Cover Page
Cover Page - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Feb. 21, 2023 | Jun. 30, 2022 | |
Entity Information [Line Items] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2022 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Transition Report | false | ||
Entity File Number | 1-8962 | ||
Entity Registrant Name | PINNACLE WEST CAPITAL CORPORATION | ||
Entity Tax Identification Number | 86-0512431 | ||
Entity Incorporation, State or Country Code | AZ | ||
Entity Address, Address Line One | 400 North Fifth Street, P.O. Box 53999 | ||
Entity Address, City or Town | Phoenix | ||
Entity Address, State or Province | AZ | ||
Entity Address, Postal Zip Code | 85072-3999 | ||
City Area Code | (602) | ||
Local Phone Number | 250-1000 | ||
Title of 12(b) Security | Common Stock,No Par Value | ||
Trading Symbol | PNW | ||
Security Exchange Name | NYSE | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Public Float | $ 8,247,902,707 | ||
Entity Common Stock, Shares Outstanding | 113,175,507 | ||
Documents Incorporated by Reference | Portions of Pinnacle West Capital Corporation’s definitive Proxy Statement relating to its Annual Meeting of Shareholders to be held on May 17, 2023 are incorporated by reference into Part III hereof. | ||
Entity Central Index Key | 0000764622 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Entity Shell Company | false | ||
Arizona Public Service Company | |||
Entity Information [Line Items] | |||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2022 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity File Number | 1-4473 | ||
Entity Registrant Name | ARIZONA PUBLIC SERVICE COMPANY | ||
Entity Tax Identification Number | 86-0011170 | ||
Entity Incorporation, State or Country Code | AZ | ||
Entity Address, Address Line One | 400 North Fifth Street, P.O. Box 53999 | ||
Entity Address, City or Town | Phoenix | ||
Entity Address, State or Province | AZ | ||
Entity Address, Postal Zip Code | 85072-3999 | ||
City Area Code | (602) | ||
Local Phone Number | 250-1000 | ||
Title of 12(g) Security | Common Stock | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Public Float | $ 0 | ||
Entity Common Stock, Shares Outstanding | 71,264,947 | ||
Documents Incorporated by Reference | Arizona Public Service Company meets the conditions set forth in General Instruction I(1)(a) and (b) of Form 10-K and is therefore filing this form with the reduced disclosure format allowed under that General Instruction. | ||
Entity Central Index Key | 0000007286 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Entity Shell Company | false |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2022 | |
Auditor [Line Items] | |
Auditor Name | Deloitte & Touche LLP |
Auditor Location | Tempe, Arizona |
Auditor Firm ID | 34 |
Arizona Public Service Company | |
Auditor [Line Items] | |
Auditor Name | Deloitte & Touche LLP |
Auditor Location | Tempe, Arizona |
Auditor Firm ID | 34 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Statement [Abstract] | |||
OPERATING REVENUES (Note 2) | $ 4,324,385 | $ 3,803,835 | $ 3,586,982 |
OPERATING EXPENSES | |||
Fuel and purchased power | 1,629,343 | 1,152,551 | 993,419 |
Operations and maintenance | 987,072 | 954,067 | 958,910 |
Depreciation and amortization | 753,195 | 650,875 | 614,378 |
Taxes other than income taxes | 220,370 | 234,639 | 224,835 |
Other expenses | 2,494 | 6,393 | 7,288 |
Total | 3,592,474 | 2,998,525 | 2,798,830 |
OPERATING INCOME | 731,911 | 805,310 | 788,152 |
OTHER INCOME (DEDUCTIONS) | |||
Allowance for equity funds used during construction (Note 1) | 45,263 | 41,737 | 33,776 |
Pension and other postretirement non-service credits — net (Note 7) | 98,487 | 112,541 | 56,341 |
Other income (Note 16) | 7,916 | 45,100 | 56,703 |
Other expense (Note 16) | (52,385) | (25,396) | (57,776) |
Total | 99,281 | 173,982 | 89,044 |
INTEREST EXPENSE | |||
Interest charges | 283,569 | 254,314 | 247,501 |
Allowance for borrowed funds used during construction (Note 1) | (28,030) | (21,052) | (18,530) |
Total | 255,539 | 233,262 | 228,971 |
INCOME BEFORE INCOME TAXES | 575,653 | 746,030 | 648,225 |
INCOME TAXES (Note 4) | 74,827 | 110,086 | 78,173 |
NET INCOME | 500,826 | 635,944 | 570,052 |
Less: Net income attributable to noncontrolling interests (Note 17) | 17,224 | 17,224 | 19,493 |
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ 483,602 | $ 618,720 | $ 550,559 |
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING — BASIC (in shares) | 113,196 | 112,910 | 112,666 |
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING — DILUTED (in shares) | 113,416 | 113,192 | 112,942 |
EARNINGS PER WEIGHTED-AVERAGE COMMON SHARE OUTSTANDING | |||
Net income attributable to common shareholders - basic (in dollars per share) | $ 4.27 | $ 5.48 | $ 4.89 |
Net income attributable to common shareholders — diluted (in dollars per share) | $ 4.26 | $ 5.47 | $ 4.87 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Statement of Comprehensive Income [Abstract] | |||
NET INCOME | $ 500,826 | $ 635,944 | $ 570,052 |
Derivative instruments: | |||
Net unrealized gain (loss), net of tax benefit (expense) of $(615), $(378), and $662 | 1,873 | 1,077 | (2,089) |
Reclassification of net realized gain, net of tax benefit (expense) of $0, $18, and $(171) (Note 15) | 0 | 18 | 592 |
Pension and other postretirement benefits activity, net of tax benefit (expense) of $(7,078), $(2,256), and $1,371 (Note 7) | 21,553 | 6,840 | (4,203) |
Total other comprehensive income (loss) | 23,426 | 7,935 | (5,700) |
COMPREHENSIVE INCOME | 524,252 | 643,879 | 564,352 |
Less: Comprehensive income attributable to noncontrolling interests | 17,224 | 17,224 | 19,493 |
COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ 507,028 | $ 626,655 | $ 544,859 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Statement of Comprehensive Income [Abstract] | |||
Net unrealized loss, tax benefit (expense) | $ (615) | $ (378) | $ 662 |
Reclassification of net realized gain, tax benefit (expense) | 0 | 18 | (171) |
Pension and other postretirement benefits activity, tax benefit (expense) | $ (7,078) | $ (2,256) | $ 1,371 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 4,832 | $ 9,969 |
Customer and other receivables | 453,209 | 391,923 |
Accrued unbilled revenues | 164,764 | 133,980 |
Allowance for doubtful accounts (Note 2) | (23,778) | (25,354) |
Materials and supplies (at average cost) | 410,481 | 349,135 |
Fossil fuel (at average cost) | 40,155 | 18,032 |
Income tax receivable (Note 4) | 14,086 | 7,514 |
Assets from risk management activities (Note 15) | 87,835 | 63,481 |
Deferred fuel and purchased power regulatory asset (Note 3) | 460,561 | 388,148 |
Other regulatory assets (Note 3) | 78,318 | 130,376 |
Other current assets | 60,091 | 83,896 |
Total current assets | 1,750,554 | 1,551,100 |
INVESTMENTS AND OTHER ASSETS | ||
Nuclear decommissioning trusts (Notes 12 and 18) | 1,073,410 | 1,294,757 |
Other special use funds (Notes 12 and 18) | 347,231 | 358,410 |
Assets from risk management activities (Note 15) | 44,394 | 46,908 |
Other assets | 125,672 | 97,884 |
Total investments and other assets | 1,590,707 | 1,797,959 |
PROPERTY, PLANT AND EQUIPMENT (Notes 1, 6 and 9) | ||
Plant in service and held for future use | 22,452,146 | 21,688,661 |
Accumulated depreciation and amortization | (7,929,878) | (7,504,603) |
Net | 14,522,268 | 14,184,058 |
Construction work in progress | 1,882,791 | 1,329,478 |
Palo Verde sale leaseback, net of accumulated depreciation of $260,754 and $256,884 (Note 17) | 90,296 | 94,166 |
Intangible assets, net of accumulated amortization of $817,961 and $737,694 | 258,880 | 273,693 |
Nuclear fuel, net of accumulated amortization of $126,157 and $133,122 | 100,119 | 106,039 |
Total property, plant and equipment | 16,854,354 | 15,987,434 |
DEFERRED DEBITS | ||
Regulatory assets (Notes 1, 3 and 4) | 1,283,221 | 1,192,987 |
Operating lease right-of-use assets (Note 8) | 801,688 | 890,057 |
Assets for pension and other postretirement benefits (Note 7) | 396,599 | 545,723 |
Other | 46,282 | 37,962 |
Total deferred debits | 2,527,790 | 2,666,729 |
TOTAL ASSETS | 22,723,405 | 22,003,222 |
CURRENT LIABILITIES | ||
Accounts payable | 430,425 | 393,083 |
Accrued taxes | 164,440 | 168,645 |
Accrued interest | 61,217 | 57,332 |
Common dividends payable | 97,895 | 95,988 |
Short-term borrowings (Note 5) | 340,720 | 292,000 |
Current maturities of long-term debt (Note 6) | 50,685 | 150,000 |
Customer deposits | 41,769 | 42,293 |
Liabilities from risk management activities (Note 15) | 37,697 | 4,373 |
Liabilities for asset retirements (Note 11) | 12,232 | 4,473 |
Operating lease liabilities (Note 8) | 105,210 | 100,443 |
Less: current regulatory liabilities | 271,575 | 296,271 |
Other current liabilities | 148,276 | 151,968 |
Total current liabilities | 1,762,141 | 1,756,869 |
LONG-TERM DEBT LESS CURRENT MATURITIES (Note 6) | 7,741,286 | 6,913,735 |
DEFERRED CREDITS AND OTHER | ||
Deferred income taxes (Note 4) | 2,384,421 | 2,311,862 |
Regulatory liabilities (Notes 1, 3, 4 and 7) | 2,061,776 | 2,499,213 |
Liabilities for asset retirements (Note 11) | 785,530 | 762,909 |
Liabilities for pension benefits (Note 7) | 116,286 | 152,865 |
Customer advances | 422,103 | 257,151 |
Coal mine reclamation | 179,255 | 174,616 |
Deferred investment tax credit | 180,677 | 186,570 |
Unrecognized tax benefits (Note 4) | 38,658 | 4,657 |
Operating lease liabilities (Note 8) | 639,247 | 728,401 |
Other | 252,149 | 232,914 |
Total deferred credits and other | 7,060,102 | 7,311,158 |
COMMITMENTS AND CONTINGENCIES (SEE NOTES) | ||
EQUITY | ||
Common stock, no par value; authorized 150,000,000 shares, 113,247,189 and 113,014,528 issued at respective dates | 2,724,740 | 2,702,743 |
Treasury stock at cost; 73,613 and 87,608 shares at respective dates | (5,005) | (6,401) |
Total common stock | 2,719,735 | 2,696,342 |
Retained earnings | 3,360,347 | 3,264,719 |
Accumulated other comprehensive loss (Note 19) | (31,435) | (54,861) |
Total shareholders’ equity | 6,048,647 | 5,906,200 |
Noncontrolling interests (Note 17) | 111,229 | 115,260 |
Total equity | 6,159,876 | 6,021,460 |
TOTAL LIABILITIES AND EQUITY | $ 22,723,405 | $ 22,003,222 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
PROPERTY, PLANT AND EQUIPMENT | ||
Accumulated depreciation of Palo Verde sale leaseback | $ 260,754 | $ 256,884 |
Accumulated amortization on intangible assets | 817,961 | 737,694 |
Accumulated amortization on nuclear fuel | $ 126,157 | $ 133,122 |
EQUITY | ||
Common stock, authorized shares (in shares) | 150,000,000 | 150,000,000 |
Common stock, issued shares (in shares) | 113,247,189 | 113,014,528 |
Treasury stock (in shares) | 73,613 | 87,608 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net income | $ 500,826 | $ 635,944 | $ 570,052 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization including nuclear fuel | 817,814 | 719,141 | 686,253 |
Deferred fuel and purchased power | (291,992) | (256,871) | (93,651) |
Deferred fuel and purchased power amortization | 219,579 | 44,557 | (12,047) |
Allowance for equity funds used during construction | (45,263) | (41,737) | (33,776) |
Deferred income taxes | 43,202 | 117,471 | 69,469 |
Deferred investment tax credit | (5,893) | (4,802) | (5,096) |
Change in derivative instruments fair value | 777 | 0 | 0 |
Stock compensation | 15,942 | 18,460 | 18,292 |
Changes in current assets and liabilities: | |||
Customer and other receivables | (63,869) | (72,559) | (18,191) |
Accrued unbilled revenues | (30,784) | (1,783) | (4,032) |
Materials, supplies and fossil fuel | (83,469) | (32,870) | 11,623 |
Income tax receivable | (6,572) | (722) | 14,935 |
Other current assets | 76,067 | (22,720) | (30,640) |
Accounts payable | 90,076 | 20,267 | (6,059) |
Accrued taxes | (4,205) | 9,094 | 14,652 |
Other current liabilities | (6,056) | (52,086) | 22,520 |
Change in margin and collateral accounts — assets | 22 | (50) | 404 |
Change in margin and collateral accounts — liabilities | 4,200 | 350 | 100 |
Change in unrecognized tax benefits | (1,989) | (568) | 2,220 |
Change in long-term regulatory liabilities | (332,470) | 57,549 | 13,017 |
Change in other long-term assets | 276,821 | (246,473) | (67,453) |
Change in other long-term liabilities | 68,677 | (29,578) | (186,227) |
Net cash provided by operating activities | 1,241,441 | 860,014 | 966,365 |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Capital expenditures | (1,707,490) | (1,473,475) | (1,326,584) |
Contributions in aid of construction | 137,436 | 105,654 | 62,503 |
Allowance for borrowed funds used during construction | (28,030) | (21,052) | (18,530) |
Proceeds from nuclear decommissioning trust sales and other special use funds | 1,207,713 | 1,720,966 | 819,518 |
Investment in nuclear decommissioning trust and other special use funds | (1,212,063) | (1,725,480) | (822,608) |
Other | (15,612) | 6,458 | 7,883 |
Net cash used for investing activities | (1,618,046) | (1,386,929) | (1,277,818) |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Issuance of long-term debt | 875,537 | 746,999 | 1,596,672 |
Repayment of long-term debt | (150,000) | 0 | (915,150) |
Short-term borrowings and (repayments) — net | 48,720 | 142,000 | 73,325 |
Short-term debt borrowings under revolving credit facility | 0 | 0 | 751,690 |
Short-term debt repayments under revolving credit facility | 0 | (19,000) | (770,690) |
Dividends paid on common stock | (378,881) | (369,478) | (350,577) |
Common stock equity issuance and purchases — net | (2,653) | (2,350) | (1,389) |
Distributions to noncontrolling interests | (21,255) | (21,255) | (22,743) |
Net cash provided by financing activities | 371,468 | 476,916 | 361,138 |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (5,137) | (49,999) | 49,685 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 9,969 | 59,968 | 10,283 |
CASH AND CASH EQUIVALENTS AT END OF YEAR | $ 4,832 | $ 9,969 | $ 59,968 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) $ in Thousands | Total | Common Stock | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interests | |
Beginning balance (in shares) at Dec. 31, 2019 | 112,540,126 | ||||||
Beginning balance (in shares) at Dec. 31, 2019 | (103,546) | ||||||
Beginning balance at Dec. 31, 2019 | $ 5,553,188 | $ 2,659,561 | $ (9,427) | $ 2,837,610 | $ (57,096) | $ 122,540 | |
Increase (Decrease) in Shareholders' Equity | |||||||
Net income | 570,052 | 550,559 | 19,493 | ||||
Other comprehensive income (loss) | (5,700) | (5,700) | |||||
Dividends on common stock | (363,063) | (363,063) | |||||
Issuance of common stock (in shares) | 219,925 | ||||||
Issuance of common stock | 17,921 | $ 17,921 | |||||
Purchase of treasury stock (in shares) | [1] | (81,256) | |||||
Purchase of treasury stock | [1] | (7,181) | $ (7,181) | ||||
Reissuance of treasury stock for stock-based compensation and other (in shares) | 112,796 | ||||||
Reissuance of treasury stock for stock-based compensation and other | 10,319 | $ 10,319 | |||||
Capital activities by noncontrolling interests | (22,743) | (22,743) | |||||
Ending balance (in shares) at Dec. 31, 2020 | 112,760,051 | ||||||
Ending balance (in shares) at Dec. 31, 2020 | (72,006) | ||||||
Ending balance at Dec. 31, 2020 | 5,752,793 | $ 2,677,482 | $ (6,289) | 3,025,106 | (62,796) | 119,290 | |
Increase (Decrease) in Shareholders' Equity | |||||||
Net income | 635,944 | 618,720 | 17,224 | ||||
Other comprehensive income (loss) | 7,935 | 7,935 | |||||
Dividends on common stock | (379,108) | (379,108) | |||||
Issuance of common stock (in shares) | 254,477 | ||||||
Issuance of common stock | 25,261 | $ 25,261 | |||||
Purchase of treasury stock (in shares) | [1] | (68,892) | |||||
Purchase of treasury stock | [1] | (4,655) | $ (4,655) | ||||
Reissuance of treasury stock for stock-based compensation and other (in shares) | 53,290 | ||||||
Reissuance of treasury stock for stock-based compensation and other | 4,543 | $ 4,543 | |||||
Capital activities by noncontrolling interests | (21,255) | (21,255) | |||||
Other | $ 2 | 1 | 1 | ||||
Ending balance (in shares) at Dec. 31, 2021 | 113,014,528 | 113,014,528 | |||||
Ending balance (in shares) at Dec. 31, 2021 | (87,608) | (87,608) | |||||
Ending balance at Dec. 31, 2021 | $ 6,021,460 | $ 2,702,743 | $ (6,401) | 3,264,719 | (54,861) | 115,260 | |
Increase (Decrease) in Shareholders' Equity | |||||||
Net income | 500,826 | 483,602 | 17,224 | ||||
Other comprehensive income (loss) | 23,426 | 23,426 | |||||
Dividends on common stock | (387,975) | (387,975) | |||||
Issuance of common stock (in shares) | 232,661 | ||||||
Issuance of common stock | 21,996 | $ 21,996 | |||||
Purchase of treasury stock (in shares) | [1] | (77,152) | |||||
Purchase of treasury stock | [1] | (5,152) | $ (5,152) | ||||
Reissuance of treasury stock for stock-based compensation and other (in shares) | 91,147 | ||||||
Reissuance of treasury stock for stock-based compensation and other | 6,548 | $ 6,548 | |||||
Capital activities by noncontrolling interests | (21,255) | (21,255) | |||||
Other | $ 2 | $ 1 | 1 | ||||
Ending balance (in shares) at Dec. 31, 2022 | 113,247,189 | 113,247,189 | |||||
Ending balance (in shares) at Dec. 31, 2022 | (73,613) | (73,613) | |||||
Ending balance at Dec. 31, 2022 | $ 6,159,876 | $ 2,724,740 | $ (5,005) | $ 3,360,347 | $ (31,435) | $ 111,229 | |
[1]Primarily represents shares of common stock withheld from certain stock awards for tax purposes. |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Parenthetical) - $ / shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Statement of Stockholders' Equity [Abstract] | |||
Dividends declared per common share (in dollars per share) | $ 3.43 | $ 3.36 | $ 3.23 |
APS - CONSOLIDATED STATEMENTS O
APS - CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
OPERATING REVENUES (Note 2) | $ 4,324,385 | $ 3,803,835 | $ 3,586,982 |
OPERATING EXPENSES | |||
Fuel and purchased power | 1,629,343 | 1,152,551 | 993,419 |
Operations and maintenance | 987,072 | 954,067 | 958,910 |
Depreciation and amortization | 753,195 | 650,875 | 614,378 |
Taxes other than income taxes | 220,370 | 234,639 | 224,835 |
Other expenses | 2,494 | 6,393 | 7,288 |
Total | 3,592,474 | 2,998,525 | 2,798,830 |
OPERATING INCOME | 731,911 | 805,310 | 788,152 |
OTHER INCOME (DEDUCTIONS) | |||
Allowance for equity funds used during construction (Note 1) | 45,263 | 41,737 | 33,776 |
Pension and other postretirement non-service credits — net (Note 7) | 98,487 | 112,541 | 56,341 |
Other income (Note 16) | 7,916 | 45,100 | 56,703 |
Other expense (Note 16) | (52,385) | (25,396) | (57,776) |
Total | 99,281 | 173,982 | 89,044 |
INTEREST EXPENSE | |||
Interest charges | 283,569 | 254,314 | 247,501 |
Allowance for borrowed funds used during construction (Note 1) | (28,030) | (21,052) | (18,530) |
Total | 255,539 | 233,262 | 228,971 |
INCOME BEFORE INCOME TAXES | 575,653 | 746,030 | 648,225 |
INCOME TAXES (Note 4) | 74,827 | 110,086 | 78,173 |
NET INCOME | 500,826 | 635,944 | 570,052 |
Less: Net income attributable to noncontrolling interests (Note 17) | 17,224 | 17,224 | 19,493 |
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | 483,602 | 618,720 | 550,559 |
Arizona Public Service Company | |||
OPERATING REVENUES (Note 2) | 4,324,385 | 3,803,835 | 3,586,982 |
OPERATING EXPENSES | |||
Fuel and purchased power | 1,629,343 | 1,152,551 | 993,419 |
Operations and maintenance | 974,220 | 940,588 | 945,181 |
Depreciation and amortization | 753,110 | 650,773 | 614,293 |
Taxes other than income taxes | 220,277 | 234,569 | 224,790 |
Other expenses | 2,494 | 6,393 | 7,288 |
Total | 3,579,444 | 2,984,874 | 2,784,971 |
OPERATING INCOME | 744,941 | 818,961 | 802,011 |
OTHER INCOME (DEDUCTIONS) | |||
Allowance for equity funds used during construction (Note 1) | 45,263 | 41,737 | 33,776 |
Pension and other postretirement non-service credits — net (Note 7) | 98,945 | 112,742 | 57,359 |
Other income (Note 16) | 5,888 | 43,053 | 51,755 |
Other expense (Note 16) | (26,108) | (18,897) | (53,694) |
Total | 123,988 | 178,635 | 89,196 |
INTEREST EXPENSE | |||
Interest charges | 262,815 | 243,592 | 233,452 |
Allowance for borrowed funds used during construction (Note 1) | (26,839) | (21,052) | (18,530) |
Total | 235,976 | 222,540 | 214,922 |
INCOME BEFORE INCOME TAXES | 632,953 | 775,056 | 676,285 |
INCOME TAXES (Note 4) | 90,800 | 125,553 | 88,764 |
NET INCOME | 542,153 | 649,503 | 587,521 |
Less: Net income attributable to noncontrolling interests (Note 17) | 17,224 | 17,224 | 19,493 |
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ 524,929 | $ 632,279 | $ 568,028 |
APS - CONSOLIDATED STATEMENTS_2
APS - CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
NET INCOME | $ 500,826 | $ 635,944 | $ 570,052 |
Derivative instruments: | |||
Net unrealized gain (loss), net of tax benefit (expense) of $(615), $(378), and $662 | 1,873 | 1,077 | (2,089) |
Reclassification of net realized gain, net of tax benefit (expense) of $0, $18, and $(171) (Note 15) | 0 | 18 | 592 |
Pension and other postretirement benefits activity, net of tax benefit (expense) of $(7,078), $(2,256), and $1,371 (Note 7) | 21,553 | 6,840 | (4,203) |
Total other comprehensive income (loss) | 23,426 | 7,935 | (5,700) |
COMPREHENSIVE INCOME | 524,252 | 643,879 | 564,352 |
Less: Comprehensive income attributable to noncontrolling interests | 17,224 | 17,224 | 19,493 |
COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | 507,028 | 626,655 | 544,859 |
Arizona Public Service Company | |||
NET INCOME | 542,153 | 649,503 | 587,521 |
Derivative instruments: | |||
Net unrealized gain (loss), net of tax benefit (expense) of $(615), $(378), and $662 | 0 | (18) | (18) |
Reclassification of net realized gain, net of tax benefit (expense) of $0, $18, and $(171) (Note 15) | 0 | 18 | 592 |
Pension and other postretirement benefits activity, net of tax benefit (expense) of $(7,078), $(2,256), and $1,371 (Note 7) | 19,284 | 6,038 | (5,970) |
Total other comprehensive income (loss) | 19,284 | 6,038 | (5,396) |
COMPREHENSIVE INCOME | 561,437 | 655,541 | 582,125 |
Less: Comprehensive income attributable to noncontrolling interests | 17,224 | 17,224 | 19,493 |
COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ 544,213 | $ 638,317 | $ 562,632 |
APS - CONSOLIDATED STATEMENTS_3
APS - CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Net unrealized loss, tax benefit (expense) | $ (615) | $ (378) | $ 662 |
Reclassification of net realized gain, tax benefit (expense) | 0 | 18 | (171) |
Pension and other postretirement benefits activity, tax benefit (expense) | (7,078) | (2,256) | 1,371 |
Arizona Public Service Company | |||
Net unrealized loss, tax benefit (expense) | 0 | 18 | 18 |
Reclassification of net realized gain, tax benefit (expense) | 0 | 18 | (171) |
Pension and other postretirement benefits activity, tax benefit (expense) | $ (6,332) | $ (1,990) | $ 1,955 |
APS - CONSOLIDATED BALANCE SHEE
APS - CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
PROPERTY, PLANT AND EQUIPMENT (Notes 1, 6 and 9) | ||
Plant in service and held for future use | $ 22,452,146 | $ 21,688,661 |
Accumulated depreciation and amortization | (7,929,878) | (7,504,603) |
Net | 14,522,268 | 14,184,058 |
Construction work in progress | 1,882,791 | 1,329,478 |
Palo Verde sale leaseback, net of accumulated depreciation of $260,754 and $256,884 (Note 17) | 90,296 | 94,166 |
Intangible assets, net of accumulated amortization of $817,961 and $737,694 | 258,880 | 273,693 |
Nuclear fuel, net of accumulated amortization of $126,157 and $133,122 | 100,119 | 106,039 |
Total property, plant and equipment | 16,854,354 | 15,987,434 |
INVESTMENTS AND OTHER ASSETS | ||
Nuclear decommissioning trusts (Notes 12 and 18) | 1,073,410 | 1,294,757 |
Other special use funds (Notes 12 and 18) | 347,231 | 358,410 |
Assets from risk management activities (Note 15) | 44,394 | 46,908 |
Other assets | 125,672 | 97,884 |
Total investments and other assets | 1,590,707 | 1,797,959 |
CURRENT ASSETS | ||
Cash and cash equivalents | 4,832 | 9,969 |
Customer and other receivables | 453,209 | 391,923 |
Accrued unbilled revenues | 164,764 | 133,980 |
Allowance for doubtful accounts (Note 2) | (23,778) | (25,354) |
Materials and supplies (at average cost) | 410,481 | 349,135 |
Fossil fuel (at average cost) | 40,155 | 18,032 |
Income tax receivable (Note 4) | 14,086 | 7,514 |
Assets from risk management activities (Note 15) | 87,835 | 63,481 |
Deferred fuel and purchased power regulatory asset (Note 3) | 460,561 | 388,148 |
Other regulatory assets (Note 3) | 78,318 | 130,376 |
Other current assets | 60,091 | 83,896 |
Total current assets | 1,750,554 | 1,551,100 |
DEFERRED DEBITS | ||
Regulatory assets (Notes 1, 3 and 4) | 1,283,221 | 1,192,987 |
Operating lease right-of-use assets (Note 8) | 801,688 | 890,057 |
Assets for pension and other postretirement benefits (Note 7) | 396,599 | 545,723 |
Other | 46,282 | 37,962 |
Total deferred debits | 2,527,790 | 2,666,729 |
TOTAL ASSETS | 22,723,405 | 22,003,222 |
EQUITY | ||
Retained earnings | 3,360,347 | 3,264,719 |
Accumulated other comprehensive loss (Note 19) | (31,435) | (54,861) |
Total shareholders’ equity | 6,048,647 | 5,906,200 |
Noncontrolling interests (Note 17) | 111,229 | 115,260 |
Total equity | 6,159,876 | 6,021,460 |
LONG-TERM DEBT LESS CURRENT MATURITIES (Note 6) | 7,741,286 | 6,913,735 |
CURRENT LIABILITIES | ||
Short-term borrowings (Note 5) | 340,720 | 292,000 |
Accounts payable | 430,425 | 393,083 |
Accrued taxes | 164,440 | 168,645 |
Accrued interest | 61,217 | 57,332 |
Common dividends payable | 97,895 | 95,988 |
Customer deposits | 41,769 | 42,293 |
Liabilities from risk management activities (Note 15) | 37,697 | 4,373 |
Liabilities for asset retirements (Note 11) | 12,232 | 4,473 |
Operating lease liabilities (Note 8) | 105,210 | 100,443 |
Less: current regulatory liabilities | 271,575 | 296,271 |
Other current liabilities | 148,276 | 151,968 |
Total current liabilities | 1,762,141 | 1,756,869 |
DEFERRED CREDITS AND OTHER | ||
Deferred income taxes (Note 4) | 2,384,421 | 2,311,862 |
Regulatory liabilities (Notes 1, 3, 4 and 7) | 2,061,776 | 2,499,213 |
Liabilities for asset retirements (Note 11) | 785,530 | 762,909 |
Liabilities for pension benefits (Note 7) | 116,286 | 152,865 |
Customer advances | 422,103 | 257,151 |
Coal mine reclamation | 179,255 | 174,616 |
Deferred investment tax credit | 180,677 | 186,570 |
Unrecognized tax benefits (Note 4) | 38,658 | 4,657 |
Operating lease liabilities (Note 8) | 639,247 | 728,401 |
Other | 252,149 | 232,914 |
Total deferred credits and other | 7,060,102 | 7,311,158 |
COMMITMENTS AND CONTINGENCIES (SEE NOTES) | ||
TOTAL LIABILITIES AND EQUITY | 22,723,405 | 22,003,222 |
Arizona Public Service Company | ||
PROPERTY, PLANT AND EQUIPMENT (Notes 1, 6 and 9) | ||
Plant in service and held for future use | 22,448,685 | 21,685,200 |
Accumulated depreciation and amortization | (7,926,575) | (7,501,317) |
Net | 14,522,110 | 14,183,883 |
Construction work in progress | 1,829,004 | 1,327,721 |
Palo Verde sale leaseback, net of accumulated depreciation of $260,754 and $256,884 (Note 17) | 90,296 | 94,166 |
Intangible assets, net of accumulated amortization of $817,961 and $737,694 | 258,725 | 273,537 |
Nuclear fuel, net of accumulated amortization of $126,157 and $133,122 | 100,119 | 106,039 |
Total property, plant and equipment | 16,800,254 | 15,985,346 |
INVESTMENTS AND OTHER ASSETS | ||
Nuclear decommissioning trusts (Notes 12 and 18) | 1,073,410 | 1,294,757 |
Other special use funds (Notes 12 and 18) | 347,231 | 358,410 |
Assets from risk management activities (Note 15) | 44,394 | 46,908 |
Other assets | 43,344 | 42,440 |
Total investments and other assets | 1,508,379 | 1,742,515 |
CURRENT ASSETS | ||
Cash and cash equivalents | 4,042 | 9,374 |
Customer and other receivables | 448,880 | 390,533 |
Accrued unbilled revenues | 164,764 | 133,980 |
Allowance for doubtful accounts (Note 2) | (23,778) | (25,354) |
Materials and supplies (at average cost) | 410,481 | 349,135 |
Fossil fuel (at average cost) | 40,155 | 18,032 |
Income tax receivable (Note 4) | 1,102 | 10,756 |
Assets from risk management activities (Note 15) | 87,704 | 63,481 |
Deferred fuel and purchased power regulatory asset (Note 3) | 460,561 | 388,148 |
Other regulatory assets (Note 3) | 78,318 | 130,376 |
Other current assets | 50,043 | 57,729 |
Total current assets | 1,722,272 | 1,526,190 |
DEFERRED DEBITS | ||
Regulatory assets (Notes 1, 3 and 4) | 1,283,221 | 1,192,987 |
Operating lease right-of-use assets (Note 8) | 796,544 | 888,207 |
Assets for pension and other postretirement benefits (Note 7) | 389,142 | 537,092 |
Other | 44,040 | 37,319 |
Total deferred debits | 2,512,947 | 2,655,605 |
TOTAL ASSETS | 22,543,852 | 21,909,656 |
EQUITY | ||
Common stock | 178,162 | 178,162 |
Additional paid-in capital | 3,171,696 | 3,021,696 |
Retained earnings | 3,607,464 | 3,470,235 |
Accumulated other comprehensive loss (Note 19) | (15,596) | (34,880) |
Total shareholders’ equity | 6,941,726 | 6,635,213 |
Noncontrolling interests (Note 17) | 111,229 | 115,260 |
Total equity | 7,052,955 | 6,750,473 |
LONG-TERM DEBT LESS CURRENT MATURITIES (Note 6) | 6,793,529 | 6,266,693 |
Total capitalization | 13,846,484 | 13,017,166 |
CURRENT LIABILITIES | ||
Short-term borrowings (Note 5) | 325,000 | 278,700 |
Accounts payable | 417,732 | 389,365 |
Accrued taxes | 156,746 | 152,012 |
Accrued interest | 60,518 | 56,622 |
Common dividends payable | 97,900 | 96,000 |
Customer deposits | 41,769 | 42,293 |
Liabilities from risk management activities (Note 15) | 37,697 | 4,373 |
Liabilities for asset retirements (Note 11) | 12,232 | 4,473 |
Operating lease liabilities (Note 8) | 104,728 | 100,199 |
Less: current regulatory liabilities | 271,575 | 296,271 |
Other current liabilities | 144,733 | 145,286 |
Total current liabilities | 1,670,630 | 1,565,594 |
DEFERRED CREDITS AND OTHER | ||
Deferred income taxes (Note 4) | 2,385,647 | 2,331,701 |
Regulatory liabilities (Notes 1, 3, 4 and 7) | 2,061,776 | 2,499,213 |
Liabilities for asset retirements (Note 11) | 785,530 | 762,909 |
Liabilities for pension benefits (Note 7) | 108,068 | 138,328 |
Customer advances | 422,103 | 257,151 |
Coal mine reclamation | 179,255 | 174,616 |
Deferred investment tax credit | 180,677 | 186,570 |
Unrecognized tax benefits (Note 4) | 38,658 | 37,423 |
Operating lease liabilities (Note 8) | 634,199 | 726,572 |
Other | 230,825 | 212,413 |
Total deferred credits and other | 7,026,738 | 7,326,896 |
COMMITMENTS AND CONTINGENCIES (SEE NOTES) | ||
TOTAL LIABILITIES AND EQUITY | $ 22,543,852 | $ 21,909,656 |
APS - CONSOLIDATED BALANCE SH_2
APS - CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
PROPERTY, PLANT AND EQUIPMENT | ||
Accumulated depreciation of Palo Verde sale leaseback | $ 260,754 | $ 256,884 |
Accumulated amortization on intangible assets | 817,961 | 737,694 |
Accumulated amortization on nuclear fuel | $ 126,157 | $ 133,122 |
EQUITY | ||
Common stock, authorized shares (in shares) | 150,000,000 | 150,000,000 |
Common stock, issued shares (in shares) | 113,247,189 | 113,014,528 |
Treasury stock (in shares) | 73,613 | 87,608 |
Arizona Public Service Company | ||
PROPERTY, PLANT AND EQUIPMENT | ||
Accumulated depreciation of Palo Verde sale leaseback | $ 260,754 | $ 256,884 |
Accumulated amortization on intangible assets | 816,827 | 736,560 |
Accumulated amortization on nuclear fuel | $ 126,157 | $ 133,122 |
APS - CONSOLIDATED STATEMENTS_4
APS - CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net income | $ 500,826 | $ 635,944 | $ 570,052 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization including nuclear fuel | 817,814 | 719,141 | 686,253 |
Deferred fuel and purchased power | (291,992) | (256,871) | (93,651) |
Deferred fuel and purchased power amortization | 219,579 | 44,557 | (12,047) |
Allowance for equity funds used during construction | (45,263) | (41,737) | (33,776) |
Deferred income taxes | 43,202 | 117,471 | 69,469 |
Deferred investment tax credit | (5,893) | (4,802) | (5,096) |
Changes in current assets and liabilities: | |||
Customer and other receivables | (63,869) | (72,559) | (18,191) |
Accrued unbilled revenues | (30,784) | (1,783) | (4,032) |
Materials, supplies and fossil fuel | (83,469) | (32,870) | 11,623 |
Income tax receivable | (6,572) | (722) | 14,935 |
Other current assets | 76,067 | (22,720) | (30,640) |
Accounts payable | 90,076 | 20,267 | (6,059) |
Accrued taxes | (4,205) | 9,094 | 14,652 |
Other current liabilities | (6,056) | (52,086) | 22,520 |
Change in margin and collateral accounts — assets | 22 | (50) | 404 |
Change in margin and collateral accounts — liabilities | 4,200 | 350 | 100 |
Change in unrecognized tax benefits | (1,989) | (568) | 2,220 |
Change in long-term regulatory liabilities | (332,470) | 57,549 | 13,017 |
Change in other long-term assets | 276,821 | (246,473) | (67,453) |
Change in other long-term liabilities | 68,677 | (29,578) | (186,227) |
Net cash provided by operating activities | 1,241,441 | 860,014 | 966,365 |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Capital expenditures | (1,707,490) | (1,473,475) | (1,326,584) |
Contributions in aid of construction | 137,436 | 105,654 | 62,503 |
Allowance for borrowed funds used during construction | (28,030) | (21,052) | (18,530) |
Proceeds from nuclear decommissioning trust sales and other special use funds | 1,207,713 | 1,720,966 | 819,518 |
Investment in nuclear decommissioning trust and other special use funds | (1,212,063) | (1,725,480) | (822,608) |
Other | (15,612) | 6,458 | 7,883 |
Net cash used for investing activities | (1,618,046) | (1,386,929) | (1,277,818) |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Issuance of long-term debt | 875,537 | 746,999 | 1,596,672 |
Repayment of long-term debt | (150,000) | 0 | (915,150) |
Short-term borrowings and (repayments) — net | 48,720 | 142,000 | 73,325 |
Short-term debt borrowings under revolving credit facility | 0 | 0 | 751,690 |
Short-term debt repayments under revolving credit facility | 0 | (19,000) | (770,690) |
Dividends paid on common stock | (378,881) | (369,478) | (350,577) |
Noncontrolling interests | (21,255) | (21,255) | (22,743) |
Net cash provided by financing activities | 371,468 | 476,916 | 361,138 |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (5,137) | (49,999) | 49,685 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 9,969 | 59,968 | 10,283 |
CASH AND CASH EQUIVALENTS AT END OF YEAR | 4,832 | 9,969 | 59,968 |
Arizona Public Service Company | |||
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net income | 542,153 | 649,503 | 587,521 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization including nuclear fuel | 817,729 | 719,039 | 686,168 |
Deferred fuel and purchased power | (291,992) | (256,871) | (93,651) |
Deferred fuel and purchased power amortization | 219,579 | 44,557 | (12,047) |
Allowance for equity funds used during construction | (45,263) | (41,737) | (33,776) |
Deferred income taxes | (6,817) | 128,852 | 36,462 |
Deferred investment tax credit | (5,893) | (4,802) | (5,096) |
Changes in current assets and liabilities: | |||
Customer and other receivables | (60,930) | (72,101) | (28,206) |
Accrued unbilled revenues | (30,784) | (1,783) | (4,032) |
Materials, supplies and fossil fuel | (83,469) | (32,870) | 11,623 |
Income tax receivable | 9,654 | (10,756) | 7,313 |
Other current assets | 59,948 | (25,587) | (24,669) |
Accounts payable | 79,492 | 23,510 | (4,503) |
Accrued taxes | 4,734 | 3,042 | 12,642 |
Other current liabilities | (3,010) | (61,647) | 29,587 |
Change in margin and collateral accounts — assets | 22 | (50) | 404 |
Change in margin and collateral accounts — liabilities | 4,200 | 350 | 100 |
Change in unrecognized tax benefits | (1,989) | (568) | 2,220 |
Change in long-term regulatory liabilities | (332,470) | 57,549 | 13,017 |
Change in other long-term assets | 288,077 | (231,804) | (65,139) |
Change in other long-term liabilities | 67,131 | (20,272) | (186,871) |
Net cash provided by operating activities | 1,230,102 | 865,554 | 929,067 |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Capital expenditures | (1,655,051) | (1,471,795) | (1,326,584) |
Contributions in aid of construction | 137,436 | 105,654 | 62,503 |
Allowance for borrowed funds used during construction | (26,839) | (21,052) | (18,530) |
Proceeds from nuclear decommissioning trust sales and other special use funds | 1,207,713 | 1,720,966 | 819,518 |
Investment in nuclear decommissioning trust and other special use funds | (1,212,063) | (1,725,480) | (822,608) |
Other | (727) | 273 | (554) |
Net cash used for investing activities | (1,549,531) | (1,391,434) | (1,286,255) |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Issuance of long-term debt | 524,852 | 446,999 | 1,099,722 |
Repayment of long-term debt | 0 | 0 | (465,150) |
Short-term borrowings and (repayments) — net | 46,300 | 278,700 | 0 |
Short-term debt borrowings under revolving credit facility | 0 | 0 | 540,000 |
Short-term debt repayments under revolving credit facility | 0 | 0 | (540,000) |
Dividends paid on common stock | (385,800) | (376,500) | (357,500) |
Equity infusion from Pinnacle West | 150,000 | 150,000 | 150,000 |
Noncontrolling interests | (21,255) | (21,255) | (22,743) |
Net cash provided by financing activities | 314,097 | 477,944 | 404,329 |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (5,332) | (47,936) | 47,141 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 9,374 | 57,310 | 10,169 |
CASH AND CASH EQUIVALENTS AT END OF YEAR | $ 4,042 | $ 9,374 | $ 57,310 |
APS - CONSOLIDATED STATEMENTS_5
APS - CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) $ in Thousands | Total | Common Stock | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interests | Arizona Public Service Company | Arizona Public Service Company Common Stock | Arizona Public Service Company Additional Paid-In Capital | Arizona Public Service Company Retained Earnings | Arizona Public Service Company Accumulated Other Comprehensive Income (Loss) | Arizona Public Service Company Noncontrolling Interests |
Beginning balance (in shares) at Dec. 31, 2019 | 112,540,126 | 71,264,947 | |||||||||
Beginning balance at Dec. 31, 2019 | $ 5,553,188 | $ 2,659,561 | $ 2,837,610 | $ (57,096) | $ 122,540 | $ 5,998,803 | $ 178,162 | $ 2,721,696 | $ 3,011,927 | $ (35,522) | $ 122,540 |
Increase (Decrease) in Shareholders' Equity | |||||||||||
Equity infusion from Pinnacle West | 150,000 | 150,000 | |||||||||
Net income | 570,052 | 550,559 | 19,493 | 587,521 | 568,028 | 19,493 | |||||
Other comprehensive income (loss) | (5,700) | (5,700) | (5,396) | (5,396) | |||||||
Dividends, Common Stock, Net | 363,063 | 363,063 | 363,000 | 363,000 | |||||||
Capital activities by noncontrolling interests | (22,743) | (22,743) | (22,743) | (22,743) | |||||||
Ending balance (in shares) at Dec. 31, 2020 | 112,760,051 | 71,264,947 | |||||||||
Ending 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 | |||||||||||
Equity infusion from Pinnacle West | 150,000 | 150,000 | |||||||||
Net income | 635,944 | 618,720 | 17,224 | 649,503 | 632,279 | 17,224 | |||||
Other comprehensive income (loss) | 7,935 | 7,935 | 6,038 | 6,038 | |||||||
Dividends, Common Stock, Net | 379,108 | 379,108 | 379,000 | 379,000 | |||||||
Capital activities by noncontrolling interests | (21,255) | (21,255) | (21,255) | (21,255) | |||||||
Other | $ 2 | 1 | 1 | 2 | 1 | 1 | |||||
Ending balance (in shares) at Dec. 31, 2021 | 113,014,528 | 113,014,528 | 71,264,947 | ||||||||
Ending 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 | 500,826 | 483,602 | 17,224 | 542,153 | 524,929 | 17,224 | |||||
Other comprehensive income (loss) | 23,426 | 23,426 | 19,284 | 19,284 | |||||||
Dividends, Common Stock, Net | 387,975 | 387,975 | 387,700 | 387,700 | |||||||
Capital activities by noncontrolling interests | (21,255) | (21,255) | (21,255) | (21,255) | |||||||
Other | $ 2 | $ 1 | 1 | ||||||||
Ending balance (in shares) at Dec. 31, 2022 | 113,247,189 | 113,247,189 | 71,264,947 | ||||||||
