EXHIBIT 10.52-01

 

FIRST AMENDED AND RESTATED INTERCONNECTION AGREEMENT

 

DATED OCTOBER 9, 2003

 

BETWEEN

 

EL PASO ELECTRIC COMPANY

 

AND

 

PUBLIC SERVICE COMPANY OF NEW MEXICO

 

FIRST REVISED SERVICE AGREEMENT NO. 47

 

SUPERSEDING ORIGINAL SERVICE AGREEMENT NO. 47

 

UNDER EL PASO ELECTRIC COMPANY

 

FERC ELECTRIC TARIFF ORIGINAL VOLUME NO. 1

 

EFFECTIVE DATE: OCTOBER             , 2003

--------------------------------------------------------------------------------

Table of Contents

 

Article I

  

DEFINITIONS

   1    

1.1

  

“Abnormal Condition”

   2    

1.2

  

“Affiliate”

   2    

1.3

  

“Afton Switching Station”

   2    

1.4

  

“Agents”

   2    

1.5

  

“Agreement”

   2    

1.6

  

“Applicable Laws and Regulations”

   2    

1.7

  

“Bankruptcy Laws”

   2    

1.8

  

“Breaching Party”

   2    

1.9

  

“Business Day”

   2    

1.10

  

“Commercial Operation Date”

   2    

1.11

  

“Commercially Reasonable Efforts”

   2    

1.12

  

“Confidential Information”

   3    

1.13

  

“Custodian”

   3    

1.14

  

“Due Diligence”

   3    

1.15

  

“Effective Date”

   3    

1.16

  

“Emergency”

   3    

1.17

  

“Environmental Laws”

   3    

1.18

  

“EPE”

   3    

1.19

  

“EPE Control Area”

   3    

1.20

  

“EPE Interconnection Facilities”

   4    

1.21

  

“EPE OATT”

   4    

1.22

  

“EPE’s Palo Verde Facilities

   4    

1.23

  

“EPE Transmission System”

   4    

1.24

  

“Facility”

   4    

1.25

  

“Federal Power Act”

   4    

1.26

  

“FERC”

   4    

1.27

  

“General Orders”

   4    

1.28

  

“Generator”

   4    

1.29

  

“Generator’s Interconnection Facilities”

   4    

1.30

  

“Good Utility Practice”

   5    

1.31

  

“Governmental Authority”

   5    

1.32

  

“Governor Droop”

   5    

1.33

  

“Hazardous Substances”

   5    

1.34

  

“Interconnected Facilities”

   5    

1.35

  

“Interconnection Point”

   5    

1.36

  

“Interconnection Service”

   5    

1.37

  

“Interconnection Studies”

   5    

1.38

  

“Interconnection System Upgrades”

   6    

1.39

  

“Interest Rate”

   6    

1.40

  

“Metering Equipment”

   6    

1.41

  

“NERC”

   6    

1.42

  

“Non-Breaching Party”

   6    

1.43

  

“Operating Agent”

   6

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  i    

--------------------------------------------------------------------------------

   

1.44

  

“Operating Committee”

   6    

1.45

  

“Operation Date”

   6    

1.46

  

“Participant”

   6    

1.47

  

“Parties”

   6    

1.48

  

“Party”

   6    

1.49

  

“Person”

   6    

1.50

  

“Power System Stabilizer (PSS)”

   6    

1.51

  

“Protective Equipment”

   7    

1.52

  

“Regional Transmission Organization” or “RTO”

   7    

1.53

  

“Release”

   7    

1.54

  

“Reliability Management System” or “RMS”

   7    

1.55

  

“Security Coordinator”

   7    

1.56

  

“SOCC”

   7    

1.57

  

“Termination Costs”

   7    

1.58

  

“Transmission Service Agreement”

   7    

1.59

  

“WSCC”

   7    

1.60

  

“WSCC Agreement”

   7    

1.61

  

“WSCC Reliability Criteria Agreement”

   7

Article II

  

TERM

   8    

2.1

  

Effectiveness of this Agreement

   8    

2.2

  

FERC Filing

   8    

2.3

  

Term

   8    

2.4

  

Material Adverse Change

   9    

2.5

  

Survival

   9

Article III

  

CONTINUING OBLIGATIONS AND RESPONSIBILITIES

   9    

3.1

  

Interconnection Service Provided

   9    

3.2

  

Scope of Interconnection Service

   9    

3.3

  

Services Outside Scope of Agreement

   10    

3.4

  

No Guarantees; Release

   10    

3.5

  

Reporting Requirements

   11    

3.6

  

Third Party Activity

   11    

3.7

  

Compliance with EPE OATT and FERC Orders No. 888 and No. 889

   11

Article IV

  

OPERATING COMMITTEE

   11    

4.1

  

Operating Committee

   11    

4.2

  

Responsibilities of the Operating Committee

   12    

4.3

  

Effectiveness of Operating Committee Determinations

   12

Article V

  

FACILITY INTERCONNECTION

   12    

5.1

  

Establishment of Interconnection

   12    

5.2

  

Necessary Easements, Permits, Licenses, Etc

   12    

5.3

  

Design and Construction of Generator’s Interconnection Facilities

   13    

5.4

   Design and Construction of EPE Interconnection Facilities and Interconnection
System Upgrades and Transmission Credits    13    

5.5

  

Subcontractors

   15    

5.6

  

Rights of Access

   15    

5.7

  

Course and Completion of Construction

   16    

5.8

  

Timely Completion

   17

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  ii    

--------------------------------------------------------------------------------

    5.9   

Environmental Compliance and Procedures

   17     5.10   

Generator Modeling Data

   18     5.11   

Equipment Requirements

   18     5.12   

Required Diagrams

   18     5.13   

Required Personnel Information

   18     5.14   

Use of Afton Switching Station by Third Parties

   18     5.15   

Interconnected Facilities and Facility Additions, Modifications or Replacements

   19

Article VI

  

ACCEPTANCE AND PERFORMANCE TESTING AND COMPLIANCE MONITORING

   20     6.1   

Responsibility for Testing

   20     6.2   

Responsibility for Modifications Following Testing

   21     6.3   

Documentation of Results to EPE or the Operating Agent

   21     6.4   

Facility Certification

   21     6.5   

Transmission Service During Testing

   21     6.6   

EPE Inspection Rights

   22     6.7   

Generator Inspection Rights

   22     6.8   

EPE’s Reviews, Inspections, and Approvals

   22

Article VIII

  

INTERCONNECTION FACILITY COSTS AND BILLING

   22     7.1   

Interconnection Construction Completion and Cost

   22     7.2   

Invoices and Payments

   23     7.3   

Adjustments

   26     7.4   

Payment Not a Waiver

   26     7.5   

Income Taxes

   26

Article VIII

  

OPERATIONS

   27     8.1   

General

   27     8.2   

Obligations of Operating Agent

   27     8.3   

Obligations of Generator

   27     8.4   

Reliability Criteria

   28     8.5   

Quality of Power

   28     8.6   

Protection and System Quality

   29     8.7   

Adjustments

   29     8.8   

Switching and Tagging Procedures

   29     8.9   

General Orders

   30     8.10   

Generation Alert

   30

Article IX

  

RELIABILITY MANAGEMENT SYSTEM

   30     9.1   

Purpose

   30     9.2   

Compliance

   31     9.3   

Participant Status

   31     9.4   

Payment of Sanctions

   31     9.5   

Transfer of Control or Sale of Facility

   31     9.6   

Failure to Comply with RMS

   31     9.7   

Publication

   31     9.8   

Third Parties

   31     9.9   

Reserved Rights

   32     9.10   

Termination

   32

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  iii    

--------------------------------------------------------------------------------

   

9.11

  

Mutual Agreement

   32    

9.12

  

Severability

   32

Article X

  

REACTIVE POWER

   32    

10.1

  

Obligation to Supply Reactive Power

   32    

10.2

  

Compensation

   33    

10.3

  

Reactive Power Standards

   33    

10.4

  

Failure to Supply Reactive Power

   33

Article XI

  

OUTAGES, INTERRUPTIONS, AND DISCONNECTIONS

   34    

11.1

  

Outage Scheduling

   34    

11.2

  

Scheduled Maintenance and Coordination

   34    

11.3

  

Other Maintenance and Coordination

   34    

11.4

  

Unplanned Outages

   34    

11.5

  

Disconnection

   34    

11.6

  

Continuity of Service

   35

Article XII

  

EMERGENCY AND ABNORMAL CONDITION PROCEDURES

   35    

12.1

  

Emergency

   35    

12.2

  

Notice of Emergency

   36    

12.3

  

Immediate Action

   36    

12.4

  

Disconnection of Facility in Event of Potential Emergency

   36    

12.5

  

Audit Rights

   37    

12.6

  

Abnormal Conditions

   37

Article XIII

  

MAINTENANCE

   38    

13.1

  

The Operating Agent Obligations

   38    

13.2

  

Generator Obligations

   38    

13.3

  

Maintenance Expenses

   38    

13.4

  

Coordination

   38    

13.5

  

Observation of Deficiencies

   38    

13.6

  

Review of Maintenance Records

   39

Article XIV

  

METERING

   39    

14.1

  

General

   39    

14.2

  

Testing

   39    

14.3

  

Data Metered

   39    

14.4

  

Data Available Upon Request

   40    

14.5

  

Costs

   40

Article XV

  

SAFETY

   40    

15.1

  

General

   40    

15.2

  

Environmental Releases

   40    

15.3

  

Other Environmental Impact

   40

Article XVI

  

COMMUNICATIONS

   40    

16.1

  

Equipment

   40    

16.2

  

Remote Terminal Unit

   41

Article XVII

  

INFORMATION REPORTING

   41    

17.1

  

General

   41    

17.2

  

Compliance Monitoring Reporting

   41    

17.3

  

Regulatory Agency Reporting

   41    

17.4

  

Penalties

   41

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  iv    

--------------------------------------------------------------------------------

Article XVIII

  

DOCUMENTATION

   42     18.1   

General

   42     18.2   

Drawings

   42

Article XIX

  

FORCE MAJEURE

   42     19.1   

Definition

   42     19.2   

Performance Excused

   43     19.3   

Labor Issues

   43     19.4   

Payment Not Excused

   43

Article XX

  

INDEMNIFICATION

   43     20.1   

INTERCONNECTION INDEMNITY

   43     20.2   

RECIPROCAL INDEMNITY

   43     20.3   

DAMAGE DISCLAIMER

   44     20.4   

Indemnities Reformed

   44     20.5   

Indemnification Procedures

   44     20.6   

Additional Indemnification Provisions

   45     20.7   

Survival

   45

Article XXI

  

INSURANCE

   45     21.1   

Generator

   45     21.2   

EPE or Operating Agent

   45     21.3   

Notice of Cancellation

   46     21.4   

Self-Insurance

   46

Article XXII

  

DEFAULT

   46     22.1   

General

   46     22.2   

Events Constituting Breach

   46     22.3   

Notice by Breaching Party

   47     22.4   

Cure and Default

   47     22.5   

Continued Operations

   47     22.6   

Upon Default

   48     22.7   

Generator’s Default in Payment for Equipment

   48

Article XXIII

  

TERMINATION

   48     23.1   

Expiration of Term

   48     23.2   

Termination in the Event of Default

   48     23.3   

Survival

   48     23.4   

Disconnection and Disposition of Facilities Upon Termination

   49

Article XXIV

  

CREDITWORTHINESS

   49

Article XXV

  

RELATIONSHIP OF THE PARTIES

   49

Article XXVI

  

REPRESENTATIONS AND WARRANTIES

   49     26.1   

Representations of EPE

   49     26.2   

Representations of Generator

   50     26.3   

Representations of Each Party

   51

Article XXVII

  

ASSIGNMENT

   51     27.1   

General

   51     27.2   

EPE

   51     27.3   

Generator

   51     27.4   

No Relief in Event of Assignment

   51

Article XXVII

  

CONFIDENTIALITY

   51

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  v    

--------------------------------------------------------------------------------

   

28.1

  

General

   51    

28.2

  

Scope

   52    

28.3

  

Rights in Confidential Information

   52    

28.4

  

Standard of Care

   52    

28.5

  

Required Disclosures

   52    

28.6

  

Possession of Confidential Information at Termination of Agreement

   52    

28.7

  

Remedies Regarding Confidentiality

   52

Article XXIX

  

DISPUTE RESOLUTION

   53    

29.1

  

Dispute Resolution by Operating Committee

   53    

29.2

  

Dispute Resolution by Senior Management

   53    

29.3

  

Arbitration

   53    

29.4

  

FERC Jurisdiction Over Certain Disputes

   54    

29.5

  

Continued Performance

   55

Article XXX

  

MISCELLANEOUS

   55    

30.1

  

Partial Invalidity

   55    

30.2

  

Successors Included

   55    

30.3

  

Applicable Laws and Regulations

   55    

30.4

  

Choice of Law and Jurisdiction

   55    

30.5

  

Entire Agreement

   55    

30.6

  

Counterparts to this Agreement

   56    

30.7

  

Amendments

   56    

30.8

  

Amendments Included

   56    

30.9

  

Notices

   56    

30.10

  

Waivers

   57    

30.11

  

No Third Party Beneficiaries

   57    

30.12

  

Further Assurances

   57    

30.13

  

Headings

   57    

30.14

  

Articles

   57    

30.15

  

Number, Gender, and Inclusion

   58    

30.16

  

Good Utility Practice

   58    

30.17

  

Succession Upon Membership in an RTO

   58    

30.18

  

Notification of Change of Operating Agent

   58    

30.19

  

Amended and Restated

   58

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  vi    

--------------------------------------------------------------------------------

FIRST AMENDED AND RESTATED INTERCONNECTION AGREEMENT

 

This First Amended and Restated Interconnection Agreement (as defined below,
“Agreement”) is made and entered into as of this 9th day of OCTOBER, 2003, by
and between El Paso Electric Company (“EPE”), a corporation organized under the
laws of the State of Texas, and Public Service Company of New Mexico
(“Generator”), a corporation organized under the laws of the State of New
Mexico.

 

W I T N E S S E T H

 

WHEREAS, EPE is engaged in the transmission and distribution of electric energy
in the States of New Mexico and Texas;

 

WHEREAS, EPE owns and operates the new Afton Switching Station near Afton, New
Mexico and 345 kV transmission lines from the existing EPE Transmission System
to Afton Switching Station;

 

WHEREAS, EPE and Generator have entered into an Interconnection Agreement on May
23, 2002 (“Interconnection Agreement”);

 

WHEREAS, Generator has constructed, owns and operates an electric generating
facility (as defined below, “Facility”) located near Afton, New Mexico;

 

WHEREAS, in accordance with the Interconnection Agreement, Generator has
constructed the new Afton Switching Station and 345 kV transmission lines from
Afton Switching Station to EPE’s existing transmission system;

 

WHEREAS, in accordance with the Interconnection Agreement, Generator has
interconnected the Facility with the EPE Transmission System at the Afton
Switching Station;

 

WHEREAS, this Agreement does not provide for transmission, distribution or
ancillary services and separate arrangements are required for such services; and

 

WHEREAS, EPE and Generator desire to amend and restate the Interconnection
Agreement by allocating the costs of interconnection facilities in accordance
with FERC policy as set forth herein.

 

NOW, THEREFORE, in consideration of the premises and mutual covenants set forth
herein, the Parties agree as follows:

 

Article I

DEFINITIONS

 

For purposes of this Agreement, the following terms shall have the following
meanings.

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  1    

--------------------------------------------------------------------------------

1.1 “Abnormal Condition” means any condition at the Facility, on the
Interconnected Facilities, on the EPE Transmission System, or on the
transmission system of other utilities which is outside normal operating
parameters such that facilities are operating outside their normal ratings or
reasonable operating limits have been exceeded and would result in an Emergency
if these conditions continue. Any condition or situation that results from lack
of sufficient planned generating capacity to meet load requirements or that
results solely from economic conditions shall not, standing alone, constitute an
Abnormal Condition.

 

1.2 “Affiliate” means, with respect to any Person, any other Person (other than
an individual) that, directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common control with, such Person. For
this purpose, “control” means the direct or indirect ownership of fifty percent
(50%) or more of the outstanding capital stock or other equity interests having
ordinary voting power.

 

1.3 “Afton Switching Station” means the 345 kV substation constructed by
Generator, and owned and operated by EPE near Afton, New Mexico as depicted in
Appendices B and E.

 

1.4 “Agents” means the officers, directors, shareholders, employees or agents
acting on behalf of a Party or group of Parties.

 

1.5 “Agreement” means this First Amended and Restated Interconnection Agreement
between EPE and Generator, including attachments, exhibits, and appendices.

 

1.6 “Applicable Laws and Regulations” means all applicable federal, state and
local laws, codes, ordinances, rules and regulations, and all duly promulgated
orders and other duly authorized actions, as amended from time to time, and
whether now existing or hereafter enacted, promulgated, entered or otherwise
arising, of any Governmental Authority having jurisdiction over the Parties
and/or their respective facilities.

 

1.7 “Bankruptcy Laws” shall have the meaning set forth in Article 22.2(c).

 

1.8 “Breaching Party” shall have the meaning set forth in Article 22.2.

 

1.9 “Business Day” means any day on which the Federal Reserve member banks are
open for business. A Business Day shall commence at 8:00 a.m. and close at 5:00
p.m., local time, at the location of the relevant Party’s principal place of
business, or at such other location as the context may require. The relevant
Party, in each instance unless otherwise specified, shall be the Party to which
the notice, payment, or delivery is being sent and by which the notice, payment,
or delivery is being received.

 

1.10 “Commercial Operation Date” means the first day on which the Facility
generates electric energy, other than test energy, for sale.

 

1.11 “Commercially Reasonable Efforts” means efforts by a Party to perform the
particular obligation under this Agreement using skills, time and funds which
are customary and reasonable in transactions of the kind and nature contemplated
by this Agreement in order for such Party to satisfy such obligation under this
Agreement.

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  2    

--------------------------------------------------------------------------------

1.12 “Confidential Information” means any confidential, proprietary, or trade
secret information associated with a plan, specification, pattern, procedure,
design, device, list, concept, policy, or compilation relating to the present or
planned business of a Party (including all information relating to a Party’s
technology, research and development, business affairs and pricing), which is
designated as “Confidential” by the Party supplying the information, whether
conveyed orally, in writing, electronically, through inspection, or otherwise
prior to or after the Effective Date. Any Confidential Information designated as
such by a Party that is conveyed in writing or electronically must clearly be
designated or marked as confidential on the face of the document or electronic
transmission. To the extent that the Confidential Information is designated as
such by a Party orally or through inspection, the Party providing such
information must inform the Party receiving such information that it is
Confidential Information.

 

1.13 “Custodian” shall have the meaning set forth in Article 22.2(c).

 

1.14 “Due Diligence” means the exercise of good faith efforts to perform a
required act on a timely basis and in accordance with Good Utility Practice
using the necessary technical resources and personnel.

 

1.15 “Effective Date” means the date set forth in Article 2.1 of this Agreement.

 

1.16 “Emergency” means (a) a condition or situation which, in the judgment of
the Operating Agent, requires immediate manual or automatic action to prevent
(i) endangerment of life or property, or (ii) loss of firm load, equipment
damage, or tripping of system elements that could adversely affect the
reliability of the EPE Transmission System or the electrical transmission
systems of others to which the EPE Transmission System is directly or indirectly
connected, and which requires that the output of the Facility be adjusted to
help avoid or mitigate such condition or situation, and (b) a condition or
situation which Generator deems imminently likely to (i) endanger life or
property, or (ii) adversely affect or impair the reliability of the Facility.
The conditions or situations described in Articles 1.16(a)(ii) and 1.16(b)(ii)
include equipment damage, danger of instability, voltage collapse or
uncontrollable cascading outages. Any condition or situation that results from
lack of sufficient planned generating capacity to meet load requirements or that
results solely from economic conditions shall not, standing alone, constitute an
Emergency.

 

1.17 “Environmental Laws” means federal, state, and local laws, regulations,
rules, ordinances, codes, decrees, judgments, directives, or judicial or
administrative orders (and any amendments thereto) relating to pollution or
protection of the environment, archaeological or natural resources, or human
health and safety, including laws relating to exposures, Releases or threatened
Releases of Hazardous Substances (including Releases or threatened Releases to
ambient air, surface water, groundwater, land, surface and subsurface strata) or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, Release, transport, or handling of Hazardous Substances.

 

1.18 “EPE” shall have the meaning set forth in the first paragraph of this
Agreement.

 

1.19

“EPE Control Area” means the power system where EPE is responsible for matching
generation within the control area and net transactions with other control areas
with the prevailing real-time

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  3    

--------------------------------------------------------------------------------

 

electrical load in the control area, for maintaining within limits generally
accepted as Good Utility Practice scheduled interchange with neighboring control
areas, and for maintaining frequency within reasonable limits in accordance with
Good Utility Practice.

 

1.20 “EPE Interconnection Facilities” means all equipment and other facilities,
including Protective Equipment and Metering Equipment owned, operated and
maintained by EPE from the Generator’s side of air switch 32485 to the
Interconnection Point. The EPE Interconnection Facilities are listed in Appendix
B.

 

1.21 “EPE OATT” means EPE’s Open Access Transmission Tariff filed with FERC in
accordance with FERC’s Order No. 888, and any successor transmission service
tariff thereto, including any such successor tariff of a Regional Transmission
Organization to which EPE transfers operating authority over the EPE
Transmission System.

 

1.22 “EPE’s Palo Verde Facilities” means three 500 kv lines and related
facilities, that extend 165 miles in total from the Palo Verde Nuclear
Generating Station near Phoenix, Arizona, with two of the lines extending to the
Westwing substation and one extending to the Kyrene substation, all facilities
entirely in Arizona.

 

1.23 “EPE Transmission System” means all of the facilities owned by EPE,
including the Interconnection System Upgrades that are made available for the
purpose of providing transmission service under the EPE OATT.

 

1.24 “Facility” means Generator’s electric generating facility with an output of
142 MW (Summer) and 149 MW (Winter) located near Afton, New Mexico, together
with the other property, facilities, and equipment owned and/or operated by
Generator up to and including the output terminals of the generator as indicated
in Appendix A.

 

1.25 “Federal Power Act” means the Federal Power Act, 16 U.S.C. § 791a et seq.,
as amended from time to time.

 

1.26 “FERC” means the Federal Energy Regulatory Commission, or any successor
federal agency.

 

1.27 “General Orders” means the set of standard operating procedures, as
modified from time to time, by which the Operating Agent operates the EPE
Transmission System and which are applicable to generating facilities connected
to that transmission system, including, at the Effective Date, the Facility.

