verde generating of ))' antitrust -tounited states of america before the nuclear regulatory...

UNITED STATES OF AMERICABEFORE THE

NUCLEAR REGULATORY COMMISSION

In the Matter ofARIZONA PUBLIC SERVICE CO.

Palo Verde Nuclear GeneratingStation, Units 1, 2, and 3Operating Licenses NPF-41, NPF-51and NPF-74

)) Docket Nos. STN 50-528) STN 50-529) STN 50-530)) Transfer of Control of) Ownership of License;) Antitrust Issues)'

AFFIDAVITS IN SUPPORT OFPETITION FOR LEAVE -TO INTERVENE AND

COMMENTS OF, SOUTHWESTERN PUBLIC SERVICE COMPANYON PROPOSED TRANSFER OF CONTROL AND ANTITRUST ISSUES

Alan J. StatmanBarry S. SpectorPaul.M. Flynn

WRIGHT & TALISMAN~ P.C.1200 G Street, N.W.Suite 600Washington, D.C. 20005(202) 393-1200

Attorneys forSouthwestern Public Service Company

April 13, 1994

1077 019. 179

9404i8020i 9404i3PDR PR t/

UNITED STATES OF AMERICABEFORE THE

NUCLEAR REGULATORY COMMISSION

In the Matter ofARIZONA PUBLIC SERVICE CO.

Palo Verde Nuclear GeneratingStation, Units 1, 2, and 3Operating Licenses NPF-41, NPF-51and NPF-74

)) Docket Nos. STN 50-528) STN 50-529) STN 50-530)) Transfer of Control of) Ownership of License;) Antitrust Issues'

)

AFFIDAVITS IN SUPPORT OFPETITION FOR LEAVE TO INTERVENE AND

COMMENTS OF SOUTHWESTERN PUBLIC SERVICE COMPANYON PROPOSED TRANSFER OF CONTROL AND ANTITRUST ISSUES

Alan J. StatmanBarry S. SpectorPaul M. Flynn

WRIGHT & TALISMANt P.C.1200 G Street, N.W.Suite 600Washington, D.C. 20005(202) 393-1200

Attorneys forSouthwestern Public Service Company

;April 13, 1994

1077-019. 17 9

TABLE OF CONTENTS

Affidavit and Exhibits of David T. Hudson

Affidavit and Exhibits of John S. Fulton

Affidavit and Exhibits of Louis F. Ridings, Jr.Affidavit and Exhibits of Joseph P. Kalt

~ ~ ~ ~ ~ ~ A

~ ~ ~ ~ ~ ~ ~ B

~ ~ ~ ~ ~ ~ C

~ ~ ~ ~ ~ ~ ~ D

STATE OF TEXAS ))

COUNTY OF POITER )

BEFORE ME, the undersigned authority, on this day personally

appeared David T. Hudson, who being by me first duly sworn did depose

and say as follows:

My name is David T. Hudson; I am Senior Engineer, Rate Research,

for Southwestern Public Service Company ("Southwestern"); I have

personal knowledge of the facts pertaining to the matters set forth herein,I

and I do hereby swear that all of said facts and statements herein are true g

and correct.

I have been employed by Southwestern since January, 1984, and I

have been doing rate and regulatory work for over ten years. I graduated

from Texas Tech University in December, 1983, with a bachelor of

Science degree in Industrial Engineering. In May, 1990, I graduated from

West Texas ASM University with a Master of Business Administration

degree. I am a Registered Professional Engineer in Texas and I am a

member of the Texas Society of Professional Engineers, the Institute of

Electrical and Electronic Engineers, and the Association of Energy

Engineers. I have testified before the Federal Energy Regulatory

Commission ("Commission" or "FERC"), the Public Utility Commission of

Texas ("PUCT"), and the New Mexico Public Utility Commission

("NMPUC").

Page 1

A.

Southwestern is an investor~wned electric utility engaged in the

generation, transmission, distribution and sale of electric energy at

wholesale and retail in four states. Refer to Exhibit DTH-1 which shows

~ Southwestern's general service area. This service area contains

approximately one-million people and covers a 62,000 square-mite area.

1. Southwestern is regulated by each municipality it serves

in Texas, state regulatory authorities in Texas, New Mexico, Oklahoma

and Kansas, and the Commission with respect to wholesale sales of

electricity in interstate commerce. During the fiscal year 1993 (year

ending August 31), Southwestern's FERC-jurisdictional sales represented ~

32 percent of Southwestern's total energy sales for the year. Wholesale

sales have progressively made up a significant portion of Southwestern's

overall business, because Southwestern is a low-cost supplier in the

region. The Central and South West Corporation ("CSW") and EI Paso

Electric Company ("EPE") merger will impact Southwestern's wholesale

markets and its ability to reach other wholesale power markets.

Southwestern is a member of the Southwest Power Pool

("SPP"). Southwestern is in the very southwest corner of the eastern-

interconnect and is bordered to the south and south-east by the Electric

Reliability Council of Texas ("ERGOT") and to the west by the Western

Systems Coordinating Council ("WSCC"). Transactions with the SPP are

handled through synchronous interties near Elk City, Oklahoma (230 kV);

Guymon, Oklahoma (115 kV); Shamrock, Texas (115 kV); and Oklaunion,

Texas (345 kV). These interties, except for the one near Guymon,

interconnect with two of the CSW operating companies, Public Service

Company of Oklahoma ("PSO") and West Texas Utilities Company

Page 2

("WTU"). The interconnection near Guymon is with WestPlains Energy in

Kansas.. ("WestPlains"-). However, this interconnection experiences

operational problems because of transmission constraints in Western

Kansas. Applicants'roposed transmission services will compound these

problems. Exhibit.DTH-2 is a map,of Southwestern's transmission

system.

Southwestern is not interconnected at all with ERCOT.

However, Southwestern's intertie with PSO at Oklaunion is only about

one mile from CSW's Oklaunion high-voltage direct-current ("HVDC")

interconnection between PSO in the SPP and WTU in ERGOT (commonly

referred to as the North HVDC interconnect).I

Two HVDC interconnections link Southwestern with the WSCC.-

Southwestern purchases and sells power and energy through the HVDC

interties near Artesia, New Mexico, and Clovis, New Mexico. These

interconnections were constructed so that EPE, Texas-New Mexico Power

Company ("TNP") and Public Service Company of New Mexico ("PNM")

can purchase low-cost power and energy from Southwestern. Sales

through these interties into the WSCC accounted for 8.1 percent of the

company's fiscal 1993 total energy sales.

Exhibit DTH-1 shows that Southwestern's service area is in-

between the service areas of EPE and two of the CSW operating

companies, PSO and WTU. Once CSW acquires EPE, the CSW operating

companies will substantially surround Southwestern and control many of

Southwestern's interconnections with other utilities. The CSW operating

companies will control four out of the six operating interconnections

Southwestern has with other utilities. They will control all of the

Page 3

Interconnections with available capacity. Southwestern's access to off-

system wholesale markets. will be substantially controlled by CSW.

2. Southwestern's mission is dedicated to providing an

expanding and diversified group of high-quality services and products for

its electric customers at the least cost. It has developed its services to

maximize efficiency, resulting in low-cost services recognized throughout

the industry. In a recent publication titled "Measuring Competitive Risk,"

Merrill Lynch listed Southwestern as the best competitively situated

company out of 97 companies in the country. Merrill Lynch evaluated

each utility's costs with respect to other producers in regional markets.

One of Southwestern's primary growth strategies is to sell into i0.

other wholesale electric markets since Southwestern is a low-cost

producer and it is experiencing slow growth in its service area.

Southwestern continues to aggressively market its power to other

utilities.

(a) Southwestern's customers enjoy high-quality

service along with low prices. Nighty-eight percent of the company's

customers are satisfied with the company's services. This is primarily

due to Southwestern's significant efforts in providing efficient service

which results in its favorable costs of service.

Costs per unit of energy is a good measure of cost

control and efficiency. Southwestern has been recognized as one of the

most efficient utilities in the country. Southwestern has one of the

lowest total Operation and Maintenance ("0&M") expense levels

(excluding fuel and purchased power) per kilowatt-hour of'any investor-

owned utility in the country. Southwestern is ranked best in the nation in

Page 4

non-fuel production OSM costs. These efficient ORIVI cost levels result in

low cost of service levels. Refer to Exhibit DTH-3, pgs. 3-4.

Efficient use of capital resources is measured by original

utility plant investment per unit of energy. Southwestern has out-

performed all other Southwest-area generating utilities with respect to

production plant investment per unit of energy. Low cost plants also

reduce costs to provide service by reducing the rate base investment per

kilowatt-hour. Refer to Exhibit DTH-3, pp. 26-27.

Southwestern has designed and constructed its own

power plants since 1945. Although constructed at about two-thirds the

national average cost, Southwestern's plants are designed to perform ~

reliably and at low fuel costs. Southwestern has a maintenance program

that not only reduces outage timeI, but also reduces costs. Since our

maintenance practices keep our forced-outage rates low, Southwestern

further minimizes generation costs. Because of high availability and low

heat rates, we can also increase our opportunity sales and keep the costs

of those sales low through moro efficien use of the plants. This not only

benefits our customers by reducing rates with shared opportunity margins

but also benefits the customers of the buying utility through lower costs.

The rate at which power plants convert heat into

electricity is a common measure of operating efficiency. The "heat rate"

is measured in British Thermal Uncs per unit kWh. Southwestern has

worked hard to keep this rate as low aa possible, and therefore, reducing

costs to Southwestern's customers. Southwestern has been recognized

for quite some time as having one of the lowest overall heat rates in the

nation. Southwestern currently has the 13th lowest system average heat

Page 5

rate in the country among investor-owned electric utilities. Refer to

Exhibit DTH-3, pp. 21-23.

(b) Each of the efficiencies described above results in

the more efficient use of electrical facilities and resources and the

lowering of Southwestern's average costs. Therefore, its cost-of-service

and rates to both native-toad customers and off-system wholesale

customers are also lowered. Over the past ten years, Southwestern's

average total rate per kilowatt-hour has declined 25 percent. Taking into

account inflation, the real price per kilowatt-hour has declined

approximately 48 percent over this same period of time. Refer to Exhibit

DTH-3, pp. 43-44.

These efficiency measures and low rates have resulted in

Southwestern penetrating new wholesale markets, including wholesale

full-requirements loads disconnecting from ERGOT and connecting directly

with Southwestern (Cap Rock Electric Cooperative, inc.), sales to The

Empire Electric District Company ("Empire District"), additional sales to

TNP and PNM in New Mexico, and the firm sale to EPE which is resold to

the Comision Federal de Electricidad ("CFE") in Mexico.

3. Southwestern has an installed net dependable capability

of 4,062 MW. Fifty-three percent of this capability is fueled by western

low sulfur coal and 46 percent by natural gas. Southwestern's firm peak

demand in 1993 was 3,370 MW. In 1993, 74 percent of Southwestern'I

generation-was from the coal-fired generating plants and 24 percent was

*om natural gas fueled generating plants. Southwestern, in 1993, had a

reserve maypln nf 20,5 percent, indicating it has capacity to sell into new

wholesale markets. Even when Southwestern reaches a point ot

requiring incremental capacity, it plans to construct its own capacity in

Page 6

the most economical fashion possible in order to meet future sales growth

and resource requirements. Currently,. Southwestern's plans are to

refurbish two existing power plants on its system and then add additional

gas-turbine capacity. This will add 560 MW of new capability over the

next ten years. Southwestern's experience in constructing its own

generation capability will greatly assist in the effrcient construction of

these required resources at low costs relative to competitors. In fact, the

incremental capacity cost per kilowatt of the initial two projects is below

Southwestern's embedded average cost per kilowatt.

{a) Unlike many other utilities, Southwestern's internal

engineering design group has designed and built Southwestern's power,

plants since 1945, including 14 gas-fueled units, three cogeneration-

plants, and five coal-fueled units. The coal-fueled units were brought on

line between 1976 and 1985 at a total average cost per kilowatt,

including allowances for funds used during construction, ranging from

$ 292/kW in 1978 to $ 510/kW in 1985, which was about two-thirds the

national average cost for similar plants. This engineering design group

was formed into a wholly-owned subsidiary of the company in 1986.

Utility Engineering Corporation provides engineering, design and

construction management services to Southwestern and other utilities

and industry. 'tility Engineering Corporation has designed and

engineered many generating units including recent large power generating

units for TNP and the City of San Antonio, Texas.

B. D' f hw rn'h I I I

Southwestern sells power and energy to a significant wholesale

customer base. In fact, in fiscal 1993, approximately 32 percent of

Page 7

Southwestern's total energy sales were made at wholesale in interstate

commerce.

1. In 1981, Southwestern and EPE entered into an

Interconnection Agreement (FERC Rate Schedule No. 104) which

contained provisions for interconnected operations through the Artesia

HVDC interconnection constructed by Southwestern for EPE and TNP.

After the Artesia HVDC interconnection was placed into operation in

1984, Southwestern sold 100 MW of- interruptible power and energy to

EPE. The interconnection agreement also provided for the sale of

economy energy and emergency service between the parties. In addition,

EPE and Southwestern were members of the Southwest Bulk Power ~

IMarketing Experiment and the Western Systems Power Pool ("WSPP").

experiment where Southwestern made sales to the western United States

through EPE. EPE transmitted power and energy and Southwestern could

reach distant wholesale markets. However, EPE has and continues to'I

refuse to join the permanent WSPP agreement which Southwestern is a

member. Therefore, Southwestern cannot reach WSCC markets through

EPE under the permanent WSPP agreement.

(a) Southwestern approached EPE about entering into

a more permanent arrangement for Southwestern to reach western

markets through EPE's system. Southwestern recognized that it is

difficult for EPE to import power from Arizona or northern New Mexico

into EPE's service area. It is advantageous for EPE to receive power from

Southwestern's system through the Artesia HVDC interconnection which

is to the east of EPE's electrical system. Therefore, in 19S7,

Southwestern and EPE entered into a new rate schedule supplementing

the Interconnection Agreement. This rate schedule provides for the

Paqe 8

exchange of power between the two companies. It supposedly allows

Southwestern to exchange power and energy with EPE by Southwestern

delivering the power and energy to the Artesia HVDC interconnection and

then receiving a like amount of power and energy from either EPE's Palo

Verde Nuclear Generating Station, Four Comers Generating Station, or

San Juan Generating Station facilities in the west. This exchange service

supposedly allows Southwestern to reach wholesale markets at those

plant electrical interfaces and provides benefits to EPE by reducing

electrical import constraints from the west on EPE's system. We have

attempted to reach markets to the west, but EPE has, told us they do not

want to exchange power under the agreement.

Since EPE will not join the current WSPP agreement or

exchange power and energy under the Power Exchange Service schedule,

Southwestern has no way to reach any wholesale markets in the west

through EPE'ystem. All of Southwestern's current WSPP sales to the

west have to be facilitated through PNM and the Blackwater HVDC

interconnection with PNM near Clovis, New Mexico. However,

Southwestern's ability to continue sales to the WSPP members in the

WSCC will soon be restricted through the PNM interconnection because

PNM wilt begin taking 200 MW of contract power *om Southwestern in

May, 1995. The capability of the PNM HVDC interconnection is 200

MW. Southwestern's additional access to western markets will be

restricted to EPE's Artesia HVDC interconnection. Applicants propose to

deny Southwestern access even though they admit they only require a

small portion (maximum of 53 MW in 2001 and less in other years) of the

Artesia HVDC interconnection capacity (133 MW).

Page 9

(b) In 1992, Southwestern entered into an agreement

with EPE for the sale of .firm power to EPE at the Artesia HVDC

interconnection. As Mr. Ridings explains in his affidavit, this sale came

about after EPE refused to transmit power and energy for Southwestern

to CFE in Mexico. Currently, EPE purchases 50 MW of contract power

under the rate schedule. This increases to 75 IVlW in January, 1996.

The contract is due to terminate at the end of 1996. Therefore, upon the

expiration of this sale, Southwestern will have 75 MW of power to sell to

other markets in 1997 and 1998.

This sale to EPE is directly related to EPE's sales to CFE

in Mexico which are also set to expire at the end of 1996. Pursuant to.Section 7.2 of Service Schedule E, Southwestern's partial requirements-

firm sale to EPE is contingent on the EPE sale to CFE. Instead of

transmitting power for Southwestern to make the sale to CFE, EPE is

purchasing Southwestern's lowwost power and reselling it to CFE at a

substantial markup. During fiscal 1993, EPE purchased power from

Southwestern at a total average price of 2.6 cents per kilowatt-hour.

EPE's markup was approximately 66 percent above the rate

Southwestern sells to EPE. The net difference in prices is EPE's effective

price to CFE for what amounts to transmission services.

2.

Southwestern

serves 18 rural electric cooperative

("REC") customers on Southwestern's electrical system. They are full-

requirements wholesale customers since they purchase electricity from

the'company to serve all of their own loads. Golden Spread Electric

Coop~rative, lnc., purchases electricity from the company and resells it to

11 of the 18 distribution cooperatives. TNP's northern Texas Panhandle

Page 10

service area near Spearman and Perryton, Texas, Is also a full-P

requirements load of Southwestern.

Of the 18 REC full-requirements wholesale customers,

Southwestern recently began serving Cap Rock Electric Cooperative, Inc.

("Cap Rock" ), of Stanton, Texas. This customer has separated its

transmission and distribution system from its previous supplier, TU

Electric Company, in ERGOT and has connected to Southwestern's

electrical system in the SPP. While,it is very difficult to penetrate the

ERGOT wholesale markets due to the Oklaunion HVDC/ERCOT barriers

and the associated transmission pricing policies, this new full-

requirements sale illustrates that wholesale customers in ERGOT are very .

interested in receiving Southwestern's efficient services. I will discuss-

these barriers later in my affidavit.

Southwestern provides wholesale partial-requirements firm

power to six customers who also generate, or purchase *om other

sources, electricity for their needs. The Texas municipalities of

Brownfield, Floydada, Lubbock, and Tulia are four of this group of

customers and are located in the middle of the company's service area.

EPE and TNP are the other two partial requirements firm customers who

are served through the Artesia HVDC interconnect.

3. Southwestern makes power sales to PNM through the

200 MW rated Blackwater HVDC tie located near Clovis, New Mexico.

Presently, Southwestern sells 100 MW to PNM in accordance with Rat»

Schedule No. 102. Curtailment by Southwestern of service in any month

can not exceed five percent of the total energy that Southwestern would

otherwise have offered to PNM in that month. In May, 1995.

Southwestern will increase its sale to PNM to 200 MW, which is the total

Paqe 11

capacity of the Blackwater HVDC interconnection converter. This

agreement has an initial term through May, . 2011. Therefore,

Southwestern will not be able to make any additional capacity sales

through the Blackwater HVDC interconnection.

4. Southwestern is interconnected with WestPlains at a

point on the Oklahoma and Kansas state line near Guymon, Oklahoma.

Southwestern occasionally sells and purchases power and energy with

WestPlains. These sales and purchases are very infrequent due to

transmission constraints in western Kansas. These constraints cause

WestPlains to open the transmission interconnection with Southwestern.

This precludes Southwestern from making many sales through this ~

Iinterconnection.

5. Historically, Southwestern has made insignificant sales to

SPP wholesale markets due to the ample low-cost supplies and the

transmission costs of reaching such markets. Recently, Southwestern

made a low-margin sale to Empire District as I will discuss below.

Southwestern makes occasional coordination sales to the east under the

WSPP agreement. However, Southwestern's WSPP sales to the east are

subject to the transmission prices CSW charges Southwestern under the

flexible WSPP transmission pricing provisions. We are finding that CSW

takes advantage of the transmission pricing flexibility to keep

Southwestern from making sales to other companies like Entergy. For

instance, CSW recently proposed charging Southwestern for transmission

services under the WSPP at a rate well in excess of the PSO/SWEPCO

open access tariff. CSW proposed charging for transmission at rates of 6

mills to 7 mills per kilowatt-hour when the total non-firm transmission rate

under the PSO/SWEPCO Coordination Transmission Tariff is 4.5 mills.

Paqe 12

These. higher WSPP transmission rates precluded Southwestern from

making sales to Entergy. Meanwhile, Southwestern does transmit energy

under the WSPP at an average rate of 3 mills per Idlowatt-hour.

6. -. Southwestern sells 66 MW of partial-requirements firm

power and energy to TNP through TNP's owned portion of the Artesia

HVDC interconnection. This is for TNP's New Mexico service area. TNP

owns 66 MW of the 200 MW capacity installed at the Artesia HVDC

converter. Southwestern's agreement with TNP to sell partial

requirements power lasts through 2001, and year to year thereafter.

Recently, TNP decreased its New Mexico area purchases from EPE and

increased its purchases *om Southwestern. TNP increased its firm,

commitment from 33 IVlW to 66 MW and is realizing significant purchased-

power cost savings.

7. In 1992,'Southwestern entered into an electric power

service agreement with Empire District. Empire District is primarily located

in and around southwest Missouri. This agreement was reached after

Southwestern aggressively pursued wholesale markets in the SPP region.

However, in order to make the sale to Empire District, Southwestern had

to make a "System Participation Capacity" sale which is discounted from

Southwestern's partial requirements firm rate. In addition, Southwestern

agreed to pay for the transmission costs through PSO to reach Empire

District. Otherwise, Southwestern would not have made the sale. This

reduces Southwestern's effective margins for the sales to Empire District.

I have'oticed that PSO's transmission rate ($ 1.31/kW/month) for

Southwestern is higher than the rate contained in the PSO/SWEPCO open

access tariff rate t$ 1.21/kW/month) filed in Docket No. ER93-938-000.

Page 13

0

~ '

There are many suppliers in the SPP. Our real opportunities are

markets in ERGOT, the west, and Mexico.

8. Each of Southwestern's wholesale sales, whether they

are requirements sales or coordination sales, result in benefits to

Southwestern's customers through the more efficient utilization of electric

facilities and resources. Firm requirements sales result in the reallocation

of fixed costs to all of Southwestern's customer classes and coordination

sales margins are redistributed to requirements customers as revenue

credits. This increased efficiency results in the lowering of

Southwestern's average total cost per unit of energy to the benefit of all

customers and enhances Southwestern's competitive position.I

9. Southwestern participates in* the bulk power market..

primarily through the WSPP. EPE used to be a member of the WSPP

experiment, but declined to join the permanent WSPP agreement. Under

the experiment, EPE transmitted power and energy through EPE's system

to markets in the western United States. However, Southwestern is no

longer able to do this through EPE because of their refusal to join the

permanent WSPP agreement. As a result, Southwestern is not able to

transmit power through EPE's system. Instead, EPE purchases

Southwestern's low-cost power and resetls it to other markets.

C. hw rn' I I I

Southwestern continues to aggressively market its power through'

interconnections with other utilities. Several of Southwestern's target

wholesale markets are io southern New Mexico and Mexico where

capacity through the Artesia HVDC is available.

1. Southwestern is pursuing sales to southern New Mexico

markets through the Artesia HVDC interconnect. Southwestern cannot

Page 14

reach these southern New Mexico markets through the Blackwater HVDC

interconnection with PNM because it will be fully utilized beginning in

May, 1996. Besides, transmission from PNM to EPE is constrained. The

most significant wholesale market in southern New Mexico is the City of

Las Cruces, New Mexico which is currently in EPE's service area. EPE's

previous long-term franchise agreement with the City has expired and the

City has not extended a new tong-term franchise to EPE. in fact, the

current one-year franchise expires in March, 1994. The City has formed

a municipal electric utility and is soliciting wholesale suppliers through a

competitive request for proposals issued in early January, 1994. The

deadline for submitting a proposal is February 28, 1994. Southwestern .I

will submit a competitive proposal to sell wholesale requirements power ~

to the City. Southwestern will require transmission services from EPE,

including use of the Artesia HVDC interconnection.

Southwestern is also talking to other prospective wholesale

customers in the southern New Mexico including Dona Ana County, and

in the long-term, the City of Fj Paso. Texas, which is just south of the

southern New Mexico border. The'City of El Paso's franchise expires in

March, 2001. Two military inataltations in EPE's southern New Mexico

service area are seeking alternative power suppliers. Holloman Air Force

Base ("Holloman") has issued a request for competitive bids for its retail

service. While Southwestern ia not attempting to directly serve the

military installation, it is proposing to increase its sales to TNP who has

electrical facilities adjacent to the base and would resale power and

energy to Holloman. White Sands Missile Range is also considering

following Holloman's actions. These two Department of Defense facilities

present secondary markets for Southwestern.

Page 15

2. Southwestern has pursued several wholesale

transactions in ERGOT. Southwestern pursued Cap Rock as I mentioned

before. WTU also pursued that sale. Due to the tariff constraints at the

Oklaunion HVDC interconnection and the pricing of transmission through

PSO, WTU and other ERGOT utilities, Cap Rock removed its loads from

ERGOT and directly attached them to Southwestern's system in the SPP.

However, this was achievable only because of Cap Rock's proximity to

the southern border of Southwestern's system. Southwestern expects

there to be significant wholesale markets in ERGOT, especially since the

PUCT has instituted competitive solicitation regulations into PUCT's

resource planning process. Southwestern has considered making sales to .~ I

TU Electric Company, Brazos Electric Cooperative, Inc., and the Lower-

Colorado River Authority. The City of Austin is conducting a solicitation

process to acquire power at this time.

3. The CSW operating companies have certain "to from and

over" tariffs dealing .with transaction across the Oklaunion HVDC North

Interconnection and the East Interconnection. Southwestern has

investigated reaching markets in ERGOT. However, these tariffs create a

barrier for Southwestern to enter the ERGOT markets. While

Southwestern is interconnected with PSO about one mile from the

Oklaunion HVDC North Interconnection, it must pay a fully-costed

postage-stamp based rate to PSO ($ 1.51/kW/month). In addition,

Southwestern must pay transmission rates to WTU and CPL, and others

in the ERGOT (for instance up to $ 3.33/kW/month to get to the City of

Brownsville). These multiple charges add up. In addition, Southwestern

must deal with the terms and conditions with requesting transmission

service pursuant to the tariff. These obstacles all create barriers to

Pape 16

Southwestern reaching the ERCOT markets. The Commission must

investigate these transmission pricing issues and should condition the

merger application to mitigate transmission pricing problems. The

Commission should condition the merger on CSW filing a single open

access tariff for its whole corporate system, including all of the SPP

facilities, ERCOT facilities, and EPE facilities.

4. Southwestern is also pursuing potential electric markets

in Mexico as discussed by Mr. Ridings in his affidavit.

D. I w I

Southwestern is concerned that the merger between CSW and EPE

will have an adverse impact on Southwestern's ability to compete in ~

Iwholesale power markets.

1. CSW's acquisition of EPE will increase the control over

Southwestern's interconnections with other utilities. In addition, CSW is

using its requirements to integrate under the Public Utility Holding

Company Act to needlessly dominate the entire capacity in the Artesia

HVDC interconnection converter and preclude low-cost suppliers from

competing for EPE's wholesale markets.

2. Applicants'pen-access on PSO/SWEPCO and EPE does

not provide any realistic markets to SPS. As I will specifically discuss

later, Southwestern is concerned that EPE expressly excludes open

access through the Artesia HVDC interconnection. Even if it does not,

the Applicants'roposed use of the Artesia HVDC interconnection will

preclude Southwestern's access through the interconnect. The

Applicants propose to lock up the entire 133 MW capacity of the

interconnection even though they only require a much smaller portion of

it for capacity transfers (at most 53 MW in the year 2001). The

Page 17

remaining capacity is being used presumably to produce minimal energy

cost savings. However, the net savings appear to be in error as l will

also describe later. Applicants'pen access tariff only for the SPP

wholesale markets provides little for Southwestern since Southwestern's

own experience shows that those markets are filled with sellers who have

low-cost excess capacity. Southwestern desires to have access

throughout the CSW system to markets that need Southwestern's power.

3. Southwestern is also concerned with the impact that the

Applicants'roposed use of Southwestern's electrical system will have

on the reliability of Southwestern's system. Applicants claim that

Southwestern can provide full access for all of their operating companies ~

with only minor transformer upgrades to Southwestern's system. This is .

due to their need to not have the incremental cost of any significant

upgrades totally eliminate their minimal production cost savings.

Southwestern's Principle Engineer in charge of System Planning, John S.

Fulton, has evaluated the Applicants'roposed use of Southwestern's

system and has many concerns with their transmission proposals. He has

also evaluated the system improvements needed to transmit power for

applicants.

4. 'outhwestern is concerned about the proposed

methodologies Applicants have for compensating Southwestern for

transmission services. Applicants propose to pay Southwestern one

embedded-cost rate for bi-directional service. Again, they do this to

minimize the transmission costs which are netted against their minimal

production cost savings. If transmission is ordered, Applicants must

properly compensate Southwestern for their services'o that

Page 18

~,

~ I

Southwestern's other customers are not adversely affected by picking up

the other costs.

5. Southwestern has several concerns regarding the CSW

and EPE open access tariffs. Most notably, Southwestern is concerned

with the terms and conditions contained in Section 1.34 of the proposed

EPE Firm Transmission Tariff and Section 1 4 of the proposed

Coordination Transmission Service Tariff which define "Transmission

Fy 'y a i i f *ti' a i euUvauu'm tyEPE. This definition does not include the Artesia HYDC interconnection

facilities or the 345 kV Transmission line from the Artesia HVDC

interconnection to the Amrad substation (refer to Section 1.9 of the firm .

tariff). Service under the tariffs will only be over the Transmission-'ystem,not any HVDC facilities. Therefore, while gg of the CSW

operating companies will enjoy the complete use of the Artesia HVDC

interconnection, other utilities will have virtually have no access on the

CSW operating company systems. No one else in the eastern United

States will get to use the essential Artesia HVDC facilities since they are

not included in the proposed open access tariffs. Southwestern is also

concerned with the conditions in the EPE open access conditions

precluding access to a "foreign country" (Mexico).

The CSW operating companies will not only serve the EPE

native toad customers, but they will also transfer power through the

Artesia HVDC interconnection to EPE to sell to wholesale bulk power

markets in the western United States and Mexico.

Southwestern is concerned with the reciprocity provisions

contained in the CSW and EPE open access tariffs. Applicants reserve

the reciprocal right for gg of their operating companies to use a

Page 19

requesting utility s facilities if a requesting utility is allowed to use just

one of the, Applicants'ystems. However, the Applicants are not

allowing requestors the right to use each of the Applicants'ystems on a

single open access basis. CSW is hiding behind the HVDC interconnects

to preclude access. The CSW operating agreement may also create other

advantages.

E. n I i li n v

The Applicants'rovide three overall categories for cost savings

associated with their merger (Exhibit . APP-4). These include: (1)

production and transmission savings; (2) administrative cost savings; and

(3) financial related cost savings. I cannot find where the Applicants .I

have provided a net present value analysis of their supposed merger-

related cost savings. I have shown that the net present value of the total

merger savings as claimed by the Applicants is only $ 282 million in 1995

dollars. Refer to my Exhibit DTH-4. I dispute the Applicants'resumed

production and transmission cost savings. Mr. Steinhilper has reviewed

the Applicants'laimed financial savings and disputes those savings.

F. f Pr vin

The Applicants claim to produce production fuel and capacity savings

after an offset for required transmission service costs is considered. I

dispute the Applicant's total net production savings. They are overstated

or even could be negative.

1. Applicants claim that their total net production and

transmission savings amount to $ 33.5 million over ten years on a nominal

cost basis. Of this $ 33.5 million in production savings, $ 37.9 million

represents fuel cost savings and $ 22.6 million represents purchased

capacity savings. There is a $ 27.0 million cost offset considered for

Page 20

transmission services and facilities. These minimal savings ($33.5 million

over 10 years) are the ones Applicants'ely on to justly their public

interest basis for requesting transmission services on Southwestern's

system pursuant to Section 211 of the Federal Power Act ("FPA").

Refer to Docket No. TX94-2-000. Exhibit DTH-5 to this affidavit shows

the insignificant production fuel cost savings as a function of the total

fuel costs over the same ten year period. Over the ten year period, the

gross fuel-related savings represent only.0.17 percent of the total CSW

operating companies'nd EPE's fuel costs. This does not even consider

any transmission cost offsets. Therefore, the actual percentage of net

fuel related savings to total production fuel costs is even smaller than ~

0.17 percent. Impacts on other utilities, including Southwestern, end up

out-weighing the insignificant claimed production related savings. This is

especially true given the competitive, reliability an'd cost impacts the

Applicants'ransmission proposal will have on Southwestern. As I will

show below, the net production cost savings are negative.

2. Applicants'mall net production savings reflect

erroneous transmission costs, including payments to Southwestern for bi-

directional embedded cost service on Southwestern's electric system. It

is Applicants'isplaced reliance on Southwestern's low embedded cost

transmission system, with their recommended minimal transformer

upgrades, which allows Applicants to show any positive net production-

related savings at all. Once appropriate incremental transmission costs

are considered and proper pricing methodologies are applied for the

requested transmission services across Southwestern's system, the net

production cost savings will be negative.

Page 21

I have noted several discrepancies with respect to Applicant's

transmission costs which are unexplained. First, Mr. Bruggeman, on p.

36 of his testimony tExhibit APP-39), states that the Applicants used a

levelized transmission cost of 05 million annually to reflect the costs for

transmission services across Southwestern's system. However, review

of Mr. Bruggeman's workpapers shows that the maximum transmission

costs reflected in Applicants'roduction cost savings analysis is only

$ 3.7 million any given year (2003). This is reproduced in my Exhibit

DTH-3. This alone causes me to believe that the Applicants'upposed

net production cost savings are over-stated. Second, Applicants have

not property identified incremental costs on Southwestern's system. Mr.~ 0

Fulton's affidavit details Southwestern's preliminary estimated-

incremental facilities necessary to maintain reliable service on our system.

I will discuss this below in more detail. Finally, Applicants have used a

levelized approach for determining the transmission costs on

Southwestern's system. Southwestern does not provide a levelized rate\ C

for any of its current customers. This levelized approach used by

Applicants could result in the understatement of Southwestern's

transmission costs in the early years and, therefore, the overstatement of

the production cost of savings.

3. Applicants'ropose to initially transmit non-firm power

across Southwestern's system from 1995 through 1998. In 1999,

Applicants'atest plan included in their merger approval filing shows that

they will require only a small amount of firm transfers between operating

companies from year to year. Refer to Applicants'xhibit (JAB-9) APP-

48. The maximum level of requested firm service is for 53 MW in the

year 200'1. The required firm transfer ranges from 0 to only 39 MW in

Page 22

other years. Applicants propose to dominate the entire 133 MW portion

of the Artesia HVDC intertie, )caving at the least 80 MW uncommitted

t133 MW less 53 MW) and unavailable for use by others, including

competitors for wholesale loads in southern New Mexico.Applicants'inimal

net energy savings provide no basis for Applicants to lock up the

remaining 80 MW and precluding economic competition through the

Artesia HVDC intertie.

I have analyzed the Applicants'roposed use of the Artesia

HVDC interconnection in excess of their stated firm power transfer

requirements. In Exhibit DTH-6, I have shown that the Applicants will

easily achieve higher net production benefits through the provision of,I

transmission services for others through the Artesia HVDC '-

interconnection. First, under my analysis, Applicants will still be fully able

to transfer their required firm power levels. Second, Applicants will

receive substantial benefits by receiving transmission service revenues

from a third party. The Applicants will also avoid paying Southwestern

for 133 MW of transmission services, when they have much smaller

needs for firm transmission services. My analysis shows that the

Applicants receive as much as $ 53.0 million in nominal net cost savings

under this third-party transmission approach as compared to their locking-

up.the Artesia HVDC facilities in totality for only $ 33.5 million in total

nominal net production cost savings. Given the minimal savings to be

produced from the, remaining uncommitted 80 MW of capacity, the

Applicants should be required to make this capacity available to others for

transmission service.. This will allow Applicants to receive transmission

service revenues which will exceed the minimal fuel cost benefits

projected by Applicants.

Page 23

4. Contained in the workpapers to Mr. Bruggeman's

testimony, there is a study of 16 different transmission proposals to

integrate the Applicants'perations in order to accomplish the merger.

The Applicants are required to be interconnected for Public UtilityHolding

Company Act purposes. Review of these workpapers reveals that due to,

the small gross production-related savings 'rom the merger, the

Applicants had to aggressively minimize the interconnection costs, even

to the point of not allowing any significant incremental transmission

facility costs to be counted against the production savings. Alternative 2

contained in the Applicants'Economic Comparison of CSW-EPE

Interconnection Alternatives" shows the Applicants'riginal transmission .0

request proposal to substantially upgrade facilities on Southwestern's .

system. Refer to Alternative 2 in the above referenced economic

comparison report contained in Mr. Bruggeman's workpapers. The report

shows that this option had a total levelized annual revenue requirement of

$ 12 million. If this option was pursued by the Applicants, they would

have shown negative net production cost savings as a result of the

merger. Exhibit DTH-7 to my affidavit shows that the net production cost

savings would be a gggg~v $ 28.2 million if the Applicants'ext original

transmission alternate was used. Applicants have only been able to

develop, at the high end, $ 33.5 million in production-related merger cost

savings. The Applicants were essentially forced to specify no facility

additions on Southwestern's system in order to keep transmission costs

off-sets at an absolute minimum, regardless of appropriate transmission

system upgrade requirements. This explains to me why Applicants

refused to allow Southwestern to progress on with a system study.

Southwestern will demonstrate the need for significant system

Page 24

improvements, which will wipe out their minor merger-related production

cost savings.

5. Applicants'ave asserted that they have calculated

approximately $ 37.9 million in gross production-related fuel savings over

the ten-year period. However, Applicants'tudy approach overstates

these supposed savings. I dispute Applicants'ontention. that a

significant amount of energy will flow from EPE to the other CSW

operating companies. Currently, EPE purchases a significant amount of

economy energy from Southwestern due to the incremental cost

differences between EPE's system and Southwestern's system.

However, CSW's operating companies do not purchase very much ~

economy energy from Southwestern. Therefore, I would assume from

this comparison of incremental costs that the EPE incremental costs on

EPE's system predominantly should be greater than those on the CSW

operating company systems. One explanation which could be causing

this distortion is the Applicants'ver-simplified assumption that the input —

'aturalgas prices for the EPE and CSW production costing models are

the same. ~ Exhibit APP-39, p.30-31 where Applicants state that they

used the PSO system spot natural gas prices. Applicants'nalysis may

make EPE's incremental costs 'look more favorable with respect to the

other CSW operating companies'ncremental costs and distorts the

Applicants'nergy cost savings. Further investigation must be

conducted to analyze the Applicants'roduction costing models.

6. The Applicants'apacity-related savings study approach

overstates such savings. The Applicants'urchased power capacity

savings evaluation approach has several steps which overstate the

recognizable savings. The Applicants have "reiterated" the EPE capacity

Page 25

expansion plan. This manipulation falsely creates perceived purchased

capacity cost savings. In addition, the Applicants presume that transfers

from one operating company to another benefit one operating company

and cost another, and the net sum impact is zero for the corporation.

However, if purchases are made from a third party supplier, such as

Southwestern, then the purchase is reflected only as a purchased power

cost. Applicants do not recognize the benefits to the third party'

customers for making such a sale as they are assuming for their own

operating companies which are making the internal transfers. This

treatment in evaluating purchased capacity cost savings favors internal

transfers of capacity between operating companies and falsely develops ~

Icapacity related savings. Finally, I'm also concerned that the

Applicants'election

criteria for purchased capacity transfers do not consider the

incremental costs for transmitting the power from the operating

companies to and from EPE. Applicants are essentially treating

transmission costs across Southwestern's system as "sunk" costs. Each

of these items may have inflated the Applicants'laimed purchased

capacity cost savings. Further information from the Applicants is

necessary to evaluate the claimed purchased capacity cost savings.

7. Applicants have understated Southwestern'a

transmission system improvements in order to minimize the transmission

cost off;sets against the minimal production cost savings.

(a) Applicants'ransmission costs across

Southwestern's system are understated. First, as I pointed out above,

their transmission costs do not even reflect the total $ 5 million levelized

annual revenue requirements shown in their testimony. Therefore, their

transmission costs are understated. However, they are also seriously

Page 26

understated because of the significant interconnection upgrades that will

have to be made by Southwestern as described in the affidavit of Mr.

John S. Fulton. Mr. Fulton preliminarily estimates that Southwestern will

expend approximately $ 46.1 million (excluding AFUDC) for new system

improvements in 1993 dollars. The incremental revenue requirements for

these additional facilities is approximately $ 9.5 per year. Reflecting these

revised transmission costs into the Applicants'et production cost

savings analysis beginning in 1999, shows that the net production cost

savings are actually a agggii~v $ 23.4 million. Refer to Exhibit DTH-8.

Moreover, I have assumed a levelized cost calculation which I added to

the embedded costs assumed by Applicants. This negative net figure,I

does not include any costs to increase the Artesia HVDC interconnection.

(b) Applicants have also understated the transmission

costs because they assume that they will pay one charge in order to

receive bi-directional transmission service so that they can transfer power

and energy on a continual basis between the operating companies. My

Exhibit DTH-8 analysis does not even refiect separate charges. Since

separate charges are appropriate for services between separate

companies, the Applicants have further understated their transmission

costs and, therefore, overstated their claimed net production cost

savings. The net production cost savings are actually more negative than

the negative $ 23.4 million shown above.

David . u son

Page 27

H

STATE OF TEXAS )).

COUNTY OF POTTER )

SWORN TO AND SUBSCRIBED BEFORE ME this 4 -day of February,1994, by DAVIDT. HUDSON.

O'PZARA D. RISTNAY PUHLC,sr'r.mNS

e cease@ vms9-74?

Notary u ic, tate of Texas

~ 0

OKLAHOMA

Albq.~hmarillo

Ro oil':5

CfllC

I aso

Dallas

~ Southwestern Public Service Company

El Paso Elechic Company

Central and Southwest SOUTHNESTERNPUBL!C SERVlCE COMPANY

4h%1

~ ~ ~ ~

Exhibit OXH-3Page 1 of 44

Southwestern Public Service CompanyCustomer Satisfaction

Very Satlsf led72%

Other2%

Sat!sf led26%

Sooroes SPS 1000 Ouetoaer Oplnlon SurveySurvey by OPlnlone Unllalled

Exhibit 9TB-3Page 2 of 44

CONTINUITYOF SERVICE

YEAR

CONTINUITYOFSERVICE INDEX

AVERAGE LENGTHOF INTERRUPTIONS

Hours

TEST YEAR

PRIOR YEAR 4

PRIOR YEAR 2

PRIOR YEAR 3

PRIOR YEAR 4

PRIOR YEAR 5

PRIOR YEAR 5

PRIOR YEAR 7

PRIOR YEAR S

PRIOR YEAR 9

AVERAGE

0.99990.99990.99990.99990.9998

0.99990.99980 +9990.9999

0.9999

0.740.680.741.07$ .640.720.732.030.91

$ .30

1.07

NOTES: CONTINUITYOF ~

SERVICE INDEX

CUSTOMER HOURS POSSIBLE CUSTOMER HOURS OUTAGE

CUSTOMER NOVAS POSSlbLK

CUSTOMER HOURS POSSISLK ~ TOTALNUMBER OF CUSTOMKA a PERIOD HOURS

CUSTOMER HOURS OUTAOK ~ A SUMMATIONOF (NUMSEA OF CUSTOMERS AFFECTED

bY EACH OUTAOKx AVERAOKLENOTHIINHOURS) OF

EACH INTERRUPTION OR OUTAOKJ

PEAIOD HOURS NUMSKAOF HOURS PEA SPKCIFIKDUNITOF TIME

IEeemple: 4740 hcwre Pee year)

~ '

I

lMENDSPS ----STX Median---TXUS Median- —US

TOTAL PRODUCl1ON EXPENSE (Less Fuel 8 PP)To Net Generation

SPS vs Texas and US Median

.800

.700

c .soont

.500P

k. 400

h

.300

%S

.200

100

S2 S3 es se 87 89

Calendar Year

Total Production Expense (Less Fuel 5 PP)To Net Generation

SPS vs Texas and US MedianCents Per kWh

US TXUS Total TX Total

SPS US Percentile US 4 of TX Percentile TX 4 ofYR UTIL Value Median Rank Rank IOUs Median . Rank Rank IOUs

82 SPS .198 ~ 513

83 SPS .226 482

84 SPS .203 532

85 SPS .186 .556

86 SPS ~ 217 614

87 SPS .171 591

88 SPS .175 645

89 SPS 167 ~ 649

90 SPS +197 o697

91 SPS ~ 197 ~ 749

10 142 ~ 210

16 140 ~ 233

8 140 ~ 240

5 154 292

7 155 338

3 153 311 *

2 156 ~ 364

1 156 ~ 408

2 157 '«&74

1 155 ~ 478

44

50

33

22

22

13

4 9

4 8

3 9

2 9

~ 2 9

1 8

1 9

1 9

1 9

1 . 9

LEGENDSPS ——STX Median—-TXUS Median—-US

TOTALPRODUCAON EXPENSETO TOTALENERGY


3.503.403.303.203. 10

3.002.90

1

I 2.80P 2.70r 2.

60'.