Ending balance at Dec. 31, 2022 | $ 6,159,876 | $ 2,724,740 | $ 3,360,347 | $ (31,435) | $ 111,229 | $ 7,052,955 | $ 178,162 | $ 3,171,696 | $ 3,607,464 | $ (15,596) | $ 111,229 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Description of Business and Basis of Presentation Pinnacle West is a holding company that conducts business through its subsidiaries, APS, El Dorado, BCE and 4CA. APS, our wholly-owned subsidiary, is a vertically-integrated electric utility that provides either retail or wholesale electric service to substantially all of the state of Arizona, with the major exceptions of about one-half of the Phoenix metropolitan area, the Tucson metropolitan area and Mohave County in northwestern Arizona. APS accounts for essentially all of our revenues and earnings and is expected to continue to do so. El Dorado is an investment firm. BCE is a subsidiary that was formed in 2014 that focuses on growth opportunities that leverage the Company’s core expertise in the electric energy industry. 4CA is a subsidiary that was formed in 2016 as a result of the purchase of El Paso’s 7% interest in Four Corners. See Note 10 for more information on 4CA matters. Pinnacle West’s Consolidated Financial Statements include the accounts of Pinnacle West and our subsidiaries: APS, El Dorado, BCE and 4CA. APS’s Consolidated Financial Statements include the accounts of APS and certain VIEs relating to the Palo Verde sale leaseback. Intercompany accounts and transactions between the consolidated companies have been eliminated. We consolidate Variable Interest Entities (each a “VIE”) for which we are the primary beneficiary. We determine whether we are the primary beneficiary of a VIE through a qualitative analysis that identifies which variable interest holder has the controlling financial interest in the VIE. In performing our primary beneficiary analysis, we consider all relevant facts and circumstances, including the design and activities of the VIE, the terms of the contracts the VIE has entered into, and which parties participated significantly in the design or redesign of the entity. We continually evaluate our primary beneficiary conclusions to determine if changes have occurred which would impact our primary beneficiary assessments. We have determined that APS is the primary beneficiary of certain VIE lessor trusts relating to the Palo Verde sale leaseback, and therefore APS consolidates these entities. See Note 17 for additional information. We have determined that Pinnacle West is the primary beneficiary of a captive insurance protected cell VIE. As of December 31, 2022, the captive cell’s activities are insignificant to our consolidated financial statements. Our 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. Accounting Records and Use of Estimates 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. Regulatory Accounting APS is regulated by the ACC and the FERC. The accompanying financial statements reflect the rate-making policies of these commissions. As a result, we capitalize certain costs that would be included as expense in the current period by unregulated companies. Regulatory assets represent incurred costs that have been deferred because they are probable of future recovery in customer rates. Regulatory liabilities generally represent amounts collected in rates to recover costs expected to be incurred in the future or amounts collected in excess of costs incurred and are refundable to customers. Management judgments include continually assessing the likelihood of future recovery of regulatory assets and/or a disallowance of part of the cost of recently completed plant, by considering factors such as applicable regulatory environment changes and recent rate orders to other regulated entities in the same jurisdiction. This determination reflects the current political and regulatory climate in Arizona and is subject to change in the future. If future recovery of costs ceases to be probable, the assets would be written off as a charge in current period earnings. Management judgments also include assessing the impact of potential Commission-ordered refunds to customers on regulatory liabilities. See Note 3 for additional information. Electric Revenues Revenues primarily consist of activities that are classified as revenues from contracts with customers. Our electric revenues generally represent a single performance obligation delivered over time. We have elected to apply the practical expedient that allows us to recognize revenue based on the amount to which we have a right to invoice for services performed. We derive electric revenues primarily from sales of electricity to our regulated retail customers. Revenues related to the sale of electricity are generally recognized when service is rendered or electricity is delivered to customers. Unbilled revenues are estimated by applying an average revenue/kWh by customer class to the number of estimated kWhs delivered but not billed. Differences historically between the actual and estimated unbilled revenues are immaterial. We exclude sales taxes and franchise fees on electric revenues from both revenue and taxes other than income taxes. Revenues from our regulated retail customers and non-derivative instruments are reported on a gross basis on Pinnacle West’s Consolidated Statements of Income. In the electricity business, some contracts to purchase electricity are netted against other contracts to sell electricity. This is called a “book-out” and usually occurs for contracts that have the same terms (quantities, delivery points and delivery periods) and for which power does not flow. We net these book-outs, which reduces both wholesale revenues and fuel and purchased power costs. Certain cost recovery mechanisms may qualify as alternative revenue programs. For alternative revenue programs that meet specified accounting criteria, we recognize revenues when the specific events permitting billing of the additional revenues have been completed. See Notes 2 and 3 for additional information. 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. See Note 2. Property, Plant and Equipment Utility plant is the term we use to describe the business property and equipment that supports electric service, consisting primarily of generation, transmission, and distribution facilities. We report utility plant at its original cost, which includes: • material and labor; • contractor costs; • capitalized leases; • construction overhead costs (where applicable); and • AFUDC. Pinnacle West’s property, plant and equipment included in the December 31, 2022, and 2021 Consolidated Balance Sheets is composed of the following (dollars in thousands): Property, Plant and Equipment: 2022 2021 Generation $ 9,563,145 $ 9,480,572 Transmission 3,589,456 3,402,016 Distribution 7,951,867 7,520,016 General plant 1,347,678 1,286,057 Plant in service and held for future use 22,452,146 21,688,661 Accumulated depreciation and amortization (7,929,878) (7,504,603) Net 14,522,268 14,184,058 Construction work in progress 1,882,791 1,329,478 Palo Verde sale leaseback, net of accumulated depreciation 90,296 94,166 Intangible assets, net of accumulated amortization 258,880 273,693 Nuclear fuel, net of accumulated amortization 100,119 106,039 Total property, plant and equipment $ 16,854,354 $ 15,987,434 Property, plant and equipment balances and classes for APS are not materially different than Pinnacle West. We expense the costs of plant outages, major maintenance and routine maintenance as incurred. We charge retired utility plant to accumulated depreciation. Liabilities associated with the retirement of tangible long-lived assets are recognized at fair value as incurred and capitalized as part of the related tangible long-lived assets. Accretion of the liability due to the passage of time is an operating expense, and the capitalized cost is depreciated over the useful life of the long-lived asset. See Note 11 for additional information. APS records a regulatory liability for the excess that has been recovered in regulated rates over the amount calculated in accordance with guidance on accounting for AROs. APS believes it is probable it will recover in regulated rates, the costs calculated in accordance with this accounting guidance. We record depreciation and amortization on utility plant on a straight-line basis over the remaining useful life of the related assets. The approximate remaining average useful lives of our utility property at December 31, 2022, were as follows: • Steam generation — 12 years; • Nuclear plant — 25 years; • Other generation — 18 years; • Transmission — 38 years; • Distribution — 33 years; and • General plant — 6 years. Depreciation of utility property, plant and equipment is computed on a straight-line, remaining-life basis. Depreciation expense was $632 million in 2022, $575 million in 2021, and $553 million in 2020. For the years 2020 through 2022, the depreciation rates ranged from a low of 1.37% to a high of 12.15%. The weighted-average depreciation rate was 3.03% in 2022, 2.87% in 2021, and 2.84% in 2020. Asset Retirement Obligations APS has AROs for its Palo Verde nuclear facilities and certain other generation assets. The Palo Verde ARO primarily relates to final plant decommissioning. This obligation is based on the NRC’s requirements for disposal of radiated property or plant and agreements APS reached with the ACC for final decommissioning of the plant. The non-nuclear generation AROs primarily relate to requirements for removing portions of those plants at the end of the plant life or lease term and coal ash pond closures. Some of APS’s transmission and distribution assets have AROs because they are subject to right of way and easement agreements that require final removal. These agreements have a history of uninterrupted renewal that APS expects to continue. As a result, APS cannot reasonably estimate the fair value of the ARO related to such transmission and distribution assets. Additionally, APS has aquifer protection permits for some of its generation sites that require the closure of certain facilities at those sites. See Note 11 for further information on Asset Retirement Obligations. Allowance for Funds Used During Construction AFUDC represents the approximate net composite interest cost of borrowed funds and an allowed return on the equity funds used for construction of regulated utility plant. Both the debt and equity components of AFUDC are non-cash amounts within the Consolidated Statements of Income. Plant construction costs, including AFUDC, are recovered in authorized rates through depreciation when completed projects are placed into commercial operation. AFUDC was calculated by using a composite rate of 5.75% for 2022, 6.75% for 2021, and 6.72% for 2020. APS compounds AFUDC semi-annually and ceases to accrue AFUDC when construction work is completed, and the property is placed in service. On June 30, 2020, FERC issued an order granting a waiver request related to the existing 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 21, 2022. The order provided a simplified approach that companies may have elected to implement in order to minimize the significant distorted effect on the AFUDC formula which resulted 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 2020 and 2021 but did not impact prior years or 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. Materials and Supplies APS values materials, supplies and fossil fuel inventory using a weighted-average cost method. APS materials, supplies and fossil fuel inventories are carried at the lower of weighted-average cost or net realizable value, unless evidence indicates that the weighted-average cost (even if in excess of market) will be recovered. Fair Value Measurements We apply recurring fair value measurements to cash equivalents, derivative instruments, investments held in the nuclear decommissioning trust and other special use funds. On an annual basis, we apply fair value measurements to plan assets held in our retirement and other benefits plans. Due to the short-term nature of short-term borrowings, the carrying values of these instruments approximate fair value. Fair value measurements may also be applied on a nonrecurring basis to other assets and liabilities in certain circumstances such as impairments. We also disclose fair value information for our long-term debt, which is carried at amortized cost. See Note 6 for additional information. Fair value is the price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market which we can access for the asset or liability in an orderly transaction between willing market participants on the measurement date. Inputs to fair value may include observable and unobservable data. We maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. We determine fair market value using observable inputs such as actively-quoted prices for identical instruments when available. When actively-quoted prices are not available for the identical instruments, we use other observable inputs, such as prices for similar instruments, other corroborative market information, or prices provided by other external sources. For options, long-term contracts, and other contracts for which observable price data are not available, we use models and other valuation methods, which may incorporate unobservable inputs to determine fair market value. The use of models and other valuation methods to determine fair market value often requires subjective and complex judgment. Actual results could differ from the results estimated through application of these methods. See Note 12 for additional information about fair value measurements. Derivative Accounting We are exposed to the impact of market fluctuations in the commodity price and transportation costs of electricity, natural gas, coal and in interest rates. We manage risks associated with market volatility by utilizing various physical and financial 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 as well as interest rate risk. The changes in market value of such contracts have a high correlation to price changes in the hedged transactions. We also enter into derivative instruments for economic hedging purposes. 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 expenses in our Consolidated Statements of Income, but does not impact our financial condition, net income, or cash flows. We account for our derivative contracts in accordance with derivatives and hedging guidance, which requires all derivatives not qualifying for a scope exception to be measured at fair value on the balance sheet as either assets or liabilities. Transactions with counterparties that have master netting arrangements are reported net on the balance sheet. See Note 15 for additional information about our derivative instruments. Loss Contingencies and Environmental Liabilities Pinnacle West and APS are involved in certain legal and environmental matters that arise in the normal course of business. Contingent losses and environmental liabilities are recorded when it is determined that it is probable that a loss has occurred, and the amount of the loss can be reasonably estimated. When a range of the probable loss exists and no amount within the range is a better estimate than any other amount, Pinnacle West and APS record a loss contingency at the minimum amount in the range. Unless otherwise required by GAAP, legal fees are expensed as incurred. Retirement Plans and Other Postretirement Benefits Pinnacle West sponsors a qualified defined benefit and account balance pension plan for the employees of Pinnacle West and its subsidiaries, in addition to a non-qualified pension plan. We also sponsor another postretirement benefit plan for the employees of Pinnacle West and its subsidiaries that provides medical and life insurance benefits to retired employees. Pension and other postretirement benefit expense are determined by actuarial valuations, based on assumptions that are evaluated annually. See Note 7 for additional information on pension and other postretirement benefits. Nuclear Fuel APS amortizes nuclear fuel by using the unit-of-production method. The unit-of-production method is based on actual physical usage. APS divides the cost of the fuel by the estimated number of thermal units it expects to produce with that fuel. APS then multiplies that rate by the number of thermal units produced within the current period. This calculation determines the current period nuclear fuel expense. APS also charges nuclear fuel expense for the interim storage and permanent disposal of spent nuclear fuel. The DOE is responsible for the permanent disposal of spent nuclear fuel and charged APS $0.001 per kWh of nuclear generation through May 2014, at which point the DOE reduced the fee to zero. In accordance with a settlement agreement with the DOE in August 2014 for interim storage, we accrued a receivable and an offsetting regulatory liability through the settlement period which ended December of 2022. See Note 10 for information on spent nuclear fuel disposal costs. Income Taxes Income taxes are provided using the asset and liability approach prescribed by guidance relating to accounting for income taxes and are based on currently enacted tax rates. We file our federal income tax return on a consolidated basis, and we file our state income tax returns on a consolidated or unitary basis. In accordance with our intercompany tax sharing agreement, federal and state income taxes are allocated to each first-tier subsidiary as though each first-tier subsidiary filed a separate income tax return. Any difference between that method and the consolidated (and unitary) income tax liability is attributed to the parent company. The income tax accounts reflect the tax and interest associated with management’s estimate of the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement for all known and measurable tax exposures. See Note 4 for additional discussion. Cash and Cash Equivalents We consider cash equivalents to be highly liquid investments with a remaining maturity of three months or less at acquisition. The following table summarizes supplemental Pinnacle West cash flow information for each of the last three years (dollars in thousands): Year ended December 31, 2022 2021 2020 Cash paid (received) during the period for: Income taxes, net of refunds $ 46,227 $ 229 $ (3,019) Interest, net of amounts capitalized 245,271 227,584 216,951 Significant non-cash investing and financing activities: Accrued capital expenditures $ 114,999 $ 167,733 $ 113,502 Dividends declared but not paid 97,895 95,988 93,531 The following table summarizes supplemental APS cash flow information for each of the last three years (dollars in thousands): Year ended December 31, 2022 2021 2020 Cash paid during the period for: Income taxes, net of refunds $ 95,985 $ 19,783 $ 41,176 Interest, net of amounts capitalized 227,159 217,749 206,328 Significant non-cash investing and financing activities: Accrued capital expenditures $ 116,533 $ 167,657 $ 113,502 Dividends declared but not paid 97,900 96,000 93,500 Intangible Assets We have no goodwill recorded and have separately disclosed other intangible assets, primarily APS’s software, on Pinnacle West’s Consolidated Balance Sheets. The intangible assets are amortized over their finite useful lives. Amortization expense was $84 million in 2022, $80 million in 2021, and $70 million in 2020. Estimated amortization expense on existing intangible assets over the next five years is $81 million in 2023, $60 million in 2024, $48 million in 2025, $33 million in 2026, and $14 million in 2027. At December 31, 2022, the weighted-average remaining amortization period for intangible assets was 6 years. Investments El Dorado holds investments in both debt and equity securities. Investments in debt securities are generally accounted for as held-to-maturity and investments in equity securities are accounted for using either the equity method (if significant influence) or the measurement alternative for investments without readily determinable fair values (if less than 20% ownership and no significant influence). BCE holds investments in equity securities. Investments in equity securities are accounted for using either the equity method (if significant influence) or the measurement alternative for investments without readily determinable fair values (if less than 20% ownership and no significant influence). Our investments in the nuclear decommissioning trusts, coal reclamation escrow accounts and active union employee medical account, are accounted for in accordance with guidance on accounting for investments in debt and equity securities. See Notes 12 and 18 for more information on these investments. Leases We determine if an agreement is a lease at contract inception. A lease is defined as a contract, or part of a contract, that conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To control the use of an identified asset an entity must have both a right to obtain substantially all of the benefits from the use of the asset and the right to direct the use of the asset. If we determine an agreement is a lease, and we are the lessee, we recognize a right-of-use lease asset and a lease liability at the lease commencement date. Lease liabilities are recognized based on the present value of the fixed lease payments over the lease term. To present value lease liabilities we use the implicit rate in the lease if the information is readily available, otherwise we use our incremental borrowing rate determined at lease commencement. Our incremental borrowing rate is based on the rate of interest we would have to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. When measuring right-of-use assets and lease liabilities we exclude variable lease payments, other than those that depend on an index or rate or are in-substance fixed payments. For short-term leases with terms of 12 months or less, we do not recognize a right-of-use lease asset or lease liability. We recognize operating lease expense using a straight-line pattern over the periods of use. APS enters into purchased power contracts that may contain leases. This occurs when a purchased power agreement designates a specific power plant, APS obtains substantially all of the economic benefits from the use of the plant and has the right to direct the use of the plant. Purchased power lease contracts may also include energy storage facilities. Lease costs relating to purchased power lease contracts are reported in fuel and purchased power on the Consolidated Statements of Income and are subject to recovery under the PSA or RES. See Note 3 . We also may enter into lease agreements related to vehicles, office space, land, and other equipment. See Note 8 for information on our lease agreements. Business Segments Pinnacle West’s reportable business segment is our regulated electricity segment, which consists of traditional regulated retail and wholesale electricity businesses (primarily electricity service to Native Load customers) and related activities and includes electricity generation, transmission, and distribution. All other segment activities are insignificant. Preferred Stock At December 31, 2022, Pinnacle West had 10 million shares of serial preferred stock authorized with no par value, none of which was outstanding, and APS had 15,535,000 shares of various types of preferred stock authorized with $25, $50, and $100 par values, none of which was outstanding. |
Revenue
Revenue | 12 Months Ended |
Dec. 31, 2022 | |
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): Year Ended December 31, Year Ended December 31, Year Ended December 31, 2022 2021 2020 Retail Electric Service Residential $ 2,046,111 $ 1,913,324 $ 1,929,178 (a) Non-Residential 1,767,616 1,586,940 1,486,098 Wholesale Energy Sales 383,126 187,640 93,345 Transmission Services for Others 116,628 99,285 65,859 Other Sources 10,904 16,646 12,502 Total Operating Revenues $ 4,324,385 $ 3,803,835 $ 3,586,982 (a) Residential revenues for the year ended December 31, 2020, reflect a $24 million reduction related to the Arizona Attorney General matter. See Note 10 . 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. 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 year ended December 31, 2022, 2021 and 2020 were $4,302 million, $3,760 million, and $3,533 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 year ended December 31, 2022, 2021 and 2020, our revenues that do not qualify as revenue from contracts with customers were $22 million, $44 million and $54 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 3 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 Consolidated Balance Sheets as of December 31, 2022, and 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): Year Ended December 31, 2022 Year Ended December 31, 2021 Year Ended December 31, 2020 Allowance for doubtful accounts, balance at beginning of period $ 25,354 $ 19,782 $ 8,171 Bad debt expense 17,006 22,251 20,633 Actual write-offs (18,582) (16,679) (9,022) Allowance for doubtful accounts, balance at end of period $ 23,778 $ 25,354 $ 19,782 |
Regulatory Matters
Regulatory Matters | 12 Months Ended |
Dec. 31, 2022 | |
Regulated Operations [Abstract] | |
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: Capital Structure Cost of Capital Long-term debt 48.07 % 3.85 % Common stock equity 51.93 % 10.25 % Weighted-average cost of capital 7.17 % • 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. The hearing for this rate case is currently scheduled to begin in August 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: Capital Structure Cost of Capital Long-term debt 45.3 % 4.10 % Common stock equity 54.7 % 10.15 % Weighted-average cost of capital 7.41 % • 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 megawatt (“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 $0.9 million 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 in formation), (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 $215.5 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 Arizona Court of Appeals heard oral arguments on November 30, 2022. The Court took the matter under advisement and will issue its decision in due course. 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. 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 if the ACC will take any further action on 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) $0.5 million 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) $0.5 million 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 recommended that funds for CCT shall not be collected from rate payers. On December 8, 2022, the ACC voted against ACC Staff’s proposed order. APS cannot predict if the ACC will take any further action on 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 and the 2017 Settlement Agreement 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, among other things, 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. 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. However, on November 10, 2022, the ACC approved a bifurcated community solar process, directing ACC Staff to develop a statewide policy through additional stakeholder involvement and establishing a separate evidentiary hearing to define other policy components. The community solar program was deferred to the ACC’s Hearing Division so that a formal evidentiary hearing could be held to consider issues of substance related to community solar. APS cannot predict the outcomes of these future activities. 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. On November 10, 2022, the ACC approved the 2023 RES Implementation Plan, including APS’s requested waiver of the distributed energy requirement for 2023. 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 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 Implementation 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 Implementation Plan that proposed an additional one-time 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 Implementation 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. On November 10, 2022, the ACC approved the 2022 DSM Implementation Plan, including a proposed performance incentive. On November 30, 2022, APS filed its 2023 DSM Implementation Plan, which requested a budget of $88 million. The ACC has not yet ruled on the 2023 DSM Implementation 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 PSA is subject to specified parameters and procedures, including the following: • APS records deferrals for recovery or refund to the extent actual retail fuel and purchased power costs vary from the Base Fuel Rate; • an adjustment to the PSA rate is made annually each February 1 (unless otherwise approved by the ACC) and goes into effect automatically unless suspended by the ACC; • the PSA uses a forward-looking estimate of fuel and purchased power costs to set the annual PSA rate, which is reconciled to actual costs experienced for each PSA Year (February 1 through January 31) (see the following bullet point); • the PSA rate includes (a) a “forward component,” under which APS recovers or refunds differences between expected fuel and purchased power costs for the upcoming calendar year and those embedded in the Base Fuel Rate; (b) a “historical component,” under which differences between actual fuel and purchased power costs and those recovered or refunded through the combination of the Base Fuel Rate and the Forward Component are recovered during the next PSA Year; and (c) a “transition component,” under which APS may seek mid-year PSA changes due to large variances between actual fuel and purchased power costs and the combination of the Base Fuel Rate and the Forward Component; and • the PSA rate may not be increased or decreased more than $0.004 per kWh in a year without permission of the ACC. The following table shows the changes in the deferred fuel and purchased power regulatory asset for 2022 and 2021 (dollars in thousands): Twelve Months Ended 2022 2021 Beginning balance $ 388,148 $ 175,835 Deferred fuel and purchased power costs — current period 291,992 256,871 Amounts charged to customers (219,579) (44,558) Ending balance $ 460,561 $ 388,148 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 third-party 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. On December 27, 2022, ACC Staff filed a proposed order supporting adoption of the recommendations in the |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Certain assets and liabilities are reported differently for income tax purposes than they are for financial statement purposes. The tax effect of these differences is recorded as deferred taxes. We calculate deferred taxes using currently enacted income tax rates. APS has recorded regulatory assets and regulatory liabilities related to income taxes on its Consolidated Balance Sheets in accordance with accounting guidance for regulated operations. The regulatory assets are for certain temporary differences, primarily the allowance for equity funds used during construction, investment tax credit (“ITC”) basis adjustment and tax expense of Medicare subsidy. The regulatory liabilities primarily relate to the change in income tax rates and deferred taxes resulting from ITCs. In accordance with regulatory requirements, APS ITCs are deferred and are amortized over the life of the related property with such amortization applied as a credit to reduce current income tax expense in the Statements of Income. Net income associated with the Palo Verde sale leaseback VIEs is not subject to tax. As a result, there is no income tax expense associated with the VIEs recorded on the Pinnacle West Consolidated and APS Consolidated Statements of Income. See Note 17 for additional details related to the Palo Verde sale leaseback VIEs. The following is a tabular reconciliation of the total amounts of unrecognized tax benefits, excluding interest and penalties, at the beginning and end of the year that are included in accrued taxes and unrecognized tax benefits (dollars in thousands): Pinnacle West Consolidated APS Consolidated 2022 2021 2020 2022 2021 2020 Total unrecognized tax benefits, January 1 $ 45,086 $ 45,655 $ 43,435 $ 45,086 $ 45,655 $ 43,435 Additions for tax positions of the current year 1,399 3,305 3,418 1,399 3,305 3,418 Additions for tax positions of prior years 2,069 1,449 1,431 2,069 1,449 1,431 Reductions for tax positions of prior years for: Changes in judgment (3,495) (2,659) (1,965) (3,495) (2,659) (1,965) Settlements with taxing authorities — — — — — — Lapses of applicable statute of limitations (1,962) (2,664) (664) (1,962) (2,664) (664) Total unrecognized tax benefits, December 31 $ 43,097 $ 45,086 $ 45,655 $ 43,097 $ 45,086 $ 45,655 Included in the balances of unrecognized tax benefits are the following tax positions that, if recognized, would decrease our effective tax rate (dollars in thousands): Pinnacle West Consolidated APS Consolidated 2022 2021 2020 2022 2021 2020 Tax positions, that if recognized, would decrease our effective tax rate $ 28,246 $ 26,300 $ 25,714 $ 28,246 $ 26,300 $ 25,714 As of the balance sheet date, the tax year ended December 31, 2019, and all subsequent tax years remain subject to examination by the IRS. With a few exceptions, we are no longer subject to state income tax examinations by tax authorities for years before 2018. We reflect interest and penalties, if any, on unrecognized tax benefits in the Pinnacle West Consolidated and APS Consolidated Statements of Income as income tax expense. The amount of interest expense or benefit recognized related to unrecognized tax benefits are as follows (dollars in thousands): Pinnacle West Consolidated APS Consolidated 2022 2021 2020 2022 2021 2020 Unrecognized tax benefit interest expense/(benefit) recognized $ (139) $ (535) $ 266 $ (139) $ (535) $ 266 Following are the total amount of accrued liabilities for interest recognized related to unrecognized benefits that could reverse and decrease our effective tax rate to the extent matters are settled favorably (dollars in thousands): Pinnacle West Consolidated APS Consolidated 2022 2021 2020 2022 2021 2020 Unrecognized tax benefit interest accrued $ 1,181 $ 1,320 $ 1,855 $ 1,181 $ 1,320 $ 1,855 Additionally, as of December 31, 2022, we have recognized less than $1 million of interest expense to be paid on the underpayment of income taxes for certain adjustments that we have filed, or will file, with the IRS. The components of income tax expense are as follows (dollars in thousands): Pinnacle West Consolidated APS Consolidated Year Ended December 31, Year Ended December 31, 2022 2021 2020 2022 2021 2020 Current: Federal $ 35,617 $ (5,041) $ 11,869 $ 103,349 $ 1,514 $ 57,299 State 1,950 2,458 1,932 161 (11) 99 Total current 37,567 (2,583) 13,801 103,510 1,503 57,398 Deferred: Federal 23,693 95,327 53,398 (31,860) 101,175 15,122 State 13,567 17,342 10,974 19,150 22,875 16,244 Total deferred 37,260 112,669 64,372 (12,710) 124,050 31,366 Income tax expense/(benefit) $ 74,827 $ 110,086 $ 78,173 $ 90,800 $ 125,553 $ 88,764 The following chart compares pretax income at the 21% statutory federal income tax rate to income tax expense (dollars in thousands): Pinnacle West Consolidated APS Consolidated Year Ended December 31, Year Ended December 31, 2022 2021 2020 2022 2021 2020 Federal income tax expense at statutory rate $ 120,887 $ 156,666 $ 136,127 $ 132,920 $ 162,762 $ 142,020 Increases (reductions) in tax expense resulting from: State income tax net of federal income tax benefit 17,740 22,656 19,146 19,000 23,339 20,124 State income tax credits net of federal income tax benefit (5,482) (7,015) (8,951) (3,744) (5,277) (7,213) Net operating loss carryback tax benefit — (5,915) — — — — Excess deferred income taxes — Tax Cuts and Jobs Act (36,241) (36,558) (50,543) (36,241) (36,558) (50,543) Allowance for equity funds used during construction (see Note 1) (4,629) (4,180) (2,747) (4,629) (4,180) (2,747) Palo Verde VIE noncontrolling interest (see Note 17) (3,617) (3,617) (4,094) (3,617) (3,617) (4,094) Investment tax credit amortization (5,608) (7,620) (7,510) (5,608) (7,620) (7,510) Other federal income tax credits (10,867) (6,976) (4,616) (7,721) (3,912) (3,035) Other 2,644 2,645 1,361 440 616 1,762 Income tax expense/(benefit) $ 74,827 $ 110,086 $ 78,173 $ 90,800 $ 125,553 $ 88,764 The components of the net deferred income tax liability were as follows (dollars in thousands): Pinnacle West Consolidated APS Consolidated December 31, December 31, 2022 2021 2022 2021 DEFERRED TAX ASSETS Risk management activities $ 8,826 $ 677 $ 8,826 $ 677 Regulatory liabilities: Excess deferred income taxes — Tax Cuts and Jobs Act 295,014 306,915 295,014 306,915 Asset retirement obligation and removal costs 107,104 174,952 107,104 174,952 Unamortized investment tax credits 48,035 49,601 48,035 49,601 Other postretirement benefits 66,893 92,654 66,893 92,654 Other 62,915 65,815 62,915 65,815 Operating lease liabilities 184,030 204,890 182,663 204,378 Pension liabilities 33,674 42,136 30,436 37,814 Coal reclamation liabilities 44,312 43,165 44,312 43,165 Renewable energy incentives 19,948 22,646 19,948 22,646 Credit and loss carryforwards 37,647 57,077 13,654 18,902 Other 72,605 74,184 72,605 74,184 Total deferred tax assets 981,003 1,134,712 952,405 1,091,703 DEFERRED TAX LIABILITIES Plant-related (2,518,164) (2,570,613) (2,518,164) (2,570,613) Risk management activities (32,648) (27,276) (32,648) (27,276) Pension and other postretirement assets (96,845) (133,624) (96,196) (132,769) Other special use funds (57,572) (64,610) (57,572) (64,610) Operating lease right-of-use assets (184,030) (204,890) (182,663) (204,378) Regulatory assets: Allowance for equity funds used during construction (44,405) (42,616) (44,405) (42,616) Deferred fuel and purchased power (114,232) (96,033) (114,232) (96,033) Pension benefits (157,629) (126,010) (157,629) (126,010) Retired power plant costs (24,397) (28,389) (24,397) (28,389) Other (103,023) (123,902) (103,023) (123,902) Other (32,479) (28,611) (7,123) (6,808) Total deferred tax liabilities (3,365,424) (3,446,574) (3,338,052) (3,423,404) Deferred income taxes — net $ (2,384,421) $ (2,311,862) $ (2,385,647) $ (2,331,701) As of December 31, 2022, PNW consolidated deferred tax assets for credit and loss carryforwards relate to state credit carryforwards net of federal benefit of $43 million, which first begin to expire in 2024. PNW consolidated credit and loss carryforwards amount above has been reduced by $5 million of unrecognized tax benefits. As of December 31, 2022, APS consolidated deferred tax assets for credit and loss carryforwards relate to state credit carryforwards net of federal benefit of $19 million, which first begin to expire in 2025. APS consolidated credit and loss carryforwards amount above has been reduced by $5 million of unrecognized tax benefits. |
Lines of Credit and Short-Term
Lines of Credit and Short-Term Borrowings | 12 Months Ended |
Dec. 31, 2022 | |
Lines of Credit and Short-Term Borrowings | |
Lines of Credit and Short-Term Borrowings | Lines of Credit and Short-Term Borrowings 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. The table below presents the consolidated credit facilities and the amounts available and outstanding (dollars in thousands): December 31, 2022 December 31, 2021 Pinnacle West APS Total Pinnacle West APS Total Commitments under Credit Facilities $ 200,000 $ 1,000,000 $ 1,200,000 $ 200,000 $ 1,000,000 $ 1,200,000 Outstanding Commercial Paper, Term Loan and Revolving Credit Facility Borrowings (15,720) (325,000) (340,720) (13,300) (278,700) (292,000) Amount of Credit Facilities Available $ 184,280 $ 675,000 $ 859,280 $ 186,700 $ 721,300 $ 908,000 Commitment Fees 0.175% 0.125% 0.175% 0.125% Pinnacle West At December 31, 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 December 31, 2022, Pinnacle West had no outstanding borrowings under its revolving credit facility, no letters of credit outstanding under t he credit facility, and $16 million of outstanding commercial paper borrowings. APS At December 31, 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 December 31, 2022, APS ha d no outstanding borrowings under its revolving credit facilities, no letters of credit outstanding under the credit facilities and $325 million of outstanding commercial paper b orrowings. See “Financial Assurances” in Note 10 for a discussion of other outstanding letters of credit. Debt Provisions 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 capitaliza tion, and (ii) $500 million (which is required to be used for costs relating to purchases of natural gas and power). On December 15, 2022, the ACC issued a financing order that, among other things, reaffirmed the short-term debt authorization from the 2020 financing order. See Note 6 for additional long-term debt provisions. |
Long-Term Debt and Liquidity Ma
Long-Term Debt and Liquidity Matters | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Long-Term Debt and Liquidity Matters | Long-Term Debt and Liquidity Matters All of Pinnacle West’s and APS’s debt is unsecured. The following table presents the components of long-term debt on the Consolidated Balance Sheets outstanding (dollars in thousands): Maturity Interest December 31, Dates (a) Rates 2022 2021 APS Pollution control bonds: Variable 2029 (b) $ 163,975 $ 35,975 Total pollution control bonds 163,975 35,975 Senior unsecured notes 2024-2050 2.20%-6.88% 6,680,000 6,280,000 Unamortized discount (14,548) (14,995) Unamortized premium 12,368 13,575 Unamortized debt issuance cost (48,266) (47,862) Total APS long-term debt 6,793,529 6,266,693 Less current maturities — — Total APS long-term debt less current maturities 6,793,529 6,266,693 BCE Los Alamitos equity bridge loan (d) (d) 27,575 — Los Alamitos construction facility (e) (e) 23,110 — Unamortized debt issuance cost (135) — Total BCE long-term debt 50,550 — Less current maturities 50,685 — Total BCE long-term debt less current maturities (135) — Pinnacle West Senior unsecured notes 2025 1.3% 500,000 500,000 Term loans 2024 (c) 450,000 300,000 Unamortized discount (25) (34) Unamortized debt issuance cost (2,083) (2,924) Total Pinnacle West long-term debt 947,892 797,042 Less current maturities — 150,000 Total Pinnacle West long-term debt less current maturities 947,892 647,042 TOTAL LONG-TERM DEBT LESS CURRENT MATURITIES $ 7,741,286 $ 6,913,735 (a) This schedule does not reflect the timing of redemptions that may occur prior to maturities. (b) The weighted-average interest rate for the variable rate pollution control bonds was 3.96% at December 31, 2022, and 0.22% at December 31, 2021. See additional details below. (c) The weighted-average interest rate was 5.1% at December 31, 2022, and 0.81% at December 31, 2021. See additional details below. (d) The weighted-average interest rate for the variable rate equity bridge loan is 5.18% at December 31, 2022 and will mature on the project’s commercial operation date, expected on or before August 15, 2023. See additional details below. (e) The weighted-average interest rate for the variable rate construction facility is 5.71% at December 31, 2022 and will mature on the project’s commercial operation date, expected on or before August 15, 2023. See additional details below. The following table shows principal payments due on Pinnacle West’s, APS’s and BCE’s total long-term debt (dollars in thousands): Year Consolidated Consolidated BCE 2023 $ 50,685 $ — $ 50,685 2024 700,000 250,000 — 2025 800,000 300,000 — 2026 250,000 250,000 — 2027 300,000 300,000 — Thereafter 5,743,975 5,743,975 — Total $ 7,844,660 $ 6,843,975 $ 50,685 Debt Fair Value Our long-term debt fair value estimates are classified within Level 2 of the fair value hierarchy. The following table represents the estimated fair value of our long-term debt, including current maturities (dollars in thousands): As of As of Carrying Fair Value Carrying Fair Value Pinnacle West $ 947,892 $ 905,525 $ 797,042 $ 792,735 APS 6,793,529 5,629,491 6,266,693 6,933,619 BCE 50,550 50,685 — — Total $ 7,791,971 $ 6,585,701 $ 7,063,735 $ 7,726,354 Credit Facilities and Debt Issuances 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 Consolidated Balance Sheets. On January 6, 2022, the remaining $300 million of proceeds was received and recognized on that date as long-term debt on the 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 was set to mature 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 term loan facility early. On December 16, 2022, Pinnacle West entered into a $175 million term loan facility that matures December 16, 2024. The proceeds were received on January 6, 2023 and used for general corporate purposes. We recognized the term loan facility as long-term debt upon settlement on January 6, 2023. APS 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 Consolidated Balance Sheets. On November 8, 2022, APS issued $400 million of 6.35% unsecured senior notes that mature December 15, 2032. The net proceeds from the sale were used to repay short-term indebtedness consisting of commercial paper, replenish cash used to fund capital expenditures, and for general corporate purposes. On January 6, 2023, Pinnacle West contributed $150 million into APS in the form of an equity infusion. APS used this contribution to repay short-term indebtedness. See “Lines of Credit and Short-Term Borrowings” in Note 5 and “Financial Assurances” in Note 10 for discussion of APS’s separate 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 $42 million non-recourse construction 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 December 31, 2022, $28 million has been drawn from the equity bridge loan and there is a $23 million outstanding balance for the construction facility and $2.5 million letters of credit outstanding under the credit facility. The equity bridge loan and construction facility mature and are due on the project’s commercial operation date, expected on or before August 15, 2023. BCE expects to convert the construction facility into a term loan upon the project’s commercial operation date. On October 19, 2022, BCE executed an interest rate swap to hedge the variable interest rate exposure of this credit facility. See Note 15. Debt Provisions Pinnacle West’s and APS’s debt covenants related to their respective bank financing arrangements include maximum debt to capitalization ratios. Pinnacle West and APS comply with this covenant. For both Pinnacle West and APS, this covenant requires that the ratio of consolidated debt to total consolidated capitalization not exceed 65%. At December 31, 2022, the ratio was approximately 57.7% for Pinnacle West and 50.8% for APS. Failure to comply with such covenant levels would result in an event of default, which, generally speaking, would require the immediate repayment of the debt subject to the covenants and could cross-default other debt. See further discussion of “cross-default” provisions below. Neither Pinnacle West’s nor APS’s financing agreements contain “rating triggers” that would result in an acceleration of the required interest and principal payments in the event of a rating downgrade. However, our bank credit agreements contain a pricing grid in which the interest rates we pay for borrowings thereunder are determined by our current credit ratings. All of Pinnacle West’s loan agreements contain “cross-default” provisions that would result in defaults and the potential acceleration of payment under these loan agreements if Pinnacle West or APS were to default under certain other material agreements. All of APS’s bank agreements contain “cross-default” provisions that would result in defaults and the potential acceleration of payment under these bank agreements if APS were to default under certain other material agreements. Pinnacle West and APS do not have a material adverse change restriction for credit facility borrowings. Although provisions in APS’s articles of incorporation and ACC financing orders establish maximum amounts of preferred stock and debt that APS may issue, APS does not expect any of these provisions to limit its ability to meet its capital requirements. On December 17, 2020, the ACC issued a financing order in which, subject to specified parameters and procedures, it approved APS’s long-term debt authorization of $7.5 billion. On December 15, 2022, the ACC issued a financing order approving APS’s application filed on April 6, 2022 requesting to increase the long-term debt limit from $7.5 billion to $8.0 billion and to exclude financing lease PPAs from the definition of long-term indebtedness for purposes of the ACC financing orders. See Note 5 for additional short-term debt provisions. |
Retirement Plans and Other Post
Retirement Plans and Other Postretirement Benefits | 12 Months Ended |
Dec. 31, 2022 | |
