Pinnacle West Capital (PNW) 10-K risk factor changes: FY2023 vs FY2022

Changes in laws or regulations that govern APS, new interpretations of [removed: law] [added: laws] and regulations, or the imposition of new or revised laws or regulations could have an adverse impact on the manner in which we operate our business and our results of operations.

In particular, new or revised laws or interpretations of existing laws or regulations may impact or call into question the ACC’s permissive regulatory authority, which may result in uncertainty as to jurisdictional authority within our state, and uncertainty as to whether [removed: ACC decisions will be binding or challenged by other agencies or bodies asserting jurisdiction.]

[added: These laws and regulations can result in increased capital,] operating, and other costs, particularly with regard to enforcement efforts focused on power plant emissions obligations.

*Environmental Clean Up.* APS has been named as a PRP for [removed: a] Superfund [removed: site] [added: sites] in Phoenix, Arizona, and it could be named a PRP in the future for other environmental clean-up at sites identified by a regulatory body.

*Coal Ash.* In December 2014, [added: the] EPA issued final regulations governing the handling and disposal of CCR, which are generated as a result of burning coal and consist of, among other things, fly ash and bottom ash.

[removed: To the extent the rule requires the closure or modification of these CCR units, modification or changes to the manner of closure of such units, or the] construction of new CCR units beyond what we currently anticipate, APS would incur significant additional costs for CCR disposal.

*Ozone National Ambient Air Quality Standards.* In 2015, [added: the] EPA finalized revisions to the NAAQS for ozone, which set new, more stringent standards on emissions of nitrogen oxide, a precursor to ozone, in an effort to protect human health and human welfare.

Depending on the outcome of future carbon emission [removed: rulemakings] [added: rulemaking] under the Clean Air Act targeting new and existing power plants, the utility industry may become subject to more stringent and expansive regulations.

[removed: Alternative GHG emission limitations may arise from litigation under either federal or state] common laws or citizen suit provisions of federal environmental statutes that attempt to force federal agency rulemaking or [removed: imposing] [added: impose] direct facility emission limitations.

*Physical and Operational Risks.* Weather extremes such as drought and high temperature variations are common occurrences in the [removed: southwest] [added: southwestern] United States’ desert area, and these are risks that APS considers in the normal course of business in the engineering and construction of its electric system.

Changes in the nature of our industry and the economic viability of certain plants and facilities, including impacts resulting from types and availability of other resources, fuel costs, legislation, and regulation, together with timing considerations related to [added: the] expiration of leases or other agreements for such facilities, could result in unaligned positions among co-owners.

Differences in the co-owners’ willingness or ability to continue their participation could lead to [added: the] eventual shut down of units or facilities and uncertainty related to the resulting cost recovery of such assets.

On February 12, 2020, ACC Staff issued its second report regarding possible modifications to the ACC’s retail electric [removed: competition rules.]

Apart from the impact [removed: upon] [added: on] electricity demand, weather conditions related to prolonged high temperatures or extreme heat events present operational challenges.

A portion of APS’s total renewable energy requirement must be met with an increasing percentage of distributed renewable energy resources (generally, [removed: small scale] [added: small-scale] renewable technologies located on customers’ properties).

In addition to these rules and requirements, energy efficiency technologies and distributed energy resources continue to evolve, which may have similar impacts on [added: the] demand for electricity.

*Actual and Projected Customer and Sales Growth.* Retail customers in APS’s service territory increased [removed: 2.1%] [added: 2.0%] for the year ended December 31, [removed: 2022,] [added: 2023,] compared with the prior-year period.

For the three years through [removed: 2022,] [added: 2023,] APS’s customer growth averaged [removed: 2.2%] [added: 2.1%] per year.

We currently project annual customer growth to be 1.5% to 2.5% for [removed: 2023] [added: 2024] and the average annual growth to be in the range of 1.5% to 2.5% through [removed: 2025] [added: 2026] based on anticipated steady population growth in Arizona during that period.

Retail electricity sales in kWh, adjusted to exclude the effects of weather variations, increased [removed: 2.4%] [added: 1.5%] for the year ended December 31, [removed: 2022,] [added: 2023,] compared with the prior-year period.

While steady customer growth was [added: somewhat] offset by [added: weaker usage among residential customers,] energy savings driven by customer conservation, energy efficiency, and distributed renewable generation initiatives, the main drivers of positive sales for this period were [removed: a] [added: continued] strong [removed: improvement in] sales to commercial and industrial customers and the ramp-up of new data center customers.

For the three years through [removed: 2022,] [added: 2023,] annual retail electricity sales growth averaged [removed: 2.5%,] [added: 2.7%,] adjusted to exclude the effects of weather variations.

Due to the expected [removed: rapid] growth of several large data centers and new large manufacturing facilities, we currently project that annual retail electricity sales in kWh will increase in the range of [removed: 3.5%] [added: 2.0%] to [removed: 5.5%] [added: 4.0%] for [removed: 2023] [added: 2024] and that average annual growth will be in the range of [removed: 4.5%] [added: 4.0%] to [removed: 6.5%] [added: 6.0%] through [removed: 2025,] [added: 2026,] including the effects of customer conservation, energy efficiency, and distributed renewable generation initiatives, but excluding the effects of weather variations.

[removed: This] [added: These] projected sales growth [removed: range includes] [added: ranges include] the impacts of several large data centers and new large manufacturing facilities, which are expected to contribute to [added: 2024 growth in the range of 2.5% to 3.5% and to] average annual growth in the range of [removed: 3.5%] [added: 3.0%] to [removed: 5.5%] [added: 5.0%] through [removed: 2025.][added: 2026.]

Actual sales growth, excluding weather-related variations, may differ from our projections as a result of numerous factors, such as economic conditions, customer growth, usage patterns and energy conservation, slower ramp-up of and/or fewer data centers and large manufacturing facilities, slower than expected commercial and industrial expansions, impacts of energy efficiency [removed: programs,] [added: programs] and growth in DG, [added: responses to retail price changes, changes in regulatory standards, and impacts of new and existing laws and regulations, including environmental laws and regulations.]

The operation of power generation facilities and transmission systems involves risks that could result in reduced output or unscheduled [removed: outages, which] [added: outages or] could [removed: materially affect] [added: otherwise significantly impact] APS’s results of operations.

The operation of power generation, transmission and distribution facilities involves certain risks, including the risk of breakdown or failure of equipment, fuel interruption, and performance below expected [removed: levels of output or efficiency.]

Concerns over [added: the] physical security of these assets could include damage to certain of our facilities due to vandalism or other deliberate acts that could lead to outages or other adverse effects.

Wildfires have the potential to affect [removed: the] communities [removed: that APS serves] [added: within APS’s service territory] and [added: the surrounding areas, as well as] APS’s vast network of electric transmission and distribution lines and facilities.

The potential likelihood of wildfires has increased due to many of the same weather and climate change impacts existing in Arizona as those that led to [removed: the] catastrophic wildfires in California.

[removed: Any] [added: Furthermore, any] damage caused to our assets, loss of service to our customers, or liability imposed as a result of wildfires could negatively impact APS’s financial condition, results of operations, or cash flows.

[removed: In addition, APS is required by the ACC to meet certain energy resource portfolio] requirements, including those related to renewables development and energy efficiency measures, in addition to specific competitive resource procurement requirements.

The development and operation of any generation facility is also subject to many risks, including those related to financing, siting, permitting, new and evolving technology, [added: extreme weather events, workforce issues, cybersecurity attacks, supply chain constraints for critical spare parts,] and the construction of sufficient transmission capacity to support these [removed: facilities.][added: facilities among others.]

In expressing concerns about the environmental and climate-related impacts from continued extraction, transportation, delivery and combustion of fossil fuels, environmental advocacy groups and other third parties have in recent years undertaken greater efforts to oppose the permitting, construction, [added: and operation of fossil fuel infrastructure projects.]

Water in the southwestern United States is limited, and various parties have made conflicting claims regarding the right to access and use such limited [removed: supply] [added: supplies] of water.

In addition, the region in which APS’s power plants are located [removed: suffer] [added: suffers] from prolonged drought conditions, which could potentially affect the plants’ water supplies.

In addition, Colorado River water supplies for Arizona are subject to a Tier [removed: 2a] [added: 1] shortage declaration, which substantially limits the quantity of water available for the state.

There appears to be an increasing level of activity, sophistication, and maturity of threat actors, including from both [removed: nation state] [added: nation-state] and non-nation state actors, that seek to exploit potential vulnerabilities in the electric utility industry and wish to disrupt the U.S. bulk power system, our information technology systems, generation (including our Palo Verde nuclear facility), transmission and distribution facilities, and other infrastructure facilities and [removed: systems and physical assets.]

Some of these systems are managed, hosted, provided, or used [removed: for] [added: by] third parties to assist in conducting our business.

If a significant cybersecurity event or breach were to occur, we may not be able to fulfill critical business functions and we could (i) experience property damage, disruptions to our business, theft of or unauthorized access to customer, employee, financial or system operation information or other information; (ii) experience loss of revenue or incur significant costs for repair, remediation and breach [added: notification, and increased capital and operating costs to implement increased security measures; and (iii) be subject to increased regulation, litigation and reputational damage.]

ACC decisions will be binding or challenged by other agencies or bodies asserting jurisdiction.

To the extent the rule requires the closure or modification of these CCR units, modification or changes to the manner of closure of such units, or the

In addition, the EPA may in the future further increase the stringency of various NAAQS, including for ozone or other pollutants, such as particulate matter.

With regard to even more stringent NAAQS requirements, additional control measures and compliance costs may become necessary for APS as well as its current and potential future customers.

Such regulations may also act as a deterrent to future customer growth or create additional costs for existing customers, potentially slowing APS’s customer growth.

*Potential Financial Risks — Greenhouse Gas Regulation, the Clean Power Plan and Potential Litigation.* Following a U.S. Supreme Court decision on June 30, 2022, which substantially narrowed EPA’s authority to regulate power plant GHG emissions under the Clean Air Act, on May 23, 2023, EPA proposed new GHG emission standards for power plants.

In contrast to measures finalized in 2015, EPA’s May 2023 proposal is focused on limiting power plant GHG emissions through control mechanisms that can be implemented at individual power plant facilities.

These mechanisms would include carbon capture and sequestration, hydrogen co-firing, natural gas co-firing, and limits on facility output, among other measures.

EPA expects to take final action on this proposal in the spring or summer of 2024.

Alternative GHG emission limitations may arise from litigation under either federal or state

competition rules.

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 now receiving unprecedented incremental requests for service from extra-large commercial energy users (over 25 MW) with very high energy demands that persist virtually around-the-clock.

These incremental requests for service by extra-large energy users far exceed available generation and transmission resource capacity in the Southwest region for the foreseeable future.

In April 2023, APS notified prospective extra-large customers without existing commitments from APS that it is not able to commit at this time to their future extra-large projects (over 25 MW).

Because of the high growth in demand for such projects, APS has developed a prioritization queue that identifies and prioritizes projects while maintaining system reliability and affordability for existing APS customers.

APS is exploring available options for securing sufficient electric generation and transmission to meet these projections of future customer needs.

levels of output or efficiency.

Additionally, as APS’s transmission infrastructure ages and its transmission system needs grow to support growth in our territory and in the Southwest, it will need to replace and expand certain portions of its transmission infrastructure, which requires significant investment of capital.

Risks related to the timely completion of and costs associated with these projects may be exacerbated by a constrained supply chain limiting the availability of necessary parts and materials as well as APS’s use, in some cases, of older, obsolete, or unsupported equipment.

Certain replacements and expansions of the transmission infrastructure will also require the acquisition or renewal of land leases, easements, or other rights-of-way that may require approvals from landowners, including individuals, governmental agencies, and, at times, tribal nations.

APS is unable to predict the outcomes of any pending or future required approvals, including any related costs, which could be significant.

If APS is unable to successfully manage the replacement and expansion of its transmission infrastructure, it could face increased equipment failures, power quality challenges, reputational impact, and financial loss.

The continued expansion of the wildland urban interface has also increased wildfire risk to surrounding communities.

APS currently intends to implement a public safety power shutoff (“PSPS”) program in addition to its current fire mitigation efforts.

While such technology is intended to mitigate fire risk, it also introduces additional risks to APS and its customers, such as claims for damages, and the timing and effectiveness of such fire mitigation efforts may be insufficient to prevent wildfires in APS’s expansive service territory and surrounding areas.

APS could be held liable for damages incurred as a result of wildfires regardless of fault and may not be able to recover all or a substantial portion of any such damages or costs from insurance or through rates.

In addition, we could also experience credit rating downgrades, reputational harm, volatility in the market for our common stock, and significant financial distress upon the occurrence of a wildfire event.

In addition, APS is required by the ACC to meet certain energy resource portfolio

systems and physical assets.

In the future, adequate insurance may not

Changes in demographics, including increased number of retirements or

These laws and regulations can result in increased capital,

*Potential Financial Risks — Greenhouse Gas Regulation, the Clean Power Plan and Potential Litigation.* In 2015, EPA finalized a rule to limit CO2 emissions from existing power plants, the Clean Power Plan, or CPP.

The implementation of this rule within the jurisdictions where APS operates would have resulted in a shift in generation from coal to more natural gas and renewable generation.

Because of a view that the federal Clean Air Act did not permit such an expansive use of administrative authority over utility generation resources, in 2019 regulations were issued that repealed the CPP and replaced it with a far narrower set of regulations focused solely on coal-fired power plant efficiency improvements.

On January 19, 2021, the U.S. Court of Appeals for the D.C. Circuit vacated the ACE regulations and remanded them back to EPA to develop new regulations governing carbon emissions from existing power plants consistent with the court’s ruling.

That decision, which endorsed an expansive view of the federal Clean Air Act consistent with the CPP, was subsequently reversed by the U.S. Supreme Court on June 30, 2022.

While the current administration has expressed its intent to develop new carbon emission regulations governing existing power plants in 2023, such action will be constrained by the U.S. Supreme Court’s decision that the CPP violated the Clean Air Act.

and responses to retail price changes.

While we proactively take steps to mitigate wildfire risk in the areas of our electrical assets, wildfire risk is always present due to APS’s expansive service territory.

APS could be held liable for damages incurred as a result of wildfires if it was determined that they were caused by or enhanced due to APS’s negligence.

and operation of fossil fuel infrastructure projects.

notification, and increased capital and operating costs to implement increased security measures; and (iii) be subject to increased regulation, litigation and reputational damage.

The ownership and operation of power generation and transmission facilities on Indian lands could result in uncertainty related to continued leases, easements, and rights-of-way, which could have a significant impact on our business.

Four Corners and portions of certain APS transmission lines are located on Indian lands pursuant to leases, easements or other rights-of-way that are effective for specified periods.

APS is unable to predict the final outcomes of pending and future approvals by the applicable sovereign governing bodies with respect to renewals of these leases, easements, and rights-of-way.

These trends, which

COVID-19 could negatively affect our business.

COVID-19 is a continually developing situation around the globe that has led to economic disruption and volatility in the financial markets.

The spread of COVID-19 and efforts to contain the virus and mitigate its public health effects, could decrease demand for energy, lower economic growth, impact our employees and contractors, cause disruptions in our supply chain, increase certain costs, further increase volatility in the capital markets (and result in increases in the cost of capital or an inability to access the capital markets or draw on available credit facilities), delay the completion of capital or other construction projects and other operations and maintenance activities, delay payments or increase uncollectable accounts, impact our ability to hire or retain qualified employees, or cause other unpredictable events, each of which could adversely affect our business, results of operations, cash flows or financial condition.

the extent that unhedged positions exist.

increased costs.

[removed: The following discussion should be read in conjunction with Pinnacle West’s Consolidated] Financial Statements and APS’s Consolidated Financial Statements and the related Notes that appear in Item 8 of this report.

This discussion provides a comparison of the [removed: 2022] [added: 2023] results with [removed: 2021] [added: 2022] results.

Pinnacle West is an investor-owned electric utility holding company based in Phoenix, Arizona with consolidated assets of [removed: about $23] [added: approximately $25] billion.

APS is Arizona’s largest and longest-serving electric company that generates safe, [removed: affordable,] [added: affordable] and reliable electricity for approximately [removed: 1.3] [added: 1.4] 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 [removed: southwest United States and the largest nuclear power plant in the] [added: southwestern] United States.

The impacts from inflation have varied across separate categories of APS’s [removed: spending.][added: spending, including increases of up to 15% in 2023.]

Key provisions that are relevant to [removed: the Company’s] [added: APS’s] clean energy commitment include (i) an extension of tax credits for solar and wind generation, including a new option for solar investments to claim a Production Tax Credit (“PTC”) in lieu of the Investment Tax Credit (“ITC”) beginning in 2022; (ii) expansion of the ITC to cover stand-alone energy storage technology beginning in 2023; and (iii) introduction of a new PTC for nuclear energy produced by existing nuclear energy [removed: plants,] [added: plants (“Nuclear PTC”),] available from 2024 through 2032.

The [removed: Internal Revenue Service and U.S. Treasury are expected] [added: Company continues] to [removed: issue] [added: await] regulations and other [removed: guidance] [added: guidance, including with respect to the Nuclear PTC,] which will provide additional details and clarifications regarding how the Company may be able to claim [removed: each of these credits.][added: IRA tax credits in future years.]

See Note [removed: 3] [added: 20] for additional [removed: information on the PSA.][added: details.]

Our strategy is to [removed: deliver shareholder value by creating] [added: create] a sustainable energy future for Arizona [added: that delivers shareholder value and shared value] by serving our customers with [removed: clean,] reliable, [added: affordable,] and [removed: affordable] [added: clean] energy.

