APS Four Corners acquisition "bittersweet"

January 3, 2014 | By Barbara Vergetis Lundin

Arizona Public Service (APS) has completed its purchase of Southern California Edison's (SCE) ownership in Units 4 and 5 of the Four Corners Power Plant near Farmington, New Mexico. APS has permanently closed the plant's older, less efficient Units 1, 2 and 3, and will install additional emission controls on the remaining cleaner, more efficient units.

Credit: APS

"We have completed a transaction that will benefit the environment, allow us to continue to support the economy of the Navajo Nation and surrounding community, and help electric users in the Southwest with an important, low-cost generating resource," said Don Brandt, APS chairman, president and CEO. "It is bittersweet because generations of Four Corners employees have dedicated their careers to running those three units to keep the lights on for our customers."

With the closing of the APS-owned Units 1, 2 and 3, capacity at Four Corners is reduced from 2,100 MW to 1,540 MW, enabling the plant to serve half a million homes. Acquiring SCE's 48 percent interest in the larger Units 4 and 5 will increase APS's total Four Corners capacity from 791 MW to 970 MW and bring APS's ownership to 63 percent of Units 4 and 5.

With the closing, particulate emissions are expected to decline by 43 percent, nitrogen oxides (NO_x) by 36 percent, carbon dioxide (CO₂) by 30 percent, mercury by 61 percent and sulfur dioxide (SO₂) by 24 percent.

The installation of selective catalytic reduction equipment on Units 4 and 5 will commence by July 31, 2018, satisfying Best Available Retrofit Technology (BART) requirements for the plant issued by the U.S. Environmental Protection Agency in August 2012.

The final purchase price for the Southern California Edison share is approximately $182 million, which is substantially less than other generation alternatives.

"Our plan for the plant moving forward saves APS customers nearly a half-billion dollars over other energy sources and maintains a highly reliable, cost-effective source of electricity generation for APS and other users in the Southwest," said Mark Schiavoni, APS executive vice president of operations. "Along with natural gas, nuclear, renewables and energy efficiency, coal has an important place in our company's balanced energy portfolio."

Earlier this week, APS filed an application with the Arizona Corporation Commission to recover costs associated with the purchase of SCE's interest in the Four Corners plant. The company's 2012 rate case settlement includes a provision that allows APS to seek rate relief for those expenses prior to its next rate case, amounting to a bill impact of about 2 percent.

For more:
- see this filing

http://www.fierceenergy.com/story/aps-four-corners-acquisition-bittersweet/2014-01-03