pnw-20230331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to


Commission File Number	Exact Name of Each Registrant as specified in its charter; State of Incorporation; Address; and Telephone Number			IRS Employer Identification No.
1-8962	PINNACLE WEST CAPITAL CORPORATION			86-0512431
	(an Arizona corporation)
	400 North Fifth Street, P.O. Box 53999
	Phoenix	Arizona	85072-3999
	(602)	250-1000
1-4473	ARIZONA PUBLIC SERVICE COMPANY			86-0011170
	(an Arizona corporation)
	400 North Fifth Street, P.O. Box 53999
	Phoenix	Arizona	85072-3999
	(602)	250-1000

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	PNW	The New York Stock Exchange

Indicate by check mark whether each 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.

PINNACLE WEST CAPITAL CORPORATION

Yes

☒

☐

ARIZONA PUBLIC SERVICE COMPANY

Yes

☒

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

PINNACLE WEST CAPITAL CORPORATION

Yes

☒

☐

ARIZONA PUBLIC SERVICE COMPANY

Yes

☒

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth 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

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

ARIZONA PUBLIC SERVICE COMPANY

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether each registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

PINNACLE WEST CAPITAL CORPORATION

Yes

☐

☒

ARIZONA PUBLIC SERVICE COMPANY

Yes

☐

☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


PINNACLE WEST CAPITAL CORPORATION	Number of shares of common stock, no par value, outstanding as of April 27, 2023:	113,255,998
ARIZONA PUBLIC SERVICE COMPANY	Number of shares of common stock, $2.50 par value, outstanding as of April 27, 2023:	71,264,947

Arizona Public Service Company meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure format allowed under that General Instruction.

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		Page

Forward-Looking Statements		2
Part I		4
Item 1.	Financial Statements	4
	Pinnacle West Capital Corporation	5
	Arizona Public Service Company	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	66
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	92
Item 4.	Controls and Procedures	93

Part II		94
Item 1.	Legal Proceedings	94
Item 1A.	Risk Factors	94
Item 5.	Other Information	94
Item 6.	Exhibits	96
Signatures		98

This combined quarterly report on Form 10-Q is separately provided by Pinnacle West Capital Corporation (“Pinnacle West”) and Arizona Public Service Company (“APS”). Any use of the words “Company,” “we,” and “our” refer to Pinnacle West. Each registrant is providing on its own behalf all of the information contained in this Form 10-Q that relates to such registrant and, where required, its subsidiaries. Except as stated in the preceding sentence, neither registrant is providing any information that does not relate to such registrant, and therefore makes no representation as to any such information. The information required with respect to each company is set forth within the applicable items. Item 1 of this report includes Condensed Consolidated Financial Statements of Pinnacle West and Condensed Consolidated Financial Statements of APS. Item 1 of this report also includes Combined Notes to Condensed Consolidated Financial Statements.

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FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements based on current expectations. These forward-looking statements are often identified by words such as “estimate,” “predict,” “may,” “believe,” “plan,” “expect,” “require,” “intend,” “assume,” “project,” “anticipate,” “goal,” “seek,” “strategy,” “likely,” “should,” “will,” “could,” and similar words. Because actual results may differ materially from expectations, we caution readers not to place undue reliance on these statements. A number of factors could cause future results to differ materially from historical results, or from outcomes currently expected or sought by Pinnacle West or APS. In addition to the Risk Factors described in Part I, Item 1A of the Pinnacle West/APS Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (“2022 Form 10-K”), Part II, Item 1A of this report and in Part I, Item 2 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this report, these factors include, but are not limited to:

•the current economic environment and its effects, such as lower economic growth, a tight labor market, inflation, supply chain delays, increased expenses, volatile capital markets, or other unpredictable effects;

•our ability to manage capital expenditures and operations and maintenance costs while maintaining reliability and customer service levels;

•variations in demand for electricity, including those due to weather, seasonality (including large increases in ambient temperatures), the general economy or social conditions, customer and sales growth (or decline), the effects of energy conservation measures and distributed generation, and technological advancements;

•the potential effects of climate change on our electric system, including as a result of weather extremes, such as prolonged drought and high temperature variations in the area where APS conducts its business;

•power plant and transmission system performance and outages;

•competition in retail and wholesale power markets;

•regulatory and judicial decisions, developments, and proceedings;

•new legislation, ballot initiatives, and regulation or interpretations of existing legislation or regulations, including those relating to environmental requirements, regulatory and energy policy, nuclear plant operations, and potential deregulation of retail electric markets;

•fuel and water supply availability;

•our ability to achieve timely and adequate rate recovery of our costs through our rates and adjustor recovery mechanisms, including returns on and of debt and equity capital investment;

