ARIZONA PUBLIC SERVICE CO

Previous wording

Pinnacle West is an investor-owned electric utility holding company based in Phoenix, Arizona with consolidated assets of approximately $31 billion. We derive essentially all of our revenues and earnings from our principal subsidiary, APS. Since 1886, APS and its affiliates have provided energy and energy-related products to people and businesses throughout Arizona. APS is Arizona’s largest and longest-serving electric company and generates safe, affordable and reliable electricity for approximately 1.5 million retail customers in 11 of Arizona’s 15 counties. APS is also the operator and co-owner of Palo Verde — a primary source of electricity for the southwestern United States. Our other active subsidiaries are El Dorado and PNW Power.

Current wording

Pinnacle West is an investor-owned electric utility holding company based in Phoenix, Arizona with consolidated assets of approximately $33 billion. We derive essentially all of our revenues and earnings from our principal subsidiary, APS. Since 1886, APS and its affiliates have provided energy and energy-related products to people and businesses throughout Arizona. APS is Arizona’s largest and longest-serving electric company and generates safe, affordable and reliable electricity for approximately 1.5 million retail customers in 11 of Arizona’s 15 counties. APS is also the operator and co-owner of Palo Verde — a primary source of electricity for the southwestern United States. Our other active subsidiaries are El Dorado and PNW Power.

Previous wording

Additional natural gas capacity is necessary to support reliable service and meet increasing energy needs. However, existing natural gas pipelines into Arizona are currently committed. As a result, in July 2025, APS executed a gas transportation precedent agreement to secure a long-term supply of natural gas. The new pipeline is expected to be operational by late 2029 and will be owned and operated by a third-party. APS plans to add up to 2,000 MW of flexible natural gas generation to its portfolio, designed to help meet the growing around-the-clock energy needs in Arizona. APS continues to explore additional development opportunities to meet Arizona’s growing needs.

Current wording

Currently, additional natural gas capacity is necessary to support reliable service and meet increasing energy needs. However, at this time existing natural gas pipelines into Arizona are fully committed. As a result, in July 2025, APS executed a gas transportation precedent agreement to secure a long-term supply of additional natural gas transportation. The new pipeline is expected to be operational by late 2029 and will be owned and operated by a third party. In July 2026, APS announced plans to convert two units at Cholla to natural gas, adding approximately 380 MW of gas-fired generation. The plan is subject to change pending the comparison to other generation sources that APS is considering in its evaluation of the 2025 ASRFP. The plan contemplates that construction on the gas conversion would begin in 2028 with a targeted in-service date in 2029. In addition to the planned Cholla gas conversion, APS plans to add up to 2,000 MW of flexible natural gas generation to its portfolio, designed to help meet the growing around-the-clock energy needs in Arizona. APS continues to explore additional development opportunities to meet Arizona’s growing needs.

Previous wording

APS uses fire modeling software to identify and calculate risk and target future system improvement investments such as fire-resistant pole wrapping, wood to steel pole conversions, and additional remote-controllable field devices like reclosers and switches. In 2024, APS began installing a system of artificial intelligence-based fire sensing cameras with the ability to detect and alert on fire ignitions. These alerts are sent both to APS and fire response dispatch centers to speed fire response in APS’s service territory regardless of the cause of the fire. APS also implemented a public safety power shutoff (“PSPS”) program on certain feeders that began in the 2024 fire season, leveraging the additional real-time analysis provided by the modeling software. APS has educated and will continue education outreach to customers and communities that may potentially be impacted by the PSPS program.

Current wording

APS uses fire modeling software to identify and calculate risk and target future system improvement investments such as fire-resistant pole wrapping, wood to steel pole conversions, and additional remote-controllable field devices like reclosers and switches. In 2024, APS began installing a system of artificial intelligence-based fire sensing cameras with the ability to detect and alert on fire ignitions. These alerts are sent both to APS and fire response dispatch centers to speed fire response in APS’s service territory regardless of the cause of the fire. APS also implemented a public safety power shutoff (“PSPS”) program on certain feeders that began in the 2024 fire season, leveraging real-time analysis of weather and environmental factors, such as temperature, humidity, fuel moisture levels, and wind, provided by APS field sensors and the modeling software. APS has educated and will continue education outreach to customers and communities that may potentially be impacted by the PSPS program.

Previous wording

APS was selected by DOE’s Grid Deployment Office (“GDO”) to receive up to $70 million in federal money for fire mitigation and grid infrastructure projects. This funding is part of the GDO’s Grid Resilience and Innovation Partnership Program and is contingent on APS negotiating and executing final grant agreements with GDO. Additionally, on May 12, 2025, Arizona Governor Hobbs signed into law a bill that requires Arizona electric utilities to develop and seek approval for wildfire mitigation plans and defines the standard of care with respect to wildfire-related claims by reference to such plans. Pursuant to that legislation, APS has submitted its Comprehensive Wildfire Mitigation Plan to the Arizona Department of Forestry and Fire Management for review and approval. APS anticipates that process will conclude sometime in the second quarter of 2026; however, APS cannot predict the outcome of this matter. APS continues to evaluate policy and regulatory options, as well as insurance programs, to mitigate the impact of wildfire events.

Current wording

APS was selected by DOE’s Grid Deployment Office (“GDO”) to receive up to $70 million in federal money for fire mitigation and grid infrastructure projects. This funding is part of the GDO’s Grid Resilience and Innovation Partnership Program and is contingent on APS negotiating and executing final grant agreements with GDO. Additionally, on May 12, 2025, the Arizona governor signed into law a bill that requires Arizona electric utilities to develop and seek approval for wildfire mitigation plans and defines the standard of care with respect to wildfire-related claims by reference to such plans. Pursuant to that legislation, APS submitted its Comprehensive Wildfire Mitigation Plan to the Arizona Department of Forestry and Fire Management for review and approval. The wildfire mitigation plan was approved on May 7, 2026. APS continues to evaluate policy and regulatory options, as well as insurance programs, to mitigate the impact of wildfire events.

