8-K

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):    August 2, 2016

Commission File Number	Exact Name of Registrant as Specified in Charter; State of Incorporation; Address and Telephone Number	IRS Employer 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:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ 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.

The following information is furnished pursuant to Item 2.02.

On August 2, 2016, Pinnacle West Capital Corporation (the “Company” or “Pinnacle West”) issued a press release regarding its financial results for the fiscal quarter ended June 30, 2016 and its earnings outlook for 2016. A copy of the press release is attached hereto as Exhibit 99.1.

Item 7.01. Regulation FD Disclosure.

The following information is furnished pursuant to Item 7.01.

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 August 2, 2016. This information contains Company operating results for the fiscal quarter ended June 30, 2016 and is attached hereto as Exhibits 99.2 and 99.3. The statistical 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 August 2, 2016.
99.2	Pinnacle West APS	Pinnacle West Capital Corporation quarterly consolidated statistical summary for the three-month and six-month periods ended June 30, 2016 and 2015.
99.3	Pinnacle West APS	Pinnacle West Capital Corporation Second Quarter 2016 Results slide presentation accompanying August 2, 2016 conference call.

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: August 2, 2016	By: /s/ James R. Hatfield
	James R. Hatfield
	Executive Vice President and
	Chief Financial Officer
	ARIZONA PUBLIC SERVICE COMPANY
	(Registrant)
Dated: August 2, 2016	By: /s/ James R. Hatfield
	James R. Hatfield
	Executive Vice President and
	Chief Financial Officer

Exhibit Index

Exhibit No.	Registrant(s)	Description
99.1	Pinnacle West APS	Earnings News Release issued on August 2, 2016.
99.2	Pinnacle West APS	Pinnacle West Capital Corporation quarterly consolidated statistical summary for the three-month and six-month periods ended June 30, 2016 and 2015.
99.3	Pinnacle West APS	Pinnacle West Capital Corporation Second Quarter 2016 Results slide presentation accompanying August 2, 2016 conference call.

EX-99.1

FOR IMMEDIATE RELEASE		August 2, 2016
Media Contact: Analyst Contact:	Alan Bunnell, (602) 250-3376 Ted Geisler, (602) 250-3200 Chalese Haraldsen, (602) 250-5643
Website:	pinnaclewest.com

PINNACLE WEST REPORTS 2016 SECOND-QUARTER RESULTS

• Hotter-than-normal weather positively impacted quarterly results

• Residential sales and customer growth improved as Arizona’s economy keeps expanding

• Investments in planned fossil power plant maintenance and higher benefit costs contributed to increased O&M expenses versus a year ago

• Full-year 2016 earnings guidance maintained

PHOENIX - Pinnacle West Capital Corp. (NYSE: PNW) today reported consolidated net income attributable to common shareholders of $121.3 million, or $1.08 per diluted share of common stock, for the quarter ended June 30, 2016. This result compares with earnings of $122.9 million, or $1.10 per share, in the same 2015 period.

“Hotter-than-normal weather - led by the warmest June on record - positively impacted our earnings compared to the year-ago period,” said Pinnacle West Chairman, President and Chief Executive Officer Don Brandt. “The favorable weather helped partially offset an increase in operations and maintenance expenses at a time when we are investing significant resources in planned fossil power plant overhauls and maintenance, as well as new customer information and outage management systems that will improve operational efficiencies, enhance reliability, and create a modernized energy system for all our customers.”

In total, O&M expenses during the 2016 second quarter decreased results by $0.19 per share compared with the prior-year-period. Quarter-over-quarter impacts primarily included the previously mentioned increase in planned fossil plant maintenance and higher employee benefit costs.

The favorable weather contributed $0.09 per share to the company’s bottom line compared to the year-ago period. Highlighted by record June heat, which helped offset a relatively mild April and May, the average high temperature in the 2016 second quarter was 94.5 degrees, while the average high temperature in the same period a year ago was 94.2 degrees. As a result, residential cooling degree-days (a measure of the effects of weather) were 4 percent higher than last year’s second quarter, which was impacted by mild weather and one of the coolest Mays on record. Cooling degree-days also were more than 2 percent better than normal 10-year historical averages.

In addition to the effects of weather, the 2016 second-quarter results comparison was positively influenced by the following major factors:

• Higherretail electricity sales -excluding the effects of weather variations, but including the effects of customer conservation, energy efficiency programs and distributed renewable generation - improved results $0.04 per share. Underlining an improving Arizona economy,total customer growth was 1.4 percent quarter-over-quarter, and mirrors recent census population data that indicates Phoenix is one of the five fastest-growing cities in the U.S.

• Adjustment mechanisms improved earnings by $0.04 per share compared to the 2015 second quarter. These adjustors included an increase in transmission revenues; revenue from the Company’s AZ Sun Program; and higher lost fixed cost recovery (LFCR) revenue.

