PHOENIX - Pinnacle West Capital Corporation (NYSE: PNW) today reported consolidated net income for the quarter ended March 31, 2002, of $53.8 million, or $0.63 per diluted share of common stock. This result compares with $59.5 million, or $0.70 per share, for the comparable quarter a year ago.

The lower earnings resulted primarily from decreased contributions from power marketing due to significantly lower wholesale prices in the western United States and by a retail electricity price decrease. However, the quarter-to-quarter comparison benefited from lower replacement power costs, and decreased power plant maintenance and generation reliability expenses.

"Although we’ll never be pleased with a decline in earnings, we still produced solid results despite the significant drop in wholesale market prices" said Chairman Bill Post. "We maintain our position from last October that matching 2001 earnings this year will be a challenge due to the lower western wholesale power prices, a sluggish economy, weather effects and retail price decreases."

The 1.5 percent retail price decrease, totaling about $27 million annually, became effective July 1, 2001, as part of Arizona Public Service’s (APS) commitment to reduce residential customer prices a total of 16 percent during the 10-year period ending 2004. APS plans to again decrease its retail prices 1.5 percent this July, bringing the total reduction for residential and small commercial customers to approximately 14.5 percent since 1994.

APS’ retail service territory continued to experience strong customer growth of about 3.2 percent, about three times the national average. However, retail sales were impacted by milder weather and were flat at 4.9 billion kilowatt-hours (kWh) compared with the same period last year. First quarter wholesale power sales were 4.4 billion kWh, up 2.9 percent from the 4.3 billion kWh sold in the comparable 2001 period.

The Company’s electricity operations earned $51.7 million for the quarter ended March 31, 2002, compared with $58.4 million for the year-ago quarter. These operations include APS’ regulated retail business and the Company’s wholesale marketing functions.

SunCor Development Co., the Company’s real estate subsidiary, and El Dorado Investment Co., its investment subsidiary, recorded combined net income of $2.1 million compared with $1.1 million for the prior-year quarter. The difference was primarily due to increased land and home sales.

Pinnacle West is a Phoenix-based company with consolidated assets of $8 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.

For more information on Pinnacle West’s operating statistics and earnings, please visit www.pinnaclewest.com/investors/financials/quarterly/default.html.

Conference Call

Pinnacle West invites interested parties to listen to the live webcast of management’s conference call to discuss the Company’s 2002 first quarter earnings at 8 a.m. (ET) on Tuesday, April 23, 2002. The conference call will be available online live on Pinnacle West’s website at http://www.pinnaclewest.com/investor/presentations/ and will remain available on the website through May 22, 2002. To access the live conference call by telephone, dial (212) 346-7472, reservation number 20476746. A replay of the call will also be available until 10 a.m. (ET), April 30, 2002, by calling (800) 633-8284 and entering reservation number 20476746.

Contacts

This press release contains forward-looking statements based on current expectations, and the Company assumes no obligation to update these statements. Because actual results may differ materially from expectations, the Company cautions readers not to place undue reliance on these statements. A number of factors could cause future results to differ materially from historical results, or from results or outcomes currently expected or sought by the Company. These factors include the ongoing restructuring of the electric industry; including the introduction of retail electric competition in Arizona and APS’ October 2001 ACC filing; the outcome of regulatory and legislative proceedings relating to the restructuring; state and federal regulatory and legislative decisions and actions, including the price mitigation plan adopted by FERC in June 2001; regional economic and market conditions, including the California energy situation and completion of generation construction in the region, which could affect customer growth and the cost of power supplies; the cost of debt and equity capital; weather variations affecting local and regional customer energy usage; conservation programs; power plant performance; the successful completion of our generation expansion program; regulatory issues associated with generation expansion, such as permitting and licensing; our ability to compete successfully outside traditional regulated markets (including the wholesale market); technological developments in the electric industry; and the real estate market in SunCor’s market areas, which include Arizona, New Mexico and Utah .

Media:
Alan Bunnell, (602) 250-3376

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