We are committed to doing our part to [removed: make the future] [added: build a] clean and [removed: carbon-free.][added: carbon-free future.]

Our vision is to create a sustainable energy future for Arizona [removed: through] [added: by] providing [removed: clean,] [added: reliable,] affordable, and [removed: reliable energy.][added: clean energy to our customers.]

We can accomplish our [removed: visions through collaboration] [added: vision by collaborating] with customers, communities, employees, policymakers, shareholders, and other stakeholders.

Our clean energy [removed: goal] [added: commitment] is based on sound science and supports continued growth and economic development while maintaining reliability and affordable prices for APS’s customers.

APS’s clean energy [removed: goals consist] [added: commitment consists] of three parts:

- [removed: a] [added: A] 2030 target [removed: of achieving] [added: to achieve] a resource mix that is 65% clean energy, with 45% of the generation portfolio coming from renewable energy; and

- [removed: a] [added: A] commitment to [removed: end APS’s use of] [added: exit from] coal-fired generation by 2031.

APS’s ability to successfully execute its clean energy commitment [removed: is dependent] [added: depends] upon a number of important external factors, [removed: some of which include] [added: including] a supportive regulatory environment, sales and customer growth, development of clean energy [removed: technologies] [added: technologies,] and continued access to capital [removed: markets.][added: markets among others.]

*2030 Goal: 65% Clean Energy.* APS has an energy mix that is already 50% clean [removed: with existing] [added: and] plans to [added: continue to] add more renewables and energy [removed: storage before 2025.][added: storage.]

“Clean” is measured as percent of energy [removed: mix] [added: mix,] which includes all carbon-free resources like nuclear, renewables, and demand-side management.

“Renewable” energy includes generation [removed: sources] [added: resources] such as solar, wind, and biomass, and is measured in accordance with the ACC’s Renewable Energy [added: Standard as a percentage of retail sales.]

This target will serve as a checkpoint for our resource planning, investment strategy, and customer affordability efforts as APS moves toward [added: a] 100% clean, carbon-free energy mix by 2050.

*2031 Goal: [removed: End APS’s Use of] [added: Exit] Coal-Fired Generation.* The [removed: commitment] [added: plan] to [removed: end APS’s use of] [added: exit] coal-fired generation by 2031 will require APS to [removed: cease use of] [added: stop relying on] coal-generation at Four Corners.

These closures and other measures taken by APS have resulted in [removed: a total reduction of] [added: annual] carbon emissions [removed: of 33% since] [added: that were 24% lower in 2022 compared to] 2005.

In addition, APS has committed to end the use of coal at its remaining Cholla units [removed: by] [added: during] 2025.

APS cannot predict [removed: if] the [removed: ACC will take any further action on] [added: outcome of] this matter.

In June 2021, APS and the owners of Four Corners entered into an agreement that would allow Four Corners to operate seasonally at the election of the owners [removed: beginning in] [added: as early as] fall 2023, subject to the necessary governmental approvals and conditions associated with changes in plant ownership.

The other unit would remain online year-round, subject to market [removed: conditions as well as planned maintenance outages and unplanned outages.]

Its near-term actions are focused on [removed: clean] [added: clean, reliable] energy and positive customer outcomes and [removed: includes:] [added: include:] (a) competitive [removed: solicitations] [added: all source requests for proposal (“RFPs”) that provide an on-ramp] to procure [added: additional] clean energy resources such as solar, wind, energy storage, and DSM resources, all of which lead to a cleaner [removed: grid;] [added: grid] and (b) strategic, short-term wholesale market purchases from a combination of existing merchant natural gas units, neighboring utility [removed: systems,] [added: systems] and wholesale market participants that ensure operational reliability.

[removed: APS has a diverse portfolio of existing and planned renewable resources, including solar, wind, geothermal, biomass, and biogas that supports our] [added: This] commitment [removed: to clean energy, which] is already strengthened by Palo Verde, [added: one of] the nation’s largest carbon-free, clean energy resource, [removed: that] [added: which] provides the foundation for reliable and affordable service for APS customers.

APS uses competitive [removed: “All-Source”] [added: “all source”] RFPs to pursue market resources that meet its system needs and offer the best value for customers.

APS selects projects based on [removed: cost] [added: cost, ability to meet system requirements] and commercial viability, taking into consideration timing and likelihood of successful contracting and development.

[removed: *Energy Storage*.][added: | PPAs Energy Storage | | | 60 | | | | | | | | | 2,182 | | | | | | | | |]

[added: *Energy Storage.*] APS deploys a number of advanced technologies on its system, including energy storage.

APS is utilizing grid-scale energy storage projects to meet customer reliability requirements, increase renewable utilization, and [added: to] further our understanding of how storage works with other advanced technologies and the grid.

APS currently plans to install more than [removed: 1,200] [added: 2,700] MW of [added: utility scale] energy storage by [removed: 2025,] [added: 2026,] including [removed: the] [added: through] energy storage projects under PPAs and AZ Sun retrofits [removed: described above.][added: as well as through resources solicited through current and future RFPs.]

The following table summarizes the resources in APS’s energy storage portfolio that are in operation and under development as of December 31, [removed: 2021.][added: 2023.]

| | | | Net Capacity in [removed: Operation (MW) | | |] [added: Operation (MW)] | | | | | | Net Capacity Planned / [removed: Under Development] [added: Under Development] (MW) | | | | | |

| APS Owned Energy Storage | | | [removed: —] [added: 182] | | | | | | [added: (a)] | | | [removed: 201] [added: 19] | | | | | | [added: (b) | | |]

| [removed: Residential] [added: Customer-Sited] Energy Storage | | | [removed: 19(a)] [added: 30] | | | | | | | | | [removed: 7] [added: 20] | | | | | | [added: | | |]

The following discussion should be read in conjunction with Pinnacle West’s Consolidated

For the discussion of 2022 compared to 2021, see Part II.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Pinnacle West Capital Corporation’s Annual Report on Form 10-K for the year ended December 31, 2022, which specific discussion is incorporated herein by reference.

The Internal Revenue Service and U.S. Treasury have issued preliminary guidance related to various provisions of the IRA that have enabled APS to claim credits related to its 2023 solar and battery investments.

At the end of 2023, APS’s residential customer satisfaction ranked in the second quartile among large investor-owned utilities, and its business customer satisfaction ranked in the second quartile of utilities nationally.

To prioritize reliability and meet substantial growth in residential and commercial energy needs, APS has developed a future-focused, strategic transmission plan.

This Ten-Year Plan includes five critical transmission projects that comprise the APS strategic transmission portfolio, which represents a significant upgrade to APS’s transmission system.

These five projects, along with other projects included in the Ten-Year Plan, are intended to support growing energy needs, strengthen reliability, and allow for the connection of new resources.

We also increased spend on mitigating the risk associated with trees that could cause hazards, resulting in more of these trees being removed before they could cause outages or wildfires.

With recent wildfire events in Hawaii and across North America, we have been devoting and will continue to devote substantial efforts to analyzing and developing enhancements to our systems and processes to mitigate fire risk within our service territory and communities, including by hardening our infrastructure, deploying new technologies where appropriate, increasing our awareness, implementing operational

changes, and enhancing our wildfire response capabilities.

APS completed implementation of best-in-class fire modelling software that we are utilizing to more surgically 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.

APS also currently intends to implement a public safety power shutoff (“PSPS”) program for this upcoming fire season, leveraging the additional real-time analysis provided by the new modelling software.

We continue to evaluate policy and regulatory options, as well as insurance programs, to mitigate the impact of wildfire events.

Maintaining reliability and affordability for our customers during the clean energy transition is fundamental to our strategy.

As a critical partner to the large quantity of renewables and energy storage we are adding to our system, natural gas generation will play an important role in maintaining reliability for our customers.

Additionally, efficiency improvements to gas units at the Redhawk and Sundance Power Plants are planned for completion prior to the summer of 2024.

APS will go live with a new Energy Management System (“EMS”) in March of 2024.

The new EMS will better allow for integration of the renewable and energy storage assets into the APS’s generation resources.

This integration will allow APS to maximize the flexibility of our resources and fully engage in the Energy Imbalance Market.

It also better positions APS to participate in market opportunities that may develop through the next decade.

APS continues to focus on mitigating the cost pressures related to the current inflationary environment.

Overall inflation grew by 2.7% in Phoenix and 3.4% nationally during 2023.

In 2022, overall inflation grew by 9.5% in Phoenix and 6.5% nationally.

APS has seen inflationary impacts in supply constrained categories related to electrical equipment, such as transformers,

wire, and cable impacted by high utility demand outpacing manufacturing capacity.

Inflation continues to impact service rates and spend categories through pass-through costs such as supplier’s increased material costs, cost of insurance, and wage rates.

APS’s customer affordability initiative includes internal opportunities, such as training and mentoring employees on identifying efficiency opportunities; maintaining an inventory to take advantage of lower pricing and avoid expediting fees; entering into long-term contracts to hedge against price volatility, which has allowed APS to mitigate against procurement spend areas such as transformers; and implementing automation technologies to enhance efficiencies and increase data-oriented decision making.

There are also external opportunities under APS’s customer affordability initiative, such as APS’s participation in the Western Energy Imbalance Market (“WEIM”).

APS is participating in market design and tariff development of Markets+, a day-ahead and real-time market offering from Southwest Power Pool.

APS also participated in the design and drafting of the tariff for the CAISO’s Extended Day-Ahead Market, which was approved by FERC in December 2023.

In addition, APS is participating in the Western Resource Adequacy Program administered by Western Power Pool.

These efforts are driven by three objectives of reducing customer cost, improving reliability, and incorporating more clean energy on APS’s system.

In terms of generation affordability, every three years, APS performs a comprehensive study, called an Integrated Resource Plan, to identify how much energy our customers will need over the next 15 years and what resources will be used to meet those needs.

In developing the IRP, APS considers factors that include how much economic growth is expected, what new technologies might be available and how weather can impact the demand for energy.

These inputs are then used to develop a plan that prioritizes reliability, affordability, and a clean, balanced energy mix.

In November 2023, APS released its latest IRP, which shows that energy demand is growing at an unprecedented rate.

This is due to continued residential and commercial customer growth throughout Arizona.

To keep pace with the fast-growing demand for electricity and maintain reliability, APS needs to add new electricity generating resources.

A comparison of the 2021 results with 2020 results can be found in the Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Inflation

Overall inflation has grown by 9.5% in Phoenix in 2022, compared to 6.5% nationally; however, APS’s work with national and international companies has helped to partially reduce local cost escalation impacts on APS.

Pricing increases across major categories have ranged from 8% to 10% for vendor services and up to 15% to 60% for equipment in 2022.

APS has seen specific inflationary impacts in individual spend categories, as well as general inflationary pricing impacts on a broader set of spend categories.

Some of the highest increases in 2022 as compared to 2021 have been in chemical costs and contract services.

Even prior to these increases, APS has focused on its customer affordability initiative, which has enabled APS to mitigate inflationary pressure.

This initiative includes identifying efficiency opportunities through APS’s LEAN Sigma approach as well as other corporate decisions.

For example, APS maintains its inventory to take advantage of lower pricing, when available, and to minimize supply chain delays that can increase the pricing due to expediting fees.

Additionally, APS has proactively entered into long-term contracts to hedge against price volatility, which has allowed it to mitigate several procurement spend areas such as transformers.

COVID-19

COVID-19 continues to be an evolving situation.

Essential planned work and capital investments continued during the pandemic with priority given to support fire mitigation and summer storm efforts, as well as heat-related outages.

Raw material shortages, rising inflation, COVID-19 related work force disruptions and natural disasters continue to place increased pressure on the global supply chain.

APS is experiencing some delays in finished materials and tight labor markets.

To date, APS has not experienced labor or material supply chain shortages that have significantly impacted its ability to serve its customers’ needs.

However, shortages are causing minor delays and shifting of work projects based on material availability.

If APS continues to experience delays in materials, it could experience an increase in purchased power costs for summer generation needs.

Such increased purchased power costs would be expected to be recoverable through the PSA.

APS has measures in place to continually monitor and evaluate resource needs and supply chain adequacy but cannot predict whether there will be material supply chain shortages in the future.

While the total expected impact of COVID-19 on future sales is currently unknown, APS experienced higher electric residential sales and lower electric commercial and industrial sales from the outset of the pandemic through April 2021.

Beginning in May 2021, electric sales from commercial and industrial customers increased to levels in line with pre-COVID-19 sales but residential sales continued to be higher than pre-COVID-19 sales.

Based on past experience, a 1% variation in our annual residential and small commercial and industrial kWh sales projections under normal business conditions can result in increases or decreases in annual net income of approximately $20 million, and a 1% variation in our annual large commercial and industrial kWh sales projections under normal business conditions can result in increases or decreases in annual net income of approximately $5 million.

The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act allowed employers to defer payments of the employer share of Social Security payroll taxes that would have otherwise been owed from March 27, 2020, through December 31, 2020.

We deferred the cash payment of the employer’s portion of Social Security payroll taxes for the period July 1, 2020, through December 31, 2020, which was approximately $18 million.

As of December 31, 2022, we have paid this cash deferral in full.

Due to COVID-19, APS voluntarily suspended disconnections of customers for nonpayment beginning March 13, 2020 until December 31, 2020.

The suspension of disconnection of customers for nonpayment ended on January 1, 2021, and customers were automatically placed on eight-month payment arrangements if they had past due balances at the end of the disconnection period of $75 or greater.

APS voluntarily began waiving late payment fees of its customers on March 13, 2020.

Effective February 1, 2023, late payment fees for residential customers were reinstated, and late payment fees for commercial and industrial customers were reinstated effective May 1, 2022.

See Note 3 for additional information regarding the Summer Disconnection Moratorium.

More detailed discussion of the impacts and future uncertainties related to COVID‑19 can be found throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Combined Notes to Pinnacle West’s and APS’s financial statements that appear in Part II, Item 8 of this report and “Risk Factors” in Part I, Item 1A of this report.

The 2050 goal will involve new thinking and depends on improved and new technologies.

Standard as a percentage of retail sales.

APS understands that the transition away from coal-fired power plants toward a clean energy future will pose unique economic challenges for the communities around these plants.

We worked collaboratively with stakeholders and leaders of the Navajo Nation to consider the impacts of ceasing operation of APS coal-fired power plants on the communities surrounding those facilities to propose a comprehensive Coal Community Transition (“CCT”) plan.

The proposed framework provided substantial financial and economic development support to build new economic opportunities and addresses a transition strategy for plant employees.

We are committed to continuing our long-running partnership with the Navajo Nation in other areas as well, including expanding electrification and developing tribal renewable energy projects.

Our proposed CCT plan supported the Navajo Nation, where Four Corners is located, the communities surrounding the Cholla Power Plant and the Hopi Tribe, which was impacted by closure of the Navajo Plant.

On November 2, 2021, the ACC approved an amended 2019 Rate Case ROO that will require (i) equal payments over a three-year period that total $10 million to the Navajo Nation, (ii) a $1 million one-time payment to the Hopi Tribe within 60 days of the 2019 Rate Case decision, (iii) a $500,000 one-time payment to the Navajo County communities within 60 days of the 2019 Rate Case decision, (iv) up to $1.25 million for electrification of homes and businesses on the Hopi reservation, and (v) up to $1.25 million for the electrification of homes and businesses on the Navajo Nation reservation.

APS is a vertically-integrated electric utility that provides either retail or wholesale electric service to most of [removed: the State of] Arizona, with the major exceptions of about one-half of the Phoenix metropolitan area, the Tucson metropolitan area and Mohave County in northwestern Arizona.

Pinnacle West’s other subsidiaries are El Dorado, [removed: BCE] [added: PNW Power,] and 4CA.

APS currently provides electric service to approximately [removed: 1.3] [added: 1.4] million customers.

We own or lease [removed: 6,340] [added: 6,491] MW of regulated generation capacity and we hold a mix of both long-term and short-term purchased power agreements for additional [removed: capacity, including a variety of agreements for the purchase of renewable energy.][added: capacity.]

During [removed: 2022,] [added: 2023,] no single purchaser or user of energy accounted for more than [removed: 2.4%] [added: 2.1%] of our electric revenues.

The following map shows APS’s retail service territory, including the locations of its generating facilities and principal transmission [removed: lines.][added: lines.]

APS’s sources of energy by type used to supply energy to Native Load customers during [removed: 2022] [added: 2023] were as follows:

[removed: ][added: ]

*Renewables include energy from wind, solar, geothermal, [added: biogas,] biomass, [removed: DG,] and [removed: solar PPAs.][added: DG.]

The share of APS’s energy supply being derived from clean resources [removed: is 51%,] [added: was approximately 51% in 2023,] which includes energy from nuclear, renewables and DSM.

APS currently has a diverse portfolio of renewable resources, [added: including solar, wind, geothermal, biogas, and biomass.]

APS’s [removed: clean energy goals consist] [added: Clean Energy Commitment consists] of three parts:

- [removed: a] [added: A] 2030 target [removed: of achieving] [added: to achieve] a resource mix that is 65% clean energy, with 45% of the generation portfolio coming from renewable energy; and

- [removed: a] [added: A] commitment to [removed: end APS’s use of] [added: exit from] coal-fired generation by 2031.

Among other strategies, APS intends to achieve these goals through various methods such as relying on Palo Verde, [added: one of] the nation’s largest [removed: producer] [added: producers] of carbon-free energy; increasing clean energy resources, including renewables; developing energy storage; [removed: ceasing the use of] [added: exiting from] coal-generated electricity; managing demand with a modern interactive grid; promoting customer technology and energy efficiency; and optimizing regional resources.

