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Pinnacle West Capital Corporation (NYSE: PNW) |
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Description of Pinnacle West Capital's Business Segments
Pinnacle West Capital Corporation is a prominent utility holding company that operates through three primary business segments, each serving distinct roles within the overall organization and contributing to its diversified portfolio. Below is an extensive description of each segment, the products and services offered, and their implications on the companys operations.
1. Regulated Electricity Segment
This segment is the backbone of Pinnacle West's operations, primarily composed of Arizona Public Service Company (APS). This segment focuses on providing safe, reliable, and efficient electricity to businesses and residents in Arizona. The major components of this segment include:
- Electricity Generation: APS operates a diverse mix of generation facilities, including natural gas, coal, nuclear, and renewable energy sources such as solar and wind. The company has been investing heavily in renewable energy to align with sustainability goals and regulatory requirements, generating a significant portion of its electricity from these sources.
- Transmission: The transmission system consists of high-voltage power lines that carry electricity from generation plants to substations. APSs infrastructure is designed to ensure reliable power delivery, integrating new technologies for smart grid improvements that enhance efficiency and reliability.
- Distribution: This includes the lower-voltage networks that deliver electricity from substations to end-users. Distribution activities involve maintaining and upgrading infrastructure, ensuring compliance with safety standards, and managing metering and customer service functions.
- Retail Electricity Services: APS offers various retail products and services, including time-of-use pricing, renewable energy options, and energy efficiency programs. The company invests in customer engagement initiatives aimed at promoting energy conservation and improving customer satisfaction.
Marketing and Trading Segment
This segment involves competitive energy market activities, focusing on wholesale marketing and trading services. It encompasses:
- Wholesale Marketing: This involves buying and selling electricity on wholesale markets. APS utilizes financial instruments and contracts to manage its energy supply and demand, ensuring it can provide reliable electricity at competitive prices to consumers.
- Trading Operations: Pinnacle Wests trading segment engages in energy trading, risk management, and commodity-related services. This function ensures the efficient operation of the electricity market while mitigating risks associated with price volatility and supply discrepancies.
- APS Energy Services: This includes a suite of commodity-related energy services for commercial and industrial customers, focusing on optimizing energy use and costs. Apex Energy Services can provide energy management solutions and advisory services tailored to various customer needs.
Real Estate Segment
Comprising the real estate development operations of SunCor Development Company, this segment plays a strategic role in diversifying Pinnacle Wests revenue base. Key aspects include:
- Real Estate Development: SunCor is involved in the acquisition, development, and management of residential and commercial properties in Arizona and New Mexico. The projects often include creating master-planned communities, commercial centers, and mixed-use developments.
- Investment Activities: Focusing on strategic partnerships and investments in various real estate ventures, SunCor aims to maximize the potential value of its real estate holdings. This segment actively assesses market conditions and opportunities for growth.
- Sustainability Initiatives: SunCor emphasizes sustainable development practices in its projects, working to enhance energy efficiency, protect the environment, and offer livable communities that meet modern standards for design and infrastructure.
Conclusion
Pinnacle West Capital Corporations diverse segments'regulated electricity, marketing and trading, and real estate'collectively position it as a significant entity in the energy and utility market, particularly in Arizona. The companys investments in renewable energy, customer-focused services in its regulated segment, proactive trading practices, and strategic real estate development all contribute to a well-rounded business strategy that adapts to evolving market conditions and regulatory environments. This comprehensive approach not only drives growth and profitability but also supports the community and environmental stewardship efforts, fostering long-term sustainability.
