Pinnacle West Profit Falls Despite Hotter Weather
Operating revenue rose 7.1% to $1.456 billion as electricity sales increased.
Pinnacle West Capital (PNW), the Arizona utility holding company, reported a 7.3% decline in second-quarter profit as higher interest charges, depreciation and lower transmission revenue outweighed stronger electricity demand. Net income fell to $178.6 million, or $1.43 a share, from $192.6 million, or $1.58 a share, a year earlier.
The decline came even as weather shifted from a drag to a benefit. Residential cooling degree days rose 7% from a year earlier, when cooling degree days were 15.4% lower and reduced earnings.
Operating revenue increased 7.1% from a year earlier, while total sales growth accelerated to 9.6% from 5.2%. Hotter weather, customer additions and usage supported the increase. Earnings also rose sequentially from first-quarter net income of $32.9 million, or $0.27 a share, reflecting the utility's seasonally stronger second quarter.
Underlying demand growth slowed. Weather-normalized sales increased 5.6%, down from 9.4% in the first quarter, while customer growth moderated to 2.1% from 2.2% in the preceding quarter and 2.4% in the comparable second and third quarters of 2024.
Operations-and-maintenance expense provided an earnings tailwind after weighing on the year-earlier quarter, declining to $283.4 million from $286.6 million. Transmission revenue moved in the opposite direction, detracting from results after contributing to earnings in both the first quarter and the year-earlier period.
Pinnacle West maintained its weather-normalized 2024 earnings forecast of $4.55 to $4.75 a share, unchanged from its first-quarter outlook.
The company also planned to convert two retired units at its Cholla coal plant to natural gas, restoring about 380 megawatts of dispatchable capacity by 2029. Construction was expected to begin in 2028, subject to regulatory approval.