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In 2002, Pinnacle West Energy, our generation affiliate, completed construction of more than 1,100 MW capacity of new clean-burning natural gas-fired generation to help address population growth in the West. Our goal is to offer a diverse fuel mix of nuclear, coal and natural gas generation to better serve our customers reliably and flexibly.
In 2002, the Palo Verde Nuclear Generating Station led the U.S. for the 11th consecutive year with a record of 30,861,905 MWH and a 94.4 percent capacity factor which included a 502-day continuous run for Unit 1.
The company’s fossil plants also recorded outstanding service records in 2002. All five Four Corners units achieved a capacity factor of 83 percent, placing the site in the top 20 percent of coal plants in the nation. The Cholla Power Plant had an availability of more than 90 percent, the station’s best since 1997. The gas and oil plants at Ocotillo, Saguaro, West Phoenix, Yucca and Douglas combined for an availability of more than 90 percent.
Water is a requirement for most traditional generation sources and we work to minimize our impact on the fresh water supply. At our Palo Verde nuclear plant, we use treated effluent, purchased from seven cities in the Phoenix metropolitan area, for cooling. A 35-mile pipeline carries treated water from a City of Phoenix sewage treatment facility to Palo Verde, where we use an advanced water treatment process that is capable of preparing 90 million gallons of water each day for use in the plant. The adjacent Redhawk, a natural gas-powered facility, uses treated effluent from Palo Verde to meet its cooling needs as well.
In 2002, the Palo Verde plant’s water reclamation facility received more than 20 billion gallons of treated effluent, offsetting use of valuable surface water or groundwater.
Renewable Technologies
As a leader in the development of renewable energy resources, APS is committed to developing clean renewable energy sources today that will fuel tomorrow’s economy.
We added nearly 1,225 kilowatts of solar capacity to our system in 2002, twice as much as we installed in 2001, reaching 2,348 kilowatts of solar capacity. These installations support our Solar Partners program. Under the Solar Partners Program, our customers are invited to purchase 15 kilowatt-hour blocks of energy generated by the solar power plants. The cost to customers is a $2.64 per month premium. At year’s end, we had 3,700 Solar Partners, an increase of 40 percent over 2001.
We also began construction of the Prescott (Ariz.) Airport Solar Power Plant, which, when completed, will be one of the largest photovoltaic solar plants in the world.
In Arizona, each state regulated utility collects funds from its customers to help provide a percentage of its energy from renewable resources through the Arizona Environmental Portfolio Standard (EPS). These funds are used by APS for the installation of new solar power facilities and for the purchase of EPS Credits from other renewable generating facilities.
In 2002, using Environmental Portfolio Standard (EPS) funding, APS began offering the EPS Credit Purchase Program. Under the program, APS pays customers who install solar systems for the EPS credits generated by these systems and helps offset the cost of installing solar on their home or business. In 2002, APS achieved 59 percent of the 0.4 percent goal — generating or purchasing credits equivalent to 56,000 megawatt hours of green energy. The program benefits customers through a one-time cash payment, while the energy credits are used by APS to meet the Arizona Corporation Commission’s Environmental Portfolio Standard (EPS) requirements.
Using EPS funds, APS assists customers in the installation of grid-tied, remote and solar water heating systems. Customers purchasing new solar electric systems of 5 kilowatts can receive an EPS Energy Purchase rebate of $2 per photovoltaic watt of direct current electricity. Customers that install new solar water heating systems can receive $350 to help offset the cost of this technology. APS uses these purchases towards meeting its EPS goals, while providing customers a financial incentive to install solar technologies.
Additionally, we offer customers in remote areas not served by a power line the option to meet their electricity needs with renewable solar energy. This off-grid solar electric service provides customers with a commercial solar system that includes all service and maintenance. The cost of the service is similar to that of owning, operating and maintaining individual generators. APS continues to provide this service for 21 customers.
In 2002, APS also began providing solar power for the Gray Wolf Landfill near Prescott by installing a 23.8 kilowatt hybrid solar power system, eliminating most of the Landfill’s need to run diesel generators for its energy needs.
Biomass
Our state is now facing a potentially devastating forest-health issue that has far-reaching implications for the eco-system, for the economy and for the safety of our citizens. Last year’s devastating Rodeo-Chedeski fire in northern Arizona combined with a destructive bark beetle infestation plaguing the state has created several tons of forest waste — a danger to the environment and an extreme fire hazard.
Our company maintains 16,000 miles of electrical lines throughout the state, many of which run through Arizona’s dense ponderosa pine forests. In those forests, many trees are being lost to the destructive bark beetle. Teams of APS arborists, however, are fighting back, removing these trees along our power lines to reduce the potential for fire and to ensure the reliability of our electrical transmission system.
