EX-99.D.1 4 0004.txt APPLICATION OF AUTHORIZATION TO TRANSFER EXHIBIT D-1 [LETTERHEAD OF MORGAN, LEWIS & BOCKIUS LLP] July 28, 2000 Honorable David P. Boergers, Secretary Federal Energy Regulatory Commission 888 First Street, N.E. Washington, D.C. 20426 Re: Application of Arizona Public Service Company, Pinnacle West Capital Corporation, and Pinnacle West Energy Corporation for Authorization to Transfer Jurisdictional Facilities, Docket No. EC00- -000 Dear Secretary Boergers: Pursuant to Section 203 of the Federal Power Act, 16 U.S.C. ss. 824b (1994), and Part 33 of the regulations of the Federal Energy Regulatory Commission, 18 C.F.R. Part 33, Arizona Public Service Company ("APS"), Pinnacle West Capital Corporation ("PWCC"), and Pinnacle West Energy Corporation ("PWE") (jointly "Applicants"), hereby submit for filing six copies of an Application for Authorization to Transfer Jurisdictional Facilities. Applicants are making this filing in connection with the proposed corporate restructuring of APS, under which APS will separate its generation and wholesale marketing businesses, from its transmission and distribution businesses. Applicants developed the restructuring plan in order to comply with the Arizona retail choice program, which provides for the introduction of customer choice for retail customers, and requires APS to divest its generation assets. As demonstrated in the body of the Application, the proposed transfer of jurisdictional facilities raises no competitive or other concerns, and is in the public interest. A form of notice suitable for publication in the FEDERAL REGISTER and a copy of the notice on a computer diskette are attached hereto. Applicants have served a copy of this Application on the Arizona Corporation Commission and the New Mexico Public Regulation Commission. In addition, copies of this transmittal letter have been sent to all customers under each of the wholesale power sales contracts, tariffs, and service agreements that APS seeks authorization under Section 203 to transfer to an affiliate. Any of these customers that desire a copy of the Application should contact the undersigned. If you have any questions about this filing, please feel free to contact me. Respectfully submitted, John D. McGrane ------------------------ John D. McGrane Morgan, Lewis & Bockius LLP 1800 M Street, N.W. Washington, D.C. 20036-5869 Phone: (202) 467-7000 Barbara M. Champion, Senior Attorney Pinnacle West Capital Corporation P.O. Box 53999 Mail Station 8695 Phoenix, Arizona 85072-3999 Phone: (602) 250-3547 Attorneys for Arizona Public Service Company Pinnacle West Capital Corporation Pinnacle West Energy Corporation Enclosures cc: Arizona Corporation Commission New Mexico Public Regulation Commission UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION Arizona Public Service Company ) Docket No. EC00-_________ Pinnacle West Capital Corporation ) Pinnacle West Energy Corporation ) APPLICATION OF ARIZONA PUBLIC SERVICE COMPANY, PINNACLE WEST CAPITAL CORPORATION, AND PINNACLE WEST ENERGY CORPORATION FOR AUTHORIZATION TO TRANSFER JURISDICTIONAL FACILITIES I. INTRODUCTION Arizona Public Service Company ("APS"), and its affiliates Pinnacle West Capital Corporation ("PWCC") and Pinnacle West Energy Corporation ("PWE") (collectively, "Applicants"), submit this Application to obtain the approvals necessary to separate APS's generation and wholesale marketing businesses from its transmission and distribution businesses. APS is separating its generation and marketing functions from its transmission and distribution functions, in accordance with the Arizona retail choice program and as a means of implementing the Settlement Agreement approved by the Arizona Corporation Commission ("ACC") which calls for the divestitures of APS's generation assets. Upon completion of the proposed corporate restructuring, PWE will own and operate APS's existing generating plants, and APS will become a "wires" company, owning and operating transmission and distribution facilities. PWCC will have a Marketing and Trading Department and act as a power marketer, and conduct trading and brokering functions on behalf of its subsidiaries APS, PWE, and APS Energy Services Company, Inc. ("APSES"). Under Section 203 of the Federal Power Act, 16 U.S.C. ss. 824b (1994), and Part 33 of the Federal Energy Regulatory Commission's ("FERC" or the "Commission") Regulations, 18 C.F.R. ss.ss. 33.1-33.10 (1999), Applicants seek authorization for: 1. the transfer from APS to PWE, directly or indirectly, of certain jurisdictional facilities; 2. the transfer from APS to PWE, directly or indirectly, of certain operational agreements to PWE; and 3. the transfer from APS to PWCC of certain wholesale power sales contracts, APS's Electric Coordination Tariff and accompanying service agreements, and certain service agreements under APS's Market-Rate Tariff including any new agreements APS enters into under its market-rate tariff up to and until the time of transfer. Upon the transfer of APS fossil generation resources to PWE, contemplated to occur on or before January 1, 2001, PWE will sell the output from its generation resources to PWCC. Under the restructuring plan, PWCC will, in turn, provide APS with all of its generation-related ancillary services pursuant to agreements to be filed with the Commission.(1) These arrangements will allow APS to continue providing ancillary services at the existing rates in its OATT until a market for ancillary services develops in Arizona. ---------- (1) Specifically, PWE intends to file an application for authorization to sell power at market-based rates in a separate but concurrent filing. At that time, PWE will also file an agreement for the sale of generation related ancillary services to PWCC at exactly the same rates that APS currently charges transmission customers under its OATT. To the extent additional generation related ancillary services may be required by the Commission or pursuant to protocols to be filed by the Arizona Independent System Administrator, PWE will supply those services to PWCC. PWCC will then in turn provide ancillary services to APS, again at the same rates currently charged by APS under its OATT. PWE and PWCC will reserve the right to change such rates and services as their costs of providing such service change, or as conditions warrant. 2 II. REQUEST FOR EXPEDITED APPROVAL AND REQUESTED EFFECTIVE DATES The approvals that Applicants request are necessary to implement Arizona's retail choice plan for the Applicants. Accordingly, Applicants request that the Commission issue an order no later than November 30, 2000, approving the Section 203 application and request expedited consideration to the extent necessary. Applicants note that they anticipate transferring most of the assets and personnel at year-end, in order to facilitate calendar year record keeping, and believe that the time between the requested approval date of November 30 and the contemplated transfer is necessary to allow the transfer of personnel and to implement other aspects of the transaction. Applicants will promptly notify the Commission upon the consummation of the transactions described herein. III. PROPOSED RESTRUCURING PLAN OF THE APPLICANTS A. DESCRIPTION OF THE PARTIES PWCC: PWCC is an Arizona corporation whose principal place of business is located at 400 North 5th Street, Phoenix, Arizona. PWCC is a holding company that is exempt from registration under the Public Utility Holding Company Act of 1935, as amended ("PUHCA"), by virtue of Section 3(a)(1) of PUHCA and Rule 2 of the regulations of the Securities and Exchange Commission ("SEC"). PWCC is the parent company of APS, PWE, and APSES. At present, PWCC has no electric-utility company subsidiaries, other than APS. PWCC has two non-utility subsidiaries, El Dorado Investment Company, an investment firm with a portfolio consisting of venture capital, limited partnerships, and other holdings, and SunCor Development Company, a real estate developer invested in planned communities and commercial/industrial projects. 