APS 2015 Annual Report Download - page 134

Table of Contents
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
these funds will be held in an escrow account and distributed to certain coal providers under the terms of the applicable coal supply
agreements.
Superfund-Related Matters
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 Motorola 52nd Street Superfund Site, 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. As part of a state governmental investigation into
groundwater contamination in this area, on January 25, 2015, ADEQ sent a letter to APS seeking information concerning the degree to
which, if any, APS’s current and former ownership of these facilities may have contributed to groundwater contamination in this area.
We are unable to predict the outcome of these matters; however, we do not expect the outcome to have a material impact on our
financial position, results of operations or cash flows.
Southwest Power Outage
On September 8, 2011 at approximately 3:30 PM, a 500 kV 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.
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. The appeal is now fully briefed and pending before the United States Court of
Appeals for the Ninth Circuit, which heard oral argument on February 9, 2016. A written decision on the case is expected 30-60 days
after oral argument. We believe the District Court's decision will be upheld on appeal, but cannot predict the outcome at the appellate
court. If the District Court's decision is reversed, the case would be remanded for discovery and trial, and there is insufficient
information at this time to reasonably estimate any possible loss or range of loss to APS and Pinnacle West.
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