Pinnacle West Capital Corporation · NYSE:PNW
Pinnacle West Capital — Investor Presentation (March 2025)
34 slides from Pinnacle West Capital's investor presentation, Mar 3, 2025
Slide 1: Renewed, Reliable and Resilient
Renewed, Reliable and Resilient March Investor Meetings
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: Table of Contents
Table of Contents 1. Company Profile 2. Growth Outlook & Energy Future 3. Financial Outlook
Slide 4: Company Profile
PINNACLE \WEST CAPITAL CORPORATION
Slide 5: Arizona's largest electric company
Arizona’s largest electric company Service Territory Key facts as of Dec. 31, 2024 Consolidated assets $26B Market cap $9.64B Generating capacity owned or leased 6.5GW (year end) Customers 1.4M Current % from clean energy 54% Retail sales mix 52%/48% (Residential/Non-Residential) 5
Slide 6: Growth Outlook & Energy Future
Growth Outlook & Energy Future
Slide 7: We are focused on solid execution and are optimistic for the future
We are focused on solid execution and are optimistic for the future KEY REASONS 1. Rapidly growing service territory with a diverse customer base 2. An improved regulatory environment 3. Making progress toward our clean energy commitment while building a balanced generation fleet 4. Tremendous oppor
Slide 8: Arizona continues to be an attractive service territory with strong customer growth
REASON #1 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 • Phoenix housin
Slide 9: Best-in-class service territory supports high tech growth and economic development
REASON #1 Best-in-class service territory supports high tech growth and economic development Arizona is an attractive location for business growth • Infrastructure ─ close proximity to major markets in the West with accessibility by rail or truck • Weather predictability ─ low propensity for natural
Slide 10: Arizona's commercial and industrial growth is diverse
REASON #1 Arizona’s commercial and industrial growth is diverse Source: Arizona Commerce Authority 10
Slide 11: We have an improved regulatory environment
REASON #2 We have an improved regulatory environment Improvements at the Arizona Corporation Commission • Balanced, constructive and more consistent outcomes, including improved ROE to APS • Approval of Formula Rate Policy Statement • Reaffirmation of Rate Case Settlement Policy • Continued support
Slide 12: We are making progress towards our Clean Energy Commitment
REASON #3 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 Issued 2024 All-Source RFP as load demand continues to increase in APS service territory Succ
Slide 13: Transmission expansion will drive increased capital investment
REASON #4 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 Su
Slide 14: We are focused on maintaining customer affordability and increasing customer satisfaction
REASON #5 We are focused on maintaining customer affordability and increasing customer satisfaction APS rates have remained well below Key areas of focus the Average rate%ofchange annual inflation 2018-2024 • Process improvements and preventative maintenance to reduce operating costs CPI CPI (PHX) A
Slide 15: Future Financial Outlook
PINNACLE \WEST CAPITAL CORPORATION
Slide 16: Our investor goals going forward
Our investor goals going forward 1. Long-term EPS growth of 5%-7% off original 2024 midpoint, supporting competitive total shareholder return 2. Optimized capital plan to reliably serve growing service territory, driving strong rate base growth and supported by SRB 3. Managing a healthy capital stru
Slide 17: Long-term outlook potential remains solid
GOAL #1 Long-term outlook potential remains solid EPS Growth off original 2024 midpoint1 Potential drivers for more consistent and timely cost recovery • Reduction of regulatory lag including formula rates • Rate case cadence and potential settlement of future rate cases 5%-7% • Continued support of
Slide 18: Capital plan to support reliability and continued growth within our service territory
GOAL #2 Capital plan to support reliability and continued growth within our service territory APS Total 2024-2027 $9.66B CapEx Profile Today $2.65B $2.55B $2.40B $2.06B $870 $950 Q4 2023 $905 $807 Generation Transmission $675 $750 $9.66B $450 Distribution $340 Other $7.80B $665 $670 $637 $675 $273 $
