Pinnacle West Capital Corporation · NYSE:PNW
Pinnacle West Capital — ESG Presentation (December 2021)
26 slides from Pinnacle West Capital's sustainability presentation, Dec 3, 2021
Slide 1: Environmental, Social, and Governance Overview December 2021
Environmental, Social, and Governance Overview December 2021
Slide 2: Forward Looking Statements
Forward Looking Statements 2 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: The Pinnacle West Story: Navigating Short-Term Challenges
T H E P I N N A C L E W E S T S T O R Y Navigating Short-Term Challenges. Longer-Term, A Powerful Growth Story 3 1 ESG Leadership 2 Shift to Clean 3 Substantive Social Impact 4 Strong Governance
Slide 4: At a Glance: Arizona's Largest Electric Company
A T A G L A N C E Arizona’s Largest Electric Company 4 $20BConsolidated assets $3.6BRevenues ~$9B Market cap ~6.3 GW Generating capacity owned or leased – year end 1.3MCustomers ~50%Current % from clean energy LargestNuclear plant in U.S. Service Territory1 Key Facts as of Dec. 31, 2020 1 As of Dece
Slide 5: Building on a Strong Performance Track Record
Building on a Strong Performance Track Record 5 Top Quartile Consistent ranking Safety Profile Flat APS core operating costs per kWh last 3 years Operating Costs 2% Average annual growth last 3 years Customer Growth 25 years Residential rates increased less than inflation 70% 34% CPI* APS Last 25 Ye
Slide 6: Leading ESG Practices Guide Our Approach
Leading ESG Practices Guide Our Approach – Snapshot ¹ Climate Change and Water Security “A Lists” by CDP: One of only 16 North American companies worldwide to receive two A scores. 2 Report dated April 27, 2021. 6 Environmental Social Governance Only North American electric utility on CDP A List for
Slide 7: The Pinnacle West Story: Shift to Clean
T H E P I N N A C L E W E S T S T O R Y Navigating Short-Term Challenges. Longer-Term, A Powerful Growth Story 7 1 ESG Leadership 2 Shift to Clean 3 Substantive Social Impact 4 Strong Governance
Slide 8: Our Clean Energy Plan Commitments
Our Clean Energy Plan 8 Commitments Pathway 2005 2019 2030 2050 1 100% clean, carbon-free electricity by 2050 2 65% clean energy by 2030 with 45% renewable energy 3 End APS’s use of coal-fired generation by end of 2031 24% 50% 65% 100%
Slide 9: Clean Energy Commitment – 1,384MW in Development Since 2020
Clean Energy Commitment – 1,384MW in development since 2020 9 Robust, Diverse Procurement Activity Energy Storage • 201 MW APS-owned resources to retrofit entire fleet of AZ Sun facilities • 300 MW under two long-term PPAs • All resources to be in service between 2022 and 2024 Solar • 150 MW owned b
Slide 10: Coal Exit Strategy – Years Earlier than Originally Projected
2018 2019 2025 2031 Coal Exit Strategy – 7 Years Earlier than Originally Projected 10 Coal Free 2038 Navajo 315 MW (now retired) Cholla 387 MW 2025 Remaining Four Corners 970 MW 20311 1Starting in 2023, Four Corners will move to a seasonal operating schedule that will further reduce annual carbon em
Slide 11: Coal Exit and Expiring Contracts Will Create a 6,000 MW Gap by 2035
Coal Exit and Expiring Purchase Contracts Will Create a 6,000 MW Supply-Demand Gap by 2035 ¹ Wi l l need more additions than 6,000 MW due to new resources being paired to meet reliability requirements (i .e., solar with s torage requires 100 MW solar plus 100 MW of s torage). 11 0 2,000 4,000 6,000
Slide 12: Key New Energy Sources to Achieve Goals
Key New Energy Sources to Achieve Goals 12 Initiatives • Solar generation • Wind generation • Gas as a bridge fuel • Demand-side management • Energy storage solutions • Innovation Resource Mix Change Today 2035 Coal 14% 0% Gas 28% 6%-17% Nuclear 23% 16% Purchased 8% 11% Renewable/ DSM 27% 56%-67%
Slide 13: Energy Storage: A Key Element of Our Renewable Energy Plan
Energy Storage A Key Element of Our Renewal Energy Plan 13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 5,000 6,000 7,000 8,000 9,000 MW Hours Throughout Day Daily Energy Usage Store solar energy at midday Storage Advantages Absorbs negative priced excess energy at noon Provide opp
Slide 14: Pilot Project Exploring Hydrogen for Long Duration Storage
