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, 2013

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	86-0512431
	(an Arizona corporation) 400 North Fifth Street, P.O. Box 53999 Phoenix, AZ 85072-3999 (602) 250-1000
1-4473	Arizona Public Service Company	86-0011170
	(an Arizona corporation) 400 North Fifth Street, P.O. Box 53999 Phoenix, AZ 85072-3999 (602) 250-1000

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, 2013, Pinnacle West Capital Corporation (the “Company” or “Pinnacle West”) issued a press release regarding its financial results for the fiscal quarter ended March 31, 2013, its earnings outlook for 2013 and its financial goal through 2015.  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, 2013.  This information contains Company operating results for the fiscal quarter ended March 31, 2013 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 May 3, 2013.
99.2	Pinnacle West APS	Pinnacle West Capital Corporation quarterly consolidated statistical summary for the three-month periods ended March 31, 2013 and 2012.
99.3	Pinnacle West APS	Pinnacle West Capital Corporation 1st Quarter 2013 Results slide presentation accompanying May 3, 2013 conference call.

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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, 2013	By:	/s/ James R. Hatfield
		James R. Hatfield
		Executive Vice President and
		Chief Financial Officer
	ARIZONA PUBLIC SERVICE COMPANY
	(Registrant)
Dated:  May 3, 2013	By:	/s/ James R. Hatfield
		James R. Hatfield
		Executive 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, 2013.
99.2	Pinnacle West APS	Pinnacle West Capital Corporation quarterly consolidated statistical summary for the three-month periods ended March 31, 2013 and 2012.
99.3	Pinnacle West APS	Pinnacle West Capital Corporation 1st Quarter 2013 Results slide presentation accompanying May 3, 2013 conference call.

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EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE		May 3, 2013
Media Contact: Analyst Contact:	Alan Bunnell, (602) 250-3376 Rebecca Hickman, (602) 250-5668
Website:	pinnaclewest.com

PINNACLE WEST REPORTS 2013 FIRST-QUARTER RESULTS

·Customer growth and colder weather drive higher retail electricity sales

·2012 regulatory settlement contributes to improved financial results

·Company continues operational excellence and cost management execution

·Company affirms full-year 2013 earnings guidance

PHOENIX — Pinnacle West Capital Corp. (NYSE: PNW) today reported consolidated on-going earnings of $24.4 million, or $0.22 per diluted share of common stock, for the quarter ended March 31, 2013. This result compares with a consolidated on-going loss of $7.5 million, or $0.07 per share, in the same 2012 period.

The Company’s net income attributable to common shareholders for the 2013 first quarter was $24.4 million, or $0.22 per diluted share, compared with a net loss of $8.3 million, or $0.08 per diluted share, for the same quarter a year ago. On-going earnings exclude results of discontinued operations. A reconciliation of reported earnings to on-going earnings is provided at the end of this release.

“It was a strong first quarter, building on our momentum from 2012,” said Pinnacle West Chairman, President and Chief Executive Officer Don Brandt. “Economic improvement in our market area, combined with superior operational performance by our employees, continued execution of our cost management program, and colder-than-normal weather allowed us to produce solid financial and operating results.

“As growth in our state begins to increase, we must maintain top-tier customer service and reliability, while providing solid financial returns for shareholders.”

The 2013 first-quarter on-going results were positively impacted by the following factors:

·The Company’s 2012 regulatory settlement, which included a retail non-fuel base rate increase, improved earnings by $0.13 per share. The settlement became effective July 1, 2012.

1

·Higher retail electricity sales — excluding the effects of weather variations, but including the effects of customer conservation, energy efficiency programs and distributed renewable generation — improved earnings by $0.06 per share. The 0.6 percent sales increase compared to the same quarter a year ago was related to customer growth of 1.4 percent and changes in customer usage patterns and related pricing.

·Colder-than-normal weather improved the Company’s earnings by $0.06 per share compared to the 2012 first quarter, during which warmer weather adversely affected earnings by $0.01 per share compared with historically normal conditions. In the 2013 first quarter, there were 613 residential heating degree-days (a measure of the effects of weather) — 24 percent more than normal and 47 percent more than the year-ago first quarter.

·Higher transmission revenues improved earnings by $0.06 per share, primarily because of retail transmission rate changes implemented in 2012.

·Lower infrastructure-related costs increased results by $0.06 per share, due to decreased interest expense resulting from lower debt balances and interest rates; and lower property taxes. These lower costs were partially offset by higher depreciation and amortization expenses.