 

1.28 “Generator” shall have the meaning set forth in the first paragraph of this
Agreement.

 

1.29 “Generator’s Interconnection Facilities” means all equipment and other
facilities, including certain Protective Equipment, owned, operated and
maintained by Generator, from the generator output terminals up to the
Generator’s side of air switch 32485 as indicated in Appendices B (Attachment 1)
and E, including any modifications, additions, or upgrades made to such
facilities, which, in conjunction with the EPE Interconnection Facilities, are
necessary to connect the Facility to the EPE Transmission System at the Afton
Switching Station.

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  4    

--------------------------------------------------------------------------------

1.30 “Good Utility Practice” means any of the practices, methods, and acts
required, approved, or engaged in by the WSCC, NERC, RTO (if applicable) or a
significant portion of the electric utility industry during the relevant time
period, or any of the practices, methods, and acts which, in the exercise of
reasonable judgment in light of the facts known at the time the decision was
made, could have been expected to accomplish the desired result at a reasonable
cost consistent with good business practices, reliability, safety, and
expedition. Good Utility Practice is not intended to be limited to the optimum
practice, method, or act; rather, it is intended to be a spectrum of practices,
methods, and acts generally accepted by the electric utility industry in the
WSCC region. Good Utility Practice shall include compliance with Applicable Laws
and Regulations.

 

1.31 “Governmental Authority” means any entity with proper jurisdiction or
authority over the Parties and/or their respective facilities, including (i) a
federal, tribal, state, local or municipal governmental body; (ii) a
governmental, regulatory or administrative agency, commission, body or other
authority exercising or entitled to exercise administrative, executive,
judicial, legislative, policy, regulatory or taxing authority or power; and
(iii) a court or governmental tribunal.

 

1.32 “Governor Droop” means the governor response characteristic (speed versus
output characteristic) defining the decrease in frequency needed to cause
generator output to go from no load to full load.

 

1.33 “Hazardous Substances” means (a) any petrochemical or petroleum products,
oil, coal ash, radioactive materials, radon gas, asbestos in any form that is or
could be friable, urea formaldehyde foam insulation and transformers or other
equipment that contains dielectric fluid that may contain polychlorinated
biphenyls; (b) any chemicals, materials, or substances defined as or included in
the definition of “hazardous substances,” “hazardous wastes,” “hazardous
materials,” “hazardous constituents,” “restricted hazardous materials,”
“extremely hazardous substances,” “toxic substances,” “contaminants,”
“pollutants,” “toxic pollutants,” or words of similar meaning and regulatory
effect under any applicable Environmental Law; or (c) any other chemical,
material, or substance, exposure to which is prohibited, limited, or regulated
by any applicable Environmental Law.

 

1.34 “Interconnected Facilities” means the EPE Interconnection Facilities and
the Generator’s Interconnection Facilities.

 

1.35 “Interconnection Point” means the point where the EPE Interconnection
Facilities attach to the bus bar within the Afton Switching Station as
delineated in Appendices B and E.

 

1.36 “Interconnection Service” means the service provided by EPE to interconnect
the Facility, via Generator’s Interconnection Facilities, with the EPE
Transmission System.

 

1.37 “Interconnection Studies” means the studies performed by or on behalf of
EPE pursuant to an interconnection request by Generator which have determined
the design, specifications and cost estimate for the Interconnected Facilities
and the Interconnection System Upgrades required to accommodate the
interconnection of the Facility.

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  5    

--------------------------------------------------------------------------------

1.38 “Interconnection System Upgrades” means the additions, modifications, and
upgrades to the EPE Transmission System, including Protective Equipment and
Metering Equipment, required beyond the Interconnection Point to accommodate the
interconnection of the Facility to the EPE Transmission System through the EPE
Interconnection Facilities as identified in Appendix B, including any
modifications, additions, or upgrades made to such facilities.

 

1.39 “Interest Rate” means the prime interest rate for currency as published
from time to time under “Money Rates” by The Wall Street Journal, or its
successor (or, if no longer so published, any substitute mutually agreeable to
the Parties), as of the payment due date and/or default date, plus two (2)
percent; provided, however, that in no event shall the Interest Rate exceed the
maximum interest rate permitted by Applicable Laws and Regulations.

 

1.40 “Metering Equipment” means all metering equipment to be installed at the
Facility and at or near the Interconnection Point and Afton Switching Station.
Metering Equipment is identified in Appendices A, B, and D.

 

1.41 “NERC” means the North American Electric Reliability Council, or any
successor organization.

 

1.42 “Non-Breaching Party” shall have the meaning set forth in Article 22.2(g).

 

1.43 “Operating Agent” shall mean the entity that operates the EPE Transmission
System. On the Effective Date of this Agreement, EPE is the Operating Agent for
the EPE Transmission System.

 

1.44 “Operating Committee” shall have the meaning set forth in Article 4.1.

 

1.45 “Operation Date” means the day upon which the Interconnected Facilities,
Interconnection System Upgrades and Facility have been completed to EPE’s and
Generator’s mutual satisfaction and energized in parallel operation as confirmed
in a written notice provided by EPE to Generator, which occurred January 1,
2003.

 

1.46 “Participant” has the meaning as stated in Article 9.3.

 

1.47 “Parties” means EPE (including in its capacity as Operating Agent) and
Generator or the successor or permitted assignee of the rights and obligations
of any of the foregoing under this Agreement.

 

1.48 “Party” means one of the Parties.

 

1.49 “Person” means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity or a government or any
political subdivision or agency thereof.

 

1.50 “Power System Stabilizer (PSS)” means a control system applied at a
generator that monitors variables such as current, voltage and shaft speed and
sends the appropriate control signals to the voltage regulator to damp system
oscillations.

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  6    

--------------------------------------------------------------------------------

1.51 “Protective Equipment” means such protective relay systems, locks and
seals, breakers, automatic synchronizers, associated communication equipment and
other control schemes and protective apparatus as is reasonably necessary under
Good Utility Practice and standards of EPE for the operation of the Facility in
parallel with the EPE Transmission System and to permit the facilities of EPE
and the Facility to operate reliably and safely.

 

1.52 “Regional Transmission Organization” or “RTO” means an entity approved by
FERC to assume responsibility for providing electric transmission services and
certain operational functions in a specific region in accordance with FERC Order
No. 2000 or any other Applicable Laws and Regulations (including, but not
limited to, other FERC orders).

 

1.53 “Release” means any release, spill, leak, discharge, disposal, pumping,
pouring, emission, emptying, injection, leaching, dumping, escape into or
through the environment of any Hazardous Substance.

 

1.54 “Reliability Management System” or “RMS” means the contractual reliability
management program implemented through the WSCC Reliability Criteria Agreement,
Article IX of this Agreement, and any similar contractual arrangement(s).

 

1.55 “Security Coordinator” means the entity authorized by the WSCC to have the
final authority to direct electric system operations to prevent or remedy
problems or disturbances that have regional impacts.

 

1.56 “SOCC” means System Operations Control Center.

 

1.57 “Termination Costs” means the costs incurred by or on behalf of EPE upon
termination of this Agreement in accordance with Article XXIII in taking one or
more of the following actions: (a) returning or canceling pending orders made by
EPE for equipment or facilities required for the interconnection contemplated by
this Agreement; (b) removing any portion of the EPE Interconnection Facilities
or Interconnection System Upgrades; and (c) performing such work as may be
necessary to ensure the safety of persons and property and to preserve the
integrity of the EPE Transmission System.

 

1.58 “Transmission Service Agreement” means any transmission service agreements
between Generator and EPE, excluding any agreement for transmission service that
is provided over EPE’s Palo Verde Facilities.

 

1.59 “WSCC” means the Western Systems Coordinating Council, or any successor
organization.

 

1.60 “WSCC Agreement” means the Western Systems Coordinating Council Agreement
dated March 20, 1967.

 

1.61 “WSCC Reliability Criteria Agreement” means the Western Systems
Coordinating Council Reliability Criteria Agreement dated June 18, 1999, among
the WSCC and certain members of WSCC.

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  7    

--------------------------------------------------------------------------------

Article II

 

TERM

 

2.1 Effectiveness of this Agreement. Article 2.2 and the fourth sentence of this
Article 2.1 of this Agreement shall become effective upon execution by the
Parties. The remaining provisions of this Agreement shall become effective on
the effective date specified by FERC in accepting this Agreement (“Effective
Date”) under Section 205 of the Federal Power Act. This Agreement shall
supercede the Interconnection Agreement upon the Effective Date. Notwithstanding
the foregoing and with respect to this Agreement, no Party shall take any action
which is inconsistent with the terms of this Agreement and Applicable Laws and
Regulations during the period between execution of this Agreement and acceptance
by FERC or earlier termination of this Agreement.

 

2.2 FERC Filing.

 

2.2.1 Within a reasonable time after execution of this Agreement by the Parties,
EPE shall file this Agreement with FERC as an amended “Rate Schedule” within the
meaning of Part 35 of FERC’s regulations and with any other Governmental
Authority to the extent required by Applicable Laws and Regulations. Each of the
Parties shall support this Agreement in its current form at FERC when filed.
Generator shall reasonably cooperate with EPE with respect to obtaining FERC
approval of such FERC filing and provide any information, including testimony,
reasonably required by EPE to comply with the applicable FERC filing
requirements.

 

2.2.2 Promptly upon execution by the Parties of any amendment to this Agreement,
EPE shall, if necessary, file such amendment with FERC and with any other
Governmental Authority, to the extent required by Applicable Laws and
Regulations. Each of the Parties shall support any such amendment at FERC when
filed. Generator shall reasonably cooperate with EPE with respect to obtaining
FERC approval of such FERC filing and provide any information, including
testimony, reasonably required by EPE to comply with the applicable FERC filing
requirements.

 

2.2.3 If FERC requires conditions to or modifications of any of the terms,
conditions or provisions agreed to herein or in an amendment hereto and: (i)
neither Party notifies the other Party in writing within fourteen (14) calendar
days following receipt of FERC’s order that the notifying Party takes exception
to FERC’s order, the FERC-ordered modifications and/or conditions shall become
part of this Agreement as an amendment or appendix; or (ii) the Party taking
exception to FERC’s conditions or modifications gives fourteen (14) calendar
days notice (following receipt of FERC’s order) to the other Party of such
exception, then the Parties shall promptly negotiate an amendment to this
Agreement acceptable to FERC and providing similar benefit, rights, or effect to
the Parties. Any such amendment shall be effective when accepted for filing by
FERC. For purposes of this Article 2.2.3, each Party reserves and may exercise
all of its rights under Applicable Laws and Regulations.

 

2.3

Term. This Agreement shall continue in full force and effect until a mutually
agreed termination date; provided, however, that such termination date shall be
no later than the date on which the Facility permanently ceases commercial
operation; and provided further that this

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  8    

--------------------------------------------------------------------------------

Agreement may be terminated earlier (a) upon a Party’s default in accordance
with the provisions of Article 23.2 or (b) by the mutual agreement of the
Parties or as explicitly provided elsewhere in this Agreement. Unless no longer
required by FERC, any termination of this Agreement permitted hereunder shall
not take effect until the filing at FERC of a notice of termination of this
Agreement which notice is accepted for filing by FERC.

 

2.4 Material Adverse Change. In the event of a change in law or regulation after
the Effective Date that has a material adverse effect, or may reasonably be
expected to have a material adverse effect, on a Party’s ability to perform
under this Agreement, the Parties shall negotiate in good faith any amendment or
amendments to this Agreement necessary to adapt the terms of this Agreement to
such change in law or regulation. If the Parties are unable to reach agreement
on any such amendments within sixty (60) days of the commencement of their
negotiations, each Party reserves and may exercise all its rights under
Applicable Laws and Regulations.

 

2.5 Survival. The applicable provisions of this Agreement shall continue in
effect after cancellation, expiration, or termination of this Agreement to
provide for final billings, billing adjustments, and the determination and
enforcement of liability and indemnification obligations arising from acts or
events that occurred while this Agreement was in effect. In addition, upon
termination of this Agreement subject to the terms of Article 23, Generator
shall be responsible for any Termination Costs incurred by or on behalf of EPE.

 

Article III

CONTINUING OBLIGATIONS AND RESPONSIBILITIES

 

3.1 Interconnection Service Provided. EPE shall provide Generator with
Interconnection Service for the Facility, as such service is defined in Article
1.36 and described in this Article III. EPE shall not provide Interconnection
Service under this Agreement for any other generating units, wherever located.
Any other generating units shall be covered by a separate interconnection
agreement or an amendment of this Agreement as provided for in Article 3.2.3.

 

3.2 Scope of Interconnection Service.

 

3.2.1 Interconnection Service shall consist of the services necessary to allow
the physical interconnection of the Facility pursuant to the terms of this
Agreement. Interconnection Service does not mean and shall not include
transmission service, ancillary services, losses, or any other service available
under the EPE OATT. Specifically, Interconnection Service shall not include the
purchase or sale of energy or ancillary services to or from the Facility beyond
the Interconnection Point, or the delivery of energy or ancillary services from
the Facility beyond the Interconnection Point, which services shall be provided
separately under the EPE OATT or by others under separate agreements, as
applicable.

 

3.2.2 Generator shall be responsible for (a) making arrangements under the EPE
OATT for transmission and ancillary services on the EPE Transmission System, and
under other applicable tariffs for such services on other transmission
system(s), associated with the injection or delivery of the capacity and/or
energy produced by the Facility beyond the Interconnection Point, which services
shall not be provided under the terms of this Agreement, (b) obtaining capacity
and/or energy to satisfy its Facility service or other requirements, and (c)
making

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  9    

--------------------------------------------------------------------------------

arrangements under applicable tariffs for transmission services, losses, and
ancillary services associated with the use of the EPE Transmission System for
the injection or delivery of capacity and/or energy to other generating
facilities owned by Generator for the purpose of supplying facility service or
for any other use. EPE makes no representations to Generator regarding the
availability of transmission service on the EPE Transmission System, and
Generator agrees that the availability of such transmission service may not be
inferred or implied from this Agreement. Generator must request such
transmission service in accordance with the EPE OATT.

 

3.2.3 In the event of an increase in the output of the Facility or other
material change or modification to the configuration and/or operation of the
Facility, the Parties shall negotiate appropriate revisions to this Agreement,
including, as necessary, the performance by EPE of studies to determine the
effects of such increase or change, and changes to the specifications or
requirements set forth in the Appendices to this Agreement, as necessary to
permit EPE to provide Interconnection Service to the Facility under this
Agreement in a safe, secure and reliable manner.

 

3.3 Services Outside Scope of Agreement.

 

3.3.1 This Agreement provides only for interconnection of the Facility with the
EPE Transmission System at the Afton Switching Station. Nothing in this
Agreement shall be read as a request by Generator, or a commitment by EPE, to
install any facilities other than those necessary to interconnect the Facility
with the EPE Transmission System at the Afton Switching Station.

 

3.3.2 This Agreement does not obligate any Party to purchase, sell, transmit or
otherwise provide any rights other than Interconnection Service. This Agreement
does not obligate any Party to provide, or entitle any Party to receive, any
transmission or other service not expressly provided for herein. This Agreement
does not provide a right to inject or transmit energy which right shall be
realized through the necessary arrangements for transmission rights and service,
including mitigation related to transmission service, if any. Each Party is
responsible for making any arrangements necessary for it to receive any
transmission or other service not expressly provided for herein that it may
desire from the other Party or any other Person. Notwithstanding any other
provision of this Agreement, nothing herein shall be construed as a
relinquishment or foreclosure of any rights to transmission credits to which
Generator may be entitled, now or in the future, as a result of, or otherwise,
associated with, the transmission capacity, if any, created by the
Interconnection System Upgrades, if any.

 

3.3.3 This Agreement does not provide for the injection, sale or purchase of
power or energy from or to the Facility. Upon Generator’s request, construction,
back-up, start-up, auxiliary, station, and maintenance power required for the
Facility at the Facility site shall be provided under a separate agreement or
any applicable tariff.

 

3.4

No Guarantees; Release. EPE (which, for the purposes of this Article 3.4, shall
be deemed to include the Operating Agent) does not warrant against the
occurrence of, and Generator releases EPE from any and all claims or damages
associated with: (a) damage to Generator’s Interconnection Facilities or the
Facility resulting from electrical transients, or (b) any

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  10    

--------------------------------------------------------------------------------

interruption in the availability of the EPE Interconnection Facilities, or any
Interconnection System Upgrades, except, in the case of subpart (a) or (b), to
the extent determined to be attributable to the negligence of, willful
misconduct of, or default under Article XXII by EPE. Generator does not warrant
against the occurrence of, and EPE releases Generator from any and all claims or
damages associated with: (y) damage to the EPE Interconnection Facilities, any
Interconnection System Upgrades, or the EPE Transmission System resulting from
electrical transients, or (z) any interruption in the availability of
Generator’s Facility, except, in the case of subpart (y) or (z), to the extent
determined to be attributable to Generator’s negligence, willful misconduct or
default under Article XXII.

 

3.5 Reporting Requirements. Each Party shall notify the other Party promptly
when it becomes aware of its inability to comply with the terms and conditions
of this Agreement, and provide a sufficient explanation of its inability to
comply, including the date, duration, and reasons for its inability to comply,
and corrective actions taken; provided that such notification shall not release
such Party from its obligation to comply with this Agreement, except as provided
under Article XIX.

 

3.6 Third Party Activity. During the term of this Agreement, other Persons may
develop, construct or acquire, and operate generating facilities in EPE’s
service territory, and reservations of transmission service by such Persons
under the EPE OATT may adversely affect the availability of transmission service
for the Facility’s electric output. EPE has no obligation to disclose to
Generator any information regarding such third party activity, except as may be
required under the EPE OATT or under this Agreement subject to the provisions of
Article 3.7. To the extent that such third party activity has, or EPE reasonably
expects the third party activity to have, a material adverse impact on the
operation of the Facility or the Interconnected Facilities, EPE shall, subject
to Article 3.7, disclose to Generator such material information as is necessary
for Generator to understand the nature and extent of such adverse impact and the
viable remedies.

 

3.7 Compliance with EPE OATT and FERC Orders No. 888 and No. 889. Nothing in
this Agreement shall be deemed or construed to obligate EPE to provide or make
available to Generator any information in violation of the EPE OATT, FERC Orders
No. 888 and No. 889 or any other Applicable Laws and Regulations.

 

Article IV

OPERATING COMMITTEE

 

4.1 Operating Committee. Within fifteen (15) days after the Effective Date, each
Party shall designate a primary and alternate representative to serve on an
operating committee (“Operating Committee”), which shall meet periodically to
ensure effective cooperation in system planning, to deal promptly with the
various operating and technical issues that may arise during the term of this
Agreement, and to attempt to resolve any disputes that may arise under this
Agreement, as more specifically described in Article 4.2. Each primary and
alternate representative shall be authorized, on behalf of the designating
Party, to act with respect to all matters delegated to the Operating Committee.
Each Party shall promptly notify the other Party of the designation of its
primary and alternate representatives and of any subsequent changes in such
designations in accordance with Article 30.9.

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  11    

--------------------------------------------------------------------------------

4.2 Responsibilities of the Operating Committee. The Operating Committee shall
have the following responsibilities and functions, each of which shall be
performed consistent with the terms and conditions of this Agreement and Good
Utility Practice: (a) to establish general policies to be followed in the
coordination of the operation and maintenance of the Interconnected Facilities;
(b) to establish procedures and standard practices, consistent with the terms
and conditions of this Agreement, for guidance for each Party’s system
controllers and other operating personnel regarding the interconnected
operations of the Afton Switching Station and the Interconnected Facilities; (c)
to establish detailed procedures to govern in the event of an Emergency; (d) to
establish detailed procedures and standard practices for metering,
communications, and control facilities; (e) to establish the plan for
disconnection of the Facility at the termination of this Agreement; (f) to
establish other procedures and standard practices as may be needed from time to
time and to engage in other activities consistent with the terms and conditions
of this Agreement, provided that the Operating Committee shall not have the
authority to modify or amend any term or condition of this Agreement; and (g) to
attempt to resolve any disputes that may arise under this Agreement in
accordance with Article 29.1.

 

4.3 Effectiveness of Operating Committee Determinations. All determinations made
by the Operating Committee, including the establishment of any procedure or
standard practice, within the scope of the Operating Committee’s
responsibilities set forth in Article 4.2, shall be effective when signed by one
designated representative of each Party and, if necessary, accepted for filing
or approved by FERC.

 

Article V

FACILITY INTERCONNECTION

 

5.1 Establishment of Interconnection. The Facility constructed by Generator
shall be interconnected to the EPE Transmission System at the Afton Switching
Station, such interconnection being further described in Appendices A, B, and E.
Appendix E may be revised by mutual written agreement of the Parties. Pursuant
to this Agreement, the Parties shall, during the term of this Agreement,
continue in service the existing transmission lines and essential terminal
equipment, to the extent required to establish and maintain a reliable
interconnection.

 

5.2

Necessary Easements, Permits, Licenses, Etc. Subject to Articles 5.6.1 and
5.6.2, each Party shall diligently pursue all rights, easements, permits,
licenses, certificates and properties necessary to construct, own and maintain
its portion of the Interconnected Facilities and the Interconnection System
Upgrades. If a Party cannot reasonably acquire all the rights, easements,
permits, licenses, certificates and properties necessary to construct, own and
maintain its portion of the Interconnected Facilities and/or Interconnection
System Upgrades, the Party shall promptly provide written notice to the other
Party indicating its inability. After such notice, Generator shall have thirty
(30) days to authorize EPE to initiate and diligently pursue the following at
Generator’s expense: (a) condemnation proceedings, (b) alternate routes,
designs, methods or procedures necessary for the construction, ownership, or
maintenance of the Interconnected Facilities and/or Interconnection System
Upgrades, or (c) any other appropriate action mutually agreed upon by the
Parties. Each Party shall also pursue with Due Diligence and maintain all
necessary governmental approvals, permits, licenses and inspections necessary
for its performance of this Agreement. Generator shall also assign to

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  12    

--------------------------------------------------------------------------------

EPE, that portion of Generator’s rights under the Bureau of Land Management
(“BLM”) Right of Way NMNM102630 (“BLM 102630 R-O-W”) for the land underlying the
Interconnection System Upgrades and the portion of the EPE Interconnection
Facilities delineated as TRACT 3 on Appendix F. Contemporaneous with the partial
assignment of the BLM 102630 R-O-W, the grants of access pursuant to Articles
5.6.1 and 5.6.2 shall become effective. All expenses associated with such
transfer shall be at Generator’s cost and shall be a part of the cost of
Interconnection System Upgrades and delineated in Appendix B.

