PHOENIX - Pinnacle West Energy announced today that it will not match a higher bid to complete the purchase of Southern California Edison’s portion of the Four Corners Power Station. In a related transaction for the purchase of SCE’s share of the Palo Verde Nuclear Generating Station, Pinnacle West Energy stated that approval of its $250-million contract is still pending before the California Public Utilities Commission.

Pinnacle West Energy’s plan to substantially increase its generation portfolio remains on track. Construction has begun on Redhawk 1 and 2, a matching pair of 530-megawatt combined cycle plants near the Palo Verde switchyard. In addition, West Phoenix 4, a new 120-megawatt combined cycle unit is scheduled to begin providing power to customers by June, and construction on West Phoenix 5, a 530-megawatt combined cycle unit, is scheduled to begin this year with operation planned for the summer of 2003.

"Our strategy, which focuses on generation growth opportunities in the western United States, is based on long-term market fundamentals and is financially disciplined," said Bill Stewart, president of Pinnacle West Energy.

Stewart also pointed out Pinnacle West Energy’s recent purchase of the Harry Allen site in southern Nevada, a gas-fired facility that currently can produce 72 megawatts with the capability to be increased by another 500 megawatts over the next five years.

Last April, the company announced it had entered into two agreements to acquire approximately 1,300 megawatts of electrical generation at Palo Verde and Four Corners from SCE for a total price of $550 million. SCE owns 48 percent of Four Corners Units 4 and 5 – 740 megawatts each – and 16 percent of Palo Verde, a three-unit, 3,900-megawatt site. APS, a Pinnacle West Energy affiliate, is part owner and operator of both plants.

Pinnacle West Energy is the wholesale generating subsidiary of Pinnacle West Capital Corporation (NYSE: PNW), 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.

Contacts

Media:
Jim McDonald; 602-250-3738, 602-321-3738 (cell)
Sheri Foote; 602-250-2363, 602-684-1332 (cell)

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

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.