The positive factors were partially offset by higher operations and maintenance expenses, which impacted earnings by $0.07 per share compared with the prior-year quarter. The expense increase primarily related to higher performance-based labor and employee benefit costs, including amortization of certain retirement benefits in 2013 compared with the regulatory deferral of such costs in 2012. The O&M variance excludes costs associated with renewable energy, energy efficiency and similar regulatory programs, which are largely offset by comparable amounts of operating revenues.

Arizona Public Service (APS), the Company’s principal subsidiary, reported 2013 first-quarter net income attributable to common shareholder of $26.0 million, compared with a net loss of $4.1 million for the comparable 2012 quarter.

Financial Outlook

Pinnacle West expects its 2013 consolidated on-going earnings will be near the top of the range of $3.45 to $3.60 per diluted share.  Key factors and assumptions underlying the outlook remain unchanged, except for actual weather through March and normal weather patterns for the remainder of the year.

2

Longer term, the Company’s goal is to achieve a consolidated earned return on average common equity of at least 9.5 percent annually in 2013 through 2015. Key factors and assumptions underlying the outlook can be found in the earnings presentation slides for the first-quarter 2013 on the Company’s website at pinnaclewest.com/investors.

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 2013 first-quarter results, as well as recent developments, at 12 noon ET (9 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 11:55 p.m. (ET), Friday, May 10, 2013, by calling (877) 660-6853 in the U.S. and Canada or (201) 612-7415 internationally and entering conference ID number 412208.

General Information

Pinnacle West Capital, an energy holding company based in Phoenix, has consolidated assets of about $13.3 billion, more than 6,300 megawatts of generating capacity and about 6,600 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 INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS

(GAAP MEASURE) TO ON-GOING EARNINGS

(NON-GAAP FINANCIAL MEASURE)

	Three Months Ended March 31, 2013				Three Months Ended March 31, 2012
	Dollars in  Millions		Diluted EPS		Dollars in Millions			Diluted EPS
Net Income (Loss) Attributable to Common Shareholders	$	24.4	$	0.22	$	(8.3	)	$	(0.08	)
Adjustments:
Loss from Discontinued Operations	—		—		0.8			0.01
On-going Earnings (Loss)	$	24.4	$	0.22	$	(7.5	)	$	(0.07	)

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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.

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 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;

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

·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;

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·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 Part 1, Item 1A of the Pinnacle West/APS Annual Report on Form 10-K for the fiscal year ended December 31, 2012, 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,
	2013			2012
Operating Revenues	$	686,652		$	620,631
Operating Expenses
Fuel and purchased power	230,679			216,309
Operations and maintenance	223,250			210,663
Depreciation and amortization	103,730			100,109
Taxes other than income taxes	40,021			42,475
Other expenses	2,049			3,068
Total	599,729			572,624
Operating Income	86,923			48,007
Other Income (Deductions)
Allowance for equity funds used during construction	6,864			4,756
Other income	758			760
Other expense	(3,752		)	(4,068		)
Total	3,870			1,448
Interest Expense
Interest charges	49,478			56,967
Allowance for borrowed funds used during construction	(3,990		)	(3,151		)
Total	45,488			53,816
Income (Loss) From Continuing Operations Before Income Taxes	45,305			(4,361		)
Income Taxes	12,469			(4,645		)
Income From Continuing Operations	32,836			284
Loss From Discontinued Operations
Net of Income Taxes	—			(765		)
Net Income (Loss)	32,836			(481		)
Less: Net income attributable to noncontrolling interests	8,392			7,776
Net Income (Loss) Attributable To Common Shareholders	$	24,444		$	(8,257	)
Weighted-Average Common Shares Outstanding - Basic	109,832			109,299
Weighted-Average Common Shares Outstanding - Diluted	110,835			109,299
Earnings Per Weighted-Average Common Share Outstanding
Income (loss) from continuing operations attributable to common shareholders - basic	$	0.22		$	(0.07	)
Net income (loss) attributable to common shareholders - basic	$	0.22		$	(0.08	)
Income (loss) from continuing operations attributable to common shareholders - diluted	$	0.22		$	(0.07	)
Net income (loss) attributable to common shareholders - diluted	$	0.22		$	(0.08	)
Amounts Attributable To Common Shareholders
Income (loss) from continuing operations, net of tax	$	24,444		$	(7,483	)
Discontinued operations, net of tax	—			(774		)
Net income (loss) attributable to common shareholders	$	24,444		$	(8,257	)

