Pinnacle West Capital Corporation · NYSE:PNW
Pinnacle West Capital — Q2 2017 Earnings Presentation
21 slides from Pinnacle West Capital's earnings presentation, Aug 3, 2017
Slide 1: Second Quarter 2017 Results
SECOND QUARTER 2017 RESULTS August 3, 2017 Second Quarter 2017
Slide 2: Forward Looking Statements and Non-GAAP Financial Measures
FORWARD LOOKING STATEMENTS AND NON-GAAP FINANCIAL MEASURES 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
Slide 3: Consolidated EPS Comparison 2017 vs. 2016
CONSOLIDATED EPS COMPARISON 2017 VS. 2016 2nd Quarter Year-to-Date On-Going Earnings On-Going Earnings $1.70 $1.49 $1.08 $1.12 2017 2016 2017 2016 2nd Quarter Year-to-Date GAAP Net Income GAAP Net Income $1.49 $1.08 $1.70 $1.12 3 Second Quarter 2017
Slide 4: On-Going EPS Variances 2nd Quarter 2017 vs. 2016
ON-GOING EPS VARIANCES 2ND QUARTER 2017 VS. 2ND QUARTER 2016 Interest, net O&M(1) D&A Other Taxes of AFUDC Other, net Gross $0.14 $(0.01) $(0.01) $(0.01) $0.03 $1.49 Margin(1) $0.27 $1.08 Gross Margin Sales $ 0.10 Weather $ 0.02 Transmission $ 0.12 LFCR $ 0.04 Other $ (0.01) 2Q 2016 2Q 2017 (1) Excl
Slide 5: Economic Indicators
ECONOMIC Arizona and Metro Phoenix remain attractive places to live and do INDICATORS business Year Over Year Employment Growth U.S. Phoenix Maricopa County ranked #1 in U.S. for 4.0% population growth in 2016 3.5% - U.S. Census Bureau March 2017 3.0% 2.5% 2.0% Above-average job growth in financial
Slide 6: Appendix
APPENDIX Second Quarter 2017
Slide 7: Residential Solar vs. APS Customer Load
RESIDENTIAL SOLAR VS. APS CUSTOMER Performance at system peak LOAD On June 20th, APS customers hit “peak demand” for 2017 using more than 7,300 MW of electricity 500 7,367 8,000 6,918 6,136 400 6,000 304 300 Residential Rooftop MW 4,000 APS Customer Load 200 100 2,000 100 5 0 0 1 2 3 4 5 6 7 8 9 10
Slide 8: 2017 Key Dates
2017 KEY DATES ACC Key Dates / Docket # Q1 Q2 Q3 Q4 Key Recurring Regulatory Filings Lost Fixed Cost Recovery Jan 15 E-01345A-11-0224 Transmission Cost Adjustor May 15 E-01345A-11-0224 2018 DSM/EE Implementation Plan Sep 1 2018 RES Implementation Plan for Reset Jul 1 of Renewable Energy Adjustor APS
Slide 9: APS Rate Case: Recommended Opinion and Order (ROO)
APS RATE CASE: RECOMMENDED OPINION AND ORDER (ROO) • Administrative Law Judge issued the ROO on July 26th • Parties to the case may file exceptions to the ROO by August 4th • The final step in the rate case process is for the Arizona Corporation Commission to vote at an Open Meeting • The ROO: − Sup
Slide 10: 2017 Rate Case Settlement (Supported by the ROO)
2017 RATE CASE SETTLEMENT (SUPPORTED BY THE ROO) Key Financial Proposals – Base Rate Changes Annualized Base Rate Revenue Changes ($ millions) Non-fuel, Non-depreciation Base Rate Increase $ 87.2 Decrease fuel and Purchased Power over Base Rates (53.6) Increase due to Changes in Depreciation Schedul
Slide 11: 2017 Rate Case Settlement (Supported by the ROO)
2017 RATE CASE SETTLEMENT (SUPPORTED BY THE ROO) Key Proposals – Revenue Requirement • Cost deferral order from in-service dates to incorporation of SCRs in rates using a step-increase no Four Corners later than January 1, 2019 Ocotillo Modernization • Cost deferral order from in-service dates to ef
Slide 12: 2017 On-Going Earnings Key Drivers
