[Federal Register Volume 66, Number 17 (Thursday, January 25, 2001)]
[Notices]
[Pages 7819-7820]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-2280]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27339]


Filings Under the Public Utility Holding Company Act of 1935, as 
amended (``Act)''

January 19, 2001.
    Notice is hereby given that the following filing(s) has/have been 
made with the Commission pursuant to provisions of the Act and rules 
promulgated under the Act. All interested persons are referred to the 
application(s) and/or declaration(s) for complete statements of the 
proposed transaction(s) summarized below. The application(s) and/or 
declaration(s) and any amendment(s) is/are available for public 
inspection through the Commission's Branch of Public Reference.
    Interested persons wishing to comment or request a hearing on the 
application(s) and/or declaration(s) should submit their views in 
writing by February 13, 2001, to the Secretary, Securities and Exchange 
Commission, Washington, DC 20549-0609, and serve a copy on the relevant 
applicant(s) and/or declarant(s) at the address(es) specified below. 
Proof of service (by affidavit or, in the case of an attorney at law, 
by certificate) should be filed with the request. Any request for 
hearing should identify specifically the issues of facts or law that 
are disputed. A person who so requests will be notified of any hearing, 
if ordered, and will receive a copy of any notice or order issued in 
the matter. After February 13, 2001, the application(s) and/or 
declaration(s), as filed or as amended, may be granted and/or permitted 
to become effective.

Pinnacle West Capital Corporation (70-9745)

    Pinnacle West Capital Corporation (``Pinnacle West''), located at 
400 East Van Buren Street, Suite 700, Phoenix, Arizona 85004, an 
Arizona holding company exempt from registration under section 3(a)(1) 
of the Act by rule 2, has filed an application with the Commission 
under sections 9(a)(2) and 10 of the Act in connection with a proposed 
corporate reorganization (``Reorganization''). The Reorganization 
involves the relocation of certain generation assets from Arizona 
Public Service Company (``APS''), Pinnacle West's public-utility 
company subsidiary, to Pinnacle West Energy Corporation (``PWE''),\1\ a 
wholly owned nonutility subsidiary of Pinnacle West. As a result of the 
Reorganization, PWE will be a public-utility company within the meaning 
of the Act, and Pinnacle West will acquire an additional public-utility 
subsidiary.
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    \1\ PWE was organized primarily to engage in the business of 
developing, owning and operating generation plants used for the 
production and sale of wholesale energy. PWE is currently engaged in 
the development of approximately 2,600 megawatts of generating 
capacity in Arizona.
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    Pinnacle West is engaged through subsidiaries in the generation, 
transmission, and distribution of

[[Page 7820]]

electricity, the sale of energy services, real estate development, and 
venture capital investment. APS provides retail electric services 
principally in Arizona. In addition to the generation, transmission, 
and distribution of electricity, APS is presently engaged in power 
marketing activities. The Arizona Corporation Commission (``ACC'') 
regulates APS with respect to its retail rates, accounting, service 
standards, service territory, issuances of securities, siting of 
generation and transmission projects, and various other matters. The 
Federal Energy Regulatory Commission regulates APS' wholesale 
generation and interstate transmission rates, accounting, and certain 
other matters.
    The purpose of the Reorganization is to comply with certain 
requirements set forth in rules adopted by the ACC that provide the 
framework for introduction of retail electric competition in Arizona 
(``Competition Rules'') and in a final ACC order approving APS' 
settlement with various parties with respect to implementation of the 
Competition Rules (``Settlement'').\2\ Under the Competition Rules and 
the Settlement, APS must separate its generating assets and competitive 
services from its transmission and distribution functions no later than 
December 31, 2002.
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    \2\ Under the terms of the Competition Rules and the Settlement, 
retail choice for APS' retail customers is being phased in. All of 
APS' retail customers will be entitled to choose their retail power 
supplier beginning January 1, 2001.
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    The principal transactions associated with the Reorganization are 
the following. First, APS will contribute certain of its fossil and 
solar generating facilities, assets and related operational agreements 
to one or more newly-formed wholly-owned subsidiaries (``Transitory 
Subsidiaries''). Second, APS will distribute (or cause to be 
distributed) all of the common stock of each Transitory Subsidiary to 
Pinnacle West. Third, the Transitory Subsidiaries will then be merged 
into PWE, with PWE as the surviving entity. It is contemplated that 
these transactions will occur simultaneously.
    When the Reorganization is completed, APS' existing divisional 
structure, in which electric utility operations are divided along 
functional lines, will be formalized, and separate corporate entities 
will engage in the transmission/distribution of electricity and the 
generation of electricity. APS will become a ``wires'' company and will 
continue to own and operate its existing electric transmission and 
distribution system. PWE become a generating company and will own or 
lease and operate APS' generation assets and sell the output from these 
assets at wholesale to Power marketing and Trading (``Power 
Marketing''), a division of Pinnacle West. Power Marketing was 
previously a division of APS engaged primarily in the sale and purchase 
of electric capacity and energy in the wholesale market. Power 
Marketing sold excess power from APS' generation facilities and also 
purchased energy from other entities to meet APS' requirements to 
supply retail and wholesale customers. The Competition Rules and 
Settlement contemplate that APS will move its Power Marketing division 
to an affiliate. Accordingly, on October 1, 2000, Power Marketing 
became a division of Pinnacle West. It is expected that Power Marketing 
will sell power to APS as well as to non-affiliated power purchasers. 
APS will continue to provide transmission and distribution services at 
regulated rates, as well as provide energy to those retail customers in 
APS' existing service territory that do not elect to use an alternate 
retail power supplier.
    Pinnacle West states that, after the Reorganization, it will 
continue to qualify for exemption from registration under section 
3(a)(1) of the Act because Pinnacle West and each public-utility 
company from which it derives, directly or indirectly, any material 
part of its income, will be predominantly intrastate in character and 
will carry on their business substantially in Arizona, the state in 
which Pinnacle West and each such public-utility company is 
organized.\3\
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    \3\ Pinnacle West states that it will continue to file, under 
rule 2, annual exemption statements on Form U-3A-2 following the 
Reorganization.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-2280 Filed 1-24-01; 8:45 am]
BILLING CODE 8010-01-M