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 (The Pinnacle West Capital Corporation Retirement Plan) and a non-qualified supplemental excess benefit retirement plan for the employees of Pinnacle West and its subsidiaries. All new employees participate in the account balance plan. Defined benefit plans specify the amount of benefits a plan participant is to receive using information about the participant. The pension plan covers nearly all employees. The supplemental excess benefit retirement plan covers officers of the Company and highly compensated employees designated for participation by the Board of Directors. Our employees do not contribute directly to the plans. We calculate the benefits based on age, years of service and pay. Pinnacle West also sponsors other postretirement benefit plans (Pinnacle West Capital Corporation Group Life and Medical Plan and Pinnacle West Capital Corporation Post-65 Retiree Health Reimbursement Arrangement “HRA”) for the employees of Pinnacle West and its subsidiaries. These plans provide medical and life insurance benefits to retired employees. Employees must retire to become eligible for these retirement benefits, which are based on years of service and age. For the medical insurance plan, retirees make contributions to cover a portion of the plan costs. For the life insurance plan, retirees do not make contributions. We retain the right to change or eliminate these benefits. 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. See Note 12 for further discussion of how fair values are determined. Due to subjective and complex judgments, which may be required in determining fair values, actual results could differ from the results estimated through the application of these methods. Under the HRA, included in the other postretirement benefit plan, the Company provides a subsidy to retirees to defray the cost of a Medicare supplemental policy. Prior to 2020, we had been assuming a 4.75% escalation of these benefits; however, actual escalation has been significantly less than this assumption. Accordingly, during 2020 and for future periods, the escalation assumption was reduced to 2.00% (see weighted-average assumption table below). This escalation factor assumption change, among other factors, resulted in an increase in the over-funded status of the other postretirement benefit plan as of December 31, 2020. As a result, on January 4, 2021, we initiated the transfer of approximately $106 million of investment assets from the other postretirement benefit plan into the Active Union Employee Medical Account Trust. The Active Union Employee Medical Account is an existing trust account that holds investments restricted for paying active union employee medical costs. See Note 19. The transfer of other postretirement benefit plan investment assets into the Active Union Employee Medical Account permits access to approximately $106 million of assets for the sole purpose of paying active union employee medical benefits. This transfer of investment assets into the Active Union Employee Medical Account is consistent with the terms of a similar 2018 transaction. A significant portion of the changes in the actuarial gains and losses of our pension and postretirement plans is attributable to APS and are recoverable in rates. Accordingly, these changes are recorded as a regulatory asset or regulatory liability. Our retail rates provide for the inclusion of annual benefit expense, which allows for recovery or return of this regulatory asset/liability. S ee Note 3. 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): Pension Plans Other Benefits Plans 2022 2021 2020 2022 2021 2020 Service cost-benefits earned during the period $ 55,473 $ 61,236 $ 56,233 $ 16,470 $ 17,796 $ 22,236 Non-service costs (credits): Interest cost on benefit obligation 107,492 98,566 118,567 17,491 16,513 25,857 Expected return on plan assets (185,775) (202,628) (187,443) (46,042) (41,444) (40,077) Amortization of: Prior service credit — — — (37,789) (37,705) (37,575) Net actuarial (gain)/loss 17,515 15,948 34,612 (12,835) (10,093) — Net periodic benefit cost/(benefit) $ (5,295) $ (26,878) $ 21,969 $ (62,705) $ (54,933) $ (29,559) Portion of cost/(benefit) charged to expense $ (16,431) $ (32,743) $ 3,386 $ (45,042) $ (38,657) $ (20,966) The following table shows the plans’ changes in the benefit obligations and funded status (dollars in thousands): Pension Plans Other Benefits Plans 2022 2021 2022 2021 Change in Benefit Obligation Benefit obligation at January 1 $ 3,716,824 $ 3,902,867 $ 591,841 $ 624,034 Service cost 55,473 61,236 16,470 17,796 Interest cost 107,492 98,566 17,491 16,513 Benefit payments (212,565) (207,928) (30,913) (31,280) Actuarial (gain) loss (857,695) (137,917) (185,428) (35,222) Benefit obligation at December 31 2,809,529 3,716,824 409,461 591,841 Change in Plan Assets Fair value of plan assets at January 1 3,812,041 3,886,544 872,435 961,165 Actual return on plan assets (787,874) 18,169 (193,807) 41,432 Employer contributions — 100,000 — — Benefit payments (194,682) (192,672) (26,341) (24,310) Transfer to active union medical account — — — (105,852) Fair value of plan assets at December 31 2,829,485 3,812,041 652,287 872,435 Funded Status at December 31 $ 19,956 $ 95,217 $ 242,826 $ 280,594 The following table shows information for pension plans with an accumulated obligation in excess of plan assets (dollars in thousands): As of December 31, 2022 2021 Accumulated benefit obligation 126,759 161,086 Fair value of plan assets — — The Pinnacle West Capital Corporation Retirement Plan is more than 100% funded on an accumulated benefit obligation basis at December 31, 2022 and December 31, 2021, therefore the only pension plan with an accumulated benefit obligation in excess of plan assets in 2022 and 2021 is a non-qualified supplemental excess benefit retirement plan. The following table shows information for pension plans with a projected benefit obligation in excess of plan assets (dollars in thousands): As of December 31, 2022 2021 Projected benefit obligation 133,818 169,912 Fair value of plan assets — — The Pinnacle West Capital Corporation Retirement Plan is more than 100% funded on a projected benefit obligation basis at December 31, 2022, and December 31, 2021, therefore the only pension plan with a projected benefit obligation in excess of plan assets in 2022 and 2021 is a non-qualified supplemental excess benefit retirement plan. The following table shows the amounts recognized on the Consolidated Balance Sheets (dollars in thousands): Pension Plans Other Benefits Plans 2022 2021 2022 2021 Noncurrent asset $ 153,773 $ 265,129 $ 242,826 $ 280,594 Current liability (17,531) (17,047) — — Noncurrent liability (116,286) (152,865) — — Net amount recognized (funded status) $ 19,956 $ 95,217 $ 242,826 $ 280,594 The following table shows the details related to accumulated other comprehensive loss (gain) as of December 31, 2022, and 2021 (dollars in thousands): Pension Plans Other Benefits Plans 2022 2021 2022 2021 Net actuarial loss (gain) $ 681,335 $ 582,895 $ (195,095) $ (262,352) Prior service credit — — (76,843) (114,632) APS’s portion recorded as a regulatory (asset) liability (637,656) (509,751) 270,604 374,816 Income tax expense (benefit) (10,797) (18,081) 784 990 Accumulated other comprehensive loss (gain) $ 32,882 $ 55,063 $ (550) $ (1,178) The following table shows the weighted-average assumptions used for both the pension and other benefits to determine benefit obligations and net periodic benefit costs: Benefit Obligations Benefit Costs 2022 2021 2022 2021 2020 Discount rate – pension plans 5.56 % 2.92 % 2.92 % 2.53 % 3.30 % Discount rate – other benefits plans 5.58 % 2.98 % 2.98 % 2.63 % 3.42 % Rate of compensation increase 4.57 % 4.00 % 4.00 % 4.00 % 4.00 % Expected long-term return on plan assets - pension plans N/A N/A 5.00 % 5.30 % 5.75 % Expected long-term return on plan assets - other benefit plans N/A N/A 5.35 % 4.90 % 4.85 % Initial healthcare cost trend rate (pre-65 participants) 6.50 % 6.00 % 6.00 % 6.50 % 7.00 % Ultimate healthcare cost trend rate (pre-65 participants) 4.75 % 4.75 % 4.75 % 4.75 % 4.75 % Number of years to ultimate trend rate (pre-65 participants) 6 4 3 4 5 Initial and ultimate healthcare cost trend rate (post-65 participants) (a) 2.00 % 2.00 % 2.00 % 2.00 % 4.75 % Interest crediting rate – cash balance pension plans 4.50 % 4.50 % 4.50 % 4.50 % 4.50 % (a) See discussion above relating to this assumptions impact on benefit obligations and the January 2021 asset transfer to the Active Union Employee Medical Account. In selecting the pretax expected long-term rate of return on plan assets, we consider past performance and economic forecasts for the types of investments held by the plan. For 2023, we are assuming a 6.70% long-term rate of return for pension assets and 6.95% (before tax) for other benefit assets, which we believe is reasonable given our asset allocation in relation to historical and expected performance. In selecting our healthcare trend rates, we consider past performance and forecasts of healthcare costs. Plan Assets The Board of Directors has delegated oversight of the pension and other postretirement benefit plans’ assets to an Investment Management Committee (“Committee”). The Committee has adopted investment policy statements (“IPS”) for the pension and the other postretirement benefit plans’ assets. The investment strategies for these plans include external management of plan assets, and prohibition of investments in Pinnacle West securities. The overall strategy of the pension plan’s IPS is to achieve an adequate level of trust assets relative to the benefit obligations. To achieve this objective, the plan’s investment policy provides for mixes of investments including long-term fixed income assets and return-seeking assets. The target allocation between return-seeking and long-term fixed income assets is defined in the IPS and is a function of the plan’s funded status. The plan’s funded status is reviewed on at least a monthly basis. Changes in the value of long-term fixed income assets, also known as liability-hedging assets, are intended to offset changes in the benefit obligations due to changes in interest rates. Long-term fixed income assets consist primarily of fixed income debt securities issued by the U.S. Treasury and other government agencies, U.S. Treasury Futures Contracts, and fixed income debt securities issued by corporations. Long-term fixed income assets may also include interest rate swaps, and other instruments. Return-seeking assets are intended to provide a reasonable long-term rate of investment return with a prudent level of volatility. Return-seeking assets are composed of U.S. equities, international equities, and alternative investments. International equities include investments in both developed and emerging markets. Alternative investments may include investments in real estate, private equity and various other strategies. The plan may also hold investments in return-seeking assets by holding securities in partnerships, common and collective trusts, and mutual funds. Based on the IPS, and given the pension plan’s funded status at year-end 2022, the target and actual allocation for the pension plan at December 31, 2022, are as follows: Target Allocation Actual Allocation Long-term fixed income assets 80 % 78 % Return-seeking assets 20 % 22 % Total 100 % 100 % The permissible range is within +/-3% of the target allocation shown in the above table, and also considers the plan’s funded status. The following table presents the additional target allocations, as a percent of total pension plan assets, for the return-seeking assets: Target Allocation Equities in US and other developed markets 12 % Equities in emerging markets 4 % Alternative investments 4 % Total 20 % The pension plan IPS does not provide for a specific mix of long-term fixed income assets but does expect the average credit quality of such assets to be investment grade. As of December 31, 2022, the asset allocation for other postretirement benefit plan assets is governed by the IPS for those plans, which provides for different asset allocation target mixes depending on the characteristics of the liability. Some of these asset allocation target mixes vary with the plan’s funded status. The following table presents the actual allocations of the investment for the other postretirement benefit plan at December 31, 2022: Actual Allocation Long-term fixed income assets 62 % Return-seeking assets 38 % Total 100 % See Note 12 for a discussion on the fair value hierarchy and how fair value methodologies are applied. The plans invest directly in fixed income, U.S. Treasury Futures Contracts, and equity securities, in addition to investing indirectly in fixed income securities, equity securities and real estate through the use of mutual funds, partnerships and common and collective trusts. Equity securities held directly by the plans are valued using quoted active market prices from the published exchange on which the equity security trades and are classified as Level 1. U.S. Treasury Futures Contracts are valued using the quoted active market prices from the exchange on which they trade and are classified as Level 1. Fixed income securities issued by the U.S. Treasury held directly by the plans are valued using quoted active market prices and are classified as Level 1. Fixed income securities issued by corporations, municipalities, and other agencies are primarily valued using quoted inactive market prices, or quoted active market prices for similar securities, or by utilizing calculations which incorporate observable inputs such as yield, maturity, and credit quality. These instruments are classified as Level 2. Mutual funds, partnerships, and common and collective trusts are valued utilizing a Net Asset Value (“NAV”) concept or its equivalent. Mutual funds, which includes exchange traded funds (“ETFs”), are classified as Level 1, and valued using a NAV that is observable and based on the active market in which the fund trades. Common and collective trusts are maintained by banks or investment companies and hold certain investments in accordance with a stated set of objectives (such as tracking the performance of the S&P 500 Index). The trust’s shares are offered to a limited group of investors and are not traded in an active market. Investments in common and collective trusts are valued using NAV as a practical expedient and, accordingly, are not classified in the fair value hierarchy. The NAV for trusts investing in exchange traded equities, and fixed income securities is derived from the market prices of the underlying securities held by the trusts. The NAV for trusts investing in real estate is derived from the appraised values of the trust’s underlying real estate assets. Investments in partnerships are also valued using the concept of NAV as a practical expedient and, accordingly, are not classified in the fair value hierarchy. The NAV for these investments is derived from the value of the partnerships’ underlying assets. The plan’s partnerships holdings relate to investments in high-yield fixed income instruments. Certain partnerships also include funding commitments that may require the plan to contribute up to $50 million to these partnerships; as of December 31, 2022, approximately $38 million of these commitments have been funded. The plans’ trustee provides valuation of our plan assets by using pricing services that utilize methodologies described to determine fair market value. We have internal control procedures 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 trustee’s internal operating controls and valuation processes. The fair value of Pinnacle West’s pension plan and other postretirement benefit plan assets at December 31, 2022, by asset category, are as follows (dollars in thousands): Level 1 Level 2 Other (a) Total Pension Plan: Cash and cash equivalents $ 1,252 $ — $ — $ 1,252 Fixed income securities: Corporate — 1,374,810 — 1,374,810 U.S. Treasury 635,245 — — 635,245 Other (b) — 131,999 — 131,999 Common stock equities (c) 155,231 — — 155,231 Mutual funds (d) 101,557 — — 101,557 Common and collective trusts: Equities — — 181,912 181,912 Real estate — — 174,228 174,228 Partnerships — — 13,359 13,359 Short-term investments and other (e) — — 59,892 59,892 Total $ 893,285 $ 1,506,809 $ 429,391 $ 2,829,485 Other Benefits: Cash and cash equivalents $ 204 $ — $ — $ 204 Fixed income securities: Corporate — 166,879 — 166,879 U.S. Treasury 221,936 — — 221,936 Other (b) — 7,321 — 7,321 Common stock equities (c) 127,493 — — 127,493 Mutual funds (d) 18,824 — — 18,824 Common and collective trusts: Equities — — 73,956 73,956 Real estate — — 23,541 23,541 Short-term investments and other (e) 3,274 — 8,859 12,133 Total $ 371,731 $ 174,200 $ 106,356 $ 652,287 (a) These investments primarily represent assets valued using NAV as a practical expedient and have not been classified in the fair value hierarchy. (b) This category consists primarily of debt securities issued by municipalities and asset backed securities. (c) This category primarily consists of U.S. common stock equities. (d) These funds invest in international common stock equities. (e) This category includes plan receivables and payables. The fair value of Pinnacle West’s pension plan and other postretirement benefit plan assets at December 31, 2021, by asset category, are as follows (dollars in thousands): Level 1 Level 2 Other (a) Total Pension Plan: Cash and cash equivalents $ 821 $ — $ — $ 821 Fixed income securities: Corporate — 1,765,623 — 1,765,623 U.S. Treasury 1,008,211 — — 1,008,211 Other (b) — 165,496 — 165,496 Common stock equities (c) 209,063 — — 209,063 Mutual funds (d) 132,656 — — 132,656 Common and collective trusts: Equities — — 255,141 255,141 Real estate — — 173,197 173,197 Partnerships — — 15,730 15,730 Short-term investments and other (e) — — 86,103 86,103 Total $ 1,350,751 $ 1,931,119 $ 530,171 $ 3,812,041 Other Benefits: Cash and cash equivalents $ 121 $ — $ — $ 121 Fixed income securities: Corporate — 244,572 — 244,572 U.S. Treasury 287,057 — — 287,057 Other (b) — 9,330 — 9,330 Common stock equities (c) 176,024 — — 176,024 Mutual funds (d) 26,262 — — 26,262 Common and collective trusts: Equities — — 96,547 96,547 Real estate — — 23,851 23,851 Short-term investments and other (e) 2,517 — 6,154 8,671 Total $ 491,981 $ 253,902 $ 126,552 $ 872,435 (a) These investments primarily represent assets valued using NAV as a practical expedient and have not been classified in the fair value hierarchy. (b) This category consists primarily of debt securities issued by municipalities. (c) This category primarily consists of U.S. common stock equities. (d) These funds invest in U.S. and international common stock equities. (e) This category includes plan receivables and payables. Contributions Future year contribution amounts are dependent on plan asset performance and plan actuarial assumptions. We made contributions to our pension plan totaling $0 million in 2022, $100 million in 2021, and $100 million in 2020. The minimum required contributions for the pension plan are zero for the next three years and we do not expect to make any voluntary contributions in 2023, 2024 or 2025. With regard to contributions to our other postretirement benefit plan, we did not make a contribution in 2022 or 2021 and do not expect to make any contributions in 2023, 2024 or 2025. The Company was reimbursed $26 million in 2022, $24 million in 2021, and $26 million in 2020 for prior years retiree medical claims from the other postretirement benefit plan trust assets. Estimated Future Benefit Payments Benefit payments, which reflect estimated future employee service, for the next five years and the succeeding five years thereafter, are estimated to be as follows (dollars in thousands): Year Pension Plans Other Benefits Plans 2023 $ 240,034 $ 31,235 2024 227,234 30,865 2025 223,813 30,251 2026 224,881 30,135 2027 221,976 29,790 Years 2028-2032 1,117,192 146,725 Electric plant participants contribute to the above amounts in accordance with their respective participation agreements. Employee Savings Plan Benefits Pinnacle West sponsors a defined contribution savings plan for eligible employees of Pinnacle West and its subsidiaries. In 2022, costs related to APS’s employees represented 99% of the total cost of this plan. In a defined contribution savings plan, the benefits a participant receives result from regular contributions participants make to their own individual account, the Company’s matching contributions and earnings or losses on their investments. Under this plan, the Company matches a percentage of the participants’ contributions in cash which is then invested in the same investment mix as participants elect to invest their own future contributions. Pinnacle West recorded expenses for this plan of approximately $12 million for 2022, $12 million for 2021, and $11 million for 2020. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Leases | Leases We lease certain land, buildings, vehicles, equipment, and other property through operating rental agreements with varying terms, provisions, and expiration dates. APS also has certain purchased power agreements that qualify as lease arrangements. Our leases have remaining terms that expire in 2023 through 2052. Substantially all of our leasing activities relate to APS. In 1986, APS entered into agreements with three separate lessor trust entities in order to sell and lease back interests in Palo Verde Unit 2 and related common facilities. These lessor trust entities have been deemed VIEs for which APS is the primary beneficiary. As the primary beneficiary, APS consolidated these lessor trust entities. The impacts of these sale leaseback transactions are excluded from our lease disclosures as lease accounting is eliminated upon consolidation. See Note 17 for a discussion of VIEs. APS has purchased power lease agreements that allow APS the right to the generation capacity from certain natural-gas fueled generators during certain months of each year throughout the term of the arrangements. As APS only has rights to use the assets during certain periods of each year, the leases have non-consecutive periods of use. APS does not operate or maintain these leased assets. APS controls the dispatch of these leased assets and is required to pay fixed monthly capacity payments during the periods of use. For these types of leased assets, APS has elected to combine both the lease and non-lease payment components and accounts for the entire fixed payment as a lease obligation. These purchased power lease contracts are accounted for as operating leases. The contracts do not contain purchase options or term extension options. In addition to the fixed monthly capacity payment, APS must also pay variable charges based on the actual production volume of the asset. The variable consideration is not included in the measurement of our lease obligation. The following table provides information related to our lease costs (dollars in thousands): For the Year Ended 2022 2021 2020 Operating Lease Cost - Purchased Power Lease Contracts $ 104,001 $ 105,762 68,883 Operating Lease Cost - Land, Property, and Other Equipment 18,061 18,498 18,493 Total Operating Lease Cost 122,062 124,260 87,376 Variable lease cost (a) 122,040 118,969 122,331 Short-term lease cost 9,928 3,872 3,804 Total lease cost $ 254,030 $ 247,101 $ 213,511 (a) Primarily relates to purchased power lease contracts. Lease costs are primarily included as a component of operating expenses on our Consolidated Statements of Income. Lease costs relating to purchased power lease contracts are recorded in fuel and purchased power on the Consolidated Statements of Income and are subject to recovery under the PSA or RES. See Note 3. The tables above reflect the lease cost amounts before the effect of regulatory deferral under the PSA and RES. Variable lease costs are recognized in the period the costs are incurred, and primarily relate to renewable purchased power lease contracts. Payments under most renewable purchased power lease contracts are dependent upon environmental factors, and due to the inherent uncertainty associated with the reliability of the generation source, the payments are considered variable and are excluded from the measurement of lease liabilities and right-of-use lease assets. Certain of our lease agreements have lease terms with non-consecutive periods of use. For these agreements we recognize lease costs during the periods of use. Leases with initial terms of 12 months or less are considered short-term leases and are not recorded on the balance sheet. The following table provides information related to the maturity of our operating lease liabilities (dollars in thousands): December 31, 2022 Year Purchased Power Lease Contracts Land, Property & Equipment Leases Total 2023 $ 106,151 $ 14,254 $ 120,405 2024 104,315 11,330 115,645 2025 106,582 8,655 115,237 2026 120,016 7,207 127,223 2027 89,108 5,292 94,400 Thereafter 210,486 37,873 248,359 Total lease commitments 736,658 84,611 821,269 Less imputed interest 57,682 19,130 76,812 Total lease liabilities $ 678,976 $ 65,481 $ 744,457 We recognize lease assets and liabilities upon lease commencement. At December 31, 2022, we have various lease arrangements that have been executed but have not yet commenced. These arrangements primarily relate to energy storage assets. The lease commencement dates for these arrangements have experienced delays. APS continues to work with the lessors to determine revised commencement dates. We expected lease commencement dates ranging from June 2023 through June 2025, with lease terms expiring through May 2045. We expect the total fixed consideration paid for these arrangements, which includes both lease and non-lease payments, will approximate $2.7 billion over the 20-year terms of the agreements. In January 2023, APS modified two existing purchase power operating lease agreements. Among other changes, the modifications extend the expiration dates of these contracts from October 2027 to October 2032 for one of the leases, and from September 2026 to October 2034 for the other lease. These lease agreements previously commenced in 2020 and 2021. In January 2023, as a result of these modifications, APS recorded an additional $537 million of operating lease liabilities and right-of-use operating lease assets. These obligations relate to payments that will occur during the periods 2023 through 2034. The following tables provide other additional information related to operating lease liabilities (dollars in thousands): Year Ended December 31, 2022 Year Ended December 31, 2021 Year Ended December 31, 2020 Cash paid for amounts included in the measurement of lease liabilities — operating cash flows: $ 118,463 $ 116,661 $ 75,097 Right-of-use operating lease assets obtained in exchange for operating lease liabilities 16,990 500,582 441,653 December 31, 2022 December 31, 2021 Weighted average remaining lease term 7 years 8 years Weighted average discount rate (a) 2.21 % 2.13 % |
Jointly-Owned Facilities
Jointly-Owned Facilities | 12 Months Ended |
Dec. 31, 2022 | |
Jointly Owned Utility Plant, Net Ownership Amount [Abstract] | |
Jointly-Owned Facilities | Jointly-Owned Facilities APS shares ownership of some of its generating and transmission facilities with other companies. We are responsible for our share of operating costs which are included in the corresponding operating expenses on our Consolidated Statements of Income. We are also responsible for providing our own financing. Our share of operating expenses and utility plant costs related to these facilities is accounted for using proportional consolidation. The following table shows APS’s interests in those jointly-owned facilities recorded on the Consolidated Balance Sheets at December 31, 2022 (dollars in thousands): Percent Plant in Accumulated Construction Generating facilities: Palo Verde Units 1 and 3 29.1 % $ 1,947,593 $ 1,099,132 $ 39,933 Palo Verde Unit 2 (a) 16.8 % 659,514 383,775 14,784 Palo Verde Common 28.0 % (b) 799,794 346,705 52,631 Palo Verde Sale Leaseback (a) 351,050 260,754 — Four Corners Generating Station 63.0 % 1,665,042 620,918 46,643 Cholla Common Facilities (c) 50.5 % 207,104 140,886 2,988 Transmission facilities: ANPP 500kV System 33.4 % (b) 133,887 55,704 2,820 Navajo Southern System 26.8 % (b) 90,345 36,929 1,945 Palo Verde — Yuma 500kV System 25.4 % (b) 24,026 7,559 128 Four Corners Switchyards 61.9 % (b) 73,243 20,350 120 Phoenix — Mead System 17.1 % (b) 39,705 20,055 51 Palo Verde — Rudd 500kV System 50.0 % 95,736 31,118 391 Morgan — Pinnacle Peak System 64.7 % (b) 119,785 25,791 96 Round Valley System 50.0 % 548 193 — Palo Verde — Morgan System 87.8 % (b) 263,576 34,415 1,414 Hassayampa — North Gila System 80.0 % 148,174 22,566 3,771 Cholla 500kV Switchyard 85.7 % 8,100 2,380 — Saguaro 500kV Switchyard 60.0 % 21,656 13,809 — Kyrene — Knox System 50.0 % 578 336 — Agua Fria Switchyard 10.0 % — — 32 (a) See Note 17. (b) Weighted-average of interests. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 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 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, 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, which required DOE to pay 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 provided APS with a method for submitting claims and getting recovery for costs incurred through December 31, 2016, which was extended to December 31, 2022. An additional extension is currently pending. 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). In February 2023, the DOE approved this claim. 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 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. 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 accumul ated funds. Th e 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. Additionally, at the sole discretion of the NEIL Board of Directors, APS would be liable to provide approximately $62.8 million in deposit premium within 20 days of request as assurance to satisfy any site obligation of retrospective premium assessment. The insurance coverage discussed in this, and the previous paragraph is subject to certain policy conditions, sublimits, and exclusions. Fuel and Purchased Power Commitments and Purchase Obligations APS is party to various fuel and purchased power contracts and purchase obligations with terms expiring between 2023 and 2043 that include required purchase provisions. APS estimates the contract requirements to be approximately $955 million in 2023; $823 million in 2024; $882 million in 2025; $905 million in 2026; $819 million in 2027; and $8.7 billion thereafter. However, these amounts may vary significantly pursuant to certain provisions in such contracts that permit us to decrease required purchases under certain circumstances. These amounts include estimated commitments relating to purchased power lease contracts. See Note 8. Of the various fuel and purchased power contracts mentioned above, some of those contracts for coal supply include take-or-pay provisions. The current coal contracts with take-or-pay provisions have terms expiring through 2031. The following table summarizes our estimated coal take-or-pay commitments (dollars in thousands): Years Ended December 31, 2023 2024 2025 2026 2027 Thereafter Coal take-or-pay commitments (a) $ 216,729 $ 211,823 $ 232,594 $ 225,345 $ 204,845 $ 880,113 (a) Total take-or-pay commitments are approximately $2.0 billion. The total net present value of these commitments is approximately $1.6 billion. APS may spend more to meet its actual fuel requirements than the minimum purchase obligations in our coal take-or-pay contracts. The following table summarizes actual amounts purchased under the coal contracts which include take-or-pay provisions for each of the last three years (dollars in thousands): Years Ended December 31, 2022 2021 2020 Total purchases $ 305,502 $ 219,958 $ 189,817 Renewable Energy Credits APS has entered into contracts to purchase renewable energy credits to comply with the RES. APS estimates the contract requirements to be approximately $31 million in 2023; $29 million in 2024; $27 million in 2025; $23 million in 2026; $19 million in 2027; and $69 million thereafter. These amounts do not include purchases of renewable energy credits that are bundled with energy. Coal Mine Reclamation Obligations APS must reimburse certain coal providers for final and contemporaneous coal mine reclamation. We account for contemporaneous reclamation costs as part of the cost of the delivered coal. We utilize site-specific studies of costs expected to be incurred in the future to estimate our final reclamation obligation. These studies utilize various assumptions to estimate the future costs. Based on the most recent reclamation studies, APS recorded an obligation for the coal mine final reclamation of approximately $179 million at December 31, 2022, and $175 million at December 31, 2021. Under our current coal supply agreements, APS expects to make payments for the final mine reclamation as follows: $18 million in 2023; $19 million in 2024; $20 million in 2025; $21 million in 2026; $22 million in 2027; and $25 million thereafter. These funds are held in an escrow account and will be distributed to certain coal providers under the terms of the applicable coal supply agreements. Any amendments to current coal supply agreements may change the timing of the contribution or cost of final reclamation. The annual payments to the escrow account and final distribution to certain coal providers may be subject to adjustments based on escrow earnings. Superfund-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 (“PRPs”). 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 52 nd 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”). The RI/FS for OU3 was finalized and submitted to EPA at the end of 2022. APS cannot predict the EPA ’ s timing with respect to this matter . APS’s estimated costs related to this investigation and study is approximately $3 million. APS anticipates incurring additional expenditures in the future, but because the ultimate remediation requirements are not yet finalized by EPA, 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 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 ancillary service provider lawsuit, filed a third-party complaint seeking contribution for its liability, if any, from APS and 28 other third-party defendants. While this lawsuit remains pending, on September 30, 2022, the U.S. District Court for the District of Arizona granted partial summary judgment to the direct defendants for $20.7 million of the $21 million in CERCLA response costs claimed by the service provider. We are unable to predict the outcome of any further litigation related to the remaining response costs at issue in this litigation; 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. APS filed its response to this information request on April 29, 2022. On January 17, 2023, EPA contacted APS to inform the Company that it would be commencing on-site investigations within the SIBW site, including the Ocotillo power plant, and performing a remedial investigation and feasibility study related to potential PFAS impacts to groundwater over the next two to three years. 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 Arizona Court of Appeals heard oral arguments on November 30, 2022. The Court took the matter under advisement and will issue its decision in due course. 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 December 31, 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 3 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 GHGs, water quality, wastewater discharges, solid waste, hazardous waste, and 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 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, APS and El Paso entered into an asset purchase agreement providing for the purchase by APS, or an affiliate of APS, of El Paso’s 7% interest in Four Corners Units 4 and 5. 4CA purchased the El Paso interest on July 6, 2016. NTEC purchased the interest from 4CA on July 3, 2018. The cost of the pollution controls related to the 7% interest is approximately $45 million, which was assumed by NTEC through its purchase of the 7% interest. 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 3 for information regarding future plans for Cholla and details related to the resulting regulatory asset. 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, APS’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 sometime 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, APS cannot predict any ultimate impacts to the Company; however, at this time APS does not believe the cost estimates for Cholla and any potential change to the cost estimate for Four Corners would have a material impact on its financial position, results of operations, or cash flows. Clean Power Plan/Affordable Clean Energy 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 decision, which endorsed an expansive view of the federal Clean Air Act consistent with EPA’s 2015 CPP, was subsequently reversed by the U.S. Supreme Court on June 30, 2022. While the current administration has expressed its intent to develop new carbon emission regulations governing existing power plants sometime in 2023, such action will be constrained by the U.S. Supreme Court’s decision that the CPP violated the Clean Air Act. Nonetheless, we cannot at this time predict the outcome of pending EPA rulemaking proceedings related to 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 fossil-fuel powered 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. EPA then issued a revised final NPDES permit for Four Corners on September 30, 2019. Based upon a November 1, 2019, filing by several environmental groups, the EAB again took up review of the Four Corners NPDES Permit. Oral argument on this appeal was held on September 3, 2020, and the EAB denied the environmental group petition on September 30, 2020. While on January 22, 2021, the environmental groups filed a petition for review of the EAB’s decision with the U.S. Court of Appeals for the Ninth Circuit, the parties to this litigation (including APS) finalized a settlement on May 2, 2022. This settlement requires investigation of thermal wastewater discharges from Four Corners, administratively closes the litigation filed in January of 2021, and is not expected to have a material impact on APS’s 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 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 on May 21, 2021, which was denied on September 9, 2022. Subsequently, Tenaska Clear Creek Wind, LLC filed with FERC a request for rehearing and a motion for stay of the September 9, 2022 order. On October 7, 2022, the request for rehearing was denied by FERC. FERC has not ruled on the motion for stay. Clear Creek has filed a Petition for Review with the U.S. Court of Appeals and Motion for Stay Pending Appeal, both of which are still pending. Tenaska Clear Creek Wind, LLC filed a second complaint with FERC on May 25, 2022, alleging that the wind farm was being curtailed in a discriminatory manner. The May 25, 2022 Complaint was denied by FERC on December 15, 2022 and Tenaska Clear Creek Wind, LLC requested Rehearing of the denial on January 13, 2023. Due to the disputed system upgrades and the related curtailment, the Clear Creek wind farm has experienced a significant reduction in power generation that has had a material adverse impact on the project’s ability to generate cash flow for investors. These energy curtailments are expected to persist, unless and until system upgrades are implemented to alleviate the present transmission system congestion, or the disputes are determined in favor of, or settled in a manner favorable to, Tenaska Clear Creek Wind, LLC. As such, during the fourth quarter of 2022, due to these on-going disputes, cost allocation uncertainties, and no probable favorable resolution, BCE determined its equity method investment was fully impaired. Prior to the impairment, the investment had a carrying value of $17.1 million, which has been written-down to reflect the investment’s estimated fair value of zero as of December 31, 2022. Pinnacle West’s Consolidated Statement of Income for the year ended December 31, 2022 includes an after-tax loss of $12.8 million relating to this impairment. 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 December 31, 2022, standby letters of credit totaled approximately $10 million and will expire in 2023. As of December 31, 2022, surety bonds expiring through 2025 totaled approximately $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 December 31, 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 wind farm in Missouri and Nobles 2 wind farm in Minnesota, 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. As of December 31, 2022 there is approximately $34 million of remaining guarantees primarily relating to the PTC Guarante |
Asset Retirement Obligations
Asset Retirement Obligations | 12 Months Ended |
Dec. 31, 2022 | |
Asset Retirement Obligation Disclosure [Abstract] | |
Asset Retirement Obligations | Asset Retirement Obligations In 2022, APS did not revise any cost estimates related to existing AROs, and no new AROs were necessary. In 2021, APS revised its cost estimates for existing AROs at Cholla related to updated estimates for the closure of ponds and facilities, which resulted in an increase to the ARO of approximately $28 million. See additional details in Notes 3 and 10 . The following table shows the change in our AROs (dollars in thousands): 2022 2021 Asset retirement obligations at the beginning of year $ 767,382 $ 705,083 Changes attributable to: Accretion expense 41,240 38,437 Settlements (10,860) (4,111) Estimated cash flow revisions — 27,973 Asset retirement obligations at the end of year $ 797,762 $ 767,382 In accordance with regulatory accounting, APS accrues removal costs for its regulated utility assets, even if there is no legal obligation for removal. See detail of regulatory liabilities in Note 3. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2022 | |
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. 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 7 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 — Energy 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. Risk Management Activities — Interest Rate Derivatives Our interest rate derivative instruments relate to an interest rate swap, which is valued using financial models that utilize observable inputs for similar instruments and are classified as Level 2. Inputs include yield curves and credit quality of the counterparties. 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 18 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 December 31, 2022, of our assets and liabilities that are measured at fair value on a recurring basis (dollars in thousands): Level 1 Level 2 Level 3 Other Total ASSETS Risk management activities — derivative instruments: Commodity contracts $ — $ 127,129 $ 26,132 $ (21,163) (a) $ 132,098 Interest rate swaps — 131 — — 131 Subtotal risk management activities - derivative instruments — 127,260 26,132 (21,163) 132,229 Nuclear decommissioning trust: Equity securities 14,658 — — 3,827 (b) 18,485 U.S. commingled equity funds — — — 472,582 (c) 472,582 U.S. Treasury debt 211,923 — — — 211,923 Corporate debt — 149,226 — — 149,226 Mortgage-backed securities — 147,938 — — 147,938 Municipal bonds — 64,881 — — 64,881 Other fixed income — 8,375 — — 8,375 Subtotal nuclear decommissioning trust 226,581 370,420 — 476,409 1,073,410 Other special use funds: Equity securities 66,974 — — 963 (b) 67,937 U.S. Treasury debt 275,267 — — — 275,267 Municipal bonds — 4,027 — — 4,027 Subtotal other special use funds 342,241 4,027 — 963 347,231 Total assets $ 568,822 $ 501,707 $ 26,132 $ 456,209 $ 1,552,870 LIABILITIES Risk management activities — derivative instruments: Commodity contracts $ — $ (25,874) $ (31,020) $ 15,357 (a) $ (41,537) Interest rate swaps — (909) — — (909) Subtotal risk management activities - derivative instruments — (26,783) (31,020) 15,357 (42,446) Total liabilities $ — $ (26,783) $ (31,020) $ 15,357 $ (42,446) (a) Represents counterparty netting, margin, and collateral. See Note 15. (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): Level 1 Level 2 Level 3 Other Total ASSETS Risk management activities — derivative instruments: Commodity contracts $ — $ 115,079 $ — $ (4,690) (a) $ 110,389 Nuclear decommissioning trust: Equity securities 45,264 — — (27,782) (b) 17,482 U.S. commingled equity funds — — — 595,048 (c) 595,048 U.S. Treasury debt 240,745 — — — 240,745 Corporate debt — 203,454 — — 203,454 Mortgage-backed securities — 155,574 — — 155,574 Municipal bonds — 72,189 — — 72,189 Other fixed income — 10,265 — — 10,265 Subtotal nuclear decommissioning trust 286,009 441,482 — 567,266 1,294,757 Other special use funds: Equity securities 47,570 — — 936 (b) 48,506 U.S. Treasury debt 298,170 — — — 298,170 Municipal bonds — 11,734 — — 11,734 Subtotal other special use funds 345,740 11,734 — 936 358,410 Total assets $ 631,749 $ 568,295 $ — $ 563,512 $ 1,763,556 LIABILITIES Risk management activities — derivative instruments: Commodity contracts $ — (4,740) (2,738) 3,105 (a) (4,373) (a) Represents counterparty netting, margin, and collateral. See Note 15. (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 3. 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. The following tables provide information regarding our significant unobservable inputs used to value our risk management derivative Level 3 instruments at December 31, 2022 and December 31, 2021: December 31, 2022 Valuation Significant Weighted-Average Commodity Contracts Assets Liabilities Technique Unobservable Input Range (b) Electricity: Forward Contracts (a) $ 26,132 $ 1,759 Discounted cash flows Electricity forward price (per MWh) $37.79 - $310.69 $ 163.92 Natural Gas: Forward Contracts (a) — 29,261 Discounted cash flows Natural gas forward price (per MMBtu) $(11.81) - $0.00 $ (5.08) Total $ 26,132 $ 31,020 (a) Includes swaps and physical and financial contracts. (b) Unobservable inputs were weighted by the relative fair value of the instrument. December 31, 2021 Valuation Significant Weighted-Average Commodity Contracts Assets Liabilities Technique Unobservable Input Range (b) Natural Gas: Forward Contracts (a) $ — $ 2,738 Discounted cash flows Natural gas forward price (per MMBtu) $(0.76) - $(0.65) $ (0.71) Total $ — $ 2,738 (a) Includes swaps and physical and financial contracts. (b) Unobservable inputs were weighted by the relative fair value of the instrument. The following table shows the changes in fair value for our risk management activities’ assets and liabilities that are measured at fair value on a recurring basis using Level 3 inputs for the years ended December 31, 2022 and 2021 (dollars in thousands): Year Ended Commodity Contracts 2022 2021 Net derivative balance at beginning of period $ (2,738) $ (1,102) Total net gains (losses) realized/unrealized: Deferred as a regulatory asset or liability (374) 13,827 Settlements (1,123) (15,463) Transfers into Level 3 from Level 2 (846) — Transfers from Level 3 into Level 2 193 — Net derivative balance at end of period $ (4,888) $ (2,738) Net unrealized gains included in earnings related to instruments still held at end of period $ — $ — Transfers in or out of Level 3 are typically related to our long dated energy transactions that extend beyond available quoted periods. Financial Instruments Not Carried at Fair Value The carrying value of our short-term borrowings approximate fair value and are classified within Level 2 of the fair value hierarchy. See Note 6 for our long-term debt fair values. Nonrecurring Fair Value Measurements As of December 31, 2022, the fair value of BCE’s impaired equity method investment that is measured at fair value on a nonrecurring basis was zero, which was valued using significant unobservable inputs (Level 3). The total tax effected impairment charge included in net income for the year ended December 31, 2022 was $12.8 million. See Note 10 for additional information. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2022 | |