EX-99.2

Exhibit 99.2

Last Updated              5/3/2013

Pinnacle West Capital Corporation

Quarterly Consolidated Statistical Summary

Periods Ended March 31, 2013 and 2012

		3 Months Ended March
Line		2013			2012			Incr (Decr)
	EARNINGS CONTRIBUTION BY SUBSIDIARY ($Millions)
1	Arizona Public Service	$	33		$	4		$	29
2	El Dorado				-			-
3	Parent Company	(1		)	(4		)	3
4	Income From Continuing Operations	32			-			32
	Income (Loss) From Discontinued Operations - Net of Tax
5	SunCor	-			(1		)	1
6	Other	-			1			(1		)
7	Total	-			-			-
8	Net Income	32			-			32
9	Less: Net Income (Loss) Attributable to Noncontrolling Interests	8			8			-
10	Net Income Attributable to Common Shareholders	$	24		$	(8	)	$	32
	EARNINGS PER SHARE BY SUBSIDIARY - DILUTED
11	Arizona Public Service	$	0.31		$	0.03		$	0.28
12	El Dorado	-			-			-
13	Parent Company	(0.01		)	(0.03		)	0.02
14	Income From Continuing Operations	0.30			-			0.30
	Income (Loss) From Discontinued Operations - Net of Tax
15	SunCor	-			(0.01		)	0.01
16	Other	-			-			-
17	Total	-			(0.01		)	0.01
18	Net Income	0.30			(0.01		)	0.31
19	Less: Net Income (Loss) Attributable to Noncontrolling Interests	0.08			0.07			0.01
20	Net Income Attributable to Common Shareholders	$	0.22		$	(0.08	)	$	0.30
21	BOOK VALUE PER SHARE	$	36.51		$	34.24		$	2.27
	COMMON SHARES OUTSTANDING (Thousands)
22	Average - Diluted	110,835			109,299			1,536
23	End of Period	109,946			109,372			574

See Glossary of Terms. Page 1 of 4

Last Updated              5/3/2013

Pinnacle West Capital Corporation

Quarterly Consolidated Statistical Summary

Periods Ended March 31, 2013 and 2012

		3 Months Ended March
Line		2013		2012		Incr (Decr)
	ELECTRIC OPERATING REVENUES (Dollars in Millions)
	REGULATED ELECTRICITY SEGMENT
	Retail
24	Residential	$	307	$	273	$	34
25	Business	329		292		37
26	Total retail	636		565		71
	Wholesale revenue on delivered electricity
27	Traditional contracts	11		12		(1		)
28	Off-system sales	23		20		3
29	Native load hedge liquidation	1		-		1
30	Transmission for others	7		6		1
31	Other miscellaneous services	8		17		(9		)
32	Total electric operating revenue	686		620		66
	ELECTRIC SALES (GWH)
	Retail sales
33	Residential	2,730		2,553		177
34	Business	3,271		3,189		82
35	Total retail	6,001		5,742		259
	Wholesale electricity delivered
36	Traditional contracts	130		163		(33		)
37	Off-system sales	816		866		(50		)
38	Retail load hedge management	-		31		(31		)
39	Total electric sales	6,947		6,802		145

See Glossary of Terms. Page 2 of 4

Last Updated              5/3/2013

Pinnacle West Capital Corporation

Quarterly Consolidated Statistical Summary

Periods Ended March 31, 2013 and 2012

		3 Months Ended March
Line		2013	2012	Incr (Decr)
	AVERAGE ELECTRIC CUSTOMERS
	Retail customers
40	Residential	1,021,817	1,007,582	14,235
41	Business	127,895	126,631	1,264
42	Total	1,149,712	1,134,213	15,499
43	Wholesale customers	53	47	6
44	Total customers	1,149,765	1,134,260	15,505
45	Customer growth (% over prior year)	1.4%	0.8%	0.6%
	RETAIL SALES (GWH) - WEATHER NORMALIZED
46	Residential	2,580	2,563	17
47	Business	3,225	3,206	19
48	Total	5,805	5,769	36
	RETAIL USAGE (KWh/Average Customer)
49	Residential	2,672	2,534	138
50	Business	25,577	25,185	392
	RETAIL USAGE - WEATHER NORMALIZED (KWh/Average Customer)
51	Residential	2,525	2,543	(18	)
52	Business	25,214	25,322	(108	)
	ELECTRICITY DEMAND (MW)
53	Native load peak demand	4,825	4,113	712
	WEATHER INDICATORS - RESIDENTIAL
	Actual
54	Cooling degree-days	-	-	-
55	Heating degree-days	613	417	196
56	Average humidity	-	-	-
	10-Year Averages
57	Cooling degree-days	-	-	-
58	Heating degree-days	496	496	-
59	Average humidity	-	-	-

