EXHIBIT 99.3

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

	THREE MONTHS ENDED				Pretax			After Tax
	MARCH 31,				Increase			Increase
	2005		2004		(Decrease)			(Decrease)
RECONCILIATION OF REGULATED ELECTRICITY SEGMENT GROSS MARGIN
Operating Income (closest GAAP measure)	$	85,256	$	84,198	$	1,058		$	643
Plus:
Operations and maintenance		156,496		137,386		19,110			11,613
Real estate segment operations		56,476		47,690		8,786			5,339
Depreciation and amortization		94,231		101,616		(7,385	)		(4,488	)
Taxes other than income taxes		35,190		30,330		4,860			2,953
Other expenses		8,374		8,750		(376	)		(228	)
Marketing and trading segment purchased power and fuel		100,641		67,764		32,877			19,979
Less:
Real estate segment revenues		72,056		51,593		20,463			12,435
Other revenues		10,135		10,905		(770	)		(468	)
Marketing and trading segment revenues		116,866		88,383		28,483			17,309
Regulated electricity segment gross margin	$	337,607	$	326,853	$	10,754		$	6,535
RECONCILIATION OF MARKETING AND TRADING SEGMENT GROSS MARGIN
Operating Income (closest GAAP measure)	$	85,256	$	84,198	$	1,058		$	643
Plus:
Operations and maintenance		156,496		137,386		19,110			11,613
Real estate segment operations		56,476		47,690		8,786			5,339
Depreciation and amortization		94,231		101,616		(7,385	)		(4,488	)
Taxes other than income taxes		35,190		30,330		4,860			2,953
Other expenses		8,374		8,750		(376	)		(228	)
Regulated electricity segment purchased power and fuel		78,423		88,611		(10,188	)		(6,191	)
Less:
Real estate segment revenues		72,056		51,593		20,463			12,435
Other revenues		10,135		10,905		(770	)		(468	)
Regulated electricity segment revenues		416,030		415,464		566			344
Marketing and trading segment gross margin	$	16,225	$	20,619	$	(4,394	)	$	(2,670	)