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): 2022 2021 2020 Net income attributable to common shareholders $ 483,602 $ 618,720 $ 550,559 Weighted average common shares outstanding — basic 113,196 112,910 112,666 Net effect of dilutive securities: Contingently issuable performance shares and restricted stock units 220 282 276 Weighted average common shares outstanding — diluted 113,416 113,192 112,942 Earnings per weighted-average common share outstanding Net income attributable to common shareholders — basic $ 4.27 $ 5.48 $ 4.89 Net income attributable to common shareholders — diluted $ 4.26 $ 5.47 $ 4.87 |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation Pinnacle West has incentive compensation plans under which stock-based compensation is granted to officers, key-employees, and non-officer members of the Board of Directors. Awards granted under the 2021 Long-Term Incentive Plan (“2021 Plan”) may be in the form of stock grants, restricted stock units, stock units, performance shares, restricted stock, dividend equivalents, performance share units, performance cash, incentive and non-qualified stock options, and stock appreciation rights. The 2021 Plan authorizes up to 1.3 million common shares to be available for grant. As of December 31, 2022, 0.9 million common shares were available for issuance under the 2021 Plan. During 2022, 2021, and 2020, the Company granted awards in the form of restricted stock units, stock units, stock grants, and performance shares. Awards granted from 2012 to May 2021 were issued under the 2012 Long-Term Incentive Plan (“2012 Plan”), and awards granted from 2007 to 2011 were issued under the 2007 Long-Term Incentive Plan (“2007 Plan”). No new awards may be granted under the 2012 or 2007 Plans. Stock-Based Compensation Expense and Activity Compensation cost included in net income for stock-based compensation plans was $16 million in 2022, $18 million in 2021, and $18 million in 2020. The compensation cost capitalized is immaterial for all years. Income tax benefits related to stock-based compensation arrangements were $2 million in 2022, $3 million in 2021, and $4 million in 2020. As of December 31, 2022, there were approximately $20 million of unrecognized compensation costs related to nonvested stock-based compensation arrangements. We expect to recognize these costs over a weighted-average period of two years. The total fair value of shares vested was $25 million in 2022, $22 million in 2021 and $22 million in 2020. The following table is a summary of awards granted and the weighted-average grant date fair value for each of the last three years: Restricted Stock Units, Stock Grants, and Stock Units (a) Performance Shares (b) 2022 2021 2020 2022 2021 2020 Units granted 174,791 152,345 118,403 208,736 161,840 122,830 Weighted-average grant date fair value $ 69.66 $ 76.72 $ 71.70 $ 77.63 $ 82.42 $ 104.74 (a) Units granted includes awards that will be cash settled of 0 in 2022, 51,074 in 2021, and 45,646 in 2020. See below for additional information on restricted stock unit grants. (b) Reflects the target payout level. The following table shows the change of nonvested awards: Restricted Stock Units, Stock Grants, and Stock Units Performance Shares Shares Weighted-Average Shares (b) Weighted-Average Nonvested at December 31, 2021 253,156 $ 79.37 280,682 $ 92.16 Granted 174,791 69.66 208,736 77.63 Vested (101,216) 84.52 (136,034) 103.30 Forfeited (c) (9,144) 76.56 (22,690) 78.29 Nonvested at December 31, 2022 317,587 (a) 73.91 330,694 78.91 Vested Awards Outstanding at December 31, 2022 78,912 136,034 (a) Includes 69,413 of awards that will be cash settled. (b) The nonvested performance shares are reflected at target payout level. (c) We account for forfeitures as they occur. Share-based liabilities paid relating to restricted stock units were $3 million, $4 million, and $6 million in 2022, 2021 and 2020, respectively. This includes cash used to settle restricted stock units of $3 million, $3 million, and $4 million in 2022, 2021 and 2020, respectively. Restricted stock units that are cash settled are classified as liability awards. All performance shares are classified as equity awards. Restricted Stock Units, Stock Grants, and Stock Units Restricted stock units are granted to officers and key employees and typically vest and settle in equal annual installments over a 4-year period after the grant date. Vesting is typically dependent upon continuous service during the vesting period. Beginning in 2022, restricted stock unit awards are issued in stock. Awards include a dividend equivalent feature that allows each award to accrue dividends and treat them as reinvested, from the date of grant until the applicable vesting date. If the award is forfeited the employee is not entitled to the accrued reinvested dividends on those shares. Awards granted to retirement-eligible employees will vest on a pro-rata basis upon the employee’s retirement. Prior to 2022, awardees typically elected to receive payment in either 100% stock, 100% cash, or 50% in cash and 50% in stock. Awards included a dividend equivalent feature that accrued dividend rights from the date of grant until the applicable vesting date, plus interest compounded quarterly. If the award was forfeited the employee was not entitled to the accrued dividends on those shares. Awards granted to retirement-eligible employees typically vested upon the employee’s retirement. Compensation cost for restricted stock unit awards is based on the fair value of the award, with the fair value being the market price of our stock on the measurement date. Restricted stock unit awards that will be settled in cash are accounted for as liability awards, with compensation cost initially calculated on the date of grant using the Company’s closing stock price and remeasured at each balance sheet date. Restricted stock unit awards that will be settled in shares are accounted for as equity awards, with compensation cost calculated using the Company’s closing stock price on the date of grant. Compensation cost is recognized over the requisite service period based on the fair value of the award. Stock grants are issued to non-officer members of the Board of Directors. They may elect to receive the stock grant, or to defer receipt until a later date and receive stock units in lieu of the stock grant. The members of the Board of Directors who elect to defer may elect to receive payment in either 100% stock, 100% cash, or 50% in cash and 50% in stock. The stock units include a dividend equivalent feature that accrues dividend rights from the date of grant to the date of payment, plus interest compounded quarterly. Performance Share Awards Performance share awards are granted to officers and key employees. The awards contain separate performance metric criteria that affect the number of shares that may be received if, after the end of a 3-year performance period, the performance criteria are met. Beginning in 2022, performance share awards contain three separate, unrelated performance criteria. The first performance criteria is based upon Pinnacle West’s total shareholder return (“TSR”) in relation to the TSR of other companies in a specified utility index (i.e., the TSR component). The second performance criteria is based upon Pinnacle West’s earnings per share (“EPS”) performance relative to an approved target (i.e., the EPS component). The third performance criteria is based upon APS’s clean MW installed of renewable or other carbon free resources compared to the approved target (i.e., the Clean component). The exact number of shares issued is calculated separately for each performance component and can vary from 0% to 200% of the target award for each separate performance criteria. Shares received include a dividend equivalent feature that treats accrued dividends as reinvested, from the date of grant until the date of payment, equal to the number of vested performance shares. If the award is forfeited or if the performance criteria are not achieved, the employee is not entitled to the dividends on those shares. Awards granted to retirement-eligible employees will vest on a pro-rata basis upon the employee’s retirement. Prior to 2022, performance share awards had two performance criteria. The first performance criteria was based upon non-financial performance metrics (i.e., the Metric component). The second performance criteria was based upon Pinnacle West’s TSR in relation to the TSR of other companies in a specified utility index (i.e., the TSR component). The exact number of shares issued will vary from 0% to 200% of the target award. Shares received included a dividend equivalent feature that allows accrued dividend rights from the date of grant until the date of payment, plus interest compounded quarterly, equal to the number of vested performance shares. If the award was forfeited, the employee was not entitled to the accrued dividends on those shares. Awards granted to retirement-eligible employees typically vested upon the employee’s retirement. Performance share awards are accounted for as equity awards, with compensation cost based on the fair value of the award on the grant date. Compensation cost relating to the EPS, Clean and Metric component of the respective awards is based on the Company’s closing stock price on the date of grant, with compensation cost recognized over the requisite service period based on the number of shares expected to vest. Management evaluates the probability of meeting the EPS, Clean and Metric component at each balance sheet date. If the EPS, Clean and Metric component criteria are not ultimately achieved, no |
Derivative Accounting
Derivative Accounting | 12 Months Ended |
Dec. 31, 2022 | |
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 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 sheet as an asset or liability and are measured at fair value. See Note 12 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. Energy Derivatives For its regulated operations, APS defers for future rate treatment 100% of the unrealized gains and losses on energy derivatives pursuant to the PSA mechanism that would otherwise be recognized in income. Realized gains and losses on energy derivatives are deferred in accordance with the PSA to the extent the amounts are above or below the Base Fuel Rate. See Note 3. Gains and losses from energy 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 energy derivatives, which represent both purchases and sales (does not reflect net position): Quantity Commodity Unit of Measure December 31, 2022 December 31, 2021 Power GWh 1,197 — Gas Billion cubic feet 149 155 Gains and Losses from Energy Derivative Instruments The following table provides information about APS’s gains and losses from energy derivative instruments in designated cash flow accounting hedging relationships (dollars in thousands): Financial Statement Year Ended Commodity Contracts Location 2022 2021 2020 Loss Reclassified from Accumulated OCI into Income (Effective Portion Realized) (a) Fuel and purchased power (b) $ — $ — $ (763) (a) During the years ended December 31, 2022, 2021, and 2020, we had no gains or losses reclassified from accumulated OCI to earnings related to discontinued cash flow hedges. (b) Amounts are before the effect of PSA deferrals. During the next twelve months, we estimate that no amounts will be reclassified from accumulated OCI into income. For APS, the delivery period for all energy derivative instruments in designated cash flow accounting hedging relationships have lapsed. The following table provides information about gains and losses from energy derivative instruments not designated as accounting hedging instruments (dollars in thousands): Financial Statement Year Ended Commodity Contracts Location 2022 2021 2020 Net Gain (Loss) Recognized in Income Fuel and purchased power (a) $ 307,287 $ 216,847 $ (3,178) (a) Amounts are before the effect of PSA deferrals. Energy Derivative Instruments in the Consolidated Balance Sheets Our energy 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 Consolidated Balance Sheets. Transactions that do not allow for offsetting of positive and negative positions are reported gross on the Consolidated Balance Sheets. We do not offset a counterparty’s current energy derivative contracts with the counterparty’s non-current energy 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 APS's 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 APS's Consolidated Balance Sheets. As of December 31, 2022: Gross Amounts Net Other Amounts Current assets $ 103,484 $ (15,808) $ 87,676 $ 28 $ 87,704 Investments and other assets 49,777 (5,383) 44,394 — 44,394 Total assets 153,261 (21,191) 132,070 28 132,098 Current liabilities (47,670) 15,808 (31,862) (5,835) (37,697) Deferred credits and other (9,223) 5,383 (3,840) — (3,840) Total liabilities (56,893) 21,191 (35,702) (5,835) (41,537) Total $ 96,368 $ — $ 96,368 $ (5,807) $ 90,561 (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 $5,835 thousand and cash margin provided to counterparties of $28 thousand. As of December 31, 2021: Gross Amounts Net Other Amounts Current assets $ 66,777 $ (3,346) $ 63,431 $ 50 $ 63,481 Investments and other assets 48,302 (1,394) 46,908 — 46,908 Total assets 115,079 (4,740) 110,339 50 110,389 Current liabilities (6,084) 3,346 (2,738) (1,635) (4,373) Deferred credits and other (1,394) 1,394 — — — Total liabilities (7,478) 4,740 (2,738) (1,635) (4,373) Total $ 107,601 $ — $ 107,601 $ (1,585) $ 106,016 (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. Interest Rate Derivatives On October 19, 2022, Bright Canyon Energy entered into an interest rate swap to hedge the variable interest rate exposure relating to the Los Alamitos credit agreement. The transaction qualifies and has been designated as cash flow hedge. The hedge’s gain or loss is reported as a component of other comprehensive income and subsequently will be reclassified into earnings in the periods during which the related interest expense on the debt is incurred. As of December 31, 2022, the interest rate swap has a notional value of $32 million with a maturity in 2041. Relating to this derivative, our Consolidated Balance Sheet as of December 31, 2022 includes approximately $0.9 million reported within the liabilities from risk management activities line within the deferred credits and other section, and $0.1 million reported within the current assets from risk management activities line. For the year ended December 31, 2022, the Consolidated Income Statement includes a pretax loss of approximately $0.8 million recognized in other comprehensive income relating to the interest rate swap. There were no gains or losses reclassified out of accumulated other comprehensive income for the year ended December 31, 2022, and we expect no significant amounts will be reclassified into earnings over the next 12 months. Credit Risk and Credit Related Contingent Features We are exposed to losses in the event of nonperformance or nonpayment by energy derivative counterparties and have risk management contracts with many energy derivative counterparties. As of December 31, 2022, we have two counterparties for which our exposure represents approximately 21% of Pinnacle West’s $132 million of risk management assets. This exposure relates to master agreements with the counterparties and both are 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 counterparties 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 energy 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 energy 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 energy derivative instruments that have credit-risk-related contingent features (dollars in thousands): December 31, 2022 Aggregate fair value of derivative instruments in a net liability position $ 56,893 Cash collateral posted — Additional cash collateral in the event credit-risk related contingent features were fully triggered (a) 32,884 (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 also have energy related non-derivative instrument contracts with investment grade credit-related contingent features, which could also require us to post additional collateral of approximately $76 million if our debt credit ratings were to fall below investment grade. |
Other Income and Other Expense
Other Income and Other Expense | 12 Months Ended |
Dec. 31, 2022 | |
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 for 2022, 2021 and 2020 (dollars in thousands): 2022 2021 2020 Other income: Interest income $ 7,326 $ 6,726 $ 12,210 Investment gains (losses) — net — — 2,358 Debt return on Four Corners SCR deferral (Note 3) — 14,955 15,865 Debt return on Ocotillo modernization project (Note 3) — 23,366 26,121 Miscellaneous 590 53 149 Total other income $ 7,916 $ 45,100 $ 56,703 Other expense: Non-operating costs $ (18,619) $ (13,008) $ (12,400) Investment gains (losses) — net (20,537) (b) (1,367) — Miscellaneous (13,229) (a) (11,021) (45,376) (a) Total other expense $ (52,385) $ (25,396) $ (57,776) (a) The 2022 miscellaneous amount includes donations of $7 million to the APS Foundation. The 2020 miscellaneous amount includes donations of approximately $10 million to the APS Foundation and approximately $25.2 million related to the CCT plan. See Note 3. (b) The 2022 investment loss is primarily related to an impairment write-off of BCE’s Clear Creek wind farm investment. See Note 10. Other Income and Other Expense - APS The following table provides detail of APS’s other income and other expense for 2022, 2021 and 2020 (dollars in thousands): 2022 2021 2020 Other income: Interest income $ 5,332 $ 4,692 $ 9,621 Debt return on Four Corners SCR deferral (Note 3) — 14,955 15,865 Debt return on Ocotillo modernization project (Note 3) — 23,366 26,121 Miscellaneous 556 40 148 Total other income $ 5,888 $ 43,053 $ 51,755 Other expense: Non-operating costs $ (15,579) $ (10,080) $ (10,659) Miscellaneous (10,529) (a) (8,817) (43,035) (a) Total other expense $ (26,108) $ (18,897) $ (53,694) (a) The 2022 miscellaneous amount includes donations of $7 million to the APS Foundation. The 2020 miscellaneous amount includes donations of approximately $10 million to the APS Foundation and approximately $25.2 million related to the CCT plan. See Note 3. |
Palo Verde Sale Leaseback Varia
Palo Verde Sale Leaseback Variable Interest Entities | 12 Months Ended |
Dec. 31, 2022 | |
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 2023 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 of $17 million for 2022, $17 million for 2021 and $19 million for 2020. 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 Consolidated Balance Sheets include the following amounts relating to the VIEs (dollars in thousands): December 31, 2022 December 31, 2021 Palo Verde sale leaseback property, plant and equipment, net of accumulated depreciation $ 90,296 $ 94,166 Equity-Noncontrolling interests 111,229 115,260 Assets of the VIEs are restricted and may only be used for payment to the noncontrolling interest holders. These assets are reported on our 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 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 $324 million beginning in 2023, and up to $501 million over the lease extension 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. |
Investments in Nuclear Decommis
Investments in Nuclear Decommissioning Trusts and Other Special Use Funds | 12 Months Ended |
Dec. 31, 2022 | |
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 Consolidated Balance Sheets. See Note 12 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): December 31, 2022 Fair Value Total Total Investment Type: Nuclear Decommissioning Trusts Other Special Use Funds Total Equity securities $ 487,240 $ 66,974 $ 554,214 $ 334,817 $ (267) Available for sale-fixed income securities 582,343 279,294 861,637 (a) 3,177 (68,795) Other 3,827 963 4,790 (b) — (29) Total $ 1,073,410 $ 347,231 $ 1,420,641 $ 337,994 $ (69,091) (a) As of December 31, 2022, the amortized cost basis of these available-for-sale investments is $927 million. (b) Represents net pending securities sales and purchases. December 31, 2021 Fair Value Total Total Investment Type: Nuclear Decommissioning Trusts Other Special Use Funds Total Equity securities $ 640,312 $ 47,570 $ 687,882 $ 451,387 $ — Available for sale-fixed income securities 682,227 309,904 992,131 (a) 24,283 (4,063) Other (27,782) 936 (26,846) (b) — — Total $ 1,294,757 $ 358,410 $ 1,653,167 $ 475,670 $ (4,063) (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 table sets 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): Year Ended December 31, Nuclear Decommissioning Trusts Other Special Use Funds Total 2022 Realized gains $ 9,017 $ 420 $ 9,437 Realized losses (40,239) — (40,239) Proceeds from the sale of securities (a) 979,639 227,558 1,207,197 2021 Realized gains 134,610 49 134,659 Realized losses (8,431) (7) (8,438) Proceeds from the sale of securities (a) 1,457,305 263,661 1,720,966 2020 Realized gains 12,194 176 12,370 Realized losses (5,553) (15) (5,568) Proceeds from the sale of securities (a) 675,035 144,484 819,519 (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 December 31, 2022, is as follows (dollars in thousands): Nuclear Decommissioning Trusts Coal Reclamation Escrow Account Active Union Employee Medical Account Total Less than one year $ 9,422 $ 49,917 $ 38,157 $ 97,496 1 year – 5 years 181,640 36,484 143,878 362,002 5 years – 10 years 122,340 — 6,831 129,171 Greater than 10 years 268,941 4,027 — 272,968 Total $ 582,343 $ 90,428 $ 188,866 $ 861,637 |
Changes in Accumulated Other Co
Changes in Accumulated Other Comprehensive Loss | 12 Months Ended |
Dec. 31, 2022 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Changes in Accumulated Other Comprehensive Loss | Changes in Accumulated Other Comprehensive Loss The following table shows the changes in Pinnacle West’s consolidated accumulated other comprehensive loss, including reclassification adjustments, net of tax, by component (dollars in thousands): Pension and Other Postretirement Benefits Derivative Instruments Total Balance at December 31, 2020 $ (60,725) $ (2,071) $ (62,796) OCI (loss) before reclassifications 2,439 1,077 3,516 Amounts reclassified from accumulated other comprehensive loss 4,401 (a) 18 (b) 4,419 Balance at December 31, 2021 (53,885) (976) (54,861) OCI (loss) before reclassifications 17,550 1,873 19,423 Amounts reclassified from accumulated other comprehensive loss 4,003 (a) — 4,003 Balance at December 31, 2022 $ (32,332) $ 897 $ (31,435) (a) These amounts primarily represent amortization of actuarial loss and are included in the computation of net periodic pension cost. See Note 7. (b) These amounts represent realized gains and losses and are included in the computation of fuel and purchased power costs and are subject to the PSA. See Note 15. Changes in Accumulated Other Comprehensive Loss — APS The following table shows the changes in APS’s consolidated accumulated other comprehensive loss, including reclassification adjustments, net of tax, by component (dollars in thousands): Pension and Other Postretirement Benefits Derivative Instruments Total Balance at December 31, 2020 $ (40,918) $ — $ (40,918) OCI (loss) before reclassifications 2,043 (18) 2,025 Amounts reclassified from accumulated other comprehensive loss 3,995 (a) 18 (b) 4,013 Balance at December 31, 2021 (34,880) — (34,880) OCI (loss) before reclassifications 15,646 — 15,646 Amounts reclassified from accumulated other comprehensive loss 3,638 (a) — 3,638 Balance at December 31, 2022 $ (15,596) $ — $ (15,596) (a) These amounts primarily represent amortization of actuarial loss and are included in the computation of net periodic pension cost. See Note 7. (b) These amounts represent realized gains and losses and are included in the computation of fuel and purchased power costs and are subject to the PSA. See Note 15. |
Schedule I - Condensed Financia
Schedule I - Condensed Financial Information of Registrant | 12 Months Ended |
Dec. 31, 2022 | |
Condensed Financial Information Disclosure [Abstract] | |
Schedule I - Condensed Financial Information of Registrant | PINNACLE WEST CAPITAL CORPORATION HOLDING COMPANY SCHEDULE I — CONDENSED FINANCIAL INFORMATION OF REGISTRANT CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (dollars in thousands) Year Ended December 31, 2022 2021 2020 Operating expenses $ 8,850 $ 10,245 $ 7,901 Other Equity in earnings of subsidiaries 500,042 628,916 566,147 Other expense (4,725) (4,919) (4,586) Total 495,317 623,997 561,561 Interest expense 18,861 10,672 14,021 Income before income taxes 467,606 603,080 539,639 Income tax benefit (15,996) (15,640) (10,920) Net income attributable to common shareholders 483,602 618,720 550,559 Other comprehensive income (loss) — attributable to common shareholders 23,426 7,935 (5,700) Total comprehensive income — attributable to common shareholders $ 507,028 $ 626,655 $ 544,859 See Combined Notes to Consolidated Financial Statements. PINNACLE WEST CAPITAL CORPORATION HOLDING COMPANY SCHEDULE I — CONDENSED FINANCIAL INFORMATION OF REGISTRANT CONDENSED BALANCE SHEETS (dollars in thousands) December 31, 2022 2021 ASSETS Current assets Cash and cash equivalents $ — $ 594 Accounts receivable 132,061 125,457 Income tax receivable 14,494 1,498 Other current assets 288 13 Total current assets 146,843 127,562 Investments and other assets Investments in subsidiaries 7,105,789 6,797,528 Deferred income taxes 1,521 19,520 Other assets 23,153 57,608 Total investments and other assets 7,130,463 6,874,656 TOTAL ASSETS $ 7,277,306 $ 7,002,218 LIABILITIES AND EQUITY Current liabilities Accounts payable $ 6,499 $ 3,071 Accrued taxes 7,694 19,855 Common dividends payable 97,895 95,988 Short-term borrowings 15,720 13,300 Current maturities of long-term debt — 150,000 Operating lease liabilities 117 107 Other current liabilities 14,637 14,684 Total current liabilities 142,562 297,005 Long-term debt less current maturities (Note 6) 947,892 647,139 Pension liabilities 8,218 14,537 Operating lease liabilities 1,459 1,576 Other 17,299 20,501 Total deferred credits and other 26,976 36,614 COMMITMENTS AND CONTINGENCIES (SEE NOTES) Common stock equity Common stock 2,719,735 2,696,342 Accumulated other comprehensive loss (31,435) (54,861) Retained earnings 3,360,347 3,264,719 Total Pinnacle West Shareholders’ equity 6,048,647 5,906,200 Noncontrolling interests 111,229 115,260 Total Equity 6,159,876 6,021,460 TOTAL LIABILITIES AND EQUITY $ 7,277,306 $ 7,002,218 See Combined Notes to Consolidated Financial Statements. PINNACLE WEST CAPITAL CORPORATION HOLDING COMPANY SCHEDULE I — CONDENSED FINANCIAL INFORMATION OF REGISTRANT CONDENSED STATEMENTS OF CASH FLOWS (dollars in thousands) Year Ended December 31, 2022 2021 2020 Cash flows from operating activities Net income $ 483,602 $ 618,720 $ 550,559 Adjustments to reconcile net income to net cash provided by operating activities: Equity in earnings of subsidiaries — net (500,042) (628,916) (566,147) Depreciation and amortization 76 93 76 Deferred income taxes 17,256 (11,381) 33,007 Accounts receivable (8,535) 8,897 (7,903) Accounts payable 3,431 (2,598) (1,964) Accrued taxes and income tax receivables — net (25,157) 16,079 9,610 Dividends received from subsidiaries 385,800 376,500 357,500 Other 47,719 4,214 20,163 Net cash flow provided by operating activities 404,150 381,608 394,901 Cash flows from investing activities Investments in subsidiaries (186,630) (145,266) (137,881) Repayments of loans from subsidiaries 14,308 4,017 932 Advances of loans to subsidiaries (3,308) (12,256) (7,261) Net cash flow used for investing activities (175,630) (153,505) (144,210) Cash flows from financing activities Issuance of long-term debt 300,000 300,000 496,950 Short-term debt borrowings under revolving credit facility — — 211,690 Short-term debt repayments under revolving credit facility — (19,000) (230,690) Short-term borrowings and (repayments) — net 2,420 (136,700) 73,325 Dividends paid on common stock (378,881) (369,478) (350,577) Repayment of long-term debt (150,000) — (450,000) Common stock equity issuance and purchases — net (2,653) (2,350) (1,389) Net cash flow used for financing activities (229,114) (227,528) (250,691) Net decrease in cash and cash equivalents (594) 575 — Cash and cash equivalents at beginning of year 594 19 19 Cash and cash equivalents at end of year $ — $ 594 $ 19 See Combined Notes to Consolidated Financial Statements. PINNACLE WEST CAPITAL CORPORATION HOLDING COMPANY NOTES TO FINANCIAL STATEMENTS OF HOLDING COMPANY The Combined Notes to Consolidated Financial Statements in Part II, Item 8 should be read in conjunction with the Pinnacle West Capital Corporation Holding Company Financial Statements. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Description of Business and Basis of Presentation | Description of Business and Basis of Presentation Pinnacle West is a holding company that conducts business through its subsidiaries, APS, El Dorado, BCE and 4CA. APS, our wholly-owned subsidiary, is a vertically-integrated electric utility that provides either retail or wholesale electric service to substantially all of the state of Arizona, with the major exceptions of about one-half of the Phoenix metropolitan area, the Tucson metropolitan area and Mohave County in northwestern Arizona. APS accounts for essentially all of our revenues and earnings and is expected to continue to do so. El Dorado is an investment firm. BCE is a subsidiary that was formed in 2014 that focuses on growth opportunities that leverage the Company’s core expertise in the electric energy industry. 4CA is a subsidiary that was formed in 2016 as a result of the purchase of El Paso’s 7% interest in Four Corners. See Note 10 for more information on 4CA matters. Pinnacle West’s Consolidated Financial Statements include the accounts of Pinnacle West and our subsidiaries: APS, El Dorado, BCE and 4CA. APS’s Consolidated Financial Statements include the accounts of APS and certain VIEs relating to the Palo Verde sale leaseback. Intercompany accounts and transactions between the consolidated companies have been eliminated. We consolidate Variable Interest Entities (each a “VIE”) for which we are the primary beneficiary. We determine whether we are the primary beneficiary of a VIE through a qualitative analysis that identifies which variable interest holder has the controlling financial interest in the VIE. In performing our primary beneficiary analysis, we consider all relevant facts and circumstances, including the design and activities of the VIE, the terms of the contracts the VIE has entered into, and which parties participated significantly in the design or redesign of the entity. We continually evaluate our primary beneficiary conclusions to determine if changes have occurred which would impact our primary beneficiary assessments. We have determined that APS is the primary beneficiary of certain VIE lessor trusts relating to the Palo Verde sale leaseback, and therefore APS consolidates these entities. See Note 17 for additional information. We have determined that Pinnacle West is the primary beneficiary of a captive insurance protected cell VIE. As of December 31, 2022, the captive cell’s activities are insignificant to our consolidated financial statements. Our 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. |
Accounting Records and Use of Estimates | Accounting Records and Use of Estimates 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. |
Regulatory Accounting | Regulatory Accounting APS is regulated by the ACC and the FERC. The accompanying financial statements reflect the rate-making policies of these commissions. As a result, we capitalize certain costs that would be included as expense in the current period by unregulated companies. Regulatory assets represent incurred costs that have been deferred because they are probable of future recovery in customer rates. Regulatory liabilities generally represent amounts collected in rates to recover costs expected to be incurred in the future or amounts collected in excess of costs incurred and are refundable to customers. |
Electric Revenues | Electric Revenues Revenues primarily consist of activities that are classified as revenues from contracts with customers. Our electric revenues generally represent a single performance obligation delivered over time. We have elected to apply the practical expedient that allows us to recognize revenue based on the amount to which we have a right to invoice for services performed. We derive electric revenues primarily from sales of electricity to our regulated retail customers. Revenues related to the sale of electricity are generally recognized when service is rendered or electricity is delivered to customers. Unbilled revenues are estimated by applying an average revenue/kWh by customer class to the number of estimated kWhs delivered but not billed. Differences historically between the actual and estimated unbilled revenues are immaterial. We exclude sales taxes and franchise fees on electric revenues from both revenue and taxes other than income taxes. Revenues from our regulated retail customers and non-derivative instruments are reported on a gross basis on Pinnacle West’s Consolidated Statements of Income. In the electricity business, some contracts to purchase electricity are netted against other contracts to sell electricity. This is called a “book-out” and usually occurs for contracts that have the same terms (quantities, delivery points and delivery periods) and for which power does not flow. We net these book-outs, which reduces both wholesale revenues and fuel and purchased power costs. Certain cost recovery mechanisms may qualify as alternative revenue programs. For alternative revenue programs that meet specified accounting criteria, we recognize revenues when the specific events permitting billing of the additional revenues have been completed. |
Allowance for Doubtful Accounts | 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. See Note 2. |
Property, Plant and Equipment | Property, Plant and Equipment Utility plant is the term we use to describe the business property and equipment that supports electric service, consisting primarily of generation, transmission, and distribution facilities. We report utility plant at its original cost, which includes: • material and labor; • contractor costs; • capitalized leases; • construction overhead costs (where applicable); and • AFUDC. Property, plant and equipment balances and classes for APS are not materially different than Pinnacle West. We expense the costs of plant outages, major maintenance and routine maintenance as incurred. We charge retired utility plant to accumulated depreciation. Liabilities associated with the retirement of tangible long-lived assets are recognized at fair value as incurred and capitalized as part of the related tangible long-lived assets. Accretion of the liability due to the passage of time is an operating expense, and the capitalized cost is depreciated over the useful life of the long-lived asset. See Note 11 for additional information. APS records a regulatory liability for the excess that has been recovered in regulated rates over the amount calculated in accordance with guidance on accounting for AROs. APS believes it is probable it will recover in regulated rates, the costs calculated in accordance with this accounting guidance. We record depreciation and amortization on utility plant on a straight-line basis over the remaining useful life of the related assets. The approximate remaining average useful lives of our utility property at December 31, 2022, were as follows: • Steam generation — 12 years; • Nuclear plant — 25 years; • Other generation — 18 years; • Transmission — 38 years; • Distribution — 33 years; and • General plant — 6 years. |
Asset Retirement Obligations | Asset Retirement Obligations APS has AROs for its Palo Verde nuclear facilities and certain other generation assets. The Palo Verde ARO primarily relates to final plant decommissioning. This obligation is based on the NRC’s requirements for disposal of radiated property or plant and agreements APS reached with the ACC for final decommissioning of the plant. The non-nuclear generation AROs primarily relate to requirements for removing portions of those plants at the end of the plant life or lease term and coal ash pond closures. Some of APS’s transmission and distribution assets have AROs because they are subject to right of way and easement agreements that require final removal. These agreements have a history of uninterrupted renewal that APS expects to continue. As a result, APS cannot reasonably estimate the fair value of the ARO related to such transmission and distribution assets. Additionally, APS has aquifer protection permits for some of its generation sites that require the closure of certain facilities at those sites. |
Allowance for Funds Used During Construction | Allowance for Funds Used During Construction AFUDC represents the approximate net composite interest cost of borrowed funds and an allowed return on the equity funds used for construction of regulated utility plant. Both the debt and equity components of AFUDC are non-cash amounts within the Consolidated Statements of Income. Plant construction costs, including AFUDC, are recovered in authorized rates through depreciation when completed projects are placed into commercial operation. AFUDC was calculated by using a composite rate of 5.75% for 2022, 6.75% for 2021, and 6.72% for 2020. APS compounds AFUDC semi-annually and ceases to accrue AFUDC when construction work is completed, and the property is placed in service. |
Materials and Supplies | Materials and Supplies APS values materials, supplies and fossil fuel inventory using a weighted-average cost method. APS materials, supplies and fossil fuel inventories are carried at the lower of weighted-average cost or net realizable value, unless evidence indicates that the weighted-average cost (even if in excess of market) will be recovered. |
Fair Value Measurements | Fair Value Measurements We apply recurring fair value measurements to cash equivalents, derivative instruments, investments held in the nuclear decommissioning trust and other special use funds. On an annual basis, we apply fair value measurements to plan assets held in our retirement and other benefits plans. Due to the short-term nature of short-term borrowings, the carrying values of these instruments approximate fair value. Fair value measurements may also be applied on a nonrecurring basis to other assets and liabilities in certain circumstances such as impairments. We also disclose fair value information for our long-term debt, which is carried at amortized cost. See Note 6 for additional information. Fair value is the price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market which we can access for the asset or liability in an orderly transaction between willing market participants on the measurement date. Inputs to fair value may include observable and unobservable data. We maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. We determine fair market value using observable inputs such as actively-quoted prices for identical instruments when available. When actively-quoted prices are not available for the identical instruments, we use other observable inputs, such as prices for similar instruments, other corroborative market information, or prices provided by other external sources. For options, long-term contracts, and other contracts for which observable price data are not available, we use models and other valuation methods, which may incorporate unobservable inputs to determine fair market value. The use of models and other valuation methods to determine fair market value often requires subjective and complex judgment. Actual results could differ from the results estimated through application of these methods. |
Derivative Accounting | Derivative Accounting We are exposed to the impact of market fluctuations in the commodity price and transportation costs of electricity, natural gas, coal and in interest rates. We manage risks associated with market volatility by utilizing various physical and financial 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 as well as interest rate risk. The changes in market value of such contracts have a high correlation to price changes in the hedged transactions. We also enter into derivative instruments for economic hedging purposes. 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 expenses in our Consolidated Statements of Income, but does not impact our financial condition, net income, or cash flows. |
Loss Contingencies and Environmental Liabilities | Loss Contingencies and Environmental Liabilities Pinnacle West and APS are involved in certain legal and environmental matters that arise in the normal course of business. Contingent losses and environmental liabilities are recorded when it is determined that it is probable that a loss has occurred, and the amount of the loss can be reasonably estimated. When a range of the probable loss exists and no amount within the range is a better estimate than any other amount, Pinnacle West and APS record a loss contingency at the minimum amount in the range. Unless otherwise required by GAAP, legal fees are expensed as incurred. |
Retirement Plans and Other Postretirement Benefits | Retirement Plans and Other Postretirement Benefits Pinnacle West sponsors a qualified defined benefit and account balance pension plan for the employees of Pinnacle West and its subsidiaries, in addition to a non-qualified pension plan. We also sponsor another postretirement benefit plan for the employees of Pinnacle West and its subsidiaries that provides medical and life insurance benefits to retired employees. Pension and other postretirement benefit expense are determined by actuarial valuations, based on assumptions that are evaluated annually. See Note 7 for additional information on pension and other postretirement benefits. |
Nuclear Fuel | Nuclear Fuel APS amortizes nuclear fuel by using the unit-of-production method. The unit-of-production method is based on actual physical usage. APS divides the cost of the fuel by the estimated number of thermal units it expects to produce with that fuel. APS then multiplies that rate by the number of thermal units produced within the current period. This calculation determines the current period nuclear fuel expense. APS also charges nuclear fuel expense for the interim storage and permanent disposal of spent nuclear fuel. The DOE is responsible for the permanent disposal of spent nuclear fuel and charged APS |
Income Taxes | Income Taxes |
Cash and Cash Equivalents | Cash and Cash Equivalents |
Intangible Assets | Intangible Assets |
Investments | Investments El Dorado holds investments in both debt and equity securities. Investments in debt securities are generally accounted for as held-to-maturity and investments in equity securities are accounted for using either the equity method (if significant influence) or the measurement alternative for investments without readily determinable fair values (if less than 20% ownership and no significant influence). BCE holds investments in equity securities. Investments in equity securities are accounted for using either the equity method (if significant influence) or the measurement alternative for investments without readily determinable fair values (if less than 20% ownership and no significant influence). Our investments in the nuclear decommissioning trusts, coal reclamation escrow accounts and active union employee medical account, are accounted for in accordance with guidance on accounting for investments in debt and equity securities. See Notes 12 and 18 for more information on these investments. |
Leases | Leases We determine if an agreement is a lease at contract inception. A lease is defined as a contract, or part of a contract, that conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To control the use of an identified asset an entity must have both a right to obtain substantially all of the benefits from the use of the asset and the right to direct the use of the asset. If we determine an agreement is a lease, and we are the lessee, we recognize a right-of-use lease asset and a lease liability at the lease commencement date. Lease liabilities are recognized based on the present value of the fixed lease payments over the lease term. To present value lease liabilities we use the implicit rate in the lease if the information is readily available, otherwise we use our incremental borrowing rate determined at lease commencement. Our incremental borrowing rate is based on the rate of interest we would have to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. When measuring right-of-use assets and lease liabilities we exclude variable lease payments, other than those that depend on an index or rate or are in-substance fixed payments. For short-term leases with terms of 12 months or less, we do not recognize a right-of-use lease asset or lease liability. We recognize operating lease expense using a straight-line pattern over the periods of use. APS enters into purchased power contracts that may contain leases. This occurs when a purchased power agreement designates a specific power plant, APS obtains substantially all of the economic benefits from the use of the plant and has the right to direct the use of the plant. Purchased power lease contracts may also include energy storage facilities. Lease costs relating to purchased power lease contracts are reported in fuel and purchased power on the Consolidated Statements of Income and are subject to recovery under the PSA or RES. See Note 3 . We also may enter into lease agreements related to vehicles, office space, land, and other equipment. See Note 8 for information on our lease agreements. |
Business Segments | Business Segments Pinnacle West’s reportable business segment is our regulated electricity segment, which consists of traditional regulated retail and wholesale electricity businesses (primarily electricity service to Native Load customers) and related activities and includes electricity generation, transmission, and distribution. All other segment activities are insignificant. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Schedule of property, plant and equipment | Pinnacle West’s property, plant and equipment included in the December 31, 2022, and 2021 Consolidated Balance Sheets is composed of the following (dollars in thousands): Property, Plant and Equipment: 2022 2021 Generation $ 9,563,145 $ 9,480,572 Transmission 3,589,456 3,402,016 Distribution 7,951,867 7,520,016 General plant 1,347,678 1,286,057 Plant in service and held for future use 22,452,146 21,688,661 Accumulated depreciation and amortization (7,929,878) (7,504,603) Net 14,522,268 14,184,058 Construction work in progress 1,882,791 1,329,478 Palo Verde sale leaseback, net of accumulated depreciation 90,296 94,166 Intangible assets, net of accumulated amortization 258,880 273,693 Nuclear fuel, net of accumulated amortization 100,119 106,039 Total property, plant and equipment $ 16,854,354 $ 15,987,434 |
