Pinnacle West Capital Corporation · NYSE:PNW

Pinnacle West Capital — Q2 2009 Earnings Presentation

20 slides from Pinnacle West Capital's earnings presentation, Aug 4, 2009

  1. Slide 1: 2nd Quarter 2009 Results

    2nd Quarter 2009 Results August 4, 2009 1

  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: CFO Agenda

    CFO Agenda ¾ 2nd Quarter Results ¾ Earnings Guidance ¾ Liquidity Second Quarter 2009 3

  4. Slide 4: Consolidated EPS Summary

    Consolidated EPS Summary 2nd Quarter 2009 vs. 2nd Quarter 2008 Reported On-Going Per Share Per Share $1.50 $1.50 $1.33 $1.00 $1.00 $0.88 $0.77 $0.68 $0.50 $0.50 $0.00 $0.00 2009 2008 2009 2008 Second Quarter 2009 4

  5. Slide 5: Non-GAAP EPS Reconciliation

    Non-GAAP EPS Reconciliation 2nd Quarter 2009 vs. 2nd Quarter 2008 2nd Qtr 2nd Qtr 2009 2008 Change EPS per diluted share as reported: $ 0.68 $ 1.33 $ (0.65) Adjustments: Real estate segment 0.09 (0.15) 0.24 Income tax credits related to prior years - (0.30) 0.30 On-going earnings per share $ 0.77 $

  6. Slide 6: Summary of On-Going EPS Variances

    Summary of On-Going EPS Variances 2nd Quarter 2009 vs. 2nd Quarter 2008 $0.04 $0.02 $(0.10) $0.88 Regulated $(0.07) Misc. items, net electricity O&M* $0.77 gross margin Infrastructure- related costs 2nd Qtr. 2nd Qtr. 2008 2009 On-going earnings declined $0.11 per share. *Excludes renewable energy an

  7. Slide 7: Regulated Electricity Gross Margin Drivers

    Regulated Electricity Gross Margin Drivers* 2nd Quarter 2009 vs. 2nd Quarter 2008 $0.10 $0.07 $0.02 $(0.04) $(0.05) $(0.08) Interim retail Transmission Weather Lower Lower hedge Other rate increase rate increases effects kWh sales mark-to-market items, net *Excludes renewable energy and demand-side

  8. Slide 8: 2009 - 2010 Earnings Guidance

    2009 - 2010 Earnings Guidance As of August 4, 2009 Guidance Estimates* Key Assumptions 2009 2010 2009 APS $ 2.35 $ 3.00 ¾ Full-year interim base rates Parent and all ¾ No additional other, net (0.05) - base rate increases Estimated EPS $ 2.30 $ 3.00 ¾ Includes identified cost savings and mild first

  9. Slide 9: CEO Agenda

    CEO Agenda ¾ Regulatory Update ¾ Operations Update ¾ SunCor Restructuring Status ¾ Looking Ahead Second Quarter 2009 9

  10. Slide 10: Appendix

    Appendix 10

  11. Slide 11: Renewable Energy and Demand-Side Management Surcharges

    Renewable Energy and Demand-Side Management Surcharges* Pretax $ Millions 25 23 20 18 15 10 9 7 7 5 4 3 2 2 2 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2007 2008 2009 * Revenues associated with these surcharges were offset by comparable amounts of O&M expense. Appendix – 2Q ‘09 11

  12. Slide 12: Quarterly Mark-to-Market on Hedge Contracts

    Quarterly Mark-to-Market on Hedge Contracts* Pretax $ Millions 20 14 14 10 7 5 3 0 (1) (3) (5) (10) (9) (20) (30) (29) (40) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2007 2008 2009 * APS 10% share under Power Supply Adjustor (PSA), net of related deferrals. Appendix – 2Q ‘09 12

  13. Slide 13: Non-GAAP Measure Reconciliation – Operating Income to Regulated Electricity Gross Margin

    Non-GAAP Measure Reconciliation – Operating Income (GAAP Measure) To Regulated Electricity Segment Gross Margin (Non-GAAP Measure) $ Millions, except per share amounts Three Months Ended June 30, 2009 2008 Reconciliation of Regulated Electricity Segment Gross Margin Operating income – closest GAAP m

  14. Slide 14: Non-GAAP Measure Reconciliation – Operating Income to Regulated Electricity Gross Margin

    Non-GAAP Measure Reconciliation – Operating Income (GAAP Measure) To Regulated Electricity Segment Gross Margin (Non-GAAP Measure) In this presentation, we present “regulated electricity gross margin” per diluted share of common stock. Regulated electricity gross margin refers to regulated electrici

  15. Slide 15: Retail Rate and Financial Stability Plan Proposed Settlement

    Retail Rate and Financial Stability Plan Proposed Settlement Primary Benefits ¾ Strengthens APS’ financial condition and supports common dividend ¾ Provides greater level of cost recovery and return on investment ¾ Demonstrates cooperation among APS, ACC Staff and other intervenors ¾ Allows opportun

  16. Slide 16: Retail Rate and Financial Stability Plan Proposed Settlement

    Retail Rate and Financial Stability Plan Proposed Settlement Proposed Settlement Base Retail Rates – Annualized revenue increases ($ millions): Non-fuel $ 196 Net fuel-related 11 Net increase $ 207 Allowed ROE (%) 11 Equity ratio (%) 54 Rate base ($ billions) $5.6 Base fuel rate (¢ per kWh) 3.76 Eff

  17. Slide 17: Retail Rate and Financial Stability Plan Proposed Settlement

    Retail Rate and Financial Stability Plan Proposed Settlement Key Financial Provisions – Other Than Base Rates ¾ Expense Reduction Commitment ƒ Beginning in 2010, identify additional $10 million pretax expense reductions above $20 million identified March 2009 ƒ $30 million average annual expense red

  18. Slide 18: Retail Rate and Financial Stability Plan Proposed Settlement

    Retail Rate and Financial Stability Plan Proposed Settlement Key Financial Provisions – Other Than Base Rates ¾ Palo Verde License Extension ƒ Extension of operating licenses to 60 years from 40 years requested December 2008 • Process expected to take about two years ƒ Effective later of NRC approva

  19. Slide 19: Retail Rate and Financial Stability Plan Proposed Settlement

    Retail Rate and Financial Stability Plan Proposed Settlement Future General Base Rate Cases ¾ Future rate case process ƒ APS to file general base rate cases on or after June 1, 2011 and June 1, 2013 ƒ Base rate increase from APS’ next rate case to be effective on or after July 1, 2012 ƒ Settling par

  20. Slide 20: Retail Rate and Financial Stability Plan Proposed Settlement

    Retail Rate and Financial Stability Plan Proposed Settlement Proposed Procedural Schedule Term sheet filed May 4, 2009 Definitive settlement agreement filed June 12, 2009 Supporting parties’ testimony filed July 1, 2009 Opposing parties’ testimony filed July 22, 2009 Supporting parties’ reply testim

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