 

5.3 Design and Construction of Generator’s Interconnection Facilities.

 

5.3.1 Unless the Parties agree otherwise in writing, Generator shall, at its own
expense, design, procure, construct, install, operate, maintain and
repair/replace Generator’s Interconnection Facilities.

 

5.3.2 Protective Equipment to be installed by Generator is set forth in Appendix
A. This Protective Equipment shall be subject to review and approval by EPE,
which approval shall not be unreasonably withheld or denied. EPE’s review and/or
approval shall not be deemed an endorsement of any equipment nor as any warranty
as to the fitness, safety, durability or reliability of any equipment.

 

5.3.3 Generator shall design, procure, construct and install Generator’s
Interconnection Facilities in accordance with applicable Interconnection Studies
and Good Utility Practice.

 

5.3.4 At Generator’s expense, Generator’s Interconnection Facilities shall be
constructed by Generator or, at Generator’s option, a third party contractor to
be selected by Generator. Notwithstanding the foregoing, Generator understands
and agrees that EPE shall be responsible for closing the connection of the EPE
Interconnection Facilities and Generator’s Interconnection Facilities.

 

5.3.5 Generator shall, at its own expense, operate, maintain and repair/replace
Generator’s Interconnection Facilities in accordance with Articles VIII and
XIII.

 

5.4 Design and Construction of EPE Interconnection Facilities and
Interconnection System Upgrades, and Transmission Credits.

 

5.4.1 At Generator’s expense, Generator shall design, procure equipment for and
construct the EPE Interconnection Facilities and the Interconnection System
Upgrades required to connect the Facility to the existing EPE Transmission
System.

 

5.4.2 At Generator’s expense, EPE will review and approve all design,
procurement of equipment and construction of the EPE Interconnection Facilities
and Interconnection System Upgrades. EPE’s approval shall not be unreasonably
withheld or denied. EPE’s review and/or approval shall not be deemed an
endorsement of any design, facility or equipment nor as any warranty as to the
fitness, safety, durability or reliability of any design, facility or equipment.

 

5.4.3 At Generator’s expense, EPE shall own, operate, maintain, and
repair/replace the EPE Interconnection Facilities.

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  13    

--------------------------------------------------------------------------------

5.4.4 EPE shall own the Interconnection System Upgrades, including Afton
Switching Station. After the Operation Date, EPE shall, at its own expense,
operate, maintain and repair/replace Interconnection System Upgrades in
accordance with Good Utility Practice.

 

5.4.5 The cost to design, engineer, procure equipment, and construct the EPE
Interconnection Facilities and the Interconnection System Upgrades is set forth
in Appendix B, subject to audit by EPE pursuant to Article 7.1.3 below.

 

5.4.6 The schedule for Generator and EPE to perform the design, procurement of
equipment, construction and testing is set forth in Appendix C.

 

5.4.7 The design, procurement, construction and installation of the EPE
Interconnection Facilities and the Interconnection System Upgrades shall be in
accordance with applicable Interconnection Studies and Good Utility Practice.
The EPE Interconnection Facilities and Interconnection System Upgrades must be
sufficient, as designed and built, to deliver the full Facility output as
defined in Article 1.24 to the Interconnection Point and to enable the Facility
to receive capacity necessary to satisfy its operational requirements (not to
exceed 10 MW of capacity).

 

5.4.8 As of the Effective Date, the Parties agree that the Interconnection
System Upgrades and the EPE Interconnection Facilities have been installed. The
costs of the Interconnection System Upgrades and the EPE Interconnection
Facilities, subject to audit by EPE pursuant to Article 7.1.3 below, are
delineated in Exhibit B.

 

5.4.9 Notwithstanding any other provision of this Agreement, Generator shall not
be responsible for any costs or expenses associated with the design,
procurement, construction, installation, testing, operation, maintenance,
repair/replacement, or any modifications or upgrades to the EPE Transmission
System that are undertaken in order to prevent, mitigate, or otherwise remedy
conditions that existed prior to the establishment of the interconnection of the
Facility with the EPE Transmission System at the Afton Switching Station, and
that were required or should have been required in order to prevent, mitigate,
or remedy such conditions regardless of, or that otherwise are unrelated to,
such interconnection. To the extent that Generator has made payment to EPE for
any such costs and expenses, EPE shall refund to Generator such sums, with
interest at the Interest Rate calculated from the date Generator made such
payment(s) to the date Generator receives the refund, within thirty (30) days of
any determination as to the appropriate allocation of the costs for such
modifications or upgrades.

 

5.4.10 Subject to the provisions of this section, EPE shall credit Generator
against charges for transmission service under any Transmission Service
Agreement in an amount equal to the cost paid by Generator, including tax
gross-up payments made by Generator to EPE in accordance with Article 7.5, for
the Interconnection System Upgrades, plus interest calculated at the FERC
approved interest rate from the date Generator incurred costs associated with
the construction, engineering and installation of the Interconnection System
Upgrades (“Transmission Service Credits”); provided, however, that such credits
shall not apply to service under any Transmission Service Agreement under which
transmission service credits or payments are due for transmission service
upgrades until the cost of such upgrades has been fully amortized through
payments by the Generator. If the amount of any remaining unapplied Transmission

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  14    

--------------------------------------------------------------------------------

Service Credits (including those held by Generator’s assignee) that exist five
(5) years from the Effective Date is equal to or less than three (3) million
dollars, EPE shall refund such remaining unapplied Transmission Service Credits
to Generator within thirty (30) days after reaching such five (5) year period,
and no further Transmission Service Credits will be due to Generator or any
other Person. If the amount of any remaining unapplied Transmission Service
Credits (including those held by Generator’s assignee) that exists five (5)
years after the Effective Date is greater than three (3) million dollars, EPE
shall continue to credit Generator against charges for transmission service
under any Transmission Service Agreement until the date the remaining balance of
such unapplied Transmission Service Credits is equal to three (3) million
dollars. Within thirty (30) days of such date, EPE shall refund three (3)
million dollars to Generator (not to exceed the remaining balance of the
unapplied Transmission Service Credits), and no further Transmission Service
Credits shall be due to Generator or any other Person. Generator may assign any
portion of the Transmission Service Credits to any Person that purchases the
Facility or that purchases power from the Facility. In the event of such
assignment, EPE will credit the assignee against charges for transmission
services provided to the assignee with respect to power purchased from the
Facility, subject to the limitations set forth above. Such assigned Transmission
Service Credits shall reduce the amount of Transmission Service Credits
available to the Generator on a dollar for dollar basis. Without limiting the
foregoing, Generator will receive Transmission Service Credits against the
charges for transmission service that EPE has invoiced Generator for service
with respect to the Facility under the existing Transmission Service Agreement
(filed with the FERC on October 29, 2002 in FERC Docket No. ER03-93-000) from
the date such transmission service commenced thereunder until the Effective
Date; provided that within thirty (30) days after the Effective Date, the
Parties shall reconcile the amount of Transmission Service Credits to be applied
against the charges for transmission service with respect to the Facility during
such period.

 

5.5 Subcontractors. Nothing in this Agreement shall prevent any Party from using
the services of subcontractors as it deems appropriate; provided, however, each
Party shall require such subcontractors to comply with the relevant terms and
conditions of this Agreement. The creation of any subcontractor relationship
shall not relieve the retaining Party of any of its obligations under this
Agreement.

 

5.6 Rights of Access.

 

5.6.1 Prior to the assignment of a portion of the BLM 102630 R-O-W, by Generator
to EPE in accordance with Article 5.2, Generator shall provide EPE access to the
Interconnection System Upgrades and the portion of the EPE Interconnection
Facilities located within the Facility property boundary to enable EPE to
perform required operation and maintenance activities of these facilities in
accordance with Good Utility Practice. Contemporaneous with the assignment of a
portion of the BLM 102630 R-O-W, Generator grants EPE at no cost to EPE and the
Operating Agent, as applicable, access, easements, or licenses upon, over,
under, and across TRACTS 1 and 2 as delineated on Appendix F that are necessary
for EPE and the Operating Agent, as applicable, and their Agents and
subcontractors to design, procure, construct, install, test, operate, maintain
and repair/replace the EPE Interconnection Facilities and the Interconnection
System Upgrades in accordance with the terms of this Agreement. With respect to
TRACT 2 both before and after the assignment of a portion of BLM 102630 R-O-W,
EPE or Operating Agent shall exercise such access rights without notification of
or supervision by

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  15    

--------------------------------------------------------------------------------

Generator. With respect to TRACT 3 before the assignment of a portion of BLM
102630 R-O-W, EPE shall exercise such access rights without notification of or
supervision by Generator, except for the area inside the Afton Switching
Station, which area will be subject to the notification requirements in the
Afton Generating Plant Operating Procedures. With respect to TRACT 1 both before
and after the assignment of a portion of the BLM 102630 R-O-W EPE or Operating
Agent shall exercise such access rights only with supervision by Generator. EPE
or Operating Agent shall provide Generator reasonable notice under the
circumstances of any request for such supervised access, and Generator and EPE
shall mutually agree upon a date and time of such supervised access and such
agreement shall not be unreasonably withheld or delayed. In addition to the
aforementioned requirement, in exercising such supervised access rights, EPE and
the Operating Agent, as applicable, shall (a) not unreasonably disrupt or
interfere with normal operations of Generator’s business, (b) act in a manner
consistent with Good Utility Practice, and (c) adhere to the safety rules and
procedures established by Generator. Generator shall execute such documents as
EPE and the Operating Agent, as applicable, may reasonably require to enable EPE
or the Operating Agent, as applicable, to establish record evidence of such
access rights. Such access rights shall remain in effect for so long as this
Agreement is in effect.

 

5.6.2 Contemporaneous with the assignment of a portion of the BLM 102630 R-O-W
by Generator to EPE in accordance with Article 5.2, EPE grants, at no cost to
Generator, all access, easements or licenses upon, over, under and across TRACT
3 as delineated on Appendix F that are necessary for Generator and its Agents
and subcontractors to design, procure, construct, install, test, operate,
maintain and repair/replace Generator’s Interconnection Facilities, EPE
Interconnection Facilities, and Facility, as applicable, in accordance with the
terms of this Agreement. Such access rights for Generator’s facilities located
inside the Afton Switching Station shall be exercised by Generator only with
supervision by EPE or the Operating Agent, as applicable. Generator shall
provide EPE or the Operating Agent, as applicable, reasonable notice under the
circumstances of any request for such supervised access to the Afton Switching
Station, and EPE or Operating Agent, as applicable, and Generator shall mutually
agree upon the date and time of such supervised access, such agreement not to be
unreasonably withheld or delayed. In addition to the aforementioned requirement,
in exercising such access rights, Generator shall (a) not unreasonably disrupt
or interfere with normal operations of EPE or the Operating Agent, (b) act in a
manner consistent with Good Utility Practice, and (c) adhere to the safety rules
and procedures established by the Operating Agent and EPE. EPE or the Operating
Agent, as applicable, shall execute such documents as Generator may reasonably
require to enable it to establish record evidence of such access rights. Such
access rights shall remain in effect for so long as this Agreement is in effect.

 

5.6.3 Any Party or its subcontractors performing construction, or other work, on
the property of the other Party shall be responsible for proper housekeeping
during the period the work is being performed and proper clean-up of the
property in a timely fashion after the work is completed.

 

5.7 Course and Completion of Construction.

 

5.7.1 Generator shall promptly notify EPE in writing when the construction of
Generator’s Interconnection Facilities and the EPE Interconnection Facilities is
complete. Likewise, each

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  16    

--------------------------------------------------------------------------------

Party shall promptly notify the other Party in writing when the construction of
the Interconnection System Upgrades is complete.

 

5.7.2 Generator shall keep the Generator’s Interconnection Facilities, the EPE
Interconnection Facilities, Interconnection System Upgrades, and any real or
personal property of EPE related to this interconnection project free and clear
of all Generator, contractor, subcontractor, supplier or materialmen’s liens,
claims and encumbrances arising out of the construction of the Generator’s
Interconnection Facilities, the EPE Interconnection Facilities and
Interconnection System Upgrades. Generator shall provide to EPE lien waivers
from Generator and all such contractors, subcontractors, suppliers or
materialmen before or upon completion of the Generator’s Interconnection
Facilities, the EPE Interconnection Facilities and Interconnection System
Upgrades. In the event that any such lien arising out of the construction of the
Generator’s Interconnection Facilities, the EPE Interconnection Facilities and
Interconnection System Upgrades shall nevertheless be filed or asserted against
the real or personal property of EPE, Generator agrees to take all steps
necessary and proper for the release and discharge of such liens in the manner
allowed under New Mexico law. Generator shall indemnify and hold EPE harmless
against any and all loss, claims, or suits (including costs and attorneys’
fees), for any lien claims asserted or filed by any party on or against EPE’s
real or personal property relating to the construction of Generator’s
Interconnection Facilities, the EPE Interconnection Facilities and the
Interconnection System Upgrades.

 

5.8 Timely Completion.

 

5.8.1 Generator shall use Commercially Reasonable Efforts to design, procure,
construct, install, and test Generator’s Interconnection Facilities and EPE
Interconnection Facilities in accordance with the schedule set forth in Appendix
C, which schedule may be revised from time to time by mutual agreement of the
Parties.

 

5.8.2 Each Party shall use Commercially Reasonable Efforts to design, procure,
construct, install, and test the Interconnection System Upgrades, in accordance
with the schedule set forth in Appendix C, which schedule may be revised from
time to time by mutual agreement of the Parties. EPE shall, at Generator’s
request and expense, take all appropriate actions to accelerate its work under
this Agreement in order to meet the schedule set forth in Appendix C, provided
that Generator authorizes such actions and the costs associated therewith in
advance and pays such costs in accordance with the payment schedule mutually
agreed upon by the Parties.

 

5.8.3 If any of the Interconnection System Upgrades is not reasonably expected
to be completed prior to the Commercial Operation Date of the Facility,
Generator may, at its option, have operating studies performed at its expense to
determine the maximum allowable output of the Facility, based upon the portion
of the Interconnection System Upgrades that is expected to be completed prior to
such Commercial Operation Date and, subject to EPE’s standards and Good Utility
Practice, Generator will be permitted to operate the Facility, provided such
limited operation of the Facility does not adversely affect the safety and
reliability of the EPE Transmission System.

 

5.9

Environmental Compliance and Procedures. The Parties shall comply with (a) all
applicable Environmental Laws in meeting all their obligations under this
Agreement; and (b) all local

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  17    

--------------------------------------------------------------------------------

 

notification and response procedures required for all applicable environmental
and safety matters which affect the ability of the Parties to meet their
respective obligations under this Agreement.

 

5.10 Generator Modeling Data. Generator shall provide the Operating Agent and
EPE with such final modeling data of the Facility and Interconnected Facilities
that reflect final Facility unit data and settings of the generation protection
and control equipment as is reasonably requested by the Operating Agent and EPE
and is necessary for reliable operation of the EPE Transmission System,
including (a) the turbine speed/load controls including the governor; and (b)
the excitation system including the automatic voltage regulator, power system
stabilizer, over-excitation controls and limits, and other controls and limits.
Such modeling data is to be provided in the format of the computer programs
utilized by the Operating Agent and EPE. On the Operation Date, such programs
are: Powerflow-General Electric PSLF; Transient Stability-General Electric PSLF;
Short Circuit-Aspen One Liner.

 

5.11 Equipment Requirements. All equipment shall be of utility grade that meets
or exceeds the quality of the equipment as required by EPE. The trip energy
source for the interconnection breaker shall be of a stored energy type (i.e.,
battery) that will be available under circumstances when the alternating current
source is unavailable. Generator shall ensure that Generator’s Interconnection
Facilities comply with all applicable requirements of the National Electrical
Safety Code, as amended from time to time, and/or any Applicable Laws and
Regulations.

 

5.12 Required Diagrams. Generator shall maintain the following equipment at
locations approved by the Operating Agent, which approval shall not be
unreasonably withheld or denied: (a) a permanent and weatherproof one-line
electrical diagram of the Facility located at the Facility site; and (b) a
permanent and weatherproof map of the Facility showing the location of all major
equipment. EPE shall maintain, at locations approved by Generator, which
approval shall not be unreasonably withheld or denied, a permanent and
weatherproof one-line diagram of the EPE Interconnection Facilities.

 

5.13 Required Personnel Information. No later than fifteen (15) Business Days
after the Effective Date, Generator shall provide the Operating Agent the names
and current telephone numbers of at least two (2) persons who are authorized to
provide access to the Facility and who have authority to make decisions
regarding the Facility, Generator’s Interconnection Facilities, and Generator’s
operations. Generator shall keep the names and telephone listings current at all
times during the term of this Agreement.

 

5.14 Use of Afton Switching Station by Third Parties.

 

5.14.1 If required by Applicable Laws and Regulations, or if EPE in its sole
discretion allows one or more third parties to use Afton Switching Station, or
any part thereof, and such use decreases the capacity of Afton Switching Station
available to the Facility, or otherwise causes any detriment to the Facility or
to Generator, or benefits any party (including EPE) other than Generator, then
Generator and such third party (parties) shall negotiate in good faith to
determine the appropriate compensation due to Generator as a result of such
third party use and to determine the appropriate allocation of the annual
carrying charges. EPE shall include a provision comparable to this Article
5.14.1 in its agreements with third party users providing for

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  18    

--------------------------------------------------------------------------------

such third party users to participate in such negotiations. In any case, the
Generator shall only be entitled to receive a reduction in charges under this
Agreement equal to the amount of charges allocated to the third party user(s)
(with a corresponding reduction in credits against the cost of transmission
service in accordance with Article 5.4.10). If the issue of such compensation or
allocation cannot be resolved through such negotiations, it shall be submitted
to the FERC for resolution.

 

5.14.2 If one or more third parties are to use Afton Switching Station in
accordance with this Article 5.14 and the Operating Agent determines that, as a
result, Good Utility Practice requires that modifications be made to the
Interconnected Facilities, the Operating Agent must comply with notification and
scheduling provisions of Article 5.15. In no event shall Generator be
responsible for the costs of any such modifications.

 

5.14.3 If it is determined by the FERC or any Governmental Authority that any
costs associated with the design, engineering, construction, procurement, or
installation of any of the EPE Interconnection Facilities or Interconnection
System Upgrades paid for by Generator pursuant to this Agreement are not
Generator’s responsibility, EPE shall refund to Generator, no later than sixty
(60) days after the determination by FERC or any Governmental Authority, that
portion of the costs paid by Generator that are included in the transmission
revenue requirement or were paid by Generator and that have not been reflected
in credits, if any, against the cost of transmission service from the Facility,
with interest at the Interest Rate.

 

5.15 Interconnected Facilities and Facility Additions, Modifications or
Replacements.

 

5.15.1 EPE Interconnection Facilities and EPE Transmission System.

 

  (a) Any additions to, modifications to, or replacements of the EPE
Interconnection Facilities must be constructed and operated in accordance with
Good Utility Practice. If such additions, modifications, or replacements made
after the Operation Date will likely cause a material adverse effect on
Generator’s operation of the Facility, the Operating Agent will, except in cases
of Emergency, provide a minimum of thirty (30) days’ advance written notice to
Generator prior to undertaking such additions, modifications, or replacements.
In the written notice, the Operating Agent must advise Generator when such
additions, modifications or replacements are expected to be made; the time
period expected to be required to complete such additions, modifications or
replacements; and whether, if known, such additions, modifications or
replacements are expected to interrupt or curtail the flow of electricity from
the Facility. The Parties shall mutually agree in advance upon a schedule for
such additions, modifications or replacements, such agreement not to be
unreasonably withheld or delayed.

 

  (b)

Unless required by Applicable Laws and Regulations, Generator shall not be
responsible for the costs of any additions, modifications, or replacements made
to the EPE Transmission System by EPE, in its sole

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  19    

--------------------------------------------------------------------------------

 

discretion, after the Operation Date in order to facilitate (a) the
interconnection of a third party or (b) the provision of transmission service to
or for a third party. Generator shall, however, be responsible for all costs of
any additions, modifications, or replacements made to the EPE Transmission
System as a result of any additions, modifications, or replacements made by
Generator to the Facility.

 

  (c) If any additions, modifications, or replacements to the EPE
Interconnection Facilities (other than those caused by additions, modifications,
or replacements made by the Generator to the Facility) cause a material adverse
effect on the Generator’s Interconnection Facilities or the interconnection of
the Facility (via Generator’s Interconnection Facilities) to the EPE
Transmission System at the Afton Switching Station, EPE shall be responsible, at
its sole cost and expense, for all actions necessary to mitigate such effect on
the interconnection (“Mitigation Actions”) and, if necessary, to promptly and
expeditiously re-establish the connection of the Facility (via Generator’s
Interconnection Facilities) with the EPE Transmission System at the Afton
Switching Station, in accordance with Good Utility Practice and/or secure such
services as are necessary to deliver the capacity and energy to the
Interconnection Point in accordance with Good Utility Practice (“Reconnection
Activities”); provided, however, that, if EPE is required by Applicable Laws and
Regulations or the RTO (if applicable) to undertake such additions,
modifications, or replacements, EPE shall not be required to undertake any
Mitigation Action or Reconnection Activity.

 

5.15.2 Generator’s Interconnection Facilities and Facility. Except for changes
deemed by the Operating Agent to be necessary to ensure the protection and
safety of a Party’s personnel and the safety and reliability of a Party’s
property, Generator shall not be required to make any modifications to the
Facility or Generator’s Interconnection Facilities unless such change is
consistent with Good Utility Practice and required (i) as a result of a change
in the Facility or (ii) as a result of a change on the EPE Transmission System
which is required by Good Utility Practice. Generator shall not be responsible
for the cost of any such modifications and the cost of operating and maintaining
such modifications unless required by Applicable Laws and Regulations or such
modifications are required as a result of a change in the Facility made by
Generator.

 

Article VI

ACCEPTANCE AND PERFORMANCE TESTING

AND COMPLIANCE MONITORING

 

6.1 Responsibility for Testing.

 

6.1.1 Prior to the Operation Date, Generator shall perform all testing of the
Facility and Generator’s Interconnection Facilities required by the RTO (if
applicable), NERC and WSCC. EPE or the Operating Agent, as applicable, may
require Generator to perform additional testing

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  20    

--------------------------------------------------------------------------------

whenever EPE or the Operating Agent reasonably determines that such additional
testing is required for reliability reasons. All testing shall be successfully
completed before the Operation Date. Testing subsequent to the Operation Date
shall be performed in compliance with the frequency requirements of NERC, WSCC,
and the RTO (if applicable) and any other reliability requirements of any other
organization/entity with responsibility for electricity and whose requirements
Generator is obligated to follow. All such tests shall be performed to the
specifications of NERC, WSCC, the RTO (if applicable), or any other
specifications required by new or other reliability organizations with
responsibility for electricity and whose requirements Generator is obligated to
follow. Generator shall inform EPE or the Operating Agent, as applicable, in
advance (whenever possible, a minimum of five (5) Business Days) when such tests
are scheduled to occur, and EPE shall have the right to have representatives
observe and monitor such tests. The cost of all such testing shall be borne by
Generator.

