PNW - Earnings call transcript Q2 2022 | Pinnacle West Capital Corporation

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Operator

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Pinnacle West Capital Corporation 2022 Second Quarter Earnings Conference Call. At this time, all participants are on a listen-only mode. After managements' prepared remarks, there will be a question-and-answer session. to Director call of like host, to now Ho, Amanda Investor would turn over the the I Relations. Please go ahead.

Amanda Ho

Thank thank everyone call would and operating like in recent XXXX I review conference quarter to and you, this webcast developments second earnings, performance. for Kelly. participating our to

Jeff here President Geisler, speakers and APS' Our CEO, Jacob will with of CFO, our Tetlow, our be and today Vice Operations President; also are Andrew us. and Executive Chairman Guldner; Cooper; Ted

with details our few The a expectations. along may cover our to need forward-looking based using related on I we slides that available with and statements results be differ and on Investor you. materially will Today's release First, slides website, comments current from information. contain actual our expectations are earnings Relations and

XX, was MD&A XXXX well risks language, which cautionary filed morning. quarter forward-looking document turn from and Please as disclosures. and in to that be to website our I that second will cause Form factors call available be XX contained of through this now over A on refer those sections, for the risk telephone this actual to August by Our It results will will could shortly next differ statements, available materially uncertainties identify the days. also call for replay XXXX. as the Jeff. our XX-Q

Jeff Guldner

for us on We today. joining all were little you thank line. the static and bit a Amanda, of you, Thank troubleshooting

year-to-date started in XXXX be hopefully this So continue address to results expectations. as with the we're able in our line here get that morning. Financial we call to

regulatory and our I'll provide of details recent I'll the also and second a operational ESG discusses accomplishments. progress results, on on Andrew quarter before so, And touch few updates developments and our

generation our which wildfire we year, adequate customers. As reliable started that through to this year. to demand and the prepare service the in summer meet season, our for delivering preparing we've peak we for Each got season, resources ensuring our team continues summer, excel summer to early move

robust area inspection as and mitigation management, and protection mandatory reenergizing to for to high-risk all vegetation well lines, to safety, infrastructure service fire reliable the line customers. Our our as public our programs contribute the requirements prior of

resource our through consecutive us provide have degrees the of the to and over of our to multiple service exceptional margin reserve through allowed and standards customers balance procurement expected days to the prepared we're Additionally, demand peak efforts days, summer. XXX meet well

expanded our organizations where The With and our our the systems customers of hot vulnerable communities ever eviction each program network cooling the a the Salvation we includes that extreme weather This XX stations including months. and our support foundation or heat with of its local partnering an the Paul, that community senior with the across as living, replacement summer a has collaboration in few community. support for benefit hydration emergency effort do air initiatives, it experienced of de continue just are collaborate with heat conditioning these St. shelter for and our remains we protection through partnership to important state's assisting summer, we Vincent and relief Arizona repair relief examples of APS populations. during Army's emergency most as programs. offer aid to to

improving on We continue to remain experiences. focused our customers'

peers gains phone our APS XXXX large industry driver made customer results, Compared of satisfaction benchmarks trend both, improvement progress. And have Power hard the overall Business Residential over APS in work saw improved survey results. our also quartile in As J.D. corporate satisfaction being and nation. that to employees drivers continued to thanks and digital, previously our when quarter XXXX, which reliability citizenship. improved customer utility as by nationally. with latest midyear and APS we And and performing the reflects Residential the in for J.D. customer the customers, Power also improvement latest exceeds second the past satisfaction our recognized business customer Power's and quality investor-owned is every strongest of power is shared, second is XXXX APS' that's were to J.D. in and first now business overall years. the JDP most satisfaction the we're midyear our quartile in now rankings for two care compared the

yet. the made look forward progress we our the journey, team's in date customer I'm customer sharing good Although experience done of to journey to further experience and we're progress you I with in future. our in not proud advancements

