Pinnacle West Capital Corporation · NYSE:PNW

Pinnacle West Capital — Edison Electric Institute Presentation 2005

16 slides from Pinnacle West Capital's conference presentation, Nov 7, 2005

  1. Slide 1: Edison Electric Institute Presentation: Retail Rate Case Filing and Financial Outlook

    Edison Electric Institute Presentation Retail Rate Case Filing and Financial Outlook November 7, 2005

  2. Slide 2: Forward-Looking Statements

    Forward-Looking Statements This presentation contains forward-looking statements based on current expectations, and 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: Retail Rate Case Filing: Rationale

    Retail Rate Case Filing Rationale ƒ Maintain financial strength to support growth and reliability ƒ Improve quality of earnings ƒ Address power supply adjustor (PSA) structural weaknesses ƒ Recognize rate base additions since 2002 ƒ Reflect current capital structure and cost of capital ƒ Update othe

  4. Slide 4: Retail Rate Case Filing: Summary

    Retail Rate Case Filing Summary Key Provisions ƒ 19.9% rate increase ($409.1 million annual revenues) ƒ Modifications to PSA ƒ Test year ended December 31, 2004 ƒ $4.4 billion rate base ƒ Base rate increase for fuel and purchased power ƒ Sundance power plant in rates ƒ Accelerate pension funding ƒ E

  5. Slide 5: Rate Increase Components

    Retail Rate Case Filing Rate Increase Components $ Millions Annual Percent Revenue Increase Increased fuel and purchased power costs $ 246.8 12.0% Capital structure update 96.8 4.7 Rate base update (including Sundance Plant) 42.5 2.1 Pension funding 41.2 2.0 Other items (18.2) (0.9) Total increase $

  6. Slide 6: Cost of Capital

    Retail Rate Case Filing Cost of Capital Capital Cost of Structure Capital Long-term debt 45.7% 5.19% Common stock equity 54.3% 11.50% Weighted-average cost of capital 8.61%

  7. Slide 7: Three Means of Recovering Fuel & Purchased Power Costs

    Three Means of Recovering Fuel & Purchased Power Costs Base Rate Level Cost Recovery r Su Ad PSA to PS har jus rc A ge

  8. Slide 8: Proposed PSA Changes

    Retail Rate Case Filing Proposed PSA Changes Proposed Provision Current Provision 4 mill limit on PSA Change to annual limit “Lifetime” limit adjustor rate changes Annual limit on fuel and Eliminate or increase $776.2 million purchased power costs $776.2 million limit annual limit under PSA Surcharg

  9. Slide 9: Retail Rate Case Filing: Timeline

    Retail Rate Case Filing Timeline ƒ Filed with ACC November 4, 2005 ƒ Procedural schedule to be issued by ALJ ƒ Requested decision effective no later than December 31, 2006

  10. Slide 10: 2005 PSA Surcharge Update

    2005 PSA Surcharge Update Components ƒ Recovery of $80 million of fuel and purchased power deferred since April 1, 2005 ƒ 1.7% temporary rate increase for 24 months ƒ Recovery of Palo Verde outage-related costs deferred to later proceeding Timeline ƒ Application filed July 2005 ƒ Hearings completed

  11. Slide 11: 2005-2007 Earnings Outlook

    2005-2007 Earnings Outlook Overall Assumptions ƒ SunCor’s business strategy reshaped to focus on real estate development services - Annual earnings $40 million to $50 million in 2006 and 2007 ƒ Fuel and purchased power costs will be: - Recovered through base rates, PSA surcharges or PSA adjustor rat

  12. Slide 12: 2005 Earnings Outlook

    2005 Earnings Outlook ƒ Reasonable range around $3.00 per share ƒ Including earnings attributable to PSA cost deferrals of approximately $0.95 per share ƒ Does not reflect: - $87 million after-tax regulatory disallowance - $55 million after-tax loss on sale of Silverhawk

  13. Slide 13: 2006 Earnings Outlook

    2006 Earnings Outlook ƒ Reasonable range around $3.00 per share ƒ Key assumptions: - SunCor earnings of $0.40 - $0.50 per share - Earnings attributable to PSA cost deferrals approximately $1.30 per share - APS fuel and purchased power costs under PSA estimated to be approximately $834 million* - $77

  14. Slide 14: 2007 Earnings Outlook

    2007 Earnings Outlook Base level of earnings within reasonable range around $2.70 per share ƒ Before effects of APS retail rate case decision ƒ Earnings attributable to PSA cost deferrals approximately $1.75 per share ƒ SunCor earnings of $0.40 - $0.50 per share Reasonable range around $3.75 per sha

  15. Slide 15: Chairman's Comments

    Chairman’s Comments

  16. Slide 16: Pinnacle West

    PINNACLE WE ST

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