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): August 26, 1999
ARIZONA PUBLIC SERVICE COMPANY
(Exact name of registrant as specified in its charter)
Arizona 1-4473 86-0011170
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification Number)
400 North Fifth Street, P.O. Box 53999, Phoenix, Arizona 85004
-------------------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(602) 250-1000
(Registrant's telephone number, including area code)
NONE
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events
Proposed Settlement Agreement
As previously reported, hearings before the Arizona Corporation
Commission (the "ACC") on the comprehensive Settlement Agreement between Arizona
Public Service Company (the "Company") and various other parties ended in July
1999. See Note 6 of Notes to Condensed Financial Statements in the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1999 (the
"June 10-Q"). On August 26, 1999, the ACC Hearing Officer assigned to conduct
the hearings on the Settlement Agreement issued a recommended decision. The
recommended decision, which is attached hereto and incorporated herein by this
reference, would approve the Settlement Agreement with some modifications.
The following are some of the proposed changes to major provisions of
the Settlement Agreement:
o The ACC would not be prevented from commencing rate change
proceedings during the Agreement term, provided that such
proceedings would not modify stranded cost recovery or reduce the
rate decreases provided in the Agreement for customer class.
o The recommended decision would change the Company's proposed
credits for metering, meter reading and billing, and instead would
require the use of higher credits proposed by ACC staff.
o The recommended decision would limit the Company's collection of
costs related to the transfer of generation assets to an affiliate
to 67% of such costs.
The ACC is tentatively scheduled to consider this recommendation at its
next regularly scheduled open meeting on September 14, 1999.
Proposed Retail Electric Competition Rules
As previously reported, in June 1999, ACC oral proceedings were held on
the rules that provide a framework for the introduction of retail electric
competition in Arizona (the "Proposed Rules"). See Note 6 of Notes to Condensed
Financial Statements in the June 10-Q. On August 26, 1999, the ACC Hearing
Officer issued a recommended decision on the Proposed Rules. The recommended
decision proposes adoption of the Proposed Rules with a number of modifications
which the recommended decision states do not change the Proposed Rules in any
substantive manner.
The ACC is tentatively scheduled to consider this recommendation at its
next regularly scheduled open meeting on September 14, 1999.
Item 7. Financial Statement, Pro Forma Financial Information and
Exhibits
(c) Exhibits
Exhibit No. Description
10.1 Settlement Agreement
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ARIZONA PUBLIC SERVICE COMPANY
(Registrant)
Dated: August 27, 1999 By: Nancy C. Loftin
---------------------------------
Nancy C. Loftin
Vice President and General Counsel
BEFORE THE ARIZONA CORPORATION COMMISSION
CARL J. KUNASEK
CHAIRMAN
JIM IRVIN
COMMISSIONER
WILLIAM A. MUNDELL
COMMISSIONER
IN THE MATTER OF THE APPLICATION OF DOCKET NO. E-01345A-98-0473
ARIZONA PUBLIC SERVICE COMPANY FOR
APPROVAL OF ITS PLAN FOR STRANDED
COST RECOVERY.
- --------------------------------------------
IN THE MATTER OF THE FILING OF ARIZONA DOCKET NO. E-01345A-97-0773
PUBLIC SERVICE COMPANY OF UNBUNDLED
TARIFFS PURSUANT TO A.A.C. R14-2-1601 ET
SEQ.
- --------------------------------------------
IN THE MATTER OF COMPETITION IN THE DOCKET NO. RE-00000C-94-0165
PROVISION OF ELECTRIC SERVICES DECISION NO. ______________
THROUGHOUT THE STATE OF ARIZONA.
OPINION AND ORDER
-----------------
- --------------------------------------------
DATES OF HEARING: July 12, 1999 (pre-hearing conference), July 14, 15,
16, 19, 20, and 21, 1999
PLACE OF HEARING: Phoenix, Arizona
PRESIDING OFFICER: Jerry L. Rudibaugh
IN ATTENDANCE: Carl J. Kunasek, Chairman
Jim Irvin, Commissioner
APPEARANCES: Mr. Steven M. Wheeler, Mr. Thomas Mumaw and Mr.
Jeffrey B. Guldner, SNELL & WILMER, LLP, on behalf of
Arizona Public Service Company;
Mr. C. Webb Crockett and Mr. Jay Shapiro, FENNEMORE
CRAIG, on behalf of Cyprus Climax Metals, Co., ASARCO,
Inc., and Arizonans for Electric Choice & Competition;
Mr. Scott S. Wakefield, Chief Counsel, and Ms. Karen
Nally on behalf of the Residential Utility Consumer
Office;
Ms. Betty Pruitt on behalf of the Arizona Community
Action Association;
Mr. Timothy Hogan on behalf of the Arizona Consumers
Council;
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DOCKET NO. E-01345A-98-0473 ET AL.
Mr. Robert S. Lynch on behalf of the Arizona
Transmission Dependent Utility Group;
Mr. Walter W. Meek on behalf of the Arizona Utility
Investors Association;
Mr. Douglas C. Nelson, DOUGLAS C. NELSON, P.C., on
behalf of Commonwealth Energy Corporation;
Mr. Lawrence V. Robertson, Jr., MUNGER & CHADWICK, and
Ms. Leslie Lawner, Director Government Affairs on
behalf of Enron Corporation, and Mr. Robertson on
behalf of PG&E Energy Services;
Mr. Lex J. Smith, BROWN & BAIN, P.A., on behalf of
Illinova Energy Partners and Sempra Energy Trading;
Mr. Randall H. Werner, ROSHKA, HEYMAN & DeWULF,
P.L.C., on behalf of NEV Southwest;
Mr. Norman Furuta on behalf of the Department of the
Navy;
Mr. Bradley S. Carroll on behalf of Tucson Electric
Power Company; and
Mr. Christopher C. Kempley, Assistant Chief Counsel
and Ms. Janet F. Wagner, Staff Attorney, Legal
Division on behalf of the Utilities Division of the
Arizona Corporation Commission.
BY THE COMMISSION:
On December 26, 1996, the Arizona Corporation Commission ("Commission")
in Decision No. 59943 enacted A.A.C. R14-2-1601 through R14-2-1616 ("Rules" or
"Electric Competition Rules").
On June 22, 1998, the Commission issued Decision No. 60977, the
Stranded Cost Order which required each Affected Utility to file a plan for
stranded cost recovery.
On August 10, 1998, the Commission issued Decision No. 61071 which made
modifications to the Rules on an emergency basis.
On August 21, 1998, Arizona Public Service Company ("APS") filed its
Stranded Costs filing.
On November 5, 1998, APS filed a Settlement Proposal that had been
entered into with the Commission's Utilities Division Staff ("Staff Settlement
Proposal"). Our November 24, 1998 Procedural Order set the matter for hearing.
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DOCKET NO. E-01345A-98-0473 ET AL.
On November 25, 1998, the Commission issued Decision No. 61259 which established
an expedited procedural schedule for evidentiary hearings on the Staff
Settlement Proposal.
On November 30, 1998, the Arizona Attorney General's Office, in
association with numerous other parties, filed a Verified Petition for Special
Action and Writ of Mandamus with the Arizona Supreme Court ("Court") regarding
the Commission's November 25, 1998 Procedural Order, Decision No. 61259. The
Attorney General sought a Stay of the Commission's consideration of the Staff
Settlement Proposal with APS and Tucson Electric Power Company ("TEP").
On December 1, 1998, Vice Chief Justice Charles J. Jones granted a
Motion for Immediate Stay of the Procedural Order. On December 9, 1998, the
Commission Staff filed a notice with the Supreme Court that the Staff Settlement
Proposal had been withdrawn from Commission consideration.
On April 27, 1999, the Commission issued Decision No. 61677, which
modified Decision No. 60977. On May 17, 1999, APS filed with the Commission a
Notice of Filing, Application for Approval of Settlement Agreement ("Settlement"
or "Agreement") (1) and Request for Procedural Order.
Our May 25, 1999 Procedural Order set the matter for hearing commencing
on July 14, 1999.
This matter came before a duly authorized Hearing Officer of the
Commission at its offices in Phoenix, Arizona. APS, Cyprus Climax Metals, Co.,
ASARCO, Inc., Arizonans for Electric Choice & Competition ("AECC"), Residential
Utility Consumer Office ("RUCO"), the Arizona Community Action Association
("ACAA"), the Arizona Consumers Council, the Arizona Transmission Dependent
Utility Group, the Arizona Utility Investors Association, Enron Corporation,
PG&E Energy Services, Illinova Energy Partners, Sempra Energy Trading, NEV
Southwest, the Department of the Navy, Tucson Electric Power Company, and Staff
- --------
(1) The Parties to the Proposed Settlement are as follows: the Residential
Utility Consumer Office, Arizona Public Service Company, Arizona Community
Action Association and the Arizonans for Electric Choice and Competition which
is a coalition of companies and associations in support of competition that
includes Cable Systems International, BHP Copper, Motorola, Chemical Lime,
Intel, Honeywell, Allied Signal, Cyprus Climax Metals, Asarco, Phelps Dodge,
Homebuilders of Central Arizona, Arizona Mining Industry Gets Our Support,
Arizona Food Marketing Alliance, Arizona Association of Industries, Arizona
Multi-housing Association, Arizona Rock Products Association, Arizona Restaurant
Association, Arizona Retailers Association, Boeing, Arizona School Board
Association, National Federation of Independent Business, Arizona Hospital
Association, Lockheed Martin, Abbot Labs and Raytheon.
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DOCKET NO. E-01345A-98-0473 ET AL.
of the Commission appeared through counsel. Evidence was presented concerning
the Settlement Agreement, and after a full public hearing, this matter was
adjourned pending submission of a Recommended Opinion and Order by the Presiding
Officer to the Commission. In addition, a post-hearing briefing schedule was
established with simultaneous briefs filed on August 5, 1999.
DISCUSSION
----------
Introduction
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The Settlement provides for rate reductions for residential and
commercial customers; sets the amount, method, and recovery period of stranded
cost that APS can collect in customer charges; establishes unbundled rates; and
provides that APS will separate its generating facilities, which will operate in
the competitive market, from its distribution system, which will continue to be
regulated.
According to APS, the Settlement was the product of months of hard
negotiations with various customer groups. APS opined that the Settlement
provides many clear benefits to customers, potential competitors, as well as to
APS. Some of those benefits are as follows:
o Allowing competition to commence in APS' service territory
months before otherwise possible and expanding the initial
eligible load by 140 MW;
o Establishing both Standard Offer and Direct Access rates, and
providing for annual rate reductions with a cumulative total
of as much as $475 million by 2004;
o Ensuring stability and certainty for both bundled and
unbundled rates;
o Resolving the issue of APS' stranded costs and regulatory
asset recovery in a fair and equitable manner;
o Providing for the divestiture of generation and competitive
services by APS in a cost-effective manner;
o Removing the specter of years of litigation and appeals
involving APS and Commission over competition-related issues;
o Continuing support for a regional ISO and the AISA;
o Continuing support for low income programs; and
o Requiring APS to file an interim code of conduct to address
affiliate relationships.
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DOCKET NO. E-01345A-98-0473 ET AL.
The Settlement was entered into by RUCO and the ACAA reflecting
Agreement by residential customers of APS to the Settlement's terms and
conditions. In addition, the Settlement was executed by the AECC, a coalition of
commercial and industrial customers and trade associations. AECC opined that
since residential and non-residential customers have agreed to the Settlement,
the "public interest" has been served. AECC indicated the Settlement was not
perfect but was the result of "give and take" by each of the parties.
Accordingly, AECC urged the Commission to protect the "public interest" by
approving the Settlement and not allow Energy Service Providers ("ESPs") to
delay the benefits that competition has to offer.
