SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
----- OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
----- OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
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COMMISSION FILE NUMBER 1-4473
ARIZONA PUBLIC SERVICE COMPANY
(Exact name of registrant as specified in its charter)
ARIZONA 86-0011170
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
400 North Fifth Street, P.O. Box 53999
Phoenix, Arizona 85072-3999 (602) 250-1000
(Address of principal executive offices, (Registrant's telephone number,
including zip code) including area code)
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Securities registered pursuant to
Section 12(b) of the Act: Name of each exchange on
Title of each class which registered
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Adjustable Rate Cumulative Preferred Stock, ........New York Stock Exchange
Series Q, $100 Par Value
$1.8125 Cumulative Preferred Stock, .................New York Stock Exchange
Series W, $25 Par Value
10% Junior Subordinated Deferrable Interest .........New York Stock Exchange
Debentures, Series A, Due 2025
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Securities registered pursuant to Section 12(g) of the Act:
Cumulative Preferred Stock
(Title of class)
(See Note 4 of Notes to Financial Statements in Item 8
for dividend rates, series designations (if any), and par values)
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
Aggregate Market Value
of Voting Stock Held by
Non-affiliates of the
Title of Each Class Shares Outstanding Registrant as of
of Voting Stock as of March 1, 1996 March 1, 1996
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Cumulative Preferred Stock ...........5,022,814 $245,000,000(a)
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(a) Computed, with respect to shares listed on the New York Stock Exchange, by reference to the closing price on the composite tape on March 1, 1996, as reported by The Wall Street Journal, and with respect to non-listed shares, by determining the yield on listed shares and assuming a market value for non-listed shares which would result in that same yield.
As of March 1, 1996, there were issued and outstanding 71,264,947 shares of the registrant's common stock, $2.50 par value, all of which were held beneficially and of record by Pinnacle West Capital Corporation.
Documents Incorporated by Reference
Portions of the registrant's definitive proxy statement relating to its annual meeting of shareholders to be held on May 21, 1996, are incorporated by reference into Part III hereof.
TABLE OF CONTENTS
PAGE
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GLOSSARY ................................................................................. 1
PART I
Item 1. Business .................................................................... 2
Item 2. Properties .................................................................. 9
Item 3. Legal Proceedings ...........................................................13
Item 4. Submission of Matters to a Vote of Security Holders .........................13
Supplemental Item.
Executive Officers of the Registrant ..........................................13
PART II
Item 5. Market for Registrant's Common Stock and Related Security Holder Matters ...15
Item 6. Selected Financial Data .....................................................16
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations ...................................................17
Item 8. Financial Statements and Supplementary Data .................................19
Item 9. Changes In and Disagreements with Accountants on Accounting
and Financial Disclosure ....................................................39
PART III
Item 10. Directors and Executive Officers of the Registrant .........................39
Item 11. Executive Compensation .....................................................39
Item 12. Security Ownership of Certain Beneficial Owners and Management ............39
Item 13. Certain Relationships and Related Transactions .............................39
PART IV
Item 14. Exhibits, Financial Statements, Financial Statement Schedules,
and Reports on Form 8-K ....................................................40
SIGNATURES ...............................................................................54
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GLOSSARY
ACC -- Arizona Corporation Commission
ACC STAFF -- Staff of the Arizona Corporation Commission
AFUDC -- Allowance for Funds Used During Construction
AMENDMENTS -- Clean Air Act Amendments of 1990
ANPP -- Arizona Nuclear Power Project, also known as Palo Verde
APS -- Arizona Public Service Company
CHOLLA -- Cholla Power Plant
CHOLLA 4 -- Unit 4 of the Cholla Power Plant
COMPANY -- Arizona Public Service Company
DOE -- United States Department of Energy
EPA -- United States Environmental Protection Agency
ENERGY ACT -- National Energy Policy Act of 1992
FASB -- Financial Accounting Standards Board
FERC -- Federal Energy Regulatory Commission
FOUR CORNERS -- Four Corners Power Plant
GAAP -- Generally accepted accounting principles
ITC -- Investment Tax Credit
KW -- Kilowatt, one thousand watts
KWH -- Kilowatt-hour, one thousand watts per hour
MORTGAGE -- Mortgage and Deed of Trust, dated as of July 1, 1946, as
supplemented and amended
MWH -- Megawatt hours, one million watts per hour
1935 ACT -- Public Utility Holding Company Act of 1935
NGS -- Navajo Generating Station
NRC -- Nuclear Regulatory Commission
PACIFICORP -- An Oregon-based utility company
PALO VERDE -- Palo Verde Nuclear Generating Station
PINNACLE WEST -- Pinnacle West Capital Corporation, an Arizona corporation,
the Company's parent
SEC -- Securities and Exchange Commission
SFAS NO. 71 -- Statement of Financial Accounting Standards No. 71,
"Accounting for the Effects of Certain Types of Regulation"
SFAS NO. 121 -- Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of"
SFAS NO. 123 -- Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation"
SRP -- Salt River Project Agricultural Improvement and Power District
USEC -- United States Enrichment Corporation
PART I
ITEM 1. BUSINESS
The Company
The Company was incorporated in 1920 under the laws of Arizona and is engaged principally in serving electricity in the State of Arizona. The principal executive offices of the Company are located at 400 North Fifth Street, Phoenix, Arizona 85004 (telephone 602-250-1000). At December 31, 1995, the Company employed 6,484 people, which includes employees assigned to joint projects where the Company is project manager.
The Company serves approximately 705,000 customers in an area that includes all or part of 11 of Arizona's 15 counties. During 1995, no single purchaser or user of energy accounted for more than 3% of total electric revenues.
Pinnacle West owns all of the outstanding shares of the Company's common stock. Pursuant to a Pledge Agreement, dated as of January 31, 1990, between Pinnacle West and Citibank, N.A., as Collateral Agent (the "Pledge Agreement"), and as part of a restructuring of substantially all of its outstanding indebtedness, Pinnacle West granted certain of its lenders a security interest in all of the Company's outstanding common stock. Until the Collateral Agent and Pinnacle West receive notice of the occurrence and continuation of an Event of Default (as defined in the Pledge Agreement), Pinnacle West is entitled to exercise or refrain from exercising any and all voting and other consensual rights pertaining to the common stock. As to matters other than the election of directors, Pinnacle West agreed not to exercise or refrain from exercising any such rights if, in the Collateral Agent's judgment, such action would have a material adverse effect on the value of the common stock. After notice of an Event of Default, the Collateral Agent would have the right to vote the common stock.
Industry and Company Issues
The utility industry continues to experience a number of challenges. Depending on the circumstances of a particular utility, these may include (i) competition in general from numerous sources (see "Competition" below); (ii) difficulties in meeting government imposed environmental requirements; (iii) the necessity to make substantial capital outlays for transmission and distribution facilities; (iv) uncertainty regarding projected electrical demand growth; (v) controversies over electromagnetic fields; (vi) controversies over the safety and use of nuclear power; (vii) issues related to spent fuel and low-level waste (see "Generating Fuel" below); and (viii) increasing costs of wages and materials.
Competition
Although the Company currently serves electricity in particular areas pursuant to certain retail service territorial rights, the Company is subject to varying degrees of competition in certain territories adjacent to or within areas that it serves which are also currently served by other utilities in its region (such as Tucson Electric Power Company, Southwest Gas Corporation, and Citizens Utility Company) as well as cooperatives, municipalities, electrical districts and similar types of governmental organizations (principally SRP). In addition, the Company is competing for large commercial and industrial projects which move into Arizona, and faces challenges from low cost hydroelectric power and natural gas fuel and the access of some utilities to preferential low-priced federal power and other subsidies.
Partly as a result of the National Energy Policy Act of 1992 (the "Energy Act"), the electric utility industry is moving toward a more competitive environment. The Energy Act is designed, among other things, to promote competition among utility and non-utility generators. The Energy Act also amends the Federal Power Act to allow the FERC to order electric utilities to transmit, or "wheel," wholesale power for others. Presently, the Company's primary competitors are the major utilities in its region as competition for wholesale transactions in electricity is already intense in the West. As competition in the electric utility industry continues to evolve, the Company will continue to pursue strategies to enhance its competitive position.
The FERC has been encouraging increased competition in the wholesale market, and a proposed FERC rule would require each utility that markets wholesale power to provide access over its transmission system to other energy providers at prices and terms comparable to those which the utility applies to itself. The FERC has also encouraged the formation of regional transmission groups to enhance coordinated transmission planning and comparable access, as the Company, other utilities in the Southwest and several power marketers are doing with the Southwestern Regional Transmission Association. All of the members of this association will file comparability and market base tariffs with the FERC this summer.
In 1995, the Company and the ACC Staff proposed a regulatory settlement agreement which the Company believes lays the groundwork for a responsible transition to a competitive future. See "1995 Regulatory Agreement" in Note 3 of Notes to Financial Statements in Item 8.
CAPITAL STRUCTURE
The capital structure of the Company (which, for this purpose, includes short-term borrowings and current maturities of long-term debt) as of December 31, 1995 is tabulated below.
Amount Percentage
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(Thousands
of Dollars)
Long-Term Debt Less Current Maturities:
First mortgage bonds ............................. $1,604,317
Other ............................................ 527,704
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Total long-term debt less current maturities ... 2,132,021 50.7%
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Non-Redeemable Preferred Stock .................... 193,561 4.6
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Redeemable Preferred Stock ........................ 75,000 1.8
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Common Stock Equity:
Common stock, $2.50 par value, 100,000,000 shares
authorized; 71,264,947 shares outstanding ...... 178,162
Premiums and expenses ............................ 1,039,550
Retained earnings ................................ 403,843
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Total common stock equity ....................... 1,621,555 38.6
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Total capitalization ........................... 4,022,137
Current Maturities of Long-Term Debt .............. 3,512 .1
Short-Term Borrowings ............................. 177,800 4.2
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Total .......................................... $4,203,449 100.0%
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See Notes 4, 5, and 6 of Notes to Financial Statements in Item 8.
So long as any of the Company's first mortgage bonds are outstanding, the Company is required for each calendar year to deposit with the trustee under its Mortgage, cash in a formularized amount related to net additions to the Company's mortgaged utility plant; however, the Company may satisfy all or any part of this "replacement fund" requirement by utilizing redeemed or retired bonds, net property additions, or property retirements. For 1995, the replacement fund requirement amounted to approximately $128 million. Many, though not all, of the bonds issued by the Company under the Mortgage are redeemable at their par value plus accrued interest with cash deposited by the Company in the replacement fund, subject in many cases to a period of time after the original issuance of the bonds during which they may not be so redeemed and/or to other restrictions on any such redemption.
Rates
State. The ACC has regulatory authority over the Company in matters relating to retail electric rates and the issuance of securities. See Note 3 of Notes to Financial Statements in Item 8 for a discussion of the 1995 regulatory agreement between the Company and the ACC Staff.
Federal. The Company's rates for wholesale power sales and transmission services are subject to regulation by the FERC. During 1995, approximately 6% of the Company's electric operating revenues resulted from such sales and charges. For most wholesale transactions regulated by the FERC, a fuel adjustment clause results in monthly adjustments for changes in the actual cost of fuel for generation and in the fuel component of purchased power expense.
1935 Act
Pinnacle West and its subsidiaries, including the Company, are currently exempt from registration under the 1935 Act; however, the SEC has the authority to revoke or condition an exemption if it appears that any question exists as to whether the exemption may be detrimental to the public interest or the interest of investors or consumers. On June 20, 1995, the SEC issued a Report on the Regulation of Public Utility Holding Companies in which, as its preferred option, the SEC recommended to the Congress conditional repeal of the 1935 Act, with an adequate transition period. The SEC further recommended that legislation repealing the 1935 Act should include provision for state access to books and records of all companies in the holding company system, and for federal audit authority and oversight of affiliate transactions. The Company cannot predict what action, if any, the Congress may take with respect to the SEC's recommendation.
Construction Program
During the years 1993 through 1995, the Company incurred approximately $807 million in capitalized expenditures. Utility capitalized expenditures for the years 1996 through 1998 are expected to be primarily for expanding transmission and distribution capabilities to meet customer growth, upgrading existing facilities and for environmental purposes. Capitalized expenditures, including expenditures for environmental control facilities, for the years 1996 through 1998 have been estimated as follows:
(Millions of Dollars)
By Year By Major Facilities
- ------------------------------------ ------------------------------------
1996 $246 Electric Generation $244
1997 242 Electric Transmission 29
1998 244 Electric distribution 352
----- General facilities 107
$732 -----
===== $732
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The amounts for 1996 through 1998 exclude capitalized interest costs and include capitalized property taxes and about $30 million each year for nuclear fuel expenditures. The Company conducts a continuing review of its construction program.
Environmental Matters
EPA Environmental Regulation. Pursuant to the Clean Air Act, the EPA has adopted regulations that address visibility impairment in certain federally-protected areas which can be reasonably attributed to specific sources. In September 1991, the EPA issued a final rule that would limit sulfur dioxide emissions at NGS. Compliance with the emission limitation becomes applicable to NGS Units 3, 2, and 1 in 1997, 1998, and 1999, respectively. SRP, the NGS operating agent, has estimated a capital cost of $500 million, most of which will be incurred through 1998, and annual operations and maintenance costs of approximately $14 million for all three units, for NGS to meet these requirements. The Company will be required to fund 14% of these expenditures.
The Clean Air Act Amendments of 1990 (the "Amendments") address, among other things, "acid rain," visibility in certain specified areas, toxic air pollutants, and the nonattainment of national ambient air quality standards. With respect to "acid rain," the Amendments establish a system of sulfur dioxide emissions "allowances." Each existing utility unit is granted a certain number of
"allowances." On March 5, 1993, the EPA promulgated rules listing allowance allocations applicable to Company-owned plants, which allocations will begin in the year 2000. Based on those allocations, the Company will have sufficient allowances to permit continued operation of its plants at current levels without installing additional equipment. In addition, the Amendments require the EPA to set nitrogen oxides emissions limitations which would require certain plants to install additional pollution control equipment. In March 1995, the EPA issued revised rules for nitrogen oxides emissions limitations, which may require the Company to install additional pollution control equipment at Four Corners. In the year 2000, Four Corners must comply with either these or recently proposed requirements which the EPA published in January 1996. The EPA has until 1997 to finalize these proposed requirements. Based on its initial evaluation, the Company currently estimates its capital cost of complying with the March 1995 rules may be approximately $20 million, the incurrence of which began in 1995 and will continue through 1999, with the highest expenditures expected during 1998.
With respect to protection of visibility in certain specified areas, the Amendments require the EPA to conduct a study, which the EPA estimates will be completed in late 1996, concerning visibility impairment in those areas and identification of sources contributing to such impairment. Interim findings of this study have indicated that any beneficial effect on visibility as a result of the Amendments would be offset by expected population and industry growth. The EPA has established a "Grand Canyon Visibility Transport Commission" to complete a study by May 1996 on visibility impairment in the "Golden Circle of National Parks" in the Colorado Plateau. NGS, Cholla, and Four Corners are located near the "Golden Circle of National Parks." Based on the recommendations of the Commission, the EPA may require additional emissions controls at various sources causing visibility impairment in the "Golden Circle of National Parks" and may limit economic development in several western states. The Company cannot currently estimate the capital expenditures, if any, which may be required as a result of the EPA studies and the Commission's recommendations.
With respect to hazardous air pollutants emitted by electric utility steam generating units, the Amendments require two studies. The results of the first study indicated an impact from mercury emissions from such units in certain unspecified areas; however, the EPA has not yet stated whether or not emissions limitations will be imposed. Next, the EPA will complete a general study in late 1996 concerning the necessity of regulating such units under the Amendments. Due to the lack of historical data, and because the Company cannot speculate as to the ultimate requirements by the EPA, the Company cannot currently estimate the capital expenditures, if any, which may be required as a result of these studies.
Certain aspects of the Amendments may require related expenditures by the Company, such as permit fees, none of which the Company expects to have a material impact on its financial position.
Purported Navajo Environmental Regulation. Four Corners and NGS are located on the Navajo Reservation and are held under easements granted by the federal government as well as leases from the Navajo Nation. The Company is the Four Corners operating agent and owns a 100% interest in Four Corners Units 1, 2 and 3, and a 15% interest in Four Corners Units 4 and 5. The Company owns a 14% interest in NGS Units 1, 2 and 3. In July 1995 the Navajo Nation enacted the Navajo Nation Air Pollution Prevention and Control Act, the Navajo Nation Safe Drinking Water Act, and the Navajo Nation Pesticide Act (collectively, the "Acts").
Pursuant to the Acts, the Navajo Nation Environmental Protection Agency is authorized to promulgate regulations covering air quality, drinking water and pesticide activities, including those that occur at Four Corners and NGS. By separate letters dated October 12 and October 13, 1995, the Four Corners participants and the NGS participants requested the United States Secretary of the Interior to resolve their dispute with the Navajo Nation regarding whether or not the Acts apply to operations of Four Corners and NGS. On October 17, 1995, the Four Corners participants and the NGS participants each filed a lawsuit in the District Court of the Navajo Nation, Window Rock District, seeking, among other things, a declaratory judgment that (i) their respective leases and
federal easements preclude the application of the Acts to the operations of Four Corners and NGS, and (ii) the Navajo Nation and its agencies and courts lack adjudicatory jurisdiction to determine the enforceability of the Acts as applied to Four Corners and NGS. On October 18, 1995, the Navajo Nation and the Four Corners and NGS participants agreed to indefinitely stay the proceedings referenced in the preceding two sentences so that the parties may attempt to resolve the dispute without litigation, and the Secretary and the Court have stayed these proceedings pursuant to a request by the parties. The Company cannot currently predict the outcome of this matter.
GENERATING FUEL
Coal, nuclear, gas, and other contributions to total net generation of
electricity by the Company in 1995, 1994, and 1993, and the average cost to the
Company of those fuels (in dollars per MWh), were as follows:
Coal Nuclear Gas Other All Fuels
---------------------- ---------------------- ---------------------- ---------------------- -----------
Percent of Average Percent of Average Percent of Average Percent of Average Average
Generation Cost Generation Cost Generation Cost Generation Cost Cost
------------ --------- ------------ --------- ------------ --------- ------------ --------- -----------
1995 (estimate)..... 54.7% $13.83 40.1% $5.21 5.0% $19.52 0.2% $11.84 $10.66
1994 ............... 59.7 13.84 33.8 6.09 6.3 24.64 0.2 16.26 11.90
1993 ............... 62.3 12.95 32.4 6.17 5.1 31.53 0.2 18.32 11.70
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Other includes oil and hydro generation.
The Company believes that Cholla has sufficient reserves of low sulfur coal committed to that plant for the next four years, the term of the existing coal contract. Sufficient reserves of low sulfur coal are available to continue operating Cholla for its useful life. The Company also believes that Four Corners and NGS have sufficient reserves of low sulfur coal available for use by those plants to continue operating them for their useful lives. The current sulfur content of coal being used at Four Corners, NGS, and Cholla is approximately 0.8%, 0.6%, and 0.4%, respectively. In 1995, average prices paid for coal supplied from reserves dedicated under the existing contracts were relatively stable, although applicable contract clauses permit escalations under certain conditions. In addition, major price adjustments can occur from time to time as a result of contract renegotiation.
NGS and Four Corners are located on the Navajo Reservation and held under easements granted by the federal government as well as leases from the Navajo Nation. See "Properties" in Item 2. The Company purchases all of the coal which fuels Four Corners from a coal supplier with a long-term lease of coal reserves owned by the Navajo Nation and for NGS from a coal supplier with a long-term lease with the Navajo Nation and the Hopi Tribe. The Company purchases all of the coal which fuels Cholla from a coal supplier who mines all of the coal under a long-term lease of coal reserves owned by the Navajo Nation, the federal government, and private landholders. See Note 11 of Notes to Financial Statements in Item 8 for information regarding the Company's obligation for coal mine reclamation.
The Company is a party to contracts with twenty-seven natural gas operators and marketers which allow the Company to purchase natural gas in the method it determines to be most economic. During 1995, the principal sources of the Company's natural gas generating fuel were 19 of these companies. The Company is currently purchasing the majority of its natural gas requirements from twelve companies pursuant to contracts. The Company's natural gas supply is transported pursuant to a firm transportation service contract between the Company and El Paso Natural Gas Company. The Company continues to analyze the market to determine the source and method of meeting its natural gas requirements.
The fuel cycle for Palo Verde is comprised of the following stages: (1) the mining and milling of uranium ore to produce uranium concentrates, (2) the conversion of uranium concentrates to uranium hexafluoride, (3) the enrichment of uranium hexafluoride, (4) the fabrication of fuel assemblies, (5) the utilization of fuel assemblies in reactors, and (6) the storage of spent fuel and the
disposal thereof. The Palo Verde participants have made arrangements through contract flexibilities to obtain quantities of uranium concentrates anticipated to be sufficient to meet operational requirements through 2000. Existing contracts and options could be utilized to meet approximately 80% of requirements in 2001 and 2002 and 50% of requirements from 2003 through 2007. Spot purchases in the uranium market will be made, as appropriate, in lieu of any uranium that might be obtained through contract flexibilities and options. The Palo Verde participants have contracted for all conversion services required through 2000 and with options for up to 70% through 2002. The Palo Verde participants, including the Company, have an enrichment services contract with USEC which obligates USEC to furnish enrichment services required for the operation of the three Palo Verde units over a term expiring in September 2002, with options to continue through September 2007. In addition, existing contracts will provide fuel assembly fabrication services until at least 2003 for each Palo Verde unit, and through contract options, approximately fifteen additional years are available.
Pursuant to the Nuclear Waste Policy Act of 1982, as amended in 1987 (the "Waste Act"), DOE is obligated to accept and dispose of all spent nuclear fuel and other high-level radioactive wastes generated by all domestic power reactors. The NRC, pursuant to the Waste Act, requires operators of nuclear power reactors to enter into spent fuel disposal contracts with DOE, and the Company, on its own behalf and on behalf of the other Palo Verde participants, has done so. Under the Waste Act, DOE was to develop the facilities necessary for the storage and disposal of spent nuclear fuel and to have the first such facility in operation by 1998. That facility was to be a permanent repository, but DOE has annouced that such a repository now cannot be completed before 2010. Several bills have been introduced in Congress contemplating the construction of a central interim storage facility which could be available in the latter part of the current decade; however, there is resistance to certain features of these bills both in Congress and the Administration.
Facility funding is a further complication. While all nuclear utilities pay into a so-called nuclear waste fund an amount calculated on the basis of the output of their respective plants, the annual Congressional appropriations for the permanent repository have been for amounts less than the amounts paid into the waste fund (the balance of which is being used for other purposes) and, according to DOE spokespersons, may now be at a level less than needed to achieve a 2010 operational date for a permanent repository. No funding will be available for a central interim facility until one is authorized by Congress.
The Company has storage capacity in existing fuel storage pools at Palo Verde which, with certain modifications, could accomodate all fuel expected to be discharged from normal operation of Palo Verde through about 2005, and believes it could augment that wet storage with new facilities for on-site dry storage of spent fuel for an indeterminate period of operation beyond 2005, subject to obtaining any required governmental approvals. One way or another, the Company currently believes that spent fuel storage or disposal methods will be available for use by Palo Verde to allow its continued operation beyond 2005.
Currently low-level waste is being stored on-site. A new low-level waste facility was built in 1995 on-site which could store an amount of waste equivalent to up to ten years of normal operation at Palo Verde. The Company is currently evaluating whether to ship low-level waste to off-site facilities or to continue to store the waste on-site. The Company currently believes that interim low-level waste storage methods are or will be available for use by Palo Verde to allow its continued operation and to safely store low-level waste until a permanent disposal facility is available.
While believing that scientific and financial aspects of the issues of spent fuel and low-level waste storage and disposal can be resolved satisfactorily, the Company acknowledges that their ultimate resolution in a timely fashion will require political resolve and action on national and regional scales which it is less able to predict.
Palo Verde Nuclear Generating Station
Regulatory. Operation of each of the three Palo Verde units requires an operating license from the NRC. Full power operating licenses for Units 1, 2, and 3 were issued by the NRC in June 1985, April 1986, and November 1987, respectively. The full power operating licenses, each valid for a period of approximately 40 years, authorize the Company, as operating agent for Palo Verde, to operate the three Palo Verde units at full power.
Nuclear Decommissioning Costs. See Note 12 of Notes to Financial Statements in Item 8 for a discussion of the Company's nuclear decommissioning costs.
Steam Generators. See "Palo Verde Nuclear Generating Station" in Note 11 of Notes to Financial Statements in Item 8 for a discussion of issues relating to the Palo Verde steam generators.
Palo Verde Liability And Insurance Matters. See "Palo Verde Nuclear Generating Station" in Note 11 of Notes to Financial Statements in Item 8 for a discussion of the insurance maintained by the Palo Verde participants, including the Company, for Palo Verde.
Department of Labor Matter. On May 10, 1993, a Department of Labor ("DOL") Administrative Law Judge ("ALJ") issued a Recommended Decision and Order finding that the Company discriminated against a former contract employee who worked at Palo Verde because he engaged in protected activities (as defined under federal regulations). The Company and the former contract employee who had raised the DOL claim entered into a settlement agreement which was approved by the Secretary of Labor in June 1995. By letter dated March 7, 1996, the NRC sent a Notice of Violation and Proposed Imposition of Civil Penalty notifying the Company that the NRC proposes to impose a $100,000 civil penalty for a "Severity Level III" violation of NRC requirements relating to the circumstances surrounding this matter. The NRC also concluded in its March 7, 1996 letter that the Company's actions taken and planned to correct the violation have already been addressed and therefore the Company is not required to respond to the Notice of Violation. The Company plans to pay the associated penalty within thirty days.
Water Supply
Assured supplies of water are important both to the Company (for its generating plants) and to its customers and, at the present time, the Company has adequate water to meet its needs. However, conflicting claims to limited amounts of water in the southwestern United States have resulted in numerous court actions in recent years.
Both groundwater and surface water in areas important to the Company's operations have been the subject of inquiries, claims, and legal proceedings which will require a number of years to resolve. The Company is one of a number of parties in a proceeding before a state court in New Mexico to adjudicate rights to a stream system from which water for Four Corners is derived. (State of New Mexico, in the relation of S.E. Reynolds, State Engineer vs. United States of America, City of Farmington, Utah International, Inc., et al., San Juan County, New Mexico, District Court No. 75-184). An agreement reached with the Navajo Nation in 1985, however, provides that if Four Corners loses a portion of its rights in the adjudication, the Navajo Nation will provide, for a then-agreed upon cost, sufficient water from its allocation to offset the loss.
A summons served on the Company in early 1986 required all water claimants in the Lower Gila River Watershed in Arizona to assert any claims to water on or before January 20, 1987, in an action pending in Maricopa County Superior Court. (In re The General Adjudication of All Rights to Use Water in the Gila River System and Source, Supreme Court Nos. WC-79-0001 through WC 79-0004 (Consolidated) [WC-1, WC-2, WC-3 and WC-4 (Consolidated)], Maricopa County Nos. W-1, W-2, W-3 and W-4 (Consolidated)). Palo Verde is located within the geographic area subject to the summons, and the rights of the Palo Verde participants, including the Company, to the use of groundwater and effluent at Palo Verde is potentially at issue in this action. The Company, as project manager of Palo Verde, filed claims that dispute the court's jurisdiction over the Palo Verde participants' groundwater rights and their contractual rights to effluent relating to Palo Verde and,
alternatively, seek confirmation of such rights. Three of the Company's less-utilized power plants are also located within the geographic area subject to the summons. The Company's claims dispute the court's jurisdiction over the Company's groundwater rights with respect to these plants and, alternatively, seek confirmation of such rights. On December 10, 1992, the Arizona Supreme Court heard oral argument on certain issues in this matter which are pending on interlocutory appeal. Issues important to the Company's claims were remanded to the trial court for further action and the trial court certified its decision for interlocutory appeal to the Arizona Supreme Court. On September 28, 1994, the Arizona Supreme Court granted review of the trial court decision. No trial date concerning the water rights claims of the Company has been set in this matter.
The Company has also filed claims to water in the Little Colorado River Watershed in Arizona in an action pending in the Apache County Superior Court. (In re The General Adjudication of All Rights to Use Water in the Little Colorado River System and Source, Supreme Court No. WC-79- 0006 WC-6, Apache County No. 6417). The Company's groundwater resource utilized at Cholla is within the geographic area subject to the adjudication and is therefore potentially at issue in the case. The Company's claims dispute the court's jurisdiction over the Company's groundwater rights and, alternatively, seek confirmation of such rights. The parties are in the process of settlement negotiations with respect to this matter. No trial date concerning the water rights claims of the Company has been set in this matter.
Although the foregoing matters remain subject to further evaluation, the Company expects that the described litigation will not have a materially adverse impact on its operations or financial position.
ITEM 2. PROPERTIES
The Company's present generating facilities have an accredited capacity aggregating 4,025,241 kW, comprised as follows:
Capacity(kW)
------------
Coal:
Units 1, 2, and 3 at Four Corners, aggregating ..................... 560,000
15% owned Units 4 and 5 at Four Corners, representing .............. 222,000
Units 1, 2, and 3 at Cholla Plant, aggregating ..................... 615,000
14% owned Units 1, 2, and 3 at the Navajo Plant, representing ..... 315,000
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1,712,000
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Gas or Oil:
Two steam units at Ocotillo, two steam units at Saguaro, and one
steam unit at Yucca, aggregating ................................ 463,400(1)
Eleven combustion turbine units, aggregating ....................... 500,600
Three combined cycle units, aggregating ............................ 253,500
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1,217,500
=========
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The Company's peak one-hour demand on its electric system was recorded on July 28, 1995 at 4,420,400 kW, compared to the 1994 peak of 4,214,000 kW recorded on June 29. Taking into account additional capacity then available to it under purchase power contracts as well as its own generating capacity, the Company's capability of meeting system demand on July 28, 1995, computed in accordance with accepted industry practices, amounted to 4,608,941 kW, for an installed reserve
margin of 6.4%. The power actually available to the Company from its resources fluctuates from time to time due in part to planned outages and technical problems. The available capacity from sources actually operable at the time of the 1995 peak amounted to 4,469,841 kW, for a margin of 1.3%.
NGS and Four Corners are located on land held under easements from the federal government and also under leases from the Navajo Nation. The risk with respect to enforcement of these easements and leases is not deemed by the Company to be material. The Company is dependent, however, in some measure upon the willingness and ability of the Navajo Nation to honor its commitments. The lease for Four Corners contains a waiver until 2001 of the requirement that the Company pay certain taxes to the Navajo Nation. The Company and the Navajo Nation are currently negotiating an agreement regarding taxes to be assessed against the Company after the expiration of the waiver. The Company cannot currently predict the outcome of this matter. Certain of the Company's transmission lines and almost all of its contracted coal sources are also located on Indian reservations. See "Generating Fuel" in Item 1.
On August 18, 1986 and December 19, 1986, the Company entered into a total of three sale and leaseback transactions under which it sold and leased back approximately 42% of its 29.1% ownership interest in Palo Verde Unit 2. The leases under each of the sale and leaseback transactions have initial lease terms expiring on December 31, 2015. Each of the leases also allows the Company to extend the term of the lease and/or to repurchase the leased Unit 2 interest under certain circumstances at fair market value. The leases in the aggregate require annual payments of approximately $40 million through 1999, approximately $46 million in 2000, and approximately $49 million through 2015 (see Note 8 of Notes to Financial Statements in Item 8).
See "Water Supply" in Item 1 with respect to matters having possible impact on the operation of certain of the Company's power plants, including Palo Verde.
In addition to that available from its own generating capacity, the Company purchases electricity from other utilities under various arrangements. One of the most important of these is a long-term contract with SRP which may be canceled by SRP on three years' notice and which requires SRP to make available, and the Company to pay for, certain amounts of electricity that are based in large part on customer demand within certain areas now served by the Company pursuant to a related territorial agreement. The Company believes that the prices payable by it under the contract are fair to both parties. The generating capacity available to the Company pursuant to the contract was 313,000 kW through May 1995, at which time the capacity decreased to 305,000 kW. In 1995, the Company received approximately 657,765 MWh of energy under the contract and paid approximately $30 million for capacity availability and energy received.
In September 1990, the Company and PacifiCorp entered into certain agreements relating principally to sales and purchases of electric power and electric utility assets, and in July 1991, after regulatory approvals, the Company sold Cholla 4 to PacifiCorp for approximately $230 million. As part of the transaction, PacifiCorp agreed to make a firm system sale to the Company for thirty years during the Company's summer peak season in the amount of 175 megawatts for the first five years, increasing thereafter, at the Company's option, up to a maximum amount equal to the rated capacity of Cholla 4. In April 1995 the Company gave PacifiCorp the required three-year notice to change the existing 175 megawatt purchase to one-for-one seasonal capacity exchange beginning in the summer of 1998. The Company has one option remaining to increase the firm purchase to the rated capacity of Cholla 4 (less the current exchange capacity) and also to convert this increase to one-for-one seasonal exchange by a three-year written notice prior to May 1, 1996. PacifiCorp has the right to purchase from the Company up to 125 average megawatts of energy per year for thirty years. PacifiCorp and the Company also entered into a 100 megawatt one-for-one seasonal capacity exchange to be effective upon the latter of May 15, 1997 or the completion of certain new transmission projects. In addition, PacifiCorp agreed to pay the Company (i) $20 million prior to January 15, 1997 and (ii) $19 million ($9.5 million of which has been paid) in connection with the construction of transmission lines and upgrades that will afford PacifiCorp 150 megawatts of northbound
transmission rights. In addition, PacifiCorp secured additional firm transmission capacity of 30 megawatts, for which approximately $0.5 million was paid during 1995. In 1995, the Company received 386,350 MWh of energy from PacifiCorp under these transactions and paid approximately $18 million for capacity availability and the energy received.
See "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Capital Needs and Resources" in Item 7 for a discussion of the Company's construction plans.
See Notes 5 and 8 of Notes to Financial Statements in Item 8 with respect to property of the Company not held in fee or held subject to any major encumbrance.
[MAP PAGE]
ITEM 3. LEGAL PROCEEDINGS
Property Taxes
On June 29, 1990, a new Arizona state property tax law was enacted, effective as of December 31, 1989, which adversely impacted the Company's earnings before income taxes in tax years 1990 through 1995 by an aggregate amount of approximately $21 million per year. On December 20, 1990, the Palo Verde participants, including the Company, filed a lawsuit in the Arizona Tax Court, a division of the Maricopa County Superior Court, against the Arizona Department of Revenue, the Treasurer of the State of Arizona, and various Arizona counties, claiming, among other things, that portions of the new tax law are unconstitutional. (Arizona Public Service Company, et al. v. Apache County, et al., No. TX 90-01686 (Consol.), Maricopa County Superior Court). In December 1992, the court granted summary judgment to the taxing authorities, holding that the law is constitutional. The Company appealed this decision to the Arizona Court of Appeals. In November 1995, the Arizona Court of Appeals reversed that decision, holding that the law is unconstitutional. The matter has been returned to the Arizona Tax Court for determination of the appropriate remedy consistent with the Arizona Court of Appeals decision. Pursuant to the provisions of the Company's 1995 proposed regulatory settlement agreement (see Note 3 of Notes to Financial Statements in Item 8), if any overcollected property taxes are refunded to the Company by the State of Arizona as a result of the disposition of this lawsuit, the Company would refund all of the net jurisdictional amount of such refund to its retail customers. The Company cannot currently predict the ultimate outcome of this matter.
See "Environmental Matters," "Palo Verde Nuclear Generating Station," and "Water Supply" in Item 1 in regard to pending or threatened litigation and other disputes.
ITEM 4. SUBMISSION OF MATTERS TO A
VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this report, through the solicitation of proxies or otherwise.
SUPPLEMENTAL ITEM. EXECUTIVE OFFICERS
OF THE REGISTRANT
The Company's executive officers are as follows:
Age At
Name March 1, 1996 Position(s) At March 1, 1996
- ------------------ ------------- -----------------------------------------------
Richard Snell 65 Chairman of the Board of Directors (1)
O. Mark DeMichele 61 President and Chief Executive Officer(1)
William J. Post 45 Senior Vice President and Chief Operating
Officer(1)
Jaron B. Norberg 58 Executive Vice President and Chief Financial
Officer(1)
William L. Stewart 52 Executive Vice President, Nuclear
Jack A. Bailey 42 Vice President, Nuclear Engineering
Jan H. Bennett 48 Vice President, Customer Service
Jack E. Davis 49 Vice President, Generation and Transmission
Edward Z. Fox 42 Vice President, Environmental, Health and
Safety
Armando B. Flores 52 Vice President, Human Resources
James M. Levine 46 Vice President, Nuclear Production
Leslie M. Mesh 49 Vice President, Marketing and Economic
Development
Gregg R. Overbeck 49 Vice President, Nuclear Support
William J. Hemelt 42 Controller
Nancy C. Loftin 42 Secretary and Corporate Counsel
Nancy E. Newquist 44 Treasurer
- ----------
|
The executive officers of the Company are elected no less often than annually and may be removed by the Board of Directors at any time. The terms served by the named officers in their current positions and the principal occupations (in addition to those stated in the table and exclusive of directorships) of such officers for the past five years have been as follows:
Mr. Snell was elected to his present position as of February 1990. He was also elected Chairman of the Board, President, and Chief Executive Officer of Pinnacle West at that time. Previously, he was Chairman of the Board (1989-1992) and Chief Executive Officer (1989-1990) of Aztar Corporation and Chairman of the Board, President, and Chief Executive Officer of Ramada Inc. (1981-1989).
Mr. DeMichele was elected President in September 1982 and became Chief Executive Officer as of January 1988.
Mr. Post was elected to his present position in September 1994. Prior to that time he was Senior Vice President, Planning, Information and Financial Services (since June 1993), and Vice President, Finance & Rates (since April 1987). In July 1995 Mr. Post was appointed Executive Vice President of Pinnacle West.
Mr. Norberg was elected to his present position in July 1986.
Mr. Stewart was elected to his present position in May 1994. Prior to that time he was Senior Vice President -- Nuclear for Virginia Power (since 1989).
