Exhibit






 EXHIBIT 10.10



TUCSON - EL PASO
POWER EXCHANGE AND TRANSMISSION AGREEMENT
		
	1.
	PARTIES


The Parties to this Agreement are EL PASO ELECTRIC COMPANY, a Texas corporation (hereinafter referred to as "EPE"); and TUCSON ELECTRIC POWER COMPANY, an Arizona corporation (hereinafter referred to as "TEP"); (collectively "Parties" and individually "Party").
		
	2.
	RECITALS


This Agreement is made with reference to the following facts, among  others:
		
	2.1
	The Parties are engaged in the generation, transmission and distribution of electric power and energy in one or more of the  States of Arizona, New Mexico, and Texas.


		
	2.2
	Electrical system interconnections exist and are being constructed which will allow scheduled interchanges of power and energy to  take place between the Parties' respective systems.


		
	2.3
	EPE is a participant in the Palo Verde Nuclear Generating Station ("PVNGS") and its share of the capacity of each of the three units now under construction will be approximately 150 MW. EPE is  also a participant in the Valley Transmission System which includes the Palo Verde-Westwing 500 kV Circuit No. l, the Palo Verde-Kyrene Circuit and will include a third line east from PVNGS.  











		
	2.4
	TEP operates a 345 kV transmission  system ("Eastern Trans­mission System") with connections to the San Juan Generating Station ("San Juan"), and the Four Corners Generating Station ("Four Corners") in each of which it is a participant. This system is likewise connected to TEP's Springerville Generating Station  ("Springerville"), its generating stations in Tucson and also to Coronado Generating Station ("Coronado") and the Greenlee 345 kV Substation, among others.


		
	2.5
	The Parties wish to exchange  capacity and energy between EPE's share of the PVNGS generating units and TEP's  system generation and to achieve other economies in the transmission of energy for their mutual  benefit.


		
	3.
	AGREEMENT


The Parties agree as follows:
		
	4.
	EFFECTIVE DATE AND TERM


This Agreement  shall become effective when it is executed.  The term during which transactions may take place hereunder is specified where applicable in the following sections.
		
	5.
	EXCHANGE OF CAPACITY AND ENERGY


		
	5.1
	EPE will deliver from its share of the PVNGS generating units, and TEP will receive, amounts of capacity with corresponding energy in accordance with the following:




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	Begin on Date
of Initial
Synchronization
	Min. Capacity
Schedule          
	Max. Capacity
Schedule          

	 
	 
	 

	PVNGS Unit 1
	100 MW
	150 MW

	PVNGS Unit 2
	200 MW
	300 MW

	PVNGS Unit 3
	300 MW
	300 MW






At  TEP' s option  such  capacity  and energy may be  received  in whole  or in part at the Palo Verde  Switchyard  or the Westwing Substation.
		
	5.2
	The amounts  listed in Paragraph  5.1 above correspond  to the PVNGS generating units operating at full rated output. The Minimum capacity  schedules  shall be adhered to unless EPE's share of the PVNGS generating units' production is less than the minimum schedules, in which case all of EPE's share of the PVNGS generating unit production shall be scheduled for delivery to TEP. Scheduling of amounts between the Minimum and the Maximum shall be  at EPE's option.


		
	5.3
	TEP recognizes that EPE will enter into another exchange agreement involving a third party with an effective date of May 1, 1995, and agrees that such third party exchange after said date shall take priority over the exchange between TEP and EPE to the extent EPE's  generation at PVNGS is inadequate to cover both arrangements. The Parties agree to cooperate and use best efforts to enable EPE to meet its power exchange obligations to the third party.


		
	5.4
	TEP shall schedule from its system generation deliveries of 




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capacity and energy to EPE at Greenlee, Springerville, Coronado, San Juan, or Four Corners at EPE's option; and EPE shall  receive such capacity and energy at Greenlee, Springerville, Coronado, San Juan, or Four Corners in total amounts equal to that scheduled to TEP at the Palo Verde switchyard or Westwing Substation.
		
	5.5
	There  shall be no charges,  costs or losses associated with the exchange of capacity and energy as covered by this Agreement.


		
	5.6
	This Agreement for the exchange of capacity and energy shall become effective with the initial synchronization date of the first PVNGS generating unit and shall continue for a term equal to the life of the PVNGS Units 1, 2, and 3.