 

6.1.2 Prior to the Operation Date, EPE or the Operating Agent, as applicable,
shall perform all testing of the EPE Interconnection Facilities and the
Interconnection System Upgrades required by NERC, WSCC and the RTO (if
applicable). All testing shall be successfully completed before the Operation
Date. After the Operation Date, the Operating Agent and EPE shall test their
facilities at their own expense (or, in the case of the Operating Agent, the EPE
Interconnection Facilities at the expense of EPE) in accordance with Good
Utility Practice. Generator shall have the right, upon five (5) Business Days’
advance written notice to the Operating Agent or EPE to require additional
testing of such entity’s facilities, at Generator’s expense, if Generator
reasonably believes that such entity’s facilities are causing a material adverse
effect on the operation of the Facility or Generator’s Interconnection
Facilities, or as may be otherwise prudent in accordance with Good Utility
Practice, and shall have the right to be present during such tests.

 

6.2 Responsibility for Modifications Following Testing. Based upon the
pre-operational testing, Generator is responsible for making any modifications
necessary to ensure the safe and reliable operation of Generator’s
Interconnection Facilities and the EPE Interconnection Facilities in accordance
with Good Utility Practice; EPE is responsible for making any modifications
necessary to ensure the safe and reliable operation of the Interconnection
System Upgrades in accordance with Good Utility Practice. The costs of all such
modifications are to be borne by Generator, except to the extent the
modifications are required as a result of the sole negligence or willful
misconduct of EPE, or any Agent of EPE.

 

6.3 Documentation of Results to EPE or the Operating Agent. Generator shall
provide EPE or the Operating Agent, as applicable, with necessary documentation
of all test results for all tests performed pursuant to Article 6.1.1. The
documentation shall be, at a minimum, that required to conform with any RTO,
NERC or WSCC requirements.

 

6.4 Facility Certification. Generator shall comply with any facility
certification requirements of NERC, WSCC, and the RTO (if applicable).

 

6.5 Transmission Service During Testing. Generator has sole responsibility to
make necessary arrangements under the EPE OATT to procure any transmission
service over the EPE Transmission System that may be required to accommodate the
testing procedures of the Facility.

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  21    

--------------------------------------------------------------------------------

6.6 EPE Inspection Rights. EPE (which, for the purposes of this Article 6.6,
shall be deemed to include the Operating Agent) shall have the right, but shall
have no obligation or responsibility, to: (a) observe Generator’s tests and/or
inspection of any of Generator’s Protective Equipment; (b) review the settings
of Generator’s Protective Equipment; and (c) review Generator’s maintenance
records relative to the Generator’s Protective Equipment. EPE may exercise the
foregoing rights from time to time as it deems necessary upon five (5) Business
Days’ written notice to Generator. However, the exercise or non-exercise by EPE
of any of the foregoing rights of observation, review or inspection shall be
construed neither as an endorsement or confirmation of any aspect, feature,
element, or condition of the Facility or Generator’s Protective Equipment or the
operation thereof, nor as a warranty as to the fitness, safety, durability, or
reliability of same.

 

6.7 Generator Inspection Rights. Generator, upon five (5) Business Days’ advance
written notice to the Operating Agent has the right, but not the obligation, to
inspect or observe the operation and maintenance activities, equipment tests,
installation, construction, or other modifications to the EPE Interconnection
Facilities which could cause a material adverse effect on Generator’s
operations. However, the exercise or non-exercise by Generator of any of the
foregoing rights of observation, review or inspection shall be construed neither
as an endorsement or confirmation of any aspect, feature, element, or condition
of the EPE Interconnection Facilities or the operation thereof, nor as a
warranty as to the fitness, safety, durability, or reliability of same.

 

6.8 EPE’s Reviews, Inspections, and Approvals. EPE’s or Operating Agent’s
review, inspection, and approval, related to the Generator’s Interconnection
Facilities and EPE’s Interconnection Facilities required under this Agreement
shall not be unreasonably withheld or delayed, and will be limited to the
purpose of ensuring the safety, reliability, protection and control of the EPE
Transmission System.

 

Article VII

INTERCONNECTION FACILITY COSTS AND BILLING

 

7.1 Interconnection Construction Completion and Cost.

 

7.1.1 Notification of Delay. If any event occurs that will materially affect the
time for completion of the Interconnection System Upgrades, or the ability to
complete them, the Party responsible for the construction of the affected
portion of the Interconnection System Upgrades shall, within five (5) Business
Days of its knowledge of any such event, notify the other Party . In such
circumstances, the responsible Party shall, within ten (10) Business Days of
notifying the other Party of such an event and corresponding delay, convene a
technical meeting with the other Party to evaluate the alternatives available to
the other Party. The responsible Party also shall make available to the other
Party all studies and work papers related to the event and corresponding delay,
including all information that is in the responsible Party’s possession that is
reasonably needed by the other Party to evaluate alternatives.

 

7.1.2 Cost Estimate. Pursuant to Article 5.4.5 and delineated in Exhibit B and
subject to audit by EPE pursuant to Article 7.1.3 below, the Parties have
established the cost to design,

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  22    

--------------------------------------------------------------------------------

engineer, procure equipment, and construct the Interconnection System Upgrades
and the EPE Interconnection Facilities.

 

7.1.3 Audit of Cost. Each Party shall have the right to receive such cost
information as is reasonably necessary to verify the cost of the Interconnection
System Upgrades and the EPE Interconnection Facilities constructed by the other
Party and that such cost was incurred in accordance with Good Utility Practice.
EPE shall have the right to receive such cost information as is reasonably
necessary to verify the cost of Generator’s activities associated with the
Interconnection System Upgrades and the EPE Interconnection Facilities and that
such costs were incurred in accordance with Good Utility Practice. Each Party
shall have the right to audit (a) the other Party’s accounts and records
pertaining to the Interconnection System Upgrades and the EPE Interconnection
Facilities, at the offices where such accounts and records are maintained,
provided at least seven (7) Business Days’ notice is given prior to any audit,
and provided further that the audit shall be limited to those portions of such
accounts and records that relate to services provided under this Agreement.
Costs incurred or billed pursuant to this Agreement for the design, engineering,
procurement of equipment, and construction of the Interconnection System
Upgrades and the EPE Interconnection Facilities, and the review and approval of
the EPE Interconnection Facilities shall be subject to audit for a period of one
(1) year following the issuance of a final cost invoice (in the case of costs
billed by EPE), or a final statement of costs incurred (in the case of costs
incurred by Generator), in accordance with Article 7.2.2. All other costs
incurred or billed pursuant to this Agreement shall be subject to audit for a
period of one (1) year after the date the bill was rendered. Generator and EPE
shall keep records and data related to all costs billed or incurred under this
Agreement for a period equivalent to the audit periods described in this Article
7.1.3. As a result of the audit, adjustments may be made to the costs
established in Exhibit B for the EPE Interconnection Facilities and the
Interconnection System Upgrades so that the final audited costs match the costs
established in Exhibit B. It shall be the Operating Committee responsibility to
reconcile the final audited costs with the costs established in Exhibit B.

 

7.2 Invoices and Payments.

 

7.2.1 Monthly Statements.

 

  (a)

EPE shall render to Generator monthly statements for EPE’s costs for review and
approval activities for the EPE Interconnection Facilities, and EPE’s costs for
the Interconnection System Upgrades on the EPE Transmission System by certified
mail, facsimile or other acceptable means conforming to the provisions of
Article 30.9. Such statements shall set forth in reasonable detail any costs
incurred by or on behalf of EPE or other charges or amounts payable by Generator
under the terms of this Agreement for the period covered thereby in connection
with the EPE Interconnection Facilities and Interconnection System Upgrades.
Generator shall make payment of the amount shown to be due to EPE by wire
transfer to an account specified by EPE not later than the thirtieth (30th) day
after receipt of the statement, unless such day is not a Business Day, in which
case Generator shall make payment on the next Business Day. All such payments
shall be deemed to be made when

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  23    

--------------------------------------------------------------------------------

 

said wire transfer is received by EPE. Overdue payments shall accrue interest
daily at the then-current Interest Rate from the due date of such unpaid amount
until the date paid.

 

  (b) Consistent with Articles 5.4.3 and 13.1, EPE is responsible for the
maintenance, repair, and replacement of the EPE Interconnection Facilities
following installation. Generator is responsible for all costs incurred by EPE
for such activities. EPE, as required, shall invoice Generator for any EPE
incurred costs associated with any maintenance, repair, and replacement of the
EPE Interconnection Facilities. Such invoice shall provide Generator with
reasonable detail of the actual costs incurred by EPE. Generator shall make
payment of the amount shown to be due to EPE by wire transfer to an account
specified by EPE not later than the thirtieth (30th) day after receipt of the
statement, unless such day is not a Business Day, in which case Generator shall
make payment on the next Business Day. All such payments shall be deemed to be
made when said wire transfer is received by EPE. Overdue payments shall accrue
interest daily at the then-current Interest Rate from the due date of such
unpaid amount until the date paid.

 

7.2.2 Invoice/Statement of Final Cost.

 

  (a) Within nine (9) months after the Effective Date, EPE shall provide an
invoice of the final costs associated with EPE’s review and approval of the EPE
Interconnection Facilities and final costs of the Interconnection System
Upgrades and the net amount due, if any, from Generator allowing for any
payments made by Generator pursuant to this Agreement. The final cost invoice
shall set forth in reasonable detail the actual costs incurred by or on behalf
of EPE in reviewing, approving, designing, procuring, constructing, installing
and testing the EPE Interconnection Facilities, and the Interconnection System
Upgrades, and shall set forth such costs in sufficient detail to enable
Generator to compare the actual costs with the estimates and to ascertain
deviations, if any, from the cost estimates. Generator shall reimburse EPE for
the amount of such invoice within thirty (30) days after receipt of such
invoice, unless such day is not a Business Day, in which case Generator shall
make payment on the next Business Day. To the extent that the estimated costs
for the Interconnection System Upgrades already paid by Generator exceed the
final, actual costs that Generator is obligated to pay hereunder for the
Interconnection System Upgrades, EPE shall refund to Generator an amount equal
to the difference within thirty (30) days of the issuance of the invoice of the
final cost.

 

  (b)

Within nine (9) months after the Effective Date, Generator shall provide a
statement of the final costs it incurred for the EPE Interconnection Facilities
and the Interconnection System Upgrades. The final statement shall set forth in
reasonable detail the actual costs incurred by or on

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  24    

--------------------------------------------------------------------------------

 

behalf of Generator in designing, procuring, constructing, installing and
testing the EPE Interconnection Facilities and the Interconnection System
Upgrades.

 

7.2.3 Failure of Payment. In the event Generator fails, for any reason other
than a billing dispute as described below, to make payment to EPE on or before
the due date as described in Article 7.2.1(a) above, an event of breach by
Generator shall be deemed to exist under Article 22.2(a). In the event of a
billing dispute between EPE and Generator, EPE shall continue to perform its
responsibilities under this Agreement and Generator shall not be deemed to have
committed an event of breach under Article 22.2(a), as long as Generator (a)
continues to make all payments not in dispute, and (b) upon request of EPE, pays
into an independent escrow account the portion of the invoice in dispute,
pending resolution of such dispute.

 

7.2.4 Billing Disputes.

 

  (a) Generator may, in good faith, challenge the correctness of any bill
rendered under this Agreement for the design, engineering, procurement, and
construction of the Interconnection System Upgrades and for the review and
approval of the EPE Interconnection Facilities no later than one (1) year
following the issuance of a final cost invoice in accordance with Article
7.2.2(a). Generator may, in good faith, challenge the correctness of any other
bill rendered under this Agreement no later than one (1) year after the date the
bill was rendered. In the event that Generator challenges a bill or a portion
prior to date on which payment is due for such bill, Generator shall nonetheless
pay the portion of the bill that is not disputed when due, with notice given to
the entity that rendered the bill at that time. Any challenge to a bill shall be
in writing and shall state the specific basis for such challenge. If it is
subsequently agreed or determined under Article XXIX that an adjustment is
appropriate, such adjustment shall be made in accordance with Article 7.3.

 

  (b) EPE may, in good faith, challenge the correctness of any statement
rendered by the Generator under this Agreement for the costs incurred in
connection with the design, engineering, procurement, and construction of the
EPE Interconnection Facilities and the Interconnection System Upgrades no later
than one (1) year following the issuance of a final cost statement in accordance
with Article 7.2.2(b). If it is subsequently agreed or determined under Article
XXIX that an adjustment is appropriate, such adjustment shall be made to the
final statement of costs incurred prepared by the Generator in accordance with
Article 7.2.2(b).

 

  (c)

Generator may, in good faith, challenge the correctness of any bill rendered
pursuant to Article 7.2.1 (b) no later than one (1) year following the issuance
of any monthly bill. In the event that Generator challenges a bill or a portion
prior to the date on which payment is due

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  25    

--------------------------------------------------------------------------------

 

for such bill, Generator shall nonetheless pay the portion of the bill that is
not disputed when due, with notice given to the entity that rendered the bill at
that time. Any challenge to a bill shall be in writing and shall state the
specific basis for such challenge. If it is subsequently agreed or determined
under Article XXIX that an adjustment is appropriate, such adjustment shall be
made in accordance with Article 7.3.

 

7.3 Adjustments. In the event adjustments or corrections to monthly statements
rendered by EPE under Article 7.2.1 are required as a result of errors in
computation or billing, the entity that rendered the monthly statement shall
promptly recompute amounts due hereunder and otherwise correct any errors in
such statements. If the total amount, as recomputed, due from Generator is less
than the total amount due as previously computed, and payment of the previously
computed amount has been made to EPE, EPE shall pay the difference to Generator
within thirty (30) days after correction of the erroneous invoice(s), together
with interest at the Interest Rate. If the total amount, as recomputed, due from
Generator is more than the total amount due as previously computed, and payment
of the previously computed amount has been made to EPE, EPE shall invoice the
difference to Generator according to the terms of Article 7.2; provided,
however, that no adjustment for any statement or payment will be made unless
objection to the accuracy thereof was made within the time frames described in
Article 7.2.4; and provided further that this Article 7.3 will survive any
termination of the Agreement for a period of one (1) year from the date of such
termination for the purpose of such statement and payment objections.

 

7.4 Payment Not a Waiver. Payment of invoices by Generator shall not constitute
a waiver of any rights or claims Generator may have under this Agreement.

 

7.5 Income Taxes. The costs associated with the Interconnection System Upgrades
were incurred by Generator and pursuant to Article 5.4.10, Generator is entitled
to Transmission Service Credits equal to those costs. Pursuant to Article 5.4.4,
Interconnection System Upgrades are owned by EPE. As such, the Interconnection
System Upgrades are part of the EPE Transmission System.

 

In the event the Internal Revenue Service (“IRS”) assesses income taxes against
EPE as a result of this transaction pursuant to the terms and conditions of this
Agreement (“ITCC Tax”), then Generator shall be solely responsible for and shall
indemnify and hold EPE harmless from any such ITCC Tax and any penalties and
interest assessed by the IRS relating to the ITCC Tax. Generator shall pay EPE
such ITCC Tax, penalties and interest upon demand after receipt of written
evidence of the assessment of such taxes. In the event Generator is required to
pay the ITCC Tax, Generator shall be entitled to Transmission Service Credits
equal to the amount of the ITCC Tax, penalties and interest actually paid plus
any interest accrued thereon. For purposes of this Article 7.5, Generator’s
liability for ITCC Tax shall be calculated on a fully grossed-up basis by taking
into account EPE’s Federal and state composite tax rate at the time of the
payments or property transfers based on the highest marginal tax rates then in
effect (the “Composite Tax Rate”), less the present value (based on a discount
rate of 8%) of the product obtained by multiplying (i) the annual tax
depreciation deductions to which EPE would be entitled over the life of the
Interconnection System Upgrades by (ii) the Composite Tax Rate.

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  26    

--------------------------------------------------------------------------------

In the event the IRS assesses ITCC Tax against EPE, and Generator pays such tax
to EPE in accordance with the preceding paragraph, Generator shall have the
right and option to request that EPE appeal that portion of EPE’s tax assessment
relating to the ITCC Tax through the appropriate administrative and judicial
process. Generator agrees to notify EPE whether Generator elects to appeal the
tax assessment within thirty (30) days after being notified of the tax
assessment; provided, however, that in no event shall Generator’s notice be
provided to EPE less than ten (10) days before the date that EPE is required to
perfect such appeal. Generator’s failure to give notice to EPE within such time
limits shall be deemed to be an election by Generator not to appeal the tax
assessment. Any such appeal shall be at Generator’s sole cost and expense. EPE
agrees to provide reasonable assistance in such appeal. If, through the
appellate process, it is conclusively determined that EPE is not liable for the
ITCC Tax for the tax years at issue, EPE shall promptly refund to Generator any
amounts paid by Generator to EPE pursuant to this Article 7.5 for such tax years
(with a corresponding reduction in credits to be applied to Generator’s
Transmission Service Credits), with respect to any payment which is determined
to be non-taxable taking into consideration a proportionate allocation of EPE’s
depreciation deductions. If the amount to be refunded to Generator in accordance
with the immediately preceding sentence is greater than the remaining balance of
Transmission Service Credits (including the amounts relating to the ITCC Tax
paid by Generator to EPE), then the amount which EPE shall be required to refund
to Generator shall be reduced to equal the remaining balance of Transmission
Service Credits, which shall be reduced to zero following such refund.

 

For purposes of this Article 7.5, all references to the IRS shall include
applicable state income taxing authorities with jurisdiction over EPE.

 

Article VIII

OPERATIONS

 

8.1 General. With respect to their performance under this Agreement, the
Operating Agent, EPE, and Generator shall comply with all applicable manuals,
standards, and guidelines of NERC, WSCC, RTO (if applicable), or any successor
agency.

 

8.2 Obligations of Operating Agent. Operating Agent shall operate and control
the EPE Interconnection Facilities, (a) in a safe and reliable manner, (b) in
accordance with Good Utility Practice, and (c) in accordance with the terms and
conditions of this Agreement. In the event of any conflict between the terms and
conditions of this Agreement and applicable planning, operational, and/or
reliability criteria, protocols, and directives of the RTO (if applicable), NERC
and WSCC, the applicable planning, operational, and/or reliability criteria,
protocols, and directives of the RTO (if applicable), NERC and WSCC shall
govern.

 

8.3 Obligations of Generator.

 

8.3.1 Synchronization. Generator shall assume all responsibility and cost for
properly synchronizing the Facility for operation with the EPE Transmission
System. Synchronizing of generation will be coordinated with the Operating
Agent’s SOCC.

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  27    

--------------------------------------------------------------------------------

8.3.2 Operation and Control. Generator shall operate and control the Facility
and Generator’s Interconnection Facilities (a) in a safe and reliable manner,
(b) in accordance with Good Utility Practice, and (c) in accordance with the
terms and conditions of this Agreement. In the event of any conflict between the
terms and conditions of this Agreement and applicable planning, operational,
and/or reliability criteria, protocols, and directives of the RTO (if
applicable), NERC and WSCC, the applicable planning, operational, and/or
reliability criteria, protocols, and directives of the RTO (if applicable), NERC
and WSCC shall govern.

 

8.3.3 Control Area Requirements. Nothing in this Agreement should be construed
as creating any obligation that Generator operate the Facility as part of the
EPE Control Area. If the Facility is not operated as part of the EPE Control
Area, in no event shall this Agreement prohibit, prevent, or otherwise limit the
ability of Generator to operate the Facility in accordance with the requirements
of the control area of which it is part, and the Parties shall negotiate in good
faith to amend this Agreement as necessary or appropriate.

 

8.4 Reliability Criteria.

 

8.4.1 Power System Stabilizers (PSS). Generator shall install and operate PSS on
generators in accordance with the WSCC criteria, the RMS criteria and any other
requirement that the Operating Agent is obligated to follow.

 

8.4.2 Automatic Voltage Regulation (AVR). Generator shall install and operate
AVR in accordance with all requirements of WSCC, the RMS criteria and any other
requirement that the Operating Agent is obligated to follow. Each interconnected
unit shall have AVR and such AVR shall be tuned in accordance with Institute of
Electronics and Electrical Engineers (“IEEE”) standard 421 or its successor.
Voltage regulator controls and limit functions (such as over- and
under-excitation and volts/hertz limiters) shall coordinate with the Facility’s
generator’s short duration capabilities and protective relays. AVRs must be
continuously acting solid state analog or digital. Tuning shall be in accordance
with the WSCC criteria and standards. Tuning results shall be included in
commissioning test reports provided to the Operating Agent or EPE, as
applicable.

 

8.4.3 Governors. Generator shall operate all governors in accordance with
requirements of NERC and the WSCC, including any requirements for Governor Droop
settings. To provide equitable and coordinated system response to
load/generation imbalances, governors shall not be blocked or operated with
excessive dead-bands.

 

8.5

Quality of Power. Generator shall ensure that the Facility’s quality of power at
the Interconnected Facilities adheres to the standards set by NERC, WSCC, the
RTO (if applicable) and the American National Standards Institute (“ANSI”). In
turn, the Operating Agent shall ensure that quality of power at the
Interconnected Facilities adheres to the standards set by NERC, WSCC, the RTO
(if applicable) and ANSI. To the extent that the Operating Agent determines that
the Afton Switching Station is adversely affected by flicker or harmonic
distortion caused by Generator, or EPE determines that the EPE Transmission
System is adversely affected by flicker or harmonic distortion caused by
Generator, Generator shall take the necessary actions to resolve the problem
promptly upon notice from the Operating Agent or EPE. If such actions taken by
Generator do not resolve the problem, the Operating Agent shall

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  28    

--------------------------------------------------------------------------------

 

notify Generator of the continuing problem and may curtail, interrupt or reduce
deliveries of electricity, or disconnect the Facility from the EPE Transmission
System at the Afton Switching Station, in accordance with Good Utility Practice
until the problem is resolved to the satisfaction of the Operating Agent or EPE,
as the case may be.

 

8.6 Protection and System Quality.

 

8.6.1 Facilities. Generator shall, at its expense, install, maintain, and
operate Protective Equipment at the Facility, including such protective and
regulating devices as are required by the RTO (if applicable), NERC, WSCC, or by
order, rule or regulation of any Governmental Authority or as are otherwise
necessary to protect personnel and equipment and to minimize adverse effects to
the Afton Switching Station and EPE’s electric system arising from the Facility.

