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Pinnacle West Capital Corp PNW

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Morningstar’s Analysis

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Disappointing ALJ Decision Creates Uncertainty in Pending Rate Case for Pinnacle West

Charles Fishman, CFA Equity Analyst

Analyst Note

| Charles Fishman, CFA |

We are reaffirming our $88 per share fair value estimate after Pinnacle West reported strong 2021 second-quarter earnings and discussed Arizona Public Service's pending rate case. Pinnacle West reported $1.91 EPS in the second quarter versus $1.71 in the same period last year. The strong results were driven by favorable weather and higher pension and other postretirement nonservice credits.

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Company Profile

Business Description

Pinnacle West is a holding company whose principle subsidiary is Arizona Public Service. APS is a vertically integrated regulated utility that provides electric service to 1.3 million customers over a 35,000-square-mile service territory in Arizona, including the city of Phoenix. Approximately 35% of power sold comes from the company's 29% interest in the nearly 4-gigawatt Palo Verde nuclear plant. Operated by APS, Palo Verde is the largest nuclear plant in the U.S. APS has invested approximately $675 million in the utility-scale photovoltaic solar plants as part of the AZ Sun Program, resulting in 170 MW of solar capacity owned by APS and over 1,000 MW of contracted solar energy from power purchase agreements.

Contact
400 North Fifth Street, P.O. Box 53999
Phoenix, AZ, 85072-3999
T +1 602 250-1000
Sector Utilities
Industry Utilities - Regulated Electric
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type High Yield
Employees 6,026

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