EXHIBIT 10.1

CURE AND ASSUMPTION AGREEMENT

This CURE AND ASSUMPTION AGREEMENT ("Agreement"), by and among El Paso Electric Company, a Texas corporation ("EPE"), Debtor and Debtor In Possession in its proceedings under Chapter 11 of Title 11 of the United States Code, 11 U.S.C. Sections 101-1330 (the "Code") currently pending in the United States Bankruptcy Court for the Western District of Texas (the "Court"), Case No. 92-10148 FM (the "Case"); each of Arizona Public Service Company ("APS"), Salt River Project Agricultural Improvement and Power District ("SRP"), Southern California Edison Company ("SCE"), Public Service Company of New Mexico ("PNM"), Southern California Public Power Authority ("SCPPA"), and the Department of Water and Power of the City of Los Angeles ("LADWP"), as the other participants, along with EPE (the "Participants"), in the Arizona Nuclear Power Project ("ANPP") pursuant to the ANPP Participation Agreement, dated as of August 23, 1973, as amended by Amendment Nos. 1 through 13 thereto (the "Participation Agreement"); each of APS, SRP, SCE, PNM, SCPPA, and LADWP, as the other parties, along with EPE (the "Switchyard Participants"), to the ANPP High Voltage Switchyard Participation Agreement, dated as of August 20, 1981, as amended (the "Switchyard Agreement"); and each of APS, SRP, and PNM, as the other parties, along with EPE (the "Valley Transmission Participants"), to the ANPP Valley Transmission System Participation Agreement, dated as of August 20, 1981, as amended (the "Valley Transmission Agreement"), is entered into as of November 19, 1993.

Capitalized terms used in this Agreement, unless otherwise defined herein, shall have the meanings assigned to such terms in the Participation Agreement. When used herein, the term "Other Parties" shall mean each and all of the parties to this Agreement other than EPE, and the term "Other Participants" shall mean each and all of the Participants other than EPE. Where used herein the term "Assume" shall mean "assume" as such term is used in Section 365 of the Code. The terms "include" and "including" are not limiting, regardless of whether accompanied by the additional words "but not limited to," or words of similar impact.

R E C I T A L S:

a. On January 8, 1992 (the "Petition Date"), EPE filed its petition for relief under Chapter 11 of the Code in the Court.

b. On February 13, 1992, the Court approved a stipulation (the "Stipulation") between EPE and APS, as Operating Agent, which among other things allocated $9,255,000 of the invoices previously rendered to EPE under the Participation Agreement as pre-petition general unsecured claims of the Other Participants.

c. On September 9, 1992, EPE filed a complaint which commenced Adversary Proceeding No. 92-1285FM (including all related proceedings and contested matters, if any, the "Lease Litigation") before the Court.

d. EPE has proposed its "Modified Third Amended Plan of Reorganization," as corrected September 15, 1993 (together with any modified or amended plan proposed by EPE providing for the acquisition of EPE by Central and South West Corporation ("CSW") by means of a merger between EPE and a wholly-owned, special purpose subsidiary of CSW, with EPE as the surviving corporation ("Reorganized EPE"), generally referred to as the "Plan"). For purposes of this Agreement, references to the "Effective Date" shall mean the Effective Date as provided in the Plan, and references to EPE will be deemed to refer also to Reorganized EPE with respect to any period on or after the Effective Date, notwithstanding any separate references to Reorganized EPE herein.

e. EPE and the Other Parties hereto desire to provide in this Agreement for the terms and conditions under which EPE would cure its defaults under and Assume the Participation Agreement, the Switchyard Agreement, the Valley Transmission Agreement, and related contracts described or scheduled herein.

f. The Other Participants believe that the Participation Agreement and related agreements are contracts and/or agreements that are not capable of being Assumed pursuant to Code Section 365 without the consent of the Other Participants; EPE disagrees and believes that said agreements are subject to assumption under Code Section 365; notwithstanding said positions, the Parties have agreed to settle and provide that Assumption will be allowed pursuant to the terms of this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and conditions contained herein, and subject to the terms and conditions stated herein, the parties hereto agree as follows:

1. EPE Assumption. Subject to all of the terms and conditions set forth in this Agreement, EPE agrees to Assume, on the Effective Date, the Participation Agreement, the Switchyard Agreement, the Valley Transmission Agreement, and to the extent that EPE is not precluded from such assumption, the following executory agreements and unexpired leases relating to the ownership, operation, and maintenance of ANPP, the ANPP High Voltage Switchyard, and/or the "Transmission System," as such term is defined in the Valley Transmission Agreement (the "Valley Transmission System"):

(a) all of the Project Agreements;

(b) all Nuclear Fuel Agreements, and all nuclear fuel agreements relating to the purchase, sale, lease, transfer, disposition, storage, transportation, mining, conversion, milling, enrichment, processing, fabrication, and reprocessing of any Nuclear Fuel for use in, used in or removed from a Reactor entered into by the Project Manager or the Operating Agent on behalf of EPE or pursuant to which EPE is a party, excluding the "RGRT Agreement" (as such term is defined in the Plan);

(c) all agreements between EPE (or EPE and the Other Participants or any of them) and any third party for land, land rights, or water rights relating to ANPP;

(d) certain agreements listed on Schedule 1 hereto relating to tax or other indemnification obligations between EPE and the Other Participants, or any of them (the "Tax Agreements");

(e) certain agreements listed on Schedule 2 hereto entered into pursuant to or relating to the Switchyard Agreement and/or the Valley Transmission Agreement or relating to the ANPP High Voltage Switchyard and/or the Valley Transmission System or pursuant to which the ANPP High Voltage Switchyard and/or the Valley Transmission System are constructed, operated, or owned by the participants; and

(f) certain agreements listed on Schedule 3 hereto entered into pursuant to or relating to the Participation Agreement or relating to ANPP or pursuant to which ANPP is constructed, operated, or owned by the Participants

(collectively, the "ANPP Assumed Agreements"). Notwithstanding any provision of this Agreement to the contrary, EPE shall have no obligation to assume the Palo Verde Leases, and the Palo Verde Leases shall not constitute ANPP Assumed Agreements. EPE agrees that the Palo Verde Leases do not include the Tax Agreements. After the Effective Date, nothing in the Case, the Plan, or any order confirming the Plan (the "Confirmation Order") shall entitle EPE to interfere with, oppose, or deny prior operating procedures and actions taken, conducted, and approved by the Participants prior to the Effective Date, except in accordance with procedures provided under the ANPP Assumed Agreements. Any cure and Assumption by EPE of the ANPP Assumed Agreements shall be deemed to have occurred only upon the Effective Date.

2. EPE Payments under the ANPP Assumed Agreements. On, or promptly following, the date of entry of the Confirmation Order (the "Confirmation Date"), subject to all of the terms and conditions set forth in this Agreement, as a condition of its Assumption of the ANPP Assumed Agreements, EPE will pay the following amounts to the following persons:

(a) the amount of $9,255,000.00 under the Participation Agreement to the Operating Agent for the benefit of all of the Other Participants;

(b) the amount of $38,658.50 under the Switchyard Agreement, to SRP, as operating agent under the Switchyard Agreement, for the benefit of all of the Switchyard Participants, other than EPE; and

(c) the amount of $12,933.47 under the Valley Transmission Agreement to SRP, as operating agent under the Valley Transmission Agreement, for the benefit of all of the Valley Transmission Participants, other than EPE.

If this Agreement is terminated pursuant to Sections 8(c) or 11 hereof, the amounts specified in subparagraphs (a) through (c) of this Section 2 shall be returned and repaid by the Operating Agent, SRP as operating agent under the Switchyard Agreement, and SRP as operating agent under the Valley Transmission Agreement, respectively, to EPE without interest promptly upon receipt of a wire transfer number evidencing transfer from EPE of the amounts described in Section 3(i) of this Agreement.

3. Parties' Agreement To Actions. The parties agree to the following actions and agreements:

(a) to the Assumption by EPE of the ANPP Assumed Agreements on the Effective Date without further requirements or steps to comply with Section 365 of the Code, and the Other Parties hereby waive as of the Effective Date, any otherwise applicable issues as to compliance with Section 365; provided, however, that EPE may not so Assume unless it (i) has paid its participant-share of all outstanding and due invoices and assessments presented by the operating agents under or pursuant to the Participation Agreement, the Switchyard Agreement, and the Valley Transmission Agreement;
(ii) is in compliance with all payment, funding, and any other material obligations pursuant to Section 8A.7.2 of the Participation Agreement; and (iii) otherwise has complied in all material respects with the terms and conditions of this Agreement; provided, however, that unless any of the Other Parties informs EPE by written notice, on or before the Confirmation Date, that EPE is not in compliance with this Agreement, and specifies the nature of such noncompliance, EPE shall be deemed to be in compliance with this Agreement as of the Confirmation Date;

(b) that EPE's payment of the amounts set forth in Section 2 of this Agreement in compliance with said Section shall constitute a complete and full accord, satisfaction, settlement, and cure of all payment defaults of EPE (as to which EPE is the sole defaulting Participant) existing and known by the Other Parties as of the date of a Court order approving this Agreement (the "Court Approval Date"), together with all interest thereon accruing through and including the Confirmation Date, under the Participation Agreement, the Switchyard Agreement, the Valley Transmission Agreement and all other ANPP Assumed Agreements; provided, however, that nothing contained in this Agreement or pursuant to any discharge or release in or pursuant to the Plan, the Confirmation Order, any order of the Court requiring the filing of claims by a deadline (the "Bar Date"), or the Code shall operate to relieve EPE of any other liability or obligation it may have that is asserted under any of the ANPP Assumed Agreements for liabilities and obligations which are assessed or asserted against EPE in common with one or more of the Other Parties;

(c) that, on the Effective Date, except as to claims that may be asserted and which are preserved under Section 12 hereof, (i) EPE shall, by the terms of this Agreement, be released and discharged from (A) any and all claims, causes of action, rights of termination, and all other rights and remedies of any other kind and nature at law or equity held by any of the Other Parties arising from actions taken or failures to act by EPE in the Lease Litigation prior to the Court Approval Date and (B) any other defaults of EPE under the ANPP Assumed Agreements existing and known by the Other Parties prior to the Court Approval Date, and
(ii) the Other Parties shall, by the terms of this Agreement, be released and discharged from any and all claims, causes of action, rights of termination and all other rights and remedies of any other kind and nature at law or equity held by EPE arising from any defaults of any of the Other Parties under the ANPP Assumed Agreements existing and known by EPE prior to the Court Approval Date; provided, however, that nothing in this Agreement, or pursuant to the Plan, the Confirmation Order, the Bar Date, or the Code shall operate to relieve EPE and/or any of the Other Parties of any liability or obligation it or they may have that may be assessed or asserted under any of the ANPP Assumed Agreements against two or more of the participants in common, and further provided, however, that nothing in this paragraph shall diminish or impair the Release referred to in Section 5 hereof;

(d) that the release and discharge by EPE pursuant to Section 3(c)(ii) above shall be deemed to apply to claims and causes of action against the Other Parties solely in their capacities as participants, but not in their capacities as operating agents;

(e) that, on the Effective Date, except as to claims that may be asserted and which are preserved under Section 12 hereof, EPE shall, by the terms of this Agreement, be released by the Other Parties from any liability for attorneys' fees and administrative costs or claims incurred in connection with the Case at any time prior to the Confirmation Date, not to include any such attorneys' fees and administrative costs or claims (i) that might arise from any of the Other Parties' transactions with EPE regarding the sale of power or transmission other than pursuant to the ANPP Assumed Agreements; or (ii) that may be asserted by any of the Other Parties which are unrelated to the ANPP Assumed Agreements;

(f) that, notwithstanding any and all other provisions of this Agreement, including without limitation subparagraphs 3(c), (d), and (e) above, if EPE shall assert in writing any claims, causes of action, rights of termination or other rights and remedies of any kind or nature at law or equity existing and known by EPE prior to the Court Approval Date and arising from any actual or alleged act or failure to act prior to the Court Approval Date ("Claims") by APS or SRP, respectively, in their respective capacities as operating agent under any of the ANPP Assumed Agreements, any and all releases and discharges granted by APS or SRP, respectively (whichever is the subject of such Claims), to EPE pursuant to subparagraph 3(c)(i)(B), (d), or (e) above shall forthwith become null, void and of no further force or effect; and APS or SRP, respectively (whichever is the subject of such Claims), shall be entitled to assert any and all claims, causes of actions, rights of termination and other rights and remedies free of the provisions of subparagraphs 3(c)(i)(B), (d), and (e) above and of the releases and discharges to which reference is made therein;

(g) that, immediately upon its receipt of the payments specified in Section 2 of this Agreement, APS, as Operating Agent, shall pay to EPE the amount of $3,818,409.62 representing amounts withheld by APS, as of the date hereof, and not distributed to EPE under the Participation Agreement;

(h) that, immediately upon its receipt of the payments specified in Section 2 of this Agreement, SRP, as operating agent under the Switchyard Agreement and the Valley Transmission Agreement, shall pay to EPE the respective amounts of $8,047.92 and $12,708.88, representing amounts withheld by SRP, as operating agent under such agreements, as of the date hereof, and not distributed to EPE under the Switchyard Agreement and the Valley Transmission Agreement, respectively;

(i) that if this Agreement is terminated pursuant to Sections 8(c) or 11 hereof, the amounts specified in subparagraphs (g) and
(h) of this Section 3 shall be returned and repaid without interest to the respective operating agents by EPE promptly and in any event within five (5) business days of such termination; and

(j) that, on the Effective Date, solely for purposes of the Plan, the Other Parties shall be deemed to have withdrawn any and all proofs of claims filed in the Case by APS, as Operating Agent, SRP, as operating agent under the Switchyard Agreement and the Valley Transmission Agreement, and the Other Parties solely in their capacities as parties to and/or participants under the ANPP Assumed Agreements; provided, however, that such action by the Other Parties shall have no effect on any liability or obligation of EPE hereunder or under the ANPP Assumed Agreements.

The intent of this Agreement (including but not limited to this Section
3) is that if, for example and not by way of limitation, a claim such as an environmental claim is made against any of the parties hereto for damages commencing on the date of an act, event, or occurrence whether before or after the Petition Date, then EPE, as a participant under the Participation Agreement, the Switchyard Agreement, and/or the Valley Transmission Agreement, as the case may be, shall be and remain liable for its pro rata share, based upon its full participant interest pursuant to such agreements, of any damages awarded on account of such claim, notwithstanding any and all provisions or effect of this Agreement, the Plan, the Confirmation Order, the Bar Date, or the Code. To the extent this Agreement releases, waives, or limits claims of the Other Parties against EPE or of EPE against the Other Parties, as the case may be, such claims are limited to those which result solely from breaches of EPE or the Other Parties but not to liabilities or obligations which are assessed or asserted against EPE in common with one or more of the Other Parties or which result, directly or indirectly, from claims by entities other than the Other Parties against EPE in common with one or more of the Other Parties.

4. Interim Agreements. Subject to all of the terms and conditions set forth in this Agreement, during the period after the Confirmation Date and until and including the earlier to occur of the Effective Date and the date upon which this Agreement shall have been terminated in accordance with Section 8(c) or 11 hereof:

(a) EPE and the Other Parties agree that, with respect to all matters relating to the ANPP Assumed Agreements, EPE and the Other Parties shall be governed by the provisions of such ANPP Assumed Agreements and this Agreement; provided, however, that this section (i) shall not impair EPE's right to assert, or prohibit EPE from asserting, any argument or defense that the Court should assume or exercise jurisdiction, and (ii) shall not impair the Other Parties' right to assert, or prohibit the Other Parties from asserting, any argument or defense that the Court should not assume or exercise jurisdiction. Notwithstanding the preceding sentence, none of the automatic stay of Section 362 of the Code, the post-confirmation injunction of Sections 524 and 1141 under the Code, or any stay or injunction under the Plan or the Confirmation Order shall be applicable to any actions or remedies taken by the Other Parties under the ANPP Assumed Agreements (including the giving of notice of default and implementation of appropriate remedies and enforcement procedures) to address any action or inaction of EPE subsequent to the Confirmation Date.

(b) Except as expressly provided in Section 3 hereof, nothing contained in this Agreement or pursuant to the Plan, the Confirmation Order, the Bar Date, or including without limitation any discharge, injunction, or release pursuant to the Plan or the Confirmation Order shall operate to waive, affect, or restrict in any manner whatsoever the rights of the Other Parties or of EPE under any of the ANPP Assumed Agreements to enforce in accordance therewith any and all rights thereunder with respect to any default or breach of EPE or the Other Parties under such agreements. No waiver or release contained herein with respect to any default or breach of EPE or the Other Parties under any of the ANPP Assumed Agreements will be deemed to have waived any subsequent default or breach of EPE or the Other Parties under any of the ANPP Assumed Agreements notwithstanding the similarity of said subsequent default or breach to similar defaults or breaches of EPE or the Other Parties waived or released herein; provided, however, that the Other Parties agree that, except as provided in
Section 3(a) hereof, they will not assert any defaults or breaches under the ANPP Assumed Agreements as a bar to EPE's assumption of the ANPP Assumed Agreements.

(c) Nothing contained in this Agreement, the Case, the Plan, or the Confirmation Order shall entitle EPE to interfere with, oppose, or deny prior operating procedures and actions taken, conducted, and approved by the ANPP Participants pursuant to the ANPP Assumed Agreements, except in accordance with procedures provided under the ANPP Assumed Agreements.

5. Limited Waiver and Release. Concurrently with the execution of this Agreement, EPE and APS will execute the limited waiver of statute of limitations attached hereto as Appendix A and made a part hereof by reference (the "Limited Waiver"). On the Effective Date, EPE and each of the Other Parties will execute and deliver the release attached hereto as Appendix B and made a part hereof by reference (the "Release").

6. Form of Payments. All payments required pursuant to Sections 2 and 3 of this Agreement shall be made by wire transfer of cash or immediately available funds pursuant to written instructions from the party to whom payment is to be made.

7. No Amendment or Change. Nothing in this Agreement shall constitute or be deemed to constitute any amendment, change, or modification of any type or nature of any of the ANPP Assumed Agreements.

8. The Plan.

(a) It is the intent of the Parties to this Agreement that (i) this Agreement be approved by the Court, become effective, and continue to be effective and binding on EPE as a party hereto,
(ii) EPE's Assumption of the ANPP Assumed Agreements in accordance with this Agreement is a condition precedent to the effectiveness of the Plan, (iii) subject to the provisions of Section 11(d) hereof, this Agreement will be the exclusive procedure by which EPE can Assume the ANPP Assumed Agreements, and (iv) notwithstanding anything to the contrary in the Plan, including but not limited to Section 7.7 thereof, or in the Merger Agreement (as such term is defined in the Plan), in the event of any inconsistency between the Plan or the Merger Agreement and this Agreement, this Agreement will control.

(b) EPE shall use all reasonable efforts, in good faith, to obtain a Confirmation Order which provides that (i) EPE's Assumption of the ANPP Assumed Agreements in accordance with this Agreement is a condition precedent to the effectiveness of the Plan, (ii) subject to the provisions of Section 11 hereof, this Agreement will be the exclusive procedure by which EPE can Assume the ANPP Assumed Agreements, and (iii) notwithstanding anything to the contrary in the Plan, including but not limited to Section 7.7 thereof, or in the Merger Agreement (as such term is defined in the Plan), in the event of any inconsistency between the Plan or the Merger Agreement and this Agreement, this Agreement will control.

(c) In the event that the Confirmation Order does not contain all of the provisions of Section 8(b)(i), (ii) and (iii) set forth above, then any of the Other Parties may terminate this Agreement, in which case this Agreement shall be void and of no further effect. Upon such a termination, any extensions provided under
Section 9 or provided under any separate stipulations of the parties shall survive and control. If the Agreement is not terminated by the Other Parties on or prior to the Confirmation Date, then EPE shall be deemed to be in full compliance with this Agreement on the Confirmation Date, and unless terminated in accordance with Section 11 herein, this Agreement shall be the exclusive procedure through which EPE may assume the ANPP Assumed Agreements.

(d) The Other Parties, solely in their capacities as parties to, and/or participants under, the ANPP Assumed Agreements, acknowledge and agree that so long as this Agreement has been approved by an Approval Order (as defined in Section 9(a) hereof) in accordance with Section 9(a) hereof and has not been terminated under Sections 8(c) or 11 hereof, the Other Parties, solely in their capacities as parties to and/or participants under the ANPP Assumed Agreements, will not object to or vote for or against the Plan;

(e) APS, as Operating Agent, will reasonably cooperate in required Nuclear Regulatory Commission proceedings and will assist in providing information for other regulatory proceedings (if any) required for the Assumption of the ANPP Assumed Agreements pursuant to this Agreement; and

(f) If the Plan is amended, EPE will make all best efforts to ensure that the Plan will be consistent with the terms of this Agreement.

