Executive Officer Stock Ownership Guidelines

In an effort to further align the interests of management and shareholders, effective October 17, 2007, the Board of Directors (the “Board”) of Pinnacle West Capital Corporation (the “Company”) adopted these stock ownership guidelines applicable to certain executive officers of the Company and its subsidiaries.  The Company believes that linking a significant portion of an officer’s current and potential future net worth to the Company’s success, as reflected in the stock price, helps to ensure that officers have a stake similar to that of the Company’s shareowners.  The guidelines also encourage the long-term management of the Company for the benefit of the shareholders.

The guidelines for each executive officer are based on the executive officer’s position and his or her base salary.  The Company expects executive officers to own, within five years of the later of the effective date of these guidelines, an executive officer’s appointment, or his or her designation as an executive officer to which these guidelines apply, Company stock having a value equal to a multiple of their annual base salary.  The types of ownership arrangements counted toward these guidelines are those securities that are beneficially owned by an executive officer in accordance with SEC Rule 13d-3, excluding unexercised options.  Compliance with these guidelines will be reviewed on an annual basis as of the date of the annual Proxy Statement table showing the amount of Company common stock owned by management.

The stock ownership guidelines for the officer positions are shown in the table below:

This policy applies to executive officers of the Company, as determined by the Board for purposes of disclosure pursuant to Item 401(b) of Regulation S-K.