S-3

As filed with the Securities and Exchange Commission on December 21, 2004

Registration No. 333-          

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM S-3

REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933

ARIZONA PUBLIC SERVICE COMPANY

(Exact name of Registrant as specified in its charter)

ARIZONA	86-0011170
(State of Incorporation)	(I.R.S. Employer
	Identification Number)

400 North Fifth Street
Phoenix, Arizona 85004
(602) 250-1000
(Address, including zip code and telephone number, including area code,
of registrant’s principal executive offices)

MATTHEW P. FEENEY
Snell & Wilmer L.L.P.
One Arizona Center
Phoenix, Arizona 85004
(602) 382-6239
(Name, address, including zip code and telephone number,
including area code, of agent for service)

          Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement, as determined by market conditions and other factors.

          If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. o

          If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. x

          If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.o

          If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.o

          If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. o

CALCULATION OF REGISTRATION FEE

				Proposed			Proposed
				Maximum			Maximum
	Amount			Offering			Aggregate			Amount of
Title of Each Class of	to be			Price			Offering			Registration
Securities to be Registered	Registered			Per Unit			Price			Fee (3)(4)
Debt Securities	$	400,000,000	(1)		(2	)		(1	)(2)	$	47,080
Total (4)	$	400,000,000			(2	)	$	400,000,000		$	47,080

(1)	In no event will the aggregate initial offering price of all securities issued from time to time pursuant to this Registration Statement exceed $400,000,000. If any such securities are issued at an original issue discount, then the aggregate initial offering price as so discounted shall not exceed $400,000,000, notwithstanding that the stated principal amount of such securities may exceed such amount.
(2)	The proposed maximum initial offering price per unit will be determined, from time to time, by the Registrant in connection with the issuance by the Registrant of the securities registered hereunder.
(3)	Calculated pursuant to Rule 457(o) of the rules and regulations under the Securities Act of 1933 (the “Securities Act”).
(4)	Pursuant to Rule 429 under the Securities Act, this Registration Statement contains a combined prospectus relating to $200,000,000 of securities registered pursuant to Registration Statement No. 333-106772 initially filed July 2, 2003 and included herein under Rule 429, for which the filing fee was previously paid, and $400,000,000 registered hereby.

          The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION
DECEMBER 21, 2004

Prospectus

Arizona Public Service Company
$600,000,000
Debt Securities

          We may offer and sell debt securities from time to time in one or more offerings. This prospectus provides you with a general description of the debt securities we may offer.

          Each time we sell debt securities, we will provide a supplement to this prospectus that contains specific information about the offering and the terms of the debt securities. The supplement may also add, update, or change information contained in this prospectus. You should carefully read this prospectus and any supplement, as well as the documents incorporated by reference in this prospectus, before you invest in any of our debt securities.

          Unless otherwise indicated in a supplement to this prospectus, the debt securities will not be listed on a national securities exchange or on the Nasdaq stock market.

          See “Risk Factors” beginning on page 3 of this prospectus to read about certain factors you should consider before investing in our debt securities.

          Our principal executive offices are located at 400 North Fifth Street, Phoenix, AZ 85004. Our telephone number is (602) 250-1000.

          Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

          We may offer and sell these securities directly to purchasers, through agents, dealers, or underwriters as designated from time to time, or through a combination of these methods. Additional information on our plan of distribution can be found inside under “Plan of Distribution.” We will describe the plan of distribution for any securities in the relevant prospectus supplement. If any agents, dealers or underwriters are involved in the sale of any securities, the relevant prospectus supplement will set forth any applicable commissions or discounts.

          This prospectus may not be used to consummate sales of these securities unless accompanied by the applicable prospectus supplement.

The date of this prospectus is                

Table of Contents

	Page
Risk Factors		3
About This Prospectus		10
Forward-Looking Statements		10
Where You Can Find More Information		12
Business of Arizona Public Service Company		13
Ratio of Earnings to Fixed Charges		13
Use of Proceeds		13
Description of Debt Securities		13
Global Securities		21
Regarding the Trustees		22
Plan of Distribution		22
Experts		24
Legal Opinions		24
Exhibit 1.1
Exhibit 5.1
Exhibit 5.2
Exhibit 12.1
EX-23.1
EX-23.2
Exhibit 25.1
Exhibit 25.2

          Unless otherwise indicated, currency amounts in this prospectus and any prospectus supplement are stated in United States dollars (“$,” “dollars,” “U.S. dollars,” or “U.S.$”).

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RISK FACTORS

     Before purchasing our debt securities you should carefully consider the following risk factors as well as the other information contained in this prospectus and the information incorporated by reference in order to evaluate an investment in our debt securities. Although we have tried to discuss key factors in this prospectus, please be aware that other risks may prove to be important in the future. New risks may emerge at any time and we cannot predict such risks or estimate the extent to which they may affect our financial performance. The documents we file with the SEC after the date of this prospectus may contain additional risk factors, or updates to the risk factors discussed below, which you should consider. See “Where You Can Find More Information.”

     We cannot predict the outcome of our general rate case pending before the Arizona Corporation Commission (the “ACC”).

     On June 27, 2003, we filed a request with the ACC to increase annual retail electricity revenues by approximately $175.1 million, or 9.8%, effective July 1, 2004. On August 18, 2004, a substantial majority of the parties to the rate case, including us, the ACC staff, the Residential Utility Consumer Office, other customer groups, and merchant power plant intervenors entered into an agreement that proposes terms under which the rate case would be settled (the “Agreement”). The Agreement is subject to ACC approval. Key financial components of the Agreement are as follows:

• We would receive an annual retail rate increase of approximately $75.5 million, or 4.21%. The increase would consist of an increase in base rates of approximately 3.77% and an increase of approximately 0.44% for recovery over five years of the past costs of our compliance with the ACC’s retail electric competition rules (the “Rules”).

• We would acquire from Pinnacle West Energy Corporation (“Pinnacle West Energy”) Redhawk Combined Cycle Units 1 and 2, West Phoenix Combined Cycle Units 4 and 5, and Saguaro Combustion Turbine Unit 3 (collectively, the “Dedicated Assets”) and rate base the Dedicated Assets at a rate base value of $700 million, which would result in a regulatory rate base disallowance of $148 million. As a result, for financial reporting purposes, we would recognize a one-time, after-tax net plant write-off of approximately $88 million in the period when the plant transfer to us is completed, and would reduce annual depreciation expense by approximately $5 million.

• To bridge the time between the effective date of the rate increase and the actual date the Dedicated Assets transfer, we and Pinnacle West Energy would enter into a cost-based purchase power agreement (the “Bridge PPA”), which would be based on the value of the Dedicated Assets described in the previous bullet point. The Bridge PPA would remain in effect until the Federal Energy Regulatory Commission (the “FERC”) approves the transfer of the Dedicated Assets to us and the transfer is completed.

• If the FERC were to issue an order denying our request to acquire the Dedicated Assets, the Bridge PPA would become a 30-year purchased power agreement, with prices reflecting cost-of-service as if we had acquired and rate-based the Dedicated Assets at the value described above.

• If the FERC were to issue an order (a) approving our request to transfer the Dedicated Assets at a value materially less than $700 million, (b) approving the transfer of fewer than all of the Dedicated Assets, or (c) that was materially inconsistent with the Agreement, we would file an appropriate application with the ACC so that rates could be adjusted. In these circumstances, the Bridge PPA would continue at least until the conclusion of the subsequent proceeding to consider any appropriate adjustment to our rates.

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• A power supply adjuster would provide for the recovery of fuel and purchased power costs, subject to specified parameters and procedures.

• We would not restore and recover in rates the $234 million write-off recorded in 1999 as a result of a 1999 settlement agreement approved by the ACC related to the implementation of retail electric competition in Arizona (the “1999 Settlement Agreement”).

• We would adopt longer service lives than originally requested for certain depreciable assets.

     This general rate case, including the proposed settlement, is the key issue affecting our financial outlook. ACC hearings on the Agreement concluded on December 3, 2004. The parties are awaiting the issuance of a recommended opinion and order from the administrative law judge, after which the ACC is expected to consider the proposed settlement. We cannot predict the outcome of this matter.

     The procurement of wholesale power by us without the ability to adjust retail rates could have an adverse impact on our business and financial results.

     Although the Rules allow retail customers to have access to competitive providers of energy and energy services, under the Rules we are the “provider of last resort” for standard-offer, full-service customers under rates that have been approved by the ACC. In the event of shortfalls of electricity due to unforeseen increases in load demand or generation or transmission outages, we may need to purchase additional supplemental power in the wholesale spot market. At various times, prices in the spot wholesale market have significantly exceeded the amount included in our current retail rates. There can be no assurance that we would be able to fully recover the costs of this power. Although the proposed settlement of our general rate case would, among other things, allow us to recover purchased power costs, there can be no assurance that the settlement agreement will be approved by the ACC as proposed.

     Deregulation or restructuring of the electric industry may result in increased competition, which could have a significant adverse impact on our business and our financial results.

     Retail competition could have a significant adverse financial impact on us due to an impairment of assets, a loss of retail customers, lower profit margins or increased costs of capital. Under the Rules, as modified by the 1999 Settlement Agreement, we were required to transfer all of our competitive electric assets and services to an unaffiliated party or parties or to a separate corporate affiliate or affiliates no later than December 31, 2002. To satisfy this requirement, we planned to transfer generation assets to Pinnacle West Energy. Pursuant to an ACC order dated September 10, 2002, the ACC unilaterally modified the 1999 Settlement Agreement and directed us to cancel any plans to divest interests in any of our generating assets. The ACC further established a requirement that we solicit bids for certain estimated amounts of capacity and energy for periods beginning July 1, 2003. Pinnacle West Energy bid on and entered into contracts to supply most of our requirements in the summer months through September 2006. In addition, as discussed above, a proposed settlement of our general rate case would result in Pinnacle West Energy transferring a significant amount of generation assets to us. These regulatory developments and legal challenges to the Rules have raised considerable uncertainty about the status and pace of retail electric competition and of electric restructuring in Arizona. Although some very limited retail competition existed in our service area in 1999 and 2000, there are currently no active retail competitors offering unbundled energy or other utility services to our customers. As a result, we cannot predict when, and the extent to which, additional competitors will re-enter our service territory.

     As a result of changes in federal law and regulatory policy, competition in the wholesale electricity market has greatly increased due to a greater participation by traditional electricity suppliers, non-utility generators, independent power producers, and wholesale power marketers and brokers. This increased competition could affect our load forecasts, plans for power supply and wholesale energy sales and related revenues. As a result of the changing regulatory environment and the relatively low barriers to

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entry, we expect wholesale competition to increase. As competition continues to increase, our financial position and results of operations could be adversely affected.

     We are subject to complex government regulation that may have a negative impact on our business and our results of operations.

     We are subject to governmental regulation that may have a negative impact on our business and results of operations. We are a “subsidiary company” of a “holding company” within the meaning of the Public Utility Holding Company Act of 1935 (“PUHCA”); however, we are exempt from the provisions of PUHCA (except Section 9(a)(2) thereof) by virtue of the filing of an annual exemption statement with the Securities and Exchange Commission (the “SEC”) by our parent company, Pinnacle West Capital Corporation (“Pinnacle West”).

     We are subject to comprehensive regulation by several federal, state and local regulatory agencies, which significantly influence our operating environment and may affect our ability to recover costs from utility customers. We are required to have numerous permits, approvals and certificates from the agencies that regulate our business. The FERC, the Nuclear Regulatory Commission (“NRC”), the Environmental Protection Agency (“EPA”), and the ACC regulate many aspects of our utility operations, including siting and construction of facilities, customer service and the rates that we can charge customers. We believe the necessary permits, approvals and certificates have been obtained for our existing operations. However, changes in regulations or the imposition of additional regulations could have an adverse impact on our results of operations. We are also unable to predict the impact on our business and operating results from pending or future regulatory activities of any of these agencies.

     We are subject to numerous environmental laws and regulations that may increase our cost of operations, impact our business plans, or expose us to environmental liabilities.

     We are subject to numerous environmental laws and regulations affecting many aspects of our present and future operations, including air emissions, water quality, wastewater discharges, solid waste, and hazardous waste. These laws and regulations can result in increased capital, operating, and other costs, particularly with regard to enforcement efforts focused on power plant emissions obligations. These laws and regulations generally require us to obtain and comply with a wide variety of environmental licenses, permits, inspections and other approvals. Both public officials and private individuals may seek to enforce applicable environmental laws and regulations. We cannot predict the outcome (financial or operational) of any related litigation that may arise.

     In addition, we may be a responsible party for environmental clean up at sites identified by a regulatory body. We cannot predict with certainty the amount and timing of all future expenditures related to environmental matters because of the difficulty of estimating clean-up costs. There is also uncertainty in quantifying liabilities under environmental laws that impose joint and several liability on all potentially responsible parties.

     We cannot be sure that existing environmental regulations will not be revised or that new regulations seeking to protect the environment will not be adopted or become applicable to us. Revised or additional regulations that result in increased compliance costs or additional operating restrictions, particularly if those costs are not fully recoverable from our customers, could have a material adverse effect on our results of operations.

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     There are inherent risks in the operation of nuclear facilities, such as environmental, health and financial risks and the risk of terrorist attack.

     We have an ownership interest in and operate, on behalf of a group of owners, the Palo Verde Nuclear Generating Station (“Palo Verde”), which is the largest nuclear electric generating facility in the United States. Palo Verde is subject to environmental, health and financial risks such as the ability to dispose of spent nuclear fuel, the ability to maintain adequate reserves for decommissioning, potential liabilities arising out of the operation of these facilities, and the costs of securing the facilities against possible terrorist attacks and unscheduled outages due to equipment and other problems. We maintain nuclear decommissioning trust funds and external insurance coverage to minimize our financial exposure to some of these risks; however, it is possible that damages could exceed the amount of insurance coverage.

     The NRC has broad authority under federal law to impose licensing and safety-related requirements for the operation of nuclear generation facilities. In the event of noncompliance, the NRC has the authority to impose fines or shut down a unit, or both, depending upon its assessment of the severity of the situation, until compliance is achieved. In addition, although we have no reason to anticipate a serious nuclear incident at Palo Verde, if an incident did occur, it could materially and adversely affect our results of operations or financial condition. A major incident at a nuclear facility anywhere in the world could cause the NRC to limit or prohibit the operation or licensing of any domestic nuclear unit.

     The operation of Palo Verde requires licenses that need to be periodically renewed and/or extended. We do not anticipate any problems renewing these licenses. However, as a result of potential terrorist threats and increased public scrutiny of utilities, the licensing process could result in increased licensing or compliance costs that are difficult or impossible to predict.

     The uncertain outcome regarding the creation of regional transmission organizations, or RTOs, and implementation of the FERC’s standard market design may materially impact our operations, cash flows or financial position.

     In a December 1999 order, the FERC established characteristics and functions that must be met by utilities in forming and operating RTOs. The characteristics for an acceptable RTO include independence from market participants, operational control over a region large enough to support efficient and nondiscriminatory markets and exclusive authority to maintain short-term reliability. Additionally, in a pending notice of proposed rulemaking, the FERC is considering implementing a standard market design for wholesale markets. On October 16, 2001, we and other owners of electric transmission lines in the Southwest filed with the FERC a request for a declaratory order confirming that our proposal to form WestConnect RTO, LLC would satisfy the FERC’s requirements for the formation of an RTO. On October 10, 2002, the FERC issued an order finding that the WestConnect proposal, if modified to address specified issues, could meet the FERC’s RTO requirements and provide the basic framework for a standard market design for the Southwest. On September 15, 2003, the FERC issued an order granting clarification and rehearing, in part, of its prior orders. In particular, this order approved the use of a physical congestion management scheme, which is used to allocate transmission rights on congested lines, for WestConnect for an initial phase-in period. The FERC indicated that the WestConnect utilities and the appropriate regional state advisory committee should develop a market-based congestion management scheme for subsequent implementation. We are now participating in a cost/benefit analysis of implementing WestConnect, the results of which are expected to be completed in 2005.

     If we ultimately join an RTO, we could incur increased transmission-related costs and receive reduced transmission service revenues; we may be required to expand our transmission system according to decisions made by the RTO rather than our internal planning process; and we may experience other impacts on our operations, cash flows or financial position that will not be quantifiable until the final tariffs and other material terms of the RTO are known.

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     Recent events in the energy markets that are beyond our control may have negative impacts on our business.

     As a result of the energy crisis in California during the summer of 2001, the recent volatility of natural gas prices in North America, the filing of bankruptcy by the Enron Corporation, and investigations by governmental authorities into energy trading activities, companies generally in the regulated and unregulated utility businesses have been under an increased amount of public and regulatory scrutiny. The capital markets and rating agencies also have increased their level of scrutiny. We believe that we are in material compliance with all applicable laws, but it is difficult or impossible to predict or control what effect these or related issues may have on our business or our access to the capital markets.

     Our results of operations can be adversely affected by milder weather.

     Weather conditions directly influence the demand for electricity and affect the price of energy commodities. Electric power demand is generally a seasonal business. In Arizona, demand for power peaks during the hot summer months, with market prices also peaking at that time. As a result, our overall operating results fluctuate substantially on a seasonal basis. In addition, we have historically sold less power, and consequently earned less income, when weather conditions are milder. As a result, unusually mild weather could diminish our results of operations and harm our financial condition.

     If we are not able to access capital at competitive rates, our ability to implement our financial strategy will be adversely affected.

     We rely on access to short-term money markets, longer-term capital markets and the bank markets as a significant source of liquidity and for capital requirements not satisfied by the cash flow from our operations. We believe that we will maintain sufficient access to these financial markets based upon current credit ratings. However, certain market disruptions or a downgrade of our credit ratings may increase our cost of borrowing or adversely affect our ability to access one or more financial markets. Such disruptions could include:

• an economic downturn;

• capital market conditions generally;

• the bankruptcy of an unrelated energy company;

• increased market prices for electricity and gas;

• terrorist attacks or threatened attacks on our facilities or those of unrelated energy companies; or

• the overall health of the utility industry.

     Changes in economic conditions could result in higher interest rates, which would increase our interest expense on our debt and reduce funds available to us for our current plans. Additionally, an increase in our leverage could adversely affect us by:

• increasing the cost of future debt financing;

• increasing our vulnerability to adverse economic and industry conditions;

• requiring us to dedicate a substantial portion of our cash flow from operations to payments on our debt, which would reduce funds available to us for operations, future business opportunities or other purposes; and

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• placing us at a competitive disadvantage compared to our competitors that have less debt.

     A significant reduction in our credit ratings could materially and adversely affect our business, financial condition and results of operations.

     We cannot be sure that any of our current ratings will remain in effect for any given period of time or that a rating will not be lowered or withdrawn entirely by a rating agency if, in its judgment, circumstances in the future so warrant. Any downgrade could increase our borrowing costs, which would diminish our financial results. We would likely be required to pay a higher interest rate in future financings, and our potential pool of investors and funding sources could decrease. In addition, borrowing costs under certain of our existing credit facilities depend on our credit ratings. A downgrade could also require us to provide additional support in the form of letters of credit or cash or other collateral to various counterparties. If our short-term ratings were to be lowered, it could limit our access to the commercial paper market. We note that the ratings from rating agencies are not recommendations to buy, sell or hold our securities and that each rating should be evaluated independently of any other rating.

     The use of derivative contracts in the normal course of our business and changing interest rates and market conditions could result in financial losses that negatively impact our results of operations.

