Pinnacle West Capital Corporation · NYSE:PNW
Pinnacle West Capital — Q3 2024 Earnings Presentation
29 slides from Pinnacle West Capital's earnings presentation, Nov 6, 2024
Slide 1: Renewed, Reliable and Resilient
Renewed, Reliable and Resilient Third-Quarter 2024 Financial Results November 6, 2024
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains forward-looking statements based on current expectations, including statements regarding our earnings guidance and financial outlook and goals. These forward-looking statements are often identified by words such as “estimate,” “predict,” “may,” “
Slide 3: Third-Quarter results
Third-Quarter results Q3 2024 vs Q3 2023 O&M1 Operating Pension & D&A OPEB non- Revenue less Fuel Interest, net All other2 and Purchased AFUDC service Income Power1 credits, net taxes3 Operating Revenue less Fuel and Purchased All Other Power Share dilution4 $ (0.10) 2022 GRC impacts $ 0.64 2023 BCE
Slide 4: 2024 EPS guidance
2024 EPS guidance Key Factors and Assumptions (as of Nov 6, 2024) 2024 Adjusted gross margin (operating revenues, net of fuel and $3.09 – $3.15 billion purchased power expenses, x/RES,DSM,CCT)1 • Retail customer growth of 1.5%-2.5% • Weather-normalized retail electricity sales growth of 4.0%-6.0% •
Slide 5: 2025 EPS guidance of $4.40 - $4.60
2025 EPS guidance of $4.40 - $4.60 2025 vs 2024 $5.10 $0.26 $(0.20) $(0.07) $0.24 O&M1 D&A Other taxes $(0.15) $0.83 Operating Interest, net $(0.28) Weather Revenue less AFUDC Pension & $4.50 Fuel and OPEB non- $(0.40) Purchased service All other Power1 credits, net Operating Revenue less Fuel and A
Slide 6: 2025 EPS guidance
2025 EPS guidance Key Factors and Assumptions (as of Nov 6, 2024) 2025 Adjusted gross margin (operating revenues, net of fuel and $3.13 – $3.19 billion purchased power expenses, x/RES,DSM,CCT)1 • Retail customer growth of 1.5%-2.5% • Weather-normalized retail electricity sales growth of 4.0%-6.0% •
Slide 7: Key drivers & assumptions for 2025 EPS guidance
Key drivers & assumptions for 2025 EPS guidance 2025 EPS guidance of $4.40-$4.60 key drivers1 Long-term guidance and key drivers1,2 Retail customer growth of Depreciation, amortization and • Long-term EPS growth target of 5%-7% off 1.5%-2.5% property taxes due to higher original 2024 midpoint pl
Slide 8: Capital plan to support reliability and continued growth
Capital plan to support reliability and continued growth within our service territory APS Total 2024-2027 $9.65B CapEx Profile Today $2.65B $2.55B $2.40B $2.05B $870 $950 Q4 2023 $905 $790 Generation Transmission $675 $750 $9.65B $450 Distribution $320 Other $7.80B $665 $670 $620 $675 $320 $380 $335
Slide 9: Rate Base growing within our service territory
Rate Base growing within our service territory Current Approved Rate Base and Test Year Detail End-of-Year Rate Base and Growth Guidance ACC FERC ACC FERC Rate Effective Date 03/08/2024 06/01/2024 $3.2 Test Year Ended 6/30/20221 12/31/2023 $2.11 Equity Layer 51.93% 49.64% Allowed ROE 9.55% 10.75% $1
Slide 10: We are focused on cost control and customer affordability
We are focused on cost control and customer affordability Operations & Maintenance Guidance O&M Guidance (millions) • Reduced year-over-year core O&M excluding planned outages • Final planned major outage in Q4 2024 at Four $65 - $75 Corners Unit 5 Planned $55 - $65 • Unit 4 final planned major outa
Slide 11: Optimized financing plan to support balanced capital structure
Optimized financing plan to support balanced capital structure 2025-2027 Financing Plan Funding Strategy • External equity to support balanced Approx. $7.6B APS capital structure and expanded, accretive capital investment $700-900M • Equity needs < prior targeted 40% $500M-700M PNW Equity of new cap
Slide 12: Maintaining healthy credit ratings to support affordable growth
We are focused on maintaining healthy credit ratings to support affordable growth1 Balance Sheet Senior Targets Corporate Unsecured Short-Term • Solid investment-grade Ratings Ratings Ratings Outlook credit ratings APS • APS equity layer >50% • PNW FFO/Debt range Moody’s Baa1 Baa1 P-2 Stable of 14%-
Slide 13: Debt maturity profile shows well managed and stable financing plan
Debt maturity profile shows well managed and stable financing plan ($millions) APS Fixed APS Floating PNW Fixed PNW Floating $1,200 $1,000 $800 $600 $400 $200 $0 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050 As of September 30, 2024 13
Slide 14: Appendix
PINNACLE \WEST CAPITAL CORPORATION
Slide 15: Progress towards our Clean Energy Commitment
We are making progress towards our Clean Energy Commitment Progress Since 2020, have contracted over 8,500 MW of clean energy and storage expected to be in service for APS customers by end of 2028 Preparing 2024 All-Source RFP as load demand continues to increase in APS service territory Successfull