50W.', 2.40

2.302.202. 10

2.001. 90

1. 80

8r

Usw w~ tj

82 83 84 85 87

Col endor Y

d'or

88

Total Production ExpenseTo Total Energy

SPS vs'Texas and US MedianCents Per k8h


SPS US Percentile US 4 of TX Percentile TX 4 ofYR UTIL Value Median Rank Rank IOUs Median Rank Rank IOUs

82 SPS 2 '3 2 '683 SPS 3 '2 2.44

84 SPS F 88 2 '385 SPS 2 '0 2 '886 SPS 2.44 2.57

87 SPS 2 29 2.45

88 SPS 2 '0 2.47

89 SPS 2.27 2.57

90 SPS 1.95 2 '291 SPS 1 87 2.61

59

65

61

40

40

16

87 147 3 ~ 46

93 143 3.09

87 143 3 22

67 168 3 12

74 169 2 52

71 167 2.37

68 169 2.51

60 171 2.53

27 170 . Q„55

25 169 2 57

50

20

50

40

30

20

10

10

4 9

4 8

4 9

2 10

5 10

10

3 10

2 10

1 10

1 10

lEGENDSPS ----STX Median---TXUS Median---US

FUEL & PP EXPENSE TO TOTALteN SALESSPS vs Texas and US Median

3.503.403.303.203. 10

C3 00

e 2 90A

t 2.602.70

Pa 2.60r 2.50k 2.hO

2.302. 202. 10

2. 00

t.go).801.70

82 84 85 86

Colandor Yaor88 89 90

t

1

0j

Fuel 5 PP Expense to Total kHh SalesSPS vs Texas and US Median

Cents Per kHh


SPS US Percentile US 4 of TX Percentile TX 4 ofYR UTIL Value Median Rank Rank ZOUs Median Rank Rank ZOUs

82 SPS 2 '3 2 16

83 SPS 3.04 2 '984 SPS 2 90 2 36

85 SPS 2 '1 2 '386 SPS 2 '1 2 13

87 SPS 2 '1 2 '688 SPS 2 '0, F 04

89 SPS 2 27 2 12

90 SPS 1.89 2 12

91 SPS 1.79 2 03

50

61

62

58

102 147 3+47

104 146 F 08

104 167 3 '386 173 3ol8

103 174 2 '8105 173 2 '9106 172 2 '0100 172 2 '0

70 171 ~ ca% 17

61 170 2+07

44

44

40

20

40

60

60

50

20

20

4 9

9

4 10

2 10

4 10

6 10

6 10

5 10

2 10

2 10

SV''0

Wrt

LEGENDSPS ——STX Median- —TXUS Median---US

TRANSMISSION O&M EXPENSE PER UNE MILESPS vs Texas and US Median

6. 00

5.00

4. 00

US----~US

4S

3.00 —US

MIfe

2.00

f.00

0.0082 85 86 87 88 89 90

Calendar Year

Transmission O&M Bxpense Per Line MileSPS vs Texas and US Median

(Thousands) Per Mile

SPSYR UTIL Value

USUS . Total

US Percentile US 5 ofMedian Rank Rank IOUs

TXTX Total

TX Percentile TX f ofMedian Rank Rank IOUs

82 SPS

83 SPS

84 SPS

85 SPS

86 SPS

87 SPS

88 SPS

89 SPS

90 SPS

91 SPS

0.98

1. 05

1 10

F 00

0 F 80

0 87

0 ~ 84

0 '30.96

0.86

3.00

3 14

3.38

3.94

4 '14.44

4 '94.72

4.98

F 00

12 134

- 10 135

9 132

8 147

5 146

7 146

5 150

6 151

1 11

1.32

1.36

1 76

2 23

2.40

2 06

3 04

2 935 150~ '~P

4 149 3 32

50

38

10

20

20

10

20

10

4 8

3 8

4 9

9

1 10

2 10

2 10

1 10

2 10

1 10

LEGEND'PS —--STX Median—-TXUS Median—-US

CUSTOMER ACCOUNnNG BPENSETO TOTALISN 8ALIES


~ 1 402

~ 1 302

~ 1 202C

~ 1102a

P~ '. 1 002r

kN . 0902h

~gl

S

~ 0802

~ 0702

040 2

8 6 8 7 8 8 8 9

Ca I en der Year

All f l'0l ' a a t tin I rtn t nh

~,

I

t

t

I

Customer Accounting Expense To TotalSPS vs Texas and US Median

Cents per kWh

kWh Sales


SPS US Percentile US j of TX Percentile TX 4 ofYR UTIL Value Median Rank Rank ZOUs Median Rank Rank ZOUs

82 SPS .0626 ~ 1144

83 SPS .0676 .1174

84 SPS ~ 0628 ~ 1193

85 SPS ~ 0602 ~ 1247

86 SPS ~ 0838 ~ 1331

87 SPS ~ 0768 ~ 1292

88 SPS 0659 ~ 1255

89 SPS .0634 ~ 1274

90 SPS .0685 .1294

91 SPS .0684 .1353

10

12

16

12

10

13

12

13 135 .0855

16 135 .1048

14 '152 ~ 1072

12 155 1136

25 153 ~ 1257

18 154 ~ 1188

15 155 1203

10 153 1148

20 151 1063

18 148 '.~63

33

33

20

20

20

20

20

10

20

20

3 9

3 9

2 10

2 10

2 10

2 10

2 10

1 10

2 10

2 10

tBBElSPS ——STX Median—-TXUS Median—-US

~ ~

P

At:NIN & GENERAL EXPENSETO 'tmAL iONH 8ALE8


. 4200

. 4100

.4000

.3900

.3800

.3700

.3600

.3500n .3400

.3300

.3200P ..31OOr 3000

. 2900W

. 2800II . 2700

.2600

.2500

.2400

.2300

.2200

. 2100

.20001900

82 8S 86 87

Calendar Year88 89

Aden & General Expense To Total kHh SalesSPS vs Texas and US Median

Cents per kNh


SPS US Percentile US 0 of TX Percentile TX 4 ofXR UTIL Ualue Median Rank Rank ZOUs Median Rank Rank IOUs

82 SPS .2014 3071

83 SPS .2256 3394

84 SPS 2184 ~ 3427

85 SPS .2050 3614

86 SPS 1982 ~ 3770

87 SPS 2070 ~ 4100

88 SPS 2071 4078

89 SPS ~1915 4049

90 SPS ~ 2146 4031

91 SPS .2327 .4089

19

21

21

18

15

14

13

15

28 147 2253

31 146 .2512

35 167 2539

32 173 .2683

26 174 ~ 3324

24 174 ~ 3733

25 173 ~ 3332

21 172 ~ 3708

23 171 ~ 3888

26 170 '.%153

33

33

40

20

10

20

20

10

10

10

3 9

3 . 9

4 10

2 10/

1 10

2 10

2 10

1 10

1 10

1 10

LEGENDSPS ----STX Median---TXUS Median—-US

TOTAL OM EXPENSE (Less Fuel & PP)To Net Generatfon


2.00I. 90

I.80I. 7O

I . 60

I 50I I. 40

p 1.30er 1.20

I. IOW

I.OO

900

.800

.700600

500

82 83 84 85 86 87 88 89 90

Ca I endor Year

Sour ce: I qq I lln I nn I nh

Total OSM Expense (Tess Fuel 6 PP)To Net Generation

SPS vs Texas and US MedianCents Per kHh


SPS US Percentile US f of TX Percentile TX 4 ofYR UTIL Value Median Rank Rank IOUs Median Rank Rank ZOUs

82 SPS ~ 603 1 ~ 27

90 SPS . 614

91 SPS .b34

1.91

l. 94

83 SPS 664 1.30

84 SPS ~ 626 1 '885 SPS ~ 616 1 ~ 47

86 SPS ~ 676 1 '787 SPS ~ 616 1 ~ 60

88 SPS 608 1 ~ 64

89 SPS .579 1.68

7 144 ~ 799

7 140 ~ 853

' 141 990

9 155 1 15

15 158 1 22

6 155 1 18

6 158 1 23

6 157 1 28

6 157 1.40

7 156 1 44

22

22

22

13

2 9

2 8

2 9

2 9

1 9

1 8

1 9

1 9

1 9

1 9

LEGENDSPS --—STX Median—-TXUS Median—-US

-TOTN. OMll iBOPENSE

TO TOTAL KVNs SOLDSPS vs Texas and US Median

5. 00

C

4.00t

rU8 ~~e ~~+ yes Qasm~~-TX

kW

3. 00

2.0082 83 84 85 87

Calendar, Year88 90

~ ~ ~ 0 h h 4 II 5 I 6 1 L

SPS USYR UTIL Value Median

Total 06M ExpenseTo Total kWhs Sold

SPS vs Texas and US MedianCents Per kNh


Percentile US g of TX Percentile TX 4 ofRank Rank XOUs Median Rank Rank XOUs

82 SPS -3.48 3.37

83 SPS 3.76 3.44

84 SPS 3.58 3 51

85 SPS 3 01 3 73

86 SPS 3.07 3 60

87 SPS 2.90 3.55

88 SPS 2 89 3.53

89 SPS 2.83 3.58

90 SPS 2.54 3.55

91 SPS 2.46 3.67

54

58

26

28

24

24

23

13

12

80 147 4 32

85 146 4 53

87 167 4 41

45 173 4.26

49 174 3 56

41 174 3 '941 173 3.56

40 172 3.66

22 171, g.,64

21 170 3.45

44

30

20

20

20

20

20

10

10

4 9

9

3 10

2 10

2 10

2 10

2 10

2 10

1 10

1 10

Customer Density oi'ervice Ter ritoriesInvestor Owned Utilites

60

60

40

c 30

o 20

'10

0ISPS NSTX MediFh EIUS Median

Source: 1991 UDI Database

Customer Density of Service TerritoriesInvestor Owned Utilities


SPS US Percentile US 4 of TX Percentile TX 4 ofUTILITY Value Median Rank Rank IOUs Median Rank Rank IOUs

SPS 123 132 15 89 8 9

Exhibit 0TH-3Page 21 of pg

HEAT RATES

Rank Company Heat RateBtu/kWh

1

2

3

4,

5

6

7

8

9

10

11

12

14

15

Commonwealth Energy System

Cincinnati Gas 8 Electric

New York State Electric & Gas

DPL

Eastern Utilities Associates

Potomac Electric Power

American Electric Power

Allegheny Power System

Detroit Edison

United Illuminating

Duke Power

New England Electric

Southwestern Public Service

Florida Progress

Southern Company

9,379

9,886

9,898

9,912

9,922

9,925

f,9539,956

9,980

9.986

9,996

9.999

'.003: 0.007

',022

'ource:Electric Li ht and Power Ma azine- August1992

LEGENDSPS ----STX Median---TXUS Median---US

ANNUALSYSTEM NET HEAT. RATESPS vs Texas and US Median

10700

10600

10500

8T

104009

P

10300r

k

10200

bs- --= - - - -US-~ tlatOS

rTA

10100

10000

9900 r Vm ~ sr m~t8 4 85 86 87 88 89 90

Calendar Year

Sour ce: 1991 UD1 Dot obooe

Annual System Net Heat RateSPS ms Texas and US Median

BTUs Per kHh


SPS US Percentile US 4 of TX Percentile TX f ofYR UTIL Value Median Rank Rank IOUs Median Rank Rank IOUs

82 SPS

83 SPS 10401 10635

84 SPS 10123 10548

85 SPS

86 SPS 9927 10600

87 SPS 9961 10525

88 SPS 10149 10555

89 SPS 9939 10568

90 SPS 9975 10537

91 SPS 10003 10531

30

18

15

21

13

19

10515

19 64 10549

14 78 10402

10502

9 73 10421

14 93 10447

22 105 10434

9 104 10511

14 105 10527

15 81, A/94

50

17

17

17

14

13

33

~ 3

2 4

1 6

~ 5

1 6

1 6

1 7

1 8

1 8

1 3

LEGENDSPS —--STX Median—-TX

. US Median—-US

ENERGY lDSSES AS A PERCENTOF TOTALENERGY


9.00

a.oo

P

fCe'. 00nt

6.00

/rr 5 ~r Ia

s.oo82

Iij(

84 as 86 87 aa

Co l endar Year

Energy Losses as a Percentof Total Energy

SPS vs Texas and US MedianPercent


:>P:i 'l.'i Pttt t ttrtt i 1» US I of TX Percentile TX 0 ofYIl O'I'I I. Y,t I ttt ~ Ht tl t.ttt H.tttk 8'tttk IOUs Ht'dian Ilank Rank IOUs

82 SVS 7.09 6.09

83 SPS &. 03 6. 63

84 SPS 7.70 5 75

85 SPS 7 16 6.50

86 SPS 6.83 6.02

87 SPS 7.28 6.16

88 SPS 6.68 5.90

89 SPS 6.47 6.00

90 SPS 6.&1 5.47

91 SPS 6.38 5.37

/0

76

&3

63

67

72

65

63

72

99 142 6.39

104 136'.40114 137 5 '6

78

100

105 156 6.44

114 158 6.32

105 162 5.78

103 163 6.26

127 161 5.18~ mr

115 160 5.28

70

90'0

80

90

70

100 158 7 00 60

7 9

6 8

9 9

6 10

7 10

9 10

8 10

8 10

9 10

7 10

LEGENDSPS --—STX Median—-TXUS Median—-US

TOTALORIGINALCOSI'RODUC'TIONANTTQ NEI CAPACITYSPS vs Texas and US Median

sao

500

r'tS

400P

r ~

k

300

~rr~.R"

.r

200r~ rr~ rQgg~ rr~ rr+

~g ~ \ f ~ ~ ~ ' / ~ ~ ~ ~ f I I

85 86 87

Colendor Yeor88 90

Total Original Cost Production Plant to Net CapacitySPS vs Texas and US Median.

$ Per kW


SPS US Percentile US 5 of TX Percentile TX 4 ofYR UTIL Valuo Median Rank Rank IOUs Median Rank Rank ZOUs

91 SPS 290 478

82 SPS

83 SPS 238 283

84 SPS 238 301

85 SPS

86 SPS 280 370

87 SPS 282 395

88 SPS 283 402

89 SPS 285 408

90 SPS 208 440

32

24

24

19

17

12

12

181

31 98 178

24 101 181

244

24 101 312

21 108 291

18 113 372

20 118 393

13 105 502

10 81 395

88

86

38

38

25

13

25

~ 7

7 8

6 7

~ 7

3 8

3 8

2 8

2 8

1 8

1 4cc

LEGENDSPS ----STX Median--'-TXUS Median---US

TOTAL ELECTRIC PUWTTO TOTAL KNfH SALES


19. 0

18.0

17. 0

16. 0

. nts 15.0Pe 14.0r

13. 0W

h

12. 0

/~

l'1.

0

'IO. 0

--—--TX9 00 r- - — ~.- ~ r

52 53 54 55 86 87 88 89 90

Calendar Year

Total Electric Plant To Total kNhSPS vs Texas and US Median

Cents Per kHg.

USUS Total

SPS US Percentile US ' of TXYR UTIL Value Median Rank Rank IOUs Median

Sales

TXTX Total

Percentile TX g ofRank Rank IOUs

82 SPS 10.6 12 0

83 SPS 10.5 12 '84 SPS 9 '9 12 2

85 SPS 10 3 13 F 1

86 SPS 11 7 13 8

87 SPS 11 6 14 6

88 SPS 11 ' 14 '89 SPS 10.4 14-4

90 SPS 11.2 14.8

91 SPS 11.5 15.5

35

32

34

33

34

33

32

27

29

32

49.

54

171 17 1~ mr

170 18.1

'1 147 9 26

47 146 9 '257 167 . 9 '257 173 10 3

59 174 12.1

57 174 12 '55 173 14 9

47 172 15 1

100.

89

67

56

33

9 9

8 9

6 9

5 9

4 9

3 9

33 3 9

1 9

1 9

33 - 3 9

c

~ ~

~ i

LEGENDSPS —--STX Median—-TXUS Median—-US

AYERAGE REStDENT|AL RATESPS vs Texas and US Median

8.OO7. 907. 807.707.6O7. 50

C 7.407.30

t7.20

P 7.10r '.00k 6 90

6.806.7O6.606.506.406.306.206. 10

82

~+~+apx-r

83 8S 86 87 88 89

48-

90

Calendar Year

h I ~ P n n ~

Average Residential RateSPS vs Texas and US Median

Cents per kWh


SPS US Percentile US f of TX Percentile TX 8 ofYR UTIL Value Median Rank Rank IOUs Median Rank Rank IOUs

82 SPS 6.98 6.74

83 SPS 7.59 7 '584 SPS 7.48 7.44

85 SPS 6.99 7.60

86 SPS 7.19 7.52

87 SPS 7.09 7.63

88 SPS 6.89 7.52

89 SPS 6.68 7.68

64

52

38

41

41

36

31

77 133 6.98

85 133 7 47

78 150 7 45

57 . 152 7 45

62 151 6 91

62 152 6 75

55 152 7.02

47 151 '7-13

2C 149 7.49

2'.) l 4 0 ~ Vie,94

56

67

60

40

80

70

50

40

10

10

5 9

6 9

6 10

4 10

8 10

7 10

5 10

4 10

1 10

1 10

lEGENDSPS —--STX Median—-TXUS Median—-US

AVERAGE NNlNERCIALRATESPS vs Texas and US Median

c

n1

7. 20

7. 10

7. 00

6. 90

6.806.706.606.506.a0

,r g

OS qy~~~~US

P~ ~ 6. 30

'6. 20k 6. 10

6 ~ 00

5.905.805.705.605.50

4»»»»»

00lD V

O

hJ rt

8

l ' I

85 86 87

Colendor Yeor88 89 90

Average Commercial RateSPS vs Texas and US Median

Cents per kHh


SPS US Percentile US 4 of TX Percentile TX f ofYR UTIL Ualue Median Rank Rank IOUs Median Rank Rank IOUs

9 $t~ )Il~ !).40 ).05

82 SPS 6.05 6.50

83 SPS 6.70 6.69

84 SPS 6.61 6-82

85 SPS 6 07 7.05

86 SPS 6.43 6.87

87 SPS 6.34 6.77

88 SPS 6.19 6.85

89 SPS 6.07 6.87

90 SPS 5.57 7.01

35

-41

35

37

37

33

15

47 134 6. 05

68 134 6 70

62 150 6 93

37 152 7 13

53 151 6 36

56 153 6.35

56 153 6.32

50 152 6.58

20 150 6.95

22 149 ':13

56

40

30

60

50

40

30

30

20

5 9

4 10

3 10

6 10

5 10

4 10

3 10

3 10

2 10

LEGENDSPS ----S .

TX Median——TXUS Median—-US

AVERAGE INDUSTRlALRATESPS vs Texas and US Median

5. 305.205. 10

5.004.904. 80

4.704.804.50

Pe 4.40r 4.30k 4.20

4. 10

4. 00

3.903.803.703.803.50

82 83 84

e a~oa~

'

87

Calendar Year88 89 90

Average Industrial RateSPS vs Texas and US Median

Cents per kNh

USUS Total

Sf'S US f'ercentile US f ofYR U'l'll. Valui. Hi.dsan Bank Bank ?OUs

TXTX Total

TX Percentile TX 4 ofHedian Rank Rank IOUs

02 bl'5 4.44 4.91

03 SPS 4.92 4.92

84 SPS 4 87 5.09

85 SPS 4 40 5.17

86 SPS 4 47 5.02

87 SPS 4 41 4 86

88 SPS 4.37 4.79

89 SPS 4.08 4.85

90 SPS 3.67 4.81

91 SPS 3.50 4.09

50

42

29

31

28

13

12

46 136 5 15

68 136 5.22

64 153 5.08

38 156'-0745 155 4.35

49 156 4.26

57 156 4.31

44 155 4 24

20 152 4.27

18 151 ~.25

40

10

70

60

60

40

10

10

4 9

4. 9

4 10

1 10

7 10

6 10

6 10

4 10

1 10

1 10

LEGENDSPS ——STX Median—-TXUS Median-—US

AVERAGE RETAlLRATESPS vs Texas and US Median

7. 00

C

6.oonte

P

er

kW

S.00

~rr~r+rr~

~ ) ~ I ~ ~ t ~ ~ t ~ ~ ~ l f' ~

8e 87

Calendar Year89

~ h I ~ ~ ~ tL I \ ~ ~

Average Retail RateSPS vs Texas and US Median

Cents per kWh

US TXUS - Total TX Total

SPS US Percentile US 5 of TX Percentile TX I ofYR UTIL Valne Meclian Bank Rank IOUs Median Rank Rank ZOUs

02 S I'5 >.31

91 SI".i 4. z I 6..'>9

83 SPS 5.06 6.09

84 SPS 5.78 6.33

85 SPS 5.31 6.35

86 SPS 5 49 6.45

87 SPS 5.41 6 27

88 SPS 5.30 6.38

89 SPS 5.04 6-42

90 SPS 4.62 6.52

29

19

23

24

25

19

39 136 5.00

59 136 6.41

52 153 6.35

29 156 6.33

35 155 5 49

38 156 5.41

39 156 5.56

30 155 5 71

17 152 5 98

12 15 1 6ra97

33

40

10

60

30

10

10

10

3 9

'4 9

4 10

1 10

6 10

6 10

3 10

1 10

1 10

1 10

LEGENDSPS ——-STX Median—-TXVS Median——US

~ AVERAGE RATE /otal Sales}SPS vs Texas and US Median

7.00

c6.oo

nte

ar

kW

S.OO

USi rUS US

Cpl

rt O4~~ee~

4.ou~ t ~ r-

$~ ~ ~ ~ -

$~ t t r ) ~ r~l r

0 5 86 87

Calendar Year88 89

Average Rate (Total Sales)SPS vs Texas and US Median

Cents per kNh


SPS US Percentile US 4 of TX Percentile TX 4 ofYR UTIL Value Median Rank Rank XOUs Median Rank Rank IOUs

82 SPS 4.92 5.62

83 SPS 5.57 5.85

84 SPS 5.41 5.92

85 SPS 4.73 6.06

86 SPS 5 03 6.06

87 SPS 4 85 5 96

88 SPS 4 55 5 82

89 SPS 4.35 5.94

90 SPS 4.12 5.88

91 SPS 4.05 6.02

31

37

21

24

18

18

16

15

46 147 5.50

65 146 5.99

61 167 F 09

36 173 6 15

42 174 5 '436 174 5 '531 173 5-32

31 172 5 63

27 171 5.84

26 170 ~ ~.97

33

30

10

20

30

10

10

10

10

3 9

4 9

3 10

1 10

2 10

3 10

1 10

1 10

1 10

1 10

LEGEND.SPS --—STX Median—-TXUS Median-—US

NUMBER OF CUSTOMERS PER EMPlDYEESPS vs Texas and US Median

1 SO

180

170

C

U

160ta

re 150

~» «8S

aQeseaa~aaaJgoaaeaaa~ ««U5

USWS

140

l 30I I I

8 2 8 3 84 85 86 87

Calendar Year89

nnr r s ~ lan l llnl h

Number of Customers per EmployeeSPS vs Texas and US Median

f of Customers


SPS US Percentile US I of TX Percentile TX 4 ofYR UTIL Value Median Hank Bank IOUs Median Rank Rank IOUs

82 SPS 131 156

83 SPS - 136 158

84 SPS

85 SPS

144 161

149 164

I l 4 1 I tl

86 SPS 162 166

87 SPS 170 170

88 SPS 173 175

89 SPS 172 177

70

70

64

64

56

50

58

95 135 165

92 132 149

84 132 144

97 152 160

85 152 169

77 153 177

85 154 179

89 154 179

82 151 179

nj 150 eak84

67

63

56

60

60

60

60

70

70

70

6 9

5 8

5 9

6 10

6 10

6 — 10

6 10

7 10

7 10

7 10

'rC

000

V''t

0

c

Exhibit DTH-3Page 42 of 44

SPS RECOGNIZED AS A SUPERIOR OPERATING COMPANY

1. 1978 — "Outstanding Electric Utility in the UnitedStates" by E ectr'c Li t Powe Magazine.

2. 1985 —-"Outstanding Business in Texas" by theAssociation of Business and presented by the Governor.

3. 1989 — "VIVA" Award from New Mexico Governor GaryCaruthers.

4. 1991 — po"wer plant Award" by power Magazine.

5. 1991 — "James McGraw Award" from c 'ca Wo 1Magazine for management and leadership.

6. Texas Governors Energy Office awarded grants forelectric van research and wind generation studies.

7. 1992 — Ranked in top 15 utilities in U.S. for lowestheat rate by Electrical Li ht Power Magazine.

Average Cost of ElectricitySouthwestern Public Service CompanyCents/kWh

01983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993

~ Rual System Cost 'verage System Cost

rg tltX

00 V'

S r.rt

'ased oui CPI-U

~ ~

~ ~

~ ~

~ ~ ~ ~ ~ ~

~ ~o ~ ~

~ ~

~ ~o~ ~~ o

~ o ~~ ~

~ ~ ~

~ ~

~ ~ ~ o

~ ~ ~ ~

~ ~

~ ~ ~ ~

~ - ~ ~ o ~ ~ ~

~ - - ~

~ ~ ~

~ ~

~ ~

~ ~ ~-I

~ ~

~ - ~ ~ ~ ~

~ ~ ~ ~ ~-

I I o ~

Exhibit DTH-4

Net Present Value of Applicants'laimed Benelits

FuelB»tatedt,.',t

t ~ ~

(2)PurchasedCap>r.>ty

~ ~ '>t

~ >

T rt>nmisston1 ..sl

> ~ ~

~ ~

(4)Other

TransmissionCost

~»v>t>tr>

TotalTransrassion

Cost»>v>tt()'8

s>> J >t

(6)Total Net

ProductionCost

Savingslc utp))

Non-FuelO&MCost

Savings($000)

(8)

FinancialCost

Savings($000)

(9)

TotalCost

Savings($000)

t.> >>.

t Ju/1998199920002001200220032004

2.Ui24,0663.9024,3105,9036.3354,596

6654,0804,4574,4104,5904,374

~ »(t„t>/s)(1.653)(2,880)(2,904)(3,039)(2,966)(2,925)(3,014)

> ~ > A > tt J/J)(>J') ( t. /t>/)(29) (1,682)

(509) (3,389)(478) (3,382)(452) (3,491)(617) J3,583)(759f L3,68+4(519) (3,533)

< '>tt4/

1.3611,1401,3424,6005,2766,7307,2415,437

7.4191/. l7222,87724,10224,79725,36227,07029,01729,87228,597

24,22324.04423,74723,31822,961

6,8626,7506,6496.6176,675

31,89341,36347,98548,56049,10036,82439,09642,39643,73040,709

10-yr total

NPV (1995, I= 8.0%)

37,936 22,576 (23,571) (3,416) (26.987/33,525'8,944

236,285

149,988

151,846

112,917

421,656

281.849

Source: Bruggeman's workpapers and Exhibit (JAB-14) APP-53.

~

'I

f'j

Exhibit DTH-5

Gross Fuel Savings Relative to Total Fuel Costs

Applicants'uel

CostSavirvjs(501 IU)

Applicants'02

AllowanceCosts(501 III)

(3)

Total'Errergtr

CostSavlrlgs($0(xrl

(4)

Applicants'otal

f'uelCosts($1100)

(5)

Applicants'avings

as aPercent ol

Total(1$ ).

I ~ ~ >

I'JV/I 'J'> llIuu'j20002001200220032004

~,II ~ I >

I I 'I,'?J4 ut>u4.U384,4 11

6.1426,5334,715

(136)(101)(238)(197)(120)

I I'. II '> I'I,I I? I? 0?.14.0I>53.9024,3105.9046,3364,595

I I>?tr ~ I; '

I IUI .1>UU

I 8 J4.?UII 'J(>8.431?.133,1JU2.282.3192,481,8232,632.2602,772.2832,975.613

0 IIII'>>.

I I 0'I">

0 I I'I>,

0 14'rv

0 t>JSv

0 tI%0.175$0.225$0.23'50.155$

38.727 P92) 37.935 22.415.719 O.1 75$

Source: Oruggernan's workpapers.

Exhibit DTH-6Page 1 of 2

Analysis of Alternative Uses of Artesia HVDC Interconnection Facilities(Assuming $2.54/t(W EPE Transmission Rato)

EPE'sAneslaHVOC

Capacity(MW)

EPE FirmPurchasefrom SPS

(IJW)

EPE'sProposedCapadlyTranster

(MW)

Remaining. Available

Capacity(MW)

(5)

AvaltableCapadly

TransmissionRevenues

(5000)

(6)

RequiredSPS

TransmissionCosts($000)

RetainedEnergySavings($000)

~ a ae eae

(8)

602Altowance

Costsf000)

(9)

PurchasedCapadty

CostSavings

$000~

(fe)

OtherTmnsmlssfon

Costs( 000)

AlterantlveTotalNet

Benefits($000)

(12)

ApplicantsProposed Net

ProductionSavings(0o)

I'I'I'>Iu'JUIu'J I1 uuu199>J

20002001200220032004

10-yr total

I ~

I I I( III.I I

1JJ133133133133133

Iu3353(9)1536

(1 I'> (1

I I Il.l.t12J10080

13311897

~ 'a u>

I e'(u4 Ie'>4

4 us43./4 >J

3.0482.4384.0543,5972,957

32+48

n0

(211)(121)

(ta211)201

(330)(816)

(3,093)

0u0u

3061.0021.758

416737

t F77

5,494

n0(1

0

(136)(101)(238)(191)(120)

P92)

0000

6654,0804.4574,4104.5904,374

22.576

65(26)(92)(29)

(509)(478)(452)(617)P59)(519)

(3,416)

2.5951,7423.9624.0253.9946.7956,88982257.6377,152

53.017

251146

1.3601.1411.3414,60053766.1317g425.436

33.524

Present Value (1995.I=8.0%) 32,597 18.943

(1) EPE-owned portion of Artesla lfVOC interconnection capacity.(2) EPE wholesale panial-requirements firmpurchase from Southwestern.

(3) trom Ood(et No. EC94-7-000. Exhblt (JAB-9) APP-48.(4) Remaining ava(tat(le 1tvoc caps(I(t(ty alter reflecting Applicants'tatud hrm needs.

(5) trans(ssx>n (uvsnuu PU(unbar 1>y IransnutluxJ powur and uns((ty throu<Jh (hu availablu caf(ac(ty ot thu llvoc Inlurconnschon.IL(sa ~ I ~U.> u> ~ »u le ~ Iu> ~ el 5J '>4 I >V u> ~ ~ (I 1 1 '( Intr I((>ne(f

e ~ ~ e 4 I ~ (~, ~ . ~ ~ I I ~

~ ~ e ~ a ( ~ ~ ~ a ) a ~ r a I al a I e> ~" I (JU> n II>U> J >e>U Ie (tul(( n(untS

>a Xa ~ ~ ~ ~ ~ ~ ~ a ea ~ ~ al'a 'e ~ I~ I a>l U ~ ' > ~ 'I a e, I ~ Ietl ~ lte'I> ~ >I>I' ln,>lru('

~ ~ ~ 'e ~ ~ ~ ~ e e ~ I ~ e ( ~ u ~ r' e» I>BI >U (lee'>I (le'I t>le>>1»> 1» II (>~ !UUI(ISa(laly&~ ~ ~ et, ~ a I ~ a> ~ e NI>e I ae u a ee » ~ I 1» ~ I> ~ Ie >U I>~ >(ee'l>1:e ~ ((>ulr >v>

~, ~ ( ~ '(,a ~ >., ',I ~ ~ ., a s .I I( ( A>(~ -.e > I IV(I> »n;( leone ( (IIIUUllu I Illul (llu 'ite(lutuilvJ ol economy u(l(u(Jy

(( 'I +title>,u>I'a e r rte 'e Ii ( ~ le>ala>la ~ et%i Ia>UJ'

Exhibit 0TH-6Pago 2 ot 2

Analysts of Alternative Uses of Artesia HVDG Interconnection Facilities(Assuming $ 1.60/kEN EPE Transmission Rate)

EPE'sArleslaEIVOC

CapacityW)

EPE FirmPurchasehorn SPS

(4)

EPE'sProposed RemainingCap actty AvailableTransfer Capacity

(M

(5)

AvailableCapacity

TransmissionRevenues

(6)

RequiredSPS

TransmissionCosts( 000)

P) '. = i -> (8)

PurchasodCapacity

CostSavtngs

000)

(!0)

OtherTransmission

Costs( 000)

AlterantlveTolalNet

Benefits00

(12)

Applicants'roposedNet

ProductionSavings

00

199519961997199S199920002001200220032001

10-yr total

I33133133133133133133133133133

so/5

103353(9)1536

8358

13313312310080

13311897

1,5941,1142.5542.5542,3621 .9201,5362,5542.2661,862

20.314

0000

(217)P21)

(1,21 I)201(330)(816)

(3,093)

0000

3061,0021,758

416737

1»2 77

5,494

00000

(136)(101)(238)(1 97)(120)

P92)

0000

6654,0804.4574.4104,5904,374

22,578

65(26)(92)(29)

(509)(4 78)(452)(617)P59)(519)

(3>416)

1,6591,0882,4622,5252,6075,6675.9876,7256,3066.058

4 1,083

251146

1,3601.1411,34 I4,6005.2766,73 I7.2425.436

33.524

Present Value (1995,1~8.0 >(>>)24.711 I8,943

(I) EPE-owned portion ol A(testa EIVOC Interconnection capacity.

(2) EPE wholesale partial-requirements firmpurchase from Southwestern.

(3) trom Docket No. EC94-7-000. Exhibit (JAB-9) APP-48.(4) Remaining availablo IIVOCcapabikly atter reflecting Applicants'taled hrm needs,

(5) rransissfon Ievenuo potent>at by tfansmltt>ng power and energy through tho avadablo capaoty ol tile I IVOC Interconnoction.

It lv>>>r »n .I nu>nu>lr I.lul»I 5 I I>or>I>v lu» tcslv I <>mt»n>'0)

,I, ~ » v„.lf ~ I I> ~ . »»;. > ~ > ~ . ~ >...~, I,> I I. ~ ',I "»

n ~ 'I l ' ' I \' ~ > ~ ~ '.> Iht'» ~ ~ I I>l>~ ~ >I I n » ' I» ll> II II'll»','>el»llI>'Iiulfenleflts

~ I ~ ': ~ . > ~ a > ~ -'. ~ I I'> ll ~ » I ~ I I > ~ I » I»' I >'l»rt,.l>l>1~I'

~ I~ ~ ~ z '

~ ~ I. ~ ~,', >> >, ~ '~ .I;.> ~ ~ > ~ I ~ », I I » ".»' I ~ 'I I l>»n>> I»» I I»:l»>r>ts sfl'lip'srs4» ~ ~ ~ ~ ~ I" I > I ~ '> I ~ I I ~ I » '» I ~ 'll>'r>r; >Il.>I(

I~ »I I ~ .~ ~ ~ ~ ~' »"> I ~ ~ ', ' I ~ ~ ~ > I >:I~ ~ »>I.~ ».I><>ll l>u>>.'I Ir>JII II>>'ItlclrllllIfl>J ot I,coflolny enenjy.

Exhibit DTH-7

Net Present Value of Applicants'laimed BenefitsUsing Applicants'ransmission Alternative 2

345 kV Transmission from Nichols Station to Southwest Station

(1)Fuel

RelatedCost

Savings($000)

(2)Purchased

CapiLityCost

. Savings($000)

(3)SPS

TranmissionCost

Savings($000)

(4)Other

TransmissionCost

Savings($000)

(5) '6)Total Total Net

Transmission ProductionCost Cost

Savings Savings($000}, ($000)

1995199619971998199920002001200220032004

10-yr total

NPV (1995, i=8.0%)

1,3541,5203,1282,8224,0663,9024,3105,9036,3354,596

37,936

6654,0804,4574,4104,5904,374

22,576

(1 ~ 168)(1,347)(1,675)(1,653)(8,583)(8,607)(8,742)(8,669)(8.628)(8,717)

(57,791)

65(26)(92)(29)

(5,100)(5,069)(5,043)(5,208)(5,350)(5,110)

(30,962)

(1.103)(1,373)(1,767)(1,682)

(13,683)(13,676)(13,785)(13.877)(13,978)(13,827)

(88,753)

251147

1,3611,140

(8,952)(5,694)(5,018)(3,564)(3,053)(4,857)

(28,241)

(16,035)

(3) Assumes annusf incremental cost recovery ol $5.703.3 (thousands) lor Southwestern's incremental facilities.

(4) Assumes ennud incremental cost recovery of $4,591 (thousands) for PSO's incremental facilities.

Exhibit DTH-8

Net Present Value ot Applicants'laimed BenefitsUsing Southwestern's Necessary System Improvements Analysis

FuelRelated

t %ihr

Py

1. ~ ~

(2)PurchasedCirpa:rty

t ..v:~4

Q ~ ~

(3)SPS

Trarin3ssronC~st

(4)Other

TransmissionCost

~ ilrlgb,4lAt)

TotalTransfAsslon

CostSavingst$irrali

(6)Total Net

ProductionCost

Savings(QXr0)

I„ra'i19M19971998199920002001200220032004

10-yr total

NPV (1995, f=8.0%)

J 1 "tt2.8224,0663,9024,3105,9036,3354,596

37,936

6654,0804,4574,4104,5904,374

22,576

t t J4/rl 1.6/5)(1.653)

(12,365)(12,389)(12,524)(12,451)(12,410)(12,499)

(80,481)

l,''r r

(92)(29)

(509)(478)(452)(617)(759)(519)

(3,416)

il herrt 1.3/3)(1.76'I)

'1,682)(12,874)(12,867)(12,976)(13,068)(13,169)(13,018)

'83,897)

~'att4/

1,3611 ~ 140

(8,143)(4,885)(4,209)(2,755)(2,244)(4,048)

(23,385)

(13,286)

(3) Assumes annual incremental cost recovery ol $9,485 (thousands) for Southwestern's incremental facilities.

~ ~r

AFFIDAVITOF JOHN S. FULTON

STATE OF TEXAS )

)

COUNTY OF POTTER )


appeared John S. Fulton, who being by me first duly sworn did depose and

say as follows:

My name is John S. Fulton. I am Principal Engineer in charge of

System Planning for Southwestern Public Service Company

("Southwestern" ). I hold a Bachelor of Science degree and Master of

Science degree in Electrical Engineering from New Mexico State University.

I am a Registered Professional Engineer in the State of New Mexico.

I have been employed by Southwestern since 1979. In my initial

assignment, I was responsible for software development of advanced

application software for the Energy Management System at our System

Control Center, in Amarillo, Texas. In 1982, I was named System

Operations Supervisor and in which position I supervised and directed the

day-to-day operation of Southwestern's generation and transmission

system. The responsibilities of this position included coordination of daily

generation scheduling and fuel procurement, scheduling of all equipment

outages on the bulk transmission system, and interchange sales and

purchases with other utilities. In 1992, I assumed the position of Principal

Engineer in charge of System Planning. In my current position, I am

responsible for evaluating Southwestern's transmission system and planning

and budgeting future transmission additions on the Southwestern system. I

Affidavi of John S. F 1

on'ave

testified before the Public Utility Commission of Texas and I filed an

affidavit about the reliability issues surrounding Applicants'roposed use of

Southwestern's transmission system. My affidavit was attached to the

"Protest, Motion to Dismiss, Motion to Intervene, and Answer of

,

Southwestern Public Service Company" in Docket No. TX94-2-000.

A. ~IdI have reviewed portions of the application in Docket No. EC94-7-000

("Application") by Central and South West Corporation ("CSW") and El Paso

Electric Company ("EPE" and jointly referred to as the "Applicants"). They

have understated the incremental costs on Southwestern's transmission

system associated with their proposal to transmit power and energy across

Southwestern's electrical system. I have done a preliminary study for the

year 2000 based on information received to date. I have made a preliminary

estimate of Southwestern's system improvements needed to accommodate

their transaction if it is ordered to be provided by the Commission. These

improvements include new or upgraded facilities on Southwestern's

electrical system and increased interconnection capability between

Southwestern's system and the Southwest Power Pool ("SPP"). I have also

estimated the cost to add more transfer capacity at the Eddy County High-

Voltage Direct-Current ("HVDC") interconnection which Applicants propose

to dominate. However, these estimates do not include estimates for

incremental facility requirements after 2000 since I have not had the time or

information to study them.

B. Descri ion of Sou hwes em's ransmission s s em

Southwestern's location and tie-lines are shown in Exhibit JSF-1,

Schedule 1. Southwestern is connected with the CSW operating companies

at several locations. The first connection with Public Service of Oklahoma

Page 2

Affidav'fJohn S. Ful on

("PSO") is from Southwestern's Nichols Station to PSO's Elk City

Interchange, shown as Line A in Exhibit JSF-1, Schedule 1, via a 230 kV

transmission line. The second connection with PSO is a 345 kV line from

Southwestern's Tuco Interchange ("Tuco") to PSO's North HVDC

Interconnection near Oklaunion, Texas ("Oklaunion") ~ This line is shown as

Line B in Exhibit JSF-1, Schedule 1. A lesser interconnect is with West

Texas Utilities Company ("WTU"), a CSW operating company, and is from

the 115 kV bus at Nichols Station to WTU's 115 kV interchange at

Shamrock, Texas. At this interchange, there is a voltage transformation

from 115 kV to 69 kV and 69 kV to 138 kV. This is necessary because

Southwestern's system is designed for 115 kV but WTU's system is

designed for 138 kV, as is most of western and southern Oklahoma. The

north WTU system, which resides in the SPP, is operated and dispatched

by PSO.

Southwestern also has an interconnect with WestPlains Energy, a

division of Utilicorp, Inc. ("WestPlains"). This interconnect is a 115 kV line

from Southwestern's Texas County Interchange near Guymon, Oklahoma to

WestPlains'iberal Interchange at Liberal, Kansas. This line is shown as

Line D in Exhibit JSF-1, Schedule 1.

Southwestern also has two interconnects with the Western Systems

Coordinating Council ("WSCC"). The Blackwater HVDC Interconnect near

Clovis, New Mexico, is shown by Line E in Exhibit JSF-1, Schedule 1. This

HVDC interconnect is rated 200 MW (nominal) and is operated by Public

Service Company of New Mexico ("PNM"). The second HVDC interconnect

is the Eddy County HVDC Interconnect near Artesia, New Mexico, as shown

by Line F on Exhibit JSF-1, Schedule 1. This HVDC interconnect is jointly

owned by EPE (2/3 capacity) and TNP (1/3 capacity) and operated by

Page 3

Affidavitof John S. Fulton

Southwestern. The rating of this interconnect is 200 MW (nominal). These

HVDC interconnects to the WSCC do not have the response characteristics

in a system disturbance that Southwestern's other synchronous interties

have nor the response characteristics that are necessary to provide reliable

'service to Southwestern's customers. A simplified interconnection diagram

is also provided as Exhibit JSF-1, Schedule 2. A diagram of the western

Oklahoma 345 kV system is provided as Exhibit JSF-1, Schedule 3.

Southwestern's internal transmission system consists of transmission

lines operated at 345 kV, 230 kV, and 115 kV. Subtransmission voltages in

use are 69 kV and 33 kV. The only internal 345 kV transmission line is

from Tolk Station, near Muleshoe, Texas to the Eddy Co. Interchange, near

Artesia, New Mexico. The bulk transmission network is primarily 230 kV

transmission lines. Many of the 230 kV transmission lines are terminated in

230/115 kV autotransformers to distribute the power to the lower voltage

Southwestern's transmission system was not designed fo'r through

transfer of bulk power, but was designed to carry the power from its

generating plants to the major load centers on its system. Southwestern's

service territory covers 52,000 square miles. Exhibit JSF-2 illustrates

Southwestern's internal transmission system.

C. Estimate of Southwes em's u rade cos s

Based on the Applicant's requested transmission service,

Southwestern has made preliminary studies to determine if additional

transmission system improvements would be required to provide the

Applicant's request for 133 MW of bi-directional firm transmission service

while allowing no degradation in reliability to our native system customers.

The transfer value that was studied was 133 MW.

Page 4


Southwestern obtained its results by conducting powerf low studies

based on the SPP 2000 Summer Peak base case, which was released on

January 25, 1994. Southwestern replaced its basic system information

contained in the SPP base case with more detailed transmission information

about Southwestern's transmission system. This detailed model information

contains approximately 677 buses as opposed to the 93 buses which are

used in the SPP model to represent Southwestern's system. This enhanced

model allows the analyst to determine additional effects near the boundaries

of So'uthwestern's system, which will not be apparent with a less detailed

model. The Applicant's studies were based on the less detailed

representation of Southwestern's system, and are insufficient to do a

complete study. I explained this in more detail in my other affidavit filed in

Docket No. TX94-2-000 which I referenced earlier.

Based on my preliminary analyses, internal system improvements, as

shown in Exhibit JSF-4, will have to be made due solely toApplicants'roposed

transaction across Southwestern's system. The minimal

transmission and substation upgrades have been identified for the year

2000. Several transformers will need replacement or uprating at a total cost

of $ 4.7 million. Several transmission lines will need to be reconductored or

rebuilt and the cost is estimated at $ 2.68 million. The total identified costs

for the 2000 year are $ 7.38 million. These costs are based on an analysis

of internal loading for the 2000 summer and winter periods. I would expect

additional incremental improvements to be needed for the years between

2000 and 2005 because incremental improvements must be made to the

transmission system to provide the Applicants their requested transmission

service while meeting the load growth of Southwestern's system and not

impacting the reliability of service to Southwestern's native customers.

Page 5

Affidav of John S. Fulton

Analysis of more significant uprating and modification to provide the

Applicant's requested transmission service is continuing. Analysis through

2005 is being conducted to determine other transmission system

improvements which are required to provide firm from bi-directional service

for the Applicants.