Previous wording

We are committed to keeping bills as low as possible for our customers while maintaining high levels of reliability. Inflation has dramatically impacted the cost of goods and services in recent years as shown by the Consumer Price Index for All Urban Consumers (“CPI-U”), which from 2018 through 2024 rose nationally 24.9% and 32.1% in Phoenix. Despite this, APS’s average residential rates remained well-below those inflation figures, rising 16.2% for the same period according to the U.S. Energy Information Administration. Inflation has moderated from earlier highs, with CPI-U rising 2.4% nationally and 1.7% in Phoenix over the 12 months ended February 2026. As a result of increased tariffs and supply chain constraints, APS amended several of its agreements from its ASRFP issued in 2023 to mitigate these cost impacts. However, APS remains cautious of potential price increases as a result of the ongoing Iranian conflict and current and proposed tariffs, which could lead to higher costs and supply chain constraints, while also continuing to monitor the outcome of the U.S. Supreme Court’s decision regarding the validity of certain tariffs and any other related executive or legislative action.

Current wording

We are committed to keeping bills as low as possible for our customers while maintaining high levels of reliability. Inflation has dramatically impacted the cost of goods and services in recent years, as shown by the Consumer Price Index for All Urban Consumers (“CPI-U”), which from 2018 through 2024 rose nationally 24.9% and 32.1% in Phoenix. Despite this, APS’s average residential rates remained well-below those inflation figures, rising 16.2% for the same period according to the U.S. Energy Information Administration. Inflation has recently reached its highest level since 2023, with CPI-U rising 4.2% nationally in the 12 months ended May 2026 and 3.0% in Phoenix over the 12 months ended April 2026. As a result of increased tariffs and supply chain constraints, APS amended several of its agreements from its ASRFP issued in 2023 to mitigate these cost impacts. However, APS remains cautious of potential price increases as a result of ongoing geopolitical events and current and proposed tariffs, which could lead to higher costs and supply chain constraints, while also continuing to monitor the impact of the U.S. Supreme Court’s recent decision regarding the validity of certain tariffs and any other related executive or legislative action.

Previous wording

There are also external opportunities that allow APS to deliver more affordable energy to customers, such as APS’s participation in western energy markets and programs. APS participated in market design and tariff development of Markets+, a day-ahead and real-time market offering from the Southwest Power Pool. The Markets+ tariff was filed with FERC on March 29, 2024 and was approved on January 16, 2025. APS is a funding party to the implementation phase of Markets+ and expects to go live in the market in October 2027. In addition, APS is participating in the Western Resource Adequacy Program administered by Western Power Pool and plans to transition to full-binding participation in 2027. These regional efforts are driven by the objectives of reducing customer cost and improving reliability. Until the transition to Markets+, APS will continue to participate in the Western Energy Imbalance Market (“WEIM”) as a tool for creating savings for APS’s customers from the real-time only, voluntary market. APS expects that its participation in the WEIM and future participation in Markets+ will lower its fuel and purchased-power costs, improve situational awareness for systems operations in the Western Interconnection, and improve integration of APS’s resources.

Current wording

There are also external opportunities that allow APS to deliver more affordable energy to customers, such as APS’s participation in western energy markets and programs. APS participated in market design and tariff development of Markets+, a day-ahead and real-time market offering from the Southwest Power Pool. The Markets+ tariff was filed with FERC on March 29, 2024 and was approved on January 16, 2025. APS is a funding party to the implementation phase of Markets+ and expects to go live in the market in late 2027 or early 2028. In addition, APS is participating in the Western Resource Adequacy Program administered by Western Power Pool and plans to transition to full-binding participation in 2027. These regional efforts are driven by the objectives of reducing customer cost and improving reliability. APS will continue to participate in the Western Energy Imbalance Market (“WEIM”) as a tool for creating savings for APS’s customers from the real-time only, voluntary market for as long as feasible leading up to the transition to Markets+. APS expects that its participation in the WEIM and future participation in Markets+ will lower its fuel and purchased-power costs, improve situational awareness for systems operations in the Western Interconnection, and improve integration of APS’s resources.

Previous wording

APS remains focused on providing reliable energy at the lowest cost possible while striving to lower emissions over time and continues to look for opportunities to support reliability through dispatchable resources, such as gas and the potential extension of coal beyond 2031. APS’s diverse portfolio of existing and planned resources includes biomass, biogas, coal, energy storage, geothermal, natural gas, nuclear, solar, and wind. Every three years, APS performs an IRP, a comprehensive study to identify what resources will be necessary to safely, reliably, and affordably meet the demand and energy needs of its customers over the next 15 years. In November 2023, APS released its latest IRP, which identified forecasted customer demand and energy needs growing at an unprecedented rate. In developing the IRP, APS considered how factors such as forecasted economic growth, impacts from weather, and new resource technology availability impact the amount and type of resources required to reliably and affordably meet customer needs. These factors, among others, were used to develop a plan that identified a balanced mix of diverse energy-generating resources to reliably serve customers’ future energy needs. APS expects to file its next IRP later in 2026, which will provide an updated view on the resource types and volumes necessary to maintain reliability for a rapidly expanding customer base. To help ensure competitive costs for resources procured by APS, APS regularly issues competitive bid solicitations through the ASRFP process, with the most recent ASRFP being issued in 2025. These ASRFPs are open to bids for all resource types, including customer-scale (behind the meter) and utility-scale (in front of the meter) resources.

