PHOENIX – Pinnacle West Capital Corp. (NYSE: PNW) expects to invest almost $5 billion in new capital over the next five years to meet the future energy needs of the second-fastest growing region in the country, Chairman Bill Post told shareholders at the Company’s Annual Meeting held today in Phoenix.

“In our company, we invest more than three times our annual earnings in capital expenditures every year in order to build the capacity needed to serve our Arizonaـretail customers,” said Post. “This investment in electric infrastructure is required to provide the basis for economic growth in our state.”

He added that over the next decade, customer demand for electricity will grow by about 3,000 megawatts, or the equivalent to three times Arizona Public Service’s (APS) share of Palo Verde, the nation’s largest nuclear generating station. “We’ve met this demand in the past, and we expect to continue to do so,” he said, emphasizing that the Company and its employees are poised to meet the state’s growing consumption of electricity while continuing to focus on customer-satisfaction improvements.

Looking to the future, Post said APS would consider additional nuclear energy capacity. However, in the near-term, he outlined four ways the Company plans to manage customer growth and demand beyond using natural gas:

• Expanding customer conservation programs that promote demand-side management efforts and provide customers greater choice;
• Increasing the use of renewable energy resources like solar, geothermal, biomass and wind;
• Implementing new coal technologies to ensure these low-cost resources remain environmentally compatible and a viable part of APS’ generation mix; and
• Building a new 500-kilovolt transmission line from Arizona to southwestern Wyoming designed to access low-cost coal and wind resources, thereby diversifying APS’ load base and strengthening the reliability of the western grid.

“These four steps will help diversify our fuel and financial risks,” said Post. “And with the continued expansion of our existing transmission system, they will allow us to meet future customer demands.”

A complete text of Post’s speech is available at the Company’s web site: www.pinnaclewest.com.

At the business portion of the annual meeting, Pinnacle West shareholders re-elected four directors to the Company’s Board of Directors: Jack E. Davis (59), president and COO of Pinnacle West, president and CEO of APS, and a director since 2001; Pamela Grant (67), a civic leader and former president of Tablescapes Inc., and a director since 1985; Martha O. Hesse (63), president of Hesse Gas Co. from 1990 to 2003, a former chairman of the Federal Energy Regulatory Commission, and a director since 1991; and William S. Jamieson Jr. (62), president of the Micah Institute of Asheville, N.C., and a director since 1991.

In other proposals, shareholders ratified the selection of Deloitte & Touche LLP as the Company’s independent auditors for the 2006 fiscal year. Shareholders also approved an individual shareholder’s proposal requesting that the Company’s Board adopt the practice of electing Directors on an annual basis versus the current staggered terms.

Pinnacle West is a Phoenix-based company with consolidated assets of about $11 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:
Alan Bunnell, (602) 250-3376

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