Exhibit 10.4
                                 AMENDMENT NO. 2

                         Decommissioning Trust Agreement
                                 (PVNGS Unit 1)
                            Dated as of July 1, 1991,
                          as Amended by Amendment No. 1
                          Dated as of December 1, 1994
                                     between

                         Arizona Public Service Company

                                       and

                                Mellon Bank, N.A.
                           as Decommissioning Trustee


                  This  Amendment  No. 2, dated as of December 16, 1996,  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  (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  limitations of
the parties' ability to modify the Decommissioning Trust Agreement under certain
circumstances;

                  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:

                              A G R E E M E N T S:
                              - - - - - - - - - - 

                  SECTION 1.  Amendments.

                  The  Decommissioning  Trust  Agreement  is hereby  amended  by
adding the  following as the last sentence of Section 13:  "Notwithstanding  the
foregoing, this Agreement may not be amended or modified in violation of Section
468A of the Code or the regulations thereunder."
<PAGE>
                  SECTION 2.  Effectiveness.

                  This  Amendment  No. 2 shall  become  effective as of the date
hereof upon the execution and delivery of a counterpart  of this Amendment No. 2
by each of the parties hereto.

                  SECTION 3.  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.

                  This  Amendment  No.  2 may  be  executed  in  any  number  of
counterparts,  all of which taken together shall constitute the same instrument,
and any of the parties  hereto may execute this  Amendment  No. 2 by signing any
such counterpart.

                  (c)        Arizona Law.

                  This Amendment No. 2 shall be construed in accordance with and
governed by the law of the State of Arizona.

                  IN WITNESS  WHEREOF,  the  parties  hereto  have  caused  this
Amendment No. 2 to the  Decommissioning  Trust  Agreement to be duly executed as
the day and year first above written.


                                            ARIZONA PUBLIC SERVICE COMPANY




                                            By       NANCY E. NEWQUIST
                                               ------------------------------

                                            Title    Treasurer
                                               ------------------------------
                                      -2-
<PAGE>
                                            MELLON BANK, N.A., as
                                            Decommissioning Trustee



                                            By       EARL G. KLECKNER
                                               ------------------------------

                                                     Earl G. Kleckner
                                            Title    Vice President
                                               ------------------------------


STATE OF ARIZONA       )
                       )  ss.
County of Maricopa     )

                  The foregoing  instrument was acknowledged before me this 16th
day of December,  1996, by Nancy E.  Newquist,  the Treasurer of ARIZONA  PUBLIC
SERVICE COMPANY, an Arizona corporation, on behalf of said corporation.


[Official Seal]                             MARIA R. MARRS
                                            ---------------------------------
                                            Notary Public


My commission expires:
July 21, 1998


STATE OF PENNSYLVANIA    )
                         )  ss.
County of Allegheny      )

                  The foregoing  instrument was acknowledged before me this 16th
day of October,  1996, by Earl Kleckner, a Trust Officer of MELLON BANK, N.A., a
corporation having trust powers, as Decommissioning  Trustee,  on behalf of said
corporation.


[Official Seal]                             STEPHANIE RIEGER
                                            ---------------------------------
                                            Notary Public

My commission expires:
May 12, 1997
                                      -3-