3 PWCC is also a power marketer. On June 20, 2000, the Commission conditionally accepted for filing a proposed market-based rate tariff and code of conduct for PWCC in Docket No. ER00-2268-000. As ordered by the Commission, PWCC submitted a compliance filing to resolve the remaining concerns of the Commission regarding potential affiliate abuse and the effect of affiliate transactions on captive wholesale customers with fuel adjustment clauses. PWCC will market power and energy that it purchases and will engage in wholesale marketing and brokering activities. APS: APS is a public service corporation organized under the laws of the State of Arizona, engaged in the business of generating, transmitting and distributing electricity in all or part of eleven of Arizona's fifteen counties. APS owns or partially owns a number of generating assets. A list of the transmission assets that APS is transferring to PWE is included as Attachment A. The transmission assets being transferred are facilities functionalized to production - such as step-up transformers and related equipment. A list of the contracts that APS will be transferring to PWE and PWCC is included in Attachment B. APS is authorized to sell wholesale power and energy at market-based rates.(2) In its order granting market-base rate authority to APS, the Commission found that APS does not possess market power.(3) APS has an OATT on file with the Commission.(4) PWE: PWE was formed as a subsidiary of its parent company, PWCC, for the purpose of owning and operating wholesale generating facilities. PWE was incorporated ---------- (2) SEE ARIZONA PUBLIC SERVICE CO., 79 FERC. & 61,022 (1997). APS recently filed an updated market analysis concerning its market-based rates. SEE ARIZONA PUBLIC SERVICE CO., Docket No. ER00-1875-000 (March 14, 2000). (3) SEE ARIZONA PUBLIC SERVICE CO., 79 FERC. & 61,022, at 61,098-99. (4) Docket Nos. OA96-153-000, ER96-2401-000. 4 in Arizona on September 27, 1999, and currently has no operating generating facilities that are subject to the Commission's jurisdiction. Upon transfer of APS's generating assets to PWE, PWE will become a generating company(5) and APS will become primarily a wires company. PWE will generally sell the output from its generating facilities to PWCC but may sell a portion to other wholesale customers. Diagrams showing the corporate relationships between PWCC, APS, and PWE before and following consummation of the transaction are attached as Appendices A and B. B. ARIZONA RESTRUCTURING The Applicants developed the restructuring plan in response to the changes currently underway in the wholesale and retail sectors of the electric and gas industries in Arizona and elsewhere. Specifically in Arizona, the ACC has implemented a plan and rules to permit retail access. On October 6, 1999, the ACC approved a Settlement Agreement between APS and several customer groups and consumer advocates resolving retail electric competition-related issues and approving unbundled tariffs.(6) Under the terms of the Electric Competition Rules of the ACC and APS's Settlement Agreement, retail choice for APS's retail customers is being phased-in. All of APS's retail customers will be entitled to choose their retail power supplier beginning January 1, 2001.(7) Remaining retail customers of APS taking service under "standard offer" bundled rates ---------- (5) PWCC currently anticipates seeking approval from the Securities and Exchange Commission ("SEC") under Section 9(a)(2) of Public Utilities Holding Company Act of 1935, as amended ("PUHCA"), in connection with the transfer since it will result in PWE becoming a public-utility company; alternatively, PWE will file for exempt wholesale generator status under Section 32 of PUHCA. (6) ACC Decision No. 61973. (7) SEE Attachment D - ACC approved Settlement Agreement,ss.1.1. 5 will be subject to planned rate reductions that will continue until July, 2004.(8) Under the Settlement Agreement, APS is entitled to apply for a change in the agreed upon rate reductions only in the event of an emergency or a material change in its cost of service as a result of specified extraordinary events. The approved Settlement Agreement also requires that APS divest its generation assets by December 31, 2002, but allows APS to divest its assets to an affiliate.(9) C. APPLICANTS PLAN TO IMPLEMENT ARIZONA RESTRUCTURING In response to the state restructuring proceedings, PWCC formed APSES, a marketer of electricity and energy-related services to primarily retail customers in Arizona and California, and PWE, a corporation formed to engage in the business of owning and operating generating facilities in Arizona and elsewhere. To further comply with state restructuring, APS is now transferring its existing generating assets, and requesting the authority to transfer associated transmission plant, and existing generation operating agreements to PWE. Additionally, APS is requesting the authority to transfer certain existing wholesale power sales agreements to PWCC. To implement the actual transfer of facilities after Commission approval, APS intends the following transactions. As previously mentioned APS and PWE are direct and wholly-owned subsidiaries of PWCC. New subsidiaries will be created as needed to implement the transfer of facilities. The following transactions will occur on or about January 1, 2001, pursuant to a plan of reorganization. First, APS will contribute its fossil and applicable solar generation assets and its operational agreements to one or more of these newly formed subsidiaries (hereafter all will be referred to as a "Transitory ---------- (8) SEE Attachment D - ACC approved Settlement Agreement,ss.ss.2.2, 2.6, 2.7. (9) SEE Attachment D - ACC approved Settlement Agreement,ss.4.1. 6 Subsidiaries"). This transaction is intended to qualify as a tax-deferred reorganization under IRC Section 368(a)(1)(D). Second, APS will distribute or cause to be distributed all of the stock of a Transitory Subsidiary to PWCC in a transaction intended to qualify as a tax-deferred spin-off under IRC Section 355. Third, under state law, the Transitory Subsidiary will then be merged into PWE (with PWE surviving) in a transaction intended to qualify as a tax-deferred statutory merger under IRC Section 368(a)(1)(A). It is contemplated that the three aforementioned transactions will occur simultaneously. APS also intends to transfer certain wholesale power contracts to PWCC in a similar manner as described above with the use of a different subsidiary (in this case, the subsidiary will be merged into PWCC). Following approval of such transfer, APS will transfer the contracts and, as required in Section 35.16 of the Commission's regulations, file a Notice of Succession within 30 days. At that time, APS will refile each agreement with the Commission in accordance with the Commission's recent ruling on rate schedule designations.(10) The transfer of the APS nuclear facilities is contemplated to occur by the end of 2002 pursuant to the current plan of reorganization. APS intends to use the same mechanism as described above for the other generating assets for transferring the nuclear assets to PWE. The delay in transferring the nuclear assets is to ensure additional time to adequately address complicated contractual arrangements, such as sale/leaseback provisions, in place amongst the various owners of the nuclear facilities. There are also certain financial and economic considerations that must be resolved before the actual transfer of nuclear assets can take place. APS will inform the Commission when the ---------- (10) SEE DESIGNATION OF ELECTRIC RATE SCHEDULE SHEETS, Order No. 614, 90 FERC. & 61,352 (2000). 7 actual transfer of its nuclear generating units takes place. The proposed restructuring plan of the Applicants will help PWCC and its affiliates adapt their electric businesses to new and changing markets. The restructuring plan will allow PWCC and its affiliates to better compete in these markets and permit better service for customers and shareholders. IV. APPLICATION PURSUANT TO SECTION 203 Section 203 of the FPA requires Commission approval for the disposition of facilities that are subject to the Commission's jurisdiction and have value in excess of $50,000. APS owns and operates step-up transformers and associated transmission facilities at its generating facilities that will be included in the direct or indirect transfer of assets to PWE. APS also has existing wholesale contracts that will be transferred to PWCC and PWE and these contracts are considered "facilities." SEE ENRON POWER MARKETING, INC., 65 FERC P. 61,305 (1993). Accordingly, the instant transaction involves a disposition of jurisdictional facilities requiring Commission approval. The Commission will approve such a disposition if it concludes that the transaction is consistent with the public interest. SEE, E.G., BOSTON EDISON CO., 80 FERC P. 61,274 (1997). In analyzing the effect of the disposition on the public interest, FERC generally considers the following three factors: (1) the effect on competition, (2) the effect on rates, and (3) the effect on regulation. As shown below, the proposed transfer of jurisdictional assets is in the public interest. The transfer will actually benefit the public interest, as it will facilitate the restructuring of the electric power industry in Arizona by (1) finalizing the implementation of retail access in Arizona as promulgated by the ACC, (2) allowing competition in the generation markets, and (3) enabling APS to operate its transmission system as a "wires" only company. 