Pinnacle West Capital Corporation

Good day, everyone, and welcome to the Pinnacle West Capital Corporation 2023 First Quarter Earnings Conference Call. At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Amanda Ho. Ma'am, the floor is yours.

Thank you, Matt. I would like to thank everyone for participating in this conference call and webcast to review our first quarter 2023 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, Jacob Tetlow, Executive Vice President of Operations, and Jose Esparza, Senior Vice President of Public Policy, 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 2023 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 11th, 2023. I will now turn the call over to Jeff.

Great. Thanks, Amanda. And thank you all for joining us today. 2023 has started off in line with the financial guidance that we provided on the fourth quarter call in February. And before Andrew discusses the details of our first quarter results, I'll provide a few updates on recent operational and regulatory developments. First off, as you know, safety is our number one priority, and I do want to take this opportunity to commend and congratulate our employees for keeping safety and sharp focus in the first quarter, especially through an unseasonably long and challenging winter period. You know, we discussed summer preparedness quite extensively, and that is our longest and highest peak demand season in Arizona. But winter preparedness is also an important part of how we reliably serve our customers throughout the year. We have an extremely diverse and broad service territory serving 11 out of 15 counties in Arizona. And so, in addition to the desert regions that most people associate with the state, APS also serves communities at much higher altitudes. This year, northern Arizona saw one of the wettest winter seasons in recent history. In fact, Flagstaff set a record for the second highest snowfall total through March 1st in over 100 years. Despite slippery roads, hazardous conditions, and freezing temperatures, our crews were able to restore power safely and quickly to our customers when they needed it the most. With winter now officially behind us, we've quickly moved to preparing for the summer. While we always have had a robust summer preparedness program, resource adequacy continues to be extremely important as energy supplies in the Southwest tighten. 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. Also, during the first quarter, our Palo Verde Nuclear Facility operated a 100% capacity factor. Unit 2 is currently in a planned refueling outage that began on April 8th and is on schedule to return to service in early May. Upon successful completion of the latest refueling outage, all three units are poised to provide around-the-clock clean energy to help meet the demands of the summer for the entire desert southwest. In addition, our resource planning process helps ensure long-term resource adequacy and progress towards our clean energy commitment. We do plan to file our 2023 integrated resource plan later this year. That will include a 15-year forecast of electricity demand and the resources needed to reliably serve our customers. We're currently engaging with a wide variety of stakeholders to gather input and feedback as we prepare that plan. I'm also extremely pleased to announce the completion of 141 megawatts of APS-owned batteries at our Arizona Sun sites, with an additional 60 megawatts that we expect to be completed by mid-year. We also expect our 150 megawatt Agave solar plant to be in service in the next few months. We look forward to having these critical resources serve customers during the peak summer season. And we're also finalizing project selections from our 2022 All-Source RFP, and we've recently signed four PPAs to be in service by 2024 and 2025. Finally, APS is actively working on another All-Source RFP that's expected to be released mid-year, and that will be for new resources to be in service by 2026 through 2028. Additionally, we reached an exciting milestone in our clean energy journey on March 26, when our highest hour served by clean percent metric peaked at 99%. And during that hour, we also reached 58% renewable energy. Our participation in the energy imbalance market and our continued effort in exploring an expanded Western energy market will be critical to maintaining customer reliability and affordability into the future. We're also starting the year with solid J.D. Power residential customer satisfaction survey scores that firmly place APS within the second quartile for overall satisfaction when compared to its large investor-owned peers. We made gains in both power quality and reliability and corporate citizenship in the first quarter, and this was especially positive given the challenging winter season that I spoke about earlier. We look forward to continuing to make improvements for our customers and providing a more frictionless customer experience. And then turning to regulatory, we continue to work through the rate case process. Expect that staff and intervener direct testimony will be filed right now scheduled for May 22nd for revenue requirement and June 5th for rate design. In addition, in March, we received a favorable decision from the Arizona Court of Appeals on our appeal of the last rate case decision. We are pleased the Court of Appeals clarified the prudency standard that must be applied by the commission in their evaluation for recovery of investments that we make. The Four Corners Power Plant is a critically important reliability asset for the entire Southwest region, and the investment in SCRs was required to keep that plant running under federal law. Right now, parties have until May 8th to file a petition for review to the Supreme Court. No one has filed that petition yet, and we look forward to working with the Commission and other parties to resolve this in a matter in the most efficient way that we can. So although 2023 is off to a solid start, we know we still have much work to do and we look forward to continuing to execute on our priorities throughout the year. And with that, I'll turn the call over to Andrew.