PARTIES AGREE TO TERMS OF POWER PLANT DECOMMISSIONING

October 17, 2000

Phoenix, AZ - Following nearly two years of negotiation, APS and six interested parties took another significant step toward decommissioning the Childs-Irving hydroelectric generating facility and restoring flows to Fossil Creek when they signed a settlement agreement formally outlining details of the historic plant's closure.

The settlement agreement, signed by the Arizona Riparian Council, American Rivers, The Nature Conservancy (Arizona Chapter), Center for Biological Diversity, Northern Arizona Audubon Society and the Yavapai-Apache Nation outlines the specific steps necessary to restore full water flows to Fossil Creek, which originates from underground aquifers in north central Arizona. Under the agreement, APS will transfer control of the area to the U.S. Forest Service after it has completed its restoration work.

The settlement agreement is subject to final approval by the Federal Energy Regulatory Commission (FERC). FERC regulates non-government hydroelectric facilities like Childs-Irving and must approve all requests for licensure and decommissioning.

"The decision to decommission the plants weighed the costs-benefits, but in the end this was simply a unique opportunity to return 14 miles of a stream to its original condition," said Ed Fox, Pinnacle West Vice President of Environment, Safety and Communications. "Cooperation among the environmental groups, the Yavapai-Apache Tribe and APS was unprecedented, but we believe the environmental benefits of closing the plants far outweigh the business impact."

"We are grateful that a sacred part of our traditional landscape will be returned to a natural state," said Vincent Randall, Chairman, Yavapai-Apache Nation.

"APS is concerned about the environment in which we live and work, and we are committed to limiting the impact that our operations have on native plant and animal species," said Bill Post, CEO of Pinnacle West.

Fossil Creek is a unique Arizona water source. It provides a year-round flow of 43 cubic feet per second (cfs), and its high mineral content has helped form large travertine formations that native fish use for shelter and spawning. After decommissioning is completed, the creek will once again flow unimpeded through a largely undeveloped portion of central Arizona. This flow should encourage the return of a greater number and variety of native fish and fauna.

"This is a tremendous example of how the Arizona environmental community and a major corporation can work together to make an enduring difference for Arizona's environment," said Les Corey, Executive Director, The Nature Conservancy, Arizona Chapter.

"Once flows are restored, Fossil Creek will literally spring back to life. This natural wonder is a treasure not just for Arizonans but for all Americans. APS should be applauded for taking such a courageous and important step toward the restoration of this beautiful river," explained Andrew Fahlund, Hydropower Policy Director for American Rivers. "Of the millions of river miles throughout this country impacted by hydropower projects, the 14 that comprise Fossil Creek are among the most unique."

The process of decommissioning the hydroelectric facilities will begin once FERC approves the agreement. Plans call for water flows to be restored to Fossil Creek by Dec. 31, 2004. In addition, APS has agreed to complete the restoration process and vacate the area by Dec. 31, 2009.

APS, Arizona's largest and longest-serving electric utility, serves more than 827,000 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).