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Pinnacle West Energy sells gas storage interest to El Paso Natural Gas

PHOENIX, Aug. 27, 2003 — Pinnacle West Energy has sold its 50 percent interest in the proposed Copper Eagle Gas Storage project to El Paso Natural Gas Co.

Pinnacle West continues to support the development of Copper Eagle because of the critical role it would play in increasing the reliability of the energy infrastructure in the West. El Paso Natural Gas brings the appropriate experience to the development and operation of a project of this nature.

“This kind of facility is essential to the Southwest’s continuing economic health and the reliability of the power supply in the West,” said Jim Levine, President and CEO of Pinnacle West Energy. “The electricity market in this region is becoming increasingly more dependent on natural gas, and storage projects like Copper Eagle will provide additional security for Arizona’s fuel supply during periods of high electricity and gas demand.

“Because Pinnacle West believes development of gas storage is critical to the reliability of our regional gas supply, we have sold our interest in the project to a company with the appropriate experience in the natural gas industry,” he said. “Through Arizona Public Service and Pinnacle West Energy, we are focused on our core business, which is providing reliable electric service to our retail customers throughout Arizona.”

Copper Eagle is a proposed natural gas storage project that would be located near Luke Air Force Base in western Maricopa County. Feasibility studies began in 2001 on a naturally occurring salt deposit in the area 20 miles west of Phoenix to determine if it has the potential to support the underground cavern storage facility.

Pinnacle West Capital Corp. is a Phoenix-based company with consolidated assets of approximately $9 billion. Through its subsidiaries, the company generates, sells and delivers electricity and sells energy-related products and services to retail and wholesale customers in the western United States. It also develops residential, commercial and industrial real estate projects.

El Paso Natural Gas is a subsidiary of El Paso Corporation.