Current wording

APS remains focused on providing reliable energy at the lowest cost possible while striving to lower emissions over time and continues to look for opportunities to support reliability through traditional dispatchable resources, such as gas and the potential extension of coal beyond 2031. APS’s diverse portfolio of existing and planned resources includes biomass, biogas, coal, energy storage, geothermal, natural gas, nuclear, solar, and wind. Every three years, APS performs an IRP, a comprehensive study to identify what resources will be necessary to safely, reliably, and affordably meet the demand and energy needs of its customers over the next 15 years. In November 2023, APS released its latest IRP, which identified forecasted customer demand and energy needs growing at an unprecedented rate. In developing the IRP, APS considered how factors such as forecasted economic growth, impacts from weather, and new resource technology availability impact the amount and type of resources required to reliably and affordably meet customer needs. These factors, among others, were used to develop a plan that identified a balanced mix of diverse energy-generating resources to reliably serve customers’ future energy needs. APS expects to file its next IRP on October 30, 2026, which will provide an updated view on the resource types and volumes necessary to maintain reliability for a rapidly expanding customer base. To help ensure competitive costs for resources procured by APS, APS regularly issues competitive bid solicitations through the ASRFP process, with the most recent ASRFP being issued in 2025. These ASRFPs are open to bids for all resource types, including customer-scale (behind the meter) and utility-scale (in front of the meter) resources.

Previous wording

APS has an aspirational goal to be carbon-neutral by 2050. This means that for any GHG emissions still produced by our generation resources as of 2050, we will aim to offset these emissions elsewhere. This goal reflects APS’s interest in new innovation and market transformations that address carbon emissions, while relying on the IRP and ASRFP processes to help determine the path forward.

Current wording

APS has an aspirational goal to be carbon-neutral by 2050. This means that for any GHG emissions still produced by our generation resources as of 2050, we will aim to offset these emissions elsewhere. This goal reflects APS’s interest in new generation and energy storage innovation and market transformations that address carbon emissions, while relying on the IRP and ASRFP processes to help determine the path forward.

Previous wording

APS’s 24/7 call center answers more than 75% of customer calls within 30 seconds, and our mobile platforms enable our more than one million customers to quickly and easily find the information they need when they need it. We seek to provide relevant and valuable options for customers to manage their bill, including through rate plan options, programs that help them save energy and money, and alerts and notifications that help keep them aware of outages, payments, and usage. APS recently introduced a high-bill analyzer tool enabling phone advisors to provide customers with specific, customized guidance based on their actual usage and habits.

Current wording

APS’s 24/7 call center answers more than 75% of customer calls within 30 seconds, and our mobile platforms enable our customers to quickly and easily find the information they need when they need it. We seek to provide relevant and valuable options for customers to manage their bill, including through rate plan options, programs that help them save energy and money, and alerts and notifications that help keep them aware of outages, payments, and usage. APS has a high-bill analyzer tool enabling phone advisors to provide customers with specific, customized guidance based on their actual usage and habits. For customers experiencing higher-than-expected bills, APS’s high-bill analyzer tool allows phone advisors to provide specific, customized guidance based on a customer's actual energy-use patterns.

Previous wording

Additionally, APS offers a customer assistance program, including up to a 60% bill discount for vulnerable customers, flexible payment arrangements, and emergency utility bill assistance. To ensure customers in need are connected to these programs, we partner with nearly one hundred community action agencies across our service territory to train representatives who serve our shared customers.

Current wording

Additionally, APS offers a variety of customer assistance resources, including income-qualified bill discounts of up to 60% for eligible customers, flexible payment arrangements and emergency utility bill assistance. To ensure customers are aware of and connected to these resources, APS partners with nearly one hundred community action agencies across our service territory, providing training and support to representatives who serve our shared customers. Through these partnerships and programs, APS works to ensure assistance is available to customers when they need it most.

Previous wording

New Nuclear Generation. Along with other Arizona electric utilities, APS is exploring additional nuclear generation to provide around-the-clock carbon-free energy to meet rising energy demands in Arizona. APS has been monitoring emerging nuclear technologies, ranging from newer proposed and installed versions of large-scale reactors to small modular nuclear reactors. Small modular nuclear reactors are typically designed to generate 300 MW or less of energy per unit compared to, for example, the 1,400 MW per unit generated at Palo Verde. The utilities have applied for a grant from DOE to begin preliminary exploration of a potential site for additional nuclear energy for Arizona. The grant could support a three-year site selection process and possible preparation of an early site permit application to NRC.

Current wording

New Nuclear Generation. Along with other Arizona electric utilities, APS is exploring additional nuclear generation to provide around-the-clock carbon-free energy to meet rising energy demands in Arizona. APS has been monitoring emerging nuclear technologies, ranging from newer proposed and installed versions of large-scale reactors to small modular nuclear reactors. Small modular nuclear reactors are typically designed to generate 300 MW or less of energy per unit compared to, for example, the 1,400 MW per unit generated at Palo Verde. The Arizona electric utilities have begun preliminary exploration of a potential site for additional nuclear energy for Arizona.

Previous wording

Artificial Intelligence. To address the rapid advancement of AI technology risks and opportunities, APS has developed an AI strategy to responsibly utilize AI to advance our business strategy, enhance customer and employee experiences, and optimize operational reliability. At the core of our AI strategy is a robust governance model that develops guidance, policies, and relevant sub-strategies for the execution of AI projects at the Company. To ensure compliance with data security, reliability requirements, and our Code of Ethical Conduct, governance and oversight are provided by leadership and experts from our information technology, cybersecurity, human resources, ethics, supply chain, legal, and nuclear generation teams.

