Wholesale Requirements Power Sale And Services Agreement

EXHIBIT 10(K)


WHOLESALE REQUIREMENTS POWER SALE


AND SERVICES AGREEMENT

BETWEEN


PUBLIC SERVICE COMPANY OF NEW MEXICO


AND


TEXAS-NEW MEXICO POWER COMPANY

WHOLESALE REQUIREMENTS POWER SALE


AND SERVICES AGREEMENT

BETWEEN


PUBLIC SERVICE COMPANY OF NEW MEXICO


AND


TEXAS-NEW MEXICO POWER COMPANY


TABLE OF CONTENTS


SECTION PAGE


Recitals

1. Undertaking of the Parties 7

2. Definitions 7

3. Effective Date and Term 13

4. Services to Be Provided 14

5. Appointment of PNM Marketing as Agent 18

6. Transmission 18

7. Rates for Service 20

8. Rate Changes 22

9. Billing and Payment 23

10. Metering 24

11. Defaults 25

12. Uncontrollable Forces 28

13. Waiver 28

14. Liability and Indemnity 29

15. Authorized Representatives 30


2

16. Governing Law and Contract Administration 32

17. Assignment 32

18. Nondedication of Facilities 33

19. Notices 33

20. Entire Agreement 34

21. Section Headings and Exhibits 34

22. Invalidity 35

23. Disputes 35

24. No Third Party Rights 37

25. Amendments 37

26. No Partnership 38

27. Signature Clause 38


EXHIBITS

1. Contract Requirements Schedule

2. Texas-New Mexico Power Company New Mexico Transmission Rights

3. EPE/TNMP Contract

4. Points of Delivery

5. Phelps Dodge/TNMP MOU

6. SPS/TNMP Contract

OPERATING PROCEDURES

1. Replacement Energy Scheduling

2. New Mexico Operating Procedures

3. Transmission Loss Accounting


3

WHOLESALE REQUIREMENTS POWER SALE

AND SERVICES AGREEMENT

BETWEEN PUBLIC SERVICE COMPANY OF NEW MEXICO

AND

TEXAS-NEW MEXICO POWER COMPANY


This Wholesale Requirements Power Sale and Services Agreement (" Agreement" ) is entered into between PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation (" PNM" ), as seller, and TEXAS-NEW MEXICO POWER COMPANY, a Texas corporation (" TNMP" ), as purchaser. PNM and TNMP are hereinafter sometimes referred to as the " Parties" or individually as a " Party."


RECITALS:

1. TNMP is a public utility engaged in the generation, transmission and distribution of Power and Energy in the States of Texas and New Mexico.


2. PNM is a public utility engaged in the generation, transmission, and wholesale sale of Power and Energy in the State of Arizona and in the generation, transmission, distribution, and retail and wholesale sale of Power and Energy in the State of New Mexico.


3. TNMP purchases 6 MW of firm point-to-point transmission service and associated ancillary services from PNM Reliability under PNM' s Open Access Transmission Tariff (" OATT" ) for delivery from the 345 kV bus at the Four Corners Switchyard to the Hidalgo 345 kV Switching Station pursuant to a service agreement dated May 26, 2000.


4. TNMP purchases 15 MW of firm point-to-point transmission service and associated ancillary services from PNM Reliability under the PNM OATT for delivery from the 345 kV bus at the Four Corners Switchyard to the Hidalgo 345 kV Switching Station pursuant to a service agreement dated February 9, 2001.


4

5. TNMP purchases control area services from PNM Reliability pursuant to the Control Area Services Agreement between TNMP and PNM Reliability, dated May 14, 1999, as amended (" Control Area Services Agreement" ).

6. TNMP is a party to an interconnection agreement with Southwestern Public Service Company (" SPS" ) dated December 8, 1981 (" SPS/TNMP Contract" ), pursuant to which TNMP purchases Power and Energy under service schedules thereto. TNMP has given notice to SPS of its intent to terminate the SPS/TNMP Interconnection Agreement and all service schedules thereto effective December 8, 2001.


7. TNMP purchases Capacity and Energy from El Paso Electric Company (" EPE" ) pursuant to a power sales agreement dated April 29, 1987, as amended (" EPE/TNMP Contract" ). TNMP has given notice to EPE of its intent to terminate the EPE/TNMP Contract effective December 31, 2002.


