POWERING GROWTH DELIVERING VALUE Investor Meetings l July 10, 2018             Powering Growth, Delivering Value
 FORWARD LOOKING STATEMENTS   This presentation contains forward-looking statements based on current expectations, including statements regarding our earnings guidance and  financial outlook and goals. These forward-looking statements are often  identified by words such as “estimate,” “predict,” “may,” “believe,” “plan,” “expect,” “require,” “intend,” “assume,” “project” and similar words. Because actual results may differ materially from expectations, we caution you not to place undue reliance on these statements. A number of factors could cause future results to differ materially from historical results, or from outcomes currently expected or sought by Pinnacle West or APS. These factors include, but are not limited to: our ability to manage capital expenditures and operations and maintenance costs while maintaining high reliability and customer service levels; variations in demand for electricity, including those due to weather seasonality, the general economy, customer and sales growth (or decline), and the effects of energy conservation measures and distributed generation; power plant and transmission system performance and outages; competition in retail and wholesale power markets; regulatory and judicial decisions, developments and proceedings; new legislation, ballet initiatives and regulation, including those relating to environmental requirements, regulatory policy, nuclear plant operations and potential deregulation of retail electric markets; fuel and water supply availability; our ability to achieve timely and adequate rate recovery of our costs, including returns on and of debt and equity capital investments; our ability to meet renewable energy and energy efficiency mandates and recover related costs; risks inherent in the operation of nuclear facilities, including spent fuel disposal uncertainty; current and future economic conditions in Arizona, including in real estate markets; the development of new technologies which may affect electric sales or delivery; the cost of debt and equity capital and the ability to access capital markets when required; environmental, economic and other concerns surrounding  coal-fired generation, including regulation of greenhouse gas emissions; volatile fuel and purchased power costs; the investment performance of the assets of our nuclear decommissioning trust, pension, and other postretirement benefit plans and the resulting impact on future funding requirements; the liquidity of wholesale power markets and the use of derivative contracts in our business; potential shortfalls in insurance coverage; new accounting requirements or new interpretations of existing requirements; generation, transmission and distribution facility and system conditions and operating costs; the ability to meet the anticipated future need for additional generation and associated transmission facilities in our region; the willingness or ability of our counterparties, power plant participants and power plant land owners to meet contractual or other obligations or extend the rights for continued power plant operations; and restrictions on dividends or other provisions in our credit agreements and ACC orders. These and other factors are discussed in Risk Factors described in Part I, Item 1A of the Pinnacle West/APS Annual Report on Form  10-K for the fiscal year ended December 31, 2017, which   you  should review carefully before placing any reliance on our financial statements, disclosures or earnings outlook. Neither Pinnacle West nor APS  assumes any   obligation to update these statements, even if our internal estimates change, except as required by law.      2       Powering Growth, Delivering Value
 VALUE PROPOSITION     We are executing on our financial and operational objectives ...                                                                                                    Leverage       Operational Excellence                       Financial Strength                                                                                              Economic Growth     Top decile safety performance            Annual dividend growth target of         Arizona’s long-term growth       among peers                               6%, subject to declaration at             fundamentals remain largely                                                 Board of Directors’ discretion            intact, including population      APS operates the Palo Verde                                                         growth, job growth and economic       Generating Station                       Strong credit ratings and balance         development                                                sheet     Disciplined cost management                                                        By 2032 we expect to add                                                Rate base growth of 6-7%                  approximately 550,000 new                                                                                           customers1                                             ... while also advocating to ensure Pinnacle West and                                              Arizona have a sustainable energy future   Pinnacle West combines                       Integrating Technology to                  Taking Steps to Address   a solid foundation and a                        Modernize the Grid                            Rate Design     clear strategy to build                   At the forefront of utilities           Worked with Arizona Corporation                                                 studying and deploying advanced          Commission and key stakeholders  shareholder value through                      infrastructure to enable reliable        to modernize rates   our core utility business                    and cost-efficient integration of       Comprehensive rate review                                                 emerging technologies into the           agreement approved in August                                                 grid and with customers                  2017, enabling investment in                                                                                          smarter, cleaner energy                                                                                          infrastructure     3       Powering Growth, Delivering Value  1 Based on the 2017 Integrated Resource Plan filed April 10, 2017.
