PNW · Q1 2026 Earnings

Q2 FY2025 Arizona growth thesis hardens → Q3 FY2025 Multi-year guidance crystallizes → Q4 FY2025 Mechanistic execution playbook → Q1 FY2026 Conversion mechanics activate

Transmission has been promoted from "incremental benefit" to "step-function earnings driver." In Q3 FY2025 transmission was framed as a doubled run-rate ($300–400M annually) layered with strategic regional projects; in Q4 it was deferred to the mid-year IRP refresh. This quarter Ted tells Travis Miller, in response to whether the Q1 transmission contribution was uniquely large: "if you go back five years ago, we've doubled and then doubled again the amount we're spending annually in terms of transmission capex... what you're beginning to see... is this continued step function upwards in the results of the transmission investment that we've been making." Andrew added the formula-rate framing: contemporaneous recovery, annual true-up, and a wholesale offset that has kept retail transmission rate increases stable. The shift signals that transmission earnings are now expected to compound rather than smooth, and supports the FY2026 print mechanically without a guide raise being needed.

The subscription model has moved from "growth pays for growth" concept to active contract negotiations with a 2026 ACC filing committed. Q3 FY2025 introduced Desert Sun Phase Two as the 1.2GW subscription anchor; Q4 framed the queue conversion as a "repeatable" procurement engine with at least one agreement expected to be filed in 2026; this quarter Andrew confirms to Richard Sunderland: "We're pleased with how the subscription model was received by the market and is coming together... We're not at the point yet of filing them with the commission, but it's trending in that direction" and reaffirms filing expected "this year." The progression — concept → repeatable engine → active negotiations with near-term filing — is de-risking faster than the Q4 framing implied.

The 20GW uncommitted queue is now explicitly being routed into the committed bucket via the subscription mechanism. To Anthony Crowdell, Andrew states the subscription offering "would reflect some elements of that 20 gigawatts potentially moving over to the committed customer bucket... as we approach opportunity to file special rate agreements... that's really the opportunity for us to be able to create more visibility into how much of that 20 gigawatts may be able to shift over." Prior quarters framed the 20GW as backlog with uncertain conversion timing; this quarter the conversion pathway is named, the vehicle is identified, and the timing is "this year." This is the most concrete commercialization framing PNW has offered on the queue to date.

The regulatory lag closure timeline has been quantified to 2029. To Julian DeMoulin-Smith on the 200bps EPS-to-rate-base-growth gap, Andrew states: "Management's goal is to be able to consistently earn within that 50 bps... and I think the latest thinking on design elements for formula rate as well as assuming a constructive outcome ultimately in the rate case revenue requirement would allow us to do so by 2029 or going forward." Q4 FY2025 framed the formula rate as "disclosure architecture"; this quarter management has put a date on closing the lag gap, which is the missing piece for crediting the full rate-base growth into EPS algorithms.

Long-term sales growth at 5–7% is now being characterized as conservative. To Alex (on for Shar Peruzza, Wells Fargo), Andrew says: "We feel comfortable with a 5%, 7% long-term... there is a large backlog of customers in our queue, and as we continue to work the capital plan... we'll continue to look for opportunities... to see sales growth beyond our base plan." Q3 FY2025 raised this band and extended it to 2030; this quarter management is implying the 5–7% is a floor rather than a ceiling given queue depth — without yet committing to a further raise.