IR 05000528/2006006

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December 20, 2006

James M. Levine, Executive Vice President, Generation Mail Station 7602 Arizona Public Service Company P.O. Box 52034 Phoenix, AZ 85072-2034

SUBJECT: PALO VERDE NUCLEAR GENERATING STATION - NRC SECURITY TEAMINSPECTION REPORT 05000528/2006006, 05000529/2006006 AND 05000530/2006006

Dear Mr. Levine:

On December 13, 2006, the U.S. Nuclear Regulatory Commission (NRC) completed a securitybaseline inspection at your Palo Verde Nuclear Generating Station facility. The inspection covered one or more of the key attributes of the security cornerstone of the NRC's Reactor Oversight Process. The enclosed inspection report documents the inspection results which were discussed on December 13, 2006, with Mr. H. Bieling, Acting Director, Emergency Services Division, and other members of your staff.This inspection examined activities conducted under your license as they relate to security andcompliance with the Commission's rules and regulations and with the conditions of your license.

The inspectors reviewed selected procedures and records, observed activities, and interviewed personnel.This report documents two findings of very low security significance (i.e., Green as determinedby the Physical Protection Significance Determination Process). The deficiencies were promptly corrected or compensated for, and the plant was in compliance with applicable physical protection and security requirements within the scope of this inspection before the inspectors left the site.NRC is treating these violations as a non-cited violations (NCVs) consistent with Section VI.A.1of the NRC Enforcement Policy because of the very low security significance of the violations and because they are entered into your corrective action program. If you contest these non-cited violations, you should provide a response within 30 days of the date of this inspection report, with the basis for your denial, to the Nuclear Regulatory Commission, ATTN.: Document Control Desk, Washington DC 20555-001: with copies to the Regional Administrator Region IV; Arizona Public Services Company-2 the Director, Office of Enforcement, United States Nuclear Regulatory Commission,Washington, DC 20555-001; and the NRC Resident Inspector at the Palo Verde Nuclear Generating Station. In accordance with 10 CFR 2.390 of the NRC's "Rules of Practice," a copy of this letter will beavailable electronically for public inspection in the NRC Public document Room or from the Publicly Available Records (PARS) component of NRC's document system, ADAMS. ADAMS is accessible from the NRC Website at http://www.nrc.gov/reading-rm/adams.html (the PublicElectronic Reading Room). However, because of the security-related concerns contained in theenclosure, and in accordance with 10 CFR 2.390, a copy of this letter's enclosure will not be available for public inspection. In accordance with 10 CFR 2.390(b)(1)(ii), the NRC is waiving the affidavit requirements foryour response, if any. This practice will ensure that your response will not be made availableelectronically for public inspection in the NRC Public Document Room or from the NRC's document system ADAMS. If Safeguards Information is necessary to provide an acceptable response, please provide the level of protection described in 10 CFR 73.21. Otherwise, mark your entire response "Security Related Information-Withhold Under 10 CFR 2.390" and follow the instructions for withholding in 10 CFR 2.390(b)(1).

Sincerely,/RA/Larry Ricketson forMichael P. Shannon, ChiefPlant Support Branch Division of Reactor SafetyDocket Nos.: 50-528, 50-529, 50-530License Nos.: NPF-41, NPF-51, NPF-74Nonpublic

Enclosure:

Inspection Report 05000528; 529; 530/2006006

w/attachment:

Supplemental Information cc w/o enclosure:Craig K. Seaman, General Manager Regulatory Affairs and Performance Improvement Palo Verde Nuclear Generating Station Mail Station 7636 P.O. Box 52034 Phoenix, AZ 85072-2034