| 3 Mo. Ended June | 6 Mo. Ended June | |||||||||||||||||||||||||||
| Line | 2006 | 2005 | Incr (Decr) | 2006 | 2005 | Incr (Decr) | ||||||||||||||||||||||
EARNINGS CONTRIBUTION BY SUBSIDIARY ($ Millions) | ||||||||||||||||||||||||||||
| 1 | Arizona Public Service | $ | 94 | $ | 64 | $ | 30 | $ | 88 | $ | 91 | $ | (3 | ) | ||||||||||||||
| 2 | Pinnacle West Energy | — | 12 | (12 | ) | — | (8 | ) | 8 | |||||||||||||||||||
| 3 | APS Energy Services | — | 1 | (1 | ) | 1 | (2 | ) | 3 | |||||||||||||||||||
| 4 | SunCor | 8 | 11 | (3 | ) | 30 | 19 | 11 | ||||||||||||||||||||
| 5 | El Dorado | — | — | — | (2 | ) | (1 | ) | (1 | ) | ||||||||||||||||||
| 6 | Parent Company | 9 | (3 | ) | 12 | 5 | 16 | (11 | ) | |||||||||||||||||||
| 7 | Income From Continuing Operations | 111 | 85 | 26 | 122 | 115 | 7 | |||||||||||||||||||||
| 8 | Loss From Discontinued Operations — Net of Tax | 1 | (58 | ) | 59 | 3 | (64 | ) | 67 | |||||||||||||||||||
| 9 | Cumulative Effect of Change in Accounting — Net of Tax | — | — | — | — | — | — | |||||||||||||||||||||
| 10 | Net Income | $ | 112 | $ | 27 | $ | 85 | $ | 125 | $ | 51 | $ | 74 | |||||||||||||||
EARNINGS PER SHARE BY SUBSIDIARY — DILUTED | ||||||||||||||||||||||||||||
| 11 | Arizona Public Service | $ | 0.95 | $ | 0.66 | $ | 0.29 | $ | 0.89 | $ | 0.97 | $ | (0.08 | ) | ||||||||||||||
| 12 | Pinnacle West Energy | — | 0.13 | (0.13 | ) | — | (0.09 | ) | 0.09 | |||||||||||||||||||
| 13 | APS Energy Services | — | 0.01 | (0.01 | ) | 0.01 | (0.03 | ) | 0.04 | |||||||||||||||||||
| 14 | SunCor | 0.08 | 0.11 | (0.03 | ) | 0.30 | 0.21 | 0.09 | ||||||||||||||||||||
| 15 | El Dorado | — | — | — | (0.02 | ) | (0.01 | ) | (0.01 | ) | ||||||||||||||||||
| 16 | Parent Company | 0.08 | (0.03 | ) | 0.11 | 0.05 | 0.17 | (0.12 | ) | |||||||||||||||||||
| 17 | Income From Continuing Operations | 1.11 | 0.88 | 0.23 | 1.23 | 1.22 | 0.01 | |||||||||||||||||||||
| 18 | Income (Loss) From Discontinued Operations — Net of Tax | 0.02 | (0.60 | ) | 0.62 | 0.02 | (0.68 | ) | 0.70 | |||||||||||||||||||
| 19 | Cumulative Effect of Change in Accounting — Net of Tax | — | — | — | — | — | — | |||||||||||||||||||||
| 20 | Net Income | $ | 1.13 | $ | 0.28 | $ | 0.85 | $ | 1.25 | $ | 0.54 | $ | 0.71 | |||||||||||||||
| 21 | BOOK VALUE PER SHARE | $ | 33.00 | * | $ | 32.89 | $ | 0.11 | $ | 33.00 | * | $ | 32.89 | 0.11 | ||||||||||||||
COMMON SHARES OUTSTANDING (Thousands) | ||||||||||||||||||||||||||||
| 22 | Average — Diluted | 99,640 | 96,299 | 3,341 | 99,562 | 94,189 | 5,373 | |||||||||||||||||||||
| 23 | End of Period | 99,284 | 98,442 | 842 | 99,284 | 98,442 | 842 | |||||||||||||||||||||
| * | Estimate |
| See Glossary of Terms. | Page 2 of 31 |
| 3 Mo. Ended June | 6 Mo. Ended June | |||||||||||||||||||||||||
| Line | 2006 | 2005 | Incr (Decr) | 2006 | 2005 | Incr (Decr) | ||||||||||||||||||||
