Good morning, my name is Jamal, and I’ll be your conference operator today. At this time, I would like to welcome everyone to the first quarter 2009 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator instructions) Thank you. Now, I would like to turn the call over to Miss Rebecca Hickman, Director of Investor Relations. You may begin, ma’am.

Thank you, Jamal. I’d like to thank everyone for participating in this conference call to review our first quarter earnings, recent developments, and operating performance. Our speakers today will be our Chairman and CEO, Don Brandt; and, our CFO, Jim Hatfield. John Robinson who is President and Chief Operating Officer of APS is also here with us. Before I turn the call over to our speakers, I need to cover a few details with you. First, I encourage you to check the quarterly earnings and statistics section of our Web site. It contains extensive supplemental information on our earnings variances and quarterly operating statistics. Second, please note that all our references to per share amounts will be after income taxes and based on diluted shares outstanding. Third, we will be referring to slides today during this conference call and webcast. The slides are available on our Investor Relations Web site with the webcast, and with the Form 8-K filed this morning. During our prepared remarks we will give you verbal cues as we move through the slides. Looking at slide two, it is my responsibility to advice you that this call and our slides will contain forward-looking statements based on current expectations. And the company assumes no obligation to update these statements. Because the actual results may differ materially from expectations, we caution you not to place undue reliance on these statements. Please refer to the forward-looking statements and the MD&A sections contained in our first quarter 2009 Form 10-Q, which was filed with the SEC this morning, as well as the risk factors section of our 2008 Form 10-K. All of which identifies some important factors that could cause actual results to differ materially from those contained in our forward-looking statements. Next, during this call we will discuss certain non-GAAP financial measures. Our press release, the slides accompanying this webcast, and our filings with the SEC, all of which are posted on our Investor Relations Web site contained additional disclosures regarding these non-GAAP measures including reconciliations of these measures to the most comparable GAAP measures. A replay of this call will be available on our Web site, www.pinnaclewest.com, for the next 30 days. It will also be available by telephone through May 12. Finally, this call and webcast are the property of Pinnacle West Capital Corporation, and any copying, transcription, redistribution, retransmission, or rebroadcast of this call, in whole or in part, without Pinnacle West’s written consent is prohibited. At this point, I’ll turn the call over to Don.

Thanks, Becky. I’d like to thank everyone for joining us on the call today. We have been focused on excellence on operations throughout the organization and optimizing the positioning and value of Pinnacle West and our subsidiaries for the future. Today, I will discuss several major milestones we have achieved since our last earnings call with you. Two weeks ago, we announced we have reached an agreement in principle to settle APS' pending retail rate case, and yesterday, a term sheet outlining the proposed settlement was filed with the Arizona Corporation Commission. In late March, we completed the review of SunCor’s strategies, markets, and properties, as a result we announced to plan to restructure SunCor by disposing a majority of its real estate assets. Also in March, The Nuclear Regulatory Commission recognized that Palo Verde operations have improved significantly and returned to plant to routine inspection and oversight. I will discuss these and other operational and regulatory matters in some detail. Then I’ll return the call over to Jim to discuss our first quarter results and other financial updates. I’ll begin with the proposed rate settlement. Yesterday, APS, the ACC staff, and other parties to the pending retail rate case filed with the ACC a term sheet outlining the proposed settlement of the case along with the recommended schedule for filing a definitive settlement agreement and for the commission’s consideration of the settlement. Throughout the negotiation process, the discussions were open to all parties to the rate case. In fact, the vast majority of the parties did indeed participate. Through the settlement process APS and the parties agreed to a rate and financial stability plan that provides benefits for APS, our customers, our investors, and other stakeholders. Additionally, many provisions of the settlement are focused on advancing Arizona’s sustainable energy…

Thank you, Don. Today, the five topics I would like to touch upon as showed on slide 11 are, first quarter results; the financial impacts of the SunCor restructuring plan to which Don referred; earnings outlook for both 2009 and more importantly, 2010; our current liquidity situation; and, the common dividend level. First, beginning with the first quarter results on slide 12. We reported, on a GAAP basis, a consolidated net loss attributable to common share holders of $156.5 million or $1.55 per share in the first quarter of 2009 as compared to net loss of $4 million or $0.04 per share in 2008’s first quarter. Earnings were down primarily due to the real state impairment and related charges recorded in this year’s first quarter as well as lower results in APS. I’ll cover SunCor’s restructuring from a financial perspective later. Excluding the real state impairment related charges, we recorded, on an on going basis, a net loss of $29 million or $0.29 per share in this year’s first quarter as compared to a net loss of $4 million or $0.04 per share for the same period in 2009. On slide 13, as a reconciliation of our GAAP earnings to our ongoing earnings per share. The reconciliation is also available in the body of the earnings release and on our web site. A couple of comments on the reconciliation before we move on. First, the difference with turning report and ongoing earnings, as you can see on the slide relates totally to SunCor. Second, we expect a majority of SunCor’s operations to move in to discontinued operations beginning in the second quarter. This will move most of the SunCor s out of ongoing results and therefore reduced the drag on ongoing earnings. Moving on to slide 14, we’ll begin the…

