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A L I M I T E D L I A B I L I T Y P A R T N E R S H I P

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Amie V. Colby Direct Dial: 202-274-2922 [email protected] Direct Fax: 202-654-5605

March 14, 2008

The Honorable Kimberly D. Bose Secretary Federal Energy Regulatory Commission 888 First Street, N.E. Washington, D.C. 20426

Re: Public Service Company of New Mexico

Docket No. OA08-___-000 OA07-26-000

Dear Secretary Bose: Pursuant to the Federal Energy Regulatory Commission’s (“Commission”) Order No. 890-A issued December 28, 2007,1 and the Commission’s Order Accepting Compliance Filing as Modified,2 Public Service Company of New Mexico (“PNM”) hereby tenders for filing revised tariff sheets to its Second Revised Volume No. 6 Open Access Transmission Tariff (“OATT”). I. Background The Commission issued Order No. 890 on February 16, 2007 in order to reform the pro forma OATT to ensure that transmission service is provided on a non-discriminatory basis.3 Pursuant to section 206 of the Federal Power Act (“FPA”), on July 12, 2007, PNM submitted a filing in Docket No. OA07-26-000 containing revisions to its OATT in order to comply with Order No. 890. On December 28, 2007, the Commission issued its Order No. 890-A, to provide clarification and grant rehearing on some aspects of Order No. 890. The attached filing is

1 Preventing Undue Discrimination and Preference in Transmission Service, Order No. 890-A, 121 FERC ¶ 61,297 (2007) (“Order No. 890-A”). 2 Public Service Co. of New Mexico, 122 FERC ¶ 61,176 (2008) (“February 26 Order”). 3 Preventing Undue Discrimination and Preference in Transmission Service, Order No. 890, FERC Stats. & Regs. ¶ 31,241 (2007) (“Order No. 890”).

TROUTMAN SANDERS LLP A T T O R N E Y S A T L A W A L I M I T E D L I A B I L I T Y P A R T N E R S H I P

Secretary Bose March 14, 2008 Page 2 intended to conform PNM’s OATT to the pro forma OATT changes adopted in Order No. 890-A. In addition, on February 26, 2008, the Commission issued its order on PNM’s July 12, 2007, Order No. 890 compliance filing. In the February 26 Order, the Commission accepted PNM’s compliance filing but did require certain modifications to PNM’s OATT. The attached filing also includes the modifications required by the February 26 Order. II. Order No. 890-A Compliance Filing A. Energy and Generator Imbalance In accordance with Order No. 890-A,4 PNM is revising Schedules 4 and 9 to indicate that PNM may charge a transmission customer a penalty for either hourly generator imbalances under Schedule 9 or hourly energy imbalances under Schedule 4 for imbalances occurring during the same hour, but not both unless the imbalances aggravate rather than offset each other. PNM also makes the following revisions to its OATT regarding imbalance provisions in compliance with Order No. 890-A: (1) Section 3 has been revised to reflect that generator imbalance service must be offered for any transmission service used to deliver energy from a generator located within PNM’s control area;5 and (2) Schedules 4 and 9 have been revised to reflect the revised language in Order No. 890-A.6 In addition, in accordance with Order No. 890-A,7 PNM proposes new OATT language in Schedules 4 and 9 to specify the method by which it will calculate incremental costs, as well as the method it will use to obtain each component of the calculation. B. Capacity Reassignment In accordance with Order No. 890-A, PNM amends section 23.1 of the pro forma OATT to lift the price cap on reassignments of capacity until October 1, 2010.8 PNM also updates

4 Order No. 890-A at P 273. 5 Order No. 890-A at P 287. 6 Order No. 890-A at PP 288, 293, 309. 7 Order No. 890-A at PP 309-310. 8 Order No. 890-A at P 390.


Secretary Bose March 14, 2008 Page 3 Schedules 7 and 8 in accordance with Order No. 890-A9 to reflect that neither discounting rules nor price ceilings otherwise discussed in the OATT apply to reassignments of capacity. C. Planning Redispatch and Conditional Firm In accordance with Order No. 890-A, PNM amends section 15.4 of its OATT to indicate that PNM will offer planning redispatch service and conditional firm options only to customers requesting long-term firm point-to-point service.10 Section 19.3 has also been amended pursuant to Order No. 890-A to show that the conditional firm option is available to eligible customers and is not limited to only existing transmission customers.11 In addition, PNM amends section 32.3 of its OATT to correspond to section 19.3 of the OATT to indicate that information required in a system impact study is almost identical for network and point-to-point customers.12 Section 32.3 has also been revised to incorporate the Commission’s directive to require the study of automatic devices when requested by a network customer in a system impact study.13 D. Acquisition of Transmission Service PNM revises section 17.7 of the OATT in order to: (1) define more equitably the rights and obligations of customers failing to make timely payment of deposits in order to extend the commencement of service;14 and (2) indicate that extensions of service are subject to availability.15 PNM also revises sections 1.39, 17.2, and 18.2 of the OATT in order to reflect the Commission’s intent that pre-confirmation service should be available to all eligible customers seeking short-term firm and non-firm transmission services.16

In addition, pursuant to Order No. 890-A, PNM updates its OATT to reflect the pro

forma changes regarding reservation priority under sections 13.2 and 14.2 of the OATT.17 9 Order No. 890-A at P 426. 10 Order No. 890-A at P 544. 11 Order No. 890-A at P 544. 12 Order No. 890-A at P 542. 13 Order No. 890-A at P 559. 14 Order No. 890-A at P 773. 15 Order No. 890-A at P 775. 16 Order No. 890-A at P 790 17 Order No. 890-A at PP 817-819.


Secretary Bose March 14, 2008 Page 4 E. Miscellaneous In accordance with Order No. 890-A, PNM: (1) changes “control area(s)” in Section 29.2(v) to “control area;”18 (2) capitalizes the term “Affiliate” throughout the OATT;19 (3) amends section 1.26 and 30.4 of the OATT to indicate that network resources do not have to be undesignated before they are used to support the provision of reserve energy under a Commission-approved reserve sharing agreement;20 and (4) makes the relevant pro forma OATT changes to section 4 and Attachment A-1.21 III. February 26 Order Compliance Filing In the February 26 Order, the Commission directed PNM to make certain modifications to its OATT. In compliance with this order, PNM has made the following changes to its OATT. A. Section 19 Cross-References In the February 26 Order, the Commission directed PNM to “properly revise cross-references in its OATT” in section 19.22 PNM has appropriately modified the section numbering in Section 19 of the OATT to reflect the addition of the section addressing clustering. B. Reinstated Provisions In PNM’s July 12 compliance filing, it made several changes to its OATT in addition to the Order No. 890 requirements in order to correct inconsistencies with the pro forma OATT. In the February 26 Order, the Commission accepted the majority of these changes, but did find that some of the changes were beyond the scope of Order No. 890. As a result, the Commission rejected these select changes and required PNM to reflect the removal of these changes in its compliance filing.23 Therefore, pursuant to the February 26 Order, PNM has reinstated language in Attachment E (Index of Point-to-Point Transmission Service Customers), Attachment I (Index of Network Integration Transmission Service Customers), and Attachment O (Index of Generator Interconnection Customers) to reflect language in PNM’s OATT prior to the filing of the Order

18 Order No. 890-A at P 866. 19 Order No. 890-A at P 1003. 20 Order No. 890-A at P 948. 21 Order No. 890-A at PP 991 and 424. 22 February 26 Order at P 16. 23 February 26 Order at P 27.


