Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2013 | Oct. 21, 2013 | |
Document and Entity Information | ||
Entity Registrant Name | PINNACLE WEST CAPITAL CORP | |
Entity Central Index Key | 764622 | |
Document Type | 10-Q | |
Document Period End Date | 30-Sep-13 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -19 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 110,044,952 | |
Document Fiscal Year Focus | 2013 | |
Document Fiscal Period Focus | Q3 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||
OPERATING REVENUES | $1,152,392 | $1,109,475 | $2,754,866 | $2,608,682 |
OPERATING EXPENSES | ||||
Fuel and purchased power | 350,953 | 302,894 | 859,216 | 783,926 |
Operations and maintenance | 233,323 | 220,729 | 685,873 | 647,628 |
Depreciation and amortization | 107,388 | 100,353 | 317,410 | 301,068 |
Taxes other than income taxes | 43,256 | 36,507 | 124,091 | 120,271 |
Other expenses | 1,784 | 1,022 | 5,853 | 5,323 |
Total | 736,704 | 661,505 | 1,992,443 | 1,858,216 |
OPERATING INCOME | 415,688 | 447,970 | 762,423 | 750,466 |
OTHER INCOME (DEDUCTIONS) | ||||
Allowance for equity funds used during construction | 5,569 | 5,708 | 18,698 | 15,639 |
Other income (Note 10) | 160 | 420 | 1,387 | 1,357 |
Other expense (Note 10) | -7,435 | -5,696 | -13,421 | -12,433 |
Total | -1,706 | 432 | 6,664 | 4,563 |
INTEREST EXPENSE | ||||
Interest charges | 50,587 | 52,242 | 151,372 | 162,209 |
Allowance for borrowed funds used during construction | -3,235 | -3,830 | -10,861 | -10,428 |
Total | 47,352 | 48,412 | 140,511 | 151,781 |
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 366,630 | 399,990 | 628,576 | 603,248 |
INCOME TAXES | 131,912 | 147,116 | 221,424 | 219,160 |
INCOME FROM CONTINUING OPERATIONS | 234,718 | 252,874 | 407,152 | 384,088 |
LOSS FROM DISCONTINUED OPERATIONS | ||||
Net of income tax benefit of $7 for three months ended September 30, 2012 and $1,047 for nine months ended September 30, 2012 | -11 | -1,595 | ||
NET INCOME | 234,718 | 252,863 | 407,152 | 382,493 |
Less: Net income attributable to noncontrolling interests (Note 6) | 8,555 | 8,040 | 25,338 | 23,582 |
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | 226,163 | 244,823 | 381,814 | 358,911 |
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING - BASIC (in shares) | 110,009 | 109,555 | 109,935 | 109,449 |
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING - DILUTED (in shares) | 111,053 | 110,655 | 110,913 | 110,420 |
EARNINGS PER WEIGHTED-AVERAGE COMMON SHARE OUTSTANDING | ||||
Income from continuing operations attributable to common shareholders - basic (in dollars per share) | $2.06 | $2.23 | $3.47 | $3.29 |
Net income attributable to common shareholders - basic (in dollars per share) | $2.06 | $2.23 | $3.47 | $3.28 |
Income from continuing operations attributable to common shareholders - diluted (in dollars per share) | $2.04 | $2.21 | $3.44 | $3.26 |
Net income attributable to common shareholders - diluted (in dollars per share) | $2.04 | $2.21 | $3.44 | $3.25 |
DIVIDENDS DECLARED PER SHARE (in dollars per share) | $0 | $1.09 | $1.57 | |
AMOUNTS ATTRIBUTABLE TO COMMON SHAREHOLDERS: | ||||
Income from continuing operations, net of tax | 226,163 | 244,834 | 381,814 | 360,515 |
Discontinued operations, net of tax | -11 | -1,604 | ||
Net income attributable to common shareholders | $226,163 | $244,823 | $381,814 | $358,911 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Parenthetical) (USD $) | 3 Months Ended | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2012 | Sep. 30, 2012 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||
Income tax benefit on discontinued operations | $7 | $1,047 |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
NET INCOME | $234,718 | $252,863 | $407,152 | $382,493 |
Derivative instruments: | ||||
Net unrealized loss, net of tax benefit of $95 and $47 for three months ended September 30, 2013 and 2012 and of $162 and $14,817 for nine months ended September 30, 2013 and 2012 | -145 | -72 | -247 | -22,696 |
Reclassification of net realized loss, net of tax benefit of $9,348 and $19,543 for three months ended September 30, 2013 and 2012 and $15,471 and $34,361 for nine months ended September 30, 2013 and 2012 | 14,310 | 29,935 | 23,685 | 52,632 |
Pension and other postretirement benefits activity, net of tax (expense) of $(625) and $(640) for three months ended September 30, 2013 and 2012 and $(807) and $(1,797) for nine months ended September 30, 2013 and 2012 | 957 | 980 | 1,235 | 2,752 |
Total other comprehensive income | 15,122 | 30,843 | 24,673 | 32,688 |
COMPREHENSIVE INCOME | 249,840 | 283,706 | 431,825 | 415,181 |
Less: Comprehensive income attributable to noncontrolling interests | 8,555 | 8,040 | 25,338 | 23,582 |
COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | $241,285 | $275,666 | $406,487 | $391,599 |
CONDENSED_CONSOLIDATED_STATEME3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net unrealized loss, tax benefit | $95 | $47 | $162 | $14,817 |
Reclassification of net realized loss, tax benefit | 9,348 | 19,543 | 15,471 | 34,361 |
Pension and other postretirement benefits activity, tax (expense) | ($625) | ($640) | ($807) | ($1,797) |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
CURRENT ASSETS | ||
Cash and cash equivalents | $135,457 | $26,202 |
Customer and other receivables | 427,370 | 277,225 |
Accrued unbilled revenues | 132,555 | 94,845 |
Allowance for doubtful accounts | -3,768 | -3,340 |
Materials and supplies (at average cost) | 223,385 | 218,096 |
Fossil fuel (at average cost) | 34,959 | 31,334 |
Deferred income taxes | 87,490 | 152,191 |
Income tax receivable (Note 5) | 133,551 | 2,423 |
Assets from risk management activities (Note 7) | 22,741 | 25,699 |
Deferred fuel and purchased power regulatory asset (Note 3) | 37,383 | 72,692 |
Other regulatory assets (Note 3) | 82,558 | 71,257 |
Other current assets | 36,805 | 37,102 |
Total current assets | 1,350,486 | 1,005,726 |
INVESTMENTS AND OTHER ASSETS | ||
Assets from risk management activities (Note 7) | 26,046 | 35,891 |
Nuclear decommissioning trust (Note 13) | 612,640 | 570,625 |
Other assets | 60,219 | 62,694 |
Total investments and other assets | 698,905 | 669,210 |
PROPERTY, PLANT AND EQUIPMENT | ||
Plant in service and held for future use | 14,597,995 | 14,346,367 |
Accumulated depreciation and amortization | -5,101,498 | -4,929,613 |
Net | 9,496,497 | 9,416,754 |
Construction work in progress | 605,987 | 565,716 |
Palo Verde sale leaseback, net of accumulated depreciation (Note 6) | 126,092 | 128,995 |
Intangible assets, net of accumulated amortization | 160,134 | 162,150 |
Nuclear fuel, net of accumulated amortization | 140,356 | 122,778 |
Total property, plant and equipment | 10,529,066 | 10,396,393 |
DEFERRED DEBITS | ||
Regulatory assets (Note 3) | 1,105,882 | 1,099,900 |
Income tax receivable (Note 5) | 70,389 | |
Other | 138,332 | 137,997 |
Total deferred debits | 1,244,214 | 1,308,286 |
TOTAL ASSETS | 13,822,671 | 13,379,615 |
CURRENT LIABILITIES | ||
Accounts payable | 250,023 | 221,312 |
Accrued taxes (Note 5) | 183,858 | 124,939 |
Accrued interest | 45,811 | 49,380 |
Common dividends payable | 59,789 | |
Short-term borrowings | 92,175 | |
Current maturities of long-term debt (Note 2) | 566,481 | 122,828 |
Customer deposits | 77,254 | 79,689 |
Liabilities from risk management activities (Note 7) | 53,468 | 73,741 |
Regulatory liabilities (Note 3) | 88,409 | 88,116 |
Other current liabilities | 181,639 | 171,573 |
Total current liabilities | 1,446,943 | 1,083,542 |
LONG-TERM DEBT LESS CURRENT MATURITIES (Note 2) | ||
Long-term debt less current maturities | 2,782,901 | 3,160,219 |
Palo Verde sale leaseback lessor notes less current maturities (Note 6) | 37,414 | 38,869 |
Total long-term debt less current maturities | 2,820,315 | 3,199,088 |
DEFERRED CREDITS AND OTHER | ||
Deferred income taxes | 2,363,783 | 2,151,371 |
Regulatory liabilities (Note 3) | 798,226 | 759,201 |
Liability for asset retirements | 364,635 | 357,097 |
Liabilities for pension and other postretirement benefits (Note 4) | 939,414 | 1,058,755 |
Deferred investment tax credit | 115,984 | 99,819 |
Liabilities from risk management activities (Note 7) | 67,662 | 85,264 |
Customer advances | 109,667 | 109,359 |
Coal mine reclamation | 114,764 | 118,860 |
Unrecognized tax benefits (Note 5) | 81,797 | 71,135 |
Other | 178,053 | 183,835 |
Total deferred credits and other | 5,133,985 | 4,994,696 |
COMMITMENTS AND CONTINGENCIES (SEE NOTES) | ||
EQUITY (Note 8) | ||
Common stock, no par value | 2,489,180 | 2,466,923 |
Treasury stock | -10,079 | -4,211 |
Total common stock | 2,479,101 | 2,462,712 |
Retained earnings | 1,886,038 | 1,624,102 |
Accumulated other comprehensive loss: | ||
Pension and other postretirement benefits | -63,181 | -64,416 |
Derivative instruments | -26,154 | -49,592 |
Total accumulated other comprehensive loss | -89,335 | -114,008 |
Total shareholders' equity | 4,275,804 | 3,972,806 |
Noncontrolling interests (Note 6) | 145,624 | 129,483 |
Total equity | 4,421,428 | 4,102,289 |
TOTAL LIABILITIES AND EQUITY | $13,822,671 | $13,379,615 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
EQUITY (Note 8) | ||
Common stock, par value |
CONDENSED_CONSOLIDATED_STATEME4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $407,152 | $382,493 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization including nuclear fuel | 377,971 | 360,570 |
Deferred fuel and purchased power | 13,093 | 51,533 |
Deferred fuel and purchased power amortization | 23,158 | -91,894 |
Allowance for equity funds used during construction | -18,698 | -15,639 |
Deferred income taxes | 256,132 | 197,527 |
Deferred investment tax credit | 16,164 | 8,974 |
Change in derivative instruments fair value | 537 | -943 |
Changes in current assets and liabilities: | ||
Customer and other receivables | -178,029 | -76,697 |
Accrued unbilled revenues | -37,710 | -11,186 |
Materials, supplies and fossil fuel | -8,914 | -23,873 |
Income tax receivable | -131,128 | 6,466 |
Other current assets | -12,246 | -10,035 |
Accounts payable | 44,704 | -69,776 |
Accrued taxes | 58,919 | 69,899 |
Other current liabilities | 4,096 | 17,071 |
Change in margin and collateral accounts - assets | -327 | 1,980 |
Change in long-term income tax receivable | 137,270 | -1,320 |
Change in unrecognized tax benefits | -57,585 | -3,554 |
Change in other long-term assets | -24,345 | -13,885 |
Change in other long-term liabilities | -2,884 | 37,181 |
Change in margin and collateral accounts - liabilities | 15,000 | 114,579 |
Net cash flow provided by operating activities | 882,330 | 929,471 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Capital expenditures | -581,515 | -670,684 |
Contributions in aid of construction | 34,910 | 41,451 |
Allowance for borrowed funds used during construction | -10,861 | -10,428 |
Proceeds from nuclear decommissioning trust sales | 363,944 | 295,126 |
Investment in nuclear decommissioning trust | -376,881 | -308,063 |
Other | -1,553 | -520 |
Net cash flow used for investing activities | -571,956 | -653,118 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Issuance of long-term debt | 136,307 | 351,081 |
Repayment of long-term debt | -72,777 | -421,703 |
Short-term borrowings and payments - net | -92,175 | |
Dividends paid on common stock | -174,485 | -167,074 |
Common stock equity issuance | 10,396 | 9,684 |
Distributions to noncontrolling interests | -9,197 | -2,630 |
Other | 812 | 185 |
Net cash flow used for financing activities | -201,119 | -230,457 |
NET INCREASE IN CASH AND CASH EQUIVALENTS | 109,255 | 45,896 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 26,202 | 33,583 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $135,457 | $79,479 |
Consolidation_and_Nature_of_Op
Consolidation and Nature of Operations | 9 Months Ended | ||||||||||
Sep. 30, 2013 | |||||||||||
Consolidation and Nature of Operations | |||||||||||
Consolidation and Nature of Operations | 1. Consolidation and Nature of Operations | ||||||||||
The unaudited condensed consolidated financial statements include the accounts of Pinnacle West and our subsidiaries: APS and El Dorado Investment Company (“El Dorado”) and formerly SunCor Development Company (“SunCor”). Intercompany accounts and transactions between the consolidated companies have been eliminated. The unaudited condensed consolidated financial statements for APS include the accounts of APS and the Palo Verde Nuclear Generating Station (“Palo Verde”) sale leaseback variable interest entities (“VIEs”) (see Note 6 for further discussion). Our accounting records are maintained in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |||||||||||
Weather conditions cause significant seasonal fluctuations in our revenues; therefore, results for interim periods do not necessarily represent results expected for the year. | |||||||||||
Our condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments except as otherwise disclosed in the notes) that we believe are necessary for the fair presentation of our financial position, results of operations and cash flows for the periods presented. These condensed consolidated financial statements and notes have been prepared consistently with the 2012 Form 10-K, with the exception of the reclassification of certain prior year amounts on our Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Cash Flows to conform to the current year presentation. | |||||||||||
The following tables show the impact of the reclassifications to prior year (previously reported) amounts of the deferred investment tax credit and income tax receivables which have become more material in 2013 (dollars in thousands): | |||||||||||
Balance Sheets - December 31, 2012 | As | Reclassifications | Amount | ||||||||
previously | reported after | ||||||||||
reported | reclassifications | ||||||||||
Deferred investment tax credit | $ | — | $ | 99,819 | $ | 99,819 | |||||
Deferred credits — other | 283,654 | (99,819 | ) | 183,835 | |||||||
Statement of Cash Flows for the Nine | As | Reclassifications | Amount | ||||||||
Months Ended September 30, 2012 | previously | reported after | |||||||||
reported | reclassifications | ||||||||||
Cash Flows from Operating Activities | |||||||||||
Deferred income taxes | $ | 206,501 | $ | (8,974 | ) | $ | 197,527 | ||||
Deferred investment tax credit | — | 8,974 | 8,974 | ||||||||
Income tax receivable | — | 6,466 | 6,466 | ||||||||
Accrued taxes | 76,365 | (6,466 | ) | 69,899 | |||||||
Change in long-term income tax receivable | — | (1,320 | ) | (1,320 | ) | ||||||
Change in other long-term assets | (15,205 | ) | 1,320 | (13,885 | ) | ||||||
Supplemental Cash Flow Information | |||||||||||
The following table summarizes supplemental Pinnacle West cash flow information (dollars in thousands): | |||||||||||
Nine Months Ended | |||||||||||
September 30, | |||||||||||
2013 | 2012 | ||||||||||
Cash paid during the period for: | |||||||||||
Income taxes, net of (refunds) | $ | 3,412 | $ | (651 | ) | ||||||
Interest, net of amounts capitalized | 141,047 | 152,582 | |||||||||
Significant non-cash investing and financing activities: | |||||||||||
Accrued capital expenditures | $ | 11,377 | $ | 11,281 |
LongTerm_Debt_and_Liquidity_Ma
Long-Term Debt and Liquidity Matters | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
Long-Term Debt and Liquidity Matters | ||||||||||||||
Long-Term Debt and Liquidity Matters | 2. Long-Term Debt and Liquidity Matters | |||||||||||||
Pinnacle West and APS maintain committed revolving credit facilities in order to enhance liquidity and provide credit support for their commercial paper programs. | ||||||||||||||
Pinnacle West | ||||||||||||||
At September 30, 2013, Pinnacle West’s $200 million credit facility, which matures in November 2016, was available to refinance indebtedness of the Company and for other general corporate purposes, including credit support for its $200 million commercial paper program. 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. At September 30, 2013, Pinnacle West had no outstanding borrowings under its credit facility, no letters of credit outstanding, and no commercial paper borrowings. | ||||||||||||||
APS | ||||||||||||||
On March 22, 2013, APS issued an additional $100 million par amount of its outstanding 4.50% unsecured senior notes that mature on April 1, 2042. The net proceeds from the sale were used to repay short-term commercial paper borrowings and replenish cash used to redeem certain tax-exempt indebtedness in November 2012. | ||||||||||||||
On April 9, 2013, APS replaced its $500 million revolving credit facility that would have matured in February 2015, with a new $500 million facility. The new revolving credit facility terminates in April 2018. | ||||||||||||||
On May 1, 2013, APS purchased all $32 million of the Maricopa County, Arizona Pollution Control Corporation Pollution Control Revenue Refunding Bonds, 2009 Series C, due 2029. On May 28, 2013, we remarketed the bonds. The interest rate for these bonds was set to a new term rate. The new term rate for these bonds ends, subject to a mandatory tender, on May 30, 2018. During this time, the bonds will bear interest at a rate of 1.75% per annum. These bonds are classified as long-term debt on our Condensed Consolidated Balance Sheets at September 30, 2013 and were classified as current maturities of long-term debt on our Condensed Consolidated Balance Sheets at December 31, 2012. | ||||||||||||||
On July 12, 2013, APS purchased all $33 million of the Coconino County, Arizona Pollution Control Corporation Pollution Control Revenue Refunding Bonds, 1994 Series A, due 2029. These bonds were classified as current maturities of long-term debt on our Condensed Consolidated Balance Sheets at December 31, 2012. | ||||||||||||||
At September 30, 2013, APS had two credit facilities totaling $1 billion, including a $500 million credit facility that was refinanced in April 2013 (see above) and a $500 million credit facility that matures in November 2016. APS may increase the amount of each facility up to a maximum of $700 million upon the satisfaction of certain conditions and with the consent of the lenders. APS will use these facilities to refinance indebtedness and for other general corporate purposes. Interest rates are based on APS’s senior unsecured debt credit ratings. | ||||||||||||||
The facilities described above are available to support APS’s $250 million commercial paper program, for bank borrowings or for issuances of letters of credit. At September 30, 2013, APS had no commercial paper borrowings and no outstanding borrowings or outstanding letters of credit under these credit facilities. | ||||||||||||||
On October 11, 2013, APS purchased all $32 million of the City of Farmington, New Mexico Pollution Control Revenue Bonds, 1994 Series C, due 2024. These bonds are classified as current maturities of long-term debt on our Condensed Consolidated Balance Sheets at September 30, 2013 and December 31, 2012. | ||||||||||||||
See “Financial Assurances” in Note 9 for a discussion of APS’s separate outstanding letters of credit. | ||||||||||||||
Debt Fair Value | ||||||||||||||
Our long-term debt fair value estimates are based on quoted market prices for the same or similar issues, and are classified within Level 2 of the fair value hierarchy. See Note 12 for a discussion of the fair value hierarchy. The following table represents the estimated fair value of our long-term debt, including current maturities (dollars in millions): | ||||||||||||||
As of | As of | |||||||||||||
September 30, 2013 | December 31, 2012 | |||||||||||||
Carrying | Fair Value | Carrying | Fair Value | |||||||||||
Amount | Amount | |||||||||||||
Pinnacle West | $ | 125 | $ | 125 | $ | 125 | $ | 125 | ||||||
APS | 3,262 | 3,538 | 3,197 | 3,750 | ||||||||||
Total | $ | 3,387 | $ | 3,663 | $ | 3,322 | $ | 3,875 | ||||||
Debt Provisions | ||||||||||||||
An existing ACC order requires APS to maintain a common equity ratio of at least 40%. As defined in the ACC order, the common equity ratio is total shareholder equity divided by the sum of total shareholder equity and long-term debt, including current maturities of long-term debt. At September 30, 2013, APS was in compliance with this common equity ratio requirement. Its total shareholder equity was approximately $4.4 billion, and total capitalization was approximately $7.6 billion. APS would be prohibited from paying dividends if payment would reduce its total shareholder equity below approximately $3.0 billion, assuming APS’s total capitalization remains the same. Since APS was in compliance with this common equity ratio requirement, this restriction does not materially affect Pinnacle West’s ability to meet its ongoing cash needs. |
Regulatory_Matters
Regulatory Matters | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Regulatory Matters | ||||||||||||||||
Regulatory Matters | 3. Regulatory Matters | |||||||||||||||
Retail Rate Case Filing with the Arizona Corporation Commission | ||||||||||||||||
On June 1, 2011, APS filed an application with the ACC for a net retail base rate increase of $95.5 million. APS requested that the increase become effective July 1, 2012. The request would have increased the average retail customer bill approximately 6.6%. On January 6, 2012, APS and other parties to the general retail rate case entered into an agreement (the “Settlement Agreement”) detailing the terms upon which the parties agreed to settle the rate case. On May 15, 2012, the ACC approved the Settlement Agreement without material modifications. | ||||||||||||||||
Settlement Agreement | ||||||||||||||||
The Settlement Agreement provides for a zero net change in base rates, consisting of: (1) a non-fuel base rate increase of $116.3 million; (2) a fuel-related base rate decrease of $153.1 million (to be implemented by a change in the base fuel rate for fuel and purchased power costs (“Base Fuel Rate”) from $0.03757 to $0.03207 per kilowatt hour (“kWh”); and (3) the transfer of cost recovery for certain renewable energy projects from the Arizona Renewable Energy Standard and Tariff (“RES”) surcharge to base rates in an estimated amount of $36.8 million. | ||||||||||||||||
APS also agreed not to file its next general rate case before May 31, 2015, and not to request that its next general retail rate increase be effective prior to July 1, 2016. The Settlement Agreement allows APS to request a change to its base rates during the stay-out period in the event of an extraordinary event that, in the ACC’s judgment, requires base rate relief in order to protect the public interest. Nor is APS precluded from seeking rate relief, or any other party to the Settlement Agreement precluded from petitioning the ACC to examine the reasonableness of APS’s rates, in the event of significant regulatory developments that materially impact the financial results expected under the terms of the Settlement Agreement. | ||||||||||||||||
Other key provisions of the Settlement Agreement include the following: | ||||||||||||||||
· An authorized return on common equity of 10.0%; | ||||||||||||||||
· A capital structure comprised of 46.1% debt and 53.9% common equity; | ||||||||||||||||
· A test year ended December 31, 2010, adjusted to include plant that is in service as of March 31, 2012; | ||||||||||||||||
· Deferral for future recovery or refund of property taxes above or below a specified 2010 test year level caused by changes to the Arizona property tax rate as follows: | ||||||||||||||||
· Deferral of 25% in 2012, 50% in 2013 and 75% for 2014 and subsequent years if Arizona property tax rates increase; and | ||||||||||||||||
· Deferral of 100% in all years if Arizona property tax rates decrease; | ||||||||||||||||
· A procedure to allow APS to request rate adjustments prior to its next general rate case related to APS’s proposed acquisition (should it be consummated) of additional interests in Units 4 and 5 and the related closure of Units 1-3 of the Four Corners Power Plant (“Four Corners”); | ||||||||||||||||
· Implementation of a “Lost Fixed Cost Recovery” rate mechanism to support energy efficiency and distributed renewable generation; | ||||||||||||||||
· Modifications to the Environmental Improvement Surcharge (“EIS”) to allow for the recovery of carrying costs for capital expenditures associated with government-mandated environmental controls, subject to an existing cents per kWh cap on cost recovery that could produce up to approximately $5 million in revenues annually; | ||||||||||||||||
· Modifications to the Power Supply Adjustor (“PSA”), including the elimination of the 90/10 sharing provision; | ||||||||||||||||
· A limitation on the use of the RES surcharge and the Demand Side Management Adjustor Charge (“DSMAC”) to recoup capital expenditures not required under the terms of the 2008 rate case settlement agreement discussed below; | ||||||||||||||||
· Allowing a negative credit that existed in the PSA rate to continue until February 2013, rather than being reset on the anticipated July 1, 2012 rate effective date; | ||||||||||||||||
· Modification of the transmission cost adjustor (“TCA”) to streamline the process for future transmission-related rate changes; and | ||||||||||||||||
· Implementation of various changes to rate schedules, including the adoption of an experimental “buy-through” rate that could allow certain large commercial and industrial customers to select alternative sources of generation to be supplied by APS. | ||||||||||||||||
The Settlement Agreement was approved by the ACC on May 15, 2012, with new rates effective on July 1, 2012. This accomplished a goal set by the parties to the 2008 rate case settlement to process subsequent rate cases within twelve months of sufficiency findings from the ACC staff, which generally occur within 30 days after the filing of a rate case. | ||||||||||||||||
2008 General Retail Rate Case On-Going Impacts | ||||||||||||||||
On December 30, 2009, the ACC issued an order approving a settlement agreement entered into by APS and twenty-one other parties in APS’s prior general retail rate case, which was originally filed in March 2008. The settlement agreement contains certain on-going requirements, commitments and authorizations that will survive the 2012 Settlement Agreement, including the following: | ||||||||||||||||
· A commitment from APS to reduce average annual operational expenses by at least $30 million from 2010 through 2014; | ||||||||||||||||
· Authorization and requirements of equity infusions into APS of at least $700 million during the period beginning June 1, 2009 through December 31, 2014 ($253 million of which was infused into APS from proceeds of a Pinnacle West equity issuance in the second quarter of 2010); and | ||||||||||||||||
· Various modifications to the existing energy efficiency, demand side management and renewable energy programs that require APS to, among other things, expand its conservation and demand side management programs through 2012 and its use of renewable energy through 2015, as well as allow for concurrent recovery of renewable energy expenses and provide for more concurrent recovery of demand side management costs and incentives. | ||||||||||||||||
Cost Recovery Mechanisms | ||||||||||||||||
APS has received regulatory decisions that allow for more timely recovery of certain costs through the following recovery mechanisms. | ||||||||||||||||
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. | ||||||||||||||||