Current wording

Artificial Intelligence. To address the rapid advancement of AI technology risks and opportunities, APS has developed an AI strategy to responsibly utilize AI to advance our business strategy, enhance customer and employee experiences, and optimize operational reliability. At the core of our AI strategy is a focus on cultural transformation and workplace adoption of AI skills, supported by a robust governance model that guides the development of policies and strategies for the execution of AI projects at the Company. To ensure compliance with data security, reliability requirements, and our Code of Ethical Conduct, governance and oversight are provided by leadership and experts from our information technology, cybersecurity, human resources, ethics, supply chain, legal, and nuclear generation teams.

Previous wording

APS requested that the increase become effective in the second half of 2026. The hearing for this rate case is currently scheduled to begin in May 2026. APS cannot predict the outcome of its request nor when the 2025 Rate Case will be decided by the ACC.

Current wording

APS requested that the increase become effective in the second half of 2026. The hearing concluded on July 7, 2026. After the conclusion of the hearing, the Administrative Law Judge overseeing the hearing issued a procedural order outlining briefing schedules and other next steps in the proceedings. The order noted that the case is anticipated to be resolved before the end of this year. APS cannot predict the outcome of its request nor when the 2025 Rate Case will be decided by the ACC.

Previous wording

Six intervenors and the Attorney General of Arizona requested rehearing on various issues included in the ACC’s decision, such as the GAC for solar customers, the SRB, and Coal Community Transition funding. On April 15, 2024, the ACC granted, in part, the rehearing applications of the Attorney General, AriSEIA, SEIA, and Vote Solar specifically to review whether the GAC rate is just and reasonable, including whether it should be higher or lower, whether the GAC rate constitutes a discriminatory fee to solar customers, and whether omission of a GAC charge is discriminatory to non-solar customers. All other applications for rehearing were denied. A limited rehearing was held October 28 through November 1, 2024. Following the limited rehearing, an Administrative Law Judge issued the Limited Rehearing ROO on December 3, 2024, which recommended affirming the GAC as just and reasonable and that the GAC is not discriminatory to solar customers and the absence of a GAC is not discriminatory to non-solar customers. On December 17, 2024, the ACC approved the Limited Rehearing ROO with an amendment that requires APS in its next rate case to propose a revenue allocation based on a site-load cost of service study in order to bring further parity in revenue collection between solar and non-solar customers. SEIA, AriSEIA, Vote Solar, the Arizona Attorney General, and two individual customers have filed requests for rehearing of the ACC’s December 17, 2024 decision on the rehearing. The ACC has taken no action on these requests. In addition, each of these parties has subsequently filed an appeal to the Arizona Court of Appeals seeking review of the ACC’s decisions regarding the GAC and on rehearing. On February 25, 2026, parties provided oral arguments before the Court of Appeals. APS cannot predict the outcome of these proceedings.

Current wording

Six intervenors and the Attorney General of Arizona requested rehearing on various issues included in the ACC’s decision, such as the GAC for solar customers, the SRB, and Coal Community Transition funding. On April 15, 2024, the ACC granted, in part, the rehearing applications of the Attorney General, AriSEIA, SEIA, and Vote Solar specifically to review whether the GAC rate is just and reasonable, including whether it should be higher or lower, whether the GAC rate constitutes a discriminatory fee to solar customers, and whether omission of a GAC charge is discriminatory to non-solar customers. All other applications for rehearing were denied. A limited rehearing was held October 28 through November 1, 2024. Following the limited rehearing, an Administrative Law Judge issued the Limited Rehearing ROO on December 3, 2024, which recommended affirming the GAC as just and reasonable and that the GAC is not discriminatory to solar customers and the absence of a GAC is not discriminatory to non-solar customers. On December 17, 2024, the ACC approved the Limited Rehearing ROO with an amendment that requires APS in its next rate case to propose a revenue allocation based on a site-load cost of service study in order to bring further parity in revenue collection between solar and non-solar customers. SEIA, AriSEIA, Vote Solar, the Arizona Attorney General, and two individual customers have filed requests for rehearing of the ACC’s December 17, 2024 decision on the rehearing. The ACC has taken no action on these requests. In addition, each of these parties has subsequently filed an appeal to the Arizona Court of Appeals seeking review of the ACC’s decisions regarding the GAC and on rehearing. On February 25, 2026, parties provided oral arguments before the Court of Appeals. On June 16, 2026, the Arizona Court of Appeals found that the GAC and related increases for residential solar customers were imposed by the ACC without adequate notice or opportunity to be heard. APS has since moved for reconsideration of this decision and, if reconsideration is not successful, plans to seek further review of this decision before the Arizona Supreme Court. APS cannot predict the outcome of these proceedings, but does not expect the outcome will have a material impact on APS’ financial position, results of operations, or cash flows.

