Pinnacle West Capital Corp

NYSE:PNW

Earnings Call Transcript 2020-Q4

[Operator]

Greetings, and welcome to the Pinnacle West Capital Corporation 2020 Fourth Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Stefanie Layton, Director of Investor Relations. Thank you. You may begin.

[Stefanie Layton, Director, IR]

Thank you, Christine. I would like to thank everyone for participating in this conference call and webcast to review our fourth quarter and full year 2020 earnings, recent developments and operating performance.

Our speakers today will be our Chairman and CEO, Jeff Guldner; and our CFO, Ted Geisler. Jim Hatfield, Chief Administrative Officer; Daniel Froetscher, APS' President and COO; and Barbara Lockwood, Senior Vice President, Public Policy, are also here with us.

First, I need to cover a few details with you. The slides we will be using are available on our Investor Relations website, along with our earnings release and related information. Note that the slides contain reconciliations of certain non-GAAP financial information.

Today's comments and our slides contain forward-looking statements based on our current expectations, and actual results may differ materially from expectations. Our 2020 Form 10-K was filed this morning, please refer to that document for forward-looking statements cautionary language as well as the risk factors and MD&A sections, which identify risks and uncertainties that could cause actual results to differ materially from those contained in our disclosures.

A replay of this call will be available shortly on our website for the next 30 days. It will also be available by telephone through March 3, 2021.

I will now turn the call over to Jeff.

[Jeff Guldner, Chairman and CEO]

Great. Thank you, Stefanie, and thank you all for joining us today. I want to spend a few minutes looking back on 2020 because there were certainly challenges, but there were also many impressive accomplishments.

So as part of my operations update, I'll share with you some of the most notable successes from 2020. I'll also provide a regulatory update and highlight our goals for 2021, and then Ted will discuss our 2020 earnings and our approach to communicating forward-looking financial expectations.

I'd like to start by recognizing our field team's exceptional execution in 2020. Our nonnuclear fleet recorded its best reliability performance since 2007 with a summertime equivalent availability factor of 95.3%. We also celebrated our best year ever for service reliability.

When you exclude voluntary and proactive fire mitigation impacts, with that performance, the average APS customer experienced less than one power outage and faced fewer total minutes of interrupted service than industry averages. And Palo Verde surpassed the 1 billion gross megawatt hours mark for production over the life of the plant, and it achieved the summer reliability capacity factor of 100%.

And in addition, the U.S. Department of Energy's Office of Nuclear Energy announced Palo Verde was the nation's top producer of carbon-free energy for the 25th year in a row, highlighting its important contribution to our clean energy commitment.

Our team's performance was even more meaningful given the record-setting summer. In 2020, we set a new record for peak demand on our system, beating the former 2017 record by 4% and then surpassing that record six more times.

Our partnership and support, both to and from our customers was another defining aspect to me of 2020. On the most challenging summer days, our customers responded to our time of use rate structure and a request to voluntarily conserve by reducing peak demand up to 240 megawatts. Our customers were there for us last year, and we were there for our customers. In 2020, we provided more than $15 million in pandemic aid to our customers and our communities.

And our commitment to our customers, communities and to each other is captured in our new APS promise, which we adopted last year. The APS promise incorporates the principles and behaviors that will empower us to achieve our strategic goals. It represents the opportunity to build on our cultural strengths and develop new behaviors that will enable our future success.

And I want to share with you an example of this behavior that involves Glenn Chamberlin, who's a storekeeper at our Yucca power plant in Yuma, and he assisted a customer who rode his bike to the plant in an effort to pay his bill. Glen not only located the nearest bill payment location, but he also provided the customer water and helped him get to the grocery store to pay his bill.

Glen went above and beyond his duties to ensure that this customer had a positive experience with APS, and it's a great example of the APS promise in action by doing the right thing and being empowered to go the extra mile literally in this case for our customers.

Turning now to regulatory. We started 2021 with two new commissioners and a new Chair. Commissioner Tovar, a Democrat and Commissioner O'Connor, a Republican, joined the bench. In addition, Commissioner Marquez Peterson was elected Chairwoman. After her election, Chairwoman Marquez Peterson outlined several priorities, including moving forward with the commission's energy rules, improving Arizona's regulatory climate and establishing permanent disconnect rules.

With regard to the commission's energy rules, the Arizona legislature has introduced two identical measures, one in the Senate and one in the House of Representatives that seek to limit the commission's ability to set energy policy. Each version was heard by the respective Natural Resources Energy and Water Committee and they passed along party lines.

