Arizona Public Service

Arizona Public Service Company is the largest electric utility in Arizona and the principal subsidiary of publicly-traded S&P 500 member Pinnacle West Capital Corporation (nyse|PNW), which in turn had been formerly named AZP Group, when Arizona Public Service reorganized as that holding company in 1985. APS, with 4,000 MW of generating capacity, serves more than one million customers in 11 counties throughout most of the state, but mainly concentrated in northern and central Arizona. [http://seekingalpha.com/article/20935-pinnacle-west-the-peak-of-the-energy-pyramid Pinnacle West: The Peak of the Energy Pyramid] , SeekingAlpha.com, By Ted Allrich, posted on: November 20, 2006]

APS is regulated by the Arizona Corporation Commission (ACC), the state agency that regulates all energy utilities in Arizona.

The holding company, Pinnacle West Capital, through its APS utility sells wholesale and retail power to the wider western United States and also provides energy-related services. Through another major subsidiary, Pinnacle West also develops and manages real estate in Arizona.

The utility company also operates three nuclear reactors. Its Palo Verde Nuclear Generating Station in Arizona is the largest nuclear plant in the U.S., came under scrutiny by the Nuclear Regulatory Commission in 2005 when operational problems began to cause prolonged outages.

History

Arizona Public Service Company began to pay a cash dividend to shareholders in 1920, and continued the annual dividend without interruption through the 1980s. The stock doubled in price through the long bear market of the 1970s, while paying a 10% dividend yield. By then it had become an electric and natural gas utility fueled 94.4% by coal plants, 5.2% by natural gas, and 0.4% by oil. The company traded its common stock on the New York Stock Exchange, and in 1976, the company issued a preferred stock (formerly nyse2|ARP Pr) with a 10.5% dividend, callable in 1990.Standard & Poor's Stock Guide, various issues]

APS also performed well through the early 1980s recession, reaching peak earnings of over US$255 million in 1983. However, by then the company had accumulated over US$2.1 billion in long-term debt.

In 1982, APS issued another preferred stock (formerly nyse2|ARP Pr O) with an 11.9% dividend, callable in 1987. And in 1983, it issued a third preferred stock (formerly nyse2|ARP Pr Q) paying an adjustable rate between 6 and 12%, through 1986.

1984 was a down year for both earnings and the stock price, which at its low that year had lost almost half its value from the 1983 peak.

AZP Group

In February 1985, Arizona Public Service Company reorganized into a holding company structure, named AZP Group Inc. [http://www.appanet.org/aboutpublic/index.cfm?ItemNumber=2741&sn.ItemNumber=2039 Compilation of Investor-Owned Utility Transactions - Holding Companies Established] , American Public Power Association, (updated 09-03)] It traded under the ticker symbol AZP. 1985 earnings reached a new record high at almost US$290 million, and by the end of the year the stock price had doubled from its 1984 low.

Pinnacle West Capital

In 1987, AZP Group changed its name to Pinnacle West Capital Corporation, and began trading under the new ticker symbol PNW. The utility continued to operate as its principal subsidiary. By then Pinnacle's long-term debt had grown to almost US$2.4 billion. Earnings had declined to US$260 million in 1986, but were recovering by the end 1987. However, the stock price reached an all-time peak that year, which was not surpassed for the next decade, as the company ran into troubles through the early 1990s.

By 1990, the company's earnings had fallen to under US$100 million, as it struggled through the 1990-1991 recession. By 1991, the company was facing a loss of almost US$190 million, and for the first time in over 70 years, it discontinued paying its dividend. The stock price plunged 85% from its 1987 peak, to its lowest level in over twenty years. It's long-term debt by then reached over US$2.5 billion.

However, by 1992, the company returned to profitability, as earnings recovered to over US$150 million. The stock price tripled from its 1991 low by the end of 1993. The company reinstated its dividend that year.

By 1995, Pinnacle West Capital had been added to the S&P MidCap 400 index. That year, earnings surpassed US$200 million again, and by early the next year the stock price began approaching its old 1987 high. Also in 1995, the utility subsidiary Arizona Public Services issued 30-year Monthly Income Debt Securities paying 10%.

ee also

*Palo Verde Nuclear Generating Station

References

External links

* [http://www.aps.com/ APS official site]
* [http://www.pinnaclewest.com/ Pinnacle West Capital]
* [http://spreadsheets.google.com/pub?key=p-H6bhxhDX3xKz_Q5HeTcAw APS Carbon Cost Analysis]