Pinnacle West Capital Corporation · NYSE:PNW

Pinnacle West Capital — Edison Electric Institute Financial Conference 2006

38 slides from Pinnacle West Capital's conference presentation, Nov 5, 2006

  1. Slide 1: Edison Electric Institute Financial Conference November 5-8, 2006

    Edison Electric Institute Financial Conference November 5-8, 2006

  2. Slide 2: Forward-Looking Statements

    Forward-Looking Statements This presentation contains forward-looking statements based on current expectations, and neither Pinnacle West nor APS assumes any obligation to update these statements or make any further statements on any of these issues, except as required by applicable law. Because act

  3. Slide 3: Focused on Our Core Business

    Focused on Our Core Business ƒ Vertically integrated utility ƒ Strong intrinsic growth ƒ Solid operating performance Phoenix ƒ Constructive regulatory outcomes ƒ Long-term value creation APS Retail Service Territory

  4. Slide 4: Regulatory Overview

    Regulatory Overview

  5. Slide 5: Arizona Corporation Commissioners

    Arizona Corporation Commissioners Party Commissioner Term Commissioner Affiliation Since Expires Jeff Hatch-Miller, Chairman Republican Jan. 2003 Jan. 2009 Michael Gleason Republican Jan. 2003 Jan. 2009 Kristin Mayes Republican Oct. 2003 Jan. 2007 William Mundell Republican June 1999 Jan. 2009 Barry

  6. Slide 6: Arizona Corporation Commission 2006 General Election Candidates

    Arizona Corporation Commission 2006 General Election Candidates Candidate Party Affiliation Richard Boyer Democrat Rick Fowlkes Libertarian Mark Manoil Democrat Kristin Mayes Republican Gary Pierce Republican

  7. Slide 7: Components of Current General Rate Request

    Components of Current General Rate Request $434 Million 20.4% Rate Increase 16.0% 14.8% 12.0% 8.0% 4.6% 4.0% 2.2% 1.9% (3.1)% 0.0% Fuel and Capital Rate Base Pension Purchased Structure Increases Funding Power (4.0)% Other

  8. Slide 8: APS Rate Case ACC Staff and RUCO Recommendations

    APS Rate Case ACC Staff and RUCO Recommendations Annual Revenue Increases (Decreases) $ Millions Staff RUCO Fuel-related $ 194 $ 299 Non-fuel 2 (67) Total $ 196 $ 232 Percent increase 9.2% 10.9% Return on equity 10.25% 9.25% Capital structure Long-term debt 45% 50% Common equity 55% 50%

  9. Slide 9: Methods for Recovering Fuel & Purchased Power Costs

    Methods for Recovering Fuel & Purchased Power Costs ƒ Base rates ƒ PSA adjustor rates ƒ PSA surcharges

  10. Slide 10: Power Supply Adjustor Supplements Fuel Cost Recovery

    Power Supply Adjustor Supplements Fuel Cost Recovery $235M Feb. Feb. 2007 2007 $173M Annual Annual Adjustor Adjustor 2005 2005 Palo Palo Verde Verde Outages Outages Surcharge Surcharge Interim $138M $125M Feb. 2006 PSA of cash Annual Adjustor of cash Adjustor 2005 2006 PSA Deferrals Estimated PSA De

  11. Slide 11: Market Growth

    Market Growth

  12. Slide 12: Arizona Economy

    Arizona Economy Arizona vs U.S. Metro Phoenix Population Growth Single-Family Building Permits 4% 50,000 40,000 3% 30,000 2% 20,000 1% 10,000 0% 0 2001 2002 2003 2004 2005 2006 2001 2002 2003 2004 2005 2006 Projected Projected Arizona U.S.

  13. Slide 13: APS Extraordinary Customer Growth

    APS Extraordinary Customer Growth 2nd Fastest Growing U.S. Electric Utility 5% APS 3.6% 4% 3% 2% 1% 0% 2000 – 2005 average annual growth

  14. Slide 14: APS Customer and Sales Growth

    APS Customer and Sales Growth Annual Growth 6% 4% 2% 0% 2001 2002 2003 2004 2005 2006 2007 2008 Projected Arizona Population APS Customers APS Retail Sales* * Weather normalized

  15. Slide 15: APS Native Load Requirements

    APS Native Load Requirements 2005 - 2009 Average Annual Growth 4.3% MW 10,000 Peak Load & Reserves 8,000 6,000 4,000 2005 2006 2007 2008 2009 Projected Long-term Resources Market Purchases Peaking Shortfall

  16. Slide 16: APS 2006 RFP for Baseload Capacity

    APS 2006 RFP for Baseload Capacity Requirements ƒ Delivery as early as 2009 but no later than 2014 ƒ Equity ownership or purchase power agreement ƒ 100 - 500 MW of capacity per proposal ƒ Ability to operate at or above 85% capacity factor Schedule ƒ Proposals received July 2006 ƒ Shortlist notificat

  17. Slide 17: Potential Major Transmission Project Arizona to Wyoming

    Potential Major Transmission Project Arizona to Wyoming TransWest Express ƒ Expands resources to meet rapid Wyoming load growth ƒ Enhances resource Nevada Salt portfolio reliability Lake City and economics Utah Las Vegas California Navajo Moenkopi Four Corners ƒ Improves fuel All Lines are 500 kV Lo

  18. Slide 18: Arizona Transmission System

    Arizona Transmission System UTAH UTAH UTAH COLORADO NAVAJO SHIPROCK MEAD/ GLEN SAN JUAN MARKETPLACE/ CANYON LAS VEGAS TRIBAL FOUR LAND CORNERS MOENKOPI FLAGSTAFF MCKINLEY CHOLLA CALIFORNIA CORONADO SPRINGER- VILLE BOUSE PINNACLE PEAK CALIFORNIA WEST WING PERKINS PALO VERDE LIBERTY GREENLEE KYRENE (A

