Pinnacle West(PNW)2025-02-25 19:52Financial Data and Key Metrics Changes - The company reported a loss of 5.24 per share, an increase of $0.83 from 2023 [25][26] - Full year 2024 customer growth was 2.1%, slightly above the guidance range of 1.5% to 2.5% [27] - Weather normalized sales growth for 2024 was 5.7%, driven by residential sales growth of 1.1% and strong growth in the commercial and industrial (C&I) segment of 9.7% [29][30] Business Line Data and Key Metrics Changes - The company achieved top quartile reliability for customers and was a top performer in power quality, helping customers choose rate options, and overall digital experience [15] - The residential customer base grew significantly, with areas like Yuma and Casa Grande seeing year-over-year growth of 34% and 36% respectively, while Metro Phoenix experienced 49% growth [19] Market Data and Key Metrics Changes - The Arizona economy is diversifying, with significant investments from companies like Taiwan Semiconductor Manufacturing Company (TSMC) and Amcor Technology, expected to create thousands of jobs and stimulate further economic growth [18] - The company is positioned to capitalize on this demand with the largest transmission and generation expansion in its history, procuring nearly 7,300 megawatts of new resources to be in service between 2026 and 2028 [20] Company Strategy and Development Direction - The company is focused on robust grid expansion, timely recovery of investments, and delivering an exceptional customer experience while maintaining a commitment to decarbonizing the electric grid [13][20] - The management emphasized the importance of creating customer value and maintaining top-tier reliability as Arizona's economic and population growth accelerates [20][35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate regulatory challenges and emphasized the importance of executing plans to deliver reliable and affordable service [35] - The company plans to file a new rate case in mid-2025 to support Arizona's economic expansion, with a focus on reducing regulatory lag [22][23] Other Important Information - The company achieved a capacity factor of 93.7% at the Palo Verde Generating Station, which exceeded 30 million megawatt hours of net generation for the sixteenth consecutive year [9] - The management team is preparing for a leadership transition, with the current CEO announcing retirement effective March 31 [9][10] Q&A Session Summary Question: Formula rates and settlement outcomes - Management believes settlements can lead to good outcomes but is preparing for a litigated case to ensure a constructive outcome [42][44] Question: Long-term CapEx trends - The company is focused on longer-dated generation and high-voltage transmission projects, with opportunities for incremental projects beyond the 2027 period [48][50] Question: EPS growth rate expectations - The focus remains on a 5% to 7% EPS growth rate with a smoother profile, while exploring opportunities for contemporaneous recovery of CapEx [60][62] Question: Support for House Bill 2201 - Management supports the bill aimed at wildfire mitigation and believes it has forward momentum, but it is still early in the legislative process [66][67] Question: Timing of formula rates implementation - The next rate case is expected to be traditional, with potential for a formula rate plan to be implemented a year after the case concludes [75][76] Question: Capital allocation with formula rates - Should formula rates be adopted, the company will look at capital allocation across business lines, particularly in generation and distribution [82][83] Question: Future nuclear projects - The company is in an assessment phase regarding new nuclear projects, focusing on collaboration and monitoring technology developments [98][99]