PHOENIX - Pinnacle West Capital Corporation (NYSE: PNW) today reported lower consolidated net income for the quarter ended June 30, 2007, of $79.0 million, or $0.78 per diluted share of common stock.   This result compares with net income of $112.2 million, or $1.13 per diluted share, for the same quarter a year ago.

The lower quarterly results were principally driven by lower earnings at Arizona Public Service (APS) as a result of an $8 million after-tax regulatory disallowance, milder weather, and the absence of $7 million of income tax credits recorded in 2006.

“The exceptional population growth in our service territory drives an ever-increasing demand for electricity,” said Pinnacle West Chairman Bill Post. “Going forward, we need to continue making substantial investments inـinfrastructure and long-term resources, while working with regulators to achieve timely and constructive regulatory treatment.”

For the second quarter of 2007, APS reported lower net income of $75.1 million, compared with net income of $93.8 million for the same period a year ago. Operationally, the 2007 quarter reflected significantly improved performance at the Palo Verde Nuclear Generating Station, which increased its output by 54 percent compared with the same quarter a year ago.

SunCor Development Co., Pinnacle West’s real estate subsidiary, reported net income of $0.3 million, compared with $9.6 million in the 2006 second quarter, primarily due to decreased sales of residential property.

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 2007 second quarter earnings and recent developments at 12 noon (ET), today, Thursday, July 26, 2007. 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 Conference ID Number 7372981. A replay of the call also will be available until 11:55 p.m. (ET), Thursday, August 2, 2007, by calling (800) 642-1687 in the U.S. and Canada or (706) 645-9291 internationally and entering the same ID number as above.

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.

Contacts

Media:
Alan Bunnell, (602) 250-3376

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