Legal Issues:
- -------------
The Arizona Consumers Council ("Consumers Council") opined that the
Agreement was not legal because: (1) There was no full rate proceeding; (2)
Section 2.8 of the Agreement violates A.R.S. Section 40-246, regarding
Commission initiated rate reductions; and (3) The Agreement illegally binds
future Commissions. According to the Consumers Council, the Commission does not
have evidence to support a finding that the rates proposed in the Agreement are
just and reasonable; that the rate base proposed is proper, and asserted the
proposed adjustment clause can not be established outside a general rate case.
Staff argued that the Commission in Decision No. 59601, dated April 26,
1996, has previously determined just and reasonable rates for APS which must be
charged until changed in a rate proceedings. According to Staff, this case is
not about changing existing rates, but instead involves the introduction of new
service-direct access. The direct access rates have been designed to replicate
the revenue flow from existing rates. Staff opined that the Commission has
routinely, and lawfully, approved rates for new services outside of a rate case.
Further, Staff asserted that the rates proposed in the Settlement are directly
related to a complete financial review. Staff indicated that the Consumers
Council has provided no contrary information and should not be allowed to
collaterally attack Decision No. 59601.
APS argued that no determination of fair value rate base ("FVRB"), fair
value rate of return ("FVROR"), or other financial analysis is legally necessary
to justify current APS rate levels, allow the introduction of a new service, or
to evaluate a series of voluntary rate decreases. In spite of that, APS did
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DOCKET NO. E-01345A-98-0473 ET AL.
provide information to support a FVRB of $5,195,675,000 and FVROR of 6.63
percent. No other party presented evidence in support of a FVRB or FVROR. Staff
supported APS.
We concur with Staff and APS. The Consumers Council has provided no
legal authority that a full rate proceeding is necessary in order to adopt a
rate reduction or rates for new services. Further, pursuant to the Arizona
Constitution, the Commission has jurisdiction over ratemaking matters. We also
find that notice of the application and hearing was provided and that APS has
provided sufficient financial information to support a finding of FVRB and
FVROR. Lastly, this Commission can clearly bind future Commissions as a result
of its Decision. However, as later discussed, we agree there are limitations to
such legal authority. Shopping Credit
One of the most contentious issues in the hearing was the level of the
"shopping credit." The "shopping credit" is the difference between the
customer's Standard Offer Rate and the Direct Access Rate available to customers
who take service from ESPs. The ESPs generally argued that the Settlement's
"shopping credits" were not sufficient to allow a new entrant to make a profit.
AECC opined that such an argument was nothing more than a request to increase
ESP's profits.
Staff opined that the "shopping credit" was too low and recommended it
be increased without impacting the stranded cost recovery amount of $350
million. Under Staff's proposal, the increased "shopping credit" would be offset
by reducing the competitive transition charge ("CTCs"). Further, Staff
recommended that any stranded costs not collected could simply be deferred and
collected after 2004.
The AECC expert testified that the "shopping credit" under the
Agreement was superior to the "Shopping Credit" in the Staff Settlement Proposal
as well as the one offered to SRP's customers. APS argued that artificially high
shopping credits will likely increase ESP profits without lowering customer
rates and will encourage inefficient firms to enter the market. Based on the
analysis of the 40kW to 200 kW customer group(2), APS showed an average margin
on the "shopping credit" of over 8 mils per kWh or a 23 percent markup over
cost. APS asserted that the test for a reasonable "shopping credit" "should not
be whether all ESPs can profit on all APS customers all of the time".
- ----------
(2) Represents over 80 percent of the general service customers for competitive
access in phase one.
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DOCKET NO. E-01345A-98-0473 ET AL.
Based on the evidence presented, the "shopping credits" appear to be
reasonable to allow ESPs to compete in an efficient manner. Further, we do not
find customer rates should be increased simply to have higher "shopping
credits".
Metering and Billing Credits
- ----------------------------
The metering and billing credits resulting from the Agreement are based
on decremental costs. Several of the ESPs and Staff argued that these credits
should be based upon embedded costs and not decremental costs. APS responded
that such a result could cause them to lose revenues since its costs would only
go down by the decremental amounts. Staff testified that the Company would not
lose significant income if it used embedded costs since it would free up
resources to service new customers.
We concur. The proposed credits for metering, meter reading and
billing(3) will result in a direct access customer paying a portion of APS costs
as well as a portion of the ESP's costs. We believe this would stymie the
competitive market for these services. As a result, we find the approval of the
Settlement should be conditioned upon the use of Staff's proposed credits for
metering, meter reading, and billing.
Proposed One-Year Advance Notice Requirement:
- ---------------------------------------------
Section 2.3 provides that
"Customers greater than 3MW who chose a direct access supplier
must give APS one year's advance notice before being eligible
to return to Standard Offer service." [emphasis added]
Several parties expressed concerns that the one-year notice requirement
to return to Standard Offer service would create a deterrent to load switching
by large industrial, institutional and commercial customers. PG&E proposed that
any increased cost could be charged directly to the customer as a condition to
its return.
We agree that APS needs to have some protection from customers leaving
the system when market prices are low and jumping back on Standard Offer rates
when market prices go up. The suggestion by PG&E that the customer be allowed to
go back to the Standard Offer if the customer pays for additional costs it
caused merits consideration and we will order APS to propose substitute language
on this issue.
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(3) For example, the monthly credits for a direct access residential customers
are $1.30, $0.30, and $0.30 for metering, meter reading and billing,
respectively.
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DOCKET NO. E-01345A-98-0473 ET AL.
Section 2.8
- -----------
Several of the parties expressed concern that Section 2.8 of the
Agreement allows APS to seek rate increases under specified conditions.
Additionally, as previously discussed, the Consumers Council opined that Section
2.8 violated A.R.S. Section 40-246. Staff recommended the Commission condition
approval of the Agreement on Section 2.8 being amended to include language that
the Commission or Staff may commence rate change proceedings under conditions
paralleling those provided to the utility, including response to petitions
submitted under A.R.S. ss. 40-246.
We agree that Section 2.8 is too restrictive on the Commission's future
action. Accordingly, we will condition approval of the Agreement on inclusion of
the following language in Section 2.8:
The Commission shall not be prevented from commencing rate
change proceedings, including responding to petitions
submitted under A.R.S. ss. 40-246. However, any result from
such proceeding shall not modify the collection of stranded
cost approved herein nor result in any reduction in the rate
decreases approved herein by customer class.
Section 7.1
- -----------
The Consumers Council opined that there was language in the Agreement
which would illegally bind future Commissions. While Staff disagreed with the
legal opinion of the Consumers Council, Staff was concerned with some of the
binding language in the Agreement and in particular with the following language
in Section 7.1:
7.1. To the extent any provision of this Agreement is inconsistent
with any existing or future Commission order, rule or
regulation or is inconsistent with the Electric Competition
Rules as now existing or as may be amended in the future, the
provisions of this Agreement shall control and the approval of
the Agreement by the Commission shall be deemed to constitute
a Commission-approved variation or exemption to any
conflicting provision of the Electric Competition Rules.
Staff recommended the Commission not approve Section 7.1
We share Staff's concerns. We also recognize that the parties want to
preserve their benefits to their Agreement. We agree with the parties that to
the extent any provision of the Agreement is inconsistent with the Electric
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DOCKET NO. E-01345A-98-0473 ET AL.
Competition Rules as finalized by the Commission in September 1999, the
provisions of the Agreement shall control. We want to make it clear that the
Commission does not intend to revisit the stranded cost portion of the
Agreement. It is also not the Commission's intent to undermine the benefits that
parties have bargained for. With that said, the Commission must be able to make
rule changes/other future modifications that become necessary over time. As a
result, we will direct the parties to file a revised Section 7.1 consistent with
the Commission's discussions herein.
Generation Affiliate
- --------------------
Section 4.1 of the Agreement provides the following:
4.1 The Commission will approve the formation of an affiliate or
affiliates of APS to acquire at book value the competitive
services assets as currently required by the Electric
Competition Rules. In order to facilitate the separation of
such assets efficiently and at the lowest possible cost, the
Commission shall grant APS a two-year extension of time until
December 31, 2002, to accomplish such separation. A similar
two-year extension shall be authorized for compliance with
A.A.C. R14-2-1606(B).
Related to Section 4.1 is Section 2.6(3) which allows APS to defer costs of
forming the generation affiliate, to be collected beginning July 1, 2004.
According to NEV Southwest, APS indicated that it intends to establish
a generation affiliate under Pinnacle West, not under APS. Further, that APS
intends to procure generation for standard offer customers from the wholesale
generation market as provided for in the Electric Competition Rules.
Additionally, it was NEV Southwest's understanding that the affiliate generation
company could bid for the APS standard offer load under an affiliate FERC
tariff, but there would be no automatic privilege outside of the market bid. NEV
Southwest supports the aforementioned concepts and recommended they be
explicitly stated in the Agreement.
We concur with NEV Southwest. To the extent that NEV Southwest has
properly stated the intent of APS, such language should be added to the
Agreement. We generally support the request of APS to defer those costs related
to formation of a new generation affiliate pursuant to the Electric Competition
Rules. We also recognize the Company is making a business decision to transfer
the generation assets to an affiliate instead of an unrelated third party. As a
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DOCKET NO. E-01345A-98-0473 ET AL.
result, we find the Company's proposed mitigation of stranded costs(4) in the
Settlement should also apply to the costs of forming the new generation
affiliate. Accordingly, Section 2.6(3) should be modified to reflect that only
67 percent of those costs to transfer generation assets to an affiliate shall be
allowed to be deferred for future collection.
Some parties were concerned that Sections 4.1 and 4.2 provide in effect
that the Commission will have approved in advance any proposed financing
arrangements associated with future transfers of "competitive services" assets
to an affiliate. As a result, there was a recommendation that the Commission
retain the right to review and approve or reject any proposed financing
arrangements. In addition, some parties expressed concern that APS has not
definitely described the assets it will retain and which it will transfer to an
affiliate.
We share the concerns that the non-competitive portion of APS not
subsidize the spun-off competitive assets through an unfair financial
arrangement. We want to make it clear that the Commission will closely
scrutinize the capital structure of APS at its 2004 rate case and make any
necessary adjustments. Further, while the Commission supports and approves the
concept of transferring generation assets and competitive services to an
affiliate, the Commission reserves the right to review and approve of the actual
assets and services to be transferred.
Unbundled Rates
- ---------------
Several parties expressed concern that the Agreement's unbundled rates
fail to provide the necessary information to determine whether a competitor's
price is lower than the Standard Offer rate. Further, Some of the parties
asserted that APS has not performed a functional cost-of-service study and as a
result the Settlement's "shopping credit" is an artificial division of costs. In
response, APS indicated the Standard Offer rates can not be unbundled on a
strict cost-of-service basis unless the Standard Offer rates are redesigned to
equal cost-of-service. APS opined that such a process would result in
significant rate increases for many customers.
AECC asserted that a full rate case would result in additional
months/years of delay with continued drain of resources by all interested
entities.
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(4) Agreement to not recover $183 million out of a claimed $533 million.
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DOCKET NO. E-01345A-98-0473 ET AL.
The ESPs asserted that the bill format proposed by APS is misleading
and too complex. In general, the ESPs desired a bill format that would allow
customers to easily compare Standard Offer and Direct Access charges in order to
make an informal decision. As a result, APS was directed to circulate an
Informational Unbundled Standard Offer Bill ("Bill") to the parties for
comments. Subsequent to the hearing, a Bill was circulated to the parties for
comments to determine what consensus could be reached on its format. In general,
there was little dispute with the format of the Bill. However, PG&E and
Commonwealth disagreed with the underlying cost allocation methodologies. Enron
was concerned that Bill portrayed the Standard Offer to be more simplistic than
the Direct Access portion of the Bill. Enron proposed a bill format that would
clearly identify those services which are available from an ESP. Based on
comments from RUCO and Staff, APS made general revisions to the proposed Bill.
We find the APS Attachment AP-1R, second revised dated 8/16/99 provides
sufficient information in a concise manner to enable customers to make an
informed choice. (See Attachment No. 2 herein). However, we find the Enron
breakdown into a Part 1 versus Parts 2 and 3 will further help educate customers
as to choice. We will direct APS to further revise its Bill to have a Part 1 as
set forth by the Enron breakdown. We believe Parts 2 and 3 can be combined for
simplicity.
