Greeting, and welcome to Pinnacle West Capital Corporation’s third quarter 2010 earnings conference call. At this time, all participants are in a listen only mode. A brief question and answer session will formal the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Becky Hickman, Director of Investor Relations. Thank you Miss Hickman. You may begin.

Thank you Christine. I’d like to thank everyone for participating in this conference call and webcast to review our third quarter earnings, operating performance and recent developments. Our speakers today will be our Chairman and CEO, Don Brandt, and our CFO, Jim Hatfield. Don Robinson, President and Chief Operator Officer of APS is also here with us. Before I turn the call over to our speakers, I need to cover a few details with you. First, our slides today are available on our investor relations website along with our earnings release, supplemental information on our earnings variances and quarterly operating statistics, the webcast and the Form 8-K we filed this morning. The slides contain reconciliations of certain non-GAAP financial information. Please note that all of our references to per share amounts today, will be after income taxes and based on diluted shares outstanding. Also, it is my responsibility to advise you that this call and our slides contain forward-looking statements based on current expectations and the company assumes no obligation to update these statements. Because actual results may differ materially from expectations, we caution you not to place undue reliance on these statements. Please refer to the forward-looking statements contained in our third quarter 2010 Form 10-Q which was filed with the SEC this morning, as well as the MD&A section which identifies risks and uncertainties that could cause actual results to differ materially from those contained in our forward-looking statements. A replay of this call will be available on our website www.pinnaclewest.com for the next 30 days. It will also be available by telephone through November 3rd. At this point, I’ll turn the call over to Jim.

Thank you Becky and good morning everyone. As you see on slide four, the topics I will touch upon today are first, a review of the consolidated quarterly results and discuss the main variances from last year’s corresponding quarter. Second, I will provide a brief update on the status and outlook for the Arizona economy. Then I will discuss our earnings guidance for 2010 and 2011. Finally, I will close with some brief comments on financing and liquidity. Slide five summarizes our reported and ongoing earnings for the quarter. On a GAAP basis, for this year’s third quarter, we reported consolidated net income attributable to common shareholders of $234 million, or $2.14 per share compared with net income of $187 million or $1.84 per share for the prior year’s third quarter. Our ongoing earnings increased $0.12 per share. For the 2010 third quarter, we had consolidated ongoing earnings of $227 million, or $2.08 per share versus $198 million or $1.96 per share for the comparable quarter a year ago. A reconciliation of our third quarter GAAP EPS to our ongoing EPS is shown on slide six. The amounts for both quarters excluding results primarily related to our discontinued real estate operations. In July, Suncor sold land parcels, commercial assets and a master plan home building community and as a result, has reduced its outstanding debt to about $6 million. As a result of the Suncor restructuring, we estimate the parent will realize approximately $110 million of cash tax benefits. As a result of bonus depreciation being extended into 2010, we now expect those tax benefits will be realized in 2012 as compared to our prior expectation of 2011. And as always, my remaining comments will focus on ongoing results. Turning your attention to slide seven, you will see the variances…

Thanks, Jim and thank you all for joining us today. I know it’s a particularly busy day for you with all the earnings announcements and we hope to make it worth your while to be on our call. We look forward to seeing you next week at the EI financial conference. Jim’s touched on several issues important to our investors including our growth in the Arizona economy. Although the recession slowed our historically robust growth patterns, Arizona retain numerous qualities that make it a desirable place to live and do business, and its past record of strong growth remains an attractive distinguishing characteristic for our company. During the third quarter we made distinct progress in some key areas and continued our track record of operational excellence. Today I’ll update you on the following; first, Arizona regulatory developments, then our strong commitment to renewable energy resources, then our recent operating performance and finally, a regulatory matter related to our Four Corners Power Plant. Looking first at Arizona regulatory matters, we continue to work with the Arizona Corporation Commission and various stakeholders to further enhance this state’s regulatory framework so as to benefit both our customers and our shareholders. As I’ve discussed in the past, the commission has been conducting workshops on several generic policy issues affecting Arizona regulation. We view many of the commission’s activities as signaling positive development for Arizona’s regulatory environment and anticipate additional progress on many of these issues through the remainder of this year and well into next year. At the time of our last earnings conference call, the commission had just approved its energy efficiency rules which await certification by the Arizona Attorney General. From APS’s perspective, the commission must implement an effective decoupling mechanism or similar device in the next APS rate case if APS…

(Operator Instructions) Thank you. Our first question is from Greg Gordon with Morgan Stanley. Please proceed with your question. Greg Gordon – Morgan Stanley: Thanks, good afternoon guys.

