PHOENIX, ARIZ. - Pinnacle West Capital Corporation (NYSE:PNW) today reported 11 percent higher income from continuing operations for the calendar year 1999 of $269.8 million or $3.17 per diluted share of common stock, compared with $242.9 million or $2.85 per share for the prior year.

Net income for 1999 of $167.9 million or $1.97 per share of common stock included an extraordinary charge for a regulatory disallowance and a tax benefit from discontinued operations, both recorded in the third quarter.

Chief Executive Officer Bill Post said the year-to-year comparison was positively affected by 3.8 percent electricity customer growth at Arizona Public Service, higher contributions from non-regulated operations and lower financing costs.

Partially offsetting these improvements were the effects of two electricity price decreases and increased utility operations and maintenance expense.

Post said cost management remained high on the agenda, and that the increase in utility operations and maintenance expense was comprised primarily of one-time costs totaling approximately $20 million ($12 million after tax) including certain environmental and other non-recurring items.

"Through continued strong operational performance, 1999 was another good year," said Post. "Earnings were strong; customer growth remained about three times the national average; we set new power plant performance records; we lowered electricity prices; we increased our dividend 7.7 percent; we reached a pivotal settlement agreement with Arizona regulators; retail electricity markets began to open to competition in Arizona; and we announced plans for new generation capacity that will supply competitive markets in Arizona and throughout the western United States."

" We have every reason to be very confident about our future, and we are," Post added.

Among specific highlights for the year, Post included:

• APS  reduced its prices for customers for the fifth time in as many years, and committed to four more decreases that will bring total reductions for residential and small business customers to approximately 16 percent over a 10-year period;
• Palo Verde Nuclear Generating Station generated more power than any other U.S. generating facility for the fifth consecutive year, and the Institute of Nuclear Power Operations awarded Palo Verde its third consecutive "INPO 1" rating as one of the nation's top nuclear plants;
• Pinnacle West Energy, a non-regulated generation affiliate, was formed and announced plans to build new natural gas power plants with a total capacity of up to 2,770 megawatts at the West Phoenix Power Plant and a site near Palo Verde; and
• APS Energy Services gained approval from the Arizona Corporation Commission to expand its offering of competitive electricity services into Arizona.

For the year, APS earnings before the extraordinary charge were $267.3 million, compared with $245.5 million in 1998.

Pinnacle West's real estate subsidiary, SunCor Development, and its investment subsidiary, El Dorado, reported combined contributions to consolidated results in 1999 of $18 million, compared with $12 million for the prior year. The improvement related primarily to the increased value of El Dorado's investment in a technology-related venture capital partnership. Management estimates that gains may also be recognized in 2000, assuming continued strength in that sector as well as the real estate market.

"The outlook in our non-regulated businesses, along with expected results from core operations, provide us the opportunity for earnings growth in 2000 despite our completion of the amortization of investment tax credits in 1999," Post said.

In 1999, the investment tax credit amortization totaled $24 million or $0.28 per share of common stock. The amortization was recorded in 1999 and prior years in accordance with a 1994 regulatory agreement.

Net income for 1999 included an extraordinary charge for a regulatory disallowance of $139.9 million after income taxes or $1.65 per share recorded in the third quarter as a part of a regulatory settlement for APS. Also in the third quarter, Pinnacle West recorded a tax benefit from discontinued operations of $38.0 million or $0.45 per share as a result of resolution of tax issues related to a former subsidiary, MeraBank.

Also today, the Pinnacle West board of directors declared a quarterly dividend of 35 cents per share of common stock, payable on March 1, 2000 to shareholders of record on February 1, 2000.

Pinnacle West is a Phoenix-based company with consolidated assets of approximately $7 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.

Pinnacle West Capital Corporation Consolidated Statements of Income
(In Thousands, Except Per Share Amounts)
(Unaudited)

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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.