Although we can't predict if these bills will ultimately pass and be signed by the governor, we do know that this will not change our investment plans in clean energy or our commitment to become 100% carbon-free by 2050.

For our Rate Case, the hearing began on January 14 and is expected to conclude by mid-March. After the hearing, the parties will file briefs and the administrative law judge will issue what's called a recommended opinion in order. Finally, the commission will schedule the case for an open meeting to vote, and our current expectation is that the case will likely conclude around midyear.

On February 22, APS entered into a settlement agreement with the Arizona Attorney General's office related to the implementation of new service plans from our 2016 rate case, including the execution of our customer education and outreach plan. The settlement resulted in APS paying $24.75 million, $24 million of which will be returned to as many as 228,000 eligible APS customers.

So moving all customers to new plans in the 2017, 2018 time frame was a major undertaking and an industry first. There are areas we could have done better to guide customers through the process. Recognizing that, we've embraced lessons learned and applied a lot of improvement, and it's my hope that the settlement agreement will enable us to concentrate on building a best-in-class customer experience which, in turn, will provide improved shareholder value for the long term. And I've said this before, and I think it's important, we will create shareholder value by creating customer value.

Looking forward, our goals for 2021 include continuously improving our customer communication and engagement, enhancing our regulatory relationship and continued execution of our clean energy commitment. On January 22, we celebrated one year since announcing our goal to reach 100% clean carbon-free energy by 2050. Over the past year, we secured more than 400 megawatts of clean energy resources. And we've also issued RFPs late last year to acquire battery storage and renewables. Those RFPs are expected to add more than a gigawatt of clean energy resources to the system.

In addition to reducing carbon through our generation resources, we also committed to transition 30% of our light-duty vehicles and equipment to electric and ultimately, to operate a 100% clean carbon-free transportation fleet by 2050. Our performance in 2020 demonstrates that we have what it takes to forge a path forward and to keep our company strong. In 2021, we look forward to supporting our growing customer base while maintaining our financial health.

So I want to thank you for your time today, and I'll turn the call over to Ted.

[Ted Geisler, CFO]

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

With Jeff having covered our 2020 performance highlights, I'll cover our full year 2020 financial results. I'll also provide additional details around our customer and sales growth forecast, capital program and rate base growth.

As I mentioned in our third quarter call, we historically have not provided forward-looking guidance during a pending rate case. Consistent with that approach, we will hold off on providing 2020 earnings guidance until after our current rate case concludes.

For full year 2020, we earned $4.87 per share compared to $4.70 per share in 2019. Excluding the $0.17 impact from the settlement with the attorney general, our 2020 earnings would have been $5.04 per share and near the midpoint of our $4.95 to $5.15 guidance range. The decrease in earnings per share resulted from - resulting from the settlement was offset by $125 million increase in pretax gross margin or $0.83 per share year-over-year from weather.

In response to the unusually large weather benefit, we did accelerate the timing of future O&M initiatives. While the pull forward increased our 2020 total O&M, our originally budgeted O&M was trending down. In 2020, we met our goal to reduce O&M by $20 million, largely through lean initiatives and automation.

In addition, every leader in the company completed White Belt Lean Sigma training. This is an important milestone in our effort to embed a mindset of cost management and customer affordability across the enterprise and to equip our people with the skills and tools to identify and implement ways we can be more efficient and cost-effective. This mindset will continue to be a top priority in 2021.

Turning now to our customer and sales growth. In 2020, we experienced 2.3% customer growth and 1.4% weather-normalized sales growth compared to 2019. Even with the impacts from COVID, we energized more than 27,000 new customers and five new substations supporting data centers.

For 2021, we expect retail customer growth to be between 1.5% and 2.5%. With that trend continuing through 2023, we expect weather-normalized retail electric sales growth between 0.5% to 1.5% in 2021, and between 1% to 2% on average from 2021 through 2023.

Our guidance now includes estimated contributions of several large data centers that have been interconnected. We will continue to estimate contributions and evaluate our sales growth guidance as these and other new data centers develop more usage history.

Although the total impact from COVID-19 on future sales is still unknown, the 2020 impact for the period from March 13 through December 31 was a 1% increase. While residential weather-normalized sales increased 5%, the increase was partially offset by a 4% decrease in commercial and industrial sales. These trends have the potential to normalize somewhat through 2021.