We concur with APS that it is not necessary to file a revised
cost-of-service study at this time. The proposed Standard Offer rates contained
in the Settlement are based on existing tariffs approved by this Commission.
Further, we concur with AECC that a full rate case with a revised
cost-of-service study would result in months/years of additional delay. Lastly,
the Standard Offer rates as proposed in the Settlement are consistent with the
Commission's requirement that no customer shall receive a rate increase.
The following was extracted from Decision No. 61677:
"No customer or customer class shall receive a rate increase
as a result of stranded cost recovery by an Affected Utility under any
of these options."
Code of Conduct
- ---------------
There were concerns expressed that APS would be writing its own Code of
Conduct. Subsequently, APS did provide a copy of its proposed Code of Conduct to
the parties for comment.
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DOCKET NO. E-01345A-98-0473 ET AL.
Based on the above, we will direct APS to file with the Commission no
later than 30 days of the date of this Decision, its interim Code of Conduct.
APS should indicate which parties are in agreement with the proposed Code of
Conduct. Subsequently, within 10 days of filing the Code of Conduct, the Hearing
Division shall establish a procedural schedule to hear the matter.
Analysis/Summary
- ----------------
Consistent with our determination in Decision No. 60977, the following
primary objectives need to be taken into consideration in deciding the overall
stranded cost issue:
A. Provide the Affected Utilities a reasonable opportunity to
collect 100 percent of their unmitigated stranded costs;
B. Provide incentives for the Affected Utilities to maximize
their mitigation effort;
C. Accelerate the collection of stranded costs into as short of a
transition period as possible consistent with other
objectives;
D. Minimize the stranded cost impact on customers remaining on
the standard offer;
E. Don't confuse customers as to the bottom line; and
F. Have full generation competition as soon as possible.
The Commission also recognized in Decision No. 60977 that the aforementioned
objectives were in conflict. Part of that conflict is reflected in the following
language extracted from Decision No. 60977:
One of the main concerns expressed over and over by various
consumer groups was that the small consumers would end up with higher
costs during the transition phase and all the benefits would flow to
the larger users. At the time of the hearing, there had been minimal
participation in California by residential customers in the competitive
electric market place. It is not the Commission's intent to have small
consumers pay higher short-term costs in order to provide lower costs
for the larger consumers. Accordingly, we will place limitations on
stranded cost recovery that will minimize the impact on the standard
offer.
Decision No. 61677 modified Decision No. 60977 and allowed each
Affected Utility to chose from five options and also provided the following:
With the modifications contained herein, we find the overall Settlement
satisfies the objectives set forth in Decision Nos. 60977 and 61677. We believe
the Settlement will result in an orderly process that will have real rate
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DOCKET NO. E-01345A-98-0473 ET AL.
reductions(5) during the transition period to a competitive generation market.
The Settlement allows every APS customer to have the immediate opportunity to
benefit from the change in market structure while maintaining reliability and
certainty of delivery. Further, the Settlement in conjunction with the Electric
Rules will provide every APS customer with a choice in a reasonable timeframe
and in an orderly manner. If anything, the Proposed Settlement favors customers
over competitors in the short run since APS has agreed to reductions in rates
totaling 7.5 percent. This Commission supports competition in the generation
market because of increased benefits to customers, including lower rates and
greater choice. While some of the potential competitors have argued that higher
"shopping credits" will result in greater choice, we find that a higher shopping
credit would also mean less of a rate reduction for APS customers. We find that
the Settlement strikes the proper balance between competing objectives by
allowing immediate rate reductions while maintaining a relatively short
transition period for collection of stranded costs, followed shortly thereafter
with a full rate case. At that point in time the collection of stranded costs
will be completed and unbundled rates can be modified based upon an updated cost
study which should encourage the competitive market.
* * * * * * * * * *
Having considered the entire record herein and being fully advised in
the premises, the Commission finds, concludes, and orders that:
FINDINGS OF FACT
----------------
1. APS is certificated to provide electric service as a public service
corporation in the State of Arizona.
2. Decision No. 59943 enacted R14-2-1601 through -1616, the Retail
Electric Competition Rules.
3. Following a hearing on generic issues related to stranded costs, the
Commission issued Decision No. 60977, dated June 22, 1998.
4. Decision No. 61071 adopted the Emergency Rules on a permanent basis,
including Staff's additional changes proposed on November 24, 1998.
- -----------------
(5) There have been instances in other states where customers were told they
would receive rate decreases which were then offset by a stranded cost add-on.
13
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DOCKET NO. E-01345A-98-0473 ET AL.
5. On August 21, 1998, APS docketed the Stranded Costs filing.
6. On November 5, 1998, APS filed the Staff Settlement Proposal.
7. Our November 24, 1998 Procedural Order set the matter for hearing.
8. Decision No. 61259 established an expedited procedural schedule for
evidentiary hearings on the Staff Settlement Proposal.
9. The Court issued a Stay of the Commission's consideration of the
Staff Settlement Proposal.
10. Staff withdrew the Staff Settlement Proposal from Commission
consideration.
11. On May 17, 1999, APS filed its Settlement requesting Commission
approval.
12. Our May 25, 1999 Procedural Order set the Settlement for hearing
commencing on July 14, 1999.
13. Decision No. 61311 (January 11, 1999) stayed the effectiveness of
the Emergency Rules and related Decisions, and ordered the Hearing Division to
conduct further proceedings in this Docket.
14. In Decision No. 61634 (April 23, 1999), the Commission adopted
modifications to R14-2-201 through-207, -210 and 212 and R14-2-1601 through
- -1617.
15. Pursuant to Decision No. 61677, dated April 27, 1999, the
Commission modified Decision No. 60977 whereby each Affected Utility could
choose one of the following options: (a) Net Revenues Lost Methodology; (b)
Divestiture/Auction Methodology; (c) Financial Integrity Methodology; (d)
Settlement Methodology; and (e) the Alternative Methodology.
16. APS and other Affected Utilities filed with the Arizona Superior
Court various appeals of Commission Orders adopting the Competition Rules and
regarding Stranded Cost (the "Outstanding Litigation").
17. Pursuant to Decision No. 61677, APS, RUCO, AECC, and ACAA entered
into the Settlement to resolve numerous issues, including stranded costs and
unbundled tariffs.
18. The difference between market based prices and the cost of
regulated power has been generally referred to as stranded costs.
14
<PAGE>
DOCKET NO. E-01345A-98-0473 ET AL.
19. Any stranded cost recovery methodology must balance the interests
of the Affected Utilities, ratepayers, and the move toward competition.
20. All current and future customers of the Affected Utilities should
pay their fair share of stranded costs.
21. Pursuant to the terms of the Settlement Agreement, APS has agreed
to the modification of its CC&N in order to implement competitive retail access
in its Service Territory.
22. The Settlement Agreement provides for competitive retail access in
APS' Service Territory, establishes rate reductions for all APS customers, sets
a mechanism for stranded cost recovery, resolves contentious litigation, and
therefore, is in the public interest and should be approved.
23. The terms and conditions of the Settlement Agreement as modified
herein are just and reasonable and in the public interest.
24. The information and formula for rate reductions contained in
Exhibit AP-3 Appended to APS Exhibit No. 2 provides current financial
information supporting current rates.
25. RUCO, ACAA, and AEC collectively, represent residential and
non-residential customers.
26. APS proposed a second page to the Standard Offer bill that will
enable customers to compare Standard Offer rates with those of competitive
suppliers.
27. All else being equal, higher shopping credits will result in less
of a rate reduction.
28. According to AECC, the Agreement results in higher shopping credits
than in the Staff Proposal as well as those offered by SRP.
29. The decremental approach for metering and billing will not provide
sufficient credits for competitors to compete.
30. Pursuant to the Settlement, customers will receive substantial rate
reductions without the necessity of a full rate case.
31. An APS rate case would take a minimum of one year to complete.
32. The "shopping credit" can be increased by increasing Standard Offer
rates.
33. All else being equal, a higher shopping credit will increase the
incentive for an ESP to enter the market.
15
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DOCKET NO. E-01345A-98-0473 ET AL.
34. ESPs that have been approved have shown more of an interest in
serving larger business customers than residential customers.
35. It is not in the customers' interests to forego guaranteed Standard
Offer rate reductions in order to maintain a higher shopping credit.
36. The Settlement will permit competition quickly and insure all
customers benefit during the transition period.
CONCLUSIONS OF LAW
------------------
1. The Affected Utilities are public service corporations within the
meaning of the Arizona Constitution, Article XV, under A.R.S. ss.ss. 40-202,
- -203, -250, -321, -322, -331, -336, -361, -365, -367, and under the Arizona
Revised Statutes, Title 40, generally.
2. The Commission has jurisdiction over the Affected Utilities and of
the subject matter contained herein.
3. Notice of the proceeding has been given in the manner prescribed by
law.
4. The Settlement Agreement as modified herein is just and reasonable
and in the public interest and should be approved.
5. APS should be authorized to implement its Stranded Cost Recovery
Plan as set forth in the Settlement Agreement.
6. APS' CC&N should be modified in order to permit competitive retail
access in APS' CC&N service territory.
7. APS should be granted the waivers that it has requested in the
Settlement Agreement.
8. APS' Interim Code of Conduct should be approved consistent with the
terms of the Settlement Agreement.
ORDER
-----
IT IS THEREFORE ORDERED that the Settlement Agreement as modified
herein is hereby approved and all Commission findings, approvals and
authorizations requested therein are hereby granted.
16
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DOCKET NO. E-01345A-98-0473 ET AL.
IT IS FURTHER ORDERED that Arizona Public Service Company's CC&N is
hereby modified to permit competitive retail access consistent with this
Decision and the Competition Rules.
IT IS FURTHER ORDERED that within 30 days of the date of this Decision,
Arizona Public Service Company shall file a proposed Code of Conduct for
Commission approval.
IT IS FURTHER ORDERED that within ten days of the date the proposed
Code of Conduct is filed, the Hearing Division shall issue a Procedural Order
setting a procedural schedule for consideration of the Code of Conduct.
IT IS FURTHER ORDERED that this Decision shall become effective
immediately.
BY ORDER OF THE ARIZONA CORPORATION COMMISSION.
- --------------------------------------------------------------------------------
CHAIRMAN COMMISSIONER COMMISSIONER
IN WITNESS WHEREOF, I, BRIAN C. McNEIL, Executive
Secretary of the Arizona Corporation Commission, have
hereunto set my hand and caused the official seal of
the Commission to be affixed at the Capitol, in the
City of Phoenix, this day of _______, 1999.
-------------------------------
BRIAN C. McNEIL
EXECUTIVE SECRETARY
DISSENT _________________
JLR:dap
17
<PAGE>
SERVICE LIST FOR: ARIZONA PUBLIC SERVICE COMPANY
DOCKET NOS.: E-01345A-98-0473, E-01345A-97-0773 and RE-
00000C-94-0165
Service List for RE-00000C-94-0165
Paul A. Bullis, Chief Counsel
LEGAL DIVISION
1200 W. Washington Street
Phoenix, Arizona 85007
Utilities Division Director
ARIZONA CORPORATION COMMISSION
1200 W. Washington Street
Phoenix, Arizona 85007
<PAGE>
ATTACHMENT 1
SETTLEMENT AGREEMENT
May 14, 1999
This settlement agreement ("Agreement") is entered into as of May 14,
1999, by Arizona Public Service Company ("APS" or the "Company") and the various
signatories to this Agreement (collectively, the "Parties") for the purpose of
establishing terms and conditions for the introduction of competition in
generation and other competitive services that are just, reasonable and in the
public interest.
