APS 2012 Annual Report Download - page 121

PINNACLE WEST CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
96
On July 1, 2011, APS filed its annual RES implementation plan, covering the 2012-2016
timeframe and requested 2012 RES funding of $129 million to $152 million. On December 14, 2011,
the ACC voted to approve APS’s 2012 RES Plan and authorized a total 2012 RES budget of $110
million. Within that budget, the ACC authorized APS to, among other items, own up to an additional
100 MW under its AZ Sun Program, for a total potential program amount of up to 200 MW. The AZ
Sun program, originally approved by the ACC in March 2010, contemplates the development of
photovoltaic solar plants which APS will own. Under this program to date, APS has executed contracts
for the development of 118 MW of new solar generation, representing an investment commitment of
approximately $502 million.
On June 29, 2012, APS filed its annual RES implementation plan, covering the 2013-2017
timeframe and requested 2013 RES funding of $97 million to $107 million. In a final order dated
January 31, 2013, the ACC approved a budget of $103 million for APS’s 2013 RES plan. That budget
includes $4 million for residential distributed energy incentives and $0.1 million for commercial
distributed energy up-front incentives, but did not include any funds for commercial distributed energy
production-based incentives. The ACC further ordered that a hearing take place to consider: (i) APS’s
proposal to establish compliance with distributed energy requirements by tracking and recording
distributed energy, rather than acquiring and retiring renewable energy credits; and (ii) removing retail
sales to APS’s largest industrial customers when calculating APS’s compliance with the annual RES
requirements.
Demand Side Management Adjustor Charge. The ACC Electric Energy Efficiency Standards
require APS to submit a Demand Side Management Implementation Plan for review by and approval of
the ACC. In 2010, the DSMAC was modified to recover estimated amounts for use on certain demand
side management programs over the current year. Previously, the DSMAC allowed for such recovery
only on a historical or after-the-fact basis. The surcharge allows for the recovery of energy efficiency
program expenses and any earned incentives.
The ACC previously approved recovery of all 2009 program costs plus incentives. The change
from program cost recovery on a historical basis to recovery on a concurrent basis, as authorized in the
2008 retail rate case settlement agreement, resulted in this one-time need to address two years (2009 and
2010) of cost recovery. As requested by APS, 2009 program cost recovery was amortized over a three-
year period, which ended in 2012.
On June 1, 2011, APS filed its 2012 Demand Side Management Implementation Plan consistent
with the ACC’s Electric Energy Efficiency Standards, which became effective January 1, 2011. The
2012 requirement under such standards is for cumulative energy efficiency savings of 3% of APS retail
sales for the prior year. This energy savings requirement is slightly higher than the goal established by
the 2008 retail rate case settlement agreement (2.75% of total energy resources for the same two-year
period). The ACC issued an order on April 4, 2012 approving recovery of approximately $72 million of
APS’s energy efficiency and demand side management program costs over a twelve-month period
beginning March 1, 2012. This amount does not include $10 million already being recovered in general
retail base rates.
On June 1, 2012, APS filed its 2013 Demand Side Management Implementation Plan. In 2013,
the standards will require APS to achieve cumulative energy savings equal to 5% of its 2012 retail
energy sales. Later in 2012, APS filed a supplement to its plan that included a proposed budget for