Forward Looking Statements This presentation contains forward-looking statements based on current expectations, including statements regarding our earnings guidance and financial outlook and goals. These forward-looking statements are often identified by words such as "estimate," "predict," "may," "believe," "plan," "expect," "require," "intend," "assume," "project," "anticipate," "goal," "seek," "strategy," "likely," "should," "will," "could," and similar words. Because actual results may differ materially ...

Financial Performance - Pinnacle West reported quarterly earnings of $1.58 per share, matching the Zacks Consensus Estimate, but down from $1.76 per share a year ago [1] - The company posted revenues of $1.36 billion for the quarter ended June 2025, exceeding the Zacks Consensus Estimate by 7.47% and up from $1.31 billion year-over-year [2] - Over the last four quarters, Pinnacle West has surpassed consensus EPS estimates two times and topped consensus revenue estimates four times [2] Stock Performance - Pinnacle West shares have increased approximately 8.9% since the beginning of the year, outperforming the S&P 500's gain of 7.1% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $2.80 on revenues of $1.66 billion, and for the current fiscal year, it is $4.53 on revenues of $5.06 billion [7] - The outlook for the Utility - Electric Power industry is positive, ranking in the top 35% of over 250 Zacks industries, suggesting potential for outperformance [8]

Forward-Looking Statements [Content of Forward-Looking Statements](index=4&type=section&id=Content%20of%20Forward-Looking%20Statements) This section outlines forward-looking statements, cautioning against undue reliance as actual results may differ due to economic, regulatory, and operational factors - Forward-looking statements are identified by words such as "estimate," "predict," "may," "believe," "plan," "expect," and similar terms, and readers are cautioned not to place undue reliance on them as actual results may differ materially[13](index=13&type=chunk) - Key factors that could cause future results to differ include uncertainties in the **economic environment** (**growth rates**, **inflation**, **capital markets**), conditions in Arizona (housing, business, regulatory), ability to manage **costs** and **capital expenditures**, **cybersecurity threats**, variations in **electricity demand**, **climate change effects**, **power plant performance**, **competition**, **regulatory** and judicial decisions, new legislation, **fuel** and water availability, **rate recovery**, **clean energy goals**, **nuclear facility risks**, new technologies, **cost of debt** and **equity**, **environmental concerns** (GHG), **volatile fuel costs**, **investment performance** of trusts, **liquidity** of wholesale power markets, **insurance shortfalls**, new accounting requirements, and **dividend restrictions**[13](index=13&type=chunk)[15](index=15&type=chunk) PART I — FINANCIAL INFORMATION [ITEM 1. FINANCIAL STATEMENTS](index=6&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents unaudited condensed consolidated financial statements for Pinnacle West and APS, along with notes detailing accounting policies, revenue, debt, regulatory matters, and other financial disclosures [Pinnacle West Condensed Consolidated Statements of Income](index=7&type=section&id=Pinnacle%20West%20Condensed%20Consolidated%20Statements%20of%20Income) Pinnacle West's consolidated net income attributable to common shareholders decreased for both the three and six months ended June 30, 2025, compared to the prior-year periods, primarily driven by higher operating expenses and interest, partially offset by increased operating revenues Pinnacle West Condensed Consolidated Statements of Income | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | Change (YoY) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (YoY) | | :------------------------------------- | :------------------------------------------ | :------------------------------------------ | :------------- | :------------------------------------------ | :------------------------------------------ | :------------- | | Operating Revenues | $1,358,751 | $1,308,994 | +$49,757 | $2,391,031 | $2,260,706 | +$130,325 | | Total Operating Expenses | $1,051,199 | $995,247 | +$55,952 | $2,026,257 | $1,880,167 | +$146,090 | | Operating Income | $307,552 | $313,747 | -$6,195 | $364,774 | $380,539 | -$15,765 | | Net Income Attributable to Common Shareholders | $192,564 | $203,805 | -$11,241 | $187,920 | $220,667 | -$32,747 | | Basic EPS | $1.61 | $1.79 | -$0.18 | $1.57 | $1.94 | -$0.37 | | Diluted EPS | $1.58 | $1.76 | -$0.18 | $1.54 | $1.92 | -$0.38 | [Pinnacle West Condensed Consolidated Statements of Comprehensive Income](index=8&type=section&id=Pinnacle%20West%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Pinnacle West's comprehensive income attributable to common shareholders decreased for the three months ended June 30, 2025, but showed a slight increase for the six months ended June 30, 2025, primarily influenced by changes in net income and other comprehensive income/loss components like derivative instruments and pension activities Pinnacle West Condensed Consolidated Statements of Comprehensive Income | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | Change (YoY) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (YoY) | | :------------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------- | :------------------------------------------ | :------------------------------------------ | :------------- | | Net Income | $196,870 | $208,111 | -$11,241 | $196,532 | $229,279 | -$32,747 | | Total other comprehensive income (loss) | -$347 | -$712 | +$365 | $501 | -$150 | +$651 | | Comprehensive Income Attributable to Common Shareholders | $192,217 | $203,093 | -$10,876 | $188,421 | $220,517 | -$32,096 | [Pinnacle West Condensed Consolidated Balance Sheets](index=9&type=section&id=Pinnacle%20West%20Condensed%20Consolidated%20Balance%20Sheets) Pinnacle West's total assets and liabilities significantly increased from December 2024 to June 2025, driven by growth in property, plant, equipment, and deferred debits Pinnacle West Condensed Consolidated Balance Sheets | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change | | :----------------------------------- | :--------------------------- | :--------------------------- | :------- | | Total Current Assets | $1,787,908 | $1,689,404 | +$98,504 | | Total Investments and Other Assets | $1,936,012 | $1,812,277 | +$123,735 | | Total Property, Plant and Equipment | $20,062,005 | $19,197,899 | +$864,106 | | Total Deferred Debits | $5,449,256 | $3,403,180 | +$2,046,076 | | **TOTAL ASSETS** | **$29,235,181** | **$26,102,760** | **+$3,132,421** | | Total Current Liabilities | $3,427,242 | $2,843,797 | +$583,445 | | Long-Term Debt Less Current Maturities | $8,507,002 | $8,058,648 | +$448,354 | | Total