Pinnacle West Capital Corporation (PNW) Q2 2026 Earnings Report, Transcript and Summary

Good day, everyone, and welcome to the Pinnacle West Capital Corporation 2026 Second Quarter Earnings Conference Call. [Operator Instructions] It is now my pleasure to hand the floor over to your host, Amanda Ho. Ma'am, the floor is yours.

Thank you, Matthew. I would like to thank everyone for participating in this conference call and webcast to review our second quarter earnings, recent developments and operating performance. Our speakers today will be our Chairman, President and CEO, Ted Geisler; and our CFO, Andrew Cooper. Jacob Tetlow, COO; and Jose Esparza, SVP of Public Policy, are also here with us. First, I need to cover a few details with you. The slides that we will be using are available on our Investor Relations website, along with our earnings release and related information. Today's comments and our slides contain forward-looking statements based on current expectations and actual results may differ materially from expectations. Our second quarter 2026 Form 10-Q was filed this morning. Please refer to that document for forward-looking statements, cautionary language as well as the risk factors and MD&A sections, which identify risks and uncertainties that could cause actual results to differ materially from those contained in our disclosures. A replay of this call will be available shortly on our website for the next 30 days. It will also be available by telephone through August 11, 2026. I will now turn the call over to Ted.

Thank you, Amanda, and thank you all for joining us today. We had a solid second quarter, supported by disciplined execution across the business. Before Andrew walks through the results and our updated outlook, I'd like to share a few updates on recent operational and regulatory developments. Arizona's economy remains on a strong and sustainable growth trajectory, further cementing the state's standing as a national leader in semiconductor manufacturing and advanced technology. A major highlight this quarter was Taiwan Semiconductor Manufacturing Company's announcement of an additional $100 billion investment in Arizona, bringing its total commitment to $265 billion. TSMC now plans to develop up to 12 leading-edge fabrication and advanced packaging facilities in North Phoenix, along with the dedicated research and development campus, and the ripple effect goes well beyond TSMC's own facilities. Nearly 20,000 acres of surrounding land are now in various stages of planning and development, giving rise to an entirely new economic corridor in the region. Halo Vista is a great example. Development is already underway with the first tenant expected to arrive in the first half of next year. Over the next decade, the project is expected to grow to approximately 30 million square feet of mixed-use development and about 9,000 residential units. It's just one illustration of the sustained growth we're seeing across our service territory. To meet that growth, our all of the above resource strategy is built to keep pace while continuing to deliver reliable and affordable service every day to our customers. Recently, we announced our intent to convert 2 retired coal-fired units at the Cholla power plant to natural gas. Once complete, the project is expected to provide approximately 380 megawatts of reliable, dispatchable generation by 2029. By repurposing existing infrastructure and transmission assets, we're able to reliably serve growing demand while maximizing the affordable value of assets already in place. Generation investment alone won't be enough to support Arizona's long-term growth. That's why we're also making significant investments in transmission with multiple projects underway and additional opportunities under development. These investments enhance system reliability and resiliency, improve integration of new resources and expand access to regional markets and out-of-state generation. Importantly, they also benefit from constructive and timely recovery through our FERC Formula rate while creating opportunities for additional wheeling revenue that helps support affordability for our retail customers. Turning to our rate case. We concluded 31 days of hearings on July 7 and have now moved into the briefing phase. Initial briefs are due August 27, with reply briefs due September 11. We expect the administrative law judge to issue a recommended opinion and order later this year, which would then advance to the commission for consideration. Based on this procedural schedule, we continue to expect a final commission decision before year-end. Throughout this process, we remain focused on achieving a constructive outcome and consistent framework for recovering ongoing investments in order to support Arizona's growth and our customers' future energy needs. As we move through the summer season, I'm proud of how our team continues to deliver top-tier reliable service amid extreme heat. Reliability is at the core of our mission, made possible by disciplined planning, thoughtful resource procurement and exceptional execution across the organization. I want to recognize our planners, engineers, operators, field personnel and all our team members for their commitment and dedication to serving our customers safely and reliably through the summer months so far. On August 2, we reached a new all-time peak demand record of 9,164 megawatts, exceeding last year's record by more than 500 megawatts. This record is a clear signal of the growth underway in our service territory and our performance this summer demonstrates we're ready for it. We're also continuing to strengthen our customer-centric culture and enhance the experience we provide to our customers. A key focus is delivering a strong billing and payment experience by offering customers flexible options and support tailored to their needs, including budget billing, flexible payment arrangements and programs designed to help customers better manage their overall energy costs. Investments in digital platforms, customer communications and self-serve capabilities remain an important part of our strategy to improve service, increase engagement and ultimately lower costs over time. And those efforts are producing meaningful results. In the second quarter, APS achieved strong performance in Escalent's customer relationship index, ranking in the first quartile for business customer satisfaction and the second quartile for residential customers, reflecting continued progress in building trust, delivering value and creating a seamless customer experience. In closing, we remain focused on building the infrastructure needed to support Arizona's growth, maintaining reliable and affordable service for our customers and advancing our key regulatory initiatives. The momentum and exceptional growth we're seeing across our state underscore just how important this work is, and we look forward to continuing to deliver for our customers, communities and shareholders through the remainder of the year. With that, I'll turn the call over to Andrew.