See Glossary of Terms. Page 3 of 4

Last Updated              5/3/2013

Pinnacle West Capital Corporation

Quarterly Consolidated Statistical Summary

Periods Ended March 31, 2013 and 2012

		3 Months Ended March
Line		2013	2012	Incr (Decr)
	ENERGY SOURCES (GWH)
	Generation production
60	Nuclear	2,456	2,360	96
61	Coal	2,753	2,571	182
62	Gas, oil and other	1,250	1,244	6
63	Total generation production	6,459	6,175	284
	Purchased power
64	Firm load	692	1,169	(477	)
65	Marketing and trading	113	71	42
66	Total purchased power	805	1,240	(435	)
67	Total energy sources	7,264	7,415	(151	)
	POWER PLANT PERFORMANCE
	Capacity Factors
68	Nuclear	99%	94%	5%
69	Coal	73%	67%	6%
70	Gas, oil and other	16%	17%	(1)%
71	System average	47%	45%	2%
	ECONOMIC INDICATORS
	Building Permits
72	Housing Permits - Metro Phoenix (a)	3,276	2,868	408
	Arizona Job Growth (b)
73	Payroll job growth (% over prior year)	1.8%	1.9%	(0.1)%
74	Unemployment rate (%, seasonally adjusted)	7.9%	8.5%	(0.6)%
Sources:
(a)	U.S. Census Bureau
(b)	Arizona Department of Economic Security

See Glossary of Terms. Page 4 of 4

EX-99.3

Exhibit 99.3

1st Quarter 2013 Results First Quarter 2013

2 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 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; our ability to achieve timely and adequate rate recovery of our costs, including returns on debt and equity capital; 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 Part I, Item 1A of the Pinnacle West/APS Annual Report on Form 10-K for the fiscal year ended December 31, 2012, 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. Forward-Looking Statements First Quarter 2013

3 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 First Quarter 2013

Capital investments Regulatory environment Operational excellence Looking ahead 4 CEO Discussion Agenda First Quarter 2013

5 CFO Agenda 1st quarter results Arizona economic outlook Earnings guidance and financial outlook First Quarter 2013

Per Share Net Income On-Going Earnings Per Share 6 Consolidated EPS Comparisons 1st Quarter 2013 vs. 1st Quarter 2012 First Quarter 2013

7 Non-GAAP EPS Reconciliation 1st Quarter 2013 vs. 1st Quarter 2012 1st Qtr 2013 1st Qtr 2012 Change EPS as reported 0.22 $ (0.08) $ 0.30 $ Adjustments: Loss from discontinued operations - 0.01 (0.01) On-going EPS 0.22 $ (0.07) $ 0.29 $ First Quarter 2013

Higher gross margin* $0.28 Lower infrastructure-related costs $0.06 Higher O&M* $(0.07) Net Increase $0.29 = * Excludes costs, and offsetting operating revenues, associated with renewable energy (net of AZ Sun), energy efficiency and similar regulatory programs. See non-GAAP reconciliation for gross margin in appendix. Other items, net $0.02 8 On-Going EPS Variances 1st Quarter 2013 vs. 1st Quarter 2012 First Quarter 2013

Net Increase $0.28 = See non-GAAP reconciliation in appendix. * Higher fuel and purchased power costs, net of off-system sales and mark-to-market. Retail transmission revenue increase $0.06 9 2012 regulatory settlement $0.13 Higher fuel costs, net* $(0.04) Higher retail kWh sales $0.06 Weather effects $0.06 Other items, net $0.01 Gross Margin EPS Drivers 1st Quarter 2013 vs. 1st Quarter 2012 First Quarter 2013

Year-Over- Year Change Non-Farm Job Growth 10 Metro Phoenix Excess Housing APS Service Territory ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 YTD YTD ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 Arizona Economic Indicators Employment & Excess Housing First Quarter 2013

Value Relative to Jan ‘05 Home Prices Nonresidential Building Vacancy Vacancy Rate Office Retail Arizona Economic Indicators Metro Phoenix Housing Prices & Nonresidential Vacancy 11 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 YTD YTD ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 First Quarter 2013

