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APS to host Stakeholder Meeting

Stranded Costs for Four Corners?

When the Competitive Power Alliance opposed APS's purchase of the Four Corners Power plant, we predicted that the purchase would be a financial disaster for APS.  Our prediction has come true and APS is attempting to cut its losses by retiring the plant in 2031.  This is seven years earlier than the planned retirement date.  

ACC Chairman Bob Burns has asked APS to come up with a plan to account for the stranded investment associated with the closing the plant early.    Here's a copy of the Burns letter.

If I had my consumer advocate hat on, I would argue that there is no stranded investment associated with the early retirement.  The rationale for stranded investment is that the company was required to make the purchase in order to ensure reliability.  The Regulatory Contract implies that in exchange for this increased capacity, the ratepayers on on the hook for any costs associated with the early obsolescence or retirement of the plant.  

However, APS purchased the plant over the objections of the stakeholders.  Sure, the plant increased capacity and reliability, but it was one of the more expensive and riskier options available at the time.  APS bet heavily on the long term economic viability of coal and lost.  They could have met their needs through low risk contracts with existing natural gas plants.  They assumed the risk and now they are trying to shift that risk to ratepayers.  

 

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