A PATH FORWARD ANNUAL REPORT PINNACLE WEST CAPITAL CORPORATION 5 FASTEST-GROWING STATES IN U.S. + GROWTH IN STATE’S LARGEST COUNTY 2018-2019 STATE COUNTY IDAHO 2.09% ADA COUNTY 2.7% NEVADA 1.74% CLARK COUNTY 1.8% ARIZONA 1.69% MARICOPA COUNTY 1.9% UTAH 1.66% SALT LAKE COUNTY 1% TEXAS 1.28% HARRIS COUNTY 0.7% SOURCE: U.S. CENSUS BUREAU A PATH FORWARD In a year that brought challenges few had imagined, Pinnacle West and its primary subsidiary Arizona OVER $15 MILLION Public Service (APS) continued to advance goals of clean energy innovation, improved collaboration with IN PANDEMIC AID stakeholders, a renewed commitment to customers, strong financial performance and a brighter energy future for Arizona. $8.8 M CUSTOMER SUPPORT The year 2020 will be remembered as a time of upheaval. The COVID-19 virus claimed hundreds of thousands of victims in the United States and $3.6 M changed all our lives. From the most difficult LOW-INCOME BILL CREDITS circumstances can come strength and commitment. Our more than 6,000 employees demonstrated their skill, dedication and resilience serving our customers $2.7 M and powering an Arizona economy that remains COMMUNITY PANDEMIC RELIEF robust despite the pandemic’s challenges. As people and businesses continue to move to Arizona, APS’s customer growth increased 2.3 percent over the Through conversations with regulators and other prior year, making the company’s service territory stakeholders, we recognized we must do more to among the fastest growing in the nation. engage customers with information and resources that directly benefit them. We now offer around-the- clock service at our care center and are expanding A SERVICE CULTURE FOR OUR innovative programs to help customers manage their CUSTOMERS AND COMMUNITIES energy use. Through our rate case, which is being The pandemic created widespread uncertainty, so heard in 2021, we’ve proposed changes that will our focus became assuring customers that our service make it easier for customers to do business with us, and support would be there when most needed. including simplified residential service plans and Throughout the hottest summer and fall in Arizona easier-to-understand redesigned bills. history, we maintained reliable service as more jobs and classrooms moved into homes and online. We also waived late fees, suspended disconnections and offered extended payment arrangements to our customers struggling during these difficult times. And, knowing the financial strain families and small businesses were facing, in 2020 we distributed more than $15 million in pandemic aid to alleviate stress on our customers and support the Arizona economy. ANNUAL DIVIDENDS INDICATED ANNUAL DIVIDEND* % INCREASE (YEAR OVER YEAR) 2020 $3.32 6.1 % 2019 $3.13 6.1 % 2018 $2.95 6.1 % 2017 $2.78 6.1 % 2016 $2.62 4.8 % *Annual dividends are reviewed and approved at October board meeting HEALTHY FINANCES CONSTRUCTING A CLEAN ENERGY FOR THE LONG TERM FUTURE FOR ARIZONA Pinnacle West once again produced solid In 2020, we set our course toward providing financial performance and shareholder value. customers with 100 percent clean energy by 2050 Hotter-than-normal weather, robust customer and made steady progress in our first year. growth and disciplined cost management led to We secured more than 400 megawatts of capacity net income of $550.6 million, or $4.87 per share, and clean energy resources, including 200 megawatts in 2020, surpassing our 2019 results of $538.3 of wind and 75 megawatts of demand response million, or $4.77 per share. Our board of directors capability. We also issued requests-for-proposals to increased the annual dividend by 6.1 percent – the procure more energy storage we can pair with solar ninth consecutive annual increase. generation and to add between 1 and 1.4 gigawatts of new resources to our system by 2024, including Applying Lean principles, employees continued to more renewable energy. lead initiatives to create and capture cost savings. For example, the procurement team negotiated lower We remain on track to cease coal generation by 2031. prices with vendors, maximized the competitive Taking a broad view and in collaboration with a range bidding process and delivered more value from of stakeholders, we proposed a coal