Nevada Correctional Facility to Host Renewable Energy Center.

Phoenix-Based APS Energy Services to Provide Biomass, Solar Technology

CARSON CITY, Nev. -- Waste cleared from Nevada's combustible forests will help fulfill the energy needs of the Northern Nevada Correctional Center (NNCC) while saving the facility a projected $9 million-plus in energy costs over the next 20 years.

APS Energy Services and NNCC today broke ground on its Renewable Energy Center, which will include a wood-fired biomass boiler with a 1,000-kilowatt steam turbine generator. (One thousand kilowatts is enough for the electricity needs of about 500 average size homes in northern Nevada.) This combined heat and power plant will utilize forest waste - wood chips - produced from forest-thinning operations in the Sierra Nevada to produce electricity, steam and hot water. The plant will provide the full thermal requirements for the existing main boiler plant at NNCC.

This is believed to be the first renewable energy woody biomass combined heat and power plant of its kind in Nevada. The system has the capability of producing up to 8 million kilowatt hours of electrical energy per year. The Renewable Energy Center also includes a 30-kilowatt photovoltaic solar system. APS Energy Services expects the facility to come online in spring 2007.

"This project works on every level imaginable," said Lori Bagwell, Chief of Fiscal Services for the Nevada Department of Corrections. "Not only do we expect air and water quality in the area to be enhanced by providing an environmentally friendly way of disposing woody biomass, we foresee tremendous savings because the facility no longer will be dependent on the volatile costs of natural gas."

The forest waste material is collected from the forest and transferred to Carson City Renewable Resources Inc. (CCRR), located in Carson City, to process the material into a form capable of use at NNCC. CCRR will provide up to 16,000 tons of clean, dry wood chips no greater in dimension than two inches for the boiler on an annual basis. This process does away with the emissions that would be emitted from controlled burns and diminishes the possibility of larger wildfires.

The wood chips are burned under controlled conditions, with temperatures upward of 1,200 degrees Fahrenheit. This process produces levels of emissions well below state standards, and many times less than uncontrolled burns. The Carson City Board of Supervisors in the special use permit added a condition that the design includes a mechanism to reduce the particulate matter emissions by a minimum of 50 percent from the original design. With the addition of the baghouse filter, particulate matter emissions will be reduced by about 75 percent from the original design.

"The demand for renewable energy projects continues to rise as technologies improve, utility rates continue to increase and we secure long-term fuel supply contracts," said Jay Johnson, APS Energy Services' Business Development Manager. "More companies are stepping up to provide immediate and long-term energy efficiency and renewable solutions. In addition to correctional facilities, we believe a project like the one at NNCC has potential applications at educational institutions, healthcare and industrial facilities."

In addition to the environmental advantages of the Renewable Energy Center, there are economic benefits. The facility estimates that utilizing forest waste as fuel to produce electricity, steam and hot water as opposed to purchasing natural gas and electricity will save more than $1 million annually. Excess electricity generated by the biomass plant will be purchased by Sierra Pacific Power Co. for use by its customers, creating a potential revenue stream for the correctional facility. Sierra Pacific also will attain the associated green energy credits.

The expected cost of the Renewable Energy Center is $8.3 million, which will be financed over 15 years. With a life expectancy of greater than 20 years, APS Energy Services expects the Renewable Energy Center to produce more than $9 million in positive cashflow over this period.

APS Energy Services is the full-service energy services provider and competitive electricity subsidiary of Pinnacle West Capital Corporation (NYSE: PNW), an Arizona-based company with consolidated assets of approximately $11.3 billion and annual revenues of about $3 billion. APS Energy Services extends its service throughout Nevada, Arizona, California and the Southwest, providing innovative solutions to meet the challenges of the ever-changing energy market.