Thank you, Ted, and thanks again to everyone for joining us today. This morning, we reported our second quarter 2026 financial results. I will walk through the key drivers behind our performance and provide some additional details for the quarter. We earned $1.43 per share during Q2, a decrease of $0.15 compared to the second quarter of 2025. Higher interest net of AFUDC, higher depreciation and amortization due to higher plant balances and lower transmission revenue were the primary negative drivers for the quarter-over-quarter comparison. These drivers were partially offset by beneficial weather and higher sales growth and usage. Weather was a benefit during the quarter. The early start to triple-digit temperatures in the valley and higher average temperatures each month of the quarter compared to the same period last year contributed to increased cooling demand. Customer and sales growth continues to be strong, contributing approximately $0.11 of quarter-over-quarter earnings benefit. We achieved 2.1% customer growth and weather-normalized sales growth of 9.6% compared with the second quarter of last year. While we are not updating our 2026 sales growth guidance at this time, year-to-date weather-normalized sales growth has tracked more closely with our longer-term outlook. Residential sales growth came in strong at 5.6%, and commercial and industrial sales also continued to perform exceptionally well, increasing 12.7% during the quarter, driven by the ongoing expansion of a diverse mix of data center and advanced manufacturing customers. O&M expense declined modestly compared with the second quarter of last year. We remain committed to our long-term objective of reducing O&M expense on a per megawatt hour basis over time. Across the organization, we continue to identify opportunities to improve efficiency, reduce risk and manage costs responsibly while maintaining the high level of service and reliability our customers expect. Interest expense increased year-over-year, reflecting higher debt balances and a higher interest rate environment. Depreciation and amortization expense also increased as investments such as Agave, Ironwood and Sundance were placed into service. These resources are providing critical capacity needed to support customer growth and maintain system reliability and are key components of our pending rate case. Transmission revenues were lower in the quarter due primarily to a final true-up adjustment related to 2025. We continue to execute well on our capital investment program and financing strategy while actively managing upcoming debt maturities. Although we are not updating our capital expenditure guidance today, it is important to note that our current outlook does not include the recently announced Cholla conversion project. We expect that project could add up to approximately $440 million of incremental capital investment, mostly in 2027 and 2028. Turning to financing. We continue to be opportunistic with the use of our ATM and have utilized all remaining capacity from our existing $900 million ATM equity program. Earlier this morning, we announced the filing of a new $500 million ATM program that will provide ongoing funding flexibility consistent with our current equity financing guidance. Additionally, in the second quarter, we successfully issued $500 million of senior unsecured notes at Pinnacle West to refinance our maturing notes and support our broader funding strategy. We continue to be deliberate in our financing plan to support a balanced capital structure and strong balance sheet and seek advantageous financing opportunities. Based on our strong execution through the first half of the year, we are reiterating all other aspects of our guidance and currently expect to finish the year at the top end of our earnings guidance range of $4.55 to $4.75 per share. As always, we remain mindful of the potential impacts of weather and sales variability during the remaining summer months and we'll continue to monitor both closely. Overall, we remain focused on executing our strategy, investing to support Arizona's continued growth, maintaining financial discipline and delivering long-term value for our customers and shareholders. This concludes our prepared remarks. I will now turn the call back over to the operator for questions.

