We monitor the health of our system for indications of failure, replacing equipment that has potential for failure and/or that has become antiquated, faulty or damaged. We add new technology/equipment to make our grid more resilient and flexible, including projects adding capacity to accommodate areas of high distributed energy resources, and integrating technology that allows us to remotely and more quickly detect and restore outages. 

We build facilities to serve (or provide energy access to) new customers. This can be additional customers within an already developed area or new customers where there was no previous infrastructure. 

Each year we invest more than $1.5 billion to upgrade and expand the infrastructure of the energy grid covering our vast service territory. That is part of how we are partners in Arizona’s prosperity – forecasting and meeting the state’s energy needs as it grows and brings new developments of all kinds. 

Our investments in infrastructure for 2022 are projected to be $1.53 billion, up from $1.5 billion in 2021. In 2021, $842 million was budgeted for projects related to transmission and distribution, the avenues by which we deliver our power into the communities and neighborhoods we serve.

*As disclosed in the Third Quarter 2021 Form 10-Q.

These distributed technologies require new utility side monitoring, and control technologies that can accommodate the operational changes these resources bring. Challenges of aligning solar production with system peak, managing weather-dependent intermittency, and related power-quality issues must be addressed via technology solutions and intelligent grid operations. Our grid modernization efforts facilitate the integration of these resources while simultaneously ensuring high reliability and power quality by providing system operators with greater visibility, intelligence, and control options future.

Learn more about our accomplishments for residential solar.

APS continues to pursue and implement advanced grid technologies, including transmission and distribution system technologies and digital meters enabling two-way communications between the utility and its customers. Customers have sent a clear signal with the high volumes of customer-connected technologies and as a service provider we must innovate to optimize all available tools and grid resources to maintain reliability. At the end of 2021, APS had more than 1.4 million smart meters on the APS system. APS plans to invest in advanced grid technologies, system upgrades and related management systems through several initiatives including investments in distribution line equipment and other smart grid technologies.

Learn more about our customer technologies and programs.

Energy Storage. APS deploys several advanced technologies on its system, including energy storage. Storage can provide capacity, improve power quality, be utilized for system regulation, integrate renewable generation, and, in certain circumstances, be used to defer certain traditional infrastructure investments. Energy storage can also aid in integrating higher levels of renewables by storing excess energy when system demand is low and renewable production is high, and then releasing the stored energy during peak demand hours later in the day and after sunset. APS is utilizing grid-scale energy storage projects to benefit customers, to increase renewable utilization and to further our understanding of how storage works with other advanced technologies and the grid. 

In addition to aligning solar production and customer energy consumption, batteries work to improve grid resiliency. In the event of a grid outage, a utility or a customer with a battery-only installation can keep critical loads energized in the unlikely event of a grid outage. 

Learn more about our clean generating technologies.

Microgrids. APS expects microgrids to play an increased role in how we support customers with critical loads, increase economic development opportunities and strengthen the grid. Microgrids are beneficial for our system and our customers as they increase reliability and resilience. Microgrids are small-scale power generating facilities — installed on customer premises that can provide backup power in case of a grid outage but can also operate while utility connected to deliver peak capacity service and frequency response. A customer with an on-site microgrid rarely, if ever, experiences a power outage. In addition, all APS customers see the benefit as the microgrid can run in parallel with the APS microgrid providing frequency response and peak capacity when needed by the grid. By sharing microgrid development costs with customers with utmost resiliency needs, cost-effective economic deployment of new grid resources may be achieved. With the potential to add energy storage to these microgrids, their responsiveness can be even further improved along with increasing flexibility and emissions reductions. Microgrids increase the potential for developing grid innovation and we have two patents that were awarded in 2021 on the systems developed in-house that enable our microgrids to perform autonomous frequency response.  

The microgrid at Marine Corps Air Station Yuma can supply complete backup power to the base in case of a grid outage.

Advanced Distribution Management System. As part of our quest to improve reliability for our customers, APS continues to invest and update in our advanced distribution management system (ADMS) for outage management, mobile device capability and advanced operations support features. APS is focused on improvements to power quality and reliability for our customers through continued application growth with automation of fault location, isolation, and service restoration and optimized voltage performance. Together, these initiatives allow our customers to benefit from improved system reliability, increased outage information, and enable effective customer technology integration, while providing grid operators with tools to provide safe, reliable, resilient and quality service. Continued ADMS Projects and future initiatives are a big step toward integrating flexible and dynamic technology that will allow us to operate the grid of the future.

