Pinnacle West Capital Corporation · NYSE:PNW
Pinnacle West Capital — Corporate Update (June 2016)
21 slides from Pinnacle West Capital's corporate update, Jun 1, 2016
Slide 1: Powering Growth, Delivering Value
POWERING GROWTH DELIVERING VALUE APS Rate Case Filing Overview l June 2016 Powering Growth, Delivering Value
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: 2016 APS Rate Case Application
2016 APS RATE CASE APPLICATION • Filed June 1, 2016* • Propose new rates go into effect on July 1, 2017 • Docket Number: E-01345A-16-0036 • Additional details, including filing, can be found at http://www.azenergyfuture.com/rate-review/ * 1-month sufficiency review period by ACC 3 Powering Growth, D
Slide 4: 2016 Rate Case Key Financials
APS has requested a rate 2016 RATE CASE increase to become effective KEY FINANCIALS July 1, 2017 Test year ended December 31, 2015 Total Rate Base - Adjusted $8.01 Billion ACC Rate Base - Adjusted $6.77 Billion Allowed Return on Equity 10.5% Capital Structure Long-term debt 44.2% Common equity 55.8%
Slide 5: 2016 Rate Case Framework
2016 RATE CASE “A Bridge to the Future” FRAMEWORK Rate Case Objectives Focus on Focus on Focus on Focus on Clean Energy Customers Innovation Sustainability • Generate power from • Optimize customer • Prudently invest in new • Achieve an earned diverse portfolio and service and reliability technologi
Slide 6: 2016 Rate Case Summary
2016 RATE CASE SUMMARY Focus on Focus Focus Focus on Clean Energy on Customers on Innovation Sustainability Ocotillo Modernization Residential Rate Design Solar Partners Programs Power Supply Adjustment Project Modernization • Installing 10 MW of • Include environmental • Requesting cost deferral •
Slide 7: APS Cost of Service
Appropriate to place residential APS COST OF SERVICE solar customers into a unique sub-category of customers • Cost of service shows disparities in ratio Percent of Cost to Serve* of allocated costs to provide electric service, and what customer classes pay for the services received 108% • Solar cus
Slide 8: Rate Design Modernization
Rate design that better aligns RATE DESIGN pricing with cost to serve and MODERNIZATION leverages existing platform Focus Area Current State Rate Case Objective Time-of-Use • > 50% of residential customers are on a • Most residential customers on a TOU rate Rates (TOU) TOU rate • On-peak hours from
Slide 9: Rate Design Modernization
Key residential rate proposals RATE DESIGN designed to reduce cost shift MODERNIZATION among customers • Streamlined rate choices for residential Current Proposed customers including combinations of the Customer Bill Customer Bill following: – Reductions to kWh (variable) charges; – Increases in bas
Slide 10: Ocotillo Modernization Project and Four Corners SCRs
OCOTILLO MODERNIZATION PROJECT AND FOUR CORNERS SCRs • Requesting Accounting Deferral Orders for two large generation-related capital investments – Ocotillo Modernization Project: Retiring two aging, steam-based, natural gas units, and replacing with 5 new, fast-ramping, combustion turbine units – F
Slide 11: Appendix
APPENDIX Powering Growth, Delivering Value
Slide 12: Rate Base
APS’s revenues come from a RATE BASE regulated retail rate base and meaningful transmission business APS Rate Base Growth Total Approved Rate Base Year-End ACC FERC Generation & Distribution Transmission 17% 83% $1.7 $1.3 $1.4 Most Recent Rate Decisions ACC FERC Rate Effective Date 7/1/2012 6/1/2016
Slide 13: Capital Expenditures
Capital expenditures are funded CAPITAL primarily through internally EXPENDITURES generated cash flow $1,285 ($ Millions) $1,205 $84 Other $88 $1,124 $1,057 $88 Distribution $85 $354 $364 Transmission $382 $340 $200 $114 Renewable $1 Generation $110 $150 $201 $194 $1 $90 Environmental1 $58 $232 $44
Slide 14: The Grid Is Evolving – Increasingly Dynamic and Complex
THE GRID IS EVOLVING – INCREASINGLY DYNAMIC AND COMPLEX • Grid stability, power quality and reliability remain the core of a sustainable electrical system • APS is at the forefront of utilities designing and planning for the electric grid • Rates need to be modernized to enable advanced technologies
Slide 15: APS Rate Design: A Solid Foundation to Build On
APS RATE DESIGN: Over 50% of APS residential customers are already on A SOLID FOUNDATION time-of-use rates, including TO BUILD ON 11% on demand rates 100% 75% 50% 25% 0% Standard TOU - Energy TOU - Demand 15 Powering Growth, Delivering Value
Slide 16: Residential vs. Utility-Scale Solar
RESIDENTIAL VS. Performance at system peak UTILITY-SCALE SOLAR On August 15th, APS customers hit “peak demand” for 2015 using more than 7,300 MW of electricity Residential Rooftop Solar AZ Sun Utility-Scale Solar 500 7,362 8,000 500 7,362 8,000 6,952 Rooftop Output AZ Sun Output 6,315 System Load Sy
Slide 17: Rooftop Solar Customers Use the Grid 24 Hours per Day
ROOFTOP SOLAR CUSTOMERS USE THE GRID 24 HOURS PER DAY TYPICAL GRID INTERACTION FOR ROOFTOP SOLAR • Customers with rooftop solar systems do not pay for all of the electric services they use • These unpaid costs are then paid by other customers (through higher rates) that can’t have or don’t want sola
Slide 18: Arizona Corporation Commission
ARIZONA CORPORATION COMMISSION Terms to January 2017 Terms to January 2019 Bob Bob Andy Tom Doug Burns (R) Stump (R)* Tobin (R) Forese (R) Little (R) Chairman Other State Officials ACC Utility Division Director - Tom Broderick RUCO Director - David Tenney * Term limited - elected to four-year terms
Slide 19: 2016 Key Dates
2016 KEY DATES ACC Key Dates Docket # Q1 Q2 Q3 Q4 Key Recurring Regulatory Filings E-01345A- Lost Fixed Cost Recovery Jan 15 11-0224 E-01345A- Transmission Cost Adjustor May 15 11-0224 Renewable Energy Surcharge TBD Jul 1 E-01345A- Jan 29: Notice of APS Rate Case Jun 1: Initial filing TBD TBD 16-003
Slide 20: Arizona Electric Utilities General Rate Cases
ARIZONA ELECTRIC UTILITIES GENERAL RATE CASES UNS Electric (93,000 customers) Tucson Electric Power Company (415,000 customers) Docket # E-04204A-15-0142 Docket # E-01933A-15-0322 Application filed May 5, 2015 Application filed Sep 4, 2015 Direct testimony - ex rate design, cost of service (Nov 6, 2
Slide 21: Investor Relations Contacts
INVESTOR RELATIONS CONTACTS Paul J. Mountain, CFA General Manager, Investor Relations & Audit Services (602) 250-4952 paul.mountain@pinnaclewest.com Ted Geisler Director, Investor Relations (602) 250-3200 ted.geisler@pinnaclewest.com Chalese Haraldsen (602) 250-5643 chalese.haraldsen@pinnaclewest.co