Final FERC Formula 2008 by D7OzTt

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Arizona Public Service Company
                                                                                                                          FERC Form 1 Page # or
Formula Rate -- Appendix A                                                                                 Notes               Instruction           2008

Shaded cells are input cells
Allocators

       Wages & Salary Allocation Factor
  1        Transmission Wages Expense                                                                                p354.21.b                       14,381,071

  2          Total Wages Expense                                                                                     p354.28b                       335,586,606
  3          Less A&G Wages Expense                                                                                  p354.27b                        57,081,207
  4          Total                                                                                                   (Line 2 - 3)                   278,505,399

  5    Wages & Salary Allocator                                                                                      (Line 1 / 4)                       5.1637%

       Plant Allocation Factors
  6          Electric Plant in Service                                                                    (Note B)   Attachment 5                 12,545,216,212
  7          Total Plant In Service                                                                                  (Sum Line 6)                 12,545,216,212

  8          Accumulated Depreciation (Total Electric Plant)                                                         Attachment 5                  4,798,400,280
  9          Total Accumulated Depreciation                                                                          (Line 8)                      4,798,400,280

  10         Net Plant                                                                                               (Line 7 - 9)                  7,746,815,932

  11        Transmission Gross Plant                                                                                 (Line 23 - Line 39)           1,710,667,179
  12   Gross Plant Allocator                                                                                         (Line 11 / 7)                     13.6360%

  13        Transmission Net Plant                                                                                   (Line 33 - Line 39)           1,177,104,227
  14   Net Plant Allocator                                                                                           (Line 13 / 10)                    15.1947%

Plant Calculations

       Plant In Service (Note O)
  15         Transmission Plant In Service                                                                (Note B)   Attachment 5                  1,605,527,693
  16         New Transmission Plant Additions for Current Calendar Year (weighted by months in service)              Attachment 6                     77,351,164
  17         Total Transmission Plant In Service                                                                     (Line 15 + 16)                1,682,878,857

  18         Other Utility Plant                                                                                     Attachment 5                    28,066,598

  19         General & Intangible                                                                                    Attachment 5                   911,925,696
  20         Total General                                                                                           (Line19)                       911,925,696
  21         Wage & Salary Allocation Factor                                                                         (Line 5)                         5.16366%
  22         General Plant Allocated to Transmission                                                                 (Line 18 + (20 * 21))           75,155,337


  23   TOTAL Plant In Service                                                                                        (Line 17 + 22)                1,758,034,194

       Accumulated Depreciation

  24         Transmission Accumulated Depreciation                                                        (Note B)   Attachment 5                   506,960,814
  25         Accumulated Depreciation for Transmission Plant Additions for Current Rate Year                         Attachment 6                       148,184
  26         Total Transmission Accumulated Depreciation                                                             (Line 24 + Line 25)            507,108,998

  27         Accumulated General Depreciation                                                                        Attachment 5                   174,416,347
  28         Accumulated Intangible Depreciation                                                                     Attachment 5                   337,893,820
  29         Total Accumulated Depreciation                                                                          (Sum Lines 27 to 28)           512,310,167
  30         Wage & Salary Allocation Factor                                                                         (Line 5)                          5.1637%
  31         General Allocated to Transmission                                                                       (Line 29 * 30)                  26,453,954

  32   TOTAL Accumulated Depreciation                                                                                (Line 26 + 31)                 533,562,952

  33   TOTAL Net Property, Plant & Equipment                                                                         (Line 23 - 32)                1,224,471,242
                                                                                                                                                                           Page 2 of 28



Adjustment To Rate Base

      Accumulated Deferred Income Taxes
 34       ADIT net of FASB 106 and 109                                                                                        Attachment 1                            -242,137,655
 35       Accumulated Deferred Income Taxes Allocated To Transmission                                                         (Line 34)                               -242,137,655

      Transmission O&M Reserves
 36        Total Balance Transmission Related Account 242 Reserves                                       Enter Negative       Attachment 5                              -1,798,239

      Prepayments
 37        Prepayments                                                                                      (Note A)          Attachment 5                              1,451,177
 38        Total Prepayments Allocated to Transmission                                                                        (Line 37)                                 1,451,177

 39   Land Held for Future Use                                                                             (Note C)           p214                                     47,367,015

      Materials and Supplies
 40        Undistributed Stores Exp                                                                         (Note A)          p227.6c & 16.c                                    0
 41        Wage & Salary Allocation Factor                                                                                    (Line 5)                                   5.1637%
 42        Total Transmission Allocated                                                                                       (Line 40 * 41)                                    0
 43        Transmission Materials & Supplies                                                                                  p227.8c                                  31,275,834
 44        Total Materials & Supplies Allocated to Transmission                                                               (Line 42 + 43)                           31,275,834

      Cash Working Capital
 45        Operation & Maintenance Expense                                                                                    (Line 73)                                35,536,495
 46        Zero Cash Working Capital                                                                                          Zero                                          0.0%
 47        Total Cash Working Capital Allocated to Transmission                                                               (Line 45 * 46)                                    0

      Network Credits
 48       Outstanding Network Credits                                                                      (Note N)           Attachment 5                              3,762,191
 49          Less Accumulated Depreciation Associated with Facilities with Outstanding Network Credits     (Note N)           Attachment 5                                898,405
 50       Net Outstanding Credits                                                                                             (Line 48 - 49)                            2,863,786

 51   TOTAL Adjustment to Rate Base                                                                                       (Line 35 + 36 + 38 + 39 + 44 + 47 - 50 )    -166,705,655

 52   Rate Base                                                                                                               (Line 33 + 51)                         1,057,765,588

O&M

      Transmission O&M
 53        Transmission O&M                                                                                                   p321.112.b                               45,009,185
 54           Less Account 565                                                                                                p321.96.b                                20,662,494
 55        Transmission O&M                                                                                                   (Line 53 - 54)                           24,346,691

      Allocated General Expenses
 56        Total A&G                                                                                                          p323.197.b                              157,964,325
 57           Less PBOP Adjustment                                                                                            Attachment 5                             -4,495,998
 58           Less Property Insurance Account 924                                                                             p323.185b                                 4,745,503
 59           Less Regulatory Commission Exp Account 928                                                    (Note E)          p323.189b                                16,522,721
 60           Less General Advertising Exp Account 930.1                                                                      p323.191b                                 3,363,085
 61           Less EPRI Dues                                                                               (Note D)           p352-353                                          0
 62        General Expenses                                                                                                   (Line 56) - Sum (57 to 61)              137,829,014
 63        Wage & Salary Allocation Factor                                                                                    (Line 5)                                   5.1637%
 64        General Expenses Allocated to Transmission                                                                         (Line 62 * 63)                            7,117,021

      Directly Assigned A&G
 65        Regulatory Commission Exp Account 928                                                           (Note G)           Attachment 5                              3,351,719
 66        General Advertising Exp Account 930.1                                                           (Note K)           Attachment 5                                      0
 67        Subtotal - Transmission Related                                                                                    (Line 65 + 66)                            3,351,719

 68        Property Insurance Account 924                                                                                     p323.185b                                 4,745,503
 69        General Advertising Exp Account 930.1                                                            (Note F)          Attatchment 5                                     0
 70        Total                                                                                                              (Line 68 + 69)                            4,745,503
 71        Net Plant Allocation Factor                                                                                        (Line 14)                                 15.1947%
 72        A&G Directly Assigned to Transmission                                                                              (Line 70 * 71)                              721,064

 73        Total Transmission O&M                                                                                             (Line 55 + 64 + 67 + 72)                 35,536,495

Depreciation & Amortization Expense

      Depreciation Expense (Note P)
 74        Transmission Depreciation Expense                                                                                  p336.7f                                  33,288,225
 75        New plant Depreciation Expense                                                                                     Attachment 6                                284,168
 76        Total Transmission Depreciation Expense                                                                            (Line 74 + Line 75)                      33,572,393

 77        General Depreciation                                                                                               p336.10f                                 27,950,162
 78        Intangible Amortization                                                                          (Note A)          p336.1f                                  33,342,551
 79        Total                                                                                                              (Line 77 + 78)                           61,292,713
 80        Wage & Salary Allocation Factor                                                                                    (Line 5)                                   5.1637%
 81        General Depreciation Allocated to Transmission                                                                     (Line 79 * 80)                            3,164,947

 82   Total Transmission Depreciation & Amortization                                                                          (Line 76 + 81)                           36,737,340
                                                                                                                                  Page 3 of 28




Taxes Other than Income

  83   Taxes Other than Income                                                         Attachment 2                           18,003,867

  84   Total Taxes Other than Income                                                   (Line 83)                              18,003,867

Return / Capitalization Calculations

       Long Term Interest
  85        Long Term Interest                                                         p117.62c through 67c                  174,550,355
  86        Long Term Interest                                                         (Line 85)                             174,550,355

  87   Preferred Dividends                                            enter positive   p118.29c                                      -

       Common Stock
  88      Proprietary Capital                                                          p112.16c                             3,339,151,034
  89        Less Preferred Stock                                      enter negative   (Line 97)                                        0
  90        Less Accumulated Other Comprehensive Income Account 219   enter negative   p112.15c                               125,701,794
  91        Less Account 216.1                                        enter negative   p112.12c                                    -7,746
  92      Common Stock                                                                 (Sum Lines 88 to 91)                 3,464,845,082

       Capitalization
  93        Long Term Debt                                                             p112.18c through 23c                 2,866,510,291
  94             Less Loss on Reacquired Debt                         enter negative   p111.81c                               -15,846,538
  95             Plus Gain on Reacquired Debt                         enter positive   p113.61c                                   631,504
  96        Total Long Term Debt                                                       (Sum Lines 93 to 95)                 2,851,295,257
  97        Preferred Stock                                                            p112.3c                                          0
  98        Common Stock                                                               (Line 92)                            3,464,845,082
  99        Total Capitalization                                                       (Sum Lines 96 to 98)                 6,316,140,339

 100         Debt %                                                                    (Line 96 / 99)                                45%
 101         Preferred %                                                               (Line 97 / 99)                                 0%
 102         Common %                                                                  (Line 98 / 99)                                55%

 103         Debt Cost                                                                 (Line 86 / 96)                             0.0612
 104         Preferred Cost                                                            (Line 87 / 97)                             0.0000
 105         Common Cost                                                 (Note J)      Fixed                                      0.1075

 106         Weighted Cost of Debt                                                     (Line 100 * 103)                           0.0276
 107         Weighted Cost of Preferred                                                (Line 101 * 104)                           0.0000
 108         Weighted Cost of Common                                                   (Line 102 * 105)                           0.0590
 109   Total Return ( R )                                                              (Sum Lines 106 to 108)                     0.0866

 110   Investment Return = Rate Base * Rate of Return                                  (Line 52 * 109)                        91,609,776

Composite Income Taxes

       Income Tax Rates
 111        FIT=Federal Income Tax Rate                                                                                           35.00%
 112        SIT=State Income Tax Rate or Composite                       (Note I)                                                  6.99%
 113        p                                                                          FIT dedictible for SIT                      0.00%
 114        T = 1-{[(1-SIT) * (1-FIT)]/(1-SIT * FIT * p)}                                                                         39.54%
 115        T/ (1-T)                                                                                                              65.41%

       ITC Adjustment                                                    (Note I)
 116        Amortized Investment Tax Credit                           enter negative   p266.8f                                   -81,816
 117        T/(1-T)                                                                    (Line 115)                                65.41%
 118        Net Plant Allocation Factor                                                (Line 14)                               15.1947%
 119        ITC Adjustment Allocated to Transmission                                   (Line 116 * (1 + 117) * 118)              -20,563




 120   Income Tax Component =                                                          [Line 115 * 110 * (1-(106 / 109))]     40,800,178

 121   Total Income Taxes                                                              (Line 119 + 120)                       40,779,615

REVENUE REQUIREMENT

       Summary
 122       Net Property, Plant & Equipment                                             (Line 33)                            1,224,471,242
 123       Adjustment to Rate Base                                                     (Line 51)                             -166,705,655
 124       Rate Base                                                                   (Line 52)                            1,057,765,588

 125         O&M                                                                       (Line 73)                              35,536,495
 126         Depreciation & Amortization                                               (Line 82)                              36,737,340
 127         Taxes Other than Income                                                   (Line 84)                              18,003,867
 128         Investment Return                                                         (Line 110)                             91,609,776
 129         Income Taxes                                                              (Line 121)                             40,779,615

 130         Gross Revenue Requirement                                                 (Sum Lines 125 to 129)               222,667,094
                                                                                                                                                        Page 4 of 28




      Adjustment to Remove Revenue Requirements Associated with Excluded Transmission Facilities
131        Transmission Plant In Service                                                                      (Line 15)                           1,605,527,693
132        Excluded Transmission Facilities                                                        (Note M)   Attachment 5                           59,171,438
133        Included Transmission Facilities                                                                   (Line 131 - 132)                    1,546,356,255
134        Inclusion Ratio                                                                                    (Line 133 / 131)                          96.31%
135        Gross Revenue Requirement                                                                          (Line 130)                            222,667,094
136        Adjusted Gross Revenue Requirement                                                                 (Line 134 * 135)                      214,460,738

      Revenue Credits & Interest on Network Credits
137       Revenue Credits                                                                                     Attachment 3                          16,011,732
138       Interest on Network Credits                                                              (Note N)   Attachment 5                                 -

139        Net Revenue Requirement                                                                            (Line 136 - 137 + 138)              198,449,005

      Net Plant Carrying Charge
140        Net Revenue Requirement                                                                            (Line 139)                            198,449,005
141        Net Transmission Plant                                                                             (Line 15 - 24)                      1,098,566,879
142        Net Plant Carrying Charge                                                                          (Line 140 / 141)                         18.0644%
143        Net Plant Carrying Charge without Depreciation                                                     (Line 140 - 74) / 141                    15.0342%
144        Net Plant Carrying Charge without Depreciation, Return, nor Income Taxes                           (Line 140 - 74 - 110 - 121) / 141         2.9831%

      Net Plant Carrying Charge Calculation per 100 Basis Point increase in ROE
145        Net Revenue Requirement Less Return and Taxes                                                      (Line 139 - 128 - 129)                 66,059,615
146        Increased Return and Taxes                                                                         Attachment 4                          141,987,341
147        Net Revenue Requirement per 100 Basis Point increase in ROE                                        (Line 145 + 146)                      208,046,955
148        Net Transmission Plant                                                                             (Line 15 - 24)                      1,098,566,879
149        Net Plant Carrying Charge per 100 Basis Point increase in ROE                                      (Line 147 / 148)                         18.9380%
150        Net Plant Carrying Charge per 100 Basis Point in ROE without Depreciation                          (Line 147 - 74) / 148                    15.9079%

