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): May 3, 2012

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:

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

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

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

oPre-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 May 3, 2012, Pinnacle West Capital Corporation (the “Company” or “Pinnacle West”) issued a press release regarding its financial results for the fiscal quarter ended March 31, 2012.  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 May 3, 2012.  This information contains Company operating results for the fiscal quarter ended March 31, 2012 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 8.01  Other Events.

Recommended Order in APS General Retail Rate Case

On May 2, 2012, the administrative law judge in Arizona Public Service Company’s (“APS”) general retail rate case pending before the Arizona Corporation Commission (“ACC”) issued a recommended order in the proceeding.  The order recommends ACC approval of the regulatory settlement agreement proposed by APS and other parties to the rate case without material modifications.  Parties to the proceeding may file exceptions to the recommended order on or before May 11, 2012.

For additional information, see “Retail Rate Case Filing with the Arizona Corporation Commission” in Note 3 of Notes to Condensed Consolidated Financial Statements in the Pinnacle West/APS Quarterly Report on Form 10-Q for the quarter ended March 31, 2012.

Item 9.01.Financial Statements and Exhibits.

(d)Exhibits.

Exhibit No.	Registrant(s)	Description
99.1	Pinnacle West APS	Earnings News Release issued on May 3, 2012.
99.2	Pinnacle West APS	Pinnacle West Capital Corporation quarterly consolidated statistical summary for the three-month periods ended March 31, 2012 and 2011.
99.3	Pinnacle West APS	Pinnacle West Capital Corporation 1st Quarter 2012 Results slide presentation accompanying May 3, 2012 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: May 3, 2012	By:	/s/ James R. Hatfield
		James R. Hatfield
		Senior Vice President and Chief Financial
		Officer
	ARIZONA PUBLIC SERVICE COMPANY
	(Registrant)
Dated: May 3, 2012	By:	/s/ James R. Hatfield
		James R. Hatfield
		Senior Vice President and Chief Financial
		Officer

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Exhibit Index

Exhibit No.	Registrant(s)	Description
99.1	Pinnacle West APS	Earnings News Release issued on May 3, 2012.
99.2	Pinnacle West APS	Pinnacle West Capital Corporation quarterly consolidated statistical summary for the three-month periods ended March 31, 2012 and 2012.
99.3	Pinnacle West APS	Pinnacle West Capital Corporation 1st Quarter 2012 Results slide presentation accompanying May 3, 2012 conference call.

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EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE		May 3, 2012
Media Contact:	Jim McDonald, (602) 250-3704
Analyst Contacts:	Rebecca Hickman, (602) 250-5668
	Geoffrey Wendt, (602) 250-5643
Website:	pinnaclewest.com

PINNACLE WEST REPORTS 2012 FIRST-QUARTER RESULTS

·Company remains focused on core utility business, operational excellence and constructive regulatory settlement for benefit of customers and shareholders

·Reduced operating and infrastructure costs more than offset effects of lower retail sales and milder weather

PHOENIX — Pinnacle West Capital Corp. (NYSE: PNW) today reported a consolidated on-going loss of $7.5 million, or $0.07 per diluted share of common stock, for the quarter ended March 31, 2012. This result compares with an on-going loss of $15.8 million or $0.15 per share, in the same 2011 period. The Company’s net loss attributable to common shareholders for the 2012 first quarter was $8.3 million, or $0.08 per diluted share, compared with a net loss of $15.1 million, or $0.14 per diluted share, for the same quarter a year ago.

On-going earnings exclude results of discontinued operations related to the Company’s real estate activities and former energy services business. A reconciliation of reported earnings to on-going earnings is provided at the end of this release.

“Our employees’ attention to operational efficiency and costs more than offset the effects of milder weather and slightly lower customer usage and helped produce first-quarter results that were in line with our expectations,” said Pinnacle West Chairman, President and Chief Executive Officer Don Brandt.

