PHOENIX - Pinnacle West Capital Corporation (NYSE: PNW) today reported income from continuing operations for the calendar year 2000 of $302.3 million or $3.56 per diluted share of common stock, compared with $269.8 million or $3.17 per share for the prior year.

"In a year that proved to be one of the most challenging in decades, we were able to increase earnings 12 percent, reduce prices to our retail customers, maintain reliability and move forward with an aggressive generation expansion plan," said Pinnacle West Chief Executive Officer Bill Post. "I congratulate the men and women of our organization for this across-the-board performance."

Income from continuing operations improved $32.6 million, or $0.39 cents per share, over the prior year primarily because of an increase in wholesale and retail electricity sales and real estate contributions. These positive factors more than offset the completion of the amortization of the investment tax credits at the end of 1999, electricity price reductions and lower earnings from El Dorado.

Among the highlights for the year, Post included:

• Arizona Public Service Company (APS) lowered its retail prices for the sixth time in seven years, with a 1.5 percent price decrease which became effective July 1, 2000. This reduction is part of APS’ commitment to reduce residential customer prices a total of 16 percent from 1994 to 2004.

• APS’ retail service territory continued to experience strong customer growth of 3.7 percent, almost four times the national average. Electricity sales to retail customers increased almost 7 percent to 22.5 million megawatt-hours (MWh) in 2000, and wholesale power sales increased about 40 percent to 22.0 million MWh.

• Pinnacle West Energy began the first construction on new power plants announced for development in Maricopa County: the Redhawk Power Plant, near the Palo Verde Nuclear Generating Station switchyard; and expansion of the West Phoenix Power Plant. The two facilities ultimately will add more than 2,700 MW of electricity generating capacity.

• The Palo Verde nuclear units produced 30.4 million MWh with a site capacity factor of almost 93 percent, its second best ever. For the sixth straight year, Palo Verde was the number one power producer of any kind in the U.S.

• The Company’s coal-fired generation units had a capacity factor of about 83 percent while its gas units experienced their highest production ever of 2.2 million MWh.

• For the seventh year in a row, Pinnacle West increased its annual dividend by 10 cents per share of common stock.

APS earnings for the year were $306.6 million, compared with $127.4 million in 1999, which included an extraordinary charge of $139.9 million for a regulatory disallowance as part of a regulatory settlement. Also in 1999, the Company completed amortization of investment tax credits, most of which related to APS.

SunCor Development, Pinnacle West’s real estate subsidiary, reported substantially higher net income of $11.5 million, compared to $6.1 million for the prior year. This increase is due primarily to an increase in land and home sales.

El Dorado, the Company’s investment subsidiary, reported income of $2.0 million, compared with $11.5 million for the prior year. This decrease was related primarily to periodic adjustments of the value of El Dorado’s investment in a technology venture capital partnership. Earnings related to El Dorado’s investments are dependent on stock market conditions, as the investments are valued each quarter based on market prices and other factors.

Looking ahead, Post said the Company has an opportunity to achieve continuing earnings growth, however, volatile western energy markets and any associated market restructuring will impact future energy costs and prices. Pinnacle West continues to closely monitor developments in the California energy markets and evaluate any potential impact on the Company and its subsidiaries. Based on its current evaluations, the Company believes its credit exposure related to the California situation is not significant and that its financial position and results of operations will not be materially affected.

Earnings for the fourth quarter were $42.3 million, or $0.50 cents per share, compared with $44.8 million, or $0.53 cents per share, in the comparable 1999 period. The quarter-to-quarter comparison was positively affected primarily by increased wholesale sales, as well as lower operations and maintenance expenses. These positive factors were more than offset by the decrease in the value of El Dorado’s investment portfolio, the electricity price decrease and other factors.

Also today, the Pinnacle West board of directors declared a quarterly dividend of $0.375 cents per share of common stock, payable on March 1, 2001, to shareholders of record on February 1, 2001.

Pinnacle West is a Phoenix-based company with consolidated assets of approximately $7 billion. Through its subsidiaries, the company generates, sells and delivers electricity and sells electricity and energy-related products and services to retail and wholesale customers in the western United States. It also develops residential, commercial, and industrial real estate projects.

Contacts

Media:
Alan Bunnell, (602) 250-3376

Analyst:
Rebecca Hickman, (602) 250-5668

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.