Message from Pinnacle West President
Jack E. Davis

At Pinnacle West and APS, we look at shareholder value through a wide-angle lens.

Shareholder value is more than earnings and stock performance — though those elements get a lot of our attention. We create shareholder value through our environmental focus, by being an employer people want to work for, by working safely, by being an integral part of the communities we serve and by holding ourselves up to a high standard of integrity.

As you’ll see in this report, these are areas we quantify and scrutinize as much as any other aspect of our business. Their impact is felt by our customers, our employees and our state, and also by Wall Street. We are pleased that our focus has been recognized in the business community as well.

Pinnacle West recently received a rating of AAA from Innovest Strategic Value Advisors, an internationally recognized investment research and advisory firm specializing in analyzing companies’ performance on environmental, social and strategic governance issues. Pinnacle West also earned the AAA rating in Innovest’s previous two studies, in 2002 and 2000.

Ultimately, our strength as a company lies in the collective character of our employees and their desire to produce safe and reliable energy while keeping the needs of the community and the environment at the forefront of everything they do. It is on that commitment to excellence that we plan for the future.

We encourage and look forward to your comments about this report and our progress in achieving our goals.

Sincerely,

Jack E. Davis
President
Pinnacle West Capital Corporation