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Arizona Public Service reaffirms gas plant proposals in new draft resource plan

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Arizona Public Service reaffirms gas plant proposals in new draft resource plan

Arizona Public Service Co. continues to assert that it needs more gas-fired plants to meet future demand, but in a preliminary 2019 integrated resource plan filed with state regulators Aug. 1, the company did not specify how much new fossil-fueled capacity it needs to meet projected needs of thousands of new customers.

The Pinnacle West Capital Corp. subsidiary instead said that as it moves toward a clean energy mix, "natural gas resources will be essential to provide highly reliable service under any future scenario."

In March 2018, the Arizona Corporation Commission rejected the company's proposed resource plan, which called for adding nearly 5,400 MW of new gas-fired capacity by 2032, and the commission ordered the company to come up with a new plan that emphasizes energy efficiency, electricity storage and smart grid improvements.

Faced with that rejection and increasing customer demand for clean energy, Arizona Public Service, or APS, said it favors a "flexible approach" to peak reliability and wants to add only essential gas-fired resources in combination with clean energy resources and storage. Operating these units sparingly will have little impact on overall carbon emissions, but they are vitally important for reliability and affordability, APS maintained.

APS said that in the near term, it can meet its needs via short-term contracts with existing gas-fired merchant plants. Some plants in the Southwest have closed, however, because the growth of renewable generation limited the hours they could run as customers turn to cheaper solar and wind. The decline in available, quick-starting gas units is a regional concern, the utility said.

Big load growth still expected

At the same time, APS is projecting 2.3% annual growth in peak energy demand from 2020 to 2035, totaling about 3,000 MW of new capacity needs as the population grows, the economy expands and electric vehicles continue to spread. APS expects to add about 400,000 new residential customers over the next 15 years to its existing base of 1.25 million.

Consequently, APS foresees a shortfall of 922 MW in the next five years. The company has 10,609 MW of existing capacity, including 4,929 MW of gas, of which 3,469 MW is utility owned and 1,460 MW is in power purchase contracts. The utility still has 1,672 MW of coal-fired capacity, although it will quit its 315-MW share in the Navajo plant in December. APS' resource mix also includes 1,947 MW of customer-based energy efficiency, distributed energy and demand response, which exceeds its 1,146-MW share of the Palo Verde nuclear plant.

The company has committed to fulfilling the state's 15%-by-2025 renewable standard but has explored ways to meet a 50% renewable energy target by 2030 and expects to have more than 20% renewables by 2022, in large part due to a recent request for proposals for up to 400 MW of solar and wind.

APS also said it will add 850 MW of battery storage by 2025, despite the April 19 explosion and fire at the McMicken battery energy storage facility. It expects to add more than 100 MW each year from private rooftop solar installations.