PHOENIX – Pinnacle West Capital Corp. (NYSE: PNW) today reported consolidated net income for the quarter ended September 30, 2006, of $184.2 million, or $1.84 per diluted share of common stock. This result reflects a decline from on-going earnings of $186.4 million, or $1.89 per diluted share, for the same period in 2005.

Third-quarter 2005 on-going results exclude several non-recurring items, the largest of which was a regulatory disallowance of $87 million, or $0.88 per share, recorded in that prior-year quarter. On-going earnings for the 2005 third quarter also exclude $4.3 million, or $0.04 per share, of income from discontinued operations related to the sales of the Company’s interests in NAC International and the Silverhawk Power Station. Reported consolidated net income was $103.7 million, or $1.05 per diluted share, for the third quarter of 2005.

“Customer price increases granted by the Arizona Corporation Commission earlier this year have had no impact on 2006 earnings” said Chairman Bill Post. “These fuel related price increases decreased customer fuel cost liabilities and stabilized our declining cash flow.”

The quarter-to-quarter comparison was negatively impacted by higher fuel costs; lower results from the Company’s wholesale power marketing and real estate operations; and milder weather. These items were substantially offset by higher fuel cost deferrals and increased retail sales at Arizona Public Service (APS) due to customer growth of 4.4 percent.

In addition, APS reported net income for the third quarter of 2006 of $168.6 million, compared with on-going earnings of $148.1 million for the same period a year ago. Third quarter 2005 on-going results exclude the previously mentioned $87 million regulatory disallowance. APS reported net income of $61.1 million for the third quarter of 2005. SunCor Development Co., Pinnacle West’s real estate subsidiary, reported net income of $17.5 million, compared with $21.4 million in the 2005 third quarter.

For more information on Pinnacle West’s operating statistics and earnings, please visit www.pinnaclewest.com/financials.

Conference Call

Pinnacle West invites interested parties to listen to the live web cast of management’s conference call to discuss the Company’s 2006 third quarter earnings and recent developments at 12 noon (ET) today, October 27. The web cast can be accessed at www.pinnaclewest.com/presentations and will be available for replay on the web site for 30 days. To access the live conference call by telephone, dial (877) 356-3961 and enter reservation number 9001144. A replay of the call also will be available until 11:55 p.m. (ET), Friday, November 3, 2006, by calling (800) 642-1687 in the U.S. and Canada or (706) 645-9291 internationally and the same reservation number.

Pinnacle West is a Phoenix-based company with consolidated assets of about $11 billion. Through its subsidiaries, the Company generates, sells and delivers electricity and sells 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.

PINNACLE WEST CAPITAL CORPORATION
NON-GAAP FINANCIAL MEASURE RECONCILIATION – NET INCOME
(GAAP MEASURE) TO ON-GOING EARNINGS (NON-GAAP FINANCIAL MEASURE)

ARIZONA PUBLIC SERVICE COMPANY
NON-GAAP FINANCIAL MEASURE RECONCILIATION – NET INCOME
(GAAP MEASURE) TO ON-GOING EARNINGS (NON-GAAP FINANCIAL MEASURE)

Contacts

Media:
Alan Bunnell, (602) 250-3376

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