Secretary Bose March 14, 2008 Page 5 890 compliance OATT. PNM has also reinstated its Loss Compensation Service Schedule, renumbered as Schedule 10, to reflect the addition of the new Schedule 9 – Generator Imbalance Service, and has reinstated language in Section 3.7, renumbered as Section 3.8. PNM has also reinstated Appendix H to its Large Generator Interconnection Agreement. Finally, PNM has modified Section 14.7 – Curtailment or Interruption of Service to replace the word “and” with the word “or” and has modified Schedule 4 – Energy Imbalance Service to include the phrase “or decremental.” C. Imbalance Energy Revenue Distribution In the February 26 Order, the Commission directed PNM to file a mechanism to credit revenues above the transmission provider’s incremental costs to all non-offending transmission customers.24 PNM is submitting the procedures for distribution of revenues related to imbalance energy revenues as a business practice.25 See Exhibit C to this filing. PNM notes that it has previously posted the procedures as a business practice.

D. Simultaneous Submission Window

In the February 26 Order, the Commission stated that if PNM has adopted the use of a “no earlier than” time limit for the submission of transmission service requests then PNM must file to clearly indicate that it has satisfied the Order No. 890 requirements for adoption of a simultaneous submission window.26 PNM advises the Commission that it has not adopted the use of a simultaneous submission window and has not adopted the use of a “no earlier than” time limit for any form of transmission service. Hence, PNM is not submitting any modification to its OATT addressing the use of a simultaneous submission window. E. Attachment J Per the February 26 Order, PNM has modified its Attachment J language to incorporate the language the Commission directed.27

24 February 26 Order at P 33. 25 The Commission has permitted the revenue distribution mechanisms to be included in business practices. See PacifiCorp, 121 FERC ¶ 61,223 at P 45 (2007). 26 February 26 Order at P 35. 27 February 26 Order at P 37.


Secretary Bose March 14, 2008 Page 6 F. Rollover Language Pursuant to the February 26 Order, PNM has reinstated language in Section 2.2 to reflect language in PNM’s OATT prior to the filing of the July 12, 2007, Order 890 compliance filing.28 PNM is concurrently reinserting Section 2.3 from PNM’s pre-Order No. 890 approved OATT. At such time as the Commission has approved PNM’s Attachment K, PNM will appropriately modify Section 2.2 and remove Section 2.3. IV. Effective Date PNM respectfully requests that the revised tariff sheets be given an effective date of March 17, 2008. V. Communications All communication and correspondence with respect to this filing should be directed to:

Charles V. García Senior Counsel, Regulatory Policy PNM Resources Inc. Alvarado Square, MS-0806 Albuquerque, NM 87158 (t) 505-241-4939 (f) 505-241-0866 (e) [email protected]

Amie V. Colby TROUTMAN SANDERS LLP 401 9th Street, NW, Suite 1000 Washington, DC 20004 (t) 202-274-2922 (f) 202-654-5605 (e) [email protected]

VI. Service Copies of this filing will be served on each electric transmission service customer served under PNM’s OATT, customers in the generator interconnection queue, as well as the New Mexico Public Regulation Commission and the New Mexico Attorney General, and will be posted by PNM in conformance with 18 C.F.R. § 35.2(d)(2007).

28 February 26 Order at P 39.

.

VII. Exhibits Attached to this filing letter are the following Exhibits:

Exhibit A Clean Tariff Sheets to PNM’s Second Revised Volume No. 6 OATT in Compliance with Commission’s Order No. 890-A and February 26 Order

Exhibit B Redline of Tariff Sheets Showing Changes to PNM’s OATT based on

Order No. 890-A and February 26 Order Exhibit C Revenue Distribution Business Practice VIII. Conclusion Based upon the foregoing, PNM respectfully requests that the Commission accept these revised tariff sheets, in compliance with the Commission’s Order No. 890-A and the February 26 Order.

Respectfully submitted,

________/s/___________________ Charles V. García Senior Counsel, Regulatory Policy PNM Resources Inc. Alvarado Square, MS-0806 Albuquerque, NM 87158 Phone: 505-241-4939 Fax: 505-241-0866 Email: [email protected]

______/s/__________________ Amie V. Colby Troutman Sanders LLP 401 9th St. N.W., Suite 1000 Washington, D.C. 20004 Phone: (202) 274-2922 Fax: (202) 654-5605 e-mail: [email protected]

Attorneys for Public Service Company of New Mexico

.

CERTIFICATE OF SERVICE

I hereby certify that on March 14, 2008, I served the foregoing document upon each

person designated on the official service list compiled by the Secretary in this proceeding.

_____/s/______________ Amie V. Colby TROUTMAN SANDERS LLP 401 9th Street, NW, Suite 1000 Washington, DC 20004

.

Exhibit A

Public Service Company of New Mexico FERC Electric Tariff Original Sheet No. 1 Second Revised Volume No.6

Issued By: Jim Butler Effective Date: March 17, 2008 Regulatory Manager Issued On: March 14, 2008

OPEN ACCESS TRANSMISSION TARIFF

OF

Public Service Company Of New Mexico



OPEN ACCESS TRANSMISSION TARIFF

TABLE OF CONTENTS Page

OPEN ACCESS TRANSMISSION TARIFF .....................................................2 TABLE OF CONTENTS ..................................................................................................2 I. COMMON SERVICE PROVISIONS ...................................................10

1 Definitions..................................................................................................10 1.1 Affiliate ....................................................................................10 1.2 Ancillary Services....................................................................10 1.3 Annual Transmission Costs .....................................................10 1.4 Application...............................................................................10 1.5 Commission .............................................................................10 1.6 Completed Application ............................................................10 1.7 Control Area.............................................................................10 1.8 Curtailment ..............................................................................11 1.9 Delivering Party .......................................................................11 1.10 Designated Agent.....................................................................11 1.11 Direct Assignment Facilities....................................................11 1.12 Eligible Customer ....................................................................11 1.13 Facilities Study.........................................................................12 1.14 Firm Point-To-Point Transmission Service .............................12 1.15 Good Utility Practice ...............................................................12 1.16 Interruption ..............................................................................13 1.17 Load Ratio Share......................................................................13 1.18 Load Shedding .........................................................................13 1.19 Long-Term Firm Point-To-Point Transmission