Deferred Credits and Other | $10,472,997 | $8,342,837 | +$2,130,160 | | Total Equity | $6,827,940 | $6,857,478 | -$29,538 | | **TOTAL LIABILITIES AND EQUITY** | **$29,235,181** | **$26,102,760** | **+$3,132,421** | [Pinnacle West Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Pinnacle%20West%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Pinnacle West experienced a net increase in cash and cash equivalents for the six months ended June 30, 2025, primarily driven by increased cash provided by operating and financing activities, despite a significant increase in cash used for investing activities Pinnacle West Condensed Consolidated Statements of Cash Flows | Cash Flow Activity | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change | | :----------------------------------- | :------------------------------------------ | :------------------------------------------ | :------- | | Net cash provided by operating activities | $663,326 | $537,138 | +$126,188 | | Net cash used for investing activities | -$1,253,332 | -$887,114 | -$366,218 | | Net cash provided by financing activities | $605,009 | $349,028 | +$255,981 | | Net increase (decrease) in cash and cash equivalents | $15,003 | -$948 | +$15,951 | | Cash and cash equivalents at end of period | $18,841 | $4,007 | +$14,834 | [Pinnacle West Condensed Consolidated Statements of Changes in Equity](index=12&type=section&id=Pinnacle%20West%20Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity) Pinnacle West's total equity slightly decreased from December 31, 2024, to June 30, 2025, primarily due to dividends on common stock and capital activities by noncontrolling interests, partially offset by net income and other comprehensive income Pinnacle West Condensed Consolidated Statements of Changes in Equity | Metric | Balance, December 31, 2024 (in thousands) | Balance, June 30, 2025 (in thousands) | Change | | :----------------------------------- | :---------------------------------------- | :------------------------------------ | :------- | | Common Stock Amount | $3,121,617 | $3,119,404 | -$2,213 | | Retained Earnings | $3,666,959 | $3,641,148 | -$25,811 | | Accumulated Other Comprehensive Loss | -$30,942 | -$30,441 | +$501 | | Total Shareholders' Equity | $6,754,311 | $6,726,788 | -$27,523 | | Noncontrolling Interests | $103,167 | $101,152 | -$2,015 | | Total Equity | $6,857,478 | $6,827,940 | -$29,538 | - **Dividends on common stock** for the six months ended June 30, **2025**, totaled **$213,731 thousand**, contributing to the decrease in **retained earnings**[34](index=34&type=chunk) [APS Condensed Consolidated Statements of Income](index=14&type=section&id=APS%20Condensed%20Consolidated%20Statements%20of%20Income) APS's consolidated net income attributable to its common shareholder decreased for both the three and six months ended June 30, 2025, compared to the prior-year periods, primarily due to higher operating expenses, partially offset by increased operating revenues APS Condensed Consolidated Statements of Income | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | Change (YoY) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (YoY) | | :------------------------------------- | :------------------------------------------ | :------------------------------------------ | :------------- | :------------------------------------------ | :------------------------------------------ | :------------- | | Operating Revenues | $1,358,751 | $1,308,994 | +$49,757 | $2,391,031 | $2,260,706 | +$130,325 | | Total Operating Expenses | $1,049,779 | $995,649 | +$54,130 | $2,021,344 | $1,876,477 | +$144,867 | | Operating Income | $308,972 | $313,345 | -$4,373 | $369,687 | $384,229 | -$14,542 | | Net Income Attributable to Common Shareholder | $204,098 | $211,801 | -$7,703 | $204,377 | $226,918 | -$22,541 | [APS Condensed Consolidated Statements of Comprehensive Income](index=15&type=section&id=APS%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) APS's comprehensive income attributable to its common shareholder decreased for both the three and six months ended June 30, 2025, compared to the prior-year periods, primarily due to changes in net income and other comprehensive income/loss related to pension and other postretirement benefits APS Condensed Consolidated Statements of Comprehensive Income | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | Change (YoY) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (YoY) | | :------------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------- | :------------------------------------------ | :------------------------------------------ | :------------- | | Net Income | $208,404 | $216,107 | -$7,703 | $212,989 | $235,530 | -$22,541 | | Total other comprehensive income (loss) | -$136 | -$307 | +$171 | $270 | -$150 | +$420 | | Comprehensive Income Attributable to Common Shareholder | $203,962 | $211,494 | -$7,532 | $204,647 | $227,101 | -$22,454 | [APS Condensed Consolidated Balance Sheets](index=16&type=section&id=APS%20Condensed%20Consolidated%20Balance%20Sheets) APS's total assets and liabilities significantly increased from December 2024 to June 2025, primarily due to growth in property, plant, equipment, and deferred debits APS Condensed Consolidated Balance Sheets | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change | | :----------------------------------- | :--------------------------- | :--------------------------- | :------- | | Total Property, Plant and Equipment | $20,061,850 | $19,197,743 | +$864,107 | | Total Investments and Other Assets | $1,808,348 | $1,712,654 | +$95,694 | | Total Current Assets | $1,771,671 | $1,682,961 | +$88,710 | | Total Deferred Debits | $5,440,763 | $3,394,877 | +$2,045,886 | | **TOTAL ASSETS** | **$29,082,632** | **$25,988,235** | **+$3,094,397** | | Total Capitalization | $15,858,403 | $15,567,210 | +$291,193 | | Total Current Liabilities | $2,801,775 | $2,120,958 | +$680,817 | | Total Deferred Credits and Other | $10,422,454 | $8,300,067 | +$2,122,387 | | **TOTAL LIABILITIES AND EQUITY** | **$29,082,632** | **$25,988,235** | **+$3,094,397** | [APS Condensed Consolidated Statements of Cash Flows](index=18&type=section&id=APS%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) APS experienced a net increase in cash and cash equivalents for the six months ended June 30, 2025, primarily due to increased cash provided by operating and financing activities, despite a significant increase in cash used for investing activities APS Condensed Consolidated Statements of Cash Flows | Cash Flow Activity | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change | | :----------------------------------- | :------------------------------------------ | :------------------------------------------ | :------- | | Net cash provided by operating activities | $697,603 | $573,430 | +$124,173 | | Net cash used for investing activities | -$1,247,910 | -$932,478 | -$315,432 | | Net cash provided