Composition of Pinnacle West Capital Corporation Revenues by
Segments |
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| Reportable Pinnacle West |
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 99.97 % |
of total Revenue |
| Regulated Electricity Segment |
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99.97 % |
of total Revenue |
| Retail Electric Service Residential |
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43.49 % |
of total Revenue |
| Retail Electric Service Non-Residential |
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50.84 % |
of total Revenue |
| Wholesale Energy Sales |
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2.4 % |
of total Revenue |
| Transmission Services for Others |
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2.47 % |
of total Revenue |
| Other Sources |
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0.79 % |
of total Revenue |
| Electric and Transmission Service |
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98.71 % |
of total Revenue |
Q1 three months ended (Mar 31 2025)
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| Revenues by Business Segments |
Revenues
(in millions $) |
%
(of total Revenues) |
| Reportable Pinnacle West |
1,032.00 |
99.97 % |
| Regulated Electricity Segment |
1,032.00 |
99.97 % |
| Retail Electric Service Residential |
448.92 |
43.49 % |
| Retail Electric Service Non-Residential |
524.86 |
50.84 % |
| Wholesale Energy Sales |
24.82 |
2.4 % |
| Transmission Services for Others |
25.55 |
2.47 % |
| Other Sources |
8.13 |
0.79 % |
| Electric and Transmission Service |
1,019.00 |
98.71 % |
| Total |
1,032.28 |
100 % |
Q1 three months ended (Mar 31 2025)
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| Revenue Growth rates by Segment |
Y/Y Revenue
% |
Q/Q Revenue
% |
| Reportable Pinnacle West |
8.4 % |
- |
| Regulated Electricity Segment |
8.4 % |
- |
| Retail Electric Service Residential |
3.75 % |
- |
| Retail Electric Service Non-Residential |
13.73 % |
- |
| Wholesale Energy Sales |
-7.59 % |
- |
| Transmission Services for Others |
-7.81 % |
- |
| Other Sources |
174.54 % |
- |
| Electric and Transmission Service |
8.06 % |
- |
| Total |
- |
- |
Q1 three months ended (Mar 31 2025)
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| Income by Business Segments |
Income
(in millions $) |
%
(Profit Margin) |
| Total |
-0.34 |
- |
Q1 three months ended (Mar 31 2025)
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| Income Growth rates by Segment |
Y/Y Income
% |
Q/Q Income
% |
| Total |
- |
- |
Annual Report on Pinnacle West Capital Corporation Divisions, Sales by Country |
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| Regulated Electricity Segment |
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100 % |
of total Revenue |
| Retail Electric Service Residential |
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50.01 % |
of total Revenue |
| Retail Electric Service Non-Residential |
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45.56 % |
of total Revenue |
| Wholesale Energy Sales |
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1.89 % |
of total Revenue |
| Transmission Services for Others |
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2.32 % |
of total Revenue |
| Other Sources |
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0.22 % |
of total Revenue |
| Electric and Transmission Service |
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98.99 % |
of total Revenue |
| Pinnacle West Reportable Segment |
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100 % |
of total Revenue |
Twelve months ended 2024
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| PNW s Annual Revenue by Geography and Business Segments |
Sales
(in millions $) |
%
(of total Sales) |
| Regulated Electricity Segment |
5,125.00 |
100 % |
| Retail Electric Service Residential |
2,562.82 |
50.01 % |
| Retail Electric Service Non-Residential |
2,334.93 |
45.56 % |
| Wholesale Energy Sales |
96.86 |
1.89 % |
| Transmission Services for Others |
119.04 |
2.32 % |
| Other Sources |
11.27 |
0.22 % |
| Electric and Transmission Service |
5,073.00 |
98.99 % |
| Total |
5,124.92 |
100 % |
| Pinnacle West Reportable Segment |
5,125.00 |
100 % |
Twelve months ended 2024
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| PNW s Annual Income by Country and Business Segments |
Income
(in millions $) |
%
(Profit Margin) |
| Total |
626.03 |
12.22 % |
Twelve months ended 2024
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| Annual Revenue and Income Growth by Country and Business Segments |
% Y/Y Sales Growth |
% Y/Y Income Growth |
| Regulated Electricity Segment |
9.14 % |
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| Retail Electric Service Residential |
11.95 % |
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| Retail Electric Service Non-Residential |
13.99 % |
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| Wholesale Energy Sales |
-53.65 % |
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| Transmission Services for Others |
-14.13 % |
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| Other Sources |
4.74 % |
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| Electric and Transmission Service |
9.07 % |
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| Pinnacle West Reportable Segment |
9.14 % |
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