PHOENIX – Pinnacle West Capital Corporation (NYSE: PNW) today reported consolidated net income attributable to common shareholders of $68.3 million, or $0.68 per diluted share of common stock, for the quarter ended June 30, 2009. These results compare with net income attributable to common shareholders of $133.9 million, or $1.33 per diluted share, for the same period a year ago.

The Company’s on-going consolidated earnings in the 2009 second quarter were $77.3 million, or $0.77 per share, compared with $89.2 million, or $0.88 per share in the comparable 2008 quarter. On-going earnings for both quarters exclude results for the Company’s real estate segment. Second-quarter 2008 on-going earnings also exclude income tax credits related to prior years of $30 million.

Arizona Public Service Co. (APS) reported a decrease in on-going earnings, recording income of $78.5 millionfor the 2009 second quarter, compared with $96.1 millionin the 2008 like period. Rising costs incurred by APS to maintain reliability and expand its electric service were the primary factor driving the lower results. These costs included: seasonal power plant overhauls and system maintenance; increased expenses related to infrastructure additions; and lower mark-to-market valuations of fuel contracts. A decrease in kilowatt-hour sales, principally from commercial and industrial customers, also contributed to the diminished quarterly results.An interim retail rate increase implemented in January 2009 and modest customer growth partially offset the negative factors.

“The bottom line is our current electricity prices do not reflect our real cost of doing business,” said Pinnacle West Chairman Don Brandt. “We must continue working with our regulators to better match our prices and costs while continuing to control costs. Cost management alone will not provide the financial strength necessary for APS to reliably serve our customers and provide a fair return for our investors.”

Brandt cited APS’ proposed retail rate settlement pending before the Arizona Corporation Commission as an example of the progress being achieved on the regulatory front. “Our Company is focused on working with the Commission and other interested parties to find positive solutions to complex and difficult energy issues facing our customers now and going forward,” he said. “If approved as proposed, the settlement will provide a measure of price stability for APS customers, and enable APS to attract the capital that is critical to support a sustainable energy future for the state of Arizona.”

The settlement not only addresses pricing and earnings issues, added Brandt, it also promotes renewable resources, energy efficiency and environmental stewardship that provide the building blocks for a recovery of economic vitality for the state of Arizona.

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

Conference Call

Pinnacle West invites interested parties to listen to the live web cast of management’s conference call to discuss the Company’s 2009 second-quarter results and recent developments at 12 noon (ET) today, August 4. The web cast can be accessed at www.pinnaclewest.com/presentations 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 Conference ID Number 16241469. A replay of the call also will be available until 11:55 p.m. (ET), Tuesday, August 11, 2009, by calling (800) 642-1687 in the U.S. and Canada or (706) 645-9291 internationally and entering the same Conference ID number as above.

Pinnacle West is a Phoenix-based company with consolidated assets of about $11.9 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.

PINNACLE WEST CAPITAL CORPORATION
ARIZONA PUBLIC SERVICE COMPANY

NON-GAAP FINANCIAL MEASURE RECONCILIATION
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS
(GAAP MEASURE) TO ON-GOING EARNINGS (NON-GAAP FINANCIAL MEASURE)

Contacts

Media:
Alan Bunnell, (602) 250-3376

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