ELECTRIC OPERATING REVENUES (Dollars in Millions) | ||||||||||||||||||||||||||
REGULATED ELECTRICITY SEGMENT | ||||||||||||||||||||||||||
Retail | ||||||||||||||||||||||||||
| 24 | Residential | $ | 337 | $ | 268 | $ | 69 | $ | 539 | $ | 458 | $ | 81 | |||||||||||||
| 25 | Business | 333 | 281 | 52 | 566 | 490 | 76 | |||||||||||||||||||
| 26 | Total retail | 670 | 549 | 121 | 1,105 | 948 | 157 | |||||||||||||||||||
Wholesale revenue on delivered electricity | ||||||||||||||||||||||||||
| 27 | Traditional contracts | 7 | 5 | 2 | 13 | 8 | 5 | |||||||||||||||||||
| 28 | Off-system sales | 22 | 12 | 10 | 34 | 12 | 22 | |||||||||||||||||||
| 29 | Transmission for others | 6 | 7 | (1 | ) | 12 | 14 | (2 | ) | |||||||||||||||||
| 30 | Other miscellaneous services | 8 | 7 | 1 | 15 | 14 | 1 | |||||||||||||||||||
| 31 | Total regulated operating electricity revenues | 713 | 580 | 133 | 1,179 | 996 | 183 | |||||||||||||||||||
MARKETING AND TRADING SEGMENT | ||||||||||||||||||||||||||
| 32 | Electricity and other commodity sales | 90 | 71 | 19 | 175 | 160 | 15 | |||||||||||||||||||
| 33 | Total operating electric revenues | $ | 803 | $ | 651 | $ | 152 | $ | 1,354 | $ | 1,156 | $ | 198 | |||||||||||||
ELECTRIC SALES (GWH) | ||||||||||||||||||||||||||
REGULATED ELECTRICITY SEGMENT | ||||||||||||||||||||||||||
Retail sales | ||||||||||||||||||||||||||
| 34 | Residential | 3,284 | 2,889 | 395 | 5,703 | 5,256 | 447 | |||||||||||||||||||
| 35 | Business | 3,971 | 3,684 | 287 | 7,170 | 6,726 | 444 | |||||||||||||||||||
| 36 | Total retail | 7,255 | 6,573 | 682 | 12,873 | 11,982 | 891 | |||||||||||||||||||
Wholesale electricity delivered | ||||||||||||||||||||||||||
| 37 | Traditional contracts | 181 | 200 | (19 | ) | 396 | 355 | 41 | ||||||||||||||||||
| 38 | Off-system sales | 586 | 598 | (12 | ) | 1,522 | 598 | 924 | ||||||||||||||||||
| 39 | Retail load hedge management | 621 | 702 | (81 | ) | 799 | 1,452 | (653 | ) | |||||||||||||||||
| 40 | Total regulated electricity | 8,643 | 8,073 | 570 | 15,590 | 14,387 | 1,203 | |||||||||||||||||||
MARKETING AND TRADING SEGMENT | ||||||||||||||||||||||||||
| 41 | Wholesale sales of electricity | 3,862 | 5,009 | (1,147 | ) | 7,753 | 11,069 | (3,316 | ) | |||||||||||||||||
| 42 | Total electric sales | 12,505 | 13,082 | (577 | ) | 23,343 | 25,456 | (2,113 | ) | |||||||||||||||||
| See Glossary of Terms. | Page 3 of 31 |
| 3 Mo. Ended June | 6 Mo. Ended June | |||||||||||||||||||||||||
| Line | 2006 | 2005 | Incr (Decr) | 2006 | 2005 | Incr (Decr) | ||||||||||||||||||||
POWER SUPPLY ADJUSTOR (“PSA”) — REGULATED ELECTRICITY SEGMENT (Dollars in Millions) | ||||||||||||||||||||||||||
| 43 | Deferred fuel and purchased power regulatory asset — beginning balance | $ | 169 | $ | — | $ | 169 | $ | 173 | $ | — | $ | 173 | |||||||||||||
| 44 | Deferred fuel and purchased power costs — current period | 78 | 38 | 40 | 91 | 38 | 53 | |||||||||||||||||||