Financial Outlook

For 2016, the Company continues to expect its on-going consolidated earnings will be within a range of $3.90 to $4.10 per diluted share, on a weather-normalized basis, and to achieve a consolidated earned return on average common equity of more than 9.5 percent.

Key factors and assumptions underlying the 2016 outlook can be found in the second-quarter 2016 earnings presentation slides on the Company’s website at pinnaclewest.com/investors.

Conference Call and Webcast

Pinnacle West invites interested parties to listen to the live webcast of management’s conference call to discuss the Company’s 2016 second-quarter results, as well as recent developments, at 12 noon ET (9 a.m. AZ time) today, August 2. 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 11:59 p.m. (ET), Tuesday, August 9, 2016, by calling (877) 660-6853 in the U.S. and Canada or (201) 612-7415 internationally and entering conference ID number 13639544.

Pinnacle West Capital Corp., an energy holding company based in Phoenix, has consolidated assets of more than $15 billion, about 6,200 megawatts of generating capacity and 6,400 employees in Arizona and New Mexico. Through its principal subsidiary, Arizona Public Service, the Company provides retail electricity service to nearly 1.2 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.

NON-GAAP FINANCIAL INFORMATION

In this press release, we refer to “on-going earnings.” On-going earnings is a “non-GAAP financial measure,” as defined in accordance with SEC rules. We believe on-going earnings provide investors with useful indicators of our results that are comparable among periods because they exclude 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, or similar concepts, to measure our performance internally in reports for management.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements based on our current expectations, including statements regarding our earnings guidance and financial outlook and goals. 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 manage capital expenditures and operations and maintenance costs while maintaining high reliability and customer service levels;

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

• power plant and transmission system performance and outages;

• competition in retail and wholesale power markets;

• regulatory and judicial decisions, developments and proceedings;

• new legislation, ballot initiatives and regulation, including those relating to environmental requirements, regulatory policy, nuclear plant operations and potential deregulation of retail electric markets;

• fuel and water supply availability;

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

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

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

• current and future economic conditions in Arizona, including in real estate markets;

• the development of new technologies which may affect electric sales or delivery;

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

• environmental and other concerns surrounding coal-fired generation, including regulation of greenhouse gas emissions;

• volatile fuel and purchased power costs;

• 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 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; and

• restrictions on dividends or other provisions in our credit agreements and Arizona Corporation Commission orders.

These and other factors are discussed in Risk Factors described in Part 1, Item 1A of the Pinnacle West/APS Annual Report on Form 10-K for the fiscal year ended December 31, 2015, which readers should review carefully before placing any reliance on our financial statements or

disclosures. 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

CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

(dollars and shares in thousands, except per share amounts)

		THREE MONTHS ENDED		SIX MONTHS ENDED
		JUNE 30,		JUNE 30,
		2016	2015	2016	2015
Operating Revenues		$ 915,394	$ 890,648	$ 1,592,561	$ 1,561,867
Operating Expenses
	Fuel and purchased power	274,848	281,477	496,133	504,714
	Operations and maintenance	242,279	210,965	485,474	425,909
	Depreciation and amortization	123,073	122,739	242,549	243,688
	Taxes other than income taxes	42,117	43,032	84,618	86,248
	Other expenses	1,329	462	1,877	1,651
	Total	683,646	658,675	1,310,651	1,262,210
Operating Income		231,748	231,973	281,910	299,657
Other Income (Deductions)
	Allowance for equity funds used during construction	10,369	9,345	20,885	18,569
	Other income	197	175	314	410
	Other expense	(2,842)	(2,609)	(6,880)	(6,895)
	Total	7,724	6,911	14,319	12,084
Interest Expense
	Interest charges	52,849	48,328	103,593	96,727
	Allowance for borrowed funds used during construction	(5,301)	(4,322)	(10,528)	(8,538)
	Total	47,548	44,006	93,065	88,189
Income Before Income Taxes		191,924	194,878	203,164	223,552
Income Taxes		65,742	67,371	67,656	75,318
Net Income		126,182	127,507	135,508	148,234
Less: Net income attributable to noncontrolling interests		4,874	4,605	9,747	9,210
Net Income Attributable To Common Shareholders		$ 121,308	$ 122,902	$ 125,761	$ 139,024
Weighted-Average Common Shares Outstanding - Basic		111,368	110,986	111,336	110,958
Weighted-Average Common Shares Outstanding - Diluted		112,004	111,460	111,930	111,426
Earnings Per Weighted-Average Common Share Outstanding
	Net income attributable to common shareholders - basic	$ 1.09	$ 1.11	$ 1.13	$ 1.25
	Net income attributable to common shareholders - diluted	$ 1.08	$ 1.10	$ 1.12	$ 1.25