Looking to the immediate future, Brandt added the Company remains focused on maintaining operational excellence throughout its core utility business and achieving approval of its proposed retail regulatory settlement. “The settlement agreement, which is pending approval by the Arizona Corporation Commission, is a thoughtful solution that balances disparate stakeholder interests and is a good outcome for customers and shareholders, alike,” he said. Arizona Public Service Co. (APS) and the other parties have requested the agreement take effect July 1, 2012.

The 2012 first-quarter on-going results were positively impacted by the following factors:

1

·Lower operations and maintenance expenses improved earnings by $0.07 per share compared with the prior-year quarter. The expense decrease was due primarily to lower fossil power plant maintenance costs as a result of less work being completed early in the year compared to 2011.

The O&M variance excludes costs for renewable energy, demand-side management and similar regulatory programs, as well as $0.16 per share of expenses associated with a 2011 first-quarter settlement of transmission right-of-way costs, all of which were essentially offset by comparable amounts of operating revenues.

·Lower infrastructure-related costs contributed $0.03 per share, primarily related to lower interest, and depreciation and amortization expenses, partially offset by higher property taxes.

·Higher transmission revenues increased earnings by $0.03 per share, primarily because of a retail transmission rate increase implemented in July 2011.

·The net effect of miscellaneous items increased earnings $0.02 per share.

These positive factors were partially offset by:

·Lower retail electricity sales — excluding the effects of weather variations — reduced earnings by $0.04 per share compared to the prior year. Total weather-normalized retail electricity sales decreased 0.9 percent in the 2012 first quarter compared to the same period a year ago. The drop in consumption reflects the effects of APS’s energy efficiency programs, partially offset by mildly improving economic conditions. APS’s customer base, however, grew 0.8 percent over the same timeframe.

·The effects of weather variations decreased the Company’s earnings by $0.03 per share.

APS, the Company’s principal subsidiary, reported a 2012 first-quarter net loss attributable to common shareholder of $4.1 million, compared with a net loss of $12.1 million for the comparable 2011 quarter.

Conference Call and Web Cast

Pinnacle West invites interested parties to listen to the live webcast of management’s conference call to discuss the Company’s 2012 first-quarter results, as well as recent developments, at 1:30 p.m. ET (10:30 a.m. AZ time) today, May 3. 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), Thursday, May 10, 2012, 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 392194.

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General Information

Pinnacle West Capital, an energy holding company based in Phoenix, has consolidated assets of about $13.2 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 LOSS

(NON-GAAP FINANCIAL MEASURE)

	Three Months Ended March 31, 2012						Three Months Ended March 31, 2011
	Dollars in Millions			Diluted EPS			Dollars in Millions			Diluted EPS
Net Loss Attributable to Common Shareholders	$	(8.3	)	$	(0.08	)	$	(15.1	)	$	(0.14	)
Adjustment:
Discontinued real estate and energy services businesses	0.8			0.01			(0.7		)	(0.01		)
On-going Loss	$	(7.5	)	$	(0.07	)	$	(15.8	)	$	(0.15	)

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 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, or similar concepts, to measure our performance internally in reports for management.

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FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements based on our current expectations.  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 and transmission system 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 environmental requirements and nuclear plant operations;

·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;

·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 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, 2011, 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.

#  #  #

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PINNACLE WEST CAPITAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