8 A. THE EFFECT ON COMPETITION The restructuring plan of the Applicants reflects the type of structural changes that are becoming typical in the evolving competitive electric marketplace. The restructuring will properly align the generation business into one unit, the transmission and distribution business into another, and the wholesale power marketing function in still another unit. Such an alignment will be beneficial to the competitive marketplace because it will allow each entity to focus exclusively on its core business. Because this restructuring is internal to the Pinnacle West corporate family, there are no competitive impacts from the transfers contemplated herein. SEE, E.G., PECO ENERGY CO., 90 FERC P. 61,269, at 61,903 (2000); PUBLIC SVC. ELEC. & GAS, CO., 88 FERC P. 61,299, at 61,916 (1999) (finding that similar internal restructuring did not increase market concentration or affect competition). Additionally, APS has had market rate approval for the past three years. On May 2, 2000, an updated market power study by APS was accepted by the Commission in Docket No. ER00-1875-000. The updated report shows that APS does not possess market power in the generation or transmission markets. In addition, PWCC recently received conditional approval for a market-based tariff in Docket No. ER00-2268-000.(11) Finally, PWE is filing for market-based rate approval in a separate but concurrent filing. Since neither APS, PWCC, or PWE possess market power in generation or transmission markets, the transfer of assets should not create any competitive issues. In fact, providing a competitive alternative for generation resources in the retail and wholesale markets, the transfer of assets will further competition to the benefit of all customers. ---------- (11) As noted previously in III.A, on July 13, 2000, APS and PWCC submitted a compliance filing to address the sole remaining concern of the Commission regarding the treatment of APS's captive wholesale customers with fuel adjustment clauses. 9 B. THE EFFECT ON RATES The transfer of assets should not affect the rates currently paid by retail and wholesale customers. APS does not intend to change its transmission rates, since none of the transmission assets being transferred to PWE are currently in APS's transmission rates reflected in its OATT. In order to deliver the output of the PWE generating assets, the entity purchasing the power will be required to use transmission service pursuant to APS's OATT. As stated previously, the retail customers of APS are protected by rate reductions through July, 2004 and all retail customers will be able by January 1, 2001 to choose their electric supplier. Most of APS's wholesale transactions are currently conducted under market-based rates or through the Western System Power Pool and the transfer of assets should have no effect on their competitive rates. APS does have some cost-based wholesale rate customers, of which all but two can readily choose alternate power suppliers. APS does not believe the transfer of assets will harm its current wholesale customers. APS recently proposed measures that will protect wholesale customers from any potential affiliate abuse associated with affiliated transactions. To protect existing customers with system incremental cost (SIC) in their pricing provisions, APS will cap the pass-through of cost at the lesser of SIC or prices based on the Palo Verde Index. For customers with a fuel adjustment clause (FAC) in their contracts, APS has proposed that the customers would pay the lesser of a FAC calculated with inter-affiliate transactions included, a FAC calculated with the inter-affiliate transactions priced not as actual but at the Palo Verde Index price for a similar duration, or the average of the actual corrected FAC for the same month for 1998 or 1999 (SEE PINNACLE WEST CAPITAL CORPORATION, Docket No. ER00-2268-000). These protections will continue in place. 10 In addition, further protection to all customers regarding ancillary services will be provided. In separate Section 205 filings, appropriate agreements will be filed with the Commission that will provide APS with its generation related ancillary services. Inasmuch as the charges for such ancillary services currently included in APS's OATT are based on the fossil generation units to be transferred from APS to PWE, the costs associated with providing these ancillary services will be unchanged when the units are transferred. Upon the transfer of the assets, PWE will sell generation-related ancillary services to PWCC at rates identical to those in APS's OATT, and under a separate agreement, PWCC in turn will provide APS with its generation-related ancillary services at exactly the same charges. Under this arrangement APS is ensured of obtaining all its generation-related ancillary services, and will merely pass through to customers subscribing to such services the costs APS incurs for these services at exactly the same rates currently in APS's OATT. Indeed, by PWE becoming a separate entity with the above-mentioned safeguards, competition in the generation market should expand, and all customers should benefit. C. THE EFFECT ON REGULATION The Commission requires Applicants under Section 203 to evaluate the effect of a proposed transaction on regulation at both the Federal and state level. The Commission is mainly concerned with instances where (1) the transaction will shift regulatory authority from the Commission to the SEC or otherwise diminish Commission authority; or (2) the affected state commissions will not have authority to act on the proposed transaction.(12) ---------- (12) SEE INQUIRY CONCERNING THE COMMISSION'S MERGER POLICY UNDER THE FEDERAL POWER ACT: POLICY STATEMENT, Order No. 592, FERC Stats. & Regs. & 30,110 (1996), at 30,124-25. 11 The transfer will not impair or diminish the Commission's jurisdiction in any respect. The restructuring plan of APS will not materially affect the ability of the Commission or state regulators to assert their regulatory jurisdiction over PWCC and its subsidiaries APS and PWE. After the transfer of assets, the Commission will continue to have jurisdiction over all of the existing wholesale transactions of APS that are being assigned to PWCC and PWE, and PWCC and PWE will be subject to federal regulation with respect to all of their wholesale power transactions. APS will continue to be subject to FERC oversight pertaining to transmission and wholesale power contracts. APS will also continue to be subject to state regulation pertaining to distribution rates and retail sales to standard offer customers under bundled rates. PWE will be under state regulation where the generation plants are located regarding applicable permitting and siting requirements. Finally, PWCC will continue to be an exempt holding company under PUHCA; therefore, the transfer will not result in any transfer of jurisdiction from the Commission to the SEC. D. PUBLIC INTEREST CONCLUSION Given that the proposed restructuring plan will have no adverse effect on competition, rates, or regulation, the Commission should find the plan consistent with the public interest. V. FILING REQUIREMENTS UNDER PART 33 In accordance with the regulations, 18 C.F.R.ss. 33.2, Applicant states as follows: A. EXACT NAME AND ADDRESS OF THE PRINCIPAL BUSINESS OFFICE OF APPLICANTS ARE: Arizona Public Service Company Pinnacle West Capital Corporation 