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<CONFORMED-NAME>PINNACLE WEST CAPITAL CORP
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<FILENAME>e-9344.txt
<DESCRIPTION>CURRENT REPORT DTD 11/15/2002
<TEXT>
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 8-K
                                 CURRENT REPORT


                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934


       Date of Report (Date of earliest event reported): November 15, 2002


                        PINNACLE WEST CAPITAL CORPORATION
             (Exact name of registrant as specified in its charter)


          Arizona                        1-8962                 86-0512431
(State or other jurisdiction          (Commission             (IRS Employer
     of incorporation)                File Number)        Identification Number)


400 NORTH FIFTH STREET, P.O. BOX 53999, PHOENIX, ARIZONA           85004
       (Address of principal executive offices)                 (Zip Code)


                                 (602) 250-1000
              (Registrant's telephone number, including area code)


                                      NONE
          (Former name or former address, if changed since last report)
<PAGE>
ITEM 5. OTHER EVENTS

TRACK A ORDER MATTERS; FINANCING APPLICATION

     As previously reported, on September 10, 2002, the Arizona Corporation
Commission (the "ACC") issued the "Track A Order," which, among other things,
directed Arizona Public Service Company ("APS") not to transfer its generation
assets to Pinnacle West Energy Corporation ("Pinnacle West Energy"). See "Track
A Order" in Note 5 of Notes to Condensed Consolidated Financial Statements in
the Company's Report on Form 10-Q for the fiscal quarter ended September 30,
2002 (the "September 10-Q"). On November 15, 2002, APS filed appeals of the
Track A Order with the Maricopa County, Arizona Superior Court and with the
Arizona Court of Appeals. ARIZONA PUBLIC SERVICE COMPANY VS. ARIZONA CORPORATION
COMMISSION, CV 2002-0222 32. ARIZONA PUBLIC SERVICE COMPANY VS. ARIZONA
CORPORATION COMMISSION, 1CA CC 02-0002.

     Also as previously reported, on September 16, 2002, APS filed an
application (the "Financing Application") with the ACC requesting the ACC to
allow APS to borrow up to $500 million and to lend the proceeds to Pinnacle West
Energy or to Pinnacle West Capital Corporation (the "Company"); to guarantee up
to $500 million of Pinnacle West Energy's or the Company's debt; or a
combination of both, not to exceed $500 million in the aggregate. See "ACC
Applications" in Note 5 of Notes to Condensed Consolidated Financial Statements
in the September 10-Q.

     On December 13, 2002, APS and the ACC staff agreed to principles for
resolving certain issues raised by APS in its appeals of the Track A Order. APS
and the ACC are the only parties to the Track A Order appeals. These principles
are contained in a document entitled "Track 'A' Appeals Issues - Principles for
Resolution," a copy of which is attached to this Report as Exhibit 99.1. The
major provisions of this document include, among other things, the following:

     *    The parties agreed that it would be appropriate for the ACC to
          consider the following matters in APS' upcoming general rate case,
          anticipated to be filed before June 30, 2003:

          *    the generating assets to be included in APS' rate base, including
               the question of whether certain power plants currently owned by
               Pinnacle West Energy (specifically, Redhawk Units 1 and 2, West
               Phoenix Combined Cycle Units 4 and 5, and Saguaro Combustion
               Turbine 3) should be included in APS' rate base;
<PAGE>
          *    the appropriate treatment of the $234 million pre-tax asset
               write-off agreed to by APS as part of a 1999 settlement agreement
               approved by the ACC among APS and various parties related to the
               implementation of retail competition in Arizona; and

          *    the appropriate treatment of costs incurred by APS in preparation
               for the previously anticipated transfer of generation assets to
               Pinnacle West Energy.

     *    Upon the ACC's issuance of a final decision that is no longer subject
          to appeal approving the Financing Application, with appropriate
          conditions, APS' appeals of the Track A Order would be limited to the
          issues described in the preceding bullet points, each of which would
          be presented to the ACC for consideration prior to any final judicial
          resolution.