Schedule of supplemental cash flow information | The following table summarizes supplemental Pinnacle West cash flow information for each of the last three years (dollars in thousands): Year ended December 31, 2022 2021 2020 Cash paid (received) during the period for: Income taxes, net of refunds $ 46,227 $ 229 $ (3,019) Interest, net of amounts capitalized 245,271 227,584 216,951 Significant non-cash investing and financing activities: Accrued capital expenditures $ 114,999 $ 167,733 $ 113,502 Dividends declared but not paid 97,895 95,988 93,531 The following table summarizes supplemental APS cash flow information for each of the last three years (dollars in thousands): Year ended December 31, 2022 2021 2020 Cash paid during the period for: Income taxes, net of refunds $ 95,985 $ 19,783 $ 41,176 Interest, net of amounts capitalized 227,159 217,749 206,328 Significant non-cash investing and financing activities: Accrued capital expenditures $ 116,533 $ 167,657 $ 113,502 Dividends declared but not paid 97,900 96,000 93,500 |
Revenue (Tables)
Revenue (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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): Year Ended December 31, Year Ended December 31, Year Ended December 31, 2022 2021 2020 Retail Electric Service Residential $ 2,046,111 $ 1,913,324 $ 1,929,178 (a) Non-Residential 1,767,616 1,586,940 1,486,098 Wholesale Energy Sales 383,126 187,640 93,345 Transmission Services for Others 116,628 99,285 65,859 Other Sources 10,904 16,646 12,502 Total Operating Revenues $ 4,324,385 $ 3,803,835 $ 3,586,982 (a) Residential revenues for the year ended December 31, 2020, reflect a $24 million reduction related to the Arizona Attorney General matter. See Note 10 |
Schedule of allowance for doubtful accounts | The following table provides a rollforward of Pinnacle West’s allowance for doubtful accounts (dollars in thousands): Year Ended December 31, 2022 Year Ended December 31, 2021 Year Ended December 31, 2020 Allowance for doubtful accounts, balance at beginning of period $ 25,354 $ 19,782 $ 8,171 Bad debt expense 17,006 22,251 20,633 Actual write-offs (18,582) (16,679) (9,022) Allowance for doubtful accounts, balance at end of period $ 23,778 $ 25,354 $ 19,782 |
Regulatory Matters (Tables)
Regulatory Matters (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Regulated Operations [Abstract] | |
Schedule Of Capital Structure And Cost Of Capital, Regulatory Matter | the following proposed capital structure and costs of capital: Capital Structure Cost of Capital Long-term debt 48.07 % 3.85 % Common stock equity 51.93 % 10.25 % Weighted-average cost of capital 7.17 % Capital Structure Cost of Capital Long-term debt 45.3 % 4.10 % Common stock equity 54.7 % 10.15 % Weighted-average cost of capital 7.41 % |
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): Twelve Months Ended 2022 2021 Beginning balance $ 388,148 $ 175,835 Deferred fuel and purchased power costs — current period 291,992 256,871 Amounts charged to customers (219,579) (44,558) Ending balance $ 460,561 $ 388,148 |
Schedule of regulatory assets | The detail of regulatory assets is as follows (dollars in thousands): S December 31, Amortization Through 2022 2021 Pension (a) $ 637,656 $ 509,751 Deferred fuel and purchased power (b) (c) 2023 460,561 388,148 Income taxes — AFUDC equity 2052 179,631 172,393 Ocotillo deferral (e) 2031 138,143 147,650 Retired power plant costs 2033 98,692 114,841 SCR deferral (e) (f) 2031 97,624 105,771 Deferred property taxes 2027 41,057 49,626 Deferred compensation 2036 33,660 33,997 Income taxes — investment tax credit basis adjustment 2056 23,977 24,768 Palo Verde VIEs (Note 17) 2046 20,933 21,094 Active union medical trust (g) 18,226 1,175 Four Corners cost deferral 2024 15,999 24,075 Navajo coal reclamation 2026 13,862 16,840 Lost fixed cost recovery (b) 2023 9,547 63,889 Loss on reacquired debt 2038 9,468 11,020 Mead-Phoenix transmission line — contributions in aid of construction 2050 9,048 9,380 Tax expense adjustor mechanism (b) 2031 5,845 6,501 Other Various 8,171 10,592 Total regulatory assets (d) $ 1,822,100 $ 1,711,511 Less: current regulatory assets $ 538,879 $ 518,524 Total noncurrent regulatory assets $ 1,283,221 $ 1,192,987 (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 7 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. |
Schedule of regulatory liabilities | The detail of regulatory liabilities is as follows (dollars in thousands): December 31, Amortization Through 2022 2021 Excess deferred income taxes - ACC — Tax Cuts and Jobs Act (a) 2046 $ 971,545 $ 1,012,448 Excess deferred income taxes - FERC — Tax Cuts and Jobs Act (a) 2058 221,877 229,116 Asset retirement obligations 2057 354,002 614,683 Other postretirement benefits (d) 270,604 374,816 Removal costs (c) 106,889 119,580 Deferred fuel and purchased power — mark-to-market (Note 15) 2024 96,367 107,601 Income taxes — change in rates 2051 64,806 67,678 Four Corners coal reclamation 2038 52,592 55,392 Income taxes — deferred investment tax credit 2056 48,035 49,601 Spent nuclear fuel 2027 39,217 45,282 Renewable energy standard (b) 2024 35,720 38,640 FERC transmission true up (b) 2024 22,895 34,303 Property tax deferral (e) 2024 15,521 20,192 Sundance maintenance 2031 16,893 13,797 Demand side management (b) 2023 8,461 5,417 Tax expense adjustor mechanism (b) (e) N/A 4,835 4,835 Other Various 3,092 2,103 Total regulatory liabilities $ 2,333,351 $ 2,795,484 Less: current regulatory liabilities $ 271,575 $ 296,271 Total noncurrent regulatory liabilities $ 2,061,776 $ 2,499,213 (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, APS accrues removal costs for its regulated assets, even if there is no legal obligation for removal. (d) See Note 7. (e) Balance includes amounts for future regulatory consideration and amortization period determination. |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of unrecognized tax benefits roll forward | The following is a tabular reconciliation of the total amounts of unrecognized tax benefits, excluding interest and penalties, at the beginning and end of the year that are included in accrued taxes and unrecognized tax benefits (dollars in thousands): Pinnacle West Consolidated APS Consolidated 2022 2021 2020 2022 2021 2020 Total unrecognized tax benefits, January 1 $ 45,086 $ 45,655 $ 43,435 $ 45,086 $ 45,655 $ 43,435 Additions for tax positions of the current year 1,399 3,305 3,418 1,399 3,305 3,418 Additions for tax positions of prior years 2,069 1,449 1,431 2,069 1,449 1,431 Reductions for tax positions of prior years for: Changes in judgment (3,495) (2,659) (1,965) (3,495) (2,659) (1,965) Settlements with taxing authorities — — — — — — Lapses of applicable statute of limitations (1,962) (2,664) (664) (1,962) (2,664) (664) Total unrecognized tax benefits, December 31 $ 43,097 $ 45,086 $ 45,655 $ 43,097 $ 45,086 $ 45,655 |
Schedule of unrecognized tax benefits | Included in the balances of unrecognized tax benefits are the following tax positions that, if recognized, would decrease our effective tax rate (dollars in thousands): Pinnacle West Consolidated APS Consolidated 2022 2021 2020 2022 2021 2020 Tax positions, that if recognized, would decrease our effective tax rate $ 28,246 $ 26,300 $ 25,714 $ 28,246 $ 26,300 $ 25,714 Pinnacle West Consolidated APS Consolidated 2022 2021 2020 2022 2021 2020 Unrecognized tax benefit interest expense/(benefit) recognized $ (139) $ (535) $ 266 $ (139) $ (535) $ 266 Following are the total amount of accrued liabilities for interest recognized related to unrecognized benefits that could reverse and decrease our effective tax rate to the extent matters are settled favorably (dollars in thousands): Pinnacle West Consolidated APS Consolidated 2022 2021 2020 2022 2021 2020 Unrecognized tax benefit interest accrued $ 1,181 $ 1,320 $ 1,855 $ 1,181 $ 1,320 $ 1,855 |
Schedule components of income tax expense | The components of income tax expense are as follows (dollars in thousands): Pinnacle West Consolidated APS Consolidated Year Ended December 31, Year Ended December 31, 2022 2021 2020 2022 2021 2020 Current: Federal $ 35,617 $ (5,041) $ 11,869 $ 103,349 $ 1,514 $ 57,299 State 1,950 2,458 1,932 161 (11) 99 Total current 37,567 (2,583) 13,801 103,510 1,503 57,398 Deferred: Federal 23,693 95,327 53,398 (31,860) 101,175 15,122 State 13,567 17,342 10,974 19,150 22,875 16,244 Total deferred 37,260 112,669 64,372 (12,710) 124,050 31,366 Income tax expense/(benefit) $ 74,827 $ 110,086 $ 78,173 $ 90,800 $ 125,553 $ 88,764 |
Schedule comparison of pretax income from continuing operations at the federal income tax rate to income tax expense - continuing operations | The following chart compares pretax income at the 21% statutory federal income tax rate to income tax expense (dollars in thousands): Pinnacle West Consolidated APS Consolidated Year Ended December 31, Year Ended December 31, 2022 2021 2020 2022 2021 2020 Federal income tax expense at statutory rate $ 120,887 $ 156,666 $ 136,127 $ 132,920 $ 162,762 $ 142,020 Increases (reductions) in tax expense resulting from: State income tax net of federal income tax benefit 17,740 22,656 19,146 19,000 23,339 20,124 State income tax credits net of federal income tax benefit (5,482) (7,015) (8,951) (3,744) (5,277) (7,213) Net operating loss carryback tax benefit — (5,915) — — — — Excess deferred income taxes — Tax Cuts and Jobs Act (36,241) (36,558) (50,543) (36,241) (36,558) (50,543) Allowance for equity funds used during construction (see Note 1) (4,629) (4,180) (2,747) (4,629) (4,180) (2,747) Palo Verde VIE noncontrolling interest (see Note 17) (3,617) (3,617) (4,094) (3,617) (3,617) (4,094) Investment tax credit amortization (5,608) (7,620) (7,510) (5,608) (7,620) (7,510) Other federal income tax credits (10,867) (6,976) (4,616) (7,721) (3,912) (3,035) Other 2,644 2,645 1,361 440 616 1,762 Income tax expense/(benefit) $ 74,827 $ 110,086 $ 78,173 $ 90,800 $ 125,553 $ 88,764 |
Schedule components of the net deferred income tax liability | The components of the net deferred income tax liability were as follows (dollars in thousands): Pinnacle West Consolidated APS Consolidated December 31, December 31, 2022 2021 2022 2021 DEFERRED TAX ASSETS Risk management activities $ 8,826 $ 677 $ 8,826 $ 677 Regulatory liabilities: Excess deferred income taxes — Tax Cuts and Jobs Act 295,014 306,915 295,014 306,915 Asset retirement obligation and removal costs 107,104 174,952 107,104 174,952 Unamortized investment tax credits 48,035 49,601 48,035 49,601 Other postretirement benefits 66,893 92,654 66,893 92,654 Other 62,915 65,815 62,915 65,815 Operating lease liabilities 184,030 204,890 182,663 204,378 Pension liabilities 33,674 42,136 30,436 37,814 Coal reclamation liabilities 44,312 43,165 44,312 43,165 Renewable energy incentives 19,948 22,646 19,948 22,646 Credit and loss carryforwards 37,647 57,077 13,654 18,902 Other 72,605 74,184 72,605 74,184 Total deferred tax assets 981,003 1,134,712 952,405 1,091,703 DEFERRED TAX LIABILITIES Plant-related (2,518,164) (2,570,613) (2,518,164) (2,570,613) Risk management activities (32,648) (27,276) (32,648) (27,276) Pension and other postretirement assets (96,845) (133,624) (96,196) (132,769) Other special use funds (57,572) (64,610) (57,572) (64,610) Operating lease right-of-use assets (184,030) (204,890) (182,663) (204,378) Regulatory assets: Allowance for equity funds used during construction (44,405) (42,616) (44,405) (42,616) Deferred fuel and purchased power (114,232) (96,033) (114,232) (96,033) Pension benefits (157,629) (126,010) (157,629) (126,010) Retired power plant costs (24,397) (28,389) (24,397) (28,389) Other (103,023) (123,902) (103,023) (123,902) Other (32,479) (28,611) (7,123) (6,808) Total deferred tax liabilities (3,365,424) (3,446,574) (3,338,052) (3,423,404) Deferred income taxes — net $ (2,384,421) $ (2,311,862) $ (2,385,647) $ (2,331,701) |
Lines of Credit and Short-Ter_2
Lines of Credit and Short-Term Borrowings (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Lines of Credit and Short-Term Borrowings | |
Schedule of Consolidated Credit Facilities and Amounts Available and Outstanding | The table below presents the consolidated credit facilities and the amounts available and outstanding (dollars in thousands): December 31, 2022 December 31, 2021 Pinnacle West APS Total Pinnacle West APS Total Commitments under Credit Facilities $ 200,000 $ 1,000,000 $ 1,200,000 $ 200,000 $ 1,000,000 $ 1,200,000 Outstanding Commercial Paper, Term Loan and Revolving Credit Facility Borrowings (15,720) (325,000) (340,720) (13,300) (278,700) (292,000) Amount of Credit Facilities Available $ 184,280 $ 675,000 $ 859,280 $ 186,700 $ 721,300 $ 908,000 Commitment Fees 0.175% 0.125% 0.175% 0.125% |
Long-Term Debt and Liquidity _2
Long-Term Debt and Liquidity Matters (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Components of long-term debt on the Consolidated Balance Sheets | The following table presents the components of long-term debt on the Consolidated Balance Sheets outstanding (dollars in thousands): Maturity Interest December 31, Dates (a) Rates 2022 2021 APS Pollution control bonds: Variable 2029 (b) $ 163,975 $ 35,975 Total pollution control bonds 163,975 35,975 Senior unsecured notes 2024-2050 2.20%-6.88% 6,680,000 6,280,000 Unamortized discount (14,548) (14,995) Unamortized premium 12,368 13,575 Unamortized debt issuance cost (48,266) (47,862) Total APS long-term debt 6,793,529 6,266,693 Less current maturities — — Total APS long-term debt less current maturities 6,793,529 6,266,693 BCE Los Alamitos equity bridge loan (d) (d) 27,575 — Los Alamitos construction facility (e) (e) 23,110 — Unamortized debt issuance cost (135) — Total BCE long-term debt 50,550 — Less current maturities 50,685 — Total BCE long-term debt less current maturities (135) — Pinnacle West Senior unsecured notes 2025 1.3% 500,000 500,000 Term loans 2024 (c) 450,000 300,000 Unamortized discount (25) (34) Unamortized debt issuance cost (2,083) (2,924) Total Pinnacle West long-term debt 947,892 797,042 Less current maturities — 150,000 Total Pinnacle West long-term debt less current maturities 947,892 647,042 TOTAL LONG-TERM DEBT LESS CURRENT MATURITIES $ 7,741,286 $ 6,913,735 (a) This schedule does not reflect the timing of redemptions that may occur prior to maturities. (b) The weighted-average interest rate for the variable rate pollution control bonds was 3.96% at December 31, 2022, and 0.22% at December 31, 2021. See additional details below. (c) The weighted-average interest rate was 5.1% at December 31, 2022, and 0.81% at December 31, 2021. See additional details below. (d) The weighted-average interest rate for the variable rate equity bridge loan is 5.18% at December 31, 2022 and will mature on the project’s commercial operation date, expected on or before August 15, 2023. See additional details below. |
Schedule of Principal payments due on Pinnacle West's and APS's total long-term debt | The following table shows principal payments due on Pinnacle West’s, APS’s and BCE’s total long-term debt (dollars in thousands): Year Consolidated Consolidated BCE 2023 $ 50,685 $ — $ 50,685 2024 700,000 250,000 — 2025 800,000 300,000 — 2026 250,000 250,000 — 2027 300,000 300,000 — Thereafter 5,743,975 5,743,975 — Total $ 7,844,660 $ 6,843,975 $ 50,685 |
Schedule of estimated fair value of long-term debt, including current maturities | The following table represents the estimated fair value of our long-term debt, including current maturities (dollars in thousands): As of As of Carrying Fair Value Carrying Fair Value Pinnacle West $ 947,892 $ 905,525 $ 797,042 $ 792,735 APS 6,793,529 5,629,491 6,266,693 6,933,619 BCE 50,550 50,685 — — Total $ 7,791,971 $ 6,585,701 $ 7,063,735 $ 7,726,354 |
Retirement Plans and Other Po_2
Retirement Plans and Other Postretirement Benefits (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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): Pension Plans Other Benefits Plans 2022 2021 2020 2022 2021 2020 Service cost-benefits earned during the period $ 55,473 $ 61,236 $ 56,233 $ 16,470 $ 17,796 $ 22,236 Non-service costs (credits): Interest cost on benefit obligation 107,492 98,566 118,567 17,491 16,513 25,857 Expected return on plan assets (185,775) (202,628) (187,443) (46,042) (41,444) (40,077) Amortization of: Prior service credit — — — (37,789) (37,705) (37,575) Net actuarial (gain)/loss 17,515 15,948 34,612 (12,835) (10,093) — Net periodic benefit cost/(benefit) $ (5,295) $ (26,878) $ 21,969 $ (62,705) $ (54,933) $ (29,559) Portion of cost/(benefit) charged to expense $ (16,431) $ (32,743) $ 3,386 $ (45,042) $ (38,657) $ (20,966) |
Schedule of changes in the benefit obligations and funded status | The following table shows the plans’ changes in the benefit obligations and funded status (dollars in thousands): Pension Plans Other Benefits Plans 2022 2021 2022 2021 Change in Benefit Obligation Benefit obligation at January 1 $ 3,716,824 $ 3,902,867 $ 591,841 $ 624,034 Service cost 55,473 61,236 16,470 17,796 Interest cost 107,492 98,566 17,491 16,513 Benefit payments (212,565) (207,928) (30,913) (31,280) Actuarial (gain) loss (857,695) (137,917) (185,428) (35,222) Benefit obligation at December 31 2,809,529 3,716,824 409,461 591,841 Change in Plan Assets Fair value of plan assets at January 1 3,812,041 3,886,544 872,435 961,165 Actual return on plan assets (787,874) 18,169 (193,807) 41,432 Employer contributions — 100,000 — — Benefit payments (194,682) (192,672) (26,341) (24,310) Transfer to active union medical account — — — (105,852) Fair value of plan assets at December 31 2,829,485 3,812,041 652,287 872,435 Funded Status at December 31 $ 19,956 $ 95,217 $ 242,826 $ 280,594 |
Schedule of projected benefit obligation and the accumulated benefit obligation for pension plans with an accumulated obligation in excess of plan assets | The following table shows information for pension plans with an accumulated obligation in excess of plan assets (dollars in thousands): As of December 31, 2022 2021 Accumulated benefit obligation 126,759 161,086 Fair value of plan assets — — The following table shows information for pension plans with a projected benefit obligation in excess of plan assets (dollars in thousands): As of December 31, 2022 2021 Projected benefit obligation 133,818 169,912 Fair value of plan assets — — |
Schedule of amounts recognized on the Consolidated Balance Sheets | The following table shows the amounts recognized on the Consolidated Balance Sheets (dollars in thousands): Pension Plans Other Benefits Plans 2022 2021 2022 2021 Noncurrent asset $ 153,773 $ 265,129 $ 242,826 $ 280,594 Current liability (17,531) (17,047) — — Noncurrent liability (116,286) (152,865) — — Net amount recognized (funded status) $ 19,956 $ 95,217 $ 242,826 $ 280,594 |
Schedule of accumulated other comprehensive loss | The following table shows the details related to accumulated other comprehensive loss (gain) as of December 31, 2022, and 2021 (dollars in thousands): Pension Plans Other Benefits Plans 2022 2021 2022 2021 Net actuarial loss (gain) $ 681,335 $ 582,895 $ (195,095) $ (262,352) Prior service credit — — (76,843) (114,632) APS’s portion recorded as a regulatory (asset) liability (637,656) (509,751) 270,604 374,816 Income tax expense (benefit) (10,797) (18,081) 784 990 Accumulated other comprehensive loss (gain) $ 32,882 $ 55,063 $ (550) $ (1,178) |
Schedule of weighted-average assumptions used for both the pension and other benefits to determine benefit obligations and net periodic benefit costs | The following table shows the weighted-average assumptions used for both the pension and other benefits to determine benefit obligations and net periodic benefit costs: Benefit Obligations Benefit Costs 2022 2021 2022 2021 2020 Discount rate – pension plans 5.56 % 2.92 % 2.92 % 2.53 % 3.30 % Discount rate – other benefits plans 5.58 % 2.98 % 2.98 % 2.63 % 3.42 % Rate of compensation increase 4.57 % 4.00 % 4.00 % 4.00 % 4.00 % Expected long-term return on plan assets - pension plans N/A N/A 5.00 % 5.30 % 5.75 % Expected long-term return on plan assets - other benefit plans N/A N/A 5.35 % 4.90 % 4.85 % Initial healthcare cost trend rate (pre-65 participants) 6.50 % 6.00 % 6.00 % 6.50 % 7.00 % Ultimate healthcare cost trend rate (pre-65 participants) 4.75 % 4.75 % 4.75 % 4.75 % 4.75 % Number of years to ultimate trend rate (pre-65 participants) 6 4 3 4 5 Initial and ultimate healthcare cost trend rate (post-65 participants) (a) 2.00 % 2.00 % 2.00 % 2.00 % 4.75 % Interest crediting rate – cash balance pension plans 4.50 % 4.50 % 4.50 % 4.50 % 4.50 % (a) See discussion above relating to this assumptions impact on benefit obligations and the January 2021 asset transfer to the Active Union Employee Medical Account. |
Schedule of fair value of pension plan and other postretirement benefit plan assets, by asset category | Based on the IPS, and given the pension plan’s funded status at year-end 2022, the target and actual allocation for the pension plan at December 31, 2022, are as follows: Target Allocation Actual Allocation Long-term fixed income assets 80 % 78 % Return-seeking assets 20 % 22 % Total 100 % 100 % The permissible range is within +/-3% of the target allocation shown in the above table, and also considers the plan’s funded status. The following table presents the additional target allocations, as a percent of total pension plan assets, for the return-seeking assets: Target Allocation Equities in US and other developed markets 12 % Equities in emerging markets 4 % Alternative investments 4 % Total 20 % Actual Allocation Long-term fixed income assets 62 % Return-seeking assets 38 % Total 100 % The fair value of Pinnacle West’s pension plan and other postretirement benefit plan assets at December 31, 2022, by asset category, are as follows (dollars in thousands): Level 1 Level 2 Other (a) Total Pension Plan: Cash and cash equivalents $ 1,252 $ — $ — $ 1,252 Fixed income securities: Corporate — 1,374,810 — 1,374,810 U.S. Treasury 635,245 — — 635,245 Other (b) — 131,999 — 131,999 Common stock equities (c) 155,231 — — 155,231 Mutual funds (d) 101,557 — — 101,557 Common and collective trusts: Equities — — 181,912 181,912 Real estate — — 174,228 174,228 Partnerships — — 13,359 13,359 Short-term investments and other (e) — — 59,892 59,892 Total $ 893,285 $ 1,506,809 $ 429,391 $ 2,829,485 Other Benefits: Cash and cash equivalents $ 204 $ — $ — $ 204 Fixed income securities: Corporate — 166,879 — 166,879 U.S. Treasury 221,936 — — 221,936 Other (b) — 7,321 — 7,321 Common stock equities (c) 127,493 — — 127,493 Mutual funds (d) 18,824 — — 18,824 Common and collective trusts: Equities — — 73,956 73,956 Real estate — — 23,541 23,541 Short-term investments and other (e) 3,274 — 8,859 12,133 Total $ 371,731 $ 174,200 $ 106,356 $ 652,287 (a) These investments primarily represent assets valued using NAV as a practical expedient and have not been classified in the fair value hierarchy. (b) This category consists primarily of debt securities issued by municipalities and asset backed securities. (c) This category primarily consists of U.S. common stock equities. (d) These funds invest in international common stock equities. (e) This category includes plan receivables and payables. Level 1 Level 2 Other (a) Total Pension Plan: Cash and cash equivalents $ 821 $ — $ — $ 821 Fixed income securities: Corporate — 1,765,623 — 1,765,623 U.S. Treasury 1,008,211 — — 1,008,211 Other (b) — 165,496 — 165,496 Common stock equities (c) 209,063 — — 209,063 Mutual funds (d) 132,656 — — 132,656 Common and collective trusts: Equities — — 255,141 255,141 Real estate — — 173,197 173,197 Partnerships — — 15,730 15,730 Short-term investments and other (e) — — 86,103 86,103 Total $ 1,350,751 $ 1,931,119 $ 530,171 $ 3,812,041 Other Benefits: Cash and cash equivalents $ 121 $ — $ — $ 121 Fixed income securities: Corporate — 244,572 — 244,572 U.S. Treasury 287,057 — — 287,057 Other (b) — 9,330 — 9,330 Common stock equities (c) 176,024 — — 176,024 Mutual funds (d) 26,262 — — 26,262 Common and collective trusts: Equities — — 96,547 96,547 Real estate — — 23,851 23,851 Short-term investments and other (e) 2,517 — 6,154 8,671 Total $ 491,981 $ 253,902 $ 126,552 $ 872,435 (a) These investments primarily represent assets valued using NAV as a practical expedient and have not been classified in the fair value hierarchy. (b) This category consists primarily of debt securities issued by municipalities. (c) This category primarily consists of U.S. common stock equities. (d) These funds invest in U.S. and international common stock equities. (e) This category includes plan receivables and payables. |
Schedule of estimated future benefit payments, which reflect estimated future employee service, for the next five years and the succeeding five years thereafter | Benefit payments, which reflect estimated future employee service, for the next five years and the succeeding five years thereafter, are estimated to be as follows (dollars in thousands): Year Pension Plans Other Benefits Plans 2023 $ 240,034 $ 31,235 2024 227,234 30,865 2025 223,813 30,251 2026 224,881 30,135 2027 221,976 29,790 Years 2028-2032 1,117,192 146,725 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Schedule of lease costs | The following table provides information related to our lease costs (dollars in thousands): For the Year Ended 2022 2021 2020 Operating Lease Cost - Purchased Power Lease Contracts $ 104,001 $ 105,762 68,883 Operating Lease Cost - Land, Property, and Other Equipment 18,061 18,498 18,493 Total Operating Lease Cost 122,062 124,260 87,376 Variable lease cost (a) 122,040 118,969 122,331 Short-term lease cost 9,928 3,872 3,804 Total lease cost $ 254,030 $ 247,101 $ 213,511 (a) Primarily relates to purchased power lease contracts. The following tables provide other additional information related to operating lease liabilities (dollars in thousands): Year Ended December 31, 2022 Year Ended December 31, 2021 Year Ended December 31, 2020 Cash paid for amounts included in the measurement of lease liabilities — operating cash flows: $ 118,463 $ 116,661 $ 75,097 Right-of-use operating lease assets obtained in exchange for operating lease liabilities 16,990 500,582 441,653 December 31, 2022 December 31, 2021 Weighted average remaining lease term 7 years 8 years Weighted average discount rate (a) 2.21 % 2.13 % |
Schedule of maturities of operating lease liabilities | The following table provides information related to the maturity of our operating lease liabilities (dollars in thousands): December 31, 2022 Year Purchased Power Lease Contracts Land, Property & Equipment Leases Total 2023 $ 106,151 $ 14,254 $ 120,405 2024 104,315 11,330 115,645 2025 106,582 8,655 115,237 2026 120,016 7,207 127,223 2027 89,108 5,292 94,400 Thereafter 210,486 37,873 248,359 Total lease commitments 736,658 84,611 821,269 Less imputed interest 57,682 19,130 76,812 Total lease liabilities $ 678,976 $ 65,481 $ 744,457 |
Jointly-Owned Facilities (Table
Jointly-Owned Facilities (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Jointly Owned Utility Plant, Net Ownership Amount [Abstract] | |
Schedule Of APS's Interests In Jointly-owned Facilities Recorded On The Consolidated Balance Sheets | The following table shows APS’s interests in those jointly-owned facilities recorded on the Consolidated Balance Sheets at December 31, 2022 (dollars in thousands): Percent Plant in Accumulated Construction Generating facilities: Palo Verde Units 1 and 3 29.1 % $ 1,947,593 $ 1,099,132 $ 39,933 Palo Verde Unit 2 (a) 16.8 % 659,514 383,775 14,784 Palo Verde Common 28.0 % (b) 799,794 346,705 52,631 Palo Verde Sale Leaseback (a) 351,050 260,754 — Four Corners Generating Station 63.0 % 1,665,042 620,918 46,643 Cholla Common Facilities (c) 50.5 % 207,104 140,886 2,988 Transmission facilities: ANPP 500kV System 33.4 % (b) 133,887 55,704 2,820 Navajo Southern System 26.8 % (b) 90,345 36,929 1,945 Palo Verde — Yuma 500kV System 25.4 % (b) 24,026 7,559 128 Four Corners Switchyards 61.9 % (b) 73,243 20,350 120 Phoenix — Mead System 17.1 % (b) 39,705 20,055 51 Palo Verde — Rudd 500kV System 50.0 % 95,736 31,118 391 Morgan — Pinnacle Peak System 64.7 % (b) 119,785 25,791 96 Round Valley System 50.0 % 548 193 — Palo Verde — Morgan System 87.8 % (b) 263,576 34,415 1,414 Hassayampa — North Gila System 80.0 % 148,174 22,566 3,771 Cholla 500kV Switchyard 85.7 % 8,100 2,380 — Saguaro 500kV Switchyard 60.0 % 21,656 13,809 — Kyrene — Knox System 50.0 % 578 336 — Agua Fria Switchyard 10.0 % — — 32 (a) See Note 17. (b) Weighted-average of interests. |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of estimated coal take-or-pay commitments | The following table summarizes our estimated coal take-or-pay commitments (dollars in thousands): Years Ended December 31, 2023 2024 2025 2026 2027 Thereafter Coal take-or-pay commitments (a) $ 216,729 $ 211,823 $ 232,594 $ 225,345 $ 204,845 $ 880,113 (a) Total take-or-pay commitments are approximately $2.0 billion. The total net present value of these commitments is approximately $1.6 billion. |
Schedule of actual take-or-pay commitments | The following table summarizes actual amounts purchased under the coal contracts which include take-or-pay provisions for each of the last three years (dollars in thousands): Years Ended December 31, 2022 2021 2020 Total purchases $ 305,502 $ 219,958 $ 189,817 |
Asset Retirement Obligations (T
Asset Retirement Obligations (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Asset Retirement Obligation Disclosure [Abstract] | |
Schedule of Change In Asset Retirement Obligations | The following table shows the change in our AROs (dollars in thousands): 2022 2021 Asset retirement obligations at the beginning of year $ 767,382 $ 705,083 Changes attributable to: Accretion expense 41,240 38,437 Settlements (10,860) (4,111) Estimated cash flow revisions — 27,973 Asset retirement obligations at the end of year $ 797,762 $ 767,382 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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 December 31, 2022, of our assets and liabilities that are measured at fair value on a recurring basis (dollars in thousands): Level 1 Level 2 Level 3 Other Total ASSETS Risk management activities — derivative instruments: Commodity contracts $ — $ 127,129 $ 26,132 $ (21,163) (a) $ 132,098 Interest rate swaps — 131 — — 131 Subtotal risk management activities - derivative instruments — 127,260 26,132 (21,163) 132,229 Nuclear decommissioning trust: Equity securities 14,658 — — 3,827 (b) 18,485 U.S. commingled equity funds — — — 472,582 (c) 472,582 U.S. Treasury debt 211,923 — — — 211,923 Corporate debt — 149,226 — — 149,226 Mortgage-backed securities — 147,938 — — 147,938 Municipal bonds — 64,881 — — 64,881 Other fixed income — 8,375 — — 8,375 Subtotal nuclear decommissioning trust 226,581 370,420 — 476,409 1,073,410 Other special use funds: Equity securities 66,974 — — 963 (b) 67,937 U.S. Treasury debt 275,267 — — — 275,267 Municipal bonds — 4,027 — — 4,027 Subtotal other special use funds 342,241 4,027 — 963 347,231 Total assets $ 568,822 $ 501,707 $ 26,132 $ 456,209 $ 1,552,870 LIABILITIES Risk management activities — derivative instruments: Commodity contracts $ — $ (25,874) $ (31,020) $ 15,357 (a) $ (41,537) Interest rate swaps — (909) — — (909) Subtotal risk management activities - derivative instruments — (26,783) (31,020) 15,357 (42,446) Total liabilities $ — $ (26,783) $ (31,020) $ 15,357 $ (42,446) (a) Represents counterparty netting, margin, and collateral. See Note 15. (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): Level 1 Level 2 Level 3 Other Total ASSETS Risk management activities — derivative instruments: Commodity contracts $ — $ 115,079 $ — $ (4,690) (a) $ 110,389 Nuclear decommissioning trust: Equity securities 45,264 — — (27,782) (b) 17,482 U.S. commingled equity funds — — — 595,048 (c) 595,048 U.S. Treasury debt 240,745 — — — 240,745 Corporate debt — 203,454 — — 203,454 Mortgage-backed securities — 155,574 — — 155,574 Municipal bonds — 72,189 — — 72,189 Other fixed income — 10,265 — — 10,265 Subtotal nuclear decommissioning trust 286,009 441,482 — 567,266 1,294,757 Other special use funds: Equity securities 47,570 — — 936 (b) 48,506 U.S. Treasury debt 298,170 — — — 298,170 Municipal bonds — 11,734 — — 11,734 Subtotal other special use funds 345,740 11,734 — 936 358,410 Total assets $ 631,749 $ 568,295 $ — $ 563,512 $ 1,763,556 LIABILITIES Risk management activities — derivative instruments: Commodity contracts $ — (4,740) (2,738) 3,105 (a) (4,373) (a) Represents counterparty netting, margin, and collateral. See Note 15. (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 shows the changes in fair value for our risk management activities’ assets and liabilities that are measured at fair value on a recurring basis using Level 3 inputs for the years ended December 31, 2022 and 2021 (dollars in thousands): Year Ended Commodity Contracts 2022 2021 Net derivative balance at beginning of period $ (2,738) $ (1,102) Total net gains (losses) realized/unrealized: Deferred as a regulatory asset or liability (374) 13,827 Settlements (1,123) (15,463) Transfers into Level 3 from Level 2 (846) — Transfers from Level 3 into Level 2 193 — Net derivative balance at end of period $ (4,888) $ (2,738) Net unrealized gains included in earnings related to instruments still held at end of period $ — $ — |
Information regarding the entity's internally developed significant unobservable inputs used to value its level 3 instruments | The following tables provide information regarding our significant unobservable inputs used to value our risk management derivative Level 3 instruments at December 31, 2022 and December 31, 2021: December 31, 2022 Valuation Significant Weighted-Average Commodity Contracts Assets Liabilities Technique Unobservable Input Range (b) Electricity: Forward Contracts (a) $ 26,132 $ 1,759 Discounted cash flows Electricity forward price (per MWh) $37.79 - $310.69 $ 163.92 Natural Gas: Forward Contracts (a) — 29,261 Discounted cash flows Natural gas forward price (per MMBtu) $(11.81) - $0.00 $ (5.08) Total $ 26,132 $ 31,020 (a) Includes swaps and physical and financial contracts. (b) Unobservable inputs were weighted by the relative fair value of the instrument. December 31, 2021 Valuation Significant Weighted-Average Commodity Contracts Assets Liabilities Technique Unobservable Input Range (b) Natural Gas: Forward Contracts (a) $ — $ 2,738 Discounted cash flows Natural gas forward price (per MMBtu) $(0.76) - $(0.65) $ (0.71) Total $ — $ 2,738 (a) Includes swaps and physical and financial contracts. (b) Unobservable inputs were weighted by the relative fair value of the instrument. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 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): 2022 2021 2020 Net income attributable to common shareholders $ 483,602 $ 618,720 $ 550,559 Weighted average common shares outstanding — basic 113,196 112,910 112,666 Net effect of dilutive securities: Contingently issuable performance shares and restricted stock units 220 282 276 Weighted average common shares outstanding — diluted 113,416 113,192 112,942 Earnings per weighted-average common share outstanding Net income attributable to common shareholders — basic $ 4.27 $ 5.48 $ 4.89 Net income attributable to common shareholders — diluted $ 4.26 $ 5.47 $ 4.87 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of restricted stock units, stock grants and stock units | The following table is a summary of awards granted and the weighted-average grant date fair value for each of the last three years: Restricted Stock Units, Stock Grants, and Stock Units (a) Performance Shares (b) 2022 2021 2020 2022 2021 2020 Units granted 174,791 152,345 118,403 208,736 161,840 122,830 Weighted-average grant date fair value $ 69.66 $ 76.72 $ 71.70 $ 77.63 $ 82.42 $ 104.74 (a) Units granted includes awards that will be cash settled of 0 in 2022, 51,074 in 2021, and 45,646 in 2020. See below for additional information on restricted stock unit grants. (b) Reflects the target payout level. The following table shows the change of nonvested awards: Restricted Stock Units, Stock Grants, and Stock Units Performance Shares Shares Weighted-Average Shares (b) Weighted-Average Nonvested at December 31, 2021 253,156 $ 79.37 280,682 $ 92.16 Granted 174,791 69.66 208,736 77.63 Vested (101,216) 84.52 (136,034) 103.30 Forfeited (c) (9,144) 76.56 (22,690) 78.29 Nonvested at December 31, 2022 317,587 (a) 73.91 330,694 78.91 Vested Awards Outstanding at December 31, 2022 78,912 136,034 (a) Includes 69,413 of awards that will be cash settled. (b) The nonvested performance shares are reflected at target payout level. |
Schedule of nonvested performance shares | The following table is a summary of awards granted and the weighted-average grant date fair value for each of the last three years: Restricted Stock Units, Stock Grants, and Stock Units (a) Performance Shares (b) 2022 2021 2020 2022 2021 2020 Units granted 174,791 152,345 118,403 208,736 161,840 122,830 Weighted-average grant date fair value $ 69.66 $ 76.72 $ 71.70 $ 77.63 $ 82.42 $ 104.74 (a) Units granted includes awards that will be cash settled of 0 in 2022, 51,074 in 2021, and 45,646 in 2020. See below for additional information on restricted stock unit grants. (b) Reflects the target payout level. The following table shows the change of nonvested awards: Restricted Stock Units, Stock Grants, and Stock Units Performance Shares Shares Weighted-Average Shares (b) Weighted-Average Nonvested at December 31, 2021 253,156 $ 79.37 280,682 $ 92.16 Granted 174,791 69.66 208,736 77.63 Vested (101,216) 84.52 (136,034) 103.30 Forfeited (c) (9,144) 76.56 (22,690) 78.29 Nonvested at December 31, 2022 317,587 (a) 73.91 330,694 78.91 Vested Awards Outstanding at December 31, 2022 78,912 136,034 (a) Includes 69,413 of awards that will be cash settled. (b) The nonvested performance shares are reflected at target payout level. |
Derivative Accounting (Tables)
Derivative Accounting (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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 energy derivatives, which represent both purchases and sales (does not reflect net position): Quantity Commodity Unit of Measure December 31, 2022 December 31, 2021 Power GWh 1,197 — Gas Billion cubic feet 149 155 |
Schedule of Gains and losses from derivative instruments in designated cash flow accounting hedges relationships | The following table provides information about APS’s gains and losses from energy derivative instruments in designated cash flow accounting hedging relationships (dollars in thousands): Financial Statement Year Ended Commodity Contracts Location 2022 2021 2020 Loss Reclassified from Accumulated OCI into Income (Effective Portion Realized) (a) Fuel and purchased power (b) $ — $ — $ (763) (a) During the years ended December 31, 2022, 2021, and 2020, we had no gains or losses reclassified from accumulated OCI to earnings related to discontinued cash flow hedges. (b) Amounts are before the effect of PSA deferrals. |
Schedule of Gains and losses from derivative instruments not designated as accounting hedges instruments | The following table provides information about gains and losses from energy derivative instruments not designated as accounting hedging instruments (dollars in thousands): Financial Statement Year Ended Commodity Contracts Location 2022 2021 2020 Net Gain (Loss) Recognized in Income Fuel and purchased power (a) $ 307,287 $ 216,847 $ (3,178) (a) Amounts are before the effect of PSA deferrals. |
Schedule of the entity's fair value of risk management activities reported on a gross basis and the impacts on offsetting liabilities | The following tables provide information about the fair value of APS's 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 APS's Consolidated Balance Sheets. As of December 31, 2022: Gross Amounts Net Other Amounts Current assets $ 103,484 $ (15,808) $ 87,676 $ 28 $ 87,704 Investments and other assets 49,777 (5,383) 44,394 — 44,394 Total assets 153,261 (21,191) 132,070 28 132,098 Current liabilities (47,670) 15,808 (31,862) (5,835) (37,697) Deferred credits and other (9,223) 5,383 (3,840) — (3,840) Total liabilities (56,893) 21,191 (35,702) (5,835) (41,537) Total $ 96,368 $ — $ 96,368 $ (5,807) $ 90,561 (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 $5,835 thousand and cash margin provided to counterparties of $28 thousand. As of December 31, 2021: Gross Amounts Net Other Amounts Current assets $ 66,777 $ (3,346) $ 63,431 $ 50 $ 63,481 Investments and other assets 48,302 (1,394) 46,908 — 46,908 Total assets 115,079 (4,740) 110,339 50 110,389 Current liabilities (6,084) 3,346 (2,738) (1,635) (4,373) Deferred credits and other (1,394) 1,394 — — — Total liabilities (7,478) 4,740 (2,738) (1,635) (4,373) Total $ 107,601 $ — $ 107,601 $ (1,585) $ 106,016 (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. |
Schedule of the entity's fair value of risk management activities reported on a gross basis and the impacts on offsetting assets | The following tables provide information about the fair value of APS's 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 APS's Consolidated Balance Sheets. As of December 31, 2022: Gross Amounts Net Other Amounts Current assets $ 103,484 $ (15,808) $ 87,676 $ 28 $ 87,704 Investments and other assets 49,777 (5,383) 44,394 — 44,394 Total assets 153,261 (21,191) 132,070 28 132,098 Current liabilities (47,670) 15,808 (31,862) (5,835) (37,697) Deferred credits and other (9,223) 5,383 (3,840) — (3,840) Total liabilities (56,893) 21,191 (35,702) (5,835) (41,537) Total $ 96,368 $ — $ 96,368 $ (5,807) $ 90,561 (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 $5,835 thousand and cash margin provided to counterparties of $28 thousand. As of December 31, 2021: Gross Amounts Net Other Amounts Current assets $ 66,777 $ (3,346) $ 63,431 $ 50 $ 63,481 Investments and other assets 48,302 (1,394) 46,908 — 46,908 Total assets 115,079 (4,740) 110,339 50 110,389 Current liabilities (6,084) 3,346 (2,738) (1,635) (4,373) Deferred credits and other (1,394) 1,394 — — — Total liabilities (7,478) 4,740 (2,738) (1,635) (4,373) Total $ 107,601 $ — $ 107,601 $ (1,585) $ 106,016 (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. |
Schedule of Information about derivative instruments that have credit-risk-related contingent features | The following table provides information about our energy derivative instruments that have credit-risk-related contingent features (dollars in thousands): December 31, 2022 Aggregate fair value of derivative instruments in a net liability position $ 56,893 Cash collateral posted — Additional cash collateral in the event credit-risk related contingent features were fully triggered (a) 32,884 (a) This amount is after counterparty netting and includes those contracts which qualify for scope exceptions, which are excluded from the derivative details above. |
Other Income and Other Expense
Other Income and Other Expense (Tables) | 12 Months Ended |
Dec. 31, 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 for 2022, 2021 and 2020 (dollars in thousands): 2022 2021 2020 Other income: Interest income $ 7,326 $ 6,726 $ 12,210 Investment gains (losses) — net — — 2,358 Debt return on Four Corners SCR deferral (Note 3) — 14,955 15,865 Debt return on Ocotillo modernization project (Note 3) — 23,366 26,121 Miscellaneous 590 53 149 Total other income $ 7,916 $ 45,100 $ 56,703 Other expense: Non-operating costs $ (18,619) $ (13,008) $ (12,400) Investment gains (losses) — net (20,537) (b) (1,367) — Miscellaneous (13,229) (a) (11,021) (45,376) (a) Total other expense $ (52,385) $ (25,396) $ (57,776) (a) The 2022 miscellaneous amount includes donations of $7 million to the APS Foundation. The 2020 miscellaneous amount includes donations of approximately $10 million to the APS Foundation and approximately $25.2 million related to the CCT plan. See Note 3. (b) The 2022 investment loss is primarily related to an impairment write-off of BCE’s Clear Creek wind farm investment. See Note 10. The following table provides detail of APS’s other income and other expense for 2022, 2021 and 2020 (dollars in thousands): 2022 2021 2020 Other income: Interest income $ 5,332 $ 4,692 $ 9,621 Debt return on Four Corners SCR deferral (Note 3) — 14,955 15,865 Debt return on Ocotillo modernization project (Note 3) — 23,366 26,121 Miscellaneous 556 40 148 Total other income $ 5,888 $ 43,053 $ 51,755 Other expense: Non-operating costs $ (15,579) $ (10,080) $ (10,659) Miscellaneous (10,529) (a) (8,817) (43,035) (a) Total other expense $ (26,108) $ (18,897) $ (53,694) (a) The 2022 miscellaneous amount includes donations of $7 million to the APS Foundation. The 2020 miscellaneous amount includes donations of approximately $10 million to the APS Foundation and approximately $25.2 million related to the CCT plan. See Note 3. |
Palo Verde Sale Leaseback Var_2
Palo Verde Sale Leaseback Variable Interest Entities (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Variable Interest Entities [Abstract] | |
Schedule of Amounts relating to the VIEs included in Consolidated Balance Sheets | Our Consolidated Balance Sheets include the following amounts relating to the VIEs (dollars in thousands): December 31, 2022 December 31, 2021 Palo Verde sale leaseback property, plant and equipment, net of accumulated depreciation $ 90,296 $ 94,166 Equity-Noncontrolling interests 111,229 115,260 |
Investments in Nuclear Decomm_2