400 North Fifth Street 400 North Fifth Street Phoenix, AZ 85004 Phoenix, AZ 85004 12 Pinnacle West Energy Corporation 400 North Fifth Street Phoenix, AZ 85004 B. NAMES AND ADDRESSES OF THE PERSONS AUTHORIZED ON BEHALF OF APPLICANTS TO RECEIVE NOTICES AND COMMUNICATIONS IN RESPECT TO THIS APPLICATION ARE AS FOLLOWS: James M. Levine Barbara M. Champion Executive Vice President Generation Senior Attorney Arizona Public Service Company Pinnacle West Capital Corporation 400 North 5th Street 400 North 5th Street Mail Station 9046 Mail Station 8695 Phoenix, Arizona 85004 Phoenix, Arizona 85004 Phone: (602) 250-2095 Phone: (602) 250-3547 Joel R. Spitzkoff John D. McGrane Manager of Federal Regulation Mary Ann K. Huntington Arizona Public Service Company Kristina Beard 400 North 5th Street Morgan, Lewis & Bockius, LLP Mail Station 9905 1800 M Street, N.W Phoenix, Arizona 85004 Washington, D.C. 20036 Phone: (602) 250-2949 Phone: (202) 467-7000 C. DESIGNATION OF THE TERRITORIES SERVED BY APPLICANTS, BY COUNTIES AND STATES: APS is an investor-owned utility engaged in the business of generation, transmission, distribution and sale of electricity in all or part of eleven of Arizona's fifteen counties. APS serves numerous wholesale customers with power, and provides various transmission services to wholesale marketers, other utilities, municipalities, Federal power marketing agencies, electric cooperatives, electric districts and irrigation districts within the State of Arizona. Neither PWE nor PWCC has any service territories. D. GENERAL STATEMENT BRIEFLY DESCRIBING THE FACILITIES OWNED OR OPERATED FOR TRANSMISSION OF ELECTRIC ENERGY IN INTERSTATE COMMERCE OR THE SALE OF ELECTRIC ENERGY AT WHOLESALE IN INTERSTATE COMMERCE: APS owns and operates generation resources and 4,283 miles of transmission facilities in Arizona and 140 miles of transmission facilities in New Mexico, and distribution facilities throughout much of Arizona. PWE will not possess transmission facilities other than the transmission facilities associated with generation plants that APS proposes to transfer to PWE. PWCC will not have any transmission facilities. Both PWCC and 13 PWE will have contracts and agreements with other parties that will be jurisdictional. E. THIS APPLICATION SEEKS AUTHORIZATION OF THE COMMISSION TO TRANSFER: As described in Section III of this Application, APS seeks to transfer certain FERC-jurisdictional facilities and operating agreements to PWE, a newly formed affiliate of its parent company, Pinnacle West Capital Corporation. The transfer of assets will be at their book value at the time of transfer. Their current value at the time of filing is $24,514,216 Additionally, APS seeks to transfer to PWCC certain wholesale contracts, APS's Electric Coordination Tariff with all related service agreements, and certain service agreements under its market based tariff. F. A STATEMENT OF FACILITIES TO BE DISPOSED OF, CONSOLIDATED, OR MERGED, GIVING A DESCRIPTION OF THEIR PRESENT USE AND OF THEIR PROPOSED USE AFTER DISPOSITION, CONSOLIDATION OR MERGER. STATE WHETHER THE PROPOSED DISPOSITION OF FACILITIES OR PLAN FOR CONSOLIDATION OR MERGER INCLUDES ALL THE OPERATING FACILITIES OF THE PARTIES OF THE TRANSACTION: Attachment A contains a list of the jurisdictional transmission facilities that APS is transferring to PWE under this Application. The jurisdictional transmission facilities being transferred are step-up transformers and associated facilities located at or adjacent to the generation plants that APS is also transferring to PWE. As described in Section III of this Application, the transferred facilities will be utilized in the same manner as before the transfer. APS will continue to operate as a "wires" company with transmission and distribution assets. Attachment B is a list of the contracts and service agreements that APS intends to transfer to PWE and PWCC. APS also seeks permission to transfer additional service agreements to PWCC that it may enter into between the time of this filing and when the actual transfer of contracts is approved. G. A STATEMENT (IN THE FORM PRESCRIBED BY THE COMMISSION'S UNIFORM SYSTEM OF ACCOUNTS FOR PUBLIC UTILITIES AND LICENSEES) OF THE COST OF THE FACILITIES INVOLVED IN THE SALE, LEASE, OR OTHER DISPOSITION OR MERGER OR CONSOLIDATION. IF ORIGINAL COST IS NOT KNOWN, AN ESTIMATE OF ORIGINAL COST BASED, INSOFAR AS POSSIBLE, UPON RECORDS OR DATA OF THE APPLICANT OR ITS PREDECESSORS MUST BE FURNISHED, TOGETHER WITH A FULL EXPLANATION OF THE MANNER IN WHICH SUCH ESTIMATE HAS BEEN MADE, AND A DESCRIPTION AND STATEMENT OF THE PRESENT CUSTODY OF ALL EXISTING PERTINENT DATA AND RECORDS: SEE Attachment C. The Applicants intend to account for the transfer in accordance with Electric Plant Instruction No. 5 and Account 102 of the 14 Commission's Uniform System of Accounts. Applicants will file the proposed accounting when they notify the Commission that the transfer is consummated. H. A STATEMENT AS TO THE EFFECT OF THE PROPOSED TRANSACTION UPON ANY CONTRACT FOR THE PURCHASE, SALE OR INTERCHANGE OF ELECTRIC ENERGY: The transfer of facilities will not have any effect upon the ability of APS, PWCC, or PWE to meet their contractual obligations. The transfer of transmission facilities is ancillary to the generating units being transferred and will not have any material effect on the existing transmission contracts of APS. SEE Section IV. B. on the discussion of how the APS restructuring plan will effect rates. I. A STATEMENT AS TO WHETHER ANY APPLICATION WITH RESPECT TO THE TRANSACTION OR ANY PART THEREOF IS REQUIRED TO BE FILED WITH ANY OTHER FEDERAL OR STATE REGULATORY BODY: The following other regulatory approvals have been or will be obtained to facilitate the transfer of assets: * The approval of the settlement agreement on October 6, 1999 by the ACC authorized APS to transfer its generating assets to a separate affiliate to foster open retail access (SEE Attachment D). APS intends to inform the ACC at least thirty days before the actual transfer of the assets. * Approval of the transfer of APS's interest in the Palo Verde Nuclear Generating Facility by the Nuclear Regulatory Commission pursuant to the Atomic Energy Act. * Further approvals, if necessary, from the Securities and Exchange Commission and the Federal Communications Commission to complete the APS restructuring plan. J. THE FACTS RELIED UPON BY APPLICANT TO SHOW THAT THE PROPOSED DISPOSITION, MERGER, OR CONSOLIDATION OF FACILITIES OR ACQUISITION OF SECURITIES WILL BE CONSISTENT WITH THE PUBLIC INTEREST: SEE Section IV of the Application. K. A BRIEF STATEMENT OF FRANCHISES HELD, SHOWING DATE OF EXPIRATION IF NOT PERPETUAL: SEE Attachment E, List of County and Municipal Franchises. 15 L. A FORM OF NOTICE SUITABLE FOR PUBLICATION IN THE FEDERAL REGISTER, AS WELL AS A COPY OF THE SAME NOTICE IN ELECTRONIC FORMAT: SEE Attachment F. An electronic version of the notice is included in the filing on a 3 1/2" diskette, in Wordperfect. VI. REQUIRED EXHIBITS UNDER PART 33 EXHIBITS A, C, D, E, AND F: Applicants request a waiver of the requirements to include Exhibits A, C, D, E, and F. Such a waiver is consistent with the Commission's NOTICE OF PROPOSED RULEMAKING: REVISED FILING REQUIREMENTS UNDER PART 33 OF THE COMMISSION'S REGULATIONS, IV FERC Stats. & Regs. P. 32,528, at 33,364 (1998), in which the Commission proposed to streamline the filing of the financial and accounting information currently required in Exhibits A, C, D, E, and F. Good cause exists to waive these filing requirements because the information required by these exhibits is not necessary for the Commission to render a decision on this Application. The Commission has recently approved other Applications for corporate realignments similar to this filing without detailed financial information. SEE, E. G., PUBLIC SERVICE ELECTRIC & GAS CO., 88 FERC P. 61,299 (1999). In accordance with the regulations, 18 C.F.R. ss. 33.3, Applicants attach the following exhibits to this Application: EXHIBIT B: STATEMENT OF MEASURE OF CONTROL The proposed transactions will not create new corporate relationships with third parties. All relevant entities are wholly owned subsidiaries of PWCC, which remains the parent company. A statement describing the measure of control or ownership is attached as Exhibit B. EXHIBIT G: APPLICATION FILED WITH FEDERAL AND STATE REGULATORS In the event Applicants file their Application with the Nuclear Regulatory Commission ("NRC") for approval to transfer APS's interest in the Palo Verde Nuclear Generating Facility to PWE prior to such time as the Commission has approved the instant Section 203 application, Applicants will submit a copy of the NRC Application to the Commission. Otherwise, Applicants request a waiver from the requirement to file Exhibit G. EXHIBIT H: COPY OF ALL CONTRACTS BETWEEN APS AND PWE REGARDING THE PROPOSED TRANSFER OF ASSETS As this Application is for an affiliate transfer, APS has not entered into any contracts to sell, lease, or otherwise dispose of the jurisdictional facilities that are the subject of this Application. 