Dive Brief:
- Pinnacle West Capital Corp. reported Q1 2014 net income, which is earnings excluding irregular budget items, of $15.8 million, $0.14 per share, a 35% drop from Q1 2013’s $24.4 million, $0.22 per share.
- Above-normal winter temperatures in Q1 2014 decreased the net income of Pinnacle subsidiary Arizona Public Service (APS), the state’s dominant electricity supplier, to $19.5 million from Q1 2013’s $26.0 million, when winter temperatures were abnormally low, according to Pinnacle West President/CEO/Chair Don Brandt.
- There were 239 heating degree-days, or weather-impacted days, which was 51% below normal and 61% below those in Q1 2013, accounting for $0.06 of the $0.08 per share drop in Pinnacle’s income while Pinnacle’s transmission earnings were down $0.03 per share from Q1 2013.
Dive Insight:
A Lost Fixed Cost Recovery (LFCR) mechanism approved by Arizona regulators and agreed to by APS in May 2012 added a surcharge to APS customers’ bills to make up for revenues lost to energy efficiency and distributed generation and improved earnings by $0.02 per share.
The net impact of slightly higher retail electricity sales and customer growth of 1.3% over Q1 2013, less diminished demand from customer conservation, energy efficiency programs, and distributed renewables, increased Q1 2014 earnings $0.01 per share.
APS reached a potentially national precedent-setting agreement with solar advocates over its proposed change to the net energy metering incentive last November when state regulators imposed a $0.70 per kilowatt charge on solar owners to help offset utility revenue losses until a final decision on solar’s value in Arizona is taken up in the next rate case.
“A robust grid is needed by all customers and rate design needs to evolve to accommodate changing technologies and preserve the integrity of the system,” Brandt said. “We have confidence that Arizona regulators understand the issue and will protect the balance of customers who do not use or have access to distributed generation technologies.”
Controversy erupted again after an Arizona Department of Revenue ruling determined that people who lease solar systems are responsible for property taxes that could run to $152 annually for homeowners and much higher for institutions. Solar leasing companies like Sunrun and SolarCity believe the ruling is illegal and have vowed to fight it. APS publicly denied supporting the ruling despite the fact that its filings advocated for it.
“The facts are the tax has been on the books as a statute for years, and they weren't paying it,” Brandt said. “Now they're being required to comply. That's sort of where we are at right now.”
