Climate Challenge Participation Accord

DOE's Energy Partnerships for a Strong Economy

This Participation Accord describes the commitments that Arizona Public Service Company (APS) and the United States Department of Energy (DOE) have made to participate in the Climate Challenge Program in pursuit of the President's goals for reducing greenhouse gas emissions. The Climate Challenge Program is a joint, voluntary effort of the DOE and the electric utility industry to reduce, avoid or sequester greenhouse gas emissions. The framework of the Climate Challenge Program was established in the Climate Challenge Program Memorandum of Understanding and exhibits thereto dated April 20, 1994 (the Climate Challenge Program MOU). See Attachment A.

APS is one of the largest investor-owned electric utilities in the Southwest, engaged in the generation, transmission, and distribution of electric power. APS is the owner/part-owner or operator of three large coal-fired and several oil/gas-fired power plants, and the nation's largest nuclear power plant. As a consequence of the significant population growth in the Southwest, APS' electricity demand has been steadily increasing over the past several years and this trend is expected to continue well into the next decade. APS is a subsidiary of Pinnacle West Capital Corporation and serves approximately 640,000 customers in Arizona

I. APS Commitments

A.
Consistent with paragraph II.B.1.C of the Climate Challenge Program MOU, APS commits to limit the carbon dioxide (CO₂) emissions from the APS-owned power generation/distribution system to its 1990 baseline level of 15,300,000 tons of CO₂ in the year 2000. APS' business activities included in the baseline emissions are power generation, transmission, and sales (retail and wholesale).

B.

In support of I.A, APS commits to undertake and/or continue to undertake a variety of economically efficient measures to reduce/avoid its system-wide greenhouse gas (GHG) emissions. Examples of such measures are described in Attachment B. For business activities outside of those in I.A, APS will only credit the differential (CO₂ emissions savings relative to CO₂ emissions in 1990 for that activity) toward APS' commitment.
C.
It is APS' goal to maintain its greenhouse (GHG) emissions below the 1990 baseline level in every year between 1991 and 1999. APS will apply any excess net reductions below its baseline during the 1991-1999 period as well as other GHG reductions in the year 2000 which APS achieves/acquires from domestic or international projects during the 1991 to 1999 period towards meeting its commitment in 2000, if necessary.

D.
APS will report annually on 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 Climate Challenge accounting protocols in Exhibit B of the Climate Challenge Program MOU.

E.
APS will confer with DOE on or before December 31, 1996, to jointly evaluate APS' progress in achieving its Climate Challenge Program goals and to discuss possible adjustments to its voluntary commitments.

F.
The APS commitment specified in I.A shall apply for the calendar year 2000. APS commits to meet with DOE representatives before December 31, 1998 to reopen or revisit this Participation Accord to address APS' continued participation in the Climate Challenge Program and the extent of APS' commitments after the year 2000.

G.
The Climate Challenge Program representative for APS will be Dr. C.V. Mathai, P.O. Box 53999, Phoenix, Arizona 85072. APS agrees to notify DOE prior to or, in any event, no later than 30 days after any change in the contact.

II. DOE Commitments

A.
DOE's commitments to APS are those set out in section III of the Climate Challenge Program MOU, which are hereby incorporated in this Participation Accord by reference.

B.
DOE will consider APS requests to intervene in regulatory 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 APS for purposes of addressing Climate Challenge Program issues, it will provide notice to APS.

C.
DOE will provide an annual report to APS describing the actions that it has taken to fulfill its commitments under Section III and Exhibit C of the Climate Challenge Program MOU and the results of those actions.

D.
The Climate Challenge Program representative for DOE, who will serve as liaison to APS, will be Allan Hoffman, DOE Room 6B-128 (EE-10), 1000 Independence Avenue, SW, Washington D.C. 20585. Telephone: 202/586-1786. DOE agrees to notify APS prior to or, in any event, no later than 30 days after any change in liaison responsibilities or personnel.

E.
In a manner and to an extent consistent with Department policy, DOE will support recognition of GHG emissions reductions achieved through voluntary efforts in any future national programs to mitigate climate change.

III. Special Provisions: Cooperative Action Among APS and Other Entities to Promote Climate Challenge Program Objectives

A.

DOE, as outlined in the Climate Challenge MOU, and APS agree that the Climate Challenge Program should provide utilities with maximum flexibility to pursue cost-effective, innovative strategies to reduce/sequester CO₂ and other, GHGs, including but not limited to demand-side- management, electro- technologies, renewable energy sources, forestry and other CO₂ sequestration activities, and international projects.

B.
DOE, as outlined in the Climate Challenge MOU, and APS agree that the Climate Challenge Program should promote the development and demonstration of innovative methods to promote cooperative, joint efforts designed to support both national objectives related to global climate change and APS' environmental goals in an economically-efficient manner. Specifically, DOE endorses the agreement to transfer 1.75 million tons of CO₂ reductions from Niagara Mohawk Power Corporation to APS, as announced by the DOE Secretary on November 18, 1994, and, APS' intent to use those CO₂ reductions, towards meeting its commitment in I.A, if necessary.

C.
In the event APS engages in a transfer or sale of GHG reductions/CO₂ sequestration's with another entity, APS agrees to provide DOE with a copy of the document governing such actions and a detailed report on the accuracy/reliability of the GHG emission reductions or CO₂ sequestration being acquired.

