Pinnacle West Capital Corporation (PNW): Business Model Canvas [Dec-2025 Updated]

You're digging into Pinnacle West Capital Corporation (PNW), trying to map out how this massive regulated utility, Arizona Public Service (APS), actually makes money and plans for the future. Honestly, it's a classic utility play, but with a twist: they are backing a $9.66 billion capital plan through 2027 while already raising their 2025 EPS guidance to $4.90 to $5.10 after a solid Q3 showing $1.82 billion in operating revenue. The core tension is balancing that stable, allowed return on equity of 10.70% with the aggressive infrastructure buildout needed for Arizona's growth, all under the watchful eye of the Arizona Corporation Commission. If you want the full, precise breakdown of their key partners, costs, and customer base-the whole nine yards-check out the Business Model Canvas I've laid out below.

Pinnacle West Capital Corporation (PNW) - Canvas Business Model: Key Partnerships

You're looking at the critical external relationships Pinnacle West Capital Corporation relies on to execute its strategy, especially given Arizona's rapid growth and the energy transition mandates. These partnerships are where capital meets regulation and physical infrastructure.

Transwestern Pipeline Company for Desert Southwest pipeline expansion

Pinnacle West Capital Corporation announced a project with Transwestern Pipeline Company to support the Desert Southwest pipeline expansion. This expansion is designed to increase the transport capacity of natural gas from the Permian Basin into Arizona. The goal is to enable new gas generation infrastructure to support reliability into the next decade. Pinnacle West Capital Corporation expects this pipeline project to be in service by 2030. This infrastructure is critical because Pinnacle West Capital Corporation is already developing 675 megawatts of additional natural gas generation to support reliability, which will coordinate its in-service timing with the pipeline completion. This is a key step before fully proceeding with procuring that new gas generation capacity.

Independent Power Producers (IPPs) for renewable energy procurement

The drive toward Pinnacle West Capital Corporation's aspirational goal of 100% carbon-free electricity by 2050 heavily involves securing resources from external producers. Between 2025 and 2028, the company plans to integrate approximately 9,805 MW of new capacity, with over 90% of that being carbon-free, like solar and battery storage. As of early 2025, Pinnacle West Capital Corporation's renewable energy portfolio included 7,660 MW total, with 3,608 MW already in operation and 4,052 MW under development or construction. The company is executing agreements on multiple projects scheduled to come online between 2026 and 2028, including more than 800 megawatts of APS-owned resources.

Here's a look at the scale of the resource build-out:

• Planned new capacity additions (2025-2028): 9,805 MW
• Planned carbon-free additions (2025-2028): Over 90% of total
• Total Renewable Energy Resources (Early 2025): 7,660 MW
• Renewables Under Development/Construction (Early 2025): 4,052 MW

Regulatory bodies like the Arizona Corporation Commission (ACC)

The Arizona Corporation Commission (ACC) is the primary external body dictating retail electric rates and security issuance for Pinnacle West Capital Corporation's principal subsidiary, Arizona Public Service (APS). The relationship is defined by rate cases and compliance with standards like the Renewable Energy Standard (RES), which requires utilities to supply up to 15% of retail sales from eligible renewable resources by 2025. In mid-2025, APS filed an application with the ACC seeking a net base rate increase of $579.52 million, which represents a 13.99% net increase, requested to be effective in the second half of 2026. The ACC's decisions directly impact the allowed cost of capital; for instance, a prior case set the allowed Return on Equity (ROE) at 10.70% with a Weighted Average Cost of Capital (WACC) of 7.63%. More recently, in December 2025, the ACC approved only $40 million for the annual Demand Side Management Implementation Plan budget, about half of what APS requested.

The regulatory environment sets the stage for financial outcomes:

Regulatory Metric/Filing	Value/Target	Context
2025 Rate Case Net Increase Sought	$579.52 million	Filed in June 2025, seeking 2026 effectiveness.
Requested Net Increase Percentage	13.99%	The percentage impact of the requested rate increase.
Allowed ROE (Prior Case Benchmark)	10.70%	A key component in determining the utility's authorized return.
ACC Approved DSM Budget (Dec 2025)	$40 million	Approved budget for energy efficiency programs.
Projected Rate Base Growth (Through 2028)	7% to 9%	Driven by capital investments in generation and transmission.