Our customer and sales growth expectations are supported by the strength we continue to see in our economy. In 2020, Arizona was the third fastest-growing state in the U.S. in addition, construction employment increased by 0.7% in 2020, which places Metro Phoenix among the strongest construction industries in the U.S. The uptick in companies relocating Arizona has supported the strength in our construction employment.

Another recent example of a new company moved in Arizona, Taiwan Semiconductor, selected a site in our service territory to build its new $12 billion facility. We recognize that growth is a key differentiator for Pinnacle West, and we actively engage in economic development to attract new employers and to help existing companies expand their Arizona operations. Our success in this area was recently recognized by Site Selection magazine, which named APS a 2020 top utility in economic development.

Moving now to CapEx and rate base. As shown on Slides 11 and 12, we have refreshed and rolled forward by one year our capital program and rate base forecast. Our current forecast includes $1.5 billion of capital investments per year for 2021 through 2023. The $150 million reduction in 2021 and $225 million reduction in 2022, reflect our ongoing refinement to balance customer bill impacts while still executing our clean energy plan.

Specifically, we've updated our pricing assumptions based on pricing we are seeing from actual bids, refreshed our capital requirements to support customer growth and updated the timing of when new resources will be added. Because the outcome of the current rate case is still pending, we are not assuming our future clean energy investments will be recovered through an adjusted mechanism.

If a recovery mechanism supporting the facilitation of clean energy transition is approved, we will refresh our assumptions and future forecasts to reflect this in other rate case outcomes. Importantly, our resource needs still exist, but we are striving to ensure rate gradualism as we procure clean energy resources.

In closing, our strategy, our team and our fundamental growth are consistent strengths that provide the backbone we need to succeed in the long run. We look forward to providing more detailed guidance at an investor briefing to be scheduled after the rate case is completed.

This concludes our prepared remarks. I'll now turn the call back over to the operator for questions.

[Operator]

[Operator Instructions] Our first question comes from the line of Julien Dumoulin-Smith with Bank of America. Please proceed with your question.

[Dariusz Lozny, Bank of America]

It's Dariusz Lozny on for Julien here. I just wanted to quickly ask about in a previous update, you guys - that's why I expect annual renewable additions of 300 to 500 megawatts in the '22 to 2030 time frame. I was just wondering if given the updated CapEx forecast that you put out, if there's been any update to that expectation?

[Ted Geisler, CFO]

Yes. Dariusz, this is Ted. Appreciate the question. I'd say directionally, that is still correct. That's an average between now and 2030 to achieve our goal of 65% clean with 45% renewables. The timing from year-to-year between now and 2030 is not necessarily just even year-over-year. And as we've mentioned before, our first - or our next coal retirement occurs by 2025. At that point, you'll see a meaningful amount of fuel savings, which means that your procurement needs in the back half of the decade can continue to ramp up to meet that 2030 goal while having a minimal bill impact.

[Dariusz Lozny, Bank of America]

And if I could ask one more. This is just about O&M cadence in '21 relative to 2020. You alluded to pulling forward some O&M spend from 2021. Can you talk about sort of how that then affects the shape of 2021 O&M?

[Ted Geisler, CFO]

Yes. We're not providing forward-looking guidance. You are correct. The pull forward was unique to 2020, given extreme weather. We want to take advantage of that and derisk future years. Similarly, once we get past pandemic, we would expect COVID-related costs would likely be reduced or eliminated. But keep in mind, Dariusz, we've historically guided to flat O&M per kilowatt hour sales growth, and we will continue to focus on our lean efforts.

And Dariusz, just again, for context, you mentioned pull forward from 2021 O&M, it's not necessarily just 2021. It's pull forward of future O&M. And so it's picking up things that would have gone in subsequent years as well.

[Operator]

Our next question comes from the line of Paul Patterson with Glenrock Associates. Please proceed with your question.

[Paul Patterson, Glenrock Associates]

I apologize for missing this, but I noticed that your CapEx was down versus the third quarter for '21 and 2022, but the rate base I think is the same that you guys have projected for 2023. Could you tell me what's sort of going on there or what I'm missing?

[Jeff Guldner, Chairman and CEO]

Yes. You're not missing anything. There are updates in both directions. So of course, you have the capital reduction and changes in accumulated depreciation, accumulated deferred taxes, but you also have changes in the asset mix, depreciation, timing, working capital and other great assets. So you've got movement in both directions, and this is a refresh that contemplates all of those factors.

