Pinnacle West Capital Q4 2025 Earnings Call Transcript

AlphaStreet
Provided by AlphaStreet
February 25, 2025
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Operator

Good day, everyone, and welcome to the Pinnacle West Capital Corporation 2024 4th-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 one on your phone to enter the question queue at any time and we will open the floor for your questions and 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.

Amanda Ho
Director, Investor Relations at Pinnacle West Capital

Thank you, Matthew. I would like to thank everyone for participating in this conference call and webcast to review our 4th-quarter and full-year 2024 earnings, recent developments and operating performance. Our speakers today will be our Chairman and CEO, Jeff Goldner; APS President; Ted Geissler; and our CFO, Andrew Cooper. Jacob Tetlow, COO, is 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 annual 2024 Form 10-K 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 March 4, 2025.

I will now turn the call over to Jeff.

Jeffrey B. Guldner
Chairman of the Board, President and Chief Executive Officer at Pinnacle West Capital

Great. Thanks, Amanda. Thank you all for joining us today. I want to look-back on 2024 and just say I'm extremely proud of our company and all of our accomplishments. I'm going to provide several updates today and share the successes we were able to achieve despite the challenges that we faced and we met or exceeded nearly every target we set for ourselves, including delivering strong service reliability to our customers.

We made significant progress in the last year, but we're not done and we look-forward to continuing to execute on our plan. On the regulatory front, we were able to achieve a constructive outcome in our last rate case and even more importantly, the commission has been committed to finding ways to reduce regulatory lag.

In December, the Commission approved a policy statement on formula rates, recognizing the need for better regulatory recovery to support our customers and the tremendous growth that we're seeing in Arizona. We started the year with two new commissioners, Commissioner Walden and Commissioner Lopez, who joined the bench in January with Commissioner Marques Peterson.

In addition, Commissioner Thompson and Commissioner Myers were elected to Chairman and Vice-Chairman, respectively, and we look-forward to continuing to work collaboratively with the new bench of commissioners.

Turning to the operations side, I want to start by recognizing our field team's exceptional execution in 2024. I'm especially proud of our employees for prioritizing safety and ending the year with zero serious injuries or fatalities or SIFs. We were able to accomplish this through 113 consecutive days of 100 degrees and above in Phoenix. That's the longest stretch in Arizona history. And APS customers set of peak energy demand record of 8,210 megawatts on Sunday, August 4, breaking a prior record of 8,162 megawatts from 2023.

Our generating fleet operated extremely well and was available when our customers critically needed the power. For the 16th consecutive year and the 20th overall, our Palverde Generating Station's three nuclear units exceeded 30 million megawatt-hours of net generation and achieved a capacity factor of 93.7%. Finally, in December, I announced my retirement date of March 31.

When I became CEO over five years ago, we began executing on a vision to improve our customer experience to position the company for long-term financial health and to enable the workforce of the future and that future provides both reliable and carbon-free electricity. Ted and I have had a close and trusted partnership throughout our tenures, enabling a seamless succession and continued focus on advancing our company's strategy.

The strength of our team and the dedication of our people is truly what makes this company special, and I can't fully express how proud I am to have been a part of this journey. And with that, I'm going to turn it over to Ted to talk about our future and what we can look-forward to.

Ted N. Geisler
President, Arizona Public Service Company at Pinnacle West Capital

Thank you, Jeff. And first, I'd like to take this opportunity to recognize everything you have done to create a strong foundation for our company's success with your collaborative leadership approach over the past five years. Under your leadership, our team has achieved performance improvement across all aspects of our business, including improving our customers' experience and the company's long-term financial health. We're truly grateful for your years of service to Pinnacle West and APS, and I'm personally grateful for the trust and confidence you've placed in me during these years.

Jeffrey B. Guldner
Chairman of the Board, President and Chief Executive Officer at Pinnacle West Capital

Thanks,.

Ted N. Geisler
President, Arizona Public Service Company at Pinnacle West Capital

Looking ahead, I'm honored and humbled to continue serving our customers and shareholders through an era of unprecedented growth. Our team is focused on robust grid expansion, improving the timely recovery of our investments, delivering an exceptional customer experience and a relentless focus on talent development.

I firmly believe we have the right strategy, the right team and the right culture to deliver consistently for our customers while creating sustained competitive value for our shareholders. Arizona is well-positioned for long-term growth and our company is committed to enabling this growth through strong execution of our generation, transmission and distribution investments.