 

8.6.2 Protective Equipment. Generator agrees that Protective Equipment must be
installed to:

 

  (a) ensure safety of the general public, and personnel of EPE (including in
its capacity as Operating Agent), and Generator;

 

  (b) minimize damage to the Afton Switching Station property and to the
property of the general public, EPE and its customers;

 

  (c) minimize adverse operating conditions on the EPE Transmission System; and

 

  (d) permit Generator to operate the Facility in parallel with the EPE
Transmission System in a safe and efficient manner.

 

The necessary Protective Equipment will be installed in accordance with Articles
5.3.2 and 5.4.

 

8.7 Adjustments. The Operating Agent may require Generator to adjust the real
power output or reactive power from the Facility only for purposes of Emergency
or Abnormal Conditions. The Operating Agent may not, unless the Generator and
Operating Agent agree in writing, require Generator to make such adjustments
based on economic considerations.

 

8.8 Switching and Tagging Procedures.

 

8.8.1 Compliance with Procedures. The Parties shall abide by the Operating
Agent’s switching and tagging rules as the Operating Agent may modify them from
time to time with respect to activities at the Interconnected Facilities and the
Afton Switching Station, and mutually agreed to activities within the Facility.
The Operating Agent shall notify Generator in advance of the Operating Agent’s
switching and tagging rules and any amendments thereto. Generator shall ensure
its personnel are trained and knowledgeable regarding the Operating Agent’s
switching and tagging rules and grounding and isolation procedures.

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  29    

--------------------------------------------------------------------------------

8.8.2 Reclosing. Generator acknowledges that following an electric disturbance,
certain equipment at the Afton Switching Station may reclose in accordance with
Good Utility Practice. The Operating Agent will provide Generator notice, as far
in advance of implementation as is reasonably practical, of the reclosing
practices of the EPE Interconnection Facilities and the Interconnection System
Upgrades, including the Afton Switching Station. The Operating Agent shall
provide Generator all data needed to study the effect of proposed changes to
such reclosing practices and allow a reasonable time period, not to exceed 120
calendar days, for modification of Generator’s Protective Equipment if
necessary. To the extent practicable, Operating Agent will cooperate with
Generator to establish or modify the reclosing angle settings of the Operating
Agent’s reclosing operations to minimize the impact such operations will have on
the EPE Transmission System (including the Afton Switching Station) and the
Facility.

 

Generator shall have sole responsibility for protecting the Facility,
Generator’s Interconnection Facilities and related equipment from any damage
resulting from such reclosure. To the extent not prohibited by Applicable Laws
and Regulations, Generator hereby indemnifies and agrees to hold harmless EPE,
the Operating Agent, and their Agents for, against and from any and all losses,
damages, costs and expenses caused by, resulting from or arising out of (a) any
damage to the Facility, Generator’s Interconnection Facilities or related
equipment to the extent caused by, resulting from, or arising out of any such
reclosure and (b) death of or injury to any person to the extent caused by,
resulting from, or arising out of any impact or effect of such reclosure upon
the Facility, Generator’s Interconnection Facilities, and/or any related
equipment.

 

If, for any reason, the Facility is disconnected from the EPE Transmission
System at the Afton Switching Station (by electric disturbance, line switching,
or otherwise), Operating Agent shall cause the switching device connecting the
Facility to the EPE Transmission System at the Afton Switching Station to become
and remain open and not reclose until the Operating Agent approves the
reclosure.

 

8.9 General Orders. Each Party shall comply with the Operating Agent’s General
Orders, in existence on the Effective Date and as may be modified from time to
time, in the operation of the Interconnected Facilities and the Facility. The
Operating Agent shall provide a written copy of its General Orders upon request
of Generator and thereafter notify Generator of any modifications in the
Operating Agent’s General Orders at least ten (10) days prior to the effective
date of any such modifications.

 

8.10 Generation Alert. The Operating Agent shall issue generation alerts when it
determines that the loss of a generating unit may create a system disturbance.
When advised by the Operating Agent, Generator shall exercise Due Diligence to
suspend non-essential maintenance and operational activities that could lead to
the loss of the Facility during the alerts.

 

Article IX

 

RELIABILITY MANAGEMENT SYSTEM

 

9.1 Purpose. In order to maintain the reliable operation of the transmission
grid, the WSCC Reliability Criteria Agreement sets forth reliability criteria
adopted by the WSCC with which Generator and EPE shall comply.

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  30    

--------------------------------------------------------------------------------

9.2 Compliance. Generator shall comply with the requirements of the WSCC
Reliability Criteria Agreement, including the applicable WSCC reliability
criteria set forth in Section IV of Annex A thereof, and, in the event of
failure to comply, agrees to be subject to the sanctions applicable to such
failure. Such sanctions shall be assessed pursuant to the procedures contained
in the WSCC Reliability Criteria Agreement.

 

9.3 Participant Status. Each of the pertinent provisions of the WSCC Reliability
Criteria Agreement is hereby incorporated by reference into this Article IX as
though fully set forth herein, and Generator shall for all purposes be
considered a “Participant,” as defined in the WSCC Reliability Agreement, and
shall be entitled to all of the rights and privileges and subject to all of the
obligations of a Participant under and in connection with the WSCC Reliability
Criteria Agreement, including the rights, privileges, and obligations set forth
in Sections 5, 6, and 10 of the WSCC Reliability Criteria Agreement.

 

9.4 Payment of Sanctions. Generator shall be responsible for reimbursing EPE for
any monetary sanctions assessed against EPE, to the extent determined to be
attributable to the action or inaction of Generator, by WSCC pursuant to the
WSCC Reliability Criteria Agreement. Generator shall also be responsible for
payment of any monetary sanction assessed against Generator by WSCC pursuant to
the WSCC Reliability Criteria Agreement.

 

9.5 Transfer of Control or Sale of Facility. In any sale or transfer of control
of the Facility or any portion thereof, Generator shall, as a condition of such
sale or transfer of control, require the acquiring party or transferee with
respect to the transferred Facility either to assume the obligations of the
Generator with respect to this Agreement or to enter into an agreement with EPE
imposing on the acquiring party or transferee the same obligations applicable to
Generator pursuant to this Article IX.

 

9.6 Failure to Comply with RMS. In the event Generator fails to comply with the
requirements of the WSCC Reliability Criteria Agreement incorporated herein and,
in the opinion of EPE, endangers the safety or reliability of the EPE
Transmission System, EPE shall have the right, subject to any necessary
regulatory approval, to direct the Operating Agent to disconnect the Facility
from the EPE Transmission System at the Afton Switching Station, and EPE and the
Operating Agent shall have no liability for any damages incurred by Generator or
the Facility as a result of such disconnection. Prior to any proposed
disconnection, the Operating Committee shall meet and the Operating Agent shall
advise the members of the Operating Committee regarding the reasons for the
proposed disconnection.

 

9.7 Publication. Generator consents to the release by the WSCC of information
related to Generator’s compliance with this Agreement only in accordance with
the WSCC Reliability Criteria Agreement.

 

9.8

Third Parties. Except for the rights and obligations between the WSCC and
Generator specified in this Article IX, this Article IX creates contractual
rights and obligations solely between the Parties. Nothing in this Article IX
shall create, as between the Parties or with respect to the WSCC: (a) any
obligation or liability whatsoever (other than as expressly provided in this
Article IX) or (b) any duty or standard of care whatsoever. In addition, nothing
in this Article IX shall create any duty, liability, or standard of care
whatsoever as to any other party. Except

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  31    

--------------------------------------------------------------------------------

 

for the rights, as a third-party beneficiary under this Article IX of the WSCC
against Generator, no third party shall have any rights whatsoever with respect
to enforcement of any provision of this Article IX. The Parties expressly intend
that the WSCC is a third-party beneficiary to this Article IX and the WSCC shall
have the right to seek to enforce against Generator any provision of this
Article IX, provided that specific performance shall be the sole remedy
available to the WSCC pursuant to Article IX and Generator shall not be liable
to the WSCC pursuant to this Article IX for damages of any kind whatsoever
(other than the payment of sanctions to the WSCC, if so construed), whether
direct, compensatory, special, indirect, consequential, or punitive.

 

9.9 Reserved Rights. Nothing in the RMS or the WSCC Reliability Criteria
Agreement shall limit the right of EPE, subject to any necessary regulatory
approvals, to take such other actions to maintain reliability, subject to any
necessary regulatory approval, including disconnection, which EPE may otherwise
be entitled to take.

 

9.10 Termination. The Generator may terminate its obligations pursuant to this
Article IX: (a) if after the effective date of this Agreement, the requirements
of the WSCC Reliability Criteria Agreement applicable to Generator are amended
so as to adversely affect the Generator, provided that Generator gives fifteen
(15) days’ notice of such termination to EPE and the WSCC within forty-five (45)
days of the date of issuance of a FERC order accepting such amendment for
filing, provided further that the forty-five (45) day period within which notice
of termination is required may be extended by the Generator for an additional
forty-five (45) days if the Generator gives written notice to EPE of such
requested extension within the initial forty-five (45) day period; or (b) for
any reason on one (1) year’s written notice to EPE and the WSCC.

 

9.11 Mutual Agreement. This Article IX may be terminated at any time by mutual
agreement of Generator and EPE.

 

9.12 Severability. If one or more provisions of this Article IX shall be
invalid, illegal or unenforceable in any respect, it shall be given effect to
the extent permitted by Applicable Laws and Regulations, and such invalidity,
illegality or unenforceability shall not affect the validity of the other
provisions of this Article IX.

 

Article X

REACTIVE POWER

 

10.1 Obligation to Supply Reactive Power. Generator shall supply reactive power
to the transmission grid in accordance with Good Utility Practice, and shall
respond to requests from the Operating Agent to increase or decrease generator
output voltage in a manner consistent with Generator’s obligation to operate the
Facility, provided such requests are consistent with Good Utility Practice and
are made in order to maintain reactive area support. The Facility shall operate
in accordance with the reactive power requirements as set forth in this
Agreement; provided, however, that such amount shall not exceed the amount
available from the Facility’s equipment in service.

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  32    

--------------------------------------------------------------------------------

10.2 Compensation. The Operating Agent shall compensate Generator for generating
or absorbing reactive power at the specific request of the Operating Agent
outside the power factor design limitation minimum requirement specified in
Article 10.3.1. The Operating Agent shall also compensate Generator for start-up
costs and real power costs if reactive support is requested by the Operating
Agent when the Facility is off-line. Such compensation shall be in accordance
with any applicable FERC tariff or rate schedule filed by Generator and accepted
for filing by FERC. The Operating Agent and EPE reserve the right to oppose any
tariff or rate schedule filed by Generator with FERC.

 

10.3 Reactive Power Standards.

 

10.3.1 Composite Power Delivery. The Facility power factor design limitation
minimum requirement shall be a reactive power capability sufficient to provide a
composite power delivery at the Interconnection Point at a power factor between
95% lagging and 95% leading. Under normal real-time operating conditions,
Generator shall operate the Facility to maintain a voltage schedule at the
Interconnection Point as prescribed by the Operating Agent within the Facility’s
power factor design limitation minimum requirement, provided such schedule is
consistent with Good Utility Practice, and necessary to maintain reactive
support on the transmission grid. In the event that the voltage schedule at the
Interconnection Point cannot be or is not maintained within such requirement,
the Operating Agent may request that the Facility be operated (within the design
limitations of the equipment in service at that time) up to the maximum
available reactive power output (measured in mega-volt ampere reactance
(“MVAR”)) in order to achieve the prescribed voltage schedule; provided,
however, that the Operating Agent has equitably coordinated such requests with
other generating facilities and other reactive power compensation resources in
the affected area in order to achieve the prescribed voltage schedule. Generator
shall promptly comply with all such requests made by the Operating Agent and
shall be compensated as provided for in Article 10.2.

 

10.3.2 Compliance. In the event that under normal transmission system operating
conditions, the Facility is unable to consistently maintain a reactive power
capability within the power factor design limitation minimum requirement,
Generator shall take appropriate actions to comply with such standards,
including, if necessary, the installation of static and/or dynamic reactive
power compensating devices.

 

10.3.3 Records. Records of requests made to Generator by the Operating Agent,
and records indicating actual responses to such requests, shall be maintained by
the Operating Agent and subject to a third party independent audit at
Generator’s request and expense. Any request for an audit by Generator shall be
made in accordance with Article 7.1.3.

 

10.4 Failure to Supply Reactive Power. To the extent that Generator fails to
operate the Facility in accordance with this Article X and Generator has not
taken any action pursuant to Article 10.3.2, the Operating Agent may, after
three (3) days’ notice to Generator, take any necessary actions to remedy
Generator’s default, at Generator’s expense, including requiring the
installation of capacitor banks or other reactive compensation equipment
required to ensure the proper voltage or reactive power supply at the Facility.

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  33    

--------------------------------------------------------------------------------

Article XI

OUTAGES, INTERRUPTIONS, AND DISCONNECTIONS

 

11.1 Outage Scheduling. On or before January 1st of each year, or such other
date mutually acceptable to the Operating Agent and Generator, each of the
foregoing shall, subject to Article 3.7, provide to the other a non-binding
preliminary maintenance schedule for the upcoming calendar year for the EPE
Interconnection Facilities and Facility. The Operating Agent and Generator
shall, subject to Article 3.7, each provide the other with timely non-binding
updates to such schedules to reflect any significant changes.

 

11.2 Scheduled Maintenance and Coordination. To the extent practicable, the
Operating Agent shall schedule any testing, shutdown, or withdrawal of the EPE
Interconnection Facilities to coincide with Generator’s scheduled outages or, if
not possible, during times acceptable to the Generator. The Operating Agent
shall, subject to Article 3.7, notify Generator in advance of any such testing,
shutdown, or withdrawal of facilities and the schedule for maintenance as well
as any changes in the schedule. The Operating Agent shall restore the EPE
Interconnection Facilities to service as quickly as possible in accordance with
Good Utility Practice.

 

11.3 Other Maintenance and Coordination. To the extent that Generator desires
EPE or the Operating Agent to perform maintenance during a time period other
than a scheduled outage, EPE and the Operating Agent shall, subject to the EPE
OATT, use Commercially Reasonable Efforts to meet Generator’s request; provided,
however, that such maintenance will not have a material adverse economic impact
upon EPE or the customers of the EPE Transmission System. If EPE determines, in
the exercise of its reasonable judgment, that Generator’s request would have a
material adverse economic impact upon EPE or the customers of the EPE
Transmission System, but Generator is willing to reimburse EPE for any costs
incurred by it, EPE shall use Commercially Reasonable Efforts to comply with
Generator’s request.

 

11.4 Unplanned Outages. In the event of an unplanned outage of a Party’s
facility (including the Facility) that adversely affects the other Party’s
facilities, the Party that owns or controls the facility that is out of service
shall use Commercially Reasonable Efforts to promptly restore that facility to
service in accordance with Good Utility Practice and, subject to Article 3.7, to
promptly notify the other Party as to the expected duration of the unplanned
outage and, to the extent known, the reason therefor.

 

11.5 Disconnection.

 

11.5.1 Disconnection during Underfrequency Load Shed Event. The Parties shall at
all times comply with NERC, WSCC, and RTO (if applicable) requirements. NERC
planning criteria require the interconnected WSCC Grid frequency be maintained
between 59.95 Hz and 60.05 Hz. WSCC has an off-nominal frequency program to
which the EPE Transmission System adheres and all generators must also comply.
In the event of an underfrequency system disturbance, the EPE Transmission
System is designed to automatically activate a multi-tiered load shed program.
Generator shall coordinate underfrequency relay set points for the Facility as
determined by the Operating Committee, consistent with WSCC criteria.

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  34    

--------------------------------------------------------------------------------

11.5.2 Disconnection after Agreement Terminates. Upon termination of this
Agreement, the Operating Agent shall disconnect the Facility from the EPE
Transmission System at the Afton Switching Station in accordance with the
disconnection plan adopted pursuant to Article 23.4.

 

11.6 Continuity of Service. Notwithstanding any other provision of this
Agreement, the Operating Agent shall not be obligated to accept, and the
Operating Agent may require Generator to curtail, interrupt or reduce, delivery
of energy if such delivery of energy impairs EPE’s ability to construct,
install, repair, replace or remove any of its equipment or any part of its
system in a safe and reliable manner or if the Operating Agent determines that
curtailment, interruption or reduction is necessary to prevent, mitigate, or
remedy an Emergency or for any reason otherwise permitted by Applicable Laws and
Regulations. The Parties shall coordinate, and if necessary negotiate in good
faith, the timing of such curtailments, interruptions, or reductions with
respect to maintenance, investigation or inspection of any of EPE’s equipment or
system consistent with the terms and conditions of this Agreement. Except in
case of Emergency, in order not to interfere unreasonably with Generator’s
operations, the Operating Agent shall give Generator reasonable prior notice of
any proposed curtailment, interruption or reduction, the reason(s) for its
occurrence, and, if it is known, its expected duration. With respect to any
curtailment, interruption or reduction permitted under this Article 11.6, the
Operating Agent agrees that: (a) the curtailment, interruption, or reduction
shall continue only for so long as reasonably necessary under Good Utility
Practice; (b) when the curtailment, interruption, or reduction must be made
under circumstances which do not allow for advance notice, the Operating Agent
will notify Generator by telephone as soon as practicable of the reasons for the
curtailment, interruption, or reduction and, if known, its expected duration;
and (c) Operating Agent will compensate Generator, except for reductions,
interruptions or curtailments under the applicable OATT, pursuant to mutually
agreed terms or pursuant to any applicable FERC-accepted tariff or rate schedule
filed by Generator.

 

Article XII

EMERGENCY AND ABNORMAL CONDITION PROCEDURES

 

12.1

Emergency. During an Emergency as declared by the Operating Agent, in its sole
discretion and consistent with Good Utility Practice, or the Security
Coordinator as appointed by WSCC for the Operating Agent’s region, the Operating
Agent has the sole discretion to direct Generator to increase or decrease real
power production (measured in MW) and/or reactive power production (measured in
MVAR), within the design and operational limitations of the Facility equipment
in service at the time. The Operating Agent shall have sole discretion,
exercised in accordance with Good Utility Practice, to determine that: (a) the
transmission grid security is threatened, and (b) any generator(s) connected to
the transmission grid must increase or decrease real power and/or reactive power
production. Generator shall follow the Operating Agent’s orders and directives
concerning Facility real power and/or reactive power output within the design
limitations of the Facility’s equipment in service at the time. The Operating
Agent shall restore the transmission system conditions to normal as quickly as
possible to alleviate any such Emergency. The Operating Agent shall reasonably
allocate the responsibility to provide real power and/or reactive power support
to the transmission system during an Emergency on an equitable,
non-discriminatory basis with respect to all generating units and other reactive
compensation resources available to the Operating Agent. The Operating Agent, or
any other Party as applicable, will compensate Generator, for a change in real
power output

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  35    

--------------------------------------------------------------------------------

 

in compliance with Operating Agent’s directive, except for reductions,
interruptions or curtailment under the applicable OATT, pursuant to mutually
agreed terms or pursuant to any applicable FERC-accepted tariff or rate schedule
filed by Generator. The Operating Agent, or any other Party as applicable, will
compensate Generator for a change in reactive power production pursuant to the
terms and conditions of Article X.

 

12.2 Notice of Emergency. The Operating Agent shall provide Generator with
prompt verbal or electronic notice of any Emergency which may reasonably be
expected to affect Generator’s operation of the Facility, and Generator shall
provide the Operating Agent with prompt verbal notice of any generation
equipment Emergency which may reasonably be expected to affect the Operating
Agent’s operations. Such verbal notification shall be followed within
twenty-four (24) hours with written notification, which shall describe in
reasonable detail the extent of the Emergency (including damage or deficiency),
the anticipated length of the outage, and the corrective actions taken.

 

12.3 Immediate Action. In the event of an Emergency, the Party (either the
Operating Agent or Generator) becoming aware of the Emergency may, in the
exercise of its reasonable judgment and in accordance with Good Utility
Practice, take such actions as are reasonable and necessary to prevent, avoid,
or mitigate injury, danger, and loss, without liability to the other Party for
its actions.

 

12.3.1 In the event that Generator has identified an Emergency involving the
transmission system, Generator shall obtain the consent of the Operating Agent
before manually performing any switching operations unless, in Generator’s
reasonable judgment, exercised in accordance with Good Utility Practice,
immediate action is required.

 

12.3.2 Either the Operating Agent or Generator shall have the right to
disconnect the Facility without prior notice or liability to the other Party if,
in such Party’s reasonable judgment and in accordance with Good Utility
Practice, an Emergency exists and immediate disconnection is required to protect
persons or property from damage caused by Generator’s interconnection or lack of
proper or properly operating protective devices. Prior to an Emergency, for
purposes of this Article 12.3.2, the Operating Agent may deem protective devices
to be operating improperly if the Operating Agent’s review pursuant to Article
XIII discloses insufficient maintenance on such devices or that maintenance
records do not exist or are insufficient to establish that adequate maintenance
on such devices has been performed, provided that the Operating Agent shall
inform Generator, in writing following the Operating Agent’s review, of such
conclusions regarding maintenance of such devices and provide Generator a
reasonable opportunity to demonstrate to the Operating Agent’s satisfaction that
adequate maintenance has been performed. The Party initiating the disconnection
shall notify the other Party of such disconnection as soon as reasonably
possible after the disconnection.

 

12.4 Disconnection of Facility in Event of Potential Emergency. If, at any time,
the Operating Agent determines, in the exercise of its reasonable judgment and
in accordance with Good Utility Practice, that the continued operation of the
Facility would cause an Emergency, the Operating Agent may disconnect the
Facility from the EPE Interconnection Facilities until such condition at the
Facility giving rise to the potential Emergency ceases to exist. The Operating
Agent shall

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  36    

--------------------------------------------------------------------------------

not be liable to Generator for the Operating Agent’s actions unless such action
constitutes willful misconduct on the part of the Operating Agent.

 

12.4.1 Notice of Disconnection. The Operating Agent shall provide Generator with
as much advance notice as is reasonably practical under the circumstances of
Operating Agent’s intent to disconnect the Facility in response to a condition
at the Facility that would cause an Emergency. Subject to Article 3.7, the
Operating Agent shall also provide Generator with information relating to the
nature of the potential Emergency and the expected duration of the disconnection
at the Interconnection Point.

 

12.4.2 Opportunity to Resolve Condition. To the extent reasonably practical, the
Operating Agent shall allow Generator an opportunity to remove or remedy such
condition at the Facility that would cause an Emergency before the Operating
Agent disconnects the Facility.

