| 3 Mo. Ended March | ||||||||||||||||
| Line | 2008 | 2007 | Incr (Decr) | |||||||||||||
EARNINGS CONTRIBUTION BY SUBSIDIARY ($ Millions) | ||||||||||||||||
| 1 | Arizona Public Service | $ | (6 | ) | $ | 4 | $ | (10 | ) | |||||||
| 2 | Pinnacle West Energy | — | — | — | ||||||||||||
| 3 | APS Energy Services | — | 1 | (1 | ) | |||||||||||
| 4 | SunCor | (1 | ) | 9 | (10 | ) | ||||||||||
| 5 | El Dorado | (1 | ) | (2 | ) | 1 | ||||||||||
| 6 | Parent Company | 4 | 5 | (1 | ) | |||||||||||
| 7 | Income From Continuing Operations | (4 | ) | 17 | (21 | ) | ||||||||||
| Income (Loss) From Discontinued Operations — Net of Tax | ||||||||||||||||
| 8 | Silverhawk | — | — | — | ||||||||||||
| 9 | SunCor | — | — | — | ||||||||||||
| 10 | Other | — | — | — | ||||||||||||
| 11 | Total | — | — | — | ||||||||||||
| 12 | Net Income | $ | (4 | ) | $ | 17 | $ | (21 | ) | |||||||
EARNINGS PER SHARE BY SUBSIDIARY — DILUTED | ||||||||||||||||
| 13 | Arizona Public Service | $ | (0.06 | ) | $ | 0.04 | $ | (0.10 | ) | |||||||
| 14 | Pinnacle West Energy | — | — | — | ||||||||||||
| 15 | APS Energy Services | — | 0.01 | (0.01 | ) | |||||||||||
| 16 | SunCor | (0.01 | ) | 0.09 | (0.10 | ) | ||||||||||
| 17 | El Dorado | (0.02 | ) | (0.02 | ) | — | ||||||||||
| 18 | Parent Company | 0.04 | 0.04 | — | ||||||||||||
| 19 | Income From Continuing Operations | (0.05 | ) | 0.16 | (0.21 | ) | ||||||||||
| Income (Loss) From Discontinued Operations — Net of Tax | ||||||||||||||||
| 20 | Silverhawk | — | — | — | ||||||||||||
| 21 | SunCor | — | — | — | ||||||||||||
| 22 | Other | 0.01 | — | 0.01 | ||||||||||||
| 23 | Total | 0.01 | — | 0.01 | ||||||||||||
| 24 | Net Income | $ | (0.04 | ) | $ | 0.16 | $ | (0.20 | ) | |||||||
| 25 | BOOK VALUE PER SHARE | $ | 35.22 | * | $ | 34.45 | $ | 0.77 | ||||||||
| �� | ||||||||||||||||
COMMON SHARES OUTSTANDING (Thousands) | ||||||||||||||||
| 26 | Average — Diluted | 100,521 | 100,622 | (101 | ) | |||||||||||
| 27 | End of Period | 100,486 | 100,115 | 371 | ||||||||||||
| * | Estimate |
| See Glossary of Terms | Page 2 of 31 |
| 3 Mo. Ended March | ||||||||||||||||
| Line | 2008 | 2007 | Incr (Decr) | |||||||||||||
ELECTRIC OPERATING REVENUES (Dollars in Millions) | ||||||||||||||||
REGULATED ELECTRICITY SEGMENT | ||||||||||||||||
Retail | ||||||||||||||||
| 28 | Residential | $ | 271 | $ | 246 | $ | 25 | |||||||||
| 29 | Business | 300 | 264 | 36 | ||||||||||||
| 30 | Total retail | 571 | 510 | 61 | ||||||||||||
Wholesale revenue on delivered electricity | ||||||||||||||||
| 31 | Traditional contracts | 12 | 5 | 7 | ||||||||||||
| 32 | Off-system sales | 24 | 7 | 17 | ||||||||||||
| 33 | Transmission for others | 7 | 7 | — | ||||||||||||
| 34 | Other miscellaneous services | 9 | 7 | 2 | ||||||||||||
| 35 | Total regulated operating electricity revenues | 623 | 536 | 87 | ||||||||||||
MARKETING AND TRADING | ||||||||||||||||
| 36 | Electricity and other commodity sales | 57 | 72 | (15 | ) | |||||||||||
| 37 | Total operating electric revenues | $ | 680 | $ | 608 | $ | 72 | |||||||||
ELECTRIC SALES (GWH) | ||||||||||||||||
REGULATED ELECTRICITY SEGMENT | ||||||||||||||||
Retail sales | ||||||||||||||||
| 38 | Residential | 2,774 | 2,734 | 40 | ||||||||||||
| 39 | Business | 3,338 | 3,285 | 53 | ||||||||||||
| 40 | Total retail | 6,112 | 6,019 | 93 | ||||||||||||
Wholesale electricity delivered | ||||||||||||||||
| 41 | Traditional contracts | 222 | 175 | 47 | ||||||||||||
