Climate Challenge Participation Letter

DOE's Energy Partnerships for a Strong Economy

The Climate Challenge Program is a joint, voluntary effort of the United States Department of Energy ("DOE") and the electric utility industry undertaken in pursuit of the President's goals for reducing greenhouse gas emissions. The framework of the Climate Challenge Program was established in the Climate Challenge Memorandum of Understanding dated April 20, 1994 ("Climate Challenge MOU"), (see Attachment A to this Participation Accord).

This Participation Accord describes the actions that Arizona Electric Power Cooperative, Inc. ("AEPCO") and DOE have committed to undertake under the Climate Challenge Program. AEPCO's commitments include specific activities and efforts to reduce, avoid, or sequester greenhouse gas emissions. DOE's commitments include specific actions designed to assist AEPCO in achieving its Climate Challenge Commitments.

AEPCO is owned and serves six rural electric distribution cooperatives supplying power to 89,000 homes and businesses in Arizona and portions of California and New Mexico. AEPCO's power generation resource is Apache Generating Station. Steam Units 2 and 3 - 175 MW coal-fired steam generators equipped with wet flue gas sulphur removal equipment are the two primary units at the plant.

Additionally, the electric cooperatives listed in Attachment B have an ownership interest in and receive bulk electric power from AEPCO. Due to this ownership and power supply relationship, the cooperatives in Attachment B will participate in the Climate Challenge Program through AEPCO.

I. AEPCO Commitments.

A.
Consistent with Paragraph II.B.1. and Exhibit B of the Climate Challenge Program MOU, AEPCO has or will undertake the following actions:

Demand-Side Management
AEPCO will continue its lighting demand-side management program, started in March 1994, which provides incentives for commercial customers to install high efficiency lighting. The effect of this program will reduce CO₂ emissions by approximately 2700 metric tons in the year 2000, with a total of 10,000 metric tons of CO₂ for the 1995-2000 time period.

Industry-Wide Initiative
AEPCO is a member of the Utility Photovoltaic Group (UPVG) and will continue to support UPVG through annual dues and service on the board of directors. UPVG goals include spurring the commercialization of grid-connected photovoltaic power.

Sales of Fly Ash to Replace Cement
AEPCO entered into a contract in early 1995 with Western Ash to provide approximately 108,000 tons of fly ash per year to be used to make structural material in place of cement. The result of these sales will displace CO₂ emissions by approximately 49,000 metric tons in the year 2000, with a total of 245,000 metric tons of CO₂ for the 1995-2000 time period.

B.

AEPCO will report to DOE annually on its activities and achievements under the Climate Challenge Program. Results achieved during each year shall be reported in a clear and understandable manner that is consistent with the guidelines adopted pursuant to subsection 1605(b) of the Energy Policy Act and the Supplemental Guidance on Commitment Definitions and Reporting in Exhibit B of the Climate Challenge MOU. The first such report may include a description of the activities and achievements of AEPCO prior to its becoming a participant in the program, expressed on an annual basis to the extent possible.

C.

AEPCO will confer with DOE no later than March 31, 1997 regarding AEPCO's participation in the Climate Challenge Program. The purpose of the meeting will be to evaluate AEPCO's progress towards achieving its Climate Challenge commitments and possible adjustments to these commitments based on the availability of reasonable, cost-justified activities for reducing greenhouse gas emissions.

D.

The Climate Challenge representative for AEPCO will be Mark Schwirtz, P. 0. Box 670, Benson, Arizona 85602. AEPCO will notify DOE prior to or, in any event, no later than 30 days after any change in contact.

A.
DOE will perform the actions and fulfill the commitments set out in section III of the Climate Challenge MOU.

B.
The Climate Challenge representative for DOE will be Mr. Larry Mansueti, Director, Climate Challenge Program, Office of Utility Technologies (EE-W): 1000 Independence Avenue, S.W., Washington, DC 20585, (202) 586-2588. DOE will notify AEPCO prior to, or in any event, no later than 30 days after any change in representative.
C.
DOE will meet with AEPCO upon request regarding possible adjustments of the Climate Challenge commitments set forth in subsection I.A. of this Participation Accord.
D.
DOE will consider requests by AEPCO to intervene in proceedings of federal, state and local commissions and boards on issues pertinent to the Climate Challenge Program. Before DOE intervenes in regulatory and other proceedings pertaining to AEPCO for purposes of addressing Climate Challenge Program issues, it will provide notice to AEPCO.
E.
To the extent permitted by applicable law and regulations and by the availability of funds, DOE will consider AEPCO's participation in Climate Challenge as a factor to be weighed positively in evaluating applications for financial and other assistance submitted to DOE in support of commitments made by AEPCO under this Participation Accord.
F.
DOE agrees to provide public recognition to AEPCO for its Climate Challenge activities. DOE will, among other things, prepare an annual report summarizing results achieved under Climate Challenge and highlighting any outstanding achievements or innovative approaches of AEPCO.

A.
Use of any DOE-developed materials by AEPCO will be governed by the provision of section IV of the Climate Challenge MOU.

B.

In addition to the foregoing provisions, DOE and AEPCO agree to act in accordance with the principles set out in section I of the Climate Challenge Program MOU and the general provisions set forth in subsections V.A, V.B, V.C, V.D, V.F and V.G. of the Climate Challenge Program MOU, which are hereby incorporated by reference.

C.
Either party may withdraw from this Participation Accord or any of the activities under the Climate Challenge Program without penalty and without being subject to remedies at law or equity.

U.S. DEPARTMENT OF ENERGY

(Original Signed By)
Hazel O'Lary
Secretary of Energy




ARIZONA ELECTRIC POWER COOPERATIVE, INC.

(Original Signed By)
Donald W. Kimball
Executive Vice President and General Manager

Attachment A - Climate Challenge Program MOU and Exhibits
Attachment B - Distribution Cooperatives Which Are Participating in the Climate Challenge Program Through Arizona Electric Power Cooperative, Inc.

Distribution Cooperatives which are participating in the Climate Challenge Program through Arizona Electric Power Cooperative, Inc.:

Anza Electric Cooperative, Inc.
Anza, California

Duncan Valley Electric Cooperative, Inc.
Duncan, Arizona

Graham County Electric Cooperative, Inc.
Pima, Arizona

Mohave Electric Cooperative, Inc.
Bullhead City, Arizona

Sulphur Springs Valley Electric Cooperative, Inc.
Willcox, Arizona

Trico Electric Cooperative, Inc.
Tucson, Arizona

Please send comments to:
Lawrence.Mansueti@hq.doe.gov