CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Income Statement [Abstract] | ||||
OPERATING REVENUES | $ 1,469,871 | $ 1,308,254 | $ 3,315,071 | $ 3,004,978 |
OPERATING EXPENSES | ||||
Fuel and purchased power | 556,571 | 427,452 | 1,174,027 | 895,514 |
Operations and maintenance | 251,663 | 232,386 | 715,392 | 692,131 |
Depreciation and amortization | 190,389 | 163,523 | 563,491 | 480,093 |
Taxes other than income taxes | 53,475 | 57,608 | 165,591 | 176,586 |
Other expenses - net | 200 | (2,088) | 1,410 | 5,361 |
Total | 1,052,298 | 878,881 | 2,619,911 | 2,249,685 |
OPERATING INCOME | 417,573 | 429,373 | 695,160 | 755,293 |
OTHER INCOME (DEDUCTIONS) | ||||
Allowance for equity funds used during construction | 9,133 | 11,352 | 30,966 | 30,549 |
Pension and other postretirement non-service credits - net (Note 5) | 24,673 | 28,135 | 73,739 | 84,101 |
Other income (Note 9) | 2,219 | 12,083 | 5,605 | 36,719 |
Other expense (Note 9) | (6,745) | (6,182) | (14,751) | (15,219) |
Total | 29,280 | 45,388 | 95,559 | 136,150 |
INTEREST EXPENSE | ||||
Interest charges | 72,185 | 64,067 | 205,677 | 188,782 |
Allowance for borrowed funds used during construction | (8,692) | (5,273) | (19,047) | (15,466) |
Total | 63,493 | 58,794 | 186,630 | 173,316 |
INCOME BEFORE INCOME TAXES | 383,360 | 415,967 | 604,089 | 718,127 |
INCOME TAXES | 52,728 | 71,863 | 83,577 | 114,073 |
NET INCOME | 330,632 | 344,104 | 520,512 | 604,054 |
Less: Comprehensive income attributable to noncontrolling interests | 4,306 | 4,306 | 12,918 | 12,918 |
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ 326,326 | $ 339,798 | $ 507,594 | $ 591,136 |
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING — BASIC (in shares) | 113,211 | 112,923 | 113,162 | 112,878 |
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING — DILUTED (in shares) | 113,463 | 113,217 | 113,376 | 113,178 |
EARNINGS PER WEIGHTED-AVERAGE COMMON SHARE OUTSTANDING | ||||
Net income attributable to common shareholders - basic (in dollars per share) | $ 2.88 | $ 3.01 | $ 4.49 | $ 5.24 |
Net income attributable to common shareholders — diluted (in dollars per share) | $ 2.88 | $ 3.00 | $ 4.48 | $ 5.22 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net Income | $ 330,632 | $ 344,104 | $ 520,512 | $ 604,054 |
OTHER COMPREHENSIVE INCOME, NET OF TAX | ||||
Derivative instruments net unrealized gain (loss), net of tax benefit (expense) of $(169), $64, $(582), and $(308) | 513 | (194) | 1,772 | 938 |
Pension and other postretirement benefit activity, net of tax benefit (expense) of $(329), $(363), $69 and $(720) | 1,001 | 1,106 | (211) | 2,192 |
Total other comprehensive income (loss) | 1,514 | 912 | 1,561 | 3,130 |
COMPREHENSIVE INCOME | 332,146 | 345,016 | 522,073 | 607,184 |
Less: Comprehensive income attributable to noncontrolling interests | 4,306 | 4,306 | 12,918 | 12,918 |
COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ 327,840 | $ 340,710 | $ 509,155 | $ 594,266 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Statement of Comprehensive Income [Abstract] | ||||
Derivative instruments net unrealized gain, tax benefit (expense) | $ (169) | $ 64 | $ (582) | $ (308) |
Pension and other postretirement benefits activity, tax benefit (expense) | $ (329) | $ (363) | $ 69 | $ (720) |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
EQUITY | ||
Common stock, authorized shares (in shares) | 150,000,000 | 150,000,000 |
Common stock, issued shares (in shares) | 113,108,728 | 113,014,528 |
Treasury stock at cost, shares (in shares) | 36,204 | 87,608 |
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Parenthetical) - $ / shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Statement of Stockholders' Equity [Abstract] | ||
Dividends declared per common share (in dollars per share) | $ 1.70 | $ 1.66 |
ARIZONA PUBLIC SERVICE COMPANY - CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
OPERATING REVENUES | $ 1,469,871 | $ 1,308,254 | $ 3,315,071 | $ 3,004,978 |
OPERATING EXPENSES | ||||
Fuel and purchased power | 556,571 | 427,452 | 1,174,027 | 895,514 |
Operations and maintenance | 251,663 | 232,386 | 715,392 | 692,131 |
Depreciation and amortization | 190,389 | 163,523 | 563,491 | 480,093 |
Taxes other than income taxes | 53,475 | 57,608 | 165,591 | 176,586 |
Other expenses - net | 200 | (2,088) | 1,410 | 5,361 |
Total | 1,052,298 | 878,881 | 2,619,911 | 2,249,685 |
OPERATING INCOME | 417,573 | 429,373 | 695,160 | 755,293 |
OTHER INCOME (DEDUCTIONS) | ||||
Allowance for equity funds used during construction | 9,133 | 11,352 | 30,966 | 30,549 |
Pension and other postretirement non-service credits - net (Note 5) | 24,673 | 28,135 | 73,739 | 84,101 |
Other income (Note 9) | 2,219 | 12,083 | 5,605 | 36,719 |
Other expense (Note 9) | (6,745) | (6,182) | (14,751) | (15,219) |
Total | 29,280 | 45,388 | 95,559 | 136,150 |
INTEREST EXPENSE | ||||
Interest charges | 72,185 | 64,067 | 205,677 | 188,782 |
Allowance for borrowed funds used during construction | (8,692) | (5,273) | (19,047) | (15,466) |
Total | 63,493 | 58,794 | 186,630 | 173,316 |
INCOME BEFORE INCOME TAXES | 383,360 | 415,967 | 604,089 | 718,127 |
INCOME TAXES | 52,728 | 71,863 | 83,577 | 114,073 |
NET INCOME | 330,632 | 344,104 | 520,512 | 604,054 |
Less: Comprehensive income attributable to noncontrolling interests | 4,306 | 4,306 | 12,918 | 12,918 |
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | 326,326 | 339,798 | 507,594 | 591,136 |
APS | ||||
OPERATING REVENUES | 1,469,871 | 1,308,254 | 3,315,071 | 3,004,978 |
OPERATING EXPENSES | ||||
Fuel and purchased power | 556,571 | 427,452 | 1,174,027 | 895,514 |
Operations and maintenance | 248,808 | 229,432 | 705,683 | 682,531 |
Depreciation and amortization | 190,368 | 163,484 | 563,427 | 480,012 |
Taxes other than income taxes | 53,456 | 57,591 | 165,509 | 176,541 |
Other expenses - net | 200 | (2,088) | 1,410 | 5,361 |
Total | 1,049,403 | 875,871 | 2,610,056 | 2,239,959 |
OPERATING INCOME | 420,468 | 432,383 | 705,015 | 765,019 |
OTHER INCOME (DEDUCTIONS) | ||||
Allowance for equity funds used during construction | 9,133 | 11,352 | 30,966 | 30,549 |
Pension and other postretirement non-service credits - net (Note 5) | 24,791 | 28,191 | 74,080 | 84,262 |
Other income (Note 9) | 1,661 | 11,597 | 4,209 | 35,120 |
Other expense (Note 9) | (3,023) | (2,196) | (7,657) | (9,807) |
Total | 32,562 | 48,944 | 101,598 | 140,124 |
INTEREST EXPENSE | ||||
Interest charges | 66,296 | 61,362 | 192,828 | 180,680 |
Allowance for borrowed funds used during construction | (8,269) | (5,273) | (18,381) | (15,466) |
Total | 58,027 | 56,089 | 174,447 | 165,214 |
INCOME BEFORE INCOME TAXES | 395,003 | 425,238 | 632,166 | 739,929 |
INCOME TAXES | 59,004 | 77,269 | 93,385 | 128,313 |
NET INCOME | 335,999 | 347,969 | 538,781 | 611,616 |
Less: Comprehensive income attributable to noncontrolling interests | 4,306 | 4,306 | 12,918 | 12,918 |
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ 331,693 | $ 343,663 | $ 525,863 | $ 598,698 |
ARIZONA PUBLIC SERVICE COMPANY - CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
NET INCOME | $ 330,632 | $ 344,104 | $ 520,512 | $ 604,054 |
OTHER COMPREHENSIVE INCOME, NET OF TAX | ||||
Pension and other postretirement benefits activity, net of tax benefit (expense) of $(300), $(330), $142, and $(685) | 1,001 | 1,106 | (211) | 2,192 |
Total other comprehensive income (loss) | 1,514 | 912 | 1,561 | 3,130 |
COMPREHENSIVE INCOME | 332,146 | 345,016 | 522,073 | 607,184 |
Less: Comprehensive income attributable to noncontrolling interests | 4,306 | 4,306 | 12,918 | 12,918 |
COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | 327,840 | 340,710 | 509,155 | 594,266 |
APS | ||||
NET INCOME | 335,999 | 347,969 | 538,781 | 611,616 |
OTHER COMPREHENSIVE INCOME, NET OF TAX | ||||
Pension and other postretirement benefits activity, net of tax benefit (expense) of $(300), $(330), $142, and $(685) | 909 | 1,000 | (432) | 2,086 |
Total other comprehensive income (loss) | 909 | 1,000 | (432) | 2,086 |
COMPREHENSIVE INCOME | 336,908 | 348,969 | 538,349 | 613,702 |
Less: Comprehensive income attributable to noncontrolling interests | 4,306 | 4,306 | 12,918 | 12,918 |
COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ 332,602 | $ 344,663 | $ 525,431 | $ 600,784 |
ARIZONA PUBLIC SERVICE COMPANY - CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Pension and other postretirement benefits activity, tax benefit (expense) | $ (329) | $ (363) | $ 69 | $ (720) |
APS | ||||
Pension and other postretirement benefits activity, tax benefit (expense) | $ (300) | $ (330) | $ 142 | $ (685) |
ARIZONA PUBLIC SERVICE COMPANY - CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
PROPERTY, PLANT AND EQUIPMENT | ||
Plant in service and held for future use | $ 22,275,468 | $ 21,688,661 |
Accumulated depreciation and amortization | (7,798,591) | (7,504,603) |
Net | 14,476,877 | 14,184,058 |
Construction work in progress | 1,684,481 | 1,329,478 |
Palo Verde sale leaseback, net of accumulated depreciation (Note 6) | 91,264 | 94,166 |
Intangible assets, net of accumulated amortization | 246,690 | 273,693 |
Nuclear fuel, net of accumulated amortization | 115,227 | 106,039 |
Total property, plant and equipment | 16,614,539 | 15,987,434 |
INVESTMENTS AND OTHER ASSETS | ||
Nuclear decommissioning trusts (Notes 11 and 12) | 1,025,913 | 1,294,757 |
Other special use funds (Notes 11 and 12) | 359,394 | 358,410 |
Assets from risk management activities (Note 7) | 86,864 | 46,908 |
Other assets | 121,346 | 97,884 |
Total investments and other assets | 1,593,517 | 1,797,959 |
CURRENT ASSETS | ||
Cash and cash equivalents | 7,032 | 9,969 |
Customer and other receivables | 603,197 | 391,923 |
Accrued unbilled revenues | 221,023 | 133,980 |
Allowance for doubtful accounts (Note 2) | (23,999) | (25,354) |
Materials and supplies (at average cost) | 386,703 | 349,135 |
Fossil fuel (at average cost) | 53,087 | 18,032 |
Income tax receivable | 0 | 7,514 |
Assets from risk management activities (Note 7) | 164,794 | 63,481 |
Deferred fuel and purchased power regulatory asset (Note 4) | 445,025 | 388,148 |
Other regulatory assets (Note 4) | 94,676 | 130,376 |
Other current assets | 65,019 | 83,896 |
Total current assets | 2,016,557 | 1,551,100 |
DEFERRED DEBITS | ||
Regulatory assets (Note 4) | 1,173,415 | 1,192,987 |
Operating lease right-of-use assets | 806,509 | 890,057 |
Assets for pension and other postretirement benefits (Note 5) | 595,511 | 545,723 |
Other | 44,550 | 37,962 |
Total deferred debits | 2,619,985 | 2,666,729 |
TOTAL ASSETS | 22,844,598 | 22,003,222 |
EQUITY | ||
Retained earnings | 3,580,102 | 3,264,719 |
Accumulated other comprehensive loss (Note 13) | (53,300) | (54,861) |
Total shareholders’ equity | 6,244,563 | 5,906,200 |
Noncontrolling interests (Note 6) | 117,550 | 115,260 |
Total equity | 6,362,113 | 6,021,460 |
Long-term debt less current maturities (Note 3) | 7,344,205 | 6,913,735 |
CURRENT LIABILITIES | ||
Short-term borrowings (Note 3) | 466,820 | 292,000 |
Accounts payable | 475,362 | 393,083 |
Accrued taxes | 285,689 | 168,645 |
Accrued interest | 61,892 | 57,332 |
Common dividends payable | 0 | 95,988 |
Customer deposits | 41,731 | 42,293 |
Liabilities from risk management activities (Note 7) | 7,240 | 4,373 |
Liabilities for asset retirements | 6,307 | 4,473 |
Operating lease liabilities | 128,618 | 100,443 |
Regulatory liabilities (Note 4) | 420,357 | 296,271 |
Other current liabilities | 139,260 | 151,968 |
Total current liabilities | 2,060,904 | 1,756,869 |
DEFERRED CREDITS AND OTHER | ||
Deferred income taxes | 2,418,914 | 2,311,862 |
Regulatory liabilities (Note 4) | 2,108,289 | 2,499,213 |
Liabilities for asset retirements | 785,540 | 762,909 |
Liabilities for pension benefits (Note 5) | 148,403 | 152,865 |
Customer advances | 362,140 | 257,151 |
Coal mine reclamation | 178,095 | 174,616 |
Deferred investment tax credit | 179,418 | 186,570 |
Unrecognized tax benefits | 4,717 | 4,657 |
Operating lease liabilities | 642,573 | 728,401 |
Other | 249,287 | 232,914 |
Total deferred credits and other | 7,077,376 | 7,311,158 |
COMMITMENTS AND CONTINGENCIES (Note 8) | ||
TOTAL LIABILITIES AND EQUITY | 22,844,598 | 22,003,222 |
APS | ||
PROPERTY, PLANT AND EQUIPMENT | ||
Plant in service and held for future use | 22,272,007 | 21,685,200 |
Accumulated depreciation and amortization | (7,795,293) | (7,501,317) |
Net | 14,476,714 | 14,183,883 |
Construction work in progress | 1,660,618 | 1,327,721 |
Palo Verde sale leaseback, net of accumulated depreciation (Note 6) | 91,264 | 94,166 |
Intangible assets, net of accumulated amortization | 246,535 | 273,537 |
Nuclear fuel, net of accumulated amortization | 115,227 | 106,039 |
Total property, plant and equipment | 16,590,358 | 15,985,346 |
INVESTMENTS AND OTHER ASSETS | ||
Nuclear decommissioning trusts (Notes 11 and 12) | 1,025,913 | 1,294,757 |
Other special use funds (Notes 11 and 12) | 359,394 | 358,410 |
Assets from risk management activities (Note 7) | 86,864 | 46,908 |
Other assets | 42,742 | 42,440 |
Total investments and other assets | 1,514,913 | 1,742,515 |
CURRENT ASSETS | ||
Cash and cash equivalents | 5,302 | 9,374 |
Customer and other receivables | 602,084 | 390,533 |
Accrued unbilled revenues | 221,023 | 133,980 |
Allowance for doubtful accounts (Note 2) | (23,999) | (25,354) |
Materials and supplies (at average cost) | 386,703 | 349,135 |
Fossil fuel (at average cost) | 53,087 | 18,032 |
Income tax receivable | 0 | 10,756 |
Assets from risk management activities (Note 7) | 164,794 | 63,481 |
Deferred fuel and purchased power regulatory asset (Note 4) | 445,025 | 388,148 |
Other regulatory assets (Note 4) | 94,676 | 130,376 |
Other current assets | 53,645 | 57,729 |
Total current assets | 2,002,340 | 1,526,190 |
DEFERRED DEBITS | ||
Regulatory assets (Note 4) | 1,173,415 | 1,192,987 |
Operating lease right-of-use assets | 801,288 | 888,207 |
Assets for pension and other postretirement benefits (Note 5) | 586,482 | 537,092 |
Other | 42,708 | 37,319 |
Total deferred debits | 2,603,893 | 2,655,605 |
TOTAL ASSETS | 22,711,504 | 21,909,656 |
EQUITY | ||
Common stock | 178,162 | 178,162 |
Additional paid-in capital | 3,171,696 | 3,021,696 |
Retained earnings | 3,804,098 | 3,470,235 |
Accumulated other comprehensive loss (Note 13) | (35,312) | (34,880) |
Total shareholders’ equity | 7,118,644 | 6,635,213 |
Noncontrolling interests (Note 6) | 117,550 | 115,260 |
Total equity | 7,236,194 | 6,750,473 |
Long-term debt less current maturities (Note 3) | 6,396,740 | 6,266,693 |
Total capitalization | 13,632,934 | 13,017,166 |
CURRENT LIABILITIES | ||
Short-term borrowings (Note 3) | 443,000 | 278,700 |
Accounts payable | 467,638 | 389,365 |
Accrued taxes | 322,779 | 152,012 |
Accrued interest | 59,531 | 56,622 |
Common dividends payable | 0 | 96,000 |
Customer deposits | 41,731 | 42,293 |
Liabilities from risk management activities (Note 7) | 7,240 | 4,373 |
Liabilities for asset retirements | 6,307 | 4,473 |
Operating lease liabilities | 128,191 | 100,199 |
Regulatory liabilities (Note 4) | 420,357 | 296,271 |
Other current liabilities | 142,905 | 145,286 |
Total current liabilities | 2,039,679 | 1,565,594 |
DEFERRED CREDITS AND OTHER | ||
Deferred income taxes | 2,385,751 | 2,331,701 |
Regulatory liabilities (Note 4) | 2,108,289 | 2,499,213 |
Liabilities for asset retirements | 785,540 | 762,909 |
Liabilities for pension benefits (Note 5) | 135,466 | 138,328 |
Customer advances | 362,140 | 257,151 |
Coal mine reclamation | 178,095 | 174,616 |
Deferred investment tax credit | 179,418 | 186,570 |
Unrecognized tax benefits | 37,134 | 37,423 |
Operating lease liabilities | 637,446 | 726,572 |
Other | 229,612 | 212,413 |
Total deferred credits and other | 7,038,891 | 7,326,896 |
COMMITMENTS AND CONTINGENCIES (Note 8) | ||
TOTAL LIABILITIES AND EQUITY | $ 22,711,504 | $ 21,909,656 |
ARIZONA PUBLIC SERVICE COMPANY - CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
|
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 520,512 | $ 604,054 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization including nuclear fuel | 612,958 | 532,341 |
Deferred fuel and purchased power | (228,483) | (224,541) |
Deferred fuel and purchased power amortization | 171,607 | 25,195 |
Allowance for equity funds used during construction | (30,966) | (30,549) |
Deferred income taxes | 43,440 | 104,128 |
Deferred investment tax credit | (7,152) | (8,333) |
Changes in current assets and liabilities: | ||
Customer and other receivables | (213,181) | (110,584) |
Accrued unbilled revenues | (87,043) | (58,334) |
Materials, supplies and fossil fuel | (72,623) | (46,744) |
Income tax receivable | 7,514 | 6,792 |
Other current assets | 54,272 | (19,129) |
Accounts payable | 137,433 | 19,005 |
Accrued taxes | 117,044 | 93,953 |
Other current liabilities | 12,575 | (26,491) |
Change in margin and collateral accounts - assets | 8,832 | (77) |
Change in other long-term assets | 208,599 | (284,291) |
Change in operating lease assets | 98,081 | 106,802 |
Change in other long-term liabilities | (235,986) | 62,012 |
Change in operating lease liabilities | (98,343) | (101,404) |
Net cash provided by operating activities | 1,031,914 | 660,513 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Capital expenditures | (1,276,861) | (1,006,431) |
Contributions in aid of construction | 103,366 | 67,278 |
Allowance for borrowed funds used during construction | (18,381) | (15,466) |
Proceeds from nuclear decommissioning trusts sales and other special use funds | 911,003 | 797,179 |
Investment in nuclear decommissioning trusts and other special use funds | (929,965) | (815,193) |
Other | (11,057) | 10,321 |
Net cash used for investing activities | (1,221,895) | (962,312) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Issuance of long-term debt | 455,628 | 596,999 |
Short-term borrowing and (repayments) - net | 174,820 | (25,000) |
Dividends paid on common stock | (282,838) | (275,329) |
Distributions to noncontrolling interests | (10,628) | (10,628) |
Net cash provided by financing activities | 187,044 | 267,519 |
NET DECREASE IN CASH AND CASH EQUIVALENTS | (2,937) | (34,280) |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 9,969 | 59,968 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 7,032 | 25,688 |
APS | ||
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | 538,781 | 611,616 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization including nuclear fuel | 612,894 | 532,260 |
Deferred fuel and purchased power | (228,483) | (224,541) |
Deferred fuel and purchased power amortization | 171,607 | 25,195 |
Allowance for equity funds used during construction | (30,966) | (30,549) |
Deferred income taxes | (9,257) | 81,255 |
Deferred investment tax credit | (7,152) | (8,333) |
Changes in current assets and liabilities: | ||
Customer and other receivables | (213,458) | (111,220) |
Accrued unbilled revenues | (87,043) | (58,334) |
Materials, supplies and fossil fuel | (72,623) | (46,744) |
Income tax receivable | 10,756 | 0 |
Other current assets | 39,479 | (20,678) |
Accounts payable | 133,357 | 19,776 |
Accrued taxes | 170,767 | 121,917 |
Other current liabilities | 21,134 | (35,386) |
Change in margin and collateral accounts - assets | 8,832 | (77) |
Change in other long-term assets | 219,472 | (272,832) |
Change in operating lease assets | 97,858 | 106,723 |
Change in other long-term liabilities | (237,486) | 61,973 |
Change in operating lease liabilities | (98,113) | (101,324) |
Net cash provided by operating activities | 1,040,356 | 650,697 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Capital expenditures | (1,254,693) | (1,006,431) |
Contributions in aid of construction | 103,366 | 67,278 |
Allowance for borrowed funds used during construction | (18,381) | (15,466) |
Proceeds from nuclear decommissioning trusts sales and other special use funds | 911,003 | 797,179 |
Investment in nuclear decommissioning trusts and other special use funds | (929,965) | (815,193) |
Other | 570 | 3,053 |
Net cash used for investing activities | (1,188,100) | (969,580) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Issuance of long-term debt | 128,000 | 446,999 |
Short-term borrowing and (repayments) - net | 164,300 | 125,000 |
Equity infusion | 150,000 | 0 |
Dividends paid on common stock | (288,000) | (280,500) |
Distributions to noncontrolling interests | (10,628) | (10,628) |
Net cash provided by financing activities | 143,672 | 280,871 |
NET DECREASE IN CASH AND CASH EQUIVALENTS | (4,072) | (38,012) |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 9,374 | 57,310 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ 5,302 | $ 19,298 |
ARIZONA PUBLIC SERVICE COMPANY - CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) $ in Thousands |
Total |
Common Stock |
Retained Earnings |
Accumulated Other Comprehensive Income (Loss) |
Noncontrolling Interests |
APS |
APS
Common Stock
|
APS
Additional Paid-In Capital
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APS
Retained Earnings
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APS
Accumulated Other Comprehensive Income (Loss)
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APS
Noncontrolling Interests
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Beginning balance (in shares) at Dec. 31, 2020 | 112,760,051 | 71,264,947 | |||||||||
Beginning balance at Dec. 31, 2020 | $ 5,752,793 | $ 2,677,482 | $ 3,025,106 | $ (62,796) | $ 119,290 | $ 6,345,185 | $ 178,162 | $ 2,871,696 | $ 3,216,955 | $ (40,918) | $ 119,290 |
Increase (Decrease) in Shareholders' Equity | |||||||||||
Net Income | 604,054 | 591,136 | 12,918 | 611,616 | 598,698 | 12,918 | |||||
Other comprehensive income (loss) | 3,130 | 3,130 | 2,086 | 2,086 | |||||||
Dividends on common stock | (187,165) | (187,165) | (187,000) | (187,000) | |||||||
Capital activities by noncontrolling interests | (10,628) | (10,628) | (10,628) | (10,628) | |||||||
Other | 0 | (1) | 1 | 0 | (1) | 1 | |||||
Ending balance (in shares) at Sep. 30, 2021 | 112,852,121 | 71,264,947 | |||||||||
Ending balance at Sep. 30, 2021 | 6,186,464 | $ 2,698,552 | 3,429,076 | (59,666) | 121,581 | 6,761,259 | $ 178,162 | 2,871,696 | 3,628,652 | (38,832) | 121,581 |
Beginning balance (in shares) at Jun. 30, 2021 | 112,819,703 | 71,264,947 | |||||||||
Beginning balance at Jun. 30, 2021 | 5,834,899 | $ 2,692,015 | 3,089,266 | (60,578) | 117,275 | 6,412,290 | $ 178,162 | 2,871,696 | 3,284,989 | (39,832) | 117,275 |
Increase (Decrease) in Shareholders' Equity | |||||||||||
Net Income | 344,104 | 339,798 | 4,306 | 347,969 | 343,663 | 4,306 | |||||
Other comprehensive income (loss) | 912 | 912 | 1,000 | 1,000 | |||||||
Dividends on common stock | 11 | 11 | |||||||||
Other | 1 | 1 | |||||||||
Ending balance (in shares) at Sep. 30, 2021 | 112,852,121 | 71,264,947 | |||||||||
Ending balance at Sep. 30, 2021 | $ 6,186,464 | $ 2,698,552 | 3,429,076 | (59,666) | 121,581 | 6,761,259 | $ 178,162 | 2,871,696 | 3,628,652 | (38,832) | 121,581 |
Beginning balance (in shares) at Dec. 31, 2021 | 113,014,528 | 113,014,528 | 71,264,947 | ||||||||
Beginning balance at Dec. 31, 2021 | $ 6,021,460 | $ 2,702,743 | 3,264,719 | (54,861) | 115,260 | 6,750,473 | $ 178,162 | 3,021,696 | 3,470,235 | (34,880) | 115,260 |
Increase (Decrease) in Shareholders' Equity | |||||||||||
Equity infusion from Pinnacle West | 150,000 | 150,000 | |||||||||
Net Income | 520,512 | 507,594 | 12,918 | 538,781 | 525,863 | 12,918 | |||||
Other comprehensive income (loss) | 1,561 | 1,561 | (432) | (432) | |||||||
Dividends on common stock | (192,213) | (192,213) | (192,000) | (192,000) | |||||||
Capital activities by noncontrolling interests | (10,628) | (10,628) | (10,628) | (10,628) | |||||||
Other | $ 2 | 2 | |||||||||
Ending balance (in shares) at Sep. 30, 2022 | 113,108,728 | 113,108,728 | 71,264,947 | ||||||||
Ending balance at Sep. 30, 2022 | $ 6,362,113 | $ 2,720,364 | 3,580,102 | (53,300) | 117,550 | 7,236,194 | $ 178,162 | 3,171,696 | 3,804,098 | (35,312) | 117,550 |
Beginning balance (in shares) at Jun. 30, 2022 | 113,078,049 | 71,264,947 | |||||||||
Beginning balance at Jun. 30, 2022 | 6,021,523 | $ 2,712,297 | 3,253,772 | (54,814) | 113,244 | 6,899,284 | $ 178,162 | 3,171,696 | 3,472,403 | (36,221) | 113,244 |
Increase (Decrease) in Shareholders' Equity | |||||||||||
Net Income | 330,632 | 326,326 | 4,306 | 335,999 | 331,693 | 4,306 | |||||
Other comprehensive income (loss) | 1,514 | 1,514 | 909 | 909 | |||||||
Other | $ 4 | 4 | 2 | 2 | |||||||
Ending balance (in shares) at Sep. 30, 2022 | 113,108,728 | 113,108,728 | 71,264,947 | ||||||||
Ending balance at Sep. 30, 2022 | $ 6,362,113 | $ 2,720,364 | $ 3,580,102 | $ (53,300) | $ 117,550 | $ 7,236,194 | $ 178,162 | $ 3,171,696 | $ 3,804,098 | $ (35,312) | $ 117,550 |
Consolidation and Nature of Operations |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidation and Nature of Operations | Consolidation and Nature of Operations The unaudited condensed consolidated financial statements include the accounts of Pinnacle West and our subsidiaries: APS, 4C Acquisition, LLC (“4CA”), Bright Canyon Energy Corporation (“BCE”) and El Dorado Investment Company (“El Dorado”). See Note 8 for more information on 4CA matters. Intercompany accounts and transactions between the consolidated companies have been eliminated. The unaudited condensed consolidated financial statements for APS include the accounts of APS and the Palo Verde Generating Station (“Palo Verde”) sale leaseback variable interest entities (“VIEs”). See Note 6 for further discussion. Our accounting records are maintained in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Amounts reported in our interim Condensed Consolidated Statements of Income are not necessarily indicative of amounts expected for the respective annual periods, due to the effects of seasonal temperature variations on energy consumption, timing of maintenance on electric generating units (“EGU”), and other factors. Our condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments except as otherwise disclosed in the notes) that we believe are necessary for the fair presentation of our financial position, results of operations, and cash flows for the periods presented. Certain information and footnote disclosures normally included in financial statements prepared in conformity with GAAP have been condensed or omitted pursuant to such regulations, although we believe that the disclosures provided are adequate to make the interim information presented not misleading. The accompanying condensed consolidated financial statements and these notes should be read in conjunction with the audited consolidated financial statements and notes included in our 2021 Form 10-K. On June 30, 2020, the United States Federal Energy Regulatory Commission (“FERC”) issued an order granting a waiver request related to the existing Allowance for Funds Used During Construction (“AFUDC”) rate calculation beginning March 1, 2020, through February 28, 2021. On February 23, 2021, this waiver was extended until September 30, 2021. On September 21, 2021, it was further extended until March 31, 2022. The order provided a simplified approach that companies may elect to implement in order to minimize the significant distorted effect on the AFUDC formula resulting from increased short-term debt financing during the COVID-19 pandemic. APS adopted this simplified approach to computing the AFUDC composite rate by using a simple average of the actual historical short-term debt balances for 2019, instead of current period short-term debt balances, and left all other aspects of the AFUDC formula composite rate calculation unchanged. This change impacted the AFUDC composite rate in 2021 and for the three-month period ended March 31, 2022. Furthermore, the change in the composite rate calculation did not impact our accounting treatment for these costs. The change did not have a material impact on our financial statements. See Note 1 in our 2021 Form 10-K for information on the accounting treatment for AFUDC. Supplemental Cash Flow Information The following table summarizes supplemental Pinnacle West cash flow information (dollars in thousands):
The following table summarizes supplemental APS cash flow information (dollars in thousands):
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Revenue |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | Revenue Sources of Revenue The following table provides detail of Pinnacle West’s consolidated revenue disaggregated by revenue sources (dollars in thousands):
Retail Electric Revenue. Pinnacle West’s retail electric revenue is generated by wholly owned, regulated subsidiary APS’s sale of electricity to our regulated customers within the authorized service territory at tariff rates approved by the ACC and based on customer usage. Revenues related to the sale of electricity are generally recognized when service is rendered, or electricity is delivered to customers. The billing of electricity sales to individual customers is based on the reading of their meters. We obtain customers’ meter data on a systematic basis throughout the month, and generally bill customers within a month from when service was provided. Customers are generally required to pay for services within 21 days of when the services are billed. See “Allowance for Doubtful Accounts” discussion below for additional details regarding payment terms. Wholesale Energy Sales and Transmission Services for Others. Revenues from wholesale energy sales and transmission services for others represent energy and transmission sales to wholesale customers. These activities primarily consist of managing fuel and purchased power risks in connection with the cost of serving our retail customers’ energy requirements. We may also sell into the wholesale markets generation that is not needed for APS’s retail load. Our wholesale activities and tariff rates are regulated by FERC. In the electricity business, some contracts to purchase energy are settled by netting against other contracts to sell electricity. This is referred to as a book-out, and usually occurs in contracts that have the same terms (product type, quantities, and delivery points) and for which power does not flow. We net these book-outs, which reduces both wholesale revenues and fuel and purchased power costs. Revenue Activities Our revenues primarily consist of activities that are classified as revenues from contracts with customers. We derive our revenues from contracts with customers primarily from sales of electricity to our regulated retail customers. Revenues from contracts with customers also include wholesale and transmission activities. Our revenues from contracts with customers for the three and nine months ended September 30, 2022 were $1,465 million and $3,299 million, respectively, and for the three and nine months ended September 30, 2021 were $1,304 million and $2,967 million, respectively. We have certain revenues that do not meet the specific accounting criteria to be classified as revenues from contracts with customers. For the three and nine months ended September 30, 2022, our revenues that do not qualify as revenue from contracts with customers were $5 million and $16 million, respectively, and for the three and nine months ended September 30, 2021 were $4 million and $38 million, respectively. This amount includes revenues related to certain regulatory cost recovery mechanisms that are considered alternative revenue programs. We recognize revenue associated with alternative revenue programs when specific events permitting recognition are completed. Certain amounts associated with alternative revenue programs will subsequently be billed to customers; however, we do not reclassify billed amounts into revenue from contracts with customers. See Note 4 for a discussion of our regulatory cost recovery mechanisms. Contract Assets and Liabilities from Contracts with Customers There were no material contract assets, contract liabilities, or deferred contract costs recorded on the Condensed Consolidated Balance Sheets as of September 30, 2022, or December 31, 2021. Allowance for Doubtful Accounts The allowance for doubtful accounts represents our best estimate of accounts receivable and accrued unbilled revenues that will ultimately be uncollectible due to credit loss risk. The allowance includes a write-off component that is calculated by applying an estimated write-off factor to retail electric revenues. The write-off factor used to estimate uncollectible accounts is based upon consideration of historical collections experience, the current and forecasted economic environment, changes to our collection policies, and management’s best estimate of future collections success. We continue to monitor the impacts of our disconnection policies, payment arrangements, among other considerations impacting our estimated write-off factor, and allowance for doubtful accounts. The following table provides a rollforward of Pinnacle West’s allowance for doubtful accounts (dollars in thousands):
