Pinnacle West Capital Corporation · NYSE:PNW
Pinnacle West Capital — Q3 2009 Earnings Presentation
19 slides from Pinnacle West Capital's earnings presentation, Oct 29, 2009
Slide 1: 3rd Quarter 2009 Results
IA PINNACLE \WEST CAPITAL CORPORATION 3™4 Quarter 2009 Results
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements based on current expectations, and neither Pinnacle West Capital Corporation (“Pinnacle West”) nor Arizona Public Service Company (“APS”) assumes any obligation to update these statements, even if our internal estimates
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures In this presentation, we present “regulated electricity segment gross margin” per diluted share of common stock. Regulated electricity segment gross margin refers to regulated electricity segment revenues less regulated electricity segment fuel and purchased power expense
Slide 4: CFO Agenda
CFO Agenda ¾ 3rd Quarter Results ¾ Arizona Economic Outlook ¾ Earnings Guidance ¾ Liquidity and Financing Third Quarter 2009 4
Slide 5: Non-GAAP EPS Reconciliation
Non-GAAP EPS Reconciliation 3rd Quarter 2009 vs. 3rd Quarter 2008 3rd Qtr 3rd Qtr 2009 2008 Change EPS per diluted share as reported $ 1.84 $ 1.50 $ 0.34 Adjustments: Real estate segment 0.12 0.06 0.06 Severance costs - 0.03 (0.03) On-going earnings per share $ 1.96 $ 1.59 $ 0.37 Third Quarter 2009
Slide 6: Summary of On-Going EPS Variances
Summary of On-Going EPS Variances 3rd Quarter 2009 vs. 3rd Quarter 2008 $0.08 $0.04 $(0.14) $0.39 $1.96 O&M* Other items, net Infrastructure- $1.59 related costs Regulated electricity gross margin* 3rd Qtr. 3rd Qtr. 2008 2009 On-going earnings increased $0.37 per share. * Excluding renewable energy
Slide 7: Regulated Electricity Gross Margin Drivers
Regulated Electricity Gross Margin Drivers* 3rd Quarter 2009 vs. 3rd Quarter 2008 $0.22 $0.13 $0.05 $0.04 $(0.01) $(0.04) Interim retail Transmission Weather Lower Higher hedge Other items, rate increase rate increase effects kWh sales mark-to-market net Regulated electricity gross margin variances
Slide 8: 2009 - 2010 On-Going Earnings Guidance
2009 - 2010 On-Going Earnings Guidance* As of October 29, 2009 2009 2010 Consolidated on-going EPS $ 2.30 $ 3.00 ¾ Excluding any SunCor impact * Within a reasonable range around specified amount Third Quarter 2009 8
Slide 9: CEO Agenda
CEO Agenda ¾ Regulatory Settlement Status ¾ Renewable Resources ¾ Operations Update ¾ SunCor Restructuring Status ¾ Looking Ahead Third Quarter 2009 9
Slide 10: Appendix
vvy PINNACLE WEST Ls CAPITAL CORPORATION Appendix — 3Q ‘09 Appendix 10
Slide 11: Renewable Energy and Demand-Side Management Surcharges
Renewable Energy and Demand-Side Management Surcharges* Pretax $ Millions 25 25 23 20 18 15 10 8 7 7 5 4 3 2 2 2 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2007 2008 2009 * Revenues associated with these surcharges were offset by comparable amounts of O&M expense. Appendix – 3Q ‘09 11
Slide 12: Quarterly Mark-to-Market on Hedge Contracts
Quarterly Mark-to-Market on Hedge Contracts* Pretax $ Millions 20 14 14 10 7 8 5 3 0 (1) (3) (5) (10) (9) (20) (30) (29) (40) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2007 2008 2009 * APS 10% share under Power Supply Adjustor (PSA), net of related deferrals. Appendix – 3Q ‘09 12
Slide 13: Retail Rate and Financial Stability Plan Proposed Settlement
Retail Rate and Financial Stability Plan Proposed Settlement Primary Benefits ¾ Strengthens APS’ financial condition and supports common dividend ¾ Provides greater level of cost recovery and return on investment ¾ Demonstrates cooperation among APS, ACC Staff, RUCO and other intervenors ¾ Allows op
Slide 14: Retail Rate and Financial Stability Plan Proposed Settlement
Retail Rate and Financial Stability Plan Proposed Settlement Proposed Settlement Base Retail Rates – Annualized revenue increases ($ millions): Non-fuel $ 196 Net fuel-related 11 Net increase $ 207 Allowed ROE (%) 11 Equity ratio (%) 54 Rate base ($ billions) $5.6 Base fuel rate (¢ per kWh) 3.76 Eff
Slide 15: Retail Rate and Financial Stability Plan Proposed Settlement
Retail Rate and Financial Stability Plan Proposed Settlement Key Financial Provisions – Other Than Base Rates ¾ Expense Reduction Commitment $30 million average expense reduction each year in 2010 through 2014 ¾ Pension and OPEB Deferrals – 2011-2012 defer for future rate recovery differences betw
Slide 16: Retail Rate and Financial Stability Plan Proposed Settlement
Retail Rate and Financial Stability Plan Proposed Settlement Key Financial Provisions – Other Than Base Rates ¾ Palo Verde License Extension Extension of operating licenses to 60 years from 40 years requested December 2008 • Process expected to take about two years Effective later of NRC approva
Slide 17: Retail Rate and Financial Stability Plan Proposed Settlement
Retail Rate and Financial Stability Plan Proposed Settlement Future Rate Case Process and Other Key Provisions ¾ Future rate case process Settling parties intend to process future cases within 12 months of sufficiency findings APS to file general base rate cases on or after June 1, 2011 and June
Slide 18: Retail Rate and Financial Stability Plan Proposed Settlement
Retail Rate and Financial Stability Plan Proposed Settlement Expected Procedural Schedule Term sheet filed May 4, 2009 Definitive settlement agreement filed June 12, 2009 Hearing conducted August 19, 2009 – September 18, 2009 ALJ recommended order expected November 2009 Commissioner consideration ex
Slide 19: Non-GAAP Measure Reconciliation – Regulated Electricity Segment Gross Margin
Non-GAAP Measure Reconciliation – Regulated Electricity Segment Gross Margin $ millions, except per share amounts Three Months Ended September 30, EPS 2009 2008 Change Reconciliation of Regulated Electricity Segment Gross Margin Regulated electricity segment revenue* $1,084 $1,040 Regulated electric
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