[Paul Patterson, Glenrock Associates]

Okay. And the decrease in CapEx, was that basically sort of just managing rates and what have you? Or what led to the lower CapEx in general in terms of what your plans are?

[Jeff Guldner, Chairman and CEO]

Yes, we're managing customer bill impact and promoting rate gradualism, as we build out clean. We're still committed to our clean energy investments and achieving our 2030 goal and ultimately, the 2050 goal. Keep in mind, as stated in the last question, the largest of our fuel savings really isn't expected until after this capital forecast that you see in this release.

And that's driven both by the coal retirement next coming in 2025 as well as the accumulated renewable additions that we are currently adding and the fuel savings that that will create. That will ultimately create enough fill headroom to allow us to continue to invest in our clean energy plan while minimizing any bill impact.

[Operator]

Our next question comes from the line of Insoo Kim with Goldman Sachs. Please proceed with your question.

[Insoo Kim, Goldman Sachs]

My first question is on the proposed clean energy writer. If in this rate case, if you don't get an approval of that, is the logical next step to refile that proposal in a separate docket? Or what are some of the other options there?

[Jeff Guldner, Chairman and CEO]

Insoo, typically, adjustment mechanisms are adopted in rate cases. If you were following the hearings, some of the dialogue that's happening right now, we continue to advocate for the advanced energy mechanism. There's some dialogue from other parties that are recognizing the fact that we have in the past, recovered capital investments. I'm thinking here, Arizona Sun, which was recovered through our renewable energy surcharge. And so there's some dialogue in the case that says, well, does the Advanced Energy Mechanism have to be it? Or are there opportunities to use other mechanisms. And so that's still a live issue in the case.

If we ultimately get through the case and the commission doesn't approve an adjustment mechanism, then you would likely be in the next case, making that proposal and again, continuing to demonstrate the benefits that that brings. And one of the primary ones, as Ted mentioned, rate gradualism that's really what we're trying to do here is you don't want to build up a bunch of capital investments then come in with a larger rate increase.

If you can manage that over a more gradual pace, you're able to keep rate increases kind of closer to the - closer to a zero real, so under the rate of inflation. And so we'll continue to make the points as we move forward, but there's several different paths this could ultimately go.

[Insoo Kim, Goldman Sachs]

So I guess, if it doesn't work out this time around and looking at the revised CapEx plans or not that. Does that - how do you think about the changes in any timing of the next rate case from how you were thinking about it a few months ago? And related to that, just thoughts on the equity issuance forecast that you guys have laid out before.

[Jeff Guldner, Chairman and CEO]

Yes. I'll let Ted on the equity side, but the timing of the next rate case isn't necessarily driven by the presence or absence of an advanced energy mechanism. It could be a factor, but it's more likely going to be driven by just the overall outcome of the case. And so it will depend on what the ultimate outcome of the case is, and then that would ultimately affect. Ted, you want to --?

[Ted Geisler, CFO]

Yes. That will ultimately affect the timing of our equity issuance. As we said, we would expect that to be before the next case. So we'll know more upon the conclusion of this case and be able to include that in our expected financing plans going forward.

[Operator]

Our next question comes from the line of Michael Weinstein with Credit Suisse. Please proceed with your question.

[Michael Weinstein, Credit Suisse]

Have you picked up any further support from interveners on the advanced energy mechanism? I think the Navajo Nation was announced as one of the supporters early on, but has there been any other further movement on that?

[Jeff Guldner, Chairman and CEO]

Yes. Let me ask Barbara Lockwood to just give her color on it.

[Barbara Lockwood, SVP, Public Policy]

Hi, Michael. The Advanced Energy Mechanism is actually supported by a number of the interveners. The Navajo Nation is one. Sierra Club is generally supportive. The Southwestern Energy Efficiency Project, and there's a number of others that are understanding and seeing the value of the Advanced Energy Mechanism and supporting that that s we go.

So there are still a number of parties that are not supportive of it, but we do have a good contingent that understands the value and is supporting the concept of the Advanced Energy Mechanism.

[Michael Weinstein, Credit Suisse]

And just a follow-up on Paul Patterson's question. The rate base or if not the rate base, the CapEx projection for renewable or clean generation, clean generation portion of it, that's the point that seems to really have been trimmed. Is that more of a delay into further years beyond 2023? Or is it - is that 6% rate base growth profile that you talk about now, is that - is that going to be a permanent feature going forward? Or is this simply kind of a delay, and so maybe you see how the rate case turns out? Or have - are there less projects, or is it the same number of renewable projects being planned for the next decade?