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Long-Term Debt and Liquidity Matters |
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Long-Term Debt and Liquidity Matters | Long-Term Debt and Liquidity Matters Pinnacle West and APS maintain committed revolving credit facilities in order to enhance liquidity and provide credit support for their commercial paper programs, to refinance indebtedness, and for other general corporate purposes. Pinnacle West On December 21, 2021, Pinnacle West entered into a $450 million term loan facility that matures December 20, 2024. On December 21, 2021, $150 million of the proceeds were received and recognized as long-term debt on the Condensed Consolidated Balance Sheets. On January 6, 2022, the remaining $300 million of proceeds were received and recognized on that date as long-term debt on the Condensed Consolidated Balance Sheets. The proceeds were used for general corporate purposes. On December 23, 2020, Pinnacle West entered into a $150 million term loan facility that would have matured June 30, 2022. The proceeds were received on January 4, 2021 and used for general corporate purposes. We recognized the term loan facility as long-term debt upon settlement on January 4, 2021. On January 6, 2022, Pinnacle West repaid this loan facility early. At September 30, 2022, Pinnacle West had a $200 million revolving credit facility that matures on May 28, 2026. Pinnacle West has the option to increase the amount of the facility up to a maximum of $300 million upon the satisfaction of certain conditions and with the consent of the lenders. Interest rates are based on Pinnacle West’s senior unsecured debt credit ratings and the agreement includes a sustainability-linked pricing metric which permits an interest rate reduction or increase by meeting or missing targets related to specific environmental and employee health and safety sustainability objectives. The facility is available to support Pinnacle West’s general corporate purposes, including support for Pinnacle West’s $200 million commercial paper program, for bank borrowings or for issuances of letters of credit. At September 30, 2022, Pinnacle West had no outstanding borrowings under its revolving credit facility, no letters of credit outstanding under the credit facility, and $24 million of outstanding commercial paper borrowings. APS At September 30, 2022, APS had two $500 million revolving credit facilities that total $1 billion and that mature on May 28, 2026. APS may increase the amount of each facility up to a maximum of $700 million, for a total of $1.4 billion, upon the satisfaction of certain conditions and with the consent of the lenders. Interest rates are based on APS’s senior unsecured debt credit ratings and the agreements include a sustainability-linked pricing metric which permits an interest rate reduction or increase by meeting or missing targets related to specific environmental and employee health and safety sustainability objectives. These facilities are available to support APS’s general corporate purposes, including support for APS’s $750 million commercial paper program, for bank borrowings or for issuances of letters of credit. At September 30, 2022, APS had no outstanding borrowings under its revolving credit facilities, no letters of credit outstanding under the credit facilities and $443 million of outstanding commercial paper borrowings. On December 17, 2020, the ACC issued a financing order in which, subject to specified parameters and procedures, it approved APS’s short-term debt authorization equal to the sum of (i) 7% of APS’s capitalization, and (ii) $500 million (which is required to be used for costs relating to purchases of natural gas and power) and a long-term debt authorization of $7.5 billion. On April 6, 2022, APS filed an application with the ACC to increase the long-term debt limit under the terms required by APS from $7.5 billion to $8.0 billion (subject to appropriate regulatory treatment of PPA lease agreements) and to continue its authorization of short-term debt granted in the 2020 financing order. On October 31, 2022, the Arizona Corporation Commission staff (“ACC Staff”) filed a report agreeing with APS's proposal to exclude financing lease PPAs from the definition of long-term debt and adopting APS’s primary proposal to increase APS’s long-term debt limit to $8 billion. This application is pending review by the ACC’s Hearing Division and a final decision by the full Commission. APS cannot predict the outcome of this matter. On January 6, 2022, Pinnacle West contributed $150 million into APS in the form of an equity infusion. APS used this contribution to repay short-term indebtedness. On September 15, 2022, APS remarketed $128 million of the Maricopa County, Arizona Pollution Control Corporation Revenue Refunding Bonds, 2009 Series B, C, D and E, due May 1, 2029 (the “Bonds”). The Bonds were originally issued on June 26, 2009, and prior to this remarketing were held as treasury bonds. Each series of the Bonds has a principal amount of $32 million. All series of the Bonds have been remarketed and issued in weekly variable interest rate modes and are classified as long-term debt on our Condensed Consolidated Balance Sheets. See “Financial Assurances” in Note 8 for a discussion of other outstanding letters of credit. BCE On February 11, 2022, a special purpose subsidiary of BCE entered into a credit agreement to finance capital expenditures and related costs for a 31 MW solar and battery storage project in Los Alamitos, California (“Los Alamitos”) that is under development by the subsidiary. The credit agreement consists of an approximately $33 million equity bridge loan facility, an approximately $38 million non-recourse construction to term loan facility, and an approximately $5 million letter of credit facility. In connection with the credit agreement, Pinnacle West has issued a guarantee of up to $42 million primarily relating to the equity bridge loan. As of September 30, 2022, $27.6 million has been drawn from the equity bridge loan and there is no outstanding balance for the non-recourse construction to term loan and $2.5 million letters of credit outstanding under the credit facility. On October 19, 2022, BCE executed an interest rate swap to hedge the variable interest rate exposure of this credit facility. See Note 7. Debt Fair Value Our long-term debt fair value estimates are classified within Level 2 of the fair value hierarchy. The following table presents the estimated fair value of our long-term debt, including current maturities (dollars in thousands):
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Regulatory Matters |
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Regulatory Matters | Regulatory Matters 2022 Retail Rate Case APS filed an application with the ACC on October 28, 2022 (the “2022 Rate Case”) seeking an increase in annual retail base rates on the date rates become effective (“Day 1”) of a net $460 million. This Day 1 net impact represents a total base revenue deficiency of $772 million offset by proposed adjustor transfers of cost recovery to annual retail rates and adjustor mechanism modifications. The average annual customer bill impact of APS’s request on Day 1 is an increase of 13.6%. The principal provisions of APS’s application are: •A test year comprised of twelve months ended June 30, 2022, adjusted as described below; •An original cost rate base of $10.5 billion, which approximates the ACC-jurisdictional portion of the book value of utility assets, net of accumulated depreciation and other credits; •The following proposed capital structure and costs of capital:
•A 1% return on the increment of fair value rate base above APS’s original cost rate base, as provided for by Arizona law; •A rate of $0.038321 per kWh for the portion of APS’s retail base rates attributable to fuel and purchased power costs (“Base Fuel Rate”); •Modification of its adjustment mechanisms including: ▪eliminate the Environmental Improvement Surcharge and collect costs through base rates, ▪eliminate the Lost Fixed Cost Recovery mechanism and collect costs through base rates and the Demand Side Management Adjustment Charge (“DSMAC”), ▪maintain as inactive the Tax Expense Adjustor Mechanism, ▪maintain the Transmission Cost Adjustment mechanism, ▪modify the performance incentive in the DSMAC, and ▪modify the Renewable Energy Adjustment Charge to include recovery of capital carrying costs of APS owned renewable and storage resources; •Changes to its limited-income program, including a second tier to provide an additional discount for customers with greater need; and •Twelve months of post-Test Year plant investments to reflect used and useful projects that will be placed into service prior to July 1, 2023. APS requested that the increase become effective December 1, 2023. APS cannot predict the outcome of its request. 2019 Retail Rate Case APS filed an application with the ACC on October 31, 2019 (the “2019 Rate Case”) seeking an increase in annual retail base rates of $69 million. This amount includes recovery of the deferral and rate base effects of the Four Corners Power Plant (“Four Corners”) selective catalytic reduction (“SCR”) project that was the subject of a separate proceeding. See “Four Corners SCR Cost Recovery” below. It also reflects a net credit to base rates of approximately $115 million primarily due to the prospective inclusion of rate refunds currently provided through the Tax Expense Adjustment Mechanism (“TEAM”). The proposed total annual revenue increase in APS’s application is $184 million. The average annual customer bill impact of APS’s request is an increase of 5.6% (the average annual bill impact for a typical APS residential customer is 5.4%). The principal provisions of APS’s application were: •a test year comprised of 12 months ended June 30, 2019, adjusted as described below; •an original cost rate base of $8.87 billion, which approximates the ACC-jurisdictional portion of the book value of utility assets, net of accumulated depreciation and other credits; •the following proposed capital structure and costs of capital:
•a 1% return on the increment of fair value rate base above APS’s original cost rate base, as provided for by Arizona law; •a rate of $0.030168 per kWh for the Base Fuel Rate; •authorization to defer until APS’s next general rate case the increase or decrease in its Arizona property taxes attributable to tax rate changes after the date the rate application is adjudicated; •a number of proposed rate and program changes for residential customers, including: ▪a super off-peak period during the winter months for APS’s time-of-use with demand rates; ▪additional $1.25 million in funding for APS’s limited-income crisis bill program; and ▪a flat bill/subscription rate pilot program; •proposed rate design changes for commercial customers, including an experimental program designed to provide access to market pricing for up to 200 MW of medium and large commercial customers; •recovery of the deferral and rate base effects of the construction and operating costs of the Ocotillo modernization project (see discussion below of the 2017 Settlement Agreement); and •continued recovery of the remaining investment and other costs related to the retirement and closure of the Navajo Generating Station (the “Navajo Plant”) (see “Navajo Plant” below). On October 2, 2020, the ACC Staff, the Residential Utility Consumer Office (“RUCO”) and other intervenors filed their initial written testimony with the ACC. The ACC Staff recommended, among other things, (i) an $89.7 million revenue increase, (ii) an average annual customer bill increase of 2.7%, (iii) a return on equity of 9.4%, (iv) a 0.3% or, as an alternative, a 0% return on the increment of fair value rate base greater than original cost, (v) the recovery of the deferral and rate base effects of the construction and operating costs of the Four Corners SCR project and (vi) the recovery of the rate base effects of the construction and ongoing consideration of the deferral of the Ocotillo modernization project. RUCO recommended, among other things, (i) a $20.8 million revenue decrease, (ii) an average annual customer bill decrease of 0.63%, (iii) a return on equity of 8.74%, (iv) a 0% return on the increment of fair value rate base, (v) the nonrecovery of the deferral and rate base effects of the construction and operating costs of the Four Corners SCR project pending further consideration, and (vi) the recovery of the deferral and rate base effects of the construction and operating costs of the Ocotillo modernization project. The filed ACC Staff and intervenor testimony include additional recommendations, some of which materially differ from APS’s filed application. On November 6, 2020, APS filed its rebuttal testimony and the principal provisions which differ from its initial application include, among other things, (i) a $169 million revenue increase, (ii) average annual customer bill increase of 5.14%, (iii) return on equity of 10%, (iv) return on the increment of fair value rate base of 0.8%, (v) new cost recovery adjustor mechanism, the Advanced Energy Mechanism (“AEM”), to enable more timely recovery of clean investments as APS pursues its clean energy commitment, (vi) recognition that securitization is a potentially useful financing tool to recover the remaining book value of retiring assets and effectuate a transition to a cleaner energy future that APS intends to pursue, provided legislative hurdles are addressed, and (vii) a Coal Community Transition (“CCT”) plan related to the closure or future closure of coal-fired generation facilities, of which $25 million would be funds that are not recoverable through rates with a proposal that the remainder be funded by customers over 10 years. The CCT plan includes the following proposed components: (i) $100 million that will be paid over 10 years to the Navajo Nation for a sustainable transition to a post-coal economy, which would be funded by customers, (ii) $1.25 million that will be paid over five years to the Navajo Nation to fund an economic development organization, which would be funds not recoverable through rates, (iii) $10 million to facilitate electrification projects within the Navajo Nation, which would be funded equally by funds not recoverable through rates and by customers, (iv) $2.5 million per year in transmission revenue sharing to be paid to the Navajo Nation beginning after the closure of the Four Corners through 2038, which would be funds not recoverable through rates, (v) $12 million that will be paid over five years to the Navajo County Communities surrounding Cholla Power Plant, which would primarily be funded by customers, and (vi) $3.7 million that will be paid over five years to the Hopi Tribe related to APS’s ownership interests in the Navajo Plant, which would primarily be funded by customers. The commitment of funds that would not be recoverable through rates of $25 million were recognized in our December 31, 2020 financials. In 2021, APS committed an additional $900,000 to be paid to the Hopi Tribe related to APS’s ownership interests in the Navajo Plant, and this amount was recognized in its December 31, 2021 financials. On December 4, 2020, the ACC Staff and intervenors filed surrebuttal testimony. The ACC Staff reduced its recommended rate increase to $59.8 million, or an average annual customer bill increase of 1.82%. In RUCO’s surrebuttal, the recommended revenue decrease changed to $50.1 million, or an average annual customer bill decrease of 1.52%. The hearing concluded on March 3, 2021, and the post-hearing briefing concluded on April 30, 2021. On August 2, 2021, the Administrative Law Judge issued a Recommended Opinion and Order in the 2019 Rate Case (the “2019 Rate Case ROO”) and issued corrections on September 10 and September 20, 2021. The 2019 Rate Case ROO recommended, among other things, (i) a $111 million decrease in annual revenue requirements, (ii) a return on equity of 9.16%, (iii) a 0.30% return on the increment of fair value rate base greater than original cost, with total fair value rate of return further adjusted to include a 0.03% reduction to return on equity resulting in an effective fair value rate of return of 4.95%, (iv) the nonrecovery of the deferral and rate base effects of the operating costs and construction of the Four Corners SCR project (see “Four Corners SCR Cost Recovery” below for additional information), (v) the recovery of the deferral and rate base effects of the operating costs and construction of the Ocotillo modernization project, which includes a reduction in the return on the deferral, (vi) a 15% disallowance of annual amortization of Navajo Plant regulatory asset recovery, (vii) the denial of the request to defer, until APS’s next general rate case, the increase or decrease in its Arizona property taxes attributable to tax rate changes, and (viii) a collaborative process to review and recommend revisions to APS’s adjustment mechanisms within 12 months after the date of the decision. The 2019 Rate Case ROO also recommended that the CCT plan include the following components: (i) $50 million that will be paid over 10 years to the Navajo Nation, (ii) $5 million that will be paid over five years to the Navajo County Communities surrounding Cholla Power Plant, and (iii) $1.675 million that will be paid to the Hopi Tribe related to APS’s ownership interests in the Navajo Plant. These amounts would be recoverable from APS’s customers through the Arizona Renewable Energy Standard and Tariff (“RES”) adjustment mechanism. APS filed exceptions on September 13, 2021, regarding the disallowance of the SCR cost deferrals and plant investments that was recommended in the 2019 Rate Case ROO, among other issues. On October 6, 2021 and October 27, 2021, the ACC voted on various amendments to the 2019 Rate Case ROO that would result in, among other things, (i) a return on equity of 8.70%, (ii) the recovery of the deferral and rate base effects of the operating costs and construction of the Four Corners SCR project, with the exception of $215.5 million (see “Four Corners SCR Cost Recovery” below), (iii) that the CCT plan include the following components: (a) a payment of $1 million to the Hopi Tribe within 60 days of the 2019 Rate Case decision, (b) a payment of $10 million over three years to the Navajo Nation, (c) a payment of $0.5 million to the Navajo County communities within 60 days of the 2019 Rate Case decision, (d) up to $1.25 million for electrification of homes and businesses on the Hopi reservation, and (e) up to $1.25 million for the electrification of homes and businesses on the Navajo Nation reservation. These payments and expenditures are attributable to the future closures of Four Corners and Cholla, along with the prior closure of the Navajo Plant and all ordered payments and expenditures would be recoverable through rates, and (iv) a change in the residential on-peak time-of-use period from 3 p.m. to 8 p.m. to 4 p.m. to 7 p.m. Monday through Friday, excluding holidays. The 2019 Rate Case ROO, as amended, results in a total annual revenue decrease for APS of $4.8 million, excluding temporary CCT payments and expenditures. On November 2, 2021, the ACC approved the 2019 Rate Case ROO, as amended. On November 24, 2021, APS filed an application for rehearing of the 2019 Rate Case with the ACC and the application was deemed denied on December 15, 2021, as the ACC did not act upon it. On December 17, 2021, APS filed its Notice of Direct Appeal at the Arizona Court of Appeals and a Petition for Special Action with the Arizona Supreme Court, requesting review of the disallowance of $215 million of Four Corners SCR plant investments and deferrals (see “Four Corners SCR Cost Recovery” below for additional information) and the 20 basis point penalty reduction to the return on equity. On February 8, 2022, the Arizona Supreme Court declined to accept jurisdiction on APS’s Petition for Special Action. The appeal at the Arizona Court of Appeals is proceeding in the normal course, and oral arguments have been set for November 30, 2022. APS cannot predict the outcome of this proceeding. Consistent with the 2019 Rate Case decision, APS implemented the new rates effective as of December 1, 2021. On December 3, 2021, ACC Staff notified the ACC of a discrepancy between the written decision, which approved the change in time-of-use on-peak hours to 4 p.m. to 7 p.m. but did not explicitly approve the 10 months contemplated in APS’s verbal testimony to implement the new time-of-use hours. On December 16, 2021, the ACC ordered APS to complete the implementation of the time-of-use peak period by April 1, 2022. On January 12, 2022, the ACC voted to extend the deadline until September 1, 2022, to complete the implementation of the new on-peak hours for residential customers. In addition, the ACC ordered extensive compliance and reporting obligations and will be continuing to explore whether penalties or rebates would be owed to certain customers. APS completed the implementation of the new on-peak hours for residential customers before the September 1, 2022 deadline. APS cannot predict the outcome of this matter. Additionally, consistent with the 2019 Rate Case decision, as of April 2022, APS has completed the following payments that will be recoverable through rates related to the CCT: (i) $3.33 million to the Navajo Nation; (ii) $500,000 to the Navajo County communities; and (iii) $1 million to the Hopi Tribe. Consistent with APS’s commitment to the impacted communities, APS has also completed the following payments: (i) $500,000 to the Navajo Nation for CCT; (ii) $1.1 million to the Navajo County Communities for CCT and economic development; and (iii) $1.25 million to the Hopi Tribe for CCT and economic development. The ACC has also authorized $1.25 million to be recovered through rates for electrification of homes and businesses on both the Navajo Nation and Hopi reservation. Expenditure of the recoverable funds for electrification of homes and businesses on the Navajo Nation and the Hopi reservations is contingent upon completion of a census of the unelectrified homes and businesses in each that are also within APS service territory. Matter of Impact of the Closures of Fossil-Based Generation Plan on Impacted Communities On September 28, 2022, ACC Staff filed their staff report in the Matter of Impact of the Closures of Fossil-Based Generation Plan on Impacted Communities. APS and other interested parties filed comments on the report. On October 21, 2022, ACC Staff filed a revised report and proposed order. The revised report and proposed order recommend that funds for CCT shall not be collected from rate payers. APS cannot predict the outcome of this matter. Information Technology ACC Investigation On December 16, 2021, the ACC opened an investigation into various matters related to APS’s Information Technology department, including information about technology projects, costs, vendor management leadership and decision making. APS is cooperating with the investigation. APS cannot predict the outcome of this matter. 2016 Retail Rate Case Filing On June 1, 2016, APS filed an application with the ACC for an annual increase in retail base rates. On March 27, 2017, a majority of the stakeholders in the general retail rate case, including the ACC Staff, RUCO, limited income advocates and private rooftop solar organizations signed a settlement agreement (the “2017 Settlement Agreement”) and filed it with the ACC. The 2017 Settlement Agreement provides for a net retail base rate increase of $94.6 million, excluding the transfer of adjustor balances, consisting of: (1) a non-fuel, non-depreciation, base rate increase of $87.2 million per year; (2) a base rate decrease of $53.6 million attributable to reduced fuel and purchased power costs; and (3) a base rate increase of $61.0 million due to changes in depreciation schedules. Other key provisions of the 2017 Settlement Agreement include the following: •an authorized return on common equity of 10.0%; •a capital structure comprised of 44.2% debt and 55.8% common equity; •a cost deferral order for potential future recovery in APS’s next general retail rate case for the construction and operating costs APS incurs for its Ocotillo modernization project; •a cost deferral and procedure to allow APS to request rate adjustments prior to its next general retail rate case related to its share of the construction costs associated with installing SCR equipment at the Four Corners; •a deferral for future recovery (or credit to customers) of the Arizona property tax expense above or below a specified test year level caused by changes to the applicable Arizona property tax rate; •an expansion of the Power Supply Adjustor (“PSA”) to include certain environmental chemical costs and third-party energy storage costs; •a new AZ Sun II program (now known as “APS Solar Communities”) for utility-owned solar distributed generation (“DG”) with the purpose of expanding access to rooftop solar for low-and moderate-income Arizonans, recoverable through the RES, to be no less than $10 million per year in capital costs, and not more than $15 million per year in capital costs; •an increase to the per kWh cap for the environmental improvement surcharge from $0.00016 to $0.00050 and the addition of a balancing account; •rate design changes, including: ▪a change in the on-peak time-of-use period from noon to 7 p.m. to 3 p.m. to 8 p.m. Monday through Friday, excluding holidays; ▪non-grandfathered DG customers would be required to select a rate option that has time of use rates and either a new grid access charge or demand component; ▪a Resource Comparison Proxy (“RCP”) for exported energy of 12.9 cents per kWh in year one; and •an agreement by APS not to pursue any new self-build generation (with certain exceptions) having an in-service date prior to January 1, 2022 (extended to December 31, 2027, for combined-cycle generating units), unless expressly authorized by the ACC. On August 15, 2017, the ACC approved the 2017 Settlement Agreement without material modifications and on August 18, 2017, the ACC issued a final written Opinion and Order reflecting its decision in APS’s general retail rate case (the “2017 Rate Case Decision”). The new rates went into effect on August 19, 2017. See “Rate Plan Comparison Tool and Investigation” below for information regarding a review and investigation pertaining to the rate plan comparison tool offered to APS customers and other related issues. Cost Recovery Mechanisms APS has received regulatory decisions that allow for more timely recovery of certain costs outside of a general retail rate case through the following recovery mechanisms. See “2022 Retail Rate Case” above for proposed modifications of adjustment mechanisms in the 2022 rate case. Renewable Energy Standard. In 2006, the ACC approved the RES. Under the RES, electric utilities that are regulated by the ACC must supply an increasing percentage of their retail electric energy sales from eligible renewable resources, including solar, wind, biomass, biogas and geothermal technologies. In order to achieve these requirements, the ACC allows APS to include a RES surcharge as part of customer bills to recover the approved amounts for use on renewable energy projects. Each year, APS is required to file a five-year implementation plan with the ACC and seek approval for funding the upcoming year’s RES budget. In 2015, the ACC revised the RES rules to allow the ACC to consider all available information, including the number of rooftop solar arrays in a utility’s service territory, to determine compliance with the RES. On November 20, 2017, APS filed an updated 2018 RES budget to include budget adjustments for APS Solar Communities (formerly known as AZ Sun II), which was approved as part of the 2017 Rate Case Decision. APS Solar Communities is a 3-year program authorizing APS to spend $10 million to $15 million in capital costs each year to install utility-owned DG systems for low to moderate income residential homes, non-profit entities, Title I schools and rural government facilities. The 2017 Rate Case Decision provided that all operations and maintenance expenses, property taxes, marketing and advertising expenses, and the capital carrying costs for this program will be recovered through the RES. On July 1, 2019, APS filed its 2020 RES Implementation Plan and proposed a budget of approximately $86.3 million. APS’s budget request supports existing approved projects and commitments and requests a permanent waiver of the RES residential distributed energy requirement for 2020. On September 23, 2020, the ACC approved the 2020 RES Implementation Plan, including APS’s requested waiver of the residential distributed energy requirements for 2020. In addition, the ACC approved the implementation of a new pilot program that incentivizes Arizona households to install at-home battery systems. Recovery of the costs associated with the pilot will be addressed in the 2021 Demand Side Management Implementation Plan (“DSM Plan”). On July 1, 2020, APS filed its 2021 RES Implementation Plan and proposed a budget of approximately $84.7 million. APS’s budget request supports existing approved projects and commitments and requests a permanent waiver of the RES residential distributed energy requirement for 2021. In the 2021 RES Implementation Plan, APS requested $4.5 million to meet revenue requirements associated with the APS Solar Communities program to complete installations delayed as a result of the COVID-19 pandemic in 2020. On June 7, 2021, the ACC approved the 2021 RES Implementation Plan, including APS’s requested waiver of the residential distributed energy requirements for 2021. As part of the approval, the ACC approved the requested budget