Pinnacle West Capital Corporation · NYSE:PNW

Pinnacle West Capital — Edison Electric Institute Financial Conference 2007

42 slides from Pinnacle West Capital's conference presentation, Nov 4, 2007

  1. Slide 1: Edison Electric Institute Financial Conference

    Edison Electric Institute Financial Conference November 4-7, 2007

  2. Slide 2: Forward-Looking Statements

    Forward-Looking Statements This presentation contains forward-looking statements based on our current expectations. 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. These forwa

  3. Slide 3: Strategic Objectives

    Strategic Objectives ƒ Focus on vertically integrated utility ƒ Capitalize on strong intrinsic growth ƒ Maintain solid operating performance ƒ Attain constructive regulatory outcomes ƒ Optimize real estate assets ƒ Create long-term value

  4. Slide 4: Regulatory Overview

    Regulatory Overview

  5. Slide 5: Arizona Corporation Commissioners

    Arizona Corporation Commissioners Party Commissioner Term Commissioner Affiliation Since Expires Mike Gleason, Chairman Republican Jan. 2003 Jan. 2009 Jeff Hatch-Miller Republican Jan. 2003 Jan. 2009 Kristin Mayes Republican Oct. 2003 Jan. 2011 William Mundell Republican June 1999 Jan. 2009 Gary Pie

  6. Slide 6: APS Retail Rate Case: Summary of Request and Final Order

    APS Retail Rate Case Summary of Request and Final Order APS Rate ACC Final Request Order Annual base rate increase (decrease) Fuel-related $ 315M $ 315M Non-fuel 120M 7M Total $ 435M $ 322M Percent increase 20.4% 15.1% Base fuel rate per kWh 3.25¢ 3.25¢ Return on equity 11.5% 10.75% Capital structur

  7. Slide 7: APS Retail Rate Case: Key Provisions of ACC Rate Order

    APS Retail Rate Case Key Provisions of ACC Rate Order ƒ Updated base fuel rate to 2007 levels ƒ ROE of 10.75% on APS’ requested debt-equity ratio ƒ Positive PSA modifications • Forward looking • Substantial removal of caps • Limited 90/10 sharing ƒ Environmental Improvement Surcharge ƒ Positive fuel

  8. Slide 8: APS Retail Rates: Unresolved Issues

    APS Retail Rates Unresolved Issues ƒ Revenue enhancement measures to deal with earnings attrition ƒ Cost impacts of growth ƒ Recognition of “net lost revenues” from demand side management

  9. Slide 9: FERC Rate Case Summary

    FERC Rate Case Summary ƒ $37 million wholesale rate increase requested for transmission and ancillary services • $30 million to be collected through retail rates ƒ Proposed formula-based rates with annual adjustment ƒ Rate base: $847 million ƒ Capital structure: 47% debt, 53% equity ƒ Return on equi

  10. Slide 10: Market Growth

    Market Growth

  11. Slide 11: Arizona Leads U.S. in Population Growth

    Arizona Leads U.S. in Population Growth 3 2 6 8 7 10 1 4 5 9 Annual percent change 2005 – 2006, U.S. Census Bureau

  12. Slide 12: Arizona Population Highlights

    Arizona Population Highlights ƒ Population 6.2 million ƒ 16th largest state ƒ 16.3% population change since 2001 ƒ Population expected to reach 10.7 million by 2030 ƒ Phoenix 5th largest city in U.S.

  13. Slide 13: APS Retail Service Territory

    APS Retail Service Territory Phoenix Phoenix APS Retail Service Territory

  14. Slide 14: Economic Growth Underpins Retail Sales Growth

    Economic Growth Underpins Retail Sales Growth Annual Growth 6% 4% 2% 0% 2002 2003 2004 2005 2006 Arizona Population APS Customers APS Retail Sales* * Weather normalized

  15. Slide 15: APS 2006 Retail Customer and Sales Mix

    APS 2006 Retail Customer and Sales Mix 1.1 Million Customers 27,970 GWh Sales 89% 47% 44% 11% 9% Residential Commercial Industrial