For APS’s operations involving fossil-fuel electricity generation and electricity transmission and distribution, APS’s annual GHG inventory is reported to [added: the] EPA under the EPA GHG Reporting Program.

In addition to reporting to the EPA, we publicly report Scope [removed: 1, 2] [added: 1] and [removed: 3] [added: 2, as well as a limited number of Scope 3,] GHG emissions.

APS operates the plant and owns 29.1% of Palo Verde Units 1 and 3 [added: and approximately 17% of Unit 2.]

The Palo Verde participants have contracted for 100% of Palo Verde’s requirements for uranium concentrates through 2028 and 48% through 2029; 100% of Palo Verde’s requirements for conversion services through [removed: 2030] [added: 2029] and [removed: 40%] [added: 75%] through [removed: 2031;] [added: 2030;] 100% of Palo Verde’s requirements for enrichment services through 2026 and 28% for 2027; and 100% of Palo Verde’s requirements for fuel fabrication through 2027 for Unit 2 and Unit 1 and 2028 for Unit 3.

Publication of these volumes [removed: do] [added: does] not signal whether or when the NRC might authorize construction of the repository.

On December 19, 2012, APS, acting on behalf of itself and the participant owners of Palo Verde, filed a second breach of contract lawsuit against the DOE in the [added: United States] Court of Federal Claims.

[removed: This] [added: The] lawsuit sought to recover damages incurred due to [removed: the] DOE’s breach of the Standard Contract for failing to accept Palo Verde’s spent nuclear fuel and high-level waste from January 1, 2007 through June 30, 2011, [removed: as it was required to do] pursuant to the terms of the Standard Contract and the NWPA.

On August 18, 2014, APS and [removed: the] DOE entered into a settlement agreement, [removed: stipulating to a dismissal of the lawsuit and payment by the] [added: which required] DOE to [added: pay] the Palo Verde owners for certain specified costs incurred by Palo Verde during the period January 1, 2007, through June 30, 2011.

In addition, the settlement agreement provided APS with a method for submitting claims and getting recovery for costs incurred through December 31, 2016, which was extended to December 31, [removed: 2022.][added: 2025.]

APS has submitted [removed: eight] [added: nine] claims pursuant to the terms of the August 18, 2014 settlement [removed: agreement] [added: agreement,] for [removed: eight] [added: nine] separate time periods during July 1, 2011 through [removed: June 30, 2021.][added: October 31, 2022.]

The DOE has approved and paid [removed: $123.9] [added: $138.2] million for these claims (APS’s share is [removed: $36] [added: $40.2] million).

On October 31, [removed: 2022,] [added: 2023,] APS filed its [removed: ninth] [added: tenth] claim pursuant to the terms of the August 18, 2014, settlement agreement in the amount of [removed: $14.3] [added: $18.46] million (APS’s share is [removed: $4.2] [added: $5.4] million).

In February [removed: 2023,] [added: 2024,] the DOE approved [added: $18.39 million of] this claim.

As a result, those generic impacts do not need to be [added: re-analyzed in the environmental reviews for individual licenses.]

[removed: The final Continued Storage Rule was] subject to continuing legal challenges before the NRC and the Court of Appeals.

If uncertainties regarding the United States government’s obligation to accept and store spent fuel are not favorably resolved, APS will evaluate [added: expanding the ISFSI, or] alternative storage solutions that may obviate the need to expand the [removed: ISFSI] [added: ISFSI,] to accommodate all of the fuel that will be irradiated during the period of extended operation.

APS has two oil-only power plants: [removed: Fairview,] [added: Douglas,] located in the town of Douglas, Arizona and Yucca GT-4 in Yuma, Arizona.

APS has long-term gas transportation agreements with three different companies, some of which are effective through [removed: 2049.][added: 2052.]

As part of APS’s Clean Energy Commitment, APS has committed to [removed: cease using] [added: exit] coal-fired generation as part of its portfolio of electricity generating resources, including Four Corners, by 2031.

The Four [removed: Corners’] [added: Corners] co-owners executed a long-term agreement for the supply of coal to Four Corners from July 2016 through 2031 (the “2016 Coal Supply Agreement”).

In June 2021, APS and the owners of Four Corners entered into an agreement that would allow Four Corners to operate seasonally at the election of the owners [removed: beginning in] [added: as early as] fall 2023, subject to the necessary governmental approvals and conditions associated with changes in plant ownership.

Under seasonal operation, one generating unit would be shut down during seasons [removed: when] [added: where] electricity demand is reduced, such as the winter and spring.

APS has committed to end the use of coal at its remaining Cholla units [removed: by] [added: during] 2025.

In addition to the AZ Sun Program, APS developed the 44 MW Red Rock Solar [added: Plant and the 150 MW Agave Solar] Plant, [added: each of] which it owns and operates.

This fleet of solar systems includes a 3 MW facility located at the Prescott Airport and 1 MW of small solar systems in various locations across [added: Arizona.]

BCE was a subsidiary of Pinnacle West, but was sold in January 2024.


The final Continued Storage Rule was

As of the date of this report, APS has elected not to begin seasonal operation due to market conditions.

On June 30, 2023, APS issued an All-Source Request for Proposal (“RFP”) seeking approximately 1,000 MW of reliable capacity, including at least 700 MW of renewable resources with a focus on in-service dates between 2026 and 2028 (the “2023 RFP”).

Bids from the 2023 RFP were received on September 6, 2023, and APS has started negotiations on multiple projects, including a 400 MW wind facility PPA that was signed in December 2023.

| PPAs | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Harquahala Sun | | | | | | Tonopah, AZ | | | | | | 2025 | | | | | | 20 | | | | | | | | | | | | 300 | | |

| Serrano Solar | | | | | | Pima and Pinal County, AZ | | | | | | 2025 | | | | | | 20 | | | | | | | | | | | | 170 | | |

| Yuma Solar Energy | | | | | | Yuma County, AZ | | | | | | 2024 | | | | | | 20 | | | | | | | | | | | | 70 | | |

| West Camp Wind Farm | | | | | | Navajo County, AZ | | | | | | 2025 | | | | | | 20 | | | | | | | | | | | | 400 | | |

| Total PPAs | | | | | | | | | | | | | | | | | | | | | | | | 1,034 | | | | | | 1,877 | | |

As noted above, on June 30, 2023, APS issued the 2023 RFP seeking approximately 1,000 MW of reliable capacity, including at least 700 MW of renewable resources, including energy storage, with a focus on in-service dates between 2026 and 2028.

| | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

(a) Includes 0.3 MW of APS-owned customer-sited batteries.

(b) Includes 19 MW of capacity that entered commercial operation in January 2024.

| Extension Term | | | | | | May 1 through October 31, 2025-2032 | | | | | | 525 | | |

| Extension Term | | | | | | May 1 through October 31, 2026-2031 | | | | | | 565 | | |

| Extension Term | | | | | | May 1 through October 31, 2027-2034 | | | | | | 570 | | |

However, on May 1, 2023, APS, Tucson Electric Company, and UNS Electric, Inc., filed a joint request to extend the IRP filing due date to November 1, 2023, which the ACC granted on June 21, 2023.

APS filed its 2023 IRP on November 1, 2023.

On January 31, 2024, stakeholders filed comments regarding the IRP.

On October 4, 2023, the ACC updated the IRP processing timeline with a due date of August 30, 2024 for the ACC Staff Assessment and Proposed Order and an open meeting decision due date yet to be determined.

APS is participating in market design and tariff development of Markets+, a day-ahead and real-time market offering from Southwest Power Pool.

APS also participated in the design and drafting of the tariff for the CAISO’s Extended Day-Ahead Market, which was approved by FERC in December 2023.

On May 26, 2023, the ACC opened a new docket to review articles within the Arizona Administrative Code related to Resource Planning, the Renewable Energy Standard and Tariff, and Electric Energy Efficiency Standards.

On January 9, 2024, the ACC approved a rulemaking process to begin on this matter.

During the ACC Open Meeting on February 6, 2024, the ACC approved motions to direct ACC Staff to include recommendations to repeal the current Electric Energy Efficiency and Renewable Energy Standard rules during the rulemaking process.

APS cannot predict the outcome of this matter.

On March 23, 2023, the ACC approved a policy statement that included information on how statewide community solar and storage programs should be structured, their location, and inclusion in RFPs.

On June 30, 2023, APS filed its 2024 RES Implementation Plan and proposed a budget of approximately $95.1 million.

APS’s budget proposal supports existing approved projects and commitments and requests a waiver of the RES renewable energy credit requirements to demonstrate compliance with the Annual Renewable Energy Requirement for 2023.

The ACC has not yet ruled on the 2024 RES Implementation Plan.

On November 26, 2021,

As the ACC’s questions pertained to the retail competition law subsequently repealed in April 2022, the Attorney General has not responded to the ACC’s request and the questions are now moot.

No action has been taken by the ACC regarding this application since that time.

However, on May 17, 2023, the Retail Energy Supply Association filed a motion with the ACC requesting it to re-open the generic docket to re-examine the ACC’s electric competition rules.

No action has been taken by the ACC regarding this motion.

APS cannot predict the outcome of these matters.

BCE also has acquired minority ownership positions in two wind farms that achieved commercial operation in 2020.

Both wind farms deliver power under long-term PPAs.

See “Business of Other Subsidiaries — Bright Canyon Energy” below for information regarding BCE’s investments.

including solar, wind, geothermal, biogas, and biomass.

APS also voluntarily tracks APS’s GHG emissions arising from APS operations.

and approximately 17% of Unit 2.

An additional extension is currently pending.

re-analyzed in the environmental reviews for individual licenses.

Additionally, 4CA, a wholly-owned subsidiary of Pinnacle West, owned 7% of Units 4 and 5 from July 2016 through July 2018 following its acquisition of El Paso’s interest in these units described below.

El Paso, a 7% owner of Units 4 and 5 of Four Corners, did not sign the 2016 Coal Supply Agreement.

Under the 2016 Coal Supply Agreement, APS agreed to assume the 7% shortfall obligation.

On February 17, 2015, APS and El Paso entered into an asset purchase agreement providing for the purchase by APS, or an affiliate of APS, of El Paso’s 7% interest in each of Units 4 and 5 of Four Corners.

4CA purchased the El Paso interest on July 6, 2016.

The purchase price was immaterial in amount, and 4CA assumed El Paso’s reclamation and decommissioning obligations associated with the 7% interest.

On June 29, 2018, 4CA and NTEC entered into an asset purchase agreement providing for the sale to NTEC of 4CA’s 7% interest in Four Corners.

NTEC assumed 4CA’s reclamation and decommissioning obligations associated with the 7% interest.

The sale transaction closed on July 3, 2018.

NTEC purchased the 7% interest at 4CA’s book value, approximately $70 million and paid the purchase price over four years pursuant to a secured interest-bearing promissory note, which was paid in full as of June 30, 2022.

In connection with the sale, Pinnacle West guaranteed certain obligations that NTEC will have to the other owners of Four Corners, such as NTEC’s 7% share of capital expenditures and operating and maintenance expenses.

Pinnacle West’s guarantee is secured by a portion of APS’s payments to be owed to NTEC under the 2016 Coal Supply Agreement.

APS anticipates that it will elect not to begin seasonal operation in November 2023, unless market conditions change.

Arizona.

In 2018, APS issued a request for proposal (“RFP”) for approximately 106 MW of energy storage to be located at up to five of its AZ Sun sites.

Based upon its evaluation of the RFP responses, APS decided to expand the initial phase of battery deployment to 141 MW by adding a sixth AZ Sun site.

These battery storage facilities are currently expected to be in service during the first quarter of 2023.

On August 2, 2021, APS executed a contract for an additional 60 MW of utility-owned energy storage to be located on APS’s AZ Sun sites.

This contract, with a 2023 in-service date, will complete the addition of storage on current APS-owned utility-scale solar facilities.

Additionally, in February 2019, APS signed two 20-year PPAs for energy storage totaling 150 MW.

These PPAs were subject to ACC approval in order to allow for cost recovery through the PSA.

APS received the requested ACC approval on January 12, 2021, and service under the agreements is expected to begin in 2023.

In December 2020, APS issued two RFPs (collectively, the “December 2020 RFPs”).

As a result of the December 2020 RFPs, APS executed four 20-year PPAs for resources that include energy storage: (a) two PPAs for standalone energy storage resources totaling 300 MW; and (b) two PPAs for solar plus storage resources totaling 275 MW.

The PPAs are also subject to ACC approval to enable cost recovery through the PSA.

APS received the requested ACC approval for three out of four of the projects on December 16, 2021 and on April 13, 2022 for the remaining project.

Service under the agreements is expected to begin in 2023 and 2024.

In May 2022, APS issued an RFP to address resource needs for 2025 and beyond (the “2022 RFP”).

As a result of the 2022 RFP, as of January 2023, APS has executed a 20-year PPA for solar plus storage resources totaling 300 MW.

The PPA is subject to ACC approval to enable cost recovery through the PSA, which was requested in December 2022 and approved in February 2023.

Service under this agreement is expected to begin in 2025.

The remaining energy storage is expected to be made up of resources solicited through current and future RFPs.

For the fiscal year ended December 31, [removed: 2022][added: 2023]

Indicate by check mark whether [removed: each] [added: the] registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, [added: a] smaller reporting [removed: company] [added: company,] or an emerging growth company.

| ARIZONA PUBLIC SERVICE COMPANY | | | | | | $ | 0 | | as of June 30, [removed: 2022] [added: 2023] | | |

| PINNACLE WEST CAPITAL CORPORATION | | | Number of shares of common stock, no par value, outstanding as of February 21, [removed: 2023:] [added: 2024:] | | | [removed: 113,175,507] [added: 113,427,367] | | |

| ARIZONA PUBLIC SERVICE COMPANY | | | Number of shares of common stock, $2.50 par value, outstanding as of February 21, [removed: 2023:] [added: 2024:] | | | 71,264,947 | | |

Portions of Pinnacle West Capital Corporation’s definitive Proxy Statement relating to its Annual Meeting of Shareholders to be held on May [removed: 17, 2023] [added: 22, 2024] are incorporated by reference into Part III hereof.

| [GLOSSARY OF NAMES AND TECHNICAL [removed: TERMS](#iefa03c257a7c412c9b6c25f752dd3e40_10)] [added: TERMS](#i097d433795444a8ca6a05c463d1777c5_10)] | | | | | | [removed: [iii](#iefa03c257a7c412c9b6c25f752dd3e40_10)] [added: [ii](#i097d433795444a8ca6a05c463d1777c5_10)] | | |

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| | | | [Pinnacle West Financial [removed: Statements](#iefa03c257a7c412c9b6c25f752dd3e40_88)] [added: Statements](#i097d433795444a8ca6a05c463d1777c5_88)] | | | [removed: [95](#iefa03c257a7c412c9b6c25f752dd3e40_88)] [added: [94](#i097d433795444a8ca6a05c463d1777c5_88)] | | |

| | | | [APS Financial [removed: Statements](#iefa03c257a7c412c9b6c25f752dd3e40_112)] [added: Statements](#i097d433795444a8ca6a05c463d1777c5_112)] | | | [removed: [106](#iefa03c257a7c412c9b6c25f752dd3e40_112)] [added: [105](#i097d433795444a8ca6a05c463d1777c5_112)] | | |

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| [Item [removed: 9C.](#iefa03c257a7c412c9b6c25f752dd3e40_214)] [added: 9C.](#i097d433795444a8ca6a05c463d1777c5_217)] | | | [Disclosure Regarding Foreign Jurisdictions that Prevent [removed: Inspections](#iefa03c257a7c412c9b6c25f752dd3e40_214)] [added: Inspections](#i097d433795444a8ca6a05c463d1777c5_217)] | | | [removed: [202](#iefa03c257a7c412c9b6c25f752dd3e40_214)] [added: [201](#i097d433795444a8ca6a05c463d1777c5_217)] | | |

| [Item [removed: 10.](#iefa03c257a7c412c9b6c25f752dd3e40_220)] [added: 10.](#i097d433795444a8ca6a05c463d1777c5_223)] | | | [Directors, Executive Officers and Corporate Governance of Pinnacle [removed: West](#iefa03c257a7c412c9b6c25f752dd3e40_220)] [added: West](#i097d433795444a8ca6a05c463d1777c5_223)] | | | [removed: [202](#iefa03c257a7c412c9b6c25f752dd3e40_220)] [added: [201](#i097d433795444a8ca6a05c463d1777c5_223)] | | |

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| [Item [removed: 15.](#iefa03c257a7c412c9b6c25f752dd3e40_238)] [added: 15.](#i097d433795444a8ca6a05c463d1777c5_241)] | | | [Exhibits and Financial Statement [removed: Schedules](#iefa03c257a7c412c9b6c25f752dd3e40_238)] [added: Schedules](#i097d433795444a8ca6a05c463d1777c5_241)] | | | [removed: [205](#iefa03c257a7c412c9b6c25f752dd3e40_238)] [added: [204](#i097d433795444a8ca6a05c463d1777c5_241)] | | |

| [Item [removed: 16.](#iefa03c257a7c412c9b6c25f752dd3e40_241)] [added: 16.](#i097d433795444a8ca6a05c463d1777c5_244)] | | | [Form 10-K [removed: Summary](#iefa03c257a7c412c9b6c25f752dd3e40_241)] [added: Summary](#i097d433795444a8ca6a05c463d1777c5_244)] | | | [removed: [226](#iefa03c257a7c412c9b6c25f752dd3e40_241)] [added: [224](#i097d433795444a8ca6a05c463d1777c5_244)] | | |

