EXHIBIT H-1
PROPOSED FORM OF FEDERAL REGISTER NOTICE
SECURITIES AND EXCHANGE COMMISSION
(Release No. 35-_______)
Filings under the Public Utility Holding Company Act of 1935, as amended ("Act")
September __, 2000
Notice is hereby given that the following filing(s) has/have been made with
the Commission pursuant to provisions of the Act and rules promulgated
thereunder. All interested persons are referred to the application(s) and/or
declaration(s) for the complete statements of the proposed transaction(s)
summarized below. The application(s) and declaration(s) and any amendments
thereto is/are available for public inspection through the Commission's Office
of Public Reference.
Interested persons wishing to comment or request a hearing on the
application(s) and/or declaration(s) should submit their views in writing by
September __, 2000, to the Secretary, Securities and Exchange Commission,
Washington, D.C. 20549-0609, and serve a copy on the relevant applicant(s)
and/or declarant(s) at the address(es) specified below. Proof of service (by
affidavit or, in case of an attorney at law, by certificate) should be filed
with the request. Any request for hearing shall identify specifically the issues
of fact or law that are disputed. A person who so requests will be so notified
of any hearing, if ordered, and will receive a copy of any notice or order
issued in the matter. After September __, 2000, the application(s) and/or
declaration(s), as filed or amended, may be granted and/or permitted to become
effective.
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Pinnacle West Capital Corporation ("PNW"), 400 North Fifth Street, Phoenix,
Arizona 85004, has filed an application-declaration pursuant to Sections 9(a)(2)
and 10 of the Act, in which it requests approval to establish a new
public-utility company subsidiary in connection with the proposed corporate
reorganization ("Reorganization"), involving the relocation of certain
generation assets from Arizona Public Service Company ("APS"), PNW's existing
public-utility company subsidiary, to Pinnacle West Energy Corporation ("PWE"),
another wholly-owned subsidiary of PNW. As a result of this Reorganization, PWE
will become an "electric utility company" and a "public-utility company" within
the meaning of the Act, and PNW will acquire an additional public-utility
subsidiary. PNW will continue to meet the requirements for an intrastate
exemption under Section 3(a)(1) of the Act and to file annual exemption
statements on Form U-3A-2 pursuant to Rule 2 of the Commission's regulations.
The purpose of the reorganization is to comply with certain requirements
set forth in rules adopted by the Arizona Corporation Commission ("ACC") that
provide the framework for
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introduction of retail electric competition in Arizona ("Competition Rules"),
and in a final ACC order approving APS's settlement with various parties and the
ACC with respect to implementation of the Competition Rules (the "Settlement").
Pursuant to the Competition Rules and Settlement, APS must move all of its
generating assets and competitive services to PNW subsidiaries no later than
December 31, 2002.
PNW was incorporated in 1985 under the laws of the State of Arizona.
Through its subsidiaries, PNW is engaged in the generation, transmission, and
distribution of electricity and the sale of energy services. Through
subsidiaries, PNW is also involved in real estate development and in venture
capital investment. PNW's principal subsidiaries are: APS, PWE, APS Energy
Services Company, Inc., SunCor Development Company, and El Dorado Investment
Company.
PNW's principal public-utility subsidiary is APS. APS, incorporated in 1920
under the laws of the State of Arizona, is a wholly-owned subsidiary of PNW.
APS's principal executive offices are located at 400 North Fifth Street, Phoenix
Arizona 85004. APS provides retail electric services principally in the State of
Arizona and is actively engaged in the competitive wholesale electric markets.
APS is subject to regulation by the ACC with respect to retail rates,
accounting, service standards, service territory, issuances of securities,
certification of generation and transmission projects and various other matters.
APS currently owns generating facilities with a total accredited capacity of
approximately 4,100 megawatts.
APS also owns and operates approximately 4,853 miles of transmission lines,
of which all but 140 miles are located within the State of Arizona. APS's
transmission was built primarily to bring generation from its power plants to
its retail electric loads in Arizona. As of December 31, 1999, APS's
distribution system served approximately 827,000 electric retail customers in
its service territory within the State of Arizona. APS provides distribution
services in 11 of Arizona's 15 counties, including the metropolitan Phoenix
area. Pursuant to the Settlement approved by the ACC in 1999, retail rates have
been set until July 1, 2004, subject to conditions or circumstances which
constitute an emergency.
PWE, another wholly-owned subsidiary of PNW, was incorporated in 1999 under
the laws of the State of Arizona. PWE was organized primarily to engage in the
business of developing, owning, and operating generation plants used for the
production and sale of wholesale energy. Currently, PWE is engaged in the
development of approximately 2,600 megawatts of generating capacity in the State
of Arizona; however, PWE is not currently an electric utility company or a
public-utility company within the meaning of the Act. Upon completion of the
Reorganization, PWE will own or lease the generation facilities currently owned
or leased by APS and will assume APS's responsibilities as operator of the
facilities.
When the Reorganization is complete, APS's existing structure, in which its
electric utility operations are divided along functional lines, will be
formalized and separate corporate entities will engage in the
transmission/distribution of electricity and the generation of electricity. APS
will continue to own and operate its existing electric transmission/distribution
system, and PWE will own or lease and operate APS's existing generation assets,
selling the output from these assets to PNW's
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power marketing and trading division and to other wholesale entities. In
addition, APS will serve as the provider of last resort to standard offer
customers in APS's existing service territory.
The generation assets will be moved to PWE at book value. In addition, PWE
will assume certain outstanding debt associated with the generating assets being
moved. Specifically, PWE will assume APS's rights and obligations with respect
to approximately $180 million in pollution control bonds.
The principal purpose of the Reorganization is to assure compliance with
the provisions of the Competition Rules and the Settlement and to provide PNW
with increased financial, managerial, and organizational flexibility which will
enable APS and PWE to compete more effectively in a restructured utility
industry. It is stated that the Reorganization will lead to a clear, functional
and corporate separation between PNW's generation business and its wires
business, enabling each company to focus its resources on more clearly defined
product markets and services. PNW also states that the Reorganization will have
no adverse effect on APS's existing electric utility operations. The
Reorganization will not result in any real change in the ultimate ownership of
existing utility assets nor will it result in the transfer or acquisition of any
additional utility assets beyond those currently held by APS or being developed
by PWE.
PNW states that the proposed transaction will satisfy the requirements of
Section 9(a)(2), as well as the relevant provisions of Section 10 of the Act.
PNW will continue to claim an exemption pursuant to Section 3(a)(1) and Rule 2
thereunder.
