PINNACLE WEST CAPITAL CORPPNW
PINNACLE WEST CAPITAL CORP Revenue Disclosure
Revenue
Sources of Revenue
The following table provides detail of Pinnacle West’s consolidated revenues disaggregated by revenue sources (dollars in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Retail Electric Service | |||||||||||||||||
| Residential | $ | 2,541,320 | $ | 2,562,822 | $ | 2,289,196 | |||||||||||
| Non-Residential | 2,542,936 | 2,334,925 | 2,048,416 | ||||||||||||||
| Wholesale Energy Sales | 108,661 | 96,857 | 208,985 | ||||||||||||||
| Transmission Services for Others | 129,667 | 119,038 | 138,631 | ||||||||||||||
| Other Sources | 17,355 | 11,273 | 10,763 | ||||||||||||||
| Total Operating Revenues | $ | 5,339,939 | $ | 5,124,915 | $ | 4,695,991 | |||||||||||
Retail Electric Revenues
All of Pinnacle West’s retail electric revenues are generated by APS. Retail electric revenue is generated by the sale of electricity to our regulated customers within the authorized service territory at tariff rates approved by the ACC and based on customer usage. Revenues related to the sale of electricity are generally recognized when service is rendered, or electricity is delivered to customers. The billing of electricity sales to individual customers is based on the reading of their meters. We obtain customers’ meter data on a systematic basis throughout the month, and generally bill customers within a month from when service was provided. Customers are generally required to pay for services within 21 days of when the services are billed. See “Allowance for Doubtful Accounts” discussion below for additional details regarding payment terms. In addition, see the section titled “2025 Rate Case” in Note 8 for details related to proposed adjustments to rate design and modifications of cost allocation methodologies to reduce cross-subsidization by ensuring customers causing production costs are covering those costs through rates.
Wholesale Energy Sales and Transmission Services for Others
All of Pinnacle West’s wholesale energy sales and transmission services for others revenues is generated by APS. Revenues from wholesale energy sales and transmission services for others represent energy and transmission sales to wholesale customers. These activities consist of managing fuel and purchased power risks and transmission needs in connection with the cost of serving our retail customers’ energy requirements. We may also sell into the wholesale markets generation that is not needed for APS’s retail load. Our wholesale activities and tariff rates are regulated by FERC.
Revenue Activities
Our revenues primarily consist of activities that are classified as revenues from contracts with customers. We derive our revenues from contracts with customers primarily from sales of electricity to our regulated retail customers. Revenues from contracts with customers also include wholesale and transmission activities. Our revenues from contracts with customers for the year ended December 31, 2025, 2024 and 2023 were $5,319 million, $5,073 million, and $4,651 million, respectively.
We have certain revenues that do not meet the specific accounting criteria to be classified as revenues from contracts with customers. For the year ended December 31, 2025, 2024, and 2023 our revenues that do not qualify as revenue from contracts with customers were $21 million, $52 million, and $45 million, respectively. This amount includes revenues related to certain regulatory cost recovery mechanisms that are considered alternative revenue programs. We recognize revenue associated with alternative revenue programs when specific events permitting recognition are completed. Certain amounts associated with alternative revenue programs will subsequently be billed to customers; however, we do not reclassify billed amounts into revenue from contracts with customers. See Note 8 for a discussion of our regulatory cost recovery mechanisms.
Allowance for Doubtful Accounts
The allowance for doubtful accounts represents our best estimate of customer and other receivables and accrued unbilled revenues that will ultimately be uncollectible due to credit loss risk. The allowance includes a write-off component that is calculated by applying an estimated write-off factor to retail electric revenues. The write-off factor used to estimate uncollectible accounts is based upon consideration of
historical collections experience, the current and forecasted economic environment, changes to our collection policies, and management’s best estimate of future collections success. We continue to monitor the impacts of our disconnection policies, payment arrangements, among other considerations impacting our estimated write-off factor, and allowance for doubtful accounts.
The following table provides a rollforward of Pinnacle West’s allowance for doubtful accounts (dollars in thousands):
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Balance at beginning of period | $ | 24,849 | $ | 22,433 | $ | 23,778 | ||||||||||||||
| Bad debt expense | 28,603 | 35,799 | 23,399 | |||||||||||||||||
| Actual write-offs | (27,957) | (33,383) | (24,744) | |||||||||||||||||
| Balance at end of period | $ | 25,495 | $ | 24,849 | $ | 22,433 | ||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 25, 2025 | |
| 2023 | Feb 27, 2024 | |
| 2022 | Feb 27, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 24, 2021 | |
| 2019 | Feb 21, 2020 | |
| 2018 | Feb 22, 2019 | |
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.