APS Energy Services - 2005 Corporate Responsibility Report - Pinnacle West Capital Corporation (PNW)

APS Energy Services

APS Energy Services (APSES) is the full-service energy services provider and competitive electricity subsidiary of Pinnacle West Capital Corporation. As part of the Pinnacle West family of companies, energy customers benefit from a cumulative knowledge and experience in energy usage, generation, transmission and distribution.

APS Energy Services is a company with a long history of delivering commodity, managing energy usage, and implementing operational efficiency, and strives to provide innovative solutions to meet the challenges of an ever-changing energy market.

Energy conservation is a core focus of APS Energy Services and the company seeks to promote and implement the efficient use of energy and develop comprehensive energy solutions, seeking renewable energy alternatives where applicable and conducting work in a sustainable and environmentally responsible manner. Energy projects are designed to upgrade equipment and provide sustainability to campus settings.

APS Energy Services is headquartered in Phoenix, Arizona with offices in Tucson, Arizona; California; Nevada; and Texas. The company currently extends services throughout Arizona, California, Nevada, New Mexico, Texas and Utah.

APS Energy Services had a net loss of $6 million in 2005, and net income of $3 million in 2004 and $16 million in 2003. As of December 31, 2005, APS Energy Services had total assets of $88 million, and carried approximately 80 employees.

APS Energy Services is constructing two biomass systems as part of comprehensive energy programs implemented at White Pine County School District (system completed) and Northern Nevada Correctional Center (NNCC), which is currently in the design phase. The biomass systems burn forest waste to create energy and provide low-cost heating and steam output (NNCC only), while helping the environment.

The construction of these systems will enhance air and water quality in the surrounding areas by providing an environmentally friendly way of disposing of woody biomass from forest thinning. Additional benefits include reduced emissions and air pollution from controlled burning and reduced volume of landfill biomass waste. Forest thinning limits the risk of wildfires and reduces mastication (chipping and spreading on forest floor) of trees and shrubs, thus reducing the bark beetles food supply, resulting in fewer beetles and fewer dead trees.

In addition to biomass, the project at NNCC also includes solar generation and meter totalization.

Arizona State University and City of Rohnert Park, CA both included solar generation as part of their comprehensive energy programs. A solar array producing 30 kW was installed on the roofs of parking structures at Arizona State University. The City of Rohnert Park, CA will install a 30kW solar system on its Sports Center roof during a roofing replacement.

APS Energy Services worked with the Yavapai-Apache Nation to install a parking-structure mounted solar array producing 30 kW. By designing a split system with separate photovoltaic and UPS subsystems, the Nation�s Medical Facility now has a system capable of supplying 30 minutes of standby power. In addition to the installation, APS Energy Services negotiated the procurement of green credits, resulting in a substantial rebate to the Nation; and negotiated the future sale of excess power back to the grid, providing an ongoing profit center.

The Hualapai Tribe, located predominantly along the western edge of the Grand Canyon in Northern Arizona, has partnered with APS Energy Services to design and construct a solar hybrid project to provide power to the remote region. The Tribe has received a grant from the U.S. Department of Agriculture�s Rural Utilities Service to build electric generation and distribution infrastructure at the Grand Canyon.

In addition to the above projects, APS Energy Services recently partnered with Sacred Power Corporation, an American Indian-owned company based in Albuquerque, NM to begin installing hybrid solar stations in 100 homes on the Navajo Nation in Arizona this summer. The project is made possible through a $1.9 million grant to the Cameron Navajo Chapter from the U.S. Department of Agriculture.

APS Energy Services is currently engineering a fixed-film digester plant for Classic Farms, located in Aurora, SD. Classic Farms received a grant from the U.S. Department of Agriculture to construct a plant that will convert animal waste into biogas to run an electric generator to serve farm operations, inclusive of water treatment. A rendering component is also part of this grant.

The project at the University of Arizona�s Central Refrigeration Building (CRB) involved the installation of a 15,000 ton/hour Thermal Energy Storage System. To provide a more efficient chilled water system at the CRB, APS Energy Services installed two new centrifugal chillers with a capacity of 1,300 tons each, utilizing glycol instead of chilled water as the heat transfer medium. This project, completed as part of a larger comprehensive energy program, allowed for 8,000 tons of cooling capacity to be added to the central plant.

APS Energy Services also refurbished the thermal ice storage facility for Arizona State University.

APS Energy Services and Arizona State University (ASU) entered into an agreement to develop, design and construct a three-level, 73,000 ft² 16MW Combined Heat and Power Facility. The project consists of a new chilled-water plant, cogeneration plant and emergency power back-up system at ASU�s main campus in Tempe.

The cogeneration will create 8,000 kW in the first two phases, with potential of 16,000 kW for future campus expansion. The heat recovered from cogeneration is used to provide steam for direct campus use and additional electricity generation via a steam turbine in a combined-cycle configuration. There is a 70 percent overall efficiency of cogeneration cooling, and a cooling capacity of 10,000 tons, with the potential for 24,000 tons.

APS Energy Services is, through its Northwind^TM Phoenix operations, providing electrical and thermal utilities to ASU�s research facilities for the next 20 years.

In 1999, Northwind� Phoenix (Northwind) began developing a district cooling system that supplies chilled water to buildings in downtown Phoenix. The system currently serves a number of downtown buildings including Chase Field (formerly Bank One Ballpark); U.S. Airways Center; Dodge Theatre; Phoenix Catholic Diocese; Maricopa County Security Center, Fourth Avenue Jail; and West Courts Complex; TGen; as well as One and Two Arizona Center.

The thermal ice plant is a 40,000 ton cooling system that integrated the existing 8,000 ton chillers at Chase Field, two 2,500 ton chillers and ice-based thermal storage tanks with a capacity of 36,000 ton hours. The project utilizes of a network of approximately 17,000 linear feet of buried pipe below downtown Phoenix streets. A second plant, located beneath the new Phoenix Convention Center is scheduled to go on line May, 2006 and will provide an additional 20,000 ton hours of thermal storage and 3,000 tons of mechanical chiller capacity.

Northwind supplies uninterrupted chilled water service on a 24/7 basis with water temperatures ranging from 34 to 39 degrees Fahrenheit. Northwind operating engineers continuously monitor plant and customer parameters in real-time through a dedicated fiber network. Northwind also maintains and monitors all heat exchangers and controls systems Installed and owned by Northwind. Meter reading and associated billing, HVAC maintenance and consulting are also provided to customers.

APS Energy Services also works with customers to help meet their sustainability goals. In 2005, The University of California (UC) and California State University (CSU) systems joined with APS Energy Services to purchase renewable energy for 15 percent of their electricity needs. Under a six-month contract, the schools will respectively purchase 39,000 MWh and 34,000 MWh worth of renewable energy certificates consisting of wind (86 percent) and landfill gas (14 percent) resources. The certificates will be supplied by 3 Phases Energy Services under a wholesale agreement with APS Energy Services.

For more information on this program, please click here.