UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 17, 2006
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Exact Name of Registrant as Specified |
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in Charter; State of Incorporation; |
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IRS Employer |
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Address and Telephone Number |
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Identification Number |
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1-8962
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Pinnacle West Capital Corporation
(an Arizona corporation)
400 North Fifth Street, P.O. Box 53999
Phoenix, AZ 85072-3999
(602) 250-1000
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86-0512431 |
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1-4473
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Arizona Public Service Company
(an Arizona corporation)
400 North Fifth Street, P.O. Box 53999
Phoenix, AZ 85072-3999
(602) 250-1000
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86-0011170 |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
This combined Form 8-K is separately filed by Pinnacle West Capital Corporation and Arizona
Public Service Company. Each registrant is filing on its own behalf all of the information
contained in this Form 8-K that relates to such registrant and, where required, its subsidiaries.
Except as stated in the preceding sentence, neither registrant is filing any information that does
not relate to such registrant, and therefore makes no representation as to any such information.
Item 8.01. Other Events
ACC Staff Report on 2005 Palo Verde Outages
As previously reported,
on February 2, 2006, Arizona Public Service Company (“APS”)
filed with the Arizona Corporation Commission (the “ACC”) an application to recover
approximately $45 million through a surcharge over a 12-month period, representing a temporary rate
increase of approximately 1.9%, proposed to begin no later than the ACC’s completion of its inquiry
regarding 2005 Palo Verde Nuclear Generating Station (“Palo Verde”)
outages. See “Power Supply Adjustor — PSA Deferrals Related to Unplanned Palo Verde Outages” in
Note 5 of Notes to Condensed Consolidated Financial Statements in the Pinnacle West
Capital Corporation/APS Report on Form 10-Q for the fiscal quarter ended June 30, 2006.
On August 17, 2006,
the ACC staff filed a report with the ACC recommending that the ACC disallow
approximately $17.4 million ($10 million after income taxes) of the $45 million request. The
report alleges that four of the eleven Palo Verde outages in 2005 were “avoidable,”
three of which resulted in the recommended disallowance. The report also finds, among other things, that:
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Three of the outages were due to “faulty or defective vendor supplied equipment” and
concludes that APS’ actions were not imprudent in connection with these outages. The
report recommends, however, that the ACC evaluate “the degree to which APS has sought
appropriate legal or other remedies” in connection these outages and that APS “be given
the opportunity to demonstrate the steps that is has taken in this regard”. |
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“Additional investigation will be needed to determine the cause of and responsibility
for” the Palo Verde Unit 1 outage resulting from vibration levels in one of the Unit’s
shutdown cooling lines. |
The report also recommends that the ACC (a) establish minimum nuclear performance standards
for Palo Verde, with associated penalties if the standards are not met; (b) require APS to provide
semi-annual operational reports to the ACC; and (c) require APS to establish programs to manage and
evaluate certain Palo Verde plant equipment.
APS disagrees with, and plans to contest, the
report’s recommendation that the ACC disallow a portion of the $45
million of PSA deferrals. Under ACC regulations, prudent investments are those “which under
ordinary circumstances would be deemed reasonable and not dishonest or obviously wasteful” and
“investments [are] presumed to have been prudently made, and such presumptions may be set aside
only by clear and convincing evidence that such investments were imprudent.” APS believes the
expenses in question were prudently incurred and are therefore
recoverable. Also on August 17, 2006, the ACC staff requested the ACC to address the issues described above
in APS’ general rate case (currently these issues are being addressed in an ACC docket separate
from the general rate case docket). If the ACC grants the staff’s request to consolidate these
proceedings, the issues described above would be addressed in the general rate case. Hearings in
the general rate case are scheduled to begin on October 10, 2006.