     Our operations include managing market risks related to commodity prices and, subject to specified risk parameters, engaging in marketing and trading activities intended to profit from market price movements. We are exposed to the impact of market fluctuations in the price and transportation costs of electricity, natural gas, coal, and emissions allowances and credits. We have established procedures to manage risks associated with these market fluctuations by utilizing various commodity derivatives, including exchange-traded futures and options and over-the-counter forwards, options, and swaps. As part of our overall risk management program, we enter into derivative transactions to hedge purchases and sales of electricity, fuels, and emissions allowances and credits. The changes in market value of such contracts have a high correlation to price changes in the hedged commodity.

     We are exposed to losses in the event of nonperformance or nonpayment by counterparties. We use a risk management process to assess and monitor the financial exposure of all counterparties. Despite the fact that the majority of trading counterparties are rated as investment grade by the rating agencies, there is still a possibility that one or more of these companies could default, resulting in a material adverse impact on our earnings for a given period.

     Changing interest rates will affect interest paid on variable-rate debt and interest earned by our pension plan and nuclear decommissioning trust funds. Our policy is to manage interest rates through the use of a combination of fixed-rate and floating-rate debt. The pension plan is also impacted by the discount rate, which is the interest rate used to discount future pension obligations. Continuation of recent decreases in the discount rate would result in increases in pension costs, cash contributions, and charges to other comprehensive income. The pension plan and nuclear decommissioning trust funds also have risks associated with changing market values of equity investments. A significant portion of the pension costs and all of the nuclear decommissioning costs are recovered in regulated electricity prices.

     Actual results could differ from estimates used to prepare our financial statements.

     In preparing our financial statements in accordance with accounting principles generally accepted in the United States of America, management must often make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures at the date of the financial statements and during the reporting period. Some of those judgments can be subjective and complex, and actual results could differ from those estimates. We consider the following accounting policies to be our most critical because of the uncertainties, judgments and complexities of the underlying accounting standards and operations involved.

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• Regulatory Accounting — Regulatory accounting allows for the actions of regulators, such as the ACC and the FERC, to be reflected in the financial statements. Their actions may cause us to capitalize costs that would otherwise be included as an expense in the current period by unregulated companies. If future recovery of costs ceases to be probable, the assets would be written off as a charge in current period earnings. We had $169 million of regulatory assets on our balance sheet at September 30, 2004.

• Pensions and Other Postretirement Benefit Accounting - Changes in our actuarial assumptions used in calculating our pension and other postretirement benefit liability and expense can have a significant impact on our earnings, plan funding requirements and financial position. The most relevant actuarial assumptions are the discount rate used to measure our liability and net periodic cost, the expected long-term rate of return on plan assets used to estimate earnings on invested funds over the long-term, and the assumed healthcare cost trend rates. We review these assumptions on an annual basis and adjust them as necessary.

• Derivative Accounting — Derivative accounting requires evaluation of rules that are complex and subject to varying interpretations. Our evaluation of these rules, as they apply to our contracts, will determine whether we use accrual accounting or fair value (mark-to-market) accounting. Mark-to-market accounting requires that changes in fair value be recorded in earnings or, if certain hedge accounting criteria are met, in common stock equity (as a component of other comprehensive income (loss)).

• Mark-to-Market Accounting — The market value of our derivative contracts is not always readily determinable. In some cases, we use models and other valuation techniques to determine fair value. The use of these models and valuation techniques sometimes requires subjective and complex judgment. Actual results could differ from the results estimated through application of these methods. Our marketing and trading portfolio consists of structured activities hedged with a portfolio of forward purchases that protects the economic value of the sales transactions.

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ABOUT THIS PROSPECTUS

     This prospectus is part of a shelf registration statement that we filed with the SEC utilizing a “shelf” registration process. Under this shelf process, we may offer up to $600,000,000 aggregate initial offering price of the debt securities described in this prospectus in one or more offerings. This prospectus provides you with a general description of the debt securities we may offer. Each time we offer debt securities, we will provide you with a prospectus supplement and, if applicable, a pricing supplement. The prospectus supplement and any applicable pricing supplement will describe the specific terms of the debt securities being offered. The prospectus supplement and any applicable pricing supplement may also add to, update or change the information in this prospectus. If there is any inconsistency between the information in this prospectus and in any supplement, you should rely on the information in the supplement. In addition, the registration statement filed with the SEC includes exhibits that provide more details about the debt securities. Please carefully read this prospectus, the applicable prospectus supplement and any applicable pricing supplement, together with the information contained in the documents referred to under the heading “Where You Can Find More Information.” You should assume that the information appearing in this prospectus and any supplement to this prospectus is accurate only as of the dates on their covers. Our business, financial condition, results of operations, and prospects may have changed since those dates.

FORWARD-LOOKING STATEMENTS

     This prospectus, any accompanying prospectus supplement, and the additional information described under the heading “Where You Can Find More Information” may contain forward-looking statements within the meaning of the safe harbor of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties and are based on the beliefs and assumptions of our management, based on information currently available to our management. When we use words such as “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates,” “predicts,” “should,” or similar expressions, we are making forward-looking statements.

     Forward-looking statements are not guarantees of performance. They involve risks, including those described under “Risk Factors” above, uncertainties, and assumptions. Our future results may differ materially from those expressed in these forward-looking statements. Many of the factors that will determine these results are beyond our ability to control or predict. Except to the extent required by federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. These factors include, but are not limited to:

• state and federal regulatory and legislative decisions and actions, including the outcome of the rate case we filed with the ACC on June 27, 2003 and the wholesale electric price mitigation plan adopted by the FERC;

• the ongoing restructuring of the electric industry, including the introduction of retail electric competition in Arizona and decisions impacting wholesale competition;

• the outcome of regulatory, legislative and judicial proceedings relating to the restructuring;

• market prices for electricity and natural gas;

• power plant performance and outages, including transmission outages and constraints;

• weather variations affecting local and regional customer energy usage;

• customer growth and energy usage;

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• regional economic and market conditions, including the results of litigation and other proceedings resulting from the California energy situation, volatile purchased power and fuel costs and the completion of generation and transmission construction in the region, which could affect customer growth and the cost of power supplies;

• the cost of debt and equity capital and access to capital markets;

• the uncertainty that current credit ratings will remain in effect for any given period of time;

• our ability to compete successfully outside traditional regulated markets (including the wholesale market);

• the performance of our marketing and trading activities due to volatile market liquidity and any deteriorating counterparty credit and the use of derivative contracts in our business (including the interpretation of the subjective and complex accounting rules related to these contracts);

• changes in accounting principles generally accepted in the United States of America and the interpretation of those principles;

• the performance of the stock market and the changing interest rate environment, which affect the amount of our required contributions to our pension plan and nuclear decommissioning trust funds, as well as our reported costs of providing pension and other postretirement benefits;

• technological developments in the electric industry;

• conservation programs; and

• other uncertainties, all of which are difficult to predict and many of which are beyond our control.

     You are cautioned not to put undue reliance on any forward-looking statements. We claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 for any forward-looking statements contained in this prospectus, including in the information incorporated by reference in this prospectus, and any prospectus supplement.

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WHERE YOU CAN FIND MORE INFORMATION

Available Information

     We file annual, quarterly, and current reports, and other information with the SEC. Our SEC filings are available to the public over the Internet at the SEC’s web site: http://www.sec.gov. You may also read and copy any document we file at the SEC’s public reference room, which is located at Room 1024, Judiciary Plaza, 450 Fifth Street NW, Washington, D.C. 20549. You may call the SEC at 1-800-SEC-0330 for further information on the public reference room. Our filings with the SEC are also available on the web site of our parent, Pinnacle West, at http://www.pinnaclewest.com. The other information on Pinnacle West’s web site is not a part of this prospectus or any prospectus supplement.

Incorporation by Reference

     The SEC allows us to incorporate by reference the information we file with them, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus, and later information that we file with the SEC will automatically update and supersede this information. We incorporate by reference the documents listed below, all documents we file with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 after the date of the initial registration statement to which this prospectus relates and prior to the effectiveness of the registration statement and any future filings we make with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 until all securities are sold under this prospectus, excluding, in each case, information deemed furnished and not filed.

• Annual Report on Form 10-K for the fiscal year ended December 31, 2003;

• Quarterly Reports on Form 10-Q for the fiscal quarter ended March 31, June 30 and September 30, 2004; and

• Current Reports on Form 8-K filed January 9, January 28, January 29, February 4, April 21, May 7, June 2, June 23, June 28, July 29, August 18, October 22 and December 20, 2004.

You may request a copy of these filings and will receive a copy of these filings, at no cost, by writing or telephoning us at the following address:

Arizona Public Service Company
Office of the Secretary
Station 9068
P.O. Box 53999
Phoenix, Arizona 85072-3999
(602) 250-3252

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BUSINESS OF ARIZONA PUBLIC SERVICE COMPANY

     We were incorporated in 1920 under the laws of Arizona and are a wholly-owned subsidiary of Pinnacle West. We are a vertically-integrated electric utility that provides either retail or wholesale electric service to most of the State of Arizona. Through our marketing and trading division, we generate, sell and deliver electricity to wholesale customers in the western United States. Our marketing and trading division also sells, in the wholesale market, the generation output of our affiliate, Pinnacle West Energy, that is not needed for our native load, which includes loads for retail customers and traditional cost-of-service wholesale customers. Our marketing and trading division focuses primarily on managing purchased power and fuel risks in connection with our costs of serving retail customer energy requirements. We do not distribute any products. We currently have more than 931,500 customers. Our principal executive offices are located at 400 North Fifth Street, Phoenix, Arizona 85004, and the telephone number is 602-250-1000.

RATIO OF EARNINGS TO FIXED CHARGES

     The following table sets forth the historical ratio of our earnings to fixed charges for each of the indicated periods (we have reclassified certain prior year amounts to conform to the current year presentation):

Nine Months
Ended	Twelve Months Ended
September 30,	December 31,
2004	2003		2002		2001		2000		1999
3.18		2.47		2.93		3.77		3.79		3.24

     The ratio of earnings to fixed charges was computed by dividing earnings by fixed charges. For this purpose, earnings consist of pre-tax income from continuing operations excluding extraordinary items and cumulative effect of change in accounting for derivatives, plus the amount of fixed charges as defined below. Fixed charges consist of: expensed interest; amortization of debt discount, premium and expense; and an estimate of interest implicit in rentals.

USE OF PROCEEDS

     We intend to use the net proceeds from the sale of these debt securities for general corporate purposes, which may include the repayment of indebtedness, capital expenditures, the funding of working capital, and asset acquisitions. The specific use of proceeds from the sale of debt securities will be set forth in the prospectus supplement relating to each offering of debt securities.

DESCRIPTION OF DEBT SECURITIES

General

     The following description highlights the general terms of the debt securities. When we offer debt securities in the future, the prospectus supplement will explain the particular terms of those securities and the extent to which any of these general provisions will not apply.

     The debt securities will be our unsecured obligations. The debt securities may be issued in one or more new series under:

• an Indenture, dated as of January 15, 1998, as amended from time to time, between JPMorgan Chase Bank, N.A. and us, in the case of senior debt securities; or

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• an Indenture, dated as of January 1, 1995, as amended from time to time, between The Bank of New York and us, in the case of subordinated debt securities.

     As of September 30, 2004, there was approximately $2.0 billion of debt outstanding under the senior debt securities indenture and there was no debt outstanding under the subordinated debt securities indenture, which are described above.

     We have summarized selected provisions of the Indentures below. The summary is not complete. We have filed the Indentures as exhibits to the registration statement. You should read the Indentures in their entirety, including the definitions, together with this prospectus and the prospectus supplement before you make any investment decision. Although separate Indentures are used for subordinated debt securities and senior debt securities, references to the “Indenture” and the description of the “Indenture” in this section apply to both Indentures, unless otherwise noted.

     You should refer to the prospectus supplement attached to this prospectus for the following information about a new series of debt securities:

• title of the debt securities;

• the aggregate principal amount of the debt securities or the series of which they are a part;

• the date on which the debt securities mature;

• the interest rate;

• when the interest on the debt securities accrues and is payable;

• the record dates for the payment of interest;

• places where principal, premium, or interest will be payable;

• periods within which, and prices at which, we can redeem debt securities at our option;

• any obligation on our part to redeem or purchase debt securities pursuant to a sinking fund or at the option of the holder;

• denominations and multiples at which debt securities will be issued if other than $1,000;

• any index or formula from which the amount of principal or any premium or interest may be determined;

• any allowance for alternative currencies and determination of value;

• whether the debt securities are defeasible under the terms of the Indenture;

• whether we are issuing the debt securities as global securities;

• any additional or different events of default and any change in the right of the trustee or the holders to declare the principal amount due and payable if there is any default;

• any addition to or change in the covenants in the Indenture; and

• any other terms.

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     We may sell the debt securities at a substantial discount below their principal amount. The prospectus supplement may describe special federal income tax considerations that apply to debt securities sold at an original issue discount or to debt securities that are denominated in a currency other than United States dollars.

     We must obtain the approval of the ACC, before incurring long-term debt. An existing ACC order allows us to have approximately $2.7 billion in principal amount of long-term debt outstanding at any one time, not including $500 million of long-term debt we issued on May 12, 2003, pursuant to a separate ACC order. We do not expect these orders to limit our ability to meet our capital requirements.

     Other than the protections described in this prospectus and in the related prospectus supplement, holders of debt securities would not be protected by the covenants in the Indenture from a highly-leveraged transaction.

Subordination

     The Indenture relating to the subordinated debt securities states that, unless otherwise provided in a supplemental indenture or a board resolution, the debt securities will be subordinate to all senior debt. This is true whether the senior debt is outstanding as of the date of the Indenture or is incurred afterwards. The balance of the information under this heading assumes that a supplemental indenture or a board resolution results in a series of debt securities being subordinated obligations.

     The Indenture states that we cannot make payments of principal, premium, or interest on the subordinated debt if:

• the principal, premium or interest on senior debt is not paid when due and the applicable grace period for the default has ended and the default has not been cured or waived; or

• the maturity of any senior debt has been accelerated because of a default.

     The Indenture provides that we must pay all senior debt in full before the holders of the subordinated debt securities may receive or retain any payment if our assets are distributed to our creditors upon any of the following:

• dissolution;

• winding-up;

• liquidation;

• reorganization, whether voluntary or involuntary;

• bankruptcy;

• insolvency;

• receivership; or

• any other proceedings.

     The Indenture provides that when all amounts owing on the senior debt are paid in full, the holders of the subordinated debt securities will be subrogated to the rights of the holders of senior debt to receive payments or distributions applicable to senior debt.

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     The Indenture defines senior debt as the principal, premium, interest and any other payment due under any of the following, whether outstanding at the date of the Indenture or thereafter incurred, created or assumed:

• all of our debt evidenced by notes, debentures, bonds, or other securities we sell for money;

• all debt of others of the kinds described in the preceding bullet point that we assume or guarantee in any manner; and

• all renewals, extensions, or refundings of debt of the kinds described in either of the two preceding bullet points.

     However, the preceding will not be considered senior debt if the document creating the debt or the assumption or guarantee of the debt states that it is not superior to, or that it is on equal footing with, our subordinated debt securities.

     The Indenture does not limit the aggregate amount of senior debt that we may issue. As of September 30, 2004, there was approximately $2.7 billion of senior debt outstanding and there was no subordinated debt outstanding.

Form, Exchange, and Transfer

     Each series of debt securities will be issuable only in fully registered form and without coupons. In addition, unless otherwise specified in a prospectus supplement, the debt securities will be issued in denominations of $1,000 and multiples of $1,000. We, the trustee, and any of our agents may treat the registered holder of a debt security as the absolute owner for the purpose of making payments, giving notices, and for all other purposes.

     The holders of debt securities may exchange them for any other debt securities of the same series, in authorized denominations, and equal principal amount. However, this type of exchange will be subject to the terms of the Indenture and any limitations that apply to global securities.

     A holder may transfer debt securities by presenting the endorsed security at the office of a security registrar or at the office of any transfer agent we designate. The holder will not be charged for any exchange or registration of transfer, but we may require payment to cover any tax or other governmental charge in connection with the transaction. We have appointed the trustee under each Indenture as security registrar. A prospectus supplement will name any transfer agent we designate for any debt securities if different from the security registrar. We may designate additional transfer agents or rescind the designation of any transfer agent or approve a change in the office through which any transfer agent acts at any time, except that we will maintain a transfer agent in each place of payment for debt securities.

     If the debt securities of any series are to be redeemed in part, we will not be required to do any of the following:

• issue, register the transfer of, or exchange any debt securities of that series and/or tenor beginning 15 days before the day of mailing of a notice of redemption of any debt security that may be selected for redemption and ending at the close of business on the day of the mailing; or

• register the transfer of or exchange any debt security selected for redemption, except for an unredeemed portion of a debt security that is being redeemed in part.

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Payment and Paying Agents

     Unless otherwise indicated in the applicable prospectus supplement, we will pay interest on a debt security on any interest payment date to the person in whose name the debt security is registered.

     Unless otherwise indicated in the applicable prospectus supplement, the principal, premium, and interest on the debt securities of a particular series will be payable at the office of the paying agents that we may designate. However, we may pay any interest by check mailed to the address, as it appears in the security register, of the person entitled to that interest. Also, unless otherwise indicated in the applicable prospectus supplement, the corporate trust office of the trustee in The City of New York will be our sole paying agent for payments with respect to debt securities of each series. Any other paying agent that we initially designate for the debt securities of a particular series will be named in the applicable prospectus supplement. We may at any time designate additional paying agents or rescind the designation of any paying agent or approve a change in the office through which any paying agent acts, except that we will maintain a paying agent in each place of payment for the debt securities of a particular series.

     All money that we pay to a paying agent for the payment of the principal, premium, or interest on any debt security that remains unclaimed at the end of two years after the principal, premium, or interest has become due and payable will be repaid to us, and the holder of the debt security may look only to us for payment.

Consolidation, Merger, and Sale of Assets

     Unless otherwise indicated in the applicable prospectus supplement, we may not:

• consolidate with or merge into any other entity;

• convey, transfer, or lease our properties and assets substantially as an entirety to any entity; or

• permit any entity to consolidate with or merge into us or convey, transfer, or lease its properties and assets substantially as an entirety to us,

     unless the following conditions are met:

• the successor entity is a corporation, partnership, unincorporated organization or trust organized and validly existing under the laws of any domestic jurisdiction and assumes our obligations on the debt securities and under the Indenture;

• immediately after giving effect to the transaction, no event of default, and no event which, after notice or lapse of time or both, would become an event of default, shall have occurred and be continuing; and

• other conditions are met.

     Upon any merger, consolidation, or transfer or lease of properties, the successor person will be substituted for us under the Indenture, and, thereafter, except in the case of a lease, we will be relieved of all obligations and covenants under the Indenture and the debt securities.

Events of Default

     Each of the following will be an event of default under the Indenture with respect to debt securities of any series:

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• our failure to pay principal of or any premium on any debt security of that series when due;

• our failure to pay any interest on any debt securities of that series when due, and the continuance of that failure for 30 days;

• our failure to deposit any sinking fund payment, when due, in respect of any debt securities of that series;

• our failure to perform any of our other covenants in the Indenture relating to that series and the continuance of that failure for 90 days after written notice has been given by the trustee or the holders of at least 25% in principal amount of the outstanding debt securities of that series;

• bankruptcy, insolvency, or reorganization events involving us; and

• any other event of default for that series described in the applicable prospectus supplement.

     If an event of default occurs and is continuing, other than an event of default relating to bankruptcy, insolvency, or reorganization, either the trustee or the holders of at least 25% in aggregate principal amount of the outstanding debt securities of the affected series may declare the principal amount of the debt securities of that series to be due and payable immediately. In the case of any debt security that is an original issue discount security or the principal amount of which is not then determinable, the trustee or the holders of at least 25% in aggregate principal amount of the outstanding debt securities of that series may declare the portion of the principal amount of the debt security specified in the terms of such debt security to be immediately due and payable upon an event of default.

