Arizona Public Service 8-K Results of Operations and Financial Condition

Pinnacle West Capital Corporation

Consolidated Statistics By Quarter

2002

																Increase
																(Decrease)
Line		1st Qtr		2nd Qtr			3rd Qtr			4th Qtr			Year-To-Date			vs Prior YTD
	EARNINGS CONTRIBUTION BY SUBSIDIARY ($ Millions)
1	Arizona Public Service	$	32	$	64		$	87		$	16		$	199		$	(82	)
2	Pinnacle West Energy		1		1			10			(31	)		(19	)		(37	)
3	APS Energy Services		2		11			7			8			28			38
4	SunCor		1		2			(1	)		8			10			7
5	El Dorado		—		(3	)		(2	)		—			(5	)		(5	)
6	Parent Company		17		(6	)		8			4			23			(12	)
7	Income From Continuing Operations		53		69			109			5			236			(91	)
8	Income (Loss) From Discontinued Operations — Net of Tax		1		6			(8	)		(20	)		(21	)		(21	)
9	Cumulative Effect of Change in Accounting — Net of Tax		—		—			—			(66	)		(66	)		(51	)
10	Net Income	$	54	$	75		$	101		$	(81	)	$	149		$	(163	)
	EARNINGS PER SHARE BY SUBSIDIARY — DILUTED
11	Arizona Public Service	$	0.37	$	0.76		$	1.02		$	0.19		$	2.35		$	(0.95	)
12	Pinnacle West Energy		0.01		0.01			0.12			(0.37	)		(0.23	)		(0.44	)
13	APS Energy Services		0.03		0.13			0.08			0.09			0.33			0.45
14	SunCor		0.02		0.02			(0.01	)		0.09			0.13			0.09
15	El Dorado		—		(0.04	)		(0.02	)		—			(0.06	)		(0.06	)
16	Parent Company		0.20		(0.07	)		0.10			0.07			0.26			(0.16	)
17	Income From Continuing Operations		0.63		0.81			1.29			0.07			2.78			(1.07	)
18	Income (Loss) From Discontinued Operations — Net of Tax		—		0.08			(0.10	)		(0.24	)		(0.25	)		(0.25	)
19	Cumulative Effect of Change in Accounting — Net of Tax		—		—			—			(0.77	)		(0.77	)		(0.60	)
20	Net Income	$	0.63	$	0.89		$	1.19		$	(0.94	)	$	1.76		$	(1.92	)
21	BOOK VALUE PER SHARE	$	30.06	$	30.54		$	31.39		$	29.40		$	29.40		$	(0.06	)
	COMMON SHARES OUTSTANDING — DILUTED (Thousands)
22	Average		84,884		84,926			84,797			85,302			84,964			34
23	End of Period		84,789		84,768			84,756			91,255			91,255			6,531

See Glossary of Terms. Page 26 of 31

Pinnacle West Capital Corporation

Consolidated Statistics By Quarter

2002

												Increase
												(Decrease)
Line		1st Qtr		2nd Qtr		3rd Qtr		4th Qtr		Year-To-Date		vs Prior YTD
	ELECTRIC OPERATING REVENUES (Dollars in Millions)
	REGULATED ELECTRICITY SEGMENT
	Retail
24	Residential	$	171	$	226	$	337	$	172	$	906	$	(9	)
25	Business		195		251		270		212		928		(24	)
26	Total retail		366		477		607		384		1,834		(33	)
	Wholesale revenue on delivered electricity
27	Traditional contracts		2		1		3		3		9		(64	)
28	Off-system sales		—		—		—		—		—		—
29	Transmission for others		6		6		6		12		30		4
30	Other miscellaneous services		4		2		4		7		17		(1	)
31	Total regulated electricity		378		486		620		406		1,890		(94	)
	MARKETING AND TRADING SEGMENT
32	Electricity and other commodity sales		62		41		83		101		287		(183	)
33	Total operating electric revenues	$	440	$	527	$	703	$	507	$	2,177	$	(277	)
	ELECTRIC SALES (GWH)
	REGULATED ELECTRICITY SEGMENT
	Retail sales
34	Residential		2,141		2,441		3,806		2,056		10,444		109
35	Business		2,771		3,429		3,681		3,036		12,917		(147	)
36	Total retail		4,912		5,870		7,487		5,092		23,361		(38	)
	Wholesale electricity delivered
37	Traditional contracts		71		121		142		140		474		(739	)
38	Off-system sales		—		—		—		—		—		—
39	Retail load hedge management		158		230		1,958		296		2,642		(398	)
40	Total regulated electricity		5,141		6,221		9,587		5,528		26,477		(1,175	)
	MARKETING AND TRADING SEGMENT
41	Wholesale sales of electricity		4,212		4,443		7,104		7,096		22,855		6,854
42	Total electric sales		9,353		10,664		16,691		12,624		49,332		5,679

