PHOENIX, Ariz -- Pinnacle West Capital Corporation (NYSE: PNW) today reported net income for the quarter ended March 31, 1996 of $31.3 million or $0.36 per share of common stock, compared with $24.6 million or $0.28 per share for the same period in 1995.

The Company attributed the earnings improvement primarily to 3.6 percent customer growth; lower interest expense due to continuing debt reduction; and the favorable effects of fuel, operations and maintenance expenses of one less refueling outage at Palo Verde in 1996.

Results for the 1996 first quarter included an extraordinary charge of $3.6 million (4 cents per share) for a debt prepayment penalty. First quarter results a year ago included a one-time gain of about $5 million (6 cents per share) from the sale of a small Arizona Public Service subsidiary.

Chairman Richard Snell said that the earnings improvement in the quarter was the result of the positive fundamentals which have been supporting the Company s progress, but that the regulatory proposal pending before the Arizona Corporation Commission if approved will significantly mitigate these benefits.

That proposal, announced in December 1995 by APS and the ACC Staff with an effective date of July 1, 1996, includes among its features rate reduction and accelerated amortization of regulatory assets which would adversely impact future earnings.

Snell also said that Pinnacle West expects to incur additional debt prepayment penalties in 1996 as it goes forward with plans to prepay approximately $70 million, and possibly refinance, more parent debt. The parent prepaid $30 million of its debt in the first quarter 1996, resulting in the extraordinary charge.

For the quarter ended March 31, 1996, APS earned $41.1 million, compared with $33.0 million for the same period in 1995.

SunCor development, Pinnacle West s real estate development subsidiary, and El Dorado Investment, its venture capital subsidiary, reported a combined loss of $1.3 million for the quarter versus combined net income of $0.3 million for the prior-year period.

For the 12-month period ended March 31, 1996, Pinnacle West reported income of $194.7 million or $2.23 per share of common stock, compared with $203.6 million or $2.33 per share for the same period a year earlier. Both periods included significant extraordinary or non-recurring items ($15.2 million of prepayment penalties in the later period and $26.8 million tax benefit recorded in the earlier period).

The Company also reported that its board of directors yesterday (April 17) declared a dividend of 25 cents per share of common stock, payable on June 1, 1996 to shareholders of record on May 1, 1996.

Pinnacle West is a Phoenix-based company with consolidated assets of approximately $7 billion. Its major subsidiary is Arizona Public Service, the state s largest electric utility.

This press release contains forward-looking statements that involve risks and uncertainties, which include, but are not limited to, the ongoing restructuring of the electric industry; the outcome of the regulatory proceedings relating to the restructuring; regional economic and market conditions, which could affect customer growth and the cost of power supplies; the cost of debt and equity capital; weather variations affecting customer usage; and the strength of the real estate market. These factors and the other matters discussed above may cause future results to differ materially from historical results, or from results or outcomes currently expected or sought by the Company.