PHOENIX - Arizona Public Service Company (APS) has been selected to receive two grants totaling $70 million from the U.S. Department of Energy (DOE) Grid Deployment Office. These grants are part of the DOE's Grid Resilience and Innovation Partnerships program, aimed at enhancing electric systems in rural, tribal, and disadvantaged communities.
The first grant, amounting to $50 million, will be directed towards expanding APS's wildfire mitigation program. This initiative will include the installation of upgraded electrical fuses and devices to allow for real-time adjustments in electricity distribution and targeted safety shutoffs in high-risk fire areas. Additionally, the project will replace select wooden poles with fire-resistant steel ones, integrate more fire modeling software, and expand the network of weather stations and fire-monitoring cameras.
The second grant, worth $20 million, will fund the construction of new smart grid technology projects. These projects are designed to improve the resilience of the energy grid against extreme weather and meet increasing energy demands. Benefits of this grant include upgrades in grid technology, additional power capacity for customers, and advanced data analysis for future planning.
APS, which operates over 38,000 miles of power lines throughout Arizona, has a history of 140 years in serving customers with reliable electricity. Jacob Tetlow, APS Executive Vice President of Operations, stated that the funding would support large-scale engineering projects to bolster the delivery of reliable energy. These efforts are in addition to the approximately $2 billion APS invests annually in maintenance and upgrades.
The projects funded by these grants are expected to strengthen grid safety, enhance decision-making capabilities regarding wildfires, and build microgrids in vulnerable communities for backup power during outages. They also aim to create jobs and support community initiatives, including APS's Crisis Bill Assistance program and scholarship and workforce development initiatives.
APS serves around 1.4 million homes and businesses across 11 counties in Arizona and is committed to providing 100% clean power by 2050. The company is also the owner and operator of Palo Verde Generating Station, the nation's largest producer of carbon-free electricity, and boasts a significant renewable energy portfolio.
The information is based on a press release statement from Arizona Public Service Company.
In other recent news, Pinnacle West Capital Corporation (NYSE:PNW) has seen significant growth in its 2024 second quarter earnings, thanks to an expanding customer base and favorable weather conditions. This growth has been driven by large C&I customers, leading to a 5.5% increase in sales. Despite this success, the company is guiding to a lower range of sales growth for the year.
Mizuho maintains a positive outlook on Pinnacle West, reaffirming an Outperform rating and a price target of $75.00. The firm's confidence stems from recent meetings with Pinnacle West's CEO Jeffrey Guldner and CFO Andrew Cooper, who expressed optimism about the company's regulatory environment and the potential for a favorable decision on the regulatory lag docket by the end of 2024.
Pinnacle West is also making strides in regulatory proceedings, with decisions on a rate case filing pending further developments. The company has completed a significant equity issuance and plans to use an ATM program for future financing needs. Looking ahead, Pinnacle West has a substantial backlog of customers extending beyond 2026, including TSMC and data center customers representing over 4,000 megawatts. Updates on sales growth and capital plans are expected in the third quarter.
InvestingPro Insights
To complement the news about Arizona Public Service Company (APS) receiving $70 million in grants from the U.S. Department of Energy, it's worth examining some financial metrics of its parent company, Pinnacle West Capital Corporation (PNW).
According to InvestingPro data, PNW has a market capitalization of $9.89 billion and a P/E ratio of 16.02, suggesting a reasonable valuation relative to its earnings. The company's revenue for the last twelve months as of Q2 2024 stood at $4.89 billion, with a notable revenue growth of 7.57% over the same period.
An InvestingPro Tip highlights that PNW has raised its dividend for 12 consecutive years, demonstrating a commitment to returning value to shareholders. This is particularly relevant given APS's long-term investments in grid infrastructure and clean energy initiatives. The current dividend yield is 4.04%, which may be attractive to income-focused investors.
Another InvestingPro Tip notes that PNW is trading at a low P/E ratio relative to its near-term earnings growth. This could indicate potential upside for investors if the company successfully leverages the DOE grants to improve its operations and financial performance.
It's worth noting that InvestingPro offers 8 additional tips for PNW, providing a more comprehensive analysis for interested investors.
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