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Despite some hefty expenses last summer to ensure reliability, earnings from continuing operations increased year-over-year by 8.1 percent. Outstanding power marketing results and steady customer growth allowed us to improve earnings while providing customers with their seventh price decrease in eight years.
It may be hard to recall now – just 12 months later – how different the energy situation looked in 2001. In May 2001 the futures price for power delivered in August ended up ten times August’s actual price. Our Power Marketing group steered through this volatility and produced outstanding results.
Our performance looks even better against the national and industry backdrop of a slowing economy and the missteps of some large companies. We made different choices. We put our trust in real assets generating real electrons that travel over real wires into real homes and businesses. Even as some of the fundamentals of our business change, this approach will not.
Our customer base continues to grow. Last year, APS experienced 3.7 percent customer growth – about three times the national average. To meet this growing demand, we added a 120-megawatt unit at our West Phoenix plant – our first generation addition since 1988. This summer we’ll add more than 1,000 megawatts at our new Redhawk facility, and next year we’ll complete our West Phoenix expansion by firing up another 530-megawatt unit. When these new gas-fired units are completed, they will enhance our supply options by providing a balanced fuel mix of coal, nuclear and natural gas.
Equally important, we’ve recently received approval to build a new 500,000-volt transmission line extending from the Palo Verde Switchyard to a new substation west of Phoenix. This much-needed line will add to our system capacity, further strengthening our reliability.
With that, let’s get right to the future. Looking ahead, I see opportunities in three significant areas. First, although today we face tougher power markets and a slower economy, customer growth and wholesale market opportunities will prevail. Second, we’ve taken on an important regulatory agenda. And third, evolutionary market developments will determine the structure and substance of future electric competition.
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