Your first question is coming from Shar Pourreza from Wells Fargo.

It's actually Alex on for Shar. Just wanted to touch on the retail sales growth you're seeing, you've exceeded expectations again this quarter. So with the third quarter being your biggest quarter, do you see this level of growth continuing at this pace for the remainder of the year? And just how are you thinking about the sales guidance longer term? Is this something you could consider revisiting just given the magnitude of growth you are already seeing across your footprint?

Sure, Alex. It's Andrew. Thanks for the question. It was a robust quarter from a sales growth perspective. And I think the key hallmark of it was the diversity of that growth across residential and across our C&I. And even within C&I, that diversification across a number of data centers ramping up as well as the continued build-out of the semiconductor ecosystem. And as I mentioned in the prepared remarks, this was a lot closer to our long-term sales growth guidance range, which we provided through 2030, which is 5% to 7% relative to the 4% to 6% that we're showing for this year. There certainly is upside potential to the sales growth range. I think as importantly, there is a sustained runway of that very robust level of sales growth. If you think about the residential side, while some of what drove this quarter was customer behavior, some of it was a secular trend towards higher usage per customer. And I think that derives in part from a saturation of energy efficiency and distributed generation on our system. It's also supported by the continued customer growth that we're seeing. We were at 2.1% for the quarter, again, above the midpoint of our customer growth guidance range. So certainly continuing to see residential outperform relative to our expectations and that sustained inflow of people as opportunities for jobs in Arizona continue to grow is something that we would expect to continue to see. And on the C&I side, 12.7% for the quarter. If you think about it, our long-term range is 4% to 6% for C&I, 5% to 7% total, 4% to 6% to the large C&I. Given C&I is half of our sales, that 12.7% corresponds to something above 6%, if you kind of divide it by 2, which suggests that we're at or above the top end of our long-term C&I growth rate. And the fact that, that 4,500 megawatts of large C&I that's ramping up, that ramp continues even beyond that guidance period, right? It takes beyond 2030 to get to the full ramp-up of that 4,500 megawatts would suggest that the run rate continues and that certainly is a pace -- as we look at the ramp, we'll continue to monitor the pace and see if there is upside to the guidance that we're providing.

Got it. Makes sense. And then just maybe just touching on the upcoming IRP filing. Maybe just a little -- if you could provide a little insight into sort of how you're thinking about the filing and how that is shaping up around the 4.5 gigawatts of committed load. With the TSMC recent announcement, is that already assumed in the 20 gigawatts of uncommitted load? Or is that incremental? And just are you -- do you remain on track to file by the end of October?

Yes. Thanks, Alex. We're on track to file the IRP by the end of October. And our approach to that remains the same, which is we will include in the load forecast all committed customer growth, that will include the full intended build-out of TSMC because we're continuing to commit to support their full investment plan. So we continue to work with TSMC on what their announcement means in terms of timing of that capacity addition as well as what the ramp looks like. And as we continue to get more confirmation and clarity on that, that will make its way into the IRP and our intention is to have our latest thinking on that, combined with all our other committed customer growth included in the IRP. As we contract for specific projects from the uncommitted queue, then that would be above and beyond what we assume in the IRP, and you would then add corresponding resources with that to be commensurate with those load additions.

Your next question is coming from Richard Sunderland from Truist Securities.