the view test reliability, to In service our outlined a on support changes regulatory resilient year rate We that a we balanced the economy, more financial year investments us the current In new actually Arizona's in we and allow future through a that raised needs. the that experience the return additional XX notice rate the expenses work revenue Peterson Arizona with items test the our plant months topics request with Lea growing company customers. accurate focus posttest docket. June to address case will file customer in to base. filed by included delay of The This filings and commission infrastructure, Commission. the secure provide a our XXth, rate months first to really and six we a will application that XXXX make to allows to the notice, will improved decision various various were and of of Chairwoman, June, months the that made clean updates. Márquez to experienced of ratemaking, to Turning from end few time now ending a expect and be intent in in have to including of to to include we've stakeholders case enable year midyear to XXXX for filing October our investments energy and necessary to for which Corporation

and on a and the understanding our common case. issues gain continue of and rate we pursue In effort solutions to continuing balanced work in that variety to forward many Commission work to we in to addition, a Arizona look an Corporation with stakeholders

assisting proud our grid and As megawatts our its issued of a on the XXX role our a which renewables thermostat ESG Arizona to of integral ESG the RFP to proposal. in electric share good progress list energy us to also conserving customers our also the with over to enhancing Award We've August. Agency response excellence to program reviewing response clean In reliable to partnership the our the megawatts where clean program of and days, like we're we've and resources. to very The towards plant recognized offers made include half helps second year year of the uninterrupted that helps demand bids service Protection expect This achieving consecutive and is dedication our X,XXX an certainly those megawatts develop in include on our energy hottest customer in seeking journey Year we experience end robust XXX operation, May, programs. customers demand while XX,XXX I'm Environmental also working highest. the And in customers provide for money, stakeholder of the operates offerings the APS marketplace, early electricity year them for solid carbon-free that efficiency nearly for while technology Rewards And STAR earlier relationships essentially opportunity accomplishments. up of energy customer of connects capacity. a the and Partner me Cool seen online through work the in we XXXX smart fourth us more program. XXX These by playing products new one-stop of ensure process goals. to APS the a this which There's shop that thermostat but our ENERGY X,XXX save acknowledge company's with APS is smart Cool by all-source to team's is currently power energy our a flexible update when and of Rewards short virtual clean smart do, on that and our the that on XXX% will the progress an We're and customers to XXXX. first improving

Financial Finally, customer roles I'd promotion policy, And and role. a utility allows public to recent including experience operations, functions, separate on technology, Ted's experience APS I'd additionally, President Ted congratulate Chief our congratulate will returning President and and within well-rounded to to Officer. CEO in APS, valuable Cooper, utility our and strategy, be his as of Geisler like us like core this to welcome to consolidate Andrew also extremely

to in Treasurer know Some the in and prior his of his met you you each I as of role better him getting role. company's new look forward to Andrew

the turn to I'll Andrew And so with that, over you. call

Andrew Cooper

everyone you thanks joining and us today. Thank Jeff, for to again

financial last with review XXXX in mentioned, around to benefit year, continue compared quarter our down Jeff As second and sales, $X.XX additional some those second results results per year. $X.XX earned details provide costs. to our share and be growth, expectations. O&M the in We quarter will this second I line the quarter

first in unfavorable largest non-service reflected lower to usage Four quarter negative statement are continued headwind, Ocotillo negative lower net and and driver well the in and Again, OPEB depreciation a Partial June the lower the to for be these modest higher a primary longer transmission the year-over-year now despite and asset these was offsets June project LFCR been As and regulatory yielded deferring and credits. no costs having lower as because on case of tax the income. of revenues, income of results. and were company include the margin as a property is sales expense, SCR quarter, case impacts reduction modernization to contributing Weather in of amortization, only Other hottest XXXX the is record. higher the the that impacts factor the lower rate to resulting continues drivers related decision Corners growth. pension costs our the O&M,

Turning sales and usage. to

X%. with Second second in in Sales driven strong sales quarter at of of has segment. X.X%, customer by our a C&I quarter previous we primarily customer line the trend growth quarters experienced as weather-normalized seen growth was growth guidance continue

