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Consolidation and Nature of Operations (Policies) | 6 Months Ended
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Jun. 30, 2026
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
Business Segments | Pinnacle West’s reportable business segment is our regulated electricity segment, which consists of retail and wholesale sales supplied under traditional cost-based regulation and related activities and includes electricity generation, transmission, and distribution. Our reportable segment activities are conducted through our wholly-owned subsidiary, APS. All other operating segment activities are insignificant to Pinnacle West. For segment reporting purposes, Pinnacle West’s Chief Executive Officer performs the function of chief operating decision maker (“CODM”). Our CODM uses net income to measure an operating segment’s profitability. When assessing the performance of an operating segment, and making decisions about allocating resources, our CODM evaluates net income actual results compared to budget. Net income is also used when implementing strategic initiatives and selecting projects to meet business objectives. Our reportable segment’s revenue streams are dependent upon regulated rate recovery, which is a primary factor in how we identify operating segments. For information on our reportable business segment’s revenues, significant expenses, net income (loss), assets, and other reportable segment items, see the APS Condensed Consolidated Statements of Income, APS Condensed Consolidated Balance Sheets, and APS Condensed Consolidated Statements of Cash Flows.
New Accounting Standards | New Accounting Standards ASU 2024-03, Income Statement Reporting: Expense Disaggregation Disclosures In November 2024, a new accounting standard was issued that requires specific disclosures related to certain costs and expenses. Companies will be required to disclose the amounts of certain cost and expense categories, such as purchases of inventory, employee compensation, depreciation, and amortization, among other disclosures. The new disclosures may be provided in the notes to the financial statements and will not require changes to the face of the Consolidated Statements of Income. The standard becomes effective on December 31, 2027, using either a prospective or retrospective approach, with early adoption permitted. The adoption of the new standard will result in disclosure changes, but will not impact our accounting for such costs and expenses or our financial statement results. We are currently evaluating the transition method and date of adoption we will elect for this new standard. ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software: Targeted Improvements to the Accounting for Internal-Use Software In September 2025, a new accounting standard was issued that modernizes the accounting for internal-use software costs by removing references to prescriptive and sequential development stages of a project and replacing them with new criteria used in determining when to start capitalizing software costs. Under the new guidance, capitalization begins when management authorizes and commits to funding the software project and it is probable the project will be completed and used as intended. When determining if a project is probable of being completed, entities must evaluate whether significant development uncertainty exists, such as unresolved technological innovations or unproven features. The new guidance also clarifies that capitalized internal-use software costs are subject to the existing property, plant, and equipment disclosure requirements. The standard will become effective for us on January 1, 2028, with early adoption permitted. Entities may adopt the standard using one of the following transition methods: a prospective approach, a retrospective approach, or a modified transition approach that considers in-process projects at the date of adoption. We are currently evaluating the impacts on our financial statements of adopting this new standard and the transition method and date of adoption we will elect. The adoption of this guidance may impact our timing and scope of software costs eligible for capitalization, and may also impact our disclosures relating to software. ASU 2025-09, Derivatives and Hedging: Hedge Accounting Improvements In November 2025, a new accounting standard was issued which clarifies certain aspects of the hedge accounting guidance. The new standard is intended to better align hedge accounting with the economics of an entity’s risk management activities, and provides entities the ability to apply hedge accounting to an expanded population of economic hedges of forecasted transactions. The standard will become effective for us on January 1, 2027, applied on a prospective basis. Early adoption is permitted. We expect to adopt this guidance on January 1, 2027. We are not currently applying hedge accounting, and do not expect the adoption of this guidance will have a material impact on our financial statements. ASU 2025-10, Government Grants: Accounting for Government Grants Received by Business Entities In December 2025, a new accounting standard was issued establishing authoritative GAAP guidance on the accounting for government grants received by business entities. Prior to the issuance of this new standard, GAAP did not include guidance relating to government grants received by business entities. The new standard is intended to eliminate diversity in practice and improve the financial reporting and consistency across business entities for government grants. The new standard defines government grants and includes recognition, measurement, presentation, and disclosure requirements. The new standard includes guidance pertaining to both government grants received relating to an asset and government grants received relating to income. The guidance includes recognition thresholds based on the probability of compliance with grant conditions and receipt of the grant, among other accounting requirements. Disclosure requirements include the nature and amounts of government grants received, the conditions attached to the grants, and accounting policies applied. The new standard will become effective for us on January 1, 2029, with early adoption permitted. Entities may adopt the standard using various transition methods, including a modified prospective approach, a modified retrospective approach, or a retrospective approach to all government grants. We are currently evaluating the impacts on our financial statements of adopting this new standard, as well as the date we will adopt this guidance and the transition method we will elect. ASU 2026-02, Environmental Credits and Environmental Credit Obligations In May 2026, a new accounting standard was issued establishing comprehensive accounting requirements for environmental credits and environmental credit obligations. Prior to the issuance of this new standard, GAAP did not include specific guidance relating to these type of instruments and activities. The new standard defines environmental credits and environmental credit obligations and provides a framework for recognition, measurement, presentation, and disclosure. Entities will be required to capitalize or expense an environmental credit based on the entity’s planned use. Environmental credits probable of being used for regulatory compliance purposes, sold, or used in nonreciprocal transfers will qualify to be recognized as assets. Generally, environmental credit assets will initially be measured at cost, with certain exceptions. Environmental credits held solely for voluntary initiatives are required to be expensed as costs are incurred. For environmental credit obligations, entities will be required to recognize liabilities that arise from existing or enacted laws, statutes, or ordinances to prevent, control, reduce, or remove emissions or other pollution that may be settled with environmental credits. Liabilities will be measured assuming the reporting date is the end of the compliance period. The liabilities will initially be measured at a cost associated with the credit used to settle the obligation, and may be funded or unfunded obligations. The standard requires gross presentation of credits and obligations and expanded disclosures regarding credit types, intended use, estimates, and financial statement impacts. The new standard will become effective for us on January 1, 2028, with early adoption permitted. Entities must adopt the standard using a retrospective approach through a cumulative-effect adjustment to the opening balance of retained earnings as of the beginning of the annual reporting period of adoption, without recasting any financial statement information before the period of adoption. We are currently evaluating the impacts on our financial statements of adopting this new standard, as well as the date we will adopt this guidance. As required, we will adopt the standard using the retrospective transition approach.

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