and authorized APS to collect $68.3 million through the Renewable Energy Adjustment Charge to support APS’s RES programs. In June 2021, the ACC adopted a clean energy rules package which would require APS to meet certain clean energy standards and technology procurement mandates, obtain approval for its action plan included in its IRP, and seek cost recovery in a rate process. Since the adopted clean energy rules differed substantially from the original Recommended Order and Opinion, supplemental rulemaking procedures were required before the rules could become effective. On January 26, 2022, the ACC reversed its prior decision and declined to send the final draft energy rules through the rulemaking process. Instead, the ACC opened a new docket to consider all-source requests for proposals (“RFP”) requirements and the IRP process. See “Energy Modernization Plan” below for more information. On July 1, 2021, APS filed its 2022 RES Implementation Plan and proposed a budget of approximately $93.1 million. APS filed an amended 2022 RES Implementation Plan on December 9, 2021, with a proposed budget of $100.5 million. This budget includes funding for programs to comply with the decision in the 2019 Rate Case, including the ACC authorizing spending $20 million to $30 million in capital costs for the APS Solar Communities program each year for a period of three years from the effective date of the 2019 Rate Case decision. APS’s budget proposal supports existing approved projects and commitments and requests a waiver of the RES residential and non-residential distributed energy requirements for 2022. On May 18, 2022, the ACC approved the 2022 RES Implementation Plan, including an amendment requiring a stakeholder working group convene to develop a community solar program for the Commission’s consideration at a future date. On September 23, 2022, APS filed a community solar proposal in compliance with the ACC order that was informed by a stakeholder working group. APS is proposing a small, pilot-scale program size of up to 140MW that would be selected through a competitive RFP. The ACC has not yet ruled on the proposal. On July 1, 2022, APS filed its 2023 RES Implementation Plan and proposed a budget of approximately $86.2 million, excluding any funding offsets. This budget contains funding for programs to comply with Commission-approved initiatives, including the 2019 Rate Case decision. APS’s budget proposal supports existing approved projects and commitments and requests a waiver of the RES residential and non-residential distributed energy requirements for 2022. The ACC has not yet ruled on the 2023 RES Implementation Plan. In response to an ACC inquiry, the ACC Staff filed a report providing the history of APS’s long-term purchased power contract of the 280 MW Concentrating Solar Power Plant. This report outlines alternative options that the ACC could pursue to address the costs of this contract, which was executed in February 2008. On July 13, 2022, the ACC approved an option to take no action at this time. Demand Side Management Adjustor Charge. The ACC Electric Energy Efficiency Standards require APS to submit a DSM Plan annually for review and approval by the ACC. Verified energy savings from APS’s resource savings projects can be counted toward compliance with the Electric Energy Efficiency Standards; however, APS is not allowed to count savings from systems savings projects toward determination of the achievement of performance incentives, nor may APS include savings from these system savings projects in the calculation of its Lost Fixed Cost Recovery (“LFCR”) mechanism. See below for discussion of the LFCR. On September 1, 2017, APS filed its 2018 DSM Plan, which proposed modifications to the DSM portfolio to better meet system and customer needs by focusing on peak demand reductions, storage, load shifting and demand response programs in addition to traditional energy savings measures. The 2018 DSM Plan sought a requested budget of $52.6 million and requested a waiver of the Electric Energy Efficiency Standard for 2018. On November 14, 2017, APS filed an amended 2018 DSM Plan, which revised the allocations between budget items to address customer participation levels but kept the overall budget at $52.6 million. On December 31, 2018, APS filed its 2019 DSM Plan, which requested a budget of $34.1 million and focused on DSM strategies to better meet system and customer needs, such as peak demand reduction, load shifting, storage and electrification strategies. On December 31, 2019, APS filed its 2020 DSM Plan, which requested a budget of $51.9 million and continued APS’s focus on DSM strategies such as peak demand reduction, load shifting, storage and electrification strategies. The 2020 DSM Plan addressed all components of the pending 2018 and 2019 DSM plans, which enabled the ACC to review the 2020 DSM Plan only. On May 15, 2020, APS filed an amended 2020 DSM Plan to provide assistance to customers experiencing economic impacts of the COVID-19 pandemic. The amended 2020 DSM Plan requested the same budget amount of $51.9 million. On September 23, 2020, the ACC approved the amended 2020 DSM Plan. On April 17, 2020, APS filed an application with the ACC requesting a COVID-19 emergency relief package to provide additional assistance to its customers. On May 5, 2020, the ACC approved APS returning $36 million that had been collected through the DSM Adjustor Charge, but not allocated for current DSM programs, directly to customers through a bill credit in June 2020. APS has refunded approximately $43 million to customers. The additional $7 million over the ACC-approved amount was the result of the kWh credit being based on historic consumption which was different than actual consumption during the refund period. The difference was recorded to the DSM balancing account and was included in the 2021 DSM Implementation Plan, as described below. On December 31, 2020, APS filed its 2021 DSM Plan, which requested a budget of $63.7 million and continued APS’s focus on DSM strategies, such as peak demand reduction, load shifting, storage and electrification strategies, as well as enhanced assistance to customers impacted economically by COVID-19. On April 6, 2021, APS filed an amended 2021 DSM Plan that proposed an additional performance incentive for customers participating in the residential energy storage pilot program approved in the 2020 RES Implementation Plan. On July 13, 2021, the ACC approved the amended 2021 DSM Plan. On December 17, 2021, APS filed its 2022 DSM Implementation Plan in accordance with an extension granted in 2021. The 2022 DSM requested a budget of $78.4 million and represents an increase of approximately $14 million in DSM spending above 2021. In March 2022, APS indicated that it intends to file its 2023 DSM Plan within 120 days after the ACC has taken action on APS’s 2022 DSM Plan. The ACC has not yet ruled on the 2022 DSM Plan. Power Supply Adjustor Mechanism and Balance. The PSA provides for the adjustment of retail rates to reflect variations primarily in retail fuel and purchased power costs. The following table shows the changes in the deferred fuel and purchased power regulatory asset for 2022 and 2021 (dollars in thousands):
On November 27, 2019, APS filed its PSA rate for the PSA year beginning February 1, 2020. That rate was $(0.000456) per kWh, which consisted of a forward component of $(0.002086) per kWh and a historical component of $0.001630 per kWh. The 2020 PSA rate is a $0.002115 per kWh decrease compared to the 2019 PSA year. These rates went into effect as filed on February 1, 2020. On November 30, 2020, APS filed its PSA rate for the PSA year beginning February 1, 2021. That rate was $0.003544 per kWh, which consisted of a forward component of $0.003434 per kWh and a historical component of $0.000110 per kWh. The 2021 PSA rate is a $0.004 per kWh increase compared to the 2020 PSA year, which is the maximum permitted under the Plan of Administration for the PSA. This left $215.9 million of fuel and purchased power costs above this annual cap which will be reflected in future year resets of the PSA. These rates were to be effective on February 1, 2021, but APS delayed the effectiveness of these rates until the first billing cycle of April 2021 due to concerns of the impact on customers during COVID-19. In March 2021, the ACC voted to implement the 2021 PSA rate on a staggered basis, with 50% of the rate increase taking effect in April 2021, and the remaining 50% taking effect in November 2021. The PSA rate implemented on April 1, 2021 was $0.001544 per kWh, which consisted of a forward component of $(0.004444) per kWh and a historical component of $0.005988 per kWh. On November 1, 2021, the remaining increase was implemented to a rate of $0.003544 per kWh and consisted of a forward component of $(0.004444) per kWh and a historical component of $0.007988 per kWh. As part of this approval, the ACC ordered ACC Staff to conduct a fuel and purchased power procurement audit to better understand the factors that contributed to the increase in fuel costs. On April 1, 2022, the ACC filed a final report of its audit findings regarding APS’s fuel and purchased power costs for the period January 2019 through January 2021. The report contains an in-depth review of APS’s fuel and purchased power contracts, its monthly fuel accounting activities, its forecasting and dispatching procedures, and its monthly PSA filings, among other fuel-related activities. The report finds that the APS’s fuel processing accounting practices, dispatching procedures, and procedures for hedging activity are reasonable and appropriate. The report includes several recommendations for the ACC’s consideration, including review of current contracts, maintenance schedules, and certain changes and improvements to the schedules in APS’s monthly PSA filings. APS cannot predict the future impacts, if any, of this audit. On November 30, 2021, APS filed its PSA rate for the PSA year beginning February 1, 2022. That rate was $0.007544 per kWh, which consisted of a forward component of $(0.004842) per kWh and a historical component of $0.012386 per kWh. The 2022 PSA rate is a $0.004 per kWh increase compared to the 2021 PSA year, which is the maximum permitted under the Plan of Administration for the PSA. These rates went into effect as filed on February 1, 2022. At the time of the compliance filing, the amount remaining over the annual cap was approximately $365 million of fuel and purchased power costs which will be reflected in future year resets of the PSA. On March 15, 2019, APS filed an application with the ACC requesting approval to recover the costs related to two energy storage power purchase tolling agreements through the PSA, and on January 12, 2021, the ACC approved this application. On October 28, 2021, APS filed an application requesting approval to recover costs related to three additional energy storage projects through the PSA once the systems are in service, and on December 16, 2021, the ACC approved this application. On February 22, 2022, APS filed an application requesting similar recovery through the PSA for a solar plus energy storage project, and on April 13, 2022, the ACC approved this application. For each of these applications that have been approved by the ACC, the ACC has not ruled on prudency. Environmental Improvement Surcharge. The EIS permits APS to recover the capital carrying costs (rate of return, depreciation and taxes) plus incremental operations and maintenance expenses associated with environmental improvements made outside of a test year to comply with environmental standards set by federal, state, tribal, or local laws and regulations. A filing is made on or before February 1 each year for qualified environmental improvements since the prior rate case test year, and the new charge becomes effective April 1 unless suspended by the ACC. There is an overall cap of $0.0005 per kWh (approximately $13 million to $14 million per year). APS’s February 1, 2022 application requested an increase in the charge to $11.4 million, or $1.1 million over the prior-period charge, and it became effective with the first billing cycle in April 2022. Transmission Rates, Transmission Cost Adjustor (“TCA”) and Other Transmission Matters. In July 2008, FERC approved a modification to APS’s Open Access Transmission Tariff to allow APS to move from fixed rates to a formula rate-setting methodology in order to more accurately reflect and recover the costs that APS incurs in providing transmission services. A large portion of the rate represents charges for transmission services to serve APS’s retail customers (“Retail Transmission Charges”). In order to recover the Retail Transmission Charges, APS was previously required to file an application with, and obtain approval from, the ACC to reflect changes in Retail Transmission Charges through the TCA. Under the terms of the settlement agreement entered into in 2012 regarding APS’s rate case (“2012 Settlement Agreement”), however, an adjustment to rates to recover the Retail Transmission Charges will be made annually each June 1 and will go into effect automatically unless suspended by the ACC. The formula rate is updated each year effective June 1 on the basis of APS’s actual cost of service, as disclosed in APS’s FERC Form 1 report for the previous fiscal year. Items to be updated include actual capital expenditures made as compared with previous projections, transmission revenue credits and other items. APS reviews the proposed formula rate filing amounts with the ACC Staff. Any items or adjustments which are not agreed to by APS and the ACC Staff can remain in dispute until settled or litigated with FERC. Settlement or litigated resolution of disputed issues could require an extended period of time and could have a significant effect on the Retail Transmission Charges because any adjustment, though applied prospectively, may be calculated to account for previously over- or under-collected amounts. The resolution of proposed adjustments can result in significant volatility in the revenues to be collected. On March 17, 2020, APS made a filing to make modifications to its annual transmission formula to provide additional transparency for excess and deficient accumulated deferred income taxes resulting from the Tax Cuts and Job Act (the “Tax Act”), as well as for future local, state, and federal statutory tax rate changes. APS amended its March 17, 2020 filing on April 28, 2020, September 29, 2021, and October 27, 2021. In January 2022, FERC approved APS’s modifications to its annual transmission formula. Effective June 1, 2020, APS’s annual wholesale transmission revenue requirement for all users of its transmission system decreased by approximately $6.1 million for the 12-month period beginning June 1, 2020, in accordance with the FERC-approved formula. Of this net amount, wholesale customer rates increased by $4.8 million and retail customer rates would have decreased by approximately $10.9 million. However, since changes in Retail Transmission Charges are reflected through the TCA after consideration of transmission recovery in retail base rates and the ACC approved balancing account, the retail revenue requirement decreased by a total of $7.4 million, resulting in reductions to both residential and commercial rates. An adjustment to APS’s retail rates to recover FERC approved transmission charges went into effect automatically on June 1, 2020. Effective June 1, 2021, APS’s annual wholesale transmission revenue requirement for all users of its transmission system increased by approximately $4 million for the 12-month period beginning June 1, 2021, in accordance with the FERC-approved formula. Of this net amount, wholesale customer rates decreased by approximately $3.2 million and retail customer rates would have increased by approximately $7.2 million. However, since changes in Retail Transmission Charges are reflected through the TCA after consideration of transmission recovery in retail base rates and the ACC approved balancing account, the retail revenue requirement decreased by $28.4 million, resulting in reductions to both residential and commercial rates. An adjustment to APS’s retail rates to recover FERC-approved transmission charges went into effect automatically on June 1, 2021. Effective June 1, 2022, APS’s annual wholesale transmission revenue requirement for all users of its transmission system decreased by approximately $33 million for the 12-month period beginning June 1, 2022, in accordance with the FERC-approved formula. Of this net amount, wholesale customer rates decreased by approximately $6.4 million and retail customer rates would have decreased by approximately $26.6 million. However, since changes in Retail Transmission Charges are reflected through the TCA after consideration of transmission recovery in retail base rates and the ACC approved balancing account, the retail revenue requirement decreased by $2.4 million, resulting in a reduction to the residential rate and increases to commercial rates. An adjustment to APS’s retail rates to recover FERC-approved transmission charges went into effect automatically on June 1, 2022. Lost Fixed Cost Recovery Mechanism. The LFCR mechanism permits APS to recover on an after-the-fact basis a portion of its fixed costs that would otherwise have been collected by APS in the kWh sales lost due to APS energy efficiency programs and to DG such as rooftop solar arrays. The fixed costs recoverable by the LFCR mechanism were 2.5 cents for both lost residential and non-residential kWh as set forth in the 2017 Settlement Agreement. The fixed costs recoverable by the LFCR mechanism are currently 2.56 cents for lost residential and 2.68 cents for lost non-residential kWh as set forth in the 2019 Rate Case decision. The LFCR adjustment has a year-over-year cap of 1% of retail revenues. Any amounts left unrecovered in a particular year because of this cap can be carried over for recovery in a future year. The kWhs lost from energy efficiency are based on a third-party evaluation of APS’s energy efficiency programs. DG sales losses are determined from the metered output from the DG units. On February 14, 2020, APS filed its 2020 annual LFCR adjustment, requesting that effective May 1, 2020, the annual LFCR recovery amount be reduced to $26.6 million (a $9.6 million decrease from previous levels). On April 14, 2020, the ACC approved the 2020 LFCR adjustment as filed, effective with the first billing cycle in May 2020. On February 15, 2021, APS filed its 2021 annual LFCR adjustment, requesting that effective May 1, 2021, the annual LFCR recovery amount be increased to $38.5 million (an $11.8 million increase from previous levels). On April 13, 2021, the ACC voted not to approve the requested $11.8 million increase to the annual LFCR adjustment; thus, the previously approved rates continued to remain intact and the $11.8 million increase was reflected in APS’s 2022 filing in accordance with the compliance requirements. As a result of the 2019 Rate Case decision, APS’s annual LFCR adjustor rate will be dependent on an annual earnings test filing, which will compare APS’s previous year’s rate of return with the related authorized rate of return. If the actual rate of return is higher than the authorized rate of return, the LFCR rate for the subsequent year is set at zero. APS determined that the changes to the LFCR mechanism, as a result of the 2019 Rate Case decision effective on December 1, 2021, did not materially impact its results of operations and financial statements for the year ended December 31, 2021. However, as a result of certain changes made to the LFCR mechanism in the 2019 Rate Case decision, the mechanism no longer qualified for alternative revenue program accounting treatment, which impacts the future timing of related revenue recognition. On February 15, 2022, APS filed its 2022 annual LFCR adjustment, requesting that effective May 1, 2022, the annual LFCR recovery amount be increased to $59.1 million (a $32.5 million increase from previous levels, which was inclusive of the $11.8 million balance from the 2021 filing). On May 9, 2022, the ACC Staff filed its revised report and proposed order regarding APS’s 2022 LFCR adjustment, concluding that APS calculated the adjustment in accordance with its Plan of Administration. On May 18, 2022, the ACC approved the 2022 LFCR adjustment, with a rate effective date of June 1, 2022. Tax Expense Adjustor Mechanism. As part of the 2017 Settlement Agreement, the parties agreed to a rate adjustment mechanism to address potential federal income tax reform and enable the pass-through of certain income tax effects to customers. The TEAM expressly applies to APS’s retail rates with the exception of a small subset of customers taking service under specially-approved tariffs. On December 22, 2017, the Tax Act was enacted. This legislation made significant changes to the federal income tax laws including a reduction in the corporate tax rate from 35% to 21% effective January 1, 2018. On August 13, 2018, APS filed a request with the ACC that addressed the return of $86.5 million in tax savings to customers related to the amortization of non-depreciation related excess deferred taxes previously collected from customers (“TEAM Phase II”). The ACC approved this request on March 13, 2019, effective the first billing cycle in April 2019 through the last billing cycle in March 2020. On March 19, 2020, due to the COVID-19 pandemic, APS delayed the discontinuation of TEAM Phase II until the first billing cycle in May 2020. Amounts credited to customers after the last billing cycle in March 2020 were recorded as a part of the balancing account and were addressed for recovery as part of the 2019 Rate Case. Both the timing of the reduction in revenues refunded through TEAM Phase II and the offsetting income tax benefit were recognized based upon our seasonal kWh sales pattern. On April 10, 2019, APS filed a third request with the ACC that addressed the amortization of depreciation related excess deferred taxes over a 28.5-year period consistent with IRS normalization rules (“TEAM Phase III”). On October 29, 2019, the ACC approved TEAM Phase III providing both (i) a one-time bill credit of $64 million which was credited to customers on their December 2019 bills, and (ii) a monthly bill credit effective the first billing cycle in December 2019 which provided an additional benefit of $39.5 million to customers through December 31, 2020. On November 20, 2020, APS filed an application to continue the TEAM Phase III monthly bill credit through the earlier of December 31, 2021, or at the conclusion of the 2019 Rate Case. On December 9, 2020, the ACC approved this request. Both the timing of the reduction in revenues refunded through the TEAM Phase III monthly bill credit and the offsetting income tax benefit were recognized based upon APS’s seasonal kWh sales pattern. As part of the 2019 Rate Case decision, the TEAM rates were reset to zero beginning December 31, 2021, and all impacts of the Tax Act were removed from the TEAM and incorporated into APS’s base rates. The TEAM was retained to address potential changes in tax law that may be enacted prior to a decision in a subsequent APS rate case. Net Metering APS’s 2017 Rate Case Decision provides that payments by utilities for energy exported to the grid from residential DG solar facilities will be determined using a RCP methodology as determined in the ACC’s generic Value and Cost of Distributed Generation docket. RCP is a method that is based on the most recent five-year rolling average price that APS incurs for utility-scale solar projects. The price established by this RCP method will be updated annually (between general retail rate cases) but will not be decreased by more than 10% per year. The ACC is no longer pursuing development of a forecasted avoided cost methodology as an option for utilities in place of the RCP. Commercial customers, grandfathered residential solar customers, and residential customers with DG systems other than solar facilities continue to qualify for net metering. In addition, the ACC made the following determinations in the Value and Cost of Distributed Generation docket: •RCP customers who have interconnected a DG system or submitted an application for interconnection for DG systems will be grandfathered for a period of 20 years from the date the customer’s interconnection application was accepted by the utility (for APS residential customers, as of September 1, 2017, based on APS’s 2017 Rate Case Decision); •customers with DG solar systems are to be considered a separate class of customers for ratemaking purposes; and •once an initial export price is set for utilities, no netting or banking of retail credits will be available for new DG customers, and the then-applicable export price will be guaranteed for new customers for a period of 10 years. This decision of the ACC addresses policy determinations only. The decision states that its principles will be applied in future general retail rate cases, and the policy determinations themselves may be subject to future change, as are all ACC policies. In accordance with the 2017 Rate Case Decision, APS filed its request for a RCP export energy price of 10.5 cents per kWh on May 1, 2019. This price also reflects the 10% annual reduction discussed above. The new rate rider became effective on October 1, 2019. APS filed its request for a fourth-year export energy price of 9.4 cents per kWh on May 1, 2020, with a requested effective date of September 1, 2020. This price reflects the 10% annual reduction discussed above. On September 23, 2020, the ACC approved the annual reduction of the export energy price but voted to delay the effectiveness of the reduction in export prices until October 1, 2021. In accordance with this decision, the RCP export energy price of 9.4 cents per kWh became effective on October 1, 2021. On April 29, 2022, APS filed an application to decrease the RCP price to 8.46 cents per kWh, reflecting a 10% annual reduction, to become effective September 1, 2022. On July 12, 2022, the ACC approved the RCP as filed. See “2016 Retail Rate Case Filing” above for information regarding an ACC order in connection with the rate review of the 2017 Rate Case Decision requiring APS to provide grandfathered net metering customers on legacy demand rates with an opportunity to switch to another legacy rate to enable such customers to benefit from legacy net metering rates. Subpoena from Former Arizona Corporation Commissioner Robert Burns On August 25, 2016, then-Commissioner Robert Burns, individually and not by action of the ACC as a whole, served subpoenas in APS’s then current retail rate proceeding on APS and Pinnacle West for the production of records and information relating to a range of expenditures from 2011 through 2016. The subpoenas requested information concerning marketing and advertising expenditures, charitable donations, lobbying expenses, contributions to 501(c)(3) and (c)(4) nonprofits and political contributions. The return date for the production of information was set as September 15, 2016. The subpoenas also sought testimony from Company personnel having knowledge of the material, including the Chief Executive Officer. After various proceedings between September 2016 and March 2020, at which time Burns’ appeal of a prior dismissal by the trial court was pending before the Arizona Court of Appeals, Burns’ position as an ACC commissioner ended on January 4, 2021. Nevertheless, Burns filed a motion with the Court of Appeals arguing that the appeal was not mooted by this fact and the court should decide the matter. On March 4, 2021, the Court of Appeals found Burns’ motion to be moot because the Court of Appeals had issued an opinion deciding the matter that same day. In its March 4, 2021, opinion, the Court of Appeals affirmed the trial court’s dismissal of Burns’ complaint, concluding that Burns could not overturn the ACC’s 4-1 vote refusing to enforce his subpoenas. On May 15, 2021, Burns filed a petition for review with the Arizona Supreme Court asking for reversal of the Court of Appeals opinion and the trial court’s judgment. APS and the ACC filed responses to Burns’ petition on July 14, 2021, requesting that the petition be denied. The Arizona Supreme Court granted Burns’ petition and heard oral argument on March 8, 2022. On September 27, 2022, the Arizona Supreme Court issued a decision in favor of Burns reversing the Court of Appeals’ decision. The Court held that the ACC acting by a majority of its commissioners may not prevent an individual commissioner from exercising investigatory powers pursuant to certain provisions of the Arizona Constitution and that a commissioner aggrieved by such action may seek judicial recourse by way of declaratory judgment. Pinnacle West and APS do not believe there will be any immediate implications given the underlying issues at hand are moot, but we cannot predict if or how this authority may be used by commissioners in the future. Energy Modernization Plan On January 30, 2018, the initial Energy Modernization Plan was proposed, which consisted of a series of energy policies tied to clean energy sources. Draft energy rules were subsequently issued and a series of revisions were made to the draft rules in 2019 and 2020. On July 30, 2020, the ACC Staff issued final draft energy rules which proposed 100% of retail kWh sales from clean energy resources by the end of 2050. Nuclear power was defined as a clean energy resource. The proposed rules also required 50% of retail energy served be renewable by the end of 2035. A new Energy Efficiency Standard (“EES”) was not included in the proposed rules. The ACC discussed the final draft energy rules at several different meetings in 2020 and 2021. On November 13, 2020, the ACC approved a final draft energy rules package. On April 19, 2021, the Administrative Law Judge issued a Recommended Order and Opinion on the final energy rules. In June 2021, the ACC adopted revised clean energy rules based on a series of ACC amendments. The adopted rules included a final standard of 100% clean energy by 2070 and the following interim standards for carbon reduction from baseline carbon emissions level: 50% reduction by December 31, 2032; 65% reduction by December 31, 2040; 80% reduction by December 31, 2050, and 95% reduction by December 31, 2060. Since the adopted clean energy rules differed substantially from the original Recommended Order and Opinion, supplemental rulemaking procedures were required before the rules could become effective. On January 26, 2022, the ACC reversed its prior decision and declined to send the final draft energy rules through the rulemaking process. Instead, the ACC opened a new docket to consider all-source RFP requirements and the IRP process. During the August 2022 Open Meeting, Commissioners voted to postpone a decision on the All-Source RFP and IRP rulemaking package until next year. APS cannot predict the outcome of this matter. Integrated Resource Planning ACC rules require utilities to develop 15-year IRPs which describe how the utility plans to serve customer load in the plan timeframe. The ACC reviews each utility’s IRP to determine if it meets the necessary requirements and whether it should be acknowledged. Based