AMENDMENT NO. 14 TO THE
                          ARIZONA NUCLEAR POWER PROJECT
                             PARTICIPATION AGREEMENT


1.       PARTIES:

         The  Parties to this  Amendment  No. 14 to the  Arizona  Nuclear  Power
         Project Participation Agreement,  hereinafter referred to as "Amendment
         No. 14," are: ARIZONA PUBLIC SERVICE COMPANY,  a corporation  organized
         and  existing  under and by virtue of the laws of the State of Arizona,
         hereinafter  referred to as "Arizona";  SALT RIVER PROJECT AGRICULTURAL
         IMPROVEMENT AND POWER DISTRICT,  an agricultural  improvement  district
         organized and existing  under and by virtue of the laws of the State of
         Arizona,  hereinafter  referred  to as "Salt River  Project";  SOUTHERN
         CALIFORNIA EDISON COMPANY,  a corporation  organized and existing under
         and by  virtue  of the  laws of the  State of  California,  hereinafter
         referred  to as  "Edison";  PUBLIC  SERVICE  COMPANY OF NEW  MEXICO,  a
         corporation  organized and existing  under and by virtue of the laws of
         the State of New  Mexico,  hereinafter  referred  to as "PNM";  EL PASO
         ELECTRIC  COMPANY,  a corporation  organized and existing  under and by
         virtue of the laws of the State of Texas,  hereinafter  referred  to as
         "El Paso";  SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY,  a joint powers
         agency  organized  and existing  under and by virtue of the laws of the
         State of California, doing business in the State of Arizona as SOUTHERN
         CALIFORNIA PUBLIC POWER AUTHORITY ASSOCIATION,  hereinafter referred to
         as  "SCPPA";  and  DEPARTMENT  OF  WATER  AND  POWER OF THE CITY OF LOS
         ANGELES,  a municipal  corporation  organized and existing under and by
         virtue of the laws of the State of California,  hereinafter referred to
         as  "LADWP,"  hereinafter  individually  referred  to  as  "Party"  and
         collectively as "Parties."

2.       RECITALS:

         2.1      Arizona,  Salt River Project,  Edison, PNM, El Paso, SCPPA and
                  LADWP are  parties  to a certain  agreement  entitled  Arizona
                  Nuclear Power  Project  Participation  Agreement,  dated as of
                  August 23, 1973,  as amended by  Amendment  No. 1, dated as of
                  January 1, 1974, Amendment No. 2, dated as of August 28, 1975,
                  Amendment  No. 3, dated as of July 22, 1976,  Amendment No. 4,
                  dated as of December  15, 1977,  Amendment  No. 5, dated as of
                  December 5, 1979, Amendment No. 6, effective as of October 16,
                  1981,  Amendment  No.  7,  effective  as  of  April  1,  1982,
                  Amendment No. 8, executed as of September 12, 1983,  Amendment
                  No.  9,  executed  as of June  12,  1984,  Amendment  No.  10,
                  executed as of November 21, 1985,  Amendment No. 11, effective
                  January 10, 1987,  Amendment No. 12, effective August 5, 1988,
                  and Amendment No. 13, effective June 15, 1991, hereinafter, as
                  so amended, referred to as the "Participation Agreement."

         2.2      The  Parties  wish  to  establish   procedures   through  this
                  Amendment  No. 14 for  allocating  the costs  associated  with
                  Postretirement Benefits other than Pensions in accordance with
                  the  Statement of Financial  Accounting  Standards  (SFAS) 106
                  adopted by the Financial Accounting Standards Board.


Revised:  02/16/01

                                                                               1
<PAGE>



3.       AGREEMENT:

         For and in consideration of the premises and the mutual  obligations of
         and  undertakings  by the  Parties  as  hereinafter  provided  in  this
         Amendment No. 14 to the Participation  Agreement,  the Parties agree as
         follows:

4.       EFFECTIVE DATE:

         This Amendment No. 14 shall become effective after it has been executed
         by all Parties. The procedures for allocating costs that are associated
         with this Amendment shall be applied retroactively to January 1, 1993.

5.       DEFINED TERMS:

         5.1      The italicized words and phrases used in this Amendment No. 14
                  shall  have  meanings  ascribed  to them in  Section  3 of the
                  Participation Agreement as amended by this Amendment No. 14.

         5.2      All  references to a "Section" or "Sections" in this Amendment
                  No. 14 shall mean a Section or Sections  of the  Participation
                  Agreement unless the text expressly states otherwise.

