Pinnacle West Capital (PNW) Risk Factor Changes

While these provisions may have the effect of encouraging persons seeking to acquire control of us to negotiate with our Board of Directors, they could enable the Board of Directors to hinder or frustrate a transactio…

General economic factors that are beyond the Company’s control impact the Company’s forecasts and actual performance.

We are exposed to losses in the event of nonperformance or nonpayment by counterparties.

Because Pinnacle West is structured as a holding company, all existing and future debt and other liabilities of its subsidiaries will be effectively senior in right of payment to its own debt securities.

APS’s financing agreements may restrict its ability to pay dividends, make distributions or otherwise transfer funds to us.

We have significant pension plan and other postretirement benefits plan obligations to our employees and retirees, and legal obligations to fund our pension trust and nuclear decommissioning trusts for Palo Verde.

Investment performance, changing interest rates, new rules or regulations and other economic, social, and political factors could decrease the value of our benefit plan assets, nuclear decommissioning trust funds and…

Like many companies in the electric utility industry, our workforce is maturing, with approximately 26.1% of employees eligible to retire by the end of 2030.

APS continues to pursue and implement advanced grid technologies, including transmission and distribution system technologies and digital meters enabling two-way communications between the utility and its customers.

with which the utility industry must comply.

We are subject to risk related to cybersecurity, IT systems, and unauthorized access to our systems that could adversely affect our business and financial condition.

Assured supplies of water are important for APS’s generating plants.

In August 2025, APS announced an update to its clean energy goal from zero-carbon to carbon-neutral by 2050.

The inability to successfully develop, acquire or operate generation and transmission facilities to meet future resource needs and load forecasts in accordance with reliability requirements and other new or evolving s…

Additionally, as APS’s transmission infrastructure ages and its transmission system needs to grow to support growth in our territory and in the Southwest, it will need to replace and expand certain portions of its tra…

The operation of power generation, transmission and distribution facilities involves certain risks, including the risk of breakdown or failure of equipment, fuel interruption, and performance below expected levels of…

Actual and Projected Customer and Sales Growth.

Effects of Energy Conservation Measures and Distributed Energy Resources.

Potential Financial Risks — GHG Regulation, the Clean Power Plan and Potential Litigation.

Concern over climate change has led to significant legislative and regulatory efforts to limit carbon dioxide, which is a major byproduct of the combustion of fossil fuel, and other GHG emissions.

transaction that some, or a majority, of our shareholders might believe to be in their best interests and, in that case, may prevent or discourage attempts to remove and replace incumbent directors.

insolvency or financial distress affecting our subsidiaries, would arise only through our equity ownership interests in our subsidiaries and only after their creditors have been satisfied.

Pending or future federal or state legislative or regulatory activity or court proceedings could increase the costs of providing medical insurance for our employees and retirees.

We have significant pension plan and other postretirement benefits plan obligations to our employees and retirees, and legal obligations to fund our pension trust and nuclear decommissioning trusts for Palo Verde.

acceptance of new technologies could also enable the entry of new market participants, such as technology companies, into the interface between APS and its customers and could have other unpredictable effects on APS’s…

Malicious actors may attack vendors to disrupt the services these vendors provide to us or to use those vendors as a cyber conduit to attack us.

We rely extensively on IT systems, networks, and services, including internet sites, data hosting and processing facilities, and other hardware, software and technical applications and platforms.

chain constraints for critical spare parts, and the construction of sufficient transmission capacity to support these facilities among others.

Potential changes in regulatory standards, impacts of new and existing laws and regulations, including environmental laws and regulations, and the need to obtain various regulatory approvals create uncertainty surroun…

facilities due to vandalism or other deliberate acts that could lead to outages or other adverse effects.

Longer term, APS has been preparing for and can serve significant load growth from residential and business customers.

in distributed renewable energy programs would result in lower demand since customers would be meeting some of their own energy needs.

2020, ACC Staff issued its second report regarding possible modifications to the ACC’s retail electric competition rules.

In November 2018, the ACC voted to re-examine the facilitation of a deregulated retail electric market in Arizona.

Ozone National Ambient Air Quality Standards.

Coal Ash.

Environmental Clean Up.

agencies, there is still a possibility that one or more of these companies could default, which could result in a material adverse impact on our earnings for a given period.

its common equity below that threshold.

We are subject to laws and rules issued by multiple government agencies concerning safeguarding and maintaining the confidentiality of our security, customer information and business information.

We rely extensively on IT systems, networks, and services, including internet sites, data hosting and processing facilities, and other hardware, software and technical applications and platforms.

drought conditions.

Potential changes in regulatory standards, impacts of new and existing laws and regulations, including environmental laws and regulations, and the need to obtain various regulatory approvals create uncertainty surroun…

replacement and expansion of its transmission infrastructure, it could face increased equipment failures, power quality challenges, reputational impact, and financial loss.

additional risk of these arrangements could lead to stranded costs and other effects that could have material adverse impacts on APS’s financial condition, results of operations, and cash flows.

Recent industry trends and projections of load growth reflect significant demand from data centers to support AI as well as onshoring of manufacturing, such as advanced semiconductor manufacturing.

Modification of the ACC’s retail electric competition rules or other efforts of deregulation and other factors, such as customers installing behind the meter technologies or large customers developing large, utility s…

See “Business of Arizona Public Service Company — Environmental Matters” in Part I, Item 1 as well as Note 14 for examples of environmental laws and regulations and matters that could affect APS’s financial condition,…