Technology vendors for smart grid and grid modernization

Pinnacle West Capital Corporation partners with technology vendors to execute its capital plan, which supports reliability and the integration of new resources. The company is focused on grid modernization, exemplified by the Agave and Ironwood projects, which are on track to be in service by 2026. These investments are part of a larger capital expenditure projection of approximately $9.66 billion from 2024 to 2027, aimed at generation, transmission, and distribution infrastructure. The company is also exploring new nuclear generation and carbon capture technologies, which require specialized vendor partnerships.

Financial institutions for long-term debt and equity financing

Access to capital markets is non-negotiable for funding the massive infrastructure build-out. In the second quarter of 2025, Pinnacle West Capital Corporation issued $800 million in bonds specifically to pay off its 2025 maturities and support its funding strategy. Looking forward, the company has updated its financing plan through 2028, forecasting an additional $1 billion to $1.2 billion of Pinnacle West equity needed through 2028, with approximately 85% of the 2026 equity need already priced as of November 2025. This balanced mix of debt and equity aligns with their balance sheet targets. For context, as of December 31, 2024, Pinnacle West Capital Corporation reported consolidated assets of $26 billion.

Finance: draft 13-week cash view by Friday.

Pinnacle West Capital Corporation (PNW) - Canvas Business Model: Key Activities

You're looking at the core engine of Pinnacle West Capital Corporation, which is essentially running Arizona Public Service (APS), its principal subsidiary. This is all about keeping the lights on for a rapidly growing state, which means a lot of heavy lifting in terms of physical assets and regulatory navigation. The key activities are where the real work-and the real spending-happens.

Regulated electric power generation and distribution

Pinnacle West Capital Corporation's main job is delivering regulated electricity. Through APS, the company provides retail service to about 1.4 million Arizona homes and businesses. As of the third quarter of 2025, the holding company reported consolidated assets of nearly $30 billion and maintained about 6,500 megawatts of generating capacity. You saw robust growth in the service territory; for instance, customer usage and sales growth contributed to a record peak demand of 8,631 megawatts (MW) on August 7, 2025. The energy mix used to supply customers in 2024 showed Gas at 24%, Nuclear at 21%, and Coal at 14% of the total power supplied. The Palo Verde Generating Station alone supplies about 27% of the state's electricity. For the 2025 third quarter, the company posted a net income attributable to common shareholders of $413.2 million, or $3.39 per diluted share. Still, year-to-date earnings through the first three quarters of 2025 were 2.4% lower than the first nine months of 2024.

Here's a snapshot of the operational scale:

Metric	Value (As of Late 2025 Data)	Source Context
Consolidated Assets	Nearly $30 billion	Q3 2025
Generating Capacity	About 6,500 MW	Q3 2025
Retail Customers Served	About 1.4 million	Q3 2025
Record Peak Demand (Aug 2025)	8,631 MW	Q3 2025
2025 Q3 Net Income (Attributable to Common Shareholders)	$413.2 million	Q3 2025

Executing a $9.66 billion capital investment plan (2024-2027)

A major activity is executing the capital plan, which is set at approximately $9.66 billion in capital expenditures covering the 2024 through 2027 period. This represents a 24% increase from the prior plan. This investment is designed to support reliability, customer growth, and integrating clean energy resources. The goal is to drive rate base growth of 6-8% annually from 2023 to 2027, projecting the rate base to climb from $11.2 billion in 2023 to about $14.4 billion by 2027. Looking further out, the updated plan through 2028 targets rate-based growth of 7%-9% through 2028. The company is targeting long-term earnings per share (EPS) growth of 5% to 7% compounded annually, which is directly tied to this rate base expansion.

