EXHIBIT 99.2

ARIZONA PUBLIC SERVICE COMPANY
NON-GAAP FINANCIAL MEASURE RECONCILIATION — OPERATING INCOME
(GAAP MEASURE) TO GROSS MARGIN (NON-GAAP FINANCIAL MEASURE)
(in thousands)

	THREE MONTHS ENDED
	JUNE 30,				Increase (Decrease)
	2007		2006		Pretax			After Tax
Reconciliation of Gross Margin
Operating income (closest GAAP measure)	$	109,643	$	119,967	$	(10,324	)	$	(6,273	)
Plus:
Operations and maintenance		170,631		164,373		6,258			3,802
Depreciation and amortization		90,809		87,969		2,840			1,726
Income taxes		42,682		46,650		(3,968	)		(2,411	)
Other taxes		34,588		32,666		1,922			1,168
Gross Margin	$	448,353	$	451,625	$	(3,272	)	$	(1,988	)

	SIX MONTHS ENDED
	JUNE 30,				Increase (Decrease)
	2007		2006		Pretax			After Tax
Reconciliation of Gross Margin
Operating income (closest GAAP measure)	$	150,232	$	145,011	$	5,221		$	3,172
Plus:
Operations and maintenance		336,565		337,726		(1,161	)		(705	)
Depreciation and amortization		178,685		174,280		4,405			2,676
Income taxes		45,825		43,621		2,204			1,339
Other taxes		69,110		68,214		896			544
Gross Margin	$	780,417	$	768,852	$	11,565		$	7,026