Thank you all for joining us today. I know that the release of the recommended opinion and order in our pending case is the most significant development for all of you, and both Ted and I will discuss that shortly, but I do want to cover some operational and customer matters before we go there. As we progress through the summer season, I'm proud to say our team continues to excel in delivering reliable service to our customers. Arizona experienced several dozen sizable wildfires in June with only mild damage to our infrastructure and minimal customer outages. We have strong vegetation management and fire mitigation programs, as well as mandatory line inspection prior to re-energizing in high-risk areas. All of these contributed to the protection of our infrastructure and reliable service for our customers.
We also successfully navigated through an early summer heat wave that resulted in six consecutive days of at least 115 degrees and three days approaching our all-time peak demand. Our resource procurement efforts and reserve margin standards ensured that we were able to meet the needs of our customers through the hot summer last year, through the early heat wave this year, and we expect these efforts will continue through the balance of the summer. Following the heat wave in June, July brought a relentless series of monsoon storms. It's good to see the monsoon back, but that does present challenges for us. In a five-day period during mid-July, our teams restored power to more than 120,000 customers affected by storm-related outages, and we effectively communicated with our customers regarding outage status and expected service restoration times.
Our field crews worked in wet, humid, and muddy conditions with no safety events. I'm extremely proud of their exemplary work and the level of service that they've provided. With the weather we've already experienced this summer, it remains as important as ever to continue assisting our communities through our heat relief support programs. APS has partnered with St. Vincent de Paul, the Salvation Army, and Lyft to ensure that Arizonans have access to an emergency shelter and eviction protection programs, to cooling and hydration stations, and have transportation to the nearest cooling shelter as part of heat relief initiatives offered throughout the summer. This is another example of our effort to collaborate for the benefit of our customers, our communities, and our company. That focus on customer experience remains a top priority as we look to improve our J.D. Power customer satisfaction scores.
We are pleased to see a measurable increase in our year-to-date residential customer satisfaction, but we recognize there's more work to do. We understand the importance of a high-quality customer experience, and I'm grateful and proud of our teams for employing a continuous improvement mindset to drive change for the benefit of our customers. Now, onto the regulatory front. As you all know, the administrative law judge issued the recommended opinion and order for our rate case on August 2nd. I will say that we are disappointed and concerned by the recommendation, which would not appropriately allow for the recovery of important investments needed to serve customers reliably. Ted will speak to our estimates of the potential financial impacts if the ROO were to be adopted by the Commission. I do want to note that this is a recommendation from the administrative law judge.
It's not yet a final order of the Commission. A summary of the key points from the ROO can be found in our investor deck on slide 23. From that, you can see that the administrative law judge recommended a $3.6 million revenue increase or a non-fuel $29 million revenue decrease, a 9.16% return on equity, an implied 0.05% return on fair value, the disallowance of the deferral and investment in the Four Corners SCR project, and recovery of the deferral and investment in the Ocotillo modernization project. There is no question that Four Corners has been a critical asset in serving our customers through the record heat the past several years. Without the EPA-mandated installation of SCRs, that plant would not have been allowed to operate. There just is not enough capacity in the West to reliably run the system without Four Corners.
We continue to believe that the Commission and other stakeholders recognize the importance of investing in assets such as Four Corners to maintain reliability given the challenges that we've all seen in the West. We've seen that as we work through the CAISO wheel-through order and the concern that the Commission has expressed on limitations that reliability challenges in a neighboring state is imposing on Arizona. Four Corners is critical for us to continue to serve our customers, and our goal is to continue to work with the Commission to recover prudent investments and ensure that quality service can be maintained for our customers. The ROO, if approved as is, would put this objective in jeopardy. Where are we procedurally? We'll file exceptions to the ROO.
They're currently asking for exceptions on August 23rd, and then the commission will schedule the case to be voted on at a future open meeting. We would expect a decision on this rate case to be issued during the third quarter of 2021. If the outcome of the case does not provide for necessary investments to support customer growth and to maintain the financial health of the company, we have the option to petition the commission for reconsideration of that decision, to challenge the legality of the decision through the court system, or to file another rate case. We will evaluate all of these options after the conclusion of the case to determine the best path forward to serve our customers and to provide value and predictability to our shareholders.
