Exhibit 10.14-01
UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION

El Paso Electric Company        )
v.                )    Docket No. EL06-45-000 and all sub-dockets
Tucson Electric Power Company    )

Tucson Electric Power Company    )
v.                )    Docket No. EL06-46-000 and all sub-dockets
El Paso Electric Company        )

[Consolidated]

SETTLEMENT AGREEMENT
This Settlement Agreement (“Settlement”) is by and between El Paso Electric
Company (“El Paso”) and Tucson Electric Power Company (“Tucson”) in resolution
of their disputes regarding the “Tucson - El Paso Power Exchange and
Transmission Agreement” entered into in 1982 (“the 1982 Agreement”), which
disputes have been the subject of the complaint dockets identified above,
currently pending on appeal before the United States Court of Appeals for the
District of Columbia Circuit, and also the subject of litigation before the
United States District Court for the District of Arizona. El Paso and Tucson are
sometimes referred to jointly as the “Parties.”
WHEREAS, El Paso and Tucson have worked together over the course of the last
several months in an effort to resolve their differences under the 1982
Agreement;

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WHEREAS, those efforts have resulted in a mutually-agreed upon resolution that
will end the
litigation that commenced five years ago before the Federal Energy Regulatory
Commission (the “Commission”), and now is the subject of two related cases
before the Courts;
WHEREAS, the Parties look forward to working with each other cooperatively
during the many years to come under which this Settlement is to remain in
effect.     
ACCORDINGLY, EL PASO AND TUCSON HAVE AGREED, AS FOLLOWS:
ARTICLE I
TUCSON LUMP SUM PAYMENT TO EL PASO
Within 10 calendar days from the Settlement's Effective Date, Tucson shall pay
El Paso, by check or wire transfer, a lump sum amount equal to the total amount
that would have been paid if Tucson had paid El Paso $69,300 per month from
February 1, 2006 through the day immediately prior to the Settlement's Effective
Date, plus interest calculated in accordance with the methodology set forth in
18 CFR § 35.19a(2)(iii), for the period from February 1, 2006 to the Effective
Date. The Parties agree that the amount will be calculated as shown in the
attachment, which sets forth the amount calculated for the period February 1,
2006 through year-end 2010. This amount will continue to accrue principal and
interest until the Effective Date. This payment under Article I is an integral
part of the Settlement's overall resolution of the Parties' claims against each
other related to Tucson's rights to transmission service on the El Paso system
in the Springerville-Luna 345 kV circuit and in the 345 kV circuit from Luna via
Hidalgo to Greenlee under the 1982 Agreement.

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ARTICLE II
TUCSON'S RESERVATION OF OATT SERVICE FROM EL PASO
Immediately upon the Settlement's Effective Date and continuing through the term
of the Settlement (unless otherwise mutually agreed upon by the Parties), Tucson
shall reserve from El Paso at least 30 MW of firm point-to-point transmission
capacity under the Open Access Transmission Tariff of El Paso on file at the
Commission (“El Paso's OATT”) for transmission of electricity from the receipt
point of Luna to the delivery point of Greenlee, under the attached service
agreement, and shall pay for such capacity at the yearly delivery rate for firm
point-to-point transmission service set forth in Schedule 7, Section A, of El
Paso's OATT (as that rate may change from time to time).
In addition, immediately upon the later of the Settlement's Effective Date and
the date on which Tucson (or any party delivering power to Tucson's Balancing
Authority Area for Tucson's use in serving its load) begins receiving
electricity from the first phase of the Macho Springs Project, and continuing
through the term of the Settlement (unless otherwise mutually agreed upon by the
Parties), Tucson shall reserve from El Paso at least 10 MW of firm
point-to-point transmission capacity under El Paso's OATT for transmission of
electricity from the receipt point of Luna to the delivery point of
Springerville under the attached service agreement, and shall pay for such
capacity at the yearly delivery rate for firm point-to-point transmission
service set forth in Schedule 7, Section A of El Paso's OATT (as that rate may
change from time to time). The Macho Springs Project refers to the 99 MW
generating facility being constructed by Macho Springs Power I, LLC in Luna
County, New Mexico to interconnect with the El Paso

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system approximately 30 miles from the receipt point of Luna. The first phase of
the Macho Springs Project consists of approximately 50 MW.
To be clear, in no circumstance during the term of this Settlement will the rate
Tucson pays El Paso for firm point-to-point service under this Article be less
than the El Paso Schedule 7, Section A yearly delivery rate currently set forth
in El Paso's OATT, unless El Paso makes a rate change filing to lower its rates
for Schedule 7, Section A service under Section 205 of the Federal Power Act, or
the Commission or a third party seeks to lower El Paso's rates for Schedule 7,
Section A service pursuant to Section 206 of the Federal Power Act, and those
lower rates are made effective during the term of this Settlement.
Tucson may request El Paso to provide transmission service on a non-firm basis
over receipt points and delivery points other than those specified in the
attached service agreements, in amounts not to exceed its firm capacity
reservations, without incurring an additional non-firm point-to-point
transmission service charge or executing a new service agreement, subject to the
conditions specified in Section 22.1 of the El Paso OATT. Tucson may also
request El Paso to modify the receipt points and/or delivery points specified in
the attached service agreements on a firm basis in accordance with Section 22.2
of the El Paso OATT. If Tucson requests modification of receipt or delivery
points on a firm basis under Section 22.2 of El Paso's OATT, El Paso shall treat
the request as a new request for service, and process it under the procedures
set forth in El Paso's OATT. Unless the receipt points and/or delivery points
specified in the attached service agreements are modified on a firm basis,
Tucson shall remain obligated to reserve, and pay for, at least 30 MW and 10 MW
of firm point-to-point transmission capacity at the points set forth in the
attached service agreements

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through the term of the Settlement. If the receipt points and/or delivery points
specified in the attached service agreements are modified on a firm basis during
the term of the Settlement, Tucson shall remain obligated to reserve, and pay
for, at least 30 MW and 10 MW of firm point-to-point transmission capacity at
the modified points, at a rate no less than El Paso's Schedule 7, Section A
yearly delivery rate.
Tucson shall be responsible for compensating El Paso for real power losses
pursuant to Schedule 10 of the El Paso OATT, as that schedule may change from
time to time. Tucson shall also be responsible for paying any applicable
ancillary service charges (including, but not limited to charges for ancillary
services under Schedules 1 and 2 of El Paso's OATT), and any other charges (in
effect currently or made effective during the term of this Settlement)
applicable under El Paso's OATT to firm point-to-point transmission service
provided pursuant to the attached service agreements or any superseding service
agreements.
Nothing in this Settlement shall affect Tucson's right to contest any rate
change filing under El Paso's OATT that may be proposed by El Paso during the
term of this Settlement, including any filing that proposes a change to (a) the
rates for firm point-to-point transmission service set forth in El Paso's OATT,
(b) the amount of compensation to be provided by Tucson for real power losses or
the manner in which that compensation is to be provided, or (c) any ancillary
service charges applicable to firm point-to-point transmission service.
ARTICLE III
TRANSMISSION RIGHTS UNDER THE 1982 AGREEMENT
170 MW of Transmission. Upon the Effective Date of the Settlement, the 200 MW of
transmission rights assigned by El Paso to Tucson in the Springerville-Luna 345
kV circuit and in

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the 345 kV circuit from Luna via Hidalgo to Greenlee in Sections 6.3 and 6.4 of
the 1982 Agreement shall be reduced to 170 MW of transmission rights, and to
only the following eligible point combinations, in the direction shown:
345 kV Receipt Point        345 kV Delivery Point
Springerville        à    Greenlee
Macho Springs    à    Springerville
Macho Springs    à    Greenlee
Luna            à    Springerville
Luna            à    Greenlee

Tucson shall be deemed to have reserved 170 MW on each circuit (the
Springerville-Luna 345 kV circuit and the 345 kV circuit from Luna via Hidalgo
to Greenlee), but Tucson may not schedule more than 170 MW of transmission
service on these lines under the 1982 Agreement, in total, at any one time. For
example, if Tucson were to schedule 130 MW of transmission service under the
1982 Agreement from any receipt point designated above to the corresponding
delivery point, it could only schedule a maximum of 40 MW of additional
transmission service under the 1982 Agreement between any receipt point and any
corresponding delivery point listed above for delivery at the same time. El Paso
will not accept multiple schedules of transmission service from Tucson where
such schedules provide for simultaneous transmission of electricity under the
1982 Agreement in excess of 170 MW, in total. For example, if Tucson were to
schedule 170 MW from Macho Springs to Springerville under the 1982 Agreement, it
would not be able to schedule transmission service for delivery of electricity
from Luna to Greenlee, at the same time under the 1982 Agreement. In addition,
the total amount of electricity to be transmitted at any time under the 1982
Agreement in