on an ACC decision, APS was originally required to file its next IRP by April 1, 2020. On February 20, 2020, the ACC extended the deadline for all utilities to file their IRPs from April 1, 2020, to June 26, 2020. On June 26, 2020, APS filed its final IRP. On July 15, 2020, the ACC extended the schedule for final ACC review of utility IRPs to February 2021. In February 2022, the ACC acknowledged APS’s IRP. The ACC also approved certain amendments to the IRP process, including, setting an EES of 1.3% of retail sales annually (averaged over a three-year period) and a demand-side resource capacity of 35% of 2020 peak demand by 2030 and authorizing future rate base treatment of qualifying demand-side resources as proposed in future rate cases. See “Energy Modernization Plan” above for information regarding proposed changes to the IRP filings. Public Utility Regulatory Policies Act Under the Public Utility Regulatory Policies Act of 1978 (“PURPA”), qualifying facilities are provided the right to sell energy and/or capacity to utilities and are granted relief from certain regulatory burdens. On December 17, 2019, the ACC mandated a minimum contract length of 18 years for qualifying facilities over 100 kW in Arizona and established that the rate paid to qualifying facilities must be based on the long-term avoided cost. “Avoided cost” is generally defined as the price at which the utility could purchase or produce the same amount of power from sources other than the qualifying facility on a long-term basis. During calendar year 2020, APS entered into two 18-year PPAs with qualified facilities, each for 80 MW solar facilities. In March 2021, the ACC approved these agreements. On July 16, 2020, FERC issued a final rule revising FERC’s regulations implementing PURPA. The final rule went into effect on December 31, 2020. Residential Electric Utility Customer Service Disconnections On June 13, 2019, APS voluntarily suspended electric disconnections for residential customers who had not paid their bills. On June 20, 2019, the ACC voted to enact emergency rule amendments to prevent residential electric utility customer service disconnections during the period June 1 through October 15 (“Summer Disconnection Moratorium”). During the Summer Disconnection Moratorium, APS could not charge late fees and interest on amounts that were past due from customers. Customer deposits must also be used to pay delinquent amounts before disconnection can occur and customers will have four months to pay back their deposit and any remaining delinquent amounts. In accordance with the emergency rules, APS began putting delinquent customers on a mandatory four-month payment plan beginning on October 16, 2019. In June 2019, the ACC began a formal regular rulemaking process to allow stakeholder input and time for consideration of permanent rule changes. The ACC further ordered that each regulated utility serving retail customers in Arizona update its service conditions by incorporating the emergency rule amendments, restore power to any customers who were disconnected during the month of June 2019 and credit any fees that were charged for a reconnection. The ACC Staff and ACC proposed draft amendments to the customer service disconnections rules. On April 14, 2021, the ACC voted to send to the formal rulemaking process a draft rules package governing customer disconnections that allows utilities to choose between a temperature threshold (above 95 degrees and below 32 degrees) or calendar method (June 1 – October 15) for disconnection moratoriums. On November 2, 2021, the ACC approved the final rules, and on November 23, 2021, the rules were submitted to the Arizona Office of the Attorney General for final review and approval. The new rules became effective on April 18, 2022, and APS has employed the calendar method for its disconnection moratorium. In accordance with the ACC service disconnection rules, APS now uses the calendar based method to suspend the disconnection of customers for nonpayment from June 1 through October 15 each year (“Annual Disconnection Moratorium”). Customers with past due balances of $75 or greater as of the beginning of the Annual Disconnection Moratorium are automatically placed on six-month payment arrangements. In addition, APS voluntarily began waiving late payment fees of its customers (“Late Fee Waivers”) on March 13, 2020. APS is continuing to apply Late Fee Waivers for residential customers; however, effective May 1, 2022, late payment fees for commercial and industrial customers were reinstated. Since the suspensions and moratoriums on disconnections began, APS has experienced an increase in bad debt expense and the related write-offs of delinquent customer accounts. Retail Electric Competition Rules On November 17, 2018, the ACC voted to re-examine the facilitation of a deregulated retail electric market in Arizona. On July 1 and July 2, 2019, ACC Staff issued a report and initial proposed draft rules regarding possible modifications to the ACC’s retail electric competition rules. On February 10, 2020, two ACC Commissioners filed two sets of draft proposed retail electric competition rules. On February 12, 2020, ACC Staff issued its second report regarding possible modifications to the ACC’s retail electric competition rules. During a July 15, 2020, ACC Staff meeting, the ACC Commissioners discussed the possible development of a retail competition pilot program, but no action was taken. The ACC continues to discuss matters related to retail electric competition, including the potential for additional buy-through programs or other pilot programs. In April 2022, the Arizona Legislature passed a bill that would nullify a 24-year-old electric deregulation law that has been in place since 1998. The bill was signed by the Arizona Governor and took effect September 23, 2022. APS cannot predict what impact, if any, this change will have on APS. On August 4, 2021, Green Mountain Energy filed an application seeking a certificate of convenience and necessity to allow it to provide competitive electric generation service in Arizona. Green Mountain Energy has requested that the ACC grant it the ability to provide competitive service in APS’s and Tucson Electric Power Company’s certificated service territories and proposes to deliver a 100% renewable energy product to residential and general service customers in those service territories. APS opposes Green Mountain Energy’s application and intends to intervene to contest it. On November 3, 2021, the ACC submitted questions to the Arizona Attorney General requesting legal opinions related to a number of issues surrounding retail electric competition and the ACC’s ability to issue competitive certificates of convenience and necessity. On November 26, 2021, the Administrative Law Judge issued a procedural order indicating it would not be appropriate to set a schedule until the Attorney General has provided his insights on the applicable law. On October 28, 2021, an ACC Commissioner docketed a letter directing ACC Staff and interested stakeholders to design a 200-300 MW pilot program that would allow residential and small commercial customers of APS to elect a competitive electricity supplier. The letter also states that similar programs should be designed for other Arizona regulated electric utilities. APS cannot predict the outcome of these future activities. Rate Plan Comparison Tool and Investigation On November 14, 2019, APS learned that its rate plan comparison tool was not functioning as intended due to an integration error between the tool and APS’s meter data management system. APS immediately removed the tool from its website and notified the ACC. The purpose of the tool was to provide customers with a rate plan recommendation based upon historical usage data. Upon investigation, APS determined that the error may have affected rate plan recommendations to customers between February 4, 2019, and November 14, 2019. By the middle of May 2020, APS provided refunds to approximately 13,000 potentially impacted customers equal to the difference between what they paid for electricity and the amount they would have paid had they selected their most economical rate, as applicable, and a $25 payment for any inconvenience that the customer may have experienced. The refunds and payment for inconvenience being provided did not have a material impact on APS’s financial statements. In February 2020, APS launched a new online rate comparison tool. The ACC hired an outside consultant to evaluate the extent of the error and the overall effectiveness of the tool. On August 20, 2020, ACC Staff filed the outside consultant’s report on APS’s rate comparison tool. The report concluded APS’s new rate comparison tool is working as intended. The report also identified a small population of additional customers that may have been affected by the error and APS has provided refunds and the $25 inconvenience payment to approximately 3,800 additional customers. These additional refunds and payment for inconvenience did not have a material impact on APS’s financial statements. On September 28, 2020, the ACC discussed this report but did not take any action. APS cannot predict whether additional inquiries or actions may be taken by the ACC. APS received civil investigative demands from the Office of the Arizona Attorney General, Civil Litigation Division, Consumer Protection & Advocacy Section (“Attorney General”) seeking information pertaining to the rate plan comparison tool offered to APS customers and other related issues including implementation of rates from the 2017 Settlement Agreement and its Customer Education and Outreach Plan associated with the 2017 Settlement Agreement. APS fully cooperated with the Attorney General’s Office in this matter. On February 22, 2021, APS entered into a consent agreement with the Attorney General as a way to settle the matter. The settlement resulted in APS paying $24.75 million, approximately $24 million of which has been returned to customers as restitution. While this matter has been resolved with the Attorney General, APS cannot predict whether additional inquiries or actions may be taken by the ACC. Four Corners SCR Cost Recovery On December 29, 2017, in accordance with the 2017 Rate Case Decision, APS filed a Notice of Intent to file its SCR Adjustment to permit recovery of costs associated with the installation of SCR equipment at Four Corners Units 4 and 5. APS filed the SCR Adjustment request in April 2018. The SCR Adjustment request provided that there would be a $67.5 million annual revenue impact that would be applied as a percentage of base rates for all applicable customers. Also, as provided for in the 2017 Rate Case Decision, APS requested that the adjustment become effective no later than January 1, 2019. The hearing for this matter occurred in September 2018. At the hearing, APS accepted ACC Staff’s recommendation of a lower annual revenue impact of approximately $58.5 million. The Administrative Law Judge issued a Recommended Opinion and Order finding that the costs for the SCR project were prudently incurred and recommending authorization of the $58.5 million annual revenue requirement related to the installation and operation of the SCRs. The ACC did not issue a decision on this matter. APS included the costs for the SCR project in the retail rate base in its 2019 Rate Case filing with the ACC. On November 2, 2021, the 2019 Rate Case decision was approved by the ACC allowing approximately $194 million of SCR related plant investments and cost deferrals in rate base and to recover, depreciate and amortize in rates based on an end-of-life assumption of July 2031. The decision also included a partial and combined disallowance of $215.5 million on the SCR investments and deferrals. APS believes the SCR plant investments and related SCR cost deferrals were prudently incurred, and on December 17, 2021, APS filed its Notice of Direct Appeal at the Arizona Court of Appeals requesting review of the $215.5 million disallowance. The appeal is proceeding in the normal course, and oral arguments are scheduled for November 30, 2022. Based on the partial recovery of these investments and cost deferrals in current rates and the uncertainty of the outcome of the legal appeals process, APS has not recorded an impairment or write-off relating to the SCR plant investments or deferrals as of September 30, 2022. If the 2019 Rate Case decision to disallow $215.5 million of the SCRs is ultimately upheld, APS will be required to record a charge to its results of operations, net of tax, of approximately $154.4 million. We cannot predict the outcome of the legal challenges nor the timing of when this matter will be resolved. See above for further discussion on the 2019 Rate Case decision. Cholla On September 11, 2014, APS announced that it would close Unit 2 of the Cholla Power Plant (“Cholla”) and cease burning coal at the other APS-owned units (Units 1 and 3) at the plant by the mid-2020s, if the United States Environmental Protection Agency (“EPA”) approved a compromise proposal offered by APS to meet required environmental and emissions standards and rules. On April 14, 2015, the ACC approved APS’s plan to retire Unit 2, without expressing any view on the future recoverability of APS’s remaining investment in the unit. APS closed Unit 2 on October 1, 2015. In early 2017, EPA approved a final rule incorporating APS’s compromise proposal, which took effect on April 26, 2017. In December 2019, PacifiCorp notified APS that it planned to retire Cholla Unit 4 by the end of 2020 and the unit ceased operation in December 2020. APS has committed to end the use of coal at its remaining Cholla units by 2025. Previously, APS estimated Cholla Unit 2’s end of life to be 2033. APS has been recovering a return on and of the net book value of the unit in base rates. Pursuant to the 2017 Settlement Agreement described above, APS will be allowed continued recovery of the net book value of the unit and the unit’s decommissioning and other retirement-related costs, $38.4 million as of September 30, 2022, in addition to a return on its investment. In accordance with GAAP, in the third quarter of 2014, Unit 2’s remaining net book value was reclassified from property, plant and equipment to a regulatory asset. In accordance with the 2019 Rate Case decision, the regulatory asset is being amortized through 2033. Navajo Plant The Navajo Plant ceased operations in November 2019. The co-owners and the Navajo Nation executed a lease extension on November 29, 2017, that allows for decommissioning activities to begin after the plant ceased operations. In accordance with GAAP, in the second quarter of 2017, APS’s remaining net book value of its interest in the Navajo Plant was reclassified from property, plant and equipment to a regulatory asset. APS has been recovering a return on and of the net book value of its interest in the Navajo plant in base rates over its previously estimated life through 2026. Pursuant to the 2019 Rate Case decision described above, APS will be allowed continued recovery of the book value of its remaining investment in the Navajo plant, $55.0 million as of September 30, 2022, in addition to a return on the net book value, with the exception of 15% of the annual amortization expense in rates. In addition, APS will be allowed recovery of other costs related to retirement and closure, including the Navajo coal reclamation regulatory asset, $14.6 million as of September 30, 2022. The disallowed recovery of 15% of the annual amortization does not have a material impact on APS financial statements. Regulatory Assets and Liabilities The detail of regulatory assets is as follows (dollars in thousands):
(a)This asset represents the future recovery of pension benefit obligations and expense through retail rates. If these costs are disallowed by the ACC, this regulatory asset would be charged to OCI and result in lower future revenues. As a result of the 2019 Rate Case decision, the amount authorized for inclusion in rate base was determined using an averaging methodology, which resulted in a reduced return in retail rates. See Note 5 for further discussion. (b)See “Cost Recovery Mechanisms” discussion above. (c)Subject to a carrying charge. (d)There are no regulatory assets for which the ACC has allowed recovery of costs, but not allowed a return by exclusion from rate base. FERC rates are set using a formula rate as described in “Transmission Rates, Transmission Cost Adjustor and Other Transmission Matters.” (e)Balance includes amounts for future regulatory consideration and amortization period determination. (f)See “Four Corners SCR Cost Recovery” discussion above. (g)Collected in retail rates. The detail of regulatory liabilities is as follows (dollars in thousands):
(a)For purposes of presentation on the Statement of Cash Flows, amortization of the regulatory liabilities for excess deferred income taxes are reflected as “Deferred income taxes” under Cash Flows From Operating Activities. (b)See “Cost Recovery Mechanisms” discussion above. (c)In accordance with regulatory accounting guidance, APS accrues removal costs for its regulated assets, even if there is no legal obligation for removal. (d)See Note 5. (e)Balance includes amounts for future regulatory consideration and amortization period determination.
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Retirement Plans and Other Postretirement Benefits |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Plans and Other Postretirement Benefits | Retirement Plans and Other Postretirement Benefits Pinnacle West sponsors a qualified defined benefit and account balance pension plan, a non-qualified supplemental excess benefit retirement plan, and other postretirement benefit plans for the employees of Pinnacle West and our subsidiaries. The other postretirement benefit plans include a group life and medical plan and a post-65 retiree health reimbursement arrangement (“HRA”). Pinnacle West uses a December 31 measurement date each year for its pension and other postretirement benefit plans. The market-related value of our plan assets is their fair value at the measurement date. The following table provides details of the plans’ net periodic benefit costs and the portion of these costs charged to expense (including administrative costs and excluding amounts capitalized as overhead construction or billed to electric plant participants) (dollars in thousands):
Contributions We have not made any voluntary contributions to our pension plan year-to-date in 2022. The minimum required contributions for the pension plan are zero and we do not expect to make any contributions in 2022, 2023 or 2024. With regard to contributions to our other postretirement benefit plan, we have not made a contribution year-to-date in 2022 and do not expect to make any contributions in 2022, 2023 or 2024. In 2022 and 2021, the Company has been reimbursed $26 million and $24 million, respectively, for prior years retiree medical claims from the other postretirement benefit plan trust assets.
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Palo Verde Sale Leaseback Variable Interest Entities |
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Variable Interest Entities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Palo Verde Sale Leaseback Variable Interest Entities | Palo Verde Sale Leaseback Variable Interest Entities In 1986, APS entered into agreements with three separate VIE lessor trust entities in order to sell and lease back interests in Palo Verde Unit 2 and related common facilities. APS will retain the assets through 2033 under all three lease agreements. APS will be required to make payments relating to the three leases in total of approximately $21 million annually for the period 2022 through 2033. At the end of the lease period, APS will have the option to purchase the leased assets at their fair market value, extend the leases for up to two years, or return the assets to the lessors. The leases’ terms give APS the ability to utilize the assets for a significant portion of the assets’ economic life, and therefore provide APS with the power to direct activities of the VIEs that most significantly impact the VIEs’ economic performance. Predominantly due to the lease terms, APS has been deemed the primary beneficiary of these VIEs and therefore consolidates the VIEs. As a result of consolidation, we eliminate lease accounting and instead recognize depreciation expense, resulting in an increase in net income for the three and nine months ended September 30, 2022, of $4 million and $13 million respectively, and for the three and nine months ended September 30, 2021 of $4 million and $13 million, respectively. The increase in net income is entirely attributable to the noncontrolling interests. Income attributable to Pinnacle West shareholders is not impacted by the consolidation. Our Condensed Consolidated Balance Sheets at September 30, 2022, and December 31, 2021, include the following amounts relating to the VIEs (dollars in thousands):
Assets of the VIEs are restricted and may only be used for payment to the noncontrolling interest holders. These assets are reported on our condensed consolidated financial statements. APS is exposed to losses relating to these VIEs upon the occurrence of certain events that APS does not consider to be reasonably likely to occur. Under certain circumstances (for example, the Nuclear Regulatory Commission (“NRC”) issuing specified violation orders with respect to Palo Verde or the occurrence of specified nuclear events), APS would be required to make specified payments to the VIEs’ noncontrolling equity participants and take title to the leased Unit 2 interests, which, if appropriate, may be required to be written down in value. If such an event were to occur during the lease periods, APS may be required to pay the noncontrolling equity participants approximately $315 million beginning in 2022, and up to $501 million over the lease terms. For regulatory ratemaking purposes, the agreements continue to be treated as operating leases and, as a result, we have recorded a regulatory asset relating to the arrangements.
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Derivative Accounting |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Accounting | Derivative Accounting Derivative financial instruments are used to manage exposure to commodity price and transportation costs of electricity, natural gas, emissions allowances, and interest rates. Risks associated with market volatility are managed by utilizing various physical and financial derivative instruments, including futures, forwards, options and swaps. As part of our overall risk management program, we may use derivative instruments to hedge purchases and sales of electricity and natural gas. Derivative instruments that meet certain hedge accounting criteria may be designated as cash flow hedges and are used to limit our exposure to cash flow variability on forecasted transactions. The changes in market value of such instruments have a high correlation to price changes in the hedged transactions. Derivative instruments are also entered into for economic hedging purposes. While economic hedges may mitigate exposure to fluctuations in commodity prices, these instruments have not been designated as accounting hedges. Contracts that have the same terms (quantities, delivery points and delivery periods) and for which power does not flow are netted, which reduces both revenues and fuel and purchased power costs in our Condensed Consolidated Statements of Income, but does not impact our financial condition, net income or cash flows. Our derivative instruments, excluding those qualifying for a scope exception, are recorded on the balance sheets as an asset or liability and are measured at fair value. See Note 11 for a discussion of fair value measurements. Derivative instruments may qualify for the normal purchases and normal sales scope exception if they require physical delivery, and the quantities represent those transacted in the normal course of business. Derivative instruments qualifying for the normal purchases and sales scope exception are accounted for under the accrual method of accounting and excluded from our derivative instrument discussion and disclosures below. For its regulated operations, APS defers for future rate treatment 100% of the unrealized gains and losses on derivatives pursuant to the PSA mechanism that would otherwise be recognized in income. Realized gains and losses on derivatives are deferred in accordance with the PSA to the extent the amounts are above or below the Base Fuel Rate. See Note 4. Gains and losses from derivatives in the following tables represent the amounts reflected in income before the effect of PSA deferrals. The following table shows the outstanding gross notional volume of derivatives, which represent both purchases and sales (does not reflect net position):
On October 19, 2022, BCE executed an interest rate swap to hedge the variable interest rate exposure relating to the Los Alamitos credit agreement. See Note 3. We are applying cash flow hedge accounting treatment to these derivative instruments. Gains and Losses from Derivative Instruments For the three and nine months ended September 30, 2022 and 2021, APS had no derivative instruments in designated accounting hedging relationships. The following table provides information about gains and losses from derivative instruments not designated as accounting hedging instruments (dollars in thousands):
(a)Amounts are before the effect of PSA deferrals. Derivative Instruments in the Condensed Consolidated Balance Sheets Our derivative transactions are typically executed under standardized or customized agreements, which include collateral requirements and, in the event of a default, would allow for the netting of positive and negative exposures associated with a single counterparty. Agreements that allow for the offsetting of positive and negative exposures associated with a single counterparty are considered master netting arrangements. Transactions with counterparties that have master netting arrangements are offset and reported net on the Condensed Consolidated Balance Sheets. Transactions that do not allow for offsetting of positive and negative positions are reported gross on the Condensed Consolidated Balance Sheets. We do not offset a counterparty’s current derivative contracts with the counterparty’s non-current derivative contracts, although our master netting arrangements would allow current and non-current positions to be offset in the event of a default. These types of transactions may include non-derivative instruments, derivatives qualifying for scope exceptions, trade receivables and trade payables arising from settled positions, and other forms of non-cash collateral (such as letters of credit). These types of transactions are excluded from the offsetting tables presented below. The following tables provide information about the fair value of our risk management activities reported on a gross basis, and the impacts of offsetting. These amounts relate to commodity contracts and are located in the assets and liabilities from risk management activities lines of our Condensed Consolidated Balance Sheets.
(a)All of our gross recognized derivative instruments were subject to master netting arrangements. (b)Includes cash collateral received from counterparties of $8,800 thousand that is subject to offsetting. (c)Represents cash collateral and cash margin that is not subject to offsetting. Amounts relate to non-derivative instruments, derivatives qualifying for scope exceptions, or collateral and margin posted or received in excess of the recognized derivative instrument. Includes cash collateral received from counterparties of $6,610 thousand and cash margin provided to counterparties of $18 thousand.
(a)All of our gross recognized derivative instruments were subject to master netting arrangements. (b)No cash collateral has been provided to counterparties, or received from counterparties, that is subject to offsetting. (c)Represents cash collateral and cash margin that is not subject to offsetting. Amounts relate to non-derivative instruments, derivatives qualifying for scope exceptions, or collateral and margin posted in excess of the recognized derivative instrument. Includes cash collateral received from counterparties of $1,635 thousand and cash margin provided to counterparties of $50 thousand. Credit Risk and Credit Related Contingent Features We are exposed to losses in the event of nonperformance or nonpayment by counterparties and have risk management contracts with many counterparties. As of September 30, 2022, we have one counterparty for which our exposure represents approximately 18% of Pinnacle West’s $252 million of risk management assets. This exposure relates to a master agreement with the counterparty, and the counterparty is rated as investment grade. Our risk management process assesses and monitors the financial exposure of all counterparties. Despite the fact that the great majority of our trading counterparties’ debt is rated as investment grade by the credit rating agencies, there is still a possibility that one or more of these companies could default, resulting in a material impact on consolidated earnings for a given period. Counterparties in the portfolio consist principally of financial institutions, major energy companies, municipalities and local distribution companies. We maintain credit policies that we believe minimize overall credit risk to within acceptable limits. Determination of the credit quality of our counterparties is based upon a number of factors, including credit ratings and our evaluation of their financial condition. To manage credit risk, we employ collateral requirements and standardized agreements that allow for the netting of positive and negative exposures associated with a single counterparty. Valuation adjustments are established representing our estimated credit losses on our overall exposure to counterparties. Certain of our derivative instrument contracts contain credit-risk-related contingent features including, among other things, investment grade credit rating provisions, credit-related cross-default provisions, and adequate assurance provisions. Adequate assurance provisions allow a counterparty with reasonable grounds for uncertainty to demand additional collateral based on subjective events and/or conditions. For those derivative instruments in a net liability position, with investment grade credit contingencies, the counterparties could demand additional collateral if our debt credit rating were to fall below investment grade (below BBB- for Standard & Poor’s or Fitch or Baa3 for Moody’s). The following table provides information about our derivative instruments that have credit-risk-related contingent features (dollars in thousands):
(a)This amount is after counterparty netting and includes those contracts which qualify for scope exceptions, which are excluded from the derivative details above. We have energy-related non-derivative instrument contracts with investment grade credit-related contingent features, which could require us to post additional collateral of approximately $76 million if our debt credit ratings were to fall below investment grade.
