Fellow shareholders, thank you for your continued commitment in Pinnacle West. Your trust and investment enables us to deliver safe, reliable, and affordable energy for our customers today and build the energy infrastructure necessary to power Arizona's growth for tomorrow. Arizona remains one of the nation's fastest-growing states. In 2025, APS delivered strong growth across every major customer class. Residential additions remained at record levels, commercial and industrial sales were robust, and the state's surge in advanced manufacturing and data centers continued to accelerate. APS met this rapidly growing demand reliably and affordably. We deployed more than 1,600 MW of new generation and battery storage and advanced a comprehensive build-out of transmission infrastructure. We also announced plans to add up to 2,000 MW of additional natural gas generation to our portfolio, designed to help meet the state's growing around-the-clock energy needs.
This additional generation strengthens the grid while maintaining affordability through our growth pays for growth model. The proposed model is intended to have extra-large customers fully fund the resources they require while helping protect existing residential and business customers from unnecessary cost shifts. In parallel, we secured our share of the nation's largest natural gas pipeline expansion project, a critical resource commitment to ensure long-term fuel supply for our growing resource portfolio. Our commitment to reliability was tested last year as Arizona experienced its third-hottest summer on record. APS customers set three all-time peak demand records, yet our system and our team performed exceptionally well. Palo Verde Generating Station achieved a 91% annual capacity factor and a 100% summertime availability for the second year in a row. Our conventional fleet delivered 93% summertime availability, one of the strongest performances in company history.
Our customers experienced some of the best reliability in the industry as measured by fewest outages. To further strengthen resilience, we announced our intention to join the Southwest Power Pool's Markets+ program. Participation in a regional day-ahead and real-time market will enhance reliability, improve resource sharing, and reduce costs for customers over time. Through our financial strategy, we maintain strong credit metrics, secured favorable access to capital, and positioned the enterprise to responsibly fund more than $10 billion of planned investment through 2028. The Pinnacle West board of directors also increased our shareholder dividend for the 14th consecutive year, affirming its continued commitment to shareholder return. In June, APS filed a precedent-setting rate case. This case aims to modernize our regulatory framework, mitigate cost recovery lag, and create predictability for customers and investors. The application includes the introduction of formula rates to promote gradualism and consistent adjustments.
We also worked with policymakers to pass meaningful legislation supporting wildfire mitigation and utility securitization. Affordability remains a top priority. Amid inflationary pressures, APS continues to keep bills as low as possible for our customers. We expanded customer assistance programs, connecting Arizonans to about $70 million in annual support and reinforcing our commitment to protect households most in need. We offer the largest energy support program in the state and are committed to supporting customers with energy-saving solutions. APS's commitment to Arizona extends beyond electricity. In 2025, APS was once again ranked as Arizona's top corporate philanthropist by the Phoenix Business Journal, contributing nearly $24 million in community support. APS was also named one of the nation's best energy and resources employers by U.S. News & World Report, a testament to our culture of innovation, accountability, and shared purpose.
Looking ahead, Pinnacle West and APS are building the grid Arizona will need for the next 50 years. We're entering this era from a position of strength, a clear vision of the future with a strong team to execute our plan, a disciplined financial strategy, and a constructive regulatory environment. Thank you again for your investment in Pinnacle West. We're honored to be the electric service provider to one of the fastest-growing regions in the country, and we couldn't do it without you. Together, we're building a safer, more reliable, and affordable energy future for Arizona. Good morning. I'm Theodore N. Geisler, Chairman of the Board, President, and CEO of Pinnacle West. It's my privilege to welcome you to the company's 41st annual meeting of the shareholders. Thank you for being with us today and for the confidence you've placed in Pinnacle West with your investment.
I would like to thank and acknowledge retiring board member Rick Fox. Rick was first elected to the board in 2014 and has provided valued counsel on a variety of issues the company has faced over the last 12 years. His knowledge and business acumen have made him an excellent advocate for shareholders and a champion of Pinnacle West. We're sincerely grateful for his many years of service. Before I call the formal portion of the annual meeting to order, please remember that this meeting will be governed by the rules of conduct outlined on the virtual meeting website. Consistent with those rules, and to provide for an orderly question- and- answer session, we will answer questions that comply with the rules of conduct and that were submitted prior to the adjournment of the formal portion of today's meeting.