On December 14, 2011, the ACC voted to approve APS’s 2012 RES plan covering the 2012-2016 timeframe and authorized a total 2012 RES budget of $110 million. On June 29, 2012, APS filed its annual RES implementation plan, covering the 2013-2017 timeframe and requested 2013 RES funding of between $97 million and $107 million. In a final order dated January 31, 2013, the ACC approved a budget of $103 million for APS’s 2013 RES plan. That budget included $4 million for residential distributed energy incentives and $0.1 million for commercial distributed energy up-front incentives, but did not include any funds for new commercial distributed energy production-based incentives beyond those for previously approved programs. The ACC conducted a hearing to consider APS’s proposal to establish compliance with distributed energy requirements by tracking and recording distributed energy, rather than acquiring and retiring renewable energy credits. In those proceedings, the ACC staff proposed a process whereby if a customer installs distributed generation without an incentive, the customer keeps the renewable energy credits generated and the RES distributed generation requirement is adjusted downward to reflect how much load is being served by renewable generation. APS has endorsed the ACC staff’s proposed solution. Finally, the ACC authorized an APS-led multi-session technical conference to consider APS’s net metering policy and the cost and benefits of distributed energy. The multi-session technical conference concluded on May 28, 2013. | ||||||||||||||||
On July 12, 2013, APS filed an application with the ACC proposing a solution to fix the cost shift brought by the current net metering rules. In its application, APS requested that the ACC cause all new residential customers installing new rooftop solar systems to either: (i) take electric service under APS’s demand-based ECT-2 rate and remain eligible for net metering; or (ii) take service under the customer’s existing rate as if no distributed energy system was installed and receive a bill credit for 100% of the distributed energy system’s output at a market-based price. APS also proposed that the ACC: (i) grandfather current rates and use of net metering for existing and immediately pending distributed energy customers; and (ii) continue using direct cash incentives for new distributed energy installations. In its September 30, 2013 report, the ACC staff recognized that net metering shifts costs from solar customers to non-solar customers. The staff recommended that the ACC wait until APS’s next rate case to address the issue. As an alternative, the ACC staff recommended that the ACC assess one of two modest charges on new solar customers with a mechanism to return all incremental revenue collected from such charges to customers. | ||||||||||||||||
On July 12, 2013, APS filed its annual RES implementation plan covering the 2014-2018 timeframe. The plan requests a budget for 2014 of approximately $143 million. The plan does not propose any new programs. Rather, the plan requests the funding necessary to fulfill previously approved projects and commitments which are needed to comply with the RES targets and APS’s obligations under its 2008 rate case settlement agreement approved by the ACC, including the remaining 50 megawatts (“MW”) of the AZ Sun Program. AZ Sun is a program that contemplates the development of photovoltaic solar plants which APS owns or will own. On September 30, 2013, the ACC staff issued a report recommending approval of APS’s plan and proposed budget. | ||||||||||||||||
Demand Side Management Adjustor Charge. The ACC Electric Energy Efficiency Standards require APS to submit a Demand Side Management Implementation Plan for review by and approval of the ACC. | ||||||||||||||||
On June 1, 2011, APS filed its 2012 Demand Side Management Implementation Plan consistent with the ACC’s Electric Energy Efficiency Standards, which became effective January 1, 2011. The 2012 requirement under such standards is for cumulative energy efficiency savings of 3% of APS retail sales for the prior year. This energy savings requirement is slightly higher than the goal established by the 2008 retail rate case settlement agreement (2.75% of total energy resources for the same two-year period). The ACC issued an order on April 4, 2012, approving recovery of approximately $72 million of APS’s energy efficiency and demand side management program costs. This amount will be recovered by the then existing DSMAC over a twelve-month period beginning March 1, 2012. This amount does not include $10 million already being recovered in general retail base rates, but does include amortization of 2009 costs (approximately $5 million of the $72 million). | ||||||||||||||||
On June 1, 2012, APS filed its 2013 Demand Side Management Implementation Plan. In 2013, the standards require APS to achieve cumulative energy savings equal to 5% of its 2012 retail energy sales. Later in 2012, APS filed a supplement to its plan that included a proposed budget for 2013 of $87.6 million. APS expects to receive a decision from the ACC in late 2013 or early 2014. | ||||||||||||||||
On June 27, 2013, the ACC voted to open a new docket investigating whether the Electric Energy Efficiency Standards (including cost recovery methodology, incentives, and the determination of cost effectiveness) should be modified or abolished. | ||||||||||||||||
PSA Mechanism and Balance. The PSA provides for the adjustment of retail rates to reflect variations in retail fuel and purchased power costs. | ||||||||||||||||
The following table shows the changes in the deferred fuel and purchased power regulatory asset for 2013 and 2012 (dollars in millions): | ||||||||||||||||
Nine Months Ended | ||||||||||||||||
September 30, | ||||||||||||||||
2013 | 2012 | |||||||||||||||
Beginning balance | $ | 73 | $ | 28 | ||||||||||||
Deferred fuel and purchased power costs — current period | (13 | ) | (52 | ) | ||||||||||||
Amounts (collected from) credited to customers | (23 | ) | 92 | |||||||||||||
Ending balance | $ | 37 | $ | 68 | ||||||||||||
The PSA rate for the PSA year beginning February 1, 2013 is $0.0013 per kWh as compared to ($0.0042) per kWh for the prior year. This represents a $0.0055 per kWh increase over the 2012 PSA charge. This new rate is comprised of a forward component of ($0.0010) per kWh and a historical component of $0.0023 per kWh. The Settlement Agreement allowed APS to exceed the $0.004 per kWh cap to PSA rate changes in this instance. Any uncollected (overcollected) deferrals during the 2013 PSA year will be included in the calculation of the PSA rate for the PSA year beginning February 1, 2014. | ||||||||||||||||
Transmission Rates, Transmission Cost Adjustor and Other Transmission Matters. In July 2008, the United States Federal Energy Regulatory Commission (“FERC”) approved an Open Access Transmission Tariff for APS to move from fixed rates to a formula rate-setting methodology in order to more accurately reflect and recover the costs that APS incurs in providing transmission services. A large portion of the rate represents charges for transmission services to serve APS’s retail customers (“Retail Transmission Charges”). In order to recover the Retail Transmission Charges, APS was previously required to file an application with, and obtain approval from, the ACC to reflect changes in Retail Transmission Charges through the TCA. Under the terms of the Settlement Agreement (discussed above), however, an adjustment to rates to recover the Retail Transmission Charges will be made annually each June 1 beginning in 2013 and will go into effect automatically unless suspended by the ACC. | ||||||||||||||||
The formula rate is updated each year effective June 1 on the basis of APS’s actual cost of service, as disclosed in APS’s FERC Form 1 report for the previous fiscal year. Items to be updated include actual capital expenditures made as compared with previous projections, transmission revenue credits and other items. The resolution of proposed adjustments can result in significant volatility in the revenues to be collected. APS reviews the proposed formula rate filing amounts with the ACC staff. Any items or adjustments which are not agreed to by APS and the ACC staff can remain in dispute until settled or litigated at FERC. Settlement or litigated resolution of disputed issues could require an extended period of time and could have a significant effect on the Retail Transmission Charge because any adjustment, though applied prospectively, may be calculated to account for previously over- or under-collected amounts. | ||||||||||||||||
Effective June 1, 2012, APS’s annual wholesale transmission rates for all users of its transmission system increased by approximately $16 million for the twelve-month period beginning June 1, 2012 in accordance with the FERC-approved formula. | ||||||||||||||||
Effective June 1, 2013, APS’s annual wholesale transmission rates for all users of its transmission system increased by approximately $26 million for the twelve-month period beginning June 1, 2013 in accordance with the FERC-approved formula. Pursuant to the Settlement Agreement (discussed above), an adjustment to APS’s retail rates to recover the FERC-approved transmission charges went into effect automatically on June 1, 2013. | ||||||||||||||||
As part of APS’s proposed acquisition of Southern California Edison’s (“SCE”) interest in Units 4 and 5 of Four Corners, APS and SCE agreed that upon closing of the acquisition (or in 2016 if the closing does not occur), the companies will terminate an existing transmission agreement between the parties that provides transmission capacity for SCE to transmit its portion of the output from Four Corners to California. On May 1, 2013, APS submitted a request with FERC seeking authorization to cancel the transmission agreement and defer a $40 million payment to be made by APS associated with the termination and recover the payment through amortization over a 10-year period. On September 13, 2013, FERC issued an Order accepting the notice of cancellation, but denying APS’s request for rate recovery of the costs associated with the cancellation. In accordance with its termination agreement with SCE (the “Termination Agreement”), APS believes that the denial by FERC of such rate recovery constitutes the failure of a condition that relieves APS of its obligations under the Termination Agreement. The parties are in discussions concerning this matter. If the matter is not resolved by negotiation, the Termination Agreement requires that disputes be resolved through arbitration. APS is unable to predict the outcome of this matter. | ||||||||||||||||
Lost Fixed Cost Recovery (“LFCR”) Mechanism. The LFCR mechanism permits APS to recover on an after-the-fact basis a portion of its fixed costs that would otherwise have been collected by APS in the kWh sales lost due to APS energy efficiency programs and to distributed generation such as roof-top solar arrays. The fixed costs recoverable by the LFCR mechanism were established in the recent rate case and amount to approximately 3.1 cents per residential kWh lost and 2.3 cents per non-residential kWh lost. The kWh’s lost from energy efficiency are based on a third-party evaluation of APS’s energy efficiency programs. Distributed generation sales losses are determined from the metered output from the distributed generation units or if metering is unavailable, through accepted estimating techniques. | ||||||||||||||||
APS filed its first LFCR adjustment on January 15, 2013 and will file for its LFCR adjustment every January thereafter. On February 12, 2013, the ACC approved an LFCR adjustment of $5.1 million, representing a pro-rated amount for 2012 since the Settlement Agreement went into effect on July 1, 2012. | ||||||||||||||||
Deregulation | ||||||||||||||||
On May 9, 2013, the ACC voted to re-examine the facilitation of a deregulated retail electric market in Arizona. The ACC subsequently opened a docket for this matter and received comments from a number of interested parties on the considerations involved in establishing retail electric deregulation in the state. One of these considerations is whether various aspects of a deregulated market, including setting utility rates on a “market” basis, would be consistent with the requirements of the Arizona Constitution. On September 11, 2013, after receiving legal advice from the ACC staff, the ACC voted 4-1 to close the current docket and await full Constitutional authority before any further examination of this matter. The motion approved by the ACC also included opening one or more new dockets in the future to explore options to offer more rate choices to customers and innovative changes within the existing cost-of-service regulatory model that could include elements of competition. | ||||||||||||||||
Regulatory Assets and Liabilities | ||||||||||||||||
The detail of regulatory assets is as follows (dollars in millions): | ||||||||||||||||
Remaining | September 30, 2013 | December 31, 2012 | ||||||||||||||
Amortization | ||||||||||||||||
Period | Current | Non-Current | Current | Non-Current | ||||||||||||
Pension and other postretirement benefits | (a) | $ | — | $ | 754 | $ | — | $ | 780 | |||||||
Income taxes — allowance for equity funds used during construction | 2043 | 4 | 105 | 4 | 92 | |||||||||||
Deferred fuel and purchased power — mark-to-market (Note 7) | 2016 | 15 | 24 | 19 | 21 | |||||||||||
Transmission vegetation management | 2016 | 9 | 16 | 9 | 23 | |||||||||||
Coal reclamation | 2038 | 8 | 20 | 8 | 24 | |||||||||||
Palo Verde VIEs (Note 6) | 2046 | — | 40 | — | 38 | |||||||||||
Deferred compensation | 2036 | — | 36 | — | 34 | |||||||||||
Deferred fuel and purchased power (b) (c) | 2013 | 37 | — | 73 | — | |||||||||||
Retired power plant costs | 2020 | 3 | 19 | — | — | |||||||||||
Tax expense of Medicare subsidy | 2024 | 2 | 15 | 2 | 17 | |||||||||||
Loss on reacquired debt | 2034 | 1 | 17 | 2 | 18 | |||||||||||
Income taxes — investment tax credit basis adjustment | 2042 | 1 | 30 | 1 | 26 | |||||||||||
Pension and other postretirement benefits deferral | 2015 | 8 | 6 | 8 | 13 | |||||||||||
Lost fixed cost recovery (b) | 2014 | 19 | — | 7 | — | |||||||||||
Transmission cost adjustor (b) | 2014 | 12 | 2 | 10 | — | |||||||||||
Other | Various | 1 | 22 | 1 | 14 | |||||||||||
Total regulatory assets (d) | $ | 120 | $ | 1,106 | $ | 144 | $ | 1,100 | ||||||||
(a) This asset represents the future recovery of under-funded pension and other postretirement benefit obligations through retail rates. If these costs are disallowed by the ACC, this regulatory asset would be charged to other comprehensive income (“OCI”) and result in lower future revenues. | ||||||||||||||||
(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 and Transmission Cost Adjustor.” | ||||||||||||||||
The detail of regulatory liabilities is as follows (dollars in millions): | ||||||||||||||||
Remaining | September 30, 2013 | December 31, 2012 | ||||||||||||||
Amortization | ||||||||||||||||
Period | Current | Non-Current | Current | Non-Current | ||||||||||||
Removal costs | (a) | $ | 26 | $ | 311 | $ | 27 | $ | 321 | |||||||
Asset retirement obligations | (a) | — | 272 | — | 256 | |||||||||||
Renewable energy standard (b) | 2014 | 27 | 22 | 43 | — | |||||||||||
Income taxes — change in rates | 2042 | — | 68 | — | 66 | |||||||||||
Spent nuclear fuel | 2047 | 5 | 37 | 10 | 36 | |||||||||||
Deferred gains on utility property | 2019 | 2 | 11 | 2 | 12 | |||||||||||
Income taxes — deferred investment tax credit | 2042 | 2 | 60 | 2 | 52 | |||||||||||
Demand side management (b) | 2014 | 26 | — | 4 | — | |||||||||||
Other | Various | — | 17 | — | 16 | |||||||||||
Total regulatory liabilities | $ | 88 | $ | 798 | $ | 88 | $ | 759 | ||||||||
(a) In accordance with regulatory accounting guidance, APS accrues for removal costs for its regulated assets, even if there is no legal obligation for removal. | ||||||||||||||||
(b) See “Cost Recovery Mechanisms” discussion above. | ||||||||||||||||
Retirement_Plans_and_Other_Ben
Retirement Plans and Other Benefits | 9 Months Ended | |||||||||||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||||||||||
Retirement Plans and Other Benefits | ||||||||||||||||||||||||||
Retirement Plans and Other Benefits | 4. Retirement Plans and Other Benefits | |||||||||||||||||||||||||
Pinnacle West sponsors a qualified defined benefit and account balance pension plan, a non-qualified supplemental excess benefit retirement plan, and other postretirement benefit plans for the employees of Pinnacle West and our subsidiaries. Pinnacle West uses a December 31 measurement date for its pension and other postretirement benefit plans. The market-related value of our plan assets is their fair value at the measurement date. | ||||||||||||||||||||||||||
Certain pension and other postretirement benefit costs in excess of amounts recovered in electric retail rates were deferred through June 30, 2012 as a regulatory asset for future recovery, pursuant to an ACC regulatory order. We deferred pension and other postretirement benefit costs of approximately $14 million in 2012. Pursuant to an ACC regulatory order, we began amortizing the regulatory asset in July 2012. We amortized approximately $2 million for the three months ended September 30, 2013, and 2012, and approximately $6 million and $2 million for the nine months ended September 30, 2013 and 2012, respectively. 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, billed to electric plant participants or charged or amortized to the regulatory asset) (dollars in millions): | ||||||||||||||||||||||||||
Pension Benefits | Other Benefits | |||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
September 30, | September 30, | September 30, | September 30, | |||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||
Service cost — benefits earned during the period | $ | 16 | $ | 16 | $ | 48 | $ | 48 | $ | 6 | $ | 7 | $ | 18 | $ | 20 | ||||||||||
Interest cost on benefit obligation | 28 | 30 | 84 | 90 | 10 | 12 | 31 | 35 | ||||||||||||||||||
Expected return on plan assets | (36 | ) | (35 | ) | (110 | ) | (106 | ) | (11 | ) | (12 | ) | (34 | ) | (34 | ) | ||||||||||
Amortization of: | ||||||||||||||||||||||||||
Prior service cost | — | — | 1 | 1 | — | — | — | — | ||||||||||||||||||
Net actuarial loss | 10 | 11 | 30 | 33 | 3 | 5 | 8 | 15 | ||||||||||||||||||
Net periodic benefit cost | $ | 18 | $ | 22 | $ | 53 | $ | 66 | $ | 8 | $ | 12 | $ | 23 | $ | 36 | ||||||||||
Portion of cost charged to expense | $ | 10 | $ | 12 | $ | 29 | $ | 25 | $ | 5 | $ | 7 | $ | 14 | $ | 13 | ||||||||||
Contributions | ||||||||||||||||||||||||||
We have made voluntary contributions of $141 million to our pension plan in 2013. The minimum contributions for the pension plan due in 2013, 2014, and 2015 under the recently enacted Moving Ahead for Progress in the 21st Century Act (MAP-21) are estimated to be zero, $89 million, and $112 million, respectively. We expect to make contributions to the pension plan up to approximately $175 million each year in 2014 and 2015. We have contributed $11 million to our other postretirement benefit plans in 2013. The total contributions to our other postretirement benefit plans are expected to be approximately $14 million in 2013 and approximately $20 million each year in 2014 and 2015. |
Income_Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2013 | |
Income Taxes | |
Income Taxes | 5. Income Taxes |
The $70 million long-term income tax receivable on the Condensed Consolidated Balance Sheets as of December 31, 2012 represented the anticipated refund related to an APS tax accounting method change approved by the Internal Revenue Service (“IRS”) in the third quarter of 2009. On July 9, 2013, IRS guidance was released which provided clarification regarding the timing and amount of this cash receipt. As a result of this guidance, uncertain tax positions decreased $67 million during the third quarter. This decrease in uncertain tax positions resulted in a corresponding increase to the total anticipated refund due from the IRS and an offsetting increase in long-term deferred tax liabilities. The $137 million anticipated refund is expected to be received within the next twelve months and has been reclassified to current income tax receivable as of September 30, 2013. | |
Finalization of the current IRS examination of tax returns for the years ended December 31, 2008 and 2009 is likely to occur within the next twelve months. As a result, the $137 million anticipated refund has been reduced by approximately $4 million to reflect the likely ultimate outcome of this examination. Additionally, it is possible that uncertain tax positions could decrease by approximately $35 million. This decrease would be materially offset by an increase in deferred tax liabilities. | |
On September 13, 2013, the U.S. Treasury Department released final income tax regulations on the deduction and capitalization of expenditures related to tangible property. These final regulations apply to tax years beginning on or after January 1, 2014. Several of the provisions within the regulations will require a tax accounting method change to be filed with the IRS, resulting in a cumulative effect adjustment. To account for the adoption of these regulations, for the quarter ended September 30, 2013, plant-related long-term deferred tax liabilities decreased by $80 million, with the offsetting decrease to current deferred income tax assets. Prior to the issuance of these regulations, this $80 million would have been repaid over 20 years through lower tax depreciation deductions. | |
Net Income associated with the Palo Verde sale leaseback variable interest entities is not subject to tax (see Note 6). As a result, there is no income tax expense associated with the VIEs recorded on the Condensed Consolidated Statements of Income. | |
The American Taxpayer Relief Act of 2012, signed into law on January 2, 2013, includes provisions making qualified property placed into service in 2013 eligible for 50% bonus depreciation for federal income tax purposes. Full recognition of the cash benefit of this provision delayed realization of approximately $78 million in federal general business income tax credit carryforwards which were classified as current deferred income taxes as of December 31, 2012. However, as of September 30, 2013, the $78 million in federal general business tax credit carryforwards are expected to be realized within the next twelve months. | |
As of September 30, 2013, the tax year ended December 31, 2008 and all subsequent tax years remain subject to examination by the IRS. With few exceptions, we are no longer subject to state income tax examinations by tax authorities for years before 2008. |
Palo_Verde_Sale_Leaseback_Vari
Palo Verde Sale Leaseback Variable Interest Entities | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Palo Verde Sale Leaseback Variable Interest Entities | ||||||||
Palo Verde Sale Leaseback Variable Interest Entities | 6. Palo Verde Sale Leaseback Variable Interest Entities | |||||||
In 1986, APS entered into agreements with three separate VIE lessor trusts in order to sell and lease back interests in Palo Verde Unit 2 and related common facilities. APS will pay approximately $49 million per year for the years 2013 to 2015 related to these leases. The lease agreements include fixed rate renewal periods, which gives APS the ability to utilize the asset for a significant portion of the asset’s economic life, and therefore provide APS with the power to direct activities of the VIEs that most significantly impact the VIEs’ economic performance. Predominately due to the fixed rate renewal periods, APS has been deemed the primary beneficiary of these VIEs and therefore consolidates the VIEs. | ||||||||
On December 31, 2012, APS notified the lessor trust entities that APS would retain the assets beyond 2015 by either exercising the fixed rate lease renewals or by purchasing the assets. If APS elects to purchase the assets, the purchase price will be based on the fair market value of the assets at the end of 2015. If APS elects to extend the leases, we will be required to make payments beginning in 2016 of approximately $23 million annually. The length of the lease extensions is unknown at this time as it must be determined through an appraisal process. APS must give notice to the lessor trusts by June 30, 2014 notifying them which of these two options (lease renewal or purchasing the assets) it will exercise. The December 31, 2012 notification does not impact APS’s consolidation of the VIEs, as APS continues to be deemed the primary beneficiary of the VIEs. | ||||||||
As a result of consolidation, we eliminate rent expense and recognize depreciation and interest expense, resulting in an increase in net income for the three and nine months ended September 30, 2013 of $9 million and $25 million, respectively, and for the three and nine months ended September 30, 2012 of $8 million and $24 million, respectively, entirely attributable to the noncontrolling interests. Income attributable to Pinnacle West shareholders remains the same. Consolidation of these VIEs also results in changes to our Condensed Consolidated Statements of Cash Flows, but does not impact net cash flows. | ||||||||
Our Condensed Consolidated Balance Sheets at September 30, 2013 and December 31, 2012 include the following amounts relating to the VIEs (in millions): | ||||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
Palo Verde sale leaseback property plant and equipment, net of accumulated depreciation | $ | 126 | $ | 129 | ||||
Current maturities of long-term debt | 20 | 27 | ||||||
Palo Verde sale leaseback lessor notes long-term debt excluding current maturities | 37 | 39 | ||||||
Equity — Noncontrolling interests | 146 | 129 | ||||||
Assets of the VIEs are restricted and may only be used to settle the VIEs’ debt obligations and for payment to the noncontrolling interest holders. Other than the VIEs’ assets reported on our consolidated financial statements, the creditors of the VIEs have no other recourse to the assets of APS or Pinnacle West, except in certain circumstances such as a default by APS under the lease. | ||||||||
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 United States Nuclear Regulatory Commission (“NRC”) issuing specified violation orders with respect to Palo Verde or the occurrence of specified nuclear events), APS would be required to make specified payments to the VIEs’ noncontrolling equity participants, assume the VIEs’ debt, 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 had occurred as of September 30, 2013, APS would have been required to pay the noncontrolling equity participants approximately $142 million and assume $57 million of debt. Since APS consolidates these VIEs, the debt APS would be required to assume is already reflected in our Condensed Consolidated Balance Sheets. | ||||||||
For regulatory ratemaking purposes, the leases continue to be treated as operating leases and, as a result, we have recorded a regulatory asset relating to the arrangements. |
Derivative_Accounting
Derivative Accounting | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Derivative Accounting | |||||||||||||||||
Derivative Accounting | 7. Derivative Accounting | ||||||||||||||||