Additional studies were made to determine if increased tie-line

capacity would be required to provide Southwestern's customers with

continued reliability and provide the Applicant's with their assumed 133 MW

of firm bi-directional transmission service. Southwestern's transmission

facilities interconnecting its system to the SPP were built to instantaneously

import power in the case of a forced outage of a large generating unit on

Southwestern's system. When power is scheduled into Southwestern

system, like Applicants propose to do up to 133 MW, Southwestern's

effective instantaneous import capability is reduced. This increases the

likelihood that if Southwestern's system suffers a forced outage of one of

its larger generating units, its remaining import capability will be insufficientW

to provide enough power to maintain Southwestern's frequency. If such a

situation occurs, then Southwestern will have to cut off customer loads until

Southwestern can get its instantaneous supply and demand in equilibrium. I

covered these reliability problems in much more detail in my other affidavit

filed in Docket No. TX94-2-000.

My analyses show that Southwestern needs to increase its

interconnection capability with the SPP much like the Applicants'originally

indicated in their May, 1993, request to Southwestern to jointly perform

transmission system studies.

In the workpapers of Mr. James A. Bruggeman are listed interconnect

alternatives for Southwestern to provide transmission service from PSO to

Page 6


EPE. Alternative 2 is the construction of a 345 kV interconnect from PSO's

Southwestern Station to Elk City and on to Amarillo. The Applicant's

estimated cost of this new interconnect is $ 53,760,000. The studies filed

in my affidavit in Docket No. TX94-2-000 fully support the fact that another

strong 345 kV interconnect is needed for Southwestern to provide the

transmission service with no adverse impact to.our customers.

Our studies of the interconnect enhancements required to support the

Applicants'equested transmission service are continuing, but other

alternatives exist for another 345 kV interconnection besides those

proposed by Mr. Bruggeman. Studies will be made as to the suitability of an

interconnect with Sunflower Electric Cooperative. This interconnect would

be shorter and less costly, the current estimate is $ 38,750,000, and may

provide more reliable operation than Mr. Bruggeman's Alternative ¹2.

Another alternative which requires consideration is an interconnect

with Oklahoma Gas and Electric at the Cimarron bus near Oklahoma City,

Oklahoma. The estimated cost of this alternative is $ 41,200,000.

Construction of, this additional interconnection would prevent the problem

which I discussed in my affidavit filed in Docket No. TX94-2-000 on page

44, paragraph g.

I have identified problems with the reconductored Cudahy-Judsonh

Large 115 kV line in southwestern Kansas. Preliminary studies indicate that

this line, which now has a lower impedance than before, may be more

subject to overloading than in previous studies. This supports the need to

perform a regional transmission study of the Applicants'roposal.

D. U radin h E d Co HVDC converter

If the Applicants continue to insist that they will use the total capacity

in the Eddy County HVDC interconnection, then Southwestern will be

Page 7

Affidav of John S. Fulton

required to invest in additional HVDC capacity in order to reach wholesale

markets in southern New Mexico.

The existing Eddy Co. HVDC converter is nominally rated at 200 MW

and has an emergency rating of 220 MW. Uprating of the converter is not

considered feasible due to the age of the design. An increase in the rating

would also require replacement of the converter transformers with higher

capacity units and likely require rebuilding of the harmonic filters.

The Eddy Co. HVDC unit was placed into service in 1984. It has

analog control systems and the particular thyristor which is used in the

direct current valves is no longer. manufactured. Southwestern, as operator

of the facility, is currently attempting to find replacement units for the

thyristors. The design is approaching obsolescence and an uprating of the

existing design does'not appear financially prudent, especially if it has to be

replaced shortly.

Southwestern would have to construct another HVDC converter

adjacent to the existing one at the Eddy County Interchange. This unit may

be a 100 MW, 200 MW, or 300 MW unit. The costs of the converters vary

based on many electrical design parameters. However, a 100 MW

converter would cost approximately $ 32 million. In addition to the cost of

the converter, substation work must be done on both the east and west

busses of the Eddy Co. HVDC facility. Additional 345 kV breakers must be

added to properly protect the equipment. All of these other facilities would

cost an additional $ 4.3 million. Therefore, the total cost to increase the

Eddy County HVDC interconnection would be $ 36.3 million, excluding

AFUDC.

J n S. Fulton

Page 8

Affid vi of John S. Ful on

STATE OF TEXAS )

)

COUNTY OF POTTER )

SWORN TO AND SUBSCRIBED BEFORE ME thIa~3 day of February,1994, by JOHN S. FULTON.

~"" '4'~c ANlTAKAYHUNNlCNTNOTARYPUSLC,

STATE OF TEXAS

uV CCMMSSCNEXPSES24 97

Notary Public, tate of Texas

Affidav of John S. Ful on

EXHIBITLIST FOR THE AFFIDAVITOF JOHN S. FULTON

JSF-1 Schedule 1 - Diagram Showing Tie-Lines With SouthwesternSchedule 2 - Simplified Area DiagramSchedule 3 - 345 kV Transmission System in Western Oklahoma

JSF-2 Southwestern Public Service Company Transmission Diagram

JSF-3 Cost Estimates

JSF-4 Determination of Internal Limitations For 2000 Summer and Winter

Schedule 1 - 2000 Summer Peak - No CSW TransfersSchedule 2 - 2000 Summer Peak - 133 MW PSO to EPESchedule 3 - 2000 Summer Peak - 133 MW EPE to PSOSchedule 4 - 2000 Winter Peak - No CSW TransfersSchedule 5 - 2000 Winter Peak - 133 MW PSO to EPESchedule 6 - 2000 Winter Peak - 133 MW EPE to PSO

HT.volcett

8lso

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srrett

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EXHIBIT JSF-ISchedule l

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LINE 0TEXAS CO.—

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S AND SURROUNDING AREAffGPD GEURIC POcfff Pfdvff

~fRIC POVQT ffJHTTR ILXTLKT~TRICPOeof PLfdff0 IftJN SLTISTctfTOI

dCMM TCC fiaCLfff0 IftJN PNTLJCTKH CSICTSR

~SOP SV S OCSR ffkVCSHTSSCCH LOCS~ 545 ST TRHCSHCSSTOI LOef~ZN CT TIIKCSHTSSTOI LOES—ff5m RV TIVHPCCSSRH LmTRIHQCTSSRH LDE ftOCITGI fLLancaster

'

EXHIBIT JSP-ISchedule 2

SIMPLIFIED INTERCONNECT DIA.GRAN

Y/E S TPL A I NS

L IBERAL

115KV

TEXAS CO.

WSCC

HVDC

BLACKWATER

SPS

N I CHOLS 23PKVN I CHOLS

115KV

ELK CITY

PSO

WTU

SHAMROCK,'UCO

QKLAUNI ON345KV

HVDCEDDY CO.

WEST OKLA.HOMA W5KV SYSTEM0 FOSSIL TRIC FOYER PLANT8 IITDRO~TRIC FOYER PUYITQ NKLEAR~TRIC FOYER PLANT0 NAJCR SLSSTAT KNev ACME TIE FACILITYO IILIOIPCPLLATKN CENTER

~588 KY 8 OYER TRAN5HL5IDN LOTS~SIS KY TRANSHISSIOI LDES~238 KY TRANSNISSKII LOES

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ITORY SERVED BY

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EXHIBITJSF-3

Cost Estimates for the Year 2000

These are estimates for the summer and winter period of 2000 only. Theyrepresent the minimum investmentin 1993 dollars, without AFUDC, that isrequired to provide the Applicant's requested transmission service for thisyear on/y.

1. Replace Cunningham Plant 230/115 kV transformer $ 2,000,000with 225 MVA unit.

2. Replace Eddy County 230/115 kV transformer with $ 2,000,000225 MVAunit.

3. Add second 75 MVA 115/69 kV transformer atGray County Interchange

S 700,000

4.

~ Reconductor Yoakum County Interchange-ODC115 kV line with 795 MCM conductor.

630,000

Rebuild Potter County Interchange-Harrington Plant $ 1,540,000230 kV line with bundled 795 MCM conductors.

6. Reconductor Osage-Canyon east 115 kV line with S 510,000795 MCM conductors.

Total Estimated Costs for Year 2000 Only $7 380 000

EXHIBITJSF-4

SCHEDULE 1

2000 SUMMER PEAK - NO CSW TRANSFERS

The Southwestern system was studied by outaging each transmissionelement one at a time. No transfers for CSW were being made in thisstudy. Only those outages which caused overloads or voltage abnormalitieswere reported in this report. Most of the contingencies which causeabnormally low voltages do so by loss of source to a step-down transformerand the transformer is being back-fed from a lower voltage source. Thesecontingencies do not indicate a problem, since the protective relayingremoves both the line and transformer from service at the same time.

Contingency 94 indicates that the Nichols ¹1 generator will be reaching itsmaximum reactive power output during this contingency.

Contingency 253 allows the serving of a 115 kV load from a 69 kV linewhich is not normally done. The result indicates that this is not desirableand it is not a limitation for the operation of Southwestern's system.

PTI INTERACTIVE PSIER SYSTEM SIMULATOR--PSS/E MON, FEB 4 13:36

SPPOOSP NITH SPS IHTERHAL MODIFICATIONS - 2/14/94 BCNO XSFERS. THIS STUDY USES A 14.4 M-COMP AT CONHAY.(SMCOMP)

»** ACCC OVERLOAD REPORT: MONITORED ELEMEHTS LOADED ABOVE 100.0 X OF RATING SET A ******ACCC VOLTAGE REPORT: VOLTAGES ABOVE 1.0500 OR BELSI 0.9500 »»»

SUBSYSTEM DESCRIPTIOH FILE: C:iPSSE21ABCiSPPOOSP.SUBMOHITORED ELEMENT FILE: C:iPSSE2IABCiSPP93SP.MONCOHTINGENCY DESCRIPTION FILE: C:iPSSE21llQCiSPPOOSP.COH

XOPEN LINE

XOPEN LINE

XOPEN LINE

X-- 0 V E R L 0 A 0 E D L I N E S --X X--MVA(MH)FL(XI--XC 0 H T I N G E N C Y E V E H T S -----.--X FROM NAME TO NAME CKT PRE-CNT POST-CNT RATING

PERCEHI'ROM

BUS 113 [PRINGLE 230] TO BUS 335 [HARRNGTH 230] CKT 1 - CONTINGENCY SINGLE 18*»» HONE ***

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS ----X V(PU)BUSES IIITH VOLTAGE LESS THAN 0.9500: 113 PRINGLE 230 0.8920

X-- 0 V E R L 0 A D E D L I H E S --X X--MVA(MH)FLOH--XC 0 N T I N G E N C Y E V E N T S --------X FROM HAME TO NAME CKT PRE-CHT POST-CHT RATING PERCEHTFROM BUS 121 [MOORE 230] TO BUS 329 [POTTR CO 230] CKT 1 - ---.-------------.---------------CONTINGENCY SINGLE 24 '"

*»* NONE *"*

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X - --- BUS ----X V(PU)BUSES HITH VOLTAGE LESS THAN 0.9500: 121 MOORE 230 O.B568

X-- 0 V E R L 0 A D E D L I N E S --X X--MVA(MH)FLOH--XC 0 N T I H G E N C Y E V E N T S --------X FROM NAME TO NAME CKT PRE-CHT POST-CHT RATING PERCENTFROM BUS 192 [HUTCH(S) 115] TO BUS 230 [GRAY CO 115] CKT 1 CONTINGENCY SINGLE 39

***NONE **»

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS ----X V(PU)BUSES QITH VOLTAGE LESS THAM 0.9500: 230 GRAY CO 115 0.9240

XOPEN LINE

X-- 0 V E R L 0 A D E D L I N E S --X X--MVA(MH)FLN--XC 0 H T I H 0 E H C Y E V E N T S --------X FROM NAME TO NAME CKT PRE-CHT POST-CHT RATING PERCENTFROM BUS 193 [HUTCH 230] TO BUS 345 [HICHOLS 230] CKT 1 - COHTINGENCY SIHGLE 41

***NONE *»*

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X----- BUS ---- X V(PU) MBUSES HITH VOLTAGE LESS THAH 0.9500: 193 HUTCH 230 0.9154

XOPEN LINE

X-- 0 V E R L 0 A D E D L I N E S --X X--MVA(KQ)FLDH--XC 0 H T I H G E H C Y E V E H T S --------X FROH NAME TO NAME CKT PRE-CHT POST-CHT RATING PERCENTFROM BUS 250 [KNGSMILL 115] TO BUS 344 [HICHOLS 115] CKT 1 - ------------------------------- COHTIHGENCY SINGLE 42

»*» NONE »»»

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X.----- BUS --.--X V(PU)BUSES NITH VOLTAGE LESS THAM 0.9500: 250 KNGSMILL 115 0.9006

0

0

0

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

PTI INTERACTIVE PSIER SYSTEH SIMULATOR--PSS/E MOH, FEB 1 4 13:36

SPPOOSP IllTH SPS IHTERHAL HODIFICATIOHS - 2/14/94 BC

NO XSFERS. THIS STUDY USES A 14 ~ 4 H-COMP AT CONNAY.(SMCOMP)

*~~ ACCC OVERLOAD REPORT: MOHITORED ELEHEHTS LOADED ABOVE 100.0 X OF RATING SET A ******ACCC VOLTAGE REPORT: VOLTAGES ABOVE 1.0500 OR BELSl 0.9500 ***

XOPEN LINE

X-- 0 V E R L 0 A D E D L I H E S --X X--MVA(N)FLSl--XC 0 N T I M G E N C Y E V E N T S --------X FROM NAHE TO NAHE CKT PRE-CHT POST-CHT RATIHG PERCEHT

FROI BUS 262 [BSlERS 115) TO BUS 268 [E PAHHDL 115] CKT 1 CONTINGENCY SINGLE 43NONE *

X---- - BUS - ---X V(PU) X------ BUS -----X V(PU) X------ BUS -- - X V(PU)BUSES lllTH VOLTAGE LESS THAH 0.9500: 262 BS}ERS 115 0.9089

XOPEN LIME

XOPEH LINE

X-- 0 V E R L 0 A D E 0 L I N E S --X X--MVA(N)FLSI--XC 0 M T I N G E N C Y E V E N T S -------X FROM NAME TO NAME CKT PRE-CNT POST-CNT RATING PERCENT

FROH BUS 268 [E PANHDL 115] TO BUS 269 [E PAHHDL 230] CKT 1 COHTIHGEHCY SINGLE 44*a* MONE ***

X- ---- BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS ".--X V(PU)BUSES IlITH VOLTAGE LESS THAH 0.9500: 262 BS}ERS 115 0.9101 268 E PANHDL 115 0.9101

X-- 0 V E R L 0 A D E D L I H E S --X X--MVA(N)FLSI--XC 0 H T I H G E H C Y E V E N T S --------X FROM NAME TO NAME CKT PRE.CHT POST-CHT RATING PERCENT

FRDH BUS 420 [RANDALL 115] TO BUS 421 [RAHDALL 230) CKT 1 - CONTINGENCY SINGLE 94341 HICHOLS 13.8 3444HICNOLS 115 1 108.2 113.4 113.0 100.4

XOPEN LIME

X-- 0 V E R L 0 A 0 E D

C 0 H T I H G E N C Y E V E N T S --------X FROM NAHE TO

FROM BUS 634 [COX 115] TO BUS 636 [LH-COX 115] CKT 1

L I H E S --X X--MVA(N)FLSI--XNAME CKT PRE-CHT POST-CHT RATING PERCEHT

CONTINGENCY SINGLE 141**4 NONE 4**

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES HITH VOLTAGE LESS THAN 0.9500: 634 COX 115 0.8784

XOPEH LIHE

X-- 0 V E R L 0 A 0 E D

C 0 H T I M G E N C Y EVENTS -------X FROM NAME TO

FROM BUS 636 [LH-COX 115) TO BUS 676 [HALE CO 115) CKT 1

L I N E S --X X--MVA(N)FLSl -XNAME CKT PRE-CHT POST-CHT RATING PERCENT

CONTINGENCY SINGLE 142***MOME ***

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES I}ITH VOLTAGE LESS THAM 0.9500: 634 COX 115 0.8626 636 LH-COX 115 0.8626

XOPEN LINE

X-- 0 V E R L 0 A D E D

CONTINGENCY EVENTS--------XFRDH HAHE TO

FROH BUS 689 [TOLK 230] TO BUS 717 [LAMB CO 230] CKT 1

L I H E S --X X--MVA(N)FLSl--XHAME CKT PRE-CHT POST-CHT RATIHG PERCENT

- COHTIHGEHCY SIHGLE 154*~* NONE **~

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

PTI IHTERACTIVE POWER SYSTEH SIMULATOR--PSS/E HOH, FEB 1 994 13:36

SPPOOSP WITH SPS INTERNAL MODIFICATIONS - 2/14/94 BC

NO XSFERS. THIS STUDY USES A 14.4 H-COMP AT COHWAY.(SHCOHP)

***ACCC OVERLOAD REPORT: MONITORED ELEMENTS LOADED ABOVE 100.0 X OF RATING SET A *****» ACCC VOLTAGE REPORT: VOLTAGES ABOVE 1.0500 OR BELOW 0.9500 ***

X - BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS --- -X V(PU)BUSES WITH VOLTAGE LESS THAN 0.9500: 717 LAHB CO 230 0.8602

XOPEH LIME

X-- 0 V E R L 0 A D E D

C 0 N T I H G E H C Y E V E N T S --------X FROM NAME TO

FROM BUS 773 [TUCO 230] TO BUS 774 [TUCO 345] CKT 1

L I H E S --X X--HVA(HW)FLOW -XMANE CKT PRE-CNT POST-CHT RATING PERCENT

CONTINGEHCY SINGLE 166 I.«*» HOME ***

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS X V(PU)BUSES WITH VOLTAGE GREATER THAM 1.0500: 774 TUCO 345 1.1192

XOPEH LINE

XOPEN LINE

X--OVE R LOADEDC 0 H T I H G E H C Y E V E H T S --------X FROM NAME TO

FROH BUS 773 [TUCO 230] TO BUS 843 [CARLISLE 230] CKT 1

X------ BUS -----X V(PU)BUSES WITH VOLTAGE LESS THAN 0.9500: 843 CARLISLE 230 0.9397

X-- 0 V E R L 0 A D E D

C 0 H T I H G E H C Y E V E H T S --------X FROM NAME TO

FROM BUS 869 [JONES . 230] TO BUS 945 [GRASSLND 230] CKT 1

L I N E S --X X--HVA(HW)FLOW -XHAHE CKT PRE-CNT POST-CHT RATING PERCENT

COHTIHGEHCY SINGLE 167***HOME ***

X------ BUS -----X V(PU) X------ BUS -----X V(PU)

L I H E S --X X--HVA(HW)FLOW--XHAHE CKT PRE-CHT POST-CNT RATING PERCENT

CONTINGENCY SINGLE 189 v*«* NOME *«»

XOPEN LINE

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES WITH VOLTAGE LESS THAN 0.9500: 945 GRASSLMD 230 0.8725 1811 BORDEN 230 0.8762

X-- 0 V E R L 0 A 0 E D L I N E S --X X--HVA(HW)FLOW--X

C 0 H T I N G E N C Y E V E H T S --------X FROM NAME TO NAME CKT PRE-CHT POST-CHT RATING PERCENT

FROM BUS 944 [GRASSLND 115] TO BUS 948 [GRAMAH 115] CKT 1 CONT IHGEHCY SINGLE 207***NOME ***

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES WITH VOLTAGE LESS THAN 0.9500: 948 GRAHAM 115 0.8781

XOPEH LIME

X-OVER LOADEDC 0 N T I N G E H C Y E V E N T S --------X FROM NAME TO

FROM BUS 945 [GRASSLHD 230] TO BUS 1811 [BORDEN 230] CKT 1

L I N E S --X X--HVA(HW)FLOW--XMANE CKT PRE-CHT POST-CHT RATING PERCENT

CONTINGENCY SINGLE 208*»* NOME *««

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES WITH VOLTAGE LESS THAN 0.9500: 1811 BORDEN 230 0.8597

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

PTI INTERACTIVE POMER SYSTEH SIHULATOR--PSS/E HOH, FEB 994 13:36

SPPOOSP 'M[TH SPS INTERNAL KOOIFICATIONS - 2/14/94 BC

NO XSFERS. THIS STUDY USES A 14.4 H-COHP AT CON'MAY.(SHCOHP)

»*» ACCC OVERLOAD REPORT: HONITORED ELEHEHTS LOADED ABOVE 100.0 X OF RATING SET A **»**» ACCC VOLTAGE REPORT: VOLTAGES ABOVE 1.0500 OR BELOM 0.9500 *»»

X-- 0 V E R L 0 A D E DX-------- C 0 H T I N G E H C Y E V E H T S --------X FROH HAHE TO

OPEN LINE FROH BUS 971 [YOAKUH 230] TO BUS 1037 [DEHVER C 230] CKT 1-L I H E S --X X--HVA(HM)FLOM--X

HAHE CKT PRE-CNT POST-CNT RATING PERCEHT- COHTINGENCY SINGLE 218

***NONE »*»

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES MITH VOLTAGE LESS THAN 0.9500: 1037 DENVER C 230 0.8781

X-- 0 V E R L 0 A D E DX-------- C 0 H T I H G E N C Y E V E H T S --------X FROH HAHE TO

OPEN LINE FROH BUS 1150 [ARTESIA 115] TO BUS 1152 [HAVAJO 3 115] CKT 1-L I N E S --X X--HVA(HM)FLOM--X

NAHE CKT PRE-CHT POST-CNT RATIHG PERCENT- COHTIHGENCY SINGLE 252

»»» NONE »*»

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES MITH VOLTAGE LESS THAN 0.9500: 1150 ARTESIA 115 0.8878

X-- 0 V E R L 0 A D E D L I N E S --X X--HVA(HM)FLOM--XX-------- C 0 N T I N G E N C Y E V E N T S --------X FROH NAHE TO HAHE CKT PRE-CNT POST-CNT RATING PERCEHT

OPEN LINE FROH BUS 1152 [HAVAJO 3 115] TO BUS 1170 [EDDY CO 115] CKT 1- - COHTINGEHCY SINGLE 2531163»ART C CL69.0 1165 ART SO R69.0 1 6.9 40.8 41.0 101.3

X-.---- BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES MITH VOLTAGE LESS THAN 0.9500: 1150 ARTESIA 115 0.8743 1152 NAVAJO 3 115 0.8741

X-- 0 V E R L 0 A D E DX-------- C 0 H T I H G E N C Y E V E H T S --------X FROH HAHE TO

OPEN LINE FROH BUS 1168 [ATOKA 115] TO BUS 1170 [EDDY CO 115] CKT 1-L I N E S --X X--HVA(HM)FLOM--X

NAHE CKT PRE-CHT POST-CNT RATING PERCEHT- CONTINGEHCY SIHGLE 254

***HONE »»*

X-.---- BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES M[TH VOLTAGE LESS THAN 0.9500: 1168 ATOKA 115 0.8642

X-- ----- C 0 N T I N G E N C Y E V E N T S

OPEN LINE FROH BUS 1177 [LEA CO 230] TO BUS

X-- 0 V E R L 0 A D E D--------X FROH NAHE TO

1841 [HIDLAHD 230] CKT 1

L I H E S --X X--HVA(HM)FLOM--XNAHE CKT PRE-CHT POST-CNT RATING PERCENT

CONTINGENCY SINGLE 263*»* HONE *»»

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES MITH VOLTAGE GREATER THAN 1.0500: '1841 HIDLAND 230 1.2315

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

PTI IHTERACTIVE POMER SYSTEH SINULATOR--PSS/E HON, FEB 1 4 13:36

SPPOOSP MITH SPS INTERNAL NOOIFICATIOHS - 2/14/94 BC

NO XSFERS. THIS STUDY USES A 14.4 H-CORP AT CON'MAY.(SHCONP)

»»» ACCC OVERLOAD REPORT: HOHITORED ELEHEHTS LOADED ABOVE 100.0 X OF RATING SET A»»****ACCC VOLTAGE REPORT: VOLTAGES ABOVE 1.0500 OR BELOM 0.9500 ***

XOPEN LINE

X-- 0 V E R L 0 A D E D

C 0 N T I N G E N C Y E V E H T S --------X FRON HANE TO

FRON BUS 1178 [CUHNIHNH 115] TO BUS 1258 [SAH AN T 115] CKT 1

L I N E S --X X -HVA(NM)FLOM--XNAHE CKT PRE.CHT POST-CHT RATING PERCENT

- CONTINGENCY SINGLE 266***NONE *»»

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES MITH VOLTAGE LESS THAN 0.9500: 1256 LE-SAH A 115 0.8611 1258 SAN AH T 115 0.8593 1264 BUCKEYE 115 0.8585

XOPEN LINE

X--OVERLOADEDCONTINGENCY EVENTS------XFRN RANE TO

FROH BUS 1179 [CUNNIHHN 230] TO BUS 1183 [POT JCT 230] CKT 1-L I H E S --X X--HVA(HM)FLDM--X

MAKE CKT PRE-CNT POST CHT RATING PERCEHT- CONTIHGENCY SIHGLE 269 ~

»»» NOHE »»»

XOPEN LIHE

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES 'MITH VOLTAGE LESS THAN 0.9500: 1183 POT JCT 230 0.8934

X-- 0 V E R L 0 A D E D, L I H E S --X X- NVA(HM)FLOM--XCOHT INGENCY EVENTS--------XFRN HANE TO NANE CKT PRE-CHT POST-CHI'ATING PERCEHT

FROH BUS 1179 [CUHHIHKH 230] TO BUS 1273 [TAYLOR 230] CKT 1- - CONTINGENCY SINGLE 270 ~»»* NONE »»»

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X--- -- BUS -----X V(PU)BUSES MITH VOLTAGE LESS THAN 0.9500: 1273 TAYLOR 230 0.9118

XOPEN LINE

X-- 0 V E R L 0 A D E D

C 0 N T I N G E N C Y E V E N T S --------X FRN NAHE ~ TO

FRON BUS 1230 [CARLSBAD 115] TO BUS 1232 [FIESTA 115] CKT 1

L I H E S -.X X--NVA(HM)FLOM--XRANE CKT PRE-CNT POST-CHT RATING PERCEHT

CONTINGENCY SINGLE 280*»* NONE ***

X------ BUS -----X V(PU) X------ BUS ----X V(PU) X------ BUS -----X V(PU)BUSES M]TH VOLTAGE LESS THAN 0.9500: 1232 FIESTA 115 0.8460 1236 HOPI 115 0.8522

XOPEH LINE

X-- 0 V E R L 0 A D E D

C 0 H T I N G E H C Y E V E N T S --------X FRN HANE TO

FROH BUS 1232 [FIESTA 115] TO BUS 1236 [HOPI 115] CKT 1 .

L I H E S --X X--HVA(HM)FLOM--XNANE CKT PRE-CHT POST CHT RATING PERCEHT

COHTINGEHCY SINGLE 281 l.»** NONE **»

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES MITH VOLTAGE LESS THAN 0.9500: 1236 HOPI 115 0.9001

PTI INTERACTIVE POVER SYSTEN SIHULATOR.-PSS/E NOH( FEB 1 4 13:36

SPPOOSP NITH SPS INTERNAL NDDIFICATIONS - 2/14/94 BCNO XSFERS. THIS STUDY USES A 14.4 N-CONP AT COHHAY.(SKCONP)

***ACCC OVERLOAD REPORT: NONITORED ELENENTS LOADED ABOVE 100.0 X OF RATING SET A a**i**ACCC VOLTAGE REPORT: VOLTAGES ABOVE 1.0500 OR BELON 0.9500 ~~*

X-- 0 V E R L 0 A D E DX-------CONTINGENCY EVENTS--------XFRON HAHE TO

OPEN LINE FRON BUS 1256 [LE-SAH A 115] TO BUS 1258 [SAH AN T 115) CKT 1

L I N E S --X X--NVA(HN)FLN--XNAHE CKT PRE-CHT POST-CHT RATING PERCENT

CONTINGENCY SIHGLE 283**4 NONE *At

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES ll[TH VOLTAGE LESS THAN 0.9500: 1256 LE-SAN A 115 0.8897

EXHIBITJSFK

SCHEDULE 2

2000 SUMMER PEAK - 133 MW PSO TO EPE

In this series of contingencies, a 133 IVIW transfer from PSO to EPE wasstudied. Again, the Southwestern system was studied by outaging eachtransmission element one at a time.

Contingency 108 indicates that the Osage - Canyon East 115 kV line will beloaded above its thermal limit.

P

Contingencies 94, 148, 153, and 157 indicate that those generators will beproducing higher reactive output to support the transmission system inthose respective contingencies.

0

0

~ j

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

PTI INTERACTIVE POUER SYSTEH SIHULATOR- PSS/E HOH, FEB 16:29

.SPPOOSP M[TH SPS IHTERNAL HODIFICATIOHS, 133 HN PSO/EPE200 HN ERCOT/PSO, 66 KN SPS/TNP. (SPOOHCOHP30) - 2/14/94 BC

»*» ACCC OVERLOAD REPORT: HOHITORED ELEHENTS LOADED ABOVE 100.0 X OF RATING SET A ******ACCC VOLTAGE REPORT: VOLTAGES ABOVE 1.0500 OR BELOU 0.9500 ***

SUBSYSTEH DESCRIPTIOH FILE: C:iPSSE21NiBCisPPOOSP.SUBHOHITORED ELEHENT FILE: C:iPSSE2INiBCiSPP93SP.HOHCOHTINGEHCY DESCRIPtlOH FILE: C:iPSSE21lliBCisPPOOSP.COH

XOPEN LINE

X-- 0 V E R L 0 A D' D L I H E S --X X--HVA(HN)FLOU--XC 0 N T I H G E N C Y E V E H T S ---"" X FRN HAHE TO HAHE CKT PRE-CHt POST-CHT RATING PERCENTFRN BUS 113 [PRIHGLE 230] TO BUS 335 [HARRHGTH 230] CKT 1 - - -----------.---.--"---------CONtlNGENCY SINGLE 18***NONE

XOPEN LINE

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES NITH VOLTAGE LESS THAN 0.9500: 113 PRINGLE 230 0.8935

X-- 0 V E R L 0 A D E D L I N E S --X X--HVA(HU)FLOU--XC 0 N T I H G E N C Y E V E H T S ------"X FRN NAHE TO NAHE CKT PRE-CHT POST-CHT RATING PERCENTFRN Bus 121 [HooRE 230] To Bus 329 fpoTTR co 230] CKT 1- -----------.------- CONTINGENCY SIHGLE 24

*»* HONE »**

x----- Bus ----x v(pu> x------ Bus -----x v(pu> x----- Bus -----x v(pu>BUSES lllTH VOLTAGE LESS THAN 0.9500: 121 HOORE 230 0.8584

XOPEH LINE

X-- 0 V E R L 0 A D E DC 0 N T I H G E N C Y E V E H I' -"-----X FRN HAHE TOFROH BUS 192 [HUTCH(S) 115) TO BUS 230 [GRAY CO 115] CKT 1

L I H E S --X X-.MVA(HN)FLOU--XNAHE CKT PRE-CHT POST-CHI'ATING PERCENT------------------ COHTIHGEHCY SIHGLE 39

»»» NONE ***

XOPEN LINE

XOPEH LINE

X------ BUS -----X V(PU) X---- - BUS -----X V(PU) X------ BUS -----X V(PU)BUSES llltH VOLTAGE LESS THAN 0.9500: 230 GRAY CO 115 0.9223

X-- 0 V E R L 0 A D E D L I N E S --X X--HVA(HN)FLOU--XC 0 N T I H G E H C Y E V E H T S --------X FROH NAHE TO NAHE CKT PRE-CN't POST-CHT RAT IHG PERCENTFRN BUS 193 [NutCH 230) TO BUS 345 [HICNOLS 230] CKT 1 ----- CNTINGEHCY SINGLE 41

*»* NONE **»

X----- BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES NITH VOLTAGE LESS THAN 0.9500: 193 HUTCH 230 0.9157

X-- 0 V E R L 0 A 0 E 0 L I N E S --X X--HVA(HU)FLOU--XC 0 N T I N G E H C Y E V E H T S --------X FRN HAHE TO HAHE CKT PRE-CNT* POST-CNT RATING PERCEHTFROH BUS 250 [KNGSHILL 115] TO BUS 344 [HICNOLS 115) CKT 1 ------------------ CONTINGENCY SINGLE 42

*»* HONE »*»

X------ Bus -----X V(PU) X------ Bus -----X V(PU) X------ BUS -----X V(PU)BUSES QITH VOLTAGE LESS THAN 0.9500: 250 KNGSHILL 115 0.8982

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

PTI INTERACTIVE PSIER SYSTEH SIISLATOR--PSS/E~ ~ ~ ~ ~ ~

HOH, FEB 1 4 16:29

SPPOOSP NITH SPS INTERNAL HOOIFICATIONS, 133 HN PSO/EPE200 W ERCOT/PSO, 66 HN SPS/TRPB (SPOOHCOHP30) - 2/14/94 BC

ii*ACCC OVERLOAD REPORT: NOHITORED ELEKEHTS LOADED ABOVE 100.0 X OF RATING SET A ~*~*~* ACCC VOLTAGE REPORT: VOLTAGES ABOVE 1.0500 OR BELON 0.9500 ***

XOPEN LINE

X-- 0 V E R L 0 A D E D L I N E S --X X--NVA(N)FLON--XC 0 H T I N G E N C Y E V E N T S --------X FROH HAHE TO HAHE CKT PRE-CHT POST-CHT RATING PERCENTFROH BUS 262 [BDHERS 115] TO BUS 268 [E PAHHDL 115] CKT 1 --- CONTINGENCY SINGLE 43***NOHE ~*~

XOPEN LINE

X------ BUS ----X V(PU) X ----- BUS -----X V(PU) X-----. BUS -----X V(PU)BUSES M[TH VOLTAGE LESS THAN 0.9500: 262 BONERS 115 0.9088

X-- 0 V E R L 0 A D E D L I N E S --X X--HVA(N)FLN--XCONTINGENCY EVENTS-------XFROH HAHE TO HAHE CKT PRE-CHT POST-CHT RATING PERCENTFR& BUS 268 [E PAHHDL 115] TO BUS 269 [E PAHHDL 230] CKT 1 -------------- COHTIHGENCY SINGLE 44***HONE ~~*

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES NITH VOLTAGE LESS THAN 0.9500: 262 BSIERS 115 0.9101 268 E PAHHDL 115 0.9102

XOPEH LINE

X-- 0 V E R L 0 AC 0 N T I H G E N C Y E V E N T S --------X FROH HAHEFROH BUS 420 [RANDALL 115] TO BUS 421 [RAKDALL 230] CKT 1

341 HICHOLS 13.8342 HICHOLS 13.8

D E D L I H E S --X X--HVA(HN)FLDN--XTO NAHE CKT PRE-CHT POST-CNT RATING PERCEHT---- COHTINGEHCY SINGLE 94

344iNICHOLS 115 1 108.4 113.8 113.0 100.7344iHICHOLS 115 1 107.5 113.0 113.0 100.0

XOPEH LINE

X-- 0 V E R L 0 A D E D L I N E S --X X--NVA(HN)FLON--XCONT! NGEHCY EVENTS-------XFROH HAHE TO NAHE CKT PRE-CHT POST-CHT RATING PERCENTFRQI BUS 470 [DF SHITH 115] TO BUS 471 [DF SHITH 230] CKT 1 - COHTINGENCY SINGLE 108

416~OSAGE 115 458 CANYON E 115 1 42.1 72.9 69.0 102.2

XOPEN LINE

X-- 0 V E R L 0 A D E 0C 0 N T I H G E H C Y E V E N T S --------X FROH NAHE TOFROM BUS 634 [COX 115] TO BUS 636 [LH-COX 115] CKT 1

L I N E S --X X--HVA(HN)FLSI--XHAHE CKT PRE-CNT POST-CHT RATING PERCENT---------- ---- CONTINGEHCY SINGLE 141

***HONE l**X------ BUS --- X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)

BUSES MITH VOLTAGE LESS THAN 0.9500: 634 COX 115 0.8788

XOPEH LINE

X--OVERLOADEDC 0 H T I N G E N C Y E V E H T S --------X FROH NAHE TOFR@I BUS 636 [LH-COX 115] TO BUS 676 [HALE CO 115] CKT 1

L I N E S --X X--HVA(HN)FLON--XHAHE CKT PRE-CNT POST-CHT RATING PERCENT-------------------- CONTINGENCY SINGLE 142

4** HONE

X------ BUS -----X V(PU) X------ BUS ---- X V(PU) X------ BUS -----X V(PU)BUSES NITH VOLTAGE LESS THAN 0.9500: 634 COX 115 0.8612 636 LH COX 115 0.8612

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

e PTI INTERACTIVE POVER SYSTEM SIMULATOR--PSS/E MOH, FEB 4 16:29

SPPOOSP lllTH SPS INTERNAL MODIFICATIONS, 133 MN PSO/EPE200 MN ERCOT/PSO, 66 MN SPS/TNT (SPOOMCOHP30) - 2/14/94 BC

»»* ACCC OVERLOAD REPORT: MONITORED ELEMENTS LOADED ABOVE 100.0 X OF RATING SET A *****» ACCC VOLTAGE REPORT: VOLTAGES ABOVE 1.0500 OR BELOJ 0.9500 «**

X

OPEH L!NE

XOPEN LINE

XOPEN LIHE

X

OPEN LINE

XOPEH LINE

X-- 0 V E R L 0 A D E D L I H E S --X X--MVA(N)FLON--XC 0 N T I N G E N C Y E V E N T S --------X FROM NAME TO NAME CKT PRE-CNT POST-CNT RATING PERCENTFROM BUS 678 fPLANT X 115] TO BUS 679 [PLANT X 230] CKT 1 ------- - CONTIHGEHCY SINGLE '148

679*PLANT X 230 684 PLANT X 20.0 1 188.7 194.9 194.0 100.5

X-- 0 V E R L 0 A D E 0 L I N E S --X X"MVA(MN)FLON--XC 0 N T I N G E H C Y E V E N T S --------X FROH NAME TO NAME CKT PRE.CHT POST-CHT RATING PERCENTFROM BUS 689 [YOLK 230] TO BUS 690 [TOLK 345] CKT 1 - -----------------------------------COHTINGEHCY SINGLE 153

679 PLANT X 230 684 PLANT X 20.0 1 188.7 194.5 194.0 100.3

X-- 0 V E R L 0 A D E D L I N E S --X X--MVA(MN)FLON--XC 0 H T I N G E N C Y E V E N T S --------X FROH NAME TO NAME CKT PRE-CHT POST-CNT RATING PERCENTFROM BUS 689 [TOLK 230] TO BUS 717 [LAMB CO 230] CKT 1 - "---------------------------------CONTINGENCY SINGLE 154

**» HONE »*»

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES NITH VOLTAGE LESS THAN 0.9500: 717 LAMB CO 230 0.8593

X-- 0 V E R L 0 A D E D L I N E S --X X--MVA(MN)FLON--XC 0 N T I N G E N C Y E V E N T S --------X FROM NAME TO NAME CKT PRE-CNT POST-CHT RATING PERCENTFROM BUS 690 [TOLK 345] TO BUS 1172 [EDDY CO 345] CKT 1- - --------------------------CONTINGENCY SINGLE 157

679 PLANT X 230 684 PLAHI' 20.0 1 188.7 199.6 194.0 102.9

X-- 0 V E R L 0 A D E D L I H E S --X X- MVA(MM)FLON -XC 0 H T I H G E N C Y E V E H T S -.-------X FROM NAME TO NAME CKT PRE-CNT POST-CHT RATING PERCEHTFROM BUS 775 [TUCO 230] TO BUS 774 [TUCO 345] CKT 1 -----------------.------ CORI'INGENCY SIHGLE 166

«»» HONE ***

XOPEN LINE

XOPEN LIHE

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS --- -X V(PU)BUSES NITH VOLTAGE GREATER THAN 1.0500: 774 TUCO 345 1.1179

X-- 0 V E R L 0 A D E D L I H E S --X X--MVA(MN)FLON--XC 0 H T I N G E N C Y E V E N T S --------X FROH NAME TO NAME CKT PRE-CHT POST-CHT RATIHG PERCENTFROH BUS 773 [TUCO 230] TO BUS 843 [CARLISLE 230] CKT 1 ------------------------CONTINGENCY SINGLE 167***NOHE »»»

X------ BUS "--X V(PU) X------ BUS -----X V(PU) X------ BUS ---.-X V(PU)BUSES NITH VOLTAGE LESS THAN 0.9500: 843 CARLISLE 230 0.9258

X-- 0 V E R L 0 A D E D L I N E S --X X--MVA(N)FLON--XC 0 N T I N G E H C Y E V E H T S --------X FROM NAME TO NAME CKT PRE-CHT POST-CHT RATING PERCENTFROM BUS 869 [JONES 230] TO BUS 945 [GRASSLND 230] CKT 1 ".--------------------------------CONTINGENCY SIHGLE 189***HONE **»

PTI INTERACTIVE PONER SYSTEH SIHULATOR--PSS/E HON( FEB 1 4 16:29

BUSES

SPPOOSP IIITH SPS IHTERNAL H(X)IFICATIONS, 133 HM PSO/EPE200 HM ERGO'f/PSO, 66 HM SPS/TNP. (SPOONCOHP30) - 2/14/94 Bc

***ACCC OVERLOAD REPORT: HOHITORED ELEHENTS LOADED ABOVE 100.0 X OF RATING SET A *****~ ACCC VOLTAGE REPORT: VOLTAGES ABOVE 1.0500 OR BELOM 0.9500 ***

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 0 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~/X--- -- BUS -----X V(PU) X------ BUS -----X V(PU) X--- -- BUS -----X V(PU)

NITH VOLTAGE LESS THAN 0.9500: 945 GRASSLND 230 0.8701 1811 BORDEN 230 0.8740

XOPEN LINE

XOPEN LINE

XOPEN LIHE

X-- 0 V E R L 0 A D E D L I N E S --X X--HVA(HN)FLSI--XC 0 H T I N G E H C.Y E V E H T S -"-----X FROH NAHE TO HOE CKT PRE-CHT POST-CNT RATING PERCENTFROH BUS 944 [GRASSLND 115] TO BUS 948 [GRANO 115] CKT 1 - -------- ----------------------- CONTINGENCY SINGLE 207***NONE **~

X"---- BUS -----X V(PU) X------ BUS -----X V(PU) X-- --- BUS -----X V(PU)BUSES NITH VOLTAGE LESS THAN 0.9500: 948 GRAHAH 115 0.8802

