UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): March 31, 2011
 	 	 	 	 	
 	 	Exact Name of Registrant as Specified in	 	 	
 	 	Charter; State of Incorporation;	 	IRS Employer	
Commission File Number	 	Address and Telephone Number	 	Identification Number	
 	 	 	 	 	
1-8962	 	Pinnacle West Capital Corporation
(an Arizona corporation)
400 North Fifth Street, P.O. Box 53999
Phoenix, AZ 85072-3999
(602) 250-1000	 	86-0512431	
 	 	 	 	 	
1-4473	 	Arizona Public Service Company
(an Arizona corporation)
400 North Fifth Street, P.O. Box 53999
Phoenix, AZ 85072-3999
(602) 250-1000	 	86-0011170	
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o	 	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	
 		
o	 	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	
 		
o	 	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	
 		
o	 	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	
This combined Form 8-K is separately filed or furnished by Pinnacle West Capital Corporation and Arizona Public Service Company. Each registrant is filing or furnishing on its own behalf all of the information contained in this Form 8-K that relates to such registrant and, where required, its subsidiaries. Except as stated in the preceding sentence, neither registrant is filing or furnishing any information that does not relate to such registrant, and therefore makes no representation as to any such information.

 

 

Item 2.02. Results of Operations and Financial Condition.
Item 7.01. Regulation FD Disclosure.
The following information is furnished pursuant to both Item 2.02 and 7.01.
On April 29, 2011, Pinnacle West Capital Corporation (the “Company” or “Pinnacle West”) issued a press release regarding its financial results for the fiscal quarter ended March 31, 2011 and its earnings outlook for 2011. A copy of the press release is attached hereto as Exhibit 99.1.
The Company is providing a quarterly consolidated statistical summary and a copy of the slide presentation made in connection with the quarterly earnings conference call on April 29, 2011. This information contains Company operating results for the fiscal quarter ended March 31, 2011 and is attached hereto as Exhibits 99.2 and 99.3. The summary and slide presentation are concurrently being posted to the Company’s website at www.pinnaclewest.com , which also contains a glossary of relevant terms.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
 	 	 	 	 	 	 	
Exhibit No.	 	Registrant(s)	 	Description	
 	 	 	 	 	 	 	
 	99.1	 	 	Pinnacle West
APS	 	Earnings News Release issued on April 29, 2011.	
 	 	 	 	 	 	 	
 	99.2	 	 	Pinnacle West
APS	 	Pinnacle West Capital Corporation quarterly consolidated statistical summary for the three-month periods ended March 31, 2011 and 2010.	
 	 	 	 	 	 	 	
 	99.3	 	 	Pinnacle West
APS	 	Pinnacle West Capital Corporation 1st Quarter 2011 Results slide presentation accompanying April 29, 2011 conference call.	
 
 1 

 
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 	 	 	 	 	 	 	
 	 	PINNACLE WEST CAPITAL CORPORATION
(Registrant)	 	 	
 	 	 	 	 	 	 	
Dated: April 29, 2011	 	By:	 	/s/ James R. Hatfield
 
James R. Hatfield	 	 	
 	 	 	 	Senior Vice President and Chief Financial Officer	 	 	
 	 	 	 	 	 	 	
 	 	ARIZONA PUBLIC SERVICE COMPANY
(Registrant)	 	 	
 	 	 	 	 	 	 	
Dated: April 29, 2011	 	By:	 	/s/ James R. Hatfield
 
James R. Hatfield	 	 	
 	 	 	 	Senior Vice President and Chief Financial Officer	 	 	
 
 2 

 

Exhibit Index
 	 	 	 	 	 	 	
Exhibit No.	 	Registrant(s)	 	Description	
 	 	 	 	 	 	 	
 	99.1	 	 	Pinnacle West
APS	 	Earnings News Release issued on April 29, 2011.	
 	 	 	 	 	 	 	
 	99.2	 	 	Pinnacle West
APS	 	Pinnacle West Capital Corporation quarterly consolidated statistical summary for the three-month periods ended March 31, 2011 and 2010.	
 	 	 	 	 	 	 	
 	99.3	 	 	Pinnacle West
APS	 	Pinnacle West Capital Corporation 1st Quarter 2011 Results slide presentation accompanying April 29, 2011 conference call.	
 
 3 

Exhibit 99.1
NEWS 
 	 	 	 	 	 	 	
FOR IMMEDIATE RELEASE	 	April 29, 2011	
Media Contact:	 	Alan Bunnell, (602) 250-3376	 	Page 1 of 4	
Analyst Contacts:	 	Rebecca Hickman, (602) 250-5668	 	 	 	 	
 	 	Geoffrey Wendt, (602) 250-5643	 	 	 	 	
Web site:	 	pinnaclewest.com	 	 	 	 	
PINNACLE WEST REPORTS 2011 FIRST-QUARTER RESULTS

 	•	 	Company affirms 2011 earnings guidance	

 	•	 	Increased customer electricity usage and weather effects positively affected results	