Mr. Bailey was elected to his present position in April 1994. Prior to that time he was Assistant Vice President, Nuclear Engineering and Projects (July 1993-April 1994); Director, Nuclear Engineering (1991-1993); and Assistant Plant Manager (1989 to 1991) at Palo Verde.
Mr. Bennett was elected to his present position in May 1991. Prior to that time he was Director, Customer Service (September 1990 to May 1991).
Mr. Davis was elected to his present position in June 1993. Prior to that time he was Director, Transmission Systems (January 1993-June 1993); Director, Fossil Generation (June 1992-December 1992); and Director, System Development and Power Operations (May 1990-May 1992).
Mr. Fox was elected to his present position in October 1995. Prior to that time he was Director, Arizona Department of Environmental Quality and Chairman, Wastewater Management Authority of Arizona (July 1991-September 1995) and Senior Associate, Snell & Wilmer (October 1989-July 1991).
Mr. Flores was elected to his present position in December 1991. Prior to
that time, he was Director -- Human Resources (1990 to 1991) and Manager
- -Employment (1989 to 1990) of GENCORP, Propulsion Division, Aerojet Group.
Mr. Levine was elected to his present position in September 1989.
Mr. Mesh was elected to his current position in October 1995. Prior to that time he was Vice President, Marketing and Business Development, Electronic Data Systems (November 1993-October 1995) and Vice President, Northern Telecom, Inc. (April 1984-October 1993).
Mr. Overbeck was elected to his current position in July 1995. Prior to that time he was Assistant to Vice President of the Company (January 1994-July 1995) and Director, Nuclear Production Site Technical Support of the Company (January 1991-January 1994).
Mr. Hemelt was elected to his present position in June 1993. Prior to that time he was Treasurer and Assistant Secretary (since April 1987).
Ms. Loftin was elected Secretary in April 1987 and became Corporate Counsel in February 1989.
Ms. Newquist was elected to her present position in June 1993. Prior to that time she was Assistant Treasurer (since October 1992). She is also Treasurer (since June 1990) and Vice President (since February 1994) of Pinnacle West. From May 1987 to June 1990, Ms. Newquist served as Pinnacle West's Director of Finance.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON
STOCK AND RELATED SECURITY HOLDER MATTERS
The Company's common stock is wholly-owned by Pinnacle West and is not listed
for trading on any stock exchange. As a result, there is no established public
trading market for the Company's common stock. See "The Company" in Part I, Item
1 for information regarding the Pledge Agreement to which the common stock is
subject.
The chart below sets forth the dividends declared on the Company's common
stock for each of the four quarters for 1995 and 1994.
COMMON STOCK DIVIDENDS
(THOUSANDS OF DOLLARS)
- -------------------------------------------------------------------------------
QUARTER 1995 1994
- --------------------------------------------------------------------------------
1st Quarter $42,500 $42,500
2nd Quarter 42,500 42,500
3rd Quarter 42,500 42,500
4th Quarter 42,500 42,500
- --------------------------------------------------------------------------------
|
After payment or setting aside for payment of cumulative dividends and mandatory sinking fund requirements, where applicable, on all outstanding issues of preferred stock, the holders of common stock are entitled to dividends when and as declared out of funds legally available therefor. See Notes 4 and 5 of Notes to Financial Statements in Item 8 for restrictions on retained earnings available for the payment of common stock dividends.
ITEM 6. SELECTED FINANCIAL DATA
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
(Thousands of Dollars)
Electric Operating Revenues .................. $ 1,614,952 $ 1,626,168 $ 1,602,413 $ 1,587,582 $ 1,385,815
Fuel and Purchased Power ..................... 269,798 300,689 300,546 287,201 273,771
Operating Expenses ........................... 963,400 957,046 929,379 908,123 782,788
---------- ----------- ----------- ----------- -----------
Operating Income ..................... 381,754 368,433 372,488 392,258 329,256
Other Income (Deductions) .................... 25,548 44,510 54,220 48,801 (324,922)
Interest Deductions-- Net .................... 167,732 169,457 176,322 194,254 226,983
----------- ----------- ----------- ----------- -----------
Net Income (Loss) .................... 239,570 243,486 250,386 246,805 (222,649)
Preferred Dividends .................. 19,134 25,274 30,840 32,452 33,404
----------- ----------- ----------- ----------- -----------
Earnings (Loss) for Common Stock (a) . $ 220,436 $ 218,212 $ 219,546 $ 214,353 $ (256,053)
=========== =========== =========== =========== ===========
Total Assets ................................. $ 6,418,262 $ 6,348,261 $ 6,357,262 $ 5,629,432 $ 5,620,692
=========== =========== =========== =========== ===========
Capital Structure:
Common Stock Equity .................. $ 1,621,555 $ 1,571,120 $ 1,522,941 $ 1,476,390 $ 1,433,463
Non-Redeemable Preferred Stock ....... 193,561 193,561 193,561 168,561 168,561
Redeemable Preferred Stock ........... 75,000 75,000 197,610 225,635 227,278
Long-Term Debt Less Current Maturities 2,132,021 2,181,832 2,124,654 2,052,763 2,185,363
----------- ----------- ----------- ----------- -----------
Total Capitalization ......... 4,022,137 4,021,513 4,038,766 3,923,349 4,014,665
Current Maturities of Long-Term Debt . 3,512 3,428 3,179 94,217 299,550
Short-Term Debt ...................... 177,800 131,500 148,000 195,000 --
----------- ----------- ----------- ----------- -----------
Total ........................ $ 4,203,449 $ 4,156,441 $ 4,189,945 $ 4,212,566 $ 4,314,215
=========== =========== =========== =========== ===========
|
(a) Financial results for 1991 include a $407 million after-tax write-off related to a rate case settlement.
See "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 7 for a discussion of certain information in the foregoing table.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
1995 Compared with 1994
Earnings in 1995 were $220.4 million compared with $218.2 million in 1994. Earnings increased primarily due to customer growth, lower fuel expenses, accelerated amortization of investment tax credits, lower operations and maintenance expenses, lower preferred stock dividends and a gain recognized on the sale of a small subsidiary. Fuel expenses decreased due to lower fuel prices and a more favorable mix resulting from increased nuclear generation. The Company does not have a fuel adjustment clause as part of its retail rate structure; therefore, changes in fuel and purchased power expenses are reflected currently in earnings. The accelerated amortization of investment tax credits was a result of a 1994 rate settlement (see Note 3 of Notes to Financial Statements) and is reflected as a $21 million decrease in income tax expense. Operations and maintenance expense decreased as a result of lower fossil plant overhaul costs, improved nuclear operations and severance costs incurred in 1994. Preferred stock dividends decreased due to less preferred stock outstanding.
Substantially offsetting these positive factors were the absence of non-cash income related to a 1991 rate settlement, milder weather, the reversal in 1994 of certain previously recorded depreciation, a retail rate reduction which became effective June 1, 1994, and in 1995 a $13 million pretax write-down of an office building and an $8 million pretax write-down of certain inventory.
1994 Compared with 1993
Earnings in 1994 were $218.2 million compared with $219.5 million in 1993. Electric operating revenues increased primarily due to strong customer growth and significantly warmer weather in 1994, partially offset by lower interchange sales and the 1994 rate reduction. Substantially offsetting the earnings effect of the 1994 rate reduction was a one-time depreciation reversal, also occasioned by the 1994 rate settlement (see Note 3 of Notes to Financial Statements). Interest expense declined due to the Company's refinancing activity in 1994 and 1993.
Substantially offsetting these positive factors were the completion in May 1994 of the recording of non-cash income related to a 1991 rate settlement (see Note 1 of Notes to Financial Statements); increased operations and maintenance expense due primarily to employee severance costs; and increased nuclear decommissioning costs.
Higher fuel and purchased power expenses in 1994 over 1993 to meet increased retail sales were about offset by lower fuel costs for reduced interchange sales.
Operating Revenues
Operating revenues reflect changes in both the volume of units sold and
price per kilowatt-hour of electric sales. An analysis of the increases
(decreases) in 1995 and 1994 electric operating revenues compared with the prior
year follows (in millions of dollars):
1995 1994
---- ----
Volume variance:
Customer growth $ 48.4 $ 56.4
Weather (42.0) 42.0
Other 7.8 (11.7)
1994 rate reduction (11.4) (26.5)
Interchange sales (7.2) (19.5)
Reversal of refund obligation (9.3) (12.1)
Other operating revenues 2.5 (4.8)
--------- ---------
Total change $ (11.2) $ 23.8
========= =========
Other Income
|
Net income reflects accounting practices required for regulated public utilities and represents a composite of cash and non-cash items, including AFUDC, accretion income on Palo Verde Unit 3 and the reversal of a refund obligation arising out of a 1991 rate settlement (see Statements of Cash Flows and Note 1 of Notes to Financial
Statements). The accretion income and refund reversals, net of income taxes, totaled $25.9 million and $58.2 million in 1994 and 1993, respectively. Also in 1994 was a one-time depreciation reversal of $15 million, after income taxes, which was included in "Other -- net" in the Statements of Income (see Note 3 of Notes to Financial Statements).
Capital Needs and Resources
The Company's capital requirements consist primarily of capital expenditures and optional and mandatory repayments of long-term debt and preferred stock. The resources available to meet these requirements include funds provided by operations and external financings.
Present construction plans through the year 2005 do not include any major baseload generating plants. In general, most of the capital expenditures are for expanding transmission and distribution capabilities to meet customer growth, upgrading existing facilities and for environmental purposes. Capital expenditures are anticipated to be approximately $246 million, $242 million and $244 million for 1996, 1997 and 1998, respectively. These amounts include about $30 million each year for nuclear fuel expenditures.
In the period 1993 through 1995, the Company funded all capital expenditures with funds provided by operations, after the payment of dividends. For the period 1996 through 1998, the Company estimates that it will fund substantially all capital expenditures in the same manner. Subject to approval of the 1995 regulatory agreement (see Note 3 of Notes to Financial Statements), $50 million annually for the years 1996 through 1999 will be invested in the Company by Pinnacle West.
During 1995, the Company redeemed $147 million of long-term debt, of which $144 million was optional. Refunding obligations for preferred stock, long-term debt, a capitalized lease obligation and certain anticipated early redemptions are expected to approximate $75 million, $164 million and $114 million for the years 1996, 1997 and 1998, respectively. As of March 1, 1996, the Company had redeemed approximately $46 million of its long-term debt and approximately $15 million of its preferred stock.
Although provisions in the Company's bond indenture, articles of incorporation, and financing orders from the ACC restrict the issuance of additional first mortgage bonds and preferred stock, management does not expect any of these restrictions to limit the Company's ability to meet its capital requirements.
As of December 31, 1995, the Company had credit commitments from various banks totaling approximately $300 million, which were available either to support the issuance of commercial paper or to be used as bank borrowings. At the end of 1995, there were $177.8 million of commercial paper and no bank borrowings outstanding.
1995 Regulatory Agreement
In December 1995, the Company and the ACC Staff announced an agreement which includes an economic proposal to be heard by the full ACC in April 1996. Principal features include an annual rate reduction of approximately $48 million ($29 million after income taxes) and recovery of substantially all of the Company's present regulatory assets through accelerated amortization over an eight-year period beginning July 1, 1996, increasing annual amortization by approximately $120 million ($72 million after income taxes). The agreement also includes an industry restructuring element. See Note 3 of Notes to Financial Statements for further discussion of this agreement.
Accounting Matters
Note 2 of Notes to Financial Statements describes two new accounting
standards related to asset impairment and stock-based compensation, which are
effective in 1996. These standards do not have a material impact on the
Company's financial position or results of operations at the time of adoption.
See Note 12 of Notes to Financial Statements for a description of a proposed
standard on accounting for certain liabilities related to closure or removal of
long-lived assets.
ITEM 8. FINANCIAL STATEMENTS
AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS
PAGE
------
Report of Management ..................................................................20
Independent Auditors' Report ..........................................................21
Statements of Income for each of the three years in the period ended December 31, 1995 23
Balance Sheets -- December 31, 1995 and 1994 ..........................................24
Statements of Cash Flows for each of the three years in the period ended
December 31, 1995 ....................................................................26
Statements of Retained Earnings for each of the three years in the period ended
December 31, 1995 ....................................................................27
Notes to Financial Statements .........................................................27
|
See Note 13 of Notes to Financial Statements for the selected quarterly financial data required to be presented in this Item.
REPORT OF MANAGEMENT
The primary responsibility for the integrity of the Company's financial information rests with management, which has prepared the accompanying financial statements and related information. Such information was prepared in accordance with generally accepted accounting principles appropriate in the circumstances, based on management's best estimates and judgments and giving due consideration to materiality. These financial statements have been audited by independent auditors and their report is included.
Management maintains and relies upon systems of internal accounting controls. A limiting factor in all systems of internal accounting control is that the cost of the system should not exceed the benefits to be derived. Management believes that the Company's system provides the appropriate balance between such costs and benefits.
Periodically the internal accounting control system is reviewed by both the Company's internal auditors and its independent auditors to test for compliance. Reports issued by the internal auditors are released to management, and such reports, or summaries thereof, are transmitted to the Audit Review Committee of the Board of Directors and the independent auditors on a timely basis.
The Audit Review Committee, composed solely of outside directors, meets periodically with the internal auditors and independent auditors (as well as management) to review the work of each. The internal auditors and independent auditors have free access to the Audit Review Committee, without management present, to discuss the results of their audit work.
Management believes that the Company's systems, policies and procedures provide reasonable assurance that operations are conducted in conformity with the law and with management's commitment to a high standard of business conduct.
O. Mark DeMichele William J. Post Jaron B. Norberg O. Mark DeMichele William J. Post Jaron B. Norberg President and Senior Vice President and Executive Vice President Chief Executive Officer Chief Operating Officer and Chief Financial Officer
INDEPENDENT AUDITORS' REPORT
Arizona Public Service Company:
We have audited the accompanying balance sheets of Arizona Public Service Company as of December 31, 1995 and 1994 and the related statements of income, retained earnings and cash flows for each of the three years in the period ended December 31, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material respects, the financial position of the Company at December 31, 1995 and 1994 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1995 in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Deloitte & Touche LLP
Phoenix, Arizona
March 1, 1996
THIS PAGE INTENTIONALLY LEFT BLANK
ARIZONA PUBLIC SERVICE COMPANY
STATEMENTS OF INCOME
Year Ended December 31,
-----------------------
1995 1994 1993
---- ---- ----
(Thousands of Dollars)
Electric Operating Revenues .............. $ 1,614,952 $ 1,626,168 $ 1,602,413
----------- ----------- -----------
Fuel Expenses:
Fuel for electric generation ........... 208,928 237,103 231,434
Purchased power ........................ 60,870 63,586 69,112
----------- ----------- -----------
Total ................................ 269,798 300,689 300,546
----------- ----------- -----------
Operating Revenues Less Fuel Expenses .... 1,345,154 1,325,479 1,301,867
----------- ----------- -----------
Other Operating Expenses:
Operations excluding fuel expenses ..... 284,842 292,292 282,660
Maintenance ............................ 115,972 119,629 118,556
Depreciation and amortization .......... 242,098 236,108 222,610
Income taxes (Note 9) .................. 178,865 168,202 168,056
Other taxes ............................ 141,623 140,815 137,497
----------- ----------- -----------
Total ................................ 963,400 957,046 929,379
----------- ----------- -----------
Operating Income ......................... 381,754 368,433 372,488
----------- ----------- -----------
Other Income (Deductions):
Allowance for equity funds used during
construction ......................... 4,982 3,941 2,326
Income taxes (Note 9) .................. 37,598 (9,042) (20,851)
Palo Verde accretion income (Note 1) ... -- 33,596 74,880
Other--net ............................. (17,032) 16,015 (2,135)
----------- ----------- -----------
Total ................................ 25,548 44,510 54,220
----------- ----------- -----------
Income Before Interest Deductions ........ 407,302 412,943 426,708
----------- ----------- -----------
Interest Deductions:
Interest on long-term debt ............. 160,032 159,840 164,610
Interest on short-term borrowings ...... 8,143 6,205 6,662
Debt discount, premium and expense ..... 8,622 8,854 9,203
Allowance for borrowed funds used during
construction ......................... (9,065) (5,442) (4,153)
----------- ----------- -----------
Total ................................ 167,732 169,457 176,322
----------- ----------- -----------
Net Income ............................... 239,570 243,486 250,386
Preferred Stock Dividend Requirements .... 19,134 25,274 30,840
----------- ----------- -----------
Earnings for Common Stock ................ $ 220,436 $ 218,212 $ 219,546
=========== =========== ===========
|
See Notes to Financial Statements.
ARIZONA PUBLIC SERVICE COMPANY
BALANCE SHEETS
ASSETS
December 31,
------------------
1995 1994
---- ----
(Thousands of Dollars)
Utility Plant (Notes 5, 7 and 8):
Electric plant in service and held for future use $ 6,544,860 $ 6,475,249
Less accumulated depreciation and amortization .. 2,231,614 2,122,439
----------- -----------
Total ................................... 4,313,246 4,352,810
Construction work in progress ................... 281,757 224,312
Nuclear fuel, net of amortization of $68,275
and $80,599 ............................. 52,084 46,951
----------- -----------
Utility Plant--net ...................... 4,647,087 4,624,073
----------- -----------
Investments and Other Assets (Note 12) .................. 97,742 90,105
----------- -----------
Current Assets:
Cash and cash equivalents ....................... 18,389 6,532
Accounts receivable:
Service customers ....................... 100,433 103,711
Other ................................... 28,107 27,008
Allowance for doubtful accounts ......... (1,656) (2,176)
Accrued utility revenues (Note 1) ............... 53,519 55,432
Materials and supplies (at average cost) ........ 78,271 89,864
Fossil fuel (at average cost) ................... 21,722 35,735
Deferred income taxes (Note 9) .................. 5,653 19,114
Other ........................................... 17,839 14,162
----------- -----------
Total Current Assets .................... 322,277 349,382
----------- -----------
Deferred Debits:
Regulatory asset for income taxes (Note 9) ...... 548,464 557,049
Palo Verde Unit 3 cost deferral (Note 1) ........ 283,426 292,586
Palo Verde Unit 2 cost deferral (Note 1) ........ 165,873 171,936
Unamortized costs of reacquired debt ............ 63,518 60,942
Unamortized debt issue costs .................... 17,772 17,673
Other ........................................... 272,103 184,515
----------- -----------
Total Deferred Debits ................... 1,351,156 1,284,701
----------- -----------
Total ................................... $ 6,418,262 $ 6,348,261
=========== ===========
|
See Notes to Financial Statements.
ARIZONA PUBLIC SERVICE COMPANY
BALANCE SHEETS
LIABILITIES
December 31,
----------------------------
1995 1994
---- ----
(Thousands of Dollars)
Capitalization (Notes 4 and 5):
Common stock ...................................................... $ 178,162 $ 178,162
Premiums and expenses-- net ....................................... 1,039,550 1,039,303
Retained earnings ................................................. 403,843 353,655
--------- ---------
Common stock equity ....................................... 1,621,555 1,571,120
Non-redeemable preferred stock .................................... 193,561 193,561
Redeemable preferred stock ........................................ 75,000 75,000
Long-term debt less current maturities ............................ 2,132,021 2,181,832
--------- ---------
Total Capitalization ...................................... 4,022,137 4,021,513
--------- ---------
Current Liabilities:
Commercial paper (Note 6) ......................................... 177,800 131,500
Current maturities of long-term debt (Note 5) ..................... 3,512 3,428
Accounts payable .................................................. 106,583 110,854
Accrued taxes ..................................................... 82,827 89,412
Accrued interest .................................................. 41,549 45,170
Other ............................................................. 53,880 50,487
--------- ---------
Total Current Liabilities ................................. 466,151 430,851
--------- ---------
Deferred Credits and Other:
Deferred income taxes (Note 9) .................................... 1,429,482 1,436,184
Deferred investment tax credit (Note 9) ........................... 115,353 142,994
Unamortized gain-- sale of utility plant (Note 8) ................. 91,514 98,551
Customer advances for construction ................................ 19,846 16,564
Other ............................................................. 273,779 201,604
--------- ---------
Total Deferred Credits and Other .......................... 1,929,974 1,895,897
--------- ---------
Commitments and Contingencies (Note 11)
Total ..................................................... $6,418,262 $6,348,261
========== ==========
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ARIZONA PUBLIC SERVICE COMPANY
STATEMENTS OF CASH FLOWS
Year Ended December 31,
--------------------------------
1995 1994 1993
---- ---- ----
(Thousands of Dollars)
Cash Flows from Operations:
Net income .......................................................... $ 239,570 $ 243,486 $ 250,386
Items not requiring cash:
Depreciation and amortization ............................... 242,098 236,108 222,610
Nuclear fuel amortization ................................... 31,587 32,564 32,024
Allowance for equity funds used during construction ......... (4,982) (3,941) (2,326)
Deferred income taxes -- net ................................ 15,344 83,249 102,697
Deferred investment tax credit -- net ....................... (27,641) (6,825) (6,948)
Rate refund reversal ........................................ -- (9,308) (21,374)
Palo Verde accretion income ................................. -- (33,596) (74,880)
Changes in certain current assets and liabilities:
Accounts receivable -- net .................................. 1,659 (7,276) 30,889
Accrued utility revenues .................................... 1,913 4,924 (8,839)
Materials, supplies and fossil fuel ......................... 25,606 4,795 2,252
Other current assets ........................................ (3,677) (1,509) (6,616)
Accounts payable ............................................ 6,333 21,666 (18,622)
Accrued taxes ............................................... (6,585) (22,881) 8,826
Accrued interest ............................................ (3,621) (577) 241
Other current liabilities ................................... 3,393 (9) 7,282
Other-- net ......................................................... 21,328 (418) 18,686
--------- --------- ---------
Net cash provided ........................................... 542,325 540,452 536,288
--------- --------- ---------
Cash Flows from Investing:
Capital expenditures ................................................ (295,772) (245,925) (228,465)
Allowance for borrowed funds used during construction ............... (9,065) (5,442) (4,153)
Other ............................................................... (22,645) (7,251) (4,522)
--------- --------- ---------
Net cash used ............................................... (327,482) (258,618) (237,140)
--------- --------- ---------
Cash Flows from Financing:
Preferred stock ..................................................... -- -- 72,644
Long-term debt ...................................................... 87,130 516,612 520,020
Short-term borrowings -- net ........................................ 46,300 (16,500) (47,000)
Dividends paid on common stock ...................................... (170,000) (170,000) (170,000)
Dividends paid on preferred stock ................................... (19,134) (26,232) (30,945)
Repayment of preferred stock ........................................ -- (124,096) (78,663)
Repayment and reacquisition of long-term debt ....................... (147,282) (462,643) (558,799)
--------- --------- ---------
Net cash used ............................................... (202,986) (282,859) (292,743)
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents ........................ 11,857 (1,025) 6,405
Cash and cash equivalents at beginning of year .............................. 6,532 7,557 1,152
--------- --------- ---------
Cash and cash equivalents at end of year .................................... $ 18,389 $ 6,532 $ 7,557
========= ========= =========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for:
Interest (excluding capitalized interest) ................... $ 163,592 $ 161,294 $ 161,843
Income taxes ................................................ $ 164,261 $ 121,578 $ 88,239
|
See Notes to Financial Statements.
ARIZONA PUBLIC SERVICE COMPANY
STATEMENTS OF RETAINED EARNINGS
Year Ended December 31,
------------------------
1995 1994 1993
---- ---- ----
(Thousands of Dollars)
Retained earnings at beginning of year ..................... $ 353,655 $ 307,098 $ 259,899
Add: Net income ............................................ 239,570 243,486 250,386
--------- --------- ---------
Total ...................................... 593,225 550,584 510,285
--------- --------- ---------
Deduct:
Dividends:
Common stock (Notes 4 and 5) ............... 170,000 170,000 170,000
Preferred stock (at required rates) (Note 4) 19,134 25,274 30,840
Premium paid on reacquisition of preferred stock ... 248 1,655 2,347
--------- --------- ---------
Total deductions ........................... 189,382 196,929 203,187
--------- --------- ---------
Retained earnings at end of year ........................... $ 403,843 $ 353,655 $ 307,098
========= ========= =========
|
See Notes to Financial Statements.
APS
NOTES TO FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Nature of Operations
APS is engaged primarily in the generation and sale of
electricity. The Company serves approximately 705,000 customers in an area that
includes all or part of 11 of Arizona's 15 counties.
Accounting Records
The accounting records are maintained in accordance with
generally accepted accounting principles (GAAP). The preparation of financial
statements in accordance with GAAP requires the use of estimates by management.
Actual results could differ from those estimates.
The Company is regulated by the ACC and the FERC and the accompanying financial statements reflect the rate-making policies of these commissions. The Company prepares its financial statements in accordance with the provisions of Statement of Financial Accounting Standards (SFAS) No. 71, "Accounting for the Effects of Certain Types of Regulation." SFAS No. 71 requires a cost-based rate-regulated enterprise to reflect the impact of regulatory decisions in its financial statements.
The Company's major regulatory assets are Palo Verde cost deferrals (see "Palo Verde Cost Deferrals" in this note) and deferred taxes (see Note 9). These items, combined with miscellaneous regulatory assets and liabilities, amounted to approximately $1.2 billion and $1.1 billion at December 31, 1995 and 1994, respectively, most of which are included in "Deferred Debits" on the Balance Sheets.
The Company's current regulatory orders and regulatory environment support the recognition of regulatory assets. If rate recovery of these costs becomes unlikely or uncertain, whether due to competition or regulatory action, the Company may no longer be able to apply the provisions of SFAS No. 71 to all or a part of its operations.
Common Stock
All of the outstanding shares of common stock of the Company are owned by
Pinnacle West. See Note 4 of Notes to Financial Statements.
Utility Plant and Depreciation
Utility plant represents the buildings, equipment and other facilities used to
provide electric service. The cost of utility plant includes labor, materials,
contract services, other related items and an allowance for funds used during
construction. The cost of retired depreciable utility plant, plus removal costs
less salvage realized, is charged to accumulated depreciation. See Note 12 for
information on a proposed accounting standard which impacts accounting for
removal costs.
APS
NOTES TO FINANCIAL STATEMENTS
Depreciation on utility property is recorded on a straight-line basis. The applicable rates for 1993 through 1995 ranged from 1.77% to 15%, which resulted in an annual composite rate of 3.44% for 1995.
Allowance for Funds Used During Construction AFUDC represents the cost of debt and equity funds used to finance construction of utility plant. Plant construction costs, including AFUDC, are recovered in authorized rates through depreciation when completed projects are placed into commercial operation. AFUDC does not represent current cash earnings.
AFUDC has been calculated using composite rates of 8.52% for 1995; 7.70% for 1994; and 7.20% for 1993. The Company compounds AFUDC semiannually and ceases to accrue AFUDC when construction is completed and the property is placed in service.
Revenues
Operating revenues are recognized on the accrual basis and include estimated
amounts for service rendered but unbilled at the end of each accounting period.
In 1991, a refund obligation of $53.4 million ($32.3 million after taxes) was recorded as a result of a 1991 rate settlement. The refund obligation was used to reduce the amount of a 1991 rate increase granted rather than require specific customer refunds and was reversed over the thirty months ended May 1994. The after-tax refund obligation reversals that were recorded as electric operating revenues amounted to $5.6 million in 1994 and $12.9 million in 1993.
Palo Verde Accretion Income
In 1991, the carrying value of Palo Verde Unit 3 was discounted to reflect the
present value of lost cash flows resulting from a 1991 rate settlement agreement
deeming a portion of the unit to temporarily be excess capacity. In accordance
with generally accepted accounting principles, accretion income was recorded
over a thirty-month period ended May 1994 in the aggregate amount of the
original discount. The after-tax accretion income recorded in 1994 and 1993 was
$20.3 million and $45.3 million, respectively.
Palo Verde Cost Deferrals
As authorized by the ACC, operating costs (excluding fuel) and financing costs
of Palo Verde Units 2 and 3 were deferred from the commercial operation date
(September 1986 and January 1988, respectively) until the date the units were
included in a rate order (April 1988 and December 1991, respectively). The
deferrals are being amortized and recovered through rates over thirty-five year
periods.
Nuclear Fuel
Nuclear fuel is charged to fuel expense using the unit-of-production method
under which the number of units of thermal energy produced in the current period
is related to the total thermal units expected to be produced over the remaining
life of the fuel.
Under federal law, the DOE is responsible for the permanent disposal of spent nuclear fuel and assesses $0.001 per kWh of nuclear generation. This amount is charged to nuclear fuel expense. See Note 12 for information on nuclear decommissioning costs.
Reacquired Debt Costs
The Company amortizes gains and losses on reacquired debt over the remaining
life of the original debt, consistent with ratemaking.
Cash and Cash Equivalents
For purposes of the statements of cash flows, the Company considers all highly
liquid debt instruments purchased with an initial maturity of three months or
less to be cash equivalents.
Reclassifications
Certain prior year balances have been restated to conform to the 1995
presentation.
2. Accounting Matters
In March 1995, the Financial Accounting Standards Board issued SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," which is effective in 1996. This statement requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss would be recognized if the sum of the estimated future undiscounted cash flows to be generated by an asset is less than its carrying value. The amount of the loss would be based on a comparison of book value to fair value. The standard also amends SFAS No. 71 to require the write-off of a regulatory asset if it is no longer probable that future revenues will recover the cost of the asset. SFAS No. 121 does not have a material impact on financial position or results of operations upon adoption.
APS
NOTES TO FINANCIAL STATEMENTS
In October 1995, the Financial Accounting Standards Board issued SFAS No. 123, "Accounting for Stock-Based Compensation," which is effective in 1996. This statement establishes a fair-value based method of accounting for stock compensation plans. The statement encourages but does not require companies to recognize compensation expense based on the new fair value method. The Company will not apply the recognition and measurement approach in SFAS No. 123 upon adoption.
See Note 12 for discussion of a proposed standard on accounting for liabilities related to closure or removal of long-lived assets.
3. Regulatory Matters
1995 Regulatory Agreement
In December 1995, the Company and the ACC Staff announced an agreement which
includes an economic proposal to be heard by the full ACC beginning on April 9,
1996. In recognition of evolving competition in the electric utility industry
and an ongoing investigation by the ACC Staff into industry restructuring in an
open competition docket involving many parties, the agreement also includes an
element setting out a number of issues which the Company and the ACC Staff agree
the ACC should be requested to consider in developing restructuring policies.
Economic Proposal
The major provisions of the economic proposal are:
o An annual rate reduction of approximately $48 million ($29 million after income taxes), or 3.25% on average, effective no earlier than July 1, 1996.
o Recovery of substantially all of the Company's present regulatory assets through accelerated amortization over an eight-year period beginning July 1, 1996, increasing annual amortization by approximately $120 million ($72 million after income taxes). See Note 1.
o A formula for sharing future cost savings between customers and shareholders referencing a return on equity (as defined) of 11.25%.
o A moratorium on filing for permanent rate changes, except under the sharing formula and under certain other limited circumstances, prior to July 2, 1999.
o Infusion of $200 million of common equity into the Company by Pinnacle West, in annual increments of $50 million starting in 1996.
Industry Restructuring
The issues listed by the Company and the ACC Staff in the industry restructuring
element of their agreement include the legal nature of utilities' service rights
and responsibilities, including the obligation to serve in a restructured
environment; compensation for restructuring, taking into account (among other
matters) stranded investment; ACC jurisdiction over market entrants; reciprocity
of access among electricity providers; maintenance of system reliability; the
utility tax structure; and clarification of federal-state jurisdictional
uncertainties.
The Company believes that, after a series of hearings on these and related issues in the competition docket, the ACC could produce a set of regulatory and legislative reforms for presentation to the appropriate bodies in 1997. Bills for industry restructuring or studies thereof have already been introduced in Congress and the Arizona legislature; the Arizona bill, which is supported by the Company, would establish a committee to study the issues and to report back to the legislature by the end of 1997.
Assuming timely resolution of the issues and approval of the economic proposal in the agreement, the Company therein proposes (independently of the ACC Staff) a plan whereby it would request the ACC to authorize access by retail customers of Arizona public service corporations to the broad generation market starting in the year 2000 for large customers, and thereafter in phased steps up to all customers in about 2004. Other parties may submit other plans, and the ultimate outcome is not predictable.
1994 Settlement Agreement
In May 1994, the ACC approved a retail rate settlement agreement which provided
for a net annual retail rate reduction of 2.2% on average, or approximately $32
million ($19 million after taxes), effective June 1, 1994. As part of the
settlement, in 1994 the Company reversed approximately $20 million of
APS
NOTES TO FINANCIAL STATEMENTS
depreciation ($15 million after income taxes) related to a 1991 Palo Verde write-off. The 1994 rate settlement also provided for the accelerated amortization of substantially all deferred ITCs over a five-year period beginning in 1995.
4. Common and Preferred Stocks
Non-redeemable preferred stock is not redeemable except at the option of the Company. Redeemable preferred stock is redeemable through sinking fund obligations in addition to being callable by the Company. Common and preferred stock balances at December 31 are shown below:
Number of Shares Par Value
---------------- ---------
Call
Outstanding Outstanding Price
---------------------- Per --------------------- Per
Authorized 1995 1994 Share 1995 1994 Share(a)
---------- ---------- ---------- ----- ------ ------ --------
(Thousands of Dollars)
Common Stock ............ 100,000,000 71,264,947 71,264,947 $ 2.50 $ 178,162 $ 178,162 --
========== ========== ========= =========
Preferred Stock:
Non-Redeemable:
$1.10 ................ 160,000 155,945 155,945 25.00 $ 3,898 $ 3,898 $ 27.50
$2.50 ................ 105,000 103,254 103,254 50.00 5,163 5,163 51.00
$2.36 ................ 120,000 40,000 40,000 50.00 2,000 2,000 51.00
$4.35 ................ 150,000 75,000 75,000 100.00 7,500 7,500 102.00
Serial preferred 1,000,000
$2.40 Series A... 240,000 240,000 50.00 12,000 12,000 50.50
$2.625 Series C.. 240,000 240,000 50.00 12,000 12,000 51.00
$2.275 Series D.. 200,000 200,000 50.00 10,000 10,000 50.50
$3.25 Series E... 320,000 320,000 50.00 16,000 16,000 51.00
Serial preferred ..... 4,000,000(b)
Adjustable rate --
Series Q ............. 500,000 500,000 100.00 50,000 50,000 (c)
Serial preferred ..... 10,000,000
$1.8125 Series W ..... 3,000,000 3,000,000 25.00 75,000 75,000 (d)
--------- --------- --------- ---------
Total ................ 4,874,199 4,874,199 $ 193,561 $ 193,561
========= ========= ========= =========
Redeemable:
Serial preferred:
$10.00 Series U ..... 500,000 500,000 100.00 50,000 50,000
$7.875 Series V ..... 250,000 250,000 100.00 25,000 25,000 (e)
--------- ---------- --------- ---------
Total 750,000 750,000 $ 75,000 $ 75,000
========= ========== ========= =========
- ----------
(a) In each case plus accrued dividends.
(b) This authorization also covers all outstanding redeemable preferred stock.
(c)Dividend rate adjusted quarterly to 2% below that of certain United States
Treasury securities, but in no event less than 6% or greater than 12% per
annum. Redeemable at par.
(d) Redeemable at par after December 1, 1998.
(e)Redeemable at $105.51 through May 31, 1996, and thereafter declining by a
predetermined amount each year to par after May 31, 2002.
|
APS
NOTES TO FINANCIAL STATEMENTS
If there were to be any arrearage in dividends on any of its preferred stock or in the sinking fund requirements applicable to any of its redeemable preferred stock, the Company could not pay dividends on its common stock or acquire any shares thereof for consideration. The redemption requirements for the above issues for the next five years are: $0 in 1996 and $10.0 million in each of the years 1997 through 2000.
Redeemable preferred stock transactions during each of the three years in the period ended December 31 are as follows:
Number of Shares Par Value
Outstanding Outstanding
------------------------------------- -------------------------------------
(Thousands of Dollars)
Description 1995 1994 1993 1995 1994 1993
----------- ----- ---- ---- ---- ---- ----
Balance, January 1 ............ 750,000 1,976,100 2,256,350 $75,000 $ 197,610 $ 225,635
Retirements:
$8.80 Series K ..... -- (142,100) (45,000) -- (14,210) (4,500)
$11.50 Series R .... -- (284,000) (35,250) -- (28,400) (3,525)
$8.48 Series S ..... -- (300,000) (200,000) -- (30,000) (20,000)
$8.50 Series T ..... -- (500,000) -- -- (50,000) --
------- -------- --------- ------- ------------- ----------
Balance, December 31 .......... 750,000 750,000 1,976,100 $75,000 $ 75,000 $ 197,610
======= ======== ========= ======= ============= ==========
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5. Long-Term Debt
The following table presents long-term debt outstanding:
December 31,
------------
Maturity Dates Interest Rates 1995 1994
-------------- -------------- ---- ----
(Thousands of Dollars)
First mortgage bonds 1997-2028 5.5%-13.25%(a) $1,604,317 $1,740,071
Pollution control indebtedness 2024-2029 Adjustable(b) 433,280 418,824
Debentures(c) 2025 10% 75,000 --
Capitalized lease obligation(d) 1995-2001 7.48% 22,936 26,365
---------- ----------
Total long-term debt 2,135,533 2,185,260
Less current maturities 3,512 3,428
---------- ----------
Total long-term debt less current maturities $2,132,021 $2,181,832
========== ==========
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(a)The weighted-average rate at December 31, 1995 and 1994 was 7.79% and 8.04%, respectively. The weighted-average years to maturity at December 31, 1995 and 1994 was 19 years.
(b)The weighted-average rates for the years ended December 31, 1995 and 1994 were 4.31% and 3.91%, respectively. Changes in short-term interest rates would affect the costs associated with this debt.
(c)Junior subordinated deferrable interest debentures due in 2025, redeemable at the option of the Company as a whole or in part on or after January 31, 2000 at par plus accrued interest.
(d)Represents the present value of future lease payments (discounted at an interest rate of 7.48%) on a combined cycle plant sold and leased back from the independent owner-trustee formed to own the facility (see Note 8).