by financing activities | $560,972 | $358,364 | +$202,608 | | Net increase (decrease) in cash and cash equivalents | $10,665 | -$684 | +$11,349 | | Cash and cash equivalents at end of period | $14,480 | $3,865 | +$10,615 | [APS Condensed Consolidated Statements of Changes in Equity](index=19&type=section&id=APS%20Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity) APS's total equity increased from December 31, 2024, to June 30, 2025, primarily due to an equity infusion from Pinnacle West and net income, partially offset by dividends paid on common stock and capital activities by noncontrolling interests APS Condensed Consolidated Statements of Changes in Equity | Metric | Balance, December 31, 2024 (in thousands) | Balance, June 30, 2025 (in thousands) | Change | | :----------------------------------- | :---------------------------------------- | :------------------------------------ | :------- | | Common Stock Amount | $178,162 | $178,162 | $0 | | Additional Paid-In Capital | $4,116,696 | $4,416,696 | +$300,000 | | Retained Earnings | $3,992,423 | $3,983,202 | -$9,221 | | Accumulated Other Comprehensive Loss | -$14,116 | -$13,846 | +$270 | | Total Shareholder Equity | $8,273,165 | $8,564,214 | +$291,049 | | Noncontrolling Interests | $103,167 | $101,152 | -$2,015 | | Total Equity | $8,376,332 | $8,665,366 | +$289,034 | - Pinnacle West provided an **equity infusion** of **$300,000 thousand** into APS during the six months ended June 30, **2025**[52](index=52&type=chunk) [Note 1. Consolidation and Nature of Operations](index=21&type=section&id=Note%201.%20Consolidation%20and%20Nature%20of%20Operations) This note details Pinnacle West's consolidation principles for its subsidiaries and VIEs, mentions the BCE sale, and highlights seasonal financial results - Pinnacle West consolidates its subsidiaries (APS, El Dorado, PNW Power) and a Captive Insurance Cell VIE. APS consolidates Palo Verde Generating Station VIEs[54](index=54&type=chunk) - The sale of Bright Canyon Energy Corporation (BCE), a former subsidiary, was completed on **January 12, 2024**[55](index=55&type=chunk) Supplemental Cash Flow Information (Six Months Ended June 30) | Cash Flow Item | Pinnacle West 2025 (in thousands) | Pinnacle West 2024 (in thousands) | APS 2025 (in thousands) | APS 2024 (in thousands) | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :---------------------- | :---------------------- | | Cash paid for Income taxes, net | $7,743 | $25,019 | $10,369 | $9,729 | | Cash paid for Interest, net | $189,041 | $177,323 | $158,073 | $152,535 | | Accrued capital expenditures | $312,762 | $214,182 | $312,762 | $214,182 | | Dividends accrued but not yet paid | $106,869 | $99,936 | $106,900 | $100,000 | | BCE Sale non-cash consideration | — | $36,510 | — | — | [Note 2. Business Segments](index=22&type=section&id=Note%202.%20Business%20Segments) Pinnacle West's sole reportable business segment is regulated electricity, operated through APS, with the CEO using net income for profitability and resource allocation - Pinnacle West's only reportable **business segment** is the **regulated electricity segment**, conducted through Arizona Public Service Company (APS)[60](index=60&type=chunk) Pinnacle West Consolidated Net Income (Loss) Reconciliation (Three Months Ended June 30) | Item | Regulated Electricity Segment 2025 (in millions) | Other 2025 (in millions) | Pinnacle West Consolidated 2025 (in millions) | Regulated Electricity Segment 2024 (in millions) | Other 2024 (in millions) | Pinnacle West Consolidated 2024 (in millions) | | :------------------------------------------ | :--------------------------------------- | :----------------------- | :------------------------------------------ | :--------------------------------------- | :----------------------- | :------------------------------------------ | | Operating revenues | $1,359 | $— | $1,359 | $1,309 | $— | $1,309 | | Net Income (Loss) | $204 | -$11 | $193 | $212 | -$8 | $204 | Pinnacle West Consolidated Net Income (Loss) Reconciliation (Six Months Ended June 30) | Item | Regulated Electricity Segment 2025 (in millions) | Other 2025 (in millions) | Pinnacle West Consolidated 2025 (in millions) | Regulated Electricity Segment 2024 (in millions) | Other 2024 (in millions) | Pinnacle West Consolidated 2024 (in millions) | | :------------------------------------------ | :--------------------------------------- | :----------------------- | :------------------------------------------ | :--------------------------------------- | :----------------------- | :------------------------------------------ | | Operating revenues | $2,391 | $— | $2,391 | $2,261 | $— | $2,261 | | Net Income (Loss) | $204 | -$16 | $188 | $227 | -$6 | $221 | Pinnacle West Consolidated Total Assets Reconciliation (as of) | Item | Regulated Electricity Segment June 30, 2025 (in millions) | Other June 30, 2025 (in millions) | Pinnacle West Consolidated June 30, 2025 (in millions) | Regulated Electricity Segment Dec 31, 2024 (in millions) | Other Dec 31, 2024 (in millions) | Pinnacle West Consolidated Dec 31, 2024 (in millions) | | :----------- | :---------------------------------------- | :------------------------ | :--------------------------------------- | :--------------------------------------- | :------------------------ | :--------------------------------------- | | Total Assets | $29,083 | $152 | $29,235 | $25,988 | $115 | $26,103 | [Note 3. New Accounting Standards](index=24&type=section&id=Note%203.%20New%20Accounting%20Standards) This note outlines new accounting standards pending adoption, including ASU 2023-09, 2024-03, and 2025-03, which will impact disclosures but not financial results - ASU **2023-09**, '**Income Taxes**: Improvements to **Income Tax Disclosures**,' will be adopted on **December 31, 2025**, expanding **income tax disclosures** without impacting **financial statement results**[64](index=64&type=chunk) - ASU **2024-03**, '**Income Statement**: **Expense Disaggregation Disclosures**,' effective **December 31, 2027**, will require specific disclosures for **cost** and **expense categories**, but will not impact **financial statement results**[65](index=65&type=chunk) - ASU **2025-03**, '**Business Combinations** and **Consolidation**: Determining the Accounting Acquirer in the Acquisition of a **Variable Interest Entity**,' effective **January 1, 2027**, revises guidance for identifying the accounting acquirer in VIE **business combinations**, with no material impact expected on **financial statements**[66](index=66&type=chunk)[67](index=67&type=chunk) [Note 4. Revenue](index=25&type=section&id=Note%204.