APS 2013 Annual Report Download - page 130

Table of Contents
PINNACLE WEST CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Superfund
Superfund establishes liability for the cleanup of hazardous substances found contaminating the soil, water or air. Those who generated, transported
or disposed of hazardous substances at a contaminated site are among those who are PRPs. PRPs may be strictly, and often are jointly and severally, liable for
clean-up. On September 3, 2003, EPA advised APS that EPA considers APS to be a PRP in the OU3 in Phoenix, Arizona. APS has facilities that are within
this Superfund site. APS and Pinnacle West have agreed with EPA to perform certain investigative activities of the APS facilities within OU3. In addition, on
September 23, 2009, APS agreed with EPA and one other PRP to voluntarily assist with the funding and management of the site-wide groundwater remedial
investigation and feasibility study work plan. We estimate that our costs related to this investigation and study will be approximately $2 million. We
anticipate incurring additional expenditures in the future, but because the overall investigation is not complete and ultimate remediation requirements are not yet
finalized, at the present time expenditures related to this matter cannot be reasonably estimated.
On August 6, 2013, RID filed a lawsuit in Arizona District Court against APS and 24 other defendants, alleging that RID’s groundwater wells were
contaminated by the release of hazardous substances from facilities owned or operated by the defendants. The lawsuit also alleges that, under Superfund
laws, the defendants are jointly and severally liable to RID. The allegations against APS arise out of APS’s current and former ownership of facilities in and
around OU3. We are unable to determine a range of potential losses that are reasonably possible of occurring.
Southwest Power Outage
Regulatory. On September 8, 2011 at approximately 3:30 PM, a 500kV transmission line running between the Hassayampa and North Gila
substations in southwestern Arizona tripped out of service due to a fault that occurred at a switchyard operated by APS. Approximately ten minutes after the
transmission line went off-line, generation and transmission resources for the Yuma area were lost, resulting in approximately 69,700 APS customers losing
service.
Within the same time period that APS’s Yuma customers lost service, a series of transmission and generation disruptions occurred across the
systems of several utilities that resulted in outages affecting portions of southern Arizona, southern California and northern Mexico. A total of approximately
7,900 MW of firm load and 2.7 million customers were reported to have been affected. Service to all affected APS customers was restored by 9:15 PM on
September 8. Service to customers affected by the wider regional outages was restored by approximately 3:25 AM on September 9.
FERC and the North American Electric Reliability Corporation (“NERC”) conducted a joint inquiry into the outages and, on May 1, 2012, they
issued a report (the “Joint Report”) with their analysis and conclusions as to the causes of the events. The report includes recommendations to help industry
operators prevent similar outages in the future, including increased data sharing and coordination among the western utilities and entities responsible for bulk
electric system reliability coordination. The Joint Report does not address potential reliability violations or an assessment of responsibility of the parties
involved. APS continues to analyze business practices and procedures related to the September 8 events.
On January 22, 2014, following non-public preliminary investigations, FERC Staff issued a Notice of Alleged Violations naming six entities
involved in the event, including APS. FERC Staff
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