		
	6.
	ASSIGNMENT OF TRANSMISSION RIGHTS


		
	6.1
	EPE hereby assigns to TEP 200 MW of  EPE's firm transmission rights and a proportional amount of nonfirm rights in the Palo Verde-Westwing Circuit No.  1 for deliveries from Westwing to Palo Verde. EPE will participate in the Palo Verde -Westwing Circuit No.  2  or an alternative third  line east from Palo Verde and will assign to TEP 100 MW of firm transmission rights and a proportional amount of nonfirm rights for deliveries from Westwing to Palo Verde in this Circuit No.  2 or to Palo Verde  over the alternative third line  east.


		
	6.2
	The assignment by EPE to TEP of transmission  rights in accordance with Paragraph 6.1 shall be for a term  of forty-three  (43) years 




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beginning with the effective date of this Agreement.
		
	6.3
	EPE hereby assigns to TEP 200 megawatts of transmission rights in the Springerville-Luna 345 kV circuit and in the existing 345 kV circuit from Luna via Hidalgo to Greenlee.


		
	6.4
	This assignment of transmission rights from EPE to TEP in the Springerville-Luna-Greenlee circuits shall begin with the commercial operating date of the Springerville-Luna circuit and shall continue for  a term of 40 years from that date.


		
	6.5
	TEP hereby assigns to EPE rights in TEP's 345 kV Eastern Transmission System between (a) the San Juan 345 kV  switchyard, the Four Corners 345 kV switchyard,  or the Coronado Station 345 kV terminal, and (b) the Greenlee 345 kV substation as follows: 


6.5.1    For delivery to Greenlee :
		
	6.5.1.1
	50 MW beginning with the commercial operating date of PVNGS Unit No. 1.


		
	6.5.1.2
	100 MW beginning with the commercial operating date of PVNGS Unit No. 2.


		
	6 .5.1.3
	150 MW beginning with the commercial operating date of PVNGS Unit No. 3.


		
	6.5.1.4
	This assignment of transmission  rights from TEP to EPE under Paragraph 6.5.1 shall terminate on the commercial operating date of the Springerville–Luna circuit.




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	6.5.2
	For delivery  from  Greenlee  to the  Coronado  345 kV terminal,  San Juan 345 kV switchyard , or Four Corners 345 kV  switchyard, TEP hereby assigns to EPE transmission rights of  150 megawatts,  beginning with the effective date of this Agreement and terminating on the commercial operating date of the  Springerville -Luna circuit.


		
	6.5.3
	Beginning with the  commercial operating date of the Springerville -Luna 345 kV circuit,  TEP hereby assigns to EPE 150 megawatts  of transmission rights in TEP's 345 kV system between  Springerville and either of Four Corners,  San Juan,  or  Coronado.  Such right s may be utilized by EPE at its option in whole or in part to either of these delivery points. This assignment of rights shall include transmission in both directions and shall be for a term of forty (40) years.


		
	6.6
	Transmission losses over  assigned  and owned  rights  shall be shared in proportion  to scheduled  use.


		
	7.
	SPRINGERVILLE-LUNA 345 KV  CIRCUIT


		
	7.1
	The Parties agree to  cooperate in the construction of EPE's Springerville-Luna 345 kV  circuit.  The Parties' responsibilities for the construction, operation and cost of the Springerville-Luna circuit shall be as follows:




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	7.1.1
	EPE shall construct a single-circuit 345 kV transmission line of approximately 210 miles in length from Luna to a point in New Mexico approximately 12 miles east of the Springerville  switchyard.  This line shall be constructed so as to be in service on or before June 1,  1987.


		
	7.1.2
	At Luna 345 kV Substation, EPE shall install at least one 345 kV circuit breaker and associated equipment,  including shunt reactors, relays,  meters,  and microwave systems to terminate  the  Springerville-Luna  345 kV  circuit.


		
	7.1.3
	EPE shall install series capacitors for 25 percent line compensation at Luna in the Springerville-Luna 345 kV circuit to control the power flow distribution.  This amount may be changed by mutual agreement of the Parties based on joint  studies of the  system.  TEP and EPE will conduct such studies and employ such corrective measures as needed to protect the Springerville generating units from subsynchronous resonance.


		
	7.1.4
	All costs associated with the construction,  operation,  and maintenance of the facilities in this Paragraph 7.1 are to be the responsibility of EPE.


		
	7.2
	TEP will purchase,  install,  operate  and maintain the following facilities  as part  of  the  Springerville-Luna  345 kV circuit:




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	7.2.1
	A double-circuit 345 kV transmission tower line shall be constructed from the Springerville switchyard east­ward for a distance of  approximately  12  miles.  One -half of this  tower  line  and  the  northern circuit  position  shall be  dedicated  to  the  Springerville-Luna  circuit  and strung with a bundle  of two conductors not larger than 954 KCM ACSR per phase.