 	•	 	Planned timing and scope of gas-fired power plant maintenance reduced bottom line	
PHOENIX — Pinnacle West Capital Corp. (NYSE: PNW) today reported a consolidated net loss attributable to common shareholders of $15.1 million, or $0.14 per diluted share of common stock, for the quarter ended March 31, 2011. This result compares with a net loss attributable to common shareholders of $6.0 million, or $0.06 per diluted share, for the same quarter in 2010.
Pinnacle West’s consolidated on-going loss in the 2011 first quarter was $14.8 million, or $0.14 per share, compared with on-going earnings of $6.9 million or $0.07 per share, in the same period a year ago. A reconciliation of net loss attributable to common shareholders to on-going earnings (loss) is provided at the end of this release.
“Our first-quarter results were in line with our expectations,” said Pinnacle West Chairman, President and Chief Executive Officer Don Brandt. “Retail electricity sales improved modestly over this time last year and appear to indicate stabilized economic conditions in Arizona. The associated revenue growth, however, was more than offset by the planned timing and level of maintenance at our fossil plants in preparation for our peak summer season.
“We have made improvements over the past few years in customer satisfaction, operational excellence and cost management. We also have seen progress in Arizona’s regulatory framework. Going forward, we intend to build on this positive momentum.”

 

			
 	 	 	
PINNACLE WEST 2011 FIRST-QUARTER RESULTS	 	April 29, 2011
Page 2 of 4	
The 2011 first-quarter on-going results were positively impacted by the following factors:

 	•	 	Higher retail customer usage — excluding the effects of weather variations — contributed $0.03 per share to the quarterly earnings comparison. Total weather-normalized retail electricity sales grew 1.2 percent in the 2011 first quarter compared to the same period a year ago. Likewise, Arizona Public Service Co’s (APS) customer base increased about 0.4 percent over the same timeframe.	

 	•	 	The effects of weather variations improved the Company’s earnings by $0.03 per share.	
These positive factors were more than offset by:

 	•	 	Increased operations and maintenance expenses decreased earnings by $0.10 per share. The expense increase was substantially due to planned timing and level of maintenance at two of the Company’s gas-fired, combined-cycle generation plants.	
 		
 	 	 	The O&M variance excluded costs for renewable energy, demand-side management and similar regulatory programs, as well as $0.16 per share of expenses associated with settlement of prior-period transmission rights-of-way related to the Four Corners Power Plant, all of which were offset by comparable amounts of operating revenues.	

 	•	 	Lower income tax benefits reduced results by $0.08 per share because of favorable resolution of income tax matters in the 2010 first quarter, which did not reoccur in the current quarter.	

 	•	 	Higher infrastructure-related costs decreased earnings by $0.06 per share, primarily related to higher property taxes and increased depreciation and amortization.	

 	•	 	The net effect of other items decreased earnings $0.03 per share.	
APS, the Company’s principal subsidiary, reported a 2011 first-quarter net loss attributable to common shareholder of $12.1 million, compared with net income of $11.0 million for the comparable 2010 quarter.
2011 Earnings Outlook
Pinnacle West continues to expect its 2011 consolidated on-going earnings will be in the range of $3.00 to $3.15 per diluted share.

 

			
 	 	 	
PINNACLE WEST 2011 FIRST-QUARTER RESULTS	 	April 29, 2011
Page 3 of 4	
Conference Call and Web Cast
Pinnacle West invites interested parties to listen to the live web cast of management’s conference call to discuss the Company’s 2011 first-quarter results, as well as recent developments, at 12 noon (ET) today, April 29. The webcast can be accessed at pinnaclewest.com/presentations and will be available for replay on the website for 30 days. To access the live conference call by telephone, dial (877) 407-8035 or (201) 689-8035 for international callers. A replay of the call also will be available until 11:55 p.m. (ET), Friday, May 6, 2011, by calling (877) 660-6853 in the U.S. and Canada or (201) 612-7415 internationally and entering Account number 286, followed by Conference ID number 370849.
General Information
Pinnacle West Capital, an energy holding company based in Phoenix, has consolidated assets of about $12.3 billion, more than 6,300 megawatts of generating capacity and about 6,700 employees in Arizona and New Mexico. Through its principal subsidiary, Arizona Public Service, the Company provides retail electricity service to more than 1.1 million Arizona homes and businesses. For more information about Pinnacle West, visit the Company’s website at pinnaclewest.com .
Dollar amounts in this news release are after income taxes. Earnings per share amounts are based on average diluted common shares outstanding. For more information on Pinnacle West’s operating statistics and earnings, please visit pinnaclewest.com/investors .
PINNACLE WEST CAPITAL CORPORATION
NON-GAAP FINANCIAL MEASURE RECONCILIATION
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS
(GAAP MEASURE) TO ON-GOING EARNINGS (LOSS)
(NON-GAAP FINANCIAL MEASURE)
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended	 	 	Three Months Ended	 	
 	 	March 31, 2011	 	 	March 31, 2010	 	
 	 	Dollars in	 	 	Diluted	 	 	Dollars in	 	 	Diluted	 	
 	 	Millions	 	 	EPS	 	 	Millions	 	 	EPS	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Loss Attributable to Common Shareholders	 	$	(15.1	)	 	$	(0.14	)	 	$	(6.0	)	 	$	(0.06	)	
Adjustment:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Discontinued operations, primarily real estate	 	 	0.3	 	 	 	—	 	 	 	12.9	 	 	 	0.13	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
On-going Earnings (Loss)	 	$	(14.8	)	 	$	(0.14	)	 	$	6.9	 	 	$	0.07	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
NON-GAAP FINANCIAL INFORMATION
In this press release, we refer to “on-going earnings (loss).” On-going earnings (loss) is a “non-GAAP financial measure,” as defined in accordance with U.S. Securities and Exchange Commission rules. We believe on-going earnings (loss) provide investors with a useful indicator of our results that is comparable among periods because it excludes the effects of unusual items that may occur on an irregular basis. Investors should note that these non-GAAP financial measures involve judgments by management, including whether an item is classified as an unusual item. We use on-going earnings (loss), or similar concepts, to measure our performance internally in reports for management.