Slide 16: SRB will expand our capacity to self-build generation
SRB will expand our capacity to self-build generation to meet customer need with reduced lag System Reliability Benefit Surcharge Key Features • Projects that compete on cost and reliability from All-Source Request for Proposals • Determines prudency of new generation between general rate cases • In
Slide 17: Transmission expansion will drive increased capital investment
Transmission expansion will drive increased capital investment Support Increase customer Access to resiliency growth markets Making progress on multiple strategic transmission opportunities as part of 2025-2027 capital expenditure plan Length Est. In- Line Voltage Status (miles) Service Sundance to
Slide 18: Arizona attractive service territory with strong customer growth
Arizona continues to be an attractive service territory with strong customer growth Arizona economy continues to New APS Customer Meter Sets be robust and attractive 40,000 • Maricopa County ranked #1 for 30,000 economic development by Site Selection 20,000 magazine 10,000 • In 2023, Maricopa County
Slide 19: Arizona’s commercial and industrial growth is diverse
Arizona’s commercial and industrial growth is diverse Source: Arizona Commerce Authority 19
Slide 20: Residential PV Applications
Residential PV Applications 5,000 Residential DG (MWdc) Annual Additions 4,500 216 169 200 81 4,000 3,500 2021 2022 2023 2024 3,000 2,500 2,000 1,500 1,000 500 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2021 Applications 2022 Applications 2023 Applications 2024 Applications 1 Monthly data equ
Slide 21: Renewable Energy & Demand Side Management expenses
Renewable Energy & Demand Side Management expenses1 ($ in millions pretax) Renewable Energy Demand Side Management $50 $45 $40 $35 $30 $26 $25 $20 $16 $18 $19 $20 $12 $21 $15 $10 $17 $18 $15 $16 $15 $14 $5 $9 $0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 1Renewable Energy and Demand Side Management expenses are substa
Slide 22: 2024 gross margin effects of weather
2024 gross margin effects of weather Variances vs. Normal ($ in millions pretax) $95 $35 ($1) Q1 Q2 Q3 Q4 2024 Total Weather Impact: $128 Million All periods recalculated to current 10-year rolling average (2013 – 2022). Numbers may not foot due to rounding. 22
Slide 23: 2024 Planned Outage Schedule
2024 Planned Outage Schedule Coal, Nuclear and Large Gas Planned Outages Q1 Q2 Q4 Actual Duration in Actual Duration in Estimated Duration Plant Unit Plant Unit Plant Unit Days Days in Days Redhawk CC1 66 West Phoenix CC5 47 Palo Verde 2 36 West Phoenix CC5 71 Palo Verde 3 37 Four Corners 5 66 23
Slide 24: 2025 Planned Outage Schedule
2025 Planned Outage Schedule Coal, Nuclear and Large Gas Planned Outages Q1 Q2 Q4 Estimated Duration Estimated Duration Estimated Duration Plant Unit Plant Unit Plant Unit in Days in Days in Days Redhawk CC2 61 Palo Verde1 1 36 Palo Verde 3 36 Four Corners 4 65 1Outage scheduled to begin at end of Q
Slide 25: Non-GAAP Measure Reconciliation
Non-GAAP Measure Reconciliation 2024 Guidance3 2025 Guidance3 Operating revenues1 $5.06 - $5.15 billion $5.20 - $5.30 billion Fuel and purchased power expenses1 $1.83 - $1.86 billion $1.93 - $1.97 billion Gross Margin $3.23 - 3.29 billion $3.27 - $3.33 billion Adjustments: Renewable energy and deman
Slide 26: 2024 Key Regulatory Dates
2024 Key Regulatory Dates Case/Docket # Q1 Q2 Q3 Q4 Rate Case Limited Rehearing Rate Case Limited Rehearing Direct Testimony Filed Sep. Rebuttal Testimony Filed Oct. 18 2022 Rate Case E-01345A-22-0144: Rates effective March 8 Rate Case Limited Rehearing 24 Began Oct. 28 Power Supply Adjustor (PSA) E
Slide 27: Wildfire Mitigation
Wildfire Mitigation Our wildfire preparedness and mitigation strategy is comprehensive and multi-faceted: Vegetation Grid hardening Asset Monitoring and Operational management investments inspection awareness mitigations • Comprehensive right- • Ongoing distribution • Enhanced line • Dedicated team
Slide 28: Consolidated Statistics
Consolidated Statistics 3 Months Ended September 30, 9 Months Ended September 30, 2024 2023 Incr (Decr) 2024 2023 Incr (Decr) ELECTRIC OPERATING REVENUES (Dollars in Millions) Retail Residential $ 967 $ 883 $ 83 $ 2,057 $ 1,835 $ 222 Business 722 649 72 1,793 1,572 221 Total Retail 1,688 1,533 156 3
Slide 29: Consolidated Statistics
Consolidated Statistics 3 Months Ended September 30, 9 Months Ended September 30, 2024 2023 Incr (Decr) 2024 2023 Incr (Decr) ENERGY SOURCES (GWH) Generation Production Nuclear 2,557 2,524 32 7,298 7,022 276 Coal 2,271 2,127 144 5,762 5,325 437 Gas, Oil and Other 3,075 2,971 103 6,445 6,800 (355) Re
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