 APS’s vision is to create a     SUSTAINABILITY                                                sustainable energy future for                                                                   Arizona        Pinnacle West and APS have  adopted a strategic framework that                        Five critical areas of our sustainability efforts  supports our operating foundation                                                                             Carbon Management                                                             • 50%  of our diverse energy mix is carbon-free                                                           • Plan to reduce carbon intensity by 23% over the next 15 yrs                                                                                Energy Innovation                                                            • More than 1,300 MW of installed solar capacity                                                           • Plan to add over 500 MW of energy storage by 2032                                                                                Safety & Security                                                            • 70% reduction in OSHA recordable injuries over past 10 yrs                                                           • Remain  top decile for safety performance in the U.S. electric                                                              utilities industry                                                                                 Water Resources                                                           • 14% reduction    in groundwater use since 2014                                                           • 20B gallons of water recycled    each year to cool Palo Verde                                                                                        People                                                           • Avg. employee tenure of 13 yrs due to strong talent strategy                                                           • More than 20% of our employees are veterans     4       Powering Growth, Delivering Value
 TECHNOLOGY                                                    Technological advancements for a                                                                  more efficient and informed    INNOVATION                                                    Worker of the Future   Advanced Data Analytics                                             Workforce Automation • Leveraging data using state                                       • Utilizing APS’s drone    of the art Machine Learning                                         program to save over $1    and Artificial Intelligence                                         million dollars through land    techniques.                                                         surveys and faster                                                                        identification of equipment  • Driving value via process                                           approaching failure.   automation and data-driven    decision making.                                                  • Deploying robotic process                                                                        automation (bots) to reduce  • Providing tools that identify                                       labor hours by implementing    inefficiencies in Supply Chain                                      simple, agile, standard    and plant operations.                                               processes.                  Electronic Work Packages                •  Enabling mobile/field workers to                    react more quickly through access to                    real-time systems and data                •  Making Leaders more efficient with                    tools to support their workers in real                    time                •  Eliminating inefficient and manual                    paper processes     5       Powering Growth, Delivering Value
 Modernizing the distribution grid     ADVANCED GRID                                                 with advanced technology                                                                   investments – resulting in     INVESTMENTS                                                   improved reliability for customers                                                                   and more efficient operations                                          Grid Operations & Investment                                         Projected $1.6 Billion from 2018-2020             R     T      Reclosers – Supervisory                      Advanced Distribution                Cap Bank Controllers, Substation  Controlled Switches, Trip Savers                     System Platform                   Regulators, Voltage Management                                                                                                     Algorithms •  Automated switches controlled from        • Integrated operational platform         •  Controls regulators and capacitor     the Distribution Operations Center        • Increases efficiency and life of           banks to manage power quality such  •  Manage load without sending field           distribution system; improves safety       as power factor and voltage    personnel to manually operate the           and communication; increases ability     switch                                      to manage overall reliability; and                                                 enables Distributed Energy Resources         Monitors – Transformers,                   Communications Backhaul                    Sensors – Current, Voltage         Breakers, Bushings •  New technologies such as APS’s            •  Leveraging AMI for distribution        •  Line sensors to measure & identify     Transformer Oil Analysis & Notification      automation                                fault current, fault location and     system leverage advances in               •  Strategically deploying Fiber for         voltage    communications and sensing to                communications backhaul                •  Improves outage restoration time and     remotely monitor health of                                               •  Transitioning to Internet Protocol        operations efficiency    transformers, enabling proactive                                                  based networks for future growth     maintenance actions to prevent critical                                                  & scalability    failures and increase reliability    6       Powering Growth, Delivering Value
 CUSTOMER                                      Programs that benefit both the   PROGRAMS                                      Company and customers           Smart Thermostats with Demand Response and Pre-Cooling              Customer Benefits               • Bill credit of $25/year in exchange for demand response               APS Benefits               • Partner with customers to reduce system load during peak periods          Behind the Meter Battery Systems              Customer Benefits               • Receive battery and one-time incentive of $500 in exchange for joint use                  of the battery              APS Benefits               • APS will own, operate, and maintain the battery systems                 • Batteries will help integrate solar resources               • Utilize battery storage as a load balancing mechanism during peak hours          Residential Grid-Interactive Water Heaters            Customer Benefits               • Bill savings opportunities               • Customers receive free heat pump water heaters               APS Benefits               • APS operates water heaters to fill the belly of the duck and avoid peak periods               • Innovative load management initiative   7     Powering Growth, Delivering Value
