SRP Summer Preparedness 2001 and 2002 Presented to

SRP Summer Preparedness 2001 and 2002 Presented to the Arizona Corporation Commission February 16, 2001 2/16/2001 ACC Energy Workshop – Summer Preparedness 2001 1

David Areghini Associate General Manager Power, Construction & Engineering Services 2/16/2001 ACC Energy Workshop – Summer Preparedness 2001 2

Agenda b SRP system & load growth b Summary of year 2001 and 2002 projected readiness b Resources and reserves b SRP system readiness 2/16/2001 ACC Energy Workshop – Summer Preparedness 2001 3

SRP Electric Service Territory Peoria Scottsdale Surprise Phoenix Litchfield Park Paradise Valley Fountain Hills Eastern Mining Area Glendale Tolleson Mesa Tempe Apache Junction Gilbert Avondale Goodyear 2/16/2001 Chandler Queen Creek ACC Energy Workshop – Summer Preparedness 2001 4

Expected Load Growth Peoria Surprise Youngtown Phoenix Scottsdale Fountain Hills Paradise Valley Litchfield Park Glendale Tolleson Mesa 2. 7% Tempe 4. 2% 4. 5% Apache Junction 18% Gilbert Avondale Chandler Goodyear 2/16/2001 3. 8% Queen Creek ACC Energy Workshop – Summer Preparedness 2001 5

Summary of Year 2001 and 2002 Projected Conditions b Transmission, SRP generation and planned energy purchases are adequate to serve the forecasted year 2001 and 2002 demand b Contingency plans are in place to handle emergency events 2/16/2001 ACC Energy Workshop – Summer Preparedness 2001 6

John Coggins Manager Supply and Trading 2/16/2001 ACC Energy Workshop – Summer Preparedness 2001 7

Operating Reserves b Protect against loss of generation or transmission resources used to deliver energy to firm load b Targeted reserve levels based on: • Amount of firm load • Largest single hazard 2/16/2001 ACC Energy Workshop – Summer Preparedness 2001 8

2001 System Reserves 2/16/2001 ACC Energy Workshop – Summer Preparedness 2001 9

Summer 2001 Reserves Jun Jul Aug Sep 4980 5330 4840 Actual reserves* 627 635 636 841 Reserves Valley Stranded 627 0 421 214 421 215 841 0 Load (MW) * Meets WSCC and NERC Criteria Meets Southwest Reserve Sharing Group Criteria 2/16/2001 ACC Energy Workshop – Summer Preparedness 2001 10

Valley Reserve Shortfall – August 2001 Navajo Four Corners/Craig/Hayden Mead Outside Valley Reserves 215 MW West Wing SRP Distribution Territory Pinnacle Peak Valley Reserves 421 MW Liberty Available Import Capability 0 MW Coronado Palo Verde Kyrene/Browning/Silverking 2/16/2001 ACC Energy Workshop – Summer Preparedness 2001 11

SRP Resources - 2001 Total 5966 MW 1902 MW Purchased Power SRP Owned 4064 MW Generation 2/16/2001 Reserves SRP Forecast Peak Load 636 MW 5330 MW 12

SRP Owned Generation – 2001 (Capacity) Total 4064 MW Hydro 229 MW Oil & Gas 1260 MW Coal 1915 MW Nuclear 660 MW 2/16/2001 ACC Energy Workshop – Summer Preparedness 2001 13

Fuel Status b Nuclear – Full requirements under contract b Coal • All plants currently at or above target inventories • Full requirements under contract b Natural gas • Full transportation requirements under contract • Retail commodity requirements secured • Pipeline curtailments anticipated • Fuel oil back-up 2/16/2001 ACC Energy Workshop – Summer Preparedness 2001 14

Fuel Status b Fuel Oil • Critical back-up for natural gas • Allows plants to continue to operate during gas curtailments • Increasing inventory levels to meet anticipated requirements • Adequate storage capability 2/16/2001 ACC Energy Workshop – Summer Preparedness 2001 15

2002 System Reserves 2/16/2001 ACC Energy Workshop – Summer Preparedness 2001 16

Summer 2002 Reserves Jun Jul Aug Sep 5147 5530 4965 Actual reserves* 831 839 840 841 Reserves Valley Stranded 749 82 370 469 510 330 841 0 Load (MW) * Meets WSCC and NERC Criteria Meets Southwest Reserve Sharing Group Criteria 2/16/2001 ACC Energy Workshop – Summer Preparedness 2001 17

SRP Resources - 2002 Total 6370 MW 2166 MW Purchased Power SRP Owned 4204 MW Generation 2/16/2001 Reserves SRP Forecast Peak Load 840 MW 5530 MW 18

John Underhill Manager System Operations 2/16/2001 ACC Energy Workshop – Summer Preparedness 2001 19

2001 System Conditions 2/16/2001 ACC Energy Workshop – Summer Preparedness 2001 20

System Improvements 2001 b Projects increasing import and load serving capability • Browning 500/230 k. V receiving station • Four 230/69 k. V transformer additions • Four new residential substations • Six 69/12 k. V transformer additions • Seven capacitor additions 2/16/2001 ACC Energy Workshop – Summer Preparedness 2001 21

Load Serving Capacity 2001 N-0 Continuous & Emergency Limit 5831 MW N-1 Continuous & Emergency Limit 5553 MW Forecasted Upper Peak 5330 MW Forecasted Base Peak 5210 MW 2/16/2001 ACC Energy Workshop – Summer Preparedness 2001 22

2002 System Conditions 2/16/2001 ACC Energy Workshop – Summer Preparedness 2001 23

System Improvements 2002 b Projects increasing import and load serving capability • Kyrene Expansion Project • Four 230/69 k. V transformer additions • Three new residential substations • Seven 69/12 k. V transformers • Multiple 230 k. V & 69 k. V line upgrades 2/16/2001 ACC Energy Workshop – Summer Preparedness 2001 24

Load Serving Capacity 2002 N-0 Continuous & Emergency Limit 6093 MW N-1 Continuous & Emergency Limit 5803 MW Forecasted Upper Peak 5530 MW Forecasted Base Peak 5410 MW 2/16/2001 ACC Energy Workshop – Summer Preparedness 2001 25

System Preparation Summer substation and line maintenance will be complete by summer • • 2/16/2001 Major line patrols Preventative maintenance Pole work Personnel training • • • Tree trimming Cable replacement Storm plan ACC Energy Workshop – Summer Preparedness 2001 26

Emergency Operations and Load Shedding b System Normal b Capacity Critical (Internal) b Capacity Emergency (Stage 1) b Pre-load Shedding (Stage 2) b Rotating Blackouts (Stage 3) 2/16/2001 ACC Energy Workshop – Summer Preparedness 2001 27

Concerns b WSCC curtailments b Existing Kyrene units (2002+) b Energy exchange at Glen Canyon b Double contingencies b Voltage collapse 2/16/2001 ACC Energy Workshop – Summer Preparedness 2001 28

Significant Near Term Major Transmission and Generation Needs Southwest Valley 500 k. V Transmission Project (Summer 2003) Santan Expansion Project (Summer 2004 -2005) 2/16/2001 ACC Energy Workshop – Summer Preparedness 2001 29

Summary Of Year 2001 and 2002 Projected Conditions b Transmission, SRP generation and planned energy purchases are adequate to serve the forecasted year 2001 and 2002 demand b Contingency plans are in place to handle emergency events 2/16/2001 ACC Energy Workshop – Summer Preparedness 2001 30