I just wanted to follow up on that last point and try to understand, again, sort of the TSMC update, where I know we'll see more details in the IRP, but what exactly it means for those additional conversations in the uncommitted queue in your Desert Sun plant opportunity overall? Could you speak a little bit more to kind of those knock-on effects out of the TSMC announcement and how you think that impacts the uncommitted side of the opportunity over the next 12 months?

Yes, sure, Richard. So just stepping back for a moment, TSMC is now committed to 12 facilities that includes both their fabs as well as advanced packaging. And then in addition to that, of course, is the R&D part. There's also a continued acceleration of schedule for them as we work to be able to support their build-out. And I think we've mentioned before their prior commitment prior to this incremental $100 billion investment was over 1 gigawatt of demand. We're working with them now on what this incremental investment means in terms of additional capacity, timing of ramp for all facilities. We're committed to be able to meet their needs and be able to serve them, but we're refining with them now on timing expectations, facilities needed to be able to support it and what the full build-out means in terms of electric demand. So details on total capacity ramp schedule, et cetera, are being finalized, and we'll provide that update as we finalize it with TSMC, but our intent is to have it included in the IRP by the end of October when we file it, given that it is part of our committed customer group. With respect to the uncommitted queue, we continue to be in negotiations on potential projects that may come from that. It's too early to be able to offer any more details and our intent would be as we're able to finalize a contract or contracts from that uncommitted queue that when those are filed, we'd be prepared to detail what that means in terms of incremental capacity and demand coming from the uncommitted queue.

Understood. And then I guess, in consideration of the Cholla conversion announcement and some of this other activity, how are you thinking about gas supply overall? And what are you focused on right now in terms of the Desert Southwest projects, siting -- potentially any siting challenges and what have you as that opens up incremental gas capacity in the region?

We certainly recognize that as we look in the next decade and beyond, new gas transport supply is going to be needed to continue to reliably support the growth in the region, which is why we contracted with that Desert Southwest pipeline now in anticipation of it getting in service at the end of this decade to prepare for next decade. So we feel comfortable in our ability to reliably serve the current gas supply through the end of this decade. But as we look into next decade, that pipeline is going to be critical to be able to continue to expand at the rate that we desire. The pipeline is in early stages of development, although it continues to move along as expected. We believe it's on schedule. They continue to work with stakeholders, community members, and work through the filing process. I know on July 9, FERC opened their scoping process for review. And I think the developer is doing a good job responding to feedback and ensuring that they continue to focus on planning the route where it meets the least impact as possible. We have to keep in mind, it does help that it's largely following the path of the existing pipeline that's there. This is not, I'll call it, a greenfield route where there's no pipeline that exists. The existing pipe connecting Permian Basin to Southern Arizona follows largely the same route. This will be planned in. This is just simply going alongside it for most of the way. So we feel good about that. But at this point, things seem to be moving on track, and we'll look forward to taking service from that pipe when it gets in service, and that will be important for our expansion plans in the next decade.

Your next question is coming from Julien Dumoulin-Smith from Jefferies.

I just wanted to follow up from the earlier sales growth question. I mean, how are you thinking about that transposing itself into the IRP? And then what drove the IRP move from August to the end of October? And did the scope change at all? I mean just given all the different moving parts on load and large loads here? Just can you elaborate a little bit? Should we expect the annual ramp in the resource portfolios in that filing specifically? Again, what should we be looking for in that in as much as this could be something of a clue into a more formalized update next year?