     If an event of default involving bankruptcy, insolvency, or reorganization occurs, the principal amount of all the debt securities of the affected series will automatically, and without any action by the trustee or any holder, become immediately due and payable. After any acceleration, but before a judgment or decree based on acceleration, the holders of a majority in aggregate principal amount of the outstanding debt securities of that series may rescind and annul the acceleration if all events of default, other than the non-payment of accelerated principal, have been cured or waived as provided in the Indenture.

     The trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request or direction of any of the holders, unless the holders have offered the trustee reasonable indemnity. Subject to provisions for the indemnification of the trustee, the holders of a majority in principal amount of the outstanding debt securities of any series will have the right to direct the time, method, and place of conducting any proceeding for any remedy available to the trustee, or exercising any trust or power conferred on the trustee, with respect to the debt securities of that series.

     No holder of a debt security of any series will have any right to institute any proceeding under the Indenture, or for the appointment of a receiver or a trustee, or for any other remedy under the Indenture, unless:

• the holder has previously given the trustee written notice of a continuing event of default with respect to the debt securities of that series;

• the holders of at least 25% in aggregate principal amount of the outstanding debt securities of that series have made written request, and the holder or holders have offered reasonable indemnity, to the trustee to institute the proceeding as trustee; and

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• the trustee has failed to institute the proceeding, and has not received from the holders of a majority in aggregate principal amount of the outstanding debt securities of that series a direction inconsistent with the request within 60 days after the notice, request, and offer of indemnity.

The limitations provided above do not apply to a suit instituted by a holder of a debt security for the enforcement of payment of the principal, premium, or interest on the debt security on or after the applicable due date.

     We are required to furnish to the trustee annually a certificate of various officers stating whether or not we are in default in the performance or observance of any of the terms, provisions, and conditions of the Indenture and, if so, specifying all known defaults.

Modification and Waiver

     In limited cases we and the trustee may make modifications and amendments to the Indenture without the consent of the holders of any series of debt securities. We and the trustee may also make modifications and amendments to the Indenture with the consent of the holders of not less than 66-2/3% in aggregate principal amount of the outstanding debt securities of each series affected by the modification or amendment. However, without the consent of the holder of each outstanding debt security affected, no modification or amendment may:

• change the stated maturity of the principal of, or any installment of principal of or interest on, any debt security;

• reduce the principal amount of, or any premium or interest on, any debt security;

• reduce the amount of principal of an original issue discount security or any other debt security payable upon acceleration of the maturity of the security;

• change the place or currency of payment of principal of, or any premium or interest on, any debt security;

• impair the right to institute suit for the enforcement of any payment on or with respect to any debt security; or

• reduce the percentage in principal amount of outstanding debt securities of any series, the consent of whose holders is required for modification or amendment of the Indenture or is necessary for waiver of compliance with certain provisions of the Indenture or of certain defaults, or modify the provisions of the Indenture relating to modification and waiver.

     In general, compliance with certain restrictive provisions of the Indenture may be waived by the holders of not less than 66-2/3% in aggregate principal amount of the outstanding debt securities of any series. The holders of a majority in aggregate principal amount of the outstanding debt securities of any series may waive any past default under the Indenture, except:

• a default in the payment of principal, premium, or interest; and

• a default under covenants and provisions of the Indenture which cannot be amended without the consent of the holder of each outstanding debt security of the affected series.

     In determining whether the holders of the requisite principal amount of the outstanding debt securities have given or taken any direction, notice, consent, waiver, or other action under the Indenture as of any date:

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• the principal amount of an outstanding original issue discount security will be the amount of the principal that would be due and payable upon acceleration of the maturity on that date,

• if the principal amount payable at the stated maturity of a debt security is not determinable, the principal amount of the outstanding debt security will be an amount determined in the manner prescribed for the debt security; and

• the principal amount of an outstanding debt security denominated in one or more foreign currencies will be the U.S. dollar equivalent of the principal amount of the debt security or, in the case of a debt security described in the previous bullet point above, the amount described in that bullet point.

     If debt securities have been fully defeased or if we have deposited money with the trustee to redeem debt securities, they will not be considered outstanding.

     Except in limited circumstances, we will be entitled to set any day as a record date for the purpose of determining the holders of outstanding debt securities of any series entitled to give or take any direction, notice, consent, waiver, or other action under the Indenture. In limited circumstances, the trustee will be entitled to set a record date for action by holders. If a record date is set for any action to be taken by holders of a particular series, the action may be taken only by persons who are holders of outstanding debt securities of that series on the record date. To be effective, the action must be taken by holders of the requisite principal amount of the debt securities within a specified period following the record date. For any particular record date, this period will be 180 days or any other shorter period that we may specify. The period may be shortened or lengthened, but not beyond 180 days.

Defeasance and Covenant Defeasance

     We may elect to have the provisions of the Indenture relating to defeasance and discharge of indebtedness, or defeasance of restrictive covenants in the Indenture, applied to the debt securities of any series, or to any specified part of a series. The prospectus supplement used in connection with the offering of any debt securities will state whether we can make these elections for that series.

     Defeasance and Discharge

     We will be discharged from all of our obligations with respect to the debt securities of a series if we deposit with the trustee money in an amount sufficient to pay the principal, premium, and interest on the debt securities of that series when due in accordance with the terms of the Indenture and the debt securities. We can also deposit securities that will provide the necessary monies. However, we will not be discharged from the obligations to exchange or register the transfer of debt securities, to replace stolen, lost, or mutilated debt securities, to maintain paying agencies, and to hold moneys for payment in trust. The defeasance or discharge may occur only if we deliver to the trustee an opinion of counsel stating that we have received from, or there has been published by, the United States Internal Revenue Service a ruling, or there has been a change in tax law, in either case to the effect that holders of such debt securities:

• will not recognize gain or loss for federal income tax purposes as a result of the deposit, defeasance, and discharge; and

• will be subject to federal income tax on the same amount, in the same manner, and at the same times as would have been the case if the deposit, defeasance, and discharge were not to occur.

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     Defeasance of Covenants

     We may elect to omit compliance with restrictive covenants in the Indenture and any additional covenants that may be described in the applicable prospectus supplement for a series of debt securities. This election will preclude some actions from being considered defaults under the Indenture for the applicable series. In order to exercise this option, we will be required to deposit, in trust for the benefit of the holders of debt securities, funds in an amount sufficient to pay the principal, premium and interest on the debt securities of the applicable series. We may also deposit securities that will provide the necessary monies. We will also be required to deliver to the trustee an opinion of counsel to the effect that holders of the debt securities will not recognize gain or loss for federal income tax purposes as a result of such deposit and defeasance of certain obligations and will be subject to federal income tax on the same amount, in the same manner and at the same times as would have been the case if the deposit and defeasance were not to occur. If we exercise this option with respect to any debt securities and the debt securities are declared due and payable because of the occurrence of any event of default, the amount of funds deposited in trust would be sufficient to pay amounts due on the debt securities at the time of their respective stated maturities but may not be sufficient to pay amounts due on the debt securities on any acceleration resulting from an event of default. In that case, we would remain liable for the additional payments.

Governing Law

     The law of the State of New York will govern the Indenture and the debt securities.

GLOBAL SECURITIES

     Some or all of the debt securities of any series may be represented, in whole or in part, by one or more global securities, which will have an aggregate principal amount equal to that of the debt securities they represent. We will register each global security in the name of a depositary or nominee identified in a prospectus supplement and deposit the global security with the depositary or nominee. Each global security will bear a legend regarding the restrictions on exchanges and registration of transfer referred to below and other matters specified in a supplemental indenture to the Indenture.

     No global security may be exchanged for debt securities registered, and no transfer of a global security may be registered, in the name of any person other than the depositary for the global security or any nominee of the depositary, unless:

• the depositary has notified us that it is unwilling or unable to continue as depositary for the global security or has ceased to be qualified to act as depositary;

• a default has occurred and is continuing with respect to the debt securities represented by the global security; or

• any other circumstances exist that may be described in the applicable supplemental indenture and prospectus supplement.

     We will register all securities issued in exchange for a global security or any portion of a global security in the names specified by the depositary.

     As long as the depositary or its nominee is the registered holder of a global security, the depositary or nominee will be considered the sole owner and holder of the global security and the debt securities that it represents. Except in the limited circumstances referred to above, owners of beneficial interests in a global security will not:

• be entitled to have the global security or debt securities registered in their names;

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• receive or be entitled to receive physical delivery of certificated debt securities in exchange for a global security; and

• be considered to be the owners or holders of the global security or any debt securities for any purpose under the Indenture.

     We will make all payments of principal, premium, and interest on a global security to the depositary or its nominee. The laws of some jurisdictions require that purchasers of securities take physical delivery of securities in definitive form. These laws make it difficult to transfer beneficial interests in a global security.

     Ownership of beneficial interests in a global security will be limited to institutions that have accounts with the depositary or its nominee, referred to as Participants, and to persons that may hold beneficial interests through Participants. In connection with the issuance of any global security, the depositary will credit, on its book-entry registration and transfer system, the respective principal amounts of debt securities represented by the global security to the accounts of its Participants. Ownership of beneficial interests in a global security will only be shown on records maintained by the depositary or the Participant. Likewise, the transfer of ownership interests will be effected only through the same records. Payments, transfers, exchanges, and other matters relating to beneficial interests in a global security may be subject to various policies and procedures adopted by the depositary from time to time. Neither we, the trustee, nor any of our agents will have responsibility or liability for any aspect of the depositary’s or any Participant’s records relating to, or for payments made on account of, beneficial interests in a global security, or for maintaining, supervising, or reviewing any records relating to the beneficial interests.

REGARDING THE TRUSTEES

     JPMorgan Chase Bank, N. A. is the trustee under the Indenture relating to the senior debt securities. We and our affiliates maintain normal commercial and banking relationships with JPMorgan Chase Bank, N.A. In addition, an affiliate of JPMorgan Chase Bank, N.A. is the owner participant under a trust to which we sold and leased back a portion of Palo Verde Unit 2. In the future JPMorgan Chase Bank, N.A. and its affiliates may provide banking, investment and other services to us and our affiliates.

     The Bank of New York is the trustee under the Indenture relating to the subordinated debt securities and under our senior note indenture. It is also trustee of Pinnacle West’s pension plan and under various indentures covering securities issued by our affiliates or on our behalf. We and our affiliates maintain normal commercial and banking relationships with The Bank of New York, including The Bank of New York serving as transfer agent and registrar for Pinnacle West’s common stock. In the future The Bank of New York and its affiliates may provide banking, investment and other services to us and our affiliates.

PLAN OF DISTRIBUTION

     We may sell the debt securities to one or more underwriters for public offering and sale by them or may sell the debt securities to investors through agents or dealers. Any underwriter or agent involved in the offer and sale of the debt securities will be named in the applicable prospectus supplement. We also reserve the right to sell debt securities directly to investors on our own behalf in those jurisdictions where we are authorized to do so.

     Underwriters may offer and sell the debt securities at a fixed price or prices, which may be changed, or from time to time at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices. We also may, from time to time, authorize underwriters acting as our agents to offer and sell the debt securities upon the terms and conditions set forth in any prospectus supplement. In connection with the sale of the debt securities, underwriters may be deemed to have received compensation from us in the form of underwriting discounts or commissions and may also receive commissions from purchasers of the debt securities for whom they may act as agent.

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     If a dealer is utilized in the sale of the debt securities in respect of which this prospectus is delivered, we may sell the debt securities to the dealer, as principal. The dealer may then resell the debt securities to the public at varying prices to be determined by the dealer at the time of resale.

     Any underwriting compensation paid by us to underwriters or agents in connection with the offering of the debt securities, and any discounts, concessions or commissions allowed by underwriters to participating dealers, will be set forth in an applicable prospectus supplement. Underwriters, dealers and agents participating in the distribution of the debt securities may be deemed to be underwriters under the Securities Act, and any discounts and commissions received by them and any profit realized by them on resale of the debt securities may be deemed to be underwriting discounts and commissions under the Securities Act. Underwriters, dealers and agents may be entitled under agreements with us to indemnification against and contribution toward certain civil liabilities, including liabilities under the Securities Act, and to reimbursement by us for certain expenses. Unless otherwise indicated in the prospectus supplement, any agreement we enter into with the underwriters will provide that the obligations of any underwriters to purchase the debt securities will be subject to certain conditions precedent and the underwriter or underwriters are obligated to purchase all of the debt securities offered in the prospectus supplement if any are purchased.

     In connection with underwritten offerings of debt securities, underwriters may over-allot or effect transactions that stabilize, maintain or otherwise affect the market price of the debt securities at levels above those that might otherwise prevail in the open market, including by entering stabilizing bids, effecting syndicate covering transactions or imposing penalty bids, each of which is described below.

• A stabilizing bid means the placing of any bid, or the effecting of any purchase, for the purpose of pegging, fixing or maintaining the price of a security.

• A syndicate covering transaction means the placing of any bid on behalf of the underwriting syndicate or the effecting of any purchase to reduce a short position created in connection with the offering.

• A penalty bid means an arrangement that permits the managing underwriter to reclaim a selling concession from a syndicate member in connection with the offering when offered debt securities originally sold by the syndicate member are purchased in syndicate covering transactions.

     These transactions may be effected on the New York Stock Exchange, in the over-the-counter market or otherwise. Underwriters are not required to engage in any of these activities, or to continue the activities if commenced.

     The debt securities may also be offered and sold, if so indicated in the prospectus supplement, in connection with a remarketing upon their purchase, in accordance with a redemption or repayment pursuant to their terms, or otherwise, by one or more firms (“remarketing firms”), acting as principals for their own accounts or as agents for us. Any remarketing firm will be identified and the terms of its agreement, if any, with us and its compensation will be described in the applicable prospectus supplement. Remarketing firms may be deemed to be underwriters in connection with the debt securities remarketed by them. Remarketing firms may be entitled under agreements which may be entered into with us to indemnification by us against certain liabilities, including liabilities under the Securities Act.

     The debt securities may or may not be listed on a national securities exchange or a foreign securities exchange. No assurances can be given that there will be a market for any of the debt securities.

     One or more of the underwriters, and/or one or more of their respective affiliates, may be a lender under our credit agreements or those of our affiliates and may provide other commercial banking, investment banking and other services to us and/or our affiliates in the ordinary course of business.

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EXPERTS

     The financial statements and the related financial statement schedule incorporated in this prospectus by reference from Arizona Public Service Company’s Annual Report on Form 10-K for the year ended December 31, 2003 have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report (which report expresses an unqualified opinion and includes explanatory paragraphs relating to the change in 2003 in the method of accounting for non-trading derivatives and to the change in 2001 in the method of accounting for derivatives and hedging activities), which is incorporated by reference herein, and have been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

LEGAL OPINIONS

     Snell & Wilmer L.L.P., One Arizona Center, Phoenix, Arizona 85004, will opine on the validity of the debt securities. We currently anticipate that Pillsbury Winthrop LLP, 1540 Broadway, New York, New York 10036, will opine on the validity of the debt securities for any underwriters of the debt securities. In giving their opinions, Pillsbury Winthrop LLP and Snell & Wilmer L.L.P. may rely as to matters of New Mexico law upon the opinion of Keleher & McLeod, P.A., Albuquerque Plaza, 201 Third NW, 12th Floor, Albuquerque, New Mexico 87102. Snell & Wilmer L.L.P. may rely as to all matters of New York law upon the opinion of Pillsbury Winthrop LLP. Pillsbury Winthrop LLP may rely as to all matters of Arizona law upon the opinion of Snell & Wilmer L.L.P.

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$600,000,000

ARIZONA PUBLIC SERVICE COMPANY

DEBT SECURITIES

APS

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution.

Securities and Exchange Commission registration fee	$	47,080
Printing, engraving, and postage expenses		10,000	*
Legal fees		150,000	*
Accounting fees		200,000	*
Rating Agency fees		237,000	*
Trustee’s fees and expenses		10,000	*
Blue Sky fees and expenses		30,000	*
Miscellaneous		5,920	*
Total	$	690,000	*

*Estimated.

Item 15. Indemnification of Directors and Officers.

     The Arizona Business Corporation Act (the “ABCA”) permits extensive indemnification of present and former directors, officers, employees or agents of an Arizona corporation, whether or not authority for such indemnification is contained in the indemnifying corporation’s articles of incorporation or bylaws. Specific authority for indemnification of present and former directors and officers is contained in Article Fifth of our Articles of Incorporation. This provision permits us to indemnify our current and former directors and officers if the board determines in good faith that the person did not act, fail to act or refuse to act willfully or with gross negligence or with fraudulent or criminal intent. In addition, Section 7.01 of our Bylaws provides that we will indemnify present and former directors and officers to the fullest extent permitted by applicable law.

     Under the ABCA, in order for a corporation to indemnify a director or officer, a majority of the corporation’s disinterested directors, special legal counsel, or the shareholders must find that the conduct of the individual to be indemnified was in good faith and that the individual reasonably believed that the conduct was in the corporation’s best interests (in the case of conduct in an “official capacity” with the corporation) or that the conduct was at least not opposed to the corporation’s best interests (in all other cases). In the case of any criminal proceeding, the finding must be to the effect that the individual had no reasonable cause to believe the conduct was unlawful. Indemnification is permitted with respect to expenses, judgments, fines, and amounts paid in settlement by such individuals. However, a corporation cannot indemnify a director in the cases noted in clause (ii) of the second sentence of the following paragraph. Broader indemnification is allowed, with certain limitations, for a director as provided in a corporation’s articles of incorporation, and for an officer who is not also a director or where the basis on which the officer was made a party to the proceeding is an act or omission solely as an officer, as provided in the articles of incorporation, bylaws, a resolution of the board of directors or a contract.

     Indemnification under the ABCA is permissive, except in the event of a successful defense, in which case a director or officer must be indemnified against reasonable expenses, including attorneys’ fees, incurred in connection with the proceeding. In addition, the ABCA requires Arizona corporations to indemnify any “outside director” (a director who is not an officer, employee or holder of more than five percent of any class of the corporation’s stock or the stock of any affiliate of the corporation) against liability unless (i) the corporation’s articles of incorporation limit such indemnification, (ii) the director is adjudged liable in a proceeding by or in the right of the corporation or in any other proceeding charging improper financial benefit to the director, whether or not involving action in the director’s official capacity, in which the director was adjudged liable on the basis that the financial benefit was improperly received by the director, or (iii) a court determines, before payment to the outside director, that the director failed to meet the standards of conduct described in the preceding paragraph. With certain limitations, a court may also order that an individual be indemnified if the court finds that the individual is fairly and

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reasonably entitled to indemnification in light of all of the relevant circumstances, whether or not the individual has met the standards of conduct in this and the preceding paragraph or was adjudged liable as described above.

     In connection with the offering made by the prospectus which is a part of this registration statement, as it may be amended or supplemented, the underwriters of the debt securities, pursuant to the relevant underwriting agreement, will severally agree to indemnify and hold harmless us, each of our directors, each of our officers who has signed this registration statement, and each person, if any, who controls us within the meaning of the Securities Act of 1933, as amended (the “Act”), against certain losses, claims, damages, or liabilities, including liabilities under the Act, that arise out of or are based upon written information furnished by such underwriters to us for use in this registration statement or in such prospectus.

     Insurance is maintained on a regular basis (and not specifically in connection with this offering) against liabilities arising on the part of directors and officers out of their performance in such capacities or arising on our part out of the foregoing indemnification provisions, subject to certain exclusions and to the policy limits.

     For information regarding our undertaking to submit to adjudication the issue of indemnification for violation of the securities laws, see Item 17 below.

