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Our electric generating facilities use a mix of fuels including coal, natural gas, oil and nuclear, as well as renewable sources. Having a balanced fuel mix has provided APS with a number of financial and environmental benefits. This fuel mix allows us to enter into long-term fuel-purchasing agreements with our suppliers, which reduces our costs and provides stable fuel sources into the future. In addition, it gives us operational flexibility so we can respond to changing markets and current events. Our fuel mix has been a significant factor in our ability to decrease our air emissions intensity while continuing to add generation resources to meet our rapid customer growth. This is discussed in more detail in the Air Emissions section of this report.
Since 2003, APS has formally included environmental factors when evaluating power purchase agreements or generation assets for procurement. Environmental factors considered include air emissions, water consumption and source, and compliance history.
In 2005, renewable energy sources accounted for a little less than 1 percent of our generation mix. That percentage will increase significantly in future years as part of our Environmental Portfolio Standard goals. See the Renewable Energy section for more information.
Producing nuclear energy depends on the acquisition of uranium and the fabrication of fuel assemblies. Again, nuclear power is a function of availability of raw materials and the capability to process them.
Natural gas is a commodity which is managed by the Fuels Procurement Group at Pinnacle West Power Marketing. The Fuels Procurement Group manages natural gas transportation contracts with El Paso Natural Gas Company.
Federal, state and local regulatory agencies conduct inspections to ensure compliance with requirements. All of our fuel suppliers maintain federal, state and local permits and adhere to environmental standards. As always, when acquiring and processing fuels for power, we work with fuel suppliers to develop environmentally preferable processes, materials and products. We assist with environmental studies aimed at finding ways to reduce the impact on air quality, ground water, vegetation and animal habitats.
We also remain committed to our policy of producing energy from natural resources in the most economic and efficient ways possible. We purchase approximately 97 percent of our coal locally. When feasible, energy is produced from local and regional fuel sources in an effort to limit the economic and environmental impact of transportation.
More detail on our fuel supply and purchased power may be found in the Investors section of our Pinnacle West Web site.
Our other major source of fuel use is in our transportation fleet. APS has 2,209 company-owned vehicles, which are managed by the APS Transportation Services department. These vehicles are used to operate and maintain our electric generation, transmission and distribution facilities, business offices and other operations which are located through-out the state of Arizona.
We have been able to significantly increase our fleet fuel efficiency over the past several years, as shown in the chart below, primarily by accelerating our purchases of new vehicles with improved mileage.
APS has also been active in hydrogen-fuel research. The company developed and built a Hydrogen/Compressed Natural Gas (CNG) fueling station in 2002. This station uses solar energy cells to generate hydrogen which is used at the facility. To date, the facility has had more than 4,600 vehicle-fueling events and produced the equivalent of 8,000 gallons of hydrogen with a perfect safety record. This facility is open to the public and accepts credit cards. Regular users include City of Phoenix Police and Fire Departments as well as Pinnacle West and APS employees, who fuel their personal vehicles. This facility is discussed further in the Clean Energy section of this Report.
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