1.  2005 Pinnacle West Capital Corporation Palo Verde Hub Participant Meeting May 27, 2005 Arizona Public Service Company Tom Glock – Manager Power Operations Arizona Public Service Company Tom Glock – Manager Power Operations

2. 2 Overview  Westwing Update  Load/Resources Adequacy  Transmission Adequacy  Coordination/Training  Conclusions  Westwing Update  Load/Resources Adequacy  Transmission Adequacy  Coordination/Training  Conclusions

3. 3 Westwing Substation Prior to 7-4-04

4. 4 T - 10T – 7 [TEP] T - 4T - 1spareT – 7 spare [TEP] Westwing 500kV Transformers XX X X X Preserved for review APS – 28.5% SRP – 44.2% WAPA – 27.3%

5. 5 T - 10T – 7 [TEP] T - 4T - 1spareT – 7 spare [TEP] Westwing 500kV Transformers X X X X X Preserved for review New transformer from BPA APS – 28.5% SRP – 44.2% WAPA – 27.3%

6. 6 Westwing XFMR Transportation Schedule n 1 st ABB transformer on pad and ABB working on. This is on the T-4 bank. n 2 nd unit on the pad for the T-1 bank. n 3 rd unit in transit in Illinois. The unit was transferred to the BNSF rail system May 25. This unit is part of the T-1 bank. n 4 th unit has completed factory testing. Unit being prepared for shipping. n 1 st ABB transformer on pad and ABB working on. This is on the T-4 bank. n 2 nd unit on the pad for the T-1 bank. n 3 rd unit in transit in Illinois. The unit was transferred to the BNSF rail system May 25. This unit is part of the T-1 bank. n 4 th unit has completed factory testing. Unit being prepared for shipping.

7. 7 Westwing In Service Schedule n T-4 outage to begin May 30. Phoenix Valley transmission system will be islanded around WW T-10 and T- 4 May 27 in preparation for the 4 day outage. T- 4 due in service June 2. n This outage will be posted May 26 on OASIS. n T – 1 estimated in service date is July 7. n T-4 outage to begin May 30. Phoenix Valley transmission system will be islanded around WW T-10 and T- 4 May 27 in preparation for the 4 day outage. T- 4 due in service June 2. n This outage will be posted May 26 on OASIS. n T – 1 estimated in service date is July 7.

8.  2005 Pinnacle West Capital Corporation Firewall’s Complete 4/22/2005

9.  2005 Pinnacle West Capital Corporation T7 & T10 Xfmr’s Taken

10.  2005 Pinnacle West Capital Corporation Spare Unit on Pad 5/18/2005

11.  2005 Pinnacle West Capital Corporation Spare Xfmr On Pad 5/18/2005

12.  2005 Pinnacle West Capital Corporation 2 nd Unit Xfmr Enroute 5/21/2005

13.  2005 Pinnacle West Capital Corporation 2 nd Unit Xfmr Enroute 5/23/2005

14.  2005 Pinnacle West Capital Corporation 34.5kV Tertiary Buss & Switches Behind T1 & T4

15. 15 Summary n With the replacement of the BPA transformer we will have adequate capacity to meet our load under expected conditions  Full capacity and redundancy will be restored with the installation of the new T-1 bank n We do not anticipate any voluntary or involuntary curtailment of customer load this summer n With the replacement of the BPA transformer we will have adequate capacity to meet our load under expected conditions  Full capacity and redundancy will be restored with the installation of the new T-1 bank n We do not anticipate any voluntary or involuntary curtailment of customer load this summer

16. 16 312 MW 2-Xfmr Banks 1-BPA Xfmr Reconfigured 11,172 MW 2005 1,240 MW 3-Xfmr Banks 12,100 MW 2005 530 MW 2-Xfmr Banks 1-New Xfmr Normal 11,390 MW 2005 2-Xfmr Banks 1-BPA Xfmr Reconfigured 10,800 MW 2004 10,003 MW 2004 Valley Peak Load Valley Maximum Load Serving Capability 10,860 MW Forecast 2005 Valley Peak Westwing Update 6,000 7,000 8,000 9,000 10,000 11,000 12,000 MW

17. 17 APS Peak Load Forecast 6954 MW 2005 Forecast 6402 MW 2004 Actual Loads/Resources Adequacy 8.6% Phoenix is the second fastest-growing metropolitan area in U.S. Adding 160 APS customers every day

18. 18 APS Resources – Existing Generation Fuel TypeCapacity - MW Nuclear1107 Coal1725 Gas3115 Oil 70 Other 5 Total6022 Loads/Resources Adequacy

19. 19 Resources  Generation 2005 (MW) Existing Generation Assets3961 Recently Transferred Assets2061 Subtotal6022  Long-term Contracts Pacificorp Exchange 480 SRP 364 Subtotal 844  Market Contracts ~ 900  Total Resources 7766  Generation 2005 (MW) Existing Generation Assets3961 Recently Transferred Assets2061 Subtotal6022  Long-term Contracts Pacificorp Exchange 480 SRP 364 Subtotal 844  Market Contracts ~ 900  Total Resources 7766 Loads/Resources Adequacy

20. 20 APS System Load and Resources 812 MW Loads/Resources Adequacy

21. 21 Training & Drills n Regional Black Start DrillMarch n Usage of Load Curtailment toolsApril n Summer StudiesMay n Transmission Path OperationsMay n Emergency OperationsMarch-June Power Simulator n NERC policies addressingJune emergency operations n DOE simulator trainingMarch-Oct. n Regional Black Start DrillMarch n Usage of Load Curtailment toolsApril n Summer StudiesMay n Transmission Path OperationsMay n Emergency OperationsMarch-June Power Simulator n NERC policies addressingJune emergency operations n DOE simulator trainingMarch-Oct. Coordination / Training

22. 22 Coordination with Fire Fighting Agencies n Coordinating with various Valley Fire Departments concerning fire protection for Westwing and similar facilities n Working with Phoenix Fire Department’s Command Training Center to develop Standard Operating Procedures for fighting electrical fires n Implementing training for fire departments in the Valley and throughout the state n Phoenix training underway for key APS personnel n Joint exercises with simulated substation event in June n Coordinating with various Valley Fire Departments concerning fire protection for Westwing and similar facilities n Working with Phoenix Fire Department’s Command Training Center to develop Standard Operating Procedures for fighting electrical fires n Implementing training for fire departments in the Valley and throughout the state n Phoenix training underway for key APS personnel n Joint exercises with simulated substation event in June Coordination / Training

23. 23 Conclusions  Adequate resources to meet load and reserve requirements  Sufficient transmission to import remote generation and purchases  Plans in-place to respond to extreme conditions  Coordination/training has been established with various State and local agencies  Anticipate meeting customers needs  Adequate resources to meet load and reserve requirements  Sufficient transmission to import remote generation and purchases  Plans in-place to respond to extreme conditions  Coordination/training has been established with various State and local agencies  Anticipate meeting customers needs