X-- 0 V E R L 0 A D E D L I H E S --X X--HVA(HN)FLON--XC 0 N T I H 0 E H C Y E V E N T S --------X FROH NOE To HOE CKT PRE-CNT POST-CHT RATING PERCEH'fFROH BUS 945 [GRASSLHD 230] To BUS 1811 [BORDEH 230] CKT 1- ---- CONTINGENCY SINGLE 208

~~~ HONE *>*

X------ BUS -----X V(PU) X ----- BUS - ---X V(PU) X------ BUS -----X V(PU)BUSES NITH VOLTAGE LESS THAN 0.9500: 1811 BORDEN 230 0.8568

X-- 0 V E R L 0 A D E D L I H E S --X X--NVA(HN)FLN--XCONT IHGEHCY EVENTS------"XFROH NOE TO NOE CKT PRE-CHT POST-CHT RATING

PERCEHI'RON

BUS 971 [YOAKUH 230] To BUS 1037 [DENVER C 230] CKT 1- ---------------------- CONTINGENCY SINGLE 218***HONE **+

X------ BUS ----.X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES NITH VOLTAGE LESS THAN 0.9500- 1037 DENVER C 230 0.8762

XOPEN LINE

X-- 0 V E R L 0 A D E DC 0 N T I N G E H C Y E V E N T S --=-----X FROH NAHE TOFROH BUS 1150 fARTESIA 115] To BUS 1152 [NAVAJO 3 115] CKT 1-

L I H E S --X X--HVA(NN)FLOM--XNAHE CKT PRE-CNT POST-CHT RATING PERCENT----------- CONTINGENCY SINGLE 252

~*~ NONE **~

XOPEN LIHE

X- ---- BUS -----X V(PU) X ---- BUS -----X V(PU) X------ BUS -----X V(PU)BUSES WITH VOLTAGE LESS THAN 0.9500: 1150 ARTESIA 115 0.8898

X-- 0 V E R L 0 A D E D L I M E S --X X--HVA(HN)FL(AI--XC 0 H T I N 0 E H C Y E V E H T S -------X FROH NOE To NAHE CKT PRE-CHT POST-CHT RATING

PERCEHI'ROH

BUS 1152 [NAVAJO 3 115] To BUS 1170 [EDDY CO 115] CKT 1 ---------.---------------------CONTINGENCY SINGLE 2531163~ART C CL69.0 1165 ART SO R69.0 1 7.4 40.4 41.0 100.2

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES NITH VOLTAGE LESS THAN 0.9500: 1150 ARTESIA 115 0.8738 1152 NAVAJO 3 115 0;8736

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

PTI INTERACTIVE POMER SYSTEH SIHULATOR--PSS/E HOH, FEB 1 16:29

SPPOOSP MITH SPS INTERNAL HODIFICATIDNS, 133 HM PSO/EPE200 NM ERCOT/PSO, 66 HM SPS/TNP. (SPODHCONP30) - 2/14/94 BC

**» ACCC OVERLOAD REPORT: HONITORED ELEHENTS LOADED ABOVE 100.0 X OF RATING SET A ***««* ACCC VOLTAGE REPORT: VOLTAGES ABOVE 1.0500 OR BELOM 0.9500 **»

XOPEN LIHE

X-- 0 V E R L 0 A D E DC 0 N T I N G E H C Y E V E N T S --"-"-X FRON HAHE TOFROH BUS 1168 [ATOKA 115] TO BUS 1170 [EDDY CO 115] CKT 1-

L I H E S --X X--HVA(HM)FLOM--XNAHE CKT PRE-CNT POST-CNT RATIHG PERCENT-"-------------------------COHTIHGENCY SINGLE 254

»«« NONE «**

X------ BUS -----X V(PU) X----- BUS -----X V(PU) X------ BUS -----X V(PU)BUSES MITH VOLTAGE LESS THAN 0.9500: 1168 ATOKA 115 0.8652

XOPEN LINE

X-- 0 V E R L 0 A D E 0C 0 N T I N 0 E N C Y E V E H T S --------X FRON NAHE TOFROH BUS 1177 fLEA CO 230] TO BUS 1841 [NIDLAND 230] CKT 1-

L I N E S -X X--HVA(HM)FLOM--XNAHE CKT PRE-CNT POST-CNT RATING PERCENT

- CONTINGENCY SIHGLE 263***NONF ***

X------ BUS -----X V(PU) X------ BUS -- -X V(PU) X------ BUS -----X V(PU)BUSES MITH VOLTAGE GREATER THAN 1.0500: 1841 HIDLAHD 230 1.2313

XOPEN LINE

X-- 0 V E R L 0 A D E DC 0 N T I H G E H C Y E V E H T S --------X FRON HAHE TOFROH BUS 1178 [CUNNINNH 115] TO BUS 1258 [SAH AH T 115] CKT 1-

L I N E S --X X--HVA(NM)FLOM--XNAHE CKI'RE-CNT POST.CHT RATING PERCENT--------------------- CONTINGENCY SINGLE 266

***NONE *«»

X------ BUS -----X V(PU) X------ BUS -- --X V(PU) X------ BUS -----X V(PU)BUSES MITH VOLTAGE LESS THAN 0.9500: 1256 LE-SAN A 115 0.8599 1258 SAH AH T 115 0.8581 1264 BUCKEYE 115 0.8573

XOPEN LINE

X-- 0 V E R L 0 A 0 E DC 0 H T I N G E H C Y E V E N T S --------X FROH NAHE TOFROH BUS 1179 [CUNNINHN 230] TO BUS 1183 [POT JCT 230] CKT 1-

L I N E S --X X--HVA(HM)FLOM--XNAHE CKT PRE-CNT POST-CHT RATING PERCENT

-- -------- CONTINGENCY SIHGLE 269«*» NONE **»

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X----- BUS -----X V(PU)BUSES MITH VOLTAGE LESS THAH 0.9500: 1183 POT JCT 230 0.8924

XOPEH LIHE

X-- 0 V E R L 0 A D E D

C 0 N T I H 0 E N C Y E V E N T S --------X FROH NANE TOFROH BUS 1179 [CUNNINHN 230] TO BUS 1273 [TAYLOR 230] CKT 1-

L I H E S --X X--HVA(HM)FLOM--XHAHE CK'I PRE-CNT POST-CNT RATIHG PERCEHT----------------- COHTIHGEHCY SINGLE 270***NONE **»

X---"- BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES MITH VOLTAGE LESS THAN 0.9500: 1273 TAYLOR 230 0.9117

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

PT] INTERACTIVE PNER SYSTEH SIHULATOR--PSS/E HOH( FEB 1 4 16:29

SPPOOSP HITH SPS IHTERNAL HOD]FICATIONS, 133 W PSO/EPE200 NH ERCOT/PSO, 66 HH SPS/TNP. (SPOOHCOHP30) - 2/14/94 BC

***ACCC OVERLOAD REPORT: HOHITORED ELEHENTS LOADED ABOVE 100.0 X OF RATING SET A ***»** ACCC VOLTAGE REPORT: VOLTAGES ABOVE 'I.0500 OR BELOH 0.9500 ***

X

OPEH LINE

X-- 0 V E R L 0 A D E DC 0 H T I N G E N C Y E V E' T S ----- --X FROH HAHE TOFROH BUS 1230 [CARLSBAD 115] TO BUS 1232 [FIESTA 115] CKT 1-

L I H E S -X X--HVA(NH)FLSI--XRANE CKT PRE-CHT POST-CHT RATING PERCENT------ CONTINGENCY SINGLE 280

*»* NONE »*»

BUSES 'NITII VOLTAGE LESS THAN

X- ---- BUS ---.X V(PU) X------ BUS .----X V(PU) X------ BUS ---"X V(PU)0.9500: 1232 FIESTA 115 0.8450 1236 HOPI 115 0.8512

XOPEH LINE

CONTINGENCY EVENTSFROH BUS 1232 [FIESTA 115] TO BUS

X-- 0 V E R L 0 A D E D L I N E S "X X--HVA(HN)FLON--X----- --X FROH NAHE TO NAHE CKT PRE-CHT POST-CNT RATING PERCENT1236 [HOPI 115] CKT 1 - .-------------".--------------CONTINGENCY SIHGLE 281***NONE ***

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES HITH VOLTAGE LESS THAN 0.9500: 1236 HOPI 115 0.8992

X

OPEN LINECONT IHGENCY EVEHTSFROH BUS 1256 [LE-SAN A 115] TO BUS

X-- 0 V E R L 0 A D E D L I N E S --X X- HVA(HH)FLOH--X--------X FROH NAHE TO NANE CKT PRE-CHT POST-CNT RATING PERCENT1258 [SAH AN T 115] CKT 1 ---------.-.---------- CONTINGENCY SIHGLE 283

»»» NONE ***

X------ BUS -----X V(PU) X---"- BUS -----X V(PU) X------ BUS -----X V(PU)BUSES HITH VOLTAGE LESS THAN 0.9500: 1256 LE-SAH A 115 0.8886

EXHIBITJSFK

SCHEDULE 3

2000 SUMMER PEAK - 133 MW EPE TO PSO

In this series of contingencies, a 133 MW transfer from EPE to PSO wasstudied. Again, the Southwestern system was studied by outaging eachtransmission element one at a time.

Contingency 45 indicates that the Gray County Interchange 115/69 kVtransformer is at its limit.

Contingencies 239, 249, 251, 269, and 271 indicate that the Eddy County230/115 kV transformer will be loaded above its maximum forced rating of150 MVA.

Contingency 282 indicate a potential overload in the area of Lea CountyElectric Cooperative, Lovington, New Mexico. Due to the flow of the CSWtransaction through their area for the loss of an internal Lea County Electric115 kV line, it is likely that Lea County Electric will have to reconductorthese two transmission lines.

Pl'I INTERACTIVE POMER SYSTEH SIHULATOR-.PSS/E HON, FEB 15:08

SPPOOSP MITH SPS INTERNAL HOOIFICATIONS - 2/13/94 BC133HM EPE/PSO, 200HM ERCOT/PSO, 0 SPS/TNP. (SHCOHP20)

***ACCC OVERLOAD REPORT: HONITORED ELEHENTS LOADED ABOVE 100.0 X OF RATING SET A ******ACCC VOLTAGE REPORT: VOLTAGES ABOVE 1.0500 OR BELOM 0.9500 ***

SUBSYSTEH DESCRIPTION FILE: C:iPSSE2IABCiSPPODSP.SUBHOHITORED ELEHENT FILE: C:iPSSE21MiBCiSPP93SP.NOHCONT INGEHCY DESCRIPT ION FILE: C: iPSSE21~BCiSPPOOSP.CON

XOPEN LINE

X-- 0 V E R L 0 A D E D L I H E S --X X--HVA(HM)FLOM--XC 0 N T I N G E N C Y E V E N T S --------X FROH NAHE TO NAHE CKT PRE-CHT POST-CHT RATING PERCENTFRDH BUS 113 [PR[NGLE 230] TO BUS 335 [HARRNGTN 230] CKT 1 -------------------". ------ ---- CONTINGENCY SINGLE 18

*At HONE ~it

X------ BUS -----X V(PU) X------ BUS -"-X V(PU) X------ BUS -----X V(PU)BUSES MITH VOLTAGE LESS THAN 0.9500: 113 PRINGLE 230 0.8902

'X

OPEN LINECONT INGEHCYFROH.BUS 121 [HOORE

X-- 0 V E R L 0 A D E D L I H E S --X X--NVA(NM)FLOM--XE V E H T S --------X FROH HAHE TO NAHE CKT PRE-CHT POST-CHT RATING PERCEHT

230] TO BUS 329 [POTTR CO 230] CKT 1 -----------------------------.-------COHtlHGENCY SINGLE 24***HONE ***

OPEN LINE

XOPEN LINE

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES M[TH VOLTAGE LESS THAH 0.9500: 121 HOORE 230 0-8554

X-- 0 V E R L 0 A D E D L I N E S --X X--NVA(HM)FLOM--XC 0 H T I N G E N C Y E V E H T S --------X FROH NAHE TO NAHE CKT PRE-CHt POST-CNT RATING PERCENTFROH BUS 192 [NU'[CH(S) 115] TO BUS 230 [GRAY CO 115] CKT 1 ------- -------------------------CONTINGEHCY SINGLE 39

0*4 NONE **1

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES MITH VOLTAGE LESS THAN 0.9500: 230 GRAY CO 115 0.9238

X-- 0 V E R L 0 A 0 E D L I H E S --X X--HVA(HM)FLOM--XC 0 N T I H G E H C Y E V E H T S --------X FROM NAHE TO NAHE CK't PRE-CHT POST-CNT RATING PERCENTFROH BUS 193 [HUTCH 230] TO BUS 345 [HICHOLS 230] CKT 1 "----- COHTIHGENCY SINGLE 41

**0 NONE II*X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)

BUSES MITH VOLTAGE LESS THAN 0.9500: 193 HUTCH 230 0.9160

XOPEN LINE

X-- 0 V E R L 0 A D E DC 0 H T I H G E N C Y E V E H T S --------X FROH NAHE TOFROH BUS 250 [KNGSNILL 115] TO BUS 344 -[HICHOLS 115] CKT 1

L I N E S --X X--NVA(HM)FLOM--XHAHE CKT PRE-CHT POST-CHT RATING PERCENT

CONTINGENCY SINGLE 42**1 HONE

11'------

BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES MITH VOLTAGE LESS THAN 0.9500: 250 KNGSHILL 115 0.9015

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

PTI IN'lERACTIVE PONER SYSTEH SIHULATOR--PSS/E NOH( FEB 1

SPPOOSP lllTH SPS .IHTERHAL HOOIFICATIOHS - 2/13/94 BC

133HN EPE/PSO, 200Hll ERCOT/PSO, 0 SPS/THP. (SHCOHP20)

4 15:08

**« ACCC OVERLOAD REPORT: HONITORED ELEHEHTS LOADED ABOVE 100.0 X OF RATING SET A ««««** ACCC VOLTAGE REPORT: VOLTAGES ABOVE 1.0500 OR BELON 0.9500 ***

XOPEN LINE

XOPEN LINE

X-- 0 V E R L 0 A D E D L I H E S -X X--HVA(HN)FLON--XC'0 N T I N G E H C Y E V E N T S --------X FROH NAHE TO NAHE CKT PRE-CHT POST-CHT RATIHG PERCEHT

FRDH BUS 262 [BOLIERS 115] TO BUS 268 [E PAHHDL 115] CKT 1 - CONTINGENCY SINGLE 43***NONE ***

X------ BUS -----X V(PU) X------ BUS - ---X V(PU) X------ BUS -----X V(PU)BUSES MITH VOLTAGE LESS THAN 0.9500: 262 BONERS 115 0.9101

X-- 0 V E R L 0 A D E D' I N E S --X X--HVA(HU)FLOU--XC 0 N T I H G E H C Y E V E H T S --------X FROH NAHE TO NAHE CKT'RE-CNT POST-CNT RATING PERCEHT

FROH BUS 268 [E PANHDL 115] TO BUS 269 [E PAHHDL 230] CKT 1 - CONTINGENCY SINGLE 44*«« HONE *«*

XOPEN LINE

X------ BUS -----X V(PU) X- ---. BUS -----X V(PU) X------ BUS -----X V(PU)BUSES NITH VOLTAGE LESS THAN 0.9500: 262 BSIERS 115 0.9118 268 E PANHDL 115 0.9119

X-- 0 V E R L 0 A D E D L I H E S --X X--HVA(HN)FLON--XC 0 N T I H G E H C Y E V E H T S --------X FROH NAHE TO NAHE CKT PRE-CHT POST-CHT RATING PERCENT

FR& BUS 269 [E PANHDL 230] TO BUS 345 [HICHOLS 230] CKT 1- COHTIHGEHCY SINGLE 45

229 GRAY CO 69.0 230 GRAY CO 115 1 36.1 64.1 64.0 100.2

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES 'WITH VOLTAGE LESS THAN 0.9500: 269 E PANHDL 230 0.9239

XOPEN LIHE

X-- 0 V E R L 0 A D E D L I H E S --XCONT I N G E N C Y E V E H T S ------ -X FROH HAHE TO NAHE CKT

FROH BUS 420 [RANDALL 115] TO BUS 421 [RANDALL 230] CKT 1

341 NICHOLS 13.8 344*HICHOLS 115 1

342 NICHOLS 13.8 344*NICHOLS 115 1

X--HVA(HN)FLOM--XPRE-CHT POST-CNT RATING PERCEHT

- CONTIHGEHCY SINGLE 94108.4 113.9 113.0 100.8107.5 113.1 113.0 100.1

XOPEN LINE

X-- 0 V E R L 0 A D E D

C 0 N T I N G E N C Y E V E H T S --------X FROH HAHE TO

FROI BUS 634 [COX 115] TO BUS 636 [LH-COX 115] CKT 1

L I H E S --X X--HVA(HN)FLSI--XHAHE CKT PRE-CNT POST-CHT RATIHG PERCEHT

----------- --------- - - CONTIHGEHCY SINGLE 141***NONE **«

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES M[TH VOLTAGE LESS THAN 0.9500: 634 COX 115 0.8786

XOPEN LINE

X-- 0 V E R L 0 A D E D

C 0 N T I H G E N C Y E V E H T S -------;X FROH NAHE TO

FRQI BUS 636 [LH-COX 115] TO BUS 676 [HALE CO 115] CKT 1

L I H E S --X X--NVA(HN)FLON--XHAHE CKT PRE-CHT POST-CNT RATING PERCENT

- CONTIHGEHCY SINGLE 142«** NOHE «*«

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

PTI INTERACTIVE POMER SYSTEH SIMULATOR--PSS/E NON( FEB 1

SPPOOSP NITH SPS INTERNAL MODIFICATIONS - 2/13/94 BC133HN EPE/PSO, 20QQ ERCOT/PSO, 0 SPS/TMP. (SHCOHP20)

4 15:08

* ~ ACCC OVERLOAD REPORI': MONITORED ELEHEN'TS LOADED ABOVE 100.0 X OF RATING SET A *~~*~~ ACCC VOLTAGE REPORT: VOLTAGES ABOVE 1.0500 OR BELOM 0.9500 ~~~

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES HITH VOLTAGE LESS THAN 0.9500: 634 COX 115 0-8612 636 LH-COX 115 0.8611

XOPEN LIME

XOPEN LINE

X-- 0 V E R L 0 A D E 0 L I H E S --X X--HVA(HM)FLSI--XC 0 N T I H G E H C Y E V E H T S --------X FROM NAME TO NAME CKT PRE-CHT POST-CHT RATING PERCENTFROM BUS 689 [TOLK 230] TO BUS 717 [LAMB CO 230] CKT 1- --- ----------------- CONTINGENCY SINGLE 154

~** NOME ***

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES 1JITH VOLTAGE LESS THAN 0.9500: 717 LAMB CO 230 0.8614

X-- 0 V E R L 0 A 0 E D L I N E S --X X-.HVA(HN)FLOM--XCONT I H G E N C Y E V E H T S -------X FROM HAHE TO NAME CKT PRE-CHT POST-CNT RATING PERCEHTFROH BUS 773 [TUCO 230] TO BUS 774 [TUCO 345] CKT 1 -------- CONTINGENCY SINGLE 166

**~ MOME *~*

XOPEN LINE

X------ BUS -----X V(PU) X------ BUS --.--X V(PU) X------ BUS -----X V(PU)BUSES IIITH VOLTAGE GREATER THAN 1.0500: 774 TUCO 345 1.1201

X-- 0 V E R L 0 A D E D L I H E S --X X--HVA(HM)FLSI--XC 0 N T I N G E H C Y E V E H T S --------X FROM NAME TO NAME CKT PRE-CNI'OST-CHT RATIHG PERCENTFRDH BUS 773 [TUCO 230] TO BUS 843 [CARLISLE 230] CKT 1 -------- CONTIHGENCY SINGLE 167***HOME **~

XOPEN LINE

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X-.----- BUS -----X V(PU)BUSES NITH VOLTAGE LESS THAM 0.9500: 843 CARLISLE 230 0.9408

X-- 0 V E R L 0 A D E D L I N E S --X X--HVA(HM)FLOM--XC 0 H T I N G E H C Y E V E H T S --------X FROH NAME TO MANE CKT PRE-CNT POST-CNT RATING PERCENTFROH BUS 869 [JONES 230] TO BUS 945 [GRASSLMD 230] CKT I ---------------------------CONTINGENCY SINGLE 189***HOME a*a

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES MITH VOLTAGE LESS TMAH 0.9500: 945 GRASSLHD 230 0.8750 1811 BORDEN 230 0.8783

XOPEN LINE

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES NITH VOLTAGE LESS THAM 0.9500: 948 GRAHAM 115 0.8806

X-- 0 V E R L 0 A D E D L I H E S --X X--HVA(HM)FLOM--XC 0 N T I H G E H C Y E V E H T S --------X FRDH MAHE TO NAME CKT PRE CHT POST-CHT RATING PERCEHTFROM BUS 944 [GRASSLMD 115] TO BUS 948 [GRAHAM 115] CKT 1 ---------- .---------- -- --------- CONTIHGEHCY SINGLE 207Ill NOME *l1

l

CI

0'

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

PTI INTERACTIVE POWER SYSTEH SIHULATOR--PSS/E HOH, FEB 14 1994 15:08

SPPOOSP WITH SPS INTERNAL HODIFICATIOHS - 2/13/94 BC133HW EPE/PSO, 200HW ERCOT/PSO, 0 SPS/THP. (SKCONP20)

**« ACCC OVERLOAD REPORT: HOHITORED ELEHEHTS LOADED ABOVE 100.0 X OF RATING SET A «««*« ACCC VOLTAGE REPORT:.VOLTAGES ABOVE 1 F 0500 OR BELOW 0.9500 ***

XOPEN LINE

XOPEN LINE

OPEN LINE

XOPEN LINE

XOPEN LINE

X-- 0 V E R L 0 A D E D L I H E S --X X.-HVA(HW)FLOW--XC 0 H T I N G E N C Y E V E N T S --------X FROH NAKE TO HAHE CKT PRE-CHT POST-CHT RATING PERCENTFRON BUS 945 [GRASSLND 230] TO BUS 1811 [BORDEN 230] CKT 1 --.----- ------------------------CONTINGENCY SINGLE 208

«** NONE **«

X------ BUS ---- X V(PU) X------ BUS ""-X V(PU) X------ BUS -----X V(PU)BUSES lllTH VOLTAGE LESS THAH 0.9500: 1811 BORDEN 230 0.8622

X-- 0 V E R L 0 A D E D L I N E S --X X--HVA(HW)FLOW--XC 0 N T I N G E N C Y E V E H T S --------X FROH NAHE TO HAHE CKT PRE-CHT POST-CHT RATING PERCENTFROH BUS 971 [YOAKUN 230] TO BUS 1037 [DEHVER C 230] CKT 1 -----------------------------CONTINGENCY SIHGLE 218

«*« HONE «*«

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES WITH VOLTAGE LESS THAH 0.9500: 1037 DENVER C 230 0.9429

X-- 0 V E R L 0 A D E D L I N E S --X X--MVA(HW)FLOW--XC 0 H T I H G E H C Y E V E H T S --------X FROH NAHE TO HAHE CKT PRE-CNT POST-CNT RATING PERCENTFROH BUS 1102 [CHAVES 115] TO BUS 1103 [CRAVES 230] CKT 1 --------- ----------------- CONTINGENCY SINGLE 239

1170«EDDY CO 115 1171 EDDY CO 230 1 113.6 137.2 128.0 107.2

X-- 0 V E R L 0 A D E D L I H E S --X X--NVA(HW)FLOW--XC 0 H T I H G E N C Y E V E N T S --------X FROH HAHE TO NAHE CKT PRE-CHT POST-CHT RATING PERCENTFROH BUS 1146 [HAGERHAN 115] TO BUS 1147 [HAGERHAN 230] CKT 1 - ------ -----------------------CONTINGENCY SINGLE 249

1170*EDDY CO 115 1171 EDDY CO 230 1 113.6 139.6 128.0 109.1

X-- 0 V E R LOAD E D L I N E S --X X--HVA(NW)FLOW -XC 0 H T I H G E N C Y E V E H T S --------X FROH NAHE TO NAHE CKT PRE-CHT POST-CHT RATING PERCEHTFROH BUS 1147 [HAGERHAH 230] TO BUS 1171 [EDDY CO 230] CKT 1- - CONTINGENCY SINGLE 25'I

1170*EDDY CO 115 1171 EDDY CO 230 1 113.6 158.6 128.0 123.9

XOPEN LINE

X-- 0 V E R L 0 A D E DC 0 N T I N G E H C Y E V E H T S --------X FRDH HAHE TOFRON BUS 1150 [ARTESIA 115] TO BUS 1152 [NAVAJO 3 115] CKT 1-

L I N E S --X X--HVA(NW)FLOW--XHAHE CKT PRE-CNT POST-CNT RATING PERCENT-------- - --------- CONTIHGENCY SINGLE 252***NONE «««

XOPEN LINE

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS ---.-X V(PU)BUSES WITH VOLTAGE LESS THAN 0.9500: 1150 ARTESIA 115 0.8881

X-- 0 V E R L 0 A 0 E D L I N E S --X X-.HVA(HW)FLOW--XC 0 H T I H G E H C Y E V E H T S --------X FROH NAHE TO NAHE CKT PRE-CH'I POST-CHT RATING PERCENTFROH BUS 1152 [NAVAJO 3 115] TO BUS 1170 [EDDY CO 115] CKT 1 - - -- ------"------------CONTINGENCY SINGLE 253

1163«ART C CL69.0 1165 ART SO R69.0 1 6.3 41.1 41.0 101.7

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ \ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ \PTI IHTERACTIVE PSIER SYSTEM SIMULATOR--PSS/E MON, FEB

SPPOOSP NITH SPS INTERNAL MODIFICATIONS - 2/13/94 BC133NI EPE/PSO, 200MN ERGOT/PSO, 0 SPS/THP. (SMCOMP20)

~ ~ ~ ~ ~

994 15:08

***ACCC OVERLOAD REPORT: MONITORED ELEMENTS LOADED ABOVE 100.0 X OF RATING SET A ******ACCC VOLTAGE REPORT: VOLTAGES ABOVE 1.0500 OR BELOH 0.9500 ~~~

X------ BUS -----X V(PU) X------ BUS .----X V(PU) X------ BUS ----X V(PU)BUSES HITH VOLTAGE LESS 'THAN 0.9500: 1150 ARTESIA 115 0.8760 1152 NAVAJO 3 115 0.8758

XOPEN LINE

X-- 0 V E R L 0 A D E DCONT I H G E H C Y E V E N T S --------X FROM NAME TOFROM BUS 1168 [ATOKA 115] TO BUS 1170 [EDDY CO 115] CKT 1-

L I N E S --X X-.MVA(MN)FLON--XNAME CKT PRE-CNT POST-CNI'ATING PERCENT---- COHTIHGEHCY SINGLE 254*it NONE *1*

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES lllTH VOLTAGE LESS THAN 0.9500: 1168 ATOKA 115 0.8645

XOPEN LINE

X-- 0 V E R L 0 A D E DC 0 N T I N G E H C Y E V E H T S -------.X FROM NAME TOFROM BUS 1177 [LEA CO 230] TO BUS 1841 [MIDLAND 230] CKT 1-

L I N E S --X X--MVA(MN)FLOtl--XNAME CKT PRE-CNT POST-CHT RATING PERCENT----.------------- COHI'INGEHCY SINGLE 263***NONF 4**

X-- --- BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES lIITH VOLTAGE GREATER THAN 1.0500: 1841 MIDLAHD 230 1.2315

XOPEN LINE

X-- 0 V E R L 0 A D E DC 0 N T I N G E H C Y E V E N T S --------X FROM NAME TOFROM BUS 1178 [CUNHIHNM 115] TO BUS 1258 [SAN AN T 115] CKT 1

L I H E S --X X--MVA(MU)FLOtl--XNAME CKT PRE-CNT POST-CNT RATIHG PERCENT----- --------------------- CONTINGENCY SINGLE 266

*~~ HONE i**

XOPEN LINE

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES NITH VOLTAGE LESS THAN 0.9500: 1256 LE-SAH A 115 0.8620 1258 SAH AN T 115 0.8602 1264 BUCKEYE 115 0.8595

X-- 0 V E R L 0 A D E D L I N E S --X X--MVA(MH)FLSI--XC 0 N T I H G E N C Y E V E N T S --------X FROM NAME TO NAME CKT PRE-CHI'OST-CNT RA'TING PERCEHTFROM BUS 1179 [CUHHIHNM 230] TO BUS 1183 [POT JCT 230] CKT 1 --- ---- ----- . ---- -- CONTINGENCY SINGLE 269

11?0~EDDY CO 115 1171 EDDY CO 230 1 113.6 133.9 128.0 104.6

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES NITH VOLTAGE LESS THAN 0.9500: 1183 POT JCI'30 0.8925

XOPEH LINE

X-- 0 V E R L 0 A 0 E 0CONT I H G E H C Y E V E H T S --------X FROM NAME TOFROM BUS 1179 [CUNHIHHM 230] TO BUS 1273 [TAYLOR 230] CKT 1

L I H E S --X X--MVA(MH)FLON--XNAME CKT PRE-CHI'OST-CHT RATIHG PERCENT----- CONTINGENCY SINGLE 270

*1* NOHf **0

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES NITH VOLTAGE LESS THAN 0.9500: 1273 TAYLOR 230 0.9116

l)

k

J

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Pl'I IHTERAC'TIVE PONER SYSTEH SIMULATOR--PSS/E MON, FEB

SPPOOSP NITH SPS INTERNAL M(e]FICATIONS - 2/13/94 BC133%I EPE/PSO, 200MN ERCOT/PSO, 0 SPS/TNP. (SHCOHP20)

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

4 15:08

» ACCC OVERLOAD REPORT: MONITORED ELEHEHTS LOADED ABOVE 100.0 X OF RATING SET A *»*»** ACCC VOLTAGE REPORT: VOLTAGES ABOVE 1.0500 OR BELON 0.9500 «*»

XOPEN LINE

X-- 0 V E R L 0 A D E D L I N E S --X X--MVA(N)FLN--XC 0 H T I N G E N C Y,E V E N T S --------X FROM NAME TO NAME CKT PRE-CNT POST-CHT RATIHG PERCENTFROM BUS 1183 [POT JCT 230] TO BUS 1196 [POT JCT 115] CKT 1 -.--------------------- COHTINGEHCY SINGLE 271

1170«EDDY CO 115 1171 EDDY CO 230 1 113.6 133.9 128.0 104.6

XOPEN LINE

X-- 0 V E R L 0 A D E D

CONTINGENCY EVENTS----;---XFROM NAME TOFROM BUS 1230 [CARLSBAD 115] TO BUS 1232 [FIESTA 115] CKT 1

L I N E S --X X--MVA(MN)FLN--XNAME CKT PRE-CHT POST-CNT RATING PERCENT--------------------- COHTINGENCY SIHGLE 280

*»* NONE «*»

XOPEN LINE

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES Nl'tH VOLTAGE LESS THAN 0.9500: 1232 FIES'TA 115 0.8459 1236 HOPI 115 0.8521

X-- 0 V E R L 0 A D E D L I H E S .-X X--MVA(MN)FLN--XC 0 N T I H G E N C Y E V E H T S --------X FROM NAME TO NAME CKT PRE-CNt POSt-CNT RATIHG PERCENTFROH BUS 1232 [FIES'lA 115] TO BUS 1236 [HOPI 115] CKT 1 -- COHTINGEHCY SINGLE 281

*»» NONE

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES 'NITH VOLTAGE LESS THAH 0.9500: 1236 HOPI 115 0.9000

XOPEN LINE

CONTINGENCY EVENTSFROM BUS 1250 [LE.WAITS 115] TO BUS

X-- 0 V E R L 0 A--------X FROM NAME

1254 [LE-LVTON 115] CKT 1

1501*LE-LOV P69.01553*LE-DEHTN69.0

D E D L I H E S --X X--MVA(MN)FLOI--XTO NAME CKT PRE-CNT POST-CHT RATING PERCENT

- ---------------------- CONTIHGENCY SINGLE 2821541 LE-REED 69.0 1 10.2 20.4 20.0 100.01559 LE-FORT 69.0 1 5.8 20.3 20.0 100.9

XOPEN LINE

CONTINGENCY EVENTSFROM BUS 1256 [LE-SAN A 115] TO BUS

X-- 0 V E R L 0 A D E D L I N E S --X X"MVA(MN)FLN--X--------X FROH NAME TO NAME CKT PRE-CHT POST-CHT RATIHG PERCENT1258 [SAN AN T 115] CKT 1 ----------------"""---------- COHTINGEHCY SINGLE 283

***NONE «**

X------ BUS -----X V(PU) X------ BUS --" X V(PU) X------ BUS - --X V(PU)BUSES NITH VOLTAGE LESS THAN 0.9500: 1256 LE-SAH A 115 0.8905

~;

~,

~ '

EXHIBITJSFA

SCHEDULE 4

2000 WINTER PEAK - NO CSW TRANSFER

The Southwestern system was studied by outaging each transmissionelement one at a time. No transfers for CSW were being made in thisstudy. Only those outages which caused overloads or voltage abnormalitieswere reported in this report. Most of the contingencies which causeabnormally low voltages do so by loss of source to a step-down transformerand the transformer is being back-fed from a lower voltage source. Thesecontingencies do not indicate a problem, since the protective relayingremoves both the line and transformer from service at the same time.

The winter peak load for Southwestern is approximately 78% of theprojected summer peak load. The generation pattern is significantlychanged from the summer case.

Contingencies 56, 62, 63, and 73 indicate high loading on one of theNichols 230/115 kV transformers.

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

PTI INTERACTIVE PNER SYSTEH SIMULATOR--PSS/E TUE, FEB 17:25

2000 SPP PREDICTED HINTER PEAK - 2/17/94 - BC (SPPOlm)HO TRANSFERS, SPS 2000 UPGRADES QITH COMNAY MINI-CO(P.

***ACCC OVERLOAD REPORT: HOHITORED ELEMENTS LOADED ABOVE 100.0 X OF RATING SET A*~~ ACCC VOLTAGE REPORT: VOLTAGES ABOVE 1.0500 OR BELOl 0.9500 ~**

*11

SUBSYSTEH DESCRIPTION FILE: C:iPSSE2IASPP94iCQI FEBi1994 SPPitIESiSPPOOSP.SUBMONITORED ELEMENT FILE: C:iPSSE21ASPP94iCSM FEBi1994 SPPit]ESiSPP93SP.HOHCONTINGENCY DESCRIPTIOH FILE: C:XPSSE21ASPP94iCSll FEBi1994 SPPiTIESiSPPOOSP.COH

X-- 0 V E R L 0 A D E D L I H E S --X X--HVA(HN)FLOM--XX-------- C 0 H T I N G E N C Y E V E H T S --------X FROH MANE TO MANE CKT PRE-CNT POST-CHT RATING PERCENT

OPEN LINE FROH BUS 113 [PRINGLE 230] TO BUS 335 [HARRNGTN 230] CKT 1 COHTINGENCY SINGLE 18***NOME **0

X.----. BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS - - -X V(PU)BUSES NITH VOLTAGE LESS THAN 0.9500: 113 PRINGLE 230 0.8926

XOPEH LINE

XOPEN LINE

X-- 0 V E R L 0 A D E D

CONTINGENCY EVENTS--"-"XFROH HQ!E TO

FROH BUS 121 [HOORE 230] TO BUS 329 [PotTR CO 230] Crt 1

X------ BUS -----X V(PU)BUSES HITH VOLTAGE LESS THAN 0.9500: 121 HOORE 230 0.8512

X-- 0 V E R L 0 A D E 0C 0 N T I H G E N C Y E V E N T S --"---.X FROM HAHE TO

FROH BUS 192 [HUtCH(S) 115] TO BUS 230 [GRAY CO 115] CKT 1

L I N E S --X X--HVA(HN)FLOM--XNAME CKT PRE-CNT POST-CHT RATIHG PERCENT

CONTINGENCY SINGLE 24***NONE **i


L I H E S --X X--HVA(HM)FLOM--XMANE CKT PRE-CHT POST CHT RATING PERCENT

CONTINGENCY SINGLE 39***NOME ~~~

X"---- BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES HITH VOLTAGE LESS TNAH 0.9500: 230 GRAY CO 115 0.9257

XOPEN LINE

X-- 0 V E R L 0 A D E D

C 0 N T I N G E N C Y E V E H T S --------X FROM MANE TO

FROM BUS 193 [HUTCH 230] TO BUS 345 [HICHOLS 230] CKT 1

L I N E S --X X--MVA(HN)FLOM--XNAME CKT PRE-CNt POST-CNT RATING PERCENT

- COHTIHGENCY SINGLE 41~** NOHE ***

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES lllTH VOLTAGE LESS THAN 0.9500: 193 HUTCH 230 0.9182

XOPEN LINE

X-- 0 V E R L 0 A D E D

COHT IHGENCY EVENTS -----XFROH NAME TO

FROH BUS 262 [BOMERS 115] TO BUS 268 [E PANHDL 115] CKT 1

L I N E S --X X--HVA(HM)FLOM-XMANE CKT PRE-CH't POST-CHT RATING PERCEHt

- CONTINGENCY SINGLE 43~** NONE ~**

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES NITH VOLTAGE LESS THAM 0.9500: 262 BOMERS 115 0.9160

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

PTI INTERACTIVE PSIER SYSTEH SIHULATOR--PSS/E TUE, FEB 2 4 17:25

2000 SPP PREDICTED IIIHTER PEAK - 2/17/94 - BC (SPPOONOO)

HO TRANSFERS, SPS 2000 UPGRADES NITH COHHAY HIHI-CONP.

*~* ACCC OVERLOAD REPORT: HOHITORED ELEHEHTS LOADED ABOVE 100.0 X OF RATING SET A *~****ACCC VOLTAGE REPOR'I: VOLTAGES ABOVE 1.0500 OR BELON 0.9500 *~*

XOPEH LINE

X-OVERLOADEDC 0 N T I N G E H C Y E V E N T S -------X FROH HARE TO

FROH BUS 268 [E PANKDL 115] TO BUS 269 [E PAHHDL 230] CKT 1

L I N E S -X X--NVA(HH)FLOM--XHAHE CKT PRE-CHT POST-CNI'ATIHG PERCENT

COHTINGEHCY SINGLE 44041 NONE 1k%

XOPEN LINE

XOPEH LINE

XOPEN LIKE

XOPEN LINE

X------ BUS -----X V(PU) X------ BUS - ---X V(PU) X------ BUS -----X V(PU)BUSES HITH VOLTAGE LESS THAN 0.9500: 262 BOMERS 115 0.9172 268 E PANNDL 115 0.9172

X-- 0 V E R L 0 A D E D L I H E S --X X--HVA(NM)FLON--XC 0 H T I N G E N C Y E V E N T S -------X FROH NANE'O NAHE CKT PRE-CNT POST-CNT RATIHG PERCENT

FROI BUS 335 [HARRHGTH 230] TO BUS 383 [EAST PLT 230] CKT 1- COHTIHGEHCY SINGLE 56

344 HICHOLS 115 345 HICHOLS 230 1 107.1 129.1 128.0 100.8

X-- 0 V E R L 0 A D E 0 L I H E S -.X X--HVA(NN)FL(XI--XC 0 H T I H G E N C Y E V E H T S --------X FROH NANE TO RANE CKT PRE-CNT POST-CNT RATING PERCENT

FROH BUS 344 [NICHOLS 115] TO BUS 345 [HICHOLS 230] CKT 1- - CONTINGENCY SIHGLE 62344*HICHOLS 115 345 HICHOLS 230 2 104.3 134.0 128.0 104.7

X-. 0 V E R L 0 A D E D L I N E S --X X.-NVA(NN)FLDN--XC 0 N T I N G E N C Y E V E N T S --------X FROH HAHE TO NAHE CKI'RE-CHT POST-CHT RATING PERCENT

FROH BUS 344 [HICHOLS 115) TO BUS 345 [HICHOLS 230] CKT 2- - CONTINGENCY SINGLE 63344*HICHOLS 115 345 HICNOLS 230 1 107.1 136.6 128.0 106.7

X-- 0 V E R L 0 A D E 0 L I H E S --X X"HVA(HN)FLOU--XC 0 H T I N G E N C Y E V E H T S .-------X FROH NAME TO HANE CKT PRE-CHT POST-CNT RATING PERCENT

FROH BUS 382 [EAST PLT 115]. TO BUS 383 [EAST PLT 230] CKT 1 . COHTINGENCY SINGLE 73344iHICHOLS 115 345 NICHOLS 230 1 107.1 129.1 128.0 'I00.8

XOPEN LINE

X" OVERLOADEDC 0 H T I N G E N C Y E V E H T S --------X FROH HAKE TO

FROH BUS 634 [COX 115] TO BUS 636 [LH.COX 115] CKT 1-L I H E S --X X--HVA(HN)FLN--X

HAHE CKT PRE-CHT POST-CHT RATING PERCENT- COHTIHGENCY SINGLE 141

~ Ni NONE **i

X -- -- BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES M[TH VOLTAGE LESS THAN 0.9500: 634 COX 115 0.9084

XOPEH LINE

X-- 0 V E R L 0 A D E 0C 0 N T I N G E N C Y E V E H T S --------X FROH NANE TO

FROH BUS 636 [LH.COX 115) TO BUS 676 [HALE CO 115] CKT 1-L I H E S --X X -IlVA(NU)FLON--X

HAHE CKT PRE-CNT POST-CHT RATING PERCENTCOHTINGENC'Y SINGLE 142

**~ NOHE *~~

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES MITH VOLTAGE LESS THAN 0.9500: 634 COX 115 0.8962 636 LH.COX 115 0.8962

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

PTI INTERACTIVE POWER SYSTEH SIHULATOR--PSS/E TUE, FEB~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

4 17:25

2000 SPP PREDICTED WINTER PEAK - 2/17/94 - BC (SPPODWOO)

NO TRANSFERS, SPS 2000 UPGRADES WITH COHWAY HINI.COHP.

t**ACCC OVERLOAD REPORT: HONITORED ELEHEHTS LOADED ABOVE 100.0 X OF RATING SET A tt*t**ACCC VOLTAGE REPORT: VOLTAGES ABOVE 1.0500 OR BELOW 0.9500 *t*

X

OPEN LIKE

X-. 0 V E R L 0 A D E D

C 0 N T I N G E N C Y E V E N T S -------.X FROH HAKE TO

FROH BUS 689 [TOLK 230] TO SUS 717 [LAHS CO 230] CKT 1 .

L I N E S --X X--HVA(HW)FLOW- X

NAKE CKT PRE-CHT POST-CNT RATING PERCEHT-------- - - COHTINGEHCY SINGLE 154t*t HOKE ***

X"---- BUS "---X V(PU) X---.-- BUS --- X V(PU) X------ BUS -----X V(PU)BUSES WITH VOLTAGE LESS THAN 0.9500: 717 LAHB CO 230 0.8635

XOPEN LINE

X--OVERLOADEDCONTINGENCY EVENTS-------XFROH NAKE TO

FROH BUS 773 PUCO 230] TO BUS 774 [TUCO 345] CKT 1-L I N E S --X X--HVA(HW)FLOW- X

NAKE CKT PRE CHT POST-CHT RATING PERCENT- CONTINGENCY SIHGLE 166ttt NONE ttt

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES WITH VOLTAGE GREATER THAN 1.0500: 774 TUCO 345 1 '213

X

OPEN LINE

X-- 0 V E R L 0 A D E D

C 0 H T I H G E N C Y E V E H T S --------X FROH HAKE TO

FRY SUS 865 [LUB E 230] TO BUS 869 [JOKES 230] CKT 1

L I N E S --X X-.HVA(HW)FLOW--XHAKE CKT PRE-CNT POST-CNT RATING PERCENT

- COHTINGEHCY SIKGLE 188t*1 HONE t**

X- ---- BUS -- --X V(PU) X------ BUS "---X V(PU) X------ BUS -----X V(PU)BUSES WITH VOLTAGE GREATER TKAH 1.0500: 865 LUB E 230 1.0927

XOPEH LINE

XOPEN LINE

X-- 0 V E R L 0 A D E D

C 0 N T I N G E N C Y E V E N T S --------X FROH NAKE TO

FROI BUS 869 [JOHES 230] TO SUS 945 [GRASSLND 230] CKT 1-

X------ BUS --.--X V(PU)BUSES WITH VOLTAGE LESS TMAH 0.9500: 945 GRASSLND 230 0.8910

X-- 0 V E R L 0 A D E D

C 0 N T I N G E N C Y E V E H T S --------X FROH NAIIE TO

FROH BUS 944 [GRASSLKD 115] TO BUS 948 [GRAHAII 115] CKT 1-

L I N E S --X X--HVA(HW)FLOW--XHAKE CKT PRE-CHT POST-CNT RATING PERCENT

- COHTIHGEHCY SINGLE 189ttt HONE tttX------ BUS -----X V(PU) X------ BUS -----X V(PU)

1811 BORDEN 230 0.8944

L I H E S --X X--HVA(HW)FLOW -XHAHE CKT PRE-CHT POST-CNT RATING PERCENT

- COHTINGENCY SINGLE 207**t HONE t**

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES 'WITH VOLTAGE LESS THAN 0.9500: 948 GRAKAH 115 0.9120

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

PTI INTERACTIVE POMER SYSTEH SIHULATOR--PSS/E~ ~ ~ ~ 0 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

TUE, FEB 4 17:25

2000 SPP PREDICTED MINTER PEAK - 2/17/94 - BC (SPPODM00)NO TRANSFERS, SPS 2000 UPGRADES MITH COHMAY HINI-COHP.

~~ ACCC OVERLOAD REPORT: HONITORED ELEHEHTS LOADED ABOVE 100.0 X OF RATING SET A ~*~~~ ACCC VOLTAGE REPORT: VOLTAGES ABOVE 1.0500 OR BELOM 0.9500 ~**

XOPEN LINE

X-- 0 V E R L 0 A 0 E DC 0 N T I N G E N C Y E V E N T S --------X FRN HAHE TOFROH BUS 945 [GRASSLND 230] TO BUS 1811 [BORDEH 230] CKT 1

L I H E S --X X--HVA(HM)FLOM--XNAHE CKT PRE-CNT POST-CNT RATING PERCENT

COHTIHGEHCY SINGLE 208***HONE ***

X"---- BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES MITH VOLTAGE LESS THAN 0.9500: 1811 BORDEN 230 0.8849

XOPEN LINE

X-- 0 V E R L 0 A D E DC 0 N T I N G E N C Y E V E H T S --------X FRN NAHE TOFROH BUS 1150 [ARTESIA 115] TO BUS 1152 [NAVAJO 3 115] CKT 1

L I H E S --X X--HVA(HM)FLOM--XNAHE CKT PRE-CNT POST-CHT RATING PERCENT

COHTINGENCY SINGLE 252~~~ NONE ~~~

X----- BUS - -"X V(PU) X------ BUS -----X V(PU) X-- -- BUS -- -X V(PU)BUSES 'MITH VOLTAGE LESS THAH 0.9500: 1150 ARTESIA 115 0.8939

XOPEN LINE

X-- 0 V E R L 0 A D E 0CONTINGENCY EVEHTS-------XFROH HARE TOFROH BUS 1152 [NAVAJO 3 115] TO BUS 1170 [EDDY CO 115] CKT 1

L I H E S --X X--HVA(HM)FLOM--XNAHE CKT PRE-CHT POST-CHT RATING PERCEHT

CONTINGENCY SINGLE 253**'+ HONE **+

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES MITH VOLTAGE LESS THAN 0.9500: 1150 ARTESIA 115 0.8822 1152 NAVAJO 3 115 0.8820

XOPEN LINE

X-- 0 V E R L 0 A D E D

C 0 N T I N G E N C Y E V E N T S --------X FROH HAHE TOFROH BUS 1168 [ATOKA 115] TO BUS 1170 [EDDY CO 115] CKT 1-

L I H E S --X X--HVA(HM)FLOM--XHAHE CKT PRE-CHT POST-CHT RATING PERCEHT

CONTIHGEHCY SINGLE 254*4* HONE *l*

X---.-- BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES 'MITH VOLTAGE LESS THAN 0.9500: 1168 ATOKA 115 0.8670

XOPEN LINE

X - 0 V E R L 0 A D E 0COHTINGENCY EVENTS--------XFRN NAHE TOFROH BUS 1171 [EDDY CO 230] TO BUS 1172 [EDDY CO 345] CKT 1

L I H E S --X X--HVA(HM)FLOM--XNAHE CKT PRE-CHT POST-CHI'ATING PERCENT

CONTINGENCY SINGLE 2574*% HONE %t*

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X--- -- BUS --- -X V(PU)BUSES MITH VOLTAGE GREATER THAN 1.0500: 1172 EDDY CO 345 1.0549

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ \ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

PTI INTERACTIVE POMER SYSTEH SIHULATOR--PSS/E TUE, FEB 17:25

2000 SPP PREDICTED MINTER PEAK - 2/17/94 - BC (SPPOOM00)NO TRANSFERS, SPS 2000 UPGRADES MITH CONMAY HIHI-COIP.

~+i ACCC OVERLOAD REPORT: HONITORED ELEHENTS LOADED ABOVE 100.0 X OF RATING SET A ***i~* ACCC VOLTAGE REPORT: VOLTAGES ABOVE 1.0500 OR BELOM 0.9500 ii*

X

OPEN LINE

X-- 0 V E R L 0 A D E D

C 0 N T I N G E N C Y E V E N T S --------X FRN NAHE TO

FROH BUS 1177 [LEA CO 230] TO BUS 1841 [HIDLAHD 230] CKT 1

L I N E S --X X"HVA(HM)FLOM-XHAHE CKT PRE-CNT POST-CNT RATING PERCENT

CONTINGENCY SINGLE 263***NONE a**

X------ BUS "."X V(PU) X"".- BUS "---X V(PU) X------ BUS -----X V(PU)BUSES MITH VOLTAGE GREATER THAN 1.0500: 1841 HIDLAHD 230 1.2454

XOPEN LINE

X-- 0 V E R"L 0 A D E D

CONT I N 0 E N C Y E V E N T S --------X FROH NAHE TO

FR@I BUS 1178 [CUNHINHN 115] TO BUS 1258 [SAH AN T 115] CKT 1

L I N E S "X X"NVA(HM)FLOM--XNAHE CKT PRE.CNT POST-CHT RATING PERCEHT

CONTINGENCY SINGLE 266***HONE ***

X------ BUS ---- X V(PU) X------ BUS -----X V(PU) X--- - BUS -----X V(PU)BUSES MITH VOLTAGE LESS THAN 0.9500: 1256 LE-SAN A 115 0.8741 1258 SAN AN T 115 0.8726 1264 BUCKEYE 115 0.8720

X

OPEN LINE

X--OVERLOADEDCONT INGENCY EVENTS--------XFROH NAHE TO

FROH BUS 1179 [CUKHIHHH 230] TO BUS 1183 [POT JCT 230] CKT 1

L I H E S --X X--NVA(HM)FLOM--XNAHE CKT PRE-CHT POST-CHT RATING PERCENT

CONTINGENCY SINGLE 269~~i NONE i~~

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES MITH VOLTAGE LESS THAN 0.9500: 1183 POT JCT 230 0.9048

XOPEH LINE

X-- 0 V E R L 0 A D E D

C 0 N T I H 0 E N C Y E V E N T S --------X FROH HAHE TO

FROH BUS 1179 [CUNNINHH 230] TO BUS 1273 [TAYLOR 230] CKT 1

L I H E S --X X--NVA(HM)FLOM--XNAHE CKT PRE-CHT POST-CHT RATING PERCENT

CONTINGENCY SINGLE 270'~~

NOHE ***

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS ---- X V(PU)BUSES MITH VOLTAGE LESS THAN 0.9500: 1273 TAYLOR 230 0.9139

X

OPEH LINE

X-- 0 V E R L 0 A D E D

C 0 N T I N G E N C Y E V E N T S --------X FRN NAHE TO

FROI BUS 1230 [CARLSBAD 115] TO BUS 1232 [FIESTA 115] CK'I 1

L I H E S --X X--HVA(HM)FLOM--XNAHE CKT PRE.CHT POST-CNT RATING PERCEHT

CONTINGENCY SINGLE 280***NONE ~**

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES MITH VOLTAGE LESS THAN 0.9500: 1232 FIESTA 115 0.8525 1236 HOPI 115 0.8577

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

PTI INTERACTIVE POMER SYSTEM SIIRILATOR"PSS/E TUE, FEB 2 4 17:25

2000 SPP PREDIC'IED IJINTER PEAK - 2/17/94 - BC (SPPOONOO)

NO TRANSFERS, SPS 2000 UPGRADES MITH COHHAY HIHI-CQlP.

***ACCC OVERLOAD REPORT: HONITORED ELEHENTS LOADED ABOVE 100.0 X OF RATING SET A ~~*~i~ ACCC VOI.TACE REPORT: VOLTAGES ABOVE 1.0500 OR BELOH 0.9500 ***

X.OPEN LINE

X-- 0 V E R L 0 A D E 0CONT INGEHCY EVENTS--------XFRN HAHE TO

FROH BUS 1232 [FIESTA 115] TO BUS 1236 [HOPI 115) CKT 1

L I H E S --X X--HVA(HH)FLOM--XHAHE CKT PRE-CNT POST-CNT RATING PERCENT

CONTINGENCY SINGLE 281***HONE **»

X--- -- BUS --- -X V(PU) X------ BUS -----X V(PU) X------ BUS ----X V(PU)BUSES ARITH VOLTAGE LESS THAN 0.9500: 1236 HOPI 115 0.9015

XOPEII LINE

X-- 0 V E R L 0 A D E 0C 0 N T I N G E N C Y E V E H T S ----- --X FROH HAHE TO

FROH BUS 1256 ILE-SAN A 115) TO BUS 1258 [SAH AN T 115) CKT 1

L I N E S --X X--HVA(HU)FLOW.-XNAHE CKT PRE CHT POST-CHT RATIHG PERCENT

CONTINGENCY SINGLE 283*ok HONE 4**

X--"- BUS ""-X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES HITH VOLTAGE LESS THAN 0.9500: 1256 LE-SAH A 115 0.8955

EXHIBITJSF%

SCHEDULE 5

2000 WINTER PEAK - 133 MW PSO TO EPE

In this series of contingencies, a 133 MW transfer from PSO to EPE wasstudied during winter loading and generation conditions. Again, theSouthwestern system was studied by outaging each transmission elementone at a time.

Contingencies 57, 62, 82, 100, 166, and 100 indicate loading at or abovethe thermal rating of the Potter County - Harrington 230 kV circuit.

Contingency 63 shows high loading on the Nichols 230/115 kV transformer.

Contingency 218 shows loading on the Yoakum County-ODC 115 kV line atthermal limit.

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

PTI INTERACTIVE PONER SYSTEM SIMULATOR--PSS/E TUE, FEB 14:44

SPOWI30 INTERNAL SPS HOGS, TRAHSFERS 133 MN PSO/EPEE66 HN SPS/THP, 0 SPS/E)eE, 200 ERCOT/PSO. 2/18/94 BC

i~* ACCC OVERLOAD REPORT: MONITORED ELEMENTS LOADED ABOVE 100.0 X OF RATING SET A **~~*~ ACCC VOLTAGE REPORT: VOLTAGES ABOVE 1.0500 OR BELON 0.9500 ~~i

SUBSYSTEM DESCRIPTIOH FILE: C:iPSSE21NiSPP94iCSN FEBi1994 SPPiTIESiSPPOOSP.SUBHONITORED ELENENT FILE: C:iPSSE2IASPP94iCSN FEBi1994 SPPiTIESiSPP93SP.MOHCONTINGENCY DESCRIPTION FILE: C:iPSSE2IASPP94iCSll FEBi1994 SPPiTIESiSPPOOSP.COH

XOPEN LINE

X--OVERLOADEDC 0 N T I N G E N C Y E V E N T S ----.---X FROM NAME TOFROM BUS 113 [PR]NGLE 230) TO BUS 335 [HARRNGTN 230] CKT 1

L I N E S --X X--MVA(MN)FLDN--XNAME CKT PRE CNT POST-CNT RATING PERCENT

- CONTINGENCY SINGLE 1811* HONE

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X----- BUS ---- X V(PU)BUSES NITH VOLTAGE LESS THAN 0.9500: 113 PRIHGLE 230 0.8899

XOPEN LINE

X-- 0 V E R L 0 A D E 0C 0 H T I H G E N C Y E V E N T S --------X FROM NAME TOFRQI BUS 121 [HOORE 230] TO BUS 329 [POTTR CO 230) CKT 1-

L I N E S --X X--MVA(MN)FLN"XNAME CKT PRE-CHT POST-CNT RATING PERCENT------ ---- - CONTINGENCY SINGLE 24

t~k NONE *1t

X----- BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES NITM VOLTAGE LESS THAH 0.9500: 121 MOORE 230 0.8518

XOPEN L]HE

X-- 0 V E R L 0 A D E D

C 0 N T I H G E H C Y E V E H T S --------X FROM NAME TOFROM BUS 192 [HUTCH(S) 115) TO BUS 230 [GRAY CO 115) CKT 1-

L I N E S --X X-.MVA(MN)FLDU--XNAME CKT PRE-CH'I POST-CNT RATING PERCENT

COHI'INGEHCY SINGLE 39***NONE ***

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X----- BUS -----X V(PU)BUSES MITM VOLTAGE LESS THAN 0.9500: 230 GRAY CO 115 0.9239

XOPEN LIKE

X-- 0 V E R L 0 A D E D

C 0 N T I N G E H C Y E V E N T S --------X FROM NAME TOFROM BUS 193 [HUTCM 230] TO BUS 345 [HICHOLS 230] CKT 1

L I H E S --X X-.MVA(N)FLON--XNAME CKT PRE-CHT POST-CHT RATIHG PERCEHT

CONTINGENCY SINGLE 41*4* NONE 111

X------ BUS --"-X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES WITH VOLTAGE LESS THAM 0.9500: 193 HUTCH 230 0.9175

XOPEN LINE

X-- 0 V E R L 0 A D E D

C 0 N T I H G E H C Y E V E N T S --------X FROM NAME TOFROM BUS 250 [KHGSMILL 115] TO BUS 344 [HICHOLS 115] CKT 1 .

L I N E S --X X--MVA(MN)FLON--XNAME CKT PRE-CNT POST-CNT RATING PERCENT

COHTIHGEHCY SINGLE 42i~~ NONE ~**

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS " --X V(PU)BUSES NITH VOLTAGE GREATER THAM 1.0500: 250 KHGSMILL 115 1.0538

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Ptl INTERACTIVE POllER SYSTEM SIMULATOR--PSS/E TUE, FEB 2 4 14:44

SPOOIQO INTERNAL SPS NODS, TRANSFERS 133 IS PSO/EPEE66 HM SPS/INP, 0 SPS/EHDE, 200 ERCOT/PSO. 2/18/94 BC

*~* ACCC OVERLOAD REPORT: HNITORED ELEMENTS LOADED ABOVE 100.0 X OF RATING SET A *~***~ ACCC VOLTAGE REPORT: VOLTAGES ABOVE 1.0500 OR BELOM 0.9500 **i

XOPEN LiNE

X-- 0 V E R L 0 A D E D

C 0 N T I N G E N C T E V E N t S --------X FROM NAKE TO

FROM BUS 262 [BOKERS 115] TO BUS 268 [E PANKDL 115] CKT 1-L I N E S --X X"HVA(N)FLOU--X

NAKE CKT PRE CHT POST CHT RATING PERCENT

CONTINGENCY SINGLE 43***HNE i**

X-----. BUS ---.-X V(PU) X.-.-.- BUS -----X V(PU) X------ BUS -----X V(PU)BUSES lIITN VOLTAGE LESS THAN 0.9500: 262 BOHERS 115 0.9188

XOPEN LINE

X.- 0 V E R L 0 A D E 0C 0 N T I N G E N C Y E V E N T S --------X FRN HAKE TO

FROM BUS 268 [E PANNDL 115] TO BUS 269 [E PAKKDL 230] CKT 1-L I N E S --X X--HVA(KM)FLOM--X

NAKE CKT PRE-CNT POST-CHT RATING PERCEHT

COHTINGEHCY SIHGLE 44*iiKNE ~*~

XOPEN LIKE

XOPEN LIKE

XOPEN LINE

XOPEN LIKE

X------ BUS -----X V(PU) X------ BUS -- --X V(PU) X------ BUS -"--X V(PU)BUSES MITH VOLTAGE LESS THAM 0.9500: 262 BOMERS 115 0.9179 268 E PANNDL 115 0.9180

X-- 0 V E R L 0 A D E D L I N E S --X X- HVA(IBI)FLOU--XC 0 N t I N G E N C T E V E N T S --- ----X FROM NAKE TO NAKE CKT PRE-CNT POST-CNT RATING PERCENT

FROM BUS 344 [HICHOLS 115] TO BUS 345 [HICKOLS 230] CKT 1 CNTINGENCY SINGLE 62344iNICHOLS 115 345 NICHOLS 230 2 102.3 131.3 128.0 102.6

X-- 0 V E R L 0 A D E D L I H E S -X X--HVA(HU)FLN--XCONT INGENCT EVENTS- -"---X FROM MANE TO NAKE CKT PRE-CNT POST-CNT RATIKG PERCEHT

FROM BUS 344 [KICHOLS 115] TO BUS 345 [HICKOLS 230] CKT 2 COHTINGENCY SINGLE 63344iHI CNOLS 115 345 HICHOLS 230 1 105.0 133.9 128.0 104.6