 DEMAND SIDE                                   2018 DSM Plan shifts the focus to                                                 align with APS’s changing   MANAGEMENT (DSM)                              resource needs    School Bus Electrification   – Pilot program to electrify school buses that can charge in the middle of the day   Managed EV Charging Program   – Fleet, workplace and multifamily charging infrastructure    – Utility controlled providing additional demand response   Reverse Demand Response Pilot   – Customers take advantage of negative pricing events                                                                            ELECTRIC   Energy Storage Initiative Expansion                                        VEHICLE    – Focus on C&I energy storage and control                                     FLEET    2018 DSM    Plan introduces new high value pilot programs to utilize the mid-day                                 overproduction of energy   8     Powering Growth, Delivering Value
 RENEWABLE                                                                      APS has been supporting solar   RESOURCES                                                                      energy for more than 60 years                                                                                                      APS Solar Portfolio*      APS currently has 1,625 MW       of renewable resources:                                                                               Owned             PPA                                                                                                           239 MW          310 MW      •  Solar*                            1,306 MW      •  Wind                                  289 MW                                                                 DG                                                                                                                  757 MW      •  Biomass                                 14 MW      •  Geothermal                              10 MW      •  Biogas                                    6 MW                                                                                   Owned solar includes 170 MW AZ Sun Program, 25 MW of APS                                                                                    owned Distributed Generation (DG), 4 MW of other APS owned                                                                                    utility scale solar and 40 MW Red Rock Solar Plant;                                                                                   PPA is primarily 250 MW Solana Concentrated Solar Facility.        Yuma Foothills                Aragonne Mesa                      Snowflake                       Salton Sea                  Glendale Landfill            Solar                          Wind                         Biomass                       Geothermal                          Biogas           35 MW                          90 MW                          14 MW                           10 MW                            3MW   * As of 3/31/18 as reported in the First Quarter 2018 Form 10-Q – with additional 99 MW under development  9         Powering Growth, Delivering Value
 Providing more renewable energy   APS SOLAR                                     and technology to all customers    APS Solar Partner Program (Installations Complete)    – Installed 10 MW of APS-owned residential PV systems with advanced controllable      inverters that can vary power output     – 4 MWh of grid-tied battery storage on 2 of the participating feeders   APS Solar Communities (Construction to begin Q2 2018)    – Deploy utility owned photovoltaic        Primary                                               Customer      Limited-Income Residential Customers      solar generation connected                                 and Multi-Family Dwellings                                              Target     directly to the distribution system     – All solar assets will use advanced       Secondary                                               Customer     Moderate-Income Residential Customers     inverters                                Target   – Program spend of $10-$15 million in      direct capital costs each year for the   Other Eligible Commercial Customers Serving Limited      three-year program period                Participants     & Moderate-Income Customers    – Program costs recovered annually through                                                             Title 1                  Rural      the Renewable Energy Surcharge                                    Non-Profits                                                           Schools                 Government   10    Powering Growth, Delivering Value
 Energy storage is an important   STORAGE PROJECTS                              part of our Integrated Resource                                                 Plan                                     2018 Battery Storage RFP                                      • Up to 106 MW located on APS solar plant sites                                      • Utility owned                                      • Anticipated in service by June 2020                                    Punkin Center Battery Storage Project                                     • 2 MW / 8 MWH lithium ion battery                                      • Placed in service March 2018                                     • Defers the rebuild of around 20 miles of 21 kV                                        distribution line for approximately 5-10 years                                     • Acts as generating capacity to the system                                     • Helps regulate the voltage on the feeder                                     APS, First Solar Battery Storage Project                                      • 50 MW battery energy storage; 65 MW solar                                       • 15-year power purchase agreement                                       • Anticipated in service in 2021                                      • APS will be able to store power and deliver energy                                        during peak hours (3-8pm)   11    Powering Growth, Delivering Value
 RESOURCE PLANNING*  Peak**                                                        8,405 MW                                          9,835 MW                                        11,410 MW  Resource Reductions                                           2017-2022                                         2017-2027                                         2017-2032 (Retirements, Expirations)                                       -487 MW                                           -872 MW                                           -872 MW                                                       Ocotillo steam unit retirements and                 Ocotillo steam unit retirements,                  Ocotillo steam unit retirements,                                                            Navajo contract expiration                     Navajo contract expiration and                    Navajo contract expiration and                                                                                                                Cholla coal retirement                            Cholla coal retirement                                                                  -509 MW                                         -1,120 MW                                         -1,133 MW                                                                 PPA expirations                                   PPA expirations                                   PPA expirations Resource Additions                                            2017-2022                                         2017-2027                                         2017-2032                                                                 2,704 MW                                          5,206 MW                                          6,923 MW                                                   Natural gas generating units, short-term          Natural gas generating units, short-term          Natural gas generating units, short-term                                                      market purchases, DSM, microgrids,                market purchases, DSM, microgrids,                market purchases, DSM, microgrids,                                                            rooftop solar and