Pinnacle West Capital Corporation · NYSE:PNW
Pinnacle West Capital — Q1 2017 Earnings Presentation
20 slides from Pinnacle West Capital's earnings presentation, May 2, 2017
Slide 1: First Quarter 2017 Results
FIRST QUARTER 2017 RESULTS May 2, 2017 First Quarter 2017
Slide 2: Forward Looking Statements and Non-GAAP Financial Measures
FORWARD LOOKING STATEMENTS AND NON-GAAP FINANCIAL MEASURES 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
Slide 3: On-Going EPS Variances 1st Quarter 2017 vs. 1st Quarter 2016
ON-GOING EPS VARIANCES 1ST QUARTER 2017 VS. 1ST QUARTER 2016 O&M(1) D&A Other, net $0.11 $(0.04) Effective $0.01 $0.21 Tax Rate $0.05 Interest, net of AFUDC $(0.02) Gross Margin(1) $0.06 Gross Margin Weather $ 0.03 $0.04 Sales $ (0.04) LFCR $ 0.04 Other $ 0.03 1Q 2016 1Q 2017 (1) Excludes costs and
Slide 4: Economic Indicators
ECONOMIC Arizona and Metro Phoenix remain attractive places to live and do INDICATORS business Nonresidential Building Vacancy – Metro Phoenix Vacancy Rate Maricopa County ranked #1 in U.S. for 25% population growth in 2016 Office - U.S. Census Bureau March 2017 20% 15% Industrial Above-average job
Slide 5: Appendix
APPENDIX First Quarter 2017
Slide 6: 2017 Key Dates
2017 KEY DATES ACC Key Dates / Docket # Q1 Q2 Q3 Q4 Key Recurring Regulatory Filings Lost Fixed Cost Recovery Jan 15 E-01345A-11-0224 Transmission Cost Adjustor May 15 E-01345A-11-0224 2018 DSM/EE Implementation Plan Jun 1 2018 RES Implementation Plan for Reset Jul 1 of Renewable Energy Adjustor APS
Slide 7: APS Rate Case
APS RATE CASE • Filed June 1, 2016 • Docket Number: E-01345A-16-0036 • Additional details, including filing, can be found at http://www.azenergyfuture.com/rate-review/ Procedural Schedule File Settlement Agreement March 27, 2017 Direct Testimony in Support of/in Opposition to the April 3, 2017 Settl
Slide 8: 2017 Proposed Rate Case Settlement
2017 PROPOSED RATE CASE SETTLEMENT Key Financial Proposals – Base Rate Changes Annualized Base Rate Revenue Changes ($ millions) Non-fuel, Non-depreciation Base Rate Increase $ 87.2 Decrease fuel and Purchased Power over Base Rates (53.6) Increase due to Changes in Depreciation Schedules 61.0 Total
Slide 9: 2017 Proposed Rate Case Settlement
2017 PROPOSED RATE CASE SETTLEMENT Key Proposals – Revenue Requirement • Cost deferral order from in-service dates to incorporation of SCRs in rates using a step-increase no Four Corners later than January 1, 2019 Ocotillo Modernization • Cost deferral order from in-service dates to effective date i
Slide 10: 2017 On-Going Earnings Key Drivers
2017 ON-GOING EARNINGS KEY DRIVERS • EPS guidance issuance pending timing and outcome of APS rate case • Retail customer growth about 1.5-2.5% • Weather-normalized retail electricity sales volume growth about 0.0-1.0% after customer conservation and energy efficiency and distributed renewable genera
Slide 11: Financial Outlook
Key Factors & Assumptions as of FINANCIAL OUTLOOK May 2, 2017 Gross Margin – Customer Growth and Weather (2017-2019) Assumption Impact Retail customer growth • Projected to average in the range of about 2-3% • Modestly improving Arizona and U.S. economic conditions Weather-normalized retail electric