151        Net Revenue Requirement                                                                            (Line 139)                           198,449,005
152        True-up amount                                                                                     Attachment 6                           4,009,054
153        Plus any increased ROE calculated on Attachment 7                                                  Attachment 7                                 -
154        Facility Credits under Section 30.9 of the APS OATT                                                Attachment 5                                 -
155        Net Adjusted Revenue Requirement                                                                   (Line 151 - 152 + 154)               202,458,059

      Annual Point-to-Point Transmission Rate
156       Average of the 4 Summer CP                                                               (Note L)   Network Transmission Peak Report       8,100,857
157       Annual Point-to-Point Transmission Rate                                                             (Line 155 / 156)                           24.99

158        Average of the 8 Non-Summer CP                                                          (Note L)   Network Transmission Peak Report       6,086,102
175        Implied Non-Summer Revenue Requirement                                                             ((Line 157/12)*8* Line 158)          101,403,302
                                                                                                                                                                                                                   Page 5 of 28



 176          Implied Summer Revenue Requirement                                                                                                                         (Line 139 - Line 175)                  97,045,703
 177          Implied Annualized Summer Point-to-Point Transmission Rate                                                                                                 ((Line 155- line 175/Line 156/4)*12)       37.42

       Retail Transmission Rates
 178         Residential (kWh)                                                                                                                                           Rate Design Worksheet                    0.00643
 179         Gen Serv < 3MW Without Demand Meters -Includes All Customers 20 kW and less (kWh)                                                                           Rate Design Worksheet                    0.00529
 180         Gen Serv < 3MW (kW)                                                                                                                                         Rate Design Worksheet                      2.173
 181         Gen Serv > 3MW (kW)                                                                                                                                         Rate Design Worksheet                      1.646

       Notes
        A Electric portion only
        B Exclude Construction Work In Progress expensed as O&M (rather than amortized). New Transmission plant
            that is expected to be placed in service in the current calendar year weighted by number of months it is expected to be in-service. New Transmission plant expected
            to be placed in service in the current calendar year that is not included in the Transmission Plan must be separately detailed on Attachment 5.
            For the Reconciliation, new transmission plant that was actually placed in service weighted by the number of months it was actually in service
        C Transmission Portion Only
        D All EPRI Annual Membership Dues
        E All Regulatory Commission Expenses
        F Safety related advertising included in Account 930.1
        G Regulatory Commission Expenses directly related to transmission service, RTO filings, or transmission siting itemized in Form 1 at 351.h.
         I The currently effective income tax rate, where FIT is the Federal income tax rate; SIT is the State income tax rate, and p =
             "the percentage of federal income tax deductible for state income taxes". If the utility includes taxes in more than one state, it must explain in
             Attachment 5 the name of each state and how the blended or composite SIT was developed. Furthermore, a utility that
             elected to use amortization of tax credits against taxable income, rather than book tax credits to Account No. 255 and reduce
             rate base, must reduce its income tax expense by the amount of the Amortized Investment Tax Credit (Form 1, 266.8.f)
             multiplied by (1/1-T). A utility must not include tax credits as a reduction to rate base and as an amortization against taxable income.
             If the tax rates change during a calendar year, an average tax rate will be used - calculated based on the number of days each was effective in the calendar year.
        J ROE of 10.75%
        K Education and outreach expenses relating to transmission, for example siting or billing
        L Based on APS Network Transmission Peak Report
        M Amount of transmission plant excluded from rates per Attachment 5.
        N Outstanding Network Credits is the balance of Network Facilities Upgrades Credits due Transmission Customers who have made lump-sum payments
             (net of accumulated depreciation) towards the construction of Network Transmission Facilities consistent with Paragraph 657 of Order 2003-A.
             Interest on the Network Credits as booked each year is added to the revenue requirement to make the Transmisison Owner whole on Line 138.
        O AFUDC shall not be applied to the portion of a Network Upgrade for which the customer has provided the funds.
        P Changes in depreciation or amortization rates must be filed with the Commission, as well as any new depreciation or amortization rates.




END
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                                                                                                                         Arizona Public Service Company

                                                                                                      Attachment 1 - Accumulated Deferred Income Taxes (ADIT) Worksheet



                                                                                                     Transmission           Plant             Labor                Total
                                                                                                        Related            Related           Related               ADIT


               ADIT- 282                                                                                            0    (1,709,872,317)               0       (1,709,872,317)
               ADIT-283                                                                                    (7,720,000)                0     (202,202,000)        (209,922,000)
               ADIT-190                                                                                             0                 0      177,815,000          177,815,000
               Subtotal                                                                                    (7,720,000)   (1,709,872,317)     (24,387,000)      (1,741,979,317)
               Wages & Salary Allocator                                                                                                          5.1637%
               Gross Plant Allocator                                                                                           13.6360%
               ADIT                                                                                        (7,720,000)     (233,158,393)       (1,259,262)       (242,137,655)



In filling out this attachment, a full and complete description of each item and justification for the allocation to Columns B-E and each separate ADIT item will be listed, dissimilar items
with amounts exceeding $100,000 will be listed separately.


      A                                                                              B                     C                   D                E                     F                                                              G
                                                                                   Total               Gas, Prod             Only
ADIT-190                                                                                               Or Other          Transmission         Plant                Labor
                                                                                                        Related             Related          Related              Related                                                      Justification

Deferred Credits - Injury Reserve                                                     952,000                 952,000                                                            Injury Reserve is Related to Injuries and Damages Liability to Third Party in all functions
Deferred credits - SFAS 112                                                         4,750,000                                                                        4,750,000   Post Employment Benefits - relates to employees in all functions
Deferrred credits - Legal Reserve                                                  10,671,000             10,671,000                                                             Production Related
Deferred credits - Palo Verde Rent                                                 13,140,000             13,140,000                                                             Production Related
Deferred Credits - Coal Reclaimation                                               36,061,000             36,061,000                                                             Production Related
Reg Liab - ARO                                                                     40,915,000             40,915,000                                                             Pursuant to State retail Regulatory Order (Regulatory Liab)
Reg Liab - PacifiCorp                                                               7,908,000              7,908,000                                                             Pursuant to State retail Regulatory Order (Regulatory Liab)
Reg Liab - Gain on Sale of Property                                                    68,000                 68,000                                                             Pursuant to State retail Regulatory Order (Regulatory Liab)
Reg Liab - Removal Costs                                                          153,411,000            153,411,000                                                             Pursuant to State retail Regulatory Order (Regulatory Liab)
Reg Liab - Glen Canyon                                                                138,000                138,000                                                             Pursuant to State retail Regulatory Order (Regulatory Liab)
Reg Liab - Medicare Subsidy                                                         2,321,000                                                                        2,321,000   Pursuant to State retail Regulatory Order (Regulatory Liab)
Reg Liab - PV ISFS                                                                 (3,817,000)             (3,817,000)                                                           Pursuant to State retail Regulatory Order (Regulatory Liab)
Reg Liab - Pension & Other Postretirement Benefits Tax                              4,197,000                                                                       4,197,000    Pursuant to State retail Regulatory Order (Regulatory Liab)
Pension and other Postretirement Benefits                                         265,155,000                                                                     265,155,000    Relates to employees in all functions
Deferred Credits - Unamortized Gain on PV Sale/Leaseback                           12,665,000             12,665,000                                                             Production related
Stock Compensation                                                                  6,633,000              5,944,000                                                   689,000   Does not Include the Portion that Flows Through Additional Paid in Capital (APIC)
MTM                                                                               180,527,000            180,527,000                                                             Production related
Deferred Credits - Def Comp                                                        12,389,000             12,389,000                                                             Not a Component of Rate Base so Deferred Taxes Are Not a Component of Rate Base
Deferred Credits - Medical Reserve                                                  4,471,000              4,471,000                                                             Not a Component of Rate Base so Deferred Taxes Are Not a Component of Rate Base
Reg Liab - Unamortized Gain on Reacquired Debt                                        250,000                250,000                                                             Pursuant to State retail Regulatory Order (Regulatory Liab)
Reg Liab - Deferred ITC                                                               494,000                494,000                                                             Pursuant to State retail Regulatory Order (Regulatory Liab)
Vacation Reserve                                                                    2,000,000                                                                        2,000,000   Not a Component of Rate Base so Deferred Taxes Are Not a Component of Rate Base
Sales/Use tax                                                                       2,606,000               2,606,000                                                            Not a Component of Rate Base so Deferred Taxes Are Not a Component of Rate Base
Bad Debt Allowance                                                                  1,247,000               1,247,000                                                            Retail Related
Reg Liab - Sundance Maintenance                                                       954,000                 954,000                                                            Pursuant to State retail Regulatory Order (Regulatory Liab)
Deferred Credits - Option II                                                        5,043,000                                                                        5,043,000   Not a Component of Rate Base so Deferred Taxes Are Not a Component of Rate Base
Interest on Tax Reserve                                                             2,398,000               2,398,000                                                            Not a Component of Rate Base so Deferred Taxes Are Not a Component of Rate Base
Severance Reserve                                                                   3,917,000                                                                        3,917,000   Relates to employees in all functions
Workers' Compensation                                                               2,597,000                                                                        2,597,000   Relates to employees in all functions
Prepaids                                                                           (2,980,000)             (2,980,000)                                                           Production and Distribution Related
Vehicle Capital Leases                                                              1,139,000               1,139,000                                                            Not a Component of Rate Base so Deferred Taxes Are Not a Component of Rate Base
Reg Liability - Amonix                                                              1,480,000               1,480,000                                                            Pursuant to State retail Regulatory Order (Regulatory Liab)

Subtotal - p234                                                                   773,700,000            483,031,000                    0                0        290,669,000
Less FASB 109 Above if not separately removed                                       6,518,000              6,518,000                    0                0
Less FASB 106 Above if not separately removed                                     112,854,000                                           0                         112,854,000
Total                                                                             654,328,000            476,513,000                    0                0        177,815,000

               Instructions for Account 190:
               1. ADIT items related only to Non-Electric Operations (e.g.,
               Gas, Water, Sewer) or Production are directly assigned to
               Column C
               2. ADIT items related only to Transmission are directly assigned to Column D
               3. ADIT items related to Plant and not in Columns C & D are included in Column E
               4. ADIT items related to labor and not in Columns C & D are included in Column F
               5. Deferred income taxes arise when items are included in
               taxable income in different periods than they are included
               in rates, therefore if the item giving rise to the ADIT is not
               included in the formula, the associated ADIT amount shall
               be excluded

               6. Re: Form 1-F filer: Sum of subtotals for Accounts 282 and 283 should tie to Form No. 1-F, p.113.57.c
                                                                                                                                                                                                                                                                Page 7 of 28




Attachment 1 - Accumulated Deferred Income Taxes (ADIT) Worksheet

                                         A                                         B                     C                       D                  E              F                                                              G
                                                                                 Total               Gas, Prod                 Only
             ADIT- 282                                                                               Or Other              Transmission           Plant          Labor
                                                                                                      Related                 Related           Related         Related                                                      Justification
Accelerated Depreciation                                                     (1,709,872,317)                                                  (1,709,872,317)                   Accelerated depreciation functionalized as plant related

Subtotal - p275 (Form 1-F filer: see note 6 below)                           (1,709,872,317)                           0                  0   (1,709,872,317)              0
Less FASB 109 Above if not separately removed                                             0                                                                0
Less FASB 106 Above if not separately removed                                             0
Total                                                                        (1,709,872,317)                           0                  0   (1,709,872,317)              0

             Instructions for Account 282:
             1. ADIT items related only to Non-Electric Operations (e.g.,
             Gas, Water, Sewer) or Production are directly assigned to
             Column C
             2. ADIT items related only to Transmission are directly assigned to Column D
             3. ADIT items related to Plant and not in Columns C & D are included in Column E
             4. ADIT items related to labor and not in Columns C & D are included in Column F
             5. Deferred income taxes arise when items are included in
             taxable income in different periods than they are included
             in rates, therefore if the item giving rise to the ADIT is not
             included in the formula, the associated ADIT amount shall
             be excluded

             6. Re: Form 1-F filer: Sum of subtotals for Accounts 282 and 283 should tie to Form No. 1-F, p.113.57.c



                                                                                                                                                0
Attachment 1 - Accumulated Deferred Income Taxes (ADIT) Worksheet

                                         A                                         B                     C                       D                  E              F                                                              G
                                                                                 Total               Gas, Prod                 Only
             ADIT-283                                                                                Or Other              Transmission          Plant           Labor
                                                                                                      Related                 Related           Related         Related                                                    Justification
Reg Asset - CRCC                                                                 (6,167,000)            (6,167,000)                                                           Pursuant to State retail Regulatory Order (Regulatory Asset)
Reg asset - AFUDC                                                               (20,174,000)           (20,174,000)                                                           Pursuant to State retail Regulatory Order (Regulatory Asset)
Reg Asset - Mead Phx Line                                                        (5,416,000)            (5,416,000)                                                           Pursuant to State retail Regulatory Order (Regulatory Asset)
Reg Asset - Decontamination                                                        (154,000)              (154,000)                                                           Pursuant to State retail Regulatory Order (Regulatory Asset)
Reg Asset - Unamortized loss on Reacquired Debt                                  (6,266,000)            (6,266,000)                                                           Pursuant to State retail Regulatory Order (Regulatory Asset)
Reg Asset - Bark Beetle                                                          (2,275,000)            (2,275,000)                                                           Pursuant to State retail Regulatory Order (Regulatory Asset)
Reg Asset - Power Supply Adjustor                                                (3,157,000)            (3,157,000)                                                           Pursuant to State retail Regulatory Order (Regulatory Asset)
Reg Asset - Power Supply Adjustor MTM                                           (46,593,000)           (46,593,000)                                                           Pursuant to State retail Regulatory Order (Regulatory Asset)
Reg Asset - Coal Reclaimation                                                    (6,742,000)            (6,742,000)                                                           Pursuant to State retail Regulatory Order (Regulatory Asset)
Reg Asset - Pension and Other Postretirement benefits                          (186,916,000)                                                                    (186,916,000) Pursuant to State retail Regulatory Order (Regulatory Asset)
MTM                                                                             (68,876,000)            (68,876,000)                                                          Pursuant to State retail Regulatory Order (Regulatory Asset)
Reg Asset - Transmission Vegitation Management                                   (7,720,000)                                   (7,720,000)                                    Pursuant to State retail Regulatory Order (Regulatory Asset)
Reg Asset - Option II                                                           (12,024,000)                                                                     (12,024,000) Pursuant to State retail Regulatory Order (Regulatory Asset)
Reg Asset - Demand Side Management                                               (6,810,000)             (6,810,000)                                                          Pursuant to State retail Regulatory Order (Regulatory Asset)
Option II                                                                        (3,262,000)                                                                      (3,262,000) Not a Component of Rate Base so Deferred Taxes Are Not a Component of Rate Base
Reg Asset - SFAS 109                                                             (1,788,000)             (1,788,000)                                                          Pursuant to State retail Regulatory Order (Regulatory Asset)
Non-Utility Plant                                                                (1,206,000)             (1,206,000)                                                          Not a Component of Rate Base so Deferred Taxes Are Not a Component of Rate Base

