Exhibit 10.4.9

SUPPLEMENTAL AGREEMENT BETWEEN
ARIZONA PUBLIC SERVICE COMPANY AND RANDALL K. EDINGTON
This Supplemental Agreement (the “Agreement”) is entered into by and between
Arizona Public Service Company (the “Company”) and Randall K. Edington
(“Executive”).
1.Background. The Company previously entered into a Supplemental Agreement dated
December 26, 2008 (the “2008 Agreement”) with Executive and that 2008 Agreement
was supplemented on June 20, 2012 (the “Supplemental Agreement”). The purpose of
this Agreement is to provide additional supplemental benefits to Executive as
described below.
2.    Effective Date. Except as otherwise noted below, this Agreement shall be
effective as of the date on which it is executed.
3.    Salary Increases. Effective as of September 30, 2014, Executive’s base
salary shall be increased to $1,000,000. Effective as of January 1, 2015,
Executive’s base salary shall be increased to $1,050,000, and effective as of
January 1, 2016, Executive’s base salary shall be increased to $1,100,000.
4.    Supplemental Pension Benefit. In addition to the pension benefit set forth
in the 2008 Agreement, as increased by the Supplemental Agreement, if Executive
is actively employed by the Company on June 30, 2016, the supplemental pension
benefit amount calculated in accordance with Section 4 of the Supplemental
Agreement shall be increased by an amount equal to 5% of the benefit that would
have otherwise been payable.
5.    Supplemental Deferred Compensation Arrangement. The Company shall provide
Executive with a deferred compensation benefit that will be credited in four
installments to accounts established for the benefit of Executive and will vest
in accordance with the terms and conditions described in the attached Exhibit A.
6.    Annual Incentive Target. In addition to the Executive’s previously
approved award opportunity target under the Company’s 2014 Annual Incentive
Award Plan for Palo Verde Employees (“2014 Palo Verde Incentive Plan”) (50% of
base salary), the Executive shall be granted an additional supplemental
incentive award opportunity target of 15% of his base salary for a total award
opportunity target of 65% of the Executive’s base salary under the 2014 Palo
Verde Incentive Plan, and by this Agreement, the 2014 Palo Verde Incentive Plan
is hereby amended to increase the award opportunity target to 65% of the
Executive’s base salary.   Subject to the normal approval process by the Human
Resources Committee of the Company’s Board of Directors, the award opportunity
target shall be 65% of the Executive’s base salary under the Company’s Annual
Incentive Award Plan for Palo Verde Employees for each of 2015 and 2016.
7.    Equity Awards. The equity awards that are expected to be granted by the
Company to the Executive under the Pinnacle West Capital Corporation 2012
Long-Term Incentive Plan in

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February 2015 and February 2016 shall have a grant date fair value of $600,000
for each year, subject to the normal approval process by the Human Resources
Committee of the Company’s Board of Directors.
8.    Impact on 2008 Agreement and Supplemental Agreement. This Agreement
supplements the 2008 Agreement and the Supplemental Agreement which otherwise
remain in full force and effect.
9.    Status of Exhibit. Exhibit A is deemed to be a part of this Agreement as
if fully set forth herein.
IN WITNESS WHEREOF, the Company and Executive have caused this Agreement to be
executed as of the date set forth below.

 
ARIZONA PUBLIC SERVICE COMPANY
 
 
 
By: /s/ Donald E. Brandt                
 
Its: Chief Executive Officer
 
 
 
December 14, 2014
 
Date
 
 
 
 
 
EXECUTIVE
 
 
 
/s/ Randall K. Edington            
 
Randall K. Edington
 
 
 
December 14, 2014                    
 
Date

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Exhibit A
SUPPLEMENTAL DEFERRED COMPENSATION PROGRAM
FOR RANDALL K. EDINGTON
1.    Purpose. By an Agreement executed on December 14, 2014 between Arizona
Public Service Company (the “Company”) and Randall K. Edington (“Executive”),
the Company agreed to establish a supplemental deferred compensation arrangement
for the benefit of Executive (the “Supplemental Deferred Compensation Benefit”).
The purpose of this document is to establish this arrangement through
Discretionary Credits to accounts established for the benefit of Executive
pursuant to the Deferred Compensation Plan of 2005 for Employees of Pinnacle
West Capital Corporation and Affiliates (the “Deferred Compensation Plan”).
2.    Definitions. Defined terms used herein shall have the respective meanings
ascribed to them in the Deferred Compensation Plan.
3.    Discretionary Credits. Four Discretionary Credits in the aggregate amount
of $1,300,000 will be allocated to four Discretionary Credit Accounts
(“Discretionary Credit Account A,” “Discretionary Credit Account B”,
“Discretionary Credit Account C” and “Discretionary Credit Account D”)
established for the benefit of Executive pursuant to Section 3.9 of the Deferred
Compensation Plan. Discretionary Credit Account A shall be credited with
$200,000 as of July 1, 2014. Discretionary Credit Account B shall be credited
with $300,000 on January 1, 2015 and Discretionary Credit Account C shall be
credited with $300,000 on January 1, 2016. Discretionary Credit Account D shall
be credited with $500,000 as of September 30, 2014.
4.    Interest. The Discretionary Credit Accounts shall be credited with
interest in accordance with Sections 3.5 and 3.7(a) of the Deferred Compensation
Plan. Discretionary Credit Account A shall be credited with interest from July
1, 2014. Discretionary Credit Account B shall be credited with interest from
January 1, 2015 and Discretionary Credit Account C shall be credited with
interest from January 1, 2016. Discretionary Credit Account D shall be credited
with interest from September 30, 2014.
5.    Vesting.
(a)Discretionary Credit Account A, Discretionary Credit Account B and
Discretionary Credit Account C vest on June 30, 2016. If Executive Separates
from Service prior to June 30, 2016, the amounts allocated to Discretionary
Credit Account A, Discretionary Credit Account B and Discretionary Credit
Account C will be forfeited; provided, however, that if Executive’s employment
with the Company is involuntarily terminated by the Company without cause,
Executive dies or Executive becomes Disabled prior to June 30, 2016, all amounts
previously credited to Discretionary Credit Account A, Discretionary Credit
Account B and Discretionary Credit Account C will be fully vested as of the date
of the termination by the Company without cause, death or Disability as
applicable.