     On December 13, 2002, the ACC staff filed its testimony in connection with
APS' Financing Application. In its testimony, the ACC staff recommends approval
of the Financing Application, subject to the following principal conditions:

     *    APS should be permitted to loan up to $500 million to Pinnacle West
          Energy (the "APS Loan"), but APS should not be permitted to lend this
          money to the Company or guarantee the debt of either Pinnacle West
          Energy or the Company;

     *    the APS Loan should be callable and secured by certain Pinnacle West
          Energy assets;

     *    the APS Loan should bear interest at a rate equal to 264 basis points
          (subject to possible adjustment) above the interest rate on debt
          issued and sold on equivalent terms as the APS Loan (including, but
          not limited to, maturity and security);

     *    the difference in interest income and interest expense should be
          capitalized as a deferred credit and used to affect retail rates in
          the future, with the deferred credit balance bearing an interest rate
          of six percent;

     *    the APS Loan should have a maturity date of not more than four years,
          unless otherwise ordered by the ACC;

     *    any demonstrable increase in APS' cost of capital as a result of the
          transaction (such as from a decline in bond rating) will be extracted
          from future rate cases; and

     *    APS should maintain a common equity ratio of at least forty percent
          and should not be allowed to pay dividends if such payment would
          reduce its common equity below that threshold, unless otherwise waived
          by the ACC. The ACC would process any waiver request within sixty
          days, and for this sixty-day period this condition would be suspended.
          However, this condition, which would be continued indefinitely, would
          not be permanently waived without an order of the ACC.

                                       2
<PAGE>
The ACC hearing on the Financing Application is scheduled to begin on January 8,
2003. The Company cannot predict the outcome of that hearing.

ACCOUNTING MATTERS

     As previously reported, the Financial Accounting Standards Board Emerging
Issues Task Force ("EITF") at its October 2002 meeting, reached a consensus
related to energy trading activities in EITF 02-03, "Issues Involved in
Accounting for Derivative Contracts Held for Trading Purposes and Contracts
Involved in Energy Trading and Risk Management Activities." See Note 8 in Notes
to Condensed Consolidated Financial Statements in the September 10-Q. This
guidance rescinds EITF 98-10, "Accounting for Contracts Involved in Energy
Trading and Risk Management Activities." This guidance became effective
immediately for all new contracts and on January 1, 2003 for existing contracts.
As such, energy trading contracts which are not derivatives or which meet the
mark-to-market exceptions under Statement of Financial Accounting Standards
("SFAS") No. 133, "Accounting for Derivatives and Hedging Activities," will be
accounted for on an accrual basis with the associated revenues and costs
recorded at the time the contracted commodities are delivered or received. The
contracts that are derivatives and are required to be marked to market as
derivatives under SFAS No. 133 or if allowed by other guidance will be
classified into trading and non-trading. We expect to adopt this new guidance
effective October 1, 2002. While we are in the process of evaluating existing
contracts, we currently expect to record, in the fourth quarter of 2002, an
after-tax loss of approximately $70 million in net income as a cumulative effect
of a change in accounting for trading activities. This amount represents the
previously recorded accumulated unrealized mark-to-market gains, net of tax on
energy trading contracts that do not meet the definition of a derivative under
SFAS No. 133. In future years, as such contracts are accounted for on the
accrual basis as discussed above, we estimate that changes in electric operating
revenues, net of purchase power and fuel costs, will result in an after-tax
increase in earnings of approximately $14 million in each of the years 2003
through 2005, and $22 million in the aggregate in years thereafter.

FORWARD-LOOKING STATEMENTS

     This Report on Form 8-K contains 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, the
Company cautions readers not to place undue reliance on these statements. A
number of factors could cause future results to differ materially from
historical results, or from results or outcomes currently expected or sought by
the Company. These factors include the ongoing restructuring of the electric