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

	THREE MONTHS ENDED MARCH 31,
	2012		2011
Operating Revenues	$	620,631	$	648,847
Operating Expenses
Fuel and purchased power	216,309		212,007
Operations and maintenance	210,663		255,029
Depreciation and amortization	100,109		106,583
Taxes other than income taxes	42,475		37,624
Other expenses	3,068		1,820
Total	572,624		613,063
Operating Income	48,007		35,784
Other
Allowance for equity funds used during construction	4,756		5,395
Other income	760		1,690
Other expense	(4,068)		(1,741)
Total	1,448		5,344
Interest Expense
Interest charges	56,967		61,077
Allowance for borrowed funds used during construction	(3,151)		(3,576)
Total	53,816		57,501
Loss From Continuing Operations Before Income Taxes	(4,361)		(16,373)
Income Taxes	(4,645)		(6,005)
Income (Loss) From Continuing Operations	284		(10,368)
Income (Loss) From Discontinued Operations
Net of Income Taxes	(765)		694
Net Loss	(481)		(9,674)
Less: Net income attributable to noncontrolling interests	7,776		5,461
Net Loss Attributable To Common Shareholders	$	(8,257)	$	(15,135)
Weighted-Average Common Shares Outstanding - Basic	109,299		108,832
Weighted-Average Common Shares Outstanding - Diluted	109,299		108,832
Earnings Per Weighted-Average Common Share Outstanding
Loss from continuing operations attributable to common shareholders - basic	$	(0.07)	$	(0.15)
Net loss attributable to common shareholders - basic	$	(0.08)	$	(0.14)
Loss from continuing operations attributable to common shareholders - diluted	$	(0.07)	$	(0.15)
Net loss attributable to common shareholders - diluted	$	(0.08)	$	(0.14)
Amounts Attributable To Common Shareholders
Loss from continuing operations, net of tax	$	(7,483)	$	(15,838)
Discontinued operations, net of tax	(774)		703
Net loss attributable to common shareholders	$	(8,257)	$	(15,135)

EX-99.2

Exhibit 99.2

Last updated 5/3/12

Pinnacle West Capital Corporation

Quarterly Consolidated Statistical Summary

Periods Ended March 31, 2012 and 2011

		3 Months Ended March
Line		2012		2011		Incr (Decr)
	EARNINGS CONTRIBUTION BY SUBSIDIARY ($ Millions)
1	Arizona Public Service	$	4	$	(7)	$	11
2	APS Energy Services	-		-		-
3	SunCor	-		-		-
4	El Dorado	-		-		-
5	Parent Company	(4)		(3)		(1)
6	Income From Continuing Operations	-		(10)		10
	Income (Loss) From Discontinued Operations - Net of Tax
7	SunCor	(1)		(1)		-
8	Other	1		1		-
9	Total	-		-		-
10	Net Income	-		(10)		10
11	Less: Net Income (Loss) Attributable to Noncontrolling Interests	8		5		3
12	Net Income Attributable to Common Shareholders	$	(8)	$	(15)	$	7
	EARNINGS PER SHARE BY SUBSIDIARY - DILUTED
13	Arizona Public Service	$	0.03	$	(0.06)	$	0.09
14	APS Energy Services	-		-		-
15	SunCor	-		-		-
16	El Dorado	-		-		-
17	Parent Company	(0.03)		(0.04)		0.01
18	Income From Continuing Operations	-		(0.10)		0.10
	Income (Loss) From Discontinued Operations - Net of Tax
19	SunCor	(0.01)		-		(0.01)
20	Other	-		0.01		(0.01)
21	Total	(0.01)		0.01		(0.02)
22	Net Income	(0.01)		(0.09)		0.08
23	Less: Net Income (Loss) Attributable to Noncontrolling Interests	0.07		0.05		0.02
24	Net Income Attributable to Common Shareholders	$	(0.08)	$	(0.14)	$	0.06
25	BOOK VALUE PER SHARE	$	34.24	$	33.31	$	0.93
	COMMON SHARES OUTSTANDING (Thousands)
26	Average - Diluted	109,299		108,832		467
27	End of Period	109,372		109,011		361