INTRODUCTION
In Decision No. 59943, dated December 26, 1996, the Arizona Corporation
Commission ("ACC" or the "Commission") established a "framework" for
introduction of competitive electric services throughout the territories of
public service corporations in Arizona in the rules adopted in A.A.C. R14-2-1601
ET SEQ. (collectively, "Electric Competition Rules" as they may be amended from
time to time). The Electric Competition Rules established by that order
contemplated future changes to such rules and the possibility of waivers or
amendments for particular companies under appropriate circumstances. Since their
initial issuance, the Electric Competition Rules have been amended several times
and are currently stayed pursuant to Decision No. 61311, dated January 5, 1999.
During this time, APS, Commission Staff and other interested parties have
participated in a number of proceedings, workshops, public comment sessions and
individual negotiations in order to further refine and develop a restructured
utility industry in Arizona that will provide meaningful customer choice in a
manner that is just, reasonable and in the public interest.
This Agreement establishes the agreed upon transition for APS to a
restructured entity and will provide customers with competitive choices for
generation and certain other retail services. The Parties believe this Agreement
will produce benefits for all customers through implementing customer choice and
providing rate reductions so that the APS service territory may benefit from
economic growth. The Parties also believe this Agreement will fairly treat APS
and its shareholders by providing a reasonable opportunity to recover prudently
incurred investments and costs, including stranded costs and regulatory assets.
Specifically, the Parties believe the Agreement is in the public interest
for the following reasons. FIRST, customers will receive substantial rate
reductions. SECOND, competition will be promoted through the introduction of
retail access faster than would have been possible without this Agreement and by
the functional separation of APS' power production and delivery functions.
THIRD, economic development and the environment will
<PAGE>
benefit through guaranteed rate reductions and the continuation of renewable and
energy efficiency programs. FOURTH, universal service coverage will be
maintained through APS' low income assistance programs and establishment of
"provider of last resort" obligations on APS for customers who do not wish to
participate in retail access. FIFTH, APS will be able to recover its regulatory
assets and stranded costs as provided for in this Agreement without the
necessity of a general rate proceeding. Sixth, substantial litigation and
associated costs will be avoided by amicably resolving a number of important and
contentious issues that have already been raised in the courts and before the
Commission. Absent approval by the Commission of the settlement reflected by
this Agreement, APS would seek full stranded cost recovery and pursue other rate
and competitive restructuring provisions different than provided for herein. The
other Parties would challenge at least portions of APS' requested relief,
including the recovery of all stranded costs. The resulting regulatory hearings
and related court appeals would delay the start of competition and drain the
resources of all Parties.
NOW, THEREFORE, APS and the Parties agree to the following provisions
which they believe to be just, reasonable and in the public interest:
TERMS OF AGREEMENT
ARTICLE I
IMPLEMENTATION OF RETAIL ACCESS
1.1 The APS distribution system shall be open for retail access on July 1,
1999; provided, however, that such retail access to electric generation and
other competitive electric services suppliers will be phased in for customers in
APS' service territory in accordance with the proposed Electric Competition
Rules, as and when such rules become effective, with an additional 140 MW being
made available to eligible non-residential customers. The Parties shall urge the
Commission to approve Electric Competition Rules, at least on an emergency
basis, so that meaningful retail access can begin by July 1, 1999. Unless
subject to judicial or regulatory restraint, APS shall open its distribution
system to retail access for all customers on January 1, 2001.
1.2 APS will make retail access available to residential customers
pursuant to its December 21, 1998, filing with the Commission.
1.3 The Parties acknowledge that APS' ability to offer retail access is
contingent upon numerous conditions and circumstances, a number of which are not
within the direct control of the Parties. Accordingly, the Parties agree that it
may become necessary to modify the terms of retail access to account for such
factors, and they further agree to address such matters in good faith and to
cooperate in an effort to propose joint resolutions of any such matters.
2
<PAGE>
1.4. APS agrees to the amendment and modification of its Certificate(s) of
Convenience and Necessity to permit retail access consistent with the terms of
this Agreement. The Commission order adopting this Agreement shall constitute
the necessary Commission Order amending and modifying APS' CC&Ns to permit
retail access consistent with the terms of this Agreement.
ARTICLE II
RATE MATTERS
2.1. The Company's unbundled rates and charges attached hereto as Exhibit
A will be effective as of July 1, 1999. The Company's presently authorized rates
and charges shall be deemed its standard offer ("Standard Offer") rates for
purposes of this Agreement and the Electric Competition Rules. Bills for
Standard Offer service shall indicate individual unbundled service components to
the extent required by the Electric Competition Rules.
2.2. Future reductions of standard offer tariff rates of 1.5% for
customers having loads of less than 3 MW shall be effective as of July 1, 1999,
July 1, 2000, July 1, 2001, July 1, 2002, and July 1, 2003, upon the filing and
Commission acceptance of revised tariff sheets reflecting such decreases. For
customers having loads greater than 3 MW served on Rate Schedules E-34 and E-35,
Standard Offer tariff rates will be reduced: 1.5%, effective July 1, 1999; 1.5%
effective July 1, 2000; 1.25% effective July 1, 2001; and .75% effective July 1,
2002. The 1.5% Standard Offer rate reduction to be effective July 1, 1999,
includes the rate reduction otherwise required by Decision No. 59601. Such
decreases shall become effective by the filing with and acceptance by the
Commission of revised tariff sheets reflecting each decrease.
2.3. Customers greater than 3 MW who choose a direct access supplier must
give APS one year's advance notice before being eligible to return to Standard
Offer service.
2.4. Unbundled rates shall be reduced in the amounts and at the dates set
forth in Exhibit A attached hereto upon the filing and Commission acceptance of
revised tariff sheets reflecting such decreases.
2.5. This Agreement shall not preclude APS from requesting, or the
Commission from approving, changes to specific rate schedules or terms and
conditions of service, or the approval of new rates or terms and conditions of
service, that do not significantly affect the overall earnings of the Company or
materially modify the tariffs or increase the rates approved in this Agreement.
Nothing contained in this Agreement shall preclude APS from filing changes to
its tariffs or terms and conditions of service which are not inconsistent with
its obligations under this Agreement.
2.6. Notwithstanding the rate reduction provisions stated above, the
Commission shall, prior to December 31, 2002, approve an adjustment clause or
clauses which
3
<PAGE>
will provide full and timely recovery beginning July 1, 2004, of the reasonable
and prudent costs of the following:
(1) APS' "provider of last resort" and Standard Offer obligations for
service after July 1, 2004, which costs shall be recovered only from
Standard Offer and "provider of last resort" customers;
(2) Standard Offer service to customers who have left Standard Offer
service or a special contract rate for a competitive generation
supplier but who desire to return to Standard Offer service, which
costs shall be recovered only from Standard Offer and "provider of
last resort" customers;
(3) compliance with the Electric Competition Rules or Commission-ordered
programs or directives related to the implementation of the Electric
Competition Rules, as they may be amended from time to time, which
costs shall be recovered from all customers receiving services from
APS; and
(4) Commission-approved system benefit programs or levels not included in
Standard Offer rates as of June 30, 1999, which costs shall be
recovered from all customers receiving services from APS.
By June 1, 2002, APS shall file an application for an adjustment clause or
clauses, together with a proposed plan of administration, and supporting
testimony. The Commission shall thereafter issue a procedural order setting such
adjustment clause application for hearing and including reasonable provisions
for participation by other parties. The Commission order approving the
adjustment clauses shall also establish reasonable procedures pursuant to which
the Commission, Commission Staff and interested parties may review the costs to
be recovered. By June 30, 2003, APS will file its request for the specific
adjustment clause factors which shall, after hearing and Commission approval,
become effective July 1, 2004. APS shall be allowed to defer costs covered by
this Section 2.6 when incurred for later full recovery pursuant to such
adjustment clause or clauses, including a reasonable return.
2.7. By June 30, 2003, APS shall file a general rate case with prefiled
testimony and supporting schedules and exhibits; provided, however, that any
rate changes resulting therefrom shall not become effective prior to July 1,
2004.
2.8. APS shall not be prevented from seeking a change in unbundled or
Standard Offer rates prior to July 1, 2004, in the event of (a) conditions or
circumstances which constitute an emergency, such as the inability to finance on
reasonable terms, or (b) material changes in APS' cost of service for Commission
regulated services resulting from federal, tribal,
4
<PAGE>
state or local laws, regulatory requirements, judicial decision, actions or
orders. Except for the changes otherwise specifically contemplated by this
Agreement, unbundled and Standard Offer rates shall remain unchanged until at
least July 1, 2004.
ARTICLE III
REGULATORY ASSETS AND STRANDED COSTS
3.1. APS currently recovers regulatory assets through July 1, 2004,
pursuant to Commission Decision No. 59601 in accordance with the provisions of
this Agreement.
3.2. APS has demonstrated that its allowable stranded costs after
mitigation (which result from the impact of retail access), exclusive of
regulatory assets, are at least $533 million net present value.
3.3. The Parties agree that APS should not be allowed to recover $183
million net present value of the amounts included above. APS shall have a
reasonable opportunity to recover $350 million net present value through a
competitive transition charge ("CTC") set forth in Exhibit A attached hereto.
Such CTC shall remain in effect until December 31, 2004, at which time it will
terminate. If by that date APS has recovered more or less than $350 million net
present value, as calculated in accordance with Exhibit B attached hereto, then
the nominal dollars associated with any excess recovery/under recovery shall be
credited/debited against the costs subject to recovery under the adjustment
clause set forth in Section 2.6(3).
3.4. The regulatory assets to be recovered under this Agreement, after
giving effect to the adjustments set forth in Section 3.3, shall be amortized in
accordance with Schedule C of Exhibit A attached hereto.
3.5. Neither the Parties nor the Commission shall take any action that
would diminish the recovery of APS' stranded costs or regulatory assets provided
for herein. The Company's willingness to enter into this Agreement is based upon
the Commission's irrevocable promise to permit recovery of the Company's
regulatory assets and stranded costs as provided herein. Such promise by the
Commission shall survive the expiration of the Agreement and shall be
specifically enforceable against this and any future Commission.
ARTICLE IV
CORPORATE STRUCTURE
4.1. The Commission will approve the formation of an
affiliate or affiliates of APS to acquire at book value the competitive services
assets as currently required by the Electric Competition Rules. In order to
facilitate the separation of such assets efficiently and at the lowest possible
cost, the Commission shall grant APS a two-year extension of time until
5
<PAGE>
December 31, 2002, to accomplish such separation. A similar two-year extension
shall be authorized for compliance with A.A.C. R14-2-1606(B).
4.2. Approval of this Agreement by the Commission shall be deemed to
constitute all requisite Commission approvals for (1) the creation by APS or its
parent of new corporate affiliates to provide competitive services including,
but not limited to, generation sales and power marketing, and the transfer
thereto of APS' generation assets and competitive services, and (2) the full and
timely recovery through the adjustment clause referred to in Section 2.6 above
for all of the reasonable and prudent costs so incurred in separating
competitive generation assets and competitive services as required by proposed
A.A.C. R14-2-1615, exclusive of the costs of transferring the APS power
marketing function to an affiliate. The assets and services to be transferred
shall include the items set forth on Exhibit C attached hereto. Such transfers
may require various regulatory and third party approvals, consents or waivers
from entities not subject to APS' control, including the FERC and the NRC. No
Party to this Agreement (including the Commission) will oppose, or support
opposition to, APS requests to obtain such approvals, consents or waivers.
4.3. Pursuant to A.R.S. ss. 40-202(L), the Commission's
approval of this Agreement shall exempt any competitive service provided by APS
or its affiliates from the application of various provisions of A.R.S. Title 40,
including A.R.S. ss.ss. 40-203, 40-204(A), 40-204(B), 40-248, 40-250, 40-251,
40-285, 40-301, 40-302, 40-303, 40-321, 40-322, 40-331, 40-332, 40-334, 40-365,
40-366, 40-367 and 40-401.
4.4. APS' subsidiaries and affiliates (including APS' parent) may take
advantage of competitive business opportunities in both energy and non-energy
related businesses by establishing such unregulated affiliates as they deem
appropriate, which will be free to operate in such places as they may determine.
