Cholla Power Plant BART Reassessment

APS is required under a Federal Implement Plan (FIP) to install Selective Catalytic Reduction (SCR) technology on Cholla Units 2 and 3 by December 2017 to meet the Best Available Retrofit Technology (BART) requirements of the Clean Air Act’s Regional Haze program. In 2015, APS began work to reassess the Cholla BART analysis and to develop an alternative proposal. Under APS’s proposal, rather than installing the SCRs by the FIP deadline, APS will close Cholla Unit 2 by April 2016 and cease burning coal in Units 1 and 3 by April 2025 or convert those units to natural gas. In October 2015, the Arizona Department of Environmental Quality (ADEQ) issued an updated Cholla air quality permit that incorporated APS’s proposal. Additionally, ADEQ subsequently submitted a proposed revision of the State Implementation Plan (SIP) to the Environmental Protection Agency (EPA) to incorporate the new air permit terms. APS retired Cholla Unit 2 on October 1, 2015. The closure of Unit 2 reduced carbon emissions at the plant by 26 percent, particulate matter emissions by 53 percent, mercury emissions by 47 percent, and nitrogen oxide emissions by 32 percent.

Four Corners Regional Haze Requirements
In accordance with EPA’s Regional Haze requirements, APS retired Units 1, 2 and 3 at Four Corners Power Plant in December of 2013 and, as of 2015, has begun installing SCRs on the remaining two units. The retirement of Units 1-3 and the installation of the SCRs will reduce nitrogen oxides (NOx) emissions from Four Corners by about 34,000 tons per year, representing a 89 percent reduction in NOx emissions. In addition, the closure of Units 1-3 reduced the site level carbon emissions by 22 percent.

Mercury and Air Toxics Standards (MATS)
In 2011, EPA issued rules establishing maximum achievable control technology standards to regulate emissions of mercury and other hazardous air pollutants from fossil-fired plants. At APS, the MATS requirements only apply to our Four Corners and Cholla power plants. The plants have been working on implementing changes at the plants in order to meet the MATS requirements, and both plants are in full compliance with the new mercury and air toxic standards.

Ozone
On October 1, 2015, EPA revised and tightened the primary ground-level ozone national ambient air quality standards (NAAQS) to 70 parts per billion (ppb). With ozone standards becoming more stringent, our fossil generation units will come under increasing pressure to reduce emissions of nitrogen oxides and volatile organic compounds, and to generate emission offsets for new projects or facility expansions located in ozone nonattainment areas. EPA is expected to designate attainment and nonattainment areas under the new 70 ppb standard by October 1, 2017. Depending on when EPA approves attainment designations for Arizona and the Navajo Nation, where our fossil generation units are located, revisions to SIPs and FIPs, respectively, implementing required controls to achieve the new 70 ppb standard are expected to be in place between 2020 and 2021.