APS 2009 Annual Report Download - page 6

APS PROdUcTIVITy gROWTH
1989
1999
2009
104 retaiL CustOmers served Per emPLOYee
199
  236
P.4
Our company has not only constructed an electric
system in Arizona, but has also worked to build lasting
relationships with our customers and their communities.
Our customers rely on us to provide rst-class service
and to invest wisely to meet their future needs. We,
in turn, look to our regulators to allow us an appropriate
return on the vast amounts of capital we invest in
critical electric infrastructure. Our company, commu-
nities, customers, regulators and shareholders exist
symbiotically. The comprehensive regulatory accord
reached in 2009 among APS, the Arizona Corporation
Commission and 21 stakeholders demonstrates the
nature and importance of this relationship.
The regulatory settlement strengthens APS nancially
by improving our ability to maintain investment-grade
credit ratings and support our common dividend.
Further, we now have a meaningful opportunity to earn
a return on equity comparable with the average for
other electric utilities. The settlement will help support
APS’s earnings until the next rate case and will play
a crucial role in our ability to access capital markets
on favorable terms in order to serve Arizona’s growing
energy needs. We also count price stability for
customers and the substantial expansion of APS’s
renewable resources and energy efciency programs
among the signicant benets of the settlement.
Looking ahead, we believe the cooperative regulatory
model demonstrated through the settlement provides
a foundation for reducing regulatory lag, streamlining
future ratemaking processes, and improving recovery
of our costs.
MAINTAINING OPERATIONAL EXCELLENCE –
ENVISION, EXECUTE, ENHANCE
To meet the energy needs of existing and new
customers, we need to maintain, expand and, where
necessary, replace our electric generation and delivery
facilities. We foresee the need to invest one billion
dollars each year in electric infrastructure. Our capital
allocation process will ensure these expenditures are
essential to meet customers’ needs, are cost effective,
and will qualify for regulatory recovery.
Our focus on creating a sustainable energy future
for Arizona has gained wide recognition. For example,
in 2010, for the sixth consecutive year, Pinnacle West
joined the ranks of the Global 100 Most Sustainable
Corporations in the World as determined by the
investment research rm Innovest Strategic Value
Advisors and , a social responsibility
magazine. Only 12 U.S. corporations made the most
recent list. Our leadership in this vital area has also
earned Pinnacle West a spot on the Dow Jones North
America Sustainability Index in each of the past ve years.
A substantial component of our resource plan relies on
renewable energy and energy efciency programs. By
the end of 2015, we expect renewable energy to supply
about 10 percent of our retail customers’ electricity
needs, an increase from the 2 percent today. Arizona’s
ample sunshine provides optimal conditions for solar
energy. Over the next ve years, we plan to invest up to
$500 million to develop and own 100 megawatts of
photovoltaic solar projects in Arizona under our AZ Sun
Program. Beyond the obvious environmental benets,
investing in solar will provide an economic boost for our
state. Furthermore, our investment in renewable
generation should hedge the costs of potential climate
legislation and increasingly stringent environmental
regulation of fossil-fueled generation.
Energy efciency programs enhance affordability for
our customers while mitigating APS’s nancial burden
with an offset to the cost of new resources. Our efforts
in this area recently earned APS the prestigious 2010
ENERGY STAR Sustained Excellence Award from the
U.S. Department of Energy and the U.S. Environmental
Protection Agency. This coveted award follows APS
being named ENERGY STAR Partner of the Year by