Hi Greg. Greg Gordon – Morgan Stanley: So thinking about the drivers for the potential for earnings growth post 2011, is it fair to say at a fairly high level that one is hopefully the economy starts to improve and the current rate structure would allow for benefits from both increased kilowatt sales usage, but also from increased revenue from hookup fees given the structure of the last rate deal. Is that fair?

Yes, that’s fair, Greg. Greg Gordon – Morgan Stanley: But you’re looking to modify that and you would look to modify that in the next rate case to get some level of decoupling and you think that that is a better risk reward in terms of allowing hopefully finally, to go after a decade of driving your ROE’s up to a tight spread to your authorized returns. I’m just wondering what the tradeoff is here in terms of you know, are investors better off in the long run being levered to an economic recovery this year where you’re not decoupled or are they better off with you pursuing a decoupling scheme where we don’t necessarily get massive benefits, but we’re also immunized from big swings over the long run.

Yeah, Greg, I think – this is Jim – and I think the right way to look at decoupling is the tradeoff for consumers at the high energy efficiency standards in Arizona. If you think about the decoupling mechanism that we had advocated as have most of the people in the open meetings, it’s a mechanism called fixed revenue per customer. And the benefit for us is, as we continue to grow customer, we will continue to get incremental recovery of costs associated with not only the energy efficiency, but the additional customer growth on the system. So from our perspective, it doesn’t really mean a tradeoff between traditional regulation and decoupling. It’s really additive to the traditional regulation. Greg Gordon – Morgan Stanley: OK. Thank you.

Greg, it’s been important from our perspective in pursuing decoupling that we didn’t trade away of the intrinsic value of this company, and that’s the long term growth profile. Greg Gordon – Morgan Stanley: OK, guys. Thanks.

Our next question comes from Daniel Eggers with Credit Suisse. Please proceed with your question. Daniel Eggers – Credit Suisse: Good morning guys. It’s actually Kevin.

Morning Kevin. Kevin – Credit Suisse: Can you actually give us a little more decoupling, when looking at decoupling it made complete sense to us and it feels like it makes complete sense for all the parties involved as well, and actually the commission wants to get their renewable energy strategy done, they need decoupling. Am I missing any rational opposition that was explored during the vetting by the commission?

No, in fact I think you hit it on the head Kevin. I think the commissioners believe, and most of the stakeholders believe that to take away the disincentive, i.e., the inability of utilities to achieve the high standard we have, decoupling is a necessary mechanism to facilitate that happening. Kevin – Credit Suisse: OK. And then on dividend policy, now with you – it seems like you have somewhat visibility into your earnings growth and a reasonable cash levels. What is your willingness and ability to step up the dividend near term?

That’s something we’ll look at down the road a little bit, Kevin. Kevin – Credit Suisse: OK. Thank you guys.

Our next question is from Ali Agha with Suntrust, Robinson, Humphrey. Please proceed with your question. Ali Agha – Suntrust, Robinson, Humphrey: Thank you. Don, you mentioned with two commission seats up for grabs, presumably one of the seats with the incumbent will come back, but Chairman Mayes will be retiring. Are you looking at any change in the regulatory regime or the overall regulatory framework post elections as you go into your next rate case?

Well, I think we’ve been following closely the commission, the staff and other interveners in our cases have over the last two years developed a very constructive working relationship and we’ve made some real progress and it’s benefited all the constituencies and I really don’t see that tact changing. Ali Agha – Suntrust, Robinson, Humphrey: And then more near term, through the nine months results, Jim perhaps to you, would you say that results so far have come in at plan or above plan and you know with just one quarter to go, should we be really thinking about say the mid to high point of the range that you read out for the year?

Well Ali, I’m not going to point you to anywhere in the range. I would say that you know, we feel like we’re on track. We’ve seen you know, gross margin deterioration on a usage basis in the year. We expected that. I feel very confident about our cost initiatives, so I would say we’re on track at this point. Ali Agha – Suntrust, Robinson, Humphrey: Lastly, you had mentioned that in ‘11, I believe you’re assuming about $0.03 to $0.04 earnings from the Arizona Sun program. The two projects that you’ve identified and the timing of them coming on line, does that give you the visibility assuming they’re on track of $0.03 to $0.04 will be realized?

Yes. You know, we’re recovering through the RAS, and we have filed the RAS and expect to get an order consistent with that before the end of the year, so we do think that gives us the visibility needed to speak about the contribution. Ali Agha – Suntrust, Robinson, Humphrey: Understood. Thank you.

Our next question comes from Ted Heyn with Catapult Capital Management. Please proceed with your questions. Ted Heyn – Catapult Capital Management: Good morning.