16 EXHIBIT I: MAP A map showing the location of the generation facilities of APS that are being transferred to PWE along with their related transmission facilities is attached as Exhibit I. VII. PROCEDURAL MATTERS A. REQUEST FOR APPROVAL WITHOUT HEARING Applicants respectfully request that the Commission approve the disposition of jurisdictional facilities associated with the restructuring that is occurring in Arizona on an expedited basis and without hearing based on the facts and supporting documents provided in this Application. The Application should support a finding that the transfer of assets is in the public interest and will promote competition. 17 B. WAIVER To the extent necessary, Applicants request a waiver of the requirement to file a market analysis in accordance with Appendix A of the Merger Policy Statement and any other waiver the Commission deems necessary to approve this Application under Section 203. Given that this filing is required to accommodate restructuring in Arizona, and that there are no rate impacts on existing customers, the Applicants believe good cause is shown for such a waiver. C. SERVICE AND COMMUNICATION Applicants have served a copy of this Application on the ACC and the New Mexico Public Regulation Commission. Applicants have also served a copy of the transmittal letter accompanying this filing on all customers under APS wholesale contracts and service agreements that are being transferred to either PWCC or PWE. Applicants will provide any of the above customers with a complete copy of this filing upon request. Communications regarding this Application should be addressed to the following persons, who are also designated for service in this proceeding: James M. Levine Barbara M. Champion Executive Vice President Generation Senior Attorney Arizona Public Service Company Pinnacle West Capital Corporation 400 North 5th Street 400 North 5th Street Mail Station 9046 Mail Station 8695 Phoenix, Arizona 85004 Phoenix, Arizona 85004 Phone: (602) 250-2095 Phone: (602) 250-3547 Joel R. Spitzkoff John D. McGrane Manager of Federal Regulation Mary Ann K. Huntington Arizona Public Service Company Kristina Beard 400 North 5th Street Morgan, Lewis & Bockius, LLP Mail Station 9905 1800 M Street, N.W. Phoenix, Arizona 85004 Washington, D.C. 20036 Phone: (602) 250-2949 Phone: (202) 467-7000 18 VIII. CONCLUSION For the foregoing reasons, Applicants respectfully request the Commission (1) to authorize the transfer of FERC-jurisdictional facilities required to implement APS's restructuring plan as described in this Application, (2) to approve the Application without hearing, and (3) to grant waiver of any filing requirements or other regulations as the Commission may find appropriate to allow approval of the transfer of assets from APS to PWE, directly or indirectly, and the transfer of jurisdictional rate schedules from APS to PWCC and PWE. Respectfully submitted, John D. McGrane -------------------------- John D. McGrane Mary Ann K. Huntington Kristina Beard Morgan, Lewis & Bockius LLP 1800 M Street, N.W. Washington, D.C. 20036 Phone: (202) 467-7000 Barbara M. Champion, Senior Attorney Pinnacle West Capital Corporation P.O. Box 53999 Mail Station 8695 Phoenix, Arizona 85072-3999 Phone: (602) 250-3547 Attorneys for Arizona Public Service Company Pinnacle West Capital Corporation Pinnacle West Energy Corporation Dated: July 28, 2000 19 SERVICE LIST DEBORAH SCOTT KENNETH R. SALINE, P.E. MR. W.A. DUNN, CHAIRMAN ARIZONA CORPORATION COMMISSION K.R. SALINE & ASSOCIATES ELECTRICAL DISTRICT NO. 3 1200 WEST WASHINGTON STREET 160 N. PASADENA, SUITE # 101 ELECTRICAL DISTRICT NO. 1 PHOENIX, AZ 85007 MESA, AZ 85201-6764 41630 W. LOUIS JOHNSON DR. MARICOPA, AZ 85239 AJO IMPROVEMENT COMPANY SHERYL A. SWEENEY, ESQ. ELIZABETH STORY, ADMINISTRATOR P.O. DRAWER 9 RYLEY, CARLOCK & APPLEWHITE TONOPAH IRRIGATION DISTRICT AJO, AZ 85321 101 NORTH FIRST AVENUE, SUITE 2600 P.O. BOX 159 PHOENIX, AZ 85003-1973 TONOPAH, AZ 85354 AMERICAN ELECTRIC POWER WILLIAM D. BAKER, ESQ. HENRY A. BRUBAKER, PRESIDENT 1 RIVERSIDE PLAZA ELLIS & BAKER AGUILA IRRIGATION DISTRICT COLUMBUS, OH 43215-2373 2111 EAST HIGHLAND, SUITE 355 P.O. BOX 263 PHOENIX, AZ 85016 AGUILA, AZ 85320 AMERICAN HUNTER ENERGY, INC. JAY I. MOYES, ESQ. JACKIE A. MECK, MANAGER 1100 LOUISIANA, SUITE 5025 MOYES STOREY BUCKEYE WATER CONSERVATION & HOUSTON, TX 77002 3003 NORTH CENTRAL AVENUE, SUITE 1250 DRAINAGE DISTRICT PHOENIX, AZ 85001-2199 P.O. BOX 1726 BUCKEYE, AZ 85326-0160 ARIZONA ELECTRIC POWER COOP. CAJUN ELECTRIC POWER COOP. H.C. DOUGLAS, PRESIDENT P.O. BOX 670 112 TELLY STREET ELECTRICAL DISTRICT NO. 6 BENSON, AZ 85602 NEW ROADS, LA 70760 P.O. BOX 167 QUEEN CREEK, AZ 85242 BRITISH COLUMBIA POWER EXCHANGE CALIFORNIA INDEPENDENT SYSTEM OPERATOR R.D. JUSTICE, MANAGER 666 BURRARD STREET, SUITE 1440 151 BLUE RAVEEN ROAD ELECTRICAL DISTRICT NO. 7 VANCOUVER, B.C. V6C 2X8 FOLSOM, CA 95630 14629 W. PEORIA AVE CANADA WADDELL, AZ 85355 CALIFORNIA POWER EXCHANGE CENTRAL LOUISIANA ELECTRIC COMPANY JAMES D. DOWNING, P.E. 1000 SOUTH FREEMONT AVE P.O. BOX 5000 ELECTRICAL DISTRICT NO. 8 BLDG A9W - 5TH FLOOR PINEVILLE, LA 71361-5000 MCMULLEN VALLEY WATER CONSERVATION ALHAMBRA, CA 91803 & DRAINAGE DISTRICT P.O. BOX 99 SALOME, AZ 85348 RESAL CRAVEN CINERGY SERVICES, INC. STEPHEN P. PAVICH, PRESIDENT CITIZENS UTILITIES COMPANY 139 EAST 4 STREET, E.F. 401 HARQUAHALA VALLEY POWER DISTRICT 2901 NORTH CENTRAL AVENUE, SUITE 1660 CINCINNATI, OH 45201 402 S. HARQUAHALA VALLEY RD PHOENIX, AZ 85012 TONOPAH, AZ 85354 TUCSON ELECTRIC POWER CO. CITIZENS LEHMAN POWER SALES JAMES R. SWEENEY, GEN. MGR. P.O. BOX 711 160 FEDERAL STREET MARICOPA COUNTY MUNICIPAL WATER TUCSON, AZ 85702 BOSTON, MA 02110 CONSERVATION DISTRICT NO. 1 P.O. BOX 900 WADDELL, AZ 85355-0900 CITY OF AZUSA CITY OF WICKENBURG STANLEY H. ASHBY, SECRETARY P.O. BOX 9500 MR. TOM CANDELARIA ROOSEVELT IRRIGATION DISTRICT AZUSA, CA 91702 155 N. TEGNER STREET 103 W. BASELINE ROAD WICKENBURG, AZ 58390-1456 BUCKEYE, AZ 85326
20 SERVICE LIST CITY OF BURBANK US DEPARTMENT OF THE INTERIOR IDAHO POWER COMPANY P.O. BOX 631 1849 C STREET, N.W. P.O. BOX 70 BURBANK, CA 91503-0631 WASHINGTON, D.C. 20240 BOISE, ID 83707 CITY OF GLENDALE E PRIME INDUSTRIAL ENERGY APPLICATIONS, INC. 729 N. AVENUE, 4TH LEVEL 1331 17TH STREET, SUITE 601 5925 DRY CREEK LANE, NE GLENDALE, CA 91206-4496 DENVER, CO 80202 CEDAR RAPIDS, IA 52402 CITY OF IDAHO FALLS EASTERN POWER DISTRIBUITON, INC. INTERCOASTAL ENERGY APPS., INC. 140 S. CAPITAL AVENUE 2800 EISENHOWER AVE P.O. BOX 657 IDAHO FALLS, ID 86402 ALEXANDRIA, VA 22314 DES MOINES IA 50303-0657 CITY OF NEEDLES EDISON SOURCE KOCH ENERGY TRADING, INC. ENOVA ENERGY MANAGEMENT, INC. 13191 CROSSROADS PKWY N, SUITE 405 P.O. BOX 2626 12555 HIGH BLUFF DR, SUITE 155 CITY OF INDUSTRY, CA 91746 HOUSTON, TX 77252-2626 SAN DIEGO, CA 92130 COASTAL ELECTRIC SERVICES COMPANY ELECTRIC CLEARINGHOUSE, INC. LA DEPT. OF WATER & POWER COASTAL TOWER DBA DYNERGY P.O. BOX 111 NINE GREENWAY PLAZA 2999 NORTH 44 ST., SUITE 300 LOS ANGELES, CA 90012-2694 HOUSTON, TX 77046-0995 PHOENIX, AZ 85012 COLORADO RIVER AGENCY ENERGY MASTERS INTERNATIONAL LG&E ENERGY MARKETING, INC. ROUTE 1, BOX 9-C 1385 MENDOTA HEIGHTS ROAD 220 W. MAIN STREET, 7TH FLOOR PARKER, AZ 85344 ST. PAUL, MN 55120-1129 LOUISVILLE, KY 40202 COLORADO RIVER COMMISSION OF NEVADA ENGELHARD POWER MARKETING, INC. MERCHANT ENERGY GROUP OF THE AMERICAS 555 EAST WASHINGTON AVENUE 101 WOOD AVENUE 151 WEST STREET, SUITE 300 SUITE 3100 ISELIN, NJ 08830-0770 ANNAPOLIS, MD 21401 LAS VEGAS, NV 89101 CON AGRA ENERGY SERVICES, INC. ENTERGY POWER MARKETING CORP. MORGAN STANLEY CAP. GROUP, INC 9 CON AGRA DRIVE PARKWOOD TWO BUILDING 1585 BROADWAY OHAMA, NE 68102-5009 10055 GROGAN'S MILL RD, SUITE 500 NEW YORK, NY 10036 THE WOODLANDS, TX 77380 COOK INLET ENERGY SUPPLY FEDERAL ENERGY SALES, INC. MONTANA POWER COMPANY 10100 SANTA MONICA BLVD, 25TH FLOOR 3222 N. RIDGE ROAD 40 E. BROADWAY LOS ANGELES, CA 90024 ELYRIA, OH 44035 BUTTE, ME 59701-9394 CORAL POWER, LLC GULFSTREAM ENERGY, LLC NATIONAL GAS & ELECTRIC 909 FANNIN, SUITE 700 2930 REVERE ST., STE 202 3555 TIMMONS, SUITE 1500 HOUSTON, TX 77010 HOUSTON TX 77098 HOUSTON, TX 77027