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accordance with Article III, and on a firm or non-firm basis under El Paso's
OATT in accordance with Article II, for delivery to Greenlee is subject to a
maximum limit of 200 MW. See Article IV.
No Other Points Permitted. To repeat what is prescribed above, Tucson's 170 MW
of transmission rights under the 1982 Agreement shall be solely at the receipt
and delivery points identified above, and solely in the point combinations and
directions shown. No other points, point combinations or directions are
permitted.
Ancillary Services. The Parties understand and agree that transmission service
provided by each Party under the 1982 Agreement is a “bundled” service which
includes both transmission service and certain transmission support functions
that are needed for the reliable transmission of electricity, and that nothing
in FERC Order No. 888 or any other FERC rule, regulation or order has required
this service to be “unbundled.” The Parties further agree that:
a)
Each of the Parties shall continue to provide such bundled transmission service
whenever it transmits electricity for the other Party under the 1982 Agreement,
in the same manner in which it has provided bundled transmission service in past
years under the 1982 Agreement.

b)
In the event transmission service under the 1982 Agreement is required to be
“unbundled” but the 1982 Agreement otherwise remains intact, the transmitting
Party shall provide scheduling, system control and dispatch service; reactive
supply and voltage control from generation or other sources service; and real
power losses (as those services are defined in FERC Order No. 888), as unbundled
ancillary services in conjunction with the transmission of electricity under the
1982 Agreement. Charges for real power losses will be those specified in the
1982

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Agreement, and each of the other two services will be provided at no additional
charge to the Party for whom electricity is being transmitted. However, the
transmitting Party shall not be obligated to provide any other ancillary
services (including those ancillary services specified in FERC Order No. 888 or
any ancillary services defined by the FERC in the future) in conjunction with
transmission of electricity under the 1982 Agreement.
c)
In the event that transmission service under the 1982 Agreement is required to
be unbundled, the Party for whom electricity is being transmitted shall have no
obligation either to purchase any ancillary services from the transmitting Party
or to self-provide any ancillary services as a condition of having electricity
transmitted under the 1982 Agreement.

Macho Springs Receipts. Macho Springs is a receipt point not currently in
existence, but it may become a receipt point during the term of this Settlement
upon the interconnection to the El Paso system of the generating facility being
constructed by Macho Springs Power I, LLC in Luna County, New Mexico. The
Parties specifically agree as part of this Settlement that (a) the only power
eligible for receipt at the Macho Springs point for transmission under the 1982
Agreement is power generated by the Macho Springs Project; and (b) any time
Tucson schedules transmission service on the El Paso transmission system with
Macho Springs as a receipt point (whether under the OATT service agreements
entered into under Article II or under the 1982 Agreement under this Article
III), Tucson shall dynamically transfer its Macho Springs power out of El Paso's
Balancing Authority Area. In the event transmission service under the 1982
Agreement is required to be unbundled, El Paso shall not be obligated by the

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1982 Agreement or this Settlement to offer and/or provide, in association with
any power received at the Macho Springs point, regulation service, energy
imbalance service, generator imbalance service, or any other ancillary service
adopted by FERC in the future.
To the extent that other ancillary services are necessary or required for the
transmission of power generated by the Macho Springs Project under the 1982
Agreement and this Settlement, El Paso shall not be responsible for those other
ancillary services, unless otherwise mutually-agreed between Tucson and El Paso.
El Paso Generator Receipts. El Paso may desire to use transmission rights that
were assigned to it in the 1982 Agreement for transmission of electricity
generated by a new wind-powered or other renewable generator that may be
interconnected to the Tucson system in the future (the “El Paso Generator”). The
Parties specifically agree as part of this Settlement that (a) any time El Paso
schedules transmission service under the 1982 Agreement with the El Paso
Generator as a receipt point, El Paso must dynamically transfer its power from
the El Paso Generator out of Tucson's Balancing Authority Area, and (b) the only
power eligible for receipt at the El Paso Generator receipt point under the 1982
Agreement is power from the El Paso Generator. In the event transmission service
under the 1982 Agreement is required to be unbundled, Tucson is not obligated by
the 1982 Agreement or this Settlement to offer and/or provide in association
with any power received at the El Paso Generator receipt point, regulation
service, energy imbalance service, generator imbalance service or any other
ancillary service adopted by FERC in the future.
To the extent that other ancillary services are necessary or required for the
transmission of power generated by the El Paso Generator under the 1982
Agreement and this Settlement,

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Tucson shall not be responsible for those other ancillary services, unless
otherwise mutually-agreed between Tucson and El Paso.
New Generation. This Settlement does not require either Party to construct
facilities for the other Party's benefit under the 1982 Agreement. Tucson has
indicated to El Paso that it may desire to add new generation in the future at
the Luna or Springerville receipt points, and the Parties hereby agree as
follows:
(a) If Tucson (or its affiliate) constructs a new generation plant at either
Luna or Springerville during the term of this Settlement, Tucson shall:
(i)
request interconnection under the Large or Small Generator Interconnection
Procedures in El Paso's OATT, and pre-pay for the cost of all facilities,
including Network Upgrades, required for the interconnection, and

(ii)
at Tucson's election, Tucson shall either (a) purchase and pay for transmission
service for delivery of electricity generated by such generation under El Paso's
OATT (with any associated obligation imposed on Tucson under El Paso's OATT to
pay El Paso for transmission facilities necessary to provide the OATT service),
or (b) make El Paso whole for the full cost of any facilities required to be
constructed and/or installed for the interconnection, including Network Upgrade
costs (if Tucson elects to have such generation transmitted under the 1982
Agreement).

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(b) If Tucson elects to have such electricity from the new generation plant
transmitted under the 1982 Agreement, the method under which Tucson shall make
El Paso whole shall be as follows: El Paso shall (i) calculate the non-usage
portion of transmission charges paid by all transmission customers for
transmission services under El Paso's OATT associated with the new generation at
the end of the repayment period agreed to by El Paso under the Large or Small
Generator Interconnection Agreement under which the new generation plant was
interconnected, with respect to power from the new generation plant, and (ii)
reimburse Tucson this amount; provided, however, that El Paso shall not be
obligated to reimburse Tucson any more than an amount equal to the total Network
Upgrade costs associated with the interconnection.
(c) If, instead of constructing a new generation plant at either Luna or
Springerville, Tucson purchases power from new generation constructed by an
unaffiliated third party at Luna and Springerville, Tucson shall, at its
election, either (i) have electricity from such new generation plant transmitted
under El Paso's OATT (with any associated obligation imposed on Tucson under the
OATT to pay El Paso for transmission facilities necessary to provide the OATT
service), or (ii) make El Paso whole for the cost of Network Upgrades associated
with the interconnection (if Tucson elects to have electricity from such new
generation plant transmitted under the 1982 Agreement).
(d) If Tucson elects to have electricity from such new generation plant
transmitted under the 1982 Agreement, the method under which Tucson shall make
El Paso whole shall be as follows: El Paso shall (i) calculate the non-usage
portion of transmission charges paid by all transmission customers for
transmission services under El Paso's OATT associated with the new

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generation at the end of the repayment period agreed to by El Paso under the
Large or Small Generator Interconnection Agreement under which the new
generation plant was interconnected, with respect to power from the new
generation plant, (ii) subtract those charges from the Network Upgrade costs
(including interest) for which El Paso has a reimbursement obligation to the
generator under the Large or Small Generator Interconnection Agreement, and
(iii) invoice Tucson the difference. Tucson shall pay the invoice within 30
days.
(e) When El Paso transmits electricity from any new generation plant at Luna or
Springerville for delivery to Tucson under the 1982 Agreement in accordance with
the provisions set forth above, Tucson shall dynamically transfer such
generation out of El Paso's Balancing Authority Area and El Paso's obligation to
offer and/or provide ancillary services for the new generation added at Luna or
Springerville shall be no greater than that applicable to the receipt of power
at the Macho Springs receipt point under the Section of this Article III
entitled “Macho Springs Receipts.”
(f) If El Paso's Large or Small Generator Interconnection Procedures or form of
agreement change during the period this Settlement is in effect such that there
is an inconsistency between the full pre-payment obligation imposed upon Tucson
in subsection (a)(i) above and the pre-payment provisions in the revised
procedures, then the pre-payment provisions in this Settlement shall govern.
(g) Similarly, if El Paso constructs a new generation plant during the term of
this Settlement at points of receipt connected to transmission facilities owned
by Tucson in which El Paso has been assigned transmission rights under the 1982
Agreement, El Paso shall:

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(i)
request interconnection under the Large or Small Generator Interconnection
Procedures in Tucson's OATT, and pre-pay for the cost of all facilities,
including Network Upgrades, required for the interconnection,

and
(ii)
at El Paso's election, El Paso shall either (a) purchase and pay for
transmission service for delivery of electricity generated by such generation
under Tucson's OATT (with any associated obligation imposed on El Paso under
Tucson's OATT to pay Tucson for transmission facilities necessary to provide the
OATT service), or (b) make Tucson whole for the full cost of any facilities
required to be constructed and/or installed for the interconnection, including
Network Upgrade costs (if El Paso elects to have such generation transmitted
under the 1982 Agreement).