8. TNMP provides electric service at retail to Phelps Dodge Corporation (" Phelps Dodge" ) pursuant to a Memorandum of Understanding dated October 30, 1999 (" Phelps Dodge/TNMP MOU" ) and to TNMP' s Fourth Revised Rate Schedule No. 9 and Fourth Revised Rate Schedule No. 11 on file with the New Mexico Public Regulation Commission (" NMPRC" ). On March 2, 2001, TNMP filed an advice notice with the NMPRC to substitute Fifth Revised Rate Schedule No. 11 for Fourth Revised Rate Schedule No. 11. TNMP' s filing is pending before the NMPRC.


9. Under the Phelps Dodge/TNMP MOU, Phelps Dodge has the right to utilize, on an interruptible basis, up to 65 MW of transmission from the TNMP side of the 345 kV bus at the Greenlee Switchyard to the Hidalgo Switching Station for the sole purpose of receiving the block energy purchases made by TNMP on behalf of Phelps Dodge.


5

10. On February 21, 2001, TNMP released a Request for Proposals (" RFP" ) seeking a full requirements contract to serve the TNMP Native Load. As a result of the RFP process, TNMP and PNM Marketing entered into a Letter of Intent dated as of April 19, 2001, pursuant to which TNMP and PNM Marketing agreed to negotiate in good faith to reach an agreement based on principles embodied in a proposal by PNM Marketing dated April 12, 2001.

11. TNMP desires to enter into this Agreement to provide adequate, efficient and reasonable service to TNMP Native Load. TNMP desires to purchase Capacity and Energy at wholesale from PNM Marketing as provided in this Agreement. TNMP further desires PNM Marketing to act as TNMP' s Agent to schedule Energy and transmission for TNMP and to dispatch Energy to TNMP as required by TNMP to serve the TNMP Native Load Requirements. TNMP further desires PNM Marketing to act as TNMP' s Agent to schedule transmission, Phelps Dodge Block Energy Purchases, and Economy Energy for TNMP as required by TNMP to serve the Phelps Dodge Load.


12. PNM Marketing will have Capacity and Energy available for sale during the term of this Agreement and desires to sell TNMP the wholesale Capacity and Energy required to provide adequate, efficient and reasonable service to TNMP so that TNMP may serve the TNMP Native Load in the amount of the TNMP Incremental Native Load Requirements for the period July 1, 2001 through December 31, 2002 and in the amount of the TNMP Native Load Requirements for the period January 1, 2003 through December 31, 2006.


13. As a result of, and to comply with, FERC Order Nos. 888 and 889, PNM has created a Wholesale Power Marketing Department (" PNM Marketing" ) and a Transmission and Reliability Department (" PNM Reliability" ). This Agreement has been negotiated by TNMP and PNM Marketing and will be administered by TNMP and PNM Marketing.

6

AGREEMENT

For mutually agreeable consideration, the Parties agree as follows:

1. UNDERTAKING OF THE PARTIES

1.1 PNM Marketing shall sell and deliver to TNMP wholesale Capacity and Energy in amounts equal to the TNMP Incremental Native Load Requirements during the period July 1, 2001 through December 31, 2002 and sell and deliver to TNMP wholesale Capacity and Energy in amounts equal to the TNMP Native Load Requirements during the period January 1, 2003 through December 31, 2006, and shall act as TNMP' s Agent as provided for herein.


2. DEFINITIONS


The following terms, when used herein with initial capitalization, whether in the singular or in the plural, shall have the meanings specified in this Section 2.

2.1 Agent PNM Marketing, in its capacity hereunder as TNMP' s wholesale supplier, with the authority to communicate, schedule, and dispatch on TNMP' s behalf as a wholesale entity.


2.2.1 Annual Peak Demand


2.2.1 Except as delineated in Section 2.2.5, for each month during the period July 1, 2001 through November 30, 2001, Annual Peak Demand shall be the higher of (i) 62 MW or (ii) the highest sixty (60) minute integrated kW metered TNMP Native Load demand for the month, measured by standard measuring equipment, less the combined SPS/TNMP Contract net schedule and EPE/TNMP Contract net schedule (after losses). Once a new Annual Peak Demand is established under (ii) above, the Annual Peak Demand for each subsequent month in the period shall not be less than the highest such metered demand established during the period.

