERC/WECC Reliability Standards form the basis for system studies Adequacy Security Must provide uninterrupted service even with any one facility being out of service Transmission limits are dependent upon many factors such as voltage control devices and power factor, generation online,etc Major path ratings subject to regional peer review, e.g. Path 48 in NNM and Path 47 in SNM WECC Path Rating Catalog documents these major paths across the western grid (over 70 WECC Paths presently exist) System limits are determined and compared to committed uses to form basis for op. procedures and capital expansion 4

System Capability-Next 4 Years Firm Annual Transmission Service Viewpoint WECC Path 48-NNM Transmission Boundary Evaluation (North to Southeast) 2007 2008 2009 2010 PNM Retail Loads 1474 1520 1562 1599 Customer Network Loads 680 683 707 713 Point-to-point transmission Services 151 151 48 10 Transmission Losses 91 89 86 86 Committed Uses 2396 2443 2403 2409 Path 48 Load-Side Resource (521) (604) (628) (628) Total Path 48 Transmission Load 1875 1840 1763 1780 Transmission Reliability Margin (TRM) 127 131 133 133 Fast Ramp Capability to Offset TRM (139) (59) (59) (59) Total Committed Use & Residual TRM 1863 1912 1837 1854 Total NNM Transmission Capability (TTC) 1863 1912 1837 1818 Available Transmission Capability (ATC) 0 0 0-36 5

WECC Path 48 2004-06 06 Frequency Duration Curve 1900 1700 Oct 2005 through September 2006 1500 2005 Path 48 MW 1300 1100 2004 900 700 500 0 1000 2000 3000 4000 5000 6000 7000 8000 NUMBER OF HOURS AT OR "ABOVE" PLOTTED MW LEVEL 6

Recently Completed System Upgrades Valencia Division improvements, 10/2004 Added needed capacity for growing loads BA Station reconfiguration, 11/2004 Improved reliability to backbone system Project Power, June 2006 Provided new transmission source for Santa Fe Area Western NM Shunt Capacitor, 2006 Provided voltage support for western 115 kv area Upgrade of West Mesa-Algodones 115 kv line ( AL line ) Provided added thermal capacity for the AL line 7

PNM/TNMP-NM Planned Facilities Santa Fe to Las Vegas 115kV transmission line improvement to accommodate Tri-State s CNMIP Cost Estimate: $2.3 million (Tri-State will cost-share) In-Service Date: Dec 2006 TNMP and Tri-State are rebuilding Alamogordo- Hollywood 115 kv line. TNMP s portion of this rebuild consists of 14 miles between Alamogordo, NM and Tularosa, NM TNMP s Cost Estimate: $4.3 million In-Service Date: 1 st quarter of 2007 Pachmann Switching Station construction to serve growing Rio Rancho area Cost Estimate: $6.6 million In-Service Date: Nov 2007 Blackwater HVDC Station Life Extension, cooling and control systems Cost Estimate: $12.5 million In-Service Date: 2007 and 2009 Corrales Bluffs-Southern Blvd 115 kv line Cost Estimate: $2.2 million In-Service Date: Dec 2007 Improve the reliability of service to loads served by Tri-State, TNMP, and EPE by operating all three lines into Alamogordo as a normally closed system Cost Estimate: $3.2 million In-Service Date: 2007 Upgrade Belen-West Mesa 115 kv line Cost Estimate: $1.22 million In-Service Date: Dec 2007 Southern NM voltage support Cost Estimate: $1.2 million In-Service Date: June 2008 Rio Puerco Switching Station including 345/115 kv transformer and looping in the FW, WW and WN 345 kv lines Cost Estimate: ~$50 million In-Service Date: 2009 Rio Puerco-Veranda 115 kv line Cost Estimate: $9 million In-Service Date: 2009 Alamogordo SVC Cost Estimate: $8.6 million In-Service Date: 2009 8

