Why did PNW's Q2 earnings exceed expectations significantly?

Pinnacle West Capital's (PNW) Q2 earnings exceeded expectations significantly due to several key factors:

1. **New Retail Base Rates**: The implementation of new retail base rates in Arizona had a positive impact on PNW's financial performance. These rates, which took effect on March 8, 2024, contributed to higher revenue and profitability.
2. **Increased Customer Growth and Usage**: PNW reported a 1.8% year-over-year customer growth and weather-normalized sales growth of 5.9%. This increase in customer base and usage directly led to higher revenue and income.
3. **Lost Fixed Cost Recovery (LFCR) Adjustor Mechanism and Surcharge**: PNW benefited from the Lost Fixed Cost Recovery (LFCR) adjustor mechanism and a surcharge resulting from the outcome of APS's 2019 Rate Case appeal. These mechanisms contributed to increased revenue and income.
4. **Other Income**: PNW's other income also contributed to the improved financial results, largely due to the sale of a former subsidiary.

In summary, PNW's Q2 earnings exceeded expectations due to a combination of new retail base rates, increased customer growth and usage, the impact of the LFCR adjustor mechanism and surcharge, and other income. These factors collectively contributed to the company's strong financial performance.