PINNACLE WEST CAPITAL CORPPNW

PINNACLE WEST CAPITAL CORP Segments Disclosure

10-KFiled Feb 25, 20262 min read
Business Segments
 
Pinnacle West’s reportable business segment is our regulated electricity segment, which consists of retail and wholesale sales supplied under traditional cost-based regulation and related activities and includes electricity generation, transmission, and distribution. Our reportable segment activities are conducted through our wholly-owned subsidiary, APS. All other operating segment activities are insignificant to Pinnacle West.

For segment reporting purposes, Pinnacle West’s Chief Executive Officer performs the function of chief operating decision maker (“CODM”). Our CODM uses net income to measure an operating segment’s profitability. When assessing the performance of an operating segment, and making decisions about allocating resources, our CODM evaluates net income actual results compared to budget. Net income is also used when implementing strategic initiatives and selecting projects to meet business objectives. Our reportable segment’s revenue streams are dependent upon regulated rate recovery, which is a primary factor in how we identify operating segments.

For information on our reportable business segment’s revenues, significant expenses, net income (loss), assets, and other reportable segment items, see the APS Consolidated Statements of Income, APS Consolidated Balance Sheets, and APS Consolidated Statements of Cash Flows.

The following table reconciles our reportable segment’s revenues, significant expenses, and net income (loss) to the Pinnacle West consolidated amounts (dollars in millions):
Year Ended December 31,
202520242023
Regulated Electricity SegmentOtherPinnacle West ConsolidatedRegulated Electricity SegmentOtherPinnacle West ConsolidatedRegulated Electricity SegmentOther Pinnacle West Consolidated
Operating revenues$5,340 $— $5,340 $5,125 $— $5,125 $4,696 $— $4,696 
Fuel and purchased power (1,933)— (1,933)(1,823)— (1,823)(1,793)— (1,793)
Operations and maintenance(1,177)(8)(1,185)(1,159)(6)(1,165)(1,044)(15)(1,059)
Depreciation and amortization (915)— (915)(895)— (895)(794)— (794)
Taxes other than income taxes (235)— (235)(227)— (227)(224)— (224)
Allowance for equity funds used during construction61 — 61 39 — 39 53 — 53 
Pension and other postretirement non-service credits, net13 (1)12 49 — 49 42 (1)41 
Other income and (expense), net(14)30 16 (11)22 11 7 — 7 
Interest charges, net of allowance for borrowed funds used during construction(332)(90)(422)(312)(65)(377)(285)(46)(331)
Income taxes(126)19 (107)(127)16 (111)(94)17 (77)
Less: Net income attributable to noncontrolling interests(15)— (15)(17)— (17)(17)— (17)
Net Income (Loss) $667 $(50)$617 $642 $(33)$609 $547 $(45)$502 
The following table reconciles our reportable segment’s assets to the Pinnacle West consolidated amount (dollars in millions):
December 31, 2025December 31, 2024
Regulated Electricity SegmentOtherPinnacle West ConsolidatedRegulated Electricity SegmentOtherPinnacle West Consolidated
Total Assets$29,886 $146 $30,032 $25,988 $115 $26,103 

About Segments Disclosures

Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.

Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.

Other Available Disclosures

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