storage                         rooftop solar and storage                      rooftop solar, storage and wind Peak Load Growth                                                    2022                                              2027                                              2032                                                                     3.4%                                              3.1%                                              3.0%                                                               2017-2022                                         2017-2027                                         2017-2032                                                                      20%                                               40%                                               62%      Reference Year            2017**                                               2022                                              2027                                               2032                                 Peak**                               7,023 MW                                                                                      Utility-Scale                                             Short-Term Market            Nuclear          Coal           Natural Gas           DSM                                               Rooftop Solar                                                  Storage                                                                                    Renewable Energy                                          Purchases                                                                        * Data shown is based on the 2017 Integrated Resource Plan filed          12          Powering Growth, Delivering Value                    April 10, 2017.                                                                        **Normal weather peak, includes planning reserves
 APPENDIX          Powering Growth, Delivering Value
 SENIOR                                                                         Our management team has more                                                                                       than 100 combined years of        MANAGEMENT                                                                     creating shareholder value in the        TEAM                                                                           energy industry  Don Brandt                                               Jim Hatfield Chairman of the Board, President and                     Executive Vice President and  Chief Executive Officer, Pinnacle West & APS             Chief Financial Officer, Pinnacle West & APS                                                                                                                       We maintain a robust                     • Joined Pinnacle West in 2002                          • Joined as SVP and CFO in             pipeline of talent to serve                                                                               2008 from OGE Energy                     • Elected to Pinnacle West                                                                               Corp.                      Board and named Chairman,                                                                      our complex operations                       CEO in 2009                                           • Responsible for corporate               and facilitate effective                                                                               functions including finance,                     • Recognized industry leader                                                                               investor relations, and risk          succession planning in a                       with 30+ years in the nuclear                                                                               management                      and energy industries                                                                         highly competitive talent                                                                             • 37+ years of financial                     • Vice Chairman of the                                                                                     environment                                                                              experience in the utility and                       Institute of Nuclear Power                                                                               energy business                      Operations and Chairman of                       the Nuclear Energy Institute  Daniel Froetscher                                        Jeff Guldner                                            Bob Bement Executive Vice President of Operations, APS              Executive Vice President, Public Policy &               Executive Vice President and                                                           General Counsel, Pinnacle West & APS                    Chief Nuclear Officer, APS                   • Joined APS in 1980                                     •  Joined APS in 2004 from                             • Joined APS in 2007 from                   • Appointed EVP of Operations,                              Snell & Wilmer                                        Arkansas Nuclear One                     February 2018                                          •  Appointed EVP and GC, April                         • Promoted from SVP of Site                   • Responsible for overseeing                                2017                                                  Operations to EVP and Chief                     T&D, fossil generation,                                •  Responsible for overseeing                            Nuclear Officer in 2016                    resource management,                                      regulatory and government                           • Responsible for all nuclear-                    sustainability, supply chain                              affairs and legal activities                          related activities associated                     and security                                           •  Significant experience in                             with Palo Verde                   • Significant leadership and                                public utility and energy law                       • Seasoned nuclear industry                     industry experience                                       and regulation                                        expert serving on several                                                                                                                                     industry committees        14        Powering Growth, Delivering Value
 APS CAPITAL                                                   Capital expenditures are funded                                                                 primarily through internally   EXPENDITURES                                                  generated cash flow   ($ Millions)                                                                                                            Other      $1,341         $99                                                                        $1,211                               $1,181                    $1,153                                             Distribution                                  $81                                               $152                                                           $115         $419                                                                                                Transmission                                  $442                                                                                                             Renewable         $174                                              $545                      $612                    Generation         $3                                  $152         $193                                                                                                              1                                  $16                                                                       