                                       3
<PAGE>
industry, including the introduction of retail electric competition in Arizona
and decisions impacting wholesale competition; the outcome of regulatory and
legislative proceedings relating to the restructuring; state and federal
regulatory and legislative decisions and actions, including price caps and other
market constraints imposed by the FERC; regional economic and market conditions,
including the California energy situation and completion of generation
construction in the region, which could affect customer growth and the cost of
power supplies; the cost of debt and equity capital and access to the capital
markets; weather variations affecting local and regional customer energy usage;
the effect of conservation programs on energy usage; power plant performance;
the successful completion of our generation expansion program; regulatory issues
associated with generation expansion, such as permitting and licensing; our
ability to compete successfully outside traditional regulated markets (including
the wholesale market); our ability to manage our marketing and trading
activities and the use of derivative contracts in our business; technological
developments in the electric industry; the performance of the stock market,
which affects the amount of our required contributions to our pension plan and
nuclear decommissioning trust funds; the strength of the real estate market in
the market areas of SunCor, our real estate subsidiary, which include Arizona,
New Mexico and Utah; and other uncertainties, all of which are difficult to
predict and many of which are beyond our control.

ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.

     (c)  Exhibits.

          EXHIBIT NO.       DESCRIPTION
          -----------       -----------

             99.1           Track 'A' Appeals Issues - Principles for Resolution

                                       4
<PAGE>
                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                        PINNACLE WEST CAPITAL CORPORATION
                                        (Registrant)

Dated: December 13, 2002                By: Barbara M. Gomez
                                            ------------------------------------
                                            Barbara M. Gomez
                                            Treasurer

                                       5

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>3
<FILENAME>exhibit.txt
<DESCRIPTION>TRACK
<TEXT>
                                                                    Exhibit 99.1

                            TRACK "A" APPEALS ISSUES
                            PRINCIPLES FOR RESOLUTION

     In conjunction with resolution of Docket No. E-01345A-02-0707 (the "APS
Financing Application"), Commission Staff and APS (hereinafter sometimes
referred to as "the Parties") agree to limit the scope and elements of the
pending APS appeals of the Commission's Decision No. 65154 (the "Track A
Order"). This agreement is entered into in recognition that the proposed APS
Financing is an "extraordinary event" in that the Utility is seeking approval to
secure financing of and for non-utility assets, owned and operated by a
non-utility affiliate.

     The Parties acknowledge that the Track A Order appropriately resolves
issues that posed a risk to Arizona consumers. Specifically, the Order protects
customers from the volatile wholesale market.

     The Parties acknowledge that the Track A Order prohibits the transfer of
certain APS assets to its non-utility affiliate, which transfer had been
contemplated by earlier Commission decisions.

     The Parties further acknowledge that the Track A Order constitutes a change
in Commission restructuring policy with respect to the divestiture of utility
generating assets, which change can only be seen as a partial readjustment of
the regulatory treatment of generating assets, under the 1999 Settlement.

     The Parties acknowledge that the Track A Order does not resolve all of the
regulatory issues that remain as a result of the Track A Order's amendment to
Decision No. 61973, the Commission Order approving the APS Settlement.

     The Parties recognize that the issues raised by the APS appeals of the
Track A Order are partially resolved to APS's satisfaction by resolution of the
APS Financing Application.

     The Parties agree that it is appropriate to dismiss certain claims and to
limit the scope of others in APS' appeal of the Track A Order upon successful
resolution of the APS Financing Application.

     The Parties further recognize that all remaining elements and claims under
the APS appeals of the Track A Order are appropriately the subject of certain
regulatory proceedings before the Commission, all of which are presently
contemplated by the Parties.

     Accordingly, the Parties agree to execute a Stipulation, or other binding
Agreement with the following provisions:

     1.   Upon the issuance of a final Commission Decision no longer subject to
appeal approving the APS Financing Application, with appropriate conditions, the
APS appeals of the Track A Order shall be limited to consideration of the issues

                                       1
<PAGE>
described in the subsequent paragraphs of this Agreement. The Parties agree that
those issues shall each be presented to the Commission for consideration in the
appropriate regulatory proceeding, as described herein, prior to final
resolution by a court.