In the meantime, we'll follow the rate case procedural schedule, and we'll articulate and advocate the areas in which we disagree with the recommended order. On the ESG front, in May, the commission voted to preliminarily approve new clean energy rules that would provide for a final standard of 100% clean energy by 2070, with interim standards, the first of which requires a 50% reduction in carbon emissions by December of 2032. A final commission vote on the clean energy rules package is required for the rules to become effective. We think we're well-aligned with the commission on the interim goals and expect to continue our current path to achieve 100% clean energy by 2050. We've executed a contract for an additional 60 MW of utility-owned energy storage to be located at our APS solar sites.
This contract, with a 2023 in-service date, will complete the addition of storage on all of our current APS-owned solar facilities. We're working through our current all source RFP for 6 MW- 800 MW of additional resources, with decisions from that RFP expected in the third quarter of this year. Our MSCI ESG rating improved from a single A to a double A this year, with MSCI noting our strong water management performance and decarbonization efforts as key score attributes.
We made good progress through the first half of this year, improving our customer experience, enhancing our stakeholder relationships, and working towards achieving our ESG and clean energy goals. We need to work through the recommended opinion and order and ensure that our perspective is understood by the commission. There's certainly more work to do, but I do want to acknowledge the team's dedication and commitment. With that, I'll turn the call over to Ted.
Thank you, Jeff, and thanks again to everyone for joining us today. With Jeff having covered our operational and regulatory updates, I'll cover our second quarter 2021 financial results. I'll also provide additional details around our customer and sales growth and potential impacts from the administrative law judge's recommended opinion and order. Our performance in the second quarter remained strong, earning $1.91 per share compared to $1.71 per share in the second quarter of 2020. Higher pension and other post-retirement non-service credits, higher sales and usage, and weather all contributed to the increase in earnings, partially offset by higher operations and maintenance expenses compared to the prior year period. We experienced 2.3% customer growth and 5.7% weather-normalized sales growth during the second quarter compared to the same period in 2020. Residential sales increased 1.3%, and commercial and industrial sales increased 10.3% compared to the second quarter of 2020.
The increase in C&I reflects the reopening and return to in-person work we are seeing this year compared to the second quarter last year, and COVID business closures that occurred last year, and primarily remote work environment. Given the strong rebound in C&I sales and continued residential strength, we're increasing our 2021 sales estimate to 1%-2% growth from our previous estimate of 0.5%-1.5% growth. The labor market in Arizona is also recovering from the COVID pandemic impacts. For 2021 through the end of May, employment in Metro Phoenix increased 1% compared to 2.2% increase in the entire U.S. To be clear, that's 1% in Metro Phoenix compared to 0.2% increase in the entire U.S. In 2020, Arizona was the third fastest-growing state in the U.S.
As a result of this continued strong population growth, Arizona reached the highest level of residential housing permits since 2006 last year. This year, through May, Maricopa County has already reached 21,000 housing permits, which puts housing permits on pace to exceed last year. We believe the relatively low mortgage rates, low cost of living, desirable place with more space and affordable housing will continue to be a driver and grow Metro Phoenix housing market and benefit the overall local economy. This continues to be one of our core strengths of our long-term growth thesis. Turning to our financial health, while the recommended opinion and order from the administrative law judge is not a final order from the commission, we want to be transparent about the potential estimated financial implications if the commission were to approve the recommended opinion and order as written.
For perspective, the general rule of thumb is that every 50 basis point reduction in ROE equates to approximately $32 million in revenue requirement. Regarding the potential impact from the recommendation to deny recovery of Four Corners' SCR investment and deferral, as of June 30th, 2021, the SCR deferral balance was approximately $75 million, and the net book value of the asset was approximately $320 million, net of accumulated deferred income taxes. Because this is only a recommendation from the ALJ and not a decision from the commission, we will not be making any changes to the deferral at this time. If the commission denies recovery of the deferral, it would likely result in a write-off of approximately $75 million, which is net of accumulated deferred income tax.
If the commission also denies recovery of the investment itself, we will consider all regulatory and legal avenues to mitigate any potential write-offs. In summary, we estimate the ROO, if approved, could decrease annual net income up to about $90 million, which includes a non-fuel decrease, as well as the effects of incremental costs we incur once rates become effective. We're already a top quartile performer for O&M and are employing additional robust cost management improvements throughout the enterprise. This magnitude of a revenue decrease would be significant and detrimental to all of our stakeholders, including customers. Regarding our financing plans, we expect to issue up to $500 million of long-term debt at APS during the remainder of 2020 to fund capital investments.