Maintaining and upgrading the transmission and distribution grid

Keeping the grid modern and resilient is non-negotiable, especially with Arizona's strong demographic trends. The company expects to add 9,805 MW of renewable energy, battery storage, and natural gas to its system between 2025 and 2028, with more than 90% of that being carbon free. This is expected to grow to over 13,000 MW in the next 14 years, marking a 60% increase. Specific reliability projects, like the Agave and Ironwood generation resources, are on track to be in service by 2026. For revenue context, in 2024, residential customers accounted for 50% of total revenues, while non-residential customers contributed 45.6%.

• Maintain and upgrade transmission and distribution infrastructure.
• Execute on Agave and Ironwood projects by 2026.
• Add 9,805 MW of new resources by 2028.
• Targeting a 60% increase in capacity over 14 years.
• Manage O&M expenses, aiming to decline on a per megawatt-hour basis.

Managing fuel and purchased power costs for customer affordability

Managing volatile fuel and purchased power costs is a constant activity to keep rates affordable. The Power Supply Adjustor (PSA) mechanism is key here, allowing retail rates to adjust for variations in these costs, though it has a year-over-year cap on recovery of $0.006/kWh. For 2025, the updated forecasted Operations and Maintenance (O&M) expense range is set between $1.025 billion and $1.045 billion. The company is focused on operational efficiency to help offset these fluctuating input costs.

Navigating the Arizona regulatory environment for rate case approvals

The regulatory environment, governed by the Arizona Corporation Commission (ACC), dictates how costs are recovered. A major activity in late 2025 was managing the 2025 APS rate case, filed on June 13, 2025. APS requested a net base rate increase of $579.52 million, which represents a 13.99% net increase. The company requested these new rates become effective in the second half of 2026. If approved as proposed, this would mean a net monthly bill impact of about $20 for a typical residential customer using 1,000 kilowatt-hours. The company also benefits from mechanisms like the System Reliability Benefit (SRB), which allows recovery of capital carrying costs for new generation facilities over $50 million. As of May 2025, the publicly traded Pinnacle West Capital Corporation was valued at nearly $11 billion in market capitalization.

The company has adjusted its 2025 full-year EPS guidance upward to a range of $4.90 to $5.10 per diluted share, while the initial 2026 EPS guidance is set at $4.55 to $4.75 per diluted share.

Pinnacle West Capital Corporation (PNW) - Canvas Business Model: Key Resources

Pinnacle West Capital Corporation's core strength lies in its regulated utility subsidiary, Arizona Public Service (APS), which provides the essential physical and human capital for its operations.

Regulated electric utility infrastructure (Arizona Public Service - APS)

The physical network is the primary asset. As of late 2025 reporting, Pinnacle West Capital Corporation has consolidated assets valued at nearly $30 billion. APS is focused on significant capital deployment to maintain and expand this infrastructure, intending to invest more than $2.5 billion annually through 2028 for upgrades and additions.

The resource mix supporting this infrastructure is diverse, with the energy mix being about 54% clean as of early 2025. This mix includes critical baseload power, like that from Palo Verde, which performed well amid record summer demand.

Exclusive service territory across 11 Arizona counties

Arizona Public Service serves approximately 1.4 million Arizona homes and businesses. This service area covers 11 of Arizona's 15 counties. The territory is experiencing rapid growth, with customer growth projected between 1.5% and 2.5% for 2025 and the long term.

The resource base must support this growth, which is stimulating a historic wave of electricity demand. For instance, in 2024 alone, APS installed more than 32,000 new residential meters.

Palo Verde Nuclear Generating Station ownership interest

Palo Verde Generating Station is a cornerstone resource, operating as the nation's largest producer of carbon-free electricity. Pinnacle West Capital Corporation, through APS, operates the plant. The ownership structure is specific:

• Owns 29.1% of Palo Verde Units 1 and 3.
• Owns approximately 17% of Unit 2.
• Leases approximately 12.1% of Unit 2.
• Total entitlement from Palo Verde is 1,146 MW.

6.5 GW of owned or leased generating capacity

Pinnacle West Capital Corporation has about 6,500 megawatts (MW) of generating capacity that it owns or leases. This capacity is a mix of nuclear, gas, oil, coal, solar, and energy storage facilities. The company also holds purchased power agreements for additional capacity.