Environmental                                  $85                                                           $191        $235                      $120                      $16                      $188                    New Gas                                                            $25                       $17                               2                                                           $10                       $46                    Generation                                 $285         $218                                              $251                      $196                                                                                                             Traditional                                                                                                             Generation       2017                     2018                      2019                     2020                                                       Projected   •  The chart does not include capital expenditures related to 4CA’s 7% interest in the Four Corners Power Plant Units 4 and 5 of      $29 million in 2017, or projected capital expenditures of $15 million in 2018, $7 million in 2019 and $6 million in 2020.  •  2018 – 2020 as disclosed in First Quarter 2018 Form 10-Q.  1 Includes Selective Catalytic Reduction controls at Four Corners with in-service dates of Q4 2017 (Unit 5) and Q2 2018 (Unit 4)  2 Ocotillo Modernization Project: 2 units scheduled for completion in Q4 2018, 3 units scheduled for completion in Q1 2019.  15      Powering Growth, Delivering Value
 OPERATIONS &                                                                   Goal is to keep O&M per kWh flat,   MAINTENANCE                                                                    adjusted for planned outages    ($ Millions)                                                                                                                       $905 - $925                                                                           $858                         $848                                                                                              75 - 85                           72                                                63                                                                                                                           830 - 840                          776                                               795                           20161                                             20171                                            2018E                                     PNW Consolidated ex RES/DSM2                          Planned Fleet Outages   1 Reclassified to reflect the adoption of the new accounting requirements for presenting pension and other postretirement non-service costs   (“Pension & OPEB Presentation”).  Increases in O&M due to the Pension & OPEB Presentation change are approximately $20 million in 2016,   $25 million in 2017 and $35 million in 2018, which are offset in pension and other post-retirement non-service credits on the income statement.  See Notes 1, 5 and 13 in the First Quarter 2018 Form 10-Q for additional information.  2 Excludes RES/DSM of $83 million in 2016, $91 million in 2017 and $105 million in 2018E.  16        Powering Growth, Delivering Value
 Tax Cuts and Jobs Act provides       TAX REFORM                                             benefits to both our customers                                                              and shareholders                    Regulatory Steps                                             Timing Impacts − Received ACC approval of $119 million annual rate         − The impact of the lower federal income tax rate is    reduction reflecting lower corporate tax rate through       based on our quarterly pre-tax earnings   the Tax Expense Adjustor Mechanism (TEAM)                                                             − The reduction to customers’ rates through the TEAM  − Second filing under the TEAM expected later in 2018         is based on a per kWh sales credit   to return excess deferred income taxes to customers                                                             − Our typical seasonal pre-tax earnings and kWh sales  − FERC guidance on the rate reduction for transmission        patterns are as follows1:   customers expected in 2018                                                                                       Q1      Q2       Q3      Q4 Recap of Excess Deferred  Taxes           As of March  ($ millions)                                31, 2018           Pre-Tax Earnings       5%     30%      55%     10%                                                                Kilowatt Hour Sales   21%     25%      33%     21% Total Regulated Excess Deferred Taxes        $1,140                                                                1 Based on historical five-year average Depreciation Related Excess Deferred  Taxes (to be returned over the life of   $1,020 - $1,040                    Rate Base Growth property)                                                             − Higher incremental rate base of $150 million per  Non-Depreciation Related Excess                                             $100 - $120        year in 2018 and 2019 Deferred Taxes                                                                    Continued Interest Deductibility                       Cash Taxes                                                             − Majority of Pinnacle West debt likely allocable to  − Minimal cash tax payments through 2018 due to                                                                regulated operations and excluded from any    existing $85 million in tax credit carryforwards                                                               limitation      17     Powering Growth, Delivering Value
 ECONOMIC                                                      Arizona and Metro Phoenix                                                                       remain attractive places to         INDICATORS                                                    live and do business      Nonresidential Building Vacancy – Metro Phoenix                                                                           Maricopa County ranked #1 in U.S. for    Vacancy Rate                                                                           population growth for second straight year 25%                                                                       - U.S. Census Bureau March 2018  20%                                      Office                         Industrial 15%                                                                       Arizona population surpassed 7 million in                                                                            2017 10%                    Retail   5%                                                                      Arizona #1 state in the country in 2017                                                                            for in-bound moves   0%                                                                           - North American Moving Services January 2018      '07  '08  '09  '10  '11  '12  '13  '14  '15  '16  '17 '18Q1         Single Family & Multifamily Housing Permits                        2017 housing construction at highest level                          Maricopa County                                   since 2007               Single Family    Multifamily     Projected  40,000                                                                           Above-average job growth in tourism,   30,000                                                                           health care, manufacturing, financial   20,000                                                                   services, and construction   10,000                                                                   Vacancy rates in office and retail space                                                                            have fallen to pre-recessionary levels       0           '07  '08 '09  '10 '11  '12 '13  '14 '15  '16 '17  '18E        18      Powering Growth, Delivering Value