Aggregate annual principal payments due on long-term debt and for sinking fund requirements through 2000 are as follows: 1996, $3.5 million; 1997, $153.8 million; 1998, $104.1 million; 1999, $104.4 million; and 2000, $104.7 million. See Note 4 for redemption and sinking fund requirements of redeemable preferred stock of the Company.
APS
NOTES TO FINANCIAL STATEMENTS
Substantially all utility plant (other than nuclear fuel, transportation equipment and the combined cycle plant) is subject to the lien of the mortgage bond indenture. The mortgage bond indenture includes provisions which would restrict the payment of common stock dividends under certain conditions which did not exist at December 31, 1995.
6. Lines of Credit The Company had committed lines of credit with various banks of $300 million at December 31, 1995 and 1994, which were available either to support the issuance of commercial paper or to be used for bank borrowings. The commitment fees at December 31, 1995 and 1994 on $200 million of these lines were 0.15% and 0.20% per annum, respectively, and on $100 million were 0.10% and 0.15% per annum, respectively. The Company had commercial paper borrowings outstanding of $177.8 million at December 31, 1995 and $131.5 million at December 31, 1994. The weighted average interest rate on commercial paper borrowings was 6.06% on December 31, 1995 and 6.25% on December 31, 1994. By Arizona statute, the Company's short-term borrowings cannot exceed 7% of its total capitalization without the consent of the ACC.
7. Jointly-Owned Facilities At December 31, 1995, the Company owned interests in the following jointly-owned electric generating and transmission facilities. The Company's share of related operating and maintenance expenses is included in operating expenses.
Percent Construction
Owned by Plant in Accumulated Work in
Company Service Depreciation Progress
------- ------- ------------ --------
(Thousands of Dollars)
Generating Facilities:
Palo Verde Nuclear Generating Station
Units 1 and 3 ..................... 29.1% $1,823,062 $ 477,569 $ 18,743
Palo Verde Nuclear Generating Station
Unit 2 (see Note 8) ............... 17.0% 556,236 149,837 9,925
Four Corners Steam Generating Station
Units 4 and 5 ..................... 15.0% 142,449 54,349 1,208
Navajo Steam Generating Station
Units 1, 2 and 3 .................. 14.0% 139,607 78,490 38,633
Cholla Steam Generating Station
Common Facilities (a) ............. 62.8%(b) 70,761 35,900 734
Transmission Facilities:
ANPP 500KV System ................... 35.8%(b) 62,607 16,589 1,106
Navajo Southern System .............. 31.4%(b) 26,737 15,561 23
Palo Verde-Yuma 500KV System ........ 23.9%(b) 11,375 3,483 9
Four Corners Switchyards ............ 27.5%(b) 3,068 1,561 53
Phoenix-Mead System ................. 17.1%(b) -- -- 39,918
|
(a)The Company is the operating agent for Cholla Unit 4, which is owned by
PacifiCorp. The common facilities at the Cholla Plant are jointly-owned.
(b) Weighted average of interests.
APS
NOTES TO FINANCIAL STATEMENTS
8. Leases
In 1986, the Company entered into sale and leaseback transactions under which it sold approximately 42% of its share of Palo Verde Unit 2 and certain common facilities. The gain of approximately $140.2 million has been deferred and is being amortized to operations expense over the original lease term. The leases are being accounted for as operating leases. The amounts to be paid each year approximate $40.1 million through 1999, $46.3 million in 2000 and $49.0 million through 2015. Options to renew for two additional years and to purchase the property at fair market value at the end of the lease terms are also included. Consistent with the ratemaking treatment, an amount equal to the annual lease payments is included in rent expense. A regulatory asset (totaling approximately $56.9 million at December 31, 1995) has been established for the difference between lease payments and rent expense calculated on a straight-line basis. Lease expense for 1995, 1994 and 1993 was $41.7 million, $42.2 million and $41.8 million, respectively.
The Company has a capital lease on a combined cycle plant which it sold and leased back. The lease requires semiannual payments of $2.6 million through June 2001, and includes renewal and purchase options based on fair market value. This plant is included in plant in service at its original cost of $54.4 million; accumulated amortization at December 31, 1995 was $42.4 million.
In addition, the Company leases certain land, buildings, equipment and miscellaneous other items through operating rental agreements with varying terms, provisions and expiration dates. Rent expense for 1995, 1994 and 1993 was approximately $9.9 million, $10.1 million and $11.1 million, respectively. Annual future minimum rental commitments, excluding the Palo Verde and combined cycle leases, for the period 1996 through 2000 range between $12 million and $13 million. Total rental commitments after the year 2000 are estimated at $115 million.
9. Income Taxes
The Company is included in the consolidated income tax returns of Pinnacle West. Income taxes are allocated to the Company based on its separate company taxable income or loss. Beginning in 1995, substantially all of the unamortized ITCs are being amortized over a five-year period in accordance with the 1994 rate settlement agreement (see Note 3). Prior to 1995, ITCs were deferred and amortized to other income over the estimated lives of the related assets as directed by the ACC.
The Company follows the liability method of accounting for income taxes which requires that deferred income taxes be recorded for all temporary differences between the tax bases of assets and liabilities and the amounts recognized for financial reporting. Deferred taxes are recorded using currently enacted tax rates. In accordance with SFAS No. 71, a regulatory asset has been established for certain temporary differences, primarily AFUDC equity, that are flowed through for regulatory purposes. This regulatory asset is being amortized as the related differences reverse.
The components of income tax expense are as follows:
Year Ended December 31,
-----------------------------
1995 1994 1993
---- ---- ----
(Thousands of Dollars)
Current:
Federal ........................ $ 120,196 $ 74,272 $ 69,243
State .......................... 33,368 26,447 23,915
--------- ---------- --------
Total current .............. 153,564 100,719 93,158
Deferred ......................... 17,933 83,350 102,697
Change in valuation allowance .... (2,589) -- --
Investment tax credit amortization (27,641) (6,825) (6,948)
--------- ---------- --------
Total expense .............. $ 141,267 $ 177,244 $188,907
========= ========== ========
|
APS
NOTES TO FINANCIAL STATEMENTS
Income tax expense differed from the amount computed by multiplying income
before income taxes by the statutory federal income tax rate due to the
following:
Year Ended December 31,
--------------------------
1995 1994 1993
---- ---- ----
(Thousands of Dollars)
Federal income tax expense at statutory rate, 35% ..........$ 133,293 $ 147,256 $ 153,753
Increase (reductions) in tax expense resulting from:
Tax under book depreciation ........................ 18,186 17,236 17,671
ITC amortization ................................... (27,641) (6,825) (6,922)
State income tax-- net of federal income tax benefit 21,770 24,947 27,005
Other .............................................. (4,341) (5,370) (2,600)
---------- ---------- ----------
Income tax expense .........................$ 141,267 $ 177,244 $ 188,907
========== ========== ==========
|
The components of the net deferred income tax liability were as follows:
December 31,
------------------
1995 1994
---- ----
(Thousands of Dollars)
Deferred tax assets:
Deferred gain on Palo Verde Unit 2 sale/leaseback ......... $ 60,686 $ 63,720
Alternative minimum tax ................................... -- 14,089
Other ..................................................... 78,021 73,084
Valuation allowance ....................................... (12,483) (15,072)
----------- -----------
Total deferred tax assets ......................... 126,224 135,821
----------- -----------
Deferred tax liabilities:
Plant related ..................................... 813,229 802,645
Income taxes recoverable through future rates-- net 548,464 557,049
Palo Verde deferrals .............................. 148,395 153,410
Other ............................................. 39,965 39,787
----------- -----------
Total deferred tax liabilities ............ 1,550,053 1,552,891
----------- -----------
Accumulated deferred income taxes-- net ................... $ 1,423,829 $ 1,417,070
=========== ===========
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10. Pension Plan and Other Benefits
Pension Plan
The Company sponsors a defined benefit pension plan covering
substantially all employees. Benefits are based on years of service and
compensation utilizing a final average pay benefit formula. The funding policy
is to contribute the net periodic cost accrued each year. However, the
contribution will not be less than the minimum required contribution nor greater
than the maximum tax-deductible contribution. Plan assets consist primarily of
domestic and international common stocks and bonds and real estate. Pension
cost, including administrative cost, for 1995, 1994 and 1993 was approximately
$21.1 million, $25.4 million and $14.0 million, respectively, of which
approximately $9.6 million, $11.9 million and $6.5 million, respectively, was
charged to expense. The remainder was either capitalized or billed to others.
APS
NOTES TO FINANCIAL STATEMENTS
The components of net periodic pension costs (excluding the costs of special termination benefits of $1.4 million in 1994) are as follows:
1995 1994 1993
---- ---- ----
(Thousands of Dollars)
Service cost-benefits earned during the period $ 16,038 $ 20,345 $ 16,754
Interest cost on projected benefit obligation 39,328 39,377 34,724
Return on plan assets ........................ (82,209) 6,105 (51,597)
Net amortization and deferral ................ 45,976 (44,000) 13,420
-------- -------- --------
Net periodic pension cost .................... $ 19,133 $ 21,827 $ 13,301
======== ======== ========
|
A reconciliation of the funded status of the plan to the amounts recognized in the balance sheet is presented below:
1995 1994
---- ----
(Thousands of Dollars)
Plan assets at fair value ............................................. $ 469,820 $ 388,010
---------- ----------
Less:
Accumulated benefit obligation, including vested benefits
of $396,138 and $308,474 in 1995 and 1994, respectively 428,258 333,564
Effect of projected future compensation increases ............. 149,836 112,780
--------- ---------
Total projected benefit obligation .................................... 578,094 446,344
--------- ---------
Plan assets less than projected benefit obligation .................... (108,274) (58,334)
Plus:
Unrecognized net loss (gain) from past experience
different from that assumed ........................... 44,614 (9,372)
Unrecognized prior service cost ............................... 23,800 25,527
Unrecognized net transition asset ............................. (32,809) (36,025)
--------- ---------
Accrued pension liability ............................................. $ (72,669) $ (78,204)
========= =========
Principal actuarial assumptions used were:
Discount rate ................................................. 7.25% 8.75%
Rate of increase in compensation levels ....................... 4.50% 5.00%
Expected long-term rate of return on assets ................... 9.00% 9.00%
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In addition to the defined benefit pension plan, the Company also sponsors qualified defined contribution plans. Collectively, these plans cover substantially all employees. The plans provide for employee contributions and partial employer matching contributions after certain eligibility requirements are met. The cost of these plans for 1995, 1994 and 1993 was $6.9 million, $6.8 million and $6.3 million, respectively, of which $3.1 million, $3.2 million and $3.0 million, respectively, was charged to expense.
Postretirement Plans
The Company provides medical and life insurance benefits to its retired
employees. Employees may become eligible for these retirement benefits based on
years of service and age. The retiree medical insurance plans are contributory;
the retiree life insurance plan is noncontributory. In accordance with the
governing plan documents, the Company retains the right to change or eliminate
these benefits.
Funding is based upon actuarially determined contributions that take tax consequences into account. Plan assets consist primarily of domestic stocks and bonds. The postretirement benefit cost for 1995, 1994 and 1993 was approximately $23 million, $28 million and $34 million, respectively, of which approximately $13 million, $13 million and $17 million was charged to expense. The remainder was either capitalized or billed to others.
APS
NOTES TO FINANCIAL STATEMENTS
The components of net periodic postretirement benefit costs are as follows:
1995 1994 1993
---- ---- ----
(Thousands of Dollars)
Service cost-benefits earned during the period $ 6,735 $ 8,785 $ 9,510
Interest cost on accumulated benefit obligation 13,743 14,026 15,630
Return on plan assets ......................... (15,133) (6,459) --
Net amortization and deferral ................. 17,142 11,619 9,146
-------- -------- --------
Net periodic postretirement benefit cost ...... $ 22,487 $ 27,971 $ 34,286
======== ======== ========
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A reconciliation of the funded status of the plan to the amounts recognized in the balance sheet is presented below:
1995 1994
---- ----
(Thousands of Dollars)
Plan assets at fair value ...................................................... $ 81,309 $ 49,666
--------- ---------
Less accumulated postretirement benefit obligation:
Retirees ............................................................... 90,222 65,552
Fully eligible plan participants ....................................... 15,497 9,128
Other active plan participants ......................................... 106,568 87,201
--------- ---------
Total accumulated postretirement benefit obligation ......... 212,287 161,881
--------- ---------
Plan assets less than accumulated benefit obligation ........................... (130,978) (112,215)
Plus:
Unrecognized transition obligation ..................................... 155,481 164,627
Unrecognized net gain from past experience different from that
assumed ........................................................ (24,561) (52,470)
--------- ---------
Accrued postretirement liability ............................................... $ (58) $ (58)
========= =========
Principal actuarial assumptions used were:
Discount rate .......................................................... 7.25% 8.75%
Annual salary increases for life insurance obligation .................. 4.50% 5.00%
Weighted average expected long-term rate of return on assets-- after tax 7.64% 7.71%
Initial health care cost trend rate-- under age 65 ..................... 9.50% 11.50%
Initial health care cost trend rate-- age 65 and over .................. 8.50% 8.50%
Ultimate health care cost trend rate (reached in the year 2002) ........ 5.50% 5.50%
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Assuming a one percent increase in the health care cost trend rate, the 1995 cost of postretirement benefits other than pensions would increase by approximately $4.5 million and the accumulated benefit obligation as of December 31, 1995 would increase by approximately $33.3 million.
11. Commitments and Contingencies
Litigation
The Company is a party to various claims, legal actions and complaints arising
in the ordinary course of business. In the opinion of management, the ultimate
resolution of these matters will not have a material adverse effect on the
operations or financial position of the Company.
Palo Verde Nuclear Generating Station
The Company has encountered tube cracking in steam generators and has taken, and
will continue to take, remedial actions that it believes have slowed the rate of
tube degradation. The projected service life of the steam generators is
reassessed periodically in conjunction with inspections made during scheduled
outages at the Palo Verde units. The Company's ongoing analyses indicate that it
will be economically desirable for the Company to replace the Unit 2 steam
generators, which have been most affected by tube
APS
NOTES TO FINANCIAL STATEMENTS
cracking, in five to ten years. The Company expects that the steam generator replacement can be accomplished within financial parameters established before replacement was a consideration, and the Company estimates that its share of the replacement costs (in 1995 dollars and including installation and replacement power costs) will be between $30 million and $50 million, most of which will be incurred after the year 2000. The Company expects that the replacement would be performed in conjunction with a normal refueling outage in order to limit incremental outage time to approximately 50 days. Based on the latest available data, the Company estimates that the Unit 1 and Unit 3 steam generators should operate for the license periods (until 2025 and 2027, respectively), although the Company will continue its normal periodic assessment of these steam generators.
The Palo Verde participants have insurance for public liability payments resulting from nuclear energy hazards to the full limit of liability under federal law. This potential liability is covered by primary liability insurance provided by commercial insurance carriers in the amount of $200 million and the balance by an industry-wide retrospective assessment program. If losses at any nuclear power plant covered by this program exceed the accumulated funds for this program, the Company could be assessed retrospective premium adjustments. The maximum assessment per reactor under the program for each nuclear incident is approximately $79 million, subject to an annual limit of $10 million per incident. Based upon the Company's 29.1% interest in the three Palo Verde units, the Company's maximum potential assessment per incident for all three units is approximately $69 million, with an annual payment limitation of approximately $9 million.
The Palo Verde participants maintain "all risk" (including nuclear hazards) insurance for property damage to, and decontamination of, property at Palo Verde in the aggregate amount of $2.75 billion, a substantial portion of which must first be applied to stabilization and decontamination. The Company has also secured insurance against portions of any increased cost of generation or purchased power and business interruption resulting from a sudden and unforeseen outage of any of the three units. The insurance coverage discussed in this and the previous paragraph is subject to certain policy conditions and exclusions.
Construction Program
Total capital expenditures in 1996 are estimated at $246 million.
Fuel and Purchased Power Commitments
The Company is a party to various fuel and purchased power contracts with terms
expiring from 1996 through 2020 that include required purchase provisions. The
Company estimates its 1996 contract requirements to be approximately $99
million. However, this amount may vary significantly pursuant to certain
provisions in such contracts which permit the Company to decrease its required
purchases under certain circumstances.
Additionally, the Company is contractually obligated to reimburse certain coal providers for amounts incurred for coal mine reclamation. The Company's share of the total obligation is estimated at $123 million. The portion of the coal mine reclamation obligation related to coal already burned was recorded in 1995 on the Balance Sheets as "Deferred Credits -- Other" with a corresponding regulatory asset for approximately $74 million.
12. Nuclear Decommissioning Costs
In 1995, the Company recorded $11.7 million for decommissioning expense. The Company estimates it will cost approximately $2.0 billion ($421 million in 1995 dollars), over a fourteen year period beginning in 2024, to decommission its 29.1% interest in Palo Verde. Decommissioning costs are charged to expense over the respective unit's operating license term and are included in the accumulated depreciation balance until each unit is retired. Nuclear decommissioning costs are currently recovered in rates.
The Company is utilizing a 1995 site-specific study for Palo Verde, prepared for the Company by an independent consultant, that assumes the prompt removal/dismantlement method of decommissioning. The Company is required to update the study every three years.
As required by regulation, the Company has established external trust accounts into which quarterly deposits are made for decommissioning. As of December 31, 1995, the Company had deposited a total of $56.7 million. The trust accounts are included in "Investments and Other Assets" on the Balance Sheets at a market value of $74.5 million on December 31, 1995. The trust funds are invested primarily in fixed-income securities and domestic
APS
NOTES TO FINANCIAL STATEMENTS
stock and are classified as available for sale. Realized and unrealized gains and losses are reflected in accumulated depreciation.
In 1994, FASB added a project to its agenda on accounting for nuclear decommissioning obligations. FASB recently issued an exposure draft "Accounting for Certain Liabilities Related to Closure or Removal of Long-Lived Assets" (formerly Nuclear Decommissioning) which would require the estimated present value of the cost of decommissioning and certain other removal costs to be recorded as a liability, along with an offsetting plant asset when a decommissioning or other removal obligation is incurred. FASB has requested comments on its proposed statement. The expected effective date is 1997. The Company is unable at this time to determine what impact the final statement may have on its financial position or results of operation.
13. Selected Quarterly Financial Data (Unaudited) Quarterly financial information for 1995 and 1994 is as follows:
Electric
Operating Operating Net Earnings for
Quarter Revenues Income(a) Income Common Stock
- ------- -------- --------- ------ ------------
(Thousands of Dollars)
1995
First $ 336,968 $ 73,214 $ 37,832 $ 33,025
Second 380,178 88,719 53,452 48,676
Third 549,082 162,602 128,345 123,570
Fourth 348,724 57,219 19,941 15,165
1994
First $ 346,049 $ 67,147 $ 38,468 $ 30,958
Second 397,156 83,607 65,851 58,879
Third 540,883 155,115 116,267 110,359
Fourth 342,080 62,564 22,900 18,016
- ----------
|
(a)The Company's operations are subject to seasonal fluctuations primarily as a result of weather conditions. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.
14. Fair Value of Financial Instruments
The Company estimates that the carrying amounts of its cash equivalents and commercial paper are reasonable estimates of their fair values at December 31, 1995 and 1994 due to their short maturities. Investments in debt and equity securities are held for purposes other than trading. The December 31, 1995 and 1994 fair values of debt and equity investments, determined by using quoted market values or by discounting cash flows at rates equal to the Company's cost of capital, approximate their carrying amounts.
The carrying value of long-term debt (excluding a capitalized lease obligation) on December 31, 1995 and 1994 was $2.11 billion and $2.16 billion, respectively, and the estimated fair value was $2.14 billion and $1.99 billion, respectively. The fair value estimates are based on quoted market prices of the same or similar issues.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE
OFFICERS OF THE REGISTRANT
Reference is hereby made to "Election of Directors" in the Company's Proxy Statement relating to the annual meeting of shareholders to be held on May 21, 1996 (the "1996 Proxy Statement") and to the Supplemental Item -- "Executive Officers of the Registrant" in Part I of this report.
ITEM 11. EXECUTIVE COMPENSATION
Reference is hereby made to the fourth paragraph under the heading "The Board and its Committees," and to "Executive Compensation" in the 1996 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Reference is hereby made to "Principal Holders of Voting Securities" and "Ownership of Pinnacle West Securities by Management" in the 1996 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Reference is hereby made to the last paragraph under the heading "The Board and its Committees" in the 1996 Proxy Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
FINANCIAL STATEMENTS
See the Index to Financial Statements in Part II, Item 8 on page 19 .
EXHIBITS FILED
EXHIBIT NO. DESCRIPTION
- ----------- -----------
3.1 -- Bylaws, amended as of February 20, 1996
10.1(a) -- 1996 Senior Management Variable Pay Plan
10.2(a) -- 1996 Officers Variable Pay Plan
10.3 -- Amendment No. 1 dated April 5, 1995 to the Long-Term Power Transactions Agreement
and Asset Purchase and Power Exchange Agreement between PacifiCorp and the
Company
10.4 -- Restated Transmission Agreement between PacifiCorp and the Company dated April 5,
1995
10.5 -- Contract among PacifiCorp, the Company and United States Department of Energy
Western Area Power Administration, Salt Lake Area Integrated Projects for Firm
Transmission Service dated May 5, 1995
10.6 -- Reciprocal Transmission Service Agreement between the Company and PacifiCorp
dated as of March 2, 1994
10.7(a) -- Letter Agreement dated as of January 1, 1996 between the Company and Kenneth M.
Carr for consulting services
10.8(a) -- Letter Agreement dated as of January 1, 1996 between the
Company and Robert G.
Matlock & Associates, Inc. for consulting services
10.9(a) -- First Amendment to the Arizona Public Service Company Severance Plan as adopted
on August 19, 1994
10.10(a) -- Pinnacle West Capital Corporation, Arizona Public Service Company, SunCor
Development Company and El Dorado Investment Company Deferred Compensation Plan
as amended and restated effective January 1, 1996
10.11(a) -- Arizona Public Service Company Supplemental Excess Benefit Retirement Plan as
amended and restated on December 20, 1995
23.1 -- Consent of Deloitte & Touche LLP
27.1 -- Financial Data Schedule
|
In addition to those Exhibits shown above, the Company hereby incorporates
the following Exhibits pursuant to Exchange Act Rule 12b-32 and Regulation
Section 201.24 by reference to the filings set forth below:
EXHIBIT NO. DESCRIPTION ORIGINALLY FILED AS EXHIBIT: FILE NO. DATE EFFECTIVE
----------- ----------- --------------------------- ------- --------------
3.2 Resolution of Board of 3.2 to 1994 Form 10-K 1-4473 3-30-95
Directors temporarily Report
suspending Bylaws in part
3.3 Articles of Incorporation, 4.2 to Form S-3 1-4473 9-29-93
restated as of May 25, 1988 Registration Nos.
33-33910 and 33-55248
by means of September 24,
1993 Form 8-K Report
|
EXHIBIT NO. DESCRIPTION ORIGINALLY FILED AS EXHIBIT: FILE NO. DATE EFFECTIVE
----------- ----------- --------------------------- ------- --------------
3.4 Certificates pursuant to 4.3 To Form S-3 Registration 1-4473 9-29-93
Sections 10-152.01 and 10-016, Nos. 33-33910 and 33-55248
Arizona Revised Statutes, by means of September 24,
establishing Series A 1993 Form 8-K Report
through V of the Company's
Serial Preferred Stock
3.5 Certificate pursuant to 4.4 to Form S-3 Registration 1-4473 9-29-93
Section 10-016, Arizona Nos. 33-33910 and 33-55248
Revised Statutes, by means of September 24,
establishing Series W 1993 Form 8-K Report
of the Company's Serial
Preferred Stock
4.1 Mortgage and Deed of Trust 4.1 to September 1992 Form 1-4473 11-9-92
Relating to the Company's First 10-Q Report
Mortgage Bonds, together with
forty-eight indentures
supplemental thereto
4.2 Forty-ninth Supplemental 4.1 to 1992 Form 10-K Report 1-4473 3-30-93
Indenture
4.3 Fiftieth Supplemental Indenture 4.2 to 1993 Form 10-K Report 1-4473 3-30-94
4.4 Fifty-first Supplemental 4.1 to August 1, 1993 Form
Indenture 8-K Report 1-4473 9-27-93
4.5 Fifty-second Supplemental 4.1 to September 30, 1993 1-4473 11-15-93
Indenture Form 10-Q Report
4.6 Fifty-third Supplemental 4.5 to Registration 1-4473 3-1-94
Indenture Statement No. 33-61228 by
means of February 23, 1994
Form 8-K Report
4.7 Agreement, dated March 21, 4.1 to 1993 Form 10-K Report 1-4473 3-30-94
1994, relating to the filing of
instruments defining the rights
of holders of long-term debt
not in excess of 10% of the
Company's total assets
4.8 Indenture dated as of January 4.6 to Registration 1-4473 1-11-95
1, 1995 among the Company and Statement Nos. 33-61228 and
The Bank of New York, 33-55473 by means of January
as Trustee 1, 1995 Form 8-K Report
4.9 Agreement of Resignation, 4.1 to September 25, 1995
Appointment, Acceptance and Form 8-K Report 1-4473 10-24-95
Assignment dated as of August
18, 1995 by and among the
Company, Bank of America
National Trust and Savings
Association and The Bank of
New York
10.12 Two separate Decommissioning 10.2 to September 1991 Form 1-4473 11-14-91
Trust Agreements (relating to 10-Q
PVNGS Units 1 and 3,
respectively), each
dated July 1, 1991,
between the Company
and Mellon Bank, N.A., as
Decommissioning Trustee
|
EXHIBIT NO. DESCRIPTION ORIGINALLY FILED AS EXHIBIT: FILE NO. DATE EFFECTIVE
----------- ----------- --------------------------- ------- --------------
10.13 Amendment No. 1 to 10.1 to 1994 Form 10-K 1-4473 3-30-95
Decommissioning Trust Agreement Report
(PVNGS Unit 1) dated as of
December 1, 1994
10.14 Amendment No. 1 to 10.2 to 1994 Form 10-K 1-4473 3-30-95
Decommissioning Trust Agreement Report
(PVNGS Unit 3) dated as of
December 1, 1994
10.15 Amended and Restated 10.1 to Pinnacle West 1991 1-8962 3-26-92
Decommissioning Trust Agreement Form 10-K Report
(PVNGS Unit 2) dated as of
January 31, 1992, among the
Company, Mellon Bank, N.A., as
Decommissioning Trustee, and
State Street Bank and Trust
Company, as successor to The
First National Bank of Boston,
as Owner Trustee under two
separate Trust Agreements, each
with a separate Equity
Participant, and as Lessor
under two separate Facility
Leases, each relating to an
undivided interest in PVNGS
Unit 2
10.16 First Amendment to Amended and 10.2 to 1992 Form 10-K 1-4473 3-30-93
Restated Decommissioning Trust Report
Agreement (PVNGS Unit 2), dated
as of November 1, 1992
10.17 Amendment No. 2 to Amended and 10.3 to 1994 Form 10-K 1-4473 3-30-95
Restated Decommissioning Trust Report
Agreement (PVNGS Unit 2) dated
as of November 1, 1994
10.18 Asset Purchase and Power 10.1 to June 1991 Form 10-Q 1-4473 8-8-91
Exchange Agreement dated Report
September 21, 1990 between the
Company and PacifiCorp, as
amended as of October 11, 1990
and as of July 18, 1991
10.19 Long-Term Power Transactions 10.2 to June 1991 Form 10-Q 1-4473 8-8-91
Agreement dated September 21, Report
1990 between the Company and
PacifiCorp, as amended as of
October 11, 1990 and as of July
8, 1991
10.20 Contract, dated July 21, 1984, 10.31 to Pinnacle West's 2-96386 3-13-85
with DOE providing for the Form S-14 Registration
disposal of nuclear fuel and/or Statement
high-level radioactive waste,
ANPP
10.21 Indenture of Lease with Navajo 5.01 to Form S-7 2-59644 9-1-77
Tribe of Indians, Four Corners Registration Statement
Plant
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EXHIBIT NO. DESCRIPTION ORIGINALLY FILED AS EXHIBIT: FILE NO. DATE EFFECTIVE
----------- ----------- --------------------------- ------- --------------
10.22 Supplemental and Additional 5.02 to Form S-7 2-59644 9-1-77
Indenture of Lease, including Registration Statement
amendments and supplements to
original lease with Navajo
Tribe of Indians, Four Corners
Plant
10.23 Amendment and Supplement No. 1 10.36 to Registration 1-8962 7-25-85
to Supplemental and Additional Statement on Form 8-B of
Indenture of Lease, Four Pinnacle West
Corners, dated April 25, 1985
10.24 Application and Grant of 5.04 to Form S-7 2-59644 9-1-77
multi-party rights-of-way and Registration Statement
easements, Four Corners Plant
Site
10.25 Application and Amendment No. 1 10.37 to Registration 1-8962 7-25-85
to Grant of multi-party Statement on Form 8-B of
rights-of-way and easements, Pinnacle West
Four Corners Power Plant Site,
dated April 25, 1985
10.26 Application and Grant of 5.05 to Form S-7 2-59644 9-1-77
Arizona Public Service Company Registration Statement
rights-of-way and easements,
Four Corners Plant Site
10.27 Application and Amendment No. 1 10.38 to Registration 1-8962 7-25-85
to Grant of Arizona Public Statement on Form 8-B of
Service Company rights-of-way Pinnacle West
and easements, Four Corners
Power Plant Site, dated April
25, 1985
10.28 Indenture of Lease, Navajo 5(g) to Form S-7 2-36505 3-23-70
Units 1, 2, and 3 Registration Statement
10.29 Application and Grant of 5(h) to Form S-7 2-36505 3-23-70
rights-of-way and easements, Registration Statement
Navajo Plant
10.30 Water Service Contract 5(l) to Form S-7 2-39442 3-16-71
Assignment with the United Registration Statement
States Department of Interior,
Bureau of Reclamation, Navajo
Plant
10.31 Arizona Nuclear Power Project 10.1 to 1988 Form 10-K 1-4473 3-8-89
Participation Agreement, dated Report
August 23, 1973, among the
Company, Salt River Project
Agricultural Improvement and
Power District, Southern
California Edison Company,
Public Service Company of New
Mexico, El Paso Electric
Company, Southern California
Public Power Authority, and
Department of Water and Power
of the City of Los Angeles, and
amendments 1-12 thereto
|
EXHIBIT NO. DESCRIPTION ORIGINALLY FILED AS EXHIBIT: FILE NO. DATE EFFECTIVE
----------- ----------- --------------------------- ------- --------------
10.32 Amendment No. 13 dated as of 10.1 to March 1991 Form 10-Q 1-4473 5-15-91
April 22, 1991, to Arizona Report
Nuclear Power Project
Participation Agreement,
dated August 23, 1973,
among the Company, Salt River
Project Agricultural Improvement
and Power District, Southern
California Edison Company,
Public Service Company of
New Mexico, El Paso Electric
Company, Southern California
Public Power Authority, and
Department of Water and Power
of the City of Los Angeles
10.33(b) Facility Lease, dated as of 4.3 to Form S-3 Registration 33-9480 10-24-86
August 1, 1986, between State Statement
Street Bank and Trust Company, as
successor to The First National
Bank of Boston, in its capacity
as Owner Trustee, as Lessor,
and the Company, as Lessee
10.34(b) Amendment No. 1, dated as of 10.5 to September 1986 Form 1-4473 12-4-86
November 1, 1986, to Facility 10-Q Report by means of
Lease, dated as of August 1, Amendment No. 1 on December
1986, between State Street Form 8
Bank and Trust Company, as
successor to The First
National Bank of Boston, in
its capacity as Owner Trustee,
as Lessor, and the Company,
as 3, 1986 Lessee
10.35(b) Amendment No. 2 dated as of 10.3 to 1988 Form 10-K 1-4473 3-8-89
June 1, 1987 to Facility Lease Report
dated as of August 1, 1986
between State Street Bank and
Trust Company, as successor to
The First National Bank of
Boston, as Lessor, and APS, as
Lessee
10.36(b) Amendment No. 3, dated as of 10.3 to 1992 Form 10-K 1-4473 3-30-93
March 17, 1993, to Facility Report
Lease, dated as of August 1,
1986, between State Street
Bank and Trust Company,
as successor to The First
National Bank of Boston, as
Lessor, and the Company, as
Lessee
|
EXHIBIT NO. DESCRIPTION ORIGINALLY FILED AS EXHIBIT: FILE NO. DATE EFFECTIVE
----------- ----------- --------------------------- ------- --------------
10.37 Facility Lease, dated as of 10.1 to November 18, 1986 1-4473 1-20-87
December 15, 1986, between Form 8-K Report
State Street Bank and Trust
Company, as successor to The
First National Bank of Boston,
in its capacity as Owner
Trustee, as Lessor, and the
Company, as Lessee
10.38 Amendment No. 1, dated as of 4.13 to Form S-3 1-4473 8-24-87
August 1, 1987, to Facility Registration Statement No.
Lease, dated as of December 33-9480 by means of August
15, 1986, between State Street 1, 1987 Form 8-K Report
Bank and Trust Company, as
successor to The First
National Bank of Boston, as
Lessor, and the Company, as
Lessee
10.39 Amendment No. 2, dated as of 10.4 to 1992 Form 10-K 1-4473 3-30-93
March 17, 1993, to Facility Report
Lease, dated as of December
15, 1986, between State Street
Bank and Trust Company, as
successor to The First
National Bank of Boston, as
Lessor, and the Company, as
Lessee
10.40(a) Directors' Deferred 10.1 to June 1986 Form 10-Q 1-4473 8-13-86
Compensation Plan, as Report
restated, effective January 1,
1986
10.41(a) Second Amendment to the 10.2 to 1993 Form 10-K 1-4473 3-30-94
Arizona Public Service Company Report
Directors' Deferred
Compensation Plan, effective
as of January 1, 1993
10.42(a) Third Amendment to the Arizona 10.1 to September 1994 Form 1-4473 11-10-94
Public Service Company 10-Q
Directors' Deferred
Compensation Plan effective as
of May 1, 1993
10.43(a) Arizona Public Service Company 10.4 to 1988 Form 10-K 1-4473 3-8-89
Deferred Compensation Plan, as Report
restated, effective January 1,
1984, and the second and third
amendments thereto, dated
December 22, 1986, and
December 23, 1987,
respectively
|
EXHIBIT NO. DESCRIPTION ORIGINALLY FILED AS EXHIBIT: FILE NO. DATE EFFECTIVE
----------- ----------- --------------------------- ------- --------------
10.44(a) Third Amendment to the Arizona 10.3 to 1993 Form 10-K 1-4473 3-30-94
Public Service Company Deferred Report
Compensation Plan, effective as
of January 1, 1993
10.45(a) Fourth Amendment to the Arizona 10.2 to September 1994 Form 1-4473 11-10-94
Public Service Company Deferred 10-Q Report
Compensation Plan effective as
of May 1, 1993
10.46(a) Pinnacle West Capital 10.7 to 1994 Form 10-K 1-4473 3-30-95
Corporation and Arizona Public Report
Service Company Directors'
Retirement Plan effective as of
January 1, 1995
10.47(a) Letter Agreement dated December 10.6 to 1994 Form 10-K 1-4473 3-30-95
21, 1993, between the Company Report
and William L. Stewart
10.48(a) Agreement for Utility 10.6 to 1988 Form 10-K 1-4473 3-8-89
Consulting Services, dated Report
March 1, 1985, between the
Company and Thomas G. Woods,
Jr., and Amendment No. 1
thereto, dated January 6, 1986
10.49(a) Letter Agreement, dated April 10.7 to 1988 Form 10-K 1-4473 3-8-89
3, 1978, between the Company Report
and O. Mark DeMichele,
regarding certain retirement
benefits granted to Mr.