9. Procedures and Timing.

(a) Promptly following the execution of this Agreement by all of the parties hereto, the parties hereto (and the Mediator, if he is agreeable) shall jointly file motions for approval of this Agreement. EPE shall use its best efforts to obtain an order of the Court approving its entry into this Agreement as provided in
Section 10(b) hereof (the "Approval Order"). EPE agrees to the extension, as to the Other Parties, of any deadline that may otherwise be applicable to the Other Parties, to dates determined by the Court, for (i) filing objections or casting ballots on the Plan (which deadline as so extended shall not be prior to six (6) days after the entry of any order denying the joint motion referred to above); (ii) filing or completion of any pretrial stipulation, order, or schedule regarding confirmation of the Plan; (iii) completion of any discovery regarding confirmation of the Plan; or (iv) presentation of any evidence or examination of any witness in any hearing on confirmation of the Plan; and in the event of any termination of this Agreement (x) EPE and the Other Parties shall cooperate with each other in good faith to enable the Other Parties and EPE to make a full presentation of their positions during the confirmation proceedings, and (y) each of the Other Parties shall have the right to object to the Plan and to vote for or against confirmation of the Plan;

(b) if, prior to the entry of the Approval Order, any change of circumstance occurs in the Case or under the Plan that is materially adverse to the Other Parties under the terms of this Agreement or under the ANPP Assumed Agreements, then, upon written notice by any of the Other Parties, this Agreement shall be void and without effect unless such change of circumstances is expressly waived by all of the Other Parties; provided, however, that the extensions granted or for which provision is made in subparagraph (a) above shall remain applicable for at least seven
(7) days after the declaration by a Participant of a material adverse change; and

(c) Subject to consent of the Mediator, EPE shall provide the Other Parties access, on a confidential basis, to a draft of the proposed settlement of issues relating to the Lease Litigation, including any proposed revision of any agreements related to the Palo Verde Leases (as such term is defined in the Plan). To the extent that any settlement among EPE and the parties to the Lease Litigation requires the consent of the Other Participants, the Other Participants will review the settlement in good faith, consistent with Section 15 of the Participation Agreement, and the required consent, if any, will not be unreasonably withheld. After the Court Approval Date, any agreement relating to the Lease Litigation or modification of such agreement, either in the Case or pursuant to the Plan, that violates any of the ANPP Assumed Agreements shall be addressed pursuant to the procedures under the ANPP Assumed Agreements. The Other Participants agree that, based solely on the description of the consensual treatment of Class 6, Class 12(a), and Class 12(b) (as such terms are defined in the Modified Third Amended Plan of Reorganization, as corrected September 15, 1993 (the "Current Plan")), as set forth in Section 3.8(A) and (C) and Section 3.14(A) and (B) of the Current Plan, and on the representations and warranties of EPE set forth below in this Section 9(c)(i) and (ii), the Other Participants agree to waive the requirement under the Participation Agreement, if any, for their consent to such consensual treatment. Assuming that Classes 6, 12(a), and 12(b) accept the consensual treatment set forth in Section 3.8(A) and (C) and Section 3.14(A) and (B) of the Current Plan, EPE hereby represents and warrants as of the Effective Date to the Other Participants that:

(i) Reorganized EPE will not seek to be treated or classified as, and will not be deemed, a Transferee, as such term is defined in Section 15.10 of the Participation Agreement, and for all purposes of the Participation Agreement, Reorganized EPE will be deemed to have succeeded by operation of law to all of the rights and obligations of Reorganized EPE under the Participation Agreement and to have been previously a Participant thereunder; and

(ii) the liabilities or obligations of Reorganized EPE with respect to its full 15.8 percent participant interest in the ANPP shall not be affected, released, or waived as a result of any release of Class 6 Claims, Class 12(a) Claims, and Class 12(b) Claims, and to the extent not covered by such Classes, any of the Lease Obligation Bondholders, Secured Lease Obligation Bondholders, Palo Verde Indenture Trustees, Funding Corporations, Owner Trustees, Owner Trusts, and Owner Participants (as such terms are defined in the Plan) under any provision of the Plan, the OP Settlement, or the Settlement Agreements (as such terms are defined in the Plan) or otherwise in the Case from any liability or obligation with respect to ANPP or the Palo Verde Leases; and Reorganized EPE agrees to indemnify the Other Participants and hold them harmless to the extent that any of said releases results in any of the Other Participants becoming obligated for more than their respective participant interests; provided, however, that Reorganized EPE's obligation to indemnify the Other Participants hereunder shall in no event result in payments by Reorganized EPE in respect of any such liability or obligation which, in the aggregate, per occurrence, exceed an amount equal to EPE's proportionate Participant - share in ANPP.

A further condition to the Other Parties' waiver of consent pursuant to this Section 9(c) is that, as of the Effective Date, neither the "OP Settlement" (as defined in the Plan) or amendments to the Plan shall materially and adversely affect the Other Participants.

10. Conditions to Binding Effect; Persons Bound; Assignments. If, between the date this Agreement is executed and the Court Approval Date, the Other Parties have not terminated this Agreement in accordance with Section 9(b) hereof, this Agreement will become binding upon EPE and the Other Parties on the earliest date upon which all of the following have occurred: (a) this Agreement has been executed and delivered by EPE and each of the Other Parties; (b) an order of the Court approving this Agreement has been entered; (c) at least ten (10) days have elapsed since the date such order was entered by the Court, and no stay of the order approving this Agreement is in effect; and (d) EPE and APS have executed and delivered the Limited Waiver. This Agreement shall be binding upon and inure to the benefit of EPE and each of the Other Parties and their respective successors and assigns, including Reorganized EPE; provided, however, that (i) the requirement in subpart (c) of the preceding sentence can be waived by EPE and Other Parties. None of the parties hereto may assign any of its rights or obligations hereunder except to a party who, concurrently with such assignment, becomes a Participant pursuant to and in accordance with the Participation Agreement with respect to the assigning person's interest in ANPP. Any person who becomes a Participant shall be bound by this Agreement.

11. Termination. (a) During the period after the Court Approval Date and on or prior to the Confirmation Date, this Agreement will terminate and be of no further force or effect in the event that: (i) confirmation of the Plan is denied by the Court; (ii) the Plan is withdrawn by EPE; or (iii) there is any change in the Plan as on file on the Court Approval Date or in the Case which materially and adversely affects any of the Other Parties, in their reasonable discretion, and any of the Other Parties so affected promptly shall have notified EPE and each of the Other Parties of the same.

(b) In the event that, on or prior to the Confirmation Date, any of the Other Parties notifies EPE that it is not in compliance with this Agreement, EPE or any of the Other Parties shall have the right, on the earlier to occur of (i) five business days after the date that such notice was sent by facsimile transmission with receipt confirmed or
(ii) the Confirmation Date, to declare this Agreement to be terminated and of no further force and effect. Upon such a termination, any extensions provided under Section 9 or provided under any separate stipulations of the parties shall survive and control.

(c) Notwithstanding that this Agreement shall have become binding and shall not have been terminated prior to the Confirmation Date, EPE and the Other Parties shall have the right to declare this Agreement to be terminated and of no further force and effect subject to the provisions of Section 11(d) hereof in the event that (i) the Plan is revoked in accordance with its terms or (ii) the Confirmation Order is vacated.

(d) In the event that one or more of the conditions to binding effect contained in Section 10 hereof are not satisfied or are not waived or this Agreement shall have been terminated in accordance with its terms:
(i) the parties agree that the Stipulation shall continue to control issues between EPE and the Other Parties pending any further order of the Court; and (ii) this Agreement and the agreements and recitals set forth herein will have no further force and effect and may not be utilized in any subsequent proceeding or court; provided, however, in the event of any termination of this Agreement, any extensions provided under Section 9 or provided under any separate stipulations of the parties shall survive and remain as a binding requirement and agreement of EPE and the Other Parties.

12. Preservation of Certain EPE or PNM Rights, Claims and Remedies. Nothing in this Agreement shall impair or modify any right, claim, or remedy of EPE or PNM in connection with the issues described in Appendix A of the Transition Agreement, dated September 2, 1993, between PNM and EPE (the "Transition Agreement") or waive any default of EPE or PNM that may exist pursuant to any agreement (collectively, the "Preserved Claims"); provided, however:

(a) PNM and EPE agree that (i) PNM will not assert a non-monetary default by EPE under the ANPP Assumed Agreements as a bar to Assumption of the ANPP Assumed Agreements by EPE pursuant to this Agreement, and (ii) PNM or EPE will not assert a non-monetary default by either PNM or EPE under the ANPP Assumed Agreements at any time prior to or on the Confirmation Date;

(b) If (i) the Transition Agreement terminates and EPE and PNM are unable to reach the Amended Interim Agreement contemplated by the Transition Agreement, and (ii) PNM or EPE determines that the party contemplating the claim is itself materially and adversely affected in its ability to import remote generation as a result of EPE or PNM import of generation entitlement from PVNGS, then PNM or EPE may pursue any and all Preserved Claims after the Confirmation Date; and

(c) In no event shall PNM or EPE assert prior to the Confirmation Date that a default under the Transition Agreement, the Interim Transmission Agreement and Agreement to Arbitrate Between EPE and PNM, or any other agreement may or shall constitute a default under any of the ANPP Assumed Agreements.

Except as provided in this Section 12, PNM and EPE will be governed by the terms of this Agreement, including the waivers and releases in
Section 3 and in the Release.

13. Governing Law. This Agreement will be governed by, and construed in accordance with, the laws of the State of Arizona.

14. Execution in Counterparts. This Agreement may be executed in any number of counterparts.

15. Headings. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.

16. Modification, Waiver, Etc. No amendment, modification, supplement, waiver, or consent made hereunder shall be effective unless in writing and signed, in the case of an amendment, modification, or supplement, by all of the parties hereto, and, in the case of a waiver or consent, by the party or parties making such waiver or consent.

17. Notices. Any and all notices with respect to this Agreement shall be in writing, both by facsimile transmission and by first class mail, directed as follows:

To EPE and Palo Verde Owners
Corporate Secretaries:

To EPE

Eduardo Rodriguez
303 Oregon Street
El Paso, Texas 79901

To APS

Nancy C. Loftin
400 N. 5th Street
Sta. 9068
Phoenix, Arizona 85004

To PNM

Patrick T. Ortiz
Alvarado Square
MS 0804

Albuquerque, New Mexico 87158

To SRP

William K. O'Neal
P.O. Box 52025
PAB 215

Phoenix, Arizona 85072

To SCE
Kenneth S. Stewart

2244 Walnut Grove Avenue
Room 330
Rosemead, California 91770

To LADWP

Judith K. Kasner
111 N. Hope Street
Room 1555
Los Angeles, California 90051

To SCPPA

Eldon A. Cotton
111 N. Hope Street
Room 1155
Los Angeles, California 90051

To Counsel:

To EPE
Bryan Krakauer
SIDLEY & AUSTIN
One First National Plaza
Chicago, IL 60603

To APS
Donald L. Gaffney
SNELL & WILMER
One Arizona Center
400 E. Van Buren
Phoenix, AZ 85004-0001

To SRP
Gary Keltner
JENNINGS, STROUSS & SALMON
2 North Central, Suite 1600
Phoenix, AZ 85004-2393

To CSW
Joris M. Hogan
MILBANK, TWEED, HADLEY & McCLOY
One Chase Manhattan Plaza
New York, NY 10005

Except as otherwise provided in this Agreement, Notices shall be deemed to be received upon the earlier to occur of, (i) in the case of facsimile transmission, receipt by the party to whom such notice is addressed, and
(ii) in the case of delivery by first class mail, on the third business day following the date upon which the notice is mailed. During the confirmation hearing, all notices hereunder to counsel attending the hearing shall also be made by hand delivery.

EPE agrees that a representative of management from APS (the "APS Representative") will receive all notices and/or documents that are provided to the Oversight Committee, as that term is defined in the Plan.

EL PASO ELECTRIC COMPANY

ARIZONA PUBLIC SERVICE COMPANY

By:                                    By:         David G. Areghini
   _______________________________        __________________________________
Its:                                   Its:  Associate General Manager,
                                             Power, Construction &
                                             Engineering Svcs
    ______________________________         _________________________________

SOUTHERN CALIFORNIA EDISON COMPANY

PUBLIC SERVICE COMPANY OF
NEW MEXICO

By:     Glenda L. Robinson             By:        Eldon A. Cotton
   ______________________________         __________________________________
Its:  Administrative Secretary         Its:            Agent
    _____________________________          _________________________________

By:     Glenda L. Robinson            By:        Eldon A. Cotton
   ______________________________         __________________________________
Its:  Administrative Secretary         Its: Assistant General Manager- Power
    _____________________________          _________________________________

Schedule 1

TAX AGREEMENTS

1. That certain letter agreement, dated August 14, 1986, from Arizona Public Service Company ("APS"), El Paso Electric Company ("EPE") and Public Service Company of New Mexico ("PNM"), addressed to Southern California Edison Company ("SCE"), Re: "Arizona Public Service Company, El Paso Electric Company and Public Service Company of New Mexico: Refinancing of Interests in Palo Verde Nuclear Generating Station" (the "Indemnity Letter").

2. That certain Contribution Agreement, dated as of August 14, 1986, by and between APS, EPE and PNM, relating to the Indemnity Letter.

3. That certain letter agreement, dated August 21, 1986, from APS, EPE and PNM, addressed to SCE, amending the Indemnity Letter.

4. That certain letter agreement, dated December 2, 1986, from APS, EPE and PNM, addressed to SCE, further amending the Indemnity Letter.

5. Any similar agreement(s) entered into by EPE in connection with EPE's 1987 sale/leaseback transactions.

6. Any indemnity agreements entered into between APS and EPE whereby EPE indemnified APS for any liabilities arising out of APS delivering Annual Reports of Operating Agent (relating to PVNGS insurance) under EPE's sale/leaseback transactions.

7. Indemnity Agreement, effective as of December 29, 1983, between APS and EPE relating to the issuance of $63,500,000 principal amount of Annual Tender Pollution Control Revenue Bonds, 1983 Series A (El Paso Electric Company Palo Verde Project), and other indemnity agreements, if any, relating to other pollution control bond issuances on behalf of EPE.

Schedule 2

SWITCHYARD AND TRANSMISSION AGREEMENTS*

Those agreements, contracts, leases, purchase orders and other documents shown on the attached Annex A.

* "Agreements, contracts, leases, purchase orders and other similar documents" are referred to collectively herein as "Agreements." By generating the attached Annex A, the Switchyard Participants and the Valley Transmission Participants have made a good faith effort to list all ongoing active Agreements currently in effect at or with respect to the ANPP High Voltage Switchyard and the Valley Transmission System. This list is subject to change at any time as old Agreements expire, existing Agreements are amended or are extended, and new Agreements are entered into. The parties to the Cure and Assumption Agreement to which this Schedule 2 is attached agree that the listing of these Agreements is not intended to, and will not, limit the liabilities and obligations of EPE as a Switchyard Participant or as a Valley Transmission Participant in common with the other such participants with respect to any and all Agreements in effect or to be in effect at or with respect to the ANPP High Voltage Switchyard and the Valley Transmission System, whether or not listed hereon.

ANNEX A

The following agreements as the same shall have been amended to date:

1. ANPP Kyrene 500/230 KV Switchyard Interconnection Agreement, effective on or about July 24, 1980.

2. Palo Verde-North Gila Line ANPP High Voltage Switchyard Interconnection Agreement, effective on or about June 7, 1984.

3. ANPP Transmission Project-Westwing Switchyard Amended Interconnection Agreement, effective on or about August 14, 1986.

4. All other agreements of any type or nature entered into by SRP as operating agent relating to the ANPP High Voltage Switchyard and/or the Valley Transmission System.

Schedule 3

ANPP AGREEMENTS*

Those agreements, contracts, leases, purchase orders and other documents shown on the attached computer-generated Annex A and the attached Annex B.

* "Agreements, contracts, leases, purchase orders and other similar documents" are referred to collectively herein as "Agreements." By generating the attached Annex A and Annex B, the Participants have made a good faith effort to list all ongoing active Agreements currently in effect at or with respect to ANPP. This list is subject to change at any time as old Agreements expire, existing Agreements are amended or are extended, and new Agreements are entered into. The parties to the Cure and Assumption Agreement to which this Schedule 3 is attached agree that the listing of these Agreements is not intended to, and will not, limit the liabilities and obligations of EPE as a Participant in ANPP in common with the Other Participants with respect to any and all Agreements in effect or to be in effect at or with respect to ANPP, whether or not listed hereon.

ANNEX A
[Omitted]

ANNEX B

The following agreements as the same shall have been amended to date:

1. Agreement for Construction of Arizona Nuclear Power Project, dated as of January 15, 1973, between APS, as Agent for all Participants in Arizona Nuclear Power Project, and Bechtel Power Corporation.

2. Agreement for Engineering and Procurement Services, dated as of January 15, 1973, between APS, as Project Manager of Arizona Nuclear Power Project, and Bechtel Power Corporation.

3. Agreement No. 13904 - Option and Purchase of Effluent, dated as of April 23, 1973, among APS and the Cities of Phoenix, Glendale, Mesa, Scottsdale, and Tempe, the Town of Youngtown, and Salt River Project Agricultural Improvement and Power District.

4. Nuclear Steam Supply System Contract, dated as of August 20, 1973, between APS as Project Manager of Arizona Nuclear Power Project and Combustion Engineering, Inc.

5. Turbine Generator Contract, dated as of March 21, 1974, between APS, as Project Manager and Operating Agent for Palo Verde Nuclear Generating Station, and General Electric Company.

6. Supplemental Agreement of Settlement, dated June 2, 1980, between APS, Salt River Project Agricultural Improvement and Power District, Southern California Edison Company, Public Service Company of New Mexico, El Paso Electric Company, Arizona Electric Power Corporation Inc., and The Department of Energy, ANPP.

7. Agreement for Delivery of Natural UF6, dated June 2, 1980, between APS, Salt River Agricultural Improvement and Power District, Southern California Edison Company, Public Service Company of New Mexico, El Paso Electric Company, Arizona Electric Power Cooperative, Inc., and the Department of Energy, ANPP.

8. Agreement for the Sale and Purchase of Wastewater Effluent, dated as of June 12, 1981, between APS, Salt River Project Agricultural Improvement and Power District and the City of Tolleson, as amended by Amendment No. 1 thereto dated as of November 12, 1981, and Amendment No. 2 thereto dated as of June 4, 1986.

9. Master Purchase and Sale Agreement for Renewal Parts and Factory Repair Work for Palo Verde Nuclear Steam Supply Systems and Related Equipment, dated as of August 14, 1981, between APS and Combustion Engineering, Inc.

10. Master Purchase and Sale Agreement for Renewal Parts and Factory Repair Work for Palo Verde Turbine Generators and Auxiliary Drive Turbines, dated as of August 6, 1982, between APS as agent for all Participants in Palo Verde Nuclear Generating Station and General Electric Company.

11. Master Agreement between APS and Singer Link-Miles Simulation Corporation - Agreement No. PV 89-20903, dated as of July 27, 1989.

12. Contract, dated July 17, 1991 Under Master Agreement Between APS and Simulation, Systems & Services Technologies for the Procurement of a Second Simulator for the Palo Verde Nuclear Generating Station.

13. All purchase orders entered into by the Project Manager or the Operating Agent relating to ANPP.

14. All software and other licensing agreements relating to ANPP.

15. All agreements for legal services or support entered into by the Operating Agent relating to ANPP.

16. All settlement agreements entered into by the Project Manager or the Operating Agent relating to ANPP.

17. All agreements for confidentiality, indemnification or waivers entered into by the Project Manager or the Operating Agent relating to ANPP.

18. All other agreements of any type or nature entered into by the Project Manager or the Operating Agent relating to ANPP.

Appendix A

AGREEMENT REGARDING ASSERTION OF CLAIMS

This AGREEMENT is by and between El Paso Electric Company, a Texas corporation ("EPE") and Arizona Public Service Company, an Arizona corporation ("APS"), individually and as Operating Agent (the "Operating Agent") under the Arizona Nuclear Power Project ("ANPP") Participation Agreement dated as of August 23, 1973, as amended by Amendment Nos. 1 through 13 thereto (the "Participation Agreement").

WHEREAS, EPE has commenced a voluntary case under Chapter 11 of the United States Bankruptcy Code (11 U.S.C. Sections 101-1330) which is currently pending in the United States Bankruptcy Court for the Western District of Texas (the "Court"), Case No. 92-10148 FM (the "Bankruptcy Action"); and

WHEREAS, this Agreement is being executed in connection with and as an integral part of that certain Cure and Assumption Agreement dated as of November __, 1993 among EPE, APS, and other parties (the "Assumption Agreement");

WHEREAS, capitalized terms used herein and not otherwise defined will have the meanings assigned to such terms in the Assumption Agreement;

WHEREAS, Section 5 of the Assumption Agreement contemplates execution of this Agreement by EPE and APS, and execution of the Release by EPE, APS and each of the Other Parties on the Effective Date;

WHEREAS, upon the Release becoming effective under Section 2 of the Release, each Participant will release each other Participant from certain claims (the "Released Claims"); and

WHEREAS, pursuant to the Plan, EPE and CSW have entered into an Agreement and Plan of Merger dated as of May 3, 1993, as amended on May 18, 1993, and August 27, 1993, and as may hereafter be amended (the "Merger Agreement") providing for the acquisition of EPE by CSW by means of a merger (the "Merger") between EPE and a wholly-owned, special purpose subsidiary of CSW.

WHEREAS, the Release shall be effective only upon the "Effective Date" of the Merger (as that term is defined in the Plan of Reorganization (the "Merger Effective Date"), but shall have absolutely no force and effect and shall be null and void if the Merger Agreement is terminated, it being the express intention of EPE and APS that if the Merger is not fully consummated, the Release Claims can be pursued by EPE and APS in the same manner and with the same effect as if these Released Claims were to be the subject of litigation and/or arbitration instituted as of the day of the signing of this Agreement;

NOW, THEREFORE, in consideration of the mutual covenants and agreements of the parties contained herein, the parties hereto agree as follows:

A. EPE and APS acknowledge and stipulate that: (i) APS and EPE are parties to the Bankruptcy Action pending before the Court; and (ii) as of the date of the execution of this Agreement, APS and EPE each could exercise whatever right that party has, if any, to commence litigation to adjudicate the Released Claims and assert defenses against the other party. Nothing herein will impair EPE's right to assert that the Released Claims could, as of the date of execution of this Agreement, be litigated before the Court and nothing herein will prohibit APS from asserting any contrary position relating to the appropriate forum for any such litigation.

B. Consistent with part F below, in the event that the Merger Agreement is terminated according to its terms and action is taken by filing a claim or initiating an arbitration proceeding to adjudicate the Released Claims on or before ninety (90) days from the date upon which the Assumption Agreement is terminated:

(1) EPE and APS each agrees that the rights and protections granted to them by the following two sentences of Section 21.5.2 of the Arizona Nuclear Power Project Participation Agreement are hereby relinquished and shall not apply to any litigation or dispute between EPE and APS to adjudicate the Released Claims: "A claim based on Willful Action must be perfected by filing suit in a court of competent jurisdiction within three years after the Willful Action occurs. All claims made thereafter relating to the same Willful Action shall be barred by this Section 21.5.2."; and

(2) the party against which Released Claims are brought shall not assert a defense to those claims based upon any period of limitation, whether prescribed by regulation or applicable law or contract provision.

C. EPE and APS each consent to the entry of an order by the Court (the "Approval Order") incorporating the terms of this Agreement and providing that: (i) the terms of this Agreement are binding upon EPE and APS; (ii) subject to part F(i) below, any period of limitation that arises from applicable law, regulation or contract provision that is applicable to the Released Claims shall be suspended so that the period of limitation will not expire prior to ninety (90) days after the date upon which the Assumption Agreement is terminated; and (iii) the Court will retain jurisdiction over EPE and APS to interpret and enforce the Approval Order and this Agreement.