| 45 | Interest on deferred fuel | 3 | — | 3 | 4 | — | 4 | |||||||||||||||||||
| 46 | Amounts recovered through revenues | (75 | ) | — | (75 | ) | (93 | ) | — | (93 | ) | |||||||||||||||
| 47 | Deferred fuel and purchased power regulatory asset — ending balance | $ | 175 | $ | 38 | $ | 137 | $ | 175 | $ | 38 | $ | 137 | |||||||||||||
MARKETING AND TRADING SEGMENT PRETAX GROSS MARGIN ANALYSIS (Dollars in Millions) | ||||||||||||||||||||||||||
Realized and Mark-To-Market Components | ||||||||||||||||||||||||||
| 48 | Electricity and other commodity sales, realized (a) | $ | 17 | $ | 18 | $ | (1 | ) | $ | 29 | $ | 30 | $ | (1 | ) | |||||||||||
| 49 | Mark-to-market reversals on realized sales (a) (b) | (1 | ) | (8 | ) | 7 | (3 | ) | (8 | ) | 5 | |||||||||||||||
| 50 | Change in mark-to-market value of forward sales | — | 3 | (3 | ) | 2 | 10 | (8 | ) | |||||||||||||||||
| 51 | Total gross margin | $ | 16 | $ | 13 | $ | 3 | $ | 28 | $ | 32 | $ | (4 | ) | ||||||||||||
By Pinnacle West Entit | ||||||||||||||||||||||||||
| 52 | Parent company marketing and trading division | $ | 11 | $ | 6 | $ | 5 | $ | 10 | $ | 27 | $ | (17 | ) | ||||||||||||
| 53 | APS | 2 | 3 | (1 | ) | 12 | (1 | ) | 13 | |||||||||||||||||
| 54 | Pinnacle West Energy | — | — | — | — | 5 | (5 | ) | ||||||||||||||||||
| 55 | APS Energy Services | 3 | 4 | (1 | ) | 6 | 1 | 5 | ||||||||||||||||||
| 56 | Total gross margin | $ | 16 | $ | 13 | $ | 3 | $ | 28 | $ | 32 | $ | (4 | ) | ||||||||||||
| (a) | Net effect on pretax gross margin from realization of prior-period mark-to-market included in line 48 and in line 49 is zero. Realization of prior-period mark-to-market relates to cash flow recognition, not earnings recognition. The arithmetic opposites of amounts included in line 48 are included in line 49. For example, line 49 shows that a prior-period mark-to-market gain of $1 million was transferred to “realized” for the second quarter of 2006. A $1 million realized gain is included in the $17 million on line 48 for the second quarter of 2006. | |
| (b) | Quarterly amounts do not total to annual amounts because of intra-year mark-to-market eliminations. |
| See Glossary of Terms. | Page 4 of 31 |
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| Line | 2006 | 2005 | Incr (Decr) | 2006 | 2005 | Incr (Decr) | ||||||||||||||||||||
AVERAGE ELECTRIC CUSTOMERS | ||||||||||||||||||||||||||
Retail customers | ||||||||||||||||||||||||||
| 57 | Residential | 930,402 | 888,509 | 41,893 | 930,601 | 889,238 | 41,363 | |||||||||||||||||||
| 58 | Business | 114,803 | 110,658 | 4,145 | 114,186 | 110,227 | 3,959 | |||||||||||||||||||
| 59 | Total | 1,045,205 | 999,167 | 46,038 | 1,044,787 | 999,465 | 45,322 | |||||||||||||||||||
| 60 | Wholesale customers | 76 | 76 | — | 76 | 79 | (3 | ) | ||||||||||||||||||
