APS 2011 Annual Report Download - page 37

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(a) Subject to approval by the United States Department of Defense.
(b) Under the AZ Sun Program, 117 MW remains to be contracted.
(c) Represents contracted capacity.
(d) Details of these agreements have not yet been publicly announced.
(e) Distributed generation is produced in DC and is converted to AC for reporting
purposes.
(f) Reflects Community Power Project.
(g) Achieved through incentive-based programs. Includes resources with production-based
incentives that have terms of 10-20 years.
(h) Agreement ramps up to 40 MW over three years.
Demand Side Management
In recent years, Arizona regulators have placed an increased focus on energy efficiency and
other demand side management programs to encourage customers to conserve energy, while
incentivizing utilities to aid in these efforts that ultimately reduce the demand for energy. In December
2009, the ACC initiated its Energy Efficiency rulemaking, with a proposed Energy Efficiency Standard
of 22% cumulative annual energy savings by 2020. This standard was adopted and became effective
on January 1, 2011. This ambitious standard will likely impact Arizona's future energy resource needs.
(See Note 3 for energy efficiency and other demand side management obligations resulting from the
settlement agreement related to APS’s 2008 retail rate case.)
Economic Stimulus Projects
Through the American Recovery and Reinvestment Act of 2009 (“ARRA”), the Federal
government made a number of programs available for utilities to develop renewable resources,
improve reliability and create jobs by using economic stimulus funding. Certain programs are also
available through the State of Arizona.
APS has two active awards with the DOE. The first is a $3 million high penetration
photovoltaic generation study related to the Community Power Project in Flagstaff, Arizona. Second,
APS is a sub-recipient under an approximately $4 million ARRA award received through the State of
Arizona for the implementation of various distributed energy and energy efficiency programs in
Arizona. DOE funding for these awards will continue to be contingent upon APS meeting certain
project milestones, including DOE-established budget parameters.
Competitive Environment and Regulatory Oversight
Retail
The ACC regulates APS’s retail electric rates and its issuance of securities. The ACC must
also approve any significant transfer or encumbrance of APS’s property used to provide retail electric
service and approve or receive prior notification of certain transactions between Pinnacle West, APS
and their respective affiliates.
APS is subject to varying degrees of competition from other investor-owned electric and gas
utilities in Arizona (such as Southwest Gas Corporation), as well as cooperatives, municipalities,
electrical districts and similar types of governmental or non-profit organizations. In addition, some