APS 2013 Annual Report Download - page 99

Table of Contents
PINNACLE WEST CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
· A procedure to allow APS to request rate adjustments prior to its next general rate case related to APS’s acquisition of additional interests in
Units 4 and 5 and the related closure of Units 1-3 of Four Corners (APS made its filing under this provision on December 30, 2013, which
would result in an average bill impact to residential customers of approximately 2% if approved as requested);
· Implementation of a “Lost Fixed Cost Recovery” rate mechanism to support energy efficiency and distributed renewable generation;
· Modifications to the Environmental Improvement Surcharge to allow for the recovery of carrying costs for capital expenditures associated
with government-mandated environmental controls, subject to an existing cents per kWh cap on cost recovery that could produce up to
approximately $5 million in revenues annually;
· Modifications to the PSA, including the elimination of the 90/10 sharing provision;
· A limitation on the use of the RES surcharge and the DSMAC to recoup capital expenditures not required under the terms of the 2009
Settlement Agreement discussed below;
· Allowing a negative credit that existed in the PSA rate to continue until February 2013, rather than being reset on the anticipated July 1,
2012 rate effective date;
· Modification of the TCA to streamline the process for future transmission-related rate changes; and
· Implementation of various changes to rate schedules, including the adoption of an experimental “buy-through” rate that could allow certain
large commercial and industrial customers to select alternative sources of generation to be supplied by APS.
The 2012 Settlement Agreement was approved by the ACC on May 15, 2012, with new rates effective on July 1, 2012. This accomplished a goal
set by the parties to the 2009 Settlement Agreement to process subsequent rate cases within twelve months of sufficiency findings from the ACC staff, which
generally occurs within 30 days after the filing of a rate case.
2008 General Retail Rate Case On-Going Impacts
On December 30, 2009, the ACC issued an order approving the 2009 Settlement Agreement entered into by APS and twenty-one other parties. The
2009 Settlement Agreement contains certain on-going requirements, commitments and authorizations that will survive the 2012 Settlement Agreement,
including the following:
· A commitment from APS to reduce average annual operational expenses by at least $30 million from 2010 through 2014;
· Authorization and requirements of equity infusions into APS of $700 million during the period beginning June 1, 2009 through
December 31, 2014 and compliance with various
95