We recognize the importance of creating customer value and remain focused on delivering an excellent customer experience. Our employees are putting customers first and working towards our goal of achieving an industry-leading customer experience. Because of this commitment, we made solid progress on that front in 2024, finishing the year as a top performer among utilities for power quality and reliability, the top performer in helping customers choose rate options, a top performer in helping customers lower their bills and a top performer for overall digital experience.

Our customer-base, which for decades leaned heavily residential, is now more diverse than ever, mirroring the diversification in our growing Arizona economy. A robust increase in commercial and industrial customers in our service territory, including new chip manufacturing and expanded data center operations is leading to strong economic growth across our entire state.

As an example, construction continues in Northwest Phoenix on the Taiwan semiconductor manufacturing company facility. By the end-of-the decade, TSMC is expected to have invested $65 billion in three dedicated semiconductor fabs. The first fab began high-volume chip production in the 4th-quarter of 2024.

Amcor Technology also announced plans to invest $2 billion in the semiconductor advanced packaging and testing facility to-be-built nearby Peoria, Arizona, creating more than 2,000 jobs. Both companies, along with an already-strong Arizona presence by Intel, is expected to stimulate many suppliers and related manufacturing and service entities to establish operations here, further increasing growth for our state and APS.

TSMC in the nearby science and manufacturing park alone is anticipated to create approximately 62,000 jobs. Meanwhile, our residential customer-base also continues to grow. In 2024, we installed more than 32,000 new residential meters, the most since before the Great Recession.

Importantly, we see residential growth across our entire service territory. For example, the Yuma area saw 34% year-over-year growth in meter sets and saw a 36% year-over-year growth. Finally, MetroPhoenix experienced 49% year-over-year growth in new meter sets.

We are well-positioned to capitalize on this demand and have embarked on the largest transmission and generation expansion in our company's history. In fact, we recently procured nearly 7,300 megawatts of new resources to be in-service between 2026 and 2028. We're committed to serving Arizona's economic and population growth responsibly, while maintaining a top-tier reliability for our customers as we connect new large customer facilities like chip manufacturers and data centers.

We continue to make progress on responsibly decarbonizing the electric grid while focusing on reliability and affordability for our customers. Last year, we delivered top-quartile reliability for our customers through another record year of summer heat and peak demand, while at the same time generating 54% of our total energy mix from carbon-free resources.

We're also working to improve timely investment recovery through innovative rate design and regulatory outcomes that benefit our customers and our company. This began last year when we secured the new system reliability benefit mechanism for improving cost recovery on new-generation investments and we look-forward to continuing to collaborate with the commission and stakeholders on implementing a formula rate plan in the future.

We're focused on executing our plan and expect to file a new rate case midyear 2025 to support Arizona's economic expansion. Thank you for your time today.

I'll now turn it over to Andrew, who will discuss our 4th-quarter and full-year 2024 earnings and our forward-looking financial expectations.

Andrew Cooper
Senior Vice President and Chief Financial Officer at Pinnacle West Capital

Thanks, Ted and Jeff, and thanks again to everyone for joining us today. Earlier this morning, we released our 4th-quarter and full-year 2024 financial results. I'll share those results and highlight key drivers and we'll review our full-year 2025 financial guidance, which was provided in Q3 2024.

We lost $0.06 per share during the 4th-quarter of 2024 compared to a flat result in Q4 of 2023. Our largest positive drivers year-over-year were new rates as well as benefits from weather and continued sales growth. These were offset by negative drivers in O&M, D&A, financing costs and other net.