 

12.4.3 Conference Regarding Condition. In the event of disconnection, the
Operating Agent shall promptly confer with one of Generator’s Operating
Committee representatives regarding the condition that gave rise to the
disconnection. The Operating Agent shall provide Generator with its
recommendation, if any, regarding the timely correction of the condition.

 

12.4.4 Restoration. The Operating Agent shall promptly reconnect the Facility
when the condition giving rise to the potential Emergency ceases to exist and
shall use reasonable efforts consistent with Good Utility Practice to minimize
the duration of any disconnection.

 

12.5 Audit Rights. The Operating Agent and Generator shall keep and maintain
records of any actions taken during an Emergency that may reasonably be expected
to impact the others’ facilities and shall make such records available for
review by the other or its auditor upon the request and expense of the other.
Any request for such an audit shall be made no later than twenty-four (24)
months following the actions taken in conjunction with the Emergency.

 

12.6

Abnormal Conditions. To the extent the Operating Agent is aware of any Abnormal
Condition, the Operating Agent will provide Generator with reasonably prompt
oral notification of such Abnormal Condition if it may reasonably be expected to
affect Generator’s Facility or operations. To the extent that Generator is aware
of any Abnormal Condition, Generator will provide the Operating Agent with
reasonably prompt oral notification of such Abnormal Condition if it may
reasonably be expected to affect the operations of the Operating Agent’s or
EPE’s facilities. Subject to Article 3.7, any such oral notification provided
hereunder shall include a description of the Abnormal Condition, its anticipated
duration, and the action taken and/or to be taken with respect to the notifying
Party’s facilities, and shall be followed as soon as practicable with written
confirmation of the facts. Each Party shall cooperate and coordinate with the
other Party in taking whatever actions on its facilities as are reasonably
necessary to mitigate or eliminate the Abnormal Condition, including, to the
extent necessary, adjusting the operation of equipment to within its rated
operating parameters; provided, however, that such measures are consistent with
Good Utility Practice and do not require operation of any of the Parties’
facilities outside their operating limits. The Operating Agent and Generator
each reserves the right, in its sole discretion, to isolate or disconnect the
Facility from the EPE Transmission System at the Afton Switching Station if it
believes an Abnormal Condition, including an electric disturbance, may cause
damage to its facilities. The Operating Agent, or

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  37    

--------------------------------------------------------------------------------

 

any other Party as applicable, will compensate Generator, for a change in real
power output in compliance with Operating Agent’s directive, except for
reductions, interruptions or curtailment under the applicable OATT, pursuant to
mutually agreed terms or pursuant to any applicable FERC-accepted tariff or rate
schedule filed by Generator. The Operating Agent, or any other Party as
applicable, will compensate Generator for a change in reactive power production
pursuant to the terms and conditions of Article X. Generator will compensate
Operating Agent or EPE, as applicable, for actions provided to Generator to
mitigate Abnormal Conditions caused by Facility pursuant to mutually agreed
terms or pursuant to any applicable FERC-accepted tariff or rate schedule filed
by Operating Agent or EPE, as applicable.

 

Article XIII

MAINTENANCE

 

13.1 The Operating Agent Obligations. The Operating Agent shall maintain and
repair/replace the EPE Interconnection Facilities: (a) in a safe and reliable
manner; (b) in accordance with Good Utility Practice; and (c) in accordance with
the terms and conditions of this Agreement.

 

13.2 Generator Obligations. Generator shall maintain and repair/replace the
Facility and Generator’s Interconnection Facilities: (a) in a safe and reliable
manner; (b) in accordance with Good Utility Practice; and (c) in accordance with
the terms and conditions of this Agreement.

 

13.3 Maintenance Expenses. In accordance with Articles 5.3 and 5.4 and subject
to Article 5.14, Generator shall be responsible for all expenses associated with
maintaining and repairing/replacing the Interconnected Facilities. The Operating
Agent agrees to provide Generator in June of each year with its best estimate of
the costs required to operate and maintain the EPE Interconnection Facilities
over the next twelve (12) months. These costs shall be billed and paid in
accordance with Articles 7.2 and 7.3. The Operating Agent will notify Generator
in advance of any increase in the cost of work to be performed if the total
amount increases by twenty-five percent (25%) or more of the estimate provided
to Generator. Any such increase shall be subject to Generator’s authorization,
which shall not be unreasonably delayed, withheld or denied. In accordance with
Article 5.4.4, EPE shall be responsible for all expenses associated with
maintaining and repairing/replacing Interconnection System Upgrades after the
Operation Date.

 

13.4 Coordination. Generator agrees to coordinate with the Operating Agent in
accordance with procedures developed by the Operating Committee regarding the
inspection, maintenance, and testing of those secondary systems in the Facility
and Interconnected Facilities directly affecting the operation of the EPE
Transmission System. To the extent possible, Generator shall provide five (5)
Business Days’ advance written notice to the Operating Agent before undertaking
such work.

 

13.5

Observation of Deficiencies. Each Party shall have the right, but not the
obligation, to observe the testing and maintenance activities performed by the
other Party with respect to facilities whose performance may adversely affect
the reliability of the observing Party’s facilities. If the observing Party
observes any deficiencies or defects associated with, or becomes aware of a lack
of maintenance, inspections, or testing with respect to, any of the other
Party’s facilities

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  38    

--------------------------------------------------------------------------------

 

and equipment that might be reasonably expected to adversely affect the
observing Party’s facilities and equipment, the observing Party shall provide
prompt written notice to such other Party. Notwithstanding the foregoing, the
observing Party shall have no liability for failure to give such notice. Upon
receipt of such written notice, such Party shall take any necessary corrective
actions in accordance with Good Utility Practice.

 

13.6 Review of Maintenance Records. Upon ten (10) Business Days’ written notice
to Generator, Generator shall provide the Operating Agent with access to
Generator’s maintenance, inspection, and testing records for Generator’s
Interconnection Facilities and any other facilities whose operation may
reasonably be expected to affect the reliability of the EPE Interconnection
Facilities, or the EPE Transmission System. The other facilities shall include
generator step up transformers, protection systems, metering, communications
systems, breakers, automatic voltage regulators, generator governor and
excitation systems. Upon ten (10) Business Days’ written notice to the Operating
Agent, the Operating Agent shall, subject to Article 3.7, provide Generator with
access to the Operating Agent’s maintenance, inspection, and testing records for
the EPE Interconnection Facilities.

 

Article XIV

METERING

 

14.1 General. Prior to the Operation Date, EPE shall provide, install, and
maintain Metering Equipment necessary to meet its obligations under this
Agreement. Generator shall have the option, subject to EPE approval, to use
EPE’s Metering Equipment for Facility operations. Beginning on the Operation
Date, the Operating Agent shall assume responsibility for operating and
maintaining the Metering Equipment. EPE shall own the Metering Equipment. At the
Operating Agent’s option, the Metering Equipment shall be located or adjusted in
such a manner to account for any transformation or interconnection losses
between the location of the meter and the Interconnection Point. The location of
the Metering Equipment and Generator’s verification meters are identified on
Appendix D.

 

14.2 Testing. The Operating Agent shall inspect and test Metering Equipment on
an annual basis or at such other time intervals as may be directed by the
Operating Committee; provided, however, that Generator, may request, after
demonstrating good cause, one additional inspection and test for Metering
Equipment per year. In addition, any Party may request a special test of meters,
but such Party shall bear the cost of such testing unless an inaccuracy shall be
disclosed exceeding one percent (1%), in which case the Operating Agent shall be
responsible for the costs of the special testing. Authorized representatives of
each Party shall have the right to be present at all routine or special tests
and to inspect any readings, testing, adjustment or calibration of the meters.
The Operating Agent shall promptly correct any inaccuracy disclosed through such
inspections and tests. For the purpose of checking the performance of the
Metering Equipment, Generator may install check metering equipment, which such
equipment shall be owned and maintained by Generator.

 

14.3

Data Metered. The following data shall be real-time metered and sent
electronically to the Operating Agent’s SOCC: (a) net MW output of each
generator of the Facility; (b) reactive power output of each generator of the
Facility, both positive and negative; (c) 345 kV bus voltage; (d) indications
(open or closed) of all circuit breakers; (e) indications (open or closed)

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  39    

--------------------------------------------------------------------------------

 

of all circuit switches; (f) various alarm points, as reasonably determined by
the Operating Agent; (g) various relay indications and relay alarms; and (h) any
other data as determined by the Operating Agent.

 

14.4 Data Available Upon Request. The Operating Agent shall provide to Generator
and EPE all metering quantities in analog and/or digital form, whichever is
available, upon request.

 

14.5 Costs. Except as otherwise provided for in this Article XIV, Generator
shall bear all reasonable costs associated with the provision of metering data
to Generator. All such costs shall be separately stated on the invoice sent to
Generator by EPE or the Operating Agent, as applicable.

 

Article XV

SAFETY

 

15.1 General. All work performed by a Party shall be performed in accordance
with Good Utility Practice and all Applicable Laws and Regulations,
Environmental Laws, and other requirements regarding the safety of persons and
property.

 

15.2 Environmental Releases. No later than twenty-four (24) hours after a Party
becomes aware of a Release of any Hazardous Substances, any asbestos or lead
abatement activities, or any type of remediation activities, such Party shall
provide written notice to the other Party of such Release or activities,
describing in reasonable detail the nature of such Release or activities. Such
Party shall also promptly provide the other Party with copies of any reports
filed with any Governmental Authority regarding such Release or activities.

 

15.3 Other Environmental Impact. No Party shall take any action(s) knowing that
such action(s) might be reasonably expected to have a material adverse
environmental impact upon the operations of the other Party without prior
written notification and agreement between the Parties.

 

Article XVI

COMMUNICATIONS

 

16.1 Equipment. Generator, at its own expense, shall maintain satisfactory
communications with the Operating Agent or its designated representative. At
Generator’s expense, Generator shall install and maintain real-time operating
communications with the Operating Agent’s SOCC to the satisfaction of the
Operating Agent or its designated representative. The data circuit(s) shall
extend from Generator’s Facility to a location(s) specified by the Operating
Agent. Any required maintenance of such communications equipment shall be
performed at Generator’s expense, but may be performed by Generator or by the
Operating Agent. EPE, at Generator’s expense, will own, operate and maintain the
communications system necessary to support the switchyard and transmission
interconnection with the existing transmission system, including switchyard
RTU(s), protective relaying, telemetry, station phones, and other similar EPE
systems. Generator will own, operate and maintain the communication system
required to support the Generator, including Generator RTU(s), telemetry,
ringdown phones, administrative communications such as LAN and telephones and
other similar Generator systems.

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  40    

--------------------------------------------------------------------------------

16.2 Remote Terminal Unit. A Remote Terminal Unit (“RTU”) or equivalent data
collection and transfer equipment acceptable to Generator and the Operating
Agent shall be installed by Generator or by EPE at Generator’s expense, to
gather accumulated and instantaneous data to be telemetered to a location(s)
designated by the Operating Agent through use of a dedicated point-to-point data
circuit(s). Generator shall install or facilitate installation of such equipment
as soon as practicable, provided that installation shall be accomplished prior
to the date of unit testing or the Commercial Operation Date, whichever comes
first. The communication protocol for this data circuit(s) shall be specified by
the Operating Agent. Instantaneous bi-directional analog real power and reactive
power flow information must be telemetered directly to the location(s) specified
by the Operating Agent.

 

Article XVII

INFORMATION REPORTING

 

17.1 General. Generator shall provide to the Operating Agent all information,
documents, or data, pertaining to the operations of the Facility, required for
the Operating Agent to fulfill its obligations to NERC, WSCC, the RTO (if
applicable) or any Governmental Authority requiring system information. Such
information, documents or data shall be supplied in the format as required by
NERC, WSCC, the RTO (if applicable) or any Governmental Authority and within a
reasonable time frame designated by the Operating Agent to meet these
obligations.

 

17.2 Compliance Monitoring Reporting. Generator shall provide all information,
documents, or data, pertaining to the operations of the Facility, requested by
NERC, WSCC, the RTO (if applicable) or any other entity with jurisdiction
requiring system information for purposes of compliance monitoring programs
including RMS. Such information, documents, or data shall be provided to the
Operating Agent if required by the specific compliance program or to the extent
otherwise required by this Agreement. Such information, documents, or data shall
be supplied in the format as required by NERC, WSCC, the RTO (if applicable) or
any other entity with jurisdiction and within the time frame designated by such
compliance program sponsor to meet these obligations.

 

17.3 Regulatory Agency Reporting. Generator shall provide to the Operating Agent
all information, documents, or data, pertaining to the operations of the
Facility, required by the Operating Agent to fulfill reporting obligations to
any Governmental Authority including FERC. Such information, documents, or data
shall be supplied in the format as required by any Governmental Authority
including FERC and within a reasonable time frame designated by the Operating
Agent to meet these obligations.

 

17.4 Penalties. Generator shall be responsible for reimbursement to the
Operating Agent of any economic sanctions or portions thereof, as applicable, or
penalties incurred or imposed upon the Operating Agent due solely to Generator’s
failure to provide information, documents, or data, pertaining to the operations
of the Facility, in the required format within the time frame specified by the
Operating Agent, or the compliance monitoring program, except to the extent that
Generator’s failure is due solely to the Operating Agent’s or any of its Agents’
negligence or willful misconduct.

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  41    

--------------------------------------------------------------------------------

Article XVIII

DOCUMENTATION

 

18.1 General. Each Party shall provide the other Party with appropriate
documentation, consistent with Good Utility Practice, in the form of written
test records, operation and maintenance procedures, drawings, material lists, or
descriptions whenever a Party makes a change, alteration, or modification to its
property, equipment, or facilities that could reasonably be expected to affect
the other Party, or whenever such documentation is necessary to ensure the safe
and reliable operation of the EPE Transmission System, the Facility, or the
Interconnected Facilities, pursuant to Good Utility Practice or required by the
Operating Committee. EPE’s obligation to provide documentation pursuant to this
Article is subject to Article 3.7.

 

18.2 Drawings. The Operating Agent shall identify, number, and provide Generator
with a duplicate set of current drawings that represent equipment or facilities
that shall be used or operated at or near the Interconnection Point, which shall
consist of one or more of the following: (a) system one-line drawings that
include breaker and switch designations – single page format drawings used for
dispatch and operation purposes; (b) one-line drawings – prints used in
conceptual design which provide detail on facility and system interconnections;
(c) elementary diagrams – drawings which provide a higher level of detail than
one-line drawings and identify on a single-line basis current and voltage
transformer locations, protection relay types, and meter and control
connections; (d) three-line diagrams – drawings which provide the highest level
of detail for the facilities in a three-line format with specific current and
voltage transformer connections, relay and meter connections; (e) schematic
drawings or elementaries – drawings which provide information on apparatus
controls, switch developments, etc.; (f) relay and control panel front view and
wiring diagrams – drawings which describe physical panel layout, relay, terminal
block and device locations, wiring, and other construction details; and (g)
other physical drawings – drawings which include information on foundations,
equipment layouts, grounding panel construction, site plans, etc.

 

Article XIX

FORCE MAJEURE

 

19.1

Definition. As used in this Agreement, the term “Force Majeure” means any cause
that is beyond the reasonable control of the Party affected which, despite the
affected Party’s exercise of Due Diligence to prevent or overcome, prevents the
performance by such affected Party of its obligations under this Agreement.
Subject to the foregoing, “Force Majeure” shall include sabotage, strikes or
other labor difficulties, riots, civil disturbances, acts of God, wars, acts of
public enemies, epidemics, drought, earthquake, flood, explosion, fire,
lightning, landslides, or similar cataclysmic event, breakage or accident to
machinery or equipment, order, regulation, or restriction imposed by
governmental military or lawfully established civil authorities, the occurrence
of an event described in the first sentence of Article 2.4 (provided that the
Party asserting Force Majeure based on such occurrence complies with its
obligations under Article 2.4), or any other cause, whether of the kind
enumerated herein or otherwise. A Force Majeure event does not include : (a)
economic hardship of or loss of markets by a Party; (b) the unavailability of
transmission or distribution capability, unless the Party claiming Force Majeure
has contracted for firm transmission and such unavailability is the result of a
“force majeure” event or “uncontrollable force” or a similar term as defined
under the applicable

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  42    

--------------------------------------------------------------------------------

 

transmission tariff; (c) events resulting from, or attributable to, normal wear
and tear experienced in power generation, interconnection, and transmission
materials and equipment; and (d) events attributable to negligence or willful
misconduct, failure to comply with any Applicable Laws and Regulations, any
default under this Agreement, or any failure to act in accordance with Good
Utility Practice in each case by the Party claiming Force Majeure.

 

19.2 Performance Excused. If any Party is rendered wholly or partially unable to
perform under this Agreement because of a Force Majeure event, such Party shall
be excused from such obligations to the extent that the occurrence of the Force
Majeure event prevents such Party’s performance and such Party shall not be
liable for any resulting damages, provided that: (a) the non-performing Party
provides the other Party with prompt verbal notice of the occurrence of the
Force Majeure event, and provides written notice describing in reasonable detail
the nature of the Force Majeure event within three (3) Business Days of the
Force Majeure event; (b) the suspension of performance shall be of no greater
scope and of no longer duration than is reasonably required by the Force Majeure
event; (c) the non-performing Party uses Due Diligence to remedy its inability
to perform; and (d) as soon as the non-performing Party is able to resume
performance of its obligations excused as a result of the occurrence, it gives
prompt written notification thereof to the other Party.

 

19.3 Labor Issues. No Party shall be required to settle a strike or other labor
dispute affecting its operations.

 

19.4 Payment Not Excused. Nothing in this Article XIX shall excuse any Party
from making payments due pursuant to the terms and conditions of this Agreement
for the period prior to the occurrence of the Force Majeure event.

 

Article XX

INDEMNIFICATION

 

20.1 INTERCONNECTION INDEMNITY. GENERATOR SHALL AT ALL TIMES INDEMNIFY AND HOLD
HARMLESS THE OPERATING AGENT AND EPE FOR, AGAINST AND FROM ANY AND ALL DAMAGES,
LOSSES, CLAIMS, INCLUDING CLAIMS AND ACTIONS RELATING TO INJURY TO OR DEATH OF
ANY PERSON OR DAMAGE TO OR LOSS OF ANY PROPERTY, DEMANDS, SUITS, RECOVERIES,
COSTS AND EXPENSES, COURT COSTS, ATTORNEY FEES, AND ALL OTHER OBLIGATIONS BY OR
TO THIRD PARTIES, ARISING OUT OF OR RESULTING FROM THE OPERATING AGENT’S OR
EPE’S PERFORMANCE OF ITS OBLIGATIONS UNDER THIS AGREEMENT ON BEHALF OF GENERATOR
EXCEPT IN CASES OF NEGLIGENCE OR INTENTIONAL WRONGDOING BY THE OPERATING AGENT
OR EPE.

 

20.2

RECIPROCAL INDEMNITY. EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, EACH PARTY
SHALL INDEMNIFY AND HOLD HARMLESS THE OTHER PARTY, ITS AFFILIATES, AGENTS,
SUCCESSORS, REPRESENTATIVES AND PERMITTED ASSIGNS FOR, AGAINST AND FROM ANY
CLAIM, LIABILITY, DAMAGE, LOSS OR EXPENSE OF ANY KIND OR NATURE (INCLUDING
REASONABLE ATTORNEYS’ FEES), (A) FOR PERSONAL INJURY TO OR DEATH OF ANY PERSON,
(B) FOR LOSS OF OR DAMAGE TO PROPERTY OF THIRD PARTIES OR

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  43    

--------------------------------------------------------------------------------

 

THE REAL PROPERTY OR TANGIBLE PERSONAL PROPERTY OF SUCH OTHER PARTIES, OR (C)
ARISING OUT OF OR RESULTING FROM PERFORMANCE OF OBLIGATIONS UNDER THIS
AGREEMENT, IN EACH INSTANCE TO THE EXTENT DETERMINED TO BE ATTRIBUTABLE TO THE
NEGLIGENCE, GROSS NEGLIGENCE, WILLFUL MISCONDUCT, OR STRICT LIABILITY IN TORT OF
OR BREACH OF THIS AGREEMENT BY THE INDEMNITOR OR ITS AFFILIATES, AGENTS,
SUCCESSORS OR PERMITTED ASSIGNS.

 

20.3 DAMAGE DISCLAIMER. THE EXPRESS REMEDIES AND MEASURES OF DAMAGES PROVIDED IN
THIS AGREEMENT SATISFY THE ESSENTIAL PURPOSES HEREOF. FOR BREACH OF ANY
PROVISION FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS PROVIDED, SUCH
EXPRESS REMEDY OR MEASURE OF DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY. THE
OBLIGOR’S LIABILITY SHALL BE LIMITED AS SET FORTH IN SUCH PROVISION AND ALL
OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. IN NO EVENT SHALL ANY
PARTY BE LIABLE FOR SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE
DAMAGES, INCLUDING LOSS OF PROFIT OR REVENUE, LOSS OF THE USE OF EQUIPMENT, COST
OF CAPITAL, COST OF TEMPORARY EQUIPMENT OR SERVICES, WHETHER BASED ON BREACH OF
CONTRACT, NEGLIGENCE, GROSS NEGLIGENCE, WILLFUL MISCONDUCT, STRICT LIABILITY OR
OTHER CAUSES OF ACTION. ALL PAYMENTS DUE FOR SERVICES UNDER THIS AGREEMENT SHALL
BE DEEMED TO CONSTITUTE DIRECT (NOT SPECIAL, INCIDENTAL, INDIRECT OR
CONSEQUENTIAL) DAMAGES FOR PURPOSES OF THIS ARTICLE 20.3. THE PROVISIONS AND
DISCLAIMERS OF THIS ARTICLE 20.3 SHALL NOT APPLY TO CLAIMS FOR PERSONAL INJURY
OR DEATH AND SHALL NOT APPLY TO ARTICLE 22.7.

 

20.4 Indemnities Reformed. The indemnities set forth in this Article XX shall be
construed to be effective to the maximum extent permitted by Applicable Laws and
Regulations. To the extent that any of the indemnities are determined to be
unenforceable or void under Applicable Laws and Regulations, the indemnities
shall be reformed and restated to the extent necessary to render them effective.

