Document:

Exhibit

EXHIBIT 10.12

ANPP TRANSMISSION PROJECT

WESTWING SWITCHYARD
AMENDED INTERCONNECTION AGREEMENT

APS Contract No. 7651

[Type here]

WESTIWING SWITCHYARD
AMENDED INTERCONNECTION AGREEMENT

TABLE OF CONTENTS

	
				
	Section
	Title
	Page
	

	 
	 
	 

	1
	PARTIES
	1
	

	2
	RECITALS
	2
	

	3
	AGREEMENT
	4
	

	4
	EFFECTIVE DATE AND TERMINATION
	4
	

	5
	FACILITIES TO BE PROVIDED
	5
	

	6
	OWNERSHIP
	7
	

	7
	OPERATION
	8
	

	8
	COST RESPONSIBILITY RATIOS
	12
	

	9
	ALLOCATION OF OPERATION AND MAINTENANCE EXPENSES
	13
	

	10
	PAYMENT FOR USE OF COMMON FACILITIES
	14
	

	11
	REGULATORY AUTHORITY AND RATE CHANGE
	16
	

	12
	OTHER PROJECT AGREEMENTS
	17
	

	13
	POWER AND ENERGY LOSSES
	17
	

	14
	PAYMENT OF TAXES
	18
	

	15
	INSURANCE
	18
	

	16
	LIABILITY; COVENANT NOT TO EXECUTE
	19
	

	17
	UNCONTROLLABLE FORCES
	26
	

	18
	RELATIONSHIP OF THE PARTIES
	27
	

	19
	GOVERNING LAW
	27
	

TABLE OF CONTENTS (Cont’d)

	
				
	20
	SUCCESSORS AND ASSIGNS
	27
	

	21
	UNFORESEEN CIRCUMSTANCES
	27
	

	22
	GENERAL CONTRACT PROVISIONS
	28
	

	23
	EXECUTION BY COUNTERPARTS
	28
	

	24
	SIGNATURE CLAUSE
	29
	

	 
	APPENDIX A
	39
	

	 
	APPENDIX B
	41
	

	 
	APPENDIX C
	42
	

	 
	APPENDIX D
	43
	

	 
	APPENDIX E
	46
	

	 
	APPENDIX F
	48
	

	 
	 
	 

WESTWING SWITCHYARD
AMENDED INTERCONNECTION AGREEMENT

		
	1.
	PARTIES:

The parties to this Westwing Switchyard Amended Interconnection Agreement hereinafter referred to as the "Amended Interconnection Agreement," are:  THE UNITED STATES OF AMERICA, hereinafter referred to as the "United States," acting through the Secretary of the Interior, his duly appointed successor or his duly authorized representative; ARIZONA PUBLIC SERVICE COMPANY, an Arizona corporation, hereinafter referred to as "Arizona"; DEPARTIMENT 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 municipal corporation of the State of California, hereinafter referred to as "Los Angeles"; EL PASO ELECTRIC COMPANY, a Texas corporation, hereinafter referred to as "El Paso"; NEVADA POWER COMPANY, a Nevada corporation, hereinafter referred to as "Nevada"; PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation, hereinafter referred to as "PNM"; SALT RIVER PROJECT AGRICULTURAL IMPROVEMENT AND POWER DISTRICT, an agricultural improvement district organized and existing under the laws of the State of Arizona, hereinafter referred to as "Salt River Project"; and TUCSON ELECTRIC POWER COMPANY, an Arizona corporation formerly known as Tucson Gas & Electric Company, hereinafter referred to as "Tucson."  These entities are referred to collectively as "Parties" and individually as "Party."

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	2.
	RECITALS:

This Amended Interconnection Agreement is made with reference to the following facts, among others:
		
	2.1
	Arizona, El Paso, PNM, and Salt River Project, hereinafter collectively referred to as the "Palo Verde-Westwing Participants," are participants, together with Southern California Edison Company, Southern California Public Power Authority and Los Angeles, in the Arizona Nuclear Power Project (ANPP) which is constructing the Palo Verde nuclear‐electric generating units 1, 2 and 3 west of Phoenix, Arizona.  Pursuant to the ANPP Valley Transmission System Participation Agreement dated August 20, 1981, as amended, the Palo Verde-Westwing Participants have con­ structed a 500 kV transmission line, hereinafter referred to as the "First Palo Verde Line," between the Palo Verde Nuclear Generating Station and the Westwing Switchyard, both located west of Phoenix, Arizona.  The Palo Verde­ Westwing Participants have constructed and ·now desire to interconnect a second 500 kV transmission line parallel to the First Palo Verde Line, hereinafter referred to as the "Second Palo Verde Line."  Both lines are hereinafter collectively referred to as the "Palo Verde Lines."

		
	2.2
	The United States, Arizona, Los Angeles, Nevada, Salt River Project, and Tucson, hereinafter collectively referred to as the "Navajo Southern Transmission System Participants," owners in undivided interest of various portions of the

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Navajo Southern Transmission System which includes the Westwing Switchyard among its facilities, recognize the mutual benefits of interconnecting transmission systems, among which are improved reliability, increased transfer capability between systems, a means of furnishing emergency assistance, and exchanges of economy energy between systems.  They are consequently willing to permit the interconnection of the Palo Verde Lines with the Westwing Switchyard in accordance with the terms and conditions contained in this Amended Interconnection Agreement.
		
	2.3
	Navajo Southern Transmission System Participants with cost responsibility in the Westwing Switchyard are the United States, Arizona, Salt River Project, and Tucson, herein­after collectively referred to as the "Navajo Westwing Participants," and they retain certain rights and obliga­tions under this Amended Interconnection Agreement in the interest of the Navajo Southern Transmission System Participants.

		
	2.4
	Arizona constructed and now operates the Westwing Switch­ yard as project manager and operating agent for the Navajo Project Southern Transmission System, and the Navajo Southern Transmission System Participants desire to con­tinue to have Arizona as the Party responsible for the design, construction, and operation of the Westwing Switchyard.

		
	2.5
	The Palo Verde-Westwing Participants have designated Salt

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River Project as project manager and operating agent to design, construct, and operate the Palo Verde Lines, and Arizona as Project Manager and Operating Agent of the Westwing Switchyard, hereinafter referred to as "Operating Agent", to design, construct, and operate the additions to the Westwing Switchyard incidental to the Palo Verde Lines interconnection.
		
	2.6
	The Palo Verde-Westwing Participants have completed the construction and interconnection of the First Palo Verde Line and its termination facilities to both the ANPP High Voltage Switchyard and the Westwing Switchyard and contemplate completing interconnection of the Second Palo Verde Line and other associated switchyard facilities on or about March 1, 1986.

		
	3.
	AGREEMENT:

In consideration of the mutual covenants herein, the Parties hereby agree as follows:
		
	4.
	EFFECTIVE DATE AND TERMINATION:

This Amended Interconnection Agreement shall become effective when it has been duly executed and delivered on behalf of all the Parties and is subject to acceptance for filing by the Federal Energy Regulatory Commission ("FERC") and will terminate concurrently with the termination of the Navajo Project Co‐Tenancy Agreement or the ANPP Valley Transmission System Participation Agreement, whichever occurs first.  On the effective date of this Amended Interconnection Agreement, the

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Westwing Switchyard Interconnection Agreement dated October 26, 1978 shall be superseded and shall be of no further force or  effect.
		
	5.
	FACILITIES TO BE PROVIDED:

		
	5.1
	The Navajo Westwing Participants will grant to the Palo Verde-Westwing Participants the necessary easements to be evidenced by appropriate documents in a form acceptable to the Palo Verde-Westwing Participants and executed by the Navajo Westwing Participants, across the Westwing Switch- yard property to enable the Palo Verde-Westwing Partici- pants to connect the Palo Verde Lines and the 500/230 kV transformer to the Westwing Switchyard 500 kV bay locations 10, 11, 12, 14 and 15 and 230 kV bay locations 1, 2, and 7, including such space as may be required for installation of shunt reactors required as a- result of the interconnection.  The bay locations are generally shown on Appendix C attached hereto and made a part hereof.  Also to be granted to the Palo Verde-Westwing Participants is an easement for a microwave control house and associated equipment to be installed in the Westwing Switchyard by Salt River Project, acting as operating agent for the ANPP High Voltage Switchyard, the Palo Verde Lines and the Palo Verde-Kyrene 500 kV line.  Said microwave control house and associated equipment will provide a communication link necessary for operation of the ANPP Valley Transmission System.

		
	5.2
	The Navajo Southern Transmission System Participants hereby

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extend to the Palo Verde-Westwing Participants the right to use the spare single phase 500/230 kV transformer as a spare for the transformers installed by the Palo Verde­ Westwing Participants.  The cost of the spare transformer is included in the cost of common facilities shown in Appendix A attached hereto and made a part hereof.
		
	5.3
	The Palo Verde-Westwing Participants shall provide at their cost and expense:

		
	5.3.1
	Termination facilities for the Palo Verde Lines.

		
	5.3.2
	A 1500 MVA 500/230 kV transformer bank suitable for parallel operation with the existing 500/230 kV transformers.

		
	5.3.3
	Shunt or territory reactors as required at Westwing Switchyard as a direct result of the interconnection of the Palo Verde Lines to the Westwing 500 kV bus.

		
	5.3.4
	Associated facilities including, but not limited to, structures, buswork, grounding, disconnect switches, 500 kV breakers, 230 kV breakers, insula­tors and associated appurtenances.

		
	5.3.5
	All relaying, metering, control and communication equipment including microwave facilities with necessary conduit, duct work and control and communication cable required incidental to the interconnection of the Palo Verde Lines and/or the 500/230kV transformer bank.

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	5.3.6
	Upgrading of eleven of the existing Navajo Project 230 kV circuit breakers shown on Appendices C and D attached hereto and made parts hereof, which have inadequate fault duty capability as a result of the interconnection of the Palo Verde Lines.  The upgrading shall coincide with the installation of the 500/230 kV transformer bank.

		
	5.3.7
	Three new 230 kV breakers:  two shall be installed with the 500/230 kV transformer; the third, including its associated equipment, shall be installed for the interconnection of Arizona's anticipated second Westwing-El Sol line to be installed in 1993.

		
	5.4
	The facilities to be installed by the Palo Verde-Westwing Participants shall conform as nearly as possible in design and appearance with existing facilities at the Westwing Switchyard.    Design and location of facilities to be in­stalled shall be subject to review and approval of the Navajo Project Transmission Engineering and Operating Com­mittee.  Such approval shall not be unreasonably withheld.

		
	6.
	OWNERSHIP:

		
	6.1
	The facilities installed under the Westwing Switchyard Interconnection Agreement and the facilities to be installed under this Amended Interconnection Agreement, except those facilities described in Sections 5.3.6 and 5.3.7, shall be owned by and remain the property of the

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Palo Verde-Westwing Participants.  Facilities provided for in Section 5.3.6 shall be the sole property of the Navajo Westwing Participants.  The Palo Verde-Westwing Participants shall own 1-1/2 of the two 230 kV breakers installed with the 500/230 kV transformer.  The Navajo Westwing Participants shall own the remaining 1/2 of the center breaker and the third breaker to be installed pursuant to Section 5.3.7.
		
	6.2
	Net salvage value calculated based on original cost less depreciation for existing equipment replaced pursuant to Section 5.3.7 hereof shall be credited to the Palo Verde­ Westwing Participants when the equipment is replaced or removed.

		
	6.3
	All facilities existing prior to the interconnection of the First Palo Verde Line shall remain the property of the Navajo Westwing Participants.

		
	6.4
	6.4    The division of ownership of facilities between the Palo Verde-Westwing Participants and the Navajo Westwing Participants as provided in this Amended Interconnection Agreement shall not be construed to limit the rights now held by the Navajo Southern Transmission System Participants for orderly expansion of the Westwing Switchyard as they may deem necessary.

		
	7.
	OPERATION:

		
	7.1
	Equipment or facilities installed by Palo Verde-Westwing Participants to uprate and replace existing Westwing

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Switchyard facilities shall be operated and maintained by Arizona, the Operating Agent for the Westwing Switchyard, at the expense of the Navajo Westwing Participants pursuant to Section 9 hereof.
		
	7.2
	Other equipment or facilities installed by the Palo Verde‐Westwing Participants to effect the 500 kV interconnection s and the 500/230 kV transformer installation shall be operated and maintained by Arizona, the Operating Agent for the Westwing Switchyard, in coordination with Salt .River Project, acting as operating agent for the Palo Verde Lines, at the expense of the Palo Verde-Westwing Participants pursuant to Section 9 hereof. Upon the in service date of Arizona's second Westwing-El Sol line, the Palo Verde-Westwing Participants shall have cost responsibility for operating and maintaining a breaker and a half and appurtenant facilities associated with their 500/230 kV transformer in the 230 kV switchyard.

		
	7.3
	The Palo Verde-Westwing Participants and the Navajo Southern Transmission System Participants acknowledge that it may from time to time be necessary for the Westwing Switchyard Operating Agent to de-energize certain facilities at the Westwing Switchyard in order to complete the installation of equipment set forth in Section 5 hereof and to maintain facilities of both the Palo Verde-Westwing Participants and the Navajo Southern Transmission System Participants.  The Operating Agent will coordinate any

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outage of facilities required for construction or maintenance purposes with the affected Parties, all in accordance with the provisions of the Navajo Project Southern Transmission System Operating Agreement, dated July 23, 1979 and the ANPP Valley Transmission System Participation Agreement.
		
	7.4
	Under normal operating conditions, the Palo Verde-Westwing Participants shall have the right to transmit power and energy through the components of the Westwing Switchyard to the extent of their firm entitlement in the Palo Verde Lines as long as such use does not interfere with or impair the firm transmission capability of the Navajo Southern Transmission System and as long as such use does not create an overloaded condition in any of the components of the Westwing Switchyard.  The words "firm transmission capability" as used herein shall mean "the maximum amount of power that can be transmitted continuously as determined by the Navajo Engineering and Operating Committee."

		
	7.5
	In the event the capacity of the Westwing Switchyard is insufficient to accommodate all requests, the Operating Agent shall first curtail non-firm schedules through the Westwing Switchyard which contribute to the overload.  The Operating Agent shall curtail non-firm schedules in a manner which results in schedules which are proportional to the Parties' schedules prior to curtailment, and shall curtail schedules in the following order:

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	7.5.1
	The non-firm schedules of the Palo Verde-Westwing Participants.

		
	7.5.2
	The non-firm schedules of the Navajo Southern Transmission System Participants.

		
	7.6
	In the event that the capacity of the Westwing Switchyard is insufficient to accommodate all firm schedules after all non-firm schedules are curtailed pursuant to Section 7.5, the Operating Agent shall curtail firm schedules through the Westwing Switchyard which contribute to the overload.  The Operating Agent shall curtail firm schedules in a manner which results in schedules which are proportional to the Parties' percentage ownership in the respective systems, and shall curtail schedules in the following order:

		
	7.6.1
	The firm schedules of the Palo Verde-Westwing Participants other than ANPP generation or its replacement capacity.

		
	7.6.2
	The firm schedules of the Navajo Southern Transmission System Participants other than Navajo generation schedules or its replacement capacity. 

		
	7.6.3
	ANPP generation schedules or its replacement capacity.

		
	7.6.4
	Navajo generation schedules or its replacement capacity.

		
	7.7
	As a means of permitting El Paso and PNM to participate in the coordination and interchange of information on a prompt and orderly basis in connection with operating matters

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under this Amended Interconnection Agreement, El Paso and PNM shall each be allowed to have a non-voting repre­sentative attend appropriate meetings of the Navajo Transmission System Engineering and Operating    Committee.
		
	7.8
	During operating emergencies, the Navajo Southern Trans­mission System Participants and the Palo Verde-Westwing Participants shall make available to each other, through their respective operating agents, such transmission capacity as may be determined to be available in the sole judgment of the supplier.  The transmission capacity provided under this Section 7.8 shall be on an interruptible basis and shall be provided only when it will not result in the impairment of or jeopardy to service in the system of the supplier:

		
	8.
	COST RESPONSIBILITY RATIOS:

		
	8.1
	"Cost Responsibility Ratios" shall be computed for the purpose of sharing operation and maintenance expenses between the Navajo Westwing Participants collectively, the Palo Verde-Westwing Participants collectively, and other parties or individual Parties.  For this purpose, each con­nection to the Westwing 500·kV bus and/or 230 kV bus through a power circuit breaker such as line connections, transformer connections, reactor or capacitor bank connec­tions will be deemed a "Function."  Likewise, each power transformer bank will be deemed a Function.  Cost

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Responsibility Ratios shall be computed by the Westwing Switchyard Operating Agent initially and subsequently upon the installation of additional Functions in the Westwing Switchyard, as follows:
	
				
	8.1.1
	Navajo Westwing
	=
	X

	 
	Participants
	 
	X+Y+Z

	 
	Cost Responsibility Ratio
	 
	 

	 
	 
	 
	 

	8.1.2
	Palo Verde-Westwing Participants
	=
	Y

	 
	Cost Responsibility Ratio
	 
	X+Y+Z

	 
	 
	 
	 

	8.1.3
	Third Party Cost
	=
	Z

	 
	Responsibility Ratio
	 
	X+Y+Z

	 
	 
	 
	 

		
	Where,
	X =    Number of Functions for Navajo Westwing Participants.

		
	Y =
	Number of Functions for Palo Verde-Westwing Participants.

		
	Z =
	Number of Functions for any third party (ies) and/or individual Party.

Ratios will be computed and used for the 500 kV Switchyard when only 500 kV costs are to be allocated, for the power transformers when only power transformer costs are to be allocated, for the 230 kV yard when only 230 kV costs are to be allocated and for the composite switchyard when 500 kV and 230 kV costs cannot be or are not normally accounted for separately.  Calculations of Cost Responsibility Ratios are shown in Appendix E attached hereto and made a part hereof.
9.    ALLOCATION OF OPERATION AND MAINTENANCE EXPENSES:
		
	9.1
	All costs of operation for the Westwing Switchyard, and for such maintenance which is not allocable to any specific

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facility or equipment within the Westwing Switchyard, shall be paid monthly by the Navajo Westwing Participants and the Palo Verde-Westwing Participants in proportion to their respective Cost Responsibility Ratios:
		
	9.1.1
	Separately by each Navajo Westwing Participant in accordance with its individual cost responsibility as set forth in Exhibit B of the Navajo Project Southern Transmission System Operating Agreement, as now written or as hereafter modified.

		
	9.1.2
	Separately by each Palo Verde-Westwing Participant in accordance with its individual cost responsibility as set forth in Appendix B of the ANPP Valley Transmission System Participation Agreement, as now written or as hereafter modified.

		
	9.2
	The costs of maintenance for the Westwing Switchyard which are allocable to any specific facility or equipment within the Westwing Switchyard shall be paid by the owners of that facility or equipment, in accordance with the applicable agreement mentioned in Sections 9.1.1 or 9.1.2 herein.

10.    PAYMENT FOR USE OF COMMON FACILITIES:
		
	10.1
	Certain facilities, as shown in Appendix A, and referred to as common facilities, are for the common use and benefit of the Navajo Westwing Participants and the Palo Verde‐Westwing Participants.  It is neither feasible nor desirable to alter the ownership of common facilities installed prior to the effective date of this Amended

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Interconnection Agreement.  Therefore, an equalization charge will be computed to equalize the investment costs of common facilities.  The payment of such charge calculated pursuant to Section 10.2 hereof shall entitle the Palo Verde-Westwing Participants to the nonexclusive use and benefit of all common facilities in the Westwing Switchyard.
		
	10.2
	Beginning on the date of firm operation of the First Palo Verde Line, the Palo Verde-Westwing Participants shall pay the Navajo Westwing Participants an equalization charge for the use of common facilities owned by the Navajo Westwing Participants.  Such payment shall be calculated as follows: (i) total actual original cost of all common facilities shall be multiplied by the Cost Responsibility Ratio of the Palo Verde-Westwing Participants for the composite yard; (ii) then subtract the amount invested by the Palo Verde‐Westwing Participants for common facilities; (iii) then multiply the result (i-ii) by the Weighted Average Annual Fixed Charge Rate (including ad valorem taxes or payments in lieu of) of the Navajo Westwing Participants, computed as shown in Line D of Appendix B.

		
	10.3
	A monthly payment shall be computed as one-twelfth of the equalization charge computed pursuant to Section 10.2  hereof.

		
	10.4
	The Palo Verde-Westwing Participants shall individually pay each month their appropriate share of the monthly payment in accordance with Section 9.1.2 hereof, to be received by

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Arizona, as Operating Agent, and credited to the accounts of the Navajo Westwing Participants, in accordance with Line E of Appendix B.
		