Skilled workforce of approximately 6,100 employees

The operational expertise is provided by the workforce. As of mid-to-late 2025 reports, Pinnacle West Capital Corporation has approximately 6,400 employees in Arizona and New Mexico. These employees maintain reliable electric service for customers, even amid extreme summer temperatures and increased demand.

Here is a quick view of the key quantitative resources as of the latest available 2025 data points:

Resource Metric	Value	Unit/Context
Consolidated Assets	Nearly $30 billion	As of Q3 2025
Owned or Leased Generating Capacity	6,500 MW	Approximate total
Palo Verde Entitlement	1,146 MW	Total entitlement from the plant
Employees	Approximately 6,400	As of Q3 2025
Customers Served	About 1.4 million	Homes and businesses served by APS
Service Territory Counties	11	Of Arizona's 15 counties
Annual Infrastructure Investment (Through 2028)	More than $2.5 billion	Planned annual investment

The company also has significant renewable energy resources under development or construction, with 4,052 MW committed as of early 2025.

Pinnacle West Capital Corporation (PNW) - Canvas Business Model: Value Propositions

Highly reliable electric service, a top-quartile utility goal

Pinnacle West Capital Corporation employees continue to execute well, maintaining reliable electric service for its 1.4 million customers. The most important numbers that measure reliability place Pinnacle West Capital Corporation solidly in the top quartile of electric utilities across the nation.

Key operational statistics as of late 2025:

• Customer growth year-to-date Q3 2025: 2.4%.
• Residential sales growth year-to-date Q3 2025: 2%.
• Weather-normalized sales growth in Q3 2025: 5.4%.
• All-time record peak demand set on July 9, 2025: 8,527 megawatts (MW).

Supporting Arizona's economic growth with infrastructure capacity

Pinnacle West Capital Corporation is pursuing smart growth to support Arizona's expansion, which translates into healthy growth for the company. The capital plan is updated through 2028 to support critical investments in transmission and generation.

Infrastructure and Growth Projections:

Metric	Value/Target	Timeframe/Context
Long-term sales growth guidance	5% to 7%	Extended through 2030
Projected annual rate base growth	7% to 9%	Through 2027
Planned renewable energy, battery storage, and natural gas additions	9,805 MW	Between 2025 and 2028
Transmission CapEx planned	$2.6 billion cumulative	Through 2028
Identified transmission projects	$6 billion-plus	Through 2034

Industrial and data center customers are driving large, committed, and prospective demand.

Commitment to a carbon-neutral energy mix by 2050

Pinnacle West Capital Corporation has an aspirational goal to be carbon-neutral by 2050. The company is committed to shutting down all its coal-fired generation units by 2031.

• Coal-fired generation units retirement target: 2031.
• Carbon-free portion of 2025-2028 planned additions: More than 90% of 9,805 MW.
• Palo Verde Generating Station supplies about 27% of Arizona's electricity.

Customer affordability through disciplined O&M cost management

The company continues to prioritize reliability and affordability. Management has been focused on disciplined Operations & Maintenance (O&M) cost management, though forecasts have been updated.

Operations & Maintenance (O&M) Guidance:

• 2025 full-year O&M guidance range: $1.025 billion to $1.045 billion.
• Q3 2025 consolidated net income: $413.2 million, or $3.39 per diluted share.
• Rate case filing requested annual revenue increase: $580,000,000.

Stable, regulated return on equity (ROE) for investors

Pinnacle West Capital Corporation seeks to build Shareholder Value through strong credit metrics and financial health. The regulatory structure supports a stable return for investors.

Return on Equity Metrics:

ROE Type	Value	Context/Date
Allowed Return on Equity (ROE)	10.70%	Regulated Rate of Return
Reported Return on Equity (ROE)	8.57%	For the quarter ending November 3, 2025
2025 EPS Guidance Range	$4.90 to $5.10 per diluted share	Raised from $4.40-$4.60

The company has a 33-year streak of maintaining dividend payments.

