Pinnacle West(PNW)2023-02-28 04:07Financial Data and Key Metrics Changes - For Q4 2022, the company reported a loss of 0.45 compared to Q4 2021 [11] - Full-year 2022 earnings were 5.47 per share in 2021, primarily due to the negative rate case outcome [12][14] - The company experienced a 5.3 billion from 2023 to 2025, with an average annual growth rate of 5% to 7% for rate base growth [40] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by the unfavorable outcome of the previous rate case but expressed confidence in long-term value creation for customers and shareholders [9][11] - The company expects headwinds in 2023 from higher benefit expenses, interest expenses, and plant depreciation and amortization [14][15] - Management emphasized a focus on cost management and operational efficiencies to navigate inflationary pressures [14] Other Important Information - The pension plan is 106% funded, with no expected contributions needed in the near term, although higher benefit expenses are anticipated in 2023 [15] - The company is deferring any equity issuance until after the current rate case resolution [16] Q&A Session Summary Question: What is the outlook for future equity needs beyond the current rate case? - The company anticipates an equity need of 500 million in 2024, dependent on the capital plan developed post-rate case [43] Question: How does the company plan to mitigate pension expense volatility? - Management is exploring regulatory recovery options and other cost levers to manage pension expenses effectively [57] Question: What is the impact of the Court of Appeals ruling on the Four Corners SCR and Ocotillo projects? - A favorable ruling would not be retroactive but could lead to recovery of disallowed capital costs, impacting EPS positively [50][52] Question: What is the company's strategy regarding clean generation spending? - The company is focused on optimizing the mix of utility-owned generation and power purchase agreements (PPAs) to maximize benefits from tax credits [58][72] Question: What is the feedback from rating agencies regarding credit outlook? - The company is committed to maintaining a 16% to 18% FFO-to-debt ratio to support its current ratings, with future adjustments dependent on the rate case outcome [66][80]