Arizona Public Service Company

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Arizona Public Service Company (APS) is the largest electric utility in Arizona and the principal subsidiary of publicly-traded S&P 500 member Pinnacle West Capital Corporation (NYSE: PNW). In 1985 APS had reorganized into a holding company structure named AZP Group, renamed Pinnacle West Capital in 1987. APS, with 4,000 megawatts (MW) of generating capacity, serves more than one million customers in 11 counties throughout most of the state, but mainly concentrated in northern and central Arizona.

Ties to the American Legislative Exchange Council

Arizona Public Service Company has previously been a corporate funder of the American Legislative Exchange Council (ALEC). It announced it would end its ALEC membership April 12, 2012, then rejoined ALEC in November 2012, paying "$7,000 in membership fees and an additional $3,000 to have a seat on ALEC’s Energy, Environment and Agriculture Task Force," according to the Arizona Capitol Times. See Corporations Who Have Cut Ties to ALEC for more.

About ALEC

ALEC is a corporate bill mill. It is not just a lobby or a front group; it is much more powerful than that. Through ALEC, corporations hand state legislators their wishlists to benefit their bottom line. Corporations fund almost all of ALEC's operations. They pay for a seat on ALEC task forces where corporate lobbyists and special interest reps vote with elected officials to approve “model” bills. Learn more at the Center for Media and Democracy's ALECexposed.org, and check out breaking news on our PRWatch.org site.

Existing Coal Plants

Arizona Public Service owns or partly owns the following plants:

Plant Name	State	Year(s) Built	Capacity
Four Corners Steam Plant	NM	1963,1964,1969,1970	2,270 MW
Cholla Generating Station	AZ	1962,1978,1980, 1981	1,129 MW
Navajo Generating Station	AZ	1974,1975,1976	2,409 MW

• Four Corners Steam Plant is a five-unit, 2,040-megawatt Power Plant, located on the Navajo Indian Reservation west of Farmington, New Mexico, and operated by APS. Fueled by low-sulfur coal from the nearby Navajo mine, the plant is owned by APS and five other utilities in the Southwest. APS' stake in Four Corners makes 782 megawatts of energy available to the APS system.

• Cholla Generating Station is a 995-megawatt Power Plant located in northeastern Arizona near Holbrook. APS operates the plant and owns Units 1, 2 and 3, while PacifiCorp (PAC) owns the 380-megawatt Unit 4 - the largest unit at the plant. The two utilities participate in a seasonal power exchange. Cholla is fueled by coal from the McKinley Mine in New Mexico.

• The Navajo Generating Station is located in northern Arizona on the Navajo Indian Reservation near Page, and features three 750-megawatt coal-fueled, steam-electric generating units. An electric railroad delivers coal to the plant from a mine on the Navajo and Hopi Indian Reservations at Black Mesa in northern Arizona. The plant is operated by Salt River Project, and is owned by a partnership of five utility companies and the U. S. Bureau of Reclamation. APS owns 14 percent of the plant.

Clean Coal Project

In September 2009 APS received $70.5 million from a U.S. Department of Energy (DOE) grant to try to feed APS carbon emissions to an algae pond, in the hope of eventually converting the algae to biofuel. The grant will support the utility's carbon sequestration project at its Cholla Generating Station. The grant comes from the DOE's roughly $1.4 billion Clean Coal Power Initiative, which has also seen applications from Duke Energy, NRG Energy, Southern Company, and American Electric Power, among other utilities.

History

Arizona Public Service Company began to pay a cash dividend to shareholders in 1920, and continued the annual dividend without interruption through the 1980s. The stock doubled in price through the long bear market of the 1970s, while paying a 10% dividend yield. By then it had become an electric and natural gas utility fueled 94.4% by coal plants, 5.2% by natural gas, and 0.4% by oil. The company traded its common stock on the New York Stock Exchange, and in 1976, the company issued a preferred stock with a 10.5% dividend, callable in 1990.

APS also performed well through the early 1980s recession, reaching peak earnings of over $255 million in 1983. However, by then the company had accumulated over $2.1 billion in long-term debt. 1984 was a down year for both earnings and the stock price, which at its low that year had lost almost half its value from the 1983 peak.

AZP Group

In February 1985, Arizona Public Service Company reorganized into a holding company structure, named AZP Group Inc. It traded under the ticker symbol AZP. 1985 earnings reached a new record high at almost $290 million, and by the end of the year the stock price had doubled from its 1984 low.

Pinnacle West Capital

In 1987, AZP Group changed its name to Pinnacle West Capital Corporation, and began trading under the new ticker symbol PNW. The utility continued to operate as its principal subsidiary.

Southern California Edison to Divest from Four Corners

On March 30, 2010, Southern California Edison (SCE) informed Arizona Public Service (APS) of the company's intentions to divest its 48 percent stake of Four Corners Power Plant by 2016. According to APS, Southern California Edison announced it did not plan to sell its shares on the open market. SCE, which supplies power to greater Southern California, does not believe that Four Corners' coal burning is the energy wave of the future. Other issues that may have prompted SCE to divest its interests include proposed legislative initiatives to regulate carbon from power plants, Best Available Retrofit Technology requirements for the plant by fall 2010, and the possible regulation of coal fly ash as a hazardous waste.

In October 2010, the California Public Utilities Commission signaled that it would end investments will be allowed at Four Corners Steam Plant after 2012 to be in compliance with SB 1368, the Emissions Performance Standard. The law, passed in 2006, prohibited new ownership investment in power plants that fail to meet minimum performance standard for carbon emissions. This law effectively prohibited investment in coal burning plants. Southern California Edison owns 48% of two of the generating units at Four Corners.

Then in November 2010 Edison International announced their intentions to sell their share of the Four Corners Steam Plant to Pinnacle West Capital Corp. (PNW) unit Arizona Public Service Co. for the price $294 million.

Edison stated that it will sell its 48% stake in Units 4 and 5 of the plant, which at the time was still subject to approval from federal and state regulators in Arizona and California, Edison spokesman Gil Alexander said.

APS to purchase SCE share and close Four Corners Steam Plant Units 1, 2, and 3

On November 8, 2010, Arizona Public Service announced that it had entered into an agreement to purchase Southern California Edison's share of Four Corners Steam Plant Units 4 and 5, which it plans to retrofit with additional emission controls. The company will close Units 1, 2, and 3. There will be no layoffs at the plant, which employs 549 workers, 74 percent of whom are Navajo. Closing the three units will reduce the capacity of Four Corners by 633 megawatts (nameplate capacity) or 560 megawatts (net summer capacity). Units 1 and 2 were built in 1963, and Unit 3 was built in 1964.

Contact Information

APS
PO Box 53933 Sta. 3200
Phoenix, AZ 85072
Phone: (800) 253-9405
Website: https://www.aps.com/

Articles and Resources

Related SourceWatch Articles

• Existing U.S. Coal Plants
• New Mexico and coal
• Arizona and coal
• Pinnacle West Capital
• United States and coal
• Global warming

External Articles

• Susan Kraemer, "Can ALEC Dim Arizona Solar on Tuesday?" CleanTechnica, December 12, 2011.

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