We will hold an investor briefing as the rate case concludes, at which time we will provide financial guidance, including any forecast of Pinnacle West-level funding needs. As we continue to navigate through the evolving pandemic and the resolution of our current rate case, we will continue to focus on our commitment to our shareholders, customers, communities, and our team. The fundamentals within our service territory of strong and diverse economic growth and increasing population and the general attractiveness of Arizona, our strong operational performance, our disciplined cost management all bode well for the future. We will continue to work hard to resolve these current challenges. This concludes our prepared remarks. I'll now turn the call over to the operator for questions.
Thank you. We will now be conducting a question and answer session. Thank you. Our first question comes from the line of Julien Dumoulin-Smith with Bank of America. Please proceed with your question.
Hey, good morning, team. Thanks for the opportunity to connect. I hope you all are doing well.
Hey, Julien.
Good morning. Perhaps at the outset here, if we can try to clarify things. Obviously, this is disappointing. How do we think about the balance sheet needs and impact here from an equity funding perspective? Specifically, you cite in your comments your regulatory and legal avenues. It sounds like there could be a multi-stage balance sheet impact such that pending that resolution, you wouldn't necessarily take the full write-off of the principal net balance until a subsequent decision is made, right?
Julien, this is Ted. Thanks for the question. I think you're thinking about it right. Let's break it out into two components of the recommendation with respect to SCR disallowance. The first is the deferral itself. Because this was just a recommendation and not an actual decision, the deferral remains intact currently. If the recommendation were to hold at a final decision, that would trigger a likely write-off of the deferral, which at this time, or as of June 30th, that balance is about $75 million.
However, if the recommendation for disallowance of the actual plant of SCRs was decided upon at the Commission, we do have other options, both within the regulatory space and legal space. As a result, we'd evaluate our options at that time, and that would not necessarily trigger a write-off then, given the fact that you do have other paths to pursue, even if a decision was made consistent with the ROO.
To press further a little bit, when you think about the avenues here, you all have talked about an equity funding need conceptually already. To the extent to which that one would pursue an immediate subsequent rate case here, would that effectively necessitate, again, necessitate in soft terms, the need to true up the capital structure inclusive of that initial $75?
Well, we'll continue to evaluate the equity needs. We've said for a while now that we would be focused on looking at equity needs to preserve the equity ratio. That said, fully recognize that if there is any write-off impact to the income statement, that'll have an impact on equity ratio going forward. We'll evaluate that, but keep in mind also, we do continue to have a strong balance sheet, both at Pinnacle and APS, and we'll evaluate being able to utilize that balance sheet to the extent possible to mitigate any further equity dilution impact.
Yeah. Understood. You absolutely have a strong balance sheet there. Just to clarify here, if you don't mind breaking it down, you said it was a $90 million figure here. Can you break that down just a little bit more between the SCR and some of the other items here? Just high level, if you don't mind. Just in terms of the impact there as we've sensitized a potential outcome.
Sure. Yeah. Happy to. High level. You've got the $4 million net sort of revenue increase as proposed in the ROO. That includes fuel. We've got to get that down to non-fuel. You back out about $33 million of fuel-related increases. That takes you to a total non-fuel revenue decrease of $29 million. You add to that the incremental cost that we've stated for a while now will hit the income statement once rates go into effect of about $110 million. You tax affect that gets you to the $90 million estimated annual impacts to ongoing earnings. Again, we expect that to be up to $90 million, and that's an estimate at this time.
Got it. If they approve the SCR, just what would that 90 go to? Do you have anything like that?
If the SCR plant would be put back into rates as approved, then about half that $90 million impact would be mitigated.
Got it. Excellent. Okay. Sorry, just to squeeze in one more here if I can. What are you willing to go to on a consolidated FFO to debt metric here? Just to clarify the earlier comment you made here. Obviously, you do have a strong balance sheet in recognizing that.
Yeah. Julien, appreciate the question. That's not something we can really discuss today. When we do have our investor brief at the conclusion of the rate case, happy to walk through more details of our financing plans at that time given that we'll have certainty on the case. All the details will be known and look forward to sharing how we think about credit metrics and financing going forward at that point.
Indeed. I appreciate that it's a certainly fluid situation. All the best. All right. Take care. Good luck.
Thank you.
Our next question comes from the line of Insoo Kim with Goldman Sachs. Please proceed with your question.
Hey, thank you. Thanks for all the color from Julien's question and all of the different breakdowns. I guess from a procedural basis, you commented that some of the avenues you have is whether it's a consideration, some legal avenues, filing another rate case. Are those all exclusive of each other, or is it possible that you could potentially just go ahead and file another rate case, given that there's more regulatory lag with other items that need recovery while pursuing specific reconsideration or legal items on the side?