	10.5
	The equalization charge may be changed only under the provisions of Section 11 hereof.

		
	10.6
	The costs and percentages set forth in Appendices A and B hereto shall be subject to review and audit by the Palo Verde-Westwing Participants.

11.    REGULATORY AUTHORITY AND RATE CHANGE:
		
	11.1
	Any Navajo Westwing Participant which can demonstrate that its respective Annual Fixed Charge Rate shown in Appendix B has become inequitable shall be entitled to change that Annual Fixed Charge Rate so that it is equitable after having first received the consent of all the Palo Verde‐Westwing Participants, which consent shall not be unreasonably withheld.  The Salt River Project shall use an Annual Fixed Charge Rate which is consistent with its pricing methods used for other inter-utility transactions.

		
	11.2
	Nothing contained herein, including the provisions of Section 11.l hereof, shall be construed as affecting in any way the rights of any Navajo Westwing Participant subject to the jurisdiction of the FERC to unilaterally make application to FERC for a change in rates or allocations shown in Appendix B, under Section 205 of the Federal Power Act and pursuant to the Commission's Rules and Regulations promulgated thereunder.

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	11.3
	The Parties agree that application for changes pursuant to Sections 11.1 or 11.2 hereof shall not be submitted by an individual Navajo Westwing Participant at less than two‐year intervals.

12.    OTHER PROJECT AGREEMENTS:
Arizona as Operating Agent for the Navajo Southern Transmission System Participants shall continue to act with respect to such participants in accordance with the Navajo Project Southern Transmission System Operating Agreement, as presently written or hereafter modified, except to the extent such agreement conflicts with this Amended Interconnection Agreement. Arizona as Project Manager and Operating Agent on behalf of the Palo Verde-Westwing Participants at the Westwing Switchyard shall act with respect to such participants in accordance with the ANPP Valley Transmission System Participation Agreement, as presently written or hereafter modified, except to the extent such agreement conflicts with this Amended Interconnection Agreement.  If differences between the Navajo Project Southern Transmission System Operating Agreement and the ANPP Valley Transmission System Participation Agreement make concurrent performance with both agreements either impos­ sible or impracticable, then, to the extent of such impossibility or impracticability, Arizona's obligations under the ANPP Valley Transmission System Participation Agreement shall be suspended.
13.    POWER AND ENERGY LOSSES:
Any power and energy losses directly resulting from the Palo Verde Lines interconnections at the Westwing Switchyard identifiable as being caused by the Palo Verde-Westwing Participants as individuals on the Navajo Southern Transmission System or any power and energy losses identifiable 

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as being caused by the Navajo Southern Transmission System Participants as individuals on the ANPP Valley Transmission System shall be returned in kind by the individual causing such losses to the affected Party(ies) at times of like conditions of loads and generation resources on the systems of the affected Party(ies) in accordance with proce­dures developed jointly by the Engineering and Operating Committees of the ANPP Valley Transmission System Participants and the Navajo Southern Transmission System Participants.
14.    PAYMENT OF TAXES:
		
	14.l
	Each Party shall use its best efforts to have any taxing authority imposing any property taxes or other taxes (excluding any sales or use taxes) or assessments on the facilities within the Westwing Switchyard, impose such taxes or assessments directly upon each Party on the basis of its respective ownership interest in the Westwing Switchyard.

		
	14.2
	All taxes and assessments levied against any Party shall be the sole responsibility of the Party upon whom said taxes and assessments are levied, unless such taxes and assess­ments are levied directly upon an individual Party in behalf of any or all of the other Parties.

		
	14.3
	Any Party exempted from any taxes assessed against any or all of the other Parties shall be given credit for such

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exemption.
15.    INSURANCE:
The Palo Verde-Westwing Participants shall provide construction and operating insurance and the Navajo Southern Transmission System Participants shall provide operating insurance to cover facilities in which they respectively retain ownership.  Such insurance shall be provided by the Palo Verde-Westwing Partici­pants in accordance with Sections 22 and 23 of the ANPP Valley Transmission System Participation Agreement and by the Navajo Southern Transmission System Participants in accordance with Section 18 of the Navajo Project Southern Transmission System Operating Agreement, as those agreements are written or may be hereafter amended by the Parties to each agreement.  Arizona, as Operating Agent, shall require insurance carriers furnishing insurance to waive rights of subrogation against all Parties as their respective interests may appear.
16.    LIABILITY; COVENANT NOT TO EXECUTE:
		
	16.1
	Except for any judgment debt for damage resulting from Willful Action and except to the extent any judgment debt is collectible from valid insurance provided pursuant to Section 15 hereof, and subject to the provisions of Sections 16.2, 16.4, and 16.5 hereof, each Party hereby extends to all other Parties, their directors, members of their governing bodies, officers and employees its covenant not to execute, levy or otherwise enforce a judgment obtained against any of them, including recording or

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effecting a judgment lien, for any direct, indirect or consequential loss, including but not limited to, death, injury, damage, claim, cost, charge or expense, whether or not resulting from the negligence of such Party, its directors, members of its governing bodies, officers, employees, or any person or entity whose negligence would be imputed to such Party from the performance or non‐performance of the obligations of any Party under this Amended Interconnection Agreement, or the construction, operation or ownership of facilities at the Westwing Switchyard, other than the obligation to pay any monies which have become due under the terms of this Agreement.
		
	16.2
	In the event any insurer providing insurance pursuant to Section 15 hereof refuses to pay any judgment obtained by a Party against another Party, its directors, members of its governing bodies, officers or employees, on account of liability referred to in Section 16.1 hereof, the Party, its directors, members of its governing bodies, officers or employees against whom the judgment is obtained shall, at the request of the prevailing Party and in consideration of the covenant given in Section 16.1 hereof, execute such documents as may be necessary to effect an assignment of its contractual rights against the nonpaying insurer and thereby give the prevailing Party the opportunity to en­force its judgment directly against such insurer. In no event when a judgment debt is collectible from valid

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insurance provided pursuant to Section 15 hereof shall the Party obtaining the judgment execute, levy or otherwise enforce the judgment (including recording or effecting a judgment lien) against the Party, its directors, members of its governing bodies, officers or employees, against whom the judgment was obtained.
		
	16.3
	Except as provided in Sections 16.4 and 16.5, the costs and expenses, including but not limited to attorneys fees, of discharging all Work Liability imposed upon one or more of the Parties for which payment is not made by the insurance procured by the Palo Verde-Westwing Participants or the Navajo Southern Transmission System Participants pursuant to Section 15 hereof shall be allocated among the Parties in proportion to their Cost Responsibility in the facilities involved in the operative facts which give rise to the Work Liability.  However, if the proximate cause of such liability cannot be determined or is not related to any particular facilities, then such costs and expenses shall be allocated among the Parties in proportion to the Cost Responsibility Ratios of the Palo Verde-Westwing Participants and the Navajo Westwing Participants in the composite switchyard and according to Sections 9.1.1 and 9.1.2 hereof.  "Work Liability" as used herein is the liability of one or more Parties for damages suffered by anyone other than a Party, whether or not resulting from the negligence of any Party, its directors, members of its

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governing bodies, officers, employees or any other person or entity whose negligence would be imputed to such Party, resulting from the construction, operation or ownership of facilities at the Westwing Switchyard or the performance or nonperformance of the obligations of any Party under this Amended Interconnection Agreement.
		
	16.4
	Each Party shall be responsible for the consequences of its own Willful Action that are not covered by insurance provided pursuant to Section 15 hereof, and each Party except the United States shall indemnify and hold harmless the other Parties, their directors, members of their governing bodies, officers and employees from the consequences thereof.

Since the United States has hot agreed to indemnify the other Parties, the indemnity provided by this Section 16.4 shall not extend to the United States.
		
	16.5
	Except for liability resulting from Willful Action, which shall be the responsibility of the willfully acting Party, any Party, except the United States, whose electric customer shall have a claim or bring an action against any other Party for any death, injury, loss or damage arising out of or in connection with electric service to such customer and caused by the operation or failure of operation of the Westwing Switchyard or any portion thereof, shall indemnify and hold harmless such other Party, its directors , members of its governing bodies,

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officers and employees from and against any liability for such death, injury, loss or damage.
Since the United States has not agreed to indemnify the other Parties, the indemnity provisions of this Section shall not extend to the United States.
		
	16.6
	The liability of the United States for any claims for damages arising out of negligence shall be governed by the Federal Tort Claims Act (28 U.S.C. 2671 S.E.Q.).

		
	16.7
	The provisions of this Section 16 shall not be construed so as to relieve any insurer of its obligation to pay any insurance proceeds in accordance with the terms and condi­tions of valid and collectible insurance policies.

		
	16.8
	The term "Willful Action" as used in this Amended Inter­connection Agreement is defined as follows:

		
	16.8.1
	Action taken or not taken by a Party (including the Operating Agent) , at the direction of its direc­tors, members of its governing bodies, officers or employees having management or administrative responsibility affecting its performance under this Amended Interconnection Agreement, which action is knowingly or intentionally taken or not taken with conscious indifference to the consequences thereof or with knowledge or intent that injury or damage would result or would probably result therefrom.

		
	16.8.2
	Action taken or not taken by a Party (including the Operating Agent), at the direction of its

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directors, members of its governing bodies, officers or employees having management or administrative responsibility affecting its performance under this Amended Interconnection Agreement, which action has been determined by final arbitration award or final judgment or judicial decree to be a material default under this Amended Interconnection Agreement and which action 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 beyond ·a reasonable time to cure such default.
		
	16.8.3
	Action taken or not taken by a Party (including the Operating Agent), at the direction of its direc­tors, members of its governing bodies, officers or employees having management or administrative responsibility affecting its performance under this Amended Interconnection 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 Amended Inter­ connection Agreement.

		
	16.8.4
	The phrase "employees having management or administrative responsibility" as used in this Section 16.8 means employees of a Party who are responsible

-24-

for one or more of the executive functions of planning, organizing, coordinating, directing, controlling, and supervising such Party's per­formance under this Amended Interconnection Agreement; provided, however, that, with respect to employees of the Operating Agent acting in its capacity as such and not in its capacity as a Party, such phrase shall refer only to (i) the Manager of System Control for the Operating Agent and (ii)anyone in the organizational structure of the Operating Agent between the Manager of System Control and an officer.
		
	16.8.5
	Willful Action does not include any act or failure to act which is merely involuntary, accidental or negligent.

		
	16.9
	The Parties recognize that Los Angeles and Nevada are required to execute this Amended Interconnection Agreement because they are Navajo Southern Transmission System Participants even though Los Angeles and Nevada have no cost responsibilities in the Westwing Switchyard. Therefore, the remaining Parties to this Amended Interconnection Agreement agree that Los Angeles and Nevada have no liabilities arising from this Agreement.

		
	16.10
	If Section 19 of the Navajo Project Navajo Generating Station Operating Agreement is amended to limit the liability of any Party for Willful Action, the Parties

-25-

agree to likewise amend this Section 16 in order to incorporate substantially the same limitation of liability principles at dollar levels to be negotiated and agreed upon.
17.    UNCONTROLLABLE FORCES:
No Party shall be considered to be in default in the performance of its obligations hereunder (other than obligations of said Party to make payment of bills rendered hereunder) when a failure of performance shall be due to an Uncontrollable Force.  The term "Uncontrollable Force" shall be any cause beyond the control of the Party affected, including but not restricted to failure of or threat of failure of facilities, flood, earthquake, storm, fire, lightning, epidemic, war, riot, civil disturbance or disobedience, labor dispute, labor or material shortage, sabotage, 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 so as to require a Party to settle any strike or labor dispute in which it may be involved.  Any Party rendered unable to fulfill any of its obligations hereunder by reason of an Uncontrollable Force shall give prompt written notice of such fact to the other Parties and shall exercise due diligence to remove such inability with al l reasonable dispatch.

-26-

18.    RELATIONSHIP OF THE PARTIES:
The covenants, obligations and liabilities of the Parties are intended to be several and not joint or collective and nothing herein contained shall ever be construed to create an associa­tion, joint venture, trust or partnership, or to impose an association, joint venture, trust or partnership covenant, obligation or liability on or with regard to any one or more of the Parties.  Each Party shall be individually responsible for its own covenants, obligations and liabilities as herein provided.  No Party or group of Parties shall be under the control of or shall be deemed to control any other Party or the Parties as a group.  No Party shall be the agent of or have a right or power to bind any other Party without its express written consent, except as expressly provided in this Amended Interconnection Agreement or other project agreements as may be applicable.
19.    GOVERNING LAW:
This Amended Interconnection Agreement shall be governed by and construed and enforceable in accordance with the laws of the State of Arizona.
20.    SUCCESSORS AND ASSIGNS:
This Amended Interconnection Agreement shall be binding upon and inure to the benefit of the respective successors and assigns of the Parties.
21.    UNFORESEEN CIRCUMSTANCES:
Should this Amended Interconnection Agreement result in placing 

-27-

an undue burden on any Party or the Operating Agent due to cir­cumstances net presently contemplated by the Parties, the Parties agree, upon request of the affected Party, to meet and negotiate an appropriate amendment to this Amended Interconnection Agreement.
22.    GENERAL CONTRACT PROVISIONS:
The General Contract Provisions attached hereto as Appendix F are hereby made a part of this Amended Interconnection Agreement.
23.    EXECUTION BY COUNTERPARTS:
This Amended Interconnection Agreement may be executed in any number of counterparts, and upon execution by all Parties, each executed counterpart shall have the same force and effect as an original instrument and as if all Parties had signed the same instrument.    Any signature page of this Amended Interconnection Agreement may be detached from any counterpart hereof without impairing the legal effect of any signature thereon and may be attached to another counterpart of this Amended Interconnection Agreement identical in form hereto but having attached to it one or more signature pages.
/
/
/
/
/
/
/

-28-

24.    SIGNATURE CLAUSE:
The signatories hereto represent that they have been appropriately authorized to enter into this Amended Interconnection Agreement on behalf of the Party for whom they sign.  This Amended Interconnection Agreement is hereby executed as of this _14th_ day of _August , 1986.
	
		
	UNITED STATES OF AMERICA

	By
	/s/ Edward M. Hallenbeck

	 
	Regional Director, Lower Colorado

	 
	Region, U.S. Bureau of Reclamation

	 
	 

	ARIZONA PUBLIC SERVICE COMPANY

	By
	 

	 
	 

	DEPARTMENT OF WATER AND POWER OF THE

	CITY OF LOS ANGELES 

	 
	                      by

	BOARD OF WATER AND POWER COMMISSIONERS 

	OF THE CITY OF LOS ANGELES

	By
	 

	And
	 

	 
	 

	EL PASO ELECTRIC COMPANY

	By
	 

	
				
	ATTEST AND COUNTERSIGN
	 
	NEVADA POWER COMPANY

	 
	 
	By
	 

	Secretary
	 
	 
	 

	 
	 
	/
	 

	 
	 
	/
	 

	 
	 
	 
	 

-29-

24.    SIGNATURE CLAUSE:
The signatories hereto represent that they have been appropriately authorized to enter into this Amended Interconnection Agreement on behalf of the Party for whom they sign.  This Amended Interconnection Agreement is hereby executed as of this ______ day of _________ , 1986.
    	
			
	 
	UNITED STATES OF AMERICA

	 
	By
	 

	 
	 
	Regional Director, Lower Colorado

	 
	 
	Region, U.S. Bureau of Reclamation

	 
	 
	 

	
	ARIZONA PUBLIC SERVICE COMPANY

	By
	/s/ Russell D. Hulse

	 
	 

	DEPARTMENT OF WATER AND POWER OF THE

	CITY OF LOS ANGELES 

	 
	 
	                      by

	 
	BOARD OF WATER AND POWER COMMISSIONERS 

	 
	OF THE CITY OF LOS ANGELES

	 
	By
	 

	 
	And
	 

	 
	 
	 

	 
	EL PASO ELECTRIC COMPANY

	 
	By
	 

	
				
	ATTEST AND COUNTERSIGN
	 
	NEVADA POWER COMPANY

	 
	 
	By
	 

	Secretary
	 
	 
	 

	 
	 
	/
	 

	 
	 
	/
	 

	 
	 
	 
	 

-29-

24.    SIGNATURE CLAUSE:
The signatories hereto represent that they have been appropriately authorized to enter into this Amended Interconnection Agreement on behalf of the Party for whom they sign.  This Amended Interconnection Agreement is hereby executed as of this _______ day of ________________, 1986.
             	
			
	 
	UNITED STATES OF AMERICA

	 
	By
	 

	 
	 
	Regional Director, Lower Colorado

	 
	 
	Region, U.S. Bureau of Reclamation

	 
	 
	 

	 
	ARIZONA PUBLIC SERVICE COMPANY

	 
	By
	 

	 
	 
	 

	 
	DEPARTMENT OF WATER AND POWER OF THE

	 
	CITY OF LOS ANGELES 

	 
	 
	                      by

	
	BOARD OF WATER AND POWER COMMISSIONERS 

	OF THE CITY OF LOS ANGELES

	By
	/s/ Paul H. Lane

	 
	General Manager and Chief Engineer

	And
	/s/ Judith K. Davidson

	 
	Secretary

	 
	EL PASO ELECTRIC COMPANY

	 
	By
	 

	
				
	ATTEST AND COUNTERSIGN
	 
	NEVADA POWER COMPANY

	 
	 
	By
	 

	Secretary
	 
	 
	 

	 
	 
	/
	 

	 
	 
	/
	 

	 
	 
	 
	 

-29-

24.    SIGNATURE CLAUSE:
The signatories hereto represent that they have been appropriately authorized to enter into this Amended Interconnection Agreement on behalf of the Party for whom they sign.  This Amended Interconnection Agreement is hereby executed as of this ________ day of ________________, 1986.
	
		
	UNITED STATES OF AMERICA

	By
	 

	 
	Regional Director, Lower Colorado

	 
	Region, U.S. Bureau of Reclamation

	 
	 

	ARIZONA PUBLIC SERVICE COMPANY

	By
	 

	 
	 

	DEPARTMENT OF WATER AND POWER OF THE

	CITY OF LOS ANGELES 

	 
	                      by

	BOARD OF WATER AND POWER COMMISSIONERS 

	OF THE CITY OF LOS ANGELES

	By
	 

	And
	 

	 
	 

	EL PASO ELECTRIC COMPANY

	By
	/s/ James P. Maloney

	 
	Vice President

	
				
	ATTEST AND COUNTERSIGN
	 
	NEVADA POWER COMPANY

	 
	 
	By
	 

	Secretary
	 
	 
	 

	 
	 
	/
	 

	 
	 
	/
	 

	 
	 
	 
	 

-29-

24.    SIGNATURE CLAUSE:
The signatories hereto represent that they have been appropriately authorized to enter into this Amended Interconnection Agreement on behalf of the Party for whom they sign.  This Amended Interconnection Agreement is hereby executed as of this _23rd_ day of       May      , 1986.

	
		
	UNITED STATES OF AMERICA

	By
	 

	 
	Regional Director, Lower Colorado

	 
	Region, U.S. Bureau of Reclamation

	 
	 

	ARIZONA PUBLIC SERVICE COMPANY

	By
	 

	 
	 

	DEPARTMENT OF WATER AND POWER OF THE

	CITY OF LOS ANGELES 

	 
	                      by

	BOARD OF WATER AND POWER COMMISSIONERS 

	OF THE CITY OF LOS ANGELES

	By
	 

	And
	 

	 
	 

	EL PASO ELECTRIC COMPANY

	By
	 

	
				
	ATTEST AND COUNTERSIGN
	 
	NEVADA POWER COMPANY

	/s/ [Illegible]
	 
	By
	/s/ [Illegible]

	Secretary
	 
	 
	Vice President

	 
	 
	 
	Resource Planning

	 
	 
	 
	and Power Dispatch

	 
	 
	 
	 

-29-

	
				
	 
	 
	PUBLIC SERVICE COMPANY OF NEW MEXICO

	 
	 
	By
	/s/ C. D. Bedford

	 
	 
	 
	 

	ATTEST AND COUNTERSIGN
	 
	SALT RIVER PROJECT AGRICULTURAL

	 
	 
	IMPROVEMENT AND POWER DISTRICT

	 
	 
	By
	 

	Secretary
	 
	 
	 

	 
	 
	TUCSON ELECTRIC POWER COMPANY

	 
	 
	By
	 

-30-

	
				
	 
	 
	PUBLIC SERVICE COMPANY OF NEW MEXICO

	 
	 
	By
	 

	 
	 
	 
	 

	ATTEST AND COUNTERSIGN
	 
	SALT RIVER PROJECT AGRICULTURAL

	 
	 
	IMPROVEMENT AND POWER DISTRICT

	/s/ Paul D. Rice
	 
	By
	/s/ John R. Lassen

	Secretary
	 
	 
	President

	 
	 
	TUCSON ELECTRIC POWER COMPANY

	 
	 
	By
	 

	May 29, 1986
	 
	 
	 

-30-

	
				
	 
	 
	PUBLIC SERVICE COMPANY OF NEW MEXICO

	 
	 
	By
	 

	 
	 
	 
	 

	ATTEST AND COUNTERSIGN
	 
	SALT RIVER PROJECT AGRICULTURAL

	 
	 
	IMPROVEMENT AND POWER DISTRICT

	 
	 
	By
	 

	Secretary
	 
	 
	 

	 
	 
	TUCSON ELECTRIC POWER COMPANY

	 
	 
	By
	/s/ H. A. Heim

-30-

	
			
	STATE OF NEVADA
	)
	 

	 
	)
	ss

	COUNTY OF CLARK
	)
	 

On this the _  13th     day of       June      , 1986, before me, the undersigned officer, personally appeared Edward M. Hallenbeck _____________ the Regional Director, LC Region, Bureau of Reclamation of the United States of America, known to me to be the person described in the foregoing instrument, and acknowledged that he executed the same in the capacity therein stated and for the purposes therein contained.
IN WITNESS WHEREOF I hereunto set my hand and official seal.
	
