Washington (Platts)--25Sep2008

The Arizona Corporation Commission late Wednesday gave initial approval
of Arizona Public Service's Solana project, a proposed 280-MW solar facility
to be built by Arizona Solar One, a subsidiary of Spain's Abengoa.

APS plans to purchase under a 30-year contract the output of the solar
facility that would be built near Gila Bend, Arizona. The commission said the
facility is designed to include salt tanks that allow the project to store
power for use during peak demand periods.

The project must still be approved by the ACC's Line Siting Committee,
which will need to sign off on the location, and the commission must approve
the power purchase contract between APS and Arizona Solar One.

In a unanimous vote on the project, the ACC said that power produced by
Solana will help APS meet its renewable energy standard that requires
utilities to obtain 15% of their power from renewable sources by 2025.

"This commission and APS continue to demonstrate our commitment to
increasing the amount of energy generated from renewable resources in
Arizona," Commissioner Bill Mundell said in a statement. "The Solana project
is an important step forward in the diversification of electric generation in
Arizona. As the costs of fossil fuels continue to rise, electricity generated
by the sun, which has zero fuel costs and zero emissions, will lower or
stabilize rates in the long run."

ACC Chairman Mike Gleason added that the decision "does not establish
prudence of the proposed project, it only confirms that Solana would be an
eligible renewable resource" under the state's renewable energy standard.