Yes, Julien, I can speak to the IRP aspect and then invite Andrew to speak to any other aspects regarding long-term load growth trends. But as we continue to finalize the analysis of the IRP and work with stakeholders, there's a lot of variables that we thought were important to try to capture accurately within this IRP. Obviously, the IRP is a snapshot in time and it seems like immediately when you file that, things continue to update. And given the volume of activity that continues to progress, we thought it was more prudent to be able to capture some of the things that were being updated this year and finalize that in the IRP. One of those being the likelihood of being able to convert Cholla, and we felt it was prudent to be able to capture that in the IRP. Another is knowing that we've been working with TSMC on their expansion plans and the desire to be able to capture the latest capacity additions and ramp schedule for them in the IRP. And then again, continuing to monitor the robust growth trends that we're seeing in the service territory and making sure that the load forecast we include in the IRP really does reflect these latest growth trends. And for all those reasons, plus ensuring we are able to take time and engage with stakeholders in a constructive manner before the filing, we felt it was better to wait until October so that we could file the most up-to-date analysis in the IRP as possible. And I think that's going to pay off because back to one of your questions, what you should expect from this IRP is really our latest thinking on the committed load growth and the ramp of that load growth. An example of that is notwithstanding the robust year-over-year weather-normalized sales growth. We've seen the TSMC fab contribution is relatively flat year-over-year. Now we expect the majority of their ramp to be coming here soon and progressing in a strong manner each year from this point out. But we want to be able to detail out in the IRP, the details of what that growth timing is coming from chip manufacturing versus data centers versus the traditional residential and C&I growth. And I think the 4.5-plus gigawatts of our committed queue, this will be the first line of sight that we're able to offer in terms of the timing of that ramp and the resources needed to be able to serve it. So that will probably be the best insight that will come from the IRP. Outside of that, it'll show the big buckets of resources needed to be able to serve it and we'll fill in those buckets as we get in the action window of each time period.

And just to clarify, this meaningfully ahead of plan sales growth thus far includes a flat TSMC thus far year-to-date, if I'm hearing you right? And then separately, in addition to that, just to clarify this. Also, how do you think about the 2025 all-source RFP? And when do you expect those decisions to land in as much as that seems to be coming in and around the time line for this IRP as well? I know you've almost got these things back to back. As we see across the industry, these kind of pancaked RFPs and IRPs, but does that dictate -- when does that come out here on the all-source here from '25?

Yes. On your first point, you're correct. The production from TSMC has been relatively flat year-over-year. The majority of their demand increases is coming very soon and will progress more rapidly as we get into next year and going forward. But I think that's noteworthy that the weather normalized growth that you saw really reflects the diversity in our service territory with robust residential, other manufacturing and small- to medium-sized business. And then, of course, the ramp of some of the existing data centers that are just now starting to occupy. But the bulk, by far, of the TSMC contribution, which is significant is yet to benefit the sales growth actuals. With respect to the RFP, we continue to finalize our evaluation of results, negotiate with counterparties on the resources and expect to be able to have some of those resources contracted by the end of the year. So as we finalize some of those contracts, we'll be in a better position to announce what comes from that RFP. But our aim is to get as far along in that process as possible at the end of this year. And then, of course, as normal, we'll roll right into another RFP when that's done.

Your next question is coming from Travis Miller from Morningstar.

Just going on the rate case. Wondering if you could characterize any thoughts, surprises, non-surprises in the conversations so far in the filings so far?

Yes. I'd say, generally speaking, we're very pleased with how the hearing wrapped up. It was a long hearing, 31 days. But that provided an incredibly robust opportunity for a very strong evidence on the record. And that's probably the best thing that came from the hearing. We have very strong evidence on the record for supporting our positions, supporting the need to be able to address regulatory lag and come up with a sustainable cost recovery framework going forward. And I also think that it's noteworthy how constructive commission staff was on many positions as well as the time that the administrative law judge took to understand the issues, understand the positions and make sure that the facts and evidence was able to be put on the record. That will help us given how substantive this case is with respect to not just the traditional recovery of revenue requirement, but more importantly, creating a new process for sustainable cost recovery going forward. That said, we're in the briefing stage. So briefs will be filed August 27 and again on September 11. And then we're in a bit of a holding pattern until the recommended order comes out here in Q4. We continue to be very confident in the ability for this case to be resolved this year. A final open meeting likely towards the end of the year, but we're on track with that schedule as we've been contemplating all year long.

Okay. Great. And then on transmission, what are the next steps? What are the signals you're looking for to start putting some of those identifying projects for the upside that you've been talking about on the transmission side?