D. Upon the execution of this Agreement, EPE and APS shall cooperate to secure prompt entry of the Approval Order. EPE and APS stipulate that entry of any order approving and/or enforcing the terms of this Agreement is necessary and appropriate (within the meaning of 11 U.S.C.
Section 105) to implement the Plan. APS and EPE reserve the right to contest the content of such an order other than the Approval Order.

E. EPE and APS agree that each party will be deciding whether to commence or to forgo commencing litigation to adjudicate the Released Claims in reliance upon the provisions of this Agreement.

F. Except as provided in this Agreement, nothing herein shall be deemed to: (i) revive or make actionable any claims that, as of the date of execution of this Agreement and entry by the Court of the Approval Order, are already time-barred by operation of any applicable limitation period, including, but not limited to, Section 21.5.2 of the Participation Agreement; or (ii) cause either APS (individually or as Operating Agent) or EPE to waive any claim or defense available to either party, including, but not limited to, those provided under Section 21.5.2 of the Participation Agreement or other applicable statutes of limitation, other than as provided in this Agreement, until release occurs pursuant to the terms of the Assumption Agreement on the Effective Date.

G. If a court of competent jurisdiction determines that any provision of this Agreement is not enforceable, that provision may be severed from this Agreement and the remainder of this Agreement shall remain in full force and effect.

H. This Agreement shall be binding upon the signatories, their predecessors, successors, assigns, affiliated entities, parents, subsidiaries and upon Reorganized EPE.

I. This Agreement may be executed in any number of counterparts.

EL PASO ELECTRIC COMPANY

By:___________________________

Its:__________________________

ARIZONA PUBLIC SERVICE COMPANY

By:___________________________

Its:__________________________

Appendix B

RELEASE

This RELEASE is made as of , 199 , by and among the Participants who are parties to the Arizona Nuclear Power Project Participation Agreement dated as of August 23, 1973, as amended by Amendment Nos. 1 through 13 thereto (the "Participation Agreement"). Capitalized terms used herein and not otherwise defined herein will have the meanings assigned to such terms in the Cure and Assumption Agreement dated as of , 199_ among El Paso Electric Company ("EPE") and the Other Parties (the "Assumption Agreement").

WHEREAS, this Release is being executed in connection with and as an integral part of the Assumption Agreement; and

WHEREAS, when used hereinafter, the terms "Participants" and "Other Participants" will include the Project Manager and the Operating Agent.

NOW, THEREFORE, in consideration of the mutual covenants and agreements of the parties contained herein and in the Assumption Agreement, the parties hereto agree as follows:

1. Release. Except as otherwise expressly stated herein, each of the Participants hereby releases each other Participant and each of their respective past and present subsidiaries, affiliates, agents, officers, directors, and employees (collectively, the "Released Parties") of and from all causes of action, suits, claims, and demands whatsoever, in law or in equity, whether based on contract, tort, or otherwise, and whether or not based on active or passive negligence or Wilful Action of any person, which any such Participant or any of their respective subsidiaries or affiliates ever had or now has on account of or by reason of any breach or default under the Participation Agreement arising or existing on or prior to the Petition Date, arising out of or relating to the outages at any Generating Unit at ANPP commencing in 1989. Notwithstanding anything to the contrary herein, nothing herein shall be interpreted or deemed to release any Participant from any obligation to perform all of its duties and fulfill all of its responsibilities under and in strict compliance with the Participation Agreement, any of the ANPP Assumed Agreements, or otherwise with respect to ANPP from and after the date of execution hereof.

2. Effective Date. This Release shall become effective only upon (a) the execution and delivery hereof by all parties hereto and (b) satisfaction of all conditions to effectiveness of the Assumption Agreement and the effectiveness thereof as provided in paragraph 10 thereof, and, except as provided below, thereafter this Release shall be binding upon and inure to the benefit of each of the Participants and the other Released Parties and their respective successors and assigns.

3. Governing Law. This Agreement will be governed by, and construed in accordance with, the laws of the State of Arizona.

4. Execution in Counterparts. This Agreement may be executed in any number of counterparts.

EL PASO ELECTRIC COMPANY

By:_________________________________
Its:________________________________

ARIZONA PUBLIC SERVICE COMPANY

By:_________________________________
Its:________________________________

Attest and Countersign                 IMPROVEMENT AND POWER DISTRICT


_________________________________      ____________________________________
Its:_____________________________      Its:________________________________

                                       SOUTHERN CALIFORNIA EDISON COMPANY


                                       By:_________________________________
                                       Its:________________________________

                                       PUBLIC SERVICE COMPANY OF
                                       NEW MEXICO


                                       By:_________________________________
                                       Its:________________________________

                                       SOUTHERN CALIFORNIA PUBLIC
Attest:                                POWER AUTHORITY


_________________________________      By:_________________________________
Its:_____________________________      Its:________________________________

                                       DEPARTMENT OF WATER AND POWER OF
Attest:                                THE CITY OF LOS ANGELES


_________________________________      By:_________________________________
Its:_____________________________      Its:________________________________

Accepted and Agreed:

CENTRAL AND SOUTH WEST CORPORATION

By:______________________________
Its:_____________________________

EXHIBIT 10.2a

SECOND AMENDMENT TO
THE ARIZONA PUBLIC SERVICE COMPANY
DIRECTORS' DEFERRED COMPENSATION PLAN

Effective January 1, 1982, ARIZONA PUBLIC SERVICE COMPANY (the

"Company") adopted the ARIZONA PUBLIC SERVICE COMPANY DIRECTORS' DEFERRED

COMPENSATION PLAN (the "Plan"). The Plan was subsequently amended and

restated in its entirety effective January 1, 1986. The Plan was thereafter

amended effective January 1, 1991. By this instrument, the Company desires

to amend the Plan to allow participants to make a onetime irrevocable

election to transfer their Deferral Option I accounts under the Plan to the

Pinnacle West Capital Corporation, Arizona Public Service Company, SunCor

Development Company and El Dorado Investment Company Deferred Compensation

Plan.

1. This Amendment shall amend only the provisions of the Plan as set

forth herein, and those provisions not expressly amended hereby shall be

considered in full force and effect.

2. Section V of the Plan is hereby amended by adding new Paragraph E

at the end thereof which shall read as follows:

E. One-Time Election to Transfer Amounts Under Deferral Option I.

Notwithstanding anything in this Section V or the Plan to the contrary, each Participant who is dessignated to participate in the Pinnacle West Capital Corporation, Arizona Public Service Company, SunCor Development Company and El Dorado Investment Company Deferred Compensation Plan (the "DCP") may elect to transfer all of the Deferral Option I accounts established for him under the Plan to the DCP. Such an election shall be irrevocable and must be made on forms acceptable to the Committee no later than the later of (a) December 31, 1992, or
(b) December 31 of the calendar year preceding the calendar year for which the Participant is first designated for participation in the DCP. A Participant who elects to transfer his Deferral Option I accounts to the DCP pursuant to this Paragraph E shall cease to be a Participant in Deferral Option I of the Plan as of the effective date of such trans- fer. All transfers under this Paragraph E shall be effective as of the January 1 next following the Participant's election. Nothing in this Paragraph E shall permit a Participant or the Beneficiary of a Participant to receive a distribution of the Participant's Deferral Option I accounts prior to the occurrence of a distribution event as provided for in this Section V if such accounts are not transferred to the DCP, or the occurrence of any distribution event as provided for in the DCP with respect to Deferral Option I accounts which are transferred to the DCP.

3. The provisions of this Amendment shall be effective as of

January 1, 1993.

Except as amended and supplemented by this instrument, the Company

hereby ratifies the Plan as restated effective January 1, 1986, and

thereafter amended.

DATED: April 4, 1993.

ARIZONA PUBLIC SERVICE COMPANY

EXHIBIT 10.3a

THIRD AMENDMENT TO
THE ARIZONA PUBLIC SERVICE COMPANY
DEFERRED COMPENSATION PLAN

Effective January 1, 1978, ARIZONA PUBLIC SERVICE COMPANY (the

"Company") adopted the ARIZONA PUBLIC SERVICE COMPANY DEFERRED COMPENSATION

PLAN (the "Plan"). The Plan was subsequently amended and restated several

times and was most recently amended and restated in its entirety on

December 15, 1983. The Plan was thereafter amended on December 22, 1986 and

on December 23, 1987. By this instrument, the Company desires to amend the

Plan to allow participants to make a one-time irrevocable election to

transfer their Deferral Option I accounts under the Plan to the Pinnacle

West Capital Corporation, Arizona Public Service Company, SunCor Development

Company and El Dorado Investment Company Deferred Compensation Plan.

1. This Amendment shall amend only the provisions of the Plan as set

forth herein, and those provisions not expressly amended hereby shall be

considered in full force and effect.

2. Section IV of the Plan is hereby amended by adding new Paragraph F

at the end thereof which shall read as follows:

F. One-Time Election to Transfer Amounts Under Deferral Option I.

Notwithstanding anything in this Section IV or the Plan to the contrary, each Participant who is designated to participate in the Pinnacle West Capital Corporation, Arizona Public Service Company, SunCor Development Company and El Dorado Investment Company Deferred Compensation Plan (the "DCP") may elect to transfer all of the Deferral Option I accounts established for him under the Plan to the DCP. Such an election shall be irrevocable and must be made on forms acceptable to the Committee no later than the later of (a) December 31, 1992, or
(b) December 31 of the calendar year preceding the calendar year for which the Participant is first designated for participation in the DCP. A Participant who elects to transfer his Deferral Option I accounts to the DCP pursuant to this Paragraph F shall cease to be a Participant in Deferral Option I of the Plan as of the effective date of such trans- fer. All transfers under this Paragraph F shall be effective as of the January 1 next following the Participant's election. Nothing in this Paragraph F shall permit a Participant or the Beneficiary of a Participant to receive a distribution of the Participant's Deferral Option I accounts prior to the occurrence of a distribution event as provided for in this Section IV if such accounts are not transferred to the DCP, or the occurrence of any distribution event as provided for in the DCP with respect to Deferral Option I accounts which are trans- ferred to the DCP.

3. The provisions of this Amendment shall be effective as of

January 1, 1993.

Except as amended and supplemented by this instrument, the Company

hereby ratifies the Plan as amended and restated effective January 1, 1984,

and thereafter amended.

DATED: April 4, 1993.

ARIZONA PUBLIC SERVICE COMPANY

EXHIBIT 10.4ac

KEY EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT

THIS AGREEMENT, made and entered into as of the ______ day of ______________, 199__, by and between Arizona Public Service Company, an Arizona corporation (hereinafter referred to as the "Company") and (hereinafter referred to as the "Executive"):

W I T N E S S E T H :

WHEREAS, the Executive has been employed by the Company in various managerial capacities for a period of years, possesses intimate knowledge of the business and affairs of the Company, and has acquired certain confiden- tial information and data with respect to the Company; and

WHEREAS, the Company desires to insure, insofar as possible, that it will continue to have the benefit of the Executive's services and to protect its confidential information and goodwill; and

WHEREAS, the Company recognizes that circumstances may arise in which a change in the control of the Company through acquisition or other- wise occurs thereby causing uncertainty of employment without regard to the Executive's competence or past contributions which uncertainty may result in the loss of valuable services of the Executive to the detriment of the Company and its shareholders, and the Company and the Executive wish to provide reasonable security to the Executive against changes in the Executive's relationship with the Company in the event of any such change in control; and

WHEREAS, both the Company and the Executive are desirous that a proposal for any change of control or acquisition will be considered by the Executive objectively and with reference only to the business interests of the Company and its shareholders;

WHEREAS, the Executive will be in a better position to consider the Company's best interests if the Executive is afforded reasonable security, as provided in this Agreement, against altered conditions of employment which could result from any such change in control or acquisi- tion; and

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements hereinafter set forth, the parties hereto mutually covenant and agree as follows:

1. Definitions.

(a) "Accrued Benefits" shall mean the benefits payable to the Executive as described in Section 6.

(b) "Act" shall mean the Securities Exchange Act of 1934.

(c) "Base Period Income" shall be an amount equal to the Executive's "annualized includible compensation" for the "base period" as defined in Section 280G(d)(1) and (2) of the Code.

(d) "Beneficial Owner" shall have the same meaning as given to that term in Rule 13d-3 of the General Rules and Regulations of the Act, provided that any pledgee of Company voting securities shall not be deemed to be the Beneficial Owner thereof prior to its disposition of, or acquisition of voting rights with respect to, such securities.

(e) "Cause" shall be limited to (i) the engaging by the Executive in conduct which has caused demonstrable and serious injury to the Company, monetary or otherwise, as evidenced by a determination in a binding and final judgment, order or decree of a court or adminis- trative agency of competent jurisdiction, in effect after exhaustion or lapse of all rights of appeal, in an action, suit or proceeding, whether civil, criminal, administrative or investigative; (ii) con- viction of a felony, as evidenced by a binding and final judgment, order or decree of a court of competent jurisdiction, in effect after exhaustion or lapse of all rights of appeal, which the Company deter- mines has a significant adverse impact on it in the conduct of its business; (iii) unreasonable neglect or refusal by the Executive to perform the Executive's duties or responsibilities (unless significant- ly changed without the Executive's consent); or (iv) a significant violation by the Executive of the Company's established policies and procedures as in effect of the date of the Change of Control which could subject the Executive to disciplinary action by the Company.

(f) "Change of Control" shall mean a change in ownership or managerial control of the stock, assets or business of the Company resulting from one (1) or more of the following circumstances:

(i) A change of control of the Company or Pinnacle West Capital Corporation, the parent of the Company, of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Act, or any successor regulation of similar import, regardless of whether the Company or Pinnacle West Capital Corporation is subject to such reporting requirement;

(ii) A change of control in ownership of the Company through a transaction or series of transactions, such that any Person (other than Pinnacle West Capital Corporation) is or becomes the Beneficial Owner, directly or indirectly, of securi- ties of the Company representing twenty percent (20%) or more of the combined voting power of the Company's then outstanding securities;

(iii) Any consolidation or merger of the Company or Pinnacle West Capital Corporation in which neither the Company nor Pinnacle West Capital Corporation is the continuing or surviving corporation or pursuant to which shares of the common stock of the Company or Pinnacle West Capital Corporation would be converted into cash (other than cash attributable to dissenters' rights), securities or other property provided by a Person other than the Company or Pinnacle West Capital Corporation, other than a consol- idation or merger of either the Company or Pinnacle West Capital Corporation in which the holders of the common stock of either the Company or Pinnacle West Capital Corporation immediately prior to the consolidation or merger have approximately the same propor- tionate ownership of common stock of the surviving corporation immediately after the consolidation or merger;

(iv) The shareholders of either the Company or Pinnacle West Capital Corporation approve a sale, transfer or other dispo- sition of all or substantially all of the assets of either the Company or Pinnacle West Capital Corporation to a Person other than the Company or Pinnacle West Capital Corporation; or

(v) During any period of two (2) consecutive years, individuals who, at the beginning of such period, constituted the Board of Directors of the Company or Pinnacle West Capital Corpo- ration cease, for any reason, to constitute at least a majority thereof, unless the election or nomination for election of each new director was approved by the vote of at least two-thirds (2/3) of the directors then still in office who were directors at the beginning of the period.

Notwithstanding any provision herein to the contrary, the filing of a proceeding for the reorganization of the Company or Pinnacle West Capital Corporation under Chapter 11 of the Federal Bankruptcy Code or any successor or other statute of similar import shall not be deemed to be a Change of Control for purposes of this Agreement.

(g) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time.

(h) "Disability" shall have the same meaning as given to that term in the Company's long-term disability plan for employees.

(i) "Employment Period" shall mean a period commencing on the date of a Change of Control, and ending on the earlier (i) of the second anniversary of such date, or (ii) the date on which the Execu- tive attains the age of sixty-five (65) provided that the Executive meets the criteria of the "bona fide executive" exception to the requirements of the Age Discrimination in Employment Act, codified at 29 U.S.C. Section 631(c).

(j) "Good Reason" shall mean:

(i) the required relocation of the Executive, without the Executive's consent, to an employment location which is more than seventy-five (75) miles from the Executive's employment loca- tion on the date of the Change of Control;

(ii) a significant reduction by the Company in the compensation and/or benefits provided to the Executive as in effect on the date of the Change of Control as the same may be increased from time to time during the Employment Period which reduction is not generally effective for all executives employed by the Company (or its successor) in the Executive's class or category;

(iii) the removal of the Executive from or any failure to reelect the Executive to any of the positions held by the Executive on the date of the Change of Control or any other positions to which the Executive shall thereafter be elected or assigned except in the event that such removal or failure to reelect relates to the termination by the Company of the Executive's employment for Cause or by reason of death, Disability or voluntary retirement;

(iv) a significant adverse change, without the Executive's written consent, in the nature or scope of the Executive's authority, powers, functions, duties or responsibili- ties, or a material reduction in the level of support services, staff, secretarial and other assistance, office space and accou- trements available to a level below that which was provided to the Executive on the date of the Change of Control and that which is necessary to perform any additional duties assigned to the Execu- tive following the Change of Control, which change or reduction is not generally effective for all executives employed by the Company (or its successor) in the Executive's class or category; or

(v) breach of any material provision of this Agreement by the Company.

(k) "Person" shall mean any individual, partnership, joint venture, association, trust, corporation or other entity (including a "group" as defined in Section 13(d)(3) of the Act), other than an employee benefit plan of the Company or an entity organized, appointed or established pursuant to the terms of any such benefit plan.

(l) "Termination Date" shall mean, except as otherwise provided in Section 12, (i) the Executive's date of death; (ii) the date of the Executive's voluntary early retirement as agreed upon in writing by the Company and the Executive; (iii) sixty (60) days after the delivery of the Notice of Termination terminating the Executive's employment on account of Disability pursuant to Section 9, unless the Executive returns full-time to the performance of his or her duties prior to the expiration of such period; (iv) the date of the Notice of Termination if the Executive's employment is terminated by the Execu- tive voluntarily other than for Good Reason; and (v) sixty (60) days after the delivery of the Notice of Termination if the Executive's employment is terminated by the Company (other than by reason of Disability) or by the Executive for Good Reason.

(m) "Termination Payment" shall mean the amount described in
Section 6(b)(i).

(n) "Total Payments" shall mean the sum of the Termination Payment and any other payments to or for the benefit of the Executive in the nature of compensation, receipt of which is contingent on the Change of Control and to which Section 280G of the Code applies.

2. Employment Period. The Company and the Executive shall retain the right to terminate the employment of the Executive at any time and for any reason prior to a Change of Control. If a Change of Control occurs when the Executive is employed by the Company, the Company will continue thereafter to employ the Executive, and the Executive will remain in the employ of the Company, in accordance with the terms and provisions of this Agreement, during the Employment Period.

3. Duties. During the Employment Period, the Executive shall, in the same capacities and positions held by the Executive at the time of such Change of Control or in such other capacities and positions as may be agreed to by the Company and the Executive in writing, devote the Executive's best efforts, attention and skill to the business and affairs of the Company, as such business and affairs now exist and as they may hereaf- ter be conducted. The services which are to be performed by the Executive hereunder are to be rendered at an employment location which is not more than seventy-five (75) miles from the Executive's employment location of the date of the Change of Control, or in such other place or places as shall be mutually agreed upon in writing by the Executive and the Company from time to time. The Executive shall not be required to be absent from such employment location for more than forty-five (45) consecutive days in any fiscal year without the Executive's consent.

4. Compensation. During the Employment Period, the Executive shall be compensated as follows:

(a) The Executive shall receive, at such intervals and in accordance with such standard policies as may be in effect on the date of the Change of Control, an annual salary not less than the Executive's annual salary as in effect as of the date of the Change of Control, subject to adjustment as provided in Section 5;

(b) The Executive shall be reimbursed, at such intervals and in accordance with such standard policies as may be in effect on the date of the Change of Control, for any and all monies advanced in connection with the Executive's employment for reasonable and necessary expenses incurred by the Executive on behalf of the Company, including travel expenses;

(c) The Executive shall be included to the extent eligible thereunder in any and all plans providing general benefits for the Company's employees, including but not limited to, group life insur- ance, hospitalization, disability, medical, dental, pension, profit sharing, savings and stock bonus plans and be provided any and all other benefits and perquisites made available to other employees of comparable status and position, on the same terms and conditions as generally provided to employees of comparable status and position;

(d) The Executive shall receive annually not less than the amount of paid vacation and not fewer than the number of paid holidays received annually immediately prior to the Change of Control or such greater amount of paid vacation and number of paid holidays as may be made available annually to other employees of comparable status and position with the Company; and

(e) The Executive shall be included in all plans providing special benefits to other employees of comparable status, including but not limited to bonus, deferred compensation, incentive compensation, supplemental pension, stock option, stock appreciation, stock bonus and similar or comparable plans extended by the Company from time to time to managers and other employees of comparable status.

5. Annual Compensation Adjustments. During the Employment Period, the Board of Directors of the Company, an appropriate committee of the Board or the President of the Company, whichever is appropriate, shall consider and appraise, at least annually, the Executive's compensation. In determining such compensation, the Board, the appropriate committee thereof or the President, whichever is appropriate, shall consider the commensurate increases given to other corporate officers and key employees generally, the scope and success of the Company's operations, the expansion of Executive's duties and the Executive's performance of his duties.

6. Payments Upon Termination.

(a) Accrued Benefits. For purposes of this Agreement, the Executive's Accrued Benefits shall include the following amounts: (i) all salary earned or accrued through the Termination Date; (ii) reim- bursement for any and all monies advanced in connection with the Executive's employment for reasonable and necessary expenses incurred by the Executive through the Termination Date; (iii) any and all other cash benefits previously earned through the Termination Date and deferred at the election of the Executive or pursuant to any deferred compensation plans then in effect; (iv) a lump sum payment of the bonus or incentive compensation otherwise payable to the Executive with respect to the year in which termination occurs under any bonus or incentive compensation plan or plans in which the Executive is a participant; and (v) all other payments and benefits to which the Executive may be entitled under the terms of any benefit plan of the Company. Payment of Accrued Benefits shall be made promptly in accor- dance with the Company's prevailing practice and the terms of any applicable benefit plans, contracts or arrangements.

(b) Termination Payment. (i) For purposes of this Agreement and subject to the limits set forth in Section 6(b)(ii) hereof, the Executive's Termination Payment shall be an amount equal to (A) plus (B), multiplied by (C), where

(A) Equals the Executive's rate of annual salary, as in effect on the date of the Change of Control and as adjusted thereafter from time to time pursuant to Section 5;

(B) Equals the amount of the average annual dollar award paid to the Executive pursuant to the Company's regular bonus plan or arrangement with respect to the four (4) years (or the number of years of the Executive's employment if less than four (4) years) preceding the Termination Date which shall be determined by dividing the total dollar amount paid to the Executive under such plan or arrangement with respect to such number of years by four (4) (or the number of years of the Executive's employment if less than four (4) years); and

(C) Equals one (1).

