APS 2013 Annual Report Download - page 131

Table of Contents
PINNACLE WEST CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
alleges that each of the named entities violated varying numbers of NERC Reliability Standards. APS is alleged to have violated seven Reliability Standard
Requirements. The allegations of violations are preliminary determinations by FERC Staff and do not constitute findings by FERC itself that any violations
have occurred.
APS intends to work with FERC Staff to resolve the matter. If violations of the Reliability Standards are ultimately determined to have occurred,
FERC has the legal authority to assert a possible fine of up to $1 million per violation per day that a violation is found to have been in existence. APS cannot
predict the timing or financial or operational impacts that may result from the Staff’s Notice of Alleged Violations, including any payments that may result
from a settlement if one is reached, or any claims that may be made as a result of the outages.
Litigation. On September 6, 2013, a purported consumer class action complaint was filed in Federal District Court in San Diego, California,
naming APS and Pinnacle West as defendants and seeking damages for loss of perishable inventory and sales as a result of interruption of electrical service.
APS and Pinnacle West filed a motion to dismiss, which the court granted on December 9, 2013. On January 13, 2014, the plaintiffs appealed the lower
court’s decision.
Clean Air Act Citizen Lawsuit
On October 4, 2011, Earthjustice, on behalf of several environmental organizations, filed a lawsuit in the United States District Court for the District
of New Mexico against APS and the other Four Corners participants alleging violations of the NSR provisions of the Clean Air Act. Subsequent to filing its
original Complaint, on January 6, 2012, Earthjustice filed a First Amended Complaint adding claims for violations of the Clean Air Act’s NSPS program.
Among other things, the environmental plaintiffs seek to have the court enjoin operations at Four Corners until APS applies for and obtains any required NSR
permits and complies with the NSPS. The plaintiffs further request the court to order the payment of civil penalties, including a beneficial mitigation project.
On April 2, 2012, APS and the other Four Corners participants filed motions to dismiss. The case is being held in abeyance while the parties seek to negotiate
a settlement. On March 30, 2013, upon joint motion of the parties, the court issued an order deeming the motions to dismiss withdrawn without prejudice
during pendency of the stay. At such time as the stay is lifted, APS and the other Four Corners participants may reinstate their motions to dismiss without
risk of default. We are unable to determine a range of potential losses that are reasonably possible of occurring.
Environmental Matters
APS is subject to numerous environmental laws and regulations affecting many aspects of its present and future operations, including air emissions,
water quality, wastewater discharges, solid waste, hazardous waste, and CCRs. These laws and regulations can change from time to time, imposing new
obligations on APS resulting in increased capital, operating, and other costs. Associated capital expenditures or operating costs could be material. APS intends
to seek recovery of any such environmental compliance costs through our rates, but cannot predict whether it will obtain such recovery. The following
proposed and final rules involve material compliance costs to APS.
Regional Haze Rules. APS has received the final rulemaking imposing new requirements on Four Corners and Cholla and is currently awaiting a
final rulemaking from EPA that could impose new requirements on the Navajo Plant. EPA and ADEQ will require these plants to install pollution control
equipment that constitutes the BART to lessen the impacts of emissions on visibility surrounding the
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