PHOENIX, ARIZ. - Pinnacle West Capital Corporation (NYSE: PNW) today reported consolidated net income for the quarter ended June 30, 2000, of $89.9 million or $1.06 per diluted share of common stock. The result compares with net income of $68.7 million or $0.81 per share for the same period in 1999.

The earnings growth reflects a large increase in the profitability of wholesale power marketing activities, as well as across-the-board operational excellence at fossil and nuclear plants. The wholesale activities drove earnings at Arizona Public Service Co. (APS) which were $95.9 million, compared with $69.5 million for the prior-year period.

"During the second quarter, we successfully managed a volatile wholesale power market driven by unprecedented peak and off-peak prices in California and the Pacific Northwest," said Chief Executive Officer Bill Post. "We also met the retail needs of our Arizona customers with prudent hedging through power marketing."

For the quarter, efficiency gains and the strong power marketing revenues more than offset the effects of increased fuel and purchased power costs; decreased contributions from the company's non-utility subsidiaries; the completion of the amortization of investment tax credits in 1999; and an electricity price decrease.

The 1.5 percent price decrease, which became effective July 1, 1999, was part of APS' commitment to reduce residential customer prices a total of 16 percent from 1994 to 2004. The latest decrease took effect on July 1, 2000, marking the sixth time in seven years APS has lowered prices.

APS' retail service territory continued to experience strong customer growth of 4.2 percent, almost four times the national average.

The Company plans to increase its generation resources by about 4,000 megawatts (MW) over the next several years. Toward that end, construction began in early July 2000 on the expansion of the Company's 650-MW West Phoenix power plant.

For the quarter, the Company's coal-fired generating units had a capacity factor of about 85 percent, a 14.4 percent increase over the same period in 1999. And, the Company's Palo Verde nuclear units produced 7.2 million megawatt-hours, the best second quarter output in plant history. Palo Verde also had a 31-day refueling outage of Unit 3, bettering the previous site refueling record by five days.

"Volatility in power prices will not soon go away, and the recent changes by the California ISO will negatively impact future wholesale markets," said Post. "But, we believe that a combination of outstanding operational performance and power marketing skill will allow us to protect our customers and reward our shareholders."

SunCor Development Co., the Company's real estate subsidiary, and El Dorado Investment Co., its investment subsidiary, recorded a combined loss of $2.5 million for the second quarter of 2000, compared with earnings of $2.9 million in the second quarter last year. The decrease was related primarily to the quarterly adjustment of the value of El Dorado's investment in a technology venture capital partnership. As previously reported, earnings related to El Dorado's investments are dependent on future stock market conditions, as the investments are valued each quarter based on market prices and other factors.

For the six-month period ended June 30, 2000, Pinnacle West reported consolidated net income of $144.0 million, or $1.70 per diluted share of common stock, compared with $99.4 million or $1.17 per share for the corresponding period in 1999.

Also today, the Pinnacle West board of directors declared a quarterly dividend of $0.35 per share of common stock, which is unchanged from the prior quarter. Dividends on common stock are payable on September 1, 2000, to shareholders of record on August 1, 2000.

Pinnacle West is a Phoenix-based company with consolidated assets of approximately $7 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 Consolidated Statements of Income
(In Thousands, Except Per Share Amounts)
(Unaudited)

Certain prior year amounts have been restated to conform to the 2000 presentation.

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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.