Ninth Supplemental Indenture

Exhibit 4.1

ARIZONA PUBLIC SERVICE COMPANY

TO

JPMORGAN CHASE BANK, N.A.

Trustee

Ninth Supplemental Indenture

Dated as of August 15, 2005

To

Indenture

Dated as of January 15, 1998

5.50% Notes due September 1, 2035

     NINTH SUPPLEMENTAL INDENTURE, dated as of August 15, 2005, between Arizona Public Service Company, a corporation duly organized and existing under the laws of the State of Arizona (herein called the “Company”), having its principal office at 400 North Fifth Street, Phoenix, Arizona 85004, and JPMorgan Chase Bank, N.A. (formerly known as The Chase Manhattan Bank), a New York banking corporation, as Trustee (herein called the “Trustee”) under the Indenture dated as of January 15, 1998 between the Company and the Trustee (the “Indenture”).

RECITALS OF THE COMPANY

     The Company has executed and delivered the Indenture to the Trustee to provide for the issuance from time to time of its unsecured debentures, notes or other evidences of indebtedness (the “Securities”), said Securities to be issued in one or more series as provided in the Indenture.

     Pursuant to the terms of the Indenture, the Company desires to provide for the establishment of a new series of its Securities to be known as its 5.50% Notes due 2035 (herein called the “Notes Due 2035”), the form and substance of the Notes Due 2035 and the terms, provisions, and conditions thereof to be set forth as provided in the Indenture and this Ninth Supplemental Indenture.

     All things necessary to make this Ninth Supplemental Indenture a valid agreement of the Company, and to make the Notes Due 2035, when executed by the Company and authenticated and delivered by the Trustee, the valid obligations of the Company, have been done.

     NOW, THEREFORE, THIS NINTH SUPPLEMENTAL INDENTURE WITNESSETH:

     For and in consideration of the premises and the purchase of the Notes Due 2035 by the Holders thereof, and for the purpose of setting forth, as provided in the Indenture, the form and substance of the Notes Due 2035 and the terms, provisions, and conditions thereof, it is mutually agreed, for the equal and proportionate benefit of all Holders of the Notes Due 2035, as follows:

ARTICLE ONE

GENERAL TERMS AND CONDITIONS OF
THE NOTES DUE 2035

     SECTION 101. There shall be and is hereby authorized a series of Securities designated the “5.50% Notes due 2035” initially limited in aggregate principal amount to $250,000,000, which amount shall be as set forth in any Company Order for the authentication and delivery of Notes Due 2035. The Notes Due 2035 shall mature and the principal shall be due and payable together with all accrued and unpaid interest thereon on September 1, 2035, and shall be issued in the form of registered Notes without coupons.

     The foregoing principal amount of the Notes Due 2035 may be increased from time to time as permitted by Section 301 of the Indenture. All Notes Due 2035 need not be issued at the same time and such series may be reopened at any time, without notice to, or the consent of, the then existing Holders, for issuances of additional Notes Due 2035. Any such additional Notes Due 2035 will be equal in rank and have the same respective maturity, payment terms, redemption features, and other terms, except for the payment of interest accruing prior to the issue date of the further Notes Due 2035 and for the first payment of interest following the issue date of the further Notes Due 2035, as those initially issued.

     SECTION 102. The Notes Due 2035 shall be issued in certificated form, except that the Notes Due 2035 shall be issued initially as a Global Security to and registered in the name of Cede & Co., as nominee of The Depository Trust Company, as Depositary therefor. Any Notes Due 2035 to be issued or transferred to, or to be held by, Cede & Co. (or any successor thereof) for such purpose shall bear the depositary legend in substantially the form set forth at the top of the form of Note Due 2035 in Article Two hereof (in lieu of that set forth in Section 204 of the Indenture), unless otherwise agreed by the Company, such agreement to be confirmed in writing to the Trustee. Such Global Security may be exchanged in whole or in part for Notes Due 2035, registered, and any transfer of such Global Security in whole or in part may be registered, in the name(s) of Persons other than such Depositary or a nominee thereof only under the circumstances set forth in Clause (2) of the last paragraph of Section 305 of the Indenture, or such other circumstances in addition to or in lieu of those set forth in Clause (2) of the last paragraph of Section 305 of the Indenture as to which the Company shall agree, such agreement to be confirmed in writing to the Trustee. Principal of, and premium, if any, and interest on the Notes Due 2035 will be payable, the transfer of Notes Due 2035 will be registrable and Notes Due 2035 will be exchangeable for Notes Due 2035, bearing identical terms and provisions, at the office or agency of the Company in the Borough of Manhattan, The City and State of New York; provided , however , that payment of interest may be made at the option of the Company by check mailed to the Holder at such address as shall appear in the Security Register.

