Fitch affirms Pinnacle West, Arizona Public Service

Fitch Ratings said it affirmed the A- long-term issuer default ratings of Pinnacle West Capital Corp. and its vertically integrated electric utility subsidiary, Arizona Public Service Co.

The outlooks are stable.

Additionally, the agency affirmed the F2 commercial paper and short-term ratings of both Pinnacle West and Arizona Public Service.

Roughly $5.5 billion of long-term debt is affected by this action.

Fitch said the affirmations reflect solid operating performance at the electric utility, strong credit metrics, an improving service territory economy, and assume no material increase in parent level debt through the forecast period.

The agency views the Arizona Corp. Commission's (ACC) approval of the settlement agreement in Arizona Public Service’s 2016 General Rate Case, including the decision to transition the net metering tariff toward an avoided cost rate as supportive of credit quality.

Fitch added that it expects the ACC to continue to address rate design regarding energy efficiency and distributed generation in a balanced manner.

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