Subtotal - p277 (Form 1-F filer: see note 6, below)                            (385,546,000)          (175,624,000)            (7,720,000)                -     (202,202,000)
Less FASB 109 Above if not separately removed                                   (21,962,000)           (21,962,000)                                       -
Less FASB 106 Above if not separately removed                                           -                                                                                -
Total                                                                          (363,584,000)          (153,662,000)            (7,720,000)                -     (202,202,000)

             Instructions for Account 283:
             1. ADIT items related only to Non-Electric Operations (e.g.,
             Gas, Water, Sewer) or Production are directly assigned to
             Column C
             2. ADIT items related only to Transmission are directly assigned to Column D
             3. ADIT items related to Plant and not in Columns C & D are included in Column E
             4. ADIT items related to labor and not in Columns C & D are included in Column F
             5. Deferred income taxes arise when items are included in
             taxable income in different periods than they are included
             in rates, therefore if the item giving rise to the ADIT is not
             included in the formula, the associated ADIT amount shall
             be excluded

             6. Re: Form 1-F filer: Sum of subtotals for Accounts 282 and 283 should tie to Form No. 1-F, p.113.57.c
                                                                                                      Page 8 of 28




Attachment 1- Accumulated Deferred Income Taxes (ADIT) Worksheet




ADITC-255

                                                                   Balance       Amortization

1           Rate Base Treatment
2           Balance to line 41 of Appendix A

3           Amortization
4           Amortization to line 116 of Appendix A                           -             (81,816)

5           Total                                                            -             (81,816)

6           Total Form No. 1 (p 266 & 267)                                   -             (81,816)

7           Difference /1                                                    -                  -

            /1 Difference must be zero
                                                                                                                                                      Page 9 of 28




                                                      Arizona Public Service Company
                                             Attachment 2 - Taxes Other Than Income Worksheet



                                                                                                  Page 263                            Allocated
Other Taxes                                                                                        Col (i)          Allocator          Amount



    Plant Related                                                                                             Gross Plant Allocator

       1   Transmission Personal Property Tax (directly assigned to Transmission)             $    16,789,101        100%          $ 16,789,101
       2   Capital Stock Tax                                                                                       13.6360%        $           -
       3   Gross Premium (insurance) Tax                                                                           13.6360%        $           -
       4   PURTA                                                                                                   13.6360%        $           -
       5   Corp License                                                                                            13.6360%        $           -
                                                                                                                   13.6360%        $           -
    Total Plant Related                                                                            16,789,101                         16,789,101


    Labor Related                                                                                         Wages & Salary Allocator


       6 Federal FICA & Unemployment & state unemployment                                          23,525,293




    Total Labor Related                                                                            23,525,293       5.1637%              1,214,766


    Other Included                                                                                            Gross Plant Allocator

       7 Miscellaneous                                                                                        0



    Total Other Included                                                                                      0    13.6360%                       0

    Total Included                                                                                                                      18,003,867



           Currently Excluded

       8   Use & Sales Tax                                                                                   0
       9   Palo Verde Sales/Leaseback Sales Tax                                                         82,040
      10   Other Sales & Use Tax                                                                   (1,169,573)
      11   Other Personal Property Tax (excluded)                                                 108,344,921
      12
      13
      14
      15
      16
      17
      18
      19
      20

      21 Total "Other" Taxes (included on p. 263)                                                 147,571,782

      22 Total "Taxes Other Than Income Taxes" - acct 408.10 (p. 114.14)                          147,571,782

      23 Difference                                                                                       -

    Criteria for Allocation:
    A      Other taxes that are incurred through ownership of plant including transmission plant will be allocated based on the Gross Plant
           Allocator. If the taxes are 100% recovered at retail they will not be included
    B      Other taxes that are incurred through ownership of only general or intangible plant will be allocated based on the Wages and Salary
           Allocator. If the taxes are 100% recovered at retail they will not be included
    C      Other taxes that are assessed based on labor will be allocated based on the Wages and Salary Allocator
    D      Other taxes except as provided for in A, B and C above, that are incurred and (1) are not fully recovered at retail or (2) are
           directly or indirectly related to transmission service will be allocated based on the Gross Plant Allocator; provided, however, that
           overheads shall be treated as in footnote B above
    E      Excludes prior period adjustments in the first year of the formula's operation and reconciliation for the first year
                                                                                                                                                   Page 10 of 28




                                                   Arizona Public Service Company
                                                Attachment 3 - Revenue Credit Workpaper


    Account 454 - Rent from Electric Property
  1 Rent from Electric Property - Transmission Related (Note 3)                                                                      3,898,528
  2 Total Rent Revenues                                                                                     (Sum Lines 1)            3,898,528

      Account 456 - Other Electric Revenues (Note 1)

  3 Scheduling, System Control & Dispatch (Ancillary Service)                                                                   $    2,095,945
  4 Net revenues associated with Network Integration Transmission Service (NITS) for which the
    load is not included in the divisor (Note 4)
  5 Point to Point Service revenues for which the load is not included in the divisor received by Transmission Owner (Note 4)       12,394,010
  6 Transitional Revenue Neutrality (Note 1)
  7 Transitional Market Expansion (Note 1)
  8 Professional Services (Note 3)                                                                                                        -
  9 Revenues from Directly Assigned Transmission Facility Charges (Note 2)                                                            223,383
 10 Rent or Attachment Fees associated with Transmission Facilities (Note 3)                                                          396,772

 11 Gross Revenue Credits                                                                                   (Sum Lines 2-10)        19,008,638
 12 Line 17g                                                                                                                        (2,996,906)
 13 Total Revenue Credits                                                                                                           16,011,732




      Revenue Adjustment to determine Revenue Credit
 14
       Note 1: All revenues related to transmission that are received as a transmission owner (i.e.,
      not received as a LSE), for which the cost of the service is recovered under this formula,
      except as specifically provided for elsewhere in this Attachment or elsewhere in the formula will
      be included as a revenue credit or included in the peak on line 171 of Appendix A.

 15 Note 2: If the costs associated with the Directly Assigned Transmission Facility Charges are
    included in the Rates, the associated revenues are included in the Rates. If the costs
    associated with the Directly Assigned Transmission Facility Charges are not included in the
    Rates, the associated revenues are not included in the Rates.

 16
      Note 3: Ratemaking treatment for the following specified secondary uses of transmission
      assets: (1) right-of-way leases and leases for space on transmission facilities for
      telecommunications; (2) transmission tower licenses for wireless antennas; (3) right-of-way
      property leases for farming, grazing or nurseries; (4) licenses of intellectual property (including
      a portable oil degasification process and scheduling software); and (5) transmission
      maintenance and consulting services (including energized circuit maintenance, high-voltage
      substation maintenance, safety training, transformer oil testing, and circuit breaker testing) to
      other utilities and large customers (collectively, products). Company will retain 50% of net
      revenues consistent with Pacific Gas and Electric Company, 90 FERC ¶ 61,314. Note: in order
      to use lines 17a - 17g, the utility must track in separate subaccounts the revenues and costs
      associated with each secondary use (except for the cost of the associated income taxes).
17a Revenues included in lines 1-11 which are subject to 50/50 sharing.                                                              4,295,300
17b Costs associated with revenues in line 17a                                                                                       1,698,512
17c Net Revenues (17a - 17b)                                                                                                         2,596,788
17d 50% Share of Net Revenues (17c / 2)                                                                                              1,298,394
17e Costs associated with revenues in line 17a that are included in FERC accounts recovered
    through the formula times the allocator used to functionalize the amounts in the FERC account                                              -
    to the transmission service at issue.
17f Net Revenue Credit (17d + 17e)                                                                                                   1,298,394
17g Line 17f less line 17a                                                                                                          (2,996,906)
 18 Note 4: If the facilities associated with the revenues are not included in the formula, the
    revenue is shown here but not included in the total above and is explained in the Cost Support;
    for example revenues associated with distribution facilities.                                                                          -

 19 Amount offset in line 4 above

 20 Total Account 454 and 456                                                                                                       19,008,638
                                                                                                                                               Page 11 of 28




                                                            Arizona Public Service Company
                                               Attachment 4 - Calculation of 100 Basis Point Increase in ROE




   A        100 Basis Point increase in ROE and Income Taxes                                       Line 12 + Line 23                       141,987,341

   B        100 Basis Point increase in ROE                                                                                                      1.00%

Return Calculation
   1       Rate Base                                                                               Appendix A, Line 52                    1,057,765,588

   2        Debt %                                                                                 Appendix A, Line 100                          45.1%
   3        Preferred %                                                                            Appendix A, Line 101                           0.0%
   4        Common %                                                                               Appendix A, Line 102                          54.9%

   5        Debt Cost                                                                              Appendix A, Line 103                          6.12%
   6        Preferred Cost                                                                         Appendix A, Line 104                          0.00%
   7        Common Cost                                          Appendix A % plus 100 Basis Pts   Appendix A, Line 105 + 1%                    11.75%

    8      Weighted Cost of Debt                                                                   Appendix A, Line 106                         0.0276
    9      Weighted Cost of Preferred                                                              Appendix A, Line 107                             -
   10      Weighted Cost of Common                                                                 Line 4 * Line 7                               0.0645
   11    Total Return ( R )                                                                        Sum Lines 8 to 10                             0.0921

   12    Investment Return = Rate Base * Rate of Return                                            Line 11 * Line 1                          97,412,361

Composite Income Taxes
       Income Tax Rates
  13       FIT=Federal Income Tax Rate                                                             Appendix A, Line 111                         35.00%
  14       SIT=State Income Tax Rate or Composite                                                  Appendix A, Line 112                          6.99%
  15       p (percent of federal income tax deductible for state purposes)                         Appendix A, Line 113                          0.00%
  16       T =1 - {[(1 - SIT) * (1 - FIT)] / (1 - SIT * FIT * p)} =                                Appendix A, Line 114                         39.54%
  17       T/ (1-T)                                                                                Appendix A, Line 115                         65.41%

         ITC Adjustment
   18       Amortized Investment Tax Credit                                                        Appendix A, Line 116                        (81,816)
   19       1/(1-T)                                                                                Appendix A, Line 117                       65.4082%
   20       Net Plant Allocation Factor                                                            Appendix A, Line 118                       15.1947%
   21       ITC Adjustment Allocated to Transmission                                               Appendix A, Line 119                         -20,563

   22    Income Tax Component = CIT=(T/1-T) * Investment Return * (1-(WCLTD/R)) =                  Line 17*Line 12*(1-(Line 8/Line 11))     44,595,543

   23    Total Income Taxes                                                                        Line 21 + 22"                            44,574,980
                                                                                                                                                                              Page 12 of 28




                                                                                                        Arizona Public Service Company
                                                                                                               Attachment 5 - Cost Support




Plant in Service Worksheet
                                  Attachment A Line #s, Descriptions, Notes, Form 1 Page #s and Instructions                                                        Details
           Calculation of Transmission Plant In Service                         Source                                   Balance For True up Balance for Estimate
           December                                                             p206.58.b                         2007         1,517,868,010
           January                                                              company records                   2008         1,517,057,110
           February                                                             company records                   2008         1,523,104,810
           March                                                                company records                   2008         1,522,810,680
           April                                                                company records                   2008         1,531,811,130
           May                                                                  company records                   2008         1,535,229,560
           June                                                                 company records                   2008         1,564,878,713
           July                                                                 company records                   2008         1,563,589,651
           August                                                               company records                   2008         1,567,361,027
           September                                                            company records                   2008         1,581,866,488
           October                                                              company records                   2008         1,594,386,266
           November                                                             company records                   2008         1,590,696,533
           December                                                             p207.58.g                         2008         1,605,527,693     1,605,527,693
           Transmission Plant In Service                                                                                       1,555,091,359     1,605,527,693

           Calculation of Distribution Plant In Service                        Source
           December                                                            p206.75.b                          2007         4,183,564,856
           January                                                             company records                    2008         4,204,459,899
           February                                                            company records                    2008         4,226,048,962
           March                                                               company records                    2008         4,242,316,058
           April                                                               company records                    2008         4,255,926,733
           May                                                                 company records                    2008         4,275,322,697
           June                                                                company records                    2008         4,298,600,453
           July                                                                company records                    2008         4,312,025,820
           August                                                              company records                    2008         4,327,297,947
           September                                                           company records                    2008         4,341,832,742
           October                                                             company records                    2008         4,355,348,435
           November                                                            company records                    2008         4,372,245,380
           December                                                            p207.75.g                          2008         4,428,372,822     4,428,372,822
           Distribution Plant In Service                                                                                       4,294,104,831     4,428,372,822

           Calculation of Intangible Plant In Service                          Source
           December                                                            p204.5.b                           2007          357,961,832
           December                                                            p205.5.g                           2008          431,596,710        431,596,710
           Intangible Plant In Service                                                                                          394,779,271        431,596,710

           Calculation of General Plant In Service                             Source
           December                                                            p206.96.b                          2007          457,918,666
           December                                                            p207.96.g                          2008          480,328,986        480,328,986
           General Plant In Service                                                                                             469,123,826        480,328,986