 

			
 	 	 	
PINNACLE WEST 2011 FIRST-QUARTER RESULTS	 	April 29, 2011
Page 4 of 4	
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements based on our current expectations, including statements regarding our 2011 earnings outlook. These forward-looking statements are often identified by words such as “estimate,” “predict,” “may,” “believe,” “plan,” “expect,” “require,” “intend,” “assume” and similar words. Because actual results may differ materially from expectations, we caution readers not to place undue reliance on these statements. A number of factors could cause future results to differ materially from historical results, or from outcomes currently expected or sought by Pinnacle West or APS. These factors include, but are not limited to:

 	•	 	our ability to achieve timely and adequate rate recovery of our costs, including returns on debt and equity capital;	

 	•	 	our ability to manage capital expenditures and other costs while maintaining reliability and customer service levels;	

 	•	 	variations in demand for electricity, including those due to weather, the general economy, customer and sales growth (or decline), and the effects of energy conservation measures and distributed generation;	

 	•	 	power plant performance and outages;	

 	•	 	volatile fuel and purchased power costs;	

 	•	 	fuel and water supply availability;	

 	•	 	regulatory and judicial decisions, developments and proceedings;	

 	•	 	new legislation or regulation including those relating to greenhouse gas emissions, renewable energy mandates, nuclear plant operation and energy efficiency standards;	

 	•	 	our ability to meet renewable energy requirements and recover related costs;	

 	•	 	risks inherent in the operation of nuclear facilities, including spent fuel disposal uncertainty;	

 	•	 	competition in retail and wholesale power markets;	

 	•	 	the duration and severity of the economic decline in Arizona and current real estate market conditions;	

 	•	 	the cost of debt and equity capital and the ability to access capital markets when required;	

 	•	 	changes to our credit ratings;	

 	•	 	the investment performance of the assets of our nuclear decommissioning trust, pension, and other postretirement benefit plans and the resulting impact on future funding requirements;	

 	•	 	the liquidity of wholesale power markets and the use of derivative contracts in our business;	

 	•	 	potential shortfalls in insurance coverage;	

 	•	 	new accounting requirements or new interpretations of existing requirements;	

 	•	 	generation, transmission and distribution facility and system conditions and operating costs;	

 	•	 	the ability to meet the anticipated future need for additional baseload generation and associated transmission facilities in our region;	

 	•	 	the willingness or ability of our counterparties, power plant participants and power plant land owners to meet contractual or other obligations or extend the rights for continued power plant operations;	

 	•	 	technological developments affecting the electric industry; and	

 	•	 	restrictions on dividends or other burdensome provisions in our credit agreements and Arizona Corporation Commission orders.	
These and other factors are discussed in Risk Factors described in Item 1A of the Pinnacle West/APS Annual Report on Form 10-K for the fiscal year ended December 31, 2010, which readers should review carefully before placing any reliance on our financial statements, disclosures or our earnings outlook. Neither Pinnacle West nor APS assumes any obligation to update these statements, even if our internal estimates change, except as required by law.
# # #

 
PINNACLE WEST CAPITAL CORPORATION
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 (unaudited)
( dollars and shares in thousands, except per share amounts)
 	 	 	 	 	 	 	 	 	
 	 	THREE MONTHS ENDED	 	
 	 	MARCH 31,	 	
 	 	2011	 	 	2010	 	
Operating Revenues	 	 	 	 	 	 	 	 	
Regulated electricity segment	 	$	647,974	 	 	$	611,425	 	
Other revenues	 	 	11,601	 	 	 	8,930	 	
 	 	 	 	 	 	 	
Total	 	 	659,575	 	 	 	620,355	 	

Operating Expenses	 	 	 	 	 	 	 	 	
Regulated electricity segment fuel and purchased power	 	 	212,007	 	 	 	215,540	 	
Operations and maintenance	 	 	256,486	 	 	 	207,842	 	
Depreciation and amortization	 	 	106,601	 	 	 	100,653	 	
Taxes other than income taxes	 	 	37,624	 	 	 	31,724	 	
Other expenses	 	 	9,716	 	 	 	6,928	 	
 	 	 	 	 	 	 	
Total	 	 	622,434	 	 	 	562,687	 	

Operating Income	 	 	37,141	 	 	 	57,668	 	

Other	 	 	 	 	 	 	 	 	
Allowance for equity funds used during construction	 	 	5,395	 	 	 	5,389	 	
Other income	 	 	1,690	 	 	 	2,108	 	
Other expense	 	 	(1,699	)	 	 	(2,696	)	
 	 	 	 	 	 	 	
Total	 	 	5,386	 	 	 	4,801	 	

Interest Expense	 	 	 	 	 	 	 	 	
Interest charges	 	 	61,077	 	 	 	60,705	 	
Allowance for borrowed funds used during construction	 	 	(3,576	)	 	 	(3,047	)	
 	 	 	 	 	 	 	
