Arizona Public Service (APS) plans a $600m-$700m modernization project for its gas-fired Ocotillo power plant, which includes the retirement of two units and expanded generating capacity.
Ocotillo is a 330-MW, four-unit gas plant, noted Arizona Public Service parent Pinnacle West Capital (NYSE: PNW) in its Feb. 21 annual Form 10-K report. The modernization project will involve retiring two older 110-MW steam units, adding five 102-MW combustion turbines and maintaining two existing 55-MW combustion turbines. In total, this project will increase the capacity of the site by 290 MW, to 620 MW, with completion targeted for summer 2018.
APS has six natural gas-fired power plants located throughout Arizona, consisting of: Redhawk, located near Palo Verde; Ocotillo, located in Tempe; Sundance, located in Coolidge; West Phoenix, located in southwest Phoenix; Saguaro, located north of Tucson; and Yucca, located near Yuma. Several of the units at Yucca run on either gas or oil. APS has one oil-only power plant, Douglas, located in the town of Douglas, Arizona.
APS owns and operates each of these plants with the exception of one oil-only combustion turbine unit and one oil and gas steam unit at Yucca that are operated by APS and owned by the Imperial Irrigation District. APS has a total entitlement from these plants of 3,179 MW.
Gas for these plants is financially hedged up to three years in advance of purchasing and the gas is generally purchased one month prior to delivery. APS has long-term gas transportation agreements with three different companies, some of which are effective through 2024. Fuel oil is acquired under short-term purchases delivered primarily to West Phoenix, where it is distributed to APS’s other oil power plants by truck.