Pinnacle West Capital Corporation

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Pinnacle West Capital Corporation 2022 Second Corner Earnings Conference Call. At this time, all participants are on a listen-only mode. After management's prepared remarks, there will be a question and answer session. I would now like to turn the call over to the host, Amanda Ho, Director of Investor Relations. Please go ahead.

Thank you, Kelly. I would like to thank everyone for participating in this conference call and webcast to review our second quarter 2022 earnings, recent developments, and operating performance. Our speakers today will be our Chairman and CEO, Jeff Goldner, and our CFO, Andrew Cooper. Ted Geisler, APS President, and Jacob Tetlow, Executive Vice President of 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 second quarter 2022 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 August 10, 2022. I will now turn the call over to Jeff.

Thank you, Amanda, and thank you all for joining us today. We were troubleshooting a little bit of static on the line, so hopefully we were able to address that as we get the call started here this morning. Financial results year to date in 2022 continue to be in line with our expectations. And so before Andrew discusses the details of our second quarter results, I'll provide a few updates on recent operational and regulatory developments. And I'll also touch on our ESG progress and accomplishments. As we move through the summer season, our team continues to excel in delivering reliable service to our customers. Each year we prepare for summer, ensuring that we've got adequate generation resources to meet our peak demand, and preparing for the summer wildfire season, which started early this year. Our robust vegetation management, fire mitigation programs, and mandatory line inspection requirements prior to re-energizing high-risk area lines all contribute to the protection of our infrastructure and to public safety, as well as to reliable service for our customers. Additionally, our resource procurement efforts and reserve margin standards have allowed us to provide exceptional service to our customers through multiple days, consecutive days of over 110 degrees, and we're well prepared to meet the expected peak demand through the balance of the summer. With the extreme weather that we experience each summer, it remains as important as ever to continue assisting our communities through our heat release support programs. APS has expanded its heat relief initiatives, including partnering with local community organizations to aid the state's most vulnerable populations. This support includes a collaboration with the Foundation for Senior Living, where we offer emergency repair or replacement of air conditioning systems during the hot summer months, the Salvation Army's network of 18 cooling and hydration stations across Arizona, and an emergency shelter and eviction protection program that we do in partnership with St. Vincent de Paul. These are just a few examples of our effort to collaborate for the benefit of our customers and our community. We continue to remain focused on improving our customers' experiences. As previously shared, APS's J.D. Power residential rankings for overall customer satisfaction have improved over the past two years. And thanks to the hard work of our employees, that improvement trend continued with the latest J.D.P. residential 2022 second quarter results which reflects our mid-year progress. Compared to 2021, APS made quartile gains in every driver of customer satisfaction, and overall satisfaction now exceeds industry benchmarks when compared to our large investor-owned peers nationally. APS's strongest performing drivers in the latest J.D. Power survey were customer care, and that's both phone and digital, power quality and reliability, and corporate citizenship. And our improvement is also being recognized by our business customers, as we saw in J.D. Power's business 2022 mid-year results. APS is now in the first quartile for business customer satisfaction, and we're also the second most improved utility in the nation. Although we've made good progress in our customer experience journey, we're not done yet. I'm proud of the team's progress to date, and I look forward to sharing further advancements in our customer experience journey with you in the future. Turning to our regulatory updates, in June, we filed our notice of intent to file a new rate case with the Arizona Corporation Commission. In that notice, we outlined the various items that we expect to request, including 12 months of post-test year plant to be included in rate base. This application will really focus on a return to balanced rate making, which will enable the company to make the necessary investments to support Arizona's growing economy and resilient infrastructure, service reliability, improved customer experience, and a clean and secure energy future for our customers. We made the decision to delay the filing a few months from mid-year to the end of October to allow for additional time to work with stakeholders and address topics that were raised by Chairwoman Leah Marquez-Peterson through various filings in the docket. The rate case will now have a test year ending June 30, 2022, and that test year actually allows us to include changes in revenue, expenses, and investments that we've experienced in the first six months of 2022, and to provide the Commission a more accurate view of our current financial needs. In addition, we continue to work with the Arizona Corporation Commission and many stakeholders in an effort to gain a common understanding on a variety of issues, and to pursue balanced solutions, and we look forward to continuing that work in our rate case. As an update on our ESG progress, earlier in May, we issued our 2022 all-source RFP, which we're seeking 1,000 to 1,500 megawatts of new resources, and that will include up to 600 to 800 megawatts of renewables, and we've seen a very robust response to that proposal. We're currently in the process of reviewing bids, We expect to develop a shortlist by the end of August. And I'm also proud to share that for the second consecutive year, the Environmental Protection Agency recognized APS with the Energy Star Partner of the Year Award for Excellence in Customer Energy Efficiency Programs. These offerings include the APS Marketplace, which is a one-stop online shop that offers customers smart energy products, and the company's Cool Rewards Smart Thermostat Program. In our fourth year of operation, our Cool Rewards Demand Response Program essentially operates like a virtual power plant where our customers provide over 100 megawatts of flexible, clean capacity. The program connects nearly 66,000 APS customers with smart thermostat technology that helps them save money while also playing an integral role in conserving energy when the demand on the electric grid is its highest. This partnership helps us ensure reliable, uninterrupted service to our customers on the hottest Arizona days, while also assisting us on our journey to 100% clean and carbon-free electricity by 2050. We've made solid progress through the first half of the year, improving our customer experience and enhancing our stakeholder relationships and working towards achieving our ESG and clean energy goals. There's certainly more work to do, but this is a good opportunity for me to acknowledge the team's dedication and those early accomplishments. Finally, I'd like to congratulate Ted Geisler on his recent promotion to president of APS. Returning to a separate CEO and president roles within APS allows us to consolidate our core utility functions, including operations, public policy, technology, customer experience, and strategy. And Ted's well-rounded utility experience will be extremely valuable in this role. And additionally, I'd also like to congratulate and welcome Andrew Cooper as our chief financial officer. Some of you met Andrew in his prior role as the company's treasurer, and I look forward to each of you getting to know him better in his new role. And so with that, Andrew, I'll turn the call over to you.