Service......................................................................................13 1.20 Native Load Customers............................................................13 1.21 Network Customer ...................................................................13 1.22 Network Integration Transmission Service .............................13 1.23 Network Load ..........................................................................13 1.24 Network Operating Agreement................................................14 1.25 Network Operating Committee................................................14 1.26 Network Resource....................................................................14 1.27 Network Upgrades ...................................................................14 1.28 Non-Firm Point-To-Point Transmission Service .....................15 1.29 Non Firm Sale ..........................................................................15 1.30 Open Access Same-Time Information System

(OASIS) ...................................................................................15 1.31 Part I.........................................................................................15 1.32 Part II .......................................................................................15 1.33 Part III ......................................................................................15



1.34 Parties.......................................................................................15 1.35 Point(s) of Delivery..................................................................15 1.36 Point(s) of Receipt ...................................................................16 1.37 Point-To-Point Transmission Service ......................................16 1.38 Power Purchaser.......................................................................16 1.38A Palo Verde/Hassayampa Common Bus ...................................16 1.39 Pre-Confirmed Application......................................................16 1.40 Receiving Party........................................................................16 1.41 Reserved Capacity ...................................................................16 1.42 Service Agreement...................................................................17 1.43 Service Commencement Date..................................................17 1.44 Short-Term Firm Point-To-Point Transmission

Service......................................................................................17 1.45 System Condition.....................................................................17 1.46 System Impact Study ...............................................................17 1.47 Third-Party Sale .......................................................................17 1.48 Transmission Customer ...........................................................18 1.49 Transmission Provider .............................................................18 1.50 Transmission Provider's Monthly Transmission

System Peak .............................................................................18 1.51 Transmission Service ...............................................................18 1.52 Transmission System ...............................................................18 1.53 Working Days ..........................................................................19

2 Initial Allocation and Renewal Procedures................................................19 2.1 Initial Allocation of Available Transfer Capability .................19 2.2 Reservation Priority For Existing Firm Service

Customers ................................................................................19 2.3 Reservation Procedure for Expiring Transmission

Services ....................................................................................20 3 Ancillary Services......................................................................................20

3.1 Scheduling, System Control and Dispatch Service..................22 3.2 Reactive Supply and Voltage Control from

Generation or Other Sources Service.......................................22 3.3 Regulation and Frequency Response Service ..........................22 3.4 Energy Imbalance Service .......................................................22 3.5 Operating Reserve - Spinning Reserve Service .......................22 3.6 Operating Reserve - Supplemental Reserve Service ...............22 3.7 Generator Imbalance Service...................................................22 3.8 Loss Compensation Service.....................................................23

4 Open Access Same-Time Information System (OASIS)...........................23 5 Local Furnishing Bonds.............................................................................24

5.1 Transmission Providers That Own Facilities Financed by Local Furnishing Bonds ......................................24

5.2 Alternative Procedures for Requesting Transmission Service......................................................................................24

6 Reciprocity.................................................................................................25



7 Billing and Payment...................................................................................26 7.1 Billing Procedure .....................................................................26 7.2 Interest on Unpaid Balances ....................................................26 7.3 Customer Default .....................................................................26

8 Accounting for the Transmission Provider's Use of the Tariff: .........................................................................................................27 8.1 Transmission Revenues ...........................................................27 8.2 Study Costs and Revenues .......................................................27

9 Regulatory Filings......................................................................................28 10 Force Majeure and Indemnification...........................................................28

10.1 Force Majeure ..........................................................................28 10.2 Indemnification ........................................................................28

11 Creditworthiness ........................................................................................29 12 Dispute Resolution Procedures ..................................................................29

12.1 Internal Dispute Resolution Procedures...................................29 12.2 External Arbitration Procedures ..............................................29 12.3 Arbitration Decisions ...............................................................30 12.4 Costs.........................................................................................30 12.5 Rights Under The Federal Power Act......................................31

II. POINT-TO-POINT TRANSMISSION SERVICE ....................................32 Preamble ................................................................................................................32 13 Nature of Firm Point-To-Point Transmission Service ...............................32

13.1 Term.........................................................................................32 13.2 Reservation Priority .................................................................32 13.3 Use of Firm Transmission Service by the

Transmission Provider .............................................................34 13.4 Service Agreements .................................................................34 13.5 Transmission Customer Obligations for Facility

Additions or Redispatch Costs.................................................35 13.6 Curtailment of Firm Transmission Service..............................36 13.7 Classification of Firm Transmission Service...........................36 13.8 Scheduling of Firm Point-To-Point Transmission

Service......................................................................................38 14 Nature of Non-Firm Point-To-Point Transmission Service.......................39

14.1 Term.........................................................................................39 14.2 Reservation Priority .................................................................39 14.3 Use of Non-Firm Point-To-Point Transmission

Service by the Transmission Provider .....................................40 14.4 Service Agreements .................................................................40 14.5 Classification of Non-Firm Point-To-Point

Transmission Service ...............................................................41 14.6 Scheduling of Non-Firm Point-To-Point

Transmission Service ...............................................................41 14.7 Curtailment or Interruption of Service.....................................42

15 Service Availability ...................................................................................43 15.1 General Conditions ..................................................................43



15.2 Determination of Available Transfer Capability .....................43 15.3 Initiating Service in the Absence of an Executed

Service Agreement...................................................................43 15.4 Obligation to Provide Transmission Service that

Requires Expansion or Modification of the Transmission System, Redispatch or Conditional Curtailment ..............................................................................44

15.5 Deferral of Service...................................................................46 15.6 Other Transmission Service Schedules....................................46 15.7 Real Power Losses ...................................................................46

16 Transmission Customer Responsibilities...................................................46 16.1 Conditions Required of Transmission Customers ...................46 16.2 Transmission Customer Responsibility for Third-

Party Arrangements .................................................................47 17 Procedures for Arranging Firm Point-To-Point

Transmission Service .................................................................................48 17.1 Application...............................................................................48 17.2 Completed Application ............................................................48 17.3 Deposit .....................................................................................50 17.4 Notice of Deficient Application...............................................51 17.5 Response to a Completed Application.....................................51 17.6 Execution of Service Agreement .............................................52 17.7 Extensions for Commencement of Service..............................52

18 Procedures for Arranging Non-Firm Point-To-Point Transmission Service .................................................................................53 18.1 Application...............................................................................53 18.2 Completed Application ............................................................53 18.3 Reservation of Non-Firm Point-To-Point

Transmission Service ...............................................................54 18.4 Determination of Available Transfer Capability .....................55

19 Additional Study Procedures For Firm Point-To-Point Transmission Service Requests..................................................................55 19.1 Notice of Need for System Impact Study ................................55 19.2 System Impact Study Agreement and Cost

Reimbursement ........................................................................56 19.3 System Impact Study Procedures.............................................57 19.4 Clustering of System Impact Studies.......................................58 19.5 Facilities Study Procedures......................................................60 19.6 Facilities Study Modifications .................................................61 19.7 Due Diligence in Completing New Facilities ..........................61 19.8 Partial Interim Service .............................................................61 19.9 Expedited Procedures for New Facilities.................................62 19.10 Penalties for Failures to Meet Study Deadlines:...........................62

