APS 2011 Annual Report Download - page 150

PINNACLE WEST CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
125
Superfund
Superfund establishes liability for the cleanup of hazardous substances found contaminating the
soil, water or air. Those who generated, transported or disposed of hazardous substances at a
contaminated site are among those who are PRPs. PRPs may be strictly, and often are jointly and
severally, liable for clean-up. On September 3, 2003, the EPA advised APS that the EPA considers
APS to be a PRP in the Motorola 52nd Street Superfund Site, OU3 in Phoenix, Arizona. APS has
facilities that are within this Superfund site. APS and Pinnacle West have agreed with the EPA to
perform certain investigative activities of the APS facilities within OU3. In addition, on September 23,
2009, APS agreed with the EPA and one other PRP to voluntarily assist with the funding and
management of the site-wide groundwater remedial investigation and feasibility study work plan. We
estimate that our costs related to this investigation and study will be approximately $1 million. We
anticipate incurring additional expenditures in the future, but because the overall investigation is not
complete and ultimate remediation requirements are not yet finalized, at the present time we cannot
accurately estimate our total expenditures.
Climate Change Lawsuit
In February 2008, the Native Village of Kivalina and the City of Kivalina, Alaska filed a
lawsuit in federal court in the Northern District of California against nine oil companies, fourteen
power companies (including Pinnacle West), and a coal company, alleging that the defendants’
emissions of carbon dioxide contribute to global warming and constitute a public and private nuisance
under both federal and state law. The plaintiffs also allege that the effects of global warming will
require the relocation of the village, and they are seeking an unspecified amount of monetary
damages. In June 2008, the defendants filed motions to dismiss the action, which were granted. The
plaintiffs filed an appeal with the Ninth Circuit Court of Appeals in November 2009, and Pinnacle
West filed its reply on June 30, 2010. On January 24, 2011, the defendants filed a motion, which was
later granted, to defer calendaring of oral argument until after the United States Supreme Court ruled in
a similar nuisance lawsuit, American Electric Power Co., Inc. v. Connecticut.
On June 20, 2011, the Supreme Court issued its opinion in Connecticut holding, among other
things, that the Clean Air Act and the EPA actions authorized by the act, which are aimed at
controlling greenhouse gas emissions, displace any federal common law right to seek abatement of
greenhouse gas emissions from fossil fuel-fired power plants. However, the Court left open the issue
of whether such claims may be available under state law. Oral argument in the Kivalina case was
heard on November 28, 2011; the parties await the court’s decision. We believe the action in Kivalina
is without merit and will continue to defend against both the federal and state claims.
Southwest Power Outage
Regulatory Inquiry. On September 8, 2011 at approximately 3:30PM, a 500 kV transmission
line running between the Hassayampa and North Gila substations in southwestern Arizona tripped out
of service due to a fault that occurred at a switchyard operated by APS. At the time, an APS employee
at the North Gila substation was performing a procedure to remove from service a capacitor bank that
was believed not to be operating properly. Approximately ten minutes after the transmission line went
off-line, generation and transmission resources for the Yuma area were lost, resulting in approximately
69,700 APS customers losing service.