6.       AMENDMENTS TO THE PARTICIPATION AGREEMENT MADE BY THIS AMENDMENT NO.14:

         6.1      Section 3 - DEFINITIONS is amended by:

                  6.1.1    The addition of new Section 3.44A, which reads in its
                           entirety as follows:

                           3.44A    Postretirement  Benefits: As defined in SFAS
                                    106,  all  forms  of  benefits,  other  than
                                    retirement income, provided by the Operating
                                    Agent to its retirees.

                  6.1.2    The addition of a new Section  3.51B,  which reads in
                           its entirety as follows:

                           3.51B    Return  on  Assets:   The  earnings  on  the
                                    investments of the plan assets  intended for
                                    the  post  retirement   health  and  welfare
                                    benefits trusts.

                  6.1.3    The  renumbering  of  Section  3.52A to 3.52B and the
                           addition  of a new  Section  3.52A which reads in its
                           entirety as follows:

                           3.52A    SFAS:   Statement  of  Financial  Accounting
                                    Standards   of  the   Financial   Accounting
                                    Standards Board.

                  6.1.4    The  renumbering of Sections 3.54K and L to 3.54L and
                           3.54M,  respectively,  and  the  addition  of  a  new
                           Section  3.54K,   which  reads  in  its  entirety  as
                           follows:


Revised:  02/16/01

                                                                               2
<PAGE>


                           3.54K    Transition   Obligation:   The  unrecognized
                                    amount of the (i) accumulated Postretirement
                                    Benefits  obligation  in  excess of (ii) the
                                    fair   value   of  plan   assets   plus  any
                                    recognized accrued  post-retirement  benefit
                                    cost  or   less   any   recognized   prepaid
                                    post-retirement  benefit cost as of the date
                                    of adoption of SFAS 106.

         6.2      Appendix E - Cost of Operating Work and Capital  Improvements,
                  is amended by the deletion of Sections E.1.6,  E.5.1 and E.5.2
                  and the  substitution  in lieu thereof of new Sections  E.1.6,
                  E.5.1, and E.5.2, which reads in their entirety as follows:

                  E.1.6    The  portion  of  the  Operating   Agent's   employee
                           pensions and benefits  expenses as defined  under FPC
                           Account 926 (including the Transition  Obligation and
                           related interest and the Return on Assets),  which is
                           the sum of the amounts determined by (1) applying the
                           Benefits Ratio  computed in accordance  with Sections
                           E.5.1 and E.5.2 hereof to the total labor  charges of
                           ANPP operating and  maintenance  expenses,  including
                           without  limitation  the labor  portion  of  expenses
                           chargeable to ANPP pursuant to Sections E.1.1, E.1.2,
                           E.1.3 and E.1.4 hereof, (2) the Transition Obligation
                           and related  interest  pursuant  to Sections  E.7A.1,
                           E.7A.2  and  E.7A.3  and (3)  the  Return  on  Assets
                           pursuant to Sections E.7B.1 and E.7B.2.

                  E.5.1    The  Benefits  Ratio set forth below shall be applied
                           to the labor expense  portion of the ANPP  operations
                           and maintenance  expenses,  to the Operating  Agent's
                           direct labor  charges  incurred in effecting  Capital
                           Improvements,  and to the labor expenses  included in
                           the Operating Agent's  supervisory and administrative
                           and general  expense  accounts.  Estimated and actual
                           Benefits  Ratios  shall be  determined,  adjusted and
                           used in the manner set forth in Section E.10 hereof.

                                        Benefits Ratio =      B
                                                             ---
                                                              L

                  Where:
                           B =  The  Operating  Agent's  total  system  employee
                           pensions and benefits (as defined in FPC Account 926,
                           excluding  the  Transition   Obligation  and  related
                           interest and the Return on Assets)  including Payroll
                           Taxes  and  worker's  compensation  expense  on labor
                           charged  to  employee  pensions  and  benefits.   The
                           Transition  Obligation  and related  interest will be
                           billed  separately and the expected  Return on Assets
                           will be credited separately to the Participants.

                           L = The Operating  Agent's  total labor  distributed,
                           including accruals less labor charged to pensions and
                           benefits, less labor charged to injuries and damages.