	
	/s/ Rebecca A. Dalton

	Notary Public

	 

My commission expires:
	
	
	Official Seal

	Rebecca A. Dalton

	Notary Public-Nevada

	My Commission expires Aug. 7, 1986

-31-

	
			
	STATE OF ARIZONA
	)
	 

	 
	)
	ss

	COUNTY OF MARICOPA
	)
	 

On this the _  13th     day of       June      , 1986, before me, the undersigned Notary Public, personally appeared   Russell D.  Hulse          who acknowledged himself to be the    Vice President   of ARIZONA PUBLIC SERVICE COMPANY, an Arizona corporation, and that he, as such officer, being authorized so to do, executed the foregoing instrument for the purposes therein contained by signing the name of the company by himself as such      Vice President      .
IN WITNESS WHEREOF I hereunto set my hand and official seal.

	
	
	 

	Notary Public

	 

My commission expires:
April 9, 1988    

-32-

	
			
	STATE OF CALIFORNIA
	)
	 

	 
	)
	ss

	COUNTY OF LOS ANGELES
	)
	 

On this the    14th     day of       August      , 1986, before me, the undersigned officer, personally appeared     Paul H. Lane     and Judith K. Davison____ who acknowledged themselves to be the  General Manager and Chief Engineer       and   Secretary of the Board   respectively, of the 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 municipal corporation of the State of California, known to me to be the persons described in the foregoing instrument, and acknowledged that they executed the same in the capacity therein stated and for the purposes therein contained.
IN WITNESS WHEREOF I hereunto set my hand and official seal.

	
	
	/s/ Linda L. Newman

	Notary Public

	 

My commission expires:  May 27, 1989

-33-

	
			
	STATE OF TEXAS
	)
	 

	 
	)
	ss

	COUNTY OF EL PASO
	)
	 

On this the _  30th     day of       May      , 1986, before me, the undersigned Notary Public, personally appeared James P. Maloney                who acknowledged himself to be the    Vice President     of EL PASO ELECTRIC COMPANY,  a Texas corporation, and that he as such officer, executed the foregoing instrument for the purposes therein contained by signing the name of the company by himself as such   Vice President  .
IN WITNESS WHEREOF I hereunto set my hand and official seal.

	
	
	/s/ Edna M. Chavez

	Notary Public

	 

My commission expires:
January 17, 1989

-34-

	
			
	STATE OF NEVADA
	)
	 

	 
	)
	ss

	COUNTY OF CLARK
	)
	 

On this the _  23rd     day of       May      , 1986, before me, the undersigned Notary Public, personally appeared   Wooldridge   and                         who acknowledged himself to be the   Vice President, Resource Planning    of NEVADA POWER COMPANY, a Nevada corporation, and that he, as such officer, being author- ized so to do, executed the foregoing instrument for the purposes therein contained by signing the name of the company by himself as such    Vice President, Resource Planning   .
IN WITNESS WHEREOF I hereunto set my hand and official seal.

	
	
	/s/ Andrea Bybee

	Notary Public

	 

My commission expires:

-35-

	
			
	STATE OF NEW MEXICO
	)
	 

	 
	)
	ss

	COUNTY OF Bernalillo
	)
	 

On this the _  13th     day of       May      , 1986, before me, the undersigned Notary Public, personally appeared    C. D. Bedford     who acknowledged himself to be the    Sr. Vice President     of PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation, and that he as such officer, executed the foregoing instrument for the purposes therein contained by signing the name of the Company by himself, as such    Sr. Vice President   .
IN WITNESS WHEREOF I hereunto set my hand and official seal.

	
	
	/s/ [Illegible]

	Notary Public

	 

My commission expires:
        3/17/87

-36-

	
			
	STATE OF ARIZONA
	)
	 

	 
	)
	ss

	COUNTY OF MARICOPA
	)
	 

On this the _  3rd     day of       June      , 1986, before me, the undersigned Notary Public, personally appeared                            John R. Lassen           and           Paul D. Rice           who acknowledged themselves to be the             President             and               Secretary                 of the SALT RIVER PROJECT AGRICULTURAL IMPROVEMENT AND POWER DISTRICT, an agricultural improvement district organized and existing under the laws of the State of Arizona, and that they, as such officers, being authorized to so do, executed the foregoing instrument for the purposes therein contained by signing the name of the company by themselves as such                    and                .
IN WITNESS WHEREOF I hereunto set my hand and official seal.

	
	
	/s/ Terrill A. London

	Notary Public

	 

My commission expires:

-37-

	
			
	STATE OF ARIZONA
	)
	 

	 
	)
	ss

	COUNTY OF MARICOPA
	)
	 

On this the _  24th     day of       April      , 1986, before me, the undersigned Notary Public, personally appeared                              H. A. Heim            who acknowledged himself to be the      Senior Vice President         of TUCSON ELECTRIC POWER COMPANY, an Arizona corporation, and that he, as such officer, being authorized so to do, executed the foregoing instrument for the purposes therein contained by signing the name of the company himself as such    Senior Vice President   .
IN WITNESS WHEREOF I hereunto set my hand and official seal.

	
	
	/s/ Herlinda H. Kennedy (Mr. Herrera)

	Notary Public

	 

My commission expires:
       4/-14-87

-38-

WESTWING SWITCHYARD 
AMENDED INTERCONNECTION AGREEMENT
COMMON FACILITIES COSTS

APPENDIX A

		
	Notes:
	1.    This estimate includes land costs and common facilities costs including the main busses.

2.    Cost of '82 and '87 facilities cover only ANPP additions at Westwing.
3.    Costs of '87 facilities are escalated to the year spent.
	
																
	Common Facilities Item Description
	Paid for and owned by Navajo Westwing Participants 
Installed as of '78
	Installed '82
	

	Paid for and owned Palo Verde-West-wing Participants
Installed '87

	230 KV
	

	500 KV
	

	500 KV
	

	230 KV
	

	500 KV
	

	Land Cost
	19,703
	

	$
	41,554
	

	$
	—
	

	$
	—
	

	$
	—
	

	Grading, Surfacing,
	104,910
	

	244,786
	

	 
	 
	 

	  Fencing
	 
	 
	 
	 
	 

	Yard Lighting
	8,590
	

	20,052
	

	11,670
	

	 
	17,529
	

	Yard Grounding
	23,160
	

	54,042
	

	30,715
	

	8,077
	

	84,462
	

	Trench & Conduit
	58,840
	

	137,299
	

	21,608
	

	2,104
	

	114,596
	

	Control & Power
	19,800
	

	46,195
	

	2,000
	

	9,609
	

	17,564
	

	   Cables
	 
	 
	 
	 
	 

	Station Service
	44,140
	

	102,992
	

	 
	 
	3,869
	

	Control House
	147,200
	

	343,434
	

	 
	 
	 

	Control House Equip.
	37,880
	

	88,397
	

	 
	 
	7,437
	

	Comm., Control,
	104,650
	

	244,184
	

	7,000
	

	17,413
	

	39,870
	

	  Relays
	 
	 
	 
	 
	 

	Initial Main Bus
	120,820
	

	217,900
	

	 
	 
	 

	Additional Main Bus
	69,410
	

	 
	193,925
	

	 
	 

	Assoc. Equip. Costs
	62,730
	

	146,380
	

	3,756
	

	6,163
	

	10,851
	

	Spare Transformer*
	755,000
	

	 
	 
	 
	 

	Engineering & Insp.
	93,100
	

	217,239
	

	51,352
	

	12,504
	

	24,121
	

	Subtotal
	1,669,933
	

	1,904,454
	

	322,026
	

	55,870
	

	320,299
	

	AFUDC, IDC, Allo-
	290,231
	

	316,649
	

	17,344
	

	6,816
	

	39,076
	

	  cated OVH
	 
	 
	 
	 
	 

	TOTAL
	1,960,164
	

	2,221,103
	

	339,370
	

	62,686
	

	359,375
	

	 
	 
	 
	 
	 
	 

	Facilities Cost:
	230KV
	

	500KV
	

	Total
	

	 
	 

	 Existing in 1978 -
	1,960,164
	

	2,221,103
	

	4,181,267
	

	Engineering & Accounting to update 1987 Numbers.
	 

	             1982 -
	 
	339,370
	

	339,370
	

	 

	             1987 -
	62,686
	

	359,375
	

	422,061
	

	 

	 
	 
	 
	 
	 
	 

	 
	$
	2,022,850
	

	$
	2,919,848
	

	$
	4,942,698
	

	 
	 

		
	*Note:
	The spare 500/230kV transformer is deemed a common facility for billing purposes.

-39-

WESTWING SWITCHYARD
AMENDED INTERCONNECTION AGREEMENT
COMMON FACILITIES COSTS

APPENDIX A (Cont'd)

The allocation of common· facilities of the Westwing Switchyard will be as follows:

	
														
	 
	Direct 
Cost
	

	% Direct 
Cost
	

	AFUDC, IDC 
Allocated OVH
	

	Total 
Cost
	

	% Total 
Cost
	

	 
	 
	 
	 
	 
	 

	SRP
	$
	1,393,407
	

	39
	

	$
	206,992
	

	$
	1,600,399
	

	38
	

	APS
	979,269
	

	27
	

	221,217
	

	1,200,486
	

	29
	

	TEP
	253,292
	

	7
	

	64,260
	

	317,552
	

	8
	

	US
	948,419
	

	27
	

	114,411
	

	1,062,830
	

	25
	

	 
	 
	 
	 
	 
	 

	  TOTAL
	$
	3,574,387
	

	100
	%
	$
	606,880
	

	$
	4,181,267
	

	100
	%

These values were determined by using the "Responsibility for Costs -%" taken from VIIA (500 kV switchyard) and VIID (230 kV switchyard) from Exhibit B, pages 3 and 4 of the Navajo Project Southern Trans­ mission System Agreement.  These percentages were multiplied by the 230 kV costs ($1,669,933) in the case of VIID and by the 500 kV costs ($1,904,454) in the case of VIIA.  The costs ($1,669,933 and $1,904,454) were taken from Appendix A (Common Facilities) of this Westwing Switchyard Amended Interconnection Agreement.  The result of the aforementioned multiplication gives the dollar allocation of 500 kV and 230 kV common facilities to each Party.  The spare transformer costs were similarly allocated based on VIIB from Exhibit B of the Navajo Agreement and added to the 230 kV and 500 kV costs to give the total Direct Cost allocations above.  Each company furnished AFUDC, IDC, Allocated Overheads, Taxes, etc., that were capitalized as part of the Westwing Switchyard costs. The sum of the Direct Cost and the Allocated Costs equals the Total Cost of existing common facilities.

-40-

WESTWING SWITCHYARD
AMENDED INTERCONNECTION AGREEMENT

APPENDIX B

Weighted Average Annual Fixed Charge Rate

	
												
	 
	 
	Arizona
	Salt River
Project
	Tucson
	United
States
	Total

	(A)
	% Total Cost of
	28.71
	

	38.28
	

	7.59
	

	25.42
	

	100.0
	

	 
	Common Facilities
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 

	(B)
	Annual Fixed Charge
	0.1865
	

	0.1504
	

	0.1679
	

	0.0751
	

	*
	

	 
	Rate
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 

	(C)
	% Annual Cost (A)
	5.3544
	

	5.7573
	

	1.2744
	

	1.9090
	

	14.2951
	

	 
	X (B)
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 

	(D)
	Weighted  Total (C)
	*
	

	*
	

	*
	

	*
	

	.142951
	

	 
	Average   Total (A)
	 
	 
	 
	 

	 
	Annual Fixed
	 
	 
	 
	 
	 

	 
	Charge Rate
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 

	(E)
	% Annual Cost
	37.46
	

	40.27
	

	8.92
	

	13.35
	

	100.0
	

	 
	Distribution
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 

	 
	(C) x 100
	 
	 
	 
	 
	 

	 
	Total (C)
	 
	 
	 
	 
	 

	
								
	Based on the following:
	 
	 
	 
	 

	      Capital Recovery
	11.37
	%
	12.76
	

	10.86
	

	 

	      Income Tax Component
	5.03
	

	0
	

	3.68
	

	 

	 
	 
	 
	 
	 

	      Al Valorem Tax (or in
	 
	 
	 
	 

	      lieu of)
	2.25
	

	2.28
	

	2.25
	

	 

	 
	 
	 
	 
	 

	TOTAL:
	18.65
	%
	15.04
	%
	16.79
	%
	 

	 
	 
	 
	 
	 

	Rate of Return
	13.68
	%
	12.50
	%
	10.60
	%
	 

	 
	 
	 
	 
	 

	Basis for Depreciation
	33 yrs.
	

	33 yrs.
	

	37 yrs.
	

	 

	 
	 
	 
	 
	 

	Composite Inc. Tax Rate
	48.96
	%
	0
	

	43.90
	%
	 

-41-

APPENDIX C
WESTWING SWITCHYARD
PLOT PLAN

-42-

WESTWING SWITCHYARD
AMENDED INTERCONNECTION AGREEMENT
ESTIMATED COSTS
APPENDIX D

	
											
	 
	 
	 
	 
	*
Total
$(000)
	4-Party
Split
	3-Party
Split

	 
	 
	 
	 
	 
	 
	 

	1987
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 

	230 kV Breaker Uprates
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 

	 
	11
	

	—
	PCB Uprates
	448
	

	448
	

	 

	 
	15
	

	—
	CCVT Uprates
	244
	

	244
	

	 

	 
	 
	 
	 
	 
	 
	 

	Sub Total
	 
	 
	692
	

	692
	

	 

	 
	 
	 
	 
	 
	 
	 

	1987
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 

	230 kV Line Bay
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 

	 
	1
	

	—
	Add Dead End Struct
	80
	

	 
	80
	

	 
	2
	

	—
	Uprated Disc SW’s
	117
	

	 
	117
	

	 
	2
	

	—
	Line Side Disc SW’s
	117
	

	 
	117
	

	 
	2
	

	—
	PCB’s w CT’s
	580
	

	 
	580
	

	 
	1
	

	—
	Set of 3 CCVT’s
	38
	

	 
	38
	

	 
	3
	

	—
	90 Turning Struct’s
	264
	

	 
	264
	

	 
	3
	

	—
	Tangent Struct’s
	175
	

	 
	175
	

	 
	1
	

	—
	O.H. Line Across Bay
	13
	

	 
	13
	

	 
	 
	 
	 
	 
	 
	 

	Sub Total
	 
	 
	1,384
	

	 
	1,384
	

	 
	 
	 
	 
	 
	 
	 

	1993
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 

	230 kV El Sol Line #2
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 

	 
	1
	

	—
	PCB w CT’s**
	466
	

	 
	466
	

	 
	1
	

	—
	Bus Disc. SW
	94
	

	 
	94
	

	 
	1
	

	—
	Line Disc. SW
	94
	

	 
	94
	

	 
	 
	 
	 
	 
	 
	 

	Sub Total
	 
	 
	654
	

	 
	654
	

*NOTE:  All costs are escalated to year spent using 7% per year. 
**Credit will be given for salvage value of existing breakers.

-43-

APPENDIX D (Cont’d)

	
								
	4-Party Split
	 
	3-Party Split

	APS
	—
	35
	%
	 
	APS
	—
	44%

	EPE
	—
	19
	%
	 
	SRP
	—
	44%

	PNM
	—
	12
	%
	 
	PNM
	—
	12%

	SRP
	—
	35
	%
	 
	 
	 
	 

	
												
	1986
	 
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 
	 

	500 kV Palo Verde Line #2 Bay
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	*
Total
$(000)
	4-Party
Split
	3-Party
Split

	 
	 
	 
	 
	 
	 
	 
	 

	 
	2
	

	—
	Int Dead End Struct’s
	 
	339
	

	339
	

	 

	 
	1
	

	—
	Add Dead End Struct
	 
	139
	

	139
	

	 

	 
	1
	

	—
	Line Relaying Term Fac
	 
	427
	

	427
	

	 

	 
	1
	

	—
	Set of 3 CCVT’s
	 
	60
	

	60
	

	 

	 
	1
	

	—
	Set of 3 Wave Trap’s
	 
	45
	

	45
	

	 

	 
	2
	

	—
	Line Side Disc SW’s
	 
	119
	

	119
	

	 

	 
	2
	

	—
	Bus Side Disc SW’s
	 
	177
	

	177
	

	 

	 
	2
	

	—
	PCB’s w/o CT’s
	 
	672
	

	672
	

	 

	 
	2
	

	—
	Sets of 3 CT’s
	 
	208
	

	208
	

	 

	 
	1
	

	—
	O.H. Line Across Bay
	 
	50
	

	50
	

	 

	 
	 
	 
	 
	 
	 
	 
	 

	Sub Total
	 
	 
	 
	2,236
	

	2,236
	

	 

	 
	 
	 
	 
	 
	 
	 
	 

	1987
	 
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 
	 

	500 kV Transformer and Bay
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 
	 

	 
	2
	

	—
	Int Dead End Struct’s
	 
	339
	

	 
	339
	

	 
	2
	

	—
	Line Side Disc SW’s
	 
	119
	

	 
	119
	

	 
	1
	

	—
	PCB w/o CT’s
	 
	336
	

	 
	336
	

	 
	1
	

	—
	Set of 3 CT’s
	 
	104
	

	 
	104
	

	 
	1
	

	—
	Lot Tertiary & Jack Bus
	 
	580
	

	 
	580
	

	 
	3
	

	—
	500/230 kV Xfmr’s
	 
	5,519
	

	 
	5,519
	

	 
	 
	 
	 
	 
	 
	 
	 

	Sub Total
	 
	 
	 
	6,997
	

	 
	6,997
	

	 
	 
	 
	 
	 
	 
	 
	 

	TOTAL
	 
	 
	 
	 
	11,963
	

	2,928
	

	9,035
	

*NOTE:  All costs are escalated to year spent using 7% per year.