Thanks, Jim. In summary, our organization is intensely focused on operational excellence as well as improving earnings and financial metrics. We work hard to maintain topnotch costumer service. We continually strive to raise the bar even higher. Constantly improving efficiency and effectiveness in every facet of the company. APS' proposed rate settlement demonstrates positive improvement in Arizona’s regulatory environment. However, it is critical for the settlement to be approved as proposed for APS, our customers, investors, and other stakeholders to realize the benefits of the settlement. The SunCor restructuring plant optimizes the assets and related financial results while minimizing risk going forward. And finally, our current common dividend is supported by our strategies, operations, and the retail rate settlement. Overall, our employees possess a drive for excellence to improve value for our shareholders, our costumers, and the communities we serve. That concludes our prepared remarks. Jamal, at this time we would be pleased to take any questions.

Yes, sir. (Operator instructions) Your first question comes from the line of Greg Gordon from Citigroup. Your line is open. Greg Gordon – Citigroup: Good afternoon.

Hey, Greg.

Hi, Greg. Greg Gordon – Citigroup: Congratulations on the settlement. I hope the commission approves it. They should. But anyways, on the point of the settlement, a couple of questions or clarification, are there any time limits or sort of a milestones in terms of when you have to meet certain minimum equity infusion requirements between now and 2014?

There are not, Greg. And I think, again, with all the parties together and discussing all the issues they understand that the timing needs to be left to the company to sort of address the marketplace at the appropriate time. Greg Gordon – Citigroup: So is it still your expectation, assuming the settlements approved that you would not need to issue equity in 2009?

That’s correct. Greg Gordon – Citigroup: Thank you. Next question is related to Palo Verde. You’re currently looking for a license extension there? Where are you in the process and at what point might we hear the decision from the NRC?

Greg, I believe it was in December we filed the license extension and we’re looking prior ground to two-year process. Greg Gordon – Citigroup: So it was December of ’09.

Eight, eight. Greg Gordon – Citigroup: I’m sorry, December of ’08. Sorry. So you wouldn’t get a decision until December 2010 most likely?

Eighteen months to two years. Greg Gordon – Citigroup: Okay. Okay. So under the terms of the settlement, if there were a change in the depreciation expense to the – due to license extension, that wouldn’t be reconciled into rates until the next base rate case?

Correct.

That’s right. Greg Gordon – Citigroup:

Thank you.

Your next question or comment comes from the line of Paul Patterson from Glenrock Associates. Your line is open Paul Patterson – Glenrock Associates: Good morning, guys.

Good morning, Paul. Paul Patterson – Glenrock Associates: Just to go over in the settlement here. You’ve got the additional $23 million from SEAC going to revenues, correct, on top of the $196 million?

Correct. Paul Patterson – Glenrock Associates: Okay. And there’s another $30 million in terms of savings that you guys are going to be able to have – when I’ve read the settlement, it seems that it was not included in the $196 million calculation.

That would be correct.

Paul,–

$10 million in incremental from what we’ve already reported to the commission. Paul Patterson – Glenrock Associates: Okay. So we should think about it as more of the $10 million incremental as opposed the $30 million?

Correct. Paul Patterson – Glenrock Associates: Okay. And then going back to the $700 million of – one final thing on the settlement, the 54% equity ratio, is that what we should be thinking about here?

Yes. Paul Patterson – Glenrock Associates: Okay. And then the $700 million equity issuance or equity infusion, what timing do we have associated with this – I know you guys have flexibility on this, but when we look at the 2010 guidance what shall we be thinking about with respect to that?