Sure, Travis, it's Andrew. We've really begun to lean into the transmission opportunity, both to serve customer growth and advance the resiliency of our system as well as reach more out-of-footprint resources. And you could see it in the kind of shift in our CapEx plan from $300 million to $400 million or so of core transmission spending to the types of figures that you see in our 3-year guidance window towards the end of the period where those numbers are up pretty substantially. And if you look back to the beginning of this decade, we were at -- in the $200 million a year range on CapEx for transmission. So we are beginning to execute beyond those core transmission projects on our strategic transmission opportunities. We file a biannual plan with the commission, which includes a number of the projects that we're doing that, again, extend to access resources further afield, build the resiliency of the system and keep up with growth. There are some pretty large projects in there, and we're just beginning to unlock the capital associated with those. There's a substantial project that creates resiliency on the line that connects the Four Corners region into Cholla, and ultimately, down into the load pocket here. And that's a multi potential $1 billion project, several hundred mile line. And so for projects like that, we've got a great contract with our FERC Formula rate and our transmission adjuster. We collect wheeling revenue, which helps to create affordability for our existing customers. And there, it's a matter of working those projects in the development stage to ensure that we can kind of sectionalize and energize the segment so that we reduce the regulatory lag there. But we've really continued to focus on our FERC jurisdictional assets given the formula rate that we have in place here today and the massive investment needs that our transmission system has. And you see it in the results even year-over-year, we continue to grow transmission revenue. Any distortion you see in Q2 is really just a result of timing of the true-up. But year-over-year, those increases continue as we file this formula every year in June, our transmission adjuster with the commission. And so we now have new transmission rates in effect as of June as well.

Your next question is coming from Paul Patterson from Glenrock Associates.

Just a few questions left. One is there was a primary election and some people sort of were surprised by the outcome there. And I was just wondering if you had any -- what you could share, if anything, on sort of your takeaways or insights on the election and what's coming up here?

Yes, sure. I think it's important to note that we have the ability to constructively work with any commissioner. I think it was consistent with prior election results that we saw Commissioner Thompson be the top vote-getter. So that wasn't a surprise. But when you got below him, the other 2 candidates in the Republican primary, they were pretty close to one another. So while it wasn't a wide margin, it certainly did result in Chairman Myers being slightly lower than Dr. Heap, who was the higher vote-getter between the two. I think stepping back from that, though, the key that I would keep in mind and focus on is that we design our strategy around serving customers reliably at the lowest cost possible, and doing that while keeping up with unprecedented growth. And we strongly believe that's the right strategy regardless of who sits on the commission. Importantly, we execute that strategy very well. And we found over the years with commissioners that when we deliver top-tier reliability, top-tier customer satisfaction, keep residential rates below the national average like they are right now while keeping up with growth that, that should resonate with any commissioner that's on the bench. Also importantly, and I mentioned this before when we were talking about the rate case hearing that our commission staff is a very important party to constructive regulatory environment, and they aren't elected. They're a critical part of the process now and going forward and are relied upon heavily by any commissioner who sits in those seats with their expert independent analysis. And I'm very confident in our constructive working relationship we have with staff and their ability to listen to the key issues and do what's right for Arizonans. So to sum it up, we know all the candidates in this race. We're confident in our ability to earn constructive outcomes on the merits of how we do business because the merits are strong. And at the end of the day, that's what's going to carry us forward beyond any individual election.

Absolutely. Awesome. So second question is the Colorado River and just sort of national reports, looks a little dire. So I know that -- I think that Palo Verde is insulated operationally from using the Colorado River and what have you. But I guess my question is that given the drought conditions, is there any operational issue short term regarding the utility? Or any longer-term issues that this drought and this sharp reduction that the federal government is proposing, I think, with respect to Arizona's share and what have you. Is there any impact longer term, I guess, in terms of -- or near term in terms of what seems like kind of dramatic reductions in water?