Slide 19: SRB will expand our capacity to self-build generation
GOAL #2 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 ca
Slide 20: Rate Base growing within our service territory
GOAL #2 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% 1
Slide 21: Optimized financing plan to support balanced capital structure
GOAL #3 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
Slide 22: We are focused on cost control and customer affordability
GOAL #4 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 at Four Corners Unit 4 $70 $55 - $65 • Lean culture and declining O&M per MWh goal Plan
Slide 23: Long term goal remains declining O&M per MWh
GOAL #4 Long term goal remains declining O&M per MWh PNW O&M (as adjusted) per MWh1 Average annual % change 2017-2024 O&M per MWh Weather Normalized Sales (MWh) CPI CPI (PHX) PNW O&M 4.67% 3.59% $32 2.97% 2017 2018 2019 2020 2021 2022 2023 2024 2024 1 O&M amounts, as adjusted, exclude RES/DSM of $14
Slide 24: We have a proven dividend growth track record
GOAL #5 1 We have a proven dividend growth track record Annualized Dividends per Share Dividend Targets • Long-term dividend growth • Attractive dividend yield • Managing long-term $3.58 dividend payout ratio into sustained 65-75% $2.50 ~4.1% DPS CAGR 2015 2016 2017 2018 2019 2020 2021 2022 2023 202
Slide 25: We are focused on maintaining healthy credit ratings to support affordable growth
GOAL #6 We are focused on maintaining healthy credit ratings to support affordable growth1 Balance Sheet Senior Targets Corporate Unsecured Short-Term • Solid investment-grade Ratings Ratings Ratings Outlook credit ratings APS • APS equity layer >50% • PNW FFO/Debt range Moody’s Baa1 Baa1 P-2 Stable
Slide 26: Debt maturity profile shows well managed and stable financing plan
GOAL #6 Debt maturity profile shows well managed and stable financing plan ($millions) APS Fixed APS Floating PNW Fixed PNW Floating $1,200 $1,000 $800 $600 $400 $200 $0 2025 2027 2029 2031 2033 2035 2037 2039 2041 2043 2045 2047 2049 As of December 31, 2024 26
Slide 27: We have a stable foundation with solid execution going forward
IN SUMMARY We have a stable foundation with solid execution going forward • Service territory is one of the fastest growing in the nation with a diverse customer base • Improved regulatory environment with focus on reducing regulatory lag • Strong customer centric strategy with improving J.D. Power
Slide 28: Appendix
PINNACLE \WEST CAPITAL CORPORATION
Slide 29: 2025 Key Regulatory Dates
2025 Key Regulatory Dates1 Case/Docket # Q1 Q2 Q3 Q4 ACC upheld Grid Access Charge 2022 Rate Case E-01345A-22-0144: Dec. 17, 2024 PSA reset 2025 PSA rate effective Power Supply Adjustor (PSA) E-01345A-22-0144: to be filed Nov. 26 March 1 To be filed May 15; Transmission Cost Adjustor E-01345A-22-014
Slide 30: Residential PV Applications
Residential PV Applications 5,000 Residential DG (MWdc) Annual Additions 4,500 216 169 200 108 4,000 3,500 2021 2022 2023 2024 3,000 2,500 2,000 1,500 1,000 500 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2021 Applications 2022 Applications 2023 Applications 2024 Applications 1 Monthly data eq
Slide 31: Renewable Energy & Demand Side Management expenses
Renewable Energy & Demand Side Management expenses1 ($ in millions pretax) Renewable Energy Demand Side Management $50 $45 $40 $35 $30 $26 $25 $20 $16 $18 $19 $12 $20 $12 $21 $15 $10 $17 $18 $18 $15 $16 $15 $14 $5 $9 $0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 1Renewable Energy and Demand Side Management expenses ar
Slide 32: 2024 gross margin effects of weather
2024 gross margin effects of weather Variances vs. Normal ($ in millions pretax) $95 $35 $18 ($1) Q1 Q2 Q3 Q4 2024 Total Weather Impact: $147 Million All periods recalculated to current 10-year rolling average (2013 – 2022). Numbers may not foot due to rounding. 32
Slide 33: Wildfire Mitigation
Wildfire Mitigation Our current practices are comprehensive and multi-faceted: Vegetation Grid hardening Asset Monitoring and Operational management investments inspection awareness mitigations • Comprehensive right- • Ongoing distribution • Enhanced line • Dedicated team of • Non-reclosing of-way c
Slide 34: 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
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