For the full-year 2024, we ended at $5.24 per share, an increase of $0.83 per Per share from 2023, slightly above our updated annual guidance range. The constructive rate case outcome as well as strong sales and usage growth throughout the year were the largest positive drivers of this increase. We also had benefits from our approved surcharges and positive contributions from weather. Offsetting these benefits were increases in O&M, D&A and debt financing costs as well as share dilution from our equity issuance. We saw strong and consistent customer and sales growth continue throughout 2024 with customer growth coming in at 2.1% for the full-year. This was slightly above the midpoint of our guidance range of 1.5% to 2.5% and continues the trend of steady customer growth each year. Last quarter, we had raised our full-year 2024 sales growth guidance from 2% to 4% up to 4% to 6% to match our long-term growth guidance after seeing multiple quarters of strong growth, particularly in the C&I segment. This strong growth continued in the 4th-quarter with weather-normalized sales growth coming in at 5.5%. We ended the full-year near the high-end of our sales guidance -- sales growth guidance range at 5.7%. This growth was driven by both consistent residential sales growth of 1.1% for the full-year and strong growth in our C&I segment of 9.7% for the year. As Ted mentioned, this growth trend reflects the diversity of our Arizona economy as we saw growth across a breadth of C&I sectors from small-business to manufacturing. The robust weather benefit in 2024 allowed us the opportunity to derisk future spend. We are focused on cost efficiencies and we continue to work towards our goal of declining O&M per megawatt-hour. Cost management is a priority and we will continue to strive for operational excellence and efficiency through our lean culture and initiatives. Looking ahead, we are reiterating all aspects of 2025 guidance provided on our 3rd-quarter 2024 call. Our weather-normalized sales growth guidance for 2025 remains unchanged at 4% to 6%, matching our long-term expectations with extra high load factor C&I customers contributing 3% to 5%. As Ted talked about earlier, we continue to see both residents and businesses viewing Arizona as a highly-attractive destination to call home. We are also reaffirming our capital and financing plans and are already making progress on both. Our capital plan continues to focus on strengthening infrastructure, improving reliability and meeting the accelerating demands of our growing service territory. These investments include strategic transmission and new-generation resources with over 40% of our future capital investments being tracked via our system reliability benefit surcharge or through our FERC formula rates, allowing for more timely recovery. Our financing plan supports a balanced utility capital structure, matched to our spending profile and includes a mix of both debt and equity. We are focused on maintaining a solid balance sheet and stable credit ratings. We completed our block equity in early 2024 and closed out the year-by opening an at-the-market program consistent with the cadence of our investment. Our laser-focus on cost management, balanced capital investment and financing plans, along with the strong growth trajectory of our service territory allows us to reaffirm our long-term 5% to 7% EPS growth guidance based on the midpoint of our original 2024 guide of $4.60 to $4.80 per share. We ended 2024 strong and our confidence in our plan for 2025 and the long-term, while continuing to recognize and address the challenges of regulatory lag with our regulators. We are focused on executing our plan to deliver reliable, affordable service to our increasingly diversified and growing service territory, while maintaining financial health and creating value into the future. This concludes our prepared remarks. I will now turn the call over to the operator for questions.

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Operator

Certainly. Everyone at this time will be conducting a question-and-answer session. If you have any questions or comments, please press star one on your phone at this time. We do ask that while posing your question please pick-up your handset if you're listening on speakerphone to provide optimum sound quality. Once again, if you have any questions or comments please press Star-1 on your phone.Your first question is coming from Julian Dumoulin-Smith from Jefferies. Your line is live.

Julien Dumoulin-Smith
Analyst at Jefferies Research

Hey, good morning, team. Thank you guys very much for the time. I appreciate it. And first-off, Jeff, Ted, congrats. It's been a pleasure and welcome indeed. So I want to just leave with that here.

Jeffrey B. Guldner
Chairman of the Board, President and Chief Executive Officer at Pinnacle West Capital

Hey, thanks. Thanks, Julian. Pass our regards on to as well. Absolutely, indeed.

Julien Dumoulin-Smith
Analyst at Jefferies Research

So maybe just to kick things off here, I mean, obviously making good progress on the core business. With respect to the ACC, it's clarified that it supports settlements in general. And frankly, now we're looking at a formula rate potentially. How do you think about a test case here being able to be settled, right? Do you need to fully litigate in order to see and implement formula rates at this point?

Jeffrey B. Guldner
Chairman of the Board, President and Chief Executive Officer at Pinnacle West Capital

Yeah, Julian, appreciate the question. We always believe that settlements can lead to good outcomes both for our customers, the regulators, stakeholders and of the company. And we've got a long track-record of constructive settlements in the past. That said, we're not assuming that this case will be settled nor does it need to be settled in order to achieve a constructive outcome.

So I think our go-in default position is to prepare for a litigated case, particularly considering that the filing will likely include details around the formula rate plan and that will be a new ratemaking concept that we want to make sure we get right and get implemented correctly. But we're always open to settlements and to the extent that stakeholders choose to align around a constructive outcome that could be concluded through a settlement, then I believe we'll be open to do so as well.

And it could be that you get some partial areas that you're able to resolve ahead of time. So -- but yeah, first time in the formula for sure.