EX-99.2

Last Updated 8/2/2016 Line 2016 2015 Incr (Decr) 2016 2015 Incr (Decr) EARNINGS CONTRIBUTION BY SUBSIDIARY (Dollars in Millions) 1 Arizona Public Service 132$ 130$ 2$ 144$ 154$ (10)$ 2 El Dorado - - - - - - 3 Parent Company (6) (2) (4) (8) (6) (2) 4 Net Income 126 128 (2) 136 148 (12) 5 Less: Net Income Attributable to Noncontrolling Interests 5 5 - 10 9 1 6 Net Income Attributable to Common Shareholders 121$ 123$ (2)$ 126$ 139$ (13)$ EARNINGS PER SHARE BY SUBSIDIARY - DILUTED 7 Arizona Public Service 1.18$ 1.17$ 0.01$ 1.29$ 1.39$ (0.10)$ 8 El Dorado - - - - - - 9 Parent Company (0.06) (0.03) (0.03) (0.08) (0.06) (0.02) 10 Net Income 1.12 1.14 (0.02) 1.21 1.33 (0.12) 11 Less: Net Income Attributable to Noncontrolling Interests 0.04 0.04 - 0.09 0.08 0.01 12 Net Income Attributable to Common Shareholders 1.08$ 1.10$ (0.02)$ 1.12$ 1.25$ (0.13)$ 13 BOOK VALUE PER SHARE 41.24$ 39.63$ 1.61$ 41.24$ 39.63$ 1.61$ COMMON SHARES OUTSTANDING (Thousands) 14 Average - Diluted 112,004 111,460 544 111,930 111,426 504 15 End of Period - Basic 111,368 110,986 382 111,336 110,958 378 6 Months Ended June 30, Pinnacle West Capital Corporation Quarterly Consolidated Statistical Summary Periods Ended June 30, 2016 and 2015 3 Months Ended June 30, Page 1 of 4

Last Updated 8/2/2016 Line 2016 2015 Incr (Decr) 2016 2015 Incr (Decr) ELECTRIC OPERATING REVENUES (Dollars in Millions) Retail 16 Residential 453$ 423$ 30$ 751$ 717$ 34$ 17 Business 422 413 9 763 749 14 18 Total retail 875 836 39 1,514 1,466 48 Wholesale revenue on delivered electricity 19 Traditional contracts 2 4 (2) 4 6 (2) 20 Off-system sales 18 34 (16) 36 57 (21) 21 Native load hedge liquidation - - - - - - 22 Total wholesale 20 38 (18) 40 63 (23) 23 Transmission for others 5 7 (2) 14 15 (1) 24 Other miscellaneous services 10 9 1 18 16 2 25 Total electric operating revenues 910$ 890$ 20$ 1,586$ 1,560$ 26$ ELECTRIC SALES (GWH) Retail sales 26 Residential 3,313 3,143 170 5,821 5,560 261 27 Business 3,756 3,721 35 7,069 6,981 88 28 Total retail 7,069 6,864 205 12,890 12,541 349 Wholesale electricity delivered 29 Traditional contracts 12 71 (59) 29 111 (82) 30 Off-system sales 931 1,361 (430) 1,909 2,371 (462) 31 Retail load hedge management - - - - - - 32 Total wholesale 943 1,432 (489) 1,938 2,482 (544) 33 Total electric sales 8,012 8,296 (284) 14,828 15,023 (195) 3 Months Ended June 30, 6 Months Ended June 30, Pinnacle West Capital Corporation Quarterly Consolidated Statistical Summary Periods Ended June 30, 2016 and 2015 Page 2 of 4

