Pinnacle West Reports 2005 Earnings Lower Annual Earnings Due to Regulatory Disallowance and Higher Fuel Costs


PHOENIX – Pinnacle West Capital Corporation (NYSE: PNW) today reported consolidated net income for the year 2005 of $176.3 million, or $1.82 per diluted share of common stock. This result compares with $243.2 million, or $2.66 per share, for the year 2004.

“Our 2005 earnings reflect the deferral of the higher natural gas prices we experienced,” said Chairman Bill Post. “The Arizona Corporation Commission’s (ACC) action last week to start recovery of these deferrals is a positive step; however, the pending emergency rate case is critical to recover the higher fuels costs we are incurring to meet current customer demands today.”

Under the power supply adjustor (PSA) approved by the ACC in Arizona Public Service Company’s (APS) last rate case, 90 percent of the increases in the Company’s fuel and purchased power costs above current base rates are “deferred,” or set aside, for future recovery from customers. In accordance with generally accepted accounting principles, the deferrals positively impact earnings on a non-cash basis until the collection of such costs is approved by the ACC.

The year-to-year comparison was negatively impacted by the regulatory disallowance resulting from the ACC’s retail rate decision issued in April 2005; higher fuel and purchased power costs; a net loss from discontinued operations related to the sale of the Company’s interest in the Silverhawk Power Station; an increase in operating costs primarily related to customer service and generation; higher property taxes; lower contributions from the marketing and trading segment; and the 2004 gain on the sale of the Phoenix Suns. These factors were partially offset by the PSA deferrals; higher retail sales volumes at APS due to customer growth; higher retail electricity revenues resulting from the company’s first price increase in 14 years; improved results from the Company's real estate operations; and lower depreciation and amortization expense.

APS reported lower net income for 2005 of $170.5 million, of which about 60 percent, or $105.5 million, was related to the PSA deferrals. This result compares with net income of $199.6 million for 2004. APS’ retail customer base grew 4.3 percent, more than three times the U.S. average, and its customers’ peak energy needs grew more than 9 percent. Moreover, in 2005, APS passed the one-million-customer mark as it added more than 41,000 new retail customers.

SunCor Development Co., Pinnacle West’s real estate subsidiary, delivered solid performance, reporting 2005 net income of $55.6 million, compared with net income of $44.7 million for 2004.

For the 2005 fourth quarter, the Company reported consolidated net income of $21.3 million, or $0.22 per diluted share of common stock. This result compares with consolidated net income of $33.7 million, or $0.37 per 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 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.

Web cast and Conference Call

The Company will hold a conference call and live web cast at 4 p.m. (ET) today, Wednesday, February 1, 2006, to discuss its earnings and recent events. The web cast 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 3786864. A replay of the call also will be available until 11:55 p.m. (ET), Wednesday, February 8, 2006, by calling (800) 642-1687 in the U.S. and Canada or (706) 645-9291 internationally and entering the same reservation number.


Alan Bunnell, (602) 250-3376

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

Email Alerts


Enter the code shown above.