Previous wording

On January 5, 2023, the ACC opened a new docket to explore the possibility of modifications to the ACC’s historical test year rules. The ACC requested comments and held two workshops exploring ways to reduce regulatory lag, including alternative ratemaking structures such as future test years, hybrid test years, and formula rates. On December 3, 2024, the ACC approved a policy statement regarding formula rate plans. The policy statement provides regulated utilities with the opportunity to propose formula rate plans in future rate cases. On March 28, 2025, RUCO, ALCG, and an individual customer filed a lawsuit challenging the ACC’s authority to issue the formula rate policy statement outside of Arizona’s formula rulemaking process. On June 13, 2025, the lawsuit challenging the ACC’s formula rate policy was dismissed by the Superior Court of Maricopa County. Following the dismissal, the plaintiffs filed an appeal with the Arizona Court of Appeals as well as a Petition for Special Action with the Arizona Supreme Court. The Supreme Court declined to exercise jurisdiction on the Petition for Special Action. The plaintiffs also filed a Petition for Special Action with the Arizona Court of Appeals, which has accepted jurisdiction to determine whether the case should be remanded back to the Superior Court for expedited consideration of the merits. On November 21, 2025, the Arizona Court of Appeals ruled that the issue should be remanded back to the Superior Court to determine whether the ACC’s formula rate policy must go through a formal rulemaking process. In response, APS, the ACC, and several other Arizona utility companies filed petitions for review of the Court of Appeals decision with the Arizona Supreme Court, which is pending at this time. APS cannot predict the outcome of this matter.

Current wording

On January 5, 2023, the ACC opened a new docket to explore the possibility of modifications to the ACC’s historical test year rules. The ACC requested comments and held two workshops exploring ways to reduce regulatory lag, including alternative ratemaking structures such as future test years, hybrid test years, and formula rates. On December 3, 2024, the ACC approved a policy statement regarding formula rate plans. The policy statement provides regulated utilities with the opportunity to propose formula rate plans in future rate cases. On March 28, 2025, RUCO, the ALCG, and an individual customer filed a lawsuit challenging the ACC’s authority to issue the formula rate policy statement outside of Arizona’s formula rulemaking process. On June 13, 2025, the lawsuit challenging the ACC’s formula rate policy was dismissed by the Superior Court of Maricopa County. Following the dismissal, the plaintiffs filed an appeal with the Arizona Court of Appeals as well as a Petition for Special Action with the Arizona Supreme Court. The Supreme Court declined to exercise jurisdiction on the Petition for Special Action. The plaintiffs also filed a Petition for Special Action with the Arizona Court of Appeals, which has accepted jurisdiction to determine whether the case should be remanded back to the Superior Court for expedited consideration of the merits. On November 21, 2025, the Arizona Court of Appeals ruled that the issue should be remanded back to the Superior Court to determine whether the ACC’s formula rate policy must go through a formal rulemaking process. In response, APS, the ACC, and several other Arizona utility companies filed petitions for review of the Court of Appeals decision with the Arizona Supreme Court. That petition was denied on May 8, 2026, which will return the litigation to the Superior Court of Maricopa County for further proceedings on the merits of whether the ACC’s issuance of the formula rate policy statement complied with the Arizona Administrative Procedure Act. APS cannot predict the outcome of this matter or the impact (if any) it may have on other proceedings.

Previous wording

•$25 million investment in Copper Sky, previously AZ-VC, of which approximately $17 million has been funded as of March 31, 2026. Copper Sky is a fund focused on analyzing, investing, managing, and otherwise dealing with investments in privately-held early stage and emerging growth technology companies and businesses primarily based in Arizona, or based in other jurisdictions and having existing or potential strategic or economic ties to companies or other interests in Arizona.

Current wording

•$25 million investment in Copper Sky, previously AZ-VC, of which approximately $19 million has been funded as of June 30, 2026. Copper Sky is a fund focused on analyzing, investing, managing, and otherwise dealing with investments in privately-held early stage and emerging growth technology companies and businesses primarily based in Arizona, or based in other jurisdictions and having existing or potential strategic or economic ties to companies or other interests in Arizona.

Previous wording

•Equity investment in SAI, a private corporation that manufactures electrical switchgear equipment used by data centers. El Dorado accounts for this investment under the equity method and has an investment carrying value of approximately $26 million as of March 31, 2026.

Current wording

•Equity investment in SAI, a private corporation that manufactures electrical switchgear equipment used by data centers. El Dorado accounts for this investment under the equity method and has an investment carrying value of approximately $34 million as of June 30, 2026.

Previous wording

Actual and Projected Customer and Sales Growth. Retail customers in APS’s service territory increased 2.2% for the period ended March 31, 2026 compared with the prior-year period. For the three years through 2025, APS’s customer growth averaged 2.2% per year. We currently project annual customer growth to be 1.5% to 2.5% for 2026 and the average annual growth to be in the range of 1.5% to 2.5% through 2030 based on anticipated steady population growth in Arizona during that period.

Current wording

Actual and Projected Customer and Sales Growth. Retail customers in APS’s service territory increased 2.1% for the period ended June 30, 2026 compared with the prior-year period. For the three years through 2025, APS’s customer growth averaged 2.2% per year. We currently project annual customer growth to be 1.5% to 2.5% for 2026 and the average annual growth to be in the range of 1.5% to 2.5% through 2030 based on anticipated steady population growth in Arizona during that period.

Previous wording

Retail electricity sales in kWh, adjusted to exclude the effects of weather variations, increased 9.4% for the period ended March 31, 2026 compared with the prior-year period. While steady customer growth was somewhat offset by lower usage among residential customers, energy savings driven by customer conservation, energy efficiency, and distributed renewable generation initiatives, the main drivers of increased revenues for this period were continued strong sales to commercial and industrial customers and the continued ramp-up of new data center and large manufacturing customers. On account of the growth of large load customers as a proportion of our business, in the first quarter of 2025, we updated our procedures with respect to estimates of unbilled revenues. This resulted in a downward adjustment to unbilled revenues in that quarter, which contributes approximately 2.0% to 2026 year-to-date sales growth as compared to the same period last year.