We are exposed to the impact of market fluctuations in the commodity price and transportation costs of electricity, natural gas, coal, emissions allowances and in interest rates. We manage risks associated with market volatility 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 fuels. 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. We also enter into derivative instruments for economic hedging purposes. While we believe the economic hedges mitigate exposure to fluctuations in commodity prices, these instruments have not been designated as accounting hedges. Contracts that have the same terms (quantities, delivery points and delivery periods) and for which power does not flow are netted, which reduces both revenues and fuel and purchased power costs in our Condensed Consolidated Statements of Income, but does not impact our financial condition, net income or cash flows. | |||||||||||||||||
On June 1, 2012, we elected to discontinue cash flow hedge accounting treatment for the significant majority of our contracts that had previously been designated as accounting hedges. This discontinuation is due to changes in PSA recovery (see Note 3), which now allows for 100% deferral of the unrealized gains and losses relating to these contracts. For those contracts that were de-designated, all changes in fair value after May 31, 2012 are no longer recorded through other comprehensive income (“OCI”), but are deferred through the PSA. The amounts previously recorded in accumulated OCI (“AOCI”) relating to these instruments will remain in AOCI, and will transfer to earnings in the same period or periods during which the hedged transaction affects earnings or sooner if we determine it is probable that the forecasted transaction will not occur. Cash flow hedge accounting treatment will continue for a limited number of contracts that are not subject to PSA recovery. | |||||||||||||||||
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 normal sales scope exception are accounted for under the accrual method of accounting and excluded from our derivative instrument discussion and disclosures below. | |||||||||||||||||
Hedge effectiveness is the degree to which the derivative instrument contract and the hedged item are correlated and is measured based on the relative changes in fair value of the derivative instrument contract and the hedged item over time. We assess hedge effectiveness both at inception and on a continuing basis. These assessments exclude the time value of certain options. For accounting hedges that are deemed an effective hedge, the effective portion of the gain or loss on the derivative instrument is reported as a component of OCI and reclassified into earnings in the same period during which the hedged transaction affects earnings. We recognize in current earnings, subject to the PSA, the gains and losses representing hedge ineffectiveness, and the gains and losses on any hedge components which are excluded from our effectiveness assessment. As cash flow hedge accounting has been discontinued for the significant majority of our contracts, after May 31, 2012, effectiveness testing is no longer being performed for these contracts. | |||||||||||||||||
Prior to the Settlement Agreement, for its regulated operations, APS deferred for future rate treatment approximately 90% of unrealized gains and losses on certain derivatives pursuant to the PSA mechanism that would otherwise be recognized in income. Due to the Settlement Agreement, for its regulated operations, APS now defers for future rate treatment 100% of the unrealized gains and losses for delivery periods after June 30, 2012 on derivatives pursuant to the PSA mechanism that would otherwise be recognized in income. Realized gains and losses on derivatives are deferred in accordance with the PSA to the extent the amounts are above or below the Base Fuel Rate (see Note 3). Gains and losses from derivatives in the following tables represent the amounts reflected in income before the effect of PSA deferrals. | |||||||||||||||||
As of September 30, 2013, we had the following outstanding gross notional volume of derivatives, which represent both purchases and sales (does not reflect net position): | |||||||||||||||||
Commodity | Quantity | ||||||||||||||||
Power | 6,498 | gigawatt hours | |||||||||||||||
Gas | 112 | Bcfs (a) | |||||||||||||||
(a) “Bcf” is Billion Cubic Feet. | |||||||||||||||||
Gains and Losses from Derivative Instruments | |||||||||||||||||
The following table provides information about gains and losses from derivative instruments in designated cash flow accounting hedging relationships (dollars in thousands): | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
Commodity Contracts | Financial Statement Location | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Loss recognized in OCI on derivative instruments (effective portion) | Other comprehensive income (loss) — derivative instruments | $ | (240 | ) | $ | (119 | ) | $ | (409 | ) | $ | (37,513 | ) | ||||
Loss reclassified from AOCI into income (effective portion realized) (a) | Fuel and purchased power (b) | (23,658 | ) | (49,478 | ) | (39,156 | ) | (86,993 | ) | ||||||||
Gain recognized in income (ineffective portion and amount excluded from effectiveness testing) | Fuel and purchased power (b) | — | — | — | 117 | ||||||||||||
(a) During the three and nine months ended September 30, 2013 and three months ended September 30, 2012, we had no amounts reclassified from AOCI to earnings related to discontinued cash flow hedges. During the nine months ended September 30, 2012, we had $1.8 million of losses reclassified from AOCI 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 a net loss of $23 million before income taxes will be reclassified from AOCI as an offset to the effect of market price changes for the related hedged transactions. In accordance with the PSA, substantially all of these amounts will be recorded as either a regulatory asset or liability and have no immediate effect on earnings. | |||||||||||||||||
The following table provides information about gains and losses from derivative instruments not designated as accounting hedging instruments during the three and nine months ended September 30, 2013 and 2012 (dollars in thousands): | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
Commodity Contracts | Financial Statement Location | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Net gain recognized in income | Operating revenues (a) | $ | 196 | $ | 258 | $ | 400 | $ | 19 | ||||||||
Net gain (loss) recognized in income | Fuel and purchased power expense (a) | (1,341 | ) | 12,870 | (11,750 | ) | 13,860 | ||||||||||
Total | $ | (1,145 | ) | $ | 13,128 | $ | (11,350 | ) | $ | 13,879 | |||||||
(a) Amounts are before the effect of PSA deferrals. | |||||||||||||||||
Derivative Instruments in the Condensed Consolidated Balance Sheets | |||||||||||||||||
Our derivative transactions are typically executed under standardized or customized agreements, which include collateral requirements and in the event of a default would allow for the netting of positive and negative exposures associated with a single counterparty. Agreements that allow for the offsetting of positive and negative exposures associated with a single counterparty are considered master netting arrangements. Transactions with counterparties that have master netting arrangements are offset and reported net on the Condensed Consolidated Balance Sheets. Transactions that do not allow for offsetting of positive and negative positions are reported gross on the Condensed Consolidated Balance Sheets. | |||||||||||||||||
We do not offset a counterparty’s current derivative contracts with the counterparty’s non-current derivative contracts, although our master netting arrangements would allow current and non-current positions to be offset in the event of default. Additionally, in the event of a default, our master netting arrangements would allow for the offsetting of all transactions executed under the master netting arrangement. 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 significant majority of our derivative instruments are not currently designated as hedging instruments. The Condensed Consolidated Balance Sheets as of September 30, 2013 and December 31, 2012, include gross liabilities of $5 million of derivative instruments designated as hedging instruments. | |||||||||||||||||
The following tables provide information about the fair value of our risk management activities reported on a gross basis, and the impacts of offsetting as of September 30, 2013 and December 31, 2012. These amounts relate to commodity contracts and are located in the assets and liabilities from risk management activities lines of our Condensed Consolidated Balance Sheets. | |||||||||||||||||
As of September 30, 2013: | Gross | Amounts | Net | Other | Amount | ||||||||||||
(dollars in thousands) | Recognized | Offset | Recognized | (c) | Reported on | ||||||||||||
Derivatives | (b) | Derivatives | Balance Sheet | ||||||||||||||
(a) | |||||||||||||||||
Current Assets | $ | 32,201 | $ | (9,605 | ) | $ | 22,596 | $ | 145 | $ | 22,741 | ||||||
Investments and Other Assets | 27,905 | (1,859 | ) | 26,046 | — | 26,046 | |||||||||||
Total Assets | 60,106 | (11,464 | ) | 48,642 | 145 | 48,787 | |||||||||||
Current Liabilities | (66,680 | ) | 32,675 | (34,005 | ) | (19,463 | ) | (53,468 | ) | ||||||||
Deferred Credits and Other | (74,751 | ) | 7,089 | (67,662 | ) | — | (67,662 | ) | |||||||||
Total Liabilities | (141,431 | ) | 39,764 | (101,667 | ) | (19,463 | ) | (121,130 | ) | ||||||||
Total | $ | (81,325 | ) | $ | 28,300 | $ | (53,025 | ) | $ | (19,318 | ) | $ | (72,343 | ) | |||
(a) All of our gross recognized derivative instruments were subject to master netting arrangements. | |||||||||||||||||
(b) Includes cash collateral provided to counterparties of $28,300. | |||||||||||||||||
(c) Represents cash collateral and 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 $19,463, and cash margin provided to counterparties of $145. | |||||||||||||||||
As of December 31, 2012: | Gross | Amounts | Net | Other | Amount | ||||||||||||
(dollars in thousands) | Recognized | Offset | Recognized | (c) | Reported on | ||||||||||||
Derivatives | (b) | Derivatives | Balance Sheet | ||||||||||||||
(a) | |||||||||||||||||
Current Assets | $ | 42,495 | $ | (17,797 | ) | $ | 24,698 | $ | 1,001 | $ | 25,699 | ||||||
Investments and Other Assets | 41,563 | (5,672 | ) | 35,891 | — | 35,891 | |||||||||||
Total Assets | 84,058 | (23,469 | ) | 60,589 | 1,001 | 61,590 | |||||||||||
Current Liabilities | (105,324 | ) | 57,046 | (48,278 | ) | (25,463 | ) | (73,741 | ) | ||||||||
Deferred Credits and Other | (100,986 | ) | 15,722 | (85,264 | ) | — | (85,264 | ) | |||||||||
Total Liabilities | (206,310 | ) | 72,768 | (133,542 | ) | (25,463 | ) | (159,005 | ) | ||||||||
Total | $ | (122,252 | ) | $ | 49,299 | $ | (72,953 | ) | $ | (24,462 | ) | $ | (97,415 | ) | |||
(a) All of our gross recognized derivative instruments were subject to master netting arrangements. | |||||||||||||||||
(b) Includes cash collateral provided to counterparties of $49,299. | |||||||||||||||||
(c) Represents cash collateral relating to non-derivative instruments or derivatives qualifying for scope exceptions. Includes cash collateral provided to counterparties of $1,001, and cash collateral received from counterparties of $25,463. This amount is not subject to offsetting. | |||||||||||||||||
Credit Risk and Credit Related Contingent Features | |||||||||||||||||
We are exposed to losses in the event of nonperformance or nonpayment by counterparties. We have risk management contracts with many counterparties, including two counterparties for which our exposure represents approximately 90% of Pinnacle West’s $49 million of risk management assets as of September 30, 2013. This exposure relates to long-term traditional wholesale contracts with counterparties that have high credit quality. Our risk management process assesses and monitors the financial exposure of all counterparties. Despite the fact that the great majority of trading counterparties’ debt is rated as investment grade by the credit rating agencies, there is still a possibility that one or more of these companies could default, resulting in a material impact on consolidated earnings for a given period. Counterparties in the portfolio consist principally of financial institutions, major energy companies, municipalities and local distribution companies. We maintain credit policies that we believe minimize overall credit risk to within acceptable limits. Determination of the credit quality of our counterparties is based upon a number of factors, including credit ratings and our evaluation of their financial condition. To manage credit risk, we employ collateral requirements and standardized agreements that allow for the netting of positive and negative exposures associated with a single counterparty. Valuation adjustments are established representing our estimated credit losses on our overall exposure to counterparties. | |||||||||||||||||
Certain of our derivative instrument contracts contain credit-risk-related contingent features including, among other things, investment grade credit rating provisions, credit-related cross default provisions, and adequate assurance provisions. Adequate assurance provisions allow a counterparty with reasonable grounds for uncertainty to demand additional collateral based on a subjective event and/or condition. For those derivative instruments in a net liability position, with investment grade credit contingencies, the counterparties could demand additional collateral if our debt credit rating were to fall below investment grade (below BBB- for Standard & Poor’s or Fitch or Baa3 for Moody’s). | |||||||||||||||||
The following table provides information about our derivative instruments that have credit-risk-related contingent features at September 30, 2013 (dollars in millions): | |||||||||||||||||
September 30, | |||||||||||||||||
2013 | |||||||||||||||||
Aggregate Fair Value of Derivative Instruments in a Net Liability Position | $ | 141 | |||||||||||||||
Cash Collateral Posted | 28 | ||||||||||||||||
Additional Cash Collateral in the Event Credit-Risk-Related Contingent Features were Fully Triggered (a) | 88 | ||||||||||||||||
(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 $175 million if our debt credit ratings were to fall below investment grade. |
Changes_in_Equity
Changes in Equity | 9 Months Ended | |||||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||||
Changes in Equity | ||||||||||||||||||||
Changes in Equity | 8. Changes in Equity | |||||||||||||||||||
The following tables show Pinnacle West’s changes in shareholders’ equity and changes in equity of noncontrolling interests for the three and nine months ended September 30, 2013 and 2012 (dollars in thousands): | ||||||||||||||||||||
Three Months Ended September 30, 2013 | Three Months Ended September 30, 2012 | |||||||||||||||||||
Common | Noncontrolling | Total | Common | Noncontrolling | Total | |||||||||||||||
Shareholders | Interests | Shareholders | Interests | |||||||||||||||||
Beginning balance, July 1 | $ | 4,032,165 | $ | 137,069 | $ | 4,169,234 | $ | 3,778,035 | $ | 121,302 | $ | 3,899,337 | ||||||||
Net income | 226,163 | 8,555 | 234,718 | 244,823 | 8,040 | 252,863 | ||||||||||||||
Other comprehensive income | 15,122 | — | 15,122 | 30,843 | — | 30,843 | ||||||||||||||
Total comprehensive income | 241,285 | 8,555 | 249,840 | 275,666 | 8,040 | 283,706 | ||||||||||||||
Issuance of capital stock | 2,331 | — | 2,331 | 2,365 | — | 2,365 | ||||||||||||||
Reissuance of treasury stock — net | 37 | — | 37 | (82 | ) | — | (82 | ) | ||||||||||||
Other (primarily stock compensation) | (22 | ) | — | (22 | ) | 258 | — | 258 | ||||||||||||
Dividends on common stock | 8 | — | 8 | — | — | — | ||||||||||||||
Ending balance, September 30 | $ | 4,275,804 | $ | 145,624 | $ | 4,421,428 | $ | 4,056,242 | $ | 129,342 | $ | 4,185,584 | ||||||||
Nine Months Ended September 30, 2013 | Nine Months Ended September 30, 2012 | |||||||||||||||||||
Common | Noncontrolling | Total | Common | Noncontrolling | Total | |||||||||||||||
Shareholders | Interests | Shareholders | Interests | |||||||||||||||||
Beginning balance, January 1 | $ | 3,972,806 | $ | 129,483 | $ | 4,102,289 | $ | 3,821,850 | $ | 108,736 | $ | 3,930,586 | ||||||||
Net income | 381,814 | 25,338 | 407,152 | 358,911 | 23,582 | 382,493 | ||||||||||||||
Other comprehensive income | 24,673 | — | 24,673 | 32,688 | — | 32,688 | ||||||||||||||
Total comprehensive income | 406,487 | 25,338 | 431,825 | 391,599 | 23,582 | 415,181 | ||||||||||||||
Issuance of capital stock | 7,268 | — | 7,268 | 7,590 | — | 7,590 | ||||||||||||||
Reissuance (purchase) of treasury stock - net | (5,868 | ) | — | (5,868 | ) | 3,277 | — | 3,277 | ||||||||||||
Other (primarily stock compensation) | 14,988 | — | 14,988 | 4,270 | — | 4,270 | ||||||||||||||
Dividends on common stock | (119,877 | ) | — | (119,877 | ) | (172,344 | ) | — | (172,344 | ) | ||||||||||
Net capital activities by noncontrolling interests | — | (9,197 | ) | (9,197 | ) | — | (2,976 | ) | (2,976 | ) | ||||||||||
Ending balance, September 30 | $ | 4,275,804 | $ | 145,624 | $ | 4,421,428 | $ | 4,056,242 | $ | 129,342 | $ | 4,185,584 |
Commitments_and_Contingencies
Commitments and Contingencies | 9 Months Ended | ||||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||||
Commitments and Contingencies. | |||||||||||||||||||||||
Commitments and Contingencies | 9. Commitments and Contingencies | ||||||||||||||||||||||
Palo Verde Nuclear 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 breach of contract lawsuit against the United States Department of Energy (“DOE”) in the United States Court of Federal Claims. The lawsuit seeks to recover APS’s 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 spent nuclear fuel and high level waste from January 1, 2007 through June 30, 2011, as it was required to do pursuant to the terms of the Standard Contract and the Nuclear Waste Policy Act. Activities in this legal proceeding are currently limited to review of supporting information for APS’s claim by the Government. | |||||||||||||||||||||||
APS currently estimates it will incur $122 million over the current life of Palo Verde for its share of the costs related to the on-site interim storage of spent nuclear fuel. At September 30, 2013, APS had a regulatory liability of $42 million that represents amounts recovered in retail rates in excess of amounts spent for on-site interim spent fuel storage. | |||||||||||||||||||||||
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 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 $13.6 billion per occurrence. Palo Verde maintains the maximum available nuclear liability insurance in the amount of $375 million, which is provided by commercial insurance carriers. The remaining balance of $13.2 billion of liability coverage is provided through a mandatory industry-wide retrospective assessment program. If losses at any nuclear power plant covered by the program exceed the accumulated funds, APS could be assessed retrospective premium adjustments. The maximum assessment per reactor under the program for each nuclear incident is approximately $127.3 million, subject to an annual limit of $19 million per incident, to be periodically adjusted for inflation. Based on APS’s interest in the three Palo Verde units, APS’s maximum potential retrospective assessment per incident for all three units is approximately $111.1 million, with an annual payment limitation of approximately $16.4 million. | |||||||||||||||||||||||
The Palo Verde participants maintain “all risk” (including nuclear hazards) insurance for property damage to, and decontamination of, property at Palo Verde in the aggregate amount of $2.75 billion, a substantial portion of which must first be applied to stabilization and decontamination. APS has also secured insurance against portions of any increased cost of generation or purchased power and business interruption resulting from a sudden and unforeseen accidental outage of any of the three units. The property damage, decontamination, and replacement power coverages are provided by Nuclear Electric Insurance Limited (“NEIL”). Effective April 1, 2013, a sublimit of $1.5 billion for non-nuclear property damage losses site-wide has been imposed on the NEIL property policies. Effective April 1, 2013, a sublimit of $327.6 million per unit has been imposed on the non-nuclear losses covered by the NEIL accidental outage policy, potentially subject to further limitations. APS is subject to retrospective assessments under all NEIL policies if NEIL’s losses in any policy year exceed accumulated funds. The maximum amount APS could incur under the current NEIL policies totals approximately $18 million for each retrospective assessment declared by NEIL’s Board of Directors due to losses. In addition, NEIL policies contain rating triggers that would result in APS providing approximately $48 million of collateral assurance within 20 business days of a rating downgrade to non-investment grade. The insurance coverage discussed in this and the previous paragraph is subject to certain policy conditions, sublimits and exclusions. | |||||||||||||||||||||||
Contractual Obligations | |||||||||||||||||||||||
As of September 30, 2013, our contractual obligations for fuel and purchased power commitments decreased approximately $300 million from December 31, 2012, as discussed in the 2012 Form 10-K. As of September 30, 2013, the updated contractual obligations related to our fuel and purchased power obligations are as follows (dollars in millions): | |||||||||||||||||||||||
2013 | 2014 | 2015 | 2016 | 2017 | Thereafter | Total | |||||||||||||||||
Fuel and Purchased Power | $ | 108 | $ | 576 | $ | 549 | $ | 516 | $ | 441 | $ | 6,399 | $ | 8,589 | |||||||||
For additional information regarding contractual obligations, see information provided in our 2012 Form 10-K. | |||||||||||||||||||||||
Superfund-Related Matters | |||||||||||||||||||||||
The Comprehensive Environmental Response, Compensation and Liability Act (“Superfund”) establishes liability for the cleanup of hazardous substances found contaminating the soil, water or air. Those who generated, transported or disposed of hazardous substances at a contaminated site are among those who are potentially responsible parties (“PRPs”). PRPs may be strictly, and often are jointly and severally, liable for clean-up. On September 3, 2003, the United States Environmental Protection Agency (“EPA”) advised APS that EPA considers APS to be a PRP in the Motorola 52nd Street Superfund Site, Operable Unit 3 (“OU3”) in Phoenix, Arizona. APS has facilities that are within this Superfund site. APS and Pinnacle West have agreed with EPA to perform certain investigative activities of the APS facilities within OU3. In addition, on September 23, 2009, APS agreed with EPA and one other PRP to voluntarily assist with the funding and management of the site-wide groundwater remedial investigation and feasibility study work plan. We estimate that our costs related to this investigation and study will be approximately $2 million. We anticipate incurring additional expenditures in the future, but because the overall investigation is not complete and ultimate remediation requirements are not yet finalized, at the present time expenditures related to this matter cannot be reasonably estimated. | |||||||||||||||||||||||
On August 6, 2013, the Roosevelt Irrigation District (“RID”) filed a lawsuit in Arizona District Court against APS and 24 other defendants, alleging that RID’s groundwater wells were contaminated by the release of hazardous substances from facilities owned or operated by the defendants. The lawsuit also alleges that, under Superfund laws, the defendants are jointly and severally liable to RID. The allegations against APS arise out of APS’s current and former ownership of facilities in and around OU3. We are unable to determine a range of potential losses that are reasonably possible of occurring. | |||||||||||||||||||||||
Southwest Power Outage | |||||||||||||||||||||||
Regulatory. On September 8, 2011 at approximately 3:30 PM, a 500 kilovolt (“kV”) transmission line running between the Hassayampa and North Gila substations in southwestern Arizona tripped out of service due to a fault that occurred at a switchyard operated by APS. Approximately ten minutes after the transmission line went off-line, generation and transmission resources for the Yuma area were lost, resulting in approximately 69,700 APS customers losing service. | |||||||||||||||||||||||
Within the same time period that APS’s Yuma customers lost service, a series of transmission and generation disruptions occurred across the systems of several utilities that resulted in outages affecting portions of southern Arizona, southern California and northern Mexico. A total of approximately 7,900 MW of firm load and 2.7 million customers were reported to have been affected. Service to all affected APS customers was restored by 9:15 PM on September 8. Service to customers affected by the wider regional outages was restored by approximately 3:25 AM on September 9. | |||||||||||||||||||||||
The FERC and the North American Electric Reliability Corporation (“NERC”) conducted a joint inquiry into the outages and, on May 1, 2012, they issued a report (the “Joint Report”) with their analysis and conclusions as to the causes of the events. The report includes recommendations to help industry operators prevent similar outages in the future, including increased data sharing and coordination among the western utilities and entities responsible for bulk electric system reliability coordination. The Joint Report does not address potential reliability violations or an assessment of responsibility of the parties involved. APS continues to analyze business practices and procedures related to the September 8 events. | |||||||||||||||||||||||
APS cannot predict the timing, results or potential impacts of enforcement actions that may be brought against APS relating to the September 8 events, or any claims that may be made as a result of the outages. If violations of NERC Reliability Standards are ultimately determined to have occurred, FERC has the legal authority to assert a possible fine of up to $1 million per violation per day that a violation is found to have been in existence. | |||||||||||||||||||||||
Litigation. On September 6, 2013, a purported consumer class action complaint was filed in Federal District Court in San Diego, California, naming APS and Pinnacle West as defendants and seeking damages for loss of perishable inventory and sales as a result of interruption of electrical service. APS and Pinnacle West intend to file a motion to dismiss the complaint. | |||||||||||||||||||||||
Clean Air Act Lawsuit | |||||||||||||||||||||||
On October 4, 2011, Earthjustice, on behalf of several environmental organizations, filed a lawsuit in the United States District Court for the District of New Mexico against APS and the other Four Corners participants alleging violations of the New Source Review (“NSR”) provisions of the Clean Air Act. Subsequent to filing its original Complaint, on January 6, 2012, Earthjustice filed a First Amended Complaint adding claims for violations of the Clean Air Act’s New Source Performance Standards (“NSPS”) program. Among other things, the plaintiffs seek to have the court enjoin operations at Four Corners until APS applies for and obtains any required NSR permits and complies with the NSPS. The plaintiffs further request the court to order the payment of civil penalties, including a beneficial mitigation project. On April 2, 2012, APS and the other Four Corners participants filed motions to dismiss. The case is being held in abeyance while the parties seek to negotiate a settlement. On March 30, 2013, upon joint motion of the parties, the court issued an order deeming the motions to dismiss withdrawn without prejudice during pendency of the stay. At such time as the stay is lifted, APS and the other Four Corners participants may reinstate their motions to dismiss without risk of default. We are unable to determine a range of potential losses that are reasonably possible of occurring. | |||||||||||||||||||||||
