Financial Performance & Guidance - The company's 2022 EPS guidance is between $4.20 and $4.35[10] - Adjusted gross margin (operating revenues, net of fuel and purchased power expenses) is projected to be $2.59 – $2.61 billion[10] - Adjusted operating and maintenance expenses are expected to be $880 – $895 million[10] - Interest expense, net of allowance for borrowed and equity funds used during construction (AFUDC ~$64 million), is projected to be $213 – $215 million[10] Rate Case & Regulatory - A new rate case was filed on October 28, 2022, requesting rates to become effective December 1, 2023, seeking a total revenue increase of $460 million, which would result in a 13.6% customer net bill impact on day 1[19] - The rate case includes a request for $130 million in rate base growth and $140 million for 12 months post test year plant[19] - The company is appealing the prior rate case, with oral arguments set for November 30[45, 78] Growth & Investment - The company forecasts long-term EPS growth target of 5%-7%[14] - Retail customer growth is projected at 1.5%-2.5%[10, 13, 14] - Weather-normalized retail electricity sales volume is expected to be 2.0-3.0% higher compared to prior year, including a 0.5-1.5% contribution from new large manufacturing facilities and data centers[10] - The company plans a total capital investment of $4.7 billion from 2022-2024[25, 38] Clean Energy Transition - The company has contracted for nearly 1,600 MW of clean energy and storage to be in service for APS customers by the end of 2024[53, 56] - An All-Source RFP has been issued, seeking 1,000 – 1,500 MWs of resources, including up to 600 – 800 MWs of renewable resources to be in service from 2025 – 2027[53]

Pinnacle West Capital Corporation (NYSE:PNW) Q2 2022 Earnings Conference Call August 3, 2022 12:00 PM ET Company Participants Amanda Ho - Director-Investor Relations Jeff Guldner - Chairman & Chief Executive Officer Andrew Cooper - Chief Financial Officer Conference Call Participants Insoo Kim - Goldman Sachs Julien Dumoulin-Smith - Bank of America Nick Campanella - Credit Suisse David Peters - Wolfe Research Shar Pourreza - Guggenheim Partners Operator Good afternoon, ladies and gentlemen. Thank you for st ...

PINNACLE WEST farial fromling 1 POWERING GROWTH DELIVERING VALUE Second Quarter 2022 Results August 3, 2022 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," "str ...

[Part I — FINANCIAL INFORMATION](index=6&type=section&id=Part%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) [Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Pinnacle West and APS, including income, balance sheets, cash flows, and equity, with accompanying notes Pinnacle West - Condensed Consolidated Statements of Income (in thousands) | | Three Months Ended June 30, | Six Months Ended June 30, | | :--- | :--- | :--- | | | **2022** | **2021** | **2022** | **2021** | | **OPERATING REVENUES** | $1,061,669 | $1,000,249 | $1,845,200 | $1,696,724 | | **OPERATING INCOME** | $223,095 | $278,386 | $277,587 | $325,920 | | **NET INCOME** | $168,618 | $219,436 | $189,880 | $259,950 | | **NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS** | $164,312 | $215,697 | $181,268 | $251,338 | | **Diluted EPS** | $1.45 | $1.91 | $1.60 | $2.22 | [Combined Notes to Condensed Consolidated Financial Statements](index=21&type=section&id=Combined%20Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures supporting financial statements, covering accounting policies, revenue, debt, liquidity, regulatory matters, and fair value measurements [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=69&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition and results, covering strategic initiatives, financial drivers, regulatory developments, operating results, liquidity, and market risks [Overview](index=69&type=section&id=Overview) This section outlines Pinnacle West's operations as Arizona's largest electric utility, its clean energy strategy, and key regulatory proceedings - APS has established a three-part clean energy goal: - **2050 Goal:** Provide **100%** clean, carbon-free