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Commitments and Contingencies |
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Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Palo Verde Generating Station Spent Nuclear Fuel and Waste Disposal On December 19, 2012, APS, acting on behalf of itself and the participant owners of Palo Verde, filed a second breach of contract lawsuit against the United States Department of Energy (“DOE”) in the United States Court of Federal Claims (“Court of Federal Claims”). The lawsuit sought to recover damages incurred due to DOE’s breach of the Contract for Disposal of Spent Nuclear Fuel and/or High-Level Radioactive Waste (“Standard Contract”) for failing to accept Palo Verde’s spent nuclear fuel and high level waste from January 1, 2007, through June 30, 2011, as it was required to do pursuant to the terms of the Standard Contract and the Nuclear Waste Policy Act. On August 18, 2014, APS and DOE entered into a settlement agreement, stipulating to a dismissal of the lawsuit and payment by DOE to the Palo Verde owners for certain specified costs incurred by Palo Verde during the period January 1, 2007 through June 30, 2011. In addition, the settlement agreement, as amended, provides APS with a method for submitting claims and getting recovery for costs incurred through December 31, 2022. APS has submitted eight claims pursuant to the terms of the August 18, 2014 settlement agreement, for eight separate time periods during July 1, 2011 through June 30, 2021. The DOE has approved and paid $123.9 million for these claims (APS’s share is $36.0 million). The amounts recovered were primarily recorded as adjustments to a regulatory liability and had no impact on reported net income. In accordance with the 2017 Rate Case Decision, this regulatory liability is being refunded to customers. See Note 4. On October 31, 2022, APS filed its ninth claim pursuant to the terms of the August 18, 2014 settlement agreement in the amount of $14.3 million (APS’s share is $4.2 million). Nuclear Insurance Public liability for incidents at nuclear power plants is governed by the Price-Anderson Nuclear Industries Indemnity Act (“Price-Anderson Act”), which limits the liability of nuclear reactor owners to the amount of insurance available from both commercial sources and an industry-wide retrospective payment plan. In accordance with the Price-Anderson Act, the Palo Verde participants are insured against public liability for a nuclear incident of up to approximately $13.7 billion per occurrence. Palo Verde maintains the maximum available nuclear liability insurance in the amount of $450 million, which is provided by American Nuclear Insurers (“ANI”). The remaining balance of approximately $13.2 billion of liability coverage is provided through a mandatory industry-wide retrospective premium program. If losses at any nuclear power plant covered by the program exceed the accumulated funds, APS could be responsible for retrospective premiums. The maximum retrospective premium per reactor under the program for each nuclear liability incident is approximately $137.6 million, subject to a maximum annual premium of approximately $20.5 million per incident. Based on APS’s ownership interest in the three Palo Verde units, APS’s maximum retrospective premium per incident for all three units is approximately $120.1 million, with a maximum annual retrospective premium of approximately $17.9 million. The Palo Verde participants maintain insurance for property damage to, and decontamination of, property at Palo Verde in the aggregate amount of $2.8 billion. APS has also secured accidental outage insurance for a sudden and unforeseen accidental outage of any of the three units. The property damage, decontamination, and accidental outage insurance are provided by Nuclear Electric Insurance Limited (“NEIL”). APS is subject to retrospective premium adjustments under all NEIL policies if NEIL’s losses in any policy year exceed accumulated funds. The maximum amount APS could incur under the current NEIL policies totals approximately $22.3 million for each retrospective premium assessment declared by NEIL’s Board of Directors due to losses. In addition, NEIL policies contain rating triggers that would result in APS providing approximately $62.8 million of collateral assurance within 20 business days of a rating downgrade to non-investment grade. The insurance coverage discussed in this and the previous paragraph is subject to certain policy conditions, sublimits and exclusions. Contractual Obligations As of September 30, 2022, our fuel and purchased power and purchase obligation commitments have increased from the information provided in our 2021 Form 10-K. The increase is primarily due to new purchased power and energy storage commitments of approximately $1.3 billion. The majority of the changes relate to 2024 and thereafter. This amount includes approximately $500 million of commitments relating to a new purchased power lease contract that is included in our non-commenced lease discussion below. At September 30, 2022, we have various lease arrangements that have been executed but have not yet commenced. These arrangements primarily relate to energy storage assets, with expected lease commencement dates ranging from December 2022 through June 2024, with terms expiring through May 2044. We expect the total fixed consideration paid for these arrangements, which includes both lease and nonlease payments, will approximate $1.8 billion over the term of the arrangements. The lease commencement dates for these leased assets have experienced delays. APS continues to work with the lessors to determine the revised commencement dates that will be achieved. For additional information regarding our lease commitments see our 2021 Form 10-K. Other than the items described above, there have been no material changes, as of September 30, 2022, outside the normal course of business in contractual obligations from the information provided in our 2021 Form 10-K. See Note 3 for discussion regarding changes in our short-term and long-term debt obligations. Superfund and Other Related Matters The Comprehensive Environmental Response Compensation and Liability Act (“Superfund” or “CERCLA”) establishes liability for the cleanup of hazardous substances found contaminating the soil, water or air. Those who released, generated, transported to or disposed of hazardous substances at a contaminated site are among the parties who are potentially responsible (each a “PRP”). PRPs may be strictly, jointly, and severally liable for clean-up. On September 3, 2003, EPA advised APS that EPA considers APS to be a PRP in the Motorola 52nd Street Superfund Site, Operable Unit 3 (“OU3”) in Phoenix, Arizona. APS has facilities that are within this Superfund site. APS and Pinnacle West have agreed with EPA to perform certain investigative activities of the APS facilities within OU3. In addition, on September 23, 2009, APS agreed with EPA and one other PRP to voluntarily assist with the funding and management of the site-wide groundwater remedial investigation and feasibility study (“RI/FS”). Based upon discussions between the OU3 working group parties and EPA, along with the results of recent technical analyses prepared by the OU3 working group to supplement the RI/FS for OU3, APS anticipates finalizing the RI/FS before the end of 2022. APS’s estimated costs related to this investigation and study are approximately $3 million. APS anticipates incurring additional expenditures in the future, but because the overall investigation is not complete and ultimate remediation requirements are not yet finalized, at the present time expenditures related to this matter cannot be reasonably estimated. On August 6, 2013, the Roosevelt Irrigation District (“RID”) filed a lawsuit in Arizona District Court against APS and 24 other defendants, alleging that RID’s groundwater wells were contaminated by the release of hazardous substances from facilities owned or operated by the defendants. The lawsuit also alleges that, under Superfund laws, the defendants are jointly and severally liable to RID. The allegations against APS arise out of APS’s current and former ownership of facilities in and around OU3. As part of a state governmental investigation into groundwater contamination in this area, on January 25, 2015, the Arizona Department of Environmental Quality (“ADEQ”) sent a letter to APS seeking information concerning the degree to which, if any, APS’s current and former ownership of these facilities may have contributed to groundwater contamination in this area. APS responded to ADEQ on May 4, 2015. On December 16, 2016, two RID environmental and engineering contractors filed an ancillary lawsuit for recovery of costs against APS and the other defendants in the RID litigation. That same day, another RID service provider filed an additional ancillary CERCLA lawsuit against certain of the defendants in the main RID litigation but excluded APS and certain other parties as named defendants. Because the ancillary lawsuits concern past costs allegedly incurred by these RID vendors, which were ruled unrecoverable directly by RID in November of 2016, the additional lawsuits do not increase APS’s exposure or risk related to these matters. On April 5, 2018, RID and the defendants in that particular litigation executed a settlement agreement, fully resolving RID’s CERCLA claims concerning both past and future cost recovery. APS’s share of this settlement was immaterial. In addition, the two environmental and engineering vendors voluntarily dismissed their lawsuit against APS and the other named defendants without prejudice. An order to this effect was entered on April 17, 2018. With this disposition of the case, the vendors may file their lawsuit again in the future. On August 16, 2019, Maricopa County, one of the three direct defendants in the service provider lawsuit, filed a third-party complaint seeking contribution for its liability, if any, from APS and 28 other third-party defendants. We are unable to predict the outcome of these matters; however, we do not expect the outcome to have a material impact on our financial position, results of operations or cash flows. On February 28, 2022, EPA provided APS with a request for information under CERCLA related to APS’s Ocotillo power plant site located in Tempe, Arizona. In particular, EPA seeks information from APS regarding APS’s use, storage, and disposal of substances containing per-and polyfluoroalkyl (“PFAS”) compounds at the Ocotillo power plant site in order to aid EPA’s investigation into actual or threatened releases of PFAS into groundwater within the South Indian Bend Wash (“SIBW”) Superfund site. The SIBW Superfund site includes the APS Ocotillo power plant site. On April 29, 2022, APS filed its response to this information request. At the present time, we are unable to predict the outcome of this matter and expenditures related to this matter cannot be reasonably estimated. Arizona Attorney General Matter APS received civil investigative demands from the Attorney General seeking information pertaining to the rate plan comparison tool offered to APS customers and other related issues including implementation of rates from the 2017 Settlement Agreement and its Customer Education and Outreach Plan associated with the 2017 Settlement Agreement. APS fully cooperated with the Attorney General’s Office in this matter. On February 22, 2021, APS entered into a consent agreement with the Attorney General as a way to settle the matter. The settlement resulted in APS paying $24.75 million, approximately $24 million of which was returned to customers as restitution. Four Corners SCR Cost Recovery As part of APS’s 2019 Rate Case, APS included recovery of the deferral and rate base effects of the Four Corners SCR project. On November 2, 2021, the 2019 Rate Case decision was approved by the ACC allowing approximately $194 million of SCR related plant investments and cost deferrals in rate base and to recover, depreciate and amortize in rates based on an end-of-life assumption of July 2031. The decision also included a partial and combined disallowance of $215.5 million on the SCR investments and deferrals. APS believes the SCR plant investments and related SCR cost deferrals were prudently incurred, and on December 17, 2021, APS filed its Notice of Direct Appeal at the Arizona Court of Appeals requesting review of the $215.5 million disallowance. The appeal is proceeding in the normal course, and oral arguments are scheduled for November 30, 2022. Based on the partial recovery of these investments and cost deferrals in current rates and the uncertainty of the outcome of the legal appeals process, APS has not recorded an impairment or write-off relating to the SCR plant investments or deferrals as of September 30, 2022. If the 2019 Rate Case decision to disallow $215.5 million of the SCRs is ultimately upheld, APS will be required to record a charge to its results of operations, net of tax, of approximately $154.4 million. We cannot predict the outcome of the legal challenges nor the timing of when this matter will be resolved. See Note 4 for additional information regarding the Four Corners SCR cost recovery. Environmental Matters APS is subject to numerous environmental laws and regulations affecting many aspects of its present and future operations, including air emissions of both conventional pollutants and greenhouse gases, water quality, wastewater discharges, solid waste, hazardous waste, and coal combustion residuals (“CCRs”). These laws and regulations can change from time to time, imposing new obligations on APS resulting in increased capital, operating, and other costs. Associated capital expenditures or operating costs could be material. APS intends to seek recovery of any such environmental compliance costs through our rates but cannot predict whether it will obtain such recovery. The following proposed and final rules involve material compliance costs to APS. Regional Haze Rules. APS has received the final rulemaking imposing pollution control requirements on Four Corners. EPA required the plant to install pollution control equipment that constitutes best available retrofit technology (“BART”) to lessen the impacts of emissions on visibility surrounding the plant. Based on EPA’s final standards, APS’s 63% share of the cost of required controls for Four Corners Units 4 and 5 was approximately $400 million, which has been incurred. In addition, EPA issued a final rule for Regional Haze compliance at Cholla that does not involve the installation of new pollution controls and that will replace an earlier BART determination for this facility. See “Cholla” in Note 4 for information regarding future plans for Cholla and details related to the resulting regulatory asset and see “Four Corners SCR Cost Recovery” above regarding recovery of the Four Corners SCR project. Coal Combustion Waste. On December 19, 2014, EPA issued its final regulations governing the handling and disposal of CCR, such as fly ash and bottom ash. The rule regulates CCR as a non-hazardous waste under Subtitle D of the Resource Conservation and Recovery Act (“RCRA”) and establishes national minimum criteria for existing and new CCR landfills and surface impoundments and all lateral expansions. These criteria include standards governing location restrictions, design and operating criteria, groundwater monitoring and corrective action, closure requirements and post closure care, and recordkeeping, notification, and internet posting requirements. The rule generally requires any existing unlined CCR surface impoundment to stop receiving CCR and either retrofit or close, and further requires the closure of any CCR landfill or surface impoundment that cannot meet the applicable performance criteria for location restrictions or structural integrity. Such closure requirements are deemed “forced closure” or “closure for cause” of unlined surface impoundments and are the subject of recent regulatory and judicial activities described below. Since these regulations were finalized, EPA has taken steps to substantially modify the federal rules governing CCR disposal. While certain changes have been prompted by utility industry petitions, others have resulted from judicial review, court-approved settlements with environmental groups, and statutory changes to RCRA. The following lists the pending regulatory changes that, if finalized, could have a material impact as to how APS manages CCR at its coal-fired power plants: •Following the passage of the Water Infrastructure Improvements for the Nation Act in 2016, EPA possesses authority to either authorize states to develop their own permit programs for CCR management or issue federal permits governing CCR disposal both in states without their own permit programs and on tribal lands. Although ADEQ has taken steps to develop a CCR permitting program, including supporting the passage of new state legislation providing ADEQ with appropriate permitting authority for CCR under the state solid waste management program, it is not clear when that program will be put into effect. On December 19, 2019, EPA proposed its own set of regulations governing the issuance of CCR management permits. The proposal remains pending. •On March 1, 2018, as a result of a settlement with certain environmental groups, EPA proposed adding boron to the list of constituents that trigger corrective action requirements to remediate groundwater impacted by CCR disposal activities. Apart from a subsequent proposal issued on August 14, 2019, to add a specific, health-based groundwater protection standard for boron, EPA has yet to take action on this proposal. •With respect to APS’s Cholla facility, the Company’s application for alternative closure was submitted to EPA on November 30, 2020. While EPA has deemed APS’s application administratively “complete,” the Agency’s approval remains pending. If granted, this application would allow the continued disposal of CCR within Cholla’s existing unlined CCR surface impoundments until the required date for ceasing coal-fired boiler operations in April 2025. This application will be subject to public comment and, potentially, judicial review. We expect to have a proposed decision from EPA regarding Cholla in 2023. We cannot at this time predict the outcome of these regulatory proceedings or when the EPA will take final action on those matters that are still pending. Depending on the eventual outcome, the costs associated with APS’s management of CCR could materially increase, which could affect APS’s financial position, results of operations, or cash flows. APS currently disposes of CCR in ash ponds and dry storage areas at Cholla and Four Corners. APS estimates that its share of incremental costs to comply with the CCR rule for Four Corners is approximately $30 million and its share of incremental costs to comply with the CCR rule for Cholla is approximately $16 million. The Navajo Plant disposed of CCR only in a dry landfill storage area. To comply with the CCR rule for the Navajo Plant, APS’s share of incremental costs was approximately $1 million, which has been incurred. Additionally, the CCR rule requires ongoing, phased groundwater monitoring. As of October 2018, APS has completed the statistical analyses for its CCR disposal units that triggered assessment monitoring. APS determined that several of its CCR disposal units at Cholla and Four Corners will need to undergo corrective action. In addition, under the current regulations, all such disposal units must have ceased operating and initiated closure by April 11, 2021, at the latest (except for those disposal units subject to alternative closure). APS completed the assessments of corrective measures on June 14, 2019; however, additional investigations and engineering analyses that will support the remedy selection are still underway. In addition, APS will also solicit input from the public and host public hearings as part of this process. Based on the work performed to date, APS currently estimates that its share of corrective action and monitoring costs at Four Corners will likely range from $10 million to $15 million, which would be incurred over 30 years. The analysis needed to perform a similar cost estimate for Cholla remains ongoing at this time. As APS continues to implement the CCR rule’s corrective action assessment process, the current cost estimates may change. Given uncertainties that may exist until we have fully completed the corrective action assessment process, we cannot predict any ultimate impacts to the Company; however, at this time we do not believe the cost estimates for Cholla and any potential change to the cost estimate for Four Corners would have a material impact on our financial position, results of operations or cash flows. EPA Climate Regulations. On June 19, 2019, EPA took final action on its proposals to repeal EPA’s 2015 Clean Power Plan (“CPP”) and replace those regulations with a new rule, the Affordable Clean Energy (“ACE”) regulations. EPA originally finalized the CPP on August 3, 2015, and such rules would have had far broader impact on the electric power sector than the ACE regulations. On January 19, 2021, the U.S. Court of Appeals for the D.C. Circuit vacated the ACE regulations and remanded them back to EPA to develop new existing power plant carbon regulations consistent with the court’s ruling. That ruling endorsed an expansive view of the federal Clean Air Act consistent with EPA’s 2015 CPP. Thereafter, on June 30, 2022, the U.S. Supreme Court reversed the D.C. Circuit’s ruling, holding that existing power plant carbon regulations on the scale of the CPP are not authorized by the federal Clean Air Act. While the Biden administration has nonetheless expressed an intent to continue its effort to regulate carbon emissions in this sector more aggressively under the Clean Air Act (consistent with the U.S. Supreme Court’s June 30 ruling), we cannot at this time predict the outcome of pending EPA rulemaking proceedings related to the regulation of carbon emissions from existing power plants. Other environmental rules that could involve material compliance costs include those related to effluent limitations, the ozone national ambient air quality standard and other rules or matters involving the Clean Air Act, Clean Water Act, Endangered Species Act, RCRA, Superfund, the Navajo Nation, and water supplies for our power plants. The financial impact of complying with current and future environmental rules could jeopardize the economic viability of our coal plants or the willingness or ability of power plant participants to fund any required equipment upgrades or continue their participation in these plants. The economics of continuing to own certain resources, particularly our coal plants, may deteriorate, warranting early retirement of those plants, which may result in asset impairments. APS would seek recovery in rates for the book value of any remaining investments in the plants, as well as other costs related to early retirement, but cannot predict whether it would obtain such recovery. Four Corners National Pollutant Discharge Elimination System (“NPDES”) Permit The latest NPDES permit for Four Corners was issued on September 30, 2019. Based upon a November 1, 2019, filing by several environmental groups, the Environmental Appeals Board (“EAB”) took up review of the Four Corners NPDES Permit. The EAB denied the environmental group petition on September 30, 2020. While the environmental groups had filed a petition for review of the EAB’s decision with the U.S. Court of Appeals for the Ninth Circuit, on May 2, 2022, the parties to the litigation executed a settlement agreement. We do not anticipate that this agreement will have a material impact on our financial position, results of operations, or cash flows. Four Corners — 4CA Matter On July 6, 2016, 4CA purchased El Paso’s 7% interest in Four Corners. NTEC purchased this 7% interest on July 3, 2018, from 4CA. NTEC purchased the 7% interest at 4CA’s book value, approximately $70 million, and paid 4CA the purchase price over a period of four years pursuant to a secured interest-bearing promissory note, which was paid in full as of June 30, 2022. In connection with the sale, Pinnacle West guaranteed certain obligations that NTEC will have to the other owners of Four Corners, such as NTEC’s 7% share of capital expenditures and operating and maintenance expenses. Pinnacle West’s guarantee is secured by a portion of APS’s payments to be owed to NTEC under the 2016 Coal Supply Agreement. BCE Matters BCE owns a minority equity ownership interest relating to the Clear Creek wind farm. Tenaska Clear Creek Wind, LLC, the developer, owner, and operator of the Clear Creek wind farm, has disputed the proposed cost allocation of system upgrades related to connecting the Clear Creek wind farm to the transmission system and filed a complaint with FERC, which was denied on September 9, 2022, and a Petition for Review with the U.S. Court of Appeals, which is still pending. Subsequently, Tenaska Clear Creek Wind, LLC filed with FERC a request for rehearing and a motion for stay of the September 9, 2022 order. While the dispute is ongoing and the ultimate costs that will be allocated to connect the Clear Creek wind farm to the transmission system are unknown, the ultimate resolution of this dispute may have a negative impact on BCE’s investment in the Clear Creek wind farm. Pinnacle West cannot predict the outcome of this matter. As discussed, under “Financial Assurances,” Pinnacle West has issued the Equity Contribution Guarantees and PTC Guarantees in connection with Clear Creek. BCE accounts for this investment as an equity method investment. As of September 30, 2022, Pinnacle West’s Condensed Consolidated Balance Sheet included $17 million relating to the Clear Creek wind farm. Financial Assurances In the normal course of business, we obtain standby letters of credit and surety bonds from financial institutions and other third parties. These instruments guarantee our own future performance and provide third parties with financial and performance assurance in the event we do not perform. These instruments support commodity contract collateral obligations and other transactions. As of September 30, 2022, standby letters of credit totaled $9 million and expire in 2023. As of September 30, 2022, surety bonds expiring through 2023 totaled $8 million. The underlying liabilities insured by these instruments are reflected on our balance sheets, where applicable. Therefore, no additional liability is reflected for the letters of credit and surety bonds themselves. We enter into agreements that include indemnification provisions relating to liabilities arising from or related to certain of our agreements. Most significantly, APS has agreed to indemnify the equity participants and other parties in the Palo Verde sale leaseback transactions with respect to certain tax matters. Generally, a maximum obligation is not explicitly stated in the indemnification provisions and, therefore, the overall maximum amount of the obligation under such indemnification provisions cannot be reasonably estimated. Based on historical experience and evaluation of the specific indemnities, we do not believe that any material loss related to such indemnification provisions is likely. Pinnacle West has issued parental guarantees and has provided indemnification under certain surety bonds for APS which were not material at September 30, 2022. In connection with the sale of 4CA’s 7% interest to NTEC, Pinnacle West is guaranteeing certain obligations that NTEC will have to the other owners of Four Corners. (See “Four Corners — 4CA Matter” above for information related to this guarantee). Pinnacle West has not needed to perform under this guarantee. A maximum obligation is not explicitly stated in the guarantee and, therefore, the overall maximum amount of the obligation under such guarantee cannot be reasonably estimated; however, we consider the fair value of this guarantee, including expected credit losses, to be immaterial. In connection with BCE’s acquisition of minority ownership positions in the Clear Creek and Nobles 2 wind farms, Pinnacle West has issued parental guarantees to guarantee the obligations of BCE subsidiaries to make required equity contributions to fund project construction (the “Equity Contribution Guarantees”) and to make production tax credit funding payments to borrowers of the projects (the “PTC Guarantees”). The amounts guaranteed by Pinnacle West are reduced as payments are made under the respective guarantee agreements. The Equity Contribution Guarantees remaining as of September 30, 2022, are immaterial in amount and the PTC Guarantees (approximately $34 million as of September 30, 2022) are currently expected to be terminated ten years following the commercial operation date of the applicable project. In connection with the credit agreement entered into by Los Alamitos on February 11, 2022, Pinnacle West has issued a guarantee of up to $42 million primarily related to the equity bridge loan. See Note 3 for additional details.
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Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Other Expense | Other Income and Other Expense The following table provides detail of Pinnacle West’s Consolidated other income and other expense (dollars in thousands):
The following table provides detail of APS’s other income and other expense (dollars in thousands):
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Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share The following table presents the calculation of Pinnacle West’s basic and diluted earnings per share (in thousands, except per share amounts):
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements We classify our assets and liabilities that are carried at fair value within the fair value hierarchy. This hierarchy ranks the quality and reliability of the inputs used to determine fair values, which are then classified and disclosed in one of three categories. The three levels of the fair value hierarchy are: Level 1 — Inputs are unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2 — Other significant observable inputs, including quoted prices in active markets for similar assets or liabilities; quoted prices in markets that are not active, and model-derived valuations whose inputs are observable (such as yield curves). Level 3 — Valuation models with significant unobservable inputs that are supported by little or no market activity. Instruments in this category may include long-dated derivative transactions where valuations are unobservable due to the length of the transaction, options, and transactions in locations where observable market data does not exist. The valuation models we employ utilize spot prices, forward prices, historical market data and other factors to forecast future prices. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Thus, a valuation may be classified in Level 3 even though the valuation may include significant inputs that are readily observable. We maximize the use of observable inputs and minimize the use of unobservable inputs. We rely primarily on the market approach of using prices and other market information for identical and/or comparable assets and liabilities. If market data is not readily available, inputs may reflect our own assumptions about the inputs market participants would use. Our assessment of the inputs and the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities as well as their placement within the fair value hierarchy levels. We assess whether a market is active by obtaining observable broker quotes, reviewing actual market activity, and assessing the volume of transactions. We consider broker quotes observable inputs when the quote is binding on the broker, we can validate the quote with market activity, or we can determine that the inputs the broker used to arrive at the quoted price are observable. Certain instruments have been valued using the concept of Net Asset Value (“NAV”) as a practical expedient. These instruments are typically structured as investment companies offering shares or units to multiple investors for the purpose of providing a return. These instruments are similar to mutual funds; however, their NAV is generally not published and publicly available, nor are these instruments traded on an exchange. Instruments valued using NAV as a practical expedient are included in our fair value disclosures; however, in accordance with GAAP are not classified within the fair value hierarchy levels. Recurring Fair Value Measurements We apply recurring fair value measurements to cash equivalents, derivative instruments, and investments held in the nuclear decommissioning trusts and other special use funds. On an annual basis, we apply fair value measurements to plan assets held in our retirement and other benefit plans. See Note 8 in the 2021 Form 10-K for fair value discussion of plan assets held in our retirement and other benefit plans. Cash Equivalents Cash equivalents represent certain investments in money market funds that are valued using quoted prices in active markets. Risk Management Activities — Derivative Instruments Exchange traded commodity contracts are valued using unadjusted quoted prices. For non-exchange traded commodity contracts, we calculate fair value based on the average of the bid and offer price, discounted to reflect net present value. We maintain certain valuation adjustments for a number of risks associated with the valuation of future commitments. These include valuation adjustments for liquidity and credit risks. The liquidity valuation adjustment represents the cost that would be incurred if all unmatched positions were closed out or hedged. The credit valuation adjustment represents estimated credit losses on our net exposure to counterparties, taking into account netting agreements, expected default experience for the credit rating of the counterparties and the overall diversification of the portfolio. We maintain credit policies that management believes minimize overall credit risk. Certain non-exchange traded commodity contracts are valued based on unobservable inputs due to the long-term nature of contracts, characteristics of the product, or the unique location of the transactions. Our long-dated energy transactions consist of observable valuations for the near-term portion and unobservable valuations for the long-term portions of the transaction. We rely primarily on broker quotes to value these instruments. When our valuations utilize broker quotes, we perform various control procedures to ensure the quote has been developed consistent with fair value accounting guidance. These controls include assessing the quote for reasonableness by comparison against other broker quotes, reviewing historical price relationships, and assessing market activity. When broker quotes are not available, the primary valuation technique used to calculate the fair value is the extrapolation of forward pricing curves using observable market data for more liquid delivery points in the same region and actual transactions at more illiquid delivery points. When the unobservable portion is significant to the overall valuation of the transaction, the entire transaction is classified as Level 3. Investments Held in Nuclear Decommissioning Trusts and Other Special Use Funds The nuclear decommissioning trusts and other special use funds invest in fixed income and equity securities. Other special use funds include the coal reclamation escrow account and the active union employee medical account. See Note 12 for additional discussion about our investment accounts. We value investments in fixed income and equity securities using information provided by our trustees and escrow agent. Our trustees and escrow agent use pricing services that utilize the valuation methodologies described below to determine fair market value. We have internal control procedures designed to ensure this information is consistent with fair value accounting guidance. These procedures include assessing valuations using an independent pricing source, verifying that pricing can be supported by actual recent market transactions, assessing hierarchy classifications, comparing investment returns with benchmarks, and obtaining and reviewing independent audit reports on the trustees’ and escrow agent’s internal operating controls and valuation processes. Fixed Income Securities Fixed income securities issued by the U.S. Treasury are valued using quoted active market prices and are typically classified as Level 1. Fixed income securities issued by corporations, municipalities, and other agencies, including mortgage-backed instruments, are valued using quoted inactive market prices, quoted active market prices for similar securities, or by utilizing calculations which incorporate observable inputs such as yield curves and spreads relative to such yield curves. These fixed income instruments are classified as Level 2. Whenever possible, multiple market quotes are obtained which enables a cross-check validation. A primary price source is identified based on asset type, class, or issue of securities. Fixed income securities may also include short-term investments in certificates of deposit, variable rate notes, time deposit accounts, U.S. Treasury and Agency obligations, U.S. Treasury repurchase agreements, commercial paper, and other short-term instruments. These instruments are valued using active market prices or utilizing observable inputs described above. Equity Securities The nuclear decommissioning trusts’ equity security investments are held indirectly through commingled funds. The commingled funds are valued using the funds’ NAV as a practical expedient. The funds’ NAV is primarily derived from the quoted active market prices of the underlying equity securities held by the funds. We may transact in these commingled funds on a semi-monthly basis at the NAV. The commingled funds are maintained by a bank and hold investments in accordance with the stated objective of tracking the performance of the S&P 500 Index. Because the commingled funds’ shares are offered to a limited group of investors, they are not considered to be traded in an active market. As these instruments are valued using NAV, as a practical expedient, they have not been classified within the fair value hierarchy. The nuclear decommissioning trusts and other special use funds may also hold equity securities that include exchange traded mutual funds and money market accounts for short-term liquidity purposes. These short-term, highly-liquid investments are valued using active market prices. Fair Value Tables The following table presents the fair value at September 30, 2022, of our assets and liabilities that are measured at fair value on a recurring basis (dollars in thousands):
(a)Represents counterparty netting, margin, and collateral. See Note 7. (b)Represents net pending securities sales and purchases. (c)Valued using NAV as a practical expedient and, therefore, are not classified in the fair value hierarchy. The following table presents the fair value at December 31, 2021, of our assets and liabilities that are measured at fair value on a recurring basis (dollars in thousands):
(a)Represents counterparty netting, margin, and collateral. See Note 7. (b)Represents net pending securities sales and purchases. (c)Valued using NAV as a practical expedient and, therefore, are not classified in the fair value hierarchy. Fair Value Measurements Classified as Level 3 The significant unobservable inputs used in the fair value measurement of our energy derivative contracts include broker quotes that cannot be validated as an observable input primarily due to the long-term nature of the quote or other characteristics of the product. Significant changes in these inputs in isolation would result in significantly higher or lower fair value measurements. Changes in our derivative contract fair values, including changes relating to unobservable inputs, typically will not impact net income due to regulatory accounting treatment. See Note 4. Because our forward commodity contracts classified as Level 3 are currently in a net purchase position, we would expect price increases of the underlying commodity to result in increases in the net fair value of the related contracts. Conversely, if the price of the underlying commodity decreases, the net fair value of the related contracts would likely decrease. Other unobservable valuation inputs include credit and liquidity reserves which do not have a material impact on our valuations; however, significant changes in these inputs could also result in higher or lower fair value measurements. Financial Instruments Not Carried at Fair Value |
Investments in Nuclear Decommissioning Trusts and Other Special Use Funds |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments in Nuclear Decommissioning Trusts and Other Special Use Funds | Investments in Nuclear Decommissioning Trusts and Other Special Use Funds We have investments in debt and equity securities held in Nuclear Decommissioning Trusts, Coal Reclamation Escrow Account, and an Active Union Employee Medical Account. Investments in debt securities are classified as available-for-sale securities. We record both debt and equity security investments at their fair value on our Condensed Consolidated Balance Sheets. See Note 11 for a discussion of how fair value is determined and the classification of the investments within the fair value hierarchy. The investments in each trust or account are restricted for use and are intended to fund specified costs and activities as further described for each fund below. Nuclear Decommissioning Trusts — APS established external decommissioning trusts in accordance with NRC regulations to fund the future costs APS expects to incur to decommission Palo Verde. Third-party investment managers are authorized to buy and sell securities per stated investment guidelines. The trust funds are invested in fixed income securities and equity securities. Earnings and proceeds from sales and maturities of securities are reinvested in the trusts. Because of the ability of APS to recover decommissioning costs in rates, and in accordance with the regulatory treatment, APS has deferred realized and unrealized gains and losses (including credit losses) in other regulatory liabilities. Coal Reclamation Escrow Account — APS has investments restricted for the future coal mine reclamation funding related to Four Corners. This escrow account is primarily invested in fixed income securities. Earnings and proceeds from sales of securities are reinvested in the escrow account. Because of the ability of APS to recover coal reclamation costs in rates, and in accordance with the regulatory treatment, APS has deferred realized and unrealized gains and losses (including credit losses) in other regulatory liabilities. Activities relating to APS coal mine reclamation escrow account investments are included within the other special use funds in the table below. Active Union Employee Medical Account — APS has investments restricted for paying active union employee medical costs. These investments may be used to pay active union employee medical costs incurred in the current and future periods. In 2022 and 2021, APS was reimbursed $15 million for each year, for prior year active union employee medical claims from the active union employee medical account. The account is invested primarily in fixed income securities. In accordance with the ratemaking treatment, APS has deferred the unrealized gains and losses (including credit losses) in other regulatory liabilities. Activities relating to active union employee medical account investments are included within the other special use funds in the table below. APS The following tables present the unrealized gains and losses based on the original cost of the investment and summarizes the fair value of APS’s nuclear decommissioning trusts and other special use fund assets (dollars in thousands):
(a)As of September 30, 2022, the amortized cost basis of these available-for-sale investments is $986 million. (b)Represents net pending securities sales and purchases.
(a)As of December 31, 2021, the amortized cost basis of these available-for-sale investments is $972 million. (b)Represents net pending securities sales and purchases. The following tables set forth APS’s realized gains and losses relating to the sale and maturity of available-for-sale debt securities and equity securities, and the proceeds from the sale and maturity of these investment securities (dollars in thousands):
(a) Proceeds are reinvested in the nuclear decommissioning trusts and other special use funds, excluding amounts reimbursed to the Company for active union employee medical claims from the active union employee medical account.
(a) Proceeds are reinvested in the nuclear decommissioning trusts and other special use funds, excluding amounts reimbursed to the Company for active union employee medical claims from the active union employee medical account. Fixed Income Securities Contractual Maturities The fair value of APS’s fixed income securities, summarized by contractual maturities, at September 30, 2022, is as follows (dollars in thousands):
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Changes in Accumulated Other Comprehensive Loss |
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Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Accumulated Other Comprehensive Loss | Changes in Accumulated Other Comprehensive Loss The following tables show the changes in Pinnacle West’s consolidated accumulated other comprehensive loss, including reclassification adjustments, net of tax, by component (dollars in thousands):
(a) These amounts primarily represent amortization of actuarial loss and are included in the computation of net periodic pension cost. See Note 5. The following tables show the changes in APS’s consolidated accumulated other comprehensive loss, including reclassification adjustments, net of tax, by component (dollars in thousands):
(a) These amounts primarily represent amortization of actuarial loss and are included in the computation of net periodic pension cost. See Note 5.
