Pinnacle West Capital (PNW) 10-Q 2005 Q3 Quarterly report

Exhibit 99.3

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

	THREE MONTHS ENDED				Pretax			After Tax
	SEPTEMBER 30,				Increase			Increase
	2005		2004		(Decrease)			(Decrease)
RECONCILIATION OF REGULATED ELECTRICITY SEGMENT GROSS MARGIN
Operating Income (closest GAAP measure)	$	162,113	$	209,356	$	(47,243	)	$	(28,710	)
Plus:
Operations and maintenance		158,940		158,607		333			202
Real estate segment operations		65,880		66,414		(534	)		(325	)
Depreciation and amortization		87,123		93,360		(6,237	)		(3,790	)
Taxes other than income taxes		34,325		31,020		3,305			2,008
Other expenses		13,521		9,568		3,953			2,402
Regulatory disallowance		143,217		—		143,217			87,033
Marketing and trading segment purchased power and fuel		86,945		76,684		10,261			6,236
Less:
Real estate segment revenues		78,755		72,754		6,001			3,647
Other revenues		16,369		12,585		3,784			2,300
Marketing and trading segment revenues		107,031		91,267		15,764			9,580
Regulated electricity segment gross margin	$	549,909	$	468,403	$	81,506		$	49,529
RECONCILIATION OF MARKETING AND TRADING SEGMENT GROSS MARGIN
Operating Income (closest GAAP measure)	$	162,113	$	209,356	$	(47,243	)	$	(28,710	)
Plus:
Operations and maintenance		158,940		158,607		333			202
Real estate segment operations		65,880		66,414		(534	)		(325	)
Depreciation and amortization		87,123		93,360		(6,237	)		(3,790	)
Taxes other than income taxes		34,325		31,020		3,305			2,008
Other expenses		13,521		9,568		3,953			2,402
Regulatory disallowance		143,217		—		143,217			87,033
Regulated electricity segment purchased power and fuel		203,519		202,156		1,363			828
Less:
Real estate segment revenues		78,755		72,754		6,001			3,647
Other revenues		16,369		12,585		3,784			2,300
Regulated electricity segment revenues		753,428		670,559		82,869			50,359
Marketing and trading segment gross margin	$	20,086	$	14,583	$	5,503		$	3,342

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

	NINE MONTHS ENDED				Pretax			After Tax
	SEPTEMBER 30,				Increase			Increase
	2005		2004		(Decrease)			(Decrease)
RECONCILIATION OF REGULATED ELECTRICITY SEGMENT GROSS MARGIN
Operating Income (closest GAAP measure)	$	432,502	$	416,159	$	16,343		$	9,932
Plus:
Operations and maintenance		467,121		434,588		32,533			19,770
Real estate segment operations		190,555		175,560		14,995			9,112
Depreciation and amortization		262,030		294,942		(32,912	)		(20,001	)
Taxes other than income taxes		103,528		93,658		9,870			5,998
Other expenses		39,451		25,893		13,558			8,239
Regulatory disallowance		143,217		—		143,217			87,033
Marketing and trading segment purchased power and fuel		215,347		232,516		(17,169	)		(10,434	)
Less:
Real estate segment revenues		232,950		186,762		46,188			28,068
Other revenues		46,763		32,904		13,859			8,422
Marketing and trading segment revenues		267,460		290,107		(22,647	)		(13,763	)
Regulated electricity segment gross margin	$	1,306,578	$	1,163,543	$	143,035		$	86,922
RECONCILIATION OF MARKETING AND TRADING SEGMENT GROSS MARGIN
Operating Income (closest GAAP measure)	$	432,502	$	416,159	$	16,343		$	9,932
Plus:
Operations and maintenance		467,121		434,588		32,533			19,770
Real estate segment operations		190,555		175,560		14,995			9,112
Depreciation and amortization		262,030		294,942		(32,912	)		(20,001	)
Taxes other than income taxes		103,528		93,658		9,870			5,998
Other expenses		39,451		25,893		13,558			8,239
Regulatory disallowance		143,217		—		143,217			87,033
Regulated electricity segment purchased power and fuel		442,532		442,409		123			75
Less:
Real estate segment revenues		232,950		186,762		46,188			28,068
Other revenues		46,763		32,904		13,859			8,422
Regulated electricity segment revenues		1,749,110		1,605,952		143,158			86,997
Marketing and trading segment gross margin	$	52,113	$	57,591	$	(5,478	)	$	(3,329	)