Pinnacle West Capital Corporation

Good day, everyone, and welcome to the Pinnacle West Capital Corporation 2025 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, Matthew. I would like to thank everyone for participating in this conference call and webcast to review our first quarter earnings, recent developments, and operating performance. Our speakers today will be our Chairman, President, and CEO, Ted Geisler, and our CFO, Andrew Cooper. Jacob Tetlow, COO, and Jose Esparza, SVP 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 that actual results may differ materially from expectations. Our first quarter 2025 form 10Q was filed this morning. Please refer to that document for forward-looking statements, cautionary language, as well as the risk factors and MDNA 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 8, 2025. I will now turn the call over to Ted.

Thanks, Amanda, and thank you all for joining us today. 2025 has started off in line with financial guidance we provided on the fourth quarter call in February. Before Andrew discusses the details of our first quarter results, I'll provide a few updates on recent operational and regulatory developments. Our diverse Arizona economy continues to thrive and grow at solid pace. Arizona has become a national leader in semiconductor and advanced manufacturing, which has attracted investments spanning the entire supply chain, including robotic manufacturing, advanced packaging, research and development, materials suppliers, and workforce development. This quarter had several notable expansion announcements, including the additional $100 billion investment by Taiwan Semiconductor Manufacturing Company beyond their original $65 billion investment. TSMC now intends to build three additional fabrication centers for a total of six, as well as two advanced packaging facilities and a research and development park. In fact, TSMC held the groundbreaking for FAD3 this week as construction progress continues to advance. Also, NVIDIA announced they're manufacturing Blackwell chips at TSMC's facilities and will be partnering with advanced packaging and testing operations right here in Arizona. In addition to TSMC, Arizona's total international exports rose almost 12% in 2024, the highest year-over-year growth rate in the country, led by mining, semiconductors, computer equipment, and aerospace products. Healthcare is another rapidly expanding sector, highlighted by Mayo Clinic's announcement of a nearly $2 billion investment in their Phoenix Healthcare Hospital campus, the clinic's largest investment to date. These announcements highlight the diversity of investments and robust growth that will fuel the Arizona economy for years to come. Turning to operations, we're focused on continuing to provide top-tier reliability for our customers, making year-round investments to secure a resilient grid and delivering excellence in customer experience. As we build out the grid to serve growth, we continue to increase our transmission investments to construct multiple high-voltage lines and substations. Through our comprehensive summer preparedness program, We've procured all necessary generation capacity and reserves, completed our grid inspections, procured critical materials needed for restoration efforts, and executed robust fire mitigation investments. This includes the deployment of fire sensing cameras that use artificial intelligence to proactively search for early signs of wildfires, enabling critical operation decisions to help keep communities safe. We're in the final stages of planned maintenance activities for our generation units. We have successfully completed our major outages for the Four Corners Power Plant. In addition, we've invested in chiller upgrades at Red Hawk and Sundance units, reducing ambient D rates during hot summer evenings when customers use the most energy. Finally, Palo Verde Unit 1 is currently in planned refueling outage and expected to return to service in early May. Upon the successful completion of the latest refueling outage, all three Palo Verde units are poised to provide reliable around-the-clock power to help meet the summer energy demand. We stand ready to safely, reliably, and affordably serve our customers as we head into summer, the season our customers depend on us the most. Turning to long-term resource procurement, we continue to make progress on our annual all-source request for proposals. As a reminder, we're seeking at least 2,000 megawatts of new resources to be in service between 2028 and 2030. We're in the process of evaluating project proposals and plan to have final projects selected later this year. which is expected to include a blend of ownership and PPA projects. We continue to build and enhance our customer-centric culture, and our employees are focused on delivering excellent customer experience. Investing in advanced digital platforms is an important part of our strategy to deliver customer experience excellence while lowering costs over time. These efforts are paying off since APS now ranks in the top 10 nationally in the J.D. Power Utility Digital Experience Survey. I'm also proud to share that APS was recently recognized by Newsweek as one of the most trustworthy companies in America for 2024. On the regulatory front, we've been preparing for upcoming rate case filing and remain on track to file mid-year. The primary objectives of this next rate case will be to recover costs and investments to secure a reliable and resilient grid, develop a modernized rate structure to support the unprecedented growth of high load factor customers in our service territory, and reduce regulatory lag. while maintaining the lowest cost possible for customers. Our current rates are based on test year expenses that go back to 2021, and we look forward to working with the Commission and stakeholders to update these costs while keeping rates affordable. The filing will include a formula rate proposal consistent with the Commission's recently approved policy statement. In conclusion, we're executing our strategy while remaining focused on creating customer value and shareholder value throughout the year. Before I hand it over to Andrew, I want to give a special birthday shout out to both Andrew and Jacob, who are celebrating today. It's truly a pleasure working alongside you both, wishing you both a very happy birthday. With that, I'll turn the call over to Andrew.