Biomass Plant Will Help Environment; APS Gaining Experience for Future Projects.

Energy Editors/Business Editors/Environment Writers

EAGAR, Ariz.--(BUSINESS WIRE)--Aug. 26, 2003

Trees cleared from Arizona's highly combustible forests soon will provide the fuel for a power plant that will produce enough electricity for up to 3,000 homes and businesses.

The Stone Forest Biomass Project, located in Eagar, will help improve the health of the nearby Apache-Sitgreaves forest by thinning Ponderosa Pine growth, while generating electricity using renewable biomass fuel and providing employment to local residents. Completion of the plant is expected this November.

This project - believed to be the first of its kind in Arizona - is significant for APS as it lays the foundation for future endeavors in this field. APS is paying the majority of the approximate $4 million cost of the construction of the plant, which will be operated by Western Renewable Energy. While APS will get the green credits to apply to the Arizona Environmental Portfolio Standard - which, by 2007 will require APS to generate 1.1 percent of its power through renewable sources - it's the experience the company is gaining with biomass that may prove most beneficial.

The Eagar plant will help APS develop a template to build biomass plants that use similar technology in other parts of the state. The company is exploring such forest-intensive locations as Flagstaff, Prescott and Payson in which to build these 3-megawatt plants. These projects would provide an outlet for dying trees and help protect the transmission lines in APS' rights-of-way from forest fire risk.

"APS is committed to developing clean renewable energy sources today that will fuel tomorrow's economy," said Ed Fox, vice president of Communications, Environment and Safety for APS. "Biomass is one of those future energy sources, and in Arizona, it also can be part of a solution to our forest health issues."

While APS has supported the Eagar project since last year, the topic of biomass has come to the forefront only recently. Ongoing drought conditions since 1999 have produced drier trees that - in the past year - have become susceptible to infestation by the bark beetle. The bark beetle feeds off these trees, which then become even more vulnerable to fire.

Biomass technology converts vegetation waste such as forest and agricultural byproducts - even yard trimmings - into clean fuel to power generators. The Stone Forest Biomass Project will help reduce future forest fire threats by converting the trees and other vegetation removed during forest thinning into electricity.

By using the wood chips that are produced from the forested trees, APS expects to reduce greenhouse gas emissions by up to 15,000 tons per year. Trees that in the past would have been burned in the forest, now will be burned in a boiler under controlled conditions, thereby producing less emissions.

The Stone Forest Biomass Project will consume approximately 96 tons of forested wood each day and - like APS' proposed biomass plants - will produce 3 megawatts of electricity. This is enough energy for up to 3,000 homes in this region.

There is a direct economic benefit as well. The Stone Forest Biomass Project will require 12 full-time employees to operate the power plant, and another 20 to harvest trees that otherwise would have no use, said Jim Anderson, forest planning staff officer for the Apache-Sitgreaves National Forest.

"By allowing the removal of small trees of non-commercial size, this project ultimately will reduce the fire hazard in this area of the state," Anderson said, adding that the Stone Forest project will result in about 2,300 acres of fire risk reduction per year. "This plant and future such projects can only help the long-term health of our forests."

Western Renewable Energy began construction of the plant in August 2001 while seeking a financial partner. APS agreed to participate in the project in February 2002.

"I knew we had to do something to protect our forest," said Steve Hall, a principal with Western Renewable Energy. "Once we realized we could maintain the forest while generating electricity this plant made all the sense in the world."

APS, Arizona's largest and longest-serving electricity utility, serves about 902,000 customers in 11 of the state's 15 counties. With headquarters in Phoenix, APS is the largest subsidiary of Pinnacle West Capital Corp. (NYSE: PNW).