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) April 30, 1994
ARIZONA PUBLIC SERVICE COMPANY
(Exact name of registrant as specified in its charter)
Arizona 1-4473 86-0011170
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
400 North Fifth Street, P.O. Box 53999, Phoenix, Az 85004
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (602)250-1000
NONE
(Former name or former address, if changed since last report)
ITEM 5.
Other Events
Palo Verde Nuclear Generating Station
As previously reported, tube cracking in the steam generators of
the Palo Verde Nuclear Generating Station ("Palo Verde") adversely
affected operations in 1993, and will continue to do so in 1994 and
probably into 1995, because of the cost of replacement power and
maintenance expense associated with unit outages and corrective
actions required to deal with the issue. See Note 10 of Notes to
Financial Statements in Part II, Item 8 of Arizona Public Service
Company (the "Company") Annual Report on Form 10-K for the fiscal
year ended December 31, 1993.
Palo Verde Unit 2
The operation of Palo Verde Unit 2 has been particularly
affected by this issue. The Company has encountered axial tube
cracking in the upper regions of the two steam generators in Unit 2.
This form of tube degradation is uncommon in the industry and, in
March 1993, led to a tube rupture and an outage of the unit that
extended to September 1993, during which the unit was refueled. In
March 1994, a mid-cycle inspection outage was completed which
revealed further tube degradation in Unit 2. The outage included,
among other things, inspecting and chemically cleaning each of Unit
2's steam generators, and subsequently starting the unit up using
boric acid in the secondary water system. Unit 2 is scheduled for
another mid- cycle inspection outage in the fall of 1994. The Unit 2
refueling and maintenance outage which was originally planned for the
fall of 1994 is now scheduled to be completed in early 1995.
Palo Verde Unit 3
Palo Verde Unit 3 is currently in a refueling outage, during
which the Company is inspecting and chemically cleaning each of Unit
3's two steam generators, and the unit will be started up with boric
acid in the secondary water system. The Company's inspection of one
of these generators has revealed axial cracking in a small number of
tubes in the upper region of the generator. As a result, the Company
is expanding the scope of its inspection of this steam generator to
obtain additional information about the extent and severity of the
axial cracking. Similar inspections have not yet been completed in
the other steam generator, but the Company expects that these
inspections will be completed within the next few weeks. The Company
currently expects that Unit 3 will be restarted in June. However, in
light of the axial cracking that the Company has found to date, the
Company anticipates that Unit 3 would be removed from service in late
1994 for a mid-cycle inspection of steam generators.
Palo Verde Unit 1
Palo Verde Unit 1 is scheduled for a refueling outage beginning
in March 1995. In late 1993 the Company concluded that Unit 1 could
be safely operated until the 1995 outage and submitted its supporting
analysis to the Nuclear Regulatory Commission. However, in light of
the axial cracking found in one of the Unit 3 steam generators, the
Company is currently evaluating the potential need for a mid-cycle
steam generator tube inspection outage in Unit 1 late in 1994.
General
Although its analysis is not yet completed, the Company believes
that the axial cracking in the Unit 2 and Unit 3 steam generator
tubes is due to the susceptibility of tube materials to a combination
of deposits on the tubes and the relatively high temperatures at
which all three units are currently designed to operate. The Company
also believes that it can retard further tube degradation to
acceptable levels by remedial actions, which include chemically
cleaning the generators and performing analyses and adjustments that
will allow the units to be operated at lower temperatures without
appreciably reducing their power output. Chemical cleaning has been
completed in Unit 2 and is being performed on Unit 3 during its
current refueling outage. The temperature analyses should be
concluded within the next several months. In the meantime, the lower
temperatures will be achieved by operating the units at less than
full power (86%).
The Company previously reported that all three units should be
returned to full power by mid-1995, and one or more of the units
could be returned to full power during 1994. However due to the
axial cracking found in Unit 3, the Company cannot currently predict
when one or more of the units will be returned to full power.
As a result of the Unit 2 mid-cycle outage and operating the
units at reduced power during the three months ended March 31, 1994,
the Company incurred additional fuel and purchased power costs
totaling about $10 million (before income taxes). During the last
nine months of 1994, the Company expects to incur replacement power
costs related to a mid-cycle inspection outage at Unit 2 and
operating the three units at 86% power averaging approximately $1.5
million (before income taxes) a month, which costs may continue into
1995. In the event that mid- cycle inspection outages are necessary
in late 1994 for Units 1 and 3 and assuming that each such outage
will last forty (40) days, the replacement power costs for both
outages are estimated to total approximately $7 million (before
income taxes). Fuel and purchased power costs increased $15.5
million (before income taxes) in 1993 due to Palo Verde outages and
reduced power operations related to steam generator tube cracking.
The Company estimates that additional operations and maintenance
expenses totaling approximately $6 million (before income taxes) will
be incurred if mid-cycle inspection outages are performed at Units 1
and 3 in late 1994.
When tube cracks are detected during any outage, the affected
tubes are taken out of service by plugging. That has occurred in a
number of tubes in all three units, particularly in Unit 2, which is
by far the most affected by cracking and plugging. The Company
expects that because of the foregoing remedial actions the rate of
plugging will slow considerably and that, while it may ultimately
reach some limit on plugging, it can operate the present steam
generators over a number of years.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Company has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
ARIZONA PUBLIC SERVICE COMPANY
(Registrant)
Dated: May 6, 1994 By Nancy E. Newquist
--------------------
Nancy E. Newquist
Treasurer