Environmental Matters | |||||||||||||||||||||||
APS is subject to numerous environmental laws and regulations affecting many aspects of its present and future operations, including air emissions, water quality, wastewater discharges, solid waste, hazardous waste, and coal combustion residuals (“CCR”). 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 new requirements on Four Corners and the Cholla Power Plant (“Cholla”) and is currently awaiting a final rulemaking from EPA that could impose new requirements on the Navajo Generating Station (“Navajo Plant”). EPA and Arizona Department of Environmental Quality (“ADEQ”) will require these plants to install pollution control equipment that constitutes the “best available retrofit technology” (“BART”) to lessen the impacts of emissions on visibility surrounding the plants. Based on EPA’s final standards, APS’s share of its total costs for Four Corners (assuming the consummation of its purchase of SCE’s interest in Units 4 and 5 and subsequent shut down of Units 1-3) could be approximately $300 million. APS’s share of costs for upgrades at Navajo, based on EPA’s Federal Implementation Plan (“FIP”) proposal, could be up to approximately $200 million. APS has filed a Petition for Review of EPA’s rule as it applies to Cholla, which, if not successful, will require installation of controls with a cost to APS of approximately $200 million. | |||||||||||||||||||||||
Mercury and Other Hazardous Air Pollutants. In 2011, EPA issued rules establishing maximum achievable control technology standards to regulate emissions of mercury and other hazardous air pollutants from fossil-fired plants. APS estimates that the cost for the remaining equipment necessary to meet these standards is approximately $120 million for Cholla Units 1-3. Estimated costs for Four Corners Units 1-3 are not included in our current environmental expenditure estimates since our estimates assume the consummation of APS’s purchase of SCE’s interest in Four Corners Units 4 and 5 and the subsequent shut down of Units 1-3. No additional equipment is needed for Four Corners Units 4 and 5 to comply with these rules. Salt River Project Agricultural Improvement and Power District (“SRP”), the operating agent for the Navajo Plant, is still evaluating compliance options under the rules. | |||||||||||||||||||||||
Other future environmental rules that could involve material compliance costs include those related to cooling water intake structures, coal combustion waste, effluent limitations, ozone national ambient air quality, greenhouse gas emissions and other rules or matters involving the Clean Air Act, Endangered Species Act, the Navajo Nation, and water supplies for our power plants. The financial impact of complying with these and other future environmental rules could jeopardize the economic viability of our coal plants or the willingness or ability of power plant participants to fund any required equipment upgrades or continue their participation in these plants. The economics of continuing to own certain resources, particularly our coal plants, may deteriorate, warranting early retirement of those plants, which may result in asset impairments. APS would seek recovery in rates for the book value of any remaining investments in the plants as well as other costs related to early retirement, but cannot predict whether it would obtain such recovery. | |||||||||||||||||||||||
Regional Haze Rules — Cholla | |||||||||||||||||||||||
APS believes that EPA’s final rule as it applies to Cholla is unsupported and that EPA had no basis for disapproving Arizona’s State Implementation Plan (“SIP”) and promulgating a FIP that is inconsistent with the state’s considered BART determinations under the regional haze program. Accordingly, on February 1, 2013, APS filed a Petition for Review of the final BART rule in the United States Court of Appeals for the Ninth Circuit. In addition, on February 4, 2013, APS filed a Petition for Reconsideration and Stay of the final BART rule with EPA. On March 22, 2013, APS filed a motion with the court to suspend the compliance deadlines under the BART rule until the court rules on the matter. The State of Arizona and three other Arizona utilities also filed similar petitions and motions. On September 30, 2013, the court issued an order denying these motions to suspend the compliance deadline. | |||||||||||||||||||||||
New Mexico Tax Matter | |||||||||||||||||||||||
On May 23, 2013, the New Mexico Taxation and Revenue Department issued a notice of assessment for coal severance surtax, penalty, and interest totaling approximately $30 million related to coal supplied under the coal supply agreement for Four Corners (the “Assessment”). APS’s share of the Assessment is approximately $12 million. For procedural reasons, on behalf of the Four Corners co-owners, including APS, the coal supplier made a partial payment of the Assessment and immediately filed a refund claim with respect to that partial payment in August 2013. The New Mexico Taxation and Revenue Department denied the refund claim. Prior to year end, the coal supplier and APS, on its own behalf and as operating agent for Four Corners, intend to file a complaint with the New Mexico District Court contesting both the validity of the Assessment and the refund claim denial. APS believes the Assessment and the refund claim denial are without merit, but cannot predict the timing or outcome of this litigation. | |||||||||||||||||||||||
Financial Assurances | |||||||||||||||||||||||
APS has entered into various agreements that require letters of credit for financial assurance purposes. At September 30, 2013, approximately $76 million of letters of credit were outstanding to support existing pollution control bonds of a similar amount. The letters of credit are available to fund the payment of principal and interest of such debt obligations. One of these letters of credit expires in 2015 and two expire in 2016. APS has also entered into letters of credit to support certain equity participants in the Palo Verde sale leaseback transactions (see Note 6 for further details on the Palo Verde sale leaseback transactions). These letters of credit will expire on December 31, 2015, and totaled approximately $32 million at September 30, 2013. Additionally, APS has issued letters of credit to support collateral obligations under certain risk management arrangements, including certain natural gas tolling contracts entered into with third parties. At September 30, 2013, $60 million of such letters of credit were outstanding that will expire in 2014 and 2015. | |||||||||||||||||||||||
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 surety bonds for APS which were not material at September 30, 2013. |
Other_Income_and_Other_Expense
Other Income and Other Expense | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
Other Income and Other Expense | ||||||||||||||
Other Income and Other Expense | 10. Other Income and Other Expense | |||||||||||||
The following table provides detail of other income and other expense for the three and nine months ended September 30, 2013 and 2012 (dollars in thousands): | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
Other income: | ||||||||||||||
Interest income | $ | 116 | $ | 307 | $ | 1,291 | $ | 1,018 | ||||||
Miscellaneous | 44 | 113 | 96 | 339 | ||||||||||
Total other income | $ | 160 | $ | 420 | $ | 1,387 | $ | 1,357 | ||||||
Other expense: | ||||||||||||||
Non-operating costs | $ | (2,028 | ) | $ | (1,645 | ) | $ | (5,951 | ) | $ | (5,885 | ) | ||
Investment losses — net | (3,435 | ) | (2,254 | ) | (3,643 | ) | (2,366 | ) | ||||||
Miscellaneous | (1,972 | ) | (1,797 | ) | (3,827 | ) | (4,182 | ) | ||||||
Total other expense | $ | (7,435 | ) | $ | (5,696 | ) | $ | (13,421 | ) | $ | (12,433 | ) | ||
Earnings_Per_Share
Earnings Per Share | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
Earnings Per Share | ||||||||||||||
Earnings Per Share | 11. Earnings Per Share | |||||||||||||
The following table presents earnings per weighted average common share outstanding for the three and nine months ended September 30, 2013 and 2012: | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
Basic earnings per share: | ||||||||||||||
Income from continuing operations attributable to common shareholders | $ | 2.06 | $ | 2.23 | $ | 3.47 | $ | 3.29 | ||||||
Loss from discontinued operations | — | — | — | (0.01 | ) | |||||||||
Earnings per share — basic | $ | 2.06 | $ | 2.23 | $ | 3.47 | $ | 3.28 | ||||||
Diluted earnings per share: | ||||||||||||||
Income from continuing operations attributable to common shareholders | $ | 2.04 | $ | 2.21 | $ | 3.44 | $ | 3.26 | ||||||
Loss from discontinued operations | — | — | — | (0.01 | ) | |||||||||
Earnings per share — diluted | $ | 2.04 | $ | 2.21 | $ | 3.44 | $ | 3.25 | ||||||
Performance shares and restricted stock units (which are contingently issuable) increased the weighted average common shares outstanding by approximately 1,044,000 shares and 1,100,000 shares for the three months ended September 30, 2013 and 2012, respectively, and by approximately 978,000 shares and 971,000 shares for the nine months ended September 30, 2013 and 2012, respectively. | ||||||||||||||
For the three and nine months ended September 30, 2013 and 2012, there were no common stock options that were excluded from the computation of diluted earnings per share as a result of the options’ exercise prices being greater than the average market price of the common shares. | ||||||||||||||
Fair_Value_Measurements
Fair Value Measurements | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Fair Value Measurements | |||||||||||||||||
Fair Value Measurements | 12. 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 — Unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide information on an ongoing basis. This category includes exchange-traded equities, exchange-traded derivative instruments, cash equivalents, and investments in United States Treasury securities. | |||||||||||||||||
Level 2 — Utilizes 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). This category includes non-exchange traded contracts such as forwards, options, swaps and certain investments in fixed income securities. This category also includes investments in common and collective trusts and commingled funds that are redeemable and valued based on the funds’ net asset value (“NAV”). | |||||||||||||||||
Level 3 — Valuation models with significant unobservable inputs that are supported by little or no market activity. Instruments in this category 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. | |||||||||||||||||
Recurring Fair Value Measurements | |||||||||||||||||
We apply recurring fair value measurements to certain cash equivalents, derivative instruments, investments held in our nuclear decommissioning trust and plan assets held in our retirement and other benefit plans. See Note 8 in the 2012 Form 10-K for the fair value discussion of plan assets held in our retirement and other benefit plans. | |||||||||||||||||
Cash Equivalents | |||||||||||||||||
Cash equivalents represent short-term investments with original maturities of three months or less in exchange-traded money market funds that are valued using quoted prices in active markets. | |||||||||||||||||
Risk Management Activities — Derivative Instruments | |||||||||||||||||
Exchange-traded commodity contracts are valued using unadjusted quoted prices. For non-exchange-traded commodity contracts, we calculate fair market 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 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 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. | |||||||||||||||||
Option contracts are primarily valued using a Black-Scholes option valuation model which utilizes both observable and unobservable inputs such as broker quotes, interest rates and price volatilities. | |||||||||||||||||
When the unobservable portion is significant to the overall valuation of the transaction, the entire transaction is classified as Level 3. Our classification of instruments as Level 3 is primarily reflective of the long-term nature of our energy transactions and the use of option valuation models with significant unobservable inputs. | |||||||||||||||||
Our energy risk management committee, consisting of officers and key management personnel, oversees our energy risk management activities to ensure compliance with our stated energy risk management policies. We have a risk control function that is responsible for valuing our derivative commodity instruments in accordance with established policies and procedures. The risk control function reports to the chief financial officer’s organization. | |||||||||||||||||
Investments Held in our Nuclear Decommissioning Trust | |||||||||||||||||
The nuclear decommissioning trust invests in fixed income securities and equity securities. Equity securities are held indirectly through commingled funds. The commingled funds are valued based on the concept of NAV, which is a value primarily derived from the quoted active market prices of the underlying equity securities. We may transact in these commingled funds on a semi-monthly basis at the NAV, and accordingly classify these investments as Level 2. The commingled funds, which are similar to mutual 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 fund shares are offered to a limited group of investors, they are not considered to be traded in an active market. | |||||||||||||||||
Cash equivalents reported within Level 2 represent investments held in a short-term investment commingled fund, valued using NAV, which invests in United States government fixed income securities. We may transact in this commingled fund on a daily basis at the NAV. | |||||||||||||||||
Fixed income securities issued by the United States Treasury held directly by the nuclear decommissioning trust are valued using quoted active market prices and are 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 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. | |||||||||||||||||
Our trustee provides valuation of our nuclear decommissioning trust assets by using pricing services that utilize the valuation methodologies described 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 trustee’s internal operating controls and valuation processes. See Note 13 for additional discussion about our nuclear decommissioning trust. | |||||||||||||||||
Fair Value Tables | |||||||||||||||||
The following table presents the fair value at September 30, 2013 of our assets and liabilities that are measured at fair value on a recurring basis (dollars in millions): | |||||||||||||||||
Quoted Prices | Significant | Significant | Other | Balance at | |||||||||||||
in Active | Other | Unobservable | September 30, | ||||||||||||||
Markets for | Observable | Inputs (a) | 2013 | ||||||||||||||
Identical Assets | Inputs | (Level 3) | |||||||||||||||
(Level 1) | (Level 2) | ||||||||||||||||
Assets | |||||||||||||||||
Risk management activities — derivative instruments: | |||||||||||||||||
Commodity Contracts | $ | — | $ | 12 | $ | 48 | $ | (11 | )(b) | $ | 49 | ||||||
Nuclear decommissioning trust: | |||||||||||||||||
U.S. commingled equity funds | — | 245 | — | — | 245 | ||||||||||||
Fixed income securities: | |||||||||||||||||
U.S. Treasury | 109 | — | — | — | 109 | ||||||||||||
Cash and cash equivalent funds | — | 13 | — | (3 | )(c) | 10 | |||||||||||
Corporate debt | — | 83 | — | — | 83 | ||||||||||||
Mortgage-backed securities | — | 82 | — | — | 82 | ||||||||||||
Municipality bonds | — | 71 | — | — | 71 | ||||||||||||
Other | — | 13 | — | — | 13 | ||||||||||||
Subtotal nuclear decommissioning trust | 109 | 507 | — | (3 | ) | 613 | |||||||||||
Total | $ | 109 | $ | 519 | $ | 48 | $ | (14 | ) | $ | 662 | ||||||
Liabilities | |||||||||||||||||
Risk management activities — derivative instruments: | |||||||||||||||||
Commodity contracts | $ | — | $ | (49 | ) | $ | (92 | ) | $ | 20 | (b) | $ | (121 | ) | |||
(a) Primarily consists of heat rate options and long-dated electricity contracts. | |||||||||||||||||
(b) Primarily represents counterparty netting, margin and collateral (see Note 7). | |||||||||||||||||
(c) Represents nuclear decommissioning trust net pending securities sales and purchases. | |||||||||||||||||
The following table presents the fair value at December 31, 2012 of our assets and liabilities that are measured at fair value on a recurring basis (dollars in millions): | |||||||||||||||||
Quoted Prices | Significant | Significant | Other | Balance at | |||||||||||||
in Active | Other | Unobservable | December 31, | ||||||||||||||
Markets for | Observable | Inputs (a) | 2012 | ||||||||||||||
Identical | Inputs | (Level 3) | |||||||||||||||
Assets | (Level 2) | ||||||||||||||||
(Level 1) | |||||||||||||||||
Assets | |||||||||||||||||
Cash equivalents | $ | 16 | $ | — | $ | — | $ | — | $ | 16 | |||||||
Risk management activities — derivative instruments: | |||||||||||||||||
Commodity Contracts | — | 22 | 62 | (22 | )(b) | 62 | |||||||||||
Nuclear decommissioning trust: | |||||||||||||||||
U.S. commingled equity funds | — | 204 | — | — | 204 | ||||||||||||
Fixed income securities: | |||||||||||||||||
U.S. Treasury | 104 | — | — | — | 104 | ||||||||||||
Cash and cash equivalent funds | 6 | 13 | — | (4 | )(c) | 15 | |||||||||||
Corporate debt | — | 80 | — | — | 80 | ||||||||||||
Mortgage-backed securities | — | 83 | — | — | 83 | ||||||||||||
Municipality bonds | — | 74 | — | — | 74 | ||||||||||||
Other | — | 11 | — | — | 11 | ||||||||||||
Subtotal nuclear decommissioning trust | 110 | 465 | — | (4 | ) | 571 | |||||||||||
Total | $ | 126 | $ | 487 | $ | 62 | $ | (26 | ) | $ | 649 | ||||||
Liabilities | |||||||||||||||||
Risk management activities — derivative instruments: | |||||||||||||||||
Commodity contracts | $ | — | $ | (96 | ) | $ | (110 | ) | $ | 47 | (b) | $ | (159 | ) | |||
(a) Primarily consists of heat rate options and long-dated electricity contracts. | |||||||||||||||||
(b) Represents counterparty netting, margin and collateral (see Note 7). | |||||||||||||||||
(c) Represents nuclear decommissioning trust net pending securities sales and purchases. | |||||||||||||||||
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 and option model inputs. 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. | |||||||||||||||||
Our option contracts classified as Level 3 primarily relate to purchase heat rate options. The significant unobservable inputs for these instruments include electricity prices, gas prices and volatilities. If electricity prices and electricity price volatilities increase, we would expect the impact on the fair value of these options to increase, and if these valuation inputs decrease, we would expect the impact on the fair value of these options to decrease. If natural gas prices and natural gas price volatilities increase, we would expect the impact on the fair value of these options to decrease, and if these inputs decrease, we would expect the impact on the fair value of the options to increase. The commodity prices and volatilities do not always move in corresponding directions. The options’ fair values are impacted by the net changes of these various inputs. | |||||||||||||||||
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 Level 3 instruments at September 30, 2013 and December 31, 2012: | |||||||||||||||||
September 30, 2013 | Valuation | Significant | Weighted- | ||||||||||||||
Fair Value (millions) | |||||||||||||||||
Commodity Contracts | Assets | Liabilities | Technique | Unobservable Input | Range | Average | |||||||||||
Electricity: | |||||||||||||||||
Forward Contracts (a) | $ | 47 | $ | 74 | Discounted cash flows | Electricity forward price (per MWh) | $24.55 – $60.97 | $ | 40.23 | ||||||||
Option Contracts (b) | — | 16 | Option model | Electricity forward price (per MWh) | $38.56 – $82.07 | $ | 55.74 | ||||||||||
Electricity price volatilities | 51% – 106% | 74 | % | ||||||||||||||
Natural gas forward price | $3.82 – $3.96 | $ | 3.91 | ||||||||||||||
Natural gas price volatilities | 24% – 51% | 31 | % | ||||||||||||||
Natural Gas: | |||||||||||||||||
Forward Contracts (a) | 1 | 2 | Discounted cash flows | Natural gas forward price (per mmbtu) | $3.31 – $4.25 | $ | 3.97 | ||||||||||
Total | $ | 48 | $ | 92 | |||||||||||||
(a) Includes swaps and physical and financial contracts. | |||||||||||||||||
(b) Electricity and natural gas price volatilities are estimated based on historical forward price movements due to lack of market quotes for implied volatilities. | |||||||||||||||||
December 31, 2012 | Valuation | Significant | Weighted- | ||||||||||||||
Fair Value (millions) | |||||||||||||||||
Commodity Contracts | Assets | Liabilities | Technique | Unobservable Input | Range | Average | |||||||||||
Electricity: | |||||||||||||||||
Forward Contracts (a) | $ | 57 | $ | 82 | Discounted cash flows | Electricity forward price (per MWh) | $23.06 – $64.20 | $ | 43.16 | ||||||||
Option Contracts | — | 27 | Option model | Electricity forward price (per MWh) | $36.66 – $92.19 | $ | 60.97 | ||||||||||
Natural gas forward price (per mmbtu) | $4.10 – $4.25 | $ | 4.2 | ||||||||||||||
Implied electricity price volatilities | 15% – 66% | 39 | % | ||||||||||||||
Implied natural gas price volatilities | 17% – 36% | 23 | % | ||||||||||||||
Natural Gas: | |||||||||||||||||
Forward Contracts (a) | 5 | 1 | Discounted cash flows | Natural gas forward price (per mmbtu) | $3.25 – $4.44 | $ | 3.93 | ||||||||||
Total | $ | 62 | $ | 110 | |||||||||||||
(a) Includes swaps and physical and financial contracts. | |||||||||||||||||
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 three and nine months ended September 30, 2013 and 2012 (dollars in millions): | |||||||||||||||||
Commodity Contracts | Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | ||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Net derivative balance at beginning of period | $ | (53 | ) | $ | (45 | ) | $ | (48 | ) | $ | (51 | ) | |||||
Total net gains (losses) realized/unrealized: | |||||||||||||||||
Included in earnings | — | — | — | 2 | |||||||||||||
Included in OCI | — | — | — | (2 | ) | ||||||||||||
Deferred as a regulatory asset or liability | 4 | (3 | ) | (2 | ) | 4 | |||||||||||
Settlements | 6 | (1 | ) | 8 | (1 | ) | |||||||||||
Transfers into Level 3 from Level 2 | (1 | ) | (4 | ) | (1 | ) | (2 | ) | |||||||||
Transfers from Level 3 into Level 2 | — | 3 | (1 | ) | — | ||||||||||||
Net derivative balance at end of period | $ | (44 | ) | $ | (50 | ) | $ | (44 | ) | $ | (50 | ) | |||||
Net unrealized gains included in earnings related to instruments still held at end of period | $ | — | $ | — | $ | — | $ | — | |||||||||
Amounts included in earnings are recorded in either operating revenues or purchased power depending on the nature of the underlying contract. | |||||||||||||||||
Transfers reflect the fair market value at the beginning of the period and are triggered by a change in the lowest significant input as of the end of the period. We had no significant Level 1 transfers to or from any other hierarchy level. Transfers in or out of Level 3 are typically related to our heat rate options and long-dated energy transactions that extend beyond available quoted periods. | |||||||||||||||||
Financial Instruments Not Carried at Fair Value | |||||||||||||||||
The carrying value of our net accounts receivable, accounts payable and any short-term borrowings approximate fair value. Our short-term borrowings are classified within Level 2 of the fair value hierarchy. For our long-term debt fair values, see Note 2. | |||||||||||||||||
Nuclear_Decommissioning_Trusts
Nuclear Decommissioning Trusts | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
Nuclear Decommissioning Trusts | ||||||||||||||
Nuclear Decommissioning Trusts | 13. Nuclear Decommissioning Trusts | |||||||||||||
To fund the costs APS expects to incur to decommission Palo Verde, APS established external decommissioning trusts in accordance with NRC regulations. Third-party investment managers are authorized to buy and sell securities per their stated investment guidelines. The trust funds are invested in fixed income securities and equity securities. APS classifies investments in decommissioning trust funds as available for sale. As a result, we record the decommissioning trust funds at their fair value on our Condensed Consolidated Balance Sheets. See Note 12 for a discussion of how fair value is determined and the classification of the nuclear decommissioning trust investments within the fair value hierarchy. Because of the ability of APS to recover decommissioning costs in rates and in accordance with the regulatory treatment for decommissioning trust funds, we have deferred realized and unrealized gains and losses (including other-than-temporary impairments on investment securities) in other regulatory liabilities. The following table includes the unrealized gains and losses based on the original cost of the investment and summarizes the fair value of APS’s nuclear decommissioning trust fund assets at September 30, 2013 and December 31, 2012 (dollars in millions): | ||||||||||||||
Fair Value | Total | Total | ||||||||||||
Unrealized | Unrealized | |||||||||||||
Gains | Losses | |||||||||||||
September 30, 2013 | ||||||||||||||
Equity securities | $ | 245 | $ | 104 | $ | — | ||||||||
Fixed income securities | 371 | 13 | (5 | ) | ||||||||||
Net payables (a) | (3 | ) | — | — | ||||||||||
Total | $ | 613 | $ | 117 | $ | (5 | ) | |||||||
(a) Net payables relate to pending securities sales and purchases. | ||||||||||||||
Fair Value | Total | Total | ||||||||||||
Unrealized | Unrealized | |||||||||||||
Gains | Losses | |||||||||||||
December 31, 2012 | ||||||||||||||
Equity securities | $ | 204 | $ | 67 | $ | — | ||||||||
Fixed income securities | 371 | 24 | — | |||||||||||
Net payables (a) | (4 | ) | — | — | ||||||||||
Total | $ | 571 | $ | 91 | $ | — | ||||||||
(a) Net payables relate to pending securities sales and purchases. | ||||||||||||||
The costs of securities sold are determined on the basis of specific identification. The following table sets forth approximate realized gains and losses and proceeds from the sale of securities by the nuclear decommissioning trust funds (dollars in millions): | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
Realized gains | $ | 1 | $ | 1 | $ | 4 | $ | 5 | ||||||
Realized losses | (3 | ) | (1 | ) | (5 | ) | (3 | ) | ||||||
Proceeds from the sale of securities (a) | 110 | 84 | 364 | 295 | ||||||||||
(a) Proceeds are reinvested in the trust. | ||||||||||||||
The fair value of fixed income securities, summarized by contractual maturities, at September 30, 2013 is as follows (dollars in millions): | ||||||||||||||
Fair Value | ||||||||||||||
Less than one year | $ | 12 | ||||||||||||
1 year - 5 years | 106 | |||||||||||||
5 years - 10 years | 104 | |||||||||||||
Greater than 10 years | 149 | |||||||||||||
Total | $ | 371 |
New_Accounting_Standards
