In an evolving climate, those that are agile and adaptable survive. Those that combine these traits with a solid strategic core thrive. We are such a company.

• After approximately a decade of preparing for retail electric competition, in mid-2002, the Arizona Corporation Commission changed its generation divestiture policy, resulting in APS remaining a vertically integrated utility. We quickly adapted to this reversal of direction and demonstrated our ability to remain agile in the face of changing regulatory and marketplace climates.
• We continue to meet the changing needs of our customers. Since 1999, our peak load has grown 18 percent, while we have continued to improve our reliability measurements.
• Streamlined processes and a more productive workforce allow us to do more with less. In 1998, we served approximately 775,000 retail electric customers with about 5,900 employees*. In 2002, we served more than 900,000 customers with approximately 6,100 employees.
• Process and workforce improvements also enable us to keep generation production costs low. In 2002, our nuclear and coal production costs averaged 1.68 cents per kilowatt-hour, well below expected national averages.
• We continue to have a diverse generation mix. By 2004, our estimated generation mix will consist of roughly 43 percent coal, 31 percent nuclear and 26 percent natural gas. This diversity will allow us to continue effectively managing risk in the face of changing wholesale markets and fuel prices.
• We continue to offer customers greater flexibility, and reduce our operating costs through our utility Web site – APS.com. In recognition of these efforts, APS.com was named Best Energy Site for 2002 by the Web Marketing Association, a national organization made up of Internet marketing, advertising, public relations and design professionals.