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Consolidation and Nature of Operations (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of supplemental cash flow information | The following table summarizes supplemental Pinnacle West cash flow information (dollars in thousands):
The following table summarizes supplemental APS cash flow information (dollars in thousands):
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Revenue (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Disaggregation of revenue | The following table provides detail of Pinnacle West’s consolidated revenue disaggregated by revenue sources (dollars in thousands):
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Schedule of accounts receivable | The following table provides a rollforward of Pinnacle West’s allowance for doubtful accounts (dollars in thousands):
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Long-Term Debt and Liquidity Matters (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of estimated fair value of long-term debt, including current maturities | The following table presents the estimated fair value of our long-term debt, including current maturities (dollars in thousands):
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Regulatory Matters (Tables) |
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Regulated Operations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of capital structure and cost of capital |
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Schedule of changes in the deferred fuel and purchased power regulatory asset | The following table shows the changes in the deferred fuel and purchased power regulatory asset for 2022 and 2021 (dollars in thousands):
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Schedule of regulatory assets | The detail of regulatory assets is as follows (dollars in thousands):
(a)This asset represents the future recovery of pension benefit obligations and expense through retail rates. If these costs are disallowed by the ACC, this regulatory asset would be charged to OCI and result in lower future revenues. As a result of the 2019 Rate Case decision, the amount authorized for inclusion in rate base was determined using an averaging methodology, which resulted in a reduced return in retail rates. See Note 5 for further discussion. (b)See “Cost Recovery Mechanisms” discussion above. (c)Subject to a carrying charge. (d)There are no regulatory assets for which the ACC has allowed recovery of costs, but not allowed a return by exclusion from rate base. FERC rates are set using a formula rate as described in “Transmission Rates, Transmission Cost Adjustor and Other Transmission Matters.” (e)Balance includes amounts for future regulatory consideration and amortization period determination. (f)See “Four Corners SCR Cost Recovery” discussion above. (g)Collected in retail rates.
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Schedule of regulatory liabilities | The detail of regulatory liabilities is as follows (dollars in thousands):
(a)For purposes of presentation on the Statement of Cash Flows, amortization of the regulatory liabilities for excess deferred income taxes are reflected as “Deferred income taxes” under Cash Flows From Operating Activities. (b)See “Cost Recovery Mechanisms” discussion above. (c)In accordance with regulatory accounting guidance, APS accrues removal costs for its regulated assets, even if there is no legal obligation for removal. (d)See Note 5. (e)Balance includes amounts for future regulatory consideration and amortization period determination.
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Retirement Plans and Other Postretirement Benefits (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of net periodic benefit costs and the portion of these costs charged to expense (including administrative costs and excluding amounts capitalized as overhead construction, billed to electric plant participants or charged or amortized to the regulatory asset) | The following table provides details of the plans’ net periodic benefit costs and the portion of these costs charged to expense (including administrative costs and excluding amounts capitalized as overhead construction or billed to electric plant participants) (dollars in thousands):
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Palo Verde Sale Leaseback Variable Interest Entities (Tables) |
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Amounts relating to the VIEs included in Condensed Consolidated Balance Sheets | Our Condensed Consolidated Balance Sheets at September 30, 2022, and December 31, 2021, include the following amounts relating to the VIEs (dollars in thousands):
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Derivative Accounting (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Outstanding gross notional amount of derivatives, which represents both purchases and sales (does not reflect net position) | The following table shows the outstanding gross notional volume of derivatives, which represent both purchases and sales (does not reflect net position):
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Schedule of Gains and losses from derivative instruments not designated as accounting hedges instruments | The following table provides information about gains and losses from derivative instruments not designated as accounting hedging instruments (dollars in thousands):
(a)Amounts are before the effect of PSA deferrals.
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Schedule of offsetting assets | The following tables provide information about the fair value of our risk management activities reported on a gross basis, and the impacts of offsetting. These amounts relate to commodity contracts and are located in the assets and liabilities from risk management activities lines of our Condensed Consolidated Balance Sheets.
(a)All of our gross recognized derivative instruments were subject to master netting arrangements. (b)Includes cash collateral received from counterparties of $8,800 thousand that is subject to offsetting. (c)Represents cash collateral and cash margin that is not subject to offsetting. Amounts relate to non-derivative instruments, derivatives qualifying for scope exceptions, or collateral and margin posted or received in excess of the recognized derivative instrument. Includes cash collateral received from counterparties of $6,610 thousand and cash margin provided to counterparties of $18 thousand.
(a)All of our gross recognized derivative instruments were subject to master netting arrangements. (b)No cash collateral has been provided to counterparties, or received from counterparties, that is subject to offsetting. (c)Represents cash collateral and cash margin that is not subject to offsetting. Amounts relate to non-derivative instruments, derivatives qualifying for scope exceptions, or collateral and margin posted in excess of the recognized derivative instrument. Includes cash collateral received from counterparties of $1,635 thousand and cash margin provided to counterparties of $50 thousand.
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Schedule of offsetting liabilities | The following tables provide information about the fair value of our risk management activities reported on a gross basis, and the impacts of offsetting. These amounts relate to commodity contracts and are located in the assets and liabilities from risk management activities lines of our Condensed Consolidated Balance Sheets.
(a)All of our gross recognized derivative instruments were subject to master netting arrangements. (b)Includes cash collateral received from counterparties of $8,800 thousand that is subject to offsetting. (c)Represents cash collateral and cash margin that is not subject to offsetting. Amounts relate to non-derivative instruments, derivatives qualifying for scope exceptions, or collateral and margin posted or received in excess of the recognized derivative instrument. Includes cash collateral received from counterparties of $6,610 thousand and cash margin provided to counterparties of $18 thousand.
(a)All of our gross recognized derivative instruments were subject to master netting arrangements. (b)No cash collateral has been provided to counterparties, or received from counterparties, that is subject to offsetting. (c)Represents cash collateral and cash margin that is not subject to offsetting. Amounts relate to non-derivative instruments, derivatives qualifying for scope exceptions, or collateral and margin posted in excess of the recognized derivative instrument. Includes cash collateral received from counterparties of $1,635 thousand and cash margin provided to counterparties of $50 thousand.
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Schedule of Information about derivative instruments that have credit-risk-related contingent features | The following table provides information about our derivative instruments that have credit-risk-related contingent features (dollars in thousands):
(a)This amount is after counterparty netting and includes those contracts which qualify for scope exceptions, which are excluded from the derivative details above.
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Other Income and Other Expense (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of other income and other expense | The following table provides detail of Pinnacle West’s Consolidated other income and other expense (dollars in thousands):
The following table provides detail of APS’s other income and other expense (dollars in thousands):
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Earnings Per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of earnings per weighted average common share outstanding | The following table presents the calculation of Pinnacle West’s basic and diluted earnings per share (in thousands, except per share amounts):
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Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair value of assets and liabilities that are measured at fair value on a recurring basis | The following table presents the fair value at September 30, 2022, of our assets and liabilities that are measured at fair value on a recurring basis (dollars in thousands):
(a)Represents counterparty netting, margin, and collateral. See Note 7. (b)Represents net pending securities sales and purchases. (c)Valued using NAV as a practical expedient and, therefore, are not classified in the fair value hierarchy. The following table presents the fair value at December 31, 2021, of our assets and liabilities that are measured at fair value on a recurring basis (dollars in thousands):
(a)Represents counterparty netting, margin, and collateral. See Note 7. (b)Represents net pending securities sales and purchases. (c)Valued using NAV as a practical expedient and, therefore, are not classified in the fair value hierarchy.
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Investments in Nuclear Decommissioning Trusts and Other Special Use Funds (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair value of APS's nuclear decommissioning trust fund assets | The following tables present the unrealized gains and losses based on the original cost of the investment and summarizes the fair value of APS’s nuclear decommissioning trusts and other special use fund assets (dollars in thousands):
(a)As of September 30, 2022, the amortized cost basis of these available-for-sale investments is $986 million. (b)Represents net pending securities sales and purchases.
(a)As of December 31, 2021, the amortized cost basis of these available-for-sale investments is $972 million. (b)Represents net pending securities sales and purchases.
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Schedule of Realized gains and losses and proceeds from the sale of securities by the nuclear decommissioning trust funds | The following tables set forth APS’s realized gains and losses relating to the sale and maturity of available-for-sale debt securities and equity securities, and the proceeds from the sale and maturity of these investment securities (dollars in thousands):
(a) Proceeds are reinvested in the nuclear decommissioning trusts and other special use funds, excluding amounts reimbursed to the Company for active union employee medical claims from the active union employee medical account.
(a) Proceeds are reinvested in the nuclear decommissioning trusts and other special use funds, excluding amounts reimbursed to the Company for active union employee medical claims from the active union employee medical account.
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Schedule of Fair value of fixed income securities, summarized by contractual maturities | The fair value of APS’s fixed income securities, summarized by contractual maturities, at September 30, 2022, is as follows (dollars in thousands):
|
Changes in Accumulated Other Comprehensive Loss (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes in accumulated other comprehensive loss including reclassification adjustments, net of tax, by component | The following tables show the changes in Pinnacle West’s consolidated accumulated other comprehensive loss, including reclassification adjustments, net of tax, by component (dollars in thousands):
(a) These amounts primarily represent amortization of actuarial loss and are included in the computation of net periodic pension cost. See Note 5. The following tables show the changes in APS’s consolidated accumulated other comprehensive loss, including reclassification adjustments, net of tax, by component (dollars in thousands):
(a) These amounts primarily represent amortization of actuarial loss and are included in the computation of net periodic pension cost. See Note 5.
|
Consolidation and Nature of Operations (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Cash paid (received) during the period for: | ||
Income taxes, net of refunds | $ 4,784 | $ (763) |
Interest, net of amounts capitalized | 177,767 | 166,257 |
Significant non-cash investing and financing activities: | ||
Accrued capital expenditures | 112,579 | 129,503 |
Right-of-use operating lease assets obtained in exchange for operating lease liabilities | 14,533 | 251,119 |
APS | ||
Cash paid (received) during the period for: | ||
Income taxes, net of refunds | 12,327 | 17,612 |
Interest, net of amounts capitalized | 167,854 | 160,467 |
Significant non-cash investing and financing activities: | ||
Accrued capital expenditures | 112,574 | 129,503 |
Right-of-use operating lease assets obtained in exchange for operating lease liabilities | $ 10,939 | $ 251,119 |
Revenue - Schedule of Disaggregation (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Disaggregation of Revenue [Line Items] | ||||
Total operating revenues | $ 1,469,871 | $ 1,308,254 | $ 3,315,071 | $ 3,004,978 |
Regulatory cost recovery revenue | 5,000 | 4,000 | 16,000 | 38,000 |
Retail Electric Service | Residential | ||||
Disaggregation of Revenue [Line Items] | ||||
Total operating revenues | 743,061 | 681,918 | 1,647,996 | 1,554,473 |
Retail Electric Service | Non-Residential | ||||
Disaggregation of Revenue [Line Items] | ||||
Total operating revenues | 547,979 | 480,671 | 1,370,164 | 1,216,449 |
Wholesale Energy Sales | ||||
Disaggregation of Revenue [Line Items] | ||||
Total operating revenues | 139,741 | 108,539 | 198,546 | 144,143 |
Transmission Services for Others | ||||
Disaggregation of Revenue [Line Items] | ||||
Total operating revenues | 36,321 | 35,816 | 91,165 | 77,388 |
Other Sources | ||||
Disaggregation of Revenue [Line Items] | ||||
Total operating revenues | 2,769 | 1,310 | 7,200 | 12,525 |
Electric and Transmission Service | ||||
Disaggregation of Revenue [Line Items] | ||||
Total operating revenues | $ 1,465,000 | $ 1,304,000 | $ 3,299,000 | $ 2,967,000 |
Revenue - Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2022 |
Dec. 31, 2021 |
|
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Allowance for doubtful accounts, balance at beginning of period | $ 25,354 | $ 19,782 |
Bad debt expense | 13,422 | 22,251 |
Actual write-offs | (14,777) | (16,679) |
Allowance for doubtful accounts, balance at end of period | $ 23,999 | $ 25,354 |
Long-Term Debt and Liquidity Matters - Narrative (Details) |
9 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Sep. 15, 2022
USD ($)
|
Feb. 11, 2022
USD ($)
MW
|
Jan. 06, 2022
USD ($)
|
Dec. 21, 2021
USD ($)
|
Sep. 30, 2022
USD ($)
creditFacility
|
Sep. 30, 2021
USD ($)
|
Oct. 31, 2022
USD ($)
|
Apr. 06, 2022
USD ($)
|
Dec. 23, 2020
USD ($)
|
Dec. 17, 2020
USD ($)
|
|
Long-Term Debt and Liquidity Matters | ||||||||||
Issuance of long-term debt | $ 455,628,000 | $ 596,999,000 | ||||||||
Pinnacle West | Term Loan | ||||||||||
Long-Term Debt and Liquidity Matters | ||||||||||
Debt instrument, face amount | $ 150,000,000 | |||||||||
Pinnacle West | Term Loan | Term Loan Maturing 2021 | ||||||||||
Long-Term Debt and Liquidity Matters | ||||||||||
Debt instrument, face amount | $ 450,000,000 | |||||||||
Issuance of long-term debt | $ 300,000,000 | $ 150,000,000 | ||||||||
Pinnacle West | Revolving Credit Facility | Revolving Credit Facility Maturing May 2026 | ||||||||||
Long-Term Debt and Liquidity Matters | ||||||||||
Current borrowing capacity on credit facility | 200,000,000 | |||||||||
Maximum borrowing capacity on credit facility upon satisfaction of certain conditions and consent of lenders (up to) | 300,000,000 | |||||||||
Long-term line of credit | 0 | |||||||||
Pinnacle West | Letter of Credit | Revolving Credit Facility Maturing May 2026 | ||||||||||
Long-Term Debt and Liquidity Matters | ||||||||||
Outstanding letters of credit | 0 | |||||||||
Pinnacle West | Commercial paper | Revolving Credit Facility Maturing May 2026 | ||||||||||
Long-Term Debt and Liquidity Matters | ||||||||||
Commercial paper | 24,000,000 | |||||||||
APS | ||||||||||
Long-Term Debt and Liquidity Matters | ||||||||||
Issuance of long-term debt | 128,000,000 | $ 446,999,000 | ||||||||
Percentage of capitalization | 7.00% | |||||||||
Capacity available for trade purchases | $ 500,000,000 | |||||||||
Long-term debt limit | $ 8,000,000,000 | $ 7,500,000,000 | ||||||||
Equity infusion from Pinnacle West | $ 150,000,000 | |||||||||
APS | Subsequent Event | ||||||||||
Long-Term Debt and Liquidity Matters | ||||||||||
Long-term debt limit | $ 8,000,000,000 | |||||||||
APS | Pollution Control Revenue Bonds | ||||||||||
Long-Term Debt and Liquidity Matters | ||||||||||
Debt instrument, face amount | $ 32,000,000 | |||||||||
Issuance of long-term debt | $ 128,000,000 | |||||||||
APS | Revolving Credit Facility | Revolving Credit Facility Maturing May 2026 | ||||||||||
Long-Term Debt and Liquidity Matters | ||||||||||
Current borrowing capacity on credit facility | 1,000,000,000 | |||||||||
Maximum borrowing capacity on credit facility upon satisfaction of certain conditions and consent of lenders (up to) | 1,400,000,000 | |||||||||
APS | Revolving Credit Facility | Revolving Credit Facility Maturing May 2026, Facility One | ||||||||||
Long-Term Debt and Liquidity Matters | ||||||||||
Current borrowing capacity on credit facility | 500,000,000 | |||||||||
Maximum borrowing capacity on credit facility upon satisfaction of certain conditions and consent of lenders (up to) | 700,000,000 | |||||||||
APS | Revolving Credit Facility | Revolving Credit Facility Maturing May 2026, Facility Two | ||||||||||
Long-Term Debt and Liquidity Matters | ||||||||||
Current borrowing capacity on credit facility | 500,000,000 | |||||||||
Maximum borrowing capacity on credit facility upon satisfaction of certain conditions and consent of lenders (up to) | 700,000,000 | |||||||||
APS | Revolving Credit Facility | Revolving Credit Facility Maturing in 2022 and 2023 | ||||||||||
Long-Term Debt and Liquidity Matters | ||||||||||
Long-term line of credit | $ 0 | |||||||||
Number of line of credit facilities | creditFacility | 2 | |||||||||
APS | Letter of Credit | Revolving Credit Facility Maturing May 2026 | ||||||||||
Long-Term Debt and Liquidity Matters | ||||||||||
Outstanding letters of credit | $ 0 | |||||||||
APS | Commercial paper | ||||||||||
Long-Term Debt and Liquidity Matters | ||||||||||
Maximum commercial paper support available under credit facility | 750,000,000 | |||||||||
APS | Commercial paper | Revolving Credit Facility Maturing May 2026 | ||||||||||
Long-Term Debt and Liquidity Matters | ||||||||||
Commercial paper | 443,000,000 | |||||||||
BCE | ||||||||||
Long-Term Debt and Liquidity Matters | ||||||||||
Solar and battery storage capacity (in MW) | MW | 31 | |||||||||
BCE | Term Loan | Non-Recourse Construction Term Loan Facility | ||||||||||
Long-Term Debt and Liquidity Matters | ||||||||||
Debt instrument, face amount | $ 38,000,000 | |||||||||
Long-term line of credit | 0 | |||||||||
BCE | Letter of Credit | ||||||||||
Long-Term Debt and Liquidity Matters | ||||||||||
Debt instrument, face amount | 5,000,000 | |||||||||
BCE | Letter of Credit | Revolving Credit Facility Maturing May 2026 | ||||||||||
Long-Term Debt and Liquidity Matters | ||||||||||
Outstanding letters of credit | 2,500,000 | |||||||||
BCE | Bridge Loan | Equity Bridge Loan Facility | ||||||||||
Long-Term Debt and Liquidity Matters | ||||||||||
Debt instrument, face amount | 33,000,000 | |||||||||
Issuance of long-term debt | $ 27,600,000 | |||||||||
BCE | Pinnacle West | Bridge Loan | ||||||||||
Long-Term Debt and Liquidity Matters | ||||||||||
Debt guarantee | $ 42,000,000 |
Long-Term Debt and Liquidity Matters - Estimated Fair Value of Long-Term Debt (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Estimated fair value of long-term debt, including current maturities | ||
Carrying Amount | $ 7,371,833 | $ 7,063,735 |
Fair Value | 6,093,147 | 7,726,354 |
APS | ||
Estimated fair value of long-term debt, including current maturities | ||
Carrying Amount | 6,396,740 | 6,266,693 |
Fair Value | 5,167,359 | 6,933,619 |
BCE | ||
Estimated fair value of long-term debt, including current maturities | ||
Carrying Amount | 27,341 | 0 |
Fair Value | 27,628 | 0 |
Pinnacle West | ||
Estimated fair value of long-term debt, including current maturities | ||
Carrying Amount | 947,752 | 797,042 |
Fair Value | $ 898,160 | $ 792,735 |
Regulatory Matters - Retail Rate Case Filing (Details) |
Oct. 28, 2022
USD ($)
$ / kWh
|
Sep. 23, 2022
MW
|
Jun. 30, 2022
USD ($)
|
Mar. 31, 2022
MW
|
Dec. 17, 2021
USD ($)
|
Oct. 27, 2021
USD ($)
|
Aug. 02, 2021
USD ($)
|
Nov. 06, 2020
USD ($)
|
Oct. 31, 2019
USD ($)
$ / kWh
MW
|
Jun. 30, 2019
USD ($)
|
Aug. 13, 2018
USD ($)
|
Mar. 27, 2017
USD ($)
$ / kWh
|
Apr. 30, 2022
USD ($)
|
Dec. 31, 2021
USD ($)
|
Dec. 31, 2020
USD ($)
|
Dec. 04, 2020
USD ($)
|
Oct. 02, 2020
USD ($)
|
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
ACC | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Revenue increase (decrease) | $ 169,000,000 | $ 59,800,000 | $ 89,700,000 | ||||||||||||||
Average annual customer bill increase (decrease), percent | 5.14% | 1.82% | 2.70% | ||||||||||||||
Recommended return on equity, percentage | 10.00% | 9.40% | |||||||||||||||
Alternative, percentage | 0.30% | ||||||||||||||||
Increment of fair value rate, percentage | 0.80% | 0.00% | |||||||||||||||
Residential Utility Consumer Office | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Revenue increase (decrease) | $ (50,100,000) | $ (20,800,000) | |||||||||||||||
Average annual customer bill increase (decrease), percent | (1.52%) | (0.63%) | |||||||||||||||
Recommended return on equity, percentage | 8.74% | ||||||||||||||||
Increment of fair value rate, percentage | 0.00% | ||||||||||||||||
ACC | APS | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Proposed annual revenue increase | $ 184,000,000 | $ (86,500,000) | |||||||||||||||
ACC | APS | Subsequent Event | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Total revenue deficiency | $ 772,000,000 | ||||||||||||||||
Retail Rate Case Filing with Arizona Corporation Commission | ACC | APS | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Base rate decrease, elimination of tax expense adjustment mechanism | $ 115,000,000 | ||||||||||||||||
Approximate percentage of increase in average customer bill | 5.60% | ||||||||||||||||
Approximate percentage of increase in average residential customer bill | 5.40% | ||||||||||||||||
Rate matter, cost base rate | $ 10,500,000,000 | $ 8,870,000,000 | |||||||||||||||
Base fuel rate (in dollars per kWh) | $ / kWh | 0.030168 | ||||||||||||||||
Funding limited income crisis bill program | $ 1,250,000 | ||||||||||||||||
Commercial customers, market pricing, threshold | MW | 140 | 280 | 0.02 | ||||||||||||||
Revenue increase (decrease) | $ (111,000,000) | ||||||||||||||||
Recommended return on equity, percentage | 8.70% | 9.16% | |||||||||||||||
Increment of fair value rate, percentage | 0.30% | ||||||||||||||||
Reduction on equity percentage | 0.03% | ||||||||||||||||
Effective fair value percentage | 4.95% | ||||||||||||||||
Net retail base rate, increase | $ 94,600,000 | ||||||||||||||||
Non-fuel and non-depreciation base rate, increase | 87,200,000 | ||||||||||||||||
Fuel-related base rate decrease | 53,600,000 | ||||||||||||||||
Base rate increase, changes in depreciation schedules | $ 61,000,000 | ||||||||||||||||
Authorized return on common equity (as a percent) | 10.00% | ||||||||||||||||
Percentage of debt in capital structure | 44.20% | ||||||||||||||||
Percentage of common equity in capital structure | 55.80% | ||||||||||||||||
Rate matter, resource comparison proxy for exported energy (in dollars per kWh) | $ / kWh | 0.129 | ||||||||||||||||
Retail Rate Case Filing with Arizona Corporation Commission | ACC | APS | Subsequent Event | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Approximate percentage of increase in average residential customer bill | 13.60% | ||||||||||||||||
Base fuel rate (in dollars per kWh) | $ / kWh | 0.038321 | ||||||||||||||||
AZ Sun Program Phase 2 | Retail Rate Case Filing with Arizona Corporation Commission | ACC | APS | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Public utilities, minimum annual renewable energy standard and tariff | $ 10,000,000 | ||||||||||||||||
Public utilities, maximum annual renewable energy standard and tariff | $ 15,000,000 | ||||||||||||||||
Coal Community Transition Plan | ACC | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Amount funded by customers | $ 100,000,000 | ||||||||||||||||
Amount funded by customers, term | 10 years | ||||||||||||||||
Amount funded by shareholders | $ 25,000,000 | $ 25,000,000 | |||||||||||||||
Coal Community Transition Plan | ACC | Navajo Nation, Economic Development Organization | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Amount funded by shareholders | $ 1,250,000 | ||||||||||||||||
Amount funded by shareholders, term | 5 years | ||||||||||||||||
Coal Community Transition Plan | ACC | Navajo Nation, Electrification Projects | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Amount funded by customers | $ 10,000,000 | ||||||||||||||||
Amount funded by shareholders | 10,000,000 | $ 500,000 | |||||||||||||||
Coal Community Transition Plan | ACC | Navajo Nation, Transmission Revenue Sharing | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Amount funded by shareholders | 2,500,000 | ||||||||||||||||