20 Procedures if The Transmission Provider is Unable to Complete New Transmission Facilities for Firm Point-To-Point Transmission Service........................................................................64



20.1 Delays in Construction of New Facilities ................................64 20.2 Alternatives to the Original Facility Additions........................65 20.3 Refund Obligation for Unfinished Facility

Additions..................................................................................65 21 Provisions Relating to Transmission Construction and

Services on the Systems of Other Utilities ................................................66 21.1 Responsibility for Third-Party System Additions....................66 21.2 Coordination of Third-Party System Additions.......................66

22 Changes in Service Specifications .............................................................67 22.1 Modifications On a Non-Firm Basis........................................67 22.2 Modification On a Firm Basis..................................................68

23 Sale or Assignment of Transmission Service ............................................68 23.1 Procedures for Assignment or Transfer of Service..................68 23.2 Limitations on Assignment or Transfer of Service..................69 23.3 Information on Assignment or Transfer of Service .................69

24 Metering and Power Factor Correction at Receipt and Delivery Points(s) ......................................................................................70 24.1 Transmission Customer Obligations........................................70 24.2 Transmission Provider Access to Metering Data.....................70 24.3 Power Factor ............................................................................70

25 Compensation for Transmission Service ...................................................70 26 Stranded Cost Recovery.............................................................................70 27 Compensation for New Facilities and Redispatch Costs ...........................71

III. NETWORK INTEGRATION TRANSMISSION SERVICE .......................72 Preamble ................................................................................................................72 28 Nature of Network Integration Transmission Service ...............................72

28.1 Scope of Service ......................................................................72 28.2 Transmission Provider Responsibilities...................................72 28.3 Network Integration Transmission Service .............................73 28.4 Secondary Service....................................................................73 28.5 Real Power Losses ...................................................................73 28.6 Restrictions on Use of Service.................................................74

29 Initiating Service........................................................................................74 29.1 Condition Precedent for Receiving Service.............................74 29.2 Application Procedures............................................................75 29.3 Technical Arrangements to be Completed Prior to

Commencement of Service ......................................................79 29.4 Network Customer Facilities ...................................................79 29.5 Filing of Service Agreement....................................................79

30 Network Resources ....................................................................................80 30.1 Designation of Network Resources .........................................80 30.2 Designation of New Network Resources.................................80 30.3 Termination of Network Resources .........................................81 30.4 Operation of Network Resources.............................................82 30.5 Network Customer Redispatch Obligation ..............................83



30.6 Transmission Arrangements for Network Resources Not Physically Interconnected With The Transmission Provider .............................................................83

30.7 Limitation on Designation of Network Resources...................83 30.8 Use of Interface Capacity by the Network Customer ..............83 30.9 Network Customer Owned Transmission Facilities ................84

31 Designation of Network Load....................................................................84 31.1 Network Load ..........................................................................84 31.2 New Network Loads Connected With the

Transmission Provider .............................................................84 31.3 Network Load Not Physically Interconnected with

the Transmission Provider .......................................................85 31.4 New Interconnection Points.....................................................85 31.5 Changes in Service Requests ...................................................85 31.6 Annual Load and Resource Information Updates....................86

32 Additional Study Procedures For Network Integration Transmission Service Requests..................................................................86 32.1 Notice of Need for System Impact Study ................................86 32.2 System Impact Study Agreement and Cost

Reimbursement ........................................................................87 32.3 System Impact Study Procedures.............................................87 32.4 Facilities Study Procedures......................................................89 32.5 Penalties for Failure to Meet Study Deadlines: .............................90

33 Load Shedding and Curtailments...............................................................90 33.1 Procedures................................................................................90 33.2 Transmission Constraints.........................................................90 33.3 Cost Responsibility for Relieving Transmission

Constraints ...............................................................................91 33.4 Curtailments of Scheduled Deliveries .....................................91 33.5 Allocation of Curtailments.......................................................91 33.6 Load Shedding .........................................................................91 33.7 System Reliability....................................................................92

34 Rates and Charges......................................................................................92 34.1 Monthly Demand Charge.........................................................93 34.2 Determination of Network Customer's Monthly

Network Load ..........................................................................93 34.3 Determination of Transmission Provider's Monthly

Transmission System Load......................................................93 34.4 Redispatch Charge ...................................................................93 34.5 Stranded Cost Recovery...........................................................93

35 Operating Arrangements............................................................................94 35.1 Operation under The Network Operating

Agreement................................................................................94 35.2 Network Operating Agreement................................................94 35.3 Network Operating Committee................................................95

SCHEDULE 1 Scheduling, System Control and Dispatch Service .............................96



SCHEDULE 2 Reactive Supply and Voltage Control from Generation or Other Sources Service.................................................................................................................98

SCHEDULE 3 Regulation and Frequency Response Service....................................100

SCHEDULE 4 Energy Imbalance Service...................................................................102

SCHEDULE 5 Operating Reserve - Spinning Reserve Service.................................107

SCHEDULE 6 Operating Reserve - Supplemental Reserve Service.........................109

SCHEDULE 7 Long-Term Firm and Short-Term Firm Point-To-Point Transmission Service .....................................................................................................112

SCHEDULE 8 Non-Firm Point-To-Point Transmission Service ..............................115

SCHEDULE 9 Generator Imbalance Service ............................................................118

SCHEDULE 10 Loss Compensation Service...............................................................124

ATTACHMENT A Form Of Service Agreement For Firm Point-To-Point Transmission Service .....................................................................................................125

ATTACHMENT A-1 Form Of Service Agreement For The Resale, Reassignment Or Transfer Of Point-To-Point Transmission Service ...............................................129

ATTACHMENT B Form Of Service Agreement For Non-Firm Point-To-Point Transmission Service .....................................................................................................133

ATTACHMENT C Methodology To Assess Available Transfer Capability ...........135

ATTACHMENT D Methodology for Completing a System Impact Study, Facilities Addition Study, Generation Interconnection Evaluation Study and Generation Interconnection Facilities Study ...................................................................................136

ATTACHMENT E Index Of Point-To-Point Transmission Service Customers .....137

ATTACHMENT F Service Agreement For Network Integration Transmission Service .............................................................................................................................138

ATTACHMENT G Network Operating Agreement ..................................................143

ATTACHMENT H Annual Transmission Revenue Requirement For Network Integration Transmission Service.................................................................................144

ATTACHMENT I Index Of Network Integration Transmission Service Customers145

ATTACHMENT J - Procedures for Addressing Parallel Flows .........................146 ATTACHMENT K - Transmission Planning Process................................................147

ATTACHMENT L - Creditworthiness Procedures....................................................148

ATTACHMENT M Small Generator Interconnection Procedures (SGIP) For Generator Interconnections Less Than 20 MW..........................................................154

ATTACHMENT M-1 Small Generator Interconnection Agreement (SGIA) .........202

ATTACHMENT M-2 SGIP Flowcharts......................................................................236



ATTACHMENT N - Large Generation Interconnection Procedures (“LGIP”) And Large Generator Interconnection Agreement (“LGIA”)...........................................239

ATTACHMENT O - Index of Generation Interconnection Customers ...................403

ATTACHMENT P - Standards For Business Practices and Communications Protocol ...........................................................................................................................404



I. COMMON SERVICE PROVISIONS

1 Definitions

1.1 Affiliate: With respect to a corporation, partnership or other entity, each

such other corporation, partnership or other entity that directly or

indirectly, through one or more intermediaries, controls, is controlled by,

or is under common control with, such corporation, partnership or other

entity.