                  E.5.2    The  following  example  sets  forth the method to be
                           employed  by the  Operating  Agent to  determine  the
                           Benefits Ratio:


Revised:  02/16/01

                                                                               3
<PAGE>



                               EXAMPLE COMPUTATION
                                OF BENEFITS RATIO

                   (Based on Operating Agent's 1997 Expenses)

 Pensions and Benefits                                  Labor          Total
                                                        -----          -----
 Employee Pensions and Benefits                       $2,542,461   $ 60,804,375

 Payroll Taxes on Labor at                                7.067%        179,676
 Total Labor Rate

 Compensation Insurance at                                0.502%         12,775
 Total Labor Rate

 Less the Transition Obligation related to Postretirement            17,141,515
 Benefits and Interest on the Transition Obligation,
 billed outside of the Benefits Ratio

 Less expected Return on Assets                                      (8,706,403)
                                                                   ------------

 Total Employee Pensions and Benefits net of the                   $ 52,561,714
                                                                   ============
 Transition Obligation and Related Interest and Expected
 Return on Assets

 Labor Base

 Labor charged to operation and maintenance,                       $323,082,848
 construction and miscellaneous general ledger
 accounts

 Less total labor charged to Pensions and Benefits                    1,799,288

 Less total labor charged to Injuries and Damages                       399,809
                                                                   ------------
 Total applicable labor                                            $320,883,751
                                                                   ============

 Benefits Ratio:  $52,561,714/$320,883,751                               16.38%



         6.3      Appendix E - Cost of Operating Work and Capital  Improvements,
                  is  amended  by adding the new  Sections  E.7A,  E.7B and E.7C
                  which read in their entirety as follows:

Revised:  02/16/01

                                                                               4
<PAGE>

         E.7A     Transition Obligation

                  E.7A.1   The  Operating  Agent's   Transition   Obligation  at
                           January 1, 1993 is $182,918,448, of which $43,000,000
                           is  allocable  to  Palo  Verde.   Future  changes  in
                           corporate-wide benefit plan levels covered under SFAS
                           106  that  may  affect  the  level  of the  Operating
                           Agent's  Transition  Obligation,  shall be applied to
                           Palo Verde at the rate of 23.508%.  Any such  changes
                           to the Transition Obligation will be reflected in the
                           year  that  the  actuarial   valuation  reports  such
                           changes.

                  E.7A.2   Interest  on the  unamortized  Transition  Obligation
                           balance at January 1 of each year will be  calculated
                           using  the  current  year's  discount  rate  per  the
                           current  year's   actuarial   valuation.   Since  the
                           actuarial  valuation is usually not  available  until
                           mid-year,  an  estimated  rate,  based  on the  prior
                           year's  actuarial  valuation  will be used  until the
                           current year's actuarial  valuation is available.  At
                           that time,  the  interest  related to the  Transition
                           Obligation  will be  trued-up  to reflect the current
                           year's  valuation.  In the event of removal of one or
                           more Generating  Units from service prior to 2013, an
                           actuarial  study will be completed to recalculate the
                           remaining  Transition  Obligation  pertaining to Palo
                           Verde on a stand-alone basis.

                  E.7A.3   The Transition  Obligation  will be amortized over 20
                           years on a straight line basis,  starting  January 1,
                           1993.  The Operating  Agent shall bill the Transition
                           Obligation  and  related  interest  for the year on a
                           monthly basis as set forth below:

                   TRANSITION OBLIGATION AND RELATED INTEREST
                       BILLED OUTSIDE OF THE BENEFITS LOAD


                                                      TOTAL         BILLED TO
                                                     COMPANY        PALO VERDE
                                                     -------        ----------
          Total Transition Obligation
          Fixed At 1-1-93 To Be
          Amortized Over 20 Years                  $182,918,448     $43,000,000

          One Year's Amortization Of the
          Transition Obligation ("T.O.")              9,145,922       2,150,000

          Interest On The Unamortized
          Balance Of The T.O. At 1-1-93              15,090,772       3,547,500
                                                    -----------      ----------

          Total 1993 Transition Obligation &
          Interest                                   24,236,694       5,697,500
                                                    ===========      ==========

          Interest On The Unamortized
          Balance Of the T.O. At 1-1-93
            Unamortized Balance At 1-1-93           182,918,448      43,000,000
            1993 Discount Rate                            8.25%           8.25%
                                                    -----------      ----------
            Interest On Transition Obligation        15,090,772       3,547,500
                                                    ===========      ==========

Revised:  02/16/01

                                                                               5
<PAGE>

         E.7B     Return on Assets

                  E.7B.1   The current  year  expected  Return on Assets will be
                           estimated  annually  by the  actuary.  Any  Return on
                           Assets  related  to any  trusts  established  for the
                           purpose  of  obtaining   preferential  tax  treatment
                           (i.e., union versus non-union), shall be allocated by
                           the  actuary  to Palo Verde  based on the  ability of
                           Palo Verde to participate in such trust.

