Pinnacle West Capital NYSE: PNW opened 2026 with first-quarter results that management said were in line with the financial guidance issued in February, supported by higher transmission revenue, weather-driven demand, and continued customer growth in Arizona.
Management points to Arizona growth and large-load momentum
Chairman, President, and CEO Ted Geisler said Arizona’s economy continues to expand, led by semiconductor and advanced manufacturing activity. Geisler highlighted Taiwan Semiconductor Manufacturing Co.’s continued buildout in the state, noting that with its second fab complete, TSMC “expects to begin volume production of 3-nanometer chips in the second half of next year.” He added that construction is underway on TSMC’s third fabrication facility, and the company has begun construction on a fourth fab and an advanced packaging facility expected to come online by 2029.
Geisler also said the broader semiconductor supply chain is expanding locally, pointing to United Integrated Services Corp, Sunlit Chemical, and Mornstair purchasing land in North Phoenix, alongside hiring and capacity increases by engineering firms and specialized suppliers. He said those investments “demonstrate strong confidence in Arizona’s economy and reinforce the sustained growth we are seeing across our service territory.”
Grid modernization, generation buildout, and summer readiness
On operations, Geisler said the company continues to emphasize reliability, grid resilience, and infrastructure investment, including the use of automation and advanced analytics. He said APS is applying machine learning tools to anticipate equipment performance, prioritize asset maintenance, and improve outage restoration estimates, including during periods of elevated wildfire or weather risk.
Geisler also provided updates on major projects:
- Redhawk expansion: Construction is underway on the project, which is expected to add eight combustion turbines and about 400 MW of natural gas capacity.
- Desert Sun: The company has “secured major equipment reservations” and is advancing early development activities including siting and permitting.
- All-source RFP: The utility has received proposals from an all-source request for proposals targeting resources entering service between 2029 and 2031, and is evaluating bids with final awards expected later this year.
Looking to near-term demand, Geisler said Palo Verde Unit 2 was in the final days of a planned refueling outage and is expected to return to service soon. He added that with all three units operating, Palo Verde will help meet summer demand with “round-the-clock, reliable, and affordable energy.”
First-quarter EPS improves on transmission revenue, weather, and lower O&M
CFO Andrew Cooper reported first-quarter 2026 earnings of $0.27 per share, compared with a loss of $0.04 per share in the first quarter of 2025. Cooper said the quarter benefited primarily from higher transmission revenue, favorable weather, higher sales and usage, and lower operations and maintenance expense, partially offset by increased financing costs, a smaller contribution from the El Dorado investment, and higher depreciation and amortization.
Cooper said transmission revenue contributed $0.16 of benefit during the quarter, reflecting increased transmission investment “to support our growing customer base.” He said the company expects transmission to remain a strong contributor throughout the year in line with annual guidance.
Weather also lifted results. Cooper said while heating load was lower early in the quarter due to mild winter conditions, March was unusually hot. Citing the National Weather Service, he said March was the hottest on record, with nine days at or above 100 degrees. Cooper quantified the weather impact as a $0.13 benefit attributable to increased cooling degree days, which raised residential and commercial demand.
On the expense side, Cooper said O&M declined versus last year, largely due to lower planned outage expenses and a reduction in commission-required energy efficiency programs. He added the company remains focused on “declining O&M per megawatt-hour.” Meanwhile, interest expense rose year over year due to higher debt balances, and depreciation and amortization increased slightly as additional plant was placed in service, partially offset by the retirement of Cholla.
Sales growth, customer additions, and the “subscription model” for large loads
Cooper said customer growth in the quarter was 2.2%, near the high end of annual customer growth guidance. Weather-normalized sales growth was 9.4% for the quarter, driven by commercial and industrial growth of 14.6% and residential growth of 1.8%. Cooper noted a one-time adjustment affected the comparison to last year; adjusting for that, he said weather-normalized sales growth would still have been 7.4%.
Despite the strong start, Cooper said the company is not changing its annual sales growth guidance of 4% to 6% at this time.
During the Q&A, Cooper discussed the company’s longer-term sales growth outlook through 2030 and said the guidance reflects customers already committed today, which he characterized as roughly 4,500 megawatts. He also said there is “a large backlog of customers in our queue,” and that the company will continue to evaluate opportunities to invest and potentially grow beyond the base plan as it executes its capital program.
Management repeatedly referenced ongoing efforts around “subscription model” contracts—special agreements designed to serve large customers while ensuring “growth pays for growth.” Responding to questions about demand, management said the company’s uncommitted queue remains “just under 20 gigawatts,” while acknowledging the mix may include duplicative or early-stage projects. The company said negotiations are active but complex, involving transmission and generation buildout, timing, financing, and rate design, and it expects to file agreements with the Arizona Corporation Commission this year once concluded.
Asked about the initial size of the subscription offering (referenced as roughly 1.0 to 1.2 gigawatts), management said the sizing was driven by the generation and transmission infrastructure it could identify and align to customer timeframes, including Desert Sun and associated transmission, and that the offering would be revisited as infrastructure opportunities evolve.
Regulatory items: rate case schedule, IRP timing, and policy changes
Geisler said the company’s rate case remains on track, with multiple rounds of written testimony completed and a hearing scheduled to begin May 18.
Management also addressed timing for its next Integrated Resource Plan filing, referencing an August 3 deadline. The company said the IRP will incorporate updated long-term views of sales growth across customer segments and will include committed high-load-factor growth, but will not include uncontracted projects in the queue, which it described as upside. Management said the IRP will outline specific near-term projects already announced and broader future “buckets” of generation and transmission needs.
On state-level policy, management said the Arizona Corporation Commission’s repeal of the Renewable Energy Standard is not expected to have an impact, noting APS is already exceeding the original renewable goals and that resource additions are increasingly market-driven. Management also said the commission’s review of demand-side management and energy efficiency programs “appropriately right-sized” offerings and, as described on the call, resulted in “a roughly 1% rate decrease to all customers.”
Balance sheet and financing: equity needs for 2026 completed
Cooper said the company has had positive discussions with all three credit rating agencies, resulting in maintained ratings and stable outlooks. He added that the company’s financing guidance is unchanged, and that it has completed all of its equity funding needs for 2026.
Cooper said Pinnacle West now has nearly $850 million of priced equity available for future issuance under equity forwards, including more than $350 million priced during the first quarter. He said the company continues to use a mix of debt and equity to maintain a balanced capital structure, and plans to revisit its capital and financing plans at the conclusion of the rate case.
About Pinnacle West Capital NYSE: PNW
Pinnacle West Capital Corporation is a publicly traded utility holding company headquartered in Phoenix, Arizona. Through its principal subsidiary, Arizona Public Service Company (APS), Pinnacle West generates, transmits and distributes electricity to more than one million residential, commercial and industrial customers across central and southern Arizona. The company's regulated operations focus on delivering safe, reliable power while meeting evolving environmental standards.
The company's diversified generation portfolio includes natural gas–fired plants, the nuclear-powered Palo Verde Generating Station—the largest nuclear facility in the United States by net output—plus growing investments in solar and battery storage projects.
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