 

20.5 Indemnification Procedures. If any Party intends to seek indemnification
under this Article XX from any other Party, the Party seeking indemnification
shall give such other Party written notice of such claim within thirty (30) days
of the commencement of, or actual knowledge of, such claim. Such notice shall
describe the claim in reasonable detail and shall indicate the amount
(estimated, if necessary) of the claim that has been or may be sustained by such
Party. To the extent that the other Party is actually and materially prejudiced
as a result of the failure to provide such notice, the other Party’s liability
under the provisions of this Article XX shall be reduced proportionately to such
prejudice. The Party being indemnified may, if in its reasonable judgment its
interests are adverse to the interests of the indemnifying Party, elect to
assume at its own expense and by its own counsel the defense of the claim, in
which case the indemnifying Party shall cooperate in good faith at its own
expense with the Party being indemnified in such defense. No Party shall settle
or compromise any claim without the prior written consent of the Party from
which it is seeking indemnification; provided, however, that such consent shall
not be unreasonably withheld, delayed or denied.

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  44    

--------------------------------------------------------------------------------

20.6 Additional Indemnification Provisions. If a court of competent jurisdiction
determines that NMSA 1978, §56-7-1 is applicable to this Agreement, then nothing
in this Article 20.6 or any other indemnification provision of this Agreement
shall extend to liability, claims, damages, losses, or expenses, including
attorney fees, arising out of:

 

20.6.1 The preparation or approval of maps, drawings, opinions, reports,
surveys, change orders, designs, or specifications by the indemnitee, or the
employees or agents of the indemnitee; or

 

20.6.2 The giving of or failure to give directions or instructions by the
indemnitee, or the employees or agents of the indemnitee, where such giving or
failure to give directions or instructions is the primary cause of bodily injury
to persons or damage to property.

 

20.7 Survival. The indemnification obligations, covenants and disclaimers, under
this Article XX shall continue in full force and effect regardless of whether
this Agreement has expired or been terminated or cancelled and shall not be
limited in any way by any limitation on insurance, on the amount or types of
damages, or by any compensation or benefits payable by the Parties under any
applicable workers’ compensation acts, disability benefit acts, or other
employee acts.

 

Article XXI

INSURANCE

 

21.1 Generator. Without limiting any obligations or liabilities under this
Agreement, Generator shall, at its expense, provide and maintain in effect for
the term of this Agreement, insurance against the risks set forth below. All
insurance shall include waivers of subrogation in favor of EPE and the Operating
Agent.

 

21.1.1 Workers’ compensation insurance with minimum statutory limits to cover
obligations imposed by federal and state statutes applicable to the Generator’s
employees and employer’s liability insurance with a minimum limit of one million
dollars ($1,000,000) per accident.

 

21.1.2 Commercial general liability insurance, including contractual liability,
broad form property damage, premises operations, and personal injury coverage in
the amount of twenty-five million dollars ($25,000,000) per occurrence for
bodily injury and property damage. Such insurance shall cover EPE (and its
affiliated companies) and the Operating Agent as additional insureds.

 

21.2 EPE or Operating Agent. Without limiting any obligations or liabilities
under this Agreement, EPE or Operating Agent shall provide and maintain in
effect for the term of this Agreement, insurance against the risks set forth
below. All insurance shall include waivers of subrogation in favor of Generator.

 

21.2.1 Workers’ compensation insurance with minimum statutory limits to cover
obligations imposed by federal and state statutes applicable to the employees of
EPE or Operating Agent and employer’s liability insurance with a minimum limit
of one million dollars ($1,000,000) per accident.

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  45    

--------------------------------------------------------------------------------

21.2.2 Commercial general liability insurance, including contractual liability,
broad form property damage, premises operations, and personal injury coverage in
the amount of twenty-five million dollars ($25,000,000) per occurrence for
bodily injury and property damage. Such insurance shall cover Generator as an
additional insured.

 

21.3 Notice of Cancellation. All policies shall provide for thirty (30) calendar
days’ prior written notice of cancellation or material adverse change and ten
(10) calendar days’ prior written notice of non-payment of premiums. Copies of
any such notice shall be provided to each Party and the Operating Agent. Prior
to the Operation Date and annually thereafter, each Party shall provide, upon
request, evidence of insurance to the Operating Agent and the other Party.

 

21.4 Self-Insurance. At its option, each Party may, with adequate credit
assurance provided to the other Party, self-insure all or part of the insurance
required in this Article XXI; provided however, that all other provisions of
this Article XXI, including waiver of subrogation and additional insured status,
shall remain enforceable. A Party’s election to self-insure shall not in any
manner result in a reduction of rights and/or benefits otherwise available to
the other Party through formal insurance policies and endorsements as specified
in this Article XXI. Each Party shall be responsible for its respective amounts
of self-insurance retentions and/or deductibles.

 

Article XXII

DEFAULT

 

22.1 General. A Party shall be deemed to have breached this Agreement upon the
occurrence of any of the events specified in Article 22.2. A Party shall be
deemed to be in default of its obligations under this Agreement upon its failure
to cure such breach in accordance with the procedures set forth in this Article
XXII.

 

22.2 Events Constituting Breach. The following events shall constitute events of
breach by a Party (“Breaching Party”) under this Agreement:

 

  (a) the failure by the Breaching Party to make any payment as required under
the terms of this Agreement;

 

  (b) the failure by the Breaching Party to comply with any material term or
condition of this Agreement, including any material breach of a representation,
warranty, or covenant of this Agreement;

 

  (c)

the Breaching Party (or any entity guaranteeing the obligations of such
Breaching Party): (i) files or consents by answer or otherwise to a filing
against it of any petition or case seeking relief under any federal, state, or
foreign bankruptcy, insolvency, or similar law (collectively, “Bankruptcy
Laws”); (ii) makes a general assignment for the benefit of a creditor(s); (iii)
applies for or consents to the appointment of a custodian, receiver, trustee,
conservator, or other officer with similar powers over it or over any
substantial part of its property (“Custodian”); (iv) takes corporate action for
the purpose of any of the events described

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  46    

--------------------------------------------------------------------------------

 

in Article 22.2(c)(i) – (iii), above; (v) is dissolved; (vi) by decree of a
court of competent jurisdiction, is adjudicated insolvent; or (vii) is unable to
provide adequate assurances to the other Party of the Breaching Party’s
continued ability to perform;

 

  (d) a Governmental Authority enters or issues an order or a decree with
respect to the Breaching Party: (i) appointing a Custodian; (ii) constituting an
order for relief under, or approving a petition or case for relief or
reorganization or any other petition or case to take advantage of, any
Bankruptcy Laws; or (iii) ordering its dissolution, winding-up, or liquidation;

 

  (e) the assignment of this Agreement by the Breaching Party in a manner
inconsistent with the terms and conditions of this Agreement;

 

  (f) the failure of the Breaching Party to provide access rights, or the
Breaching Party’s attempt to revoke or terminate such access rights, as provided
under this Agreement; and

 

  (g) the failure by the Breaching Party to provide information or data to the
other Party (“Non-Breaching Party”) as required under this Agreement, provided
that the Non-Breaching Party seeking such information or data requires such
information or data to satisfy its obligations under this Agreement.

 

22.3 Notice by Breaching Party. In the event of a breach under Article 22.2(c)
or Article 22.2(d), the Breaching Party shall provide the Non-Breaching Party
notice of the event of breach within three (3) Business Days of the occurrence
of such event of breach. Such notice shall be in writing and set forth in
reasonable detail the nature of the event of breach.

 

22.4 Cure and Default. Upon obtaining knowledge of an event of breach under
Article XXII, the Non-Breaching Party shall give written notice to the Breaching
Party, describing, in reasonable detail, to the extent known and applicable, the
actions necessary to cure the event of breach. Upon receiving such notice, the
Breaching Party shall have thirty (30) days to cure such breach. If the breach
cannot be cured within thirty (30) days, the Breaching Party shall commence in
good faith all actions that are reasonable and appropriate to cure such breach
within such thirty (30) day period, and thereafter shall pursue such action to
completion. In the event that the Breaching Party (a) fails to cure such breach
or fails to take all actions that are reasonable and appropriate to cure such
breach within thirty (30) days of receiving the notice from the Non-Breaching
Party or (b) having commenced cure within such thirty (30) day period, fails to
complete cure within one hundred eighty (180) days of receiving the notice from
the Non-Breaching Party, the Breaching Party shall be in default of this
Agreement.

 

22.5 Continued Operations. In the event of a breach or a default by a Party, but
prior to termination of this Agreement, the Parties shall continue to operate
and maintain such power systems, protective devices, metering equipment,
transformers, communications equipment, building facilities, software,
documentation, structural components, and other facilities, equipment, and

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  47    

--------------------------------------------------------------------------------

appurtenances that are reasonably necessary to operate and maintain the EPE
Transmission System and the Facility in a safe and reliable manner.

 

22.6 Upon Default. Upon default, the non-defaulting Party may: (a) commence an
action to require the Party in default to remedy such default and specifically
perform its obligations under this Agreement; (b) pursue other rights and
remedies as it may have in law or equity (subject to the limitations set forth
in Article XX); and/or (c) terminate this Agreement pursuant to Article 23.2.
Notwithstanding the foregoing, EPE may not terminate this Agreement upon a
default by Generator provided that (x) EPE can be made whole by monetary
damages, (y) Generator agrees to compensate EPE for damages suffered by it as a
result of such default (subject to the limitations set forth in Article XX) and
(z) such default does not pose a threat to the safety or reliability of the EPE
Transmission System.

 

22.7 Generator’s Default in Payment for Equipment. If Generator is in default of
its obligation to reimburse or otherwise pay EPE for the cost of all or any part
of EPE Interconnection Facilities (the portion of such equipment for which
Generator is in default of payment is herewith referred to as “Default
Equipment”), then Generator shall pay EPE the sum of (a) the costs incurred by
or on behalf of EPE for the acquisition, installation and maintenance of such
Default Equipment (including appropriate carrying charges on such Default
Equipment calculated from the date of acquisition), (b) the costs incurred by or
on behalf of EPE for labor with respect to the Default Equipment, and (c)
interest at the Interest Rate on the amounts specified in subparts (a) and (b)
above calculated from the date of breach. If Generator is in default of its
obligation to reimburse or otherwise pay EPE for the cost of all or any part of
the Interconnection System Upgrades (the portion of such upgrade for which
Generator is in default of payment is herewith referred to as “Default
Upgrade”), then Generator shall pay EPE the sum of (x) the costs incurred by or
on behalf of EPE for the acquisition, installation and maintenance of such
Default Upgrade (including appropriate carrying charges on such Default Upgrade
calculated from the date of acquisition), (y) the costs incurred by or on behalf
of EPE for labor with respect to the Default Upgrade, and (z) interest at the
Interest Rate on the amounts specified in subparts (x) and (y) above calculated
from the date of breach.

 

Article XXIII

TERMINATION

 

23.1 Expiration of Term. Except as otherwise provided in this Article XXIII,
this Agreement shall terminate at the conclusion of the term set forth in
Article 2.3.

 

23.2 Termination in the Event of Default. Subject to Articles 23.3 and 22.6, EPE
or Generator may each terminate this Agreement upon the default by the other
Party upon: (a) providing written notice of termination to the other Party; and
(b) to the extent required, filing a notice of termination with FERC, which must
be accepted for filing by FERC.

 

23.3 Survival. Termination of this Agreement shall not relieve any Party of any
of its liabilities or obligations arising hereunder prior to the effective date
of the termination of this Agreement. In the event of termination, each Party
may take whatever judicial or administrative actions are necessary to enforce
its rights under this Agreement.

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  48    

--------------------------------------------------------------------------------

23.4 Disconnection and Disposition of Facilities Upon Termination. Upon
termination of this Agreement, unless otherwise ordered or approved by FERC, the
Operating Agent may disconnect the Facility from the EPE Transmission System at
the Afton Switching Station in accordance with a plan for disconnection which
the Operating Committee approves or upon which the Parties agree. EPE may, in
its sole discretion, retain or dispose of any EPE Interconnection Facilities and
Interconnection System Upgrades, provided that in either case Generator shall
pay any applicable Termination Costs.

 

Article XXIV

CREDITWORTHINESS

 

For purposes of determining Generator’s ability to meet its obligations
hereunder during the term of this Agreement, EPE (including in its capacity as
Operating Agent) may require Generator to provide and maintain in effect a
letter of credit or other form of security to meet Generator’s responsibilities
and obligations or an alternate form of security consistent with commercial
practices established by the Uniform Commercial Code that protects EPE against
non-payment. In any instance where facilities to be built require EPE to incur
costs, EPE will not be obligated to incur any costs until Generator provides EPE
with a letter of credit or other reasonable form of security acceptable to EPE,
consistent with commercial practices as established by Uniform Commercial Code,
equivalent to the costs of the new facilities or upgrades.

 

Article XXV

RELATIONSHIP OF THE PARTIES

 

EPE (including in its capacity as Operating Agent) and Generator are independent
contractors. Nothing in this Agreement creates, or is intended to create, an
association, trust, partnership or joint venture or impose a trust or
partnership duty, obligation or liability on or with regard to either of the
Parties. Each Party shall be individually responsible for its own covenants,
obligations, and liabilities under the terms and conditions of this Agreement.

 

Article XXVI

REPRESENTATIONS AND WARRANTIES

 

26.1 Representations of EPE. EPE represents and warrants to the Generator as
follows:

 

  (a) EPE is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Texas and EPE has the requisite
corporate power and authority to carry on its business as now being conducted;

 

  (b)

EPE has the requisite corporate power to execute and deliver this Agreement and
to carry out the actions required of it by this Agreement. The execution and
delivery of this Agreement and the actions it contemplates have been duly and
validly authorized by EPE and no other corporate proceedings on the part of EPE
are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by EPE and constitutes a legal, valid, and binding agreement of EPE
enforceable against it according to its terms

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  49    

--------------------------------------------------------------------------------

 

and conditions, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws of general
application relating to or affecting the enforcement of creditors’ rights and by
general equitable principles;

 

  (c) EPE is not in violation of any Applicable Laws and Regulations promulgated
or judgment entered by any Governmental Authority, which individually or in the
aggregate would adversely affect EPE’s entering into or performance of its
obligations under this Agreement;

 

  (d) EPE’s entering into and performance of its obligations under this
Agreement will not give rise to any default under any agreement to which it is a
party; and

 

  (e) EPE shall comply with all Applicable Laws and Regulations of all
Governmental Authorities having jurisdiction over EPE or the transactions under
this Agreement and with which failure to comply could reasonably be expected to
have a material adverse effect on EPE.

 

26.2 Representations of Generator. Generator represents and warrants to EPE as
follows:

 

  (a) Generator is a corporation duly organized, validly existing, and in good
standing under the laws of the State of New Mexico and Generator has the
requisite corporate power and authority to carry on its business as now being
conducted;

 

  (b) Generator has the requisite corporate power to execute and deliver this
Agreement and to carry out the actions required of it by this Agreement. The
execution and delivery of this Agreement and the actions it contemplates have
been duly and validly authorized by Generator and no other corporate proceedings
on the part of Generator are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Generator and constitutes a legal, valid,
and binding agreement of Generator enforceable against it according to its terms
and conditions, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws of general
application relating to or affecting the enforcement of creditors’ rights and by
general equitable principles;

 

  (c) Generator is not in violation of any Applicable Laws and Regulations
promulgated or judgment entered by any Governmental Authority, which
individually or in the aggregate would adversely affect Generator’s entering
into or performance of its obligations under this Agreement;

 

  (d) Generator’s entering into and performance of its obligations under this
Agreement will not give rise to any default under any agreement to which it is a
party; and

 

  (e) Generator shall comply with all Applicable Laws and Regulations of all
Governmental Authorities having jurisdiction over Generator or the transactions
under this Agreement and with which failure to comply could reasonably be
expected to have a material adverse effect on EPE.

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  50    

--------------------------------------------------------------------------------

26.3 Representations of Each Party. The representations and warranties set forth
in Articles 26.1 and 26.2 shall continue in full force and effect for the term
of this Agreement.

 

Article XXVII

ASSIGNMENT

 

27.1 General. This Agreement shall be binding upon and inure to the benefit of
the Parties hereto and their respective successors and permitted assigns, but
neither this Agreement nor any of the rights, interests, or obligations
hereunder shall be assigned by any Party, including by operation of law, without
the prior written consent of the other Party, such consent not to be
unreasonably withheld or delayed; provided, however, that such prior consent
shall not be required (a) for an assignment to an Affiliate or (b) for security
for a financing party. Any assignment of this Agreement in violation of this
Article XXVII shall be, at the option of the non-assigning Party, void. The
assignee shall expressly assume all of the assignor’s obligations under this
Agreement.

 

27.2 EPE. Notwithstanding Article 27.1, any party with which EPE may
consolidate, or into which it may merge, or into which it may convey or transfer
substantially all of its electric utility assets or part of the EPE Transmission
System that includes the EPE Interconnection Facilities and Interconnection
System Upgrades, or its interest in the Afton Switching Station, shall
automatically and without the consent or approval of Generator succeed to all of
EPE’s rights, interests, duties and obligations under this Agreement.

 

27.3 Generator. Notwithstanding Article 27.1, any party with which Generator may
consolidate, or into which it may merge, or into which it may convey or transfer
substantially all of its electric utility assets shall automatically and without
the consent or approval of EPE succeed to all of Generator’s rights, interests,
duties and obligations under this Agreement.

 

27.4 No Relief in Event of Assignment. No assignment shall relieve the assigning
Party of its obligations under this Agreement in the event that the assignee
fails to perform under the terms and conditions of this Agreement, unless and
until the assignee agrees in writing to assume the obligations and duties of the
assigning Party and the non-assigning Party reasonably determines that the
assignee is no less technically and financially capable of performing its
obligations under the Agreement than the assigning Party.

 

Article XXVIII

CONFIDENTIALITY

 

28.1 General. During the term of this Agreement and for a period of twelve (12)
months after the expiration or termination of this Agreement, except as
otherwise provided in this Article XXVIII, each Party shall hold in confidence
and shall not disclose any Confidential Information to any Person. A Party may
disclose Confidential Information received from the other Party to the receiving
Party’s auditors and attorneys, Persons providing financing to the receiving
Party, and to other third parties as may be necessary for the receiving Party to
perform its obligations under this Agreement. To the extent that any disclosure
of Confidential Information is necessary, the disclosing Party shall endeavor to
preserve the confidentiality of the Confidential Information.

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  51    

--------------------------------------------------------------------------------

28.2 Scope. Confidential Information shall not include any information that the
receiving Party can demonstrate: (a) is generally available to the public other
than as a result of a disclosure by the receiving Party; (b) was in the lawful
possession of the receiving Party on a non-confidential basis prior to receiving
it from any other Party; (c) was supplied to the receiving Party without any
restrictions by a third party who, to the knowledge of the receiving Party, was
under no obligation to any other Party to keep the information confidential; (d)
was independently developed by the receiving Party; (e) is, or becomes, publicly
known, through no wrongful act or omission of the receiving Party or breach of
this Agreement; or (f) is required, in accordance with Article 28.5, to be
disclosed to any Governmental Authority or is otherwise required to be disclosed
by law or subpoena, or is necessary in any legal proceeding establishing rights
or obligations under this Agreement. Confidential Information is not considered
confidential if the Party that designated such information as confidential
notifies the other Party that such information is no longer confidential.

 

28.3 Rights in Confidential Information. Each Party retains all rights, title,
and interest in the Confidential Information that it discloses to the other
Party. The disclosure by a Party to the other Party of Confidential Information
shall not be deemed a waiver by any Party or any other Person or entity of the
right to protect the Confidential Information from public disclosure.

 

28.4 Standard of Care. Each Party shall use the same standard of care to protect
Confidential Information that it receives as it uses to protect its own
Confidential Information from disclosure, publication, or dissemination.

 

28.5 Required Disclosures. If a Governmental Authority requests or requires a
Party to disclose Confidential Information, such Party shall provide prompt
notice to the Party that provided the Confidential Information of such request
or requirement so that such other Party may seek an appropriate protective order
or waive compliance with the terms of this Agreement. Notwithstanding the
absence of a protective order or waiver, a Party may disclose such Confidential
Information which it is legally required to disclose. Each Party shall use
Commercially Reasonable Efforts to obtain reliable assurances that confidential
treatment will be accorded to Confidential Information required to be disclosed.

 

28.6 Possession of Confidential Information at Termination of Agreement. Upon
the termination or expiration of this Agreement and within ten (10) days of
receipt of a written request from the other Party, a Party shall destroy, erase,
delete, or return to such other Party any and all written or electronic
Confidential Information received from the other Party and shall retain no
written or electronic copies of any Confidential Information.

 

28.7 Remedies Regarding Confidentiality. The Parties agree that monetary damages
by themselves may be inadequate to compensate a Party for another Party’s breach
of its obligations under Article XXVIII. Each Party accordingly agrees that the
other Party may seek equitable relief, by way of injunction or otherwise, if it
breaches or threatens to breach its obligations under Article XXVIII.

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  52    

--------------------------------------------------------------------------------

Article XXIX

DISPUTE RESOLUTION

 

29.1 Dispute Resolution by Operating Committee. To the extent that a dispute
arises under this Agreement, the Party raising such dispute shall provide
written notice of such dispute to the other Party. Within ten (10) Business Days
(or such other period as the Parties may agree upon) of the receipt of the
notice by such Party, the Operating Committee shall convene in an attempt to
resolve the dispute. If the Operating Committee is able to resolve the dispute,
such resolution shall be reported in writing and shall be binding on the
Parties.

 

29.2 Dispute Resolution by Senior Management. If the Operating Committee is
unable to resolve the dispute within thirty (30) Business Days of the receipt of
such notice, then the Parties shall refer the dispute to their respective senior
management for resolution. If the senior management is able to resolve the
dispute, such resolution shall be reported in writing and shall be binding on
the Parties. In the event the senior management is unable to resolve the dispute
within thirty (30) Business Days (or such other period as the Parties may agree
upon) of referral, the Parties may elect to proceed to arbitration pursuant to
Article 29.3 or if the Parties do not agree to proceed to arbitration within
thirty (30) Business Days of the referral of the dispute to senior management,
then each Party shall have the right to pursue any other rights or remedies that
may be available at law or equity, subject to Article 20.3.

 

29.3 Arbitration.

 

29.3.1 Commencement of Arbitration Proceeding. If the Operating Committee and
the senior management are unable to resolve a dispute arising under this
Agreement pursuant to Articles 29.1 and 29.2, the Parties, by mutual written
agreement, may submit the dispute to arbitration. Each Party shall submit a
written statement detailing the nature of the dispute, designating the issue(s)
to be arbitrated, identifying the provisions of this Agreement under which the
dispute arose, and setting forth such Party’s proposed resolution of such
dispute. The arbitration shall be conducted in accordance with the provisions of
this Article XXIX, unless otherwise agreed in writing by the Parties.