Item 16. List of Exhibits.

Exhibit No.	Description
1.1	Form of Underwriting Agreement for Debt Securities
4.1	Form(s) of Supplemental Indenture relating to Debt Securities (to be filed as Exhibit(s) by means of Form 8-K)
4.2	Specimen(s) of Debt Securities (to be filed as Exhibit (s) by means of Form 8-K)
5.1	Opinion of Snell & Wilmer L.L.P.
5.2	Opinion of Pillsbury Winthrop LLP
12.1	Computation of Ratio of Earnings to Fixed Charges
23.1	Consent of Deloitte & Touche LLP
23.2	Independent Accountants’ Consent
23.3	Consent of Snell & Wilmer L.L.P. (included in Opinion filed as Exhibit No. 5.1)
23.4	Consent of Pillsbury Winthrop LLP (included in Opinion filed as Exhibit No. 5.2)
24.1	Power of Attorney (see signature page)
25.1	Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Bank of New York, as Trustee under the Indenture relating to the subordinated Debt Securities
25.2	Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of JPMorgan Chase Bank, N.A., as Trustee under the Indenture relating to the senior Debt Securities

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     In addition to those Exhibits shown above, the Company hereby incorporates the following Exhibits pursuant to Rule 411 of Regulation C promulgated under the Act by reference to the filings set forth below:

Exhibit		Previously Filed		Date
No.	Description	as Exhibit:	File No.a	Effective
4.3	Indenture dated as of January 1, 1995 among the Company and The Bank of New York, as Trustee, relating to subordinated Debt Securities	4.6 to Registration Statement Nos. 33-61228 and 33-55473 by means of January 1, 1995 Form 8-K Report	1-4473	1-11-95
4.4	First Supplemental Indenture dated as of January 1, 1995, relating to the issuance of $75,000,000 of 10% Junior Subordinated Deferrable Interest Debentures, Series A, Due 2025	4.4 to Registration Statement Nos. 33-61228 and 33-55473 by means of January 1, 1995 Form 8-K Report	1-4473	1-11-95
4.5	Indenture dated as of January 15, 1998 among the Company and JPMorgan Chase Bank, N.A. (formerly known as The Chase Manhattan Bank), as Trustee, relating to Senior Debt Securities	4.10 to Registration Statement Nos. 333-15379 and 333- 27551 by means of January 13, 1998 Form 8-K Report	1-4473	1-16-98
4.6	First Supplemental Indenture dated as of January 15, 1998, relating to the issuance of $100,000,000 of 6-1/4% Notes Due 2005	4.3 to Registration Statement Nos. 333-15479 and 333- 27551 by means of January 13, 1998 Form 8-K Report	1-4473	1-16-98
4.7	Second Supplemental Indenture dated as of February 15, 1999	4.3 to Registration Statement Nos. 333-27551 and 333- 58445 by means of February 18, 1999 Form 8-K Report	1-4473	2-22-99
4.8	Third Supplemental Indenture dated as of November 1, 1999	4.5 to Registration Statement No. 333-58445 by means of November 2, 1999 Form 8-K Report	1-4473	11-5-99
4.9	Fourth Supplemental Indenture dated as of August 1, 2000	4.1 to Registration Statement Nos. 333-58445 and 333-94277 by means of August 2, 2000 Form 8-K Report	1-4473	8-4-00
4.10	Fifth Supplemental Indenture dated as of October 1, 2001	4.1 to September 2001 Form 10-Q Report	1-4473	11-6-01

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Exhibit		Previously Filed		Date
No.	Description	as Exhibit:	File No.a	Effective
4.11	Sixth Supplemental Indenture dated as of March 1, 2002	4.1 to Registration Statement Nos. 333-63994 and 333-83398 by means of February 26, 2002 Form 8-K Report	1-4473	2-28-02
4.12	Seventh Supplemental Indenture dated as of May 1, 2003	4.1 to Registration Statement No. 333-90824 by means of May 7, 2003 Form 8-K Report	1-4473	5-9-03
4.13	Eighth Supplemental Indenture dated as of June 15, 2004	4.1 to Registration Statement No. 333-106772 by means of June 24, 2004 Form 8-K Report	1-4473	6-28-04

^aReports filed under File No. 1-4473 were filed in the office of the Securities and Exchange Commission located in Washington, D.C.

Item 17. Undertakings.

The undersigned registrant hereby undertakes:

     (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

          (i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

          (ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; notwithstanding the foregoing, any increase or decrease in the volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

          (iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided however, that paragraphs (1)(i) and (1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Securities and Exchange Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement.

     (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

     (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

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     (4) That, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

     (5) That, insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, and controlling persons of the registrant pursuant to the provisions referred to in Item 15 of this registration statement, or otherwise, the registrant has been advised that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit, or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

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SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3, reasonably believes that the security rating requirement contained in Transaction Requirement B.2 of Form S-3 will be met by the time of the sale of any subordinated debt securities registered hereunder and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Phoenix, State of Arizona on the 21st day of December, 2004.

ARIZONA PUBLIC SERVICE COMPANY
By	/s/ Jack E. Davis
	(Jack E. Davis, President and
	Chief Executive Officer)

     Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities and on the dates indicated. Each person whose signature appears below hereby authorizes Donald E. Brandt, Chris N. Froggatt and Barbara M. Gomez and each of them, as attorneys-in-fact, to sign in his or her name and behalf, individually and in each capacity designated below, and to file any amendments, including post-effective amendments, to this registration statement, and any related Rule 462(b) registration statement or amendment thereto.

Signature	Title	Date
/s/ William J. Post	Director	December 21, 2004
(William J. Post, Chairman
of the Board of Directors)
/s/ Jack E. Davis	Principal Executive Officer	December 21, 2004
	and Director
(Jack E. Davis, President and Chief Executive Officer)
/s/ Donald E. Brandt	Principal Financial Officer	December 21, 2004
(Donald E. Brandt, Executive Vice President and Chief Financial Officer)
/s/ Chris N. Froggatt	Principal Accounting Officer	December 21, 2004
(Chris N. Froggatt, Vice President and Controller)
/s/ Edward N. Basha, Jr.	Director	December 21, 2004
(Edward N. Basha, Jr.)
/s/ Michael L. Gallagher	Director	December 21, 2004
(Michael L. Gallagher)

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Signature	Title	Date
/s/ Pamela Grant	Director	December 21, 2004
(Pamela Grant)
/s/ Roy A. Herberger, Jr.	Director	December 21, 2004
(Roy A. Herberger, Jr.)
/s/ Martha O. Hesse	Director	December 21, 2004
(Martha O. Hesse)
/s/ William S. Jamieson, Jr.	Director	December 21, 2004
(William S. Jamieson, Jr.)
/s/ Humberto S. Lopez	Director	December 21, 2004
(Humberto S. Lopez)
/s/ Kathryn L. Munro	Director	December 21, 2004
(Kathryn L. Munro)
/s/ Bruce J. Nordstrom	Director	December 21, 2004
(Bruce J. Nordstrom)
/s/ William L. Stewart	Director	December 21, 2004
(William L. Stewart)

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Exhibit No.	Index to Exhibits
1.1	Form of Underwriting Agreement for Debt Securities
4.1	Form(s) of Supplemental Indenture relating to Debt Securities (to be filed as Exhibit(s) by means of Form 8-K)
4.2	Specimen(s) of Debt Securities (to be filed as Exhibit (s) by means of Form 8-K)
5.1	Opinion of Snell & Wilmer L.L.P.
5.2	Opinion of Pillsbury Winthrop LLP
12.1	Computation of Ratio of Earnings to Fixed Charges
23.1	Consent of Deloitte & Touche LLP
23.2	Independent Accountants’ Consent
23.3	Consent of Snell & Wilmer L.L.P. (included in Opinion filed as Exhibit No. 5.1)
23.4	Consent of Pillsbury Winthrop LLP (included in Opinion filed as Exhibit No. 5.2)
24.1	Power of Attorney (see signature page)
25.1	Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Bank of New York, as Trustee under the Indenture relating to the subordinated Debt Securities
25.2	Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of JPMorgan Chase Bank, N.A., as Trustee under the Indenture relating to the senior Debt Securities

For a description of the Exhibits incorporated in this filing by reference, see Item 16. EX-1.1 2 p69984exv1w1.htm EXHIBIT 1.1

EXHIBIT 1.1

ARIZONA PUBLIC SERVICE COMPANY

UNDERWRITING AGREEMENT

[                   ], [                   ]

Dear Sir or Madam:

     1. Introduction. Arizona Public Service Company, an Arizona corporation (the “Company’), proposes to issue and sell from time to time up to $600,000,000 in aggregate principal amount of its unsecured debentures, notes or other evidences of indebtedness (the “Securities”) registered under the registration statement referred to in Section 2(a). The Securities will be issued under the Indenture, dated as of January 15, 1998 (the “Original Indenture”), between the Company and JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank), as trustee (the “Trustee”), as amended and supplemented by one or more Supplemental Indentures between the Company and the Trustee (each, a “Supplemental Indenture”) (the Original Indenture as amended and supplemented by such Supplemental Indentures, including the [                   ] Supplemental Indenture (as defined below) being sometimes hereinafter referred to as the “Indenture”). The Securities will be issued in one or more series, which series may vary as to interest rates, maturities, redemption provisions, selling prices, and other terms, with all such terms for any particular issue of the Securities being determined at the time of sale. Particular issues of the Securities may be sold from time to time to one or more of the firms to whom this Agreement is addressed, and to such other purchasers as the Company shall designate and as shall agree in writing to comply with the terms and conditions of this Agreement, for resale in accordance with the terms of offering determined at the time of sale. The Securities involved in any such offering are hereinafter referred to as the “Purchased Securities,” the party or parties that agree to purchase the same are hereinafter referred to as the “Underwriters” of such Purchased Securities, and the representative or representatives of the underwriters, if any, specified in a Terms Agreement referred to in Section 3 are hereinafter referred to as the “Representative.”

     2. Representations and Warranties of the Company. In connection with each offering of the Purchased Securities, the Company represents and warrants to, and agrees with, the Underwriters that:

     (a) Two registration statements on Form S-3 (File Nos. 333-101457 and 333-[                   ]) in respect of the Purchased Securities (and certain other securities) have been filed with the Securities and Exchange Commission (the “Commission”) (the earliest of such registration statements being sometimes called the “First Registration Statement” and the later the “Second Registration Statement”) and have become effective. Each such registration statement, as amended at the time of the Terms Agreement referred to in Section 3 relating to the

Purchased Securities, together with any related Rule 462(b) registration statement or amendment thereto, including all exhibits thereto and the documents incorporated by reference in the prospectus contained in the registration statements, are hereinafter collectively called the “Registration Statement” and the combined prospectus included in the Second Registration Statement when it became effective, as supplemented at the time of the Terms Agreement referred to in Section 3 relating to the Purchased Securities, including by a Prospectus Supplement (as defined below), to reflect the terms of the Purchased Securities and the terms of the offering thereof, including all material incorporated by reference therein, is hereinafter referred to as the “Prospectus.” The details of the terms of the offering of the Purchased Securities shall be reflected in the Prospectus Supplement. Any reference herein to any preliminary prospectus relating to the Purchased Securities, the Prospectus, or any amendment or supplement thereto, shall be deemed to refer to and include the documents incorporated by reference therein pursuant to the applicable form under the Act, as of the date of such preliminary prospectus, the Prospectus, or any amendment or supplement thereto, as the case may be; any reference to any amendment or supplement to any preliminary prospectus relating to the Purchased Securities, the Prospectus, or any amendment or supplement thereto, shall be deemed to refer to and include any documents filed after the date of such preliminary prospectus, the Prospectus, or any amendment or supplement thereto, as the case may be, under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and incorporated by reference in such preliminary prospectus, the Prospectus, or any amendment or supplement thereto, as the case may be; and any reference to any amendment to the Registration Statement shall be deemed to refer to and include any annual report of the Company filed pursuant to Section 13(a) or 15(d) of the Exchange Act after the effective date of the Registration Statement that is incorporated by reference in the Registration Statement.

     (b) Each part of the Registration Statement relating to the Securities, when such part became effective, conformed in all material respects to the requirements of the Securities Act of 1933 (the “Act”), the Trust Indenture Act of 1939 (the “Trust Indenture Act”) and the rules and regulations (the “Rules and Regulations”) of the Commission and did not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading. Any preliminary prospectus filed pursuant to Rule 424(b) under the Act complied when so filed in all material respects with the Act and the Rules and Regulations. On the date of the Prospectus, the Registration Statement and the Prospectus will conform in all material respects to the requirements of the Act, the Trust Indenture Act and the Rules and Regulations, and at such date neither the Registration Statement nor the Prospectus will include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they are made, not misleading; provided, however, that the foregoing does not apply to (i) statements in or omissions from any such documents based upon written information furnished to the Company by any Underwriter specifically for use therein or (ii) that part of the Registration Statement that consists of the Statement of Eligibility (Form T-1) under the Trust Indenture Act of 1939 of JPMorgan Chase Bank, as Trustee under the Indenture. The Company hereby consents to the use of the Prospectus in connection with the sale and distribution of the Purchased Securities by the Underwriters.

     (c) The consummation of the transactions herein contemplated and the fulfillment of the terms hereof will not conflict with, or result in a breach of, or constitute a default under, any

2

indenture or mortgage or other material agreement, instrument or deed of trust to which the Company is now a party.

     (d) The Original Indenture has been duly qualified under the Trust Indenture Act and has been duly authorized, executed and delivered by the Company and is a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency or similar laws affecting creditors’ rights generally and general principles of equity.

     (e) The [                   ] Supplemental Indenture, to be dated as of [                   ], establishing the terms of the Purchased Securities (the “[                   ] Supplemental Indenture”) has been duly authorized by the Company and, when executed and delivered by the Company, will be a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency or similar laws affecting creditors’ rights generally and general principles of equity.

     (f) The Purchased Securities have been duly authorized and, when executed and authenticated in accordance with the provisions of the Indenture and delivered to and paid for by the Underwriters in accordance with the terms of this Agreement, will be entitled to the benefits of the Indenture, will be valid and binding obligations of the Company, in each case enforceable against the Company in accordance with their respective terms, subject to applicable bankruptcy, insolvency or similar laws affecting creditors’ rights generally and general principles of equity and will conform to the description of the Purchased Securities contained in the Prospectus.

     (g) An order of the Arizona Corporation Commission has been granted authorizing the issuance and sale of the Purchased Securities on the terms and conditions herein and in the Prospectus and the Terms Agreement referred to in Section 3 relating to the Purchased Securities. No other approval or consent of any public body or governmental authority is necessary for such issuance and sale of the Purchased Securities, except the registration of the Purchased Securities under the Act, the qualification of the Indenture under the Trust Indenture Act, and such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Purchased Securities by the Underwriters.

     (h) The Company holds such valid franchises, certificates of convenience and necessity, licenses, and permits as are necessary with respect to the maintenance and operation of its property and business as now conducted, except that (i) the Company from time to time makes minor extensions of its system prior to the time a related franchise, certificate, license, or permit is procured, (ii) from time to time communities already being served by the Company become incorporated and considerable time may elapse before a franchise is procured, (iii) certain franchises may have expired prior to the renegotiation thereof, (iv) the Company may not have obtained certain permits or variances relating to the environmental requirements described in any of its Form 10-K Report, its Form 10-Q Reports, and/or its Form 8-K Reports incorporated by reference in the Prospectus, (v) certain minor defects and exceptions may exist which, individually and in the aggregate, are not deemed material, and (vi) the Company does not make any representation regarding the geographical scope of any franchise, certificate, license, or permit that is not specific as to its geographical scope.

3

     (i) This Agreement has been, and the Terms Agreement will be, duly authorized, executed and delivered by the Company.

     (j) The Company is not an “investment company” or entity “controlled” by an “investment company,” as such terms are defined in the United States Investment Company Act of 1940, as amended (the “1940 Act”).

     (k) The Company is a corporation duly formed under the laws of the State of Arizona, is in good standing in the State of Arizona, and has the power to enter into and has duly authorized, by proper corporate action, the execution and delivery of this Agreement and the Terms Agreement and all other documents contemplated hereby to be executed by the Company.

     (l) The financial statements of the Company referred to, incorporated by reference or contained in the Prospectus present fairly in all material respects the financial position of the Company as of the dates indicated and the results of its operations for the periods specified, and the financial statements have been prepared in conformity with generally accepted accounting principles consistently applied in all material respects with respect to the periods involved except as stated therein.

     3. Purchase and Offering. The obligation of the Underwriters to purchase, and the obligation of the Company to sell, the Purchased Securities will be evidenced by the execution and delivery of a Terms Agreement substantially in the form of Exhibit A hereto (the “Terms Agreement”) at the time the Company determines to sell the Purchased Securities. The Terms Agreement shall specify (by incorporation by reference or otherwise) the party or parties that will be Underwriters, the principal amount to be purchased by each, the purchase price to be paid by the Underwriters, any compensation or commissions to be paid to Underwriters, the offering price, and the terms of the Purchased Securities not already specified in the Indenture, including, but not limited to, interest rates, maturity, redemption provisions, and sinking fund requirements, if any. The Terms Agreement shall also specify (by incorporation by reference or otherwise) the time and date of delivery and payment (the “Closing Date”), the place of delivery and payment, and any details of the terms of offering that should be reflected in the prospectus supplement relating to the offering of the Purchased Securities and filed pursuant to Rule 424(b) under the Act (the “Prospectus Supplement”). It is understood that the Underwriters will offer the Purchased Securities for sale as set forth in the Prospectus. The obligations of the Underwriters to purchase the Purchased Securities shall be several and not joint. Except as may otherwise be set forth in the Terms Agreement, the Purchased Securities will be in definitive form and in such denominations and registered in such names as the Underwriters may request.

     4. Covenants of the Company. In connection with each offering of Purchased Securities, the Company covenants and agrees with the several Underwriters that:

     (a) The Company will file the Prospectus with the Commission pursuant to and in accordance with Rule 424(b) under the Act not later than the second business day following the Closing Date.

     (b) The Company will advise the Representative promptly of any amendment of the Registration Statement or supplement to the Prospectus which it proposes to make in the period

4

between the date of the Terms Agreement and the Closing Date (other than any periodic report to be filed by the Company under the Securities Act of 1934 during such period). The Company will provide the Underwriters and their counsel with a draft of such amendment or supplement prior to filing and will reasonably consider any changes proposed in writing by counsel to the Underwriters based on legal grounds. The Company will also advise the Representative, or if there is no Representative, the Underwriters of the institution by the Commission of any stop order proceedings in respect of the Registration Statement, or of any part thereof, and will use its best efforts to prevent the issuance of any such stop order and to obtain as soon as possible its lifting, if issued.

     (c) If, at any time when a prospectus relating to the Purchased Securities is required to be delivered under the Act, any event occurs as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact, or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary at any time to amend or supplement the Registration Statement or the Prospectus to comply with the applicable law, the Company will promptly notify the Underwriters of such event and will promptly prepare and file with the Commission, an amendment or supplement that will correct such statement or omission or an amendment that will effect such compliance.

     (d) The Company, at its expense, will furnish or cause to be furnished to the Underwriters, copies of the Prospectus and all amendments and supplements thereto, in each case as soon as available and in such quantities as the Representative or Underwriters may reasonably request.

     (e) As soon as practicable, but not later than 18 months, after the date of the Terms Agreement relating to the Purchased Securities, the Company will make generally available to its security holders an earning statement or statements (which need not be audited) covering a period of at least 12 months beginning after the effective date of the Registration Statement (as defined in Rule 158(c) under the Act), which will satisfy the provisions of section 11(a) of the Act and the Rules and Regulations.