           Calculation of Production Plant In Service                          Source
           December                                                            p204.46b                           2007         5,399,681,600
           January                                                             company records                    2008         5,450,104,077
           February                                                            company records                    2008         5,455,397,598
           March                                                               company records                    2008         5,466,291,096
           April                                                               company records                    2008         5,447,381,832
           May                                                                 company records                    2008         5,482,327,160
           June                                                                company records                    2008         5,560,690,321
           July                                                                company records                    2008         5,566,905,545
           August                                                              company records                    2008         5,575,100,820
           September                                                           company records                    2008         5,584,956,464
           October                                                             company records                    2008         5,580,085,324
           November                                                            company records                    2008         5,590,608,034
           December                                                            p205.46.g                          2008         5,599,390,001     5,599,390,001
           Production Plant In Service                                                                                         5,519,916,913     5,599,390,001


           Total Plant In Service                                              Sum of averages above                          12,233,016,201     12,545,216,212
                                                                                                                                                                          Page 13 of 28




Accumulated Depreciation Worksheet
                                 Attachment A Line #s, Descriptions, Notes, Form 1 Page #s and Instructions                                                     Details
          Calculation of Transmission Accumulated Depreciation                 Source                                Balance For True up Balance for Estimate
          December                                                             Prior year p219.25             2007          485,631,331
          January                                                              company records                2008          487,979,806
          February                                                             company records                2008          490,388,108
          March                                                                company records                2008          490,840,931
          April                                                                company records                2008          493,579,559
          May                                                                  company records                2008          495,624,246
          June                                                                 company records                2008          497,851,564
          July                                                                 company records                2008          499,248,895
          August                                                               company records                2008          500,805,969
          September                                                            company records                2008          503,025,290
          October                                                              company records                2008          505,200,016
          November                                                             company records                2008          506,015,567
          December                                                             p219.25                        2008          506,960,814        506,960,814
          Transmission Accumulated Depreciation                                                                             497,165,546        506,960,814

            Calculation of Distribution Accumulated Depreciation               Source
            December                                                           Prior year p219.26             2007         1,144,739,323
            January                                                            company records                2008         1,149,981,850
            February                                                           company records                2008         1,153,749,877
            March                                                              company records                2008         1,159,440,495
            April                                                              company records                2008         1,160,166,456
            May                                                                company records                2008         1,157,901,530
            June                                                               company records                2008         1,164,242,958
            July                                                               company records                2008         1,163,786,011
            August                                                             company records                2008         1,169,068,477
            September                                                          company records                2008         1,172,243,774
            October                                                            company records                2008         1,173,601,830
            November                                                           company records                2008         1,179,851,401
            December                                                           p219.26                        2008         1,186,103,459     1,186,103,459
            Distribution Accumulated Depreciation                                                                          1,164,221,342     1,186,103,459

            Calculation of Intangible Accumulated Depreciation                 Source
            December                                                           Prior year p200.21.c           2007          300,703,716
            December                                                           p200.21c                       2008          337,893,820        337,893,820
            Accumulated Intangible Depreciation                                                                             319,298,768        337,893,820

            Calculation of General Accumulated Depreciation                    Source
            December                                                           Prior year p219.28             2007          181,657,843
            December                                                           p219.28                        2008          174,416,347        174,416,347
            Accumulated General Depreciation                                                                                178,037,095        174,416,347

            Calculation of Production Accumulated Depreciation                 Source
            December                                                           Prior year p219.20 thru 219.24007
                                                                                                            2              2,524,738,437
            January                                                            company records                2008         2,485,454,042
            February                                                           company records                2008         2,497,534,518
            March                                                              company records                2008         2,506,825,002
            April                                                              company records                2008         2,516,649,995
            May                                                                company records                2008         2,526,804,408
            June                                                               company records                2008         2,526,710,679
            July                                                               company records                2008         2,536,364,859
            August                                                             company records                2008         2,547,045,735
            September                                                          company records                2008         2,560,591,448
            October                                                            company records                2008         2,565,678,639
            November                                                           company records                2008         2,577,205,950
            December                                                           p219.20 thru 219.24            2008         2,593,025,840     2,593,025,840
            Production Accumulated Depreciation                                                                            2,585,115,895     2,593,025,840


            Total Accumulated Depreciation                                     Sum of averages above                       4,743,838,645      4,798,400,280
                                                                                                                                                                                                                          Page 14 of 28




Electric / Non-electric Cost Support
                                 Attachment A Line #s, Descriptions, Notes, Form 1 Page #s and Instructions                               Form 1 Amount     Electric Portion   Non-electric Portion   Details
        Plant Allocation Factors
             Accumulated Intangible Depreciation                                                                           p200.21.c       337,893,820        337,893,820               0
       Materials and Supplies
            Undistributed Stores Exp                                                                                p227.6c & 15.c              0                  0                    0
       Depreciation Expense
            Intangible Amortization                                                                                 p336.1d&e               33,342,551        33,342,551                0

Transmission / Non-transmission Cost Support

                                                                                                                                                                               End of Year for
                                                                                                                                                                               Est. Average for
                                  Attachment A Line #s, Descriptions, Notes, Form 1 Page #s and Instructions                              Beg of year        End of Year             Final                      Details
  39         Plant Held for Future Use                                                                  p214        Total                    12,630,199       56,557,062             34,593,631
                                                                                                                    Non-transmission
                                                                                                                    Related                     7,894,820        9,190,047
                                                                                                                    Transmission
                                                                                                                    Related                     4,735,379     47,367,015              26,051,197


PBOPs Cost Support

                                 Attachment A Line #s, Descriptions, Notes, Form 1 Page #s and Instructions                              Form 1 Amount         PBOBs               All other                    Details
  57   Allocated General Expenses
            Account 926 (2006)                                                                                                                 77,941,202       12,427,757            65,513,445 Base year
            Account 926 (Current Year)                                                                              p323.187b                 77,374,227         7,931,759            69,442,468 Current Year
            Change in PBOP Expense                                                                                                                              (4,495,998)



EPRI Dues Cost Support
                               Attachment A Line #s, Descriptions, Notes, Form 1 Page #s and Instructions                                Form 1 Amount       EPRI Dues                                          Details
       Allocated General Expenses                                                                                                             A&G
  61          Less EPRI Dues                                                                                        p352-353                   2,768,934           0

Regulatory Expense Related to Transmission Cost Support
                                                                                                                                                            Transmission       Non-transmission
                                       Attachment A Line #s, Descriptions, Notes, Form 1 Page #s and Instructions                        Form 1 Amount         Related              Related                     Details
       Directly Assigned A&G
  65        Regulatory Commission Exp Account 928                                                                   p350.1 thru 350.21     16,522,721         3,351,719            13,171,002

Safety Related Advertising Cost Support
                                                                                                                                                                                  Non-safety
                                 Attachment A Line #s, Descriptions, Notes, Form 1 Page #s and Instructions                              Form 1 Amount      Safety Related         Related                      Details
       Directly Assigned A&G
  69        General Advertising Exp Account 930.1                                                                   p323.191.b              3,363,085                      -                    -                None
                                                                                                                                                                                                                                                                 Page 15 of 28




MultiState Workpaper
                                   Attachment A Line #s, Descriptions, Notes, Form 1 Page #s and Instructions                                                 State 1         State 2          State 3             State 4         State 5           Composite
       Income Tax Rates
                                                                                                                                                                AZ              NM               CA                   TX              UT
 112         SIT=State Income Tax Rate or Composite                                                                                                           6.968%          7.600%           8.840%               0.00%           5.00%               6.99%

Education and Out Reach Cost Support
                                                                                                                                                                            Education &
                                 Attachment A Line #s, Descriptions, Notes, Form 1 Page #s and Instructions                                                Form 1 Amount     Outreach           Other                                   Details
       Directly Assigned A&G
  66        General Advertising Exp Account 930.1                                                                                     p323.191.b                3,363,085        0                3,363,085                              None

Excluded Plant Cost Support
                                                                                                                                                             Excluded
                                                                                                                                                           Transmission
                               Attachment A Line #s, Descriptions, Notes, Form 1 Page #s and Instructions                                                    Facilities                                 Description of the Facilities
       Adjustment to Remove Revenue Requirements Associated with Excluded Transmission Facilities
 132       Excluded Transmission Facilities                                                                                                                    59,171,438                        General Description of the Facilities

             Instructions:                                                                                                                                    Enter $                                              None
        1    Remove all investment below 69 kV facilities, including the investment allocated to distribution of a dual function substation, generator,
             interconnection and local and direct assigned facilities for which separate costs are charged and step-up generation substation included in
             transmission plant in service.
                                                                                                                                                               59,171,438                                   Put discription here
        2    If unable to determine the investment below 69kV in a substation with investment of 69 kV and higher as well as below 69 kV,                       Or
             the following formula will be used:                                             Example                                                          Enter $
         A   Total investment in substation                                                          1,000,000
         B   Identifiable investment in Transmission (provide workpapers)                              500,000
         C   Identifiable investment in Distribution (provide workpapers)                              400,000
         D   Amount to be excluded (A x (C / (B + C)))                                                 444,444
                                                                                                                                                                                                                               Add more lines if necessary

Transmission Related Account 242 Reserves


                                                                                                                                                                                           End of Year for
                                                                                                                                                                                           Est. Average for                         Trans
                                   Attachment A Line #s, Descriptions, Notes, Form 1 Page #s and Instructions                                               Beg of year     End of Year          Final           Allocation        Related        Details
  36   Transmission Related Account 242 Reserves (exclude current year environmental site related reserves)                                                                   Enter $
             Directly Assignable to Transmission
             Total                                                                                                 (A) Total                                   83,505,467     90,329,391        86,917,429



             Labor Related, or General plant related
                                                                                     Vacation Accrual - Old Plan                                                8,324,807      7,107,519          7,716,163
                                                                                     Workmen's Compensation Liability                                           7,345,718      6,569,321          6,957,520
                                                                                     Vacation Accrual                                                           3,134,901      3,870,663          3,502,782
                                                                                     Vacation Accrual - Participants                                            2,755,043      1,917,154          2,336,098
                                                                                     Severance                                                                  3,274,132      9,894,297          6,584,214
                                                                                     SERBP                                                                      4,045,280      5,465,945          4,755,613
                                                                                                                   (B) Sum Labor Related                       28,879,882     34,824,899        31,852,390          5.16%          1,798,239


             Other
                                                                                                                        (A) - (B)                              54,625,585     55,504,492        55,065,039          0.00%                 -



             Total Transmission Related Reserves                                                                                                                                                                                   1,798,239

Prepayments
                                                                                                                                                                                           End of Year for
                                                                                                                                                                                           Est. Average for                         Trans
Attachment A Line #s, Descriptions, Notes, Form 1 Page #s and Instructions                                                                                  Beg of year     End of Year          Final           Allocation        Related        Details
                                                                                                                                                                                                                                            Page 16 of 28




   37 Prepayments
          Labor Related                                                          Worksheet 5                                                                                             -           5.164%              -
            Plant Related                                                        Worksheet 5                                                 9,940,396          8,892,429          9,416,413        15.195%     1,351,177
            100% Transmission Related                                            Worksheet 5                                                          -          100,000              50,000       100.000%       100,000
            Other (Excluded)                                                     Worksheet 5                                                 5,465,887          6,315,661          5,890,774         0.000%              -

                                                                                                                                                                                                                1,451,177

Materials & Supplies

                                                                                                                                                                            End of Year for
                                                                                                                                                                            Est. Average for
Attachment A Line #s, Descriptions, Notes, Form 1 Page #s and Instructions                                                              Beg of year         End of Year           Final

            Assigned to O&M                                                      p227.6
  40        Stores Expense Undistributed                                         p227.15
            Undistributed Stores Exp                                                                                                              -                  -                   -


  43        Transmission Materials & Supplies                                    p227.8                                                    13,197,373          31,275,834         22,236,604

Outstanding Network Credits Cost Support
                               Attachment A Line #s, Descriptions, Notes, Form 1 Page #s and Instructions                                                                               Description of the Credits
                                                                                                                                                                            End of Year for
                                                                                                                                                                            Est. Average for
       Network Credits                                                                                                                  Beg of year         End of Year           Final
  48       Outstanding Network Credits                                                                                                                                              General Description of the Credits
           December                                                              Account 253                   For 2007   5,950,818         5,950,818
           December                                                              Account 253                   For 2008   3,762,191                            3,762,191
           Average Beginning and End of Year                                                                              4,856,505                                                4,856,505

  49        Accumulated Depreciation Associated with Facilities with Outstanding Network Credits
            December                                                              Account 253                  For 2007    739,405            739,405
            December                                                              Account 253                  For 2008    898,405                               898,405
            Average Beginning and End of Year                                                                              818,905                                                  818,905




Interest on Outstanding Network Credits Cost Support
                                                                                                                                        Interest on
                                  Attachment A Line #s, Descriptions, Notes, Form 1 Page #s and Instructions                          Network Credits                           Description of the Interest on the Credits
                                                                                                                                          Credits
 138        Interest on Network Credits                                                                                                                 0                          General Description of the Credits


                                                                                                                                                                                                              Add more lines if necessary
                                                                                                                                                                  Page 17 of 28




Amort of Other Utility Plant
              Attachment A Line #s, Descriptions, Notes, Form 1 Page #s and Instructions   Total Reserve          Allocation   Allocator        w/ interest
 18
       Organization Costs                                                                       (73,639.00) wages & salaries          5.1637%          (3,802)
       Franchises                                                                              749,409.43 zero                        0.0000%                 0
       Misc Intangible                                                                     279,956,979.54 wages & salaries            5.1637%      14,456,026
       Steam Land & Land Rights                                                                 49,489.38 zero                        0.0000%                 0
       Nuclear Structures & Improvements                                                     1,845,789.78 zero                        0.0000%                 0
       Nuclear Reactor Plant Equipment                                                      19,274,679.34 zero                        0.0000%                 0
       Nuclear Turbogenerator Equip                                                          3,801,034.48 zero                        0.0000%                 0
       Nuclear Accessory Elec Equipment                                                        694,927.38 zero                        0.0000%                 0
       Nuclear Misc Power Equipment                                                            482,708.06 zero                        0.0000%                 0
       Other Prod Land & Land Rights                                                                 76.16 zero                       0.0000%                 0
       Transmission Land & Land Rights                                                      11,705,724.71 100% Transmission        100.0000%       11,705,725
       SCE Trans Land & Land Rights                                                          1,036,143.40 100% Transmission        100.0000%        1,036,143
       Distribution Land & Land Rights                                                       1,053,280.04 zero                        0.0000%                 0
       Distribution Structures & Improvements                                                  195,946.00 zero                        0.0000%                 0
       Distribution Line Transformers                                                          179,792.00 zero                        0.0000%                 0
       Distribution Customer Installations                                                      44,421.38 zero                        0.0000%                 0
       General Plant Land & Land Rights                                                        104,755.97 wages & salaries            5.1637%           5,409
       General Plant Structures & Improvements                                              12,612,507.31 wages & salaries            5.1637%         651,267
       General Plant Computer Hardware                                                        (549,932.29) wages & salaries           5.1637%         (28,397)
       General Plant Transportation Equipment                                                4,582,518.87 wages & salaries            5.1637%         236,626
       General Plant Communication Equipment                                                   147,207.56 wages & salaries            5.1637%           7,601


