Nuclear plant's outages to may cause
higher rates for Arizona utility customers
Oct 26, 2005 - The Tribune, Mesa, Ariz.
Author(s): Ed Taylor
Oct. 26--Unplanned outages at the Palo Verde nuclear plant could cost
Arizona Public Service customers $40million in higher electric rates.
That possibility was raised in a letter to the Arizona Corporation
Commission written by APS executive vice president Steven Wheeler.
Wheeler said the utility intends to seek approval to recover those
estimated costs in the form of higher surcharges for customers.
The $40million represents the added costs to APS to generate
electricity and purchase power from more expensive replacement sources,
Wheeler said.
Of that amount, about $14million is related to the latest unplanned
shutdown between Oct. 11 and Oct. 20, when APS engineers were unable to
assure federal regulators the reactor core cooling systems at the
plant's three units could operate in all emergency situations.
Last week APS said it intended to try to recover those costs from
customers, but officials had not yet estimated what those costs were.
The $40million estimate was revealed Monday in Wheeler's letter to
the commission.
The commission, which regulates utilities in Arizona, must approve
any APS rate increase before it can take effect.
The $40million is in addition to an $80million surcharge the company
is seeking to impose on customers to cover the higher cost of natural
gas used a fuel in some of its other generators. Hearings on that
requests are scheduled to begin this morning.
Chairman Jeff Hatch-Miller said the commission will hold formal
hearings, probably in the first quarter of next year, to determine how
much of those costs should be passed on to customers. Also on Tuesday
the commissioners decided to hold a special hearing, probably before the
end of this year, on safety and maintenance procedures at Palo Verde.
The plant has been plagued with unplanned shut downs this year over a
variety of issues, and Hatch-Miller said the commissioners "owe it to
the people of Arizona" to determine if operations at the plant, the
largest nuclear complex in the United States, can be improved."
"Palo Verde is incredibly important to us," he said. "It is one of
the cheapest power sources we have, and it is the cleanest base- load
generator we have."
The majority rejected, however, an immediate special hearing
requested by commissioners Bill Mundell and Kris Mayes to determine the
cost impact of the Palo Verde shutdowns. The majority said they
preferred to wait for the formal hearings next year.
Mayes was upset that APS officials told the public during the
shutdown they were unsure if they would seek higher rates when she said
they already knew they would try to get the money from ratepayers.
"APS has been deceptive about this," she said.
APS spokesman Jim McDonald called the charges of deception "simply
wrong" and that company spokesmen have always told the media what they
knew at the time about the utility's intentions.
McDonald agreed that Palo Verde has been hit by an unusual number of
unplanned shutdowns this year, but he said it appears to be more because
of chance than any pattern.
Unscheduled shutdowns of Palo Verde units happened between May 23 and
June 24 and between July 6 and July 13 before the latest outage this
month.
McDonald said the aging of the units, which went online between 1986
and 1988, isn't a factor.
"We have an ongoing maintenance program to keep the plants in good
operating condition," he said.
Salt River Project, which obtains about 20percent of its power from
Palo Verde, incurred about $19million in higher costs related to the
shutdowns between April and August, said spokesman Scott Harelson. The
October cost won't be known until next month.
Also undetermined is how much of those costs will be passed on to
customers, he said. As a quasi-public entity, SRP is not regulated by
the corporation commission and can impose a surcharge without approval
of regulators.
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