Pinnacle West Capital Corporation

Greetings, and welcome to the Pinnacle West Capital Corporation 2021 First Quarter Earnings Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Stephanie Layton, Director of Investor Relations. Thank you. You may begin.

Thank you, Christine. I would like to thank everyone for participating in this conference call and webcast to review our first quarter 2021 earnings, recent developments, and operating performance. Our speakers today will be our Chairman and CEO, Jeff Goldner, and our CFO, Ted Geisler. Jim Hatfield, Chief Administrative Officer, Daniel Fletcher, APS's President and COO, Barbara Lockwood, Senior Vice President, Public Policy, and Jacob Tetlow, Senior Vice President, Operations, are also here with us. First, I need to cover a few details with you. The slides that we will be using are available on our investor relations website, along with our earnings release and related information. Today's comments and our slides contain forward-looking statements based on current expectations and actual results may differ materially from expectations. Our first quarter 2021 form 10Q was filed this morning. Please refer to that document for forward-looking statements cautionary language. as well as the risk factors and MD&A sections, which identify risks and uncertainties that could cause actual results to differ materially from those contained in our disclosures. A replay of this call will be available shortly on our website for the next 30 days. It will also be available by telephone through May 12th, 2021. I will now turn the call over to Jeff.

Thanks, Stephanie, and thank all of you for joining us today. 2021 has started off in line with our financial expectations. And so before Ted discusses the details of our first quarter results, I'll provide a few updates on our recent operational and regulatory developments. And I'll also touch on our progress towards achieving our 2021 goals. Spring is an important time of year for our summer preparedness work. And while we've always had a robust summer preparedness program, resource adequacy has recently become a more visible topic. given the events in neighboring states over the past year. To serve our customers with top-tier reliability, each year we perform preventative maintenance, emergency operations center drills, acquire critical spare equipment, conduct fire mitigation line patrols, and execute a comprehensive plan to support public safety and first responders. We're also procuring an additional 450 megawatts of seasonal peaking capacity, including hydropower, and we expanded our contract up to 60 megawatts for demand response from our commercial and industrial customers to help ensure that we've got adequate resources through the 2021 summer season. Additional information detailing our summer preparedness work can be found on the Pinnacle West website under the Events and Presentations tab. Our procurement process is another important way that we help ensure long-term resource adequacy. Last year, we announced the addition of 141 megawatts of battery storage to be located on six of our APS-owned solar sites. Development has begun, and this project is on track to meet the expected 2022 in-service date. We also announced two RFPs last year, including an all-source RFP and a battery RFP. The response to these solicitations was robust. and we're in the process of reviewing the proposals. We expect to narrow the potential projects under review to a smaller pool soon. On the regulatory front, the Commission continues to evaluate the clean energy rules preliminarily approved last year. In fact, the Commission is scheduled to discuss the clean energy rules at their open meeting today. The Commission may hold their final vote today or they may choose to continue the discussion. For our rate case, The hearing concluded in March. Initial briefs were filed on April 6th and reply briefs were filed on April 30th. The ACC is scheduled to discuss at their open meeting today whether to reopen the evidentiary record in our pending case to include additional evidence, including evidence regarding adjuster cost recovery mechanisms. We believe the rate case record is sufficient and that adjusters provide substantial benefit to customers by supporting both critical programs and reflecting changes in utility costs that can be promptly passed on to customers. Pending this decision, the next steps in this rate case are that the administrative law judge will issue a recommended opinion and order, and the commission will schedule the case for an open meeting to vote. We currently expect the decision on the rate case will be issued during the third quarter of 2021. Turning to our 2021 goals, on the fourth quarter 2020 earnings call, we highlighted improving our customer communication and engagement enhancing our regulatory relationship, and continuing to execute our clean energy commitment as three key priorities. We've made progress towards these objectives during the first quarter, but we recognize there's more work to do. Customer enrollment in our Cool Rewards program surpassed 36,000 connected smart thermostats. We're also working on a customer bill redesign project to simplify customer bills. And a lot of the work that we're doing in the customer communication and education space is the result of collaboration with and input from our customer advisory and our stakeholder advisory boards. I can say we truly appreciate the individuals and organizations that participate in these forums, and they provide us with tremendous feedback. In the regulatory space, We appreciate the Commission's balanced decision to implement our annual power supply adjuster rate change 50% in April and 50% in November, instead of our typical February 1st implementation date. This decision recognizes and balances the ongoing COVID impacts on customers, providing rate gradualism and helping to ensure that the company remains financially secure. I already covered some of the progress we've made on procuring additional clean energy. I'm also proud to share that the U.S. Environmental Protection Agency selected APS as a 2021 Energy Star Partner of the Year in recognition of our demand-side management programs. These programs contributed to our overall 2020 energy efficiency savings of nearly 586,000 megawatt hours, and they will contribute to reducing lifetime carbon emissions by an estimated 2.1 billion pounds. In addition, we continue to explore partnerships with our customers to expand our microgrid offerings. I'll close my comments by sharing that Daniel Frecher, President and Chief Operating Officer, will retire this August after serving nearly 41 years with the company. Daniel has been instrumental in the success of this company over the past four decades, in particular, He served as a respected and admired leader both within the companies and in the communities that we serve and as a mentor to many. I can't express in words my gratitude and appreciation for Daniel's contribution. I join my colleagues in congratulating Daniel on his retirement. Thanks, man. Thank you. As Stephanie mentioned, Jacob Tetlow, Senior Vice President of Operations, is here today, and he'll be joining our earnings calls going forward. Jacob has a wealth of experience in both transmission and distribution operations and fossil generation here at APS. And Jacob's extensive experience, as well as the company's robust succession planning, position us well to continue operating with top-tier reliability. And with that, I'll turn the call over to Ted.