APS to Redeem Mortage Bonds.

Business Editors

PHOENIX--(BUSINESS WIRE)--March 31, 2003

As announced earlier this month, Arizona Public Service (APS) has deposited monies with its first mortgage bond trustee sufficient to redeem the following first mortgage bonds:

-- The entire $33,075,000 of outstanding 8 percent series due

Feb. 1, 2025; and

-- The entire $54,150,000 of outstanding 7.25 percent series due

Aug. 1, 2023.

APS originally issued the 8 percent series in February of 1993 and the 7.25 percent series in August of 1993.

The 8 percent series has been called for redemption and will be redeemed on April 7, 2003.

The 7.25 percent series will be redeemed on Aug. 1, 2003. The bonds will be redeemed at par value plus accrued interest pursuant to the replacement provision contained in the utility's first mortgage bond indenture. APS has adequate cash available from operations to redeem the bonds and will recognize annual savings of approximately $4 million.

Bondholders of the 7.25 percent series will be notified in July of this year where they should surrender their certificates to the first mortgage bond trustee.

APS, Arizona's longest-serving electric utility, serves about 900,000 customers in 11 of the state's 15 counties. APS, with headquarters in Phoenix, is the largest subsidiary of Pinnacle West Capital Corporation (NYSE: PNW).