Leveraging Growth for Greater Reliability and Environmental Quality
Our customer growth is not just compatible with high reliability and environmental quality – it will ultimately enhance both. A high rate of growth brings opportunities that a stagnant or declining customer base would not allow – opportunities for achieving new efficiencies and employing new technologies.

Opportunities to replace older equipment come faster because of our growth. At every opportunity we’re leveraging growth to improve reliability with new and better technology and infrastructure. Ultimately, the result is greater flexibility, cost efficiency and reliability. Growth-generated enhancements will propel us further and faster toward our goal of becoming a model 21st century utility.

Growth also has advantages for creating a sustainable environment. With the support of our regulators, we are pursuing growth of solar power – a technology in which we are a national leader among utilities – and of biomass, wind and hydrogen as future alternative sources of power.

We know the challenges of growth. We’re vigilant, but not intimidated. We have a skilled and experienced group of men and women who tackle the opportunities. Our employees demand more of themselves today in order to meet the needs of tomorrow. That’s the attitude guiding us toward continuing improvement.

Clashing Visions, Growing Agendas
As we said in last year’s Annual Report, we’re becoming a new kind of integrated utility. This year, with our new regulatory platform, we’re much closer to our goal: a utility meeting its customers’ needs reliably and efficiently with vertically integrated resources in an evolving market.

That vision is becoming more common as it’s evident that competition and regulation – or re-regulation – will continue to clash and coexist. Clearly, our company will continue to live in both worlds. We’re a vertically integrated company, and that means our generation resources as well as our “wires” infrastructure will primarily earn a regulated return. Yet we plan to obtain over 1,000 megawatts from the competitive market in the next three years. And with the high availability factors of our recently completed gas units, we will sell into the wholesale market. That sounds like competition.

The Federal Energy Regulatory Commission (FERC) and many states, including Arizona, will continue to adopt new and sometimes discordant positions. It’s our job to satisfy both sets of rules and succeed in both worlds. In reality, market and regulatory structures will be determined by many factors – core competencies of the utility, market robustness and liquidity, and the interplay of power, policy and politics among state regulators, Congress and the FERC. Until there is more clarity, we will continue to balance these evolving structures, maintaining flexibility to exceed customer and shareholder expectations.

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