I now call the annual meeting to order. The polls are now open for voting on the following matters. One, the election of directors. Two, an advisory vote to approve executive compensation. Three, ratification of the appointment of the company's independent accountant for the year ending December 31st, 2026. The polls will remain open, and you may cast your votes until all formal items have been presented, and I announce that the polls are closed. I expect the polls will close about three minutes from now. If you have already voted and do not wish to change your vote, you need not vote again. If you have not yet voted and would like to do so, or if you wish to change a prior vote, you can do so now by clicking on the Vote Here link and following the instructions.
I call upon the Secretary of the company, Shirley Baum, for her report with respect to the notice of this meeting and quorum.
The notice and proxy statement was first furnished on approximately April 3, 2026 to shareholders of record at the close of business on March 12th, 2026. The election inspector has informed me that the holders of more than 91% of the outstanding shares entitled to vote at the meeting are present or represented by proxy. There are a sufficient number of shares present to constitute the quorum.
Thank you, Shirley. Proper notice of the meeting has been given, and the quorum is present to conduct the business of the meeting. The first item of business is the election of directors. There are 10 nominees properly before you for election to serve as directors until the 2027 annual meeting of shareholders. No other persons are eligible for the election today. I call upon the Secretary for the introduction of the nominees.
The 10 nominees are Glynis A. Bryan, Ronald Butler Jr., Gonzalo A. de la Melena Jr., Carol S. Eicher, Susan T. Flanagan, Ted N. Geisler, Paula J. Sims, William H. Spence, Kristine L. Svinicki, and James E. Trevathan Jr. To learn about our nominees with respect to their backgrounds and their qualifications to serve as directors, we refer you to our 2026 proxy statement.
Thank you, Shirley. I declare that the nominations are now closed. The second item of business is an advisory vote to approve our executive compensation program as set forth in our 2026 proxy statement. The third item of business is the ratification of the audit committee's appointment of Deloitte & Touche LLP as the company's independent accountant for the year ending December 31st, 2026. This concludes the presentation of the items of business that are properly before the meeting. I now declare the polls closed. Shirley has been provided with the preliminary vote results from the election inspector. Shirley, will you please now share that report with our shareholders?
The election inspector's preliminary report indicates that all the director nominees have been elected. The proposal on the executive compensation program received a majority of the votes cast, and the shareholders ratified the appointment of the independent accountant.
The election inspector will provide the company with a written report on the final vote count at a later date. The formal portion of today's meeting is adjourned. Before we move into the Q&A portion of the meeting, I want to take a few minutes to talk about where Pinnacle West and APS stand and where we're headed. This year is especially meaningful for us because APS is marking its 140th anniversary. Throughout that time, APS has served Arizona and powered the growth that has shaped the state from the territorial days to today's period of extraordinary expansion. Few institutions have been as consistently dedicated to the people and prosperity of this state's progress. That legacy carries a clear responsibility to deliver safe, reliable, and affordable energy while building the infrastructure needed to support Arizona's continued growth and economic diversification for generations to come.
Today, Arizona is undergoing one of the most transformative periods in history. Population growth, the rise of new industries, and the rapid expansion of advanced manufacturing and data centers are reshaping the state's economy. Pinnacle West and APS are at the center of that transformation. Growth across our service territory remains strong. In 2025, weather-normalized sales increased 5%, while customer growth stayed robust at 2.4%. Demand from commercial and industrial customers continues to accelerate, driven by a variety of sectors such as advanced manufacturing and data centers, including investments from companies like TSMC, Microsoft, and Amkor Technology. Looking ahead, we expect overall sales growth of 5%-7% annually through the end of the decade. Meeting this demand reliably and affordably requires disciplined investment and strong execution.