The Termination Payment shall be payable in a lump sum on the Executive's Termination Date. Such lump sum payment shall not be reduced by any present value or similar factor. The Executive shall not be required to mitigate the amount of such payment by securing other employment or other- wise and such payment shall not be reduced by reason of the Executive secur- ing other employment or for any other reason.

(ii) It is the intention of the Company and the Executive that no portion of the Termination Payment and any other payment under this Agreement, or payments to or for the benefit of the Executive under any other agreement, plan or arrangement be deemed to be an "excess parachute payment" as defined in Section 280G of the Code. It is agreed that the present value of the Total Payments shall not exceed an amount equal to two and ninety-nine hundredths (2.99) times the Executive's Base Period Income, which is the maximum amount which the Executive may receive without becoming subject to the tax imposed by
Section 4999 of the Code or which the Company may pay without loss of deduction under Section 280G(a) of the Code. Present value for purpos- es of this Agreement shall be calculated in accordance with the regula- tions issued under Section 280G of the Code. Within sixty (60) days following delivery of the Notice of Termination or notice by the Company to the Executive of its belief that there is a payment or bene- fit due the Executive which will result in an excess parachute payment as defined in Section 280G of the Code, the Executive and the Company shall, at the Company's expense, obtain the opinions, which need not be unqualified, of legal counsel and certified public accountants or a firm of recognized executive compensation consultants. The Executive shall select said legal counsel, certified public accountants and executive compensation consultants; provided that if the Company does not accept one (1) or more of the parties selected by the Executive, the Company shall provide the Executive with the names of such legal counsel, certified public accountants and/or executive compensation consultants as the Company may select; if the Executive does not accept the party or parties selected by the Company, the legal counsel, certified public accountants and/or executive compensation consultants selected by the Executive and the Company, respectively, shall select the legal counsel, certified public accountants and/or executive compensation consultants, whichever is applicable, who shall provide the opinions required by this Section 6(b)(ii). The opinions required hereunder shall set forth (a) the amount of the Base Period Income of the Executive, (b) the present value of Total Payments and (c) the amount and present value of any excess parachute payments. In the event that such opinions determine that there would be an excess parachute payment, the Termination Payment or any other payment deter- mined by such counsel to be includible in Total Payments shall be reduced or eliminated as specified by the Executive in writing deliv- ered to the Company within thirty (30) days of his or her receipt of such opinions or, if the Executive fails to so notify the Company, then as the Company shall reasonably determine, so that under the bases of calculation set forth in such opinions there will be no excess para- chute payment. The provisions of this Section 6(b)(ii), including the calculations, notices and opinions provided for herein shall be based upon the conclusive presumption that the compensation and benefits provided for in Section 4 hereof and any other compensation, including but not limited to the Accrued Benefits, earned on or after the date of Change of Control by the Executive pursuant to the Company's compensa- tion programs if such payments would have been made in the future in any event, even though the timing of such payment is triggered by the Change of Control, are reasonable compensation for services rendered prior to the Change of Control; provided, however, that in the event legal counsel so requests in connection with the opinion required by this Section 6(b)(ii), a firm of recognized executive compensation con- sultants, selected by the Executive and the Company pursuant to the procedures set forth above, shall provide an opinion, upon which such legal counsel may rely, as to the reasonableness of any item of compen- sation as reasonable compensation for services rendered prior to the Change of Control by the Executive. In the event that the provisions of Sections 280G and 4999 of the Code are repealed without succession, this Section 6(b)(ii) shall be of no further force or effect.

7. Death. If the Executive shall die during the Employment Period, but after delivery of a Notice of Termination by the Company for reasons other than Cause or disability or by the Executive for Good Reason, the Executive's employment shall terminate on his or her date of death and the Executive's estate, heirs and beneficiaries shall be entitled to the Executive's Accrued Benefits as of the Termination Date, all benefits avail- able to them under the Company's benefits plans as in effect on the Termina- tion Date on account of the Executive's death, and, subject to the provi- sions of this Agreement, to such Termination Payment as the Executive would have been entitled to had the Executive survived. In such event, the Termination Date shall be sixty (60) days following delivery of the Notice of Termination subject to the provisions of Section 12.

If the Executive shall die during the Employment Period, but prior to the delivery of a Notice of Termination, the Executive's employment shall terminate and the Executive's estate, heirs and beneficiaries shall receive all the Executive's Accrued Benefits through the Termination Date and all benefits available to them under the Company's benefit plans as in effect on the Termination Date on account of the Executive's death.

8. Retirement. If, during the Employment Period, the Executive and the Company shall execute an agreement providing for the voluntary retirement of the Executive from the Company, the Executive shall receive only his or her Accrued Benefits through the Termination Date.

9. Termination for Disability. If, as a result of the Executive's Disability, the Executive shall have been absent from the Executive's duties hereunder on a full-time basis for five (5) consecutive months during the Employment Period, and within sixty (60) days after the Company notifies the Executive in writing that it intends to terminate the Executive's employment, the Executive shall not have returned to the per- formance of his or her duties on a full-time basis, the Company may termi- nate the Executive's employment, subject to Section 12. During the term of the Executive's Disability prior to termination, the Executive shall continue to receive all salary and benefits payable under Sections 4 and 5, including participation in all employee benefit plans, programs and arrange- ments in which the Executive was entitled to participate immediately prior to the disability provided that the Executive's continued participation is permitted under the terms and provisions of such plans, programs and arrangements. In the event that the Executive's participation in any such plan, program or arrangement is barred as the result of such Disability, the Executive shall be entitled to receive an amount equal to the annual con- tributions, payments, credits or allocations which would have been paid by the Company to the Executive, to the Executive's account or on the Execu- tive's behalf under such plans, programs and arrangements. In the event the Executive's employment is terminated on account of the Executive's Disabili- ty in accordance with this Section 9, the Executive shall receive his or her Accrued Benefits in accordance with Section 6(a) hereof and shall remain eligible for all benefits provided by any long-term disability programs of the Company in effect at the time of such termination.

10. Termination Not Giving Rise to a Termination Payment. If, during the Employment Period, the Executive's employment is terminated for Cause, or if the Executive voluntarily terminates his or her employment other than for Good Reason, subject to the procedures set forth in Section 12, the Executive shall be entitled to receive only his or her Accrued Benefits in accordance with Section 6(a).

11. Termination Giving Rise to a Termination Payment. If, during the Employment Period, the Executive's employment is terminated by the Executive for Good Reason or by the Company other than by reason of death, Disability pursuant to Section 9 or Cause, subject to the procedures set forth in Section 12,

(a) the Executive shall be entitled to receive and the Company shall pay the Executive's Accrued Benefits in accordance with
Section 6(a) and, in lieu of further salary payments for periods following the Termination Date, as severance pay, a Termination Pay- ment;

(b) the Executive and his or her dependents shall continue to be covered for one (1) year, under the same terms and conditions, by the medical plan and/or dental plan maintained by the Company which covered that Executive and his or her dependents prior to the Executive's Termination Date. The Executive and the Company shall share the cost of such continued coverage in the same proportions as they shared the cost of such coverage prior to the Executive's Termina- tion Date. For purposes of satisfying the Company's obligation under the Consolidated Omnibus Budget Reconciliation Act ("COBRA") to con- tinue group health care coverage to the Executive and his or her dependents as a result of the Executive's termination of employment, the period during which the Executive is permitted to continue to participate in the Company's medical plans and/ or dental plans under this Section 11(b) shall be taken into account and treated as part of the period during which the Executive and his or her dependents are entitled to continued coverage under the Company's group health plans under COBRA. Following the end of the continuation period specified in this Section 11(b), the Executive and his or her dependents shall be covered under such plans and arrangements only as required under the provisions of COBRA;

(c) the Executive's termination shall be treated as a "Normal Termination" as defined in the Pinnacle West Capital Corpora- tion Stock Option and Incentive Plan, which shall entitle the Executive to exercise any outstanding stock options during the three (3) month period beginning on the Executive's Termination Date, and any restric- tions remaining on any "Restricted Stock" (as defined in such Stock Option and Incentive Plan) awarded to the Executive shall lapse on his or her Termination Date; and

(d) "out-placement" services will be provided by the Company to the Executive for a period beginning on the Executive's Termination Date. Such services shall be provided for a period equal to one (1) week per year of service with the Company or an affiliate, plus one (1) week for each two (2) years by which the Executive's age exceeds age forty (40), plus one (1) week for each Ten Thousand Dollars ($10,000) of compensation, but in no event less than six (6) months. Notwith- standing the foregoing, the Executive's right to out-placement services shall terminate on the earlier of the date on which the Executive becomes employed in a position commensurate with his or her current salary and responsibilities or on the last day of the period determined pursuant to the formula set forth in this Section 11(d). The "out- placement" services shall be provided by an out-placement company selected by the Company.

12. Termination Notice and Procedure. Any termination by the Company or the Executive of the Executive's employment during the Employment Period shall be communicated by written Notice of Termination to the Executive if such Notice is delivered by the Company and to the Company if such Notice is delivered by the Executive, all in accordance with the fol- lowing procedures:

(a) The Notice of Termination shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances alleged to provide a basis for termination.

(b) Any Notice of Termination by the Company shall be approved by a resolution duly adopted by a majority of the directors of the Company then in office, specifying in detail the basis for such termination.

(c) If the Company shall give a Notice of Termination for Cause or by reason of Disability and the Executive in good faith notifies the Company that a dispute exists concerning such termination within the fifteen (15) day period following the Executive's receipt of such notice, the Executive may elect to continue his or her employment during such dispute. If it is thereafter determined that (i) the reason given by the Company for termination did exist, the Executive's Termination Date shall be the earlier of (A) the date on which the dispute is finally determined, either by mutual written agreement of the parties or pursuant to Section 14, (B) the date of the Company's Notice of Termination for Cause, (C) the date of the Executive's death, or (D) one day prior to the end of the Employment Period, and the Executive shall not be entitled to a Termination Payment based on events occurring after the Company delivered its Notice of Termination; or (ii) the reason given by the Company for termination did not exist, the employment of the Executive shall continue as if the Company had not delivered its Notice of Termination and there shall be no Termina- tion Date arising out of such notice.

(d) If the Executive shall in good faith give a Notice of Termination for Good Reason and the Company notifies the Executive that a dispute exists concerning the termination within the fifteen (15) day period following the Company's receipt of such notice, the Executive may elect to continue his or her employment during such dispute. If it is thereafter determined that (i) Good Reason did exist, the Executive's Termination Date shall be the earlier of (A) the date on which the dispute is finally determined, either by mutual written agreement of the parties or by a court of competent jurisdiction, (B) the date of the Executive's death, or (C) one day prior to the end of the Employment Period, and the Executive's Termination Payment shall reflect events occurring after the Executive delivered his or her Notice of Termination; or (ii) Good Reason did not exist, the employ- ment of the Executive shall continue after such determination as if the Executive had not delivered the Notice of Termination asserting Good Reason.

(e) If the Executive does not elect to continue employment pending resolution of a dispute regarding a Notice of Termination under Sections 12(c) and (d), and it is finally determined that the reason for termination set forth in such Notice of Termination did not exist, if such notice was delivered by the Executive, the Executive will be deemed to have voluntarily terminated his or her employment and if delivered by the Company, the Company will be deemed to have terminated the Executive other than by reason of death, disability or Cause.

(f) If the opinion required to be delivered pursuant to
Section 6(b)(ii) shall not have been delivered on or before the date that would otherwise constitute the Termination Date, the Termination Date shall be delayed to the earlier of the date on which such opinion is delivered or one (1) day prior to the end of the Employment Period.

13. Obligations of the Executive.

(a) The Executive agrees that if, during the Employment Period, the Executive's employment is terminated in a manner entitling the Executive to a Termination Payment or the Executive has voluntarily terminated his or her employment, the Executive shall not, for a period commencing on the Termination Date and ending after one (1) year, (i) act in a similar capacity for any electric utility company which competes to a substantial degree with the Company in the State of Arizona or (ii) engage in any activity involving substantial competi- tion with the Company in the electric utility industry in the State of Arizona, without the prior written approval of the Company's Board of Directors; provided, however, that nothing in this Section 13(a) shall prohibit the Executive from owning stock or other securities of a competitor amounting to less than twenty percent (20%) of the stated capital of such competitor.

(b) The Executive covenants and agrees, during the Executive's employment by the Company and following his or her Termina- tion Date, to hold in strict confidence any and all information in the Executive's possession as a result of the Executive's employment with the Company; provided that nothing in this Agreement shall be construed as prohibiting the Executive from reporting any suspected instance of illegal activity of any nature, any nuclear safety concern, any workplace safety concern or any public safety concern to the United States Nuclear Regulatory Commission, United States Department of Labor or any federal or state governmental agency or prohibiting the Execu- tive from participating in any way in any state or federal administra- tive, judicial or legislative proceeding or investigation with respect to any such claims and matters.

14. Arbitration. All claims, disputes and other matters in question between the parties arising under this Agreement, other than
Section 13 which may be enforced by the Company through injunctive relief, shall be decided by arbitration in accordance with the rules of the American Arbitration Association, unless the parties mutually agree otherwise. Any arbitration required under this Agreement shall be held in Phoenix, Arizona, unless the parties mutually agree otherwise. The Company shall pay the costs of any such arbitration. The award by the arbitrator shall be final, and judgment may be entered upon it in accordance with applicable law in any state or Federal court having jurisdiction thereof.

15. Expenses and Interest. If, after a Change of Control a good faith dispute arises with respect to the enforcement of the Executive's rights under this Agreement or if any arbitration or legal proceeding shall be brought in good faith to enforce or interpret any provision contained herein, or to recover damages for breach hereof and the Executive is the prevailing party, the Executive shall recover from the Company any reason- able attorney's fees and necessary costs and disbursements incurred as a result of such dispute or legal proceeding, and prejudgment interest on any money judgment obtained by the Executive calculated at the rate of interest announced by The Valley National Bank of Arizona from time to time as its prime rate from the date that payments to the Executive should have been made under this Agreement.

16. Payment Obligations Absolute. The Company's obligation during and after the Employment Period to pay the Executive the compensation and to make the arrangements provided herein shall be absolute and uncondi- tional and shall not be affected by any circumstances, provided that the Company may apply amounts payable under this Agreement to any debts owed to the Company by the Executive on his or her Termination Date, and provided further that the amount payable under this Agreement shall be offset by any amounts payable to the Executive under a separate severance plan, agreement or arrangement established by the Company so that in no event shall the total amount received by the Executive be more than the amount permitted under Section 6(b)(ii). All amounts payable by the Company under this Agreement shall be paid without notice or demand. Each and every payment made under this Agreement by the Company shall be final. Notwithstanding the foregoing, in the event that the Company has paid an Executive more than the amount to which the Executive is entitled under this Agreement, the Company shall have the right to recover all or any part of such overpayment from the Executive or from whomsoever has received such amount.

17. Successors. (a) If all or substantially all of the Company's business and assets are sold, assigned or transferred to any Person, or if the Company merges into or consolidates or otherwise combines with any Person which is a continuing or successor entity, then the Company shall assign all of its right, title and interest in this Agreement as of the date of such event to the Person which is either the acquiring or successor corporation, and such Person shall assume and perform from and after the date of such assignment the terms, conditions and provisions imposed by this Agreement upon the Company. Failure of the Company to obtain such assign- ment shall be a breach of this Agreement. In case of such assignment by the Company and of assumption and agreement by such Person, all further rights as well as all other obligations of the Company under this Agreement thenceforth shall cease and terminate and thereafter the expression "the Company" wherever used herein shall be deemed to mean such Person(s).

(a) This Agreement and all rights of the Executive shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, estates, executors, administrators, heirs and beneficiaries. In the event of the Executive's death, all amounts payable to the Executive under this Agreement shall be paid to the Executive's estate, heirs and representatives. This Agreement shall inure to the benefit of, be binding upon and be enforceable by, any successor, surviving or resulting corporation or other entity to which all or substantially all of the Company's business and assets shall be transferred whether by merger, consolidation, transfer or sale. This Agreement shall not be terminated by the voluntary or involuntary dissolution of the Company.

18. Enforcement. The provisions of this Agreement shall be regarded as divisible, and if any of said provisions or any part hereof are declared invalid or unenforceable by a court of competent jurisdiction, the validity and enforceability of the remainder of such provisions or parts hereof and the applicability thereof shall not be affected thereby.

19. Amendment or Termination. The term of this Agreement shall run until December 31, 199__, and shall continue for additional one (1) year periods thereafter, unless the Company notifies the Executive in writing six
(6) months prior to December 31, 199__ (or the anniversary of that date in the event the Agreement continues beyond that date pursuant to the provi- sions of this Section 19) that it does not intend to continue the Agreement. Notwithstanding the foregoing, (i) if a Change of Control has occurred on or before the date on which the Agreement has been terminated by the Company in accordance with this Section 19, the Agreement shall not terminate with respect to that Change of Control until the end of the Employment Period, and (ii) this Agreement shall terminate if, prior to a Change in Control, the Executive ceases to be employed by the Company as a manager or execu- tive.

This Agreement sets forth the entire agreement between the Executive and the Company with respect to the subject matter hereof, and supersedes all prior oral or written negotiations, commitments, understand- ing and writing with respect thereto.

This Agreement may not be terminated, amended or modified during its term as specified above except by written instrument executed by the Company and the Executive.

20. Withholding. The Company shall be entitled to withhold from amounts to be paid to the Executive under this Agreement any federal, state or local withholding or other taxes or charges which it is from time to time required to withhold. The Company shall be entitled to rely on an opinion of counsel if any question as to the amount or requirement of any such with- holding shall arise.

21. Venue; Governing Law. This Agreement and the Executive's and Company's respective rights and obligations hereunder shall be governed by and construed in accordance with the laws of the State of Arizona. Any action concerning this Agreement shall be brought in the Federal or state courts located in the County of Maricopa, Arizona, and each party consents to the venue and jurisdiction of such courts.

22. Notice. Notices given pursuant to this Agreement shall be in writing and shall be deemed given when received, and if mailed, shall be mailed by United States registered or certified mail, return receipt requested, addressee only, postage prepaid, if to the Company, to

Board of Directors
Arizona Public Service Company 400 North 5th Street
Phoenix, Arizona 85004
Attention: Corporate Secretary

or if to the Executive, to

or to such other address as the party to be notified shall have given to the other.

23. Funding. Benefits payable under this Agreement shall constitute an unfunded general obligation of the Company payable from its general assets, and the Company shall not be required to establish any special fund or trust for purposes of paying benefits under this Agreement. The Executive shall not have any vested right to any particular assets of the Company as a result of execution of this Agreement and shall be a gen- eral creditor of the Company.

24. No Waiver. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by the other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same time or any prior or subsequent time.

25. Headings. The headings herein contained are for reference only and shall not affect the meaning or interpretation of any provision of this Agreement.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and the Executive has executed this Agreement, on the date and year first above written.

ARIZONA PUBLIC SERVICE COMPANY

By_______________________________________
Its____________________________________

ATTEST:

By________________________________
Its_____________________________

EXHIBIT 10.5ac

KEY EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT

THIS AGREEMENT, made and entered into as of the _____ day of _______________, 1994, by and between Arizona Public Service Company, an Arizona corporation (hereinafter referred to as the "Company") and _______________ (hereinafter referred to as the "Executive"):

W I T N E S S E T H :

WHEREAS, the Executive has been employed by the Company in various managerial and executive capacities for a period of years, possesses intimate knowledge of the business and affairs of the Company, and has acquired certain confidential information and data with respect to the Company;

WHEREAS, the Company desires to insure, insofar as possible, that it will continue to have the benefit of the Executive's services and to protect its confidential information and goodwill; and

WHEREAS, the Company recognizes that circumstances may arise in which a change in the control of the Company through acquisition or other- wise occurs thereby causing uncertainty of employment without regard to the Executive's competence or past contributions which uncertainty may result in the loss of valuable services of the Executive to the detriment of the Company and its shareholders, and the Company and the Executive wish to provide reasonable security to the Executive against changes in the Executive's relationship with the Company in the event of any such change in control; and

WHEREAS, both the Company and the Executive are desirous that a proposal for any change of control or acquisition will be considered by the Executive objectively and with reference only to the business interests of the Company and its shareholders;

WHEREAS, the Executive will be in a better position to consider the Company's best interests if the Executive is afforded reasonable security, as provided in this Agreement, against altered conditions of employment which could result from any such change in control or acquisi- tion; and

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements hereinafter set forth, the parties hereto mutually covenant and agree as follows:

1. Definitions.

(a) "Accrued Benefits" shall mean the benefits payable to the Executive as described in Section 6.

(b) "Act" shall mean the Securities Exchange Act of 1934.

(c) "Base Period Income" shall be an amount equal to the Executive's "annualized includible compensation" for the "base period" as defined in Section 280G(d)(l) and (2) of the Code.

(d) "Beneficial Owner" shall have the same meaning as given to that term in Rule 13d-3 of the General Rules and Regulations of the Act, provided that any pledgee of Company voting securities shall not be deemed to be the Beneficial Owner thereof prior to its disposition of, or acquisition of voting rights with respect to, such securities.

(e) "Cause" shall be limited to (i) the engaging by the Executive in conduct which has caused demonstrable and serious injury to the Company, monetary or otherwise, as evidenced by a determination in a binding and final judgment, order or decree of a court or administrative agency of competent jurisdiction, in effect after exhaustion or lapse of all rights of appeal, in an action, suit or proceeding, whether civil, criminal, administra- tive or investigative; (ii) conviction of a felony, as evidenced by a binding and final judgment, order or decree of a court of competent jurisdiction, in effect after exhaustion or lapse of all rights of appeal, which the Company determines has a significant adverse impact on it in the conduct of its business; (iii) unrea- sonable neglect or refusal by the Executive to perform the Executive's duties or responsibilities (unless significantly changed without the Executive's consent); or (iv) a significant violation by the Executive of the Company's established policies and procedures as in effect of the date of the Change of Control which could subject the Executive to disciplinary action by the Company.