Total	 	 	57,501	 	 	 	57,658	 	

Income (Loss) From Continuing Operations Before Income Taxes	 	 	(14,974	)	 	 	4,811	 	
 	 	 	 	 	 	 	 	 	
Income Taxes	 	 	(5,649	)	 	 	(7,172	)	

Income (Loss) From Continuing Operations	 	 	(9,325	)	 	 	11,983	 	
 	 	 	 	 	 	 	 	 	
Loss From Discontinued Operations	 	 	 	 	 	 	 	 	
Net of Income Taxes	 	 	(349	)	 	 	(12,880	)	

Net Loss	 	 	(9,674	)	 	 	(897	)	
 	 	 	 	 	 	 	 	 	
Less: Net income attributable to noncontrolling interests	 	 	5,461	 	 	 	5,117	 	

Net Loss Attributable To Common Shareholders	 	$	(15,135	)	 	$	(6,014	)	

Weighted-Average Common Shares Outstanding — Basic	 	 	108,832	 	 	 	101,474	 	
 	 	 	 	 	 	 	 	 	
Weighted-Average Common Shares Outstanding — Diluted	 	 	108,832	 	 	 	101,474	 	
 	 	 	 	 	 	 	 	 	
Earnings Per Weighted-Average Common Share Outstanding	 	 	 	 	 	 	 	 	
Income (loss) from continuing operations attributable to common shareholders — basic	 	$	(0.14	)	 	$	0.07	 	
Net loss attributable to common shareholders — basic	 	$	(0.14	)	 	$	(0.06	)	
Income (loss) from continuing operations attributable to common shareholders — diluted	 	$	(0.14	)	 	$	0.07	 	
Net loss attributable to common shareholders — diluted	 	$	(0.14	)	 	$	(0.06	)	
 	 	 	 	 	 	 	 	 	
Amounts Attributable To Common Shareholders	 	 	 	 	 	 	 	 	
Income (loss) from continuing operations, net of tax	 	$	(14,795	)	 	$	6,855	 	
Discontinued operations, net of tax	 	 	(340	)	 	 	(12,869	)	
 	 	 	 	 	 	 	
Net loss attributable to common shareholders	 	$	(15,135	)	 	$	(6,014	)	

Exhibit 99.2
Last updated 4/29/11
Pinnacle West Capital Corporation
Quarterly Consolidated Statistical Summary
Periods Ended March 31, 2011 and 2010
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	3 Months Ended March	 	
Line	 	 	 	2011	 	 	2010	 	 	Incr (Decr)	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	EARNINGS CONTRIBUTION BY SUBSIDIARY ($ Millions)	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
1	 	Arizona Public Service	 	$	(7	)	 	$	16	 	 	$	(23	)	
2	 	APS Energy Services	 	 	1	 	 	 	—	 	 	 	1	 	
3	 	SunCor	 	 	—	 	 	 	—	 	 	 	—	 	
4	 	El Dorado	 	 	—	 	 	 	—	 	 	 	—	 	
5	 	Parent Company	 	 	(3	)	 	 	(4	)	 	 	1	 	

6	 	Income From Continuing Operations	 	 	(9	)	 	 	12	 	 	 	(21	)	

 	 	Income (Loss) From Discontinued Operations — Net of Tax	 	 	 	 	 	 	 	 	 	 	 	 	
7	 	SunCor	 	 	(1	)	 	 	(21	)	 	 	20	 	
8	 	Other	 	 	—	 	 	 	8	 	 	 	(8	)	
 	 	 	 	 	 	 	 	 	 	 	 	
9	 	Total	 	 	(1	)	 	 	(13	)	 	 	12	 	

10	 	Net Income	 	 	(10	)	 	 	(1	)	 	 	(9	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
11	 	Less: Net Income (Loss) Attributable to Noncontrolling Interests	 	 	5	 	 	 	5	 	 	 	—	 	

12	 	Net Income Attributable to Common Shareholders	 	$	(15	)	 	$	(6	)	 	$	(9	)	

 	 	EARNINGS PER SHARE BY SUBSIDIARY — DILUTED	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
13	 	Arizona Public Service	 	$	(0.06	)	 	$	0.16	 	 	$	(0.22	)	
14	 	APS Energy Services	 	 	—	 	 	 	—	 	 	 	—	 	
15	 	SunCor	 	 	—	 	 	 	—	 	 	 	—	 	
16	 	El Dorado	 	 	—	 	 	 	—	 	 	 	—	 	
17	 	Parent Company	 	 	(0.03	)	 	 	(0.04	)	 	 	0.01	 	

18	 	Income From Continuing Operations	 	 	(0.09	)	 	 	0.12	 	 	 	(0.21	)	

 	 	Income (Loss) From Discontinued Operations — Net of Tax	 	 	 	 	 	 	 	 	 	 	 	 	
19	 	SunCor	 	 	—	 	 	 	(0.21	)	 	 	0.21	 	
20	 	Other	 	 	—	 	 	 	0.08	 	 	 	(0.08	)	
 	 	 	 	 	 	 	 	 	 	 	 	
