Effective Stakeholder engagement is a critical part of our business plan and essential to our ongoing success.  Our company has numerous programs and activities for engagement, communication and consultation with our communities and other stakeholders, which cover the majority of our operations.  

Our major stakeholders include:

• Customers
• Shareholders
• Employees
• Investors and the investment community
• Municipalities and community organizations in our service territory
• Native American tribes
• Arizona, New Mexico and federal agencies, including the Arizona Corporation Commission
• The business community and partners
• Industry organizations
• Non-governmental organizations at the local, state and national level

Listed below are examples of the numerous ways we interact with our various stakeholders on an ongoing basis. Many more examples are provided throughout this report.

Customers
Pinnacle West interacts with customers in a variety of ways, including our 24-hour call center, customer surveys, focus groups, office visits, our Web sites, and through our active community outreach and volunteer programs. We also conduct semi-annual customer satisfaction surveys.  Our goal is to provide an on-going communication and link to our customers to ensure the highest possible customer service. This is discussed in more detail in the Customers section of this report.

From these interactions the company is able to evaluate the results of our customer satisfaction efforts, reward top performing individuals and teams, and identify areas for continuous improvement. Customer satisfaction results play a partial role in the annual performance assessment for most leaders and managers. Results are also used to determine a portion of APS' annual companywide incentive pay.

Throughout APS, customer input and feedback is sought prior to and following major initiatives and events (such as new bill designs, rate increases and major curtailment efforts) to help direct communications and assess the impact on overall customer satisfaction. Additionally, results from customer satisfaction research are used to identify and prioritize opportunities to improve, to support and assist in decision-making and allocating of customer service and related resources and to assess the success of major initiatives undertaken.

Employees
Pinnacle West produces a daily employee e-mail newsletter (called Newsline) and a monthly written publication (called On), to help keep employees informed on issues and news affecting the company and its employees. Other communications tools are also used to keep employees informed of important news and events affecting the company. Processes are also in place for employees to provide feedback to the company, anonymously if desired. These processes are discussed in further detail in other sections of this report, including Workplace Performance and Corporate Governance.

An online Sustainability Discussion Board was launched in mid-March of 2007 to promote employee participation in dialogue about sustainability topics and ideas. To date, more than 1,000 employees have visited the site.

Our Community
APS works closely with municipalities, government agencies and the public to build consensus and to proactively plan the generation, transmission and distribution resources necessary to accommodate the state’s rapid customer and business growth. As part of the process, APS conducts environmental studies and extensive public outreach to identify sensitive areas with respect to the affected communities. This process is described in more detail in the Land Use and Biodiversity section of this report.

APS brings together various stakeholders in special Focus teams to obtain feedback on specific issues or programs, on an ad hoc basis. APS has also formed a stakeholder Demand-Side Management (DSM) Collaborative team which works with APS in the development of DSM portfolio projects.

We also have a formal corporate volunteer program that is an important part of our community outreach efforts. This effort is extensive and partners Pinnacle West with communities across our service territory on an ongoing basis. 

Likewise, our small business development program, minority and women owned business development program, state-wide economic development program and other business and community outreach programs all provide formal and ongoing outreach to our communities.

A Community Advisory Panel (CAP) was formed in 1999 by Pinnacle West Energy prior to the construction of the Redhawk Power Plant. CAP members are composed of a broad range of local community interests. Typical members will include local residents, members of civic and homeowners organizations, environmental groups, education institutions, business associations and community leaders. The purpose of the group was to establish two-way communication to review issues of concern and to create a responsive, proactive partnership between the company and the surrounding communities where the plant was to be built.

In the building of Redhawk, the CAP was instrumental in the formation of the Community Funds (contributions are made annually by the company) and to return the unused portion of the Redhawk plant property to its natural state (previously used for farming).

After the construction of Redhawk (completed in 2002), the CAP continued meeting with Redhawk Power Plant representatives and requested that the Palo Verde Nuclear Generating Station be included in the meetings. Since that time, the group has had periodic meetings with representatives from both plants and covers a wide range of subjects that include:

• Identifying community concerns and issues regarding the power plants
• Providing operational issues at the plants that could affect members of the community
• Assisting APS in distributing information regarding the plants to the community

Organizations and other Stakeholders
The decommissioning of the Childs-Irving Hydroelectric Plants, and restoration of Fossil Creek to its native flow, was the product of a unique cooperative effort between APS, Native American tribes, government agencies, conservation groups and academia. This unprecedented restoration resulted in restoration of a perennial stream in the arid Southwest to a condition similar to that seen a century ago. 

APS worked with four environmental interest groups involved in environmental issues in the western United States: Environmental Defense, the Grand Canyon Trust, Western Resource Advocates and the New Mexico Citizens for Clean Air and Water, on the issue of visibility in the western United States, and planned voluntary emission controls at the APS Cholla and Four Corners plants. 

Emergency planning for the Palo Verde Nuclear Generating Station is a cooperative effort involving Pinnacle West Capital Corporation/Arizona Public Service Company (Operating Manager for Palo Verde), the State of Arizona, Maricopa County and the Town of Buckeye.

These are just a few of the ways we work with our stakeholders.  Throughout this report we provide other examples of how we engage our stakeholders to work in a cooperative and mutually beneficial way.