Exhibit 10.1
AMENDMENT NO. 5
Decommissioning Trust Agreement
(PVNGS Unit l)
          This Amendment No. 5 dated as of May 1, 2007, to the Decommissioning
Trust Agreement (PVNGS Unit 1), dated as of July 1, 1991, as amended by
Amendment No. 1 thereto dated as of December 1, 1994, Amendment No. 2 thereto
dated as of December 16, 1996, Amendment No. 3 thereto dated as of March 18,
2002, and Amendment No. 4 thereto dated as of December 19, 2003 (the
“Decommissioning Trust Agreement”, terms used herein as therein defined), is
entered into between Arizona Public Service Company (“APS”) and Mellon Bank,
N.A., as Decommissioning Trustee (“Decommissioning Trustee”).
R E C I T A L S:
          WHEREAS, the parties hereto wish to amend the Decommissioning Trust
Agreement.
          NOW, THEREFORE, in consideration of the premises and of other good and
valuable consideration, receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
          SECTION 1. Amendment.

  (a)   Paragraph (c) of Section 5 shall be restated as follows:         to
(i) hold assets, in a depository, in a clearing corporation, in book entry form,
or by any subcustodian or other entity or in any other manner permitted by law;
provided that the Decommissioning Trustee shall not be responsible for any
losses resulting from the deposit or maintenance of securities or other property
(in accordance with market practice, custom, or regulation) with any foreign or
domestic clearing facility, book-entry system, centralized custodial depository,
or similar organization generally used by professional custodians engaged in the
banking or trust company industry within the applicable market for the asset
type in question, and (ii) settle transactions in futures and/or options
contracts, short-selling programs, foreign exchange or foreign exchange
contracts, swaps and other derivative investments with third parties;     (b)  
Paragraph (a) of Section 8 shall be restated as follows:         To hold,
manage, invest, and reinvest the assets of the Funds; provided however that
notwithstanding the provisions of Section 8(c), Decommissioning Trustee shall,
at the close of business on each day, without prior approval or direction from
the Investment Manager(s), have the power, rights, and responsibility to invest
cash balances, including those held as part of an account of the Investment
Manager(s), as authorized in writing delivered to the Decommissioning Trustee by
APS. Nothing in this Section shall be construed as authorizing

 

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      Decommissioning Trustee to carry on any business or to divide the gains
therefrom.     (c)   The first sentence of clause (ii) of Paragraph (c) of
Section 8 shall be deleted.     (d)   The third sentence of clause (ii) of
Paragraph (c) of Section 8 shall be restated as follows:         Upon proper
notification from the Investment Manager(s), Decommissioning Trustee shall
execute and deliver instruments in accordance with the appropriate trading
authorizations; provided that the Decommissioning Trustee shall not follow any
direction that would result in assets of the Second Fund being invested in
investments not allowed for a qualified nuclear decommissioning reserve fund
under Section 468A of the Code and the regulations thereunder.     (e)   Clause
(ii) of Paragraph (d) of Section 8 shall be restated as follows:        
Decommissioning Trustee is required to supervise and review the securities and
other assets and investments authorized for purchase by the Investment
Managers(s) within two weeks of the end of the calendar month during which such
purchase was made to determine that such securities, assets and/or investments
are in accordance with the notice communicated in writing to and accepted by the
Decommissioning Trustee, whose acceptance shall not be unreasonably withheld.
Upon the completion of such review, the Decommissioning Trustee shall promptly
notify APS in writing if any securities, assets or investments are not
consistent with such notice.     (f)   Section 11 shall be restated as follows:
        Limitations on Transfer and Assignment. APS may not, in whole or in
part, transfer, assign, pledge, encumber, or grant any security interest in its
beneficial interest under this Agreement or in either of the Funds, whether
voluntary or involuntary, except for (i) Permitted Liens, and (ii) as otherwise
required or allowed by Applicable Law.         Notwithstanding the foregoing, if
the Decommissioning Trustee advances cash or securities for any purpose or in
the event that the Decommissioning Trustee shall incur or be assessed taxes,
interest, charges, expenses, assessments, or other liabilities in connection
with the performance of this Agreement, except such as may arise from its
failure to exercise due care, any property at any time held for the Fund or
under this Agreement shall be security therefor and the Decommissioning Trustee
shall be entitled to collect from the Fund sufficient cash for reimbursement,
and if such cash is insufficient, dispose of the assets held under this
Agreement to the extent necessary to obtain reimbursement.

