Slide 1: 1st Quarter 2012 Results
1st Quarter 2012 Results First Quarter 2012
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements based on current expectations, including statements regarding our 2012 earnings outlook. These forward-looking statements are often identified by words such as “estimate,” “predict,” “may,” “believe,” “plan,” “expect,”
Slide 3: Amounts Attributable to Common Shareholders and Non-GAAP Financial Measures
Amounts Attributable to Common Shareholders and Non-GAAP Financial Measures In this presentation, references to net income and earnings per share (EPS) refer to amounts attributable to common shareholders. We present “gross margin” per diluted share of common stock. Gross margin refers to operating
Slide 4: CFO Agenda
CFO Agenda 1st Quarter Results Arizona Economic Outlook Liquidity and Financing Activities First Quarter 2012 4
Slide 5: Consolidated EPS Comparisons
Consolidated EPS Comparisons 1st Quarter 2012 vs. 1st Quarter 2011 Net Loss On-Going Loss Per Share Per Share $0.00 $0.00 ($0.06) ($0.06) $(0.07) $(0.08) ($0.12) ($0.12) $(0.14) $(0.15) ($0.18) ($0.18) 2012 2011 2012 2011 First Quarter 2012 5
Slide 6: Non-GAAP EPS Reconciliation
Non-GAAP EPS Reconciliation 1st Quarter 2012 vs. 1st Quarter 2011 1st Qtr 1st Qtr 2012 2011 Change EPS as reported $ (0.08) $ (0.14) $ 0.06 Less discontinued operations 0.01 (0.01) 0.02 On-going EPS $ (0.07) $ (0.15) $ 0.08 First Quarter 2012 6
Slide 7: On-Going EPS Variances
On-Going EPS Variances 1st Quarter 2012 vs. 1st Quarter 2011 Lower infrastructure- related costs Other, net $0.03 $(0.03) Net Increase Lower O&M* $0.07 $0.08 = Higher gross margin* $0.01 * Excludes costs, and offsetting operating revenues, associated with renewable energy (net of AZ Sun), energy eff
Slide 8: Gross Margin EPS Drivers
Gross Margin EPS Drivers 1st Quarter 2012 vs. 1st Quarter 2011 Lower retail Other, net usage $0.03 $(0.04) Line extensions $0.02 Weather effects Retail $(0.03) transmission charge increase $0.03 Net Increase $0.01 = See non-GAAP reconciliation in appendix. First Quarter 2012 8
Slide 9: Arizona Economic Indicators
Arizona Economic Indicators Employment & Consumer Spending Non-Farm Job Growth Consumer Spending Year-Over- Year-Over- Year Change Year Change 10% 25% 8% 20% 6% 15% 4% 10% 2% 5% 0% 0% (2)% (5)% (4)% (10)% (6)% (15)% (8)% (20)% (10)% (25)% ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 First
Slide 10: CEO Discussion Agenda
CEO Discussion Agenda Arizona Regulatory Developments Generation and Renewables Investments Utility Operations Update Looking Ahead First Quarter 2012 10
Slide 11: Appendix
Appendix First Quarter 2012
Slide 12: 2012 On-Going Earnings Key Drivers
2012 On-Going Earnings Key Drivers Retail customer growth about 1% Weather-normalized retail electricity sales volume growth slightly negative taking into account effects of Company’s energy efficiency initiatives Weather 2009 regulatory settlement provisions, until 2012 retail rate decision
Slide 13: 2012 Proposed Retail Rate Case Settlement
2012 Proposed Retail Rate Case Settlement Key Benefits from Investor Perspective The proposed settlement contains a number of benefits for customers and shareholders. Provides financial support APS needs to achieve Arizona’s energy goals Encourages progress toward sustainable energy future Sup
Slide 14: 2012 Proposed Retail Rate Case Settlement: Base Rate Changes
2012 Proposed Retail Rate Case Settlement Key Financial Proposals – Base Rate Changes The proposed net base rate change would be zero, when implemented – an important benefit to customers. Annualized Base Rate Revenue Changes ($ millions) Non-fuel base rate increase $ 116.3 Fuel-related base rate de
Slide 15: 2012 Proposed Retail Rate Case Settlement: Other than Base Rates
2012 Proposed Retail Rate Case Settlement Key Proposals – Other than Base Rates Other key proposals provide customers rate stability while continuing constructive regulatory treatment and limiting regulatory lag. Post test-year plant additions – 15 months’ additions included in rate base Constru
Slide 16: 2012 Proposed Retail Rate Case Settlement: Key Financial Assumptions
2012 Proposed Retail Rate Case Settlement Key Financial Assumptions Updated rate base, cost of capital and fuel prices underpin the proposed settlement amounts. Rate base $5.7 billion Allowed return on equity 10% Capital structure Long-term debt 46.1% Common equity 53.9% Base fuel rate (¢/kWh) 3.21¢
Slide 17: 2012 Proposed Retail Rate Case Settlement: Procedural Schedule
2012 Proposed Retail Rate Case Settlement Procedural Schedule Key Dates The provisions of the settlement are targeted to become effective July 1, 2012, as originally requested by APS. Settlement agreement filed January 6 Hearing conducted January 26 – February 3 Post-hearing briefs filed Febru
Slide 18: Four Corners Power Plant Proposed Plan
Four Corners Power Plant Proposed Plan Acquire Southern California Edison’s 739 MW interest in Units 4 & 5 and shut down 560 MW Units 1 – 3 Purchase price: $294 million (subject to adjustments) Acquisition target date: No earlier than December 1, 2012 Estimated environmental compliance investm
Slide 19: APS AZ Sun Program
APS AZ Sun Program Up to 200 MW utility-scale photovoltaic solar plants to be owned by APS In service 2011 through 2015 Constructive rate recovery through RES until included in base rates Commitments to date: 104 MW with $451 million estimated capital investment Project summary Name Net
Slide 20: Gross Margin Effects of Weather Variances Versus Normal
Gross Margin Effects of Weather Variances Versus Normal* Pretax Millions $25 20 $20 $15 9 8 $10 4 $5 2 $0 ($5) (4) (4) ($10) ($15) ($20) ($25) ($30) (26) (27) ($35) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2010 2011 2012 *All periods recalculated to conform to current presentation. First Quarter 2012 20
Slide 21: Quarterly Mark-to-Market on Hedge Contracts
Quarterly Mark-to-Market on Hedge Contracts* Pretax Millions $10 $5 1 0 0 $0 (1) (1) (2) (2) (2) (2) $(5) $(10) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2010 2011 2012 * Related to APS 10% share under Power Supply Adjustor (PSA), net of related deferrals. First Quarter 2012 21
Slide 22: Renewable Energy, Demand-Side Management and Similar Regulatory Expenses
Renewable Energy, Demand-Side Management and Similar Regulatory Expenses* Pretax Millions $50 $45 $40 2 $35 23 2 $30 15 2 18 16 $25 12 13 8 11 $20 16 $15 21 23 $10 18 19 19 19 19 16 $5 10 $0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2010 2011 2012 Renewable Energy Demand-Side Management Competition Rules Complianc
Slide 23: Non-GAAP Measure Reconciliation
Non-GAAP Measure Reconciliation Gross Margin Three Months Ended March 31, EPS $ millions, pretax, except per share amounts 2012 2011 Change Operating revenues* $ 621 $ 649 Fuel and purchased power expenses* (216) (212) Gross margin 405 437 $ (0.18) Less: Renewable energy, energy efficiency and simil