This year, we're on track to bring online 2,100 MW of new generation and storage resources following more than 1,600 MW added last year. We also plan to add up to 2,000 MW of flexible natural gas generation to meet Arizona's growing around-the-clock energy needs. In addition, we've outlined more than $6 billion in transmission investments over the next 10 years to connect new customers and resources while securing a resilient and reliable grid. At the same time, we're being intentional about affordability for our customers. Our growth pays for growth strategy ensures new large customers, such as data centers, fund the resources they require while protecting existing residential and small business customers from cost shifts. Reliability remains central to everything we do. Our system consistently performs well under challenging conditions, supported by assets like Palo Verde Generating Station and our other highly available generation resources.
APS is nationally recognized for reliability, reflecting decades of careful planning and operational excellence throughout our 140-year history. Last year, we achieved solid financial results, ending at the upper range of our updated earnings guidance thanks to robust customer and sales growth, along with disciplined cost management. Pinnacle West completed its largest-ever long-term debt issuance, demonstrating investors' trust in our approach, and our board raised the dividend for the 14th year in a row. At the same time, we're investing for the future, nearly $8 billion in capital through 2028 to strengthen the grid and support continued growth, all while delivering exceptional customer experience. Importantly, our operating and maintenance costs per MWh rank in the top quartile among our peers, reinforcing our ongoing commitment to customer affordability. That commitment is front and center in our current rate case.
The comprehensive application is designed to modernize our regulatory framework, reduce regulatory lag, enable more gradual rate changes for customers, and support timely investment in one of the fastest-growing regions in our country. We expect a decision later this year, and we remain focused on achieving a constructive outcome for customers, communities, and shareholders. Execution of our strategy ultimately depends on our people. We're investing in new talent development programs, expanding our leadership capabilities, and growing the tools and technologies our employees use every day, including artificial intelligence to support the grid of the future. Our employees care deeply for our customers and have embraced the challenge of expanding the grid at an unprecedented pace. This is reflected in our operational performance, customer satisfaction, and community engagement.
As we look ahead, our priorities are clear: deliver safe, reliable, and affordable energy, invest in the infrastructure Arizona will need to serve our record growth, advance constructive regulatory outcomes, and continue building the capabilities needed to create long-term value for both customers and shareholders. As we celebrate 140 years of service, we do it with confidence. Not because the work is finished, but because this company has consistently demonstrated its ability to plan ahead, adapt, and deliver. Thank you for your continued confidence and investment in Pinnacle West. We're proud of what we've accomplished together and even more excited about what lies ahead. We now have a video, then we'll return to answer the submitted questions. For those participating by telephone, there will be silence on the line while the video plays.
It started with a single streetlamp in 1886. Before Arizona was even a state, a commitment was made to a small, growing community in the desert. From that first glimmer of possibility, our focus has been simple: to provide safe, reliable energy you can count on. For 140 years, that promise hasn't changed. We've been here through every chapter of Arizona's story, supporting the growth of its communities, its economy, and its appeal. From making mining possible to producing a booming metropolitan area and operating one of the nation's largest power producers for the desert Southwest, our balanced, diverse resources power your local coffee shop, hospitals, schools, and keep your home cool during the extreme heat of summer.
As we look toward the next century, we are transforming our energy grid, embracing innovative technologies, and investing in our dedicated team while continuing to deliver the safe, reliable energy that has and will continue to power Arizona. 140 years of service isn't just a milestone for us. It's a celebration of our customers, our people, and the communities we all call home. Arizona Public Service, committed to serving Arizona since 1886.
Adjust the AC, plug in your cellphone, and start making dinner. Reliable energy is critical for everyday life. What makes energy reliable? To keep power reliable, no matter the season or weather, APS uses a diverse mix of energy sources. What's in our energy mix? Resources like nuclear, natural gas, wind, solar, energy storage, coal, and programs that help customers use less energy during times of high demand are all part of our diverse energy mix. Let's take a look at how these resources show up on a hot summer day to keep your power reliable. The clean, carbon-free nuclear power we produce at Palo Verde Generating Station is the foundation, staying steady no matter the season. Coal from our one remaining coal plant, shown here in orange, also provides power around the clock. Other resources help support customers at different times.