| 42 | Off-system sales | 416 | 243 | 173 | ||||||||||||
| 43 | Retail load hedge management | 162 | 117 | 45 | ||||||||||||
| 44 | Total regulated electricity | 6,912 | 6,554 | 358 | ||||||||||||
MARKETING AND TRADING | ||||||||||||||||
| 45 | Wholesale sales of electricity | 920 | 1,923 | (1,003 | ) | |||||||||||
| 46 | Total electric sales | 7,832 | 8,477 | (645 | ) | |||||||||||
| See Glossary of Terms | Page 3 of 31 |
| 3 Mo. Ended March | ||||||||||||||||
| Line | 2008 | 2007 | Incr (Decr) | |||||||||||||
POWER SUPPLY ADJUSTOR (“PSA”) - - REGULATED ELECTRICITY SEGMENT (Dollars in Millions) | ||||||||||||||||
| 47 | Deferred fuel and purchased power regulatory asset — beginning balance | $ | 111 | $ | 160 | $ | (49 | ) | ||||||||
| 48 | Deferred fuel and purchased power costs — current period | (11 | ) | 25 | (36 | ) | ||||||||||
| 49 | Regulatory disallowance | — | — | — | ||||||||||||
| 50 | Interest on deferred fuel | 1 | 2 | (1 | ) | |||||||||||
| 51 | Amounts recovered through revenues | (51 | ) | (69 | ) | 18 | ||||||||||
| 52 | Deferred fuel and purchased power regulatory asset — ending balance | $ | 50 | $ | 118 | $ | (68 | ) | ||||||||
MARKETING AND TRADING PRETAX GROSS MARGIN ANALYSIS (Dollars in Millions) | ||||||||||||||||
Realized and Mark-To-Market Components | ||||||||||||||||
| 53 | Electricity and other commodity sales, realized (a) | $ | 5 | $ | 13 | $ | (8 | ) | ||||||||
| 54 | Mark-to-market reversals on realized sales (a) (b) | — | (8 | ) | 8 | |||||||||||
| 55 | Change in mark-to-market value of forward sales | 1 | 10 | (9 | ) | |||||||||||
| 56 | Total gross margin | $ | 6 | $ | 15 | $ | (9 | ) | ||||||||
By Pinnacle West Entity | ||||||||||||||||
| 57 | APS | $ | — | $ | (1 | ) | $ | 1 | ||||||||
| 58 | Pinnacle West | 7 | 11 | (4 | ) | |||||||||||
| 59 | APS Energy Services | (1 | ) | 5 | (6 | ) | ||||||||||
| 60 | Pinnacle West Energy | — | — | — | ||||||||||||
| 61 | Total gross margin | $ | 6 | $ | 15 | $ | (9 | ) | ||||||||
| (a) | Net effect on pretax gross margin from realization of prior-period mark-to-market included in line 53 and in line 54 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 53 are included in line 54. For example, line 54 shows that a prior-period mark-to-market gain of $0 million was transferred to “realized” for the first quarter of 2008. A $0 million realized gain is included in the $5 million on line 53 for the first quarter of 2008. | |
| (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 |
| 3 Mo. Ended March | ||||||||||||||||
| Line | 2008 | 2007 | Incr (Decr) | |||||||||||||
AVERAGE ELECTRIC CUSTOMERS | ||||||||||||||||
Retail customers | ||||||||||||||||
| 62 | Residential | 982,459 | 965,428 | 17,031 | ||||||||||||
| 63 | Business | 122,833 | 118,649 | 4,184 | ||||||||||||
| 64 | Total | 1,105,292 | 1,084,077 | 21,215 | ||||||||||||
| 65 | Wholesale customers | 50 | 63 | (13 | ) | |||||||||||
| 66 | Total customers | 1,105,342 | 1,084,140 | 21,202 | ||||||||||||
| 67 | Customer growth (% over prior year) | 2.0 | % | 3.8 | % | (1.8 | )% | |||||||||
RETAIL SALES (GWH) - WEATHER NORMALIZED | ||||||||||||||||
| 68 | Residential | 2,694 | 2,657 | 37 | ||||||||||||
| 69 | Business | 3,300 | 3,228 | 72 | ||||||||||||
| 70 | Total | 5,994 | 5,885 | 109 | ||||||||||||
RETAIL USAGE (KWh/Average Customer) | ||||||||||||||||
| 71 | Residential | 2,824 | 2,832 | (8 | ) | |||||||||||