The information required with respect to each company is set forth [removed: within][added: within the applicable items.]

| BCE | | | Bright Canyon Energy [removed: Corporation, a subsidiary of the Company] [added: Corporation] | | |

| [removed: distributed renewable energy systems or] DG | | | Small-scale renewable energy technologies that are located on customers’ properties, such as rooftop solar systems | | |

- [added: uncertainties associated with] the current [removed: economic environment] and [removed: its effects, such as lower] [added: future] economic [removed: growth, a tight] [added: environment, including economic growth rates,] labor [removed: market,] [added: market conditions,] inflation, supply chain delays, increased expenses, volatile capital markets, or other unpredictable effects;

- generation, transmission and distribution [removed: facility] [added: facilities] and system conditions and operating costs;

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).

| PINNACLE WEST CAPITAL CORPORATION | | | | | | $ | 9,215,155,738 | | as of June 30, 2023 | | |

| [PART I](#i097d433795444a8ca6a05c463d1777c5_16) | | | | | | [3](#i097d433795444a8ca6a05c463d1777c5_16) | | |

| [Item 1C.](#i097d433795444a8ca6a05c463d1777c5_2169) | | | [Cybersecurity](#i097d433795444a8ca6a05c463d1777c5_2169) | | | [48](#i097d433795444a8ca6a05c463d1777c5_2169) | | |

| [PART II](#i097d433795444a8ca6a05c463d1777c5_40) | | | | | | [55](#i097d433795444a8ca6a05c463d1777c5_40) | | |

| | | | | | | | | |

| | | | | | | | | |

| [PART III](#i097d433795444a8ca6a05c463d1777c5_220) | | | | | | [201](#i097d433795444a8ca6a05c463d1777c5_220) | | |

| | | | | | | | | |

| [PART IV](#i097d433795444a8ca6a05c463d1777c5_238) | | | | | | [204](#i097d433795444a8ca6a05c463d1777c5_238) | | |

| | | | | | | | | |

| [SIGNATURES](#i097d433795444a8ca6a05c463d1777c5_247) | | | | | | [225](#i097d433795444a8ca6a05c463d1777c5_247) | | |

| PNW Power | | | Pinnacle West Power, LLC, a subsidiary of the Company | | |

See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

| PINNACLE WEST CAPITAL CORPORATION | | | | | | $ | 8,247,902,707 | | as of June 30, 2022 | | |

| [PART I](#iefa03c257a7c412c9b6c25f752dd3e40_16) | | | | | | [3](#iefa03c257a7c412c9b6c25f752dd3e40_16) | | |

| [PART II](#iefa03c257a7c412c9b6c25f752dd3e40_40) | | | | | | [54](#iefa03c257a7c412c9b6c25f752dd3e40_40) | | |

| | | | [Combined Notes to Consolidated Financial Statements](#iefa03c257a7c412c9b6c25f752dd3e40_130) | | | [112](#iefa03c257a7c412c9b6c25f752dd3e40_130) | | |

| | | | [Pinnacle West Schedule I](#iefa03c257a7c412c9b6c25f752dd3e40_196) | | | [197](#iefa03c257a7c412c9b6c25f752dd3e40_196) | | |

| [PART III](#iefa03c257a7c412c9b6c25f752dd3e40_217) | | | | | | [202](#iefa03c257a7c412c9b6c25f752dd3e40_217) | | |

| [PART IV](#iefa03c257a7c412c9b6c25f752dd3e40_235) | | | | | | [205](#iefa03c257a7c412c9b6c25f752dd3e40_235) | | |

| [SIGNATURES](#iefa03c257a7c412c9b6c25f752dd3e40_244) | | | | | | [227](#iefa03c257a7c412c9b6c25f752dd3e40_244) | | |

the applicable items.

| COVID-19 | | | 2019 Novel Coronavirus | | |

| El Paso | | | El Paso Electric Company | | |

iii

Neither Pinnacle West nor APS has received written comments regarding its periodic or current reports from the SEC staff that were issued 180 days or more preceding the end of its [removed: 2022] [added: 2023] fiscal year and that remain unresolved.

The Company prioritizes and maintains a high level of commitment to responsible and secure cybersecurity practices given the critical nature of its services and the potential consequences of a successful cyber-attack on the Company and the electric grid.

A successful cyber-attack could have far-reaching consequences, from compromising the integrity of sensitive data to disrupting power supply.

To that end, the Company implements a robust risk management, strategy, and governance regime aimed at ensuring effective controls are in place to identify, mitigate, remediate, and communicate cyber threats at appropriate levels within the organization.

APS’s cybersecurity group (the “Cybersecurity Group”) is comprised of cybersecurity analysts, engineers, architects, and others, led by the Director of Cybersecurity, who reports to APS’s Vice President, Operations Support.

The Director of Cybersecurity has more than twenty years of experience in information technology and cybersecurity roles, with more than ten of those years at the Company.

The Director of Cybersecurity also holds cybersecurity certifications from multiple certifying bodies and is active in utility cybersecurity professional organizations.

The Cybersecurity Group has day-to-day responsibility for safeguarding the Company’s critical assets and assessing, identifying, and managing material risks from cybersecurity threats.

In fulfilling its responsibility, the Cybersecurity Group manages formal documented internal processes such as risk management and vulnerability scanning, as well as other processes, such as assessing threat intelligence, that include outside partners.

Intelligence sharing comes from industry sources such as the Electricity Information Sharing and Analysis Center, government sources, as well as commercially purchased information sources.

The Cybersecurity Group also engages third parties for assessments and audits of its systems periodically and as needed.

Such assessments and audits may include, among other things, pre-production evaluation of technologies, overall program assessments, and compliance program assessments including audits by our regulators.

Depending on the products and services provided and the potential for data exchange and technology risk, we may require vendors and service providers to pass APS’s vendor risk management program, which sets forth security and data protection requirements, as a condition to doing or continuing to do business with us.

For contracts with vendors that will handle or have access to certain sensitive data, APS requires contractual provisions setting forth cybersecurity controls, vulnerability management, secure development practices, and other security and data protection requirements.

A subset of vendors that meet a predetermined risk profile due to strategic relationships, technology risk, or other factors is continually monitored by a third-party risk management service, and the Company annually reviews independent assessments of these vendors.

The Cybersecurity Group also has documented processes for identifying, responding to, and internally escalating cybersecurity incidents.

Once an incident meets certain criteria, the Company’s Cybersecurity Incident Command or, in the most severe cases that impact the entire Company, the Corporate Emergency Operations Center is activated and formal response procedures are followed to address the incident.

The Cybersecurity Group has a formal incident response plan that details response and escalation procedures, including activation of a Cybersecurity Disclosure Committee, consisting of the Chief Financial Officer and the General Counsel, to assess an incident’s materiality with input as needed from the Director of Cybersecurity, Chief Accounting Officer, Chief Information Officer, and others, including outside advisors.

Cybersecurity risk management has been integrated into the Company’s overall enterprise risk management program (the “Enterprise Risk Management Program”) through policies and processes that implement a risk management framework designed to identify, manage, and monitor business unit risks throughout the organization.

The Enterprise Risk Management Program is overseen by an executive committee (the “Executive Risk Committee”), which meets at least quarterly and is comprised of members holding executive leadership positions in the Company, including the Chairman and Chief Executive Officer, President, and other Executive and Senior Vice Presidents, and is chaired and sponsored by the Chief Financial Officer.

Every year, as a part of the Enterprise Risk Management Program, the top risks affecting the Company are identified.

For 2023, cybersecurity was identified as a top risk.

The applicable subject matter experts brief the Company’s Board of Directors on the status of all top enterprise risks at least once per year.

Finally, the Nuclear and Operating Committee of the Company’s Board of Directors provides ultimate oversight of cybersecurity risk and also receives briefings at least twice per year from the Cybersecurity Group, and notable audit findings relating to cybersecurity are aggregated and provided to the Board of Directors’ Audit Committee.

To date, we do not believe there have been risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect Pinnacle West or APS.

However, there is no assurance that will continue to be the case.

If a significant cybersecurity event or incident were to occur, our ability to fulfill our critical business functions and our business strategy, results of operations, and financial condition could all be materially impacted.

See the risk factor entitled, “We are subject to cybersecurity risks and risks of unauthorized access to our systems that could adversely affect our business and financial condition” in Item 1A—Risk Factors for more information.

APS’s portfolio of owned generating facilities as of December 31, [removed: 2022] [added: 2023] is provided in the table below:

| Redhawk [removed: (d)] | | | | | | 2 | | | | | | | | | | | | Gas | | | | | | Load Following | | | | | | 1,088 | | |

| Ocotillo [removed: (e)] [added: (d)] | | | | | | 7 | | | | | | | | | | | | Gas | | | | | | Peaking | | | | | | 620 | | |

| Cotton Center [removed: (f)] [added: (e)] | | | | | | 1 | | | | | | | | | | | | Solar | | | | | | As Available | | | | | | 17 | | |

| Hyder I [removed: (f)] [added: (e)] | | | | | | 1 | | | | | | | | | | | | Solar | | | | | | As Available | | | | | | 17 | | |

| Paloma [removed: (f)] [added: (e)] | | | | | | 1 | | | | | | | | | | | | Solar | | | | | | As Available | | | | | | 17 | | |

| Gila Bend [removed: (f)] [added: (e)] | | | | | | 1 | | | | | | | | | | | | Solar | | | | | | As Available | | | | | | 36 | | |

| Hyder II [removed: (f)] [added: (e)] | | | | | | 1 | | | | | | | | | | | | Solar | | | | | | As Available | | | | | | 14 | | |

| Foothills [removed: (f)] [added: (e)] | | | | | | 1 | | | | | | | | | | | | Solar | | | | | | As Available | | | | | | 38 | | |

| Desert Star [removed: (f)] [added: (e)] | | | | | | 1 | | | | | | | | | | | | Solar | | | | | | As Available | | | | | | 10 | | |

| APS Owned Distributed Energy | | | | | | | | | | | | | | | | | | Solar | | | | | | As Available | | | | | | [removed: 36] [added: 37] | | |

| Total Solar | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | [removed: 264] [added: 415] | | |

| Total Capacity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | [removed: 6,340] [added: 6,491] | | |

The other participants are Salt River Project, SCE, El [removed: Paso,] [added: Paso Electric Company,] Public Service Company of New Mexico, Southern California Public Power Authority, and Los Angeles Department of Water & Power.

[removed: (e)Ocotillo] [added: (d)Ocotillo] Steam Units 1 and 2 were retired on January 10, 2019.

[removed: (f)APS] [added: (e)APS] is under contract and currently plans to add battery storage at these AZ Sun sites.

Current Facilities. As of [removed: January 3, 2023,] [added: February 1, 2024,] APS’s transmission facilities consist of approximately [removed: 5,828] [added: 5,832] pole miles of overhead lines and approximately 85 miles of underground lines, [removed: 5,768] [added: 5,772] miles of which are located in Arizona.

APS’s distribution facilities consist of approximately [removed: 11,276] [added: 11,289] miles of overhead lines and approximately [removed: 23,082] [added: 23,604] miles of underground primary cable [removed: (20,021] [added: (20,508] when excluding abandoned conductor), all of which are located in Arizona.

APS also owns and maintains [removed: 469] [added: 485] substations, including both transmission and distribution yards.

The following table shows APS’s jointly-owned interests in those transmission facilities recorded on the Consolidated Balance Sheets at December 31, [removed: 2022:][added: 2023:]

| Morgan — Pinnacle Peak System | | | [removed: 64.7] [added: 63.2] | | % |

| Navajo Southern System | | | [removed: 26.8] [added: 25.2] | | % |

| Four Corners Switchyards | | | [removed: 61.9] [added: 57.5] | | % |

| Palo Verde — Yuma 500kV System | | | [removed: 25.4] [added: 25.3] | | % |

| Palo Verde — Morgan System | | | [removed: 87.8] [added: 87.5] | | % |

Expansion. Each [removed: year] [added: year,] APS prepares and files with the ACC a Ten-Year Transmission Plan.

In APS’s [removed: 2023] [added: 2024] Ten-Year Plan, APS projects it will develop [removed: 84] [added: 109] miles of new transmission lines over the next 10 years.

Additionally, APS plans to upgrade [removed: 55] [added: 730] miles of existing transmission lines over the same horizon.

The [removed: 2023] [added: 2024] Ten-Year Plan includes a new [removed: 25-mile] [added: 28-mile] 500kV line from the Jojoba substation to the Rudd substation.

[removed: In addition, this] [added: This] new source will provide customers in the area greater access to a diverse mix of resources from around the region.

The [removed: 2023] [added: 2024] Ten-Year Plan includes numerous projects with the purpose to interconnect new renewable energy resources to the transmission system.

In recent negotiations, certain of the affected Indian tribes have required payments substantially [added: in excess of amounts that we have paid in the past for such rights-of-way.]

| Agave Solar | | | | | | 1 | | | | | | | | | | | | Solar | | | | | | As Available | | | | | | 150 | | |

Additionally, the 2024 Ten-Year Plan includes the rebuild of both Four Corners to Pinnacle Peak 345kV lines which span 289 miles each.

This rebuild will replace aging towers to ensure continued reliability and safety, increase important capability to the Metro Phoenix area, and improve access to a diverse mix of resources from the Four Corners region throughout the Southwest.

(d)Redhawk generation capacity increased by 104 MW following the Advanced Gas Path upgrade installed on both units.

in excess of amounts that we have paid in the past for such rights-of-way.

The executive officers, their ages at February 27, [removed: 2023,] [added: 2024,] current positions and principal occupations for the past five years are as follows:

| Jeffrey B. Guldner | | | | | | [removed: 57] [added: 58] | | | | | | Chairman of the Board, Chief Executive Officer and President of Pinnacle West | | | | | | 2019-Present | | |

| Elizabeth A. Blankenship | | | | | | [removed: 51] [added: 52] | | | | | | Vice President, Controller and Chief Accounting Officer of Pinnacle West and APS | | | | | | 2019-Present | | |

| Andrew D. Cooper | | | | | | [removed: 44] [added: 45] | | | | | | Senior Vice President and Chief Financial Officer of Pinnacle West and APS | | | | | | 2022-Present | | |

| Jose L. Esparza | | | | | | [removed: 48] [added: 49] | | | | | | Senior Vice President, Public Policy of APS | | | | | | 2022-Present | | |

| Theodore N. Geisler | | | | | | [removed: 44] [added: 45] | | | | | | President of APS | | | | | | 2022-Present | | |

| Adam C. Heflin | | | | | | [removed: 59] [added: 60] | | | | | | Executive Vice President and Chief Nuclear Officer, PVGS, of APS | | | | | | 2022-Present | | |

| Paul J. Mountain | | | | | | [removed: 45] [added: 46] | | | | | | Vice President and Treasurer of Pinnacle West and APS | | | | | | 2022-Present | | |

| Robert E. Smith | | | | | | [removed: 53] [added: 54] | | | | | | Executive Vice President, General Counsel and Chief Development Officer of Pinnacle West and APS | | | | | | 2021-Present | | |

| Jacob Tetlow | | | | | | [removed: 50] [added: 51] | | | | | | Executive Vice President, Operations of APS | | | | | | 2021-Present | | |

| | | | | | | | | | | | | Executive Vice President, Public Policy of APS | | | | | | 2017-2018 | | |

| | | | | | | | | | | | | General Counsel of Pinnacle West and APS | | | | | | 2017-2018 | | |

| Donna M. Easterly | | | | | | 58 | | | | | | Senior Vice President, Human Resources of APS | | | | | | 2020-Present | | |

| | | | | | | | | | | | | Vice President, Human Resources and Ethics of APS | | | | | | 2017-2020 | | |

| | | | | | | | | | | | | General Manager, Transmission and Distribution Operations and Maintenance of APS | | | | | | 2017-2018 | | |

At the close of business on February 21, [removed: 2023,] [added: 2024,] Pinnacle West’s common stock was held of record by approximately [removed: 15,182] [added: 14,476] shareholders.

At December 31, [removed: 2022,] [added: 2023,] APS did not have any outstanding preferred stock.

[Table of [removed: Contents](#iefa03c257a7c412c9b6c25f752dd3e40_7)][added: Contents](#i097d433795444a8ca6a05c463d1777c5_7)]

This graph compares the cumulative total shareholder return on Pinnacle West’s common stock during the five years ended December 31, [removed: 2022,] [added: 2023,] to the cumulative total returns on the S&P 500 Index and the Edison Electric Index.

The comparison assumes that $100 was invested on December 31, [removed: 2017,] [added: 2018,] in Pinnacle West’s common stock and in each of the indices shown and that all of the dividends were reinvested.