Well, I think we addressed this on the last call. Again, based on the schedule of getting the order, we don’t anticipate the need to issue equity until any earlier than sometime in 2010. I think in our $3 guidance, we have about $0.07 to $0.075 to $0.08 of dilution based on a new equity issuance. And we’d just for simplicity made the assumption as the middle of the year, just to make our math easy. And going forward from there, based on return-to-normal growth, I support that we’ll have to issue equity on a periodic basis just to support the capital structure anyways. So I didn’t look at that provision as anything that we wouldn’t have to do to maintain the credit ratings anyway. Paul Patterson – Glenrock Associates: Okay.

Whether its 700 or not, who knows based on what happens in the future. But some level of equity will be needed past ten just to support your billion dollar a year CapEx program. Paul Patterson – Glenrock Associates: Sure. Sure. And then in terms of 2010, when we look at the SunCor impact, I wasn’t completely clear on the restructuring tax benefits. Does that go to the – basically to the pay down of debt, or how should we think about that benefit that shows up from the tax benefits from restructuring?

I think our – first and foremost our goal is to get the banks paid off to allow SunCor to operate without restrictions of the bank. Beyond that, that can be used for various things. And anything after that would just be cash that can be used to run the business. Paul Patterson – Glenrock Associates: And how much – I’m wondering if there would be – How much of that benefit – the tax benefit could we see show up like that? Outside the – or will just be part of the discontinued operation? I’m just wondering how’d that work.

Paul Patterson – Glenrock Associates: But will that be part of the discontinued operations or does that mean that as a corporation you benefit from? Do you follow me?

Yes. It wouldn’t be part of the discontinued operations. It’d be additional cash flow for the corporation as a whole. And during this, as Jim indicated, we expect to complete the sales processes during 2009 while the values are depressed from what they might have been. Regardless, we still expect to generate substantial cash proceeds from these transactions. Paul Patterson – Glenrock Associates: Okay. And then marketing and trading for 2010, is that in the 2010 guidance? Is there any benefit from that?

No. I mean, as we’ve stated earlier, we’re essentially out of that business. We did have a longer term contract that rolled off at eight, so you will see in the first half of the year some sort of negative, but that’s incorporated in our Q-30. But no, nothing in 2010. Paul Patterson – Glenrock Associates: Okay. Great. Thanks a lot, guys.

Paul, one other thing that I want to clarify. You asked about a $196 million plus the $23 million with respect to the settlement. There’s another $11 million that you need to consider. The $196 is the non-fuel based rate increases, the $11 million is the fuel-related base rate increases, and the $23 million is the estimated 2010 impact of the scheduled three or line extension collection. So that’s a total of $230 million. Paul Patterson – Glenrock Associates: I really appreciate that. Thank you.

Thanks.

Thanks, Paul.

Your next question comes from the line of Paul Ridzon from KeyBanc. Your line is open. Paul Ridzon – KeyBanc: Good noon or good morning. I guess wherever you are. First of all, congratulations on the settlement, it looks pretty balanced. I just have a couple of questions. There’s been some noise around changing the line extension methodology to funding some of it. Where do you see that going?

Paul, I think a couple of things on that. Obviously, that has been somewhat controversial especially in the development community. I do think the parties to the settlement know the importance of kayak and understanding – it would be very unfair to put that into the part of the settlement then take away the line extension. I think there are some things we can do around the line extension feed that would benefit people but would not hurt the impact to APS. And so I think that’s where we’ll ultimately end up. Paul Ridzon – KeyBanc: And Greg Gordon asked this question, but I saw some settlement language around maintaining a 52% debt-to-Cap ratio. How much variability is there around that? Are they going to look at that every quarter and force equity or–

No, no. It’s really. I would look at it this way, Paul. I think it’s more of an ongoing reporting requirement. And to monitor that, more obviously comfortable in the context of the settlement with meeting those provisions or we wouldn’t agree to it. But again, they understand right in the business that issue of equity and timing is a decision the company has to make. And so, they’ll just be watching that from the sidelines in terms of where we are according to that metric. Paul Ridzon – KeyBanc: How do you think about in the event that we see the return very quickly of robust growth, let’s hope it happens, but to what extent do you think you’ve kind of lock yourself out of filing to get relief on some of that. What provisions are there if any in the settlement that could kind of give you the opportunity for emergency relief?

Well I think if you look at the timing, – our ability to file, we can’t – we are not able to file any sooner than 6/1/11. So frankly, based on the settlement, we’ll have the opportunity to file with 2010 past year. And frankly that’s not a whole lot different than we would have anyway. Paul Ridzon – KeyBanc: Thank you. That’s pretty much status quo. I see your point.

