Unprecedented Move by APS Improves Natural Environment; Power Plant Closure Gives Rebirth to Important Arizona Waterway.

PHOENIX -- Arizona's first commercial hydroelectric power plants ceased operation today as part of a unique endeavor between APS, government agencies, Native American tribes, conservation groups and academia. By closing the Childs and Irving hydroelectric power plants in central Arizona, full water flow was restored to Fossil Creek after nearly a century of restricted flows.

The Childs and Irving power plants, located in a remote area between Strawberry and Camp Verde, were considered an engineering and logistical marvel when constructed almost 100 years ago. The small hydroelectric power plants provided energy essential to Arizona's growth, powering the booming mining operations in Jerome and the Bradshaw Mountains, and later energized the growing communities of Prescott and Phoenix.

In 1999 and in concert with the Yavapai-Apache Nation, American Rivers, Arizona Riparian Council, Center for Biological Diversity, The Nature Conservancy and Northern Arizona Audubon Society, APS decided to decommission the Childs and Irving plants and restore full flow to Fossil Creek at the cost to APS of about $13 million. Despite the cost of decommissioning and lost revenue from plant operations, APS determined that restoring Fossil Creek to its natural flow outweighed the business benefits provided by the facility.

"Our decision was based on what was best for Arizona," said Jack Davis, APS president and CEO. "As a responsible corporate citizen, we carefully reviewed our business goals and determined that closing the power plants, returning the stream to its full flow and recreating the natural condition of this beautiful area was simply the right decision.

"This is an unparalleled and exciting opportunity to return a work site to its pristine condition, creating an ecosystem where nature can continue to thrive," Davis added. "This cooperative effort will ultimately enhance the native riparian area and enrich an already popular recreation area that can be enjoyed for generations."

Returning Fossil Creek to its full flow yields an additional 14 miles of wetland ecosystem valuable for wildlife habitat and creek-side recreation.

Fossil Springs, which feeds Fossil Creek, is a unique Arizona water source. It provides a year-round flow of 43 cubic feet per second, and its high mineral content has helped form large travertine formations that native fish use for shelter and spawning. The restored flow should encourage the return of a greater number and variety of native fish and fauna.

As part of the preparations for the return of full flow to Fossil Creek, the U.S. Bureau of Reclamation, U.S. Fish and Wildlife Service, U.S. Forest Service and the Arizona Game & Fish Department conducted a native fish restoration project. The project, which recently was completed, included the removal of non-native species and construction of a fish barrier that keeps non-native fish from entering the restored area.

An integral part of the region's heritage, the historic value of the Childs and Irving plants will not be ignored. APS worked with local historical groups and the surrounding communities to preserve as much of the facilities as possible. As a result, two of the plant's original structures -- the powerhouse and icehouse at the Childs site -- will remain as historic elements.

Now that the Childs and Irving plants have been shut down, APS employees will begin deconstruction and removal of power plant structures. The site should be returned to the Forest Service by the end of 2009.

APS, Arizona's largest and longest-serving electric utility, serves more than 989,500 customers in 11 of the state's 15 counties. With headquarters in Phoenix, APS is the largest subsidiary of Pinnacle West Capital Corporation (NYSE: PNW).

NOTE:

Quotes from major stakeholder organizations follow.

Stakeholder Quotes...

Yavapai-Apache Nation

"We have participated in the decommissioning process as full partners because we believe the waters of Tu Do Tliz (Fossil Creek) should flow freely into Tu Cho (the Verde River). It also is a critical first step in restoring an important place within our home country to a more natural state. Our People are proud to have been involved with the construction of the facility, its maintenance and success over the decades, but now we are happy to let it go back to the way it should be. The facility's time has passed. This living water is a gauge of the health of the Canyon and it is Sacred to us. Let us all remain vigilant to make sure that the waters continue to flow freely and that Tu Do Tliz is treated with care and respect so all of our Grandchildren can enjoy it and count on it like our ancestors did. The permanent flowing water of Tu Do Tliz gives life to the place. Even though our People do not live there now, it remains a home in our heart."

- Vincent Randall, Apache Historian and Yavapai-Apache Tribal Council 

American Rivers

"Today Fossil Creek is a river reborn and our newest national treasure. We applaud Arizona Public Service for its remarkable environmental stewardship. With this new beginning, we call on the Congress and the U.S. Forest Service to grant Fossil Creek protections and resources to safeguard this gem of the Southwest for generations to come. At a time when most of the news about the environment is dire and full of conflict, Fossil Creek offers us hope that with cooperation and commitment we can protect and restore our natural heritage."

- Rebecca Wodder, President of American Rivers

Arizona Riparian Council

"The Arizona Riparian Council applauds the decision by Arizona Public Service to cease hydropower production, and to return full stream flows to Fossil Creek. APS has been a true partner in working with the environmental community and others to make this unique opportunity a reality. We gratefully acknowledge the work of several generations of APS workers who have been good stewards of this magnificent stream."

- Tim Flood, Chair, Land Use Committee

Center for Biological Diversity

"The APS' dam decommissioning and return of full flows to Fossil Creek truly is an historic event. The restoration of this remarkable travertine system will benefit Arizona's imperiled native fish in their time of desperate need. This also is a monumental victory for Arizona's natural heritage and future generations. Careful citizen vigilance still will be necessary to assure proper management and further protections for the creek, and to preserve the investment and efforts made by APS and others that we commemorate today. What a great gift to our kids. This is our legacy, and a great day for Arizona."

