PHOENIX, ARIZ. - Pinnacle West Capital Corporation (NYSE:PNW) today reported consolidated net income for the quarter ended June 30, 1998 of $49.0 million or $0.57 per share of common stock, compared with $67.2 million or $0.78 per share a year ago.

Continued strong customer growth of 3.8 percent at Arizona Public Service was not enough to overcome the effect on earnings from the weather, which was both very mild in the second quarter this year and warmer than normal in the prior-year period. The Company believes that the weather adversely affected the earnings comparison by approximately $22 million after income taxes.

For the second quarter 1998, utility operations and maintenance expenses increased, primarily as a result of the timing of scheduled outages at power plants and of other miscellaneous expenses. Earnings were also affected by a 1.2 percent price decrease for APS electricity customers, which became effective July 1, 1997.

"The story in the second quarter was the weather," said Chairman Richard Snell.

"With the exception of potential weather effects, which we can't predict, our earnings outlook for the year remains on track," he said. "Customer growth is still about three times the national average, and our commitment to managing costs will stay in high gear."

For the quarter ended June 30, 1998, APS earned $49.7 million, compared with $66.3 million for the year-ago quarter.

SunCor Development, the company's real estate subsidiary, and El Dorado, its investment subsidiary, reported combined earnings of approximately $3.1 million, compared with earnings of $4.9 million a year earlier.

For the six-month period ended June 30, 1998, Pinnacle West reported consolidated net income of $80.1 million or $0.94 per share of common stock, compared with $92.6 million or $1.07 per share for the corresponding period in 1997.

Pinnacle West is a Phoenix-based holding company with consolidated assets of approximately $7 billion. Its major subsidiary is APS, Arizona's largest electric utility.

SunCor, its real estate subsidiary, has some 13,400 acres of residential, commercial and industrial projects under development.

Pinnacle West Capital Corporation Consolidated Income Statements
(In Thousands, Except Per Share Amounts)
(Unaudited)

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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.