ARIZONA PUBLIC SERVICE CO

Previous wording

Our vision is to create a sustainable energy future for Arizona. Our mission is to serve customers with safe, reliable, and affordable energy. We are committed to delivering operational excellence at the lowest cost possible while aspiring to lower carbon emissions over time.

Current wording

Our vision is to create a sustainable energy future for Arizona. Our mission is to serve customers with safe, reliable, and affordable energy. As a part of that mission, in 2026, APS introduced its Pledge for Responsible Energy Growth, reaffirming its longstanding commitment to protect customers while serving the needs of new large energy users. The pledge is built on three core principles: safeguarding reliability by connecting large customers only when the grid can reliably support such customers; protecting customer rates by ensuring new large energy users pay the costs associated with serving their energy needs and growth; and preserving sufficient capacity to meet the needs of Arizona’s current and future homes, businesses, schools, hospitals, and communities.

Previous wording

Palo Verde, one of the nation’s largest carbon-free energy resources, serves as a foundational part of APS’s resource portfolio. The plant is a critical asset to the Southwest, generating more than 32 million MWh – enough power for roughly 3.4 million households, or approximately 8.5 million people. Its continued operation is important to a carbon-neutral future for Arizona and the region, as a reliable, continuous, affordable resource and as a large contributor to the local economy. APS owns or leases 29.1% of Units 1, 2, and 3 Palo Verde. In June 2025, APS entered into agreements to purchase two of the three leased interests in Unit 2. The two subject leased interests represented approximately 7% or 94 MW of Unit 2. The transaction closed in September 2025, leaving one remaining lease for approximately 5.2% of Unit 2 that expires in 2033. See Note 9 for more information. The 2025 Rate Case includes pro forma adjustments to account for these acquisitions.

Current wording

Palo Verde, one of the nation’s largest carbon-free energy resources, serves as a foundational part of APS’s resource portfolio. The plant is a critical asset to the Southwest, generating more than 32 million MWh per year – enough power for roughly 3.4 million households, or approximately 8.5 million people. Its continued operation is important to a carbon-neutral future for Arizona and the region, as a reliable, continuous, affordable resource and as a large contributor to the local economy. APS owns or leases 29.1% of Units 1, 2, and 3 Palo Verde. In June 2025, APS entered into agreements to purchase two of the three leased interests in Unit 2. The two subject leased interests represented approximately 7% or 94 MW of Unit 2. The transaction closed in September 2025, leaving one remaining lease for approximately 5.2% of Unit 2 that expires in 2033. See Note 9 for more information. The 2025 Rate Case includes pro forma adjustments to account for these acquisitions.

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 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.

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

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, 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.

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. The grant agreements with GDO were finalized and became effective September 30, 2026. 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 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.

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 slightly moderated from recent peaks, with CPI-U rising 3.4% nationally and 2.5% in Phoenix over the 12 months ended August 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. Ongoing geopolitical events and tariffs could lead to further cost increases and supply chain constraints resulting in rate increases and other negative impacts.

Previous wording

APS has seen increasing demand from large load customers in recent years. In the 2025 Rate Case, APS requested adjustments to rate designs and modification of cost allocation methodologies to ensure growth pays for growth and reduce cross-subsidization by customer classes. In line with the 2025 Rate Case, APS has developed an approach it believes will allow for these large load customers to fund the incremental infrastructure needed to serve them through long-term contracts where they cover capital costs and assume development risks, accelerating their path to service and ensuring those infrastructure costs are borne by those customers rather than residential or small business customers.

Current wording

APS has seen increasing demand from large energy users in recent years. Consistent with the Pledge for Responsible Energy Growth, APS is seeking adjustments to rate designs and modification of cost allocation methodologies in the 2025 Rate Case to ensure growth pays for growth and reduce cross-subsidization by customer classes. In line with the 2025 Rate Case, APS has developed an approach it believes will allow for these large energy users to fund the incremental infrastructure needed to serve them through long-term contracts where they cover capital costs and assume development risks, thereby accelerating their path to service and ensuring those infrastructure costs are borne by those customers rather than residential or small business customers.

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 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.

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 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 November 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 before being replaced by the real-time market of 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. As other market participants evaluate their market options, APS continues to monitor the participants in Western markets to ensure viability of benefits to its customers.

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 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.

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 extension of coal-fired generation 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 October 2026, APS released its latest IRP, which identified forecasted customer demand and energy needs growing faster than previously predicted. 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 filed its IRP on October 30, 2026, providing 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’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.

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 help customers understand and manage their energy bills by providing relevant information and options, including tools that explain energy usage and bill drivers, programs that help customers save energy and money, and alerts and notifications that help keep customers informed about outages, payments and usage. APS also helps many customers evaluate their rate plan options and identify the most economical rate plan based on their individual energy-use patterns and needs. 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 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.

Current wording

Additionally, APS offers a variety of customer assistance resources, including APS CARE, income-qualified discounts through APS Energy Support, Crisis Bill Assistance, and flexible payment arrangements. 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

◦elimination of the interim rate reset by accepting Commission approval prior to implementation (subject to an automatic reversion provision).

