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): March 27, 2003
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 85072-3999
(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)
ITEM 5. OTHER EVENTS
APS FINANCING APPLICATION
On March 27, 2003, the ACC approved the $500 million Financing Application
of Arizona Public Service Company ("APS") (see "APS Financing Application" in
Item 5 of the Pinnacle West Capital Corporation (the "Company" or "Pinnacle
West") Current Report on Form 8-K dated March 11, 2003), subject to the
following principal conditions:
* any debt issued by APS pursuant to the order must be unsecured;
* APS will be permitted to loan up to $500 million (the "APS Loan") to
Pinnacle West Energy Corporation ("Pinnacle West Energy"), guarantee
up to $500 million of Pinnacle West Energy debt or a combination of
both, not to exceed $500 million in the aggregate;
* the APS Loan must be callable and secured by certain Pinnacle West
Energy assets;
* the APS Loan must bear interest at a rate equal to 264 basis points
above the interest rate on APS debt that could be issued and sold on
equivalent terms (including, but not limited to, maturity and
security);
* the 264 basis points referred to in the previous bullet will be
capitalized as a deferred credit and used to offset retail rates in
the future, with the deferred credit balance bearing an interest rate
of six percent per annum;
* the APS Loan must 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 excluded
from future rate cases;
* APS must maintain a common equity ratio of at least forty percent and
may not pay common dividends if such payment would reduce its common
equity ratio below that threshold, unless otherwise waived by the ACC.
The ACC will process any waiver request within sixty days, and for
this sixty-day period this condition will be suspended. However, this
condition, which will be continued indefinitely, will not be
permanently waived without an order of the ACC; and
* certain waivers of the ACC's affiliated interest rules previously
granted to APS and its affiliates will be withdrawn and, during the
term of the APS Loan, neither Pinnacle West nor Pinnacle West Energy
may reorganize or restructure, acquire or divest assets, or form, buy
or sell affiliates (each, a "Covered Transaction"), or pledge or
otherwise encumber the Pinnacle West Energy assets without prior ACC
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approval, except that the foregoing restrictions will not apply to the
following categories of Covered Transactions:
* Covered Transactions less than $100 million, measured on a
cumulative basis over the calendar year in which the Covered
Transactions are made;
* Covered Transactions by SunCor Development Company ("SunCor") of
less than $300 million through 2005, consistent with SunCor's
anticipated accelerated asset sales activity during those years;
* Covered Transactions related to the payment of ongoing
construction costs for Pinnacle West Energy's (a) West Phoenix
Unit 5, located in Phoenix, with an expected commercial operation
date in mid-2003, and (b) Silverhawk plant, located near Las
Vegas, with an expected commercial operation date in mid-2004;
and
* Covered Transactions related to the sale of 25% of the Silverhawk
plant to Southern Nevada Water Authority ("SNWA") if SNWA
exercises its existing purchase option to do so.
The ACC also ordered the ACC staff to conduct an inquiry into our and our
affiliates' compliance with the retail electric competition and related rules
and decisions.
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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: March 27, 2003 By: Barbara M. Gomez
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Barbara M. Gomez
Treasurer
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