communities existing contracts. Altogether, employees increased transition plan to support the areas that are home efficiency and decreased costs by more than $20 to coal-fired power stations. The communities million, achieving our 2020 goal. surrounding the Four Corners and Cholla power plants, including the Navajo Nation and Hopi Tribe, could use the proposed $144 million package to help diversify and modernize their economies. APS CLEAN ENERGY COMMITMENT CLEAN ENERGY PATHWAY 2020 2031 APS ANNOUNCES CLEAN END ALL COAL-FIRED ENERGY COMMITMENT GENERATION 2010 2040 2030 2050 ACHIEVE A RESOURCE MIX PROVIDE 100% CLEAN, THAT IS 65% CLEAN ENERGY CARBON-FREE ELECTRICITY TO CUSTOMERS RELIABILITY OUR STATE AND EVEN WITH THE ECONOMY CAN COUNT ON EXTREME CHALLENGES Our operational performance for the year is best summed up by what happened in mid-August. OF 2020, THE PEOPLE While utilities in California and Arizona were OF OUR COMPANY forced to declare energy emergencies because of extreme heat, we did not have to take that step. RESPONDED TO THE CALL AND CONTINUED Our ability to avoid an energy emergency was the TO STRENGTHEN result of careful long-term planning, resource adequacy, flexibility and innovative customer A FOUNDATION programs. We relied heavily on our baseload and fast- OF OPERATIONAL ramping assets, including Four Corners, Ocotillo and Palo Verde, and they performed exceptionally when EXCELLENCE, IMPROVING we needed them. Our fossil fleet’s availability factor, CUSTOMER EXPERIENCE or the percentage of time units are available when called upon, was 95.3 percent from June through AND STRONG FINANCIAL September. Palo Verde Generating Station’s capacity PERFORMANCE. factor for the same time frame was 100 percent, and this clean energy asset – the largest in the nation – produced its billionth megawatt-hour of electricity. The future is never certain, but we’ve shown we have what it takes to forge a path forward by supporting a healthy Arizona and keeping our OUR PROMISE AND PATH FORWARD company strong. Thank you for investing with us In September, we introduced the APS Promise, to create this exciting future. which boldly states that as Arizona stewards, we do what is right for the people and prosperity of our Sincerely, state, centering our ultimate purpose with employees and those we serve. In pursuit of our vision to create a sustainable energy future for Arizona, we look to our people and our 10-year strategic plan as we seek to fulfill our mission to serve our customers with JEFF GULDNER clean, reliable and affordable energy. CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Exact Name of Each Registrant as specified in its Commission File charter; State of Incorporation; Address; and IRS Employer Number Telephone Number Identification No. 1-8962 PINNACLE WEST CAPITAL CORPORATION 86-0512431 (an Arizona corporation) 400 North Fifth Street, P.O. Box 53999 Phoenix Arizona 85072-3999 (602) 250-1000 1-4473 ARIZONA PUBLIC SERVICE COMPANY 86-0011170 (an Arizona corporation) 400 North Fifth Street, P.O. Box 53999 Phoenix Arizona 85072-3999 (602) 250-1000 Securities registered pursuant to Section 12(b) of the Act: Title Of Each Class Trading Symbol Name Of Each Exchange On Which Registered PINNACLE WEST CAPITAL Common Stock, PNW New York Stock Exchange CORPORATION No Par Value Securities registered pursuant to Section 12(g) of the Act: ARIZONA PUBLIC SERVICE COMPANY Common Stock, Par Value $2.50 per share Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act PINNACLE WEST CAPITAL CORPORATION Yes ☒ No ☐ ARIZONA PUBLIC SERVICE COMPANY Yes ☒ No ☐ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. PINNACLE WEST CAPITAL CORPORATION Yes ☒ No ☐ ARIZONA PUBLIC SERVICE COMPANY Yes ☒ No ☐ Indicate by check mark whether each registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. PINNACLE WEST CAPITAL CORPORATION Yes ☒ No ☐ ARIZONA PUBLIC SERVICE COMPANY Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). PINNACLE WEST CAPITAL CORPORATION Yes ☒ No ☐ ARIZONA PUBLIC SERVICE COMPANY Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. PINNACLE WEST CAPITAL CORPORATION Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ ARIZONA PUBLIC SERVICE COMPANY Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.