(f) "Change of Control" shall mean a change in ownership or managerial control of the stock, assets or business of the Company resulting from one (1) or more of the following circumstances:

(i) A change of control of the Company or Pinnacle West Capital Corporation, the parent of the Company, of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Act, or any successor regulation of similar import, regard- less of whether the Company or Pinnacle West Capital Corpora- tion is subject to such reporting requirement;

(ii) A change of control in ownership of the Company through a transaction or series of transactions, such that any Person (other than Pinnacle West Capital Corporation) is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the combined voting power of the Company's then outstanding securities;

(iii) Any consolidation or merger of the Company or Pinnacle West Capital Corporation in which neither the Compa- ny nor Pinnacle West Capital Corporation is the continuing or surviving corporation or pursuant to which shares of the common stock of the Company or Pinnacle West Capital Corpora- tion would be converted into cash (other than cash attribut- able to dissenters' rights), securities or other property provided by a Person other than the Company or Pinnacle West Capital Corporation, other than a consolidation or merger of either the Company or Pinnacle West Capital Corporation in which the holders of the common stock of either the Company or Pinnacle West Capital Corporation immediately prior to the consolidation or merger have approximately the same propor- tionate ownership of common stock of the surviving corpora- tion immediately after the consolidation or merger;

(iv) The shareholders of either the Company or Pinnacle West Capital Corporation approve a sale, transfer or other disposition of all or substantially all of the assets of either the Company or Pinnacle West Capital Corporation to a Person other than the Company or Pinnacle West Capital Corpo- ration; or

(v) During any period of two (2) consecutive years, individuals who, at the beginning of such period, constituted the Board of Directors of the Company or Pinnacle West Capi- tal Corporation cease, for any reason, to constitute at least a majority thereof, unless the election or nomination for election of each new director was approved by the vote of at least two-thirds (2/3) of the directors then still in office who were directors at the beginning of the period.

Notwithstanding any provision herein to the contrary, the filing of a proceeding for the reorganization of the Company or Pinnacle West Capital Corporation under Chapter 11 of the Federal Bankrupt- cy Code or any successor or other statute of similar import shall not be deemed to be a Change of Control for purposes of this Agreement.

(g) "Code" shall mean the Internal Revenue Code as amended from time to time.

(h) "Disability" shall have the same meaning as given to that term in the Company's long-term disability plan for employ- ees.

(i) "Employment Period" shall mean a period commencing on the date of a Change of Control, and ending on the earlier (i) of the second anniversary of such date, or (ii) the date on which the Executive attains the age of sixty-five (65) provided that the Executive meets the criteria of the "bona fide executive" excep- tion to the requirements of the Age Discrimination in Employment Act, codified at 29 U.S.C. Section 631(c).

(j) "Good Reason" shall mean:

(i) the required relocation of the Executive, without the Executive's consent, to an employment location which is more than seventy-five (75) miles from the Executive's em- ployment location on the date of the Change of Control;

(ii) a significant reduction by the Company in the compensation and/or benefits provided to the Executive as in effect on the date of the Change of Control as the same may be increased from time to time during the Employment Period which reduction is not generally effective for all executives employed by the Company (or its successor) in the Executive's class or category;

(iii) the removal of the Executive from or any failure to reelect the Executive to any of the positions held by the Executive on the date of the Change of Control or any other positions to which the Executive shall thereafter be elected or assigned except in the event that such removal or failure to reelect relates to the termination by the Company of the Executive's employment for Cause or by reason of death, Disability or voluntary retirement;

(iv) a significant adverse change, without the Executive's written consent, in the nature or scope of the Executive's authority, powers, functions, duties or responsi- bilities, or a material reduction in the level of support services, staff, secretarial and other assistance, office space and accoutrements available to a level below that which was provided to the Executive on the date of the Change of Control and that which is necessary to perform any additional duties assigned to the Executive following the Change of Control, which change or reduction is not generally effective for all executives employed by the Company (or its successor) in the Executive's class or category; or

(v) breach of any material provision of this Agreement by the Company.

(k) "Person" shall mean any individual, partnership, joint venture, association, trust, corporation or other entity (includ- ing a "group" as defined in Section 13(d)(3) of the Act), other than an employee benefit plan of the Company or an entity orga- nized, appointed or established pursuant to the terms of any such benefit plan.

(l) "Termination Date" shall mean, except as otherwise provided in Section 12, (i) the Executive's date of death; (ii) the date of the Executive's voluntary early retirement as agreed upon in writing by the Company and the Executive; (iii) sixty (60) days after the delivery of the Notice of Termination terminating the Executive's employment on account of Disability pursuant to
Section 9, unless the Executive returns full-time to the perfor- mance of his or her duties prior to the expiration of such period;
(iv) the date of the Notice of Termination if the Executive's employment is terminated by the Executive voluntarily other than for Good Reason; and (v) sixty (60) days after the delivery of the Notice of Termination if the Executive's employment is terminated by the Company (other than by reason of Disability) or by the Executive for Good Reason.

(m) "Termination Payment" shall mean the amount described in
Section 6(b)(i).

(n) "Total Payments" shall mean the sum of the Termination Payment and any other payments to or for the benefit of the Executive in the nature of compensation, receipt of which is contingent on the Change of Control and to which Section 280G of the Code applies.

2. Employment Period. The Company and the Executive shall retain the right to terminate the employment of the Executive at any time and for any reason prior to a Change of Control. If a Change of Control occurs when the Executive is employed by the Company, the Company will continue thereafter to employ the Executive, and the Executive will remain in the employ of the Company, in accordance with the terms and provisions of this Agreement, during the Employment Period.

3. Duties. During the Employment Period, the Executive shall, in the same capacities and positions held by the Executive at the time of such Change of Control or in such other capacities and positions as may be agreed to by the Company and the Executive in writing, devote the Executive's best efforts, attention and skill to the business and affairs of the Company, as such business and affairs now exist and as they may hereaf- ter be conducted. The services which are to be performed by the Executive hereunder are to be rendered at an employment location which is not more than seventy-five (75) miles from the Executive's employment location of the date of the Change of Control, or in such other place or places as shall be mutually agreed upon in writing by the Executive and the Company from time to time. The Executive shall not be required to be absent from such employment location for more than forty-five (45) consecutive days in any fiscal year without the Executive's consent.

4. Compensation. During the Employment Period, the Executive shall be compensated as follows:

(a) The Executive shall receive, at such intervals and in accordance with such standard policies as may be in effect on the date of the Change of Control, an annual salary not less than the Executive's annual salary as in effect as of the date of the Change of Control, subject to adjustment as provided in Section 5;

(b) The Executive shall be reimbursed, at such intervals and in accordance with such standard policies as may be in effect on the date of the Change of Control, for any and all monies advanced in connection with the Executive's employment for reasonable and necessary expenses incurred by the Executive on behalf of the Company, including travel expenses;

(c) The Executive shall be included to the extent eligible thereunder in any and all plans providing general benefits for the Company's employees, including but not limited to, group life insurance, hospitaliza- tion, disability, medical, dental, pension, profit sharing, savings and stock bonus plans and be provided any and all other benefits and perquisites made available to other employees of comparable status and position, on the same terms and conditions as generally provided to employees of comparable status and position;

(d) The Executive shall receive annually not less than the amount of paid vacation and not fewer than the number of paid holidays received annually immediately prior to the Change of Control or such greater amount of paid vacation and number of paid holidays as may be made available annually to other employees of comparable status and position with the Com- pany; and

(e) The Executive shall be included in all plans providing special benefits to senior executives, including but not limited to bonus, deferred compensation, incentive compensation, supplemental pension, stock option, stock appreciation, stock bonus and similar or comparable plans extended by the Company from time to time to senior corporate officers, key employees and other employees of comparable status.

5. Annual Compensation Adjustments. During the Employment Period, the Board of Directors of the Company, an appropriate committee of the Board or the President of the Company, whichever is appropriate, shall consider and appraise, at least annually, the Executive's compensation. In determining such compensation, the Board, the appropriate committee thereof or the President, whichever is appropriate, shall consider the commensurate increases given to other corporate officers and key employees generally, the scope and success of the Company's operations, the expansion of Executive's duties and the Executive's performance of his duties.

6. Payments Upon Termination.

(a) Accrued Benefits. For purposes of this Agreement, the Executive's Accrued Benefits shall include the following amounts: (i) all salary earned or accrued through the Termination Date; (ii) reimbursement for any and all monies advanced in connection with the Executive's employ- ment for reasonable and necessary expenses incurred by the Executive through the Termination Date; (iii) any and all other cash benefits previously earned through the Termination Date and deferred at the election of the Executive or pursuant to any deferred compensation plans then in effect;
(iv) a lump sum payment of the bonus or incentive compensation otherwise payable to the Executive with respect to the year in which termination occurs under any bonus or incentive compensation plan or plans in which the Executive is a participant; and (v) all other payments and benefits to which the Executive may be entitled under the terms of any benefit plan of the Company. Payment of Accrued Benefits shall be made promptly in accordance with the Company's prevailing practice and the terms of any applicable benefit plans, contracts or arrangements.

(b) Termination Payment. (i) For purposes of this Agreement and subject to the limits set forth in Section 6(b)(ii) hereof, the Executive's Termination Payment shall be an amount equal to (A) plus (B), multiplied by
(C), where

(A) Equals the Executive's rate of annual salary, as in effect on the date of the Change of Control and as adjusted thereafter from time to time pursuant to Section 5;

(B) Equals the amount of the average annual dollar award paid to the Executive pursuant to the Company's regular bonus plan or arrangement with respect to the four (4) years (or the number of years of the Executive's employment if less than four (4) years) preceding the Termination Date which shall be determined by dividing the total dollar amount paid to the Executive under such plan or arrangement with respect to such number of years by four
(4) (or the number of years of the Executive's employment if less than four (4) years); and

(C) Equals three (3).

The Termination Payment shall be payable in a lump sum on the Executive's Termination Date. Such lump sum payment shall not be reduced by any present value or similar factor. The Executive shall not be required to mitigate the amount of such payment by securing other employment or other- wise and such payment shall not be reduced by reason of the Executive secur- ing other employment or for any other reason.

(ii) It is the intention of the Company and the Executive that no portion of the Termination Payment and any other payment under this Agree- ment, or payments to or for the benefit of the Executive under any other agreement, plan or arrangement be deemed to be an "excess parachute payment" as defined in Section 280G of the Code. It is agreed that the present value of the Total Payments shall not exceed an amount equal to two and ninety- nine hundredths (2.99) times the Executive's Base Period Income, which is the maximum amount which the Executive may receive without becoming subject to the tax imposed by Section 4999 of the Code or which the Company may pay without loss of deduction under Section 280G(a) of the Code. Present value for purposes of this Agreement shall be calculated in accordance with the regulations issued under Section 280G of the Code. Within sixty (60) days following delivery of the Notice of Termination or notice by the Company to the Executive of its belief that there is a payment or benefit due the Executive which will result in an excess parachute payment as defined in
Section 280G of the Code, the Executive and the Company shall, at the Company's expense, obtain the opinions, which need not be unqualified, of legal counsel and certified public accountants or a firm of recognized executive compensation consultants. The Executive shall select said legal counsel, certified public accountants and executive compensation consul- tants; provided that if the Company does not accept one (1) or more of the parties selected by the Executive, the Company shall provide the Executive with the names of such legal counsel, certified public accountants and/or executive compensation consultants as the Company may select; if the Executive does not accept the party or parties selected by the Company, the legal counsel, certified public accountants and/or executive compensation consultants selected by the Executive and the Company, respectively, shall select the legal counsel, certified public accountants and/or executive compensation consultants, whichever is applicable, who shall provide the opinions required by this Section 6(b)(ii). The opinions required hereunder shall set forth (a) the amount of the Base Period Income of the Executive,
(b) the present value of Total Payments and (c) the amount and present value of any excess parachute payments. In the event that such opinions determine that there would be an excess parachute payment, the Termination Payment or any other payment determined by such counsel to be includible in Total Payments shall be reduced or eliminated as specified by the Executive in writing delivered to the Company within thirty (30) days of his or her receipt of such opinions or, if the Executive fails to so notify the Company, then as the Company shall reasonably determine, so that under the bases of calculation set forth in such opinions there will be no excess parachute payment. The provisions of this Section 6(b)(ii), including the calculations, notices and opinions provided for herein shall be based upon the conclusive presumption that the compensation and benefits provided for in Section 4 hereof and any other compensation, including but not limited to the Accrued Benefits, earned on or after the date of Change of Control by the Executive pursuant to the Company's compensation programs if such payments would have been made in the future in any event, even though the timing of such payment is triggered by the Change of Control, are reasonable compensation for services rendered prior to the Change of Control; provided, however, that in the event legal counsel so requests in connection with the opinion required by this Section 6(b)(ii), a firm of recognized executive compensation consultants, selected by the Executive and the Company pursuant to the procedures set forth above, shall provide an opinion, upon which such legal counsel may rely, as to the reasonableness of any item of compensation as reasonable compensation for services rendered prior to the Change of Control by the Executive. In the event that the provisions of Sections 280G and 4999 of the Code are repealed without succession, this Section 6(b)(ii) shall be of no further force or effect.

7. Death. If the Executive shall die during the Employment Period, but after delivery of a Notice of Termination by the Company for reasons other than Cause or disability or by the Executive for Good Reason, the Executive's employment shall terminate on his or her date of death and the Executive's estate, heirs and beneficiaries shall be entitled to the Executive's Accrued Benefits as of the Termination Date, all benefits avail- able to them under the Company's benefits plans as in effect on the Termina- tion Date on account of the Executive's death, and, subject to the provi- sions of this Agreement, to such Termination Payment as the Executive would have been entitled to had the Executive survived. In such event, the Termi- nation Date shall be sixty (60) days following delivery of the Notice of Termination subject to the provisions of Section 12.

If the Executive shall die during the Employment Period, but prior to the delivery of a Notice of Termination, the Executive's employment shall terminate and the Executive's estate, heirs and beneficiaries shall receive all the Executive's Accrued Benefits through the Termination Date and all benefits available to them under the Company's benefit plans as in effect on the Termination Date on account of the Executive's death.

8. Retirement. If, during the Employment Period, the Executive and the Company shall execute an agreement providing for the voluntary retirement of the Executive from the Company, the Executive shall receive only his or her Accrued Benefits through the Termination Date.

9. Termination for Disability. If, as a result of the Executive's Disability, the Executive shall have been absent from the Executive's duties hereunder on a full-time basis for five (5) consecutive months during the Employment Period, and within sixty (60) days after the Company notifies the Executive in writing that it intends to terminate the Executive's employment, the Executive shall not have returned to the performance of his or her duties on a full-time basis, the Company may terminate the Executive's employment, subject to Section 12. During the term of the Executive's Disability prior to termination, the Executive shall continue to receive all salary and benefits payable under Sections 4 and 5, including participation in all employee benefit plans, programs and arrange- ments in which the Executive was entitled to participate immediately prior to the disability provided that the Executive's continued participation is permitted under the terms and provisions of such plans, programs and arrangements. In the event that the Executive's participation in any such plan, program or arrangement is barred as the result of such Disability, the Executive shall be entitled to receive an amount equal to the annual con- tributions, payments, credits or allocations which would have been paid by the Company to the Executive, to the Executive's account or on the Execu- tive's behalf under such plans, programs and arrangements. In the event the Executive's employment is terminated on account of the Executive's Disabili- ty in accordance with this Section 9, the Executive shall receive his or her Accrued Benefits in accordance with Section 6(a) hereof and shall remain eligible for all benefits provided by any long-term disability programs of the Company in effect at the time of such termination.

10. Termination Not Giving Rise to a Termination Payment. If, during the Employment Period, the Executive's employment is terminated for Cause, or if the Executive voluntarily terminates his or her employment other than for Good Reason, subject to the procedures set forth in Section 12, the Executive shall be entitled to receive only his or her Accrued Benefits in accordance with Section 6(a).

11. Termination Giving Rise to a Termination Payment. If, during the Employment Period, the Executive's employment is terminated by the Executive for Good Reason or by the Company other than by reason of death, Disability pursuant to Section 9 or Cause, subject to the procedures set forth in Section 12,

(a) the Executive shall be entitled to receive and the Company shall pay the Executive's Accrued Benefits in accordance with Section 6(a) and, in lieu of further salary payments for periods following the Termina- tion Date, as severance pay, a Termination Payment;

(b) the Executive's termination shall be treated as a "Normal Termination" as defined in the Pinnacle West Capital Corporation Stock Option and Incentive Plan, which shall entitle the Executive to exercise any outstanding stock options during the three (3) month period beginning on the Executive's Termination Date, and any restrictions remaining on any "Re- stricted Stock" (as defined in such Stock Option and Incentive Plan) awarded to the Executive shall lapse on his or her Termination Date; and

(c) "out-placement" services will be provided by the Company to the Executive for a period beginning on the Executive's Termination Date. Such services shall be provided for a period equal to one (1) week per year of service with the Company or an affiliate, plus one (1) week for each two
(2) years by which the Executive's age exceeds age forty (40), plus one (1) week for each Ten Thousand Dollars ($10,000) of compensation, but in no event less than six (6) months. Notwithstanding the foregoing, the Executive's right to out-placement services shall terminate on the earlier of the date on which the Executive becomes employed in a position commensu- rate with his or her current salary and responsibilities or on the last day of the period determined pursuant to the formula set forth in this Section
11(c). The "out-placement" services shall be provided by an out-placement company selected by the Company.

12. Termination Notice and Procedure. Any termination by the Company or the Executive of the Executive's employment during the Employment Period shall be communicated by written Notice of Termination to the Executive if such Notice is delivered by the Company and to the Company if such Notice is delivered by the Executive, all in accordance with the fol- lowing procedures:

(a) The Notice of Termination shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances alleged to provide a basis for termination.

(b) Any Notice of Termination by the Company shall be approved by a resolution duly adopted by a majority of the directors of the Company then in office, specifying in detail the basis for such termination.

(c) If the Company shall give a Notice of Termination for Cause or by reason of Disability and the Executive in good faith notifies the Company that a dispute exists concerning such termination within the fifteen
(15) day period following the Executive's receipt of such notice, the Executive may elect to continue his or her employment during such dispute. If it is thereafter determined that (i) the reason given by the Company for termination did exist, the Executive's Termination Date shall be the earlier of (A) the date on which the dispute is finally determined, either by mutual written agreement of the parties or pursuant to Section 14, (B) the date of the Company's Notice of Termination for Cause, (C) the date of the Executive's death, or (D) one day prior to the end of the Employment Period, and the Executive shall not be entitled to a Termination Payment based on events occurring after the Company delivered its Notice of Termination; or
(ii) the reason given by the Company for termination did not exist, the employment of the Executive shall continue as if the Company had not deliv- ered its Notice of Termination and there shall be no Termination Date arising out of such notice.

(d) If the Executive shall in good faith give a Notice of Termination for Good Reason and the Company notifies the Executive that a dispute exists concerning the termination within the fifteen (15) day period following the Company's receipt of such notice, the Executive may elect to continue his or her employment during such dispute. If it is thereafter de- termined that (i) Good Reason did exist, the Executive's Termination Date shall be the earlier of (A) the date on which the dispute is finally determined, either by mutual written agreement of the parties or by a court of competent jurisdiction, (B) the date of the Executive's death, or (C) one day prior to the end of the Employment Period, and the Executive's Termina- tion Payment shall reflect events occurring after the Executive delivered his or her Notice of Termination; or (ii) Good Reason did not exist, the employment of the Executive shall continue after such determination as if the Executive had not delivered the Notice of Termination asserting Good Reason.

(e) If the Executive does not elect to continue employment pending resolution of a dispute regarding a Notice of Termination under Sections 12(c) and (d), and it is finally determined that the reason for termination set forth in such Notice of Termination did not exist, if such notice was delivered by the Executive, the Executive will be deemed to have voluntarily terminated his or her employment and if delivered by the Company, the Company will be deemed to have terminated the Executive other than by reason of death, disability or Cause.

(f) If the opinion required to be delivered pursuant to Section 6(b)(ii) shall not have been delivered on or before the date that would otherwise constitute the Termination Date, the Termination Date shall be delayed to the earlier of the date on which such opinion is delivered or one
(1) day prior to the end of the Employment Period.

13. Obligations of the Executive.

(a) The Executive agrees that if, during the Employment Period, the Executive's employment is terminated in a manner entitling the Executive to a Termination Payment or the Executive has voluntarily terminated his or her employment, the Executive shall not, for a period commencing on the Termination Date and ending after one (1) year, (i) act in a similar capa- city for any electric utility company which competes to a substantial degree with the Company in the State of Arizona or (ii) engage in any activity involving substantial competition with the Company in the electric utility industry in the State of Arizona, without the prior written approval of the Company's Board of Directors; provided, however, that nothing in this
Section 13(a) shall prohibit the Executive from owning stock or other securities of a competitor amounting to less than twenty percent (20%) of the stated capital of such competitor.

(b) The Executive covenants and agrees, during the Executive's employment with the Company and following his or her Termination Date, to hold in strict confidence any and all information in the Executive's possession as a result of the Executive's employment with the Company; provided that nothing in this Agreement shall be construed as prohibiting the Executive from reporting any suspected instance of illegal activity of any nature, any nuclear safety concern, any workplace safety concern or any public safety concern to the United States Nuclear Regulatory Commission, United States Department of Labor or any federal or state governmental agency or prohibiting the Executive from participating in any way in any state or federal administrative, judicial or legislative proceeding or investigation with respect to any such claims and matters.

14. Arbitration. All claims, disputes and other matters in question between the parties arising under this Agreement, other than
Section 13 which may be enforced by the Company through injunctive relief, shall be decided by arbitration in accordance with the rules of the American Arbitration Association, unless the parties mutually agree otherwise. Any arbitration required under this Agreement shall be held in Phoenix, Arizona, unless the parties mutually agree otherwise. The Company shall pay the costs of any such arbitration. The award by the arbitrator shall be final, and judgment may be entered upon it in accordance with applicable law in any state or Federal court having jurisdiction thereof.

15. Expenses and Interest. If, after a Change of Control a good faith dispute arises with respect to the enforcement of the Executive's rights under this Agreement or if any arbitration or legal proceeding shall be brought in good faith to enforce or interpret any provision contained herein, or to recover damages for breach hereof and the Executive is the prevailing party, the Executive shall recover from the Company any reason- able attorney's fees and necessary costs and disbursements incurred as a result of such dispute or legal proceeding, and prejudgment interest on any money judgment obtained by the Executive calculated at the rate of interest announced by The Valley National Bank of Arizona from time to time as its prime rate from the date that payments to the Executive should have been made under this Agreement.