Julien Dumoulin-Smith
Analyst at Jefferies Research

Excellent. And maybe a little bit more of a longer-term question as you think about it. Obviously, you guys give a capex forecast through '27 only and versus some of your peers. And obviously, given the longer-dated nature of some of the demand growth, some of the capex is a little bit longer-dated than we've seen historically.

Clearly, I'm cognizant of the logo coming at the high-end of the range. Obviously, RFP here being exceptionally large. I mean, how do you think about capex trends beyond the '27 period? I just want to start to needle a little bit on that, just given the trends we're seeing from some of your peers and given the robust growth dynamics you're seeing?

Andrew Cooper
Senior Vice President and Chief Financial Officer at Pinnacle West Capital

Hi, Julian, it's Andrew. No, it's a great question. And we provide this three years because that's the period in which we forecast in the shorter-term. But if you think about the types of projects that we're -- that we're looking at right now, they're longer data generation projects.

They're -- the high voltage transmission, those longer lead-time projects. And so those will extend over this period. Frankly, as we look at our generation resources and the ability to through a formula, be able to recover distribution and maintenance generation capex as well, there are going to be incremental opportunities that we look at as we as we go out into the future past this rate case and think about the formula rate.

So between the nature of the projects that may not be captured in a '25 through '27 period other than through being AFUDC construction work-in progress, you're talking about -- if you look at our strategic transmission plan, you have projects within service dates at the end of this decade into the beginning of the next decade.

And frankly, as the generation resources that we begin to look at to meet the needs in the 2030s start to develop through the plan, those are going to be longer lead-time and larger projects where we look at the variety of ways to finance them and what are we going to own on the generation side versus PPAs.

So there's a lot that as we get through the other side of this formula rate opportunity, opportunity we'll be looking at from a capital allocation and overall size of the capital envelope.

Julien Dumoulin-Smith
Analyst at Jefferies Research

Wonderful. Excellent guys. Thank you very much. All the best. Congrats,. Thanks,

Jeffrey B. Guldner
Chairman of the Board, President and Chief Executive Officer at Pinnacle West Capital

Thanks, Julien.

Operator

Thank you. Your next question is coming from Michael Lonigan from Evercore. Your line is live.

Michael Lonegan
Analyst at Evercore ISI

Hi, good morning. Thanks for taking my questions and congrats, Jeff and Ted.

Jeffrey B. Guldner
Chairman of the Board, President and Chief Executive Officer at Pinnacle West Capital

Yeah. Hi, thanks, Mike. Thank you.

Michael Lonegan
Analyst at Evercore ISI

Yeah, of course. In the past, you've talked about a goal for an Evergreen 5% to 7% EPS growth rate. Obviously, formula rates will help improve cost recovery. Sales growth continues to be robust near the top-end of expectations. Capex opportunities, significant backload of high load customers large. Just wondering if you see an opportunity to increase your growth rate to the high-end of 5% to 7% or above that range at some point or does your focus remain on a continuation of 5% to 7% with a smoother profile?

Jeffrey B. Guldner
Chairman of the Board, President and Chief Executive Officer at Pinnacle West Capital

Yeah. Michael, I think the first and foremost is the continuation of the 5% to 7% with a smoother profile. That is our number-one goal right now is to work-through this next rate case proceeding to try to find ways to reduce regulatory lag. We've also leaned into capex that has more recovery like the generation projects, including the 800 megawatts we won in the last RFP that are -- should be eligible for the SRB As well as the substantial increases in transmission. But certainly, as we look at the long-term, we're pretty conservative in how we forecast that top-line growth. We've got a long runway in the past of experience with data center type customers. And so as we see the ramp-up of some of our large industrial customers. As we see the continued residential customer behavior, this year, we saw 1.1% residential customer growth, which was pretty substantial above the top-end of what our expectation was there. So as we look at those customer classes and on the residential side, a continuation of trends around kind of the acceleration of new rooftop solar, we'll continue to look at what that top-line looks like. But number-one is getting through the formula rate opportunity and the chance to have a smoother path of earnings going-forward.

Michael Lonegan
Analyst at Evercore ISI

Got it. Thank you. And then secondly, I was wondering if you could share your thoughts and talk about the level of support from legislators for House Bill 2,201 proposed in Arizona, you know, that would address wildfire mitigation plans and proposed limitations on liabilities as it pertains to class-action lawsuits, damage claims and other items. I'm just wondering what your thoughts and confidence level is in favorable legislation being passed.