[removed: ][added: ]

[removed: Years] [added: | | | | | | | Year] Ended December [removed: 31,][added: 31, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| [removed: Company/Index] [added: Company/Index] | | | | | | [removed: 2017] [added: 2018] | | | [removed: 2018] | | | [removed: 2019] [added: 2019] | | | [removed: 2020] | | | [removed: 2021] [added: 2020] | | | [removed: 2022] | | | [added: 2021 | | | | | | 2022 | | | | | | 2023 | | |]

| Pinnacle West Common Stock | | | | | | $100 | | | [removed: $104] | | | [removed: $113] [added: $109] | | | [removed: $104] | | | [removed: $96] [added: $101] | | | [removed: $109] | | | [added: $93 | | | | | | $105 | | | | | | $104 | | |]

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Edison Electric Institute Index | | | | | | $100 | | | | | | $126 | | | | | | $124 | | | | | | $146 | | | | | | $147 | | | | | | $134 | | |

| S&P 500 Index | | | | | | $100 | | | | | | $131 | | | | | | $156 | | | | | | $200 | | | | | | $164 | | | | | | $207 | | |

| | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Edison Electric Institute Index | | | | | | $100 | | | $104 | | | $130 | | | $129 | | | $151 | | | $153 | | |

| S&P 500 Index | | | | | | $100 | | | $96 | | | $126 | | | $149 | | | $192 | | | $156 | | |

| [Management’s Report on Internal Control over Financial Reporting (Pinnacle West Capital [removed: Corporation)](#iefa03c257a7c412c9b6c25f752dd3e40_82)] [added: Corporation)](#i097d433795444a8ca6a05c463d1777c5_82)] | | | [removed: [90](#iefa03c257a7c412c9b6c25f752dd3e40_82)] [added: [89](#i097d433795444a8ca6a05c463d1777c5_82)] | | |

| [Report of Independent Registered Public Accounting [removed: Firm](#iefa03c257a7c412c9b6c25f752dd3e40_85)] [added: Firm](#i097d433795444a8ca6a05c463d1777c5_85)] (PCAOB ID No. 34) | | | [removed: [91](#iefa03c257a7c412c9b6c25f752dd3e40_85)] [added: [90](#i097d433795444a8ca6a05c463d1777c5_85)] | | |

| [Pinnacle West Consolidated Statements of Income for [removed: 2022, 2021 and 2020](#iefa03c257a7c412c9b6c25f752dd3e40_88)] [added: 202](#i097d433795444a8ca6a05c463d1777c5_88)[3](#i097d433795444a8ca6a05c463d1777c5_88)[, 202](#i097d433795444a8ca6a05c463d1777c5_88)[2](#i097d433795444a8ca6a05c463d1777c5_88) [and](#i097d433795444a8ca6a05c463d1777c5_88) [2021](#i097d433795444a8ca6a05c463d1777c5_88)] | | | [removed: [95](#iefa03c257a7c412c9b6c25f752dd3e40_88)] [added: [94](#i097d433795444a8ca6a05c463d1777c5_88)] | | |

| [Pinnacle West Consolidated Statements of Comprehensive Income for [removed: 2022, 2021 and 2020](#iefa03c257a7c412c9b6c25f752dd3e40_91)] [added: 202](#i097d433795444a8ca6a05c463d1777c5_91)[3](#i097d433795444a8ca6a05c463d1777c5_91)[, 202](#i097d433795444a8ca6a05c463d1777c5_91)[2](#i097d433795444a8ca6a05c463d1777c5_91) [and](#i097d433795444a8ca6a05c463d1777c5_91) [2021](#i097d433795444a8ca6a05c463d1777c5_91)] | | | [removed: [96](#iefa03c257a7c412c9b6c25f752dd3e40_91)] [added: [95](#i097d433795444a8ca6a05c463d1777c5_91)] | | |

| [Pinnacle West Consolidated Balance Sheets as of December 31, [removed: 2022 and 2021](#iefa03c257a7c412c9b6c25f752dd3e40_94)] [added: 202](#i097d433795444a8ca6a05c463d1777c5_94)[3](#i097d433795444a8ca6a05c463d1777c5_94) [and](#i097d433795444a8ca6a05c463d1777c5_94) [2022](#i097d433795444a8ca6a05c463d1777c5_94)] | | | [removed: [97](#iefa03c257a7c412c9b6c25f752dd3e40_94)] [added: [96](#i097d433795444a8ca6a05c463d1777c5_94)] | | |

| [Pinnacle West Consolidated Statements of Cash Flows [removed: for 2022, 2021 and 2020](#iefa03c257a7c412c9b6c25f752dd3e40_97)] [added: for](#i097d433795444a8ca6a05c463d1777c5_97) [2023](#i097d433795444a8ca6a05c463d1777c5_97)[, 202](#i097d433795444a8ca6a05c463d1777c5_97)[2](#i097d433795444a8ca6a05c463d1777c5_97) [and](#i097d433795444a8ca6a05c463d1777c5_97) [2021](#i097d433795444a8ca6a05c463d1777c5_97)] | | | [removed: [99](#iefa03c257a7c412c9b6c25f752dd3e40_97)] [added: [98](#i097d433795444a8ca6a05c463d1777c5_97)] | | |

| [Pinnacle West Consolidated Statements of Changes in Equity for [removed: 2022, 2021 and 2020](#iefa03c257a7c412c9b6c25f752dd3e40_100)] [added: 202](#i097d433795444a8ca6a05c463d1777c5_100)[3](#i097d433795444a8ca6a05c463d1777c5_100)[, 202](#i097d433795444a8ca6a05c463d1777c5_100)[2](#i097d433795444a8ca6a05c463d1777c5_100) [and](#i097d433795444a8ca6a05c463d1777c5_100) [2021](#i097d433795444a8ca6a05c463d1777c5_100)] | | | [removed: [100](#iefa03c257a7c412c9b6c25f752dd3e40_100)] [added: [99](#i097d433795444a8ca6a05c463d1777c5_100)] | | |

| [Management’s Report on Internal Control over Financial Reporting (Arizona Public Service [removed: Company)](#iefa03c257a7c412c9b6c25f752dd3e40_106)] [added: Company)](#i097d433795444a8ca6a05c463d1777c5_106)] | | | [removed: [101](#iefa03c257a7c412c9b6c25f752dd3e40_106)] [added: [100](#i097d433795444a8ca6a05c463d1777c5_106)] | | |

| [Report of Independent Registered Public Accounting [removed: Firm](#iefa03c257a7c412c9b6c25f752dd3e40_109)] [added: Firm](#i097d433795444a8ca6a05c463d1777c5_109)] (PCAOB ID No. 34) | | | [removed: [102](#iefa03c257a7c412c9b6c25f752dd3e40_109)] [added: [101](#i097d433795444a8ca6a05c463d1777c5_109)] | | |

| [APS Consolidated Statements of Income [removed: for 2022, 2021 and 2020](#iefa03c257a7c412c9b6c25f752dd3e40_112)] [added: for](#i097d433795444a8ca6a05c463d1777c5_112) [2023,](#i097d433795444a8ca6a05c463d1777c5_112) [2022](#i097d433795444a8ca6a05c463d1777c5_112) [and](#i097d433795444a8ca6a05c463d1777c5_112) [2021](#i097d433795444a8ca6a05c463d1777c5_112)] | | | [removed: [106](#iefa03c257a7c412c9b6c25f752dd3e40_112)] [added: [105](#i097d433795444a8ca6a05c463d1777c5_112)] | | |

| [APS Consolidated Statements of Comprehensive Income [removed: for 2022, 2021 and 2020](#iefa03c257a7c412c9b6c25f752dd3e40_115)] [added: for](#i097d433795444a8ca6a05c463d1777c5_115) [2023,](#i097d433795444a8ca6a05c463d1777c5_115) [2022](#i097d433795444a8ca6a05c463d1777c5_115) [and](#i097d433795444a8ca6a05c463d1777c5_115) [2021](#i097d433795444a8ca6a05c463d1777c5_115)] | | | [removed: [107](#iefa03c257a7c412c9b6c25f752dd3e40_115)] [added: [106](#i097d433795444a8ca6a05c463d1777c5_115)] | | |

| [APS Consolidated Balance Sheets as of December [removed: 31, 2022 and 2021](#iefa03c257a7c412c9b6c25f752dd3e40_118)] [added: 31,](#i097d433795444a8ca6a05c463d1777c5_118) [2023 and](#i097d433795444a8ca6a05c463d1777c5_118) [2022](#i097d433795444a8ca6a05c463d1777c5_118)] | | | [removed: [108](#iefa03c257a7c412c9b6c25f752dd3e40_118)] [added: [107](#i097d433795444a8ca6a05c463d1777c5_118)] | | |

| [APS Consolidated Statements of Cash Flows [removed: for 2022, 2021 and 2020](#iefa03c257a7c412c9b6c25f752dd3e40_121)] [added: for](#i097d433795444a8ca6a05c463d1777c5_121) [2023,](#i097d433795444a8ca6a05c463d1777c5_121) [2022](#i097d433795444a8ca6a05c463d1777c5_121) [and](#i097d433795444a8ca6a05c463d1777c5_121) [2021](#i097d433795444a8ca6a05c463d1777c5_121)] | | | [removed: [110](#iefa03c257a7c412c9b6c25f752dd3e40_121)] [added: [109](#i097d433795444a8ca6a05c463d1777c5_121)] | | |

| [APS Consolidated Statements of Changes in Equity [removed: for 2022, 2021 and 2020](#iefa03c257a7c412c9b6c25f752dd3e40_124)] [added: for](#i097d433795444a8ca6a05c463d1777c5_124) [2023](#i097d433795444a8ca6a05c463d1777c5_124)[,](#i097d433795444a8ca6a05c463d1777c5_124) [2022](#i097d433795444a8ca6a05c463d1777c5_124) [and](#i097d433795444a8ca6a05c463d1777c5_124) [2021](#i097d433795444a8ca6a05c463d1777c5_124)] | | | [removed: [111](#iefa03c257a7c412c9b6c25f752dd3e40_124)] [added: [110](#i097d433795444a8ca6a05c463d1777c5_124)] | | |

| [Combined Notes to Consolidated Financial [removed: Statements](#iefa03c257a7c412c9b6c25f752dd3e40_130)] [added: Statements](#i097d433795444a8ca6a05c463d1777c5_130)] | | | [removed: [112](#iefa03c257a7c412c9b6c25f752dd3e40_130)] [added: [111](#i097d433795444a8ca6a05c463d1777c5_130)] | | |

| [Note 1. Summary of Significant Accounting [removed: Policies](#iefa03c257a7c412c9b6c25f752dd3e40_130)] [added: Policies](#i097d433795444a8ca6a05c463d1777c5_130)] | | | [removed: [112](#iefa03c257a7c412c9b6c25f752dd3e40_130)] [added: [111](#i097d433795444a8ca6a05c463d1777c5_130)] | | |

| [Note 2. [removed: Revenue](#iefa03c257a7c412c9b6c25f752dd3e40_133)] [added: Revenue](#i097d433795444a8ca6a05c463d1777c5_133)] | | | [removed: [120](#iefa03c257a7c412c9b6c25f752dd3e40_133)] [added: [119](#i097d433795444a8ca6a05c463d1777c5_133)] | | |

| [Note 5. Lines of Credit and Short-Term [removed: Borrowings](#iefa03c257a7c412c9b6c25f752dd3e40_145)] [added: Borrowings](#i097d433795444a8ca6a05c463d1777c5_142)] | | | [removed: [148](#iefa03c257a7c412c9b6c25f752dd3e40_145)] [added: [145](#i097d433795444a8ca6a05c463d1777c5_142)] | | |

| [Note 6. Long-Term Debt and Liquidity [removed: Matters](#iefa03c257a7c412c9b6c25f752dd3e40_148)] [added: Matters](#i097d433795444a8ca6a05c463d1777c5_145)] | | | [removed: [150](#iefa03c257a7c412c9b6c25f752dd3e40_148)] [added: [147](#i097d433795444a8ca6a05c463d1777c5_145)] | | |

| [Note 7. Retirement Plans and Other Postretirement [removed: Benefits](#iefa03c257a7c412c9b6c25f752dd3e40_151)] [added: Benefits](#i097d433795444a8ca6a05c463d1777c5_148)] | | | [removed: [153](#iefa03c257a7c412c9b6c25f752dd3e40_151)] [added: [151](#i097d433795444a8ca6a05c463d1777c5_148)] | | |

| [Note 9. Jointly-Owned [removed: Facilities](#iefa03c257a7c412c9b6c25f752dd3e40_157)] [added: Facilities](#i097d433795444a8ca6a05c463d1777c5_154)] | | | [removed: [166](#iefa03c257a7c412c9b6c25f752dd3e40_157)] [added: [163](#i097d433795444a8ca6a05c463d1777c5_154)] | | |

| [removed: [Note 10. Commitments and Contingencies](#iefa03c257a7c412c9b6c25f752dd3e40_160)] [added: COMMITMENTS AND CONTINGENCIES (Note 10)] | | | [removed: [167](#iefa03c257a7c412c9b6c25f752dd3e40_160)] | | | [added: | | | | | |]

| [Note 11. Asset Retirement [removed: Obligations](#iefa03c257a7c412c9b6c25f752dd3e40_163)] [added: Obligations](#i097d433795444a8ca6a05c463d1777c5_163)] | | | [removed: [176](#iefa03c257a7c412c9b6c25f752dd3e40_163)] [added: [173](#i097d433795444a8ca6a05c463d1777c5_163)] | | |

| [Note 12. Fair Value [removed: Measurements](#iefa03c257a7c412c9b6c25f752dd3e40_166)] [added: Measurements](#i097d433795444a8ca6a05c463d1777c5_166)] | | | [removed: [176](#iefa03c257a7c412c9b6c25f752dd3e40_166)] [added: [174](#i097d433795444a8ca6a05c463d1777c5_166)] | | |

| [Note 13. Earnings Per [removed: Share](#iefa03c257a7c412c9b6c25f752dd3e40_169)] [added: Share](#i097d433795444a8ca6a05c463d1777c5_169)] | | | [removed: [183](#iefa03c257a7c412c9b6c25f752dd3e40_169)] [added: [180](#i097d433795444a8ca6a05c463d1777c5_169)] | | |

| [Note 14. Stock-Based [removed: Compensation](#iefa03c257a7c412c9b6c25f752dd3e40_172)] [added: Compensation](#i097d433795444a8ca6a05c463d1777c5_172)] | | | [removed: [184](#iefa03c257a7c412c9b6c25f752dd3e40_172)] [added: [180](#i097d433795444a8ca6a05c463d1777c5_172)] | | |

| [Note 15. Derivative [removed: Accounting](#iefa03c257a7c412c9b6c25f752dd3e40_175)] [added: Accounting](#i097d433795444a8ca6a05c463d1777c5_175)] | | | [removed: [187](#iefa03c257a7c412c9b6c25f752dd3e40_175)] [added: [184](#i097d433795444a8ca6a05c463d1777c5_175)] | | |

| [Note 16. Other Income and Other [removed: Expense](#iefa03c257a7c412c9b6c25f752dd3e40_178)] [added: Expense](#i097d433795444a8ca6a05c463d1777c5_178)] | | | [removed: [191](#iefa03c257a7c412c9b6c25f752dd3e40_178)] [added: [188](#i097d433795444a8ca6a05c463d1777c5_178)] | | |

| [Note 17. Palo Verde Sale Leaseback Variable Interest [removed: Entities](#iefa03c257a7c412c9b6c25f752dd3e40_184)] [added: Entities](#i097d433795444a8ca6a05c463d1777c5_184)] | | | [removed: [192](#iefa03c257a7c412c9b6c25f752dd3e40_184)] [added: [189](#i097d433795444a8ca6a05c463d1777c5_184)] | | |

| [Note 18. Investments in Nuclear Decommissioning Trusts and Other Special Use [removed: Funds](#iefa03c257a7c412c9b6c25f752dd3e40_187)] [added: Funds](#i097d433795444a8ca6a05c463d1777c5_187)] | | | [removed: [193](#iefa03c257a7c412c9b6c25f752dd3e40_187)] [added: [189](#i097d433795444a8ca6a05c463d1777c5_187)] | | |

| [Note 19. Changes in Accumulated Other Comprehensive [removed: Loss](#iefa03c257a7c412c9b6c25f752dd3e40_190)] [added: Loss](#i097d433795444a8ca6a05c463d1777c5_190)] | | | [removed: [196](#iefa03c257a7c412c9b6c25f752dd3e40_190)] [added: [193](#i097d433795444a8ca6a05c463d1777c5_190)] | | |

Based on our evaluation under the framework in *Internal Control — Integrated Framework (2013),* our management concluded that our internal control over financial reporting was effective as of December 31, [removed: 2022.][added: 2023.]

The effectiveness of our internal control over financial reporting as of December 31, [removed: 2022,] [added: 2023,] has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report which is included herein and also relates to the Company’s consolidated financial statements.

We have audited the accompanying consolidated balance sheets of Pinnacle West Capital Corporation and subsidiaries (the “Company”) as of December 31, [removed: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] the related consolidated statements of income, comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, [removed: 2022,] [added: 2023, and] the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the “financial statements”).

We also have audited the Company’s internal control over financial reporting as of December 31, [removed: 2022,] [added: 2023,] based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2022,] [added: 2023,] in conformity with accounting principles generally accepted in the United States of America.

Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2022,] [added: 2023,] based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

Decisions to be made by the ACC in the future will impact the accounting for regulated operations, including decisions about the amount of allowable deferred costs [added: and]

[removed: and] return on invested capital included in rates and any refunds that may be required.