electricity[288](index=288&type=chunk) - **2030 Target:** Achieve a **65%** clean energy resource mix, with **45%** from renewables[289](index=289&type=chunk) - **2031 Goal:** End all use of coal-fired generation[290](index=290&type=chunk) - The Arizona Corporation Commission (ACC) approved the 2019 Rate Case, resulting in a total annual revenue decrease for APS of **$4.8 million**, effective December 1, 2021, with APS appealing certain aspects including a **$215.5 million** disallowance of Four Corners SCR project investments[91](index=91&type=chunk)[342](index=342&type=chunk) - APS projects annual customer growth of **1.5% to 2.5%** through 2024 and weather-normalized retail sales growth of **3.5% to 4.5%** through 2024, driven by population growth and new large manufacturing and data center customers[356](index=356&type=chunk)[359](index=359&type=chunk) [Results of Operations](index=84&type=section&id=Results%20of%20Operations) This section details the decrease in net income attributable to common shareholders for Q2 and H1 2022, primarily due to higher depreciation, lower revenue, and increased O&M costs Q2 2022 vs Q2 2021 Change in Net Income Attributable to Common Shareholders (in millions) | | **2022** | **2021** | **Net Change** | | :--- | :--- | :--- | :--- | | **Operating revenues less fuel and purchased power** | $708 | $726 | $(18) | | Operations and maintenance | $(244) | $(228) | $(16) | | Depreciation and amortization | $(186) | $(158) | $(28) | | Taxes other than income taxes | $(54) | $(60) | $6 | | Income taxes | $(27) | $(47) | $20 | | **Regulated electricity segment income** | **$166** | **$217** | **$(51)** | | **Net Income Attributable to Common Shareholders** | **$164** | **$216** | **$(52)** | Six Months 2022 vs 2021 Change in Net Income Attributable to Common Shareholders (in millions) | | **2022** | **2021** | **Net Change** | | :--- | :--- | :--- | :--- | | **Operating revenues less fuel and purchased power** | $1,225 | $1,222 | $3 | | Operations and maintenance | $(462) | $(458) | $(4) | | Depreciation and amortization | $(373) | $(317) | $(56) | | Taxes other than income taxes | $(112) | $(118) | $6 | | Income taxes | $(31) | $(42) | $11 | | **Regulated electricity segment income** | **$184** | **$253** | **$(69)** | | **Net Income Attributable to Common Shareholders** | **$181** | **$251** | **$(70)** | [Liquidity and Capital Resources](index=90&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains sufficient liquidity through operating cash flow, credit facilities, and external financing, with capital expenditures focused on clean energy and infrastructure - Net cash provided by operating activities increased by **$275 million** to **$588 million** for the six months ended June 30, 2022, compared to the same period in 2021[394](index=394&type=chunk)[396](index=396&type=chunk) Estimated Capital Expenditures (in millions) | Category | 2022 | 2023 | 2024 | | :--- | :--- | :--- | :--- | | **Generation** | | | | | Nuclear Generation | $110 | $120 | $110 | | Renewables and ESS | $230 | $210 | $450 | | Other Generation | $250 | $270 | $190 | | **Distribution** | $510 | $530 | $500 | | **Transmission** | $250 | $210 | $210 | | **Other** | $175 | $185 | $190 | | **Total APS** | **$1,525** | **$1,525** | **$1,650** | - Pinnacle West and APS are in compliance with their debt covenants, requiring a maximum debt-to-capitalization ratio of **65%**, with ratios of approximately **57%** for Pinnacle West and **50%** for APS as of June 30, 2022[411](index=411&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=97&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section refers to Item 2 (MD&A) for detailed disclosures on the company's exposure to market risks, including interest rate, commodity, and credit risks - The company is exposed to market risks from changes in interest rates, commodity prices (electricity and natural gas), and the value of investments in its nuclear decommissioning trusts and benefit plan assets[420](index=420&type=chunk)[421](index=421&type=chunk)[422](index=422&type=chunk) Hypothetical 