PHOENIX- Pinnacle West Capital Corporation (NYSE: PNW) has been recognized as one of nation’s top two utilities in demonstrating superior environmental and social performance characteristics by an international investment advisory firm.

Innovest Strategic Value Advisors Inc., of New York (www.innovestgroup.com), assigned Pinnacle West its top rating (AAA), and ranked the Company second out of 28 electric companies listed on the Standard & Poor's 500 for environmental performance. Pinnacle West also earned the AAA rating and a number-three ranking from Innovest’s initial study in 2000.

"Pinnacle West has demonstrated strong leadership in the environmental area," said Frank Dixon, Managing Director of Research and Development for Innovest. "In the face of increasing regulations and consumer concerns about the environment, environmental leadership helps companies build a competitive advantage. In addition, environmental leadership is a strong indicator of superior overall management, which is the primary determinant of stock market returns. As a result, it is likely Pinnacle West will outperform the market going forward."

Innovest develops industry sector annual reports to help investors identify companies with excellent environmental performance records. The research firm has found a positive correlation between stock price and environmental performance mainly because environmental performance turns out to be an excellent proxy for management quality, the primary determinant of stock returns. Innovest's environmental ratings (ranging from AAA to CCC) identify environmental risks, management quality and profit opportunity differentials typically not identified by traditional financial analysts.

These ratings are based on a number of environmental risk factors including site liabilities, spills and releases, regulatory compliance and emissions. Pinnacle West received top ratings for 14 of the study's 22 performance indicators. The indicators include environmental management, performance improvement and opportunity factors. This included a "Best in Class" designation of the Environmental Training & Development category.

Innovest cited several examples where Pinnacle West subsidiary Arizona Public Service, the largest and longest-serving electric utility in Arizona, reduced costs through aggressive pollution prevention and waste minimization programs. Among those APS efforts:

• The implementation of integrated waste management programs, which led to about $2.5 million in savings in 2000;
• Employees sharing surplus materials more efficiently through an intranet-based Materials Exchange Program, which saved $90,000 in 2000 and $300,000 in 1999; and
• The Materials Safety Program, which has reduced the use of hazardous products by 14 percent while reducing overall procurement costs.

"As an independent, third party, Innovest’s review of our environmental risk and exposure found that our performance merited its highest ranking, and that means a lot to us," said Ed Fox, Pinnacle West Vice President of Communications, Environment and Safety. "We take our environmental performance seriously. To have a third party without a vested interest in our organization tell us we’re performing at such a high level is important because it indicates we are doing right by the communities in which we work and live, our employees and our shareholders.

"We’re proud that Innovest has so positively acknowledged our environmental efforts. At the same time, we will continue our pursuit of environmental excellence."

In 1994, Pinnacle West’s subsidiary Arizona Public Service became the first electric utility in the world to endorse the 10-point Code of Conduct adopted by the Coalition for Environmentally Responsible Economies (CERES). These CERES principles require public reporting of specific environmental achievements and goals.

Contacts

Pinnacle WeestPinMedia:
Paul Reynolds, (602) 250-5656
Alan Bunnell, (602) 250-3376

Analyst:
Rebecca Hickman, (602) 250-5668
Lisa Malagon, (602) 250-5671

Pinnacle West (NYSE: PNW) is a Phoenix-based company with consolidated assets of approximately $8 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.