%20Revenue) Pinnacle West's consolidated operating revenues increased due to higher non-residential retail electric service and wholesale energy sales, with revenue recognized from contracts and alternative programs Pinnacle West Consolidated Revenues by Source (in thousands) | Revenue Source | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | | :-------------------------- | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Residential Electric Service | $651,666 | $658,158 | -$6,492 | $1,100,589 | $1,090,850 | +$9,739 | | Non-Residential Electric Service | $654,038 | $609,871 | +$44,167 | $1,178,895 | $1,071,354 | +$107,541 | | Wholesale Energy Sales | $17,893 | $10,261 | +$7,632 | $42,717 | $37,125 | +$5,592 | | Transmission Services for Others | $31,996 | $27,541 | +$4,455 | $57,543 | $55,253 | +$2,290 | | Other Sources | $3,158 | $3,163 | -$5 | $11,287 | $6,124 | +$5,163 | | **Total Operating Revenues** | **$1,358,751** | **$1,308,994** | **+$49,757** | **$2,391,031** | **$2,260,706** | **+$130,325** | - **Revenues from contracts** with customers for Pinnacle West were **$1,345 million** for the three months ended June 30, **2025** (up from **$1,303 million** in **2024**) and **$2,364 million** for the six months ended June 30, **2025** (up from **$2,246 million** in **2024**)[72](index=72&type=chunk) Pinnacle West Allowance for Doubtful Accounts Rollforward (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Balance at beginning of period | $24,849 | $22,433 | | Bad debt expense | $11,287 | $35,799 | | Actual write-offs | -$18,687 | -$33,383 | | Balance at end of period | $17,449 | $24,849 | [Note 5. Debt and Liquidity Matters](index=26&type=section&id=Note%205.%20Debt%20and%20Liquidity%20Matters) Pinnacle West and APS maintain liquidity through credit facilities, with Pinnacle West issuing new notes and APS receiving an equity infusion to manage debt - Pinnacle West has a **$200 million revolving credit facility** (matures April **2029**) and a **$200 million 364-day term loan facility** (matures December **2025**)[77](index=77&type=chunk) - As of June 30, **2025**, Pinnacle West had **$80 million** in outstanding **commercial paper borrowings**[78](index=78&type=chunk) - On May 15, **2025**, Pinnacle West issued **$400 million** of **4.90% senior unsecured notes** due **2028** and **$400 million** of **5.15% senior unsecured notes** due **2030**, using proceeds to repay **$500 million** of **1.3% senior unsecured notes** maturing June 15, **2025**, and for general corporate purposes[80](index=80&type=chunk) - APS has a **$1.25 billion revolving credit facility** (matures April **2029**) and a **$400 million 364-day term loan agreement** (matures December **2025**)[81](index=81&type=chunk) - As of June 30, **2025**, APS had **$725 million** in outstanding **commercial paper borrowings**[82](index=82&type=chunk) - On May 15, **2025**, Pinnacle West contributed **$300 million** in **equity** to APS, which APS used to repay **$300 million** of **3.15% senior notes**[83](index=83&type=chunk) Estimated Fair Value of Long-Term Debt (in thousands) | Entity | Carrying Amount (June 30, 2025) | Fair Value (June 30, 2025) | Carrying Amount (December 31, 2024) | Fair Value (December 31, 2024) | | :------------- | :------------------------------ | :------------------------- | :---------------------------------- | :------------------------------- | | Pinnacle West | $1,663,965 | $1,733,083 | $1,367,770 | $1,393,744 | | APS | $7,193,037 | $6,321,922 | $7,490,878 | $6,525,248 | | **Total** | **$8,857,002** | **$8,055,005** | **$8,858,648** | **$7,918,992** | [Note 6. Regulatory Matters](index=28&type=section&id=Note%206.%20Regulatory%20Matters) This note details significant regulatory activities impacting APS, including rate cases, cost recovery mechanisms, net metering, power plant closures, and regulatory assets and liabilities - On **June 13, 2025**, APS filed the **2025 Rate Case** with the ACC, seeking a **net base rate increase** of **$579.5 million** (**13.99% net increase**) to address a **$662.4 million base revenue deficiency**, with new rates requested to be effective in the second half of **2026**[86](index=86&type=chunk) 2025 Rate Case Proposed Capital Structure and Costs of Capital | Capital Component | Capital Structure (%) | Cost of Capital (%) | | :---------------- | :-------------------- | :------------------ | | Long-term debt | 47.65 | 4.26 | | Common stock equity | 52.35 | 10.70 | | Weighted-average cost of capital | | 7.63 | - The **2022 Rate Case**, approved on **February 22, 2024**, resulted in an approximately **$491.7 million increase** in annual **base revenue**, a **9.55% return on equity**, and new rates effective **March 8, 2024**[91](index=91&type=chunk)[92](index=92&type=chunk) - APS ceased operations at Cholla Power Plant in March **2025** and formally retired Units **1** and **3** on April **30, 2025**, with approximately **$81 million** of remaining net-book value associated with these assets[143](index=143&type=chunk) - APS is seeking **recovery** of ongoing **environmental remediation** and **closure costs** in the **2025 Rate Case**[143](index=143&type=chunk) Regulatory Assets (in thousands) | Regulatory Asset | Amortization Through | June 30, 2025 | December 31, 2024 | | :------------------------------------------------ | :------------------- | :------------ | :---------------- | | Pension | (a) | $733,970 | $750,976 | | Income taxes — allowance for funds used during construction equity | 2054 | $196,476 | $192,936 | | Deferred fuel and purchased power | 2026 | $182,412 | $287,597 | | Ocotillo deferral | 2034 | $107,353 | $114,775 | | Lease incentives | (g) | $92,379 | $70,541 | | SCR deferral | 2038 | $80,154 | $83,123 | | Retired power plant costs | 2033 | $62,607 | $68,380 | | FERC Transmission true up | 2027 | $52,720 | $35,159 | | Total regulatory assets | | $1,661,230 | $1,810,458 | | Less: current regulatory assets | | $303,848 | $420,969 | | Total non-current regulatory assets | | $1,357,382 | $1,389,489 | Regulatory Liabilities (in thousands) | Regulatory Liability | Amortization Through | June 30, 2025 | December 31, 2024 | | :------------------------------------------------ | :------------------- | :------------ | :---------------- | | Excess deferred income taxes - ACC — Tax Cuts and Jobs Act | 2046 | $876,142 | $888,896 | | Excess deferred income taxes - FERC — Tax Cuts and Jobs Act | 2058 | $205,166 | $207,400 | | Asset retirement obligations and removal costs | (d) | $357,327 | $358,403 | | Other postretirement benefits | (c) | $228,956 | $238,113 | | Four Corners coal reclamation | 2038 | $97,617 | $77,532 | | Renewable energy standard | 2026 | $76,796 | $68,523 | | Income taxes — deferred investment tax credit | 2056 | $65,449 | $66,327 | | Income taxes — change in rates | 2053 | $58,246 | $59,133 | | Demand side management | 2025 | $30,983 | $23,927 | | Deferred fuel and purchased power — mark-to-market | 2028 | $27,058 | — | | Total regulatory liabilities | | $2,094,737 | $2,062,233 | | Less: current regulatory liabilities | | $182,458 | $206,955 | | Total non-current regulatory liabilities | | $1,912,279 | $1,855,278 | [Note 7. Retirement Plans and Other Postretirement Benefits](index=41&type=section&id=Note%207.