APS 2012 Annual Report Download - page 52

28
the impact on our business and operating results from pending or future regulatory activities of any of
these agencies.
The operation of APS’s nuclear power plant exposes it to substantial regulatory oversight and
potentially significant liabilities and capital expenditures.
The NRC has broad authority under federal law to impose licensing and safety-related
requirements for the operation of nuclear generation facilities. Events at nuclear facilities of other
operators or impacting the industry generally may lead the NRC to impose additional requirements and
regulations on all nuclear generation facilities, including Palo Verde. As a result of the March 2011
earthquake and tsunami that caused significant damage to the Fukushima Daiichi Nuclear Power Plant
in Japan, various industry organizations are working to analyze information from the Japan incident
and develop action plans for U.S. nuclear power plants. Additionally, the NRC is performing its own
independent review of the events at Fukushima Daiichi, including a review of the agency’s processes
and regulations in order to determine whether the agency should promulgate additional regulations and
possibly make more fundamental changes to the NRC’s system of regulation. We cannot predict when
or if the NRC will take formal action as a result of its review. The financial and/or operational impacts
on Palo Verde and APS may be significant.
In the event of noncompliance with its requirements, the NRC has the authority to impose
monetary civil penalties or a progressively increased inspection regime that could ultimately result in
the shut-down of a unit, or both, depending upon the NRC’s assessment of the severity of the situation,
until compliance is achieved. The increased costs resulting from penalties, a heightened level of
scrutiny and implementation of plans to achieve compliance with NRC requirements may adversely
affect APS’s financial condition, results of operations and cash flows.
APS is subject to numerous environmental laws and regulations, and changes in, or liabilities
under, existing or new laws or regulations may increase APS’s cost of operations or impact its
business plans.
APS is, or may become, subject to numerous environmental laws and regulations affecting
many aspects of its present and future operations, including air emissions, water quality, discharges of
wastewater and streams originating from fly ash and bottom ash handling facilities, solid waste,
hazardous waste, and coal combustion products, which consist of bottom ash, fly ash, and air pollution
control wastes. These laws and regulations can result in increased capital, operating, and other costs,
particularly with regard to enforcement efforts focused on power plant emissions obligations. These
laws and regulations generally require APS to obtain and comply with a wide variety of environmental
licenses, permits, and other approvals. If there is a delay or failure to obtain any required
environmental regulatory approval, or if APS fails to obtain, maintain, or comply with any such
approval, operations at affected facilities could be suspended or subject to additional expenses. In
addition, failure to comply with applicable environmental laws and regulations could result in civil
liability as a result of government enforcement actions or private claims or criminal penalties. Both
public officials and private individuals may seek to enforce applicable environmental laws and
regulations. APS cannot predict the outcome (financial or operational) of any related litigation that
may arise.
Environmental Clean Up. APS has been named as a PRP for a Superfund site in Phoenix,
Arizona and it could be named a PRP in the future for other environmental clean up at sites identified
by a regulatory body. APS cannot predict with certainty the amount and timing of all future