Natural gas, shown in purple, supports 24/7 reliable service. It delivers when energy use is high and helps fill in gaps when solar and wind aren't available. Natural gas is an important partner to renewable resources, shown here in green, largely solar and wind, and battery energy storage, shown in blue. Solar, wind, and energy storage are important cost-effective parts of our diverse energy mix. If energy is available, we can buy it from the market to meet customer needs. Energy saving programs play an important role too by helping customers use less energy during times of high demand. We're constantly studying how much energy customers will need in the future. We look at things like how Arizona is growing, new technology, and changes in the weather to help us select cost-effective and reliable energy sources.
Every three years, the results are publicly filed with the Arizona Corporation Commission in an Integrated Resource Plan. We also use a competitive purchasing process to select the projects that are the best fit and give you the most reliable power at the least cost. We participate in regional energy markets, which help keep bills as low as possible for customers. Every day of the year, a diverse energy mix makes the system more resilient. It's critical to how we meet Arizona's growing energy needs while keeping power reliable and bills as low as possible. Arizona's energy future is bright, and we value the opportunity to power ahead with you. You can learn more at aps.com/resources.
Whether it's wildfires during the spring and monsoon, during the summertime, snow events during the winter months, we're always looking at the weather. My name's Tony Merriman. I'm a meteorologist here at APS. One of the tools that we're using are weather stations that helps us verify any kind of forecast that we have. We also use cameras to look for wildfires, or we can, during monsoon season, see thunderstorms rolling in to different areas. We use Pano AI cameras to help detect wildfires in real time. As far as wildfire mitigation is concerned, early detection means early suppression. APS is an integral part of the communities. We work a lot with our fire partners and the state and federal partners as well to give them information as soon as we know.
If there needs to be a response, the response time is reduced by quite a bit because they have the advance notice. I get to come into work with great meteorologists. I work with great data analysts. The fire mitigation team is just such a great group to work with. I get to see and work with the best of the best in the state.
Energy means different things to different people. It's the caffeine in our coffee, the music in our heads, the connection between people. At APS, energy is our heartbeat. Energy is more than our business. It's our passion, a steady rhythm that powers Arizona today and tomorrow. We power our communities through service, volunteering our time, partnering with organizations across the state, supporting those in need, providing resources for schools and teachers, and offering programs that lend a helping hand when it's needed most. We power Arizona through partnerships, working with first responders to help ensure safety around electrical equipment, training, preparing, and using advanced tools like a network of AI cameras to help detect wildfires faster. When the unexpected happens, we are ready to restore power quickly and safely. We support Arizona's small businesses, fueling economic growth through collaboration and innovation.
When our cities and towns thrive, Arizona thrives. We're powering Arizona forward with investments to deliver reliable energy to withstand extreme heat, powerful storms, and whatever Mother Nature sends our way. We're planning for Arizona's future with a diverse energy mix built on reliability, flexibility, and keeping costs manageable. We're enhancing the customer experience, making it easier, faster, and more responsive. At APS, we're not just powering communities. We're powering possibility. We're powering Arizona.
I hope you enjoyed that video which shows how hard our team works every day to serve our customers and how proud we are of their ability to deliver exceptional customer service while creating value for our shareholders. We'll answer questions submitted during the meeting. I've got a few questions to go through that we're happy to provide a response for. I'll read two questions at once because they both are related. One is, "How does the company balance the data center demands versus those of other consumers?" The second related question is, "Has the rise of data centers created unforeseen growth for the company?" Both are very relevant questions to today's operating environment. First I'll say that the data center demand is truly extraordinary, not just in Arizona, but across the country.
It's really one of the most exciting changes that our industry is experiencing because the scale of data centers is significant. The impact on their ability to be built and therefore serve society's needs is real and critical to our economy's future. We're working very hard to build the infrastructure necessary to be able to serve these large customers. In doing so, we wanna do it responsibly while not jeopardizing reliability or affordability of the grid. We've adopted three principles that guides all of our planning. The first of those principles is to ensure that we never take on more data center demand than what our grid can handle, and therefore make sure that we do not put reliability at risk for all existing customers.
