PHOENIX--(BUSINESS WIRE)

--June 1, 2004--

Arizona Public Service Company (APS) announced today that it has reached an agreement with PPL Corporation (NYSE: PPL) to acquire the 450-megawatt Sundance Generating Station near Coolidge, Ariz., for approximately $190 million.

Located 55 miles southeast of downtown Phoenix in Pinal County, the simple-cycle, natural gas-fired Sundance station consists of 10 quick-start General Electric combustion turbines capable of providing enough electrical capacity for approximately 225,000 homes.

According to APS President and CEO Jack Davis, the facility will provide resources essential to meeting the growing energy needs of APS customers throughout Arizona. "Sundance offers excellent support for APS' existing generation facilities, and will deliver energy to meet the ever-growing energy needs of APS customers across the state," Davis said. The Company's retail customer base is growing at about three times the national average.

The transaction is the result of a process that APS began last November when it announced it was in the market for long-term generating resources required to meet an existing shortfall of peak capacity, which is expected to grow to at least 1,400 megawatts by 2007. The solicitation yielded 13 proposals, all of which were carefully evaluated by APS before the decision was made to acquire the Sundance facility from PPL.

The purchase agreement is contingent upon the approval of various regulatory authorities, including the Arizona Corporation Commission (ACC), the Federal Energy Regulatory Commission, the U.S. Department of Justice and the U.S. Federal Trade Commission. The two companies are seeking ACC approval by Dec. 31, 2004.

If the transaction proceeds as scheduled, ownership is expected to transfer to APS no later than March 31, 2005, in time for the summer peak energy season.

"This is an outstanding acquisition for APS and our customers," said Davis. "This economic resource matches our needs with a technology that has proven reliability and operating flexibility. Moreover, ownership of these generating units provides essential value to our customers as they will help stabilize prices at levels that are very reasonable."

Designed as a peaking facility, the plant's individual units can be on line within six minutes and can be operating at full power shortly thereafter. As a result, Davis said, Sundance can reduce costs during times of greatest need by providing energy and reserves when the pressure on all available capacity is intense and wholesale market prices are most expensive and volatile. The plant enhances APS' ability to provide reliable service because of its rapid response capability during times of system disturbance or an unexpected outage of a major generating station.

APS, Arizona's largest and longest-serving electricity utility, serves more than 931,500 customers in 11 of the state's 15 counties. With headquarters in Phoenix, APS is the largest subsidiary of Pinnacle West Capital Corp. (NYSE: PNW).