Starwood Solar I Agreement Terminated

September 30, 2009

PHOENIX - APS announced it has received notice from Starwood Energy Group Global, LLC that it is terminating the long-term purchase power agreement the two companies signed in May 2009. This ends plans for Starwood Solar I, the 290-megawatt concentrating solar plant (CSP), which was to be located in the Harquahala Valley, 75 miles west of Phoenix.

"APS remains committed to solar energy and we intend to aggressively respond to this development as we stay on track with our plans to increase the amount of renewable energy we provide to customers," said Don Robinson, President of APS.

Starwood Solar I was the second large-scale solar project announced by APS in the last 19 months. The first, Solana, continues to move forward. Financing for the 280-megawatt CSP plant is expected to be announced in the first half of 2010. Solana will be built 70 miles southwest of Phoenix, near Gila Bend, Ariz.

APS understands that after the major subcontractor agreements were negotiated, the size and the final risk profile of the engineering, procurement and construction contract, among other factors, were the reasons Lockheed Martin decided not to go forward.

Lockheed Martin was the engineering, procurement and construction firm that partnered with Starwood to develop the project.

As work begins on replacing the energy from Starwood Solar I, APS expects to announce before the end of the year the results of two current solicitations for renewable energy: one for small-scale generation projects and one for distributed generation.  

APS, Arizona's largest and longest-serving electricity utility, serves more than 1.1 million customers throughout the state. With headquarters in Phoenix, APS is the largest subsidiary of Pinnacle West Capital Corp. (NYSE: PNW).

Steven Gotfried
(602) 250-3040 or (602) 568-5067

Jim McDonald
(602) 250-3703 or (602) 321-3738

Analyst Contact:
Rebecca Hickman
(602) 250-5668