The APS affiliate or affiliates acquiring APS' generating assets may be a
participant in the energy supply market within and outside of Arizona. Approval
of this Agreement by the Commission shall be deemed to include the following
specific determinations required under Sections 32(c) and (k)(2) of the Public
Utility Holding Company Act of 1935:
APS or an affiliate is authorized to establish a subsidiary company,
which will seek exempt wholesale generator ("EWG") status from the
Federal Energy Regulatory Commission, for the purposes of acquiring and
owning Generation Assets.
The Commission has determined that allowing the Generation Assets to
become "eligible facilities," within the meaning of Section 32 of the
Public Utility Holding Company Act ("PUHCA"), and owned by an APS EWG
affiliate (1) will benefit consumers, (2) is in the public interest,
and (3) does not violate Arizona law.
6
<PAGE>
The Commission has sufficient regulatory authority, resources and
access to the books and records of APS and any relevant associate,
affiliate, or subsidiary company to exercise its duties under Section
32(k) of PUHCA.
APS will purchase any electric energy from its EWG affiliate at market
based rates. This Commission has determined that (1) the proposed
transaction will benefit consumers and does not violate Arizona law;
(2) the proposed transaction will not provide APS' EWG affiliate an
unfair competitive advantage by virtue of its affiliation with APS; (3)
the proposed transaction is in the public interest.
The APS affiliate or affiliates acquiring APS' generating assets will be subject
to regulation by the Commission, to the extent otherwise permitted by law, to no
greater manner or extent than that manner and extent of Commission regulation
imposed upon other owners or operators of generating facilities.
4.5. The Commission's approval of this Agreement will constitute certain
waivers to APS and its affiliates (including its parent) of the Commission's
existing affiliate interest rules (A.A.C. R14-2-801, ET SEQ.), and the
rescission of all or portions of certain prior Commission decisions, all as set
forth on Exhibit D attached hereto.
4.6. The Parties reserve their rights under Sections 205 and 206 of the
Federal Power Act with respect to the rates of any APS affiliate formed under
the provisions of this Article IV.
ARTICLE V
WITHDRAWAL OF LITIGATION
5.1. Upon receipt of a final order of the Commission approving this
Agreement that is no longer subject to judicial review, APS and the Parties
shall withdraw with prejudice all of their various court appeals of the
Commission's competition orders.
ARTICLE VI
APPROVAL BY THE COMMISSION
6.1. This Agreement shall not become effective until the issuance of a
final Commission order approving this Agreement without modification on or
before August 1, 1999. In the event that the Commission fails to approve this
Agreement without modification according to its terms on or before August 1,
1999, any Party to this Agreement may withdraw from this Agreement and shall
thereafter not be bound by its provisions; provided, however, that if APS
withdraws from this Agreement, the Agreement shall be null and void and of no
further force and effect. In any event, the rate reduction provisions of this
Agreement shall not take effect until this Agreement is approved. Parties so
withdrawing shall be free to pursue
7
<PAGE>
their respective positions without prejudice. Approval of this Agreement by the
Commission shall make the Commission a Party to this Agreement and fully bound
by its provisions.
6.2. The Parties agree that they shall make all reasonable and good faith
efforts necessary to (1) obtain final approval of this Agreement by the
Commission, and (2) ensure full implementation and enforcement of all the terms
and conditions set forth in this Agreement. Neither the Parties nor the
Commission shall take or propose any action which would be inconsistent with the
provisions of this Agreement. All Parties shall actively defend this Agreement
in the event of any challenge to its validity or implementation.
ARTICLE VII
MISCELLANEOUS MATTERS
7.1. To the extent any provision of this Agreement is inconsistent with
any existing or future Commission order, rule or regulation or is inconsistent
with the Electric Competition Rules as now existing or as may be amended in the
future, the provisions of this Agreement shall control and the approval of this
Agreement by the Commission shall be deemed to constitute a Commission-approved
variation or exemption to any conflicting provision of the Electric Competition
Rules.
7.2. The provisions of this Agreement shall be implemented and enforceable
notwithstanding the pendency of a legal challenge to the Commission's approval
of this Agreement, unless such implementation and enforcement is stayed or
enjoined by a court having jurisdiction over the matter. If any portion of the
Commission order approving this Agreement or any provision of this Agreement is
declared by a court to be invalid or unlawful in any respect, then (1) APS shall
have no further obligations or liability under this Agreement, including, but
not limited to, any obligation to implement any future rate reductions under
Article II not then in effect, and (2) the modifications to APS' certificates of
convenience and necessity referred to in Section 1.4 shall be automatically
revoked, in which event APS shall use its best efforts to continue to provide
noncompetitive services (as defined in the proposed Electric Competition Rules)
at then current rates with respect to customer contracts then in effect for
competitive generation (for the remainder of their term) to the extent not
prohibited by law and subject to applicable regulatory requirements.
7.3. The terms and provisions of this Agreement apply solely to and are
binding only in the context of the purposes and results of this Agreement and
none of the positions taken herein by any Party may be referred to, cited or
relied upon by any other Party in any fashion as precedent or otherwise in any
other proceeding before this Commission or any other regulatory agency or before
any court of law for any purpose except in furtherance of the purposes and
results of this Agreement.
7.4. This Agreement represents an attempt to compromise and settle
disputed claims regarding the prospective just and reasonable rate levels, and
the terms and conditions
8
<PAGE>
of competitive retail access, for APS in a manner consistent with the public
interest and applicable legal requirements. Nothing contained in this Agreement
is an admission by APS that its current rate levels or rate design are unjust or
unreasonable.
7.5. As part of this Agreement, APS commits that it will continue the
APS Community Action Partnership (which includes weatherization, facility repair
and replacement, bill assistance, health and safety programs and energy
education) in an annual amount of at least $500,000 through July 1, 2004.
Additionally, the Company will, subject to Commission approval, continue low
income rates E-3 and E-4 under their current terms and conditions.
7.6. APS shall actively support the Arizona Independent Scheduling
Administrator ("AISA") and the formation of the Desert Star Independent System
Operator. APS agrees to modify its OATT to be consistent with any FERC approved
AISA protocols. The Parties reserve their rights with respect to any AISA
protocols, including the right to challenge or seek modifications to, or waivers
from, such protocols. APS shall file changes to its existing OATT consistent
with this section within ten (10) days of Commission approval of this Agreement
pursuant to Section 6.1.
7.7. Within thirty (30) days of Commission approval of this Agreement
pursuant to Section 6.1, APS shall serve on the Parties an Interim Code of
Conduct to address inter-affiliate relationships involving APS as a utility
distribution company. APS shall voluntarily comply with this Interim Code of
Conduct until the Commission approves a code of conduct for APS in accordance
with the Electric Competition Rules that is concurrently effective with codes of
conduct for all other Affected Utilities (as defined in the Electric Competition
Rules). APS shall meet and confer with the Parties prior to serving its Interim
Code of Conduct.
7.8. In the event of any disagreement over the interpretation of this
Agreement or the implementation of any of the provisions of this Agreement, the
Parties shall promptly convene a conference and in good faith shall attempt to
resolve such disagreement.
7.9. The obligations under this Agreement that apply for a specific term
set forth herein shall expire automatically in accordance with the term
specified and shall require no further action for their expiration.
7.10. The Parties agree and recommend that the Commission schedule
public meetings and hearings for consideration of this Agreement. The filing of
this Agreement with the Commission shall be deemed to be the filing of a formal
request for the expeditious issuance of a procedural schedule that establishes
such formal hearings and public meetings as may be necessary for the Commission
to approve this Agreement in accordance with
9
<PAGE>
Section 6.1 and that afford interested parties adequate opportunity to comment
and be heard on the terms of this Agreement consistent with applicable legal
requirements.
DATED at Phoenix, Arizona, as of this 14th day of May, 1999.
RESIDENTIAL UTILITY ARIZONA PUBLIC SERVICE COMPANY
CONSUMER OFFICE
By Greg Patterson By Jack E. Davis
------------------------------- -------------------------------
Title Director Title President, Energy
---------------------------- -------------------------------
Delivery & Sales
-------------------------------
ARIZONA COMMUNITY ACTION (Party)
ASSOCIATION ------------------------------------
By Janet Regner By
------------------------------- -------------------------------
Title Executive Director Title
---------------------------- ------------------------------
ARIZONANS FOR ELECTRIC CHOICE AND (Party)
COMPETITION,* a coalition of companies ------------------------------------
and associations in support of
competition that includes Cable Systems
International, BHP Copper, Motorola, By
Chemical Lime, Intel, Honeywell, -------------------------------
Allied Signal, Cyprus Climax Metals,
Asarco, Phelps Dodge, Homebuilders Title
of Central Arizona, Arizona Mining ------------------------------
Industry Gets Our Support, Arizona
Food Marketing Alliance, Arizona
Association of Industries, Arizona
Multi-housing Association, Arizona Rock
Products Association, Arizona Restaurant (Party)
Association, and Arizona Retailers ----------------------------------
Association.
By Peter A. Woog By
------------------------------- -------------------------------
Title Chairman Title
---------------------------- ----------------------------
* Enron is not a signatory to this Agreement.
* Also included: Boeing, AZ School Board Association, National Federation of
Independent Business (NFIB), AZ Hospital Association, Lockheed Martin, Abbot
Labs, Raytheon
10
<PAGE>
(Party) (Party)
- --------------------------------- ---------------------------------
By By
------------------------------- -------------------------------
Title Title
---------------------------- ----------------------------
(Party) (Party)
- --------------------------------- ---------------------------------
By By
------------------------------- -------------------------------
Title Title
---------------------------- ----------------------------
(Party) (Party)
- --------------------------------- ---------------------------------
By By
------------------------------- -------------------------------
Title Title
---------------------------- ----------------------------
(Party) (Party)
- --------------------------------- ---------------------------------
By By
------------------------------- -------------------------------
Title Title
---------------------------- ----------------------------
11
<PAGE>
EXHIBIT A
5/10/99
DA-R1
ELECTRIC DELIVERY RATES
ARIZONA PUBLIC SERVICE COMPANY A.C.C. No. XXXX
Phoenix, Arizona Tariff or Schedule No. DA-R1
Filed by: Alan Propper Original Tariff
Title: Director, Pricing and Regulation Effective: XXX XX, 1999
DIRECT ACCESS
RESIDENTIAL SERVICE
AVAILABILITY
This rate schedule is available in all certificated retail delivery
service territory served by Company and where facilities of adequate capacity
and the required phase and suitable voltage are adjacent to the premises served.
APPLICATION
This rate schedule is applicable to customers receiving electric energy
on a direct access basis from any certificated Electric Service Provider (ESP)
as defined in A.A.C. R14-2-1603. This rate schedule is applicable only to
electric delivery required for residential purposes in individual private
dwellings and in individually metered apartments when such service is supplied
at one point of delivery and measured through one meter. For those dwellings and
apartments where electric service has historically been measured through two
meters, when one of the meters was installed pursuant to a water heating or
space heating rate schedule no longer in effect, the electric service measured
by such meters shall be combined for billing purposes.
This rate schedule shall become effective as defined in Company's Terms
and Conditions for Direct Access (Schedule #10.)
TYPE OF SERVICE
Service shall be single phase, 60 Hertz, at one standard voltage
(120/240 or 120/208 as may be selected by customer subject to availability at
the customer's premise). Three phase service is furnished under the Company's
Conditions Governing Extensions of Electric Distribution Lines and Services
(Schedule #3). Transformation equipment is included in cost of extension. Three
phase service is required for motors of an individual rated capacity of 7 1/2 HP
or more.
METERING REQUIREMENTS
All customers shall comply with the terms and conditions for load
profiling or hourly metering specified in Schedule #10.
MONTHLY BILL
The monthly bill shall be the greater of the amount computed under A.
or B. below, including the applicable Adjustments.