10% Price Movement Impact on Risk Management Assets/Liabilities (in millions) | Commodity | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | | **Gain (Loss)** | **Gain (Loss)** | | | **Price Up 10%** | **Price Down 10%** | **Price Up 10%** | **Price Down 10%** | | Electricity | $7 | $(7) | $— | $— | | Natural gas | $60 | $(60) | $50 | $(50) | | **Total** | **$67** | **$(67)** | **$50** | **$(50)** | [Controls and Procedures](index=97&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2022, with no material changes to internal control over financial reporting - Both Pinnacle West's and APS's Chief Executive Officer and Chief Financial Officer concluded that the respective company's disclosure controls and procedures were effective as of June 30, 2022[430](index=430&type=chunk)[431](index=431&type=chunk) - There were no material changes in internal control over financial reporting during the fiscal quarter ended June 30, 2022[433](index=433&type=chunk) [Part II — OTHER INFORMATION](index=99&type=section&id=Part%20II%20%E2%80%94%20OTHER%20INFORMATION) [Legal Proceedings](index=99&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to other parts of the report for detailed information on legal proceedings, including regulatory and environmental matters - For details on legal proceedings, the report directs readers to Note 4 (ACC and FERC matters) and Note 8 (environmental, Superfund, and other disputes)[437](index=437&type=chunk)[438](index=438&type=chunk) [Risk Factors](index=99&type=section&id=Item%201A.%20Risk%20Factors) This section states no new risk factors are reported and directs readers to the 2021 Form 10-K and Q1 2022 Form 10-Q for comprehensive risk disclosures - The company advises that the risk factors discussed in its 2021 Form 10-K and Q1 2022 Form 10-Q should be carefully considered, as they could materially affect business, financial condition, and future results[439](index=439&type=chunk) [Other Information](index=99&type=section&id=Item%205.%20Other%20Information) No information was reported under this item - No information was reported under this item[440](index=440&type=chunk) [Exhibits](index=100&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications, XBRL data files, and incorporated corporate governance documents - The exhibits filed include CEO and CFO certifications (Exhibits 31.1-32.2) and XBRL interactive data files (Exhibit 101 series)[442](index=442&type=chunk)

PINNACLE WEST - farmial from - farming - farmilly 1 POWERING GROWTH DELIVERING VALUE First Quarter 2022 Results May 4, 2022 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," "goa ...

Pinnacle West Capital Corporation (NYSE:PNW) Q1 2022 Earnings Conference Call May 4, 2022 12:00 PM ET Company Participants Amanda Ho – Director-Investor Relations Jeff Guldner – Chairman and Chief Executive Officer Ted Geisler – Chief Financial Officer Jacob Tetlow – Executive Vice President, Operations Conference Call Participants Julien Dumoulin-Smith – Bank of America Nicholas Campanella – Credit Suisse Insoo Kim – Goldman Sachs Paul Patterson – Glenrock Associates David Peters – Wolfe Research Anthony C ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | Commission File Number | | Exact Name of Each Registrant as specified in its charter; State of Incorporation; Address; and Telephone Number | IRS Employer Identification No. | | --- | --- ...

PINACLE WEST 1 POWERING GROWTH DELIVERING VALUE Fourth Quarter & Full Year 2021 Results February 25, 2022 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," "strat ...

Pinnacle West Capital Corporation (NYSE:PNW) Q4 2021 Earnings Conference Call February 25, 2022 11:00 AM ET Company Participants Amanda Ho – Director-Investor Relations Jeff Guldner – Chairman and Chief Executive Officer Ted Geisler – Chief Financial Officer Conference Call Participants Shar Pourreza – Guggenheim Partners Insoo Kim – Goldman Sachs Paul Patterson – Glenrock Associates Anthony Crowdell – Mizuho Group David Peters – Wolfe Research Operator Good day, ladies and gentlemen, and welcome to the Pin ...