2017 ON-GOING EARNINGS KEY DRIVERS • EPS guidance issuance pending timing of APS rate case decision • Retail customer growth about 1.5-2.5% • Weather-normalized retail electricity sales volume growth about 0.0-1.0% after customer conservation and energy efficiency and distributed renewable generatio
Slide 13: APS Capital Expenditures
APS CAPITAL Capital expenditures are funded primarily through internally EXPENDITURES generated cash flow ($ Millions) Other $1,337 $1,224 $77 Distribution $87 $1,139 $72 $1,009 $402 Transmission $388 $102 $409 Renewable $203 Generation $127 $412 $3 $102 $198 $170 Environmental(1) $17 $220 $106 $190
Slide 14: Operations & Maintenance
OPERATIONS & Goal is to keep O&M per kWh flat, MAINTENANCE adjusted for planned outages ($ Millions) $137 $103 $83 $150 $124 $96 $805 $828 $761 $788 $772 $754 2011 2012 2013 2014 2015 2016 PNW Consolidated RES/DSM* *Renewable energy and demand side management expenses are offset by adjustment mechan
Slide 15: Balance Sheet Strength
BALANCE SHEET STRENGTH Debt Maturity Schedule Credit Ratings ($Millions) • A- or equivalent ratings or better at S&P, Moody’s and Fitch $600 2017 Major Financing Activities $500 • $250 million re-opening in March of APS’s outstanding 4.35% senior unsecured notes due $400 November 2045 • Currently ex
Slide 16: Residential PV Applications
Residential DG (MWdc) Annual Additions RESIDENTIAL PV 133 74 70 APPLICATIONS* 51 57 44 18 22 10 2009 2011 2013 2015 2017 YTD -Jun 5,000 4,528 4,500 4,000 3,500 3,000 2,786 2,500 2,018 2,045 1,879 2,000 1,599 1,634 1,471 1,414 1,369 1,478 1,473 1,267 1,291 1,331 1,500 1,141 1,154 1,003 1,002 1,000 76
Slide 17: Gross Margin Effects of Weather
GROSS MARGIN EFFECTS OF WEATHER VARIANCES VS. NORMAL Pretax Millions $15 $10 $5 12 10 2 4 $0 (4) $(5) (17) $(10) $(15) $(20) Q1 Q2 Q3 Q4 Q1 Q2 2016 2017 $(7) Million $14 Million All periods recalculated to current 10-year rolling average (2005-2014) 17 Second Quarter 2017
Slide 18: Renewable Energy and Demand Side Management Expenses
RENEWABLE ENERGY AND DEMAND SIDE MANAGEMENT EXPENSES* Pretax Millions Renewable Energy Demand Side Management $40 $30 $20 18 12 15 13 $10 12 15 8 7 6 4 5 $0 2 Q1 Q2 Q3 Q4 Q1 Q2 2016 2017 $83 Million $34 Million * O&M expenses related to renewable energy and demand side management programs are partia
Slide 19: Non-GAAP Measure Reconciliation
NON-GAAP MEASURE RECONCILIATION Three Months Ended June 30, EPS $ millions pretax, except per share amounts 2017 2016 Impact Operating revenues* $ 945 $ 915 Fuel and purchased power expenses* (255) (275) Gross margin 690 640 $ 0.27 Adjustments: Renewable energy (excluding AZ Sun) and demand side man
Slide 20: Consolidated Statistics
CONSOLIDATED STATISTICS 3 Months Ended June 30, 6 Months Ended June 30, 2017 2016 Incr (Decr) 2017 2016 Incr (Decr) ELECTRIC OPERATING REVENUES (Dollars in Millions) Retail Residential $ 476 $ 453 23 $ 778 $ 751 $ 27 Business 433 422 11 770 763 7 Total Retail 909 875 34 1,548 1,514 34 Sales for Resa
Slide 21: Consolidated Statistics
CONSOLIDATED STATISTICS 3 Months Ended June 30, 6 Months Ended June 30, 2017 2016 Incr (Decr) 2017 2016 Incr (Decr) WEATHER INDICATORS - RESIDENTIAL Actual Cooling Degree-Days 571 503 68 571 503 68 Heating Degree-Days 3 1 2 439 397 42 Average Humidity 17% 20% (3)% 17% 20% (3)% 10-Year Averages (2005
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