     SECTION 103. Each Note Due 2035 will bear interest at the rate of 5.50%, from August 22, 2005 or from the most recent Interest Payment Date (as hereinafter defined) to which interest has been paid or duly provided for until the principal thereof is paid or made available for payment, payable on March 1 and September 1 of each year (each, an “Interest Payment Date”), commencing on March 1, 2006, to the person in whose name such Note Due 2035 or any Predecessor Security is registered, at the close of business on February 15 and August 15, as the case may be, whether or not a Business Day, immediately preceding the Interest Payment Date. Any such interest installment not punctually paid or duly provided for shall forthwith cease to be payable to the Holders on such regular record date, and may be paid to the Person in whose name the Note Due 2035 (or one or more Predecessor Securities) is registered at the close of business on a special record date to be fixed by the Trustee for the payment of such defaulted interest, notice whereof shall be given to the Holders of the Notes Due 2035, not less than 10 days prior to such special record date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes Due 2035 may be listed, and upon such notice as may be required by such exchange, all as more fully described in the Indenture.

     The amount of interest payable for any period will be computed on the basis of a 360-day year of twelve 30-day months. Interest will accrue from August 22, 2005 to, but not including, the relevant payment date. In the event that any date on which interest is payable on the Notes Due 2035 is not a Business Day, then payment of interest payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay), in each case with the same force and effect as if made on such date. A “Business Day” shall mean any day, except a Saturday, a Sunday or a legal holiday in the City of New York on which banking institutions are authorized or required by law, regulation or executive order to close.

     SECTION 104. The Company may redeem all or any portion of the Notes Due 2035, at its option, at any time or from time to time, upon notice as provided in the Indenture. The Redemption Price for any Notes Due 2035 to be redeemed on any Redemption Date will be equal to the greater of the following amounts:

               (a) 100% of the principal amount of the Notes Due 2035 being redeemed on the Redemption Date; or

               (b) the sum of the present values of the remaining scheduled payments of principal and interest on the Notes Due 2035 being redeemed on that Redemption Date (not including any portion of any payments of interest accrued to the Redemption Date) discounted to the Redemption Date on a semiannual basis at the Adjusted Treasury Rate plus 15 basis points, as determined by a Reference Treasury Dealer appointed by the Company for such purpose;

plus, in each case, accrued and unpaid interest thereon to the Redemption Date. The Redemption Price will be calculated on the basis of a 360-day year consisting of twelve 30-day months.

     For purposes of this Section 104, the following terms shall have the following meanings:

     “ Adjusted Treasury Rate ” means, with respect to any Redemption Date, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.

     “ Comparable Treasury Issue ” means the U.S. Treasury security selected by a Reference Treasury Dealer appointed by the Company for such purpose as having a maturity comparable to the remaining term of the Notes Due 2035 to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of such Notes Due 2035.

     “ Comparable Treasury Price ” means, with respect to any Redemption Date, (A) the average of the Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (B) if the Trustee obtains fewer than three such Reference Treasury Dealer Quotations, the average of all such quotations, or (C) if only one Reference Treasury Dealer Quotation is received, such quotation.

     “ Reference Treasury Dealer ” means (A) UBS Securities LLC and BNY Capital Markets, Inc. (or their respective affiliates which are Primary Treasury Dealers), and their respective successors; provided, however, that if any of the foregoing shall cease to be a primary U.S. Government securities dealer in the United States (a “Primary Treasury Dealer”), the Company will substitute therefor another Primary Treasury Dealer; and (B) any other Primary Treasury Dealer(s) selected by the Trustee after consultation with the Company.

     “ Reference Treasury Dealer Quotations ” means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. (New York City time) on the third Business Day preceding such Redemption Date.

     The Company shall give the Trustee written notice of the Redemption Price, promptly after the calculation thereof.

     The Trustee shall be under no duty to inquire into, may conclusively presume the correctness of, and shall be fully protected in acting upon the Company’s calculation of any Redemption Price.

     Notwithstanding Section 1104 of the Indenture, any notice of redemption given pursuant to said Section with respect to the foregoing redemption need not set forth the Redemption Price but only the manner of calculation thereof.

     SECTION 105. The Notes Due 2035 shall be defeasible pursuant to Section 1302 or 1303 of the Indenture.

ARTICLE TWO

FORM OF NOTES DUE 2035

     SECTION 201. The Notes Due 2035 and the Trustee’s certificate of authentication to be endorsed thereon are to be substantially in the following forms:

Form of Face of Security

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO ARIZONA PUBLIC SERVICE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

ARIZONA PUBLIC SERVICE COMPANY

5.50% Note due 2035

     Arizona Public Service Company, a corporation duly organized and existing under the laws of Arizona (herein called the “Company