PHOENIX – Pinnacle West Capital Corporation (NYSE: PNW) today reported consolidated net income for the quarter ended December 31, 2007, of $2.9 million, or $0.03 per diluted share of common stock. This result compares with net income of $18.5 million, or $0.18 per diluted share, for the same quarter a year ago.

The quarterly results were impacted by lower results from the Company’s utility and real estate operations. Arizona Public Service (APS), the Company’s principal subsidiary, reported net income of $0.3 million, compared with earnings of $12.9 million for the same period a year ago. In addition, real estate subsidiary SunCor Development Co. reported lower net income of $8.1 million, compared with $11.4 million in the final quarter of 2006, reflecting a continued slowdown in the western U.S. real estate markets.

The 2007 fourth-quarter earnings were negatively impacted by increased operation and maintenance costs primarily related to power plant maintenance and planned overhauls, as well as higher customer service, depreciation and other growth-related costs. These factors more than offset increased retail sales at APS primarily due to customer growth of 2.6 percent.

“Arizona’s growth and the increasing demand for energy require additional capital investment,” said Chairman Bill Post. “Meeting this growth – and finding a way to effectively pay for and recover the associated costs – will require a transparent, collaborative and forward-looking process with all our stakeholders. We are committed to working with our customers, communities and regulators to find solutions to these challenges.”

Post added that in 2007 the Company’s employees continued meeting the challenges of growth in Arizona. The Company recorded all-time best results in measures such as customer outage frequency and average outage duration, all while setting 35,000 new meters and managing one of the hottest summers on record. APS’ top-tier customer service also was recognized in 2007 survey results from J.D. Power and Associates. APS was rated number two among investor-owned electric utilities in the West for superior customer satisfaction by both residential and business customers.

For the year 2007 as a whole, Pinnacle West’s consolidated net income decreased 6 percent to $307.1 million, or $3.05 per share, compared with 2006 net income of $327.3 million, or $3.27 per diluted share. APS reported earnings of $283.9 million during the same period compared with $269.7 millionin 2006. And, SunCor reported net income of $23.7 million, down from $60.5 million for the same period a year ago.

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 fourth-quarter earnings and year-end results, as well as recent developments at 11 a.m. (ET) today, January 30. 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 28391511. A replay of the call also will be available until 11:55 p.m. (ET), Thursday, February 7, 2008, by calling (800) 642-1687 in the U.S. and Canada or (706) 645-9291 internationally and entering 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.

Contacts

Media:
Alan Bunnell, (602) 250-3376

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