     (f) The Company will furnish to the Representative such copies of the Registration Statement (including one copy of the Registration Statement for the counsel for the Underwriters, which is signed and includes all exhibits), including all amendments or supplements thereto, as may be reasonably requested.

     (g) The Company will arrange or cooperate in arrangements for the qualification of the Purchased Securities for sale under the laws of such jurisdictions as the Representative or, if there is no Representative, the Underwriters, designates and will continue such qualifications in effect so long as required for the distribution of the Purchased Securities, provided that the Company shall not be required to qualify as a foreign corporation in any State, to consent to service of process in any State other than with respect to claims arising out of the offering or sale of the Purchased Securities, or to meet other requirements deemed by it to be unduly burdensome.

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     (h) The Company will pay all expenses incident to the performance of its obligations under this Agreement, and will reimburse the Underwriters for any reasonable expenses (including reasonable fees and disbursements of counsel) incurred by them in connection with the qualification of the Purchased Securities with respect to which the Terms Agreement relating to the Purchased Securities has been entered for sale under the laws of such jurisdictions as the Representative or, if there is no Representative, the Underwriters designate, and the printing of memoranda relating thereto, and for any fees charged by investment rating agencies for the rating of the Purchased Securities. It is understood, however, that, except as provided in this Section 4(h) and Section 6 and 7, the Underwriters will pay all of their own costs and expenses.

     (i) The Company will not, for a period beginning at the time of execution of the Terms Agreement relating to the Purchased Securities and ending on the Closing Date, offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, or file with the Commission a registration statement under the Act relating to any additional debt securities of the Company (or warrants to purchase debt securities of the Company) that mature more than one year after the Closing Date and that are substantially similar to the Purchased Securities, without the prior written consent of the Representative or, if there is no Representative, the Underwriters.

     5. Conditions of the Obligations of the Underwriters. The obligations of the Underwriters to purchase and pay for the Purchased Securities will be subject to the accuracy of the representations and warranties on the part of the Company herein, to the accuracy of the statements of Company officers made pursuant to the provisions hereof, to the performance by the Company of its obligations hereunder, and to the following additional conditions precedent:

     (a) On the date of the Terms Agreement, the Underwriters shall have received a letter from Deloitte & Touche LLP, dated the date of the Terms Agreement, confirming that they are independent certified public accountants within the meaning of the Act and the applicable published Rules and Regulations thereunder, and stating in effect that

          (i) in their opinion the financial statements and schedules of the Company audited by them and incorporated by reference in the Prospectus comply as to form in all material respects with the applicable accounting requirements of the 1934 Act and the Rules and Regulations thereunder,

          (ii) they have performed the procedures specified by the American Institute of Certified Public Accountants for a review of interim financial information as described in Statement of Auditing Standards No. 100, Interim Financial Information, on any unaudited financial statements included in the Registration Statement,

          (iii) on the basis of the review referred to in clause (ii) above, a reading of the latest available interim financial statements of the Company, inquiries of officials of the Company responsible for financial and accounting matters, and other specified procedures, nothing came to their attention that caused them to believe that:

          (A) the unaudited financial statements, if any, incorporated by reference in the Prospectus do not comply as to form in all material respects with

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the applicable accounting requirements of the 1934 Act and the Rules and Regulations thereunder or any material modifications should be made to such unaudited financial statements and summary of earnings for them to be in conformity with generally accepted accounting principles;

          (B) if any unaudited “capsule” information is contained in the Prospectus, the unaudited consolidated operating revenues, gross income, net income and net income per share amounts or other amounts constituting such “capsule” information and described in such letter do not agree with the corresponding amounts set forth in the unaudited consolidated financial statements or were not determined on a basis substantially consistent with that of the corresponding amounts in the audited statements of income;

          (C) at the date of the most recent available unaudited financial statements and at a specified date not more than five days prior to the date of the Terms Agreement, except in all cases for increases or decreases which result from the declaration or payment of dividends, there was any increase in the amounts of common stock, redeemable preferred stock, or non-redeemable preferred stock of the Company or any increase, exceeding $10,000,000, in long-term debt of the Company or, at the date of the most recent available unaudited financial statements there was any decrease in net assets as compared with amounts shown in the most recent financial statements included or incorporated by reference in the Prospectus; or

          (D) for the period from the date of the most recent balance sheet included or incorporated by reference in the Prospectus to the end of the most recently completed month for which financial information is available to the Company, as compared to the corresponding period in the preceding year, there were any decreases, exceeding 3%, in the amounts of total revenues or net income,

except in all cases for increases or decreases which the Prospectus (including any material incorporated by reference therein) discloses have occurred or may occur, or which are described in such letter,

          (iv) they have compared specified dollar amounts (or percentages derived from such dollar amounts) and other financial information contained in the Prospectus (in each case to the extent that such dollar amounts, percentages and other financial information are derived from the general accounting records of the Company and its subsidiaries subject to the internal controls of the Company’s accounting system or are derived directly from such records by analysis or computation) with the results obtained from inquiries, a reading of such general accounting records and other procedures specified in such letter and have found such dollar amounts, percentages and other financial information to be in agreement with such results, except as otherwise specified in such letter.

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All financial statements and schedules included in material incorporated by reference into the Prospectus shall be deemed included in the Prospectus for purposes of this subsection.

     (b) No stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued, and no order directed to the adequacy of any document incorporated by reference in the Prospectus, and no proceedings for either purpose shall have been instituted or threatened or, to the knowledge of the Company or the Underwriters, shall be contemplated by the Commission.

     (c) Subsequent to the execution of the Terms Agreement relating to the Purchased Securities and prior to the Closing Date, (i) there shall not have occurred any change, or any development involving a prospective change, in or affecting particularly the business or properties of the Company or its subsidiaries which, in the judgment of the Representative, materially impairs the investment quality of the Purchased Securities, (ii) there shall not have occurred a suspension or material limitation in trading in securities generally on the New York Stock Exchange, (iii) there shall not have occurred a general moratorium on or a material disruption in commercial banking activities in New York declared by either Federal or New York State authorities, (iv) no rating of any of the Company’s debt securities shall have been reduced, suspended or withdrawn and there shall have been no public announcement that any such debt securities have been placed on CreditWatch, Watchlist, or under any similar surveillance or review, in each case with negative implications, by Moody’s Investor Service’s, Inc. or Standard & Poor’s, a division of The McGraw-Hill Companies, Inc., or any successor agencies thereto, (v) there shall not have occurred any outbreak or escalation of major hostilities in which the United States is involved, any declaration of war by Congress or any other substantial national or international calamity or emergency if, in the judgment of the Representative, the effect of any such outbreak, escalation, declaration, calamity or emergency (including, without limitation, an act of terrorism that results in any such substantial national or international calamity or emergency) makes it impractical or inadvisable to proceed with completion of the sale of and payment for the Purchased Securities, and (vi) there shall not have occurred any material disruption of securities settlement or clearance services. If the Underwriters elect not to purchase the Purchased Securities as a result of the occurrence of one of the events specified in this Section 5(c), the Representatives will promptly notify the Company.

     (d) The Underwriters shall have received an opinion of Snell & Wilmer L.L.P., counsel for the Company, dated the relevant Closing Date, to the effect that:

          (i) The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Arizona with corporate power and authority to carry on its business as described in the Prospectus; and the Company is duly qualified as a foreign corporation to do business in the States of New Mexico, California, Oregon, Washington, Montana, Wyoming, and Texas;

          (ii) The Purchased Securities have been duly authorized, executed, authenticated, issued, and delivered, constitute valid and legally binding obligations of the Company entitled to the benefits provided by the Indenture (except as the same may be limited by (A) general principles of equity or by bankruptcy, insolvency, reorganization, arrangement,

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moratorium, or other laws or equitable principles relating to or affecting the enforcement of creditors’ rights generally and (B) the qualification that certain waivers, procedures, remedies, and other provisions of the Purchased Securities and the Indenture may be unenforceable under or limited by the law of the State of Arizona; however, such law does not in such counsel’s opinion substantially prevent the practical realization of the benefits intended by such documents) and conform to the description thereof in the Prospectus;

          (iii) The Indenture has been duly authorized, executed, and delivered, has been duly qualified under the Trust Indenture Act, and constitutes a valid and binding instrument enforceable in accordance with its terms except as the same may be limited by (A) general principles of equity or by bankruptcy, insolvency, reorganization, arrangement, moratorium, or other laws or equitable principles relating to or affecting the enforcement of creditors’ rights generally and (B) the qualification that certain waivers, procedures, remedies, and other provisions of the Purchased Securities and the Indenture may be unenforceable under or limited by the law of the State of Arizona; however, such law does not in such counsel’s opinion substantially prevent the practical realization of the benefits intended by such documents;

          (iv) With certain exceptions, a public service corporation is required to obtain certificates of convenience and necessity from the Arizona Corporation Commission under A.R.S. Section 40-281.A for construction of its lines, plant, services, or systems, or any extensions thereof, within the State of Arizona, and to obtain franchises or similar consents or permits from counties and incorporated municipalities under A.R.S. Section 40-283.A for the construction, operation, and maintenance of transmission lines within the State of Arizona; to such counsel’s knowledge after due inquiry, the Company holds such valid franchises, certificates of convenience and necessity, consents, and permits pursuant to such statutory provisions as are necessary with respect to the maintenance and operation of its property and business as now conducted, except that (A) the Company from time to time makes minor extensions of its system prior to the time a related franchise, certificate, license, or permit is procured, (B) from time to time communities already being served by the Company become incorporated and considerable time may elapse before a franchise is procured, (C) certain franchises may have expired prior to the renegotiation thereof, (D) certain minor defects and exceptions may exist which, individually and in the aggregate, are not deemed material, and (E) such counsel need not be required to express any opinion regarding the geographical scope of any franchise, certificate, license, or permit that is not specific as to its geographical scope;

          (v) The Company is organized and operating in the State of Arizona, and its securities issues, including the issuance and sale of the Purchased Securities, are regulated by the ACC under the laws of the State of Arizona. The issuance and sale of the Purchased Securities on the terms and conditions set forth or contemplated herein and in the Prospectus and the Terms Agreement relating to the Purchased Securities and the execution and delivery of the Supplemental Indenture relating to the Purchased Securities have been duly authorized by the Arizona Corporation Commission, said Commission had jurisdiction in the premises, and no further approval, authorization, or consent of any other public board or body is necessary to the validity of such issuance and sale of such Purchased Securities or the execution and delivery of such Supplemental Indenture, except as may be required under state securities or blue sky laws, as to which laws such counsel shall not be required to express an opinion, and the registration

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under the Act of the Purchased Securities and the qualification of the Indenture under the Trust Indenture Act;

          (vi) The Registration Statement has become effective under the Act, and, to the knowledge of such counsel, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are pending or contemplated under the Act, and each part of the Registration Statement relating to the Securities, when such part became effective, and the Prospectus, as of the date of the Prospectus Supplement, and each amendment or supplement thereto, as of their respective effective or issue dates, other than financial statements and schedules and other financial, statistical or accounting data included or incorporated by reference therein or omitted therefrom, as to which such counsel need express no opinion, complied as to form in all material respects with the requirements of the Act, the Trust Indenture Act, and the published Rules and Regulations. Although such counsel does not assume any responsibility for the accuracy, or completeness or fairness of the statements contained in the Registration Statement or the Prospectus and has not independently verified any of such statements except as stated in such opinion, such counsel have no reason to believe that (1) any part of the Registration Statement, when such part became effective other than financial statements and schedules, and other financial, statistical or accounting data included or incorporated by reference therein or omitted therefrom, as to which such counsel need express no opinion, contained any untrue statement of a material fact or omitted to state any material fact, required to be stated therein or necessary to make the statements therein, not misleading, or (2) the Prospectus, as of the date of the related Prospectus Supplement and at the Closing Date, other than financial statements and schedules, and other financial, statistical or accounting data included or incorporated by reference therein or omitted therefrom, as to which such counsel need express no opinion, contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in light of the circumstances under which they are made, not misleading; and to the knowledge of such counsel there are no legal or governmental proceedings required to be described in the Prospectus that are not described as required, nor any contracts or documents of a character required to be described in the Registration Statement or Prospectus or to be filed as exhibits to the Registration Statement that are not described and filed as required (it being understood that such counsel need express no opinion as to the statements of eligibility and qualification of the trustee under the Indenture);

          (vii) This Agreement and the Terms Agreement have been duly authorized, executed, and delivered by the Company;

          (viii) The Company is not an “investment company” or an entity “controlled” by an “investment company,” as such terms are defined in the 1940 Act; and

          (ix) Neither the execution nor delivery by the Company of this Agreement or the Terms Agreement, nor the consummation by the Company of the transactions therein contemplated, nor the fulfillment by the Company of the terms, conditions or provisions thereof (1) conflicts with, violates or results in a breach of any law, administrative regulation or, to the knowledge of such counsel, court decree applicable to the Company, (2) conflicts with, violates or results in a breach of any of the terms, conditions or provisions of the Articles of Incorporation or by-laws of the Company or of any material agreement or instrument listed in a

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certificate provided by the Company, to which the Company is a party or by which it is bound, or constitutes a default thereunder, or (3) will result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any of the properties or assets of the Company, except as contemplated therein; and

     Whenever the opinions required by this Agreement are stated to be “to the knowledge of such counsel” or “to such counsel’s knowledge”, such statements are intended to signify that those attorneys in the firm responsible for preparing the opinion or who have given substantive attention to the transactions contemplated by this Agreement, after consultation with such other attorneys in such firm who have worked on legal matters related to the Company and its subsidiaries as they considered appropriate, do not have current actual knowledge of the inaccuracy of such statement. However, except where expressly stated otherwise, such counsel need not undertake any special or independent investigation to determine the existence or absence of such facts, and no inference as to such counsel’s knowledge of the existence or absence of such facts should be drawn from its representation of the Company in connection with this transaction or otherwise.

     In giving such opinion, Snell & Wilmer L.L.P. may rely solely upon certificates of the Company as to any factual matters upon which any such opinions are based and may rely upon the opinion of Keleher & McLeod, P.A., referred to below, as to all matters governed by the laws of the State of New Mexico, and may rely on the opinion of Underwriters’ counsel as to all matters governed by the law of the State of New York, and further may rely upon the opinion of Morgan, Lewis & Bockius LLP, delivered to you at closing, as to all matters under the Public Utility Holding Company Act of 1935, as amended, and the Federal Power Act, as amended.

     (e) The Underwriters shall have received evidence that the Purchased Securities have been rated [                   ] or higher by Moody’s Investors Service and [                   ] or higher by Standard & Poor’s Corporation.

     (f) The Underwriters shall have received an opinion of Keleher & McLeod, P.A., New Mexico counsel for the Company, dated the Closing Date, to the effect that:

          (i) The Company is duly qualified as a foreign corporation to do business and is in good standing in the State of New Mexico and has full corporate power and authority to engage in the State of New Mexico in the business now conducted by it therein; and

          (ii) The activities of the Company in the State of New Mexico to date do not constitute it a “public utility” as that term is defined in the relevant laws of the State of New Mexico, and accordingly, no public utility franchises or certificates of convenience and necessity are necessary under New Mexico law with respect to the maintenance and operation of the Company’s property and business as now conducted in the State of New Mexico and no approval, authorization, or consent of the New Mexico Public Regulation Commission or any other public board or body of the State of New Mexico is required for the issuance and sale of the Purchased Securities on the terms and conditions herein and in the Prospectus set forth or contemplated or for the execution of the Supplemental Indenture relating to the Purchased Securities, except as may be required under New Mexico state securities or blue sky laws, as to which laws such counsel shall not be required to express an opinion.

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     In giving such opinion, Keleher & McLeod, P.A. may rely solely upon certificates of the Company as to any factual matters upon which any such opinions are based.

     (g) The Underwriters shall have received from counsel for the Underwriters such opinion or opinions, dated the Closing Date, with respect to such matters as the Underwriters may reasonably require and the Company shall have furnished to such counsel such documents as they request for the purpose of enabling them to pass upon any such matters In rendering such opinion, such counsel may and rely as to all matters governed by the laws of the States of Arizona and New Mexico upon the opinions of Snell & Wilmer L.L.P. and Keleher & McLeod, P.A., referred to above.

     (h) The Underwriters shall have received a certificate of the President or any Vice President and a principal financial or accounting officer of the Company, dated the Closing Date, in which such officers, to the best of their knowledge after reasonable investigation, shall state that the representations and warranties of the Company in this Agreement are true and correct, that the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to the Closing Date, that no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are contemplated by the Commission, and that, subsequent to the date of the most recent financial statements in the Prospectus, there has been no material adverse change in the financial position or results of operations of the Company and its subsidiaries except as set forth or contemplated in the Prospectus or as described in such certificate.

     (i) The Underwriters and the Representative shall have received a letter of Deloitte & Touche LLP, dated the Closing Date, which meets the requirements of subsection (a) of this Section, except that the specified date referred to in such subsection will be a date not more than five days prior to the Closing Date for the purposes of this subsection.

     The Company will furnish the Underwriters with such conformed copies of such opinions, certificates, letters, and documents as may be reasonably requested.

     6. Indemnification.

     (a) The Company will indemnify and hold harmless each Underwriter and each person, if any, who controls such Underwriter within the meaning of the Act, against any losses, claims, damages or liabilities, joint or several, to which such Underwriter or such controlling person may become subject, under the Act or otherwise, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any part of the Registration Statement relating to the Securities, when such part became effective, any preliminary prospectus relating the Securities, the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, not misleading; and will reimburse each Underwriter and each such controlling person for any legal or other expenses reasonably incurred by such Underwriter or such controlling person, as incurred, in connection with investigating or defending any such loss, claim, damage, liability, or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim,

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damage, or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any of such documents in reliance upon and in conformity with written information furnished to the Company by any Underwriter specifically for use therein and provided, further, however, that with respect to any untrue statement or alleged untrue statement in or omission or alleged omission from any preliminary prospectus relating to the Securities or the Prospectus, as amended or supplemented, the indemnity agreement contained in this subsection (a) shall not inure to the benefit of any Underwriter from whom the person asserting any such losses, claims, damages or liabilities purchased the Securities concerned, insofar as such indemnity relates to an untrue statement or alleged untrue statement in or omission or alleged omission from any preliminary prospectus relating to the Securities or the Prospectus, but eliminated or remedied prior to the consummation of such sale in the Prospectus, or any amendment or supplement thereto, furnished on a timely basis by the Company to the Underwriters, unless a copy of the Prospectus (in the case of such a statement or omission made in such preliminary prospectus) or such amendment or supplement (in the case of such a statement or omission made in the Prospectus) (excluding, however, any document then incorporated or deemed to be incorporated by reference in the Prospectus or such amendment or supplement) is furnished by such Underwriter to such person (i) with or prior to the written confirmation of the sale involved or (ii) as soon as available after such written confirmation (if it is made available to the Underwriters prior to settlement of such sale). This indemnity agreement will be in addition to any liability which the Company may otherwise have.

     (b) Each Underwriter will severally indemnify and hold harmless the Company, each of its directors, each of its officers who have signed the Registration Statement, and each person, if any, who controls the Company within the meaning of the Act, against any losses, claims, damages, or liabilities to which the Company or any such director, officer, or controlling person may become subject, under the Act or otherwise, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any part of the Registration Statement relating to the Securities, when such part became effective, any preliminary prospectus, the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by such Underwriter specifically for use therein; and will reimburse any legal or other expenses reasonably incurred, as incurred, by the Company or any such director, officer, or controlling person in connection with investigating or defending any such loss, claim, damage, liability, or action. This indemnity agreement will be in addition to any liability which such Underwriter may otherwise have.