DeMichele
10.50(a) Letter Agreement dated July 28, 10.1 to September 1995 10-Q 1-4473 11-14-95
1995, between the Company and Report
Jaron B. Norberg regarding
certain of Mr. Norberg's
retirement benefits
10.51(a)(c) Key Executive Employment and 10.3 to 1989 Form 10-K 1-4473 3-8-90
Severance Agreement between the Report
Company and certain executive
officers of the Company
10.52(a)(c) Revised form of Key Executive 10.5 to 1993 Form 10-K 1-4473 3-30-94
Employment and Severance Report
Agreement between the Company
and certain executive officers
of the Company
|
EXHIBIT NO. DESCRIPTION ORIGINALLY FILED AS EXHIBIT: FILE NO. DATE EFFECTIVE
----------- ----------- --------------------------- ------- --------------
10.53(a)(c) Second revised form of Key 10.9 to 1994 Form 10-K 1-4473 3-30-95
Executive Employment and Report
Severance Agreement between the
Company and certain executive
officers of the Company
10.54(a)(c) Key Executive Employment and 10.4 to 1989 Form 10-K 1-4473 3-8-90
Severance Agreement between the Report
Company and certain managers of
the Company
10.55(a)(c) Revised form of Key Executive 10.4 to 1993 Form 10-K 1-4473 3-30-94
Employment and Severance Report
Agreement between the Company
and certain key employees of
the Company
10.56(a)(c) Second revised form of Key 10.8 to 1994 Form 10-K 1-4473 3-30-95
Executive Employment and Report
Severance Agreement between the
Company and certain key
employees of the Company
10.57(a) Arizona Public Service Company 10.5 to 1989 Form 10-K 1-4473 3-8-90
Performance Review Severance Report
Pay Plan, effective January 1,
1990
10.58(a) Arizona Public Service Company 10.1 to September 30, 1993 1-4473 11-15-93
Severance Plan as adopted on Form 10-Q Report
June 22, 1993
10.59(a) Pinnacle West Capital 10.1 to 1992 Form 10-K 1-4473 3-30-93
Corporation Stock Option and Report
Incentive Plan
10.60(a) Pinnacle West Capital A to the Proxy Statement for 1-8962 4-16-94
Corporation 1994 Long-Term the Plan Report Pinnacle
Incentive Plan effective as of West 1994 Annual Meeting of
March 23, 1994 Shareholders
10.61(a) Pinnacle West Capital 10.7 to 1993 Form 10-K 1-4473 3-30-94
Corporation, Arizona Public Report
Service Company, SunCor
Development Company, and El
Dorado Investment Company
Supplemental Executive Benefit
Plan as amended and restated on
December 31, 1992 effective as
of January 1, 1992
10.62 Agreement No. 13904 (Option and 10.3 to 1991 Form 10-K 1-4473 3-19-92
Purchase of Effluent) with Report
Cities of Phoenix, Glendale,
Mesa, Scottsdale, Tempe, Town
of Youngtown, and Salt River
Project Agricultural
Improvement and Power District,
dated April 23, 1973
|
EXHIBIT NO. DESCRIPTION ORIGINALLY FILED AS EXHIBIT: FILE NO. DATE EFFECTIVE
----------- ----------- --------------------------- ------- --------------
10.63 Agreement for the Sale and 10.4 to 1991 Form 10-K 1-4473 3-19-92
Purchase of Wastewater Report
Effluent with City of Tolleson
and Salt River Agricultural
Improvement and Power
District, dated June 12, 1981,
including Amendment No. 1
dated as of November 12, 1981
and Amendment No. 2 dated as
of June 4, 1986
99.1 Collateral Trust Indenture 4.2 to 1992 Form 10-K Report 1-4473 3-30-93
among PVNGS II Funding Corp.,
Inc., the Company and Chemical
Bank, as Trustee
99.2 Supplemental Indenture to 4.3 to 1992 Form 10-K Report 1-4473 3-30-93
Collateral Trust Indenture
among PVNGS II Funding Corp.,
Inc., the Company and Chemical
Bank, as Trustee
99.3(b) Participation Agreement, dated 28.1 to September 1992 Form 1-4473 11-9-92
as of August 1, 1986, among 10-Q Report
PVNGS Funding Corp., Inc.,
Bank of America National
Trust and Savings Association,
State Street Bank and Trust
Company, as successor to
The First National Bank of
Boston, in its individual
capacity and as Owner Trustee,
Chemical Bank, in its individual
capacity and as Indenture Trustee,
the Company, and the Equity
Participant named therein
99.4(b) Amendment No. 1 dated as of 10.8 to September 1986 Form 1-4473 12-4-86
November 1, 1986, to Participation 10-Q Report by means of
Agreement, dated as of August 1, Amendment No. 1, on December
1986, among PVNGS Funding Corp., 3, 1986 Form 8
Inc., Bank of America National
Trust and Savings Association,
State Street Bank and Trust
Company, as successor to The First
National Bank of Boston,
in its individual capacity
and as Owner Trustee, Chemical Bank,
in its individual capacity and
as Indenture Trustee, the
Company, and the Equity
Participant named therein
|
EXHIBIT NO. DESCRIPTION ORIGINALLY FILED AS EXHIBIT: FILE NO. DATE EFFECTIVE
----------- ----------- --------------------------- ------- --------------
99.5(b) Amendment No. 2, dated as 28.4 to 1992 Form 10-K 1-4473 3-30-93
of March 17, 1993, to Report
Participation Agreement,
dated as of August 1, 1986,
among PVNGS Funding Corp.,
Inc., PVNGS II Funding Corp.,
Inc., State Street Bank
and Trust Company, as successor
to The First National Bank
of Boston, in its individual
capacity and as Owner
Trustee, Chemical Bank,
in its individual capacity and
as Indenture Trustee,
the Company, and the Equity
Participant named
therein
99.6(b) Trust Indenture, Mortgage, 4.5 to Form S-3 Registration 33-9480 10-24-86
Security Agreement and Statement
Assignment of
Facility Lease, dated as
of August 1, 1986, between
State Street Bank and Trust
Company, as successor to
The First National Bank of
Boston, as Owner Trustee, and
Chemical Bank, as Indenture
Trustee
99.7(b) Supplemental Indenture No. 1, 10.6 to September 1986 Form 1-4473 12-4-86
dated as of November 1, 1986 10-Q Report by means of
to Trust Indenture, Mortgage, Amendment No. 1 on
Security Agreement and December 3, 1986 Form 8
Assignment of Facility Lease,
dated as of August 1, 1986,
between State Street Bank and
Trust Company, as successor
to The First National Bank of
Boston, as Owner Trustee, and
Chemical Bank, as Indenture
Trustee
99.8(b) Supplemental Indenture No. 2 4.4 to 1992 Form 10-K Report 1-4473 3-30-93
to Trust Indenture, Mortgage,
Security Agreement and
Assignment of Facility Lease,
dated as of August 1, 1986,
between State Street Bank
and Trust Company, as successor
to The First National Bank of
Boston, as Owner Trustee,
and Chemical Bank, as Indenture
Trustee
99.9(b) Assignment, Assumption and 28.3 to Form S-3 33-9480 10-24-86
Further Agreement, dated as of Registration Statement
August 1, 1986, between the
Company and State Street Bank
and Trust Company, as successor
to The First National Bank of
Boston, as Owner Trustee
|
EXHIBIT NO. DESCRIPTION ORIGINALLY FILED AS EXHIBIT: FILE NO. DATE EFFECTIVE
----------- ----------- --------------------------- ------- --------------
99.10(b) Amendment No. 1, dated as of 10.10 to September 1986 Form 1-4473 12-4-86
November 1, 1986, to 10-Q Report by means of
Assignment, Assumption and Amendment No. 1 on December
Further Agreement, dated as of 3, 1986 Form 8
August 1, 1986, between the
Company and State Street Bank
and Trust Company, as successor
to The First National Bank of
Boston, as Owner Trustee
99.11(b) Amendment No. 2, dated as of 28.6 to 1992 Form 10-K 1-4473 3-30-93
March 17, 1993, to Assignment, Report
Assumption and Further
Agreement, dated as of August
1, 1986, between the
Company and State Street Bank
and Trust Company, as successor
to The First National Bank of
Boston, as Owner Trustee
99.12 Participation Agreement, dated 28.2 to September 1992 Form 1-4473 11-9-92
as of December 15, 1986, among 10-Q Report
PVNGS Funding Corp., Inc., State
Street Bank and Trust Company, as
successor to The First National
Bank of Boston, in its individual
capacity and as Owner Trustee,
Chemical Bank, in its individual
capacity and as Indenture Trustee
under a Trust Indenture, the
Company, and the Owner
Participant named therein
99.13 Amendment No. 1, dated as of 28.20 to Form S-3 1-4473 8-10-87
August 1, 1987, to Registration Statement No.
Participation Agreement, dated 33-9480 by means of a
as of December 15, 1986, among November 6, 1986 Form 8-K
PVNGS Funding Corp., Inc. as Report
Funding Corporation, State
Street Bank and Trust Company,
as successor to The First
National Bank of Boston, as
Owner Trustee, Chemical Bank,
as Indenture Trustee, the
Company, and the Owner
Participant named therein
|
EXHIBIT NO. DESCRIPTION ORIGINALLY FILED AS EXHIBIT: FILE NO. DATE EFFECTIVE
----------- ----------- --------------------------- ------- --------------
99.14 Amendment No. 2, dated as 28.5 to 1992 Form 10-K 1-4473 3-30-93
of March 17, 1993, to Report
Participation Agreement,
dated as of December 15, 1986,
among PVNGS Funding Corp.,
Inc., PVNGS II Funding Corp.,
Inc., State Street Bank and
Trust Company, as successor to
The First National Bank of Boston,
in its individual capacity and as
Owner Trustee, Chemical Bank, in
its individual capacity and as
Indenture Trustee, the Company,
and the Owner Participant named
therein
99.15 Trust Indenture, Mortgage, 10.2 to November 18, 1986 1-4473 1-20-87
Security Agreement and Assignment Form 8-K Report
of Facility Lease, dated as
of December 15, 1986, between
State Street Bank and Trust
Company, as successor to The
First National Bank of Boston,
as Owner Trustee, and
Chemical Bank, as Indenture
Trustee
99.16 Supplemental Indenture No. 1, 4.13 to Form S-3 1-4473 8-24-87
dated as of August 1, 1987, to Registration Statement No.
Trust Indenture, Mortgage, 33-9480 by means of August
Security Agreement and 1, 1987 Form 8-K Report
Assignment of Facility Lease,
dated as of December 15, 1986,
between State Street Bank and
Trust Company, as successor to
The First National Bank of
Boston, as Owner Trustee, and
Chemical Bank, as Indenture
Trustee
99.17 Supplemental Indenture No. 2 4.5 to 1992 Form 10-K Report 1-4473 3-30-93
to Trust Indenture, Mortgage,
Security Agreement and
Assignment of Facility
Lease, dated as of December
15, 1986, between State Street
Bank and Trust Company, as
successor to The First National
Bank of Boston, as Owner Trustee,
and Chemical Bank, as Indenture
Trustee
99.18 Assignment, Assumption and 10.5 to November 18, 1986 1-4473 1-20-87
Further Agreement, dated as of Form 8-K Report
December 15, 1986, between the
Company and State Street Bank
and Trust Company, as
successor to The First
National Bank of Boston, as
Owner Trustee
|
EXHIBIT NO. DESCRIPTION ORIGINALLY FILED AS EXHIBIT: FILE NO. DATE EFFECTIVE
----------- ----------- --------------------------- ------- --------------
99.19 Amendment No. 1, dated as of 28.7 to 1992 Form 10-K 1-4473 3-30-93
March 17, 1993, to Report
Assignment, Assumption and
Further Agreement, dated as
of December 15, 1986, between
the Company and State Street
Bank and Trust Company, as
successor to The First
National Bank of Boston, as
Owner Trustee
99.20(b) Indemnity Agreement dated as 28.3 to 1992 Form 10-K 1-4473 3-30-93
of March 17, 1993 by the Report
Company
99.21 Extension Letter, dated as of 28.20 to Form S-3 1-4473 8-10-87
August 13, 1987, from the Registration Statement No.
signatories of the 33-9480 by means of a
Participation Agreement to November 6, 1986 Form 8-K
Chemical Bank Report
99.22 Pledge Agreement dated as of 28.1 to January 21, 1990 1-4473 2-15-90
January 31, 1990, between Form 8-K Report
Pinnacle West Capital Report
Corporation as Pledgor and
Citibank, N.A. as Collateral
Agent
99.23 Arizona Corporation 28.1 to 1991 Form 10-K 1-4473 3-19-92
Commission Order dated Report
December 6, 1991
99.24 Arizona Corporation 10.1 to June Form 10-Q 1-4473 8-12-94
Commission Order dated Report
June 1, 1994
99.25 Rate Reduction Agreement 10.1 to December 4, 1995 1-4473 12-14-95
dated December 4, 1995 Form 8-K Report
between the Company and the
ACC Staff
- ----------
(a) Management contract or compensatory plan or arrangement required to be
filed as an exhibit pursuant to Item 14(c) of Form 10-K.
(b) An additional document, substantially identical in all material respects
to this Exhibit, has been entered into, relating to an additional Equity
Participant. Although such additional document may differ in other respects
(such as dollar amounts, percentages, tax indemnity matters, and dates of
execution), there are no material details in which such document differs from
this Exhibit.
(c) Additional agreements, substantially identical in all material respects to
this Exhibit have been entered into with additional officers and key employees
of the Company. Although such additional documents may differ in other respects
(such as dollar amounts and dates of execution), there are no material details
in which such agreements differ from this Exhibit.
|
REPORTS ON FORM 8-K
During the quarter ended December 31, 1995, and the period ended March 29, 1996, the Company filed the following Reports on Form 8-K:
Report filed October 24, 1995 regarding the resignation of Bank of America National Trust and Savings Association as trustee under the Company's Mortgage and Deed of Trust dated as of July 1, 1946, and the appointment of The Bank of New York as the successor trustee.
Report filed December 14, 1995 regarding the Company's Rate Reduction Agreement with the ACC Staff dated December 4, 1995.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ARIZONA PUBLIC SERVICE COMPANY
(Registrant)
Date: March 29, 1996 O. MARK DEMICHELE
--------------------------------------
(O. Mark DeMichele, President
and Chief Executive Officer)
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ----------------------------------------------- -------------------------------- ------------------
O. MARK DEMICHELE
----------------------------------------------- Principal Executive Officer
(O. Mark DeMichele, President) and Director March 29, 1996
WILLIAM J. POST
-----------------------------------------------
(William J. Post, Senior Vice President Principal Accounting Officer
and Chief Operating Officer) and Director March 29, 1996
JARON B. NORBERG
-----------------------------------------------
(Jaron B. Norberg, Executive Vice President Principal Financial Officer
and Chief Financial Officer) and Director March 29, 1996
KENNETH M. CARR
-----------------------------------------------
(Kenneth M. Carr) Director March 29, 1996
MARTHA O. HESSE
-----------------------------------------------
(Martha O. Hesse) Director March 29, 1996
MARIANNE MOODY JENNINGS
-----------------------------------------------
(Marianne Moody Jennings) Director March 29, 1996
ROBERT G. MATLOCK
-----------------------------------------------
(Robert G. Matlock) Director March 29, 1996
JOHN R. NORTON III
-----------------------------------------------
(John R. Norton III) Director March 29, 1996
DONALD M. RILEY
-----------------------------------------------
(Donald M. Riley) Director March 29, 1996
|
SIGNATURE TITLE DATE
- ----------------------------------------------- -------------------------------- ------------------
HENRY B. SARGENT
-----------------------------------------------
(Henry B. Sargent) Director March 29, 1996
WILMA W. SCHWADA
-----------------------------------------------
(Wilma W. Schwada) Director March 29, 1996
VERNE D. SEIDEL
-----------------------------------------------
(Verne D. Seidel) Director March 29, 1996
RICHARD SNELL
-----------------------------------------------
(Richard Snell) Director March 29, 1996
DIANNE C. WALKER
-----------------------------------------------
(Dianne C. Walker) Director March 29, 1996
BEN F. WILLIAMS, JR.
-----------------------------------------------
(Ben F. Williams, Jr.) Director March 29, 1996
THOMAS G. WOODS, JR.
-----------------------------------------------
(Thomas G. Woods, Jr.) Director March 29, 1996
|
APPENDIX
In accordance with Item 304 of Regulation S-T of the Securities Exchange Act of 1934, the Company's Service Territory map contained in this Form 10-K is a map of the State of Arizona showing the Company's service area, the location of its major power plants and principal transmission lines, and the location of transmission lines operated by the Company for others. The major power plants shown on such map are the Navajo Generating Station located in Coconino County, Arizona; the Four Corners Power Plant located near Farmington, New Mexico; the Cholla Power Plant, located in Navajo County, Arizona; the Yucca Power Plant, located near Yuma, Arizona; and the Palo Verde Nuclear Generating Station, located about 55 miles west of Phoenix, Arizona (each of which plants is reflected on such map as being jointly owned with other utilities), as well as the Ocotillo Power Plant and West Phoenix Power Plant, each located near Phoenix, Arizona, and the Saguaro Power Plant, located near Tucson, Arizona. The Company's major transmission lines shown on such map are reflected as running between the power plants named above and certain major cities in the State of Arizona. The transmission lines operated for others shown on such map are reflected as running from the Four Corners Plant through a portion of northern Arizona to the California border.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS TO
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
ARIZONA PUBLIC SERVICE COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
----------- -----------
3.1 -- Bylaws, amended as of February 20, 1996
10.1(a) -- 1996 Senior Management Variable Pay Plan
10.2(a) -- 1996 Officers Variable Pay Plan
10.3 -- Amendment No. 1 dated April 5, 1995 to the Long-Term Power Transactions
Agreement and Asset Purchase and Power Exchange Agreement between PacifiCorp
and the Company
10.4 -- Restated Transmission Agreement between PacifiCorp and the Company dated April
5, 1995
10.5 -- Contract among PacifiCorp, the Company and United States Department of Energy
Western Area Power Administration, Salt Lake Area Integrated Projects for Firm
Transmission Service dated May 5, 1995
10.6 -- Reciprocal Transmission Service Agreement between the Company and PacifiCorp
dated as of March 2, 1994
10.7(a) -- Letter Agreement dated as of January 1, 1996 between the Company and Kenneth M.
Carr for consulting services
10.8(a) -- Letter Agreement dated as of January 1, 1996 between the
Company and Robert G. Matlock & Associates, Inc. for consulting services
10.9(a) -- First Amendment to the Arizona Public Service Company Severance Plan as adopted
on August 19, 1994
10.10(a) -- Pinnacle West Capital Corporation, Arizona Public Service Company, SunCor
Development Company and El Dorado Investment Company Deferred Compensation Plan
as amended and restated effective January 1, 1996
10.11(a) -- Arizona Public Service Company Supplemental Excess Benefit Retirement Plan as
amended and restated on December 20, 1995
23.1 -- Consent of Deloitte & Touche LLP
27.1 -- Financial Data Schedule
- ----------
(a) Management contract or compensatory plan or arrangement required to be
filed as an exhibit pursuant to Item 14(c) of Form 10-K.
|
For a description of the Exhibits incorporated in this filing by reference, see Part IV, Item 14.
Exhibit 3.1
BYLAWS
OF
ARIZONA PUBLIC SERVICE COMPANY
(Amended as of February 20, 1996)
1.01. References. Any reference herein made to law will be deemed to refer to the law of the State of Arizona, including the applicable provision or provisions of Chapters 1-17 of Title 10, Arizona Revised Statues (or its successor), as at any given time in effect. Any reference herein made to the Articles will be deemed to refer to the applicable provision or provisions of the Articles of Incorporation of the Company, and all amendments thereto, as at any given time on file with the Arizona Corporation Commission (this reference to that Commission being intended to include any successor to the incorporating and related functions being performed by that Commission at the date of the initial adoption of these Bylaws). Parenthetical references to section or article numbers in the case of the law are to the indicated sections of Title 10, Arizona Revised Statues, and in the case of the Articles are to the indicated sections and articles thereof, as both the law and the Articles are in effect at the date of the initial adoption of these Bylaws; such references are for purposes of convenience only and are not to be considered as part of, or used in construing, these Bylaws.
1.02. Seniority. Except as indicated in Part X of these Bylaws, the law and the Articles (in that order of precedence) will in all respects be considered senior and superior to these Bylaws, with any inconsistency to be resolved in favor of the law and the Articles (in that order of precedences), and with these Bylaws to be deemed automatically amended from time to time to eliminate any such inconsistency which may then exist.
1.03. Shareholders of Record. Except as otherwise required by law and subject to any procedure established by the Company pursuant to Arizona Revised Statutes Section 10-723 (or any comparable successor provision), the word "shareholder" as used herein shall mean one who is a holder record of shares of the Company.
II. SHAREHOLDERS MEETINGS
2.01. Annual Meetings. An annual meeting of the shareholders will be held within nine months after the end of the Company's fiscal year, at a time of day and place as determined by the Board of Directors (or, in the absence of action by the Board, as setforth in the notice given, or waiver signed, with respect to such meetings as contemplated in Section 2.03 below). If any annual meeting is for any reason not held within the period determined as aforesaid, a special meeting may thereafter be called and held in lieu thereof pursuant to the provisions of Section 2.02 below, and the same proceedings (including the election of directors) may be conducted thereat as at a regular meeting. Any director elected at any annual meeting, or special meeting in lieu of an annual meeting, will continue in office until the election of his or her successor, subject to his or her earlier resignation pursuant to Section 6.01 below or his or her removal pursuant to Section 3.13 below.
2.02. Special Meetings.
(a) Special meetings of the shareholders may be held whenever and wherever called for by the Chairman of the Board, the President, a majority of the Board of Directors, or upon the delivery of proper written request of the holders of not less than forty percent (40%) of all shares outstanding and entitled to vote at any such meeting.
(b) For purposes of this Section, proper written request for the call of a special meeting shall be made by a written request (i) specifying the purposes for any special meeting requested and providing the information required by Section 2.05 hereof, (ii) delivered either in person or by registered or certified mail, return receipt requested, (iii) to the Chairman of the Board, the President, or such other person as may be specifically authorized by law to receive such request. Within thirty (30) days after receipt of proper written request, a special meeting shall be called and notice given in the manner required by these Bylaws, and the meeting shall be held at a time and place selected by the Board of Directors, but not later than ninety (90) days after receipt of such proper written request. The shareholder(s) requesting a special meeting of shareholders must pay to the Company the Company's reasonably estimated cost of preparing and mailing a notice of a meeting of shareholders before such notice is prepared and mailed.
2.03. Notice. Notice of any meeting of the shareholders will be given as provided by law to each shareholder of record entitled to vote at such meeting and, if required by law, to each other shareholder of the Company. Any such notice may be waived as provided by law .
2.04. Right to Vote. For each meeting of the shareholders, the Board of Directors will fix in advance a record date as contemplated by law, and the shares of stock and the shareholders "entitled to vote" (as that or any similar term is herein used) at any meeting of the shareholders will be determined as of the applicable record date. The Secretary (or in his or her absence an Assistant Secretary) will see to the making and production of any record of shareholders entitled to vote or otherwise entitled to notice of shareholders' meetings, in either case which is required by law. Any voting entitlement may be exercised through proxy, or in such other manner as specifically provided by law, in accordance with the applicable law. In the event of contest, the burden of proving the validity of any undated or irrevocable proxy will rest with the person seeking to exercise the same. A telegram or cablegram appearing to have been transmitted by a shareholder (or by his duly authorized attorney-in-fact) may be accepted as a sufficiently written and executed proxy.
2.05. Manner of Bringing Business Before Meetings.
(a) At any annual or special meeting of shareholders only such
business shall be conducted as shall have been properly brought before the
meeting. In order to be properly brought before the meeting, such business must
be a proper subject for shareholder action under applicable law and must have
been (i) specified in the written notice of the meeting (or any supplement
thereto) given to shareholders who were shareholders on the record date for such
meeting by or at the direction of the Board of Directors or otherwise in
accordance with law or these Bylaws, (ii) brought before the meeting at the
direction of the Board of Directors or the Chairman of the meeting, selected as
provided in Section 2.09 hereof, or (iii) specified in a written notice given by
or on behalf of a shareholder on the record date for such meeting entitled to
vote thereat or a duly authorized proxy for such shareholder, in accordance with
Section 2.05(b) and (c) hereof.
(b) A shareholder notice referred to in Section 2.05(a)(iii) hereof must be delivered personally to, or mailed to and received at, the principal executive office of the Company, addressed to the attention of the Secretary, not more than ten (10) days after the date of the initial notice referred to in Section 2.05(a)(i) hereof, in the case of business to be brought before a special meeting of shareholders, and not less than thirty (30) days prior to the anniversary date of the initial notice referred to in Section 2.05(a)(i) hereof with respect to the previous year's annual meeting, in the case of business to be brought before an annual meeting of shareholders.
(c) A shareholder notice referred to in Section 2.05(a)(iii) hereof shall set forth:
(i) a full description of each item of business proposed to be brought before the meeting and the reasons for conducting such business at such meeting;
(ii) the name and address of the person proposing to bring such business before the meeting;
(iii) the class and number of shares held of record, held
beneficially, and represented by proxy by such person as of the
record date for the for the meeting, if such date has been made
publicly available, or as of a date not more than thirty (30)
days prior to the delivery of the initial notice referred to in
Section 2.05(a)(i) hereof, if the record date has not been made
publicly available;
(iv) if any item of business involves a nomination for director, all information regarding each such nominee that would be required to be set forth in a definitive proxy statement filed with the Securities and Exchange Commission pursuant to Section 14 of the Securities Exchange Act of 1934, as amended, or any successor thereto, and the written consent of each such nominee to serve if elected;
(v) any material interest of such shareholder in the specified business;
(vi) whether or not such shareholder is a member of any partnership, limited partnership, syndicate, or other group pursuant to any agreement, arrangement, relationship, understanding, or otherwise, whether or not in writing, organized in whole or in part for the purpose of acquiring, owning, or voting shares of the Company; and
(vii) all other information that would be required to be filed with the Securities and Exchange Commission, if, with respect to the business proposed to be brought before the meeting, the person proposing such business was a participant in a solicitation subject to Section 14 of the Securities Exchange Act of 1934, as amended, or any successor thereto.
No business shall be brought before any meeting of the shareholders of the Company otherwise than as provided in this Section 2.05.
(d) Notwithstanding the provisions of this Section 2.05, the Board of Directors shall not be obligated to include information as to any shareholder nominee for director or any other shareholder proposal in any proxy statements or other communication sent to shareholders.
(e) The Chairman of the meeting may, if the facts warrant, determine that any proposed item of business was not brought before the meeting in accordance with the provisions of this Section 2.05, and if he should so determine, he shall so declare to the meeting and the defective item of business shall be disregarded.
2.06. Right to Attend. Except only to the extent of persons designated by the Board of Directors or the Chairman of the meeting to assist in the conduct of the meeting (as referred to in Sections 2.08 and 2.09 below) and except as otherwise permitted by the Board or such Chairman, the persons entitled to attend any meeting of shareholders may be confined to (i) shareholders entitled to vote thereat and other shareholders entitled to notice of the meeting and (ii) the persons upon whom proxies valid for purposes of the meeting have been conferred or their duly appointed substitutes (if the related proxies confer a power of substitution); provided, however, that the Board of Directors or the Chairman of the meeting may establish rules limiting the number of persons referred to in clause (ii) as being entitled to attend on behalf of any shareholder so as to preclude such an excessively large representation of such shareholder at the meeting as, in the judgment of the Board or such Chairman, would be unfair to other shareholders represented at the meeting or be unduly disruptive of the orderly conduct of business at such meeting (whether such representation would result from fragmentation of the aggregate number of shares held by such shareholder for the purpose of conferring proxies, from the naming of an excessively large proxy delegation by such shareholder or from employment of any other device). A person otherwise entitled to attend any such meeting will cease to be so entitled if, in the judgment of the Chairman of the meeting, such person engages thereat in disorderly conduct impeding the proper conduct of the meeting in the interests of all shareholders as a group.
2.07. Quorum. Matters related to a quorum of the shareholders at any meeting thereof will be determined in accordance with applicable law and the Articles (ss.6 Art. Third), if applicable.
2.08. Election inspectors. The Board of Directors, in advance of any shareholders meeting may appoint an election inspector or inspectors to act at such meeting (and any adjournment thereof). If an election inspector or inspectors are not so appointed, the Chairman of the meeting may or, upon request of any person entitled to vote at the meeting will, make such appointment. If any person appointed as an inspector fails to appear or to act, a substitute may be appointed by the Chairman of the meeting. If appointed, the election inspector or inspectors (acting through a majority of them if there be more than one) will determine the number of shares outstanding, the authenticity, validity and effect of proxies, the credentials of persons purporting to be shareholders or persons named or referred to in proxies, and the number of shares represented at the meeting in person and by proxy; they will receive and count votes, ballots and consents and announce the results thereof; they will hear and determine all challenges and questions pertaining to proxies and voting; and, in general, they will perform such acts as may be proper to conduct elections and voting with complete fairness to all shareholders. No such election inspector need be a shareholder of the Company.
2.09. Organization and Conduct of Meetings. Each shareholders meeting will be called to order and thereafter chaired by the Chairman of the Board; or if the Chairman of the Board is absent or so requests, then by the President; or if both the Chairman of the Board and the President are unavailable, then by such other officer of the Company or such shareholder as may be appointed by the Board of Directors. The Secretary (or in his or her absence an Assistant Secretary) of the Company will act as secretary of each shareholders meeting; if neither the Secretary nor an Assistant Secretary is in attendance, the Chairman of the meeting may appoint any person (whether a shareholder or not) to act as secretary thereat. After calling a meeting to order, the Chairman thereof may require the registration of all shareholders intending to vote in person, and the filing of all proxies with the election inspector or inspectors, if one or more have been appointed (or, if not, with the secretary of the meeting). After the announced time for such filing of proxies has ended, no further proxies or changes, substitutions or revocations of proxies will be accepted. If directors are to be elected, a tabulation of the proxies so filed will, if any person entitled to vote in such election so requests, be announced at the meeting (or adjournment thereof) prior to the closing of the election polls. Absent a showing of bad faith on his or her part, the Chairman of a meeting will, among other things, have absolute authority to determine the order of business to be conducted at such meeting and to establish rules for, and appoint personnel to assist in, preserving the orderly conduct of the business of the meeting (including any informal, or question and answer, portions thereof.) Any informational or other informal session of shareholders conducted under the auspices of the Company after the conclusion of or otherwise in conjunction with any formal business meeting of the shareholders will be chaired by the same person who chairs the formal meeting, and the foregoing authority on his or her part will extend to the conduct of such informal session.
2.10. Voting The number of shares voted on any matter submitted to the shareholders which is required to constitute their action thereon or approval thereof will be determined in accordance with applicable law and the Articles (Art. Third), and these Bylaws, if applicable. No ballot or change of vote will be accepted after the polls have been declared closed following the ending of the announced time for voting.
2.11. Shareholder Approval or Ratification. The Board of Directors may submit any contract or act for approval or ratification at any duly constituted meeting of the shareholders, the notice of which either includes mention of the proposed submittal or is waived as contemplated in Section 2.03 above. Except as otherwise required by law (e.g., Arizona Revised Statutes Section 10-863), any contract or act so submitted is approved or ratified by a majority of the votes cast thereon at such meeting, the same will be valid and as binding upon the Company and all of its shareholders as it would be if approved and ratified by each and every shareholder of the Company.
2.12. Informalities and Irregularities. All informalities or irregularities in any call or notice of a meeting, or in the areas of credentials, proxies, quorums, voting and similar matters, will be deemed waived if no objection is made at the meeting.
III. BOARD OF DIRECTORS
3.01. Membership. The Board of Directors will have the power to increase or decrease its size within the limits fixed in the Articles (Art. Fifth). Any vacancy occurring in the Board, whether by reason of death, resignation, disqualification or otherwise, may be filled by the directors as contemplated by law and the Articles (Art. Fifth). Any such increase in the size of the Board, and the filling of any vacancy created thereby, will require action by a majority of the whole membership of the Board as comprised immediately before such increase.
3.02. Qualifications. In order to qualify as a director, a person must
be the owner of one or more shares of the capital stock of the Company or of any
parent corporation thereof at the time of assuming office (except that it shall
not be a requirement that any member of the initial Board of Directors be a
shareholder of the Company or of any parent corporation thereof, and except as
may otherwise be provided in these Bylaws or in the Articles) and for so long
thereafter as such person remains in office. A person will cease to qualify as a
director if he or she (i) is in good faith determined by a majority of the other
directors then in office to be physically or mentally incapable of competent
performance as a director for a period, starting with inception of the
incapacity, that has extended or is likely to extend for more than six months or
(ii) has failed to attend six successive regular meetings of the Board (as
determined in accordance with Section 3.03 below) unless and to the extent such
failure is waived by a majority of the other directors then in office; however,
disqualification pursuant to clause (i) or (ii) of this sentence will not
preclude the subsequent election or appointment of such person as a director by
the shareholders or the Board if a majority of the directors in office
immediately prior to the submission of such person for election or appointment
shall determine that his or her prior incapacity or principal reason for prior
non-attendance no longer exists. A person will not qualify for election or
appointment as a director, whether initially or on re-election and whether by
the shareholders at their annual meeting or by the Board or Directors as
contemplated in Section 3.01 above, if such person's 70th birthday occurs on or
has occurred before the date of such election, appointment, or re-election. A
person who has been a full-time employee of the Company within twelve months
prior to the date of any election will not qualify for election as a director on
that date unless he then remains a full-time employee of the Company or unless
the Board of Directors specifically authorizes the election of such person (but
it is not intended that any such authorization will extend a person's service on
the Board beyond the age limitation set out in the preceding sentence). A person
who has qualified by age or employment status for his or her most recent
election as a director may serve throughout the term for which such person was
elected, notwithstanding the occurrence of his or her 70th birthday or cessation
of full-time employment by the Company between the date of such election and the
end of such term, subject however, to his or her otherwise remaining qualified
for such office.
3.03. Regular Meetings. A regular annual meeting of the directors is to be held as soon as practicable after the adjournment of each annual shareholders meeting, either at the place of the shareholders meeting or at such other place as the directors elect at the shareholders meeting may have been informed of at or before the time of their election. Regular meetings, other than the annual ones, may be held at regular intervals at such times and places as the Board of Directors may provide.
3.04. Special Meetings. Special meetings of the Board of Directors may be held whenever and wherever called for by the Chairman of the Board, the President or the number of directors which would be required to constitute a quorum.
3.05. Notice. No notice need be given of regular meetings of the Board
of Directors. Notice of the time and place (but not necessarily the purpose or
all of the purposes) of any special meeting will be given to each director in
person or by telephone, or via mail, telegram or facsimile transmission
addressed in the manner then appearing on the Company's records. Notice to any
director of any such special meeting will be deemed given sufficiently in
advance when (i) if given by mail, the same is deposited in the United States
mail at least four days before the meeting date, with postage thereon prepaid,
(ii) if given by telegram, the same is delivered to the telegraph office for
fast transmittal at least 48 hours prior to the convening of the meeting, (iii)
if given by facsimile transmission, the same is received by the director or an
adult member of his or her staff or household, at least 24 hours prior to the
convening of the meeting, or (iv) if personally delivered or given by telephone,
the same is handed, or the substance thereof is communicated over the telephone,
to the director or to an adult member of his or her office staff or household,
at least 24 hours prior to the convening of the meeting. Any such notice may be
waived as provided by law. No call or notice of a meeting of directors will be
necessary if each of them waives the same in writing or by attendance. Any
meeting, once properly called and noticed (or as to which call and notice have
been waived as aforesaid) and at which a quorum is formed, may be adjourned to
another time and place by a majority of those in attendance.
3.06. Quorum; Voting A quorum for the transaction of business at any meeting or adjourned meeting of the directors will consist of a majority of those then in office. Any matter submitted to a meeting of the directors will be resolved by a majority of the votes cast thereon, except as otherwise required by these Bylaws (Sections 3.01 and 3.02 above and Section 3.07 below), by law and any other applicable section) or by the Articles. However, in case of an equality of votes, the Chairman of the meeting will have a second or deciding vote. Where action by a majority of the whole membership is required, such requirement will be deemed to relate to a majority of the directors in office at the time the action is taken. In computing any such majority, whether for purposes of determining the presence of a quorum or the adequacy of the vote on any proposed action, any unfilled vacancies at the time existing in the membership of the Board will be excluded from the computation.
3.07. Executive Committee. The Board of Directors may, by resolution adopted by a majority of the whole Board, name three or more of its members as an Executive Committee who will include the Chairman of the Board and, if he or she is a director, the President of the Company as ex-officio members. The Chairman and, to the extent the naming of one is considered appropriate by the Board, the Vice Chairman of the Executive Committee will from time to time be designated by the Board from the membership of the Executive Committee. Such Executive Committee will have and may exercise the powers of the Board of Directors in the management of the business and affairs of the Company while the Board is not in session, except only as precluded by law or where action other than by a majority of the votes cast is required by these Bylaws, or the law (all as referred to in Section 3.06 above), and subject to such limitations as may be included in any applicable resolution passed by a majority of the whole membership of the Board. A majority of those named to the Executive Committee will constitute a quorum.
3.08. Other Committees. Other standing or ad hoc committees (of such respective sizes as may be considered appropriate by the Chairman of the Board), their respective chairmen and (to the extent that the naming thereof is considered appropriate by the Chairman of the Board) their respective vice chairmen, may from time to time be appointed by the Chairman of the Board, subject to the Board's approval or ratification, from the membership of the Board to perform such functions as the Board may see fit. The committees so to be appointed will include one or more to perform an audit review function. The Chairman of the Board and the President of the Company may be ex-officio members of all standing committees except any committee appointed to perform the audit review function. Subject to the Board's approval or ratification, the Chairman of the Board may at any time fill vacancies in, remove persons from, consolidate, subdivide or dissolve any such standing or ad hoc committee.
3.09. Committee Functioning. Notice requirements (and related waiver provisions) for meetings of the Executive Committee and other committees of the Board will be the same as those set forth in Section 3.05 above for meetings of the Board of Directors. Except as provided in the next two succeeding sentences, a majority of those named to the Executive Committee or any other committee of the Board will constitute a quorum at any meeting thereof (with the effect of departure of committee members from a meeting and the computation of a majority of committee members to be in accordance with the applicable policies of Section 3.06 above), and any matter submitted to a meeting of any such committee will be resolved by a majority of the votes cast thereon. No distinction will be made among ex-officio or other members of any such committee for quorum, voting or other purposes, except that the membership of any committee (including the Executive Committee), in performing any function vested in it as herein contemplated, may be deemed to exclude any officer or employee of the Company, in either case, or other person, having a direct or indirect personal interest in any proposed exercise of such function, whose exclusion for that purpose is deemed appropriate by a majority of the other members of such committee proposing to perform such function. All committees are to keep regular minutes of the transactions of their meetings.
3.10. Action by Telephone or Consent. Any meeting of the Board or any committee thereof may be held by conference telephone or similar communications equipment as permitted by law in which case any required notice of such meeting may generally describe the arrangements (rather than the place) for the holding thereof, and all other provisions herein contained or referred to will apply to such meeting as though it were physically held at a single place. Action may also be taken by the Board or any committee thereof without a meeting if the members thereof consent in writing thereto as contemplated by law.
3.11. Presumption of Assent. A director of the Company who is present at a meeting of the Board of Directors or of any committee when corporate action is taken is deemed to have assented to the action taken unless either: (i) the director objects at the beginning of the meeting or promptly on the director's arrival to holding it or transacting business at the meeting; (ii) the director's dissent or abstention from the action taken is entered in the minutes of the meeting; or (iii) the director delivers written notice of the director's dissent or abstention to the presiding officer of the meeting before its adjournment or to the Company before 5:00 P.M. on the next business day after the meeting. The right of dissent or abstention is not available to a director who votes in favor of the action taken.
3.12. Compensation. By resolution of the Board, the directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors or of any committee, and may be paid a fixed sum for attendance at each such meeting and/or a stated fee as a director or committee member. No such payment will preclude any director from serving the Company in any other capacity and receiving compensation therefor.
3.13. Removal. Any director or the entire Board of Directors may be removed with or without cause, only at a special meeting of shareholders called for that purpose, by the affirmative vote of sixty-six and two-thirds percent (66-2/3%) of the issued and outstanding shares of stock then entitled to vote on the election of directors, except that if less than the entire Board of Directors is to be removed, no one of the directors may be removed if the votes cast against the director's removal would be sufficient to elect the director if then cumulatively voted at an election for the class of directors of which the director is a part.