Investments in Nuclear Decommissioning Trusts and Other Special Use Funds (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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): December 31, 2022 Fair Value Total Total Investment Type: Nuclear Decommissioning Trusts Other Special Use Funds Total Equity securities $ 487,240 $ 66,974 $ 554,214 $ 334,817 $ (267) Available for sale-fixed income securities 582,343 279,294 861,637 (a) 3,177 (68,795) Other 3,827 963 4,790 (b) — (29) Total $ 1,073,410 $ 347,231 $ 1,420,641 $ 337,994 $ (69,091) (a) As of December 31, 2022, the amortized cost basis of these available-for-sale investments is $927 million. (b) Represents net pending securities sales and purchases. December 31, 2021 Fair Value Total Total Investment Type: Nuclear Decommissioning Trusts Other Special Use Funds Total Equity securities $ 640,312 $ 47,570 $ 687,882 $ 451,387 $ — Available for sale-fixed income securities 682,227 309,904 992,131 (a) 24,283 (4,063) Other (27,782) 936 (26,846) (b) — — Total $ 1,294,757 $ 358,410 $ 1,653,167 $ 475,670 $ (4,063) (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. |
Schedule of Realized gains and losses and proceeds from the sale of securities by the nuclear decommissioning trust funds | The following table sets 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): Year Ended December 31, Nuclear Decommissioning Trusts Other Special Use Funds Total 2022 Realized gains $ 9,017 $ 420 $ 9,437 Realized losses (40,239) — (40,239) Proceeds from the sale of securities (a) 979,639 227,558 1,207,197 2021 Realized gains 134,610 49 134,659 Realized losses (8,431) (7) (8,438) Proceeds from the sale of securities (a) 1,457,305 263,661 1,720,966 2020 Realized gains 12,194 176 12,370 Realized losses (5,553) (15) (5,568) Proceeds from the sale of securities (a) 675,035 144,484 819,519 (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. |
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 December 31, 2022, is as follows (dollars in thousands): Nuclear Decommissioning Trusts Coal Reclamation Escrow Account Active Union Employee Medical Account Total Less than one year $ 9,422 $ 49,917 $ 38,157 $ 97,496 1 year – 5 years 181,640 36,484 143,878 362,002 5 years – 10 years 122,340 — 6,831 129,171 Greater than 10 years 268,941 4,027 — 272,968 Total $ 582,343 $ 90,428 $ 188,866 $ 861,637 |
Changes in Accumulated Other _2
Changes in Accumulated Other Comprehensive Loss (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Schedule of changes in accumulated other comprehensive loss including reclassification adjustments, by component | The following table shows the changes in Pinnacle West’s consolidated accumulated other comprehensive loss, including reclassification adjustments, net of tax, by component (dollars in thousands): Pension and Other Postretirement Benefits Derivative Instruments Total Balance at December 31, 2020 $ (60,725) $ (2,071) $ (62,796) OCI (loss) before reclassifications 2,439 1,077 3,516 Amounts reclassified from accumulated other comprehensive loss 4,401 (a) 18 (b) 4,419 Balance at December 31, 2021 (53,885) (976) (54,861) OCI (loss) before reclassifications 17,550 1,873 19,423 Amounts reclassified from accumulated other comprehensive loss 4,003 (a) — 4,003 Balance at December 31, 2022 $ (32,332) $ 897 $ (31,435) (a) These amounts primarily represent amortization of actuarial loss and are included in the computation of net periodic pension cost. See Note 7. (b) These amounts represent realized gains and losses and are included in the computation of fuel and purchased power costs and are subject to the PSA. See Note 15. The following table shows the changes in APS’s consolidated accumulated other comprehensive loss, including reclassification adjustments, net of tax, by component (dollars in thousands): Pension and Other Postretirement Benefits Derivative Instruments Total Balance at December 31, 2020 $ (40,918) $ — $ (40,918) OCI (loss) before reclassifications 2,043 (18) 2,025 Amounts reclassified from accumulated other comprehensive loss 3,995 (a) 18 (b) 4,013 Balance at December 31, 2021 (34,880) — (34,880) OCI (loss) before reclassifications 15,646 — 15,646 Amounts reclassified from accumulated other comprehensive loss 3,638 (a) — 3,638 Balance at December 31, 2022 $ (15,596) $ — $ (15,596) (a) These amounts primarily represent amortization of actuarial loss and are included in the computation of net periodic pension cost. See Note 7. (b) These amounts represent realized gains and losses and are included in the computation of fuel and purchased power costs and are subject to the PSA. See Note 15. |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Details) $ / shares in Units, $ in Millions | 1 Months Ended | 12 Months Ended | 36 Months Ended | ||
May 31, 2014 $ / kWh | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Dec. 31, 2022 USD ($) $ / shares shares | |
Approximate remaining average useful lives of utility property | |||||
Depreciation | $ 632 | $ 575 | $ 553 | ||
Depreciation rates (as a percent) | 3.03% | 2.87% | 2.84% | ||
Allowance for Funds Used During Construction | |||||
Composite rate used to calculate AFUDC (as a percent) | 5.75% | 6.75% | 6.72% | ||
Income Taxes | |||||
Percent likelihood largest tax benefit amount is realized (greater than) | 50% | ||||
Intangible Assets | |||||
Amortization expense | $ 84 | $ 80 | $ 70 | ||
Estimated amortization expense on existing intangible assets over the next five years | |||||
Estimated amortization expense, next year | 81 | $ 81 | |||
Estimated amortization expense, in two years | 60 | 60 | |||
Estimated amortization expense, in three years | 48 | 48 | |||
Estimated amortization expense, in four years | 33 | 33 | |||
Estimated amortization expense, in five years | $ 14 | $ 14 | |||
Remaining amortization period for intangible assets | 6 years | ||||
Pinnacle West | |||||
Preferred Stock | |||||
Preferred stock, shares authorized (in shares) | shares | 10,000,000 | 10,000,000 | |||
Preferred stock, shares outstanding (in shares) | shares | 0 | 0 | |||
Arizona Public Service Company | |||||
Nuclear Fuel | |||||
Charges for the permanent disposal of spent nuclear fuel (in dollars per kWh) | $ / kWh | 0.001 | ||||
Preferred Stock | |||||
Preferred stock, shares authorized (in shares) | shares | 15,535,000 | 15,535,000 | |||
Preferred stock, shares outstanding (in shares) | shares | 0 | 0 | |||
Preferred stock par or stated value per share 1 (in dollars per share) | $ / shares | $ 25 | $ 25 | |||
Preferred stock par or stated value per share 2 (in dollars per share) | $ / shares | 50 | 50 | |||
Preferred stock par or stated value per share 3 (in dollars per share) | $ / shares | $ 100 | $ 100 | |||
Minimum | |||||
Approximate remaining average useful lives of utility property | |||||
Depreciation rates (as a percent) | 1.37% | ||||
Maximum | |||||
Approximate remaining average useful lives of utility property | |||||
Depreciation rates (as a percent) | 12.15% | ||||
Investments | |||||
Ownership percentage for classification as cost method investments by El Dorado | 20% | ||||
Steam Generation | |||||
Approximate remaining average useful lives of utility property | |||||
Average useful life | 12 years | ||||
Nuclear Plant | |||||
Approximate remaining average useful lives of utility property | |||||
Average useful life | 25 years | ||||
Other Generation | |||||
Approximate remaining average useful lives of utility property | |||||
Average useful life | 18 years | ||||
Transmission | |||||
Approximate remaining average useful lives of utility property | |||||
Average useful life | 38 years | ||||
Distribution | |||||
Approximate remaining average useful lives of utility property | |||||
Average useful life | 33 years | ||||
General Plant | |||||
Approximate remaining average useful lives of utility property | |||||
Average useful life | 6 years | ||||
El Paso's Interest in Four Corners | 4CA | |||||
Utility Plant and Depreciation [Line Items] | |||||
Ownership interest acquired (as a percent) | 7% | 7% |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Summary of Property, Plant and Equipment (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Utility Plant and Depreciation [Line Items] | ||
Net | $ 14,522,268 | $ 14,184,058 |
Construction work in progress | 1,882,791 | 1,329,478 |
Intangible assets, net of accumulated amortization | 258,880 | 273,693 |
Nuclear fuel, net of accumulated amortization | 100,119 | 106,039 |
Total property, plant and equipment | 16,854,354 | 15,987,434 |
Electric Service | ||
Utility Plant and Depreciation [Line Items] | ||
Generation | 9,563,145 | 9,480,572 |
Transmission | 3,589,456 | 3,402,016 |
Distribution | 7,951,867 | 7,520,016 |
General plant | 1,347,678 | 1,286,057 |
Plant in service and held for future use | 22,452,146 | 21,688,661 |
Accumulated depreciation and amortization | (7,929,878) | (7,504,603) |
Net | 14,522,268 | 14,184,058 |
Construction work in progress | 1,882,791 | 1,329,478 |
Intangible assets, net of accumulated amortization | 258,880 | 273,693 |
Nuclear fuel, net of accumulated amortization | 100,119 | 106,039 |
Total property, plant and equipment | 16,854,354 | 15,987,434 |
Electric Service | Variable Interest Entity | ||
Utility Plant and Depreciation [Line Items] | ||
Total property, plant and equipment | $ 90,296 | $ 94,166 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash and Cash Equivalents [Line Items] | |||
Income taxes, net of refunds | $ 46,227 | $ 229 | $ (3,019) |
Interest, net of amounts capitalized | 245,271 | 227,584 | 216,951 |
Cash Flow, Noncash Investing and Financing Activities Disclosure [Abstract] | |||
Accrued capital expenditures | 114,999 | 167,733 | 113,502 |
Dividends declared but not paid | 97,895 | 95,988 | 93,531 |
Arizona Public Service Company | |||
Cash and Cash Equivalents [Line Items] | |||
Income taxes, net of refunds | 95,985 | 19,783 | 41,176 |
Interest, net of amounts capitalized | 227,159 | 217,749 | 206,328 |
Cash Flow, Noncash Investing and Financing Activities Disclosure [Abstract] | |||
Accrued capital expenditures | 116,533 | 167,657 | 113,502 |
Dividends declared but not paid | $ 97,900 | $ 96,000 | $ 93,500 |
Revenue - Schedule of Disaggreg
Revenue - Schedule of Disaggregation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | |||
Total Operating Revenues | $ 4,324,385 | $ 3,803,835 | $ 3,586,982 |
Retail Electric Service | Residential | |||
Disaggregation of Revenue [Line Items] | |||
Total Operating Revenues | 2,046,111 | 1,913,324 | 1,929,178 |
Retail Electric Service | Non-Residential | |||
Disaggregation of Revenue [Line Items] | |||
Total Operating Revenues | 1,767,616 | 1,586,940 | 1,486,098 |
Wholesale Energy Sales | |||
Disaggregation of Revenue [Line Items] | |||
Total Operating Revenues | 383,126 | 187,640 | 93,345 |
Transmission Services for Others | |||
Disaggregation of Revenue [Line Items] | |||
Total Operating Revenues | 116,628 | 99,285 | 65,859 |
Other Sources | |||
Disaggregation of Revenue [Line Items] | |||
Total Operating Revenues | $ 10,904 | $ 16,646 | $ 12,502 |
Revenue - Additional Informatio
Revenue - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | |||
Operating revenues | $ 4,324,385 | $ 3,803,835 | $ 3,586,982 |
Regulatory cost recovery revenue | 22,000 | 44,000 | 54,000 |
Retail Electric Service | Residential | |||
Disaggregation of Revenue [Line Items] | |||
Operating revenues | 2,046,111 | 1,913,324 | 1,929,178 |
Retail Electric Service | Arizona Attorney General Settlement | Residential | |||
Disaggregation of Revenue [Line Items] | |||
Operating revenues | (24,000) | ||
Electric and Transmission Service | |||
Disaggregation of Revenue [Line Items] | |||
Operating revenues | $ 4,302,000 | $ 3,760,000 | $ 3,533,000 |
Revenue - Allowance for Doubtfu
Revenue - Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |||
Allowance for doubtful accounts, balance at beginning of period | $ 25,354 | $ 19,782 | $ 8,171 |
Bad debt expense | 17,006 | 22,251 | 20,633 |
Actual write-offs | (18,582) | (16,679) | (9,022) |
Allowance for doubtful accounts, balance at end of period | $ 23,778 | $ 25,354 | $ 19,782 |
Regulatory Matters - Retail Rat
Regulatory Matters - Retail Rate Case Filing (Details) | Oct. 28, 2022 USD ($) $ / kWh | Sep. 23, 2022 MW | Jun. 30, 2022 USD ($) | Mar. 31, 2022 MW | Oct. 27, 2021 USD ($) | 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 ($) | Dec. 31, 2022 USD ($) | Apr. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Dec. 04, 2020 USD ($) | Oct. 02, 2020 USD ($) |
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% | ||||||||||||||||
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% | 9.40% | |||||||||||||||
Alternative, percentage | 0.30% | ||||||||||||||||
Increment of fair value rate, percentage | 0.80% | 0% | |||||||||||||||
ACC | Coal Community Transition Plan | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Amount funded by shareholders | $ 25,000,000 | $ 25,200,000 | |||||||||||||||
Amount funded by customers, term | 10 years | ||||||||||||||||
Amount funded by customers | $ 100,000,000 | ||||||||||||||||
ACC | Coal Community Transition Plan | 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 | ||||||||||||||||
ACC | Coal Community Transition Plan | Navajo Nation, Electrification Projects | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Amount funded by shareholders | $ 10,000,000 | $ 7,000,000 | $ 500,000 | $ 10,000,000 | |||||||||||||
Amount funded by customers | 10,000,000 | ||||||||||||||||
ACC | Coal Community Transition Plan | Navajo Nation, Transmission Revenue Sharing | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Amount funded by shareholders | $ 2,500,000 | ||||||||||||||||
ACC | Coal Community Transition Plan | Navajo County Communities, Cholla Power Plant Closure | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Amount funded by customers, term | 5 years | ||||||||||||||||
Amount funded by customers | $ 12,000,000 | ||||||||||||||||
ACC | Coal Community Transition Plan | Navajo Nation, Generation Station | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Amount funded by customers | $ 3,700,000 | ||||||||||||||||
ACC | Coal Community Transition Plan | Navajo Nation, Generation Station | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Amount funded by customers | $ 900,000 | ||||||||||||||||
ACC | Coal Community Transition Plan | Navajo Nation, Hopi Tribe | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Regulatory matters, amounts recoverable by rates | 1,000,000 | ||||||||||||||||
ACC | Coal Community Transition Plan | Navajo Nation | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Regulatory matters, amounts recoverable by rates | 3,330,000 | ||||||||||||||||
ACC | Coal Community Transition Plan | Navajo Nation, Hopi Reservation | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Regulatory matters, amounts recoverable by rates | 1,250,000 | ||||||||||||||||
ACC | Coal Community Transition Plan | Navajo County Communities | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Regulatory matters, amounts recoverable by rates | 500,000 | ||||||||||||||||
ACC | Coal Community Transition Plan | Navajo County Communities, CCT and Economic Development | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Amount funded by shareholders | 1,100,000 | ||||||||||||||||
ACC | Coal Community Transition Plan | Navajo Nation, Hopi Tribe for CCT and Economic Development | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Amount funded by shareholders | $ 1,250,000 | ||||||||||||||||
ACC | Arizona Public Service Company | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Total revenue deficiency | $ 772,000,000 | ||||||||||||||||
Proposed annual revenue increase | $ 184,000,000 | $ (86,500,000) | |||||||||||||||
ACC | Arizona Public Service Company | Retail Rate Case Filing with Arizona Corporation Commission | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Approximate percentage of increase in average residential customer bill | 13.60% | 5.40% | |||||||||||||||
Rate matter, cost base rate | $ 10,500,000,000 | $ 8,870,000,000 | |||||||||||||||
Base fuel rate (in dollars per kWh) | $ / kWh | 0.038321 | 0.030168 | |||||||||||||||
Base rate decrease, elimination of tax expense adjustment mechanism | $ 115,000,000 | ||||||||||||||||
Approximate percentage of increase in average customer bill | 5.60% | ||||||||||||||||
Funding limited income crisis bill program | $ 1,250,000 | ||||||||||||||||
Commercial customers, market pricing, threshold | MW | 140 | 280 | 200 | ||||||||||||||
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% | ||||||||||||||||
Settlement agreement, net retail base rate increase | $ 94,600,000 | ||||||||||||||||
Settlement agreement, non fuel and non depreciation base rate, increase | 87,200,000 | ||||||||||||||||
Fuel-related base rate decrease | 53,600,000 | ||||||||||||||||
Settlement agreement, base rate increase, changes in depreciation schedules | $ 61,000,000 | ||||||||||||||||
ACC | Arizona Public Service Company | Retail Rate Case Filing with Arizona Corporation Commission | Coal Community Transition Plan | Navajo Nation, Economic Development Organization | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Amount funded by customers, term | 10 years | ||||||||||||||||
Amount funded by customers | $ 50,000,000 | ||||||||||||||||
Disallowance of annual amortization percentage | 15% | ||||||||||||||||
ACC | Arizona Public Service Company | Retail Rate Case Filing with Arizona Corporation Commission | Coal Community Transition Plan | Navajo County Communities, Cholla Power Plant Closure | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Amount funded by shareholders | $ 500,000 | $ 5,000,000 | |||||||||||||||
Amount funded by shareholders, term | 60 days | 5 years | |||||||||||||||
ACC | Arizona Public Service Company | Retail Rate Case Filing with Arizona Corporation Commission | Coal Community Transition Plan | Navajo Nation, Hopi Tribe | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Amount funded by shareholders | $ 1,000,000 | $ 1,675,000 | |||||||||||||||
Amount not recoverable | 215,500,000 | ||||||||||||||||
ACC | Arizona Public Service Company | Retail Rate Case Filing with Arizona Corporation Commission | Coal Community Transition Plan | Navajo Nation | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Amount funded by shareholders | $ 10,000,000 | ||||||||||||||||
Amount funded by shareholders, term | 3 years | ||||||||||||||||
ACC | Arizona Public Service Company | Retail Rate Case Filing with Arizona Corporation Commission | Coal Community Transition Plan | Navajo Nation, Hopi Reservation | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Amount funded by shareholders | $ 1,250,000 | ||||||||||||||||
ACC | Arizona Public Service Company | Retail Rate Case Filing with Arizona Corporation Commission | Coal Community Transition Plan | Navajo Nation Reservation | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Revenue increase (decrease) | 4,800,000 | ||||||||||||||||
Amount funded by shareholders | $ 1,250,000 | ||||||||||||||||
Minimum | ACC | Arizona Public Service Company | |||||||||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||||||||
Annual increase in retail base rates | $ 460,000,000 | $ 69,000,000 |
Regulatory Matters - Capital St
Regulatory Matters - Capital Structure and Costs of Capital (Details) - Arizona Public Service Company | Oct. 28, 2022 | Oct. 31, 2019 |
Cost of Capital | ||
Long-term debt | 3.85% | 4.10% |
Common stock equity | 10.25% | 10.15% |
Weighted-average cost of capital | 7.17% | 7.41% |
Retail Rate Case Filing with Arizona Corporation Commission | ||
Capital Structure | ||
Common stock equity | 51.93% | 54.70% |
Retail Rate Case Filing with Arizona Corporation Commission | ACC | ||
Capital Structure | ||
Long-term debt | 48.07% | 45.30% |
Regulatory Matters - Cost Recov
Regulatory Matters - Cost Recovery Mechanisms (Details) | 1 Months Ended | 12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
Feb. 23, 2023 USD ($) $ / MWh | Feb. 01, 2023 USD ($) $ / kWh | Oct. 31, 2022 USD ($) | Sep. 23, 2022 MW | Jul. 12, 2022 USD ($) $ / kWh | Jun. 01, 2022 USD ($) | Mar. 31, 2022 MW | Feb. 15, 2022 USD ($) | Feb. 01, 2022 USD ($) $ / KWH_Kilowatt_hour $ / kWh | Nov. 01, 2021 $ / kWh | Oct. 01, 2021 $ / 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 MW | Oct. 29, 2019 USD ($) | May 01, 2019 $ / kWh | Apr. 10, 2019 | Aug. 13, 2018 USD ($) | Nov. 20, 2017 USD ($) | Sep. 01, 2017 | Mar. 31, 2021 | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) program MW | Dec. 31, 2017 $ / kWh | Dec. 31, 2017 $ / KWH_Kilowatt_hour | Nov. 30, 2022 USD ($) | Jul. 01, 2022 USD ($) | Apr. 18, 2022 USD ($) | Dec. 17, 2021 USD ($) | Dec. 09, 2021 USD ($) | Oct. 28, 2021 agreement | Jul. 01, 2021 USD ($) | Jul. 01, 2020 USD ($) | May 15, 2020 USD ($) | May 05, 2020 USD ($) | Dec. 31, 2019 USD ($) | Jul. 01, 2019 USD ($) | Mar. 15, 2019 agreement | |
Change in regulatory asset | |||||||||||||||||||||||||||||||||||||||||||||||||
Deferred fuel and purchased power costs — current period | $ 291,992,000 | $ 256,871,000 | $ 93,651,000 | ||||||||||||||||||||||||||||||||||||||||||||||
Amounts charged to customers | (219,579,000) | (44,557,000) | 12,047,000 | ||||||||||||||||||||||||||||||||||||||||||||||
Number of customers | customer | 3,800 | 13,000 | |||||||||||||||||||||||||||||||||||||||||||||||
Inconvenience payment | $ 25 | $ 25 | |||||||||||||||||||||||||||||||||||||||||||||||
Arizona Public Service Company | |||||||||||||||||||||||||||||||||||||||||||||||||
Change in regulatory asset | |||||||||||||||||||||||||||||||||||||||||||||||||
Deferred fuel and purchased power costs — current period | 291,992,000 | 256,871,000 | 93,651,000 | ||||||||||||||||||||||||||||||||||||||||||||||
Amounts charged to customers | $ (219,579,000) | (44,557,000) | $ 12,047,000 | ||||||||||||||||||||||||||||||||||||||||||||||
Demand side management funds | $ 36,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
Customer credits | 43,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
Customer credits, additional funds | 7,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
Percentage increase under PSA effective for first billing cycle beginning April 2021 | 50% | ||||||||||||||||||||||||||||||||||||||||||||||||
Remaining percentage increase under PSA effective for first billing cycle beginning November 2021 | 50% | ||||||||||||||||||||||||||||||||||||||||||||||||
Arizona Public Service Company | 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 | ||||||||||||||||||||||||||||||||||||||||||||||||
Arizona Public Service Company | Damage from Fire, Explosion or Other Hazard | |||||||||||||||||||||||||||||||||||||||||||||||||
Change in regulatory asset | |||||||||||||||||||||||||||||||||||||||||||||||||
Past due balance threshold qualifying for payment extension | $ 75 | ||||||||||||||||||||||||||||||||||||||||||||||||
ACC | Arizona Public Service Company | |||||||||||||||||||||||||||||||||||||||||||||||||
Settlement Agreement | |||||||||||||||||||||||||||||||||||||||||||||||||
Program term | 18 years | ||||||||||||||||||||||||||||||||||||||||||||||||
Change in regulatory asset | |||||||||||||||||||||||||||||||||||||||||||||||||
Public utilities, requested rate increase (decrease), income tax amount | $ (184,000,000) | $ 86,500,000 | |||||||||||||||||||||||||||||||||||||||||||||||
Requested rate increase (decrease), deferred taxes amortization, period | 28 years 6 months | ||||||||||||||||||||||||||||||||||||||||||||||||
Public utilities, requested rate increase (decrease), amount, one-time bill credit | $ 64,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
Public utilities, requested rate increase (decrease), amount, one-time bill credit, additional benefit | $ 39,500,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
Number of public utility programs | program | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||
Solar power capacity | MW | 80 | ||||||||||||||||||||||||||||||||||||||||||||||||
Arizona Renewable Energy Standard and Tariff | ACC | Arizona Public Service Company | |||||||||||||||||||||||||||||||||||||||||||||||||
Settlement Agreement | |||||||||||||||||||||||||||||||||||||||||||||||||
Plan term | 5 years | ||||||||||||||||||||||||||||||||||||||||||||||||
Arizona Renewable Energy Standard and Tariff 2018 | ACC | Arizona Public Service Company | |||||||||||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||||||
Arizona Renewable Energy Standard and Tariff 2018 | ACC | Arizona Public Service Company | Minimum | |||||||||||||||||||||||||||||||||||||||||||||||||
Change in regulatory asset | |||||||||||||||||||||||||||||||||||||||||||||||||
Authorized spending in capital costs | $ 20,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
Arizona Renewable Energy Standard and Tariff 2018 | ACC | Arizona Public Service Company | Maximum | |||||||||||||||||||||||||||||||||||||||||||||||||
Change in regulatory asset | |||||||||||||||||||||||||||||||||||||||||||||||||
Authorized spending in capital costs | $ 30,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
Arizona Renewable Energy Standard and Tariff 2018 | ACC | Arizona Public Service Company | Solar Communities | |||||||||||||||||||||||||||||||||||||||||||||||||
Settlement Agreement | |||||||||||||||||||||||||||||||||||||||||||||||||
Program term | 3 years | ||||||||||||||||||||||||||||||||||||||||||||||||
Arizona Renewable Energy Standard and Tariff 2018 | ACC | Arizona Public Service Company | Solar Communities | Minimum | |||||||||||||||||||||||||||||||||||||||||||||||||
Settlement Agreement | |||||||||||||||||||||||||||||||||||||||||||||||||
Required annual capital investment | $ 10,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
Arizona Renewable Energy Standard and Tariff 2018 | ACC | Arizona Public Service Company | Solar Communities | Maximum | |||||||||||||||||||||||||||||||||||||||||||||||||
Settlement Agreement | |||||||||||||||||||||||||||||||||||||||||||||||||
Required annual capital investment | $ 15,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
Power Supply Adjustor (PSA) | ACC | Arizona Public Service Company | |||||||||||||||||||||||||||||||||||||||||||||||||
Change in regulatory asset | |||||||||||||||||||||||||||||||||||||||||||||||||
Beginning balance | $ 388,148,000 | 175,835,000 | |||||||||||||||||||||||||||||||||||||||||||||||
Deferred fuel and purchased power costs — current period | 291,992,000 | 256,871,000 | |||||||||||||||||||||||||||||||||||||||||||||||
Amounts charged to customers | (219,579,000) | (44,558,000) | |||||||||||||||||||||||||||||||||||||||||||||||
Ending balance | $ 460,561,000 | $ 388,148,000 | $ 175,835,000 | ||||||||||||||||||||||||||||||||||||||||||||||
PSA rate (in dollars per kWh) | $ / kWh | 0.007544 | 0.003544 | 0.001544 | 0.003544 | (0.000456) | ||||||||||||||||||||||||||||||||||||||||||||
Forward component Of PSA rate1 (in dollars per kWh) | $ / kWh | (0.004842) | (0.004444) | (0.004444) | 0.003434 | (0.002086) | ||||||||||||||||||||||||||||||||||||||||||||
Historical component Of PSA rate1 (in dollars per kWh) | 0.012386 | 0.007988 | 0.005988 | 0.000110 | 0.001630 | ||||||||||||||||||||||||||||||||||||||||||||
Fuel and purchased power costs above annual cap | $ 456,000,000 | $ 215,900,000 | |||||||||||||||||||||||||||||||||||||||||||||||
Power Supply Adjustor (PSA) | ACC | Arizona Public Service Company | Subsequent Event | |||||||||||||||||||||||||||||||||||||||||||||||||
Change in regulatory asset | |||||||||||||||||||||||||||||||||||||||||||||||||
PSA rate (in dollars per kWh) | 0.019074 | 0.006 | |||||||||||||||||||||||||||||||||||||||||||||||
Period to reduce balancing account | 24 months | ||||||||||||||||||||||||||||||||||||||||||||||||
Reporting threshold of balancing account | $ 500,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
Power Supply Adjustor (PSA) | ACC | Arizona Public Service Company | Cost Recovery Mechanisms | |||||||||||||||||||||||||||||||||||||||||||||||||
Change in regulatory asset | |||||||||||||||||||||||||||||||||||||||||||||||||
Maximum increase decrease in PSA rate (in dollars per kWh) | $ / kWh | 0.004 | ||||||||||||||||||||||||||||||||||||||||||||||||
PSA rate In prior years1 (in dollars per kWh) | $ / kWh | (0.004) | (0.004) | 0.002115 | ||||||||||||||||||||||||||||||||||||||||||||||
Number of agreements | agreement | 3 | 2 | |||||||||||||||||||||||||||||||||||||||||||||||
Retail Rate Case Filing with Arizona Corporation Commission | Arizona Public Service Company | Maximum | |||||||||||||||||||||||||||||||||||||||||||||||||
Change in regulatory asset | |||||||||||||||||||||||||||||||||||||||||||||||||
Fixed costs recoverable per power lost (in dollars per kWh) | $ / KWH_Kilowatt_hour | 2.68 | ||||||||||||||||||||||||||||||||||||||||||||||||
Retail Rate Case Filing with Arizona Corporation Commission | ACC | Arizona Public Service Company | |||||||||||||||||||||||||||||||||||||||||||||||||
Change in regulatory asset | |||||||||||||||||||||||||||||||||||||||||||||||||
Commercial customers, market pricing, threshold | MW | 140 | 280 | 200 | ||||||||||||||||||||||||||||||||||||||||||||||
Demand Side Management Adjustor Charge 2020 | ACC | Arizona Public Service Company | |||||||||||||||||||||||||||||||||||||||||||||||||
Settlement Agreement | |||||||||||||||||||||||||||||||||||||||||||||||||
Amount of proposed budget | $ 51,900,000 | $ 51,900,000 | |||||||||||||||||||||||||||||||||||||||||||||||
Demand Side Management Adjustor Charge 2021 | ACC | Arizona Public Service Company | |||||||||||||||||||||||||||||||||||||||||||||||||
Settlement Agreement | |||||||||||||||||||||||||||||||||||||||||||||||||
Amount of proposed budget | $ 63,700,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
Demand Side Management Adjustor Charge 2022 | ACC | Arizona Public Service Company | |||||||||||||||||||||||||||||||||||||||||||||||||
Settlement Agreement | |||||||||||||||||||||||||||||||||||||||||||||||||
Amount of proposed budget | $ 78,400,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
Change in regulatory asset | |||||||||||||||||||||||||||||||||||||||||||||||||
Rate matter, increase (decrease) in proposed budget | $ 14,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
Demand Side Management Adjustor Charge 2023 | ACC | Arizona Public Service Company | |||||||||||||||||||||||||||||||||||||||||||||||||
Settlement Agreement | |||||||||||||||||||||||||||||||||||||||||||||||||
Amount of proposed budget | $ 88,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
Environmental Improvement Surcharge | FERC | Arizona Public Service Company | |||||||||||||||||||||||||||||||||||||||||||||||||
Change in regulatory asset | |||||||||||||||||||||||||||||||||||||||||||||||||
Rate matters, environmental surcharge cap rate1 (in dollars per kWh) | $ / KWH_Kilowatt_hour | 0.0005 | ||||||||||||||||||||||||||||||||||||||||||||||||
Environmental Improvement Surcharge | FERC | Arizona Public Service Company | Subsequent Event | |||||||||||||||||||||||||||||||||||||||||||||||||
Change in regulatory asset | |||||||||||||||||||||||||||||||||||||||||||||||||
Rate matters, increase (decrease) In cost recovery | $ 14,700,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
Rate matters, increase (decrease) In cost recovery, excess Of annual amount | $ 3,300,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
Environmental Improvement Surcharge | FERC | Arizona Public Service Company | Minimum | |||||||||||||||||||||||||||||||||||||||||||||||||
Change in regulatory asset | |||||||||||||||||||||||||||||||||||||||||||||||||
Rate matters, environmental surcharge cap rate1, amount | $ 13,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
Environmental Improvement Surcharge | FERC | Arizona Public Service Company | Maximum | |||||||||||||||||||||||||||||||||||||||||||||||||
Change in regulatory asset | |||||||||||||||||||||||||||||||||||||||||||||||||
Rate matters, environmental surcharge cap rate1, amount | $ 15,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
Transmission rates, transmission cost adjustor and other transmission matters | FERC | Arizona Public Service Company | |||||||||||||||||||||||||||||||||||||||||||||||||
Change in regulatory asset | |||||||||||||||||||||||||||||||||||||||||||||||||
Rate matters, increase (decrease) In cost recovery | $ 33,000,000 | $ 4,000,000 | $ (6,100,000) | ||||||||||||||||||||||||||||||||||||||||||||||
Rate matters, increase (decrease) in cost recovery, wholesale customer rates | 6,400,000 | 3,200,000 | (4,800,000) | ||||||||||||||||||||||||||||||||||||||||||||||
Rate matters, increase (decrease) in cost recovery, retail customer rates | 26,600,000 | 7,200,000 | (10,900,000) | ||||||||||||||||||||||||||||||||||||||||||||||
Rate matters, increase (decrease) In retail revenue requirements | $ 2,400,000 | $ 28,400,000 | $ 7,400,000 | ||||||||||||||||||||||||||||||||||||||||||||||
Lost Fixed Cost Recovery Mechanism | Arizona Public Service Company | |||||||||||||||||||||||||||||||||||||||||||||||||
Change in regulatory asset | |||||||||||||||||||||||||||||||||||||||||||||||||
Fixed costs recoverable per power lost (in dollars per kWh) | 0.025 | 2.56 | |||||||||||||||||||||||||||||||||||||||||||||||
Rate matter cap percentage of retail revenue | 1% | ||||||||||||||||||||||||||||||||||||||||||||||||
Amount of adjustment approved 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) | ||||||||||||||||||||||||||||||||||||||||||||||
Net Metering | ACC | Arizona Public Service Company | |||||||||||||||||||||||||||||||||||||||||||||||||
Change in regulatory asset | |||||||||||||||||||||||||||||||||||||||||||||||||
Rate matters, cost of service, resource comparison proxy method, maximum annual percentage decrease | 10% | 10% | |||||||||||||||||||||||||||||||||||||||||||||||
Rate matters, cost of service for interconnected dg system customers, grandfathered period | 20 years | ||||||||||||||||||||||||||||||||||||||||||||||||
Rate matters, cost of service for new customers, guaranteed export price period | 10 years | ||||||||||||||||||||||||||||||||||||||||||||||||
Rate matter, request second-year energy price for exported energy1 (in dollars per kwh) | $ / kWh | 0.0846 | 0.094 | 0.094 | 0.105 |
Regulatory Matters - Four Corne
Regulatory Matters - Four Corners, Cholla and Navajo Plant (Details) - Arizona Public Service Company - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | |||
Nov. 02, 2021 | Sep. 30, 2018 | Apr. 30, 2018 | Dec. 31, 2022 | Aug. 02, 2021 | |
Coal Community Transition Plan | Navajo Nation, Economic Development Organization | Retail Rate Case Filing with Arizona Corporation Commission | ACC | |||||
Acquisition | |||||
Disallowance of annual amortization percentage | 15% | ||||
Retired power plant costs | |||||
Acquisition | |||||
Net book value | $ 37.2 | ||||
Navajo Plant | |||||
Acquisition | |||||
Net book value | 52.6 | ||||
Navajo Plant, Coal Reclamation Regulatory Asset | |||||
Acquisition | |||||
Net book value | 13.9 | ||||
SCE | Four Corners Units 4 and 5 | |||||
Acquisition | |||||
Settlement agreement, ACC approved rate adjustment, annualized customer impact | $ 58.5 | $ 67.5 | |||
Disallowance of plant investments | $ 194 | ||||
Cost deferrals | $ 215.5 | ||||
Amount not recoverable | $ 154.4 |
Regulatory Matters - Schedule o
Regulatory Matters - Schedule of Regulatory Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Detail of regulatory assets | ||
Total noncurrent regulatory assets | $ 1,822,100 | $ 1,711,511 |
Less: current regulatory assets | 538,879 | 518,524 |
Total noncurrent regulatory assets | 1,283,221 | 1,192,987 |
Pension | ||
Detail of regulatory assets | ||
Total noncurrent regulatory assets | 637,656 | 509,751 |
Deferred fuel and purchased power | ||
Detail of regulatory assets | ||
Total noncurrent regulatory assets | 460,561 | 388,148 |
Income taxes — AFUDC equity | ||
Detail of regulatory assets | ||
Total noncurrent regulatory assets | 179,631 | 172,393 |
Ocotillo deferral | ||
Detail of regulatory assets | ||
Total noncurrent regulatory assets | 138,143 | 147,650 |
Retired power plant costs | ||
Detail of regulatory assets | ||
Total noncurrent regulatory assets | 98,692 | 114,841 |
SCR deferral | ||
Detail of regulatory assets | ||
Total noncurrent regulatory assets | 97,624 | 105,771 |
Deferred property taxes | ||
Detail of regulatory assets | ||
Total noncurrent regulatory assets | 41,057 | 49,626 |
Deferred compensation | ||
Detail of regulatory assets | ||
Total noncurrent regulatory assets | 33,660 | 33,997 |
Income taxes — investment tax credit basis adjustment | ||
Detail of regulatory assets | ||
Total noncurrent regulatory assets | 23,977 | 24,768 |
Palo Verde VIEs (Note 17) | ||
Detail of regulatory assets | ||
Total noncurrent regulatory assets | 20,933 | 21,094 |
Active union medical trust | ||
Detail of regulatory assets | ||
Total noncurrent regulatory assets | 18,226 | 1,175 |
Four Corners cost deferral | ||
Detail of regulatory assets | ||
Total noncurrent regulatory assets | 15,999 | 24,075 |
Navajo coal reclamation | ||
Detail of regulatory assets | ||
Total noncurrent regulatory assets | 13,862 | 16,840 |
Lost fixed cost recovery | ||
Detail of regulatory assets | ||
Total noncurrent regulatory assets | 9,547 | 63,889 |
Loss on reacquired debt | ||
Detail of regulatory assets | ||
Total noncurrent regulatory assets | 9,468 | 11,020 |
Mead-Phoenix transmission line — contributions in aid of construction | ||
Detail of regulatory assets | ||
Total noncurrent regulatory assets | 9,048 | 9,380 |
Tax expense adjustor mechanism | ||
Detail of regulatory assets | ||
Total noncurrent regulatory assets | 5,845 | 6,501 |
Other | ||
Detail of regulatory assets | ||
Total noncurrent regulatory assets | $ 8,171 | $ 10,592 |
Regulatory Matters - Schedule_2
Regulatory Matters - Schedule of Regulatory Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Detail of regulatory liabilities | ||
Total regulatory liabilities | $ 2,333,351 | $ 2,795,484 |
Less: current regulatory liabilities | 271,575 | 296,271 |
Total noncurrent regulatory liabilities | 2,061,776 | 2,499,213 |
Asset retirement obligations | ||
Detail of regulatory liabilities | ||
Total regulatory liabilities | 354,002 | 614,683 |
Other postretirement benefits | ||
Detail of regulatory liabilities | ||
Total regulatory liabilities | 270,604 | 374,816 |
Removal costs | ||
Detail of regulatory liabilities | ||
Total regulatory liabilities | 106,889 | 119,580 |
Deferred Fuel and Purchased Power MTM Costs [Member] | ||
Detail of regulatory liabilities | ||
Total regulatory liabilities | 96,367 | 107,601 |
Income taxes — change in rates | ||
Detail of regulatory liabilities | ||
Total regulatory liabilities | 64,806 | 67,678 |
Four Corners coal reclamation | ||
Detail of regulatory liabilities | ||
Total regulatory liabilities | 52,592 | 55,392 |
Income taxes — deferred investment tax credit | ||
Detail of regulatory liabilities | ||
Total regulatory liabilities | 48,035 | 49,601 |
Spent nuclear fuel | ||
Detail of regulatory liabilities | ||
Total regulatory liabilities | 39,217 | 45,282 |
Renewable energy program | ||
Detail of regulatory liabilities | ||
Total regulatory liabilities | 35,720 | 38,640 |
FERC transmission true up | ||
Detail of regulatory liabilities | ||
Total regulatory liabilities | 22,895 | 34,303 |
Property tax deferral | ||
Detail of regulatory liabilities | ||
Total regulatory liabilities | 15,521 | 20,192 |
Sundance maintenance | ||
Detail of regulatory liabilities | ||
Total regulatory liabilities | 16,893 | 13,797 |
Demand side management | ||
Detail of regulatory liabilities | ||
Total regulatory liabilities | 8,461 | 5,417 |
Tax expense adjustor mechanism | ||
Detail of regulatory liabilities | ||
Total regulatory liabilities | 4,835 | 4,835 |
Other | ||
Detail of regulatory liabilities | ||
Total regulatory liabilities | 3,092 | 2,103 |
ACC | Excess deferred income taxes - ACC - Tax Cuts and Jobs Act | ||
Detail of regulatory liabilities | ||
Total regulatory liabilities | 971,545 | 1,012,448 |
FERC | Excess deferred income taxes - ACC - Tax Cuts and Jobs Act | ||
Detail of regulatory liabilities | ||
Total regulatory liabilities | $ 221,877 | $ 229,116 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Income Taxes | |
Income tax expense attributable to non controlling interests | $ 0 |
Interest expense to be received on the underpayment of income taxes | 1 |
Increase (decrease) in deferred income taxes due to regulation adoption | 5 |
Arizona Public Service Company | |
Income Taxes | |
Increase (decrease) in deferred income taxes due to regulation adoption | 5 |
State | |
Income Taxes | |
State credit carryforwards net of federal benefit | 43 |
State | Arizona Public Service Company | |
Income Taxes | |
State credit carryforwards net of federal benefit | $ 19 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Tabular reconciliation of the total amounts of unrecognized tax benefits, excluding interest and penalties, at the beginning and end of the year | |||
Total unrecognized tax benefits, beginning of the year | $ 45,086 | $ 45,655 | $ 43,435 |
Additions for tax positions of the current year | 1,399 | 3,305 | 3,418 |
Additions for tax positions of prior years | 2,069 | 1,449 | 1,431 |
Reductions for tax positions of prior years for: | |||
Changes in judgment | (3,495) | (2,659) | (1,965) |
Settlements with taxing authorities | 0 | 0 | 0 |
Lapses of applicable statute of limitations | (1,962) | (2,664) | (664) |
Total unrecognized tax benefits, end of the year | 43,097 | 45,086 | 45,655 |
Arizona Public Service Company | |||
Tabular reconciliation of the total amounts of unrecognized tax benefits, excluding interest and penalties, at the beginning and end of the year | |||
Total unrecognized tax benefits, beginning of the year | 45,086 | 45,655 | 43,435 |
Additions for tax positions of the current year | 1,399 | 3,305 | 3,418 |
Additions for tax positions of prior years | 2,069 | 1,449 | 1,431 |
Reductions for tax positions of prior years for: | |||
Changes in judgment | (3,495) | (2,659) | (1,965) |
Settlements with taxing authorities | 0 | 0 | 0 |
Lapses of applicable statute of limitations | (1,962) | (2,664) | (664) |
Total unrecognized tax benefits, end of the year | $ 43,097 | $ 45,086 | $ 45,655 |
Income Taxes - Summary of Unrec
Income Taxes - Summary of Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax [Line Items] | |||
Tax positions, that if recognized, would decrease our effective tax rate | $ 28,246 | $ 26,300 | $ 25,714 |
Unrecognized tax benefit interest expense/(benefit) recognized | (139) | (535) | 266 |
Unrecognized tax benefit interest accrued | 1,181 | 1,320 | 1,855 |
Arizona Public Service Company | |||
Income Tax [Line Items] | |||
Tax positions, that if recognized, would decrease our effective tax rate | 28,246 | 26,300 | 25,714 |
Unrecognized tax benefit interest expense/(benefit) recognized | (139) | (535) | 266 |
Unrecognized tax benefit interest accrued | $ 1,181 | $ 1,320 | $ 1,855 |
Income Taxes - Components of In
Income Taxes - Components of Income Tax Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Current: | |||
Federal | $ 35,617 | $ (5,041) | $ 11,869 |
State | 1,950 | 2,458 | 1,932 |
Total current | 37,567 | (2,583) | 13,801 |
Deferred: | |||
Federal | 23,693 | 95,327 | 53,398 |
State | 13,567 | 17,342 | 10,974 |
Total deferred | 37,260 | 112,669 | 64,372 |
Income tax expense/(benefit) | 74,827 | 110,086 | 78,173 |
Arizona Public Service Company | |||
Current: | |||
Federal | 103,349 | 1,514 | 57,299 |
State | 161 | (11) | 99 |
Total current | 103,510 | 1,503 | 57,398 |
Deferred: | |||
Federal | (31,860) | 101,175 | 15,122 |
State | 19,150 | 22,875 | 16,244 |
Total deferred | (12,710) | 124,050 | 31,366 |
Income tax expense/(benefit) | $ 90,800 | $ 125,553 | $ 88,764 |
Income Taxes - Effective Tax Ra
Income Taxes - Effective Tax Rate Reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Reconciliation Increases Reductions in Tax Expense [Abstract] | |||
Federal income tax expense at statutory rate | $ 120,887 | $ 156,666 | $ 136,127 |
State income tax net of federal income tax benefit | 17,740 | 22,656 | 19,146 |
State income tax credits net of federal income tax benefit | (5,482) | (7,015) | (8,951) |
Net operating loss carryback tax benefit | 0 | (5,915) | 0 |
Excess deferred income taxes — Tax Cuts and Jobs Act | (36,241) | (36,558) | (50,543) |
Allowance for equity funds used during construction (see Note 1) | (4,629) | (4,180) | (2,747) |
Palo Verde VIE noncontrolling interest (see Note 17) | (3,617) | (3,617) | (4,094) |
Investment tax credit amortization | (5,608) | (7,620) | (7,510) |
Other federal income tax credits | (10,867) | (6,976) | (4,616) |
Other | 2,644 | 2,645 | 1,361 |
Income tax expense/(benefit) | 74,827 | 110,086 | 78,173 |
Arizona Public Service Company | |||
Income Tax Reconciliation Increases Reductions in Tax Expense [Abstract] | |||
Federal income tax expense at statutory rate | 132,920 | 162,762 | 142,020 |
State income tax net of federal income tax benefit | 19,000 | 23,339 | 20,124 |
State income tax credits net of federal income tax benefit | (3,744) | (5,277) | (7,213) |
Net operating loss carryback tax benefit | 0 | 0 | 0 |
Excess deferred income taxes — Tax Cuts and Jobs Act | (36,241) | (36,558) | (50,543) |
Allowance for equity funds used during construction (see Note 1) | (4,629) | (4,180) | (2,747) |
Palo Verde VIE noncontrolling interest (see Note 17) | (3,617) | (3,617) | (4,094) |
Investment tax credit amortization | (5,608) | (7,620) | (7,510) |
Other federal income tax credits | (7,721) | (3,912) | (3,035) |
Other | 440 | 616 | 1,762 |
Income tax expense/(benefit) | $ 90,800 | $ 125,553 | $ 88,764 |
Income Taxes - Components of De
Income Taxes - Components of Deferred Income Tax Liability (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
DEFERRED TAX ASSETS | ||
Risk management activities | $ 8,826 | $ 677 |
Regulatory liabilities: | ||
Excess deferred income taxes — Tax Cuts and Jobs Act | 295,014 | 306,915 |
Asset retirement obligation and removal costs | 107,104 | 174,952 |
Unamortized investment tax credits | 48,035 | 49,601 |
Other postretirement benefits | 66,893 | 92,654 |
Other | 62,915 | 65,815 |
Operating lease liabilities | 184,030 | 204,890 |
Pension liabilities | 33,674 | 42,136 |
Coal reclamation liabilities | 44,312 | 43,165 |
Renewable energy incentives | 19,948 | 22,646 |
Credit and loss carryforwards | 37,647 | 57,077 |
Other | 72,605 | 74,184 |
Total deferred tax assets | 981,003 | 1,134,712 |