     (c) Promptly after receipt by an indemnified party under this Section of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section, notify the indemnifying party of the commencement thereof; but the failure to notify the indemnifying party shall not relieve it from any liability that it may have under subsection (a) or (b) above except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided further that the failure to notify the indemnifying party shall not relieve it from any liability that it may have to an indemnified party otherwise than under subsection (a) or (b) above. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein

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and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, without the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its assumption of the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation. Notwithstanding the indemnifying party’s election to appoint counsel to represent the indemnified party in an action, the indemnified party shall have the right to employ separate counsel (including local counsel), and the indemnifying party shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a conflict of interest, (ii) the actual or potential defendants in, or targets of, any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, (iii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of the institution of such action or (iv) the indemnifying party shall authorize the indemnified party to employ separate counsel at the expense of the indemnifying party. It is understood that the indemnifying party shall not, in respect of the legal expenses of any indemnified party in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all such indemnified parties. Such firm shall be designated in writing by the Representative, in the case of parties indemnified pursuant to Section 6(a) above, and by the Company, in the case of parties indemnified pursuant to Section 6(b) above. An indemnifying party shall not be liable for any settlement of a claim or action effected without its written consent, which shall not be unreasonably withheld.

     (d) If the indemnification provided for in this Section is unavailable or insufficient to hold harmless an indemnified party for any loss, claim, damage, liability, or action described in subsection (a) or (b) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities referred to in subsection (a) or (b) above on the following basis: (i) if such loss, claim, damage, liability, or action arises under subsection (a) above, then (A) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters on the other from the offering of the Securities or (B) if the allocation provided by clause (A) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (A) above but also the relative fault of the Company on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities as well as any other relevant equitable considerations; and (ii) if such loss, claim, damage, liability, or action arises under subsection (b) above, then in such proportion as is appropriate to reflect the relative fault of the Company on the one hand and the Underwriter on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities as well as any other relevant equitable considerations. For the purposes of clause (i) above, the relative benefits received by the Company on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses)

14

received by the Company bear to the total underwriting discounts and commissions received by the Underwriters. For the purposes of clauses (i) and (ii) above, the relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Underwriters and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The Company and each of the Underwriters agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (d). The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding the provisions of this subsection (d), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters’ obligations in this subsection (d) to contribute are several in proportion to their respective underwriting obligations and not joint.

     7. Default of Underwriters; Termination by Underwriters. If any Underwriter or Underwriters default in their obligations to purchase Purchased Securities pursuant to this Agreement and the Terms Agreement and the principal amount of Purchased Securities that such defaulting Underwriter or Underwriters agreed but failed to purchase is ten percent (10%) or less of the principal amount of Purchased Securities to which such Terms Agreement relates, the Representative or, if there is no Representative, the Underwriters, may make arrangements satisfactory to the Company for the purchase of such Purchased Securities by other persons, including any of the Underwriters, but if no such arrangements are made by the Closing Date the non-defaulting Underwriters shall be obligated severally, in proportion to their respective commitments hereunder and under such Terms Agreement, to purchase the Purchased Securities that such defaulting Underwriter or Underwriters agreed but failed to purchase. If any Underwriter or Underwriters so default and the aggregate principal amount of Purchased Securities with respect to which such default or defaults occur is more than the above-described amount and arrangements satisfactory to the remaining Underwriters and the Company for the purchase of such Purchased Securities by other persons are not made within thirty-six hours after such default, the Terms Agreement will terminate without liability on the part of any non-defaulting Underwriter or the Company, except as provided in Section 8. As used in this Agreement, the term “Underwriter” includes any person substituted for an Underwriter under this Section. Nothing herein will relieve a defaulting Underwriter from liability for its default.

     If this Agreement shall be terminated by the Underwriters because of any failure or refusal on the part of the Company to comply with the terms or to fulfill any of the conditions of this Agreement, or if for any reason the Company shall be unable to perform its obligations under this Agreement, the Company shall not be liable to any Underwriter or to any member of

15

any selling group for the loss of anticipated profits from the transactions contemplated by this Agreement. However, in such an event, the Company will reimburse the Underwriters for all out of pocket expenses (including the reasonable fees and disbursements of their counsel) reasonably incurred by the Underwriters in connection with this Agreement and the offering contemplated hereunder; provided, however, that if the Purchased Securities are not delivered by or on behalf of the Company solely as a result of the failure to satisfy the condition set forth in Section 5(c) hereof, the Company shall have no liability to the Underwriters except as provided in Sections 4(h) and 6 of this Agreement.

     8. Survival of Certain Representations and Obligations. The respective indemnities, agreements, representations, warranties, and other statements of the Company or its officers and of the Underwriters set forth in or made pursuant to this Agreement will remain in full force and effect regardless of any investigation, or statement as to the results thereof, made by or on behalf of the Underwriters or the Company or any of its officers or directors or any controlling person, and will survive delivery of and payment for the Purchased Securities. If any Terms Agreement is terminated pursuant to Section 7, or if for any reason a purchase pursuant to any Terms Agreement is not consummated, the Company shall remain responsible for the expenses to be paid or reimbursed by it pursuant to Section 4 and the respective obligations of the Company and the Underwriters pursuant to Section 6 shall remain in effect.

     9. Notices. All communications hereunder relating to any offering of Purchased Securities will be in writing, and, if sent to the Underwriters, may be mailed, delivered, or telecopied and confirmed to the Representative first named in the Terms Agreement relating to such Purchased Securities at the address furnished to the Company in writing for the purpose of communications, or, if there is no Representative, to the Underwriters at their addresses furnished to the Company in writing for the purpose of communications; provided, however, that any notice to an Underwriter pursuant to Section 6 will be mailed, delivered, or telecopied and confirmed to each such Underwriter at its own address. All communications hereunder to the Company shall be mailed to the Company, Attention: Treasurer, at P.O. Box 53999, Phoenix, Arizona 85072-3999, or delivered, or telecopied and confirmed to the Company at 400 North Fifth Street, Phoenix, Arizona 85004.

     10. Successors. This Agreement will inure to the benefit of and be binding upon the parties hereto and the Underwriter or Underwriters as are named in any Terms Agreement and their respective successors and the officers and directors and controlling persons referred to in Section 6, and no other person will have any right or obligation hereunder.

     11. Representation of Underwriters. The Representatives, if any, may act for the Underwriters in connection with any offering to which a Terms Agreement may relate, and any action under this Agreement or such Terms Agreement taken by the Representatives jointly or the Representative first named in such Terms Agreement in such capacity will be binding upon the Underwriters of Purchased Securities to which such Terms Agreement relates.

     12. Execution in Counterpart. This Agreement and any Terms Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all such respective counterparts shall together constitute a single instrument.

16

     13. Applicable Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York.

     14. Headings. The headings of the sections of this Agreement have been inserted for convenience of reference only and shall not be deemed a part of this Agreement.

17

     If the foregoing is in accordance with your understanding of our agreement, kindly sign and return to us the enclosed duplicate hereof, whereupon it will become a binding agreement between the Company and the Underwriters in accordance with its terms.

Very truly yours,
ARIZONA PUBLIC SERVICE COMPANY
By:
	Name: Barbara M. Gomez
	Title: Vice President and Treasurer

The foregoing Underwriting Agreement is hereby confirmed and accepted as of the date first above written.

[                                   ]

By:
	Name:
	Title:

[                                   ]

By:
	Name:
	Title:

On their own behalf and, if applicable, as Representatives of the Underwriters named in a Terms Agreement.

18

EXHIBIT A

TERMS AGREEMENT

[                   ], [                   ]

Arizona Public Service Company
400 North Fifth Street
Phoenix, Arizona 85004

Attention: Treasurer

Ladies and Gentlemen:

     Arizona Public Service Company (the “Company”) hereby agrees to sell to the several Underwriters (the “Underwriters”) named on Schedule I hereto and listed in the Company’s Prospectus Supplement (the “Prospectus Supplement”) of even date herewith relating to $[                   ] in aggregate principal amount of its [                   ]% Notes due [                   ] (the “Purchased Securities”), and the Underwriters hereby agree to purchase, severally and not jointly, the principal amount of the Purchased Securities set forth opposite such Underwriter’s name in Schedule I hereto in the principal amount and at the prices set forth therein. The sale of the Purchased Securities by the Company and the purchase thereof by the Underwriters shall be made on the basis of the representations, warranties, and agreements contained in the Underwriting Agreement (the “Underwriting Agreement”), dated [                   ], [                   ], relating to the issuance and sale of up to $600,000,000 of the Company’s Securities under the Company’s Indenture, and shall be subject to the terms and conditions set forth in such Underwriting Agreement. The provisions of the Underwriting Agreement are incorporated herein by reference. As contemplated by Section 3 of the Underwriting Agreement, certain terms of the Purchased Securities are described in the Prospectus Supplement.

     The Underwriters propose to offer the Purchased Securities to the public in the manner and upon the terms set out in the Prospectus Supplement.

     On [                   ], [                   ] the Company will deliver the Purchased Securities to the Underwriters in book-entry form through the facilities of The Depository Trust Company at the office of the Company, 400 North Fifth Street, Phoenix, Arizona 85004, against payment of the purchase price by transfer of funds by Fed Wire from the Underwriters to the Company’s account at a bank in Phoenix, Arizona designated by the Company. Such purchase price will be deemed to have been received by the Company upon the Company’s receipt of the Fed Wire reference number relating to such transfer of funds. Closing shall occur at the office of the Company, 400 North Fifth Street, Phoenix, Arizona, at 7:00 a.m. Phoenix time, on [                   ], [                   ], or at such other time and date as the Underwriters and the Company may agree upon in writing, such time and date being referred to as the “Closing Date.” All of the Purchased Securities referred to in this paragraph shall be in global form and registered in the name of Cede & Co. and deposited with The Depository Trust Company, as depositary.

     If the foregoing is acceptable to you, please sign below and transmit evidence of such signing to [                   ] and [                   ], the Representatives, at your earliest convenience. At that point, the agreement signified hereby will constitute the Terms Agreement, as described in the Underwriting Agreement.

     All capitalized terms herein, not otherwise defined herein, are used as defined in the Underwriting Agreement. This agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of such respective counterparts shall together constitute a single instrument.

Very truly yours,
[                                    ]
By:
	Name:
	Title:
[                                    ]
By:
	Name:
	Title:
As Representatives of the Several Underwriters.

Confirmed and accepted as
of the date first above written.

ARIZONA PUBLIC SERVICE COMPANY

By:
Name:	Barbara M. Gomez
Title:	Vice President and Treasurer

20

SCHEDULE I

	Principal Amount of
Underwriter	Purchased Securities	Purchase Price*
[_________________________] [_________________________]	$	$
Total	$	$

     * Reflecting a purchase price of [       ]% of the principal amount of the Purchased Securities.

EX-1.1

exv1w1

EX-5.1

EXHIBIT 5.1

December 21, 2004

Arizona Public Service Company
400 North Fifth Street
Phoenix, Arizona 85004

Ladies and Gentlemen:

          We have acted as counsel to Arizona Public Service Company, an Arizona corporation (the “Company”), in connection with the Company’s preparation and filing with the Securities and Exchange Commission (the “Commission”) of a registration statement on Form S-3 (the “Registration Statement”) under the Securities Act of 1933, as amended (the “Securities Act”), with respect to up to $400,000,000 maximum aggregate offering price of debt securities (“Debt Securities”), which may consist of either (a) senior debt securities to be issued under the indenture (the “Senior Indenture”) filed as Exhibit 4.5 to the Registration Statement or (b) subordinated debt securities to be issued under the indenture (the “Subordinated Indenture”) filed as Exhibit 4.3 to the Registration Statement (collectively, the “Securities”), in each case to be issued and sold from time to time by the Company under the Registration Statement pursuant to Rule 415 under the Securities Act. The Senior Indenture and the Subordinated Indenture are sometimes hereinafter referred to individually as an “Indenture” and collectively as the “Indentures.”

     In our capacity as such counsel, we have either participated in the preparation of or have reviewed and are familiar with the Registration Statement and exhibits thereto, including the combined prospectus comprising a part thereof (the “Prospectus”), which also relates to an additional $200,000,000 maximum aggregate offering price of securities of the Company remaining unsold under Registration Statement No. 333-106772. We have also reviewed such other documents and have satisfied ourselves as to such other matters as we have deemed necessary in order to render this opinion. As to any facts material to the opinions expressed herein which were not independently established or verified, we have relied upon oral or written statements and representations of officers and other representatives of the Company and others.

     Based upon the foregoing and in reliance thereon, and subject to the qualifications and limitations set forth herein, we are of the opinion that after (a) the Company’s Board of Directors has taken all necessary corporate action (whether directly or pursuant to a proper delegation of its authority) to approve the issuance and establish the terms of the Securities, the terms of the offering of the Securities and related matters, (b) the Registration Statement has become effective and the securities or “blue sky” laws of various states shall have been complied with, and (c) any other applicable regulatory approvals, including, without limitation, approval of the Arizona Corporation Commission and any required approval of the Commission pursuant to The Public Utility Holding Company Act of 1935 or of the Federal Energy Regulatory Commission pursuant to the Federal Power Act, have been obtained, then when (i) the Indenture and any supplemental indenture or other instrument thereunder to be entered into, or otherwise executed or adopted, in connection with the issuance of the Securities have been duly executed and delivered by the Company and the trustee named therein, (ii) the Securities have been duly executed, authenticated and delivered in accordance with the terms of the Indenture, and (iii) the Securities have been issued and sold, and the purchase price therefor has been paid to the Company, in the manner contemplated by the Registration Statement and in any relevant amendment thereto or in any supplement to the Prospectus and in accordance with the Indenture, the Securities will be valid and legally binding obligations of the Company, enforceable against the Company in accordance with their terms, except as may be limited by (A) general principles of equity or by bankruptcy, insolvency, reorganization, arrangement, moratorium, or other laws or equitable principles relating to or affecting

Arizona Public Service Company
December 21, 2004
Page 2

the enforcement of creditors’ rights generally and (B) the qualification that certain waivers, procedures, remedies, and other provisions of the Securities may be unenforceable under or limited by the law of the State of Arizona; however, such law does not in our opinion substantially prevent the practical realization of the benefits thereof.

     We are members of the bar of the State of Arizona. The opinions expressed herein are limited solely to the laws of the State of Arizona and the Federal laws of the United States of America (except that we express no opinion as to Arizona securities or blue sky laws) and we express no opinion on the laws of any other jurisdiction. We note that the Indentures will be governed by and construed in accordance with the law of the State of New York, without regard to conflicts of laws principles thereof. In so far as this opinion relates to matters which are governed by the laws of the State of New York, we have relied upon the opinion of Pillsbury Winthrop LLP addressed to you of even date herewith, which is being filed as an exhibit to the Registration Statement.

     The Securities may be issued from time to time on a delayed or continuous basis, but this opinion is limited to the laws, including the rules and regulations thereunder, as in effect on the date hereof. We disclaim any obligation to advise you of any change in any of these sources of law or subsequent legal or factual developments which might affect any matters or opinions set forth herein.

     We hereby consent to the filing of this opinion with the Commission as Exhibit 5.1 to the Registration Statement. We also consent to the reference to our firm under the heading “Legal Opinions” in the Registration Statement.

Very truly yours,

/s/ Snell & Wilmer L.L.P.

EX-5.2

Exhibit 5.2

[Letterhead of Pillsbury Winthrop LLP]

December 21, 2004

Arizona Public Service Company
400 North Fifth Street
Phoenix, Arizona 85004

Ladies and Gentlemen:

     Arizona Public Service Company, an Arizona corporation (the “Company”), has filed with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Securities Act”), a Registration Statement on Form S-3 (the “Registration Statement”) with respect to up to $600,000,000 maximum aggregate offering price of debt securities (the “Debt Securities”), which may consist of senior debt securities (the “Senior Debt Securities”) or subordinated debt securities (the “Subordinated Debt Securities”), in each case to be issued and sold from time to time by the Company under the Registration Statement pursuant to Rule 415 under the Securities Act.

     The Senior Debt Securities will be issued pursuant to an Indenture dated as of January 15, 1998 between the Company and JPMorgan Chase Bank, as trustee (the “Senior Indenture”), and the Subordinated Debt Securities will be issued pursuant to an Indenture dated as of January 1, 1995 between the Company and The Bank of New York, as trustee (the “Subordinated Indenture”), in each case as filed as exhibits to the Registration Statement.

     In so acting, we have reviewed originals (or copies certified or otherwise identified to our satisfaction) of the Registration Statement (including the exhibits thereto), the Articles of Incorporation and By-Laws of the Company as in effect on the date hereof, corporate and other documents, records and papers and certificates of public officials. We are members of the Bar of the State of New York and, for purposes of this opinion, do not hold ourselves out as experts of the laws of any jurisdiction other than the State of New York.

     On the basis of such review and assuming that (i) the applicable provisions of the Securities Act, the Trust Indenture Act of 1939, as amended, and the securities or “blue sky” laws of applicable states shall have been complied with, (ii) appropriate resolutions have been adopted by the Board of Directors of the Company (or a duly appointed committee or representative thereof) and remain effective authorizing the issuance and sale of the Debt Securities, (iii) the Senior Indenture and the Subordinated Indenture, and any supplemental indenture or other instrument entered into or otherwise executed or adopted thereunder, in each case, have been duly executed and delivered so as not to violate any applicable law or result in a default under or breach of any agreement or instrument binding upon the Company and (iv) the Debt Securities have been issued and sold upon the terms specified in such resolutions, we are of the opinion that the Debt Securities will be legally issued and will constitute the valid and

Arizona Public Service Company
December 21, 2004

binding obligations of the Company, subject to bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws affecting creditors’ rights generally, to general equitable principles (whether considered in a proceeding in equity or at law) and to concepts of materiality, reasonableness, good faith and fair dealing and the discretion of the court before which any matter is brought.

     We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the references to us under the heading “Legal Opinions” in the related prospectus. In giving this consent, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission thereunder.

Very truly yours,

/s/ Pillsbury Winthrop LLP

2

EX-12.1

Exhibit 12.1

ARIZONA PUBLIC SERVICE COMPANY
COMPUTATION OF EARNINGS TO FIXED CHARGES
($000’s)

	Nine Months
	Ended		Twelve Months
	September 30,		Ended December 31,
	2004		2003		2002		2001		2000		1999
Earnings:
Income from continuing operations	$	184,555	$	180,937	$	199,343	$	280,688	$	306,594	$	268,322
Income taxes		112,023		86,854		126,805		183,136		195,665		133,015
Fixed charges		135,701		181,793		168,985		166,939		179,381		179,088
Total earnings	$	432,279	$	449,584	$	495,133	$	630,763	$	681,640	$	580,425
Fixed Charges:
Interest charges	$	109,108	$	147,610	$	133,878	$	130,525	$	141,886	$	140,948
Amortization of debt discount		3,616		3,337		2,888		2,650		2,105		2,084
Estimated interest portion of annual rents		22,977		30,846		32,219		33,764		35,390		36,056
Total fixed charges	$	135,701	$	181,793	$	168,985	$	166,939	$	179,381	$	179,088
Ratio of Earnings to Fixed Charges (rounded down)		3.18		2.47		2.93		3.77		3.79		3.24

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in this Registration Statement of Arizona Public Service Company on Form S-3, of our report dated March 11, 2004 (which report expresses an unqualified opinion and includes explanatory paragraphs relating to the change in 2003 in the method of accounting for non-trading derivatives, and to the change in 2001 in the method of accounting for derivatives and hedging activities) appearing in the Annual Report on Form 10-K of Arizona Public Service Company for the year ended December 31, 2003 and to the reference to us under the heading “Experts” in the Prospectus, which is part of this Registration Statement.

