News Release

April 19, 2004

Four Corners Water Users Negotiate Shortage-Sharing Deal for 2004

PNM NEWS News releases Financial news Contact PNM

NEWS MEDIA CONTACT Susan Sponar Telephone: (505) 241-2768

Waterflow, N.M.: For the second consecutive year, major water users in the Four Corners region have signed a shortage-sharing agreement to be implemented this summer.

By signing the agreement, the 10 participating entities have taken a proactive, voluntary step to deal with potential water shortages. The New Mexico Interstate Stream Commission has described the 2003 and 2004 agreements as an unprecedented example of tribal, governmental, agricultural and industrial water users working together to establish water priorities and address shortage issues without litigation.

As part of the agreement's principles, the entities have agreed to reduce water consumption to protect the critical level at Navajo Reservoir, which has been drawn down as a result of the ongoing severe drought. The Bureau of Reclamation will monitor water levels at the reservoir and determine whether drought conditions dictate a shortage.

The parties to the shortage sharing agreement are the Navajo Nation; the Jicarilla Apache Nation; PNM (operator of the San Juan Generating Station); Arizona Public Service (operator of the Four Corners Power Plant); BHP Billiton; the Hammond Irrigation Project; the City of Farmington; the Jewett Valley Ditch; the Farmers Mutual Ditch; and the Bloomfield Irrigation District.

In connection with the shortage sharing agreement, the San Juan Generating Station (SJGS), the Four Corners Power Plant and BHP Billiton will contract to lease an additional 16,000 acre-feet of water from the Jicarilla Apache Nation during 2004 for use at the power plants and coal mines, to be used only as a contingency supply should a serious drought occur. As part of the shortage sharing-agreement PNM, APS and BHP will pay into a fund that could total as much as $1.2 million to financially compensate irrigators for voluntarily taking water shortages should a serious drought occur this summer.

"PNM is proud to be a part of this effort, which is a model of cooperation for other regions in the West to follow as they seek to cope with the potential of a serious drought," said John Myers, vice president of power production at PNM. "The spirit of cooperation and fairness that this agreement embodies reflects the spirit of the Four Corners community."

"The possibility of priority administration on the San Juan River was averted during 2004 because major water users on the river in New Mexico developed recommendations for sharing shortages," said State Engineer John D'Antonio. "I support the efforts of water users to work toward cooperative solutions. These solutions are preferable to state- or court-imposed actions."

In last year's shortage-sharing agreement, the Navajo Agricultural Products Industries (NAPI) led regional conservation efforts by saving an estimated 25,000 acre-feet. SJGS and Four Corners Power Plant reduced their total usage by 5 percent, representing approximately 3,700 acre-feet. Irrigators also saved water by shortening their irrigation seasons and voluntarily limiting their diversion rates.