Pinnacle West Capital Corporation · NYSE:PNW
Pinnacle West Capital — Non-Deal Roadshow (September 2015)
28 slides from Pinnacle West Capital's roadshow presentation, Sep 11, 2015
Slide 1: Investor Meetings | September 14-17, 2015
Powering Growth, Delivering Value Investor Meetings | September 14-17, 2015 POWERING GROWTH DELIVERING VALUE
Slide 2: Forward Looking Statements
Powering Growth, Delivering Value 2 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 suc
Slide 3: Value Proposition
Powering Growth, Delivering Value 3 • Top quartile ratings in Customer Satisfaction, Reliability and Safety • Palo Verde Nuclear Generating station continues record levels of electricity production • Disciplined cost management Operational Excellence • Arizona’s long-term growth fundamentals remain
Slide 4: Arizona Economic Indicators
Powering Growth, Delivering Value 4 ARIZONA ECONOMIC INDICATORS Business services, healthcare, tourism, and consumer services leading job recovery – each growing 3-7% YoY 0% 5% 10% 15% 20% 25% '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 Industrial Nonresidential Building Vacancy – Metro Phoenix Sing
Slide 5: Resource Planning
Powering Growth, Delivering Value 5 RESOURCE PLANNING* ACC considering modifications to the IRP filing schedule, including delaying the 2016 IRP filing for one- year to allow time to consider the impacts of the Clean Power Plan 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 2014 2017 2020 2023 2026
Slide 6: Capital Expenditures
Powering Growth, Delivering Value 6 $289 $316 $352 $547 $24 $43 $178 $180 $63 $80 $1 $2 $192 $192 $113 $146 $242 $325 $375 $331 $73 $100 $92 $79 2014 2015 2016 2017 CAPITAL EXPENDITURES 70% of capital expenditures are recovered through rate adjustors (30%) and depreciation cash flow (40%) ($ Million
Slide 7: Rate Design Modernization
Powering Growth, Delivering Value 7 Rate Design Modernization Steps: • Grid Access Charge filing on April 2, 2015 – Interim solution – Seeking increase to $3.00/kw (or about $21/month) from $0.70/kw* • Other modifications to be discussed in a rate case – Align Time of Use (or peak vs. off-peak) rate
Slide 8: Key Dates for Rate Design
Powering Growth, Delivering Value 8 KEY DATES FOR RATE DESIGN 2013 2014 2015 • Net metering Technical Workshops and July 2013 Renewable Energy Standard Annual filing, which laid the groundwork for the November decision • Nov. 2013: ACC decision on net metering; recognized cost shift and implemented
Slide 9: APS Solar Innovation
Powering Growth, Delivering Value 9 • Installing 10 MW of APS-owned residential rooftop solar − Equates to approximately 1,500 customers − Will be filed for recovery in next general rate case − 2 MW (of the 10 MW) will be coupled with storage − Participating customers receive monthly payment through
Slide 10: Environmental Regulations and Compliance
Powering Growth, Delivering Value 10 Regional Haze / BART (SCR) Mercury and Other Hazardous Air Pollutants (ACI + Baghouse) Coal Combustion Residuals Cooling Water Intake Structures – CWA 316(b) EPA Ruling Announced in 1999, with site-specific requirements announced more recently MATS compliance by
Slide 11: 2015 Key Dates
Powering Growth, Delivering Value 11 2015 KEY DATES ACC Key Dates Docket # Q1 Q2 Q3 Q4 Key Recurring Regulatory Filings Lost Fixed Cost Recovery E-01345A-11-0224 Jan 15 Net Metering – Quarterly Installation Filings E-01345A-13-0248 Jan 15 Apr 15 Jul 15 Oct 15 Transmission Cost Adjustor E-01345A-11-0
Slide 12: Appendix
Powering Growth, Delivering Value APPENDIX
Slide 13: Arizona Corporation Commission
Powering Growth, Delivering Value 13 ARIZONA CORPORATION COMMISSION * Term limited - elected to four-year terms (limited to two consecutive) Bob Stump (R)* Tom Forese (R) Doug Little (R) Terms to January 2019 Terms to January 2017 Susan Bitter Smith (R) Chairman Bob Burns (R)
Slide 14: Financial Outlook
Powering Growth, Delivering Value 14 FINANCIAL OUTLOOK Key Factors & Assumptions as of July 30, 2015 Assumption Impact Retail customer growth • Expected to average about 2-3% annually • Modestly improving Arizona and U.S. economic conditions Weather-normalized retail electricity sales volume growth
Slide 15: Retail Sales Impact from Energy Efficiency and Distributed Generation
Powering Growth, Delivering Value 15 2015 2016 2017 RETAIL SALES IMPACT FROM ENERGY EFFICIENCY AND DISTRIBUTED GENERATION YoY Retail Sales Before Customer Programs Energy Efficiency & Customer Conservation Distributed Generation Distributed Generation (DG) Impact • DG makes up 0.5% or less of the ne