Arizona to the The employment began usage in rate continuing In at over at the in May, to XXXX and years rate trends which this to-date. Arizona market, sales to our not X.X%. national the X.X%, monitor guidance labor recover of XX has unemployment are lowest XXXX, state stood time. rate in are strong compared We and ranges remained changing

from the XXXX. and cities Those the population XX number top benefit US grow fastest-growing has addition, which Maricopa among net XX In Grande, and The by to Arizona's APS, into Metro Casa migration to nationally areas census Arizona data receive of top cost highest favorably of locations and from migration, we included Buckeye, served Arizona compares in the Recent four California. in Goodyear. continues that living of shows net many Phoenix high many included including cities cities state.

project APS steady population solid We continue growth. customer and to growth

strong. addition, and industrial In growth commercial remained

CommercialSearch, fact, growth listing found nationally Phoenix commercial in a In development ranks that XXXX. industrial platform, for second

customers to is continue impacts growth. of While for the to growth corresponding of the service pressures the the outweigh and keep for capital investments. experiencing again inflationary adequacy case growth operate. maintain the Like rate underscores reliability we're territory of need into significant benefit we're as grid substantial continue investment need negative positive, up to recovery we resource This to every that and area timely the everyone across reasonable the else, those move facing and with

these and Sigma mitigate customer continue We affordability pressures. initiatives on rely culture to to Lean our

will goal to of O&M to the continue keeping having through the We impacts remain declining flat monitor our per hour. and O&M committed and year megawatt inflationary

issue the of benefit to Turning costs.

we a has in volatility this been markets, understand topic of the Given interest. the

making today, headwind markets expense XXXX, XXXX year-end in calculate if they XXXX. While pension estimate, we the not do to we where for have early pension are it expect do to until too remain some

highlight points mitigate to key serve benefit that a to three are and support volatility there cost However, funded I and status. robust pension want

in of strategy as to practices the allocation reduced has funded a support First, and to position. levels lower the Consistent been particularly investing increased longer is portfolio. more funded the investment company liability-driven sets to is expected currently well-funded volatility and current allocation volatile to fixed term. income asset plan cost over has The liability-driven the classes with in assets, the benefit a status

this income higher in assets. would benefit reflected to be impacted allocation fixed and very return yields prevailing by Additionally year's expected also on next cost importantly, in the fixed near-term, income and plan is asset

the account portion for differences an amortized method for account booked is to Only accounting Second, amortization. we commonly employ quarter the test test assumptions in cost, a which service life. that the corridor benefit future possible used between results utility the to is and industry. prescribed remaining exceeds actual actuarial GAAP over are Any the

and recovery test to upcoming this as in look expect impacts we Third, benefit reflect to rate year's year, benefit least our we our a of at given mid-XXXX cost portion costs, case. future

current our guidance. to Turning

We we are maintaining other growth $X.XX but recognizing of continue areas to $X.XX benefits inflation see earnings per our to XXXX share the remain of range the financial guidance guidance All headwinds. sales of unchanged. as

confident strategy, strong deliver and that on back We year on I the to our are can we over our any to the finish questions. concludes to outlook. execute the continue will now turn call This prepared operator for remarks. we'll

Operator

The with is Insoo Goldman your Please now Sachs. question open Instructions] is questions. for from Kim first [Operator Certainly. Your floor pose question. coming

Your line live. is

Insoo Kim

there about, I in to maybe many that And an it one true? is by you seems be guidance and could it's question to we first relatively is or that offset not but say? that mitigate it's or Thank and Yes. as indication I guidance, about pieces year-end. confident change early still you in-flux on moving My range But the like annual that think of you're we could any that the 'XX XXXX, too least of on expecting growth on item pension growth whether of are X% still just the most at ’XX midpoint for current that. you're that know think And the off it if X% 'XX it that in could guess you.