New Accounting Standards | 9 Months Ended |
Sep. 30, 2013 | |
New Accounting Standards | |
New Accounting Standards | 14. New Accounting Standards |
During 2013, we adopted, on a retrospective basis, new guidance relating to balance sheet offsetting disclosures. The new guidance requires enhanced disclosures regarding an entity’s ability to offset certain instruments on the balance sheet and how offsetting impacts the balance sheet. The adoption of this guidance resulted in expanded disclosures relating to our derivative instruments (see Note 7), but did not impact our financial statement results. | |
During 2013, we also adopted, on a prospective basis, new guidance relating to reporting amounts reclassified from AOCI. This guidance requires new disclosures relating to AOCI and how reclassifications from AOCI impact net income. As a result of adopting this new guidance, we have included a new footnote disclosure to provide the information required by the new standard (see Notes 15 and S-3). The adoption of this guidance did not impact our financial statement results. | |
In July 2013, new guidance was issued which will generally require entities to present unrecognized tax benefits as a reduction to any available deferred tax asset for a net operating loss, a similar tax loss, or a tax credit carryforward. The new guidance is effective for us on January 1, 2014, with early application permitted. We are currently evaluating the impacts of this new guidance. The adoption of this new guidance may impact our balance sheet presentation, but will not impact our results of operations or cash flows. |
Changes_in_Accumulated_Other_C
Changes in Accumulated Other Comprehensive Loss | 9 Months Ended | |||||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||||
Changes in Accumulated Other Comprehensive Loss | ||||||||||||||||||||
Changes in Accumulated Other Comprehensive Loss | 15. Changes in Accumulated Other Comprehensive Loss | |||||||||||||||||||
The following table shows the changes in accumulated other comprehensive loss, including reclassification adjustments, net of tax, by component for the three and nine months ended September 30, 2013 (dollars in thousands): | ||||||||||||||||||||
Three Months Ended September 30, 2013 | Nine Months Ended September 30, 2013 | |||||||||||||||||||
Derivative | Pension and | Total | Derivative | Pension and | Total | |||||||||||||||
Instruments | Other | Instruments | Other | |||||||||||||||||
Postretirement | Postretirement | |||||||||||||||||||
Benefits | Benefits | |||||||||||||||||||
Beginning balance | $ | (40,319 | ) | $ | (64,138 | ) | $ | (104,457 | ) | $ | (49,592 | ) | $ | (64,416 | ) | $ | (114,008 | ) | ||
Other comprehensive loss before reclassifications | (145 | ) | — | (145 | ) | (247 | ) | (1,635 | ) | (1,882 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive loss | 14,310 | (a) | 957 | (b) | 15,267 | 23,685 | (a) | 2,870 | (b) | 26,555 | ||||||||||
Net current period other comprehensive income | 14,165 | 957 | 15,122 | 23,438 | 1,235 | 24,673 | ||||||||||||||
Ending balance | $ | (26,154 | ) | $ | (63,181 | ) | $ | (89,335 | ) | $ | (26,154 | ) | $ | (63,181 | ) | $ | (89,335 | ) | ||
(a) 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 7. | ||||||||||||||||||||
(b) These amounts primarily represent amortization of actuarial loss, and are included in the computation of net periodic pension cost. See Note 4. | ||||||||||||||||||||
Consolidation_and_Nature_of_Op1
Consolidation and Nature of Operations (Tables) | 9 Months Ended | ||||||||||
Sep. 30, 2013 | |||||||||||
Consolidation and Nature of Operations | |||||||||||
Schedule of impact of the reclassifications to prior year (previously reported) amounts of the deferred investment tax credit and income tax receivables which have become more material | The following tables show the impact of the reclassifications to prior year (previously reported) amounts of the deferred investment tax credit and income tax receivables which have become more material in 2013 (dollars in thousands): | ||||||||||
Balance Sheets - December 31, 2012 | As | Reclassifications | Amount | ||||||||
previously | reported after | ||||||||||
reported | reclassifications | ||||||||||
Deferred investment tax credit | $ | — | $ | 99,819 | $ | 99,819 | |||||
Deferred credits — other | 283,654 | (99,819 | ) | 183,835 | |||||||
Statement of Cash Flows for the Nine | As | Reclassifications | Amount | ||||||||
Months Ended September 30, 2012 | previously | reported after | |||||||||
reported | reclassifications | ||||||||||
Cash Flows from Operating Activities | |||||||||||
Deferred income taxes | $ | 206,501 | $ | (8,974 | ) | $ | 197,527 | ||||
Deferred investment tax credit | — | 8,974 | 8,974 | ||||||||
Income tax receivable | — | 6,466 | 6,466 | ||||||||
Accrued taxes | 76,365 | (6,466 | ) | 69,899 | |||||||
Change in long-term income tax receivable | — | (1,320 | ) | (1,320 | ) | ||||||
Change in other long-term assets | (15,205 | ) | 1,320 | (13,885 | ) | ||||||
Summary of supplemental cash flow information | The following table summarizes supplemental Pinnacle West cash flow information (dollars in thousands): | ||||||||||
Nine Months Ended | |||||||||||
September 30, | |||||||||||
2013 | 2012 | ||||||||||
Cash paid during the period for: | |||||||||||
Income taxes, net of (refunds) | $ | 3,412 | $ | (651 | ) | ||||||
Interest, net of amounts capitalized | 141,047 | 152,582 | |||||||||
Significant non-cash investing and financing activities: | |||||||||||
Accrued capital expenditures | $ | 11,377 | $ | 11,281 | |||||||
LongTerm_Debt_and_Liquidity_Ma1
Long-Term Debt and Liquidity Matters (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
Long-Term Debt and Liquidity Matters | ||||||||||||||
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 millions): | |||||||||||||
As of | As of | |||||||||||||
September 30, 2013 | December 31, 2012 | |||||||||||||
Carrying | Fair Value | Carrying | Fair Value | |||||||||||
Amount | Amount | |||||||||||||
Pinnacle West | $ | 125 | $ | 125 | $ | 125 | $ | 125 | ||||||
APS | 3,262 | 3,538 | 3,197 | 3,750 | ||||||||||
Total | $ | 3,387 | $ | 3,663 | $ | 3,322 | $ | 3,875 | ||||||
Regulatory_Matters_Tables
Regulatory Matters (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Regulatory Matters | ||||||||||||||||
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 2013 and 2012 (dollars in millions): | |||||||||||||||
Nine Months Ended | ||||||||||||||||
September 30, | ||||||||||||||||
2013 | 2012 | |||||||||||||||
Beginning balance | $ | 73 | $ | 28 | ||||||||||||
Deferred fuel and purchased power costs — current period | (13 | ) | (52 | ) | ||||||||||||
Amounts (collected from) credited to customers | (23 | ) | 92 | |||||||||||||
Ending balance | $ | 37 | $ | 68 | ||||||||||||
Schedule of regulatory assets | The detail of regulatory assets is as follows (dollars in millions): | |||||||||||||||
Remaining | September 30, 2013 | December 31, 2012 | ||||||||||||||
Amortization | ||||||||||||||||
Period | Current | Non-Current | Current | Non-Current | ||||||||||||
Pension and other postretirement benefits | (a) | $ | — | $ | 754 | $ | — | $ | 780 | |||||||
Income taxes — allowance for equity funds used during construction | 2043 | 4 | 105 | 4 | 92 | |||||||||||
Deferred fuel and purchased power — mark-to-market (Note 7) | 2016 | 15 | 24 | 19 | 21 | |||||||||||
Transmission vegetation management | 2016 | 9 | 16 | 9 | 23 | |||||||||||
Coal reclamation | 2038 | 8 | 20 | 8 | 24 | |||||||||||
Palo Verde VIEs (Note 6) | 2046 | — | 40 | — | 38 | |||||||||||
Deferred compensation | 2036 | — | 36 | — | 34 | |||||||||||
Deferred fuel and purchased power (b) (c) | 2013 | 37 | — | 73 | — | |||||||||||
Retired power plant costs | 2020 | 3 | 19 | — | — | |||||||||||
Tax expense of Medicare subsidy | 2024 | 2 | 15 | 2 | 17 | |||||||||||
Loss on reacquired debt | 2034 | 1 | 17 | 2 | 18 | |||||||||||
Income taxes — investment tax credit basis adjustment | 2042 | 1 | 30 | 1 | 26 | |||||||||||
Pension and other postretirement benefits deferral | 2015 | 8 | 6 | 8 | 13 | |||||||||||
Lost fixed cost recovery (b) | 2014 | 19 | — | 7 | — | |||||||||||
Transmission cost adjustor (b) | 2014 | 12 | 2 | 10 | — | |||||||||||
Other | Various | 1 | 22 | 1 | 14 | |||||||||||
Total regulatory assets (d) | $ | 120 | $ | 1,106 | $ | 144 | $ | 1,100 | ||||||||
(a) This asset represents the future recovery of under-funded pension and other postretirement benefit obligations through retail rates. If these costs are disallowed by the ACC, this regulatory asset would be charged to other comprehensive income (“OCI”) and result in lower future revenues. | ||||||||||||||||
(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 and Transmission Cost Adjustor.” | ||||||||||||||||
Schedule of regulatory liabilities | The detail of regulatory liabilities is as follows (dollars in millions): | |||||||||||||||
Remaining | September 30, 2013 | December 31, 2012 | ||||||||||||||
Amortization | ||||||||||||||||
Period | Current | Non-Current | Current | Non-Current | ||||||||||||
Removal costs | (a) | $ | 26 | $ | 311 | $ | 27 | $ | 321 | |||||||
Asset retirement obligations | (a) | — | 272 | — | 256 | |||||||||||
Renewable energy standard (b) | 2014 | 27 | 22 | 43 | — | |||||||||||
Income taxes — change in rates | 2042 | — | 68 | — | 66 | |||||||||||
Spent nuclear fuel | 2047 | 5 | 37 | 10 | 36 | |||||||||||
Deferred gains on utility property | 2019 | 2 | 11 | 2 | 12 | |||||||||||
Income taxes — deferred investment tax credit | 2042 | 2 | 60 | 2 | 52 | |||||||||||
Demand side management (b) | 2014 | 26 | — | 4 | — | |||||||||||
Other | Various | — | 17 | — | 16 | |||||||||||
Total regulatory liabilities | $ | 88 | $ | 798 | $ | 88 | $ | 759 | ||||||||
(a) In accordance with regulatory accounting guidance, APS accrues for removal costs for its regulated assets, even if there is no legal obligation for removal. | ||||||||||||||||
(b) See “Cost Recovery Mechanisms” discussion above. |
Retirement_Plans_and_Other_Ben1
Retirement Plans and Other Benefits (Tables) | 9 Months Ended | |||||||||||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||||||||||
Retirement Plans and Other Benefits | ||||||||||||||||||||||||||
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, billed to electric plant participants or charged or amortized to the regulatory asset) (dollars in millions): | |||||||||||||||||||||||||
Pension Benefits | Other Benefits | |||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
September 30, | September 30, | September 30, | September 30, | |||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||
Service cost — benefits earned during the period | $ | 16 | $ | 16 | $ | 48 | $ | 48 | $ | 6 | $ | 7 | $ | 18 | $ | 20 | ||||||||||
Interest cost on benefit obligation | 28 | 30 | 84 | 90 | 10 | 12 | 31 | 35 | ||||||||||||||||||
Expected return on plan assets | (36 | ) | (35 | ) | (110 | ) | (106 | ) | (11 | ) | (12 | ) | (34 | ) | (34 | ) | ||||||||||
Amortization of: | ||||||||||||||||||||||||||
Prior service cost | — | — | 1 | 1 | — | — | — | — | ||||||||||||||||||
Net actuarial loss | 10 | 11 | 30 | 33 | 3 | 5 | 8 | 15 | ||||||||||||||||||
Net periodic benefit cost | $ | 18 | $ | 22 | $ | 53 | $ | 66 | $ | 8 | $ | 12 | $ | 23 | $ | 36 | ||||||||||
Portion of cost charged to expense | $ | 10 | $ | 12 | $ | 29 | $ | 25 | $ | 5 | $ | 7 | $ | 14 | $ | 13 |
Palo_Verde_Sale_Leaseback_Vari1
Palo Verde Sale Leaseback Variable Interest Entities (Tables) | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Palo Verde Sale Leaseback Variable Interest Entities | ||||||||
Amounts relating to the VIEs included in Condensed Consolidated Balance Sheets | Our Condensed Consolidated Balance Sheets at September 30, 2013 and December 31, 2012 include the following amounts relating to the VIEs (in millions): | |||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
Palo Verde sale leaseback property plant and equipment, net of accumulated depreciation | $ | 126 | $ | 129 | ||||
Current maturities of long-term debt | 20 | 27 | ||||||
Palo Verde sale leaseback lessor notes long-term debt excluding current maturities | 37 | 39 | ||||||
Equity — Noncontrolling interests | 146 | 129 | ||||||
Derivative_Accounting_Tables
Derivative Accounting (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Derivative Accounting | |||||||||||||||||
Outstanding gross notional amount of derivatives, which represents both purchases and sales (does not reflect net position) | As of September 30, 2013, we had the following outstanding gross notional volume of derivatives, which represent both purchases and sales (does not reflect net position): | ||||||||||||||||
Commodity | Quantity | ||||||||||||||||
Power | 6,498 | gigawatt hours | |||||||||||||||
Gas | 112 | Bcfs (a) | |||||||||||||||
(a) “Bcf” is Billion Cubic Feet. | |||||||||||||||||
Gains and losses from derivative instruments in designated cash flow accounting hedges relationships | The following table provides information about gains and losses from derivative instruments in designated cash flow accounting hedging relationships (dollars in thousands): | ||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
Commodity Contracts | Financial Statement Location | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Loss recognized in OCI on derivative instruments (effective portion) | Other comprehensive income (loss) — derivative instruments | $ | (240 | ) | $ | (119 | ) | $ | (409 | ) | $ | (37,513 | ) | ||||
Loss reclassified from AOCI into income (effective portion realized) (a) | Fuel and purchased power (b) | (23,658 | ) | (49,478 | ) | (39,156 | ) | (86,993 | ) | ||||||||
Gain recognized in income (ineffective portion and amount excluded from effectiveness testing) | Fuel and purchased power (b) | — | — | — | 117 | ||||||||||||
(a) During the three and nine months ended September 30, 2013 and three months ended September 30, 2012, we had no amounts reclassified from AOCI to earnings related to discontinued cash flow hedges. During the nine months ended September 30, 2012, we had $1.8 million of losses reclassified from AOCI to earnings related to discontinued cash flow hedges. | |||||||||||||||||
(b) Amounts are before the effect of PSA deferrals. | |||||||||||||||||
Gains and losses from derivative instruments not designated as accounting hedges instruments | The following table provides information about gains and losses from derivative instruments not designated as accounting hedging instruments during the three and nine months ended September 30, 2013 and 2012 (dollars in thousands): | ||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
Commodity Contracts | Financial Statement Location | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Net gain recognized in income | Operating revenues (a) | $ | 196 | $ | 258 | $ | 400 | $ | 19 | ||||||||
Net gain (loss) recognized in income | Fuel and purchased power expense (a) | (1,341 | ) | 12,870 | (11,750 | ) | 13,860 | ||||||||||
Total | $ | (1,145 | ) | $ | 13,128 | $ | (11,350 | ) | $ | 13,879 | |||||||
(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 of offsetting | |||||||||||||||||
As of September 30, 2013: | Gross | Amounts | Net | Other | Amount | ||||||||||||
(dollars in thousands) | Recognized | Offset | Recognized | (c) | Reported on | ||||||||||||
Derivatives | (b) | Derivatives | Balance Sheet | ||||||||||||||
(a) | |||||||||||||||||
Current Assets | $ | 32,201 | $ | (9,605 | ) | $ | 22,596 | $ | 145 | $ | 22,741 | ||||||
Investments and Other Assets | 27,905 | (1,859 | ) | 26,046 | — | 26,046 | |||||||||||
Total Assets | 60,106 | (11,464 | ) | 48,642 | 145 | 48,787 | |||||||||||
Current Liabilities | (66,680 | ) | 32,675 | (34,005 | ) | (19,463 | ) | (53,468 | ) | ||||||||
Deferred Credits and Other | (74,751 | ) | 7,089 | (67,662 | ) | — | (67,662 | ) | |||||||||
Total Liabilities | (141,431 | ) | 39,764 | (101,667 | ) | (19,463 | ) | (121,130 | ) | ||||||||
Total | $ | (81,325 | ) | $ | 28,300 | $ | (53,025 | ) | $ | (19,318 | ) | $ | (72,343 | ) | |||
(a) All of our gross recognized derivative instruments were subject to master netting arrangements. | |||||||||||||||||
(b) Includes cash collateral provided to counterparties of $28,300. | |||||||||||||||||
(c) Represents cash collateral and 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 $19,463, and cash margin provided to counterparties of $145. | |||||||||||||||||
As of December 31, 2012: | Gross | Amounts | Net | Other | Amount | ||||||||||||
(dollars in thousands) | Recognized | Offset | Recognized | (c) | Reported on | ||||||||||||
Derivatives | (b) | Derivatives | Balance Sheet | ||||||||||||||
(a) | |||||||||||||||||
Current Assets | $ | 42,495 | $ | (17,797 | ) | $ | 24,698 | $ | 1,001 | $ | 25,699 | ||||||
Investments and Other Assets | 41,563 | (5,672 | ) | 35,891 | — | 35,891 | |||||||||||
Total Assets | 84,058 | (23,469 | ) | 60,589 | 1,001 | 61,590 | |||||||||||
Current Liabilities | (105,324 | ) | 57,046 | (48,278 | ) | (25,463 | ) | (73,741 | ) | ||||||||
Deferred Credits and Other | (100,986 | ) | 15,722 | (85,264 | ) | — | (85,264 | ) | |||||||||
Total Liabilities | (206,310 | ) | 72,768 | (133,542 | ) | (25,463 | ) | (159,005 | ) | ||||||||
Total | $ | (122,252 | ) | $ | 49,299 | $ | (72,953 | ) | $ | (24,462 | ) | $ | (97,415 | ) | |||
(a) All of our gross recognized derivative instruments were subject to master netting arrangements. | |||||||||||||||||
(b) Includes cash collateral provided to counterparties of $49,299. | |||||||||||||||||
(c) Represents cash collateral relating to non-derivative instruments or derivatives qualifying for scope exceptions. Includes cash collateral provided to counterparties of $1,001, and cash collateral received from counterparties of $25,463. This amount is not subject to offsetting. | |||||||||||||||||
Information about derivative instruments that have credit-risk-related contingent features | The following table provides information about our derivative instruments that have credit-risk-related contingent features at September 30, 2013 (dollars in millions): | ||||||||||||||||
September 30, | |||||||||||||||||
2013 | |||||||||||||||||
Aggregate Fair Value of Derivative Instruments in a Net Liability Position | $ | 141 | |||||||||||||||
Cash Collateral Posted | 28 | ||||||||||||||||
Additional Cash Collateral in the Event Credit-Risk-Related Contingent Features were Fully Triggered (a) | 88 | ||||||||||||||||
(a) This amount is after counterparty netting and includes those contracts which qualify for scope exceptions, which are excluded from the derivative details above. | |||||||||||||||||
Changes_in_Equity_Tables
Changes in Equity (Tables) | 9 Months Ended | |||||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||||
Changes in Equity | ||||||||||||||||||||
Schedule of changes in shareholders' equity and changes in equity of noncontrolling interests | The following tables show Pinnacle West’s changes in shareholders’ equity and changes in equity of noncontrolling interests for the three and nine months ended September 30, 2013 and 2012 (dollars in thousands): | |||||||||||||||||||
Three Months Ended September 30, 2013 | Three Months Ended September 30, 2012 | |||||||||||||||||||
Common | Noncontrolling | Total | Common | Noncontrolling | Total | |||||||||||||||
Shareholders | Interests | Shareholders | Interests | |||||||||||||||||
Beginning balance, July 1 | $ | 4,032,165 | $ | 137,069 | $ | 4,169,234 | $ | 3,778,035 | $ | 121,302 | $ | 3,899,337 | ||||||||
Net income | 226,163 | 8,555 | 234,718 | 244,823 | 8,040 | 252,863 | ||||||||||||||
Other comprehensive income | 15,122 | — | 15,122 | 30,843 | — | 30,843 | ||||||||||||||
Total comprehensive income | 241,285 | 8,555 | 249,840 | 275,666 | 8,040 | 283,706 | ||||||||||||||
Issuance of capital stock | 2,331 | — | 2,331 | 2,365 | — | 2,365 | ||||||||||||||
Reissuance of treasury stock — net | 37 | — | 37 | (82 | ) | — | (82 | ) | ||||||||||||
Other (primarily stock compensation) | (22 | ) | — | (22 | ) | 258 | — | 258 | ||||||||||||
Dividends on common stock | 8 | — | 8 | — | — | — | ||||||||||||||
Ending balance, September 30 | $ | 4,275,804 | $ | 145,624 | $ | 4,421,428 | $ | 4,056,242 | $ | 129,342 | $ | 4,185,584 | ||||||||
Nine Months Ended September 30, 2013 | Nine Months Ended September 30, 2012 | |||||||||||||||||||
Common | Noncontrolling | Total | Common | Noncontrolling | Total | |||||||||||||||
Shareholders | Interests | Shareholders | Interests | |||||||||||||||||
Beginning balance, January 1 | $ | 3,972,806 | $ | 129,483 | $ | 4,102,289 | $ | 3,821,850 | $ | 108,736 | $ | 3,930,586 | ||||||||
Net income | 381,814 | 25,338 | 407,152 | 358,911 | 23,582 | 382,493 | ||||||||||||||
Other comprehensive income | 24,673 | — | 24,673 | 32,688 | — | 32,688 | ||||||||||||||
Total comprehensive income | 406,487 | 25,338 | 431,825 | 391,599 | 23,582 | 415,181 | ||||||||||||||
Issuance of capital stock | 7,268 | — | 7,268 | 7,590 | — | 7,590 | ||||||||||||||
Reissuance (purchase) of treasury stock - net | (5,868 | ) | — | (5,868 | ) | 3,277 | — | 3,277 | ||||||||||||
Other (primarily stock compensation) | 14,988 | — | 14,988 | 4,270 | — | 4,270 | ||||||||||||||
Dividends on common stock | (119,877 | ) | — | (119,877 | ) | (172,344 | ) | — | (172,344 | ) | ||||||||||
Net capital activities by noncontrolling interests | — | (9,197 | ) | (9,197 | ) | — | (2,976 | ) | (2,976 | ) | ||||||||||
Ending balance, September 30 | $ | 4,275,804 | $ | 145,624 | $ | 4,421,428 | $ | 4,056,242 | $ | 129,342 | $ | 4,185,584 | ||||||||
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 9 Months Ended | ||||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||||
Commitments and Contingencies. | |||||||||||||||||||||||
Schedule of updated contractual obligations related to the entity's fuel and purchased power obligations | As of September 30, 2013, the updated contractual obligations related to our fuel and purchased power obligations are as follows (dollars in millions): | ||||||||||||||||||||||
2013 | 2014 | 2015 | 2016 | 2017 | Thereafter | Total | |||||||||||||||||
Fuel and Purchased Power | $ | 108 | $ | 576 | $ | 549 | $ | 516 | $ | 441 | $ | 6,399 | $ | 8,589 | |||||||||
Other_Income_and_Other_Expense1
Other Income and Other Expense (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
Other Income and Other Expense | ||||||||||||||
Detail of other income and other expense | The following table provides detail of other income and other expense for the three and nine months ended September 30, 2013 and 2012 (dollars in thousands): | |||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
Other income: | ||||||||||||||
Interest income | $ | 116 | $ | 307 | $ | 1,291 | $ | 1,018 | ||||||
Miscellaneous | 44 | 113 | 96 | 339 | ||||||||||
Total other income | $ | 160 | $ | 420 | $ | 1,387 | $ | 1,357 | ||||||
Other expense: | ||||||||||||||
Non-operating costs | $ | (2,028 | ) | $ | (1,645 | ) | $ | (5,951 | ) | $ | (5,885 | ) | ||
Investment losses — net | (3,435 | ) | (2,254 | ) | (3,643 | ) | (2,366 | ) | ||||||
Miscellaneous | (1,972 | ) | (1,797 | ) | (3,827 | ) | (4,182 | ) | ||||||
Total other expense | $ | (7,435 | ) | $ | (5,696 | ) | $ | (13,421 | ) | $ | (12,433 | ) | ||
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
Earnings Per Share | ||||||||||||||
Schedule of earnings per weighted average common share outstanding | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
Basic earnings per share: | ||||||||||||||
Income from continuing operations attributable to common shareholders | $ | 2.06 | $ | 2.23 | $ | 3.47 | $ | 3.29 | ||||||
Loss from discontinued operations | — | — | — | (0.01 | ) | |||||||||
Earnings per share — basic | $ | 2.06 | $ | 2.23 | $ | 3.47 | $ | 3.28 | ||||||
Diluted earnings per share: | ||||||||||||||
Income from continuing operations attributable to common shareholders | $ | 2.04 | $ | 2.21 | $ | 3.44 | $ | 3.26 | ||||||
Loss from discontinued operations | — | — | — | (0.01 | ) | |||||||||
Earnings per share — diluted | $ | 2.04 | $ | 2.21 | $ | 3.44 | $ | 3.25 |
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Fair Value Measurements | |||||||||||||||||
Fair value of assets and liabilities that are measured at fair value on a recurring basis | The following table presents the fair value at September 30, 2013 of our assets and liabilities that are measured at fair value on a recurring basis (dollars in millions): | ||||||||||||||||
Quoted Prices | Significant | Significant | Other | Balance at | |||||||||||||
in Active | Other | Unobservable | September 30, | ||||||||||||||
Markets for | Observable | Inputs (a) | 2013 | ||||||||||||||
Identical Assets | Inputs | (Level 3) | |||||||||||||||
(Level 1) | (Level 2) | ||||||||||||||||
Assets | |||||||||||||||||
Risk management activities — derivative instruments: | |||||||||||||||||
Commodity Contracts | $ | — | $ | 12 | $ | 48 | $ | (11 | )(b) | $ | 49 | ||||||
Nuclear decommissioning trust: | |||||||||||||||||
U.S. commingled equity funds | — | 245 | — | — | 245 | ||||||||||||
Fixed income securities: | |||||||||||||||||
U.S. Treasury | 109 | — | — | — | 109 | ||||||||||||
Cash and cash equivalent funds | — | 13 | — | (3 | )(c) | 10 | |||||||||||
Corporate debt | — | 83 | — | — | 83 | ||||||||||||
Mortgage-backed securities | — | 82 | — | — | 82 | ||||||||||||
Municipality bonds | — | 71 | — | — | 71 | ||||||||||||
Other | — | 13 | — | — | 13 | ||||||||||||
Subtotal nuclear decommissioning trust | 109 | 507 | — | (3 | ) | 613 | |||||||||||
Total | $ | 109 | $ | 519 | $ | 48 | $ | (14 | ) | $ | 662 | ||||||
Liabilities | |||||||||||||||||
Risk management activities — derivative instruments: | |||||||||||||||||
Commodity contracts | $ | — | $ | (49 | ) | $ | (92 | ) | $ | 20 | (b) | $ | (121 | ) | |||
(a) Primarily consists of heat rate options and long-dated electricity contracts. | |||||||||||||||||
(b) Primarily represents counterparty netting, margin and collateral (see Note 7). | |||||||||||||||||
(c) Represents nuclear decommissioning trust net pending securities sales and purchases. | |||||||||||||||||
The following table presents the fair value at December 31, 2012 of our assets and liabilities that are measured at fair value on a recurring basis (dollars in millions): | |||||||||||||||||
Quoted Prices | Significant | Significant | Other | Balance at | |||||||||||||
in Active | Other | Unobservable | December 31, | ||||||||||||||
Markets for | Observable | Inputs (a) | 2012 | ||||||||||||||
Identical | Inputs | (Level 3) | |||||||||||||||
Assets | (Level 2) | ||||||||||||||||
(Level 1) | |||||||||||||||||
Assets | |||||||||||||||||
Cash equivalents | $ | 16 | $ | — | $ | — | $ | — | $ | 16 | |||||||
Risk management activities — derivative instruments: | |||||||||||||||||
Commodity Contracts | — | 22 | 62 | (22 | )(b) | 62 | |||||||||||
Nuclear decommissioning trust: | |||||||||||||||||
U.S. commingled equity funds | — | 204 | — | — | 204 | ||||||||||||
Fixed income securities: | |||||||||||||||||
U.S. Treasury | 104 | — | — | — | 104 | ||||||||||||
Cash and cash equivalent funds | 6 | 13 | — | (4 | )(c) | 15 | |||||||||||
Corporate debt | — | 80 | — | — | 80 | ||||||||||||
Mortgage-backed securities | — | 83 | — | — | 83 | ||||||||||||
Municipality bonds | — | 74 | — | — | 74 | ||||||||||||
Other | — | 11 | — | — | 11 | ||||||||||||
Subtotal nuclear decommissioning trust | 110 | 465 | — | (4 | ) | 571 | |||||||||||
Total | $ | 126 | $ | 487 | $ | 62 | $ | (26 | ) | $ | 649 | ||||||
Liabilities | |||||||||||||||||
Risk management activities — derivative instruments: | |||||||||||||||||
