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                                                                    EXHIBIT 10.1

2005 OFFICER AND CEO VARIABLE INCENTIVE PLANS

      On December 14, 2004, the Human Resources Committee (the "Committee") of
the Pinnacle West Capital Corporation (the "Company") Board of Directors
approved the Chairman and CEO Variable Incentive Plan (the "CEO Incentive
Plan"). The Company's Chairman of the Board and CEO, William J. Post, is
eligible to receive an incentive award under the CEO Incentive Plan. Incentive
award funding under the CEO Incentive Plan is triggered by the attainment of
specified 2005 Company earnings. The amount of the award to Mr. Post is in the
sole discretion of the Committee. Accordingly, the Committee may consider
factors other than 2005 Company earnings to measure Mr. Post's performance.

      On December 15, 2004, the Company's Board of Directors, acting on the
recommendation of the Committee, approved the 2005 Officer Variable Incentive
Plan (the "Officer Incentive Plan"). Each of the Company's officers, as well as
the officers of Arizona Public Service Company ("APS") (currently 19 officers),
are eligible to participate in the Officer Incentive Plan, including the
following four most highly-compensated current executive officers (excluding the
CEO) named in the Company's proxy statement relating to its May 19, 2004 annual
meeting: Jack E. Davis, President and Chief Operating Officer of the Company;
Donald E. Brandt, Executive Vice President and Chief Financial Officer of the
Company; James M. Levine, Executive Vice President, Generation of APS; and
Steven M. Wheeler, Executive Vice President, Customer Service and Regulation of
APS (the "Named Executive Officers").

      The Officer Incentive Plan is composed of two components, one of which is
based on the Company's 2005 earnings and the other on the achievement of
specified business unit results. Once a specified earnings threshold is met, the
achievement of the level of earnings and business unit results generally
determines what award, if any, the officer receives. However, the amount of the
award, if any, to each officer under the Officer Incentive Plan is in the sole
discretion of the Committee. Accordingly, the Committee may consider factors
other than Company earnings and the achievement of business unit results to
measure performance, including input from the CEO about each officer's 2005
achievements.

      Subject to the foregoing, award opportunities (expressed as a percentage
of the officer's base salary) for the Chairman and CEO and the Named Executive
Officers will be based on the following performance measures (weighted according
to the indicated percentages):

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<TABLE>
<CAPTION>
   OFFICER                   PERFORMANCE MEASURE(S)                      AWARD OPPORTUNITY
   -------                   ----------------------                      -----------------
<S>                 <C>                                          <C>
William J. Post     Company Earnings                             Threshold (63%)
                                                                 Midpoint (125%)
                                                                 Maximum (200%)

Jack E. Davis       Company Earnings                             Threshold (37.5%)
                                                                 Midpoint   (75%)
                                                                 Maximum  (150%)

Donald E. Brandt    -Company Earnings (50%)                      -Company Earnings:
                    -Shared Services Business Unit Results         Threshold (0%)
                    (Combined Generation Business Unit, Palo       Midpoint  (25%)
                    Verde Business Unit, and Delivery Business     Maximum (50%)
                    Unit Performance; Meeting or Exceeding       -Shared Services Business Unit
                    Budget Targets; and Preventable Recordable   Results (up to 50%)
                    Injuries) (50%)

James M. Levine     -Company Earnings (50%)                      -Company Earnings:
                    -Generation Business Unit Results              Threshold (0%)
                    (Preventable Recordable Injuries; Coal &       Midpoint  (25%)
                    Nuclear Production Cost; APS Gas Units'        Maximum (50%)
                    Annual Equivalent Availability Factor;       -Generation Business Unit Results
                    Coal and Nuclear Capacity Factor; and        (up to 50%)
                    Environmental) (50%)

Steven M. Wheeler   -Company Earnings (50%)                      -Company Earnings:
                    -Delivery Unit Results (Preventable            Threshold (0%)
                    Recordable Injuries; Customer                  Midpoint  (25%)
                    Satisfaction; Business Performance Trends;     Maximum (50%)
                    Customer Reliability; and Environmental      -Delivery Business Unit Results
                    Incidents) (50%)                             (up to 50%)
</TABLE>

      Award opportunities for other executive vice presidents and senior vice
presidents are up to 100% of base salary (up to 50% based on Company earnings
and up to 50% based on the achievement of business unit results). Award
opportunities for other officers are up to 70% of base salary (up to 35% based
on Company earnings and up to 35% based on the achievement of business unit
results).<PAGE>

                                                                 EXHIBIT 10.79.2

                          SECOND AMENDMENT TO AGREEMENT

      THIS SECOND AMENDMENT is made and entered into by and between Arizona
Public Service Company ("APS") and James M. Levine ("Employee").

                                   WITNESSETH:

      WHEREAS, APS and Employee entered into an Employment Agreement dated
October 11, 2002 as amended by that certain Amendment to Agreement effective as
of October 11, 2002 (collectively, the "Agreement");

      WHEREAS, the parties desire to amend the provisions of the Agreement
relating to incentive pay and the issuance of equity incentives to Employee;

      NOW, THEREFORE, effective as of January 1, 2005, the Agreement is amended
as follows:

      1. Section 4(a) is deleted in its entirety and the following new Section
4(a) is inserted in lieu thereof:

            (a) Incentive Pay. Employee will be allowed to participate in any
annual officer incentive plan and to receive incentive payments thereunder based
on Employee's position and the attainment of specified objectives (e.g.,
earnings, business unit, and individual objectives), all in accordance with the
terms of any such plan.