Ted N. Geisler
President, Arizona Public Service Company at Pinnacle West Capital

Yeah, Michael, I appreciate the question. It's still pretty early in the process. It's a house bill and it's still in the house. So we'll continue to monitor. Of course, we support it as well as many other organizations throughout the state, Firefighter Association, many of the unions, other utilities, really all those that have been paying attention to wildfire risk throughout our country and the West, in particular realize that any legislation that's going to help establish guidelines and standards for how to be better around wildfire prevention and ensure that all entities are aligned on what good wildfire prevention measures look like is probably good legislation for any state.

And so we support it. We think that there is forward momentum and progress, and we'll continue to monitor it along the way, but probably too early to be able to anticipate any final conclusion at this point.

Michael Lonegan
Analyst at Evercore ISI

Great. Thank you very much.

Ted N. Geisler
President, Arizona Public Service Company at Pinnacle West Capital

Yeah. Thanks, Michael.

Operator

Thank you. Once again, everyone, if you have any questions or comments, please press star than one on your phone. Your next question is coming from Travis Miller from Morningstar. Your line is live.

Travis Miller
Analyst at Morningstar

Good morning. Thank you. I echo the -- echo the congratulations to both of you.

Jeffrey B. Guldner
Chairman of the Board, President and Chief Executive Officer at Pinnacle West Capital

Yeah. Thanks, Jeff. Jeff, over the last five years.

Travis Miller
Analyst at Morningstar

The real quick clarification on the mid-year 2025 rate case. As the formula rates go, how does that go together, right? Would it be then the next rate case that you would implement formula rates because obviously, this would be the historical. So how is that kind of timing going to work if the commission does support formula rates as part of the filing.

Jeffrey B. Guldner
Chairman of the Board, President and Chief Executive Officer at Pinnacle West Capital

Yeah, Travis. Appreciate the question. The way we would anticipate it working is this next case would really look like a traditional rate case based on a historic test year with post-test year plan. So if you assume a mid-2025 filing, let's anticipate a conclusion of a case perhaps by the end of 2026.

And then if that included designed for a formula rate plan on a go-forward basis, consistent with the commission's policy statement, which of course is orienting a Formula 8 plan based on a historic test year, then you could assume as soon as one year later, a Formula 8 plan would then take into account any adjustments that would be made based on whatever the formula rate plan is intended to adjust.

So it's a way to keep the costs trued up on a go-forward basis once you conclude this next rate case and we'll look to work-through all the details of that in this next case as a part of the filing and align with the commission on details around how that formula would work.

Travis Miller
Analyst at Morningstar

Okay. That makes sense. Thanks. And then one quick other one on that. ROE, what are your thoughts on that? I don't think it was in the policy statement, but you correct me if I'm wrong there.

Jeffrey B. Guldner
Chairman of the Board, President and Chief Executive Officer at Pinnacle West Capital

Well, we wouldn't envision that

Travis Miller
Analyst at Morningstar

Change every year.

Jeffrey B. Guldner
Chairman of the Board, President and Chief Executive Officer at Pinnacle West Capital

So yeah, Travis, I wouldn't envision that the ROE would really be a factor any different than it is today around a formula rate. So we would take the opportunity in this case to be able to demonstrate what an appropriate ROE would be for us to be able to attract capital commensurate with our peers.

And then we'll look to work with the commission on how that would be maintained in a future forward -- formula rate construct. So it wasn't detailed out in the policy statement and we'll just look to work-through all those details in this upcoming case?

Travis Miller
Analyst at Morningstar

Okay. Great. That's helpful. And at one higher-level, again, back to the formula rates, any chance that if this is successful that you would shift around capex? Or is there some opportunity to shift around capex between transmission of transmission already obviously has that work level, but between distribution and generation perhaps shifting that capex if you end-up getting that formulary plan authorization?

Andrew Cooper
Senior Vice President and Chief Financial Officer at Pinnacle West Capital

Yeah, Travis, it's Andrew. Yeah, that's a great question. I think we will definitely be looking at capital allocation should we be working through a formula rate. If you think about some of the projects that we're spending more heavily on today, they're in the generation space and they're in the transmission space because of the more contemporary recovery. And in the case of transmission, a formula rate that has a premium FERC ROE associated with it. But the opportunity in our distribution system and our IT backbone infrastructure and one of the areas that I always think about is maintenance of our generation fleet, not only just some of our older fossil units, but investing in for the long-term.

And all of those are opportunities that we have to wait for periodic rate cases to recover on. And so we'll look at the -- both the allocation among our business lines and then what the size of the overall capital spend would be as it's supported by our credit metrics and our financing plan with the more predictable and contemporaneous recovery that we see should formula rates be adopted?