(h) If El Paso elects to have such electricity from the new generation plant
transmitted under the 1982 Agreement, the method under which El Paso shall make
Tucson whole shall be as follows: Tucson shall (i) calculate the non-usage
portion of transmission charges paid by all transmission customers for
transmission services under Tucson's OATT associated with the new generation at
the end of the repayment period agreed to by Tucson under the Large or Small
Generator Interconnection Agreement under which the new generation plant was
interconnected, with respect to power from the new generation plant, and (ii)
reimburse El Paso this amount; provided, however, that Tucson shall not be
obligated to reimburse El Paso any more than an amount equal to the total
Network Upgrade costs associated with the interconnection.

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(i) If, instead of constructing a new generation plant, El Paso purchases power
from new generation constructed by an unaffiliated third party, El Paso shall,
at its election, either (i) have electricity from such new generation plant
transmitted under Tucson's OATT (with any associated obligation imposed on El
Paso under the OATT to pay Tucson for transmission facilities necessary to
provide the OATT service), or (ii) make Tucson whole for the cost of Network
Upgrades associated with the interconnection (if El Paso elects to have
electricity from such new generation plant transmitted under the 1982
Agreement).
(j) If El Paso elects to have electricity from such new generation plant
transmitted under the 1982 Agreement, the method under which El Paso shall make
Tucson whole shall be as follows: Tucson shall (i) calculate the non-usage
portion of transmission charges paid by all transmission customers for
transmission services under Tucson's OATT associated with the new generation at
the end of the repayment period agreed to by Tucson under the Large or Small
Generator Interconnection Agreement under which the new generation plant was
interconnected, with respect to power from the new generation plant, (ii)
subtract those charges from the Network Upgrade costs (including interest) for
which Tucson has a reimbursement obligation to the generator under the Large or
Small Generator Interconnection Agreement, and (iii) invoice El Paso the
difference. El Paso shall pay the invoice within 30 days.
(k) When Tucson transmits electricity from any new generation plant for delivery
to El Paso under the 1982 Agreement in accordance with the provisions set forth
above, El Paso shall dynamically transfer such generation out of Tucson's
Balancing Authority Area and Tucson's obligation to offer and/or provide
ancillary services for the new generation added shall be no

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greater than that applicable to the receipt of power at the Macho Springs
receipt point under the Section of this Article III entitled “Macho Springs
Receipts.”
(l) If Tucson's Large or Small Generator Interconnection Procedures or form of
agreement change during the period this Settlement is in effect such that there
is an inconsistency between the full pre-payment obligation imposed upon El Paso
in subsection (g)(i) above and the pre-payment provisions in the revised
procedures, then the pre-payment provisions in this Settlement shall govern.
ARTICLE IV
GREENLEE
Service provided under Articles II and III of this Settlement, combined, shall
not exceed 200 MW for delivery at Greenlee at any time.
ARTICLE V
EFFECTIVE DATE AND TERM
Effective Date. The Effective Date of this Settlement is the first day of the
first month after the later to occur of the following two issuances: (a)
issuance by the Federal Energy Regulatory Commission of a Final Non-Appealable
Order approving the Settlement without modification or condition, and (b)
issuance by the Federal Energy Regulatory Commission of a Final Non-Appealable
Order approving a settlement agreement between El Paso and Macho Springs Power
I, LLC regarding the reimbursement of network upgrade costs associated with the
interconnection of Macho Springs to the El Paso system. To be clear, both
issuances must occur for the Settlement to become effective.
Final Non-Appealable Order. An order shall be considered a Final Non-Appealable
Order (i) on the day after the expiration of the period for filing a request for
rehearing of the

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Commission's order approving the Settlement, when no such request for rehearing
has been filed, or (ii) if a request for rehearing is filed, on the day after
the expiration of the period for filing a request for rehearing of the
Commission's order on rehearing, when no further request for rehearing is filed.
Neither El Paso nor Tucson will file a request for rehearing of a Commission
order approving the Settlement without modification or condition.
Term. This Settlement shall become effective on the Effective Date and remain in
effect for the remaining term set forth in Section 6.4 of the 1982 Agreement,
which term began with the commercial operation date of the Luna-Springerville
circuit (on April 19, 1990) and is to end 40 years later (on April 19, 2030).
ARTICLE VI
FINAL RESOLUTION AND WAIVER
Final Resolution. This Settlement shall be a final and complete resolution of
Tucson's rights to transmission service on the El Paso system in the
Springerville-Luna 345 kV circuit and in the 345 kV circuit from Luna via
Hidalgo to Greenlee under the 1982 Agreement.
Litigation Withdrawn. Within 10 calendar days of the Settlement's Effective
Date, El Paso shall withdraw its appeal before the United States Court of
Appeals for the District of Columbia Circuit in Case No. 10-1194, and Tucson
shall withdraw its complaint before the United States District Court for the
District of Arizona in Case No. 4:08-CV-680-TUC-CKJ. The Parties agree to not
re-file or otherwise pursue those claims, or the claims in underlying
proceedings, in the future.

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Waiver. Approval of this Settlement shall constitute waiver of any of the
Commission's rules and regulations that may be necessary to effectuate the
Settlement in accordance with all of its terms.
ARTICLE VII
MISCELLANEOUS
Standard of Review. It is the intent of the Parties that, to the maximum extent
permitted by law, the provisions of this Settlement shall not be subject to
change under Sections 205 and 206 absent the written agreement of the Parties,
and that the standard of review for changes unilaterally proposed by either El
Paso or Tucson, or by the Commission acting sua sponte or at the request of a
third party, shall be the public interest standard of review, sometimes referred
to as the Mobile Sierra public interest standard.
Compromise. This Settlement is a compromise for the purpose of reaching a
resolution of a long-standing dispute. The Commission's approval of the
Settlement shall not constitute approval of, or any precedent regarding, any
principle or issue or methodology underlying the Settlement.
No Precedent. This Settlement is entered into upon the understanding that it
constitutes a negotiated agreement and no Party shall be deemed to have
approved, accepted, agreed to, or consented to any principle or position in the
captioned proceedings or to have prejudiced positions taken or that may be taken
in these or any other proceedings. This Settlement shall not be cited or relied
upon as precedent for any purpose, or as establishing any issue or principle,
except to the extent of enforcing the terms and conditions of the Settlement
itself. Nothing herein shall be deemed a “settled practice” as that term was

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interpreted and applied in Public Service Comm'n of New York v. FERC, 642 F.2d
1335 (D.C. Cir. 1980).     
Withdrawal. This Settlement is submitted by the Parties on the express condition
that it will not become effective if the Commission modifies and/or attaches
conditions to it. In the event the Settlement does not become effective pursuant
to its terms, it will be withdrawn from the dockets and shall not be used by
anyone in these Commission proceedings or in any other case, court docket or
other forum.    
Nonseverability. The Settlement's various provisions are not severable.     
Governing Law, Regulatory Authority, and Rules. The validity, interpretation and
enforcement of this Settlement and each of its provisions shall be governed and
construed in accordance with the laws of the State of Arizona, without regard to
its conflicts of law principles; provided, however, that where jurisdiction over
a dispute between the Parties properly lies before the federal courts, the Party
with a cause of action may file suit before a federal court with jurisdiction to
hear the dispute. This Settlement is subject to all Applicable Laws and
Regulations. Each Party expressly reserves the right to seek changes in, appeal,
or otherwise contest any laws, orders, or regulations of a Governmental
Authority.
Amendment. The Parties may amend this Settlement by a written instrument duly
executed by both Parties, subject to any applicable approval(s) required by a
Governmental Authority.
No Third-Party Beneficiaries. This Settlement is not intended to and does not
create rights, remedies, or benefits of any character whatsoever in favor of any
persons, corporations, associations, or entities other than the Parties, and the
obligations herein assumed are solely