21 SERVICE LIST NEVADA POWER COMPANY SALT RIVER PROJECT AGRICULTURAL UTAH MUNICAPAL POWER AGENCY P.O. BOX 230 IMPROVEMENT & POWER DISTRICT 8722 SOUTH 300 WEST LAS VEGAS, NV 89151-0230 P.O. BOX 52025 SANDY, UT 84070 PHOENIX, AZ NORTHERN WASCO COUNTY PUD SAN CARLOS IRRIGATION PROJECT UTILITY 2000 ENERGY 2345 RIVER ROAD P.O. BOX 250 140 FOURTH AVENUE, S.W. DALLES, OR 97058 COOLIDGE, AZ 85228 SUITE 1710 CALGARY, ALBERTA T2P 3N3 CANADA NP ENERGY INC. SAN DIEGO GAS & ELECTRIC VALLEY ELECTRIC ASSOCIATION 3650 NATIONAL CITY TOWER P.O. BOX 1831 P.O. BOX 237 LOUISVILLE, KY 40202 SAN DIEGO, CA 92112-4120 PAHRUMP, NV 89041 PACIFICORP SNOHOMISH COUNTY PUD #1 WASHINGTON WATER POWER 825 NE MULTNOMAH P.O. BOX 1107 P.O. BOX 3727 PORTLAND, OR 97232 EVERETT, WA 8206-1107 SPOKANE, SA 99220-3727 PG&E ENERGY SERVICES SONAT POWER MARKETING WESTERN POWER SERVICES, INC. VALERO POWER SERVICES CO. 1900 FIFTH AVENUE 12200 NORTH PECOS STREET 353 SACRAMENTO STREET, SUITE 1900 BIRMINGHAM, AL 35203 DENVER, CO 80234-3439 SAN FRANCISCO, CA 94111 POWER COMPANY OF AMERICA SOUTHERN CALIFORNIA EDISON WESTERN RESOURCES, INC. 2 GREENWICH PLAZA, 2ND FLOOR 2244 WALNUT GROVE AVENUE P.O. BOX 889 GREENWICH, CT 06830 ROSEMEAD, CA 91770 TOPEKA, KS 66601 POWER EXCHANGE CORP. EL PASO ELECTRIC COMPANY WILLIAMS ENERGY SERVICES COMPANY 450 SANSOME ST., SUITE 1400 P.O. BOX 982 P.O. BOX 2848 SAN FRANCISCO, CA 94111 EL PASO, TX 79960 TULSA, OK 74101-9567 PUBLIC SERVICE COMPANY OF NEW MEXICO THE ENERGY AUTHORITY, INC. AQUILA ENERGY MARKETING CORP. ALVARADO SQUARE 76 S. LAURA STREET, STE 1500 P.O. BOX 13207 ALBUQUERQUE, NM 87158 JACKSONVILLE, FL 32202 KANSAS CITY, MO 64199-3207 RAINBOW ENERGY MARKETING CORP. TOHONO O'ODHAM UTILITY AUTHORITY TRACTABEL ENERGY MARKETING, INC. 909 SOUTH 7TH STREET, SUITE 405 P.O. BOX 816 1177 WEST LOOP, SUITE 800 BISMARK, SD 58504 SELLS, AZ 85635 HOUSTON, TX 77027 ROCKY MOUNTAIN GENERATION COOP. NEW MEXICO PUBLIC SERVICE COMMISSION 5441 BOEING DR., SUITE 200 224 EAST PALACE LOVELAND, CO 80538-8810 SANTA FE, NM 87503
22 VERIFICATION 23 UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION Arizona Public Service Company ) Docket No. EC00-_____-000 Pinnacle West Capital Corporation ) Docket No. ER00-_____-000 Pinnacle West Energy Company ) VERIFICATION JACK E. DAVIS STATE OF ARIZONA ) ) ss. County of Maricopa ) Jack E. Davis, being first duly sworn upon oath, deposes and says: That he is Chief Corporation Officer and Executive Vice President of Pinnacle West Capital Corporation, and makes this verification for and on behalf of said corporations, being thereto duly authorized; that he has read the foregoing Application and knows the contents thereof, and that the same is true to the best of his knowledge, information and belief. Jack Davis ---------------------------------------- SUBSCRIBED AND SWORN to before me this 27th day of July, 2000. Joel R. Spitzkoff ---------------------------------------- Notary Public My Commission expires: June 22, 2003 ------------------------------ [SEAL] 24 APPENDIX A PRE-RESTRUCTURING ORGANIZATIONAL CHART APPENDIX A PNW CORPORATE STRUCTURE (PRIOR TO PROPOSED RESTRUCTURING) Pursuant to Regulation S-T, Rule 304, Appendix A is a diagram of holding company structure titled "PNW Corporate Structure (Prior to Proposed Restructing)," which shows Pinnacle West Capital Corporation as the parent corporation, with a Shared Services division. The following wholly-owned subsidiaries of PNW are also shown: PWE (Expanded Generation), APSES (Competitive Retail Sales), SunCor Development Company, El Dorado Investment Company, and APS (including Generation Business Unit (Current Generation), Bulk Power Marketing Group (wholesale merchant), and Energy Delivery and Sales (Transmission , Distribution & Retail Standard Offer Sales)). Two inactive subsidiaries of APS -- Axiom and Bixco -- are also shown. APPENDIX B POST-RESTRUCTURING ORGANIZATIONAL CHART APPENDIX B POST - RESTRUCTURING ORGANIZATIONAL CHART Pursuant to Regulation S-T, Rule 304, Appendix B is a diagram of holding company structure titled "PNW Corporate Structure (Subsequent to Proposed Restructing)," which shows Pinnacle West Capital Corporation as the parent corporation, with a Shared Services division and a Bulk Power Marketing division. The following wholly-owned subsidiaries of PNW are also shown: PWE (Generation), APSES (Competitive Retail Sales), SunCor Development Company, El Dorado Investment Company, and APS (Transmission, Distribution and Retail Sales). Two inactive subsidiaries of APS -- Axiom and Bixco -- are also shown. ATTACHMENT A LIST OF THE JURISDICTIONAL TRANSMISSION FACILITIES ATTACHMENT A LIST OF THE JURISDICTIONAL TRANSMISSION FACILITIES BEING TRANSFERRED FROM APS TO PWE APS is requesting permission to transfer associated transmission equipment composed of step-up transformers, breakers, disconnect switches, potential and current transformers, metering and tie lines located at the following generating sites that APS is also transferring to its affiliate PWE: PALO VERDE NUCLEAR GENERATING PLANT (APS operates the plant and owns 29.1% of all three Units.) FOUR CORNERS POWER PLANT (APS operates the plant and owns 100% of Unit 1, 2, and 3. APS owns 15% of Unit 4 and 5.) CHOLLA POWER PLANT (APS operates the plant but owns only Units 1, 2, and 3. Unit 4 is owned by PacifiCorp.) WEST PHOENIX POWER PLANT (APS operates the plant and owns all units.) YUCCA POWER PLANT (APS operates the plant but only owns Units 1, 2, 3, and 4. Unit 5 is owned by Imperial Irrigation District.) OCOTILLO POWER PLANT (APS operates the plant and owns all units.) SAGUARO POWER PLANT (APS operates the plant and owns all units.) NAVAJO POWER PLANT (APS owns 14% of all three units, but does not operate the plant) FAIRVIEW/DOUGLAS (APS operates the plant and owns the one unit.) ATTACHMENT B LIST OF WHOLESALE CONTRACTS AND SERVICE AGREEMENTS BEING TRANSFERRED FROM APS TO PWCC AND PWE Attachment B Page 1 of 9 Existing APS Agreements, Tariffs and Service Agreements to be Transferred to Other APS Affiliates
Rate Schedule Designations Agreement/Tariff Title Counter-Party Assigned to: -------------------------- ---------------------- ------------- ------------ 1 FPC Rate Schedule No. 5 Axis Station Agreement Southern California Edison Pinnacle West Energy 2 FPC Rate Schedule No. 46 United States Department Southern California Edison, Pinnacle West Capital of Interior Kaiparowits San Diego Gas & Electric, Corporation Power Coordination United States of America Contract 3 FERC Rate Schedule No.106 Operating Letter for Electrical District No. 3 Pinnacle West Capital Banking of Arizona Power Corporation Authority Energy 4 FERC Rate Schedule No. 117 Operating Letter for Electrical District No. 1 Pinnacle West Capital Banking of Arizona Power Corporation Authority Energy 5 FERC Rate Schedule No. 120 Wholesale Power Agreement Southern California Edison Pinnacle West Capital Corporation 6 FERC Rate Schedule No. 182 Long Term Power PacifiCorp Pinnacle West Capital Transaction Agreement Corporation 7 FERC Rate Schedule No. 211 Four Corners Co-tenancy Southern California Edison, Pinnacle West Energy Agreement and Four Public Service Company of New Corners Operating Mexico, El Paso Electric, Agreement Salt River Project Agricultural Improvement & Power District, Tucson Electric Power Company 8 FERC Rate Schedule No. 215 Transmission Service Southern California Pinnacle West Capital Agreement Edison/Colorado River Corporation Irrigation Project (Bureau of Indian Affairs) 9 FERC Rate Schedule No. 225 Power Service Agreement Citizens Utilities Company Pinnacle West Capital Corporation 10 FERC Rate Schedule No. 229 Navajo Project Co-tenancy United States of America, Pinnacle West Energy Agreement Dept. of Water & Power of Los Angeles, Nevada Power Company, Salt River Project Agricultural Improvement & Power District, Tucson Electric Power Company 11 FERC Rate Schedule No. 231 Electric Power Service Colorado River Commission of Pinnacle West Capital Agreement Nevada Corporation 12 FERC Rate Schedule No.237 Service Agreement Under Washington Water Power Pinnacle West Capital FERC Electric Tariff, Corporation Original Volume No. 9 of Washington Water Power
