Potentially Responsible Party (PRP) Issues

APS was named in 2003 as a Potential Responsible Party in the Motorola 52nd Street Operable Unit 3 Superfund Site located in Phoenix, Arizona. In July 2004, APS completed negotiations with the EPA and signed a formal agreement, an Administrative Order of Consent. The agreement obligates APS to determine the extent, if any, of its contribution to the regional groundwater impacts, and if so, to identify options for addressing the company’s contribution to those impacts under the EPA’s oversight and guidelines.

APS is currently implementing the scope of work specified in the Administrative Order on Consent to evaluate potential groundwater impacts at our facility. The results of the groundwater investigations are expected in the second quarter of 2006.

APS continues to provide funding for the clean-up of the EPA CERCLA Hassayampa Landfill superfund site. APS sent industrial solid waste to this municipal landfill until it closed in the late 1970s. The facility was later designated as a federal superfund site and APS named as one of a number of PRPs. APS’ contribution to this clean-up effort is small, representing approximately 1.5 percent of the total annual assessment.

MGP Remediation Program Status

Manufactured Gas Plants (MGPs) operated from the late 1800s to about 1950, making synthetic gas for domestic heating and lighting purposes. Several predecessors of APS operated plants in Arizona communities including Phoenix, Globe, Miami, Prescott, Douglas and Yuma. The manufactured gas process created by-products including lampblack, tar and oils, some of which remained at the sites after operations ceased.

The company began evaluating each site in 1993 to address any remaining material that may have been generated by MGP activities. We began remediating the sites in 1996.

The following table describes the current status of our manufactured gas plant (MGP) remediation program. Each of these sites is anticipated to be completed under guidance of the Arizona Department of Environmental Quality (ADEQ) through their Voluntary Remediation Program (VRP). The action dates for these projects have generally been pushed back one year from the estimated dates in our 2004 report. This was due to the complexity and level of effort that was required at the 52nd street Superfund project during 2005, leading to delays in the overall MGP schedule.

Other Remediation Projects
The following table describes the current status of APS’ non-MGP remediation projects. Each of these sites is also anticipated to be completed under guidance of the ADEQ through the Voluntary Remediation Project, with the exception of the Casa Grande Service Center which is subject to the ADEQ’s Leaking Underground Storage Tank program.