  16. Slide 16: Arizona Transmission System

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

  17. Slide 17: Potential Inter-Regional Transmission

    Potential Inter-Regional Transmission ƒ Expand resources to meet rapid load growth Wyoming ƒ Enhance resource portfolio reliability Nevada Utah and economics California ƒ Increase system import capability ƒ Improve fuel diversity TransWest Express Project Existing Lines New Upgrades Other Planned Pr

  18. Slide 18: WECC Available Transmission Capability

    WECC Available Transmission Capability 3,007 4,038 2,678 6,453 440 225 Summer 2007 estimates (MW)

  19. Slide 19: Operations Overview

    Operations Overview

  20. Slide 20: APS 2nd Among Western Electric IOUs in Residential Customer Satisfaction

    APS 2nd Among Western Electric IOU’s in Residential Customer Satisfaction J.D. Power Rating 800 APS 750 700 650 600 550 500 2007 J.D. Power Residential Customer Satisfaction Survey

  21. Slide 21: APS 2nd Among Western Electric IOUs in Business Customer Satisfaction

    APS 2nd Among Western Electric IOU’s in Business Customer Satisfaction J.D. Power Rating 800 APS 750 700 650 600 550 500 2007 J.D. Power Business Customer Satisfaction Survey

  22. Slide 22: 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% ‘02 ‘03 ‘04 ‘05 ‘06 YTD ‘02 ‘03 ‘04 ‘05 ‘06 YTD Sep ‘07 Sep ‘07 APS Industry Average* * Latest available

  23. Slide 23: Nuclear Generation Overview

    Nuclear Generation Overview Capacity Factor 100% ƒ Top U.S. power producer past 14 years 75% ƒ Unit 1 vibration resolved in 2006 50% ƒ NRC oversight and inspections 25% ƒ Randy Edington, chief nuclear officer 0% ƒ Performance improvement ‘05 ‘06 YTD Sept ‘05 ‘06 YTD Sept ‘05 ‘06 YTD Sept plan underw

  24. Slide 24: Coal Generation Overview

    Coal Generation Overview Capacity Factor 2006 Highlights 100% ƒ Record-breaking coal capacity factor for third straight year 75% ƒ Four Corners • Set new production record 15.9+ million MWh 50% • Capacity factor 87% ƒ Cholla 25% • Set new production record 4.7+ million MWh • Capacity factor 87% 0% ‘

  25. Slide 25: 2006 Energy Fuel Mix

    2006 Energy Fuel Mix Consolidated Native Load Coal Coal 26% 26% 42% 42% Nuclear Gas 14% 14% 14% 14% Gas Nuclear 22% Purchased 14% 22% 22% 22% 14% Power 46% 46% Purchased Power

  26. Slide 26: Social Responsibility Awards

    Social Responsibility Awards ƒ Innovest’s highest rating (AAA) and ranked #2 electric utility ƒ Dow Jones Sustainability Index ƒ Global 100 Most Sustainable Corporations in World by Corporate Knights ƒ Storebrand’s Social Responsibility Index “best in class” distinction ƒ EPA Climate Protection Awar

  27. Slide 27: Financial Overview

    Financial Overview

  28. Slide 28: Pinnacle West Capital Corporation 2007 Earnings Guidance

    Pinnacle West Capital Corporation 2007 Earnings Guidance ƒ Consolidated earnings expected to be within reasonable range around $2.90 per share • APS earnings approximately $2.70 per share (8.25% ROE) • SunCor earnings approximately $20 million ƒ Major EPS differences from July 2007 guidance • Hotter

  29. Slide 29: Significant Capital Investment to Support Growth

    Significant Capital Investment to Support Growth $ Millions 1,200 1,000 APS Distribution 800 APS Transmission 600 400 APS Generation 200 Other 0 2004 2005 2006 2007 2008 2009 Projected Excluding SunCor

  30. Slide 30: Solid Equity Ratios to Support Growth

    Solid Equity Ratios to Support Growth Consolidate APS d 60% 60% 53% 50% 50% 50% 40% 40% 30% 30% 2002 2003 2004 2005 2006 Jun 2002 2003 2004 2005 2006 Jun 2007 2007 Excludes off-balance sheet adjustments