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      Nothwithstanding the foregoing, nothing in this Agreement shall prohibit
the lending of the assets of the Fund in accordance with the terms and
conditions of a separate securities lending agreement.     (g)   The second
sentence of the fourth paragraph of Section 21 shall be restated as follows:    
    Decommissioning Trustee shall promptly advise APS if it has actual knowledge
that any of the investments are not in accordance with the notice communicated
in writing to and accepted by the Decommissioning Trustee.     (h)   The
following shall be added to the first paragraph of Section 23.         The
Decommissioning Trustee shall not be responsible or liable for any losses or
damages suffered by the Fund arising as a result of the insolvency of any
custodian, (other than the Decommissioning Trustee or any affiliate of the
Decommissioning Trustee) subtrustee or subcustodian, except to the extent the
Decommissioning Trustee failed to exercise due care in its selection, monitoring
or continued retention of such entity. Settlements of transactions may be
effected in trading and processing practices customary in the jurisdiction or
market where the transaction occurs. APS acknowledges that this may, in certain
circumstances, require the delivery of cash or securities (or other property)
without the concurrent receipt of securities (or other property) or cash. In
such circumstances, provided the Trustee has exercised due care and used
reasonable efforts, the Decommissioning Trustee shall have no responsibility for
nonreceipt of payment (or late payment) or nondelivery of securities or other
property (or late delivery) by the counterparty.     (i)   The definition of the
term “Permitted Investments” in Exhibit A to the Decommissioning Trust Agreement
is hereby deleted.     (j)   Exhibit B to the Decommissioning Trust Agreement is
hereby deleted.

           SECTION 2. Miscellaneous

  (a)   Full Force and Effect.

          Except as expressly provided herein, the Decommissioning Trust
Agreement shall remain unchanged and in full force and effect. Each reference in
the Decommissioning Trust Agreement and in any exhibit or schedule thereto to
“this Agreement,” “hereto,” “hereof” and terms of similar import shall be deemed
to refer to the Decommissioning Trust Agreement as amended hereby.

  (b)   Counterparts/Representations.

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          The Amendment No. 5 may be executed in any number of counterparts, all
of which taken together shall constitute one and the same instrument, and any of
the parties hereto may execute this Amendment No. 5 by signing any such
counterpart. Each party represents and warrants to the other that it has full
authority to enter into this Amendment upon the terms and conditions hereof and
that the individual executing this Amendment on its behalf has the requisite
authority to bind that Party.
          IN WITNESS WHEREOF, the parties hereto have caused this Amendment No.
5 to the Decommissioning Trust Agreement to be duly executed as of the day and
year first above written.

                  ARIZONA PUBLIC SERVICE COMPANY    
 
           
 
  By:   /s/ Janice Emery
 
   
 
  Title:   Director, Trust Investments    
 
           
 
                MELLON BANK, N.A. as Decommissioning Trustee    
 
           
 
  By:   /s/ Thomas J. McNally    
 
           
 
  Title:   Vice President    
 
           

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STATE OF ARIZONA
)     
 
) ss: 
County of Maricopa
)     

     The foregoing instrument was acknowledged before me this 16th day of April,
2007, by Janice Emery, the Director Trust Invest of ARIZONA PUBLIC SERVICE
COMPANY, an Arizona corporation, on behalf of said corporation.

         
 
  /s/ Suzanne Wineck
 
Notary Public    

(SEAL) [p73819p7381901.gif]

         
COMMONWEALTH OF PENNSYLVANIA
)     
 
) ss: 
County of Allegheny
)     

     The foregoing instrument was acknowledged before me this 26th day of April,
2007, by Thomas J. McNally, a Vice President of Mellon Bank, N.A. a national
banking association having trust powers, as Decommissioning Trustee, on behalf
of said national banking association.

         
 
  /s/ Julie Ann Mosco
 
Notary Public    

         
 
  COMMONWEALTH OF PENNSYLVANIA    
 
  Notarial Seal
Julie Ann Mosco, Notary Public
City Of Pittsburgh, Allegheny County
My Commission Expires Oct. 13, 2007                   Member, Pennsylvania
Association Of Notaries    

My commission expires:
October 13, 2007

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