To: Editors, News Directors

Date: October 27, 2003

For: Immediate Release

Judge Upholds ACC Decision on Power Plant
Plaintiffs sought to halt expansion of Springerville power plant

PHOENIX – The Arizona Corporation Commission last week scored another legal victory when Superior Court Judge Ruth Hilliard upheld the Commission’s authorization to expand the Springerville Generating Station in northeastern Arizona. In a November 2002 decision, the Arizona Corporation Commission gave conditional approval for the construction of up to two new state-of-the-art coal-fired generators, each with a nominal rating of 400 megawatts.

"This is not the first time we have been sued over one of our power plant siting decisions," Commission Chairman Marc Spitzer explained. "However, Arizona courts have recognized that our process is fair, our reasoning is clear and our decisions are sound. We are pleased to score another victory in the courts."

The Grand Canyon Trust, Land and Water Fund of the Rockies and the Arizona Center for Law in the Public Interest filed a Superior Court lawsuit against the Commission on January 9, 2003. The lawsuit asked the court to vacate the Commission’s approval. The groups cited concerns that the Commission had failed to balance the need for the plant with its effect on the environment, specifically citing carbon dioxide emissions. The parties also challenged the line siting statute, stating that it was not constitutional.

The Commission argued that it did balance need with the effect on the environment – pointing out that once a required retrofit is completed and the two new units are running, there will be a net 70 percent decrease in sulfur dioxide emissions and a net 50 percent reduction in nitrogen oxide emissions. These reductions represent net decreases from emission levels authorized under the current permits for Units 1 and 2, meaning the plant could double in size but emissions would be cut by 70 and 50 percent, respectively. The expanded plant will also use lower-sulfur coal, which further reduces air emissions.

"My fellow Commissioners and I are charged with balancing the need for a power plant with its effect upon the environment – a duty we take very seriously," Commissioner Bill Mundell said. "With the many conditions added to our 2002 approval of the Springerville expansion, I am confident that we have the proper environmental safeguards in place. Unlike our neighbors to the West who are dealing with skyrocketing energy prices and reliability issues, Arizonans continue to enjoy the benefits of reliable, affordable, diverse energy sources."

In part, Superior Court Judge Ruth Hilliard’s ruling reads: "The court is not satisfied that the Commission abused its discretion in issuing its Decision No. 65347 and finds no valid legal basis or factual basis to set the decision aside." (Hilliard’s Ruling Minute Entry in CV2003-000436, filed 10/22/03.)

On the constitutional question, Judge Hilliard states that the "argument was not raised before the Corporation Commission and is untimely now. Even if the constitutionality of the statute were considered, the Court finds that the statute is not vague, is not an undue delegation of legislative powers or violative of due process."

The expansion of the Springerville Generating Station is a project that Tucson Electric Power (TEP), a subsidiary of Unisource Energy Corporation, is constructing with two other partners. The partners are the Tri-State Generation and Transmission Association, Inc. and Bechtel Corporation. Tri-State and Salt River Project will use power produced by the plant. Bechtel Corporation is serving as the engineering, procurement and construction contractor, according to TEP materials.

The three partners will break ground for Unit 3 in a Friday, November 14, 2003 ceremony.

Commissioners Jeff Hatch-Miller, Mike Gleason and Kristin K. Mayes were not serving on the Commission at the time and did not rule on this case. All three separately congratulated Commission staff members for successfully defending the Commission’s decision.