Finance: review the impact of the $580 million revenue request on the allowed 10.70% ROE by next Tuesday.

Pinnacle West Capital Corporation (PNW) - Canvas Business Model: Customer Relationships

You're looking at the relationship Pinnacle West Capital Corporation, through its subsidiary Arizona Public Service (APS), maintains with the 1.4 million Arizona homes and businesses it serves. This relationship is foundational, given the regulated monopoly status in its service territory.

Dedicated regulatory-driven customer service and support

The service commitment is heavily influenced by regulatory outcomes. For instance, the current rate structure customers pay is based on Test Year expenses dating back to 2021. APS is actively engaged in its pending rate case, with a hearing scheduled for Q2 of next year (2026). The company aims for top quartile reliability among its peers; reliability is the product here. This focus was tested when APS customers set a new all-time record peak demand of 8,631 megawatts (MW) on August 7, 2025, during the third-hottest Arizona summer on record.

Proactive communication on outages and energy efficiency programs

Maintaining service during peak stress is a key customer interaction point. Employees executed well ensuring reliable service amid extreme summer temperatures, meeting the record demand. APS remains committed to providing cost-effective demand-side management and energy efficiency programs that help customers manage energy use. These initiatives support the aspirational goal of serving customers with 100% clean, carbon-free electricity by 2050.

Community engagement and utility bill assistance programs

Pinnacle West Capital Corp. actively engages in community giving, doling out money to entities like food banks and schools. Following the third quarter of 2025, the company specifically announced it expands support for community and utility bill assistance programs. The corporate parent is worth nearly $11 billion and has donated millions in the past to politicians, business groups, and community entities to advocate for sound public policy.

Long-term, non-contractual relationship due to monopoly status

The relationship is inherently long-term because APS is the sole regulated provider. The customer base is growing robustly, which management is confident will continue. Customer growth for 2025 is narrowed to the high end of the 2% to 2.5% range. This growth is fueling sales, with weather-normalized sales growth reaching 5.4% in the third quarter of 2025, driven by 6.6% Commercial & Industrial growth and 4.3% residential growth for that quarter. Long-term sales growth guidance has been raised to 5% to 7% annually through 2030.

Here's a quick look at the customer and sales momentum through the third quarter of 2025:

Metric	Value/Rate	Period/Context
Total Retail Customers Served	1.4 million	As of late 2025
2025 Customer Growth Guidance (Narrowed)	High end of 2% to 2.5%	Full Year 2025
Weather-Normalized Sales Growth	5.4%	Q3 2025
Residential Sales Growth	4.3%	Q3 2025
Long-Term Sales Growth Projection	5% to 7% annually through 2030

Digital self-service tools for billing and usage monitoring

Investing in advanced digital platforms is a key part of the strategy to deliver customer experience excellence while lowering costs over time. These efforts are showing results, as APS now ranks in the top 10 nationally in the J.D. Power Utility Digital Experience Survey. The company continues to build and enhance its customer-centric culture.

• APS serves approximately 1.4 million retail customers.
• 2025 consolidated earnings guidance raised to $4.90 to $5.10 per diluted share.
• Forecasted 2025 adjusted core Operating & Maintenance (O&M) expenses are in the $910 million to $920 million range.
• APS expects to add 9,805 MW of new capacity between 2025 and 2028.

Finance: draft 13-week cash view by Friday.

Pinnacle West Capital Corporation (PNW) - Canvas Business Model: Channels

You're looking at how Pinnacle West Capital Corporation, through its principal subsidiary Arizona Public Service (APS), gets its regulated product-electricity-to its customers. For a utility of this scale, the channels are massive physical assets mixed with modern digital touchpoints.

Physical transmission and distribution power lines

The core channel is the physical grid itself. Pinnacle West Capital Corporation has consolidated assets valued at nearly $30 billion as of its late 2025 reporting. This infrastructure supports about 6,500 megawatts of generating capacity across Arizona and New Mexico. You should note the scale of planned investment; the capital plan from 2025 through 2027 includes $7.6 billion dedicated to strengthening this infrastructure, incorporating new generation, and expanding transmission resources to keep up with demand.