3.14. Directors Emeriti. With the exception of each person designated as a director emeritus of the Company prior to December 17, 1970, no director or former director of the Company or any other person is to be appointed as a director emeritus or honorary director or be given any similar title. The one position of director emeritus remaining in effect at the date of the initial adoption of these Bylaws will continue for one-year terms, subject to confirmation at each regular annual meeting of the directors; so long as he remains in such position, that director emeritus will be accorded those privileges and rights, and have those duties and responsibilities, which are set out in the applicable portion of the minutes of the meeting of the Board of Directors held on December 17, 1970.
IV. OFFICERS - GENERAL
4.01. Elections and Appointments. The directors will elect or appoint the officers of the Company contemplated in Part V below such election or appointment will regularly take place at the annual meeting of the directors, but elections of officers may be held at any other meeting of the Board. A person elected or appointed to any office will continue to hold that office until the election or appointment of his or her successor, subject to action earlier taken pursuant to Section 4.04 or 6.01 below. Any person may hold more than one office.
4.02. Additional Appointments. In addition to the offices contemplated in Part V below, the Board of Directors may create other corporate positions, and appoint persons thereto, with such authority to perform such duties as may be prescribed from time to time by the Board of Directors, by the chief executive officer or by the superior officer of any person so appointed. Notwithstanding such additional appointments, only those persons whose offices are described in Part V are to be considered an officer of the Company unless the resolution or other Board action appointing such person expressly states that such person is to be considered an officer of the Company. Each of such persons (in the order designated by the Board, the chief executive officer or the superior officer of such person) will be vested with all of the powers and charged with all of the duties of his or her superior officer in the event of such superior officer's absence or disability.
4.03. Bonds and Other Requirements. The Board of Directors may require any officer or other appointee to give bond to the Company (with sufficient surety, and conditioned upon the faithful performance of the duties of his or her office or position) and to comply with any other conditions which may from time to time be required of him or her by the Board.
4.04. Removal or Delegation. Provided that a majority of the whole membership thereof concurs therein, the Board of Directors may remove any officer of the Company as provided by law and declare his or her office or offices vacant or abolished or, in the case of the absence or disability of any officer or for any other reason considered sufficient, may temporarily delegate his or her powers and duties to any other officer or to any director. Similar action may be taken by the Board of Directors in regard to appointees designated pursuant to Section 4.02 above.
4.05. Salaries. Salary levels and bonus arrangements pertaining to the officers of the Company will from time to time be set or approved by the Board of Directors. Salary levels and bonus arrangements pertaining to appointees contemplated in Section 4.02 above, unless so set or approved by the Board of Directors, will be left to the discretion of the chief executive officer, which discretion may be delegated by the chief executive officer to any one or more other officers. Any salary or bonus so set or approved may be paid on such current or deferred basis as may be designated by the Board or the officer who shall have set or approved the same. No officer or appointee will be prevented from receiving a salary or fee by reason of the fact that he or she is also a director of the Company.
V. SPECIFIC OFFICERS, FUNCTIONS AND POWERS
5.01. Chairman of the Board. The Chairman of the Board of Directors will serve as a general executive officer, but not necessarily as a full-time employee, of the Company. He or she will preside at all meetings of the directors and be vested with such other powers and duties as the Board may from time to time designate.
5.02. Chief Executive Officer. Subject to the control of the Board of
Directors exercised as hereinafter provided, the Chief Executive Officer of the
Company will supervise its business and affairs and the performance of their
respective duties by all other officers, by appointees designated pursuant to
Section 4.02 above, and by such additional appointees to such additional
positions corporate, divisional or otherwise) as the Chief Executive Officer may
designate, with authority on his or her part to delegate the foregoing duty of
supervision to such extent and to such person or persons as may be determined by
the Chief Executive Officer. except as otherwise indicated from time to time by
resolution of the Board of Directors, its management of the business and affairs
of the Company will be implemented through the office of the Chief Executive
Officer.
5.03. President and Vice Presidents. Unless specified to the contrary by
resolution of the Board of Directors, the President will be the Chief Executive
Officer of the Company. In addition to the supervisory functions above set forth
on the part of the Chief Executive Officer (or in lieu thereof if a contrary
specification is made by the Board relative to the Chief Executive Officer), the
President will be vested with such powers and duties as the Board may from time
to time designate. Vice Presidents may be elected by the Board of Directors to
perform such duties as may be designated by the Board or be assigned or
delegated to them by their respective superior officers. The Board may identify
(i) one or more Vice Presidents as "Executive" or "Senior" Vice Presidents, (ii)
the President or any Vice President as "General Manager" of the Company and
(iii) any Vice President, the Treasurer, the Controller or the General Auditor
as having one or more of the capacities referred to in Section 5.05 below, and
the title of any Vice President, the Treasurer, the Controller or the General
Auditor may include words indicative of his or her particular function or area
of responsibility and authority. Vice Presidents will succeed to the
responsibilities and authority of the President, in the event of his or her
absence or disability, in the order consistent with their respective titles or
regular duties or as specifically designated by the Board of Directors or,
pending action by the Board of Directors, by the Chairman of the Board.
5.04. Treasurer. Controller, General Auditor and Secretary. The Treasurer, Controller, General Auditor and Secretary each will perform all such duties normally associated with his or her office including, in the case of the Secretary, the giving of notice and the preparation and retention of minutes of corporate proceedings and the custody of corporate records and the seal of the Company) as are not assigned to a Vice President of the Company, along with such other duties as may be designated by the Board or be assigned or delegated to them by their respective superior officers. The Board may appoint one or more Assistant Treasurers, Assistant Controllers, Assistant General Auditors and Assistant Secretaries, each of whom (in the order designated by the Board or their respective superior officers) will be vested with all of the powers and charged with all of the duties of the Treasurer, Controller, General Auditor or Secretary (as the case may be) in the event of his or her absence or disability.
5.06. Specific Powers. Except as may otherwise be specifically provided in a resolution of the Board of Directors, any of the officers referred to in this Part V will be a proper officer to authenticate records of the Company and to sign on behalf of the Company any deed, bill of sale, assignment, option, mortgage, pledge, note, bond, debenture, evidence of indebtedness, application, consent (to service of process or otherwise), agreement, indenture or other instrument of importance to the Company. Any such officer may represent the Company at any meeting of the shareholders or members of any corporation, association, partnership, joint venture or other entity in which this Company then has an interest, and may vote such interest in person or by proxy appointed by him or her, provided that the Board of Directors may from time to time confer the foregoing authority upon any other person or persons.
VI. RESIGNATIONS AND VACANCIES
6.01. Resignation. Any director, committee member, officer or other appointee may resign from his or her office or position at any time by written notice as specified in accordance with Arizona Revised Statutes Sections 10-807 and 10-843. The acceptance of a resignation will not be required to make it effective.
6.02. Vacancies. If the office or position of any director, committee member or officer, or any appointee designated pursuant to Section 4.02 above, becomes vacant by reason of his or her death, resignation, disqualification, removal or otherwise, the Board of Directors may choose a successor to hold office for the unexpired term.
VII. INDEMNIFICATION AND RATIFICATION
7.01. Indemnification. In order to induce qualified persons to serve the Company (and any other corporation, joint venture, partnership, trust or other enterprise at the request of the Company) as directors and officers, the Company will indemnify such persons to the fullest extent permitted by law or by the Articles, if applicable. Insofar as applicable law requires a determination as to the standard of conduct followed by a person seeking indemnification, the Board of Directors or the disinterested members thereof will consider the relevant facts, or cause them to be submitted for consideration, as soon as practicable, but such consideration of any facts in issue in pending legal proceedings will not be required before the final adjudication thereof. A determination, whether favorable or adverse to the party seeking indemnification, pursuant to any such consideration (which determination, if the same is to be made by a court pursuant to law, will be deemed made when contained in a final unappealed or unappealable decision) will be binding on all parties concerned.
7.02. Ratification; Special Committee. Any transaction involving the Company, any of its subsidiary corporations or any of its directors, officers, employees or agents which at any time is questioned in any manner or context (including a shareholder's derivative suit), on the ground of lack of authority, conflict of interest, misleading or omitted statement of fact or law, nondisclosure, miscomputation, improper principles or practices of accounting, inadequate records, defective or irregular execution or any similar ground, may be investigated and/or ratified (before or after judgment), or an election may be made not to institute or pursue a claim or legal proceedings on account thereof or to accept or approve a negotiated settlement with respect thereto (before or after the institution of legal proceedings), by the Board of Directors or by a special committee thereof comprised of one or more disinterested directors (that is, a director or directors who did not participate in the questioned transaction with actual knowledge of the questioned aspect or aspects thereof). Such a special committee may be validly formed and fully empowered to act, in accordance with the purposes and duties assigned thereto, by resolution or resolutions of the Board of Directors, notwithstanding (i) the inclusion of Board members who are not disinterested as aforesaid among those who form a quorum at the meeting or meetings at which one or more members of such special committee are elected or appointed to the Board or to such special committee or at which such committee is formed or empowered, or their inclusion among the directors who vote upon or otherwise participate in taking any of the foregoing actions, or (ii) the taking of any of such actions by the disinterested members of the Board (or a majority of such members) whose number is not sufficient to constitute a quorum or a majority of the membership of the full Board. Any such special committee so comprised will, to the full extent consistent with its purposes and duties as expressed in such resolution or resolutions, have all of the authority and powers of the full Board and its Executive Committee (the same as though it were the full Board and/or its Executive Committee in carrying out such purposes and duties) and will function in accordance with Section 3.09 above. No other provisions of these Bylaws which may at any time appear to conflict with any provision of this Section 7.02, and no defect or irregularity in the formation, empowering or functioning of any such special committee, will serve to impede, impair or bring into question any action taken or purported to be taken by such committee or the validity of any such action. Any ratification of a transaction pursuant to this Section 7.02 will have the same force and effect as if the transaction has been duly authorized originally. Any such ratification, and any election made pursuant to this Section 7.02 with respect to claims, legal proceedings or settlements, will be binding upon the Company and its shareholders and will constitute a bar to any claim or the execution of any judgment in respect of the transaction involved in such ratification or election.
VIII. SEAL
8.01. Form Thereof. The seal of the Company will have inscribed thereon the name of the Company, the year of its incorporation and the word "SEAL."
IX. STOCK CERTIFICATES
9.01. Form Thereof. Each certificate representing stock of the Company will be in such form conforming to law as may from time to time be approved by the Board of Directors, and will bear the manual or facsimile signatures and seal of the Company as required or permitted by law.
9.02. Ownership. The Company will be entitled to treat the registered owner of any share as the absolute owner thereof and accordingly, will not be bound to recognize any beneficial, equitable or other claim to, or interest in, such share on the part of any other person, whether or not it has notice thereof, except as may expressly be provided by Chapter 8 of Title 47, Arizona Revised Statutes (or its successor), as at the time in effect, or other applicable law.
9.03. Transfers. Transfers of stock will be made on the books of the Company only upon surrender of the certificate therefor, duly endorsed by an appropriate person, with such assurance of the genuineness and effectiveness of the endorsement as the Company may require, all as contemplated by Chapter 8 of Title 47, Arizona Revised Statutes (or its successor), as at the time in effect, and/or upon submission of any affidavit, other document or notice which the Company considers necessary.
9.04. Lost Certificates. In the event of the loss, theft or destruction of any certificate representing stock of this Company or of any predecessor corporation, the Company may issue (or, in the case of any such stock as to which a transfer agent and/or registrar have been appointed, may direct such transfer agent and/or registrar to countersign, register and issue) a replacement certificate in lieu of that alleged to be lost, stolen or destroyed, and cause the same to be delivered to the owner of the stock represented thereby, provided that the owner shall have submitted such evidence showing the circumstances of the alleged loss, theft or destruction, and his or her ownership of the certificate as the Company considers satisfactory, together with any other facts which the Company considers pertinent, and further provided that an indemnity agreement and/or indemnity bond shall have been provided in form and amount satisfactory to the Company and to its transfer agents and/or registrars, if applicable.
X. EMERGENCY BYLAWS
10.01. Emergency Conditions. The emergency Bylaws provided in this Part X will be effective in the event of an emergency as prescribed in Arizona Revised Statutes Section 10-207.D. To the extent not inconsistent with the provisions of this Part X, these Bylaws will remain in effect during such emergency and upon its termination these emergency Bylaws will cease to be operative.
10.02. Board Meetings. During any such emergency, a meeting of the Board of Directors or any of its committees may be called by any officer or director of the Company. Notice of the time and place of the meeting will be given by the person calling the same to those of the directors whom it may be feasible to reach by any available means of communication. Such notice will be given so much in advance of the meeting as circumstances permit in the judgment of the persons calling the same. At any Board or committee meeting held during any such emergency, a quorum will consist of a majority of those who could reasonably be expected to attend the meeting if they were able to do so, but in no event more than a majority of those to whom notice of such meeting is required to have been given as above provided.
10.03. Certain Actions. The Board of Directors, either before or during any such emergency, may provide and from time to time modify lines of succession in the event that during such an emergency any or all officers, appointees, employees or agents of the Company are for any reason rendered incapable of discharging their duties. The Board, either before or during any such emergency, may, effective in the emergency, change the head office or designate several alternative head offices of the Company, or authorize the officers to do so.
10.04. Liability. No director, officer, appointee, employee or agent acting in accordance with these emergency Bylaws will be liable except for willful misconduct.
10.05. Modifications. These emergency Bylaws will be subject to repeal or change by further action of the Board of Directors, but no such repeal or change will modify the provisions of Section 10.04 with respect to action taken prior to the time of such repeal or change. Any amendment of these emergency Bylaws may make any further or different provisions that may be practical and necessary for the circumstances of the emergency.
XI. DIVIDENDS
11.01. Declaration. Subject to such restrictions or requirements as may be imposed by law or the Company's Articles or as may otherwise be binding upon the Company, the Board of Directors may from time to time declare dividends on stock of the Company outstanding on the dates of record fixed by the Board, to be paid in cash, in property or in shares of the Company's stock on or as of such payment or distribution dates as the Board may prescribe.
XII. AMENDMENTS
12.01. Procedure. These Bylaws may be amended, supplemented, repealed or temporarily or permanently suspended, in whole or in part, or new bylaws may be adopted, at any duly constituted meeting of the Board of Directors, the notice of which meeting either includes mention of the proposed action relative to the Bylaws or is waived as provided in Section 3.05 above. If, however, the chairman of any such meeting or a majority of directors in attendance thereat in good faith determines that any such action has arisen as a matter of necessity at the meeting and is otherwise proper, no notice of such action will be required.
12.02. Amendment of Bylaws. Notwithstanding any other provision of these
Bylaws, Sections 2.02, 3.01, and 3.13 and Article XII of these Bylaws shall not
be altered, amended, supplemented, repealed, or temporarily or permanently
suspended, in whole or in part, or replacement Bylaw provisions adopted without:
(i) the affirmative vote of a majority of the directors then in office; or (ii)
the affirmative vote of seventy-five percent (75%) or more of the outstanding
shares of the Company entitled to vote generally.
CERTIFICATE
I, NANCY C. LOFTIN, the Secretary of ARIZONA PUBLIC SERVICE COMPANY, an Arizona Corporation, do HEREBY CERTIFY that the foregoing is a true and correct copy of the Company's Bylaws, as amended and that such Bylaws, as amended, are in full force and effect as of the date hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of said corporation this 20th day of February, 1996.
[SEAL]
NANCY C. LOFTIN
Secretary
Exhibit 10.1a
Under the Company's 1996 Senior Management Variable Pay Plan, the President of the Company, with the approval of the Human Resources Committee of the Board of Directors, annually designates employees to participate in the program, establishes their participation level, and establishes certain financial and operational goals for the Company which must be satisfied in order for variable pay awards to be made. The impact, if any, of each employee's performance on his or her variable pay award is determined by his or her officer. Subject to final approval by the Human Resources Committee of the Board of Directors, the President of the Company also determines at year-end the degree to which those goals have been satisfied and the amount of variable pay to be awarded to participating employees, if any.
Exhibit 10.2a
Under the Company's 1996 Officers Variable Pay Plan, the President of the Company, with the approval of the Human Resources Committee of the Board of Directors, annually designates the officers who will participate in the program, establishes their participation level, and establishes certain financial and operational goals for the Company which must be satisfied in order for variable pay awards to be made. The impact, if any, of each officer's performance on his or her variable pay award is determined by the President of the Company, with the approval of the Human Resources Committee. Subject to final approval by the Human Resources Committee of the Board of Directors, the President also determines at year-end the degree to which those goals have been satisfied and the amount of variable pay to be awarded to participating officers, if any.
Exhibit 10.3 Amendment No. 1 to the Long-Term Power Transactions Agreement and Asset Purchase and Power Exchange Agreement
This Amendment No. 1 to the Long-Term Power Transactions Agreement and Asset Purchase and Power Exchange Agreement ("Amendment No. 1"), dated this 5th day of April, 1995, is between PacifiCorp, an Oregon corporation, and Arizona Public Service Company, an Arizona corporation ("APS"). PacifiCorp and APS are sometimes referred to herein collectively as "Parties" and individually as "Party."
On September 21, 1990, the Parties entered into a series of agreements including a "Transmission Agreement," a "Long-Term Power Transactions Agreement" and an "Asset Purchase and Power Exchange Agreement" ("Asset Agreement").
In light of changed circumstances, the Parties have determined that the aforementioned three agreements should be amended. To that end, on even date herewith, the Parties have executed a Restated Transmission Agreement. Furthermore, the Parties agree that the Long-Term Power Transactions Agreement and the Asset Agreement shall be amended as follows:
1. Subsection 1.13 of the Long-Term Power Transactions Agreement is hereby amended by deleting that subsection in its entirety and substituting the following therefor:
Page 1 - Amendment No. 1 to the Long-Term Power Transactions Agreement and Asset Purchase and Power Exchange Agreement (PacifiCorp/APS)
"1.13 'Point of Delivery' for all transactions hereunder means (1) Four Corners; (2) the Glen Canyon Substation or, in the event the Navajo Loop-In Project is constructed, Navajo; (3) the Pinnacle Peak Substation of the Western Area Power Administration; (4) such other location(s) as may be established by mutual agreement of the Parties' dispatchers, schedulers, or authorized representatives; and (5) the Cholla Generating Station 500 Kv switchyard under the circumstances described in Subsection 15.03 of the Asset Agreement and Subsection 7.5 of this Agreement."
2. Subsection 3.3 of the Long-Term Power Transactions Agreement is hereby amended by deleting that subsection in its entirety and substituting the following therefor:
"3.3 Increased Capacity Exchange. Upon the later of (i) the completion of the Mead/ Phoenix Line or (ii) May 15, 1997, and for the balance of the term of this Agreement, 100 megawatts of Exchange Capacity shall be made available in addition to any Exchange Capacity available as a result of the exchange option provided for in Subsection 3.2, subject to the same terms and conditions set forth in Subsections 3.2.1, 3.2.2, 3.2.3 and 3.2.4."
3. Subsections 15.01 and 15.02 of the Asset Agreement are
hereby amended by deleting those subsections in their entirety
and substituting the following therefor:
"15. Transmission.
"15.01 In addition to the transmission rights provided for in Section 13, during the Term of this Agreement, PacifiCorp shall have a firm right to schedule a net of 350 MW of power at (a) Pinnacle Peak or, in the event the Navajo Loop-In Project is constructed, Navajo; (b) Four Corners; (c) the Cholla Generating Station switchyard; (d) the Existing Combustion Turbines; (e) Combustion
Page 2 - Amendment No. 1 to the Long-Term Power Transactions Agreement and Asset Purchase and Power Exchange Agreement (PacifiCorp/APS)
Turbines installed pursuant to Section 12; and (f) Palo Verde/Westwing, subject to the limitations set forth in Subsection 15.02.
"15.02 PacifiCorp's transfer rights shall be subject to Subsection 15.03 and shall be limited as follows:
"(a) Except as further limited by paragraphs (b) and (c), PacifiCorp may not make a transmission request which, in and of itself, (1) results in a net schedule of more than 350 MW or (2) results in total exports from APS' control area of more than 350 MW. PacifiCorp's net schedule shall be calculated as the algebraic sum of transfers into APS' control area and PacifiCorp generation internal to APS' control area (counted as positive values) and transfers out of APS' control area (counted as negative values).
"(b) When the output of Unit 4 is reduced below 150 MW for any reason, PacifiCorp's right to schedule deliveries to Palo Verde from Pinnacle Peak/Four Corners shall be reduced megawatt-for-megawatt to the extent Unit 4 output is reduced below 150 MW.
"(c) Transfers of power and energy under this Section 15 shall not include Firm Capacity acquired by APS from PacifiCorp under the Power Agreement and delivered by PacifiCorp at Glen Canyon/Four Corners."
This Amendment No. 1 shall be effective upon its approval or acceptance for filing by the Federal Energy Regulatory Commission.
Page 3 - Amendment No. 1 to the Long-Term Power Transactions Agreement and Asset Purchase and Power Exchange Agreement (PacifiCorp/APS)
IN WITNESS WHEREOF, the Parties have signed this Agreement as of
the date first above written.
PacifiCorp
Arizona Public Service Company
Page 4 - Amendment No. 1 to the Long-Term Power Transactions Agreement and Asset Purchase and Power Exchange Agreement (PacifiCorp/APS)
Exhibit 10.4
RESTATED TRANSMISSION AGREEMENT
BETWEEN
PACIFICORP
AND
ARIZONA PUBLIC SERVICE COMPANY
Index of Sections
Page
PARTIES ..............................................1
RECITALS ..............................................1
AGREEMENT ..............................................4
Section 1. Term..........................................4
Section 2. Regulatory Approval and Termination...........4
Section 3. Phoenix/Mead Line.............................5
Section 4. Navajo loop-In Project/Alternate
Arrangements..................................5
S7ection 5. Transmission Interconnection with
Northwest Utilities...........................5
Section 6. PacifiCorp Transfer Rights....................7
Section 7. Western Area Power Administration
Transmission Rights...........................7
Section 8. Scheduling....................................9
Section 9. Uncontrollable Forces.........................9
Section 10. Indemnification..............................10
Section 11. Assignment...................................11
Section 12. Miscellaneous................................11
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RESTATED TRANSMISSION AGREEMENT
PARTIES
The Parties to this Restated Transmission Agreement ("Agreement"), dated this 5th day of April, 1995, are PacifiCorp, an Oregon corporation and Arizona Public Service Company, an Arizona corporation ("APS"). APS and PacifiCorp are sometimes referred to collectively as "Parties" and individually as "Party."
RECITALS
WHEREAS, PacifiCorp and APS are engaged in the generation,
transmission and distribution of electric power and energy; and
WHEREAS, the Parties have resolved to enhance the efficient operation
of their respective systems by taking advantage of the diversity of their loads
and generation facilities; and
WHEREAS, on September 21, 1990, the Parties entered into a series of
contracts, including a Transmission Agreement, as amended by an October 11, 1990
Letter Agreement and an October 1, 1993 Amendment No. 1 between the Parties to
achieve such efficiencies; and
WHEREAS, the Parties intend to continue to study and discuss
additional arrangements which will enhance efficiency and inure to the benefit
of their customers and, to that end, have executed Amendment No. 1 to the
Long-Term Power Transactions Agreement and Asset Purchase and Power Exchange
1 - RESTATED TRANSMISSION AGREEMENT
Agreement ("Amendment No. 1") of even date herewith and have determined that
this Restated Transmission Agreement should be substituted for the original
Transmission Agreement, as amended; and
WHEREAS, PacifiCorp owns a 345 kV transmission line from Sigurd, Utah
that interconnects at the Utah/Nevada border with a 345 kV transmission line
owned by the Nevada Power Company that is interconnected with the Harry Allen
Substation in Southern Nevada which collectively are hereinafter referred to as
the "Sigurd/Harry Allen line;" and
WHEREAS, PacifiCorp and Nevada Power Company have had discussions
regarding the potential of significantly increasing the transfer capability
between Nevada and Utah either by upgrading the existing Sigurd/Harry Allen line
or constructing a parallel line (hereinafter referred to as the "Sigurd Upgrade
Project"); and
WHEREAS, APS, along with a number of other entities, is a participant
in the Mead-Phoenix project which, among other things, is expected to result in
the construction of a 500 kV transmission line from Phoenix, Arizona to the Mead
Substation in Nevada (hereinafter referred to as the "Phoenix/Mead line") and an
interconnection of the Mead Substation and the Harry Allen Substation at a new
substation in Southern Nevada presently referred to as "Marketplace"; and
2 - RESTATED TRANSMISSION AGREEMENT
WHEREAS, it is expected that as a result of the Mead- Phoenix Project,
APS will have at least 200 MW of bidirectional firm transmission rights between
Phoenix and Marketplace; and
WHEREAS, the Sigurd Substation is interconnected to transmission lines
going north to interconnect with Montana Power Company and Idaho Power Company
at the Brady Substation, and potentially The Washington Water Power Company
(hereinafter referred to as the "Northwest Utilities"), and Idaho Power Company
at the Borah Substation; and
WHEREAS, at such time as the Mead-Phoenix Project and the Sigurd
Upgrade Project are completed, there will exist a major new transmission path
interconnecting utilities in the Desert Southwest with PacifiCorp and the
Northwest Utilities; and
WHEREAS, APS and other entities in the Desert Southwest are
considering interconnecting the Navajo Generating Station switchyard to the Glen
Canyon Generating Station switchyard, hereinafter referred to as the "Navajo
Loop-In Project"; and
WHEREAS, the Sigurd Upgrade Project and the Navajo Loop-In Project are
not anticipated to be completed in a timely fashion, if at all; and
WHEREAS, APS wishes to engage in the purchase, sale and exchange of
power and energy with Northwest Utilities and PacifiCorp wishes to engage in the
purchase, sale and exchange of power with utilities in the Desert Southwest; and
3 - RESTATED TRANSMISSION AGREEMENT
WHEREAS, APS and PacifiCorp are concurrently with the signing of this Agreement, contracting with the Western Area Power Administration ("Western") for transmission service between the Glen Canyon 230 kV Substation and Western's 230 kV Pinnacle Peak Substation;
NOW, THEREFORE, in consideration of the mutual covenants set forth below, the Parties agree as follows:
AGREEMENT
1. Term This Agreement shall be effective and shall replace the Transmission Agreement in its entirety upon (i) execution of a Firm Transmission Service Contract between APS, PacifiCorp and the U.S. Department of Energy, Western, Salt Lake City Area Integrated Projects ("Western Transmission Contract") as described in Section 7 and (ii) its acceptance or approval for filing by the Federal Energy Regulatory Commission ("FERC"), and shall terminate on the same date that the Asset Purchase and Power Exchange Agreement dated September 21, 1990 ("Asset Agreement") between the Parties terminates.
2. Regulatory Approval and Termination
2.01 PacifiCorp shall file this Agreement and Amendment No. 1 with the
FERC. APS shall file a letter of concurrence supporting PacifiCorp's filing of
this Agreement and Amendment No. 1 with the FERC. If the FERC issues an order
not accepting either agreement for filing in their entirety and without material
change, the Parties shall exercise best
4 - RESTATED TRANSMISSION AGREEMENT
efforts to amend the agreements to comply with the FERC order or negotiate replacement agreements providing similar benefits to both Parties. In the event such amendment or replacement agreements are not executed by the Parties within sixty days following the FERC's issuance of such order, this Agreement and Amendment No. 1 shall terminate and be of no further force or effect and the Transmission Agreement dated as of September 21, 1990, shall remain in full force and effect.
2.02 The rates for service specified herein, and the provisions contained herein for services to be provided without separate charge, shall remain in effect for the term of this Agreement and shall not be subject to change through application to the FERC pursuant to Section 205 of the Federal Power Act absent the agreement of PacifiCorp and Arizona.
3. Phoenix/Mead Line APS shall work in good faith with other affected entities to cause the Phoenix/Mead Line to be in service by the end of 1996.
4. Navajo Loop-In Project/Alternate Arrangements If the Navajo Loop-In Project is completed, or if APS or PacifiCorp construct transmission facilities or enter into other commercial arrangements that negate APS' or PacifiCorp's need to maintain its contractual rights under the Western Transmission Contract, either Party may, upon mutual agreement of the Parties, which agreement shall not be unreasonably withheld, terminate its participation in the Western
5 - RESTATED TRANSMISSION AGREEMENT
Transmission Contract. A Party shall not be required to agree to such termination unless, upon its sole determination, such Party determines that it will not incur any additional costs or there will be no adverse operational impacts to its system as a result of such termination.
5. Transmission Interconnection with Northwest Utilities
5.01 During the term of this Agreement, APS shall have 100 MW of net bidirectional firm transfer rights through PacifiCorp's system between the Glen Canyon/Four Corners Substations and the Borah/Brady Substations in Idaho; however, the sum of North-bound transfers and South-bound transfers shall not exceed 300 MW in any hour.
5.02 Upon the later of: (i) the completion of the Phoenix/Mead Line or
(ii) May 15, 1997, and for the balance of the term of this Agreement, APS shall
have an additional firm right to transfer 150 MW from the Borah/Brady Substation
over PacifiCorp's system to the Four Corners/Glen Canyon Substations. In
addition to APS' rights to transfer 150 MW from the Borah/Brady Substations to
the Four Corners/Glen Canyon Substations, APS shall have the right to make
and/or accept deliveries at the Glen Canyon Substation as described in the
Western Transmission Contract.
5.03 PacifiCorp shall provide the services described in Subsections 5.01 and 5.02 without charge to APS.
6 - RESTATED TRANSMISSION AGREEMENT
6. PacifiCorp Transfer Rights
6.01 Upon the later of: (i) the completion of the Phoenix/Mead Line or
(ii) May 15, 1997, and for the balance of the term of this Agreement, PacifiCorp
shall have a firm right to deliver up to 150 MW from the Phoenix terminal of the
Phoenix/Mead Line to the Mead Substation (or to the Marketplace Substation, if
such is constructed) from APS' firm rights. PacifiCorp's 150 MW Phoenix/Mead
delivery rights are in addition to a 350 MW net scheduling right provided under
Section 15 of the Asset Agreement. In addition to PacifiCorp's rights to deliver
up to 150 MW from the Phoenix terminal of the Phoenix/ Mead line to the Mead
Substation (or to the Marketplace Substation, if such is constructed),
PacifiCorp shall have the right to make and/or accept deliveries at the Pinnacle
Peak Substation as described in the Western Transmission Contract.
6.02 Except as provided for in Section 16 of the Asset Agreement, APS
shall provide the transmission services described in Subsection 6.01 without
charge to PacifiCorp.
7. Western Area Power Administration Transmission Rights
7.01 Except as provided for in Section 4, effective the later of (i)
May 15, 1997 or (ii) the completion of the Phoenix-Mead Transmission Project,
and for the balance of the term of this Agreement, the Parties shall contract
with Western for firm, bidirectional transmission service between the Glen
Canyon Substation and Western's Pinnacle Peak Substation in amounts necessary to
allow for the transfers specified in
7 - RESTATED TRANSMISSION AGREEMENT
Sections 5 and 6 and to allow for the seasonal exchange provided in Section 3.3 of the Long-term Power Transaction Agreement dated September 21, 1990, as amended. The cost of the aforementioned transmission service (hereinafter referred to as "Western Transfer Rights") shall be shared equally between the Parties unless otherwise mutually agreed.
7.02 APS shall have first priority use of the north- to-south transfer
capability available from the Western Transfer Rights. PacifiCorp shall have
first priority use of the south-to-north transfer capability available from the
Western Transfer Rights.
7.03 At such times as either Party is not making use of its
first-priority use of the Western Transfer Rights as set forth in Subsection
7.02, such use shall be made available to the other Party for nonfirm
transactions at no charge. It is understood that use by one Party of the other
Party's Western Transfer rights, unless otherwise mutually agreed, is on a
nonfirm basis and such use may be interrupted or curtailed by the Party with
first-priority rights at any time.
7.04 At such times as some or all of the Western Transfer Rights are
not available, the Parties shall use best efforts to reschedule deliveries
previously scheduled under the Western Transfer Rights to mutually agreed
alternate point(s) of delivery; provided, however, a Party shall not be required
to interrupt or curtail its other firm schedules at any such alternate point(s)
of delivery in order to accommodate
8 - RESTATED TRANSMISSION AGREEMENT
deliveries previously scheduled under the Western Transmission
Contract.
8. Scheduling
PacifiCorp and APS shall preschedule their transfer requirements no
later than 1000 hours MST on each work day observed by both Parties immediately
preceding the day(s) of delivery, or as otherwise mutually agreed by the
Parties' dispatchers or schedulers. The Parties shall make delivery in
accordance with preschedules, unless otherwise mutually agreed, which comply
with the applicable transfer rights set forth in Sections 5 and 6. All
deliveries shall be deemed to be made during the hours and in the amounts as
accounted for in the APS and PacifiCorp system logs. However, if scheduled
deliveries are interrupted due to an Uncontrollable Force as defined in Section
9, such schedules shall be adjusted to reflect such interruption.
9. Uncontrollable Forces
Neither Party to this Agreement shall be considered to be in default
in the performance of any obligation hereunder if failure to perform shall be
due to an Uncontrollable Force. The term "Uncontrollable Force" means any cause
beyond the control of the Party affected, including, but not limited to, failure
of facilities, flood, earthquake, storm, fire, lightening, epidemic, war, riot,
civil disturbance, labor disturbance, sabotage, restraint by court order or
public authority, which by exercise of due foresight, such Party could
9 - RESTATED TRANSMISSION AGREEMENT
not reasonably have been expected to avoid, and which by exercise of due
diligence would not be able to overcome. The Parties shall not, however, be
relieved of liability for failure of performance if such failure is due to
causes arising out of removable or remediable causes which it fails to remove or
remedy with reasonable dispatch. Any Party rendered unable to fulfill any
obligation by reason of an Uncontrollable Force shall exercise due diligence to
remove such inability with all reasonable dispatch. Nothing contained herein,
however, shall be construed to require a Party to prevent or settle a strike
against its will.
10. Indemnification
Neither Party ("First Party") shall be liable, whether in warranty,
tort, or strict liability, to the other Party ("Second Party") for any injury or
death to any person, or for any loss or damage to any property, caused by or
arising out of any electric disturbance of the First Party's electric system,
whether or not such electric disturbance resulted from the First Party's
negligent act or omission. Each Second Party releases the First Party from, and
shall indemnify and hold harmless the First Party from, any such liability. As
used in this Section, (1) the term "Party" means, in addition to such Party
itself, its agents, directors, officers, and employees; (2) the term "damage"
means all damage, including consequential damage; and (3) the term "persons"
means any person, including those not connected with either Party to this
Agreement.
10 - RESTATED TRANSMISSION AGREEMENT
11. Assignment
Neither Party shall assign this Agreement without the prior written
consent of the other Party, except:
(a) to any corporation into which or with which the Party making
the assignment is merged or consolidated or to which the Party transfers
substantially all of its assets;
(b) to any person or entity wholly owning, wholly owned by, or
wholly owned in common with the Party making the assignment.
Subject to the foregoing restrictions in this Section, this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the Parties and their respective successors and assigns.
12. Miscellaneous
12.01 Amendment. This Agreement may be amended only by an instrument
in writing executed by the Parties which expressly refers to this Agreement and
states that it is an amendment hereto.
12.02 Section and Paragraph Headings. The section and paragraph
headings contained in this Agreement are for reference purposes only and shall
not in any way affect the meaning or interpretation of this Agreement.
12.03 Waiver. Any of the terms or conditions of this Agreement may be
waived at any time and from time to time, in writing, by the Party entitled to
the benefit of such terms or conditions.
11 - RESTATED TRANSMISSION AGREEMENT
12.04 Choice of Law. This Agreement shall be subject to and be
construed under the laws of the State of Arizona.
12.05 Notices. All notices, requests, demands, and other
communications given by APS or PacifiCorp shall be in writing and shall be
deemed to have been duly given when delivered personally or when deposited into
the United States mail, to the following addresses:
To APS: Arizona Public Service Company
Corporate Secretary
P.O. Box 53999
Phoenix, AZ 85072-3999
To PacifiCorp: PacifiCorp
Sr. Vice President,
Wholesale Transactions & Transmission
700 N.E. Multnomah Blvd.
Portland, OR 97232
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or to such other address as APS or PacifiCorp may designate in writing.
12.06 Integrated Agreement. This Agreement constitutes the entire agreement between the Parties hereto, and supersedes all prior agreements and understandings, oral and written, among the Parties hereto with respect to the subject matter hereof.
12 - RESTATED TRANSMISSION AGREEMENT
IN WITNESS WHEREOF, the Parties have signed this Agreement as of the date first above written.
Pacificorp
Arizona Public Service Company
13 - RESTATED TRANSMISSION AGREEMENT
Contract No. 94-SLC-0276
Exhibit 10.5
CONTRACT
AMONG
PACIFICORP
AND
ARIZONA PUBLIC SERVICE COMPANY
AND
UNITED STATES DEPARTMENT OF ENERGY
WESTERN AREA POWER ADMINISTRATION
SALT LAKE CITY AREA INTEGRATED PROJECTS
FOR
FIRM TRANSMISSION SERVICE
APS CONTRACT NO. 48253
Contract No. 94-SLC-0276
CONTRACT
BETWEEN
PACIFICORP
AND
ARIZONA PUBLIC SERVICE COMPANY
AND
UNITED STATES
DEPARTMENT OF ENERGY
WESTERN AREA POWER ADMINISTRATION
SALT LAKE CITY AREA INTEGRATED PROJECTS
FOR
FIRM TRANSMISSION SERVICE
1. PREAMBLE......................................................... 1
2. EXPLANATORY RECITALS............................................. 2
3. AGREEMENT........................................................ 2
4. TERM OF CONTRACT................................................. 2
5. FIRM TRANSMISSION SERVICE........................................ 3
6. CONDITIONS FOR DELIVERY OF TRANSMISSION SERVICE.................. 4
7. PAYMENT FOR TRANSMISSION SERVICE FURNISHED BY WESTERN............ 5
8. SCHEDULING, ACCOUNTING, AND BILLING PROCEDURES................... 6
9. GENERAL POWER CONTRACT PROVISIONS................................ 6
10. EXHIBITS......................................................... 7
11. AUTHORITY TO EXECUTE............................................. 7
SIGNATURE CLAUSE.................................................. 8
EXHIBIT A
RATE SCHEDULE SP-FT4
GENERAL POWER CONTRACT PROVISIONS
Contract No. 94-SLC-0276
CONTRACT
BETWEEN
PACIFICORP
AND
ARIZONA PUBLIC SERVICE COMPANY
AND
UNITED STATES
DEPARTMENT OF ENERGY
WESTERN AREA POWER ADMINISTRATION
SALT LAKE CITY AREA INTEGRATED PROJECTS
FOR
FIRM TRANSMISSION SERVICE
Contract No. 94-SLC-0276
2.2 PacifiCorp and APS are engaged in the electric utility business and desire firm transmission service over the Colorado River Storage Project's transmission facilities.
