Pinnacle West Capital Corporation · NYSE:PNW
Pinnacle West Capital — Credit Suisse 2007 Energy Summit
26 slides from Pinnacle West Capital's conference presentation, Feb 6, 2007
Slide 1: Credit Suisse 2007 Energy Summit
Credit Suisse 2007 Energy Summit February 6, 2007 Forward-Looking Statements This presentation contains forward-looking statements. Neither the Company nor APS assumes any obligation to update these statements or make any further statements on any of these issues, except as required by applicable la
Slide 2: Strategic Objectives; Arizona Leads U.S. in Population Growth
Strategic Objectives ¾ Focus on vertically ¾ integrated utility ¾ Capitalize on strong ¾ intrinsic growth ¾ Maintain solid ¾ operating performance ¾ Attain constructive ¾ regulatory outcomes ¾ Optimize real estate assets ¾ ¾ Create long-term value ¾ 2 Arizona Leads U.S. in Population Growth 3 2 6 8
Slide 3: Solid Economic Foundation for Sales Growth; APS Resource Requirements
Solid Economic Foundation for Sales Growth Annual Growth 6% 6% 4% 4% 2% 2% 0% 0% 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 Arizona Arizona Population Population APS APS Customers Customers APS APS Retail Retail Sales* Sales* ** Weather Weather normalized normalized 4 APS Resource Requirement
Slide 4: Nuclear Overview; 2006 Coal Generation Highlights
Nuclear Overview Capacity Factor ¾ Top U.S. power ¾ 100% 100% producer past 14 years ¾ Recent operating issues ¾ 75% 75% •• Unit Unit 11 vibration vibration •• Pressurizer Pressurizer replacements replacements 50% 50% ¾ NRC concerns ¾ ¾ Performance ¾ 25% 25% improvement plan underway 0% 0% ‘05 ¾ Ran
Slide 5: Superior Customer Satisfaction; Regulatory Issues
Superior Customer Satisfaction vs. Western Investor-Owned Electrics Business Customers Residential Customers APS ranked APS ranked #1 among IOUs #2 among IOUs in West in West J.D. J.D. Power Power 2006 2006 survey survey results results 8 Regulatory Issues ¾ Retail rate case ¾ ¾ 7-mill interim PSA a
Slide 6: APS Retail Rate Request Components; Regulatory Calendar
APS Retail Rate Request Components 20.4% Increase $ 435 Million 14.8% 14.8% Fuel Fuel and and Purchased Purchased Power Power $315 $315 Capital Capital Structure Structure Update Update 98 98 Sundance Sundance and and Other Other Rate Rate Base Base Items Items 46 46 4.6% 4.6% 2.2% Pension Pension F
Slide 7: SunCor Objectives; SunCor Gross Margin Contribution by Business Line
SunCor Objectives ¾ Capitalize on assets ¾ and expertise ¾ Deploy capital efficiently ¾ ¾ Maintain strong ¾ financial discipline 12 SunCor Gross Margin Contribution by Business Line $$ Millions Millions Pretax Pretax 175 175 150 150 Home Home Sales Sales 125 125 Condo Condo Sales Sales 100 100 Land
Slide 8: Financial Objectives; Consolidated EPS Summary
Financial Objectives ¾ Strong financial discipline ¾ ¾ Ample liquidity and access to capital markets ¾ ¾ Solid balance sheet strength ¾ ¾ Active management of costs and business risks ¾ ¾ Long-term value for shareholders ¾ 14 Consolidated EPS Summary 4th Quarter 2006 and 2005 Per Per Share Share $0.
Slide 9: Consolidated On-Going EPS Variances; Consolidated EPS Summary
Consolidated On-Going EPS Summary of Major Variances 4th Quarter 2006 vs 4th Quarter 2005 $$ 0.10 0.10 Retail Retail sales sales growth growth $(0.07) $(0.07) Higher Higher O&M O&M costs costs $(0.04) $(0.04) Higher Higher depreciation depreciation $(0.03) $(0.03) Higher Higher interest interest cos
Slide 10: Consolidated On-Going EPS; 2007 Earnings Outlook
Consolidated On-Going EPS Summary of Major Variances Year 2006 vs Year 2005 $$ 0.53 0.53 Retail Retail sales sales growth growth $$ 0.05 0.05 SunCor SunCor $$ 0.01 0.01 Other Other items items -- net net $(0.34) $(0.34) Higher Higher O&M O&M costs costs $(0.29) $(0.29) Increased Increased fuel fuel
Slide 11: Solid Equity Ratios to Support Growth; Significant Capital Investment
Solid Equity Ratios to Support Growth Consolidated APS 60% 60% 60% 60% 52% 52% 51% 51% 50% 50% 50% 50% 40% 40% 40% 40% 30% 30% 30% 30% 2002 2002 2003 2003 2004 2005 2006* 2004 2005 2006* 2002 2002 2003 2003 2004 2004 2005 2005 2006* 2006* Excludes Excludes off-balance off-balance sheet sheet adjustm
Slide 12: Top Quartile Five-Year Dividend Growth; Strategic Summary
Top Quartile Five-Year Dividend Growth 2001 2001 –– 2006 2006 Compound Compound Annual Annual Growth Growth Rates Rates for for U.S. U.S. Electric Electric Utilities Utilities 30% 30% 25% 25% 20% 20% 15% PNW PNW 15% 5.6% 5.6% 10% 10% 5% 5% Industry Industry Average Average 0% 0% 0.2% 0.2% (5)% (5)%
Slide 13: Appendix
eS POSS PINNACLE WEST CAPITAL CORPORATION 13
Slide 14: Earnings Summary; On-Going Earnings Reconciliation
