PHOENIX - Strong operational performance, deliberate generation expansion and reduced retail customer prices resulted in a successful 2000 for Pinnacle West Capital Corporation (NYSE: PNW), Chairman and Chief Executive Officer Bill Post said at the Company’s Annual Meeting of Shareholders held today in Phoenix. The Company reported record earnings of $302.3 million in 2000, a 12 percent increase over the prior year.

"We’re proud of our financial performance. But it doesn’t really tell the whole story," Post said. "Our company is blessed with a dedicated team of professional people who are focused, every minute of every day, on results. And, while we’ve been producing exceptional financial results, we’ve also been decreasing prices and expanding our business."

Arizona Public Service Company (APS), the company’s principal subsidiary, will lower its retail prices another 1.5 percent this summer. This price decrease, effective July 1, will mark the seventh time in eight years that APS has decreased prices. The reduction is part of APS’ commitment to reduce retail prices a total of 16 percent from 1994 to 2004.

"No other investor-owned utility in the nation can match this," Post continued. "In fact, our customers have collectively saved more than $600 million since 1994 due to our price reductions."

In addition to lowering prices for its retail customers, the company expanded its core business and started construction on almost 2,800 megawatts (MW) of generating resources to ensure system reliability, while meeting the growing electricity needs of its Arizona customers.

Pinnacle West Energy, the Company’s wholesale generating subsidiary, yesterday marked the completion of a new 120-MW generating unit at its West Phoenix Power Station. The state-of-the-art, highly efficient and environmentally responsible unit will be placed into commercial operation in June 2001. It is the first new generating unit designed to serve the Phoenix metropolitan area since the last of three units at the Palo Verde Nuclear Generating Station began operating in 1988.

The new West Phoenix unit is at the heart of more than 500 MW of new generation Pinnacle West Energy is adding to its system this summer. Also, construction began in December on two of four planned 530-MW units at the Redhawk Power Station. Those units will be commercially operational by June 2002. Construction on another 530-MW unit at the West Phoenix station will begin later this summer.

While the company reduced prices to retail customers and moved forward with its generation expansion plan, the company experienced a solid financial year. Last year the company’s stock price increased substantially, and combined with dividends, produced a total return to shareholders of 62 percent.

In his remarks to shareholders, Post cited a number of key highlights for the past year:

• For the seventh year in a row, Pinnacle West increased its annual dividend by 10 cents per share of common stock, an increase of 7 percent. By comparison, the industry posted an average decrease of 4 percent.

• The company’s cash flow, based on a per share comparison, is the second highest in the industry, and last year it increased by 10 percent.

• The company’s power marketing group managed market risk and protected shareholders and customers from wholesale-price volatility while ensuring the company’s power supply met customer demand. In just four years, the power marketing group has increased its revenue from $40 million to $1.6 billion.

Chairman Post officiated at the business portion of the meeting, during which Pinnacle West shareholders re-elected five directors to the Company’s board.

Re-elected to the board were Jack E. Davis (54), president of Pinnacle West; Roy A. Herberger Jr. (58), president of Thunderbird, The American Graduate School of International Management and director since 1992; Humberto S. Lopez (55), president of HSL Properties and director since 1995; Robert G. Matlock (67), independent management consultant and director since 2000; and Kathryn L. Munro (52), chairman of BridgeWest L.L.C., an investment company, and director since 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 electricity and 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

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.