		
	7.2.2
	At  Springerville two 345 kV  circuit breakers and associated switchyard equipment, including shunt reactors, relaying, metering,  and microwave systems shall be installed to provide a termination for the Springerville-Luna 345 kV circuit.  TEP will maintain,  operate,  upgrade, or replace as required the termination facilities of the Springerville-Luna circuit at the Springerville switchyard and the 12 miles of double-circuit line east of Springerville switchyard.


		
	7.3
	EPE will reimburse TEP for one-half of all costs as incurred in Paragraph 7.2.1 and for all costs as incurred in Paragraph 7.2.2, including overheads, taxes, insurance, and administrative and general costs,  all as associated with the .procurement,  installation, construction, operation and maintenance,  upgrading or replacement of the facilities described in Paragraph 7.2.  To cover TEP' s administrative and general costs, a charge of one and one-quarter (l1⁄4) percent shall be added to the total construction costs and capital  




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improvement costs (including overheads) and twenty (20) percent shall be added to the operation and maintenance  expenses.  Included in EPE 's costs shall be a $4.5 million share of the common facilities of the Springerville switchyard as indicated in Exhibit A,  or the Parties may by mutual agreement apply this $4.5 million  share to other project facilities.
		
	7.4
	The facilities to be constructed by TEP for EPE's Springerville-Luna 345 kV circuit shall be  ready for service on or before June 1, 1987.  At  EPE' s request,  TEP will construct the above facilities for completion  at an earlier  date,  in which case  EPE shall reimburse TEP for its carrying charges during the interim period.


		
	7.5
	In the event EPE desires to terminate the 345 kV circuit from Springerville at a location other than Luna,  the Parties agree to renegotiate  such elements of this Agreement as may be affected, with the intent to achieve  similar  system performance and exchange of  rights.


		
	8.
	EMERGENCY TRANSMISSION SERVICE


		
	8.1
	Each Party will supply emergency transmission service when and if requested by the other Party in amounts up to the capacity of its transmission system and for a period  not to exceed  10 days, provided that in the sole judgment of the supplying party,  such transmission  service will not  result in impairment  of  or jeopardy 




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to service to its customers.   Each Party shall be the sole judge as to the conditions under which it is possible for it to provide emergency transmission service.
		
	8.2
	Insofar as practicable,  hourly schedules for emergency trans­mission service shall be arranged between the system dispatchers on a tentative basis at least one day in advance,  subject to later modification if unforeseen circumstances should arise.


		
	9.
	ENGINEERING AND OPERATING COMMITTEE


		
	9.1
	In order to provide for the continuing communication between the Parties with regard to construction  schedules,  costs,  possible delays,  expected performance,  and other matters which may affect the facilities between which power will be exchanged and the construction  of the  Springerville-Luna  transmission line, and thereafter the operation of the facilities over which rights are assigned between  the  Parties  under this Agreement,  an Engineering  and Operating Committee  shall be established, with EPE' s member  acting  as  chairman.


		
	9.2
	The Committee  shall consist of two member s from each Party and will meet periodically,  but not less than twice  annually, and shall have the following duties:


		
	9.2.1
	Provide liaison with respect to engineering and construction progress of generating and transmission facilities.




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	9.2.2
	Provide update of capital budget cost s and operating costs for the Springerville-Luna transmission circuit.


		
	9.2.3
	Provide coordination with respect to power exchange and scheduling.


		
	9.2.4
	Provide liaison on matters which may be the  subject  of this Agreement.


		
	9.3
	The Engineering and Operating  Committee  shall have  no  authority to modify  any of the provisions  of  this Agreement,  but may  by  mutual  agreement  put  into effect  rules  and  procedures for  the purpose of  implementing this Agreement.  The E&O Committee may also appoint such ad hoc committees as may be required for joint planning and operating studies,  auditing of billed  expenses, and  such other  matters as may be required  to effect coordinated operation  under this Agreement.


		
	10.
	PAYMENT OF FUNDS


		
	10.1
	EPE shall pay its share of the costs specified in Paragraph 7. 3 no later than the date when funds are required by TEP to pay for procurement,  installation,  construction,  operation and maintenance,  upgrading or replacement of facilities so that TEP will not have to advance any funds on behalf of EPE.