Current wording

◦elimination of the interim rate reset by accepting ACC approval prior to implementation (subject to an automatic reversion provision).

Previous 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.

Current wording

APS requested that the increase become effective in the second half of 2026. The hearing concluded on July 7, 2026. APS and other parties filed their Initial Post-Hearing Briefs and Reply Briefs on August 27, 2026 and September 11, 2026, respectively. Although APS anticipates that the 2025 Rate Case will 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. 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.

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 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. Following motions for reconsideration filed by APS and the Commission, the Court of Appeals denied those motions on October 29, 2026. APS now plans to file a petition for review with 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, 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.

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 returned 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. Subsequent to that remand, the Superior Court granted a motion on August 28, 2026, to stay the proceedings pending the outcome of appellate litigation in the Arizona Court of Appeals addressing challenges to the UNS Gas Inc. Annual Rate Adjustment Mechanism, which is premised on similar grounds as the Superior Court litigation. Thereafter, on September 28, 2026, RUCO filed a petition for another special action with the Arizona Supreme Court seeking to reverse the Superior Court’s stay and enjoin further implementation of retail formula rates in Arizona pursuant to the ACC’s policy statement. 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 $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.

Current wording

•$25 million investment in Copper Sky, of which approximately $20 million has been funded as of September 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

•$7.5 million investment in Westly Seed Fund, of which approximately $2 million has been funded as of June 30, 2026. Westly Seed Fund is focused on supporting entrepreneurs involved in the energy, mobility, building, and industrial sectors.

Current wording

•$7.5 million investment in Westly Seed Fund, of which approximately $3 million has been funded as of September 30, 2026. Westly Seed Fund is focused on supporting entrepreneurs involved in the energy, mobility, building, and industrial sectors.

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 $34 million as of June 30, 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 $41 million as of September 30, 2026.

Previous wording

Electric Operating Revenues. For 2025, retail electric revenues were 95% of our total operating revenue. For 2023 through 2025, retail electric revenues averaged approximately 94% of our total operating revenues. Our electric operating revenues are affected by customer growth or decline, variations in weather from period to period, customer mix, average usage per customer and the impacts of energy efficiency programs, distributed energy additions, electricity rates and tariffs, the recovery of PSA deferrals and the operation of other recovery mechanisms. Our revenues are affected by the availability of excess generation or other energy resources and wholesale market conditions, including competition, demand, and prices.

Current wording

Electric Operating Revenues. For 2025, retail electric revenues were 95% of our total operating revenues. For 2023 through 2025, retail electric revenues averaged approximately 94% of our total operating revenues. Our electric operating revenues are affected by customer growth or decline, variations in weather from period to period, customer mix, average usage per customer and the impacts of energy efficiency programs, distributed energy additions, electricity rates and tariffs, the recovery of PSA deferrals and the operation of other recovery mechanisms. Our revenues are affected by the availability of excess generation or other energy resources and wholesale market conditions, including competition, demand, and prices.

Previous 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.

Current wording

Actual and Projected Customer and Sales Growth. Retail customers in APS’s service territory increased 2.0% for the nine months ended September 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 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.

Current wording

Retail electricity sales in kWh, adjusted to exclude the effects of weather variations, increased 9.5% for all retail customers, including 4.2% for residential customers and 13.9% for commercial and industrial customers for the nine months ended September 30, 2026 compared with the prior-year period. While overall strong sales to commercial and industrial customers continue to be driven by the ramp-up of new large manufacturing and data center customers, the main drivers of increased revenues for this period were continued high levels of residential, small commercial, and industrial customer usage, following the strong customer usage pattern established during the second quarter, 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 0.5% 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, 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 large manufacturing and data center facilities, we currently project that annual retail electricity sales in kWh will increase in the range of 8.0% to 10.0% for 2026 and that average annual growth will be in the range of 8.0% to 10.0% 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 large manufacturing and data center facilities, which are expected to contribute to 2026 growth in the range of 5.0% to 7.0% and to average annual growth in the range of 7.0% to 9.0% through 2030.

Previous wording

Longer term, APS has been preparing for and can serve significant load growth from residential and business customers. On top of these existing growth trends, APS is also receiving incremental requests for service from large load customers with very high energy demands that persist virtually around-the-clock, such as data centers for AI and large manufacturers. These incremental requests for service by large load customers far exceed available generation and transmission resource capacity in the Southwest region for the foreseeable future. Because of the high growth in demand for such projects, APS has developed a queue that identifies and prioritizes projects while maintaining system reliability and affordability for existing APS customers. APS is also exploring available options for developing additional electric generation and transmission to meet these projections of future customer needs as a part of the company’s “growth pays for growth” strategy, such as long-term contracts with large load customers to pay for the costs associated with the incremental infrastructure needed to provide service without compromising reliability and affordability for existing customers.