  31. Slide 31: U.S. Electric Utilities Current Dividend Yields

    U.S. Electric Utilities Current Dividend Yields PNW 5.3% 6% 5% Industry Average 4% 3.7% 3% 2% 1% 0% Pinnacle West Electric Industry As of September 30, 2007

  32. Slide 32: Current Credit Ratings

    Current Credit Ratings S&P Moody’s Fitch Pinnacle West (Parent) Senior Unsecured Debt* BB+ Baa3 N/A Commercial Paper A3 P3 F3 Outlook Stable Negative Stable APS Senior Unsecured Debt BBB- Baa2 BBB Commercial Paper A3 P2 F2 Outlook Stable Negative Stable * Preliminary

  33. Slide 33: Liquidity Resources

    Liquidity Resources APS ƒ $400 million revolver through December 2010 ƒ $500 million revolver through September 2011 ƒ Short-term borrowing $150 million as of September 30, 2007 ƒ Next long-term debt maturity 2011 Pinnacle West (parent) ƒ $300 million revolver through December 2010 ƒ Short-term borr

  34. Slide 34: SunCor

    SunCor

  35. Slide 35: SunCor Overview

    SunCor Overview ƒ Commercial and residential real estate developer in IDAHO Western U.S. Boise ƒ Total assets $607 million ƒ Stockholder’s equity $271 million UTAH ƒ Projects under development St. George • 8 master-planned communities • 6 major commercial projects Sedona Santa Fe Prescott Albuquerqu

  36. Slide 36: SunCor Objectives

    SunCor Objectives ƒ Capitalize on assets and expertise ƒ Deploy capital efficiently ƒ Maintain strong financial discipline

  37. Slide 37: SunCor Balance Sheet Summary

    SunCor Balance Sheet Summary $ Millions Legacy Properties $ 173 Liabilities $ 286 Post-1990 Properties 391 Minority Interest 50 Total Properties 564 Stockholder’s Equity 271 Other 43 Total Liabilities Total Assets $ 607 & Equity $ 607 As of December 31, 2006

  38. Slide 38: SunCor Gross Margin Contribution by Business Line

    SunCor Gross Margin Contribution by Business Line $ Millions Pretax 175 150 Home Sales 125 Condo Sales 100 Land Sales 75 Commercial Property 50 & Management 25 Sale of Assets* 0 2002 2003 2004 2005 2006 2007 Projected * Includes discontinued operations

  39. Slide 39: SunCor Project Diversity by Type

    SunCor Project Diversity by Type Legacy Properties Post-1990 Properties $ Millions $ Millions 400 400 300 300 200 200 100 100 0 0 2001 2002 2003 2004 2005 2006 2001 2002 2003 2004 2005 2006 Master Planned Master Planned Owned Ventures with Landowners Commercial & Other

  40. Slide 40: SunCor Geographic Project Diversity

    SunCor Geographic Project Diversity Legacy Properties Post-1990 Properties $ Millions $ Millions 400 400 300 300 200 200 100 100 0 0 2001 2002 2003 2004 2005 2006 2001 2002 2003 2004 2005 2006 Metro Phoenix Northern Arizona Utah New Mexico Idaho

  41. Slide 41: SunCor Project Summaries: Master-Planned Communities

    SunCor Project Summaries Master-Planned Communities Year Original 12/31/06 Acquired Acreage Acreage Palm Valley (Phoenix, AZ) 1987 11,300 2,700 Rancho Viejo Phase I (Santa Fe, NM)* 1996 2,500 1,500 Coral Canyon (St. George, UT)* 1998 2,500 750 StoneRidge (Northern AZ)* 2001 1,840 1,100 Avimor (Boise

  42. Slide 42: SunCor Project Summaries: Major Commercial Properties

    SunCor Project Summaries Major Commercial Properties Year Original 12/31/06 Acquired Acreage Acreage Talavi 1987 140 7 Alameda Crossing (Palm Valley) 1987 21 17 Palm Valley Office Park Phase 3 1987 4 4 Centrepoint 1989 80 3 Hayden Ferry Lakeside Office & Condos 2000 17 15 Rio West Business Park 2004

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