Compliance is our minimum standard of performance and we strive to perform beyond compliance in all areas of our business. All our managers and employees are required to uphold regulatory compliance as part of their daily activities and business planning. When non-compliance issues do arise, we take appropriate steps to address those issues and prevent them from happening again.

As an energy supplier and producer, we are subject to environmental, health and safety regulations on the federal, state, county and local levels. In addition, the Four Corners Power Plant located on the Navajo Nation near Farmington, New Mexico, works with the Navajo Nation Environmental Protection Agency to address certain environmental issues.

We maintain a goal of zero notices of violation (NOVs) resulting in fines or penalties. Success in meeting this target is reflected in individual employee performance evaluations and compensation.

The Maricopa County Environmental Services Department issued a total of ten Notices of Violation and one Compliance Status Notification to the West Phoenix Power Plant in November and December of 2004. One NOV was subsequently rescinded. These actions are currently being negotiated.