Attachment B Page 2 of 9 Existing APS Agreements, Tariffs and Service Agreements to be Transferred to Other APS Affiliates
Rate Schedule Designations Agreement/Tariff Title Counter-Party Assigned to: -------------------------- ---------------------- ------------- ------------ 13 FERC Rate Schedule No. 238 Service Agreement Under PacifiCorp Pinnacle West Capital FERC Electric Tariff, Corporation Original Volume No. 12 of PacifiCorp 14 FERC Rate Schedule No. 239 Mutual Netting/Settlement PacifiCorp Pinnacle West Capital Agreement Corporation 15 FERC Electric Tariff, Market Based Rate Tariff Rainbow Energy Marketing Corp Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 1 16 FERC Electric Tariff, Market Based Rate Tariff NP Energy Inc. Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 2 17 FERC Electric Tariff, Market Based Rate Tariff Valley Electric Association Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 3 18 FERC Electric Tariff, Market Based Rate Tariff Cinergy Services, Inc. Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 4 19 FERC Electric Tariff, Market Based Rate Tariff LG&E Energy Marketing Inc. Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 5 20 FERC Electric Tariff, Market Based Rate Tariff Rocky Mountain Generation Pinnacle West Capital Second Revised Volume 3, Service Agreements Coop. Corporation Service Agreement No. 6 21 FERC Electric Tariff, Market Based Rate Tariff Entergy Power Marketing Corp. Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 7 22 FERC Electric Tariff, Market Based Rate Tariff E Prime Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 8 23 FERC Electric Tariff, Market Based Rate Tariff Power Company of America Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 9
Attachment B Page 3 of 9 Existing APS Agreements, Tariffs and Service Agreements to be Transferred to Other APS Affiliates
Rate Schedule Designations Agreement/Tariff Title Counter-Party Assigned to: -------------------------- ---------------------- ------------- ------------ 24 FERC Electric Tariff, Market Based Rate Tariff Idaho Power Company Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 10 25 FERC Electric Tariff, Market Based Rate Tariff Sonat Power Marketing Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 11 26 FERC Electric Tariff, Market Based Rate Tariff American Hunter Energy Inc. Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 12 27 FERC Electric Tariff, Market Based Rate Tariff Western Power Services, Inc. Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 13 28 FERC Electric Tariff, Market Based Rate Tariff National Gas & Electric Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 14 29 FERC Electric Tariff, Market Based Rate Tariff Cajun Electric Power Coop. Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 15 30 FERC Electric Tariff, Market Based Rate Tariff British Columbia Power Pinnacle West Capital Second Revised Volume 3, Service Agreements Exchange Corporation Service Agreement No. 17 31 FERC Electric Tariff, Market Based Rate Tariff Cook Inlet Energy Supply Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 18 32 FERC Electric Tariff, Market Based Rate Tariff Snohomish County PUD #1 Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 19 33 FERC Electric Tariff, Market Based Rate Tariff PG&E/ Valero Power Services Pinnacle West Capital Second Revised Volume 3, Service Agreements Inc Corporation Service Agreement No. 20
Attachment B Page 4 of 9 Existing APS Agreements, Tariffs and Service Agreements to be Transferred to Other APS Affiliates
Rate Schedule Designations Agreement/Tariff Title Counter-Party Assigned to: -------------------------- ---------------------- ------------- ------------ 34 FERC Electric Tariff, Market Based Rate Tariff Western Resources, Inc. Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 21 35 FERC Electric Tariff, Market Based Rate Tariff MP Energy Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 22 36 FERC Electric Tariff, Market Based Rate Tariff Tucson Electric Power Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 23 37 FERC Electric Tariff, Market Based Rate Tariff Coral Power LLC Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 24 38 FERC Electric Tariff, Market Based Rate Tariff City of Burbank Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 25 39 FERC Electric Tariff, Market Based Rate Tariff Morgan Stanley Capital Group Pinnacle West Capital Second Revised Volume 3, Service Agreements Inc Corporation Service Agreement No. 26 40 FERC Electric Tariff, Market Based Rate Tariff Tractabel Energy Marketing, Pinnacle West Capital Second Revised Volume 3, Service Agreements Inc. Corporation Service Agreement No. 27 41 FERC Electric Tariff, Market Based Rate Tariff Koch Energy Trading Inc. Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 28 42 FERC Electric Tariff, Market Based Rate Tariff PG&E Energy Services Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 29 43 FERC Electric Tariff, Market Based Rate Tariff Williams Energy Services Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 30
Attachment B Page 5 of 9 Existing APS Agreements, Tariffs and Service Agreements to be Transferred to Other APS Affiliates
Rate Schedule Designations Agreement/Tariff Title Counter-Party Assigned to: -------------------------- ---------------------- ------------- ------------ 44 FERC Electric Tariff, Market Based Rate Tariff Central Louisiana Electric Pinnacle West Capital Second Revised Volume 3, Service Agreements Company Corporation Service Agreement No. 31 45 FERC Electric Tariff, Market Based Rate Tariff LA Dept of Water & Power Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 32 46 FERC Electric Tariff, Market Based Rate Tariff Nevada Power Company Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 33 47 FERC Electric Tariff, Market Based Rate Tariff San Diego Gas & Electric Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 34 48 FERC Electric Tariff, Market Based Rate Tariff Arizona Electric Power Coop. Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 35 49 FERC Electric Tariff, Market Based Rate Tariff Salt River Project Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 36 50 FERC Electric Tariff, Market Based Rate Tariff Southern California Edison Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 37 51 FERC Electric Tariff, Market Based Rate Tariff Majority Districts (ED6, ED7, Pinnacle West Capital Second Revised Volume 3, Service Agreements ED8, MWD, Harquahala, Corporation Service Agreement No. 38 McMullen, RID, AID, BID & TID) 52 FERC Electric Tariff, Market Based Rate Tariff American Electric Power Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 39 53 FERC Electric Tariff, Market Based Rate Tariff ConAgra Energy Services, Inc. Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 40
Attachment B Page 6 of 9 Existing APS Agreements, Tariffs and Service Agreements to be Transferred to Other APS Affiliates
Rate Schedule Designations Agreement/Tariff Title Counter-Party Assigned to: -------------------------- ---------------------- ------------- ------------ 54 FERC Electric Tariff, Market Based Rate Tariff Eastern Power Distribution Inc Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 41 55 FERC Electric Tariff, Market Based Rate Tariff Morgan Stanley Capital Group Pinnacle West Capital Second Revised Volume 3, Service Agreements Inc Corporation Service Agreement No. 42 56 FERC Electric Tariff, Market Based Rate Tariff Tohono O'Odham Utility Pinnacle West Capital Second Revised Volume 3, Service Agreements Authority Corporation Service Agreement No. 43 57 FERC Electric Tariff, Market Based Rate Tariff Town of Wickenburg Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 44 58 FERC Electric Tariff, Market Based Rate Tariff California ISO Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 46 59 FERC Electric Tariff, Market Based Rate Tariff California Power Exchange Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 47 60 FERC Electric Tariff, Market Based Rate Tariff Electrical District No. 1 Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 48 61 FERC Electric Tariff, Market Based Rate Tariff Electrical District No. 3 Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 49 62 FERC Electric Tariff, Market Based Rate Tariff Public Service Company of New Pinnacle West Capital Second Revised Volume 3, Service Agreements Mexico Corporation Service Agreement No. 50 63 FERC Electric Tariff, Market Based Rate Tariff Merchant Energy Group of the Pinnacle West Capital Second Revised Volume 3, Service Agreements Americas Corporation Service Agreement No. 51