2.2.2 For the month of December, 2001, the Annual Peak Demand shall be deemed to be 62 MW.

7

2.2.3 For each month during the period January 1, 2002 through December 31, 2002, Annual Peak Demand shall be the higher of (i) 32 MW or (ii) the highest sixty (60) minute integrated kW metered TNMP Native Load demand for the month, measured by standard measuring equipment, less the EPE/TNMP Contract net schedule (after losses). Once a new Annual Peak Demand is established under (ii) above, the Annual Peak Demand for each subsequent month in the period shall not be less than the highest such metered demand established during the period.

2.2.4 For each month during the period January 1, 2003 through December 31, 2006, Annual Peak Demand shall be the higher of (i) the Contract Requirements for the applicable year as specified in Exhibit 1 hereto, or (ii) the highest sixty (60) minute integrated kW metered TNMP Native Load demand for the month, measured by standard measuring equipment. Once a new Annual Peak Demand is established under (ii) above, the Annual Peak Demand for each subsequent month shall not be less than the highest such metered demand established during the prior eleven-month period.


2.2.5 The Annual Peak Demand shall not be adjusted for interruption or curtailment of the SPS/TNMP Contract due to the loss or deration of the Eddy County Tie or interruption or curtailment of the EPE/TNMP Contract. In cases where the Eddy County Tie or the EPE/TNMP Contract is interrupted or curtailed, the Annual Peak Demand will be considered to be as if no interruption or curtailment of the SPS/TNMP Contract or EPE/TNMP Contract occurred.


2.3 Authorized Representatives - The persons designated by each Party, and authorized on its behalf to act as its Authorized Representative and its Alternate pursuant to Section 15.


8

2.4 Business Day - Any day on which financial business is normally conducted; normally, a Business Day is Monday through Friday except for federally recognized holidays, which are currently: New Year' s Day, Martin Luther King Day, Presidents' Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving and Christmas.


2.5 Capacity - Firm electric generation capability, usually expressed in megawatts.


2.6 Contract Requirements - The forecast TNMP Incremental Native Load Requirements and TNMP Native Load Requirements, as specified in Exhibit 1 hereto.


2.7 Control Area Services Agreement - The Control Area Services Agreement between TNMP and PNM Reliability, dated May 14, 1999, as amended.


2.8 Date of Initial Service - July 1, 2001, which is the date on which PNM Marketing commences providing the services to TNMP described hereunder, pursuant to Section 4.0.


2.9 Economy Energy - Electric energy that is recallable immediately upon notice by the seller.

2.10 Eddy County Tie - The AC to DC to AC Intertie located at the interface between the SPS and EPE systems.


2.11 Effective Date - The date on which this Agreement has been executed by both Parties.

2.12 Energy - The energy provided associated with Capacity hereunder, usually expressed in megawatt hours.

2.13 EPE - El Paso Electric Company.

2.14 EPE/TNMP Contract, - The Power Sales Agreement between EPE and TNMP, dated April 29, 1987, as amended. A copy of the EPE/TNMP Contract is attached hereto as Exhibit 3.


9

2.15 FERC - The Federal Energy Regulatory Commission or any successor thereto.

2.16 FPA - The Federal Power Act.

2.17 Incremental Ancillary Services - Ancillary services provided beyond those already procured by TNMP through the Control Area Services Agreement between TNMP and PNM Reliability, dated May 14, 1999, as amended, and beyond those already procured through the PNM Transmission Agreements.

2.18 Incremental Transmission Service - Transmission service procured by PNM Marketing to provide service pursuant to this Agreement, and which is beyond transmission service owned or contracted for by TNMP.

2.19 Market-Based Sales Tariff - PNM' s FERC-approved or accepted Power and Energy Sales Tariff, First Revised Volume No. 3, as it may be amended from time to time.


2.20 Market Price - the applicable Dow Jones Non-Firm On-Peak or Dow Jones Non-Firm Off-Peak Electricity Index price at Four Corners. In the event this index does not exist in the future the Parties shall agree on a suitable replacement.

2.21 NMPRC - The New Mexico Public Regulation Commission or any successor thereto.


2.22 Non-Firm Transmission Service - Transmission service that is subject to immediate curtailment or interruption upon notice.

2.23 OATT - Open Access Transmission Tariff.

2.24 Operating Procedures - Procedures developed and agreed to in writing by the Parties' respective Authorized Representatives that are intended to address specific operational details regarding the implementation and administration of the Agreement.

2.25 Phelps Dodge, - Phelps Dodge Corporation.


10

2.26 Phelps Dodge Block Energy Purchase - Purchases made by TNMP on behalf of Phelps Dodge using 65 MW of interruptible transmission rights from the TNMP side of the 345 kV bus at the Greenlee Switchyard to the Hidalgo 345 kV Switching Station.