Part I [Business](index=7&type=section&id=Item%201.%20Business) Pinnacle West, through its subsidiary APS, is a regulated electric utility serving 1.3 million customers, focused on a clean energy transition to 100% carbon-free electricity by 2050 [Business of Arizona Public Service Company](index=7&type=section&id=Business%20of%20Arizona%20Public%20Service%20Company) APS is a regulated electric utility serving 1.3 million customers, committed to 100% carbon-free electricity by 2050, managing diverse generation assets and environmental challenges - APS is a vertically-integrated electric utility serving approximately **1.3 million customers** and owns or leases **6,323 MW** of regulated generation capacity[19](index=19&type=chunk)[22](index=22&type=chunk) APS 2021 Energy Sources for Native Load Customers | Energy Source | Percentage of Supply | | :--- | :--- | | Nuclear | 29% | | Gas/Oil | 26% | | Coal | 21% | | Renewables* | 13% | | Purchased Power | 11% | *Renewables include wind, solar, geothermal, biomass, and distributed generation - APS has established a 'Clean Energy Commitment' with three primary goals: - Achieve **100% clean, carbon-free electricity by 2050** - Reach a **65% clean energy mix by 2030**, with **45% from renewables** - End all use of coal-fired generation by **2031**[28](index=28&type=chunk)[33](index=33&type=chunk) - APS operates the Palo Verde Generating Station, the largest nuclear power plant in the U.S., and holds renewed operating licenses for its three units extending to **2045, 2046, and 2047**, respectively[33](index=33&type=chunk)[36](index=36&type=chunk) - The company plans to cease using coal at its remaining Cholla units by **2025** and at the Four Corners plant by **2031**. The Navajo Plant ceased operations in November **2019**[53](index=53&type=chunk)[58](index=58&type=chunk)[61](index=61&type=chunk) - APS is significantly expanding its energy storage capacity, with plans to install over **900 MW by 2025** through a combination of utility-owned battery projects and Power Purchase Agreements (PPAs)[74](index=74&type=chunk) - The Arizona Renewable Energy Standard (RES) mandates that APS supply **12% of its retail electric sales from renewable resources in 2022**, increasing to **15% by 2025**[86](index=86&type=chunk) - APS faces significant environmental regulatory oversight from the EPA concerning regional haze, coal combustion residuals (coal ash), and ozone standards, which could lead to material compliance costs[113](index=113&type=chunk)[116](index=116&type=chunk)[124](index=124&type=chunk) [Human Capital](index=31&type=section&id=Human%20Capital) The company prioritizes employee safety, development, and diversity, implementing COVID-19 protocols and fostering engagement through talent programs and surveys - In response to the COVID-19 pandemic, the company transitioned non-essential workers to remote work in March **2020** and implemented safety protocols like bifurcated control rooms to maintain essential services[142](index=142&type=chunk) Workforce Diversity Statistics (as of Dec 31, 2021) | Metric | Percentage | | :--- | :--- | | Ethnically or Racially Diverse Employees | 33% | | Female Employees | 25% | | Veteran Employees | 16% | | Female Officers | 40% | - The company focuses on talent development through programs such as leadership academies, from which **84 employees graduated in 2021**, and a summer internship program that hosted **67 interns**[151](index=151&type=chunk)[152](index=152&type=chunk) - Employee engagement is tracked via annual and quarterly surveys, focusing on an Employee Experience Index. Feedback has led to enterprise-wide initiatives to improve communication and remove job obstacles[154](index=154&type=chunk) [Business of Other Subsidiaries](index=34&type=section&id=Business%20of%20Other%20Subsidiaries) Pinnacle West's non-utility subsidiaries, Bright Canyon Energy and El Dorado, invest in energy infrastructure and Arizona-based technology ventures - Bright Canyon Energy (BCE) develops energy infrastructure and has acquired minority ownership in two wind farms: the **242 MW Clear Creek project (9.9% ownership)** and the **250 MW Nobles 2 project (5.1% ownership)**, both of which are operational[159](index=159&type=chunk)[160](index=160&type=chunk) - El Dorado, an investment subsidiary, has committed **$25 million** to the Energy Impact Partners fund to foster utility industry innovation and another **$25 million** to the invisionAZ Fund to support early-stage technology companies in Arizona[161](index=161&type=chunk) [Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) The