Pinnacle West Capital NYSE: PNW raised its full-year earnings and sales-growth outlook after reporting third-quarter results supported by stronger demand across customer classes, favorable weather and continued economic development in Arizona.
The utility reported third-quarter earnings of $3.49 per share, up $0.10 from a year earlier. Chief Financial Officer Andrew Cooper said sales and customer growth contributed about $0.35 per share of earnings growth in the quarter, more than offsetting higher depreciation, amortization, interest expense and financing costs associated with system investments.
The company increased its 2026 earnings guidance to $5.05 to $5.25 per share from a previous range of $4.55 to $4.75 per share. It also lifted its full-year retail sales growth outlook to 8% to 10%, including expected growth of 5% to 7% from large commercial and industrial customers.
Demand Growth Drives Updated Outlook
Weather-normalized retail sales rose 9.5% during the third quarter, including a 14.5% increase in commercial and industrial sales and a 4.5% gain in residential sales. Customer growth was 1.8%.
Cooper said the quarter marked the company’s second consecutive period of weather-normalized retail sales growth above 9%. While weather benefited results, he said the updated guidance was driven primarily by stronger-than-expected sales growth rather than temperature-related demand.
“This has been fundamentally a story of sales growth,” Cooper said, pointing to residential customer additions and usage as well as the faster-than-expected ramp of large commercial and industrial customers.
For the period through 2030, Pinnacle West raised its long-term sales-growth outlook to 8% to 10%, from a prior outlook of 5% to 7%. The company expects large commercial and industrial customers to contribute 7% to 9% growth over that period, while annual customer growth is projected at 1.5% to 2.5%.
Chairman, President and CEO Ted Geisler said the company served customers through 12 record-setting peak-demand days during the summer. The Palo Verde nuclear plant operated at a 100% capacity factor over the summer, he said.
TSMC Agreement and Customer Protections
In October, Pinnacle West executed its first direct pricing contract with Taiwan Semiconductor Manufacturing Co., or TSMC. Subject to regulatory approval, the 25-year agreement would serve approximately 1.88 gigawatts of demand at full build-out across TSMC’s chip manufacturing campus.
Geisler said the agreement includes upfront capital contributions and credit-support mechanisms intended to align infrastructure and resource investments with TSMC’s demand. “TSMC pays its own way,” he said, adding that residential customers would not subsidize the growth. The company expects to file the agreement with the Arizona Corporation Commission in the coming days.
Management described the direct pricing contract model as a repeatable framework for other large customers. The agreements can include cash construction-work-in-progress contributions, deferred-revenue prepayments, collateral, termination provisions, direct assignment of costs, and minimum energy and demand thresholds.
The company said it is in discussions with other prospective customers but did not provide a timetable or forecast for additional agreements. Geisler said Pinnacle West is also seeking to preserve capacity for residential, small and medium-sized businesses, manufacturing and other non-data-center demand.
Resource Plan Calls for Generation and Transmission Additions
Pinnacle West’s recently filed Integrated Resource Plan projects annual customer energy requirements will more than double to about 80,600 gigawatt-hours by 2041. Peak demand is projected to reach 14.5 gigawatts, more than 5 gigawatts above current levels.
The preferred plan identifies nearly 15 gigawatts of new resources and roughly 2.6 gigawatts of additional transmission capacity over the 15-year planning horizon. Geisler emphasized that the plan is a roadmap rather than a decision on resource ownership.
The company’s committed-demand forecast increased to 5.8 gigawatts, about 1.3 gigawatts above its prior level. The 15-gigawatt resource estimate reflects committed or contracted demand and does not include potential future data-center or large-manufacturing projects that have not been contracted, according to Geisler.
- About 4.5 gigawatts of resources are expected to enter service by 2028.
- The plan includes about 2.8 gigawatts of additional thermal generation.
- Approximately 40% of projects currently in development are APS-owned.
Geisler cited the Redhawk expansion, Cholla conversion, Saguaro and Desert Sun projects as developments with initial phases underway. The company plans to continue using an all-source competitive procurement process and expects to issue resource requests for proposals generally on an annual basis.
The company also said the Southwest Pipeline is expected to support incremental thermal generation entering service in the 2030s. Pinnacle West has contracted capacity beyond the needs of its currently announced projects, Geisler said. Management continues to favor a portfolio combining natural gas, utility-scale solar and battery storage.
Rate Case and Financing Plans
Pinnacle West is awaiting the administrative law judge’s recommended opinion and order in its pending rate case. The company expects a final Arizona Corporation Commission decision before year-end, with management indicating it anticipates a decision around mid-December.
Cooper said the company expects rates from the case to remain in effect through 2027. Under its proposed formula-rate timeline, the first filing would occur in May 2027, with rates taking effect toward the end of that year. A second filing in May 2028 would be the first opportunity to operate in a full annual formula-rate cadence, with 2029 representing the expected run-rate period.
Management’s goal is to earn within 50 basis points of its authorized return after addressing regulatory lag. Cooper said formula rates, direct pricing contracts and sales growth should help narrow the gap between rate-base growth and earnings growth over time.
During the third quarter, Pinnacle West issued $700 million of senior unsecured notes, including a $100 million reopening of its 2035 notes. It also priced about $235 million through its at-the-market equity program, bringing year-to-date activity under the program to nearly $920 million.
Cooper said the company has priced most of its anticipated 2026 and 2027 equity needs. Pinnacle West generally seeks to maintain the utility’s equity capitalization above 50%, with management favoring the 52%-plus range included in the current rate case.
About Pinnacle West Capital (NYSE:PNW)
Pinnacle West Capital Corporation NYSE: PNW is an energy holding company based in Phoenix, Arizona. Its principal subsidiary, Arizona Public Service Company (APS), is an electric utility that generates, transmits and distributes electricity to customers across Arizona.
APS serves residential, commercial, industrial and governmental customers through a diverse power portfolio that includes nuclear, natural gas, coal, solar and other renewable energy resources. The utility is also involved in maintaining and expanding the electric grid, supporting energy-efficiency programs and developing cleaner energy resources.
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