Last Updated 8/2/2016 Line 2016 2015 Incr (Decr) 2016 2015 Incr (Decr) AVERAGE ELECTRIC CUSTOMERS Retail customers 34 Residential 1,057,620 1,042,275 15,345 1,060,686 1,045,615 15,071 35 Business 131,573 130,396 1,177 131,368 130,274 1,094 36 Total retail 1,189,193 1,172,671 16,522 1,192,054 1,175,889 16,165 37 Wholesale customers 46 49 (3) 45 47 (2) 38 Total customers 1,189,239 1,172,720 16,519 1,192,099 1,175,936 16,163 39 Total customer growth (% over prior year) 1.4% 1.2% 0.2% 1.4% 1.2% 0.2% RETAIL SALES (GWH) - WEATHER NORMALIZED 40 Residential 3,223 3,166 57 5,801 5,759 42 41 Business 3,704 3,762 (58) 6,997 6,963 34 42 Total 6,927 6,928 (1) 12,798 12,722 76 43 Retail sales (GWH) (% over prior year) - 0.7% (0.7)% 0.6% - 0.6% RETAIL USAGE (KWh/Average Customer) 44 Residential 3,132 3,015 117 5,488 5,318 170 45 Business 28,551 28,538 13 53,809 53,586 223 RETAIL USAGE - WEATHER NORMALIZED (KWh/Average Customer) 46 Residential 3,047 3,038 9 5,469 5,508 (39) 47 Business 28,152 28,849 (697) 53,265 53,445 (180) ELECTRICITY DEMAND (MW) 48 Native load peak demand 7,025 6,622 403 7,025 6,622 403 WEATHER INDICATORS - RESIDENTIAL Actual 49 Cooling degree-days 503 484 19 503 484 19 50 Heating degree-days 1 1 - 397 254 143 51 Average humidity 20% 24% (4)% 20% 24% (4)% 10-Year Averages 52 Cooling degree-days 491 491 - 491 491 - 53 Heating degree-days 9 9 - 489 489 - 54 Average humidity 15% 15% - 15% 15% - 3 Months Ended June 30, 6 Months Ended June 30, Pinnacle West Capital Corporation Quarterly Consolidated Statistical Summary Periods Ended June 30, 2016 and 2015 Page 3 of 4

Last Updated 8/2/2016 Line 2016 2015 Incr (Decr) 2016 2015 Incr (Decr) ENERGY SOURCES (GWH) Generation production 55 Nuclear 2,147 2,217 (70) 4,692 4,727 (35) 56 Coal 1,329 2,862 (1,533) 2,631 5,136 (2,505) 57 Gas, oil and other 2,432 1,428 1,004 4,300 2,459 1,841 58 Total generation production 5,908 6,533 (625) 11,623 12,322 (699) Purchased power 59 Firm load 2,219 2,002 217 3,546 3,258 288 60 Marketing and trading 265 105 160 343 189 154 61 Total purchased power 2,484 2,107 377 3,889 3,447 442 62 Total energy sources 8,392 8,640 (248) 15,512 15,769 (257) POWER PLANT PERFORMANCE Capacity Factors 63 Nuclear 86% 89% (3)% 94% 95% (1)% 64 Coal 36% 68% (32)% 36% 61% (25)% 65 Gas, oil and other 33% 24% 9% 29% 20% 9% 66 System average 43% 45% (2)% 43% 41% 2% ECONOMIC INDICATORS Building Permits (a) 67 Metro Phoenix 8,215 6,117 2,098 13,500 10,580 2,920 Arizona Job Growth (b) 68 Payroll job growth (% over prior year) 2.9% 2.2% 0.7% 2.2% 2.3% (0.1)% 69 Unemployment rate (%, seasonally adjusted) 5.6% 6.1% (0.5)% 6.1% 6.2% (0.1)% Sources: (a) U.S. Census Bureau (b) Arizona Department of Economic Security 6 Months Ended June 30, Pinnacle West Capital Corporation Quarterly Consolidated Statistical Summary Periods Ended June 30, 2016 and 2015 3 Months Ended June 30, Page 4 of 4

EX-99.3

Second Quarter 2016 SECOND QUARTER 2016 RESULTS August 2, 2016

Second Quarter 20162 FORWARD LOOKING STATEMENTS AND NON-GAAP FINANCIAL MEASURES This presentation contains forward-looking statements based on current expectations, including statements regarding our earnings guidance and financial outlook and goals. 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 manage capital expenditures and operations and maintenance costs while maintaining high reliability and customer service levels; variations in demand for electricity, including those due to weather seasonality, the general economy, customer and sales growth (or decline), and the effects of energy conservation measures and distributed generation; power plant and transmission system performance and outages; competition in retail and wholesale power markets; regulatory and judicial decisions, developments and proceedings; new legislation, ballet initiatives and regulation, including those relating to environmental requirements, regulatory policy, nuclear plant operations and potential deregulation of retail electric markets; fuel and water supply availability; our ability to achieve timely and adequate rate recovery of our costs, including returns on and of debt and equity capital investments; our ability to meet renewable energy and energy efficiency mandates and recover related costs; risks inherent in the operation of nuclear facilities, including spent fuel disposal uncertainty; current and future economic conditions in Arizona, including in real estate markets; the development of new technologies which may affect electric sales or delivery; the cost of debt and equity capital and the ability to access capital markets when required; environmental and other concerns surrounding coal-fired generation, including regulation of greenhouse gas emissions; volatile fuel and purchased power costs; 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 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; and restrictions on dividends or other provisions in our credit agreements and ACC orders. These and other factors are discussed in Risk Factors described in Part I, Item 1A of the Pinnacle West/APS Annual Report on Form 10-K for the fiscal year ended December 31, 2015, 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. In this presentation, references to net income and earnings per share (EPS) refer to amounts attributable to common shareholders. We present “gross margin” per diluted share of common stock. Gross margin refers to operating revenues less fuel and purchased power expenses. 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 Consolidated Statements of Income, which are the most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles in the United States of America (GAAP). We view 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 also provide a reconciliation to show the impacts associated with certain regulatory adjustments. We believe on-going earnings and these adjustments included in the reconciliation 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 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.