X-- 0 V E R L 0 A 0 E D L I M E S --X X--HVA(NU)FLOM--XC 0 H T I M G E N C Y E V E M T S --------X FROM NAKE TO NAKE CKT PRE-CNT POST-CHT RATING PERCENT

FROM BUS 401 [BUSHLAND 230] TO BUS 471 [DF SMITH 230] CKT 1 COHTINGEKCY SINGLE 82329 POTTR CO 230 335 NARRNGTH 230 1 304.6 353.1 347.0 102.1

X-- 0 V E R L 0 A D E D L I H E S --X X--MVA(MH)FLOM-XC 0 M T I N G E N C T E V E H T S --------X FROM NAKE TO NAKE CKT PRE-CHT POST-CNT RATIKG PERCENT

FROH BUS 431 [OMENS CO 230] TO BUS 601 [SKISKER 230] CKT 1- CONTIKGENCY SINGLE 100329 POTTR CO 230 335 NARRNGTH 230 1 304.6 351.4 347.0 101.6

XOPEN LINE

X-- 0 V E R L 0 A 0 E D

CONT I N G E N C Y E V E N T S --------X FROM NAKE TO

FROM BUS 634 [COX 115) TO BUS 636 [LH-COX 115] CKT 1

L I N E S .-X X--MVA(HN)FLOM"XNAKE CKT PRE.CHT POST-CHI'ATIKG PERCENT

CONTINGENCY SINGLE 141*4* HNE 444

X------ BUS -----X V(PU) X----" BUS -----X V(PU) X---- - BUS -----X V(PU)BUSES WITH VOLTAGE LESS THAN 0.9500: 634 COX 115 0.9061

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

PTI INTERACTIVE POMER SYSTEM SIWLATOR--PSS/E TUE, FEB 2

SPOOH30 IHTERNAL SPS NODS, TRANSFERS 133 W PSO/EPE,66 HM SPS/TNP, 0 SPS/EHDE, 200 ERCOT/PSO. 2/18/94.BC

~ ~

14:44

***ACCC OVERLOAD REPORT: MONITORED ELEHEHTS LOADED ABOVE 100.0 X OF RATING SET A ******ACCC VOLTAGE REPORT: VOLTAGES ABOVE 1.0500 OR BELOH 0.9500 *t*

XOPEN LINE

X-- 0 V E R L 0 A D E D

C 0 N T I N G E N C Y E V E N T S --------X FRDH MANE TO

FRN BUS 636 ILH.COX 115] TO BUS 676 (HALE CO 115] CKT 1-L I H E S -X X-.HVA(HM)FLON--X

NAME CKT PRE-CNI'OST-CHT RATING PERCENT- CONTINGENCY SIHGLE 142

***HONE tttX.----- BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)

BUSES lllTH VOLTAGE LESS THAN 0.9500: 634 COX 115 0.8937 636 LH-COX 115 0.8937

XOPEN Llkf

X-OVERLOADEDC 0 N T I N G E N C Y E V E N T S - -- -"X FROM MANE TO

FROM BUS 689 ITOLK 230] TO BUS 717 (LAMB CO 230] CKT 1-L I N E S --X X--HVA(HM)FLOI--X

MANE CKT PRE-CNT POST-CNT RATING PERCEHT- COHTINGEHCY SINGLE 154

**t NOME ***

X

OPEN LINE

X--- -- BUS -----X V(PU) X------ BUS --"-X V(PU) X------ BUS -----X V(PU)BUSES NITN VOLTAGE LESS THAM 0.9500: 717 LAMB CO 230 0.8600

X- 0 V E R L 0 A D E 0 L I H E S --X X--HVA(HM)FLON--XC 0 H T I N G E H C Y E V E H T S --------X FROM NAME TO MANE CKI'RE.CHT POST CNT RATING PERCENT

FRQI BUS 773 ITUCO 230] TO BUS 774 ITUCO 345] CKT 1 CONTINGENCY SINGLE 166329 POTTR CO 230 335 MARRkGTH 230 1 304.6 356.8 347.0 103.4

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X---- - BUS -----X V(PU)BUSES HITH VOLTAGE GREATER THAN 1.0500: .774 TUCO 345 1.1173

XOPEN LINE

X-- 0 V E R L 0 A D E 0C 0 H T I N G E N C Y E V E H T S --------X FROM NAME TO

FROI BUS 865 [LUB E 230] TO BUS 869 (JOHES 230] CKT 1-L I N E S --X X--HVA(kk)FLON--X

MANE CKT PRE-CHT POST-CNT RATINGPERCEHI'OHTINGEMCY

SINGLE 188***NONE ***

X------ BUS -----X V(PU) X------ BUS - ---X V(PU) X------ BUS -----X V(PU)BUSES ARITH VOLTAGE GREATER THAH 1.0500: 865 LUB E 230 1.0901

X

OPEN LINE

X-- 0 V E R L 0 A 0 E D

C 0 H T I H G E N C Y E V E H T S --------X .FROH NAME TO

FRDH BUS 869 [JOHES 230] TO BUS 945 IGRASSLkD 230] CKT 1

L I H E S --X X- NVA(HM)FLON--XNAME CKT PRE-CHT POST-CNT RATlkG PERCEHT

CONTINGENCY SINGLE 189***NOME t**

X------ BUS -----X V(PU) X ---- BUS -----X V(PU) X------ BUS -----X V(PU)BUSES M]TH VOLTAGE LESS THAM 0.9500: 945 GRASSLND 230 0.8860 1811 BORDEN 230 0.8900

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

PTI INTERACTIVE POMER SYSTEH SIHULATOR--PSS/E TUE, FEB 2

SPOOM30 INTERNAL SPS IKX)S, TRANSFERS 133 HM PSO/EPE,66 HM SPS/TNP, 0 SPS/EISE, 200 ERCOT/PSO. 2/18/94 BC

~ ~

4 14:44

XOPEN LINE

~** ACCC OVERLOAD REPORT: HOHITORED ELEHEHTS LOADED ABOVE 100.0 X OF RATIKG SET A ******ACCC VOLTAGE REPORT: VOLTAGES ABOVE 1.0500 OR BELOM 0.9500 ~~~

~ ~ 0 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

X-- 0 V E R L 0 A D E 0 L I H E S --X X--HVA(HM)FLOM--XCONTINGENCY EVENTS;---- --XFRN NOE TO HOE CKT PRE-CNT POST-CNT RATING PERCENTFRN BUS 944 [GRASSLND 115] TO BUS 948 [GRANAH 115] CKT 1- - - COHTINGENCT SIKGLE 207

4*4 NONE 4**

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES MITH VOLTAGE LESS THAN 0.9500: 948 GRAHAH 115 0.9132

X

OPEN LINE

X

OPEN LIKE

XOPEN LINE

X-- 0 V E R L 0 A D E 0CONT I N G E H C Y E V E N T S --------X FRN NAHE TOFRN BUS 945 [GRASSLKD 230] TO BUS 1811 [BORDEN 230] CKT 1-

X-.---- BUS -----X V(PU)BUSES MITH VOLTAGE LESS THAN 0.9500: 1811 BORDEH 230 0.8884

X-- 0 V E R L 0 A D E D

C 0 N T I H G E N C Y E V E H T S --------X FRN NAHE TO

FROH BUS 971 [TOAKIN 230] TO BUS 1037 [DENVER C 230] CKT 1-970*YOAKLN 115 1014

X--OVERLOADEDC 0 N T I H G E H C T E V E N T S --------X FRN KOE TOFRN BUS 1150 [ARTESIA 115] TO BUS 1152 [KAVAJO 3 115] CKT 1-

L I H E S --X X--HVA(HM)FLOM--XNAHE CKT PRE-CN'I POST-CNT RATING PERCENT

- CONTINGENCY SINGLE 208**t HOKE ***


L I H E S --X X--HVA(HM)FLOM--XNAME CKT PRE-CHT POST-CNT RATING PERCENT

- CONTINGEKCY SINGLE 218OOC 115 1 66.9 114.6 112.0 100.0

L I H E S --X X--HVA(HM)FLOM--XNAHE CKT PRE-CHT POST-CNT RATING PERCENT

- CONTIHGENCY SINGLE 252**1 NONE *1*

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES MITH VOLTAGE LESS THAN 0.9500: 1150 ARTESIA 115 0.8936

XOPEN LINE

X-- 0 V E R L 0 A D E D

COKT INGENC'Y EVENTS--------XFRN NAHE TOFROH BUS 1152 [NAVAJO 3 115] TO BUS 1170 [EDDY CO 115] CKT 1-

L I N E S --X X--HVA(HM)FLOM--XNOE CKT PRE-CNT POST-CNT RATING PERCENT

- COHTINGENCT SINGLE 253*~~ HONE ~~~

X ---- BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES MITH VOLTAGE LESS THAN 0.9500: 1150 ARTESIA 115 0.8844 1152 NAVAJO 3 115 0.8842

XOPEN LINE

X-- 0 V E R L 0 A D E D

CONT INGENCT EVENTS--------XFRN NOE TOFROH BUS 1168 [ATOKA 115] TO BUS 1170 [EDDY CO 115] CKT 1-

L I N E S --X X--HVA(HM)FLOM--XNAHE CKT PRE-CHT POST-CNT RATING PERCENT

- COHTIHGEHCY SINGLE 254***HONE ***

I

t

0

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

PTI INTERACTIVE POWER SYSTEH SINILATOR--PSS/E TUE, FEB~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

4 14:44

SPOOW30 INTERNAL SPS NODS, TRANSFERS 133 HW PSO/EPE,66 HW SPS/TNP, 0 SPS/EISE, 200 ERCOT/PSO. 2/18/94 BC

***ACCC OVERLOAD REPORT: HONITORED ELEKEHTS LOADED ABOVE 100.0 X OF RATING SET A «*«««« ACCC VOLTAGE REPORT: VOLTAGES ABOVE 1.0500 OR BELOW 0.9500 **«

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES WITH VOLTAGE LESS THAN 0.9500: 1168 ATOKA 115 0.8662

XOPEH LINE

X-- 0 V E R L 0 A 0 E D

C 0 H T I H G E N C Y E V E H T S -"---"X FROH HAHE TOFRQI BUS 1171 [EDDY CO 230] TO BUS 1172 [EDDY CO 345] CKT 1-

X- ---- BUS -----X V(PU)BUSES WITH VOLTAGE GREATER THAN 1.0500: 1172 EDDY CO 345 1.0519

L I N E S --X X--HVA(HW)FLOW- XNAHE CKT PRE-CNT POST.CHT RATIHG PERCENT

CORI'IHGEHCY SINGLE 257***NONE «««


XOPEN LINE

X-- 0 V E R L 0 A 0 E D L I H E S --X X--NVA(HW)FLOW--XC 0 H T I N G E N C Y E V E N T S --------X FROH NAHE TO RANE CKT PRE-CNT POST-CHT RATING PERCENT

FROH BUS 1177 [LEA CO 230] TO BUS 1841 [HIDLAND 230) CKI'- CONTINGENCY SINGLE 263««« NONE ***

X----- BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS ----X V(PU)BUSES WITH VOLTAGE GREATER THAN 1.0500: 1841 HIDLAHD 230 1.2449

XOPEN LINE

X--OVERLOADEDC 0 N T I N G E N C Y E V E H T S --------X FROM NAHE TOFROH BUS 1178 [CUHNIHNH 115] TO BUS 1258 [SAH AN T 115] CKT 1-

L I N E S --X X--HVA(HW)FLOW--XHAHE CKT PRE-CNT POST-Ckl'ATING PERCENT

CONTINGENCY SINGLE 266***NONE ***

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES WITH VOLTAGE LESS THAN 0.9500: 1256 LE-SAH A 115 0.8738 1258 SAN Ak T 115 0.8723 1264 BUCKEYE 115 0.8717

XOPEN LlkE

X - OV E R LOAD E D

CONTINGEHCY EVENTS--------XFROH NAHE TO

FROH BUS 1179 [CUHHIHHH 230) TO BUS 1183 [POT JCT 230) CKT 1-L I H E S --X X--HVA(HW)FLOW--X

NAHE CKT PRE-CHT POST-CNT RATING PERCEHT,CONTIHGEHCY SINGLE 269

**« HONE ***

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X--- -- BUS -----X V(PU)BUSES WITH VOLTAGE LESS THAN 0.9500: 1183 POT JCT 230 0.9038

XOPEN LIHE

X-- 0 V E R L 0 A 0 E D

C 0 N T I N G E N C Y E V E H T S --------X FROH kAME TO

FROH BUS 1179 [CUNNIHHH 230) TO BUS 1273 [TAYLOR 230) CKT 1-L I H E S .-X X--HVA(HW)FLOW--X

NAHE CKT PRE-CNI'OST-CHT RATING PERCENT- COHTIHGEHCY SINGLE 270

HONE ***

X- ---- BUS -----X V(PU) X------ BUS ----X V(PU) X------ BUS -----X V(PU)BUSES WITH VOLTAGE LESS THAN 0.9500: 1273 TAYLOR 230 0.9135

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

PTI INTERACTIVE PONER SYSTEM SIHULATOR--PSS/E TUE, FEB 22 994 14:44

SPOOM30 INTERNAL SPS HOGS, TRANSFERS 133 W PSO/EPE,66 1BI SPS/TNP, 0 SPS/EHDE, 200 ERCOT/PSO. 2/18/94 BC

***ACCC OVERLOAD REPORT: HOHITORED ELEMENTS LOADED ABOVE 100.0 X OF RATING SET A ~***iiACCC VOLTAGE REPORT: VOLTAGES ABOVE 1.0500 OR BELSI 0.9500 *~

~ ~ ~ ~ 0 0 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

XOPEN LINE

X-- 0 V E R L 0 A D E D

C 0 H T I N G E N C Y E V E N T S -- ---"X FROM NAME TO

FROM BUS 1230 [CARLSBAD 115] TO BUS 1232 [FIESTA 115] CKT 1-L I N E S --X X--HVA(HM)FLON--X

MANE CKT PRE-CNT POST-CNT RATING PERCENT- CONTINGENCY SINGLE 280

44* MONE 4k*

X----- BUS -----X V(PU) X------ BUS -----X V(PU) X "---- BUS - ---X V(PU)BUSES HITH VOLTAGE LESS THAM 0.9500! 1232 FIESTA 115 0.8597 1236 HOPI 115 0.8649

XOPEN LINE

X-- 0 V E R L 0 A D E D

C 0 N T I H G E N C Y E V E N T S - -- - -X FROH NAME TO

FRIMI BUS 1232 [FIESTA 115] TO BUS 1236 [HOPI 115] CKT 1

L I H E S --X X--HVA(HM)FLN--XMANE CKT PRE-CNT POST-CMT RATIHG PERCENT

- COHTINGENCY SIHGLE 281***MONE *~~

X------ BUS ----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES HITN VOLTAGE LESS THAN 0.9500: 1236 HOPI 115 0.9011

XOPEN LINE

X-- 0 V E R L 0 A D E D

CONT I NGENCY EVENTS--------XFROH MANE TO

FROH BUS 1256 [LE SAN A 115] TO BUS 1258 [SAH AN T 115] CKT 1

L I M E S --X X--HVA(HM)FLOU--XMANE CKT PRE-CNT POST-CNT RATING PERCENT

- CONTINGENCY SINGLE 283***MONE 1@a

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X- ---- BUS - ---X V(PU)BUSES ARITH VOLTAGE LESS THAN 0.9500: 1256 LE-SAN A 115 0.8936

EXHIBITJSFK

SCHEDULE 6

2000 WINTER PEAK - 133 MW EPE TO PSO

In this series of contingencies, a 133 MW transfer from EPE to PSO wasstudied during winter loading and generation conditions. Again, theSouthwestern system was studied by outaging each transmission elementone at a time.

Contingencies 57, 62, 63, and 73 indicate high loading on Nichols 230/115kV transformer.

Contingencies 249, 251, and 258 indicate high loading on the Eddy CountyInterchange transformer.

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

PT[~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

INTERACTIVE PPMER SYSTEH SIMULATOR--PSS/E TUE, FEB 16:04

SPPOOM20 MITH IHTERHAL H(SS. TRANSFERS 133 HM EPE/PSO,0 SPS/TNP, 0 SPS/fief, 200 HM ERCOT/PSO. - 2/18/94 - BC

***ACCC OVERLOAD REPORT: HOHITORED ELENEHTS LOADED ABOVE 100.0 X OF RATING SET A ******ACCC VOLTAGE REPORT: VOLTAGES ABOVE 1.0500 OR BELOM 0.9500 ***

SUBSYSTEH DESCRIPTION FILE: C:iPSSE21ASPP94iCSM FEBi1994 SPPiTIESiSPPOOSP.SUBHOHITORED ELEHENT FILE: C:iPSSE21ASPP94iCSM FEBi1994 SPPiTIESiSPP93SP.HPHCONTINGENCY DESCRIPT[OH FILE: C:iPSSE21ASPP9QCSM FEBi1994 SPPiTIESiSPPOOSP.COH

XOPEN L!NE

X-- 0 V E R L 0 A D E D

C 0 H T I H G E H C Y E V E N T S --------X FROH NAHE TpFRPH BUS 113 [PRINGLE 230] Tp BUS 335 [HARRNGTH 230] CKT 1

L I N E S --X X--HVA(HM)FLOM--XNAHE CKT PRE-CNT POST-CNT RATING PERCENT

COHTINGEHCY SINGLE 18ttt NPNE t**

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES-MITH VOLTAGE LESS THAN 0.9500: 113 PRINGLE 230 0.8935

XOPEN LINE

X-- 0 V E R L 0 A D E D

C 0 N T I N G E N C Y E V E N T S --------X FROH NAHE TpFRPH BUS 121 [H(XWE 230] Tp BUS 329 [POTTR Cp 230] CKT 1

L I N E S --X X--NVA(HM)FLOM--XNAHE CKT PRE-CHT POST-CH'I RATING PERCENT

- CONTINGENCY SINGLE 24tt* NPNf **t

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES MITH VOLTAGE LESS THAN 0.9500: 121 HOORE 230 0.8515

XOPEN LINE

X-- 0 V E R L 0 A D E D

C 0 N T I N G E N C Y E V E N T S --------X FROM NAHE TOFRPH BUS 192 [HUTCH(S) 115] Tp BUS 230 [GRAY Cp 115] CKT 1

L I N E S --X X--HVA(HM)FLPM--XNAHE CKT PRE-CHT POST-CNT RATING PERCENT

COHTINGENCY SINGLE 39t*t NPNf ***

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES MITH VOLTAGE LESS THAN 0.9500: 230 GRAY Cp 115 0.9255

XOPEN LINE

X-- 0 V E R L 0 A D E D

C 0 N T I N G E H C Y E V E H T S --------X FROH HAHE - TpFROH BUS 193 [HUTCH 230] Tp BUS 345 [HICHOLS 230] CKT 1

L I H E S --X X--NVA(HM)FLOM--XNAHE CKT PRE-CHT POST-CHT RATIHG PERCENT

- CONTINGENCY SIHGLE 41**t NONE ***

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES MITH VOLTAGE LESS THAN 0.9500: '193 HUTCH 230 0.9191

XOPEN LINE

X-- 0 V E R L 0 A 0 E D

C 0 N T I N G E H C Y E V E H T S --------X FRPH - HARE TpFRPH BUS 262 [B(SS 115] TO BUS 268 [E PANHDL 115] CKT 1

L I N E S --X X--HVA(HM)FLPM--XNAHE CKT PRE-CHT POST-CHT RATING PERCENT

- COHTINGEHCY SINGLE 43t*t NPNf ***

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES MITH VOLTAGE LESS THAN 0.9500: 262 BPMERS 115 0.9162

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

PTI INTERACTIVE POWER SYSTEH SINJLATOR--PSS/E TUE, FEB 4 16:04

SPPODW20 WITH INTERNAL NODS. TRANSFERS 133 NW EPE/PSO,0 SPS/THP, 0 SPS/EIWE, 200 NW ERCOT/PSO. - 2/18/94 - BC

*~~ ACCC OVERLOAD REPORT: NONITORED ELEHENTS LOADED ABOVE 100.0 X OF RATING SET A **~i**ACCC VOLTAGE REPORT: VOLTAGES ABOVE 1.0500 OR BELOW 0.9500 ***

X

OPEN LINE

X

OPEN LINE

XOPEN LINE

XOPEN LINE

XOPEN LINE

X-- 0 V E R L 0 A D E D L I H E S --X X- NVA(NW)FLOW--XC 0 N T I N G E N C Y E V E H T S --------X FRON WANE TO HANE CKT PRE-CHT POST-CHT RATING PERCENT

FROH BUS 268 [E PANHDL 115) TO BUS 269 [E PANHDL 230] CKT 1- COHTIHGEHCY SINGLE 44*4* HONE ***

X----- BUS -"--X V(PU) X------ BUS -- "X V(PU) X------ BUS -----X V(PU)BUSES WITH VOLTAGE LESS THAN 0.9500: 262 BOWERS 115 0.9174 268 E PANHDL 115 0.9174

X-- 0 V E R L 0 A 0 E D L I N E S --X X--NVA(NW)FLOW--XC 0 H T I N G E N C Y E V E H T S --------X FRON NAHE TO MANE CKT PRE-CHT POST-CHT RATING PERCENT

FROH BUS 335 [HARRNGTN 230] TO BUS 383 [EAST PLT 230) CKT 1- CON]'IHGEHCY SINGLE 56344*NICHOLS 115 345 NICHOLS 230 1 108.6 130.8 128.0 102.2

X-- 0 V E R L 0 A 0 E D L I N E S --X X--HVA(HW)FLOW--XC 0 N T I N G E N C Y E V E N T S --------X FROH NAHE TO NAHE CKT PRE-CHT POST-CNT RATING PERCENT

FROH BUS 344 [HICHOLS 115] TO BUS 345 [NICHOLS 230) CKT 1- CONTINGENCY SINGLE 62344*HICHOLS 115 345 HICHOLS 230 2 105.8 135.9 128.0 106.1

X-- 0 V E R L 0 A D E 0 L I N E S --X X--HVA(HW)FLOW--XC 0 N T I H G E N C Y E V E N T S --------X FROH NAHE TO HAHE CKT PRE-CHT POST-CH'I RATING PERCENT

FROH BUS 344 [HICHOLS 115] TO BUS 345 [HICHOLS 230] CKT 2- CON)'IHGEHCY SINGLE 63344*HICNOLS 115 345 HICHOLS 230 1 108.6 138.5 128.0 108.2

X-- 0 V E R L 0 A D E D, L I H E S --X X- HVA(HW)FLOW--XC 0 N T I H G E H C Y E V E H T S --------X FRON NAHE TO HAHE CKT PRE-CHT POST-CNT RATING PERCENT

FROH BUS 382 [EAST PLT 115] TO BUS 383 [EAST PLT 230] CKT 1- CONTIHGENCY SINGLE 733444HICHOLS 115 345 NICHOLS 230 1 108.6 130.7 128.0 102 ~ 1

XOPEN LINE

X- OVERLOADEDC 0 H T I H G E H C Y E V E N T S --------X FROH NAME TO

FRON BUS 634 [COX 115] TO BUS 636 [LH-COX 115] CKT 1 .

L I H E S --X X- HVA(NW)FLOW -XNAME CKT PRE-CHT POST-CNT RATING PERCENT

CONTINGENCY SIHGLE 141***NONE ***

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES WITH VOLTAGE LESS THAN 0.9500: 634 COX 115 0.9071

XOPEN LINE

X-- 0 V E R L 0 A 0 E 0 L I H E S --X X--HVA(HW)FLOW--XCONT I N G E N C Y E V E N T S --------X FRON NAHE TO NAHE CKT PRE-CHT POST-CNT RATING PERCENT

FROH BUS 636 [LH-COX 115] TO BUS 676 [HALE CO 115) CKT 1 COHTIHGENCY SINGLE 142***NOHE ***

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES WITH VOLTAGE LESS THAN 0.9500: 634 COX 115 0.8948 636 LH-COX 115 0.8948

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

PTI INTERACTIVE POMER SYSTEH SIIRILATOR--PSS/E TUE( FEB 22 4 16:04

SPPODM20 MITH INTERNAL HOOS ~ TRANSFERS 133 HM EPE/PSO,0 SPS/TNP, 0 SPS/EHOE ~ 200 HM ERCOT/PSO. - 2/18/94 - BC

***ACCC OVERLOAD REPORT: HOHITORED ELEHEHTS LOADED ABOVE 100.0 X OF RATING SET A ~~~~~~ ACCC VOLTAGE REPORT: VOLTAGES ABOVE 1.0500 OR BELOM 0.9500 ***

XOPEN LIHE

X-- 0 V E R L 0 A D E D

C 0 H T I H G E H C Y E V E N T S -"-"- X FROH NAHE TO

FROH BUS 689 [YOLK 230] TO BUS 717 [LAHB CO 230] CKT 1-L I H E S --X X--HVA(NM)FLOM--X

NAHE CKT PRE-CHT POST-CNT RATING PERCENT

COHTIHGEHCY SINGLE 154*4* NONE ***

X------ BUS ----X V(PU) X--- " BUS - --X V(PU) X------ BUS -----X V(PU)BUSES MITH VOLTAGE LESS THAN 0.9500: 717 LANS CO . 230 0.8629

XOPEN LINE

X-- 0 V E R L 0 A D E 0CONT I N G E N C Y E V E H T S --------X FROH HAHE TO

FROH BUS 773 [TUCO 230] TO BUS 774 [TUCO 345] CKT 1

L I H E S --X X--HVA(HM)FLOM--XNAHE CKT PRE CHT POST-CHT RAl'IHG PERCENT

COHTIHGENCY SINGLE 16641* NONE

X------ BUS ---"X V(PU) X--- -- BUS -----X V(PU) X------ BUS - -- X V(PU)BUSES MITH VOLTAGE GREATER THAN 1.0500: 774 TUCO 345 1.1229

X

OPEN LINE

X--OVERLOADEDC 0 H T I H 0 E H C Y E V E N T S --------X FROH NAHE TO

FROH BUS 865 [LUB E 230] TO BUS 869 [JONES 230] CKT 1

L I H E S --X X--HVA(HM)FLOM--XNAHE CKT PRE-CHT POST-CHT RATING PERCENT

CONTINGENCY SIHGLE 188t14 NONE oil

X------ BUS -----X V(PU) X------ BUS ---- X V(PU) X------ BUS -----X V(PU)BUSES MITH VOLTAGE GREATER THAM 1.0500: 865 LUB E 230 1.0907

XOPEN LIKE

X-- 0 V E R L 0 A D E 0C 0 H T I N G E H C Y E V E H T S -----".X FROH HAHE TO

FROH BUS 869 [JONES 230] TO BUS 945 [GRASSLHD 230] CKT 1

L I H E S --X X--HVA(HM)FLOM--XHAHE CKT PRE CNI'OST-CNT RATING PERCENT

COHTINGEHCY SINGLE 18941* NONE *4k

X- - - BUS - ---X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES MITH VOLTAGE LESS THAN 0.9500: 945 GRASSLND 230 0.8945 1811 BORDEN 230 0.8978

X

OPEN LIHE

X" OVERLOADEDC 0 H T I H G E N C Y E V E H T S --------X FROH HAHE TO

FROH BUS 944 [GRASSLND 115] TO BUS 948 [GRANAH 115] CKT 1

L I H E S --X X--HVA(HM)FLOM--XHAHE CKT PRE-CNT POST-CNT RATING PERCEHT

COHTIHGENCY SINGLE 207*1* NONE 1I*

X------ BUS -----X V(PU) X---.-- BUS -----X V(PU) X------ BUS -----X V(PU)BUSES MITH VOLTAGE LESS THAN 0.9500: 948 GRAHAH 115 0.9131

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

PTI INTERACTIVE PSIER SYSTEH SIHULATOR--PSS/E TUE, FEB 4 16:04

SPPDOll20 NITH IHTERNAL H(SS. TRANSFERS 133 HM EPE/PSO,0 SPS/TNP, 0 SPS/EISE, 200 NM ERCOT/PSO. - 2/18/94 - BC

**~ ACCC OVERLOAD REPORT: HOHITORED ELEHENTS LOADED ABOVE 100.0 X OF RATING SET A ***~~~ ACCC VOLTAGE REPORT: VOLTAGES ABOVE 1.0500 OR BELOU 0.9500 *~*

XOPEN LIHE

X-- 0 V E R L 0 A D E 0CONTINGENCY EVENTS--------XFRN NAHE TO

FRO( BUS 945 [GRASSLND 230) TO BUS 1811 [BORDEN 230] CKT 1-L I N E S --X X--HVA(HU)FLN--X

NAHE CKT PRE-CNT POST-CNT RATING PERCENT

CONTINGENCY SINGLE 208**INONE 4**

XOPEN LINE

XOPEN LINE

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS --- X V(PU)BUSES M[TH VOLTAGE LESS THAN 0.9500: 1811 BORDEN 230 0.8823

X-- 0 V E R L 0 A D E 0 L I N E S --X X--HVA(HU)FLOM--XCONT IHGENCY EVENTS--------XFRN NAHE TO NAHE CKT PRE-CHT POST-CNT RATING PERCENTFROH BUS 1146 [HAGERHAH 115] TO BUS 1147 [HAGERHAN 230] CKT 1- - CONTINGENCY SINGLE 249

1170 EDDY CO 115 1171 EDDY CO 230 1 106.6 131.4 128.0 102.6

X-- 0 V E R L 0 A D E D L I H E S --X X-.KVA(HU)FLOU--XCONT IHGENCY EVENTS--------XFRN HAHE TO NAHE CKT PRE-CHT POST-CNT RATING PERCENT

FROH BUS 1147 [HAGERHAH 230] TO BUS 1171 [EDDY CO 230] CKT 1- - CONTINGENCY SINGLE 2511170~EDDY CO 115 1171 EDDY CO 230 1 106.6 140.4 128.0 109.7

X------ BUS -----X V(PU) X------ BUS -----X'(PU) X------ BUS -----X V(PU)BUSES NITH VOLTAGE GREATER THAN 1.0500: 1147 HAGERHAH 230 1.0514

XOPEN LINE

X-- 0 V E R L 0 A D E 0C 0 N T I H G E N C Y E V E N T S --------X FRON HANE TO

FROH BUS 1150 [ARTESIA 115] TO BUS 1152 [NAVAJO 3 115) CKT 1-L I H E S --X X--HVA(HN)FLN--X

NAHE CKT PRE-CHT POST-CNT RATING PERCENT- COHTIHGENCY SINGLE 252

%00 HONE **1

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X--- -- BUS ----X V(PU)BUSES NITH VOLTAGE LESS THAN 0.9500: 1150 ARTESIA 115 0.9131

XOPEN LINE

X-- 0 V E R L 0 A D E D

CONT IHGENCY EVENTS------ -XFROH HAHE TO

FROH BUS 1152 [NAVAJO 3 115] TO BUS 1170 [EDDY CO 115) CKT 1

L I H E S --X X--HVA(HN)FLON.-XNAHE CKT PRE-CNT POST-CHT RATIHG PERCENT

- CONTINGENCY SINGLE 253***HONE ***

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES MITH VOLTAGE LESS THAN 0.9500: 1150 ARTESIA 115 0.8951 1152 NAVAJO 3 115 0.8949

XOPEN LINE

X-- 0 V E R L 0 A D E D

C 0 H T I N G E H C Y E V E H T S --------X FROH NAHE TOFROH BUS 1168 [ATOKA 115] TO BUS 1170 [EDDY CO 115) CKT 1-

L I H E S --X X--MVA(HN)FLOW -XNAHE CKT PRE-CHT POST-CHT RATIHG PERCENT

- CONTINGENCY SIHGLE 254%*4 HONE 4oo

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

PTI INTERACTIVE POKER SYSTEII SIHULATOR--PSS/E TUE, FEB 4 16:04

SPPOOH20 KITH IHTERNAL IKmS. TRANSFERS 133 Hll EPE/PSO,0 SPS/TNP, 0 SPS/EHDE, 200 HM ERCOT/PSO. - 2/18/94 - BC

ACCC OVERLOAD REPORT: HNITORED ELEMENTS LOADED ABOVE 100.0 X OF RATING SET A * *111 ACCC VOLTAGE REPORT: VOLTAGES ABOVE 1.0500 OR BELOM 0.9500 1**

XOPEN LINE

X------ BUS -----X V(PU) X------ BUS - --X V(PU) X------ BUS -----X V(PU)BUSES IIITH VOLTAGE LESS THAN 0.9500: 1168 ATOKA 115 0.8678

X-- 0 V E R LOAD E D L I N E S --X X--HVA(HH)FLOM-XC 0 N T I N G E N C Y E V E N T S --------X FRN MANE TO MANE CKT PRE-CNT POST-CHT RATIHG PERCENTFRN BUS 1171 [EDDY CO 230] TO BUS 1172 [EDDY CO 345] CKT 1 CNTINGENCY SINGLE 257

1*1 HOKE 11*

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES IIITH VOLTAGE GREATER THAM 1 F 0500: 1172 EDDY CO 345 1.0570

XOPEN LINE

XOPEN LIME

CONTINGENCY EVENTSFROH BUS 1171 [EDDY CO 230] TO BUS

CONTINGENCY EVENTSFROH BUS 1177 [LEA CO 230] TO BUS

X-- 0 V E R L 0 A D E 0 L I N E S --X X--HVA(HU)FLOU--X--------X FRN NAKE TO NAKE CKT PRE-CHI'OST-CNT RATING PERCENT

1179 [CUNHINHH 230] CKT 1 COHTIHGEKCY SINGLE 2581170*EDDY CO 115 1171 EDDY CO 230 1 106.6 128.6 128.0 100.4

X- 0 V E R L 0 A D E 0 L I H E S --X X--HVA(HN)FLOH.-X--------X FRN KAHE tO KAHE CKT PRE-CNT POST-CNT RATING PERCEHT

1841 [HIDLAKD 230] CKT 1 CONTINGENCY SINGLE 263*1* MOME *1*

XOPEN LINE

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS --- -X V(PU)BUSES IIITN VOLTAGE GREATER THAN 1.0500: 1841 HIDLAMD 230 1.2486

X-- 0 V E R L 0 A D E D L I H E S --X X--HVA(HH)FLN--XC 0 N T I N G E H C Y E V E N T S --------X FRN MAHE TO MANE CKT PRE-CHT POST-CNT RATING PERCENT

FRN BUS 1178 [CUKHIHHH 115] TO BUS 1258 [SAN AN T 115] CKT 1 COHTIKGEMCY SINGLE 266***HOME ***

X------ BUS -----X V(PU) X------ BUS "-"X V(PU) X------ BUS -----X V(PU)BUSES KITH VOLTAGE LESS THAN 0.9500: 'l256 LE-SAN A 115 0.8725 1258 SAN AH T 115 0.8710 1264 BUCKEYE 115 0.8704

XOPEH LINE

CONT INGEHCY EVENTSFRN BUS 1179 [CUMHINIOI 230] TO BUS

X-- 0 V E R L 0 A 0 E D L I H E S --X X--HVA(HU)FLOH.-X--------X FRN MANE TO NAKE CKT PRE-CHT POST-CNT RATING PERCENT

1183 [POT JCT 230] CK't 1 - -----------------""-----" COHTIHGEHCY SINGLE 269***HOKE 1**

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES lllTH VOLTAGE LESS THAN 0.9500: 'l183 POT JCT 230 0.9062

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 0 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

PT[ INTERACTIVE POMER SYSTEH SIIRJLATOR--PSS/E TUE, FEB 4 16:04

SPPOSI20 ARITH INTERNAL HOGS. TRANSFERS 133 W EPE/PSO,0 SPS/THP, 0 SPS/EISE, 200 HM ERCOT/PSO. - 2/18/94 BC

~* ACCC OVERLOAD REPORT: HON[TORED ELEKENTS LOADED ABOVE 100.0 X OF RATING SET A ***

~"* ACCC VOLTAGE REPORT: VOLTAGES ABOVE 1.0500 OR BELSI 0.9500 ~~*

X-- 0 V E R L 0 A D E 0X-------- C 0 N T I H G E N C Y E V E H T S --------X FROH NAHE TO

OPEN LINE FROH BUS 1179 [CUNNINHH 230] TO BUS 1273. [TAYLOR 230) CKT 1

L I N E S --X X--HVA(Hll)FLOH--XHAHE CKT PRE CHT POST-CNT RATING PERCENT

- CONTINGENCY SINGLE 270**0 HONE *1*

X------ BUS --"-X V(PU) X----- BUS -- --X V(PU) X-"--- BUS -----X V(PU)BUSES IIITH VOLTAGE LESS THAN 0.9500: 1273 TAYLOR 230 0.9139

X-- 0 V E R L 0 A D E DX-------- C 0 N T I N G E N C Y E V E N T S -----.--X FROH NAHE TO

OPEN LINE FROH BUS '1230 [CARLSBAD 115] TO BUS 1232 [FIESTA 115] CKT 1

L I N E S --X X -HVA(N)FLOH -XNAHE CKT PRE-CHT POST-CNT RATING PERCENT

- CONTINGENCY SINGLE 280*i% NONE ***

X"-" BUS --"-X V(PU) X------ BUS -----X V(PU) X-- --- BUS -----X V(PU)BUSES 'HITH VOLTAGE LESS THAN 0.9500: 1232 FIESTA 115 0.8560 1236 HOPI 115 0.8613

X-- 0 V E R L 0 A 0 E DX-------- CONT I H G E N C Y E V E H T S - ------X FROH HAHE TO

OPEN LINE FROH BUS 1232 [FIESTA 115) TO BUS 1236 [HOPI 115) CKT 1-L I N E S --X X.-HVA(N)FLON--X

NAHE CKT PRE-CNT POST-CHT RATING PERCEHT

CONTINGENCY SINGLE 281«*~ NONE ~~~

X------ BUS -----X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES HITH VOLTAGE LESS THAN 0.9500: 1236 HOPI 115 0.8971

X-- 0 V E R L 0 A D E DX-------- C 0 N T I N G E N C Y E V E H T S - ------X FROH NAHE TO

OPEN LINE FROH BUS 1256 [LE-SAN A 115) TO BUS 1258 [SAN AN T 115) CKT 1

L I N E S --X X-.HVA(SI)FLN--XNAHE CKT PRE-CHT POST-CHT RATING PERCENT

COHTIHGEHCY SIHGLE 2831*4 NONE 41*

X------ BUS ---.-X V(PU) X------ BUS -----X V(PU) X------ BUS -----X V(PU)BUSES HITH VOLTAGE LESS THAH 0.9500: 1256 LE-SAN A 115 0.8965

AFFIDAVITOF LOUIS F. RIDINGS JR.

STATE OF TEXAS )

)

COUNTY OF POTTER )


appeared Louis F. Ridings, Jr., who being by me first duly sworn did

depose and say as follows:

1. My name is Louis F. Ridings, Jr. and I am Vice President of

Quixx Corporation'(Quixx), a wholly owned subsidiary of Southwestern

Public Service Company (Southwestern). In my affidavit I will address

the efforts of Southwestern and Quixx to sell electricity to Mexico. I will

discuss the interrelationship between these activities and those of CentralII

and South West Services, Inc. (CSW) and its subsidiaries and El Paso

Electric Company (EPE) who are Applicants in the current proceeding. In

my former position as Manager of Operations of Quixx and in my current

position of Vice President, I repave been actively involved in and

knowledgeable of the activities of both Southwestern and Quixx.

2. In late 1991, Quixx through Shell Mining Company became

aware of an opportunity to sell power io three industrial customers which

had facilities located throughout '.mexico. As a result, I traveled to

Monterey, Mexico, to explore '.i e potential of these customers to

purchase power from Southwestern Because of the facilities'ocation,

transmission to most of them requiiea transmission access through the

Electric Reliability Council of Texas iERCOT) and specifically through

CSW's subsidiaries West Texas Utilities Company (WTU) and Central

Power &, Light Company (CP&L). Since the industrials expressed a

continuing interest in the project. a second meeting with the industrials

Page 1

Affidavi of Louis F. Ridin s Jr.

was held, in Amarillo. At that meeting, it was recognized by all parties

that it was improbable that Southwestern could make a system supply

sale through ERGOT because of a belief that CSW would not provide

transmission access for Southwestern to get to Mexico. It was

concluded that a more viable option was to build a power plant in Milam

County, Texas, which is in ERCOT, where Shell Mining owned substantial

lignite reserves. However, to be successful, the project still needed to

develop a transmission strategy to get the power from within ERCOT

across the border.

3. A feasibility study was undertaken. One conclusion was that

access was still needed through ERCOT and most logically over the CSW

companies. We thought the possibility of obtaining transmission access

through CSW was slim unless we granted CSW project participation.

Therefore, a meeting with CSW Energy, an independent power production

subsidiary of CSW, was set up with the assumption that of all CS".l

companies they would be the most interested in potentially cooperating

with the other participants. At the meeting in April, 1992, executives:>i

CSW Energy and the CSW parent company were present. To gain CSUN's

cooperation, we offered CSW Energy part ownership of the proposeu

Milam plant, a portion of the AC.DC Interconnection facility which .. is

needed at the Mexican border to effectuate the sale, and full ownersr..o

of the additional transmission facilities required. CSW was also offer ~ .">

part of the sale to the industrials in Mexico. They declined the proposai

entirely, indicating they already had a lock on this export market and s.i.v

no need to share it with anyone else.

4. We were determined to pursue the sale, so we approached

potential customer for a power exchange from the proposed Milam piani

Page 2

Affidavitof Louis F.'idin s Jr.

Brazos Electric Cooperative, Inc. (Brazos), which is an ERCOT rural

electric cooperative, and with Brazos we identified the City of San

Antonio, an ERGOT municipal utility, as another potential participant. The

City of San Antonio expressed both interest in our project and doubt that

CPRL would be willing to wheel power into what CPSL clearly considered

was its "territory," due to prior unsuccessful efforts by the City to sell to

.Mexico through CPRL's system. Nonetheless, a second meeting with

CSW was set up by Brazos to see if we could get CSW to cooperate.

5. In May, 1992, we went to Dallas to meet with CSW. We knew

that CSW had called on our potential Mexican customers and was in fact,

trying to sell power to them. Therefore, CSW knew that there was

substantial interest on the part of the Mexican industrial customers in our

proposal. At the meeting were CSW executives, including Executive Vice

President Thomas V. Shockley, III, who has filed testimony in this case.

Shockley told us in no uncertain terms that CSW considered Northern

Mexico its market and outlined CSW's long relationship there. We, in

contrast, were characterized as outsiders and not even members of

ERCOT. Shockley told us that we had no business being in ERCOT or

Mexico. He concluded that CSW would attempt to block any effort by us

to make sales through ERGOT to Mexico.

6. Subsequent to the second CSW meeting, Brazos set up a

meeting with Medina Electric Cooperative (Medina), another ERCOT rural

electric cooperative. We discussed Medina's willingness to permit the

building of a transmission line from San Antonio through Medina to the

border through a small service area they have along the border, as *

opposed to the massive areas CPSL controls. Medina told us CP5L was

obviously not considering the benefits of interconnecting with a proposed

Page 3

Affidavitof Louis F. Ridin s Jr.

line from San Antonio to Mexico, near Laredo, Texas, because this1

interconnection would solve a voltage problem for them and enhance

their system reliability along the southern Texas border areas they were

serving. This was the case irrespective of whether the line was owned

by CPBcL or others.

7. One of the major factors in deciding not to pursue the

aforementioned sale to these Mexican industrial customers from the

Milam plant site was the uncertainty involved in bringing power to the

Mexican border due to CSW's refusal to cooperate. We also believe, due

to discussions with Mexican officials and private Mexican citizens, that

had CSW provided wheeling, sales to Comision Federal de Electricidad

(CFE) would have also been a distinct possibility. It was made clear to us

that CFE would welcome the opportunity to evaluate a competitive power

supply option from us.

8. In 1990, we became aware through Shell Mining Company of

power demands in the Juarez, Mexico region. We decided to approach

EPE to seek access for a short-term sale of 3-5 years to CFE. CFE had

indicated that it would welcome an alternative proposal to the one they

had from EPE, fearing the EPE proposal was not market based.

Moreover, CFE'appeared reluctant to buy firm power from EPE apparently

due to high EPE prices in the past.

9. We approached EPE with a proposal under which Southwestern

would sell power to a joint venture of Quixx and Shell Mining who would

resell it to CFE with wheeling over EPE. EPE rejected the proposal stating

CFE was their customer, it was their market, and we should stay out.

We approached EPE again, this time offering them significant interest in

the resale to CFE plus the wheeling revenue. They refused again. EPE

Page 4


told us that Southwestern could sell to EPE and EPE could resell to CFE.

That was the only acceptable transaction to them. We went back to CFE

and told CFE that EPE would not provide transmission services, we gave

them a power price and asked them to intercede with EPE to help get us

wheeling. CFE was reluctant to do so over concerns of overreaching into

domestic U.S. affairs. I understand CFE used our price proposal to

bargain down EPE to a lower price than EPE had previously offered. Left

with no other choice, Southwestern reluctantly agreed to sell the power

to EPE at its embedded costs and thus allow EPE to resell the power at a

substantial markup.

10. CFE suggested that we propose a long-term sale in conjunction

with their long-term resource planning activities. As a result of our

discussions, CFE amended an existing request for proposals (RFP) for

long-range power, which had been previously limited to power plants to

be constructed in Mexico, to allow purchase power bids from the U. S.

We developed and presented on behalf of Southwestern, Quixx, and Shell

Mining, a plan to sell 600 megawatts (in three 200 MW increments in

'l994, 1996, and 1998) to CFE at Juarez. Our proposal also had a 14-

year term with an option to extend. CFE's RFP was modeled after our

initial proposal. CSW, EPE and others also bid the purchased power

option and all bids were evaluated together. It is our understanding that

we were among the two finalists, and, after many months of

consideration, CFE chose the power plant option over our purchased

power plan. I would note that CSW actually competed with EPE for this

long-term sale to CFE.

11. In the course of developing our long-term proposal we met

again with EPE in an attempt to lower the cost of transmission in part by

Page 5


obtaining transmission access on EPE. Our plan was to provide certain

increments of power to CFE in the near term, through EPE, and to

construct a single line to the border from the Southwestern system. EPE

refused our proposal, yet again. Not only was this harmful to our efforts

due to the resulting requirement of constructing two lines versus the one

line necessary had they agreed to our proposal, but CFE indicated a

strong preference for the use of existing transmission for part of the sale

due to perceived uncertainty relating to the permitting of new

transmission lines in the U.S. CFE also expressed concerns about the

adversarial relationship between Southvvestern and EPE.

12. EPE also attempted to block Southwestern from building itsI

proposed line to CFE. EPE attempted to preempt the transmission

corridors chosen by us by amending their prior filing to the Bureau of

Land Management. The only purpose of this was an attempt to thwart

Southwestern's efforts by dominating valuable right-of-way rights. EPE is

attempting to control needed inputs tor a competitive market to exist.

'l 3. Despite these setback s..ve continue to actively pursue

opportunities in Mexico which:.e ".onsider to be promising, including

sales to the aforementioned I',teiican ndustrial customers and CFE. If

successful, CSW's attempt to n.o~opoiize the border transmission paths

through EPE's acquisition and bv '~ i q to offer us any access either to

Mexico or ERGOT would be a cons.<.eraole barrier to our efforts.

-t;ou s . Ridings, Jr.

Page 6


STATE OF TEXAS )

)

COUNTY OF POTTER )

SWORN TO AND SUBSCRIBED BEFORE ME this 22 day of February,1994, by LOUIS F. RIDINGS, JR.

;. g'sr ~ .»I .e "L l3. 1 tlat I e]

flvo'l\» pl.'/III"/1 I ]Q7,Q7

Notary Public, State of Texas

AFFIDAVIFOF ALEPH P. KALT

STATE OF MASSACHUSETTS

COURIY OF MIDDLESEX

BEFORE ME, the undersigned authority, on this day personally appeared Joseph P. Kalt, who

being duly sworn did depose and say as follows:

My name is Joseph P. Kalt. I am the Ford Foundation Professor of International

Political Economy and Academic Dean for Research at the John F. Kennedy School of

Government, Harvard University, 79 JFK Street, Cambridge, 1VQissachusetts, 02138. I am iwso

the faculty chairman of the Kennedy School's Environment and Natural Resources Program.

Outside ofHarvard, I serve as a senior economist with The Economics Resource Group, Inc., an

economic consulting firm specializing in matters of antitrust, regulation, and business

performance, with special emphasis on energy and natural resource sectors.

I am a specialist in natural resource and energy policy, and have published widely

on matters relating to the regulation of natural gas, electricity, oil, and coal markets. I have

testified in numerous administrative, judicial, and Congressional proceedings concerning the

performance of the nation's energy markets, and I have testified before this Commission on a

number of occasions, including in Nonhemr Utilines Service Company (Re: Public Service

Company ofNew Hampshire) (FERC Docket Nos. EC90-10-000, et al., 1990), another matter

involving the merger of two electric power companies.

I received my Master's (1977) and Phd'1980) in economics from the University

ofCalifornia, Los Angeles, and my undergraduate degree in economics from Stanford University'

(1973), Ijoined the faculty at Harvard in 1978, and served as Instructor, Assistant Professor, and

Associate Professor in the Department ofEconomics before becoming a Professor in the Kennedy

School of Government in 1986. Over my years at Kuvard I have had responsibility for the

teaching of graduate courses in=antitrust and regulation, microeconomics, and environment and

natural resource policy, among others. A detailed description of my qualifications, research

publications, and related background is provided in the attached Appendix.

L IFIRODUCHQN hND OVERVS;W

Central and South West Services, Inc. (CSW) and El Paso Electric Company (EPE)

are seeking approval from the Federal Energy Regulatory Commission (the Commission, or the

FERC) in this proceeding for the acquisitioa of EPE by CSW. I have been asked by

Southwestern Public Service Company (SPS) analyze the potential effects of the proposed

merger of CSW and EFB on competitioa ia the dectric utility industry in the affected markets.

I have also been asked to assess the likely benefits and costs to the public of the proposed

merger.

For purposes of my analyma, I have reviewed the Application and supporting

materials of CSW and EPB filed before this Commission, including the affidavit of Dr. George

R. Hall concerning certain aspects of the merger's prospective effects on competition. I also have

reviewed the af6davits ofMr. David T. Hudson, Mr. John S. Fulton, Mr. Louis F. Ridings, and

Affidavitof Jose P. Kalt

Mr. James D. Steinhilper that are being fiiled concurrently with this affidavit. I and/or persons

under my direction have had discussions with employees ofSPS concerning the proposed merger

and its potential effects on SPS and its competitive position. I and/or persons under my direction

also have coHected and reviewed information relevant to my analysis. Given the nature of the

information provided by the Applicants and the relatively brief time available for review of that

information, my analyiis and conclusions are necessarily preliminaty and subject to revision upon

acquisitio'n 'of further data and analyses. Definitive conclusions regarding the merger's

competitive effects, as well as its societal costs and benefits, willrequire additional informationI

beyond that available to me at this time.

LA Principal Fiadinls1

Based on my investigations to this point, I do not believe that it can be concluded

that the proposed merger of CSW and EPE would be free ofsignificant anticompetitive impacts,

or that the merger is consistent with the public interest as measured by a social cost-benefit test.

In fact, the available evidence indicates that the CSW/EPE merger poses substantial threats to

competition in a number ofkey markets. Moreover, my analysis to this point strongly indicates

that the private costs and benefits of the merger to the merging parties diverge substantially from

the public's costs and benefits and that the net impact on the public has not been shown io be

positive or even benign.

The competition analysis submitted by Dr. Hall on behalf of CSW and EPE was

largely or completely silent on a number of key issues raised by the proposed merger ln

particular, it did not,adequately address at least two of the merger's potentially adverse effects

on competition:

Moaopsonistic Effects: The CSW/EPE merger would significantly alter the

ownership of transmission facilities in such a way as to reduce the marketplace

access of SPS in its role as a seller of electric power.'y combining the

transmission facilities ofEPE and CSW under the ownership ofa single party (i.e„CSW), the merger would tend to "bottle up" SPS, leaving it subject to reduced

competition among effective buyers and enhanced potential for monopsonisticmarket power. In bottling up SPS, the merger would inhibit SPS's ability to reach

signi6cant prospective buyers, such as Mexico and the municipality ofLas Cruces,

New Mexico.