                  E.7B.2   As soon as practical  after the end of each  calendar
                           year,  the actual Return on Assets will be determined
                           by the  actuary  and  allocated  to Palo  Verde.  The
                           actuary shall then  calculate the allocation of total
                           trust(s)  assets at the end of each  calendar year to
                           Palo   Verde   based   on   current   year   trust(s)
                           contributions,   earnings  and   distributions.   The
                           allocation  of trust assets to Palo Verde will be the
                           basis for the allocation of expected Return on Assets
                           annually by the actuary.

         E.7C     Funding of Postretirement Benefit Costs

                  E.7C.1   All  Postretirement  Benefit  costs,  other  than the
                           expected   Return  on  Assets   and  the   Transition
                           Obligation and related  interest,  as defined in SFAS
                           106, are to be billed through the Benefits Ratio.

                  E.7C.2   Postretirement  Benefits  that  have  been  collected
                           either  through the Benefits  Load,  or as Transition
                           Obligation and related interest,  as adjusted for the
                           Return on  Assets,  shall be funded by the  Operating
                           Agent in  irrevocable  external  trusts  intended for
                           postretirement  health and welfare benefits.  Funding
                           will occur within an administratively reasonable time
                           period on approximately a quarterly basis.

7.       EXECUTION BY COUNTERPARTS:

         This  Amendment  No. 14 may be executed in any number of  counterparts,
         and upon execution by all Participants, each executed counterpart shall
         have the same force and effect as an original  instrument and as if all
         Participants had signed the same instrument. Any signature page of this
         Amendment No. 14 may be detached from any counterpart of this Amendment
         No. 14 without impairing the legal effect of any signature thereon, and
         may be  attached  to  another  counterpart  of this  Amendment  No.  14
         identical  in  form  hereto  but  having  attached  to it one  or  more
         signature pages.

Revised:  02/16/01

                                                                               6
<PAGE>



8.       SIGNATURE CLAUSE:

         The  signatories  hereto  represent  that they have been  appropriately
         authorized  to enter into this  Amendment No. 14 on behalf of the Party
         for whom they sign.

                                            ARIZONA PUBLIC SERVICE COMPANY



                                            By:
                                               ---------------------------------

                                            Its:
                                                --------------------------------

                                            Date:
                                                 -------------------------------


                                            SALT RIVER PROJECT AGRICULTURAL
                                            IMPROVEMENT AND POWER DISTRICT



                                            By:
                                               ---------------------------------

                                            Its:
                                                --------------------------------

                                            Date:
                                                 -------------------------------

ATTEST AND COUNTERSIGN:


By:
   -------------------------------------

Its:
    ------------------------------------

Date:
     -----------------------------------



                                            SOUTHERN CALIFORNIA EDISON COMPANY



                                            By:
                                               ---------------------------------

                                            Its:
                                                --------------------------------

                                            Date:
                                                 -------------------------------


Revised:  02/16/01

                                                                               7
<PAGE>



                                            PUBLIC SERVICE COMPANY OF NEW MEXICO



                                            By:
                                               ---------------------------------

                                            Its:
                                                --------------------------------

                                            Date:
                                                 -------------------------------



                                            EL PASO ELECTRIC COMPANY



                                            By:
                                               ---------------------------------

                                            Its:
                                                --------------------------------

                                            Date:
                                                 -------------------------------



                                            SOUTHERN CALIFORNIA PUBLIC POWER
                                            AUTHORITY, doing business in the
                                            State of Arizona
                                            as SOUTHERN CALIFORNIA PUBLIC POWER
                                            AUTHORITY ASSOCIATION



                                            By:
                                               ---------------------------------

                                            Its:
                                                --------------------------------

                                            Date:
                                                 -------------------------------

ATTEST AND COUNTERSIGN:

By:
   -------------------------------------

Its:
    ------------------------------------

Date:
     -----------------------------------


Revised:  02/16/01

                                                                               8
<PAGE>


                                            DEPARTMENT OF WATER AND POWER OF
                                            THE CITY OF LOS ANGELES



                                            By:
                                               ---------------------------------

                                            Its:
                                                --------------------------------

                                            Date:
                                                 -------------------------------


STATE OF ARIZONA           )
                           ) ss.
County of Maricopa         )

                  On this _____ day of  _____________________,  1999, before me,
the       undersigned       Notary       Public,       personally       appeared
______________________________    who    acknowledged    himself   to   be   the
_________________________   of  ARIZONA  PUBLIC  SERVICE  COMPANY,   an  Arizona
corporation,  and that he as such officer,  being authorized to do, executed the
foregoing  instrument for the purposes therein  contained by signing the name of
the company by himself as such ____________________________.

                  IN WITNESS WHEREOF, I hereunto set my hand and official seal.