Drone Technology and Predictive Maintenance. Our unmanned aircraft system (UAS) program continues to grow and provide benefits to our customers. UAS technology, commonly referred to as “drones,” allows field personnel and engineers to work safer in hazardous terrain, collect hard-to-reach imagery, and evolve engineering practice at lower costs than traditional methods for power line patrols and inspections. We currently operate a cutting-edge fleet of drones with a continued dedication to strategy, training and program development that promises to improve reliability and safety performance. We have ensured that our UAS program meets all Federal Aviation Administration requirements. UAS-mounted thermal imaging cameras and high-resolution sensors are used to inspect distribution, transmission, generation and communications equipment to determine the overall health of systems. In addition to providing improved inspection data, UAS helps us respond more quickly to outages and issues affecting the grid, such as storm damage. In the future, they may be used to survey remote transmission and distribution lines using machine learning to detect anomalies, reducing the cost to perform annual inspections for proactive maintenance.

APS is also implementing state-of-the-art robotic inspection systems. In 2021, the first FLIR first watch system was placed into service and allowed the team to perform high resolution visual inspections and infrared scans in areas that included confined spaced and personal risk. This device allows us to access an unsafe site before it is safe for people to enter. In 2022, we have also added Spot the Dog, a robot that is much more autonomous than the FLIR system and will allow the team to perform inspections with consistent results, improve efficiency and safety and perform inspections that were just not practical prior to this advancement. The addition of these tools are great strides in technology and advance a safer and more effective predictive drone maintenance team.

Learn more about our clean technology innovation partnerships.

These changes in weather patterns pose a fire risk to the communities we serve. In response, we collaborate with key stakeholders to reduce wildland fire risk and create defensible space throughout Arizona. We have finalized, and are creating visibility for, the APS Comprehensive Fire Mitigation Plan with internal and external stakeholders.

We work year-round to minimize the risk of wildfires. Public safety and coordination with first response and forest management agencies are our highest priorities in helping to prevent and respond to wildfires.

Through proactive fire mitigation measures, we work to reduce the likelihood of fire in and around our equipment and facilities including substation overhead power lines and poles. Mitigation initiatives include the deployment of infrastructure systems technology as well as mobile technology to track and report fires. These innovations allow us to be more proactive and nimbler in our efforts to keep first responders and our customers safe. Fire mitigation efforts, including pre-season patrols and grid hardening, have benefits beyond fire mitigation including reliability and customer service.

We use a three-pronged approach to mitigate fire risk. First, we assess site-specific fire risk and develop a model to prioritize resources. Second, we educate the communities we serve about fire mitigation. Third, we create defensible space around poles (DSAP), the goal of the DSAP program is to remove combustible material inside a minimum 10-foot radius around equipment poles on a three-year cycle. Fire mitigation efforts recently developed a dedicated hazard vegetation mitigation program aimed at addressing the increased tree mortality near electric facilities across the state. In addition, our rights-of-way, which are managed for compatible vegetation, are used by firefighters to suppress wildfires across Arizona.

The effectiveness of our fire mitigation efforts was evident during the Telegraph Fire in Superior, Ariz., and the Rafael Fire in the Prescott National Forest in 2021. During these events, our crews collaborated with federal, state, and local officials to de-energize power lines and ensure the safety of residents and homes in the affected areas. As a result of the defensible space created in our utility corridor, the fires were prevented from reaching many of our poles and damaging our lines. This greatly improved our ability to quickly restore service after the fires were contained.

We appreciate first responders who protect communities across the state, and are proud to support them by providing scholarships for rural firefighters to attend the Arizona State Fire School, sponsoring the Arizona Wildfire & Incident Management Academy in Prescott, and more.

Learn more about our wildfire safety efforts.

Awareness. All employees and contractors are required to take cybersecurity training and learn techniques to identify suspicious cyber activity and safeguard sensitive customer information. Quarterly security bulletins and other outreach activities help raise employee awareness about emerging threats and risks to the company. Regular awareness testing and training assesses our employees’ susceptibility to certain cyber threats, such as phishing. We also hold workshops and “lunch and learns” to educate employees on critical issues, such as creating secure passwords, recognizing potential attacks, securing personally identifiable information and ensuring safe file storage.

Defensive Posture. We utilize a multilayer defensive technology model including firewalls, unified threat management devices, anti-malware technologies, data encryption technologies, and data loss prevention. These systems have alerting capability to notify cybersecurity personnel when critical events are detected. Additional processes, such as vulnerability scanning, identify cybersecurity or technology risk to prioritize for remediation and enterprise logging systems detect and alert potentially malicious behavior. Access to systems and data is provided based on business need with additional reviews and/or approvals required for privileged roles. In addition, the company does maintain an information security risk insurance policy.