•our ability to meet renewable energy and energy efficiency mandates and recover related costs;

•the ability of APS to achieve its clean energy goals (including a goal by 2050 of 100% clean, carbon-free electricity) and, if these goals are achieved, the impact of such achievement on APS, its customers, and its business, financial condition, and results of operations;

•risks inherent in the operation of nuclear facilities, including spent fuel disposal uncertainty;

•current and future economic conditions in Arizona;

•the direct or indirect effect on our facilities or business from cybersecurity threats or intrusions, data security breaches, terrorist attack, physical attack, severe storms, or other catastrophic events, such as fires, explosions, pandemic health events, or similar occurrences;

•the development of new technologies which may affect electric sales or delivery, including as a result of delays in the development and application of new technologies;

•the cost of debt, including increased cost as a result of rising interest rates, and equity capital and the ability to access capital markets when required;

•environmental, economic, and other concerns surrounding coal-fired generation, including regulation of greenhouse gas emissions (“GHG”);

•volatile fuel and purchased power costs;

•the investment performance of the assets of our nuclear decommissioning trust, pension, and other postretirement benefit plans and the resulting impact on future funding requirements;

•the liquidity of wholesale power markets and the use of derivative contracts in our business;

•potential shortfalls in insurance coverage;

•new accounting requirements or new interpretations of existing requirements;

•generation, transmission, and distribution facility and system conditions and operating costs;

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•the ability to meet the anticipated future need for additional generation and associated transmission facilities in our region;

•the willingness or ability of our counterparties, power plant participants, and power plant landowners to meet contractual or other obligations or extend the rights for continued power plant operations; and

•restrictions on dividends or other provisions in our credit agreements and Arizona Corporation Commission (“ACC”) orders.

These and other factors are discussed in the Risk Factors described in Part I, Item 1A of our 2022 Form 10-K, Part II, Item 1A of this report, and in Part I, Item 2 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this report, which readers should review carefully before placing any reliance on our financial statements or disclosures. Neither Pinnacle West nor APS assumes any obligation to update these statements, even if our internal estimates change, except as required by law.

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PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES


			Page

Pinnacle West Condensed Consolidated Statements of Income for Three Months Ended March 31, 2023 and 2022			5
Pinnacle West Condensed Consolidated Statements of Comprehensive Income for Three Months Ended March 31, 2023 and 2022			6
Pinnacle West Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022			7
Pinnacle West Condensed Consolidated Statements of Cash Flows for Three Months Ended March 31, 2023 and 2022			9
Pinnacle West Condensed Consolidated Statements of Changes in Equity for Three Months Ended March 31, 2023 and 2022			10

APS Condensed Consolidated Statements of Income for Three Months Ended March 31, 2023 and 2022			11
APS Condensed Consolidated Statements of Comprehensive Income for Three Months Ended March 31, 2023 and 2022			12
APS Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022			13
APS Condensed Consolidated Statements of Cash Flows for Three Months Ended March 31, 2023 and 2022			15
APS Condensed Consolidated Statements of Changes in Equity for Three Months Ended March 31, 2023 and 2022			16

Combined Notes to Condensed Consolidated Financial Statements			17
Note 1. Consolidation and Nature of Operations			17
Note 2. Revenue			19
Note 3. Long-Term Debt and Liquidity Matters			21
Note 4. Regulatory Matters			22
Note 5. Retirement Plans and Other Postretirement Benefits			39
Note 6. Palo Verde Sale Leaseback Variable Interest Entities			40
Note 7. Derivative Accounting			41
Note 8. Commitments and Contingencies			44
Note 9. Other Income and Other Expense			52
Note 10. Earnings Per Share			53
Note 11. Fair Value Measurements			53
Note 12. Investment in Nuclear Decommissioning Trusts and Other Special Use Funds			59

Note 13. Changes in Accumulated Other Comprehensive Loss			62

Note 14. Leases			63

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PINNACLE WEST CAPITAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

(dollars and shares in thousands, except per share amounts)


	Three Months Ended March 31,
	2023		2022

OPERATING REVENUES (Note 2)	$	944,955	$	783,531

OPERATING EXPENSES
Fuel and purchased power	394,504		265,269
Operations and maintenance	250,080		218,342