Active Interconnection Requests PNM NNM Transmission System Shiprock San Juan Four Corners 700 MW Coal Ojo Taos Springer Clapha m McKinley Springerville Gallup PEGS Bluewater Ambrosia 102 MW Wind West Mesa 85 MW Gas 520 MW Gas Algodones Los Alamos 72 MW CC B-A Albuquerque Area Espanola Norton Santa Fe Las Vegas WECC 300 MW Wind 200 MW Wind (with signed LGIA) Black Water 51 MW Wind Bravo Dome SPP ~ Clovis 345 kv Lines 230 kv Lines 115 kv Lines Switching Stations Network Belen 140 MW Gas (signed LGIA) Sandia 37 MW Biomass 100 MW Wind 9

Wind Energy Potential in NM Map By created by TrueWind Solutions from MesoMap system using historical weather data 10

Existing Wind Generation in New Mexico Installed or under construction: 496 MW 2 MW Llano Estacado near Clovis - Cielo Wind, hosted by Xcel Energy (1999, expanded in 2003) 204MW NMWEC near Fort Summer FPLE, hosted by PNM (2003) 80MW Caprock near Tucumcari, Cielo Wind, hosted by Xcel Energy (2005) 120MW San Juan Mesa Wind Project near Elida, Padoma Wind Power, hosted by Xcel Energy- ISD 12/31/2005 90 MW Aragonne Mesa Superior Wind, west of Santa Rosa, hosted by APS (ISD 12/2006) Known Proposed Wind Farms 753MW in PNM s interconnection queue (incl. Aragonne) 420 MW in Tri-State s interconnection queue 500 MW in El Paso Electric s interconnection queue 11

Wind Interconnection Interest Primarily in Eastern NM Shiprock San Juan York Canyon Four Corners McKinley Springerville Springer Ojo Taos Pillar Black Lake Bisti Los Alamos Hernandez Norton Bravo Dome Storrie Lake Yah-tah-ey Las Vegas Ambrosia Algodones Santa Fe PEGS Blackwater B-A Blue Water Guadalupe HVDC tie West Mesa Moriarty Belen Sandia Willard Bernardo Hollywood Socorro Area of interest for wind generation interconnection to the PNM system Existing New Mexico Wind Energy Center (204 MW) Greenlee Central Elephant Butte Alamogordo Holloman AFB Artesia HVDC tie Hidalgo Picacho Dona Ana Luna Salopeck Deming Phelps Dodge Diablo Arroyo Newman Rio Grande Amrad Caliente 345 kv 230 kv 115 kv BB 345kV line - 223-mile radial transmission facility terminated in HVDC converter station 12

System Considerations- Case Study Installed and proposed projects on the BB line Present Use 404MW (204MW wind, 200MW power purchases) In queue as of 10/06: ~551MW (Wind) Withdrawn as of 10/06: 1200MW Line maximum capability 1000 MW BA 345kV 300 MW wind (proposed) 204 MW Wind (existing) Blackwater 345kV Eastern interconnected system To PNM Bulk Transmission System 90 mi. 70 mi. 63 mi. To SPS 200 MW (proposed) (signed LGIA) 51 MW Wind (proposed) Western interconnected system 200 MW HVDC 13

State and Regional Planning Advancements New Mexico IRP Rule recommended for approval WestConnect Subregion SWAT-AZ/NM/Southern NV, West TX CCPG-Colorado WECC Transmission Expansion Policy Committee Regional Congestion Studies Coordinates the western subregions: SWAT, CCPG, CAISO, STEP, RMATS, NTAC,and latest: Northern Tier Transmission Group 14

National Initiatives EPACT 2005 Brought about big changes FERC regulatory reach extended Mandatory Reliability Standards FERC certified NERC as the ERO 7/2006 NOPR issued approving 83 of 107 standards DOE s National Interest Electric Transmission Corridor Identification Congestion study issued 8/2006 FERC backstop siting could be complex 15

FERC Open Access Reform FERC Order 888 Open Access Reform Initiative NOPR issued 5/2006 Comments and Replies filed Primary themes include: Greater transparency in ATC Open regional transmission planning Reform energy imbalance penalties Reform rollover rights policy Increase customer access to information Maintains protections for and State jurisdiction over bundled retail load FERC Tech Conference held 10/2006 16

Questions? 17