Pinnacle West Capital's Q1 2025: Unraveling Contradictions in Rate Plans, CapEx Strategies, and Demand Forecasts

Formula rate plan and timeline, capital expenditure strategy, regulatory lag recovery timing, planned load growth and customer demand are the key contradictions discussed in Pinnacle West Capital's latest 2025Q1 earnings call.



Sales and Customer Growth:
- Pinnacle West Capital Corporation reported a 2.1% weather-normalized sales growth for Q1 2025, driven by strong C&I growth of 5.3%.
- This was primarily due to the ramp-up of manufacturing and data center customers, particularly from TSMC and other high-load customers.

Capital Expenditure (CapEx) and Transmission Investments:
- The company is investing in multiple high-voltage lines and substations as part of a comprehensive summer preparedness program.
- This investment is in response to the need to secure a resilient grid to serve growth in the service territory, especially from sectors like semiconductors and healthcare.

Regulatory Activities and Rate Case Filing:
- Pinnacle West plans to file a midyear rate case to recover costs and investments, aiming for a modernized rate structure that supports high load factor customers.
- The rate case aims to reduce regulatory lag and maintain the lowest costs possible for customers, with a focus on minimizing regulatory lag through a formula rate plan.

Long-term Resource Procurement:
- Pinnacle West is seeking at least 2,000 megawatts of new resources through its annual All-Source Request for Proposals, to be in service between 2028 and 2030.
- This effort is part of the company's strategy to secure reliable and resilient grid capacity to meet future demand, especially from sectors experiencing rapid growth like semiconductors and healthcare.