APS 2015 Annual Report Download - page 14

Table of Contents
life of the facility, we are on track to meet the current site specific decommissioning costs for Palo Verde at the time the units are
expected to be decommissioned. See Note 19 for additional information about APS’s nuclear decommissioning trusts.
Palo Verde Liability and Insurance Matters — See “Palo Verde Nuclear Generating Station — Nuclear Insurance” in Note 10
for a discussion of the insurance maintained by the Palo Verde participants, including APS, for Palo Verde.
Impact of Earthquake and Tsunami in Japan on Nuclear Energy Industry — On March 11, 2011, an earthquake measuring 9.0
on the Richter Scale occurred off the coast of Japan causing a series of seven tsunamis. As a result, the Fukushima Daiichi Nuclear
Power Station experienced severe damage.
Following the earthquake and tsunamis, the NRC established a task force to conduct a systematic and methodical review of
NRC processes and regulations to determine whether the agency should make additional improvements to its regulatory system. On
March 12, 2012, the NRC issued the first regulatory requirements based on the recommendations of the Near Term Task Force. With
respect to Palo Verde, the NRC issued two orders requiring safety enhancements regarding: (1) mitigation strategies to respond to
extreme natural events resulting in the loss of power at the plant; and (2) enhancement of spent fuel pool instrumentation.
The NRC has issued a number of guidance documents regarding implementation of these requirements. Palo Verde has met the
NRC’s imposed deadlines for installation of equipment to address these requirements, but has minor additional work to perform in
2016. Palo Verde has spent approximately $125 million on capital enhancements as of December 31, 2015 (APS’s share is 29.1%).
Natural Gas and Oil Fueled Generating Facilities
APS has six natural gas power plants located throughout Arizona, consisting of Redhawk, located near Palo Verde; Ocotillo,
located in Tempe (discussed below); Sundance, located in Coolidge; West Phoenix, located in southwest Phoenix; Saguaro, located
north of Tucson; and Yucca, located near Yuma. Several of the units at Yucca run on either gas or oil. APS has one oil-only power
plant, Douglas, located in the town of Douglas, Arizona. APS owns and operates each of these plants with the exception of one oil-
only combustion turbine unit and one oil and gas steam unit at Yucca that are operated by APS and owned by the Imperial Irrigation
District. APS has a total entitlement from these plants of 3,179 MW. Gas for these plants is financially hedged up to three years in
advance of purchasing and the gas is generally purchased one month prior to delivery. APS has long-term gas transportation
agreements with three different companies, some of which are effective through 2024. Fuel oil is acquired under short-term purchases
delivered primarily to West Phoenix, where it is distributed to APS’s other oil power plants by truck.
Ocotillo is a 330 MW 4-unit gas plant located in the metropolitan Phoenix area. In early 2014, APS announced a project to
modernize the plant, which involves retiring two older 110 MW steam units, adding five 102 MW combustion turbines and maintaining
two existing 55 MW combustion turbines. In total, this increases the capacity of the site by 290 MW, to 620 MW, with completion
targeted by summer 2019. APS completed a competitive solicitation process in which the Ocotillo project was evaluated against other
alternatives. Consistent with the independent monitor’s report, the Ocotillo project was selected as the best alternative. APS must
finalize the permitting process before construction begins.
Solar Facilities
To date, APS has begun operation of 170 MW of utility scale solar through its AZ Sun Program, discussed below. These
facilities are owned by APS and are located in multiple locations throughout Arizona.
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