Pinnacle West Capital Corp. Files 2023 Annual Report

TL;DR

<b>Pinnacle West Capital Corp. has submitted its 2023 10-K annual report, detailing financial performance and corporate structure.</b>

AI Summary

PINNACLE WEST CAPITAL CORP (PNW) filed a Annual Report (10-K) with the SEC on February 27, 2024. Pinnacle West Capital Corp. filed its 10-K report for the fiscal year ending December 31, 2023. The filing covers the period from January 1, 2023, to December 31, 2023. Arizona Public Service Co. is listed as a subsidiary with its own filing details. The report includes data for fiscal years 2020, 2021, 2022, and 2023. Specific financial elements like common stock, treasury stock, retained earnings, and noncontrolling interest are detailed for year-end 2020.

Why It Matters

For investors and stakeholders tracking PINNACLE WEST CAPITAL CORP, this filing contains several important signals. The 10-K filing provides a comprehensive overview of Pinnacle West Capital Corp.'s financial health and operational status for the fiscal year 2023, crucial for investors assessing the company's performance and future prospects. The inclusion of detailed financial data for multiple prior years (2020-2023) allows for trend analysis and comparison, aiding analysts in understanding the company's historical trajectory and stability.

Risk Assessment

Risk Level: — PINNACLE WEST CAPITAL CORP shows moderate risk based on this filing. The filing is a standard annual report (10-K) and does not contain immediate, specific negative financial indicators or significant new risks beyond typical industry challenges.

Analyst Insight

Review the detailed financial statements and risk factors within the 10-K to understand Pinnacle West Capital Corp.'s performance and potential challenges in the utility sector.

Key Numbers

• 2023-12-31 — Fiscal Year End (Pinnacle West Capital Corp.)
• 2024-02-27 — Filed As Of Date (Pinnacle West Capital Corp.)
• 2023-01-01 — Reporting Period Start (Pinnacle West Capital Corp.)
• 2023-12-31 — Reporting Period End (Pinnacle West Capital Corp.)

Key Players & Entities

• PINNACLE WEST CAPITAL CORP (company) — COMPANY CONFORMED NAME
• ARIZONA PUBLIC SERVICE CO (company) — COMPANY CONFORMED NAME
• AZ (company) — STATE OF INCORPORATION
• 400 NORTH FIFTH STREET (company) — BUSINESS ADDRESS
• PHOENIX (company) — CITY
• 2023-12-31 (date) — FISCAL YEAR END
• 2024-02-27 (date) — FILED AS OF DATE
• 2023-01-01 (date) — REPORTING PERIOD START

FAQ

Industry Context

Pinnacle West Capital Corp. operates in the electric services industry, providing electricity to customers in Arizona.

Regulatory Implications

The filing is a standard SEC Form 10-K, adhering to regulations set forth by the Securities and Exchange Commission for public companies.

What Investors Should Do

1. Analyze the financial statements for revenue, net income, and debt levels.
2. Review the business description for any changes in operations or strategy.
3. Examine the risk factors section for potential challenges facing the company.

Key Dates

• 2023-12-31: Fiscal Year End — End of the reporting period for Pinnacle West Capital Corp.
• 2024-02-27: Filing Date — Date Pinnacle West Capital Corp. filed its 10-K report.

Year-Over-Year Comparison

This filing is the 2023 10-K for Pinnacle West Capital Corp., providing updated financial and operational data compared to previous filings.