See Glossary of Terms. Page 27 of 31

Pinnacle West Capital Corporation

Consolidated Statistics By Quarter

2002

																Increase
																(Decrease)
Line		1st Qtr			2nd Qtr			3rd Qtr		4th Qtr			Year-To-Date			vs Prior YTD
	POWER SUPPLY ADJUSTOR (“PSA”) — REGULATED ELECTRICITY SEGMENT (Dollars in Millions)
43	Deferred fuel and purchased power regulatory asset — beginning balance	$	—		$	—		$	—	$	—		$	—		$	—
44	Deferred fuel and purchased power costs — current period		—			—			—		—			—			—
45	Amounts recovered through revenues		—			—			—		—			—			—
46	Deferred fuel and purchased power regulatory asset — end of period	$	—		$	—		$	—	$	—		$	—		$	—
	MARKETING AND TRADING SEGMENT PRETAX GROSS MARGIN ANALYSIS (Dollars in Millions)
	Realized and Mark-To-Market Components
47	Electricity and other commodity sales, realized (a)	$	39		$	25		$	19	$	38		$	121		$	(62	)
48	Mark-to-market reversals on realized sales (b)		(22	)		(9	)		2		(8	)		(41	)		(47	)
49	Change in mark-to-market value of forward sales		23			3			23		(1	)		52			(76	)
50	Total gross margin	$	40		$	19		$	44	$	29		$	132		$	(185	)
	By Pinnacle West Entity
51	Parent company marketing and trading division	$	35		$	9		$	32	$	14		$	90		$	12
52	APS		1			—			1		—			2			(233	)
53	Pinnacle West Energy		—			—			—		4			4			4
54	APS Energy Services		4			10			11		11			36			32
55	Total gross margin	$	40		$	19		$	44	$	29		$	132		$	(185	)

(a)

The net effect on pretax gross margin from realization of prior-period mark-to-market included in line 47 and in line 48 is zero. Realization of prior-period mark-to-market relates to cash flow recognition, not earnings recognition. The opposites of amounts included in line 47 are included in line 48. For example, line 48 shows that a prior-period mark-to-market gain of $41 million was transferred to “realized” for the total year 2002. A $41 million realized gain is included in the $121 million on line 47 for total year 2002.

(b)

Quarterly amounts do not total to the annual amounts because of intra-year mark-to-market eliminations.

See Glossary of Terms. Page 28 of 31

Pinnacle West Capital Corporation

Consolidated Statistics By Quarter

2002

																	Increase
																	(Decrease)
Line		1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			Year-To-Date			vs Prior YTD
	AVERAGE ELECTRIC CUSTOMERS
	Retail customers
56	Residential		801,000			795,681			798,590			811,930			801,801			25,462
57	Business		99,335			100,096			100,318			101,177			100,228			2,030
58	Total		900,335			895,777			898,908			913,107			902,029			27,492
59	Wholesale customers		67			67			67			67			67			1
60	Total customers		900,402			895,844			898,975			913,174			902,096			27,493
61	Customer Growth (% over prior year)		3.2	%		3.2	%		3.1	%		3.2	%		3.1	%		(0.5	)%
	RETAIL SALES (GWH) — WEATHER NORMALIZED
											��
62	Residential		2,148			2,461			3,746			2,135			10,490			641
63	Business		2,776			3,410			3,696			3,024			12,905			86
64	Total		4,924			5,871			7,441			5,159			23,395			727
	RETAIL USAGE (KWh/Average Customer)
65	Residential		2,673			3,068			4,766			2,532			13,025			(287	)
66	Business		27,896			34,258			36,691			30,011			129,241			(4,384	)
	RETAIL USAGE — WEATHER NORMALIZED (KWh/Average Customer)
67	Residential		2,681			3,093			4,690			2,630			13,083			396
68	Business		27,943			34,065			36,839			29,885			128,754			(1,788	)
	ELECTRICITY DEMAND (MW)
69	System peak demand		3,921			5,425			5,803			3,828			5,803			116

