Pinnacle West Capital Corporation · NYSE:PNW
Pinnacle West Capital — Q2 2024 Earnings Presentation
25 slides from Pinnacle West Capital's earnings presentation, Aug 1, 2024
Slide 1: Renewed, Reliable and Resilient: Second-Quarter 2024 Financial Results
Renewed, Reliable and Resilient Second-Quarter 2024 Financial Results August 1, 2024
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: Second-Quarter results impacted by new rates and record June heat
Second-Quarter results impacted by new rates and record June heat O&M1 D&A Pension & Income Interest, net OPEB non- All other2 taxes3 AFUDC service credits, net Operating Revenue less Fuel and Purchased Power Operating Revenue less Fuel 2022 GRC impacts $ 0.45 and Purchased Weather $ 0.29 Power1 Sal
Slide 4: 2024 EPS guidance
2024 EPS guidance Key Factors and Assumptions (as of August 1, 2024) 2024 Adjusted gross margin (operating revenues, net of fuel and $2.93 – $3.00 billion purchased power expenses, x/RES,DSM,CCT)1 • Retail customer growth of 1.5%-2.5% • Weather-normalized retail electricity sales growth of 2.0%-4.0%
Slide 5: Key drivers & assumptions for 2024 EPS guidance
Key drivers & assumptions for 2024 EPS guidance 2024 EPS guidance of $4.60-$4.80 key drivers1 Long-term guidance and key drivers • Long-term EPS growth target of 5%-7% off New rates in effect March 8, Depreciation, amortization and 2024 property taxes due to higher 2024 midpoint plant in service
Slide 6: Capital plan to support reliability and continued growth within our service territory
Capital plan to support reliability and continued growth within our service territory APS Total 2024-2026 $6.0B CapEx Profile $2.00B $2.05B $1.95B Today $1.80B $655 $755 $760 $634 Generation One year ago $420 Transmission $340 $415 Distribution $361 Other $7.80B $590 $572 $565 $550 $6.85B $385 $233
Slide 7: Rate Base growing within our service territory
Rate Base growing within our service territory Current Approved Rate Base and Test Year Detail End-of-Year Rate Base and Growth Guidance ACC FERC ACC FERC Rate Effective Date 03/08/2024 06/01/2024 $2.6 Test Year Ended 6/30/20221 12/31/2023 $2.01 Equity Layer 51.93% 49.64% Allowed ROE 9.55% 10.75% $1
Slide 8: We are focused on cost control and customer affordability
We are focused on cost control and customer affordability Operations & Maintenance Guidance O&M Guidance (millions) • Reduced year-over-year core O&M excluding planned outages • Final planned major outage in Q4 2024 at Four Corners Unit 5 Planned $75-$85 $46 • Unit 4 final planned major outage in 20
Slide 9: Optimized financing plan to support balanced capital structure
Optimized financing plan to support balanced capital structure 2024-2026 Financing Plan Funding Strategy • Successfully raised ~$750 million of Approx. $400M external equity in a forward sale to support balanced APS capital structure ✓ Future PNW Capital Approx. $6B and expanded, accretive investmen
Slide 10: We are focused on maintaining healthy credit ratings to support affordable growth
We are focused on maintaining healthy credit ratings to support affordable growth1 Balance Sheet Senior Targets Corporate Unsecured Short-Term • Solid investment-grade Ratings Ratings Ratings Outlook credit ratings APS • APS equity layer >50% • PNW FFO/Debt range Moody’s Baa1 Baa1 P-2 Stable of 14%-
Slide 11: Debt maturity profile shows well managed and stable financing plan
Debt maturity profile shows well managed and stable financing plan ($millions) APS Fixed APS Floating PNW Fixed PNW Floating $1,200 $1,000 $800 $600 $400 $200 $0 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050 As of June 30, 2024 11
Slide 12: Appendix
PINNACLE WEST CAPITAL CORPORATION
Slide 13: We are making progress towards our Clean Energy Commitment
We are making progress towards our Clean Energy Commitment Progress Since 2020, have contracted over 5,000 MW of clean energy and storage to be in service for APS customers by end of 2025 Issued 2023 All-Source RFP for approximately 1,000 MW of reliable capacity, including at least 700 MW of renewab