 ECONOMIC                                      Arizona’s focus on economic                                                 development continues to support   DEVELOPMENT                                   growth in the state   2017  APS partnered with Greater Phoenix Economic Council and Arizona Commerce Authority to   welcome 21 new companies to the state, adding an estimated:   —   39.8 MW   —   4,300 new jobs   —   $659.9M in capital investment   —   Notable corporations include UPS, Ball Corporation, Aldi and Chewy.com   2018  Nikola Motors selected Arizona for its new headquarters and manufacturing facility adding an   estimated:    —10 MW   —1,500 new jobs   —   $900M in capital investment   —   Nikola sited Arizona’s quality workforce, pro-business atmosphere and inexpensive       housing as differentiating factors    Governor Ducey approves budget for the Arizona Commerce Authority    —   Supports business expansion and attraction efforts, workforce development and job       training, and tax credit administration   19    Powering Growth, Delivering Value
 APS’s revenues come from a  RATE BASE                                                       regulated retail rate base and                                                                  meaningful transmission business            APS Rate Base Growth                                          Total Approved Rate Base                      Year-End                  ACC         FERC                                  Generation & Distribution           Transmission               Rate Base Guidance:      6-7% Average Annual Growth Rate                                               17%                                               $1.8                                         83%      $1.4                                                                                            ACC FERC                                                          Rate Effective Date           8/19/2017              6/1/2017                                             $9.1                                                          Test Year Ended              12/31/20151            12/31/2016    $6.8                                                          Rate Base                        $6.8B                 $1.4B                                                          Equity Layer                    55.8%                   55%                                                          Allowed ROE                     10.0%                 10.75%   2016       2017      2018      2019      2020                               Projected                  1 Adjusted to include post test-year plant in service through 12/31/2016    Rate base $ in billions, rounded   20      Powering Growth, Delivering Value
 BALANCE SHEET STRENGTH                                                                                        Credit Ratings1     Long-Term Debt Maturity Schedule                                                                  •  A- or equivalent ratings or better at S&P, Moody’s  ($Millions)                                                         and Fitch   $600                                                                          2018 Major Financing Activities    $500                                                           •  Currently expect up to $600 million of long-term                                                                      debt issuance at APS                                                                   1    $400                                      $300                   We are disclosing credit ratings to enhance understanding of                                                                   our sources of liquidity and the effects of our ratings on our                                                                   costs of funds.    $300                       $600     $200                                              $250    $100                 $82      $-                2018          2019           2020                        APS             PNW     21      Powering Growth, Delivering Value
 CREDIT RATINGS AND                                                                     Credit metrics remain a key focus     METRICS                                        Pinnacle                           APS                                              2012      2013     2014     2015      2016      2017                                        West    Corporate Credit Ratings1                                       APS        Moody’s              A2              A3               FFO / Debt   27.7%     31.5%    27.5%     29.7%     26.5%    26.9%        S&P                  A-              A-            FFO / Interest   4.8x      5.6X      5.5x     5.8x      5.0x     5.2x                                                                  Debt /        Fitch                A-              A-                            50.7%     47.7%    45.3%     45.8%     47.7%    47.3%                                                          Capitalization    Senior Unsecured1                                    Pinnacle West        Moody’s              A2              A3               FFO / Debt   26.7%     29.8%    26.5%     28.9%     25.1%    24.7%        S&P                  A-            BBB+            FFO / Interest   4.4x      4.9X      5.2x     5.6x      4.9x     4.8x                                                                  Debt /        Fitch                 A              A-                            52.1%     49.1%    46.7%     47.0%     49.0%    50.3%                                                          Capitalization    Note: Moody’s, Fitch and S&P rate the    outlooks for APS and Pinnacle West as Stable.       Source: Standard & Poor’s  1We are disclosing credit ratings to enhance understanding of our sources of liquidity and the effects of our ratings on our costs of    funds.      22      Powering Growth, Delivering Value
 OCOTILLO MODERNIZATION PROJECT AND       FOUR CORNERS SCRs       •  Included in the 2017 Rate Review Order1, APS has been granted Accounting Deferral Orders for         two large generation-related capital investments           –  Ocotillo Modernization Project: Retiring two aging, steam-based, natural gas units, and               replacing with 5 new, fast-ramping, combustion turbine units           –  Four Corners Power Plant: Installing Selective Catalytic Reduction (SCR) equipment to comply               with Federal environmental standards                                     Ocotillo Modernization Project                     Four Corners SCRs                                          Units 6, 7 – Fall 2018                        Unit 5 – Late 2017 In-Service Dates                                     Units 3, 4 and 5 – Spring 2019                    Unit 4 – Spring 2018  Total Cost (APS)                              $500 million                                $400 million  Estimated Cost Deferral               $45 million (through 2019)                   $30 million (through 2018)                                 − Cost deferral from date of commercial     −  Cost deferral from time of installation                                   operation to the effective date of rates     to incorporation of the SCR costs in                                   in next rate case                            rates using a step increase beginning  Accounting Deferral                                − Includes depreciation, O&M, property         in 2019                                  taxes, and capital carrying charge2       −  Includes depreciation, O&M, property                                                                                taxes, and capital carrying charge2        1 The ACC’s decision is subject to appeals.       2 APS will calculate the capital carrying charge using the 5.13% embedded cost of debt established in the 2017 Rate Review Order.       23     Powering Growth, Delivering Value
