Greetings and welcome to Pinnacle West Capital Corporation's 2016 Fourth Quarter and Full Year Earnings Conference Call. At this time all participants are in a listen-only-mode. A Question-and-Answer Session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. I would now like to turn the conference over to Mr. Ted Geisler, Director of Investor Relations. Thank you Mr. Geisler, you may begin.

Thank you, Manny. I would like to thank everyone for participating in this conference call and webcast to review our fourth quarter and full year 2016 earnings, recent developments and operating performance. Our speakers today will be our Chairman and CEO, Don Brandt; and our CFO, Jim Hatfield. Jeff Guldner, APS's Senior Vice President of Public Policy; and Mark Schiavoni, APS's Chief Operating Officer are also here with us. First, I need to cover a few details with you. The slides that we will be using are available on our Investor Relations website, along with our earnings release and related information. Note that the slides contain reconciliations of certain non-GAAP financial information. Today's comments and our slides contain forward-looking statements based on current expectations and the company assumes no obligation to update these statements. Because actual results may differ materially from our expectations, we caution you not to place undue reliance on these statements. Our full year 2016 10-K was filed this morning. Please refer to that document for forward-looking statements, cautionary language as well as the risk factors and MD&A sections, which identify risks and uncertainties that could cause actual results to differ materially from those contained in our disclosures. A replay of this call will be available shortly on our website for the next 30 days. It will also be available by telephone through March 3. I will now turn the call over to Don.

Thanks Ted and thank you all for joining us today. Pinnacle West concluded a productive 2016 with earnings in line with our expectations. Palo Verde Nuclear Generating Station had another record year. Our employees set a new companywide safety record and we continue making progress on our regulatory initiatives. Our capital execution program is on track with several noteworthy projects recently placed in the service and our balance sheet remains one of the strongest in the industry. Jim will discuss the financial results in a moment, my comments will focus on our 2016 highlights and the year ahead. Our fleet performed very well in 2016 highlighted by Palo Verde's 25th consecutive year as the Nation's largest power producer. Total production reached 32.2 billion kilowatt hours of carbon-free electricity. In fact, the fall refueling outage for Unit-3 set a station record for the shortest outage ever and set an unclear industry record for radiological safety. Before I continue, I want to recognize Randy Edington for his significant positive impact on our company as Chief Nuclear Officer. Randy will be retiring from APS in March and I want to thank him for the great service to our company and the nuclear industry as a whole during his decade of leadership here in Arizona. Because of his skill and experience as well as his ability to develop strong leaders and sustainable processes he's left a lasting legacy of excellence at Palo Verde. In 2016, APS also achieved the safest year with the fewest reportable injuries in our history. I consider the safety of our employees the top priority, and I also believe safety metrics are good indicators of management's ability to lead an organization. These just aren’t statistics, but the result of a continued commitment from all our employees and management team to…

Thank you John and thank you everyone for joining us on the call. This morning, we’ve reported our financial results for the fourth quarter and full year 2016. As you can see on Slide 3 in the materials, we had a good year and ended on a strong note. Before I review the details of our 2016 results let me touch on a couple of highlights from the quarter. For the fourth quarter of 2016, we earned $0.47 per share compared to $0.37 per share in the fourth quarter of 2015. Slide 4 outlines the variances which drove the increase in our quarterly earnings per share. Gross margin was flat including lower sales which were offset by higher LFCR revenues. Lower operations on maintenance expenses in the fourth quarter of 2016 compared to 2015 improved earnings by $0.06 per share largely due to lower employee benefit cost driven by the adoption of a new stock compensation accounting guidance. Now, I’ll turn to Slide 5. Let’s review some of the details of our full year results. 2016 results were in line with our expectations earning $3.95 per share compared to $3.92 per share in 2015, translate into an earned consolidated ROE of 9.5 on a weather normalized basis. Gross margin was the fastest driver for the year contributing $0.33 per share including favorable year-over-year weather. Sales in 2016 compared to 2015 added $0.05 to gross margin, weather normalized retail flow of our sales [ph] after the effects of energy efficiency program and distributed generation were flat year-over-year, but similar to the pattern we saw throughout 2016, the usage trends and related pricing by customer class or mix and generated a positive gross margin effect. Transmission LFCR revenues also continued to add incremental growth in our gross margins as designed contributing $0.17…

Thank you. We will now be conducting a Question-And-Answer Session. [Operator Instruction] our first question is from Julien Dumoulin-Smith of UBS. Please go ahead.