Yes, Paul, we don't anticipate any operational impact at all as a result of the negotiations on Colorado River allocation. Importantly, as you said, Palo Verde operates on a 100% recycled wastewater, which we're very proud of. It's the only nuclear plant in the world not on a body of water, and we're able to maintain that sustainable operation through the wastewater treatment that we use. Also, I think it's noteworthy that we've been able to keep up with record growth while cutting our overall water usage for operations in half over the last 10 years. So we've got a pretty good sustainable story in terms of contributing to water savings as a company while keeping up with growth. With respect to the long term, certainly, there needs to be a reallocation framework designed among the lower basin states and the upper basin states to match actual water allocation with the current levels of the Colorado River. But we view that as a long-term framework that may result in changing economics for water, but there's a variety of long-term solutions that could fill in the gap in the shortfall of the Colorado River. It's just a matter of developing those long-term solutions and who pays for it. So it's more of an economic issue than it is an impact of no water supply. And Arizona has a variety of water resource supply. Colorado River being just one of them. So we're certainly paying attention to that, want to make sure that the states are able to continue to collaborate and find a durable solution that meets everyone's expectations. Arizona put forward a reasonable solution that helps reallocate water usage in 2027, 2028 that should meet the intent of the new operating guidelines. And then I know there's longer-term solutions being evaluated from there. So it's a situation to continue to monitor, but we believe it's more about long-term economics than it is water supply.

[Operator Instructions] Your next question is coming from Steve D'Ambrisi from RBC Capital. Stephen D’Ambrisi: Just a quick one. Most of my questions have been asked and answered, but just a quick follow-up on the TSMC announcement. Obviously, the ramp rate is a critical factor. But just given the commentary that TSMC's previously announced investment represented more than a gigawatt of demand. Can we use that prior $165 billion for greater than 1 gigawatt as like a rule of thumb for potential power demand from the incremental $100 billion? And just -- or if there's anything you could highlight that would potentially change the intensity per dollar of capital invested in this announcement versus prior announcements?

Yes, Steve, I think directionally, that's probably a fair general assumption, but we're still working through the details of what each fab will require as well as the ramp schedule of that. And certainly, the fabs do differ with respect to the type of chips they manufacture and the energy intensity. The more advanced the chips tends to be, the more energy intensive. And so I think there could be variation to that rule, and we'll be prepared to detail more about that when we finalize things with TSMC and hopefully able to put those details in the IRP as well. But for the purpose of just a general directional estimate, I think the way you outlined it may make sense. Stephen D’Ambrisi: Okay. And then just, again, like on the sales for the year, I mean running -- the C&I running like 13% or 14% year-to-date and that being half of your total sales. I mean, just simplistically, right, that seems like that's almost all of your -- above the top end of your long-term sales growth just at C&I. And so can you just -- is there timing or certain things ramping earlier? Or are you just really that far above because it seems like resi is going pretty well as well?

Yes. Steve, it's a combination of things, right? The ramp schedules from data center customers have always been as AI remains kind of a nascent field, our forecasting has to kind of keep up with what our customers are saying and our lived experience over the last 5 years of having data center customers. And we certainly see these levels as pretty robust. There are some elements of it that we expect would be a faster ramp. But part of it is that our customers are trying to figure out the use case going on inside their box. And so we continue to refine our own forecast as we go along and find very favorable what we're seeing from these customers as they continue to move forward. We've got half a dozen different campuses going at various stages of ramp. As Ted mentioned, not a lot of change year-over-year from TSMC, but that broader ecosystem of new manufacturers coming in and folks outside the data center industry beginning to lay down facilities in Phoenix has continued to contribute to the length of the runway. But the residential customer story was a big piece of it, and that increased usage per customer, the continued customer growth. Even though more of it now from residential is coming in the off-peak hours, which comes at a lower price, it's still contributing a positive margin overall to the story. So it's been the diversity of the growth. It's been continuing to refine the data center ramp rates as we understand what one data center is doing within the facility versus another. And just the ongoing dialogue with our customers will help us to continue to refine whether there is upside to those numbers to that long-term rate over the long term. But certainly, the runway of it is pretty robust.

That completes our Q&A session. Everyone, this concludes today's event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.