Coal Community Transition Plan | ACC | Navajo County Communities | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Amount funded by customers | $ 12,000,000 | ||||||||||||||||
Amount funded by customers, term | 5 years | ||||||||||||||||
Coal Community Transition Plan | ACC | Navajo Nation, Generation Station | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Amount funded by customers | $ 3,700,000 | ||||||||||||||||
Coal Community Transition Plan | ACC | Navajo Nation, Hopi Tribe | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Amount recoverable through rates related to the CCT | 1,000,000 | ||||||||||||||||
Coal Community Transition Plan | ACC | Navajo Nation | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Amount recoverable through rates related to the CCT | 3,330,000 | ||||||||||||||||
Coal Community Transition Plan | ACC | Navajo Nation, Hopi Reservation | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Amount recoverable through rates related to the CCT | 1,250,000 | ||||||||||||||||
Coal Community Transition Plan | ACC | Navajo Nation, Navajo Plant | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Amount funded by customers | $ 900,000 | ||||||||||||||||
Coal Community Transition Plan | ACC | Navajo County Communities | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Amount recoverable through rates related to the CCT | 500,000 | ||||||||||||||||
Coal Community Transition Plan | ACC | Navajo County Communities, CCT and Economic Development | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Amount funded by shareholders | 1,100,000 | ||||||||||||||||
Coal Community Transition Plan | ACC | Navajo Nation, Hopi Tribe for CCT and Economic Development | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Amount funded by shareholders | $ 1,250,000 | ||||||||||||||||
Coal Community Transition Plan | Retail Rate Case Filing with Arizona Corporation Commission | ACC | APS | Navajo Nation, Economic Development Organization | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Disallowance of annual amortization percentage | 15.00% | ||||||||||||||||
Amount funded by customers | $ 50,000,000 | ||||||||||||||||
Amount funded by customers, term | 10 years | ||||||||||||||||
Coal Community Transition Plan | Retail Rate Case Filing with Arizona Corporation Commission | ACC | APS | Navajo County Communities | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Amount funded by shareholders | $ 500,000 | $ 5,000,000 | |||||||||||||||
Amount funded by shareholders, term | 60 days | 5 years | |||||||||||||||
Coal Community Transition Plan | Retail Rate Case Filing with Arizona Corporation Commission | ACC | APS | Navajo Nation, Hopi Tribe | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Amount not recoverable | $ 215,500,000 | ||||||||||||||||
Amount funded by shareholders | $ 1,000,000 | $ 1,675,000 | |||||||||||||||
Amount funded by shareholders, term | 60 days | ||||||||||||||||
Coal Community Transition Plan | Retail Rate Case Filing with Arizona Corporation Commission | ACC | APS | Navajo Nation | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Amount funded by shareholders | $ 10,000,000 | ||||||||||||||||
Amount funded by shareholders, term | 3 years | ||||||||||||||||
Coal Community Transition Plan | Retail Rate Case Filing with Arizona Corporation Commission | ACC | APS | Navajo Nation, Hopi Reservation | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Amount funded by shareholders | $ 1,250,000 | ||||||||||||||||
Coal Community Transition Plan | Retail Rate Case Filing with Arizona Corporation Commission | ACC | APS | Navajo Nation Reservation | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Revenue increase (decrease) | 4,800,000 | ||||||||||||||||
Amount funded by shareholders | $ 1,250,000 | ||||||||||||||||
Disallowance of plant investments | $ 215,000,000 | ||||||||||||||||
Minimum | ACC | APS | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Annual increase in retail base rates | $ 69,000,000 | ||||||||||||||||
Minimum | ACC | APS | Subsequent Event | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Annual increase in retail base rates | $ 460,000,000 | ||||||||||||||||
Minimum | Retail Rate Case Filing with Arizona Corporation Commission | ACC | APS | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Rate matter, environmental surcharge cap rate (in dollars per kWh) | $ / kWh | 0.00016 | ||||||||||||||||
Maximum | Retail Rate Case Filing with Arizona Corporation Commission | ACC | APS | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Rate matter, environmental surcharge cap rate (in dollars per kWh) | $ / kWh | 0.00050 |
Regulatory Matters - Capital Structure and Costs of Capital (Details) - APS - $ / kWh |
Oct. 28, 2022 |
Jul. 12, 2022 |
Oct. 01, 2021 |
May 01, 2020 |
Oct. 31, 2019 |
May 01, 2019 |
---|---|---|---|---|---|---|
Cost of Capital | ||||||
Long-term debt | 4.10% | |||||
Common stock equity | 10.15% | |||||
Weighted-average cost of capital | 7.41% | |||||
Subsequent Event | ||||||
Cost of Capital | ||||||
Long-term debt | 3.85% | |||||
Common stock equity | 10.25% | |||||
Weighted-average cost of capital | 7.17% | |||||
Retail Rate Case Filing with Arizona Corporation Commission | ||||||
Capital Structure | ||||||
Common stock equity | 54.70% | |||||
Retail Rate Case Filing with Arizona Corporation Commission | Subsequent Event | ||||||
Capital Structure | ||||||
Common stock equity | 51.93% | |||||
Retail Rate Case Filing with Arizona Corporation Commission | ACC | ||||||
Capital Structure | ||||||
Long-term debt | 45.30% | |||||
Retail Rate Case Filing with Arizona Corporation Commission | ACC | Subsequent Event | ||||||
Capital Structure | ||||||
Long-term debt | 48.07% | |||||
Net Metering | ACC | ||||||
Cost of Capital | ||||||
Second-year export energy price (in dollars per kWh) | 0.0846 | 0.094 | 0.094 | 0.105 |
Regulatory Matters - Cost Recovery Mechanisms (Details) |
1 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 12, 2022
USD ($)
$ / kWh
|
Jun. 01, 2022
USD ($)
|
Feb. 15, 2022
USD ($)
|
Feb. 01, 2022
USD ($)
$ / kWh
$ / KWH_Kilowatt_hour
|
Nov. 01, 2021
$ / kWh
|
Oct. 01, 2021
USD ($)
$ / kWh
|
Jun. 07, 2021
USD ($)
|
Jun. 01, 2021
USD ($)
|
Apr. 01, 2021
$ / kWh
|
Feb. 22, 2021
USD ($)
|
Feb. 15, 2021
USD ($)
|
Feb. 01, 2021
USD ($)
$ / kWh
|
Aug. 20, 2020
USD ($)
customer
|
Jun. 01, 2020
USD ($)
|
May 01, 2020
$ / kWh
|
Feb. 14, 2020
USD ($)
|
Feb. 01, 2020
$ / kWh
|
Nov. 14, 2019
USD ($)
customer
|
Oct. 31, 2019
USD ($)
$ / KWH_Kilowatt_hour
|
Oct. 29, 2019
USD ($)
|
May 01, 2019
$ / kWh
|
Apr. 10, 2019 |
Aug. 13, 2018
USD ($)
|
Nov. 20, 2017
USD ($)
|
Sep. 01, 2017
USD ($)
|
Mar. 27, 2017
$ / kWh
|
Mar. 31, 2021 |
Sep. 30, 2022
USD ($)
|
Sep. 30, 2021
USD ($)
|
Dec. 31, 2020
USD ($)
program
MW
|
Dec. 31, 2017
$ / kWh
|
Dec. 31, 2017
$ / KWH_Kilowatt_hour
|
Jul. 01, 2022
USD ($)
|
Apr. 18, 2022
USD ($)
|
Dec. 31, 2021
USD ($)
|
Dec. 17, 2021
USD ($)
|
Dec. 09, 2021
USD ($)
|
Jul. 01, 2021
USD ($)
|
Jul. 01, 2020
USD ($)
|
May 15, 2020
USD ($)
|
May 05, 2020
USD ($)
|
Dec. 31, 2019
USD ($)
|
Jul. 01, 2019
USD ($)
|
Mar. 15, 2019
agreement
|
Dec. 31, 2018
USD ($)
|
Nov. 14, 2017
USD ($)
|
|
Change in regulatory asset | ||||||||||||||||||||||||||||||||||||||||||||||
Deferred fuel and purchased power costs — current period | $ 228,483,000 | $ 224,541,000 | ||||||||||||||||||||||||||||||||||||||||||||
Amounts charged to customers | (171,607,000) | (25,195,000) | ||||||||||||||||||||||||||||||||||||||||||||
Rate plan comparison tool, number of customers | customer | 3,800 | 13,000 | ||||||||||||||||||||||||||||||||||||||||||||
Rate plan comparison tool, inconvenience payment | $ 25 | $ 25 | ||||||||||||||||||||||||||||||||||||||||||||
APS | ||||||||||||||||||||||||||||||||||||||||||||||
Change in regulatory asset | ||||||||||||||||||||||||||||||||||||||||||||||
Deferred fuel and purchased power costs — current period | 228,483,000 | 224,541,000 | ||||||||||||||||||||||||||||||||||||||||||||
Amounts charged to customers | $ (171,607,000) | (25,195,000) | ||||||||||||||||||||||||||||||||||||||||||||
Percentage increase under PSA effective for first billing cycle beginning April 2021 | 50.00% | |||||||||||||||||||||||||||||||||||||||||||||
Remaining percentage increase under PSA effective for first billing cycle beginning November 2021 | 50.00% | |||||||||||||||||||||||||||||||||||||||||||||
Demand side management funds | $ 36,000,000 | |||||||||||||||||||||||||||||||||||||||||||||
Customer credits | $ 43,000,000 | |||||||||||||||||||||||||||||||||||||||||||||
Customer credits, additional funds | $ 7,000,000 | |||||||||||||||||||||||||||||||||||||||||||||
APS | 2017 Settlement Agreement and its Customer Education and Outreach Plan | ||||||||||||||||||||||||||||||||||||||||||||||
Change in regulatory asset | ||||||||||||||||||||||||||||||||||||||||||||||
Settlement amount | $ 24,750,000 | |||||||||||||||||||||||||||||||||||||||||||||
Settlement amount returned to customers | $ 24,000,000 | |||||||||||||||||||||||||||||||||||||||||||||
Lost Fixed Cost Recovery Mechanisms | APS | ||||||||||||||||||||||||||||||||||||||||||||||
Change in regulatory asset | ||||||||||||||||||||||||||||||||||||||||||||||
Fixed cost recoverable per power lost (in dollars per kWh) | 0.025 | 2.56 | ||||||||||||||||||||||||||||||||||||||||||||
Percentage of retail revenues | 1.00% | |||||||||||||||||||||||||||||||||||||||||||||
Amount of adjustment representing prorated sales losses pending approval | $ 59,100,000 | $ 38,500,000 | $ 26,600,000 | |||||||||||||||||||||||||||||||||||||||||||
Increase (decrease) in amount of adjustment representing prorated sales losses | $ 32,500,000 | $ 11,800,000 | $ (9,600,000) | |||||||||||||||||||||||||||||||||||||||||||
ACC | APS | ||||||||||||||||||||||||||||||||||||||||||||||
Settlement Agreement | ||||||||||||||||||||||||||||||||||||||||||||||
Program term | 18 years | |||||||||||||||||||||||||||||||||||||||||||||
Change in regulatory asset | ||||||||||||||||||||||||||||||||||||||||||||||
Amount requested to be returned in form of tax savings to customers | $ (184,000,000) | $ 86,500,000 | ||||||||||||||||||||||||||||||||||||||||||||
Deferred taxes amortization, period | 28 years 6 months | |||||||||||||||||||||||||||||||||||||||||||||
Public Utilities, one-time bill credit | $ 64,000,000 | |||||||||||||||||||||||||||||||||||||||||||||
Public Utilities, one-time bill credit, additional benefit | $ 39,500,000 | |||||||||||||||||||||||||||||||||||||||||||||
Number of programs | program | 2 | |||||||||||||||||||||||||||||||||||||||||||||
Solar capacity (in MW) | MW | 80 | |||||||||||||||||||||||||||||||||||||||||||||
ACC | RES | APS | ||||||||||||||||||||||||||||||||||||||||||||||
Settlement Agreement | ||||||||||||||||||||||||||||||||||||||||||||||
Plan term | 5 years | |||||||||||||||||||||||||||||||||||||||||||||
ACC | RES 2018 | APS | ||||||||||||||||||||||||||||||||||||||||||||||
Settlement Agreement | ||||||||||||||||||||||||||||||||||||||||||||||
Amount of proposed budget | $ 86,200,000 | $ 100,500,000 | $ 93,100,000 | $ 84,700,000 | $ 86,300,000 | |||||||||||||||||||||||||||||||||||||||||
Revenue requirements | $ 4,500,000 | |||||||||||||||||||||||||||||||||||||||||||||
Authorized amount to be collected | $ 68,300,000 | |||||||||||||||||||||||||||||||||||||||||||||
ACC | RES 2018 | APS | Solar Communities | ||||||||||||||||||||||||||||||||||||||||||||||
Settlement Agreement | ||||||||||||||||||||||||||||||||||||||||||||||
Program term | 3 years | |||||||||||||||||||||||||||||||||||||||||||||
ACC | Demand Side Management Adjustor Charge 2018 | APS | ||||||||||||||||||||||||||||||||||||||||||||||
Settlement Agreement | ||||||||||||||||||||||||||||||||||||||||||||||
Amount of proposed budget | $ 52,600,000 | $ 52,600,000 | ||||||||||||||||||||||||||||||||||||||||||||
ACC | Demand Side Management Adjustor Charge 2019 | APS | ||||||||||||||||||||||||||||||||||||||||||||||
Settlement Agreement | ||||||||||||||||||||||||||||||||||||||||||||||
Amount of proposed budget | $ 34,100,000 | |||||||||||||||||||||||||||||||||||||||||||||
ACC | Demand Side Management Adjustor Charge 2020 | APS | ||||||||||||||||||||||||||||||||||||||||||||||
Settlement Agreement | ||||||||||||||||||||||||||||||||||||||||||||||
Amount of proposed budget | $ 51,900,000 | $ 51,900,000 | ||||||||||||||||||||||||||||||||||||||||||||
ACC | Power Supply Adjustor (PSA) | APS | ||||||||||||||||||||||||||||||||||||||||||||||
Change in regulatory asset | ||||||||||||||||||||||||||||||||||||||||||||||
Beginning balance | $ 375,181,000 | $ 388,148,000 | 175,835,000 | |||||||||||||||||||||||||||||||||||||||||||
Deferred fuel and purchased power costs — current period | 228,483,000 | 224,541,000 | ||||||||||||||||||||||||||||||||||||||||||||
Amounts charged to customers | (171,606,000) | (25,195,000) | ||||||||||||||||||||||||||||||||||||||||||||
Ending balance | $ 445,025,000 | $ 375,181,000 | $ 175,835,000 | |||||||||||||||||||||||||||||||||||||||||||
PSA rate (in dollars per kWh) | $ / kWh | 0.007544 | 0.003544 | 0.001544 | 0.003544 | (0.000456) | |||||||||||||||||||||||||||||||||||||||||
PSA rate for prior year (in dollars per kWh) | $ / kWh | 0.004842 | (0.004444) | (0.004444) | 0.003434 | (0.002086) | |||||||||||||||||||||||||||||||||||||||||
Forward component of increase in PSA (in dollars per kWh) | 0.012386 | 0.007988 | 0.005988 | 0.000110 | 0.001630 | |||||||||||||||||||||||||||||||||||||||||
Fuel and purchased power costs above annual cap | $ 365,000,000 | $ 215,900,000 | ||||||||||||||||||||||||||||||||||||||||||||
ACC | Net Metering | APS | ||||||||||||||||||||||||||||||||||||||||||||||
Change in regulatory asset | ||||||||||||||||||||||||||||||||||||||||||||||
Cost of service, resource comparison proxy method, maximum annual percentage decrease | 10.00% | 10.00% | ||||||||||||||||||||||||||||||||||||||||||||
Cost of service for interconnected DG system customers, grandfathered period | 20 years | |||||||||||||||||||||||||||||||||||||||||||||
Cost of service for new customers, guaranteed export price period | 10 years | |||||||||||||||||||||||||||||||||||||||||||||
Second-year export energy price (in dollars per kWh) | $ / kWh | 0.0846 | 0.094 | 0.094 | 0.105 | ||||||||||||||||||||||||||||||||||||||||||
ACC | Demand Side Management Adjustor Charge 2021 | APS | ||||||||||||||||||||||||||||||||||||||||||||||
Settlement Agreement | ||||||||||||||||||||||||||||||||||||||||||||||
Amount of proposed budget | $ 63,700,000 | |||||||||||||||||||||||||||||||||||||||||||||
ACC | Demand Side Management Adjustor Charge 2022 | APS | ||||||||||||||||||||||||||||||||||||||||||||||
Settlement Agreement | ||||||||||||||||||||||||||||||||||||||||||||||
Amount of proposed budget | $ 78,400,000 | |||||||||||||||||||||||||||||||||||||||||||||
Change in regulatory asset | ||||||||||||||||||||||||||||||||||||||||||||||
Increase in proposed budget | $ 14,000,000 | |||||||||||||||||||||||||||||||||||||||||||||
FERC | Environmental Improvement Surcharge | APS | ||||||||||||||||||||||||||||||||||||||||||||||
Change in regulatory asset | ||||||||||||||||||||||||||||||||||||||||||||||
Rate matter, environmental surcharge cap rate (in dollars per kWh) | $ / KWH_Kilowatt_hour | 0.0005 | |||||||||||||||||||||||||||||||||||||||||||||
Increase (decrease) in annual wholesale transmission rates | 11,400,000 | |||||||||||||||||||||||||||||||||||||||||||||
Rate matters, increase (decrease) in cost recovery, excess of annual amount | $ 1,100,000 | |||||||||||||||||||||||||||||||||||||||||||||
FERC | Open Access Transmission Tariff | APS | ||||||||||||||||||||||||||||||||||||||||||||||
Change in regulatory asset | ||||||||||||||||||||||||||||||||||||||||||||||
Increase (decrease) in annual wholesale transmission rates | $ 33,000,000 | $ 4,000,000 | $ (6,100,000) | |||||||||||||||||||||||||||||||||||||||||||
Increase (decrease) in wholesale customer rates | (6,400,000) | (3,200,000) | 4,800,000 | |||||||||||||||||||||||||||||||||||||||||||
Increase (decrease) in retail customer rates | 26,600,000 | 7,200,000 | (10,900,000) | |||||||||||||||||||||||||||||||||||||||||||
Increase (decrease) in retail revenue requirements | $ (2,400,000) | $ (28,400,000) | $ (7,400,000) | |||||||||||||||||||||||||||||||||||||||||||
Cost Recovery Mechanisms | ACC | Power Supply Adjustor (PSA) | APS | ||||||||||||||||||||||||||||||||||||||||||||||
Change in regulatory asset | ||||||||||||||||||||||||||||||||||||||||||||||
Historical component of increase in PSA (in dollars per kWh) | $ / kWh | 0.004 | 0.004 | (0.002115) | |||||||||||||||||||||||||||||||||||||||||||
Cost recovery, number of agreements | agreement | 2 | |||||||||||||||||||||||||||||||||||||||||||||
Minimum | ACC | APS | ||||||||||||||||||||||||||||||||||||||||||||||
Change in regulatory asset | ||||||||||||||||||||||||||||||||||||||||||||||
Operating results | $ (69,000,000) | |||||||||||||||||||||||||||||||||||||||||||||
Minimum | ACC | RES 2018 | APS | ||||||||||||||||||||||||||||||||||||||||||||||
Change in regulatory asset | ||||||||||||||||||||||||||||||||||||||||||||||
Authorized spending | $ 20,000,000 | |||||||||||||||||||||||||||||||||||||||||||||
Minimum | ACC | RES 2018 | APS | Solar Communities | ||||||||||||||||||||||||||||||||||||||||||||||
Settlement Agreement | ||||||||||||||||||||||||||||||||||||||||||||||
Required annual capital investment | $ 10,000,000 | |||||||||||||||||||||||||||||||||||||||||||||
Minimum | ACC | Retail Rate Case Filing with Arizona Corporation Commission | APS | ||||||||||||||||||||||||||||||||||||||||||||||
Change in regulatory asset | ||||||||||||||||||||||||||||||||||||||||||||||
Rate matter, environmental surcharge cap rate (in dollars per kWh) | $ / kWh | 0.00016 | |||||||||||||||||||||||||||||||||||||||||||||
Minimum | FERC | Environmental Improvement Surcharge | APS | ||||||||||||||||||||||||||||||||||||||||||||||
Change in regulatory asset | ||||||||||||||||||||||||||||||||||||||||||||||
Rate matter, environmental surcharge cap rate amount | $ 13,000,000 | |||||||||||||||||||||||||||||||||||||||||||||
Maximum | Retail Rate Case Filing with Arizona Corporation Commission | APS | ||||||||||||||||||||||||||||||||||||||||||||||
Change in regulatory asset | ||||||||||||||||||||||||||||||||||||||||||||||
Fixed cost recoverable per power lost (in dollars per kWh) | $ / KWH_Kilowatt_hour | 2.68 | |||||||||||||||||||||||||||||||||||||||||||||
Maximum | ACC | RES 2018 | APS | ||||||||||||||||||||||||||||||||||||||||||||||
Change in regulatory asset | ||||||||||||||||||||||||||||||||||||||||||||||
Authorized spending | $ 30,000,000 | |||||||||||||||||||||||||||||||||||||||||||||
Maximum | ACC | RES 2018 | APS | Solar Communities | ||||||||||||||||||||||||||||||||||||||||||||||
Settlement Agreement | ||||||||||||||||||||||||||||||||||||||||||||||
Required annual capital investment | $ 15,000,000 | |||||||||||||||||||||||||||||||||||||||||||||
Maximum | ACC | Retail Rate Case Filing with Arizona Corporation Commission | APS | ||||||||||||||||||||||||||||||||||||||||||||||
Change in regulatory asset | ||||||||||||||||||||||||||||||||||||||||||||||
Rate matter, environmental surcharge cap rate (in dollars per kWh) | $ / kWh | 0.00050 | |||||||||||||||||||||||||||||||||||||||||||||
Maximum | FERC | Environmental Improvement Surcharge | APS | ||||||||||||||||||||||||||||||||||||||||||||||
Change in regulatory asset | ||||||||||||||||||||||||||||||||||||||||||||||
Rate matter, environmental surcharge cap rate amount | $ 14,000,000 | |||||||||||||||||||||||||||||||||||||||||||||
Damage from Fire, Explosion or Other Hazard | APS | ||||||||||||||||||||||||||||||||||||||||||||||
Change in regulatory asset | ||||||||||||||||||||||||||||||||||||||||||||||
Past due balance threshold qualifying for payment extension | $ 75 |
Regulatory Matters - Four Corners, Cholla and Navajo Plant (Details) - APS - USD ($) $ in Millions |
1 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Nov. 02, 2021 |
Sep. 30, 2018 |
Apr. 30, 2018 |
Sep. 30, 2022 |
Aug. 02, 2021 |
|
Navajo Nation, Economic Development Organization | Coal Community Transition Plan | Retail Rate Case Filing with Arizona Corporation Commission | ACC | |||||
Business Acquisition [Line Items] | |||||
Disallowance of annual amortization percentage | 15.00% | ||||
SCE | Four Corners Units 4 and 5 | |||||
Business Acquisition [Line Items] | |||||
Settlement agreement, ACC approved rate adjustment, annualized customer impact | $ 58.5 | $ 67.5 | |||
Disallowance of plant investments | $ 194.0 | ||||
Cost deferrals | $ 215.5 | ||||
Amount not recoverable | $ 154.4 | ||||
Retired power plant costs | |||||
Business Acquisition [Line Items] | |||||
Net book value | 38.4 | ||||
Navajo Plant | |||||
Business Acquisition [Line Items] | |||||
Net book value | 55.0 | ||||
Navajo Plant, Coal Reclamation Regulatory Asset | |||||
Business Acquisition [Line Items] | |||||
Net book value | $ 14.6 |
Regulatory Matters - Schedule of Regulatory Assets (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Detail of regulatory assets | ||
Current | $ 539,701 | $ 518,524 |
Non-Current | 1,173,415 | 1,192,987 |
Pension | ||
Detail of regulatory assets | ||
Current | 0 | 0 |
Non-Current | 511,382 | 509,751 |
Deferred fuel and purchased power | ||
Detail of regulatory assets | ||
Current | 445,025 | 388,148 |
Non-Current | 0 | 0 |
Income taxes — allowance for funds used during construction (“AFUDC”) equity | ||
Detail of regulatory assets | ||
Current | 7,625 | 7,625 |
Non-Current | 173,136 | 164,768 |
Ocotillo deferral | ||
Detail of regulatory assets | ||
Current | 9,507 | 9,507 |
Non-Current | 131,013 | 138,143 |
Retired power plant costs | ||
Detail of regulatory assets | ||
Current | 15,157 | 15,160 |
Non-Current | 87,324 | 99,681 |
SCR deferral | ||
Detail of regulatory assets | ||
Current | 8,147 | 8,147 |
Non-Current | 91,514 | 97,624 |
Deferred property taxes | ||
Detail of regulatory assets | ||
Current | 8,569 | 8,569 |
Non-Current | 34,630 | 41,057 |
Deferred compensation | ||
Detail of regulatory assets | ||
Current | 0 | 0 |
Non-Current | 34,251 | 33,997 |
Income taxes — investment tax credit basis adjustment | ||
Detail of regulatory assets | ||
Current | 826 | 1,129 |
Non-Current | 22,996 | 23,639 |
Lost fixed cost recovery | ||
Detail of regulatory assets | ||
Current | 23,275 | 63,889 |
Non-Current | 0 | 0 |
Palo Verde VIEs (Note 6) | ||
Detail of regulatory assets | ||
Current | 0 | 0 |
Non-Current | 20,973 | 21,094 |
Active Union Medical Trust | ||
Detail of regulatory assets | ||
Current | 0 | 0 |
Non-Current | 19,086 | 1,175 |
Four Corners cost deferral | ||
Detail of regulatory assets | ||
Current | 8,077 | 8,077 |
Non-Current | 9,941 | 15,998 |
Coal reclamation | ||
Detail of regulatory assets | ||
Current | 2,978 | 2,978 |
Non-Current | 11,628 | 13,862 |
Loss on reacquired debt | ||
Detail of regulatory assets | ||
Current | 1,648 | 1,648 |
Non-Current | 8,183 | 9,372 |
Mead-Phoenix transmission line contributions in aid of construction (“CIAC”) | ||
Detail of regulatory assets | ||
Current | 332 | 332 |
Non-Current | 8,799 | 9,048 |
Tax expense adjustor mechanism (b) (e) | ||
Detail of regulatory assets | ||
Current | 656 | 656 |
Non-Current | 5,354 | 5,845 |
TCA balancing account | ||
Detail of regulatory assets | ||
Current | 5,413 | 170 |
Non-Current | 0 | 3,663 |
Tax expense of Medicare subsidy | ||
Detail of regulatory assets | ||
Current | 1,235 | 1,235 |
Non-Current | 1,111 | 2,469 |
Other | ||
Detail of regulatory assets | ||
Current | 1,231 | 1,254 |
Non-Current | $ 2,094 | $ 1,801 |
Regulatory Matters - Schedule of Regulatory Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Detail of regulatory liabilities | ||
Current | $ 420,357 | $ 296,271 |
Non-Current | 2,108,289 | 2,499,213 |
Other postretirement benefits | ||
Detail of regulatory liabilities | ||
Current | 50,624 | 37,789 |
Non-Current | 292,490 | 337,027 |
Asset retirement obligations | ||
Detail of regulatory liabilities | ||
Current | 0 | 0 |
Non-Current | 316,513 | 614,683 |
Deferred fuel and purchased power — mark-to-market (Note 7) | ||
Detail of regulatory liabilities | ||
Current | 172,946 | 60,693 |
Non-Current | 86,243 | 46,908 |
Removal costs | ||
Detail of regulatory liabilities | ||
Current | 72,955 | 69,476 |
Non-Current | 35,619 | 50,104 |
Income taxes — change in rates | ||
Detail of regulatory liabilities | ||
Current | 2,876 | 2,876 |
Non-Current | 61,642 | 64,802 |
Four Corners coal reclamation | ||
Detail of regulatory liabilities | ||
Current | 2,316 | 2,316 |
Non-Current | 50,013 | 53,076 |
Income taxes — deferred investment tax credit | ||
Detail of regulatory liabilities | ||
Current | 2,264 | 2,264 |
Non-Current | 45,436 | 47,337 |
Spent nuclear fuel | ||
Detail of regulatory liabilities | ||
Current | 7,224 | 6,701 |
Non-Current | 33,377 | 38,581 |
Renewable energy standard (b) | ||
Detail of regulatory liabilities | ||
Current | 29,626 | 38,453 |
Non-Current | 661 | 187 |
FERC transmission true up (b) | ||
Detail of regulatory liabilities | ||
Current | 21,354 | 21,379 |
Non-Current | 659 | 12,924 |
Property tax deferral (e) | ||
Detail of regulatory liabilities | ||
Current | 4,671 | 4,671 |
Non-Current | 12,018 | 15,521 |
Sundance maintenance | ||
Detail of regulatory liabilities | ||
Current | 0 | 0 |
Non-Current | 16,119 | 13,797 |
Demand side management (b) | ||
Detail of regulatory liabilities | ||
Current | 4,759 | 0 |
Non-Current | 9,214 | 5,417 |
Tax expense adjustor mechanism (b) (e) | ||
Detail of regulatory liabilities | ||
Current | 0 | 0 |
Non-Current | 4,835 | 4,835 |
Other | ||
Detail of regulatory liabilities | ||
Current | 600 | 1,511 |
Non-Current | 2,998 | 592 |
ACC | Excess deferred income taxes - Tax Act | ||
Detail of regulatory liabilities | ||
Current | 40,903 | 40,903 |
Non-Current | 926,539 | 971,545 |
FERC | Excess deferred income taxes - Tax Act | ||
Detail of regulatory liabilities | ||
Current | 7,239 | 7,239 |
Non-Current | $ 213,913 | $ 221,877 |
Retirement Plans and Other Postretirement Benefits - Narrative (Details) - USD ($) $ in Millions |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2022 |
Dec. 31, 2021 |
|
Pension Benefits | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Minimum employer contributions for the next three years | $ 0 | |
Other Benefits | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Retiree medical cost reimbursement | $ 26 | $ 24 |
Retirement Plans and Other Postretirement Benefits - Schedule of Net Benefit Cost (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Amortization of: | ||||
Portion of benefit charged to expense | $ (24,673) | $ (28,135) | $ (73,739) | $ (84,101) |
Pension Benefits | ||||
Retirement Plans and Other Benefits | ||||
Service cost — benefits earned during the period | 13,868 | 15,309 | 41,605 | 45,927 |
Interest cost on benefit obligation | 26,873 | 24,641 | 80,619 | 73,924 |
Expected return on plan assets | (46,443) | (50,657) | (139,331) | (151,971) |
Amortization of: | ||||
Prior service credit | 0 | 0 | 0 | 0 |
Net actuarial loss (gain) | 4,379 | 3,987 | 13,136 | 11,961 |
Net periodic benefit | (1,323) | (6,720) | (3,971) | (20,159) |
Portion of benefit charged to expense | (4,246) | (7,803) | (12,258) | (24,428) |
Other Benefits | ||||
Retirement Plans and Other Benefits | ||||
Service cost — benefits earned during the period | 4,117 | 4,449 | 12,352 | 13,347 |