A. RATE
May - October Billing Cycles (Summer):
Basic Competitive
Delivery System Transition
Service Distribution Benefits Charge
------- ------------ -------- ------
$/month $10.00
All kWh $0.04158 $0.00115 $0.00930
November - April Billing Cycles (Winter):
Basic Competitive
Delivery System Transition
Service Distribution Benefits Charge
------- ------------ -------- ------
$/month $10.00
All kWh $0.03518 $0.00115 $0.00930
B. MINIMUM $ 10.00 per month
(CONTINUED ON REVERSE SIDE)
<PAGE>
DA-R1
A.C.C. No. XXXX
Page 2 of 2
ADJUSTMENTS
1. When Metering, Meter Reading or Consolidated Billing are provided by
the Customer's ESP, the monthly bill will be credited as follows:
Meter $1.30 per month
Meter Reading $0.30 per month
Billing $0.30 per month
2. The monthly bill is also subject to the applicable proportionate
part of any taxes, or governmental impositions which are or may in
the future be assessed on the basis of gross revenues of the Company
and/or the price or revenue from the electric service sold and/or
the volume of energy delivered or purchased for sale and/or sold
hereunder.
SERVICES ACQUIRED FROM CERTIFICATED ELECTRIC SERVICE PROVIDERS
Customers served under this rate schedule are responsible for acquiring
their own generation and any other required competitively supplied services from
an ESP. The Company will provide and bill its transmission and ancillary
services on rates approved by the Federal Energy Regulatory Commission to the
Scheduling Coordinator who provides transmission service to the Customer's ESP.
The Customer's ESP must submit a Direct Access Service Request pursuant to the
terms and conditions in Schedule #10.
ON-SITE GENERATION TERMS AND CONDITIONS
Customers served under this rate schedule who have on-site generation
connected to the Company's electrical delivery grid shall enter into an
Agreement for Interconnection with the Company which shall establish all
pertinent details related to interconnection and other required service
standards. The Customer does not have the option to sell power and energy to the
Company under this tariff.
TERMS AND CONDITIONS
This rate schedule is subject to the Company's Terms and Conditions for
Standard Offer and Direct Access Services (Schedule #1) and Schedule #10. These
schedules have provisions that may affect customer's monthly bill.
<PAGE>
EXHIBIT A
5/10/99
DA-GS1
ELECTRIC DELIVERY RATES
ARIZONA PUBLIC SERVICE COMPANY A.C.C. No. XXXX
Phoenix, Arizona Tariff or Schedule No. DA-GS1
Filed by: Alan Propper Original Tariff
Title: Director, Pricing and Regulation Effective: XXX XX, 1999
DIRECT ACCESS
GENERAL SERVICE
AVAILABILITY
This rate schedule is available in all certificated retail delivery
service territory served by Company at all points where facilities of adequate
capacity and the required phase and suitable voltage are adjacent to the
premises served.
APPLICATION
This rate schedule is applicable to customers receiving electric energy
on a direct access basis from any certificated Electric Service Provider (ESP)
as defined in A.A.C. R14-2-1603. This rate schedule is applicable to all
electric service required when such service is supplied at one point of delivery
and measured through one meter. For those customers whose electricity is
delivered through more than one meter, service for each meter shall be computed
separately under this rate unless conditions in accordance with the Company's
Schedule #4 (Totalized Metering of Multiple Service Entrance Sections At a
Single Premise for Standard Offer and Direct Access Service) are met. For those
service locations where electric service has historically been measured through
two meters, when one of the meters was installed pursuant to a water heating
rate schedule no longer in effect, the electric service measured by such meters
shall be combined for billing purposes.
This rate schedule shall become effective as defined in Company's Terms
and Conditions for Direct Access (Schedule #10).
This rate schedule is not applicable to residential service, resale
service or direct access service which qualifies for Rate Schedule DA-GS10.
TYPE OF SERVICE
Service shall be single or three phase, 60 Hertz, at one standard
voltage as may be selected by customer subject to availability at the customer's
premise. Three phase service is furnished under the Company's Conditions
Governing Extensions of Electric Distribution Lines and Services (Schedule #3).
Transformation equipment is included in cost of extension. Three phase service
is not furnished for motors of an individual rated capacity of less than 7 1/2
HP, except for existing facilities or where total aggregate HP of all connected
three phase motors exceed 12 HP. Three phase service is required for motors of
an individual rated capacity of more than 7 1/2 HP.
METERING REQUIREMENTS
All customers shall comply with the terms and conditions for load
profiling or hourly metering specified in the Company's Schedule #10.
MONTHLY BILL
The monthly bill shall be the greater of the amount computed under A.
or B. below, including the applicable Adjustments.
A. RATE
June - October Billing Cycles (Summer):
Basic Competitive
Delivery System Transition
Service Distribution Benefits Charge
------- ------------ -------- ------
$/month $12.50
Per kW over 5 $0.721
Per kWh for the
first 2,500 kWh $0.04255
Per kWh for the
next 100 kWh per
kW over 5 $0.04255
Per kWh for the
next 42,000 kWh $0.02901
Per kWh for all
additional kWh $0.01811
Per all kWh $0.00115
Per all kW $2.43
(CONTINUED ON REVERSE SIDE)
<PAGE>
DA-GS1
A.C.C. No. XXXX
Page 2 of 3
A. RATE (continued)
November - May Billing Cycles (Winter):
Basic Competitive
Delivery System Transition
Service Distribution Benefits Charge
------- ------------ -------- ------
$/month $12.50
Per kW over 5 $0.652
Per kWh for the
first 2,500 kWh $0.03827
Per kWh for the
next 100 kWh per
kW over 5 $0.03827
Per kWh for the
next 42,000 kWh $0.02600
Per kWh for all
additional kWh $0.01614
Per all kWh $0.00115
Per all kW $2.43
PRIMARY AND TRANSMISSION LEVEL SERVICE:
1. For customers served at primary voltage (12.5kV to below 69kV),
the Distribution charge will be discounted by 11.6%.
2. For customers served at transmission voltage (69kV or higher),
the Distribution charge will be discounted 52.6%.
3. Pursuant to A.A.C. R14-2-1612.K.11, the Company shall retain
ownership of Current Transformers (CT's) and Potential
Transformers (PT's) for those customers taking service at voltage
levels of more than 25kV. For customers whose metering services
are provided by an ESP, a monthly facilities charge will be
billed, in addition to all other applicable charges shown above,
as determined in the service contract based upon the Company's
cost of CT and PT ownership, maintenance and operation.
DETERMINATION OF KW
The kW used for billing purposes shall be the average kW supplied
during the 15-minute period of maximum use during the month, as
determined from readings of the delivery meter.
B. MINIMUM
$12.50 plus $1.74 for each kW in excess of five of either the highest
kW established during the 12 months ending with the current month or
the minimum kW specified in the agreement for service, whichever is
the greater.
ADJUSTMENTS
1. When Metering, Meter Reading or Consolidated Billing are provided by
the Customer's ESP, the monthly bill will be credited as follows:
Meter $4.00 per month
Meter Reading $0.30 per month
Billing $0.30 per month
2. The monthly bill is also subject to the applicable proportionate part
of any taxes, or governmental impositions which are or may in the
future be assessed on the basis of gross revenues of the Company
and/or the price or revenue from the electric service sold and/or the
volume of energy delivered or purchased for sale and/or sold
hereunder.
SERVICES ACQUIRED FROM CERTIFICATED ELECTRIC SERVICE PROVIDERS
Customers served under this rate schedule are responsible for acquiring
their own generation and any other required competitively supplied services from
an ESP or under the Company's Open Access Transmission Tariff. The Company will
provide and bill its transmission and ancillary services on rates approved by
the Federal Energy Regulatory Commission to the Scheduling Coordinator who
provides transmission service to the Customer's ESP. The Customer's ESP must
submit a Direct Access Service Request pursuant to the terms and conditions in
Schedule #10.
(CONTINUED ON PAGE 3)
<PAGE>
DA-GS1
A.C.C. No. XXXX
Page 3 of 3
ON-SITE GENERATION TERMS AND CONDITIONS
Customers served under this rate schedule who have on-site generation
connected to the Company's electrical delivery grid shall enter into an
Agreement for Interconnection with the Company which shall establish all
pertinent details related to interconnection and other required service
standards. The Customer does not have the option to sell power and energy to the
Company under this tariff.
CONTRACT PERIOD
0 - 1,999 kW: As provided in Company's standard agreement for service.
2,000 kW and above: Three (3) years, or longer, at Company's option for
initial period when construction is required. One
(1) year, or longer, at Company's option when
construction is not required.
TERMS AND CONDITIONS
This rate schedule is subject to Company's Terms and Conditions for
Standard Offer and Direct Access Service (Schedule #1) and the Company's
Schedule #10. These Schedules have provisions that may affect customer's monthly
bill.
<PAGE>
EXHIBIT A
5/10/99
DA-GS10
ELECTRIC DELIVERY RATES
ARIZONA PUBLIC SERVICE COMPANY A.C.C. No. XXXX
Phoenix, Arizona Tariff or Schedule No. DA-GS10
Filed by: Alan Propper Original Tariff
Title: Director, Pricing and Regulation Effective: XXX XX, 1999
DIRECT ACCESS
EXTRA LARGE GENERAL SERVICE
AVAILABILITY
This rate schedule is available in all certificated retail delivery
service territory served by Company at all points where facilities of adequate
capacity and the required phase and suitable voltage are adjacent to the
premises served.
APPLICATION
This rate schedule is applicable to customers receiving electric energy
on a direct access basis from any certificated Electric Service Provider (ESP)
as defined in A.A.C. R14-2-1603. This rate schedule is applicable only to
customers whose monthly maximum demand is 3,000 kW or more for three (3)
consecutive months in any continuous twelve (12) month period ending with the
current month. Service must be supplied at one point of delivery and measured
through one meter unless otherwise specified by individual customer contract.
For those customers whose electricity is delivered through more than one meter,
service for each meter shall be computed separately under this rate unless
conditions in accordance with the Company's Schedule #4 (Totalized Metering of
Multiple Service Entrance Sections At a Single Premise for Standard Offer and
Direct Access Service) are met.
This rate schedule is not applicable to resale service.
This rate schedule shall become effective as defined in Company's Terms
and Conditions for Direct Access (Schedule #10).
TYPE OF SERVICE
Service shall be three phase, 60 Hertz, at Company's standard voltages
that are available within the vicinity of customer's premise.
METERING REQUIREMENTS
All customers shall comply with the terms and conditions for hourly
metering specified in Schedule #10.
MONTHLY BILL
The monthly bill shall be the greater of the amount computed under A.
or B. below, including the applicable Adjustments.
A. RATE
Basic Competitive
Delivery System Transition
Service Distribution Benefits Charge
------- ------------ -------- ------
$/month $2,430.00
per kW $3.53 $2.82
per kWh $0.00999 $0.00115
PRIMARY AND TRANSMISSION LEVEL SERVICE:
1. For customers served at primary voltage (12.5kV to below
69kV), the Distribution charge will be discounted by 4.8%.
2. For customers served at transmission voltage (69kV or higher),
the Distribution charge will be discounted 36.7%.
3. Pursuant to A.A.C. R14-2-1612.K.11, the Company shall retain
ownership of Current Transformers (CT's) and Potential
Transformers (PT's) for those customers taking service at
voltage levels of more than 25 kV. For customers whose
metering services are provided by an ESP, a monthly facilities
charge will be billed, in addition to all other applicable
charges shown above, as determined in the service contract
based upon the Company's cost of CT and PT ownership,
maintenance and operation.
DETERMINATION OF KW
The kW used for billing purposes shall be the greater of:
1. The kW used for billing purposes shall be the average kW
supplied during the 15minute period (or other period as
specified by individual customer's contract) of maximum use
during the month, as determined from readings of the delivery
meter.
2. The minimum kW specified in the agreement for service or
individual customer contract.
(CONTINUED ON REVERSE SIDE)
<PAGE>
DA-GS10
A.C.C. No. XXXX
Page 2 of 2
B. MINIMUM
$2,430.00 per month plus $1.74 per kW per month.
