TO: EDITORS, NEWS DIRECTORS

DATE: April 30, 2001

FOR: IMMEDIATE RELEASE

Note to Editors: This includes additional information about the Santan decision along with quotes from the Commissioners.

Santan Plant Approved with Severe Environmental Restrictions

PHOENIX - Arizona Corporation Commission Chairman Bill Mundell, Commissioner Jim Irvin and Commissioner Marc Spitzer added specific health and safety conditions before voting to approve the expansion of the Salt River Project's (SRP) Santan Generating Station in Gilbert, Arizona. Gilbert is a suburb of the Phoenix metropolitan area.

An unprecedented 34 conditions were already attached to the Arizona Power Plant and Transmission Line Siting Committee's recommendation to approve the power plant. The Power Plant and Line Siting Committee's recommendations came after more than 20 days of public hearings. The Commission kept these conditions and recommendations and added new, more stringent conditions. A final, unanimous vote by the Commissioners ended two full days of public comment and deliberations during which both sides had substantial opportunities to state their respective positions.

The new conditions addressing air quality, health and safety are largely the result the public's input throughout the process. Salt River Project will have to comply with the following additional conditions:

(Because the Open Meeting Law prohibits the Commissioners from meeting to discuss the case privately, several similar amendments were offered. Parentheses show whose amendment was passed even though another Commissioner may have presented a similar idea.)

• Diesel fuel cannot be used to power the plant. The existing 275 MW power plant is equipped to run on natural gas or diesel. The application specified that the new 825 MW units could only use natural gas. The Commission's approval bans the use of any fuel other than natural gas in either the existing units or the new units. (Spitzer)

• The plant must install the absolute, most effective emission control equipment, regardless of cost. (Mundell)

• SRP will have to obtain any carbon monoxide emissions reductions at the Santan site where technologically feasible. If not feasible, carbon monoxide reductions will come from areas closest to the plant. (Mundell)

• SRP must file a report with the Commission every five years showing what technologies or mechanical enhancements could be made to further reduce air emissions. Commission staff will then analyze the report, perform an economic feasibility study and offer recommendations to the Commissioners on what, if any, changes should be made. SRP will be required to apply for the permits and make any necessary changes to the plant in the 24 months following the Commission's action. (Spitzer)

• Unless jointly agreed to by SRP and the community working group, SRP will construct a 10' wall surrounding the plant site to enhance aesthetics and shield the plant from view. (Irvin)

• When possible, SRP will use local, in-state contractors throughout the plant expansion process. (Irvin)

• SRP will provide $20,000 annually to the Pipeline Safety Revolving Fund to help enhance the safety of natural gas pipelines in the Gilbert area and the rest of the state. (Spitzer)

The Commissioners found that SRP's application to expand the Santan Generating Facility met the requirements of the plant siting statutes that begin with section 40-360 of Arizona Revised Statutes. One of the provisions, section 40-360.07(B), requires:

"In arriving at its decision, the Commission shall comply with the provisions of §40-360.06 and shall balance, in the broad public interest, the need for an adequate, economical and reliable supply of electric power with the desire to minimize the effect thereof on the environment and ecology of this state."

The Commission's action requires the plant to operate under more stringent air quality requirements than would have been imposed by existing state and federal regulations.

All three Commissioners praised the neighbors for their involvement, for taking the time to become educated on such a complex issue and for bringing forth their concerns in a reasonable manner. "It is because of their concerns about air quality that the diesel ban passed," Chairman Mundell said later. "I was happy to support an amendment to ban the use of diesel because it ensures that the resulting air quality - even after the addition of the new plant - will be far better than it is today."

"We've managed to resolve the health issues by approving a cleaner plant and requiring SRP to come back every 5 years to see if new technologies allow us to reduce emissions even more," Commissioner Spitzer explained. "What doesn't change is the extraordinary statutory constraint that requires us to go through this balancing test. The need for the plant has been established and these amendments answer the environmental issues."

Commissioner Irvin called the Santan case "an issue of health, safety and the future." He added, "This is truly one of the most difficult votes during my tenure that I have had to make - someone may go home unhappy. We have the responsibility to make the right decision for the state. I vote 'aye.'"

Voting last, Mundell prefaced his support of the expansion by saying, "The issue would have been totally, totally different if the plant wasn't already there. Without this generation facility expansion in front of us, we have no authority to clean up the existing plant or force them to stop burning diesel. This case allows us to order SRP to that clean up the air and make sure we have affordable, reliable electricity for the future."

SRP expects to begin construction at the site in 2003 after obtaining other required permits. The new 825 MW units should be operational in 2005.