| 61 | Total customers | 1,045,281 | 999,243 | 46,038 | 1,044,863 | 999,544 | 45,319 | |||||||||||||||||||
| 62 | Customer growth (% over prior year) | 4.6 | % | 4.2 | % | 0.4 | % | 4.5 | % | 4.1 | % | 0.4 | % | |||||||||||||
RETAIL SALES (GWH) — WEATHER NORMALIZED | ||||||||||||||||||||||||||
| 63 | Residential | 3,105 | 2,905 | 200 | 5,619 | 5,344 | 275 | |||||||||||||||||||
| 64 | Business | 3,926 | 3,693 | 233 | 7,178 | 6,751 | 427 | |||||||||||||||||||
| 65 | Total | 7,031 | 6,598 | 433 | 12,797 | 12,095 | 702 | |||||||||||||||||||
RETAIL USAGE (KWh/Average Customer) | ||||||||||||||||||||||||||
| 66 | Residential | 3,530 | 3,252 | 278 | 6,128 | 5,911 | 218 | |||||||||||||||||||
| 67 | Business | 34,590 | 33,292 | 1,298 | 62,792 | 61,020 | 1,773 | |||||||||||||||||||
RETAIL USAGE — WEATHER NORMALIZED (KWh/Average Customer) | ||||||||||||||||||||||||||
| 68 | Residential | 3,337 | 3,269 | 68 | 6,038 | 6,010 | 29 | |||||||||||||||||||
| 69 | Business | 34,194 | 33,377 | 817 | 62,859 | 61,247 | 1,613 | |||||||||||||||||||
ELECTRICITY DEMAND (MW) | ||||||||||||||||||||||||||
| 70 | System peak demand | 6,624 | 6,458 | 166 | 6,624 | 6,458 | 166 | |||||||||||||||||||
| See Glossary of Terms. | Page 5 of 31 |
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| Line | 2006 | 2005 | Incr (Decr) | 2006 | 2005 | Incr (Decr) | ||||||||||||||||||||
ENERGY SOURCES (GWH) | ||||||||||||||||||||||||||
Generation production | ||||||||||||||||||||||||||
| 71 | Nuclear | 1,198 | 1,619 | (421 | ) | 2,918 | 3,866 | (948 | ) | |||||||||||||||||
| 72 | Coal | 3,183 | 3,088 | 95 | 6,266 | 6,028 | 238 | |||||||||||||||||||
| 73 | Gas, oil and other | 2,000 | 2,074 | (74 | ) | 3,252 | 3,201 | 51 | ||||||||||||||||||
| 74 | Total generation production | 6,381 | 6,781 | (400 | ) | 12,436 | 13,095 | (659 | ) | |||||||||||||||||
Purchased power | ||||||||||||||||||||||||||
| 75 | Firm load | 1,884 | 880 | 1,004 | 2,249 | 1,466 | 783 | |||||||||||||||||||
| 76 | Marketing and trading | 4,807 | 5,984 | (1,177 | ) | 9,654 | 11,816 | (2,162 | ) | |||||||||||||||||
| 77 | Total purchased power | 6,691 | 6,864 | (173 | ) | 11,903 | 13,282 | (1,379 | ) | |||||||||||||||||
| 78 | Total energy sources | 13,072 | 13,645 | (573 | ) | 24,339 | 26,377 | (2,038 | ) | |||||||||||||||||
POWER PLANT PERFORMANCE | ||||||||||||||||||||||||||
Capacity Factors | ||||||||||||||||||||||||||
| 79 | Nuclear | 49 | % | 67 | % | (18 | )% | 60 | % | 80 | % | (20 | )% | |||||||||||||
| 80 | Coal | 84 | % | 83 | % | 1 | % | 83 | % | 81 | % | 2 | % | |||||||||||||
| 81 | Gas, oil and other | 28 | % | 28 | % | 0 | % | 23 | % | 22 | % | 1 | % | |||||||||||||
| 82 | System average | 48 | % | 49 | % | (1 | )% | 47 | % | 48 | % | (1 | )% | |||||||||||||
Generation Capacity Out of Service and Replaced for Native Load (average MW/day) (a) | ||||||||||||||||||||||||||
| 83 | Nuclear | 553 | 329 | 224 | 859 | 381 | 478 | |||||||||||||||||||
