business-framework

APS Promise

In 2020, we introduced the APS Promise – our commitment to our customers, community and each other as employees. The Promise aligns with CEO Jeff Guldner’s focus on company culture – building on our cultural strengths and helping develop new behaviors that will enable our future success. The Promise explains why we’re here (our purpose) and what we’re here to do (our vision and mission). It serves as a guide, provides direction, creates clarity and keeps our employees focused on the right things. It aligns employees to shared purpose, vision, mission and way of being and gives meaning to the work we do every day.

At APS, this is our “why.” We do what we do for the good of our customers and communities and for their prosperity. What’s good for Arizona is good for APS.


10-Year Strategic Plan

This 10-Year Strategic Plan was developed concurrently with the APS Promise and describes how we will execute our Mission to achieve our Vision. It provides direction with measurable milestones to undertake and achieve our long-range goals. Central to this effort is fortifying and maintaining positive relationships with customers, our workforce, external stakeholders, regulators and the financial community to ensure the resilience of the company’s financial health and longevity. The 10-Year Strategic Plan sets priorities while proactively focusing plans and resources. It is designed to ensure employees and other stakeholders are working toward common goals with established understanding around envisioned outcomes. This encourages a clear and ambitious organizational direction in response to a changing environment. The 10-Year Strategic Plan is designed to be the strategic instrument that articulates where we are headed, and the actions needed to progress. It also adopts the APS Culture Principles, which will guide us in how we measure success. Fundamentally, the 10-Year Strategic Plan will guide the disciplined efforts and essential decisions and actions taken to shape what we do, what we stand for, who we serve, and what we strive to become.

To establish an effective strategy, the officer team looked at more than 60 potential drivers of change (broader, societal forces impacting the energy industry and utility sector) to understand which are most likely to transform the future of our business and the communities we serve. They identified six critical areas expected to greatly impact our business over the next 10 years. As the officer team considered how to address the six identified Drivers of Change most likely to impact our business, five Long-Term Issues (LTI) emerged as priority areas of focus during the next 10 years. These LTIs were established to ensure employees and all stakeholders are effectively aligned toward common goals with established understanding around envisioned outcomes:

  • Focus on Customer Experience and Community Stewardship
  • Support an Evolving Workforce
  • Decarbonize and Manage Generation Resources
  • Achieve a Constructive Regulatory Environment
  • Ensure Long-Term Financial Health

Our business plan defines how each business unit executes our strategy. Tiered metrics provide a clear look at what the company is trying to accomplish by measuring what matters. Our performance management program recognizes and rewards the individual contributions to priority work.

 

The initiatives supporting the business plans align with the LTIs. These plans help us prioritize our work, collaborate across the organization, align our resources and measure our progress with rigor and discipline. Our performance compensation across the business is connected to business unit performance, individual performance and value-driving tiered business metrics.

We have several goals and environmental and social indicators that we use to measure progress and hold ourselves accountable. See our ESG performance data.

Read our 10-Year Strategic Plan.

Integrated Resource Plan

Bold energy goals require ambitious plans and sound resource management. Together with our team of resource experts, energy planners and input from cross-sector stakeholders, we have developed a strategic road map on our path to a 100% carbon-free generation mix by 2050. Our Integrated Resource Plan (IRP) details how we plan to serve our customers’ energy needs for the next 15 years, which includes an interim target of achieving a 65% clean energy mix by 2030. We are focused on integrating renewable resources, empowering customers with flexible energy efficiency options and incorporating advanced technology to produce 100% clean and affordable energy—all while providing reliable service and remaining good stewards of Arizona’s diverse environment.

Here's how we plan to take our commitment to clean energy to the next level:

  • Eliminate the use of coal in energy generation by 2031.
  • Add renewables, including solar paired with storage to harness Arizona’s sunshine. 
  • Continue to invest in vital carbon-free resources such as nuclear energy from Palo Verde Generating Station.
  • Engage customers through expanded energy efficiency programs and smart energy choices.

Learn more about our IRP at aps.com. 


Priority Sustainability Issues

In summer 2020, Arizona Public Service (APS), in partnership with the Electric Power Research Institute (EPRI), initiated an assessment to identify the sustainability issues that are most important to the company and its stakeholders. The decision to do so was driven by growing stakeholder interest and a recognition that an informed sustainability strategy is critical to delivering business value. The assessment strengthened our existing commitment to sustainability and established a foundation on which to develop programs that address the most important sustainability issues. The project was designed to build on existing APS efforts to understand stakeholder interests; leverage EPRI expertise; inform future Sustainability and Corporate Responsibility Reports; and advance a robust sustainability perspective to drive performance.

The APS assessment employed a four-phased approach:

  1. Identify a list of issues through an analysis of literature sources relevant to APS;
  2. Refine the list of issues through a virtual workshop with the APS Environmental, Social and Governance (ESG) Executive Council and interviews with external stakeholders;
  3. Prioritize the issues through surveys with a broader group of internal and external stakeholders; and
  4. Validate the issues through discussions with the APS ESG Executive Council.

Read more about our Priority Sustainability Issues assessment results.

Risks & Opportunities

Due to the complexity of the operating, financial and regulatory environments, the company has numerous risks and obligations, which are addressed by policies, processes, controls, processes and programs at the enterprise and the business area level. Risks are identified, assessed and prioritized based on the likelihood and impact of their occurrence. Each business area maintains an inventory of its most significant risks and associated risk mitigation plans. Annually, business areas record this information in a prescribed format, for analysis, categorization, and prioritization of risks to support development of an enterprise risk profile.

The Executive Risk Committee reviews the enterprise risk profiles and provides the board of directors with a report of the company’s top risks on an annual basis. Consistent with the NYSE rules (NYSE Rule 303A), the Audit Committee annually reviews the company’s “risk assessment and risk management” policies. For APS, climate change risks include drought, frequency and intensity of monsoon storms and forest fires. The enterprise-wide risk identification and assessment process contemplates short-, medium- and longer-term risks.

Learn more about our risk assessment by reading our most recent 10K.

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