16. Payment Obligations Absolute. The Company's obligation during and after the Employment Period to pay the Executive the compensation and to make the arrangements provided herein shall be absolute and uncondi- tional and shall not be affected by any circumstances, provided that the Company may apply amounts payable under this Agreement to any debts owed to the Company by the Executive on his or her Termination Date, and provided further that the amount payable under this Agreement shall be offset by any amounts payable to the Executive under a separate severance plan, agreement or arrangement established by the Company so that in no event shall the total amount received by the Executive be more than the amount permitted under Section 6(b)(ii). All amounts payable by the Company under this Agreement shall be paid without notice or demand. Each and every payment made under this Agreement by the Company shall be final. Notwithstanding the foregoing, in the event that the Company has paid an Executive more than the amount to which the Executive is entitled under this Agreement, the Company shall have the right to recover all or any part of such overpayment from the Executive or from whomsoever has received such amount.

17. Successors. (a) If all or substantially all of the Company's business and assets are sold, assigned or transferred to any Person, or if the Company merges into or consolidates or otherwise combines with any Person which is a continuing or successor entity, then the Company shall assign all of its right, title and interest in this Agreement as of the date of such event to the Person which is either the acquiring or successor corporation, and such Person shall assume and perform from and after the date of such assignment the terms, conditions and provisions imposed by this Agreement upon the Company. Failure of the Company to obtain such assign- ment shall be a breach of this Agreement. In case of such assignment by the Company and of assumption and agreement by such Person, all further rights as well as all other obligations of the Company under this Agreement thenceforth shall cease and terminate and thereafter the expression "the Company" wherever used herein shall be deemed to mean such Person(s).

(b) This Agreement and all rights of the Executive shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, estates, executors, administrators, heirs and beneficia- ries. In the event of the Executive's death, all amounts payable to the Executive under this Agreement shall be paid to the Executive's estate, heirs and representatives. This Agreement shall inure to the benefit of, be binding upon and be enforceable by, any successor, surviving or resulting corporation or other entity to which all or substantially all of the Company's business and assets shall be transferred whether by merger, consolidation, transfer or sale. This Agreement shall not be terminated by the voluntary or involuntary dissolution of the Company.

18. Enforcement. The provisions of this Agreement shall be regarded as divisible, and if any of said provisions or any part hereof are declared invalid or unenforceable by a court of competent jurisdiction, the validity and enforceability of the remainder of such provisions or parts hereof and the applicability thereof shall not be affected thereby.

19. Amendment or Termination. Except as otherwise provided herein, the term of this Agreement shall run until December 31, 1994, and shall continue for additional one (1) year periods thereafter, unless the Company notifies the Executive in writing six (6) months prior to December 31, 1994 (or the anniversary of that date in the event the Agreement continues beyond that date pursuant to the provisions of this Section 19) that it does not intend to continue the Agreement. Notwithstanding the foregoing, (i) if a Change of Control has occurred on or before the date on which the Agreement has been terminated by the Company in accordance with this Section 19, the Agreement shall not terminate with respect to that Change of Control until the end of the Employment Period, and (ii) this Agreement shall terminate if, prior to a Change of Control, the Executive ceases to be employed by the Company in an executive position.

This Agreement sets forth the entire agreement between the Executive and the Company with respect to the subject matter hereof, and supersedes all prior oral or written negotiations, commitments, understand- ing and writing with respect thereto, including, but not limited to, the Key Executive Employment and Severance Agreement by and between the Company and the Executive executed on or about January 30, 1990.

This Agreement may not be terminated, amended or modified during its term as specified above except by written instrument executed by the Company and the Executive.

20. Withholding. The Company shall be entitled to withhold from amounts to be paid to the Executive under this Agreement any federal, state or local withholding or other taxes or charges which it is from time to time required to withhold. The Company shall be entitled to rely on an opinion of counsel if any question as to the amount or requirement of any such with- holding shall arise.

21. Venue; Governing Law. This Agreement and the Executive's and Company's respective rights and obligations hereunder shall be governed by and construed in accordance with the laws of the State of Arizona. Any action concerning this Agreement shall be brought in the Federal or state courts located in the County of Maricopa, Arizona, and each party consents to the venue and jurisdiction of such courts.

22. Notice. Notices given pursuant to this Agreement shall be in writing and shall be deemed given when received, and if mailed, shall be mailed by United States registered or certified mail, return receipt requested, addressee only, postage prepaid, if to the Company, to

Board of Directors
Arizona Public Service Company 400 North 5th Street
Phoenix, Arizona 85004
Attention: Corporate Secretary

or if to the Executive, to

or to such other address as the party to be notified shall have given to the other.

23. Funding. Benefits payable under this Agreement shall constitute an unfunded general obligation of the Company payable from its general assets, and the Company shall not be required to establish any special fund or trust for purposes of paying benefits under this Agreement. The Executive shall not have any vested right to any particular assets of the Company as a result of execution of this Agreement and shall be a gen- eral creditor of the Company.

24. No Waiver. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by the other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same time or any prior or subsequent time.

25. Headings. The headings herein contained are for reference only and shall not affect the meaning or interpretation of any provision of this Agreement.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and the Executive has executed this Agreement, on the date and year first above written.

ARIZONA PUBLIC SERVICE COMPANY

By ___________________________
Its ________________________

ATTEST:

By ___________________________
Its ________________________

EXHIBIT 10.6a

AMENDMENT TO
PINNACLE WEST CAPITAL CORPORATION
ARIZONA PUBLIC SERVICE COMPANY
SUNCOR DEVELOPMENT COMPANY
AND
EL DORADO INVESTMENT COMPANY
DEFERRED COMPENSATION PLAN

Pinnacle West Capital Corporation ("Pinnacle"), pursuant to the power granted to it by Section 11.2 of the above-named plan (the "Plan"), hereby amends the Plan, effective as of December 4, 1992, by making the following deletions and additions:

I. Definition of "Unforeseeable Financial Emergency"

The definition of "Unforeseeable Financial Emergency" found at Section 1.34 is deleted and a new Section 1.34 is added that reads as follows:

"`Unforeseeable Financial Emergency' shall mean an unanticipated emergency that is cause by an event beyond the control of the Participant that would result in severe financial hardship to the Participant resulting from (i) a sudden and unexpected illness or accident of the Participant or a dependent of the Participant, (ii) a loss of the Participant's property due to casualty or (iii) such other extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, all as determined in the sole discretion of the Committee."

II. Modification of Section 4.1

Section 4.1 is modified to add the following sentence at the end thereof:

"Notwithstanding the foregoing, amounts transferred to this plan pursuant to Section 13.2 shall not be eligible for a Short-Term Payout."

III. Modification of Section 4.2

Section 4.2 is modified by deleting the second sentence of that Section and adding the following second sentence:

"The payout shall not exceed the lesser of (i) the Participant's Account Balance, calculated as if such Participant were receiving a Termination Benefit, or (ii) the amount reasonably needed to satisfy the Unforeseeable Financial Emergency."

IV. Addition of New Section 13.2

A new Section 13.2 is added that reads as follows:

"Any Participant who was a participant in the Arizona Public Service Company Deferred Compensation Plan, the Pinnacle West Capital Corporation Deferred Compensation Plan, the Arizona Public Service Company Directors' Deferred Compensation Plan or the Pinnacle West Capital Corporation Directors' Deferred Compensation Plan prior to becoming a Participant in this Plan shall have the right to elect, upon the later of the date upon which he or she first becomes designated for participation in the Plan or the first Plan Entry Date following the adoption of this amendment, to transfer his or her Deferral Option I account balance in that plan to this Plan. This election shall be made in accordance with the rules and on the forms established from time to time by the Committee. If the election is made, the Participant's Deferral Option I account balance under the other plan shall be added to his or her Account Balance under this Plan and any such transferred account balance shall become subject to the terms and conditions of this Plan. Upon the completion of the transfer of his or her account balance under the other plan to this Plan, the Participant's participation in Deferral Option I of the other plan shall terminate and he or she shall have no further interest in Deferral Option I of that plan.

Pinnacle has caused this Amendment to be signed by its duly authorized officer on December 31, 1992.

Pinnacle West Capital Corporation

EXHIBIT 10.7a

PINNACLE WEST CAPITAL CORPORATION

ARIZONA PUBLIC SERVICE COMPANY

SUNCOR DEVELOPMENT COMPANY

AND

EL DORADO INVESTMENT COMPANY

SUPPLEMENTAL EXECUTIVE BENEFIT PLAN

Amended and Restated Effective as of January 1, 1992

                              TABLE OF CONTENTS

                                                                        Page

ARTICLE 1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . .    1

ARTICLE 2 Selection, Enrollment and Eligibility . . . . . . . . . . . .    5

       2.1  Selection by Committee  . . . . . . . . . . . . . . . . . .    5
       2.2  Enrollment Requirements . . . . . . . . . . . . . . . . . .    6
       2.3  Eligibility; Commencement of Participation  . . . . . . . .    6

ARTICLE 3 Vesting; Account Balance Allocation . . . . . . . . . . . . .    6

       3.1  Vesting in Change in Control Benefit  . . . . . . . . . . .    6
       3.2  Account Balance Allocations . . . . . . . . . . . . . . . .    7

ARTICLE 4 Benefits  . . . . . . . . . . . . . . . . . . . . . . . . . .    7

       4.1  Change in Control Benefit . . . . . . . . . . . . . . . . .    7
       4.2  Employer Benefit  . . . . . . . . . . . . . . . . . . . . .    7
       4.3  Withholding and Payroll Taxes . . . . . . . . . . . . . . .    8

ARTICLE 5 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . .    8

       5.1  Beneficiary . . . . . . . . . . . . . . . . . . . . . . . .    8
       5.2  Beneficiary Designation; Change; Spousal Consent  . . . . .    8
       5.3  Acknowledgment  . . . . . . . . . . . . . . . . . . . . . .    8
       5.4  No Beneficiary Designation  . . . . . . . . . . . . . . . .    8
       5.5  Doubt as to Beneficiary . . . . . . . . . . . . . . . . . .    8
       5.6  Discharge of Obligations  . . . . . . . . . . . . . . . . .    9

ARTICLE 6 Termination, Amendment or Modification of the Plan  . . . . .    9

       6.1  Termination, Amendment or Modification Prior  to One Year
            Before Change in Control  . . . . . . . . . . . . . . . . .    9
       6.2  Termination,  Amendment or  Modification Within  One Year
            Before Change of Control or Following Change in Control . .    9
       6.3  Termination of Plan Agreement . . . . . . . . . . . . . . .   10

ARTICLE 7 Other Benefits and Agreements . . . . . . . . . . . . . . . .   10
       7.1  Coordination with Other Benefits  . . . . . . . . . . . . .   10

ARTICLE 8 Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . .   11

       8.1  Establishment of the Trust  . . . . . . . . . . . . . . . .   11
       8.2  Interrelationship of the Plan and the Trust . . . . . . . .   11
       8.3  Accounts  . . . . . . . . . . . . . . . . . . . . . . . . .   11

ARTICLE 9 Insurance Policies  . . . . . . . . . . . . . . . . . . . . .   12

       9.1  Policies  . . . . . . . . . . . . . . . . . . . . . . . . .   12
       9.2  Documents Required By Insurer . . . . . . . . . . . . . . .   12

ARTICLE 10 Administration . . . . . . . . . . . . . . . . . . . . . . .   12

       10.1 Committee Duties  . . . . . . . . . . . . . . . . . . . . .   12
       10.2 Agents  . . . . . . . . . . . . . . . . . . . . . . . . . .   12
       10.3 Binding Effect of Decisions . . . . . . . . . . . . . . . .   12
       10.4 Indemnity of Committee  . . . . . . . . . . . . . . . . . .   13
       10.5 Employer Information  . . . . . . . . . . . . . . . . . . .   13

ARTICLE 11 Claims Procedures  . . . . . . . . . . . . . . . . . . . . .   13

       11.1 Presentation of Claim . . . . . . . . . . . . . . . . . . .   13
       11.2 Notification of Decision  . . . . . . . . . . . . . . . . .   13
       11.3 Review of a Denied Claim  . . . . . . . . . . . . . . . . .   14
       11.4 Decision on Review  . . . . . . . . . . . . . . . . . . . .   14
       11.5 Legal Action  . . . . . . . . . . . . . . . . . . . . . . .   14

ARTICLE 12 Miscellaneous  . . . . . . . . . . . . . . . . . . . . . . .   14

       12.1 Unsecured General Creditor  . . . . . . . . . . . . . . . .   14
       12.2 Employer's Liability  . . . . . . . . . . . . . . . . . . .   15
       12.3 Nonassignability  . . . . . . . . . . . . . . . . . . . . .   15
       12.4 Not a Contract of Employment  . . . . . . . . . . . . . . .   15
       12.5 Furnishing Information  . . . . . . . . . . . . . . . . . .   15
       12.6 Terms . . . . . . . . . . . . . . . . . . . . . . . . . . .   15
       12.7 Captions  . . . . . . . . . . . . . . . . . . . . . . . . .   15
       12.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . .   15
       12.9 Validity  . . . . . . . . . . . . . . . . . . . . . . . . .   16
       12.10     Notice . . . . . . . . . . . . . . . . . . . . . . . .   16
       12.11     Successors . . . . . . . . . . . . . . . . . . . . . .   16
       12.12     Spouse's Interest  . . . . . . . . . . . . . . . . . .   16
       12.13     Incompetent  . . . . . . . . . . . . . . . . . . . . .   16
       12.14     Distribution in the Event of Taxation  . . . . . . . .   17

PINNACLE WEST CAPITAL CORPORATION

ARIZONA PUBLIC SERVICE COMPANY

SUNCOR DEVELOPMENT COMPANY

AND

EL DORADO INVESTMENT COMPANY

SUPPLEMENTAL EXECUTIVE BENEFIT PLAN

Amended and Restated Effective as of January 1, 1992

The purpose of this Plan is to provide specified benefits to a select group of management, highly compensated employees and Directors who contribute materially to the continued growth, development and future business success of Pinnacle West Capital Corporation, an Arizona corporation, Arizona Public Service Company, an Arizona corporation, SunCor Development Company, an Arizona corporation, El Dorado Investment Company, an Arizona corporation, and their subsidiaries. This Plan is amended and restated effective as of January 1, 1992.

ARTICLE 1
Definitions

For purposes hereof, unless otherwise clearly apparent from the context, the following phrases or terms shall have the following indicated meaning:

1.1 "Beneficiary" shall mean one or more persons, trusts, estates or other entities, designated in accordance with Article 5 below, that are entitled to receive benefits under this Plan upon the death of a Participant.

1.2 "Beneficiary Designation Form" shall mean the form established from time to time by the Committee that a Participant completes, signs and returns to the Committee to designate one or more beneficiaries.

1.3 "Board" shall mean the Board of Directors of the Company.

1.4 "Change in Control" shall mean the date upon which the first of the following events occurs:

(a) A change in control of the Company of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities and Exchange Act of 1934 (the "Act"), or any successor regulation of similar import, regardless of whether the Company is subject to such reporting requirement;

(b) A change in control of ownership of the Company through a transaction or series of transactions, such that any person
(as that term is used in Sections 13 and 14(d)(2) of the Act) is or becomes the beneficial owner (as that term is used in
Section 13(d) of the Act), directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the combined voting power of the Company's then outstanding securities;

(c) Any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of the common stock of the Company would be converted into cash, securities or other property, other than a merger of the Company in which the holders of the common stock of the Company immediately prior to the merger have the same proportionate ownership of common stock of the surviving corporation immediately after the merger;

(d) The shareholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company;

(e) During any period of two (2) consecutive years, individuals who, at the beginning of such period, constituted the Board cease, for any reason, to constitute at least a majority thereof, unless the election or nomination for election of each new director was approved by the vote of at least two- thirds (2/3) of the directors then still in office who were directors at the beginning of the period;

(f) Substantially all of the assets of the Company and its subsidiaries, in the aggregate, are sold or otherwise transferred to parties that are not within a "controlled group of corporations" (as defined in Section 1563 of the Code) in which the Company is a member;

(g) More than eighty percent (80%) of the stock, or substantially all of the assets of, any Employer, other than the Company, are sold or otherwise transferred to a party or parties that are not within a "controlled group of corporations" (as defined in Section 1563 of the Code) in which that Employer is a member, provided, that (i) with respect to any Employer that is not a Significant Subsidiary (as defined in Regulation S-X promulgated by the Securities and Exchange Commission, as in effect on the date hereof) of the Company, any such event shall constitute a Change in Control with respect to such Employer only if the Board determines, within forty-five (45) days of such event, that such event constitutes a Change in Control, and (ii) any such event shall constitute a Change in Control only with respect to that Employer and its employees or Directors who are Participants;

(h) The Company voluntarily files a petition for bankruptcy under federal bankruptcy law, or an involuntary bankruptcy petition is filed against the Company under federal bankruptcy law, which involuntary petition is not dismissed within 120 days of the filing or such later date as agreed to by the Company and the parties filing the involuntary petition or as may be approved by a court;

(i) The Company makes a general assignment for the benefit of creditors; or

(j) The Company seeks or consents to the appointment of a trustee,

              receiver, liquidator or similar person.

1.5    "Change  in  Control Benefit"  shall mean  the  benefit set  forth in
       Section 4.1 below.

1.6    "Claimant" shall have the meaning set forth in Section 11.1 below.

1.7    "Code" shall mean the Internal Revenue Code of 1986, as amended.

1.8    "Committee"  shall mean  the  administrative  committee appointed  to
       manage and administer the  Plan in accordance with the  provisions of
       Article 10 below.

1.9    "Company" shall  mean Pinnacle  West Capital Corporation,  an Arizona
       corporation.

1.10   "Director" shall  mean any  member of the  board of  directors of  an
       Employer.

1.11   "Disability"  shall  mean  a  period of  disability  during  which  a
       Participant qualifies for benefits under the Participant's Employer's
       long-term  disability plan or, if a  Participant does not participate
       in such a plan,  a period of disability during  which the Participant
       would have qualified for benefits under such a plan, as determined in
       the  sole discretion  of the  Committee, had  the Participant  been a
       participant in such a plan.

1.12   "Employer" shall mean the Company, Arizona Public Service Company, an
       Arizona  corporation,   SunCor   Development  Company,   an   Arizona
       corporation, El  Dorado Investment Company,  an Arizona  corporation,
       and/or any subsidiaries of such corporations that have  been selected
       by the Board to participate in the Plan.

1.13   "Employer Benefit" shall  mean the benefit  set forth in  Section 4.2
       below.

1.14   "ERISA" shall  mean the  Employee Retirement  Income Security Act  of
       1974, as amended from time to time.

1.15   "Insurer" shall mean  the insurance company  or companies that  issue
       one or more Policies.

1.16   "Participant"  shall  mean any  employee or  Director of  an Employer
       (a) who is selected  to participate  in the Plan,  (b) who elects  to
       participate  in  the  Plan, (c) who  signs  a  Plan  Agreement and  a
       Beneficiary Designation  Form,  (d) whose signed  Plan Agreement  and
       Beneficiary Designation  Form are accepted by  the Committee, (e) who
       commences participation  in the Plan on  his or her Plan  Entry Date,
       and (f) whose Plan Agreement has not terminated.

1.17   "Participant's  Account"  shall   mean  an  account  established   in
       accordance with Section 8.3 below.

1.18   "Plan"  shall mean  the  Pinnacle West  Capital Corporation,  Arizona
       Public  Service Company,  SunCor  Development Company  and El  Dorado
       Investment  Company Supplemental  Executive  Benefit  Plan, which  is
       defined by this instrument and by each Plan Agreement, all as amended
       from time to time.

1.19   "Plan  Agreement" shall mean a  written agreement, as  may be amended
       from  time to time, which is entered  into by and between an Employer
       and a Participant.   Each  Plan Agreement executed  by a  Participant
       shall provide for  the entire  benefit to which  such Participant  is
       entitled to under the Plan, and the Plan Agreement bearing the latest
       date of acceptance by the Committee shall govern such entitlement.

1.20   "Plan  Entry Date" shall  mean one of  two dates in any  Plan Year on
       which  an  employee  or   Director  selected  by  the  Committee   to
       participate  in the Plan is eligible to commence participation in the
       Plan in accordance with Article 2.  The two entry dates are January 1
       and July 1.

1.21   "Plan Year" shall, for the first Plan Year, begin on January 1, 1992,
       and  end on  December 31, 1992.   For each Plan  Year thereafter, the
       Plan Year shall begin  on January 1 of each year and continue through
       December 31 of that year.

1.22   "Policy"  or "Policies" shall mean  the policy or  policies issued in
       the name of the  Trustee in accordance with the  terms and conditions
       of this Plan and each respective Plan Agreement.

1.23   "Retirement"  and "Retires" shall mean,  with respect to an employee,
       severance from  employment with  all Employers  for any  reason other
       than a  leave of absence, death or Disability on or after the earlier

of the attainment of: (a) age sixty-five (65), (b) age sixty (60) with ten (10) Years of Service, or (c) age fifty-five (55) with twenty (20) Years of Service; and shall mean, with respect to a Director who is not an employee, severance of his or her

       directorship(s) with all  Employers on  or after the  earlier of  the
       attainment of: (x) age  sixty-five (65), (y) age sixty (60)  with ten
       (10) years of  board service, or (z) age  fifty-five (55) with twenty
       (20) years of  board service.  If  a Participant is both  an employee
       and a Director, Retirement shall not occur until he or she Retires as
       both  an  employee and  a Director;  provided,  however, that  such a
       Participant may elect, in accordance with the policies and procedures
       established by  the Committee, to Retire for purposes of this Plan at
       the time he or she Retires as an employee of all Employers.

1.24   "Termination of Employment" shall mean the ceasing of employment with
       or  service as a Director  of all Employers,  voluntarily or involun-
       tarily,  for any reason  other than Retirement,  Disability, leave of
       absence  or  death.   If  a Participant  is  both an  employee  and a
       Director,  a Termination  of  Employment shall  occur  only upon  the
       termination of the last position held; provided, however, that such a
       Participant may elect, in accordance with the policies and procedures
       established by the Committee, to be treated for purposes of this Plan
       as  having experienced a Termination of Employment  at the time he or
       she ceases employment with all Employers as an employee.

1.25   "Trust" shall  mean the  trust established pursuant  to that  certain
       Trust  Agreement dated as of  January 1, 1992,  between all Employers
       and the Trustee, as the same may be amended or restated from time  to
       time.

