Financial Data and Key Metrics Changes - The company reported earnings of $0.94 per share for Q2 2023, down $0.51 compared to the same quarter last year, primarily due to extremely mild weather in June [36][69] - The updated EPS guidance range for the year is now $4.10 to $4.30 per share, reflecting the impact of a new surcharge approved by the commission [38][35] Business Line Data and Key Metrics Changes - Operating and Maintenance (O&M) guidance for 2023 has been increased to a range of $915 million to $935 million, with expectations of flat O&M per megawatt hour compared to last year [5][12] - Year-over-year increases in O&M categories were attributed to inflation and high customer growth, with generation fleet O&M constituting a significant portion of the increase [45] Market Data and Key Metrics Changes - Customer growth remains steady at 2% for Q2, with Arizona continuing to be a popular migration destination, contributing to strong fundamentals for customer growth [37] - Weather-normalized sales growth for the quarter was 0.1%, with commercial and industrial sales growth at 2.2% [70] Company Strategy and Development Direction - The company is focused on maintaining reliability and affordability while transitioning to 100% clean and carbon-free electricity by 2050 [43] - A new all-source RFP for 1,000 megawatts is being issued to ensure a diverse energy mix and reliable service [43] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by the recent heat wave but emphasized the company's preparedness and ability to deliver reliable service [2][67] - The company is actively working to reduce regulatory lag and improve the predictability of earnings streams [55][80] Other Important Information - The company successfully broke its previous peak demand record in July, reaching nearly 8,200 megawatts, a 500-megawatt increase from the prior record set in 2020 [34] - The company is advocating for a generation rider to address regulatory lag and support capital deployment [49] Q&A Session Summary Question: Comments on the rate case and generation rider - Management noted that there is interest from staff in understanding the value of the proposed generation rider, and they are advocating for it to address regulatory lag [9][10] Question: Impact of pension-related adjustments on future EPS - Management indicated that pension-related adjustments would be reflected in revenue requirements and customer charges, with ongoing advocacy for these adjustments [23][91] Question: Expectations for O&M in the latter part of the year - Management stated that they will evaluate O&M opportunities and risks at the end of the summer, considering weather impacts and operational needs [76] Question: Long-term growth rate expectations post-rate case - Management expressed confidence in achieving a linear earnings stream within the 5% to 7% growth rate, with updates to key drivers expected after the rate case concludes [80][81]
Pinnacle West(PNW) - 2023 Q2 - Earnings Call Transcript