2. Monopolistic Hfects: The proposed merger would bring all of the gatewaysbetween the United States and the electric power market ofnortheastern and nQcentral Mexico under the exclusive and unregulated control of CSW. In so domg,the merger would lay in place the foundation for a monopoly in cross-borderelectric power trattsmission. This portends enhanced seller (monopoly) marketpower over northern Mexico on the part of the post-merger CSW. Economically,this is inconsistent with the principles of freer U.S.-Mexico energy trade as setforth in the North American Free Trade Agreement (NAFTA).

With these points in mind, it is useful to put the proposed merger in overall

perspective. SPS has been, and likely will continue to be, an aggressive, low-cost seller of

wholesale power in the Southwest CSWe too, appears to be looking at a future in which it will

have exces3 capacity that it would like to sell, potentially in competition with SPS. CSW's

Notwithstanding the fact that SPS has been and expects to continue to bc a major seller ofwholesale power(scc accompanying afFidavit of David T. Hudson, on behalf of SPS, this preceding, at 2 and 3A), thecalculation of the merger's cffccts on thc SPS Market'rovided by Dr. Hall focus exclusively on SPS inthe role ofa buyer ofpower. The resulting market share and concentration indices apply solely to the issueof prospective monopoly market power directed toward SPS; they shed no light on the question ofprospective monopaony market power directed against SPS (See Direct Testimony of George R. Hall, onbehalf ofCSW and EPE, this pnneding, at Exhibits GRH4, GRH-9, GRH-10, and accompanying text).

merger strategy would have the effect of bringing under CSW's control key market outlets that

SPS needs to reach customers. Moreover, CSW's acquisition ofEPE's system would consolidate

the ownership of all the gateways to the key northern Mexico market. In order to achieve these

results, CSW needs to link itsc:lfto an otherwise disconnected distant utility—EPE. The linkage

is to be obtained by conditioning the merger on Section 211 access to a third utility —SPS. In

so doing, however, the merger package would inhibit or block. SPS's ability to access the

wholesale marketplace. Not only does this portend anticompetitive monopsonistic impacts on

SPS, but it also would adversely affect certain buyers of power in markets where SPS has

demonstrably been, or otherwise would be, a major player. In particular, the manner in vBych

CSW proposes to use SPS's and EPE's facilities raises considerable obstacles to service by SPS

to CSW's highly-valued markets —Mexico and localities such as Las Cruces. This may be

consistent with the private interests of CSW, but it is likely to be contrary to the public interest.

LB Ove widow

The following sections of this affidavit set forth the results of the analyses that I

have been able to conduct based on the information available regarding the merger and the

markets in which the merging companies operate. Section 11 discusses the appropriate economic

criteria for evaluating mergers of electric utilities. For reasons suggerted above, much of the

analysis is focussed on problems of monopsony market power, competitive access, and the

options available to a seller in SPS's position. Section III examines the competitive opnons

available to SPS when it seeks to sell its wholesale power. From a competitive perspective, the

Affi t f Jose P. Kal

key question is how many alternative buyers can realistically reach SPS and register theirI

demands. The answer to this question turns critically on the outlets by which SPS's wholesale

supplies can be accessed by buyers. Each of the outlets that buyers have for reaching SPS is

examined in detail, and the prospective impact of the merger ofEPE and CSW on these options

is assessed. Section IV examines the potential anticompetitive and distorting effects of the

CSW/HPE merger on trade in electricity with Mexico and considers the implications of these

effects in light of the policy commitments recently entered into under NAFTA. Section V

examines the adequacy of available information on the prospective benefits and costs of the

proposed merger, with an eye toward assessing whether the proposed merger is justifiable on/he

grounds of benefiits in excess of costs.

IL ECONOMIC CRlIKRJh FOR EVhLUATINGIXFrCIRICUTD2IYMERGERS

The competitiveness of a marketplace is, in part, a fimction of its structure—

where "structure" refers to such attributes of a market as the ease or dif6culty ofentry, the degree

of differentiation between various parties'fferings, the nature of regulatory oversight, and the

degree to which market transactions are concentrated in the hands of a few or many market

participants. Mergers raise public interest concerns over market competitiveness primarily

because they can alter market concentration: Allelse equal, the merger of two firms in a market

L

makes that market more concentrated by combining the otherwise separate operations of two

firms into one. Allelse equal, a more concentrated market is more likely to exhibit the exercise

of market power rather than competition.

Kh Mat%et Power

Market power is the convene of competition. Market power is ultimately the

ability of a firm or group of firms acting in a tacitly or explicitly coordinated fashion to affect

prices. Such power comes in two distinct forms: seller market power and buyer market power.

Both are recognized as the basic targets of coacern in public policy toward mergers. Seller, or

monopoly, market power refers to the ability of firms as sellers to raise the price of their products

by reducing (or threatening to reduce) the amount of product that is supplied to the market.P,

Buyer, or monopsony, market power refers to the ability of buyers to depress the price of the

fJo P. Kal

goods that they purcliase, or otherwise disadvantage a seller, by holding back {or threatening to

hold back) on the level of purchases.

It is well recognized that monopoly market power raises prices. Because

monopsony market power tends to depress prices in affected markets, however, it might

superficially appear that monopsony is beneficial to the public. This is wrong. Monopsony

market power worsens industry performance and the efBciency of the nation's economy. The

monopsonist profits by driving a wedge between the costs of the upstream products itpurchases

{i.e., the prices it pays are depressed by monopsony market power) and the price received from

customers once those products are turned into downstream output and sales. This sends disto~

signals to the marketplace. By depressing prices, the monopsonist tends to shrink the output of

the affected sellers. In so doing, the monopsonist leaves an incremental range of supply

unpurchased despite the fact that such supply could be produced at less cost than the associated

contribution to consumer value {as this value is reflected in the downstream price). Under

monopsony, upstream sellers (such as a wholesale bulk power seller) receive less for less supply.

In fact, by discouraging upstream supply needed in the production of downstream supplies of

goods and services, downstream supplies are generally harder to provide. By the workmgs of

supply and deinand, this means that, ifanything, monopsony tends to put upward pressure on

downstream consumer prices. Monopsony is not in the public interest.

P. Kal

ILB Mjuhet Power lad ContIul Over Madat Access

A particular form of highly concentrated market structure can arise when one or

a few firms are in control of facilities (such as transmission lines or transmission interchanges,

in the context of electricity markets) that buyers need in order to register their demands with

sellers, or sellers need to reach buyers. Control over essential facilities of this form can enable

the firm in command'of those facilities to exercise market power by controlling the flow of

sellers'upplies or buyers'emands. The firm controlling facilities that are necessary for market

access may be able to use that control as a form of gateway, or spigot, through which sales must

flow and demands must be registered. The result can be monopoly market power, monopsjny

market power, or both.

A firm in control of facilities that are essehtial for market access may realize the

gains from market power in a number of alternative ways. The firm in control of market access,

for example, might exercise monopsony power by denying all downstream buyers access to

captive upstream sellerl. The firm could then make itself the sole monopsonistic buyer of

supplies available upstream from the gateway it controls —buying upstream at depressed prices

and subsequently serving as a merchant dispersing supplies to meet the demands of some or all

downstream buyers. Similarly, an essential gateway may enable the firm in control to deny all

upstream sellerI access to a particular group of downstream buyers who lack other supply

alternatives. By buying upstream supplies (perhaps in a competitive marketplace) and then

serving as sole merchant to particular downstream captive customers, monopoly may be exercised

against those customers.

ffi of Jose P. Kd

Realizing the gains from exercising market power attendant to gateway control

does not require that the firm in question even take title to upstream supplies, or that the firm act

as brokering merchant between sellers and buyers. Ifthe firm can charge above competitive fees

(e.g„ tariffs) for access to its gateway, it can readily exercise monopsony and/or monopoly power

against sellers or buyers dependent on gateway access. Ifupstream sellers are captive, for

example, monopsonistic profits. can be captured with high access fees that have the monopsonistic

effect of leaving upstream sellers with depressed prices; for any given delivered price paid by

buyers, high monopsonistic access fees leave upstream sellers with lower netback prices. If

downstream buyers are captive, high access fees can produce monopolistic profits for the arm

in control of access by raising buyers'elivered prices; for any given f.o.b. price paid to sellers,

high monopolistic access fees raise buyers'elivered costs.

An example of the exercise of market power through the control ofmarket access

when the firm in control serves as the intermediate merchant between upstream seller and

downstream buyer appears to be provided by EPE in its Mexican transactions. At present, EPE

sells bulk power capacity to the Comision Federal de Electricidad (CFE) ofMexico through its

gateway at El Paso, Texas. In order to service this contract, EPE presently purchases 50 M%

offirmcapacity &om SPS through the former's share of transmission capacity at the Artesia, New

Mexico interchange (where EPE and SPS are interconnected).'PE's purchases from SPS are

expressly conditioned by contract on the existence of Mexican purchases from EPE. Thus, EPE

See Direct Testimony ofPedro Serrano, Jr., on behalf ofCSW and EPE, thfs preceding, Exhibit APP 28,at 30.

10

Affidavitof'e P. Kal

is in the position of the kind ofmerchant described above, economically achieving the equivalent

of wheeling SPS power toMexico.'n

its merchant role, EPE purchases from SPS at a price of2.6 cents per kilowatt-

hour. EPEs effective resales of this capacity are not regulated, and the 2.6 cents is marked up

by 66%, to 4,3 cents per kilowatt-hour.'t is not plausible that this mark-up is equal to EPE's

marginal cost of wheeling SPS's power to CFE.'PS, for example, typically faces regulated

wheeling charges in the southwest which are approximately one-quarter of the implicit charge

embodied by EPE's mark up on Mexican sales (and regulated wheeling charges commonly

include a component for recovery of embedded fixed costs). The EPE mark up on SPS's poler

appears to reveal an exaction of profit attributable to market power.

Incentives to exercise market power through the control of access facilities can be

particularly distorting when the firm in control of access facilities is also vertically integrated into

upstream production. Under such conditions, particularly in regulated industries (where regulated

access charges and regulated upstream sales prices can cany disparate margins above marginal

costs), an integrated firm can have incentives to take returns to market power upstream by using

As CSV witness Dr. Gcorgc R. Hall appropriately notes, "many utilitics buy and resell bulk po~er as an

alternative to providing distinct transmission services to other utilities. Sales from utility A to ut~htv Cusing iho transmission system of intermediate utility B may bc recorded as a sale from A to B and soonersale &am B to C. In such situations, the uue character of what are really wheeling transactions ~ill bchidden hom the repozted data'Direct Testimony of George R. Hall, on behalf of CSW and EPF.. thirproceeding, Exhibit APP-92, at 15). That is, utilityC's demand is registered with utilityAby thc purchasesof utilityB.

AffidavitofDavid T. Hudson, on behalf of SPS, this pmccrding, at 10.

Ifthis mark-up wac effectivel disciplined by competition, it would bc cxpccted to bc at or close iomarginal cost.

access control to block upstream competitors, thereby reserving downstream sales for itself. The

result can be upstream depression of competitors'rices (as they are compelled to turn to less

attractive alternative sales opportunities) and/or downstream monopoly prices (as buyers are left

with fewer alternatives). As explained in Section IIIbelow, such an explanation is consistent

with CSW's post-merger limits on SPS's access through EPE to localities such as Las Cruces,

¹w Mexico.

ILC Assessing Relevant Magnets in larger Analyses

Competition is ultimately about options. When buyers have the ability to buy fijm

a large number of sellers, for example, an individual seller that attempts to charge a price above

the competitive level will find all of its potential customers have exercised their option to buy

from another firm charging a lower price. Of course, the number of available options is

important to sellers as well as to buyers. When sellers face a large number of potential buyers,

sellers will refuse to accept the offer of a buyer who attempts to buy at prices below the

competitive level. Instead, the sellers will turn to other buyers who are paying competitive

prices. Of course, the ability of buyers and scdlers to avoid attempts to exercise market power

to their detriment willbe as limited as ther options.

To assess (i.e., count up and measure) the options that buyers'or sellers realistically

have before and after a merger, it is necessary to identify the products, geographic range, and

time frame that constitute the relevant market. The relevant market for assessing the potential

for a merger to create or enhance monopolistic market power consists of those options to which

12

i t f se P. Kal

k

buyers (for whom the pre-merger firms were alternative sources of supply) can realistically turn

I

in order to siitisfy their demands. 'The relevant market for assessing the potential for a merger

to create or enhance monopsonistic market power consists of those options to which sellers (for

whom the pre-merger firms were alternative outlets for sales) can realistically turn in order to

make their sales.

ILC.i Relevant Ma&ets for Hectric UtilityMeq:ei3

The concept of realistic options is important for relevant market definition in the

electric power industry. It is illustrated by the Commission's general policy of not looihtg

beyond so-called "second-tier" utilities in defining geographic markets and assessing sales

competition. As a general guide, it is reasonable to presume, for example, that the expense,

logistics, and traiisactions costs of setting up three wheeling arrangements makes "third-tier"

options unrealistic and keeps them out of the relevant market. Similarly, for a monopsony

analysis, where the relevant market consists of realistic prospective buyers, excessive costs of

reaching a seller keep buyers who confront multiple and high'tariKs out of the relevant market

for that seller's supplies. Obviously, buyers who are denied access to facilities that would be

. needed to register demand for a seller's supplies are not in that seller's relevant market, Where

prospective buyers confront an owner of access facilities who insists on serving as the merchant

of supplies accessed through its facilities (see Section II.B above), those buyers'emands are

13

f Jose P. Kal

appropriately registered in the seller's relevant market as the demand of the merchant who

controls them.

With respect to product market definition, in wholesale electric power markets of

interest to my analysis here, the most basic distinction is that between firmpower {or "capacity")

traiisactions, and non-firm energy transactions. These products generally fall into different

relevant markets because of their different origins in buyers'emands. Finn power transactions

commonly arise from utilities'apacity obligations to their power pools and regulatoiy bodies,

with buyers entering the marketplace when their own installed capacity falls short of their needs

L

and obligations to deliver power. Non-firm energy transactions, on the other hand, commonly

arise from buyers'hort-term emergency or economy needs and reflect buying utilities'emands

for least-cost power Rows.

As a result of the peculiar nature ofpublic utilityregulation ofmost electric power

sellers, the relevant product market in a monopsony analysis of capacity transactions can, in an

anomalous sense, include self-purchase for purposes of serving retail sales. That is, a utility

seller offirmpower might find itselfsubject to attempted exercises ofmonopsony power by other

buying utilities; rather than accept low wholesale prices from would-be monopsonists, the utility

may eschew wholesale sales. Depending on the applicable regulatory response, the foregone

revenue credits of such sales may be loaded back onto the utility's retail customers. Because of

most utilities franchise monopolies in their home retail territories, retail prices can typically be

raised in such circuinstances. While this avoids monopsony, it constitutes an exercise, albeit

See note 3 above.

14

fltdavi of Jose P. Kd

regulated of monopoly power against home-load retail customers. Thus, ifa merger cut offor

monopsonistically limited wholesale buyers'bility to reach a power-selling utilityand the utility

experienced a loss ofrevenue recovery in wholesale markets, the consequence ofthe merger may

be an exercise of monopoly power against the affected utility's retail customers.

In general, the product and geographic range of relevant markets expands as the

time horizon ofanalysis expands. This is because, in the face ofmonopoly or monopsony market

power, affected buyers or sellers may be able to adjust more over time. A buyer facing a

monopson zed PP

own transmission facilities. Whether or not such alternatives are in the relevant market, however,

monopolist seller of wholesale firm electric power, for example, may be able to overcome its

L

need to buy by installing additional generation capacity of its own. A seller facing a

i market for its wholesale su lies m be able to reach new buyers by building its

depends on whether they can be had "realistically" —i.e., at costs which can block an attempt

to exercise market power by imposing a small but significant and nontransitoty price change.

The time horizon beyond which would-be victims of market power can alter their

systems and their capital is denoted the "long run" and creates a useful distinction between short-

run and long-run relevant markets.'owever, whether or not (and when) such options as own-

generation or new transmission facilities are in long-run relevant markets depends upon the costs

and other impediments (such as siting and securing rights of way) of realistically turning to such

options. Ifsuch options willnot prevent small but significant,and nontransitory price impacts

by monopolists or monopsonists, such options are appropriately excluded from even long-run

Ia Section Illbelovr, I treat the short run as extending to 1998.

15

0

I

!

0

AAidavitof Jose P. Kal

relevant markets. Thus, for example, even ifpost-merger control by CSW of rights ofway could

serve as a barrier to SPS's entering the Mexican market by building new transmission facilities

in the long run,'he cost of such facilities could well exclude them from the relevant market for

merger analysis. Similarly, compelling a buyer such as the municipality ofLas Cruces to turn,

perhaps, to building its own generation or additional transmission facilities in order to avoid

having to purchase CSW power post-merger could reasonably be expected to be so expensive as

to prevent the inclusion of such alternatives in the relevantmarket.'inally,

it should be noted that the distinction between long-run and short-run

L

markets does not suggest that merger analysis is more concerned about one or the other. the

~~

~

public policy concern engendered by a merger extends from the time of the merger over the

foreseeable future. It is of little current consolation to the victims of post-merger market power

that such power may dissipate in the long run.

KC2 Measurin Concentration ia Relevant Markets

The identification of the boundaries of (i.e., the participants in) relevant markets

is a precursor to measuring the eKect of a merger on the concentration of those markets. One

measure of concentration is market share. A hIgh market share of the post-merger firm, all else

equal, raises concerns that the firm may possess unilateral market power. A significant change

See Affidavitof Louis F. Ridin8s, Jn, on behalf of SPS, this pmcstding, at 6.

See Section II'e]ow.

16

P. Kal

in the firm's market share which leaves it at a high level provides indication that the merger

threatens to enhance the exercise of market power.

In addition to market shares, the impacts of a merger on market concentration can

be measured with the Herfindahl-Hirschman Index (HHI). This index measures concentration as

a function of all market participants'hares. The HHI is calculated as the sum of the squared

values of each participant's market share. Thus, a pure monopoly has a market share of 100%

and an HHI of 10,000 (i.e., 100% squared); a market with two equal-sized firms has an HHI of

5,000 (i.e., 50% squared plus 50% squared).

As with market share figures, there are no definitive cutoff values for HHIs pat

define the startin ints ofmarket power. However, there are commonly used threshold valuesgpo

for screening mergers for potential anti~mpetitive impacts. Markets with post-merger HHIs

below 1000'are commonly referred to as unconcentrated. Markets with post-merger HHIs

between 1000 and 1800 are commonly conadered to be moderately concentrated, and markets

with post-merger HHIs above 1800 are generally called concentrated.

The level of the post-metger HHI is important, but the magnitude of the change

in the HHI caused by the merger is important as well because it is a measure of the possible

effects of the merger on market performance Here, too, there are rules of thumb. Merger-

induced increases in the HHI of less than 1 00 points are not commonly considered to produce

harmful consequences in moderately concentrated markets, and merger-induced increases in the

HHI of less than 50 points are often treated as acceptable in concentrated markets. Of course,

each of these thresholds, whether for concentration levels or for changes in concentration, is only

17

hHidavlt of Jose P. Kal

a guide. The evaluation of the competitive i'mplications of a proposed merger requires fact-

intensive investigation ofthe incentives, strategies, and behavior ofthe participants in the markets

of interest

I examine certain key implications of the change in ownership over transmission

facilities that would be occasioned by the proposed CSW/EPE merger. In particular, I investigate

the impact on parties who prospectively buy power from SPS. I also examine implications for

SPS as a seller of power. In doing so, I apply standard procedures for assessing market shares

and associated HHIs in an investigation of the marketplace ofbuyers faced by SPS in its role as

a seller of wholesale firm power. CSW witness Dr. George R. Hall has performed analysel of

SPS's market from the perspective of concerns over possible monopolistic market power. He has

not, however, provided any quantitative analysis of the more realistic concerns over monopsony.

18

Nidavi of'ose P. Kal

IIL 'QK MERGERS EFF1XTS ON SPS AS h SELUHt OF ELKCIICHT

SPS is an investorwwned electric utilityoperating primarily in northwesternTexas,'ith

additional service territory in small portions ofNew Mexico, Oklahoma, and Kansas. SPS

is a member of the Southwest Power Pool (SPP). In addition to providing retail service to

customers in its service territory, SPS also provides service to a number of municipalities and is

a major seller of wholesale power. In Fiscal Year 1993, 32% of SPS's energy. sales were made

to off-system wholesale buyers." As discussed by Mr. Hudson, SPS's success as a wholesaler

has been founded on its demonstrated efficiency and marketplace aggressiveness; and SPS

anticipates that it will continue to focus much of its business on sales beyond its own sepjce

territory.

SPS's ability to continue to sell at wholesale is dependent upon SPS's access to

transmission facilities through which buyers are able to register their demands. These facilities

are described at length by Mr. Hudson and are summarized here in Figure 1. As shown in this

figure, SPS has five potential outlets for power through which buyers are able to reach SPS."

The effect of the merger on these transmission outlets will be to bring the outlet currently

controlled by EPE labelled 1 in Figure I) and the outlets currently controlled by CSW under

common ownership.

AffidavitofDavid T. Hudson, on behalf of SPS, this pmcscdittg, at 2.

Thc transmission outlets are: (I) EPEfiNP; (2) ERCOT access through the PSO-SWEPCO To, From, andOver Tariff, (3) access through the PSO-SWEPCO opcnwcccss tariff; (4) to West Plains Energy; and (S)Public Service ofNew Mexico (PNM). See below for details.

19

04

li

Affi 'se P.

CSW is presently the owner offour major electric power companies: Southwestern

Electric Power Company (SWEPCO),'Public Service Company ofOklahoma (PSO), West Texas

Utilities Company (WTU), and Central Power and Light Co. (CPL). The CSW system consisting

of these companies straddles much ofTexas, Ok)ahoma, Arkansas, and Louisiana. CSW's WTU

and CPL af6liates participate in the Electric Reliability Council of Texas (ERCOT). The PSO

and SWEPCO af6liates are members of the Southwest Power Pool (SPP). EPE generates,

transmits, and distributes electricity in western Texas and southern New Mexico (see Figure 1)

and is a member of the Western Systems Coordinating Council (WSCC).

IILA Changes ia Availabilityof Access Through EPE

Currently, EPE owns and controls 133 MW'fcapacity in the HVDC tie located

at Artesia, NM." This interconnection provides SPS with potential access to markets for the sale

of firm power. However, following the merger, CSW/EPE will effectively block SPS's access

to the tie through their plans to reserve the Artesia tie for their own use." Specifically, by 1999,

CSW's plan to integrate its system with the EPE system indicates that it intends to reserve 133

MWof firm, bi-directional transmission capacity on the SPS system. Ifenacted, this plan would

The remaining 66 MW of capacity are owned and controlled by TNP. SPS has a contract to scil TNP 66hGV of finn power.

See Affidavitof David T. Hudson, on behalf of SPS, this pmcsedittg, at 19.

20

apparently enable CSW to exhaust the available capacity of 133 MW through the Artesia tie,

leaving no capacity available for firm sales by SPS."

The City ofLas Cruces, New Mexico currently has a request for proposals (RFP)

outstanding for a 10-15 year contract to provide the city with firm wholesale power. SPS is

actively pursuing this business, and Las Cruces has stated that SPS "appears to be the lowest cost

producer of wholesale power in the area, and the City believes that SPS is a very probable

supplier of wholesale power to a municipal electric utility which is owned and operated by Las

Cruces."" However, SPS would not be able to meet the demand of the City of Las Cruces for

a long-term contract thmugh the Artesia interconnection if the current irPE/CSW syQm

integration plan is enacted. Therefore, the implication of the CSW/EPE system integration plan

is that Las Cruces would be blocked from obtaining power from its preferred provider, SPS.

Presently available evidence suggests that Las Cruces'ealistic alternatives to

obtaining power from SPS are limited. It is my understanding that transmission capacity on

EPE's system from the west (Springerville) and from the north (Four Corners) is limited.

Moreover, Las Cruces'onstruction of its own generation station does not appear to be a realisnc

or relevant alternative. The installation of additional capacity by Las Cruces when SPS and EPE

have the firm generation and transmission capacity available to serve Las Cruces would be

wasteful and more expensive than efficient utility service. To the extent that LasCruces'ee

Affidavitof David T. Hudson, on behalf of SPS, this proceeding, at 22-23.

Motion to Intervene and Protest by the City ofLas Cruces, New Mexico, El Paso Electric Companh, rr A,Docket No. TX94-2400, at 4.

21

Affidavit f Jose P. Kal

construction of its own generation would come at significantly higher cost than service through

SPS, that alternative would not preclude a small but significant and nontransitory price increase

by a would-be monopolist (i.e:, such an alternative is not in the relevant market).

As noted, the CSW/EPE system integration plan directly implies that CSW/EPE

intends to claim and control its entire 133 MW capacity of the Artesia interconnection for itself

because CSW/EPE intends to reserve 133 MW of firm, bi-directional transmission capacity on

SPS through its Section 211 plan. However, as explained by Mr. Hudson, CSW and EPE's

application shows they do not intend to use more than 53 MvVof the Artesia tie capacity for firm

capacity trmisactions between CSW and EPE." The remaining capacity presumably willjbe

reserved by CSW/EPE for economy transactions between the CSW operating companies. This

reservation of the Artesia capacity for economy trades when Las Cruces, a current EPE customer,

could consummate a firm power purchase through that capacity does not represent the highest

and best use for the line. Moreover, SPS's preliminary analysis indicates that CSW/EPE would

realize more incremental revenue recovery by providing firm transmission services for SPS

through the Artesia tie than by using the ue for their own economy transactions." Of course, a

strategy of reserving the Artesia tie for itself could be profitable to CSW/EPE ifdoing so blocks

SPS's access to wholesale markets that CSW/EPE values highly (such as Las Cruces). However,

to the extent that such a strategy would raise the cost of power to a buyer such as Las Cruces

AffidavitofDavid T. Hudson, of bchaK of SPS. chic proceeding, at 22.

AffidavitofDavid T. Hudson, of behalf of SPS. this proceeding, at 23.

22

hAidavi of Jose P. Mal

or would monopsonistically bottle up SPS, it would not serve the public's interest in maintaining

a competitive and d6cient electric power industry.

The case ofLas Cruces appears to represent an actual exercise of market power

that would emanate from the proposed merger plan. The vertical integration of a CSW that is

in capacity surplus with EPE's transmission facilities and the effective reservation of those

facilities for CSW/EPE use would result in the exercise of monopoly market power over Las

Cruces (and similarly situated localities") according to available evidence on alternatives.

The merger raises another issue of concern, as well, Specifically, the merger

, lwould lead to increased concentration of the buyers that can realistically reach SPS to register

their demands. I turn to this issue in the following section.~~

IILB Concentadion of Tamsmission Osvnership and Problems of Monopsony

All else equal,, the competitiveness of the market that SPS confronts when it

attempts to sell wholesale power depends on how many independent buyers can reach SPS and

register their demands and the concentration of these buyers (e.g., as reflected in their market

shares and the associated HHI). By "independent" buyers I mean to distinguish between those

buyers who can transact directly with SPS without relying on an intermediate "merchant in

control of access to SPS. As seen in the case of the SPS-EPE-Mexico transaction described

above (see Section H), EPE serves as the merchant, and it is EPE that registers demand for SPS's

power. Even ifthere were a multitude of independent buyers making up Mexican demand in this

C

These include Dona Ana County, Holloman AirForce Base, and White Sands Missile Range

23

ffidavitof Jose P. Kal

case, EPEs control of the gateway between SPS and Mexico would continue to make EPE the

effective demander of SPS's power. For precisely the reasons explained in Section 11 above, if

we wish to examine the market shares of the potential buyers of SPS's power in this context,

Mexican demand must be treated as the effective demand of the single access-controlling

merchant, EPE. The following analysis seeks to determine how many such effective demanders

would SPS would face with and without the merger; and how concentrated the market they

constitute would be.

Identifying economically effective demanders and measuring such buyers'

concentration in SPS's market require a definition of the relevant market ofbuyers. The rele~t

market appropriate to the assessment of monopsony market power in SPS's market consists of

the buyers that could n.alistically and independently register their demands with SPS. In order

to register demand with SPS, a buyer must have adequate traiismission access to SPS's supply

of capacity or power. If SPS's transmission gateways limit access to only a relatively few

potential buyers, the possibility of monopsony market power over SPS is significant

The following subsections examine the practical ability of independent buyers to

reach SPS in order to register their demands through each of SPS's transmission outlets. The

objective is to construct measures of buyer market shares and associated monopsony HHIs. My

analysis is directed at firm capacity transactions and initially focusses on the short-run period

extending through 1998. Demands for capacity are measured by utilities'apacity deficits. Given

the limited time available for this preliminary analysis, I have relied on the same data as Dr. Hall

for identification of such deficits, where possible (i.e., for U.S. utilities).

24

Hi f Jo P. Kal

Using capacity deficits in calculating buyer (monopsony) HHIs and market shares

is the economic analogue to the familiar practice of using utilities'urplus capacities in

calculating market shares and HHIs in analyses of monopoly market power. To constitute

effective demand, a utility with a capacity deficit must have access to transmission capacity

linking it to the seller(s) of interest in a monopsony analysis. For purposes of market share and1

HHI calculations, realistic effective demand is measured by the lesser of capacity deficits or

available transmission capacity to serve those deficits. Moreover, where transmission access is

not economically open to buyers, but instead potential buyers confront an intermediate utility that

has the capability and incentive to serve as the merchant of those buyers'emands, the aggregate

~~

demand of those buyers is properly treated as a component of the effective demand of that

intermediate access-controlling utility for purposes of market share and HHI calculations.

This last point is important for understanding how to properly calculate marketI

shares and HHIs in a monopsony analysis in circumstances where open transmission access is

withheld or rendered commercially impracticable. A numerical example illustrates the principle.

Consider the case of EPE's purchase of SPS's capacity for purposes of allowing EPE's sales to

Mexico (using approximate numbers for illustration purposes). If total Mexican demand for

purchases through the El Paso, Texas gateway that EPE controls is 150 MW, and EPE has

surplus capacity of its own of 100 MW, EPE's demand for other utilities'apacity is the

remaining 50 MW. Heuristically, when Mexico knocks on EPE's door and asks for 150 MW,

25

EPE knocks on SPS's door and asks for 50 MW to see ifSPS would like to compete for a sale."

In calculating monopsony market shares and HHIs, the 50 MvVofeffective demand appropriately

would be assigned to EPE as the relevant potential buyer, despite the fact that the demand

originated in Mexican capacity deficits.

By assigning effective downstream demands to EPE (or CSW/EPE post-merger),

the market share and HHIcalculations reflect, as they must, the fact that EPE (or CSW/EPE) has

already has m the case of Mexico, EPE (or CSW/EPE) o p y

of merchant when downstream buyers knock on its door. Even ifEPE (or CSW/EPE) would

reserved for itself the discretion to refuse to wheel and, instead, serve as the merchant of

downstream buyers'emands. Note:, again, however, that treating downstream demands in this

way does not imply that EPE (or CSW/EPE) will, in fact, purchase from SPS. But just a4 it

w uld have the abili to la the role

refuse to register such demand 'with SPS, SPS would suffer the effects ofmonopsonization ifand

to the extent that SPS lacks alternative competitive buyers it can turn to through its other outlets

to the market.

In fact, this approach is conservative in measuring EPE's size as a potential

effective buyer of SPS's capacity in so far as it presumes that EPE would always use up its own

surplus capacity before turning to other utilities to service Mexican demands. I follow this

Assuming there are 50 MW of availablc transmission capacity between EPE and SPS. IftranNnissioncapacity were, say, 40 MW, the knock on SPS's door would be for 40 MV. Note also that, paralleling ihccase of monopoly analysis,.it is irrelevant in a monopsony analysis of the market ofbuyers faced tn 'iPSwhether EPE would actually end up buying from SPS. The point of monopsony analysis is ihai. ifmonopsony power were oxcreisable by, say, EPE, such power could be used to depress prices and inaneit in EPE's or other buyers'nterests to purchase from SPS.

26

ffidavltof Sos P. Kal

conservative approach in the calculations reported below. I begin by systematically surveying

effective demands registrable through each of SPS's possible transmission outlets.

IILB.1 1be hrtesia (Eddy County) Tie

SPS is interconnected to Texas-New Mexico Power (TNP) and EPE through a 200

MW HVDC tie located in Artesia, New Mexico (the Eddy County Tie). See interconnection 1

in Figure 1. One-third of this tie is owned by TNP, and two-thirds is owned by EPE. Currently,

SPS has a contract for a firm capacity sale to TNP for 66 MW, fillingTNP's portion of the tie.

lTherefore, until the end of this contract in 2004, no additional demand can be registered with S

through the TNPmwned portion of this tie.

Figure 2 is a stylized trimsrnissioa map, showing the transmission outlets available

to SPS and the effective demands forecasted to be registered through them in 1998.~ TNP is

shown as capable of registering zero effective demand with SPS because its transmission capacity

is already filled with its own capacity purchase in 199S.

As discussed above in Secnoa II, SPS currently has a contract to supply firm

capacity to EPE through EPE's 133 MW share of the Artesia (Eddy County) interconnection.

SPS's present obligation to EPE is 50 MW SPS's contract obligation with EPE rises to 75 MW

in 1996 and terminates at the end of 1996 EPFs eA'ective control over the Artesia tie capacity

As discussed below, 1998 represents a year us whch both EPE and CSW would have incentives io registereffective demand with SPS in the absence of the merger. In prior yeats, the conservative assumption (seetext above) that EPE and CSW would exhaust all of their own surpluses before'urning to a scHer such asSPS combines with EPE and CSW surpluses to preclude demand for SPS power.

27

(see above) would give it the discretion to either wheel power or purchase power from SPS for

downstream buyers. Accordingly, EPE is the effective demander with access to SPS over this

capacity, as reflected in Figure 2 (and the market share and HHIcalculations reported in Section

III.C).

The supply/demand balance for EPE as merchant is shown in the lower left-hand

corner ofFigure 2. There are two utilities accessible via EPE expected to be on the market for

capacity 1998 —Plains Electric Generation and Transmission Cooperative (PEGT) and CFE in

Mexico." PEGT is projected to have a capacity deficit of 6 MW in 1998.~ As noted below in