1.2 Ancillary Services: Those services that are necessary to support the

transmission of capacity and energy from resources to loads while

maintaining reliable operation of the Transmission Provider's

Transmission System in accordance with Good Utility Practice.

1.3 Annual Transmission Costs: The total annual cost of the Transmission

System for purposes of Network Integration Transmission Service shall be

the amount specified in Attachment H until amended by the Transmission

Provider or modified by the Commission.

1.4 Application: A request by an Eligible Customer for transmission service

pursuant to the provisions of the Tariff

1.5 Commission: The Federal Energy Regulatory Commission.

1.6 Completed Application: An Application that satisfies all of the

information and other requirements of the Tariff, including any required

deposit.

1.7 Control Area: An electric power system or combination of electric

power systems to which a common automatic generation control scheme is

applied in order to:

(1) match, at all times, the power output of the generators within the

electric power system(s) and capacity and energy purchased from



entities outside the electric power system(s), with the load within

the electric power system(s);

(2) maintain scheduled interchange with other Control Areas, within

the limits of Good Utility Practice;

(3) maintain the frequency of the electric power system(s) within

reasonable limits in accordance with Good Utility Practice; and

(4) provide sufficient generating capacity to maintain operating

reserves in accordance with Good Utility Practice.

1.8 Curtailment: A reduction in firm or non-firm transmission service in

response to a transfer capability shortage as a result of system reliability

conditions.

1.9 Delivering Party: The entity supplying capacity and energy to be

transmitted at Point(s) of Receipt.

1.10 Designated Agent: Any entity that performs actions or functions on

behalf of the Transmission Provider, an Eligible Customer, or the

Transmission Customer required under the Tariff.

1.11 Direct Assignment Facilities: Facilities or portions of facilities that are

constructed by the Transmission Provider for the sole use/benefit of a

particular Transmission Customer requesting service under the Tariff.

Direct Assignment Facilities shall be specified in the Service Agreement

that governs service to the Transmission Customer and shall be subject to

Commission approval.

1.12 Eligible Customer: (i) Any electric utility (including the Transmission

Provider and any power marketer), Federal power marketing agency, or

any person generating electric energy for sale for resale is an Eligible

Customer under the Tariff. Electric energy sold or produced by such

entity may be electric energy produced in the United States, Canada or



Mexico. However, with respect to transmission service that the

Commission is prohibited from ordering by Section 212(h) of the Federal

Power Act, such entity is eligible only if the service is provided pursuant

to a state requirement that the Transmission Provider offer the unbundled

transmission service, or pursuant to a voluntary offer of such service by

the Transmission Provider. (ii) Any retail customer taking unbundled

Transmission Service pursuant to a state requirement that the

Transmission Provider offer the transmission service, or pursuant to a

voluntary offer of such service by the Transmission Provider, is an eligible

Customer under the Tariff.

1.13 Facilities Study: An engineering study conducted by the Transmission

Provider to determine the required modifications to the Transmission

Provider's Transmission System, including the cost and scheduled

completion date for such modifications, that will be required to provide

the requested transmission service.

1.14 Firm Point-To-Point Transmission Service: Transmission Service

under this Tariff that is reserved and/or scheduled between specified

Points of Receipt and Delivery pursuant to Part II of this Tariff.

1.15 Good Utility Practice: Any of the practices, methods and acts engaged in

or approved by a significant portion of the electric utility industry during

the relevant time period, or any of the practices, methods and acts which,

in the exercise of reasonable judgment in light of the facts known at the

time the decision was made, could have been expected to accomplish the

desired result at a reasonable cost consistent with good business practices,

reliability, safety and expedition. Good Utility Practice is not intended to

be limited to the optimum practice, method, or act to the exclusion of all

others, but rather to be acceptable practices, methods, or acts generally

accepted in the region, including those practices required by Federal

Power Act section 215(a)(4).



1.16 Interruption: A reduction in non-firm transmission service due to

economic reasons pursuant to Section 14.7.

1.17 Load Ratio Share: Ratio of a Transmission Customer's Network Load to

the Transmission Provider's total load computed in accordance with

Sections 34.2 and 34.3 of the Network Integration Transmission Service

under Part III of the Tariff and calculated on a rolling twelve month basis.

1.18 Load Shedding: The systematic reduction of system demand by

temporarily decreasing load in response to transmission system or area

capacity shortages, system instability, or voltage control considerations

under Part III of the Tariff.

1.19 Long-Term Firm Point-To-Point Transmission Service: Firm Point-

To-Point Transmission Service under Part II of the Tariff with a term of

one year or more.

1.20 Native Load Customers: The wholesale and retail power customers of

the Transmission Provider on whose behalf the Transmission Provider, by

statute, franchise, regulatory requirement, or contract, has undertaken an

obligation to construct and operate the Transmission Provider's system to

meet the reliable electric needs of such customers.

1.21 Network Customer: An entity receiving transmission service pursuant to

the terms of the Transmission Provider's Network Integration

Transmission Service under Part III of the Tariff.

1.22 Network Integration Transmission Service: The transmission service

provided under Part III of the Tariff.

1.23 Network Load: The load that a Network Customer designates for

Network Integration Transmission Service under Part III of the Tariff.

The Network Customer's Network Load shall include all load served by



the output of any Network Resources designated by the Network

Customer. A Network Customer may elect to designate less than its total

load as Network Load but may not designate only part of the load at a

discrete Point of Delivery. Where an Eligible Customer has elected not to

designate a particular load at discrete points of delivery as Network Load,

the Eligible Customer is responsible for making separate arrangements

under Part II of the Tariff for any Point-To-Point Transmission Service

that may be necessary for such non-designated load.

1.24 Network Operating Agreement: An executed agreement that contains

the terms and conditions under which the Network Customer shall operate

its facilities and the technical and operational matters associated with the

implementation of Network Integration Transmission Service under Part

III of the Tariff.

1.25 Network Operating Committee: A group made up of representatives

from the Network Customer(s) and the Transmission Provider established

to coordinate operating criteria and other technical considerations required

for implementation of Network Integration Transmission Service under

Part III of this Tariff.