21	 	Total	 	 	—	 	 	 	(0.13	)	 	 	0.13	 	

22	 	Net Income	 	 	(0.09	)	 	 	(0.01	)	 	 	(0.08	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
23	 	Less: Net Income (Loss) Attributable to Noncontrolling Interests	 	 	0.05	 	 	 	0.05	 	 	 	—	 	

24	 	Net Income Attributable to Common Shareholders	 	$	(0.14	)	 	$	(0.06	)	 	$	(0.08	)	

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
25	 	BOOK VALUE PER SHARE	 	$	33.31	 	 	$	31.65	 	 	$	1.66	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	COMMON SHARES OUTSTANDING (Thousands)	 	 	 	 	 	 	 	 	 	 	 	 	
26	 	Average — Diluted	 	 	108,832	 	 	 	101,474	 	 	 	7,358	 	
27	 	End of Period	 	 	109,011	 	 	 	101,534	 	 	 	7,477	 	

See Glossary of Terms.	 	Page 1 of 4	

 

Last updated 4/29/11
Pinnacle West Capital Corporation
Quarterly Consolidated Statistical Summary
Periods Ended March 31, 2011 and 2010
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	3 Months Ended March	 	
Line	 	 	 	2011	 	 	2010	 	 	Incr (Decr)	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	ELECTRIC OPERATING REVENUES (Dollars in Millions)	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	REGULATED ELECTRICITY SEGMENT	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Retail	 	 	 	 	 	 	 	 	 	 	 	 	
28	 	Residential	 	$	273	 	 	$	267	 	 	$	6	 	
29	 	Business	 	 	298	 	 	 	289	 	 	 	9	 	
 	 	 	 	 	 	 	 	 	 	 	 	
30	 	Total retail	 	 	571	 	 	 	556	 	 	 	15	 	
 	 	Wholesale revenue on delivered electricity	 	 	 	 	 	 	 	 	 	 	 	 	
31	 	Traditional contracts	 	 	11	 	 	 	18	 	 	 	(7	)	
32	 	Off-system sales	 	 	18	 	 	 	16	 	 	 	2	 	
33	 	Transmission for others	 	 	8	 	 	 	8	 	 	 	(0	)	
34	 	Other miscellaneous services	 	 	40	 	 	 	13	 	 	 	27	 	
 	 	 	 	 	 	 	 	 	 	 	 	
35	 	Total regulated operating electricity revenues	 	 	647	 	 	 	611	 	 	 	36	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	MARKETING AND TRADING	 	 	 	 	 	 	 	 	 	 	 	 	
36	 	Electricity and other commodity sales	 	 	—	 	 	 	—	 	 	 	—	 	
 	 	 	 	 	 	 	 	 	 	 	 	
37	 	Total operating electric revenues	 	$	647	 	 	$	611	 	 	$	36	 	

 	 	ELECTRIC SALES (GWH)	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	REGULATED ELECTRICITY SEGMENT	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Retail sales	 	 	 	 	 	 	 	 	 	 	 	 	
38	 	Residential	 	 	2,652	 	 	 	2,575	 	 	 	77	 	
39	 	Business	 	 	3,274	 	 	 	3,167	 	 	 	107	 	
 	 	 	 	 	 	 	 	 	 	 	 	
40	 	Total retail	 	 	5,926	 	 	 	5,742	 	 	 	185	 	
 	 	Wholesale electricity delivered	 	 	 	 	 	 	 	 	 	 	 	 	
41	 	Traditional contracts	 	 	143	 	 	 	156	 	 	 	(13	)	
42	 	Off-system sales	 	 	647	 	 	 	609	 	 	 	38	 	
43	 	Retail load hedge management	 	 	31	 	 	 	201	 	 	 	(170	)	
 	 	 	 	 	 	 	 	 	 	 	 	
44	 	Total regulated electricity	 	 	6,747	 	 	 	6,707	 	 	 	39	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	MARKETING AND TRADING	 	 	 	 	 	 	 	 	 	 	 	 	
45	 	Wholesale sales of electricity	 	 	—	 	 	 	—	 	 	 	—	 	
 	 	 	 	 	 	 	 	 	 	 	 	
46	 	Total electric sales	 	 	6,747	 	 	 	6,707	 	 	 	39	 	

 	 	POWER SUPPLY ADJUSTOR (“PSA”)
— REGULATED ELECTRICITY SEGMENT
(Dollars in Millions)	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
47	 	Deferred fuel and purchased power regulatory asset/(liability) — beginning balance	 	$	(58	)	 	$	(87	)	 	$	29	 	
48	 	Deferred fuel and purchased power costs — current period	 	 	(50	)	 	 	(44	)	 	 	(6	)	
49	 	Interest on deferred fuel	 	 	—	 	 	 	—	 	 	 	—	 	
50	 	Amounts refunded/(recovered) through revenues	 	 	31	 	 	 	26	 	 	 	5	 	
 	 	 	 	 	 	 	 	 	 	 	 	
51	 	Deferred fuel and purchased power regulatory asset/(liability) — ending balance	 	$	(77	)	 	$	(105	)	 	$	28	 	

 	 	 	
See Glossary of Terms.	 	Page 2 of 4	

 

