The Valley’s warmest June on record was money in the bank for Pinnacle West Capital Corp., the parent company of Arizona Public Service, which is seeking regulatory approval to raise rates.
Pinnacle West said Friday its second-quarter earnings grew more than four times over the same quarter a year ago as hot weather and population growth sparked heavy demand for electricity.
“Growth in our service territory remains robust,” said Chairman Bill Post, who said Arizona’s population growth is three times the national average.
The Phoenix-based company reported earnings of $112.2 million, or $1.13 per share, for the quarter ended June 30, compared with $26.7 million, or 28 cents per share, in the same quarter a year ago.
Revenue was $925 million, up from $755.3 million a year ago.
Among the positive factors cited by the company were 4.6 percent growth in the number of APS customers, deferral of fuel and purchased power costs and a very hot June. The average temperature during the month was almost five degrees above normal, which added 10 cents a share to the bottom line, said chief financial officer Don Brandt.
In addition, customers are using more electricity per household because of the trend toward largervolume houses that need more space cooling and a larger number of appliances, Post said.
The positive factors were partially offset by higher fuel costs for its electricity generators and higher maintenance costs related to problems at the Palo Verde Nuclear Generating Station west of Phoenix. However, the Arizona Corporation Commission approved three temporary rate increases in the first half of this year that allowed the company to recover some of the increased cost of natural gas fuel.
APS has two more rateincrease requests pending before the commission: A temporary 1.9 percent surcharge over 12 months to pay for the cost of more expensive replacement power while repairs were being made to Palo Verde, and a 7 percent permanent rate increase to cover higher operating and capital costs for new transmission lines and generators to serve the growing state.
“Successfully serving this growth will require continuing cooperation from state regulators as our company invests in new, long-term resources to meet the ever-increasing demand for electricity,” Post said.
APS spokesman Alan Bunnell said the strong second quarter doesn’t undermine the utility’s case for higher rates. One of the reasons the books looked strong in the second quarter was the company was allowed by regulators to collect money from ratepayers for higher fuel costs that occurred in 2005.
“This quarter reflects what we would have gotten in prior quarters if we have been allowed to collect it then,” Bunnell said. “We think the commissioners will understand that.” Also he said the comparison with the second quarter of 2005 was distorted by a one-time loss the company recorded a year ago related to the sale of a power plant.