Yes. And I think the big thing with that tough, Paul, is certainly the staff is committed to try and process the case in 12 months. And we’ve talked about some things we can do try to make that happen. And so I think, from being locked out it doesn’t seem to be anything significant. I think once we file again to whenever that is, I think we’ll see an accelerated process on the other end. Paul Ridzon – KeyBanc: That would be very welcomed. And then, just from a bookkeeping perspective, of the 2/30/09 guidance what have we done so far in the first quarter? How are you doing that accounting?

I’m not sure of the question, Paul. Paul Ridzon – KeyBanc: How much of the 2/30 is now under your belt? I just don’t know what’s your accounting as far as the APS' versus other pieces?

The APS of in quarter was about a $0.15 loss. Paul Ridzon – KeyBanc: So basically, relative to 2/30 guidance were at a $0.15 loss?

Right but – Paul Ridzon – KeyBanc: Okay. Understood. Thank you.

I don’t think that the loss unexpected based on where we headed into the year. Paul Ridzon – KeyBanc: Okay. Thanks a lot.

Yes.

Your next question or comment comes from the line of Daniel Sites [ph] from Dudek Research Group [ph]. Your line is open. Daniel Sites – Dudek Research Group: Thanks. Just on what we're doing – following on just the previous question. You are assuming normal weather for the rest of the year, is that – or you’ll recover the $0.15 loss. Is that it?

That’s correct. We have – Daniel Sites – Dudek Research Group: And refueling schedule, do you have the sense of when refueling are taking place? Roughly?

I’m sorry. Could you repeat that question? Daniel Sites – Dudek Research Group: The refueling for Palo Verde. Do you have sense of the timing for that?

Yes. We’re on – we plan a 44 day outage. That such – May 17th is the expected breaker closure. All the reports we’ve gotten is we’re on tract with that. So it looks like from a capacity and fuel perspective, knock on wood, as we’ve said here today, were on tract to meet our target. Daniel Sites – Dudek Research Group: And this is – do you have another one of this for the year?

No we refuel a unit because there are three units in there on the 18-month cycle. So you end up with one every spring and fall and were expecting the next unit to take it down for refueling right around the first of October of 2009. Daniel Sites – Dudek Research Group: Okay. Okay. Because of future rate filings, since you are respected, have you changed anything in your CapEx schedule or is it the same one as the one you have presented in March?

It’s the same one that we have highlighted March at this point. Daniel Sites – Dudek Research Group: Okay.

Obviously we look to adjust that going forward, it will be definitive upon growth and other thing that we see in the service territory. Daniel Sites – Dudek Research Group: Okay. But you haven’t – For the time being no change.

Correct. Daniel Sites – Dudek Research Group: Great. And just to – Maybe I missed it, on which debt will be left on SunCor when you’re done with your program at this point?

Our expectation is there’ll be no debt at SunCor when we’re through with the asset divestitures. Daniel Sites – Dudek Research Group: Okay. Great. Thanks a lot.

Thanks.

Your next question comes from the line of Kevin Fallon from Blenheim Capital Management. Your line is open. Kevin Fallon – Blenheim Capital Management: Good morning. Just a couple of questions on the settlement. In particular, I’m trying to understand on the $700 million in equity infusions. Are you guys required to put from the parent down into the sub $700 million of cash or do you retain the earnings or anything like that get calculate into that or get calculated against that figure?

Well I think the expectation of the party that’s not sort of retain the earnings you keep in the business, but I think most importantly, as we look out in a lot of the filing we’re doing and the monitoring has to do with where are we FFO to debt, and where are the credit metrics that sort of thing. Obviously, you get a three great weather years in a row. And you don’t need to issue equity. I don’t think that's the intent of the same issue equity when it's not needed. Kevin Fallon – Blenheim Capital Management: But it doesn’t require you to issue $700 million worth of new equity or debt at a parent level and put it down. Is that correct?

That's correct. Kevin Fallon – Blenheim Capital Management: Okay. And in terms of the dividend from Arizona public service to the parent, you guys have paid a $170 million a year for the last couple of years. Does the settlement allow you to increase that payment up to the parent now?

Yes. There's a restriction on dividend after 2009. Kevin Fallon – Blenheim Capital Management: After 2009, you can set it to whatever you need?

Yes. Kevin Fallon – Blenheim Capital Management: And in terms of the SunCor to $80 million tax gain that's going to be realized in counting your 2010 to actual cash?

That's correct. Kevin Fallon – Blenheim Capital Management: And it's $80 million of cash? It's not a tax affected $80 million.

