Finance, Nuclear and Operating Committee/Charter

Committee Members:
     Michael L. Gallagher, Chairman
     Susan Clark-Johnson
     Dr. Roy A. Herberger, Jr.
     Kathryn L. Munro
     Bruce J. Nordstrom
     W. Douglas Parker
     William J. Post
     William L. Stewart

Finance, Nuclear and Operating Committee Charter:

GENERAL

The Finance, Nuclear and Operating Committee is responsible to the Board of Directors and reports regularly to the Board on the activities of the Committee.

Members of the Committee are selected by the full Board on at least an annual basis and may be removed by the full Board at any time.

The Committee may create subcommittees and vest those subcommittees with the authority of the full Committee with respect to specific matters delegated to such subcommittees.

FINANCE, NUCLEAR AND OPERATING COMMITTEE DUTIES AND RESPONSIBILITIES

1. Review the Company's historical and projected financial performance and review any matters brought to the Committee’s attention affecting the Company's financial or liquidity condition.
2. Review and recommend approval of short-term investment and borrowing guidelines.
3. Review the Company's financing plan and recommend approval of the issuance and optional redemption of long-term debt, common equity, preferred stock, credit facilities, and other types of credit support, including derivatives; and review and recommend approval of the general parameters within which designated Board committees or designated Officers of the Company may, pursuant to Board authority, establish terms and conditions relating to the issuance of long-term debt and equity securities, and review the levels of risk being undertaken in its financing activities, as well as the financial performance of interest rate hedging activities.
4. Review and monitor the Companies'dividend policies and dividend actionsand provide input to the Board as the Committee deems appropriate.
5. Establish the Investment Management Committee to oversee the investment programs of the Company’s trusts and benefit plans; and receive periodic updates from the Investment Management Committee.
6. Review and recommend approval of the Company's Construction Budget.
7. Review the Company's Operations and Maintenance Budget
8. Review and monitor the performance of the Company's environmental programs.
9. Review the Company's insurance programs.
10. Review and monitor the customer and power plant operations of the Company.
11. Monitor the operating performance, key performance indicator results and trends, and any significant incidents or events at Palo Verde.
12. Review the results of major inspections and evaluations by external oversight groups such as the Nuclear Regulatory Commission and the Institute of Nuclear Power Operations.
13. Review and assess reports from the Palo Verde Nuclear Oversight Committee, which shall formally report to the Finance, Nuclear and Operating Committee and APS' Chief Executive Officer.
14. Conduct a self-assessment on at least an annual basis to determine whether the Committee is functioning effectively, consistent with the self-assessment process reflected in the Company's Corporate Governance Guidelines.
15. Review and update the Committee's Charter as needed.

MANAGEMENT'S RESPONSIBILITIES

1. Provide the Finance, Nuclear and Operating Committee with the necessary resources to discharge the Committee's duties and responsibilities, as reflected in this Charter and as assigned to the Committee by the Board of Directors.

Effective as of October 22, 2008.