2.3 Electrical system interconnections exist either directly or through third parties which will allow the transmission of power and energy among Western, PacifiCorp, and APS.
2.4 Western is willing to furnish firm transmission service to PacifiCorp and APS under the terms and conditions provided herein.
Contract No. 94-SLC-0276
beginning May 1, 1997, or (ii) the date of initial commercial operation of the Mead-Phoenix transmission project.
4.2 PacifiCorp and APS reserve the right to jointly reduce the transmission amounts in Exhibit A or to jointly terminate this Contract with three (3) years prior written notification to Western.
4.3 This Contract may also be terminated at any time upon the mutual agreement of the Parties.
5.2 PacifiCorp and APS will have reciprocal use to each others unused firm capacity rights at no additional charge by Western or the other Party. Western shall have subsequent rights to use, on an interruptible basis, any portion of the capacity in the CRSP
Contract No. 94-SLC-0276
transmission facilities reserved for but not being used by PacifiCorp and/or APS. Western reserves the right to grant the use of any such capacity to others, on an interruptible basis, during the times PacifiCorp or APS does not schedule the use of such capacity.
5.3 When any additional point of receipt or delivery from or to PacifiCorp or APS is jointly established, as provided in Section 5.1 hereof, PacifiCorp and APS shall provide or cause to be provided, at no expense to Western, such equipment and devices not provided by Western as, in the opinion of the Contracting Officer, may be required because of the addition.
5.4 The transmission system loss factor used herein shall be reviewed by Western at least once every three years after the effective date of this Contract and shall be adjusted to more nearly conform to actual average system losses. PacifiCorp and APS will be given written notice of any adjustment and the adjusted loss factor shall be set forth in a revision of Exhibit A.
Contract No. 94-SLC-0276
6.2 In outage situations, neither PacifiCorp nor APS will be curtailed until total firm schedules on the path exceed the transfer capability. When curtailments are necessary, firm schedules will be reduced among all entities referenced in 6.1 having firm rights on the path. Reductions will be made pro-rata based on each entities firm rights.
6.3 Schedules of power under this Contract through the 345/230 kV facilities onto PacifiCorp's 230-kV Glen Canyon to Sigurd line shall not diminish the existing rights of Western under Contract No. 14-06-400-2436 and associated scheduling procedures.
7.2 The rate set forth in Rate Schedule SP-FT4 attached hereto may be adjusted in accordance with Section 11 of the attached General Power Contract Provisions. Western will give PacifiCorp and APS notice of each superseding rate schedule along with supporting data at least thirty (30) days in advance of the effective date of said superseding rate schedule.
Contract No. 94-SLC-0276
8.2 Transmission service furnished hereunder shall be scheduled in advance, on an hourly basis, emergencies excepted, and accounted for on the basis of such advance schedules, all in accordance with Procedures agreed upon in advance between the authorized representatives.
8.3 In the event PacifiCorp and APS fail or refuse to execute the initial Procedures or any revised Procedures which Western determines to be necessary due to changes in this Contract or the power system of either Party, Western will temporarily implement essential procedures, as determined by the Contracting Officer, until mutually acceptable procedures have been developed and executed by the authorized representatives.
Contract No. 94-SLC-0276
words "rate schedule" shall mean the charge for service provided pursuant to this Contract, and the words, "electric service" shall mean the service provided pursuant to this Contract.
Inasmuch as certain provisions of this Contract may change during the term
hereof, they will be set forth in exhibits from time to time agreed upon
by the Parties. The initial Exhibit A and all future exhibits shall be
attached hereto and made a part hereof, and each shall be in full force
and effect in accordance with its terms unless superseded by a subsequent
exhibit.
11. AUTHORITY TO EXECUTE
- --- --------------------
Each individual signing this Contract certifies that the Party represented
has duly authorized such individual to execute this contract that binds
and obligates the Party.
|
Contract No. 94-SLC-0276
IN WITNESS WHEREOF, the Parties have caused this Contract to be executed the
date first written above.
WESTERN AREA POWER ADMINISTRATION
Area Manager Western Area Power Administration P.O. Box 11606 Salt Lake City, UT 84147
(SEAL) PACIFICORP
By: John A. Bohling
--------------------------------------
Lenore M. Martin Senior Vice President
- ---------------------------- --------------------------------------
Attest Title:
700 NE Multnomah
Portland, Oregon 97232
--------------------------------------
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Address:
(SEAL) ARIZONA PUBLIC SERVICE COMPANY
By: Jack E. Davis
--------------------------------------
Marie A. Papietro Title: Vice President
- ----------------- --------------------------------------
Attest
Address: P.O. Box 53999
Phoenix, Arizona 85072-3999
--------------------------------------
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Rate Schedule SP-FT4
(Supersedes Schedule SP-FT3)
UNITED STATES DEPARTMENT OF ENERGY
WESTERN AREA POWER ADMINISTRATION
COLORADO RIVER STORAGE PROJECT
ARIZONA, COLORADO, NEW NEXICO, WYOMING, UTAH
Beginning on October 1, 1992, and extending through September 30, 1996.
In the area served by the Colorado River Storage Project (CRSP) transmission system.
To firm transmission service customers for which power and energy are supplied to the CRSP transmission system at points of interconnection with other systems and transmitted and delivered, less losses, to points of delivery on the CRSP transmission system established by contract.
Transmission service for alternating current, 60 hertz, three-phase, delivered and metered at the voltages and points of delivery established by contract.
Transmission service charge: $22.68 per kilowatt-year for each kilowatt of transmission service contracted for, payable monthly at the rate of $1.89 per kilowatt-month.
PacifiCorp Arizona Public Service Company Contract No. 94-SLC-0276 Exhibit A
MAXIMUM TRANSMISSION OBLIGATION IN KILOWATTS
1. This Exhibit A made this 5th day of May, 1995, to be effective under and as a part of Contract No. 94-SLC-0276, dated May 5, 1995, shall become effective on the date that transmission service is initiated under the Contract, and shall remain in effect until superseded by another Exhibit A; Provided, That this revised Exhibit A or any superseding Exhibit A shall be terminated by the termination of said Contract.
Summer Season Winter Season Losses
Point of Receipt Point of Delivery (May-October) (November-April) (%)
---------------- ----------------- ------------- ---------------- -----
Primary Transmission
Pinnacle Peak 230 kV Glen Canyon 230 kV -0- 250,000 kW 5.5
Secondary Transmission
Pinnacle Peak 230 kV Glen Canyon 230 kV 150,000 kW -0- 5.5
|
PacifiCorp Arizona Public Service Company Contract No. 94-SLC-0276 Exhibit A
Summer Season Winter Season Losses
Point of Receipt Point of Delivery (May-October) (November-April) (%)
---------------- ----------------- ------------- ---------------- -----
Primary Transmission
Glen Canyon 230 kV Pinnacle Peak 230 kV 250,000 kW -0- 5.5
Secondary Transmission
Glen Canyon 230 kV Pinnacle Peak 230 kV -0- 150,000 kW 5.5
|
Exhibit 10.6
RECIPROCAL TRANSMISSION SERVICE AGREEMENT
BETWEEN
ARIZONA PUBLIC SERVICE COMPANY
AND
PACIFICORP
APS Contract No. 48138
By Federal Energy Regulatory Commission ("FERC") order/ notice of acceptance dated ___________________ in FERC Docket No. ___________, this Agreement, Arizona Public Service Company Rate Schedule FERC Rate Schedule No. , and PacifiCorp FERC Rate Schedule No. ______, was accepted for filing and permitted to become effective in accordance with Section of this Agreement on the _____ day of _________________, 19____.
EXECUTION COPY
APS Contract No. 48138
EXHIBIT 10.6
RECIPROCAL TRANSMISSION SERVICE AGREEMENT
BETWEEN
ARIZONA PUBLIC SERVICE COMPANY
AND
PACIFICORP
1. PARTIES............................................................ 1
2. RECITALS........................................................... 1
3. ENTIRE AGREEMENT................................................... 3
4. DEFINITIONS........................................................ 3
4.1 Authorized Representative(s)................................. 3
4.2 Cholla/Four Corners System:.................................. 3
4.3 Due Date..................................................... 3
4.4 FERC......................................................... 3
4.5 Four Corners/Borah-Brady System:............................. 3
4.6 Interest..................................................... 4
4.7 kV........................................................... 4
4.8 kWh.......................................................... 4
4.9 MW........................................................... 4
4.10 Point of Delivery............................................ 4
4.11 Point of Receipt............................................. 4
4.12 Reciprocal Transmission Demand............................... 4
4.13 Reciprocal Transmission Service.............................. 5
4.14 Transmission Demand.......................................... 5
4.15 Transmission Service......................................... 5
4.16 Uncontrollable Force......................................... 5
5. SPECIAL PROVISIONS................................................. 6
5.1 Reciprocal Transmission Service.............................. 6
5.2 Effective Date, Acceptance and Term.......................... 6
5.3 Authorized Representatives:.................................. 8
6. RATES FOR TRANSMISSION SERVICE..................................... 9
7. GENERAL TERMS AND CONDITIONS....................................... 9
7.1 Notifications................................................ 9
7.2 Electrical Load Characteristics.............................. 10
7.3 Uncontrollable Force......................................... 11
7.4 Indemnity.................................................... 11
7.5 Waiver....................................................... 12
7.6 Billing and Payment.......................................... 12
7.7 Unilateral Action............................................ 13
7.8 Assignment................................................... 13
7.9 Regulatory Fees.............................................. 14
7.10 Third Party Beneficiaries.................................... 15
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APS Contract No. 48138
7.11 Applicable Law............................................... 15
7.12 Nondedication of Facilities.................................. 15
7.13 Interruptions................................................ 15
EXHIBIT A............................................................. A-1
|
APS Contract No. 48138
|
RECIPROCAL TRANSMISSION SERVICE AGREEMENT
BETWEEN
ARIZONA PUBLIC SERVICE COMPANY
AND
PACIFICORP
2.1 APS and PacifiCorp are engaged in the generation, transmission and
distribution of electric power and energy in the western United
States.
2.2 The Parties have taken steps through a series of prior agreements to
enhance the efficient operation of their respective systems by
taking advantage of the diversity of their loads and generation
facilities.
2.3 PacifiCorp owns the Cholla Unit No. 4 at the Cholla Generation
Station and has increased the net generating capability of the
Cholla Unit No. 4 from 350 MW to 380 MW effective October 1, 1993.
2.4 To integrate the increase in the net generating capability of the
Cholla Unit No. 4 into PacifiCorp's system, PacifiCorp
APS Contract No. 48138
has requested south to north firm transmission service from APS, on
the Cholla/Four Corners System, in addition to the transmission
service provided by APS under the September 21, 1990 transmission
agreement between the Parties.
2.5 Pending the execution of this Agreement and acceptance for filing by
the FERC, APS has been providing firm transmission service for the
increase in the net generating capability of the Cholla Unit No. 4
under the terms and conditions of the Western System Power Pool
Agreement.
2.6 APS desires south to north firm Transmission Service on the Four Corners/Borah-Brady System.
2.7 In keeping with the Parties' continuing efforts to study and discuss additional arrangements to benefit the Parties and enhance the efficiencies of their respective systems which will inure to the benefit of their customers, and in the event PacifiCorp's Four Corners/Borah-Brady System is able to accommodate Reciprocal Transmission Service, APS and PacifiCorp recognize the mutual benefits of and agree to provide Reciprocal Transmission Service to each other over the Cholla/Four Corners System and the Four Corners/Borah- Brady System, respectively, under the terms hereof.
2.8 Until the Four Corners/Borah-Brady System is able to accommodate additional transmission for APS, which will initiate such Reciprocal Transmission Service, APS agrees to provide PacifiCorp with Transmission Service under the terms hereof.
APS Contract No. 48138
APS Contract No. 48138
electric transmission system between the Four Corners Power Plant
345 kV switchyard and the Borah and Brady substations in southern
Idaho.
4.6 Interest: Interest compounded monthly at the rate per annum quoted
by Citibank, NA, New York, New York as the prime interest rate
quoted as of the first day of each month in which a payment is
overdue, plus three percent (3%). APS may change the designated
banking institution stated herein by providing PacifiCorp with
fifteen (15) day advance written notice.
4.7 kV: Kilovolt or kilovolts.
4.8 kWh: Kilowatt-hour or kilowatt-hours.
4.9 MW: Megawatt or Megawatts.
4.10 Point of Delivery: For the Cholla/Four Corners System, the point of
interconnection between the Parties in the Four Corners Power Plant
345 kV switchyard and, for the Four Corners/Borah-Brady System, the
Borah and/or Brady Substations.
4.11 Point of Receipt: For the Cholla/Four Corners System, the point of
interconnection between the Parties in the Cholla Power Plant 500 kV
switchyard and, for the Four Corners/Borah-Brady System, the point
of interconnection between APS and PacifiCorp in the Four Corners
Power Plant 345 kV Switchyard.
4.12 Reciprocal Transmission Demand: For the Cholla/Four Corners System,
the 30,000 kW of firm transmission capacity APS shall
APS Contract No. 48138
be obligated to provide for PacifiCorp on the Cholla/Four Corners
System from the Point of Receipt to the Point of Delivery. For the
Four Corners/Borah-Brady System, the 30,000 kW of firm transmission
capacity PacifiCorp is obligated to provide for APS on the Four
Corners/Borah-Brady System from the Point of Receipt to the Point of
Delivery.
4.13 Reciprocal Transmission Service: The firm transmission capacity
provided by APS to PacifiCorp over the Cholla/Four Corners System
from the Point of Receipt to the Point of Delivery and by PacifiCorp
to APS over the Four Corners/Borah-Brady System from the Point of
Receipt to the Point of Delivery up to the Reciprocal Transmission
Demand at no cost to the Parties.
4.14 Transmission Demand: The 30,000 kW of firm capacity APS shall be
obligated to provide and PacifiCorp is obligated to pay for on the
Cholla/Four Corners System from the Point of Receipt to the Point of
Delivery.
4.15 Transmission Service: The firm capacity provided by APS to
PacifiCorp from south to north over the Cholla/Four Corners System
from the Point of Receipt to the Point of Delivery up to the
Transmission Demand in accordance with the rates and charges in
Section .
4.16 Uncontrollable Force: Any cause beyond the control of the Party
affected, including, but not limited to, failure of facilities,
flood, earthquake, storm, fire, lightning, epidemic, war, riot,
civil disturbance, labor disturbance,
APS Contract No. 48138
5.2.1 This Agreement shall become effective upon execution and
acceptance for filing by the FERC and permitted to become
effective under the rules and regulations of the FERC.
5.2.2 The Parties agree to waiver of FERC's filing and notice
requirements in order to permit the early filing and
acceptance of this Agreement.
5.2.3 The Parties agree to fully participate in any FERC hearing
and/or court proceeding regarding this Agreement.
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APS Contract No. 48138
5.2.4 The Parties concur with all rates and charges and all
terms and conditions in this Agreement and, upon the FERC
filing, the Parties agree to support the acceptance in
full of this Agreement.
5.2.5 If upon the filing of this Agreement, FERC orders a
hearing to determine whether this Agreement is just and
reasonable, this Agreement shall not become effective
until the date when an order no longer subject to judicial
review has been issued by the FERC determining this
Agreement to be just and reasonable.
5.2.6 If, as the result of the filing, FERC modifies or
conditions any of the terms and conditions, rates or
charges of this Agreement, and such modification or
condition is objectionable to either PacifiCorp or APS for
whatever reason and as solely determined by PacifiCorp or
APS, this Agreement shall terminate and be of no further
force or effect upon written notice of such objection by
either Party within thirty (30) days from the date of
FERC's order modifying or conditioning this Agreement. In
the event that neither PacifiCorp nor APS provide written
notice, this Agreement shall be deemed accepted as
conditioned or modified.
5.2.7 The term of this Agreement shall be from the effective
date and shall remain in effect for the
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APS Contract No. 48138
term of the Transmission Agreement between PacifiCorp and
APS, dated September 21, 1990 (APS Contract No. 48015).
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5.3 Authorized Representatives:
5.3.1 Within thirty (30) days after the execution of this
Agreement, each Party shall designate its Authorized
Representative by giving written notice to the other
Party. Either Party may change its Authorized
Representative by giving written notice to the other Party
at anytime. The functions and responsibilities of the
Authorized Representatives shall be:
5.3.1.1 To establish procedures and standard practices
(consistent with the provisions hereof) for
the guidance of system load dispatchers and
other operating employees as to matters
affecting interconnected operations of the
respective systems related to this Agreement,
including but not limited to scheduled
maintenance and repair;
5.3.1.2 To do such other things as are necessary to
administer and implement this Agreement;
provided that the Authorized Representatives
shall have no authority to amend any of the
provisions of this Agreement.
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5.3.2 The establishment of any practice or procedure and
APS Contract No. 48138
any other action or determination by the Authorized
Representatives shall be effective when signed by the
designated Authorized Representatives of both Parties.
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7.1.1 Notifications under this Agreement, except written
notices required or authorized herein, may be made by
telephone or other means between the Authorized
Representatives established pursuant to Section 5.3.1.
Any written notices, demands or requests given under
Sections 7.1.2 and 7.1.3. hereof shall be delivered in
person or mailed as follows:
For PacifiCorp:
Vice President, Power Systems and Development
PacifiCorp
700 NE Multnomah, Suite 1600
Portland, Oregon 97232-4116
For APS:
Arizona Public Service Company
c/o Secretary
P.O. Box 53999
Phoenix, Arizona 85072-3999
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APS Contract No. 48138
Either Party may change such designations from time to
time by giving written notice to the other Party.
7.1.2 Except as set forth in Section 7.1.3 hereof, where any
notice, demand or request provided for in this Agreement
must be given within a specific period of time, such
notice, demand or request shall be in writing, and shall
be deemed properly served, given or made, if sent by
registered or certified mail, postage prepaid, to the
person(s) that have been designated in accordance with
Section 7.1.1 hereof.
7.1.3 Communications between the Parties of a routine nature,
when time is not of the essence, shall be deemed served,
if delivered in person (or by agent of either Party),
sent by facsimile or sent by first-class mail, postage
prepaid, to the person(s) who have been designated in
accordance with Section 7.1.1 hereof.
7.2 Electrical Load Characteristics:
7.2.1 The Parties shall design, construct, operate, maintain
and coordinate their respective facilities in accordance
with generally accepted utility practices of the Western
Systems Coordinating Council.
7.2.2 Each Party shall use its best effort to construct,
operate and maintain its system facilities so as to avoid
the likelihood of a disturbance originating
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APS Contract No. 48138
from its system which might cause impairment of service
in the system of the other Party.
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7.3 Uncontrollable Force: Neither Party to this Agreement shall be
considered to be in default in the performance of any obligation
hereunder if failure to perform shall be due to an Uncontrollable
Force. The Parties shall not, however, be relieved of liability for
failure of performance if such failure is due to causes arising out
of removable or remediable causes which it fails to remove or remedy
with reasonable dispatch. Any Party rendered unable to fulfill any
obligation by reason of an Uncontrollable Force shall exercise due
diligence to remove such inability with all reasonable dispatch.
Nothing contained herein, however, shall be construed to require a
Party to prevent or settle a strike against its will.
7.4 Indemnity:
7.4.1 Neither Party ("First Party") shall be liable, whether in
warranty, tort, or strict liability, to the other Party
("Second Party") for any injury or death to any person,
or for any loss or damage to any property, caused by or
arising out of any electric disturbance of the First
Party's electric system, whether or not such electric
disturbance resulted from the First Party's negligent act
or omission. Each Second Party releases the First Party
from, and shall indemnify and hold harmless the First
Party
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APS Contract No. 48138
from, any such liability. As used in this Section , i)
the term "Party" means, in addition to such Party itself,
its agents, directors, officers, and employees; ii) term
"damage" means all damage, including consequential
damage; and iii) the term "persons" means any person,
including those not connected with either Party to this
Agreement.
7.4.2 The provisions of this Section shall not be construed so
as to relieve any insurer of its obligation to pay any
insurance proceeds in accordance with the terms and
conditions of any valid insurance policy of either Party.
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7.5 Waiver: The failure of either Party to insist upon strict
performance of any of the provisions of this Agreement or the
payment or acceptance of payment by either Party for all or part of
the obligations under this Agreement shall not be deemed a waiver of
any right or remedy otherwise available to either Party with respect
to the future performance of such provisions.
7.6 Billing and Payment:
7.6.1 APS shall render invoices to PacifiCorp for Transmission
Service on or before the fifteenth (15th) day of each
calendar month for services furnished during the
preceding billing period.
7.6.2 PacifiCorp shall pay APS on or before the Due Date.
PacifiCorp shall mail the payment to APS' designated
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APS Contract No. 48138
office. PacifiCorp may also pay invoices by electronic
transfer if agreed to by the Parties. Amounts which are
not received by APS on or before the Due Date shall bear
Interest.
7.6.3 In the event any portion of any invoice is disputed,
PacifiCorp shall pay the disputed amount under protest
when due. If the protested portion of the payment is
found to be incorrect, APS shall refund to PacifiCorp any
payment due, including Interest from the date APS
receives payment to the date the refund check is mailed
by APS.
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7.7 Unilateral Action: Nothing contained in this Agreement shall be construed as affecting in any way, the right of either Party to unilaterally make application to the FERC for a change, with respect to the service it is rendering to the other Party, in classification, or service, or any provision, term, rule, rate, regulation, condition or contract relating thereto, under Section 205 of the Federal Power Act or any successor statute and pursuant to the FERC's rules and regulations promulgated thereunder; or the right of PacifiCorp to request modifications with respect to the services rendered hereunder by APS under Section 206 of the Federal Power Act and pursuant to the FERC's rules and regulations promulgated thereunder.
7.8 Assignment:
7.8.1 Neither Party shall assign this Agreement without the
APS Contract No. 48138
prior written consent of the other Party, which consent
may not be unreasonably withheld. The restrictions of this
Section shall not apply:
7.8.1.1 to any corporation into which or with which
the Party making the assignment is merged or
consolidated or to which the Party transfers
substantially all of its assets;
7.8.1.2 to any person or entity wholly owning, wholly
owned by, or wholly owned in common with the
Party making the assignment.
7.8.2 Subject to the foregoing restrictions in this Section ,
this Agreement shall be binding upon, inure to the benefit
of and be enforceable by the Parties and their respective
successors and assigns.
7.9 Regulatory Fees:
7.9.1 Any regulatory filing fees related to any changes to this
Agreement, or relative to either Party's decision to
modify or to terminate this Agreement, shall be the
responsibility of the Party initiating said action unless
otherwise mutually agreed.
7.9.2 The responsibility for any regulatory fees, charges, or
assessments associated with Reciprocal Transmission
Service under this Agreement, other than those described
in Section hereof, shall be equally shared by both
Parties.
7.9.3 The responsibility for any regulatory fees, charges,
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APS Contract No. 48138
or assessments associated with Transmission Service under
this Agreement, other than those described in Section
hereof, shall be the responsibility of PacifiCorp to the
extent that such charges or assessments are not already
recovered in APS' charges to PacifiCorp for Transmission
Services.
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7.10 Third Party Beneficiaries: This Agreement shall not be construed to
create rights in, or to grant remedies to any third Party as a
beneficiary of this Agreement or of any duty, obligation, or
undertaking established herein.
7.11 Applicable Law: This Agreement shall be construed and interpreted in
accordance with Arizona law.
7.12 Nondedication of Facilities: The performance of the Parties pursuant
to this Agreement shall not constitute the dedication of the
electric system or any portion thereof of either Party to the other
Party or to a third party, and it is understood and agreed that any
right, interest, obligation or duty hereunder by either Party shall
cease upon the termination of this Agreement.
7.13 Interruptions:
7.13.1 The Parties shall use due diligence to furnish
uninterrupted Transmission Service or Reciprocal
Transmission Service but do not guarantee uninterrupted
transmission of a Party's capacity and energy.
7.13.2 The Parties shall not be liable for any claim of
APS Contract No. 48138
damage attributable to any interruption or reduction of
Transmission Service or Reciprocal Transmission Service
due to (i) an Uncontrollable Force as defined in the
Agreement; (ii) any operating decisions, which in the
operating Party's sole judgement are necessary to
maintain reliable service or to protect its generation or
transmission facilities or to ensure the safety of its
employees or contractors, and (iii) necessary or routine
maintenance, repairs, replacements, or installations of
equipment, or the investigation and inspection of
equipment. To the extent practicable, the Parties shall
provide reasonable advance notice to each other of any
scheduled interruptions, reductions or other impairments
of Transmission Service or Reciprocal Transmission
Service.
7.13.3 In the event it is necessary to curtail Transmission
Service or Reciprocal Transmission Service because in the
discretion of the Party providing such service, the
transmission system over which such service is being
provided is in jeopardy, APS and PacifiCorp shall curtail
their respective transactions in the following order: (i)
non-firm transactions that would mitigate such jeopardy
shall be reduced proportionately and (ii) firm schedules
shall be reduced proportionately with all other firm
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APS Contract No. 48138
transactions on the affected transmission system to a
level necessary to remove such jeopardy; provided,
however, the Parties in order to maintain system
integrity, may utilize curtailment provisions which may
vary from this principle in accordance with generally
accepted utility practices.
7.13.4 The Parties shall endeavor to restore Transmission
Service or Reciprocal Transmission Service as soon as
practicable after an interruption.
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APS Contract No. 48138
ARIZONA PUBLIC SERVICE COMPANY
PACIFICORP
APS Contract No. 48138
RECIPROCAL TRANSMISSION SERVICE AGREEMENT
BETWEEN
ARIZONA PUBLIC SERVICE COMPANY
AND
PACIFICORP
1. Transmission Charge: $1.52/kW per month times the Transmission Demand.
2. Tax Charge: A Tax Charge of 0% shall be applied to the Transmission Charges in Section 1 above, subject to the terms of Section 3 hereof. The 0% Tax Charge is to cover the "Arizona Transaction Privilege (Sales) Tax or similar tax(es).
3. SALES TAX:
3.1 The Parties believe that the Transmission Service being provided hereunder is not subject to transaction privilege tax (sales tax), excise tax or any similar tax ("Taxes"). If, and in the event that, the Arizona State Department of Revenue, Arizona cities or towns, or other governmental units ("Taxing Entity") issue(s) an assessment or notice of intent to assess for such Taxes, whether prospectively or retroactively, and any associated interest or penalties, APS shall notify PacifiCorp of such Taxes.
3.2 APS shall pay the Taxing Entity the required retroactive Taxes and
APS shall notify PacifiCorp of such payment. The notification shall
include a proof of payment satisfactory to PacifiCorp. PacifiCorp
agrees to reimburse APS for the full amount of the retroactive Taxes
and any associated interest or penalties paid by APS, within fifteen
(15) days of such notification.
3.3 PacifiCorp shall have the right, upon notification and at its own expense, to participate with APS in any appeal or protest of an assessment of Taxes.
3.4 APS shall have the right to include Taxes in any future invoice
rendered to PacifiCorp after the date of notification specified in
Section 3.1 hereof and prior to the date of a final determination,
if any, that such Taxes are not due.
3.5 If any Taxes and associated interest and penalties paid by APS and for which APS was reimbursed by PacifiCorp pursuant
APS Contract No. 48138
to Section 3.2 hereof, are refunded, or credited, by a Taxing Entity to APS, APS shall notify PacifiCorp of the receipt of such refund, or credit, within fifteen (15) days and APS shall promptly refund the amount of such refund, or credit, including any interest paid thereon.
3.6 Each Party to any proceeding pursuant to this Section 3 shall bear its own cost and expense, including attorneys fees, in connection therewith.
Exhibit 10.7(a) Arizona Public Service Company
PALO VERDE NUCLEAR GENERATING STATION
P.O. BOX 52034 PHOENIX, ARIZONA 85072-2034
LETTER AGREEMENT PV95-23027 Copy No. 2
Mr. Kenneth M. Carr
2322 Fort Scott Drive
Arlington VA 22202
Dear Mr. Carr:
Subject: Consulting Agreement No. PV95-23027 with Arizona Public Service Company ("APS") Relating to Nuclear Committee ("Committee") for the Palo Verde Nuclear Generating Station ("PVNGS")
This letter, when executed by you, shall constitute our revised Agreement as to you providing certain Consulting Services to APS, acting in its capacity as Operating Agent of PVNGS, on the following terms and conditions:
I. SCOPE OF SERVICES
1. You will provide consulting services as an advisor to the Committee under the direction of the Chairman of such Committee. The Committee shall advise the APS Executive Vice President, Nuclear and the APS Board of Directors as to its independent assessment of PVNGS activities, placing particular emphasis on those activities which affect long term safety at and reliable operation of the PVNGS facility.
2. It is understood and agreed that as an advisor to the Committee, you shall have no authority or responsibility to direct APS to take any action of any kind, or to supervise or direct any work or activities performed by APS, its officers, employees, agents or contractors. APS shall have the sole responsibility to accept, implement, reject or otherwise act upon all or any part of any advice, recommendation or opinion rendered by the Committee or any member of the committee to APS.
AGREEMENT NO. PV95-23027
3. The Committee shall meet periodically at such times and places and for such durations as the Chairman of the Nuclear Committee of the APS Board of Directors shall designate.
4. As an independent contractor, you will be solely responsible for determining the methods, manner, and means used to perform the Services, and will perform the Services in a timely manner, exercising the degree of skill, care, competence and prudence customarily imposed upon individuals performing similar work.
5. You will not accept engagements from or for other parties, either before or after termination of this Agreement, which would in any way involve a review or assessment concerning PVNGS, APS, or any of the other participants of PVNGS without the prior written consent of APS.
6. You will not assign your rights, interests or obligations hereunder without the prior written consent of APS. It is agreed that any purported assignment without the consent of APS shall be null and void.
II. COMPENSATION
1. Compensation for you as an advisor of the Committee is $150.00 for each hour worked; provided, that the compensation for work performed within any one day shall not exceed $1,200.00 per day. Consultant will be compensated for reasonable travel expenses incurred in the performance of Services under this Agreement, reimbursed at actual cost, and other reasonable and necessary expenses which are approved, in advance, by the Vice President, Nuclear Production. In addition to such hourly compensation, as an advisor to the Committee, you will receive a retainer in the amount of $15,000.00 annually, to be paid quarterly in equal installments. Annual retainer shall be effective as of May 21, 1996. Compensation for air travel shall be limited to the rates then in effect for coach class or equivalent air fares. Total compensation for services rendered, including travel, shall not exceed $40,000.00 in any calendar year without the written authorization of APS.
AGREEMENT NO. PV95-23027
2. Invoices shall be submitted on a quarterly basis, and shall specify the number of hours and days spent on work and travel for the Committee, and associated expenses. Invoices shall identify the Agreement No., provide a breakdown of invoice amount and be accompanied by supporting documentation, including receipts. Accurate and detailed accounting records in support of all billings to APS shall be maintained in accordance with generally recognized accounting principles and practices. These records shall be available for audit upon reasonable request.
3. Invoice(s) shall be submitted as specified below:
a) The original invoice without supporting documentation to:
Arizona Public Service Company P. O. Box 53940 Phoenix, AZ 85072-3940 Attn: Disbursement Accounting Mail Station: 9440
b) Two (2) information copies, with supporting documentation to:
Arizona Public Service Company P. O. Box 52034 Phoenix, AZ 85072-2034 Attn: Nuclear Materials Management & Budgets Mail Station: 7845-KG
III. CONFIDENTIALITY AND PROPRIETARY INTEREST
You shall treat as confidential and not disclose to others, either before or after termination of this Agreement, any data, drawings, plans, models, studies, surveys, reports, analysis, information, proposals, and any other documents required or developed in connection with the Services to be performed hereunder, including all copies thereof (hereinafter collectively referred to as "documentation"), without the prior written consent of APS, and will maintain such documentation with the same degree of confidentiality and care as you maintain with respect to your own confidential information. All such documentation not delivered to APS during the course of this Agreement shall be delivered to APS upon termination of this Agreement.
IV. INDEMNIFICATION
AGREEMENT NO. PV95-23027
APS agrees to indemnify and hold you harmless from and against any and all liability, losses or damages you may suffer as a result of any suits, actions, claims or demand being asserted against you arising from acts or omissions within the scope of your duties as a member of the Committee and all costs (including attorneys fees), judgments, awards or fines issued against you in connection therewith, provided that APS shall have the opportunity and authority to select defense counsel (with APS being responsible for the payment of all attorney fees and expenses associated therewith), participate in the defense of the claim(s) and approve any settlement thereof.
V. TERM AND TERMINATION
This Agreement shall be effective as of the 1st day of January, 1996, and shall continue in full force and effect until terminated as provided herein. Either party may terminate the Agreement at any time by giving written notice of termination to the other party at least thirty (30) days in advance of the effective date of such termination. Notwithstanding the termination of this Agreement by either Party, the indemnification obligations of APS set forth in Paragraph IV above shall continue in full force and effect.
VI. GOVERNING LAW AND VENUE
This Agreement shall be governed by and construed in accordance with the laws of the State of Arizona. Any action or judicial proceeding instituted in connection with this Agreement shall be instituted only in the state or federal courts of the State of Arizona.
VII. ENTIRE AGREEMENT
This Agreement embodies the entire agreement between the parties, and shall supersede all prior agreements, proposals, representations, negotiations, or letters pertaining to the Services to be performed hereunder, whether written or oral. No alteration, modification, or variation of the terms of this Agreement shall be valid unless made in writing and signed by the parties hereto, and no oral understanding or agreement not incorporated herein shall be binding on either party hereto.
To confirm your agreement with the provisions of this Agreement No. PV95-23027 please sign both copies. Copy Number 2 may be retained for your records. Please return Copy Number 1 to:
AGREEMENT NO. PV95-23027
Arizona Public Service Company
P. O. Box 52034
Phoenix, AZ 85072-2034
Attention: Edna L. Roberts, Mail Station 7845
KENNETH M. CARR ARIZONA PUBLIC SERVICE COMPANY
Signature Kenneth M. Carr Signature Carl. D. Churchman
--------------------------- ---------------------------
Name Kenneth M. Carr Name Carl D. Churchman
-------------------------------- --------------------------------
Title VADM, USN (RET) Title Director, NMMB
------------------------------- ------------------------------
Date 19 March, 1996 Date 3-22-96
-------------------------------- --------------------------------
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SLF/ELR
Exhibit 10.8(a) Arizona Public Service Company
PALO VERDE NUCLEAR GENERATING STATION
P.O. BOX 52034 PHOENIX, ARIZONA 85072-2034
LETTER AGREEMENT PV95-23026 Copy No. 2
Robert G. Matlock & Associates, Inc.
418 Broadmoor
Richland WA 99353
Attention: Robert G. Matlock
Dear Mr. Matlock:
Subject: Consulting Agreement No. PV95-23026 with Arizona Public Service Company ("APS") Relating to Nuclear Committee ("Committee") for the Palo Verde Nuclear Generating Station ("PVNGS")
This letter, when executed by you, shall constitute our revised Agreement as to you providing certain Consulting Services to APS, acting in its capacity as Operating Agent of PVNGS, on the following terms and conditions:
I. SCOPE OF SERVICES
1. You will provide consulting services as the Chairman of such Committee. The Committee shall advise the APS Executive Vice President, Nuclear and the APS Board of Directors as to its independent assessment of PVNGS activities, placing particular emphasis on those activities which affect long term safety at and reliable operation of the PVNGS facility.
2. It is understood and agreed that as an advisor to the Committee, you shall have no authority or responsibility to direct APS to take any action of any kind, or to supervise or direct any work or activities performed by APS, its officers, employees, agents or contractors. APS shall have the sole responsibility to accept, implement, reject or otherwise act upon all or any part of any advice, recommendation or opinion rendered by the Committee or any member of the committee to APS.
AGREEMENT NO. PV95-23026
3. The Committee shall meet periodically at such times and places and for such durations as the Chairman of the Nuclear Committee of the APS Board of Directors shall designate.
4. As an independent contractor, you will be solely responsible for determining the methods, manner, and means used to perform the Services, and will perform the Services in a timely manner, exercising the degree of skill, care, competence and prudence customarily imposed upon individuals performing similar work.
5. You will not accept engagements from or for other parties, either before or after termination of this Agreement, which would in any way involve a review or assessment concerning PVNGS, APS, or any of the other participants of PVNGS without the prior written consent of APS.
6. You will not assign your rights, interests or obligations hereunder without the prior written consent of APS. It is agreed that any purported assignment without the consent of APS shall be null and void.
II. COMPENSATION
1. Compensation for you as an advisor of the Committee is $150.00 for each hour worked; provided, that the compensation for work performed within any one day shall not exceed $1,200.00 per day. Consultant will be compensated for reasonable travel expenses incurred in the performance of Services under this Agreement, reimbursed at actual cost, and other reasonable and necessary expenses which are approved, in advance, by the Vice President, Nuclear Production. Compensation for air travel shall be limited to the rates then in effect for coach class or equivalent air fares. Total compensation for services rendered, including travel, shall not exceed $40,000.00 in any calendar year without the written authorization of APS.
AGREEMENT NO. PV95-23026
2. Invoices shall be submitted on a quarterly basis, and shall specify the number of hours and days spent on work and travel for the Committee, and associated expenses. Invoices shall identify the Agreement No., provide a breakdown of invoice amount and be accompanied by supporting documentation, including receipts. Accurate and detailed accounting records in support of all billings to APS shall be maintained in accordance with generally recognized accounting principles and practices. These records shall be available for audit upon reasonable request.