%20Retirement%20Plans%20and%20Other%20Postretirement%20Benefits) Pinnacle West sponsors defined benefit pension and postretirement plans, with net periodic benefit costs decreasing due to full amortization of prior-service credits Net Periodic Benefit Costs (Credits) (in thousands) | Plan Type | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | | :-------------------------- | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Pension Plans | $16,110 | $10,947 | +$5,163 | $33,606 | $22,775 | +$10,831 | | Other Benefits Plans | -$7,978 | -$15,423 | +$7,445 | -$17,200 | -$30,587 | +$13,387 | | **Total Net Periodic Benefit Costs (Credits)** | **$8,132** | **-$4,476** | **+$12,608** | **$16,406** | **-$7,812** | **+$24,218** | - Prior-service credits for other **postretirement benefits** became fully amortized as of **January 31, 2025**, impacting the **net periodic benefit costs**[152](index=152&type=chunk) - No voluntary **cash contributions** are expected for the **pension plan** in **2025**, **2026**, or **2027**, and no **contributions** have been made to the other **postretirement benefit plan** year-to-date in **2025**, with none expected through **2027**[153](index=153&type=chunk) [Note 8. Variable Interest Entities](index=42&type=section&id=Note%208.%20Variable%20Interest%20Entities) Pinnacle West consolidates a Captive Insurance Cell VIE, while APS consolidates Palo Verde Sale Leaseback VIEs and plans to purchase two leased interests - Pinnacle West consolidates a **Captive Insurance Cell VIE**, which provides terrorism, **excess liability** (including wildfire), **excess property**, and **excess employment practice liability coverage**[154](index=154&type=chunk) - Consolidation increased Pinnacle West's **net income** by **$1.7 million** for the three months and **$2.4 million** for the six months ended June 30, **2025**[156](index=156&type=chunk)[158](index=158&type=chunk) - APS consolidates Palo Verde Sale Leaseback VIEs, which are treated as **operating leases** for **regulatory purposes**[159](index=159&type=chunk) - Consolidation increased APS's **net income** by **$4 million** for the three months and **$9 million** for the six months ended June 30, **2025**, attributable to **noncontrolling interests**[161](index=161&type=chunk)[164](index=164&type=chunk) - In June **2025**, APS executed **purchase agreements** for two of the three Palo Verde VIE **lease arrangements** for approximately **$199 million**, contingent on FERC approval, which would terminate those **lease agreements** and increase APS's **ownership** of Unit **2** to approximately **24%**[165](index=165&type=chunk) APS Condensed Consolidated Balance Sheet Amounts Relating to VIEs (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------------------ | :------------ | :---------------- | | Palo Verde sale leaseback property, plant and equipment, net | $80,622 | $82,556 | | Equity — Noncontrolling interests | $101,152 | $103,167 | [Note 9. Derivative Accounting](index=45&type=section&id=Note%209.%20Derivative%20Accounting) Pinnacle West uses derivatives for commodity and interest rate risk, with APS deferring energy derivative gains/losses for rate treatment, and the company managing counterparty credit risk - Pinnacle West uses **derivative financial instruments** (futures, forwards, options, swaps) to manage exposure to **commodity price** and **transportation costs** of electricity, natural gas, emissions allowances, and **interest rates**[166](index=166&type=chunk) - APS defers **100%** of unrealized **gains and losses** on **energy derivatives** and realized **gains and losses** (to the extent they vary from the Base Fuel Rate) for future **rate treatment** under the Power Supply Adjustor (PSA) mechanism[169](index=169&type=chunk) Outstanding Gross Notional Volume of Energy Derivatives (June 30, 2025) | Commodity | Unit of Measure | June 30, 2025 | December 31, 2024 | | :---------- | :-------------- | :------------ | :---------------- | | Power | GWh | 1,555 | 1,051 | | Gas | Billion cubic feet | 286 | 235 | Gains and Losses from Energy Derivative Instruments Not Designated as Accounting Hedges (in thousands) | Financial Statement Location | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Fuel and purchased power | -$75,934 | -$2,752 | $40,770 | -$58,694 | Fair Value of APS's Risk Management Activities (June 30, 2025, in thousands) | Item | Gross Recognized Derivatives (a) | Amounts Offset (b) | Net Recognized Derivatives | Other (c) | Reported on Balance Sheets | | :---------------------- | :----------------------------- | :----------------- | :------------------------- | :-------- | :------------------------- | | Current assets | $22,143 | -$11,245 | $10,898 | $5 | $10,903 | | Investments and other assets | $34,203 | $— | $34,203 | $— | $34,203 | | Current liabilities | -$31,741 | $11,245 | -$20,496 | -$5,196 | -$25,692 | | Deferred credits and other | -$7,144 | $— | -$7,144 | $— | -$7,144 | Energy Derivative Instruments with Credit-Risk-Related Contingent Features (June 30, 2025, in thousands) | Metric | Amount | | :---------------------------------------------------------- | :----- | | Aggregate fair value of derivative instruments in a net liability position | $37,251 | | Additional collateral if credit-risk related contingent features were fully triggered | $980 | [Note 10. Commitments and Contingencies](index=48&type=section&id=Note%2010.%20Commitments%20and%20Contingencies) This note details various commitments and contingencies, including nuclear insurance, legal proceedings, fuel commitments, environmental matters, and financial assurances - Palo Verde participants are insured against **public liability** for **nuclear incidents** up to approximately **$16.3 billion** per occurrence, with **$500 million** from commercial insurance and the remainder from an industry-wide retrospective premium program[185](index=185&type=chunk) - APS, along with **25** other U.S. nuclear power plant operators, is named in a **class action lawsuit** alleging **antitrust violations** related to **compensation information exchange** and **suppression**[188](index=188&type=chunk) - In July **2025**, APS executed a long-term gas transportation precedent agreement, with **purchase commitments** estimated at **$7.3 billion** over a **25-year service period**, expected to begin in **2029**[190](index=190&type=chunk) - EPA's final regulations on **Coal Combustion Residuals** (CCRs) could materially increase APS's **management costs**, with initial CCRMU site surveys due by **February 2026** and final site investigation reports by **February 2027**[201](index=201&type=chunk) - EPA's latest final regulations on **power plant carbon dioxide emissions** (April **25, 2024**) impose **performance standards** for new and existing power plants, potentially leading to a material increase in APS's **costs** for frequently operated gas-fired plants[205](index=205&type=chunk)[209](index=209&type=chunk) - However, EPA has proposed repealing these GHG regulations, with comments due by **August 7, 2025**[210](index=210&type=chunk)[213](index=213&type=chunk) - As of June 30, **2025**, standby **letters of credit** totaled approximately **$29.2 million** and **surety bonds** totaled approximately **$23.4 million**, expiring through **2026**[221](index=221&type=chunk) [Note 11. Other Income and Other Expense](index=58&type=section&id=Note%2011.