Section IV, U.S. Department of Energy and Mexican forecasts indicate that Mexico's national

utility, CFE, will continue to be capacity-short in most future years (even after the completion

of the Samalayuca and other generating facilities). With demand growing extremely rapidly in

Mexico, EPE is expected to enjoy demand for capacity from CFE totalling 78 MW in 1998. Not

all of this demand willbe registered with SPS, however. EPE is projected to have a capacity

surplus in 1998 (i.e., 17 MW); and this would allow it to meet a portion of the demand of others.

Even after serving such demand to the fullest extent possible with its own generation, EPE would

have to look to SPS or other sources of power for 67 MW of demand in order to capitalae on

This (conservatively) overlooks ihc demands of the municipality ofLas Cruces. Assuming that EPEwc'lwaysexhaust its own capacity surpluses first, recognition of the demand of Las Cruccs (and siaularty

situated localities) would be offset by an increase in EPE's indicated capacity surplus (shown as i ~ MWin Figure 2) because EPE has apparently reported itself as retaining the Las Cruces contracr ia ice datautiTized by Dr. HalL Sec discussion above.

Available data indicate that PEGT would have demand for a firm capacity contract well inro iha oeaicentury.

28

ANithtvi of Jose P. Kal

its role as the merchant in effective control of access to SPS through the Artesia tie.~ Meeting

this demand by serving as the merchant of SPS power would not exhaust the 133 MW of tie

capacity owned by EPE at Artesia As a result, the effective demand ofEPE (or CSW/EPE post-

merger) that could potentially be attracted by SPS with favorable pricing would be 67 MW. This

figure is shown as "EPE or CSW Effective Demand" in the lower left corner ofFigure 2, where

the reference to "EPE or CSW" refers to the different pre- and post-merger ownership situations.

And it is this figure of 67 MW ofEPE- (pre-merger) or CSW- (post-merger) controlled effective

demand which is entered into the market share and HHI calculations as attributable to EPE or

L

CSW via the indicated transmission facilities.

Although the SPS service temtoty borders the ERCOT, it is not directly

interconnected with the ERCOT transmission grid. In order for SPS to access the ERCOT

system, it must utilize a one-mile section of the transmission system owned by its neighbor to

the east, CSW subsidiary PSO. This segment of the PSO transmission system is connected to

one of CSW's ERCOT subsidi'aries, WTU, through a HVDC interconnection located at

There is no ambiguity regarding the terms of EPE's openwccess tariffregarding Mexico. Itexplicitly statesthat transmission services to a foreign country are not covered by the tariff Sce El Paso Electric Company,Firm Transmission Service Tariff, Exhibit g V$-5) APPA, at paragraph 2.1. Regarding a merchant role

-vis PEGT's demand, see note 3 above.

29

Affidavit f Jose P. Kal

Oklaunion, Texas (the North tie, see interconnection 2 in Figure 1). CSW companies control 142

MW of this interconnection.~

In order for SPS to sell power to a utility in ERCOT, it would have to pay a

"pancaked tariffrepresenting a combination ofPSO-SWEPCO and ERCOT transmission tariffs.~

The applicable PSO-SWEPCO tariffrate is specified in PSO-SWEPCO's "To, From, and Over"

(TFO) tariff Although PSO and its sister operating company SWEPCO have offered an

alternative tariff (PSO-SWEPCO open-access tari6) for access to their transmission assets, it

specifically excludes power destined for, or originating in, ERCOT. Thus, to reach ERCOT, SPS

capacity sales would have to bear the burden of the TFO tariff.

The TFO tariffrate of$ 1.51 per kW-month is significantly above the rate specified

in the'PSO-SWEPCO open-access tariffof $ 1.21 per kW-month.~ Once having gained access

to ERCOT through the TFO tariff, SPS would have to pay an additional distance-sensitive

ERCOT transmission tarifffrom Oklaunion to the delivery point of the utilitybuying SPS power.

Thc remainitig capacity over this tic represents the Okhhoma Municipal Power Authority {OMPA)reservation in order to access their entitlemcnt share of the Oklaunion generation plant in ERCOT. See

Direct Testimony of George R. Hall, on behalf of CSW and EPE this proceeding, Exhibit APP- 92, at 50-51. The possibility exists for CSW to move more thsa 142 MW through thc Oklauaioa tie throughdisplaccnurnt. If'the analysis that follows were based oa this assumption, CSW would appear to be a largerpotential purchaser of SPS power than currently shown, and the market of buyers would be moreconcentrated.

When one transmission tsrifF must be paid on top of another in order to move power betwccn two pouts,these rates are refened to as 'paacaked'anffs.

These rates can also be stated ia tcnns of cents pcr kilowatt-hour. Based on a load factor of 2S percent,a rate used in SPS's supply planning for long-term contracts, the TFO tariffrate is approximately 0 8 ccatsper kilowatt-hour and the PSO-SWEPCO open~cess tariffrate is approximately 0.66 cents per kdo wsn-hour. See SPP Intcrpool Tariff,Appendix D, Public Service Company ofOklahoma Southwcstcrn ElectncPower Company Iatcrpool Tratistaissioa Scrvicc TarifF, aad Southwestern Electrio Power Company PubhcService Compaay of Oklahoma, Southwest Power Pool Firm Transmission Service TarifF.

30

hAi 'Jose P. Kal

The two legs of this transtnission route, assuming the ERCOT destination is Brownsville, Texas

(e.g., to reach a Mexican gateway), are shown in Figure 3. The ERCOT transmission tariffvaries

with distance traveled, but SPS has been quoted a rate of $3.33 per kilowatt-month in order to

reach Brownsville from Oklaunion." &us, the total transmission cost for SPS to reach

Brownsville is $4.84 per kilowatt-month {$1.51 per kilowatt-month plus $3.33 per kilowatt-

month). At a 25 percent load factor, this implies a cost of 2.6 cents per kilowatt hour, oi

approximately 0.8 cents per'kilowatt-hour for the TFO tariffand 1.8 cents per kilowatt-hour for

the mileage-sensitive ERCOT tariff

The "pancaked" rates faced by SPS to reach potential buyers in ERCOT mike

sales into or through ERCOT to third-party buyers economically unrealistic, A simple example

illustrates this point. SPS's FERC-approved tariff rate for interruptible power works out to an

average price per kilowatt-hour of 5.1 cents." The delivered price of this power to Brownsville

would be approximately 7.7 cents per kilowatt-hour, while the delivered price of this power to

a utility accessible. through the PSO-SWEPCO open-access tariff, for example, would be

approximately 5.8 cents per kilowatt-hour (i.e., 5.1 cents for the energy and approximately 0.7

cents for wheeling). Ifwholesale power prices in ERCOT bear any resemblance to the wholesale

prices at which SPS currently sells off-system power, SPS would have to lower its delivered pnce

Using the same 25 percent load factor as in the previous calculation, this tariffrate is approximately t S

cents per kilowatt<our.

SPS's capacity charge for intenuptible power is $5.85 per kilowatt-month. Ata 25 percent load factor, thecost per kilowatt+our is approximately 3.2 cents. ln addition, purchasers pay a fuel charge, based on actualuse, of approximately 1.9 cents per kilowatt-hour.

31

Ai 't f se P. Kal

for power by approximately 1.9 cents per kilowatt-hour (or 25 percent) in order for the delivered

price of its power in ERCOT to be competitive with other ERCOT alternatives,

As discussed above, ifmore than a "small but significant and nontransitoiy" price

change on the part of a supplier would be necessary in order to attract buyers to whom it

currently does not sell goods, then those buyers are not part of the relevant geographic maiket

for a monopsony merger analysis. In the example above, however, SPS would have to cut its

price by over 25 percent in order for ERCOT utilities to consider SPS a realistic supply option

for them. Thus, these ERCOT utilities are not in SPS's relevant market is independent potential

buyers.

The existence of"pancaked tiriffrates effectively blocks SPS from making direct

sales into ERCOT. However, this does not mean that no demand from ERCOT could be

registered with SPS. CSW companies operate in the SPP and in ERCOT, and they transfer

power across SPP withn ERCOT boundaries for their internal coordination transactions at

intracompany tariffrates. To the extent that CSW companies can wheel into and in ERCOT at

a lower effective cost than is available to SPS, the CSW companies can act as merchants to

power-short utilities reachable in and through ERCOT. Just as in the case of EPE's current

dealings withMexico, so too would CSW have the capability and incentive to play this role when

and ifutilities in capacity deficit knock oa its door looking for power. IfCSW found itself

unable to meet such demand through its own capacity surpluses, SPS would be one of the utilities

to whom CSW would potentially turn to in a merchant role. CSW's effective control over the

ability to move SPS power into and through ERCOT would give it the discretion to do so.

32

ffi of Jose P. Kd

Accordingly, CSW would be in the relevant market of potential SPS buyers, carrying the

.effective demand from downstream.

The figures in the lower right corner ofFigure.2 show the supply/demand balance

for the pre-merger CSW operating companies for 1998. As shown, some ERCOT utilities are

power-short For example, Houston Power 8h Light (HPL) has a capacity deficit of405 MW, and

other ERCOT utilities have a combined deficit of 213 MW in 1998. In addition, CSW can sell

into Mexico through its CPL subsidiary, and (as reported in Section IV be)ow) Mexico has an

effective demand for capacity from CPL of 77 MW in 1998. The CSW operating companies

have a significant amount of surplus capacity (illMW from WTU/CPL plus 295 MW fiym

PSO/SWEPCO for a total of 406 MW) which I conservatively assume willgo first to satisfy the

ERCOT demand.

The unsatisfied ERCOT demand represents a potential market for SPS, but the

amount available to SPS is limited by PSO's and SWEPCO's share of the ERCOT-SPP

interconnection capacity. In 1998, the'nterconnection capacity available to SPS (assuming that

PSO and SWEPCO use their available transmission capacity first to sell their excess generation

into ERCOT) is 147 MW. Thus, this is the amount ofERCOT demand that would be regi¹crcd

'with SPS through PSO/SWEPCO. Precisely paralleling the treatment of demand reai¹ared

through EPE, this figure is utilized to measure CSW's size as an effectiv potential buyer through

the tie to ERCOT in market share and HHI calculations reported below.

33

1K'SO sad SWEPCO

SPS is directly interconnected with PSO. See interconnection 3 in Figure 1. PSO

is party to the PSO-SWEPCO open-access tariff filed in anticipation of CSW's merger with EPE

In theory, this open-access tarifF should give SPS opportunities to make capacity sales to

downstream utilities that are interconnected with PSO and SWEPCO. However, the supply-

demand balances of the utilities directly interconnected to PSO and SWEPCO indicate that there

are few potential buyers accessible through this open-access tarifF that would wish to register

their demands with SPS. In fact, Dr. Hall's data indicate that there are only two utilities

accessible through the PSO-SWEPCO open-access tariff that are likely to need to purchhe

~~ ~

capacity by 1998, Central Louisiana Electric Co. (CLECO) and KAMOElectric Coop, Each of

these utilities would register its demand with SPS independently through the PSO-SWEPCO

open-'access tariff. As shown in Figure 2, KAMOhas an effective demand of 68 MW in 1998

.and CLECO has an effective demand of 43 MW in 1998.

Because there may be efFective open access under the PSO-SWEPCO open-access

tarifF in 1998, PSO and/or SWEPCO are not assumed to be merchants trying to meet KAMO's

and CLECO's demands. Rather, as the converse to the controlled or discretiongy access through

EPE and ERCOT, these companies are shown in Figure 2 as being able to use PSO-SWEPCO

open access'to knock on SPS's door themselves. When confronted with potential direct buyers

in this way in the past, SPS has shown its ability to be competitive and secure customers.~

Dizeot Tcstitnoay of David T. Hudson, on behalE of SPS, this ptocssdltt g.

34

ffidavi f P. Kal

Hence, KAMOand CLECO can reasonably be presumed to be in the relevant market for SPS

sales as effective buyers in 1998 and not dependent upon the discretion of CSW for access.

I should note that the foregoing assumption is quite conservative. The PSO-

SWEPCO open-access tarifF contains asymmetric reciprocity conditions under which, should SPS

elect to take advantage of the tarifF, SPS would then have to provide open access to all CSW

affiliates across its system. SPS would have no comparable rights of economically viable open

access across CSW's entire system (i.e., WTU and CPL would be protected). Economically, the

reciprocity condition of open access use of PSO-SWEPCO's tariff can be expected to act as a

barrier to SPS's use of the tariK This condition makes the initial cost (i.e., true marginal tfst)

of the Brst unit of open access used by SPS greater than the tarifF filed with the Commission.

Specifically, the true marginal cost of the first unit ofuse of the PSO-SWEPCO open-access tariff

by SPS would equal the published tariff rate plus any and all costs experienced by SPS as a

result of having to concomitantly provide open access to all CSW affiliates to its own system.

Such costs would include not only possible monetary costs, but costs associated with loss of

flexibilityin planning and operating its own system, transactions costs associated with providing

open access to CSW, and loss of strategic opportunities that might otherwise have been

available.~ Ifsuch costs turned out to be significant enough, SPS might have to eschew use of

open access tmder the PSO-SWEPCO tarifF, and buyers such as KAMOand CLECO would not

be in the relevant market as independent effective demanders. Insteatl, demand registered through

Impacts might be felt, foroxample, in generation siting decisions, location ofaccded transmission upgrades,changes in fuel use and plant dispatch, etc.

3S

hffi f se P. Kal

SPS's connection to PSO would be under the effective control of a CSW affiliate. The only

outlets for SPS with available capacity would then be entirely under the control of CSW

following the merger with EPE (see below and Figure 2).

IILBAWest Pbins Energy (UtBicoip)

SPS is interconnected with West Plains Energy ofKaiisas, a Utilicorp subsidiary,

through a 115 kV line (the North Linc) that runs to Liberal, Kansas. See interconnection 4 in

Figure 1. The ability of SPS to make power sales through this line, however, is severely limited

by the requirement that the interconnection be opened frequently due to the physical constradtits

of the trimnsmission system in western Kansas." Based on the low quality of service available,

firm capacity transactions are not economically reasonable through this line. Thus, Figure 2

shows the effective demand registered through this line to be zero in 1998.

IILBS Public SeIvice ofNnv Mexico

SPS is interconnected to Public Service ofNew Mexico (PNM) through a 200 hAV

HVDC interconnection at Blackwater, New Mexico. (See interconnection 5 in Figure 1.) This

interconnection was built by PNM under a contract for a long-term capacity purchase. SPS

currently supplies PNM with 100 MW of capacity; however, in May 1995, SPS is obligated to

Direct Testimony ofDavid T. Hudson, on behalf of SPS, thb proct edlng, at 12.

36

Affidavitof se P. Kalt

increase its sales to PNM to 200 MW." This sale effectively makes further sales over the PNM

connection infeasible.~ The contract with PNM extends through May 31, 2011. Therefore, as

reflected in Figure 2, no effective demand for SPS power would realistically be registered through

the PNM transmission gateway.

IKC Buyer Marut Shares and Concentration in SPS's Marut

Figure 2 now provides the necessary ingredients for calculation of buyer market

shares and HHIs for an analysis for the potential of the CSW/EPE merger to create or enhance

monopsony market power in the relevant market in which SPS can attempt to sell wholesale fpn

capacity. Figure 2 contains the measures of the level of each effective buyer's potential purchases

from SPS, and the sum of these measures gives the aggregate size of the market. The ratio of

each buyer's size to the aggregate of all buyers'otential purchases yields that buyer's market

share, and these shares can be used to calculate the market's overall HHL

Figure 2 suggests that the market that SPS faces even in the absence of a merger

between CSW and EPE is quite concentrated. Based on data available at this time, only four

effective buyers —KAMO, CLECO, EPE, and CSW —would potentially compete for SPS's

capacity supplies in the absence of the merger The merger would collapse EPE and CSW into

Under the contract, SPS can interrupt its capacity sale to PNM up to a maximum of five percent of the iirnein any month.

Direct Testimony of David T. Hudson, on behalf of SPS, this pnpcccding, at 11-12.

37

Nidavi f Jo P. Kal

a single party and make the market even more concentrated. The resulting market shares and

HHIs for 1998 are shown in Table III-1.

IKG1 Marlat Shue and HHIResults

Table III-1 describes the pre- and post-merger concentration of buyers in the

relevant market which SPS would be expected to face as a seller of electric power capacity in

)998. The effective demands for capacity registered with SPS are shown in the second column

of the table, labeled "Lesser of Tie/Line Capacity or Capacity Deficit". The demand levels are

the effective demands shown in Figure 2. For example, the demand shown for EPEgin

l III-1is67MW whichistheeffectivedemandshownforEPEinFigure2. TheremainingTab e

columns of this table are perfectly analogous to those commonly employed in familiar summaries

of monopoly market power analyses in capacity markets.

The pre-merger buyer market shares of CSW and EPE are 20.62% and 45,23%,

respectively. The merger creates a firm, CSW/EPE, with a market share of over 6S%. The

monopsony HHIs at the bottom of Table III-1 reflect the level of buyer concentration in the

market before and after the merger. Prior to the merger, the potential buyers of SPS capacity are

quite concentrated, as indicated by the HHI of 3084. This value indicates that the pre-merger

buyer market is in the range that is generally referred to as highly concentrated The

accompanying merger-related increase in the monopsony HHI to 4949 is over 1800 points Thus,

this analysis indicates that the proposed merger between CSW and EPE would lead io a

'ignificantincrease in concentration ofbuyers in SPS's relevant market. In fact, at the levels of

38

Table III-1MEASURES OF MONOPSONY FOR SPS AS SELLER:

EFFECTlVE DEMANDAND "BUYER"CAPACITY DEFICITS1998

t+~~g"',A'~~ ""~~P%M4'

at

"~@+~~ 4 ~I@~p+Qtg) .++~f~p~~~b Q+ g())Yt@@g,~g~t/+rrAHAt

gt~~glyg(),'"u, „'. ',"PJp~~~! ~„', Shaaft„) g;Share)~~ N~;,~ HHI)hQ ',tg;„~ HNl"„","g)":,

1. Buyers Accessible Through Artesla Tle

Effective EPE Demand

0

67

0,00%

20.62%

0.00% 0

425

0

Effective CSW Demand

2. Buyer Acceslble In or Through ERCOT

147 4523% — 2,046

CLECO

Line open

Tie Full

3. Buyer Accessible Through PSONWEPCO Open Access Term

20.92% 20.92%

1323%" 13.23%

4. Buyers Accesshle TolThrough West Plains

0 0.00% 0.00%

5. Buyers Accessible Tluough PNN

0 0.00% 0.00%

Resume

438

175

0

438

175

0

Merged CompanyTotal're4ferger

Market Tofal

Post4lerger Market Total

Change ln HHI

67+ 147 ~ 214

325

325

100.0%

65.85%

100.0%

3,084

4,336

4,949

1,865

mpany repreaenta to eman e merger ra conaummate

39

hAidavit of'ose P. Kalt

concentpeon seen here, I believe that the likely adverse effects of the proposed merger one

monopsony market power are so dramatic that this merger warrants extremely close scrutiny and

possible remedial conditions.

The conclusion that the merger leads to a significant increase in the concentration

of buyers that register their demands with SPS is at odds with Dr. Hall's conclusion that no

competing transmission alternatives would be affected by the merger. The fundamental reason

for the difference in the conclusions of the monopsony analysis reported here and Dr. Hall'

monopoly analysis appears to be his focus on the fact that no parallel transmission gatewaysI

would come under the control of the merged CSW/EPE However, as the above analysis shAs,

transmission gateways need not be parallel in order for them to provide competing alternatives

for sellers seeking to reach competitive buyers of their bulk power. The non-parallel transmission

alternatives prospectively available to SPS are relevant to the concentration of the effective

buyers that SPS encounters as a seller of po~er. The high concentration of effective buyers, and

the change in that concentration, that the CSW/EPE merger would produce in the. relevant market

into which SPS would sell wholesale power are not surprising. SPS confronts only three viable

transmission outlets into the late 1990s, and two of these are under the effective control of the

merging parties —separately prior to the merger and collectively following the merger. The third

outlet (PSO-S%EPCO's open-access route) is arguably open for access by buyers potentially

registering their demands with SPS, but even the merging parties identify only two realisnc,

independent buyers in the time frame examined. The potential of a merger to create problems

of monopsony market power for a bottled-up seller in a context such as this is compelling.

40

hffiditvitof Jose P. Kalt

IKC2 Tle Longer Rtm

The market shares and concentration indices shown in Table III-I provide a

snapshot of the buyer market structure faced by SPS at a particular point in time, 1998. Over

the period extending at least through 1998, the transmission capacity that might serve SPS's needs

as an aggressive, low-cost seller of wholesale electric power has been presumed to be fixed. The

period over which transmission capacity outlets are fixed for SPS defines the short run. In the

long run (i.e., at some future date) relevant transmission capacity might be altered by the building

of new capacity and the eventual expiration of existing contracts that tie up capacity. To thel

extent a party independent of CSW/EPE would make additional capacity available in the plst-

merger marketplace, such capacity would tend to reduce the concentration ofthe market ofbuyers

faced by SPS.

The adding of transmission'apacity is not likely to be as much of a long-run

procompetitive force in otherwise monopsonistic markets faced by power seHers as the adding

of new generation capacity can be in the case of power buyers facing monopoly market power.

Due to regulatory and planning requirements, individual utilities generally must avoid sustained

capacity deficits, and generating capacity is commonly added unit by unit as demand grows. This

aids in dissipating over time any seller market power that a capacity-buying utility might

otherwise confront: own generation (or even demand-side management investments) provide

Concentration might bc reduced in the time frame beyond that examined numerically here by theappearance ofadditional buyers accessible via PSO-SWEPCO open access. As discussed below, however,the utiTityrcguhtoty and phnning process (generally pushing utilities to provide sufficient capacity to meettheir own needs) tends to keep the universe of eapacityMficit utilities relatively small.

41

alternatives to purchased capacity. By contrast, an aggressive, low-cost seller might reasonably

expect at any point in time to find some utilities in capacity deficit and seeking to purchase

capacity, although such would-be buyers may be spread across disparate points on the compass.

Building transmission capacity under such circumstances is likely to entail significant risk

Building capacity for the sole purpose of avoiding otherwise monopsonistic control over

marketplace access, thereby leaving the pre-existing capacity under utilized, is simply wasteful ~

IK9. Public Policy Conclusions

As I have noted above, market concentration numbers are not the sole basiAor

assessing the competitive implications of a merger. It is appropriate, in fact, to step back from

the particular numerical values of market shares and HHIs and address the question of whether

approval at this time of the as-proposed merger of CSW and EPE would be consistent with

principles of sound public policy. I believe that the answer to this question is "no."

Independent of the precise numerical values for such things as the magnitude of

a particular utility's capacity deficit or the expiration of an existing transmission-blocking

contract, the merger plan proposed by CSW and EPE would lay in place the foundations for a

highly concentrated market ofeffective electnc power buyers. In so doing, conditions are creaied

which are ripe for the exercise ofmonopsony market power. Moreover, the merging parties have

designed a plan that ties up transmission capaaty owned by a low-cost power seller and impedes

access of that seller to demonstrably willingbuyers. Bottling up an aggressive, low-cost supplier

42

%devi f Jose P. Kal

and preventing buyers from exercising their preferences for using that supplier are inconsistent

with the public's interest in a competitive and ef6cient electric power industry.

43

Affidavitof Jose P. Kal

IV. EFHXT OF 'IRE MERGER ON GATEWAYS A)R .ELI~~RICIIYSALES TO MIKICO

Northern Mexico is important to this merger. CFE buys electricity from U.S.

generators and imports that electricity through gateways along the border with Texas. CFE's

importing regions, Norte and Noreste, are connected to these gateways. One gateway is owned

by EPE and the others are owned by CSW. The only other major gateway for bulk electricity

exchanges with CFE is in southern California, and the associated western portion of CFE does

not trade bulk power with Norte or Noreste. Table IV-1 lists the various points along the Texas

border where power was sold to CFE in 1992. The table shows that electricity sold through theI

EPE gateway generated about six times the revenue that CSW earned through its gateways with

va.

SPS sells electricity to EPE that is brokered to CFE. The average cost of all SPS

electricity sold to EPE under the contract for 1992 was 2.6 cents per kilowatt-hour, while EPE ~

resold this power at an average cost of 4.3 cents per kilowatt-hour. The magnitude of the price

differential, 1.7 cents per kilowatt-hour, is several times greater than the typical wheeling charge

SPS faces in the marketplace. Hence, even if a wheeling charge were paid to EPE, it appears

that SPS's electricity sales would appear to be very competitive in Northern Mexico ifSPS had

direct access to CFE across EPE's transmission system.

44

Aitbtvitof'ose P, Kalt

Table IV-1

ELECTRICITY EXPORTS TO MEXICO1882

CPL CFE Falcort Dam, TX;Brownsville, TX;Eagle Pass, TX;

Laredo, TX

168,831 $5,199.1 3.1

EPE forEPE8 SPS

CFE

CFE

Presldlo, TX

El Paso, TX

607 $25.l

793,268 $33,787.7

4.2

4.3

oufce: ce o oea argy, ectnaty ransacaona osa n ma on or ra, une

Northern Mexico is important to CSW because it represents a market for electricity

sales that is growing rapidly —at 5-6% per year." Ifthe merger with EPE is approved, CSW

will acquire the last, most lucrative gateway of them all, establishing itself as the monopolist'I

gatekeeper for electricity sales to CFE. CSW recognizes the opportunities that lie in Mexico.

For example, in public statements, statements to its employees, presentations to investors, and

by opening an office in Mexico City, CSW has made it clear that it sees opportunities in

electricity sales in Northern Mexico. Furthermore, CSW witnesses indicate CSW has plans to

Several recent press stories have chronicled thc growth prospects forNorthern Mexico. For example, seeThe Texas Obssn cr, October 1, 1993, at 9; ENR, September 27, 1993, at 16; and EIscrrfc Power A Icrt,September 29, 1993, at 18-19. Electricity demand increases in linc with economic growth. Hence, thefaster the expansion of the economy, the greater stress is placed on tho electricity supply. An em pascalexplanation of the relationship between electricity demand and economic growth appears in InternauonEnergy Agency, EIserrfctty In le Cuunrsissr Issues aruI OurlooIr {Paris: OECD, 1985), at 43<S

45

AAi of Jose P. Kal

construct an HVDC interconnect at the Bates station that willcreate the same transfer capability

that SPS has with EPE.~

Northern Mexico is important to the economic analysis of this merger because,

with the merger, CFE willface a change in i ts options as a buyer. Mexico's Norte region, which

is adjacent to and interconnected with EPE, is connected with the Noreste region that is adjacent

to CSW. Moreover, CFE has definite plans to strengthen these interconnections in the next

several years." Thus, absent the merger, CFE would be able to choose to buy power from either

EPE or CSW. Post-merger, CPE will face CSW at all border crossings. CFE's choices as a

buyer of electricity willhave been reduced from two to one.

IV% SPS Can Compete with New Generation in Mexico

According to CSW, Samalayuca 0, a new generating facility near Juarez, willbe

able to overcome competition for electricity sales from the U.S. CSW witnesses point to the fact

that the Samalayuca IIproject was chosen over other proposals that included sales from the U.S."

Ihave prepared Table IV-2 to show that even aAer Samalayuca is in place, the energy componentP

'Merger ofCentral and South West Corporauon and El Paso Electric Company,'hc Elcenic Company,May 1993, and CPL, Ksws, VoL 56, No. 4. l993 See Direct Testimony of Edward Kolodziej, Jr., oabehalf of CSW and EPE, this pmcscding, at l 3, for mformation about the Bates interconnect.

Information pertaining to CFE's planned addtuoas to transmission infrastructure are sumnuLiized in a senesofmaps produced by CFE, Subdireccion de Prognunacion. These plans were reviewed with CFE engmeersby telephone.

Direct Testimony ofGeorge R. Hall, on behalf of CSW and EPE, this proescdfng, Exhibit APP-92. at 58.

46

ANidavi of Jose P. Kal

of SPS electricity generation willbe lower cost The data are shown in Table IV-2. The fuel

cost differential is derived from CSW's forecasts for natural gas and coal prices through 2005."

Table lV-2A COMPARlSON OF SYSTEM ENERGY COST ESTIMATES

CFE'S SAMALAYUCAll v. SPS1997, 2000, 2006

1. SPS (74% coal, 26% natural gas)

interstate Natural Gas ($/mmbtu)

Market Coal ($/mmbtu)

Weighted Fuel Cost ($/mmbtu)(coaVQaa late)

Fuel Cost (Pkwh)

2. Samatayuca (100% gas)

interstate Natural Gas ($/mmbtu)

Fuel Cost (lt/kwh)

3. SPS v. Samalayuca

Fuel Cost Differential (lt/kwh)ource: ee o

2.35

1.99

2.10(rtM30)

2.1

2.35

2.5

(0.4)

3.00

2.55(eN40)

2.6

3,00

3.2

(0.6)

'j~,2005

4.29

2.79g

3.54(Sh50)

3.7

4.29

(0.8)

I have adjusted SPS's fuel use to reflect what Mr. Hudson described to me as the

company's move toward an increased use of natural gas-fired generation, but the mixture of coal

and gas still produces a fuel cost differential favonng SPS by 0.4 to 0.8 cents per kilowatt-how

Direct Testimony of Pedro Scrrano, Jr., on behalf of CSW anti EPE, rh/c procccding, Exhibit APP-33.Exhibit PS-S.


The cost of fuel usually constitutes the largest fraction of the cost of generating an additional

kilowatt ofelectricity. Therefore, Iexpect that SPS's electricity generation should be competitive

with electricity from the newly constructed Samalayuca plant However, for the benefits of

competition to be realized in the marketplace, SPS would require access to CFE.

IVX 1le Prospect for Sales of Hectrlcity from the US. to Northern Mexico

Despite the evidence noted above of CSW's strong interest in the Northern Mexico

market, CSW witnesses minimize the importance of Northern Mexico in their analyses of this

merger. CSW witness Dr. Hall, relying on CSW's Mr. Kolodziej.and others, notes pat

Samalayuca II, one of two electricity generation facilities in Northern Mexico to be completed

by 1998, will create a surplus of power near Juarez. Juarez is the point of sale for EPE's

exports to CFE and is only one ofnine zones or subregions contained within CFE's Norte region.

Based on the projected short-run capacity surplus in Juarez created by Samalayuca II, and the

view that CFE's two Northern Mexico regions are not connected by suKcient transmission

capacity to accommodate inter-regional flows of electricity, CSW excludes Northern Mexico as

a relevant market for the purposes of the merger analysis."

Direct Testimony of George R. Hall, on behalf of CSW and EPE, this proceeding, Exhibit APP.9:, ai 56.Direct Testimony ofEdward Kolodziej, Jr., on behalf on CSW and EPE, this procssdjng, Ex}uhi APP.1).at 14-15.

Direct Testimony ofEdward Kolodziej, fr., on behalf on CSW and EPE, this proceeding, Exhi&i HAPP. i ).at 14-15.

48

AAidavitof Jose P. Kal

However, CSW's conclusions about Mexican demand for imports ofU.S. electric

power fail to consider the supply or demand balance beyond the Juarez zone. Furthermore, as

information from CFE indicates, the Norte and Noreste regions engage in large electricity

transfers. Thus, the analysis should be expanded to an examination of the combined components

ofsupply and demand for both regions ofNorthern Mexico. Table.IV-3 contains the components

of the supply and demand for the period 1993-98 based on recognition of the integration of

Northern Mexico into a common market."

Table N-3NORTHERN MEXICO SUPPLY AND DEMAND COMPONENTS

1993 - 1998(Megawatts)

,"~tll~l"»++i».llitsr~n'f»»»m I, I ~g»"»„» @I pplr»pj>„» 'i ~l>gpss'jl),".lpga'l„'»,KQi»'<i~Qg", &»SLT4fle~e>+Ji'Iw~Ãrfw~}m>i''

*i .»i 'M»».'i 5~+hMA" r)(~Q',.»" »'»g'»»ix~»»"»»4»»»'SSk

~jj'tQSI'> ~;..".CSSS> @$q1SS7. 1998

1. Peak Demand

2. Capacity{Margin set at 16%)

3. Transfers from Other CFE Regions

4,988

4,465

575

5,301 5,740 6,129 6,503 6,907

5,053 5,053 5,347 5,932 6,077

575 575 575 575 675

4. ImportsEPE GatewayCSW Gateway

150150

0

150 150 207 0150 150 150

0 0 57 0

15578

Net Capacity Surpiusl(Deficit)ource:

202 477 38 0 4

The data in Table IV-3 show EPE sales to Mexico fixed at the contract level of 150 MW through l996(Direct Testimony of Pedro Serrano, Jr., on behalf of CSW and EPE, this preeeiding, Exhibit APP-34)As thc new generation capacity from Samalayuca II and Carbon IIbegin to come online in 1996. the aced

for imports from thc U.S. dcclincs. Thc data for capacity in the Norestc region werc provided by CPE's

Area de Control Noreste. Later capacity additions reflect the start-up of Carbon II, units 3 and 4

49

AAidttvitof Jose P. Kal

Icompiled Table IV-3 from information provided to me by CFE and ajoint DOE-

CFE document" While more time and data would be required to fine-tune the Northern Mexico

electricity supply/demand forecast, the components ofsupply and demand identified in this simple

example consist of: (1) regional peaL demand (Norte and Noreste), (2) regional peak generation

capacity, (3) inter-regional transfers of electricity from elsewhere in CFE, and (4) the expected

electricity sales for EPE and CSW. Based on information provided by CFE, the transfers of

electricity at peak demand between regions is from the east to the north, then to the west. Off-

peak, the electricity flows are reversed. At such times, power flows from the Noreste region to

the southeast to supplement the demand for electricity in the vicinityofMexico City. Finagy,

CFE documents indicate that because of internal requirements there were no sales of electricity

from Northern Mexico to the U.S. through the CPL or EPE gateways in either 1991, 1992, or

1993.

This supply-demand balance shows that as peak demand in Northern Mexico

continues to grow, sales to CFE across the EPE and CSW gateways will be required by 1998

Thc electricity demand forecasts to 2002 appear in CFE's 'Estudio del Mcrcado Electrico, Arcs Norte sndArea Norestc', Subdiieccion de Programacion, Gerencia de Programacion de Sistcmas Electricos. Thegeneration capacity data were drawn from U.S./Mexico Electricity Trade', DOE, March, 1991, CFE's Areade Control Norcstc and updated using a variety ofmaps produced by CFE's Subdireccion de Programscionfor Area Nortc, Area Norestc and the Main Network and Electric System (1991). Several telephoneconversations were necessary to verify electricity flows between CFE regions. CFE staff in Monterrey andMexico City provided system information. I relied on CFE personnel to determine the start-up dates forthe various units of Carbon Il and Samalayuca II. I'ith only slight modifications, the dates appear tocorrespond with those provided by CSW witnesses. A 16% reserve requirement was used to adjust installedgeneration capacity. The 16% target was used by CFE in the joint DOENFE study. The nct capacitysurplus/deficit in Table IV-3 is measured against the 16% reserve requirement.

This information was provided by a senior engineer and area chief in CFE's Monterrey offic.

50

Affidjtvi f se P. Kal

even though CFE has added 1219 MW of generation capacity. As Samalayuca II and Carbon

II start up, peak load requirements are met for 1997 without additional imports of electricity.

However, by the end of this short-run analysis, substantial sales of capacity across the CPL and

EPE gateways are needed to meet peak demand.

IV.C gabe Relevant 1Vbtt%at

CSW's witnesses conclude that the merger will not foreclose any meaningful

competition between CFE and EPE based on their view that the Norte and Noreste regions of

CFE are only weakly connected, preventing meaningful inter-regional transfers of electricity.

CSW and EPE have, in fact, competed with one another to make a long-term capacity sale to

CFE, in response to an RFP from CFE in 1992. Therefore, the assumption that competition

would not be foreclosed by the merger of CSW and EPE is incorrect. Moreover, information

provided by CFE pertaining to both the existing interconnections and the planned expansions of

inter-regional transmission capabilities indicates that the assumption of CSW's witnesses is

incorrect. In fact, there have been significant inter-regional transfers of electricity on a regular

basis, and the ability to transfer electricity between the northern regions will be expanded in

several stages before 1998.

Currently, a 230 kV line, as shown in Figure 4, with an estimated peak capacity

of 200 MW, connects the Norte and Noreste regions near Torreon Sur." According to CFE

The capacity of that transmission interconnect is shown in a CFE map, Subdireccion de Programacton,Gerencia de Programacion de Sistemas Electricos, for the Noreste region, 1993.

51


documents, that interconnection will be expanded, so by the time the proposed merger is

consummated, the line's capacity should have increased to at least 300 MW.~ CFE also plans

to interconnect the two regions at a second point, closer to the U.S. border. This interconnection

would allow electricity from new generation facilities such as Carbon II, units 3 and 4, to flow

between the regions.'7

CFE's current operation and planned expansions strongly indicate that the Norte

and Noreste regions form one market for electricity. Based on this supply/demand analysis and

the capacity for inter-regional movements of electricity, the electricity surplus posited by CSW

does not appear to be likely. To the contrary, the data of Table IV-3 show that the 1219 hiW

of new generation capacity from Samalayuca II and Carbon II will be absorbed by regional

~~

demand. In fact, this new generation capacity ts insuKicient to prevent the return of capacity

defiicits by 1998 as shown in Figure 5.

Based on the foregoing analysis, it is inappropriate to dismiss the Mexican market

as somehow unaffected by the merger. ln fact, the data suggest that competition to supply

electricity to Mexico willbe seriously'irected by the merger. First, contrary to theApplicants'ontention,

CSW and EPE are potenual competitors for electricity sales into Mexico in the

absence of the merger. CSW's acquisiuon of EPE, the largest exporter on the border, representsr

a complete concentration of seller market power Second, the data from CFE showing a hkdy

The expansion of the link between the two cesiocs Is shown on the system map for the Noreste resioo,Subdireccion de Programaeion, Gerencia de Programacion de Sistcmas Elcctricos, projected for l996

The CFE map for 1996 shows a 400 MW interconnection in place between Rio Escondido and HeieuleaHowever, that line is expected to operate only at 200 MW imtil aber the cnd of thc century.

52


Icapacity deficit indicate that CFE willbe dependent on the U.S. as its only source for incremental

near-term capacity. 'hird, the consolidation of control by CSW over al) of the available

gateways outside ofCalifornia, and the proposal to exclude the Mexican gateways in ERCOT and

on EPE's system from open access, could allow CSW to curtail (ifnot eliminate) competition