Current wording

Retail electricity sales in kWh, adjusted to exclude the effects of weather variations, increased 3.9% for residential customers, 13.6% for commercial and industrial customers, 3.9% for residential customers, and 9.5% for all retail customers for the period ended June 30, 2026 compared with the prior-year period. While strong sales to commercial and industrial customers continue to be driven by the ramp-up of new data center and large manufacturing customers, the main drivers of increased revenues for this period were a surge in residential usage during April and May, including on days with normal weather conditions, following strong weather-driven demand caused by a record-setting March heat wave in Arizona in the first quarter of 2026 and steady customer growth, which was only partially offset by energy savings driven by customer conservation, energy efficiency, and distributed renewable generation. Due to the growth of large load customers as a proportion of our business, in the first quarter of 2025, we updated our procedures with respect to estimates of unbilled revenues. This resulted in a downward adjustment to unbilled revenues in that quarter, which contributes approximately 0.9% to 2026 year-to-date sales growth as compared to the same period last year.

Previous wording

For the three years through 2025, annual retail electricity sales growth averaged 3.9%, adjusted to exclude the effects of weather variations. Due to the expected growth of several data centers and large manufacturing facilities, we currently project that annual retail electricity sales in kWh will increase in the range of 4.0% to 6.0% for 2026 and that average annual growth will be in the range of 5.0% to 7.0% through 2030, including the effects of customer conservation, energy efficiency, and distributed renewable generation initiatives, but excluding the effects of weather variations. These projected sales growth ranges include the impacts of several data centers and large manufacturing facilities, which are expected to contribute to 2026 growth in the range of 3.0% to 5.0% and to average annual growth in the range of 4.0% to 6.0% through 2030.

Current wording

For the three years through 2025, annual retail electricity sales growth averaged 3.9%, adjusted to exclude the effects of weather variations. Due to the expected growth of several data centers and large manufacturing facilities, we currently project that annual retail electricity sales in kWh will increase in the range of 4.0% to 6.0% for 2026 and that average annual growth will be in the range of 5.0% to 7.0% through 2030, including the effects of customer conservation, energy efficiency, and distributed renewable generation, but excluding the effects of weather variations. These projected sales growth ranges include the impacts of several data centers and large manufacturing facilities, which are expected to contribute to 2026 growth in the range of 3.0% to 5.0% and to average annual growth in the range of 4.0% to 6.0% through 2030.

Previous wording

Operating revenues less fuel and purchased power. Operating revenues less fuel and purchased power expenses were $61 million higher for the three months ended March 31, 2026 compared with the prior-year period. The following table summarizes the major components of this change (dollars in millions):

Current wording

Operating revenues less fuel and purchased power. Operating revenues less fuel and purchased power expenses were $16 million higher for the three months ended June 30, 2026 compared with the prior-year period. The following table summarizes the major components of this change (dollars in millions):

Previous wording

Operations and maintenance. Operations and maintenance expenses decreased $23 million for the three months ended March 31, 2026 compared with the prior-year period, primarily due to:

Current wording

Operations and maintenance. Operations and maintenance expenses decreased $4 million for the three months ended June 30, 2026 compared with the prior-year period primarily due to:

Previous wording

•a decrease of $10 million related to costs for renewable energy programs and similar regulatory programs, which are partially offset in operating revenues and purchased power;

Current wording

•a decrease of $18 million related to costs for renewable energy programs and similar regulatory programs, which are partially offset in operating revenues and purchased power;

Previous wording

•a decrease of $14 million related to non-nuclear generation costs, primarily due to lower planned outages;

Current wording

•a decrease of $1 million related to non-nuclear generation costs, primarily due to lower planned outages;

Previous wording

•an increase of $2 million related to nuclear generation costs;

Current wording

•an increase of $4 million related to nuclear generation costs;

Previous wording

•an increase of $2 million related to transmission, distribution, and customer service costs;

Current wording

•an increase of $4 million related to transmission, distribution, and customer service costs;

Previous wording

•an increase of $4 million related to corporate resource costs; and

Current wording

•an increase of $5 million related to corporate resource costs; and

Previous wording

Depreciation and amortization. Depreciation and amortization expenses were $5 million higher for the three months ended March 31, 2026 compared to the prior-year period, primarily due to increased plant additions and intangible assets, partially offset by operations ceasing at Cholla in 2025.

Current wording

Depreciation and amortization. Depreciation and amortization expenses were $14 million higher for the three months ended June 30, 2026 compared to the prior-year period, primarily due to increased plant in service, partially offset by operations ceasing at the Cholla plant.

Previous wording

Other income and expense, net. Other income and expense, net was $15 million lower for the three months ended March 31, 2026 compared to the prior-year period, primarily due to investment gains in El Dorado recognized in the prior year and lower PSA interest income. The difference between APS’s and Pinnacle West’s other income and expense, net is primarily related to Pinnacle West’s gain in investment in El Dorado.

Current wording

Other income and expense, net. Other income and expense, net was $5 million lower for the three months ended June 30, 2026 compared to the prior-year period, primarily due to lower PSA interest income and higher other expenses, partially offset by investment gains in the Captive. The difference between APS’s and Pinnacle West’s other income and expense, net is primarily related to Pinnacle West’s investment gains in the Captive.

Previous wording

Interest charges, net of allowance for borrowed funds and equity funds used during construction. Interest charges, net of allowance for funds used during construction, were $19 million higher for the three months ended March 31, 2026 compared to the prior-year period, primarily due to higher debt balances.

Current wording

Interest charges, net of allowance for borrowed funds and equity funds used during construction. Interest charges, net of allowance for funds used during construction, were $18 million higher for the three months ended June 30, 2026 compared to the prior-year period, primarily due to higher debt balances, partially offset by higher allowance for equity funds used during construction.