- Dr. Robin Silver, Conservation Chair of the Center for Biological Diversity

Northern Arizona Audubon Society

"It is rare in this day and age when a coalition of environmental organizations can work together with a major corporation such as Arizona Public Service to achieve the restoration of such a stunning and remarkable ecosystem as Fossil Creek. It is a credit to the good will and patience of all the parties over a number of years which will leave a legacy of unparalleled beauty and uniqueness found nowhere else in the Southwest. And for those of us in Audubon, the restoration of full flows to the creek holds the exciting possibility of unimagined prospects of greater diversity and numbers of bird species -- truly a win-win for the citizens of Arizona and the environment."

- Phyllis Kegley, President, Northern Arizona Audubon Society

The Nature Conservancy

"APS and conservation organizations, including The Nature Conservancy, first began discussions in 1997 about shutting down the Fossil Creek power plants as a historic conservation opportunity. Today the Conservancy applauds APS for voluntarily dismantling the plants to return full creek flow and investing $13 million in restoration of the creek's habitat. Now Fossil Creek's water again will form breathtaking travertine dams, pools and waterfalls. Return of the creek's natural flow and reintroduction of native fish species also will make it a model for native fish habitat in Arizona. This cooperative effort not only revitalizes a lush streamside home for plants and wildlife, but also signifies a milestone in what business and conservationists can achieve through working together."

- Patrick Graham, State Director

U.S. Bureau of Reclamation

"The decommissioning of the APS Childs-Irving hydroelectric plants and associated return of stream flows to Fossil Creek represent an historic step in the restoration of degraded streams and aquatic biota of Arizona. Native Arizona fishes are among the most endangered group of species in the United States, and flow restoration at Fossil Creek -- in conjunction with construction of a fish barrier and removal of nonnative fishes from the watershed -- immediately enhances the conservation status of native fishes and other declining riparian biota. The voluntary decommissioning by APS of its hydro facilities at Fossil Creek, and the successful inter-agency collaboration toward biological restoration, now serve as the project to emulate in the future. The importance of this gift of a newly-restored river to the people of Arizona and the nation cannot be overstated."

- Bruce D. Ellis, Chief, Environmental Resources Management Division, Bureau of Reclamation, Phoenix Area Office

U.S. Forest Service

"The Forest Service is pleased to witness the return of natural flows to Fossil Creek. We know the area's rich resources will benefit by this river restoration. We want to recognize Arizona Public Service for being a great neighbor, worthy land steward and wonderful partner. Fossil Creek and the area around is a regional and national treasure."

- Nora Rasure, Forest Supervisor, Coconino National Forest 

U.S. Fish & Wildlife Service

"Arizona Public Service's unselfish decommissioning of the power plants at Irving and Childs restores more than water flows to Fossil Creek. This gift to Arizonans has provided a window in which a native fishery can be restored and a riparian ecosystem maintained for future generations. APS initiated and led a complex process that involved more than 100 stakeholders to evaluate dam disposition, historical resources, the decommissioning schedule, recreation, visitation, access issues and licensing options. The U.S. Fish & Wildlife Service has worked closely with APS and many partners to negotiate, plan and now restore the authenticity of what lives below the surface of Fossil Creek waters. Due to APS' voluntary decommissioning, we have been able to erect a barrier to prevent upstream movement of predatory and competing non-native fish species, and remove these non-natives above the barrier in order to restore the authentic fish community and protect a sensitive population of lowland leopard frogs. Native fish benefiting from Fossil Creek restoration include Sonora and desert suckers -- both important food sources of early Native Americans; speckled dace -- one of Arizona's most colorful natives; longfin dace and roundtail chub -- a species whose decline is of great concern. Restoring native fish populations in the Verde River basin stream reaches helps to reverse the downward trend of native fish populations, hopefully averting the need to add some species to the list of those protected by the Endangered Species Act, and assisting in recovering currently listed species."

- Dale Hall, Southwest Regional Director, U.S. Fish & Wildlife Service

Northern Arizona University 

"The decommissioning of the historic Childs-Irving power plants by APS offers Northern Arizona University faculty and students a wonderful living laboratory. For many years, our scientists, engineers, archaeologists, recreation planners and others have studied the amazing Fossil Creek region. On June 18, we will begin studying the return of an ecosystem unlike any other in the region. Hundreds of NAU students have participated in our research. Thousands more will follow them, to observe and learn as the system begins another dramatic change in its evolution."

- William Auberle, Director, Engineering Program, NAU, Director, Ecological Monitoring and Assessment Program, NAU

Arizona Game & Fish Department

"The voluntary decommissioning of the Irving and Childs power plants and restoration of full water flows to Fossil Creek begin a new chapter in the history of this unique area. The Arizona Game & Fish Department applauds APS for its progressive decision to allow nearly 29 million gallons of water a day to return to the creek. The decision will create a wealth of opportunities to conserve and enhance a magnificent riparian ecosystem for present and future generations. We are proud to work with our conservation partners in this leading-edge endeavor that will restore native fish, benefit other wildlife resources, and provide recreational opportunities for Arizona residents and visitors from all over the world. The project exemplifies the proven concept that cooperation makes for good conservation."

- Duane Shroufe, Director, Arizona Game & Fish Department