-44-

APPENDIX C
WESTWING SWITCHYARD
ONE LINE DIAGRAM

-45-

WESTWING SWITCHYARD
AMENDED INTERCONNECTION AGREEMENT
APPENDIX E
EXAMPLE CALCULATION OF COST RESPONSIBILITY RATIOS

The plan for the Westwing Switchyard, as shown for 1986 on Appendices C and D, provides for twenty (20)separate Functions, eight (8) on the 500 kV bus, four (4)power transformer banks, and eight (8) on the 230 Kv bus.  Five (5) Functions on the 500 kV bus, three (3) power transformer banks, and seven (7) Functions on the 230 kV bus, or a total of fifteen (15) Functions, are owned by the Navajo Westwing Participants.  Three (3) Functions on the 500 kV bus, one (1) power transformer bank, and one (1) Function on the 230 kV bus, or a total of five (5) Functions, will be owned by the Palo Verde-Westwing Participants.  An example of the computation of Cost Responsibility Ratios 1mder the aforementioned 1986 plan, for the composite switchyard, would be:

	
								
	Navajo Westwing
	=
	X
	=
	15
	=
	75
	%

	Participants
	 
	X+Y+Z
	 
	15+5+0
	 
	 

	 
	 
	 
	 
	 
	 
	 

	Palo Verde-Westwing
	=
	Y
	=
	5
	=
	25
	%

	Participants
	 
	X+Y+Z
	 
	15+5+0
	 
	 

	 
	 
	 
	 
	 
	 
	 

	Third Party Cost
	=
	Z
	=
	0
	=
	0.0%
	

	 
	 
	X+Y+Z
	 
	15+5+0
	 
	 

	 
	 
	 
	 
	 
	 
	 

Computation of Cost Responsibility Ratios for the 500 kV yard, power transformer banks, and the 230 kV switchyard would be computed in similar fashion and result in the following:

-46-

WESTWING- SWITCHYARD
AMENDED INTERCONNECTION AGREEMENT 
APPENDIX E
EXAMPLE CALCULATION OF COST RESPONSIBILITY RATIOS
(Continued)

	
				
	 
	500 kV
only
	Power
Transformers
only
	230 kV
only

	Navajo Westwing
	62.50%
	75%
	87.50%

	Participants
	 
	 
	 

	 
	 
	 
	 

	Palo Verde-Westwing
	37.50%
	25%
	12.50%

	Participants
	 
	 
	 

                

-47-

WESTWING SWITCHYARD
AMENDED INTERCONNECTION AGREEMENT
APPENDIX F
GENERAL CONTRACT PROVISIONS

1.DEFINITIONS:
The following terms, when used in this Appendix F, shall have the meanings specified:
1.1    Contracting Officer means the Secretary of Interior, his duly appointed successor or his duly authorized representative.
1.2    Contractor means any of the non-Federal Participants.
1.3    Non-Federal Participants means Arizona, Los Angeles, El Paso, Nevada, PNM, Salt River Project and Tucson.
1.4    Agreement means the Amended Interconnection Agreement.
2.OFFICIALS NOT TO BENEFIT:
No Member of or Delegate to Congress or Resident Commissioner shall be admitted to any share or part of this Agreement or to any benefit that may arise herefrom, but this restriction shall not be construed to extend to this Agreement if made with .a corporation or company for its general benefit.
3.COVENANT AGAINST CONTINGENT FEES:
The non-Federal Participants- warrant that no person or selling agency has been employed or retained.to solicit or secure this Agreement upon an agreement or understanding for a commission, percentage, brokerage, or contingent fee, excepting bona fide

-48-

employees or bona fide established commercial or selling agencies maintained by a non-Federal Participant for the purpose of securing business. For breach or violation of this warranty the United States shall have the right to annul this Agreement with­out liability, or in its discretion to deduct from the payments to be made hereunder, or otherwise recover the full amount of such commission, percentage, brokerage or contingent fee.
4.EQUAL OPPORTUNITY CLAUSE:
4.1    Except as provided in Title 42 U.S.C. Section 2000-e-2 (i) and in keeping with any obligation undertaken by any of the non-Federal Participants or its assigns, pursuant to the terms of said Title 42 U.S.C. Section 2000-e-2(i) to give preference for employment to qualified Indians for work on or near an Indian Reservation, during the performance of this agreement, the Contractor agrees as follows:
		
	4.1.1
	The Contractor will not discriminate against any employee or applicant for employment because of race, color, religion, sex or national origin.  The Contractor will take affirmative action to insure that applicants are employed and that employees are treated during employment, without regard to their race, color, religion, sex or national origin.  Such action shall include, but not be limited to the following:  employment, upgrading, demotion or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms

-49-

of compensation; and selection for training, including apprenticeship.  The Contractor agrees to post in conspicuous places available to employees and applicants for employment, notices to be provided by the Contracting Officer setting forth the provisions of this equal opportunity clause.
		
	4.1.2
	The Contractor will, in all solicitations or advertisements for employees· placed by or on behalf Gf the Contractor, state that all qualified appli­cants will receive consideration for employment without regard to race, color, religion, sex or national origin.

		
	4.1.3
	The Contractor will send to each labor union or representative of workers with which it has a collective bargaining agreement or other contract or understanding a notice to be provided by the agency Contracting Officer advising the labor union of workers' representative of the Contractor's commitments under this equal opportunity clause and shall post copies of the notice in conspicuous places available to employees and applicants for employment.

		
	4.1.4
	The Contractor will comply with all provisions of Executive Order No. 11246 of September 24, 1965, and of the rules, regulations and relevant orders of the Secretary of Labor.

-50-

		
	4.1.5
	The Contractor will furnish all information and reports required by Executive Order No. 11246 of September 24, 1965, and by the rules, regulations and orders of the Secretary of Labor, or pursuant thereto, and will permit access to its books, records and accounts by the contracting agency and the Secretary of Labor for purposes of investiga­tion to ascertain compliance with such rules, regulations and orders.

		
	4.1.6
	In the event of the Contractor' s noncompliance with this equal opportunity clause, or with any of the said rules, regulations or orders, this Agreement may be cancelled, terminated or suspended in whole or in part and the Contractor may be declared ineligible for further government contracts in accordance with procedures authorized in Executive Order No. 11246 of September 24, 1965, and such other sanctions may be imposed and remedies invoked as provided in Executive Order No. 11246 of September 24, 1965, or by rule, regulation or order of the Secretary of Labor, or otherwise provided by law.

		
	4.1.7
	The Contractor will include the provisions of Sections 4.1.1 through 4.1. 7 hereof in every subcontract or purchase order unless exempted by rules, regulations or orders of the Secretary of

-51-

Labor issued pursuant to Section 204 of Executive Order No. 11246 of September 24, 1965, so that such provisions will be binding upon each subcontractor or vendor.  The Contractor will take such action with respect to any subcontract or purchase order as the contracting agency may direct as a means of enforcing such provisions, including sanctions for noncompliance; provided, however, that in the event the Contractor becomes involved in, or is threatened with, litigation with a subcontractor or vendor as a result of such direction by the contracting agency, the Contractor may request the United States to enter into such litigation to protect the interests of the United States.
5.WORK HOURS ACT OF 1962:
5.1    This Agreement, to the extent that it is of a character specified in the Contract Work Hours Standards Act (Public Law 87-581, 76 Stat. 357) and is not covered by the Walsh‐Healey Public Contracts Act (41 U.S.C. Sections 35‐45), is subject to the following provisions and to all other provisions and exceptions of said Contract Work Hours Standards Act:
		
	5.1.1
	No Contractor or subcontractor contracting for any part of the contract work which may require or involve the employment of laborers or mechanics shall require or permit any laborer or mechanic in

-52-

any workweek in which he is employed on such work, to work in excess of eight (8) hours in any calendar day or in excess of forty (40) hours in any workweek unless such laborer or mechanic receives compensation at a rate not less than one and one-half times his basic rate of pay for all hours worked in excess of eight (8) hours in any calendar day or in excess of forty (40) hours in such workweek, whichever is the greater number of overtime hours.
		
	5 .1.2
	In the event of any violation of the provisions of Section 5.1.1 hereof, the Contractor and any subcontractor responsible for such violation shall be liable to any affected employee for his unpaid wages.  In addition, such Contractor or sub­contractor shall be liable to the United States for liquidated damages.  Such liquidated damages shall be computed, with respect to each individual laborer or mechanic employed in violation of the provisions of Sections 5.1.1 hereof, in the sum of Ten Dollars ($10.00) for each calendar day on which such employee was required or permitted to work in excess of eight (8) hours or in excess of forty (40) hours in a workweek without payment of the required overtime wages.

		
	5.1.3
	The Secretary of Labor may withhold, or cause to be 

-53-

withheld, from ·any monies payable on account of work performed by the Contractor or subcontractor, the full amount of wages required by this Agreement, and such sums as may administratively be determined to be necessary to satisfy any liabili­ties of such Contractor or subcontractor for liquidate damages as provided in Section 5.1.2 hereof.
		
	5.1.4
	The Contractor shall require the foregoing Sections 5.1.1, 5.1.2, 5.1.3 and this 5.1.4 to be inserted in all subcontracts.

6.EXAMINATION OF RECORDS:
The non-Federal Participants agree that the Comptroller General of the United States, or any of his duly authorized representatives, shall, until the expiration of three (3) years after final payment under this Agreement, have access to and the right to examine any directly pertinent books, documents, papers and records of the non-Federal Participants involving transactions related to this Agreement.
7.ASSIGNMENT OF CLAIMS:
		
	7.1
	Pursuant to the provisions of the Assignment of Claims Act of 1940, as amended (31 U.S.C. Section 203, 41 U.S.C. Section 15), if this agreement provides for payments aggregating $1,000 or more, claims for monies due or to become due any non-Federal Participant from the Government under this Agreement may be assigned to a bank, trust company, 

-54-

or other financing institution, including any Federal lending agency, and may thereafter be further assigned and reassigned to any such institution.  Any such assignment or reassignment shall cover all amounts payable under this Agreement and not already paid and shall not be made to more than one party, except that any such assignment or reassignment may be made to one party as agent or trustee for two or more parties participating in such financing. Unless otherwise provided in this Agreement, payments to an assignee of any monies due or to become due under this Agreement shall not, to the extent provided in said Act, be amended, be subject to reduction or setoff.  (The preceding sentence applies only if this Agreement is made in time of war or national emergency as defined in said Act and is with the Department of Defense, the General Services Administration, the Atomic Energy Commission, the National Aeronautics and Space Administration, the Federal Aviation Agency, or any other department or agency of the United States designated by the President pursuant to Clause 4 of the proviso of Section 1 of the Assignment of Claims Act of 1940, as amended by the Act of May 15, 1951, 65 Stat. 41.)
		
	7.2
	In no event shall copies of this Agreement or of any plans, specifications, or other similar documents relating to work under this Agreement, if marked "Top Secret," "Secret," or "Confidential," be furnished to any assignee of any claim arising under this Agreement or to any other person not

-55-

entitled to receive the same.  However, a copy of any part or all of this Agreement so marked may be furnished, or any information contained therein may be disclosed, to such assignee upon the prior written authorization of the Contracting Officer.
8.CONVICT LABOR:
In connection with the performance of work under this Agreement, the non-Federal Participants agree not to employ any person undergoing sentence of imprisonment at hard labor.
9.AGREEMENT SUBJECT TO COMPACTS, ACTS AND TREATY:
This Agreement is made upon the express conditions and with the express understanding that all rights hereunder shall be subject to and controlled by the applicable provisions of the Colorado River Compact dated November 24, 1922, and proclaimed by the President of the United States June 25, 1929, the Boulder Canyon Project Act approved December 21, 1928, the Boulder Canyon Project Adjustment Act of July 19, 1940, the Upper Colorado River Basin Compact dated October 11, 1948, and the Mexican Water Treaty of February 3, 1944.

-56-Exhibit

EXHIBIT 10.14

	
			
	 	

	 
	 
	 
	 

INTERCHANGE AGREEMENT

BETWEEN

COMISION FEDERAL DE ELECTRICIDAD

AND

EL PASO ELECTRIC COMPANY

I N D E X

	
				
	 
	 
	PAGE
	

	RECITALS
	2
	

	SECTION 1 -
	PREMISES
	3
	

	SECTION 2 - 
	TERM, TERMINATION AND AUTHORIZATIONS
	5
	

	SECTION 3 - 
	DEFINITIONS
	7
	

	SECTION 4 - 
	OWNERSHIP AND OPERATION OF THE INTERCONNECTION
	14
	

	SECTION 5 - 
	INTERCHANGE SERVICES
	15
	

	SECTION 6 - 
	ADMINISTRATION
	15
	

	SECTION 7 - 
	OPERATION AND MAINTENANCE
	19
	

	SECTION 8 - 
	GENERALITIES
	22
	

	SECTION 9 - 
	COLLECTIONS AND PAYMENTS
	23
	

	SECTION 10 - 
	JURISDICTION
	25
	

	SECTION 11 - 
	TAXES 
	25
	

	SECTION 12 - 
	LANGUAGE
	25
	

	 
	 
	 

	INTERCHANGE 
	SERVICE A
	SA/ 1
	

	INTERCHANGE 
	SERVICE B
	SB/ 1
	

	EXHIBIT "A"
	 
	 

	 
	 
	 

	 
	 
	 

-1-

	
			
	 
	INTERCHANGE AGREEMENT
BETWEEN
COMISION FEDERAL DE ELECTRICIDAD
AND
EL PASO ELECTRIC COMPANY
	

This Electric Energy Interchange Agreement (referred to hereinafter as the "Agreement") is entered into by and between Comisión Federal de Electrici­dad, represented herein by its General Director, Mr. Alberto Escofet Artigas and El Paso Electric Company, represented herein by its President Mr. Evern R. Wall, in accordance to the following recitals and clauses, in which, for purposes of brevity, the Parties shall be referred to as "CFE" and "EPE", respectively.

RECITALS

This Agreement is entered into on April 14, 1982, by and between Comisión Federal de Electricidad and El Paso Electric Company. CFE is a Descentralized Institution which is part of the Federal Public Administration of the United Mexican States, whose purpose is to provide the public electric ener­gy service, in accordance with the Ley del Servicio Público de Energía Eléc­trica (Electric Energy Public Service I.aw), which was published in the Dia­rio Oficial de la Federación (Official Gazzette of the Federation) of December 22, 1975; being represented herein by its General Director, Mr. Alberto Escofet Artigas, who evidences his authority and powers in the terms of Article 14 of the above-cited Law, with a certified copy of his appointment, issued by the President of the Republic, recorded under Public Instrument Number 37,999, dated July 16, 1980, before Mr. Pedro del Paso Regaert, Notary Public Number 65 of Mexico City.

-2-

El Paso Electric Company is a corporation organized and existing under the laws in effect in the State of Texas and in the United States of America, which is represented herein by Mr. Evern R. Wall, President of EPE, who herein evidences his authority and powers with the documents which are presented to C.F.E. and which it keeps in its files.

Hereinafter, CFE and EPE shall also be referred to individually as "Party", or jointly "Parties".

SECTION 1 - PREMISES

		
	1.1
	CFE's electric system in Ciudad Juárez, Chihuahua, hereinafter referred to as "CFE-Juárez", and EPE's electric system in El Paso, Texas, hereinafter referred to as "EL PASO", are contiguous along a portion of the Mexico-United States of America border, as is shown in Exhibit "A" hereof.

		
	1.2
	Both parties recognize that mutual benefits may derive from the interchange of electric energy between their systems, since such interchange will make the assistance in the operation of both systems possible, improving generation costs and rendering a more dependable service to the corresponding CFE-Juárez and EL PASO consumers.

		
	1.3
	Both Parties own and operate facilities for generation, transmission and distribution which may be interconnected through two existing 69/KV transmission lines.

-3-

		
	1.4
	The CFE-Juárez and EL PASO systems are members of major interconnected systems. CFE-Juárez is a member of CFE's Sistema Interconectado Nacional (SINAL), which shall also be referred to as the "Main System" corresponding to CFE-Juárez and EL PASO is a member of the Western Systems Coordinating Council (WSCC) system, which shall also be referred to as the "Main System" corresponding to EL PASO.

		
	1.5
	Both Parties recognize that at the present time it is not practical or convenient for the interconnection between the systems of the Parties to occurr while the CFE-Juárez system is interconnected with the rest of CFE's Sistema Interconectado Nacional (SINAL) and EL PASO's system is simultaneously interconnected with the rest of the Western Systems Coordinating Council (WSCC) system.

		
	1.6
	According to what is provided in paragraph 1.5, in order to accom­plish the electric energy interchanges between the Parties, it is convenient to separate a part of the system of one of the Parties when this part is interconnected with the Main System corresponding to the other Party, in accordance with the procedures which the Co­ordinating Committee shall establish within thirty (30) days after the signing hereof.

		
	1.7
	This Agreement shall allow the Parties, to join their efforts in or­der to analyze and construct if necessary, new interconnections which allow to increase colaboration between the Parties. In each case the corresponding situation shall be analyzed and this Agree­ment shall be modified, ammended or ratified by an additional agree­ment if necessary, with the appropriate intervention of the corres­ponding authorities.

-4-

		
	1.8
	For purposes of implementation of this Agreement, all references to CFE's system, shall be understood as CFE-Juárez's system.

SECTION 2. TERM, TERMINATION AND AUTHORIZATIONS.

		
	2.1
	Term. - This Agreement shall become effective when signed by both Parties, and shall continue in effect for a period of two (2) years. At the end of this term, this Agreement shall continue in effect for an indefinite term until written notice of termination is given by either of the Parties ninety (90) days in advance.

		
	2.2
	Authorizations. - Each Party agrees to take the necessary steps in their respective country to obtain all the authorizations necessary to implement this Agreement. Each Party agrees to notify the other Party when all of the authorizations required by that Party to implement this Agreement have been obtained.

		
	2.2.1
	According to what is provided in paragraph 2.2, as regards CFE, it must obtain authorizations from the agencies which are listed below:

		
	(a)
	The Secretaría de Patrimonio y Fomento Industrial (National As­sets and Industrial Development Department), with regard to the Ley del Servicio Público de Energía Eléctrica (Electric Energy Public Service Law) and Regulations derived therefrom.

		
	(b)
	The Secretaría de Comercio (Commerce Department), according to the Ley del Servicio Público de Energía Eléctrica (Electric En­ergy Public Service Law) and Regulations derived therefrom, with regard to the importation and exportation of electric energy and in accordance with the Ley sobre Adquisiciones, Arrendamientos y Almacenes de la Administración Pública Federal (Federal Public Administration Acquisitions, Leases and Inventories Law).

-5-

		
	2.2.2
	According to the provisions of paragraph 2.2, the governmental authorizations which EPE must obtain are the following:

		
	(a)
	Presidential permits and authorizations or permits from other governmental agencies with regard to the importation or exporta­tion of electric energy and the construction of facilities on the international border.

		
	(b)
	Registration of EPE in the Padrón de Proveedores de la Adminis­tración Pública Federal (Federal Public Administration Suppliers List) which is kept by the Secretaría de Comercio (Commerce De­partment), in accordance with the Ley sobre Adquisiciones, Arrendamientos y Almacenes de la Administración Pública Federal (Federal Public Administration Acquisitions, Leases and Inventories Law) of the United Mexican States.

2.3    Termination.
		
	2.3.1
	If the authorizations applicable in each case and referred to in section 2.2 hereof are not obtained during the nine-month period following the signing hereof, the Parties shall meet and decide to adopt any of the following solutions: (i) to terminate this Agree­ment without any further liability to either of the Parties or (ii) to continue the procedures to obtain such authorizations. If the Parties decide to continue along the lines of option (ii) above, the Agreement shall continue in force for another six-month period at the end of which if either of the Parties has not obtained the required authorizations, either of the Parties may terminate this A­greement by written notice to the other Party, thirty (30) calendar days in advance and without there being further liability to either Party. Once all the authorizations have been issued, neither Party may terminate this Agreement based on this section 2.3.1

-6-

		
	2.3.2
	Breach. - In case of serious and repeated noncompliance by a Party with the obligations assumed according to this Agreement by a Party towards the other, the affected Party may request in writing to the other Party, the termination of this Agreement, regardless of the normal termination term provided for in section 2.1, giving authentic proof of the motives which justify its decision.

		
	2.3.3
	Termination of the Agreement in accordance to sections 2.3.1 or 2.3.2 shall not release either of the Parties of the obligation to return the interchange services derived from this Agreement or from complying with the corresponding compensation for the services which may have been previously received from the other Party.

SECTION 3. - DEFINITIONS.

For purposes of this Agreement, the Parties agree to establish the following conventional definitions:
		
	3.1
	Sistema Interconectado Nacional (SINAL) - The main electric system of CFE of which the electric system of CFE-Juárez is a part.

		
	3.2
	Western Systems Coordinating Council (WSCC) - An organization consisting of several electric utilities which are interconnected and are located in the western portion of the United States of America and Canada and of which EPE is a member.

		
	3.3
	CFE-Juárez - The electric system owned by CFE which supplies the northern portion of the State of Chihuahua and is contiguous with the United States of America border, and which is connected with the rest of SINAL at the Moctezuma Substation.

-7-

		
	3.4
	EL PASO - The electric system owned by EPE which supplies the southern portion of the State of New Mexico and the western portion of the State of Texas, which is contiguous with the Mexican border, and which is connected with the rest of the WSCC system at several points which are shown in Exhibit "A" of this document.

		
	3.5
	Capacity - The measure in Megawatts of the dependable load-carrying ability of one or more generating units determined in accordance with prevailing operating conditions at the applicable time.

		
	3.6
	Capacity Resources - The Capacity Resources of EL PASO are:

		
	(a)
	The Capacity of the generating units installed in EPE's service area, plus

		
	(b)
	The capacity owned by EPE from generating units installed outside EPE's service area, plus

		
	(c)
	The aggregate capacity made available to EL PASO on a firm basis under purchase contracts with Third Parties, minus

		
	(d)
	The aggregate capacity made available, under sales contracts, to Third Parties.