12 * Guidance near top of range. See key factors and assumptions in appendix. Consolidated Financial Outlook As of May 3, 2013 On-Going EPS $2.99 $3.45 – $3.60* $3.50 First Quarter 2013

13 Dividend Growth Goal Indicated Annual Dividend Rate at Year-End * Increase effective 4th quarter 2012 Future dividends subject to declaration at Board of Directors’ discretion. Projected Consolidated Earned ROE Goal At Least 9.5% 9.9% Projected Annual Dividend Growth Approx. 4% Consolidated Financial Outlook As of May 3, 2013 First Quarter 2013

 Appendix First Quarter 2013

Electricity gross margin* (operating revenues, net of fuel and purchased power expenses) about $2.17 billion to $2.22 billion Retail customer growth about 1.5% Weather-normalized retail electricity sales volume about flat to prior year taking into account effects of customer conservation and energy efficiency and distributed renewable generation initiatives Actual weather through March; normal weather patterns remainder of year Operating expenses* (operations and maintenance, depreciation and amortization, and taxes other than income taxes) about $1.34 billion to $1.37 billion Interest expense, net of allowances for borrowed and equity funds used during construction, about $175 million to $185 million Net income attributable to noncontrolling interests about $30 million to $35 million Effective tax rate about 35% * Excludes O&M of $114 million, and offsetting operating revenues, associated with renewable energy and energy efficiency programs 15 2013 On-Going EPS Guidance Key Factors & Assumptions as of May 3, 2013 First Quarter 2013

2013-2015 Financial Outlook Key Drivers & Assumptions as of May 3, 2013 16 2012 retail rate settlement effective July 1, 2012 Revenue provisions Retail base rate changes effective July 1, 2012 Adjustment mechanisms Four Corners acquisition AZ Sun additions to flow through RES until next base rate case Lost Fixed Cost Recovery (LFCR) mechanism assumed to offset 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 Cost mitigation provisions Power Supply Adjustor (PSA) – 100% pass-through Potential property tax deferrals – 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 First Quarter 2013

2013-2015 Financial Outlook Key Drivers & Assumptions as of May 3, 2013 (cont.) 17 Modestly improving Arizona and U.S. economic conditions Retail customer growth to average 2% annually Weather-normalized retail electricity sales volume growth: Less than 1% after customer conservation and energy efficiency and distributed renewable generation initiatives Rate base growth to average 6% annually AZ Sun Program Transmission rate adjustments (FERC formula rates and retail adjustor) Four Corners cost deferrals between dates acquired and included in retail rates Company-wide operating and capital cost management Financing to maintain balanced capital structure for credit ratings and retail regulatory test year Interest rates Actual weather through March 2013; normal weather patterns thereafter First Quarter 2013

Pretax Millions *All periods recalculated to conform to current presentation. 18 Gross Margin Effects of Weather Variances Versus Normal* 2011 2012 2013 First Quarter 2013

Pretax Millions * Related to APS 10% share under Power Supply Adjustor (PSA), net of related deferrals, effective through June 30, 2012. 19 Quarterly Mark-to-Market on Hedge Contracts* 2011 2012 2013 First Quarter 2013

Pretax Millions 20 * O&M expenses related to Renewable Energy Standard and similar regulatory programs are offset by comparable revenue amounts. Renewable Energy, Demand Side Management and Similar Regulatory Expenses* 2011 2012 2013 First Quarter 2013

21 Non-GAAP Measure Reconciliation Gross Margin $ millions pretax, except per share amounts 2013 2012 Operating revenues* 687 $ 621 $ Fuel and purchased power expenses* (231) (217) Gross margin 456 404 0.28 $ Less Renewable energy (excluding AZ Sun), energy efficiency and similar regulatory programs (25) (24) - Gross margin - adjusted 431 $ 380 $ 0.28 $ * Line items from Consolidated Statements of Income Three Months Ended March 31, EPS Change

Non-GAAP EPS Reconciliation Consolidated On-Going EPS Guidance 22 Year 2011 Actual Year 2012 Actual Year 2013 Guidance* Net income attributable to common shareholders 3.09 $ 3.45 $ Adjustments: Loss (income) from discontinued operations (0.10) 0.05 On-going EPS 2.99 $ 3.50 $ $3.45 - $3.60 * As of May 3, 2013 First Quarter 2013