2.27 Phelps Dodge Load, - The energy sold by TNMP to Phelps Dodge pursuant to the Phelps Dodge/TNMP MOU.

2.28 Phelps Dodge/TNMP MOU - The Memorandum of Understanding between Phelps Dodge and TNMP dated October 30, 1999, or its replacement. A copy of the Phelps Dodge/TNMP MOU is attached hereto as Exhibit 5.

2.29 PNM - Public Service Company of New Mexico, including its subsidiaries and affiliates.

2.30 PNM Marketing - PNM' s Wholesale Power Marketing Department.


2.31 PNM Reliability - PNM' s Transmission and Reliability Department.


2.32 PNM Transmission Agreements - Service agreements under the PNM OATT providing 6 MW of firm point-to-point transmission service and associated ancillary services from the 345 kV bus at the Four Corners Switchyard to the Hidalgo 345 kV Switching Station pursuant to a service agreement dated May 26, 2000 and providing 15 MW of firm point-to-point transmission service and associated ancillary services from the 345 kV bus at the Four Corners Switchyard to the Hidalgo 345 Kv Switching Station pursuant to a service agreement dated February 9, 2001, as may be modified from time to time.


2.33 Points of Delivery - All points of delivery into the TNMP New Mexico Transmission System at which energy deliveries are made to TNMP, as listed in Exhibit 4, and which may be modified from time to time.


2.34 Regulatory Authority - A governmental body having regulatory jurisdiction over one or both of the Parties or over this Agreement or portions of this Agreement including, but not limited to, the New Mexico Public Regulation Commission and the Federal Energy Regulatory Commission.


11

2.35 Replacement Energy - In accordance with Operating Procedure #1, attached hereto, any energy that is procured by PNM Marketing, through December 8, 2001, on behalf of TNMP to replace energy lost when energy deliveries under the SPS/TNMP Contract are interrupted or curtailed due to the loss or deration of the Eddy County Tie, and any energy that is procured by PNM Marketing, through December 31, 2002, on behalf of TNMP to replace energy lost when energy deliveries under the EPE/TNMP Contract are interrupted or curtailed.

2.36 RTO - Regional Transmission Organization.

2.37 SPS - Southwestern Public Service Company.

2.38 SPS/TNMP Contract - The Interconnection Agreement between TNMP and SPS, dated December 8, 1981, and all service schedules thereto. A copy of the SPS/TNMP Contract is attached hereto as Exhibit 6.

2.39 2.39 TNMP - Texas-New Mexico Power Company.

2.40 TNMP Incremental Native Load Requirements - For the period July 1, 2001 through December 31, 2002, all Capacity and Energy required by TNMP to serve TNMP Native Load, excluding the amount of Capacity and Energy procured by TNMP on its own behalf pursuant to the EPE/TNMP Contract and the SPS/TNMP Contract.


2.41 TNMP Native Load - The Capacity and Energy sold by TNMP to its retail electric customers in New Mexico measured at the Points of Delivery, excluding the Phelps Dodge Load.


2.42 TNMP Native Load Requirements - All Capacity and Energy required by TNMP to serve the TNMP Native Load.

2.43 TNMP New Mexico Transmission System - The TNMP network of electrical substations and other electric facilities, equipment and systems used to serve TNMP Native Load and the Phelps Dodge Load.


12

2.44 TNMP Reliability - TNMP Transmission and Reliability Department. 2.45 TSGT - Tri-State Generation and Transmission Association, Inc. 2.46 WSCC - Western Systems Coordinating Council.


3. EFFECTIVE DATE AND TERM


3.1 The Effective Date of this Agreement shall be the date on which this Agreement has been executed by both Parties. Not later than seven (7) Business Days after the Effective Date, PNM shall file this Agreement with the FERC as a service agreement pursuant to its Market-Based Sales Tariff and the FPA and shall request a waiver of any applicable notice requirements to permit delivery of service hereunder by PNM to TNMP, beginning July 1, 2001. TNMP shall provide PNM with a certificate pursuant to 18 C.F.R. a7 35.1 (a) indicating TNMP' s concurrence in the Agreement and in all of the rates, terms and conditions thereof, to be included with the PNM filing. TNMP shall support the PNM filing by filing a timely motion at FERC to intervene in support of the PNM filing and by taking other action which TNMP deems appropriate in support of the PNM filing.