/s/ DELOITTE & TOUCHE LLP

Phoenix, Arizona
December 17, 2004

EX-23.2

EXHIBIT 23.2

INDEPENDENT ACCOUNTANTS’ CONSENT

We consent to the incorporation by reference in this Registration Statement of Arizona Public Service Company on Form S-3 of our report dated March 11, 2004 on our examination conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants of management’s assertion that the Company maintained effective internal control over financial reporting as of December 31, 2003 (which report was not intended to comply with, and should not be relied on for compliance with, the U.S. Securities and Exchange Commission rule relating to Section 404 or Section 103 of the Sarbanes-Oxley Act of 2002) appearing in the Annual Report on Form 10-K of Arizona Public Service Company for the year ended December 31, 2003.

/s/ DELOITTE & TOUCHE LLP

Phoenix, Arizona
December 17, 2004

EX-25.1

                                                                    Exhibit 25.1

================================================================================
                                    FORM T-1

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                            STATEMENT OF ELIGIBILITY
                   UNDER THE TRUST INDENTURE ACT OF 1939 OF A
                    CORPORATION DESIGNATED TO ACT AS TRUSTEE

                      CHECK IF AN APPLICATION TO DETERMINE
                      ELIGIBILITY OF A TRUSTEE PURSUANT TO
                             SECTION 305(b)(2) [ ]

                              THE BANK OF NEW YORK
               (Exact name of trustee as specified in its charter)

New York                                                   13-5160382
(State of incorporation                                    (I.R.S. employer
if not a U.S. national bank)                               identification no.)

One Wall Street, New York, N.Y.                            10286
(Address of principal executive offices)                   (Zip code)

                         Arizona Public Service Company
               (Exact name of obligor as specified in its charter)

Arizona                                                    86-0011170
(State or other jurisdiction of                            (I.R.S. employer
incorporation or organization)                             identification no.)

400 North Fifth Street
Phoenix, Arizona                                           85004
(Address of principal executive offices)                   (Zip code)

                                  -------------

                          Subordinated Debt Securities
                       (Title of the indenture securities)

================================================================================




1.    GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:

      (a)   NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
            IT IS SUBJECT.



            Name                                        Address
            ----                                        -------
                                               
Superintendent of Banks of the State of           2 Rector Street, New York,
New York                                          N.Y. 10006, and Albany, N.Y. 12203

Federal Reserve Bank of New York                  33 Liberty Plaza, New York,
                                                  N.Y. 10045

Federal Deposit Insurance Corporation             Washington, D.C. 20429

New York Clearing House Association               New York, New York  10005


      (b)   WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.

      Yes.

2.    AFFILIATIONS WITH OBLIGOR.

      IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
      AFFILIATION.

      None.

16.   LIST OF EXHIBITS.

      EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
      INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
      7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
      229.10(d).

      1.    A copy of the Organization Certificate of The Bank of New York
            (formerly Irving Trust Company) as now in effect, which contains the
            authority to commence business and a grant of powers to exercise
            corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
            filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
            Form T-1 filed with Registration Statement No. 33-21672 and Exhibit
            1 to Form T-1 filed with Registration Statement No. 33-29637.)

      4.    A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form
            T-1 filed with Registration Statement No. 33-31019.)

      6.    The consent of the Trustee required by Section 321(b) of the Act.
            (Exhibit 6 to Form T-1 filed with Registration Statement No.
            33-44051.)

      7.    A copy of the latest report of condition of the Trustee published
            pursuant to law or to the requirements of its supervising or
            examining authority.

                                      -2-


                                    SIGNATURE

      Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 30th day of November, 2004.

                                               THE BANK OF NEW YORK

                                               By:    /s/  ROBERT A. MASSIMILLO
                                                   -----------------------------
                                                   Name: ROBERT A. MASSIMILLO
                                                   Title: VICE PRESIDENT


                                                                       EXHIBIT 7

                       Consolidated Report of Condition of

                              THE BANK OF NEW YORK

                    of One Wall Street, New York, N.Y. 10286
                     And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business September 30,
2004, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.



                                                           Dollar Amounts
                                                            In Thousands
                                                        
ASSETS
Cash and balances due from depository institutions:
   Noninterest-bearing balances and currency and coin .     $ 3,036,306
   Interest-bearing balances ..........................       9,034,655
Securities:
   Held-to-maturity securities ........................       1,693,598
   Available-for-sale securities ......................      20,325,634
Federal funds sold and securities purchased under
   agreements to resell................................
   Federal funds sold in domestic offices .............          19,100
   Securities purchased under agreements to
   resell .............................................       4,324,992
Loans and lease financing receivables:
   Loans and leases held for sale .....................           6,685
   Loans and leases, net of unearned
     income ...........................................      37,402,355
   LESS: Allowance for loan and
     lease losses .....................................         594,211
   Loans and leases, net of unearned
     income and allowance .............................      36,808,144
Trading Assets ........................................       3,420,107
Premises and fixed assets (including capitalized
   leases) ............................................         969,419
Other real estate owned ...............................           1,253
Investments in unconsolidated subsidiaries and
   associated companies ...............................         253,729
Customers' liability to this bank on acceptances
   outstanding ........................................         166,157
Intangible assets......................................
   Goodwill ...........................................       2,708,882
   Other intangible assets ............................         748,171




                                                         
Other assets ..........................................       6,998,625
                                                            -----------
Total assets ..........................................     $90,515,457
                                                            ===========

LIABILITIES
Deposits:
   In domestic offices ................................     $40,236,165
   Noninterest-bearing ................................      15,201,748
   Interest-bearing ...................................      25,034,417
   In foreign offices, Edge and Agreement
     subsidiaries, and IBFs ...........................      24,110,224
   Noninterest-bearing ................................         300,559
   Interest-bearing ...................................      23,809,665
Federal funds purchased and securities sold under
     agreements to repurchase..........................
   Federal funds purchased in domestic
     offices ..........................................         717,565
   Securities sold under agreements to
     repurchase .......................................         812,853
Trading liabilities ...................................       2,598,442
Other borrowed money:
   (includes mortgage indebtedness and obligations
   under capitalized leases) ..........................       4,158,526
Not applicable
Bank's liability on acceptances executed and
   outstanding ........................................         167,267
Subordinated notes and debentures .....................       2,389,088
Other liabilities .....................................       6,730,454
                                                            -----------
Total liabilities .....................................     $81,920,584
                                                            ===========
Minority interest in consolidated
   subsidiaries .......................................         142,058

EQUITY CAPITAL
Perpetual preferred stock and related
   surplus ............................................               0
Common stock ..........................................       1,135,284
Surplus ...............................................       2,087,205
Retained earnings .....................................       5,213,125
Accumulated other comprehensive income ................          17,201
Other equity capital components .......................               0
                                                            -----------
Total equity capital ..................................       8,452,815
                                                            -----------
Total liabilities, minority interest, and equity
   capital ............................................     $90,515,457
                                                            ===========





      I, Thomas J. Mastro, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition is true and
correct to the best of my knowledge and belief.

                                                            Thomas J. Mastro,
                                        Senior Vice President and Comptroller

      We, the undersigned directors, attest to the correctness of this statement
of resources and liabilities. We declare that it has been examined by us, and to
the best of our knowledge and belief has been prepared in conformance with the
instructions and is true and correct.

Thomas A. Renyi
Gerald L. Hassell                       Directors
Alan R. Griffith

EX-25.2

                                                                    EXHIBIT 25.2

- --------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                            -------------------------

                                    FORM T-1

                            STATEMENT OF ELIGIBILITY
                    UNDER THE TRUST INDENTURE ACT OF 1939 OF
                   A CORPORATION DESIGNATED TO ACT AS TRUSTEE

                   -------------------------------------------
               CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
                     A TRUSTEE PURSUANT TO SECTION 305(b)(2)
                    ----------------------------------------

                    JPMORGAN CHASE BANK, NATIONAL ASSOCIATION
               (Exact name of trustee as specified in its charter)

                                                                     13-4994650
(State of incorporation                                        (I.R.S. employer
if not a national bank)                                     identification No.)

1111 POLARIS PARKWAY
COLUMBUS, OHIO                                                            43271
(Address of principal executive offices)                             (Zip Code)

                                Thomas F. Godfrey
                  Vice President and Assistant General Counsel
                    JPMorgan Chase Bank, National Association
                       1 Chase Manhattan Plaza, 25th Floor
                               New York, NY 10081
                               Tel: (212) 552-2192
            (Name, address and telephone number of agent for service)

                  --------------------------------------------
                         ARIZONA PUBLIC SERVICE COMPANY
               (Exact name of obligor as specified in its charter)

ARIZONA                                                              86-0011170
(State or other jurisdiction of                                (I.R.S. employer
incorporation or organization)                               identification No.)

400 NORTH FIFTH STREET
PHOENIX, ARIZONA                                                     85004
(Address of principal executive offices)                             (Zip Code)

                  --------------------------------------------
                                 DEBT SECURITIES
                       (Title of the indenture securities)
              ----------------------------------------------------



                                     GENERAL

Item 1. General Information.

      Furnish the following information as to the trustee:

      (a) Name and address of each examining or supervising authority to which
it is subject.

            Comptroller of the Currency, Washington, D.C.

            Board of Governors of the Federal Reserve System, Washington, D.C.,
      20551

            Federal Deposit Insurance Corporation, Washington, D.C., 20429.

      (b) Whether it is authorized to exercise corporate trust powers.

            Yes.

Item 2. Affiliations with the Obligor and Guarantors.

      If the obligor or any guarantor is an affiliate of the trustee, describe
each such affiliation.

      None.

                                       -2-


Item 16. List of Exhibits

      List below all exhibits filed as a part of this Statement of Eligibility.

      1. A copy of the Articles of Association of JPMorgan Chase Bank, N.A.

      2. A copy of the Certificate of Authority of the Comptroller of the
Currency for the trustee to commence business.

      3. None, the authority of the trustee to exercise corporate trust powers
being contained in the documents described in Exhibits 1 and 2.

      4. A copy of the existing By-Laws of the Trustee.

      5. Not applicable.

      6. The consent of the Trustee required by Section 321(b) of the Act.

      7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.

      8. Not applicable.

      9. Not applicable.

                                    SIGNATURE

      Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, JPMorgan Chase Bank, N.A., has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York and State of New York, on the 30th day
of November, 2004.

                                               JPMORGAN CHASE BANK, N.A.

                                               By /s/ Rosa Ciaccia
                                                  ----------------
                                                 /s/ Rosa Ciaccia
                                                     Trust Officer


- -
                                                         Exhibit 1 to Form T-1
                                                         Articles of Association

                             SECRETARY'S CERTIFICATE

      I, Anthony J. Horan, Secretary of JPMorgan Chase Bank, National
Association, a banking association organized under the laws of the United States
(the "Bank"), do hereby certify that:

      Exhibit A attached hereto is a true and correct copy of the Articles of
      Association of the Bank, upon merger with Bank One N.A., Chicago, Illinois
      and Bank One, N.A., Columbus Ohio, as filed with the Office of the
      Controller of the Currency.

      WITNESS my hand and seal of JPMorgan Chase Bank, National Association as
of this 10th day of September, 2004.

                                    /s/ Anthony J. Horan
                                    ----------------------------------
                                    Anthony J. Horan
                                    Corporate Secretary



                                                                       Exhibit A

                                                    [To be effective upon merger
                                                    of banks. Head office in
                                                    Columbus, Ohio.]

                    JPMORGAN CHASE BANK, NATIONAL ASSOCIATION

                                   CHARTER NO.

                            ARTICLES OF ASSOCIATION

For the purpose of organizing an Association to perform any lawful activities of
national banks, the undersigned do enter into the following Articles of
Association:

FIRST. The title of this Association shall be JPMorgan Chase Bank, National
Association (the "Association").

SECOND. The main office of the Association shall be in the City of Columbus,
County of Franklin, State of Ohio. The general business of the Association shall
be conducted at its main office and its branches.

THIRD. The board of directors of this Association shall consist of not less than
five nor more than twenty-five persons, the exact number to be fixed and
determined from time to time by resolution of a majority of the full board of
directors or by resolution of a majority of the shareholders at any annual or
special meeting thereof.

FOURTH. There shall be an annual meeting of the shareholders to elect directors
and transact whatever other business may be brought before the meeting. It shall
be held at the main office or any other convenient place and on such date as the
board of directors may designate.

FIFTH. The authorized amount of capital stock of this Association shall be
$1,800,180,000, divided into 148,765,000 shares of common stock of the par value
of $12 each and 15,000,000 shares of preferred stock of the par value of $1
each; but said capital stock may be increased or decreased from time to time,
according to the provisions of the laws of the United States.

In the event of any such increase in the capital stock of this Association by
the sale of additional shares or the distribution of additional shares as a
stock dividend, each shareholder of this Association (unless otherwise provided
by the shareholders' vote or votes authorizing the increase) shall be entitled,
in proportion to the number of shares of said capital stock owned by him before
such increase, to proportionate rights in respect of such additional shares as
follows: (1) to the extent that such shareholder's proportionate right in
respect of such additional shares shall embrace one or more whole shares of such
additional shares, to receive (a) in the case of a sale, a transferable warrant
entitling the holder to subscribe, within the specified subscription period, for
such one or more whole shares of such additional shares or (b) in the case of a
stock dividend, a certificate evidencing such one or more whole shares of such
additional shares; and (2) to the extent that such shareholder's proportionate
right in respect of such additional shares shall embrace a fraction of a share,
to receive (a) in the case of a sale, a fractional subscription warrant,
conditioned that it shall be void unless, within the specified subscription
period, it is

                                                                     Page 1 of 3



combined with other such fractional subscription warrants in the aggregate
entitling the holder thereof to subscribe for a whole share or whole shares of
such additional shares and such subscription is completed by such holder of such
combined fractional warrants or (b) in the case of a stock dividend, a
fractional warrant which shall not represent or entitle the holder thereof to
any of the privileges of a shareholder of this Association but may be combined
with other such fractional warrants in the aggregate entitling the holder
thereof to exchange them for a whole share or whole shares of such additional
shares and conditioned that the holder exchanging such combined fractional
warrants for such whole share or whole shares of such additional shares shall
receive any dividends applicable to such whole share or whole shares declared
after the date of such fractional warrants and payable in respect of such whole
share or whole shares at the time of such exchange.

In the event of an increase in the capital stock of this Association in
pursuance of a statutory consolidation to which this Association may be a party,
the additional shares shall be issued in such a manner as the contract or plan
of consolidation may provide, pursuant to and in contemplation of the statute
under which said consolidation is effected.

In the event of an increase in the capital stock of this Association in
pursuance of a plan or contract (other than in the case of a statutory
consolidation) for the acquisition by this Association of the assets, in whole
or in part, and the good will of another banking institution or banker, the
additional shares shall be subscribed for by or issued to any persons, firms,
trustees or corporations, whether or not shareholders of this Association, as,
in its discretion in the execution of such plan or contract, the Board of
Directors may approve.

The Association, at any time and from time to time, may authorize and issue debt
obligations, whether or not subordinated, without the approval of the
shareholders.

SIXTH. The Board of Directors shall appoint one of its members President of this
Association, who shall be Chairman of the Board; but the Board of Directors may
appoint a director, in lieu of the President, to be Chairman of the Board, who
shall perform such duties as maybe designated by the Board of Directors. The
Board of Directors shall have the power to appoint one or more Vice Presidents;
to appoint a Cashier and such other officers as may be required to transact the
business of this Association; to fix the salaries to be paid to all officers of
this Association; and to dismiss such officers, or any of them; but the Board of
Directors may delegate the authority to exercise such powers of appointment,
salary determination and dismissal.

The Board of Directors shall have the power to define the duties of officers and
employees of this Association, to require bonds from them, and to fix the
penalty thereof; to regulate the manner in which directors shall be elected or
appointed, and to appoint judges of election; in the event of an increase of the
capital stock of this Association to regulate the manner in which such increase
shall be made; to make all by-laws that it may be lawful for them to make for
the general regulation of the business of this Association and the management of
its affairs; and generally to do and perform all acts that it may be lawful for
a Board of Directors to do and perform.

SEVENTH. The board of directors shall have the power to change the location of
the main office to any other location permitted under applicable law, without
the approval of the shareholders, and shall have the power to establish or
change the location of any branch or branches of the Association to any other
location permitted under applicable law, without the approval of the
shareholders subject to such limitations as from time to time may be provided by
law.

                                                                     Page 2 of 3


EIGHTH. The corporate existence of this Association shall continue until
termination according to the laws of the United States.

NINTH. These Articles of Association may be amended at any regular or special
meeting of the shareholders by the affirmative vote of the holders of a majority
of the stock of this Association, unless the vote of the holders of a greater
amount of stock is required by law, and in that case by the vote of the holders
of such greater amount.

In witness whereof, we have hereunto set our hands as of June 21, 2004.

                                        By /s/ Hans W. Becherer
                                        -----------------------------------
                                        Hans W. Becherer

                                        By /s/ Frank A. Bennack, Jr.
                                        -----------------------------------
                                        Frank A. Bennack, Jr.

                                        By /s/ Lawrence A. Bossidy
                                        -----------------------------------
                                        Lawrence A. Bossidy

                                        By /s/ Ellen V. Futter
                                        -----------------------------------
                                        Ellen V. Futter

                                        By /s/ William H. Gray, III
                                        -----------------------------------
                                        William H. Gray, III

                                        By /s/s William B. Harrison, Jr.
                                        -----------------------------------
                                        William B. Harrison, Jr.

                                        By /s/ Helene L. Kaplan
                                        -----------------------------------
                                        Helene L. Kaplan

                                                                     Page 3 of 3


                              Exhibit 2 to Form T-1
                            Certificate of Authority

[COMPTROLLER OF THE CURRENCY ADMINISTRATOR OF NATIONAL BANKS LOGO]

COMPTROLLER OF THE CURRENCY
ADMINISTRATOR OF NATIONAL BANKS

Washington, D.C. 20219

             CERTIFICATE OF CORPORATE EXISTENCE AND FIDUCIARY POWERS

I, Julie L. Williams, Acting Comptroller of the Currency, do hereby certify
that:

1. The Comptroller of the Currency, pursuant to Revised Statutes 324, et seq,,
as amended, 12 U.S.C 1, et seq., as amended, has possession , custody and
control of all records pertaining to the chartering of all National Banking
Associations.

2. "JPMorgan Chase Bank, National Association," New York, New York, (Charter No.
8) is a National Banking Association formed under the laws of the United States
and is authorized thereunder to transact the business of banking and exercise
Fiduciary Powers on the date of this Certificate.

                                 IN TESTIMONY WHEREOF, I have hereunto

                                 subscribed my name and caused my seal of office

                                 to be affixed to these presents at the Treasury

                                 Department in the City of Washington and

                                 District of Columbia, this November 17, 2004.

[SEAL]

                                       /s/ Julie L. Williams
                                 ---------------------------------------
                                   ACTING COMPTROLLER OF THE CURRENCY

                                                           Exhibit 4 to Form T-1
                                                           By-Laws

                              [JPMORGANCHASE LOGO]

JPMORGAN CHASE BANK
Office of the Secretary
270 Park Avenue, 35th floor
New York, NY 10017-2070

                                   CERTIFICATE

      I, Anthony J. Horan, Corporate Secretary of JPMorgan Chase Bank, National
Association do hereby certify that attached is a true and correct copy of the
By-laws of JPMorgan Chase Bank, National Association, a banking organization
organized under the laws of the State of New York, and that said By-laws, as
approved by the Board of Directors to be effective upon conversion of the Bank
to a National Association, will be in full force and effect on the date of
conversion.

