HOENIX - Pinnacle West Energy has reached an agreement to acquire about 1,300 megawatts of electrical generation in Arizona and New Mexico from Southern California Edison for a total price of $550 million, the companies announced today.

The two companies on Thursday signed purchase agreements in which Pinnacle West Energy will acquire SCE’s interests in the Palo Verde Nuclear Generating Station west of Phoenix and the Four Corners Power Plant near Farmington, New Mexico. SCE owns 16 percent of the three-unit Palo Verde plant and 48 percent of Four Corners Units 4 and 5, for a total of approximately 1,300 megawatts at both plants.

Arizona Public Service, a Pinnacle West Energy affiliate, is part owner and operator of both plants. Palo Verde is among the world’s top performing nuclear stations, and Four Corners is consistently among the most reliable low-cost power producers in the western United States.

“These acquisitions are part of our overall growth strategy and will solidify our position among the West’s largest power producers,” said Bill Stewart, president of Pinnacle West Energy. “Perhaps more importantly, that they help balance our fuel mix so that we don’t rely too heavily on any single energy source.”

The acquisition gives Pinnacle West Capital Corporation subsidiaries Pinnacle West Energy and Arizona Public Service a combined 45 percent interest in Palo Verde, the nation’s largest power producer of any kind, and a 73 percent ownership of Four Corners, the nation’s 10th largest coal plant.

Combined with previously announced natural gas-fired power plant developments in Arizona and Nevada, the acquisitions ultimately will provide a mix of about 23 percent natural gas, 32 percent nuclear and 45 percent coal, a “fuel mix that will help protect us and our customers from market fluctuations,” Stewart said.

The purchase also gives Pinnacle West Energy and APS a combined 8,000 megawatts of owned generating capacity upon completion of the previously announced projects, up from 4,000 megawatts today. That’s an increase in production capacity from 23 million megawatt-hours to 42 million-megawatt hours.

The previously announced plant developments include the 2,120-megawatt Redhawk Power Plant near the Palo Verde switchyard; 650 megawatts in West Phoenix; and about 1,500 megawatts at two Nevada sites.

Closing on the SCE acquisitions is to take place in 2001 following various regulatory approvals. The purchase agreement must be approved by, among other agencies, the California Public Utilities Commission, which encourages competing bids in such sales. Under the agreement, Pinnacle West Energy has a right of first refusal in such a scenario.

“These acquisitions further our goal to be a growing, competitive electricity supplier in the Southwest,” said Bill Post, CEO of Pinnacle West Capital Corporation (NYSE:PNW), parent company of Pinnacle West Energy and APS. “We intend to ensure a reliable, efficient supply of electricity to bolster our economy, benefit consumers and provide a vibrant energy market in the Southwest.”

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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.