Insoo, I'd say what is the requirement to exhaust administrative remedies, the rehearing or reconsideration request is necessary before you pursue a court appeal. If you do pursue a court appeal, that doesn't change your ability to file another rate case and have the appeal pending and a separate rate case moving. Again, we would look at what options we would need to employ based on what the conclusion of the case is.
Got it. I'll leave that there. Just a different topic on the ROE, if it seems like continuation of solid, whether it's customer growth or just demand growth that you're seeing. I guess more on a normalized basis beyond 2021, are those trends that you're seeing giving you the confidence that you could raise that in the normalized, whether normal ROE by half a percent on average through 2023? Just some more color there.
Yeah. Insoo, I think that's right. We're looking at the local economy, the trends that we see. Last year was difficult to be able to separate what was normal growth versus fluctuation between C&I and residential due to COVID, but we're starting to see that trend normalize with some repeated pattern. For example, the residential growth we see, we believe that's true sustained growth. On C&I, we believe out of the 10.3, just under 2% of that is really organic growth. When we see what's coming down the pipe with respect to new industrial and commercial growth, which then in turn spurs more housing growth, we're confident that we'll continue to have robust customer growth, and that'll translate into the increased usage, which is what gave us confidence to increase that range.
Got it. All right. That's it for me. Thank you.
Thanks, Insoo Kim.
Our next question comes from the line of Paul Patterson with Glenrock Associates. Please proceed with your question.
Hey, good morning.
Hey, Paul. Morning.
A couple things. Just a housekeeping item. The LFCR which they didn't vote to increase, but you guys are still deferring. It wasn't clear to me in the rule how that's going to be impacted if the rule were to be adopted?
Hi, Paul. This is Barbara Lockwood. We didn't propose to do anything with the LFCR in this case. We just proposed to let it continue to operate as it currently operates. We expect that it will just continue to function with the balancing account that already exists with the LFCR, and it'll be addressed in the next application to change that adjuster.
If they don't allow an increase, I guess it just simply keeps getting deferred. Is that sort of how we should think about it?
Yes. Actually, there's a balancing account with that adjuster, and the dollars just accumulate in that until there's action taken on that adjuster one way or another.
Okay.
I will say-
If I could. Sure.
I'm sorry, Paul. I will say in the rule, there is a provision to leave open the rate case for 12 months so that we can work with stakeholders on alternatives for our adjuster suite. We're looking at that as an opportunity to find alignment and common ground and prepare a proposal that will address any issues or concerns and resolve, hopefully, any lingering questions about our adjusters.
Got it. Then, the Chair put out a letter earlier this week, and in fact, there's been some back and forth on this whole proceeding regarding the renewable implementation in Solana and the contract associated with it, and you guys have been very articulate. I don't know if it was you, Barbara, or someone else who wrote that prudency is not done through the lens of hindsight and what have you. Nonetheless, we got this letter on Monday that seems to be saying we should be doing a prudence review on a somewhat dated PPA that is way above market current rates. How should we think about this in the context of I guess, what do you say to that, I guess? How should we think about that, seeing this letter?
Paul, I think right now it's a single commissioner who has expressed her point of view with respect to that Solana contract. I agree again, strongly. If you go back to the time that that contract was entered into, there was a big debate about solar thermal versus solar photovoltaic. Where's the future of it? The importance of the capacity value and the molten salt storage for us, it had a very different natural gas price profile. To look today and go back that far and say that this was imprudent, it's a PPA, so it's a purchase power agreement. It's not an item that's in our rate base. It was done consistent with the commission direction at the time.
The commissioners at the time were very excited, very much pushing to have that project move forward. Understand the Chairwoman Márquez Peterson's viewpoint on that. We'll continue to share our perspective on it, but it's clear to me that was prudent when it was entered into at the time. It was consistent with the standards that we had at the time, and I don't know from a legal basis how you could go back now and say that there's an issue that we should be accountable for on it.
If it was to be rejected by the commission, would that be a force majeure, or would you just basically have to sort of legally proceed You would do that anyway, obviously, but how do we think about that?
We'd take that one step at a time. Obviously, right now, the most important thing to do is make sure it's clear what the legal standard is and where this plant fits into it, and then you don't have to go to the force majeure issues. That would not be good for development in Arizona if you start having contracts that are being defaulted on. I think we feel pretty strongly that this is a proceeding we'll put our perspective on, but it was a prudent decision at the time, and it should continue to be part of our asset portfolio, and let's just take that one step at a time.
