Pinnacle West Capital Corporation · NYSE:PNW
Pinnacle West Capital — Q1 2021 Earnings Presentation
26 slides from Pinnacle West Capital's earnings presentation, May 5, 2021
Slide 1: Powering Growth, Delivering Value: First Quarter 2021 Results
POWERING GROWTH DELIVERING VALUE First Quarter 2021 Results May 5, 2021 1
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: EPS Variances
EPS Variances 1st Quarter 2021 vs. 1st Quarter 2020 Other, net2 $(0.02) O&M1 & 2 $(0.06) D&A2 $0.32 $(0.02) Other Taxes2 Pension $(0.02) & OPEB Non- Effective Tax $0.27 service Rate 3 Operating Credits, net $(0.09) Revenue less $0.09 Fuel and Purchased Operating Revenue less Fuel and Power1 $0.17 Pu
Slide 4: Key Drivers & Guidance
Key Drivers & Guidance As of May 5, 2021 2021 Key Drivers • Operations and maintenance • EPS guidance pending APS rate case conclusion • Depreciation and amortization • Retail customer growth about 1.5-2.5% • Interest rates • Weather-normalized retail electricity • AFUDC sales growth of 0.5%-1.5% •
Slide 5: Long-Term Debt Maturity Profile
Long-Term Debt Maturity Profile ($MM) APS Long-Term Debt PNW Long-Term Debt 1,250 1,000 750 500 250 0 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 2043 2045 2047 2049 As of March 31, 2021 5 Fi rs t Quarter 2021
Slide 6: Economic Development
Economic Development Future Expansions Taiwan Semiconductor is expected to break ground in 2021 Phoenix's metro ranked 7th in the nation among large cities and be operational by 2024. for its new business formation rate1 MLily selected Goodyear for their second U.S. factory. The nearly 650,000 squar
Slide 7: Economic Indicators
Economic Indicators Annual Employment Growth Last Three Years 1 Steady Housing Growth2 Single Family & Multifamily Housing Permits Maricopa County 39,693 1% (1)% 20% CAGR 6,582 National Arizona '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 12018-2020 2Maricopa County population 4.5M, 62% of state popu
Slide 8: APS Capital Expenditures
APS Capital Expenditures Capital expenditures will support our growing customer base and our transition to a cleaner generation mix. $ in millions $2,000 PROJECTED $1,800 $1,600 $1,500 $1,500 $1,500 $1,400 $203 $190 $187 $1,262 Traditional Generation $1,200 $199 $314 $392 $406 Clean Generation $1,00
Slide 9: Rate Base
Rate Base APS’s revenues come from a regulated retail rate base and meaningful transmission business. APS Rate Base Growth Total Approved Rate Base Year-End Long-term Rate Base Guidance: ~6% Average Annual Growth Generation & Distribution 20% Transmission $2.3 80% $1.7 $10.6 ACC FERC $8.6 Rate Effec
Slide 10: Operations & Maintenance
Operations & Maintenance Goal is to keep O&M per kWh flat, adjusted for planned outages. $ in millions $933 $886 $858 74 $856 45 63 48 795 859 808 841 2017 2018 2019 2020 2 1 PNW Consolidated ex RES/DSM Planned Fleet Outages 1 Excludes RES/DSM of $91 million in 2017, $104 million in 2018, $86 millio
Slide 11: 2021 Planned Outage Schedule
2021 Planned Outage Schedule Coal, Nuclear and Large Gas Planned Outages Q1 Q2 Q4 Estimated Duration Estimated Duration in Estimated Plant Unit Plant Unit Plant Unit in Days Days Duration in Days Four Corners* 4 47 Four Corners* 4 30 Palo Verde 2 30 Palo Verde 3 30 *Outage duration spans Q1-Q2. Numb
Slide 12: Appendix
PINNACLE WEST
Slide 13: Future Focus: Clean Energy Plan
Future Focus: Clean Energy Plan APS Clean Energy Commitment | Clean Energy Pathway Clean Energy Commitments A Clean Economic Future • 100% clean, carbon-free • Meet our responsibility to power Arizona and move toward electricity by 2050 a low-carbon economy • 65% clean energy by 2030 • Guided by sou
Slide 14: Resource Planning
Resource Planning Procurement Activities Storage Contracted Battery RFP • 141 MW located on six APS • 60 MW of APS-owned battery storage solar plant sites • Located on two APS solar plant sites • Utility owned • To be in service no later than • Expected in service 2022 June 1, 2023 Wind Contracted A
Slide 15: Credit Ratings & Metrics