from other U.S. utilities for sales to Mexico. Fourth, these circutrtstances may encourage CSW

to extract monopoly rents from CFE and prevent potentially more ef6cient U.S. sellers of

electricity from making sales to Mexico.

IV3) 1be Proposed Merger and NAFl'A

The proposed merger is not in keeping with NAFTA,nor is the merger consistent

with the Clinton Administration's public policy on international commerce. The recently signed

trade agreement has set the public policy tone for transactions between the U.S. and hiexico.

The treaty was designed to facilitate trade by reducing barriers between the two national markets,'I

including regulatory barriers:

"The objectives of the Agreement ... are to ... facilitate the cross-border movement ofgoods and services between the temtories of the Parties: promote conditions of furcompetition in the free trade area; ... " (NAFTA at Article 102).

"The parties recognize the importance of having viable and internationally compeuuveenergy and petrochemical sectors ... " (NAFTA at Article 601).

Moreover, withNAFTA in place, regulatory action should be increasingly vi

gal�lant,

so as not to create a structure that might impede international trade not only now, but in the

foreseeable future. Regulatory approval of CSW/EPE's proposed merger plan will produce a

53

ANhmt of Jose P. Kant

monopoly along the gateways to Northern Mexico, substantially increasing the risk that a

'ompetitor willing to offer its product for sale in Mexico willbe prevented from doing so and

that Mexican purchases will take place at above-competitive prices. This is inconsistent with

NAFTA. The trade agreement was crafted to remove barriers to trade along the border with

Mexico, not to replace barriers with CSW border guards able to collect unregulated tariffs on

electricity trade.

54

I

~

0

AAidavitof Jose P. Kalt

V. THE CS% 'COST-BENEFXI"'NALYSIS

A merger is not consistent with the public interest ifthe costs of the merger to the

public outweigh the benefits of the merger to the public. In the case of a merger of electric

utilities, the public's interest is different from the interests of the merging compariies because the

public has interests beyond the merging companies'rofits and losses. Therefore, an appropriate

cost-benefit analysis willnot reflect an accounting of the impacts of the merger on the merged

firm's income statement and balance sheet, but instead, will reflect the effect of the merger on

the public's "income statement" and "balance sheet". In other words, the analysis should focus

on issues of concern to society in general rather than to the merging firms in particular. g

The production, transmission, and distribution ofelectricity uses the nation's scarce

resources —fuel, labor, steel, etc. Allocating these resources to the electric power industry

diverts them from other industries where they would contribute to output and consumer value.

To the public, these are the societal costs of electric power. Ifa utility merger results in more

of the nation's resources being used up than the merging companies would use independently, the

merger is a waste to the public.

In performing a societal cost-benefit analysis, it is important to recognize that

many traiisiictions do not "use up" resources. In particular, when resources are taken from one

party and simply transferred to another, these resources are not "used up". While such mmsfers

make one party to the transfer richer and the other poorer, they do not indicate that the public

has borne a cost or gained a benefit, and they should not be reflected in a cost-benefit analysis.

55

The "cost-benefit" analysis presented by CSW'n this proceeding does not have

the wide scope necessary to determine whether or not the proposed merger with EPE is in the

public interest Instead, CSW's analysis focusses narrowly on the effects of the merger on the

private interests of the CSW/EPE shareholders, bondholders, and ratepayers. Moreover, the CSW

filingdoes not contain enough information to perform an appropriate public cost-benefit analysis.

Nevertheless, differences between the private costs and benefits of the merger that CSW has put

forth and the public costs and benefits of the merger stand out in a number of key dimensions.

Financial: The merging companies claim the merger will result in benefits as a

result of a reduction in EPEs cost of capital that is attributabie to themerrier.

However, their analysis does not consider the possibility that there might be

offsetting impacts on the remainder of the CSW system that arise from the indirect

loan guarantees and costly infusions of CSW equity that CSW has offered as part

of its plan to acquire EPE." Following this merger, any high-risk assets owned

by EPE do not suddenly become less risky. Rather, the risky assets are "rolled

in" with the safe assets of CSW, and the riskiness, of EPE's assets is shifted and

masked in the same way that the costs of a new, expensive generating facility are

shifted and masked when they are rolled into a utility's rate base. When this

happens, however, the public's risk that the plant will turn out to be partially or

completely a waste of resources does not go away. To the extent that the

Dnect Testimony ofDr. Samuel Hadaway, on behalf of CSUN and EPE, this pracecdfng, Exhibit APP-56,at S and 10.

Affidavit f Jose P. Kalt

2.

financial benefits CSW claims, in fact, represent the shining and masking of risk,

the public financial benefits of this merger are nonexistent

CSW/KPE Capacity Savings: CSW's treatment of savings from capacity

transtictions provides an example of a private benefit that may be ofno benefit to

the general public because it has no effect on the ef6ciency of the economy as a

whole. Absent the merger, EPE would likely have to turn to the market for

capacity in order to meet its system needs." However, because CSW has excess

capacity available, this capacity transaction willbe handled within the CSW/EPE

system following the merger. CSW claims the savings to CSW/EPE attribu+le

to not turning to the market for capacity as merger-related savings. To the extent

EPE would have turned to other utilities with excess capacity to supply its

capacity needs, the amount of excess or under utilized capacity in existence would

not change with the adjustments to EPE's resource plan. Only the location—

CSW or other utilities —of excess capacity would be affected. If capacity

utilization in the electric uuhty industry does not change, there is no benefit to the

public from this change in resource planning, and the apparent benefit to

CS%/EPE is merely a transfer to CSW/EPE from the utilities that would have sold

capacity to EPE Indeed, if CSW's operating costs are higher than the operanng

Direct Testimony of James A. Bnqgeman, on behalf of CSN and EPE, this pmeasding, Exhibit APP.39,at 23-25.

In other words, CSlV willhave less excess capacity and the utility that would have sold its excess capacuyto EPE willhave more.

57


costs of the utilityEPE would have turned to for capacity, this change in resource

planning can actually increase the costs to the public of producing electricity.

3. Coats Outside the CSW/EPE System: SPS willbear significant costs associated

with provision to CSW/EPE of thc Section 211 service on which the proposed

merger is conditioned. These costs of approximately $46 million are based on

system upgrades necessary for SPS to reliably provide transmission service."

However, CSW/EPE proposes to pay only the embedded costs of using SPS's

transmission system, and the full incremental social costs (i.e., the labor and

materials necessary to upgrade SPS's transmission system) are not reflectc$ in

CSW's calculations. Therefore, CSW's private analysis of costs and benefits fails

to recognize a signi6cant cost to the public of this merger because CSW and EPE

would avoid bearing thc full resource cost of their merger.

These examples demonstrate how CSW's private cost-benefit analysis can diverge

in both magnitude and direction from measures of public costs and benefits. In light of these

shortcomings, and considering a) the relatively small savings claimed by CSW/EPE and b)

CSW/EPE's dependence on third-party, long-haul transmission to integrate their distant systems,

there should be a heightened concern that this merger does not convey net benefits to the public

Accordingly, determination of the nct impact on the public requires fact-intensive scrutiny of the

cost-benefit issues.

Affidavitof David T; Hudaon, on behalf of SPS, this pioeecdjng, at 27.

58

VERIFICATION

I, Joseph P. Kalt, being duly sworn, state that I have read the foregoing document, and

that the contents thereof are true and correct to the best of my knowledge and belief.

Jos h P. Kalt

Subscribed to and sworn to before me on this M day of February, 1994.

N7ir (lgguu

Notary Public

My commission expires 7/ .,i;

Vita

JOSEPH PEGGS KALT

PERSONAL INFORMATION

Position: Ford Foundation Professor in International Political Economy and Academic Dean

for Research, John F. Kennedy School of Government, Harvard University

~ Address: (Office) John F. Kennedy School of GovernmentHarvard UniversityCambridge, MA 02138

(617) 495-1480

(Home) 1 Calumet Road

Winchester, MA 01890Date of Birth: 1-12-51

Married, 2 Children

EDUCATION

~De ree Date

UCLAUCLAStanford University

Economics - Ph.D.Economics - Xf.A.Economics - B.A.

5/803/776/73

MAJOR FIELDS OF SPECIALIZATION

Industrial OrganizationEconomics of RegulationNatural Resource EconomicsPublic Choice and Political EconomyMicroeconomic Theory

PROFESSIONAL POSITIONS

The Ford Foundation Professor in International Political Economy, John F. Kennedy Sit:. ~ i

Government, Harvard University, July 1992 to present.

Academic Dean for Research, July 1992 to present.I

Professor of Political Economy, John F. Kennedy School of Government, Harvard University,1986 to June 1992.

Chairman of Degree Programs, John F. Kennedy School of Government, Harvard University,1990 to June 1992.

Professor of Political Economy, John F. Kennedy School of Government, Harvard University,1986 to June 1992.

Chairman, Environment and Natural Resources Program, Center for Science and InternationalAffairs, Kennedy School of Government, Harvard University, 1990 to present.

Co-Principal Investigator, The Harvard Project on American Indian Economic Development, 1987

to present.

Senior Advisor, Royal Commission on Aboriginal Affairs (Canadian Constitutional Commission),,September 1993 to present.

Steering Committee, National Park Service, 75th Anniversary Symposium, 1991.

Assistant Director for Natural Resources, Energy and Environmental Policy Center, KennedySchool of Government, Harvard University. 1985 to 1990.

Board of Trustees, Foundation for American Communications, 1989 to present.

Editorial Board, Economic In ui, 1988 to present.

Advisory Committee, Oak Ridge National Laboratory, Energy Division, 1987 to 1989.

Commissioner, President's Aviation Safety Commission, 1987-88.

Principal Lecturer in the Program of Economics for Journalists, Foundation for AmencanCommunications, teaching economic principles to working journalists in the broadcast and printmedia, 1979 to present.

Lecturer in the Economics Institute for Federal Administrative Law Judges, University ot ~1iamt

School of Law, 1983 to present.

Research Fellow, Energy and Environmental Policy Center, Kennedy School of Government,Harvard University, 1981 to 1987.

Associate Professor of Economics, Harvard University, 7/83 to 11/86.

Editorial Board, MITPress Series on Re lation of Economic Activi, 8/84 to present.

Co-Director, Harvard Study on the Future ofNatural Gas Policy (with Frank C. Schuller), Energyand Environmental Policy Center, Kennedy School of Government, 1984-86.

Research Advisory Committee, American Enterprise institute, 1979 to 1985.

Editor, uarterl Journal o Economics, 10'9 io 9 84

Assistant Professor of Economics, Harvard 1'miersity. 7/80 to 6/83.

Instructor in Economics, Harvard Universitv. 8 io br 80.L

Junior StaE Economist, the President's Council . t'conomic Advisors, Washinyon D.C., 9/PA

to 9/75, analyzing federal energy, environmental. transportation, and tax policies.

TESTIMONY

United States of America Before the Federal l;.".erqy Regulatory Commission, in the Matter otMojave Pipeline Company, Docket Nos t. P'i:-'8-000 and CP93-258-001, Economic Analysisof Public Policy with Respect to Mojave Pt:vitae ( company's Proposed Expansion, statement on

behalf of Mojave Pipeline Company, Janua~ i s'ia

United States of America Before the Fe~e.~i l -migs Regulatory Commission, in the matter otMarket-Based Ratemaking for Oil Pipehne~ 1).iiet 4o RM 94-1-000, Comments in Response

to Notice of Inquiry, statement on behali' iR( () Pipeline Company, Four Corners Pipeline

Company, and ARCO Transportation Ala.ii '-. January 1994.

In Re Columbia Gas Transmission Corpora! i 'n i 'ms Quantification Proceedings, on behaliti'xxon

USA, U.S. Bankruptcy Court, July . "s ' iiiober 1993.

El Paso Natural Gas Company v. Windward l-~ere & Marketing, et al., on behalf ot El Paio

Natural Gas Company, deposition testimony ihu~ust l 993.

Analysis ofCompetition Issues Raised by the Proposed Acquisition of Sagasco Holdings Limitedby Santos Limited, statement on behalf of Sagasco Holdings Limited, August 1993.

Indiana Utility Regulatory Commission, in the matter of the Proposed Merger between PSI

Resources, Inc., PSI Energy, Inc., Cincinnati Gas k Electric Co., and CINergy Corp., on behalfof PSI Resources, Inc., June 1993.

Interstate Commerce Commission in the matter of Farmland Industries, fnc. v. Gulf Central

Pipeline Company, et al., on behalf of Gulf Central Pipeline Co., May 1993.

United States of America Before the Federal Energy Regulatory Commission, Revisions to OilPipeline Regulations Pursuant to the Energy Policy Act of 1992, Docket No. RM93-11-000.Comments on the Commission Staffs Proposal, statement on behalf of ARCO Pipe LineCompany and Four Corners Pipe Line Company, May 1993.

United States Fish and Wildlife Service, U,S, Department of the Interior, in the matter ot the

Proposed Endangered Species Act Designation ot Critical Habitat for Salir Ari:onica (ArizonaWillow)on the Fort Apache Indian Reaervarion. on behalf of the White Mountain Apache Trib~,April 1993.

Bureau of Land Management, U.S. Department ot the Interior, in the matter of the Proposed

Increase in Royalty Rates on Soda Ash, prepared statements on behalf of General Che:.u-~l

Corp., February 1993.

Interstate Commerce Commission in the maner ot Ex Parte No. 346 (Sub-No. 28) Rail (te.-t:f.il

Exemption Authority: Export Corn and Export Soybeans, prepared testimony on beh~ft i ."e

Association of American Railroads, December 19922.

State of California, et al„v. Standard Oil Co ot California, et al., MDI. - 150, on "«" »iMobil, Shell, ARCO, and Standard Oil ot Cahtornia, deposition testimony, October

I'>'merican

Arbitration Association in the matter ot'he Arbitration between Wisconsin P

Light Company and Burlington Northern Railroad Company and Soo Line Railroad ('". I"iCase No. 56-19M0280-91, prepared tesnmony on behalf of Burlington Northern it a,

Company, August 1992, September 1992

Office of Hearings and Appeals, U.S. Depanment of Energy, in the matter of The (

Exception Relief, prepared statements, on behalt ot the Refiners, July 1992; testimony1992, November 1992, December 1992.

State Corporation Commission, Commonwealth ofVirginia, in the matter ofRevision ofWorkers'ompensation

Insurance Rates, Case No. INS910224, prepared testimony on behalf of the

National Council on Compensation Insurance, April 1992, July 1992, testimony July 1992.

United States of America Before the Federal Energy Regulatory Commission, prepared directtestimony on behalf of Transcontinental Gas Pipe Line Corporation, March 1992.

International Trade Administration, U.S. Department of Commerce, in the matter of CertainSoftwood Lumber Products from Canada (INV. C-122-816), written reports, Economic Anal sis

of Canadian Lo Ex ort Polic, on behalf of the Canadian Provinces, February 1992, March1992, April 1992, testimony April 1992, May l992.

Don Van Vranken, et al. v. Atlantic Richfield Company, on behalf of Atlantic RichfieldCompany, a petroleum products pricing dispute in U.S. District Court, deposition testimony,February 1992; testimony, August 1992.-

Greater Rockford Energy and Technology. et al, v Shell Oil Company, et al., on behalf ofAtlantic Richfield Company, an antitrust maner in U.S. District Court, deposition testimonyDecember 1991.

Commonwealth of Massachusetts Department ot Public Utilities, in the matter of the Petition otBoston Gas Company for Preapproval of Supplemental Residential Demand-Side Management

Programs, on behalf of the Better Home Heat Council, D.P.U. 91-29, June 15, 1991.

State of Alaska, et al. v. Amerada Hess. et al. on behalf of British Petroleum and Exxon. a

royalty litigation in the Superior Court ot the State of Alaska, deposition testimony, June I t> > I

and September 1991.

Interstate Commerce Commission, in the marter ot Aational Grain and Feed Association'urlingtonNorthern Railroad Co., et al., on beVialt'ot'Burlington Northern Company, Docket ~o

40169, May 14, 1991.

Federal Energy Regulatory Commission. L s Oepartment of Energy, in the matter ot'R(.'()Pipeline Company, Docket Nos. IS90-34-Oih) a <. on behalf of ARCO Pipeline Company .:c J

February 1, 199l.

Minnesota Workers'ompensation Insurance inuirust Litigation, on behalf of Liberty ~tuiu~l

Insurance Company, ~et ., an antitrust mauer in U S. District Court, deposition tesum i.iNovember 1990.

Federal Energy Regulatory Commission, U.S. Department of Energy, in the matter of Northeast

Utilities Service Company (Re: Public Service Company of New Hampshire), Docket Nos.

EC90-10-000 et al on behalf ofNortheast Utilities Service Company, filed March 1990 and July1990.

United States of America v. Misle Bus and Equipment Company, U.S. District Court, September1990.

The Kansas Power and Light Company et al. v. Amoco Production Company et al., on behalf ofAmoco Production Company et al. an antitrust matter in U.S. District Court, depositiontestimony, March 1990 through June 1990.

Esso Standard Oil Company (Puerto Rico) before the Department of Consumer Affairs,Commonwealth of Puerto Rico, on behalf of Esso (Puerto Rico), August 1989.

Utah International v. Arizona Public Service. et al., on behalf of Arizona Public Service, an

arbitration proceeding, June 1989.

Office of Hearings and Appeals, V.S. Depattment of Energy, in the matter of The CitronetfeException Relief, on behalf of the Refiners, April 1989.

Department of Revenue, State of Alaska, in the matter of Atlantic Richfield Company ~nd

Combined Subsidiaries, Oil and Gas Corporate Income Tax {AS 43.21) for 1978-1981, on behaliof Atlantic Richfield Company, December 1988,

Texas Utilities Company and Chaco Energy Company v. Santa Fe Industries, Inc. et al., on ben~itof Santa Fe Industries, an antiuust matter in U S. District Court, deposition testimony, Yoiemr er

1988, inarch 1989 and July 1989.

Doyle Hartman v. Burlington Northern, Inc . El Paso Natural Gas Co., et al on behalf oi'l P i.,s

Natural Gas, an antitrust matter in the U S District Court, deposition testimony, October '. «I

MidAmerican Long Distance Company v Honeywell, Inc. on behalf of Honeywell Inc . <n i

District Court, deposition testimony, August I 988

Federal Energy Regulatory Commission, U S Department of Energy, in the matter ot Br"~< ~ "

of Interstate Natural Gas Pipeline Capacity. Docket Nio. RM88-13-000, on behalf of Exi. - l

USA, et al. filed July 1988. s

Federal Energy Regulatory Commission, U.S. Department ofEnergy, in the matter ofNatural Gas

Pipeline Company of America, Docket Nos. RP87-141- 000 et al. on behalf of Natural Gas

Pipeline Company of America, filed November 1987.

Federal Energy Regulatory Commission, U.S. Department of Energy, in the matter of MojavePipeline Company et al., Docket Nos. CP85-437-000, et al., on behalf of Mojave PipelineCompany, filed September 1987.

Federal Energy Regulatory Commission, U.S. Department of Energy, in the matter of ColumbiaGas Transmission Company, Docket Nos. RP86-168-000, et al on behalf of Exxon Co., USA,et al. filed April 1987.

L. Knife & Sons v. Villa Banfi, on behalf of Villa Banfi, an antitrust matter in U.S. DistrictCourt, February-March 1987.

Office of Hearings and Appeals, U.S. Department of Energy, in the matter of U.S. Departmentof Energy v. Cities Service Corporation, on behalf of Cities Service Corp., December 1986 and

February 1987.

Federal Energy Regulatory Commission, U.S. Department of Energy, in the matter of TexasEastern Transmission Corp., Docket Nos. RP85-177, et al on behalf of Exxon Co., USA, et al.,

filed August 1986.

Federal Energy Regulatory Commission, U S Department of Energy, in the matter of North'stCentral Pipeline Corp., Docket Nos. CP86-631. ei al., on behalf of Mobil Oil Corp., et al., tiledAugust 1986.

Federal Energy Regulatory Commission, U S, Department of Energy, in the matter ot A4RPipeline Co., et al in Docket Nos. CP84-386. ei al. on behalf of Bethlehem Steel Corporation.filed May 1986.

Federal Energy Regulatory Commission. L' Department of Energy, Request for SupplementalComments Re: PERC Order No. 436 and Related Proposed Rulemakings, February 25, 1~86 on

behalf of the Natural Gas Supply Association. 'Old Gas Decontrol, FERC's Block Billing i'or

Pipelines, and the Winners and Losers in Natural Gas Policy."

Office of Hearings and Appeals, U.S. Department ot Energy, in the matter of MDL-378 StripperWell Exemption Litigation, on behalf of the Reiiners, August-September 1984.

J

~

0'

Office of Hearings and Appeals, U.S. Department of Energy, in the matter of U.S. Departmentof Energy v. Dorchester Gas Corporation, on behalf of Dorchester Gas Corp., January 1984.

PUBLICATIONS AND RESEARCH

Books and iVfonographs:

Oversi ht of Re lated Utilities'uel~Su Iv Contracts: Achievin Maximum Benefit fromCom etitive Natural Gas and Emission Allowance Xlarkets, with Adam B. Jaffe (The Economics

Resource Group, 1993).

What Can Tribes Do? Strate ies and Instituuons n american Indian Economic Develo ment, ed.

with Stephen Cornell (University of Calitormz Press. 1992).

National Parks for the 21st Century: The 'L'ttl~Eenda, (Report of the Steering Commiuee,

1992).

ases in Microeconomics, with Jose A G o:ez-I".anez (Prentice Hall, 1990).

Drawin the Line on Natural Gas Re latlt n I "e flarvard Stud on the Future of Narural Gas

~Pl~ic (Greenwood-Praeger Press/Quorum il." ih I ~87), ed. with F.C. Schuller; author ot twobook chapters.

The FACS/Ford Stud of Economic and i<. "ebs Journalism, with James T. Hamilton (LosAngeles: Foundation for American Comms.f21,~u»ns and the Ford Foundation, 1987).

The Econ mics and Politics of il Pnee Re~.tauten Federal Polic in the Post-Embar so Era,

(Cambridge, MA: MITPress, 1981. pa;ef" 3 R eulu»n l983).

Petrpleum PriCe Re atipn: Shpuld h~ e i'lr; " i 'huh Kenneth J. ArrOW (WaShingtOn. D (American Enterprise Institute, 1979)

Articles:

"Precedent and Legal Argument in U.S I':.1 e f' licv Do they Matter to the Political Econ<smv

of the Lumber Dispute?," National Bureau t 1 onomic Research, Conference on Polui'alEconomy of Trade Protection, February I ~ "~ t.'rat't)

"Where Does Economic Development Really Come From? Constitutional Rule Among the

Modern Sioux and Apache," with Stephen Cornell, Faculty Research Working Paper Series. John

Fh dydh I IG .I 19339 h Id~it I .G 9 9

"Incentive Regulation for Natural Gas Pipelines," with Adam B. Jaffe, Faculty Research WorkingPaper Series, John F. Kennedy School of Government, May 1993 (forthcoming in Ellig, J. and

J.P. Kalt, ed., New Directions in Natural Gas Polic, 1994).

"Reloading the Dice: Improving the Chances for Economic Development on American IndianReservations," with Stephen Cornell in What Can Tribes Do? Strate ies and Institutions inAmerican Indian Economic Develo ment, (University of California Press, 1992) pp. 1-59.

"The Regulation of Exhaustible Resource Markets." with Shanta Devarajan, Environmental and

Natural Resources Program, Center for Science and International Affairs, Kennedy School otGovernment, April 1991.

"Comment on Pierce," Research in Law and Economics, Volume 13, 1991, pp. 57-61.

"Where's the Glue: Institutional Bases ot American Indian Economic Development." 'iithStephen Cornell, National Bureau of Economic Research, Conference on Political EconoiTiv.

December 1990.

"Pathways from Poverty: Economic Development and Institution-Building on American I"..~i~n

Reservations," American Indian Culture and Research Journal, with Stephen Cornell.1'"'The

Apparent Ideological Behavior ot Legislators: Testing for Principal- Agent ~"~.iPolitical Institutions," with M. A. Zupan. Journal ot Law and Economics, April 1990

"How Natural is Monopoly? The Case ot'ypass in Natural Gas Distribution Markets

Harry G. Broadman, Yale J urnal on Re ulauon. Summer 1989.

"The Federal Energy Regulatory Commissions Proposed Policy Statement on Gas I.".."-

Charges (PL 89-I-000)," with Charles J C:c.,".eui and William W. Hogan, Discussi. ~ ", ~"

Series, Energy and Environmental Policy (. en!er. V.kennedy School of Government,

Jui'Culture

and Institutions as Collective Goods l..ues in the Modeling of Economic Dei e

93'" IIF«G

American Indian Economic Development, June I')89

"Public Choice, Culture and American Indian Economic Development," with Stephen E. Cornell,~EH dy j* d hdh E'

I p,hhy"The Redesign ofRate Structures and Capacity Auctioning in the Natural Gas Pipeline Industry,"Discussion Pa er Series Energy and Environmental Policy Center, Kennedy School ofGovernment, June 1988.

"The Political Economy of Protectionism: Tariffs and Retaliation in the Timber Industry," inTrade Polic Issues and Em irical Analysis ed. R. Baldwin, 1988.

"The Impact ofDomestic Environmental Regulatory Policy on U.S. International Competitivenessin International Com etitiveness ed. A.M. Spence and H.A. Hazard, 1988.

"The Redefinition of Property Rights in American Indian Reservations: A Comparative Analysisof Native American Economic Development." Discussion Pa er Series, Energy and

Environmental Policy Center, Kennedy School'ot'overnment, June 1987.

"Re-Establishing the Regulatory Bargain in the Electric UtilityIndustry," Discussion Pa er Serie,Energy and Environmental Policy Center. Kennedy School of Government, March 1987

hpdhdd pp dh I I I« «Eh I I..HCherry and D. Foy, March 1987).

"Natural Gas Policy in Turmoil," with Frank C Schuller, in Drawin the Line on Natural Gas

Re lation'he Harvard Stud on the Future ot Natural Gas Poli ed. J.P. Kalt and F C

Schuller, 1987.

"Market Power and Possibilities for Compenuon," in Drawin the Line on Natural (i,i~Re lation'. The Harvard Stud on the Fuiuf t Natural as Poli ed. J.P. Kalt and F C

Schuller, 1987.

"The Political Economy of Coal Regulanon l he Power of the Underground Coal Industr.The Political n m o Re lation, ed bv R Rogowsky and B. Yandle (Washington. D C

Federal Trade Commission, GPO 1986 and ti~rthcoming in Re lation and om etitive Slra.;~Washington, D.C.: University Press ot Amert.a. I i89)

"Regional Effects of Energy Price Decomrol l 4e Roles of Interregional Trade, Stockhi i ',"~and Microeconomic Incidence," with Robert i Leone, Rand Journal f Economics, s~uu. er

1986.

IO

~ ~

"AReview of the Adequacy ofElectric Power Generating Capacity in the United States, 1985-93

and 1993-Beyond," with James T. Hamilton and Henry Lee, Discussion Pa er Series, Energy and

Environmental Policy Center, Kennedy School of Government, June 1986.

"A Framework for Diagnosing the Regional Impacts of Energy Price Policies: An Applicationto Natural Gas Deregulation," with Susan Bender and Henry Lee, Resources and Ener Journal,March 1986.

"Intertemporal Consumer Surplus in Lagged-Adjustment Demand Models," with Michael G.

Baumann, Ener Economics Journal, January 1986.

"ANote on Nonrenewable Resource Extraction Under Discontinuous Price Policy," with AnthonyL. Otten, Journal of Environmental Economics and IMana ement December 1985.

"Exhaustible Resource Price Policy, International Trade, and Intertemporal Welfare," February1986 (revised June 1988, Journal of Environmental Economics and Mana ement 1989).

"The Ideological Behavior ofLegislators: Rational On-the-Job Consumption or Just a Residual?"with Mark A. Zupan, Harvard Institute of Economic Research, Discussion Paper No. 1043, R feral1984 (revised November 1984, Stanford University Conference on The Political Economy

ot'l

I*. d.R.N Ill.

"Capture and Ideology in the Economic Theory of Politics," with Mark A. Zupan, Amen ~n

Economic Review, June 1984.

"A Comment on 'The Congressional-Bureaucratic System: A Principal Agent Perspecu~ePublic Choice, 1984. I

"The Creation, Growth and Entrenchment of Special Interests in Oil Price Policy," in 1",e

Political Econom ofDere latio, ed. by Roger G. Noll and Bruce M. Owen(Washington D td

American Enterprise Institute, 1983).

"The Costs and Benefits ofFederal Regulation ot Coal Strip Mining," Natural Resources l. tI™.i,October 1983.

"Oil and Ideology in the United States Senate." The Ener Journal, April 1982.

dll G d dd*fd*G IG I"~.ddl

"The Role of Governmental Incentives in Energy Production," with Robert S. Stillman. Annual~Ri PH VI.5(Pd Al .CA.A IR t,i9 ),pp.I-'.

"Why Oil Prices Should be Decontrolled," with Kenneth J. Arrow, ~Re lotion, September/October

1979, pp. 13-17.

"Technological Change and Factor Substitution in the United States, 1929- 67," InternationalEconomic Review, Spring/Summer 1977.

"The Capital Shortage: Concept and Measurement," with George M. von Furstenberg, The

Journal of Economics and Business, Spring/Summer 1977, pp. 198-2)0.

"Problems of Stabilization in an Inflationary Environment: Discussion of Three Papers," 1975

Proceedin s of the Business and Ec nomic Statistics Section: American Statistical Association

Research Reports and Monographs:

"Energy Issues in Thailand: An Analysis of the Organizational and Analytical Needs ot the

Thailand Development Research Institute." Harvard Institute for International Development.March 1986.

"Natural Gas Decontrol: ANorthwest Industrial Perspective," with Susan Bender and Henry Lee.

Discussion Pa er Series, Kennedy School ot Government, Harvard University, November 1983

"Natural Gas Decontrol: A Northeast Industrial Perspective," with Henry Lee and Robert ALeone, Discussion Pa er Serie Kennedy School of Government, Harvard University, October1982.

"Television Industry Self-Regulation: Protecting Children from Competition inBroadcasting.'ith

George J. Holder, Harvard Institute ot'conomic Research, Discussion Paper No. 89e.,april1982.

"The Use ofPolitical Pressure as a Policv Tool Dunng the 1979 Oil Supply Crisis," with Stephen

Erfle and John Pound, Discussion Pa er Series, Kennedy School of Government, Hai-..iro

University, April 1981.

"Problems of Minority Fuel Oil Dealers" with Henry Lee, Discussion Pa er Series, Energy and

Environmental Policy Center, Kennedy School of Government, Harvard University, April 1981.

Federal Control ofPetroleum Prices'. A Case Study ofThe Theory of Re lation, doctoral thesis

(Chairman Harold Demsetz), Department of Economics, University of California, Los Angeles,

CA, 1980.

Other Publications:

Statement to U.S. Congress, Joint Economic Committee, Subcommittee on Trade, Productivityand Economic Growth, The Economic Im act i)t'oner Oil Prices (Hearing of March 12, 1986),

"Administration Backsliding on Energy Policv. 'iiih Peter i4avarro, Wall Street Journal, editorial

page, February 9, 1982.

Statement to the Energy and Natural Re"ur;es. (.ommittee, U.'S. Senate, in GovernmentRes nse to Oil Su 1 Disru tions (Hearing i Julv 8-29, 1981), U.S. Government PrintingOffice, 1981, pp. 623-630 and 787-801

"Redistribution of Wealth in Federal Oil P i:;; '.in Die o Business Journal, August 18, 1980.

pp. 22"3.

"The Energy Crisis-Moral Equivalent ol ( . t '.t tr tvlth Peter Navarro, ~Re lation, January ~

February 1980, pp. 41-43.

"Windfall Profits Tax Will Reap Bonanza~--ii i i..tr ~4'horn?" with Peter Navarro, The q liamiHerald, December 23, 1979, editorial.p.i e

Papers Delivered: 't

"The Redesi .jjjfRstc Structures and C.u .i. i <.".:..ning in the Natural Gas Pipeline Industrv.-Natural Gas Association, Housti n

' '<ar;n I >88.

"Property Rights and American Indian i . ~ mai Development," Pacific Research lnsuiuieConference, Alexandria, VA, May 1987

"The Development ofPrivate Property Markets in Wilderness Recreation: An Assessment of the

Policy of Self-Determination by American Indians," Political Economy Research Center

Conference, Big Sky, Montana, December 4-7, 1985.

"Lessons from the U.S. Experience with Energy Price Regulation," International Association ofEnergy Economists Delegation to the People's Republic of China, Beijing and Shanghai, PRC,

June 1985.

"The Impact ofDomestic Regulation on the International Competitiveness ofAmerican Industry,"

Harvard/NEC Conference on International Competition, Ft. Lauderdale, FL, March 7-9, 1985.

"The Welfare and Competitive Effects of Natural Gas Pricing," American Economic AssociationAnnual Meetings, December 1984.

"The Ideological Behavior of Legislators," Stanford University Conference on the PoliticalEconomy of Public Policy, March 1984..

"Principal-Agent Slack in the Theory of Bureaucratic Behavior," Columbia University Center t'yLaw and Economic Studies, 1984.

"The Political Power of the Underground Coal Industry," FTC Conference on the Strategic t ~e

of Regulation, March 1984.

"Decontrolling Natural Gas Prices: The lntertemporal Implications of Theory," Inter".. ~:: .".3

Assn. of Energy Economists Annual Meetings. Houston, TX, November 1981.

"The Role of Government and the Marketplace in the Production and Distribution ot';.",e;.~Brown University Symposium on Energy ~nd Economics, March 1981.

"A Political Pressure Theory of Oil Pricinit.'anterence on New Strategies for Manas:.".,a i

Oil Shortages, Yale University, November l'i80

"The Politics ergy," Eastern Economic .dissociation Annual Meetings, 1977.

Workshop Presentations:

University ofMontana; Oglala Lakota College. L'niversity of New Mexico; Columbia 1 -. ~ e- u ~Law School; Department ofEconomics and Kennedy School ofGovernment, Harvard L.".: ~ ~ ~ ~MIT;University ofChicago; Duke University. L'niversity ofRochester; Yale University '

~

0

0

1

0

Polytechnic Institute; U.S. Federal Trade Commission; University of Texas; University ofArizona; Federai Reserve Bank of Dallas; U.S. Department of Justice; Rice University;Washington Uaiveraity, University of Michigan, University of Saskatchewan, Montana State

University, UC~ University of Maryland, National Bureau of Economic Research, Universityof Southern California.

Referee:

d 'I E I . IIJ E f l,E~ii,J E f Iffd

~Ecanom, Review ofEconomics and Statistics, Science Ma azine, Journal of Polic Analysis and~MEMCdd*d f*,»d f d,MIJNorth-Holland Press.

HONORS, RESEARCH FELLOWSHIPS, A,"iD AWARDS

Harvard - Allyn Young Prize for Excellence in the Teaching of the Principles ofEconomics, 1978-79 and 1979-80

- Research funding sources have included: The National Science Foundation, The

Ford Foundation, The Northwest Area Foundation, the U.S. Departmentot'nergy,the Research Center t'or h lanagerial Economics and Public Policy at the

UCLA Graduate School ot h lanagement, the MITEnergy Laboratory, Harvard's

Eaergy and Environmental Policy Center, the Political Economy Research

Center, the Center for Economic Policy Research at Stanford, the Federal TradeCommission, and Resources i'or ihe Future.

UCLA - Chancellor's Intern Fellowship in Economics, 9/73 to 7/78, one of two awarded

in 1973.

- Smith-Richardson Dissertauon Fellowship in Political Economy, Foundauixn " r

h in Economics and Educauon, 6/77 to 9/77.IE

er Research Fellowship 1 CLA Foundation, 6/76 to 9/76.

- Dissertation Fellowship, Hooi er Insutuuon, Stanford University, 9/77 io "

Stanford - Four years of academic scholarships, 1969-1973. Graduated with L'nixie:.Jii

Distinction and Departmental Honors.

15

TEACHING

Introduction to Environment and Natural Resource Policy (Graduate, Kennedy School ofGovernment), Fall 1991, 1992, 1993.

Seminar in Positive Political Economy (Graduate, Kennedy School of Government), 1992, 1993.

Intermediate Microeconomics (Graduate, Kennedy School ofGovernment), Fall 1986, 1987, 1988.

Natural Resources and Public Lands Policy (Graduate, Kennedy School of Government) Fall

1985, 1986, 1989; Spring 1987, 1988, 1991.

Economics of Regulation and Antitrust (Graduate), Spring 1980, 1981, 1982, 1985, 1986.

Economics of Regulation (Undergraduate), Spring 1979, 1981, 1983, Fall 1984.

Introduction to Energy and Environmental Policy (Graduate, Kennedy School of Government),Spring 1985.

Graduate Seminar in Industrial Organization and Regulation, 1979-86.

Intermediate Microeconomics (Undergraduate), Fall 1981, 1982.

Principles of Economics (Undergraduate), 1978-80.

Seminar in Energy and Environmental Policy (Kennedy School of Government), 1980-83. 1>'> ~

93.

Figure 1

SERVICE TERRITORIES AND TRANSMISSION SYSTEMSI 4

Four Corner

+ Phoenix

Tucson

San JuanE

Artesia

-.'f EIPSatnalayuc

aso

Albuquerque ~> 5Blackwater

II

,'marillo II 3 + Oklahoma City

Oklauniqn.+ LubbocK.'

,)

j

I, I

II

,I

MEXICO~ „

Chihuahua

i Austin

+ San Antonio

Il

HoustrIh1

J ~

Carbon II

r--i SPS

EPECPLPSOSWEPCOWTU

TorreonMon rrey

400 kv or 345 kv230 kv115 kv or LowerCross-border

Interconnections'VDC

Ties II

Figure 2

EFFECTIVE DEMAND FORSPS CAPACITYSALES: 1998

EFFECTIVE DEMAND0

(LINE OPEN)

EFFECTIVE DEMANDKAMO 6SCLECO 43

111g

5ECTIVE DEMAND

0(TIE FULL)

Tp PNM

SPS

0(TIE FULL) ~+

ro ~„

EFFECTIVE DEMAND6

X

gl0pa

I-

0

PEGTMEXICOEPE

EFFECTtV DEMAND

DEMANDcontrained by:

EPE ARTESIA TIE CAPACITYEPE OR CSW EFFECTIVE DEMAND

133

EFFECTIVE DEMAND

.=~ ":RCOT~ ~ g

"::T CSWLl 'QD

:nstratned by:.:;,. ERCOT TIE CAPACITY~

= =" ":CTIVECSW-ERGOT TIE DEMAND='='= SWEPCO SUPPLY===ECTIVE CSW DEMAND

405::3

~ ~

EFFECTIVE DEMAND FORSPS CAPACITYSALES: 1998

DATA SOURCES

PEGT, EPE, and Artesia Tie capacity data from Direct Testimony, George R. Hall, this

proceeding, Exhibit (GRH-71, APP-99, at 5; GRH Exhibit APP-92, at 29; and Direct TestimonyDavid T. Hudson, this proceeding, at 9. For sources of Mexico data, see notes to Kelt, TableIV-3, Northern Mexico Supply and Demand Components.

HLP, Other ERGOT, Non-PSO CSW, North Tie capacity, and PSO Supply data from DirectTestimony, George R. Hall, this proceeding, Exhibits (GRH-7), APP-99, at 1,3; GRH ExhibitAPP-92, at 29; and Direct Testimony David T. Hudson, this proceeding, at 3. For sources ofMexico data, see notes to Kalt, Table IV-3. Northern Mexico Supply and Demand Components.

KAMO and CLECO data from Direct Testimony. George R. Hall, this proceeding, Exhibit (GRH-7), APP-99, at 1.

The weak connection via North line to West Plains Energy of Kansas requires that circuit be

opened periodicaily to prevent line overloads. thus making firm capacity sales impossible. ThIPcondition will be exacerbated by the power flows forecasted for the merged companies. See

'irectTestimony David T. Hudson, this proceeding, at 11.

SPS has contracted to supply PNM with 200 MW of capacity over PNM's Blackwater tie unu(

2011. See Direct Testimony David T. Hudson. this proceeding, at 12.

SPS has contracted to supply TNP with 66 MW of capacity over TNP's share of the Artes a

until 2001. See Direct Testimony Dawd T Hudson, this proceeding, at 13.

'CSW-ERGOT TIE CAPACITY'epresents CSW controlled access to the North and East 'sbetween ERGOT and SPP.

Fig 3

PANCAKE TRANSMISSION RATES MAKE DIRECTSALES BY SPS INTO ERGOT ECONOMICALLYINFEASIBI E

SPS To, From, and Over Tariff0.8 cents/kWh

Okiaunion-;

ERGOTERGOT Tariff1.8 cents/kWh

/I

Total Tariff2.6 cent+'kWh

:: Brownsville

Fig e 4-TRANSMISSION SYSTEMS, GATEWAYS, AND REGlONAL MARKETS

FOR THE U.S. AND MEXICO

—,,;,W'SCQ::

j! '

~'t i 'g3 hoenlx ~

! Iw i.V

+,'Tucson

1

i

, Artesia)

a layuca El Paso.arez Ciudad

"I

. "!, pit! uangi. -a

j'-'"6gri',''.';«",".r'"'~"

4 '."; BJackwater

w'i.! p

..'r'~ri!i;i.':A'NN&&

pi~

,'marillo

i/h~g"

~i!I

!ir!.~'r'.i!?«ii i

8rAiiir,iiri' '.4

g5".~c

r ri, Ii,i;

l i~(r

i i

I

fi i!<'!'~!i'.t~ C

@~i,~p~",c

-- 0i Lubbock

ERGOT,i&A,fii~!.. i j.A I ~ ~ i i i..iiiii' ~ "iVr Vr'„i/i), ilt,lgiiil,„

i@4(i,i(<gil li~;<

y3ri'<~i~ r~ r~qqQiii I6 iit'i'~i'8' i

i''asas

Grande

Cuauhtemoc

Alfstlns!,i: i

SantiagoV

AndulaciaTorreon

NORQSTE

Tampico ~

Moctez'a $>cr6 i

",Presi o i San AntonioChihuahua~

Eagle PassGamer'go

Hercules !o Escond!do iRT carb6 :. Falcon Dam

Batep (proposed)Garcia~-'"- .... ~Brownsville

onterrey

400 kv or 345 kv230 kv115 kv or Lower I

Cross-border InterconnectionsHVDC Ties I

Figure 5NORTHERN MEXICO IMPORT REQUIREMENTS

(Megawatts)

150 150155

1995Source: Table IV-3.

1996 1997 1998

verde generating of ))' antitrust -tounited states of america before the nuclear regulatory...

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