1.26   "Trustee" shall mean the trustee named in the Trust and any successor
       trustee.

1.27   "Vesting Date" shall mean  the date upon which a  Participant becomes
       100% vested  in his or  her Change  in Control Benefit  in accordance
       with Section 3.1 below.

1.28   "Years of  Service" shall mean the  total number of years  in which a
       Participant  has been  employed  by one  or  more Employers  and  has
       completed  in each  of  those  years 1,000  hours  of  service.   For
       purposes of this definition only, a year of employment shall be a 365
       day period (or  366 day period in the case of  a leap year) that, for
       the first year  of employment,  commences on the  employee's date  of
       hiring and that, for any subsequent year, commences on an anniversary
       of that hiring date.

ARTICLE 2
Selection, Enrollment and Eligibility

2.1 Selection by Committee. Participation in the Plan shall be limited to a select group of management, highly compensated employees and Directors of the Employers. From that group, the Committee shall select, in its sole discretion, employees and Directors of the Employers to participate in the Plan.

2.2 Enrollment Requirements. As a condition to participation, each selected employee or Director shall complete, execute and return to the Committee a Plan Agreement and a Beneficiary Designation Form. In addition, the Committee, in its sole discretion, shall establish from time to time such other enrollment requirements as it determines in its sole discretion are necessary.

2.3 Eligibility; Commencement of Participation. Provided an employee or Director selected to participate in the Plan has met all enrollment requirements set forth in this Plan and required by the Committee, that employee or Director shall commence participation in the Plan on the Plan Entry Date that immediately follows his or her selection to participate in the Plan. If a selected employee or Director fails to meet all such requirements prior to that Plan Entry Date, that employee or Director shall not be eligible to participate in the Plan until the Plan Entry Date that follows his or her completion of those requirements.

ARTICLE 3
Vesting; Account Balance Allocation

3.1 Vesting in Change in Control Benefit.

(a) General Rule. If a Participant has not Retired, died, suffered a Disability or experienced a Termination of Employment prior to 90 days prior to a Change in Control, the Participant shall become 100% vested in his or her Change in Control Benefit on January 1 of the Plan Year following the Change in Control (the "Vesting Date"); provided, however, that if a Participant voluntarily terminates his or her employment with all Employers at any time on or after the date of the Change in Control and prior to the Vesting Date, that Participant shall forfeit his or her rights to benefits under this Plan.

(b) Early Vesting. If at any time on or after 90 days prior to a Change in Control and prior to the Vesting Date a Participant Retires, dies, suffers a Disability or experiences an involuntarily termination of employment with all Employers, the Participant (or the Participant's Beneficiary in the event of the Participant's death) shall become 100% vested in his or her Change in Control Benefit on the later of (i) the date of the Change in Control or (ii) the date of such Retirement, death, Disability or involuntary termination of employment, and such date (rather than January 1 of the following Plan Year) shall be considered the "Vesting Date" for purposes of this Plan.

3.2 Account Balance Allocations. Within 60 days of the end of each Plan Year, each Participant with a balance in his or her Participant's Account shall receive a statement of the dollar amount of his or her balance.

ARTICLE 4
Benefits

4.1 Change in Control Benefit.

(a) Eligibility. On the Vesting Date, the Participant or the Participant's Beneficiary shall become entitled to the Change in Control Benefit described in this Section 4.1.

(b) Benefit and Payment. The "Change in Control Benefit" shall be a dollar amount that is equal to the fair market value of the assets allocated to and held in the Participant's Account as of the Vesting Date, plus any earnings allocated to that account from that date to the date of payment of the Change in Control Benefit. This benefit shall be paid to the Participant, or his or her Beneficiary, within 90 days of the Vesting Date.

4.2 Employer Benefit.

(a) Eligibility. The Participant's Employer shall be entitled to the Employer Benefit if:

(i) A Participant Retires, suffers a Disability or experiences a Termination of Employment prior to 90 days prior to a Change in Control;

(ii) A Participant voluntarily terminates his or her employment (other than by Retirement or Disability) with all of his or her Employers at any time on or after the date of a Change in Control and prior to January 1 of the Plan Year following a Change in Control; or

(iii) A Participant dies at any time.

(b) Benefit and Payment. The "Employer Benefit" shall be a distribution of the assets allocated to and held in the Participant's Account as of the date of the event described in
Section 4.2(a) above after taking in account any distributions made or to be made in accordance with Section 4.1 above, plus any earnings allocated to that account from that date to the date of payment of the Employer Benefit. This benefit shall be paid to the Participant's Employer within 120 days of January 1 of the Plan Year following that event.

4.3 Withholding and Payroll Taxes. The Trustee shall withhold from any and all benefit payments made under this Article 4, all federal, state and local income, employment and other taxes required to be withheld in connection with the payment of benefits hereunder, in amounts to be determined in sole discretion of the Participant's Employer.

ARTICLE 5
Beneficiary

5.1 Beneficiary. Each Participant shall have the right, at any time, to designate his or her Beneficiary (both primary as well as contingent) to receive any benefits payable under the Plan to a Beneficiary upon the death of a Participant.

5.2 Beneficiary Designation; Change; Spousal Consent. A Participant shall designate his or her Beneficiary by completing and signing the Beneficiary Designation Form, and returning it to the Committee or its designated agent. A Participant shall have the right to change a Beneficiary by completing, signing and otherwise complying with the terms of the Beneficiary Designation Form and the Committee's rules and procedures, as in effect from time to time. If the Participant names, with respect to more than 50% of his or her benefit under this Plan, someone other than his or her spouse as a Beneficiary, a spousal consent, in the form designated by the Committee, must be signed by that Participant's spouse and returned to the Committee. Upon the acceptance by the Committee of a new Beneficiary Designation Form, all Beneficiary designations previously filed shall be cancelled. The Committee shall be entitled to rely on the last Beneficiary Designation Form filed by the Participant and accepted by the Committee before his or her death.

5.3 Acknowledgment. No designation or change in designation of a Beneficiary shall be effective until received, accepted and acknowledged in writing by the Committee or its designated agent.

5.4 No Beneficiary Designation. If a Participant fails to designate a Beneficiary as provided in Sections 5.1, 5.2 and 5.3 above or, if all designated Beneficiaries predecease the Participant or die prior to complete distribution of the Participant's benefits, then the Participant's designated Beneficiary shall be deemed to be his or her surviving spouse. If the Participant has no surviving spouse, the benefits remaining under the Plan to be paid to a Beneficiary shall be payable to the executor or personal representative of the Participant's estate.

5.5 Doubt as to Beneficiary. If the Committee has any doubt as to the proper Beneficiary to receive payments pursuant to this Plan, the Committee shall have the right, exercisable in its discretion, before a Change in Control, to cause the Trustee to withhold such payments until this matter is resolved to the Committee's satisfaction.

5.6 Discharge of Obligations. The payment of benefits under the Plan to a Beneficiary shall fully and completely discharge all Employers and the Committee from all further obligations under this Plan with respect to the Participant, and that Participant's Plan Agreement shall terminate upon such full payment of benefits.

ARTICLE 6
Termination, Amendment or
Modification of the Plan

6.1 Termination, Amendment or Modification Prior to One Year Before Change in Control. Prior to one year before a Change in Control, each Employer reserves the right to terminate the Plan or any related Plan Agreement, in whole or in part, with respect to Participants whose services are retained by that Employer, and the Company reserves the right to amended or modify the Plan or any related Plan Agreement, in whole or in part, with respect to all Participants. Notwithstanding the foregoing, no termination, amendment or modification shall be effective to decrease or reduce a Participant's potential benefits under this Plan below the fair market value of the assets in his or her Participant's Account as reflected on the last statement provided under Section 3.2 above prior to the effective date of the termination, amendment or modification.

6.2 Termination, Amendment or Modification Within One Year Before Change of Control or Following Change in Control.

(a) General. Within one year before a Change in Control and thereafter, neither the Company, any subsidiary of the Company nor any corporation, trust or other person that succeeds to all or any substantial portion of the assets of the Company shall have the right to terminate, amend or modify the Plan and/or any Plan Agreement in effect prior to such Change in Control, and all benefits under the Plan and any such Plan Agreement shall thereafter be paid in accordance with the terms of the Plan and such Plan Agreement, as in effect immediately prior to such Change in Control. If the Plan is terminated, amended, or modified within one year before the Change in Control, such termination, amendment or modification shall be considered void as of the date of the termination, amendment or modification. Subject to Section 6.2(b) below, any provision of this Plan or any Plan Agreement to the contrary shall be construed in accordance with this
Section 6.2(a).

(b) Compliance with ERISA and Code. Notwithstanding any other provision of this Plan, if, at any time within one year before a Change in Control or any time thereafter, counsel to the Company advises the Company in writing that it is counsel's opinion that the provisions of this Plan and/or any related Plan Agreement are not in compliance with ERISA or the Code, or any final or proposed regulation or ruling under ERISA or the Code promulgated by the Internal Revenue Service or the Department of Labor, the Company shall have the right, in its sole discretion, to amend, modify or terminate this Plan and/or any related Plan Agreement in order to comply with such applicable law, to minimize the Plan's noncompliance with such applicable law and/or to avoid the Plan from failing to comply with such applicable law.

(c) Limitation. If the Company elects to amend, modify or terminate the Plan and/or any Plan Agreement under
Section 6.2(b), the Company may do so only to the extent that such amendment, modification or termination does not decrease or reduce a Participant's potential benefit under this Plan below the fair market value of the assets in his or her Participant's Account as reflected on the last statement provided under Section 3.2 above prior to the effective date of the termination, amendment or modification.

6.3 Termination of Plan Agreement. Absent the earlier termination, modification or amendment of the Plan, the Plan Agreement of any Participant shall terminate upon the full payment of the applicable benefit provided under Article 4.

ARTICLE 7
Other Benefits and Agreements

7.1 Coordination with Other Benefits. The benefits provided for a Participant and Participant's Beneficiary under the Plan are in addition to any other benefits available to such Participant under any other plan or program for employees or directors of the Participant's Employer. The Plan shall supplement and shall not supersede, modify or amend any other such plan or program except as may otherwise be expressly provided.

The benefit, if any, to be received under this Plan shall be offset, but not below zero, by the benefits that a Participant has received in the past as a "Short-Term Payout" or as a result of an "Unforeseeable Financial Emergency" under the Pinnacle West Capital Corporation, Arizona Public Service Company, Suncor Development Company and El Dorado Investment Company 1992 Deferred Compensation Plan, which was effective January 1, 1992.

ARTICLE 8
Trust

8.1 Establishment of the Trust; Premiums. The Employers shall establish the Trust and shall at least annually transfer over to the Trust such assets as the Committee determines, prior to a Change in Control, or the Trustee determines, after a Change in Control, are necessary to provide for the Employers' future liabilities created with respect to the benefits provided under the Plan and the Plan Agreements, including, without limitation, the payment of insurance premiums in amounts sufficient to acquire and maintain all Policies held by the Trustee. At the direction of the Committee, prior to a Change in Control, or the Trustee, after a Change in Control, the Employers shall pay any and all Policy premiums and other costs directly to the Insurer. In addition, if the Trust incurs any tax liability, the Employers, to the extent the administrative account is insufficient to pay such taxes, shall contribute to the Trust sufficient funds to allow the Trustee to pay any such tax liability.

8.2 Interrelationship of the Plan and the Trust. The provisions of the Plan and the Plan Agreement shall govern the rights of a Participant and the Employers to receive distributions pursuant to the Plan. The provisions of the Trust shall govern the rights of the Trustee, Employers, Participant and a Participant's Beneficiary as to the assets of the Trust. The Employers shall at all times remain liable to carry out their obligations under the Plan. The Employers and the Trustee shall cooperate with each other as is necessary to minimize the Trust's tax liability.

8.3 Accounts.

(a) The Trustee shall establish and maintain the following separate accounts in the Trust:

(i) A "Participant's Account" for each Participant to which the Employers' contributions, or a portion thereof, and earnings thereon shall be allocated to, held, and invested, the assets of which are to be used to pay the Change in Control Benefit and/or Employer Benefit in accordance with this Plan and the Trust; and
(ii) An "Administrative Account" for the administrative expenses of the Trust to which a portion of the Employers' contributions and earnings thereon may be allocated to, held and invested, the assets of which are to be used to pay the administrative expenses, including all taxes, of the Trust in accordance with the terms and provisions of this Plan and the Trust.

(b) Prior to a Change in Control, the Committee shall direct the Trustee in writing as to (i) the allocation of the Employers' contributions to the accounts described in Section 8.3(a) above, and (ii) the allocations of the earnings on the Employer's contributions held and invested in the accounts described in Section 8.3(a) above. Thereafter, the Trustee shall make such allocations in accordance with the terms and provisions of this Plan and the Trust.

(c) Each of the accounts described in Section 8.3(a) above shall qualify for and be treated as separate shares under Code
Section 663(c).

ARTICLE 9
Insurance Policies

9.1 Policies. The Committee may direct the Trustee in writing to acquire one or more Policies in the Trustee's name. The Trustee shall be the sole and absolute owner and beneficiary of each Policy, with all rights of an owner and beneficiary, including without limitation, the right to surrender Policies for their cash surrender values and to take one or more loans against one or more Policies. Notwithstanding the foregoing, the Trustee shall exercise its ownership rights in each Policy only in accordance with the terms of this Plan, the respective Plan Agreements and the Trust.

9.2 Documents Required By Insurer. The Trustee, the Participant's Employer and the Participant shall sign such documents and provided such information as may be required from time to time by the Insurer.

ARTICLE 10
Administration

10.1 Committee Duties. This Plan shall be administered by a Committee which shall consist of persons approved by the Board of the Company. Members of the Committee may be Participants under this Plan. The Committee shall also have the discretion and authority to make, amend, interpret, and enforce all appropriate rules and regulations for the administration of this Plan and decide or resolve any and all questions including interpretations of this Plan, as may arise in connection with the Plan.

10.2 Agents. In the administration of this Plan, the Committee may, from

       time  to time, employ agents and delegate to them such administrative
       duties as it sees  fit and may from time to time consult with counsel
       who may be counsel to any Employer.

10.3   Binding Effect of Decisions.  The decision or action of the Committee
       with respect to any question arising out of or in connection with the
       administration, interpretation  and application  of the Plan  and the
       rules  and  regulations  promulgated  hereunder shall  be  final  and
       conclusive  and binding upon all  persons having any  interest in the
       Plan.

10.4   Indemnity  of  Committee.   All  Employers shall  indemnify  and hold
       harmless the members  of the  Committee against any  and all  claims,
       losses, damages, expenses or liabilities  arising from any action  or
       failure  to act  with respect  to this  Plan, except  in the  case of
       willful misconduct by the Committee or any of its members.

10.5   Employer  Information.    To  enable  the Committee  to  perform  its
       functions, each Employer shall supply full and timely  information to
       the  Committee on  all matters  relating to  the compensation  of its
       Participants,   the  date  and   circumstances  of   the  Retirement,
       Disability, death  or Termination of Employment  of its Participants,
       and such other pertinent information as the  Committee may reasonably
       require.

                              Claims Procedures

11.1   Presentation  of Claim.  Any Participant or Beneficiary of a deceased
       Participant (such Participant or  Beneficiary being referred to below
       as a "Claimant") may deliver  to the Committee a written claim  for a
       determination  with  respect to  the  amounts  distributable to  such
       Claimant from the Plan.  If such a claim relates to the contents of a
       notice  received by  the  Claimant, the  claim  must be  made  within
       60 days after  such notice was  received by the Claimant.   All other
       claims  must be made within 180  days of the date  on which the event
       that caused the claim to  arise occurred.  The claim must  state with
       particularity the determination desired by the Claimant.

11.2   Notification of Decision.  The Committee shall  consider a Claimant's
       claim  within a  reasonable time,  and shall  notify the  Claimant in
       writing:

       (a)    that the Claimant's requested determination has been made, and
              that the claim has been allowed in full; or

       (b)    that the Committee has reached a conclusion contrary, in whole
              or  in part,  to the  Claimant's requested  determination, and
              such  notice must  set  forth in  a  manner calculated  to  be
              understood by the Claimant:

                  (i)       the specific  reason(s) for  the  denial of  the
                            claim, or any part of it;

                 (ii)       the    specific   reference(s)    to   pertinent
                            provisions of  the Plan  upon which  such denial
                            was based;

(iii) a description of any additional material or information necessary for the Claimant to perfect the claim, and an explanation of why such material or information is necessary; and

(iv) an explanation of the claim review procedure set forth in Section 11.3 below.

11.3 Review of a Denied Claim. Within 60 days after receiving a notice from the Committee that a claim has been denied, in whole or in part, a Claimant (or the Claimant's duly authorized representative) may file with the Committee a written request for a review of the denial of the claim. Thereafter, but not later than 30 days after the review procedure began, the Claimant (or the Claimant's duly authorized representative):

(a) may review pertinent documents;

(b) may submit written comments or other documents; and/or

(c) may request a hearing, which the Committee, in its sole discretion, may grant.

11.4 Decision on Review. The Committee shall render its decision on review promptly, and not later than 60 days after the filing of a written request for review of the denial, unless a hearing is held or other special circumstances require additional time, in which case the Committee's decision must be rendered within 120 days after such date. Such decision must be written in a manner calculated to be understood by the Claimant, and it must contain:

(a) specific reasons for the decision;

(b) specific reference(s) to the pertinent Plan provisions upon which the decision was based; and

(c) such other matters as the Committee deems relevant.

11.5   Legal Action.  A Claimant's  compliance with the foregoing provisions
       of  this Article 11 is a mandatory prerequisite to a Claimant's right
       to commence any legal action with  respect to any claim for  benefits
       under this Plan.

       payable to a Participant or his or her Beneficiary shall be paid from
       the general assets of an Employer exclusively.

12.2   Employer's  Liability.  An  Employer's liability  for the  payment of
       benefits shall be defined only by the Plan and the Plan Agreement, as
       entered into between  the Employer  and a Participant.   An  Employer
       shall have no  obligation to a  Participant under the Plan  except as
       expressly provided in the Plan.

12.3   Nonassignability.  Neither  a Participant nor any other  person shall
       have  any   right  to   commute,  sell,  assign,   transfer,  pledge,
       anticipate, mortgage or otherwise encumber, transfer, hypothecate  or
       convey in advance  of actual  receipt, the amounts,  if any,  payable
       hereunder, or  any part thereof, which  are, and all  rights to which
       are  expressly  declared  to  be unassignable  and  non-transferable,
       except  that  the foregoing  shall not  apply  to any  family support
       obligations  set forth  in a  court order.   No  part of  the amounts
       payable  shall, prior  to actual  payment, be  subject to  seizure or
       sequestration for  the payment  of any debts,  judgments, alimony  or
       separate maintenance owed by  a Participant or any other  person, nor
       be transferable by  operation of law in the event  of a Participant's
       or any other person's bankruptcy or insolvency.

12.4   Not a Contract of Employment.   The terms and conditions of this Plan
       shall  not be deemed to  constitute a contract  of employment between
       any  Employer  and  the  Participant.    Such  employment  is  hereby
       acknowledged to be an  "at will" employment relationship that  can be
       terminated at any time for any reason, with  or without cause, unless
       expressly provided in  a written  employment agreement.   Nothing  in
       this  Plan shall  be deemed  to give  a Participant  the right  to be
       retained  in  the service  of any  Employer or  to  be retained  as a
       director,  or  to  interfere  with  the  right  of  any  Employer  to
       discipline or discharge the Participant at any time.

12.5   Furnishing  Information.    A  Participant will  cooperate  with  the
       Committee by  furnishing any  and all  information  requested by  the
       Committee and take such other actions as may be requested in order to
       facilitate  the  administration  of  the  Plan and  the  payments  of
       benefits hereunder, including but not limited to taking such physical
       examinations as the Committee may deem necessary.

12.6   Terms.  Whenever any words are used herein in the singular or in  the
       plural,  they shall  be construed  as though  they were  used in  the
       plural or the singular, as the case  may be, in all cases where  they
       would so apply.

12.7   Captions.  The captions  of the articles, sections and  paragraphs of
       this Plan are for  convenience only and shall  not control or  affect
       the meaning or construction of any of its provisions.

12.8   Governing Law.   The provisions of  this Plan shall be  construed and
       interpreted according to the laws of the State of Arizona.

12.9   Validity.   In case any  provision of this  Plan shall be  illegal or
       invalid  for any  reason,  said illegality  or  invalidity shall  not
       affect the remaining parts  hereof, but this Plan shall  be construed
       and enforced as if such illegal and invalid provision had never  been
       inserted herein.

12.10 Notice. Any notice or filing required or permitted to be given to the Committee under this Plan shall be sufficient if in writing and hand-delivered, or sent by registered or certified mail, to the address indicated below:

If a Participant's Employer is Pinnacle West Capital Corporation or any other Employer other than Arizona Public Service Company, then to

Pinnacle West Capital Corporation 400 East Van Buren Street
Post Office Box 52132
Phoenix, Arizona 85072-2132 Attn: Human Resources

If a Participant's Employer is Arizona Public Service Company, then to:

Arizona Public Service Company 400 North 5th Street
P.O. Box 53999
Phoenix, Arizona 85072-3999 Attn: Manager, Compensation and Benefit Station 8460

Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification.

Any notice or filing required or permitted to be given to a Participant under this Plan shall be sufficient if in writing and hand-delivered, or sent by mail, to the last known address of the Participant.

12.11 Successors. The provisions of this Plan shall bind and inure to the benefit of the Participant's Employer and its successors and assigns and the Participant, the Participant's Beneficiaries, and their permitted successors and assigns.

12.12 Spouse's Interest. The interest in the benefits hereunder of a spouse of a Participant who has predeceased the Participant shall automatically pass to the Participant and shall not be transferable by such spouse in any manner, including but not limited to such spouse's will, nor shall such interest pass under the laws of intestate succession.

12.13 Incompetent. If the Committee determines in its discretion that a benefit under this Plan is to be paid to a minor, a person declared incompetent or to a person incapable of handling the disposition of that person's property, the Committee may direct payment of such benefit to the guardian, legal representative or person having the care and custody of such minor, incompetent or incapable person. The Committee may require proof of minority, incompetency, incapacity or guardianship, as it may deem appropriate prior to distribution of the benefit. Any payment of a benefit shall be a payment for the account of the Participant and the Participant's Beneficiary, as the case may be, and shall be a complete discharge of any liability under the Plan for such payment amount.