		
	10.2
	On or before the twenty-fifth day of each month,  TEP shall advise EPE of the following month's  estimated  expenditures for  EPE's share of  all costs pursuant to Paragraphs  7.3 and 7.4.  The




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amount  specified  by  TEP shall consider  unexpended  funds from EPE' s  prior  payments.
		
	10.3
	Upon completion of construction, TEP shall compute the total recorded  construction expenditures,  including appropriate overheads,  and EPE shall promptly settle any balance between its share of  such total recorded construction expenditures and funds advanced by EPE.  


		
	10.4
	Following completion of all construction,  TEP will provide the cost data required for EPE to keep its books in compliance with the Uniform System of Accounts.


		
	10.5
	TEP shall notify EPE by telephone of the need for payment by EPE for its share of costs  specified in Paragraphs  7.3 and 7.4. On the following day EPE shall wire such payment to a bank of TEP's  choice.


		
	10.6
	Funds not paid by EPE to TEP on or before the due date specified shall be payable with interest accrued at the  rate charged to prime commercial borrowers by the Bank of America,  but not in excess of the maximum rate of interest permitted by law.


		
	11.
	UNCONTROLLABLE FORCES


Neither Party shall be considered to be in default in the performance of any of its obligations hereunder (other than the obligations of EPE to make payments to TEP as required) when a failure of performance shall be due to uncontrollable forces.  The term "uncontrollable forces" shall


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mean any cause beyond  the  control of  the  Party  unable to perform  such obligation,  including but  not limited  to failure of  or threat  of failure  of facilities,  flood,  earthquake,  storm,  fire, lightning,  and other natural catastrophes, epidemic,  war,  riot,  civil disturbance or disobedience, labor dispute, labor or material or fuel shortage,  sabotage,  government priorities and restraint by court order or public authority,  and action or nonaction  by  or failure to obtain the necessary  authorizations  or approvals from any governmental agency or authority,  which by exercise of due diligence such Party could not reasonably have been expected to avoid and which by exercise of due diligence it shall be unable to overcome.  Nothing contained herein shall be construed as to require either Party to settle any strike or labor dispute in which it may be involved.
		
	12.
	ELECTRICAL DISTURBANCES


Each Party hereto shall maintain its system in conformance with accepted modern practices to:
		
	12.1
	Minimize  electric  disturbances,  such as,  but not limited  to,  an abnormal flow of power, which may damage or interfere with the system or customers  of the other  Party hereto; and


		
	12.2
	Minimize the effect on its system and its customers of  such electric disturbances  originating  on the  system  of  either  Party hereto.


		
	13.
	LIABILITY AND INDEMNITY


		
	13.1
	Except for any loss,  damage,  claim,  cost, charge or expense 




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resulting from Willful Action, neither  Party,  its directors, officers nor employee s shall be liable to the other Party for any loss, damage,  claim,  cost,  charge,  or expense of  any kind  or nature  incur red by the other  Party (including direct,  indirect or consequential loss, damage,  claim,  cost,  charge or expense; and whether or not resulting from the negligence of a Party, its directors, officers, employees or any person or entity whose negligence would be imputed to such Party) from (i) engineering, repair ,  supervision, inspection,  testing,  protection, operation, maintenance,  replacement, reconstruction,  use  or ownership of such Party' s electric  system,  or  (ii) the performance  or non­performance of the obligations of a Party under this Agreement. Except for any loss,  damage,  claim,  cost,  charge or expense resulting from Willful Action,  each Party releases  the other Party, its directors or other governing body,  officers,  and employees  from any  such liability.
		
	13.2
	For the purpose of this Paragraph 13, Willful Action shall be defined as:


		
	13.2.1
	Action taken or not taken by a Party at the direction of its directors, officers or employees having management or administrative responsibility affecting its performance under this Agreement,  which action is knowingly or intentionally taken or not taken with 




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conscious indifference to the consequences  thereof or with intent that injury or damage would  result or would probably result therefrom.
		
	13.2.2
	Action taken or not taken by a Party at the direction of its directors, officers or employees having management or administrative responsibility  affecting its performance under this Agreement,  which action has been determined  by final arbitration  award  or final judgment or judicial  decree to be a material default under this Agreement and which occurs or continues beyond the time specified in such arbitration award or judgment or judicial decree for curing such default or, if no time to cure is specified therein,  occurs or continues thereafter beyond a reasonable time to cure such default.