The Capacity Resources of CFE-Juárez are:
		
	(a)
	The Capacity of all the generating units installed in CFE-Juárez service area, plus

		
	(b)
	The aggregate capacity which is made available to CFE--Juárez on a firm basis from other CFE installations, plus

		
	(c)
	The aggregate capacity which is made available to CFE-Juárez on a firm basis, according to purchase contracts with Third Parties, minus

		
	(d)
	The aggregate capacity made available under sales contracts to Third Parties.

-8-

		
	3.7
	Unitary Decremental Energy Cost.- The expense in United States of America dollars, per Kilowatt-Hour, which the Receiver would incurr if the total block of energy received in accordance with a particular Interchange Service of this Agreement (after adjustments for any increase or decrease of the Receiver's system transmission losses) were to be obtained in any of the two following manners:

		
	(a)
	From generation with its own available Capacity Resources, using the generating unit or units which have the lowest Incremental Operating Costs and which are not being used to satisfy its own energy requirements at the time of the reception of the energy supplied by the Supplier. This expense is equal to the sum of the following concepts, divided by the amount of kilowatt-hours of such energy:

		
	(1)
	The cost of make ready, starting up and shutting-down (in case necessary to generate the energy received from the Sup­plier) such generating units, plus the Replacement Cost of Fuel for no-load operation and the cost of the fuel required to render its own services;

		
	(2)
	The Replacement Cost of Fuel or the cost of another primary energy source used to generate such energy in the generating units mentioned; and

		
	(3)
	The Incremental Maintenance Cost of such generating units.

		
	(b)
	From the purchase of energy from Third Parties, or also, in the case of CFE-Juárez, for the energy obtained from any other installations of CFE. 

-9-

		
	3.8
	Replacement Cost of Fuel.

Unless otherwise mutually agreed, the replacement cost of fuel shall be based on the following:
		
	(1)
	For CFE-Juárez the replacement cost of fuel shall be based on the international export price of oil produced in Mexico or the cost of imported fuel, depending on the case.

		
	(2)
	For EL PASO, the replacement cost of fuel placed in storage.

		
	3.9
	Associated Energy. - The energy (Kilowatt-Hour) associated with con­tracted capacity.

		
	3.10
	Emergency. - Any unforeseeable or inevitable temporary circumstance not within the control of the affected Party (such as the loss or reduction of generating or transmission capacity) which affects the system of either of the Parties, which prevents, interferes or jeopardizes the rendering of satisfactory service in the affected sys­tem, as a result of any cause other than: (a) Scheduled Maintenance or (b) an anticipated fuel supply deficiency.

		
	3.11
	Emergency Assistance. - Service provided pursuant to Interchange Service A, under which one of the Parties shall supply the other Party, upon the latter's request, the power and energy which the latter may require to reestablish or protect the supply of energy in its system when it is affected by Emergency conditions.

		
	3.12
	Energy Requirements. The total energy demand on a Party's system, during the applicable period, expressed in Kilowatt-Hours.

		
	3.13
	Energy Resources. - The energy generation capacity which a Party has in its Capacity Resources, during the applicable period, expressed in Kilowatt-Hours.

-10-

3.14    Firm Power Delivery.
Deliveries of capacity and electric energy to a Party, which are interruptible only in the event of degradation in the Supplier's system security.
3.15    Unitary Incremental Energy Cost.
The expense, in United States of America dollars, per Kilowatt-Hour incurred by the Supplier to supply the electric energy in accordance with a specific Interchange Service of this Agreement, determined in consideration of the following:
		
	(a)
	If the Supplier generated such electric energy with its own generating units, the expense incurred in the generation of electric energy (after adjustments for increases or decreases in the transmission losses in the Supplier's system) using the generating unit or units which have the lowest Incremental Operation Cost and which are not being utilized to meet its Energy Requirements, which expense shall be the sum of the following items divided by the number of Kilowatt-Hours of such energy:

		
	(1)
	The cost of make ready, starting up and shutting-down (if necessary to supply such electric energy) the generating u­nits, plus the Replacement Cost of Fuel for no-load operation and the cost of the fuel required to render its own services; plus

		
	(2)
	The Replacement Cost of Fuel or the cost of another primary source of energy utilized to generate the electric energy in question, and

		
	(3)
	The Incremental Maintenance Cost of the generating units mentioned in this paragraph (a).

-11-

		
	(b)
	If the Supplier obtained all or part of the electric energy sup­plied to the Receiver for that purpose and not to satisfy its own Energy requirements, then the Unitary Incremental Energy Cost of the Supplier for the energy acquired for that purpose shall be equal to the purchase price of such energy, which shall be adjusted for any increase or decrease of the transmission losses in the Supplier's system. In the case of CFE-Juárez, if it acquired all or part of the electric energy supplied to the Receiver from the rest of CFE's installations, then the Unitary Incremental Energy Cost for such Energy shall be equal to the cost which CFE incurrs for its generation and transmission.

		
	3.16
	Incremental Maintenance Cost.

The amount, expressed in mills of United States of America dollars per Kilowatt-Hour, which the maintenance expenses are increased due to the increase in generation to satisfy the delivery of energy under any of the Interchange Services provided in this Agreement. This cost shall be established by the Coordinating Committee.
		
	3.17
	Incremental Operating Cost.

The increase in cost due to fuel consumption in United States of America dollars, per Kilowatt-Hour, due to the increase in the power output of a generating unit.
		
	3.18
	Interconnection.

Any arrangement of one or more transmission lines, switches, meters, control devices and other related facilities which directly connect or allow the interchange of electric energy between the CFE-Juárez and EL PASO systems.

-12-

		
	3.19
	Peak Demand.

The highest aggregate demand, in Megawatts, on all sources of power of a system, including all the purchases of energy during the applicable period, measured in one hour intervals, and less the demand resulting from all the sales of energy and all demands originated from transitory load variations between the interconnected systems.
		
	3.20
	Interconnection Point.

The geographical location where the transmission line or lines which are part of an Interconnection, cross the international border.
		
	3.21
	Receiver.

The Party receiving service provided for in the Interchange Services attached hereto.
		
	3.22
	Scheduled Maintenance.

The removal of a generating unit from service, planned in advance, for inspection or overhaul of one or more major equipment groups.
		
	3.23
	Short-Term Firm Capacity.

The service provided in Interchange Service B which, through mutual agreement of the Parties, the Supplier makes available for the Receiver to schedule a specified amount of Capacity and Associated Energy for a determined number of consecutive days.
		
	3.24
	Supplier.

The Party furnishing the services provided for in the Interchange Services, attached hereto.
Third Party.
Any person, physical or legal, whether public or private, which op­erates and/or owns an electric system, excluding any of the Parties to this Agreement.

-13-

SECTION 4 - OWNERSHIP AND OPERATION OF THE INTERCONNECTION.

		
	4.1
	Each Party accepts the obligation to operate and maintain its interconnection facilities up to the existing Interconnection Points which are shown in Exhibit A and which are described hereunder:

		
	Interconnection I:
	Transmission of 69 KV between the Río Grande Substation of EL PASO and Chaveña Substation of CFE‐Juárez.

		
	Interconnection II:
	Transmission of 69 KV between the Ascárate Substation of EL PASO and the Colegio Substation of CFE-Juárez.

		
	4.2
	Each Party owns its installations up to the Interconnection Points and will modify, design, build, operate and maintain such installations at its own cost.

		
	4.3
	When the systems of both Parties, or a portion of them, are operating interconnected, each Party shall take the necessary care to maintain the continuity of service in the supply and receipt of ca­pacity and energy according to this Agreement.

		
	4.4
	Neither Party will have physical access to the facilities of the other Party without the prior and express consent of the other Party. No labor relationship shall exist between the personnel of CFE and EPE, nor between the personnel of EPE and CFE. Consequently, each Party shall be considered as the employer of its workers, employees or agents; and will fully assume the responsibility derived from risks related to its facilities. Neither Party shall assume responsibility towards the customers of the other Party or for claims that third parties may bring against one of the Parties with respect to the facilities of the other Party.

-14-

		
	4.5
	Each of the Parties reserves the right to continue or renew existing agreements and to enter into additional agreements of any type with a Third Party.

SECTION 5 - INTERCHANGE SERVICES.

		
	5.1
	Terms and conditions.

The terms and conditions of the services that one Party as Supplier will provide, to the other Party, as Receiver, as provided in this Agreement, and the amount which will be paid for them shall be specifically detailed in the documents referred to as Interchange Serv­ices which shall be attached hereto, each one of which, after having been signed by the authorized officers of both Parties and approved by the competent regulatory agencies, shall become part of this A­greement for the whole term thereof or for a lesser term if the Par­ties so specify in each one of them.
		
	5.2
	Interchange Services.

Initially, it is agreed on the following Interchange Services which become part of this Agreement:
Interchange Service A:    Emergency Assistance
Interchange Service B:    Short-Term Firm Capacity

SECTION 6 - ADMINISTRATION.

		
	6.1
	Coordinating Committee.

The Parties hereby establish a committee, referred to as the Coor­dinating Committee, which shall have the authority and obligations set forth in this Section 6 and in other sections of this Agreement. 

-15-

The Coordinating Committee shall limit its duties to what is established in this Agreement. The Parties agree that within the membership of the Coordinating Committee there is no existing preemi­nence and therefore all its members shall have equal status and the vote of each member shall have equal value.
		
	6.2
	Membership in the Coordinating Committee.

Within thirty (30) days after the date this Agreement becomes effective, each Party shall appoint in written form the person which shall represent it in the Committee, as well as an alternate with authority to act in case of absence of the representative. Such appointments shall be made in written form and shall inform the other Party of the degree of delegated authority and the limitations of the representatives authority. Both Parties may designate new representatives or alternates by written notice to the other Party. The salaries and expenses of the representatives and alternates of each Party shall be borne by the Party they represent.
		
	6.3
	Unanimity Requirement.

Any determination, approval, recommendation or any other action re­lated to this Agreement taken by the Coordinating Committee shall require the affirmative vote or consent of each member of such Committee. In case a consensus cannot be reached, the corresponding matter shall be dealt with and resolved by the Sub-Director de Ope­ración (Sub-Director of Operation) of CFE and the President of EPE, with the understanding that the representatives which the Parties appoint hereby for such purpose, may be substituted by written no­tice to the other Party.

-16-

		
	6.4
	Meetings.

The Coordinating Committee shall decide on the place and dates to meet, it shall prepare the agendas for the meetings and shall prepare and distribute the minutes of the meetings and other official documents of the Coordinating Committee as well. The meetings of the Coordinating Committee may be called by any of its members, but in any case, such Committee must meet at least once every quarter, or more often if both Parties agree. Each Party undertakes that its representative or alternate shall be present in every meeting of the Coordinating Committee, called with at least fifteen (15) days prior written notice.

		
	6.5
	Appointment of Sub-Committees.

The Coordinating Committee is authorized to establish as many permanent or temporary Sub-Committees as necessary to assist the Committee to accomplish its purposes and to exercise its authority, according to the provisions of this Agreement. The Coordinating Committee shall determine the number of representatives which each one of the Parties shall have in each Sub-Committee with the understanding that each Party shall be equally represented. Each one of the Parties, upon being notified of the creation of any Sub-Committee by the Coordinating Committee, shall designate its representative on such Sub-Committee within thirty (30) days after such notice, as well as any alternates who will act in the absence of the representative. The salaries and expenses of the representatives and alternates of each Party shall be borne by the Party they represent.

-17-

		
	6.6
	Resolutions by Unanimity.

If a Sub-Committee cannot agree on a certain matter entrusted to it by the Coordinating Committee, that Sub-Committee may present several recommendations to the Coordinating Committee for its solution. In case no consensus is reached at the Coordinating Committee, the procedure established in paragraph 6.3 hereof shall be followed.
		
	6.7
	Powers and Duties of the Coordinating Committee.

The Coordinating Committee shall have the powers and duties listed in the following paragraphs:
		
	6.7.1
	Exchange of Information.

To establish procedures that will provide for exchange of information between the Parties so as to obtain optimum benefits from this Agreement.
		
	6.7.2
	Exchange Capacity.

To determine the transfer capacity of Interconnections I and II and of any other future Interconnections, under normal conditions or Emergency.
		
	6.7.3
	Metering and Energy Accounting.

To determine procedures to meter the interchange and to make the corresponding registrations, as well as verification and accounting procedures required for the implementation of this Agreement.
		
	6.7.4
	Operating Procedures.

To determine procedures and operational standards for the rendering of services according to this Agreement, including the delegation of authority to the system operators of each of the Parties for the implementation of this Agreement.

-18-

		
	6.7.5
	Interconnection Equipment.

To recommend the equipment needed to enhance the operation of the interconnected systems and for the management of this Agreement.
		
	6.7.6
	Attributes for Interchange Services.

To propose additional interchange services and, in such case, to carry out the necessary studies which lead to a recommendation to adjust the technical and economic parameters associated with the different Interchange Services.
		
	6.7.7
	Other Powers and Duties.

To carry out other authorized actions which may be necessary for the implementation of this Agreement.

SECTION 7 - OPERATION AND MAINTENANCE.

		
	7.1
	General Stipulations.

The provisions of this Section are applicable to all operations go­verned by this Agreement, unless an Interchange Service specifies otherwise for actions related to such Interchange Service. In the event that the terms of this Agreement conflict with the terms of an Interchange Service, the terms of the Interchange Service will prevail over this Agreement.
		
	7.2
	Service Interruption and Disturbances.

The Parties express that the basic objective of this Agreement, according to the premises established in Section 1, is to obtain reciprocal assistance. Therefore, each Party shall operate its system 

-19-

attempting to minimize the probabilities of service interruptions or disturbances which might affect the other Party's service. In the event that one of the Parties deems that service to its own customers is being affected due to the operating conditions of the other Party's system, the proper steps to remedy the deficiency shall be taken by mutual agreement of the Parties. However, it is expressly agreed that neither Party may demand from the other Party payments for damages or losses or any other compensation as a result of service interruptions, disturbances, blackouts or other operating deficiencies. Consequently, each Party must assume the whole responsibility towards its own customers or users regarding claims arising from service interruptions, disturbances, blackouts or other operating deficiencies.
Each Party agrees to hold the other Party harmless if a customer of the first Party brings suit against the other Party.
		
	7.3
	Automatic Load Shedding and Tie Separation.

Immediately following the appointment of the Coordinating Committee, it will adopt procedures covering systems separation and automatic load shedding.
		
	7.4
	Maintenance of Interconnection Facilities.

Each Party will maintain its own interconnection facilities in good operating condition; however, the Parties shall coordinate scheduled maintenance or construction work, in accordance with the procedures to be established according to the provisions of Section 6.7.4.

-20-

		
	7.5
	Maintenance of Communication Equipment.

Each Party will pay the expense of maintaining its communication system and of its telemetering facilities, as well as those related to the interconnection of such equipment with the corresponding system of the other Party as needed to effectively implement this Agreement.
		
	7.6
	Metering Equipment.

Every capacity and energy service rendered through each Interconnection will be measured at the end of each Interconnection line and at any other location which may be necessary to verify deliveries and interchanges effected pursuant to this Agreement.
		
	7.7
	Non-Intentional Interchange of Energy.

The quantity of power and energy supplied according to this Agreement by one Party to the other, according to each Interchange Ser­vice or any other service between the CFE-Juárez and EL PASO systems, shall be determined based on quantity scheduled by the system operators of the Parties. The Parties shall operate the respective systems in a way that net energy and capacity delivered be as close as possible to the scheduled net deliveries. Any difference between the scheduled net delivery and the actual net deliveries shall be verified in accordance with the procedures established by the Coordinating Committee and such differences may be compensated in cash or in kind, as determined by the Coordinating Committee.
		
	7.8
	Frequency Maintenance.

Each Party shall operate its system in such a way that will permit to maintain the frequency of the Interconnected Systems of the Par­ties at approximately 60 Hz (within the maximum limits of normal 

-21-

deviations of operation established periodically by the Coordinating Committee).
		
	7.9
	KVAR Requirements.

Each Party shall normally provide the reactive kilovoltpere (KVAR) requirements for its own system, so that there will be no interchange of KVAR between the systems; however, by prior agreement of the system operators, the Parties may exchange KVAR. The Parties shall cooperate to control the flow of KVAR to prevent the introduction of objectionable operating conditions on both systems.

SECTION 8 - GENERALITIES.

		
	8.1
	Notifications:

All notifications, petitions or applications with regard to this Agreement shall be considered to have been properly given, if sent by registered mail to the Sub-Director de Operación or to the Gerente del Centro Nacional de Control de Energía of the Comisión Federal, Río Ródano 14, 06500 México, D. F., if the notification is for CFE; and to the Secretary, El Paso Electric Company, Post Office Box 982, El Paso, Texas, 79960, if the notification is for El Paso Electric Company. The designation of the person to whom the notifications must be sent, or the address of such person, may be changed at any time by written notice. All notifications relating to the delivery or receipt of energy or relating to the operation of facilities shall be considered valid if transmitted by telephone and registered in the system operators' logs of both Parties.

-22-

Notifications of legal nature or within judicial procedures shall be subject to the applicable legal requirements.
		
	8.2
	Successors and Assigns.

This Agreement shall innure in the benefit of and shall bind the successors and assigns of both Parties. However, it will not be transferable by either Party without the prior written consent of the other Party, which shall not be denied unless there is justification.
		
	8.3
	Fortuitous Event and Force Majeure.

Neither EPE nor CFE shall be responsible for non-compliance with their obligations under this Agreement when such non-compliance is due to force majeure or to a fortuitous event, as defined by the Mexican Legislation. When a fortuitous event or force majeure occur, the affected Party shall notify and evidence such occurrence to the other within ten (10) calendar days of the occurrence.

SECTION 9 - COLLECTIONS AND PAYMENTS.

		
	9.1
	The Receiver shall compensate the Supplier for the interchanges rendered according to this Agreement in the amount billed every month. Such bills shall indicate separately the corresponding amounts of each type of Interchange Service that has been supplied.

		
	9.2
	The interchanges rendered hereunder shall be accounted for on a calendar month basis. The Supplier shall present a monthly invoice to the Receiver, in United States of America dollars, for the services rendered under this Agreement starting on the month in which the 

-23-

operations of the first interconnection between CFE-Juárez and EL PASO begin. The amounts payable hereunder for any service rendered shall be paid within thirty (30) calendar days after the receipt of the invoice by the corresponding Party.
		
	9.3
	In the event that upon reviewing an invoice, the Party which must pay it considers that a portion of the amount billed is not due by it, that Party shall make the corresponding observations to the o­ther Party within a ten (10) natural day period following the re­ceipt of the bill, so that the other Party may in turn review the bill and within the ten (10) natural days following the notification of the observations, make the corresponding correction or clearly evidence the propriety of the charge which is being objected, in the understanding that in the event the Parties have not resolved the existing differences before the term established in paragraph 9.2, fifty percent (50%) of the disputed amount and the total amount which is not disputed shall be paid within such term. The foregoing shall, of course, not preclude the reimbursement of the amount paid in excess or the payment of the additional amount which is deter­mined to be owed, through the corresponding debits or credits on the following bill.

		
	9.4
	All payments made by EPE to CFE shall be made in United States of America dollars at a banking institution selected by CFE in Ciudad Juárez, Chihuahua. All payments made by CFE to EPE shall be made in United States of America dollars at a banking institution selected by EPE in El Paso, Texas. Each Party shall notify the other of the selection of a banking institution, pursuant to the terms of paragraph 8.1 of this Agreement, within a fifteen (15) calendar day period following the date of signature of this Agreement.

-24-

SECTION 10 - JURISDICTION.

		
	10.1
	For the interpretation and compliance of this Agreement, as well as for any case in which judicial intervention is required regarding the Agreement, the Parties hereby submit to the jurisdiction of the competent federal courts in Mexico City, Federal District. In ev­ery case, the provisions of article 45 of the Ley del Servicio Pú­blico de Energía Eléctrica (Electric Energy Public Service Law) shall be applicable.

SECTION 11 - TAXES.

		
	11.1
	The taxes and duties legally assesible which are incurred as a consequence of this Agreement in the United States of America or in the United Mexican States shall be paid respectively by EPE or CFE. In every case regarding payments which CFE must make, the provisions of the Ley de Presupuesto, Contabilidad y Gasto Público (Budget, Accounting and Public Expenditures Law), and regulations promulgated thereunder shall be observed.

SECTION 12 - LANGUAGE.