Slide 12: Rate Base
APS’s revenues come from a RATE BASE regulated retail rate base and meaningful transmission business APS Rate Base Growth Total Rate Base Year-End ACC FERC Generation & Distribution Transmission 17% $1.8 83% $1.4 Most Recent Rate Decisions ACC FERC As Filed 6/1/2016 $8.3 Rate Effective Date 7/1/2017
Slide 13: APS Capital Expenditures
APS CAPITAL Capital expenditures are funded primarily through internally EXPENDITURES generated cash flow ($ Millions) Other $1,337 $1,224 $71 Distribution $87 $1,139 $71 $1,009 $398 Transmission $388 $84 $415 Renewable $207 Generation $127 $4 $491 $102 $197 $136 $17 Environmental(1) $100 $220 $237
Slide 14: Operations & Maintenance
OPERATIONS & Goal is to keep O&M per kWh flat, MAINTENANCE adjusted for planned outages ($ Millions) $137 $103 $83 $150 $124 $96 $805 $828 $761 $788 $772 $754 2011 2012 2013 2014 2015 2016 PNW Consolidated RES/DSM* *Renewable energy and demand side management expenses are offset by adjustment mechan
Slide 15: Balance Sheet Strength
BALANCE SHEET STRENGTH Debt Maturity Schedule Credit Ratings ($Millions) • A- or equivalent ratings or better at S&P, Moody’s and Fitch $600 2017 Major Financing Activities $500 • $250 million re-opening in March of APS’s outstanding 4.35% senior unsecured notes due $400 November 2045 • Currently ex
Slide 16: Residential PV Applications
Residential DG (MWdc) Annual Additions RESIDENTIAL PV 133 74 APPLICATIONS* 51 57 44 34 18 22 10 2009 2011 2013 2015 2017 Q1 2,500 2,182 2,250 2,051 2,000 1,809 1,750 1,616 1,644 1,489 1,547 1,415 1,374 1,500 1,293 1,348 1,268 1,154 1,250 1,003 1,349 1,002 1,000 1,157 1,158 1,141 1,189 1,168 760 1,07
Slide 17: Gross Margin Effects of Weather Variances vs. Normal
GROSS MARGIN EFFECTS OF WEATHER VARIANCES VS. NORMAL Pretax Millions $15 $10 13 $5 2 4 $0 (4) $(5) (17) $(10) $(15) $(20) Q1 Q2 Q3 Q4 Q1 2016 2017 $(4) Million $2 Million All periods recalculated to current 10-year rolling average (2005-2014) 17 First Quarter 2017
Slide 18: Renewable Energy and Demand Side Management Expenses
RENEWABLE ENERGY AND DEMAND SIDE MANAGEMENT EXPENSES* Pretax Millions Renewable Energy Demand Side Management $40 $30 $20 18 12 15 13 $10 12 8 7 6 4 5 $0 Q1 Q2 Q3 Q4 Q1 2016 2017 $83 Million $17 Million * O&M expenses related to renewable energy and demand side management programs are partially offs
Slide 19: Non-GAAP Measure Reconciliation
NON-GAAP MEASURE RECONCILIATION Three Months Ended March 31, EPS $ millions pretax, except per share amounts 2017 2016 Impact Operating revenues* $ 677 $ 677 Fuel and purchased power expenses* (212) (221) Gross margin 465 456 $ 0.05 Adjustments: Renewable energy (excluding AZ Sun) and demand side ma
Slide 20: Consolidated Statistics
CONSOLIDATED STATISTICS 3 Months Ended March 31, 3 Months Ended March 31, 2017 2016 Incr (Decr) 2017 2016 Incr (Decr) ELECTRIC OPERATING REVENUES (Dollars in Millions) WEATHER INDICATORS - RESIDENTIAL Retail Actual Residential $ 302 $ 299 $ 3 Cooling Degree-Days - - - Business 337 341 (4) Heating De
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