Resiliency. We monitor for emerging cybersecurity threats 24 hours a day, seven days a week. Our Cyber Defense Center detects, alerts, contains and mitigates attacks in real time. To enhance our capabilities and provide improved threat intelligence, we maintain relationships and coordinate with federal, state, and local government partners, utility associations, regulatory bodies, and private sector information-sharing organizations. Additionally, we retain third-party incident response professionals to assist in response investigations, if needed. 

External Audits and Certifications. We perform regular vulnerability assessments and penetration testing. We also use crowdsourced vulnerability assessments, perform regular programmatic assessments against standard industry frameworks and are audited triennially by industry regulators.

Training. All employees and contractors are required to take cybersecurity training and learn techniques to identify suspicious cyber activity and safeguard sensitive customer information. Quarterly security bulletins and other outreach activities help raise employee awareness about emerging threats and risks to the company. We also hold workshops and “lunch and learns” to educate employees on critical issues, such as creating secure passwords, recognizing potential attacks, securing personally identifiable information and ensuring safe file storage.

Governance.The Nuclear and Operating Committee of our Board of Directors  periodically reviews, with management, principal risks related to or arising out of the company’s nuclear, fossil generation, transmission and distribution, environmental health and safety operations, or other matters addressed by the Committee, and assesses the effectiveness of the company’s measures to address these risks, including oversight of security policies, programs and controls for protection of cyber and physical assets. The Nuclear and Operating Committee receives a cybersecurity update twice a year and more frequently if the Committee or management so requests. The results of these reviews are reported to the full Board of Directors.  The full Board of Directors exercises oversight in relation to the company’s enterprise risks, which often include risks related to cybersecurity and data privacy. 

In addition to our cybersecurity efforts, we take extensive measures to protect our customers’ personally identifiable information. We utilize preventative and detective controls in our commitment to keep customers’ sensitive information safe and secure. Internal audits, data loss prevention technology, and reviews utilizing Generally Accepted Privacy Principles are examples of our internal controls and systems to ensure safe handling of customer data.

The EIM enables us to take advantage more quickly of favorable pricing opportunities in wholesale energy markets, operate clean generation resources more effectively and pass the savings on to our customers. APS joined the market in 2016 and the market continues to expand with utility participation. According to the most recent report released by CAISO, the EIM has delivered more than $248 million in gross benefits (as of January 2022) to our customers since our participation began.

In addition to EIM participation, we are actively evaluating the development of future wholesale markets that will strengthen our ability to provide clean reliable power. As members of the Western Markets Exploratory Group, we are exploring the potential for a staged approach to new market services and solutions with other western utilities to enable market-based solutions that result in reliable and resilient energy systems. We also continue to actively engage and participate in the development of CAISO Extended Day-Ahead Market, and Southwest Power Pool Markets + as we look to unlock new pathways to deliver on the APS Promise. As part of our commitment to provide reliable service we also coordinate with our peer utilities through participation in the regional Western Resource Adequacy Program, which allows us to plan with other utilities in the region to ensure reliable energy service with an evolving mix of clean resources.

Learn more about the Western Markets Exploratory Group, Western Resource Adequacy Program, CAISO Extended Day Ahead Market, and Southwest Power Pool Markets +. 

Any organization associated with electrical generation, transmission, and interconnection of the bulk power system in the United States, Canada, and part of Mexico is subject to North American Electric Reliability Corporation (NERC) standards. Each of the more than 1,000 NERC reliability requirements has been developed to address a risk associated with planning and operating the North American bulk power system.  For instance, these risks may be associated with sophisticated physical and cyberthreats, severe cold or hot temperatures, extreme natural events, challenging oil and natural gas interdependencies, and/or a changing resource mix.  

While all such applicable responsible entities have the common goal to maintain compliance, APS has the mindset that compliance is a natural byproduct of careful and intentional reliability and security practices. Stated another way, compliance does not occur by accident.  

At APS, overall reliability and security is a shared responsibility with clear roles defined for oversight and accountability throughout the organization. APS maintains a constant state of readiness including documented processes and tools to address each applicable requirement. Moreover, APS has processes in place for identifying, assessing and prioritizing risks to achieving reliability, security and compliance objectives. APS’s NERC internal control program is developed to address these risks. The result is a tailored and continually enhanced approach to identifying concerns before they have an impact on providing safe, affordable electricity to our customers.

APS is constantly developing tools and awareness to achieve safe, reliable and secure energy generation and delivery. This includes staying on the forefront as new standards are developed, leveraging industry lessons learned, proactively implementing above–and-beyond practices and conducting stakeholder outreach building upon a long history of productive relationships in the industry.