Credit Ratings & Metrics APS Pinnacle West S&P Credit Metrics TME 12/31/20 Corporate Credit Ratings1 APS Moody’s A2 A3 FFO/Debt 22.0% S&P A- A- FFO/Interest 7.0x Fitch A- A- Debt/Capitalization 49.7% Senior Unsecured 1 Pinnacle West Moody’s A2 A3 FFO/Debt 20.2% S&P A- BBB+ FFO/Interest 6.8x Fitch A
Slide 16: Gross Margin Effects of Weather
Gross Margin Effects of Weather $ in millions pretax Variances vs. Normal $55 $45 $35 $25 $15 4 $5 $(5) $(15) $(25) $(35) Q1 Q2 Q3 Q4 2021 $4 Million All periods recalculated to current 10-year rolling average (2009 – 2018). Numbers may not foot due to rounding. 16 Fi rs t Quarter 2021
Slide 17: Renewable Energy & Demand Side Management Expenses
Renewable Energy & Demand Side Management Expenses1 $40 Demand Side Management Renewable Energy $30 $20 $11 $11 $14 $11 $10 $12 $9 $7 $6 $7 $3 $0 Q1 Q2 Q3 Q4 Q1 2020 2021 $73 Million $18 Million 1 Renewable energy and demand side management expenses are offset by adjustment mechanisms. 17 Fi rs t Qu
Slide 18: Residential PV Applications
Residential PV Applications 1 Residential DG (MWdc) Annual Additions 133 151 133 139 122 2,500 39 2016 2017 2018 2019 2020 2021 2,000 1,500 1,000 500 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2018 Applications 2019 Applications 2020 Applications 2021 Applications 1 Monthly data equals applic
Slide 19: Regulatory 2021 Key Dates
Regulatory 2021 Key Dates ACC Key Dates / Docket # Q1 Q2 Q3 Q4 Approved 50% Effective Power Supply Adjustor (PSA): E-01345A-16-0036 50% Effective April 1 March 24 November 1 Increase denied Lost Fixed Cost Recovery: E-01345A-16-0036 Filed Feb 15 April 13 To be filed May 15 Transmission Cost Adjustor
Slide 20: 2019 Rate Case Rebuttal Testimony
2019 Rate Case Rebuttal Testimony Filed November 6, 2020 | Docket Number: E-01345A-19-0236 Additional details, including filing, can be found at http://www.pinnaclewest.com/investors Rebuttal Testimony Highlights Advanced Energy • Recover clean energy investments Mechanism (AEM) • Could replace the
Slide 21: Key Financials
Key Financials Rebuttal Testimony SCR and Ocotillo Cost Deferrals $ in Millions Q1 2021 Q1 2020 Test year ended June 30, 2019 Operating Cost Deferral Impacts: Total Rate Base - Adjusted $11.2 Billion Depreciation and $5 $4 ACC Rate Base - Adjusted $8.9 Billion Amortization Allowed Return on Equity
Slide 22: APS Rebuttal Testimony | Revenue Requirement
APS Rebuttal Testimony | Revenue Requirement Customer Bill Impact = Net Base Rate Increase + Net Adjustor Dollars (millions) Bill Impact Changes Total Revenue Deficiency in APS’s Application $184 5.6% Base Rate Changes Net adjustments $(28) (0.9)% TEAM $(119) (3.6)% All other adjustor mech
Slide 23: Summary of Rate Case Intervenor Recommendations
Summary of Rate Case Intervenor Recommendations APS (Rebuttal) ACC Staff (Surrebuttal) RUCO (Surrebuttal) Total Revenue Increase $169 $59.8 $(50.0) (Base Rate and Adjustors) ($MM) 5.1% 1.8% (1.5)% Base Rate Increase ($MM) $40 $(55.2) $(165.0) ROE 10.00% 9.40% 8.70% Alt 1: 0.00% Return on Fair Value
Slide 24: APS Rate Case Procedural Schedule
APS Rate Case Procedural Schedule Arizona Public Service Company Docket #E-01345A-19-0236 • Application Filed October 31, 2019 • Staff/Intervenor Direct Testimony (October 2, 2020) • Staff/Intervenor Direct Testimony (Rate Design) (October 9, 2020) • APS Rebuttal Testimony (November 6, 2020) • Staff
Slide 25: Consolidated Statistics
Consolidated Statistics 3 Months Ended March 31 3 Months Ended March 31 2021 2020 Incr (Decr) 2021 2020 Incr (Decr) TOTAL OPERATING REVENUES (Dollars in Millions) RETAIL SALES (GWH) - WEATHER NORMALIZED Retail Residential 2,535 2,480 55 Residential $ 341 $ 325 16 Business 3,167 3,196 (29) Business 3
Slide 26: Consolidated Statistics
Consolidated Statistics 3 Months Ended March 31 3 Months Ended March 31 2021 2020 Incr (Decr) 2021 2020 Incr (Decr) ENERGY SOURCES (GWH) WEATHER INDICATORS - RESIDENTIAL Generation Production Actual Cooling Degree-Days - - - Nuclear 2,459 2,405 55 Heating Degree-Days 506 525 (19) Coal 1,340 1,407 (6
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