ADJUSTMENTS
1. When Metering, Meter Reading or Consolidated Billing are
provided by the Customer's ESP, the monthly bill will be
credited as follows:
Meter $ 55.00 per month
Meter Reading $ 0.30 per month
Billing $ 0.30 per month
2. The monthly bill is also subject to the applicable
proportionate part of any taxes, or governmental impositions
which are or may in the future be assessed on the basis of
gross revenues of the Company and/or the price or revenue from
the electric service sold and/or the volume of energy
delivered or purchased for sale and/or sold hereunder.
SERVICES ACQUIRED FROM CERTIFICATED ELECTRIC SERVICE PROVIDERS
Customers served under this rate schedule are responsible for acquiring
their own generation and any other required competitively supplied services from
an ESP. T he Company will provide and bill its transmission and ancillary
services on rates approved by the Federal Energy Regulatory Commission to the
Scheduling Coordinator who provides transmission service to the Customer's ESP.
The Customer's ESP must submit a Direct Access Service Request pursuant to the
terms and conditions in Schedule #10.
ON-SITE GENERATION TERMS AND CONDITIONS
Customers served under this rate schedule who have on-site generation
connected to the Company's electrical delivery grid shall enter into an
Agreement for Interconnection with the Company which shall establish all
pertinent details related to interconnection and other required service
standards. The Customer does not have the option to sell power and energy to the
Company under this tariff.
CONTRACT PERIOD
For service locations in:
a) Isolated Areas: Ten (10) years, or longer, at Company's
option, with standard seven (7) year termination period.
b) Other Areas: Three (3) years, or longer, at Company's option.
TERMS AND CONDITIONS
This rate schedule is subject to Company's Terms and Conditions for
Standard Offer and Direct Access Service (Schedule #1) and the Company's
Schedule #10. These schedules have provisions that may affect customer's monthly
bill.
<PAGE>
EXHIBIT A
5/13/99
DA-GS11
ELECTRIC DELIVERY RATES
ARIZONA PUBLIC SERVICE COMPANY A.C.C. No. XXXX
Phoenix, Arizona Tariff or Schedule No. DA-GS11
Filed by: Alan Propper Original Tariff
Title: Director, Pricing and Regulation Effective: XXX XX, 1999
DIRECT ACCESS
RALSTON PURINA
AVAILABILITY
This rate schedule is available in all certificated retail delivery
service territory served by Company at all points where facilities of adequate
capacity and the required phase and suitable voltage are adjacent to the
premises served.
APPLICATION
This rate schedule is applicable only to Ralston Purina (Site
#863970289) when it receives electric energy on a direct access basis from any
certificated Electric Service Provider (ESP) as defined in A.A.C. R14-2-1603.
Service must be supplied as specified by individual customer contract and the
Company's Schedule #4 (Totalized Metering of Multiple Service Entrance Sections
At a Single Premise for Standard Offer and Direct Access Service).
This rate schedule is not applicable to resale service.
This rate schedule shall become effective as defined in Company's Terms
and Conditions for Direct Access (Schedule #10).
TYPE OF SERVICE
Service shall be three phase, 60 Hertz, at 12.5 kV.
METERING REQUIREMENTS
Customer shall comply with the terms and conditions for hourly metering
specified in Schedule #10.
MONTHLY BILL
The monthly bill shall be the greater of the amount computed under A.
or B. below, including the applicable Adjustments.
A. RATE
Basic Competitive
Delivery System Transition
Service Distribution Benefits Charge
------- ------------ -------- ------
$/month $2,430.00
per kW $2.58 $1.86
per kWh $0.00732 $0.00115
DETERMINATION OF KW
The kW used for billing purposes shall be the greater of:
1. The kW used for billing purposes shall be the average kW
supplied during the 15minute period (or other period as
specified by individual customer's contract) of maximum
use during the month, as determined from readings of the
delivery meter.
2. The minimum kW specified in the agreement for service or
individual customer contract.
B. MINIMUM
$2,430.00 per month plus $1.74 per kW per month.
ADJUSTMENTS
1. When Metering, Meter Reading or Consolidated Billing are provided by
the Customer's ESP, the monthly bill will be credited as follows:
Meter $ 55.00 per month
Meter Reading $ 0.30 per month
Billing $ 0.30 per month
2. The monthly bill is also subject to the applicable proportionate
part of any taxes, or governmental impositions which are or may in
the future be assessed on the basis of gross revenues of the Company
and/or the price or revenue from the electric service sold and/or
the volume of energy delivered or purchased for sale and/or sold
hereunder.
(CONTINUED ON REVERSE SIDE)
<PAGE>
DA-GS11
A.C.C. No. XXXX
Page 2 of 2
SERVICES ACQUIRED FROM CERTIFICATED ELECTRIC SERVICE PROVIDERS
Customer is responsible for acquiring its own generation and any other
required competitively supplied services from an ESP. T he Company will provide
and bill its transmission and ancillary services on rates approved by the
Federal Energy Regulatory Commission to the Scheduling Coordinator who provides
transmission service to the Customer's ESP. The Customer's ESP must submit a
Direct Access Service Request pursuant to the terms and conditions in Schedule
#10.
ON-SITE GENERATION TERMS AND CONDITIONS
If Customer has on-site generation connected to the Company's
electrical delivery grid, it shall enter into an Agreement for Interconnection
with the Company which shall establish all pertinent details related to
interconnection and other required service standards. The Customer does not have
the option to sell power and energy to the Company under this tariff.
TERMS AND CONDITIONS
This rate schedule is subject to Company's Terms and Conditions for
Standard Offer and Direct Access Service (Schedule #1) and the Company's
Schedule #10. These schedules have provisions that may affect customer's monthly
bill.
<PAGE>
EXHIBIT A
5/13/99
DA-GS12
ELECTRIC DELIVERY RATES
ARIZONA PUBLIC SERVICE COMPANY A.C.C. No. XXXX
Phoenix, Arizona Tariff or Schedule No. DA-GS12
Filed by: Alan Propper Original Tariff
Title: Director, Pricing and Regulation Effective: XXX XX, 1999
DIRECT ACCESS
BHP COPPER
AVAILABILITY
This rate schedule is available in all certificated retail delivery
service territory served by Company at all points where facilities of adequate
capacity and the required phase and suitable voltage are adjacent to the
premises served.
APPLICATION
This rate schedule is applicable only to BHP Copper (Site #774932285)
when it receives electric energy on a direct access basis from any certificated
Electric Service Provider (ESP) as defined in A.A.C. R14-2-1603. Service must be
supplied as specified by individual customer contract and the Company's Schedule
#4 (Totalized Metering of Multiple Service Entrance Sections At a Single Premise
for Standard Offer and Direct Access Service).
This rate schedule is not applicable to resale service.
This rate schedule shall become effective as defined in Company's Terms
and Conditions for Direct Access (Schedule #10).
TYPE OF SERVICE
Service shall be three phase, 60 Hertz, at 12.5 kV or higher.
METERING REQUIREMENTS
Customer shall comply with the terms and conditions for hourly metering
specified in Schedule #10.
MONTHLY BILL
The monthly bill shall be the greater of the amount computed under A.
or B. below, including the applicable Adjustments.
A. RATE
Basic Distribution Distribution Competitive
Delivery at Primary at Transmission System Transition
Service Voltage Voltage Benefits Charge
------- ------- ------- -------- ------
$/month $2,430.00
per kW $2.35 $1.22 $1.54
per kWh $0.00665 $0.00346 $0.00115
PRIMARY AND TRANSMISSION LEVEL SERVICE:
Pursuant to A.A.C. R14-2-1612.K.11, the Company shall retain
ownership of Current Transformers (CT's) and Potential
Transformers (PT's) for those customers taking service at
voltage levels of more than 25 kV. For customers whose
metering services are provided by an ESP, a monthly facilities
charge will be billed, in addition to all other applicable
charges shown above, as determined in the service contract
based upon the Company's cost of CT and PT ownership,
maintenance and operation.
DETERMINATION OF KW
The kW used for billing purposes shall be the greater of:
1. The kW used for billing purposes shall be the average kW
supplied during the 30minute period (or other period as
specified by individual customer's contract) of maximum use
during the month, as determined from readings of the delivery
meter.
2. The minimum kW specified in the agreement for service or
individual customer contract.
B. MINIMUM
$2,430.00 per month plus $1.74 per kW per month.
(CONTINUED ON REVERSE SIDE)
<PAGE>
DA-GS12
A.C.C. No. XXXX
Page 2 of 2
ADJUSTMENTS
1. When Metering, Meter Reading or Consolidated Billing are
provided by the Customer's ESP, the monthly bill will be
credited as follows:
Meter $ 55.00 per month
Meter Reading $ 0.30 per month
Billing $ 0.30 per month
2. The monthly bill is also subject to the applicable
proportionate part of any taxes, or governmental impositions
which are or may in the future be assessed on the basis of
gross revenues of the Company and/or the price or revenue from
the electric service sold and/or the volume of energy
delivered or purchased for sale and/or sold hereunder.
SERVICES ACQUIRED FROM CERTIFICATED ELECTRIC SERVICE PROVIDERS
Customer is responsible for acquiring its own generation and any other
required competitively supplied services from an ESP. T he Company will provide
and bill its transmission and ancillary services on rates approved by the
Federal Energy Regulatory Commission to the Scheduling Coordinator who provides
transmission service to the Customer's ESP. The Customer's ESP must submit a
Direct Access Service Request pursuant to the terms and conditions in Schedule
#10.
ON-SITE GENERATION TERMS AND CONDITIONS
If Customer has on-site generation connected to the Company's
electrical delivery grid, it shall enter into an Agreement for Interconnection
with the Company which shall establish all pertinent details related to
interconnection and other required service standards. The Customer does not have
the option to sell power and energy to the Company under this tariff.
TERMS AND CONDITIONS
This rate schedule is subject to Company's Terms and Conditions for
Standard Offer and Direct Access Service (Schedule #1) and the Company's
Schedule #10. These schedules have provisions that may affect customer's monthly
bill.
<PAGE>
EXHIBIT A
5/13/99
DA-GS13
ELECTRIC DELIVERY RATES
ARIZONA PUBLIC SERVICE COMPANY A.C.C. No. XXXX
Phoenix, Arizona Tariff or Schedule No. DA-GS13
Filed by: Alan Propper Original Tariff
Title: Director, Pricing and Regulation Effective: XXX XX, 1999
DIRECT ACCESS
CYPRUS BAGDAD
AVAILABILITY
This rate schedule is available in all certificated retail delivery
service territory served by Company at all points where facilities of adequate
capacity and the required phase and suitable voltage are adjacent to the
premises served.
APPLICATION
This rate schedule is applicable only to Cyprus Bagdad (Site
#120932284) when it receives electric energy on a direct access basis from any
certificated Electric Service Provider (ESP) as defined in A.A.C. R14-2-1603.
Service must be supplied as specified by individual customer contract and the
Company's Schedule #4 (Totalized Metering of Multiple Service Entrance Sections
At a Single Premise for Standard Offer and Direct Access Service).
This rate schedule is not applicable to resale service.
This rate schedule shall become effective as defined in Company's Terms
and Conditions for Direct Access (Schedule #10).
TYPE OF SERVICE
Service shall be three phase, 60 Hertz, at 115 kV or higher.
METERING REQUIREMENTS
Customer shall comply with the terms and conditions for hourly metering
specified in Schedule #10.
MONTHLY BILL
The monthly bill shall be the greater of the amount computed under A.
or B. below, including the applicable Adjustments.
A. RATE
Basic Competitive
Delivery System Transition
Service Distribution Benefits Charge
------- ------------ -------- ------
$/month $2,430.00
per kW $1.05 $1.34
per kWh $0.00298 $0.00115
PRIMARY AND TRANSMISSION LEVEL SERVICE:
Pursuant to A.A.C. R14-2-1612.K.11, the Company shall retain
ownership of Current Transformers (CT's) and Potential
Transformers (PT's) for those customers taking service at
voltage levels of more than 25 kV. For customers whose
metering services are provided by an ESP, a monthly facilities
charge will be billed, in addition to all other applicable
charges shown above, as determined in the service contract
based upon the Company's cost of CT and PT ownership,
maintenance and operation.