		
	12.1
	The Parties execute this Agreement signing two (2) originals in Spa­nish and two (2) originals in English. It is hereby agreed that both the Spanish and English texts of this Agreement are valid and binding, so long as the English version which is signed has been prepared and certified by an official expert translator authorized to act as such by the Mexican judicial authorities; and in the event of a dispute, both texts shall be used to determine the intention of the Parties.

-25-

This Agreement is signed in Mexico City, Federal District, on April 14, 1982.

	
			
	EL PASO ELECTRIC COMPANY
	 
	COMISION FEDERAL DE ELECTRICIDAD

	 
	 
	 

	/s/Evern R. Wall
	 
	/s/[ILLEGIBLE]

	 
	 
	 

	President
	 
	General Director

EL SUSCRITO, LIC. ANDRES OCHOA BUNSOW, PERITO TRADUCTOR E INTERPRETE DE IDIOMAS, DEBIDAMENTE DESIGNADO Y AUTORIZADO POR EL TRIBUNAL SUPERIOR DE JUSTICIA DEL DISTRITO FEDERAL, SEGUN BOLETIN JUDICIAL No. 30 DE FECHA 13 DE FEBRERO DE 1981.

CERTIFICO:

QUE LA ANTERIOR ES UNA FIEL TRADUCCION DEL INGLES AL ESPAÑOL, DEL DOCUMENTO ORIGINAL QUE TUVE A LA VISTA Y QUE SE ADJUNTA A ESTA TRADUCCION PARA TODOS LOS EFECTOS LEGALES A QUE HAYA LUGAR.

MEXICO, D. F., A 14 DE ABRIL DE 1982

-26-

INTERCHANGE SERVICE A
EMERGENCY ASSISTANCE
COMISION FEDERAL DE ELECTRICIDAD
AND
EL PASO ELECTRIC COMPANY
SECTION 1 - OBJECTIVE.

		
	1.1
	The objective of this Interchange Service A is to render Emergency Assistance between the electric systems of CFE-Juárez and EL PASO.

		
	1.2
	The Parties recognize that the terms under which a Party, as Receiver, has the right to request Emergency Assistance, and the other Party, as Supplier, is obligated according to this Service to provide Emergency Assistance, are conditions which arise in temporary circumstances out of control of the affected Party and which prevent, interfere or jeopardize the rendering of satisfactory service in the system of the Party which requests the Emergency Assistance, and which result from any cause other than Scheduled Maintenance or anticipated fuel supply deficiencies.

SECTION 2 - TERM.
This Interchange Service A, once it has been signed by the Parties, shall become effective simuntaneously with the Interchange Agreement between Comisión Federal de Electricidad and El Paso Electric Company and shall continue in effect throughout the term of the Interchange Agreement, or until a new Interchange Service A is executed.

-SA/1-

SECTION 3 - SUPPLY OF EMERGENCY ASSISTANCE.

		
	3.1
	Each Party, upon the request of the other Party, shall supply as Emergency Assistance the power and energy that the Receiver may need to restore or protect the supply of energy in the affected system by an Emergency under the following conditions: (a) that in the Supplier's judgement, such supply does not cause any deterioration or serious risk for the service of the Supplier's system; (b) that such supply does not exceed the maximum transmission capacity of the In­terconnection facilities; and (c) that Emergency Assistance shall never exceed seventy-two (72) continuous hours. After such seventy‐two (72) hours, the assistance shall continue to be supplied; however, the compensation basis for such supply shall be those of Interconnection Service B.

		
	3.2
	The Supplier from whom the Emergency Assistance is requested shall utilize, to the degree necessary, all energy sources at its disposal to render the Emergency Assistance.

		
	3.3
	If a Party affected by an Emergency requests Emergency Assistance, such Party shall communicate, as soon as possible, with the Supplier to schedule such Emergency Assistance. The Receiver with due diligence shall correct the conditions which caused the Emergency and reestablish the normal operating conditions of its system.

SECTION 4 - COMPENSATION BASIS.

		
	4.1
	The energy supplied during a period of Emergency Assistance shall be returned to the Supplier at the rate of 1.2 KWH for each KWH supplied during the Emergency. The conditions in which the energy supplied shall be returned shall be agreed upon by the system operators 

-SA/2-

of both Parties, considering the following:
		
	a)
	Energy supplied between 0700 and 2300 hours, time of Ciudad Juárez, shall be returned between 0700 and 2300 hours, time of Ciudad Juárez.

		
	b)
	Energy supplied on days between Monday and Friday inclusive shall be returned on days between Monday and Friday inclusive.

		
	c)
	Energy supplied on Saturday or Sunday shall be returned on Saturday or Sunday.

		
	4.2
	If the Receiver of Emergency Assistance service does not return the energy supplied within a period of fifteen (15) calendar days from the beginning of the Emergency Assistance, then the Receiver shall pay the Supplier for the energy not returned an amount to be deter­mined on the basis of 120% of the Unitary Incremental Energy Cost of the Supplier incurred in supplying such energy. In determining which KWH will be billed by the Supplier to the Receiver, it is agreed that the first KWH supplied in Emergency Assistance shall be the first KWH which the Receiver must return.

		
	4.3
	In the event that this Interchange Service A is terminated, the obligations of the Parties with respect to compensation not paid shall continue in effect until they have been fulfilled.

	
			
	EL PASO ELECTRIC COMPANY
	 
	COMISION FEDERAL DE ELECTRICIDAD

	 
	 
	 

	/s/Evern R. Wall
	 
	/s/[ILLEGIBLE]

	 
	 
	 

	President
	 
	General Director

	 
	 
	 

	Date:  April 14, 1982
	 
	Date:  April 14, 1982

                

-SA/3-

INTERCHANGE SERVICE B
SHORT-TERM FIRM CAPACITY
COMISION FEDERAL DE ELECTRICIDAD
AND
EL PASO ELECTRIC COMPANY

SECTION 1 - OBJECTIVE.

		
	1.1
	In order to achieve a more economical system operation, as well as to improve system reliability and permit increased flexibility and convenience of their operation, this Interchange Service B provides that either Party, as Supplier, may agree to furnish or make available to the other Party, as Receiver, a specified amount of Capacity and Associated Energy for a period not exceeding forty five (45) consecutive days.

SECTION 2 - TERM.

		
	2.1
	This Interchange Service B, once signed by the Parties, shall become effective simultaneously with the Interchange Agreement between Comisión Federal de Electricidad and El Paso Electric Company and shall continue in effect throughout the term of the Interchange Agreement, or until a new Interchange Service B is executed.

SECTION 3 - SUPPLY OF SHORT-TERM FIRM CAPACITY

		
	3.1
	Upon mutual agreement of the Parties, the Supplier shall maintain available for scheduling by the Receiver the agreed upon amount of Capacity at all times during the expressly agreed upon period of supply of Short-Term Firm Capacity.

-SB/1-

		
	3.2
	At any time during the agreed upon period, the Receiver may schedule and Supplier shall deliver Associated Energy up to the agreed upon amount of Short-Term Firm Capacity which has been made available.

		
	3.3
	The Unitary Incremental Energy Cost of the Supplier shall be deter- mined prior to the rendering of this Service B.

		
	3.4
	The Receiver shall pay the Supplier for the Short-Term Firm Capacity and for the Associated Energy received according to the rate set‐forth in Section 4 of this Interchange Service B.

SECTION 4 - COMPENSATION BASIS.

The Supplier shall bill and the Receiver shall pay for the agreed upon amounts of Short-Term Firm Capacity and for the Associated Energy received, based on the following charges:
4.1    Demand charges.
.10 dollars (10 cents of a dollar) of the United States of America, per kilowatt of demand per calendar day based on Ciudad Juárez time.
4.2    Energy charge.
At the rate of 115% (one hundred and fifteen percent) of the Unitary Incremental Energy Cost of the Supplier.
	
			
	EL PASO ELECTRIC COMPANY
	 
	COMISION FEDERAL DE ELECTRICIDAD

	 
	 
	 

	/s/Evern R. Wall
	 
	/s/[ILLEGIBLE]

	 
	 
	 

	President
	 
	General Director

	 
	 
	 

	Date:  April 14, 1982
	 
	Date:  April 14, 1982

-SB/2-

	
	
	CF0094

INTERCHANGE SERVICE C
ECONOMY ENERGY
COMISION FEDERAL DE ELECTRICIDAD
AND
EL PASO ELECTRIC COMPANY

SECTION 1 – OBJECTIVE
		
	1.1
	The objective of this Interchange Service C is to establish the terms and conditions of economic energy transactions ("Economy Energy") between the electric systems of CFE-Juárez and EL PASO.  This Interchange Service C is expected to allow the Parties to achieve more efficient utilization of production capacity as well as to permit increased production flexibility and convenience of operation. 

		
	1.2
	CFE-Juárez desires to obtain, and EL PASO desires to supply, up to 60 MW each hour of Economy Energy from the effective date of this Interchange Service C. This Interchange Service C provides the terms and conditions which will allow such Economy Energy transactions to occur.

		
	1.3
	This Interchange Service C allows for the repayment of Economy Energy by a Receiver in either cash or by the return of energy as specified in Section 4 herein.     

SECTION 2 – TERM

		
	2.1
	This Interchange Service C shall become effective 

once it has been signed by both Parties and shall continue in effect throughout the term of the Interchange Agreement or until a new Interchange Service C is executed.

		
	2.2
	Each Party is hereby obligated to undertake the necessary actions to obtain all authorizations within its own country, needed to implement this Interchange Service C.

SECTION 3 – ECONOMY ENERGY

		
	3.1
	Either Party ("Receiver") may request Economy Energy from the other Party ("Supplier"). Each Party shall be the sole judge of the conditions under which it is economic or practical for it to deliver, accept or return Economy Energy hereunder.

		
	3.2
	Prior to the supply or return of Economy Energy hereunder, the Parties' respective system operators shall mutually agree upon the point(s), rate and term of delivery for each such Economy Energy transaction.

		
	3.3
	Either Party may interrupt or curtail the supply or receipt of Economy Energy, upon verbal notice to the other Party, when the supply or receipt of such energy will result in the impairment of or jeopardize service to its electrical system, its customers or its other commitments.

		
	3.4
	Upon mutual agreement of the Parties' respective system operators, either or both of CFE-Baja's 230 KV interconnections with San Diego Gas & Electric Company at the Tijuana and La Rosita substations may be designated as point(s) of delivery for Economy Energy transactions hereunder.

		
	3.5
	The supply or return of Economy Energy transactions shall be accounted for on the basis of actual hourly flows as metered. The Parties' respective system operators shall maintain records of actual hourly flows as metered, as well as applicable Unitary Incremental Energy Costs and Unitary Decremental Energy Costs for accounting and operating purposes.  Upon mutual agreement of the Parties' respective system operators, such Unitary Incremental Energy Costs may be accounted for on a weekly basis and quoted in advance of any transactions hereunder. Should the Supplier's Unitary Incremental Energy Cost differ significantly from its quotation, the Supplier shall notify the Receiver of its revised Unitary Incremental Energy Cost and the Receiver shall have the option to curtail or interrupt its acceptance of further energy hereunder.

SECTION 4 – COMPENSATION BASIS

		
	4.1
	At the end of each month during the term of this Interchange Service C, a Party supplying Economy Energy 

during that month shall bill the Receiver, and the Receiver shall have the option to pay for such Economy Energy provided hereunder in USA dollars or by the return of energy in accordance with this Section 4. Payments shall be made in accordance with the provisions of Section 9.2 of the Interchange Agreement.    

		
	4.1.1
	In the event the Receive elects to return energy to the Supplier as payment for Economy Energy, then the Receiver shall return such energy at a rate equal to 120% of the Unitary Incremental Energy Cost of the supplier.

		
	4.1.2
	In the event the Receiver elects to pay in USA dollars (i) all or any portion of the monthly billing or (ii) all or any portion of the balance in the Open Account established pursuant to Section 4.2.1, then the Receiver shall pay for such Economy Energy at a rate equal to 115% of the Unitary Incremental Cost of the Supplier.

		
	4.1.3
	In the event the Receiver has not made payment for any portion of the Economy Energy provided by the Supplier within five (5) months following the date a monthly billing hereunder becomes due, then the Receiver shall pay for any remaining portion of that monthly billing in USA dollars at a rate equal to 120% of the Unitary Incremental Energy Cost of the Supplier.

		
	4.2
	On or before the date a monthly billing hereunder becomes due, the Receiver shall (i) pay the amount of such billing in USA dollars or (ii) give written notice from the Receiver's member on the Coordination Committee to the Supplier that it elects to compensate the Supplier with energy deliveries in accordance with the provisions of this Section 4; provided, however, that such election may not be made for more than $500,000 (five hundred thousand) USA dollars during any month or for an amount which would cause the balance in the Open Account described in Section 4.2.1 to exceed $2,000,000 (two million) USA dollars.  These limits may be modified periodically by written agreement of the Coordination Committee.

		
	4.2.1
	An Open Account will be established in which the Parties shall enter the value, in USA dollars, of all monthly billings which were not paid when due and in which a Receiver has made the election to return energy as provided by Section 4.1.1 herein. Each Party will also enter into the Open Account all payments made by either Party, whether in USA dollars or by return of energy, in partial or total settlement of the outstanding balance of the Open Account.

		
	4.2.2
	As soon as possible after the end of each month, the Party with a credit balance in the Open Account at the end of each month ("Net Supplier") 

shall submit to the Party with a debit balance in the Open Account at the end of each month ("Net Receiver") a statement showing the settlements and outstanding monthly balances in the Open Account, together with interest accrued thereon.

		
	4.2.3
	The value in USA dollars of energy returned in partial or total settlement of the outstanding balance of the Open Account shall be equal to Receiver's Unitary Decremental Energy Cost associated with the return energy.

		
	4.2.4
	Payments made shall be applied first to the oldest outstanding monthly balance in the Open Account until satisfied.

		
	4.2.5
	The outstanding balance carried at the end of each month in the Open Account shall accrue interest, which shall be entered into the Open Account, at a rate equal to one-twelve (1/12) the sum of the annual LIBOR rate (London Interbank Offered Rate) in effect on the last day of such month, plus two percent (2%).

SECTION 5 – GENERALITIES

		
	5.1
	In the event that this Interchange Service C is terminated, the obligations of the Parties with respect to compensation not paid shall continue in effect until they have been fulfilled.

		
	5.2
	The Interchange Agreement, as amended by this Interchange Service C, remains in full force and effect.

IN WITNESS WHEREOF, the Parties hereto have agreed upon the foregoing and have executed this Interchange Service C in both Spanish and English in several counterparts, and in the cities and dates mentioned hereunder.  

	
			
	EL PASO ELECTRIC COMPANY
	 
	COMISION FEDERAL DE ELECTRICIDAD

	 
	 
	 

	/s/Evern R. Wall
	 
	/s/[ILLEGIBLE]

	 
	 
	 

	Mr. Evern R. Wall
	 
	Ing. Fernando Hiriart Balderrama

	President and Chairman of
	 
	General Director

	the Board
	 
	 

	 
	 
	 

	Date:  April 23, 1987
	 
	Date:  6/iv/87

	 
	 
	 

	Place:  El Paso, Texas
	 
	Place:  Mexico City

INTERCHANGE SERVICE D AGREEMENT
FIRM CAPACITY
COMISION FEDERAL DE ELECTRICIDAD
AND
EL PASO ELECTRIC COMPANY

This Interchange Service D Agreement of Firm Capacity and Associated Energy is executed pursuant the following antecedents and sections:

ANTECEDENTS

I.On April 14, 1982, the "COMISION FEDERAL DE ELECTRICIDAD" (hereinafter called "CFE") and the EL PASO ELECTRIC COMPANY (hereinafter called "EPE") executed an agreement for interchange of electric energy, which is called herein the "Basic Agreement". The Basic Agreement continues to be in effect, pursuant to Section 2.1 thereof.

II.Pursuant to the provisions of Section 5.1 of the Basic Agreement with regard to the Interchange Services, the specific terms and conditions of the services furnished by one Party as the Supplier to the other Party, as the Receiver, shall be fully described in the Agreements called Interchange Services, which, once signed by the authorized officers and approved by the authorities with jurisdiction, shall form a part of the Basic Agreement during the full term of the latter or for a shorter term. Such Interchange Service Agreements may be modified or terminated in accordance with its terms.

III.Pursuant to Section 5 of the Basic Agreement, the following Interchange Service Agreements continue to be in force:

1

Interchange Service A: Emergency Assistance
Interchange Service B: Short-term Firm Capacity
Interchange Service C: Economy Energy

IV.CFE recites that for execution of this Agreement it has obtained authorization from the Ministry of Energy, Mines and State-Owned Industries, with regard to the Law on Public Service of Electric Energy and Regulations derived therefrom, as well as authorization from the Ministry of Commerce and Industrial Promotion, pursuant to that law and its regulations, insofar as they refer to the importation and exportation of electric energy and pursuant to the Law on Acquisitions, Rentals and rendering of Services with regard to Personal Property.

Such assertion is corroborated by certified copies of cited authorizations and same copies which are attached hereto and hereby incorporated by reference.

V.CFE recites that, for execution and performance of this Agreement, it does not need any other governmental permit or authorization from the Federal Government of the Mexican United States.

VI.For its part, EPE, recites that it has permanent registration as a foreign supplier in the Register of the Suppliers authorized by the Federal Public Administration of the Ministry of Programming and Budgeting of the Mexican Federal Government as well as the authorization of the Department of Energy of the Federal Government of the United States of America, no other permit or authorization being required from the Federal Government of the United States of America.

2

VII.EPE, likewise, recites that previous to the date of this Agreement, has delivered to CFE certified copies of the registration and authorization mentioned in the preceding antecedent. CFE acknowledges having received such copies.

VIII.CFE declares that to cover the expenditures to be derived from the present Agreement, CFE will utilize current budget funds as authorized by the Ministry of Programming and Budgeting.

IX.The Parties hereto acknowledge that the authorization of the expenditures referred to in the preceding antecedent apply only to the present budget year of CFE and agree that execution of this Agreement for each of the subsequent budget years shall be subject to the continuance of authorization for the disbursement of funds, that in its case may be granted by the Ministry of Programming and Budgeting.

SECTIONS

SECTION 1 - DEFINITIONS

For purposes of this Agreement, CFE and EPE agree to establish the following conventional definitions:

1.1    "Associated Energy" - For the purposes of this Interchange Service D Agreement, Associated Energy shall mean the energy scheduled by CFE pursuant to Section 4 hereof, associated with Firm Capacity and provided by EPE hereunder.

3

1.2    "Average System Energy Cost" - Shall mean EPE's average cost of energy generated by EPE's system resources and/or purchased by EPE during any invoicing period. Currently, the EL PASO system resources include approximately 793 MW of natural gas, 600 MW of nuclear and 104 MW of coal based resources.

1.3    "CFE-Juárez" - Shall have the meaning stipulated in Section 3.3 of the Basic Agreement and is hereby incorporated by reference.

1.4    "EL PASO" - Shall have the meaning stipulated in Section 3.4 of the Basic Agreement and is hereby incorporated by reference.

1.5    "Firm Capacity" - Shall mean capacity produced and supplied by EPE pursuant to Section 4 hereof, which includes system reserves and is intended to have assured reliability.

1.6    "Firm Capacity Charge" - The monthly charge in United States of America dollars for each KW of Firm Capacity provided hereunder.

1.7    "Associated Energy Cost" - The monthly cost in United States of America dollars for each KWH of energy provided hereunder which consists of the Average System Energy Cost plus fifteen percent (15%), plus the cost of any third party purchase power dedicated to providing service hereunder.

1.8    "Monthly Demand" - The highest hourly metered amount of Firm Capacity for the month subject to a Minimum Monthly Demand charge as defined in Section 1.9.

1.9    "Minimum Monthly Demand" – For invoicing purposes, the Minimum Monthly Demand from May 1, 1991 through December 31, 1991, shall be 40MW for the period of

4

January 1, 1992 through December 31, 1996 such amount shall be 120 MW for the months of October through April and 150 MW for the months of May through September.

In the event the Diablo-Insurgentes facilities are not operational by January 1, 1992, the Minimum Monthly Demand shall be subject to the Parties determination as to the transfer capability, but in no case less than 80 MW.

SECTION 2 - PURPOSE

2.1    The purpose of this Interchange Service D Agreement is to set forth the terms and conditions which will permit transactions of Firm Capacity and Associated Energy between the electric systems of CFE-Juárez and EL PASO. This Interchange Service D Agreement shall permit the contracting Parties hereto to utilize more efficiently the generation of energy, as well as to permit a greater flexibility of generation of energy and convenience of operation.