Second Quarter 20163 CONSOLIDATED EPS COMPARISON 2016 VS. 2015 $1.08 $1.10 2016 2015 2nd Quarter GAAP Net Income $1.08 $1.10 2nd Quarter On-Going Earnings $1.12 $1.25 2016 2015 Year-to-Date GAAP Net Income $1.12 $1.25 Year-to-Date On-Going Earnings

Second Quarter 20164 Gross Margin(1),(2) $0.21 ON-GOING EPS VARIANCES 2ND QUARTER 2016 VS. 2ND QUARTER 2015 Other, net $(0.01) Interest, net of AFUDC $(0.01) (1) Excludes costs and offsetting operating revenues, associated with renewable energy (excluding AZ Sun) and demand side management programs. (2) Adjusted to exclude Palo Verde system benefits charge. See non-GAAP reconciliation. O&M(1) $(0.19) 2Q 2015 2Q 2016 Gross Margin Weather $0.09 Sales $0.04 Transmission Line Sale $0.03 Transmission $0.02 LFCR $0.01 AZ Sun $0.01 Other, net $0.01 $1.10 $1.08 D&A(2) $(0.02)

Second Quarter 20165 ECONOMIC INDICATORS Arizona and Metro Phoenix remain attractive places to live and do business Single Family & Multifamily Housing Permits Maricopa County Job Growth (Total Nonfarm) – Metro Phoenix 0.0% 2.5% 5.0% '11 '12 '13 '14 '15 '16 Metro Phoenix U.S. YoY Change Construction, business services, financial services and healthcare adding jobs at a rate above 4% Phoenix ranked 1st in tech industry job growth over last 2 years (tied with San Francisco) - CBRE September 2015 Arizona ranked 1st for projected job growth - Forbes September 2015 E 0 10,000 20,000 30,000 40,000 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 Single Family Multifamily May Metro Phoenix growth rate 3rd fastest among top 15 metro areas - U.S. Census Bureau March 2016 Housing construction on pace to have its best year since 2007

Second Quarter 20166 2016 ON-GOING EPS GUIDANCE Key Factors & Assumptions as of August 2, 2016 2016 Electricity gross margin* (operating revenues, net of fuel and purchased power expenses) $2.34 – $2.39 billion • Retail customer growth about 1.5-2.5% • Weather-normalized retail electricity sales volume about 0-1.0% to prior year taking into account effects of customer conservation, energy efficiency and distributed renewable generation initiatives • Assumes normal weather Operating and maintenance* $825 - $845 million Other operating expenses (depreciation and amortization including impacts related to Palo Verde sale leaseback, and taxes other than income taxes) $645 - $665 million Interest expense, net of allowance for borrowed and equity funds used during construction (Total AFUDC $50 million) $155 - $165 million Net income attributable to noncontrolling interests ~$20 million Effective tax rate 34-35% Average diluted common shares outstanding ~112.0 million On-Going EPS Guidance $3.90 - $4.10 * Excludes O&M of $82 million, and offsetting revenues, associated with renewable energy and demand side management programs.

Second Quarter 2016 APPENDIX

Second Quarter 20168 2016 KEY DATES ACC Key Dates Docket # Q1 Q2 Q3 Q4 Key Recurring Regulatory Filings Lost Fixed Cost Recovery E-01345A-11-0224 Jan 15 Transmission Cost Adjustor E-01345A-11-0224 May 15 Renewable Energy Adjustor E-01345A-16-0238 Jul 1 APS Rate Case E-01345A-16-0036 Jan 29: Notice of Intent Filing Jun 1: Initial filing Dec 21: Direct testimony Resource Planning and Procurement E-00000V-15-0094 Feb 9: Stakeholder meeting Mar 1: Preliminary IRP filed Jul 18: Prelim IRP workshop Oct 1: File updates to preliminary IRP* Reducing System Peak Demand Costs E-00000J-16-0257 Aug 4: Initial workshop Value and Cost of Distributed Generation E-00000J- 14-0023 Feb 25: DG Methodologies & supporting testimony filed Apr 7: Rebuttal testimony and alternate proposals due Apr 15: Pre-hearing Apr 18: Hearing; Jun 8-9 Hearing Jun 13: Responses Due Jul 11: Initial briefs Aug 5: Reply briefs TBD: ALJ Order ACC Open Meetings - ACC Open Meetings Held Monthly * April 2017: Final IRP due Other Key Dates Docket # Q1 Q2 Q3 Q4 Arizona State Legislature n/a In session Jan 11- May 7 (Adjourned) Elections n/a Aug 30: Primary Nov 8: General All Source Request for Proposal (RFP) n/a Mar 11: RFP Issued Jun 9: Responses Due TBD

