Business Context and Reporting Period
This Form 8-K is a combined current report filed by Pinnacle West Capital Corporation and its subsidiary, Arizona Public Service Company (APS), on September 14, 2005. The filing addresses regulatory proceedings before the Arizona Corporation Commission (ACC) regarding the Power Supply Adjustor (PSA).
Key Financial Metrics
The filing does not provide comprehensive financial statements, revenue, profit, or cash flow data. Specific financial figures related to the regulatory matter include:
- Deferred Purchased Power and Fuel Costs: Approximately $117 million as of August 31, 2005.
- Proposed Surcharge Recovery: $80 million (revised from an initial $100 million request).
- Withdrawn Amount: $20 million related to replacement power costs for unplanned outages at the Palo Verde Nuclear Generating Station.
Material Changes and Regulatory Developments
On July 22, 2005, APS filed an application to recover $100 million in deferred costs via a surcharge over 24 months starting in November 2005. As of this filing, a procedural agreement has been reached to modify this request:
- APS will withdraw $20 million from the current application to address prudence reviews regarding unplanned outages at Palo Verde between April 1, 2005, and July 31, 2005.
- The revised application seeks recovery of the remaining $80 million over a 24-month period beginning at year-end.
- A hearing is scheduled to commence on October 27, 2005, pending approval of the procedural schedule.
Outlook, Risks, and Management Commentary
Management asserts that the $20 million in withdrawn expenses were prudently incurred. Under ACC regulations, such expenses are presumed prudent unless clear and convincing evidence proves they were unreasonable, dishonest, or wasteful. The primary risk involves the regulatory review of the prudence of the Palo Verde outage costs, which will be addressed in a separate proceeding. The filing does not provide specific guidance on future earnings or liquidity beyond the surcharge mechanism.
Investor Verification Checklist
- Verify the final approval of the procedural schedule and the October 27, 2005, hearing date by the ACC.
- Monitor the separate proceeding regarding the prudence of the $20 million in Palo Verde outage costs.
- Confirm the implementation timeline for the $80 million surcharge recovery starting at year-end.
- Review subsequent filings for updates on the total deferred purchased power and fuel costs balance.