1. Arizona ACC Biennial Transmission Assessment Navajo Transmission Project Update May 22, 2008 Presentation by Ben Hoisington Project Administrator, DPA

2. Navajo Transmission Project (NTP) Project Description The NTP will be a 500 kV transmission line extending from a new substation located near the Four Corners Power Plant in northwestern New Mexico to the Marketplace Substation south of Boulder City, Nevada. The approximate length of the line will be 478 miles. The project will be constructed in phases with Segment 1 will begin construction in 2009 and be in service in 2011. Segments 2 and 3 will follow, schedule not yet determined. Segment 1 – 198 mile 500 kV single circuit transmission line. Segment 2 – 62 mile 500 kV single circuit transmission line from Red Mesa West site to Moenkopi II site. Generally parallels an existing 345 kV transmission line. Segment 3 – 218 mile 500 kV single circuit transmission line from Moenkopi II site to Marketplace. Generally parallels an existing 500 kV transmission line.

3. NTP Project Segment 1 Summary A new 198-mile 500 kV line from the Desert Rock Power Plant to Red Mesa East with an interconnection at Four Corners Anticipated Path Rating 1,600 MW Estimated Direct Construction Costs $350 million RFQ for EPC contractor issued in 2007 RFP for EPC contractor will be issued in August 2008

4. NTP Environmental Status EIS Record of Decision - issued, 1997 State of Arizona CEC - issued, 2000 Navajo Nation Right-of-Way Grant - issued, 2002 Updated Biological and Cultural Studies are completed in 2006 BLM has prepared a new draft Record of Decision Final ROD expected in June 2008

5. NTP Project Segment 1 Summary WECC path rating process will begin in January 06 –Comprehensive Progress Report issued December 2007 –WECC Regional Planning report issued in March 2007 –Final WECC Path rating is expected in 2008 In service date is scheduled for Q4 2011

6. Navajo Transmission Project Location

8. NTP - Major Facilities Desert Rock Energy Project - Red Mesa East 500 kV line A new 198-mile, 500 kV transmission line will be constructed between the new DREP 500 kV switching station to the new Red Mesa East 500 kV switching station. Conductor will be double-bundled 2156 kcm Bluebird and the line will be series compensated at the DREP switchyard. Tentative size of the series capacitor is 45 ohm with a minimum rating of 2200 A continuous. In addition, the line will have two shunt reactors (one at each terminal) rated for 154 Mvar @ 500 kV. Metering point for NTP 1 will be the DREP terminal. RME 500 kV Switching Station. The DREP-RME 500 kV line will terminate at a new 500 kV ring bus which will include a fold-in of the existing Navajo- Moenkopi 500 kV line. Location of the new switchyard is approximately 14 miles south of the Navajo Generation Station.