%20Other%20Income%20and%20Other%20Expense) Pinnacle West's consolidated other income increased for three months but decreased for six months, while other expense decreased, with APS showing similar trends Pinnacle West Consolidated Other Income and Other Expense (in thousands) | Item | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | | :-------------------------- | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Other income: | | | | | | | | Interest income | $4,260 | $5,396 | -$1,136 | $10,256 | $12,956 | -$2,700 | | Investment gain — net | $6,504 | $— | +$6,504 | $17,488 | $— | +$17,488 | | Gain on sale of BCE | $— | $— | $— | $— | $22,988 | -$22,988 | | Miscellaneous | $1,340 | $489 | +$851 | $1,821 | $548 | +$1,273 | | **Total other income** | **$12,104** | **$5,885** | **+$6,220** | **$29,565** | **$36,492** | **-$6,927** | | Other expense: | | | | | | | | Non-operating costs | -$3,245 | -$2,038 | -$1,207 | -$5,474 | -$8,188 | +$2,714 | | Investment losses — net | $— | -$497 | +$497 | $— | -$1,274 | +$1,274 | | Miscellaneous | -$1,014 | -$497 | -$517 | -$1,355 | -$1,137 | -$218 | | **Total other expense** | **-$4,259** | **-$3,032** | **-$1,227** | **-$6,829** | **-$10,599** | **+$3,770** | APS Other Income and Other Expense (in thousands) | Item | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | | :-------------------------- | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Other income: | | | | | | | | Interest income | $3,674 | $4,602 | -$928 | $9,281 | $11,398 | -$2,117 | | Miscellaneous | $— | -$11 | +$11 | $115 | $48 | +$67 | | **Total other income** | **$3,674** | **$4,591** | **-$917** | **$9,396** | **$11,446** | **-$2,050** | | Other expense: | | | | | | | | Non-operating costs | -$2,876 | -$2,397 | -$479 | -$4,868 | -$4,652 | -$216 | | Miscellaneous | -$1,014 | -$497 | -$517 | -$1,355 | -$1,136 | -$219 | | **Total other expense** | **-$3,890** | **-$2,894** | **-$996** | **-$6,223** | **-$5,788** | **-$435** | [Note 12. Common Stock Equity and Earnings Per Share](index=59&type=section&id=Note%2012.%20Common%20Stock%20Equity%20and%20Earnings%20Per%20Share) Pinnacle West utilizes an ATM equity program and forward sale agreements, issued Convertible Senior Notes, and details EPS calculations and authorized common stock changes - Pinnacle West has an ATM Program allowing the sale of up to **$900 million** of **common stock**, with approximately **$800 million** available as of June 30, **2025**, including outstanding **forward sale agreements**[229](index=229&type=chunk) Pinnacle West ATM Program and February 2024 Forward Sale Agreements (June 30, 2025, in thousands, except per share amounts) | Agreement Type | Number of Shares | Forward Sales Price Per Share | Aggregate Value | | :-------------------------------- | :--------------- | :---------------------------- | :-------------- | | November 2024 ATM Forward Sale | 552,833 | $89.73 | $49,606 | | March 2025 ATM Forward Sale | 544,959 | $90.83 | $49,499 | | February 2024 Forward Sale (Initial) | 11,240,601 | $64.51 | $725,131 | | February 2024 Forward Sale (Settled) | 5,377,115 | $64.17 | $345,049 (Net Proceeds) | - In June **2024**, Pinnacle West issued **$525 million** of **4.75% Convertible Senior Notes** due **2027**, with an initial **conversion rate** of **10.8338 shares** per **$1,000 principal amount** (approx. **$92.30 per share**)[235](index=235&type=chunk)[238](index=238&type=chunk) - As of June 30, **2025**, **conversion conditions** were not met, and the **notes** were classified as **long-term debt**[240](index=240&type=chunk) Pinnacle West Basic and Diluted EPS (in thousands, except per share amounts) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income attributable to common shareholders | $192,564 | $203,805 | $187,920 | $220,667 | | Weighted average common shares outstanding – basic | 119,517 | 113,695 | 119,555 | 113,658 | | Weighted average common shares outstanding – diluted | 121,865 | 115,803 | 121,813 | 115,015 | | Basic EPS | $1.61 | $1.79 | $1.57 | $1.94 | | Diluted EPS | $1.58 | $1.76 | $1.54 | $1.92 | - On May **21, 2025**, Pinnacle West shareholders approved an amendment to increase authorized **common stock shares** from **150,000,000** to **300,000,000**[244](index=244&type=chunk) [Note 13. Fair Value Measurements](index=62&type=section&id=Note%2013.%20Fair%20Value%20Measurements) This note describes the fair value hierarchy for assets and liabilities, including derivatives and trust investments, providing detailed measurements and Level 3 input discussions - **Fair value measurements** are classified into a three-level hierarchy: **Level 1** (unadjusted quoted prices in active markets), **Level 2** (significant observable inputs other than Level 1), and **Level 3** (significant unobservable inputs)[245](index=245&type=chunk)[246](index=246&type=chunk)[247](index=247&type=chunk) Fair Value of Assets and Liabilities (June 30, 2025, in thousands) | Item | Level 1 | Level 2 | Level 3 | Other (a) | Total | | :------------------------------------------------ | :------ | :------ | :------ | :-------- | :------ | | ASSETS | | | | | | | Risk management activities — derivative instruments: Commodity contracts | $— | $52,106 | $4,240 | -$11,240 | $45,106 | | Nuclear decommissioning trusts: Equity securities | $17,914 | $— | $— | $3,676 | $21,590 | | Nuclear decommissioning trusts: U.S. commingled equity funds | $— | $— | $— | $450,053 | $450,053 | | Nuclear decommissioning trusts: U.S. Treasury debt | $347,666 | $— | $— | $— | $347,666 | | Nuclear decommissioning trusts: Corporate debt | $— | $231,394 | $— | $— | $231,394 | | Other special use funds: Equity securities | $64,322 | $— | $— | $2,844 | $67,166 | | Other special use funds: U.S. Treasury debt | $356,166 | $— | $— | $— | $356,166 | | **Total assets** | **$786,068** | **$570,655** | **$4,240** | **$445,333** | **$1,806,296** | | LIABILITIES | | | | | | | Risk management activities — derivative instruments: Commodity contracts | $— | -$15,853 | -$23,032 | $6,049 | -$32,836 | Significant Unobservable Inputs for Level 3 Risk Management Derivative Instruments (June 30, 2025) | Commodity Contracts | Assets (thousands) | Liabilities (thousands) | Valuation Technique | Significant Unobservable Input | Range | Weighted Average | | :-------------------- | :----------------- | :---------------------- | :------------------ | :----------------------------- | :---- | :--------------- | | Electricity Forward Contracts | $3,994 | $22,954 | Discounted cash flows | Electricity forward price (per MWh) | $24.00 - $164.62 | $92.66 | | Natural Gas Forward Contracts | $246 | $78 | Discounted cash flows | Natural gas forward price (per MMBtu) | $0.00 - $0.07 | $0.04 | [Note 14. Investments in Nuclear Decommissioning Trusts and Other Special Use Funds](index=68&type=section&id=Note%2014.