Morning Ted. Ted Heyn – Catapult Capital Management: I had two quick questions. First, I think you guys had talked about potentially giving a discrete ‘11 guidance range and it looks like you have kept the same language as you did from the second quarter call. Was there any thought process in why you chose to do that versus kind of laying out some more defined goal posts?

No, I think Ted that we’re still in the budget process here and you know, when we come out with it, I think we want the most certainty we have and so we’re not quite there yet. we’ll do it at our fourth quarter call, and we’ve done it either third or fourth quarter historically, I’ve been told, so I think we’re still on track with normal practice. Ted Heyn – Catapult Capital Management: Fair enough. And then I guess, the second question I had was relating to the discussions about 2010 guidance in the press release. There’s some bullet points that walk through what the changes to your gross margin and operating expenses were relative to the second quarter, and it looks like your gross margins are now coming down. The range came down zero to $30 million and the operating expenses actually went up $20 to $30 million, offset by interest expense being about $10 million lower. That gets me you know, a $30 million pretax reduction, which seems, is there something that’s not in those numbers, because it seems like you reiterated your range, but that $30 million seems like a pretty big piece of the range.

Well, I would say this about the guidance ranges. Gross margin we just really tightened the range after nine months of actual at this point. The operating expenses we did get an increase – a significant increase in property tax in the third quarter, we reflected that in total operating expenses. I wouldn’t look at it as kind of cutting it down the middle. We create these ranges, our goal post as a way to communicate possible ups and downs, but it’s not linear through the ranges. Ted Heyn – Catapult Capital Management: Okay. So we shouldn’t just add up the middle and then say that’s up $0.15 and that’s – it could be any portions of the pluses and minuses.

That’s correct. Ted Heyn – Catapult Capital Management: Okay. And then, I’m sorry, so you said that the biggest swing on the OpEx was property tax?

We had a – in the third quarter we had the increase in benefit costs. We had the overhaul but that’s the timing issue that was really slid forward, and then we had an increase in property tax. The assessed valuations in Maricopa County and Pinal County in residential dropped significantly in 2010, Maricopa County 19.4%, Pinal 21.3. As a result, of the first evaluation decrease in Arizona and property tax since ‘93, we had our first increase in property taxes since 1998. And so because our evaluation is not consistent with their drop in residential, we had more property at higher rates, and we were a bit surprised by that, but we’ll get through it as well. Ted Heyn – Catapult Capital Management: Well, I guess the tax man is more bullish on values in the near term than you are because it’s beneficial to him right?

Well they have a budget too so. Ted Heyn – Catapult Capital Management: Yes. Okay thanks a lot, I appreciate it.

(Operator Instructions). Our next question is from Brian Chin with Citigroup. Please proceed with your question. Brian Chin – Citigroup: Hi, a quick question on the BART requirements for Four Corners. Could you just walk through the timeline over which the commission might have to look at some of the estimates that you put out there? I think you’ve put out in the 10-Q about $640 million of environmental CapEx that might be necessary. Just what’s the timeline of looking at that going forward?

The timeline is – this is Don Robinson. The timeline of actually having to comply with that comes five years after the rules actually go in place. So we would be actually putting those expenditures in and seeking recovery from probably three and half years, four years from now. Brian Chin – Citigroup: Okay, great. Thanks.

Our next question is from Michael Worms with BMO Capital Markets. Please proceed with your question. Michael Worms – BMO Capital Markets: Thank you, good morning, everyone.

Good morning, Michael. Michael Worms – BMO Capital Markets: Just a quick question or two. One would be, has it been determined who the next Chairman of the commission will be?

No it has not. That’ll be up to the commission to elect a Chairman. Michael Worms – BMO Capital Markets: Okay, and then secondly, you suggested there would be opportunities to exceed the guidance range in 2011. Can you just kind of give us some color as to what opportunities there would be? Other than the Sun project or I’m assuming that’s in there already.

Yes. We assumed a contribution at some level of Arizona Sun. I think you have higher hookup fees, you have upside potential or downside I guess as well from just customer growth. We also have a higher – we have the pension deferral next year as well, which kicks in as part of the settlement, and then we’re going to do our best to continue to hold expenses relatively flat. Michael Worms – BMO Capital Markets: Great, thank you very much. See you next week.

Yes, thanks Michael.

There are no further questions in the queue at this time. I would now like to turn the floor back over to management for closing comments.

Well again, thank you for taking the time today and we’ll see you next week. Becky if you have anything to add.

Thanks. And if there’s anything you need, please give me a call. Thank you, all.

Ladies and gentlemen this does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.