[Jeff Guldner, Chairman and CEO]

Yes, Michael, I appreciate the question. I'd say that we are committed to achieving those goals in 2030. But we continue to evaluate the timing of those assets in service over the next decade. I can't project any forward guidance, of course, beyond the years that we've listed here. But in order to achieve those ultimate goals in 2030, the amount needing to be procured hasn't changed.

We'll take a look at how to best time that procurement to promote rate gradualism and take advantage of the fuel savings that we expect to occur beyond the capital forecast that we provided you today.

[Michael Weinstein, Credit Suisse]

And it was - what was the main driver of lower cash flows that led you to reduce the forecast for CapEx? Is that - it sounded like depreciation is one of the main drivers?

[Jeff Guldner, Chairman and CEO]

Michael, you're referring to rate base, the correlation of capital rate base.

[Michael Weinstein, Credit Suisse]

Yes. I guess - well, I mean I think you mentioned a couple of different factors that were pushing you to - or I guess, reduce the capital spending, right, through 2023 versus the prior plan, and we're hearing something about depreciation.

[Jeff Guldner, Chairman and CEO]

Well, I'd - yes, I'd focus on the reduction of capital, more about that concept of rate gradualism and trying to minimize near-term bill impact. I'd say the other drivers are really more about the refresh to rate base to line up with this capital forecast that includes other factors such as depreciation, asset timing, timing of working capital reg assets, et cetera.

[Michael Weinstein, Credit Suisse]

Right. I mean, I think it's a little bit striking only because it looks like you might be losing an entire year of rate base growth versus the prior forecast, so this is something you might want to address. Maybe that would be addressed in that Analyst Day that you're planning after the rate case concludes.

[Jeff Guldner, Chairman and CEO]

Certainly, when the rate case concludes, we'll be able to provide our financing plans and expectations going forward as well as more detail on how we're going to continue to execute our clean energy plan.

[Operator]

Our next question comes from the line of Charles Fishman with Morningstar. Please proceed with your question.

[Charles Fishman, Morningstar]

Just make sure I understand this. So not necessarily this year, but '22, '23, there is enough headroom or at least - maybe it is something you cannot answer until the rate case. Would there be enough headroom that if you got that clean generation mechanism, that the clear generation CapEx would increase significantly? Is that - am I concluding correctly on that?

[Ted Geisler, CFO]

Charles, I think the way to think about that is the mechanism is one element of this pending rate case. When the rate case concludes, we'll take that opportunity to look at our guidance going forward, including the capital plan. The benefit of the mechanism, as Jeff pointed out, is it promotes rate gradualism and helps ensure a minimal and more gradual bill impact to customers over time. So that's one of the important elements of the mechanism, but we'll really take a point to look at the entire rate case outcome, including whether the proposed mechanism is approved to then look at guidance going forward, including CapEx.

[Charles Fishman, Morningstar]

But it sounds like there's certainly the need or the opportunity from our clean generation. It's just a question of balancing rates and headroom, etc., perhaps?

[Ted Geisler, CFO]

Our resource need hasn't changed, and that's part of why you see some of the reduction in these near-term years was largely in the clean energy spend because our customer growth still remains robust. That's largely what's fueling the transmission and distribution spend. So the resource need still exists. The goal to get to 2030 still exists. We're only showing out through 2023 here.

The timing between now and 2030 still leaves a lot of opportunity for us to continue to execute and invest in clean generation. And as stated earlier, the fuel savings that will create that bill headroom is largely beyond this 2023 period, and therefore, creates an opportunity for continued clean energy investments while minimizing bill impact.

[Operator]

Our next question comes from the line of Anthony Crowdell with Mizuho. Please proceed with your question.

[Anthony Crowdell, Mizuho]

Just I guess if I could follow-up on Mike Weinstein's question. And I think also earlier, you guys referred to maybe there is like an amount of bill impact. You're mitigating bill impact, I guess, with lower CapEx. So off that is - first question is, where do you think the sweet spot is on like acceptable bill increases to get through? And then the second, it's very specific, your CapEx at $1.500 billion. How do you get to that? Like, just curious if you could give us some insight into either of those.