%20Investments%20in%20Nuclear%20Decommissioning%20Trusts%20and%20Other%20Special%20Use%20Funds) This note details investments in nuclear decommissioning and other special use trusts, recorded at fair value and restricted for future costs, with deferred gains/losses - **Investments** in **nuclear decommissioning trusts** fund future Palo Verde **decommissioning costs**, while other **special use funds** (coal reclamation, active union employee medical, Captive) fund related specific **costs**[275](index=275&type=chunk)[276](index=276&type=chunk)[278](index=278&type=chunk)[279](index=279&type=chunk) Fair Value of Nuclear Decommissioning Trusts and Other Special Use Funds (June 30, 2025, in thousands) | Investment Type | Nuclear Decommissioning Trusts | Other Special Use Funds | Total Fair Value | Total Unrealized Gains | Total Unrealized Losses | | :------------------------ | :----------------------------- | :---------------------- | :--------------- | :--------------------- | :---------------------- | | Equity securities | $467,967 | $64,322 | $532,289 | $385,464 | $— | | Available for sale-fixed income securities | $866,215 | $356,166 | $1,222,381 | $15,242 | -$19,502 | | Other | $3,676 | $2,844 | $6,520 | $— | $— | | **Total** | **$1,337,858** | **$423,332** | **$1,761,190** | **$400,706** | **-$19,502** | Proceeds from Sale of Securities (Six Months Ended June 30, in thousands) | Year | Nuclear Decommissioning Trusts | Other Special Use Funds | Total Proceeds | | :--- | :----------------------------- | :---------------------- | :------------- | | 2025 | $758,914 | $160,730 | $919,644 | | 2024 | $648,453 | $123,922 | $772,375 | Fair Value of Fixed Income Securities by Contractual Maturities (June 30, 2025, in thousands) | Maturity | Nuclear Decommissioning Trusts | Coal Reclamation Escrow Account | Active Union Employee Medical Account | Total | | :--------------- | :----------------------------- | :------------------------------ | :------------------------------------ | :------ | | Less than one year | $19,613 | $83,392 | $39,865 | $142,870 | | 1 year – 5 years | $278,017 | $58,611 | $158,159 | $494,787 | | 5 years – 10 years | $171,593 | $— | $16,139 | $187,732 | | Greater than 10 years | $396,992 | $— | $— | $396,992 | | **Total** | **$866,215** | **$142,003** | **$214,163** | **$1,222,381** | [Note 15. Changes in Accumulated Other Comprehensive Loss](index=71&type=section&id=Note%2015.%20Changes%20in%20Accumulated%20Other%20Comprehensive%20Loss) Pinnacle West's consolidated accumulated other comprehensive loss slightly decreased due to reclassification adjustments for pension and postretirement benefits, with APS showing a similar trend Pinnacle West Consolidated Accumulated Other Comprehensive Loss (in thousands) | Component | Balance March 31, 2025 | Other comprehensive (loss) before reclassifications | Amounts reclassified from accumulated other comprehensive loss (a) | Balance June 30, 2025 | | :-------------------------- | :--------------------- | :------------------------------------------------ | :--------------------------------------------------------------- | :-------------------- | | Pension and Other Postretirement Benefits | -$31,163 | -$503 | $450 | -$31,216 | | Derivative Instruments | $1,069 | -$294 | $— | $775 | | **Total** | **-$30,094** | **-$797** | **$450** | **-$30,441** | APS Accumulated Other Comprehensive Loss (in thousands) | Component | Balance March 31, 2025 | Other comprehensive (loss) before reclassifications | Amounts reclassified from accumulated other comprehensive loss (a) | Balance June 30, 2025 | | :-------------------------------- | :--------------------- | :------------------------------------------------ | :--------------------------------------------------------------- | :-------------------- | | Pension and Other Postretirement Benefits | -$13,710 | -$504 | $368 | -$13,846 | [Note 16. Leases](index=73&type=section&id=Note%2016.%20Leases) APS leases various assets, including PPAs and energy storage agreements, with lease costs in operating expenses and significant future lease commitments - APS leases land, buildings, vehicles, equipment, and has PPAs and **energy storage agreements** that qualify as **lease arrangements**, with terms expiring from **2025** through **2073**[293](index=293&type=chunk) Total Lease Cost (in thousands) | Lease Cost Type | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | | :------------------------------------------ | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Operating Lease Cost - PPAs and Energy Storage PPA Lease Contracts | $76,947 | $39,391 | +$37,556 | $89,494 | $40,328 | +$49,166 | | Operating Lease Cost - Land, Property, and Other Equipment | $5,286 | $5,025 | +$261 | $10,623 | $9,798 | +$825 | | Total Operating Lease Cost | $82,233 | $44,416 | +$37,817 | $100,117 | $50,126 | +$49,991 | | Variable Lease Cost | $32,838 | $47,783 | -$14,945 | $54,208 | $69,347 | -$15,139 | | Short-term Lease Cost | $528 | $6,445 | -$5,917 | $1,120 | $9,245 | -$8,125 | | **Total Lease Cost** | **$115,599** | **$98,644** | **+$16,955** | **$155,445** | **$128,718** | **+$26,727** | Maturity of Operating Lease Liabilities (June 30, 2025, in thousands) | Year | PPAs and Energy Storage PPA Lease Contracts | Land, Property and Equipment Leases | Total Lease Commitments | | :-------------------------- | :---------------------------------------- | :---------------------------------- | :---------------------- | | 2025 (remaining six months) | $216,654 | $9,838 | $226,492 | | 2026 | $355,402 | $17,062 | $372,464 | | 2027 | $381,465 | $14,481 | $395,946 | | 2028 | $385,407 | $11,789 | $397,196 | | 2029 | $389,492 | $9,656 | $399,148 | | 2030 | $393,621 | $5,663 | $399,284 | | Thereafter | $3,462,329 | $58,191 | $3,520,520 | | Total lease commitments | $5,584,370 | $126,680 | $5,711,050 | | Less imputed interest | $1,927,257 | $41,271 | $1,968,528 | | **Total lease liabilities** | **$3,657,113** | **$85,409** | **$3,742,522** | - APS has e

Exhibit 99.1 FOR IMMEDIATE RELEASE August 6, 2025 Media Contact: Analyst Contact: Alan Bunnell (602) 250-3376 Amanda Ho (602) 250-3334 Website: pinnaclewest.com PINNACLE WEST REPORTS LOWER 2025 SECOND-QUARTER FINANCIAL RESULTS COMPARED TO A YEAR AGO Prioritizing Reliability and Affordability PHOENIX – Pinnacle West Capital Corp. (NYSE: PNW) today reported a consolidated net income attributable to common shareholders of $192.6 million, or $1.58 per diluted share of common stock, for the quarter ended June 30 ...