Slide 14: SRB will expand our capacity to self build generation to meet customer need with reduced lag
SRB will expand our capacity to self build generation to meet customer need with reduced lag System Reliability Benefit Surcharge Key Features • Projects that compete on cost and reliability from All-Source Request for Proposals • Determines prudency of new generation between general rate cases • In
Slide 15: Arizona continues to be an attractive service territory with strong customer growth
Arizona continues to be an attractive service territory with strong customer growth Arizona economy continues to be robust Residential Customer Growth1 and attractive 3% • Maricopa County ranked #1 for economic development by Site Selection magazine 2.4% 1.5%-2.5% 2.3% 2.2% • In 2023, Maricopa Count
Slide 16: Arizona's commercial and industrial growth is diverse
Arizona’s commercial and industrial growth is diverse Source: Arizona Commerce Authority 16
Slide 17: Residential PV Applications
Residential PV Applications 5,000 Residential DG (MWdc) Annual Additions 4,500 216 169 200 60 4,000 3,500 2021 2022 2023 2024 3,000 2,500 2,000 1,500 1,000 500 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2021 Applications 2022 Applications 2023 Applications 2024 Applications 1 Monthly data equ
Slide 18: Renewable Energy & Demand Side Management expenses
Renewable Energy & Demand Side Management expenses1 ($ in millions pretax) Renewable Energy Demand Side Management $40 $35 $30 $25 $20 $16 $18 $19 $20 $12 $21 $15 $10 $16 $17 $15 $15 $14 $5 $9 $0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 1Renewable Energy and Demand Side Management expenses are substantially offset b
Slide 19: 2024 gross margin effects of weather
2024 gross margin effects of weather Variances vs. Normal ($ in millions pretax) $35 ($1) Q1 Q2 Q3 Q4 2024 Total Weather Impact: $33 Million All periods recalculated to current 10-year rolling average (2013 – 2022). Numbers may not foot due to rounding. 19
Slide 20: 2024 Planned Outage Schedule
2024 Planned Outage Schedule Coal, Nuclear and Large Gas Planned Outages Q1 Q2 Q4 Actual Duration in Actual Duration in Estimated Duration Plant Unit Plant Unit Plant Unit Days Days in Days Redhawk CC1 66 West Phoenix CC5 47 Palo Verde 2 36 West Phoenix CC5 71 Palo Verde 3 37 Four Corners 5 66 20
Slide 21: Non-GAAP Measure Reconciliation
Non-GAAP Measure Reconciliation 2023 Actuals4 2024 Guidance4 Operating revenues1 $4.70 billion $4.92 - $5.02 billion Fuel and purchased power expenses1 $1.79 billion $1.85 - $1.89 billion Gross Margin $2.90 billion $3.06 - $3.13 billion Adjustments: Renewable energy and demand side management progra
Slide 22: 2024 Key Regulatory Dates
2024 Key Regulatory Dates Case/Docket # Q1 Q2 Q3 Q4 Rate Case Limited Rehearing Rate Case Limited Rehearing Rebuttal Testimony Due Oct. 18 2022 Rate Case: E-01345A-22-0144: Rates effective March 8 Direct Testimony Due Sep. 20 Rate Case Limited Rehearing Begins Nov. 5 Power Supply Adjustor (PSA) E-01
Slide 23: Wildfire Mitigation
Wildfire Mitigation Our wildfire preparedness and mitigation strategy is comprehensive and multi-faceted: Vegetation Grid hardening Asset Monitoring and Operational management investments inspection awareness mitigations • Comprehensive right- • Ongoing distribution • Enhanced line • Dedicated team
Slide 24: Consolidated Statistics
Consolidated Statistics 3 Months Ended June 30, 6 Months Ended June 30, 2024 2023 Incr (Decr) 2024 2023 Incr (Decr) ELECTRIC OPERATING REVENUES (Dollars in Millions) Retail Residential $ 658 $ 542 $ 116 $ 1,091 $ 952 $ 139 Business 610 517 93 1,071 923 149 Total Retail 1,268 1,059 209 2,162 1,875 28
Slide 25: Consolidated Statistics
Consolidated Statistics 3 Months Ended June 30, 6 Months Ended June 30, 2024 2023 Incr (Decr) 2024 2023 Incr (Decr) ENERGY SOURCES (GWH) Generation Production Nuclear 2,192 1,991 202 4,741 4,497 244 Coal 1,502 1,130 372 3,491 3,198 293 Gas, Oil and Other 1,960 2,044 (84) 3,370 3,829 (459) Renewables
Pinnacle West Capital — Q2 2024 Earnings Presentation on 6ix