 FOUR CORNERS SCR                                       APS filed for a rate increase   STEP INCREASE                                          on April 27, 2018                               Key Components of APS’s Filed Request            Financial                         Cost of Capital                         Bill Impact   • Consistent with prior               • 7.85% Return on Rate               • Rate rider applied as a     disclosed estimates                   Base1                                percentage of base rates                                           – Weighted Average Cost              for all applicable customers                                            of Capital   • $390 million direct costs           • 5.13% Return on Deferral1          • $67.5 million revenue     vs. $400 million1                     – Embedded Cost of Debt              requirement    contemplated in APS’s     recent rate case   • $40 million in indirect             • 5% Depreciation Rate               • ~2% bill impact    costs (overhead, AFUDC)               – 20 year useful life                                             (2038-depreciation                                             study)                                         • 5 Year Deferral                                           Amortization   1 Based on 2017 Rate Review Order  24     Powering Growth, Delivering Value
 ARIZONA CORPORATION COMMISSION          Terms to January 2019                                                           Terms to January 2021                Tom                      Justin                                   Bob                        Boyd                     Andy         Forese (R)                Olson (R)**                             Burns (R)*                   Dunn (R)                 Tobin (R)          Chairman            Other State Officials       ACC Executive Director – Ted Vogt      RUCO Director – David Tenney      *  Term limited - elected to four-year terms (limited to two consecutive)   **Governor Doug Ducey appointed Justin Olson to fill the remainder of former Commissioner Doug Little’s term.   25        Powering Growth, Delivering Value
 2018 KEY DATES  ACC Key Dates / Docket #                                      Q1                            Q2                              Q3                            Q4  Key Recurring Regulatory Filings Lost Fixed Cost Recovery                                                          Filed Feb 15                                             Decision Expected Q3 E-01345A-11-0224  Transmission Cost Adjustor                                                             Filed May 15  E-01345A-11-0224                                                                   Implemented Jun 1                                                                                                                    Sep 7: File 2019 Plan 2019 DSM/EE Implementation Plan E-01345A-18-0105                                                                                                   2018 DSM Decision                                                                                                                         Expected Q3  2019 RES Implementation Plan                                                      Jun 12: 2018 RES Plan                                                                                                                    Jul 1: Filed 2019 Plan TBD                                                                                      approved                                                                                    May 1: Filed Year Two           Sep 1: Year Two RCP  APS Rate Review/                                                                                                       Export Rate                                                         Feb: Customer                RCP Export Rate Four Corners SCR Step Increase                                                                                  Expected Implementation                                                        Transition Began E-01345A-16-0036                                                                    Apr 27: Filed Four          Sep 5: Four Corners SCR                                                                                    Corners SCR Request                 Hearing Begins                                                         ACC declined to  Resource Planning and Procurement                                                                                  Workshops Begin for                                                     acknowledge Arizona  E-00000V-15-0094                                                                                                      APS 2020 IRP                                                          utility’s IRPs  Review and Modification of Current Net                                                                               Staff Draft Rules Metering Rules RE-00000A-17-0260                                                                                         Expected  Modification of the Federal Tax Reform                                                      Implemented March 1 Rate Adjustment    AU-00000A-17-0379  Energy Modernization Plan                           Staff Notice of Inquiry        Apr 23: Responses to  E-00000Q-16-0289                                     opened February 22               Notice of Inquiry  Other Key Dates                                               Q1Q2Q3Q4 Arizona State Legislature                                       In session Jan 8 – End of Q2 Elections                                                                                                          Aug 28: Primary                Nov 6: General         26        Powering Growth, Delivering Value
 INTEGRATED                                                    The ACC can acknowledge the                                                                   filing of an IRP, but they do not     RESOURCE PLAN                                                 approve IRP’s    15-Year Plan               IRP Cycle              Acknowledgement              Decision Impact          Looking Ahead • An Integrated      • Occurs every 2-3 years       • ACC does not              • A non-                  • The next IRP    Resource Plan      • Utility-and Commission-       approve or reject           acknowledged              filing is    (IRP) provides       led stakeholder               IRPs; it                    IRP does not              scheduled for    a 15-year            workshops during              acknowledges or             require a revised         April 2020   forward look                                       declines to                 filing and there is                         development of the IRP                                                             • Stakeholder    at a utility’s                                     acknowledge the             no requirement                                                                                                             process for the    resource           • Preliminary IRP filed         filing                      that a utility                                                                                                             2020 IRP cycle    needs and its        about 1 year prior to                                     modify its                                                      • Acknowledgement                                      starts as early    plan to meet         the Final IRP                                             resource plan                                                       of an IRP does not                                    as August 2018   those needs in                       • Year after Final IRP          guaranty recovery    a reliable and                         filing, Commission Staff      of investments nor    affordable                         issues a Recommended          does non-   fashion                         Order regarding IRP           acknowledgement                         Acknowledgement               imply non-recovery                       • Commission votes on           of investments                          IRP Acknowledgement    27      Powering Growth, Delivering Value
