APS Files Rate Case with ACC; Seeks First Price Increase in More Than 13 Years.

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PHOENIX--(BUSINESS WIRE)--June 27, 2003

Arizona Public Service (APS) today filed its first general rate case in more than a dozen years as required under terms of its 1999 regulatory settlement with the Arizona Corporation Commission (ACC). As part of the filing, the Company is requesting a 9.8 percent, or $175 million, overall rate increase for retail customers.

"Like any other company, we've experienced significant increases in operating costs," said Jack Davis, APS CEO and President. "Whether it's the fuel we use to generate electricity, new plants and facilities, maintenance or other costs, expenses for providing reliable service are up. Looking forward, it's clear that rising costs require a rate adjustment."

Davis said that while the Company is reluctant to raise rates, it needs to recover costs that are not included in current prices. For example, the cost of natural gas to run the Company's plants for retail customers has jumped 500 percent -- from about $30 million in 1999 to more than $180 million in 2003.

"We've also built new plants and added more than 5,800 miles of transmission and distribution lines -- all designed to meet the highest reliability standards and ensure that the lights stay on for APS customers," he said. "These initiatives helped us protect Arizona customers and avoid the turmoil of blackouts and price shocks that swept through the region over the past two years."

The Company anticipates the ACC will rule on its request by mid-2004. Any increase in rates would not occur before that time.

If approved by the ACC, the price increase would be the first in more than 13 years for APS' retail customers. Under the proposed increase, an average residential bill would increase from $94.33 per month to $103.57 per month, based on average usage of 1,100 kilowatt-hours of energy.

Since APS last raised rates in 1991, the costs for all other U.S. goods and services (from gasoline to groceries) will have risen by 38 percent. By contrast, APS has lowered prices eight of the past nine years and plans to decrease its retail prices another 1.5 percent this July 1, completing a 10-year commitment of reducing prices a total of 16 percent for residential and small commercial customers since 1994.

Even with the proposed increase in 2004, APS rates will still be lower than pre-1990 levels, and well below the consumer price index. (See chart.)

Customers wishing to learn more about the rate filing can go to the breaking news section at aps.com for the most up-to-date information. They also can call APS at [phone] or toll-free at [phone].

APS, Arizona's largest and longest-serving electric utility, serves about 902,000 customers in 11 of the state's 15 counties. With headquarters in Phoenix, APS is the largest subsidiary of Pinnacle West Capital Corp. (NYSE: PNW).

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