764622--2/28/2007--ARIZONA_PUBLIC_SERVICE_CO

related topics
{operation, natural, condition}
{cost, regulation, environmental}
{capital, credit, financial}
{loss, insurance, financial}
{debt, indebtedness, cash}
{competitive, industry, competition}
{regulation, government, change}
{stock, price, share}
{product, market, service}
APS is subject to comprehensive government regulation by several federal, state and local regulatory agencies that significantly affect its business and results of operations. APS is subject to numerous environmental laws and regulations that may increase its cost of operations, impact its business plans, or expose it to environmental liabilities. Concern over climate change could result in significant legislative and regulatory efforts to limit greenhouse gas emissions. There are inherent risks in the operation of nuclear facilities, such as environmental, health and financial risks and the risk of terrorist attack. The operation of power generation facilities involves risks that could result in unscheduled power outages or reduced output, which could materially affect our results of operations. 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. Changes in technology may adversely affect our business. Our results of operations can be adversely affected by milder weather. Our cash flow largely depends on the performance of our subsidiaries. Our ability to meet our debt service obligations could be adversely affected because our debt securities are structurally subordinated to the debt securities and other obligations of our subsidiaries. If we are not able to access capital at competitive rates, our ability to implement our financial strategy will be adversely affected. A further reduction in our credit ratings could materially and adversely affect our business, financial condition and results of operations. 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. Actual results could differ from estimates used to prepare our financial statements. The market price of our common stock may be volatile.

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