[removed: While the Company has] indicated it expects to recover costs from customers through regulated rates, there is a risk that the ACC will not approve: (1) full recovery of the costs of providing utility service, or (2) full recovery of all amounts invested in the utility business and a reasonable return on that investment.

| [Note 3. Regulatory Matters](#i097d433795444a8ca6a05c463d1777c5_136) | | | [121](#i097d433795444a8ca6a05c463d1777c5_136) | | |

| [Note 4. Income Taxes](#i097d433795444a8ca6a05c463d1777c5_139) | | | [140](#i097d433795444a8ca6a05c463d1777c5_139) | | |

| [Note 8. Leases](#i097d433795444a8ca6a05c463d1777c5_151) | | | [159](#i097d433795444a8ca6a05c463d1777c5_151) | | |

| [Note 10. Commitments and Contingencies](#i097d433795444a8ca6a05c463d1777c5_157) | | | [164](#i097d433795444a8ca6a05c463d1777c5_157) | | |

| [Note 20. Sale of Bright Canyon Energy](#i097d433795444a8ca6a05c463d1777c5_2136) | | | [194](#i097d433795444a8ca6a05c463d1777c5_2136) | | |

| [Note 21. New Accounting Standards](#i097d433795444a8ca6a05c463d1777c5_196) | | | [195](#i097d433795444a8ca6a05c463d1777c5_196) | | |

February 27, 2024

Decisions to be made by the ACC in the future will impact the accounting for regulated operations, including decisions about the amount of allowable deferred costs and return on invested capital included in rates and any refunds that may be required.

While the Company has

Management judgments include continually assessing the likelihood of future recovery of regulatory assets and/or a disallowance of part of the cost of recently completed plant, by considering factors such as regulatory environment changes, and recent rate orders specific to APS and to other regulated entities in the same jurisdiction.

- We observed the ACC Open Meeting during which the Recommended Order and Opinion regarding the 2022 Retail Rate Case was amended and approved and read the approved 2022 Rate Case Recommended Order and Opinion as amended.

We obtained and evaluated management’s internally prepared analysis regarding impacts of the approved 2022 Rate Case Recommended Order and Opinion as amended to rates and recorded balances.

February 27, 2024

| Net unrealized gain, net of tax expense of $234, $615, and $360 | | | 713 | | | | | | 1,873 | | | | | | 1,095 | | |

| | | | 2023 | | | | | | 2022 | | |

| Assets held for sale (Note 20) | | | 35,139 | | | | | | — | | |

| | | | 2023 | | | | | | 2022 | | |

| Liabilities from risk management activities (Note 15) | | | 42,975 | | | | | | 4,749 | | |

| Other | | | 251,469 | | | | | | 247,400 | | |

| Net Income | | | $ | 518,781 | | | | | $ | 500,826 | | | | | $ | 635,944 | |

| Gain on sale relating to BCE | | | (6,423) | | | | | | — | | | | | | — | | |

| Other current assets | | | (19,550) | | | | | | 76,089 | | | | | | (22,770) | | |

| Other current liabilities | | | 40,510 | | | | | | (1,856) | | | | | | (51,736) | | |

| Change in long-term regulatory assets | | | 53,112 | | | | | | 12,432 | | | | | | (17,012) | | |

| Change in other long-term assets | | | (195,598) | | | | | | 159,030 | | | | | | (345,470) | | |

| Change in operating lease assets | | | 90,525 | | | | | | 105,359 | | | | | | 116,009 | | |

| Change in other long-term liabilities | | | 63,080 | | | | | | 170,359 | | | | | | 78,219 | | |

| Change in operating lease liabilities | | | (65,779) | | | | | | (103,671) | | | | | | (108,365) | | |

| Proceeds from sale relating to BCE | | | 23,400 | | | | | | — | | | | | | — | | |

| Net income | | | | | | | | | — | | | | | | | | | | | | — | | | | | | 501,557 | | | | | | — | | | | | | 17,224 | | | | | | 518,781 | | |

| Issuance of common stock | | | 290,500 | | | | | | 27,936 | | | | | | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 27,936 | | |

| Balance, December 31, 2023 | | | 113,537,689 | | | | | | $ | 2,752,676 | | | | | (113,272) | | | | | | $ | (8,185) | | | | | $ | 3,466,317 | | | | | $ | (33,144) | | | | | $ | 107,198 | | | | | $ | 6,284,862 | |

February 27, 2024

We also have audited the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the ACC, auditing these judgments required specialized knowledge of accounting for rate regulation and the rate setting process due to its inherent complexities.

Our audit procedures related to the impact of rate regulation on the financial statements included the following, among others:

We also tested the effectiveness of management’s controls over the initial recognition of amounts as property, plant, and equipment; regulatory assets or liabilities; and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates or of a future reduction in rates.

- We observed the ACC Open Meeting during which the Recommended Order and Opinion regarding the 2022 Retail Rate Case was amended and approved and read the approved 2022 Rate Case Recommended Order and Opinion as amended.

| [Note](#iefa03c257a7c412c9b6c25f752dd3e40_139) [3](#iefa03c257a7c412c9b6c25f752dd3e40_139)[. Regulatory Matters](#iefa03c257a7c412c9b6c25f752dd3e40_139) | | | [122](#iefa03c257a7c412c9b6c25f752dd3e40_139) | | |

| [Note](#iefa03c257a7c412c9b6c25f752dd3e40_142) [4](#iefa03c257a7c412c9b6c25f752dd3e40_142)[. Income Taxes](#iefa03c257a7c412c9b6c25f752dd3e40_142) | | | [143](#iefa03c257a7c412c9b6c25f752dd3e40_142) | | |

| [Note 8. Leases](#iefa03c257a7c412c9b6c25f752dd3e40_154) | | | [162](#iefa03c257a7c412c9b6c25f752dd3e40_154) | | |

February 27, 2023

- We read APS’s 2022 rate application submitted to the ACC on October 28, 2022.

For certain regulatory assets or liabilities where management’s assessment is based on precedents established by the ACC under similar circumstances and not specifically addressed in a regulatory order, we also obtained a letter from internal legal counsel regarding their assessment.

- We evaluated management’s assessment that the SCR plant investment is not probable of a partial disallowance and that the SCR deferred costs are probable of recovery.

We read the Notice of Direct Appeal filed with the Arizona Court of Appeals and Petition for Special Action filed with the Arizona Supreme Court, read APS’s opening brief submitted to the Arizona Court of Appeals, read the ACC’s Answering Brief, read the Intervenors’ briefs, read APS’s reply brief, and observed the Appeal Oral Arguments, reviewed the Company’s internally prepared memo, and reviewed a legal letter from the Company’s external counsel to assess the likelihood of recovery in future rates or of a future reduction in rates based on the ACC decision.

| Derivative instruments: | | | | | | | | | | | | | | | | | |

| Net unrealized gain (loss), net of tax benefit (expense) of $(615), $(378), and $662 | | | 1,873 | | | | | | 1,077 | | | | | | (2,089) | | |

| Reclassification of net realized gain, net of tax benefit (expense) of $0, $18, and $(171) (Note 15) | | | — | | | | | | 18 | | | | | | 592 | | |

| | | | | | | | | | | | |

| Other | | | 252,149 | | | | | | 232,914 | | |

| Other current assets | | | 76,067 | | | | | | (22,720) | | | | | | (30,640) | | |

| Other current liabilities | | | (6,056) | | | | | | (52,086) | | | | | | 22,520 | | |

| Change in margin and collateral accounts — assets | | | 22 | | | | | | (50) | | | | | | 404 | | |

| Change in margin and collateral accounts — liabilities | | | 4,200 | | | | | | 350 | | | | | | 100 | | |

| Change in unrecognized tax benefits | | | (1,989) | | | | | | (568) | | | | | | 2,220 | | |

| Change in other long-term assets | | | 276,821 | | | | | | (246,473) | | | | | | (67,453) | | |

| Change in other long-term liabilities | | | 68,677 | | | | | | (29,578) | | | | | | (186,227) | | |

| Balance, December 31, 2019 | | | 112,540,126 | | | | | | $ | 2,659,561 | | | | | (103,546) | | | | | | $ | (9,427) | | | | | $ | 2,837,610 | | | | | $ | (57,096) | | | | | $ | 122,540 | | | | | $ | 5,553,188 | |

| Net income | | | | | | | | | — | | | | | | | | | | | | — | | | | | | 550,559 | | | | | | — | | | | | | 19,493 | | | | | | 570,052 | | |

| Issuance of common stock | | | 219,925 | | | | | | 17,921 | | | | | | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 17,921 | | |

- We read the Company’s 2022 rate application submitted to the ACC on October 28, 2022.

We read the Notice of Direct Appeal filed with the Arizona Court of Appeals and Petition for Special Action filed with the Arizona Supreme Court, read the Company’s opening brief submitted to the Arizona Court of Appeals, read the ACC’s Answering Brief, read the Intervenors’ briefs, read the Company’s reply brief, and observed the Appeal Oral Arguments, reviewed the Company’s internally prepared memo, and reviewed a legal letter from the Company’s external counsel to assess the likelihood of recovery in future rates or of a future reduction in rates based on the ACC decision.

| Net unrealized loss, net of tax expense of $0, $18, and $18 | | | — | | | | | | (18) | | | | | | (18) | | |

| Other | | | 230,825 | | | | | | 212,413 | | |

| Other current assets | | | 59,948 | | | | | | (25,587) | | | | | | (24,669) | | |

| Other current liabilities | | | (3,010) | | | | | | (61,647) | | | | | | 29,587 | | |

| Change in other long-term assets | | | 288,077 | | | | | | (231,804) | | | | | | (65,139) | | |

| Change in other long-term liabilities | | | 67,131 | | | | | | (20,272) | | | | | | (186,871) | | |

| Short-term debt borrowings under revolving credit facility | | | — | | | | | | — | | | | | | 540,000 | | |

| Short-term debt repayments under revolving credit facility | | | — | | | | | | — | | | | | | (540,000) | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Balance, December 31, 2019 | | | 71,264,947 | | | | | | $ | 178,162 | | | | | $ | 2,721,696 | | | | | $ | 3,011,927 | | | | | $ | (35,522) | | | | | $ | 122,540 | | | | | $ | 5,998,803 | |

| Net income | | | | | | | | | — | | | | | | — | | | | | | 568,028 | | | | | | — | | | | | | 19,493 | | | | | | 587,521 | | |

El Dorado is an investment firm.

BCE is a subsidiary that was formed in 2014 that focuses on growth opportunities that leverage the Company’s core expertise in the electric energy industry.

4CA is a subsidiary that was formed in 2016 as a result of the purchase of El Paso’s 7% interest in Four Corners.

$0.001 per kWh of nuclear generation through May 2014, at which point the DOE reduced the fee to zero.

Pinnacle West’s management, with the participation of Pinnacle West’s Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of Pinnacle West’s disclosure controls and procedures as of December 31, [removed: 2022.][added: 2023.]

APS’s management, with the participation of APS’s Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of APS’s disclosure controls and procedures as of December 31, [removed: 2022.][added: 2023.]

No change in Pinnacle West’s or APS’s internal control over financial reporting occurred during the fiscal quarter ended December 31, [removed: 2022,] [added: 2023,] that materially affected, or is reasonably likely to materially affect, Pinnacle West’s or APS’s internal control over financial reporting.

Rule 10b5-1 Trading Plans

During the fiscal quarter ended December 31, 2023, none of our directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”

None.

Reference is hereby made to “Information About Our Board and Corporate Governance” and “Proposal 1 — Election of Directors” in the Pinnacle West Proxy Statement relating to the Annual Meeting of Shareholders to be held on May [removed: 17, 2023] [added: 22, 2024] (the [removed: “2023] [added: “2024] Proxy Statement”) and to the “Information about our Executive Officers” section in Part I of this report.

Reference is hereby made to “Director Compensation,” “Executive Compensation,” and “Human Resources Committee Interlocks and Insider Participation” in the [removed: 2023] [added: 2024] Proxy Statement.

Reference is hereby made to “Ownership of Pinnacle West Stock” in the [removed: 2023] [added: 2024] Proxy Statement.

The following table sets forth information as of December 31, [removed: 2022,] [added: 2023,] with respect to the [removed: the] 2021 Plan, 2012 Plan, the 2007 Plan, under which our equity securities are outstanding or currently authorized for issuance.

| Equity compensation plans approved by security holders | | | [removed: 1,340,572] [added: 1,485,075] | | | | | | — | | | | | | [removed: 864,533] [added: 3,535,951] | | |

(c) Awards under the 2021 [removed: Plan] [added: Plan, as amended,] can take the form of options, stock appreciation rights, restricted stock, performance shares, performance share units, performance cash, stock grants, stock units, dividend equivalents, and restricted stock units.

Additional shares cannot be awarded under the 2012 [removed: Plan] [added: Plan, as amended,] and the 2007 Plan.

However, if an award under the 2012 [removed: Plan] [added: Plan, as amended,] or the 2007 Plan is forfeited, terminated or canceled or expires, the shares subject to such award, to the extent of the forfeiture, termination, cancellation, or expiration, may be added back to the shares available for issuance under the 2021 Plan.

Amounts in column (a) in the table above include shares subject to awards outstanding under three equity compensation plans that were previously approved by our shareholders: (a) the 2007 Plan, which was approved by our shareholders at our 2007 [removed: annual meeting] [added: Annual Meeting] of [removed: shareholders and] [added: Shareholders,] under which no new stock awards may be granted; (b) the 2012 Plan, [removed: as amended,] which was approved by our shareholders at our 2012 [removed: annual meeting] [added: Annual Meeting] of [removed: shareholders and] [added: Shareholders, as amended by] the [removed: first amendment] [added: First Amendment] to the 2012 [removed: Plan] [added: Plan, which] was approved by our shareholders at our 2017 [removed: annual meeting] [added: Annual Meeting] of [removed: shareholders and] [added: Shareholders,] under which no new stock awards may be granted; and (c) the 2021 [removed: Plan] [added: Plan,] which was approved by our shareholders at our 2021 [removed: annual meeting] [added: Annual Meeting] of [removed: shareholders.][added: Shareholders, as amended by the First Amendment to the 2021 Plan, which was approved by our shareholders at our 2023 Annual Meeting of Shareholders.]

| Total | | | 1,485,075 | | | | | | — | | | | | | 3,535,951 | | |

| Total | | | 1,340,572 | | | | | | — | | | | | | 864,533 | | |

Reference is hereby made to “Information About Our Board and Corporate Governance” and “Related Party Transactions” in the [removed: 2023] [added: 2024] Proxy Statement.

Reference is hereby made to “Audit Matters — Audit Fees and — Pre-Approval Policies” in the [removed: 2023] [added: 2024] Proxy Statement.

| Type of Service | | | | | | [removed: 2022] [added: 2023] | | | | | | [removed: 2021] [added: 2022] | | |

| Audit Fees (1) | | | | | | $ | [removed: 2,653,737] [added: 2,707,633] | | | | | $ | [removed: 2,580,260] [added: 2,653,737] | |

| Audit-Related Fees (2) | | | | | | [removed: 498,167] [added: 372,040] | | | | | | [removed: 333,905] [added: 498,167] | | |

(2) The aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the financial statements and are not included in Audit Fees reported above, which primarily consist of fees for employee benefit plan audits [added: in 2022] and [added: 2023 and] environmental, social and governance assurance readiness performed in [removed: 2022 and 2021.][added: 2022.]

All of the services performed by Deloitte & Touche LLP for APS in [removed: 2022] [added: 2023] were pre-approved by the Audit Committee or the Chair consistent with the pre-approval policy.

| Tax Fees | | | | | | — | | | | | | — | | |

| All Other Fees (3) | | | | | | 1,672,676 | | | | | | — | | |

(3) The aggregate fees billed for independent third-party advisory (quality assurance) services related to a large-scale information technology project.