Core Viewpoint - Wall Street anticipates a year-over-year decline in earnings for Pinnacle West due to lower revenues, with a focus on how actual results compare to estimates impacting stock price [1][2] Earnings Expectations - Pinnacle West is expected to report quarterly earnings of $1.58 per share, reflecting a year-over-year decrease of 10.2% [3] - Revenues are projected to be $1.26 billion, down 3.4% from the same quarter last year [3] Estimate Revisions - The consensus EPS estimate has been revised 3.32% higher in the last 30 days, indicating a reassessment by analysts [4] - The Most Accurate Estimate for Pinnacle West matches the Zacks Consensus Estimate, resulting in an Earnings ESP of 0% [12] Earnings Surprise Prediction - A positive Earnings ESP is a strong predictor of an earnings beat, especially when combined with a Zacks Rank of 1, 2, or 3 [10] - Pinnacle West currently holds a Zacks Rank of 3, making it challenging to predict an earnings beat [12] Historical Performance - In the last reported quarter, Pinnacle West was expected to post earnings of $0.05 per share but instead reported a loss of -$0.04, resulting in a surprise of -180.00% [13] - Over the past four quarters, the company has beaten consensus EPS estimates three times [14] Industry Comparison - Duke Energy, another player in the electric power industry, is expected to report earnings of $1.25 per share, indicating a year-over-year increase of 5.9% [18] - Duke Energy's revenues are expected to be $7.4 billion, up 3.2% from the previous year, but it has an Earnings ESP of -3.66% and a Zacks Rank of 4 [19][20]

Core Viewpoint - Pinnacle West Capital Corporation (PNW) is expected to report second-quarter 2025 results on August 6, following a significant negative earnings surprise of 180% in the previous quarter [1] Group 1: Factors Impacting Q2 Performance - PNW's Q2 earnings are anticipated to benefit from retail customer growth and increased retail electricity sales, driven by higher electricity demand from new large manufacturing facilities and data centers [2] - The bottom line is expected to improve due to lower core operations and maintenance expenses, with Arizona Public Service's Energy Management System enhancing the integration of renewable and energy storage assets [3] - However, higher depreciation, amortization, and property taxes are likely to offset some of the positive impacts on PNW's performance [4] Group 2: Q2 Expectations - The Zacks Consensus Estimate for earnings is $1.58 per share, reflecting a year-over-year decrease of 10.2% [5] - The revenue estimate stands at $1.27 billion, indicating a year-over-year decline of 3% [5] - Total electric sales are estimated at 9,757.73 gigawatt-hours, down 1.7% from the previous year's quarter [5] Group 3: Earnings Prediction - The current model does not predict an earnings beat for PNW, with an Earnings ESP of 0.00% and a Zacks Rank of 3 (Hold) [6][7] - Other industry players like IDACORP and Xcel Energy are expected to report earnings beats, with IDACORP having an Earnings ESP of +1.56% and a Zacks Rank of 2 [8][10]

As a percentage of NRG's recent stock price of $159.87, this dividend works out to approximately 0.28%, so look for shares of NRG Energy Inc to trade 0.28% lower — all else being equal — when NRG shares open for trading on 8/1/25. Similarly, investors should look for EMA to open 1.56% lower in price and for PNW to open 1.00% lower, all else being equal. Below are dividend history charts for NRG, EMA, and PNW, showing historical dividends prior to the most recent ones declared. NRG Energy: NRG tickertech On ...

Core Insights - The article compares Portland General Electric (POR) and Pinnacle West (PNW) to determine which stock offers better value for investors [1] Valuation Metrics - Portland General Electric has a Zacks Rank of 2 (Buy), indicating a stronger earnings outlook compared to Pinnacle West, which has a Zacks Rank of 4 (Sell) [3] - POR has a forward P/E ratio of 12.44, while PNW has a forward P/E of 19.66, suggesting that POR is more undervalued [5] - The PEG ratio for POR is 3.72, compared to PNW's PEG ratio of 9.27, indicating that POR's expected earnings growth is more favorable [5] - POR's P/B ratio is 1.14, while PNW's P/B ratio is 1.55, further supporting the notion that POR is a better value option [6] - Based on these metrics, POR has earned a Value grade of B, while PNW has a Value grade of C [6] Earnings Outlook - The improving earnings outlook for POR enhances its attractiveness in the Zacks Rank model, positioning it as the superior value option at this time [7]

Group 1 - Pinnacle West (PNW) and Avista Corporation (AVA) are both regulated electric utilities operating in the Western U.S. but have different investment profiles [1] - Pinnacle West is based in Arizona and is characterized by growth potential [1] Group 2 - Joseph Jones, a professor with over fifteen years of market study experience, focuses on portfolio construction from a dividend growth investor's perspective [1]

Core Viewpoint - Investors in the Utility - Electric Power sector should consider Edison International (EIX) and Pinnacle West (PNW) for potential value investment opportunities [1] Group 1: Zacks Rank and Earnings Estimates - Edison International has a Zacks Rank of 2 (Buy), while Pinnacle West has a Zacks Rank of 3 (Hold), indicating a stronger earnings outlook for EIX [3] - The Zacks Rank system emphasizes companies with positive earnings estimate revisions, suggesting that EIX is likely experiencing an improvement in its earnings outlook compared to PNW [3] Group 2: Valuation Metrics - EIX has a forward P/E ratio of 9.12, significantly lower than PNW's forward P/E of 20.71, indicating that EIX may be undervalued [5] - The PEG ratio for EIX is 1.30, while PNW's PEG ratio is 9.77, further suggesting that EIX is more attractive in terms of expected earnings growth relative to its price [5] - EIX's P/B ratio is 1.23 compared to PNW's P/B of 1.63, reinforcing the notion that EIX is undervalued relative to its book value [6] - These metrics contribute to EIX's Value grade of A and PNW's Value grade of C, indicating a stronger value proposition for EIX [6]