12.14 Distribution in the Event of Taxation. If, for any reason, all or any portion of a Participant's benefit under this Plan becomes taxable to the Participant prior to the Vesting Date, a Participant may petition the Committee, if prior to a Change in Control, or the Trustee, after a Change in Control, for a distribution of assets sufficient to meet the Participant's tax liability (including additions to tax, penalties and interest). Upon the grant of such a petition, which grant shall not be unreasonably withheld, the Trustee shall distribute to the Participant from the Trust, immediately available funds in an amount equal to that Participant's federal, state and local tax liability associated with such taxation, which liability shall be measured by using that Participant's then current highest federal, state and local marginal tax rate, plus the rates or amounts for the applicable additions to tax, penalties and interest. If the petition is granted, the tax liability distribution shall be made within 90 days of the date when the Participant's petition is granted.

IN WITNESS WHEREOF the Company and Arizona Public Service Company have signed this amended and restated Supplemental Executive Benefit Plan document on December 31, 1992.

Pinnacle West Capital Corporation,
an Arizona corporation

Arizona Public Service Company,
an Arizona corporation

EXHIBIT 10.8a

ARIZONA PUBLIC SERVICE COMPANY

SUPPLEMENTAL EXCESS BENEFIT

RETIREMENT PLAN

                              TABLE OF CONTENTS




                                                                        Page

ARTICLE ONE - PREAMBLE  . . . . . . . . . . . . . . . . . . . . . . . .  1

ARTICLE TWO - CONSTRUCTION  . . . . . . . . . . . . . . . . . . . . . .  2

ARTICLE THREE - ELIGIBILITY AND PARTICIPATION . . . . . . . . . . . . .  3

ARTICLE FOUR - BENEFITS . . . . . . . . . . . . . . . . . . . . . . . .  3

ARTICLE FIVE - PAYMENT OF BENEFITS  . . . . . . . . . . . . . . . . . .  4

ARTICLE SIX - FUNDING . . . . . . . . . . . . . . . . . . . . . . . . .  5

ARTICLE SEVEN - ADMINISTRATION  . . . . . . . . . . . . . . . . . . . .  5

ARTICLE EIGHT - AMENDMENT AND TERMINATION OF THE PLAN . . . . . . . . .  6

ARTICLE NINE - ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . .  6

ARTICLE TEN - WITHHOLDING . . . . . . . . . . . . . . . . . . . . . . .  7

ARTICLE ELEVEN - OTHER BENEFIT PLANS OF THE COMPANY   . . . . . . . . .  7

ARTICLE TWELVE - MISCELLANEOUS  . . . . . . . . . . . . . . . . . . . .  7

ARIZONA PUBLIC SERVICE COMPANY

SUPPLEMENTAL EXCESS BENEFIT RETIREMENT PLAN

ARTICLE ONE

PREAMBLE

ARIZONA PUBLIC SERVICE COMPANY, hereinafter referred to as the

"Company", has previously adopted the ARIZONA PUBLIC SERVICE COMPANY

EMPLOYEES' RETIREMENT PLAN, hereinafter referred to as the "Retirement

Plan". Subsequent to adoption of the Retirement Plan, the Company adopted

THE SAVINGS PLAN FOR EMPLOYEES OF ARIZONA PUBLIC SERVICE COMPANY,

hereinafter referred to as the "Savings Plan." The Retirement Plan and the

Savings Plan are subject to the benefit and contribution limitations of

Section 415 of the Internal Revenue Code, hereinafter referred to as the

"Code". By reason of the limitations of Section 415 of the Code, and

pursuant to the terms and provisions of the Retirement Plan and Savings

Plan, a Participant's benefits under the Retirement Plan may be reduced from

the benefits otherwise payable pursuant to the terms and provisions of the

Retirement Plan (operative in the absence of the benefit and contribution

limitations of Section 415). The Employee Retirement Income Security Act of

1974, hereinafter referred to as the "Act", permits establishment of an

"excess benefit plan" for the purpose of paying retirement benefits to

certain employees in excess of the benefits permitted to be paid under the

Retirement Plan by reason of Section 415 of the Code. Accordingly, the

Company hereby adopts the ARIZONA PUBLIC SERVICE COMPANY SUPPLEMENTAL EXCESS

BENEFIT RETIREMENT PLAN, hereinafter referred to as the "Plan", effective

January 1, 1982.

ARTICLE TWO

CONSTRUCTION

Terms capitalized in this Plan shall have the meaning given in

Article Two of the Retirement Plan, governing definitions and construction,

except where such terms are otherwise defined in this Plan. If any

provision of this Plan is determined for any reason to be invalid or

unenforceable, the remaining provisions shall continue in full force and

effect. All of the provisions of this Plan shall be construed and enforced

according to the laws of the State of Arizona, and shall be administered

according to the laws of such state, except as otherwise required by the

Act, the Code or other applicable federal law. It is the intention of the

Company that the Plan, as adopted by the Company, shall constitute an

"excess benefit plan", as defined in Section (3)(36) of the Act. Benefits

under this Plan shall be paid from the Company's general assets, and not

from any trust fund or other segregated fund. This Plan shall be construed

in a manner consistent with the Company's intention.

ARTICLE THREE

ELIGIBILITY AND PARTICIPATION

The Executive Committee of the Board of Directors of the Company

shall designate for participation in this Plan Employees of the Company who

are Participants in the Retirement Plan. Designation of participants in

this Plan may be made individually or by group designation, as determined by

the Executive Committee. A participant in this Plan shall commence

participation in this Plan as of the first day of the Plan Year in which his

participation is determined. Such participation shall continue until the

Executive Committee informs the participant in writing that he is no longer

eligible for participation in this Plan.

ARTICLE FOUR

BENEFITS

Any participant in this Plan who is a Participant in the

Retirement Plan and who receives a benefit under the Retirement Plan, or

such Retirement Plan Participant's surviving spouse or annuitant in the

event of the Retirement Plan Participant's death, shall be entitled to a

monthly benefit payable hereunder in accordance with this ARTICLE FOUR and

with ARTICLE FIVE of this Plan, equal to the excess, if any, of (a) the

amount of such participant's or surviving spouse's or annuitant's monthly

benefit under the Retirement Plan computed under the provisions of the

Retirement Plan without regard to the limitations of Section 5.8 of the

Retirement Plan and Section 415 of the Code, over (b) the amount of such

participant's or surviving spouse's or annuitant's monthly benefit actually

payable under the Retirement Plan, computed under the provisions of the

Retirement Plan and subject to Section 5.8 of the Retirement Plan and

Section 415 of the Code.

Benefits payable under this Plan shall be payable to a Plan

participant or his spouse or other annuitant in the same manner and subject

to all the same options, conditions, privileges and restrictions as are

applicable to the benefits payable to the Plan participant, spouse or other

annuitant of a Participant under the Retirement Plan, as though such

benefits were payable as a part of the benefits being paid under the

Retirement Plan, without, however, taking into account the limitations of

Section 5.8 of the Retirement Plan and Section 415 of the Internal Revenue

Code. An election of mode of payment under the Retirement Plan shall be a

similar election under this Plan.

ARTICLE FIVE

PAYMENT OF BENEFITS

Benefits under this Plan shall become payable when a Plan

participant (or his spouse or annuitant) begins to receive payments under

the Retirement Plan, and shall be payable by the Company in the same manner

and at the same time as the Plan participant's (or his spouse's or

annuitant's) benefits under the Retirement Plan are paid, as though such

benefits were otherwise payable as a part of the benefits being paid under

the Retirement Plan.

ARTICLE SIX

FUNDING

Benefits under this Plan shall be payable from the general assets

of the Company, and shall not be segregated in a trust fund or otherwise

funded in any manner prior to the time of payment. No Plan participant

shall have any vested rights hereunder nor any right hereunder to any

specific assets of the Company.

ARTICLE SEVEN

ADMINISTRATION

This Plan will be administered by the Committee which administers

the Retirement Plan. With respect to administration of this Plan, the

provisions of Article Eleven of the Retirement Plan, governing claims,

Section 10.4 of the Retirement Plan, governing powers of the Committee, and

Section 12.2 of the Retirement Plan, regarding scope of responsibility,

shall be fully applicable.

ARTICLE EIGHT

AMENDMENT AND TERMINATION OF THE PLAN

This Plan may be amended in whole or in part, prospectively or

retroactively, by action of the Company's Board of Directors, and may be

terminated at any time by action of the Company's Board of Directors;

provided, however, that no such amendment or termination shall reduce any

amount payable hereunder to the extent such amount accrued prior to the date

of amendment or termination.

ARTICLE NINE

ASSIGNMENT

No Plan participant or beneficiary of a Plan participant shall

have any right to assign, pledge, hypothecate, anticipate or any way create

a lien on any amounts payable hereunder. No amounts payable hereunder shall

be subject to assignment or transfer or otherwise be alienable, either by

voluntary or involuntary act, or by operation of law, or subject to

attachment, execution, garnishment, sequestration or other seizure under any

legal, equitable or other process, or be liable in any way for the debts or

defaults of Plan participants and their beneficiaries.

ARTICLE TEN

WITHHOLDING

Any taxes required to be withheld from payments to Plan

participants hereunder shall be deducted and withheld by the Company.

ARTICLE ELEVEN

OTHER BENEFIT PLANS OF THE COMPANY

Nothing contained in this Plan shall prevent a Plan participant

prior to his death, or his spouse or other annuitant after his death, from

receiving, in addition to any payments provided for under this Plan, any

payments provided for under the Retirement Plan or under the Savings Plan,

or which would otherwise be payable or distributable to him, his surviving

spouse or annuitant under any plan or policy of the Company or otherwise.

Nothing in this Plan shall be construed as preventing the Company or any of

its subsidiaries from establishing any other or different plans providing

for current or deferred compensation for employees.

ARTICLE TWELVE

MISCELLANEOUS

Nothing contained in this Plan shall be construed as a contract of

employment between the Company and an employee, or as a right of any

employee to be continued in the employment of the Company, or as a

limitation of the right of the Company to discharge any of its employees,

with or without cause.

All of the provisions of this Plan shall be binding upon all

persons who shall be entitled to any benefit hereunder, their heirs and

personal representatives.

IN WITNESS WHEREOF, ARIZONA PUBLIC SERVICE COMPANY has signed and

sealed this instrument the 17th day of DECEMBER, 1982.

ARIZONA PUBLIC SERVICE
COMPANY

"Company"

Attest:

FIRST AMENDMENT TO

THE ARIZONA PUBLIC SERVICE COMPANY

SUPPLEMENTAL EXCESS BENEFIT RETIREMENT PLAN

ARIZONA PUBLIC SERVICE COMPANY, hereinafter referred to as the

"Company," has previously adopted the ARIZONA PUBLIC SERVICE COMPANY

EMPLOYEES' RETIREMENT PLAN, hereinafter referred to as the "Retirement

Plan." Subsequent to adoption of the Retirement Plan, the Company adopted

THE SAVINGS PLAN FOR EMPLOYEES OF ARIZONA PUBLIC SERVICE COMPANY,

hereinafter referred to as the "Savings Plan." The Company previously

adopted the ARIZONA PUBLIC SERVICE COMPANY SUPPLEMENTAL EXCESS BENEFIT

RETIREMENT PLAN, hereinafter referred to as the "Plan," effective January 1,

1982. By this First Amendment, the Company intends to amend the Plan to

include bonuses in pensionable compensation under the Plan.

1. This First Amendment to the Plan shall be effective January 1,

1986. Any provision of the Plan not amended by this First Amendment to the

Plan shall be considered to remain in full force and effect.

2. This First Amendment shall affect the benefits under this Plan for

employees becoming entitled to benefits under this Plan on and after January

1, 1986. The benefits of any employees for whom benefits have commenced

under this Plan prior to such date shall be determined in accordance with

the terms and provisions of the Plan in effect before this First Amendment.

3. Article Four of the plan is hereby amended and restated in its

entirety to provide as follows:

"ARTICLE FOUR

BENEFITS

Any participant in this Plan who is a participant in the Retirement

Plan and who receives a benefit under the Retirement Plan, or such

Retirement Plan Participant's surviving spouse or annuitant in the event of

the Retirement Plan Participant's death, shall be entitled to a monthly

benefit payable hereunder in accordance with this ARTICLE FOUR and with

ARTICLE FIVE of this Plan, equal to the excess, if any, of (a) the amount of

such Participant's or surviving spouse's or annuitant's monthly benefit

under the Retirement Plan (1) computed under the provisions of the

Retirement Plan without regard to the limitations of Section 415 of the Code

and the corresponding provisions of the Retirement Plan (as of January 1,

1986, set forth in Section 5.10 of the Retirement Plan) and (2) computed as

though bonuses and incentive payments payable to salaried Employees are

taken into account under the Retirement Plan in determining Average Monthly

Compensation and Compensation and are not excluded from consideration in

such determination, over (b) the amount of such Participant's or surviving

spouse's or annuitant's monthly benefit actually payable under the

Retirement Plan, computed under the provisions of the Retirement Plan and

subject to Section 415 of the Code and Section 5.10 of the Retirement Plan.

Benefits payable under this Plan shall be payable to a Plan participant

or his spouse or other annuitant in the same manner and subject to all the

same options, conditions, privileges and restrictions as are applicable to

the benefits payable to the Plan participant, spouse or other annuitant of a

Participant under the Retirement Plan, as though such benefits were payable

as a part of the benefits being paid under the Retirement Plan; provided

that such payment shall be separate from payment under the Retirement Plan

and may be paid on a different day of the month than the day on which

Retirement Plan benefit payments are made. An election of mode of payment

under the Retirement Plan shall be a similar election under this Plan."

4. Except as amended by this First Amendment, the Company hereby

ratifies the Plan in its entirety.

IN WITNESS WHEREOF, ARIZONA PUBLIC SERVICE COMPANY has signed and

sealed this instrument the 20th day of September, 1986.

ARIZONA PUBLIC SERVICE COMPANY

ATTEST:

SECOND AMENDMENT TO
THE ARIZONA PUBLIC SERVICE COMPANY
SUPPLEMENTAL EXCESS BENEFIT RETIREMENT PLAN

Effective January 1, 1982, ARIZONA PUBLIC SERVICE COMPANY (the

"Company") adopted the ARIZONA PUBLIC SERVICE COMPANY SUPPLEMENTAL EXCESS

BENEFIT RETIREMENT PLAN (the "Plan"). The Plan was thereafter amended on

September 30, 1986. By this instrument, the Company intends to amend the

Plan to provide eligible employees with the benefits attributable to

compensation in excess of $200,000.00, which may not be taken into account

for purposes of the qualified pension and profit sharing plans maintained by

the Company as a result of recent amendments to the Internal Revenue Code of

1986, as amended.

1. This amendment shall amend only those provisions set forth herein,

and those provisions not amended hereby shall remain in full force and

effect.

2. Article Four of the Plan is hereby amended and restated in its

entirety to provide as follows:

ARTICLE FOUR

BENEFITS

Subject to ARTICLE SIX, any participant in the Plan who is a Participant in the Retirement Plan and who receives a benefit under the Retirement Plan, or such participant's surviving spouse or annuitant in the event of the participant's death, shall be entitled to a monthly benefit payable hereunder in accordance with this ARTICLE FOUR and with ARTICLE FIVE of the Plan, equal to the excess, if any, of (a) the amount of such participant's or surviving spouse's or annuitant's monthly benefit under the Retirement Plan computed (i) under the provisions of the Retirement Plan without regard to that plan's exclusion of bonuses or incentive payments payable to the participant or to the limitations on the amount of "Compensation" that may be taken into account under the Retirement Plan under Section 401(a)(17) of the Code and without regard to the provisions of Section 5.9 of the Retirement Plan and Section 415 of the Code, over (b) the amount of such participant's or surviving spouse's or annuitant's monthly benefit actually payable under the Retirement Plan, as determined under the provisions of the Retirement Plan, including the exclusion of bonuses and incentive payments payable to the participant and the limitations on the amount of "Compensation" that may be taken into account under the Retirement Plan under Code Section 401(a)(17) and the provisions of Section 5.9 of the Retirement Plan and Section 415 of the Code.

Benefits payable under the Plan shall be payable to a Plan participant or his spouse or other annuitant in the same manner and subject to all the same options, conditions, privileges and restrictions as are applicable to the benefits payable to the Plan participant, spouse or other annuitant of a Participant under the Retirement Plan, as though such benefits were payable as a part of the benefits being paid under the Retirement Plan, without, however, taking into account the Retirement Plan's exclusion of bonuses and incentive payments payable to the participant, the limitation on the "Compensation" that may be taken into account under the Retirement Plan under Code Section 401(a)(17) and the provisions of Section 5.9 of the Retirement Plan and Section 415 of the Code. An election of mode of payment under the Retirement Plan shall constitute an election of a similar mode of payment under this Plan.

3. This Amendment shall be effective as of January 1, 1989.

Except as amended hereby, the Company hereby ratifies the Plan as

adopted and thereafter amended.

Dated: July 24, 1990.

ARIZONA PUBLIC SERVICE COMPANY

THIRD AMENDMENT TO
THE ARIZONA PUBLIC SERVICE COMPANY
SUPPLEMENTAL EXCESS BENEFIT RETIREMENT PLAN

Effective January 1, 1982, ARIZONA PUBLIC SERVICE COMPANY (the

"Company") adopted the ARIZONA PUBLIC SERVICE COMPANY SUPPLEMENTAL EXCESS

BENEFIT RETIREMENT PLAN (the "Plan"). The Plan was thereafter amended on

September 30, 1986 and July 24, 1990. By this instrument, the Company

intends to amend the Plan to include deferred compensation as pension

earnings for purposes of calculating the participant's benefit under the

Plan and to clarify the inclusion of bonuses and incentive payments as

pension earnings.

1. This Amendment shall amend only those provisions set forth herein,

and those provisions not amended hereby shall remain in full force and

effect.

2. Article Four of the Plan is hereby amended and restated in its

entirety to provide as follows:

ARTICLE FOUR
BENEFITS

Subject to ARTICLE SIX, any participant in the Plan who is a participant in the Retirement Plan and who receives a benefit under the Retirement Plan, or such participant's surviving spouse or annuitant in the event of the participant's death, shall be entitled to a monthly benefit payable hereunder in accordance with this ARTICLE FOUR and with ARTICLE FIVE of the Plan, equal to the excess, if any, of (a) the amount of such participant's or surviving spouse's or annuitant's monthly benefit under the Retirement Plan computed under the provisions of the Retirement Plan but (i) including "Compensation" deferred by the participant under the Company's deferred compensation plan; (ii) subject to the limitations set forth below, including as "Compensation" cash payments made to the participant pursuant to bonus or incentive plans maintained by the Company for employees generally; and
(iii) including "Compensation" in excess of the amount allowed to be taken into account under Section 401(a)(17) of the Code and
(iv) without regard to the provisions of Section 5.9 of the Retirement Plan and Section 415 of the Code, over (b) the amount of such participant's or surviving spouse's or annuitant's monthly benefit actually payable under the Retirement Plan, as determined under the provisions of the Retirement Plan, including the exclusion of the participant's deferred compensation, the exclusion of bonus and incentive payments payable to the participant, the limitation on the amount of "Compensation" that may be taken into account under the Retirement Plan under Code
Section 401(a)(17) and the provisions of Section 5.9 of the Retirement Plan and Section 415 of the Code. For purposes of the foregoing determination, non-cash bonus or incentive payments, bonus or incentive payments which are not "year-end" bonus or incentive payments, and bonuses or incentive payments under individual agreements between the Company and a participant shall be disregarded. In addition, cash payments made under bonus or incentive plans maintained by the Company for employees generally shall be disregarded to the extent that such payments exceed the maximum amount that the Human Resources Committee of the Board, as successor hereunder to the Executive Committee, determines, in its discretion, from time to time, may be taken into account under the Plan as "Compensation." The Human Resources Committee may differentiate among various groups of employees in establishing the maximum bonus or incentive payments that may be taken into account under the Plan.

Benefits payable under the Plan shall be payable to a Plan participant or his spouse or other annuitant in the same manner and subject to all the same options, conditions, privileges and restrictions as are applicable to the benefits payable to the Plan participant, spouse or other annuitant of a Participant under the Retirement Plan, as though such benefits were payable as a part of the benefits being paid under the Retirement Plan. An election of mode of payment under the Retirement Plan shall constitute an election of a similar mode of payment under this Plan.

3. ARTICLE SEVEN is hereby amended in its entirety

to read as follows:

ARTICLE SEVEN
ADMINISTRATION

The Plan will be administered by the Administrative Committee that administers the Retirement Plan. With respect to administration of the Plan, except as otherwise provided in this ARTICLE SEVEN, the provisions of Article Eleven of the Retirement Plan governing claims, Section 10.4 of the Retirement Plan governing powers of the Administrative Committee, and Section 12.2 of the Retirement Plan regarding scope of responsibility, shall be fully applicable. Notwithstanding any provision to the contrary herein, the Human Resources Committee shall have the sole and absolute discretion to determine whether a bonus or incentive payment made to a participant constitutes "Compensation" for purposes of ARTICLE FOUR of the Plan.

4. This Amendment shall be effective as of January 1, 1992.

Except as amended hereby, the Company hereby ratifies the Plan as

adopted and thereafter amended.

DATED: February 13, 1992.

ARIZONA PUBLIC SERVICE COMPANY

EXHIBIT 10.9a

Under the Company's 1994 Key Employees Variable Pay Plan, the President of the Company, with the approval of the Human Resources Committee of the Board of Directors, annually designates employees to participate in the program, establishes their participation level and establishes certain financial and operational goals for the Company which must be satisfied in order for variable pay awards to be made. The impact, if any, of each employee's performance on his or her variable pay award is determined by the President of the Company, with the approval of the Human Resources Committee. Subject to final approval by the Human Resources Committee of the Board of Directors, the President of the Company also determines at year-end the degree to which those goals have been satisfied and the amount of variable pay to be awarded to participating employees, if any.

EXHIBIT 10.10a

Under the Company's 1994 Officers Variable Pay Plan, the President of the Company, with the approval of the Human Resources Committee of the Board of Directors, annually designates the officers who will participate in the program, establishes their participation level, and establishes certain financial and operational goals for the Company which must be satisfied in order for variable pay awards to be made. The impact, if any, of each officer's performance on his or her variable pay award is determined by the President of the Company, with the approval of the Human Resources Committee. Subject to the final approval by the Human Resources Committee of the Board of Directors, the President also determines at year-end the degree to which those goals have been satisfied and the amount of variable pay to be awarded to participating officers, if any.