| 3.1 | | | | | | Pinnacle West | | | | | | [Articles of Incorporation, restated as of May 21, 2008](http://www.sec.gov/Archives/edgar/data/7286/000095015308001386/p76062exv3w1.htm) | | | | | | 3.1 to Pinnacle West/APS June 30, 2008 Form 10-Q Report, File No. 1-8962 | | | | | | [added: 8/7/2008] | | |

| 4.3 | | | | | | Pinnacle West APS | | | | | | [Indenture dated as of November 15, 1996 between APS and The Bank of New York, as Trustee](http://www.sec.gov/Archives/edgar/data/7286/0000950147-96-000580.txt) | | | | | | 4.5 to APS’s Registration Statements Nos. 33-61228, 33-55473, 33-64455 and [removed: 333- 15379] [added: 333-15379] by means of November 19, 1996 Form 8-K Report, File No. 1-4473 | | | | | | 11/22/1996 | | |

| 4.7 | | | | | | Pinnacle West | | | | | | [removed: [Second] [added: [Third] Amended and Restated Pinnacle West Capital Corporation Investors Advantage Plan dated as of [removed: June 23, 2004](http://www.sec.gov/Archives/edgar/data/764622/000095015304001894/p69469exv4w4.htm)] [added: November 25, 2008](http://www.sec.gov/Archives/edgar/data/764622/000095013408021205/p13537exv4w1.htm)] | | | | | | [removed: 4.4] [added: 4.1] to Pinnacle West’s [removed: June 23, 2004] Form [removed: 8-K Report,] [added: S-3 Registration Statement No. 333-155641,] File No. 1-8962 | | | | | | [removed: 8/9/2004] [added: 11/25/2008] | | |

| 4.9 | | | | | | Pinnacle West APS | | | | | | [Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of [removed: 1934](https://www.sec.gov/Archives/edgar/data/764622/000076462223000023/pnw20221231exhibit49.htm)] [added: 1934](https://www.sec.gov/Archives/edgar/data/764622/000076462224000016/pnw20231231exhibit49.htm)] | | | | | | | | | | | | | | |

| [removed: 10.4(4)b] [added: 10.4(10)b] | | | | | | Pinnacle West APS | | | | | | [removed: [Retention] [added: [First Amendment to Discretionary Credit Award] Agreement dated [removed: December 19, 2008] [added: February 21, 2021] between APS and [removed: Maria Lacal](https://www.sec.gov/Archives/edgar/data/0000007286/000076462221000013/pnw202012311045a.htm)] [added: Jacob Tetlow](https://www.sec.gov/Archives/edgar/data/7286/000076462223000023/ex10410.htm)] | | | | | | [removed: 10.4.5a] [added: 10.4(10)] to Pinnacle West/APS [removed: 2021] [added: 2022] Form 10-K Report, File Nos. 1-8962 and 1-4473 | | | | | | [removed: 2/24/2021] [added: 2/27/2023] | | |

| [removed: 10.4(5)b] [added: 10.4(8)b] | | | | | | Pinnacle West APS | | | | | | [removed: [First Amendment to the Retention Agreement] [added: [Offer of Employment Letter] dated May [removed: 24, 2011] [added: 19, 2022] between APS and [removed: Maria Lacal](https://www.sec.gov/Archives/edgar/data/0000007286/000076462221000013/pnw202012311045b.htm)] [added: Adam Heflin](https://www.sec.gov/Archives/edgar/data/7286/000076462223000023/ex1048.htm)] | | | | | | [removed: 10.4.5b] [added: 10.4(8)] to Pinnacle West/APS [removed: 2021] [added: 2022] Form 10-K Report, File Nos. 1-8962 and 1-4473 | | | | | | [removed: 2/24/2021] [added: 2/27/2023] | | |

| [removed: 10.4(6)(a)b] [added: 10.4(9)b] | | | | | | Pinnacle West APS | | | | | | [removed: [Medical Retention] [added: [Discretionary Credit Award] Agreement dated [removed: October 31, 2014] [added: June 21, 2019] between APS and [removed: Maria Lacal](https://www.sec.gov/Archives/edgar/data/0000007286/000076462221000013/pnw20201231exhibit1046.htm)] [added: Jacob Tetlow](https://www.sec.gov/Archives/edgar/data/7286/000076462223000023/ex1049.htm)] | | | | | | [removed: 10.4.6] [added: 10.4(9)] to Pinnacle West/APS [removed: 2021] [added: 2022] Form 10-K Report, File Nos. 1-8962 and 1-4473 | | | | | | [removed: 2/24/2021] [added: 2/27/2023] | | |

| [removed: 10.4(6)(b)b] [added: 10.6(5)(l)bd] | | | | | | Pinnacle West [removed: APS] | | | | | | [removed: [Discretionary Credit] [added: [Form of Performance Share] Award Agreement [removed: dated October 31, 2014 between APS and Maria Lacal](https://www.sec.gov/Archives/edgar/data/0000007286/000076462221000013/pnw20201231exhibit1047.htm)] [added: under the Pinnacle West Capital Corporation 2012 Long-Term Incentive Plan](https://www.sec.gov/Archives/edgar/data/7286/000076462221000013/pnw202012311065k.htm)] | | | | | | [removed: 10.4.7] [added: 10.6.5k] to Pinnacle West/APS [removed: 2021] [added: 2020] Form 10-K Report, File Nos. 1-8962 and 1-4473 | | | | | | 2/24/2021 | | |

| [removed: 10.4(7)b] [added: 10.6(5)(m)bd] | | | | | | Pinnacle West [removed: APS] | | | | | | [removed: [Discretionary Credit] [added: [Form of Performance Share] Award Agreement [removed: dated September 29, 2016 between APS and Maria Lacal](https://www.sec.gov/Archives/edgar/data/0000007286/000076462221000013/pnw20201231exhibit1048.htm)] [added: under the Pinnacle West Capital Corporation 2012 Long-Term Incentive Plan](https://www.sec.gov/Archives/edgar/data/7286/000076462221000013/pnw202012311065l.htm)] | | | | | | [removed: 10.4.8] [added: 10.6.5l] to Pinnacle West/APS [removed: 2021] [added: 2020] Form 10-K Report, File Nos. 1-8962 and 1-4473 | | | | | | 2/24/2021 | | |

| [removed: 10.6(5)(a)bd] [added: 10.6(5)(b)bd] | | | | | | Pinnacle West | | | | | | [Form of Performance Share Award Agreement under the Pinnacle West Capital Corporation 2012 Long-Term Incentive Plan](http://www.sec.gov/Archives/edgar/data/7286/000110465912032315/a12-8451_1ex10d1.htm) | | | | | | 10.1 to Pinnacle West/APS March 31, 2012 Form 10-Q Report, File Nos. 1-8962 and 1-4473 | | | | | | 5/3/2012 | | |

| [removed: 10.6(5)(b)bd] [added: 10.6(5)(c)bd] | | | | | | Pinnacle West | | | | | | [Form of Restricted Stock Unit Award Agreement under the Pinnacle West Capital Corporation 2012 Long-Term Incentive Plan](http://www.sec.gov/Archives/edgar/data/7286/000110465912032315/a12-8451_1ex10d2.htm) | | | | | | 10.2 to Pinnacle West/APS March 31, 2012 Form 10-Q Report, File Nos. 1-8962 and 1-4473 | | | | | | 5/3/2012 | | |

| [removed: 10.6(5)(c)bd] [added: 10.6(5)(d)bd] | | | | | | Pinnacle West | | | | | | [Form of Performance Share Award Agreement under the Pinnacle West Capital Corporation 2012 Long-Term Incentive Plan](http://www.sec.gov/Archives/edgar/data/7286/000110465914012068/a13-25897_1ex10d6d8c.htm) | | | | | | 10.6.8c to Pinnacle West/APS 2013 Form 10-K Report, File Nos. 1-8962 and 1-4473 | | | | | | 2/21/2014 | | |

| [removed: 10.6(5)(d)bd] [added: 10.6(5)(e)bd] | | | | | | Pinnacle West | | | | | | [Form of Restricted Stock Unit Award Agreement under the Pinnacle West Capital Corporation 2012 Long-Term Incentive Plan](http://www.sec.gov/Archives/edgar/data/7286/000110465914012068/a13-25897_1ex10d6d8d.htm) | | | | | | 10.6.8d to Pinnacle West/APS 2013 Form 10-K Report, File Nos. 1-8962 and 1-4473 | | | | | | 2/21/2014 | | |

| [removed: 10.6(5)(e)bd] [added: 10.6(5)(f)bd] | | | | | | Pinnacle West | | | | | | [Form of Performance Share Award Agreement under the Pinnacle West Capital Corporation 2012 Long-Term Incentive Plan](http://www.sec.gov/Archives/edgar/data/7286/000076462216000087/pnw20151231exhibit1066e.htm) | | | | | | 10.6.6e to Pinnacle West/APS 2015 Form 10-K Report, File Nos. 1-8962 and 1-4473 | | | | | | 2/19/2016 | | |

| [removed: 10.6(5)(f)bd] [added: 10.6(5)(g)bd] | | | | | | Pinnacle West | | | | | | [Form of Restricted Stock Unit Award Agreement under the Pinnacle West Capital Corporation 2012 Long-Term Incentive Plan](http://www.sec.gov/Archives/edgar/data/7286/000076462217000010/pnw20161231exhibit1066f.htm) | | | | | | 10.6.6f to Pinnacle West/APS 2016 Form 10-K Report, File Nos. 1-8962 and 1-4473 | | | | | | 2/24/2017 | | |

| [removed: 10.6(5)(g)bd] [added: 10.6(5)(h)bd] | | | | | | Pinnacle West | | | | | | [Form of Performance Share Award Agreement under the Pinnacle West Capital Corporation 2012 Long-Term Incentive Plan](http://www.sec.gov/Archives/edgar/data/7286/000076462217000010/pnw20161231exhibit1066g.htm) | | | | | | 10.6.6g to Pinnacle West/APS 2016 Form 10-K Report, File Nos. 1-8962 and 1-4473 | | | | | | 2/24/2017 | | |

| [removed: 10.6(5)(h)bd] [added: 10.6(5)(i)bd] | | | | | | Pinnacle West | | | | | | [Form of Restricted Stock Unit Award Agreement under the Pinnacle West Capital Corporation 2012 Long-Term Incentive Plan](http://www.sec.gov/Archives/edgar/data/7286/000076462219000046/exhibit102-033119.htm) | | | | | | 10.2 to Pinnacle West/APS March 31, 2019 Form 10-Q Report, File Nos. 1-8962 and 1-4473 | | | | | | 5/1/2019 | | |

| [removed: 10.6(5)(i)bd] [added: 10.6(5)(j)bd] | | | | | | Pinnacle West | | | | | | [Form of Performance Share Award Agreement under the Pinnacle West Capital Corporation 2012 Long-Term Incentive Plan](http://www.sec.gov/Archives/edgar/data/7286/000076462219000046/exhibit103-033119.htm) | | | | | | 10.3 to Pinnacle West/APS March 31, 2019 Form 10-Q Report, File Nos. 1-8962 and 1-4473 | | | | | | 5/1/2019 | | |

| [removed: 10.6(5)(j)bd] [added: 10.6(5)(k)bd] | | | | | | Pinnacle West | | | | | | [Form of Performance Share Award Agreement under the Pinnacle West Capital Corporation 2012 Long-Term Incentive Plan](https://www.sec.gov/Archives/edgar/data/7286/000076462220000038/exhibit101-03312020.htm) | | | | | | 10.1 to Pinnacle West/APS March 31, 2020 Form 10-Q Report, File Nos. 1-8962 and 1-4473 | | | | | | 5/8/2020 | | |

| [removed: 10.6(5)(k)bd] [added: 10.6(5)(r)bd] | | | | | | Pinnacle West | | | | | | [Form of Performance Share Award Agreement under the Pinnacle West Capital Corporation [removed: 2012] [added: 2021] Long-Term Incentive [removed: Plan](https://www.sec.gov/Archives/edgar/data/7286/000076462221000013/pnw202012311065k.htm)] [added: Plan](https://www.sec.gov/Archives/edgar/data/7286/000076462222000014/pnw20211231exhibit1065p.htm)] | | | | | | [removed: 10.6.5k] [added: 10.6.5p] to Pinnacle West/APS 2020 Form 10-K Report, File Nos. 1-8962 and 1-4473 | | | | | | [removed: 2/24/2021] [added: 2/25/2022] | | |

| [removed: 10.6(5)(l)bd] [added: 10.6(5)(s)bd] | | | | | | Pinnacle West | | | | | | [Form of Performance Share Award Agreement under the Pinnacle West Capital Corporation [removed: 2012] [added: 2021] Long-Term Incentive [removed: Plan](https://www.sec.gov/Archives/edgar/data/7286/000076462221000013/pnw202012311065l.htm)] [added: Plan](https://www.sec.gov/Archives/edgar/data/7286/000076462222000014/pnw20211231exhibit1065q.htm)] | | | | | | [removed: 10.6.5l] [added: 10.6.5q] to Pinnacle West/APS 2020 Form 10-K Report, File Nos. 1-8962 and 1-4473 | | | | | | [removed: 2/24/2021] [added: 2/25/2022] | | |

| [removed: 10.6(5)(m)bd] [added: 10.6(5)(n)bd] | | | | | | Pinnacle West APS | | | | | | [Pinnacle West Capital Corporation 2021 Long-Term Incentive Plan](https://www.sec.gov/Archives/edgar/data/764622/000120677421000951/pnw3796881-def14a.htm#d379688a056) | | | | | | Appendix A to the Proxy Statement for Pinnacle West’s 2021 Annual Meeting of Shareholders, File No. 1-8962 | | | | | | 4/01/2021 | | |

| [removed: 10.6(5)(n)bd] [added: 10.6(5)(p)bd] | | | | | | Pinnacle West | | | | | | [Form of Restricted Stock Unit Award Agreement under the Pinnacle West Capital Corporation 2021 Long-Term Incentive Plan](https://www.sec.gov/Archives/edgar/data/7286/000076462222000014/pnw20211231exhibit1065n.htm) | | | | | | 10.6.5n to Pinnacle West/APS 2020 Form 10-K Report, File Nos. 1-8962 and 1-4473 | | | | | | 2/25/2022 | | |

| [removed: 10.6(5)(o)bd] [added: 10.6(5)(q)bd] | | | | | | Pinnacle West | | | | | | [Form of Restricted Stock Unit Award Agreement under the Pinnacle West Capital Corporation 2021 Long-Term Incentive Plan](https://www.sec.gov/Archives/edgar/data/7286/000076462222000014/pnw20211231exhibit1065o.htm) | | | | | | 10.6.5o to Pinnacle West/APS 2020 Form 10-K Report, File Nos. 1-8962 and 1-4473 | | | | | | 2/25/2022 | | |

| [removed: 10.6(5)(p)bd] [added: 10.6(5)(t)bd] | | | | | | Pinnacle West | | | | | | [Form of Performance Share Award Agreement under the Pinnacle West Capital Corporation 2021 Long-Term Incentive [removed: Plan](https://www.sec.gov/Archives/edgar/data/7286/000076462222000014/pnw20211231exhibit1065p.htm)] [added: Plan](https://www.sec.gov/Archives/edgar/data/7286/000076462222000014/pnw20211231exhibit1065r.htm)] | | | | | | [removed: 10.6.5p] [added: 10.6.5r] to Pinnacle West/APS 2020 Form 10-K Report, File Nos. 1-8962 and 1-4473 | | | | | | 2/25/2022 | | |

| [removed: 10.6(5)(q)bd] [added: 10.6(5)(u)bd] | | | | | | Pinnacle West | | | | | | [Form of Performance Share Award Agreement under the Pinnacle West Capital Corporation 2021 Long-Term Incentive [removed: Plan](https://www.sec.gov/Archives/edgar/data/7286/000076462222000014/pnw20211231exhibit1065q.htm)] [added: Plan](https://www.sec.gov/Archives/edgar/data/7286/000076462222000014/pnw20211231exhibit1065s.htm)] | | | | | | [removed: 10.6.5q] [added: 10.6.5s] to Pinnacle West/APS 2020 Form 10-K Report, File Nos. 1-8962 and 1-4473 | | | | | | 2/25/2022 | | |

| [removed: 10.6(5)(t)bd] [added: 10.6(5)(v)bd] | | | | | | Pinnacle West | | | | | | [Master Amendment to Performance Share Agreements](http://www.sec.gov/Archives/edgar/data/7286/000110465912032315/a12-8451_1ex10d3.htm) | | | | | | 10.3 to Pinnacle West/APS March 31, 2012 Form 10-Q Report, File Nos. 1-8962 and 1-4473 | | | | | | 5/3/2012 | | |

| [removed: 10.6(5)(u)bd] [added: 10.6(5)(w)bd] | | | | | | Pinnacle West | | | | | | [Master Amendment to Restricted Stock Unit Agreements](http://www.sec.gov/Archives/edgar/data/7286/000110465912032315/a12-8451_1ex10d4.htm) | | | | | | 10.4 to Pinnacle West/APS March 31, 2012 Form 10-Q Report, File Nos. 1-8962 and 1-4473 | | | | | | 5/3/2012 | | |

| [removed: 10.6(5)(v)bd] [added: 10.6(5)(a)bd] | | | | | | Pinnacle West | | | | | | [First Amendment to the Pinnacle West Capital Corporation 2012 Long-Term Incentive Plan](http://www.sec.gov/Archives/edgar/data/764622/000104746917002241/a2231141zdef14a.htm) | | | | | | Appendix A to the Proxy Statement for Pinnacle West’s 2017 Annual Meeting of Shareholders, File No. 1-8962 | | | | | | 3/31/2017 | | |

| 10.9(1) | | | | | | Pinnacle West APS | | | | | | ANPP Participation Agreement, dated August 23, 1973, among APS, SRP, SCE, Public Service Company of New Mexico, El [removed: Paso,] [added: Paso Electric Company,] Southern California Public Power Authority, and Department of Water and Power of the City of Los Angeles, and amendments 1-12 thereto | | | | | | 10.1 to APS’s 1988 Form 10-K Report, File No. 1-4473 | | | | | | 3/8/1989 | | |

| 10.9(1)(a) | | | | | | Pinnacle West APS | | | | | | Amendment No. 13, dated as of April 22, 1991, to ANPP Participation Agreement, dated August 23, 1973, among APS, SRP, SCE, Public Service Company of New Mexico, El [removed: Paso,] [added: Paso Electric Company,] Southern California Public Power Authority, and Department of Water and Power of the City of Los Angeles | | | | | | 10.1 to APS’s March 31, 1991 Form 10-Q Report, File No. 1-4473 | | | | | | 5/15/1991 | | |

| 10.9(1)(b) | | | | | | Pinnacle West APS | | | | | | [Amendment No. 14 to ANPP Participation Agreement, dated August 23, 1973, among APS, SRP, SCE, Public Service Company of New Mexico, El [removed: Paso,] [added: Paso](http://www.sec.gov/Archives/edgar/data/764622/000095014700001246/0000950147-00-001246-0003.txt) [Electric Company](http://www.sec.gov/Archives/edgar/data/764622/000095014700001246/0000950147-00-001246-0003.txt)[,] Southern California Public Power Authority, and Department of Water and Power of the City of Los Angeles](http://www.sec.gov/Archives/edgar/data/764622/000095014700001246/0000950147-00-001246-0003.txt) | | | | | | 99.1 to Pinnacle West’s June 30, 2000 Form 10-Q Report, File No. 1-8962 | | | | | | 8/14/2000 | | |

