Pinnacle West Reports Third Quarter Earnings; Results Reflect Company's Investments to Meet Retail Growth


PHOENIX – Pinnacle West Capital Corp. (NYSE: PNW) today reported consolidated net income for the quarter ended September 30, 2004, of $105.4 million, or $1.15 per diluted share of common stock. This result compares with consolidated net income of $110.0 million, or $1.20 per diluted share, for the same period in 2003.

“Our results reflect milder weather and rising costs necessary to meet Arizona’s growing energy needs,” said Chairman Bill Post, citing customer growth that is three times the national average. “With an eye to the future, we remain focused on achieving regulatory treatment that covers the costs of providing reliable service for our retail customers.”

The decrease in quarter-to-quarter earnings was primarily the result of hotter-than-normal weather in the 2003 summer period; a net increase in costs related to new electricity generating units placed into service in mid-2003 and mid-2004; an increase in customer service and other operating costs; and higher fuel and purchased power prices.

These factors were partially offset by lower replacement power costs due to fewer unplanned power plant outages; improved wholesale power marketing results; the absence of regulatory asset amortization; and higher retail sales volumes due to customer growth of 3.9 percent during the 2004 third quarter.

For the nine-month period ended September 30, 2004, Pinnacle West’s consolidated net income was $209.5 million, or $2.29 per diluted share of common stock. This result compares with consolidated net income of $191.5 million, or $2.09 per diluted share, in last year’s corresponding period.

For more information on Pinnacle West’s operating statistics and earnings, please visit

Pinnacle West is a Phoenix-based company with consolidated assets of approximately $9.9 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.

Webcast and Conference Call

The Company will hold a conference call and live webcast at 12 noon. (ET) today, Friday, October 22 to discuss its earnings. The webcast can be accessed at and will be available for replay on the web site for 30 days. To access the live conference call by telephone, dial (877) 356-3961 and enter reservation number 9289484. A replay of the call also will be available until 11:55 p.m. (ET), Friday, October 29, 2004, by calling (800) 642-1687 in the U.S. and Canada or (706) 645-9291 internationally and entering the same reservation number.

This press release may contain forward-looking statements within the meaning of the safe harbor of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties and are based on the beliefs and assumptions of our management, based on information currently available to our management. When we use words such as “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates,” “predicts,” “should,” or similar expressions, we are making forward-looking statements. Forward-looking statements are not guarantees of performance. They involve risks, (including those described in the "Risk Factors" in Exhibit 99.1 to our most recent Report on Form 10-Q filed with the SEC), uncertainties, and assumptions. Our future results may differ materially from those expressed in these forward-looking statements. Many of the factors that will determine these results are beyond our ability to control or predict. Except to the extent required by applicable laws, we undertake no obligation to publicly update any forwarding-looking statement, whether as a result of new information, future events or otherwise. These factors include, but are not limited to: state and federal regulatory and legislative decisions and actions, including the outcome of the rate case APS filed with the ACC on June 27, 2003 and the wholesale electric price mitigation plan adopted by the FERC; the ongoing restructuring of the electric industry, including the introduction of retail electric competition in Arizona and decisions impacting wholesale competition; the outcome of regulatory, legislative and judicial proceedings relating to the restructuring; market prices for electricity and natural gas; power plant performance and outages, including transmission outages and constraints; weather variations affecting local and regional customer energy usage; customer growth and energy usage; regional economic and market conditions, including the results of litigation and other proceedings resulting from the California energy situation, volatile purchased power and fuel costs and the completion of generation and transmission construction in the region, which could affect customer growth and the cost of power supplies; the cost of debt and equity capital and access to capital markets; the uncertainty that current credit ratings will remain in effect for any given period of time; our ability to compete successfully outside traditional regulated markets (including the wholesale market); the performance of our marketing and trading activities due to volatile market liquidity and any deteriorating counterparty credit and the use of derivative contracts in our business (including the interpretation of the subjective and complex accounting rules related to these contracts); changes in accounting principles generally accepted in the United States of America and the interpretation of those principles; the performance of the stock market and the changing interest rate environment, which affect the amount of our required contributions to our pension plan and nuclear decommissioning trust funds, as well as our reported costs of providing pension and other postretirement benefits; technological developments in the electric industry; strength of the real estate market in SunCor’s market areas, which include Arizona, Idaho, New Mexico and Utah; conservation programs; and other uncertainties, all of which are difficult to predict and many of which are beyond our control.


Alan Bunnell, (602) 250-3376

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

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