Power Marketing is part of our parent company, which positions it uniquely to manage our enterprise-wide energy risk. Power Marketing supplements our existing resources with short-term purchases and reduces financial exposure with hedging techniques. By buying wholesale power to serve our retail customers, and selling available output from our generating facilities and other energy resources, this group optimizes results of energy markets and owned generation.

    We’ve been both calculating and aggressive with our power marketing. We calculate our risks in buying and selling power, striking a balance between moderate risk and the cost of hedging those risks. When opportunities arise, we move swiftly and aggressively to improve our positions. We’ve exceeded expectations in the past, and it is our intention to do so in the future.

    Given the current depressed wholesale power prices, we expect lower gross margins from Power Marketing. On the other hand, we foresee lower expenditures for reliability and purchased power in 2002 – we won’t have to spend the $140 million we spent in 2001 to ensure uninterrupted electric service for our customers. 

    While the Arizona economy is slowing somewhat, it remains robust by comparison with the rest of the nation – and growth will continue. We expect to add customers at a rate of 3.2 percent in 2002, compared to the 3.7 to 4.2 percent of the last few years. Moving forward, this continued growth will drive our top-line revenues and strengthen our bottom-line results.

    We also believe market volatility may increase in Western power markets later in the year. That could create trading opportunities, especially as we bring Redhawk Units 1 and 2 on line.