2.2    Beginning on the date that this Interchange Service D Agreement becomes effective pursuant to Section 3 hereof, EPE shall supply to CFE-Juárez Firm Capacity and Associated Energy pursuant to the terms and conditions hereunder.

SECTION 3 - TERM

3.1    This Interchange Service D Agreement shall take effect once signed by both Parties and shall continue in force through December 31, 1996 and from month to month thereafter unless terminated by either Party by thirty (30) days written notice of termination; provided however, that the Parties shall have the option to extend Firm Capacity service beyond December 31, 1996 subject to mutual agreement of the Parties and negotiations regarding the Firm Capacity Charge and/or amounts of Firm Capacity.

5

SECTION 4 - FIRM CAPACITY AND ASSOCIATED ENERGY

4.1    EPE shall make varying amounts of Firm Capacity and Associated Energy available to CFE and CFE agrees to pay all the corresponding charges in accordance with the conditions in Sections 1.9 and 5 under this Interchange Service D Agreement.

4.2    CFE shall furnish EPE with schedules of its Firm Capacity and Associated Energy requirements from EPE prior to September 1 of each year for the following calendar year. In addition, by the twenty-fifth day of each month, CFE shall furnish EPE with its estimated Firm Capacity and Associated Energy requirements under this Interchange Service D Agreement for the following month.

4.3    In the event of an emergency either Party hereto may interrupt or restrict the supply or receipt of Associated Energy by means of verbal notice to the other Party. For the purposes of this Section 4.3 and in accordance with Section 3.10 of the Basic Agreement, an emergency is any unforeseeable or inevitable temporary circumstance not within the control of the affected Party (such as the loss or reduction of generating or transmission capacity) which affects the system of either of the Parties, which prevents, interferes or jeopardizes the rendering of satisfactory service in the affected system, as a result of any cause other than: (a) Scheduled Maintenance or (b) an anticipated fuel supply deficiency.

4.4    Normal points of delivery shall be at either the Ascarate-Rivereña or Diablo-Insurgentes interconnection points with CFE-Juárez system or other points mutually agreed upon by the Parties.

6

SECTION 5 - BASIS FOR COMPENSATION

5.1    EPE shall provide to CFE and CFE shall pay in United States of America Dollars for Firm Capacity and Associated Energy for the term of this Interchange Service D Agreement as follows:

5.1.1    The Firm Capacity Charge hereunder shall be as indicated below:
	
			
	Period
	 
	Monthly Firm Capacity Charge

	05/01/91 - 12/31/91
	 
	$15.00/KW-month

	01/01/92 - 12/31/92
	 
	$15.60/KW-month

	01/01/93 - 12/31/93
	 
	$16.70/KW-month

	01/01/94 - 12/31/94
	 
	$17.10/KW-month

	01/01/95 - 12/31/95
	 
	$17.50/KW-month

	01/01/96 - 12/31/96
	 
	$17.90/KW-month

5.1.2    Charge for Associated Energy: The charge for Associated Energy shall be calculated using a base energy charge of $0.01870 per KWH.

5.2    Monthly Invoicing: The monthly invoice for services of Firm Capacity and Associated Energy provided by EPE to CFE hereunder shall be the sum of the Firm Capacity Invoicing, plus the Associated Energy Invoicing, plus the Base Energy Charge Invoicing Adjustment as indicated immediately below:

	
		
	Firm Capacity Invoicing:

	The monthly Firm Capacity Charge ($/Kw-month) pursuant to Section 5.1.1 times the Monthly Demand as defined in Section 1.8 hereunder for Firm Capacity. If the Monthly Demand is less than the Minimum Monthly Demand then the Minimum Monthly Demand shall apply.

    

7

	
		
	Associated Energy:
Invoicing
	The base energy charge of $0.01870 times the amount of KWH provided during the invoiced month.

	 
	 

	Base Energy Charge
Invoicing Adjustment:
	The difference between the previous month's Associated Energy Cost and the base energy charge times the amount of KWH provided in that month.

For the convenience of the Parties, examples of monthly invoicing are included in Exhibit A, attached hereto and hereby incorporated by reference.

5.3    The Parties hereto acknowledge that the authorization for the expenditures to be derived from the present Agreement granted by the Ministry of Programming and Budgeting to CFE correspond only to the preset budget year and agree that execution of this Agreement for each of the subsequent budget years shall be subject to the continuance of authorization for the disbursement of funds that in its case may be granted by the Ministry of Programming and Budgeting.

5.4    Within ten (10) calendar days following the end of each month and for each month during the term of this Interchange Service D Agreement, EPE shall bill CFE and CFE shall pay to EPE for Firm Capacity and Associated Energy precisely in United States of America dollars and at the bank in the United States of America that from time to time EPE indicates to CFE, within twenty-one (21) calendar days upon the receipt of such invoice. The payments shall be made for the total Monthly Invoicing amount pursuant to Section 5.2 hereunder.

SECTION 6 - GENERAL STANDARDS

6.1    In the event this Interchange Service D Agreement is terminated, the obligations of CFE with regard to unpaid compensation shall continue until they haven fully paid.

8

6.2    The Basic Agreement executed between the Parties, and except for the amendments thereto agreed in this Interchange Service D Agreement shall continue in full force and effect.

6.3    In the event of any discrepancy between the provisions of the Basic Agreement and those agreed herein, the provisions of this Interchange Service D Agreement shall prevail, as provided in Section 7.1 of the Basic Agreement.

IN TESTIMONY WHEREOF the Parties hereto have signed this Interchange Service D both in Spanish and in English in several counterparts and, in the cities and on the dates which follow.

	
			
	EL PASO ELECTRIC COMPANY
	 
	COMISION FEDERAL DE ELECTRICIDAD

	 
	 
	 

	/s/David H. Wiggs, Jr.
	 
	/s/[ILLEGIBLE]

	 
	 
	 

	David H. Wiggs, Jr.
	 
	Ing. Guillermo Guerrero Villalobos

	CEO, Chairman and President
	 
	Director General

	the Board
	 
	 

	 
	 
	 

	Date:  March 18, 1991
	 
	Date: 3 de abril de 1991

	Place:  El Paso, Texas
	 
	Place:  Mexico City

9

INTERCHANGE SERVICE D AGREEMENT
FIRM CAPACITY
COMISION FEDERAL DE ELECTRICIDAD
AND
EL PASO ELECTRIC COMPANY

Exhibit A

Examples of Monthly Invoicing

For the convenience of the Parties, examples of monthly invoicing are included in this Exhibit A.

	
			
	
	 
	El Paso Electric Company
P.O.Box 982
El Paso.Texas 79960
(915) 543-5711

    
Exhibit A
Page 1 of 3

COMISION FEDERAL DE ELECTRICIDAD    March 18, 1991

Invoice for Firm Capacity and Associated Energy for the month of ________ 1991 pursuant to the EPE-CFE Interchange Service D Agreement.

Account Number 2146-1000-01

	
					
	Firm Capacity Invoicing:
	 
	 

	40,000 KW of Demand @ $15.00/KW
	$
	600,000.00
	

	 

	 
	 
	 

	Associated Energy Invoicing:
	 
	 

	20,440,000 KWH @ $0.0187/KWH
	$
	382,228.00
	

	 

	 
	 
	 

	Base Energy Charge Invoicing Adjustment:
	 
	 

	19,000,000 KWH @ ($0.0157/KWH - $0.0187/KWH)
	$
	57,000.00
	

	cr

	 
	 
	 

	 
	 
	 

	Total
	$
	925,228.00
	

	 

Date of receipt    

Signature    

Please Remit Payment to:
First City National Bank of El Paso
Routing Transit No. 1120-2233-2
Credit El Paso Electric Company
Account No. 4500474

For illustration purposes only

	
			
	
	 
	El Paso Electric Company
P.O.Box 982
El Paso.Texas 79960
(915) 543-5711

Exhibit A
Page 2 of 3

COMISION FEDERAL DE ELECTRICIDAD    March 18, 1991

Invoice for Firm Capacity and Associated Energy for the month of ________ 1991 pursuant to the EPE-CFE Interchange Service D Agreement.

Account Number 2146-1000-01

	
					
	Firm Capacity Invoicing:
	 
	 

	120,000 KW of Demand @ $15.60/KW
	$
	1,872,000.00
	

	 

	 
	 
	 

	Associated Energy Invoicing:
	 
	 

	61,320,000 KWH @ $0.0187/KWH
	$
	1,146,684.00
	

	 

	 
	 
	 

	Base Energy Charge Invoicing Adjustment:
	 
	 

	60,000,000 KWH @ ($0.0185/KWH - $0.0187/KWH)
	$
	12,000.00
	

	cr

	 
	 
	 

	 
	 
	 

	Total
	$
	3,006,684.00
	

	 

Date of receipt    

Signature    

Please Remit Payment to:
First City National Bank of El Paso
Routing Transit No. 1120-2233-2
Credit El Paso Electric Company
Account No. 4500474

For illustration purposes only

	
			
	
	 
	El Paso Electric Company
P.O.Box 982
El Paso.Texas 79960
(915) 543-5711

Exhibit A
Page 3 of 3

COMISION FEDERAL DE ELECTRICIDAD    March 18, 1991

Invoice for Firm Capacity and Associated Energy for the month of ________ 1991 pursuant to the EPE-CFE Interchange Service D Agreement.

Account Number 2146-1000-01

	
					
	Firm Capacity Invoicing:
	 
	 

	150,000 KW of Demand @ $16.70/KW
	$
	2,505,000.00
	

	 

	 
	 
	 

	Associated Energy Invoicing:
	 
	 

	76,650,000 KWH @ $0.0187/KWH
	$
	1,433,355.00
	

	 

	 
	 
	 

	Base Energy Charge Invoicing Adjustment:
	 
	 

	71,000,000 KWH @ ($0.0217/KWH - $0.0187/KWH)
	$
	213,000.00
	

	cr

	 
	 
	 

	 
	 
	 

	Total
	$
	4,151,355.00
	

	 

Date of receipt    

Signature    

Please Remit Payment to:
First City National Bank of El Paso
Routing Transit No. 1120-2233-2
Credit El Paso Electric Company
Account No. 4500474

For illustration purposes only

INTERCHANGE AGREEMENT
BETWEEN
EL PASO ELECTRIC COMPANY
AND
COMISION FEDERAL DE ELECTRICIDAD
OPERATING PROCEDURE No. 1
Revision No. 1

OPERATING PROCEDURES OF INTERCONNECTIONS AND UNITS BLACK
START ASSISTANCE.

1.PURPOSE:

Section 6.7.4 of the Interconnection Agreement ( Agreement ) between El Paso Electric Company ( EPE ) and Comision Federal de Electricidad ( CFE ), authorize the Coordinating Committee to determine operating rules and procedures to provide service under the Agreement. Operating Procedure No. 1 will provide the rules for the interchange of energy under the Interchange Agreement; and will also provide for black start interchange assistance.

1

2.INTERCONNECTION OPERATING PROCEDURES:

Under normal operating conditions, the interchange of energy will be maintained using the two interconnections. Under emergency conditions, assistance will be requested and energy will be taken subject to the supplying party conditions, such energy will be accounted as emergency energy pursuant to Section 4 of Interchange Service A.

3.BLACK START ASSITANCE:

During the time of emergency conditions and requirement of black start assistance, the party needing such power will inform the supplying party of the situation and will receive, with such notice only, 10 MW for black start, such power will not be accounted under any other type of interchange but will be compensated pursuant to Section 4 of Interchange Service A.

	
			
	APPROVED
	 
	APPROVED

	EL PASO ELECTRIC COMPANY
	 
	COMISION FEDERAL DE ELECTRICIDAD

	 
	 
	 

	/s/John A. Whitacre
	 
	/s/[ILLEGIBLE]

	 
	 
	 

	John A. Whitacre
	 
	Ing. Augusto Avalos Reyna

	Assistant Vice-President
	 
	Jefe Centro de Control

	System Operations
	 
	Area Norte

	 
	 
	 

	Date: 02 July 1991
	 
	 

	 
	 
	 

	City:  Gómez Palacio, Durango, México.
	 
	 

2

	
						
	 	

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

3

INTERCHANGE AGREEMENT
BETWEEN
EL PASO ELECTRIC COMPANY
AND
COMISION FEDERAL DE ELECTRICIDAD

OPERATING PROCEDURE NO. 2
COORDINATION OF SERVICES
REVISION NO. 1

		
	1.
	PURPOSE:

Pursuant to Section 6.7.4 of the Interchange Agreement between El Paso Electric Company (EPE) and Comision Federal de Electricidad (CFE), the Coordinating Committee is authorized to determine operating rules and procedures to provide service under the Interchange Agreement. Operating Procedure No. 2 will allow for the common provision of various interchange services between the parties and will simplify their accountability.

		
	2.
	INTERCHANGE SERVICES:

The parties have agreed to the following interchange services:
	
		
	a.
	Interchange Service A-Emergency Assistance

	b.
	Interchange Service B-Short-Term Capacity

	c.
	Interchange Service C-Economy Energy

	d.
	Interchange Service D-Firm Capacity

1

3.PROCEDURES FOR THE INTERCHANGE OF SERVICES:
		
	a.
	Firm Capacity Service is a service with priority and assured reliability to CFE, as such it is a basic service.

Firm Capacity Service has priority over the interchange of economy energy and other transactions with CFE, unless the parties agree otherwise.

When Economy Energy and/or Emergency Assistance is required in addition to Firm Capacity, the parties will follow the procedures listed in paragraphs (3.b) and (3.c).

		
	b.
	Emergency Assistance is a service with priority and will be available to the parties upon mutual agreement of the system operators and will be under the terms and conditions of Interchange Service A and according to the following procedures:

		
	1)
	The requesting party will notify the supplying party's system operator of the need for Emergency Assistance, type of emergency, amount, point(s) of delivery and estimated duration of the emergency.

		
	2)
	The supplying party will provide Emergency Assistance to the requesting party as mutually agreed. During the time when EPE provides Emergency Assistance and Firm Capacity to CFE, the energy delivered to CFE will be considered as associated energy to Firm Capacity until the Maximum Energy Demand of 

2

Firm Capacity is reached by CFE during a period of time. The Maximum Energy Demand of CFE is the agreed upon Forecasted Maximum Demand for the period and all energy associated with such demand assuming a 100 percent load factor. Any energy delivered to CFE over the Maximum Energy Demand will be considered as service under Emergency Assistance and will be treated as such, unless the parties agree otherwise.

		
	c.
	Economy Energy Service is a nonfirm service with a reduced priority which may be interrupted by the supplying party with a minimum prior notice to the other party.    This service will be delivered pursuant to Interchange Service C and the following procedures:

		
	1)
	The requesting party will notify the supplying party's system operator of the need to purchase Economy Energy including the amount, point(s) of delivery and estimated duration of purchase.

		
	2)
	The supplying party will provide Economy Energy to the requesting party as mutually agreed.    During the time EPE provides Economy Energy and Firm Capacity to CFE, the energy delivered to CFE will be considered as associated energy to Firm Capacity until the Maximum Energy Demand of Firm Capacity is reached by CFE during a period of time. The Maximum Energy Demand of CFE is the agreed upon Forecasted Maximum Demand for the period and all energy associated with such demand assuming a 100 percent load factor. Any energy 

3

delivered to CFE over the Maximum Energy Demand will be considered as Economy Energy Service and will be treated as such, unless the parties agree otherwise.

		
	3)
	In the event of an emergency in EPE's system, EPE will notify CFE of such an emergency and if CFE can not reduce the demand of economy energy during the next hour of receiving such notification from EPE, EPE may take any action it considers necessary to preserve its system.

		
	4.
	MONTHLY BILLING FOR INTERCHANGE SERVICES: When a combination of services occur during a month, the billing of each service will be determined as follows:

		
	a.
	Firm Capacity only. The monthly billing will be determined using the actual maximum demand during a billing period, pursuant to Interchange Service D, plus the associated energy delivered during the month.

Pursuant to section 4.3 of Interchange Service D, when upon EPE's request a reduction in firm capacity is made, CFE may request a meeting to agree upon the adjustment to the Monthly Demand component of the monthly Firm Capacity Invoicing.

		
	b.
	Firm Capacity and Economy Energy. The monthly billing for Firm Capacity will be determined by the Forecasted Maximum Demand and its associated energy. The Forecasted Maximum Demand is an agreed to amount equal to or greater than the Minimum Monthly Demand established in Interchange Service D that CFE and EPE set on or before the first day of the month for that month's billing cycle. This agreement may be increased by the Parties if system conditions 

4

develop that would affect the agreed to amount. The remaining energy will be considered Economy Energy using paragraph (3.c.2.) and will be billed pursuant to Interchange Service C.

		
	c.
	Firm Capacity and Emergency Assistance. The monthly billing for firm capacity will be determined in accordance with the Forecasted Maximum Demand and its associated energy as described in paragraph (4.b). The remaining energy will be treated as Emergency Assistance using paragraph (3.b.2) and will be billed pursuant to Interchange Service A.

		
	d.
	Firm Capacity, Economy Energy and Emergency Assistance. The monthly billing for the combination of Firm Capacity and Economy Energy and/or Emergency Assistance will be the sum determined as described in paragraphs (4b) and (4c).

	
			
	Approved By
	 
	Approved By

	 
	 
	 

	El Paso Electric Company
	 
	Comisión Federal De Electricidad

	 
	 
	 

	/s/John A. Whitacre
	 
	/s/[ILLEGIBLE]

	 
	 
	 

	John A. Whitacre
	 
	Ing. Augusto Avalos Reyna

	Assistant Vice-President
	 
	Jefe Centro de Control

	System Operations
	 
	Area Norte

	 
	 
	 

	Date: 12 May 1993
	 
	 

	 
	 
	 

	City:  Gómez Palacio, Durango, México
	 
	 

5

INTERCHANGE AGREEMENT
BETWEEN
EL PASO ELECTRIC COMPANY
AND
COMISION FEDERAL DE ELECTRICIDAD
OPERATING PROCEDURE No. 3
COMMUNICATION AND COORDINATION
OF
SYSTEM OPERATIONS

1.PURPOSE:

Pursuant to Section 6.7.4 of the Interchange Agreement between El Paso Electric Company (EPE) and Comisión Federal de Electricidad (CFE), the Coordinating Committee is authorized to determine operating rules and procedures to provide service under the Interchange Agreement. The Parties believe that improved communication and coordination activities will minimize the effects to the extent possible of electrical disturbances that occur on one Party's system from affecting the other Party's system. This Operating Procedure No. 3 is established to promote greater communication and coordination under the different operating system conditions that would reduce the system reliability as defined by WSCC reliability criteria.

2.PROCEDURES FOR SWITCHING COORDINATION:

2.1    Switching under normal system conditions:

		
	2.1.1
	Each Party shall provide the other Party with a minimum twenty­-four (24) hour notice prior to initiating any planned switching procedures regarding transmission lines, transformers or generators that could affect the reliability of the parties interconnected operations.

1

		
	2.1.2
	Each Party shall provide the other Party with a minimum twenty-four (24) hour notice prior to any scheduled or planned outages that might affect the quality of service to that Party's customers.

2.2    Switching under emergency conditions:

		
	2.2.1
	When possible, emergency switching that may affect interconnected operations shall be coordinated between the Parties' respective system controllers prior to switching taking place.

		
	2.2.2
	In any event, emergency switching activities that may affect interconnected operations shall be communicated to the Party as soon as practical following the switching activity.

3.COMMUNICATIONS:

3.1    Communication checks during normal operations:

		
	3.1.1
	The Parties shall notify each other of scheduled switching operations within the interconnected area.

3.2    Communications checks during an emergency:

		
	3.2.1.
	System controllers of CFE shall notify EPE when there is an emergency in the CFE system that may affect EPE operations.

		
	3.2.2.
	System controllers of EPE shall notify CFE when there is an emergency in the EPE system that may affect CFE operations.

		
	3.3
	The communication contemplated in 3.1 and 3.2 above is to be accomplished with existing telephone circuits. Contact is to be made between the system controllers as soon as possible upon the occurrence of an emergency condition as determined by each Party.

		
	4.
	The Parties shall meet at least once a quarter to facilitate greater communication and coordination of operations affecting interconnected operations.

2

		
	5.
	Exhibit A is a list of contacts that shall be used during system operations. This exhibit shall be revised during the quarterly meetings described in Section 4 above and shall be updated as appropriate.

		
	6.
	Following a system disturbance affecting interconnected operations, the Parties shall meet within fifteen (15) days thereafter to exchange technical operating data information and, if deemed necessary, set another meeting date to investigate such disturbance and initiate activities that will prevent future disturbances of a similar nature or mitigate the effects of such disturbances if prevention is impractical.