company faces substantial regulatory, operational, and financial risks, including cost recovery challenges, environmental compliance, climate impacts, cybersecurity, and credit rating downgrades - **Regulatory Risk:** Financial condition depends on APS's ability to recover costs in a timely manner through regulated rates approved by the ACC and FERC. Regulatory decisions can materially impact results, and prior decisions can be reopened[169](index=169&type=chunk) - **Environmental Risk:** APS is subject to numerous environmental laws regarding air emissions, water quality, and coal combustion residuals (CCR). New or revised regulations could increase costs, jeopardize the economic viability of coal plants, and lead to asset impairments[175](index=175&type=chunk)[178](index=178&type=chunk)[180](index=180&type=chunk) - **Climate Change Risk:** The company faces financial risks from potential GHG regulations and litigation, as well as physical and operational risks from weather extremes like drought, high temperatures, and increased wildfire threat, which are common in the Southwest[181](index=181&type=chunk)[183](index=183&type=chunk)[192](index=192&type=chunk) - **Cybersecurity Risk:** The company is subject to increasing threats from sophisticated actors targeting IT and operational systems. A significant breach could disrupt critical business functions, lead to data theft, and result in significant financial and reputational damage[210](index=210&type=chunk)[212](index=212&type=chunk) - **Nuclear Operations Risk:** Ownership and operation of the Palo Verde nuclear plant expose the company to significant liabilities, stringent regulatory oversight by the NRC, and risks related to spent fuel disposal and potential terrorist attacks[174](index=174&type=chunk)[219](index=219&type=chunk) - **Financial Risk:** A downgrade of credit ratings could increase borrowing costs and limit access to capital. The value of pension and nuclear decommissioning trust funds is subject to market performance, and shortfalls could require significant additional funding[230](index=230&type=chunk)[231](index=231&type=chunk) - **COVID-19 Risk:** The pandemic could continue to negatively affect the business by decreasing energy demand, disrupting the supply chain, increasing uncollectable accounts, and delaying capital projects[226](index=226&type=chunk)[227](index=227&type=chunk) [Properties](index=52&type=section&id=Item%202.%20Properties) As of December 31, 2021, APS owned 6,323 MW of diverse generation capacity and operated extensive transmission and distribution networks, with some facilities on leased Indian lands APS Owned Generation Capacity by Type (as of Dec 31, 2021) | Facility Type | Owned Capacity (MW) | | :--- | :--- | | Nuclear | 1,146 | | Steam (Coal) | 1,357 | | Combined Cycle (Gas) | 1,975 | | Combustion Turbine (Gas/Oil) | 1,598 | | Solar | 247 | | **Total Capacity** | **6,323** | - APS's transmission facilities include approximately **5,814 pole miles of overhead lines** and **74 miles of underground lines**. Its distribution network comprises **11,258 miles of overhead lines** and **22,821 miles of underground primary cable**[262](index=262&type=chunk) - Key power plants, such as Four Corners, and portions of the transmission system are located on Indian lands under leases and rights-of-way. The Four Corners leasehold interest has been extended to **2041**[266](index=266&type=chunk)[267](index=267&type=chunk)[268](index=268&type=chunk) [Legal Proceedings](index=55&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various legal proceedings, including environmental, Superfund, and regulatory matters before the ACC and FERC - The company references other sections for details on legal proceedings, specifically Note 4 for ACC and FERC matters, and Note 11 for environmental, Superfund-related, and other disputes[270](index=270&type=chunk) [Information about our Executive Officers](index=56&type=section&id=Information%20about%20our%20Executive%20Officers) This section lists Pinnacle West's executive officers as of February 25, 2022, detailing their ages, positions, and professional backgrounds - Provides a list of executive officers, their ages, and their roles and employment history over the past five years[275](index=275&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=57&type=section&id=Item%205.