See Glossary of Terms. Page 1 of 4

Last updated 5/3/12

Pinnacle West Capital Corporation

Quarterly Consolidated Statistical Summary

Periods Ended March 31, 2012 and 2011

		3 Months Ended March
Line		2012		2011		Incr (Decr)
	ELECTRIC OPERATING REVENUES (Dollars in Millions)
	REGULATED ELECTRICITY SEGMENT
	Retail
28	Residential	$	273	$	273	$	(0)
29	Business	292		298		(6)
30	Total retail	565		571		(6)
	Wholesale revenue on delivered electricity
31	Traditional contracts	12		11		1
32	Off-system sales	20		18		3
33	Transmission for others	6		8		(2)
34	Other miscellaneous services	17		40		(23)
35	Total regulated operating electricity revenues	620		647		(27)
	MARKETING AND TRADING
36	Electricity and other commodity sales	-		-		-
37	Total operating electric revenues	$	620	$	647	$	(27)
	ELECTRIC SALES (GWH)
	REGULATED ELECTRICITY SEGMENT
	Retail sales
38	Residential	2,553		2,652		(99)
39	Business	3,189		3,274		(85)
40	Total retail	5,743		5,926		(184)
	Wholesale electricity delivered
41	Traditional contracts	163		143		20
42	Off-system sales	866		647		220
43	Retail load hedge management	31		31		(0)
44	Total regulated electricity	6,802		6,747		56
	MARKETING AND TRADING
45	Wholesale sales of electricity	-		-		-
46	Total electric sales	6,802		6,747		56
	POWER SUPPLY ADJUSTOR (“PSA”) - REGULATED ELECTRICITY SEGMENT (Dollars in Millions)
47	Deferred fuel and purchased power regulatory asset/(liability) - beginning balance	$	28	$	(58)	$	86
48	Deferred fuel and purchased power costs - current period	(47)		(50)		3
49	Interest on deferred fuel	-		-		-
50	Amounts refunded/(recovered) through revenues	24		31		(7)
51	Deferred fuel and purchased power regulatory asset/(liability) - ending balance	$	5	$	(77)	$	82

See Glossary of Terms. Page 2 of 4

Last updated 5/3/12

Pinnacle West Capital Corporation

Quarterly Consolidated Statistical Summary

Periods Ended March 31, 2012 and 2011

		3 Months Ended March
Line		2012	2011	Incr (Decr)
	AVERAGE ELECTRIC CUSTOMERS
	Retail customers
52	Residential	1,007,582	999,692	7,890
53	Business	126,632	125,591	1,040
54	Total	1,134,213	1,125,283	8,930
55	Wholesale customers	47	47	-
56	Total customers	1,134,260	1,125,330	8,930
57	Customer growth (% over prior year)	0.8%	0.4%	0.4%
	RETAIL SALES (GWH) - WEATHER NORMALIZED
58	Residential	2,638	2,640	(2)
59	Business	3,205	3,258	(53)
60	Total	5,843	5,898	(55)
	RETAIL USAGE (KWh/Average Customer)
61	Residential	2,534	2,653	(119)
62	Business	25,185	26,071	(886)
	RETAIL USAGE - WEATHER NORMALIZED (KWh/Average Customer)
63	Residential	2,618	2,641	(22)
64	Business	25,306	25,940	(633)
	ELECTRICITY DEMAND (MW)
65	Native load peak demand	4,113	4,814	(701)
	WEATHER INDICATORS - RESIDENTIAL
	Actual
66	Cooling degree-days	-	-	-
67	Heating degree-days	417	587	(170)
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 5/3/12

Pinnacle West Capital Corporation

Quarterly Consolidated Statistical Summary

Periods Ended March 31, 2012 and 2011

		3 Months Ended March
Line		2012	2011	Incr (Decr)
	ENERGY SOURCES (GWH)
	Generation production
72	Nuclear	2,360	2,448	(88)
73	Coal	2,571	2,950	(379)
74	Gas, oil and other	1,244	839	405
75	Total generation production	6,175	6,237	(62)
	Purchased power
76	Firm load	1,169	617	552
77	Marketing and trading	71	227	(156)
78	Total purchased power	1,240	844	396
79	Total energy sources	7,415	7,081	334
	POWER PLANT PERFORMANCE
	Capacity Factors
80	Nuclear	94%	99%	(5)%
81	Coal	67%	78%	(11)%
82	Gas, oil and other	17%	12%	5%
83	System average	45%	47%	(2)%
	ECONOMIC INDICATORS
	Building Permits (a)
84	Metro Phoenix	2,446	1,663	783
	Arizona Job Growth (b)
85	Payroll job growth (% over prior year)	1.7%	0.7%	0.9%
86	Unemployment rate (%, seasonally adjusted)	8.7%	9.7%	(1.1)%