		
	13.2.3
	Action taken or not taken by a Party at the direction of its directors, officers or employees having management or administrative responsibility affecting its performance under this Agreement, which action is knowingly or intentionally taken or not taken with the knowledge that such action taken or not taken is a material default under this Agreement.


		
	13.2.4
	Willful Action does not include any act or failure to act 




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which is merely involuntary,  accidental or negligent.
		
	13.2.5
	The phrase  "employees having management  or administrative  responsibility," as used  in this  Paragraph  13.2. means  the employees  of a Party who are responsible for one or more of the executive functions of  planning, organizing, coordinating, directing, controlling and supervising such Party's performance  under this Agree­ment with responsibility for results.


		
	13.3
	A Party whose electric customer shall have a claim or bring an action against the other Party for any death,  injury,  loss, or damage arising or alleged to have arisen out of or in connection with interruptions  to or  curtailment  of  electric  service to such customer  caused by any act or omission,  including active or passive negligence,  of the other Party or anyone directly or indirectly employed by the other Party shall indemnify and hold harmless such other Party, its directors, officers, agents, and employee s from and against any liability for such death, injury, loss or damage.


		
	13.4
	Neither Party shall be liable for  any loss of earnings,  revenues, indirect or consequential damages which may occur to the  other Party  as a result  of  performance  or failure of  performance  here­under by reason of any cause whatsoever, including negligence.


		
	13.5
	The provisions of this Paragraph 13 shall not be construed so as 




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to relieve  any insurer  of its obligation to pay any insurance proceeds in accordance with the terms of any valid policy.
		
	14.
	ASSIGNMENT OF AGREEMENT


Neither Party shall voluntarily assign this Agreement or any part thereof without the written consent of the other Party, except in connection with the  sale or merger of  a substantial portion  of its properties.
		
	15.
	NO DEDICATION OF FACILITIES


Any undertaking by one Party to the other under any provision of this Agreement  shall not constitute the dedication of the system or any portion thereof of either Party to the public or· to the other Party,  and it is understood and agreed that any such undertaking by either Party shall cease upon the termination  of  this Agreement.
		
	16.
	NOTICES


Any notice, demand or request provided for in this Agreement, or served, given or made in connection with it, shall be in writing and shall be deemed properly served, given or made if delivered in per son or sent by United States mail, postage prepaid,  to the persons specified below:


El Paso Electric Company
c/o The Secretary
P. O. Box 982
El Paso, Texas  79960


Tucson Electric Power Company 
c/o The Secretary
P. O. Box 711
Tucson, Arizona  85702


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Either  Party may at any time or from time to time,  by notice to the other Party,  change the designation or address of the person so specified as the one to receive notices pursuant to this Agreement.
		
	17.
	GOVERNING LAW


This Agreement shall be interpreted,  governed by and construed under the laws of the State of Arizona or the laws of the United States, as applicable, as if executed and to be performed wholly within the State of Arizona.
		
	18.
	GENERAL


The compensation,  rates, charges, terms and conditions as specified herein shall remain in effect for the term of  this Agreement and shall not be subject to change through filing with, or application to, the Federal Energy Regulatory Commission pursuant to the provisions of Section 205 of the Federal Power Act absent the mutual agreement of the Parties  hereto.  Neither Party shall request or initiate,  directly or indirectly,  action by said Commission for any change herein pursuant to Section 206(a) of  said Act.
		
	19.
	THIRD PARTY RIGHTS


Nothing in this Agreement shall be construed to extend any benefits to, or create a cause of action by,  any third party.


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IN WITNESS WHEREOF, the Parties have caused this Agreement
to be executed as of  the 19th day of  April  1982.




TUCSON ELECTRIC POWER COMPANY
By     /s/ [ILLEGIBLE]    
    Executive Vice President




EL PASO ELECTRIC COMPANY
By     /s/ Harry I. Zimmer    
     Vice President










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EXHIBIT A
SPRINGERVILLE SWITCHYARD
COMMON FACILITIES


Site Preparation
Yard Surfacing
Access Road
Land and Land Rights
Drainage
Fencing
Lighting
Civil Work
Grounding
Control House
Control Cable
Communications
Microwave
345 kV Yard






EPE's share of the costs for these facilities will be as follows:


	
		
	 
	May 31 1984 - $1,000,000

	 
	(1) May 31 1985 - $1,000,000

	 
	(2) May 31 1987 - $2,500,000

	 
	TOTAL      $4,500,000








(1)  Or the commercial operating date of Springerville Unit 1, if earlier. 
(2)  Or the commercial operating date of Springerville Unit 2, if earlier


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