Pinnacle West's 2Q Earnings Down from a Year Ago

Pinnacle West Capital Corp. reported that due to "a number of events" its consolidated net income for the second quarter came in below last year's results for the same quarter. The company posted net income of $66.9 million ($0.79 per diluted share of common stock), compared to $89.9 million ($1.06 per share) for the same quarter a year ago.

"We were in line with our expectations despite being affected by a number of events in the second quarter," Chairman Bill Post said. "We remain confident in our financial and operational outlook."

The company said strong power marketing results, which improved upon the second quarter of 2000, were offset by a number of items, including: increased fuel and purchased power costs; an outage extension at the Palo Verde Nuclear Generating Station to replace fuel control element assemblies; generation reliability measures; a new accounting standard; continuing retail electricity price decreases; and increased pension costs.

"Most of these items reflect our commitment to ensure a reliable supply of electricity during the demanding summer months and lower prices for our retail customers," said Post.

Since 1994, the Pinnacle said its principal subsidiary, Arizona Public Service Co. (APS), has reduced retail prices more than $605 million --- the largest cumulative price decrease among investor-owned utilities in the nation. Pinnacle noted that these decreases are part of APS' goal to reduce residential and small commercial rates by 16% from 1994 to 2004. On July 1, APS lowered prices by 1.5%, the seventh decrease in eight years.

The company said it also expanded its resources during the quarter by adding more than 500 MW of generation capability. The expansion includes a new 120 MW unit at its West Phoenix Power Station, refurbishment of several existing units, and the addition of about 200 megawatts of temporary generation. Pinnacle's electricity operations earned $70.0 million for the quarter ended June 30, 2001, compared with $95.2 million for the year-ago period. Although it came as a decrease, the company said it was the best second quarter in the company's history. These operations include the Pinnacle's wholesale marketing and generation functions and APS' regulated retail business.

Second-quarter wholesale power sales were 5.0 billion kWh, up about 32% from the comparable period in 2000. Retail energy sales also increased from the same quarter last year, climbing 2.9% to 5.9 billion kWh.

Pinnacle West is a Phoenix-based company with that through its subsidiaries, generates, sells and delivers electricity and energy-related products and services to retail and wholesale customers in the western United States. The company's consolidated assets total approximately $7 billion.

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