Sources:
(a)	Arizona Real Estate Center, Arizona State University W.P. Carey College of Business and Home Builders Marketing, Inc. /RLBrown Reports
(b)	Arizona Department of Economic Security

See Glossary of Terms. Page 4 of 4

EX-99.3

Exhibit 99.3

1st Quarter 2012 Results

Forward-Looking Statements 2 This presentation contains forward-looking statements based on current expectations, including statements regarding our 2012 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 and transmission system 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 environmental requirements and nuclear plant operations; 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; 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 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, 2011, 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 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 attributable 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

CFO Agenda 1st Quarter Results Arizona Economic Outlook Liquidity and Financing Activities 4

Per Share Net Loss On-Going Loss Per Share 5 Consolidated EPS Comparisons 1st Quarter 2012 vs. 1st Quarter 2011

Non-GAAP EPS Reconciliation 1st Quarter 2012 vs. 1st Quarter 2011 6 1st Qtr 1st Qtr 2012 2011 Change EPS as reported (0.08) $ (0.14) $ 0.06 $ Less discontinued operations 0.01 (0.01) 0.02 On-going EPS (0.07) $ (0.15) $ 0.08 $ 

Higher gross margin* $0.01 Lower infrastructure-related costs $0.03 Lower O&M* $0.07 Net Increase $0.08 = * Excludes costs, and offsetting operating revenues, associated with renewable energy (net of AZ Sun), energy efficiency and similar regulatory programs, as well as 2011 settlement of transmission rights of-way. See non-GAAP reconciliation for gross margin in appendix. On-Going EPS Variances 1st Quarter 2012 vs. 1st Quarter 2011 Other, net $(0.03) 7 First Quarter 2012

Gross Margin EPS Drivers 1st Quarter 2012 vs. 1st Quarter 2011 Net Increase $0.01 = See non-GAAP reconciliation in appendix. Lower retail usage $(0.04) Retail transmission charge increase $0.03 8 Other, net $0.03 Line extensions $0.02 Weather effects $(0.03)

9 Arizona Economic Indicators Employment & Consumer Spending Year-Over-Year Change Non-Farm Job Growth Consumer Spending ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘05 ‘06 ‘08 ‘09 ‘10 ‘11 Year-Over-Year Change ‘07

CEO Discussion Agenda Arizona Regulatory Developments Generation and Renewables Investments Utility Operations Update Looking Ahead 10

 Appendix

2012 On-Going Earnings Key Drivers 12 Retail customer growth about 1% Weather-normalized retail electricity sales volume growth slightly negative taking into account effects of Company’s energy efficiency initiatives Weather 2009 regulatory settlement provisions, until 2012 retail rate decision goes into effect Pension and OPEB deferrals Line extensions as revenues Palo Verde depreciation reduction due to license extension 2012 retail rate settlement proposed to become effective July 1, 2012 Retail base rate changes Adjustment mechanism modifications Potential property tax deferrals Transmission rate increases AZ Sun Program Company-wide operating and capital cost management Interest rates

2012 Proposed Retail Rate Case Settlement Key Benefits from Investor Perspective Provides financial support APS needs to achieve Arizona’s energy goals Encourages progress toward sustainable energy future Supports renewable energy and energy efficiency Continues constructive regulatory framework established in 2009 regulatory settlement Demonstrates collaboration and cooperation among APS and numerous stakeholders Allows decision approximately one year after filing Provides no base rate change for customers and promotes rate gradualism The proposed settlement contains a number of benefits for customers and shareholders. 13

2012 Proposed Retail Rate Case Settlement Key Financial Proposals – Base Rate Changes The proposed net base rate change would be zero, when implemented – an important benefit to customers. 14 Annualized Base Rate Revenue Changes ($ millions) Non-fuel base rate increase $ 116.3 Fuel-related base rate decrease (153.1) Revenues related to AZ Sun and other solar projects to be transferred from Renewable Energy Surcharge to base rates 36.8 Net base rate change $ -0-