Slide 16: Arizona's Renewable Resource and Energy Efficiency Standards
Powering Growth, Delivering Value 16 • Cumulative savings from energy efficiency programs must be equivalent to 22% of annual retail sales by 2020 • Annual milestones in place to measure progress toward cumulative 2020 goal – 9.5% by 2015 – 22% by 2020 ARIZONA’S RENEWABLE RESOURCE AND ENERGY EFFICIE
Slide 17: Residential PV Applications
Powering Growth, Delivering Value 17 250 364 346 450 637 728 654 803 878 969 545 863 527 732 873 779 1,223 1,253 1,496 0 28 33 83 41 45 62 64 84 63 94 34 69 102 95 51 75 83 71 37 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 RESIDENTIAL PV APPLICATIONS As of July 31, 2015, over 34,500 residential
Slide 18: Operational Considerations with Increased Variable Generation
Powering Growth, Delivering Value 18 OPERATIONAL CONSIDERATIONS WITH INCREASED VARIABLE GENERATION The grid provides real-time voltage and power needed to start air conditioners and other motors loads (for typical AC unit) • Steep ramp rate of backup generation • Instant variability • Voltage contro
Slide 19: AZ Sun Program
Powering Growth, Delivering Value 19 • Community-scale photovoltaic solar plants to be owned by APS • Constructive rate recovery through RES until included in base rates • Commitments to date: 170 MW, $675 million capital investment (average of $3,970/kw) AZ SUN PROGRAM Owning solar resources makes
Slide 20: Ocotillo Power Plant (Tempe, AZ)
Powering Growth, Delivering Value 20 • Benefits: – Maintains system reliability through retirement of aging steam units – Replacement units meet need for increased portfolio responsiveness – Aids integration of renewables • Estimated project cost of $500M • Expected timeline: – Early 2016: Planned s
Slide 21: APS Transmission
Powering Growth, Delivering Value 21 • 10-Year Transmission Plan filed January 2015 (115 kV and above) – 275 miles of new lines – Includes Hassayampa-North Gila (HANG2) • ~110 miles; 500kV • Construction started March 2013 • In-service May 2015 • Also includes other planned lines – Palm Valley-TS2-T
Slide 22: Bright Canyon Energy – Transmission Growth
Powering Growth, Delivering Value 22 BRIGHT CANYON ENERGY – TRANSMISSION GROWTH TRANSCANYON A 50/50 Joint Venture formed with BHE U.S. Transmission, subsidiary of Berkshire Hathaway Energy, to pursue transmission opportunities in the western United States BRIGHT CANYON ENERGY Pinnacle West subsidiar
Slide 23: Operations & Maintenance Outlook
Powering Growth, Delivering Value 23 OPERATIONS & MAINTENANCE OUTLOOK Targeting to be top quartile in peer benchmarking for staffing $749 $754 $761 $788 $805 $121 $150 $124 $137 $103 $109 2010 2011 2012 2013 2014 2015E PNW Consolidated RES/DSM* As of July 30, 2015 *Renewable energy and demand side m
Slide 24: Balance Sheet Strength
Powering Growth, Delivering Value 24 BALANCE SHEET STRENGTH $250 $50 $500 $250 $125 $- $100 $200 $300 $400 $500 2016 2017 2018 2019 2020 APS PNW ($Millions) Debt Maturity Schedule Credit Ratings • A- rating or better at S&P, Moody’s and Fitch • Moody’s and Fitch upgraded APS and PNW in Q2 2015 Major
Slide 25: Credit Ratings and Metrics
Powering Growth, Delivering Value 25 2010 2011 2012 2013 2014 APS FFO / Debt 23.7% 23.6% 27.7% 31.5% 26.6% FFO / Interest 3.3x 4.2x 4.8x 5.6X 5.8x Debt / Capitalization 52.6% 52.9% 50.7% 47.7% 46.3% Pinnacle West FFO / Debt 22.3% 23.0% 26.7% 29.8% 23.6% FFO / Interest 3.1x 3.8x 4.4x 4.9X 5.6x Debt /
Slide 26: Generation Portfolio
Powering Growth, Delivering Value 26 GENERATION PORTFOLIO* Fuel/Plant Location Units Dispatch COD Ownership Interest1 Net Capacity (MW) NUCLEAR 1,146 MW Palo Verde Wintersburg, AZ 1-3 Base 1986-1989 29.1% 1,146 COAL 1,932 MW Cholla Joseph City, AZ 1-3 Base 1962-1980 100 647 Four Corners Farmington,
Slide 27: Purchased Power Contracts
Powering Growth, Delivering Value 27 PURCHASED POWER CONTRACTS* Fuel/Contract Location Owner/Developer Status1 PPA Signed COD Term (Years) Net Capacity (MW) SOLAR 310 MW Solana Gila Bend, AZ Abengoa IO Feb-2008 2013 30 250 RE Ajo Ajo, AZ Duke Energy Gen Svcs IO Jan-2010 2011 25 5 Sun E AZ 1 Prescott
Slide 28: Investor Relations Contacts
Powering Growth, Delivering Value 28 INVESTOR RELATIONS CONTACTS Paul J. Mountain, CFA Director, Investor Relations Telephone: (602) 250-4952 E-mail: paul.mountain@pinnaclewest.com Chalese Haraldsen Telephone: (602) 250-5643 E-mail: chalese.haraldsen@pinnaclewest.com Pinnacle West Capital Corporatio
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