SecProbe.io

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Mail Stop 3561

 					September 1, 2005

Mr. Donald E. Brandt
Executive Vice President and Chief Financial Officer
Arizona Public Service Company
400 North Fifth Street
P.O. Box 53999, M.S. 9042
Phoenix, AZ 85072-3999

	Re:	Arizona Public Service Company
		Form 10-K for Fiscal Year Ended December 31, 2004
		Filed March 16, 2005
		Forms 10-Q for Fiscal Quarters Ended
		March 31, 2005 and June 30, 2005
		File No. 1-4473

Dear Mr. Brandt:

      We have reviewed your filings and have the following
comments.
Where indicated, we think you should revise your disclosures in
future filings in response to these comments.  If you disagree, we
will consider your explanation as to why our comment is
inapplicable
or a revision is unnecessary.  Please be as detailed as necessary
in
your explanation.  In some of our comments, we may ask you to
provide
us with information so we may better understand your disclosure.
After reviewing this information, we may or may not raise
additional
comments.

	Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects.  We welcome
any questions you may have about our comments or on any other
aspect
of our review.  Feel free to call us at the telephone numbers
listed
at the end of this letter.

Form 10-K for Fiscal Year Ended December 31, 2004

Note 3. Regulatory Matters, page 81
1. We note that the transfer of PWEC Dedicated Assets from
Pinnacle
West Energy to APS will result in a mandatory rate base
disallowance
of $150 million, which will be recognized as a one-time after-tax
net
plant write-off of approximately $90 million in the period of
transfer.  Please tell us the governing accounting literature you
relied upon in calculating the amount and timing of the charge.
If
you utilized SFAS 71, explain why SFAS 90 was not applicable. We
further note that the "Bridge PPA," which would be in effect for
30
years should the transfer not be approved, allows for cost-based
recovery of plant based on a rate base value of $700 million.  As
the
book value of such assets is $850 and prices under the PPA reflect
cost-of-service, please tell us what consideration you gave to
applying regulatory accounting to the plant prior to actual
transfer
since the "Bridge PPA" effectively converted the plant into a
regulated asset irrespective of FERC approval.  On a related
point,
tell us whether you tested these assets for impairment prior to
transfer, the results of such test, and the governing accounting
literature used to test for impairment.  Finally, tell us whether
you
will be earning a return on plant and whether such return is
consistent with similar productive assets.

Note 8. Retirement Plans and Other Benefits, page 96

2. Please explain to us how you calculate the market related value
of
plan assets as that term is defined in SFAS 87.  Since there is an
alternative to how you can calculate this item, and it has a
direct
effect on pension expense, we believe you should disclose how you
determine this amount in accordance with paragraph 12 of APB 22.

Statements of Income, page 130
3. Note 17 discloses that Pinnacle West has three principal
business
segments, including the regulated electricity segment, the
marketing
and trading segment, and the real estate segment.  Although APS
also
has regulated electricity and marketing and trading businesses, we
note APS has no segment disclosures for marketing and trading.
Please explain this disparity.  In doing so, please describe in
greater detail the nature of the APS marketing and trading
activities, including whether they include bulk power sales to
other
electric utilities, and how such activities differ from those
included in the Pinnacle West marketing and trading segment.  In
this
regard a comparison of marketing and trading for Pinnacle West
relative to APS, including whether the latter is a subset of the
former, may be helpful to our understanding.  If you consider APS`
marketing and trading and regulated electricity businesses to be
separate operating segments under paragraph 10 of SFAS 131, please
explain how you determined it was appropriate to aggregate them
for
reporting purposes based on paragraphs 17-24 of SFAS 131.  If you
consider regulated electricity and marketing and trading
businesses
to be one operating segment, please explain your rationale under
SFAS
131 for APS.  We may have further comment.

*    *    *    *

      As appropriate, please respond to these comments within 10
business days or tell us when you will provide us with a response.
Please furnish a cover letter that keys your responses to our
comments and provides any requested information.  Detailed cover
letters greatly facilitate our review.  Please understand that we
may
have additional comments after reviewing your responses to our
comments.

	We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed investment decision.  Since the
company and its management are in possession of all facts relating
to
a company`s disclosure, they are responsible for the accuracy and
adequacy of the disclosures they have made.

	In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:

* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;

* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and

* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.

      In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.

      You may contact Staff Accountant Sarah Goldberg at (202)
551-
3340 if you have questions regarding comments on the financial
statements and related matters.  Please contact me at (202) 551-
3849
with any other questions.

							Sincerely,

							Jim Allegretto
							Senior Assistant Chief
Accountant

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Mr. Brandt
Arizona Public Service Company
September 1, 2005
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