3. Invoice(s) shall be submitted as specified below:
a) The original invoice without supporting documentation to:
Arizona Public Service Company P. O. Box 53940 Phoenix, AZ 85072-3940 Attn: Disbursement Accounting Mail Station: 9440
b) Two (2) information copies, with supporting documentation to:
Arizona Public Service Company P. O. Box 52034 Phoenix, AZ 85072-2034 Attn: Nuclear Materials Management & Budgets Mail Station: 7845-KG
III. CONFIDENTIALITY AND PROPRIETARY INTEREST
You shall treat as confidential and not disclose to others, either before or after termination of this Agreement, any data, drawings, plans, models, studies, surveys, reports, analysis, information, proposals, and any other documents required or developed in connection with the Services to be performed hereunder, including all copies thereof (hereinafter collectively referred to as "documentation"), without the prior written consent of APS, and will maintain such documentation with the same degree of confidentiality and care as you maintain with respect to your own confidential information. All such documentation not delivered to APS during the course of this Agreement shall be delivered to APS upon termination of this Agreement.
IV. INDEMNIFICATION
AGREEMENT NO. PV95-23026
APS agrees to indemnify and hold you harmless from and against any and all liability, losses or damages you may suffer as a result of any suits, actions, claims or demand being asserted against you arising from acts or omissions within the scope of your duties as a member of the Committee and all costs (including attorneys fees), judgments, awards or fines issued against you in connection therewith, provided that APS shall have the opportunity and authority to select defense counsel (with APS being responsible for the payment of all attorney fees and expenses associated therewith), participate in the defense of the claim(s) and approve any settlement thereof.
V. TERM AND TERMINATION
This Agreement shall be effective as of the 1st day of January, 1996. You will perform the Services for a period of two (2) years from the effective date of this Agreement. APS may extend this agreement for additional two year periods by giving written notice of extension. Either party may terminate the Agreement at any time by giving written notice of termination to the other party at least thirty (30) days in advance of the effective date of such termination. Notwithstanding the termination of this Agreement by either Party, the indemnification obligations of APS set forth in Paragraph IV above shall continue in full force and effect.
VI. GOVERNING LAW AND VENUE
This Agreement shall be governed by and construed in accordance with the laws of the State of Arizona. Any action or judicial proceeding instituted in connection with this Agreement shall be instituted only in the state or federal courts of the State of Arizona.
VII. ENTIRE AGREEMENT
This Agreement embodies the entire agreement between the parties, and shall supersede all prior agreements, proposals, representations, negotiations, or letters pertaining to the Services to be performed hereunder, whether written or oral. No alteration, modification, or variation of the terms of this Agreement shall be valid unless made in writing and signed by the parties hereto, and no oral understanding or agreement not incorporated herein shall be binding on either party hereto.
AGREEMENT NO. PV95-23026
To confirm your agreement with the provisions of this Agreement No. PV95-23026 please sign both copies. Copy Number 2 may be retained for your records. Please return Copy Number 1 to:
Arizona Public Service Company
P. O. Box 52034
Phoenix, AZ 85072-2034
Attention: Edna L. Roberts, Mail Station 7845
ROBERT G. MATLOCK ARIZONA PUBLIC SERVICE COMPANY
& ASSOCIATES, INC.
Signature Robert G. Matlock Signature Carl D. Churchman
------------------------- -----------------------
Name Robert G. Matlock Name Carl D. Churchman
------------------------------ ----------------------------
Title Title Director, NMMB
----------------------------- ---------------------------
Date 3-19-96 Date 3-15-96
------------------------------ ----------------------------
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SLF/ELR
Exhibit 10.9(a)
FIRST AMENDMENT TO THE
ARIZONA PUBLIC SERVICE COMPANY
SEVERANCE PLAN
Effective June 22, 1993, Arizona Public Service Company (the
"Company") established the ARIZONA PUBLIC SERVICE COMPANY SEVERANCE PLAN (the
"Plan"). By this instrument, the Company intends to amend the Plan to give
certain employees who are displaced from their positions with the Company the
option of electing a special benefit package and to make certain technical
revisions.
1. This Amendment shall amend only those Sections or subsections
set forth herein, and those Sections or subsections not specifically amended
hereby shall remain in full force and effect.
2. Section 1(f) is hereby amended in its entirety to
read as follows:
(f) "Guideline" - The Arizona Public Service Company Workforce
Management Guideline for Non-Management Employees and the Arizona
Public Service Company Workforce Management Guideline for Management
Employees, dated November 30, 1993, as the same may be amended from time
to time.
3. Section 2(b)(i) is hereby amended in its entirety
as follows:
(i) An employee who is offered a regular performance review
position with a salary grade which is within one salary grade of the
position held by the employee prior to receipt of notice of his
displacement under the Guideline;
(a) An employee eligible to participate under Section 2 shall become a participant entitled to benefits under Section 4 of the Plan if, after being notified of coverage under Section 2, he (i) accepts, in writing on a form provided by the Company, during the Election Period, the severance benefits payable under Section 4, (ii) elects, if eligible, between the severance benefits described in Section 4(a) and the severance benefits described in Section 4(b), and (iii) executes a full waiver and release of claims in such form and containing such terms and conditions as may be acceptable to the Company.
(b) An eligible employee under Section 2 who does not satisfy the
requirements set forth in Section 3(a) (other than Section 3(a)(ii))
shall not be entitled to benefits under this Plan. An eligible employee
under Section 2 who satisfies the requirements of Sections 3(a)(i) and
(iii) but not Section 3(a)(ii) shall be deemed to have elected to
receive benefits under Section 4(a).
(a) Subject to Sections 4(b) and (c) and Section 5, participants shall receive the severance benefits described herein.
(i) Severance Pay. Each participant shall receive severance
pay equal to four (4) weeks of Base Pay, plus one (1) week of
Base Pay for each Year of Service, up to a maximum of twenty-six
(26) weeks of Base Pay.
(ii) Medical and Dental Benefits. Each participant and his dependents shall continue to be covered by the medical plan and/or dental plan maintained by the Company which covered that participant and his dependents on the date on which the participant became entitled to benefits under the Plan as
described in this Section 4(a)(ii), provided that the participant
authorizes deduction of his share of the cost of such continued
coverage from the severance payments made to him pursuant to
Section 4(a)(i).
During the participant's Severance Period, the Company will continue to pay the same percentage of the cost for continued coverage under the applicable medical plan and/or dental plan for such participant and his dependents as it pays for active employees and their dependents covered by that medical plan and/or dental plan, and the participant shall be responsible for paying the remaining cost of continued coverage under the Com- pany's medical plan and/or dental plan as determined by the Company through deduction from his severance pay. For purposes of satisfying the Company's obligation under COBRA to continue group health care coverage to the participant and his dependents as a result of the participant's termination of employment, the period during which the participant and his dependents continue to participate in the Company's medical plan and/or dental plan under this Section 4(a)(ii) shall be in addition to the period during which the participant and his dependents are entitled to continued coverage under the Company's medical plan and/or dental plan under COBRA. The participant and his dependents shall be responsible for paying the full cost of any continued coverage under the Company's medical plan and/or dental plan which is elected pursuant to COBRA after the end of the participant's Severance Period and the Company shall not contribute to the cost of such coverage.
(iii) Outplacement Services. Each participant shall be eligible for outplacement services following his termination of employment. The level of outplacement services provided to a participant will be determined by the Company based on the participant's job classification upon termination of employment. Outplacement services shall be provided by the individual or organization designated by the Company in its discretion.
(iv) Training Assistance. Each participant shall be eligible for up to One Thousand Dollars ($1,000.00) as reimbursement for tuition and related expenses (not including room and board) for classes completed by that participant within twelve (12) months follow- ing his termination of employment. Tuition and related expenses shall be eligible for reimbursement only if they are attributable to classes offered by an accredited post-secondary educational or vocational institution which will enhance the participant's existing job skills, allow the participant to develop new job skills or lead to an associate, bachelor or advanced degree for the participant.
(b) Notwithstanding the foregoing and subject to Section 4(c) and
Section 5, participants who were notified of their displacement from
their positions with the Company during the period beginning April 15,
1994, and ending on May 30, 1994, and whose termination dates are not
extended by the Company, may elect the following benefits in lieu of
the benefits provided under Section 4(a).
(i) Severance Pay. Each participant shall receive severance pay equal to four (4) weeks of Base Pay, plus one and one-half (1- 1/2) weeks of Base Pay for each Year of Service, up to a maximum of thirty-nine (39) weeks of Base Pay.
(ii) Medical and Dental Benefits. Each participant and his
dependents shall continue to be covered by the medical plan
and/or dental plan maintained by the Company which covered that
participant and his dependents on the date on which the
participant became entitled to benefits under the Plan as
described in this Section 4(b)(ii), provided that the participant
authorizes deduction of his share of the cost of such continued
coverage from the severance payments made to him pursuant to
Section 4(b)(i).
During the participant's Severance Period, the Company will continue to pay the same percentage of the cost for continued coverage under the applicable medical plan and/or dental plan for such participant and his dependents as it pays for active employees
and their dependents covered by that medical plan and/or dental plan, and the participant shall be responsible for paying the remaining cost of continued coverage under the Com- pany's medical plan and/or dental plan as determined by the Company through deduction from his severance pay. For purposes of satisfying the Company's obligation under COBRA to continue group health care coverage to the participant and his dependents as a result of the participant's termination of employment, the period during which the participant and his dependents continue to participate in the Company's medical plan and/or dental plan under this Section 4(b)(ii) shall be in addition to the period during which the participant and his dependents are entitled to continued coverage under the Company's medical plan and/or dental plan under COBRA. The participant and his dependents shall be responsible for paying the full cost of any continued coverage under the Company's medical plan and/or dental plan which is elected pursuant to COBRA after the end of the par- ticipant's Severance Period and the Company shall not contribute to the cost of such coverage.
(c) Notwithstanding Section 4(a) or Section 4(b), in no event will the value of the benefits payable under Section 4 exceed the participant's Maximum Permitted Benefit.
6. The references in Section 5 and Section 8 to "Section 4(a)"
are hereby changed to "Section 4(a)(i) or Section 4(b)(i)" and the references in
Section 8 to "Section 4(b)" are hereby changed to "Section 4(a)(ii) or Section
4(b)(ii)."
7. The following sentence is hereby added to the
third paragraph of Section 12:
Any amendment to the Plan shall be in writing, approved by the Board and
executed by a duly authorized officer of the Company.
8. This amendment shall be effective April 15, 1994.
Except as amended by this instrument, the Company hereby ratifies the Plan as adopted effective June 22, 1993.
DATED: 8/19, 1994.
ARIZONA PUBLIC SERVICE COMPANY
Exhibit 10.10(a)
PINNACLE WEST CAPITAL CORPORATION
ARIZONA PUBLIC SERVICE COMPANY
SUNCOR DEVELOPMENT COMPANY
AND
EL DORADO INVESTMENT COMPANY
DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS
ARTICLE 1 - Definitions..................................................... 1
ARTICLE 2 - Selection, Enrollment, Eligibility.............................. 6
2.1 Selection by Committee........................... 6
2.2 Enrollment Requirements.......................... 6
2.3 Eligibility; Commencement of Participation....... 6
2.4 Loss of Eligibility to Participate............... 6
ARTICLE 3 - Deferral Commitments/Interest Crediting......................... 6
3.1 Deferral......................................... 6
3.2 Maximum Deferral................................. 7
3.3 Election to Defer; Effect of Election Form....... 7
3.4 Withholding of Deferral Amounts.................. 7
3.5 Interest Crediting Prior to Distribution......... 7
3.6 Installment Distribution......................... 7
3.7 FICA Taxes....................................... 8
ARTICLE 4 - Short-Term Payout and Unforeseeable Financial
Emergencies............................................. 8
4.1 Short-Term Payout................................ 8
4.2 Withdrawal Payout; Suspensions for
Unforeseeable Financial Emergencies.......................... 9
ARTICLE 5 - Retirement Benefit.............................................. 9
5.1 Retirement Benefit............................... 9
5.2 Payment of Retirement Benefits................... 9
5.3 Death Prior to Completion of Retirement
Benefits..................................................... 9
ARTICLE 6 - Pre-Retirement Survivor Benefit.................................10
6.1 Pre-Retirement Survivor Benefit..................10
6.2 Payment of Pre-Retirement Survivor Benefits......10
6.3 Restriction in the Event of Suicide or Falsely
Provided Information.........................................10
ARTICLE 7 - Termination Benefit.............................................10
7.1 Termination Benefits.............................10
7.2 Payment of Termination Benefit...................11
7.3 Death Prior to Pay Out...........................11
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ARTICLE 8 - Disability Waiver and Benefit...................................12
8.1 Disability Waiver................................12
8.2 Disability Benefit...............................12
ARTICLE 9 - Beneficiary Designation.........................................13
9.1 Beneficiary......................................13
9.2 Beneficiary Designation and Change; Spousal
Consent..........................................13
9.3 Acknowledgment...................................13
9.4 No Beneficiary Designation.......................13
9.5 Doubt as to Beneficiary..........................13
9.6 Discharge of Obligations.........................14
ARTICLE 10 - Leave of Absence...............................................14
10.1 Paid Leave of Absence............................14
10.2 Unpaid Leave of Absence..........................14
ARTICLE 11 - Termination, Amendment or Modification.........................14
11.1 Termination......................................14
11.2 Amendment........................................15
11.3 Interest Rate in the Event of a Change in
Control..........................................15
11.4 Effect of Payment................................17
ARTICLE 12 - Administration.................................................17
12.1 Committee Duties.................................17
12.2 Agents...........................................17
12.3 Binding Effect of Decisions......................17
12.4 Indemnity of Committee...........................17
12.5 Employer Information.............................17
ARTICLE 13 - Other Benefits and Agreements..................................18
13.1 Coordination with Other Benefits.................18
13.2 Transfers to the Plan............................18
ARTICLE 14 - Claims Procedures..............................................19
14.1 Presentation of Claim............................19
14.2 Notification of Decision.........................19
14.3 Review of a Denied Claim.........................19
14.4 Decision on Review...............................20
14.5 Legal Action.....................................20
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ARTICLE 15 - Miscellaneous..................................................20
15.1 Unsecured General Creditor.......................20
15.2 Employer's Liability.............................20
15.3 Nonassignability.................................21
15.4 Not a Contract of Employment.....................21
15.5 Furnishing Information...........................21
15.6 Terms............................................21
15.7 Captions.........................................21
15.8 Governing Law....................................21
15.9 Validity.........................................21
15.10 Notice...........................................22
15.11 Successors.......................................22
15.12 Spouse's Interest................................22
15.13 Incompetent......................................22
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PINNACLE WEST CAPITAL CORPORATION
ARIZONA PUBLIC SERVICE COMPANY
SUNCOR DEVELOPMENT COMPANY
AND
EL DORADO INVESTMENT COMPANY
DEFERRED COMPENSATION PLAN
Effective January 1, 1992, Pinnacle West Capital Corporation, an Arizona corporation (the "Company"), established the Pinnacle West Capital Corporation, Arizona Public Service Company, SunCor Development Company and El Dorado Investment Company Deferred Compensation Plan (the "Plan") for the purpose of providing specified benefits to a select group of management, highly compensated employees and Directors who contribute materially to the continued growth, development and future business success of the Company, Arizona Public Service Company, SunCor Development Company, El Dorado Investment Company, and their subsidiaries. The Plan was thereafter amended several times. By this amendment and restatement in the entirety, the Company intends to incorporate all prior amendments and to make certain technical and clarifying revisions.
ARTICLE 1
Definitions
For purposes hereof, unless otherwise clearly apparent from the context, the following phrases or terms shall have the following indicated meanings:
1.1 "Account Balance" shall mean the sum of (i) the Deferral Amount, plus
(ii) interest credited in accordance with all the applicable interest
crediting provisions of the Plan, reduced by all Short-Term Payouts,
if made. This account shall be a bookkeeping entry only and shall be
utilized solely as a device for the measurement and determination of
the amounts to be paid to the Participant pursuant to this Plan.
1.2 "Annual Deferral" shall mean that portion of a Participant's Base Annual Salary, Year-End Bonus and/or Directors Fees that a Participant elects to have and is deferred, in accordance with Article 3, for any one Plan Year. In the event of Re- tirement, Disability, death or a Termination of Employment prior to the end of a Plan Year, such year's Annual Deferral shall be the actual amount withheld prior to such event.
1.3 "Base Annual Salary" shall mean the annual compensation, excluding
bonuses, commissions, overtime, incentive payments, non-monetary
awards, Directors Fees and other fees, paid to a Participant for
employment services rendered to any Employer, before reduction for
compensation deferred pursuant to all qualified, non-qualified and
Code Section 125 compensation plans of any Employer.
1.4 "Beneficiary" shall mean one or more persons, trusts, estates or other
entities, designated in accordance with Article 9, that are entitled
to receive benefits under this Plan upon the death of a Participant.
1.5 "Beneficiary Designation Form" shall mean the form established from
time to time by the Committee that a Participant completes, signs and
returns to the Committee to designate one or more Beneficiaries.
1.6 "Board" shall mean the Board of Directors of the Company.
1.7 "Bonus Rate" for a Plan Year shall mean an interest rate determined
for each Plan Year by the Committee, in its sole discretion, which
rate shall be determined on or before the first business day of the
month that precedes the beginning of the Plan Year for which the rate
applies.
1.8 "Change in Control" shall have the meaning set forth in Section 11.3.
1.9 "Claimant" shall have the meaning set forth in Section 14.1.
1.10 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.11 "Committee" shall mean the administrative committee appointed to
manage and administer the Plan in accordance with its provisions
pursuant to Article 12.
1.12 "Company" shall mean Pinnacle West Capital Corporation, an Arizona
corporation.
1.13 "Crediting Rate" for a Plan Year shall mean a rate of interest equal
to the ten-year U.S. Treasury Note rate as published on the last
business day of the first week of October preceding a Plan Year.
1.14 "Deferral" shall mean the sum of all of a Participant's Annual
Deferrals.
1.15 "Director" shall mean any member of the board of directors of an
Employer.
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1.16 "Directors Fees" shall mean the annual fees paid by an Employer,
including retainer fees and meetings fees, as compensation for serving
on a board of directors of an Employer.
1.17 "Disability" shall mean a period of disability during which a
Participant qualifies for benefits under the Participant's Employer's
long-term disability plan or, if a Participant does not participate in
such a plan, a period of disability during which the Participant would
have qualified for benefits under such a plan, as determined in the
sole discretion of the Committee, had the Participant been a
participant in such a plan.
1.18 "Disability Benefit" shall mean the benefit set forth in Article 8.
1.19 "Effective Date" shall mean January 1, 1996.
1.20 "Election Form" shall mean the form established from time to time by
the Committee that a Participant completes, signs and returns to the
Committee to make an election under the Plan.
1.21 "Employer" shall mean the Company, Arizona Public Service Company, an
Arizona corporation, SunCor Development Company, an Arizona
corporation, El Dorado Investment Company, an Arizona corporation,
and/or any subsidiaries of such corporations that have been selected
by the Board to participate in the Plan.
1.22 "Participant" shall mean any employee or Director of an Employer (i)
who is selected to participate in the Plan, (ii) who elects to
participate in the Plan, (iii) who signs a Plan Agreement, an Election
Form and a Beneficiary Designation Form, (iv) whose signed Plan
Agreement, Election Form and Beneficiary Designation Form are accepted
by the Committee, (v) who commences participation in the Plan on his
or her Plan Entry Date, and (vi) whose Plan Agreement has not
terminated.
1.23 "Plan" shall mean the Pinnacle West Capital Corporation, Arizona
Public Service Company, SunCor Development Company and El Dorado
Investment Company Deferred Compensation Plan, which shall be
evidenced by this instrument and by each Plan Agreement, as amended
from time to time.
1.24 "Plan Agreement" shall mean a written agreement, as amended from time
to time, which is entered into by and between an Employer and a
Participant. Each Plan Agreement executed by a Participant shall
provide for the entire benefit to which such Participant is entitled
to under the Plan, and the Plan Agreement bearing the latest date of
acceptance by the Committee shall govern such entitlement.
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1.25 "Plan Entry Date" shall mean one of two dates in any Plan Year on
which an employee or Director selected by the Committee to participate
in the Plan is eligible to commence participation in the Plan in
accordance with Article 3. The two entry dates are January 1 and July
1.
1.26 "Plan Year" shall begin on January 1 of each year and continue through
December 31.
1.27 "Preferred Rate" for a Plan Year shall mean the Crediting Rate plus
the Bonus Rate for such Plan Year.
1.28 "Pre-Retirement Survivor Benefit" shall mean the benefit set forth in
Article 6.
1.29 "Retirement" and "Retires" shall mean, with respect to an employee,
severance from employment with all Employers for any reason other than
a leave of absence, death or Disability on or after the earlier of the
|
attainment of (a) age sixty-five (65) with five (5) Years of Service or (b) age fifty-five (55) with ten (10) Years of Service; and shall mean, with respect to a Director who is not an employee, severance of his or her directorship(s) with all Employers on or after the earlier of the attainment of (x) age sixty-five (65) with five (5) Years of Service as a Director or (y) age fifty-five (55) with ten (10) Years
of Service as a Director. If a Participant is both an employee and a
Director, Retirement shall not occur until he or she Retires as both
an employee and a Director; provided, however, that such a
Participant may elect, in accordance with the policies and procedures
established by the Committee, to Retire for purposes of this Plan at
the time he or she Retires as an employee of all Employers.
1.30 "Retirement Benefit" shall mean the benefit set forth in Article 5.
1.31 "SEBP" shall mean the Pinnacle West Capital Corporation, Arizona
Public Service Company, SunCor Development Company and El Dorado
Investment Company Supplemental Executive Benefit Plan, as the same
may be amended from time to time.
1.32 "Short-Term Payout" shall mean the payout set forth in Section 4.1.
1.33 "Termination Benefit" shall mean the benefit set forth in Article 7.
1.34 "Termination of Employment" shall mean the ceasing of employment by an
employee with all Employers or ceasing service as a Director of all
Employers, voluntarily or involuntarily, for any reason other than
Retirement, Disability, leave of absence or death. If a Participant is
both an employee and a Direc-
|
tor, a Termination of Employment shall occur only upon the termination
of the last position held; provided, however, that such a Participant
may elect, in accordance with the policies and procedures established
by the Committee, to be treated for purposes of this Plan as having
experienced a Termination of Employment at the time he or she ceases
employment with all Employers as an employee.
1.35 "Unforeseeable Financial Emergency" shall mean an unanticipated
emergency that is caused by an event beyond the control of the
Participant that would cause severe financial hardship to the
Participant as a result of (i) a sudden and unexpected illness or
accident of the Participant or a dependent of the Participant, (ii) a
loss of the Participant's property due to casualty or (iii) such other
extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant, all as determined in the
sole discretion of the Committee.
1.36 "Year-End Bonus" shall mean compensation paid to a Participant who is
an employee as an annual bonus under any Employer's regular annual
bonus and incentive plans. Special bonuses or incentive payments made
to a Participant shall not constitute "Year-End Bonuses."
1.37 "Years of Plan Participation" shall mean the total number of full Plan
Years a Participant has been a participant in the Plan and has either
(i) made deferral elections or (ii) had an Account Balance. For
purposes of a Participant's first Plan Year of participation only, any
partial Plan Year of partici- pation shall be treated as a full Plan
Year. A single Plan Year of Plan participation described above shall
be referred to as a "Year of Plan Participation."
1.38 "Years of Service" shall mean the total number of years of employment
during which a Participant has been credited with at least 1,000 hours
of service in each of those years. For purposes of this definition
only, (i) Participants who are employees shall be credited with ten
(10) hours of service for each working day during which they are
employed by the Employer and Participants who are Directors shall be
credited with ten (10) hours of service for each day (other than
weekend days) during which they serve as a Director, provided that no
Participant shall be credited with more than 1,000 hours of service in
any one year of employment, and (ii) a year of employment shall be a
365 day period (or 366 day period in the case of a leap year) that,
for the first year of employment, commences on the employee's date of
hiring or the date the Director begins his service as a Director and
that, for any subsequent year, commences on an anniversary of that
date.
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ARTICLE 2
Selection, Enrollment, Eligibility
2.1 Selection by Committee. Participation in the Plan shall be limited to a select group of management, highly compensated employees and Directors of the Employers. From that group, the Committee shall select, in its sole discretion, employees and Directors of the Employers to participate in the Plan.
2.2 Enrollment Requirements. As a condition to participation, each selected employee or Director shall complete, execute and return to the Committee a Plan Agreement, an Election Form and a Beneficiary Designation Form. In addition, the Committee, in its sole discretion, shall establish from time to time such other enrollment requirements as it determines in its sole discretion are necessary.
2.3 Eligibility; Commencement of Participation. If an employee or Director selected to participate in the Plan has met all enrollment requirements set forth in this Plan and required by the Committee, that employee or Director shall commence participation in the Plan on the Plan Entry Date that immediately follows his or her selection to participate in the Plan. If a selected employee or Director fails to meet all such requirements prior to that Plan Entry Date, that employee or Director shall not be eligible to participate in the Plan until the Plan Entry Date that follows his or her completion of those requirements.
2.4 Loss of Eligibility to Participate. If the status of a Participant changes, without Termination of Employment, so that he is no longer an employee eligible to participate pursuant to Section 2.1 or if the Committee fails to designate a Participant for continued participation as required under Section 2.1, he shall become an inactive Participant as of the last day of the Plan Year in which such change of status or such failure by the Committee occurred. Inactive Participants shall continue to participate in the Plan for all purposes other than for purposes of making deferrals under Section 3.1 and 3.2.
ARTICLE 3
Deferral Commitments/Interest Crediting
3.1 Deferral. Subject to Section 3.2 below, a Participant may defer, for each Plan Year starting with his or her commencement of participation in the Plan and ending immediately prior to his or her Retirement, death or Termination of Employment, none or any portion of his or her Base Annual Salary, Year-End Bonus and/or Directors Fees.
3.2 Maximum Deferral. For each Plan Year, a Participant may defer up to fifty percent (50%) of his or her Base Annual Salary, up to one hundred percent (100%) of his or her Year-End Bonus and/or up to one hundred percent (100%) of his or her Directors Fees.
3.3 Election to Defer; Effect of Election Form. In connection with a Participant's commencement of participation in the Plan, the Participant may elect to defer from his or her Base Annual Salary, Year-End Bonus and/or Directors Fees an Annual Deferral by delivering to the Committee a completed Election Form, which election and form must be accepted by the Committee for a valid election to exist. For each succeeding Plan Year, a new Election Form for a Plan Year must be delivered to the Committee, in accordance with its rules and procedures, before the end of the immediately preceding Plan Year. If no Election Form is delivered and accepted for a Plan Year, no Annual Deferral will be withheld for that Plan Year.
3.4 Withholding of Deferral Amounts. For each Plan Year, the Base Annual Salary portion of the Annual Deferral shall be withheld each payroll period from the Participant's Base Annual Salary in equal amounts. The Year-End Bonus and/or Directors Fees portion of the Annual Deferral shall be withheld at the time the Year-End Bonus and/or Director Fees are or would otherwise be paid to the Participant.
3.5 Interest Crediting Prior to Distribution. Prior to any distribution of benefits under Articles 4, 5, 6, 7 or 8, interest shall be credited and compounded annually on a Participant's Account Balance as though the Annual Deferral for that Plan Year was withheld at the beginning of the Plan Year or, in the case of the first year of Plan participation, was withheld on the Participant's Plan Entry Date. The rate of interest for crediting shall be the Preferred Rate, unless otherwise provided in this Plan. In the event of Retirement, Disability, death or a Termination of Employment prior to the end of a Plan Year, the basis for that year's interest crediting will be a fraction of the full year's interest based on the amount actually deferred for the Plan Year as of the date of the Participant's Retirement, Disability, death or Termination of Employment and based further on the number of full months that the Participant was employed with or served as a Director of the Employer during the Plan Year prior to the occurrence of such event. If a Short-Term Payout is made, for purposes of crediting interest, the Account Balance shall be reduced as of the first day of the Plan Year in which the Short-Term Payout is made.
3.6 Installment Distribution. In the event a benefit is paid in installments under Articles 5, 6, 7 or 8, installment payment amounts shall be determined in the following manner:
(a) Interest Rate. The interest rate to be used to calculate
installment payment amounts shall be a fixed interest rate that is
determined by averaging the Preferred Rates for the Plan Year in which
a Participant becomes eligible to receive a benefit and the four (4)
preceding Plan Years. If a Participant has completed fewer than five
(5) Plan Years, this average shall be determined using the Crediting
Rates for the Plan Years during which the Participant participated in
the Plan. Notwithstanding the foregoing, if the terminated Participant
elects installment distributions at age fifty-five (55), the
applicable interest rate(s) to be used from the termination date until
age fifty-five (55) shall be determined in accordance with the table
set forth in Section 7.1, by using the Crediting Rates or Preferred
Rates, as the case may be.
(b) Installment Payments. For purposes of calculating installment payment amounts, each annual installment payment, starting with the first payment [which for this purpose is deemed to be paid as of the date that the Participant becomes eligible to receive a benefit under this Plan (the "Eligibility Date")] and continuing thereafter for each additional year that starts on the anniversary of the Eligibility Date until the Participant's Account Balance is paid in full, shall be deemed to have been paid prior to the crediting of interest for that year. (The result of this is that interest crediting shall be made after taking into account the annual installment payment for that year.)
(c) Amortization. Based on the interest rate determined in accordance with Section 3.6(b) above, the Participant's Account Balance shall be amortized in equal installment payments over the term of the specified payment period. The resulting number shall be the installment payment that is to be paid each year.
3.7 FICA Taxes. For each Plan Year in which an Annual Deferral is being withheld, the Participant's Employer(s) shall ratably withhold from that portion of the Participant's Base Annual Salary that is not being deferred, the Participant's share of FICA taxes based on an amount equal to the Base Annual Salary before reduction by the Annual Deferral.
ARTICLE 4
Short-Term Payout and Unforeseeable Financial Emergencies
4.1 Short-Term Payout. In connection with each election to defer an Annual Deferral, a Participant may elect to receive a future Short-Term Payout from the Plan with respect to that Annual Deferral. The Short-Term Payout shall be a lump sum payment in an amount that is equal to the Annual Deferral plus interest credited at the Preferred Rate, and it shall be paid
within sixty (60) days of the first day of the Plan Year that is five
(5) years after the first day of the Plan Year in which the Annual
Deferral is actually deferred. Notwithstanding the foregoing, amounts
transferred to this Plan pursuant to Section 13.2 shall not be
eligible for a Short-Term Payout.
4.2 Withdrawal Payout; Suspensions for Unforeseeable Financial Emergencies. If the Participant experiences an Unforeseeable Financial Emergency, the Participant may petition the Committee to (i) suspend any deferrals required to be made by a Participant and/or (ii) receive a partial or full payout from the Plan. The payout shall not exceed the lesser of (i) the Participant's Account Balance, calculated as if such Participant were receiving a Termination Benefit, or (ii) the amount reasonably needed to satisfy the Unforeseeable Financial Emergency. If, subject to the sole discretion of the Committee, the petition for a suspension and/or payout is approved, suspension shall take effect upon the date of approval and any payout shall be made within sixty (60) days of the date of approval.
ARTICLE 5
Retirement Benefit
5.1 Retirement Benefit. A Participant who Retires shall receive, as a Retirement Benefit, his or her Account Balance.
5.2 Payment of Retirement Benefits. A Participant, in connection with his
or her commencement of participation in the Plan, shall elect on an
Election Form to receive the Retirement Benefit in a lump sum or in
equal annual payments over a period of five (5), ten (10) or fifteen
(15) years (the latter determined in accordance with Section 3.6
above). The Partic- ipant may change this election to an allowable
alternative payout period by submitting a new Election Form to the
Commit- tee, provided that any such Election Form is submitted at
least two (2) years prior to the Participant's Retirement. Subject to
the foregoing, the Election Form most recently accepted by the
Committee shall govern the payout of the Retirement Benefit. The lump
sum payment shall be made, or installment payments shall commence, no
later than sixty (60) days from the date the Participant Retires.
5.3 Death Prior to Completion of Retirement Benefits. If a Participant dies after Retirement but before the Retirement Benefit is paid in full, the Participant's unpaid Retirement Benefit payments shall continue and shall be paid to the Participant's Beneficiary over the remaining number of years and in the same amounts as that benefit would have been paid to the Participant had the Participant survived.
ARTICLE 6
Pre-Retirement Survivor Benefit
6.1 Pre-Retirement Survivor Benefit. Except as provided in Section 6.3 below, if a Participant dies before he or she Retires, experiences a Termination of Employment or suffers a Disability, the Participant's Beneficiary shall receive a Pre- Retirement Survivor Benefit equal to the Participant's Account Balance.
6.2 Payment of Pre-Retirement Survivor Benefits. The Pre-Retire- ment Survivor Benefit shall be paid in a lump sum. However, if the Pre-Retirement Survivor Benefit exceeds $25,000, payment may, at the sole discretion of the Committee, be made in equal monthly payments over a period of time. In no event, however, shall that period of time exceed the payment period previously elected by the Participant for the payment of the Retirement Benefit, or, if no election was made, fifteen (15) years. The first (or only payment, if made in lump sum) shall be made within sixty (60) days of the Committee's receiving proof of the Participant's death.
6.3 Restriction in the Event of Suicide or Falsely Provided Information. In the event of a Participant's suicide within two (2) years after the Participant first becomes a Participant, or in the event the Participant's death is determined to be from a bodily or mental cause or causes, the information about which was withheld, knowingly concealed, or falsely provided by the Participant if requested to furnish evidence of good health, the Pre-Retirement Survivor Benefit shall be equal to the Participant's Deferral, without interest, all determined as of his or her date of death.
ARTICLE 7
Termination Benefit
7.1 Termination Benefits. If the Participant experiences a Termination of Employment prior to his or her Retirement, death or Disability, the Participant shall receive a Termination Benefit, which shall be equal to the Participant's Account Balance as of the date of his or her Termination of Employment, with interest credited in the manner provided in Section 3.5 above, but using the applicable interest rate set forth in the following schedule:
Completion of Years of Plan Participation
Prior to Termination of Employment Applicable Rate
----------------------------------------- ---------------
Less than five years Crediting Rate
Five or more years Preferred Rate
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7.2 Payment of Termination Benefit.
(a) Lump Sum or Installments. In connection with his or her
commencement of participation in the Plan, a Participant shall elect
on an Election Form to receive the Termination Benefit in a lump sum
or in equal annual payments (the latter determined in accordance with
Section 3.6 above) over a period of five (5), ten (10) or fifteen (15)
years. If a Participant elects a lump sum payment, he or she shall
specify whether the lump sum will be paid within sixty (60) days of
(i) his or her Termination of Employment or (ii) his or her attainment
of age fifty-five (55) following Termination of Employment. If the
Participant elects installment payments, they will begin within sixty
(60) days of the Participant's 55th birthday (or his or her
Termination of Employment, if the Participant is over age fifty-five
(55) upon his or her Termination of Employment). The Participant may
change his or her election to an allowable alternative payout period
by submitting a new Election Form to the Committee, provided that any
such Election Form is submitted at least two (2) years prior to the
Participant's Termination of Employment and is accepted by the
Committee in its sole discretion. Notwithstanding the foregoing, each
Participant in the Plan shall be given an opportunity during 1995 to
make an election with respect to his or her Termination Benefit, and
such election, if accepted by the Committee, shall be treated, for
purposes of this Section 7.2(a), as the initial election for the
payment of the Termination Benefit. Failure to make an election will
result in the Termination Benefit paid in a lump sum at the time of
the Participant's Termination of Employment.
Subject to the foregoing, the Election Form most recently accepted by the Committee shall govern the payout of the Termination Benefit.
(b) Commencement of Payments. Payment of the Termination Benefit shall commence within sixty (60) days of the date elected by the Participant in accordance with Section 7.2(a) above.
7.3 Death Prior to Pay Out.
(a) Death Prior to Commencement of Payments. If a Participant dies prior to the payout date that he or she elected for his or her Termination Benefit, his or her Termination Benefit shall be paid in a lump sum within sixty (60) days of the date that the Committee receives proof of the Participant's death.
(b) Death After Commencement. If a Participant dies after the commencement of the payment of his or her Termination
Benefit, but before the Termination Benefit is paid in full, the Participant's unpaid Termination Benefit payments shall continue and shall be paid to the Participant's Beneficiary over the remaining number of years and in the same amounts as that benefit would have been paid to the Participant had the Participant survived.
ARTICLE 8
Disability Waiver and Benefit
8.1 Disability Waiver.
(a) Eligibility. By participating in the Plan, all Participants are eligible for this waiver.
(b) Waiver of Deferral; Credit for Plan Year of Disability. A Participant who is determined by the Committee to be suffering from a Disability shall be excused from fulfilling that portion of the Annual Deferral commitment that would otherwise have been withheld from a Participant's Base Annual Salary, Year-End Bonus and/or Directors Fees for the Plan Year during which the Participant first suffers a Disability. In addition, the Participant's Account Balance shall be credited with that portion of the Annual Deferral commitment that is excused in accordance with the preceding sentence, unless the Disability ceases in the Plan Year that it commences, in which case, the crediting shall apply only for the period of Disability.
(c) Return to Work. If a Participant returns to employment with an Employer after a Disability ceases, the Participant may elect to defer an Annual Deferral for the Plan Year following his or her return to employment and for every Plan Year thereafter; provided such deferral elections are otherwise allowed and an Election Form is delivered to and accepted by the Committee for each such election in accordance with Section 3.3 above.
8.2 Disability Benefit. A Participant suffering a Disability shall, for benefit purposes under this Plan, continue to be considered to be employed and shall be eligible for the benefits provided for in Articles 4, 5, 6 or 7 in accordance with the provisions of those Articles. Notwithstanding the above, the Committee shall have the right, in its sole and absolute discretion and for purposes of this Plan only, to terminate a Participant's employment or service as a Director at any time after such Participant is determined to be permanently disabled under the Participant's Employer's long- term disability plan or would have been determined to be permanently disabled had he or she participated in that plan. In determining the Participant's Account Balance for purposes
of the Disability Benefit described in the previous sentence, the Preferred Rate shall be used in lieu of the rates specified in Section 7.1.