1.26 Network Resource: Any designated generating resource owned,

purchased, or leased by a Network Customer under the Network

Integration Transmission Service Tariff. Network Resources do not

include any resource, or any portion thereof, that is committed for sale to

third parties or otherwise cannot be called upon to meet the Network

Customer's Network Load on a non-interruptible basis, except for

purposes of fulfilling obligations under a Commission-approved reserve-

sharing program.

1.27 Network Upgrades: Modifications or additions to transmission-related

facilities that are integrated with and support the Transmission Provider's



overall Transmission System for the general benefit of all users of such

Transmission System.

1.28 Non-Firm Point-To-Point Transmission Service: Point-To-Point

Transmission Service under the Tariff that is reserved and scheduled on an

as-available basis and is subject to Curtailment or Interruption as set forth

in Section 14.7 under Part II of this Tariff. Non-Firm Point-To-Point

Transmission Service is available on a stand-alone basis for periods

ranging from one hour to one month.

1.29 Non Firm Sale: An energy sale for which receipt or delivery may be

interrupted for any reason or no reason, without liability on the part of

either the buyer or seller.

1.30 Open Access Same-Time Information System (OASIS): The

information system and standards of conduct contained in Part 37 of the

Commission's regulations and all additional requirements implemented by

subsequent Commission orders dealing OASIS.

1.31 Part I: Tariff Definitions and Common Service Provisions contained in

Sections 2 through 12.

1.32 Part II: Tariff Sections 13 through 27 pertaining to Point-To-Point

Transmission Service in conjunction with the applicable Common Service

Provisions of Part I and appropriate Schedules and Attachments.

1.33 Part III: Tariff Sections 28 through 35 pertaining to Network Integration

Transmission Service in conjunction with the applicable Common Service

Provisions of Part I and appropriate Schedules and Attachments.

1.34 Parties: The Transmission Provider and the Transmission Customer

receiving service under the Tariff.

1.35 Point(s) of Delivery: Point(s) on the Transmission Provider's

Transmission System where capacity and energy transmitted by the



Transmission Provider will be made available to the Receiving Party

under Part II of the Tariff. The Point(s) of Delivery shall be specified in

the Service Agreement for Long-Term Firm Point-to-Point Transmission

Service.

1.36 Point(s) of Receipt: Point(s) of interconnection on the Transmission

Provider's Transmission System where capacity and energy will be made

available to the Transmission Provider by the Delivering Party under Part

II of the Tariff. The Point(s) of Receipt shall be specified in the Service

Agreement for Long-Term Firm Point-to-Point Transmission Service.

1.37 Point-To-Point Transmission Service: The reservation and transmission

of capacity and energy on either a firm or non-firm basis from the Point(s)

of Receipt to the Point(s) of Delivery under Part II of the Tariff.

1.38 Power Purchaser: The entity that is purchasing the capacity and energy

to be transmitted under the Tariff.

1.38A Palo Verde/Hassayampa Common Bus: The Palo Verde Switchyard

and the Hassayampa Switchyard (including the string bus facilities

connecting with the Palo Verde Switchyard). The Palo Verde Switchyard

and the Hassayampa Switchyard will be considered as a single Point of

Receipt and a single Point of Delivery for purposes of this tariff.

1.39 Pre-Confirmed Application: An Application that commits the Eligible

Customer to execute a Service Agreement upon receipt of notification that

the Transmission provider can provider the requested Transmission

Service.

1.40 Receiving Party: The entity receiving the capacity and energy

transmitted by the Transmission Provider to Point(s) of Delivery.

1.41 Reserved Capacity: The maximum amount of capacity and energy that

the Transmission Provider agrees to transmit for the Transmission



Customer over the Transmission Provider's Transmission System between

the Point(s) of Receipt and the Point(s) of Delivery under Part II of the

Tariff. Reserved Capacity shall be expressed in terms of whole megawatts

on a sixty (60) minute interval (commencing on the clock hour) basis.

1.42 Service Agreement: The initial agreement and any amendments or

supplements thereto entered into by the Transmission Customer and the

Transmission Provider for service under the Tariff.

1.43 Service Commencement Date: The date the Transmission Provider

begins to provide service pursuant to the terms of an executed Service

Agreement, or the date the Transmission Provider begins to provide

service in accordance with Section 15.3 or Section 29.1 under the Tariff.

1.44 Short-Term Firm Point-To-Point Transmission Service: Firm Point-

To-Point Transmission Service under Part II of the Tariff with a term of

less than one year.

1.45 System Condition: A specified condition on the Transmission provider’s

system or on a neighboring system, such as a constrained transmission

element or flowgate, that may trigger Curtailment of Long-Term Firm

Point-To-Point Transmission Service using the curtailment priority

pursuant to Section 13.6. Such conditions must be identified in the

Transmission Customer’s Service Agreement.

1.46 System Impact Study: An assessment by the Transmission Provider of

(i) the adequacy of the Transmission System to accommodate a request for

either Firm Point-To-Point Transmission Service or Network Integration

Transmission Service and (ii) whether any additional costs may be

incurred in order to provide transmission service.

1.47 Third-Party Sale: Any sale for resale in interstate commerce to a Power

Purchaser that is not designated as part of Network Load under the

Network Integration Transmission Service.



1.48 Transmission Customer: Any Eligible Customer (or its Designated

Agent) that (i) executes a Service Agreement, or (ii) requests in writing

that the Transmission Provider file with the Commission, a proposed

unexecuted Service Agreement to receive transmission service under Part

II of the Tariff. This term is used in the Part I Common Service

Provisions to include customers receiving transmission service under Part

II and Part III of this Tariff.

1.49 Transmission Provider: Public Service Company of New Mexico

(“PNM”) (or its Designated Agent), which is an operating company of

PNM Resources, Inc. (“PNM Resources”). PNM is a public utility that

owns, controls, or operates facilities used for the transmission of electric

energy in interstate commerce and provide transmission service under the

Tariff. As of the Effective Date of this OATT, PNM will own, control,

and operate a transmission system comprised of the existing PNM

Transmission System and the former TNMP New Mexico Transmission

System. This OATT includes references to the PNM Transmission

System and the former TNMP Transmission System.

1.50 Transmission Provider's Monthly Transmission System Peak: The

maximum firm usage of the Transmission Provider's Transmission System

in a calendar month.

1.51 Transmission Service: Point-To-Point Transmission Service provided

under Part II of the Tariff on a firm and non-firm basis.

1.52 Transmission System: The facilities owned, controlled or operated by

the Transmission Provider that are used to provide transmission service

under Part II and Part III of the Tariff. PNM operates a Transmission

System comprised of the PNM Transmission System and the former

TNMP Transmission System, but will continue to include some separate

postings of related information on the OASIS.



1.53 Working Days: Monday through Friday, excluding holidays and

weekends, between 7 a.m. and 4 p.m. local time.