%20Market%20for%20Registrants%27%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Pinnacle West's common stock (PNW) trades on the NYSE, underperforming industry and broader market indices over the past five years, while APS stock is not publicly traded - Pinnacle West's common stock is traded on the NYSE under the symbol **PNW**. As of February 17, 2022, there were approximately **15,730 shareholders of record**[277](index=277&type=chunk) Cumulative Total Shareholder Return (2016-2021) | Company/Index | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Pinnacle West Common Stock | $100 | $113 | $117 | $127 | $117 | $108 | | Edison Electric Institute Index | $100 | $112 | $116 | $146 | $144 | $169 | | S&P 500 Index | $100 | $122 | $116 | $153 | $181 | $233 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=59&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Pinnacle West's 2021 net income increased due to customer growth and regulatory factors, as the company pursues a clean energy transition with significant capital investments, despite recent credit rating downgrades [Overview](index=59&type=section&id=Overview) The company's strategy focuses on clean energy transition, grid reliability, and customer affordability, with significant investments and projected growth, while navigating impacts from the COVID-19 pandemic and the 2019 Rate Case - The COVID-19 pandemic resulted in higher residential electricity sales and increased bad debt expense. The combined impact of the pandemic and the Summer Disconnection Moratorium negatively impacted 2021 operating results by approximately **$25 million pre-tax**[294](index=294&type=chunk)[298](index=298&type=chunk) - The company's 'Clean Energy Commitment' aims for **100% clean, carbon-free electricity by 2050**, with a **2030 target of 65% clean energy (45% renewable)** and a full exit from coal generation by **2031**[303](index=303&type=chunk)[304](index=304&type=chunk) - The 2019 Rate Case concluded in November **2021**, resulting in an annual revenue decrease of **$4.8 million**, an authorized ROE of **8.70%**, and a disallowance of **$215.5 million** in costs for the Four Corners SCR project, which APS is appealing[363](index=363&type=chunk)[365](index=365&type=chunk) Projected Annual Growth (2022-2024) | Metric | Projected Average Annual Growth | | :--- | :--- | | Customer Growth | 1.5% to 2.5% | | Retail Sales (weather-normalized) | 3.5% to 4.5% | [Results of Operations](index=76&type=section&id=Results%20of%20Operations) Consolidated net income attributable to common shareholders increased to $619 million in 2021, driven by higher retail revenue and pension credits, partially offset by weather impacts and increased expenses Consolidated Net Income Attributable to Common Shareholders | Year | Net Income (in millions) | | :--- | :--- | | 2021 | $619 | | 2020 | $551 | - The **$56 million increase** in operating revenues less fuel and purchased power was primarily driven by: - **+$76 million** from higher customer usage and growth - **+$30 million** from lower refunds related to the Tax Act - **+$26 million** from higher transmission revenues - **-$114 million** from the effects of weather[397](index=397&type=chunk) - Pension and other postretirement non-service credits increased by **$57 million** year-over-year, primarily due to actual market returns exceeding estimated returns in 2020[399](index=399&type=chunk) - Depreciation and amortization expense increased by **$37 million** due to increased plant in service[398](index=398&type=chunk) [Liquidity and Capital Resources](index=79&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains liquidity despite decreased operating cash flow, with substantial projected capital expenditures for clean energy, but faces credit rating downgrades due to regulatory uncertainty Summary of Cash Flows (Consolidated) | (in millions) | 2021 | 2020 | | :--- | :--- | :--- | | Net cash from operating activities | $860 | $967 | | Net cash used for investing activities | $(1,387) | $(1,278) | | Net cash from financing activities | $477 | $361 | Estimated Capital Expenditures (APS) | (in millions) | 2022 | 2023 | 2024 | | :--- | :--- | :--- | | Generation (Clean & Other) | $590 | $600 | $750 | | Distribution | $510 | $530 | $500 | | Transmission | $250 | $210 | $210 | | Other | $175 | $185 | $190 | | **Total APS** | **$1,525** | **$1,525** | **$1,650** | - In late **2021**, Fitch, S&P, and Moody's all downgraded the credit ratings of Pinnacle West and APS, citing negative outlooks primarily due to regulatory uncertainty following the 2019 Rate Case decision[432](index=432&type=chunk) - At December 31, 2021, the debt-to-capitalization ratio was **56% for Pinnacle West** and **50% for APS**, both in compliance with the **65% maximum