Pinnacle West Capital Corporation

Good day, everyone, and welcome to the Pinnacle West Capital Corporation 2023 Third 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, Matthew. I would like to thank everyone for participating in this conference call and webcast to review our third 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 third quarter 2023 Form 10Q was filed this morning. Please refer to that document for forward-looking statements, cautionary language, as well as 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 November 9, 2023. I will now turn the call over to Jess.

Great. Thanks, Amanda. And thank you all for joining us today. We continue to execute well on our operations performance and financial management. As part of my operations update, I'll share with you our success in managing through a record-breaking summer in the Valley and reliably serving our customers when they needed us the most. I'll also provide an update on our pending rate case and other regulatory filings. As Andrew will explain, our earnings expectations for the year are on track to meet our guidance range that we recently updated in the second quarter. First, I want to recognize our operations and field teams for doing an exceptional job maintaining reliable service for our customers this summer. July was just one day short of an entire month of 110 plus degrees, and August did not provide much reprieve. We ended the summer with 55 days of 110 plus degrees, and 36 days of overnight lows above 90 degrees. During this period, our generation fleet performed extremely well and was available when our customers critically needed the power. Our careful long-term planning for resource adequacy combined with equipment maintenance programs and innovative customer demand side programs proved beneficial throughout the summer. APS set five new peak demand records during the month of July, ultimately reaching 8,162 megawatts on July 15th. That figures over 500 megawatts higher than our last peak demand that was set in August of 2020. Our baseload and fast ramping assets, including Four Corners, Ocotillo, and Palo Verde all performed well. Our non-nuclear generation fleet's equivalent availability factor, which is the percentage of time that a generation unit is available and ready to perform when called upon, was 93.4% from June through September. In addition, we were extremely pleased to have our Agave solar facilities and our AZSun batteries online and available to serve customers. Finally, Palver Degenerating Station's capacity factor for the same time frame was 99%. With the successful completion of the summer run, Palo Verde Unit 1 has entered its planned refueling outage on October the 7th. Not only were our generation plants there when we needed them, our customers were as well. Customers participating in APS's Cool Rewards Program helped create grid capacity while earning bill credits for voluntarily reducing their energy use. A community of more than 58,000 customers and about 80,000 smart thermostats created a virtual power plant to save energy during the peak hours of the summer. This year, participating customers conserved a record 135 megawatts of power, the equivalent of a peaking unit. APS's Cool Rewards is the cornerstone of our virtual power plant, which is rapidly approaching 200 megawatts in participation and will be an important part of our long-term resource planning strategy. We'll continue to expand this resource and these important partnerships with our customers as we continue our journey to 100% clean and carbon-free electricity by 2050. Long-term planning has been key to providing reliable service. In fact, we just filed our Integrated Resource Plan, or IRP, with the Arizona Corporation Commission yesterday, outlining our resource needs for the next 15 years. We're expecting strong customer and demand growth during this period and have outlined the resources necessary to maintain affordable and reliable service for our customers. We anticipate that a variety of resource types will be important in serving this period of robust customer growth and look forward to partnering with customers, developers, and stakeholders on bringing these technologies online. While the IRP does not specify ownership type, we are committed to continuing our competitive all-source RFP process, which will yield a blend of PPA and ownership projects. The IRP includes a variety of scenarios, but our preferred scenario identifies a diverse blend of technologies to secure a reliable grid while maintaining a strong focus on customer affordability. And this scenario also achieves our clean energy goals of 65% carbon-free by 2030. 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 partners with local community organizations to aid the state's most vulnerable populations. This support includes a collaboration with the Foundation for Senior Living, offering emergency repair or replacement of AC systems during the hot summer months. The Salvation Army's network of 18 cooling and hydration stations across Arizona an emergency shelter and homeless prevention program in partnership with St. Vincent de Paul, and a new partnership with Solari 211 and Lyft to provide eligible Arizonans with free rides to cooling shelters. These are just a few examples of our efforts to collaborate for the benefit of our customers and communities, and I'm pleased to share that APS was recently recognized with the Innovative Corporate Philanthropy Award by the Phoenix Business Journal for these partnerships and programs aimed at providing heat relief to vulnerable individuals and customers. I'm also happy to share that we've completed our labor negotiations with our local IBEW and have a newly ratified agreement in effect. We've worked hard to build a collaborative relationship with our labor union employees, and I'm grateful that we've been able to reach an agreement that allows us to continue to serve our customers and retain top talent. Finally, our customer care center was ranked as the top care center amongst our peers so far through the third quarter of this year, as rated by our customers in the J.D. Power Electric Customer Satisfaction Study. And overall, our customer satisfaction as rated by customers through J.D. Power remains strong. I'm extremely proud of our employees, our progress so far, and look forward to closing out the year strong. Turning to our rate case, after 24 days of hearings, we wrapped up on October 3rd and the parties are now in the briefing period. Initial briefs are due November 6th, with reply briefs due November 21st. We expect the administrative law judge to issue her recommended opinion and order later this year, possibly early next year, with it being placed on an open meeting agenda shortly thereafter. We look forward to completing our rate case in a constructive manner while securing the cost recovery that's necessary to enable continued growth of our electric grid and to support Arizona's growing economy. As we look to wrap up 2023, our focus and priorities remain on executing our mission of providing clean, reliable, and affordable service to our customers. I want to thank you all for your time today, and I'll turn it over to Coop.