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) December 15, 1993
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PINNACLE WEST CAPITAL CORPORATION
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(exact name of registrant as specified in its charter)
Arizona 1-8962 86-051243
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
400 E. Van Buren St., P. O. Box 52132, Phoenix, AZ 85072-2132
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(Address of principal executive offices) (Zip Code)
Registrant's phone number, including area code (602) 379-2500
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NONE
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(Former name or former address, if changed since last report)
The following information relates primarily to Pinnacle West
Capital Corporation (the "Company") and its principal subsidiary, Arizona
Public Service Company ("APS").
ITEM 5. Other Events
Palo Verde Nuclear Generating Station
On December 26, 1993 Unit 3 of the Palo Verde Nuclear Generating Station
("Palo Verde") returned to service at 85% power following a mid-cycle outage
during which APS inspected Unit 3's steam generators. See Note 9 of Notes
to Consolidated Financial Statements in the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1993 (the "September 10-Q").
APS has informed the Nuclear Regulatory Commission (the "NRC") that the
inspection did not reveal the type of tube degradation (axial cracking in
upper bundle) experienced in Unit 2's steam generators; however, the
inspection did reveal another more common type of tube degradation
(circumferential cracking at tubesheet) in the unit's steam generators which
has occurred in similarly-designed steam generators at other plants. The
next regular refueling outage for Unit 3 is scheduled to begin in March
1994, at which time APS plans to inspect and chemically clean that unit's
steam generators.
On January 8, 1994 APS removed Unit 2 from service to inspect and
chemically clean its two steam generators during a mid-cycle outage. The
initial inspection and the cleaning have been completed, and one of the
steam generators is currently being reinspected. To date the inspection has
revealed additional tube degradation of the type (axial cracking in upper
bundle) previously found in that unit's steam generators. The inspection
has also revealed the common type of tube degradation (circumferential
cracking at tubesheet) which has occurred in similarly-designed steam
generators at other plants. Based on these findings, APS has expanded the
scope of the inspection of the Unit 2 steam generators and the planned
duration of the outage until mid to late March. However, because APS'
analysis of Unit 2's steam generators is ongoing, APS cannot predict with
certainty the timing of the restart of Unit 2. APS is currently evaluating
the need for an additional mid-cycle outage for Unit 2 during 1994.
Unit 1 continues to operate at 85% power since it returned to service in
late November 1993 after its refueling outage. See Note 9 of Notes to
Consolidated Financial Statements in the September 10-Q for more
information.
APS has performed, and is continuing, certain corrective actions
including, among other things, chemical cleaning, operating the units at
reduced temperatures, and, for some period, operating the units at 85%
power. As a result of these corrective actions, all three units should be
returned to 100% power by mid 1995, and one or more of the units could be
returned to 100% power during the course of 1994. So long as the three
units are involved in mid-cycle outages and are operated at 85% power, APS
estimates that it will incur additional fuel and purchased power costs
averaging approximately $2 million per month (before income taxes).
As previously disclosed, by letter dated July 7, 1993, the NRC advised
APS that, as a result of a Recommended Decision and Order by a Department of
Labor Administrative Law Judge (the "DOL ALJ") finding that APS
discriminated against a former contract employee at Palo Verde because he
engaged in "protected activities" (as defined under federal regulations),
the NRC intended to schedule an enforcement conference with APS. See "Palo
Verde Nuclear Generating Station" in Part II, Item 5 of the September 10-Q,
and in Part II, Item 5 of the Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1993.
Following the DOL ALJ's finding, APS investigated various elements of
both the substantive allegations and the manner in which the U. S.
Department of Labor (the "DOL") proceedings were conducted. As a result of
that investigation, APS determined that one of its employees had falsely
testified during the proceedings, that there were inconsistencies in the
testimony of another employee, and that certain documents were requested in,
but not provided during, discovery. The two employees in question are no
longer with APS. APS provided the results of its investigation to the DOL
ALJ, who referred matters relating to the conduct of the two former
employees of APS to the U.S. Attorney's office in Phoenix, Arizona. On
December 15, 1993, APS and the former contract employee who had raised the
DOL claim entered into a settlement agreement, a part of which remains
subject to approval by the Secretary of Labor.
By letter dated August 10, 1993 APS also provided the results of its
investigation to the NRC, and advised the NRC that, as a result of APS'
investigation, APS had changed its position opposing the finding of
discrimination. The NRC is investigating this matter and APS is fully
cooperating with the NRC in this regard.
SIGNATURE
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 thereunto duly authorized.
PINNACLE WEST CAPITAL CORPORATION
(Registrant)
By: /s/ Henry Sargent
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Henry Sargent
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer
and Officer Duly Authorized
to sign this Report)
Dated: February 22, 1994