| 84 | Coal | 184 | 244 | (60 | ) | 441 | 439 | 2 | ||||||||||||||||||
| 85 | Gas | 117 | 164 | (47 | ) | 318 | 376 | (58 | ) | |||||||||||||||||
| 86 | Total | 854 | 737 | 117 | 1,618 | 1,196 | 422 | |||||||||||||||||||
| (a) | Includes planned and unplanned outages |
| See Glossary of Terms. | Page 6 of 31 |
| 3 Mo. Ended June | 6 Mo. Ended June | ||||||||||||||||||||||||
| Line | 2006 | 2005 | Incr (Decr) | 2006 | 2005 | Incr (Decr) | |||||||||||||||||||
ENERGY MARKET INDICATORS (a) | |||||||||||||||||||||||||
Electricity Average Daily Spot Prices ($/MWh) | |||||||||||||||||||||||||
On-Peak | |||||||||||||||||||||||||
| 87 | Palo Verde | $ | 51.30 | $ | 53.33 | $ | (2.03 | ) | $ | 52.54 | $ | 51.54 | $ | 1.00 | |||||||||||
| 88 | SP15 | $ | 55.39 | $ | 55.19 | $ | 0.20 | $ | 56.87 | $ | 55.45 | $ | 1.42 | ||||||||||||
Off-Peak | |||||||||||||||||||||||||
| 89 | Palo Verde | $ | 28.38 | $ | 33.03 | $ | (4.65 | ) | $ | 35.15 | $ | 35.04 | $ | 0.11 | |||||||||||
| 90 | SP15 | $ | 27.73 | $ | 34.73 | $ | (7.00 | ) | $ | 36.26 | $ | 37.85 | $ | (1.59 | ) | ||||||||||
WEATHER INDICATORS | |||||||||||||||||||||||||
Actual | |||||||||||||||||||||||||
| 91 | Cooling degree-days | 1,740 | 1,538 | 202 | 1,783 | 1,572 | 211 | ||||||||||||||||||
| 92 | Heating degree-days | 4 | 1 | 3 | 468 | 458 | 10 | ||||||||||||||||||
| 93 | Average humidity | 18 | % | 20 | % | (2 | )% | 23 | % | 38 | % | (15 | )% | ||||||||||||
10-Year Averages | |||||||||||||||||||||||||
| 94 | Cooling degree-days | 1,547 | 1,547 | — | 1,646 | 1,646 | — | ||||||||||||||||||
| 95 | Heating degree-days | 31 | 31 | — | 545 | 545 | — | ||||||||||||||||||
| 96 | Average humidity | 23 | % | 23 | % | 0 | % | 32 | % | 32 | % | 0 | % | ||||||||||||
ECONOMIC INDICATORS | |||||||||||||||||||||||||
Building Permits — Metro Phoenix (b) (d) | |||||||||||||||||||||||||
| 97 | Single-family | 5,756 | 7,837 | (2,081 | ) | 14,472 | 18,193 | (3,721 | ) | ||||||||||||||||
| 98 | Multi-family | 2,305 | 621 | 1,684 | 5,192 | 2,362 | 2,830 | ||||||||||||||||||
| 99 | Total | 8,061 | 8,458 | (397 | ) | 19,664 | 20,555 | (891 | ) | ||||||||||||||||
Arizona Job Growth (c) (d) | |||||||||||||||||||||||||
| 100 | Payroll job growth (% over prior year) | 4.7 | % | 5.6 | % | (0.9 | )% | 5.2 | % | 5.1 | % | 0.1 | % | ||||||||||||
| 101 | Unemployment rate (%, seasonally adjusted) | 4.3 | % | 4.7 | % | (0.4 | )% | 4.4 | % | 4.6 | % | (0.2 | )% | ||||||||||||
| Sources: | ||
| (a) | Average of daily prices obtained and used with permission from Dow Jones & Company, Inc. | |
| (b) | Arizona Real Estate Center, Arizona State University W.P. Carey College of Business | |
| (c) | Arizona Department of Economic Security | |
| (d) | Economic indicators reflect latest available data through periods ended May 31, 2006. |
| See Glossary of Terms | Page 7 of 31 |