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(b)Discretionary Credit Account D shall vest 180 days after the “Executive
Termination Date,” provided that Palo Verde’s key regulatory and oversight
evaluations and assessments have not declined during the period beginning
September 30, 2014 and ending as of 180 days after the Executive Termination
Date (the “Assessments Condition”). If (i) the Assessments Condition is not met,
(ii) Executive’s employment is terminated for cause or (iii) the Executive
Termination Date is prior to June 30, 2016, the amounts allocated to
Discretionary Credit Account D will be forfeited; provided, however, that if
Executive’s employment with the Company is involuntarily terminated by the
Company without cause, Executive dies or Executive becomes Disabled, and the
Assessments Condition is met, all amounts previously credited to Discretionary
Credit Account D will be fully vested 180 days after the date of the Executive’s
termination of employment due to any of such events.  For this purpose, the
“Executive Termination Date” is the date on which Executive’s employment with
the Company ceases, voluntarily or involuntarily.
For purposes of this document, “Disability” shall have the meaning ascribed to
it in the Pinnacle West Capital Corporation Long-Term Disability Plan.
6.    Payment of Discretionary Credits. Executive’s vested interest in his
Discretionary Credit Accounts will be paid to Executive (or to the Beneficiary
designated by Executive pursuant to the Deferred Compensation Plan in the event
of Executive’s death)  in installments over a period of 10 years following
Executive’s Separation from Service in accordance with Sections 3.7 and 5.1 of
the Deferred Compensation Plan.  As provided in the Deferred Compensation Plan,
the first installment payment generally shall be made within 30 days following
Executive’s Separation from Service, unless Executive is a Specified Employee on
the date of his Separation from Service.  If Executive is a Specified Employee
on the date of his Separation from Service, the payment of Executive’s vested
interest in his Discretionary Credit Accounts may not commence prior to the
first day of the seventh month following Executive’s Separation from Service. 
In addition, if Executive is not a Specified Employee on the date of his
Separation form Service, the first installment payment from Discretionary Credit
Account D shall be made within 30 days following the date on which Discretionary
Credit Account D vests in accordance with Section 5(b) of this document.  The
Discretionary Credit Accounts may not be distributed as a Short‑Term Payout or
due to an Unforeseeable Financial Emergency.
7.    Executive’s Plan Status. Regardless of whether Executive makes an Annual
Deferral pursuant to the terms of the Deferred Compensation Plan for the
relevant Plan Year, Executive shall be deemed to be a Participant in the
Deferred Compensation Plan and to have elected to participate in the Deferred
Compensation Plan for the limited purpose of receiving the Discretionary Credits
described in this document. This document shall be deemed to be Executive’s
Election Form with respect to the Discretionary Credits for purposes of
Section 2.2 and Section 3.3 of the Deferred Compensation Plan.
8.    Relationship to Other Benefits. The Discretionary Credits allocated to
Executive pursuant to this document shall not be taken into account as
compensation or for purposes of determining any benefits due to Executive
pursuant to the terms of any pension, retirement, savings, profit sharing,
incentive, group insurance or other tax qualified or nonqualified benefit plan
sponsored by the Company, Pinnacle West Capital Corporation or any affiliate of
either. In addition,

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the amounts payable to Executive attributable to the Discretionary Credit
Accounts established for Executive pursuant to the Deferred Compensation Plan
shall be disregarded for purposes of the benefit plans referred to in the
preceding sentence.
9.    Plan Document. As provided above, this document is entered into pursuant
to the provisions of Section 3.9 of the Deferred Compensation Plan. Accordingly,
except as otherwise set forth in this document, the provisions of the Deferred
Compensation Plan shall apply in determining the rights of Executive as well as
the administration of Executive’s Discretionary Credit Accounts. In cases of
conflict, this document controls over any conflicting provisions of the Deferred
Compensation Plan, except as may be required by Section 409A of the Internal
Revenue Code or the provisions of any other applicable law or regulation.
10.    Amendments. This document may not be modified, altered or changed, except
by a written agreement signed by the Company and Executive.
11.    Entire Agreement. This document and the Deferred Compensation Plan
constitute the entire agreement between the Company and Executive regarding this
Supplemental Deferred Compensation Arrangement.
12.    Severability. If any provision of this document is held to be invalid,
the remaining provisions shall remain in full force and effect.

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