Pinnacle West Capital : 1st Quarter 2021 Presentation

POWERING GROWTH

DELIVERING VALUE

First Quarter 2021 Results

May 5, 2021

1

Forward Looking Statements

This presentation contains forward-looking statements based on current expectations, including statements regarding our earnings guidance and financial outlook and goals. These forward-looking statements are often identified by words such as "estimate," "predict," "may," "believe," "plan," "expect," "require," "intend," "assume," "project," "anticipate," "goal," "seek," "strategy," "likely," "should," "will," "could," and similar words. Because actual results may differ materially from expectations, we caution you not to place undue reliance on these statements. A number of factors could cause future results to differ materially from historical results, or from outcomes currently expected or sought by Pinnacle West or APS. These factors include, but are not limited to: the potential effects of the continued COVID-19 pandemic, including, but not limited to, demand for energy, economic growth, our employees and contractors, supply chain, expenses, capital markets, capital projects, operations and maintenance activities, uncollectable accounts, liquidity, cash flows, or other unpredictable events; our ability to manage capital expenditures and operations and maintenance costs while maintaining reliability and customer service levels; variations in demand for electricity, including those due to weather seasonality, the general economy or social conditions, customer and sales growth (or decline), the effects of energy conservation measures and distributed generation, and technological advancements; power plant and transmission system performance and outages; competition in retail and wholesale power markets; regulatory and judicial decisions, developments and proceedings; new legislation, ballot initiatives and regulation, including those relating to environmental requirements, regulatory and energy policy, nuclear plant operations and potential deregulation of retail electric markets; fuel and water supply availability; our ability to achieve timely and adequate rate recovery of our costs through our rates and adjustor recovery mechanisms, including returns on and of debt and equity capital investments; our ability to meet renewable energy and energy efficiency mandates and recover related costs; the ability of APS to achieve its clean energy goals (including a goal by 2050 of 100% clean, carbon-free electricity) and, if these goals are achieved, the impact of such achievement on APS, its customers, and its business, financial condition and results of operations; risks inherent in the operation of nuclear facilities, including spent fuel disposal uncertainty; current and future economic conditions in Arizona, including in real estate markets; the direct or indirect effect on our facilities or business from cybersecurity threats or intrusions, data security breaches, terrorist attack, physical attack, severe storms, droughts, or other catastrophic events, such as fires, explosions, pandemic health events, or similar occurrences; the development of new technologies which may affect electric sales or delivery; the cost of debt and equity capital and the ability to access capital markets when required; environmental, economic and other concerns surrounding coal-fired generation, including regulation of greenhouse gas emissions; volatile fuel and purchased power costs; the investment performance of the assets of our nuclear decommissioning trust, pension, and other postretirement benefit plans and the resulting impact on future funding requirements; the liquidity of wholesale power markets and the use of derivative contracts in our business; potential shortfalls in insurance coverage; new accounting requirements or new interpretations of existing requirements; generation, transmission and distribution facility and system conditions and operating costs; the ability to meet the anticipated future need for additional generation and associated transmission facilities in our region; the willingness or ability of our counterparties, power plant participants and power plant land owners to meet contractual or other obligations or continue or extend the rights for continued power plant operations; and restrictions on dividends or other provisions in our credit agreements and ACC orders. These and other factors are discussed in Risk Factors described in Part I, Item 1A of the Pinnacle West/APS Annual Report on Form 10-K for the fiscal year ended December 31, 2020, which you should review carefully before placing any reliance on our financial statements, disclosures or earnings outlook. Neither Pinnacle West nor APS assumes any obligation to update these statements, even if our internal estimates change, except as required by law.

In this presentation, references to net income and earnings per share (EPS) refer to amounts attributable to common shareholders.

2	First Quarter 2021

EPS Variances

1st Quarter 2021 vs. 1st Quarter 2020

						Other, net2
	O&M1 & 2					$(0.02)
					$0.32
	$(0.06)	D&A2		Other Taxes2	Pension
		$(0.02)
			$(0.02)	& OPEB Non-	Effective Tax
$0.27
				service	Rate3
Operating					Credits, net	$(0.09)
Revenue less					$0.09
Fuel and	Operating Revenue less Fuel and
Purchased
Power1 $0.17		Purchased Power
	Transmission		$	0.03
	Federal Tax Reform3	$	0.12
	Weather		$	0.03
1Q 2020	Sales/Usage		$	0.01		1Q 2021
Other		$	(0.02)

1 Includes costs and offsetting operating revenues associated with renewable energy and demand side management programs, see slide 17 for more information.

1. Includes the deferral impacts of the Four Corners Selective Catalytic Reduction (SCR) equipment and Ocotillo Modernization Pro ject (OMP), see slide 21 for more information.
2. The Effective Tax Rate is primarily impacted by the amortization of excess deferred taxes related to Federal Tax Reform, whic h is offset in Operating Revenue less Fuel and Purchased Power.

3	First Quarter 2021

Key Drivers & Guidance

As of May 5, 2021

		2021 Key Drivers
•	EPS guidance pending APS rate	•	Operations and maintenance
	case conclusion	•	Depreciation and amortization
•	Retail customer growth about 1.5-2.5%	•	Interest rates
•	Weather-normalized retail electricity	•	AFUDC
	sales growth of 0.5%-1.5%	•	Pension & OPEB
•	Transmission revenue

2021 - 2023 Guidance

• Retail customer growth about 1.5-2.5%
• Weather-normalizedretail electricity sales growth of 1.0-2.0% on average

4 First Quarter 2021

Long-Term Debt Maturity Profile

($MM)				APS Long-Term Debt	PNW Long-Term Debt
1,250
1,000
750
500
250
0
2021	2023	2025	2027	2029	2031	2033	2035	2037	2039	2041	2043	2045	2047	2049

As of March 31, 2021

5 First Quarter 2021