In an effort to be waste-wise, APS is partnering in a three-megawatt biomass plant in Eagar, Arizona. The plant uses wastewood to generate electricity, offsetting conventional generation.The clean energy created by the plant will help the company reduce its emissions — including greenhouse gas emissions — while providing a use for the trees that are dead and damaged by the fires and beetle infestation. Over the next decade significant amounts of dead and damaged wood will need to be removed from the forests. We are looking at other biomass plants to provide an outlet for that effort. In conjunction with an aggressive reforestation effort, this focus on biomass can simultaneously promote significant benefits for the environment, the economy and the local communities.
In addition to it's solar and biomass projects the company, APS is the only utility in Arizona, and one of only a handful in the United States, to build and operate a facility that produces and stores hydrogen and compressed natural gas.
The downtown-Phoenix facility houses a hydrogen-powered generator that could power 50 homes. Along with that, there is a fueling facility for pure hydrogen and compressed natural gas. The facility, used by employees and contracted companies, offers hydrogen, compressed natural gas and a compressed natural gas-hydrogen blend. Tests of the Compressed Natural Gas/Hydrogen (CNG/H2) fuel have shown improved vehicle performance with lower air emissions.
Transmission
The company met the challenge of the highest customer demand in APS history by adding new generation and substantially upgrading its transmission and distribution system. On average, a new substation was completed every seven-and-a-half weeks, throughout the year. Our transmission team also completed major rebuilds of a 230-kilovolt (kV) substation in Phoenix and a 345-kV substation serving the Payson area and made additions and upgrades at approximately 50 other substations.
Of particular importance was the siting and approval of a 500-kV transmission line in the southwest Phoenix area. The line, expected to be live in 2003, will bring essential transmission capacity to the growing region and, in particular, open key areas to economic development.
We own and maintain high-voltage transmission lines that transfer power from our power plants to our customers throughout Arizona. By the end of 2002, we had 4,981 miles of overhead 69-kV and larger transmission lines and nearly 30 miles of 69-kV and larger of underground transmission lines.
Distribution
Our distribution network takes power from high-voltage transmission lines and delivers it to our customers. During 2002, we added 131 miles of overhead distribution and 518 miles of underground distribution. With the added distribution, we maintained 24,371 miles of above-ground local distribution and 12,352 circuit miles of below-ground distribution as of Dec. 31, 2002.
Demand Side Management Programs and Energy Conservation
In an effort to reduce consumption in the summer of 2001, the company enlisted Critical Peak Demand Reduction and The Time of Use promotion efforts. The Time of Use promotion was run again in 2002. We routinely offer printed and online materials to our customers to help them reduce their energy consumption.
Here are some components of APS’ Demand Side Management programs:
Performance Built Homes — To help builders promote the value of energy efficiency, APS works with building materials vendors to provide buyers with heating and cooling guarantees. Builders who meet program specifications are able to offer their homebuyers a two-year guarantee that the monthly costs to heat and cool their home will be less than a specified amount. The participating insulation product vendor provides the guarantee. The program continues to gain momentum, with 20 builders participating (including four of the top ten builders) and more than 3,000 lots committed in the program to-date. In addition, APS’ support for the guarantee concept has been instrumental in influencing construction practices throughout the Phoenix metro area.
Online Energy Audit — APS provides online energy analysis software on aps.com. The feature allows customer and prospective customers to analyze home and business energy use and identify energy efficient measures.
Bill Analysis — A recent innovation to aid customers in analyzing their energy use is the "bill download" feature on aps.com. Registered aps.com users can download their bill history online and compare current usage to past usage.
Energy Cost Brochures — APS provides energy information to homebuilders and customers. Most new-home subdivisions are provided with a brochure that shows the APS estimate of the energy cost for each model. In addition, APS sales people provided charts showing the impact on energy use of various building components. These have been effective in convincing builders to switch to more energy efficient components. The software is also used to provide builders and homeowners with estimates of costs used in resolving complaints such as when insulation is left out of the attic. It is used to provide builders with energy cost estimates needed to qualify for some building grants, and helps them to see the energy impact on component choices.
Northwind Cooling
Conceived in 2000 and completed in 2001, APS Energy Services’ Northwind Phoenix District Cooling System serves eight buildings in the downtown area. The system uses an industrial grade, ice-based chiller that manufactures three million pounds of ice each night when utility loads and rates are lowest. During peak periods, the ice is melted and 34-degree water is distributed through an extensive network of underground pipes to provide state-of-the-art cooling to buildings throughout the area. In 2002 the project was expanded to serve the Pinnacle West headquarters as well as several other buildings in the downtown-Phoenix area.
NorthwindPhoenix currently has nearly three miles of installed pipe. Bank One Ballpark, Northwind’s first customer reduced its electrical demand by nearly 40 percent after switching to district cooling.
NorthwindPhoenix also has a co-generation facility in Tucson named Tucson District Energy. Northwind entered into a 20-year contract with the City of Tucson to install a 1.6 MW gas-fired generator with heat recovery and 500 tons of absorption chilling to supplement three 1,250-ton centrifugal chillers. Electricity generated by the project is used in the plant to operate chillers and pumps as well as supplying all the electric needs for police and fire headquarter buildings.
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