Depreciation and amortization	191,906		186,605
Taxes other than income taxes	57,138		57,998
Other expenses	610		825
Total	894,238		729,039
OPERATING INCOME	50,717		54,492
OTHER INCOME (DEDUCTIONS)
Allowance for equity funds used during construction	15,061		9,747
Pension and other postretirement non-service credits - net (Note 5)	9,865		23,809
Other income (Note 9)	6,077		1,704
Other expense (Note 9)	(4,131)		(3,422)
Total	26,872		31,838
INTEREST EXPENSE
Interest charges	88,119		65,389
Allowance for borrowed funds used during construction	(12,722)		(4,482)
Total	75,397		60,907
INCOME BEFORE INCOME TAXES	2,192		25,423
INCOME TAXES	1,183		4,161
NET INCOME	1,009		21,262
Less: Net income attributable to noncontrolling interests (Note 6)	4,306		4,306
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	(3,297)	$	16,956

WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING - BASIC	113,358		113,102
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING - DILUTED	113,358		113,295

EARNINGS PER WEIGHTED-AVERAGE COMMON SHARE OUTSTANDING
Net income (loss) attributable to common shareholders - basic	$	(0.03)	$	0.15
Net income (loss) attributable to common shareholders - diluted	$	(0.03)	$	0.15

The accompanying notes are an integral part of the financial statements.

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PINNACLE WEST CAPITAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

(dollars in thousands)


	Three Months Ended March 31,
	2023		2022

NET INCOME	$	1,009	$	21,262

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX

Derivative instruments net unrealized gain (loss), net of tax benefit (expense) of $202 and $(83)	(616)		252

Pension and other postretirement benefit activity, net of tax expense of $169 and $296	515		901
Total other comprehensive income (loss)	(101)		1,153

COMPREHENSIVE INCOME	908		22,415
Less: Comprehensive income attributable to noncontrolling interests	4,306		4,306

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	(3,398)	$	18,109

The accompanying notes are an integral part of the financial statements.

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PINNACLE WEST CAPITAL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(dollars in thousands)


	March 31, 2023		December 31, 2022
ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	6,951	$	4,832
Customer and other receivables	449,096		453,209
Accrued unbilled revenues	143,276		164,764
Allowance for doubtful accounts (Note 2)	(22,112)		(23,778)
Materials and supplies (at average cost)	425,457		410,481
Income tax receivable	11,699		14,086
Fossil fuel (at average cost)	39,571		40,155
Assets from risk management activities (Note 7)	16,095		87,835
Deferred fuel and purchased power regulatory asset (Note 4)	469,962		460,561
Other regulatory assets (Note 4)	130,840		78,318
Other current assets	77,551		60,091
Total current assets	1,748,386		1,750,554
INVESTMENTS AND OTHER ASSETS
Nuclear decommissioning trusts (Notes 11 and 12)	1,125,617		1,073,410
Other special use funds (Notes 11 and 12)	352,877		347,231
Assets from risk management activities (Note 7)	17,082		44,394
Other assets	147,430		125,672
Total investments and other assets	1,643,006		1,590,707
PROPERTY, PLANT AND EQUIPMENT
Plant in service and held for future use	22,624,104		22,452,146
Accumulated depreciation and amortization	(8,072,595)		(7,929,878)
Net	14,551,509		14,522,268
Construction work in progress	2,101,830		1,882,791
Palo Verde sale leaseback, net of accumulated depreciation (Note 6)	89,329		90,296
Intangible assets, net of accumulated amortization	260,454		258,880
Nuclear fuel, net of accumulated amortization	112,735		100,119
Total property, plant and equipment	17,115,857		16,854,354
DEFERRED DEBITS
Regulatory assets (Note 4)	1,258,663		1,283,221
Operating lease right-of-use assets	1,361,847		801,688
Assets for pension and other postretirement benefits (Note 5)	405,409		396,599
Other	47,205		46,282
Total deferred debits	3,073,124		2,527,790

TOTAL ASSETS	$	23,580,373	$	22,723,405

The accompanying notes are an integral part of the financial statements.

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PINNACLE WEST CAPITAL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(dollars in thousands)


	March 31, 2023		December 31, 2022
LIABILITIES AND EQUITY

CURRENT LIABILITIES
Accounts payable	$	361,410	$	430,425
Accrued taxes	214,484		164,440
Accrued interest	72,146		61,217
Common dividends payable	—		97,895
Short-term borrowings (Note 3)	497,550		340,720
Current maturities of long-term debt (Note 3)	60,821		50,685
Customer deposits	41,186		41,769
Liabilities from risk management activities (Note 7)	83,874		37,697
Liabilities for asset retirements	20,321		12,232

