business-responsibilities
Risks & Opportunities | Targets & Goals | Integrated Resource Plan

Updated: July 2020

As of April 1, 2020, the board of directors consisted of 12 directors, 11 of whom are independent. The makeup of the board includes three women and two directors who are racially or ethnically diverse. The Pinnacle West president and CEO is the only board member who is not independent, and he serves as the chairman of the board.

The board of directors has five standing committees: Audit, Corporate Governance, Finance, Human Resources, and Nuclear and Operating. The Nuclear and Operating Committee oversees the company’s sustainability initiatives and strategy.

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 and controls, processes and programs at both the enterprise and the business area level. The Executive Risk Committee also 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.

Risks are identified, defined, assessed and prioritized based on the likelihood and impact of their occurrence. Business areas maintain an inventory of their 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. At APS, we use an Energy Policy Committee to identify and evaluate opportunities, including opportunities associated with climate change, at the company and asset level. The Energy Policy Committee, using input from informed stakeholders and subject matter experts, provides strategic direction, business planning and management method recommendations consistent with the company’s business direction.

Targets & Goals

The APS Core outlines our values and the critical areas of focus for our business. The APS Strategic Plan outlines our company’s long-term strategy and how short-term initiatives lay the groundwork for future success. It gives individual employees, departments and business units direction in setting their own priorities and measurable goals that connect to this broader plan, align with our Core and support our vision of a sustainable energy future for Arizona.

We have a series of strategic planning tools and resources that build from the APS vision and allow us to conduct scenario planning to test our business model against what the world might look like in the future. They also allow us to track emerging trends in our industry through strategic signposts and metrics so that we can continually evolve to meet our customers’ changing needs.

From that planning come our Corporate Strategic Initiatives (CSI), which are designed to allow us to evaluate gaps, build competencies, showcase an issue or capitalize on an opportunity. CSIs for 2020 include:

  • Clean Energy Commitment: Deliver on our clean energy targets that advance our clean energy transition
  • Customer First: Transform the way we engage with our customers
  • Empowered Culture: Create an inclusive, high performing and empowered team culture
  • Innovative Growth: Pursue long-term growth and innovation opportunities
  • Market Evolution: Plan ahead for evolving markets
  • Palo Verde for the Long Term: Prepare Palo Verde to support our clean energy commitment

With our corporate strategic planning goals established, we move next to business unit planning efforts. This includes the establishment of business unit priorities and the identification of additional tiered metrics, which complete our operational target development.

Our corporate and business unit metrics and the initiatives supporting them align with the critical areas of focus: operational excellence, shareholder value, environment, customer value, community, employees and security. Our business plans support our long-term company strategies and provide a focused, well-defined direction. These plans help us prioritize our work, collaborate across the organization, align our resources and measure our progress with rigor and discipline. Our executive officers’ compensation is connected to business unit performance, individual performance and value-driving business metrics.

See our Sustainability Performance Summary

Integrated Resource Plan

We publicly detail our roadmap to the future with an Integrated Resource Plan (IRP). This plan forecasts how we can serve Arizona’s energy needs over the next 15 years with a resource mix that supports clean, affordable, reliable, and customer-focused operations. The IRP addresses our steps to integrate growing renewable resources, pursue advanced technologies, fulfill regulatory targets, and manage environmental impacts.

  • The 2020 IRP is an important step forward in our commitment to 100% carbon-free energy by 2050. Achieving a clean energy future depends on what we do right now, so the IRP includes a 2020-2024 action plan focusing our commitments to renewables, batteries, energy efficiency and demand management.
  • Our plan sets out immediate action steps, a path to exiting coal by 2031, and a flexible approach to meeting our long-term goals. We tested portfolio and scenario options with a broad group of stakeholders. Long-term flexibility allows us to update our assumptions as new technologies emerge and costs decline – until no carbon is left in our system.
  • This approach will enable APS to power Arizona’s growth for generations to come. We have designed the plan to ensure APS is prepared to meet the needs of an Arizona that continues to grow.

To learn more about the IRP, read the related news release and visit aps.com/resources.

For more information on our clean energy commitment, read the related news release and visit aps.com/cleanenergy.


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