Last updated 4/29/11
Pinnacle West Capital Corporation
Quarterly Consolidated Statistical Summary
Periods Ended March 31, 2011 and 2010
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	3 Months Ended March	 	
Line	 	 	 	2011	 	 	2010	 	 	Incr (Decr)	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	AVERAGE ELECTRIC CUSTOMERS	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Retail customers	 	 	 	 	 	 	 	 	 	 	 	 	
52	 	Residential	 	 	999,692	 	 	 	995,053	 	 	 	4,639	 	
53	 	Business	 	 	125,591	 	 	 	125,397	 	 	 	194	 	
 	 	 	 	 	 	 	 	 	 	 	 	
54	 	Total	 	 	1,125,283	 	 	 	1,120,450	 	 	 	4,833	 	
55	 	Wholesale customers	 	 	47	 	 	 	51	 	 	 	(4	)	
 	 	 	 	 	 	 	 	 	 	 	 	
56	 	Total customers	 	 	1,125,330	 	 	 	1,120,501	 	 	 	4,829	 	

57	 	Customer growth (% over prior year)	 	 	0.4	%	 	 	0.6	%	 	 	(0.2	)%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	RETAIL SALES (GWH) —
WEATHER NORMALIZED	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
58	 	Residential	 	 	2,612	 	 	 	2,598	 	 	 	14	 	
59	 	Business	 	 	3,264	 	 	 	3,205	 	 	 	58	 	
 	 	 	 	 	 	 	 	 	 	 	 	
60	 	Total	 	 	5,876	 	 	 	5,804	 	 	 	72	 	

 	 	RETAIL USAGE
(KWh/Average Customer)	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
61	 	Residential	 	 	2,653	 	 	 	2,588	 	 	 	65	 	
62	 	Business	 	 	26,071	 	 	 	25,255	 	 	 	816	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	RETAIL USAGE —
WEATHER NORMALIZED
(KWh/Average Customer)	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
63	 	Residential	 	 	2,613	 	 	 	2,611	 	 	 	2	 	
64	 	Business	 	 	25,987	 	 	 	25,563	 	 	 	424	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	ELECTRICITY DEMAND (MW)	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
65	 	Native load peak demand	 	 	4,814	 	 	 	3,925	 	 	 	888	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	WEATHER INDICATORS — RESIDENTIAL	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Actual	 	 	 	 	 	 	 	 	 	 	 	 	
66	 	Cooling degree-days	 	 	—	 	 	 	—	 	 	 	—	 	
67	 	Heating degree-days	 	 	587	 	 	 	501	 	 	 	86	 	
68	 	Average humidity	 	 	—	 	 	 	—	 	 	 	—	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	10-Year Averages	 	 	 	 	 	 	 	 	 	 	 	 	
69	 	Cooling degree-days	 	 	—	 	 	 	—	 	 	 	—	 	
70	 	Heating degree-days	 	 	500	 	 	 	500	 	 	 	—	 	
71	 	Average humidity	 	 	—	 	 	 	—	 	 	 	—	 	

See Glossary of Terms.	 	Page 3 of 4	

 

Last updated 4/29/11
Pinnacle West Capital Corporation
Quarterly Consolidated Statistical Summary
Periods Ended March 31, 2011 and 2010
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	3 Months Ended March	 	
Line	 	 	 	2011	 	 	2010	 	 	Incr (Decr)	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	ENERGY SOURCES (GWH)	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Generation production	 	 	 	 	 	 	 	 	 	 	 	 	
72	 	Nuclear	 	 	2,448	 	 	 	2,365	 	 	 	84	 	
73	 	Coal	 	 	2,950	 	 	 	3,007	 	 	 	(58	)	
74	 	Gas, oil and other	 	 	839	 	 	 	816	 	 	 	23	 	
 	 	 	 	 	 	 	 	 	 	 	 	
75	 	Total generation production	 	 	6,237	 	 	 	6,188	 	 	 	49	 	
 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Purchased power	 	 	 	 	 	 	 	 	 	 	 	 	
76	 	Firm load	 	 	593	 	 	 	471	 	 	 	122	 	
77	 	Marketing and trading	 	 	283	 	 	 	421	 	 	 	(138	)	
 	 	 	 	 	 	 	 	 	 	 	 	
78	 	Total purchased power	 	 	876	 	 	 	892	 	 	 	(16	)	
 	 	 	 	 	 	 	 	 	 	 	 	
79	 	Total energy sources	 	 	7,113	 	 	 	7,080	 	 	 	33	 	

 	 	POWER PLANT PERFORMANCE	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Capacity Factors	 	 	 	 	 	 	 	 	 	 	 	 	
80	 	Nuclear	 	 	99	%	 	 	96	%	 	 	3	%	
81	 	Coal	 	 	78	%	 	 	80	%	 	 	(2	)%	
82	 	Gas, oil and other	 	 	12	%	 	 	11	%	 	 	1	%	
83	 	System average	 	 	47	%	 	 	46	%	 	 	1	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	ECONOMIC INDICATORS	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Building Permits — Metro Phoenix (a)	 	 	 	 	 	 	 	 	 	 	 	 	
84	 	Single-family	 	 	737	 	 	 	1,150	 	 	 	(413	)	
85	 	Multi-family	 	 	62	 	 	 	253	 	 	 	(191	)	
 	 	 	 	 	 	 	 	 	 	 	 	