Previous wording

March 31, 2026 was $33 million, compared with consolidated net loss attributable to common shareholders of $5 million for the prior-year period. The results reflect an increase of approximately $38 million, primarily as a result of higher transmission revenues, lower operations and maintenance expenses, the effects of weather, due primarily to extreme heat during February and March, the hottest on record in APS’s service territory, and customer usage, growth and related pricing. These positive factors were partially offset by higher interest charges, lower other income due to El Dorado investment gains recognized in the prior year, higher income taxes due to higher pre-tax income, partially offset by higher tax credits, and higher depreciation and amortization expenses mostly due to increased plant additions and intangible assets, partially offset by operations ceasing at Cholla in 2025.

Current wording

June 30, 2026 was $211 million, compared with consolidated net income attributable to common shareholders of $188 million for the prior-year period. The results reflect an increase of approximately $23 million, primarily as a result of the effects of weather, increased usage and customer growth, lower operations and maintenance expenses, and higher transmission service revenues. Customer growth in turn was partially offset by the related pricing and the impacts of energy efficiency. These positive factors were partially offset by higher interest charges, lower other income mainly due to higher El Dorado other income recognized in the prior year, and higher depreciation and amortization expenses mostly due to increased plant additions and intangible assets, partially offset by operations ceasing at Cholla.

Previous wording

•a decrease of $7 million related to information technology costs;

Current wording

•a decrease of $5 million related to information technology costs;

Previous wording

Income taxes. Income taxes were $7 million higher for the three months ended March 31, 2026 compared with the prior-year period, primarily due to higher pre-tax income, partially offset by higher tax credits.

Current wording

Income taxes. Income taxes were $3 million higher for the six months ended June 30, 2026 compared with the prior-year period, primarily due to higher pre-tax income, partially offset by higher tax credits.

Previous wording

Our primary sources of cash are dividends from APS and external debt and equity issuances. An ACC order does not allow APS to pay common dividends if the payment would reduce its common equity ratio below 40%. Per the related ACC order, the common equity ratio is defined as total shareholder equity divided by the sum of total shareholder equity and long-term debt, including current maturities of long-term debt. As of March 31, 2026, APS’s common equity ratio, as defined, was 50%. APS’s total shareholder equity was approximately $8.9 billion, and total capitalization, as calculated pursuant to the ACC order, was approximately $17.7 billion. Under this order, APS would be prohibited from paying dividends if such payment would reduce its total shareholder equity below approximately $7.1 billion, assuming APS’s total capitalization remains the same. This restriction does not materially affect Pinnacle West’s ability to meet its ongoing cash needs or ability to pay dividends to shareholders.

Current wording

Our primary sources of cash are dividends from APS and external debt and equity issuances. An ACC order does not allow APS to pay common dividends if the payment would reduce its common equity ratio below 40%. Per the related ACC order, the common equity ratio is defined as total shareholder equity divided by the sum of total shareholder equity and long-term debt, including current maturities of long-term debt. As of June 30, 2026, APS’s common equity ratio, as defined, was 51%. APS’s total shareholder equity was approximately $9.0 billion, and total capitalization, as calculated pursuant to the ACC order, was approximately $17.8 billion. Under this order, APS would be prohibited from paying dividends if such payment would reduce its total shareholder equity below approximately $7.1 billion, assuming APS’s total capitalization remains the same. This restriction does not materially affect Pinnacle West’s ability to meet its ongoing cash needs or ability to pay dividends to shareholders.

Previous wording

Dividends to Pinnacle West from APS are also dependent on a number of factors including, among others, APS’s financial condition and free cash flow, the sources of which vary from quarter-to-quarter due in part to the seasonal nature of electricity demand in Arizona. APS’s sources of cash include cash from operations and external sources of liquidity, including long- and short-term external debt financing such as commercial paper, term loans and its revolving credit facility. Cash from operations is dependent upon, among other things, the rates APS may charge and the timeliness of recovering costs incurred through its rates and adjustor recovery mechanisms. Regulatory lag may delay recovery and affect operating cash flows. APS’s capital requirements consist primarily of capital expenditures and maturities of long-term debt. APS funds its capital requirements with cash from operations and, to the extent necessary, external debt financings and equity infusions from Pinnacle West. On December 17, 2024, the ACC issued a financing order approving a limit on yearly equity infusions equal to 2.5% of APS’s total assets each calendar year on a three-year rolling average basis, subject to APS’s equity ratio remaining below the most recently approved rate case capital structure plus 50 basis points.

Current wording

Dividends to Pinnacle West from APS are also dependent on a number of factors including, among others, APS’s financial condition and free cash flow, the sources of which vary from quarter-to-quarter due in part to the seasonal nature of electricity demand in Arizona. APS’s sources of cash include cash from operations and external sources of liquidity, including long- and short-term external debt financing such as commercial paper, term loans and its revolving credit facility. Cash from operations is dependent upon, among other things, the rates APS may charge and the timeliness of recovering costs incurred through its rates and adjustor recovery mechanisms. Regulatory lag may delay recovery and affect operating cash flows. APS’s capital requirements consist primarily of capital expenditures and maturities of long-term debt. APS funds its capital requirements with cash from operations and, to the extent necessary, external debt financings and equity infusions from Pinnacle West. On December 17, 2024, the ACC issued a financing order approving a limit on yearly equity infusions equal to 2.5% of APS’s total assets each calendar year on a three-year rolling average basis, subject to APS’s equity ratio remaining below the most recently approved rate case capital structure plus 50 basis points. On July 31, 2026, APS submitted an application to the ACC requesting to increase the long-term debt limit from $9.5 billion to $12 billion. APS cannot predict the outcome of this matter.

