APS projects substantial capital expenditures, with estimates of $2.4 billion for 2025, $2.55 billion for 2026, and $2.65 billion for 2027. These investments are critical for infrastructure additions, upgrades, and new customer construction, including significant allocations to renewables, energy storage, and transmission.

APS has contracted for 3,606 MW of battery storage, 517 MW of natural gas, 2,649 MW of solar, and 500 MW of wind resources from its 2023 ASRFP, expected in service from 2026 to 2028. Additionally, the 2024 ASRFP seeks another 2,000 MW of resources, highlighting proactive measures to address unprecedented load growth.

In June 2025, APS entered into agreements to purchase two of its three leased interests in Palo Verde Unit 2 for approximately $199 million, subject to FERC approval, with an expected closing by December 31, 2025. This move will increase APS's ownership of Unit 2 to approximately 24%, reducing future lease payment obligations.

APS filed its 2025 Rate Case application on June 13, 2025, seeking a net base rate increase of $579.5 million, representing a 13.99% net increase. This application aims to recover costs for plant additions and operational expenses, and proposes a 'Formula Rate Adjustment Mechanism' (FRAM) to reduce regulatory lag, signaling proactive financial management.

APS has increased investments in fire mitigation, including system upgrades, fire modeling software, and the installation of AI-based fire sensing cameras in 2024. The company was also selected by the DOE for up to $70 million in federal funding for grid resilience and fire mitigation projects, demonstrating a commitment to operational safety and reliability.

APS withdrew its deferral application for unrecovered book value and closure costs of Cholla Units 1 and 3 on July 8, 2025, opting instead to address these costs in the 2025 Rate Case. This indicates a strategic shift in how management seeks cost recovery for retired assets, consolidating efforts within the broader rate review process.

APS faces continued uncertainty from various regulatory proceedings, including appeals related to the 2022 Rate Case's grid access charge for solar customers and the unresolved 2024, 2025, and 2026 Renewable Energy Standard Implementation Plans. The outcome of these proceedings could materially impact future revenues and cost recovery.

New EPA regulations on power plant carbon dioxide emissions (April 2024) and effluent limitation guidelines (April 2024) impose stringent requirements, potentially leading to material increases in APS’s costs to build, operate, and maintain new gas-fired power plants, with regulatory deadlines in 2032 that may not be feasible.

APS, along with 25 other U.S. nuclear power plant operators, was named in a class action lawsuit on July 11, 2025, alleging antitrust violations related to compensation information exchange. The company is currently unable to predict the outcome or material financial impact of this new legal challenge.

Retail customers in APS’s service territory increased by 2.4% for the period ended June 30, 2025, compared to the prior-year period. Annual customer growth is projected to be in the range of 1.5% to 2.5% through 2027, indicating a robust and expanding customer base.

APS is actively participating in market design and tariff development for Markets+ (SPP), with an expected go-live in October 2027, and continues participation in WEIM. These regional efforts are aimed at reducing customer costs and improving reliability, strengthening APS's competitive stance in the broader energy market.

The 2025 Rate Case application includes proposals for adjustments to rate designs to reduce cross-subsidization by certain customer classes and modifications of cost allocation methodologies. This indicates ongoing regulatory influence on pricing power, aiming for more equitable cost recovery across customer segments.

Operations and maintenance expenses increased by $15 million for the three months ended June 30, 2025, compared to the prior-year period, and by $57 million for the six-month period. Key drivers include a $19 million increase in information technology costs and an $18 million increase in non-nuclear generation costs due to planned outages.

APS is maintaining inventory to leverage lower pricing and avoid expediting fees, and entering into long-term contracts to hedge against price volatility for critical items like transformers. This strategic approach aims to mitigate cost increases and ensure a reliable supply chain amidst inflationary pressures.

APS is implementing automation technologies to enhance efficiencies and improve data-oriented decision making, including a new high-bill analyzer tool for phone advisors. These efforts aim to streamline business processes and improve customer satisfaction, contributing to operational effectiveness.

APS has developed an AI strategy to responsibly utilize AI for advancing its business strategy, enhancing customer and employee experiences, and optimizing operational reliability. This includes a robust governance model to ensure compliance with data security and ethical conduct.

APS is actively exploring additional nuclear generation, including small modular nuclear reactors (SMRs), and has applied for a DOE grant to support preliminary site exploration for new nuclear energy in Arizona. This demonstrates a commitment to long-term carbon-free energy solutions.

APS continues to monitor emerging CCUS technologies, which could offer the potential to keep existing fossil fuel generators in operation by isolating CO2 emissions. While still in the demonstration phase, this indicates an interest in advanced solutions for emissions reduction.

Net cash used for investing activities increased by $366.2 million to $1,253.3 million for the six months ended June 30, 2025, primarily due to a $317 million increase in capital expenditures. This reflects significant ongoing investments in utility plant, renewables, and transmission infrastructure.

Pinnacle West issued $800 million in senior unsecured notes in May 2025, using the proceeds to repay $500 million of maturing notes. This proactive debt management strategy aims to optimize interest costs and extend debt maturities, despite an overall increase in interest charges.

Net cash provided by financing activities increased by $256 million, primarily due to a $915 million net increase in short-term borrowings. This indicates a shift in funding strategy, utilizing short-term debt to manage liquidity and capital needs.

APS updated its clean energy goal from an aspirational 'zero-carbon' to 'carbon-neutral' by 2050, signifying a commitment to offset any remaining greenhouse gas emissions. This strategic shift reflects an evolving approach to environmental responsibility while ensuring reliability and affordability.

APS filed its 2026 RES Implementation Plan on July 1, 2025, proposing a $110.1 million budget for 2026 to support existing approved projects and commitments. This demonstrates ongoing efforts to meet increasing renewable energy requirements, despite pending ACC rulings on prior plans.

APS ceased operations at Cholla Units 1 and 3 on April 30, 2025, and is seeking recovery for approximately $81 million of remaining net-book value and closure costs in the 2025 Rate Case. The company is also addressing corrective actions for coal combustion residuals (CCR) disposal units at Cholla and Four Corners, reflecting progress on environmental commitments.

The Consumer Price Index for All Urban Consumers (CPI-U) nationally grew 2.7% and in Phoenix 0.2% over the 12 months ended June 2025, indicating an easing of inflationary impacts. However, APS remains cautious of potential price increases due to current and proposed tariffs, which could lead to higher costs.

APS is experiencing unprecedented incremental requests for service from extra high load factor customers (over 25 MW) with very high energy demands, exceeding available generation and transmission capacity. This reflects strong economic activity and demand for electricity in its service territory.

The Arizona Corporation Commission (ACC) is reviewing rules related to Resource Planning, Renewable Energy Standards (RES), and Energy Efficiency Standards (EES), with staff recommending repeal of current RES and EES rules. This dynamic regulatory environment introduces uncertainty but also opportunities for shaping future energy policy.