Interest cost on benefit obligation | 4,372 | 4,128 | 13,118 | 12,385 |
Expected return on plan assets | (11,510) | (10,361) | (34,531) | (31,083) |
Amortization of: | ||||
Prior service credit | (9,447) | (9,425) | (28,341) | (28,279) |
Net actuarial loss (gain) | (3,209) | (2,523) | (9,627) | (7,569) |
Net periodic benefit | (15,677) | (13,732) | (47,029) | (41,199) |
Portion of benefit charged to expense | $ (11,318) | $ (9,765) | $ (33,736) | $ (28,901) |
Palo Verde Sale Leaseback Variable Interest Entities - Narrative (Details) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2022
USD ($)
powerPlant
|
Sep. 30, 2021
USD ($)
|
Sep. 30, 2022
USD ($)
lease
powerPlant
|
Sep. 30, 2021
USD ($)
|
Dec. 31, 1986
trust
|
|
Palo Verde Sale Leaseback Variable Interest Entities | |||||
Net income attributable to noncontrolling interest | $ 4,306,000 | $ 4,306,000 | $ 12,918,000 | $ 12,918,000 | |
APS | |||||
Palo Verde Sale Leaseback Variable Interest Entities | |||||
Number of VIE lessor trusts | 3 | 3 | 3 | ||
Net income attributable to noncontrolling interest | $ 4,306,000 | 4,306,000 | $ 12,918,000 | 12,918,000 | |
Palo Verde VIE | APS | |||||
Palo Verde Sale Leaseback Variable Interest Entities | |||||
Net income attributable to noncontrolling interest | $ 4,000,000 | $ 4,000,000 | 13,000,000 | $ 13,000,000 | |
Initial loss exposure to the VIE's noncontrolling equity participants during lease extension period | 315,000,000 | ||||
Palo Verde VIE | APS | Maximum | |||||
Palo Verde Sale Leaseback Variable Interest Entities | |||||
Maximum loss exposure to the VIE's noncontrolling equity participants during lease extension period (up to) | $ 501,000,000 | ||||
Palo Verde VIE | APS | Period through 2033 | |||||
Palo Verde Sale Leaseback Variable Interest Entities | |||||
Number of leases under which assets are retained | lease | 3 | ||||
Annual lease payments | $ 21,000,000 | ||||
Palo Verde VIE | APS | Period through 2033 | Maximum | |||||
Palo Verde Sale Leaseback Variable Interest Entities | |||||
Lease period (up to) | 2 years |
Palo Verde Sale Leaseback Variable Interest Entities - Schedule of VIEs (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Palo Verde Sale Leaseback Variable Interest Entities | ||
Palo Verde sale leaseback property, plant and equipment, net of accumulated depreciation | $ 16,614,539 | $ 15,987,434 |
Amounts relating to the VIEs included in Condensed Consolidated Balance Sheets | ||
Equity — Noncontrolling interests | 117,550 | 115,260 |
APS | ||
Palo Verde Sale Leaseback Variable Interest Entities | ||
Palo Verde sale leaseback property, plant and equipment, net of accumulated depreciation | 16,590,358 | 15,985,346 |
Amounts relating to the VIEs included in Condensed Consolidated Balance Sheets | ||
Equity — Noncontrolling interests | 117,550 | 115,260 |
Palo Verde VIE | APS | ||
Palo Verde Sale Leaseback Variable Interest Entities | ||
Palo Verde sale leaseback property, plant and equipment, net of accumulated depreciation | 91,264 | 94,166 |
Amounts relating to the VIEs included in Condensed Consolidated Balance Sheets | ||
Equity — Noncontrolling interests | $ 117,550 | $ 115,260 |
Derivative Accounting - Narrative (Details) $ in Thousands |
Sep. 30, 2022
USD ($)
|
---|---|
Commodity Contracts | |
Derivative Accounting | |
Aggregate fair value of derivative instruments in a net liability position | $ 3,563 |
Additional collateral to counterparties for energy related non-derivative instrument contracts | 76,000 |
Risk Management Assets | Credit Concentration Risk | |
Derivative Accounting | |
Aggregate fair value of derivative instruments in a net liability position | $ 252,000 |
Risk Management Assets | Credit Concentration Risk | One Counterparties | |
Derivative Accounting | |
Concentration risk | 18.00% |
APS | |
Derivative Accounting | |
Percentage of unrealized gains and losses on certain derivatives deferred for future rate treatment | 100.00% |
Derivative Accounting - Schedule of Gross Notional Amounts Outstanding (Details) - Commodity Contracts GWh in Thousands, Bcf in Thousands |
Sep. 30, 2022
GWh
Bcf
|
Dec. 31, 2021
GWh
Bcf
|
---|---|---|
Outstanding gross notional amount of derivatives | ||
Power | GWh | 781 | 0 |
Gas | Bcf | 139 | 155 |
Derivative Accounting - Gains and Losses from Derivative Instruments (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Not Designated as Hedging Instruments | Commodity Contracts | Fuel and purchased power | ||||
Gains and losses from derivative instruments | ||||
Net Gain Recognized in Income | $ 138,855 | $ 147,712 | $ 425,122 | $ 269,686 |
Derivative Accounting - Derivative Instruments in the Balance Sheets (Details) - USD ($) |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Assets | ||
Gross Recognized Derivatives | $ 251,658,000 | $ 110,389,000 |
Liabilities | ||
Gross Recognized Derivatives | (4,298,000) | |
Amount Reported on Balance Sheets | (7,861,000) | (4,373,000) |
Commodity Contracts | ||
Assets | ||
Gross Recognized Derivatives | 262,753,000 | 115,079,000 |
Amounts Offset | (11,113,000) | (4,740,000) |
Net Recognized Derivatives | 251,640,000 | 110,339,000 |
Other | 18,000 | 50,000 |
Amount Reported on Balance Sheets | 251,658,000 | 110,389,000 |
Liabilities | ||
Gross Recognized Derivatives | (3,564,000) | (7,478,000) |
Amounts Offset | 2,313,000 | 4,740,000 |
Net Recognized Derivatives | (1,251,000) | (2,738,000) |
Other | (6,610,000) | (1,635,000) |
Amount Reported on Balance Sheets | (7,861,000) | (4,373,000) |
Assets and Liabilities | ||
Gross Recognized Derivatives | 259,189,000 | 107,601,000 |
Amounts Offset | (8,800,000) | 0 |
Net Recognized Derivatives | 250,389,000 | 107,601,000 |
Other | (6,592,000) | (1,585,000) |
Amount Reported on Balance Sheets | 243,797,000 | 106,016,000 |
Cash collateral received subject to offsetting | 8,800,000 | |
Cash collateral received from counterparties | 6,610,000 | 1,635,000 |
Commodity Contracts | Current assets | ||
Assets | ||
Gross Recognized Derivatives | 175,362,000 | 66,777,000 |
Amounts Offset | (10,586,000) | (3,346,000) |
Net Recognized Derivatives | 164,776,000 | 63,431,000 |
Other | 18,000 | 50,000 |
Amount Reported on Balance Sheets | 164,794,000 | 63,481,000 |
Commodity Contracts | Investments and other assets | ||
Assets | ||
Gross Recognized Derivatives | 87,391,000 | 48,302,000 |
Amounts Offset | (527,000) | (1,394,000) |
Net Recognized Derivatives | 86,864,000 | 46,908,000 |
Other | 0 | 0 |
Amount Reported on Balance Sheets | 86,864,000 | 46,908,000 |
Commodity Contracts | Current liabilities | ||
Liabilities | ||
Gross Recognized Derivatives | (2,416,000) | (6,084,000) |
Amounts Offset | 1,786,000 | 3,346,000 |
Net Recognized Derivatives | (630,000) | (2,738,000) |
Other | (6,610,000) | (1,635,000) |
Amount Reported on Balance Sheets | (7,240,000) | (4,373,000) |
Assets and Liabilities | ||
Cash collateral received from counterparties | 6,610,000 | 1,635,000 |
Commodity Contracts | Deferred credits and other | ||
Liabilities | ||
Gross Recognized Derivatives | (1,148,000) | (1,394,000) |
Amounts Offset | 527,000 | 1,394,000 |
Net Recognized Derivatives | (621,000) | 0 |
Other | 0 | 0 |
Amount Reported on Balance Sheets | (621,000) | 0 |
Assets and Liabilities | ||
Cash collateral received from counterparties | $ 0 | $ 0 |
Derivative Accounting - Credit Risk and Credit Related Contingent Features (Details) - Commodity Contracts $ in Thousands |
Sep. 30, 2022
USD ($)
|
---|---|
Credit Risk and Credit-Related Contingent Features | |
Aggregate fair value of derivative instruments in a net liability position | $ 3,563 |
Additional cash collateral in the event credit-risk-related contingent features were fully triggered (a) | $ 545 |
Commitments and Contingencies (Details) |
9 Months Ended | 108 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 31, 2022
claim
|
Nov. 02, 2021
USD ($)
|
Nov. 01, 2021
USD ($)
|
Feb. 22, 2021
USD ($)
|
Jul. 03, 2018
USD ($)
|
Apr. 05, 2018
defendant
plaintiff
|
Dec. 16, 2016
plaintiff
|
Jul. 06, 2016 |
Aug. 06, 2013
defendant
|
Sep. 30, 2022
USD ($)
powerPlant
|
Jun. 30, 2020
USD ($)
timePeriod
claim
|
Dec. 31, 1986
trust
|
|
Commitments and Contingencies | ||||||||||||
Production tax credit guarantees | $ 34,000,000 | |||||||||||
APS | ||||||||||||
Commitments and Contingencies | ||||||||||||
Maximum insurance against public liability per occurrence for a nuclear incident (up to) | 13,700,000,000 | |||||||||||
Maximum available nuclear liability insurance (up to) | 450,000,000 | |||||||||||
Remaining nuclear liability insurance through mandatory industry wide retrospective assessment program | 13,200,000,000 | |||||||||||
Maximum retrospective premium assessment per reactor for each nuclear liability incident | 137,600,000 | |||||||||||
Annual limit per incident with respect to maximum retrospective premium assessment | $ 20,500,000 | |||||||||||
Number of VIE lessor trusts | 3 | 3 | ||||||||||
Maximum potential retrospective assessment per incident of APS | $ 120,100,000 | |||||||||||
Annual payment limitation with respect to maximum potential retrospective premium assessment | 17,900,000 | |||||||||||
Amount of "all risk" (including nuclear hazards) insurance for property damage to, and decontamination of, property at Palo Verde | 2,800,000,000 | |||||||||||
Maximum amount that APS could incur under the current NEIL policies for each retrospective assessment | 22,300,000 | |||||||||||
Collateral assurance provided based on rating triggers | $ 62,800,000 | |||||||||||
Period to provide collateral assurance based on rating triggers | 20 days | |||||||||||
APS | Letters of Credit Expiring in 2023 | ||||||||||||
Commitments and Contingencies | ||||||||||||
Outstanding letters of credit | $ 9,000,000 | |||||||||||
APS | Surety Bonds Expiring in 2023 | ||||||||||||
Commitments and Contingencies | ||||||||||||
Surety bonds expiring, amount | 8,000,000 | |||||||||||
APS | Coal combustion waste | Four Corners | ||||||||||||
Commitments and Contingencies | ||||||||||||
Site contingency increase in loss exposure not accrued, best estimate | 30,000,000 | |||||||||||
APS | Coal combustion waste | Cholla | Minimum | ||||||||||||
Commitments and Contingencies | ||||||||||||
Site contingency increase in loss exposure not accrued, best estimate | 16,000,000 | |||||||||||
APS | Coal combustion waste | Navajo Plant | ||||||||||||
Commitments and Contingencies | ||||||||||||
Site contingency increase in loss exposure not accrued, best estimate | 1,000,000 | |||||||||||
APS | Coal combustion waste | Cholla and Four Corners | Minimum | ||||||||||||
Commitments and Contingencies | ||||||||||||
Site contingency increase in loss exposure not accrued, best estimate | 10,000,000 | |||||||||||
APS | Coal combustion waste | Cholla and Four Corners | Maximum | ||||||||||||
Commitments and Contingencies | ||||||||||||
Site contingency increase in loss exposure not accrued, best estimate | $ 15,000,000 | |||||||||||
APS | Four Corners Units 4 and 5 | Regional Haze Rules | ||||||||||||
Commitments and Contingencies | ||||||||||||
Percentage of share of cost of control | 63.00% | |||||||||||
Expected environmental cost | $ 400,000,000 | |||||||||||
APS | SCE | Four Corners Units 4 and 5 | ||||||||||||
Commitments and Contingencies | ||||||||||||
Disallowance of plant investments | $ 194,000,000 | |||||||||||
Cost deferrals | $ 215,500,000 | |||||||||||
Amount not recoverable | 154,400,000 | |||||||||||
APS | Contaminated groundwater wells | ||||||||||||
Commitments and Contingencies | ||||||||||||
Costs related to investigation and study under Superfund site | 3,000,000 | |||||||||||
Number of defendants against whom Roosevelt Irrigation District (RID) filed lawsuit | defendant | 28 | 24 | ||||||||||
Number of plaintiffs | plaintiff | 2 | |||||||||||
APS | Contaminated groundwater wells | Settled Litigation | ||||||||||||
Commitments and Contingencies | ||||||||||||
Number of plaintiffs | plaintiff | 2 | |||||||||||
APS | Public Utilities, Inventory, Fuel | ||||||||||||
Commitments and Contingencies | ||||||||||||
Increase in contractual obligations | 1,300,000,000 | |||||||||||
Increase in contractual obligations, lease arrangements | 500,000,000 | |||||||||||
Total fixed consideration paid for lease arrangements | 1,800,000,000 | |||||||||||
4C Acquisition, LLC | Four Corners | ||||||||||||
Commitments and Contingencies | ||||||||||||
Percentage of share of cost of control | 7.00% | |||||||||||
BCE | Clear Creek Wind Farm | ||||||||||||
Commitments and Contingencies | ||||||||||||
Equity method investments | $ 17,000,000 | |||||||||||
NTEC | Four Corners | ||||||||||||
Commitments and Contingencies | ||||||||||||
Option to purchase ownership interest (as a percent) | 7.00% | 7.00% | ||||||||||
Proceeds from operating and maintenance cost reimbursement | $ 70,000,000 | |||||||||||
Breach of Contract for Disposal of Spent Nuclear Fuel and/or High Level Radioactive Waste | ||||||||||||
Commitments and Contingencies | ||||||||||||
Amount awarded from other party | $ 14,300,000 | $ 123,900,000 | ||||||||||
Breach of Contract for Disposal of Spent Nuclear Fuel and/or High Level Radioactive Waste | APS | ||||||||||||
Commitments and Contingencies | ||||||||||||
Number of claims submitted | claim | 8 | |||||||||||
Number of settlement agreement time periods | timePeriod | 8 | |||||||||||
Amount awarded from other party | $ 4,200,000 | $ 36,000,000 | ||||||||||
Breach of Contract for Disposal of Spent Nuclear Fuel and/or High Level Radioactive Waste | APS | Subsequent Event | ||||||||||||
Commitments and Contingencies | ||||||||||||
Number of claims submitted | claim | 9 | |||||||||||
2017 Settlement Agreement and its Customer Education and Outreach Plan | APS | ||||||||||||
Commitments and Contingencies | ||||||||||||
Settlement amount | $ 24,750,000 | |||||||||||
Settlement amount returned to customers | $ 24,000,000 |
Other Income and Other Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Other income: | ||||
Interest income | $ 1,785 | $ 1,602 | $ 5,118 | $ 5,236 |
Miscellaneous | 434 | 4 | 487 | 48 |
Total other income | 2,219 | 12,083 | 5,605 | 36,719 |
Other expense: | ||||
Non-operating costs | (2,956) | (2,973) | (9,110) | (9,013) |
Investment losses — net | (935) | (704) | (2,191) | (1,478) |
Miscellaneous | (2,854) | (2,505) | (3,450) | (4,728) |
Total other expense | (6,745) | (6,182) | (14,751) | (15,219) |
APS | ||||
Other income: | ||||
Interest income | 1,402 | 1,118 | 3,897 | 3,645 |
Miscellaneous | 259 | 2 | 312 | 40 |
Total other income | 1,661 | 11,597 | 4,209 | 35,120 |
Other expense: | ||||
Non-operating costs | (2,369) | (1,892) | (6,407) | (7,284) |
Miscellaneous | (654) | (304) | (1,250) | (2,523) |
Total other expense | (3,023) | (2,196) | (7,657) | (9,807) |
SCR deferral | ||||
Other income: | ||||
Debt return | 0 | 4,091 | 0 | 12,266 |
SCR deferral | APS | ||||
Other income: | ||||
Debt return | 0 | 4,091 | 0 | 12,266 |
Octotillo modernization project | ||||
Other income: | ||||
Debt return | 0 | 6,386 | 0 | 19,169 |
Octotillo modernization project | APS | ||||
Other income: | ||||
Debt return | $ 0 | $ 6,386 | $ 0 | $ 19,169 |
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Earnings Per Share [Abstract] | ||||
Net income attributable to common shareholders | $ 326,326 | $ 339,798 | $ 507,594 | $ 591,136 |
Weighted average common shares outstanding - basic (in shares) | 113,211 | 112,923 | 113,162 | 112,878 |
Net effect of dilutive securities: | ||||
Contingently issuable performance shares and restricted stock units (in shares) | 252 | 294 | 214 | 300 |
Weighted average common shares outstanding — diluted (in shares) | 113,463 | 113,217 | 113,376 | 113,178 |
Earnings per weighted-average common share outstanding | ||||
Net income attributable to common shareholders - basic (in dollars per share) | $ 2.88 | $ 3.01 | $ 4.49 | $ 5.24 |
Net income attributable to common shareholders - diluted (in dollars per share) | $ 2.88 | $ 3.00 | $ 4.48 | $ 5.22 |
Fair Value Measurements - Assets and Liabilities Measured on a Recurring Basis (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Assets | ||
Commodity contracts, assets | $ 251,658 | $ 110,389 |
Commodity contracts, liabilities | (11,095) | (4,690) |
Nuclear decommissioning trust | 1,025,913 | 1,294,757 |
Nuclear decommissioning trust, other | 443,371 | 567,266 |
Other special use funds | 359,394 | 358,410 |
Other special use funds, other | 1,123 | 936 |
Total assets | 1,636,965 | 1,763,556 |
Total assets, other | 433,399 | 563,512 |
Liabilities | ||
Gross derivative liability | (4,298) | |
Gross derivative liability, other | 3,105 | |
Amount reported on balance sheet | (7,861) | (4,373) |
Equity securities | ||
Assets | ||
Nuclear decommissioning trust | 8,098 | 17,482 |
Nuclear decommissioning trust, other | 5,249 | (27,782) |
Other special use funds | 39,692 | 48,506 |
Other special use funds, other | 1,123 | 936 |
U.S. commingled equity funds | ||
Assets | ||
Nuclear decommissioning trust | 438,122 | 595,048 |
U.S. Treasury debt | ||
Assets | ||
Nuclear decommissioning trust | 199,314 | 240,745 |
Other special use funds | 315,643 | 298,170 |
Corporate debt | ||
Assets | ||
Nuclear decommissioning trust | 164,700 | 203,454 |
Mortgage-backed securities | ||
Assets | ||
Nuclear decommissioning trust | 142,214 | 155,574 |
Municipal bonds | ||
Assets | ||
Nuclear decommissioning trust | 64,457 | 72,189 |
Other special use funds | 4,059 | 11,734 |
Other fixed income | ||
Assets | ||
Nuclear decommissioning trust | 9,008 | 10,265 |
Level 1 | ||
Assets | ||
Commodity contracts, assets | 0 | 0 |
Nuclear decommissioning trust | 202,163 | 286,009 |
Other special use funds | 354,212 | 345,740 |
Total assets | 556,375 | 631,749 |
Liabilities | ||
Gross derivative liability | 0 | 0 |
Level 1 | Equity securities | ||
Assets | ||
Nuclear decommissioning trust | 2,849 | 45,264 |
Other special use funds | 38,569 | 47,570 |
Level 1 | U.S. commingled equity funds | ||
Assets | ||
Nuclear decommissioning trust | 0 | 0 |
Level 1 | U.S. Treasury debt | ||
Assets | ||
Nuclear decommissioning trust | 199,314 | 240,745 |
Other special use funds | 315,643 | 298,170 |
Level 1 | Corporate debt | ||
Assets | ||
Nuclear decommissioning trust | 0 | 0 |
Level 1 | Mortgage-backed securities | ||
Assets | ||
Nuclear decommissioning trust | 0 | 0 |
Level 1 | Municipal bonds | ||
Assets | ||
Nuclear decommissioning trust | 0 | 0 |
Other special use funds | 0 | 0 |
Level 1 | Other fixed income | ||
Assets | ||
Nuclear decommissioning trust | 0 | 0 |
Level 2 | ||
Assets | ||
Commodity contracts, assets | 251,715 | 115,079 |
Nuclear decommissioning trust | 380,379 | 441,482 |
Other special use funds | 4,059 | 11,734 |
Total assets | 636,153 | 568,295 |
Liabilities | ||
Gross derivative liability | (2,933) | (4,740) |
Level 2 | Equity securities | ||
Assets | ||
Nuclear decommissioning trust | 0 | 0 |
Other special use funds | 0 | 0 |
Level 2 | U.S. commingled equity funds | ||
Assets | ||
Nuclear decommissioning trust | 0 | 0 |
Level 2 | U.S. Treasury debt | ||
Assets | ||
Nuclear decommissioning trust | 0 | 0 |
Other special use funds | 0 | 0 |
Level 2 | Corporate debt | ||
Assets | ||
Nuclear decommissioning trust | 164,700 | 203,454 |
Level 2 | Mortgage-backed securities | ||
Assets | ||
Nuclear decommissioning trust | 142,214 | 155,574 |
Level 2 | Municipal bonds | ||
Assets | ||
Nuclear decommissioning trust | 64,457 | 72,189 |
Other special use funds | 4,059 | 11,734 |
Level 2 | Other fixed income | ||
Assets | ||
Nuclear decommissioning trust | 9,008 | 10,265 |
Level 3 | ||
Assets | ||
Commodity contracts, assets | 11,038 | 0 |
Nuclear decommissioning trust | 0 | 0 |
Other special use funds | 0 | 0 |
Total assets | 11,038 | 0 |
Liabilities | ||
Gross derivative liability | (630) | (2,738) |
Level 3 | Equity securities | ||
Assets | ||
Nuclear decommissioning trust | 0 | 0 |
Other special use funds | 0 | 0 |
Level 3 | U.S. commingled equity funds | ||
Assets | ||
Nuclear decommissioning trust | 0 | 0 |
Level 3 | U.S. Treasury debt | ||
Assets | ||
Nuclear decommissioning trust | 0 | 0 |
Other special use funds | 0 | 0 |
Level 3 | Corporate debt | ||
Assets | ||
Nuclear decommissioning trust | 0 | 0 |
Level 3 | Mortgage-backed securities | ||
Assets | ||
Nuclear decommissioning trust | 0 | 0 |
Level 3 | Municipal bonds | ||
Assets | ||
Nuclear decommissioning trust | 0 | 0 |
Other special use funds | 0 | 0 |
Level 3 | Other fixed income | ||
Assets | ||
Nuclear decommissioning trust | 0 | 0 |
Fair Value Measured at Net Asset Value Per Share | U.S. commingled equity funds | ||
Assets | ||
Nuclear decommissioning trust | $ 438,122 | $ 595,048 |
Investments in Nuclear Decommissioning Trusts and Other Special Use Funds - Narrative (Details) $ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2021
USD ($)
| |
APS | |
Schedule of Equity Method Investments [Line Items] | |
Employee medical claims amount | $ 15 |
Investments in Nuclear Decommissioning Trusts and Other Special Use Funds (Details) - APS - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
Dec. 31, 2021 |
|
Nuclear decommissioning trust fund assets | |||||
Fair Value | $ 1,385,307 | $ 1,385,307 | $ 1,653,167 | ||
Total Unrealized Gains | 303,763 | 475,670 | |||
Total Unrealized Losses | (88,101) | (4,063) | |||
Amortized cost | 986,000 | 986,000 | 972,000 | ||
Realized gains and losses and proceeds from the sale of securities by the nuclear decommissioning trust funds | |||||
Realized gains | 788 | $ 1,652 | 8,093 | $ 6,026 | |
Realized losses | (6,908) | (1,562) | (26,582) | (6,856) | |
Proceeds from the sale of securities | 218,817 | 209,336 | 910,487 | 797,178 | |
Nuclear Decommissioning Trusts | |||||
Nuclear decommissioning trust fund assets | |||||
Fair Value | 1,025,913 | 1,025,913 | 1,294,757 | ||
Realized gains and losses and proceeds from the sale of securities by the nuclear decommissioning trust funds | |||||
Realized gains | 788 | 1,652 | 8,093 | 6,026 | |
Realized losses | (6,908) | (1,555) | (26,582) | (6,849) | |
Proceeds from the sale of securities | 153,573 | 181,728 | 783,232 | 606,796 | |
Other Special Use Funds | |||||
Nuclear decommissioning trust fund assets | |||||
Fair Value | 359,394 | 359,394 | 358,410 | ||
Realized gains and losses and proceeds from the sale of securities by the nuclear decommissioning trust funds | |||||
Realized gains | 0 | 0 | 0 | 0 | |
Realized losses | 0 | (7) | 0 | (7) | |
Proceeds from the sale of securities | 65,244 | $ 27,608 | 127,255 | $ 190,382 | |
Equity securities | |||||
Nuclear decommissioning trust fund assets | |||||
Equity securities | 479,540 | 479,540 | 687,882 | ||
Total Unrealized Gains | 302,627 | 451,387 | |||
Total Unrealized Losses | (458) | 0 | |||
Equity securities | Nuclear Decommissioning Trusts | |||||
Nuclear decommissioning trust fund assets | |||||
Equity securities | 440,971 | 440,971 | 640,312 | ||
Equity securities | Other Special Use Funds | |||||
Nuclear decommissioning trust fund assets | |||||
Equity securities | 38,569 | 38,569 | 47,570 | ||
Available for sale-fixed income securities | |||||
Nuclear decommissioning trust fund assets | |||||
Fair Value | 899,395 | 899,395 | 992,131 | ||
Total Unrealized Gains | 1,136 | 24,283 | |||
Total Unrealized Losses | (87,618) | (4,063) | |||
Fair value of fixed income securities, summarized by contractual maturities | |||||
Less than one year | 129,442 | 129,442 | |||
1 year – 5 years | 380,698 | 380,698 | |||
5 years – 10 years | 120,566 | 120,566 | |||
Greater than 10 years | 268,689 | 268,689 | |||
Total | 899,395 | 899,395 | |||
Available for sale-fixed income securities | Nuclear Decommissioning Trusts | |||||
Nuclear decommissioning trust fund assets | |||||
Fair Value | 579,693 | 579,693 | 682,227 | ||
Fair value of fixed income securities, summarized by contractual maturities | |||||
Less than one year | 16,334 | 16,334 | |||
1 year – 5 years | 184,936 | 184,936 | |||
5 years – 10 years | 113,793 | 113,793 | |||
Greater than 10 years | 264,630 | 264,630 | |||
Total | 579,693 | 579,693 | |||
Available for sale-fixed income securities | Other Special Use Funds | |||||
Nuclear decommissioning trust fund assets | |||||
Fair Value | 319,702 | 319,702 | 309,904 | ||
Available for sale-fixed income securities | Coal Reclamation Escrow Account | |||||
Fair value of fixed income securities, summarized by contractual maturities | |||||
Less than one year | 53,384 | 53,384 | |||
1 year – 5 years | 34,386 | 34,386 | |||
5 years – 10 years | 0 | 0 | |||
Greater than 10 years | 4,059 | 4,059 | |||
Total | 91,829 | 91,829 | |||
Available for sale-fixed income securities | Active Union Employee Medical Account | |||||
Fair value of fixed income securities, summarized by contractual maturities | |||||
Less than one year | 59,724 | 59,724 | |||
1 year – 5 years | 161,376 | 161,376 | |||
5 years – 10 years | 6,773 | 6,773 | |||
Greater than 10 years | 0 | 0 | |||
Total | 227,873 | 227,873 | |||
Other | |||||
Nuclear decommissioning trust fund assets | |||||
Fair Value | 6,372 | 6,372 | (26,846) | ||
Total Unrealized Gains | 0 | 0 | |||
Total Unrealized Losses | (25) | 0 | |||
Other | Nuclear Decommissioning Trusts | |||||
Nuclear decommissioning trust fund assets | |||||
Fair Value | 5,249 | 5,249 | (27,782) | ||
Other | Other Special Use Funds | |||||
Nuclear decommissioning trust fund assets | |||||
Fair Value | $ 1,123 | $ 1,123 | $ 936 |
Changes in Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning balance | $ 6,021,523 | $ 5,834,899 | $ 6,021,460 | $ 5,752,793 |
OCI (loss) before reclassifications | 513 | (194) | (1,441) | (187) |
Amounts reclassified from accumulated other comprehensive loss | 1,001 | 1,106 | 3,002 | 3,317 |
Ending balance | 6,362,113 | 6,186,464 | 6,362,113 | 6,186,464 |
APS | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning balance | 6,899,284 | 6,412,290 | 6,750,473 | 6,345,185 |
Ending balance | 7,236,194 | 6,761,259 | 7,236,194 | 6,761,259 |
Pension and Other Postretirement Benefits | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning balance | (55,097) | (59,639) | (53,885) | (60,725) |
OCI (loss) before reclassifications | 0 | 0 | (3,213) | (1,125) |
Amounts reclassified from accumulated other comprehensive loss | 1,001 | 1,106 | 3,002 | 3,317 |
Ending balance | (54,096) | (58,533) | (54,096) | (58,533) |
Pension and Other Postretirement Benefits | APS | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning balance | (36,221) | (39,832) | (34,880) | (40,918) |
OCI (loss) before reclassifications | 0 | 0 | (3,160) | (914) |
Amounts reclassified from accumulated other comprehensive loss | 909 | 1,000 | 2,728 | 3,000 |
Ending balance | (35,312) | (38,832) | (35,312) | (38,832) |
Derivative Instruments | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning balance | 283 | (939) | (976) | (2,071) |
OCI (loss) before reclassifications | 513 | (194) | 1,772 | 938 |
Amounts reclassified from accumulated other comprehensive loss | 0 | 0 | 0 | 0 |
Ending balance | 796 | (1,133) | 796 | (1,133) |
Accumulated Other Comprehensive Loss | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning balance | (54,814) | (60,578) | (54,861) | (62,796) |
Ending balance | (53,300) | (59,666) | (53,300) | (59,666) |
Accumulated Other Comprehensive Loss | APS | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning balance | (36,221) | (39,832) | (34,880) | (40,918) |
Ending balance | $ (35,312) | $ (38,832) | $ (35,312) | $ (38,832) |