APS 2013 Annual Report Download - page 13

Table of Contents
Following the earthquake and tsunamis, the NRC established a task force to conduct a systematic and methodical review of NRC processes and
regulations to determine whether the agency should make additional improvements to its regulatory system. On March 12, 2012, the NRC issued the first
regulatory requirements based on the recommendations of the Near Term Task Force. With respect to Palo Verde, the NRC issued two orders requiring safety
enhancements regarding: (1) mitigation strategies to respond to extreme natural events resulting in the loss of power at plants; and (2) enhancement of spent
fuel pool instrumentation.
The NRC has issued a series of interim staff guidance documents regarding implementation of these requirements. Due to the developing nature of
these requirements, we cannot predict the ultimate financial or operational impacts on Palo Verde or APS; however, the NRC has directed nuclear power plants
to implement the first tier recommendations of the NRC’s Near Term Task Force. In response to these recommendations, Palo Verde expects to spend
approximately $100 million for capital enhancements to the plant over the next several years (APS’s share is 29.1%).
Natural Gas and Oil Fueled Generating Facilities
APS has six natural gas power plants located throughout Arizona, consisting of Redhawk, located near Palo Verde; Ocotillo, located in Tempe
(discussed below); Sundance, located in Coolidge; West Phoenix, located in southwest Phoenix; Saguaro, located north of Tucson; and Yucca, located near
Yuma. Several of the units at Yucca run on either gas or oil. APS has one oil-only power plant, Douglas, located in the town of Douglas, Arizona. APS owns
and operates each of these plants with the exception of one oil-only combustion turbine unit and one oil and gas steam unit at Yucca that are operated by APS
and owned by the Imperial Irrigation District. APS has a total entitlement from these plants of 3,179 MW. Gas for these plants is financially hedged up to
three years in advance of purchasing and the gas is generally purchased one month prior to delivery. APS has long-term gas transportation agreements with
three different companies, some of which are effective through 2024. Fuel oil is acquired under short-term purchases delivered primarily to West Phoenix,
where it is distributed to APS’s other oil power plants by truck.
Ocotillo is a 330 MW 4-unit gas plant. In early 2014, APS announced a roughly $600-$700 million project to modernize the plant, which will
involve retiring two older 110 MW steam units, adding five 102 MW combustion turbines and maintaining two existing 55 MW combustion turbines. In
total, this will increase the capacity of the site by 290 MW, to 620 MW, with completion targeted for summer 2018.
Solar Facilities
To date, APS has begun operation of 118 MW of utility scale solar through its AZ Sun Program, discussed below. These facilities are owned by
APS and are located in multiple locations throughout Arizona.
Additionally, APS owns and operates more than forty small solar systems around the state. Together they have the capacity to produce
approximately 4 MW of renewable energy. This fleet of solar systems includes a 3 MW facility located at the Prescott Airport and 1 MW of small solar in
various locations across Arizona. APS has also developed solar photovoltaic distributed energy systems installed as part of the Community Power Project in
Flagstaff, Arizona. The Community Power Project, approved by the ACC on April 1, 2010, is a pilot program through which APS owns, operates and
receives energy from approximately 1 MW of solar photovoltaic distributed energy systems located within a certain test area in Flagstaff, Arizona.
Additionally, APS owns 14 MW of
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