Operating lease liabilities	65,130		105,210
Regulatory liabilities (Note 4)	202,266		271,575
Other current liabilities	105,141		148,276
Total current liabilities	1,724,329		1,762,141
LONG-TERM DEBT LESS CURRENT MATURITIES (Note 3)	7,916,554		7,741,286
DEFERRED CREDITS AND OTHER
Deferred income taxes	2,379,720		2,384,421
Regulatory liabilities (Note 4)	2,060,273		2,061,776
Liabilities for asset retirements	787,220		785,530
Liabilities for pension benefits (Note 5)	114,290		116,286

Customer advances	532,596		422,103
Coal mine reclamation	180,446		179,255
Deferred investment tax credit	184,427		180,677
Unrecognized tax benefits	38,863		38,658
Operating lease liabilities	1,240,584		639,247
Other	256,620		252,149
Total deferred credits and other	7,775,039		7,060,102
COMMITMENTS AND CONTINGENCIES (Note 8)
EQUITY
Common stock, no par value; authorized 150,000,000 shares, 113,359,467 and 113,247,189 issued at respective dates	2,730,851		2,724,740
Treasury stock at cost; 106,141 and 73,613 shares at respective dates	(7,451)		(5,005)
Total common stock	2,723,400		2,719,735
Retained earnings	3,357,052		3,360,347
Accumulated other comprehensive loss (Note 13)	(31,536)		(31,435)
Total shareholders’ equity	6,048,916		6,048,647
Noncontrolling interests (Note 6)	115,535		111,229
Total equity	6,164,451		6,159,876

TOTAL LIABILITIES AND EQUITY	$	23,580,373	$	22,723,405

The accompanying notes are an integral part of the financial statements.

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PINNACLE WEST CAPITAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(dollars in thousands)


	Three Months Ended March 31,
	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	1,009	$	21,262
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization including nuclear fuel	208,772		203,639
Deferred fuel and purchased power	(90,305)		(6,110)
Deferred fuel and purchased power amortization	80,904		39,442
Allowance for equity funds used during construction	(15,061)		(9,747)
Deferred income taxes	(5,150)		3,835
Deferred investment tax credit	3,749		(319)
Change in derivative instruments fair value	786		—
Stock compensation	3,635		5,338
Changes in current assets and liabilities:
Customer and other receivables	2,831		66,146
Accrued unbilled revenues	21,488		1,215
Materials, supplies and fossil fuel	(14,392)		(11,892)
Income tax receivable	2,387		542
Other current assets	(8,110)		13,347
Accounts payable	(69,576)		(13,873)
Accrued taxes	50,044		53,847
Other current liabilities	(84,239)		(40,211)
Change in margin and collateral accounts - assets	11		8,600


Change in other long-term assets	(58,036)		52,153
Change in operating lease assets	(8,920)		324
Change in other long-term liabilities	138,649		(47,883)
Change in operating lease liabilities	51,129		953
Net cash provided by operating activities	211,605		340,608
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(445,171)		(391,583)
Contributions in aid of construction	25,165		28,262
Allowance for borrowed funds used during construction	(12,722)		(4,422)
Proceeds from nuclear decommissioning trusts sales and other special use funds	226,626		361,754
Investment in nuclear decommissioning trusts and other special use funds	(227,196)		(361,809)
Other	(19,941)		(6,543)
Net cash used for investing activities	(453,239)		(374,341)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of long-term debt	185,136		312,052
Short-term borrowing and (repayments) - net	156,830		(29,050)


Dividends paid on common stock	(96,078)		(94,265)
Repayment of long-term debt	—		(150,000)
Common stock equity issuances and (purchases) - net	(2,135)		(1,005)


Net cash provided by financing activities	243,753		37,732

NET INCREASE IN CASH AND CASH EQUIVALENTS	2,119		3,999

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	4,832		9,969

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	6,951	$	13,968

The accompanying notes are an integral part of the financial statements.

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PINNACLE WEST CAPITAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(unaudited)

(dollars in thousands)


	Three Months Ended March 31, 2023
	Common Stock			Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interests		Total
	Shares	Amount		Shares	Amount
Balance, December 31, 2022	113,247,189	$	2,724,740	(73,613)	$	(5,005)	$	3,360,347	$	(31,435)	$	111,229	$	6,159,876
Net income (loss)		—			—		(3,297)		—		4,306		1,009
Other comprehensive loss		—			—		—		(101)		—		(101)

Issuance of common stock	112,278	6,111			—		—		—		—		6,111
Purchase of treasury stock (a)		—		(33,154)	(2,490)		—		—		—		(2,490)
Reissuance of treasury stock for stock-based compensation and other		—		626	44		—		—		—		44

Other		—			—		2		—		—		2
Balance, March 31, 2023	113,359,467	$	2,730,851	(106,141)	$	(7,451)	$	3,357,052	$	(31,536)	$	115,535	$	6,164,451


