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A Utility Look at Nuclear Power

Edward Fox, Uranium Exploration and Development

• Pinnacle West, holding company for APS, investor-owned electric utility serving more than 1 million customers in Arizona, including part of Phoenix metro area

• APS growth > 3 times national average. Arizona will need nearly 7,200 megawatts of new capacity by 2015.

• APS operates Palo Verde nuclear station, nation's largest power producer for 14 years in a row.

• But like nearly every utility in the last 10 years we turned to natural gas for new capacity -- clean, few siting issues, added quickly and in small increments. Today we are 31% NG, 43% coal and 26% nuclear. But NG is 60% of our fuel costs.

• Fuel diversity, as recent events prove, is vital for economic, environmental and energy security reasons.

• Different fuel sources respond to diverse, often unconnected, economic and cultural factors.

° Coal responds to railroads, mining, environmental regulations.

° Natural gas -- heating demand and ability to build new pipelines and LNG terminals.

° Renewables -- like wind and solar are intermittent, others are limited in availability.

• Nuclear has a different set of drivers. Let's briefly look at those drivers and other facts.

Legacy Issues that Need to be Addressed

• Economic competitiveness with cheap coal and natural gas is an issue but changes if natural gas stays above $5