       Tie to Line 21 FF1 Page 200                                                            337,893,820                                          28,066,598
                                                                                                                                                                                                           page 18 of 28




                                                                                     Arizona Public Service Company
                                                                           Attachment 6 - Estimate and Reconciliation Worksheet




Exec Summary
 Step Month Year            Action
   1  April Year 2   TO populates the formula with Year 1 data from FERC Form 1.
   2  April Year 2   TO estimates all transmission Cap Adds, Retirements, and associated depreciation for Year 2 based on Months expected to be in service in Year 2.
   3  April Year 2   TO adds estimates from Step 2 to Appendix A
   4   May Year 2    Post results of Step 3 on APS web site.
   5  June Year 2    Results of Step 3 go into effect.
   6  April Year 3   TO populates the formula with Year 2 data from FERC Form 1.
   7  April Year 3   Reconciliation - TO calculates the true up amount by subtracting the results of Step 6 by Step 3.
   8  April Year 3   Reconciliation - TO calculates interst and ammortization associated with the true up calculated in Step 7 and applies that amount to line 152 of the formula.
   9  April Year 3   TO estimates all transmission Cap Adds, Retirements, CWIP and associated depreciation for Year 3 based on Months expected to be in service and monthly CWIP balances in Year 3.
  10  April Year 3   TO adds 13 month average Cap Adds and retirements (line 16 and 25) to the Formula.
  11   May Year 3    Post results of Step 10 on APS web site.
  12 June Year 3     Results of Step 9 go into effect for the Rate Year 2.



Reconciliation details

  1    April Year 2 TO populates the formula with Year 1 data from FERC Form 1.
                        $170,102,801 Rev Req based on Year 1 data                           Must run Appendix A to get this number (without estimated cap adds) from Appendix A

  2    April Year 2 TO estimates all transmission Cap Adds, Retirements, and associated depreciation for Year 2 based on Months expected to be in service in Year 2.
                                                                                                                         (E)                           (F)               (G)
                    (A)                  (B)                          (C)                  (D)                                               Accumulated Balance
                     Other Project PIS         other retirements          Project X PIS      Project X PIS retirements Other Project PIS               Project X PIS     Total
             Dec                                                                                                                                     0                 0                0
             Jan               6,462,081                                                                               0                   6,462,081                 -         6,462,081
             Feb               4,239,206                                                                               0                 10,701,287                  -       10,701,287
             Mar               5,393,533                                                                               0                 16,094,820                  -       16,094,820
             Apr               3,464,268                                                                               0                 19,559,088                  -       19,559,088
             May              56,610,409                                                                               0                 76,169,497                  -       76,169,497
             Jun              71,079,243                                                                               0                147,248,740                  -     147,248,740
             Jul                 450,000                                                                               0                147,698,740                  -     147,698,740
             Aug                 152,500                                                                               0                147,851,240                  -     147,851,240
             Sep               3,196,677                                                                               0                151,047,917                  -     151,047,917
             Oct                     -                                                                                 0                151,047,917                  -     151,047,917
             Nov               3,324,428                                                                               0                154,372,345                  -     154,372,345
             Dec              13,090,874                                                                               0                167,463,220                  -     167,463,220
             Total       167,463,220                                                   -                                                 91,978,223                  -       91,978,223

                                                                        13 month avg of new plant additions = Col F + Col H                                  91,978,223   goes to line 16 of the formula
                                                                                                                                                                                                                   page 19 of 28




                  (I) =F               (J)                               (K) = I * J          (L)                            (M) = H                           (N)             (O) = L * M          (P)
                       Total Other     Composite Trans                       Depreciation            Accum Deprec                      Total Project X         Composite Trans   Depreciation             Accum
                       Project PIS             Deprec Rate                      Expense                                                      PIS                  Deprec Rate      Expense                Deprec

          Jan              6,462,081                             0.18%            11,372                           11,372                                -                0.18%                 -              -
          Feb              4,239,206                             0.18%             7,460                           18,831                                -                0.18%                 -              -
          Mar              5,393,533                             0.18%             9,491                           28,323                                -                0.18%                 -              -
          Apr              3,464,268                             0.18%             6,096                           34,419                                -                0.18%                 -              -
          May             56,610,409                             0.18%            99,619                          134,038                                -                0.18%                 -              -
          Jun             71,079,243                             0.18%          125,081                           259,119                                -                0.18%                 -              -
          Jul                450,000                             0.18%               792                          259,911                                -                0.18%                 -              -
          Aug                152,500                             0.18%               268                          260,179                                -                0.18%                 -              -
          Sep              3,196,677                             0.18%             5,625                          265,804                                -                0.18%                 -              -
          Oct                      0                             0.18%               -                            265,804                                -                0.18%                 -              -
          Nov              3,324,428                             0.18%             5,850                          271,655                                -                0.18%                 -              -
          Dec             13,090,874                             0.18%            23,036                          294,691                                -                0.18%                 -              -
          Total                                                                 294,691                           175,345                                                                       -              -
                                       13 mo. Avg accumulated depreciation = Col L + Col P:                                                         175,345    goes to line 25 of the formula
                                       Depreciation Expense = Col K + Col O                                                                         294,691    goes to line 75 of the formula

3   April Year 2 TO adds estimates from Step 2 to Appendix A
                      179,696,947                                        Include inputs to Appendix A Lines 16, 25, and 75

4   May   Year 2 Post results of Step 3 on APS web site.
                  $    179,696,947                                       Must run Appendix A to get this number (with results of step 2)

5   June Year 2 Results of Step 3 go into effect.
                     179,696,947

6   April Year 3 TO populates the formula with Year 2 data from FERC Form 1.

                        180,812,500 Rev Req based on Prior Year data


7   April Year 3 Reconciliation - TO calculates the true up amount by subtracting the results of Step 6 by Step 3.
                                                                      Prior Year True Up First Year True up              Total True Up
                                     Results of Step 6                 $     180,812,500 $                    45,203,125 $                     226,015,625
                                     Results of Step 5                 $     179,696,947 $                    40,742,549 $                     220,439,496
                                      True up w/o interest                                                                $                       5,576,130
                                      Refund of Amounts Overcollected                                                     $                      (1,750,000)
                                                                                                                          $                       3,826,130

                                                                                            Divide True up w/o interest by the number of months the rate was in effect and place that result
                                       True Up to be recovered           $        3,826,130 in the month that the rate went in effect in the interest calculation below
                                                                                                                                                                                              page 20 of 28




8   April Year 3
                Reconciliation - TO calculates interst and ammortization associated with the true up calculated in Step 7 and applies that amount to line 152 of the formula.
                Interest on Amount of Refunds or Surcharges
                Interest 35.19a for 1st quarter Current Yr                                                      0.3767%
                                                                                               Interest 35.19a for and
          Month          Yr                                              1/12 of Step 7                35.19 b                                                 Interest       Refunds Owed
                                                                                                  March Current Yr                   Months
         Jun    Year 1                                                           318,844                        0.3767%                            11.5             13,811          332,655
         Jul    Year 1                                                           318,844                        0.3767%                            10.5             12,610          331,454
         Aug    Year 1                                                           318,844                        0.3767%                             9.5             11,409          330,253
         Sep    Year 1                                                           318,844                        0.3767%                             8.5             10,208          329,052
         Oct    Year 1                                                           318,844                        0.3767%                             7.5               9,007         327,851
         Nov    Year 1                                                           318,844                        0.3767%                             6.5               7,806         326,651
         Dec    Year 1                                                           318,844                        0.3767%                             5.5               6,605         325,450
         Jan    Year 2                                                           318,844                        0.3767%                             4.5               5,404         324,249
         Feb    Year 2                                                           318,844                        0.3767%                             3.5               4,203         323,048
         Mar    Year 2                                                           318,844                        0.3767%                             2.5               3,002         321,847
         Apr    Year 2                                                           318,844                        0.3767%                             1.5               1,801         320,646
         May    Year 2                                                           318,844                        0.3767%                             0.5                 600         319,445
         Total                                                                 3,826,130                                                                                          3,912,600

                                                                             Balance                    Interest                     Amort                   Balance
         Jun      Year 2                                                        3,912,600                          0.3767%                     334,088         3,593,250
         Jul      Year 2                                                        3,593,250                          0.3767%                     334,088         3,272,697
         Aug      Year 2                                                        3,272,697                          0.3767%                     334,088         2,950,936
         Sep      Year 2                                                        2,950,936                          0.3767%                     334,088         2,627,963
         Oct      Year 2                                                        2,627,963                          0.3767%                     334,088         2,303,774
         Nov      Year 2                                                        2,303,774                          0.3767%                     334,088         1,978,364
         Dec      Year 2                                                        1,978,364                          0.3767%                     334,088         1,651,728
         Jan      Year 3                                                        1,651,728                          0.3767%                     334,088         1,323,862
         Feb      Year 3                                                        1,323,862                          0.3767%                     334,088           994,760
         Mar      Year 3                                                          994,760                          0.3767%                     334,088           664,419
         Apr      Year 3                                                          664,419                          0.3767%                     334,088           332,834
         May      Year 3                                                          332,834                          0.3767%                     334,088                 0
         Total with interest                                                                                                                 4,009,054

         The difference between the Reconciliation in Step 6 and the forecast in Prior Year with interest                                                      4,009,054
                                                                                                                                                                                                               page 21 of 28




9    April Year 3 TO estimates all transmission Cap Adds, Retirements, CWIP and associated depreciation for Year 3 based on Months expected to be in service and monthly CWIP balances in Year 3.
                  Note: Jan and Feb are actuals, Mar-Dec forecasted. Retirements are not forecasted.
                                                                                                                         (E)                          (F)               (G)
                  (A)                  (B)                               (C)                (D)                                              Accumulated Balance
                   Other Project PIS         other retirements               Project X PIS    Project X PIS retirements Other Project PIS             Project X PIS     Total
           Dec                                                                                                                                      0                 0               0
           Jan              21,158,647                          (32,010)                                               0                  21,126,637                -       21,126,637
           Feb               9,466,063                         (146,061)                                               0                  30,446,639                -       30,446,639
           Mar               8,969,147                                                                                 0                  39,415,786                -       39,415,786
           Apr                 823,929                                                                                 0                  40,239,715                -       40,239,715
           May              17,585,057                                                                                 0                  57,824,772                -       57,824,772
           Jun              30,503,432                                                                                 0                  88,328,204                -       88,328,204
           Jul              18,973,679                                                                                 0                107,301,883                 -     107,301,883
           Aug                     -                                                                                   0                107,301,883                 -     107,301,883
           Sep                 100,000                                                                                 0                107,401,883                 -     107,401,883
           Oct              11,557,533                                                                                 0                118,959,416                 -     118,959,416
           Nov               7,423,944                                                                                 0                126,383,360                 -     126,383,360
           Dec              34,451,594                                                                                 0                160,834,954                 -     160,834,954
           Total        161,013,025                                                       -                                               77,351,164                -       77,351,164

                                                                         13 month avg of new plant additions = Col F + Col H                                    77,351,164    goes to line 16 of the formula


                    (I) =F               (J)                             (K) = I * J        (L)                           (M) = H                          (N)             (O) = L * M          (P)
                         Total Other     Composite Trans                     Depreciation          Accum Deprec                     Total Project X        Composite Trans   Depreciation             Accum
                         Project PIS             Deprec Rate                    Expense                                                   PIS                 Deprec Rate      Expense                Deprec

            Jan             21,158,647                           0.18%              37,342                       37,342                               -               0.18%                 -              -
            Feb              9,466,063                           0.18%              16,706                       54,049                               -               0.18%                 -              -
            Mar              8,969,147                           0.18%              15,829                       69,878                               -               0.18%                 -              -
            Apr                823,929                           0.18%               1,454                       71,332                               -               0.18%                 -              -
            May             17,585,057                           0.18%              31,035                      102,368                               -               0.18%                 -              -
            Jun             30,503,432                           0.18%              53,835                      156,203                               -               0.18%                 -              -
            Jul             18,973,679                           0.18%              33,486                      189,689                               -               0.18%                 -              -
            Aug                      0                           0.18%                 -                        189,689                               -               0.18%                 -              -
            Sep                100,000                           0.18%                 176                      189,865                               -               0.18%                 -              -
            Oct             11,557,533                           0.18%              20,398                      210,263                               -               0.18%                 -              -
            Nov              7,423,944                           0.18%              13,102                      223,365                               -               0.18%                 -              -
            Dec             34,451,594                           0.18%              60,803                      284,168                               -               0.18%                 -              -
            Total                                                                 284,168                       148,184                                                                     -              -
                                         13 mo. Avg accumulated depreciation = Col L + Col P:                                                    148,184   goes to line 25 of the formula
                                         Depreciation Expense = Col K + Col O                                                                    284,168   goes to line 75 of the formula

     Rev Req based on Year 2 data with estimated Cap Adds, Rets, and Deprec for Year 3 Cap Adds (Step 9) and True up of Year 1 data (Step 8)
                  Must run App A to get this # (with 13 mo. avg cap adds, depreciation for Year 3 cap adds)

11    May   Year 3 Post results of Step 10 on APS web site.
                    $    198,449,005

12   June Year 3 Results of Step 9 go into effect for the Rate Year 2.
                      202,458,059 Step 11 plus the difference between the Reconciliation in Step 6 and the forecast in Prior Year with interest
                                                                                                                                                                                                                                                                  Page 22 of 28