Andrew Cooper

right definitely now. Yes Insoo, too say to question. the It is thanks early for

it on year. we mitigants today. undoubtedly from the so we monitoring performed low long-term fixed absolutely some be the is XXXX stand As similarly market But be to are perspective, right But going see continues an we returns at for our because fixed income the highlight really all if perspective. I a starting us what But heavily most headwind. of at I think O&M invested from headwind assets income. from that, There at as next allocated points we year-end, pension There some is to which wanted heavily badly this weigh the that calculations about year we well income that today. that as headwind asset was yields to are to income, those be that that that an where side. year will this have the an because are And level of expected on in may assets classes asset lower be on we of mentioned, missing to will mark-to-market market over expected this is the place volatility X% offset return when be because we from an from XXX potential in into that's industry we they think the where calculation are were around the have out set so that losses asset the year. return And last we'll the fixed amortization than fixed higher offset basis when will year than you next against on return there to we're the then project forward and were

Insoo Kim

it. Got

No for you helpful. Okay. that's that. Thank

it through more Jeff and I guess the it going investments energy rate late Second, resources. clean in favorable could case getting IRA happen, fall just for knows will filing guess outlook make Bill stakeholder and I and that as with that and -- benefit, if for further but ready the what who potentially the -- you're other solar to process the

that energy the get year the clean didn't case writer mechanism. in things the of One last rate we was

of initially through conversations a initial just go go through focus been that you what those the you that topic as feedback? have stakeholder is and As process, big

Jeff Guldner

focused area an obviously that now. we're Yes. in right That's

fully moves litigated again exactly which in now technical it's in get good the Insoo, particularly we rate continue important you discussions. in are whether more whether – case right the a I'd it have you're a of track up to think some see that I but we're building it start right. you to say, of further the aspects and as those track case what's what or moves track into options as application, settlement

in energy have And case, just as cases to help a you rate in want having conceptually, we kind of particular in benefits on the this just to resources. And it catch come sure make of You are. tracker clean does avoid really what investments focused that making. build serial with in we're up it's that

I Tucson that's a think Arizona so, going regulation. something is pretty some And out be time still to a it for expect It's on. presents of the also that compelling Electric ordinary case. I spending little

continues not build, of topic a utility hopefully but to smoothly absolutely benefits and to so, serial come on having momentum to more And here force the as this see rate people every in begin come that there's of just discussion. cases, in

Insoo Kim

much. Got it. you Thank so

Jeff Guldner

Thanks, Insoo.

Operator

next from post is Dumoulin-Smith Julien America. of Your your live/ from question, coming your Please Bank question is line

Julien Dumoulin-Smith

Good morning. Andrew to Thanks bit just welcome front. team. little to question on to more just talk back time come and a on the I want here. again. appreciate I Maybe IRA the to that

Again a impacts as win mentioned be there with playing limiting as AMT well? respect here all-source RFP elaborate a well to the rider renewable field on level just off, might effectively to that more on as, vector obviously compete opportunities. First considerations latest notwithstanding, etcetera the ownership you the little bit opportunity

Jeff Guldner

no Yes. for AMT Julien, effect us.

into ability that's obviously over it's to mean if I a very if got production compete. credit, helpful. solar of the But things think line. finish move you're get the to right the tax on I one -- you

deployment tax and -- some the it of ahead advantage customer generally of perspective, the us helpful move credits. view tax of the technology the a to for different cost because continue really reduce think being I take the affordability help we is to with from clean IRA would process

there's others balance, us PPA move number of But helpful are we that And of a doing would a maintaining balance still that technologies. forward in as be bill so certainly and And and utility balance. ownership provisions clean a obviously it in would work. that's with that but deploying be both a PPAs

Julien Dumoulin-Smith

related Obviously, a you're to here And side kudos we the right. growth on Got what in longer about to as it evolving term? it. talk bit some I All on thrown growth can talk seeing economic if long-term your on, near-term term can Excellent. here. just the longer curious little the then load can the on, you've load touch if here, probably is of nontrivial And there TSMC the think the that. contribution guide, of you you and numbers about trends, that out specifically obviously picture some

Andrew Cooper

Sure me sales start usage let Julien, and the with side.