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for the use and benefit of the Parties. Neither Party may assign the rights
provided it under this Settlement.
Waiver. The failure of a Party to this Settlement to insist, on any occasion,
upon strict performance of any provision of this Settlement will not be
considered a waiver of any obligation, right, or duty of, or imposed upon, such
Party. Any waiver at any time by either Party of its rights with respect to this
Settlement shall not be deemed a continuing waiver or a waiver with respect to
any other failure to comply with any other obligation, right, duty of this
Settlement. Any waiver of this Settlement shall, if requested, be provided in
writing.
Entire Agreement. This Settlement, including all attachments and any documents
identified there, constitutes the entire agreement between the Parties with
reference to the subject matter hereof, and supersedes all prior and
contemporaneous understandings or agreements, oral or written, between the
Parties with respect to the subject matter of this Settlement.
Conflicts. In the event of a conflict between the body of this Settlement and
any attachments, the terms and provisions of the body of this Settlement shall
prevail and be deemed the final intent of the Parties.
No Dedication of Facilities. No undertaking by El Paso under any provision of
this Settlement shall constitute the dedication of El Paso's system or any
portion thereof to Tucson or to the public.
Partnership. This Settlement shall not be interpreted or construed to create an
association, joint venture, agency relationship, or partnership between the
Parties or to impose any partnership obligation or partnership liability upon
either Party. Neither Party shall have

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any right, power or authority to enter into any agreement or undertaking for, or
act on behalf of, or to act as or be an agent or representative of, or to
otherwise bind, the other Party.
Notices. Notices required in connection with the scheduling of transmission
service under Article II of this Settlement shall be in accordance with the
service agreements attached to the Settlement. Notices required in connection
with the scheduling of transmission service under Article III of this Settlement
shall be in conformance with the Parties past practices under the 1982
Agreement. Any other written notice or request of a more general nature in
connection with this Settlement shall be tendered to the applicable Party at the
following addresses:
If to Tucson:
Tucson Electric Power Company
c/o UniSource Energy Corp.
Attention: General Counsel    
One South Church Avenue
Tucson, AZ 85701
Phone:     
Fax:         
Email:     

If to El Paso:
El Paso Electric Company         El Paso Electric Company
Attention: General Counsel      Attention: Asst. VP - System Operations
100 N. Stanton             100 N. Stanton
El Paso, TX 79901            El Paso, TX 79901
Phone: (915) 543-5776         Phone: (915) 543-5719
Fax: (915) 521-4728            Fax: (915) 521-4763
Email: mary.kipp@epelectric.com     Email: joe.nevarez@epelectric.com

Interpretation. Both Parties participated in the preparation of this Settlement
and no ambiguity should be construed against any Party as the primary drafter
hereof.

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Privilege for Settlement Discussion. All offers of settlement and settlement
discussions and negotiations related thereto are and shall remain subject to the
privilege for such communications established by the Commission's Rules.
Multiple Counterparts. This Settlement may be executed in two or more
counterparts, each of which is deemed an original but all constitute one and the
same instrument.

The Parties have caused their duly authorized representatives to execute this
Settlement on this 26th day of April, 2011.

For El Paso Electric Company                For Tucson Electric Power Company

/s/David W. Stevens              /s/David G. Hutchens
Print Name: David W. Stevens     Print Name: David G. Hutchens        
Title: April 26, 2011             Title: Executive Vice President

        

21

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

EL PASO ELECTRIC COMPANY
 
 
 
 
 
 
 
 
 
 
 
 
TUCSON ELECTRIC POWER COMPANY
 
 
 
 
 
 
 
 
 
 
Settlement Calculation, Article I
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Interest Rate
Annual Interest Rate
Annual Interest Rate
Annual Interest Rate
Annual Interest Rate
Annual Interest Rate
Annual Interest Rate
 
 
 
0.0678
0.0730
0.0774
0.0817
0.0825
0.0825
0.0825
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
30 MW @
 
Quarter Ended
Quarter Ended
Quarter Ended
Quarter Ended
Quarter Ended
Quarter Ended
Quarter Ended
 
Firm PTP
 
31-Mar-06
30-Jun-06
30-Sep-06
31-Dec-06
31-Mar-07
30-Jun-07
30-Sep-07
 
$2.31 kW/mo.
Assume
90 Days In Quarter
91 Days in Quarter
92 Days in Quarter
92 Days in Quarter
90 Days In Quarter
91 Days in Quarter
92 Days in Quarter
 
Monthly Delivery
Earn Interest
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Charge
All Month
Interest
Cumulative
Interest
Cumulative
Interest
Cumulative
Interest
Cumulative
Interest
Cumulative
Interest
Cumulative
Interest
Cumulative
 
 
 
0.0170
Balance
0.0183
Balance
0.0194
Balance
0.0204
Balance
0.0206
Balance
0.0206
Balance
0.0206
Balance
 
 
 
Q1 2006
Q1 2006
Q2 2006
Q2 2006
Q3 2006
Q3 2006
Q4 2006
Q4 2006
Q1 2007
Q1 2007
Q2 2007
Q2 2007
Q3 2007
Q3 2007
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Feb 06
69,300

1-Feb-06
757

70,057

1,279

71,336

1,380

72,716

1,485

74,201

1,530

75,731

1,562

77,293

1,594

78,888

Mar
69,300

1-Mar-06
392

69,692

1,272

70,963

1,373

72,337

1,477

73,814

1,522

75,336

1,554

76,890

1,586

78,476

Apr
69,300

1-Apr-06
—

—

1,251

70,551

1,365

71,916

1,469

73,385

1,514

74,898

1,545

76,443

1,577

78,020

May
69,300

1-May-06
—

—

834

70,134

1,357

71,491

1,460

72,951

1,505

74,456

1,536

75,991

1,567

77,559

Jun
69,300

1-Jun-06
—

—

403

69,703

1,349

71,052

1,451

72,503

1,495

73,998

1,526

75,525

1,558

77,082

Jul
69,300

1-Jul-06
—

—

—

—

1,326

70,626

1,443

72,069

1,486

73,555

1,517

75,072

1,548

76,621

Aug
69,300

1-Aug-06
—

—

—

—

875

70,175

1,433

71,608

1,477

73,085

1,507

74,592

1,538

76,131

Sep
69,300

1-Sep-06
—

—

—

—

423

69,723

1,424

71,147

1,467

72,614

1,498

74,112

1,529

75,640

Oct
69,300

1-Oct-06
—

—

—

—

—

—

1,400

70,700

1,458

72,158

1,488

73,647

1,519

75,165

Nov
69,300

1-Nov-06
—

—

—

—

—

—

923

70,223

1,448

71,671

1,478

73,150

1,509

74,658

Dec
69,300

1-Dec-06
—

—

—

—

—

—

462

69,762

1,439

71,200

1,469

72,669

1,499

74,168

Jan 07
69,300

1-Jan-07
—

—

—

—

—

—

—

—

1,413

70,713

1,458

72,172

1,489

73,660

Feb
69,300

1-Feb-07
—

—

—

—

—

—

—

—

921

70,221

1,448

71,669

1,478

73,148

Mar
69,300

1-Mar-07
—

—

—

—

—

—

—

—

476

69,776

1,439

71,216

1,469

72,684

Apr
69,300

1-Apr-07
—

—

—

—

—

—

—

—

—

—

1,414

70,714

1,458

72,172

May
69,300

1-May-07
—

—

—

—

—

—

—

—

—

—

942

70,242

1,449

71,691

Jun
69,300

1-Jun-07
—

—

—

—

—

—

—

—

—

—

455

69,755

1,439

71,194

Jul
69,300

1-Jul-07
—

—

—

—

—

—

—

—

—

—

—

—

1,414

70,714

Aug
69,300

1-Aug-07
—

—

—

—

—

—

—

—

—

—

—

—

932

70,232

Sep
69,300

1-Sep-07
—

—

—

—

—

—

—

—

—

—

—

—

451

69,751

Oct
69,300

1-Oct-07
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Nov
69,300

1-Nov-07
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Dec
69,300

1-Dec-07
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Jan 08
69,300

1-Jan-08
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Feb
69,300

1-Feb-08
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Mar
69,300

1-Mar-08
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Apr
69,300

1-Apr-08
—

—

—

—

—

—

—

—

—

—

—

—

—

—

May
69,300

1-May-08
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Jun
69,300

1-Jun-08
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Jul
69,300

1-Jul-08
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Aug
69,300

1-Aug-08
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Sep
69,300

1-Sep-08
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Oct
69,300

1-Oct-08
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Nov
69,300

1-Nov-08
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Dec
69,300

1-Dec-08
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Jan 09
69,300

1-Jan-09
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Feb
69,300

1-Feb-09
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Mar
69,300

1-Mar-09
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Apr
69,300

1-Apr-09
—

—

—

—

—

—

—

—

—

—

—

—

—

—

May
69,300

1-May-09
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Jun
69,300

1-Jun-09
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Jul
69,300

1-Jul-09
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Aug
69,300

1-Aug-09
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Sep
69,300

1-Sep-09
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Oct
69,300

1-Oct-09
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Nov
69,300

1-Nov-09
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Dec
69,300

1-Dec-09
—

—

—

—

—

—

—

—

—

—

—

—

—

—

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

EL PASO ELECTRIC COMPANY
 
 
 