| 10.9(1)(c) | | | | | | Pinnacle West APS | | | | | | [Amendment No. 15, dated November 29, 2010, to ANPP Participation Agreement, dated August 23, 1973, among APS, SRP, SCE, Public Service Company of New Mexico, El [removed: Paso,] [added: Paso](http://www.sec.gov/Archives/edgar/data/7286/000095012311015421/c09734exv10w9w1c.htm) [Electric Company](http://www.sec.gov/Archives/edgar/data/7286/000095012311015421/c09734exv10w9w1c.htm)[,] Southern California Public Power Authority, and Department of Water and Power of the City of Los Angeles](http://www.sec.gov/Archives/edgar/data/7286/000095012311015421/c09734exv10w9w1c.htm) | | | | | | 10.9.1c to Pinnacle West/APS 2010 Form 10-K Report, File Nos. 1-8962 and 1-4473 | | | | | | 2/18/2011 | | |

| 10.9(1)(d) | | | | | | Pinnacle West APS | | | | | | [Amendment No. 16, dated April 28, 2014, to ANPP Participation Agreement, dated August 23, 1973, among APS, SRP, SCE, Public Service Company of New Mexico, El [removed: Paso,] [added: Paso](http://www.sec.gov/Archives/edgar/data/7286/000110465914033796/a14-8980_1ex10d2.htm) [Electric Company](http://www.sec.gov/Archives/edgar/data/7286/000110465914033796/a14-8980_1ex10d2.htm)[,] Southern California Public Power Authority, and Department of Water and Power of the City of Los Angeles](http://www.sec.gov/Archives/edgar/data/7286/000110465914033796/a14-8980_1ex10d2.htm) | | | | | | 10.2 to Pinnacle West/APS March 31, 2014 Form 10-Q Report, File Nos. 1-8962 and 1-4473 | | | | | | 5/2/2014 | | |

| 10.10(4) | | | | | | Pinnacle West APS | | | | | | [removed: [Contract among PacifiCorp, APS and DOE Western Area Power Administration, Salt Lake Area Integrated Projects for Firm] [added: [Reciprocal] Transmission Service [added: Agreement between APS and PacifiCorp] dated [removed: May 5, 1995](http://www.sec.gov/Archives/edgar/data/7286/0000950147-96-000112.txt)] [added: as of March 2, 1994](http://www.sec.gov/Archives/edgar/data/7286/0000950147-96-000112.txt)] | | | | | | [removed: 10.5] [added: 10.6] to APS’s 1995 Form 10-K Report, File No. 1-4473 | | | | | | 3/29/1996 | | |

| [removed: 10.11(2)] [added: 10.11(1)] | | | | | | Pinnacle West | | | | | | [removed: [Amended] [added: [Second Amended] and Restated Five-Year Credit Agreements dated as of [removed: May 28, 2021,] [added: April 10, 2023,] among Pinnacle West, as Borrower, Barclays Bank PLC, as [added: Agent, Co-Sustainability Structuring] Agent and Issuing Bank, and the lenders and other parties [removed: thereto](https://www.sec.gov/Archives/edgar/data/7286/000076462221000054/exhibit101063021.htm)] [added: thereto](https://www.sec.gov/Archives/edgar/data/7286/000076462223000053/pnwsecondamendedandrestate.htm)] | | | | | | 10.1 to Pinnacle West/APS [removed: June 30, 2021] [added: April 10, 2023] Form [removed: 10-Q] [added: 8-K] Report, File [removed: Nos.] [added: No.] 1-8962 [removed: and 1-4473] | | | | | | [removed: 8/5/2021] [added: 4/10/2023] | | |

| [removed: 10.11(3)] [added: 10.11(2)] | | | | | | Pinnacle West APS | | | | | | [removed: [Amended and Restated Five-Year] [added: [Five-Year] Credit Agreement dated as [removed: of May 28, 2021,] [added: of](https://www.sec.gov/Archives/edgar/data/7286/000076462223000053/apscreditagreement.htm) [April 10, 2023](https://www.sec.gov/Archives/edgar/data/7286/000076462223000053/apscreditagreement.htm)[,] among APS, as Borrower, Barclays Bank PLC, as Agent, Co-Sustainability Structuring Agent and Issuing Bank, and the lenders and other parties [removed: thereto](https://www.sec.gov/Archives/edgar/data/7286/000076462221000054/exhibit102063021.htm)] [added: thereto](https://www.sec.gov/Archives/edgar/data/7286/000076462223000053/apscreditagreement.htm)] | | | | | | 10.2 to Pinnacle West/APS [removed: June 30, 2021] [added: April 10, 2023] Form [removed: 10-Q] [added: 8-K] Report, File [removed: Nos.] [added: No.] 1-8962 [removed: and 1-4473] | | | | | | [removed: 8/5/2021] [added: 4/10/2023] | | |

| [removed: 10.16] [added: 4.6(u)] | | | | | | Pinnacle West APS | | | | | | [removed: [Purchase and Sale Agreement] [added: [Thirtieth Supplemental Indenture] dated [removed: November 8, 2010 by and between SCE and APS](http://www.sec.gov/Archives/edgar/data/7286/000095012310102502/c08041exv10w1.htm)] [added: as of June 30, 2023](https://www.sec.gov/Archives/edgar/data/7286/000110465923077180/tm2314178d4_ex4-1.htm)] | | | | | | [removed: 10.1] [added: 4.1] to Pinnacle West/APS [removed: November 8, 2010] [added: June 30, 2023] Form 8-K Report, File Nos. 1-8962 and 1-4473 | | | | | | [removed: 11/8/2010] [added: 6/30/2023] | | |

| [removed: 21.1] [added: 21] | | | | | | Pinnacle West | | | | | | [Subsidiaries of Pinnacle [removed: West](https://www.sec.gov/Archives/edgar/data/764622/000076462223000023/pnw20221231exhibit211.htm)] [added: West](https://www.sec.gov/Archives/edgar/data/764622/000076462224000016/pnw20231231exhibit21.htm)] | | | | | | | | | | | | | | |

| 23.1 | | | | | | Pinnacle West | | | | | | [Consent of Deloitte & Touche [removed: LLP](https://www.sec.gov/Archives/edgar/data/764622/000076462223000023/a231-pnwconsent2022.htm)] [added: LLP](https://www.sec.gov/Archives/edgar/data/764622/000076462224000016/pnw20231231exhibit231.htm)] | | | | | | | | | | | | | | |

| 10.6(5)(o)bd | | | | | | Pinnacle West | | | | | | [First Amendment to the Pinnacle West Capital Corporation 2021 Long-Term Incentive Plan](https://www.sec.gov/ix?doc=/Archives/edgar/data/764622/000130817923000547/lpnw2023_def14a.htm) | | | | | | Appendix A to the Proxy Statement for Pinnacle West’s 2022 Annual Meeting of Shareholders, File No. 1-8962 | | | | | | 5/19/2023 | | |

| 97 | | | | | | Pinnacle West | | | | | | [Policy Relating to Recovery of Erroneously Awarded Compensation](https://www.sec.gov/Archives/edgar/data/764622/000076462224000016/exhibit97.htm) | | | | | | | | | | | | | | |

| 104 | | | | | | Pinnacle West APS | | | | | | The Cover Page Interactive Data File (formatted as Inline iXBRL and contained in Exhibit 101) | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Exhibit No. | | | | | | Registrant(s) | | | | | | Description | | | | | | Previously Filed as Exhibit: a | | | | | | Date Filed | | |

| | | | | | | | | | | | | | | | | | | | | | | | | 8/7/2008 | | |

| 4.7(a) | | | | | | Pinnacle West | | | | | | [Third Amended and Restated Pinnacle West Capital Corporation Investors Advantage Plan dated as of November 25, 2008](http://www.sec.gov/Archives/edgar/data/764622/000095013408021205/p13537exv4w1.htm) | | | | | | 4.1 to Pinnacle West’s Form S-3 Registration Statement No. 333-155641, File No. 1-8962 | | | | | | 11/25/2008 | | |

| 10.4(8)b | | | | | | Pinnacle West APS | | | | | | [Offer of Employment Letter dated May 19, 2022 between APS and Adam Heflin](https://www.sec.gov/Archives/edgar/data/764622/000076462223000023/ex1048.htm) | | | | | | | | | | | | | | |

| 10.4(9)b | | | | | | Pinnacle West APS | | | | | | [Discretionary Credit Award Agreement dated](https://www.sec.gov/Archives/edgar/data/764622/000076462223000023/ex1049.htm) [June 21](https://www.sec.gov/Archives/edgar/data/764622/000076462223000023/ex1049.htm)[, 2019](https://www.sec.gov/Archives/edgar/data/764622/000076462223000023/ex1049.htm) [](https://www.sec.gov/Archives/edgar/data/764622/000076462223000023/ex1049.htm)[between APS and](https://www.sec.gov/Archives/edgar/data/764622/000076462223000023/ex1049.htm) [Jacob Tetlow](https://www.sec.gov/Archives/edgar/data/764622/000076462223000023/ex1049.htm) | | | | | | | | | | | | | | |

| 10.4(10)b | | | | | | Pinnacle West APS | | | | | | [First Amendment to Discretionary Credit Award Agreement dated February 2](https://www.sec.gov/Archives/edgar/data/764622/000076462223000023/ex10410.htm)[1](https://www.sec.gov/Archives/edgar/data/764622/000076462223000023/ex10410.htm)[, 2021 between APS and Jacob Tetlow](https://www.sec.gov/Archives/edgar/data/764622/000076462223000023/ex10410.htm) | | | | | | | | | | | | | | |

| 10.6(4)bd | | | | | | Pinnacle West APS | | | | | | [Summary of 202](https://www.sec.gov/Archives/edgar/data/764622/000076462223000023/a1064-summaryof2023incenti.htm)[3](https://www.sec.gov/Archives/edgar/data/764622/000076462223000023/a1064-summaryof2023incenti.htm) [Variable Incentive Plan and Officer Variable Incentive Plan](https://www.sec.gov/Archives/edgar/data/764622/000076462223000023/a1064-summaryof2023incenti.htm) | | | | | | | | | | | | | | |

| 10.6(5)(r)bd | | | | | | Pinnacle West | | | | | | [Form of Performance Share Award Agreement under the Pinnacle West Capital Corporation 2021 Long-Term Incentive Plan](https://www.sec.gov/Archives/edgar/data/7286/000076462222000014/pnw20211231exhibit1065r.htm) | | | | | | 10.6.5r to Pinnacle West/APS 2020 Form 10-K Report, File Nos. 1-8962 and 1-4473 | | | | | | 2/25/2022 | | |

| 10.6(5)(s)bd | | | | | | Pinnacle West | | | | | | [Form of Performance Share Award Agreement under the Pinnacle West Capital Corporation 2021 Long-Term Incentive Plan](https://www.sec.gov/Archives/edgar/data/7286/000076462222000014/pnw20211231exhibit1065s.htm) | | | | | | 10.6.5s to Pinnacle West/APS 2020 Form 10-K Report, File Nos. 1-8962 and 1-4473 | | | | | | 2/25/2022 | | |

| 10.10(5) | | | | | | Pinnacle West APS | | | | | | [Reciprocal Transmission Service Agreement between APS and PacifiCorp dated as of March 2, 1994](http://www.sec.gov/Archives/edgar/data/7286/0000950147-96-000112.txt) | | | | | | 10.6 to APS’s 1995 Form 10-K Report, File No. 1-4473 | | | | | | 3/29/1996 | | |

| 10.11(1) | | | | | | Pinnacle West APS | | | | | | [Term Loan Agreement dated as of February 26, 2019 among APS, as Borrower, SunTrust Bank, as Agent, SunTrust Bank, TD Bank, N.A., U.S. Bank National Association and The Bank of Nova Scotia, as Co-Syndication Agents and such institutions compromising the lenders party thereto](http://www.sec.gov/Archives/edgar/data/7286/000076462219000046/exhibit101-033119.htm) | | | | | | 10.1 to Pinnacle West/APS March 31, 2019 Form 10-Q Report, File Nos. 1-8962 and 1-4473 | | | | | | 5/1/2019 | | |

| 10.11(4) | | | | | | Pinnacle West APS | | | | | | [Five-Year Credit Agreement dated as of May 28, 2021, among APS, as Borrower, Barclays Bank PLC, as Agent, Co-Sustainability Structuring Agent and Issuing Bank, and the lenders and other parties thereto](https://www.sec.gov/Archives/edgar/data/7286/000076462221000054/exhibit103063021.htm) | | | | | | 10.3 to Pinnacle West/APS June 30, 2021 Form 10-Q Report, File Nos. 1-8962 and 1-4473 | | | | | | 8/5/2021 | | |

| 10.17 | | | | | | Pinnacle West APS | | | | | | [Proposed Settlement Agreement dated January 6, 2012 by and among APS and certain parties to its retail rate case (approved by ACC Order No. 73183)](http://www.sec.gov/Archives/edgar/data/7286/000110465912012301/a12-3670_4ex10d17.htm) | | | | | | 10.17 to Pinnacle West/APS 2011 Form 10-K Report, File Nos. 1-8962 and 1-4473 | | | | | | 2/24/2012 | | |

| 10.18 | | | | | | Pinnacle West APS | | | | | | [Proposed Settlement Agreement dated March 27, 2017 by and among APS and certain parties to its retail rate case (approved by ACC Order No. 76295)](http://www.sec.gov/Archives/edgar/data/7286/000076462217000030/pnw3311710qdoc.htm) | | | | | | 10.1 to Pinnacle West/APS March 31, 2017 Form 10-Q Report, File Nos. 1-8962 and 1-4473 | | | | | | 5/2/2017 | | |

| 10.19 | | | | | | Pinnacle West | | | | | | [Purchase and Sale Agreement, dated June 29, 2018, by and between Navajo Transitional Energy Company, LLC and 4CA](http://www.sec.gov/Archives/edgar/data/7286/000076462218000052/exhibit102-063018.htm) | | | | | | 10.2 to Pinnacle West/APS June 30, 2018 Form 10-Q Report, File Nos. 1-8962 and 1-4473 | | | | | | 8/3/2018 | | |

| 99.9 | | | | | | Pinnacle West APS | | | | | | [ACC Order, Decision No. 61969, dated September 29, 1999, including the Retail Electric Competition Rules](http://www.sec.gov/Archives/edgar/data/7286/000095014799001272/0000950147-99-001272.txt) | | | | | | 10.2 to APS’s September 30, 1999 Form 10-Q Report, File No. 1-4473 | | | | | | 11/15/1999 | | |

| 99.10 | | | | | | Pinnacle West | | | | | | [Purchase Agreement by and among Pinnacle West Energy Corporation and GenWest, L.L.C. and Nevada Power Company, dated June 21, 2005](http://www.sec.gov/Archives/edgar/data/7286/000095015305001937/p71004exv99w5.txt) | | | | | | 99.5 to Pinnacle West/APS June 30, 2005 Form 10-Q Report, File Nos. 1-8962 and 1-4473 | | | | | | 8/9/2005 | | |

| Date: February 27, [removed: 2023] [added: 2024] | | | /s/ Jeffrey B. Guldner | | |

| /s/ Jeffrey B. Guldner | | | | | | Principal Executive Officer | | | | | | February 27, [removed: 2023] [added: 2024] | | |

| /s/ Andrew Cooper | | | | | | Principal Financial Officer | | | | | | February 27, [removed: 2023] [added: 2024] | | |

| /s/ Elizabeth A. Blankenship | | | | | | Principal Accounting Officer | | | | | | February 27, [removed: 2023] [added: 2024] | | |

| /s/ Glynis A. Bryan | | | | | | Director | | | | | | February 27, [removed: 2023] [added: 2024] | | |

| /s/ Richard P. Fox | | | | | | Director | | | | | | February 27, [removed: 2023] [added: 2024] | | |

| /s/ Gonzalo A. de la Melena, Jr. | | | | | | Director | | | | | | February 27, [removed: 2023] [added: 2024] | | |

| /s/ Kathryn L. Munro | | | | | | Director | | | | | | February 27, [removed: 2023] [added: 2024] | | |

| /s/ Bruce J. Nordstrom | | | | | | Director | | | | | | February 27, [removed: 2023] [added: 2024] | | |

| /s/ Paula J. Sims | | | | | | Director | | | | | | February 27, [removed: 2023] [added: 2024] | | |

| /s/ William H. Spence | | | | | | Director | | | | | | February 27, [removed: 2023] [added: 2024] | | |

| /s/ James E. Trevathan, Jr. | | | | | | Director | | | | | | February 27, [removed: 2023] [added: 2024] | | |

| /s/ Kristine L. Svinicki | | | | | | Director | | | | | | February 27, 2024 | | |

| (Kristine L. Svinicki) | | | | | | | | | | | | | | |

| Date: February 27, 2024 | | | /s/ Jeffrey B. Guldner | | |

| /s/ Jeffrey B. Guldner | | | | | | Principal Executive Officer | | | | | | February 27, 2024 | | |

| /s/ Andrew Cooper | | | | | | Principal Financial Officer | | | | | | February 27, 2024 | | |

| /s/ Elizabeth A. Blankenship | | | | | | Principal Accounting Officer | | | | | | February 27, 2024 | | |

| /s/ Glynis A. Bryan | | | | | | Director | | | | | | February 27, 2024 | | |

| /s/ Gonzalo A. de la Melena, Jr. | | | | | | Director | | | | | | February 27, 2024 | | |

| /s/ Richard P. Fox | | | | | | Director | | | | | | February 27, 2024 | | |

| /s/ Kathryn L. Munro | | | | | | Director | | | | | | February 27, 2024 | | |

| /s/ Bruce J. Nordstrom | | | | | | Director | | | | | | February 27, 2024 | | |

| /s/ Paula J. Sims | | | | | | Director | | | | | | February 27, 2024 | | |

| /s/ William H. Spence | | | | | | Director | | | | | | February 27, 2024 | | |