Pilot Project Exploring Hydrogen as Potential Solution for Long Duration Storage 14 Collaborators • Palo Verde nuclear plant and Idaho National Laboratory Pilot Program • Examine long-term cost effectiveness of hydrogen production at utility scale Goal • Use of hydrogen for long term storage of ener
Slide 15: Managing Capital Plan to Support Customer Growth, Reliability and Clean Transition
$191 $175 $185 $190 $602 $510 $530 $500 $240 $250 $210 $210 $257 $340 $330 $560 $210 $250 $270 $190 2021E 2022E 2023E 2024E Traditional Generation Clean Generation Transmission Distribution Other Total 2022-2024 $4.7B $1.50B $1.53B $1.53B $1.65B 15 Managing Capital Plan to Support Customer Growth, R
Slide 16: The Pinnacle West Story: Substantive Social Impact
T H E P I N N A C L E W E S T S T O R Y Navigating Short-Term Challenges. Longer-Term, A Powerful Growth Story 16 1 ESG Leadership 2 Shift to Clean 3 Substantive Social Impact 4 Strong Governance
Slide 17: Helping our Communities Thrive Creates Lasting Benefits for our Company
Helping our Communities Thrive Creates Lasting Benefits for our Company 17 $10.5 Million We donated more than $10.5 million in 2020 Small Business Assistance Provided direct assistance to 956 small businesses impacted by the pandemic Community- Minded Employees Employees pledged $2.2 million to Unit
Slide 18: Customer Driven Initiatives Underway – A Few Examples
Customer Driven Initiatives Underway – A Few Examples 18 Take Charge AZ Customer Advisory Board • Pilot program to encourage electric vehicle adoption by installing charging stations • Expect to install more than 300 chargers through 2021 Energy Efficiency • Gathers direct insight from residential c
Slide 19: Example of Innovation in Initiatives: Bringing the Residential Customer into the Advanced Economy
E X A M P L E O F I N N O V A T I O N I N N I T I A T I V E Bringing the Residential Customer into the Advanced Economy 19 Initiatives • Award-winning program to promote installation of advanced smart thermostats – reduces demand during peak load window • Super off-peak electric vehicle charging rat
Slide 20: Supporting our People to Strengthen our Company
Supporting our People to Strengthen our Company 20 Virtually hosted 56 summer interns from 11 different universities with a diversity rate of 52% in 2020 Robust employee engagement, including 10 Employee Network Groups Average employee tenure of 12 years in 2020 due to strong talent strategy Total t
Slide 21: Enhanced Diversity, Equity and Inclusion Unites Our Team
Enhanced Diversity, Equity and Inclusion Unites Our Team 21 2020 Inclusion Council In 2020, we launched our Inclusion Council, which is comprised of: • The Employee Advisory Board • The Inclusion Steering Committee • The Inclusion Working Team • The Executive Advocates • 32% are ethnically or racial
Slide 22: The Pinnacle West Story: Strong Governance
T H E P I N N A C L E W E S T S T O R Y Navigating Short-Term Challenges. Longer-Term, A Powerful Growth Story 22 1 ESG Leadership 2 Shift to Clean 3 Substantive Social Impact 4 Strong Governance
Slide 23: Robust Shareholder Rights Reflect Investor Feedback
Robust Shareholder Rights Reflect Investor Feedback 23 Reduced threshold to call a special meeting to 15% Annual elections of all directors with cumulative voting No poison pill plan or similar anti-takeover provision in place No supermajority provisions in our Articles of Incorporation or Bylaws Pr
Slide 24: Board Independence
Board Independence Our Strong Governance Enables Successful Execution 24 • Ten of our eleven directors are independent • Robust Board refreshment, with director retirement policy • Defined oversight of environmental, social and governance practices by the Corporate Governance and Public Responsibili
Slide 25: Diverse Board Representation
25 Diverse Board Representation • 30% of independent directors gender or ethnically diverse • Diversity in skills, knowledge and expertise • Average tenure is 8.7 years for our independent directors
Slide 26: Executive Compensation Linked to Shareholder Priorities
Executive Compensation Linked to Shareholder Priorities 26 Substantial proportion of target compensation is at risk Performance share measures include safety and customer experience performance Anti-hedging and anti-pledging policies Stock ownership guidelines for all Named Executive Officers Clawba
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