covenant**[427](index=427&type=chunk) [Financial Statements and Supplementary Data](index=92&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements for Pinnacle West and APS, including management's report on internal controls and the auditor's report highlighting regulatory accounting as a critical audit matter - Presents the audited consolidated financial statements for Pinnacle West and APS for the years ended December 31, **2021, 2020, and 2019**[467](index=467&type=chunk) - Includes Management's Report on Internal Control over Financial Reporting, concluding that internal controls were effective as of December 31, **2021**[469](index=469&type=chunk)[505](index=505&type=chunk) - The Report of Independent Registered Public Accounting Firm (Deloitte & Touche LLP) provides an unqualified opinion on the financial statements and the effectiveness of internal controls. It highlights 'Regulatory Accounting' as a Critical Audit Matter, noting the significant management judgments required to assess the likelihood of recovering regulatory assets and the impact of future regulatory orders[472](index=472&type=chunk)[480](index=480&type=chunk)[483](index=483&type=chunk) [Controls and Procedures](index=200&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of December 31, 2021, with no material changes to internal control over financial reporting during Q4 2021 - Management of both Pinnacle West and APS concluded that their respective disclosure controls and procedures were effective as of December 31, **2021**[917](index=917&type=chunk)[918](index=918&type=chunk) - No material changes in internal control over financial reporting occurred during the fourth quarter of **2021**[918](index=918&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=201&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance%20of%20Pinnacle%20West) This section incorporates by reference information on directors, executive officers, and corporate governance from the 2022 Proxy Statement, including the Code of Ethics - Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's definitive Proxy Statement for its **2022 Annual Meeting of Shareholders**[924](index=924&type=chunk) [Executive Compensation](index=201&type=section&id=Item%2011.%20Executive%20Compensation) This section incorporates by reference executive and director compensation details from the company's 2022 Proxy Statement - Details on executive compensation are incorporated by reference from the **2022 Proxy Statement**[927](index=927&type=chunk) [Security Ownership and Related Stockholder Matters](index=201&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section incorporates by reference security ownership information from the 2022 Proxy Statement, detailing outstanding and available securities under equity compensation plans as of December 31, 2021 Equity Compensation Plan Information (as of Dec 31, 2021) | Plan Category | Securities to be Issued Upon Exercise (a) | Securities Remaining Available for Future Issuance (c) | | :--- | :--- | :--- | | Approved by security holders | 1,243,225 | 1,241,996 | | Not approved by security holders | — | — | | **Total** | **1,243,225** | **1,241,996** | [Certain Relationships and Related Transactions, and Director Independence](index=203&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) This section incorporates by reference information on related party transactions and director independence from the company's 2022 Proxy Statement - Information on certain relationships, related transactions, and director independence is incorporated by reference from the **2022 Proxy Statement**[937](index=937&type=chunk) [Principal Accountant Fees and Services](index=203&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) This section details fees paid to Deloitte & Touche LLP for audit and audit-related services in 2021 and 2020, all pre-approved by the Audit Committee APS Principal Accountant Fees (Deloitte & Touche LLP) | Type of Service | 2021 | 2020 | | :--- | :--- | :--- | | Audit Fees | $2,580,260 | $2,414,909 | | Audit-Related Fees | $333,905 | $323,067 | Part IV [Exhibits and Financial Statement Schedules](index=204&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section provides an index of financial statements and schedules, listing all exhibits filed with the Form 10-K, including corporate governance and material contracts - Lists all exhibits filed with the Form 10-K, including Articles of Incorporation, Bylaws, debt indentures, material contracts, and executive compensation plans[945](index=945&type=chunk)[946](index=946&type=chunk)