                                                                                        Arizona Public Service Company
                                                                      Attachment 7 - Transmission Enhancement Charge Worksheet
line #                        Formula Line
   1                               153     Plus any increased ROE calculated on Attachment 7                                                                                    $                         -
                                                          =Incentive - Revenue Credit for the corresponding rate year
         Fixed Charge Rate (FCR) if not a CIAC
  2              A             143         Net Plant Carrying Charge without Depreciation                                                                                                           15.0342%
  3              B             150         Net Plant Carrying Charge per 100 Basis Point in ROE without Depreciation                                                                                15.9079%
  4              C                         Line B less Line A                                                                                                                                        0.8737%
         FCR if a CIAC
  5              D             144         Net Plant Carrying Charge without Depreciation, Return, nor Income Taxes                                                                                  2.9831%

         The FCR resulting from Formula in a given year is used for that year only.
         Therefore actual revenues collected in a year do not change based on cost data for subsequent years

                                                Beginning = 13 month Plant CWIP or Incentive Plant balance                                                                      Total = Sum of Revenue for Project CWIP and PIS
                                                Deprec = 13 month avg Accumulated Depreciation                                                                                  Incentive = Total for "W Increased ROE" row
                                                Ending = Beginning - Deprec                                                                                                     Revenue Credit = Total for ''FCR W base ROE'' row
                                                Revenue= FCR* Ending + Ending
         Details                                                                   Project A                                                                        Project B

 6       Life                                            -                                                                                     -
 7       CIAC                                        No                                                                                    No
 8       Increased ROE (Basis Points)                0                                                                                      0
 9       FCR W base ROE                              15.034%                                                                               15.034%
 10      FCR W increased ROE                         15.034%                                                                               15.034%
 11      Investment
 12      Annual Depreciation Exp                         -                                                                                     -
 13      13 monthly Avg                                  -                                                                                     -
                                                                                                            Revenue [(Beginning +                                               Revenue [(Beginning + Ending)/2*
 14                                 Invest Yr     Beginning          Depreciation            Ending          Ending)/2* Line 11]        Beginning    Depreciation   Ending                 Line 11]                  Total           Incentive       Rev Credit
 15      FCR W base ROE               2005                -                         -              -                                -          -                -         -                                 -    $           -                   $           -
 16      W Increased ROE              2005                -                         -              -                                -          -                -         -                                 -    $           -   $           -
 17      FCR W base ROE               2006                -                         -              -                                -                                                                            $           -                   $           -
 18      W Increased ROE              2006                -                         -              -                                -                                                                            $           -   $           -
 19      FCR W base ROE               2007                -                         -              -                                -                                                                            $           -                   $           -
 20      W Increased ROE              2007                -                         -              -                                -                                                                            $           -   $           -
 21      FCR W base ROE               2008                -                         -              -                                -                                                                            $           -                   $           -
 22      W Increased ROE              2008                -                         -              -                                -                                                                            $           -   $           -
 23      FCR W base ROE               2009                -                         -              -                                -                                                                            $           -                   $           -
 24      W Increased ROE              2009                -                         -              -                                -                                                                            $           -   $           -
 25      FCR W base ROE               2010                -                         -              -                                -                                                                            $           -                   $           -
 26      W Increased ROE              2010                -                         -              -                                -                                                                            $           -   $           -
 27      FCR W base ROE               2011                -                         -              -                                -                                                                            $           -                   $           -
 28      W Increased ROE              2011                -                         -              -                                -                                                                            $           -   $           -
 29      FCR W base ROE               2012                -                         -              -                                -                                                                            $           -                   $           -
 30      W Increased ROE              2012                -                         -              -                                -                                                                            $           -   $           -
 31      FCR W base ROE               2013                -                         -              -                                -                                                                            $           -                   $           -
 32      W Increased ROE              2013                -                         -              -                                -                                                                            $           -   $           -
 33      FCR W base ROE               2014                -                         -              -                                -                                                                            $           -                   $           -
 34      W Increased ROE              2014                -                         -              -                                -                                                                            $           -   $           -
 35      FCR W base ROE               2015                -                         -              -                                -                                                                            $           -                   $           -
 36      W Increased ROE              2015                -                         -              -                                -                                                                            $           -   $           -
 37      FCR W base ROE               2016                -                         -              -                                -                                                                            $           -                   $           -
 38      W Increased ROE              2016                -                         -              -                                -                                                                            $           -   $           -
 39      FCR W base ROE               2017                -                         -              -                                -                                                                            $           -                   $           -
 40      W Increased ROE              2017                -                         -              -                                -                                                                            $           -   $           -
 41      FCR W base ROE               2018                -                         -              -                                -                                                                            $           -                   $           -
 42      W Increased ROE              2018                -                         -              -                                -                                                                            $           -   $           -
 43      FCR W base ROE               2019                -                         -              -                                -                                                                            $           -                   $           -
 44      W Increased ROE              2019                -                         -              -                                -                                                                            $           -   $           -
 45      FCR W base ROE               2020                -                         -              -                                -                                                                            $           -                   $           -
 46      W Increased ROE              2020                -                         -              -                                -                                                                            $           -   $           -
 47      FCR W base ROE               2021                -                         -              -                                -                                                                            $           -                   $           -
 48      W Increased ROE              2021                -                         -              -                                -                                                                            $           -   $           -
 49      FCR W base ROE               2022                -                         -              -                                -                                                                            $           -                   $           -
 50      W Increased ROE              2022                -                         -              -                                -                                                                            $           -   $           -
 51      FCR W base ROE               2023                -                         -              -                                -                                                                            $           -                   $           -
 52      W Increased ROE              2023                -                         -              -                                -                                                                            $           -   $           -
 53      FCR W base ROE               2024                -                         -              -                                -                                                                            $           -                   $           -
 54      W Increased ROE              2024                                          -              -                                -                                                                            $           -   $           -
 55                            ….                              ….                         …..          ….                                                                                                                                        $           -
 56                            ….               ….             …..                        …..          ….                                                                                                                        $           -   $           -
                                                                                                                                                                                                                      Page 23 of 28

Worksheet 1 - Revenue Allocation
NETWORK TRANSMISSION PEAK REPORT
                                                                                           2008

                                                                                                                                                                                                 Transmission
Date/Time                                      01/18@0800 02/05@0800 03/25@2000 04/29@1800 05/19@1700 06/17@1700 07/31@1700 08/01@1700 09/06@1700 10/01@1700 11/01@1600 12/15@1900               Revenue
                                                   Jan         Feb        Mar        Apr        May         Jun       Jul        Aug         Sep        Oct        Nov       Dec                 R
                                                                                                                                                                                       4CP Average equirement
Own Load Peak                                      4,403.600  4,379.200  3,573.900  4,330.500  5,960.300  6,770.600  6,892.100  7,025.900  6,113.900  5,442.500  4,064.500  4,041.400             $    202,458,059
Company Use                                          (10.587)   (11.127)   (10.194)   (11.634)   (10.164)   (12.617)   (11.710)   (14.514)   (12.623)   (11.438)   (10.088)   (10.605)
BHP Minerals International, Inc.                      (8.180)    (5.080)    (9.020)    (8.845)   (11.285)   (10.280)    (9.455)   (11.580)    (9.870)    (8.500)    (9.140)    (6.375)
less APS Supplied Demand already included below      (28.704)   (37.127) (101.056)  (143.360)  (145.186)  (174.145)  (177.943)  (184.576)  (147.091)  (143.143)    (78.874)   (44.266)
Non-Firm Retail Loads
BHP Copper Inc. (Magma)                                0.000      0.000      0.000      0.000      0.000      0.000      0.000      0.000      0.000      0.000      0.000      0.000
Net APS Official System Peak                       4,356.129  4,325.866  3,453.630  4,166.661  5,793.665  6,573.558  6,692.992  6,815.230  5,944.316  5,279.419  3,966.398  3,980.154 6506.524 $       162,612,205

Transmission Wheeling Contract Demand
Plains Electric Cooperative                          67.518     67.518     67.518     67.518     67.518     67.518      67.518      67.518     67.518      67.518      67.518     67.518
Tucson Electric Power                               102.564    102.564    102.564    102.564    102.564    102.564     102.564     102.564    102.564     102.564     102.564    102.564
NTUA                                                    N/A        N/A        N/A        N/A        N/A        N/A         N/A         N/A        N/A         N/A         N/A        N/A
Yuma Cogen. Associates                               52.154     52.154     52.154     52.154     52.154     52.154      52.154      52.154     52.154      52.154      52.154     52.154
Total Trans. Wheeling Contract Demands              222.236    222.236    222.236    222.236    222.236    222.236     222.236     222.236    222.236     222.236     222.236    222.236    222.236 $     5,554,162

Distribution Wheeling Contract Demand
ED-5                                                    N/A        N/A        N/A        N/A        N/A        N/A         N/A         N/A        N/A         N/A         N/A        N/A
Yuma-Mesa                                             0.135      0.135      0.135      0.135      0.135      0.135       0.135       0.135      0.135       0.135       0.135      0.135
City of Wickenburg                                      N/A        N/A        N/A        N/A        N/A        N/A         N/A         N/A        N/A         N/A         N/A        N/A
USAF - (Luke AFB)                                     4.974      4.974      4.974      4.974      4.974      4.974       4.974       4.974      4.974       4.974       4.974      4.974
Unit B Irrigation District                            0.016      0.016      0.016      0.016      0.016      0.016       0.016       0.016      0.016       0.016       0.016      0.016
SCIIP                                                 0.063      0.063      0.063      0.063      0.063      0.063       0.063       0.063      0.063       0.063       0.063      0.063
Navy (Marine Corp)                                    2.278      2.278      2.278      2.278      2.278      2.278       2.278       2.278      2.278       2.278       2.278      2.278
Total Dist. Wheeling Contract Demands                 7.466      7.466      7.466      7.466      7.466      7.466       7.466       7.466      7.466       7.466       7.466      7.466      7.466 $      186,592

Distribution Wheeling Loads
Maricopa Cnty Mun Dist - Lake Pleasant                 N/A        N/A        N/A        N/A        N/A        N/A          N/A         N/A        N/A         N/A        N/A         N/A      0.000 $           -

Irrigation Wheeling Loads:
ED-1                                                  6.347      7.173        N/A        N/A        N/A        N/A         N/A         N/A        N/A         N/A         N/A        N/A
ED-3                                                 45.120     49.950        N/A        N/A        N/A        N/A         N/A         N/A        N/A         N/A         N/A        N/A
ED-6                                                    N/A        N/A        N/A        N/A        N/A        N/A         N/A         N/A        N/A         N/A         N/A        N/A
ED-7                                                    N/A        N/A        N/A        N/A        N/A        N/A         N/A         N/A        N/A         N/A         N/A        N/A
ED-8                                                    N/A        N/A        N/A        N/A        N/A        N/A         N/A         N/A        N/A         N/A         N/A        N/A
Maricopa County Municipal District                      N/A        N/A        N/A        N/A        N/A        N/A         N/A         N/A        N/A         N/A         N/A        N/A
Roosevelt Irrigation District                           N/A        N/A        N/A        N/A        N/A        N/A         N/A         N/A        N/A         N/A         N/A        N/A
Buckeye Irrigation District                             N/A        N/A        N/A        N/A        N/A        N/A         N/A         N/A        N/A         N/A         N/A        N/A
Aguila Irrigation District                              N/A        N/A        N/A        N/A        N/A        N/A         N/A         N/A        N/A         N/A         N/A        N/A
Harquahala Irrigation District                          N/A        N/A        N/A        N/A        N/A        N/A         N/A         N/A        N/A         N/A         N/A        N/A
McMullen Valley Irrigation District                     N/A        N/A        N/A        N/A        N/A        N/A         N/A         N/A        N/A         N/A         N/A        N/A
Tonopah Irrigation District                             N/A        N/A        N/A        N/A        N/A        N/A         N/A         N/A        N/A         N/A         N/A        N/A
Yuma Irrigation District                                N/A        N/A        N/A        N/A        N/A        N/A         N/A         N/A        N/A         N/A         N/A        N/A
  Gila Project                                          N/A        N/A        N/A        N/A        N/A        N/A         N/A         N/A        N/A         N/A         N/A        N/A
  CRFW                                                  N/A        N/A        N/A        N/A        N/A        N/A         N/A         N/A        N/A         N/A         N/A        N/A
Total Irrigation Wheeling Loads                      51.467     57.123      0.000      0.000      0.000      0.000       0.000       0.000      0.000       0.000       0.000      0.000      0.000 $           -

Network Customer Wheeling Loads
Central AZ Water Cons District                       14.472      0.749     15.818     23.148     31.104     23.206      32.594      26.597     22.522      26.266       0.727     19.634
Citizens                                            278.487    276.184    214.651    246.486    378.368      0.000       0.000       0.000      0.000       0.000       0.000      0.000
NTUA                                                  8.435      8.073      5.140      4.100      4.629      4.945       5.522       5.107      4.025       4.249       3.380      7.790
Ajo Improvement District                              1.938      1.754      2.215      2.400      2.492      3.251       3.087       3.405      2.277       2.738       1.651      1.651
Tohono O'odham                                          N/A        N/A        N/A        N/A        N/A        N/A         N/A         N/A        N/A         N/A         N/A        N/A
City of Williams                                      6.290      6.287      5.134      4.225      5.050      5.826       5.924       5.389      4.944       4.481       4.146      7.107
Southwest Transmission Cooperative                    0.000      0.000      0.000      0.000      0.000      0.000       5.000       4.500      4.500       3.500       3.000      1.500
   APS Merchant Group:                   ED-6         0.097      0.227      0.517      0.372      0.457      0.460       0.065       0.155      0.202       0.053       0.010      0.075
                                         ED-7         1.262      0.184      2.807      0.873      2.379      2.731       1.906       3.806      4.590       3.347       1.149      1.309
                                         ED-8        11.649     15.668     34.834     29.771     36.635     36.834      39.260      46.888     44.501      40.061      18.800      7.215
           Maricopa County Municipal District         5.130      5.011      5.498      3.012      5.519      5.624       3.915       5.771     10.099       8.395       3.648     12.169
                  Roosevelt Irrigation District       3.446      1.541      3.632      1.469      4.016      4.941       5.754       8.292      7.423       4.024       0.547      2.669
                    Buckeye Irrigation District       1.112      0.309      2.137      1.464      3.333      4.096       3.275       4.371      4.532       2.595       0.272      0.568
                      Aguila Irrigation District      0.750      1.079      4.205      5.755      6.250      6.908       4.569       5.554      5.204       3.576       2.475      4.045
                 Harquahala Irrigation District       4.927      5.240      8.625     10.229     11.358     10.805      11.957      12.426     11.156       9.844       7.874      0.598
             McMullen Valley Irrigation District      4.939      1.249      6.460     10.303     10.956     11.191       9.731      11.959     11.381       9.368       3.233      0.860
                   Tonopah Irrigation District        1.775      1.719      2.032      2.408      3.551      3.690       4.426       4.482      3.531       3.762       2.395      0.745
                          City of Wickenburg          4.204      4.582      3.328      3.981      6.319      6.857       7.431       7.532      6.144       5.472       3.907      4.161
                            Tohono O'odham           14.010     13.045      8.878      8.876     11.979     13.510      14.007      13.536      9.930      10.441       7.844     10.456
                                         ED-3         0.000      0.000     70.421    101.193     90.768    112.840     114.119     115.239     91.297      87.421      73.855     27.249
Total Network Customer Wheeling Loads               362.923    342.901    396.332    460.065    615.163    257.715     272.542     285.009    248.258     229.593     138.913    109.801    265.881 $     6,644,945