Okay. I guess just finally, I've been doing this, I guess, too long, but when there seems to be an effort on the part of the commission to control rates or to what have you guys might win on many of these cases legally. I guess what the concern starts to come up with is, there's more than one way to cause problems in terms of recovery and what have you. How do you think about strategically going ahead with your plans and your investments and what have you in this environment, if you follow what I'm saying? In other words, I guess strategically, I am sure you guys must be thinking about maybe different strategic alternatives if this environment sort of continues. Do you follow what I'm saying?
Yeah, I follow what you're saying. That's been an important piece of how we've looked at this broadly. Our customer affordability initiative was driven in large part to say we've got to be as effective as we can at managing our controllable O&M expenses so that we can create headroom to make the investments in clean energy that we know we're going to need to make in the future and keep the rate growth at or below the rate of inflation. That continues, and our rates are lower today than if you compare it, Ted, from what, 2018 were?
6.7% average bill lower than 2018.
We've continued to focus on keeping rates low. I think what's important as we have the dialogue with the stakeholders and the commission is the understanding that it's a balance. If we do this in a way that causes credit ratings to degrade and your cost of debt increases, ultimately, customers end up paying for that. If the cost to issue equity is higher because we're not able to maintain the competitive field to attract equity investment in, then that's ultimately going to be a higher cost to customers. That's the important thing in this is we're doing everything that we can to manage costs. We're looking at ways that we can, again, move out of variable fuel resources and start saving on the fuel bill.
We've got to do that in balance, and I think that's the message we have to continue to send to the Commission is that if all you focus on is the short-term rate impacts, don't reflect on where we are with respect to the work that's already happened in lowering our rates over the last few years. Ultimately, it's going to end up costing customers more. It is just an alignment. It's an alignment effort that we just have to continue to focus on.
Yeah. Paul, I'll just add, too, from a strategic standpoint, when we look at the value creation opportunities we've got, we are disappointed in this ruling, no two ways about it, and we've got a lot of facts to be able to continue to demonstrate as to why the investments were prudent and critical to keep the lights on. We also recognize that this is 1 of the last legacy issues that we are working to resolve with the Commission. We were called into this case. It didn't start out in the normal form. Notwithstanding, we've made a lot of great progress with the Commission. This is one of the last legacy items that we need to put to bed and get behind us.
Once we do, we can't forget about the fact that we have robust growth in our service territory. Just increased the ranges again today. Continue to have that strong balance sheet, disciplined cost management, a tremendous path forward for investing in clean. We will continue to make progress with the Commission and get this case behind us and then be able to unlock more value with those other strengths that we've got.
Okay. Thanks a lot, and hang in there.
Our next question comes to the line of Steve Fleishman with Wolfe Research. Please proceed with your question.
Yeah, thanks. I guess first question is just in terms of in the event that you do need to pursue a legal review of this case, any sense on how long that might take? How long has that taken maybe in other cases in the courts?
Yes, Steve. The law in Arizona does provide for a direct appeal in a rate case matter to the Court of Appeals. You go into the Court of Appeals rather than starting at Superior Court and then working your way up. Typically, those are in the year timeframe or so, which is often why you might see a case also filed. If you got a legal appeal, you might still see a company file a rate case at the same time.
Okay. Just in terms of, I know the balance sheet's strong and your payout ratio is relatively low. Just how should we think about risk to credit and, if at all, the dividend, if this were implemented?
Yes, Steve. Well, certainly, we're engaged with the agencies as we continue to work through this. They recognized that this was just a recommendation, not a decision. They also recognize we've got continued growth in rate base and capital investment. As soon as we solidify our financing plans, similar with our equity investors, we'll be working with the agencies to make sure that we incorporate the conclusion of the case and update any assumptions there. We'll evaluate, certainly with them, what the credit metrics look like and ratings, et cetera. With respect to the dividend, our intent is to continue defending the dividend. The board reviews this annually. We'll certainly take into consideration where the case concludes. We'll share more of the dividend policy at the investor brief here at the end. We intend to continue defending the dividend.
Okay. Just maybe the last question is just, we'll get the outcome of this case. When you're looking kind of. Obviously, it's important for, I guess, future cases. Just, you have a pretty big capital plan, and at least for now, they haven't approved this renewables rider. The other issue is that these rate cases take a long time in the state. How are you thinking about just managing the capital plan, given what's happened here, the length of rate cases, and just how do you keep focusing on having such a big capital plan if this is where we end up?