Other key proposals provide customers rate stability while continuing constructive regulatory treatment and limiting regulatory lag. 15 2012 Proposed Retail Rate Case Settlement Key Proposals – Other than Base Rates Post test-year plant additions – 15 months’ additions included in rate base Constructive new or modified adjustment mechanisms Lost Fixed Cost Recovery (LFCR) rate mechanism to address ratemaking effects of energy efficiency and distributed renewable energy Power Supply Adjustor (PSA) – 100% pass-through Transmission Cost Adjustor (TCA) – streamlined for future rate changes Environmental Improvement Surcharge (EIS) – recovery of certain carrying costs for government-mandated environmental capital expenditures Four Corners transaction – procedure to allow APS to request related rate adjustments, if transaction consummated Property tax expense deferrals for future tax rate changes Current PSA credit on customer bills to continue until February 1, 2013, rather than reset when base rate changes become effective July 1, 2012 Next general rate case may be filed on or after May 31, 2015 for rates to become effective on or after July 1, 2016 (4-year stay-out)

Updated rate base, cost of capital and fuel prices underpin the proposed settlement amounts. 16 2012 Proposed Retail Rate Case Settlement Key Financial Assumptions Rate base $5.7 billion Allowed return on equity 10% Capital structure Long-term debt 46.1% Common equity 53.9% Base fuel rate (¢/kWh) 3.21¢ Projected fuel-price year for base fuel rate 2012 Test year ended December 31, 2010 adjusted for post-test year plant additions

2012 Proposed Retail Rate Case Settlement Procedural Schedule Key Dates The provisions of the settlement are targeted to become effective July 1, 2012, as originally requested by APS. 17 Settlement agreement filed January 6 Hearing conducted January 26 – February 3 Post-hearing briefs filed February 29 and March 14 Administrative law judge’s recommendation Decision requested to become effective July 1 First Quarter 2012

Four Corners Power Plant Proposed Plan Acquire Southern California Edison’s 739 MW interest in Units 4 & 5 and shut down 560 MW Units 1 – 3 Purchase price: $294 million (subject to adjustments) Acquisition target date: No earlier than December 1, 2012 Estimated environmental compliance investment: $300 million Arizona, California and other regulatory approvals required Arizona and California approvals obtained New coal supply contract negotiations under way Economic, environmental and social benefits 18

APS AZ Sun Program Up to 200 MW utility-scale photovoltaic solar plants to be owned by APS In service 2011 through 2015 Constructive rate recovery through RES until included in base rates Commitments to date: 104 MW with $451 million estimated capital investment Project summary 50 MW in commercial operation to date Planning and procurement under way for additional projects Name Net Capacity Actual or Target Operation Date Paloma 17 MW Sept. 2011 Cotton Center 17 MW Oct. 2011 Hyder Phase 1 11 MW Oct. 2011 Hyder Phase 2 5 MW Feb. 2012 Chino Valley 19 MW 4Q 2012 Yuma Foothills Phase 1 17 MW 1Q 2013 Yuma Foothills Phase 2 18 MW 4Q 2013 19

Gross Margin Effects of Weather Variances Versus Normal* Pretax Millions 2011 *All periods recalculated to conform to current presentation. 20 2012 2010

Quarterly Mark-to-Market on Hedge Contracts* Pretax Millions * Related to APS 10% share under Power Supply Adjustor (PSA), net of related deferrals. 2010 2011 21 2012

Renewable Energy, Demand-Side Management and Similar Regulatory Expenses* * O&M expenses related to Renewable Energy Standard and similar regulatory programs are offset by comparable revenue amounts. Pretax Millions 2010 2011 22 2012

Non-GAAP Measure Reconciliation Gross Margin 23 $ millions, pretax, except per share amounts 2012 2011 Operating revenues* 621 $ 649 $ Fuel and purchased power expenses* (216) (212) Gross margin 405 437 (0.18) $ Less: Renewable energy, energy efficiency and similar regulatory programs (26) (32) 0.03 Revenues related to 2011 settlement of transmission right-of-way - (28) 0.16 Gross margin - adjusted 379 $ 377 $ 0.01 $ * Line items from Consolidated Statements of Income. Three Months Ended March 31, EPS Change First Quarter 2012