SUNZIA SOUTHWEST TRANSMISSION PROJECT PROJECT UPDATE NEW MEXICO RETA David Getts General Manager SouthWestern Power Group

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1 SUNZIA SOUTHWEST TRANSMISSION PROJECT David Getts General Manager SouthWestern Power Group PROJECT UPDATE NEW MEXICO RETA

2 SouthWestern Power Group Independent developer of utility-scale generation and transmission in the Desert Southwest Project Manager/Developer of SunZia Staff of 10, based in Phoenix, in business for 12 years Major References: ~ 2,400 MW CCGT Panda Gila River power plant (in operation) ~ 1,000 MW CCGT Bowie Power Station (permitted) ~ 600 MW Lignite CFB Rockdale Power Plant (in operation) ~ 125 MW Solar PV power project (in development) Owned by MMR Group in Baton Rouge, LA 2

3 MMR Group Construction services firm based in Baton Rouge, LA 22 offices in USA, Canada & overseas In business +25 years; owned by senior management Approximately 2,000 employees Electrical & Instrumentation specialty Industrial markets only: power, oil & gas, process, etc. Built over 30,000 MWs of generation 3

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5 Project Participants Salt River Project (Arizona utility) Tri-State G&T (multi-state G&T association) Shell WindEnergy (a Royal Dutch Shell company) Tucson Electric Power (Arizona utility) SouthWestern Power Group/ MMR Group (G&T development firm) 5

6 Project Description Two, single-circuit 500kV transmission project between central New Mexico and central Arizona Purpose is to deliver primarily renewable energy from NM and AZ to western markets (at the Palo Verde hub) Route will be ~500 miles long Configuration Options: ~ Two 500 kv AC lines (3,000 MW transfer capacity) ~ One 500 kv AC and one 500 kv DC line (4,500 MW transfer capacity) Interconnects up to five substations (two in AZ; three in NM) 6

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8 Current Project Status WECC granted Phase 3 status in Mar 2011, which affirmed the transfer capacity at 3,000 MW s for 2 x 500kV AC lines Obtained Declaratory Order from FERC in May 2011 BLM achieved agreement with US Dept of Defense on acceptable route around White Sands Missile Range One of 7 pilot projects supported by the Federal Rapid Response Team for Transmission (RRTT), announced Oct 2011 Commenced anchor tenant discussions in Jan 2012 Draft EIS published in May

9 BLM s Timeline for Completing NEPA Source: BLM website (last visited 8/17/2012) 9

10 Project Development Schedule Draft EIS May 2012 Final EIS Q Record of Decision Q State permits Q ROW acquisition 2013/2014 Financial Close 2014 COD

11 SunZia Schedule 11

12 Customer Arrangements Commenced anchor tenant process in Nov 2011 Received numerous responses in 2011 Identified acceptable anchor tenant candidates based on: ~ development, ownership and O&M experience in the region ~ financial condition and credit worthiness ~ ability to win PPAs with load-serving entities Currently, in discussion with several potential anchor tenants regarding draft precedent agreement Anchor tenant process is open and on-going 12

13 SunZia Attributes Highly experienced, local development team Supportive partnership of utilities & independents Most advanced interstate project in AZ & NM Large, positive economic impacts Improves reliability of the regional grid Early, ongoing collaboration with conservation NGO s Well-received by AZ & NM Regulators Supported by AZ & NM Governors 13

14 David Getts General Manager (602) W SunZia Southwest Transmission Project Summer

15 Appendix

16 Where are the New Resources? SunZia Southwest Transmission Project New Mexico RETA

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18 Economic Impacts during Construction in New Mexico 18

19 Economic Impacts during O&M in New Mexico 19