DEFERRED TAX LIABILITIES | ||
Plant-related | (2,518,164) | (2,570,613) |
Risk management activities | (32,648) | (27,276) |
Pension and other postretirement assets | (96,845) | (133,624) |
Other special use funds | (57,572) | (64,610) |
Operating lease right-of-use assets | (184,030) | (204,890) |
Regulatory assets: | ||
Allowance for equity funds used during construction | (44,405) | (42,616) |
Deferred fuel and purchased power | (114,232) | (96,033) |
Pension benefits | (157,629) | (126,010) |
Retired power plant costs | (24,397) | (28,389) |
Other | (103,023) | (123,902) |
Other | (32,479) | (28,611) |
Total deferred tax liabilities | (3,365,424) | (3,446,574) |
Deferred income taxes — net | (2,384,421) | (2,311,862) |
Arizona Public Service Company | ||
DEFERRED TAX ASSETS | ||
Risk management activities | 8,826 | 677 |
Regulatory liabilities: | ||
Excess deferred income taxes — Tax Cuts and Jobs Act | 295,014 | 306,915 |
Asset retirement obligation and removal costs | 107,104 | 174,952 |
Unamortized investment tax credits | 48,035 | 49,601 |
Other postretirement benefits | 66,893 | 92,654 |
Other | 62,915 | 65,815 |
Operating lease liabilities | 182,663 | 204,378 |
Pension liabilities | 30,436 | 37,814 |
Coal reclamation liabilities | 44,312 | 43,165 |
Renewable energy incentives | 19,948 | 22,646 |
Credit and loss carryforwards | 13,654 | 18,902 |
Other | 72,605 | 74,184 |
Total deferred tax assets | 952,405 | 1,091,703 |
DEFERRED TAX LIABILITIES | ||
Plant-related | (2,518,164) | (2,570,613) |
Risk management activities | (32,648) | (27,276) |
Pension and other postretirement assets | (96,196) | (132,769) |
Other special use funds | (57,572) | (64,610) |
Operating lease right-of-use assets | (182,663) | (204,378) |
Regulatory assets: | ||
Allowance for equity funds used during construction | (44,405) | (42,616) |
Deferred fuel and purchased power | (114,232) | (96,033) |
Pension benefits | (157,629) | (126,010) |
Retired power plant costs | (24,397) | (28,389) |
Other | (103,023) | (123,902) |
Other | (7,123) | (6,808) |
Total deferred tax liabilities | (3,338,052) | (3,423,404) |
Deferred income taxes — net | $ (2,385,647) | $ (2,331,701) |
Lines of Credit and Short-Ter_3
Lines of Credit and Short-Term Borrowings - Schedule of Credit Facilities (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Pinnacle West | ||
Lines of Credit and Short-Term Borrowings | ||
Commitment fees (as a percent) | 0.175% | 0.175% |
Arizona Public Service Company | ||
Lines of Credit and Short-Term Borrowings | ||
Commitment fees (as a percent) | 0.125% | 0.125% |
Revolving credit facility | ||
Lines of Credit and Short-Term Borrowings | ||
Commitments under Credit Facilities | $ 1,200,000 | $ 1,200,000 |
Outstanding Commercial Paper, Term Loan and Revolving Credit Facility Borrowings | (340,720) | (292,000) |
Amount of Credit Facilities Available | 859,280 | 908,000 |
Revolving credit facility | Pinnacle West | ||
Lines of Credit and Short-Term Borrowings | ||
Commitments under Credit Facilities | 200,000 | 200,000 |
Outstanding Commercial Paper, Term Loan and Revolving Credit Facility Borrowings | (15,720) | (13,300) |
Amount of Credit Facilities Available | 184,280 | 186,700 |
Revolving credit facility | Arizona Public Service Company | ||
Lines of Credit and Short-Term Borrowings | ||
Commitments under Credit Facilities | 1,000,000 | 1,000,000 |
Outstanding Commercial Paper, Term Loan and Revolving Credit Facility Borrowings | (325,000) | (278,700) |
Amount of Credit Facilities Available | $ 675,000 | $ 721,300 |
Lines of Credit and Short-Ter_4
Lines of Credit and Short-Term Borrowings - Additional Information (Details) $ in Thousands | Dec. 31, 2022 USD ($) Facility | Dec. 31, 2021 USD ($) | Dec. 17, 2020 USD ($) |
Arizona Public Service Company | ACC | |||
Debt Provisions | |||
Percentage of APS's capitalization used in calculation of short-term debt authorization | 7% | ||
Required amount to be used in purchases of natural gas and power which is used in calculation of short-term debt authorization | $ 500,000 | ||
Revolving credit facility | |||
Lines of Credit and Short-Term Borrowings | |||
Commitments under Credit Facilities | $ 1,200,000 | $ 1,200,000 | |
Long-term line of credit | 340,720 | 292,000 | |
Revolving credit facility | Arizona Public Service Company | |||
Lines of Credit and Short-Term Borrowings | |||
Commitments under Credit Facilities | 1,000,000 | 1,000,000 | |
Long-term line of credit | 325,000 | 278,700 | |
Revolving credit facility | Revolving credit facility maturing May 2026 | Arizona Public Service Company | |||
Lines of Credit and Short-Term Borrowings | |||
Commitments under Credit Facilities | 500,000 | ||
Maximum borrowing capacity on credit facility upon satisfaction of certain conditions and consent of lenders | 1,400,000 | ||
Long-term line of credit | $ 0 | ||
Number of credit facilities | Facility | 2 | ||
Revolving credit facility | Revolving credit facility maturing May 2026, facility two | Arizona Public Service Company | |||
Lines of Credit and Short-Term Borrowings | |||
Maximum borrowing capacity on credit facility upon satisfaction of certain conditions and consent of lenders | $ 700,000 | ||
Revolving credit facility | Revolving credit facility maturing May 2026, facility one | Arizona Public Service Company | |||
Lines of Credit and Short-Term Borrowings | |||
Maximum borrowing capacity on credit facility upon satisfaction of certain conditions and consent of lenders | 700,000 | ||
Letter of Credit | Arizona Public Service Company | |||
Lines of Credit and Short-Term Borrowings | |||
Outstanding letters of credit | 10,000 | ||
Letter of Credit | Revolving credit facility maturing May 2026 | Arizona Public Service Company | |||
Lines of Credit and Short-Term Borrowings | |||
Outstanding letters of credit | 0 | ||
Commercial paper | Arizona Public Service Company | |||
Lines of Credit and Short-Term Borrowings | |||
Maximum commercial paper support available under credit facility | 750,000 | ||
Commercial paper | Revolving credit facility maturing May 2026 | Arizona Public Service Company | |||
Lines of Credit and Short-Term Borrowings | |||
Commercial paper | 325,000 | ||
Pinnacle West | Revolving credit facility | |||
Lines of Credit and Short-Term Borrowings | |||
Commitments under Credit Facilities | 200,000 | 200,000 | |
Long-term line of credit | 15,720 | $ 13,300 | |
Pinnacle West | Revolving credit facility | Revolving credit facility maturing May 2026 | |||
Lines of Credit and Short-Term Borrowings | |||
Commitments under Credit Facilities | 200,000 | ||
Maximum borrowing capacity on credit facility upon satisfaction of certain conditions and consent of lenders | 300,000 | ||
Long-term line of credit | 0 | ||
Pinnacle West | Letter of Credit | Revolving credit facility maturing May 2026 | |||
Lines of Credit and Short-Term Borrowings | |||
Outstanding letters of credit | 0 | ||
Pinnacle West | Commercial paper | Revolving credit facility maturing May 2026 | |||
Lines of Credit and Short-Term Borrowings | |||
Commercial paper | $ 16,000 |
Long-Term Debt and Liquidity _3
Long-Term Debt and Liquidity Matters - Components of Long-Term Debt (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Long-Term Debt and Liquidity Matters [Line Items] | ||
Total long-term debt | $ 7,791,971 | $ 7,063,735 |
TOTAL LONG-TERM DEBT LESS CURRENT MATURITIES | 7,741,286 | 6,913,735 |
Pinnacle West | ||
Long-Term Debt and Liquidity Matters [Line Items] | ||
Gross long-term debt | 7,844,660 | |
Unamortized discount | (25) | (34) |
Unamortized debt issuance cost | (2,083) | (2,924) |
Total long-term debt | 947,892 | 797,042 |
Less current maturities | 0 | 150,000 |
Total long-term debt less current maturities | 947,892 | 647,042 |
TOTAL LONG-TERM DEBT LESS CURRENT MATURITIES | 947,892 | 647,139 |
Arizona Public Service Company | ||
Long-Term Debt and Liquidity Matters [Line Items] | ||
Gross long-term debt | 6,843,975 | |
Unamortized discount | (14,548) | (14,995) |
Unamortized premium | 12,368 | 13,575 |
Unamortized debt issuance cost | (48,266) | (47,862) |
Total long-term debt | 6,793,529 | 6,266,693 |
Less current maturities | 0 | 0 |
Total long-term debt less current maturities | 6,793,529 | 6,266,693 |
TOTAL LONG-TERM DEBT LESS CURRENT MATURITIES | 6,793,529 | 6,266,693 |
Bright Canyon Energy Corporation | ||
Long-Term Debt and Liquidity Matters [Line Items] | ||
Gross long-term debt | 50,685 | |
Los Alamitos equity bridge loan | 27,575 | 0 |
Los Alamitos construction facility | 23,110 | 0 |
Unamortized debt issuance cost | (135) | 0 |
Total long-term debt | 50,550 | 0 |
Less current maturities | 50,685 | 0 |
Total long-term debt less current maturities | (135) | 0 |
Pollution Control Bonds - Variable | Arizona Public Service Company | ||
Long-Term Debt and Liquidity Matters [Line Items] | ||
Gross long-term debt | $ 163,975 | $ 35,975 |
Weighted-average interest rate (as a percent) | 3.96% | 0.22% |
Total Pollution Control Bonds | Arizona Public Service Company | ||
Long-Term Debt and Liquidity Matters [Line Items] | ||
Gross long-term debt | $ 163,975 | $ 35,975 |
Senior Unsecured Notes | Pinnacle West | ||
Long-Term Debt and Liquidity Matters [Line Items] | ||
Gross long-term debt | $ 500,000 | 500,000 |
Interest rate (as a percent) | 1.30% | |
Senior Unsecured Notes | Arizona Public Service Company | ||
Long-Term Debt and Liquidity Matters [Line Items] | ||
Gross long-term debt | $ 6,680,000 | 6,280,000 |
Senior Unsecured Notes | Arizona Public Service Company | Minimum | ||
Long-Term Debt and Liquidity Matters [Line Items] | ||
Interest rate (as a percent) | 2.20% | |
Senior Unsecured Notes | Arizona Public Service Company | Maximum | ||
Long-Term Debt and Liquidity Matters [Line Items] | ||
Interest rate (as a percent) | 6.88% | |
Term Loan | Pinnacle West | ||
Long-Term Debt and Liquidity Matters [Line Items] | ||
Term loans | $ 450,000 | $ 300,000 |
Term Loan | Arizona Public Service Company | ||
Long-Term Debt and Liquidity Matters [Line Items] | ||
Weighted-average interest rate (as a percent) | 5.10% | 0.81% |
Variable Rate Construction Facility | Bright Canyon Energy Corporation | ||
Long-Term Debt and Liquidity Matters [Line Items] | ||
Weighted-average interest rate (as a percent) | 5.71% | |
Bridge Loan | Bright Canyon Energy Corporation | ||
Long-Term Debt and Liquidity Matters [Line Items] | ||
Weighted-average interest rate (as a percent) | 5.18% |
Long-Term Debt and Liquidity _4
Long-Term Debt and Liquidity Matters - Future Principal Payments (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Arizona Public Service Company | |
Principal payments due on long-term debt | |
2023 | $ 0 |
2024 | 250,000 |
2025 | 300,000 |
2026 | 250,000 |
2027 | 300,000 |
Thereafter | 5,743,975 |
Total | 6,843,975 |
Bright Canyon Energy Corporation | |
Principal payments due on long-term debt | |
2023 | 50,685 |
2024 | 0 |
2025 | 0 |
2026 | 0 |
2027 | 0 |
Thereafter | 0 |
Total | 50,685 |
Pinnacle West | |
Principal payments due on long-term debt | |
2023 | 50,685 |
2024 | 700,000 |
2025 | 800,000 |
2026 | 250,000 |
2027 | 300,000 |
Thereafter | 5,743,975 |
Total | $ 7,844,660 |
Long-Term Debt and Liquidity _5
Long-Term Debt and Liquidity Matters - Fair Value of Long-Term Debt (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Estimated fair value of long-term debt, including current maturities | ||
Carrying Amount | $ 7,791,971 | $ 7,063,735 |
Fair Value | 6,585,701 | 7,726,354 |
Arizona Public Service Company | ||
Estimated fair value of long-term debt, including current maturities | ||
Carrying Amount | 6,793,529 | 6,266,693 |
Fair Value | 5,629,491 | 6,933,619 |
Bright Canyon Energy Corporation | ||
Estimated fair value of long-term debt, including current maturities | ||
Carrying Amount | 50,550 | 0 |
Fair Value | 50,685 | 0 |
Pinnacle West | ||
Estimated fair value of long-term debt, including current maturities | ||
Carrying Amount | 947,892 | 797,042 |
Fair Value | $ 905,525 | $ 792,735 |
Long-Term Debt and Liquidity _6
Long-Term Debt and Liquidity Matters - Additional Information (Details) $ in Thousands | 12 Months Ended | ||||||||||||
Jan. 06, 2023 USD ($) | Sep. 15, 2022 USD ($) | Feb. 11, 2022 USD ($) MW | Jan. 06, 2022 USD ($) | Dec. 21, 2021 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Dec. 16, 2022 USD ($) | Nov. 08, 2022 USD ($) | Dec. 23, 2020 USD ($) | Dec. 17, 2020 USD ($) | Dec. 16, 2020 USD ($) | |
Long-Term Debt and Liquidity Matters [Line Items] | |||||||||||||
Issuance of long-term debt | $ 875,537 | $ 746,999 | $ 1,596,672 | ||||||||||
Maximum | |||||||||||||
Debt Provisions | |||||||||||||
Ratio of consolidated debt to consolidated capitalization (as a percent) | 65% | ||||||||||||
Arizona Public Service Company | |||||||||||||
Long-Term Debt and Liquidity Matters [Line Items] | |||||||||||||
Issuance of long-term debt | $ 524,852 | 446,999 | 1,099,722 | ||||||||||
Equity infusion from Pinnacle West | $ 150,000 | ||||||||||||
Debt Provisions | |||||||||||||
Actual ratio of consolidated debt to total consolidated capitalization required to be maintained as per the debt covenant (as a percent) | 50.80% | ||||||||||||
Arizona Public Service Company | Subsequent Event | |||||||||||||
Long-Term Debt and Liquidity Matters [Line Items] | |||||||||||||
Equity infusion from Pinnacle West | $ 150,000 | ||||||||||||
Arizona Public Service Company | Pollution Control Revenue Bonds | |||||||||||||
Long-Term Debt and Liquidity Matters [Line Items] | |||||||||||||
Notes issued | $ 32,000 | ||||||||||||
Issuance of long-term debt | $ 128,000 | ||||||||||||
Arizona Public Service Company | ACC | |||||||||||||
Debt Provisions | |||||||||||||
Long term debt authorization | $ 8,000,000 | $ 7,500,000 | |||||||||||
Bright Canyon Energy Corporation | |||||||||||||
Long-Term Debt and Liquidity Matters [Line Items] | |||||||||||||
Public Utilities, Solar and Battery Storage Capacity | MW | 31 | ||||||||||||
Unsecured Senior Notes Maturing 2032 | Arizona Public Service Company | Senior Notes | |||||||||||||
Long-Term Debt and Liquidity Matters [Line Items] | |||||||||||||
Notes issued | $ 400,000 | ||||||||||||
Interest rate (as a percent) | 6.35% | ||||||||||||
Term Loan | Non-Recourse Construction Term Loan Facility | Bright Canyon Energy Corporation | |||||||||||||
Long-Term Debt and Liquidity Matters [Line Items] | |||||||||||||
Notes issued | $ 42,000 | ||||||||||||
Long-term line of credit | $ 23,000 | ||||||||||||
Bridge Loan | Equity Bridge Loan Facility | Bright Canyon Energy Corporation | |||||||||||||
Long-Term Debt and Liquidity Matters [Line Items] | |||||||||||||
Notes issued | 33,000 | ||||||||||||
Issuance of long-term debt | 28,000 | ||||||||||||
Letter of Credit | Arizona Public Service Company | |||||||||||||
Long-Term Debt and Liquidity Matters [Line Items] | |||||||||||||
Outstanding letters of credit | 10,000 | ||||||||||||
Letter of Credit | Bright Canyon Energy Corporation | |||||||||||||
Long-Term Debt and Liquidity Matters [Line Items] | |||||||||||||
Notes issued | 5,000 | ||||||||||||
Letter of Credit | Revolving credit facility maturing May 2026 | Arizona Public Service Company | |||||||||||||
Long-Term Debt and Liquidity Matters [Line Items] | |||||||||||||
Outstanding letters of credit | 0 | ||||||||||||
Letter of Credit | Revolving credit facility maturing May 2026 | Bright Canyon Energy Corporation | |||||||||||||
Long-Term Debt and Liquidity Matters [Line Items] | |||||||||||||
Outstanding letters of credit | 2,500 | ||||||||||||
Pinnacle West | |||||||||||||
Long-Term Debt and Liquidity Matters [Line Items] | |||||||||||||
Issuance of long-term debt | $ 300,000 | $ 300,000 | $ 496,950 | ||||||||||
Debt Provisions | |||||||||||||
Actual ratio of consolidated debt to total consolidated capitalization required to be maintained as per the debt covenant (as a percent) | 57.70% | ||||||||||||
Pinnacle West | Term Loan | |||||||||||||
Long-Term Debt and Liquidity Matters [Line Items] | |||||||||||||
Notes issued | $ 175,000 | $ 150,000 | |||||||||||
Pinnacle West | Term Loan | Term Loan Maturing 2024 | |||||||||||||
Long-Term Debt and Liquidity Matters [Line Items] | |||||||||||||
Notes issued | $ 450,000 | ||||||||||||
Issuance of long-term debt | $ 300,000 | $ 150,000 | |||||||||||
Pinnacle West | Bridge Loan | Bright Canyon Energy Corporation | |||||||||||||
Long-Term Debt and Liquidity Matters [Line Items] | |||||||||||||
Debt guarantee | $ 42,000 | ||||||||||||
Pinnacle West | Letter of Credit | Revolving credit facility maturing May 2026 | |||||||||||||
Long-Term Debt and Liquidity Matters [Line Items] | |||||||||||||
Outstanding letters of credit | $ 0 |
Retirement Plans and Other Po_3
Retirement Plans and Other Postretirement Benefits - Additional Information (Details) - USD ($) | 12 Months Ended | ||||
Jan. 04, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Defined Benefit Plan Disclosure [Line Items] | |||||
Ultimate healthcare cost trend rate (pre-65 participants) | 4.75% | 4.75% | 4.75% | ||
Initial and ultimate healthcare cost trend rate (post-65 participants) (a) | 2% | 2% | |||
Funded percentage (more than) | 100% | 100% | |||
Partnership funding commitments, contribution amount (up to) | $ 50,000,000 | ||||
Partnership funding commitments, funded amount | 38,000,000 | ||||
Other Benefits | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Transfer to active union medical account | $ 106,000,000 | $ 0 | $ 105,852,000 | ||
Expected long-term return on plan assets for next fiscal year (as a percent) | 6.95% | ||||
Contributions | |||||
Employer contributions | $ 0 | 0 | |||
Minimum contributions under MAP-21 | |||||
Retiree medical cost reimbursement | 26,000,000 | 24,000,000 | $ 26,000,000 | ||
Pension Benefits | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Transfer to active union medical account | $ (106,000,000) | $ 0 | 0 | ||
Expected long-term return on plan assets for next fiscal year (as a percent) | 6.70% | ||||
Contributions | |||||
Employer contributions | $ 0 | 100,000,000 | 100,000,000 | ||
Minimum contributions under MAP-21 | |||||
Minimum contributions under MAP-21 | 0 | ||||
Pinnacle West | |||||
Minimum contributions under MAP-21 | |||||
Expenses recorded for the defined contribution savings plan | $ 12,000,000 | $ 12,000,000 | $ 11,000,000 | ||
Arizona Public Service Company | |||||
Minimum contributions under MAP-21 | |||||
APS's employees share of total cost of the plans (as a percent) | 99% |
Retirement Plans and Other Po_4
Retirement Plans and Other Postretirement Benefits - Net Periodic Benefit Costs and Portion including Portion Charged to Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Net periodic benefit costs and the portion of these costs charged to expense | |||
Portion of cost/(benefit) charged to expense | $ (98,487) | $ (112,541) | $ (56,341) |
Pension Benefits | |||
Net periodic benefit costs and the portion of these costs charged to expense | |||
Service cost-benefits earned during the period | 55,473 | 61,236 | 56,233 |
Interest cost on benefit obligation | 107,492 | 98,566 | 118,567 |
Expected return on plan assets | (185,775) | (202,628) | (187,443) |
Prior service credit | 0 | 0 | 0 |
Net actuarial (gain)/loss | 17,515 | 15,948 | 34,612 |
Net periodic benefit cost/(benefit) | (5,295) | (26,878) | 21,969 |
Portion of cost/(benefit) charged to expense | (16,431) | (32,743) | 3,386 |
Other Benefits | |||
Net periodic benefit costs and the portion of these costs charged to expense | |||
Service cost-benefits earned during the period | 16,470 | 17,796 | 22,236 |
Interest cost on benefit obligation | 17,491 | 16,513 | 25,857 |
Expected return on plan assets | (46,042) | (41,444) | (40,077) |
Prior service credit | (37,789) | (37,705) | (37,575) |
Net actuarial (gain)/loss | (12,835) | (10,093) | 0 |
Net periodic benefit cost/(benefit) | (62,705) | (54,933) | (29,559) |
Portion of cost/(benefit) charged to expense | $ (45,042) | $ (38,657) | $ (20,966) |
Retirement Plans and Other Po_5
Retirement Plans and Other Postretirement Benefits - Changes Benefit Obligations and Funded Status (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Jan. 04, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Pension Benefits | ||||
Change in Benefit Obligation | ||||
Benefit obligation at the beginning of the period | $ 3,716,824 | $ 3,902,867 | ||
Service cost | 55,473 | 61,236 | $ 56,233 | |
Interest cost | 107,492 | 98,566 | 118,567 | |
Benefit payments | (212,565) | (207,928) | ||
Actuarial (gain) loss | (857,695) | (137,917) | ||
Benefit obligation at the end of the period | 2,809,529 | 3,716,824 | 3,902,867 | |
Change in Plan Assets | ||||
Balance at the beginning of the period | 3,812,041 | 3,886,544 | ||
Actual return on plan assets | (787,874) | 18,169 | ||
Employer contributions | 0 | 100,000 | 100,000 | |
Benefit payments | (194,682) | (192,672) | ||
Transfer to active union medical account | $ 106,000 | 0 | 0 | |
Balance at the end of the period | 2,829,485 | 3,812,041 | 3,886,544 | |
Funded Status at the end of the period | 19,956 | 95,217 | ||
Other Benefits | ||||
Change in Benefit Obligation | ||||
Benefit obligation at the beginning of the period | 591,841 | 624,034 | ||
Service cost | 16,470 | 17,796 | 22,236 | |
Interest cost | 17,491 | 16,513 | 25,857 | |
Benefit payments | (30,913) | (31,280) | ||
Actuarial (gain) loss | (185,428) | (35,222) | ||
Benefit obligation at the end of the period | 409,461 | 591,841 | 624,034 | |
Change in Plan Assets | ||||
Balance at the beginning of the period | 872,435 | 961,165 | ||
Actual return on plan assets | (193,807) | 41,432 | ||
Employer contributions | 0 | 0 | ||
Benefit payments | (26,341) | (24,310) | ||
Transfer to active union medical account | $ (106,000) | 0 | (105,852) | |
Balance at the end of the period | 652,287 | 872,435 | $ 961,165 | |
Funded Status at the end of the period | $ 242,826 | $ 280,594 |
Retirement Plans and Other Po_6
Retirement Plans and Other Postretirement Benefits - Projected Benefit Obligation for Pension Plans (Details) - Pension Benefits - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Projected benefit obligation and the accumulated benefit obligation for pension plans with an accumulated obligation in excess of plan assets | ||
Accumulated benefit obligation | $ 126,759 | $ 161,086 |
Fair value of plan assets | 0 | 0 |
Projected benefit obligation | 133,818 | 169,912 |
Fair value of plan assets | $ 0 | $ 0 |
Retirement Plans and Other Po_7
Retirement Plans and Other Postretirement Benefits - Amounts Recognized on the Consolidated Balance Sheets (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Amounts recognized on the Consolidated Balance Sheets | ||
Noncurrent asset | $ 396,599 | $ 545,723 |
Pension Benefits | ||
Amounts recognized on the Consolidated Balance Sheets | ||
Noncurrent asset | 153,773 | 265,129 |
Current liability | (17,531) | (17,047) |
Noncurrent liability | (116,286) | (152,865) |
Net amount recognized (funded status) | 19,956 | 95,217 |
Other Benefits | ||
Amounts recognized on the Consolidated Balance Sheets | ||
Noncurrent asset | 242,826 | 280,594 |
Current liability | 0 | 0 |
Noncurrent liability | 0 | 0 |
Net amount recognized (funded status) | $ 242,826 | $ 280,594 |
Retirement Plans and Other Po_8
Retirement Plans and Other Postretirement Benefits - Impact to Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Pension Benefits | ||
Details related to accumulated other comprehensive loss | ||
Net actuarial loss (gain) | $ 681,335 | $ 582,895 |
Prior service credit | 0 | 0 |
APS’s portion recorded as a regulatory (asset) liability | (637,656) | (509,751) |
Income tax expense (benefit) | (10,797) | (18,081) |
Accumulated other comprehensive loss (gain) | 32,882 | 55,063 |
Other Benefits | ||
Details related to accumulated other comprehensive loss | ||
Net actuarial loss (gain) | (195,095) | (262,352) |
Prior service credit | (76,843) | (114,632) |
APS’s portion recorded as a regulatory (asset) liability | 270,604 | 374,816 |
Income tax expense (benefit) | 784 | 990 |
Accumulated other comprehensive loss (gain) | $ (550) | $ (1,178) |
Retirement Plans and Other Po_9
Retirement Plans and Other Postretirement Benefits - Weighted-Average Assumptions for Pensions and Other Benefits (Details) | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Weighted-average assumptions used to determine benefit obligations | ||||
Rate of compensation increase | 4.57% | 4% | ||
Initial healthcare cost trend rate (pre-65 participants) | 6.50% | 6% | ||
Ultimate healthcare cost trend rate (pre-65 participants) | 4.75% | 4.75% | 4.75% | |
Number of years to ultimate trend rate (pre-65 participants) | 6 years | 4 years | ||
Initial and ultimate healthcare cost trend rate (post-65 participants) (a) | 2% | 2% | ||
Interest crediting rate – cash balance pension plans | 4.50% | 4.50% | ||
Weighted-average assumptions used to determine net periodic benefit costs | ||||
Initial healthcare cost trend rate (pre-65 participants) | 6% | 6.50% | 7% | |
Ultimate healthcare cost trend rate (pre-65 participants) | 4.75% | 4.75% | 4.75% | |
Number of years to ultimate trend rate (pre-65 participants) | 3 years | 4 years | 5 years | |
Initial and ultimate healthcare cost trend rate (post-65 participants) (a) | 2% | 2% | 4.75% | |
Interest crediting rate – cash balance pension plans | 4.50% | 4.50% | 4.50% | |
Pension Benefits | ||||
Weighted-average assumptions used to determine benefit obligations | ||||
Discount rate (as a percent) | 5.56% | 2.92% | ||
Weighted-average assumptions used to determine net periodic benefit costs | ||||
Discount rate (as a percent) | 2.92% | 2.53% | 3.30% | |
Rate of compensation increase | 4% | 4% | 4% | |
Expected long-term return on plan assets (as a percent) | 5% | 5.30% | 5.75% | |
Other Benefits | ||||
Weighted-average assumptions used to determine benefit obligations | ||||
Discount rate (as a percent) | 5.58% | 2.98% | ||
Weighted-average assumptions used to determine net periodic benefit costs | ||||
Discount rate (as a percent) | 2.98% | 2.63% | 3.42% | |
Expected long-term return on plan assets (as a percent) | 5.35% | 4.90% | 4.85% |
Retirement Plans and Other P_10
Retirement Plans and Other Postretirement Benefits - Asset Allocation (Details) | Dec. 31, 2022 |
Pension Benefits | |
Defined Benefit Plan Disclosure [Line Items] | |
Target Allocation | 100% |
Actual Allocation | 100% |
Pension Benefits | Long-term fixed income assets | |
Defined Benefit Plan Disclosure [Line Items] | |
Target Allocation | 80% |
Actual Allocation | 78% |
Pension Benefits | Return-seeking assets | |
Defined Benefit Plan Disclosure [Line Items] | |
Target Allocation | 20% |
Actual Allocation | 22% |
Target Allocation | 20% |
Pension Benefits | Equities in US and other developed markets | |
Defined Benefit Plan Disclosure [Line Items] | |
Target Allocation | 12% |
Pension Benefits | Equities in emerging markets | |
Defined Benefit Plan Disclosure [Line Items] | |
Target Allocation | 4% |
Pension Benefits | Alternative investments | |
Defined Benefit Plan Disclosure [Line Items] | |
Target Allocation | 4% |
Other Benefits | |
Defined Benefit Plan Disclosure [Line Items] | |
Actual Allocation | 100% |
Other Benefits | Long-term fixed income assets | |
Defined Benefit Plan Disclosure [Line Items] | |
Actual Allocation | 62% |
Other Benefits | Return-seeking assets | |
Defined Benefit Plan Disclosure [Line Items] | |
Actual Allocation | 38% |
Retirement Plans and Other P_11
Retirement Plans and Other Postretirement Benefits - Fair Value of Pinnacle West's Pension Plan (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Pension Benefits | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Other | $ 429,391 | $ 530,171 | |
Fair value of plan assets | 2,829,485 | 3,812,041 | $ 3,886,544 |
Pension Benefits | Level 1 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 893,285 | 1,350,751 | |
Pension Benefits | Level 2 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 1,506,809 | 1,931,119 | |
Other Benefits | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Other | 106,356 | 126,552 | |
Fair value of plan assets | 652,287 | 872,435 | $ 961,165 |
Other Benefits | Level 1 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 371,731 | 491,981 | |
Other Benefits | Level 2 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 174,200 | 253,902 | |
Cash and cash equivalents | Pension Benefits | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Other | 0 | 0 | |
Fair value of plan assets | 1,252 | 821 | |
Cash and cash equivalents | Pension Benefits | Level 1 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 1,252 | 821 | |
Cash and cash equivalents | Pension Benefits | Level 2 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 0 | 0 | |
Cash and cash equivalents | Other Benefits | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Other | 0 | 0 | |
Fair value of plan assets | 204 | 121 | |
Cash and cash equivalents | Other Benefits | Level 1 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 204 | 121 | |
Cash and cash equivalents | Other Benefits | Level 2 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 0 | 0 | |
Corporate | Pension Benefits | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Other | 0 | 0 | |
Fair value of plan assets | 1,374,810 | 1,765,623 | |
Corporate | Pension Benefits | Level 1 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 0 | 0 | |
Corporate | Pension Benefits | Level 2 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 1,374,810 | 1,765,623 | |
Corporate | Other Benefits | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Other | 0 | 0 | |
Fair value of plan assets | 166,879 | 244,572 | |
Corporate | Other Benefits | Level 1 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 0 | 0 | |
Corporate | Other Benefits | Level 2 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 166,879 | 244,572 | |
U.S. Treasury | Pension Benefits | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Other | 0 | 0 | |
Fair value of plan assets | 635,245 | 1,008,211 | |
U.S. Treasury | Pension Benefits | Level 1 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 635,245 | 1,008,211 | |
U.S. Treasury | Pension Benefits | Level 2 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 0 | 0 | |
U.S. Treasury | Other Benefits | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Other | 0 | 0 | |
Fair value of plan assets | 221,936 | 287,057 | |
U.S. Treasury | Other Benefits | Level 1 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 221,936 | 287,057 | |
U.S. Treasury | Other Benefits | Level 2 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 0 | 0 | |
Other fixed income | Pension Benefits | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Other | 0 | 0 | |
Fair value of plan assets | 131,999 | 165,496 | |
Other fixed income | Pension Benefits | Level 1 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 0 | 0 | |
Other fixed income | Pension Benefits | Level 2 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 131,999 | 165,496 | |
Other fixed income | Other Benefits | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Other | 0 | 0 | |
Fair value of plan assets | 7,321 | 9,330 | |
Other fixed income | Other Benefits | Level 1 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 0 | 0 | |
Other fixed income | Other Benefits | Level 2 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 7,321 | 9,330 | |
Common stock equities | Pension Benefits | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Other | 0 | 0 | |
Fair value of plan assets | 155,231 | 209,063 | |
Common stock equities | Pension Benefits | Level 1 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 155,231 | 209,063 | |
Common stock equities | Pension Benefits | Level 2 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 0 | 0 | |
Common stock equities | Other Benefits | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Other | 0 | 0 | |
Fair value of plan assets | 127,493 | 176,024 | |
Common stock equities | Other Benefits | Level 1 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 127,493 | 176,024 | |
Common stock equities | Other Benefits | Level 2 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 0 | 0 | |
Mutual funds | Pension Benefits | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Other | 0 | 0 | |
Fair value of plan assets | 101,557 | 132,656 | |
Mutual funds | Pension Benefits | Level 1 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 101,557 | 132,656 | |
Mutual funds | Pension Benefits | Level 2 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 0 | 0 | |
Mutual funds | Other Benefits | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Other | 0 | 0 | |
Fair value of plan assets | 18,824 | 26,262 | |
Mutual funds | Other Benefits | Level 1 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 18,824 | 26,262 | |
Mutual funds | Other Benefits | Level 2 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 0 | 0 | |
Equities | Pension Benefits | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Other | 181,912 | 255,141 | |
Fair value of plan assets | 181,912 | 255,141 | |
Equities | Pension Benefits | Level 1 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 0 | 0 | |
Equities | Pension Benefits | Level 2 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 0 | 0 | |
Equities | Other Benefits | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Other | 73,956 | 96,547 | |
Fair value of plan assets | 73,956 | 96,547 | |
Equities | Other Benefits | Level 1 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 0 | 0 | |
Equities | Other Benefits | Level 2 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 0 | 0 | |
Real estate | Pension Benefits | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Other | 174,228 | 173,197 | |
Fair value of plan assets | 174,228 | 173,197 | |
Real estate | Pension Benefits | Level 1 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 0 | 0 | |
Real estate | Pension Benefits | Level 2 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 0 | 0 | |
Real estate | Other Benefits | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Other | 23,541 | 23,851 | |
Fair value of plan assets | 23,541 | 23,851 | |
Real estate | Other Benefits | Level 1 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 0 | 0 | |
Real estate | Other Benefits | Level 2 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 0 | 0 | |
Partnerships | Pension Benefits | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Other | 13,359 | 15,730 | |
Fair value of plan assets | 13,359 | 15,730 | |
Partnerships | Pension Benefits | Level 1 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 0 | 0 | |
Partnerships | Pension Benefits | Level 2 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 0 | 0 | |
Short-term investments and other | Pension Benefits | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Other | 59,892 | 86,103 | |
Fair value of plan assets | 59,892 | 86,103 | |
Short-term investments and other | Pension Benefits | Level 1 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 0 | 0 | |
Short-term investments and other | Pension Benefits | Level 2 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 0 | 0 | |
Short-term investments and other | Other Benefits | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Other | 8,859 | 6,154 | |
Fair value of plan assets | 12,133 | 8,671 | |
Short-term investments and other | Other Benefits | Level 1 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | 3,274 | 2,517 | |
Short-term investments and other | Other Benefits | Level 2 | |||
Fair value of Pinnacle West's pension plan and other postretirement benefit plan assets, by asset category | |||
Gross fair value of plan assets | $ 0 | $ 0 |
Retirement Plans and Other P_12
Retirement Plans and Other Postretirement Benefits - Estimated Future Benefit Payments (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Pension Benefits | |
Estimated Future Benefit Payments | |
2023 | $ 240,034 |
2024 | 227,234 |
2025 | 223,813 |
2026 | 224,881 |
2027 | 221,976 |
Years 2028-2032 | 1,117,192 |
Other Benefits | |
Estimated Future Benefit Payments | |
2023 | 31,235 |
2024 | 30,865 |
2025 | 30,251 |
2026 | 30,135 |
2027 | 29,790 |
Years 2028-2032 | $ 146,725 |
Leases - Additional information
Leases - Additional information (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 USD ($) Counterparty | Jan. 31, 2023 USD ($) program | Dec. 31, 2021 USD ($) | |
Lessee, Lease, Description [Line Items] | |||
Number of lease agreements, sell and lease back | Counterparty | 3 | ||
Lease not yet commenced | $ 2,700,000 | ||
Lease not yet commenced period | 20 years | ||
Operating lease right-of-use assets (Note 8) | $ 801,688 | $ 890,057 | |
Total lease liabilities | $ 744,457 | ||
Subsequent Event | |||
Lessee, Lease, Description [Line Items] | |||
Number of purchase power operating lease agreements | program | 2 | ||
Operating lease right-of-use assets (Note 8) | $ 537,000 | ||
Total lease liabilities | $ 537,000 |
Leases - Lease costs (Details)
Leases - Lease costs (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Operating Leased Assets [Line Items] | |||
Operating Lease Cost | $ 122,062 | $ 124,260 | $ 87,376 |
Variable lease cost | 122,040 | 118,969 | 122,331 |
Short-term lease cost | 9,928 | 3,872 | 3,804 |
Purchased Power Lease Contracts | |||
Operating Leased Assets [Line Items] | |||
Operating Lease Cost | 104,001 | 105,762 | 68,883 |
Land, Property & Equipment Leases | |||
Operating Leased Assets [Line Items] | |||
Operating Lease Cost | 18,061 | 18,498 | 18,493 |
Total lease cost | $ 254,030 | $ 247,101 | $ 213,511 |
Leases - Maturity of our operat
Leases - Maturity of our operating lease liabilities (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Lessee, Lease, Description [Line Items] | |
2023 | $ 120,405 |
2024 | 115,645 |
2025 | 115,237 |
2026 | 127,223 |
2027 | 94,400 |
Thereafter | 248,359 |
Total lease commitments | 821,269 |
Less imputed interest | 76,812 |
Total lease liabilities | 744,457 |
Purchased Power Lease Contracts | |
Lessee, Lease, Description [Line Items] | |
2023 | 106,151 |
2024 | 104,315 |
2025 | 106,582 |
2026 | 120,016 |
2027 | 89,108 |
Thereafter | 210,486 |
Total lease commitments | 736,658 |
Less imputed interest | 57,682 |
Total lease liabilities | 678,976 |
Land, Property & Equipment Leases | |
Lessee, Lease, Description [Line Items] | |
2023 | 14,254 |
2024 | 11,330 |
2025 | 8,655 |
2026 | 7,207 |
2027 | 5,292 |
Thereafter | 37,873 |
Total lease commitments | 84,611 |
Less imputed interest | 19,130 |
Total lease liabilities | $ 65,481 |
Leases - Other additional infor
Leases - Other additional information related to operating lease liabilities (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Leases [Abstract] | |||
Cash paid for amounts included in the measurement of lease liabilities - operating cash flows | $ 118,463 | $ 116,661 | $ 75,097 |
Right-of-use operating lease assets obtained in exchange for operating lease liabilities | $ 16,990 | $ 500,582 | $ 441,653 |
Weighted average remaining lease term | 7 years | 8 years | |
Weighted average discount rate | 2.21% | 2.13% |
Jointly-Owned Facilities (Detai
Jointly-Owned Facilities (Details) - Arizona Public Service Company $ in Thousands | Dec. 31, 2022 USD ($) |
Palo Verde Units 1 and 3 | |
Interests in jointly-owned facilities | |
Percent Owned | 29.10% |
Plant in Service | $ 1,947,593 |
Accumulated Depreciation | 1,099,132 |
Construction Work in Progress | $ 39,933 |
Palo Verde Unit 2 | |
Interests in jointly-owned facilities | |
Percent Owned | 16.80% |
Plant in Service | $ 659,514 |
Accumulated Depreciation | 383,775 |
Construction Work in Progress | $ 14,784 |
Palo Verde Common | |
Interests in jointly-owned facilities | |
Percent Owned | 28% |
Plant in Service | $ 799,794 |
Accumulated Depreciation | 346,705 |
Construction Work in Progress | 52,631 |
Palo Verde Sale Leaseback | |
Interests in jointly-owned facilities | |
Plant in Service | 351,050 |
Accumulated Depreciation | 260,754 |
Construction Work in Progress | $ 0 |
Four Corners Generating Station | |
Interests in jointly-owned facilities | |
Percent Owned | 63% |
Plant in Service | $ 1,665,042 |
Accumulated Depreciation | 620,918 |
Construction Work in Progress | $ 46,643 |
Cholla Common Facilities | |
Interests in jointly-owned facilities | |
Percent Owned | 50.50% |
Plant in Service | $ 207,104 |
Accumulated Depreciation | 140,886 |
Construction Work in Progress | $ 2,988 |
ANPP 500kV System | |
Interests in jointly-owned facilities | |
Percent Owned | 33.40% |
Plant in Service | $ 133,887 |
Accumulated Depreciation | 55,704 |
Construction Work in Progress | $ 2,820 |
Navajo Southern System | |
Interests in jointly-owned facilities | |
Percent Owned | 26.80% |
Plant in Service | $ 90,345 |
Accumulated Depreciation | 36,929 |
Construction Work in Progress | $ 1,945 |
Palo Verde — Yuma 500kV System | |
Interests in jointly-owned facilities | |
Percent Owned | 25.40% |
Plant in Service | $ 24,026 |
Accumulated Depreciation | 7,559 |
Construction Work in Progress | $ 128 |
Four Corners Switchyards | |
Interests in jointly-owned facilities | |
Percent Owned | 61.90% |
Plant in Service | $ 73,243 |
Accumulated Depreciation | 20,350 |
Construction Work in Progress | $ 120 |
Phoenix — Mead System | |
Interests in jointly-owned facilities | |
Percent Owned | 17.10% |
Plant in Service | $ 39,705 |
Accumulated Depreciation | 20,055 |
Construction Work in Progress | $ 51 |
Palo Verde — Rudd 500kV System | |
Interests in jointly-owned facilities | |
Percent Owned | 50% |
Plant in Service | $ 95,736 |
Accumulated Depreciation | 31,118 |
Construction Work in Progress | $ 391 |
Morgan — Pinnacle Peak System | |
Interests in jointly-owned facilities | |
Percent Owned | 64.70% |
Plant in Service | $ 119,785 |
Accumulated Depreciation | 25,791 |
Construction Work in Progress | $ 96 |
Round Valley System | |
Interests in jointly-owned facilities | |
Percent Owned | 50% |
Plant in Service | $ 548 |
Accumulated Depreciation | 193 |
Construction Work in Progress | $ 0 |
Palo Verde — Morgan System | |
Interests in jointly-owned facilities | |
Percent Owned | 87.80% |
Plant in Service | $ 263,576 |
Accumulated Depreciation | 34,415 |
Construction Work in Progress | $ 1,414 |
Hassayampa — North Gila System | |
Interests in jointly-owned facilities | |
Percent Owned | 80% |
Plant in Service | $ 148,174 |
Accumulated Depreciation | 22,566 |
Construction Work in Progress | $ 3,771 |
Cholla 500kV Switchyard | |
Interests in jointly-owned facilities | |
Percent Owned | 85.70% |
Plant in Service | $ 8,100 |
Accumulated Depreciation | 2,380 |
Construction Work in Progress | $ 0 |
Saguaro 500kV Switchyard | |
Interests in jointly-owned facilities | |
Percent Owned | 60% |
Plant in Service | $ 21,656 |
Accumulated Depreciation | 13,809 |
Construction Work in Progress | $ 0 |
Kyrene — Knox System | |
Interests in jointly-owned facilities | |
Percent Owned | 50% |
Plant in Service | $ 578 |
Accumulated Depreciation | 336 |
Construction Work in Progress | $ 0 |
Agua Fria Switchyard | |
Interests in jointly-owned facilities | |
Percent Owned | 10% |
Plant in Service | $ 0 |
Accumulated Depreciation | 0 |
Construction Work in Progress | $ 32 |
Commitments and Contingencies -
Commitments and Contingencies - Palo Verde Nuclear Generating Station, Contractual Obligations and Super-Fund Related Matters (Details) $ in Thousands | 12 Months Ended | |||||
Apr. 05, 2018 Defendant plaintiff | Dec. 16, 2016 plaintiff | Aug. 06, 2013 Defendant | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Fuel and Purchased Power Commitments and Purchase Obligations [Abstract] | ||||||
Total take-or-pay commitments | $ 179,255 | $ 174,616 | ||||
Arizona Public Service Company | ||||||
Fuel and Purchased Power Commitments and Purchase Obligations [Abstract] | ||||||
2023 | 955,000 | |||||
2024 | 823,000 | |||||
2025 | 882,000 | |||||
2026 | 905,000 | |||||
2027 | 819,000 | |||||
Thereafter | 8,700,000 | |||||
Total take-or-pay commitments | 179,255 | 174,616 | ||||
Arizona Public Service Company | Coal Take-or-Pay Commitments | ||||||
Fuel and Purchased Power Commitments and Purchase Obligations [Abstract] | ||||||
2023 | 216,729 | |||||
2024 | 211,823 | |||||
2025 | 232,594 | |||||
2026 | 225,345 | |||||
2027 | 204,845 | |||||
Thereafter | 880,113 | |||||
Total take-or-pay commitments | 2,000,000 | |||||
Present value of commitments | 1,600,000 | |||||
Total purchases | 305,502 | 219,958 | $ 189,817 | |||
Arizona Public Service Company | Renewable Energy Credits | ||||||
Fuel and Purchased Power Commitments and Purchase Obligations [Abstract] | ||||||
2023 | 31,000 | |||||
2024 | 29,000 | |||||
2025 | 27,000 | |||||
2026 | 23,000 | |||||
2027 | 19,000 | |||||
Thereafter | 69,000 | |||||
Arizona Public Service Company | Coal Mine Reclamation Obligations | ||||||
Fuel and Purchased Power Commitments and Purchase Obligations [Abstract] | ||||||
2023 | 18,000 | |||||
2024 | 19,000 | |||||
2025 | 20,000 | |||||
2026 | 21,000 | |||||
2027 | 22,000 | |||||
Thereafter | 25,000 | |||||
Arizona Public Service Company | Coal Mine Reclamation Balance Sheet Obligations | ||||||
Fuel and Purchased Power Commitments and Purchase Obligations [Abstract] | ||||||
Total take-or-pay commitments | 179,000 | $ 175,000 | ||||
Arizona Public Service Company | Contaminated Groundwater Wells | ||||||
Fuel and Purchased Power Commitments and Purchase Obligations [Abstract] | ||||||
Costs related to investigation and study under Superfund site | $ 3,000 | |||||
Number of defendants against whom Roosevelt Irrigation District ("RID") filed lawsuit | Defendant | 28 | 24 | ||||
Number of plaintiffs | plaintiff | 2 | |||||
Arizona Public Service Company | Contaminated Groundwater Wells | Settled Litigation | ||||||
Fuel and Purchased Power Commitments and Purchase Obligations [Abstract] | ||||||
Number of plaintiffs | plaintiff | 2 |
Commitments and Contingencies_2
Commitments and Contingencies - Additional Information (Details) $ in Thousands | 9 Months Ended | 12 Months Ended | 108 Months Ended | ||||||||