2 Initial Allocation and Renewal Procedures

2.1 Initial Allocation of Available Transfer Capability: For purposes of

determining whether existing capability on the Transmission Provider's

Transmission System is adequate to accommodate a request for firm

service under this Tariff, all Completed Applications for new firm

transmission service received during the initial sixty (60) day period

commencing with the effective date of the Tariff will be deemed to have

been filed simultaneously. A lottery system conducted by an independent

party shall be used to assign priorities for Completed Applications filed

simultaneously. All Completed Applications for firm transmission service

received after the initial sixty (60) day period shall be assigned a priority

pursuant to Section 13.2.

2.2 Reservation Priority For Existing Firm Service Customers: Existing

firm service customers (wholesale requirements and transmission-only,

with a contract term of one year or more), have the right to continue to

take transmission service from the Transmission Provider when the

contract expires, rolls over or is renewed. This transmission reservation

priority is independent of whether the existing customer continues to

purchase capacity and energy from the Transmission Provider or elects to

purchase capacity and energy from another supplier. If at the end of the

contract term, the Transmission Provider's Transmission System cannot

accommodate all of the requests for transmission service, the existing firm

service customer must agree to accept a contract term at least equal to the

competing request by any new Eligible Customer and to pay the current

just and reasonable rate, as approved by the Commission, for such service.

This transmission reservation priority for existing firm service customers

is an ongoing right that may be exercised at the end of all firm contract

terms of one year or longer.



2.3 Reservation Procedure for Expiring Transmission Services: Existing

firm service customers with contract terms of one year or more must

notify Transmission Provider via the OASIS no later than sixty (60) days

prior to the expiration of their existing contract to renew or roll over the

transmission service. If the existing firm service customer renews the

transmission service, Transmission Provider will follow the procedures

outlined in Parts II and III regarding new requests for transmission service.

3 Ancillary Services

Ancillary Services are needed with transmission service to maintain reliability

within and among the Control Areas affected by the transmission service. The

Transmission Provider is required to provide (or offer to arrange with the local

Control Area operator as discussed below), and the Transmission Customer is

required to purchase, the following Ancillary Services: (i) Scheduling, System

Control and Dispatch, and (ii) Reactive Supply and Voltage Control from

Generation or Other Sources.

The Transmission Provider is required to offer to provide (or offer to arrange with

the local Control Area operator as discussed below) the following Ancillary

Services only to the Transmission Customer serving load within the Transmission

Provider's Control Area (i) Regulation and Frequency Response, (ii) Energy

Imbalance, (iii) Operating Reserve - Spinning, and (iv) Operating Reserve –

Supplemental. The Transmission Customer serving load within the Transmission

Provider's Control Area is required to acquire these Ancillary Services, whether

from the Transmission Provider, from a third party, or by self-supply.

The Transmission Provider is required to provide (or offer to arrange with the

local Control Area Operator as discussed below), to the extent it is physically

feasible to do so from its resources or from resources available to it, Generator

Imbalance Service when Transmission Service is used to deliver energy from a

generator located within its Control Area. The Transmission Customer using

Transmission Service to deliver energy from a generator located within the



Transmission Provider’s Control Area is required to acquire Generator Imbalance

Service, whether from the Transmission Provider, from a third party, or by self-

supply.

The Transmission Customer may not decline the Transmission Provider's offer of

Ancillary Services unless it demonstrates that it has acquired the Ancillary

Services from another source. The Transmission Customer must list in its

Application which Ancillary Services it will purchase from the Transmission

Provider. A Transmission Customer that exceeds its firm reserved capacity at any

Point of Receipt or Point of Delivery or an Eligible Customer that uses

Transmission Service at a Point of Receipt or Point of Delivery that it has not

reserved is required to pay for all of the Ancillary Services identified in this

section that were provided by the Transmission Provider associated with the

unreserved service. The Transmission Customer or Eligible Customer will pay for

Ancillary Services based on the amount of transmission service it used but did not

reserve.

If the Transmission Provider is a public utility providing transmission service but

is not a Control Area operator, it may be unable to provide some or all of the

Ancillary Services. In this case, the Transmission Provider can fulfill its

obligation to provide Ancillary Services by acting as the Transmission Customer's

agent to secure these Ancillary Services from the Control Area operator. The

Transmission Customer may elect to (i) have the Transmission Provider act as its

agent, (ii) secure the Ancillary Services directly from the Control Area operator,

or (iii) secure the Ancillary Services (discussed in Schedules 3, 4, 5, 6, and 9)

from a third party or by self-supply when technically feasible.

The Transmission Provider shall specify the rate treatment and all related terms

and conditions in the event of an unauthorized use of Ancillary Services by the

Transmission Customer.

The specific Ancillary Services, prices and/or compensation methods are

described on the Schedules that are attached to and made a part of the Tariff.



Three principal requirements apply to discounts for Ancillary Services provided

by the Transmission Provider in conjunction with its provision of transmission

service as follows: (1) any offer of a discount made by the Transmission Provider

must be announced to all eligible customers solely by posting on the OASIS, (2)

any customer-initiated requests for discounts (including requests for use by one’s

wholesale merchant or an Affiliate’s use) must occur solely by posting on the

OASIS, and (3) once a discount is negotiated, details must be immediately posted

on the OASIS. A discount agreed upon for an Ancillary Service must be offered

for the same period to all Eligible Customers on the Transmission Provider’s

system. Sections 3.1 through 3.7 list the seven Ancillary Services.

3.1 Scheduling, System Control and Dispatch Service: The rates and/or

methodology are described in Schedule 1.

3.2 Reactive Supply and Voltage Control from Generation or Other

Sources Service: The rates and/or methodology are described in Schedule

2.

3.3 Regulation and Frequency Response Service: Where applicable the

rates and/or methodology are described in Schedule 3.

3.4 Energy Imbalance Service: Where applicable the rates and/or


3.5 Operating Reserve - Spinning Reserve Service: Where applicable the

rates and/or methodology are described in Schedule 5.

3.6 Operating Reserve - Supplemental Reserve Service: Where applicable

the rates and/or methodology are described in Schedule 6.

3.7 Generator Imbalance Service: Where applicable the rates and/or




3.8 Loss Compensation Service: Where applicable, at Transmission

Customer’s option, Transmission Provider will provide as described in

Schedule 10.

4 Open Access Same-Time Information System (OASIS)

Terms and conditions regarding Open Access Same-Time Information System

and standards of conduct are set forth in 18 CFR 37 of the Commission's

regulations (Open Access Same-Time Information System and Standards of

Conduct for Public Utilities) and 18 C.F.R. § 38 of the Commission’s regulations

(Business Practice Standards and Communication Protocols for Public Utilities).

In the event available transfer capability as posted on the OASIS is insufficient to

accommodate a request for firm transmission service, additional studies may be

required as provided by this Tariff pursuant to Sections 19 and 32.

The Transmission Provider shall post on OASIS and its public website an

electronic link to all rules, standards and practices that (i) relate to the terms and

conditions of transmission service, (ii) are not subject to a North American

Energy Standards Board (“NAESB”) copyright restriction, and (iii) are not

otherwise included in this Tariff. The Transmission Provider shall post on OASIS

, and on its public website an electronic link to the NAESB website where any

rules, standards and practices that are protected by copyright may be obtained.