As we saw quarter, a this of continuation of lot trends. been it's the a

most important the would growth the on from continuation that really is then, recovery the online thing level. this to seeing the trends think where those seen strengths trend have lot a C&I a the that the consistent of I last customer saw perspective, we're that the side. And was of quarter there. residential is we the come some COVID X% the of where From customer of of quarter maturation we at usage this work-from-home started really and customers

something the been side on something pretty the about. where to from is continuation guidance So been that that in our good spot has residential of territory, customer of that economic activity perspective we feel has service growth

the trends the On take seen we're play those pandemic a maturation of putting around some the of over longer-term I'll the C&I that side, course we've seeing recovery. which TSMC out let question, aside of Jeff

Jeff Guldner

a I ahead Julien on we're standpoint. national state TSMC, really if the I think a of And the couple you sectors that look from Yeah. technology at moving think key there's

One of semiconductors. them is

engineers state TSMC other there's service start so "Hey, and a our know, over Intel need Act now case manufacturers you And university case I'm ASU to here -- River we've clustering to at CHIPS opening see you quite I effect is for or territory. a continue the continues remarkable our you manufacturers. the as make that building for as fab, here territory. systems think other So out And churn to in say Arizona that Intel chip to a sure Salt that State it the makes because nice in had support." to get while. pace. I ecosystem, tailwind out another University is much but into for will infrastructure be chip

things we're keep ecosystem customer. semiconductors very they TSMC And like, think build working I largest to we'll going little like them to their with And to closely. that be so again help updated, up will growth to what largest as timing be in general. and continue -- with then keep looks that because continue work early A but drive chain think I load, with will obviously exactly to our obviously tell to to likely our that's folks that supply continue out

see other that though watch to you electric Motors Motors area. is the pretty us space. is companies whether also the Metro of building working out And they're one the size and Lucid ago Phoenix vehicle it's a significant at couple clustering scaling other months in The just down are Nikola down truly site, a see or on Lucid impressive. or We that of the factory there the

to so of areas just we're some And We to going growth those our that's affect pretty bioscience we the territory. as seeing a service we manufacturing think of already And advanced strong helpful. because that was niche of utilization but good in like develop. how that area, resources. I certainly the again, have begin see Hopefully

Julien Dumoulin-Smith

shifting absolutely. you too seeing And early bottom-line on said yet, any TSMC timing way. the weren't either tell for as Yes, to you

Jeff Guldner

Yeah.

Julien Dumoulin-Smith

best right, soon. All excellent luck. See you very guys. much, you of Thank

Jeff Guldner

Julien. Thanks,

Operator

Campanella from Please Nick question, coming is Credit is live. with question next your your Suisse. post line Your

Nick Campanella

Ted Congrats morning. to Good Hey. and Andrew.

wanted O&M. to ask on So just I

being guidance annual kind you out of Is just kind without kind about think backdrop O&M line that? look then, kind back X% current $X.XX half new going it's the of just have of able rates X% to Can decrease. and just quarter. the up a And pointing headwind to year is how like the Thanks. last we that? you year. that you time to inflationary And the XXXX, do specific sight still to O&M, we I I have? of line the reconcile on at If had that think versus hit manage of there like X% there kind of this into roughly of we to help know

Andrew Cooper

Nick. Sure,

So really at in so definitely the the what second those in aren't there's balance think of the to reflected you're We'll continue mind, lot and beginning see That some side. of in some in to play seeing headwinds the rest particular the costs and third of and from O&M anything of we time lead quarter sales this out a put there. the longer just see and play the half that going we're year. a are of that is Jeff about don't monitoring inflation position RFP, the to point out We those inflation the changes project how we be seeing are any into and quarter capital out. that's Keep in this. between piece this I that. on RFP certainly year. the of monitor mentioned,

gotten for our to We the perspective inflationary helped some to item and plus well business. on really prices have year on be of perspective sure That's initiatives it's was to the given Fuel customer affordability continue XX% high key So really going gas monitor customer vigilant us. mechanism from O&M, of PSM very to into this us blunted just for was a segment for cost, our of big were that and affordability obviously next. that to summer. a that for this kind and land hedged the continue make and how from

rest So a really of vigilance for just continued monitoring the the year. and

Nick Campanella

Okay.

future fixed would it. assets? and US be using back assets continuing does our the XXX% monitor. contributions just you contracts. then on to understanding as but you the how understand up slide And just that downside So the of is the to if in lower can rates maybe go rate to about How a just kind us help affect of plays of here? I required just that And just had the treasury interest go could Got portfolio this volatility pension combination income disclosure