That's why we've established a data center queue that ensures that data centers that have expressed an interest in connecting to our grid need to wait to be able to connect to the grid so that it coincides with our ability to build the infrastructure sufficient to serve them while not jeopardizing reliability for all others. The second principle we call growth pays for growth. This means that all the incremental infrastructure necessary to be able to serve these large exceptional customers, like data centers, is paid for by data centers without creating a cost shift to other customer classes. That's a central part of our rate case application that's in front of the Arizona Corporation Commission today. The third principle is to ensure that we're always preserving enough available grid capacity to support what I would call non-data center organic growth needs of the service territory.
Meaning, we want to make sure that we're able to responsibly serve the next housing development, the next grocery store, the next small business, and purposely plan for readily having available enough grid capacity to support society's ongoing electric demand, while still keeping up with data center demand in a responsible way. Those three principles have served us well. It's allowed us to be able to commit to over 4,500 MW of data center demand today, which is more than half of our entire electric demand of the service territory today. It's also allowed us to be thoughtful about making sure we don't take on more data center demand than what the grid can handle, while also modernizing rates to ensure that growth pays for growth.
I also wanna note that, while data center demand is a important part of our growth story now and into the future, one of the differentiating factors of our service territory and the value we'll be able to create for Pinnacle West shareholders is the diversity within our growth. Data centers is a key element of our growth demand, but we also are benefiting from sustained high growth from residential customers as well as small to medium-sized business customers and advanced manufacturing. TSMC, Amkor, and others are examples of chip manufacturing that is locating in our service territory, which is creating exciting demands for increased electric usage as well as jobs and other ancillary benefits to the service territory.
It's that diversity and growth that is really benefiting our company over the long term, creating increased demand across a wide variety of sectors and strengthening the local economy within Arizona. The next question is about whether a federal regulatory environment has created a tailwind for the company and if state regulations are supporting this tailwind. We have seen outsized attention on our federal government trying to transform a lot of the processes related to supporting the increased growth needed for energy infrastructure. A couple that I'm most excited about is some of the reforms we've seen relative to permitting and siting of energy infrastructure, such as FERC reforms, where the process time to be able to get applications approved for large infrastructure projects is getting faster.
We appreciate the federal government's attention on advancing those reforms to be able to bring new infrastructure to life quicker than it may once have been. We're also seeing exciting reforms in the Nuclear Regulatory Commission, both around the ongoing responsibilities the NRC has for the existing nuclear fleet, but also their focus on fast-tracking permitting for new nuclear, which we believe is gonna be a key part of our industry's generation capacity well into the future. Those are two examples where we are seeing support from the federal regulatory environment to help aid in the substantial grid expansion that our service territory and our country is undergoing. The last question is around whether we're seeing increased encroachments from competition in areas that we operate.
While we operate a vertically integrated utility that is the sole service provider within our service territory and we have the obligation to serve that service territory, we do hear from time to time certain new large customers like data centers exploring whether behind-the-meter generation would be an option for them as a way to be able to accelerate their ability to build their infrastructure and get electric service. While any of those customers are free to be able to install their own behind-the-meter generation to serve themselves, to the extent that they still want to be connected to the grid, even if the intent is just for backup purposes, that then requires us to still build the same level of infrastructure, even if we were to be a backup service provider, as if we were the primary service provider.
Those customers still then need to wait and ensure that they're bringing their own load demand online coincident with our ability to build generation and transmission to reliably serve them. To date, we've not had such examples of large customers choose to install their own behind-the-meter generation for the purpose of being their own primary service provider because they've expressed a recognition of the benefits of having defense in depth of the grid and the full backup of the scale and resiliency that the grid offers. We'll continue to monitor that situation as data center demand continues to increase across the entire country. Thank you for those questions. If questions do come to mind between now and the next annual meeting, you can contact our investor relations team by going to our website and clicking on the investors tab.
Thank you for your continuing support. We look forward to a productive and rewarding year ahead. The annual meeting is now adjourned.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.