Pinnacle West Capital Corporation: 2Q26 Preview: Waiting For The RAB Unlock

Research evidence excerpt

Pinnacle West Capital Corporation: 2Q26 Preview: Waiting For The RAB Unlock

ble to the same period last year. Negative YoY drivers primarily 52 Week range USD 108.37-85.32

include higher interest expense, increased D&A, higher property taxes, share dilution, and other

including El Dorado impact. Positive YoY drivers primarily include lower O&M, increased sales

growth, and higher transmission earnings.

Focus items and catalyst calendar

• Pending rate case: Hearings are underway in Pinnacle West’s pending Arizona rate case. We

view the Staff testimony as positive by setting a baseline on ROE at the existing level and a

Source: IDC

favorable formula rate set-up. As a reminder, on March 3rd, ACC Staff provided direct Link to Barclays Live for interactive charting

testimony regarding cost-of-capital where they recommended a 9.80% ROE and 0.2% FVI

(without formula rate adjustment mechanism, "FRAM"), comparing with APS’s proposed

North America Power & Utilities

10.70%, and current operating level of 9.55% (9.80% if including FVI). Alternatively, Staff

Nicholas Campanella

recommended lower end of the range at 9.55% ROE and 0.2% FVI with a FRAM. The proposed +1 212 526 6123

52.35% equity layer is not contested. On the revenue requirement, Staff recommends a $525 nicholas.campanella@barclays.com

million base rate increase, vs. APS’s $662 million proposal, which is above 75% of the request. BCI, US

On formula rates, Staff characterized APS’s proposed FRAM as risk-reducing, and stated that if

Michael Lonegan

FRAM is approved, the Commission should consider setting ROE toward the lower end of the +1 212 526 8462

recommended range. Hearings will end in July. We expect PNW to take this proceeding the michael.lonegan1@barclays.com

BCI, US

Barclays Capital Inc.