Commodity contracts | $ | — | $ | (96 | ) | $ | (110 | ) | $ | 47 | (b) | $ | (159 | ) | |||
(a) Primarily consists of heat rate options and long-dated electricity contracts. | |||||||||||||||||
(b) Represents counterparty netting, margin and collateral (see Note 7). | |||||||||||||||||
(c) Represents nuclear decommissioning trust net pending securities sales and purchases. | |||||||||||||||||
Information regarding the entity's internally developed significant unobservable inputs used to value its level 3 instruments | |||||||||||||||||
September 30, 2013 | Valuation | Significant | Weighted- | ||||||||||||||
Fair Value (millions) | |||||||||||||||||
Commodity Contracts | Assets | Liabilities | Technique | Unobservable Input | Range | Average | |||||||||||
Electricity: | |||||||||||||||||
Forward Contracts (a) | $ | 47 | $ | 74 | Discounted cash flows | Electricity forward price (per MWh) | $24.55 – $60.97 | $ | 40.23 | ||||||||
Option Contracts (b) | — | 16 | Option model | Electricity forward price (per MWh) | $38.56 – $82.07 | $ | 55.74 | ||||||||||
Electricity price volatilities | 51% – 106% | 74 | % | ||||||||||||||
Natural gas forward price | $3.82 – $3.96 | $ | 3.91 | ||||||||||||||
Natural gas price volatilities | 24% – 51% | 31 | % | ||||||||||||||
Natural Gas: | |||||||||||||||||
Forward Contracts (a) | 1 | 2 | Discounted cash flows | Natural gas forward price (per mmbtu) | $3.31 – $4.25 | $ | 3.97 | ||||||||||
Total | $ | 48 | $ | 92 | |||||||||||||
(a) Includes swaps and physical and financial contracts. | |||||||||||||||||
(b) Electricity and natural gas price volatilities are estimated based on historical forward price movements due to lack of market quotes for implied volatilities. | |||||||||||||||||
December 31, 2012 | Valuation | Significant | Weighted- | ||||||||||||||
Fair Value (millions) | |||||||||||||||||
Commodity Contracts | Assets | Liabilities | Technique | Unobservable Input | Range | Average | |||||||||||
Electricity: | |||||||||||||||||
Forward Contracts (a) | $ | 57 | $ | 82 | Discounted cash flows | Electricity forward price (per MWh) | $23.06 – $64.20 | $ | 43.16 | ||||||||
Option Contracts | — | 27 | Option model | Electricity forward price (per MWh) | $36.66 – $92.19 | $ | 60.97 | ||||||||||
Natural gas forward price (per mmbtu) | $4.10 – $4.25 | $ | 4.2 | ||||||||||||||
Implied electricity price volatilities | 15% – 66% | 39 | % | ||||||||||||||
Implied natural gas price volatilities | 17% – 36% | 23 | % | ||||||||||||||
Natural Gas: | |||||||||||||||||
Forward Contracts (a) | 5 | 1 | Discounted cash flows | Natural gas forward price (per mmbtu) | $3.25 – $4.44 | $ | 3.93 | ||||||||||
Total | $ | 62 | $ | 110 | |||||||||||||
(a) Includes swaps and physical and financial contracts. | |||||||||||||||||
Changes in fair value for assets and liabilities that are measured at fair value on a recurring basis using Level 3 inputs | 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 three and nine months ended September 30, 2013 and 2012 (dollars in millions): | ||||||||||||||||
Commodity Contracts | Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | ||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Net derivative balance at beginning of period | $ | (53 | ) | $ | (45 | ) | $ | (48 | ) | $ | (51 | ) | |||||
Total net gains (losses) realized/unrealized: | |||||||||||||||||
Included in earnings | — | — | — | 2 | |||||||||||||
Included in OCI | — | — | — | (2 | ) | ||||||||||||
Deferred as a regulatory asset or liability | 4 | (3 | ) | (2 | ) | 4 | |||||||||||
Settlements | 6 | (1 | ) | 8 | (1 | ) | |||||||||||
Transfers into Level 3 from Level 2 | (1 | ) | (4 | ) | (1 | ) | (2 | ) | |||||||||
Transfers from Level 3 into Level 2 | — | 3 | (1 | ) | — | ||||||||||||
Net derivative balance at end of period | $ | (44 | ) | $ | (50 | ) | $ | (44 | ) | $ | (50 | ) | |||||
Net unrealized gains included in earnings related to instruments still held at end of period | $ | — | $ | — | $ | — | $ | — | |||||||||
Nuclear_Decommissioning_Trusts1
Nuclear Decommissioning Trusts (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
Nuclear Decommissioning Trusts | ||||||||||||||
Fair value of APS's nuclear decommissioning trust fund assets | The following table includes the unrealized gains and losses based on the original cost of the investment and summarizes the fair value of APS’s nuclear decommissioning trust fund assets at September 30, 2013 and December 31, 2012 (dollars in millions): | |||||||||||||
Fair Value | Total | Total | ||||||||||||
Unrealized | Unrealized | |||||||||||||
Gains | Losses | |||||||||||||
September 30, 2013 | ||||||||||||||
Equity securities | $ | 245 | $ | 104 | $ | — | ||||||||
Fixed income securities | 371 | 13 | (5 | ) | ||||||||||
Net payables (a) | (3 | ) | — | — | ||||||||||
Total | $ | 613 | $ | 117 | $ | (5 | ) | |||||||
(a) Net payables relate to pending securities sales and purchases. | ||||||||||||||
Fair Value | Total | Total | ||||||||||||
Unrealized | Unrealized | |||||||||||||
Gains | Losses | |||||||||||||
December 31, 2012 | ||||||||||||||
Equity securities | $ | 204 | $ | 67 | $ | — | ||||||||
Fixed income securities | 371 | 24 | — | |||||||||||
Net payables (a) | (4 | ) | — | — | ||||||||||
Total | $ | 571 | $ | 91 | $ | — | ||||||||
(a) Net payables relate to pending securities sales and purchases. | ||||||||||||||
Realized gains and losses and proceeds from the sale of securities by the nuclear decommissioning trust funds | The following table sets forth approximate realized gains and losses and proceeds from the sale of securities by the nuclear decommissioning trust funds (dollars in millions): | |||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
Realized gains | $ | 1 | $ | 1 | $ | 4 | $ | 5 | ||||||
Realized losses | (3 | ) | (1 | ) | (5 | ) | (3 | ) | ||||||
Proceeds from the sale of securities (a) | 110 | 84 | 364 | 295 | ||||||||||
(a) Proceeds are reinvested in the trust. | ||||||||||||||
Fair value of fixed income securities, summarized by contractual maturities | The fair value of fixed income securities, summarized by contractual maturities, at September 30, 2013 is as follows (dollars in millions): | |||||||||||||
Fair Value | ||||||||||||||
Less than one year | $ | 12 | ||||||||||||
1 year - 5 years | 106 | |||||||||||||
5 years - 10 years | 104 | |||||||||||||
Greater than 10 years | 149 | |||||||||||||
Total | $ | 371 |
Changes_in_Accumulated_Other_C1
Changes in Accumulated Other Comprehensive Loss (Tables) | 9 Months Ended | |||||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||||
Changes in Accumulated Other Comprehensive Loss | ||||||||||||||||||||
Schedule of changes in accumulated other comprehensive loss including reclassification adjustments, by component | The following table shows the changes in accumulated other comprehensive loss, including reclassification adjustments, net of tax, by component for the three and nine months ended September 30, 2013 (dollars in thousands): | |||||||||||||||||||
Three Months Ended September 30, 2013 | Nine Months Ended September 30, 2013 | |||||||||||||||||||
Derivative | Pension and | Total | Derivative | Pension and | Total | |||||||||||||||
Instruments | Other | Instruments | Other | |||||||||||||||||
Postretirement | Postretirement | |||||||||||||||||||
Benefits | Benefits | |||||||||||||||||||
Beginning balance | $ | (40,319 | ) | $ | (64,138 | ) | $ | (104,457 | ) | $ | (49,592 | ) | $ | (64,416 | ) | $ | (114,008 | ) | ||
Other comprehensive loss before reclassifications | (145 | ) | — | (145 | ) | (247 | ) | (1,635 | ) | (1,882 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive loss | 14,310 | (a) | 957 | (b) | 15,267 | 23,685 | (a) | 2,870 | (b) | 26,555 | ||||||||||
Net current period other comprehensive income | 14,165 | 957 | 15,122 | 23,438 | 1,235 | 24,673 | ||||||||||||||
Ending balance | $ | (26,154 | ) | $ | (63,181 | ) | $ | (89,335 | ) | $ | (26,154 | ) | $ | (63,181 | ) | $ | (89,335 | ) | ||
(a) 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 7. | ||||||||||||||||||||
(b) These amounts primarily represent amortization of actuarial loss, and are included in the computation of net periodic pension cost. See Note 4. |
Consolidation_and_Nature_of_Op2
Consolidation and Nature of Operations (Details) (USD $) | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 |
Cash Flows from Operating Activities | |||
Deferred income taxes | $256,132 | $197,527 | |
Deferred investment tax credit | 115,984 | 8,974 | 99,819 |
Deferred credits - other | 178,053 | 183,835 | |
Income tax receivable | -131,128 | 6,466 | |
Accrued taxes | 58,919 | 69,899 | |
Change in long-term income tax receivable | 137,270 | -1,320 | |
Change in other long-term assets | -24,345 | -13,885 | |
Cash paid during the period for: | |||
Income taxes, net of (refunds) | 3,412 | -651 | |
Interest, net of amounts capitalized | 141,047 | 152,582 | |
Significant non-cash investing and financing activities: | |||
Accrued capital expenditures | 11,377 | 11,281 | |
As previously reported | |||
Cash Flows from Operating Activities | |||
Deferred income taxes | 206,501 | ||
Deferred credits - other | 283,654 | ||
Accrued taxes | 76,365 | ||
Change in other long-term assets | -15,205 | ||
Reclassifications | |||
Cash Flows from Operating Activities | |||
Deferred income taxes | -8,974 | ||
Deferred investment tax credit | 8,974 | 99,819 | |
Deferred credits - other | -99,819 | ||
Income tax receivable | 6,466 | ||
Accrued taxes | -6,466 | ||
Change in long-term income tax receivable | -1,320 | ||
Change in other long-term assets | $1,320 |
LongTerm_Debt_and_Liquidity_Ma2
Long-Term Debt and Liquidity Matters (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Apr. 09, 2013 | Sep. 30, 2013 | Apr. 09, 2013 | Mar. 22, 2013 | 1-May-13 | Jul. 12, 2013 | Oct. 11, 2013 |
Pinnacle West | Pinnacle West | APS | APS | APS | APS | Long term debt | Revolving credit facility maturing in 2016 | Revolving credit facility maturing in 2016 | Revolving credit facility maturing in 2015 | Revolving credit facility maturing in 2018 | Revolving credit facility maturing in 2018 | 4.50% unsecured senior notes that mature on April 1, 2042 | Pollution Control Revenue Refunding Bonds, 2009 Series C | Pollution Control Revenue Refunding Bonds, 1994 Series A | Pollution Control Revenue Refunding Bonds, 1994 Series C | |||
ACC | ACC | APS | Pinnacle West | APS | APS | APS | APS | APS | APS | APS | APS | |||||||
Minimum | item | Subsequent event | ||||||||||||||||
Long-Term Debt and Liquidity Matters | ||||||||||||||||||
Current borrowing capacity on credit facility | $1,000,000,000 | $200,000,000 | $500,000,000 | $500,000,000 | $500,000,000 | $500,000,000 | ||||||||||||
Maximum commercial paper support available under credit facility | 250,000,000 | 200,000,000 | ||||||||||||||||
Maximum borrowing capacity on credit facility upon satisfaction of certain conditions and consent of lenders | 300,000,000 | 700,000,000 | 700,000,000 | |||||||||||||||
Outstanding borrowings | 0 | 0 | 0 | |||||||||||||||
Outstanding letters of credit | 0 | 0 | 0 | |||||||||||||||
Commercial paper borrowings outstanding | 0 | 0 | ||||||||||||||||
Notes issued | 100,000,000 | |||||||||||||||||
Interest rate (as a percent) | 4.50% | 1.75% | ||||||||||||||||
Long-term debt redemption | 32,000,000 | 33,000,000 | 32,000,000 | |||||||||||||||
Number of line of credit facilities | 2 | |||||||||||||||||
Estimated fair value of long-term debt, including current maturities | ||||||||||||||||||
Carrying Amount | 3,387,000,000 | 3,322,000,000 | 125,000,000 | 125,000,000 | 3,262,000,000 | 3,197,000,000 | ||||||||||||
Fair Value | 3,663,000,000 | 3,875,000,000 | 125,000,000 | 125,000,000 | 3,538,000,000 | 3,750,000,000 | ||||||||||||
Debt Provisions | ||||||||||||||||||
Required common equity ratio ordered by ACC (as a percent) | 40.00% | |||||||||||||||||
Total shareholder equity | 4,275,804,000 | 3,972,806,000 | 4,392,797,000 | 4,093,000,000 | 4,400,000,000 | |||||||||||||
Total capitalization | 7,600,000,000 | |||||||||||||||||
Dividend restrictions, shareholder equity required | $3,000,000,000 |
Regulatory_Matters_Details
Regulatory Matters (Details) (USD $) | 9 Months Ended | 1 Months Ended | 1 Months Ended | 3 Months Ended | 9 Months Ended | 0 Months Ended | 0 Months Ended | 9 Months Ended | 1 Months Ended | 1 Months Ended | 12 Months Ended | 1 Months Ended | 1 Months Ended | 9 Months Ended | 0 Months Ended | 1 Months Ended | |||||||||||||||||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Jan. 31, 2012 | Jun. 30, 2011 | Jan. 06, 2012 | Jan. 31, 2012 | Dec. 31, 2009 | Jun. 30, 2010 | Dec. 30, 2009 | Sep. 30, 2013 | 1-May-13 | Dec. 31, 2012 | Feb. 12, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Dec. 31, 2011 | Jun. 02, 2012 | Jun. 30, 2012 | Apr. 30, 2012 | Jun. 30, 2011 | Dec. 31, 2009 | Jun. 02, 2011 | Jan. 31, 2013 | Jun. 30, 2012 | Jun. 30, 2012 | Jul. 12, 2013 | Feb. 28, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Jun. 01, 2013 | Jun. 30, 2012 | |
APS | APS | Filing with the Arizona Corporation Commission | Filing with the Arizona Corporation Commission | Filing with the Arizona Corporation Commission | Filing with the Arizona Corporation Commission | 2008 General Retail Rate Case On-Going Impacts | 2008 General Retail Rate Case On-Going Impacts | 2008 General Retail Rate Case On-Going Impacts | Cost Recovery Mechanisms | Cost Recovery Mechanisms | Cost Recovery Mechanisms | Cost Recovery Mechanisms | Cost Recovery Mechanisms | Cost Recovery Mechanisms | Cost Recovery Mechanisms | Cost Recovery Mechanisms | Cost Recovery Mechanisms | Cost Recovery Mechanisms | Cost Recovery Mechanisms | Cost Recovery Mechanisms | Cost Recovery Mechanisms | Cost Recovery Mechanisms | Cost Recovery Mechanisms | Cost Recovery Mechanisms | Cost Recovery Mechanisms | Cost Recovery Mechanisms | Cost Recovery Mechanisms | Cost Recovery Mechanisms | Cost Recovery Mechanisms | Cost Recovery Mechanisms | |||
APS | APS | APS | APS | APS | APS | APS | Power Supply Adjustor (PSA) | ACC | APS | APS | APS | APS | APS | APS | APS | APS | APS | APS | APS | APS | APS | APS | APS | APS | APS | APS | APS | APS | |||||
ACC | ACC | ACC | ACC | ACC | ACC | ACC | 2013 DSMAC | Lost Fixed Cost Recovery Mechanism | Lost Fixed Cost Recovery Mechanism | ACC | ACC | ACC | ACC | ACC | ACC | ACC | ACC | ACC | ACC | ACC | ACC | ACC | ACC | ACC | FERC | FERC | |||||||
Retail rate case filing | Retail rate case filing | Retail rate case filing | Retail rate case filing | 2008 General retail rate case | 2008 General retail rate case | RES | 2012 RES | 2013 DSMAC | 2012 DSMAC | 2012 DSMAC | 2012 DSMAC | 2012 DSMAC | 2012 DSMAC | 2013 RES | 2013 RES | 2013 RES | RES implementation plan covering 2014-2018 timeframe | Power Supply Adjustor (PSA) | Power Supply Adjustor (PSA) | Power Supply Adjustor (PSA) | Transmission Rates, Transmission Cost Adjustor and Other Transmission Matters | Transmission Rates, Transmission Cost Adjustor and Other Transmission Matters | |||||||||||
Maximum | item | Maximum | Minimum | ||||||||||||||||||||||||||||||
Regulatory Matters | |||||||||||||||||||||||||||||||||
Net retail rate increase | $95,500,000 | ||||||||||||||||||||||||||||||||
Approximate percentage of increase in the average retail customer bill | 6.60% | ||||||||||||||||||||||||||||||||
Settlement Agreement | |||||||||||||||||||||||||||||||||
Net change in base rates | 0 | ||||||||||||||||||||||||||||||||
Non-fuel base rate increase | 116,300,000 | ||||||||||||||||||||||||||||||||
Fuel-related base rate decrease | 153,100,000 | ||||||||||||||||||||||||||||||||
Current base fuel rate (in dollars per kWh) | 0.03757 | ||||||||||||||||||||||||||||||||
Approved base fuel rate (in dollars per kWh) | 0.03207 | ||||||||||||||||||||||||||||||||
Estimated amount of transfer of cost recovery for certain renewable energy projects from the RES surcharge to base rates | 36,800,000 | ||||||||||||||||||||||||||||||||
Authorized return on common equity (as a percent) | 10.00% | ||||||||||||||||||||||||||||||||
Percentage of debt in capital structure | 46.10% | ||||||||||||||||||||||||||||||||
Percentage of common equity in capital structure | 53.90% | ||||||||||||||||||||||||||||||||
Deferral of property taxes in 2012, if Arizona property tax rates increase (as a percent) | 25.00% | ||||||||||||||||||||||||||||||||
Deferral of property taxes in 2013, if Arizona property tax rates increase (as a percent) | 50.00% | ||||||||||||||||||||||||||||||||
Deferral of property taxes for 2014 and subsequent years, if Arizona property tax rates increase (as a percent) | 75.00% | ||||||||||||||||||||||||||||||||
Deferral of property taxes in all years, if Arizona property tax rates decrease (as a percent) | 100.00% | ||||||||||||||||||||||||||||||||
Annual cost recovery due to modifications to the Environmental Improvement Surcharge | 5,000,000 | ||||||||||||||||||||||||||||||||
Elimination of the sharing provision of fuel and purchased power costs | 9 | ||||||||||||||||||||||||||||||||
Period to process the subsequent rate cases | 12 months | ||||||||||||||||||||||||||||||||
ACC staff sufficiency findings, general period of time | 30 days | ||||||||||||||||||||||||||||||||
2008 General Retail Rate Case on-going impacts | |||||||||||||||||||||||||||||||||
Number of other parties to the settlement agreement | 21 | ||||||||||||||||||||||||||||||||
Minimum amount of reduction of average annual operational expenses from 2010 through 2014 | 30,000,000 | ||||||||||||||||||||||||||||||||
Authorization and requirements of equity infusions into APS beginning June 1, 2009 through December 31, 2014 | 700,000,000 | ||||||||||||||||||||||||||||||||
Equity infusions into APS | 253,000,000 | ||||||||||||||||||||||||||||||||
Change in regulatory asset | |||||||||||||||||||||||||||||||||
Plan term | 5 years | ||||||||||||||||||||||||||||||||
Funding approval as per budget authorized | 110,000,000 | ||||||||||||||||||||||||||||||||
Funding request | 107,000,000 | 97,000,000 | |||||||||||||||||||||||||||||||
Amount of approved budget | 103,000,000 | ||||||||||||||||||||||||||||||||
Amount of approved budget for residential distributed energy up-front incentives | 4,000,000 | ||||||||||||||||||||||||||||||||
Amount of approved budget for commercial distributed energy up-front incentives | 100,000 | ||||||||||||||||||||||||||||||||
Amount of proposed budget | 87,600,000 | 143,000,000 | |||||||||||||||||||||||||||||||
Percentage of cumulative energy savings for prior year | 3.00% | ||||||||||||||||||||||||||||||||
Percentage of annual energy savings to meet energy efficiency goal for 2011 | 2.75% | ||||||||||||||||||||||||||||||||
Period of energy savings goal | 2 years | ||||||||||||||||||||||||||||||||
Demand-side management adjustor charge (DSMAC) | 72,000,000 | ||||||||||||||||||||||||||||||||
Costs already being recovered in general rates | 10,000,000 | ||||||||||||||||||||||||||||||||
Amortization of recovery of demand-side management adjustor charge included in costs already been recovered | 5,000,000 | ||||||||||||||||||||||||||||||||
Percentage of cumulative energy savings for current year | 5.00% | ||||||||||||||||||||||||||||||||
Beginning balance | 73,000,000 | 28,000,000 | |||||||||||||||||||||||||||||||
Deferred fuel and purchased power costs-current period | -13,093,000 | -51,533,000 | -13,093,000 | -51,533,000 | -13,000,000 | -52,000,000 | |||||||||||||||||||||||||||
Amounts (collected from) credited to customers | -23,158,000 | 91,894,000 | -23,158,000 | 91,894,000 | -23,000,000 | 92,000,000 | |||||||||||||||||||||||||||
Ending balance | 37,000,000 | 68,000,000 | |||||||||||||||||||||||||||||||
PSA rate (in dollars per kWh) | 0.0013 | ||||||||||||||||||||||||||||||||
PSA rate for prior year (in dollars per kWh) | -0.0042 | ||||||||||||||||||||||||||||||||
Increase in PSA charge (in dollars per kWh) | 0.0055 | ||||||||||||||||||||||||||||||||
Forward component of increase in PSA (in dollars per kWh) | -0.001 | ||||||||||||||||||||||||||||||||
Historical component of increase in PSA (in dollars per kWh) | 0.0023 | ||||||||||||||||||||||||||||||||
Maximum increase or decrease in PSA charge without permission of the ACC (in dollars per kWh) | 0.004 | ||||||||||||||||||||||||||||||||
Increase in annual wholesale transmission rates | 26,000,000 | 16,000,000 | |||||||||||||||||||||||||||||||
Deferred contract termination charges to be amortized over a future period related to proposed acquisition of Southern California Edison | 40,000,000 | ||||||||||||||||||||||||||||||||
Amortization period | 10 years | ||||||||||||||||||||||||||||||||
Fixed costs recoverable per residential power lost (in dollars per kWh) | 0.031 | ||||||||||||||||||||||||||||||||
Fixed costs recoverable per non-residential power lost (in dollars per kWh) | 0.023 | ||||||||||||||||||||||||||||||||
Amount of adjustment approved representing prorated sales losses | $5,100,000 |
Regulatory_Matters_Details_2
Regulatory Matters (Details 2) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Detail of regulatory assets | ||
Regulatory assets, current | $120,000,000 | $144,000,000 |
Regulatory assets, non-current | 1,105,882,000 | 1,099,900,000 |
Pension and other postretirement benefits | ||
Detail of regulatory assets | ||
Regulatory assets, non-current | 754,000,000 | 780,000,000 |
Income taxes - allowance for equity funds used during construction | ||
Detail of regulatory assets | ||
Regulatory assets, current | 4,000,000 | 4,000,000 |
Regulatory assets, non-current | 105,000,000 | 92,000,000 |
Deferred fuel and purchased power - mark-to-market | ||
Detail of regulatory assets | ||
Regulatory assets, current | 15,000,000 | 19,000,000 |
Regulatory assets, non-current | 24,000,000 | 21,000,000 |
Transmission vegetation management | ||
Detail of regulatory assets | ||
Regulatory assets, current | 9,000,000 | 9,000,000 |
Regulatory assets, non-current | 16,000,000 | 23,000,000 |
Coal reclamation | ||
Detail of regulatory assets | ||
Regulatory assets, current | 8,000,000 | 8,000,000 |
Regulatory assets, non-current | 20,000,000 | 24,000,000 |
Palo Verde VIE | ||
Detail of regulatory assets | ||
Regulatory assets, non-current | 40,000,000 | 38,000,000 |
Deferred compensation | ||
Detail of regulatory assets | ||
Regulatory assets, non-current | 36,000,000 | 34,000,000 |
Deferred fuel and purchased power | ||
Detail of regulatory assets | ||
Regulatory assets, current | 37,000,000 | 73,000,000 |
Retired power plant costs | ||
Detail of regulatory assets | ||
Regulatory assets, current | 3,000,000 | |
Regulatory assets, non-current | 19,000,000 | |
Tax expense of Medicare subsidy | ||
Detail of regulatory assets | ||
Regulatory assets, current | 2,000,000 | 2,000,000 |
Regulatory assets, non-current | 15,000,000 | 17,000,000 |
Loss on reacquired debt | ||
Detail of regulatory assets | ||
Regulatory assets, current | 1,000,000 | 2,000,000 |
Regulatory assets, non-current | 17,000,000 | 18,000,000 |
Income taxes - investment tax credit basis adjustment | ||
Detail of regulatory assets | ||
Regulatory assets, current | 1,000,000 | 1,000,000 |
Regulatory assets, non-current | 30,000,000 | 26,000,000 |
Pension and other postretirement benefits deferral | ||
Detail of regulatory assets | ||
Regulatory assets, current | 8,000,000 | 8,000,000 |
Regulatory assets, non-current | 6,000,000 | 13,000,000 |
Lost fixed cost recovery | ||
Detail of regulatory assets | ||
Regulatory assets, current | 19,000,000 | 7,000,000 |
Transmission cost adjustor | ||
Detail of regulatory assets | ||
Regulatory assets, current | 12,000,000 | 10,000,000 |
Regulatory assets, non-current | 2,000,000 | |
Other | ||
Detail of regulatory assets | ||
Regulatory assets, current | 1,000,000 | 1,000,000 |
Regulatory assets, non-current | $22,000,000 | $14,000,000 |
Regulatory_Matters_Details_3
Regulatory Matters (Details 3) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Detail of regulatory liabilities | ||
Regulatory liabilities, current | $88,000,000 | $88,000,000 |
Regulatory liabilities, non-current | 798,226,000 | 759,201,000 |
Removal costs | ||
Detail of regulatory liabilities | ||
Regulatory liabilities, current | 26,000,000 | 27,000,000 |
Regulatory liabilities, non-current | 311,000,000 | 321,000,000 |
Asset retirement obligations | ||
Detail of regulatory liabilities | ||
Regulatory liabilities, non-current | 272,000,000 | 256,000,000 |
Renewable energy standard | ||
Detail of regulatory liabilities | ||
Regulatory liabilities, current | 27,000,000 | 43,000,000 |
Regulatory liabilities, non-current | 22,000,000 | |
Income taxes - change in rates | ||
Detail of regulatory liabilities | ||
Regulatory liabilities, non-current | 68,000,000 | 66,000,000 |
Spent nuclear fuel | ||
Detail of regulatory liabilities | ||
Regulatory liabilities, current | 5,000,000 | 10,000,000 |
Regulatory liabilities, non-current | 37,000,000 | 36,000,000 |
Deferred gains on utility property | ||
Detail of regulatory liabilities | ||
Regulatory liabilities, current | 2,000,000 | 2,000,000 |
Regulatory liabilities, non-current | 11,000,000 | 12,000,000 |
Income taxes-deferred investment tax credit | ||
Detail of regulatory liabilities | ||
Regulatory liabilities, current | 2,000,000 | 2,000,000 |
Regulatory liabilities, non-current | 60,000,000 | 52,000,000 |
Demand side management | ||
Detail of regulatory liabilities | ||
Regulatory liabilities, current | 26,000,000 | 4,000,000 |
Other | ||
Detail of regulatory liabilities | ||
Regulatory liabilities, non-current | $17,000,000 | $16,000,000 |
Retirement_Plans_and_Other_Ben2
Retirement Plans and Other Benefits (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 |
Retirement Plans and Other Benefits | |||||
Amount of pension and other postretirement benefit costs deferred | $14 | ||||
Amortization of regulatory assets | 2 | 2 | 6 | 2 | |
Pension Benefits | |||||
Net periodic benefit costs and the portion of these costs charged to expense | |||||
Service cost - benefits earned during the period | 16 | 16 | 48 | 48 | |
Interest cost on benefit obligation | 28 | 30 | 84 | 90 | |
Expected return on plan assets | -36 | -35 | -110 | -106 | |
Amortization of prior service cost | 1 | 1 | |||
Amortization of net actuarial loss | 10 | 11 | 30 | 33 | |
Net periodic benefit cost | 18 | 22 | 53 | 66 | |
Portion of cost charged to expense | 10 | 12 | 29 | 25 | |
Contributions | |||||
Employer's contributions under the plan | 141 | ||||
Minimum Contributions under MAP-21 | |||||
2013 | 0 | ||||
2014 | 89 | ||||
2015 | 112 | ||||
Pension Benefits | Maximum | |||||
Expected employer's contributions | |||||
2014 | 175 | ||||
2015 | 175 | ||||
Other Benefits | |||||
Net periodic benefit costs and the portion of these costs charged to expense | |||||
Service cost - benefits earned during the period | 6 | 7 | 18 | 20 | |
Interest cost on benefit obligation | 10 | 12 | 31 | 35 | |
Expected return on plan assets | -11 | -12 | -34 | -34 | |
Amortization of net actuarial loss | 3 | 5 | 8 | 15 | |
Net periodic benefit cost | 8 | 12 | 23 | 36 | |
Portion of cost charged to expense | 5 | 7 | 14 | 13 | |
Contributions | |||||
Employer's contributions under the plan | 11 | ||||
Expected employer's contributions | |||||
2013 | 14 | ||||
2014 | 20 | ||||
2015 | $20 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2013 | Dec. 31, 2012 | |
Income Taxes | |||
Long-term income tax receivables | $70,389,000 | ||
Decrease in long term deferred tax liability | 80,000,000 | ||
Period over which deferred income tax liability would have been repaid | 20 years | ||