      2. Section 4(b) is deleted in its entirety and the following new Section
4(b) is inserted in lieu thereof:

            (b) Equity Incentives. Employer agrees to request the Human
Resources Committee (the "Committee") to grant Employee equity incentive awards
under the 2002 Long-Term Incentive Plan (the "2002 Plan") in the same form as,
and in an amount equivalent to 65% - 85% of, each of the annual base grants
awarded to a member of the Office of the President (the "President") under the
2002 Plan. Any special awards granted to the President shall not be deemed
subject to this provision.

      3. Section 4(c) is deleted in its entirety and the following new Section
4(c) is inserted in lieu thereof:

            (c) In addition to (b) above, Employer agrees to request the
Committee to grant Employee 2000 performance shares each year under the 2002
Plan, all in accordance with the terms of the 2002 Plan and as otherwise agreed
upon by the parties.

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      4. Except as otherwise set forth herein, the terms and conditions in the
Agreement remain in full force and effect.

                                           Arizona Public Service Company

Date: 3-11-05                         By: /s/ Jack Davis
      ------------------                  ---------------------------------
                                          Jack Davis
                                          President and Chief Executive Officer

Date: 3-11-05                             /s/ James M. Levine
      ------------------                  ---------------------------------
                                          James M. Levine<PAGE>

                                                                   Exhibit 10.95

                           PERFORMANCE SHARE AGREEMENT
                                    UNDER THE
                     PINNACLE WEST CAPITAL CORPORATION 2002
                            LONG-TERM INCENTIVE PLAN

      THIS AWARD AGREEMENT is made and entered into as of __________ __, 20___
(the "Date of Grant"), by and between Pinnacle West Capital Corporation (the
"Company"), and ______________ ("Employee").

                                   BACKGROUND

      A.    The Board of Directors of the Company (the "Board of Directors") has
            adopted, and the Company's shareholders have approved, the Pinnacle
            West Capital Corporation 2002 Long-Term Incentive Plan (the "Plan"),
            pursuant to which performance share incentive awards may be granted
            to employees of the Company and its subsidiaries and certain other
            individuals.

      B.    The Company desires to grant to Employee a performance share award
            under the terms of the Plan as described herein.

      C.    Pursuant to the Plan, the Company and Employee agree as follows:

                                    AGREEMENT

            1.    GRANT OF AWARDS. The Company grants to Employee a performance
                  share award of _________ performance shares, subject to the
                  terms, conditions, and adjustments set forth in this Award
                  Agreement.

            2.    AWARD SUBJECT TO PLAN. This award is granted under, and is
                  expressly subject to, all of the terms and provisions of the
                  Plan, which terms are incorporated herein by reference, and
                  this Award Agreement. The committee referred to in Section 4
                  of the Plan (the "Committee") has been appointed by the Board
                  of Directors, and designated by it, as the Committee to make
                  awards.

            3.    PERFORMANCE PERIOD. The performance period for the award of
                  _____ performance shares (the "Award") is the period beginning
                  __________ __, 20___ and ending __________ __, 20___ (the
                  "Performance Period").

            4.    PAYMENT.

                  (a)   PERFORMANCE SHARES PAYABLE IN CAPITAL STOCK. Subject to
                        early termination of this Award Agreement pursuant to
                        Section 5 below, if Employee remains employed by the

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                        Company or any of its subsidiaries throughout the
                        Performance Period, promptly following the Performance
                        Period, but not later than __________ __, 20___ (the
                        "Payment Date"), the Company will deliver to Employee
                        one (1) share of Capital Stock for each then-outstanding
                        performance share granted to Employee under the Award
                        made pursuant to this Award Agreement.

                  (b)   DIVIDEND EQUIVALENTS. No dividend equivalents are
                        granted pursuant to this Award.

            5.    TERMINATION OF AWARD. This Award Agreement will terminate and
                  be of no further force or effect on the date that Employee is
                  no longer actively employed by the Company or any of its
                  subsidiaries for any reason, including death, disability or
                  retirement. Employee will, however, be entitled to receive any
                  of the Capital Stock payable under Section 4 of this Award
                  Agreement if Employee's employment terminates after the
                  Performance Period but before Employee's receipt of the
                  Capital Stock.

            6.    TAX WITHHOLDING. Employee must pay, or make arrangements
                  acceptable to the Company for the payment of, any and all
                  federal, state, and local income and payroll tax withholding
                  that in the opinion of the Company is required by law. Unless
                  Employee satisfies any such tax withholding obligation by
                  paying the amount in cash or by check, the Company will
                  withhold shares of Capital Stock having a Fair Market Value on
                  the date of withholding sufficient to cover the withholding
                  obligation.

            7.    NON-TRANSFERABILITY. Neither this award nor any rights under
                  this Award Agreement may be assigned, transferred, or in any
                  manner encumbered except by will or the laws of descent and
                  distribution, and any attempted assignment, transfer,
                  mortgage, pledge or encumbrance, except as herein authorized,
                  will be void and of no effect.

            8.    DEFINITIONS: COPY OF PLAN AND PLAN PROSPECTUS. To the extent
                  not specifically defined in this Award Agreement, all
                  capitalized terms used in this Award Agreement will have the
                  same meanings ascribed to them in the Plan. By signing this
                  Award Agreement, Employee acknowledges receipt of a copy of
                  the Plan and the related Plan Prospectus.

            9.    CHOICE OF LAW. This Agreement will be governed by the laws of
                  the State of Arizona, excluding any conflicts or choice of law
                  rule or principle that might otherwise refer construction or
                  interpretation of this Agreement to another jurisdiction.

                                       2
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      An authorized representative of the Company has signed this Award
Agreement, and Employee has signed this Award Agreement to evidence Employee's
acceptance of the award on the terms specified in this Award Agreement, all as
of the Date of Grant.

                                       PINNACLE WEST CAPITAL CORPORATION

                                       By: _____________________________________

                                       Its: ____________________________________

                                       _________________________________________
                                       Employee

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