Previous wording

Program, which takes into account the forward sale agreements in effect as of March 31, 2026. Pinnacle West also has forward sale agreements from an equity offering in February 2024 in effect as of March 31, 2026. See “Financing Cash Flows and Liquidity—Equity Offerings” below and Note 13 for more information.

Current wording

Pinnacle West has an ATM Program under which Pinnacle West may offer and sell Pinnacle West common stock and enter into forward sale agreements from time to time, subject to market conditions and other factors. Pinnacle West also has forward sale agreements from an equity offering in February 2024 in effect as of June 30, 2026. See “Financing Cash Flows and Liquidity—Equity Offerings” below and Note 13 for more information.

Previous wording

Three-month period ended March 31, 2026 compared with three-month period ended March 31, 2025. Pinnacle West’s consolidated net cash provided by operating activities was $235 million in 2026 compared to $402 million in 2025, a decrease of $167 million in net cash provided, primarily due to $74 million higher payments for operations and maintenance costs, $53 million higher working capital, $50 million in higher payments for fuel and purchased power costs, $27 million in higher interest paid on debt and $25 million higher payments for other taxes paid; partially offset by $65 million higher cash receipts from electric revenues.

Current wording

Six-month period ended June 30, 2026 compared with six-month period ended June 30, 2025. Pinnacle West’s consolidated net cash provided by operating activities was $629 million in 2026 compared to $663 million in 2025, a decrease of $34 million in net cash provided, primarily due to $68 million in higher payments for fuel and purchased power costs, $35 million in higher interest paid on debt, net of amounts capitalized, and $14 million higher payments for other taxes paid; partially offset by $61 million higher cash receipts from electric revenues and $22 million in higher working capital, net. The difference between APS’s and Pinnacle West’s net cash provided by operating activities primarily relates to APS’s lower interest paid on debt, net of amounts capitalized, and other changes in working capital.

Previous wording

Retirement plans and other postretirement benefits. Pinnacle West sponsors a qualified defined benefit pension plan and a non-qualified supplemental excess benefit retirement plan for the employees of Pinnacle West and our subsidiaries. Pinnacle West also sponsors other postretirement benefit plans for the employees of Pinnacle West and its subsidiaries. The requirements of the Employee Retirement Income Security Act of 1974 (“ERISA”) require us to contribute a minimum amount to the qualified plan. We contribute at least the minimum amount required under ERISA regulations, but no more than the maximum tax-deductible amount. Future year contribution amounts are dependent on plan asset performance and plan actuarial assumptions. The expected minimum required cash contributions for the pension plan are zero for the next three years and we do not expect to make any voluntary cash contributions in 2026, 2027 or 2028; however, we continue to evaluate and assess our ongoing contribution strategy. Regarding contributions to our other postretirement benefit plan, we have not made a contribution year-to-date in 2026 and do not expect to make any contributions in 2026, 2027 or 2028. We continually monitor financial market volatility and its impact on our retirement plans and other postretirement benefits, but we believe our liability driven investment strategy helps to minimize the impact of market volatility on our plan’s funded status.

Current wording

Security Act of 1974 (“ERISA”) require us to contribute a minimum amount to the qualified plan. We contribute at least the minimum amount required under ERISA regulations, but no more than the maximum tax-deductible amount. Future year contribution amounts are dependent on plan asset performance and plan actuarial assumptions. The expected minimum required cash contributions for the pension plan are zero for the next three years. However, while we do not expect to make any voluntary cash contributions in 2026, we are evaluating whether to make voluntary contributions in 2027 and 2028. The amounts of voluntary contributions, if any, will be determined as we continue to evaluate and assess our ongoing contribution strategy. Regarding contributions to our other postretirement benefit plan, we have not made a contribution year-to-date in 2026 and do not expect to make any contributions in 2026, 2027 or 2028. We continually monitor financial market volatility and its impact on our retirement plans and other postretirement benefits, but we believe our liability driven investment strategy helps to minimize the impact of market volatility on our plan’s funded status.

Previous wording

Three-month period ended March 31, 2026 compared with three-month period ended March 31, 2025. Pinnacle West’s consolidated net cash used for investing activities was $551 million in 2026 compared to $586 million in 2025, a decrease of $35 million primarily related to a $39 million increase in contributions in aid of construction partially offset by an $8 million increase in capital expenditures. See “Capital Expenditures” below for additional details.

Current wording

Six-month period ended June 30, 2026 compared with six-month period ended June 30, 2025. Pinnacle West’s consolidated net cash used for investing activities was $1,200 million in 2026 compared to $1,253 million in 2025, a decrease of $53 million of cash used primarily related to a $70 million increase in contributions in aid of construction; partially offset by a $25 million increase in capital expenditures. See “Capital Expenditures” below for additional details.

Previous wording

Three-month period ended March 31, 2026 compared with three-month period ended March 31, 2025. Pinnacle West’s consolidated net cash provided by financing activities was $316 million in 2026 compared to $190 million in 2025, an increase of $126 million in net cash provided primarily due to an increase of $595 million higher issuances of long-term debt; partially offset by a $465 million decrease in short-term borrowings.

Current wording

Six-month period ended June 30, 2026 compared with six-month period ended June 30, 2025. Pinnacle West’s consolidated net cash provided by financing activities was $574 million in 2026 compared to $605 million in 2025, a decrease of $31 million in net cash provided primarily due to a net decrease of $775 million in short-term borrowings; partially offset by a $450 million decrease in long-term debt repayments and a $297 million increase in long-term borrowings.