      IN WITNESS WHEREOF I have hereunto set my hand and affixed the seal of
JPMorgan Chase Bank as of this 16th day of September 2004.

                                                  /s/ Anthony J. Horan
                                              ------------------------------
                                                   Anthony J. Horan



JULY 12, 2004                                                          Exhibit D

                                     BY-LAWS

                    JPMORGAN CHASE BANK, NATIONAL ASSOCIATION

                                November _, 2004



                                     BY-LAWS

                                       OF

                    JPMORGAN CHASE BANK, NATIONAL ASSOCIATION

                                    ARTICLE I

                            MEETINGS OF SHAREHOLDERS

            SECTION 1.01. SHAREHOLDERS' MEETINGS. The regular annual meeting of
the shareholders of JPMorgan Chase Bank, National Association (the "Bank") for
the election of directors and the transaction of whatever other business may
properly come before the meeting shall be held at the main banking office of the
Bank or any other convenient place the Board of Directors may designate, on such
date as may be designated by the Board of Directors. Special meetings of the
shareholders may be called by the Chairman of the Board, the Chief Executive
Officer, the President, or the Secretary. The time and place of each special
meeting shall be designated by the Board and shall be included in a notice of
meeting.

            SECTION 1.02. CONSENT IN LIEU OF MEETING OF SHAREHOLDERS. Except as
otherwise required by applicable laws and regulations, any action that may be
taken at the annual meeting or any special meeting of the shareholders may also
be taken without a meeting if a written consent to the action is signed by all
of the persons who would be entitled to vote thereon and is filed with the
Secretary of the Bank as part of the corporate records.

                                   ARTICLE II

                               BOARD OF DIRECTORS

            SECTION 2.01. NUMBER. The business and affairs of the Bank shall be
managed by or under the direction of a Board of Directors, of such number as may
be fixed from time to time by resolution adopted by the Board, but in no event
less than 5 or more than 25. Each director hereafter elected shall hold office
until the next annual meeting of the shareholders and until his successor is
elected and has qualified, or until his death or until he shall resign or shall
have been removed.

            SECTION 2.02. QUALIFICATIONS. During his entire term of service,
each director of the Bank, unless otherwise permitted under the laws of the
United States, must be a citizen of the United States and must own, in his own
right, capital stock in the Bank or in a company that controls the Bank, in such
amounts as required by applicable statute or regulation.

            SECTION 2.03. OATH. Each person appointed or elected a director of
the Bank must, prior to exercising the functions of such office, take the oath
of such office in the form prescribed by the Comptroller of the Currency.

                                                                     Page 2 of 7


            SECTION 2.04. VACANCIES. In case of any increase in the number of
directors, the additional director or directors, and in case of any vacancy in
the board due to death, resignation, removal, disqualification or any other
cause, the successors to fill the vacancies shall be elected by action of the
shareholders or, subject to the limits specified in 12 CFR Part 7, a majority of
the directors then in office.

            SECTION 2.05. ANNUAL MEETING. An annual meeting of the directors
shall be held each year at such time and place as shall be designated by the
Board. At such meeting, the directors may elect from their own number a Chairman
of the Board, a Chief Executive Officer, and a President, and shall elect or
appoint such other officers authorized by these By-laws, and appoint such
Committees consistent with Article III hereof, as they may deem desirable.

            SECTION 2.06. REGULAR MEETINGS. The Board may hold regular meetings,
without notice, at such times and places as the Board may from time to time
determine.

            SECTION 2.07. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by the Chairman of the Board, the Chief Executive
Officer, the President, or a majority of the directors then in office. Unless
waived, each member of the Board of Directors shall be given notice by
telephone, in person, or in writing by facsimile transmission, hand delivery,
courier service, first-class mail, certified mail, express mail, email or other
electronic means, stating the time and place of each special meeting.

            SECTION 2.08. QUORUM; MAJORITY VOTE. Except as otherwise provided
herein or as required by applicable law, a majority of the members of the entire
Board (or the next highest integer in the event of a fraction) shall constitute
a quorum, and a majority of those present and voting at any meeting of the Board
of Directors shall decide each matter considered. If less than a quorum be
present, a majority of those present may adjourn any meeting from time to time
and the meeting may be held as adjourned without further notice.

                                   ARTICLE III

                             COMMITTEES OF THE BOARD

            SECTION 3.01. COMMITTEES. Except for those duties that by law or
regulation must be performed by at least a majority of the full Board of
Directors, the performance of such duties as the Board deems appropriate may be
assigned to one or more committees of one or more persons. Membership in each
such committee shall be as established from time to time by the Board. All acts
done and powers conferred by any Committee from time to time shall be deemed to
be, and may be certified as being done or conferred under authority of the
Board. A Committee may delegate its duties to one or more subcommittees composed
of one or more members of the Committee. Each Committee may fix its own rules
and procedures, in the absence of which the provisions of the Articles of
Association and these By-laws with respect to meetings of the Board shall apply
to Committees and their members. The minutes of the meetings of each Committee
shall be submitted at the next regular meeting of the Board at which a quorum is
present, or, if impracticable, at the next such subsequent meeting.

                                                                     Page 3 of 7


            SECTION 3.02. EXAMINING COMMITTEE. The Audit Committee of J.P.
Morgan Chase & Co. shall be the Examining Committee of the Bank and shall have
full and complete authority to act for and on behalf of this Bank in the
exercise of the authority granted to it by the By-laws and the Board of
Directors of J.P. Morgan Chase & Co.

                                   ARTICLE IV

                              OFFICERS AND AGENTS

            SECTION 4.01. OFFICERS. The officers of the Bank may include a
Chairman of the Board, a Chief Executive Officer, and a President, each of whom
must be a director and shall be elected by the Board; and such other officers as
may from time to time be elected by the Board or under its authority, or
appointed by or under the authority of the Chairman, the Chief Executive
Officer, or the President.

            SECTION 4.02. OTHER EMPLOYEES. The Board of Directors may delegate
others to appoint agents and employees, define their duties, fix their
compensation and dismiss them.

            SECTION 4.03. TERM OF OFFICE. All officers, agents, and employees
appointed by the Board of Directors, or under its authority, shall hold office
at the pleasure of the Board.

            SECTION 4.04. CHAIRMAN OF THE BOARD. The Chairman shall preside at
all meetings of the shareholders and at all meetings of the Board. The Chairman
of the Board shall have the same power to perform any act on behalf of the Bank
and to sign for the Bank as is prescribed in these Bylaws for the Chief
Executive Officer. He shall perform such other duties as from time to time may
be prescribed by the Board.

            SECTION 4.05. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer
shall be the chief executive officer of the Bank and shall have, subject to the
control of the Board and the Chairman, general supervision and direction of the
policies and operations of the Bank and of its several officers other than the
Chairman. In the absence of the Chairman, he shall preside at all meetings of
the shareholders and at all meetings of the Board. He shall have the power to
execute any document or perform any act on behalf of the Bank, including without
limitation the power to sign checks, orders, contracts, leases, notes, drafts
and other documents and instruments in connection with the business of the Bank,
and together with the Secretary or an Assistant Corporate Secretary execute
conveyances of real estate and other documents and instruments to which the seal
of the Bank may be affixed. He shall perform such other duties as from time to
time may be prescribed by the Board.

            SECTION 4.06. PRESIDENT. The President shall, subject to the
direction and control of the Board, the Chairman and the Chief Executive
Officer, participate in the supervision of the policies and operations of the
Bank. In general, the President shall perform all duties incident to the office
of President, and such other duties as from time to time may be prescribed by
the Board, the Chairman, or the Chief Executive Officer. In the absence of the
Chairman or the Chief Executive Officer, the President shall preside at meetings
of shareholders and of the Board. The President shall have the same power to
sign for the Bank as is prescribed in these By-laws for the Chief Executive
Officer.

                                                                     Page 4 of 7


            SECTION 4.07. POWERS AND DUTIES OF OTHER OFFICERS. The powers and
duties of all other officers of the Bank shall be those usually pertaining to
their respective offices, subject to the direction and control of the Board and
as otherwise provided in these By-laws.

            SECTION 4.08. FIDELITY BONDS. The Board, in its discretion, may
require any or all officers, agents, and employees of the Bank to give bonds
covering the faithful performance of their duties or may obtain insurance
covering the same, in either case in form and amount approved by the Board, the
premiums thereon to be paid by the Bank.

                                   ARTICLE V

                                INDEMNIFICATION

      SECTION 5.01. RIGHT TO INDEMNIFICATION. The Bank shall to the fullest
extent permitted by applicable law as then in effect indemnify any person (the
"Indemnitee") who was or is involved in any manner (including, without
limitation, as a party or a witness), or is threatened to be made so involved,
in any threatened, pending or completed investigation, claim, action, suit or
proceeding, whether civil, administrative or investigative (including, without
limitation, any action, suit or proceeding by or in the right of the Bank to
procure a judgment in its favor, but excluding any action, suit, or proceeding
brought by such person against the Bank or any affiliate of the Bank (a
"Proceeding") by reason of the fact that he is or was a director, officer, or
employee of the Bank, or is or was serving at the request of the Bank as a
director, officer or employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against all expenses (including
attorney's fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such Proceeding. Such
indemnification shall be a contract right and shall include the right to receive
payment in advance of any expenses incurred by the Indemnitee in connection with
such Proceeding, consistent with the provisions of applicable law as then in
effect.

      SECTION 5.02. CONTRACTS AND FUNDING. The Bank may enter into contracts
with any director, officer, or employee of the Bank in furtherance of the
provisions of this Article V and may create a trust fund, grant a security
interest or use other means (including, without limitation, a letter of credit)
to ensure the payment of such amounts as may be necessary to effect
indemnification as provided in this Article V.

      SECTION 5.03. EMPLOYEE BENEFIT PLANS. For purposes of this Article V,
references to "other enterprises" shall include employee benefit plans;
references to "fines" shall include any excise taxes assessed on a person with
respect to any employee benefit plan; and references to "serving at the request
of the Bank" shall include any service as a director, officer, employee, or
agent of the Bank which imposes duties on, or involves services by, such
director, officer, employee, or agent with respect to an employee benefit plan,
its participants, or beneficiaries; and a person who acted in good faith and in
a manner he reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner not opposed to the best interests of the corporation.

      SECTION 5.04. INDEMNIFICATION NOT EXCLUSIVE RIGHT. The right of
indemnification and advancement of expenses provided in this Article V shall not
be exclusive of any other rights to which a person seeking indemnification may
otherwise be entitled, under any statute, by-law, agreement, vote of
shareholders or disinterested directors or otherwise, both as to action in his

                                                                     Page 5 of 7


official capacity and as to action in another capacity while holding such
office. The provisions of this Article V shall inure to the benefit of the heirs
and legal representatives of any person entitled to indemnity under this Article
V and shall be applicable to Proceedings commenced or continuing after the
adoption of this Article V whether arising from acts or omissions occurring
before or after such adoption.

      SECTION 5.05. ADVANCEMENT OF EXPENSES; PROCEDURES. In furtherance, but not
in limitation, of the foregoing provisions, the following procedures and
remedies shall apply with respect to advancement of expenses and the right to
indemnification under this Article V:

            (a) Advancement of Expenses. All reasonable expenses incurred by or
on behalf of the Indemnitee in connection with any Proceeding shall be advanced
to the Indemnitee by the Bank within twenty (20) days after the receipt by the
Bank of a statement or statements from the Indemnitee requesting such advance or
advances from time to time, whether prior to or after final disposition of such
Proceeding. Such statement or statements shall reasonably evidence the expenses
incurred by the Indemnitee and, if required by law at the time of such advance,
shall include or be accompanied by an undertaking by or on behalf of the
Indemnitee to repay the amounts advanced if, and to the extent, it should
ultimately be determined that the Indemnitee is not entitled to be indemnified
against such expenses.

            (b) Written Request for Indemnification. To obtain indemnification
under this Article VII, an Indemnitee shall submit to the Secretary of the Bank
a written request, including such documentation and information as is reasonably
available to the Indemnitee and reasonably necessary to determine whether and to
what extent the Indemnitee is entitled to indemnification (the "Supporting
Documentation"). The determination of the Indemnitee's entitlement to
indemnification shall be made within a reasonable time after receipt by the Bank
of the written request for indemnification together with the Supporting
Documentation. The Secretary of the Bank shall, promptly upon receipt of such a
request for indemnification, advise the Board in writing that the Indemnitee has
requested indemnification.

            (c) Procedure for Determination. The Indemnitee's entitlement to
indemnification under this Article V shall be determined (i) by the Board by a
majority vote of a quorum (as defined in Article II of these By-laws) consisting
of directors who were not parties to such action, suit or proceeding, or (ii) if
such quorum is not obtainable, or, even if obtainable, a quorum of disinterested
directors so directs, by independent legal counsel in a written opinion, or
(iii) by the shareholders, but only if a majority of the disinterested
directors, if they constitute a quorum of the Board, presents the issue of
entitlement to indemnification to the shareholders for their determination.

                                   ARTICLE VI

                                    BY-LAWS

            SECTION 6.01. INSPECTION. A copy of the By-laws shall at all times
be kept in a convenient place at the principal office of the Bank, and shall be
open for inspection by shareholders during banking hours.

            SECTION 6.02. AMENDMENTS. These By-laws may be added to, amended,
altered or repealed by action of the shareholders, or by vote of a majority of
the entire Board at any meeting of

                                                                     Page 6 of 7


the Board. No amendment may be made unless the By-laws, as amended, are
consistent with the requirements of the laws of the United States and of the
Articles of Association of the Bank.

            SECTION 6.03. CONSTRUCTION. The masculine gender, where appearing in
these By-laws, shall be deemed to include the feminine gender.

                                   ARTICLE VII

                                  MISCELLANEOUS

            SECTION 7.01. SEAL. The corporate seal of the Bank shall be in the
form of a circle and shall bear the full name of the Bank and the words
"Corporate Seal" together with the logo of J.P. Morgan Chase & Co.

            SECTION 7.02. FISCAL YEAR. The fiscal year of the Bank shall be the
calendar year.

            SECTION 7.03. WAIVER OF NOTICE. Unless otherwise provided by the
laws of the United States, notice of any Board or Board committee meeting, need
not be given to any person who (a) submits a signed waiver of notice, whether
before or after the meeting, or (b) is present at such meeting; and any meeting
shall be a legal meeting without any notice thereof having been given, if all
the members are present.

            SECTION 7.04. ELECTRONIC MEETINGS. Subject to the provisions
required or permitted by these or the Articles of Association of the Bank for
notice of meetings, members of the Board of Directors, or members of any
committee of the Board, may participate in and hold a meeting of the Board of
Directors or such committee by means of conference telephone or other
communications equipment by means of which all persons participating in the
meeting can hear each other. Participation in such a meeting shall constitute
presence in person at such meeting, except where a person participates in the
meeting for the express purpose of objecting to the transaction of any business
on the ground that the meeting is not lawfully called or convened.

            SECTION 7.05. CONSENT IN LIEU OF MEETING OF DIRECTORS. Except as
otherwise required by applicable laws and regulations, any action that may be
taken at a meeting of the Board of Directors or any committee of the Board may
also be taken without a meeting if a written consent to the action is signed by
all the directors, or by all members of such committee, and is filed with the
Secretary of the Bank as part of the corporate records.

            SECTION 7.06. GOVERNING LAW. To the extent not inconsistent with
applicable Federal banking statutes and regulations, or safety and sound banking
practice, the Bank shall follow the corporate governance procedures, including
indemnification standards, of the Delaware General Corporation Law, as amended.

                                                                     Page 7 of 7


                                        Exhibit 6 to Form T-1 Consent of Trustee

TRUSTEE'S CERTIFICATE PURSUANT TO SECTION 321(b)

The undersigned trustee, as a condition precedent to the qualification of the
indenture to which this statement of eligibility applies, hereby consents that
reports of examinations by Federal, State, Territorial, or District authorities
may be furnished by such authorities to the Securities and Exchange Commission
upon request therefor.

JPMORGAN CHASE BANK, N.A.

By: /s/Thomas J. Foley
    ------------------
Name: Thomas J. Foley
Title: Vice President



                              Exhibit 7 to Form T-1

                                Bank Call Notice

                             RESERVE DISTRICT NO. 2
                       CONSOLIDATED REPORT OF CONDITION OF

                               JPMorgan Chase Bank
                  of 270 Park Avenue, New York, New York 10017
                     and Foreign and Domestic Subsidiaries,
                     a member of the Federal Reserve System,

                  at the close of business September 30, 2004,
              in accordance with a call made by the Federal Reserve
               Bank of this District pursuant to the provisions of
                            the Federal Reserve Act.



                                                                                   DOLLAR AMOUNTS
                                                                                     IN MILLIONS
                                                                                
                            ASSETS

Cash and balances due from depository institutions:
     Noninterest-bearing balances and
     currency and coin .........................................................     $  19,187
     Interest-bearing balances .................................................        33,195
Securities:
Held to maturity securities ....................................................           121
Available for sale securities ..................................................        53,698
Federal funds sold and securities purchased under
     agreements to resell.......................................................
     Federal funds sold in domestic offices ....................................        33,011
     Securities purchased under agreements to resell ...........................        82,951
Loans and lease financing receivables:
     Loans and leases held for sale ............................................        17,558
     Loans and leases, net of unearned income ..................................     $ 171,323
     Less: Allowance for loan and lease losses .................................         2,382
     Loans and leases, net of unearned income and
     allowance .................................................................       168,941
Trading Assets..................................................................       196,355
Premises and fixed assets (including capitalized leases)........................         5,578
Other real estate owned.........................................................           101
Investments in unconsolidated subsidiaries and
     associated companies.......................................................            94
Customers' liability to this bank on acceptances
     outstanding................................................................           391
Intangible assets
     Goodwill...................................................................         2,554
     Other Intangible assets....................................................         5,411
Other assets ...................................................................        42,626
TOTAL ASSETS ...................................................................     $ 661,772
                                                                                     =========




                                                                                  
                            LIABILITIES

Deposits
     In domestic offices .......................................................     $ 209,624
     Noninterest-bearing .......................................................     $  82,597
     Interest-bearing ..........................................................       127,027
     In foreign offices, Edge and Agreement
     subsidiaries and IBF's ....................................................       120,503
   Noninterest-bearing .........................................................     $   7,003
     Interest-bearing ..........................................................       113,500

Federal funds purchased and securities sold under agreements to repurchase:
     Federal funds purchased in domestic offices ...............................        22,032
     Securities sold under agreements to repurchase ............................        96,912
Trading liabilities ............................................................       107,450
Other borrowed money (includes mortgage indebtedness
     and obligations under capitalized leases) .................................        21,794
Bank's liability on acceptances executed and outstanding .......................           391
Subordinated notes and debentures ..............................................        12,821
Other liabilities ..............................................................        31,690
TOTAL LIABILITIES ..............................................................       623,217
Minority Interest in consolidated subsidiaries .................................           348

                            EQUITY CAPITAL

Perpetual preferred stock and related surplus ..................................             0
Common stock ...................................................................         1,785
Surplus  (exclude all surplus related to preferred stock) ......................        16,954
Retained earnings ..............................................................        20,050
Accumulated other comprehensive income .........................................          (582)
Other equity capital components ................................................             0
TOTAL EQUITY CAPITAL ...........................................................        38,207
                                                                                     ---------
TOTAL LIABILITIES, MINORITY INTEREST, AND EQUITY CAPITAL .......................     $ 661,772
                                                                                     =========



I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.

                                           JOSEPH L. SCLAFANI

We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.

                                           WILLIAM B. HARRISON, JR.   )
                                           JAMES DIMON                )DIRECTORS
                                           LAWRENCE A. BOSSIDY        )