Andrew Cooper

Yes. a question, No, it's Nick. great

is our XXX% future equities rates. that a And really make in makes years. north Those That We And may the is our create We us to to is liability-driven in The over actuarial funded be gains funded to remains intact. asset pension. losses and status is. project perspective about so strategy – the from do hedging of have can next today. not don't XX% that move position to still an which our process to other what and status. assets agnostic a star risk few is kind any contributions is relatively expected relative return changes that interest and allocation assets contributions to

securities at to some to income rate which asset the environment allocation the status funded our way rising we income and fixed market the year, So following perspective. matching with the those does fixed from in treasury end interest assets a with expected our a benefit with up from other return interest of and securities agnostic is liability helps our of mark strategy, LDI cost It becoming perspective rate move because help year. the volatility to the our and that's in a

Nick Campanella

it. Got

just as pension of us could were type get any inform could more have what you to number $XX that to one if return that trying thing I know in you $XX pension how on guidance question. And here? just Okay. if we up XXXX year-end follow for or XXXX, extrapolate income into XXXX? other like the you million then give kind million so. Could change I of And I color? it's guess number that And

Andrew Cooper

Yes.

it's in a in XX% returns time. income and actuarial really it that think you It in from help the to forces market of you're will portfolio we reflective and where at and our is in income year, give – extrapolate. deck rates year gains were asset years, assets classes over changes prior the is you still years. hopefully – contribution actuarial been fixed each have this fixed quarter significant given on meant I accumulation that help prior gains XXXX losses in And generally. which equities. discount number driver historically responds So kind heavy. in are interest of information and fairly We're well as And rates seeing the and how this of XX% to those as the the The provided XXXX

So if you that kind year. end or we the of take non-service those at the contribution at combination how of factors of arrive the cost that's

Nick Campanella

I’ll in get back queue. right. All the Thanks.

Operator

Your question Wolfe coming Research. from pose Peters question. David Please next with your is

live. is line Your

David Peters

Yes. Hey, all hope you guys doing well. are

Jeff Guldner

Hey, David.

David Peters

sensitivity between Hard assets. sense on guys the mark keep to now but actually Again, still lot just had is like impact on and nonetheless? you better which can a in I there understanding Thank year-end the you about or any how down But so the a potential that can think or are another Understanding income, than harping assets on lot to you. this faring pension XX% happen question equities, the OPEB. and when think fixed but of are that XXXX?

Andrew Cooper

get sensitive rates line sensitive. changes more or zero Yes. our interest of both makes It's into it a can and to interest less our it's you are go items. -- service rates, the number of non-service factors give thumb rates, interest to And in rise, rule closer costs costs more to certain related as that that hard it to it on as become

respond directions move start linear as rates least from -- impacts. to rates factors, which do do at costs interest returns costs, opposite service to with market that move. not have in So key But with have they're which discount costs, you our everything you service the and nothing and if interest

have to amortization expected income impact the base, You of maybe then, which on has which year, have smaller there's earlier, for and if a with from a prior negative you following our And I marking netted. losses in asset always mentioned return year. positive actuarial market any gains fixed a is yields. as But the return

prior asset having which if discount the gains use, test, from our which expected higher have return a So you we rate apply loss XXXX. in before the been you see would net any we the in the actuarial than year, you corridor from accounting you is

loss you So test you're the have to going would actuarial net a amortize. corridor and apply smaller that then

are them drivers linear, with them we based expect we none those make any that want None factors headwind on are be what hand. are of So, us that market those exact let synchronicity all work other, them of the return. them but to the I in we mean, at sure we had get each would of to the and to

David Peters

hedging income that to XXX% interest on protect does the XX% Okay. rate help volatility, And downside of the just fixed that, Appreciate that. asset clarify on allocation?

Andrew Cooper

Not directly. the it or down goes ensures liability up. as goes -- The up, liability goes goes the if asset asset is, move, does What the interest it down, asset that the rates down. goes if

helpful at in meant life service the really participants funded reduce materially. keep per becoming heavily status income se. by doesn't interest looking volatility hedging is sure the status the making benefit but to of fixed to change of is not securities between and our those that rates, It's it's the and asset average hedging asset to to we're that Being the it agnostic moves our plan cost, intact the our allocated So relationship so funded liability.

