Release Date: February 25, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: With respect to the Arizona Corporation Commission (ACC), how do you think about a test case being able to be settled, and do you need to fully litigate to implement formula rates? A: Theodore Geisler, President of Arizona Public Service Co., explained that while settlements can lead to good outcomes, they are preparing for a litigated case, especially since the filing will likely include details around the formula rate plan. They are open to settlements if stakeholders align around a constructive outcome.
Q: How do you think about CapEx trends beyond the 2027 period, given the robust growth dynamics you're seeing? A: Andrew Cooper, CFO, noted that while they provide a three-year forecast, longer-dated projects like high voltage transmission and generation resources will extend beyond this period. They will look at capital allocation and the size of the capital envelope as they progress through the formula rate opportunity.
Q: Do you see an opportunity to increase your growth rate to the high end of 5% to 7% or above that range at some point? A: Andrew Cooper emphasized that their primary goal is to maintain a 5% to 7% growth rate with a smoother profile. They are focused on reducing regulatory lag and leaning into CapEx with more contemporaneous recovery.
Q: What is your confidence level in favorable legislation being passed for House Bill 2201, which addresses wildfire mitigation plans? A: Theodore Geisler stated that while it's early in the process, they support the bill along with many organizations. It aims to establish guidelines for wildfire prevention, and they see forward momentum and progress.
Q: How will the timing work for implementing formula rates if the commission supports them as part of the filing? A: Theodore Geisler explained that the next case will look like a traditional rate case with a historic test year. If it includes a formula rate plan, it could be implemented a year after the case concludes, allowing for cost adjustments based on the formula.
Q: What are your thoughts on ROE in the context of the formula rate plan? A: Theodore Geisler mentioned that they don't envision ROE being a different factor in a formula rate. They will demonstrate an appropriate ROE to attract capital and work with the commission on maintaining it in a future formula rate construct.
Q: Is there an opportunity to shift CapEx between distribution and generation if you get formula rate plan authorization? A: Andrew Cooper indicated that they will look at capital allocation among business lines and the overall capital spend size, supported by credit metrics and financing plans, if formula rates are adopted.
Q: What are the decision points for new nuclear projects, and how do you see the decision tree for SMRs? A: Theodore Geisler stated that they are in an assessment period, collaborating with utility partners to evaluate suitable locations and technologies. They are monitoring technology and supply side maturity, with decision criteria becoming clearer as developments progress.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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