  19. Slide 19: Operations Overview

    Operations Overview

  20. Slide 20: APS 2nd Among Western Electric IOU's in Customer Satisfaction

    APS 2nd Among Western Electric IOU’s in Customer Satisfaction J.D. Power Rating 800 APS 750 700 650 600 550 500 2006 Residential Customer Satisfaction Survey

  21. Slide 21: APS Superior Customer Service

    APS Superior Customer Service Residential Study ƒ Ranked 2nd out of 9 electric IOU’s in the West ƒ Ranked top quartile among electric utilities in U.S. (including public power) Business Study ƒ Ranked 1st out of 9 electric IOU’s in the West ƒ Ranked top quartile among electric utilities in U.S. (inc

  22. Slide 22: Improving APS Customer Efficiency

    Improving APS Customer Efficiency Average Annual Growth Customers 3.6% Cumulative Employees 1.2% Change 20% 15% 10% 5% 0% 2000 2001 2002 2003 2004 2005 Average Customers Employees

  23. Slide 23: Generation Operating History

    Generation Operating History Nuclear and Coal Combined Gas Capacity Factors Equivalent Availability Factors 100% 100% 90% 90% 80% 80% 70% 70% 60% 60% 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 APS Industry Average* APS Industry Average* * Latest available

  24. Slide 24: APS 2005 Retail Customer and Sales Mix

    APS 2005 Retail Customer and Sales Mix 1 Million Customers 26,478 GWh Sales 89% 46% 44% 11% 10% Residential Commercial Industrial

  25. Slide 25: 2005 Energy Fuel Mix

    2005 Energy Fuel Mix Consolidated Native Load Coal Coal 23% 23% 43% 43% Gas Nuclear 13% 13% 13% 13% Nuclear Gas Purchased Power 25% 25% 20% 20% 12% 12% 51% 51% Purchased Power

  26. Slide 26: Financial Overview

    Financial Overview

  27. Slide 27: Financial Overview

    Financial Overview ƒ Strong financial discipline ƒ Maintain ample liquidity and access to capital markets ƒ Continue to strengthen balance sheet ƒ Actively manage costs and business risks ƒ Maximize value of non-utility operations ƒ Build long-term value for shareholders

  28. Slide 28: Strengthening Equity Ratios

    Strengthening Equity Ratios Consolidated APS 60% 60% 53% 54% 50% 50% 40% 40% 30% 30% 2002 2003 2004 2005 2002 2003 2004 2005 Excludes off-balance sheet adjustments

  29. Slide 29: Projected Capital Expenditures

    Projected Capital Expenditures $ Millions 1,000 800 APS Distribution 600 APS Transmission 400 APS Generation 200 Other 0 2005 2006 2007 2008 Projected Excluding SunCor

  30. Slide 30: Current Credit Ratings

    Current Credit Ratings S&P Moody’s Pinnacle West (Parent) Senior Unsecured Debt BB+ Baa3 Outlook Stable Negative APS Senior Unsecured Debt BBB- Baa2 Outlook Stable Negative

  31. Slide 31: Top Quartile Five-Year Dividend Growth

    Top Quartile Five-Year Dividend Growth 2000 – 2005 Compound Annual Growth Rates 25% For U.S. Electric Utilities 20% PNW 15% 5.9% 10% 5% Industry Average 0% (5)% (1.4)% (10)% (15)% (20)% (25)%

  32. Slide 32: SunCor Overview

    SunCor Overview

  33. Slide 33: SunCor Overview

    SunCor Overview ƒ Commercial and residential IDAHO real estate developer in Boise Western U.S. ƒ Total assets $487 million* ƒ Projects under development UTAH • 7 master-planned St. George communities Sedona Prescott Santa Fe Albuquerque • 5 major commercial ARIZONA Phoenix projects NEW MEXICO • 22,0

  34. Slide 34: SunCor Asset Summary

    SunCor Asset Summary $ Millions Legacy Properties $ 163 Post-1990 Properties 243 Total Properties 406 Consolidated Land Not Owned 34 Other 47 Total Assets $ 487 As of December 31, 2005

  35. Slide 35: SunCor Properties Mix

    SunCor Properties Mix Total Properties $406 Million Project Type Mix Geographic Mix Phoenix Area Commercial 69% 37% Homebuilding 43% 11% 10% 9% Golf Urban Northern Utah Arizona 12% Infill New 8% Mexico 1% Idaho As of December 31, 2005

  36. Slide 36: SunCor Project Summaries Master-Planned Communities

    SunCor Project Summaries Master-Planned Communities Year Original 12/31/05 Acquired Acreage Acreage Palm Valley (Phoenix, AZ) 1987 11,300 3,150 Rancho Viejo Phase I (Santa Fe, NM)* 1996 2,500 1,520 Coral Canyon (St. George, UT)* 1998 2,500 720 StoneRidge (Northern AZ)* 2001 1,840 1,127 Avimor (Boise

  37. Slide 37: SunCor Project Summaries Major Commercial Properties

    SunCor Project Summaries Major Commercial Properties Year Original 12/31/05 Acquired Acreage Acreage Talavi (Phoenix, AZ) 1987 140 7 Centrepoint (Phoenix, AZ) 1989 80 3 Hayden Ferry Lakeside Office & Condos (Phoenix, AZ) 2000 17 15 Rio West Business Park (Phoenix, AZ) 2004 25 25 Riverside Distributi

  38. Slide 38: Slide 38

Pinnacle West Capital — Edison Electric Institute Financial Conference 2006 on 6ix