Oct. 31, 2022 claim | Sep. 30, 2022 USD ($) | Nov. 02, 2021 USD ($) | Nov. 01, 2021 USD ($) | Feb. 22, 2021 USD ($) | Jul. 03, 2018 USD ($) | Jul. 06, 2016 | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) Trust | Jun. 30, 2020 USD ($) timePeriod claim | Feb. 11, 2022 USD ($) | |
Financial Assurances | |||||||||||
Production tax credit guarantees | $ 34,000 | ||||||||||
Arizona Public Service Company | |||||||||||
Palo Verde Nuclear Generating Station [Abstract] | |||||||||||
Maximum insurance against public liability per occurrence for a nuclear incident | 13,700,000 | ||||||||||
Maximum available nuclear liability insurance | 450,000 | ||||||||||
Remaining nuclear liability insurance through mandatory industry wide retrospective assessment program | 13,200,000 | ||||||||||
Maximum assessment per reactor for each nuclear incident | 137,600 | ||||||||||
Annual limit per incident with respect to maximum assessment | $ 20,500 | ||||||||||
Number of VIE lessor trusts | Trust | 3 | ||||||||||
Maximum potential retrospective assessment per incident of APS | $ 120,100 | ||||||||||
Annual payment limitation with respect to maximum potential retrospective assessment | 17,900 | ||||||||||
Amount of "all risk" (including nuclear hazards) insurance for property damage to, and decontamination of, property at Palo Verde | 2,800,000 | ||||||||||
Request second-year energy price for exported energy | 22,300 | ||||||||||
Collateral assurance based on rating triggers | $ 62,800 | ||||||||||
Period to provide collateral assurance based on rating triggers | 20 days | ||||||||||
Arizona Public Service Company | Contaminated Groundwater Wells | |||||||||||
Palo Verde Nuclear Generating Station [Abstract] | |||||||||||
Costs claimed | $ 21,000 | ||||||||||
Arizona Public Service Company | Pending Litigation | Contaminated Groundwater Wells | |||||||||||
Arizona Attorney General [Abstract] | |||||||||||
Settlement amount | $ 20,700 | ||||||||||
Bright Canyon Energy Corporation | Clear Creek Wind Farm | |||||||||||
BCE Matters [Abstract] | |||||||||||
Equity method investments | $ 17,100 | $ 17,100 | $ 0 | ||||||||
Impairment of equity method investments | 12,800 | ||||||||||
2017 Settlement Agreement and its Customer Education and Outreach Plan | Arizona Public Service Company | |||||||||||
Arizona Attorney General [Abstract] | |||||||||||
Settlement amount | $ 24,750 | ||||||||||
Settlement amount returned to customers | $ 24,000 | ||||||||||
Arizona Public Service Company and Palo Verde Owners vs. United States Department of Energy - Spent Nuclear Fuel and Waste Disposal | |||||||||||
Palo Verde Nuclear Generating Station [Abstract] | |||||||||||
Settlement amount, awarded to company | $ 14,300 | $ 123,900 | |||||||||
Arizona Public Service Company and Palo Verde Owners vs. United States Department of Energy - Spent Nuclear Fuel and Waste Disposal | Arizona Public Service Company | |||||||||||
Palo Verde Nuclear Generating Station [Abstract] | |||||||||||
Gain contingency, new claims filed, number | claim | 9 | 8 | |||||||||
Gain contingency, number of settlement agreement time periods | timePeriod | 8 | ||||||||||
Settlement amount, awarded to company | $ 4,200 | $ 36,000 | |||||||||
Letter of Credit | Arizona Public Service Company | |||||||||||
Financial Assurances | |||||||||||
Outstanding letters of credit | 10,000 | ||||||||||
Bridge Loan | Bright Canyon Energy Corporation | Pinnacle West | |||||||||||
Financial Assurances | |||||||||||
Debt guarantee | $ 42,000 | ||||||||||
Four Corners Units 4 and 5 | Arizona Public Service Company | SCE | |||||||||||
Four Corners SCR Cost Recovery [Abstract] | |||||||||||
Disallowance of plant investments | $ 194,000 | ||||||||||
Cost deferrals | $ 215,500 | ||||||||||
Amount not recoverable | $ 154,400 | ||||||||||
Four Corners | NTEC | |||||||||||
Environmental Matters | |||||||||||
Option to purchase, ownership interest (as a percent) | 7% | 7% | |||||||||
Payment received for coal supply agreement | $ 70,000 | ||||||||||
Financial Assurances | |||||||||||
Option to purchase, ownership interest (as a percent) | 7% | ||||||||||
Four Corners | 4CA | |||||||||||
Environmental Matters | |||||||||||
Percentage share cost of control | 7% | ||||||||||
Regional Haze Rules | Four Corners Units 4 and 5 | Arizona Public Service Company | |||||||||||
Environmental Matters | |||||||||||
Percentage share cost of control | 63% | ||||||||||
Expected environmental cost | $ 400,000 | ||||||||||
Regional Haze Rules | Four Corners Units 4 and 5 | Four Corners | Arizona Public Service Company | |||||||||||
Environmental Matters | |||||||||||
Additional expected environment cost | $ 45,000 | ||||||||||
Regional Haze Rules | Four Corners Units 4 and 5 | Natural Gas Tolling Letter of Credit | Arizona Public Service Company | |||||||||||
Environmental Matters | |||||||||||
Additional percentage share of cost of control | 7% | ||||||||||
Coal Combustion Waste | Four Corners | Arizona Public Service Company | |||||||||||
Environmental Matters | |||||||||||
Additional expected environment cost | $ 30,000 | ||||||||||
Coal Combustion Waste | Navajo Generating Station | Arizona Public Service Company | |||||||||||
Environmental Matters | |||||||||||
Additional expected environment cost | 1,000 | ||||||||||
Coal Combustion Waste | Minimum | Cholla | Arizona Public Service Company | |||||||||||
Environmental Matters | |||||||||||
Additional expected environment cost | 16,000 | ||||||||||
Coal Combustion Waste | Minimum | Cholla and Four Corners | Arizona Public Service Company | |||||||||||
Environmental Matters | |||||||||||
Additional expected environment cost | 10,000 | ||||||||||
Coal Combustion Waste | Maximum | Cholla and Four Corners | Arizona Public Service Company | |||||||||||
Environmental Matters | |||||||||||
Additional expected environment cost | 15,000 | ||||||||||
Surety Bonds Expiring in 2025 | Arizona Public Service Company | |||||||||||
Financial Assurances | |||||||||||
Surety bonds expiring, amount | $ 8,000 |
Asset Retirement Obligations (D
Asset Retirement Obligations (Details) - Arizona Public Service Company - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Change in asset retirement obligations | ||
Asset retirement obligations at the beginning of year | $ 767,382 | $ 705,083 |
Changes attributable to: | ||
Accretion expense | 41,240 | 38,437 |
Settlements | (10,860) | (4,111) |
Estimated cash flow revisions | 0 | 27,973 |
Asset retirement obligations at the end of year | $ 797,762 | 767,382 |
Cholla | ||
Asset Retirement Obligations | ||
Increase in asset retirement obligation | $ 28,000 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value of Assets and Liabilities (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
ASSETS | ||
Commodity contracts, assets | $ 132,229 | |
Commodity contracts, liabilities | (21,163) | |
Nuclear decommissioning trust | 1,073,410 | $ 1,294,757 |
Nuclear decommissioning trust, other | 476,409 | 567,266 |
Other special use fund | 347,231 | 358,410 |
Other special use funds, other | 963 | 936 |
Total assets | 1,552,870 | 1,763,556 |
Total assets, other | 456,209 | $ 563,512 |
LIABILITIES | ||
Derivative instruments, other | 15,357 | |
Derivative instruments, total | (42,446) | |
Total liabilities | (42,446) | |
Total liabilities other | $ 15,357 | |
DerivativeLiabilityStatementOfFinancialPositionExtensibleEnumerationNotDisclosedFlag | Subtotal risk management activities - derivative instruments | Subtotal risk management activities - derivative instruments |
Commodity Contracts | ||
ASSETS | ||
Commodity contracts, assets | $ 153,261 | $ 115,079 |
LIABILITIES | ||
Derivative instruments | (56,893) | (7,478) |
Derivative instruments, total | (41,537) | (4,373) |
Commodity contracts | ||
ASSETS | ||
Commodity contracts, assets | 132,098 | 110,389 |
Commodity contracts, liabilities | (21,163) | (4,690) |
LIABILITIES | ||
Derivative instruments, other | 15,357 | 3,105 |
Derivative instruments, total | (41,537) | (4,373) |
Interest rate swaps | ||
ASSETS | ||
Commodity contracts, assets | 131 | |
Commodity contracts, liabilities | 0 | |
LIABILITIES | ||
Derivative instruments, other | 0 | |
Derivative instruments, total | (909) | |
Equity securities | ||
ASSETS | ||
Nuclear decommissioning trust | 18,485 | 17,482 |
Nuclear decommissioning trust, other | 3,827 | (27,782) |
Other special use fund | 67,937 | 48,506 |
Other special use funds, other | 963 | 936 |
U.S. commingled equity funds | ||
ASSETS | ||
Nuclear decommissioning trust | 472,582 | 595,048 |
U.S. Treasury debt | ||
ASSETS | ||
Nuclear decommissioning trust | 211,923 | 240,745 |
Other special use fund | 275,267 | 298,170 |
Corporate debt | ||
ASSETS | ||
Nuclear decommissioning trust | 149,226 | 203,454 |
Mortgage-backed securities | ||
ASSETS | ||
Nuclear decommissioning trust | 147,938 | 155,574 |
Municipal bonds | ||
ASSETS | ||
Nuclear decommissioning trust | 64,881 | 72,189 |
Other special use fund | 4,027 | 11,734 |
Other fixed income | ||
ASSETS | ||
Nuclear decommissioning trust | 8,375 | 10,265 |
Level 1 | ||
ASSETS | ||
Commodity contracts, assets | 0 | |
Nuclear decommissioning trust | 226,581 | 286,009 |
Other special use fund | 342,241 | 345,740 |
Total assets | 568,822 | 631,749 |
LIABILITIES | ||
Derivative instruments | 0 | |
Total liabilities | 0 | |
Level 1 | Commodity contracts | ||
ASSETS | ||
Commodity contracts, assets | 0 | 0 |
LIABILITIES | ||
Derivative instruments | 0 | 0 |
Level 1 | Interest rate swaps | ||
ASSETS | ||
Commodity contracts, assets | 0 | |
LIABILITIES | ||
Derivative instruments | 0 | |
Level 1 | Equity securities | ||
ASSETS | ||
Nuclear decommissioning trust | 14,658 | 45,264 |
Other special use fund | 66,974 | 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 | 211,923 | 240,745 |
Other special use fund | 275,267 | 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 fund | 0 | 0 |
Level 1 | Other fixed income | ||
ASSETS | ||
Nuclear decommissioning trust | 0 | 0 |
Level 2 | ||
ASSETS | ||
Commodity contracts, assets | 127,260 | |
Nuclear decommissioning trust | 370,420 | 441,482 |
Other special use fund | 4,027 | 11,734 |
Total assets | 501,707 | 568,295 |
LIABILITIES | ||
Derivative instruments | (26,783) | |
Total liabilities | (26,783) | |
Level 2 | Commodity contracts | ||
ASSETS | ||
Commodity contracts, assets | 127,129 | 115,079 |
LIABILITIES | ||
Derivative instruments | (25,874) | (4,740) |
Level 2 | Interest rate swaps | ||
ASSETS | ||
Commodity contracts, assets | 131 | |
LIABILITIES | ||
Derivative instruments | (909) | |
Level 2 | Equity securities | ||
ASSETS | ||
Nuclear decommissioning trust | 0 | 0 |
Other special use fund | 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 fund | 0 | 0 |
Level 2 | Corporate debt | ||
ASSETS | ||
Nuclear decommissioning trust | 149,226 | 203,454 |
Level 2 | Mortgage-backed securities | ||
ASSETS | ||
Nuclear decommissioning trust | 147,938 | 155,574 |
Level 2 | Municipal bonds | ||
ASSETS | ||
Nuclear decommissioning trust | 64,881 | 72,189 |
Other special use fund | 4,027 | 11,734 |
Level 2 | Other fixed income | ||
ASSETS | ||
Nuclear decommissioning trust | 8,375 | 10,265 |
Level 3 | ||
ASSETS | ||
Commodity contracts, assets | 26,132 | |
Nuclear decommissioning trust | 0 | 0 |
Other special use fund | 0 | 0 |
Total assets | 26,132 | 0 |
LIABILITIES | ||
Derivative instruments | (31,020) | |
Total liabilities | (31,020) | |
Level 3 | Commodity contracts | ||
ASSETS | ||
Commodity contracts, assets | 26,132 | 0 |
LIABILITIES | ||
Derivative instruments | (31,020) | (2,738) |
Level 3 | Interest rate swaps | ||
ASSETS | ||
Commodity contracts, assets | 0 | |
LIABILITIES | ||
Derivative instruments | 0 | |
Level 3 | Equity securities | ||
ASSETS | ||
Nuclear decommissioning trust | 0 | 0 |
Other special use fund | 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 fund | 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 fund | 0 | 0 |
Level 3 | Other fixed income | ||
ASSETS | ||
Nuclear decommissioning trust | 0 | 0 |
Level 3 | Forward Contracts | Commodity Contracts | ||
ASSETS | ||
Total assets | 26,132 | 0 |
LIABILITIES | ||
Total liabilities | (31,020) | (2,738) |
Level 3 | Forward Contracts | Natural Gas: | Commodity Contracts | Discounted Cash Flows | ||
ASSETS | ||
Total assets | 0 | 0 |
LIABILITIES | ||
Total liabilities | (29,261) | (2,738) |
NAV | U.S. commingled equity funds | ||
ASSETS | ||
Nuclear decommissioning trust | $ 472,582 | $ 595,048 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Bright Canyon Energy Corporation | Clear Creek Wind Farm | |
Fair value of assets and liabilities that are measured at fair value on a recurring basis | |
Impairment of equity method investments | $ 12.8 |
Fair Value Measurements - Signi
Fair Value Measurements - Significant Unobservable Inputs (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 USD ($) $ / MMBTU $ / MWh | Dec. 31, 2021 USD ($) $ / MMBTU | |
Information regarding the entity's internally developed significant unobservable inputs used to value its level 3 instruments | ||
Assets | $ 1,552,870 | $ 1,763,556 |
Liabilities | 42,446 | |
Level 3 | ||
Information regarding the entity's internally developed significant unobservable inputs used to value its level 3 instruments | ||
Assets | 26,132 | 0 |
Liabilities | 31,020 | |
Level 3 | Forward Contracts | Commodity Contracts | ||
Information regarding the entity's internally developed significant unobservable inputs used to value its level 3 instruments | ||
Assets | 26,132 | 0 |
Liabilities | $ 31,020 | $ 2,738 |
Level 3 | Forward Contracts | Discounted Cash Flows | Commodity Contracts | Weighted Average | ||
Information regarding the entity's internally developed significant unobservable inputs used to value its level 3 instruments | ||
Electricity forward price (in usd per MWh) | $ / MWh | 163.92 | |
Natural gas forward price (in usd per MMBTu) | $ / MMBTU | (5.08) | (0.71) |
Level 3 | Forward Contracts | Discounted Cash Flows | Commodity Contracts | Minimum | ||
Information regarding the entity's internally developed significant unobservable inputs used to value its level 3 instruments | ||
Electricity forward price (in usd per MWh) | $ / MWh | 37.79 | |
Natural gas forward price (in usd per MMBTu) | $ / MMBTU | (11.81) | 0.76 |
Level 3 | Forward Contracts | Discounted Cash Flows | Commodity Contracts | Maximum | ||
Information regarding the entity's internally developed significant unobservable inputs used to value its level 3 instruments | ||
Electricity forward price (in usd per MWh) | $ / MWh | 310.69 | |
Natural gas forward price (in usd per MMBTu) | $ / MMBTU | 0 | 0.65 |
Level 3 | Forward Contracts | Discounted Cash Flows | Electricity: | Commodity Contracts | ||
Information regarding the entity's internally developed significant unobservable inputs used to value its level 3 instruments | ||
Assets | $ 26,132 | |
Liabilities | 1,759 | |
Level 3 | Forward Contracts | Discounted Cash Flows | Natural Gas: | Commodity Contracts | ||
Information regarding the entity's internally developed significant unobservable inputs used to value its level 3 instruments | ||
Assets | 0 | $ 0 |
Liabilities | $ 29,261 | $ 2,738 |
Fair Value Measurements - Fai_2
Fair Value Measurements - Fair value for our risk management activities (Details) - Commodity Contracts - Level 3 - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Net derivative beginning balance | $ (2,738) | $ (1,102) |
Deferred as a regulatory asset or liability | (374) | 13,827 |
Settlements | (1,123) | (15,463) |
Transfers into Level 3 from Level 2 | (846) | 0 |
Transfers from Level 3 into Level 2 | 193 | 0 |
Net derivative ending balance | (4,888) | (2,738) |
Net unrealized gains included in earnings related to instruments still held at end of period | $ 0 | $ 0 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Earnings Per Share [Abstract] | |||
Net income attributable to common shareholders | $ 483,602 | $ 618,720 | $ 550,559 |
Weighted average common shares outstanding — basic (in shares) | 113,196 | 112,910 | 112,666 |
Net effect of dilutive securities: | |||
Contingently issuable performance shares and restricted stock units (in shares) | 220 | 282 | 276 |
Weighted average common shares outstanding — diluted (in shares) | 113,416 | 113,192 | 112,942 |
Earnings per weighted-average common share outstanding | |||
Net income attributable to common shareholders - basic (in dollars per share) | $ 4.27 | $ 5.48 | $ 4.89 |
Net Income attributable to common shareholders - diluted (in dollars per share) | $ 4.26 | $ 5.47 | $ 4.87 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Details) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 USD ($) program shares | Dec. 31, 2021 USD ($) performance_criteria | Dec. 31, 2020 USD ($) | |
Stock-Based Compensation | |||
Compensation cost that has been charged against income | $ 16 | $ 18 | $ 18 |
Total income tax benefit recognized | 2 | 3 | 4 |
Total unrecognized compensation cost related to nonvested share-based compensation arrangements granted | $ 20 | ||
Expected weighted-average period of recognition of unrecognized compensation cost | 2 years | ||
Total fair value of shares vested | $ 25 | $ 22 | 22 |
Performance Share Awards | |||
Performance period | 3 years | ||
Number of unrelated performance element criteria | program | 3 | ||
Number of performance element criteria | performance_criteria | 2 | ||
Restricted Stock Units | |||
Stock-Based Compensation | |||
Share-based liabilities paid | $ 3 | $ 4 | 6 |
Cash flow effect, cash used to settle awards | $ 3 | $ 3 | $ 4 |
Restricted Stock Units, Stock Grants and Stock Units | |||
Vesting period | 4 years | ||
Percentage of cash that the participant may elect as a dividend for the first option available under the plan | 50% | ||
Percentage of stock that the participant may elect as dividend under second option of plan | 50% | ||
Performance Shares | Minimum | |||
Performance Share Awards | |||
Exact number of shares issued as a percentage of the target award | 0% | 0% | |
Performance Shares | Maximum | |||
Performance Share Awards | |||
Exact number of shares issued as a percentage of the target award | 200% | 200% | |
Officers and Key Employees | Restricted Stock Units | |||
Restricted Stock Units, Stock Grants and Stock Units | |||
Percentage of fully transferable shares of stock that the participant may elect as a deferral for the first option available under the plan | 100% | ||
Percentage of fully transferable shares of stock in that participant may receive cash | 100% | ||
Non-Officer Board of Director Member | Restricted Stock Units | |||
Restricted Stock Units, Stock Grants and Stock Units | |||
Percentage of fully transferable shares of stock that the participant may elect as a deferral for the first option available under the plan | 100% | ||
Percentage of cash that the participant may elect as a dividend for the first option available under the plan | 100% | ||
Percentage of stock that the participant may elect as dividend under second option of plan | 50% | ||
Percentage of fully transferable shares of stock that the participant may elect as a dividend equivalent deferral for the first option available under the plan | 50% | ||
2012 Plan | |||
Stock-Based Compensation | |||
Common shares available for grant (in shares) | shares | 1.3 | ||
Common shares available for issuance (in shares) | shares | 0.9 |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Restricted Stock, Stock Grants, Stock Units and Performance Shares (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Restricted Stock Units, Stock Grants, and Stock Units | |||
Stocks granted and the weighted average fair value | |||
Units granted (in shares) | 174,791 | 152,345 | 118,403 |
Weighted-average grant date fair value (in dollars per share) | $ 69.66 | $ 76.72 | $ 71.70 |
Number of granted awards to be settled in cash (in shares) | 0 | 51,074 | 45,646 |
Performance Shares | |||
Stocks granted and the weighted average fair value | |||
Units granted (in shares) | 208,736 | 161,840 | 122,830 |
Weighted-average grant date fair value (in dollars per share) | $ 77.63 | $ 82.42 | $ 104.74 |
Stock-Based Compensation - Stat
Stock-Based Compensation - Status of Nonvested Restricted Stock, Stock Grants, Stock Units and Performance Shares (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Restricted Stock Units, Stock Grants, and Stock Units | |||
Nonvested shares | |||
Balance at the beginning of the period (in shares) | 253,156 | ||
Granted (in shares) | 174,791 | 152,345 | 118,403 |
Vested (in shares) | (101,216) | ||
Forfeited (in shares) | (9,144) | ||
Balance at the end of the period (in shares) | 317,587 | 253,156 | |
Weighted-Average Grant-Date Fair Value | |||
Balance at the beginning of the period (in dollars per share) | $ 79.37 | ||
Granted (in dollars per share) | 69.66 | $ 76.72 | $ 71.70 |
Vested (in dollars per share) | 84.52 | ||
Forfeited (in dollars per share) | 76.56 | ||
Balance at the end of the period (in dollars per share) | $ 73.91 | $ 79.37 | |
Vested awards outstanding at end of year (in shares) | 78,912 | ||
Vested awards outstanding at end of year (in dollars per share) | |||
Number of nonvested awards to be settled in cash (in shares) | 69,413 | ||
Performance Shares | |||
Nonvested shares | |||
Balance at the beginning of the period (in shares) | 280,682 | ||
Granted (in shares) | 208,736 | 161,840 | 122,830 |
Vested (in shares) | (136,034) | ||
Forfeited (in shares) | (22,690) | ||
Balance at the end of the period (in shares) | 330,694 | 280,682 | |
Weighted-Average Grant-Date Fair Value | |||
Balance at the beginning of the period (in dollars per share) | $ 92.16 | ||
Granted (in dollars per share) | 77.63 | $ 82.42 | $ 104.74 |
Vested (in dollars per share) | 103.30 | ||
Forfeited (in dollars per share) | 78.29 | ||
Balance at the end of the period (in dollars per share) | $ 78.91 | $ 92.16 | |
Vested awards outstanding at end of year (in shares) | 136,034 | ||
Vested awards outstanding at end of year (in dollars per share) |
Derivative Accounting - Additio
Derivative Accounting - Additional Information (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Commodity Contracts | |
Derivative [Line Items] | |
Aggregate fair value of derivative instruments in a net liability position | $ 56,893 |
Additional collateral to counterparties for energy related non-derivative instrument contracts | 76,000 |
Interest Rate Contract | |
Derivative [Line Items] | |
Derivative, notional amount | 32,000 |
Derivative, loss on derivative | 900 |
Gain (Loss) price risk management activity | 100 |
Loss on derivative instruments, pretax | 800 |
Risk Management Assets | Credit Concentration Risk | |
Derivative [Line Items] | |
Aggregate fair value of derivative instruments in a net liability position | $ 132,000 |
Risk Management Assets | Credit Concentration Risk | Three Counterparties | |
Derivative [Line Items] | |
Concentration risk, percentage | 21% |
Arizona Public Service Company | |
Derivative [Line Items] | |
Percentage of unrealized gains and losses on certain derivatives deferred for future rate treatment before accounting treatment change | 100% |
Derivative Accounting - Outstan
Derivative Accounting - Outstanding Gross Notional Amounts Outstanding (Details) - Commodity Contracts MWh in Thousands | 12 Months Ended | |
Dec. 31, 2022 MWh Bcf | Dec. 31, 2021 MWh Bcf | |
Outstanding gross notional amount of derivatives | ||
Power | MWh | 1,197 | 0 |
Gas | Bcf | 149 | 155 |
Derivative Accounting - Gains a
Derivative Accounting - Gains and Losses from Derivative Instruments (Details) - Commodity Contracts - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Designated as Hedging Instruments | |||
Derivative Instruments in Designated Cash Flows Hedges | |||
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income on Discontinuation | $ 0 | $ 0 | $ 0 |
Fuel and purchased power | Not Designated as Hedging Instruments | |||
Derivative Instruments Not Designated as Cash Flows Hedges | |||
Net Gain (Loss) Recognized in Income | 307,287 | 216,847 | (3,178) |
Fuel and purchased power | Designated as Hedging Instruments | |||
Derivative Instruments in Designated Cash Flows Hedges | |||
Loss reclassified from accumulated other comprehensive income into income (effective portion realized) | $ 0 | $ 0 | $ (763) |
Derivative Accounting - Derivat
Derivative Accounting - Derivative Instruments in the Balance Sheet (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Assets | ||
Gross Recognized Derivatives | $ 132,229 | |
Liabilities | ||
Amounts Reported on Balance Sheets | (42,446) | |
Commodity Contracts | ||
Assets | ||
Gross Recognized Derivatives | 153,261 | $ 115,079 |
Amounts Offset | (21,191) | (4,740) |
Net Recognized Derivatives | 132,070 | 110,339 |
Other | 28 | 50 |
Amounts Reported on Balance Sheets | 132,098 | 110,389 |
Liabilities | ||
Gross Recognized Derivatives | (56,893) | (7,478) |
Amounts Offset | 21,191 | 4,740 |
Net Recognized Derivatives | (35,702) | (2,738) |
Other | (5,835) | (1,635) |
Amounts Reported on Balance Sheets | (41,537) | (4,373) |
Assets and Liabilities | ||
Gross Recognized Derivatives | 96,368 | 107,601 |
Amounts Offset | 0 | 0 |
Net Recognized Derivatives | 96,368 | 107,601 |
Other | (5,807) | (1,585) |
Amounts Reported on Balance Sheets | 90,561 | 106,016 |
Commodity Contracts | Current assets | ||
Assets | ||
Gross Recognized Derivatives | 103,484 | 66,777 |
Amounts Offset | (15,808) | (3,346) |
Net Recognized Derivatives | 87,676 | 63,431 |
Other | 28 | 50 |
Amounts Reported on Balance Sheets | 87,704 | 63,481 |
Commodity Contracts | Investments and other assets | ||
Assets | ||
Gross Recognized Derivatives | 49,777 | 48,302 |
Amounts Offset | (5,383) | (1,394) |
Net Recognized Derivatives | 44,394 | 46,908 |
Other | 0 | 0 |
Amounts Reported on Balance Sheets | 44,394 | 46,908 |
Commodity Contracts | Current liabilities | ||
Liabilities | ||
Gross Recognized Derivatives | (47,670) | (6,084) |
Amounts Offset | 15,808 | 3,346 |
Net Recognized Derivatives | (31,862) | (2,738) |
Other | (5,835) | (1,635) |
Amounts Reported on Balance Sheets | (37,697) | (4,373) |
Commodity Contracts | Deferred credits and other | ||
Liabilities | ||
Gross Recognized Derivatives | (9,223) | (1,394) |
Amounts Offset | 5,383 | 1,394 |
Net Recognized Derivatives | (3,840) | 0 |
Other | 0 | 0 |
Amounts Reported on Balance Sheets | $ (3,840) | $ 0 |
Derivative Accounting - Credit
Derivative Accounting - Credit Risk and Related Contingent Features (Details) - Commodity Contracts $ in Thousands | Dec. 31, 2022 USD ($) |
Credit Risk and Credit-Related Contingent Features | |
Aggregate fair value of derivative instruments in a net liability position | $ 56,893 |
Cash collateral posted | 0 |
Additional cash collateral in the event credit-risk related contingent features were fully triggered | $ 32,884 |
Other Income and Other Expens_2
Other Income and Other Expense (Details) - USD ($) | 12 Months Ended | ||||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Apr. 30, 2022 | Nov. 06, 2020 | |
Other income: | |||||
Interest income | $ 7,326,000 | $ 6,726,000 | $ 12,210,000 | ||
Investment gains (losses) — net | 0 | 0 | 2,358,000 | ||
Miscellaneous | 590,000 | 53,000 | 149,000 | ||
Total other income | 7,916,000 | 45,100,000 | 56,703,000 | ||
Other expense: | |||||
Non-operating costs | (18,619,000) | (13,008,000) | (12,400,000) | ||
Investment gains (losses) - net | (20,537,000) | (1,367,000) | |||
Miscellaneous | (13,229,000) | (11,021,000) | (45,376,000) | ||
Total other expense | (52,385,000) | (25,396,000) | (57,776,000) | ||
Arizona Public Service Company | |||||
Other income: | |||||
Interest income | 5,332,000 | 4,692,000 | 9,621,000 | ||
Miscellaneous | 556,000 | 40,000 | 148,000 | ||
Total other income | 5,888,000 | 43,053,000 | 51,755,000 | ||
Other expense: | |||||
Non-operating costs | (15,579,000) | (10,080,000) | (10,659,000) | ||
Miscellaneous | (10,529,000) | (8,817,000) | (43,035,000) | ||
Total other expense | (26,108,000) | (18,897,000) | (53,694,000) | ||
ACC | Coal Community Transition Plan | |||||
Other expense: | |||||
Amount funded by shareholders | 25,200,000 | $ 25,000,000 | |||
ACC | Navajo Nation, Electrification Projects | Coal Community Transition Plan | |||||
Other expense: | |||||
Amount funded by shareholders | 7,000,000 | 10,000,000 | $ 500,000 | $ 10,000,000 | |
SCR deferral | |||||
Other income: | |||||
Debt return | 14,955,000 | 15,865,000 | |||
SCR deferral | Arizona Public Service Company | |||||
Other income: | |||||
Debt return | 0 | 14,955,000 | 15,865,000 | ||
Octotillo modernization project | |||||
Other income: | |||||
Debt return | 23,366,000 | 26,121,000 | |||
Octotillo modernization project | Arizona Public Service Company | |||||
Other income: | |||||
Debt return | $ 0 | $ 23,366,000 | $ 26,121,000 |
Palo Verde Sale Leaseback Var_3
Palo Verde Sale Leaseback Variable Interest Entities - Additional Information (Details) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 USD ($) lease Trust | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Dec. 31, 1986 Trust | |
Palo Verde Sale Leaseback Variable Interest Entities | ||||
Net income attributable to noncontrolling interest | $ 17,224 | $ 17,224 | $ 19,493 | |
Arizona Public Service Company | ||||
Palo Verde Sale Leaseback Variable Interest Entities | ||||
Number of VIE lessor trusts | Trust | 3 | |||
Net income attributable to noncontrolling interest | $ 17,224 | 17,224 | 19,493 | |
Arizona Public Service Company | Variable Interest Entity | ||||
Palo Verde Sale Leaseback Variable Interest Entities | ||||
Number of VIE lessor trusts | Trust | 3 | |||
Net income attributable to noncontrolling interest | 17,000 | $ 17,000 | $ 19,000 | |
Initial loss exposure to the VIEs noncontrolling equity participants during lease extension period | 324,000 | |||
Maximum loss exposure to the VIE's noncontrolling equity participants during lease extension period | $ 501,000 | |||
Arizona Public Service Company | Period 2022 through 2023 | Variable Interest Entity | ||||
Palo Verde Sale Leaseback Variable Interest Entities | ||||
Number of leases under which assets are retained | lease | 3 | |||
Annual lease payments | $ 21,000 | |||
Lease period | 2 years |
Palo Verde Sale Leaseback Var_4
Palo Verde Sale Leaseback Variable Interest Entities - Schedule of VIEs (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Palo Verde Sale Leaseback Variable Interest Entities | ||
Palo Verde sale leaseback property, plant and equipment, net of accumulated depreciation | $ 16,854,354 | $ 15,987,434 |
Amounts relating to the VIEs included in Condensed Consolidated Balance Sheets | ||
Equity-Noncontrolling interests | 111,229 | 115,260 |
Arizona Public Service Company | ||
Palo Verde Sale Leaseback Variable Interest Entities | ||
Palo Verde sale leaseback property, plant and equipment, net of accumulated depreciation | 16,800,254 | 15,985,346 |
Amounts relating to the VIEs included in Condensed Consolidated Balance Sheets | ||
Equity-Noncontrolling interests | 111,229 | 115,260 |
Palo Verde VIE | Arizona Public Service Company | ||
Palo Verde Sale Leaseback Variable Interest Entities | ||
Palo Verde sale leaseback property, plant and equipment, net of accumulated depreciation | 90,296 | 94,166 |
Amounts relating to the VIEs included in Condensed Consolidated Balance Sheets | ||
Equity-Noncontrolling interests | $ 111,229 | $ 115,260 |
Investments in Nuclear Decomm_3
Investments in Nuclear Decommissioning Trusts and Other Special Use Funds - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Arizona Public Service Company | ||
Schedule of Equity Method Investments [Line Items] | ||
Employee medical claims amount | $ 15 | $ 15 |
Investments in Nuclear Decomm_4
Investments in Nuclear Decommissioning Trusts and Other Special Use Funds (Details) - Arizona Public Service Company - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Nuclear decommissioning trust fund assets | |||
Fair Value | $ 1,420,641 | $ 1,653,167 | |
Total Unrealized Gains | 337,994 | 475,670 | |
Total Unrealized Losses | (69,091) | (4,063) | |
Amortized cost | 927,000 | 972,000 | |
Realized gains and losses and proceeds from the sale of securities by the nuclear decommissioning trust funds | |||
Realized gains | 9,437 | 134,659 | $ 12,370 |
Realized losses | (40,239) | (8,438) | (5,568) |
Proceeds from the sale of securities | 1,207,197 | 1,720,966 | 819,519 |
Nuclear Decommissioning Trusts | |||
Nuclear decommissioning trust fund assets | |||
Fair Value | 1,073,410 | 1,294,757 | |
Realized gains and losses and proceeds from the sale of securities by the nuclear decommissioning trust funds | |||
Realized gains | 9,017 | 134,610 | 12,194 |
Realized losses | (40,239) | (8,431) | (5,553) |
Proceeds from the sale of securities | 979,639 | 1,457,305 | 675,035 |
Other Special Use Funds | |||
Nuclear decommissioning trust fund assets | |||
Fair Value | 347,231 | 358,410 | |
Realized gains and losses and proceeds from the sale of securities by the nuclear decommissioning trust funds | |||
Realized gains | 420 | 49 | 176 |
Realized losses | 0 | (7) | (15) |
Proceeds from the sale of securities | 227,558 | 263,661 | $ 144,484 |
Equity securities | |||
Nuclear decommissioning trust fund assets | |||
Equity securities | 554,214 | 687,882 | |
Total Unrealized Gains | 334,817 | 451,387 | |
Total Unrealized Losses | (267) | 0 | |
Equity securities | Nuclear Decommissioning Trusts | |||
Nuclear decommissioning trust fund assets | |||
Equity securities | 487,240 | 640,312 | |
Equity securities | Other Special Use Funds | |||
Nuclear decommissioning trust fund assets | |||
Equity securities | 66,974 | 47,570 | |
Available for sale-fixed income securities | |||
Nuclear decommissioning trust fund assets | |||
Fair Value | 861,637 | 992,131 | |
Total Unrealized Gains | 3,177 | 24,283 | |
Total Unrealized Losses | (68,795) | (4,063) | |
Fair value of fixed income securities, summarized by contractual maturities | |||
Less than one year | 97,496 | ||
1 year – 5 years | 362,002 | ||
5 years – 10 years | 129,171 | ||
Greater than 10 years | 272,968 | ||
Total | 861,637 | ||
Available for sale-fixed income securities | Nuclear Decommissioning Trusts | |||
Nuclear decommissioning trust fund assets | |||
Fair Value | 582,343 | 682,227 | |
Fair value of fixed income securities, summarized by contractual maturities | |||
Less than one year | 9,422 | ||
1 year – 5 years | 181,640 | ||
5 years – 10 years | 122,340 | ||
Greater than 10 years | 268,941 | ||
Total | 582,343 | ||
Available for sale-fixed income securities | Other Special Use Funds | |||
Nuclear decommissioning trust fund assets | |||
Fair Value | 279,294 | 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 | 49,917 | ||
1 year – 5 years | 36,484 | ||
5 years – 10 years | 0 | ||
Greater than 10 years | 4,027 | ||
Total | 90,428 | ||
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 | 38,157 | ||
1 year – 5 years | 143,878 | ||
5 years – 10 years | 6,831 | ||
Greater than 10 years | 0 | ||
Total | 188,866 | ||
Other | |||
Nuclear decommissioning trust fund assets | |||
Fair Value | 4,790 | (26,846) | |
Total Unrealized Gains | 0 | 0 | |
Total Unrealized Losses | (29) | 0 | |
Other | Nuclear Decommissioning Trusts | |||
Nuclear decommissioning trust fund assets | |||
Fair Value | 3,827 | (27,782) | |
Other | Other Special Use Funds | |||
Nuclear decommissioning trust fund assets | |||
Fair Value | $ 963 | $ 936 |
Changes in Accumulated Other _3
Changes in Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Changes in accumulated other comprehensive income (loss) by component | ||
Beginning balance | $ 6,021,460 | $ 5,752,793 |
Ending balance | 6,159,876 | 6,021,460 |
Pension and Other Postretirement Benefits | ||
Changes in accumulated other comprehensive income (loss) by component | ||
Beginning balance | (53,885) | (60,725) |
OCI (loss) before reclassifications | 17,550 | 2,439 |
Amounts reclassified from accumulated other comprehensive loss | 4,003 | 4,401 |
Ending balance | (32,332) | (53,885) |
Derivative Instruments | ||
Changes in accumulated other comprehensive income (loss) by component | ||
Beginning balance | (976) | (2,071) |
OCI (loss) before reclassifications | 1,873 | 1,077 |
Amounts reclassified from accumulated other comprehensive loss | 0 | 18 |
Ending balance | 897 | (976) |
Accumulated Other Comprehensive Income (Loss) | ||
Changes in accumulated other comprehensive income (loss) by component | ||
Beginning balance | (54,861) | (62,796) |
OCI (loss) before reclassifications | 19,423 | 3,516 |
Amounts reclassified from accumulated other comprehensive loss | 4,003 | 4,419 |
Ending balance | (31,435) | (54,861) |
Arizona Public Service Company | ||
Changes in accumulated other comprehensive income (loss) by component | ||
Beginning balance | 6,750,473 | 6,345,185 |
Ending balance | 7,052,955 | 6,750,473 |
Arizona Public Service Company | Pension and Other Postretirement Benefits | ||
Changes in accumulated other comprehensive income (loss) by component | ||
Beginning balance | (34,880) | (40,918) |
OCI (loss) before reclassifications | 15,646 | 2,043 |
Amounts reclassified from accumulated other comprehensive loss | 3,638 | 3,995 |
Ending balance | (15,596) | (34,880) |
Arizona Public Service Company | Derivative Instruments | ||
Changes in accumulated other comprehensive income (loss) by component | ||
Beginning balance | 0 | 0 |
OCI (loss) before reclassifications | 0 | (18) |
Amounts reclassified from accumulated other comprehensive loss | 0 | 18 |
Ending balance | 0 | 0 |
Arizona Public Service Company | Accumulated Other Comprehensive Income (Loss) | ||
Changes in accumulated other comprehensive income (loss) by component | ||
Beginning balance | (34,880) | (40,918) |
OCI (loss) before reclassifications | 15,646 | 2,025 |
Amounts reclassified from accumulated other comprehensive loss | 3,638 | 4,013 |
Ending balance | $ (15,596) | $ (34,880) |
Schedule I - Condensed Financ_2
Schedule I - Condensed Financial Information of Registrant - Comprehensive Income (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
CONDENSED FINANCIAL STATEMENTS | |||
Operating expenses | $ 3,592,474 | $ 2,998,525 | $ 2,798,830 |
Other | |||
Total | 99,281 | 173,982 | 89,044 |
Interest expense | 283,569 | 254,314 | 247,501 |
Income tax benefit | 74,827 | 110,086 | 78,173 |
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | 483,602 | 618,720 | 550,559 |
Other comprehensive income (loss) — attributable to common shareholders | 23,426 | 7,935 | (5,700) |
COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | 507,028 | 626,655 | 544,859 |
Pinnacle West | |||
CONDENSED FINANCIAL STATEMENTS | |||
Operating expenses | 8,850 | 10,245 | 7,901 |
Other | |||
Equity in earnings of subsidiaries | 500,042 | 628,916 | 566,147 |
Other expense | (4,725) | (4,919) | (4,586) |
Total | 495,317 | 623,997 | 561,561 |
Interest expense | 18,861 | 10,672 | 14,021 |
Income before income taxes | 467,606 | 603,080 | 539,639 |
Income tax benefit | (15,996) | (15,640) | (10,920) |
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | 483,602 | 618,720 | 550,559 |
Other comprehensive income (loss) — attributable to common shareholders | 23,426 | 7,935 | (5,700) |
COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ 507,028 | $ 626,655 | $ 544,859 |
Schedule I - Condensed Financ_3
Schedule I - Condensed Financial Information of Registrant - Balance Sheets (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Current assets | ||||
Cash and cash equivalents | $ 4,832 | $ 9,969 | ||
Accounts receivable | 453,209 | 391,923 | ||
Income tax receivable | 14,086 | 7,514 | ||
Other current assets | 60,091 | 83,896 | ||
Total current assets | 1,750,554 | 1,551,100 | ||
Investments and other assets | ||||
Other assets | 125,672 | 97,884 | ||
Total investments and other assets | 1,590,707 | 1,797,959 | ||
TOTAL ASSETS | 22,723,405 | 22,003,222 | ||
Current liabilities | ||||
Accounts payable | 430,425 | 393,083 | ||
Accrued taxes | 164,440 | 168,645 | ||
Common dividends payable | 97,895 | 95,988 | ||
Short-term borrowings | 340,720 | 292,000 | ||
Current maturities of long-term debt | 50,685 | 150,000 | ||
Operating lease liabilities | 105,210 | 100,443 | ||
Other current liabilities | 148,276 | 151,968 | ||
Total current liabilities | 1,762,141 | 1,756,869 | ||
Deferred credits and other | ||||
Long-term debt less current maturities (Note 6) | 7,741,286 | 6,913,735 | ||
Operating lease liabilities | 639,247 | 728,401 | ||
Other | 252,149 | 232,914 | ||
Total deferred credits and other | 7,060,102 | 7,311,158 | ||
COMMITMENTS AND CONTINGENCIES (SEE NOTES) | ||||
Common stock equity | ||||
Common stock | 2,724,740 | 2,702,743 | ||
Accumulated other comprehensive loss (Note 19) | (31,435) | (54,861) | ||
Retained earnings | 3,360,347 | 3,264,719 | ||
Total shareholders’ equity | 6,048,647 | 5,906,200 | ||
Noncontrolling interests | 111,229 | 115,260 | ||
Total equity | 6,159,876 | 6,021,460 | $ 5,752,793 | $ 5,553,188 |
TOTAL LIABILITIES AND EQUITY | 22,723,405 | 22,003,222 | ||
Pinnacle West | ||||
Current assets | ||||
Cash and cash equivalents | 0 | 594 | ||
Accounts receivable | 132,061 | 125,457 | ||
Income tax receivable | 14,494 | 1,498 | ||
Other current assets | 288 | 13 | ||
Total current assets | 146,843 | 127,562 | ||
Investments and other assets | ||||
Investments in subsidiaries | 7,105,789 | 6,797,528 | ||
Deferred income taxes | 1,521 | 19,520 | ||
Other assets | 23,153 | 57,608 | ||
Total investments and other assets | 7,130,463 | 6,874,656 | ||
TOTAL ASSETS | 7,277,306 | 7,002,218 | ||
Current liabilities | ||||
Accounts payable | 6,499 | 3,071 | ||
Accrued taxes | 7,694 | 19,855 | ||
Common dividends payable | 97,895 | 95,988 | ||
Short-term borrowings | 15,720 | 13,300 | ||
Current maturities of long-term debt | 0 | 150,000 | ||
Operating lease liabilities | 117 | 107 | ||
Other current liabilities | 14,637 | 14,684 | ||
Total current liabilities | 142,562 | 297,005 | ||
Deferred credits and other | ||||
Long-term debt less current maturities (Note 6) | 947,892 | 647,139 | ||
Pension liabilities | 8,218 | 14,537 | ||
Operating lease liabilities | 1,459 | 1,576 | ||
Other | 17,299 | 20,501 | ||
Total deferred credits and other | 26,976 | 36,614 | ||
COMMITMENTS AND CONTINGENCIES (SEE NOTES) | ||||
Common stock equity | ||||
Common stock | 2,719,735 | 2,696,342 | ||
Accumulated other comprehensive loss (Note 19) | (31,435) | (54,861) | ||
Retained earnings | 3,360,347 | 3,264,719 | ||
Total shareholders’ equity | 6,048,647 | 5,906,200 | ||
Noncontrolling interests | 111,229 | 115,260 | ||
Total equity | 6,159,876 | 6,021,460 | ||
TOTAL LIABILITIES AND EQUITY | $ 7,277,306 | $ 7,002,218 |
Schedule I - Condensed Financ_4
Schedule I - Condensed Financial Information of Registrant - Cash Flows (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities | |||
Net income | $ 500,826 | $ 635,944 | $ 570,052 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 817,814 | 719,141 | 686,253 |
Deferred income taxes | 43,202 | 117,471 | 69,469 |
Accounts receivable | (63,869) | (72,559) | (18,191) |
Accounts payable | 90,076 | 20,267 | (6,059) |
Net cash provided by operating activities | 1,241,441 | 860,014 | 966,365 |
Cash flows from investing activities | |||
Net cash used for investing activities | (1,618,046) | (1,386,929) | (1,277,818) |
Cash flows from financing activities | |||
Issuance of long-term debt | 875,537 | 746,999 | 1,596,672 |
Short-term debt borrowings under revolving credit facility | 0 | 0 | 751,690 |
Short-term debt repayments under revolving credit facility | 0 | (19,000) | (770,690) |
Short-term borrowings and (repayments) — net | 48,720 | 142,000 | 73,325 |
Dividends paid on common stock | (378,881) | (369,478) | (350,577) |
Repayment of long-term debt | (150,000) | 0 | (915,150) |
Common stock equity issuance and purchases — net | (2,653) | (2,350) | (1,389) |
Net cash provided by financing activities | 371,468 | 476,916 | 361,138 |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (5,137) | (49,999) | 49,685 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 9,969 | 59,968 | 10,283 |
CASH AND CASH EQUIVALENTS AT END OF YEAR | 4,832 | 9,969 | 59,968 |
Pinnacle West | |||
Cash flows from operating activities | |||
Net income | 483,602 | 618,720 | 550,559 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Equity in earnings of subsidiaries — net | (500,042) | (628,916) | (566,147) |
Depreciation and amortization | 76 | 93 | 76 |
Deferred income taxes | 17,256 | (11,381) | 33,007 |
Accounts receivable | (8,535) | 8,897 | (7,903) |
Accounts payable | 3,431 | (2,598) | (1,964) |
Accrued taxes and income tax receivables — net | (25,157) | 16,079 | 9,610 |
Dividends received from subsidiaries | 385,800 | 376,500 | 357,500 |
Other | 47,719 | 4,214 | 20,163 |
Net cash provided by operating activities | 404,150 | 381,608 | 394,901 |
Cash flows from investing activities | |||
Investments in subsidiaries | (186,630) | (145,266) | (137,881) |
Repayments of loans from subsidiaries | 14,308 | 4,017 | 932 |
Advances of loans to subsidiaries | (3,308) | (12,256) | (7,261) |
Net cash used for investing activities | (175,630) | (153,505) | (144,210) |
Cash flows from financing activities | |||
Issuance of long-term debt | 300,000 | 300,000 | 496,950 |
Short-term debt borrowings under revolving credit facility | 0 | 0 | 211,690 |
Short-term debt repayments under revolving credit facility | 0 | (19,000) | (230,690) |
Short-term borrowings and (repayments) — net | 2,420 | (136,700) | 73,325 |
Dividends paid on common stock | (378,881) | (369,478) | (350,577) |
Repayment of long-term debt | (150,000) | 0 | (450,000) |
Common stock equity issuance and purchases — net | (2,653) | (2,350) | (1,389) |
Net cash provided by financing activities | (229,114) | (227,528) | (250,691) |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (594) | 575 | 0 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 594 | 19 | 19 |
CASH AND CASH EQUIVALENTS AT END OF YEAR | $ 0 | $ 594 | $ 19 |