Second Quarter 20169 ARIZONA ELECTRIC UTILITIES GENERAL RATE CASES UNS Electric (93,000 customers) Docket # E-04204A-15-0142 Application filed May 5, 2015 Direct testimony - ex rate design, cost of service (Nov 6, 2015) Direct testimony - rate design, cost of service (Dec 9, 2015) Rebuttal testimony (Jan 19, 2016) Surrebuttal testimony (Feb 23, 2016) Rejoinder testimony (Feb 29, 2016) Prehearing (Feb 26, 2016) Hearing (Mar 1, 2016) Post hearing initial briefs (April 25, 2016) Reply briefs (May 11, 2016) ALJ recommended order and opinion (ROO) filed Jul 20, 2016 Exceptions to ROO due Jul 29, 2016 Tucson Electric Power Company (415,000 customers) Docket # E-01933A-15-0322 Application filed Nov 5, 2015 Direct testimony – ex rate design and cost of service (Jun 3, 2016) Direct testimony – rate design and cost of service (Jun 24, 2016) Rebuttal testimony (Jul 25, 2016) Surrebuttal testimony (Aug 18, 2016) Rejoinder testimony (Aug 25, 2016) Prehearing (Aug 25, 2016) Hearing (Aug 31, 2016) Sulphur Springs Valley Electric Cooperative (58,000 customers) Docket # E-01575A-15-0312 Application filed Aug 31, 2015 Direct testimony - ex rate design, cost of service (Mar 18, 2016) Direct testimony - rate design, cost of service (Apr 1, 2016) Rebuttal testimony (Apr 15, 2016) Surrebuttal testimony (May 4, 2016) Rejoinder (May 11, 2016) Prehearing (May 13, 2016) Hearing (May 17, 2016) – Concluded May 27 Trico Electric Cooperative (38,000 customers) Docket # E-01461A-15-0363 Application filed Oct 23, 2015 Direct testimony - ex rate design, cost of service (May 4, 2016) Direct testimony - rate design, cost of service (May 25, 2016) Rebuttal testimony (Jun 22, 2016) Surrebuttal testimony (Jul 8, 2016) Rejoinder (Jul 15, 2016) Prehearing (Jul 18, 2016) Direct settlement testimony (Jul 29, 2016) Reply settlement testimony (Aug 12, 2016) Hearing (Aug 17, 2016)

Second Quarter 201610 2016 APS RATE CASE APPLICATION • Filed June 1, 2016 • Propose new rates go into effect on July 1, 2017 • Docket Number: E-01345A-16-0036 • Additional details, including filing, can be found at http://www.azenergyfuture.com/rate-review/ Procedural Schedule Staff and Intervenor Direct Testimony (ex rate design) Staff and Intervenor Direct Testimony (rate design) APS Rebuttal Testimony Staff and Intervenor Surrebuttal Testimony APS Rejoinder Testimony Prehearing Conference Proposed Hearing Commencement Date December 21, 2016 January 27, 2017 February 17, 2017 March 10, 2017 March 17, 2017 March 20, 2017 March 22, 2017

Second Quarter 201611 2016 RATE CASE KEY FINANCIALS APS has requested a rate increase to become effective July 1, 2017 Test year ended December 31, 2015 Total Rate Base - Adjusted $8.01 Billion ACC Rate Base - Adjusted $6.77 Billion Allowed Return on Equity 10.5% Capital Structure Long-term debt 44.2% Common equity 55.8% Base Fuel Rate (¢/kWh) 2.9882 Post-test year plant period 18 months Overview of Rate Increase ($ in Millions) Total stated base rate increase (inclusive of existing adjustor transfers) $ 433.4 15.00% Less: Transfer to base rates of various adjustors already in effect (267.5) (9.26) Net Customer Bill Impact $ 165.9 5.74%

Second Quarter 201612 2016 RATE CASE KEY FINANCIALS APS has requested a rate increase to become effective July 1, 2017 Overview of Rate Increase ($ in Millions) – Key Components Post-Test Year Plant Additions $ 98.1 Fair Value Increment 51.9 ROE Increase from 10.0% to 10.5% 29.3 Increase due to Changes in Depreciation Schedules 81.4 Decrease Fuel and Purchased Power over Base Rates (61.7) Decrease in Other Costs (33.1) Total Base Rate Increase $ 165.9