Current wording

Longer term, APS has been preparing for and can serve significant load growth from residential and business customers. On top of these existing growth trends, APS is also receiving incremental requests for service from large energy users with very high energy demands that persist virtually around-the-clock, such as data centers for AI and large manufacturers. These incremental requests for service far exceed available generation and transmission resource capacity in the Southwest region for the foreseeable future. APS has developed a queue that identifies and prioritizes projects while maintaining system reliability and affordability for existing APS customers and signed its first DPC with a large energy user. See Note 7. APS continues exploring available options for developing additional electric generation and transmission to meet these projections of future customer needs while protecting customers as a part of the company’s Pledge for Responsible Energy Growth.

Previous wording

June 30, 2026 was $179 million, compared with consolidated net income attributable to common shareholders of $193 million for the prior-year period. The results reflect a decrease of approximately $14 million, primarily as a result of higher interest charges, higher depreciation and amortization expenses mostly due to increased plant additions, partially offset by operations ceasing at Cholla, and lower transmission service revenues. These negative factors were partially offset by the favorable impacts of the effects of weather, increased customer usage, customer growth, lower operations and maintenance expenses, and lower income taxes. Customer growth in turn was partially offset by the related pricing and the impacts of energy efficiency.

Current wording

September 30, 2026 was $434 million, compared with consolidated net income attributable to common shareholders of $413 million for the prior-year period. The results reflect an increase of approximately $21 million, primarily as a result of increased customer usage and growth and the effects of weather. These positive factors were partially offset by higher depreciation and amortization expenses, primarily due to increased plant in service, higher interest charges, and lower other income. Customer usage and growth were also partially offset by the related pricing and impacts of energy efficiency.

Previous 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):

Current wording

Operating revenues less fuel and purchased power. Operating revenues less fuel and purchased power expenses were $50 million higher for the three months ended September 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 $4 million for the three months ended June 30, 2026 compared with the prior-year period primarily due to:

Current wording

Operations and maintenance. Operations and maintenance expenses decreased $5 million for the three months ended September 30, 2026 compared with the prior-year period primarily due to:

Previous 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;

Current wording

•a decrease of $20 million related to costs for renewable energy programs and similar regulatory programs, which are partially offset in operating revenues and fuel and purchased power;

Previous wording

•a decrease of $15 million related to non-nuclear generation costs, primarily due to lower planned outages;

Current wording

•a decrease of $2 million related to non-nuclear generation costs;

Previous wording

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

Current wording

•an increase of $3 million related to nuclear generation costs;

Previous wording

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

Current wording

•an increase of $3 million related to transmission, distribution, and customer service costs;

Previous wording

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

Current wording

•an increase of $3 million related to corporate resource costs; and

Previous wording

•an increase of $2 million related to information technology costs;

Current wording

•an increase of $8 million related to information technology costs.

Previous 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.

Current wording

Depreciation and amortization. Depreciation and amortization expenses were $18 million higher for the three months ended September 30, 2026 compared with the prior-year period, primarily due to increased plant in service, partially offset by lower amortization of intangibles.

Previous 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.

Current wording

Other income and expense, net. Other income and expense, net were $9 million lower for the three months ended September 30, 2026 compared with the prior-year period, primarily due to the Captive activity recognized during the third quarter and lower PSA interest income. The difference between APS's and Pinnacle West's other income and expense, net is primarily related to investment activity recognized by Pinnacle West.

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 $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.

Current wording

Interest charges, net of allowance for borrowed funds and equity funds used during construction. Interest charges, net of allowance for borrowed funds and equity funds used during construction, were $11 million higher for the three months ended September 30, 2026 compared with the prior-year period, primarily due to higher debt balances, partially offset by higher allowance for equity funds used during construction.

Previous 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.

Current wording

Income taxes. Income taxes were $2 million higher for the three months ended September 30, 2026 compared with the prior-year period, primarily due to higher pre-tax income and lower permanent tax benefits, partially offset by higher tax credits.

Previous wording

Our consolidated net income attributable to common shareholders for the six months ended

Current wording

Our consolidated net income attributable to common shareholders for the nine months ended

Previous 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.

Current wording

September 30, 2026 was $646 million, compared with consolidated net income attributable to common shareholders of $601 million for the prior-year period. The results reflect an increase of approximately $45 million, primarily as a result of increased customer usage and growth, the effects of weather, higher LFCR revenues, and higher transmission revenues. These positive factors were partially offset by higher interest charges, higher depreciation and amortization expenses, primarily due to increased plant in service, partially offset by operations ceasing at Cholla and lower amortization of intangible assets, and lower other income. Customer usage and growth were also partially offset by the related pricing and impacts of energy efficiency.

Previous wording

Operating revenues less fuel and purchased power. Operating revenues less fuel and purchased power expenses were $76 million higher for the six months ended June 30, 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 $126 million higher for the nine months ended September 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 $27 million for the six months ended June 30, 2026 compared with the prior-year period, primarily due to:

Current wording

Operations and maintenance. Operations and maintenance expenses decreased $31 million for the nine months ended September 30, 2026 compared with the prior-year period, primarily due to:

Previous wording

•a decrease of $28 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 $48 million related to costs for renewable energy programs and similar regulatory programs, which are partially offset in operating revenues and fuel and purchased power;