The physical delivery system is under constant expansion to serve a booming territory. For instance, in 2025, APS installed 32,000 new residential meters, the most since the Great Recession, directly reflecting the growth in the physical delivery channel.

Customer service centers and call centers

When the lights are on, the service needs to be there too. Pinnacle West Capital Corporation serves approximately 1.4 million Arizona homes and businesses. To support these customers, the company focuses heavily on service quality. In a recent period, their call center was ranked number one in their peer set, and overall customer experience ranked in the top quartile according to JD Power metrics. This focus is key because, honestly, for a utility, reliability and service are inseparable from the product itself.

The operational focus is clear, aiming for top-tier performance in a high-demand environment. You can expect metrics like First Response Time and Average Resolution Time to be tightly managed, though the specific 2025 figures for those operational metrics aren't public like the financial results are.

Digital channels: website and mobile application for billing

For routine interactions, the digital channels are essential for efficiency. While specific adoption rates for the website and mobile application aren't broken out in the earnings reports, the company is clearly investing here, aiming for a top tier digital experience. These platforms are the primary way the 1.4 million customers manage billing, check usage, and access information without tying up a call center agent. This digital self-service capability is critical to managing the high volume generated by the 2.4% customer growth seen in 2025.

• Digital experience is a recognized component of their overall high customer experience ranking.
• Self-service options help manage billing and account inquiries for 1.4 million customers.
• Digital investment supports the overall goal of operational excellence.

Direct communication via regulatory filings and public outreach

For a regulated utility, communication with governing bodies and the public is a mandatory channel. This involves detailed regulatory filings, such as the 2025 APS rate case application, which requested a net revenue increase of $580 million. On the public outreach side, community stewardship is a channel for building trust. For example, their Heat Relief program partnered with agencies to connect more than 140,000 people with services, which is a direct, non-billing interaction channel.

Key Account Managers for large Commercial & Industrial (C&I) customers

Large C&I customers are a distinct and growing segment that requires dedicated management. This segment is driving significant demand, evidenced by a 6.6% sales increase in Q3 2025. Key Account Managers act as the direct channel for these high-load customers, which include semiconductor manufacturers and data centers. This direct relationship is vital for managing their substantial energy needs and ensuring infrastructure investments align with their growth plans, which is part of the long-term sales growth guidance recently raised to 5% to 7% through 2030.

Here's a quick look at the scale and growth impacting these direct channels as of late 2025:

Metric Category	Specific Data Point	Value/Amount
Customer Base Scale	Total Retail Customers Served	Approx. 1.4 million
Infrastructure Investment	Capital Plan (2025-2027)	$7.6 billion
Customer Growth (2025)	Q3 Retail Customer Growth Rate	2.4%
C&I Segment Performance	Q3 2025 Sales Increase	6.6%
Public Outreach Scale	Heat Relief Program People Connected	Over 140,000

Finance: draft 13-week cash view by Friday.

Pinnacle West Capital Corporation (PNW) - Canvas Business Model: Customer Segments

Pinnacle West Capital Corporation, through its principal subsidiary Arizona Public Service (APS), provides retail electricity service to approximately 1.4 million Arizona homes and businesses. The customer base is segmented primarily by usage profile and load characteristics.

The retail sales mix, reflecting the proportion of energy sold to each group, is detailed below, based on year-end 2024 figures which inform the 2025 operational structure.

Customer Segment Category	Retail Sales Mix Percentage	Key Metric/Example Data Point
Residential customers	52%	Projected residential customer growth for 2025 is at the high end of the 1.5% to 2.5% range.
Commercial and Industrial (C&I) customers	48%	Weather-normalized C&I sales growth reached 6.6% for the third quarter of 2025.
Large load customers (e.g., data centers, semiconductor manufacturers)	Included in C&I	TSMC announced a total investment of $165 billion in Arizona, with its first fabrication facility in full production.
Wholesale power purchasers and transmission service users	Separate from Retail Sales	Higher transmission service revenues contributed to the 2025 third-quarter net income increase of about $18 million compared to the 2024 third quarter.