 Residential DG (MWdc) Annual Additions                                                                                                                                                150      RESIDENTIAL PV                                                                                                                     133                                                                                                                                   74                  63                                                                                                                            57                                                                                                              44     51                                                       1                                               22      APPLICATIONS                                                                        10     18                                                                                         2009                 2012         2014          2016          2018  YTD   4,000                                                                       3771                                                                                                      3505 3,500  3,000                                                               2474 2,500                                                                                    2167                                                    1955                                              2033 2,000                                 1827                          1564                                                                                     1602              1436                                                           1413         1364                                 1442                      1434 1,500                                 1267                     1291                                                                        1283              1153                                  1100                                                                     1278                                          1002                                                                                          1349                           844                                                                                                 1189 1,000                                 1091                     1157         1158                                                                        1168                           759                      1001                                              1141                                  1077              804                       832   500                     680                      715                                                                                      636         615                                                                                                                                 540              484                                                                                                  324      0              Jan          Feb          Mar         Apr          May          Jun          Jul         Aug         Sep          Oct         Nov          Dec                            2015 Applications              2016 Applications               2017 Applications              2018 Applications        1 Monthly data equals applications received minus cancelled applications. As of May 31, 2018, approximately 79,400 residential grid-tied       solar photovoltaic (PV) systems have been installed in APS’s service territory, totaling approximately 628 MWdc of installed capacity.        Excludes APS Solar Partner Program residential PV systems.      Note:  www.arizonagoessolar.org      logs total residential application volume, including cancellations.  Solar water heaters can also be found       on the site, but are not included in the chart above.      28        Powering Growth, Delivering Value
 Distributed generation is changing       THE “DUCK CURVE”                                              the load shape of the grid                   Current Spring Day                                                    Spring Day 2022            Excess renewables create over-generation                           ... and potentially for nuclear generation in             challenges ...                                                       the future 5,000                                                            5,000  4,500                                                            4,500  4,000                                                            4,000  3,500                                                            3,500  3,000                                                            3,000  2,500                                                            2,500  2,000                                                            2,000     Generation Minimum                                                                                   Output                 Generation  1,500        Minimum Output                                      1,500  1,000                                                            1,000               Nuclear Output                                                  Nuclear Output    500                                               Over-                500                                           Over-                                           Generation                                                         Generation     -                                                                -           1   3   5    7   9  11   13  15  17  19  21  23                  1   3    5   7    9   11131517192123                                 Hour                                                              Hour      29      Powering Growth, Delivering Value
 Strategic transmission investment                                                    is essential to maintain reliability      APS TRANSMISSION                              and deliver diversified resources                                                    to customers                                                    •  10-Year Transmission Plan filed January                                                       2018 (115 kV and above)                                                      – 52 miles of new lines                                                      – 13 bulk transformer additions                              Flagstaff                                                   •  Also includes:                                                      – Sun Valley-Morgan 500kV (2018)                                                      – North Gila-Orchard 230kV (2021)                                                      – Cholla Synchronous Condenser (2019)                            Phoenix                  •  Transmission investment diversifies                                                       regulatory risk                                                      – Constructive regulatory treatment                                                      – FERC formula rates and retail adjustor   Legend                           Tucson    Planned lines    Existing lines    Solar potential area    Wind potential area     30    Powering Growth, Delivering Value
 INVESTOR RELATIONS CONTACTS                                       Stefanie Layton                                Director, Investor Relations                                      (602) 250-4541                             stefanie.layton@pinnaclewest.com                                     Michelle Clemente                                      (602) 250-3752                           michelle.clemente@pinnaclewest.com                              Pinnacle West Capital Corporation                             P.O. Box 53999, Mail Station 9998                              Phoenix,  Arizona  85072-3999                          Visit us online at: www.pinnaclewest.com   31    Powering Growth, Delivering Value