APS 2013 Annual Report Download - page 8

Table of Contents
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 2013 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 63% of Four Corners Units 4 and 5 following the acquisition of SCE’s interest in Units 4 and 5 described
below. As of December 30, 2013, APS retired Units 1, 2 and 3. APS has a total entitlement from Four Corners of 970 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, allowing APS to acquire 739 MW from SCE. On December 30, 2013, APS and SCE closed
this transaction. The final purchase price for SCE’s interest was approximately $182 million, subject to certain minor post-closing adjustments.
In connection with APS’s most recent retail rate case with the ACC, the ACC reserved the right to review the prudence of the Four Corners transaction
for cost recovery purposes upon the closing of the transaction. On December 30, 2013, APS filed an application with the ACC to request rate adjustments
prior to its next general rate case related to APS’s acquisition of SCE’s interest in Four Corners. If approved, these would result in an average bill impact to
residential customers of approximately 2%. APS cannot predict the outcome of this request.
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