ARTICLE 9
Beneficiary Designation
9.1 Beneficiary. Each Participant shall have the right, at any time, to designate his or her Beneficiary (both primary as well as contingent) to receive any benefits payable under the Plan to a Beneficiary upon the death of a Participant.
9.2 Beneficiary Designation and Change; Spousal Consent. A Participant shall designate his or her Beneficiary by completing and signing the Beneficiary Designation Form, and returning it to the Committee or its designated agent. A Participant shall have the right to change a Beneficiary by completing, signing and otherwise complying with the terms of the Beneficiary Designation Form and the Committee's rules and procedures, as in effect from time to time. If the Participant names, with respect to more than fifty percent (50%) of his or her benefit under this Plan, someone other than his or her spouse as a Beneficiary, a spousal consent, in the form designated by the Committee, must be signed by that Participant's spouse and returned to the Committee. Upon the acceptance by the Committee of a new Beneficiary Designation Form, all Beneficiary designations previously filed shall be cancelled. The Committee shall be entitled to rely on the last Beneficiary Designation Form filed by the Participant and accepted by the Committee prior to his or her death.
9.3 Acknowledgment. No designation or change in designation of a Beneficiary shall be effective until received, accepted and acknowledged in writing by the Committee or its designated agent.
9.4 No Beneficiary Designation. If a Participant fails to designate a Beneficiary as provided in Sections 9.1, 9.2 and 9.3 above or, if all designated Beneficiaries predecease the Participant or die prior to complete distribution of the Participant's benefits, then the Participant's designated Beneficiary shall be deemed to be his or her surviving spouse. If the Participant has no surviving spouse, the benefits remaining under the Plan to be paid to a Beneficiary shall be payable to the executor or personal representative of the Participant's estate.
9.5 Doubt as to Beneficiary. If the Committee has any doubt as to the proper Beneficiary to receive payments pursuant to this Plan, the Committee shall have the right, exercisable in its discretion, to cause the Participant's Employer to
withhold such payments until this matter is resolved to the Committee's satisfaction.
9.6 Discharge of Obligations. The payment of benefits under the Plan to a Beneficiary shall fully and completely discharge all Employers and the Committee from all further obligations under this Plan with respect to the Participant, and that Participant's Plan Agreement shall terminate upon such full payment of benefits.
ARTICLE 10
Leave of Absence
10.1 Paid Leave of Absence. If a Participant is authorized by the
Participant's Employer for any reason to take a paid leave of absence
from the employment of the Employer, the Participant shall continue to
be considered employed by the Employer and the Annual Deferral shall
continue to be withheld during such paid leave of absence in
accordance with Section 3.3.
10.2 Unpaid Leave of Absence. If a Participant is authorized by the
Participant's Employer for any reason to take an unpaid leave of
absence from the employment of the Employer, the Participant shall
continue to be considered employed by the Employer and the Participant
shall be excused from making deferrals until the earlier of the date
the leave of absence expires or the Participant returns to a paid
employment status. Upon such expiration or return, deferrals shall
resume for the remaining portion of the Plan Year in which the
expiration or return occurs, based on the deferral election, if any,
made for that Plan Year prior to the leave of absence.
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ARTICLE 11
Termination, Amendment or Modification
11.1 Termination. Any Employer reserves the right to terminate the Plan at
any time with respect to Participants whose services are retained by
that Employer. Upon the termination of the Plan, all Plan Agreements
shall terminate and a Participant's Account Balance shall be paid out
in accordance with the benefits that the Participant would have
received if the Participant had experienced a Termination of
Employment on the date of Plan termination or, if Plan termination
occurs after the date upon which the Participant was eligible to
Retire, the Participant had Retired on the date of Plan termination.
Prior to a Change in Control, the Employer shall have the right, in
its sole discretion, and notwithstanding any elections made by the
Participant, to pay such benefits in a lump sum or in monthly
installments for up to fifteen
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(15) years, with interest credited during the installment period as
provided in Section 3.6 but utilizing an average of Crediting Rates
instead of an average of Preferred Rates. After a Change in Control,
the Employer shall be required to pay such benefits in a lump sum. The
termination of the Plan shall not adversely affect any Participant or
Beneficiary who has become entitled to the payment of any benefits
under the Plan as of the date of termination; provided however, that
the Employer shall have the right to accelerate installment payments
by paying the present value equivalent of such payments, using the
Crediting Rate for the Plan Year in which the termination occurs as
the discount rate, in a lump sum or pursuant to a different payment
schedule.
11.2 Amendment. The Company may, at any time, amend or modify the Plan in
whole or in part with respect to any Employer or all Employers,
provided, however, that no amendment or modifica- tion shall be
effective to decrease or restrict the present value equivalent, using
the Crediting Rate for the Plan Year of the amendment or modification
as the discount rate, of a Participant's Account Balance in existence
at the time the amendment or modification is made, calculated as if
the Participant had experienced a Termination of Employment as of the
effective date of the amendment or modification, or if the amendment
or modification occurs after the date upon which the Participant was
eligible to Retire, the Participant had Retired as of the effective
date of the amendment or modification. The amendment or modification
of the Plan shall not affect any Participant or Beneficiary who has
become entitled to the payment of benefits under the Plan as of the
date of the amendment or modification; provided however, that the
Employer effected by such amendment or modification shall have the
right to accelerate installment payments by paying the present value
equivalent of such payments, using the Crediting Rate for the Plan
Year of the amendment or modification as the discount rate, in a lump
sum or pursuant to a different payment schedule.
11.3 Interest Rate in the Event of a Change in Control.
(a) Change in Control. A "Change in Control" shall be deemed to occur
six (6) months prior to the occurrence of the first of any of the
following events:
(i) A change in control of the Company of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A
of Regulation 14A promulgated under the Securities and Exchange
Act of 1934 (the "Act"), or any successor regulation of similar
import, regardless of whether the Company is subject to such
reporting requirement;
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(ii) A change in control of ownership of the Company through a transaction or series of transactions, such that any person (as that term is used in Sections 13 and 14(d)(2) of the Act) is or becomes the beneficial owner (as that term is used in Section 13(d) of the Act), directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the combined voting power of the Company's then outstanding securities;
(iii) Any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of the common stock of the Company would be converted into cash, securities or other property, other than a merger of the Company in which the holders of the common stock of the Company immediately prior to the merger have the same proportionate ownership of common stock of the surviving corporation immediately after the merger;
(iv) The shareholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company;
(v) During any period of two (2) consecutive years, individuals who, at the beginning of such period, constituted the Board cease, for any reason, to constitute at least a majority thereof, unless the election or nomination for election of each new director was approved by the vote of at least two-thirds (2/3) of the directors then still in office who were directors at the beginning of the period;
(vi) Substantially all of the assets of the Company and its subsidiaries, in the aggregate, are sold or otherwise transferred to parties that are not within a "controlled group of corporations" (as defined in Section 1563 of Code) in which the Company is a member; or
(vii) More than eighty percent (80%) of the stock, or
substantially all of the assets of, any Employer, other than the
Company, are sold or otherwise transferred to parties that are
not within a "controlled group of corporations" (as defined in
Section 1563 of the Code) in which that Employer is a member,
provided that any such event shall constitute a Change in Control
only with respect to that Employer and its employees or Directors
who are Participants.
(b) Interest Rate. If a Change in Control occurs, the applicable interest rate to be used in determining a Partici-
pant's benefit in connection with a Termination of Employment after the Change in Control, or a Plan termination, amendment or modification under Sections 11.1 and 11.2 after a Change in Control, shall be the Preferred Rate. The Crediting Rate for the Plan Year in which the Change in Control occurs, and not the Preferred Rate, shall be used as the discount rate for determining present value.
11.4 Effect of Payment. The full payment of the applicable benefit under Articles 5, 6, 7 or 8 of the Plan shall completely discharge all obligations to a Participant under this Plan and the Participant's Plan Agreement shall terminate.
ARTICLE 12
Administration
12.1 Committee Duties. This Plan shall be administered by a Committee which
shall consist of persons approved by the Board. Members of the
Committee may be Participants under this Plan. The Committee shall
also have the discretion and authority to make, amend, interpret, and
enforce all appropriate rules and regulations for the administration
of this Plan and decide or resolve any and all questions including
interpretations of this Plan, as may arise in connection with the
Plan.
12.2 Agents. In the administration of this Plan, the Committee may, from
time to time, employ agents and delegate to them such administrative
duties as it sees fit and may from time to time consult with counsel
who may be counsel to any Employer.
12.3 Binding Effect of Decisions. The decision or action of the Committee
with respect to any question arising out of or in connection with the
administration, interpretation and application of the Plan and the
rules and regulations promulgated hereunder shall be final and
conclusive and binding upon all persons having any interest in the
Plan.
12.4 Indemnity of Committee. All Employers shall indemnify and hold
harmless the members of the Committee against any and all claims,
losses, damages, expenses or liabilities arising from any action or
failure to act with respect to this Plan, except in the case of
willful misconduct by the Committee or any of its members.
12.5 Employer Information. To enable the Committee to perform its
functions, each Employer shall supply full and timely information to
the Committee on all matters relating to the compensation of its
Participants, the date and circumstances
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of the Retirement, Disability, death or Termination of Employment of its Participants, and such other pertinent information as the Committee may reasonably require.
ARTICLE 13
Other Benefits and Agreements
13.1 Coordination with Other Benefits. Except as provided in this Section,
the benefits provided for a Participant and Participant's Beneficiary
under the Plan are in addition to any other benefits available to such
Participant under any other plan or program for employees or directors
of the Participant's Employer. The Plan shall supplement and shall not
supersede, modify or amend any other such plan or program except as
may otherwise be expressly provided.
In the event a Participant receives or becomes entitled to
receive a benefit under the SEBP, the benefits to be received under
this Plan shall be offset and reduced (but not below zero) by the
benefits paid under the SEBP. In determining the amount that should
offset and reduce benefits under this Plan, the amount paid under the
SEBP shall be translated into its future value by assuming it earned
interest from the date of payment to the Participant, in accordance
with the crediting provisions of Sections 3.5 and 3.6, to the date the
benefit under this Plan becomes due and payable.
13.2 Transfers to the Plan. Any Participant who was a participant in the
Arizona Public Service Company Deferred Compensation Plan, the
Pinnacle West Capital Corporation Deferred Compen- sation Plan, the
Arizona Public Service Company Directors' Deferred Compensation Plan
or the Pinnacle West Capital Corporation Directors' Deferred
Compensation Plan prior to becoming a Participant in this Plan shall
have the right to elect, upon the date upon which he or she first
becomes designated for participation in the Plan, to transfer his or
her Deferral Option I account balance in that plan to this Plan. This
election shall be made in accordance with the rules and on the forms
established from time to time by the Committee. If the election is
made, the Participant's Deferral Option I account balance under the
other plan shall be added to his or her Account Balance under this
Plan and any such transferred account balance shall become subject to
the terms and conditions of this Plan. Upon the completion of the
transfer of his or her account balance under the other plan to this
Plan, the Participant's participation in Deferral Option I of the
other plan shall terminate and he or she shall have no further
interest in Deferral Option I of that plan.
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ARTICLE 14
Claims Procedures
14.1 Presentation of Claim. Any Participant or Beneficiary of a deceased
Participant (such Participant or Beneficiary being referred to below
as a "Claimant") may deliver to the Committee a written claim for a
determination with respect to the amounts distributable to such
Claimant from the Plan. If such a claim relates to the contents of a
notice received by the Claimant, the claim must be made within sixty
(60) days after such notice was received by the Claimant. All other
claims must be made within one hundred eighty (180) days of the date
on which the event that caused the claim to arise occurred. The claim
must state with particularity the determination desired by the
Claimant.
14.2 Notification of Decision. The Committee shall consider a Claimant's
claim within a reasonable time, and shall notify the Claimant in
writing:
(a) that the Claimant's requested determination has been made, and
that the claim has been allowed in full; or
(b) that the Committee has reached a conclusion contrary, in whole or
in part, to the Claimant's requested determination, and such notice
must set forth in a manner calculated to be understood by the
Claimant:
(i) the specific reason(s) for the denial of the claim, or any
part of it;
(ii) specific reference(s) to pertinent provisions of the Plan
upon which such denial was based;
(iii) a description of any additional material or information
necessary for the Claimant to perfect the claim, and an
explanation of why such material or information is necessary; and
(iv) an explanation of the claim review procedure set forth in
Section 14.3 below.
14.3 Review of a Denied Claim. Within sixty (60) days after receiving a
notice from the Committee that a claim has been denied, in whole or in
part, a Claimant (or the Claimant's duly authorized representative)
may file with the Committee a written request for a review of the
denial of the claim. Thereafter, but not later than thirty (30) days
after the review procedure began, the Claimant (or the Claimant's duly
authorized representative):
(a) may review pertinent documents;
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(b) may submit written comments or other documents; and/or
(c) may request a hearing, which the Committee, in its sole discretion, may grant.
14.4 Decision on Review. The Committee shall render its decision on review promptly, and not later than sixty (60) days after the filing of a
written request for review of the denial, unless a hearing is held or
other special circumstances require additional time, in which case the
Committee's decision must be rendered within one hundred twenty (120)
days after such date. Such decision must be written in a manner
calculated to be understood by the Claimant, and it must contain:
(a) specific reasons for the decision;
(b) specific reference(s) to the pertinent Plan provisions upon
which the decision was based; and
(c) such other matters as the Committee deems relevant.
14.5 Legal Action. A Claimant's compliance with the foregoing provisions of
this Article 14 is a mandatory prerequisite to a Participant's right
to commence any legal action with respect to any claim for benefits
under this Plan.
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ARTICLE 15
Miscellaneous
15.1 Unsecured General Creditor. Amounts payable to a Participant or his or
her Beneficiary under this Plan shall be paid from the general assets
of an Employer. Participants and their Beneficiaries, heirs,
successors and assigns shall have no legal or equitable rights,
interest or claims in any property or assets of an Employer. Any and
all of an Employer's assets shall be, and remain, the general,
unpledged unrestricted assets of the Employer. An Employer's
obligation under the Plan shall be merely that of an unfunded and
unsecured promise to pay money in the future and Participants and
their Beneficiaries shall be unsecured creditors of the Participant's
Employer.
15.2 Employer's Liability. An Employer's liability for the payment of
benefits shall be defined only by the Plan and the Plan Agreement, as
entered into between the Employer and a Participant. An Employer shall
have no obligation to a Participant under the Plan except as expressly
provided in the Plan.
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15.3 Nonassignability. Neither a Participant nor any other person shall
have any right to commute, sell, assign, transfer, pledge, anticipate,
mortgage or otherwise encumber, transfer, hypothecate or convey in
advance of actual receipt, the amounts, if any, payable hereunder, or
any part thereof, which are, and all rights to which are expressly
declared to be unassignable and non-transferable, except that the
foregoing shall not apply to any family support obligations set forth
in a court order. No part of the amounts payable shall, prior to
actual payment, be subject to seizure or sequestration for the payment
of any debts, judgments, alimony or separate maintenance owed by a
Participant or any other person, nor be transferable by operation of
law in the event of a Participant's or any other person's bankruptcy
or insolvency.
15.4 Not a Contract of Employment. The terms and conditions of this Plan
shall not be deemed to constitute a contract of employment between any
Employer and the Participant. Such employment is hereby acknowledged
to be an "at will" employment relationship that can be terminated at
any time for any reason, with or without cause, unless expressly
provided in a written employment agreement. Nothing in this Plan shall
be deemed to give a Participant the right to be retained in the
service of any Employer or to be retained as a Director, or to
interfere with the right of any Employer to discipline or discharge
the Participant at any time.
15.5 Furnishing Information. A Participant will cooperate with the
Committee by furnishing any and all information requested by the
Committee and take such other actions as may be requested in order to
facilitate the administration of the Plan and the payments of benefits
hereunder, including but not limited to taking such physical
examinations as the Committee may deem necessary.
15.6 Terms. Whenever any words are used herein in the singular or in the
plural, they shall be construed as though they were used in the plural
or the singular, as the case may be, in all cases where they would so
apply.
15.7 Captions. The captions of the articles, sections and paragraphs of
this Plan are for convenience only and shall not control or affect the
meaning or construction of any of its provisions.
15.8 Governing Law. The provisions of this Plan shall be construed and
interpreted according to the laws of the State of Arizona.
15.9 Validity. In case any provision of this Plan shall be illegal or
invalid for any reason, said illegality or
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invalidity shall not affect the remaining parts hereof, but this Plan
shall be construed and enforced as if such illegal and invalid
provision had never been inserted herein.
15.10 Notice. Any notice or filing required or permitted to be given to the
Committee under this Plan shall be sufficient if in writing and
hand-delivered, or sent by registered or certified mail, to the
addresses indicated below:
If a Participant's Employer is Pinnacle West Capital
Corporation or one of its subsidiaries other than Arizona
Public Service Company, then to:
Pinnacle West Capital Corporation
400 East Van Buren Street
Post Office Box 52132
Phoenix, Arizona 85072-2132
Attn: Human Resources Administrator
If a Participant's Employer is Arizona Public Service
Company or its subsidiaries, then to:
Arizona Public Service Company
400 North 5th Street
P.O. Box 53999
Phoenix, Arizona 85072-3999
Attn: Manager of Benefit Services
Station 8460
Such notice shall be deemed given as of the date of delivery or, if
delivery is made by mail, as of the date shown on the postmark on the
receipt for registration or certification.
Any notice or filing required or permitted to be given to a
Participant under this Plan shall be sufficient if in writing and
hand-delivered, or sent by mail, to the last known address of the
Participant.
15.11 Successors. The provisions of this Plan shall bind and inure to the
benefit of the Participant's Employer and its successors and assigns
and the Participant, the Participant's Beneficiaries, and their
permitted successors and assigns.
15.12 Spouse's Interest. The interest in the benefits hereunder of a spouse
of a Participant who has predeceased the Participant shall
automatically pass to the Participant and shall not be transferable by
such spouse in any manner, including but not limited to such spouse's
will, nor shall such interest pass under the laws of intestate
succession.
15.13 Incompetent. If the Committee, in its discretion, determines that a
benefit under this Plan is to be paid to a minor, a
22
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person declared incompetent or to a person incapable of handling the
disposition of that person's property, the Committee may direct
payment of such benefit to the guardian, legal representative or
person having the care and custody of such minor, incompetent or
incapable person. The Committee may require proof of minority,
incompetency, incapacity or guardianship, as it may deem appropriate
prior to distribution of the benefit. Any payment of a benefit shall
be a payment for the account of the Participant and the Participant's
Beneficiary, as the case may be, and shall be a complete discharge of
any liability under the Plan for such payment amount.
IN WITNESS WHEREOF the Company has caused this amended and
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restated Plan to be executed by its duly authorized officers this 1 day of December, 1995.
PINNACLE WEST CAPITAL CORPORATION
ATTEST:
328594/7816-0007
Exhibit 10.11(a)
ARIZONA PUBLIC SERVICE COMPANY
SUPPLEMENTAL EXCESS BENEFIT
RETIREMENT PLAN
TABLE OF CONTENTS
Page
ARTICLE ONE - PREAMBLE....................................... 1
ARTICLE TWO - CONSTRUCTION................................... 1
ARTICLE THREE - ELIGIBILITY AND PARTICIPATION.................. 2
ARTICLE FOUR - BENEFITS....................................... 3
ARTICLE FIVE - PAYMENT OF BENEFITS............................ 7
ARTICLE SIX - COORDINATION OF BENEFITS....................... 9
ARTICLE SEVEN - FUNDING........................................ 11
ARTICLE EIGHT - ADMINISTRATION................................. 11
ARTICLE NINE - AMENDMENT AND TERMINATION OF THE PLAN.......... 12
ARTICLE TEN - ASSIGNMENT..................................... 12
ARTICLE ELEVEN - WITHHOLDING................................................ 13
ARTICLE TWELVE - OTHER BENEFIT PLANS OF THE COMPANY......................... 13
ARTICLE THIRTEEN - MISCELLANEOUS............................................ 14
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ARIZONA PUBLIC SERVICE COMPANY
SUPPLEMENTAL EXCESS BENEFIT RETIREMENT PLAN
ARTICLE ONE
PREAMBLE
Effective January 1, 1982, ARIZONA PUBLIC SERVICE COMPANY (the
"Company") adopted the ARIZONA PUBLIC SERVICE COMPANY SUPPLEMENTAL EXCESS
BENEFIT RETIREMENT PLAN (the "Plan") for the purpose of paying retirement
benefits to certain employees in excess of the benefits permitted to be paid
under the Arizona Public Service Company Employees' Retirement Plan (the
"Retirement Plan") by reason of Section 415 of the Internal Revenue Code (the
"Code"). The Plan was thereafter amended several times to provide additional
benefits, thereby changing the Plan from an "excess benefit plan" under the
Employee Retirement Income Security Act of 1974, as amended (the "Act"), to a
"top hat" plan under the Act. By this amendment and restatement in the entirety,
the Company intends to extend certain benefits to eligible employees and to make
other technical changes.
ARTICLE TWO
CONSTRUCTION
Terms capitalized in this Plan shall have the meaning given in Article Two of the Retirement Plan, governing definitions and construction, except where such terms are otherwise defined in this Plan. If any provision of this Plan is determined to be invalid or unenforceable for any reason, the remaining provisions shall continue in full force and effect. All of
the provisions of this Plan shall be construed and enforced according to the laws of the State of Arizona, and shall be administered according to the laws of such state, except as otherwise required by the Act, the Code or other applicable federal law. It is the intention of the Company that the Plan, as adopted by the Company, shall constitute an "unfunded plan of deferred compensation for a select group of management and highly compensated employees" within the meaning of Sections 201(2) and 301(3) of the Act. Benefits under this Plan shall be paid from the Company's general assets, and not from any trust fund or other segregated fund. This Plan shall be construed in a manner consistent with the Company's intention.
ARTICLE THREE
ELIGIBILITY AND PARTICIPATION
Employees of the Company who are members of a select group of management or highly compensated employees, as determined by the Human Resources Committee of the Board of Directors of the Company, in its discretion, and from time to time, shall be eligible to participate in the Plan if they satisfy the eligibility requirements of Section 3(a) on or after January 1, 1994, or Section 3(b) on or after January 1, 1996.
(a) Eligible employees who are officers of the Company shall be entitled to the benefits described in Section 4(a).
(b) Eligible employees of the Company who are not officers, who are designated for participation by the Human
Resources Committee of the Company's Board of Directors and who are participants
in the Retirement Plan shall be entitled to the benefits described in Section
4(b). The Human Resources Committee may make its designations under this Section
3(b) by individual designation or by group designation.
A participant in this Plan shall commence participation in this Plan as of the first day of the Plan Year in which he becomes a participant pursuant to this ARTICLE THREE or the first day of his employment with the Company, whichever is later. Such participation shall continue until the earlier of the date on which the participant no longer satisfies the requirements for participation under Section 3(a) or Section 3(b) or the date on which the Human Resources Committee informs the participant in writing that he is no longer eligible to participate in this Plan.
Notwithstanding the foregoing, if the status of a participant changes for reasons other than termination of employment with the Company, so that he no longer is eligible to participate in the Plan, his participation in the Plan shall cease but his benefit under this Plan as of the date of his change of status shall not be cancelled or distributed, but shall be determined upon his termination of employment with the Company.
ARTICLE FOUR
BENEFITS
(a) Subject to ARTICLE SIX and ARTICLE SEVEN, a participant who is eligible under Section 3(a) and who receives a
benefit under the Retirement Plan shall be entitled to a monthly benefit equal to the lesser of (i) or (ii), reduced by (iii), where
(i) Equals three percent (3%) of the participant's Average Monthly Compensation multiplied by the participant's Years of Service, not to exceed ten (10) Years of Service, plus two percent (2%) of the participant's Average Monthly Compensation multiplied by the participant's Years of Service in excess of ten
(10) Years of Service,
(ii) Equals sixty percent (60%) of the participant's Average Monthly Compensation, and
(iii) Equals the amount of such participant's monthly benefit determined under the terms of the Retirement Plan and payable in the form of the qualified joint and survivor annuity described in Section 6.2 of the Retirement Plan.
For purposes of this Section 4(a), Compensation shall be determined without regard to the limitation set forth in Section 401(a)(17) of the Code and shall be increased by any cash payments made to the participant pursuant to bonus or incentive plans maintained by the Company for employees generally and by any amounts deferred by the participant under any of the Company's deferred compensation plans for employees, provided that bonus or incentive payments made in a form other than cash, bonus or incentive payments which are not "year-end" bonus or
incentive payments, bonus or incentive payments under individual agreements
between the Company and a participant, and cash payments made under bonus or
incentive plans maintained by the Company for employees generally which exceed
the maximum amount that the Human Resources Committee determines, in its
discretion, or, effective January 1, 1996, the Company's President or Chief
Operating Officer determines, in his or her discretion, may be taken into
account under this Plan shall not be taken into account as Compensation for
purposes of this Plan unless the Human Resources Committee determines in its
discretion or, effective January 1, 1996, the President or Chief Operating
Officer of the Company determines, in his or her discretion, that such bonus or
incentive payment shall be taken into account as Compensation under this Plan.
Eligible bonuses and incentive payments shall be taken into account as
Compensation in the year in which such amounts are paid rather than in the year
in which they are earned, provided that, effective January 1, 1996, the
President or Chief Operating Officer of the Company shall have the authority to
determine, in his or her discretion, that such bonus or incentive payment shall
be taken into account in the year in which such amounts are earned rather than
in the year in which they are paid. The Human Resources Committee (effective
January 1, 1996, the Company's President or Chief Operating Officer) shall have
the sole and absolute discretion to determine whether a bonus or incentive
payment made to a participant constitutes Compensation for purposes of this
Section 4(a) and
may differentiate among individuals in establishing the bonus or incentive payments that may be taken into account under the Plan.
(b) Subject to ARTICLE SIX and ARTICLE SEVEN, any participant who is designated for participation pursuant to Section 3(b) and who receives a benefit under the Retirement Plan, or such participant's surviving spouse or annuitant in the event of the participant's death, shall be entitled to a monthly benefit payable equal to (i) reduced by (ii), where
(i) Equals the amount of such participant's or surviving spouse's or annuitant's monthly benefit under the Retirement Plan computed under the provisions of the Retirement Plan but without regard to the cap on Compensation in Section 2.1(o) and the limitations in Section 5.10 of the Retirement Plan and the provisions of Sections 401(a)(17) and 415 of the Code; and
(ii) Equals the amount of such participant's or surviving spouse's or annuitant's monthly benefit actually payable under the terms of the Retirement Plan.
For purposes of this calculation, Compensation shall include any amount of the participant's regular salary that the participant has elected to defer under any of the Company's deferred compensation plans for employees and shall exclude all bonus or incentive payments paid to the participant. The Human Resources Committee shall have the sole and absolute discretion to determine a participant's Compensation for purposes of this Section 4(b).
Benefits payable under this Section 4(b) shall be payable to a Plan participant or his spouse or other annuitant in the same manner and subject to all the same options, conditions, privileges and restrictions as are applicable to the benefits payable to the Plan participant, spouse or other annuitant of a Participant under the Retirement Plan, as though such benefits were payable as a part of the benefits being paid under the Retirement Plan.
ARTICLE FIVE
PAYMENT OF BENEFITS
(a) Subject to ARTICLE SIX, a participant entitled to benefits under Section 4(a) may elect to commence receiving unreduced benefits on or after the date on which the participant attains the age of sixty-five (65) years or attains the age of sixty (60) years and is credited with at least twenty (20) Years of Service. A participant may elect to commence receiving benefits earlier if he has attained at least the age of fifty- five (55) years and is credited with at least ten (10) Years of Service, provided that the participant's benefit shall be reduced by three percent (3%) for each year (or part thereof) by which the participant's retirement age precedes the date on which he would have attained the age of sixty (60) years if he is credited with at least twenty (20) Years of Service or the date on which he would have attained the age of sixty-five (65) years if credited with less than twenty (20) Years of Service. Notwithstanding the foregoing, in calculating the monthly benefit of a
participant who elects to retire with a reduced early retirement benefit under this Section 5(a), the participant's monthly benefit calculated under Section 4(a) shall not be reduced by the amount specified in Section 4(a)(iii) until the date on which the participant attains the age of sixty (60) years. Upon the participant's attainment of the age of sixty (60) years, the participant's monthly benefit under Section 4(a) shall be reduced by the amount determined under Section 4(a)(iii) as if such participant had elected to retire and begun receiving Early Retirement Benefits under the Retirement Plan upon attaining such age.
Benefits payable to a Participant under Section 4(a) shall be payable in the form of a fifty percent (50%) joint and survivor annuity, which shall provide a monthly payment to the participant for his life equal to the amount determined under Section 4(a) and upon his death, shall provide monthly payments to the participant's spouse for life equal to fifty percent (50%) of the monthly payments being received by the participant at the time of his death.
If a participant entitled to benefits under Section 4(a) dies prior to commencing benefits, the participant's spouse shall be entitled to a survivor annuity equal to fifty percent (50%) of the monthly benefit that the participant would have received had he terminated employment on the day before his death, survived to the age on which he would first be eligible to
commence benefits under this Section 5(a), elected to retire and commence benefits under the Plan at that time and then died.
(b) Benefits payable to a participant under Section 4(b) shall become payable when a participant (or his spouse or annuitant) begins to receive payments under the Retirement Plan, and shall be subject to the same adjustments and shall be payable by the Company in the same manner and at the same time as the Plan participant's (or his spouse's or annuitant's) benefits under the Retirement Plan are paid, as though such benefits were otherwise payable as a part of the benefits being paid under the Retirement Plan, subject to ARTICLE SIX. An election of mode of payment under the Retirement Plan shall constitute an election of a similar mode of payment under this Plan.
ARTICLE SIX
COORDINATION OF BENEFITS
(a) Notwithstanding any provision in this Plan to the contrary, the benefits payable under Section 4(a) of this Plan to a participant who is also entitled to benefits as an officer under the Pinnacle West Capital Corporation Supplemental Excess Benefit Retirement Plan (the "Pinnacle West Plan") shall be offset and reduced by that portion of the benefit payable under the Pinnacle West Plan which is attributable to Years of Service with an Affiliate.
In no event shall the benefit payable under Section 4(a) of this Plan, when combined with the benefit payable under the corresponding provision of the Pinnacle West Plan, exceed the
amount that would have been payable under Section 4(a) of this Plan alone if (i) the participant's Compensation and Years of Service earned as a result of employment with an Affiliate had been earned as a result of employment with the Company, and (ii) the benefit payable to the participant in the form of a qualified joint and survivor annuity under the Pinnacle West Capital Corporation Employees' Retirement Plan was payable from the Retirement Plan.
(b) If an employee who was participating in a retirement plan
sponsored by an Affiliate, which is not a participating employer in the
Retirement Plan, becomes an employee of the Company and a participant in the
Plan under Section 4(b) and such employee's accrued benefit under the retirement
plan maintained by the Affiliate formerly employing him is transferred to the
Retirement Plan, upon termination of employment, the employee's benefits,
calculated in accordance with Section 4(b), will be payable in full from the
Plan in accordance with Section 5(b). If an employee who was a participant in
the retirement plan of an Affiliate, which is not a participating employer in
the Retirement Plan, becomes an employee of the Company and a participant in
this Plan, and such employee's accrued benefit under the retirement plan
maintained by his former employer is not transferred to the Retirement Plan,
upon termination of employment, the employee's benefits, calculated in
accordance with Section 4(b), will be payable from the Plan in accordance with
Section 5(b) to the extent such benefits are attributable to the pension
benefits payable to that employee under the Retirement Plan. The benefits calculated pursuant to Section 4(b) that are attributable to the pension benefits payable to the employee under the Retirement Plan are those benefits that bear the same ratio to the total benefits due to the employee, calculated pursuant to Section 4(b), as the benefit payable to the employee from the Retirement Plan bears to the total benefits payable to the employee under both the Retirement Plan and the retirement plan maintained by the Affiliate formerly employing that employee.
ARTICLE SEVEN
FUNDING
Benefits under this Plan shall be payable from the general assets of the Company and shall not be segregated in a trust fund or otherwise funded in any manner prior to the time of payment. No Plan participant shall have any vested rights hereunder nor any right hereunder to any specific assets of the Company.
ARTICLE EIGHT
ADMINISTRATION
The Plan will be administered by the Administrative Committee that administers the Retirement Plan. Except as otherwise expressly provided in this Plan, the Administrative Committee shall have the same powers and responsibilities as it has under Sections 10.4 and 12.2 of the Retirement Plan. Claims
for benefits under the Plan shall be determined in the manner set forth in Article Eleven of the Retirement Plan.
ARTICLE NINE
AMENDMENT AND TERMINATION OF THE PLAN
This Plan may be amended in whole or in part, prospectively or retroactively, by action of the Company's Board of Directors, and may be terminated at any time by action of the Board of Directors; provided, however, that no such amendment or termination shall reduce any amount payable hereunder to the extent such amount accrued prior to the date of amendment or termination. All amendments shall be in writing, approved by the Company's Board of Directors and executed by a duly authorized officer of the Company.
ARTICLE TEN
ASSIGNMENT
No Plan participant or beneficiary of a Plan participant shall have any right to assign, pledge, hypothecate, anticipate or any way create a lien on any amounts payable hereunder. No amounts payable hereunder shall be subject to assignment or transfer or otherwise be alienable, either by voluntary or involuntary act, or by operation of law, or be subject to attachment, execution, garnishment, sequestration or other seizure under any legal, equitable or other process, or be liable in any way for the debts or defaults of Plan participants and their beneficiaries. Notwithstanding the foregoing, assignments of the
benefits provided under this Plan shall be permitted for purposes of satisfying family support obligations if such assignments are pursuant to a court order which satisfies the requirements for a "qualified domestic relations order" as defined in Section 206(d)(3) of the Act.
ARTICLE ELEVEN
WITHHOLDING
Any taxes required to be withheld from payments to Plan participants hereunder shall be deducted and withheld by the Company.
ARTICLE TWELVE
OTHER BENEFIT PLANS OF THE COMPANY
Nothing contained in this Plan shall prevent a Plan participant prior to his death, or his spouse or other annuitant after his death, from receiving, in addition to any payments provided for under this Plan, any payments provided for under the Retirement Plan or under The Savings Plan for Employees of Arizona Public Service Company, or which would otherwise be payable or distributable to him, his surviving spouse or annu- itant under any plan or policy of the Company or otherwise. Nothing in this Plan shall be construed as preventing the Company or any of its subsidiaries from establishing any other or different plans providing for current or deferred compensation for employees.
ARTICLE THIRTEEN
MISCELLANEOUS
Nothing contained in this Plan shall be construed as a contract of employment between the Company and an employee, or as a right of any employee to be continued in the employment of the Company, or as a limitation of the right of the Company to discharge any of its employees, with or without cause.
All of the provisions of this Plan shall be binding upon all persons who shall be entitled to any benefit hereunder, their heirs and personal representatives.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed by its duly authorized officers this 20th day of December, 1995.
ARIZONA PUBLIC SERVICE COMPANY
"Company"
Attest:
337632
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement Nos. 33-51085, 33-57822, 33-61228, 33-55473 and 33-64455 on Form S-3, of our report dated March 1, 1996 appearing in this Annual Report on Form 10-K of Arizona Public Service Company for the year ended December 31, 1995.
DELOITTE &TOUCHE LLP
DELOITTE &TOUCHE LLP
Phoenix, Arizona
March 28, 1996
| ARTICLE UT |
| MULTIPLIER: 1000 |
| CURRENCY: U.S.DOLLARS |
| PERIOD TYPE | 12 MOS |
| FISCAL YEAR END | DEC 31 1995 |
| PERIOD START | JAN 01 1995 |
| PERIOD END | DEC 31 1995 |
| EXCHANGE RATE | 1 |
| BOOK VALUE | PER BOOK |
| TOTAL NET UTILITY PLANT | 4,647,087 |
| OTHER PROPERTY AND INVEST | 97,742 |
| TOTAL CURRENT ASSETS | 322,277 |
| TOTAL DEFERRED CHARGES | 1,351,156 |
| OTHER ASSETS | 0 |
| TOTAL ASSETS | 6,418,262 |
| COMMON | 178,162 |
| CAPITAL SURPLUS PAID IN | 1,039,550 |
| RETAINED EARNINGS | 403,843 |
| TOTAL COMMON STOCKHOLDERS EQ | 1,621,555 |
| PREFERRED MANDATORY | 75,000 |
| PREFERRED | 193,561 |
| LONG TERM DEBT NET | 2,132,021 |
| SHORT TERM NOTES | 0 |
| LONG TERM NOTES PAYABLE | 0 |
| COMMERCIAL PAPER OBLIGATIONS | 177,800 |
| LONG TERM DEBT CURRENT PORT | 3,512 |
| PREFERRED STOCK CURRENT | 0 |
| CAPITAL LEASE OBLIGATIONS | 0 |
| LEASES CURRENT | 0 |
| OTHER ITEMS CAPITAL AND LIAB | 2,214,813 |
| TOT CAPITALIZATION AND LIAB | 6,418,262 |
| GROSS OPERATING REVENUE | 1,614,952 |
| INCOME TAX EXPENSE | 178,865 |
| OTHER OPERATING EXPENSES | 1,054,333 |
| TOTAL OPERATING EXPENSES | 1,233,198 |
| OPERATING INCOME LOSS | 381,754 |
| OTHER INCOME NET | 25,548 |
| INCOME BEFORE INTEREST EXPEN | 407,302 |
| TOTAL INTEREST EXPENSE | 167,732 |
| NET INCOME | 239,570 |
| PREFERRED STOCK DIVIDENDS | 19,134 |
| EARNINGS AVAILABLE FOR COMM | 220,436 |
| COMMON STOCK DIVIDENDS | 170,000 |
| TOTAL INTEREST ON BONDS | 155,016 |
| CASH FLOW OPERATIONS | 542,325 |
| EPS PRIMARY | 0 |
| EPS DILUTED | 0 |