The service territory is one of the fastest-growing in the United States, which directly impacts customer acquisition and energy demand forecasts for Pinnacle West Capital Corporation.

• Customers in the fastest-growing US service territory (Phoenix metro area): Maricopa County, home to about 70% of APS customers, ranked third for numeric growth among U.S. counties recently.
• Overall customer growth for 2025 is expected to be at the high end of the 2% to 2.5% range.
• The company anticipates customer growth will contribute 3% to 5% of its long-term weather-normalized sales growth.
• APS plans to add 9,805 MW of renewable energy, battery storage, and natural gas between 2025 and 2028 to meet this growth.

The Commercial and Industrial segment is a critical driver of near-term sales expansion, especially due to specific industrial anchors.

For the second quarter of 2025, the C&I segment showed robust sales growth of 8%, directly linked to the ramping of large manufacturing and data center customers.

The growth from large customers is significant enough that Pinnacle West Capital Corporation has updated its procedures for estimating unbilled revenues related to these customer classes.

Regarding transmission service users, Pinnacle West Capital Corporation's 2025 Ten-Year Plan includes developing 184 miles of new transmission lines and upgrading 687 miles of existing lines over the next 10 years to support the growing region, including a 28-mile 500kV line for the Phoenix metropolitan area.

The financial results for the third quarter of 2025 reflect the direct impact of these customer segments, with the company raising its 2025 consolidated earnings guidance to a range of $4.90 to $5.10 per diluted share.

The company's consolidated assets were nearly $30 billion as of the third quarter of 2025.

Pinnacle West Capital Corporation (PNW) - Canvas Business Model: Cost Structure

The cost structure for Pinnacle West Capital Corporation (PNW) is heavily weighted toward capital-intensive utility operations, driven by necessary infrastructure investment and the inherent costs of energy production and delivery in a growing service territory like Arizona.

High Capital Expenditures (CapEx)

Capital spending is a dominant cost driver, reflecting the need to maintain and upgrade assets to serve a rapidly expanding customer base. Pinnacle West Capital announced plans to invest approximately $\text{\$9.66 billion}$ in capital expenditures spanning from 2024 through 2027, focusing on generation, transmission, and distribution infrastructure. This translates to an average annual capital outlay near $\text{\$2.415 billion}$ to support reliability and clean energy integration.

Fuel and Purchased Power Expenses

These represent significant variable costs tied directly to energy generation and procurement. Volatile fuel and purchased power costs are explicitly noted as a risk factor for Pinnacle West Capital. For the third quarter of 2025, the impact of these costs, alongside weather effects, influenced the year-over-year change in operating revenue less these expenses.

Operations and Maintenance (O&M) Expenses

Operations and Maintenance (O&M) expenses are closely managed, with management signaling a focus on efficiency. For the full year 2025, Pinnacle West Capital revised its consolidated O&M guidance upward to a range of $\text{\$1.025 billion}$ to $\text{\$1.045 billion}$. The strategic goal is for these costs to decline on a per megawatt-hour (MWh) basis, which helps offset inflationary pressures and supports customer affordability, even as total spending increases due to system needs.

Here is a look at key financial metrics relevant to the cost base as of late 2025:

Cost/Metric Category	Latest Reported Value/Range	Reporting Period/Date
Forecasted 2024-2027 Total CapEx	$\text{\$9.66 billion}$	Through 2027
Revised 2025 Consolidated O&M Expense Guidance	$\text{\$1.025 billion}$ to $\text{\$1.045 billion}$	Full Year 2025
Interest Expense on Debt	$\text{\$93.53 million}$	Quarter Ending September 2025
Total Debt (Short-Term + Long-Term Debt & Capital Lease Obligation)	Approx. $\text{\$14.25 billion}$ (using Sep 2025 data)	September 2025
Weighted Average Cost of Capital (WACC)	$\text{4.55\%}$	As of November 27, 2025

Interest Expense on Long-Term Debt

Financing the substantial asset base requires significant debt, leading to interest expense. Pinnacle West Capital reported an Interest Expense on Debt of $\text{\$93.53 million}$ for the fiscal quarter ending in September of 2025. The company's capital structure, as referenced in mid-2025 regulatory filings, included approximately $\text{47.65\%}$ long-term debt. The overall cost of financing, represented by the Weighted Average Cost of Capital (WACC), was most recently calculated at $\text{4.55\%}$ as of late November 2025.