That's correct. Kevin Fallon – Blenheim Capital Management: And under the settlement, the transmission hikes that you get for your for formula rates, are those incremental to whatever you get in the settlement here?

Correct. Kevin Fallon – Blenheim Capital Management: And does this settlement allow for the automatic pass through on the retail section? Or do you have to go and seek recovery in the process you currently do?

Well, I think we're going to have to go to the process that we've gone through the past, but if you remember sort of the 2007 and 2008, it was pretty perfunctory process at the commission. Kevin Fallon – Blenheim Capital Management: That's right. But there's nothing – in other words, they stay out or what have you in no way should have perform precludes the deferred hikes?

Correct. Kevin Fallon – Blenheim Capital Management: Okay.

And all the other surcharges will go on at sort of normal. Kevin Fallon – Blenheim Capital Management: And the $11 million of the net fuel related increase that just basically increased in the fuel component in based rate. Is that a earnings impact or is that a cash flow impact?

Tax earnings–

That's a pretax earnings impact. Kevin Fallon – Blenheim Capital Management: So, earnings are actually increased by pretax so $11 million I think it was. Excellent, thank you very much.

Thank you, Kevin.

Your next question comes from the line of Andrew Levy from Incremental Capital. Your line is open. Andrew Levy – Incremental Capital: Hey, guys. I guess you saved $3 in 010, assuming you get the full ratings or not the full ratings but the full settlement which you probably will. As you look in the 2011, I know you're not making a forecast for 2011, but everything else equal – are you able to grow earnings off to 2010 based? Or you're not sure or –?

Andrew, we're not going to talk about guidance for 2011 today. Andrew Levy – Incremental Capital: Yes. I understand the guidance, but can you grow earnings on the next couple of years with this settlement? Of you $3 based or not?

We're just not going to go in this to 2011 today. I mean, if I were to indicate one way or another, that's effectively guidance, and I can't do that today. Andrew Levy – Incremental Capital: Okay. Thank you.

Your next question comes from the line Reza Hatefi from Decade. Your line is open. Reza Hatefi – Decade: Thank you. I just wanted to confirm an earlier question. The $700 million of equity, that's just infusion into the utility, but otherwise, you can still continue with your normal $170 million out flow from the utility to the parent level. Correct?

That's correct. Reza Hatefi – Decade: Okay, great. Thank you very much.

Okay, Reza. Thanks.

Your next question comes from the line of Chris Shelton from Millennium. Your line is open.

Chris, are you there?

Mister Shelton, your line is open. Chris Shelton – Millennium: Hello.

Hey, Chris. Chris Shelton – Millennium: Can you hear me now?

Yes. Chris Shelton – Millennium: Sorry, I was on mute. I have a quick question on the expense savings that are ear marked in the settlement. And I know, for the following deed for the commission this year, some of those incentives were capitalized and some were extent. Is that the plan for $150 million over the five-years or there's more kind of expense savings?

Well its expense – let's go back. The $20 million was expense which could be reduction of capital, working capital, O&M, and the $30 million is no different in characterization from the 20. Chris Shelton – Millennium: Okay, so kind of all income statements affecting?

Sure. Yes. Chris Shelton – Millennium: Okay. And then, I guess the second thing – in the past, you guys had kind of been running pretty mean at the utility, I think on the cost side. And I'm sure it's where you guys are thinking you can really make an effort to control cost going forward.

Let me give Don Robinson a chance to talk here. Chris Shelton – Millennium: Okay. Perfect.

They always give me the fun ones. We're actually looking at all of the cost here. We have run very lean and we'll continue to do that. We're going to look at improving some of the efficiency that we do have in some of the operating areas of the plant, our plants as well as the operational areas. And we're going to look at reducing some of our back office cost.

Yes. We'll say this, Chris, back to your point. We follow statistics. We follow fossil capacity factors, customer sat, reliability, O&M per customer and then customers per employee. Those last few statistics show us very favorably. Our own imprecated DH [ph] is lower than the average in the Western state, customers per employee continues to rise. That said, we're going to continue on our – for – it's really about efficiency and productivity, and we'll continue to try overturn stones, to try to find where there maybe some opportunity. Chris Shelton – Millennium: Got you. So maybe some opportunities going forward that you may not have in the past, I guess – well I guess that's it. Thanks, guys.

Thank you.

(Operator instructions) At this time, there are no further questions on queue.

Okay. Well let me just extend a very sincere thank you for all of your time today. And obviously, if you have any questions, give any of us a call. We would be happy to talk to you, and have a great day.

This concludes today's conference call. You may now disconnect.