[Jeff Guldner, Chairman and CEO]

Yes, Anthony, let me start with just the kind of bill impact. And the challenge, of course, is there's not - things change kind of year-over-year. There's not necessarily a sweet spot. It's always good if you can keep the rate pressure kind of at or below the rate of inflation, certainly over the long term. And that's what we've been successful in doing, if you go back and look at the last probably 10, 15 years. But it gets a little lumpy, and so growth helps.

So as you get additional growth, that can pick up some of the costs for the additional resources. But as Ted's pointed out, we've got retiring assets that need to be replaced. And the biggest benefit that comes from retiring something like a coal asset is that you save the fuel cost and you move into more zero marginal cost resources.

And it's really that changing a - putting a resource that consumes fuel cost and that gets passed through our fuel adjuster, power supply adjuster with a zero marginal cost resource that creates that headroom because we're changing out expense from the carrying cost of the asset.

And so that's where some of this timing is being driven as when you look at Cholla retiring, it's in the 2024 time frame. So it's outside of our planning window, but that's what we're trying to triangulate is to make sure that we're not putting unnecessary or unacceptable build pressure on as we manage through the 2030 clean commitment. You want to talk, Ted, on the CapEx?

[Ted Geisler, CFO]

Yes. And I'd just say, I wouldn't read too much into the even number of $1.5 billion. That's just part of the projections. As we continue to support customer growth, large customers moving into our service territory, that will continue to drive transmission distribution investment. As we continue to get the results of our RFPs, that will inform more specific numbers on our clean energy investments. The numbers could get more refined as we get closer to each year. But I think directionally, this is a good projection.

[Anthony Crowdell, Mizuho]

And then just lastly, if I could touch on the settlement that you went, I believe, maybe on Monday. Is there anything we could maybe infer from that, that maybe the regulatory environment has improved from the changes the company has made or just that you've reached a settlement, I know the current - the pending rate case, it's going to be fully mitigated continuing on that path. But is there any reads where we could look - see that, hey, you're able to reach a settlement with parties on a very contentious issue and that things that may be following for the rate case? And I'll leave it at that.

[Jeff Guldner, Chairman and CEO]

Yes. Look, it's a little different. So this was the attorney general. So this is not a normal party to commission proceedings. And if you go back and look, the inquiry into the rate migration and the customer education outreach plan began at the commission, and then they had referred, and the attorney general has jurisdiction over other things that the commission may not, but the attorney general then picked that up in their civil division, and we have been cooperating with them and providing information for more than a year, I believe, on that matter, and we had the opportunity instead of litigating that case. It's important that we focus on improving the customer experience here.

And I didn't want to spend three years in litigation with this. The right thing to do is to settle the case. We're satisfied the $24 million or the $24.75 million goes back to customers. That's the right thing to do. And so the appropriate thing for us was to reach the settlement, but it's not the traditional parties. This wasn't a multiparty settlement. This was basically us and the attorney general.

[Operator]

Our next question comes from the line of David Peters with Wolfe Research. Please proceed with your question.

[David Peters, Wolfe Research]

Does the CapEx refresh, particularly with respect to the renewables, reflect any changes at all in what you view is likely to be rate based versus PPAs now that you've started to work through some of these RFPs?

[Ted Geisler, CFO]

Well, David, we're still committed to that open, transparent competitive procurement process. So while we still believe there'll be a blend of PPAs and ownership going forward, I think this is more about timing between now and our 2030 goal and wanting to respect that bill impact and take advantage of fuel savings that may occur beyond 2023, than it is any prediction of results of future RFPS.

[David Peters, Wolfe Research]

And can you remind me just what is kind of a baseline expectation within that 300 to 500 megawatts per year over the - through, I guess, 2030 that you expect to be APS owned?

[Ted Geisler, CFO]

We don't have a specific percentage or sort of baseline split between the two. We just run the RFP, and we have results evaluated from those solicitations. We had a project last year, for example, that was a repower of an existing wind facility that's under PPA. It made good economic sense for our customers to sign that PPA, since it's an existing facility.

But then we also took contracts for ownership of utility scale, utility-owned storage to couple with our existing APS solar assets. And we're finalizing a result of an RFP right now for utility-owned, utility-scale solar plus storage. So it just depends on the bids we get and the economics of each bid and the viability of the projects that are proposed.

[Operator]

We have no further questions at this time. I would now like to turn the floor back over to management for closing comments.

[Stefanie Layton, Director, IR]

Thank you for joining us today. This concludes our call.

[Operator]

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.