Earnings Summary 4th Quarter 2006 vs 4th Quarter 2005 $ Millions, except EPS 2006 2006 2005 2005 Change Change APS APS $$ 12.9 12.9 $$ 18.3 18.3 $$ (5.4) (5.4) SunCor SunCor (including (including disc disc ops) ops) 11.4 11.4 13.5 13.5 (2.1) (2.1) Other Other (5.8) (5.8) (10.5) (10.5) 4.7 4.7 Net Ne
Slide 15: Earnings Summary; On-Going Earnings Reconciliation
Earnings Summary Year Ended December 31, 2006 vs 2005 $ Millions, except EPS 2006 2006 2005 2005 Change Change APS APS $$ 269.7 269.7 $$ 170.5 170.5 $$ 99.2 99.2 SunCor (including disc ops) SunCor 60.5 60.5 55.6 55.6 4.9 4.9 Other Other (2.9) (2.9) (49.8) (49.8) 46.9 46.9 Net Net income income as as
Slide 16: Current Credit Ratings Profile; Liquidity Resources
Current Credit Ratings Profile S&P Moody’s Fitch Pinnacle West (Parent) Senior Unsecured Debt BB+ Baa3 BBB- Outlook Stable Negative Stable APS Senior Unsecured Debt BBB- Baa2 BBB Outlook Stable Negative Stable 30 Liquidity Resources APS ¾ $400 million revolver through December 2010 ¾ ¾ $500 million
Slide 17: APS Retail Service Territory; Arizona Population Highlights
APS Retail Service Territory Phoenix Phoenix APS Retail Service Territory 32 Arizona Population Highlights ¾ Arizona’s population 6.2 million ¾ Arizona 16th largest state ¾ Arizona 16.3% population change since 2001 ¾ Arizona’s population expected to reach 10.7 million by 2030 ¾ Phoenix 5th th large
Slide 18: APS 2006 Retail Customer and Sales Mix; Native Load Energy Fuel Mix
APS 2006 Retail Customer and Sales Mix 1.1 1.1 Million Million Customers Customers 27,970 27,970 GWh GWh Sales Sales 89% 47% 44% 11% 9% Residential Residential Commercial Commercial Industrial Industrial 34 APS 2006 Native Load Energy Fuel Mix Coal 42% Gas Nuclear 22% 22% Purchased Power 14% 35 18
Slide 19: Generation Operating History; APS Baseload Capacity RFP
Generation Operating History Nuclear Nuclear and and Coal Coal Combined Combined Gas Gas Capacity Capacity Factors Factors Equivalent Equivalent Availability Availability Factors Factors 100% 100% 90% 90% 80% 80% 70% 70% 60% 60% 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 APS APS Industry Indu
Slide 20: 2006 Social Responsibility Awards
2006 Social Responsibility Awards ¾ ¾ Innovest’s highest rating (AAA) and ranked #2 electric utility ¾ ¾ Dow Jones Sustainability Index industry leader ¾ ¾ Global 100 Most Sustainable Corporations in World by Corporate Knights ¾ ¾ Storebrand’s Social Responsibility Index “best in class” distinction
Slide 21: APS Retail Price Compared with CPI; APS Retail Rate Case
APS Retail Price Compared with Consumer Price Index 60% 60% 50% 50% 40% 40% 30% 30% CPI CPI 20% 20% 2007 2007 10% 10% Proposed Proposed ** 0% 0% (10)% (10)% APS APS Price Price (20)% (20)% 1992 1992 1993 1993 1994 1994 1995 1995 1996 1996 1997 1997 1998 1998 1999 1999 2000 2000 2001 2001 2002 2002 2
Slide 22: Potential Major Transmission Project Wyoming to Arizona; Arizona Transmission System
Potential Major Transmission Project Wyoming to Arizona TransWest Express ¾ ¾ Expand resources to meet rapid load growth Wyoming ¾ ¾ Enhance resource portfolio reliability and economics Nevada Utah ¾ ¾ Increase system California import capability TransWest Express ¾ ¾ Improve fuel diversity Project
Slide 23: WECC Available Transmission Capability; SunCor Overview
WECC Available Transmission Capability 3,007 3,989 2,478 5,263 290 301 Summer Summer 2006 2006 estimates estimates (MW) (MW) 44 SunCor Overview ¾ Commercial and residential ¾ real estate developer in IDAHO Western U.S. Boise ¾ Total assets $608 million ¾ ¾ Stockholder’s equity ¾ $274 million ¾ Proje
Slide 24: SunCor Balance Sheet Summary; SunCor Project Diversity by Type
SunCor Balance Sheet Summary $ Millions Legacy Properties $ 183 Liabilities $ 284 Post-1990 Properties 357 Minority Interest 50 Total Properties 540 Stockholder’s Equity 274 Other 68 Total Liabilities Total Assets $ 608 & Equity $ 608 As As of of September September 30, 30, 2006 2006 46 SunCor Proje
Slide 25: SunCor Geographic Project Diversity; Project Summaries Master-Planned Communities
SunCor Geographic Project Diversity Legacy Legacy Properties Properties Post-1990 Post-1990 Properties Properties $$ Millions Millions $$ Millions Millions 400 400 400 400 300 300 300 300 200 200 200 200 100 100 100 100 00 00 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005 2006* 2006* 2001 2001 20
Slide 26: SunCor Project Summaries Major Commercial Projects
SunCor Project Summaries Major Commercial Projects Estimated Estimated Year Year Original Original 9/30/06 9/30/06 Acquired Acquired Acreage Acreage Acreage Acreage Talavi Talavi 1987 1987 140 140 77 Centrepoint Centrepoint 1989 1989 80 80 33 Hayden Hayden Ferry Ferry Lakeside Lakeside Office Office
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