86	 	Total	 	 	799	 	 	 	1,403	 	 	 	(604	)	

 	 	Arizona Job Growth (b)	 	 	 	 	 	 	 	 	 	 	 	 	
87	 	Payroll job growth (% over prior year)	 	 	(0.1	)%	 	 	(4.4	)%	 	 	4.3	%	
88	 	Unemployment rate
(%, seasonally adjusted)	 	 	9.6	%	 	 	10.2	%	 	 	(0.6	)%	
 
Sources:
 	 	 	
(a)	 	Arizona Real Estate Center, Arizona State University W.P. Carey College of Business	
 		
(b)	 	Arizona Department of Economic Security	

See Glossary of Terms.	 	Page 4 of 4	

Exhibit 99.3

1st Quarter 2011 Results	

 

Forward-Looking Statements This presentation contains forward-looking statements based on current expectations, including statements regarding our 2011 earnings outlook. These forward-looking statements are often identified by words such as "estimate," "predict," "may," "believe," "plan," "expect," "require," "intend," "assume" and similar words. Because actual results may differ materially from expectations, we caution you not to place undue reliance on these statements. A number of factors could cause future results to differ materially from historical results, or from outcomes currently expected or sought by Pinnacle West or APS. These factors include, but are not limited to: our ability to achieve timely and adequate rate recovery of our costs, including returns on debt and equity capital; our ability to manage capital expenditures and other costs while maintaining reliability and customer service levels; variations in demand for electricity, including those due to weather, the general economy, customer and sales growth (or decline), and the effects of energy conservation measures and distributed generation; power plant performance and outages; volatile fuel and purchased power costs; fuel and water supply availability; regulatory and judicial decisions, developments and proceedings; new legislation or regulation including those relating to greenhouse gas emissions, renewable energy mandates, nuclear plant operation and energy efficiency standards; our ability to meet renewable energy requirements and recover related costs; risks inherent in the operation of nuclear facilities, including spent fuel disposal uncertainty; competition in retail and wholesale power markets; the duration and severity of the economic decline in Arizona and current real estate market conditions; the cost of debt and equity capital and the ability to access capital markets when required; changes to our credit ratings; the investment performance of the assets of our nuclear decommissioning trust, pension, and other postretirement benefit plans and the resulting impact on future funding requirements; the liquidity of wholesale power markets and the use of derivative contracts in our business; potential shortfalls in insurance coverage; new accounting requirements or new interpretations of existing requirements; generation, transmission and distribution facility and system conditions and operating costs; the ability to meet the anticipated future need for additional baseload generation and associated transmission facilities in our region; the willingness or ability of our counterparties, power plant participants and power plant land owners to meet contractual or other obligations or extend the rights for continued power plant operations; technological developments affecting the electric industry; and restrictions on dividends or other burdensome provisions in our credit agreements and Arizona Corporation Commission orders. These and other factors are discussed in Risk Factors described in Item 1A of the Pinnacle West/APS Annual Report on Form 10-K for the fiscal year ended December 31, 2010, which you should review carefully before placing any reliance on our financial statements, disclosures or earnings outlook. Neither Pinnacle West nor APS assumes any obligation to update these statements, even if our internal estimates change, except as required by law. 2 First Quarter 2011	

 

In this presentation, references to net income and earnings per share refer to amounts attributable to common shareholders.We present "regulated electricity segment gross margin" per diluted share of common stock. Regulated electricity segment gross margin refers to regulated electricity segment revenues less regulated electricity segment fuel and purchased power expenses. Regulated electricity segment gross margin is a "non-GAAP financial measure," as defined in accordance with SEC rules. The Appendix contains a reconciliation of this non-GAAP financial measure to the referenced revenue and expense line items on our Condensed Consolidated Statements of Income, which are the most directly comparable financial measures calculated and presented in accordance with GAAP. We view regulated electricity segment gross margin as an important performance measure of the core profitability of our operations. We refer to "on-going earnings" in this presentation, which is also a non-GAAP financial measure. We believe on-going earnings provide investors with a useful indicator of our results that is comparable among periods because it excludes the effects of unusual items that may occur on an irregular basis. Reconciliations of on- going earnings to our net income available to common shareholders are included in this presentation.Investors should note that these non-GAAP financial measures may involve judgments by management, including whether an item is classified as an unusual item. These measures are key components of our internal financial reporting and are used by our management in analyzing the operations of our business. We believe that investors benefit from having access to the same financial measures that management uses. Amounts Attributable to Common Shareholders and Non-GAAP Financial Measures 3 First Quarter 2011	

 

CFO Agenda 1st Quarter ResultsArizona Economic Outlook2011 Earnings Guidance 4 First Quarter 2011	

 

Consolidated EPS Comparisons 1st Quarter 2011 vs. 1st Quarter 2010 Per Share Per Share Net Income (Loss) On-Going Earnings (Loss) (CHART) Per Share 5 First Quarter 2011	

 

Non-GAAP EPS Reconciliation 1st Quarter 2011 vs. 1st Quarter 2010 1st Quarter 2011 vs. 1st Quarter 2010 1st Quarter 2011 vs. 1st Quarter 2010 6 First Quarter 2011	

 

Regulated electricity gross margin*$0.04 Prior-year favorable tax matter resolution$(0.08) O&M*$(0.10) NetDecrease$(0.21) = * Excludes costs, and offsetting operating revenues, associated with renewable energy, demand-side management and similar regulatory programs, as well as settlement of prior-period Four Corners transmission rights-of-way. See non-GAAP reconciliation for regulated electricity gross margin in Appendix. On-Going EPS Variances 1st Quarter 2011 vs. 1st Quarter 2010 Other, net$(0.01) Infrastructure- related costs$(0.06) 7 First Quarter 2011	