Second Quarter 201613 Focus Area Current State Rate Case Objective Time-of-Use Rates (TOU) • > 50% of residential customers are on a TOU rate • On-peak hours from 12-7 PM (M-F) • TOU difference in on-peak prices that are 4 times the off-peak prices • Most residential customers on a TOU rate • On-peak hours from 3-8 PM (M-F) to better align with system peak • TOU difference in on-peak prices that are 2 times the off-peak prices Demand Rates • 11% of residential customers are on demand rates, more than any other electric utility • Most residential customers on demand rates • Calculated on the highest demand averaged over a one-hour period during the on-peak period each month Basic Service (Fixed) Charge • Customers pay basic service charge ranging from $8.67 - $16.91 per month • Set basic service charge for all rate classes ranging from $14 - $24 per month Net Metering • Excess power compensated at full retail price • Excess power compensated at export price aligned with avoided cost • Recovery of cost to purchase through existing PSA mechanism • Grandfather qualified rooftop solar customers Lost Fixed Cost Recovery (LFCR) • 1% year-over-year adjustment cap based on total revenues • Recovers portion of costs reduced by energy efficiency (EE) and distributed generation (DG) programs • Similar construct, but increase year-over-year adjustment cap to 2% based on total revenues • Increased portion of lost fixed costs eligible for recovery RATE DESIGN MODERNIZATION Rate design that better aligns pricing with cost to serve and leverages existing platform

Second Quarter 201614 RATE DESIGN MODERNIZATION Key residential rate proposals designed to reduce cost shift among customers • Streamlined rate choices for residential customers including combinations of the following: – Reduced kWh charges for variable portion (energy rate) – Increased fixed charge component (basic service charge) – Variations of new demand (kW) charge applied to on-peak hours • Measured using a customer’s peak demand during on-peak hours (3-8 pm, Monday-Friday) • Peak demand then multiplied by a demand rate • Example: – 5kW demand during on-peak* – $6.60/kW demand rate (R-1 rate plan) – 5kW x $6.60 = $33.00 demand charge Variable Variable (energy rate per kWh) Fixed Fixed (basic service charge) Demand (demand rate per kW) Current Customer Bill Proposed Customer Bill * Peak demand is calculated on the highest demand averaged over a one-hour period during the on-peak period each month.

Second Quarter 201615 OCOTILLO MODERNIZATION PROJECT AND FOUR CORNERS SCRs Ocotillo Modernization Project Four Corners SCRs In-Service Dates Units 6, 7 – Fall 2018 Units 3, 4 and 5 – Spring 2019 Unit 5 – Late 2017 Unit 4 – Spring 2018 Total Cost (APS) $500 million $400 million Estimated Cost Deferral $45 million (through 2019) $30 million (through 2018) Rate Request Requesting cost deferral from date of commercial operation to the effective date of rates in next rate case Requesting cost deferral order from time of installation to incorporation of the SCR costs in rates using a step increase beginning in 2019 • Included in the 2016 rate case application, APS is requesting Accounting Deferral Orders for two large generation-related capital investments – Ocotillo Modernization Project: Retiring two aging, steam-based, natural gas units, and replacing with 5 new, fast-ramping, combustion turbine units – Four Corners Power Plant: Installing Selective Catalytic Reduction (SCR) equipment to comply with Federal environmental standards

Second Quarter 201616 FINANCIAL OUTLOOK Key Factors & Assumptions as of August 2, 2016 Assumption Impact Retail customer growth • Expected to average about 2-3% annually • Modestly improving Arizona and U.S. economic conditions Weather-normalized retail electricity sales volume growth • About 0.5-1.5% after customer conservation and energy efficiency and distributed renewable generation initiatives Assumption Impact AZ Sun Program • Additions to flow through RES until next base rate case • First 50 MW of AZ Sun is recovered through base rates Lost Fixed Cost Recovery (LFCR) • Offsets 30-40% of revenues lost due to ACC-mandated energy efficiency and distributed renewable generation initiatives Environmental Improvement Surcharge (EIS) • Assumed to recover up to $5 million annually of carrying costs for government- mandated environmental capital expenditures Power Supply Adjustor (PSA) • 100% recovery as of July 1, 2012 Transmission Cost Adjustor (TCA) • TCA is filed each May and automatically goes into rates effective June 1 • Beginning July 1, 2012 following conclusion of the regulatory settlement, transmission revenue is accrued each month as it is earned. Four Corners Acquisition • Four Corners rate increase effective January 1, 2015 Potential Property Tax Deferrals (2012 retail rate settlement): Assume 60% of property tax increases relate to tax rates, therefore, will be eligible for deferrals (Deferral rates: 50% in 2013; 75% in 2014 and thereafter) Gross Margin – Customer Growth and Weather (2016-2018) Gross Margin – Related to 2012 Retail Rate Settlement Outlook Through 2016: Goal of earning more than 9.5% Return on Equity (earned Return on Equity based on average Total Shareholder’s Equity for PNW consolidated, weather-normalized)

