Arizona Public Service (APS) has decided that a partial repowering of its gas-fired Ocotillo power plant, not offers taken through a request for proposals (RFP), is the best way to meet future capacity needs, said APS parent Pinnacle West Capital Corp. (NYSE: PNW) in its July 30 quarterly Form 10-Q report.
“Ocotillo is a 330 MW 4-unit gas plant located in Tempe, Arizona,” said the Form 10-Q. “In early 2014, APS announced a project to modernize the plant, which involves retiring two older 110 MW steam units, adding five 102 MW combustion turbines and maintaining two existing 55 MW combustion turbines. In total, this increases the capacity of the site by 290 MW, to 620 MW.
“During the [Arizona Corporation Commission’s] Integrated Resource Planning meeting in the fall of 2014, there was clear understanding of the need to replace the existing steam units, but questions were raised on the cost effectiveness of the additional three units. To address these matters, APS issued a request for proposal (‘RFP’) in late January 2015 for the incremental capacity, equivalent to 3 of the 5 units. Bids were due in March and have been analyzed by APS. An independent monitor was involved throughout the entire RFP process. The RFP affirmed that APS’s bid at the existing Ocotillo site was the most cost effective while it also demonstrated that a target completion date of 2019 was most appropriate (instead of 2018 as originally planned).”