The Transmission Provider shall also post on OASIS and its public website an

electronic link to a statement of the process by which the Transmission Provider

shall add, delete or otherwise modify the rules, standards and practices that are

not included in this Tariff. Such process shall set forth the means by which the

Transmission Provider shall provide reasonable advance notice to Transmission

Customers and Eligible Customers of any such additions, deletions or

modifications, the associated effective date, and any additional implementation

procedures that the Transmission Provider deems appropriate.



5 Local Furnishing Bonds

5.1 Transmission Providers That Own Facilities Financed by Local

Furnishing Bonds: This provision is applicable only to Transmission

Providers that have financed facilities for the local furnishing of electric

energy with tax-exempt bonds, as described in Section 142(f) of the

Internal Revenue Code ("local furnishing bonds"). Notwithstanding any

other provision of this Tariff, the Transmission Provider shall not be

required to provide Transmission Service to any Eligible Customer

pursuant to this Tariff if the provision of such Transmission Service would

jeopardize the tax-exempt status of any local furnishing bond(s) used to

finance the Transmission Provider's facilities that would be used in

providing such Transmission Service.

5.2 Alternative Procedures for Requesting Transmission Service:

(i) If the Transmission Provider determines that the provision of

transmission service requested by an Eligible Customer would

jeopardize the tax-exempt status of any local furnishing bond(s)

used to finance its facilities that would be used in providing such

transmission service, it shall advise the Eligible Customer within

thirty (30) days of receipt of the Completed Application.

(ii) If the Eligible Customer thereafter renews its request for the same

transmission service referred to in (i) by tendering an application

under Section 211 of the Federal Power Act, the Transmission

Provider, within ten (10) days of receiving a copy of the Section

211 application, will waive its rights to a request for service under

Section 213(a) of the Federal Power Act and to the issuance of a

proposed order under Section 212(c) of the Federal Power Act.

The Commission, upon receipt of the Transmission Provider’s

waiver of its right to a request for service under Section 213(a) of

the Federal Power Act and to the issuance of a proposed order



under Section 212(c) of the Federal Power Act, shall issue an order

under Section 211 of the Federal Power Act. Upon issuance of the

order under Section 211 of the Federal Power Act, the

Transmission Provider shall be required to provide the requested

transmission service in accordance with the terms and conditions

of this Tariff.

6 Reciprocity

A Transmission Customer receiving transmission service under this Tariff agrees

to provide comparable transmission service that it is capable of providing to the

Transmission Provider on similar terms and conditions over facilities used for the

transmission of electric energy owned, controlled or operated by the Transmission

Customer and over facilities used for the transmission of electric energy owned,

controlled or operated by the Transmission Customer's corporate Affiliates. A

Transmission Customer that is a member of or takes transmission service from a

power pool, Regional Transmission Group, Regional Transmission Organization

(RTO), Independent System Operator (ISO) or other transmission organization

approved by the Commission for the operation of transmission facilities also

agrees to provide comparable transmission service to the transmission-owning

members of such power pool and Regional Transmission Group, RTO, ISO or

other transmission organization on similar terms and conditions over facilities

used for the transmission of electric energy owned, controlled or operated by the

Transmission Customer and over facilities used for the transmission of electric

energy owned, controlled or operated by the Transmission Customer's corporate

Affiliates.

This reciprocity requirement applies not only to the Transmission Customer that

obtains transmission service under the Tariff, but also to all parties to a

transaction that involves the use of transmission service under the Tariff,

including the power seller, buyer and any intermediary, such as a power marketer.



This reciprocity requirement also applies to any Eligible Customer that owns,

controls or operates transmission facilities that uses an intermediary, such as a

power marketer, to request transmission service under the Tariff. If the

Transmission Customer does not own, control or operate transmission facilities, it

must include in its Application a sworn statement of one of its duly authorized

officers or other representatives that the purpose of its Application is not to assist

an Eligible Customer to avoid the requirements of this provision.

7 Billing and Payment

7.1 Billing Procedure: Within a reasonable time after the first day of each

month, the Transmission Provider shall submit an invoice to the

Transmission Customer for the charges for all services furnished under the

Tariff during the preceding month. The invoice shall be paid by the

Transmission Customer within twenty (20) days of receipt. All payments

shall be made in immediately available funds payable to the Transmission

Provider, or by wire transfer to a bank named by the Transmission

Provider.

7.2 Interest on Unpaid Balances: Interest on any unpaid amounts (including

amounts placed in escrow) shall be calculated in accordance with the

methodology specified for interest on refunds in the Commission's

regulations at 18 CFR 35.19a(a)(2)(iii). Interest on delinquent amounts

shall be calculated from the due date of the bill to the date of payment.

When payments are made by mail, bills shall be considered as having been

paid on the date of receipt by the Transmission Provider.

7.3 Customer Default: In the event the Transmission Customer fails, for any

reason other than a billing dispute as described below, to make payment to

the Transmission Provider on or before the due date as described above,

and such failure of payment is not corrected within thirty (30) calendar

days after the Transmission Provider notifies the Transmission Customer

to cure such failure, a default by the Transmission Customer shall be



deemed to exist. Upon the occurrence of a default, the Transmission

Provider may initiate a proceeding with the Commission to terminate

service but shall not terminate service until the Commission so approves

any such request. In the event of a billing dispute between the

Transmission Provider and the Transmission Customer, the Transmission

Provider will continue to provide service under the Service Agreement as

long as the Transmission Customer (i) continues to make all payments not

in dispute, and (ii) pays into an independent escrow account the portion of

the invoice in dispute, pending resolution of such dispute. If the

Transmission Customer fails to meet these two requirements for

continuation of service, then the Transmission Provider may provide

notice to the Transmission Customer of its intention to suspend service in

sixty (60) days, in accordance with Commission policy.

8 Accounting for the Transmission Provider's Use of the Tariff:

The Transmission Provider shall record the following amounts, as outlined below.

8.1 Transmission Revenues: Include in a separate operating revenue account

or subaccount the revenues it receives from Transmission Service when

making Third-Party Sales under Part II of the Tariff.

8.2 Study Costs and Revenues: Include in a separate transmission operating

expense account or subaccount, costs properly chargeable to expense that

are incurred to perform any System Impact Studies or Facilities Studies

which the Transmission Provider conducts to determine if it must

construct new transmission facilities or upgrades necessary for its own

uses, including making Third-Party Sales under the Tariff; and include in a

separate operating revenue account or subaccount the revenues received

for System Impact Studies or Facilities Studies performed when such

amounts are separately stated and identified in the Transmission

Customer's billing under the Tariff.



9 Regulatory Filings

Nothing contained in the Tariff or any Service Agreement shall be construed as

affecting in any way the right of the Transmission Provider to unilaterally make

application to the Commission f

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