 

Regulated Electricity Gross Margin Drivers 1st Quarter 2011 vs. 1st Quarter 2010 NetIncrease$0.04 = Higher retailusage$0.03 Weathereffects$0.03 See non-GAAP reconciliation in Appendix. Other, net$(0.02) 8 First Quarter 2011 Lineextension revenues$0.01 Transmissionrate decrease$(0.01)	

 

Fossil Generation Planned Outage O&M Quarterly Expense as Percent of Annual Total 9 First Quarter 2011(CHART)	

 

Arizona Economic Indicators Employment & Retail Sales Month-to-Month Change Non-Farm Job Growth (CHART) '05 '06 '07 '08 '09 '11 10 First Quarter 2011 Retail Sales (CHART) Year-over-Year Change '05 '06 '07 '08 '09 '10 '10 '11	

 

Consolidated On-Going EPS Outlook (CHART) Per Share $3.00 - $3.15 See key factors and assumptions in Appendix. 11 First Quarter 2011	

 

CEO Discussion Agenda 12 First Quarter 2011 Renewables and Generation InvestmentsEnvironmental ComplianceRate RegulationOperations Update Looking Ahead	

 

Appendix	

 

APS AZ Sun Program 100 MW photovoltaic solar plants to be owned by APSUp to $500 million capital investmentIn service 2011 through 2014Constructive rate recoveryCommitments to date:83 MW with $384 million capital investmentProject summary:Additional procurement initiatives underway Name Net Capacity Target Operation Date Paloma 17 MW 2011 Cotton Center 17 MW 2011 Hyder Phase I 11 MW 2011 Hyder Phase II 5 MW 2012 Chino Valley 19 MW 2012 Luke Air Force Base 14 MW 2012/2013 14 First Quarter 2011	

 

Four Corners Power Plant Transactions Acquire Southern California Edison's 739 MW interest in Units 4 & 5 and shut down 560 MW Units 1 - 3Purchase price: $294 million Acquisition target date: late 2012 Estimated environmental compliance investment: $300 millionFinance with mix of debt and equityArizona, California and other regulatory approvals requiredACC Procedural ScheduleMay 31, 2011 Staff/Intervenor direct testimony dueJune 22, 2011 APS rebuttal testimony dueJuly 14, 2011 Hearing to commence 15 First Quarter 2011	

 

2011 Retail Rate Case Prefiling Notice Notice filed February 1, 2011Key rate case proposals outlined in noticeRevenue-per-customer decoupling mechanismPost test-year plant additions through rate effective dateInfrastructure tracking adjustment mechanismGeneration plant capacity additionsEnvironmental compliance investmentsLine extension policy changesAccounting to revert to contributions in aid of construction or customer advancesProposal to implement free footage allowance and other measures dependent on customer classCost of capital estimates54% equity / 46% debt capital structure11% return on equity, 6.4% cost of debt100% Power Supply AdjustorSecond 50 MW of AZ Sun programs to be recovered through RES consistent with treatment for first 50 MWAmounts not disclosed for rate request and other financial measures 16 First Quarter 2011	

 

Electricity gross margin (operating revenues,* net of fuel and purchased power expenses) about $2.05 billion to $2.10 billion; Retail customer growth about 1 percent;Weather-normalized retail electricity sales volume growth about 1 percent taking into account effects of the Company's energy efficiency initiatives;Normal weather for year;Operating expenses (operations and maintenance,* depreciation and amortization, and taxes other than income taxes) about $1.32 billion to $1.35 billion;Interest expense, net of allowances for borrowed and equity funds used during construction, about $200 million to $210 million;Net income attributable to noncontrolling interests about $20 million to $25 million;Effective tax rate about 34 percent;Full-year effect of 2010 equity issuance; andAPS earnings to contribute substantially all of consolidated earnings. 2011 On-Going EPS Guidance Key Factors and Assumptions as of April 29, 2011 17 First Quarter 2011 * Excludes O&M, and offsetting operating revenues, associated with renewable energy, demand-side management and similar regulatory programs, as well as $28 million pretax related to settlement of prior-period Four Corners transmission rights-of-way.	

 

Renewable Energy, Demand-Side Management and Similar Regulatory Expenses* and Similar Regulatory Expenses* and Similar Regulatory Expenses* * O&M expenses related to Renewable Energy Standard and similar regulatory programs are offset by comparable revenue amounts. 2008 Pretax Millions 2009 2010 2011 18 First Quarter 2011	

 

Quarterly Mark-to-Market on Hedge Contracts* Hedge Contracts* Hedge Contracts* PretaxMillions * Related to APS 10% share under Power Supply Adjustor (PSA), net of related deferrals. 2009 2010 2011 19 First Quarter 2011	

 

Gross Margin Effects of Weather Variances Versus Normal* Variances Versus Normal* Variances Versus Normal* 2009 2010 PretaxMillions 2011 *All periods recalculated to conform to current presentation. 20 First Quarter 2011	

 

Non-GAAP Measure Reconciliation Regulated Electricity Segment Gross Margin 21 First Quarter 2011