Other Transmission Loads
PacificCorp: (30MW)                                  30.000     30.000     30.000     30.000     30.000     30.000      30.000      30.000     30.000      30.000      30.000     30.000
Pacific Corp: Supplemental Trans. Rights            180.000    180.000    180.000    180.000    180.000    180.000     180.000     180.000    180.000     180.000     180.000    180.000
Public Service of New Mexico                        130.000    130.000    130.000    130.000    130.000    130.000     130.000     130.000    130.000     130.000     130.000    130.000
OATT (Part II) Capacity Long Term                   751.000    751.000    751.000    751.000    758.000    758.000     758.000     758.000    761.000     761.000     761.000    761.000
Total Other Transmission Loads                     1091.000   1091.000   1091.000   1091.000   1098.000   1098.000    1098.000    1098.000   1101.000    1101.000    1101.000   1101.000   1098.750 $    27,460,155

Total Adjusted Network Peak                        6091.221   6046.592   5170.664   5947.428   7736.530   8158.975    8293.236    8427.941   7523.276    6839.714    5436.013   5420.657   8100.857 $   202,458,059
Average of Four Summer Months (June-September)     8100.857
Average of Eight Non-Summer Months                 6086.102
Average of Twelve Months                           6757.687
                                                                                                                                    Page 24 of 28




WORKSHEET - 2 Retail Allocation

                                                            2008
                                        June       July         August     September

                                        ADJ.        ADJ.        ADJ.         ADJ.
                                       PEAK        PEAK        PEAK         PEAK
                                      CONTRIB     CONTRIB     CONTRIB      CONTRIB                      Retail
                CLASS                   (MW)        (MW)        (MW)         (MW)       4CP           Revenues
 E-10                                      69.3
 E-12                                     801.7       908.6        911.9        828.2
 EC-1                                      39.8                                                                                  Ind. Max.
 ET-1                                    1261.1      1378.9       1459.3       1348.5                                              3,173.900
 ECT-1                                    338.9       362.8        398.9        386.9
 ET-2                                     232.1       232.6        250.8        249.6
 ECT-2                                    119.6       136.0        153.0        167.3
 TOTAL                                   2862.5      3018.9       3173.9       2980.5
 E-20                                       6.1         6.7          6.9          7.1
 E-38, E-221(Water Pumping Service)        45.6        43.1         49.5         45.1
 E-32TOU (0-20kW)                           0.2         0.2          0.2          0.2                                              NCP
 E-32TOU (21-100kW)                         2.6         2.8          2.6          3.0                                                 8.500
 E-32TOU (101-400kW)                        3.6         3.5          3.7          3.7
 E-32TOU (401-999kW)                        8.5         8.3          8.1          7.1
 E-30, E-32 (0-20kW)                      449.4       445.1        424.9        305.6
 E-32 (21-100 kW)                         614.2       589.5        578.9        477.2
 E-32(101-400 kW)                         648.3       636.4        624.4        490.5                                              4CP
 E-32(401-999 kW)                         455.1       440.5        442.4        339.3                                               419.325
 E-32TOU (>= 1000 kW)                      15.4        17.9         15.9         13.0
 E-32(>= 1000 kW)                         236.3       224.1        217.6        186.2
 E-34                                     177.8       169.6        166.8        149.5
 E-35                                     129.1       134.9        131.2        122.3
 E-36                                       0.0         0.0          0.0          0.0
 9 SPECIALS                                87.9        95.5         95.4         88.6
 STREETLIGHTS                               0.0         0.0          0.0          0.0
 DUSK TO DAWN                               0.0         0.0          0.0          0.0
 RESALE                                   202.0       200.5        219.3        191.2
 LOSSES                                   826.0       854.6        864.2        723.8
Total System Load                        6770.6      6892.1       7025.9       6133.9
System Load Check                        6770.6      6892.1       7025.9       6113.9     6,700.6

 RESIDENTIAL                             2862.5      3018.9       3173.9       2980.5     3,009.0        $86,219,993   53.02%

3 MW & GREATER
E-34                                      177.8       169.6        166.8        149.5
E-35                                      129.1       134.9        131.2        122.3
Customer #2                                 3.8         4.1          4.1          4.0
Customer #3                                 7.2         7.0          6.9          5.5
Customer #4                                65.1        73.5         71.4         67.8
Customer #5                                 0.0         0.0          0.0          0.0
Customer #12                                0.0         0.0          0.0          0.0
Customer #13                                0.0         0.0          0.0          0.0
Customer #6                                 0.0         0.0          0.0          0.0
Customer #7                                 0.0         0.0          0.0          0.0
3 MW & GREATER TOTAL                      383.0       389.1        380.4        349.1         375.4      $10,756,904    6.62%

LESS THAN 3 MW
RETAIL TARIFFS                           2485.3      2418.1       2375.1       1878.0
Customer #8                                 0.0         0.0          0.0          0.0
Customer #9                                 0.2         0.0          0.0          0.0
Customer #10                                0.6         0.7          0.6          0.7
Customer #11                                0.7         0.7          0.8          0.8
LESS THAN 3 MW TOTAL                     2486.8      2419.5       2376.5       1879.5     2,290.6        $65,635,308   40.36%



Total                                    5732.3      5827.5       5930.8       5209.1     5,674.9       $162,612,205   100.00%
                                                                                                                                                                                                                                                                                               Page 25 of 28




WORKSHEET - 3 Rate Design

                                                                                                                                               TY 2008 OATT COSTS FOR RETAIL SERVICE

                                                                     Jan                 Feb                Mar               Apr               May                 Jun               Jul             Aug              Sep               Oct              Nov             Dec                Annual
Billing Determinants
Residential (kWh)                                                 1,076,358,839         983,613,015     829,414,519          770,706,629     853,919,093        1,146,828,792   1,662,314,416    1,654,835,948    1,535,334,336    1,182,073,257      855,413,206      862,994,913        13,413,806,963
Gen Serv und 3MW NDM (kWh)                                           13,507,320          15,809,001      16,087,999           16,036,539      16,536,052           19,754,822      13,581,917       17,723,272       17,617,791       17,746,586       19,716,804       15,904,110           200,022,213
Gen Serv und 3MW DM (billed kW)                                       2,197,824           2,182,216       2,199,311            2,307,010       2,446,946            2,683,773       2,747,566        2,864,163        2,808,561        2,653,173        2,395,265        2,235,716            29,721,524
Gen Serv und 3MW DM (kWh)                                           922,367,972         895,600,174     890,439,766          927,920,343     948,103,501        1,064,161,568   1,188,611,198    1,221,465,243    1,202,534,825    1,082,110,568      951,077,937      915,286,102        12,209,679,197
Gen Serv ovr 3MW (billed kW)                                            507,321             520,424         527,586              529,658         554,390              571,002         583,262          587,866          571,286          549,060          527,068          507,419             6,536,342
Gen Serv ovr 3MW (kWh)                                              218,893,000         225,352,000     233,914,000          225,100,000     238,092,000          251,604,000     276,255,000      259,327,000      267,983,000      255,738,000      248,402,000      240,431,000         2,941,091,000
Total kWh sales                                                   2,231,127,131       2,120,374,190   1,969,856,284        1,939,763,511   2,056,650,646        2,482,349,182   3,140,762,531    3,153,351,463    3,023,469,952    2,537,668,411    2,074,609,947    2,034,616,125        28,764,599,373

NITS
Residential (kWh)                                $ 0.00643           6,918,517           6,322,374         5,331,232          4,953,875         5,488,740          7,371,477        10,684,867       10,636,797        9,868,676        7,598,018        5,498,344        5,547,077          86,219,993
Gen Serv < 3MW Without Demand Meters -Includes
All Customers 20 kW and less (kWh)               $ 0.00529              71,441              83,614            85,090             84,818            87,460            104,484            71,835           93,739           93,181           93,862          104,283           84,117           1,057,924
Gen Serv < 3MW (kW)                              $    2.173          4,775,318           4,741,406         4,778,549          5,012,552         5,316,597          5,831,163         5,969,769        6,223,105        6,102,296        5,764,677        5,204,307        4,857,648          64,577,384
Gen Serv > 3MW (kW)                              $    1.646            834,902             856,465           868,252            871,662           912,363            939,702           959,878          967,455          940,169          903,592          867,399          835,063          10,756,904
Total OATT Cost by Month                                            12,600,177          12,003,860        11,063,122         10,922,906        11,805,160         14,246,826        17,686,349       17,921,096       17,004,322       14,360,149       11,674,333       11,323,905         162,612,205


Total OATT Costs by Class
Residential                                                   $      6,918,517    $      6,322,374    $ 5,331,232      $      4,953,875    $ 5,488,740      $      7,371,477    $ 10,684,867     $ 10,636,797     $ 9,868,676      $ 7,598,018      $ 5,498,344      $ 5,547,077      $      86,219,993
Gen Serv< 3MW                                                 $      4,846,759    $      4,825,020    $ 4,863,639      $      5,097,369    $ 5,404,057      $      5,935,647    $ 6,041,604      $ 6,316,844      $ 6,195,477      $ 5,858,539      $ 5,308,590      $ 4,941,765      $      65,635,308
Gen Serv> 3MW                                                 $        834,902    $        856,465    $    868,252     $        871,662    $    912,363     $        939,702    $    959,878     $    967,455     $    940,169     $    903,592     $    867,399     $    835,063     $      10,756,904
Total                                                         $     12,600,177    $     12,003,860    $ 11,063,122     $     10,922,906    $ 11,805,160     $     14,246,826    $ 17,686,349     $ 17,921,096     $ 17,004,322     $ 14,360,149     $ 11,674,333     $ 11,323,905     $     162,612,205

Cost per kWh
Residential                                                   $        0.00643    $        0.00643    $     0.00643    $        0.00643    $     0.00643    $        0.00643    $     0.00643    $     0.00643    $     0.00643    $     0.00643    $     0.00643    $     0.00643    $         0.00643
Gen Serv< 3MW                                                 $        0.00518    $        0.00529    $     0.00537    $        0.00540    $     0.00560    $        0.00548    $     0.00503    $     0.00510    $     0.00508    $     0.00533    $     0.00547    $     0.00531    $         0.00529
Gen Serv> 3MW                                                 $        0.00381    $        0.00380    $     0.00371    $        0.00387    $     0.00383    $        0.00373    $     0.00347    $     0.00373    $     0.00351    $     0.00353    $     0.00349    $     0.00347    $         0.00366
Total                                                         $        0.00565    $        0.00566    $     0.00562    $        0.00563    $     0.00574    $        0.00574    $     0.00563    $     0.00568    $     0.00562    $     0.00566    $     0.00563    $     0.00557    $         0.00565

Test Year Avg. OATT Expense per kWh                                                                                                                                                                                                                                                   $         0.00565

                                                                                                                                                                                                                                                                                2007 $          0.00485

                                                                                                                                                                                                                                                                         % Increase              16.56%
                                                                                                                                                                           Page 26 of 28
Worksheet 4 - Revenue Credits

Account 454 - Rent from Electric Property
                                                                    $ Included on
Description                                          Amount         Attachment 3
SCE 500kv Line                                           3,898,528          3,898,528
Attachment Fees for Joint Pole Use                          869,039
Land and miscellaneous                                      627,666
Other                                                       399,124
Total                                                    5,794,357
Total Account 454 (p300,19.b.)                           5,794,357
Difference (must be zero)                                       -

Account 456 - Other Electric Revenues
                                                                     $ Included on
Description                                          Amount          Attachment 3
Photovoltaic modules resales                              3,283,525
Streetlights                                              2,302,860
PCS project                                               1,597,797             396,772
SFAS 133                                                  1,056,068
Facility charges                                            940,441
Fuel loading                                                778,798
Management/administration fees                              689,418            108,333
SRP Schedule K                                               73,855             73,855
UPL Four Corners Switchyard                                  25,469             25,469
Mead Phoenix O&M                                             15,726             15,726
Surepay and Autopay Discount                             (1,067,664)
Other                                                       758,163
Total                                                   10,454,456
Total Account 456 (p300,21.b.)                          10,454,456
Difference (must be zero)                                       -