	Three Months Ended March 31, 2022
	Common Stock			Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interests		Total
	Shares	Amount		Shares	Amount
Balance, December 31, 2021	113,014,528	$	2,702,743	(87,608)	$	(6,401)	$	3,264,719	$	(54,861)	$	115,260	$	6,021,460
Net income		—			—		16,956		—		4,306		21,262
Other comprehensive income		—			—		—		1,153		—		1,153
Dividends on common stock		—			—		(74)		—		—		(74)
Issuance of common stock	33,171	3,582			—		—		—		—		3,582
Purchase of treasury stock (a)		—		(24,885)	(1,665)		—		—		—		(1,665)
Reissuance of treasury stock for stock-based compensation and other		—		61,572	4,418		—		—		—		4,418


Balance, March 31, 2022	113,047,699	$	2,706,325	(50,921)	$	(3,648)	$	3,281,601	$	(53,708)	$	119,566	$	6,050,136

(a)Primarily represents shares of common stock withheld from certain stock awards for tax purposes.

The accompanying notes are an integral part of the financial statements.

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ARIZONA PUBLIC SERVICE COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

(dollars in thousands)


	Three Months Ended March 31,
	2023		2022

OPERATING REVENUES (Note 2)	$	944,955	$	783,531

OPERATING EXPENSES
Fuel and purchased power	394,504		265,269
Operations and maintenance	246,179		214,601
Depreciation and amortization	191,884		186,583
Taxes other than income taxes	57,125		57,959
Other expenses	610		825
Total	890,302		725,237
OPERATING INCOME	54,653		58,294
OTHER INCOME (DEDUCTIONS)
Allowance for equity funds used during construction	15,061		9,747
Pension and other postretirement non-service credits - net (Note 5)	10,106		23,907
Other income (Note 9)	5,075		1,152
Other expense (Note 9)	(2,617)		(1,849)
Total	27,625		32,957
INTEREST EXPENSE
Interest charges	75,222		62,309
Allowance for borrowed funds used during construction	(11,157)		(4,422)
Total	64,065		57,887
INCOME BEFORE INCOME TAXES	18,213		33,364
INCOME TAXES	3,247		4,859
NET INCOME	14,966		28,505
Less: Net income attributable to noncontrolling interests (Note 6)	4,306		4,306
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDER	$	10,660	$	24,199

The accompanying notes are an integral part of the financial statements.

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ARIZONA PUBLIC SERVICE COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

(dollars in thousands)


	Three Months Ended March 31,
	2023		2022

NET INCOME	$	14,966	$	28,505

OTHER COMPREHENSIVE INCOME, NET OF TAX



Pension and other postretirement benefits activity, net of tax expense of $150 and $269	457		820
Total other comprehensive income (loss)	457		820

COMPREHENSIVE INCOME	15,423		29,325
Less: Comprehensive income attributable to noncontrolling interests	4,306		4,306

COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDER	$	11,117	$	25,019

The accompanying notes are an integral part of the financial statements.

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ARIZONA PUBLIC SERVICE COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(dollars in thousands)


	March 31, 2023		December 31, 2022
ASSETS

PROPERTY, PLANT AND EQUIPMENT
Plant in service and held for future use	$	22,620,643	$	22,448,685
Accumulated depreciation and amortization	(8,069,288)		(7,926,575)
Net	14,551,355		14,522,110
Construction work in progress	2,036,078		1,829,004
Palo Verde sale leaseback, net of accumulated depreciation (Note 6)	89,329		90,296
Intangible assets, net of accumulated amortization	260,299		258,725
Nuclear fuel, net of accumulated amortization	112,735		100,119
Total property, plant and equipment	17,049,796		16,800,254

INVESTMENTS AND OTHER ASSETS
Nuclear decommissioning trusts (Notes 11 and 12)	1,125,617		1,073,410
Other special use funds (Notes 11 and 12)	352,877		347,231
Assets from risk management activities (Note 7)	17,082		44,394
Other assets	44,165		43,344
Total investments and other assets	1,539,741		1,508,379

CURRENT ASSETS
Cash and cash equivalents	6,648		4,042
Customer and other receivables	438,251		448,880
Accrued unbilled revenues	143,276		164,764
Allowance for doubtful accounts (Note 2)	(22,112)		(23,778)
Materials and supplies (at average cost)	425,457		410,481
Fossil fuel (at average cost)	39,571		40,155
Income tax receivable	1,102		1,102
Assets from risk management activities (Note 7)	15,961		87,704
Deferred fuel and purchased power regulatory asset (Note 4)	469,962		460,561
Other regulatory assets (Note 4)