Key Financial Figures

• $2.50 — ERVICE COMPANY Common Stock , Par Value $2.50 per share Indicate by check mark if t
• $138.2 million — 31, 2022. The DOE has approved and paid $138.2 million for these claims (APS's share is $40.2
• $40.2 million — illion for these claims (APS's share is $40.2 million). The amounts recovered were primarily
• $18.46 million — , settlement agreement in the amount of $18.46 million (APS's share is $5.4 million). In Febru
• $5.4 million — mount of $18.46 million (APS's share is $5.4 million). In February 2024, the DOE approved $1
• $18.39 million — on). In February 2024, the DOE approved $18.39 million of this claim. Waste Confidence and C

Filing Documents

• pnw-20231231.htm (10-K) — 5475KB
• pnw20231231exhibit49.htm (EX-4.9) — 42KB
• pnw20231231exhibit21.htm (EX-21) — 2KB
• pnw20231231exhibit231.htm (EX-23.1) — 2KB
• pnw20231231exhibit232.htm (EX-23.2) — 2KB
• pnw20231231exhibit311.htm (EX-31.1) — 10KB
• pnw20231231exhibit312.htm (EX-31.2) — 10KB
• pnw20231231exhibit313.htm (EX-31.3) — 10KB
• pnw20231231exhibit314.htm (EX-31.4) — 11KB
• pnw20231231exhibit321pnw.htm (EX-32.1) — 9KB
• pnw20231231exhibit322aps.htm (EX-32.2) — 9KB
• exhibit97.htm (EX-97) — 9KB
• pnw-20231231_g1.jpg (GRAPHIC) — 191KB
• pnw-20231231_g2.jpg (GRAPHIC) — 67KB
• pnw-20231231_g3.jpg (GRAPHIC) — 53KB
• pnw-20231231_g4.jpg (GRAPHIC) — 82KB
• 0000764622-24-000016.txt (&nbsp;) — 26285KB
• pnw-20231231.xsd (EX-101.SCH) — 170KB
• pnw-20231231_cal.xml (EX-101.CAL) — 193KB
• pnw-20231231_def.xml (EX-101.DEF) — 1034KB
• pnw-20231231_lab.xml (EX-101.LAB) — 1772KB
• pnw-20231231_pre.xml (EX-101.PRE) — 1347KB
• pnw-20231231_htm.xml (XML) — 4496KB

FORWARD-LOOKING STATEMENTS

FORWARD-LOOKING STATEMENTS 1 PART I 3 Item 1.

Business

Business 3 Item 1A.

Risk Factors

Risk Factors 33 Item 1B. Unresolved Staff Comments 47 Item 1C. Cybersecurity 48 Item 2.

Properties

Properties 50 Item 3.

Legal Proceedings

Legal Proceedings 53 Item 4. Mine Safety Disclosures 53 Information about our Executive Officers 54 PART II 55 Item 5. Market for Registrants' Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 55 Item 6. [Reserved] 56 Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 57 Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 87 Item 8.

Financial Statements and Supplementary Data

Financial Statements and Supplementary Data 88 Pinnacle West Financial Statements 94 APS Financial Statements 105 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 200 Item 9A.

Controls and Procedures

Controls and Procedures 200 Item 9B. Other Information 201 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 201 PART III 201 Item 10. Directors, Executive Officers and Corporate Governance of Pinnacle West 201 Item 11.

Executive Compensation

Executive Compensation 201 Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 201 Item 13. Certain Relationships and Related Transactions, and Director Independence 203 Item 14. Principal Accountant Fees and Services 203 PART IV 204 Item 15. Exhibits and Financial Statement Schedules 204 Item 16. Form 10-K Summary 224