Income Taxes, additional disclosures | |||
Percentage of bonus depreciation for federal income tax purposes | 50.00% | ||
Federal general business income tax credit carryforwards whose realization will be delayed on recognition of cash benefit | 78,000,000 | ||
Federal general business income tax credit carryforwards | 78,000,000 | 78,000,000 | |
Palo Verde VIE | |||
Income Taxes | |||
Income tax expense associates with the VIE's | 0 | ||
ARIZONA PUBLIC SERVICE COMPANY | |||
Income Taxes | |||
Long-term income tax receivables | 70,784,000 | ||
Decrease in uncertain tax positions | 67,000,000 | 67,000,000 | |
Income tax receivable that will be reclassified from long term to short-term | 137,000,000 | ||
Anticipated refund amount | 4,000,000 | 4,000,000 | |
ARIZONA PUBLIC SERVICE COMPANY | Expected contributions | |||
Income Taxes | |||
Decrease in uncertain tax positions | $35,000,000 | $35,000,000 |
Palo_Verde_Sale_Leaseback_Vari2
Palo Verde Sale Leaseback Variable Interest Entities (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | |
item | |||||
Palo Verde Sale Leaseback Variable Interest Entities | |||||
Increase in net income due to consolidation of Palo Verde Sale Leaseback Trusts | $8,555,000 | $8,040,000 | $25,338,000 | $23,582,000 | |
Amounts relating to the VIEs included in Condensed Consolidated Balance Sheets | |||||
Palo Verde sale leaseback property plant and equipment, net of accumulated depreciation | 126,092,000 | 126,092,000 | 128,995,000 | ||
Current maturities of long-term debt | 566,481,000 | 566,481,000 | 122,828,000 | ||
Palo Verde sale leaseback lessor notes long-term debt excluding current maturities | 37,414,000 | 37,414,000 | 38,869,000 | ||
Equity-Noncontrolling interests | 145,624,000 | 145,624,000 | 129,483,000 | ||
ARIZONA PUBLIC SERVICE COMPANY | |||||
Palo Verde Sale Leaseback Variable Interest Entities | |||||
Number of VIE lessor trusts | 3 | 3 | |||
Annual lease payments | 49,000,000 | ||||
Increase in net income due to consolidation of Palo Verde Sale Leaseback Trusts | 8,555,000 | 8,040,000 | 25,338,000 | 23,573,000 | |
Amounts relating to the VIEs included in Condensed Consolidated Balance Sheets | |||||
Palo Verde sale leaseback property plant and equipment, net of accumulated depreciation | 126,092,000 | 126,092,000 | 128,995,000 | ||
Current maturities of long-term debt | 566,481,000 | 566,481,000 | 122,828,000 | ||
Palo Verde sale leaseback lessor notes long-term debt excluding current maturities | 37,414,000 | 37,414,000 | 38,869,000 | ||
Equity-Noncontrolling interests | 145,624,000 | 145,624,000 | 129,483,000 | ||
ARIZONA PUBLIC SERVICE COMPANY | Consolidation of VIEs | |||||
Palo Verde Sale Leaseback Variable Interest Entities | |||||
Annual lease payment if lease is extended | 23,000,000 | ||||
Number of options | 2 | ||||
Increase in net income due to consolidation of Palo Verde Sale Leaseback Trusts | 9,000,000 | 8,000,000 | 25,000,000 | 24,000,000 | |
Amounts relating to the VIEs included in Condensed Consolidated Balance Sheets | |||||
Palo Verde sale leaseback property plant and equipment, net of accumulated depreciation | 126,000,000 | 126,000,000 | 129,000,000 | ||
Current maturities of long-term debt | 20,000,000 | 20,000,000 | 27,000,000 | ||
Palo Verde sale leaseback lessor notes long-term debt excluding current maturities | 37,000,000 | 37,000,000 | 39,000,000 | ||
Equity-Noncontrolling interests | 146,000,000 | 146,000,000 | 129,000,000 | ||
Maximum payment to the VIEs' noncontrolling equity participants upon the occurrence of certain unlikely events | 142,000,000 | ||||
VIE debt to be assumed upon the occurrence of certain unlikely events | $57,000,000 |
Derivative_Accounting_Details
Derivative Accounting (Details) | Sep. 30, 2013 |
GW | |
Commodity - Power | |
Outstanding gross notional amount of derivatives | |
Outstanding gross notional amount of derivative instruments | 6,498 |
Commodity - Gas | |
Outstanding gross notional amount of derivatives | |
Outstanding gross notional amount of derivative instruments | 112,000 |
ARIZONA PUBLIC SERVICE COMPANY | |
Derivative Accounting | |
Percentage of unrealized gains and losses on certain derivatives deferred for future rate treatment before accounting treatment change | 90.00% |
Percentage of unrealized gains and losses on certain derivatives deferred for future rate treatment | 100.00% |
Derivative_Accounting_Details_
Derivative Accounting (Details 2) (Commodity Contracts, USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Designated as Hedging Instruments | ||||
Gains and losses from derivative instruments | ||||
Loss recognized in OCI on derivative instruments (effective portion) | ($240,000) | ($119,000) | ($409,000) | ($37,513,000) |
Loss reclassified from AOCI into income (effective portion realized) | -23,658,000 | -49,478,000 | -39,156,000 | -86,993,000 |
Gain recognized in income (ineffective portion and amount excluded from effectiveness testing) | 117,000 | |||
Amount reclassified from AOCI to earnings related to discontinued cash flow hedges | 0 | 0 | 0 | 1,800,000 |
Estimated net loss before income taxes to be reclassified from AOCI | 23,000,000 | |||
Not Designated as Hedging Instruments | ||||
Gains and losses from derivative instruments | ||||
Net gain recognized in income from Derivative Instruments | -1,145,000 | 13,128,000 | -11,350,000 | 13,879,000 |
Not Designated as Hedging Instruments | Revenue | ||||
Gains and losses from derivative instruments | ||||
Net gain recognized in income from Derivative Instruments | 196,000 | 258,000 | 400,000 | 19,000 |
Not Designated as Hedging Instruments | Fuel and purchased power | ||||
Gains and losses from derivative instruments | ||||
Net gain recognized in income from Derivative Instruments | ($1,341,000) | $12,870,000 | ($11,750,000) | $13,860,000 |
Derivative_Accounting_Details_1
Derivative Accounting (Details 3) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Commodity Contracts | ||
Assets | ||
Amount Reported on Balance Sheet | $49,000 | |
Assets and Liabilities | ||
Gross Recognized Derivatives | -81,325 | -122,252 |
Amounts Offset | 28,300 | 49,299 |
Net Recognized Derivatives | -53,025 | -72,953 |
Other | -19,318 | -24,462 |
Amount Reported on Balance Sheet | -72,343 | -97,415 |
Commodity Contracts | Current Assets | ||
Assets | ||
Gross Recognized Derivatives | 32,201 | 42,495 |
Amounts Offset | -9,605 | -17,797 |
Net Recognized Derivatives | 22,596 | 24,698 |
Other | 145 | 1,001 |
Amount Reported on Balance Sheet | 22,741 | 25,699 |
Commodity Contracts | Investments and Other Assets | ||
Assets | ||
Gross Recognized Derivatives | 27,905 | 41,563 |
Amounts Offset | -1,859 | -5,672 |
Net Recognized Derivatives | 26,046 | 35,891 |
Amount Reported on Balance Sheet | 26,046 | 35,891 |
Commodity Contracts | Total Assets | ||
Assets | ||
Gross Recognized Derivatives | 60,106 | 84,058 |
Amounts Offset | -11,464 | -23,469 |
Net Recognized Derivatives | 48,642 | 60,589 |
Other | 145 | 1,001 |
Amount Reported on Balance Sheet | 48,787 | 61,590 |
Commodity Contracts | Current Liabilities | ||
Liabilities | ||
Gross Recognized Derivatives | -66,680 | -105,324 |
Amounts Offset | 32,675 | 57,046 |
Net Recognized Derivatives | -34,005 | -48,278 |
Other | -19,463 | -25,463 |
Amount Reported on Balance Sheet | -53,468 | -73,741 |
Commodity Contracts | Deferred Credits and Other | ||
Liabilities | ||
Gross Recognized Derivatives | -74,751 | -100,986 |
Amounts Offset | 7,089 | 15,722 |
Net Recognized Derivatives | -67,662 | -85,264 |
Amount Reported on Balance Sheet | -67,662 | -85,264 |
Commodity Contracts | Total Liabilities | ||
Liabilities | ||
Gross Recognized Derivatives | -141,431 | -206,310 |
Amounts Offset | 39,764 | 72,768 |
Net Recognized Derivatives | -101,667 | -133,542 |
Other | -19,463 | -25,463 |
Amount Reported on Balance Sheet | -121,130 | -159,005 |
Designated as Hedging Instruments | ||
Liabilities | ||
Amount Reported on Balance Sheet | $5,000 | $5,000 |
Derivative_Accounting_Details_2
Derivative Accounting (Details 4) (Commodity Contracts, USD $) | 9 Months Ended |
Sep. 30, 2013 | |
item | |
Commodity Contracts | |
Credit Risk and Credit-Related Contingent Features | |
Concentration of credit risk, number of counterparties | 2 |
Concentration of risk with two counterparties, as a percentage of risk management assets | 90.00% |
Risk management activities-derivative instruments: Commodity Contracts | $49,000,000 |
Aggregate Fair Value of Derivative Instruments in a Net Liability Position | 141,000,000 |
Cash Collateral Posted | 28,000,000 |
Additional Cash Collateral in the Event Credit-Risk Related Contingent Features were Fully Triggered | 88,000,000 |
Additional collateral to counterparties for energy related non-derivative instrument contracts | $175,000,000 |
Changes_in_Equity_Details
Changes in Equity (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Changes in equity | ||||
Balance | $4,169,234 | $3,899,337 | $4,102,289 | $3,930,586 |
Net income | 234,718 | 252,863 | 407,152 | 382,493 |
Other comprehensive income | 15,122 | 30,843 | 24,673 | 32,688 |
COMPREHENSIVE INCOME | 249,840 | 283,706 | 431,825 | 415,181 |
Issuance of capital stock | 2,331 | 2,365 | 7,268 | 7,590 |
Reissuance of treasury stock - net | 37 | -82 | -5,868 | 3,277 |
Other (primarily stock compensation) | -22 | 258 | 14,988 | 4,270 |
Dividends on common Stock | 8 | -119,877 | -172,344 | |
Net capital activities by noncontrolling interests | -9,197 | -2,976 | ||
Balance | 4,421,428 | 4,185,584 | 4,421,428 | 4,185,584 |
Common Shareholders | ||||
Changes in equity | ||||
Balance | 4,032,165 | 3,778,035 | 3,972,806 | 3,821,850 |
Net income | 226,163 | 244,823 | 381,814 | 358,911 |
Other comprehensive income | 15,122 | 30,843 | 24,673 | 32,688 |
COMPREHENSIVE INCOME | 241,285 | 275,666 | 406,487 | 391,599 |
Issuance of capital stock | 2,331 | 2,365 | 7,268 | 7,590 |
Reissuance of treasury stock - net | 37 | -82 | -5,868 | 3,277 |
Other (primarily stock compensation) | -22 | 258 | 14,988 | 4,270 |
Dividends on common Stock | 8 | -119,877 | -172,344 | |
Balance | 4,275,804 | 4,056,242 | 4,275,804 | 4,056,242 |
Noncontrolling Interests | ||||
Changes in equity | ||||
Balance | 137,069 | 121,302 | 129,483 | 108,736 |
Net income | 8,555 | 8,040 | 25,338 | 23,582 |
COMPREHENSIVE INCOME | 8,555 | 8,040 | 25,338 | 23,582 |
Net capital activities by noncontrolling interests | -9,197 | -2,976 | ||
Balance | $145,624 | $129,342 | $145,624 | $129,342 |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details) (ARIZONA PUBLIC SERVICE COMPANY, USD $) | 0 Months Ended | 9 Months Ended |
Apr. 02, 2013 | Sep. 30, 2013 | |
item | ||
ARIZONA PUBLIC SERVICE COMPANY | ||
Palo Verde Nuclear Generating Station | ||
Estimated share of the costs related to on-site interim storage of spent nuclear fuel | $122,000,000 | |
Regulatory liability of amounts recovered in retail rates in excess of amounts spent for on-site interim spent fuel storage | 42,000,000 | |
Maximum insurance against public liability per occurrence for a nuclear incident | 13,600,000,000 | |
Maximum available nuclear liability insurance | 375,000,000 | |
Remaining nuclear liability insurance through mandatory industry wide retrospective assessment program | 13,200,000,000 | |
Maximum assessment per reactor for each nuclear incident | 127,300,000 | |
Annual limit per incident with respect to maximum assessment | 19,000,000 | |
Number of VIE lessor trusts | 3 | |
Maximum potential retrospective assessment per incident of APS | 111,100,000 | |
Annual payment limitation with respect to maximum potential retrospective assessment | 16,400,000 | |
Amount of "all risk" (including nuclear hazards) insurance for property damage to, and decontamination of, property at Palo Verde | 2,750,000,000 | |
Sublimit for non-nuclear property damage losses which has been imposed to the primary policy offered | 1,500,000,000 | |
Sublimit for non-nuclear losses which has been imposed to the accidental outage policy | 327,600,000 | |
Maximum amount that APS could incur under the current NEIL policies for each retrospective assessment | 18,000,000 | |
Collateral assurance provided based on rating triggers | $48,000,000 | |
Period to provide collateral assurance based on rating triggers | 20 days |
Commitments_and_Contingencies_2
Commitments and Contingencies (Details 2) (ARIZONA PUBLIC SERVICE COMPANY, USD $) | 1 Months Ended | 9 Months Ended | 0 Months Ended | |
In Millions, unless otherwise specified | Sep. 30, 2011 | Sep. 30, 2013 | Sep. 08, 2011 | Aug. 06, 2013 |
item | item | Contaminated groundwater wells | ||
kV | item | |||
MW | ||||
Contractual Obligations | ||||
Decrease in contractual obligations for fuel and purchased power commitments | $300 | |||
2013 | 108 | |||
2014 | 576 | |||
2015 | 549 | |||
2016 | 516 | |||
2017 | 441 | |||
Thereafter | 6,399 | |||
Total commitments | 8,589 | |||
Superfund-Related Matters | ||||
Costs related to investigation and study under Superfund site | 2 | |||
Number of defendants against whom Roosevelt Irrigation District ("RID") filed lawsuit | 24 | |||
Southwest Power Outage | ||||
Capacity of transmission line that tripped out of service (in kV) | 500 | |||
Period, after the transmission line went off-line, over which generation and transmission resources for the Yuma area were lost | 10 minutes | |||
Number of customers losing service in Yuma area | 69,700 | |||
Capacity of firm load that were reported to have been affected due to outages affecting portions of southern Arizona, southern California and northern Mexico (in MW) | 7,900 | |||
Number of customers that were reported to have been affected due to outages | 2,700,000 | |||
Maximum possible fine per violation per day that the violation is found to have been in existence | 1 | |||
Financial Assurances | ||||
Outstanding letters of credit to support existing variable interest rate pollution control bonds | 76 | |||
Number of letters of credit expiring in 2015 | 1 | |||
Number of letters of credit expiring in 2016 | 2 | |||
Letters of credit to support certain equity lessors in the Palo Verde sale leaseback transactions | 32 | |||
Outstanding letters of credit to support natural gas tolling contract obligations | $60 |
Commitments_and_Contingencies_3
Commitments and Contingencies (Details 3) (USD $) | 0 Months Ended | 9 Months Ended | ||||
In Millions, unless otherwise specified | 23-May-13 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 |
Four Corners | Four Corners | Four Corners | Navajo Plant | Cholla | Cholla Units 1-3 | |
New Mexico Tax Matter | ARIZONA PUBLIC SERVICE COMPANY | ARIZONA PUBLIC SERVICE COMPANY | ARIZONA PUBLIC SERVICE COMPANY | ARIZONA PUBLIC SERVICE COMPANY | ARIZONA PUBLIC SERVICE COMPANY | |
New Mexico Tax Matter | ||||||
Environmental Matters | ||||||
Expected environmental cost | $300 | $200 | $200 | $120 | ||
Coal severance surtax, penalty, and interest | 30 | |||||
Share of the assessment | $12 |
Other_Income_and_Other_Expense2
Other Income and Other Expense (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Other income: | ||||
Interest income | $116 | $307 | $1,291 | $1,018 |
Miscellaneous | 44 | 113 | 96 | 339 |
Total other income | 160 | 420 | 1,387 | 1,357 |
Other expense: | ||||
Non-operating costs | -2,028 | -1,645 | -5,951 | -5,885 |
Investment losses - net | -3,435 | -2,254 | -3,643 | -2,366 |
Miscellaneous | -1,972 | -1,797 | -3,827 | -4,182 |
Total other expense | ($7,435) | ($5,696) | ($13,421) | ($12,433) |
Earnings_Per_Share_Details
Earnings Per Share (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Basic earnings per share: | ||||
Income from continuing operations attributable to common shareholders (in dollars per share) | $2.06 | $2.23 | $3.47 | $3.29 |
Loss from discontinued operations (in dollars per share) | ($0.01) | |||
Earnings per share - basic (in dollars per share) | $2.06 | $2.23 | $3.47 | $3.28 |
Diluted earnings per share: | ||||
Income from continuing operations attributable to common shareholders (in dollars per share) | $2.04 | $2.21 | $3.44 | $3.26 |
Loss from discontinued operations (in dollars per share) | ($0.01) | |||
Earnings per share - diluted (in dollars per share) | $2.04 | $2.21 | $3.44 | $3.25 |
Performance shares and restricted stock units | 1,044,000 | 1,100,000 | 978,000 | 971,000 |
Options to purchase shares of common stock outstanding excluded from computation of diluted earnings per share due to its antidilutive effect | 0 | 0 | 0 | 0 |
Fair_Value_Measurements_Detail
Fair Value Measurements (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Assets | ||
Nuclear decommissioning trust | $612,640,000 | $570,625,000 |
Total assets | 48,000,000 | 62,000,000 |
Fair value measurement on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets | ||
Cash Equivalents | 16,000,000 | |
Nuclear decommissioning trust | 109,000,000 | 110,000,000 |
Total assets | 109,000,000 | 126,000,000 |
Fair value measurement on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. Treasury | ||
Assets | ||
Nuclear decommissioning trust | 109,000,000 | 104,000,000 |
Fair value measurement on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Cash and cash equivalent funds | ||
Assets | ||
Nuclear decommissioning trust | 6,000,000 | |
Fair value measurement on a recurring basis | Significant Other Observable Inputs (Level 2) | ||
Assets | ||
Risk management activities-derivative instruments: Commodity Contracts | 12,000,000 | 22,000,000 |
Nuclear decommissioning trust | 507,000,000 | 465,000,000 |
Total assets | 519,000,000 | 487,000,000 |
Liabilities | ||
Risk management activities-derivative instruments: Commodity Contracts | -49,000,000 | -96,000,000 |
Fair value measurement on a recurring basis | Significant Other Observable Inputs (Level 2) | US commingled equity funds | ||
Assets | ||
Nuclear decommissioning trust | 245,000,000 | 204,000,000 |
Fair value measurement on a recurring basis | Significant Other Observable Inputs (Level 2) | Cash and cash equivalent funds | ||
Assets | ||
Nuclear decommissioning trust | 13,000,000 | 13,000,000 |
Fair value measurement on a recurring basis | Significant Other Observable Inputs (Level 2) | Corporate debt | ||
Assets | ||
Nuclear decommissioning trust | 83,000,000 | 80,000,000 |
Fair value measurement on a recurring basis | Significant Other Observable Inputs (Level 2) | Mortgage-backed securities | ||
Assets | ||
Nuclear decommissioning trust | 82,000,000 | 83,000,000 |
Fair value measurement on a recurring basis | Significant Other Observable Inputs (Level 2) | Municipality bonds | ||
Assets | ||
Nuclear decommissioning trust | 71,000,000 | 74,000,000 |
Fair value measurement on a recurring basis | Significant Other Observable Inputs (Level 2) | Other | ||
Assets | ||
Nuclear decommissioning trust | 13,000,000 | 11,000,000 |
Fair value measurement on a recurring basis | Significant Unobservable Inputs (Level 3) | ||
Assets | ||
Risk management activities-derivative instruments: Commodity Contracts | 48,000,000 | 62,000,000 |
Total assets | 48,000,000 | 62,000,000 |
Liabilities | ||
Risk management activities-derivative instruments: Commodity Contracts | -92,000,000 | -110,000,000 |
Fair value measurement on a recurring basis | Other | ||
Assets | ||
Risk management activities-derivative instruments: Commodity Contracts | -11,000,000 | -22,000,000 |
Nuclear decommissioning trust | -3,000,000 | -4,000,000 |
Total assets | -14,000,000 | -26,000,000 |
Liabilities | ||
Risk management activities-derivative instruments: Commodity Contracts | 20,000,000 | 47,000,000 |
Fair value measurement on a recurring basis | Other | Cash and cash equivalent funds | ||
Assets | ||
Nuclear decommissioning trust | -3,000,000 | -4,000,000 |
Fair value measurement on a recurring basis | Fair Value | ||
Assets | ||
Cash Equivalents | 16,000,000 | |
Risk management activities-derivative instruments: Commodity Contracts | 49,000,000 | 62,000,000 |
Nuclear decommissioning trust | 613,000,000 | 571,000,000 |
Total assets | 662,000,000 | 649,000,000 |
Liabilities | ||
Risk management activities-derivative instruments: Commodity Contracts | -121,000,000 | -159,000,000 |
Fair value measurement on a recurring basis | Fair Value | US commingled equity funds | ||
Assets | ||
Nuclear decommissioning trust | 245,000,000 | 204,000,000 |
Fair value measurement on a recurring basis | Fair Value | U.S. Treasury | ||
Assets | ||
Nuclear decommissioning trust | 109,000,000 | 104,000,000 |
Fair value measurement on a recurring basis | Fair Value | Cash and cash equivalent funds | ||
Assets | ||
Nuclear decommissioning trust | 10,000,000 | 15,000,000 |
Fair value measurement on a recurring basis | Fair Value | Corporate debt | ||
Assets | ||
Nuclear decommissioning trust | 83,000,000 | 80,000,000 |
Fair value measurement on a recurring basis | Fair Value | Mortgage-backed securities | ||
Assets | ||
Nuclear decommissioning trust | 82,000,000 | 83,000,000 |
Fair value measurement on a recurring basis | Fair Value | Municipality bonds | ||
Assets | ||
Nuclear decommissioning trust | 71,000,000 | 74,000,000 |
Fair value measurement on a recurring basis | Fair Value | Other | ||
Assets | ||
Nuclear decommissioning trust | $13,000,000 | $11,000,000 |
Fair_Value_Measurements_Detail1
Fair Value Measurements (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||
In Millions, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 |
Electricity forward contracts | Electricity forward contracts | Electricity forward contracts | Electricity forward contracts | Electricity forward contracts | Electricity forward contracts | Electricity forward contracts | Electricity forward contracts | Option Contracts | Option Contracts | Option Contracts | Option Contracts | Option Contracts | Option Contracts | Option Contracts | Option Contracts | Natural gas forward contracts | Natural gas forward contracts | Natural gas forward contracts | Natural gas forward contracts | Natural gas forward contracts | Natural gas forward contracts | Natural gas forward contracts | Natural gas forward contracts | ||||||
Minimum | Minimum | Maximum | Maximum | Weighted Average | Weighted Average | Minimum | Minimum | Maximum | Maximum | Weighted Average | Weighted Average | Minimum | Minimum | Maximum | Maximum | Weighted Average | Weighted Average | ||||||||||||
Discounted cash flows | Discounted cash flows | Discounted cash flows | Discounted cash flows | Discounted cash flows | Discounted cash flows | Option model | Option model | Option model | Option model | Option model | Option model | Discounted cash flows | Discounted cash flows | Discounted cash flows | Discounted cash flows | Discounted cash flows | Discounted cash flows | ||||||||||||
Information regarding the entity's internally developed significant unobservable inputs used to value its level 3 instruments | |||||||||||||||||||||||||||||
Assets | $48 | $48 | $62 | $47 | $57 | $1 | $5 | ||||||||||||||||||||||
Liabilities | 92 | 92 | 110 | 74 | 82 | 16 | 27 | 2 | 1 | ||||||||||||||||||||
Electricity forward price (per MWh) | 24.55 | 23.06 | 60.97 | 64.2 | 40.23 | 43.16 | 38.56 | 36.66 | 82.07 | 92.19 | 55.74 | 60.97 | |||||||||||||||||
Electricity price volatilities (as a percent) | 51.00% | 15.00% | 106.00% | 66.00% | 74.00% | 39.00% | |||||||||||||||||||||||
Natural gas forward price (per mmbtu) | 3.82 | 4.1 | 3.96 | 4.25 | 3.91 | 4.2 | 3.31 | 3.25 | 4.25 | 4.44 | 3.97 | 3.93 | |||||||||||||||||
Natural gas price volatilities (as a percent) | 24.00% | 17.00% | 51.00% | 36.00% | 31.00% | 23.00% | |||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||
Net derivative balance at beginning of period | -53 | -45 | -48 | -51 | |||||||||||||||||||||||||
Total net gains (losses) realized/unrealized: | |||||||||||||||||||||||||||||
Included in earnings | 2 | ||||||||||||||||||||||||||||
Included in OCI | -2 | ||||||||||||||||||||||||||||
Deferred as a regulatory asset or liability | 4 | -3 | -2 | 4 | |||||||||||||||||||||||||
Settlements | 6 | -1 | 8 | -1 | |||||||||||||||||||||||||
Transfers into Level 3 from Level 2 | -1 | -4 | -1 | -2 | |||||||||||||||||||||||||
Transfers from Level 3 into Level 2 | 3 | -1 | |||||||||||||||||||||||||||
Net derivative balance at end of period | -44 | -50 | -44 | -50 | |||||||||||||||||||||||||
Transfers in or out of Level 1 to or from any other hierarchy level | $0 |
Nuclear_Decommissioning_Trusts2
Nuclear Decommissioning Trusts (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | |
Nuclear decommissioning trust fund assets | |||||
Fair Value | $612,640,000 | $612,640,000 | $570,625,000 | ||
Realized gains and losses and proceeds from the sale of securities by the nuclear decommissioning trust funds | |||||
Proceeds from the sale of securities | 363,944,000 | 295,126,000 | |||
Fair value of fixed income securities, summarized by contractual maturities | |||||
Total | 612,640,000 | 612,640,000 | 570,625,000 | ||
ARIZONA PUBLIC SERVICE COMPANY | |||||
Nuclear decommissioning trust fund assets | |||||
Fair Value | 612,640,000 | 612,640,000 | 570,625,000 | ||
Unrealized Gains | 117,000,000 | 117,000,000 | 91,000,000 | ||
Unrealized Losses | -5,000,000 | -5,000,000 | |||
Net payables for securities purchases | -3,000,000 | -3,000,000 | -4,000,000 | ||
Realized gains and losses and proceeds from the sale of securities by the nuclear decommissioning trust funds | |||||
Realized gains | 1,000,000 | 1,000,000 | 4,000,000 | 5,000,000 | |
Realized losses | -3,000,000 | -1,000,000 | -5,000,000 | -3,000,000 | |
Proceeds from the sale of securities | 110,000,000 | 84,000,000 | 363,944,000 | 295,126,000 | |
Fair value of fixed income securities, summarized by contractual maturities | |||||
Total | 612,640,000 | 612,640,000 | 570,625,000 | ||
ARIZONA PUBLIC SERVICE COMPANY | Equity Securities | |||||
Nuclear decommissioning trust fund assets | |||||
Fair Value | 245,000,000 | 245,000,000 | 204,000,000 | ||
Unrealized Gains | 104,000,000 | 104,000,000 | 67,000,000 | ||
Fair value of fixed income securities, summarized by contractual maturities | |||||
Total | 245,000,000 | 245,000,000 | 204,000,000 | ||
ARIZONA PUBLIC SERVICE COMPANY | Fixed income securities. | |||||
Nuclear decommissioning trust fund assets | |||||
Fair Value | 371,000,000 | 371,000,000 | 371,000,000 | ||
Unrealized Gains | 13,000,000 | 13,000,000 | 24,000,000 | ||
Unrealized Losses | -5,000,000 | -5,000,000 | |||
Fair value of fixed income securities, summarized by contractual maturities | |||||
Less than one year | 12,000,000 | 12,000,000 | |||
1 year - 5 years | 106,000,000 | 106,000,000 | |||
5 years - 10 years | 104,000,000 | 104,000,000 | |||
Greater than 10 years | 149,000,000 | 149,000,000 | |||
Total | $371,000,000 | $371,000,000 | $371,000,000 |
Changes_in_Accumulated_Other_C2
Changes in Accumulated Other Comprehensive Loss (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Changes in accumulated other comprehensive income (loss) by component | ||||
Beginning balance | ($104,457) | ($114,008) | ||
Other comprehensive loss before reclassifications | -145 | -1,882 | ||
Amounts reclassified from accumulated other comprehensive loss | 15,267 | 26,555 | ||
Net current period other comprehensive income | 15,122 | 30,843 | 24,673 | 32,688 |
Ending balance | -89,335 | -89,335 | ||
Derivative Instruments | ||||
Changes in accumulated other comprehensive income (loss) by component | ||||
Beginning balance | -40,319 | -49,592 | ||
Other comprehensive loss before reclassifications | -145 | -247 | ||
Amounts reclassified from accumulated other comprehensive loss | 14,310 | 23,685 | ||
Net current period other comprehensive income | 14,165 | 23,438 | ||