 
 
 
 
 
 
 
 
 
TUCSON ELECTRIC POWER COMPANY
 
 
 
 
 
 
 
 
 
 
Settlement Calculation, Article I
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Interest Rate
Annual Interest Rate
Annual Interest Rate
Annual Interest Rate
Annual Interest Rate
Annual Interest Rate
Annual Interest Rate
 
 
 
0.0678
0.0730
0.0774
0.0817
0.0825
0.0825
0.0825
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
30 MW @
 
Quarter Ended
Quarter Ended
Quarter Ended
Quarter Ended
Quarter Ended
Quarter Ended
Quarter Ended
 
Firm PTP
 
31-Mar-06
30-Jun-06
30-Sep-06
31-Dec-06
31-Mar-07
30-Jun-07
30-Sep-07
 
$2.31 kW/mo.
Assume
90 Days In Quarter
91 Days in Quarter
92 Days in Quarter
92 Days in Quarter
90 Days In Quarter
91 Days in Quarter
92 Days in Quarter
 
Monthly Delivery
Earn Interest
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Charge
All Month
Interest
Cumulative
Interest
Cumulative
Interest
Cumulative
Interest
Cumulative
Interest
Cumulative
Interest
Cumulative
Interest
Cumulative
 
 
 
0.0170
Balance
0.0183
Balance
0.0194
Balance
0.0204
Balance
0.0206
Balance
0.0206
Balance
0.0206
Balance
 
 
 
Q1 2006
Q1 2006
Q2 2006
Q2 2006
Q3 2006
Q3 2006
Q4 2006
Q4 2006
Q1 2007
Q1 2007
Q2 2007
Q2 2007
Q3 2007
Q3 2007
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Jan 10
69,300

1-Jan-10
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Feb
69,300

1-Feb-10
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Mar
69,300

1-Mar-10
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Apr
69,300

1-Apr-10
—

—

—

—

—

—

—

—

—

—

—

—

—

—

May
69,300

1-May-10
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Jun
69,300

1-Jun-10
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Jul
69,300

1-Jul-10
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Aug
69,300

1-Aug-10
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Sep
69,300

1-Sep-10
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Oct
69,300

1-Oct-10
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Nov
69,300

1-Nov-10
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Dec
69,300

1-Dec-10
—

—

—

—

—

—

—

—

—

—

—

—

—

—

 
 
 
—

—

—

—

—

—

—

—

—

—

—

—

—

—

January 1, 2011
4,088,700

 
1,149

139,749

5,038

352,687

9,448

570,035

14,428

792,363

19,153

1,019,416

23,837

1,251,153

28,602

1,487,654

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

EL PASO ELECTRIC COMPANY
 
 
 
 
 
 
 
 
 
 
 
 
TUCSON ELECTRIC POWER COMPANY
 
 
 
 
 
 
 
 
 
 
Settlement Calculation, Article I
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Interest Rate
Annual Interest Rate
Annual Interest Rate
Annual Interest Rate
Annual Interest Rate
Annual Interest Rate
Annual Interest Rate
 
 
 
0.0825
0.0776
0.0677
0.0530
0.0500
0.0452
0.0337
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
30 MW @
 
Quarter Ended
Quarter Ended
Quarter Ended
Quarter Ended
Quarter Ended
Quarter Ended
Quarter Ended
 
Firm PTP
 
31-Dec-07
31-Mar-08
30-Jun-08
30-Sep-08
31-Dec-08
31-Mar-09
30-Jun-09
 
$2.31 kW/mo.
Assume
92 Days in Quarter
91 Days In Quarter
91 Days in Quarter
92 Days in Quarter
92 Days in Quarter
90 Days in Quarter
91 Days in Quarter
 
Monthly Delivery
Earn Interest
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Charge
All Month
Interest
Cumulative
Interest
Cumulative
Interest
Cumulative
Interest
Cumulative
Interest
Cumulative
Interest
Cumulative
Interest
Cumulative
 
 
 
0.0206
Balance
0.0194
Balance
0.0169
Balance
0.0133
Balance
0.0125
Balance
0.0113
Balance
0.0084
Balance
 
 
 
Q4 2007
Q4 2007
Q1 2008
Q1 2008
Q2 2008
Q2 2008
Q3 2008
Q3 2008
Q4 2008
Q4 2008
Q1 2009
Q1 2009
Q2 2009
Q2 2009
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Feb 06
69,300