3.2 If the FERC does not accept this Agreement for filing without change or modification, or, if the FERC orders a change or modification to this Agreement, unless such change or modification is mutually agreeable to the Parties as evidenced by their written agreement subsequent to such FERC order, TNMP and PNM Marketing agree to work together in good faith to agree upon terms and conditions that are acceptable to them and to the FERC. If the Parties are unable to reach such agreement within fifteen (15) days (or such longer period as they may mutually agree upon) from the date of the FERC order declining to accept this Agreement for filing without change or modification or ordering a change or modification to this Agreement, this Agreement shall become null and void and all obligations shall terminate on the fifteenth day following the failure to reach such agreement within the period(s) provided for above, except for obligations to pay for services rendered and liabilities for acts committed prior to the date the Agreement becomes null and void.


13

3.3 The Date of Initial Service hereunder shall be July 1, 2001.

3.4 Unless terminated earlier in accordance with Sections 3.2 or 11, this Agreement shall remain in effect through December 31, 2006.


4. SERVICES TO BE PROVIDED


4.1 Commencing on the Date of Initial Service, and continuing through December 31, 2002, PNM Marketing shall sell and deliver to TNMP and TNMP shall purchase and receive from PNM Marketing, Capacity and Energy in the amount of the TNMP Incremental Native Load Requirements, in accordance with the terms, covenants and conditions of this Agreement.


4.1.1 It is understood and agreed by the Parties that sales to TNMP under this Agreement shall take place only after all energy available to TNMP pursuant to the EPE/TNMP Contract and the SPS/TNMP Contract has been utilized to serve TNMP Native Load.


4.1.2 To the extent that all of the energy available to TNMP pursuant to the EPE/TNMP Contract and the SPS/TNMP Contract is not required to serve TNMP Native Load, PNM Marketing may purchase such energy from TNMP at the cost of such energy to TNMP, as specified in the applicable contract, and such energy may be resold by PNM Marketing to third parties. PNM Marketing will reimburse TNMP for the cost of this energy through a credit netted against invoiced amounts due to PNM Marketing from TNMP pursuant to this Agreement.


4.1.3 PNM Marketing shall provide Replacement Energy in accordance with Operating Procedure #1, attached hereto, on behalf of TNMP, to replace energy lost when energy deliveries under the SPS/TNMP Contract are interrupted or curtailed due to the loss or deration of the Eddy County Tie, and to energy lost when energy deliveries under the EPE/TNMP Contract are interrupted or curtailed.


14

4.2 Commencing on January 1, 2003, and continuing through December 31, 2006, PNM Marketing shall sell and deliver to TNMP and TNMP shall purchase and receive from PNM Marketing, Capacity and Energy in the amount of the TNMP Native Load Requirements, in accordance with the terms, covenants and conditions of this Agreement.

4.3 Commencing on the Date of Initial Service, and continuing through December 31, 2006, PNM Marketing shall act as TNMP' s Agent for scheduling energy from the SPS/TNMP Contract and the EPE/TNMP Contract, for scheduling deliveries of Energy to serve the TNMP Native Load Requirements, and for scheduling deliveries of Economy Energy and Phelps Dodge Block Energy Purchases to TNMP in order for TNMP to serve the Phelps Dodge Load, including scheduling of transmission services and associated ancillary services necessary for such deliveries.

4.3.1 To the extent available, PNM Marketing shall purchase Economy Energy for sale to TNMP for service to the Phelps Dodge Load, pursuant to Operating Procedure #2, and shall provide such energy to TNMP at a delivered price to be agreed upon at the time of a proposed Economy Energy transaction.


4.4 Commencing on the Date of Initial Service, and continuing through December 31, 2006, PNM Marketing shall procure or self-supply Incremental Ancillary Services for TNMP in order for TNMP to serve the TNMP Native Load, as delineated below:


4.4.1 PNM Marketing shall reimburse TNMP for costs incurred under the Control Area Services Agreement for Regulation and Frequency Response Service and Energy Imbalance Service associated with scheduling and dispatch of energy to TNMP in order for TNMP to serve TNMP Native Load. Alternatively, the Parties may arrange for self-provision by PNM Marketing of Regulation and Frequency Response Service and Energy Imbalance Service associated with scheduling and dispatch of energy to serve TNMP Native Load.


