In the call, Amanda Ho mentions the availability of a replay of the call for the next thirty days online and by telephone until March 4, 2025. Jeffrey Guldner then expresses pride in the company's 2024 achievements despite challenges, emphasizing strong service reliability and progress in regulatory matters. The company successfully resolved its last rate case, and the commission approved measures to reduce regulatory lag. New commissioners joined in January, and leadership roles were assigned. On the operations side, the field team accomplished zero serious injuries while dealing with an unprecedented stretch of high temperatures in Phoenix.

The paragraph discusses APS's achievements under the leadership of the retiring CEO, Jeff, highlighting a record energy demand of 8,210 megawatts and consistent performance of the Palo Verde Generating Station. Jeff reflects on his tenure, emphasizing improved customer experience and the company's financial health. He announces a seamless succession to Ted, who expresses gratitude for Jeff's leadership and looks forward to continuing the company's growth and success with a customer and shareholder-focused approach.

The paragraph highlights the company's focus on grid expansion, timely investment recovery, exceptional customer experience, and talent development, asserting that Arizona is poised for long-term growth. It underscores the company's commitment to enhancing generation, transmission, and distribution investments, emphasizing the creation of customer value and achieving an industry-leading experience. The company was a top performer in power quality, helping customers with rate options, lowering bills, and overall digital experience in 2024. The customer base is diversifying alongside Arizona's economy, driven by significant commercial and industrial growth, exemplified by the Taiwan Semiconductor Manufacturing Company's $65 billion investment in semiconductor fabs and Amcor Technology's $2 billion investment in a nearby facility, leading to economic development and job creation.

The paragraph discusses the economic and population growth in Arizona, driven by companies like TSMC and Intel, leading to job creation and residential expansion across the state, particularly in areas like Yuma, Casa Grande, and Metro Phoenix. The company is responding to this demand with a significant transmission and generation expansion, adding 7,300 megawatts of new resources by 2028. They aim to balance this growth by maintaining reliable and affordable service, focusing on decarbonizing the grid, and using carbon-free resources for 54% of their energy mix. The implementation of a new system reliability benefit mechanism last year aids in investment recovery and benefits both customers and the company.

The company plans to continue collaborating with the commission and stakeholders to implement a formula rate plan, with the intention of filing a new rate case in mid-2025 to support Arizona's economic growth. In the fourth quarter of 2024, the company reported a loss of six cents per share, compared to breaking even in the same period of 2023. Key positive drivers included new rates, favorable weather, and sales growth, but these were offset by increases in O&M, DNA, and financing costs. For the full year 2024, earnings were $5.24 per share, up 83 cents from 2023, exceeding their annual guidance. The increase was driven by a constructive rate case outcome, strong sales and usage growth, surcharges, and favorable weather, offset by rising operational costs and share dilution. Customer growth in 2024 was 2.1%, slightly above their guidance range, indicating steady yearly growth.

The company experienced strong growth in 2024, particularly in the commercial and industrial (C&I) segment, ending the year with a 5.7% sales growth, driven by consistent residential sales and significant C&I growth. This reflects Arizona's diverse economy. They aim to improve cost efficiencies and operational excellence while maintaining a 4% to 6% sales growth target for 2025. The company remains committed to strengthening infrastructure to meet increasing demands, with significant future capital investments focused on system reliability and financed through strategic means.

The paragraph discusses a company's financial strategy aimed at supporting a balanced capital structure through a mix of debt and equity, emphasizing the importance of maintaining a solid balance sheet and stable credit ratings. In early 2024, the company completed its block equity and initiated an at-the-market program to align with its investment pace. It focuses on cost management, balanced capital investment, and a strong growth trajectory to reaffirm its long-term earnings per share growth guidance of 5% to 7%. The company concluded 2024 successfully and is optimistic about its 2025 plan, addressing regulatory challenges while committing to delivering reliable, affordable service to its growing service area. The paragraph concludes with the company opening the floor to questions from the audience.

The paragraph involves a discussion between Ted Geisler and Julien Dumoulin-Smith about the possibility of implementing formula rates in a current case. Ted Geisler emphasizes that while settlements have historically led to favorable outcomes for customers and stakeholders, the current case does not need to be settled to achieve a constructive result. The company is prepared to litigate, particularly as the filing will introduce a new rate-making concept. Geisler is open to settlements if stakeholders align on a constructive outcome and mentions that partial resolutions could be achieved beforehand. Julien then inquires about long-term capital expenditure (CapEx) trends beyond 2027, considering the company's CapEx forecast and comparing it to peers, given the high demand growth and large-scale RFP mentioned. Andrew Cooper is addressed to potentially continue the discussion.