1-Feb-06
1,627

80,515

1,562

82,077

1,389

83,466

1,106

84,572

1,057

85,629

968

86,596

730

87,326

Mar
69,300

1-Mar-06
1,619

80,095

1,554

81,649

1,382

83,030

1,100

84,131

1,052

85,182

963

86,145

726

86,871

Apr
69,300

1-Apr-06
1,609

79,629

1,545

81,174

1,374

82,548

1,094

83,641

1,046

84,687

957

85,644

722

86,365

May
69,300

1-May-06
1,600

79,158

1,536

80,694

1,366

82,060

1,087

83,147

1,039

84,186

951

85,138

717

85,855

Jun
69,300

1-Jun-06
1,590

78,672

1,526

80,198

1,357

81,556

1,081

82,636

1,033

83,669

945

84,615

713

85,328

Jul
69,300

1-Jul-06
1,580

78,201

1,517

79,718

1,349

81,067

1,074

82,142

1,027

83,168

940

84,108

709

84,817

Aug
69,300

1-Aug-06
1,570

77,701

1,507

79,208

1,341

80,549

1,067

81,616

1,020

82,636

934

83,570

704

84,274

Sep
69,300

1-Sep-06
1,560

77,200

1,498

78,698

1,332

80,030

1,060

81,091

1,014

82,104

928

83,032

700

83,731

Oct
69,300

1-Oct-06
1,550

76,716

1,488

78,204

1,324

79,528

1,054

80,581

1,007

81,589

922

82,511

695

83,206

Nov
69,300

1-Nov-06
1,540

76,198

1,478

77,676

1,315

78,991

1,047

80,038

1,000

81,038

916

81,954

690

82,644

Dec
69,300

1-Dec-06
1,530

75,697

1,469

77,166

1,306

78,472

1,040

79,512

994

80,506

910

81,415

686

82,101

Jan 07
69,300

1-Jan-07
1,519

75,180

1,458

76,638

1,297

77,935

1,033

78,968

987

79,955

903

80,859

681

81,540

Feb
69,300

1-Feb-07
1,509

74,656

1,448

76,105

1,288

77,393

1,025

78,418

980

79,398

897

80,296

676

80,972

Mar
69,300

1-Mar-07
1,499

74,184

1,439

75,623

1,280

76,903

1,019

77,922

974

78,896

892

79,787

672

80,459

Apr
69,300

1-Apr-07
1,489

73,661

1,429

75,090

1,271

76,361

1,012

77,372

967

78,339

885

79,225

667

79,892

May
69,300

1-May-07
1,479

73,170

1,419

74,589

1,262

75,852

1,005

76,857

961

77,817

879

78,697

663

79,360

Jun
69,300

1-Jun-07
1,468

72,663

1,410

74,072

1,254

75,326

998

76,324

954

77,278

873

78,151

658

78,810

Jul
69,300

1-Jul-07
1,458

72,172

1,400

73,572

1,245

74,818

991

75,809

948

76,757

867

77,624

654

78,278

Aug
69,300

1-Aug-07
1,449

71,681

1,391

73,071

1,237

74,308

985

75,293

941

76,234

861

77,095

650

77,745

Sep
69,300

1-Sep-07
1,439

71,189

1,381

72,570

1,228

73,798

978

74,776

935

75,711

856

76,567

645

77,212

Oct
69,300

1-Oct-07
1,414

70,714

1,372

72,086

1,220

73,306

971

74,277

928

75,205

850

76,055

641

76,696

Nov
69,300

1-Nov-07
932

70,232

1,363

71,595

1,212

72,806

965

73,771

922

74,693

844

75,537

636

76,174

Dec
69,300

1-Dec-07
466

69,766

1,353

71,120

1,204

72,323

958

73,282

916

74,198

838

75,036

632

75,668

Jan 08
69,300

1-Jan-08
—

—

1,330

70,630

1,195

71,825

952

72,777

910

73,686

833

74,519

628

75,147

Feb
69,300

1-Feb-08
—

—

872

70,172

1,188

71,359

946

72,305

904

73,209

827

74,036

624

74,660

Mar
69,300

1-Mar-08
—

—

443

69,743

1,180

70,924

940

71,863

898

72,762

822

73,584

620

74,204

Apr
69,300

1-Apr-08
—

—

—

—

1,160

70,460

934

71,394

892

72,286

817

73,103

616

73,719

May
69,300

1-May-08
—

—

—

—

773

70,073

928

71,002

888

71,889

812

72,702

613

73,314

Jun
69,300

1-Jun-08
—

—

—

—

374

69,674

923

70,597

882

71,479

808

72,287

609

72,896

Jul
69,300

1-Jul-08
—

—

—

—

—

—

908

70,208

878

71,086

803

71,889

606

72,495

Aug
69,300

1-Aug-08
—

—

—

—

—

—

599

69,899

874

70,773

800

71,572

603

72,175

Sep
69,300

1-Sep-08
—

—

—

—

—

—

289

69,589

870

70,459

796

71,255

600

71,856

Oct
69,300

1-Oct-08
—

—

—

—

—

—

—

—

857

70,157

793

70,950

598

71,547

Nov
69,300

1-Nov-08
—

—

—

—

—

—

—

—

565

69,865

789

70,654

595

71,250

Dec
69,300

1-Dec-08
—

—

—

—

—

—

—

—

282

69,582

786

70,369

593

70,962

Jan 09
69,300

1-Jan-09
—

—

—

—

—

—

—

—

—

—

774

70,074

590

70,665

Feb
69,300

1-Feb-09
—

—

—

—

—

—

—

—

—

—

505

69,805

588

70,393

Mar
69,300

1-Mar-09
—

—

—

—

—

—

—

—

—

—

261

69,561

586

70,147

Apr
69,300

1-Apr-09
—

—

—

—

—

—

—

—

—

—

—

—

577

69,877

May
69,300

1-May-09
—

—

—

—

—

—

—

—

—

—

—

—

385

69,685

Jun
69,300

1-Jun-09
—

—

—

—

—

—

—

—

—

—

—

—

186

69,486

Jul
69,300

1-Jul-09
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Aug
69,300

1-Aug-09
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Sep
69,300

1-Sep-09
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Oct
69,300

1-Oct-09
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Nov
69,300

1-Nov-09
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Dec
69,300

1-Dec-09
—

—

—

—

—

—

—

—

—

—

—

—

—

—

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

EL PASO ELECTRIC COMPANY
 
 
 
 
 
 
 
 
 
 
 
 
TUCSON ELECTRIC POWER COMPANY
 
 
 
 
 
 
 
 
 
 
Settlement Calculation, Article I
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Interest Rate
Annual Interest Rate
Annual Interest Rate
Annual Interest Rate
Annual Interest Rate
Annual Interest Rate
Annual Interest Rate
 
 
 
0.0825
0.0776
0.0677
0.0530
0.0500
0.0452
0.0337
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
30 MW @
 
Quarter Ended
Quarter Ended
Quarter Ended
Quarter Ended
Quarter Ended
Quarter Ended
Quarter Ended
 
Firm PTP
 
31-Dec-07
31-Mar-08
30-Jun-08
30-Sep-08
31-Dec-08
31-Mar-09
30-Jun-09
 
$2.31 kW/mo.
Assume
92 Days in Quarter
91 Days In Quarter
91 Days in Quarter
92 Days in Quarter
92 Days in Quarter
90 Days in Quarter
91 Days in Quarter
 
Monthly Delivery
Earn Interest
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Charge
All Month
Interest
Cumulative
Interest
Cumulative
Interest
Cumulative
Interest
Cumulative
Interest
Cumulative
Interest
Cumulative
Interest
Cumulative
 
 
 
0.0206
Balance
0.0194
Balance
0.0169
Balance
0.0133
Balance
0.0125
Balance
0.0113
Balance
0.0084
Balance
 
 
 
Q4 2007
Q4 2007
Q1 2008
Q1 2008
Q2 2008
Q2 2008
Q3 2008
Q3 2008
Q4 2008
Q4 2008
Q1 2009
Q1 2009
Q2 2009
Q2 2009
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Jan 10
69,300

1-Jan-10
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Feb
69,300

1-Feb-10
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Mar
69,300

1-Mar-10
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Apr
69,300

1-Apr-10
—

—

—

—

—

—

—

—

—

—

—

—

—

—

May
69,300

1-May-10
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Jun
69,300

1-Jun-10
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Jul
69,300

1-Jul-10
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Aug
69,300

1-Aug-10
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Sep
69,300

1-Sep-10
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Oct
69,300

1-Oct-10
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Nov
69,300

1-Nov-10
—

—

—

—

—

—

—

—

—

—

—

—

—

—

Dec
69,300

1-Dec-10
—

—

—

—

—

—

—

—

—

—

—

—

—

—

 
 
 
—

—

—

 
 
 
 
 
 
 
 
 
 
 
January 1, 2011
4,088,700

 
33,495

1,729,049

36,188

1,973,137

35,702

2,216,740

31,168

2,455,808

32,402

2,696,110

32,006

2,936,016

25,884

3,169,801

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

EL PASO ELECTRIC COMPANY
 
 
 
 
 
 
 
 
 
 
 
TUCSON ELECTRIC POWER COMPANY
 
 
 
 
 
 
 
 
 
Settlement Calculation, Article I
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Interest Rate
Annual Interest Rate
Annual Interest Rate
Annual Interest Rate
Annual Interest Rate
Annual Interest Rate
 
 
 
 
0.0325
0.0325
0.0325
0.0325
0.0325
0.0325
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
30 MW @
 
Quarter Ended
Quarter Ended
Quarter Ended
Quarter Ended
Quarter Ended
Quarter Ended
 
 
Firm PTP
 
30-Sep-09
31-Dec-09
31-Mar-10
30-Jun-10
30-Sep-10
31-Dec-10
 
 
$2.31 kW/mo.
Assume
92 Days in Quarter
92 Days in Quarter
90 Days in Quarter
91 Days in Quarter
92 Days in Quarter
92 Days in Quarter
 
 
Monthly Delivery
Earn Interest
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Charge
All Month
Interest
Cumulative
Interest
Cumulative
Interest
Cumulative
Interest
Cumulative
Interest
Cumulative
Interest
Cumulative
Cumulative
 
 
 
0.0081
Balance
0.0081
Balance
0.0081
Balance
0.0081
Balance
0.0081
Balance
0.0081
Balance
Interest
 
 
 
Q3 2009
Q3 2009
Q4 2009
Q4 2009
Q1 2010
Q1 2010
Q2 2010
Q2 2010
Q3 2010
Q3 2010
Q4 2010
Q4 2010
31-Dec-10
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Feb 06
69,300