Travis Miller
Analyst at Morningstar

Okay, great. That's very helpful. Thank you.

Operator

Thank you. Your next question is coming from Chris Ellinghouse from Williams Capital. Your line is live.

Chris Ellinghaus
Analyst at Siebert Williams Shank

Hey everybody. How are you? So Ted and Jeff, I hope you have a great retirement. As you get a better sense of some of these longer lead-time owned projects, would that give you the opportunity to extend your CapEx forecast at that point?

Ted N. Geisler
President, Arizona Public Service Company at Pinnacle West Capital

You know, Chris, it could, but I'll just underscore what Andrew said, which is, I think our capex forecast is really meant to reflect what our capital plan is currently while we're entering a period of a new rate application along with agreeing with the commission on how to keep rates trued up going-forward through a formula rate plan.

So our first priority is really to work-through that process and then after that they reflect on what the right capital outlook could be, capital allocation across our three business lines of generation, transmission, distribution. So we'll certainly continue to assess and reflect on what a forward-looking forecast could be. But priority number-one is to file this case and then align with commission and stakeholders on how to keep rates trued up going-forward through the formulary plan.

Chris Ellinghaus
Analyst at Siebert Williams Shank

Sure. When you talk about the end of 2026 sort of timeline for adjudicating the case. Are you including in that sort of thought process you know, the complication addition of the formula rate issue in the case.

Ted N. Geisler
President, Arizona Public Service Company at Pinnacle West Capital

Chris, yes. That's a rough estimate of what a timeline could be based on historical timelines of practice. But given that the commission really took most of 2024 to host workshops and ultimately align on what good mitigation tool would be to minimize regulatory lag, aligning on Formula 8 plan.

A lot of that work and alignment has already been done. It culminated in the issuance of a policy statement. And so this is really about including and ultimately implementing that policy statement in our rate case filing and then just simply detailing out the mechanics of how it would work.

So yes, that timeline estimate, we, we believe can still be accomplished with the formula rate plan mechanics being agreed to as well.

Chris Ellinghaus
Analyst at Siebert Williams Shank

Okay. Maybe it's a good question for Ted. You put out your statement on new nuclear thoughts in December, I think it was. You know, when you talk about the early 2040s, can you just sort of discuss what you see as the decision points to get to that point in terms Of when new SMRs are ready, how do you sort of get to that decision tree that you sort of have in your mind?

Ted N. Geisler
President, Arizona Public Service Company at Pinnacle West Capital

Yeah, Chris. And this is Ted. You know, we really wanted to put out the announcement to just recognize that we think nuclear has the potential for helping us serve customers in the long-term with reliable, affordable carbon-free energy. But given the reality of the long-lead time it takes to develop and frankly, the uncertainty around which nuclear technology may be best-suited for any potential future investment, step one was really for us to begin a formal collaboration with some of our utility partners in the state, Salt River Project and Tucson Electric

And begin assessing where locations may be suitable for new nuclear, what technologies may be in the best interest of our customers over the long-term and importantly, monitor the technology and supply-side maturity over-time. And so the announcement was really a recognition that we think nuclear is a promising technology, but it's too early to be able to commit to a project.

However, we are taking the developments that we see elsewhere seriously, and we want to dedicate a team to pay attention to those developments and begin thinking about what options may exist in Arizona.

As we start to zero in on potential suitable locations, what technology is maturing nicely in the marketplace. And importantly, if the supply-side starts to mature where you have a dependable scaled-up set of contractors that can develop the technology, then I think the decision criteria will become more clear and we'll be in a better position to more seriously consider whether there's a project that could come from this effort.

But at this point, I'd just emphasize it's really an assessment period and then we'll know more in the future.

Chris Ellinghaus
Analyst at Siebert Williams Shank

That's helpful. I appreciate it. Thanks so much. Appreciate the color.

Ted N. Geisler
President, Arizona Public Service Company at Pinnacle West Capital

Thanks, Chris.

Operator

Thank you. That completes our Q&A session. Everyone, this concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation

Corporate Executives
  • Amanda Ho
    Director, Investor Relations
  • Jeffrey B. Guldner
    Chairman of the Board, President and Chief Executive Officer
  • Ted N. Geisler
    President, Arizona Public Service Company
  • Andrew Cooper
    Senior Vice President and Chief Financial Officer
Analysts

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