15

4.4.2 PNM Marketing shall procure or self-provide Operating Reserve (Spinning Reserve and Supplemental Reserve) to TNMP associated with TNMP Native Load in accordance with WSCC requirements.

4.4.2.1 Until modified by WSCC, the amount of Spinning Reserve to be procured or self-provided to TNMP by PNM Marketing hereunder shall be equal to three and one-half percent (3.5%) of the hourly metered TNMP Native Load less energy available from the SPS/TNMP Contract and the EPE/TNMP Contract.


4.4.2.2 Until modified by WSCC, the amount of Supplemental Reserve to be procured or self-provided to TNMP by PNM Marketing hereunder shall be equal to three and one-half percent (3.5%) of the hourly metered TNMP Native Load less energy available from the SPS/TNMP Contract and the EPE/TNMP Contract. PNM Marketing shall continue TNMP' s existing practice of using TNMP' s right to interrupt or curtail service pursuant to the Phelps Dodge/TNMP MOU as a source of Supplemental Reserve for TNMP Native Load, provided that the Dodge/TNMP MOU or its replacement remains in effect and to the extent that the Phelps Dodge Load is available for interruption or curtailment. Accordingly, to activate Supplemental Reserve hereunder the Phelps Dodge Load shall be interrupted or curtailed immediately upon notice, pursuant to Operating Procedure # 2.

4.4.3 Ancillary Services which are bundled together with the purchase of Incremental Transmission Service shall be procured as part of Incremental Transmission Service and addressed in accordance with Section 6.

4.4.4 PNM Marketing shall have no obligation to provide Ancillary Services related to the Phelps Dodge Load hereunder, beyond those already provided by PNM Reliability to TNMP on behalf of Phelps Dodge through the Control Area Services Agreement.


16

4.5 Commencing on the Date of Initial Service, and continuing through December 31, 2006, PNM Marketing shall procure or self-provide Incremental Transmission Service and losses not otherwise provided by TNMP.

4.6 It is understood and agreed by the Parties that there may be increases or decreases to TNMP Native Load, during the term of this Agreement. Attached hereto as Exhibit 1 is a schedule of Contract Requirements for the TNMP Incremental Native Load Requirements and the TNMP Native Load Requirements for the term of this Agreement, which include expected growth in the TNMP Native Load. It is understood and agreed by the Parties that PNM Marketing currently has, or will obtain, the resources necessary to serve the Contract Requirements under the provisions of this Agreement. To the extent TNMP expects the TNMP Incremental Native Load Requirements or the TNMP Native Load Requirements to exceed the Contract Requirements specified in Exhibit 1, TNMP shall promptly notify PNM Marketing in writing. PNM Marketing shall be obligated to serve TNMP with respect to loads in excess of the Contract Requirements resulting from normal load growth. PNM Marketing shall not be obligated to serve TNMP with respect to loads in excess of the Contract Requirements resulting from other than normal load growth, including a change in the character of service of the Phelps Dodge Load. In the event of an increase in load for reasons other than normal load growth, including a change in the character of service of the Phelps Dodge Load, TNMP shall be free to seek alternate suppliers for such incremental needs.


4.6.1 In the event that metered TNMP Native Load demand for any calendar year, measured according to Section 10, falls below 85% of Contract Requirements for the applicable year of this Agreement, the Parties shall project the

17

amount and hourly profile of the energy that TNMP will not use in subsequent years in conjunction with the lost load, using the historical load factors associated with the lost load. If TNMP determines that it will not need such energy (Displaced Energy) TNMP shall release the Displaced Energy to PNM for a period of one calendar year. For any such Displaced Energy that PNM sells in the market, PNM shall pay TNMP an amount equal to 95% of the Market Price (adjusted for the cost to deliver the energy to Four Corners), minus the applicable energy costs for the period as set forth in Section 7.2.

5. APPOINTMENT OF PNM MARKETING AS AGENT

5.1 Effective upon the Date of Initial Service, TNMP hereby appoints PNM Marketing to act as its Agent as defined herein.


6. TRANSMISSION


6.1 In accordance with the services provided under Section 4.5, PNM Marketing will utilize best efforts to economically utilize TNMP' s existing transmission rights (as described in Exhibit 2) and Incremental Transmission Service to serve TNMP with respect to the TNMP Native Load Requirements and the Phelps Dodge Load. The Parties recognize that the economic balance between power supply and transmission utilization can be difficult to achieve to the satisfaction of both Parties; therefo ...