IV. General Provisions

A.
Use of DOE-developed materials by APS will be governed by the provisions of section IV of the Climate Challenge Program MOU, which are hereby incorporated in this Participation Accord by reference.

B.
In addition to the foregoing provisions, DOE and APS agree to act in accordance with the principles set out in section I of the Climate Challenge Program MOU and the general provisions set out in subsections V.A - 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 its activities under the Climate Challenge Program without penalty and without being subject to remedies at law or equity.

D.

APS and DOE recognize that there may be circumstances beyond APS's control that may prevent APS in meeting its commitments described in this Participation Accord. Examples would include a major curtailment of the operation of the Palo Verde Nuclear Generating Station and severe financial hardship caused by extra ordinary market conditions.

E.
In the event APS is unable to fulfill its commitments I. A, B, and C, APS will work with DOE to amend its commitment and explore various measures APS may undertake.

ARIZONA PUBLIC SERVICE COMPANY DEPARTMENT OF ENERGY

     (original signed by)                              (Original signed by)

By: ____________________                           By: ___________________

     President and CEO                                 Secretary of Energy



Date:  ______________                              Date: ____________

Attachments:

Attachment A - Climate Challenge Program MOU and exhibits

Attachment B - Examples of APS Projects to Reduce GHG Emissions

Demand Side Management:

APS has implemented various DSM programs since 1977. APS' DSM programs have targeted improvement in the thermal envelop performance of residential retrofit and new construction, and high-efficiency appliances and equipment related to heating, cooling, motors, and lighting load.

APS' DSM efforts have resulted in a system demand reduction of approximately 480 MW and an annual energy reduction of 480,000 MWh in 1993.

APS is committed to implementing DSM measures as part of its resource acquisition strategy. APS continues to implement its successful, current mix of DSM programs and will develop more cost-effective DSM programs in the future.

Nuclear Unit Performance:

APS has been making a concerted effort to improve its nuclear unit performance and reduce outage time. This has resulted in a significant reduction in greenhouse gas emissions from our fossil plants. APS produced 5,994,000 MWh/yr from its share of Palo Verde Nuclear Generating Station in 1990 and is projecting to produce 7,728,000 MWh/yr by the year 2000. That equates to a reduction of about 1,820,000 T CO₂/yr.

Renewable Energy Programs:

APS has a goal of 12 Mw of solar power by the year 2000. APS has been conducting solar thermal and photovoltaic (PV) research since the late 1970's, including the installation of a 225 kW PV system at the Sky Harbor Airport in Phoenix, our participation in the 10 MW Solar I Central Receiver project, and the continuous side-by-side test and evaluation of PV panels on a home and at the APS Solar Test and research (STAR) facility in Tempe, Arizona, since 1988.

In 1994, APS installed a total of 18 kW of PV on a home, school and hospital to evaluate its potential, and installed a prototype 20 kW High Concentration PV system that can lead to the use of PV generation in the distribution system. In 1995, APS will install 25 kW of PV at Carol Spring Mountain to offset the use of a remote diesel generator supplying telecommunications customers, and is planning 100's of kW of trial PV generation projects. APS is also preparing to offer PV systems to serve new, remote customers that cannot readily be connected to a power line, and will install and evaluate several solar water heating systems in residential and commercial applications to help promote their appropriate use. For larger scale solar generation, APS is pursuing the development of Solar Dish Stirling technology which has good potential for large scale use before 2000, and is currently participating in the Solar Two project to add molten salt energy storage to Solar I, to help develop commercial Solar Central Receiver plants after 2000.

Upgrade Plant instrumentation & Controls:

APS has made combustion controls upgrades at three coal fired units with the intent of making these plants operate more efficiently. These upgraded controls allow the fine tuning of boiler operation to improve efficiency and reduce emissions. Upgrades are scheduled at two additional units.

CFC/HCFC Management:

All APS refrigeration technicians will take a certification course to ensure that they are proficient at maintaining refrigeration equipment without releasing CFC's or HCFC's into the atmosphere.

Electric Vehicles:

APS currently has a fleet of 12 electric vehicles. Current plans are to expand this fleet to 87 vehicles by 1997. APS encourages the use of electric vehicles through its sponsorship of an annual electric vehicle race, which demonstrates the feasibility of operating electric vehicles under high performance conditions.

Employee Travel Reduction Programs:

APS encourages its employees to carpool or use the bus through the use of incentives and subsidies. APS has also instituted flexible schedules and shortened work weeks at some locations.

Use of Coal Combustion By-Products:

APS has sold 478,000 tons of flyash from its Cholla plant between 1991 and 1993. Each ton of flyash used for cement production eliminates approximately 0.6 tons of CO₂ emitted in the calcining of limestone for cement production. Sales of flyash are expected to increase as APS makes an effort to improve the quality of its ash.

Green Lights Program:

In 1994, APS was selected by the Environmental Protection Agency as the "Utility of the Year" for its Green Lights program. The Green Lights program is on-going at many of APS' facilities. APS also encourages its customers to institute the Green Lights Program APS expects to save about 11,500 MWh/yr (about 12,000 T CO₂/yr).

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