Account 456.1 - Revenues from Transmission of Electricity of Others
                                                                                                                                           Included in
                                                                                                                                           Divisor (Y or   $ Included on
CUSTOMER                                             Classification   Demand Charges      Energy Charges Other Charges Total Revenues           N)         Attachment 3
AJO IMPROVEMENT                                      FNO                                          (79,178)                      (79,178)         Y
APS Merchant (Network)                               FNO                                                     (6,984,022)     (6,984,022)         Y
Arizona Public Service                               FNO                                                      6,676,813       6,676,813          Y
Central Arizona Project (began 4/03)                 FNO                                          446,288                       446,288          Y
NTUA                                                 FNO                                          151,701                       151,701          Y
Pinnacle West Capital Corp (Citizens)                FNO                                                      3,649,864       3,649,864          Y
Pinnacle West Capital Corp (COW)                     FNO                                                        155,533         155,533          Y
Pinnacle West Capital Corp (Retail)                  FNO                                                    154,124,557   154,124,557            Y
Pinnacle West Capital Corp (Retail                   FNO                                                   (154,124,557) (154,124,557)           Y
Pinnacle West Capital Corp (Retail                   FNO                      158,548                                           158,548          Y
Southwest Transmission Cooperative                   FNO                                           47,362                        47,362          Y
AkChin                                               LFP                                         (537,634)                     (537,634)         Y
Coral Power (35mw)                                   LFP                                                                               0         Y
PacificCorp                                          LFP                       76,892                                            76,892          Y
Public Service of New Mexico                         LFP                    1,120,949                                         1,120,949          Y
Salt River Project (Desert Basin & Knox Tie)         LFP                   12,774,707                                       12,774,707           Y
Shell Energy North America LP                        LFP                    1,098,723                                         1,098,723          Y
Snowflake White Mountain Power                       LFP                      201,788                                           201,788          Y
Arizona Electric Pwr. Coop.                          NF                                                61                             61                            61
AZPS for-APS Merchant P-T-P (OS)                     NF                                                                                0                             0
Barclays Capital                                     NF                                            19,855                        19,855                         19,855
Bear Energy, L. P.                                   NF                                             5,584                         5,584                          5,584
Calpine Power Services                               NF                                             9,377                         9,377                          9,377
Cargill-Alliant, LLC                                 NF                                            24,656                        24,656                         24,656
Citigroup Energy, Inc.                               NF                                           121,893                       121,893                        121,893
Conoco, Inc.                                         NF                                           126,571                       126,571                        126,571
Constellation Power Source, Inc.                     NF                                             4,310                         4,310                          4,310
Coral Power/ Shell Energy N.A.                       NF                                            65,581                        65,581                         65,581
Dynegy (OS)                                          NF                                           311,003                       311,003                        311,003
El Paso Electric Company                             NF                                            31,131                        31,131                         31,131
Florida Power & Light                                NF                                            83,858                        83,858                         83,858
JP Morgan Ventures Energy Corp                       NF                                             2,698                         2,698                          2,698
Los Angeles Wholesale Marketing                      NF                                                89                             89                            89
Macquarie Cook Power Inc                             NF                                             1,271                         1,271                          1,271
Mirant Americas Energy                               NF                                             6,293                         6,293                          6,293
Morgan Stanley                                       NF                                           182,194                       182,194                        182,194
Nevada Power Company                                 NF                                            13,806                        13,806                         13,806
PacifiCorp                                           NF                                            27,212                        27,212                         27,212
PacifiCorp Power Marketing (Iberdrola)               NF                                            11,143                        11,143                         11,143
Panda-Gila River                                     NF                                           312,910                       312,910                        312,910
Portland General Electric                            NF                                                60                             60                            60
Powerex                                              NF                                           449,091                       449,091                        449,091
Public Serv Of New Mexico                            NF                                             6,416                         6,416                          6,416
Salt River Project Merchant                          NF                                           332,726                       332,726                        332,726
Sempra Trading Corp                                  NF                                            82,500                        82,500                         82,500
Southern California Edison Co.                       NF                                             1,232                         1,232                          1,232
TransAlta Energy Marketing                           NF                                             3,903                         3,903                          3,903
Tucson Electric Power Company                        NF                                           168,255                       168,255                        168,255
Western Aria Power Admin (CRSP)                      NF                                             1,760                         1,760                          1,760
YCA-non firm                                         NF                                            45,660                        45,660                         45,660
ED #1 APA                                            OLF                                            1,664                         1,664         Y
ED #2                                                OLF                                                                               0        Y
ED #3                                                OLF                                           (1,403)                       (1,403)        Y
LUKE AFB MAIN BASE (CRSP)                            OLF                      174,463                                           174,463         Y
MARINE CORP.                                         OLF                       77,652                                            77,652         Y
PacifiCorp                                           OLF                      547,200                                           547,200         Y
Public Serv Of New Mexico (LF-130mw)                 OLF                    1,415,030                                         1,415,030         Y
Public Serv Of New Mexico (old Plains)               OLF                    1,200,739                           618,288       1,819,027         Y              618,288
SAN CARLOS INDIAN IRRIGATION PROJ.                   OLF                        2,160                                             2,160         Y
Salt River Project Fringe                            OLF                                           10,267                        10,267                          10,267
Tucson Electric Power Company                        OLF                    1,824,000                                         1,824,000         Y
UNIT B IRRIG & DRAIN                                 OLF                          540                                               540         Y
Yuma Cogeneration - Firm                             OLF                      927,504                                           927,504         Y
Yuma Irrigation Disctrict (CRFW & Filla Proj)        OLF                                           25,920                        25,920         Y
Yuma Irrigation Disctrict (YID)                      OLF                                                                               0        Y
YUMA-MESA                                            OLF                         4,500                                            4,500         Y
Abitibi Consolidated                                 OS                                                           2,942           2,942                          2,942
Imperial Irrigation District                         OS                                                          52,997          52,997                         52,997
Salt River Project Schedule Q                        OS                                                         772,910         772,910                        772,910
AZPS for-APS Merchant P-T-P (SF)                     SFP                                          439,507                       439,507                        439,507
Barclays Capital                                     SFP                                           17,372                        17,372                         17,372
Bear Energy, L.P.                                    SFP                                            1,808                         1,808                          1,808
Calpine Power Services                               SFP                                              341                           341                            341
Cargill-Alliant, LLC                                 SFP                      106,956               1,366                       108,322                        108,322
Citigroup Energy, Inc.                               SFP                                          109,713                       109,713                        109,713
Conoco, Inc.                                         SFP                                          144,784                       144,784                        144,784
Constellation Power Source, Inc.                     SFP                                           10,592                        10,592                         10,592
Coral Power/Shell Energy N.A.                        SFP                       56,572              68,127                       124,699                        124,699
El Paso Electric Company                             SFP                                           27,641                        27,641                         27,641
Florida Power & Light                                SFP                                           32,064                        32,064                         32,064
Gila River Power                                     SFP                                        2,167,892                     2,167,892                      2,167,892
JP Morgan Ventures Energy Corp                       SFP                                            4,918                         4,918                          4,918
Los Angeles Wholesale Marketing                      SFP                                            1,109                         1,109                          1,109
Louis Dreyfus Energy Service                         SFP                                              121                           121                            121
Macquarie Cook Power Inc                             SFP                                            6,030                         6,030                          6,030
Morgan Stanley                                       SFP                                           52,044                        52,044                         52,044
PacifiCorp                                           SFP                          552             156,718        42,956         200,226                        200,226
PacifiCorp Power Marketing (Iberdrola)               SFP                                              644                           644                            644
Panda-Gila River                                     SFP                                          390,528                       390,528                        390,528
Powerex                                              SFP                                        1,020,941                     1,020,941                      1,020,941
Public Svc Co of New Mexico (SF)                     SFP                                          715,752                       715,752                        715,752
Salt River Project Merchant                          SFP                                          178,898                       178,898                        178,898
Sempra Trading Corp                                  SFP                                           94,940                        94,940                         94,940
Southern California Edison Co.                       SFP                                           52,622                        52,622                         52,622
TransAlta Energy Marketing                           SFP                                            3,507                         3,507                          3,507
Tri-State G&T (was Plains G&T)                       SFP                                              135                           135                            135
Tucson Electric Power Company                        SFP                                        2,732,506                     2,732,506                      2,732,506
Western Area Power Admin (CRSP)                      SFP                                               13                             13                            13
Other                                                AD                                                         (23,200)        (23,200)                       (23,200)
Total                                                                      21,769,475          10,950,719     4,965,081     37,685,275                      12,526,972
Account 456.1 (p300,22.b.)                                                                                                  37,685,275
Difference (must be zero)                                                                                                           -
Exclude PTP Scheduling from Ancillary Services                                                                                                                (132,962)
Total Revenue Credits                                                                                                                                       12,394,010
                                                                                                                              Page 27 of 28



                                                       Worksheet 5 - Prepaid Items

                                                                                100%             100%         Gross
                                                                          Non-Transmission   Transmission      Plant        Labor
      Component (5)           BOY            EOY              AVG            Related (1)       Related (2)   Related (3)   Related (4)

ENERGY VELOCITY               21,534            14,449          17,992                                            17,992
West Phoenix Prepaid         100,000                 0          50,000                                            50,000
PREPAID POSTAGE              801,467         1,550,017       1,175,742                                         1,175,742
PREPAID INSURANCE          7,262,413         3,459,076       5,360,744                                         5,360,744
PREPAID INSURANC           1,404,952         1,303,431       1,354,192                                         1,354,192
PPD POSTAGE-PERMITS/METERS 132,170             140,964         136,567                                           136,567
Misc Prepaids                      0         2,206,632       1,103,316                                         1,103,316
                              72,422
INS PREM-MAR PC BONDS 05 SER A-E                72,422          72,422                                            72,422
                             145,437
PPD 1YR INS PREM-NAV/COC PCB2004               145,437         145,437                                           145,437
Total Plant Related        9,940,396         8,892,429       9,416,412                                         9,416,412

POWER MARKETING PREPAIDS          0            327,584         163,792            163,792
PREPAYMENTS-MISC BUSINESS LICE 445                   0             223                223
                          2,087,380
PPD SOFTWARE MAINT CONTRACTS                 1,881,717       1,984,549          1,984,549
                            724,325
REGULATORY COMMISSION EXP-ACC                2,218,199       1,471,262          1,471,262
                            485,191
REGULATORY COMMISSION EXP-RUCO                 347,576         416,383            416,383
NAVAJO PLANT LEASE           85,176             85,176          85,176             85,176
Acquired Coal Bonuses     1,461,919          1,345,543       1,403,731          1,403,731
Annual Agency Fees          611,250             30,000         320,625            320,625
Annual Agency Fees                0             25,000          12,500             12,500
Annual Agency Fees                0              6,944           3,472              3,472
Annual Agency Fees                0              6,944           3,472              3,472
Annual Agency Fees                0              6,944           3,472              3,472
Annual Agency Fees                0             12,667           6,333              6,333
Annual Agency Fees                     0       12,667             6,333              6,333
ACC DOCUMENT FEES                   7,700          7,700          7,700              7,700
Prepaid BHP Escrow FC Coal          2,500          1,000          1,750              1,750
Total Non-Transmission Related 5,465,887     6,315,661       5,890,774          5,890,774


Wheeling Prepaid Expense               0      100,000            50,000                           50,000
Total Transmission Related             0      100,000            50,000                           50,000


Grand Total                   15,406,283    15,308,090      15,357,186          5,890,774         50,000       9,416,412                 0
                                                                                                                                                                            Page 28 of 28



ARIZONA PUBLIC SERVICE COMPANY
WORKSHEET - 6 Depreciation Rates
TRANSMISSION DEPRECIATION COMPOSITE RATE AS OF 12-31-2007
company                func_class                    depr_group                            Balance                Rate            Rate * Balance         Composite Rate
Arizona Public Service Transmission Plant - Electric 00 35200 Struc & Improvements                40,461,914.10           2.07%              837,561.62
Arizona Public Service Transmission Plant - Electric 00 35201 Struc & Improv SCE Syst                 409,688.51          3.25%               13,314.88
Arizona Public Service Transmission Plant - Electric 00 35202 Struc & Imprv, ACC Jur Gen               95,935.00         -0.26%                 (249.43)
Arizona Public Service Transmission Plant - Electric 00 35300 Substation Eq, FERC Jur            598,327,537.65           2.09%           12,505,045.54
Arizona Public Service Transmission Plant - Electric 00 35300 W Phoenix CC4 Substa Eq               1,953,105.00          1.65%               32,226.23
Arizona Public Service Transmission Plant - Electric 00 35300 W Phoenix CC5 Substa Eq               4,597,653.24          1.72%               79,079.64
Arizona Public Service Transmission Plant - Electric 00 35301 Redhawk Substation Eq               23,996,448.00           1.68%              403,140.33
Arizona Public Service Transmission Plant - Electric 00 35302 Saguaro 3 Substation Eq               1,508,531.00          1.67%               25,192.47
Arizona Public Service Transmission Plant - Electric 00 35301 Substation Eq, SCE System           14,941,663.42           3.25%              485,604.06
Arizona Public Service Transmission Plant - Electric 00 35302 Substation Eq, ACC Jur Gen          51,321,057.58           1.11%              569,663.74
Arizona Public Service Transmission Plant - Electric 00 35304 Sundance Sub Eq, ACC Jur              4,474,261.99          1.18%               52,796.29
Arizona Public Service Transmission Plant - Electric 00 35400 Towers & Fdn, FERC Jur              84,176,337.32           1.99%            1,675,109.11
Arizona Public Service Transmission Plant - Electric 00 35401 Towers & Fdn, SCE System            13,752,583.99           3.25%              446,958.98
Arizona Public Service Transmission Plant - Electric 00 35402 Towers & Fdn, ACC Jur Gen             1,329,316.00          1.45%               19,275.08
Arizona Public Service Transmission Plant - Electric 00 35501 Wood & Oth Poles & Fxt              63,979,432.74           2.73%            1,746,638.51
Arizona Public Service Transmission Plant - Electric 00 35501 Redhawk Wood/Oth Pol & Fxt            1,361,358.00          2.28%               31,038.96
Arizona Public Service Transmission Plant - Electric 00 35502 Steel Poles & Fixtures             234,061,581.25           2.73%            6,389,881.17
Arizona Public Service Transmission Plant - Electric 00 35503 Poles & Fixt SCE System                 930,308.00          3.25%               30,235.01
Arizona Public Service Transmission Plant - Electric 00 35504 Poles & Fixt, ACC Jur Gen                 5,532.00         -1.46%                  (80.77)
Arizona Public Service Transmission Plant - Electric 00 35600 OH Cond & Dev, FERC Jur            320,332,395.18           2.16%            6,919,179.74
Arizona Public Service Transmission Plant - Electric 00 35601 OH Cond & Dev, SCE System           22,653,514.87           3.25%              736,239.23
Arizona Public Service Transmission Plant - Electric 00 35602 OH Cond & Dev, ACC Jur Gen              586,319.00          1.47%                8,618.89
Arizona Public Service Transmission Plant - Electric 00 35603 Redhawk OH Cond & Devices             1,361,358.00          2.33%               31,719.64
Arizona Public Service Transmission Plant - Electric 00 35695 CIAC Vintage 1995                    (9,500,000.00)        10.00%             (950,000.00)
Arizona Public Service Transmission Plant - Electric 00 35697 CIAC Vintage 1997                    (9,500,000.00)        10.00%             (950,000.00)
Arizona Public Service Transmission Plant - Electric 00 35700 UG Conduits                         19,190,146.66           2.20%              422,183.23
Arizona Public Service Transmission Plant - Electric 00 35800 UG Conductors                       26,863,834.89           1.85%              496,980.95

                                                                                               1,513,671,813.39                          32,057,353.09                    2.12%

								
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