See Glossary of Terms. Page 29 of 31

Pinnacle West Capital Corporation

Consolidated Statistics By Quarter

2002

																	Increase
																	(Decrease)
Line		1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			Year-To-Date			vs Prior YTD
	ENERGY SOURCES (GWH)
	Generation production
70	Nuclear		2,257			2,242			2,387			2,095			8,981			596
71	Coal		2,890			2,703			3,280			3,183			12,056			(516	)
72	Gas, oil and other		337			659			1,918			1,455			4,369			375
73	Total		5,484			5,604			7,585			6,733			25,406			455
	Purchased power
74	Firm load		70			846			859			(157	)		1,619			(1,342	)
75	Marketing and trading		3,993			4,599			8,771			6,340			23,704			6,051
76	Total		4,063			5,445			9,630			6,183			25,323			4,709
77	Total energy sources		9,547			11,049			17,215			12,916			50,729			5,164
	POWER PLANT PERFORMANCE
	Capacity Factors
78	Nuclear		96	%		95	%		100	%		87	%		94	%		6	%
79	Coal		78	%		72	%		87	%		84	%		80	%		(4	)%
80	Gas, oil and other		12	%		20	%		38	%		29	%		27	%		(10	)%
81	System average		62	%		62	%		69	%		60	%		63	%		(7	)%
	Generation Capacity Out of Service and Replaced for Native Load (average MW/day)
82	Nuclear		62			66			12			129			67			(60	)
83	Coal		184			279			88			116			167			—
84	Gas		12			18			106			54			48			16
85	Total		258			363			206			299			282			(44	)

See Glossary of Terms. Page 30 of 31

Pinnacle West Capital Corporation

Consolidated Statistics By Quarter

2002

																	Increase
																	(Decrease)
Line		1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			Year-To-Date			vs Prior YTD
	ENERGY MARKET INDICATORS (a)
	Electricity Average Daily Spot Prices ($/MWh)
	On-Peak
86	Palo Verde	$	26.86		$	30.65		$	35.45		$	36.18		$	32.28		$	(86.13	)
87	SP15	$	28.46		$	31.51		$	35.55		$	41.35		$	34.22		$	(85.77	)
	Off-Peak
88	Palo Verde	$	22.17		$	14.10		$	18.21		$	25.09		$	19.89		$	(41.68	)
89	SP15	$	22.76		$	15.95		$	19.54		$	28.52		$	21.69		$	(51.79	)
	WEATHER INDICATORS
	Actual
90	Cooling degree-days		89			1,741			2,647			398			4,875			(247	)
91	Heating degree-days		472			—			—			328			800			(360	)
92	Average humidity		28	%		16	%		27	%		38	%		27	%		(9	)%
	10-Year Averages
93	Cooling degree-days		80			1,491			2,540			420			4,531			—
94	Heating degree-days		521			36			—			415			972			—
95	Average humidity		43	%		24	%		33	%		40	%		35	%		0	%
	ECONOMIC INDICATORS
	Building Permits — Metro Phoenix (b)
96	Single-family		7,682			9,666			8,689			8,275			34,312			1,447
97	Multi-family		1,249			2,005			2,662			1,158			7,074			(1,930	)
98	Total		8,931			11,671			11,351			9,433			41,386			(483	)
	Arizona Job Growth (c)
99	Payroll job growth (% over prior year)		(0.8	)%		(0.2	)%		(0.1	)%		1.1	%		0.0	%		(1.0	)%
100	Unemployment rate (%, seasonally adjusted)		6.3	%		6.2	%		6.1	%		6.0	%		6.2	%		1.5	%

Sources:
(a)	This price is an 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

See Glossary of Terms. Page 31 of 31