APS 2012 Annual Report Download - page 6

APS employees worked hard to accomplish these results, while also working safely. We recorded a
fifth consecutive year of company-best workplace safety, moving us to the cusp of the top 10 percent
in our industry.
Consistently superior operating performance contributed to another year of solid financial results and
shareholder value creation. Our company recorded net income of $381.5 million, or $3.45 per share,
compared with net income of $339.5 million, or $3.09 per share, in 2011. Ongoing earnings were
$3.50 per share, up 17 percent from last year.
Our total shareholder return of 10.3 percent trailed the 15.9 percent return of the S&P 500 Index, but
greatly exceeded the industry average of 0.1 percent as measured by the S&P 1500 Electric Utility Index.
Over the last five years, our return of 57.8 percent significantly outpaced that of the broader market
(8.5 percent) and our industry (which declined 1.1 percent over the period).
Pinnacle West’s shareholder value increased almost $600 million in 2012 and more than $3.2 billion
over the past four years.
POSITIVE RATE CASE OUTCOME
As we moved into 2012, our most important goal was to secure a constructive outcome in our
retail rate case. We succeeded. Through a collaborative process with nearly two dozen stakeholder
groups, we reached a four-year agreement that was approved on schedule by the Arizona
Corporation Commission.
Our customers received significant benefits. With the exception of a potential increase related to plans
for our Four Corners Power Plant, and barring any extraordinary events, base rates will remain frozen
until at least July 1, 2016.
At the same time, the agreement gives APS the opportunity to earn a competitive financial return when
we serve customers well and manage costs. Annual adjustment mechanisms enable timely recovery of
our investments and ACC-mandated program costs – with the added benefit of making rate changes
more gradual for customers. Other provisions mitigate the effects of certain cost increases until the
next potential rate case.
The process that produced the agreement earned praise for its inclusiveness and transparency.
The outcome provided further evidence of Arizona’s increasingly stable and constructive
regulatory climate.
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