David Peters

you. Thank Okay. Perfect.

separate. question, other one Just

obviously, us growth, you QX. remind I QX driven CAGR continued this sales next maybe within is just with Anything have maybe, How in as you to could much you have specifically? late? And sales respect seen from strong from by that you've the follow through until, that of being Just of then, guess, that effect new changes EPS the guys rate case. rates in

Andrew Cooper

seeing in growth, to of result C&I of, and quarter a a that sort the and the institutions. now normalcy sales I are, really as customer right growth So on C&I government of big consistent showing the perspective strong particular, this side the that had return customers, schools We trends from growth mentioned. from we're our was

continuing home. anyone was from now On as home levels, working is customer back who side, to get the working residential from normal to to start usage see

side really continued customer growth. the residential just be be going So to to is driven by

growth factors Jeff about some customers, XXX that's the from points earlier a sales time from Over that X.X% the the baked an growth long then, term in contributed X.X% back term of X% driven in implicit talked period. is really lot we're that X% And monitoring. key and X.X% end this near-term basis perspective. tracking towards EPS CAGR which industrial over And X% of the large in a that on is longer by to thing that to which our incremental growth, the to to

David Peters

guys. Thank you, Okay.

Andrew Cooper

Thank Yes. you.

Operator

pose question. Your next from with is question your Please Pourreza Partners. coming Guggenheim Shar

Your is line live.

Shar Pourreza

Hey, guys.

Jeff Guldner

Hey, Shar.

Shar Pourreza

hit has were does the is if drag to of estimates to started I you that the could -- takeaway? be? Jeff, there -- could mark like impact guess going message what have today out could entire the impact, drag what topic, on on can guess, without additional into guess, this key today I obviously offset everyone you potential what's everyone on or could but be. the pension you some I the details offset you

Jeff Guldner

which obviously, too seeing challenge, mean, know don't you going mark-to-market we it's at Shar. how the is the end Yeah year. all of to I are the

have as what don't that to good you a So estimate is.

indicated strategies I to we there think can but that that's every Andrew use, or offset can't headwind mechanisms that create. we're say to going are I going

on and to for on in to that execute a while. culture test headwind the case around the not the us cost little us in two And likely and the headwind that we're continuing be just depending Sigma to that's back a and management years. going it of get amortization we our be to -- put the think for XXXX. averaging for And to Lean rate will anchoring can I then really a it's

So test again it's that we've split this helpful here. got

proposing deferral on you've in we're would case. that this, XXXX-XXXX to in looking for rate we the a regulatory But things is not last mechanism XXXX-XXXX pursuing want got other So or the at rate then get other averaged, and there's which frankly did some because they based it mechanism how be case.

to Can see I the that that that going obviously can this headwind can deliver we're just don't provided. see exactly we that So to we you continue can't. offset? this we focused but mitigate the work what what all forward. to get long-term to on I what know time? guidance doing headwinds on to we like moving can impact headwind We're tell I we can do other to we of is going be

Shar Pourreza

then it. it, just O&M And performance? lower the just Got closer got to your the guide? where you are end year-to-date you Are towards given trending

Andrew Cooper

Shar, where we of as continue we to it maintaining are. summer, range get to those that have. seeing we the the watch see As We're guidance now going pressures. we're through We're

we're mentioned of some maintaining capital same been easy a it's I affordability lot new the and now. but of that right are As customer the what starting on things and vigilance we to around some our of doing focused that not projects is Jeff engage challenges in, the said around

Shar Pourreza

rate filed the you then with rate being half on case the of thank and around Got visibility to towards concludes? just it. case Are until for back guidance providing just And this. It's any XXXX year. XXXX going the wait for you lastly this just around

Andrew Cooper

consistent be would with that Shar prior practice. our Yeah.

that's anticipated now. what's So right

Shar Pourreza

Appreciate Fantastic. it. it. That Thanks guys. was

Andrew Cooper

Yeah. Thanks Shar.

Jeff Guldner

Thanks very much.

Operator

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Pinnacle West Capital (PNW) 3 Aug 222022 Q2 Earnings call transcript