- Record-setting summer heat drives increase in customer sales and usage
- Operating performance, reliability remain strong for customers
- Creative approach used to address monsoon outages, restore power
Pinnacle West Capital Corp. (NYSE: PNW) reported consolidated net income attributable to common shareholders for the 2024 third quarter of $395.0 million, or $3.37 per diluted share of common stock. This result compares with consolidated net income of $398.2 million, or $3.50 per diluted share of common stock, for the same period a year ago.
The results reflect a decrease of about $3 million, primarily as a result of higher operations and maintenance expense; increased depreciation and amortization expense mostly due to increased plant and intangible assets; higher interest charges; higher income taxes and the timing of recognition for permanent items, partially offset by higher tax credits. These negative factors were partially offset by the favorable impacts of new customer rates and the effects of weather.
“For a second consecutive quarter, we experienced a historic run of record heat that led to summer 2024 being the hottest on record,” said Pinnacle West Chairman, President and Chief Executive Officer Jeff Guldner. “Consequently, our customers used more energy to cool their homes and businesses than under normal weather conditions. And, while this quarter’s net income was down slightly from the same period a year ago, the collective increase in energy consumption and the growing number of customers we serve led to strong financial results.”
Providing Reliable Power, Customer Assistance During Record Summer Heat
In addition to robust customer growth of 2.3% and weather-normalized sales growth of 5.9% during the quarter, weather variations also spurred an increase in customers’ energy consumption. The average high and low temperatures were slightly higher during the 2024 third-quarter than last year’s comparable period – and both were well over historical averages.
This summer’s stretch of 113 consecutive days above 100 degrees in Phoenix was the longest streak in Arizona history. Additionally, Phoenix exceeded the record for most 110-plus degree days in a year with 70, surpassing the prior record of 55 days in 2023. APS customers, in turn, set a record peak energy demand of 8,210 megawatts (MW) on Sunday, Aug. 4, breaking the previous record of 8,162 MW set on Saturday, July 15, 2023.
The warmer temperatures meant air conditioners were running around the clock to keep homes and businesses cool. As a result, the number of residential cooling degree-days (a utility’s measure of the effects of weather) in this year’s third quarter were 32% higher than historical 10-year averages.
“Our employees take to heart the importance of keeping our 1.4 million customers cool and safe,” Guldner shared. “They deliver reliable power year-round, but especially on the hottest summer days when customers need it most. As more people and businesses move to Arizona, I am proud to say we continue to be one of the most reliable energy providers in the nation – and with rates below the national average.
“Even so, sustained excessive heat can deeply affect people’s pocketbooks as they use more power to stay cool and safe. If someone is struggling to pay their bill, the first step is to reach out to us. We have the largest energy support program in the state, and we can connect customers with other assistance programs.”
APS increased energy support and crisis bill assistance; maintained a summer moratorium on disconnects for past-due bills; assisted customers with payment arrangements; and partnered with more than 100 local non-profit and community agencies to connect the state’s most vulnerable populations with helpful resources.
Responding to Storm-Caused Outages with Innovation
Despite one of the driest monsoon seasons on record, APS customers experienced powerful storms that produced extreme weather, including hurricane-force winds.
In the sweltering heat of July, APS employees responded to one of the area’s strongest storms. Severe winds of up to 75 mph, fueled by multiple downbursts, caused extensive statewide damage, especially impacting one southwest Phoenix neighborhood. With dozens of downed transmission poles and broken electrical equipment, APS crews first had to rebuild the grid serving that area to effectively restore power.
To protect nearby neighborhoods, APS partnered with customers enrolled in the company’s Cool Rewards smart thermostat program in a unique and historic way. APS technology experts targeted a specific portion of customer-owned smart thermostats to voluntarily help conserve power. The creative approach – along with operational back-ups including rerouting electricity – helped relieve strain on the storm-ravaged electric system. This resourcefulness marked the first time the company’s Cool Rewards program was utilized in such a targeted manner.
A collaboration with customers, APS Cool Rewards is a network of 95,000-plus smart thermostats that acts like a virtual power plant capable of conserving nearly 160 MW of energy, similar to that produced by a small power plant.
Financial Outlook
Given the positive impact of weather and customer and sales growth through the first three quarters of the year – partially offset by higher than previously forecasted operations and maintenance expenses – the company is adjusting its 2024 consolidated earnings guidance upward to a range of $5.00 to $5.20 per diluted share.
Looking forward, the Company estimates its 2025 consolidated earnings will be within a range of $4.40 to $4.60 per diluted share on a weather-normalized basis.
Key factors and assumptions underlying the 2024 and 2025 outlook can be found in the third-quarter 2024 earnings presentation slides at pinnaclewest.com/investors.