1-Feb-06
710

88,036

715

88,751

721

89,472

727

90,199

733

90,932

739

91,671

22,371

Mar
69,300

1-Mar-06
706

87,576

712

88,288

717

89,005

723

89,728

729

90,457

735

91,192

21,892

Apr
69,300

1-Apr-06
702

87,067

707

87,775

713

88,488

719

89,207

725

89,932

731

90,662

21,362

May
69,300

1-May-06
698

86,553

703

87,256

709

87,965

715

88,680

721

89,400

726

90,126

20,826

Jun
69,300

1-Jun-06
693

86,021

699

86,720

705

87,424

710

88,135

716

88,851

722

89,573

20,273

Jul
69,300

1-Jul-06
689

85,506

695

86,201

700

86,901

706

87,607

712

88,319

718

89,036

19,736

Aug
69,300

1-Aug-06
685

84,959

690

85,649

696

86,345

702

87,047

707

87,754

713

88,467

19,167

Sep
69,300

1-Sep-06
680

84,412

686

85,098

691

85,789

697

86,486

703

87,189

708

87,897

18,597

Oct
69,300

1-Oct-06
676

83,882

682

84,563

687

85,250

693

85,943

698

86,641

704

87,345

18,045

Nov
69,300

1-Nov-06
671

83,316

677

83,993

682

84,675

688

85,363

694

86,057

699

86,756

17,456

Dec
69,300

1-Dec-06
667

82,768

672

83,441

678

84,119

683

84,802

689

85,491

695

86,186

16,886

Jan 07
69,300

1-Jan-07
663

82,202

668

82,870

673

83,543

679

84,222

684

84,907

690

85,596

16,296

Feb
69,300

1-Feb-07
658

81,630

663

82,293

669

82,962

674

83,636

680

84,315

685

85,000

15,700

Mar
69,300

1-Mar-07
654

81,113

659

81,772

664

82,436

670

83,106

675

83,781

681

84,462

15,162

Apr
69,300

1-Apr-07
649

80,541

654

81,196

660

81,855

665

82,520

670

83,191

676

83,867

14,567

May
69,300

1-May-07
645

80,005

650

80,655

655

81,310

661

81,971

666

82,637

671

83,308

14,008

Jun
69,300

1-Jun-07
640

79,450

646

80,096

651

80,746

656

81,402

661

82,064

667

82,731

13,431

Jul
69,300

1-Jul-07
636

78,914

641

79,555

646

80,201

652

80,853

657

81,510

662

82,172

12,872

Aug
69,300

1-Aug-07
632

78,376

637

79,013

642

79,655

647

80,302

652

80,955

658

81,613

12,313

Sep
69,300

1-Sep-07
627

77,839

632

78,471

638

79,109

643

79,752

648

80,400

653

81,053

11,753

Oct
69,300

1-Oct-07
623

77,319

628

77,947

633

78,581

638

79,219

644

79,863

649

80,512

11,212

Nov
69,300

1-Nov-07
619

76,793

624

77,417

629

78,046

634

78,680

639

79,319

644

79,963

10,663

Dec
69,300

1-Dec-07
615

76,283

620

76,903

625

77,528

630

78,158

635

78,793

640

79,433

10,133

Jan 08
69,300

1-Jan-08
611

75,757

616

76,373

621

76,994

626

77,619

631

78,250

636

78,886

9,586

Feb
69,300

1-Feb-08
607

75,266

612

75,878

617

76,494

622

77,116

627

77,742

632

78,374

9,074

Mar
69,300

1-Mar-08
603

74,807

608

75,415

613

76,027

618

76,645

623

77,268

628

77,896

8,596

Apr
69,300

1-Apr-08
599

74,318

604

74,922

609

75,530

614

76,144

619

76,763

624

77,386

8,086

May
69,300

1-May-08
596

73,910

601

74,510

605

75,116

610

75,726

615

76,341

620

76,962

7,662

Jun
69,300

1-Jun-08
592

73,488

597

74,086

602

74,687

607

75,294

612

75,906

617

76,523

7,223

Jul
69,300

1-Jul-08
589

73,084

594

73,678

599

74,276

603

74,880

608

75,488

613

76,101

6,801

Aug
69,300

1-Aug-08
586

72,762

591

73,353

596

73,949

601

74,550

606

75,155

611

75,766

6,466

Sep
69,300

1-Sep-08
584

72,440

589

73,028

593

73,622

598

74,220

603

74,823

608

75,431

6,131

Oct
69,300

1-Oct-08
581

72,129

586

72,715

591

73,306

596

73,901

600

74,502

605

75,107

5,807

Nov
69,300

1-Nov-08
579

71,829

584

72,412

588

73,001

593

73,594

598

74,192

603

74,794

5,494

Dec
69,300

1-Dec-08
577

71,538

581

72,119

586

72,705

591

73,296

596

73,892

600

74,492

5,192

Jan 09
69,300

1-Jan-09
574

71,239

579

71,818

584

72,401

588

72,990

593

73,583

598

74,180

4,880

Feb
69,300

1-Feb-09
572

70,965

577

71,541

581

72,123

586

72,709

591

73,299

596

73,895

4,595

Mar
69,300

1-Mar-09
570

70,717

575

71,292

579

71,871

584

72,455

589

73,043

593

73,637

4,337

Apr
69,300

1-Apr-09
568

70,445

572

71,018

577

71,595

582

72,176

586

72,763

591

73,354

4,054

May
69,300

1-May-09
566

70,251

571

70,822

575

71,397

580

71,977

585

72,562

590

73,152

3,852

Jun
69,300

1-Jun-09
565

70,051

569

70,620

574

71,194

578

71,772

583

72,355

588

72,943

3,643

Jul
69,300

1-Jul-09
557

69,857

568

70,425

572

70,997

577

71,574

582

72,155

586

72,741

3,441

Aug
69,300

1-Aug-09
367

69,667

566

70,233

571

70,804

575

71,379

580

71,959

585

72,544

3,244

Sep
69,300

1-Sep-09
177

69,477

565

70,042

569

70,611

574

71,185

578

71,763

583

72,346

3,046

Oct
69,300

1-Oct-09
—

—

557

69,857

568

70,425

572

70,997

577

71,574

582

72,155

2,855

Nov
69,300

1-Nov-09
—

—

367

69,667

566

70,233

571

70,804

575

71,379

580

71,959

2,659

Dec
69,300

1-Dec-09
—

—

184

69,484

565

70,048

569

70,617

574

71,191

578

71,769

2,469

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

EL PASO ELECTRIC COMPANY
 
 
 
 
 
 
 
 
 
 
 
TUCSON ELECTRIC POWER COMPANY
 
 
 
 
 
 
 
 
 
Settlement Calculation, Article I
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Interest Rate
Annual Interest Rate
Annual Interest Rate
Annual Interest Rate
Annual Interest Rate
Annual Interest Rate
 
 
 
 
0.0325
0.0325
0.0325
0.0325
0.0325
0.0325
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
30 MW @
 
Quarter Ended
Quarter Ended
Quarter Ended
Quarter Ended
Quarter Ended
Quarter Ended
 
 
Firm PTP
 
30-Sep-09
31-Dec-09
31-Mar-10
30-Jun-10
30-Sep-10
31-Dec-10
 
 
$2.31 kW/mo.
Assume
92 Days in Quarter
92 Days in Quarter
90 Days in Quarter
91 Days in Quarter
92 Days in Quarter
92 Days in Quarter
 
 
Monthly Delivery
Earn Interest
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Charge
All Month
Interest
Cumulative
Interest
Cumulative
Interest
Cumulative
Interest
Cumulative
Interest
Cumulative
Interest
Cumulative
Cumulative
 
 
 
0.0081
Balance
0.0081
Balance
0.0081
Balance
0.0081
Balance
0.0081
Balance
0.0081
Balance
Interest
 
 
 
Q3 2009
Q3 2009
Q4 2009
Q4 2009
Q1 2010
Q1 2010
Q2 2010
Q2 2010
Q3 2010
Q3 2010
Q4 2010
Q4 2010
31-Dec-10
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Jan 10
69,300

1-Jan-10
—

—

—

—

557

69,857

568

70,424

572

70,997

577

71,573

2,273

Feb
69,300

1-Feb-10
—

—

—

—

363

69,663

566

70,229

571

70,799

575

71,375

2,075

Mar
69,300

1-Mar-10
—

—

—

—

188

69,488

565

70,052

569

70,621

574

71,195

1,895

Apr
69,300

1-Apr-10
—

—

—

—

—

—

557

69,857

568

70,424

572

70,997

1,697

May
69,300

1-May-10
—

—

—

—

—

—

371

69,671

566

70,237

571

70,808

1,508

Jun
69,300

1-Jun-10
—

—

—

—

—

—

179

69,479

565

70,044

569

70,613

1,313

Jul
69,300

1-Jul-10
—

—

—

—

—

—

—

—

557

69,857

568

70,425

1,125

Aug
69,300

1-Aug-10
—

—

—

—

—

—

—

—

367

69,667

566

70,233

933

Sep
69,300

1-Sep-10
—

—

—

—

—

—

—

—

177

69,477

565

70,042

742

Oct
69,300

1-Oct-10
—

—

—

—

—

—

—

—

—

—

557

69,857

557

Nov
69,300

1-Nov-10
—

—

—

—

—

—

—

—

—

—

367

69,667

367

Dec
69,300

1-Dec-10
—

—

—

—

—

—

—

—

—

—

184

69,484

184

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
January 1, 2011
4,088,700

 
26,856

3,404,557

28,770

3,641,227

30,692

3,879,819

32,631

4,120,350

34,579

4,362,830

36,556

4,607,285

518,585

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

*TEP to submit on EPE OASIS a Transmission Service Request (TSR) for this
Agreement. TSR may be marked “Not Pre-Confirmed” pending FERC action
on the Settlement.
Page 1 of 4
ATTACHMENT A

Form Of Service Agreement For
Firm Point-To-Point Transmission Service

1.0
This Service Agreement, dated as of                 , is entered into, by and
between     El Paso Electric Company or “EPE”     (the Transmission Provider),
and Tucson Electric Power Company or “TEP” ("Transmission Customer"). Note:
Transmission capacity purchased on the EPE OASIS. TSR #______________________.*

2.0
The Transmission Customer has been determined by the Transmission Provider to
have a Completed Application for Firm Point-To-Point Transmission Service under
the Tariff.

