Arizona Electric Power Cooperative

The Arizona Electric Power Cooperative (AEPCO) is the owner and operator of the Apache Generating Station, a coal-fired power station near Cochise, Arizona. In 2001, AEPCO restructured and became a generation only cooperative with ownership of the generating station in Cochise, Arizona, and the headquarters facility located in Benson, Arizona. AEPCO has 21 employees. Substation, transmission, and power delivery functions necessary to transmit Apache Generating Station power to the end-use consumers are provided by Southwest Transmission Cooperative and the Class A distribution cooperatives.

AEPCO and Coal Issues
According to AEPCO's 2008 Annual report, coal will continue to play a key role in the cooperative's future, and its costs are increased by the company's lack of shipping choices:

"At AEPCO’s Apache Generating Station, 63 percent of the generation capacity is from coal, with the rest from natural gas. Because natural gas has been a historically higher-priced fuel, coal remains the fuel choice for generation. Developing clean coal technologies, promoting rail shipper legislative solutions and maintaining coal’s ability to compete on costs will be the key drivers to AEPCO’s future generation choices."

"Since railroads are the only practical means of transportation to move coal from mines in Colorado, New Mexico and Wyoming to Apache Generating Station, AEPCO must establish coal transportation agreements with the railroads to ship up to 1.5 million tons of coal a year."

"Four major railroads move more than 90 percent of the freight that is transported in the United States, including coal. Currently, railroads are exempt from antitrust laws designed to control unreasonable monopoly pricing. Captive rail customers are hard hit by these high costs, and there is little or no relief due to ineffective regulatory oversight by the Surface Transportation Board (STB), the federal agency charged by Congress with protecting rail customers from monopoly power abuses."

AEPCO considers itself "a captive customer of Union Pacific Railroad (UP). Because UP has no competition, AEPCO has no leverage to negotiate reasonable rail rates. Delivery quotes for 2009 from UP for coal origins in Colorado, Wyoming and Montana have increased more than 100 percent. This massive increase in rail transportation costs limits AEPCO’s coal supply options, making optimum mine origins prohibitively expensive and effectively providing local coal suppliers with monopolistic pricing power. This is expected to increase the cost of electricity up to 30 percent for AEPCO’s members and customers. In response to these increases, AEPCO has filed a complaint with the STB seeking rate relief."

AEPCO and Clean Coal
AEPCO's 2008 Annual report lays out the cooperative's plans for investing in "clean coal" technology:

"AEPCO is participating with Salt River Project, Arizona Public Service (APS) and Tucson Electric Power Company in Phase II of the Western Regional Carbon Sequestration Partnership’s Arizona Utilities Storage pilot project in northeast Arizona. The project is 80 percent funded by the United States Department of Energy. The remaining 20 percent is funded by the participating utilities. AEPCO’s financial involvement is relative to its share of coal generation in the state of Arizona. Northeastern Arizona’s Colorado plateau region, where the pilot is being conducted, provides the area’s most favorable geologic setting for carbon sequestration. Most of the rest of Arizona, including the area surrounding Apache Generating Station, is unsuitable for CO2 storage."

"The pilot project site is located approximately one mile north of Joseph City in Navajo County on land owned by APS. A test site in northeast Arizona was selected by geologists because of its deep sandstone formations containing salt water that is not potable or suitable for irrigation. Commercial CO2 will be purchased and transported by truck to the site, where it will be pumped about three-fourths of a mile deep into the underground formation, then stored and monitored with sensitive instruments. The land surface will remain undisturbed, except for a small area required for the injection well. The next phase of the project will attempt to determine the extent and capacity of area geologic formations suitable for carbon sequestration. AEPCO could use its participation in carbon sequestration at this location as a strategy to achieve compliance with climate change regulations."

EPA releases list of 44 "high hazard" coal ash dumps
In response to demands from environmentalists as well as Senator Barbara Boxer (D-California), chair of the Senate Committee on the Environment and Public Works, the EPA made public a list of 44 "high hazard potential" coal waste dumps. The rating applies to sites at which a dam failure would most likely cause loss of human life, but does not include an assessment of the likelihood of such an event. Arizona Electric Power Cooperative owns 7 of the sites, all of which store coal combustion waste for the Apache Generating Station. To see the full list of sites, see Coal waste.

Contact Details
Arizona Electric Power Cooperative, Inc. PO Box 670 Benson, Arizona 85602 Phone: 520-586-3631 Website:http://www.aepco.coop/

Related SourceWatch Articles

 * Existing U.S. Coal Plants
 * Arizona and coal
 * United States and coal
 * Global warming
 * Coal