Long-Term Debt and Liquidity Matters

12 Months Ended

Dec. 31, 2025

All of Pinnacle West’s and APS’s debt is unsecured. The following table presents the components of long-term debt on the Consolidated Balance Sheets outstanding (dollars in thousands):


	Maturity	Interest	December 31,
	Dates (a)	Rates	2025		2024
APS
Pollution control bonds:
Variable	2029	(b)	$	163,975	$	163,975

Total pollution control bonds			163,975		163,975
Senior unsecured notes	2026-2055	2.20%-6.88%	8,030,000		7,380,000

Unamortized discount			(16,796)		(14,252)
Unamortized premium			17,144		9,955
Unamortized debt issuance cost			(54,383)		(48,800)
Total APS long-term debt			8,139,940		7,490,878
Less current maturities			250,000		300,000
Total APS long-term debt less current maturities			7,889,940		7,190,878
Pinnacle West
Senior unsecured notes	2027-2030	4.75%-5.15%	1,325,000		1,025,000
Floating rate note	2026	(c)	350,000		350,000

Unamortized discount			(681)		(5)
Unamortized debt issuance cost			(8,583)		(7,225)

Total Pinnacle West long-term debt			1,665,736		1,367,770
Less current maturities			350,000		500,000
Total Pinnacle West long-term debt less current maturities			1,315,736		867,770
TOTAL LONG-TERM DEBT LESS CURRENT MATURITIES			$	9,205,676	$	8,058,648

(a) This schedule does not reflect the timing of redemptions that may occur prior to scheduled maturity.

(b) The weighted-average interest rate for the variable rate pollution control bonds was 3.52% at December 31, 2025, and 4.01% at December 31, 2024.

(c) The weighted-average interest rate was 5.10% at December 31, 2025, and was 5.88% at December 31, 2024. See additional details below.

The following table shows principal payments due on Pinnacle West’s and APS’s total long-term debt (dollars in thousands):


Year	Pinnacle West Consolidated		APS Consolidated
2026	$	600,000	$	250,000
2027	825,000		300,000
2028	400,000		—
2029	568,975		568,975
2030	400,000		—
Thereafter	7,075,000		7,075,000
Total	$	9,868,975	$	8,193,975

Debt Fair Value

Our long-term debt fair value estimates are classified within Level 2 of the fair value hierarchy. The following table represents the estimated fair value of our long-term debt, including current maturities (dollars in thousands):


	As of December 31, 2025				As of December 31, 2024
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Pinnacle West	$	1,665,736	$	1,731,388	$	1,367,770	$	1,393,744
APS	8,139,940		7,433,142		7,490,878		6,525,248
Total	$	9,805,676	$	9,164,530	$	8,858,648	$	7,918,992

Debt and Equity Issuances

Pinnacle West

On February 28, 2024, Pinnacle West entered into equity forward sale agreements (the “February 2024 Forward Sale Agreements”), which may be settled with Pinnacle West common stock or cash. Pinnacle West also has an ATM Program under which it may offer and sell common stock and enter into forward sale agreements from time to time, subject to market conditions and other factors.

In August 2025, Pinnacle West amended the February 2024 Forward Sale Agreements with Wells Fargo Bank, National Association to extend the maturity date to December 31, 2026. In September 2025, Pinnacle West partially settled the February 2024 Forward Sale Agreements by issuing 243,186 shares of common stock and receiving net proceeds of $15 million. In December 2025, Pinnacle West partially settled the February 2024 Forward Sale Agreements by issuing 1,193,950 shares of common stock and receiving net proceeds of $75 million. The proceeds from both partial settlements were recorded in equity and were used for general corporate purposes. See Note 16 for more information on the February 2024 Forward Sale Agreements and the ATM Program.

On May 15, 2025, Pinnacle West issued $400 million of 4.90% senior unsecured notes that mature May 15, 2028 and $400 million of 5.15% senior unsecured notes that mature May 15, 2030. The net proceeds from the issuances were used to repay $500 million of 1.3% senior unsecured notes that were maturing June 15, 2025 and for general corporate purposes.

Pinnacle West also has $525 million of 4.75% Convertible Senior Notes due 2027 (“Convertible Notes”) outstanding, which are senior unsecured obligations of Pinnacle West and will mature on June 15, 2027. See Note 16 for more information.

APS

On May 15, 2025, Pinnacle West contributed $300 million into APS in the form of an equity infusion. APS used this contribution to repay the $300 million of 3.15% senior notes that matured on the same date.

On December 18, 2025, Pinnacle West contributed $75 million into APS in the form of an equity infusion. APS used this contribution for general corporate purposes.

On August 15, 2025, APS issued $700 million of 5.90% senior unsecured notes that mature August 15, 2055 and reopened its 5.70% senior unsecured notes that mature August 15, 2034, issuing an additional $250 million of such notes. The net proceeds from the issuances were used to repay the $400 million 364-day Term Loan and for general corporate purposes. See Note 6.

See “Lines of Credit and Short-Term Borrowings” in Note 6 for discussion of Pinnacle West’s and APS’s revolving credit facilities. See Notes 6 and 14 for discussion of APS’s separate outstanding letters of credit.

Debt Provisions

Pinnacle West’s and APS’s debt covenants related to their respective bank financing arrangements include maximum debt to capitalization ratios. Pinnacle West and APS comply with these covenants. For both Pinnacle West and APS, this covenant requires that the ratio of consolidated debt to total consolidated capitalization not exceed 65%. At December 31, 2025, the ratio was approximately 60% for Pinnacle West and 50% for APS. Failure to comply with such covenant levels would result in an event of default, which, generally speaking, would require the immediate repayment of the debt subject to the covenants and could cross-default other debt. See further discussion of “cross-default” provisions below.

Neither Pinnacle West’s nor APS’s financing agreements contain “rating triggers” that would result in an acceleration of the required interest and principal payments in the event of a rating downgrade. However, our bank credit agreements contain a pricing grid in which the interest rates we pay for borrowings thereunder are determined by our current credit ratings.

All of Pinnacle West’s and APS’s credit agreements contain “cross-default” provisions that would result in defaults and the potential acceleration of payment if Pinnacle West or APS were to default under certain other material agreements. Pinnacle West and APS do not have a material adverse change covenant for credit facility borrowings.

Although provisions in APS’s articles of incorporation and ACC financing orders establish maximum amounts of preferred stock and debt that APS may issue, APS does not expect any of these provisions to limit its ability to meet its capital requirements.

The ACC has authorized a limit on yearly equity infusions into APS equal to 2.5% of APS’s total assets each calendar year on a three-year rolling average basis, subject to APS’s equity ratio remaining below the most recently approved rate case capital structure plus 50 basis points. See Note 6 for additional short-term debt provisions.