Pinnacle West Capital ( PNW) posted a drop in first-quarter earnings, citing decreased contributions from power marketing and an increase in costs. The company earned $25.3 million, or 28 cents a share, in the quarter ended March 31, compared with $53.8 million, or 63 cents a share, in the year-ago quarter. Results from continuing operations were 22 cents a share. Analysts were expecting 44 cents a share. Increased costs during the quarter resulted from placing three new electricity-generating units into service in 2002, the company said. Also hurting results were higher costs related to scheduled power-plant overhauls; the effects of milder weather; higher costs for pension and other postretirement benefits; and a retail-electricity price decrease. "We continue to monitor the uncertainties in the western wholesale power markets and their potential impact on our results," said company Chairman Bill Post. Revenue was $604 million, up from last year's $500 million. Shares of the Phoenix-based company were down 2% at $32.09 Friday afternoon.