APS 2012 Annual Report Download - page 29

5
Energy Sources and Resource Planning
To serve its customers, APS obtains power through its various generation stations and through
purchased power agreements. Resource planning is an important function necessary to meet Arizona’s
future energy needs. APS’s sources of energy by type during 2012 were as follows:
Generation Facilities
APS has ownership interests in or leases the coal, nuclear, gas, oil and solar generating
facilities described below. For additional information regarding these facilities, see Item 2.
Coal-Fueled Generating Facilities
Four Corners – Four Corners is a 5-unit coal-fired power plant located in the northwestern
corner of New Mexico. APS operates the plant and owns 100% of Four Corners Units 1, 2 and 3 and
15% of Units 4 and 5. APS has a total entitlement from Four Corners of 791 MW.
On November 8, 2010, APS and SCE entered into an asset purchase agreement (the “Asset
Purchase Agreement”) providing for the purchase by APS of SCE’s 48% interest in each of Units 4
and 5 of Four Corners. If consummated, APS would acquire 739 MW from SCE. The purchase price
is $294 million, subject to certain adjustments. Completion of the purchase by APS is subject to the
receipt of approvals by the ACC, the CPUC and the FERC. On March 29, 2012, the CPUC issued an
order approving the sale. On April 18, 2012, the ACC voted to allow APS to move forward with the
purchase. The Asset Purchase Agreement provides that the purchase price will be reduced by $7.5
million for each month between October 1, 2012 and the closing date. The ACC reserved the right to
review the prudence of the transaction for cost recovery purposes in a future proceeding if the purchase
closes. The ACC also authorized an accounting deferral of certain costs associated with the purchase
until any such cost recovery proceeding concludes. The FERC application seeking authorization for
the transaction was approved on November 27, 2012. The principal remaining condition to closing is
the negotiation and execution of a new coal supply contract for Four Corners on terms reasonably
acceptable to APS.
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