DETERMINATION OF KW
The kW used for billing purposes shall be the greater of:
1. The kW used for billing purposes shall be the average kW
supplied during the 30minute period (or other period as
specified by individual customer's contract) of maximum use
during the month, as determined from readings of the delivery
meter.
2. The minimum kW specified in the agreement for service or
individual customer contract.
B. MINIMUM
$2,430.00 per month plus $1.74 per kW per month, until June 30, 2004
when this minimum will no longer be applicable.
(CONTINUED ON REVERSE SIDE)
<PAGE>
DA-GS13
A.C.C. No. XXXX
Page 2 of 2
ADJUSTMENTS
1. When Metering, Meter Reading or Consolidated Billing are
provided by the Customer's ESP, the monthly bill will be
credited as follows:
Meter $ 55.00 per month
Meter Reading $ 0.30 per month
Billing $ 0.30 per month
2. The monthly bill is also subject to the applicable
proportionate part of any taxes, or governmental impositions
which are or may in the future be assessed on the basis of
gross revenues of the Company and/or the price or revenue from
the electric service sold and/or the volume of energy
delivered or purchased for sale and/or sold hereunder.
SERVICES ACQUIRED FROM CERTIFICATED ELECTRIC SERVICE PROVIDERS
Customer is responsible for acquiring its own generation and any other
required competitively supplied services from an ESP. T he Company will provide
and bill its transmission and ancillary services on rates approved by the
Federal Energy Regulatory Commission to the Scheduling Coordinator who provides
transmission service to the Customer's ESP. The Customer's ESP must submit a
Direct Access Service Request pursuant to the terms and conditions in Schedule
#10.
ON-SITE GENERATION TERMS AND CONDITIONS
If Customer has on-site generation connected to the Company's
electrical delivery grid, it shall enter into an Agreement for Interconnection
with the Company which shall establish all pertinent details related to
interconnection and other required service standards. The Customer does not have
the option to sell power and energy to the Company under this tariff.
TERMS AND CONDITIONS
This rate schedule is subject to Company's Terms and Conditions for
Standard Offer and Direct Access Service (Schedule #1) and the Company's
Schedule #10. These schedules have provisions that may affect customer's monthly
bill.
<PAGE>
ARIZONA PUBLIC SERVICE COMPANY Exhibit A
Competitive Transition Charges 5/13/99
By Direct Access Rate Classes Schedule A
<TABLE>
<CAPTION>
Line Competition Transition Charges Effective January 1 of
- ---- ------------------------------------------------------------
# Direct Access Rate Class 1999 2000 2001 2002 2003 2004
- ---- ------------------------ ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
1 Residential, DA-R1 (per kWh) $0.0093 $0.0084 $0.0063 $0.0056 $0.0050 $0.0036
2 Under 3 mW, DA-GS1, (per kW/mo.) $ 2.43 $ 2.20 $ 1.66 $ 1.46 $ 1.30 $ 0.94
3 3 mW and Above, DA-GS10 (per kW/mo.) $ 2.82 $ 2.55 $ 1.89 $ 1.72 $ 1.51 $ 1.09
4 BHP Copper (per kW/mo.) $ 1.54 $ 1.53 $ 1.06 $ 0.95 $ 0.83 $ 0.61
5 Cyprus Copper (per kW/mo.) $ 1.34 $ 1.46 $ 1.05 $ 0.94 $ 0.82 $ 0.61
6 Ralston Purina (per kW/mo.) $ 1.86 $ 1.98 $ 1.50 $ 1.34 $ 1.18 $ 0.87
7 Average Retail (per kWh) $0.0067 $0.0061 $0.0054 $0.0048 $0.0043 $0.0031
</TABLE>
Charges are based upon recovery of $350 million NPV derived from APS' Compliance
Filing of 8/21/98 as adjusted to synchronize Direct Access and Standard Offer
revenue decreases.
<PAGE>
ARIZONA PUBLIC SERVICE COMPANY Exhibit A
Distribution Charges 5/13/99
By Direct Access Rate Classes Schedule B
<TABLE>
<CAPTION>
Distribution Charges Effective January 1 of
Line ------------------------------------------------------------
# Direct Access Rate Class 1999 2000 2001 2002 2003 2004a/
---- ------------------------ ---- ---- ---- ---- ---- ------
<S> <C> <C> <C> <C> <C> <C>
RESIDENTIAL, DA-R1
1 Summer per kWh $0.04158 $0.04041 $0.03934 $0.03837 $0.03748 $0.03689
2 Winter per kWh $0.03518 $0.03419 $0.03329 $0.03247 $0.03172 $0.03122
DA-GS1 (UNDER 3 MW)
Summer Rates
3 per kW for all kW over 5 $0.721 $0.691 $ 0.663 $ 0.638 $ 0.615 $ 0.600
4 per kWh for the first 2,500 kWh $0.04255 $0.04075 $0.03912 $0.03763 $0.03627 $0.03537
5 per kWh for the next 100 kWh per kW over 5 $0.04255 $0.04075 $0.03912 $0.03763 $0.03627 $0.03537
6 per kWh for the next 42,000 kWh $0.02901 $0.02779 $0.02667 $0.02565 $0.02473 $0.02411
7 per kWh for all additional kWh $0.01811 $0.01735 $0.01665 $0.01602 $0.01544 $0.01506
Winter Rates
8 per kW for all kW over 5 $0.652 $ 0.624 $ 0.599 $ 0.576 $ 0.555 $ 0.541
9 per kWh for the first 2,500 kWh $0.03827 $0.03666 $0.03519 $0.03385 $0.03263 $0.03182
10 per kWh for the next 100 kWh per kW over 5 $0.03827 $0.03666 $0.03519 $0.03385 $0.03263 $0.03182
11 per kWh for the next 42,000 kWh $0.02600 $0.02490 $0.02390 $0.02299 $0.02216 $0.02161
12 per kWh for all additional kWh $0.01614 $0.01546 $0.01484 $0.01427 $0.01376 $0.01342
Voltage Discounts
13 Primary Voltage 11.6% 12.1% 12.6% 13.1% 13.6% 13.9%
14 Transmission Voltage 52.6% 54.9% 57.2% 59.5% 61.7% 63.3%
DA-GS10 (3 MW AND ABOVE)
15 per kW $ 3.53 $ 3.33 $ 3.15 $ 2.98 $ 2.83 $ 2.73
16 per kWh $0.00999 $0.00943 $0.00892 $0.00845 $0.00802 $0.00774
Voltage Discounts
17 Primary Voltage Discount 4.8% 5.1% 5.3% 5.6% 5.9% 6.2%
18 Transmission Voltage Discount 36.7% 38.9% 41.1% 43.4% 45.8% 47.4%
DA-GS11 (RALSTON PURINA)
19 per kW $ 2.58 $ 2.71 $ 2.57 $ 2.44 $ 2.32 $ 2.25
20 per kWh $0.00732 $0.00767 $0.00727 $0.00691 $0.00657 $0.00635
DA-GS12 (BHP COPPER)
21 Primary Voltage Delivery per kW $ 2.35 $ 2.30 $ 2.16 $ 2.07 $ 1.99 $ 1.93
22 per kWh $0.00665 $0.00651 $0.00611 $0.00585 $0.00561 $0.00546
23 Transmission Voltage Delivery per kW $ 1.22 $ 1.17 $ 1.03 $ 0.94 $ 0.85 $ 0.80
24 per kWh $0.00346 $0.00332 $0.00292 $0.00266 $0.00242 $0.00227
DA-GS13 (CYPRUS BAGDAD)
25 per kW $ 1.05 $ 1.21 $ 1.03 $ 0.94 $ 0.85 $ 0.80
26 per kWh $0.00297 $0.00343 $0.00292 $0.00266 $0.00242 $0.00227
</TABLE>
a/ Transmission voltage customers will not pay Distribution Charges after
June 30, 2004
<PAGE>
Exhibit A
5/14/99
Schedule C
ARIZONA PUBLIC SERVICE COMPANY
Regulatory Asset Amortization Schedule
(Millions of Dollars)
1/1 - 6/30
1999 2000 2001 2002 2003 2004 1/ Total 2/
---- ---- ---- ---- ---- ------- --------
164 158 145 115 86 18 686
1/ Amortization ends 6/30/2004
2/ Includes the disallowance from Section 3.3
<PAGE>
1999 Residential 20 .93
General Service less than 3MW 20 2.43
General Service greater than 3MW 20 2.82
BHP Copper 20 1.54
Cyprus Copper 20 1.34
Ralston Purina 20 1.86
2000 Residential 20 .84
General Service less than 3MW 20 2.20
General Service greater than 3MW 20 2.55
BHP Copper 20 1.53
Cyprus Copper 20 1.46
Ralston Purina 20 1.98
2001 Residential 100 .63
General Service less than 3MW 100 1.66
General Service greater than 3MW 100 1.89
BHP Copper 100 1.06
Cyprus Copper 100 1.05
Ralston Purina 100 1.50
2002 Residential 100 .56
General Service less than 3MW 100 1.46
General Service greater than 3MW 100 1.72
BHP Copper 100 .95
Cyprus Copper 100 .94
Ralston Purina 100 1.34
2003 Residential 100 .50
General Service less than 3MW 100 1.30
General Service greater than 3MW 100 1.51
BHP Copper 100 .83
Cyprus Copper 100 .82
Ralston Purina 100 1.18
2004 Residential 100 .36
General Service less than 3MW 100 .94
General Service greater than 3MW 100 1.09
BHP Copper 100 .61
Cyprus Copper 100 .61
Ralston Purina 100 .87
- ----------
1 This formula assumes no change in APS' distribution service territory. In
the event of any material change (e.g. by purchase, sale, expansion,
condemnation, etc.) the formula will be adjusted such that APS receives
the same opportunity to recover the agreed upon level of costs.
2 General Service unmetered loads will have a demand calculated for CTC
purposes based on contract energy.
3 At the end of 2004 the net present value will be calculated to compare to
the $350 million.
<PAGE>
5/7/99
EXHIBIT C
Generation assets include, but are not limited to, APS' interest in the
following generating stations:
Palo Verde
Four Corners
Navajo
Cholla
Saguaro
Ocotillo
West Phoenix
Yucca
Douglas
Childs
Irving
Including allocated common and general plant, support assets, associated land,
fuel supplies and contracts, etc. Generation assets will not include facilities
included in APS' FERC transmission rates.
<PAGE>
EXHIBIT D
AFFILIATE RULES WAIVERS
R14-2-801(5) and R14-2-803, such that the term "reorganization" does not
include, and no Commission approval is required for, corporate restructuring
that does not directly involve the utility distribution company ("UDC") in the
holding company. For example, the holding company may reorganize, form, buy or
sell non-UDC affiliates, acquire or divest interests in non-UDC affiliates,
etc., without Commission approval.
R14-2-804(A)
R14-2-805(A) shall apply only to the UDC
R14-2-805(A)(2)
R14-2-805(A)(6)
R14-2-805(A)(9), (10), and (11)
RECISION OF PRIOR COMMISSION ORDERS
Section X.C of the "Cogeneration and Small Power Production Policy" attached to
Decision No. 52345 (July 27, 1981) regarding reporting requirements for
cogeneration information.
Decision No. 55118 (July 24, 1986) - Page 15, Lines 5-1/2 through 13-1/2;
Finding of Fact No. 24 relating to reporting requirements under the abolished
PPFAC.
Decision No. 55818 (December 14, 1987) in its entirety. This decision related to
APS Schedule 9 (Industrial Development Rate) which was terminated by the
Commission in Decision No. 59329 (October 11, 1995).
9th and 10th Ordering Paragraphs of Decision No. 56450 (April 13, 1989)
regarding reporting requirements under the abolished PPFAC.