Attachment B Page 7 of 9 Existing APS Agreements, Tariffs and Service Agreements to be Transferred to Other APS Affiliates
Rate Schedule Designations Agreement/Tariff Title Counter-Party Assigned to: -------------------------- ---------------------- ------------- ------------ 64 FERC Electric Tariff, Market Based Rate Tariff Northern Wasco County PUD Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 52 65 FERC Electric Tariff, Market Based Rate Tariff San Carlos Irrigation Project Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 53 66 FERC Electric Tariff, Market Based Rate Tariff City of Idaho Falls Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 54 67 FERC Electric Tariff, Market Based Rate Tariff San Carlos Irrigation Project Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 55 68 FERC Electric Tariff, Market Based Rate Tariff Utah Municipal Power Agency Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 56 69 FERC Electric Tariff, Market Based Rate Tariff The Energy Authority, Inc. Pinnacle West Capital Second Revised Volume 3, Service Agreements Corporation Service Agreement No. 57 70 FERC Electric Tariff, Electric Coordination Pinnacle West Capital Volume 1 Tariff Corporation 71 FERC Electric Tariff, Electric Coordination Snohomish Public Utility Volume 1, Service Tariff Service Agreement District Pinnacle West Capital Agreement No. 1 Corporation 72 FERC Electric Tariff, Electric Coordination Electric Clearinghouse Inc. Pinnacle West Capital Volume 1, Service Tariff Service Agreement Corporation Agreement No. 2 73 FERC Electric Tariff, Electric Coordination Gulfstream Energy, LLC Pinnacle West Capital Volume 1, Service Tariff Service Agreement Corporation Agreement No. 3 74 FERC Electric Tariff, Electric Coordination Citizens Utility Company Pinnacle West Capital Volume 1, Service Tariff Service Agreement Corporation Agreement No. 4 75 FERC Electric Tariff, Electric Coordination LG&E Power Marketing, Inc. Pinnacle West Capital Volume 1, Service Tariff Service Agreement Corporation Agreement No. 5 76 FERC Electric Tariff, Electric Coordination Power Exchange Corp. Pinnacle West Capital Volume 1, Service Tariff Service Agreement Corporation Agreement No. 6
Attachment B Page 8 of 9 Existing APS Agreements, Tariffs and Service Agreements to be Transferred to Other APS Affiliates
Rate Schedule Designations Agreement/Tariff Title Counter-Party Assigned to: -------------------------- ---------------------- ------------- ------------ 77 FERC Electric Tariff, Electric Coordination Intercoastal Power Marketing Pinnacle West Capital Volume 1, Service Tariff Service Agreement Corporation Agreement No. 8 78 FERC Electric Tariff, Electric Coordination Rainbow Energy Marketing Corp. Pinnacle West Capital Volume 1, Service Tariff Service Agreement Corporation Agreement No. 9 79 FERC Electric Tariff, Electric Coordination Town of Wickenburg Pinnacle West Capital Volume 1, Service Tariff Service Agreement Corporation Agreement No. 10 80 FERC Electric Tariff, Electric Coordination Engelhard Power Marketing, Pinnacle West Capital Volume 1, Service Tariff Service Agreement Inc. Corporation Agreement No. 11 81 FERC Electric Tariff, Electric Coordination Coastal Electric Services Pinnacle West Capital Volume 1, Service Tariff Service Agreement Company Corporation Agreement No. 13 82 FERC Electric Tariff, Electric Coordination Utility 2000 Energy Pinnacle West Capital Volume 1, Service Tariff Service Agreement Corporation Agreement No. 14 83 FERC Electric Tariff, Electric Coordination City of Needles Pinnacle West Capital Volume 1, Service Tariff Service Agreement Corporation Agreement No. 15 84 FERC Electric Tariff, Electric Coordination Citizens Lehman Power Sales Pinnacle West Capital Volume 1, Service Tariff Service Agreement Corporation Agreement No. 16 85 FERC Electric Tariff, Electric Coordination Energy Masters International Pinnacle West Capital Volume 1, Service Tariff Service Agreement Corporation Agreement No. 17 86 FERC Electric Tariff, Electric Coordination Aquila Energy Marketing Corp. Pinnacle West Capital Volume 1, Service Tariff Service Agreement Corporation Agreement No. 18 87 FERC Electric Tariff, Electric Coordination Industrial Energy Pinnacle West Capital Volume 1, Service Tariff Service Agreement Applications, Inc. Corporation Agreement No. 19 88 FERC Electric Tariff, Electric Coordination Electrical District No. 3 Pinnacle West Capital Volume 1, Service Tariff Service Agreement Corporation Agreement No. 20 89 FERC Electric Tariff, Electric Coordination Western Power Services, Inc. Pinnacle West Capital Volume 1, Service Tariff Service Agreement Corporation Agreement No. 21 90 FERC Electric Tariff, Electric Coordination Federal Energy Sales, Inc. Pinnacle West Capital Volume 1, Service Tariff Service Agreement Corporation Agreement No. 22 91 FERC Electric Tariff, Electric Coordination Cinergy Services, Inc. Pinnacle West Capital Volume 1, Service Tariff Service Agreement Corporation Agreement No. 23 92 FERC Electric Tariff, Electric Coordination Ajo Improvement Company Pinnacle West Capital Volume 1, Service Tariff Service Agreement Corporation Agreement No. 24
Attachment B Page 9 of 9 Existing APS Agreements, Tariffs and Service Agreements to be Transferred to Other APS Affiliates
Rate Schedule Designations Agreement/Tariff Title Counter-Party Assigned to: -------------------------- ---------------------- ------------- ------------ 93 FERC Electric Tariff, Electric Coordination City of Glendale Pinnacle West Capital Volume 1, Service Tariff Service Agreement Corporation Agreement No. 25 94 FERC Electric Tariff, Electric Coordination City of Azusa Pinnacle West Capital Volume 1, Service Tariff Service Agreement Corporation Agreement No. 26 95 FERC Electric Tariff, Electric Coordination Tohono O'Odham Utility Pinnacle West Capital Volume 1, Service Tariff Service Agreement Authority Corporation Agreement No. 27 96 FERC Electric Tariff, Electric Coordination Koch Energy Trading, Inc. Pinnacle West Capital Volume 1, Service Tariff Service Agreement Corporation Agreement No. 28 97 FERC Electric Tariff, Electric Coordination Edison Source Pinnacle West Capital Volume 1, Service Tariff Service Agreement Corporation Agreement No. 29 98 FERC Electric Tariff, Electric Coordination Williams Energy Services Pinnacle West Capital Volume 1, Service Tariff Service Agreement Company Corporation Agreement No. 30 99 FERC Electric Tariff, Electric Coordination Colorado River Agency Pinnacle West Capital Volume 1, Service Tariff Service Agreement Corporation Agreement No. 31
ATTACHMENT C STATEMENT OF THE COST OF FACILITIES INVOLVED IN THE TRANSFER OF ASSETS BETWEEN APS AND PWE ATTACHMENT C ARIZONA PUBLIC SERVICE COMPANY TRANSMISSION EQUIPMENT BY POWER PLANT AND RELATED SUBSTATION EQUIPMENT ORIGINAL COSTS AND ACCUMULATED DEPRECIATION AS OF MAY 31-2000 POWER PLANTS
ORIGINAL COSTS ACCUM DEPR NET BOOK VALUE -------------- ---------- -------------- FAIRVIEW/DOUGLAS $ 186,986 $ 149,683 $ 37,303 OCOTILLO POWER PLANT $ 2,164,238 $ 1,405,630 $ 758,608 SAGUARO POWER PLANT $ 1,649,298 $ 1,397,934 $ 251,364 YUCCA POWER PLANT $ 652,184 $ 537,451 $ 114,733 CHOLLA STEAM PLANT $13,197,993 $ 7,326,215 $ 5,871,778 PALO VERDE NUCLEAR PLANT $21,126,640 $ 6,436,097 $14,690,543 NAVAJO STEAM PLANT $ 2,009,351 $ 1,203,950 $ 805,401 WEST PHOENIX PLANT $ 2,409,236 $ 1,729,150 $ 680,086 FOUR CORNERS STEAM PLANT $ 3,835,334 $ 2,530,934 $ 1,304,400 --------------------------------------------- TOTAL POWER PLANT EQUIP IN TRANSMISSION $47,231,260 $22,717,044 $24,514,216 =============================================
ATTACHMENT D SETTLEMENT AGREEMENT APPROVED BY THE ARIZONA CORPORATION COMMISSION AUTHORIZING APS TO TRANSFER ITS GENERATING FACILITIES TO A SEPARATE AFFILIATE