Exhibit 99.1

PINNACLE WEST CAPITAL CORPORATION
NON-GAAP FINANCIAL MEASURE RECONCILIATION — OPERATING INCOME
(GAAP MEASURE) TO GROSS MARGIN (NON-GAAP FINANCIAL MEASURE)
(in thousands)

	THREE MONTHS ENDED
	MARCH 31,				Increase (Decrease)
	2006		2005		Pretax			After Tax
RECONCILIATION OF REGULATED ELECTRICITY SEGMENT GROSS MARGIN
Operating Income (closest GAAP measure)	$	57,163	$	91,825	$	(34,662	)	$	(21,126	)
Plus:
Operations and maintenance		178,427		155,084		23,343			14,228
Real estate segment operations		71,330		55,334		15,996			9,750
Depreciation and amortization		87,621		90,944		(3,323	)		(2,025	)
Taxes other than income taxes		35,573		34,565		1,008			614
Other expenses		8,522		8,374		148			90
Marketing and trading segment fuel and purchased power		74,175		70,809		3,366			2,052
Less:
Real estate segment revenues		107,854		69,936		37,918			23,111
Other revenues		11,224		10,135		1,089			664
Marketing and trading segment revenues		85,002		89,257		(4,255	)		(2,593	)
Regulated electricity segment gross margin	$	308,731	$	337,607	$	(28,876	)	$	(17,599	)
RECONCILIATION OF MARKETING AND TRADING SEGMENT GROSS MARGIN
Operating Income (closest GAAP measure)	$	57,163	$	91,825	$	(34,662	)	$	(21,126	)
Plus:
Operations and maintenance		178,427		155,084		23,343			14,228
Real estate segment operations		71,330		55,334		15,996			9,750
Depreciation and amortization		87,621		90,944		(3,323	)		(2,025	)
Taxes other than income taxes		35,573		34,565		1,008			614
Other expenses		8,522		8,374		148			90
Regulated electricity segment fuel and purchased power		157,395		78,423		78,972			48,133
Less:
Real estate segment revenues		107,854		69,936		37,918			23,111
Other revenues		11,224		10,135		1,089			664
Regulated electricity segment revenues		466,126		416,030		50,096			30,534
Marketing and trading segment gross margin	$	10,827	$	18,448	$	(7,621	)	$	(4,645	)