Second Quarter 201617 Credit Ratings • A- rating or better at S&P, Moody’s and Fitch 2016 Major Financing Activities • Repaid, at maturity, $250 million of 6.25% senior unsecured notes due August 1 • $350 million 30-year 3.75% APS senior unsecured notes issued May 2016 • $100 million term loan closed April 2016 • Currently expect up to an additional $350 million of long-term debt We are disclosing credit ratings to enhance understanding of our sources of liquidity and the effects of our ratings on our costs of funds. BALANCE SHEET STRENGTH $50 $600 $250 $125 $- $100 $200 $300 $400 $500 $600 2017 2018 2019 2020 APS PNW ($Millions) Debt Maturity Schedule

Second Quarter 201618 OPERATIONS & MAINTENANCE OUTLOOK Goal is to keep O&M per kWh flat, adjusted for planned outages $754 $761 $788 $805 $772 $150 $124 $137 $103 $96 $82 2011 2012 2013 2014 2015 2016E PNW Consolidated RES/DSM* *Renewable energy and demand side management expenses are offset by adjustment mechanisms. ($ Millions) $825 - $845

Second Quarter 201619 $263 $220 $224 $288 $66 $77 $235 $114 $44 $227 $201 $103 $58 $107 $1 $1 $201 $122 $217 $139 $340 $359 $346 $398 $85 $93 $83 $81 2015 2016 2017 2018 CAPITAL EXPENDITURES Capital expenditures are funded primarily through internally generated cash flow ($ Millions) $1,205 $1,307 Other Distribution Transmission Renewable Generation Environmental(1) Traditional Generation Projected $1,124 New Gas Generation(2) $1,057 • The table does not include capital expenditures related to 4CA’s 7% interest in Four Corners Units 4 and 5 of $3 million in 2015, $30 million in 2016 and $25 million in 2017. • 2016 – 2018 as disclosed in Second Quarter 2016 Form 10-Q. (1) Includes Selective Catalytic Reduction controls at Four Corners with in-service dates of Q4 2017 (Unit 5) and Q1 2018 (Unit 4) (2) Ocotillo Modernization Project: 2 units scheduled for completion in Q4 2018, 3 units schedule for completion in Q1 2019

Second Quarter 201620 249 357 339 442 610 710 641 785 871 939 523 837 489 688 835 721 1163 1163 1358 1150 1011 1201 1093 11841187 782 1315 1055 1460 1680 0 250 500 750 1000 1250 1500 1750 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2014 Applications 2015 Applications 2016 Applications * As of June 30, 2016, over 45,000 residential grid-tied solar photovoltaic (PV) systems have been installed in APS’s service territory. Excludes APS Solar Partner Program residential PV systems. Note: www.arizonagoessolar.org logs total residential application volume, including cancellations. Solar water heaters can also be found on the site, but are not included in the chart above. RESIDENTIAL PV APPLICATIONS* 15 19 23 44 51 57 74 2009 2011 2013 2015 Residential DG (MW) Annual Additions

Second Quarter 201621 (8) (4) 2 5 (5) 13 $(10) $(5) $0 $5 $10 $15 Q1 Q2 Q3 Q4 Q1 Q2 GROSS MARGIN EFFECTS OF WEATHER VARIANCES VS. NORMAL Pretax Millions All periods recalculated to current 10-year rolling average (2005-2014) 2015 $(5) Million 2016 $8 Million

Second Quarter 201622 12 7 11 11 8 4 11 14 18 12 12 15 $0 $10 $20 $30 $40 Q1 Q2 Q3 Q4 Q1 Q2 Renewable Energy Demand Side Management RENEWABLE ENERGY AND DEMAND SIDE MANAGEMENT EXPENSES* * O&M expenses related to renewable energy and demand side management programs are partially offset by comparable revenue amounts Pretax Millions 2015 $96 Million 2016 $39 Million

Second Quarter 201623 NON-GAAP MEASURE RECONCILIATION $ millions pretax, except per share amounts 2016 2015 Operating revenues* 915$ 891$ Fuel and purchased power expenses* (275) (282) Gross margin 640 609 0.17$ Adjustments: Renewable energy (excluding AZ Sun) and demand side management programs (13) (17) 0.02 Palo Verde system benefits charge 4 - 0.02 Adjusted gross margin 631$ 592$ 0.21$ Depreciation and amortization* (123)$ (123)$ -$ Adjustments: Palo Verde system benefits charge (4) - (0.02) Adjusted depreciation and amortization (127)$ (123)$ (0.02)$ * Line items from Consolidated Statements of Income Three Months Ended June 30, EPS Impact