Exhibit 10.1

               Arizona Public Service Company Director Equity Plan


Benefit - On each Date of Grant,  beginning July 1, 1997,  Pinnacle West Capital
Corporation  ("Pinnacle West") will issue to each Plan Participant who meets the
stock ownership  requirements  described  below,  solely from treasury shares, a
number of shares  (rounded up to the  nearest  whole  share) of Pinnacle  West's
common stock,  no par value ("Common  Stock"),  determined by dividing $6,000 by
the Fair Market Value (such shares of Common Stock are  hereinafter  referred to
as the "Plan Shares").

Plan  Participants - Members,  as of the relevant Date of Grant, of the Board of
Directors of Arizona  Public  Service  Company  ("APS") who are not employees of
APS, Pinnacle West, or any of their respective subsidiaries.

Stock  Ownership  Requirements  -  During  the  first  calendar  year in which a
Participant is eligible to receive Plan Shares,  he or she must own at least 200
shares of Common Stock on or before the December 31 following the Date of Grant.
In subsequent  years, a Participant  must otherwise own the requisite  number of
shares of Common Stock as of the June 30 preceding  the Date of Grant to receive
Plan  Shares,  and the  amount of Common  Stock that a  Participant  must own to
receive the Plan Shares will increase by 200 shares  annually until it reaches a
maximum of 1,000 shares. For example,  on June 30, 1998, a Plan Participant must
own 400  shares of Common  Stock to  receive  the Plan  Shares on July 1,  1998,
assuming the Plan  Participant  first became  eligible to receive Plan Shares on
July 1, 1997. These levels of stock ownership will be subject to periodic review
by the Pinnacle West Board or the Pinnacle West Human Resources Committee.

Certain Terms -

"Date of Grant" means the first business day of July.

"Fair  Market  Value" means the average of the high and low prices of the Common
Stock on The New York Stock Exchange on the Date of Grant.