Revenue

12 Months Ended

Dec. 31, 2025

Revenue from Contract with Customer [Abstract]

Revenue

Revenue

Sources of Revenue

The following table provides detail of Pinnacle West’s consolidated revenues disaggregated by revenue sources (dollars in thousands):

	Year Ended December 31,
	2025		2024		2023
Retail Electric Service
Residential	$	2,541,320	$	2,562,822	$	2,289,196
Non-Residential	2,542,936		2,334,925		2,048,416
Wholesale Energy Sales	108,661		96,857		208,985
Transmission Services for Others	129,667		119,038		138,631
Other Sources	17,355		11,273		10,763
Total Operating Revenues	$	5,339,939	$	5,124,915	$	4,695,991

Retail Electric Revenues

All of Pinnacle West’s retail electric revenues are generated by APS. Retail electric revenue is generated by the sale of electricity to our regulated customers within the authorized service territory at tariff rates approved by the ACC and based on customer usage. Revenues related to the sale of electricity are generally recognized when service is rendered, or electricity is delivered to customers. The billing of electricity sales to individual customers is based on the reading of their meters. We obtain customers’ meter data on a systematic basis throughout the month, and generally bill customers within a month from when service was provided. Customers are generally required to pay for services within 21 days of when the services are billed. See “Allowance for Doubtful Accounts” discussion below for additional details regarding payment terms. In addition, see the section titled “2025 Rate Case” in Note 8 for details related to proposed adjustments to rate design and modifications of cost allocation methodologies to reduce cross-subsidization by ensuring customers causing production costs are covering those costs through rates.

Wholesale Energy Sales and Transmission Services for Others

All of Pinnacle West’s wholesale energy sales and transmission services for others revenues is generated by APS. Revenues from wholesale energy sales and transmission services for others represent energy and transmission sales to wholesale customers. These activities consist of managing fuel and purchased power risks and transmission needs in connection with the cost of serving our retail customers’ energy requirements. We may also sell into the wholesale markets generation that is not needed for APS’s retail load. Our wholesale activities and tariff rates are regulated by FERC.

Revenue Activities

Our revenues primarily consist of activities that are classified as revenues from contracts with customers. We derive our revenues from contracts with customers primarily from sales of electricity to our regulated retail customers. Revenues from contracts with customers also include wholesale and transmission activities. Our revenues from contracts with customers for the year ended December 31, 2025, 2024 and 2023 were $5,319 million, $5,073 million, and $4,651 million, respectively.

We have certain revenues that do not meet the specific accounting criteria to be classified as revenues from contracts with customers. For the year ended December 31, 2025, 2024, and 2023 our revenues that do not qualify as revenue from contracts with customers were $21 million, $52 million, and $45 million, respectively. This amount includes revenues related to certain regulatory cost recovery mechanisms that are considered alternative revenue programs. We recognize revenue associated with alternative revenue programs when specific events permitting recognition are completed. Certain amounts associated with alternative revenue programs will subsequently be billed to customers; however, we do not reclassify billed amounts into revenue from contracts with customers. See Note 8 for a discussion of our regulatory cost recovery mechanisms.

Allowance for Doubtful Accounts

The allowance for doubtful accounts represents our best estimate of customer and other receivables and accrued unbilled revenues that will ultimately be uncollectible due to credit loss risk. The allowance includes a write-off component that is calculated by applying an estimated write-off factor to retail electric revenues. The write-off factor used to estimate uncollectible accounts is based upon consideration of

historical collections experience, the current and forecasted economic environment, changes to our collection policies, and management’s best estimate of future collections success. We continue to monitor the impacts of our disconnection policies, payment arrangements, among other considerations impacting our estimated write-off factor, and allowance for doubtful accounts.

The following table provides a rollforward of Pinnacle West’s allowance for doubtful accounts (dollars in thousands):

	Year Ended December 31,
	2025		2024		2023
Balance at beginning of period	$	24,849	$	22,433	$	23,778
Bad debt expense	28,603		35,799		23,399
Actual write-offs	(27,957)		(33,383)		(24,744)
Balance at end of period	$	25,495	$	24,849	$	22,433