Pinnacle West Capital Corporation

Good day, everyone, and welcome to the Pinnacle West Capital Corporation 2023 Second Quarter Earnings Conference Call. At this time, all participants have been placed on a listen-only mode. If you have any questions or comments during the presentation, you may press star 1 on your phone to enter the question queue at any time. It is now my pleasure to turn the floor over to your host, Amanda Ho. Ma'am, the floor is yours.

Thank you, Matthew. I would like to thank everyone for participating in this conference call and webcast to review our second 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 Tedlow, 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 second 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&E 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 10th, 2023. I will now turn the call over to Jeff.

Great. Thanks, Amanda. Thank you all for joining us today. Although our second quarter financials were negatively impacted by significantly mild weather in June, as well as higher operating expenses, we have updated our full year 2023 guidance to take into account the settlement that was reached between APS and the Commission on the SCR matter. Before Andrew goes through the details of our second quarter results and updates to our 2023 full-year guidance, I'll just provide a few updates on recent operational and regulatory developments. Starting with operations, as we progress through the summer season, I'm very proud to say that our team continues to excel in delivering reliable service to our customers. The poverty-generating station successfully completed its planned refueling and maintenance outage for Unit 1 on May 13th. Additionally, we commissioned the remaining 60 megawatts of energy storage at our AZ sun sites, so that totals now 201 megawatts of APS-owned storage installed this year, and 150 megawatts of APS-owned solar at the Agave solar facility. These are all valuable resources to help serve our customers through the summer season. In fact, while that second quarter was marked by extremely mild weather, as I think all of you probably know, July certainly heated up. Our robust planning, resource procurement efforts, and our dedicated team have allowed us to provide exceptional service to our customers throughout this unprecedented heat wave. Phoenix experienced a record number of consecutive days of over 110 degrees, shattering prior records for daytime highs, for evening lows, for days over 110 degrees, and the APS team served its customers with top-tier reliability throughout it all. In fact, we broke our previous peak demand record multiple times this July, reaching a new all-time record on July 20th at nearly 8,200 megawatts. That's a 500-megawatt increase compared to our prior record that was set in 2020. I want to recognize our operators and our field teams for doing such an exceptional job in making sure that customers continue to have reliable service through this unrelenting heat. As you know, APS plans years in advance to continue serving customers with reliable and affordable energy. Our resource planners secure a diverse energy mix to meet demand, like solar and wind power, battery energy storage, and our APS-operated Palver regenerating station, which is still the largest nuclear plant in the U.S. and the country's largest producer of clean energy. When temperatures cause demand to increase, APS's strength and resilience comes from using flexible resources like natural gas to keep homes and businesses cool over long stretches of extreme heat. Another important tool that I want to highlight and that we utilize is our Cool Rewards Demand Response Program. It's in its fifth year of operation. That program essentially operates as a virtual power plant where our customers provide over 110 megawatts of flexible, clean capacity. The program connects nearly 80,000 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. So you can see we take an all-of-the-above approach to provide the most affordable and reliable service when our customers need us the most. And as part of our vigorous planning, we recently issued an all-source RFP for another 1,000 megawatts to be online between 2026 and 2028. We're seeking the best combination of resources to serve our customers reliably while not sacrificing affordability and continuing to build towards our clean energy future. Additionally, we continue to remain focused on providing exceptional customer service. Our JDPower JDP residential rankings for overall customer satisfaction have steadily improved over the past two years. And I'm proud to share that the latest JDP residential 2023 second quarter results have placed us back in the first quartile compared to our peers. APS's strongest performing drivers in the latest survey were customer care, both phone and digital, power quality and reliability, and corporate citizenship. We've made remarkable progress over the past few years, moving from fourth quartile to first, and that progress would not have happened without the dedication and commitment of our hardworking employees across the company. I look forward to continuing to provide exemplary service to our customers in the future. Turning to our regulatory updates, Last quarter, I spoke about the appeal of our last rate case and the favorable court of appeals decision. The commission directed its legal staff to enter into negotiations with the company, and in June, we reached an agreement with the commission legal staff on how to implement that decision. The joint resolution was then approved at the June open meeting, and it created a court resolution surcharge that started on July the 1st. We're pleased that we were able to reach an agreement with the Commission in a reasonable and expeditious manner to resolve this issue. And as I've mentioned previously, the Four Corners Power Plant is a critically important reliability asset for the entire Southwest. And the investment in SCRs was required to keep that plant running under federal law. Andrew will address the financial impacts from this decision here in a few minutes. On our rate case, we are almost done with all rounds of written testimony. Our rejoinder testimony is due tomorrow. The hearing is scheduled to begin on August 10th, and we look forward to working through that process and resolving this rate case in a timely and constructive manner. We've made solid progress through the first half of this year, improving our customer experience, enhancing our stakeholder relationships, and executing on our regulatory matters. There's certainly more work to do, but I think this is a good opportunity to acknowledge the team's dedication and early accomplishments here in 2023. And with that, I'll turn the call over to Andrew.