SIGNATURES

SIGNATURES 225 This combined Form 10-K is separately filed by Pinnacle West and APS. Each registrant is filing on its own behalf all of the information contained in this Form 10-K that relates to such registrant and, where required, its subsidiaries. Except as stated in the preceding sentence, neither registrant is filing any information that does not relate to such registrant, and therefore makes no representation as to any such information. The information required with respect to each company is set forth within the applicable items. Item 8 of this report includes Consolidated Financial Statements of Pinnacle West and Consolidated Financial Statements of APS. Item 8 also includes Combined Notes to Consolidated Financial Statements. i Table of Contents GLOSSARY OF NAMES AND TECHNICAL TERMS 4CA 4C Acquisition, LLC, a subsidiary of the Company AC Alternating Current ACC Arizona Corporation Commission ADEQ Arizona Department of Environmental Quality AFUDC Allowance for Funds Used During Construction ANPP Arizona Nuclear Power Project, also known as Palo Verde APS Arizona Public Service Company, a subsidiary of the Company ARO Asset retirement obligations BART Best available retrofit technology Base Fuel Rate The portion of APS's retail base rates attributable to fuel and purchased power costs BCE Bright Canyon Energy Corporation CAISO California Independent System Operator CCR Coal combustion residuals Cholla Cholla Power Plant DC Direct Current DG Small-scale renewable energy technologies that are located on customers' properties, such as rooftop solar systems DOE United States Department of Energy DOI United States Department of the Interior DSM Demand side management EES Energy Efficiency Standard EGU Electric generating unit El Dorado El Dorado Investment Company, a subsidiary of the Company EPA United States Environmental Protection Agency FERC United States Federal Energy Regulatory Commission Four Corners Four Corners Power Pla

FORWARD-LOOKING STATEMENTS

FORWARD-LOOKING STATEMENTS This document contains forward-looking statements based on current expectations. 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 from expectations, we caution readers not to place undue reliance on these statements. A number of factors could cause future results to differ materially from historical results, or from outcomes currently expected or sought by Pinnacle West or APS. In addition to the Risk Factors described in Item 1A and in Item 7 — "Management's Discussion and Analysis of Financial Condition and Results of Operations" of this report, these factors include, but are not limited to: uncertainties associated with the current and future economic environment, including economic growth rates, labor market conditions, inflation, supply chain delays, increased expenses, volatile capital markets, or other unpredictable effects; our ability to manage capital expenditures and operations and maintenance costs while maintaining reliability and customer service levels; variations in demand for electricity, including those due to weather, seasonality (including large increases in ambient temperatures), the general economy or social conditions, customer, and sales growth (or decline), the effects of energy conservation measures and distributed generation, and technological advancements; the potential effects of climate change on our electric system, including as a result of weather extremes such as prolonged drought and high temperature variations in the area where APS conducts its business; power plant and transmission system performance and outages; competition in retail and wholesale power markets; regulatory and judicial decisions, developments, and proceedings; new

BUSINESS

ITEM 1. BUSINESS Pinnacle West Pinnacle West is a holding company that conducts business through its subsidiaries. We derive essentially all of our revenues and earnings from our wholly-owned subsidiary, APS. APS is a vertically-integrated electric utility that provides either retail or wholesale electric service to most of Arizona, with the major exceptions of about one-half of the Phoenix metropolitan area, the Tucson metropolitan area and Mohave County in northwestern Arizona. Pinnacle West's other subsidiaries are El Dorado, PNW Power, and 4CA. BCE was a subsidiary of Pinnacle West, but was sold in January 2024. Additional information related to these subsidiaries is provided later in this report. Our reportable business segment is our regulated electricity segment, which consists of traditional regulated retail and wholesale electricity businesses (primarily electric service to Native Load customers) and related activities, and includes electricity generation, transmission, and distribution. BUSINESS OF ARIZONA PUBLIC SERVICE COMPANY APS currently provides electric service to approximately 1.4 million customers. We own or lease 6,491 MW of regulated generation capacity and we hold a mix of both long-term and short-term purchased power agreements for additional capacity. During 2023, no single purchaser or user of energy accounted for more than 2.1% of our electric revenues. 3 Table of Contents The following map shows APS's retail service territory, including the locations of its generating facilities and principal transmission lines. 4 Table of Contents Energy Sources and Resource Planning To serve its customers, APS obtains power through its various generation stations and through purchased power agreements. Resource planning is an important function necessary to meet Arizona's future energy needs. APS's sources of energy by type used to supply energy to Native Load customers during 2023 were as follows: *Renewables include energy f