Moody's confirms Pinnacle West ratings

Moody's Investors Service said it confirmed the ratings of Pinnacle West Capital Corp.'s issuer rating at Baa3, bank credit facility at Baa3 and short-term rating of Prime-3, concluding the review for possible downgrade.

The outlook is negative.

Moody's said the confirmation of Pinnacle's ratings reflects an improvement in the company's financial flexibility following an order by the Federal Energy Regulatory Commission that restored Pinnacle's authorization to issue debt and equity securities, and a decision by the Arizona Corporation Commission to allow an interim rate increase for subsidiary Arizona Public Service Co. (senior unsecured Baa2, negative outlook).

The negative outlook for Pinnacle reflects the potential for weaker financial performance if the Palo Verde nuclear facility does not return to normal operating performance by mid-summer as is expected, or if other significant pending regulatory proceedings for APS do not provide for relatively timely recovery of increased costs, particularly those for fuel and purchased power, the agency said.

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