The particulars of the transaction:

We are obligated to deliver 25 MW of power to WALC at Pinnacle Peak through 12/31/04.

The company receives $45 for each MW delivered to WALC.

Pinnacle Peak is not a liquid trading hub.  There are only two utilities with facilities at Pinnacle Peak, WALC and APS.  

We are currently utilizing APS transmission to deliver energy to WALC during off peak hours. 

The cost of the APS transmission is $1.95.

The energy to satisfy this obligation is available at Four Corners under contract from El Paso Electric.  The energy from El Paso is contracted to be purchased through the end of this year under a prepetition agreement at a fixed price of $22.25.

The Transmission Service Agreement will be terminated by APS for nonpayment of  a prepetition obligation of $43,708.60.

APS is the sole party able to provide transmission to Pinnacle Peak at this time.

Absent the ability to purchase transmission from APS, the company will be forced to settle the WALC obligation at above market prices due to the illiquidity at Pinnacle Peak.  These costs could run as high as $5.  

The inablity to purchase APS transmission for $1.95 will increase the company's costs by as much as $3 over the term of the WALC obligation.

There are approximately 95,000 MWh remaining to be delivered to WALC for the remainder of 2001 on light load hours.

The increased cost to deliver would result in an additional expense of $285,000 for the remaining deliveries this year.

The increased cost for the entire term of the WALC agreement could exceed $1,000,000.