| 72 | Business | 27,175 | 27,687 | (512 | ) | |||||||||||
RETAIL USAGE - WEATHER NORMALIZED (KWh/Average Customer) | ||||||||||||||||
| 73 | Residential | 2,742 | 2,752 | (10 | ) | |||||||||||
| 74 | Business | 26,865 | 27,205 | (340 | ) | |||||||||||
ELECTRICITY DEMAND (MW) | ||||||||||||||||
| 75 | System peak demand | 4,685 | 4,781 | (96 | ) | |||||||||||
| See Glossary of Terms | Page 5 of 31 |
| 3 Mo. Ended March | ||||||||||||||||
| Line | 2008 | 2007 | Incr (Decr) | |||||||||||||
ENERGY SOURCES (GWH) | ||||||||||||||||
Generation production | ||||||||||||||||
| 76 | Nuclear | 2,318 | 2,299 | 19 | ||||||||||||
| 77 | Coal | 2,924 | 3,164 | (240 | ) | |||||||||||
| 78 | Gas, oil and other | 1,148 | 1,151 | (3 | ) | |||||||||||
| 79 | Total generation production | 6,390 | 6,614 | (224 | ) | |||||||||||
Purchased power | ||||||||||||||||
| 80 | Firm load | 740 | 278 | 462 | ||||||||||||
| 81 | Marketing and trading | 1,205 | 2,128 | (923 | ) | |||||||||||
| 82 | Total purchased power | 1,945 | 2,406 | (461 | ) | |||||||||||
| 83 | Total energy sources | 8,335 | 9,020 | (685 | ) | |||||||||||
POWER PLANT PERFORMANCE | ||||||||||||||||
Capacity Factors | ||||||||||||||||
| 84 | Nuclear | 93 | % | 94 | % | (1 | )% | |||||||||
| 85 | Coal | 76 | % | 84 | % | (8 | )% | |||||||||
| 86 | Gas, oil and other | 16 | % | 16 | % | 0 | % | |||||||||
| 87 | System average | 47 | % | 50 | % | (3 | )% | |||||||||
Generation Capacity Out of Service and Replaced for Native Load (average MW/day) (a) | ||||||||||||||||
| 88 | Nuclear | 8 | 57 | (49 | ) | |||||||||||
| 89 | Coal | 327 | 203 | 124 | ||||||||||||
| 90 | Gas | 356 | 267 | 89 | ||||||||||||
| 91 | Total | 691 | 527 | 164 | ||||||||||||
| (a) | Includes planned and unplanned outages |
| See Glossary of Terms | Page 6 of 31 |
| 3 Mo. Ended March | ||||||||||||||||
| Line | 2008 | 2007 | Incr (Decr) | |||||||||||||
ENERGY MARKET INDICATORS (a) | ||||||||||||||||
Electricity Average Daily Spot Prices ($/MWh) | ||||||||||||||||
On-Peak | ||||||||||||||||
| 92 | Palo Verde | $ | 69.40 | $ | 54.62 | $ | 14.78 | |||||||||
| 93 | SP15 | $ | 79.09 | $ | 60.02 | $ | 19.07 | |||||||||
Off-Peak | ||||||||||||||||
| 94 | Palo Verde | $ | 56.39 | $ | 42.06 | $ | 14.33 | |||||||||
| 95 | SP15 | $ | 62.35 | $ | 45.86 | $ | 16.49 | |||||||||
WEATHER INDICATORS | ||||||||||||||||
Actual | ||||||||||||||||
| 96 | Cooling degree-days | 105 | 172 | (67 | ) | |||||||||||
| 97 | Heating degree-days | 583 | 589 | (6 | ) | |||||||||||
| 98 | Average humidity | 40 | % | 36 | % | 4 | % | |||||||||
10-Year Averages | ||||||||||||||||
| 99 | Cooling degree-days | 96 | 96 | — | ||||||||||||
| 100 | Heating degree-days | 517 | 517 | — | ||||||||||||
| 101 | Average humidity | 42 | % | 42 | % | 0 | % | |||||||||
ECONOMIC INDICATORS | ||||||||||||||||
Building Permits — Metro Phoenix (b) (d) | ||||||||||||||||
| 102 | Single-family | 1,418 | 2,263 | (845 | ) | |||||||||||
| 103 | Multi-family | 1,070 | 1,488 | (418 | ) | |||||||||||
| 104 | Total | 2,488 | 3,751 | (1,263 | ) | |||||||||||
Arizona Job Growth (c) (d) | ||||||||||||||||
| 105 | Payroll job growth (% over prior year) | 0.4 | % | 2.5 | % | (2.1 | )% | |||||||||
| 106 | Unemployment rate (%, seasonally adjusted) | 4.2 | % | 3.9 | % | 0.3 | % | |||||||||
| 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 periods ended February 29, 2008 (latest available data) and February 28, 2007. |
| See Glossary of Terms | Page 7 of 31 |