In this paragraph, Andrew discusses the company's focus on long-term, high-voltage transmission projects that extend beyond their current three-year forecast period. These projects, which include capital expenditures in generation and distribution, are expected to become incremental opportunities past the current rate case. As these projects progress, especially those planned for service dates at the end of this decade into the 2030s, the company will explore various financing options and ownership structures, such as generation versus power purchase agreements (PPA). Julien Dumoulin-Smith acknowledges the explanation, expresses his appreciation, and Michael Lonegan from Evercore briefly congratulates Jeff and Ted before asking his questions.

In the discussion, Ted Geisler emphasized the company's commitment to maintaining a 5% to 7% EPS growth with a smoother profile by addressing regulatory lag and investing in CapEx with contemporaneous recovery, particularly through generation and transmission projects. While there is optimism about increased growth due to strong sales, growing industrial and residential customer bases, and new solar trends, the focus remains on achieving consistent growth through strategic rate management and ongoing projects. Michael Lonegan acknowledges this strategy, expressing understanding.

In the paragraph, Ted Geisler addresses a question from Michael Lonegan about the support for House Bill 2201 in Arizona, which focuses on wildfire mitigation plans and limits on liabilities related to class action lawsuits and damage claims. Geisler states that the bill is still in the early stages, but it has support from various organizations, including firefighter associations, unions, and utilities. He emphasizes the importance of establishing guidelines for wildfire prevention and expresses optimism about the bill's progress, though it's too soon to predict its outcome. The discussion then shifts to Travis Miller from Morningstar, who seeks clarification on a rate case related to formula rates.

In the discussion, Ted Geisler explains the anticipated process for implementing formula rates in a future rate case. Initially, the next case will resemble a traditional rate case based on a historic test year, with expectations for filing by mid-2025 and a conclusion by the end of 2026. If the commission supports formula rates, a plan could be implemented a year later to adjust costs on a go-forward basis. This would involve aligning details with the commission. Regarding the Return on Equity (ROE), Geisler notes that it would remain consistent with current approaches, with opportunities to demonstrate an appropriate ROE to attract capital, and collaborate with the commission on maintaining it in future formula rate structures.

In the paragraph, Travis Miller asks if there's a possibility of reallocating capital expenditures (CapEx) between different areas like distribution and generation if a formula rate plan is authorized. Andrew Cooper responds by confirming that capital allocation will be considered, particularly in generation and transmission projects, due to potential benefits like a premium FERC Return on Equity (ROE). He mentions the opportunities in the distribution system, IT infrastructure and the maintenance of their generation fleet, including investments in Palo Verde. Cooper notes that the decision will consider business line allocations and overall capital spending, aligning with credit metrics and financing plans, for a more predictable financial recovery with the adoption of formula rates. Following that interaction, the operator introduces a new question from Chris Ellinghaus of Williams Capital.

In the paragraph, Chris Ellinghaus asks Ted Geisler about the potential opportunity to extend the company's CapEx forecast given the longer lead time for certain projects. Ted Geisler responds, emphasizing that their current CapEx forecast aligns with their capital plan and their focus on a new rate application to implement a formula rate plan. Their priority is to work through this process with the commission and stakeholders to keep rates accurate going forward. Geisler acknowledges that by the end of 2026, they aim to address the case, including the formula rate issue, leveraging the commission's prior work from 2024 to mitigate regulatory lag, culminating in a policy statement that will be included in the rate case filing.

In the paragraph, Ted Geisler discusses the potential of nuclear energy for providing reliable, affordable, and carbon-free energy in the long term. He explains that due to the extended development timelines and uncertainty about which nuclear technology is most suitable, the company has started collaborating with utility partners like Salt River Project and Tucson Electric to assess potential new nuclear locations and technologies in Arizona. Although no project commitments are being made yet, the company is closely monitoring technological and supply chain progress and dedicating resources to explore future options.

The paragraph discusses the emerging focus on potential suitable locations for a project, noting that technology is advancing in the marketplace. As the supply side strengthens with reliable contractors capable of developing the technology, decision-making criteria will become clearer. Currently, the process is in an assessment phase, and more information will be available in the future. Chris Ellinghaus acknowledges the information, and Jeffrey Guldner and the Operator conclude the session, thanking everyone for their participation.

This summary was generated with AI and may contain some inaccuracies.