It's Jeremy [indiscernible] on. Just on the first off on the Navajo plant it's been kind of a fluid situation and I guess one, is there any sense to think that it wouldn’t shut down at this point or is that pretty clear and two, can you just clarify what exactly that might be backfilled with, as I understand it not -- the shutdown is not included in your IRP?

This is Mark Schiavoni, and yes, as far as your first quarter about shutdown. The owners led by SRP who is the operating agent has made decision at 2019 which is a current exploitation of the existing lease either as a year to lease [ph] and move forward beyond 2019 with the current owners structure or a changed owner structure. Couple of owners have made it clear they do not want to operate beyond 2019. But in the meantime, department has interior and our ACC as well as others that pull all the party together and are looking forward some sort of resolution post 2019 in order to continue the operating of the facility. The economics or the facility as it stands today would not warrant continued operation without some significant changes. So that’s an ongoing issue still to be resolved. As far as the impact of the generation we will update our [indiscernible] as we go forward. But the current expectation is, we have the resources until at least 2019 potentially longer, and we will put it into our future finance and what we do from an RP [ph] or some more other positions with regards to Navajo generating station.

Okay. And just to clarify that, will that be traditional generation or something more along the lines of storage or even solar since you guys, I believe just passed the 1 gigawatt mark in solar or it [technical difficulty].

It would be any amount at this point, so.

Okay and then just one other question on tax reform. If we had a lower tax rate and obviously that's a pass through. Would you expect that to be changed in the rate case following the tax reform or would there be any chance of that happening sooner?

Well I think lower overall corporate tax rate will be passed on to customers. I don't think it never going to wait till the next rate case. I think the [indiscernible] maybe something that hurt the company, so you want to put it all together and do it all at once. But we'll just have to wait and see there is at least two proposals out there. The treasury secretary spoke yesterday. I think the issue is further clouded and we'll just have to wait and see ultimately what happens

Okay thank you.

Thank you. the next question is from Ali Agha of SunTrust. Please go ahead.

First question it looks like the weather normalized electric sales for the year at flat or below of what you'd been projecting for the year, if I recall correctly. What do you think was causing that and any further visibility both in terms of the growth on customers and sales that you're projecting looking over the next three years given where we've been running last four or five, six quarters? Anything it is important to give us that more optimism. I know you've talked about the economic indicators. But why did '16 coming below what you had been expecting?

Well I think well first of all. No question we had a weak fourth quarter, heading into fourth quarter we had positive sales. So don't know that that's necessarily a trend and I'm not going to the to the first and fourth quarters to look at the trend with us being waited till second, third quarter. But I will say we have a lot of business sales were up last year for example State Farm [ph] started filling their buildings in 2015 that wasn't complete until October of this year. So you'll have a full year impact of that, and we just see a lot of construction, especially multi-family homes going on into Downtown Phoenix. So all the signs are pointing towards modest sales growth in 2017, we're projecting between of 0% and 1%. So we will ultimately see what happens.

Okay. And then second over this next three-year cycle '17 through '19, do you have a sort of an earn ROE goal given like you had in the last cycle minimal was 9.5% and you got higher. I mean should we think about similar goals or different goals over this cycle period?

I think I'll defer that until we talk about ’17 guidance.

Okay. And then on the rate case itself, I guess you know is the confidence level still pretty high on reaching a settlement on or before March 17th and what remains in your mind the most contentious issues at this stage?

Ali, this is Don here and we continue engaging with the parties in a constructive settlement discussions and in generally speaking, we believe that parties are motivated to settle. It’s really difficult to go in any detail at this point.

Okay. But Don, is it fair to say I mean the usual ROEs et cetera. all would be up for negotiation I guess?

Everything is up for negotiation.

Yeah, thank you.

Thank you. We have no further questions at this time. I would like to turn the conference back over to Mr. Geisler for closing remarks.

Thank you Manny, this concludes our call. Thank you all for joining today.