Regulatory Compliance and Depreciation/Amortization Costs

Depreciation and Amortization (D&A) is a non-cash cost that reflects the wear and tear of the utility plant. D&A costs have been variable; for instance, second-quarter 2025 results showed higher D&A due to new plant additions, while third-quarter 2025 results showed lower D&A partially due to operations ceasing at the Cholla plant.

Other regulatory and compliance costs are embedded in operations, but the need for timely cost recovery is managed through regulatory mechanisms. You should track these key cost components:

• Higher interest charges were noted as a negative factor impacting net income in the second quarter of 2025 compared to the prior year.
• Depreciation and amortization expense is directly influenced by the pace of capital additions and asset retirements.
• The company's 2026 earnings projection anticipates a decline from 2025 levels, partly due to expected higher financing and D&A costs.
• Regulatory lag remains a risk, as capital spending ramps up before rate relief takes effect, potentially pinching margins.

Finance: draft 13-week cash view by Friday.

Pinnacle West Capital Corporation (PNW) - Canvas Business Model: Revenue Streams

You're looking at the core money-makers for Pinnacle West Capital Corporation (PNW) as of late 2025. The business model is heavily regulated, meaning revenue stability comes from serving a growing customer base under approved tariffs. It's all about volume and approved investment returns, so let's look at the hard numbers driving the top line.

The primary revenue engine is the regulated retail electric sales through its principal subsidiary, Arizona Public Service (APS). As of the third quarter of 2025, APS is serving approximately 1.4 million customers across central Arizona. This customer base is expanding; for the third quarter of 2025, the company reported a 2.4% increase in its customer base year-over-year. That growth, combined with a hot summer, drove weather-normalized sales growth of 5.4% for the quarter.

Here's a snapshot of the recent top-line performance, which is what we use to gauge the health of the revenue base:

Metric	Value	Period
Reported Operating Revenues	$1,820.7 million	Q3 2025
Q3 2025 Net Income Attributable to Common Shareholders	$413.2 million	Q3 2025
Reported Q3 2025 Earnings Per Share (EPS)	$3.39	Q3 2025
Long-Term Sales Growth Target	5% to 7% through 2030

Another key component feeding the revenue stream is income derived from infrastructure investment. Pinnacle West Capital Corporation is executing on a significant capital plan, with APS intending to invest more than $2.5 billion annually through 2028 for infrastructure additions and upgrades. The return on this investment is realized through rate base growth. Management projects rate base growth at 7% to 9% through 2028.

Beyond direct retail sales, the company captures revenue from its transmission assets. The Q3 2025 results specifically cited higher transmission service revenues as a positive contributor to the quarter's performance. This revenue stream is less dependent on local weather and more on system utilization and contracts with third parties.

Management's confidence in these revenue drivers-customer growth, sales volume, and capital deployment-is reflected in their updated outlook. For the full year 2025, Pinnacle West Capital Corporation raised its consolidated earnings per share (EPS) guidance to a range of $4.90 to $5.10 per diluted share. That's a significant lift from the previous range of $4.40 to $4.60. Looking ahead, the 2026 consolidated earnings guidance is set between $4.55 to $4.75 per diluted share on a weather-normalized basis.

To summarize the revenue drivers in a list, you see:

• Regulated retail electric sales to 1.4 million customers.
• Revenue tied to rate base growth projected at 7% to 9% through 2028.
• Contribution from higher transmission service revenues.
• Total Q3 2025 operating revenues of $1,820.7 million.
• 2025 full-year EPS guidance range raised to $4.90 to $5.10.

Finance: draft 13-week cash view by Friday.