                                                --------------------------------
                                                Notary Public

My Commission Expires:

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



Revised:  02/16/01

                                                                               9
<PAGE>



STATE OF ARIZONA           )
                           ) ss.
County of Maricopa         )

                  On this _____ day of  _____________________,  1999, before me,
the       undersigned       Notary       Public,       personally       appeared
______________________________    who    acknowledged    himself   to   be   the
_________________________  of SALT RIVER PROJECT  AGRICULTURAL  IMPROVEMENT  AND
POWER  DISTRICT,  an Arizona  corporation,  and that he as such  officer,  being
authorized to do,  executed the foregoing  instrument  for the purposes  therein
contained   by   signing   the  name  of  the   company   by   himself  as  such
____________________________.

                  IN WITNESS WHEREOF, I hereunto set my hand and official seal.



                                                --------------------------------
                                                Notary Public

My Commission Expires:

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


STATE OF CALIFORNIA        )
                           ) ss.
County of Los Angeles      )

                  On this _____ day of  _____________________,  1999, before me,
the       undersigned       Notary       Public,       personally       appeared
______________________________    who    acknowledged    himself   to   be   the
_________________________  of SOUTHERN  CALIFORNIA EDISON COMPANY,  a California
corporation,  and that he as such officer,  being authorized to do, executed the
foregoing  instrument for the purposes therein  contained by signing the name of
the company by himself as such ____________________________.

                  IN WITNESS WHEREOF, I hereunto set my hand and official seal.



                                                --------------------------------
                                                Notary Public

My Commission Expires:

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


Revised:  02/16/01

                                                                              10
<PAGE>



STATE OF NEW MEXICO        )
                           ) ss.
County of Bernalillo       )

                  On this _____ day of  _____________________,  1999, before me,
the       undersigned       Notary       Public,       personally       appeared
______________________________    who    acknowledged    himself   to   be   the
_________________________  of PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico
corporation,  and that he as such officer,  being authorized to do, executed the
foregoing  instrument for the purposes therein  contained by signing the name of
the company by himself as such ____________________________.

                  IN WITNESS WHEREOF, I hereunto set my hand and official seal.



                                                --------------------------------
                                                Notary Public

My Commission Expires:

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

STATE OF TEXAS             )
                           ) ss.
County of El Paso          )

                  On this _____ day of  _____________________,  1999, before me,
the       undersigned       Notary       Public,       personally       appeared
______________________________    who    acknowledged    himself   to   be   the
_________________________  of EL PASO ELECTRIC COMPANY, a Texas corporation, and
that  he as  such  officer,  being  authorized  to do,  executed  the  foregoing
instrument for the purposes therein contained by signing the name of the company
by himself as such ____________________________.

                  IN WITNESS WHEREOF, I hereunto set my hand and official seal.



                                                --------------------------------
                                                Notary Public

My Commission Expires:

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



Revised:  02/16/01

                                                                              11
<PAGE>



STATE OF CALIFORNIA        )
                           ) ss.
County of Los Angeles      )

                  On this _____ day of  _____________________,  1999, before me,
the       undersigned       Notary       Public,       personally       appeared
______________________________    who    acknowledged    himself   to   be   the
_________________________  of SOUTHERN  CALIFORNIA PUBLIC POWER AUTHORITY (doing
business  in the  State  of  Arizona  as  SOUTHERN  CALIFORNIA  POWER  AUTHORITY
ASSOCIATION),  a California  joint powers  agency,  and that he as such officer,
being  authorized  to do,  executed the  foregoing  instrument  for the purposes
therein  contained  by  signing  the  name of the  company  by  himself  as such
____________________________.

                  IN WITNESS WHEREOF, I hereunto set my hand and official seal.



                                                --------------------------------
                                                Notary Public

My Commission Expires:

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



STATE OF CALIFORNIA        )
                           ) ss.
County of Los Angeles      )

                  On this _____ day of  _____________________,  1999, before me,
the       undersigned       Notary       Public,       personally       appeared
______________________________    who    acknowledged    himself   to   be   the
_________________________  of  DEPARTMENT  OF WATER AND POWER OF THE CITY OF LOS
ANGELES,  a department  organized and existing  under the Charter of the City of
Los Angeles, a California  municipal  corporation,  and that he as such officer,
being  authorized  to do,  executed the  foregoing  instrument  for the purposes
therein  contained  by  signing  the  name of the  company  by  himself  as such
____________________________.

                  IN WITNESS WHEREOF, I hereunto set my hand and official seal.



                                                --------------------------------
                                                Notary Public

My Commission Expires:

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



Revised:  02/16/01
                                                                              12