 

29.3.2 Appointment of Arbitrator. Within ten (10) days of the date of the
Parties’ written agreement to submit a dispute to arbitration, a representative
of each Party shall meet for the purpose of selecting an arbitrator. If the
Parties’ representatives are unable to agree on an arbitrator within twenty (20)
days of the date of the Parties’ written agreement to submit the dispute to
arbitration, then an arbitrator shall be selected in accordance with the
procedures of the American Arbitration Association (“AAA”). Whether the
arbitrator is selected by the Parties’ representatives or in accordance with the
procedures of the AAA, the arbitrator shall, to the extent reasonably
practicable or unless otherwise agreed by the Parties, have the qualifications
and experience in the occupation, profession, or discipline relevant to the
subject matter of the dispute.

 

29.3.3 Arbitration Proceedings. Any arbitration proceeding shall be conducted in
accordance with the commercial arbitration rules of the AAA in effect on the
date of the notice, except as may be specifically modified in this Agreement.

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  53    

--------------------------------------------------------------------------------

29.3.4 Authority of Arbitrator. The arbitrator shall be bound by the provisions
of this Agreement where applicable, and shall have no authority to modify any
terms and conditions of this Agreement in any manner. The arbitrator shall
render a decision, and may determine that monetary damages are due to a Party or
may issue a directive that a Party take certain actions or refrain from taking
certain actions, but shall not be authorized to order any other form of relief;
provided, however, that nothing in this Article 29.3 shall preclude the
arbitrator from rendering a decision which adopts the resolution of the dispute
proposed by a Party. Unless otherwise agreed to by the Parties, the arbitrator
shall render a decision within forty-five (45) days of the conclusion of the
arbitration hearing, and shall notify the Parties in writing of such decision
and the reasons supporting such decision. The decision of the arbitrator shall
be final and binding upon the Parties and may be enforced or challenged in any
court of competent jurisdiction. The arbitrator shall have no authority to award
any damages inconsistent with the terms of this Agreement. The decision must
also be filed at FERC if it affects FERC-jurisdictional rates, terms, and
conditions of service or facilities.

 

29.3.5 Expenses and Costs. The fees and expenses of the arbitrator shall be
shared equally by the Parties, unless the arbitrator specifies a different
allocation. All other expenses and costs of the arbitration proceeding shall be
the responsibility of the Party incurring such expenses and costs.

 

29.3.6 Location of Arbitration Proceedings. Unless otherwise agreed by the
Parties, any arbitration proceedings shall be conducted in El Paso, Texas.

 

29.3.7 Confidentiality. The existence, contents, or results of any arbitration
proceeding under this Article XXIX may not be disclosed without the prior
written consent of the Parties; provided, however, that any Party may make
disclosures as may be required to fulfill regulatory obligations to any agencies
having jurisdiction, seek or obtain from a court of competent jurisdiction
judgment on, confirmation, or vacation of an arbitration award, and may inform
its lenders, Affiliates, auditors, attorneys, and insurers, and any Person
providing it with financing, as necessary, under pledge of confidentiality and
may consult with expert consultants as required in connection with an
arbitration proceeding under pledge of confidentiality. If a Party seeks
preliminary injunctive relief from any court to preserve the status quo or avoid
irreparable harm pending arbitration, the Parties shall keep the court
proceedings confidential to the maximum extent permitted by Applicable Laws and
Regulations.

 

29.3.8 Preliminary Injunctive Relief. Nothing in this Article XXIX shall be
construed to preclude the ability of any Party to resort to a court of competent
jurisdiction solely for the purposes of securing a temporary or preliminary
injunction to preserve the status quo or avoid irreparable harm pending
arbitration. This Article 29.3.8 shall not be construed as a waiver of
arbitration under Article 29.3.

 

29.4

FERC Jurisdiction Over Certain Disputes. Nothing in this Agreement shall be
construed to preclude any Party from filing an application, petition or
complaint with FERC with respect to any claim over which FERC has jurisdiction.
In such case, the other Party may request that FERC decline to adjudicate such
application, petition or complaint. If FERC declines to adjudicate such
application, petition or complaint with respect to all or part of a claim, the
portion of the claim not so accepted by FERC may be resolved through
arbitration, as provided

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  54    

--------------------------------------------------------------------------------

 

in this Article XXIX. To the extent that FERC asserts or accepts jurisdiction
over all or part of a claim, the decisions, findings of fact, or orders of FERC
shall be final and binding, subject to judicial review under the Federal Power
Act, and any arbitration proceedings that may have commenced prior to the
assertion or acceptance of jurisdiction by FERC shall be stayed, pending the
outcome of the FERC proceedings. The arbitrator shall have no authority to
modify, and shall be conclusively bound by, any decisions, findings of fact, or
orders of FERC; provided, however, that to the extent that any decisions,
findings of fact, or orders of FERC do not provide a final or complete remedy to
the Party seeking relief, such Party may proceed to arbitration under this
Article XXIX to secure such a remedy, subject to any FERC decisions, findings,
or orders.

 

29.5 Continued Performance. The Parties shall continue to perform their
respective obligations under this Agreement during the pendency of any dispute
including a dispute regarding the effectiveness of the purported termination of
this Agreement.

 

Article XXX

MISCELLANEOUS

 

30.1 Partial Invalidity. Wherever possible, each provision of this Agreement
shall be interpreted in a manner as to be effective and valid under Applicable
Laws and Regulations, but if any provision contained herein shall be found to be
invalid, illegal, or unenforceable in any respect and for any reason, such
provision shall be ineffective to the extent, but only to the extent, of such
invalidity, illegality, or unenforceability without invalidating the remainder
of the provision or any provision of this Agreement, unless such a construction
would be unreasonable. If such a construction would be unreasonable or would
deprive a Party of a material benefit under this Agreement, the Parties shall
seek to amend this Agreement to remove the invalid portion and otherwise provide
the benefit, unless prohibited by Applicable Laws and Regulations.

 

30.2 Successors Included. Reference to any individual, corporation, or other
entity shall be deemed a reference to such individual, corporation, or other
entity together with its successors and permitted assigns from time to time.

 

30.3 Applicable Laws and Regulations. This Agreement is made subject to all
existing and future Applicable Laws and Regulations, and to all existing and
future duly promulgated orders or other duly authorized actions of Governmental
Authorities having jurisdiction over the matters set forth in this Agreement.

 

30.4 Choice of Law and Jurisdiction. The interpretation and performance of this
Agreement shall be in accordance with the laws of the State of New Mexico,
without regard to choice of law or conflict of laws principles that would
require the application of the laws of a different jurisdiction.

 

30.5

Entire Agreement. This Agreement supersedes all previous representations,
understandings, negotiations, and agreements either written or oral between the
Parties or their representatives with respect to the subject matter hereof, and
constitutes the entire agreement of the Parties with respect to the subject
matter hereof. In the event of any inconsistency between the main body of

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  55    

--------------------------------------------------------------------------------

 

this Agreement and the Appendices attached hereto and made a part hereof, the
main body of this Agreement shall control.

 

30.6 Counterparts to this Agreement. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one and the same instrument.

 

30.7 Amendments. No amendments or changes to this Agreement shall be binding
unless made in writing and duly executed by the Parties and accepted or approved
by the FERC. Notwithstanding any provisions in this Agreement to the contrary,
Generator may exercise its rights under Sections 205 and 206 of the Federal
Power Act and pursuant to FERC’s rules and regulations promulgated thereunder
with respect to any rate, term, condition, charge, classification of service,
rule or regulation for any services provided under this Agreement over which
FERC has jurisdiction. Notwithstanding any provisions in this Agreement to the
contrary, EPE may unilaterally make application to the FERC under Section 205 of
the Federal Power Act and pursuant to FERC’s rules and regulations promulgated
thereunder for a change in any rate, term, condition, charge, classification of
service, rule or regulation under or related to this Agreement.

 

30.8 Amendments Included. Reference to, and the definition of, any document
(including this Agreement) shall be deemed a reference to such document as it
may be amended, amended and restated, supplemented, or modified from time to
time.

 

30.9 Notices. Unless otherwise provided in this Agreement, any notice, consent,
or other communication required to be made under this Agreement shall be in
writing and shall be delivered in person, by certified mail (postage prepaid,
return receipt requested), or by nationally recognized overnight courier
(charges prepaid), in each case properly addressed to such Party as shown below,
or sent by facsimile transmission to the facsimile number indicated below. Any
Party may from time to time change its address for the purposes of notices,
consents, or other communications to that Party by a similar notice specifying a
new address, but no such change shall become effective until it is actually
received by the Party sought to be charged with its contents. All notices,
consents, or other communications required or permitted under this Agreement
that are addressed as provided in this Article 30.9 shall be deemed to have been
given (a) upon delivery if delivered in person, by overnight courier or
certified mail or (b) upon automatically generated confirmation if given by
facsimile.

 

Generator:

 

Senior Vice President

Bulk Marketing and Development

Public Service Company of New Mexico

2401 Aztec Road, NE

Albuquerque, New Mexico 87107

Tel:    505-855-6250

Fax:    505-855-6368

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  56    

--------------------------------------------------------------------------------

El Paso Electric Company:

 

Assistant Vice President, System Operations

El Paso Electric Company

123 W. Mills

El Paso, Texas 79901

Tel:    915-543-5711

Fax:    915-521-4763

 

Operating Agent:

 

Assistant Vice President, System Operations

El Paso Electric Company

123 W. Mills

El Paso, Texas 79901

Tel:    915-543-5711

Fax:    915-521-4763

 

30.10 Waivers. The failure of any Party to enforce at any time any provision of
this Agreement shall not be construed as a waiver of such provision. Nor shall
such Party’s failure to enforce a provision affect in any way the validity of
this Agreement or any portion thereof or the right of a Party thereafter to
enforce each and every provision of this Agreement. To be effective, a waiver
under this Agreement must be in writing and specifically state that it is a
waiver. No waiver of any breach of this Agreement shall be held to constitute a
waiver of any other or subsequent breach.

 

30.11 No Third Party Beneficiaries. Except as provided in Article IX with
respect to the WSCC for express purposes set forth in Article IX, nothing in
this Agreement, whether express or implied, is intended to confer any rights or
remedies under or by reason of this Agreement on any Persons other than the
Parties and their respective permitted successors and assigns.

 

30.12 Further Assurances. If any Party determines in its reasonable discretion
that any further instruments, assurances, or other things are necessary or
desirable to carry out the terms of this Agreement, the other Party shall
execute and deliver all such instruments or assurances, and do all things
reasonably necessary or desirable to carry out the terms of this Agreement.
Without limiting the generality of the foregoing, EPE agrees, at Generator’s
expense and upon Generator’s request, to prepare and/or provide such information
in connection with this Agreement and/or the services to be provided under this
Agreement as may be reasonably required by any potential lender to Generator.

 

30.13 Headings. The headings contained in this Agreement are solely for the
convenience of the Parties and shall not be used or relied upon in any manner in
the construction or interpretation of this Agreement.

 

30.14 Articles. Unless otherwise specified, all references in this Agreement to
numbered articles shall be to numbered articles in this Agreement.

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  57    

--------------------------------------------------------------------------------

30.15 Number, Gender, and Inclusion. Defined terms in the singular shall include
the plural and vice versa, and the masculine, feminine, or neuter gender shall
include all genders. Whenever the words “include,” “includes,” or “including”
are used in this Agreement, they are not limiting, and have the meaning as if
followed by the words “without limitation.”

 

30.16 Good Utility Practice. The Parties shall discharge any and all obligations
under this Agreement in accordance with Good Utility Practice.

 

30.17 Succession Upon Membership in an RTO. If the Operating Agent joins an RTO,
the terms and conditions provided in this Agreement for interconnection with the
EPE Transmission System at the Afton Switching Station shall be superseded by
any pertinent interconnection and operational provisions required by the RTO,
and the Parties shall amend this Agreement as necessary to conform with RTO
requirements. Additionally, if a change in the Operating Agent occurs under an
RTO, the Parties shall amend this Agreement to reflect such change.

 

30.18 Notification of Change of Operating Agent. The Operating Agent will
provide the other Party with advanced written notice of a change in the identity
of the Operating Agent.

 

30.19 Amended and Restated. The Interconnection Agreement is hereby amended and
restated in its entirety as set forth in this Agreement.

 

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date set
forth at the beginning of this Agreement.

 

PUBLIC SERVICE COMPANY OF NEW MEXICO

By:

 

/s/ ROGER FLYNN

--------------------------------------------------------------------------------

Title:

 

Executive Vice President &

Chief Operating Officer

EL PASO ELECTRIC COMPANY (INCLUDING IN ITS CAPACITY AS OPERATING AGENT)

By:

 

/s/ JOHN A. WHITACRE

--------------------------------------------------------------------------------

Title:

 

Vice President - Transmission & Distribution

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  58    

--------------------------------------------------------------------------------

Appendix A

Equipment to be Installed for Generator Interconnection Facilities

 

Appendix B

Equipment to be Installed for EPE Interconnection Facilities & Interconnection
System Upgrades

 

Appendix C

EPE’s and Generator’s Construction and Testing Schedule

 

Appendix D

Metering, Relay, and Communication Equipment

 

Appendix E

Interconnection Drawing and One-line and Schematics

 

Appendix F

Afton Plot Map

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

  59    

--------------------------------------------------------------------------------

APPENDIX A

 

EQUIPMENT TO BE INSTALLED

FOR GENERATOR INTERCONNECTION FACILITIES

PHASE I

 

The Afton Power Project Phase I consists of a simple cycle turbine for peaking
application and common facilities configured to allow for immediate expansion to
a combined cycle facility. The comprehensive design is based on interconnection
studies that have been completed for the existing combustion turbine. The unit
is being designed to current utility industry standards. Certain items below are
subject to bid change, field change, and manufacturer’s change but represent
final design as of the date of execution of this Agreement. The equipment
provided for the Facility is being designed to Generator design criteria.

 

The following major items are to be installed, as defined in the Agreement, as
Generator’s Interconnection Facilities:

 

  • GE 18 kV generator low side breaker, synchronizing systems, relay and
protective systems;

 

  • Waukesha 208 MVA 18kV: 345 kV autotransformer, three phase;

 

  • Interconnecting Isophase Al buss, PT’s, CT’s;

 

  • Steel reinforced concrete civil/foundation structures, conduit and cable
trench as required, control and power cables, grounding and lightning protection
system; and

 

  • Interconnection to EPE communication equipment, interconnection to
switchyard communication and control equipment.

--------------------------------------------------------------------------------

APPENDIX B

 

EQUIPMENT TO BE INSTALLED FOR EPE INTERCONNECTION FACILITIES AND

INTERCONNECTION SYSTEM UPGRADES

 

EPE Interconnection Facilities and Interconnection System Upgrades.

 

The Afton Switchyard is configured for an ultimate arrangement of four (4) bays
arranged in a breaker and a half arrangement. This ultimate arrangement can
accommodate four (4) 345 kV lines and three (3) generator connections. One
breaker position will be a spare position. The initial switchyard installation
will be two (2) bays arranged in breaker and a half arrangement. This initial
arrangement will provide connections for two (2) 345 kV lines and two (2)
generators. The switchyard is being designed using EPE standards.

 

The Afton 345kV Switchyard will be connected to El Paso Electric Company’s (EPE)
Luna to Newman 345kV Line by the construction of two (2) parallel single circuit
transmission lines (approximately 0.5 miles each) called the Afton to Luna line
No. 1 and the Afton to Newman Line.

 

Each line will consist of three (3) phases using two (2) 795 kcmil, 45/7 strands
ACSR code word “Tern” per phase and two (2) 3/8” EHS, 7 strands galvanized steel
overhead shieldwires. One shieldwire will carry integral fiber optic
communications cable.

 

The conductors and shieldwires will be supported using direct embedded H-Frame
tangent structures and single pole angle guyed tubular steel pole structures.

 

Connection to the existing EPE Luna to Newman Line will be by means of a flying
tap configuration. The new transmission lines will be insolated from each other
by installing a self-supporting steel pole Deadend structure with drilled pier
type foundations in the existing EPE Luna to Newman right of way.

 

The equipment being provided for the Switchyard was purchased using EPE
specifications, as follows:

 

  • Six (6) circuit breakers rated 362 kV, 1300 kV BIL, 2000 Amp, 40 kA
interrupting rating. The breakers are provided with bushing current transformers
and standard factory control cabinets. These breakers are being provided by
GE-Hitachi HVB, Inc.

 

  • Fourteen (14) 345 kV disconnect switches rated 362 kV, 1300 kV BIL, 2000
Amp, 100 kA withstand capability. Two of the switches are being provided with
grounding switches. These switches are Pascor Atlantic switches.

 

  • Fourteen (14) capacitor voltage transformers (CVT) rated 345 kV, 1300 kV
BIL, with a ratio of 1800/3000 to 1. The CVT’s accuracy classification is
0.3MWXYZ, ZZ. The CVT’s are being provided by Trench Limited.

 

  • Twelve (12) total current transformers (CT) as follows:

 

  • Six (6) current transformers (CT) rated 345kV, 1300kV BIL, with a ratio of
2000:5 AMR. The CT’s accuracy classification is 0.3B1.8.

--------------------------------------------------------------------------------

  • Three (3) current transformers (CT) rated 345kV, 1300kV BIL, with a ratio of
300:5 A. The CT’s accuracy classification is 0.15B1.8 and have an extended range
to provide metering accuracy for the plant auxiliary loads as well as plant
generation.

 

  • Three (3) current transformers (CT) rated 345kV, 1300kV BIL, with a ratio of
500:5 A. The CT’s accuracy classification is 0.15B1.8. The CT’s are being
provided by Trench Limited.

 

  • Structural Steel for transmission line dead ends and equipment supports.

 

  • DC system including batteries, battery rack, charger and panel boards. The
DC system will be rated 125 volts.

 

  • 120/208 volt AC auxiliary system including transformers, automatic transfer
switch and panel boards.

 

  • Control building for housing the 125 v DC system and the 120/208 v AC system
and the protective relay panels.

 

  • Protective relay and control panels for line and bus protection. Ten (10)
line protection and control panels and two (2) bus protection and control panels
will be included. The protective relay and control panels will be designed to
EPE standards. The panels include redundant revenue metering equipment. EPE
designed and provided six (6) transmission line protective relay panels.

 

  • Conduit and cable trench.

 

  • Control and power cable.

 

  • Grounding system consisting of cable, ground rods and connections to
equipment.

 

  • Lightning protection system consisting of shield wires connected to the
transmission line dead ends.

 

  • Switchyard bus rated 2000 amp. The bus will consist of aluminum tube and
ACSR conductor.

 

  • Lightning system mounted on the switchyard steel structures.

 

  • Bus support insulators.

 

  • Crushed rock for covering the switchyard.

 

  • Switchyard fence.

 

  • Interconnection to EPE communications equipment.

 

  • Interconnection to the Generators plant equipment.

 

  • Costs associated with transfer of a portion of the BLM 102630 R-O-W

 

Total cost of EPE Interconnection Facilities and Interconnection System
Upgrades, including installation, labor and overheads:

 

$8,539,351.82 (per Generator accounting records as of June 3, 2003)

 

To allocate the $8,539,351.82 into EPE Interconnection Facilities Costs and
Interconnection System Upgrade Costs, a detailed estimate of the costs of the
facilities between the Interconnection Point and Generator’s side of air switch
32485 was obtained from the two primary contractors. The resulting estimate of
$400,016.38 represents the cost of the EPE Interconnection Facilities. The cost
of the Interconnection System Upgrades is equal to the remaining amount of
$8,139,335.44.

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

       

--------------------------------------------------------------------------------

EPE Interconnection Facilities Costs

 

EPE Interconnection Facilities

 

    

Steel and Apparatus

12,198.00   

High Switch Support Stand

54,947.00   

Single Bay Dead End Tower at Generator Step Up Transformer

68,072.50   

50% of Double Bay Dead End Tower in Afton Switchyard

47,925.00   

Current Transformer (3 – single phase, ratio: 300:5, accuracy: 0.15B1.8)

28,288.00   

Disconnect Switch at Generator Step Up Transformer

--------------------------------------------------------------------------------

$211,430.50   

Subtotal Steel and Apparatus *

    

Installation, Labor, Hardware, Grounding, Foundations, Appurtenances

60,869.50   

50% of Double Bay Deadend in Afton Switchyard

21,422.00   

Conductor & Static between Deadend Towers

71,216.00   

Single Bay Deadend at Generator Step up Transformer

--------------------------------------------------------------------------------

    

Subtotal Installation, Labor, Hardware, Grounding, Foundations,

$153,507.50   

Appurtenances **

$364,938.00   

Total Direct Costs Associated with EPE Interconnection Facilities

--------------------------------------------------------------------------------

$35,078.38   

Overhead Costs (ratably allocated)

--------------------------------------------------------------------------------

$400,016.38   

Total EPE Interconnection Facilities (radial facilities)

--------------------------------------------------------------------------------

 

EPE Interconnection Facilities costs are broken down into a listing for steel
and apparatus and for the associated costs of installation, labor, hardware,
grounding, foundations, appurtenances required to put the steel and apparatus
into service.

* allocation of costs to EPE Interconnection Facilities per estimate provided by
Power Engineers

** allocation of costs to EPE Interconnection Facilities per estimate provided
by Great Southwestern

 

Interconnection System Upgrade Costs

 

Interconnection System Upgrades

 

    

Total Direct Costs associated with Interconnection System

$7,425,577.93   

Upgrades

$713,757.51   

Overhead Costs (ratably allocated)

--------------------------------------------------------------------------------

$8,139,335.44   

(a) Total Interconnection System Upgrades (network upgrades)

 

Note: The dollar values and allocations in this Appendix B were provided by
Generator as of June 3, 2003 and are subject to audit by EPE in accordance with
Article 7.1.3.

 

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

       

--------------------------------------------------------------------------------

LOGO [g90589appd_b.jpg]

--------------------------------------------------------------------------------

APPENDIX C

 

EPE’S AND GENERATOR’S CONSTRUCTION AND TESTING SCHEDULE

 

As of the Effective Date of this Agreement the Parties have completed the
construction and testing schedule.

 

--------------------------------------------------------------------------------

First Amended and Restated

Interconnection Agreement between

El Paso Electric Company and

Public Service Company of New Mexico

       

--------------------------------------------------------------------------------

LOGO [g90589appd_p1.jpg]

--------------------------------------------------------------------------------

LOGO [g90589appd_p2.jpg]

--------------------------------------------------------------------------------

LOGO [g90589appd_p3.jpg]

--------------------------------------------------------------------------------

LOGO [g90589appd_e.jpg]

--------------------------------------------------------------------------------

LOGO [g90589appd_f.jpg]