     2.   The Parties agree that it is appropriate for the Commission to
consider what generating assets should be included in APS's rate base,
specifically including the question of whether Redhawk 1 and 2, West Phoenix
Combined Cycle 4 and 5, and Saguaro Combustion Turbine 3, should be included in
rate base. This issue should be considered in the upcoming APS general rate
case, anticipated to be filed before June 30, 2003. The Parties expressly
recognize that the Commission will consider prudence, used and usefulness, and
reasonable operating costs in the course of considering rate base treatment for
the assets. The rate case will also require consideration of the appropriate
rates to be adopted to compensate APS for its reasonable operating expenses and
a fair return on the fair value of its property devoted to public service.

     3.   The Parties agree that it is appropriate for the Commission to
consider the appropriate treatment and amounts of so-called "stranded
investment". Specifically, APS should have the opportunity to present evidence
and argument to support a differing regulatory treatment for the "234 million
write-off". The issues surrounding the $234 million write-off should be
presented to the Commission in the upcoming APS general rate case, along with
any other relevant issues or adjustments associated with the appropriate
treatment and amounts of so-called "stranded investment".

     4.   The Parties agree that it is appropriate for the Commission to
consider the appropriate treatment of costs incurred by APS in preparation for
the previously anticipated transfer of generation assets to a non-utility
affiliate. Specifically, APS should have the opportunity to present evidence and
argument to support a specific dollar amount and recovery percentage for such
costs. Issues surrounding the amount and recovery of so-called "transition
costs" should be presented in the upcoming rate case.

     5.   All issues and claims which are or may be construed as being raised by
the APS Track A appeals shall be deemed to be resolved, other than as expressly
described in Paragraphs 2 through 4 above. The issues described in Paragraphs 2
through 4 above shall be considered by the Commission in the described
regulatory proceedings prior to final resolution in any judicial proceeding. No
Party waives their right to judicial review of those Commission decisions by
this agreement. Notwithstanding the provisions of the succeeding paragraph, APS
will retain all of its causes of action with regard to the matters in paragraphs
2 through 4. Any relief that APS seeks in the aforementioned causes of action
shall be limited to authorizing the specific regulatory treatment sought by APS
in connection with paragraphs 2 through 4.

                                       2
<PAGE>
     6.   Claims which are specifically resolved include the following:

          a) The allegation that APS is entitled to recovery of allegedly lost
     revenues associated with rate reductions;

          b) The allegation that APS is entitled to recover alleged losses
     associated with legal claims that APS previously dismissed;

          c) Alleged business damages resulting from increased financing costs
     and other costs incurred by Pinnacle West Capital Corporation ("PWCC") and
     Pinnacle West Energy Corporation ("PWEC"), as well as any alleged damages
     associated with possible ratings downgrades of APS alleged to occur or have
     occurred as a result of Commission action.

          d) Alleged loss of opportunities relating to supposed reliance on the
     Settlement Agreement Order, including but not limited to foregone power
     sales by PWEC, as well as alleged damages associated with loss of
     opportunity to pursue the APS appeals of the Electric Competition Rules.

          e) Alleged loss of the opportunity to recover higher sales costs due
     to the rate moratorium, as well as any allegations of damages caused by
     increased costs incurred to maintain reliability during 2000 and 2001;

          f) Any other miscellaneous alleged losses.

          g) Alleged violations of A.R.S. ss. 40-252;

          h) Alleged violations of the Arizona Procedures Act;

          i) Alleged controversies that might support a declaratory judgment;

          j) An alleged lack of substantial evidence to support the Decision and
     alleged abuses of discretion;

          k) Alleged violations of due process;

          l) Alleged violations of equal protection;

          m) Alleged Supremacy clause violations;

          n) Alleged Contracts Clause violations;

          o) Alleged takings of private property claims;

          p) Alleged breach of contract claims.

                                       3
<PAGE>
     7.   This agreement is not intended to limit the scope and purpose of the
upcoming general rate case, or the adjustment mechanism proceeding, except as
explicitly described herein.

AGREED IN PRINCIPLE:


Jack Davis                                     Ernest Johnson
---------------------------------              ---------------------------------
Jack Davis                                     Ernest Johnson
Arizona Public Service Company                 Arizona Corporation Commission
President and CEO                              Director of Utilities

                                       4

</TEXT>
</DOCUMENT>
</SUBMISSION>