3.0
The Transmission Customer has provided to the Transmission Provider an
Application deposit in accordance with the provisions of Section 17.3 of the
Tariff.

4.0
Service under this agreement shall commence on the later of (l) the requested
service commencement date, or (2) the date on which construction of any Direct
Assignment Facilities and/or Network Upgrades are completed, or (3) such other
date as it is permitted to become effective by the Commission. Service under
this agreement shall terminate on such date as mutually agreed upon by the
parties.

5.0
The Transmission Provider agrees to provide and the Transmission Customer agrees
to take and pay for Firm Point-To-Point Transmission Service in accordance with
the provisions of Part II of the Tariff and this Service Agreement.

    

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

Page 2 of 4

6.0
Any notice or request made to or by either Party regarding this Service
Agreement shall be made to the representative of the other Party as indicated
below.

Transmission Provider:

El Paso Electric Company                
Attention: AVP - System Operations M/S 751
Post Office Box 982                    
El Paso, TX 79960                    

Transmission Customer:

Tucson Electric Power Company            
Attention:                         
                                                        

7.0
The Tariff is incorporated herein and made a part hereof.

IN WITNESS WHEREOF, the Parties have caused this Service Agreement to be
executed by their respective authorized officials.

Transmission Provider:

By:                      AVP-System Operations                     
Name                Title                Date

                        

Transmission Customer:

By:                                                   
Name                Title                Date

    

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Page 3 of 4    

Specifications For Long-Term Firm Point-To-Point
Transmission Service

l.0
Term of Transaction: TBD    (To correspond to the term of Settlement
Agreement)_____________________________________________

Start Date:     TBD    (Immediately Upon Settlement's Effective Date)

Termination Date:     To correspond to the termination of the EPE/TEP 1982
Exchange Agreement -- April 19, 2030.                

2.0
Description of capacity and energy to be transmitted by Transmission Provider
including the electric Control Area in which the transaction originates.

30 MW. Transaction originates in the EPE Control Area    

3.0
Point(s) of Receipt:     Luna 345 kV Substation            

Delivering Party:     El Paso Electric Company                

4.0
Point(s) of Delivery:     Greenlee 345 kV Substation        

Receiving Party:     Tucson Electric Power Company            

5.0
Maximum amount of capacity and energy to be transmitted (Reserved Capacity):
    30 MW                            

6.0
Designation of party(ies) subject to reciprocal service obligation:

Tucson Electric Power Company                    
                                            
                                            
    
7.0
Name(s) of any Intervening Systems providing transmission service:

None. Transaction utilizes EPE transmission.            
                                            
                                            

                                        

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Page 4 of 4

8.0
Service under this Agreement may be subject to some combination of the charges
detailed below. (The appropriate charges for individual transactions will be
determined in accordance with the terms and conditions of the Tariff.)

8.1
Transmission Charge: EPE's Applicable Long-Term Firm Point-to-Point Transmission
Service Tariff Rate in its OATT set forth in Schedule 7, Section A. Currently,
the yearly delivery charge is $27.72 per KW of Reserved Capacity per year, which
will be invoiced on a monthly basis at one-twelfth of that demand charge.

8.2
System Impact and/or Facilities Study Charge(s):

None                            
                                            

8.3    Direct Assignment Facilities Charge:     None            
                                            

8.4
Ancillary Services Charges:     As applicable under EPE's OATT. Currently, EPE's
effective Schedule 1 rate is $0.843 per KW-Year and Schedule 2 rate is $0.528
per KW-Year.        

                                        

                                        

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*TEP to submit on EPE OASIS a Transmission Service Request (TSR) for this
Agreement. TSR may be marked “Not Pre-Confirmed” pending FERC action
on the Settlement.

Page 1 of 4
ATTACHMENT A

Form Of Service Agreement For
Firm Point-To-Point Transmission Service

1.0
This Service Agreement, dated as of                 , is entered into, by and
between     El Paso Electric Company or “EPE” (the Transmission Provider), and
Tucson Electric Power Company or “TEP” ("Transmission Customer"). Note:
Transmission capacity purchased on the EPE OASIS. TSR #______________________.*

2.0
The Transmission Customer has been determined by the Transmission Provider to
have a Completed Application for Firm Point-To-Point Transmission Service under
the Tariff.

3.0
The Transmission Customer has provided to the Transmission Provider an
Application deposit in accordance with the provisions of Section 17.3 of the
Tariff.

4.0
Service under this agreement shall commence on the later of (l) the requested
service commencement date, or (2) the date on which construction of any Direct
Assignment Facilities and/or Network Upgrades are completed, or (3) such other
date as it is permitted to become effective by the Commission. Service under
this agreement shall terminate on such date as mutually agreed upon by the
parties.

5.0
The Transmission Provider agrees to provide and the Transmission Customer agrees
to take and pay for Firm Point-To-Point Transmission Service in accordance with
the provisions of Part II of the Tariff and this Service Agreement.

    

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Page 2 of 4

6.0
Any notice or request made to or by either Party regarding this Service
Agreement shall be made to the representative of the other Party as indicated
below.

Transmission Provider:

El Paso Electric Company                
Attention: AVP - System Operations M/S 751
Post Office Box 982                    
El Paso, TX 79960                    

Transmission Customer:

Tucson Electric Power Company            
Attention:                         
                            
                            

7.0
The Tariff is incorporated herein and made a part hereof.

IN WITNESS WHEREOF, the Parties have caused this Service Agreement to be
executed by their respective authorized officials.

Transmission Provider:

By:                      AVP-System Operations                     
Name                Title                Date

                        

Transmission Customer:

By:                                                       
Name                Title                Date

    

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Page 3 of 4    

Specifications For Long-Term Firm Point-To-Point
Transmission Service

l.0
Term of Transaction: TBD    (To correspond to the term of Settlement Agreement)

Start Date:     TBD    (The later of the Settlement's Effective Date and the
date on which TEP, or any party delivering power to TEP's Balancing Authority
Area for TEP's use in serving its load, begins receiving electricity from the
first phase of the Macho Springs Project)

Termination Date:     To correspond to the termination of the EPE/TEP 1982
Exchange Agreement -- April 19, 2030.                

2.0
Description of capacity and energy to be transmitted by Transmission Provider
including the electric Control Area in which the transaction originates.

10 MW. Transaction originates in the EPE Control Area    

3.0
Point(s) of Receipt:     Luna 345 kV Substation            

Delivering Party:     El Paso Electric Company                

4.0
Point(s) of Delivery:     Springerville 345 kV Substation        

Receiving Party:     Tucson Electric Power Company            

5.0
Maximum amount of capacity and energy to be transmitted (Reserved Capacity):
    10 MW                            

6.0
Designation of party(ies) subject to reciprocal service obligation:

Tucson Electric Power Company                    
                                            
                                            
    
7.0
Name(s) of any Intervening Systems providing transmission service:

None. Transaction utilizes EPE transmission.            
                                            
    
                                        

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

Page 4 of 4

8.0
Service under this Agreement may be subject to some combination of the charges
detailed below. (The appropriate charges for individual transactions will be
determined in accordance with the terms and conditions of the Tariff.)

8.1
Transmission Charge: EPE's Applicable Long-Term Firm Point-to-Point Transmission
Service Tariff Rate in its OATT set forth in Schedule 7, Section A. Currently,
the yearly delivery charge is $27.72 per KW of Reserved Capacity per year, which
will be invoiced on a monthly basis at one-twelfth of that demand charge.

8.2
System Impact and/or Facilities Study Charge(s):

None                            
                                            

8.3    Direct Assignment Facilities Charge:     None            
                                            

8.4
Ancillary Services Charges:     As applicable under EPE's OATT. Currently, EPE's
effective Schedule 1 rate is $0.843 per KW-Year and Schedule 2 rate is $0.528
per KW-Year.