Steve, I think that's a fair point. Aside from the current case that we're in, from a regulatory construct standpoint, our top priority is to continue to work with stakeholders in the Commission to minimize regulatory lag. That includes getting back to the timeframe of the cases that we had before. We've actually got a pretty good track record of relatively short-duration rate cases. This one is a bit of an anomaly, particularly given it fell within a year of COVID. That certainly had an impact. Aside from that, whether it be our clean investments or investments to continue to support the robust growth within the service territory, we recognize that that lag has an impact, and we believe there's options to be able to continue to mitigate it, and that is a priority for us, both within this case and beyond.
We look at the capital plan, aside from investing in clean, we have to fund the growth. We've got commercial industrial customers coming that demand investment in infrastructure to be able to continue to drive this local economy. We need to make sure that we're aligned with our stakeholders and the regulator on the need to continue to fund that capital to be able to fuel Arizona's growth. If you look at the $1.5 billion in our guidance, by far the majority of that is just to keep up with Arizona's growth, and it's our job to do it.
Steve, I'll just add one thing to note. This case has been particularly long. It is unusual in a number of ways in that we were called in. It was also fully litigated, and it's the first fully litigated case we've had in quite some time. We will always seek to settle, and we can improve the timeframes to do so, and we're hopeful that we'll be in that position in the next case that we have. Keep in mind that this case is relatively unique in terms of the timeframe and the circumstances around it. As Ted said, it's hopefully the final piece of some of the legacy issues that we've been dealing with.
Okay. Thank you.
Thank you, Steve.
Our next question comes from the line of Sophie Karp with KeyBanc Capital Markets. Please proceed with your question. Hello, Ms. Karp, your line is live. Perhaps you have your line on mute.
Operator, we can move on to the next caller.
Our next question comes from the line of Anthony Crowdell with Mizuho. Please proceed with your question.
Hey. Good morning, Jeff. Good morning, Ted. Just, I guess, maybe a weird question. If the rule is adopted, and maybe the investment in the SCR is found not prudent, do you stop operation of it? I guess there's an O&M drag associated with operating the SCRs or operating the plant. Would you stop utilizing the facility?
That's the question I think, Anthony, is given that that SCR is legally required for us to operate the plant. Given that if we didn't have Four Corners on a day like today, we're going to have a hot day today. If we didn't have the capacity out of Four Corners, there's nothing else in the West. There's nothing else that we could go get. There's no other resource that we could use to keep the lights on. You have to continue to operate it.
That's why I'm struggling in particular with this recommendation, as this has been clearly demonstrated over the last two summers as not just used and useful, but necessary from a capacity basis in the face of a bunch of challenges around capacity in whether it's California or Texas, that's just brought that to a highlight. You're now putting us in a position to say, "Well, you got to run the plant, but we're not going to give you recovery of either the investment in the plant that's required to continue to operate it or the ongoing operating expenses of it. Just don't think that's a reasonable outcome.
Anthony, I'll just add, keep in mind, what's in this case and what we're talking about is the environmental technology, the SCRs. The plant itself is in rate base from prior decisions, obviously, and that remains in rate base.
I guess my follow-up is maybe a longer-term strategy question. If we look at how the utility sector has evolved maybe over the last 10, 20 years, it seems that given some really challenging regulatory decisions, a lot of single-state utilities have looked to diversify their regulatory risk and pursued maybe either being acquired by a multi-state utility to enable efficient capital to move through different jurisdictions. Is that something that if this ROO, if this rule was upheld, something that the company would have to entertain?
Anthony, we don't talk about M&A issues. I will say in terms of diversification, we do have some work going on at our Bright Canyon affiliate, and so there is some opportunity there. Again, the vast majority of revenue net income comes from APS, but we continue to look at opportunities there and just one perspective, we've got some ownership in a couple of wind farms. One's in Missouri and one's in Minnesota.
I think it will be important for us to share with the regulators if the returns that we see from capital invested in those states is better than the returns we can get here in Arizona. That puts you in a real predicament. The ROEs are important to maintain the attractiveness to get capital invested in states and to continue to invest in needed reliability. We do have some assets that are outside the traditional regulated platform. It's not yet material from an earnings standpoint. We do look for opportunities there.
Great. Thanks for taking my questions.
Thanks, Anthony.
Thanks, Anthony.
We have reached the end of the question and answer session. I would now like to turn the floor back over to management for closing comments.
Thank you for joining us today. This concludes our call.
Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.