	
			
	APPROVED
	 
	APPROVED

	 
	 
	 

	El Paso Electric Company
	 
	Comisión Federal De Electricidad

	 
	 
	 

	/s/John A. Whitacre
	 
	/s/[ILLEGIBLE]

	 
	 
	 

	John A. Whitacre
	 
	Ing. Augusto Avalos Reyna

	Assistant Vice President
	 
	Jefe del Centro de Control

	System Operations
	 
	Area Norte

	 
	 
	 

	Date: 12 Mayo 1993
	 
	 

	 
	 
	 

	City:  Gómez Palacio, Dgo. México
	 
	 

3

INTERCHANGE AGREEMENT
BETWEEN
EL PASO ELECTRIC COMPANY
AND
COMISION FEDERAL DE ELECTRICIDAD
OPERATING PROCEDURE No. 3
COMMUNICATION AND COORDINATION OF
SYSTEM OPERATIONS

EXHIBIT A

COMISION FEDERAL DE ELECTRICIDAD CONTACTS

	
			
	NAME
	FUNCTION
	TELEPHONE

	System Controller
On Duty
	(24 Hours)
	(011-52-16) 15-44-19

	 
	 
	 

	Ing. Adrián Aguirre
	Jefe del Departamento de
Operaciones
	(011-52-16) 15-44-79
Cellular
(011-52-16) 28-11-95

	 
	 
	 

	Ing. Armando Fernández
	Jefe del Departamento
Subárea Cd. Juárez
	(011-52-16) 15-47-14
Cellular
(011-52-16) 28-26-01

EL PASO ELECTRIC COMPANY CONTACTS

	
			
	NAME
	FUNCTION
	TELEPHONE

	 
	 
	 

	System Controller
On Duty
	(24 Hours)
	(915) 543-5890

	 
	 
	 

	Mr. Bill Massie
	Supervisor-System Control
	(915) 543-5887
Cellular
(915) 525-8093

	 
	 
	 

	Mr. John A. Whitacre
	Assistant Vice President
System Operations
	(915) 543-5888
Cellular
(915) 525-8094

	
			
	APPROVED
	 
	APPROVED

	 
	 
	 

	El Paso Electric Company
	 
	Comisión Federal De Electricidad

	 
	 
	 

	/s/John A. Whitacre
	 
	/s/[ILLEGIBLE]

	 
	 
	 

	John A. Whitacre
	 
	Ing. Augusto Avalos Reyna

	Assistant Vice President
	 
	Jefe del Centro de Control

	System Operations
	 
	Area Norte

1

INTERCHANGE SERVICE E AGREEMENT
BLOCK ENERGY
COMISION FEDERAL DE ELECTRICIDAD
AND
EL PASO ELECTRIC COMPANY

This Interchange Service E Agreement of Block Energy is executed pursuant the following antecedents and sections:

ANTECEDENTS

		
	I.
	On April 14, 1982, the "COMISION FEDERAL DE ELECTRICIDAD" (hereinafter called "CFE") and the EL PASO ELECTRIC COMPANY (hereinafter called "EPE") executed an agreement for interchange of electric energy, which is called herein the "Basic Agreement". The Basic Agreement continues to be in effect, pursuant to Section 2.1 thereof.

		
	II.
	Pursuant to the provisions of Section 5.1 of the Basic Agreement with regard to the Interchange Services, the specific terms and conditions of the services furnished by one Party as the Supplier to the other Party, as the Receiver, shall be fully described in the Agreements called Interchange Services, which, once signed by the authorized officers and approved by the authorities with jurisdiction, shall form a part of the Basic Agreement during the full term of the latter or for a shorter term. Such Interchange Service Agreements may be modified or terminated in accordance with its terms.

		
	III.
	Pursuant to Section 5 of the Basic Agreement, the following Interchange Service Agreements continue to be in force:

	
		
	Interchange Service A: 
	Emergency Assistance

	 
	 

	Interchange Service B:
	Short-term Firm Capacity

1

	
		
	Interchange Service C: 
	Economy Energy

	 
	 

	Interchange Service D: 
	Firm Capacity

		
	IV.
	CFE recites that for execution of this Agreement it is in the process of obtaining authorization and in some cases has obtained authorization from the Ministry of Energy, with regard to the Law on Public Service of Electric Energy and Regulations derived therefrom, as well as authorization from the Secretaria de Hacienda y Credito Publico, pursuant to that law and its regulations, insofar as they refer to the importation and exportation of electric energy, and to the 1995 Budget Authorization, and pursuant to the Law on Acquisitions, Rentals and rendering of Services with regard to Personal Property. Such assertion is corroborated by certified copies of cited authorizations and same copies which are attached hereto and hereby incorporated by reference.

		
	V.
	CFE recites that, for execution and performance of this Agreement, it does not need any other governmental permit or authorization from the Federal Government of the United States of Mexico.

		
	VI
	For its part, EPE, recites that it has the authorization of the Department of Energy of the Federal Government of the United States of America, no other permit or authorization being required from the Federal Government of the United States of America.

		
	VII.
	EPE, likewise, recites that previous to the date of this Agreement, has delivered to CFE certified copies of the registration and authorization mentioned in the preceding antecedent    CFE acknowledges having received such copies.

2

		
	VIII.
	CFE declares that to cover the expenditures to be derived from the present Agreement, CFE will utilize current budget funds as authorized by the Secretaria de Hacienda y Credito Publico.

		
	IX.
	The signatories hereto represent that they have been duly authorized to enter into this Agreement on behalf of the Party for which they sign, as corroborated by documentation attached and made part of this document.

SECTIONS

SECTION 1 - DEFINITIONS

For purposes of this Agreement, CFE and EPE agree to establish the following conventional definitions:

		
	1.1
	"Block Energy" - For purposes of this Interchange Service E Agreement, "Block Energy" shall be energy scheduled by CFE in accordance with Section 4 of this Agreement, associated with a corresponding amount of capacity provided by EPE.

		
	1.2
	"CFE-Juárez" - Shall have the meaning stipulated in Section 3.3 of the Basic Agreement and is hereby incorporated by reference.

		
	1.3
	"EL PASO" - Shall have the meaning stipulated in Section 3.4 of the Basic Agreement and is hereby incorporated by reference.

		
	1.4
	"Block Energy Cost" - The monthly charge in United States of America dollars for each KWH of energy in accordance with the rate in Section 5.1.2.

3

SECTION 2 - PURPOSE

		
	2.1
	The purpose of this Interchange Service E Agreement is to set forth the terms and conditions which will allow for transactions of Block Energy between the electric systems of CFE-Juárez and EL PASO. This Interchange Service E Agreement shall permit the contracting Parties hereto to utilize more efficiently the generation of energy, as well as to permit a greater flexibility of generation of energy and convenience of operation.

		
	2.2
	Beginning on the date that this Interchange Service E Agreement becomes effective pursuant to Section 3 hereof, EPE shall supply to CFE-Juárez Block Energy pursuant to the terms and conditions hereunder.

SECTION 3 - TERM

		
	3.1
	This Interchange Service E Agreement shall, upon execution by both Parties, become effective as of June 1, 1995 and shall continue through September 30, 1995 and upon mutual agreement, may continue thereafter on a month-to-month basis but under no circumstance shall extend beyond December 31, 1995.

SECTION 4 - BLOCK ENERGY

		
	4.1
	EPE shall make available varying amounts of Block Energy up to 50 MW to CFE in accordance with Section 1.1 and CFE agrees to pay all the corresponding charges in accordance with the conditions in Section 5 under this Interchange Service E Agreement.

		
	4.2
	CFE shall furnish EPE with schedules of its Block Energy requirements from EPE by 12:00 pm Mountain Standard Time (MST) the day before such schedule is to be

4

 effective. Schedules may be also made on a weekly or monthly basis. Schedules of Block Energy shall be subordinate to and shall be deemed as amounts in excess of the Minimum Monthly Demand for Firm Capacity pursuant to Interchange Service Schedule D Agreement.

		
	4.3
	In the event of an emergency (as defined in Section 4.3 of the Interchange Service D Agreement) during the term of this Interchange Service Schedule E Agreement, either Party may interrupt or restrict the supply or receipt of Block Energy by means of verbal notice to the other Party. The Parties agree that EPE will first curtail or interrupt CFE's schedules of Economy Energy, then Block Energy if necessary, prior to interrupting CFE's schedules of Firm Capacity.

		
	4.4
	Points of delivery shall be the Ascarate-Riverena and/or Diablo-Insurgentes interconnection points with CFE-Juárez system or other mutually agreed upon points.

SECTION 5 – BASIS FOR COMPENSATION

		
	5.1
	EPE shall provide to CFE and CFE shall pay in United States of America Dollars for Block Energy for the term of this Interchange Service E Agreement as follows:

		
	5.1.2
	Block Energy Charge: The charge for Block Energy shall be $35.00 United States of America dollars per megawatt hour delivered under this Agreement.

		
	5.2
	Within ten (10) calendar days following the end of each month and for each month during the term of this Interchange Service E Agreement, EPE shall bill CFE and CFE shall pay to EPE for Block Energy precisely in United States of America dollars and at the bank in the United States of America that from time to time EPE indicates to CFE, within twenty-one (21) calendar days upon the receipt of such invoice.

5

SECTION 6 - GENERAL STANDARDS

		
	6.1
	In the event this Interchange Service E Agreement is terminated, the obligations of CFE with regard to unpaid compensation shall continue until they have been fully paid.

		
	6.2
	The Basic Agreement executed between the Parties, except for modifications agreed to in this Interchange Service E Agreement, shall continue in full force and effect.

		
	6.3
	In the event of any discrepancy between the provisions of the Basic Agreement and those agreed herein, the provisions of this Interchange Service E Agreement shall prevail, as provided in Section 7.1 of the Basic Agreement.

IN TESTIMONY WHEREOF the Parties hereto have signed this Interchange Service E Agreement both in Spanish and in English on this      day of July 1995.

	
			
	EL PASO ELECTRIC COMPANY
	 
	COMISION FEDERAL DE ELECTRICIDAD

	 
	 
	 

	/s/[ILLEGIBLE]
	 
	/s/[ILLEGIBLE]

	 
	 
	 

	John C. Horne
	 
	Ing. Enrique Villanueva Landeros

	Vice President
	 
	Subdirector de Transmision-

	 
	 
	Transformacion Y Control

	 
	 
	 

	 
	 
	/s/[ILLEGIBLE]

	 
	 
	Ing. Raymundo Campos Milan

	 
	 
	Coordinador del CENACE

    

Translation Certification on back.

6

I, ELENA MILÁN REYES, expert translator acknowledged by the Superior Court of Justice of the Federal District of Mexico as proven by the Judiciary Gazette of March 31, 1995, CERTIFY THAT: to the best of my knowledge and belief this is a true, correct and complete translation of he original document that was brought before me.

México, Distrito Federal, August 2, 1995

	
			
	 
	 
	/s/Elena Milan

	 
	 
	ELENA MILÁN REYES

	 
	 
	Ave. Copilco 76-A10-503

        

CONVENIO DE SERVICIO DE INTERCAMBIO E
BLOQUES DE ENERGIA
QUE CELEBRAN
COMISION FEDERAL DE ELECTRICIDAD
Y
EL PASO ELECTRIC COMPANY

El presente Convenio de Servicio de Intercambio E de Bloques de Energía lo celebran las partes arriba indicadas de acuerdo con las siguientes antecedentes y secciones:

ANTECEDENTES

I.    El 14 de abril de 1982, la "COMISION FEDERAL DE ELECTRICIDAD" (en adelante identificada como "CFE") y EL PASO ELECTRIC COMPANY (en adelante identificada como "EPE"), celebraron un convenio para el intercambio de energía eléctrica, el cual aquí se identificará como el "Convenio Básico". Tal convenio continúa en vigor de conformidad con la Sección 2.1 del mismo.

II.     De acuerdo con las estipulaciones de la Sección 5.1 del Convenio Básico en relación con los servicios de intercambio, los términos y condiciones específicas de los servicios a ser proveídos por una de las partes como Proveedor a la otra parte como Receptor, se describen en detalle en los convenios denominados Servicios de Intercambio, los cuales, han sido firmados por funcionarios autorizados y aprobados por las autoridades competentes y forman parte integral del Convenio Básico durante toda la vigencia de este último o por un término más corto. Tales Convenios de Servicio de intercambio pueden ser modificados o terminados de acuerdo a lo estipulado en los mismos.

III.     De acuerdo con la Sección 5 del Convenio Básico, los siguientes convenios de Servicio de Intercambio continúan en vigor:
	
		
	Servicio de Intercambio A: 
	Asistencia en Emergencia.

	 
	 

	Servicio de Intercambio B: 
	Capacidad Firme a Corto Plazo.

2

	
		
	Servicio de Intercambio C: 
	Energía Económica;

	 
	 

	Servicio de Intercambio D: 
	Capacidad Firme y Energía Asociada

IV.     CFE declara, que para la celebración de este convenio está tramitando y en algunos casos ya ha obtenido autorización por parte de la Secretaría de Energía, por lo que toca a la Ley del Servicio Público de Energía Eléctrica y su Reglamento; y por parte de la Secretaría de Hacienda y Crédito Público por lo que se refiere a la importación y exportación de energía eléctrica y a la autorización presupuestal para 1995, de conformidad con la Ley de Aduanera y con la Ley de Presupuesto, Contabilidad y Gasto Público. Tal aseveración se corrobora con copias certificadas de las solicitudes y autorizaciones obtenidas, mismas copias que se agregan al presente convenio.

V.     Igualmente, CFE declara que para la celebración y firma de este convenio, no requiere ningún otro permiso o autorización por parte del Gobierno Federal de los Estados Unidos Mexicanos.

VI.     Por su parte EPE declara que cuenta con la autorización del Departamento de Energía del Gobierno Federal de los Estados Unidos de América y que para la celebración de este convenio no requiere ningún otro permiso o autorización del Gobierno Federal, Estatal o Local de los Estados Unidos de América.

VII     De igual forma EPE declara, que previamente a la fecha de este Convenio, ha entregado a CFE copias certificadas de la autorización mencionada en el antecedente inmediato anterior.

VIII     CFE declara que para cubrir las erogaciones que se deriven del presente Convenio, utilizará los fondos de la correspondiente partida presupuestal autorizada por la Secretaría de Hacienda y Crédito Público.

3

IX     Los representantes de cada una de las Partes declaran que han sido autorizados por sus respectivas empresas para suscribir este Convenio y cuentan con facultades legales suficientes para este efecto, conforme a la documentación que exhiben y se agrega al presente Convenio como anexo.

S E C C I O N E S

SECCION 1 - DEFINICIONES

Para los efectos de este convenio, CFE y EPE convienen en establecer las siguientes definiciones convencionales:

1.1.         "Bloque de Energía." Para propósito de este Convenio de Servicio de intercambio E, "Bloque de Energía" significará la energía programada por CFE de acuerdo a la Sección 4 de este convenio, relacionada con una cantidad de capacidad correspondiente y proporcionada por EPE bajo este convenio.

1.2.         "CFE-Juárez". Tendrá el significado estipulado en la Sección 3.3 del Convenio Básico, y misma sección que se incorpora aquí por referencia, tal y como si se insertara a la letra.

1.3.         "El Paso. Tendrá el significado estipulado en la Sección 3.4 del Convenio Básico, y misma sección que se incorpora aquí por referencia, tal y como si se insertara a la letra.

1.4.         "Costo por Bloque de Energía". El costo mensual en dólares de los Estados Unidos de América por cada KWh de la energía, al precio que se conviene en la Sección 5.1.2.

SECCION 2 - PROPOSITO

2.1         El propósito de este Convenio de Servicio de intercambio E es el señalar los términos y

4

 condiciones que permitirán transacciones de Bloques de Energía entre los sistemas eléctricos de CFE-Juárez y EL PASO. Este Convenio de Servicio de Intercambio E permitirá a las partes contratantes el utilizar más eficientemente la generación de energía, así como permitir una mayor flexibilidad de generación de energía y conveniencia de operación.

2.2     A partir de la fecha en que este Convenio de Servicio de Intercambio E entre en vigor de acuerdo a su Sección 3, EPE suministrara a CFE-Juárez Bloques de Energía, de acuerdo con las condiciones y términos estipulados en este convenio.

SECCION 3 - VIGENCIA

3.1     Este Convenio de Servicio de Intercambio E entrará en vigor después de firmado por ambas partes contratantes a partir del 1° de junio de 1995 y continuará vigente hasta el 31 de septiembre de 1995, y de mutuo acuerdo podrá extenderse de tal fecha en adelante, de mes a mes, pero por ninguna circunstancia más allá del 31 de diciembre de 1995.

SECCION 4 - BLOQUES DE ENERGÍA

4.1     EPE pondrá a disposición de CFE cantidades variables de energía hasta por 50 MW de Bloque de Energía, y CFE se compromete a cubrir los cargos correspondientes de acuerdo con las condiciones establecidas en las secciones 1.1 y 5 de este Convenio de Servicio de Intercambio E.

4.2     CFE deberá proporcionar a EPE sus programas de Bloque de Energía a las 12:00 P.M. Tiempo de la Montaña, del día anterior al que se haga efectiva la programación. Tales programas deberán formularse con una base semanal o mensual. Los programas de Bloque de Energía deberán ser considerados en exceso a la Demanda Mínima Mensual de Capacidad Firme, de acuerdo al Convenio de Servicio de Intercambio D.

5

4.3     En caso de una Emergencia (como se le define en la Sección 4.3. del Convenio de Servicio de Intercambio D) que ocurra durante el plazo de vigencia de este Convenio de Servicio de Intercambio E, cualquiera de las Partes contratantes puede interrumpir o restringir el suministro o recepción del Bloque de Energía mediante aviso verbal a la otra Parte contratante. Las Partes contratantes están de acuerdo en que EPE cortará o interrumpirá primero la Energía Económica, después el Bloque de Energía y por último, de ser necesario, la Capacidad Firme programada por CFE, conforme al convenio de servicio de intercambio que corresponda.

4.4     Los puntos de entrega serán los puntos de las interconexiones Ascárate-Rivereña y/o Diablo-Insurgentes, con el sistema CFE-Juárez u otros puntos que sean mutuamente convenidos.

SECCION 5 - BASES PARA LA COMPENSACION

5.1     EPE suministrará a CFE y ésta pagará a EPE el Bloque de Energía en dólares de los Estados Unidos de América durante el plazo de vigencia de este Convenio de Servicio de Intercambio E, como se pasa a señalar:

5.1.2  Cargo por Bloque de Energía: El cargo por Bloque de Energía Asociada se calculará a razón de $35.00 Dólares de los Estados Unidos de América, por megawatt hora que se suministre en el Bloque de Energía conforme a este Convenio de Servicio de Intercambio.

5.2     Dentro de los días (10) días de calendario siguientes al final de cada mes y por cada mes durante la vigencia de este Convenio de Servicio de Intercambio E, EPE facturará a CFE y ésta pagará a EPE por Bloque de Energía, precisamente en dólares, moneda legal de los Estados Unidos de América y en el banco en los Estados Unidos de América que le indique EPE a CFE, y dentro de los 21 (veintiún) días de calendario a la recepción de la factura.

6

SECCION 6 - ESTANDARES GENERALES

6.1     En el caso de que este Convenio de Servicio de Intercambio E se termine, las obligaciones de CFE respecto a compensación no pagada a EPE subsistirán hasta que tal compensación haya sido totalmente pagada.

6.2     El Convenio Básico celebrado entre las partes y salvo por las modificaciones a tal convenio que se estipulen en este Convenio de Servicio de Intercambio E, continuarán en vigor en sus términos originales.

6.3     En caso de cualquier discrepancia entre lo estipulado en el Convenio Básico y lo estipulado en este convenio, prevalecerán las disposiciones de este Convenio de Servicio de Intercambio E, como se señala en la Sección 7.1 del Convenio Básico.

En testimonio de lo cual las partes contratantes firman este Convenio en español y en ingles el día          de julio de 1995.

	
			
	EL PASO ELECTRIC COMPANY
	 
	COMISION FEDERAL DE ELECTRICIDAD

	 
	 
	 

	/s/[ILLEGIBLE]
	 
	/s/[ILLEGIBLE]

	 
	 
	 

	John C. Horne
	 
	Ing. Enrique Villanueva Landeros

	Vicepresident
	 
	Subdirector de Transmisión, Transformación 

	 
	 
	y Control

	 
	 
	 

	 
	 
	/s/[ILLEGIBLE]

	 
	 
	Ing. Raymundo Campos Milán

	 
	 
	Coordinador del CENACE

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