Ending balance | -26,154 | -26,154 | ||
Pension and other postretirement benefits | ||||
Changes in accumulated other comprehensive income (loss) by component | ||||
Beginning balance | -64,138 | -64,416 | ||
Other comprehensive loss before reclassifications | -1,635 | |||
Amounts reclassified from accumulated other comprehensive loss | 957 | 2,870 | ||
Net current period other comprehensive income | 957 | 1,235 | ||
Ending balance | ($63,181) | ($63,181) |
CONDENSED_CONSOLIDATED_STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (APSC) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
OPERATING EXPENSES | ||||
Fuel and purchased power | $350,953 | $302,894 | $859,216 | $783,926 |
Operations and maintenance | 233,323 | 220,729 | 685,873 | 647,628 |
Depreciation and amortization | 107,388 | 100,353 | 317,410 | 301,068 |
Taxes other than income taxes | 43,256 | 36,507 | 124,091 | 120,271 |
Total | 736,704 | 661,505 | 1,992,443 | 1,858,216 |
OPERATING INCOME | 415,688 | 447,970 | 762,423 | 750,466 |
OTHER INCOME (DEDUCTIONS) | ||||
Allowance for equity funds used during construction | 5,569 | 5,708 | 18,698 | 15,639 |
Other income (Note S-2) | 160 | 420 | 1,387 | 1,357 |
Other expense (Note S-2) | -7,435 | -5,696 | -13,421 | -12,433 |
Total | -1,706 | 432 | 6,664 | 4,563 |
INTEREST EXPENSE | ||||
Allowance for borrowed funds used during construction | -3,235 | -3,830 | -10,861 | -10,428 |
Total | 47,352 | 48,412 | 140,511 | 151,781 |
NET INCOME | 234,718 | 252,863 | 407,152 | 382,493 |
Less: Net income attributable to noncontrolling interests (Note 6) | 8,555 | 8,040 | 25,338 | 23,582 |
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | 226,163 | 244,823 | 381,814 | 358,911 |
ARIZONA PUBLIC SERVICE COMPANY | ||||
ELECTRIC OPERATING REVENUES | 1,151,535 | 1,108,623 | 2,752,427 | 2,606,458 |
OPERATING EXPENSES | ||||
Fuel and purchased power | 350,953 | 302,894 | 859,216 | 783,926 |
Operations and maintenance | 222,617 | 218,403 | 668,319 | 640,596 |
Depreciation and amortization | 107,364 | 100,329 | 317,338 | 300,997 |
Income taxes | 143,335 | 153,797 | 241,347 | 233,679 |
Taxes other than income taxes | 43,015 | 36,255 | 123,366 | 119,499 |
Total | 867,284 | 811,678 | 2,209,586 | 2,078,697 |
OPERATING INCOME | 284,251 | 296,945 | 542,841 | 527,761 |
OTHER INCOME (DEDUCTIONS) | ||||
Income taxes | 4,123 | 3,170 | 9,555 | 6,906 |
Allowance for equity funds used during construction | 5,569 | 5,708 | 18,698 | 15,639 |
Other income (Note S-2) | 721 | 815 | 3,012 | 2,343 |
Other expense (Note S-2) | -4,615 | -3,352 | -15,755 | -11,969 |
Total | 5,798 | 6,341 | 15,510 | 12,919 |
INTEREST EXPENSE | ||||
Interest on long-term debt | 47,214 | 48,841 | 140,978 | 150,416 |
Interest on short-term borrowings | 1,553 | 1,334 | 4,950 | 5,283 |
Debt discount, premium and expense | 1,008 | 1,070 | 3,001 | 3,182 |
Allowance for borrowed funds used during construction | -3,235 | -3,830 | -10,861 | -10,428 |
Total | 46,540 | 47,415 | 138,068 | 148,453 |
NET INCOME | 243,509 | 255,871 | 420,283 | 392,227 |
Less: Net income attributable to noncontrolling interests (Note 6) | 8,555 | 8,040 | 25,338 | 23,573 |
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | $234,954 | $247,831 | $394,945 | $368,654 |
CONDENSED_CONSOLIDATED_STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (APSC) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
NET INCOME | $234,718 | $252,863 | $407,152 | $382,493 |
Derivative instruments: | ||||
Net unrealized loss, net of tax benefit of $95 and $47 for three months ended September 30, 2013 and 2012 and of $162 and $14,820 for nine months ended September 30, 2013 and 2012 | -145 | -72 | -247 | -22,696 |
Reclassification of net realized loss, net of tax benefit of $9,348 and $19,547 for three months ended September 30, 2013 and 2012 and $15,471 and $34,367 for nine months ended September 30, 2013 and 2012 | 14,310 | 29,935 | 23,685 | 52,632 |
Pension and other postretirement benefits activity, net of tax (expense) of $(621) and $(568) for three months ended September 30, 2013 and 2012 and $(798) and $(1,409) for nine months ended September 30, 2013 and 2012 | 957 | 980 | 1,235 | 2,752 |
Total other comprehensive income | 15,122 | 30,843 | 24,673 | 32,688 |
COMPREHENSIVE INCOME | 249,840 | 283,706 | 431,825 | 415,181 |
Less: Comprehensive income attributable to noncontrolling interests | 8,555 | 8,040 | 25,338 | 23,582 |
COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | 241,285 | 275,666 | 406,487 | 391,599 |
ARIZONA PUBLIC SERVICE COMPANY | ||||
NET INCOME | 243,509 | 255,871 | 420,283 | 392,227 |
Derivative instruments: | ||||
Net unrealized loss, net of tax benefit of $95 and $47 for three months ended September 30, 2013 and 2012 and of $162 and $14,820 for nine months ended September 30, 2013 and 2012 | -145 | -72 | -247 | -22,693 |
Reclassification of net realized loss, net of tax benefit of $9,348 and $19,547 for three months ended September 30, 2013 and 2012 and $15,471 and $34,367 for nine months ended September 30, 2013 and 2012 | 14,310 | 29,931 | 23,684 | 52,625 |
Pension and other postretirement benefits activity, net of tax (expense) of $(621) and $(568) for three months ended September 30, 2013 and 2012 and $(798) and $(1,409) for nine months ended September 30, 2013 and 2012 | 951 | 869 | 1,222 | 2,158 |
Total other comprehensive income | 15,116 | 30,728 | 24,659 | 32,090 |
COMPREHENSIVE INCOME | 258,625 | 286,599 | 444,942 | 424,317 |
Less: Comprehensive income attributable to noncontrolling interests | 8,555 | 8,040 | 25,338 | 23,573 |
COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | $250,070 | $278,559 | $419,604 | $400,744 |
CONDENSED_CONSOLIDATED_STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (APSC) (Parenthetical) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Net unrealized loss, tax benefit | $95 | $47 | $162 | $14,817 |
Reclassification of net realized loss, tax benefit | 9,348 | 19,543 | 15,471 | 34,361 |
Pension and other postretirement benefits activity, tax (expense) | -625 | -640 | -807 | -1,797 |
ARIZONA PUBLIC SERVICE COMPANY | ||||
Net unrealized loss, tax benefit | 95 | 47 | 162 | 14,820 |
Reclassification of net realized loss, tax benefit | 9,348 | 19,547 | 15,471 | 34,367 |
Pension and other postretirement benefits activity, tax (expense) | ($621) | ($568) | ($798) | ($1,409) |
CONDENSED_CONSOLIDATED_BALANCE2
CONDENSED CONSOLIDATED BALANCE SHEETS (APSC) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
PROPERTY, PLANT AND EQUIPMENT | ||
Plant in service and held for future use | $14,597,995 | $14,346,367 |
Accumulated depreciation and amortization | -5,101,498 | -4,929,613 |
Net | 9,496,497 | 9,416,754 |
Construction work in progress | 605,987 | 565,716 |
Palo Verde sale leaseback, net of accumulated depreciation (Note 6) | 126,092 | 128,995 |
Intangible assets, net of accumulated amortization | 160,134 | 162,150 |
Nuclear fuel, net of accumulated amortization | 140,356 | 122,778 |
Total property, plant and equipment | 10,529,066 | 10,396,393 |
INVESTMENTS AND OTHER ASSETS | ||
Nuclear decommissioning trust (Note 13) | 612,640 | 570,625 |
Assets from risk management activities (Note 7) | 26,046 | 35,891 |
Other assets | 60,219 | 62,694 |
Total investments and other assets | 698,905 | 669,210 |
CURRENT ASSETS | ||
Cash and cash equivalents | 135,457 | 26,202 |
Customer and other receivables | 427,370 | 277,225 |
Accrued unbilled revenues | 132,555 | 94,845 |
Allowance for doubtful accounts | -3,768 | -3,340 |
Materials and supplies (at average cost) | 223,385 | 218,096 |
Income tax receivable | 133,551 | 2,423 |
Fossil fuel (at average cost) | 34,959 | 31,334 |
Deferred fuel and purchased power regulatory asset (Note 3) | 37,383 | 72,692 |
Other regulatory assets (Note 3) | 82,558 | 71,257 |
Deferred income taxes | 87,490 | 152,191 |
Assets from risk management activities (Note 7) | 22,741 | 25,699 |
Other current assets | 36,805 | 37,102 |
Total current assets | 1,350,486 | 1,005,726 |
DEFERRED DEBITS | ||
Regulatory assets (Note 3) | 1,105,882 | 1,099,900 |
Income tax receivable (Note 5) | 70,389 | |
Other | 138,332 | 137,997 |
Total deferred debits | 1,244,214 | 1,308,286 |
TOTAL ASSETS | 13,822,671 | 13,379,615 |
CAPITALIZATION | ||
Common stock | 2,479,101 | 2,462,712 |
Retained earnings | 1,886,038 | 1,624,102 |
Accumulated other comprehensive loss: | ||
Pension and other postretirement benefits | -63,181 | -64,416 |
Derivative instruments | -26,154 | -49,592 |
Total shareholders' equity | 4,275,804 | 3,972,806 |
Noncontrolling interests (Note 6) | 145,624 | 129,483 |
Total equity | 4,421,428 | 4,102,289 |
Long-term debt less current maturities (Note 2) | 2,782,901 | 3,160,219 |
Palo Verde sale leaseback lessor notes less current maturities (Note 6) | 37,414 | 38,869 |
CURRENT LIABILITIES | ||
Short-term borrowings | 92,175 | |
Current maturities of long-term debt (Note 2) | 566,481 | 122,828 |
Accounts payable | 250,023 | 221,312 |
Accrued taxes (Note 5) | 183,858 | 124,939 |
Accrued interest | 45,811 | 49,380 |
Common dividends payable | 59,789 | |
Customer deposits | 77,254 | 79,689 |
Liabilities from risk management activities (Note 7) | 53,468 | 73,741 |
Regulatory liabilities (Note 3) | 88,409 | 88,116 |
Other current liabilities | 181,639 | 171,573 |
Total current liabilities | 1,446,943 | 1,083,542 |
DEFERRED CREDITS AND OTHER | ||
Deferred income taxes | 2,363,783 | 2,151,371 |
Regulatory liabilities (Note 3) | 798,226 | 759,201 |
Liability for asset retirements | 364,635 | 357,097 |
Liabilities for pension and other postretirement benefits (Note 4) | 939,414 | 1,058,755 |
Deferred investment tax credit | 115,984 | 99,819 |
Liabilities from risk management activities (Note 7) | 67,662 | 85,264 |
Customer advances | 109,667 | 109,359 |
Coal mine reclamation | 114,764 | 118,860 |
Unrecognized tax benefits (Note 5) | 81,797 | 71,135 |
Other | 178,053 | 183,835 |
Total deferred credits and other | 5,133,985 | 4,994,696 |
COMMITMENTS AND CONTINGENCIES (SEE NOTES) | ||
TOTAL LIABILITIES AND EQUITY | 13,822,671 | 13,379,615 |
ARIZONA PUBLIC SERVICE COMPANY | ||
PROPERTY, PLANT AND EQUIPMENT | ||
Plant in service and held for future use | 14,594,129 | 14,342,501 |
Accumulated depreciation and amortization | -5,097,804 | -4,925,990 |
Net | 9,496,325 | 9,416,511 |
Construction work in progress | 605,987 | 565,716 |
Palo Verde sale leaseback, net of accumulated depreciation (Note 6) | 126,092 | 128,995 |
Intangible assets, net of accumulated amortization | 159,979 | 161,995 |
Nuclear fuel, net of accumulated amortization | 140,356 | 122,778 |
Total property, plant and equipment | 10,528,739 | 10,395,995 |
INVESTMENTS AND OTHER ASSETS | ||
Nuclear decommissioning trust (Note 13) | 612,640 | 570,625 |
Assets from risk management activities (Note 7) | 26,046 | 35,891 |
Other assets | 33,203 | 31,650 |
Total investments and other assets | 671,889 | 638,166 |
CURRENT ASSETS | ||
Cash and cash equivalents | 113,072 | 3,499 |
Customer and other receivables | 426,425 | 274,815 |
Accrued unbilled revenues | 132,555 | 94,845 |
Allowance for doubtful accounts | -3,768 | -3,340 |
Materials and supplies (at average cost) | 223,385 | 218,096 |
Income tax receivable | 126,098 | 589 |
Fossil fuel (at average cost) | 34,959 | 31,334 |
Deferred fuel and purchased power regulatory asset (Note 3) | 37,383 | 72,692 |
Other regulatory assets (Note 3) | 82,558 | 71,257 |
Deferred income taxes | 538 | 74,420 |
Assets from risk management activities (Note 7) | 22,741 | 25,699 |
Other current assets | 35,983 | 37,077 |
Total current assets | 1,231,929 | 900,983 |
DEFERRED DEBITS | ||
Regulatory assets (Note 3) | 1,105,882 | 1,099,900 |
Unamortized debt issue costs | 22,367 | 22,492 |
Income tax receivable (Note 5) | 70,784 | |
Other | 114,995 | 114,222 |
Total deferred debits | 1,243,244 | 1,307,398 |
TOTAL ASSETS | 13,675,801 | 13,242,542 |
CAPITALIZATION | ||
Common stock | 178,162 | 178,162 |
Additional paid-in capital | 2,379,696 | 2,379,696 |
Retained earnings | 1,899,375 | 1,624,237 |
Accumulated other comprehensive loss: | ||
Pension and other postretirement benefits | -38,281 | -39,503 |
Derivative instruments | -26,155 | -49,592 |
Total shareholders' equity | 4,392,797 | 4,093,000 |
Noncontrolling interests (Note 6) | 145,624 | 129,483 |
Total equity | 4,538,421 | 4,222,483 |
Long-term debt less current maturities (Note 2) | 2,657,901 | 3,035,219 |
Palo Verde sale leaseback lessor notes less current maturities (Note 6) | 37,414 | 38,869 |
Total capitalization | 7,233,736 | 7,296,571 |
CURRENT LIABILITIES | ||
Short-term borrowings | 92,175 | |
Current maturities of long-term debt (Note 2) | 566,481 | 122,828 |
Accounts payable | 243,470 | 215,577 |
Accrued taxes (Note 5) | 178,349 | 116,700 |
Accrued interest | 45,542 | 49,135 |
Common dividends payable | 59,800 | |
Customer deposits | 77,254 | 79,689 |
Liabilities from risk management activities (Note 7) | 53,468 | 73,741 |
Regulatory liabilities (Note 3) | 88,409 | 88,116 |
Other current liabilities | 152,392 | 145,326 |
Total current liabilities | 1,405,365 | 1,043,087 |
DEFERRED CREDITS AND OTHER | ||
Deferred income taxes | 2,337,320 | 2,133,976 |
Regulatory liabilities (Note 3) | 798,226 | 759,201 |
Liability for asset retirements | 364,635 | 357,097 |
Liabilities for pension and other postretirement benefits (Note 4) | 901,146 | 1,017,556 |
Deferred investment tax credit | 115,984 | 99,819 |
Liabilities from risk management activities (Note 7) | 67,662 | 85,264 |
Customer advances | 109,667 | 109,359 |
Coal mine reclamation | 114,764 | 118,860 |
Unrecognized tax benefits (Note 5) | 81,589 | 70,932 |
Other | 145,707 | 150,820 |
Total deferred credits and other | 5,036,700 | 4,902,884 |
COMMITMENTS AND CONTINGENCIES (SEE NOTES) | ||
TOTAL LIABILITIES AND EQUITY | $13,675,801 | $13,242,542 |
CONDENSED_CONSOLIDATED_STATEME8
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (APSC) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $407,152 | $382,493 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization including nuclear fuel | 377,971 | 360,570 |
Deferred fuel and purchased power | 13,093 | 51,533 |
Deferred fuel and purchased power amortization | 23,158 | -91,894 |
Allowance for equity funds used during construction | -18,698 | -15,639 |
Deferred income taxes | 256,132 | 197,527 |
Deferred investment tax credit | 16,164 | 8,974 |
Change in derivative instruments fair value | 537 | -943 |
Changes in current assets and liabilities: | ||
Customer and other receivables | -178,029 | -76,697 |
Accrued unbilled revenues | -37,710 | -11,186 |
Materials, supplies and fossil fuel | -8,914 | -23,873 |
Income tax receivable | -131,128 | 6,466 |
Other current assets | -12,246 | -10,035 |
Accounts payable | 44,704 | -69,776 |
Accrued taxes | 58,919 | 69,899 |
Other current liabilities | 4,096 | 17,071 |
Change in margin and collateral accounts - assets | -327 | 1,980 |
Change in margin and collateral accounts - liabilities | 15,000 | 114,579 |
Change in unrecognized tax benefits | -57,585 | -3,554 |
Change in long-term income tax receivable | 137,270 | -1,320 |
Change in other long-term assets | -24,345 | -13,885 |
Change in other long-term liabilities | -2,884 | 37,181 |
Net cash flow provided by operating activities | 882,330 | 929,471 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Capital expenditures | -581,515 | -670,684 |
Contributions in aid of construction | 34,910 | 41,451 |
Allowance for borrowed funds used during construction | -10,861 | -10,428 |
Proceeds from nuclear decommissioning trust sales | 363,944 | 295,126 |
Investment in nuclear decommissioning trust | -376,881 | -308,063 |
Other | -1,553 | -520 |
Net cash flow used for investing activities | -571,956 | -653,118 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Issuance of long-term debt | 136,307 | 351,081 |
Short-term borrowings - net | -92,175 | |
Repayment of long-term debt | -72,777 | -421,703 |
Dividends paid on common stock | -174,485 | -167,074 |
Noncontrolling interests | -9,197 | -2,630 |
Net cash flow used for financing activities | -201,119 | -230,457 |
NET INCREASE IN CASH AND CASH EQUIVALENTS | 109,255 | 45,896 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 26,202 | 33,583 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 135,457 | 79,479 |
Cash paid during the period for: | ||
Income taxes paid | 3,412 | -651 |
Interest, net of amounts capitalized | 141,047 | 152,582 |
Significant non-cash investing and financing activities: | ||
Accrued capital expenditures | 11,377 | 11,281 |
ARIZONA PUBLIC SERVICE COMPANY | ||
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | 420,283 | 392,227 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization including nuclear fuel | 377,899 | 360,499 |
Deferred fuel and purchased power | 13,093 | 51,533 |
Deferred fuel and purchased power amortization | 23,158 | -91,894 |
Allowance for equity funds used during construction | -18,698 | -15,639 |
Deferred income taxes | 256,253 | 222,251 |
Deferred investment tax credit | 16,164 | 8,974 |
Change in derivative instruments fair value | 537 | -943 |
Changes in current assets and liabilities: | ||
Customer and other receivables | -179,494 | -79,152 |
Accrued unbilled revenues | -37,710 | -11,186 |
Materials, supplies and fossil fuel | -8,914 | -23,873 |
Income tax receivable | -125,509 | -775 |
Other current assets | -11,449 | -10,446 |
Accounts payable | 43,886 | -72,802 |
Accrued taxes | 61,649 | 62,834 |
Other current liabilities | 1,073 | 112 |
Change in margin and collateral accounts - assets | -327 | 1,980 |
Change in margin and collateral accounts - liabilities | 15,000 | 114,579 |
Change in unrecognized tax benefits | -57,585 | -3,554 |
Change in long-term income tax receivable | 137,665 | -1,320 |
Change in other long-term assets | -28,686 | -17,185 |
Change in other long-term liabilities | 691 | 36,451 |
Net cash flow provided by operating activities | 898,979 | 922,671 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Capital expenditures | -581,515 | -670,684 |
Contributions in aid of construction | 34,910 | 41,451 |
Allowance for borrowed funds used during construction | -10,861 | -10,428 |
Proceeds from nuclear decommissioning trust sales | 363,944 | 295,126 |
Investment in nuclear decommissioning trust | -376,881 | -308,063 |
Other | -1,561 | -520 |
Net cash flow used for investing activities | -571,964 | -653,118 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Issuance of long-term debt | 136,307 | 351,081 |
Short-term borrowings - net | -92,175 | |
Repayment of long-term debt | -72,777 | -421,703 |
Dividends paid on common stock | -179,600 | -162,400 |
Noncontrolling interests | -9,197 | -2,630 |
Net cash flow used for financing activities | -217,442 | -235,652 |
NET INCREASE IN CASH AND CASH EQUIVALENTS | 109,573 | 33,901 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 3,499 | 19,873 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 113,072 | 53,774 |
Cash paid during the period for: | ||
Income taxes paid | 3,412 | |
Interest, net of amounts capitalized | 138,626 | 149,338 |
Significant non-cash investing and financing activities: | ||
Accrued capital expenditures | $11,377 | $11,281 |
Changes_in_Equity_APSC
Changes in Equity (APSC) | 9 Months Ended | |||||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||||
Changes in equity | ||||||||||||||||||||
Changes in Equity | 8. Changes in Equity | |||||||||||||||||||
The following tables show Pinnacle West’s changes in shareholders’ equity and changes in equity of noncontrolling interests for the three and nine months ended September 30, 2013 and 2012 (dollars in thousands): | ||||||||||||||||||||
Three Months Ended September 30, 2013 | Three Months Ended September 30, 2012 | |||||||||||||||||||
Common | Noncontrolling | Total | Common | Noncontrolling | Total | |||||||||||||||
Shareholders | Interests | Shareholders | Interests | |||||||||||||||||
Beginning balance, July 1 | $ | 4,032,165 | $ | 137,069 | $ | 4,169,234 | $ | 3,778,035 | $ | 121,302 | $ | 3,899,337 | ||||||||
Net income | 226,163 | 8,555 | 234,718 | 244,823 | 8,040 | 252,863 | ||||||||||||||
Other comprehensive income | 15,122 | — | 15,122 | 30,843 | — | 30,843 | ||||||||||||||
Total comprehensive income | 241,285 | 8,555 | 249,840 | 275,666 | 8,040 | 283,706 | ||||||||||||||
Issuance of capital stock | 2,331 | — | 2,331 | 2,365 | — | 2,365 | ||||||||||||||
Reissuance of treasury stock — net | 37 | — | 37 | (82 | ) | — | (82 | ) | ||||||||||||
Other (primarily stock compensation) | (22 | ) | — | (22 | ) | 258 | — | 258 | ||||||||||||
Dividends on common stock | 8 | — | 8 | — | — | — | ||||||||||||||
Ending balance, September 30 | $ | 4,275,804 | $ | 145,624 | $ | 4,421,428 | $ | 4,056,242 | $ | 129,342 | $ | 4,185,584 | ||||||||
Nine Months Ended September 30, 2013 | Nine Months Ended September 30, 2012 | |||||||||||||||||||
Common | Noncontrolling | Total | Common | Noncontrolling | Total | |||||||||||||||
Shareholders | Interests | Shareholders | Interests | |||||||||||||||||
Beginning balance, January 1 | $ | 3,972,806 | $ | 129,483 | $ | 4,102,289 | $ | 3,821,850 | $ | 108,736 | $ | 3,930,586 | ||||||||
Net income | 381,814 | 25,338 | 407,152 | 358,911 | 23,582 | 382,493 | ||||||||||||||
Other comprehensive income | 24,673 | — | 24,673 | 32,688 | — | 32,688 | ||||||||||||||
Total comprehensive income | 406,487 | 25,338 | 431,825 | 391,599 | 23,582 | 415,181 | ||||||||||||||
Issuance of capital stock | 7,268 | — | 7,268 | 7,590 | — | 7,590 | ||||||||||||||
Reissuance (purchase) of treasury stock - net | (5,868 | ) | — | (5,868 | ) | 3,277 | — | 3,277 | ||||||||||||
Other (primarily stock compensation) | 14,988 | — | 14,988 | 4,270 | — | 4,270 | ||||||||||||||
Dividends on common stock | (119,877 | ) | — | (119,877 | ) | (172,344 | ) | — | (172,344 | ) | ||||||||||
Net capital activities by noncontrolling interests | — | (9,197 | ) | (9,197 | ) | — | (2,976 | ) | (2,976 | ) | ||||||||||
Ending balance, September 30 | $ | 4,275,804 | $ | 145,624 | $ | 4,421,428 | $ | 4,056,242 | $ | 129,342 | $ | 4,185,584 | ||||||||
ARIZONA PUBLIC SERVICE COMPANY | ||||||||||||||||||||
Changes in equity | ||||||||||||||||||||
Changes in Equity | ARIZONA PUBLIC SERVICE COMPANY | |||||||||||||||||||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | ||||||||||||||||||||
S-1. Changes in Equity | ||||||||||||||||||||
The following tables show APS’s changes in shareholder equity and changes in equity of noncontrolling interests for the three and nine months ended September 30, 2013 and 2012 (dollars in thousands): | ||||||||||||||||||||
Three Months Ended September 30, 2013 | Three Months Ended September 30, 2012 | |||||||||||||||||||
Shareholder | Noncontrolling | Total | Shareholder | Noncontrolling | Total | |||||||||||||||
Equity | Interests | Equity | Interests | |||||||||||||||||
Beginning balance, July 1 | $ | 4,142,726 | $ | 137,070 | $ | 4,279,796 | $ | 3,902,791 | $ | 121,302 | $ | 4,024,093 | ||||||||
Net income | 234,954 | 8,555 | 243,509 | 247,831 | 8,040 | 255,871 | ||||||||||||||
OCI | 15,116 | — | 15,116 | 30,728 | — | 30,728 | ||||||||||||||
Total comprehensive income | 250,070 | 8,555 | 258,625 | 278,559 | 8,040 | 286,599 | ||||||||||||||
Other | 1 | (1 | ) | — | 1 | — | 1 | |||||||||||||
Ending balance, September 30 | $ | 4,392,797 | $ | 145,624 | $ | 4,538,421 | $ | 4,181,351 | $ | 129,342 | $ | 4,310,693 | ||||||||
Nine Months Ended September 30, 2013 | Nine Months Ended September 30, 2012 | |||||||||||||||||||
Shareholder | Noncontrolling | Total | Shareholder | Noncontrolling | Total | |||||||||||||||
Equity | Interests | Equity | Interests | |||||||||||||||||
Beginning balance, January 1 | $ | 4,093,000 | $ | 129,483 | $ | 4,222,483 | $ | 3,943,007 | $ | 108,399 | $ | 4,051,406 | ||||||||
Net income | 394,945 | 25,338 | 420,283 | 368,654 | 23,573 | 392,227 | ||||||||||||||
OCI | 24,659 | — | 24,659 | 32,090 | — | 32,090 | ||||||||||||||
Total comprehensive income | 419,604 | 25,338 | 444,942 | 400,744 | 23,573 | 424,317 | ||||||||||||||
Dividends on common stock | (119,800 | ) | — | (119,800 | ) | (162,400 | ) | — | (162,400 | ) | ||||||||||
Net capital activities by noncontrolling interests | — | (9,197 | ) | (9,197 | ) | — | (2,630 | ) | (2,630 | ) | ||||||||||
Other | (7 | ) | — | (7 | ) | — | — | — | ||||||||||||
Ending balance, September 30 | $ | 4,392,797 | $ | 145,624 | $ | 4,538,421 | $ | 4,181,351 | $ | 129,342 | $ | 4,310,693 |
Other_Income_and_Other_Expense3
Other Income and Other Expense (APSC) | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
Other Income and Other Expense | 10. Other Income and Other Expense | |||||||||||||
The following table provides detail of other income and other expense for the three and nine months ended September 30, 2013 and 2012 (dollars in thousands): | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
Other income: | ||||||||||||||
Interest income | $ | 116 | $ | 307 | $ | 1,291 | $ | 1,018 | ||||||
Miscellaneous | 44 | 113 | 96 | 339 | ||||||||||
Total other income | $ | 160 | $ | 420 | $ | 1,387 | $ | 1,357 | ||||||
Other expense: | ||||||||||||||
Non-operating costs | $ | (2,028 | ) | $ | (1,645 | ) | $ | (5,951 | ) | $ | (5,885 | ) | ||
Investment losses — net | (3,435 | ) | (2,254 | ) | (3,643 | ) | (2,366 | ) | ||||||
Miscellaneous | (1,972 | ) | (1,797 | ) | (3,827 | ) | (4,182 | ) | ||||||
Total other expense | $ | (7,435 | ) | $ | (5,696 | ) | $ | (13,421 | ) | $ | (12,433 | ) | ||
ARIZONA PUBLIC SERVICE COMPANY | ||||||||||||||
Other Income and Other Expense | ARIZONA PUBLIC SERVICE COMPANY | |||||||||||||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | ||||||||||||||
S-2. Other Income and Other Expense | ||||||||||||||
The following table provides detail of APS’s other income and other expense for the three and nine months ended September 30, 2013 and 2012 (dollars in thousands): | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
Other income: | ||||||||||||||
Interest income | $ | 2 | $ | 61 | $ | 1,061 | $ | 244 | ||||||
Miscellaneous | 719 | 754 | 1,951 | 2,099 | ||||||||||
Total other income | $ | 721 | $ | 815 | $ | 3,012 | $ | 2,343 | ||||||
Other expense: | ||||||||||||||
Non-operating costs (a) | $ | (2,263 | ) | $ | (2,007 | ) | $ | (6,868 | ) | $ | (6,690 | ) | ||
Asset dispositions | (1,203 | ) | (248 | ) | (3,864 | ) | (666 | ) | ||||||
Miscellaneous | (1,149 | ) | (1,097 | ) | (5,023 | ) | (4,613 | ) | ||||||
Total other expense | $ | (4,615 | ) | $ | (3,352 | ) | $ | (15,755 | ) | $ | (11,969 | ) | ||
(a) As defined by the FERC, includes below-the-line non-operating utility expense (items excluded from utility rate recovery). |
Changes_in_Accumulated_Other_C3
Changes in Accumulated Other Comprehensive Loss (APSC) | 9 Months Ended | |||||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||||
Changes in Accumulated Other Comprehensive Loss | 15. Changes in Accumulated Other Comprehensive Loss | |||||||||||||||||||
The following table shows the changes in accumulated other comprehensive loss, including reclassification adjustments, net of tax, by component for the three and nine months ended September 30, 2013 (dollars in thousands): | ||||||||||||||||||||
Three Months Ended September 30, 2013 | Nine Months Ended September 30, 2013 | |||||||||||||||||||
Derivative | Pension and | Total | Derivative | Pension and | Total | |||||||||||||||
Instruments | Other | Instruments | Other | |||||||||||||||||
Postretirement | Postretirement | |||||||||||||||||||
Benefits | Benefits | |||||||||||||||||||
Beginning balance | $ | (40,319 | ) | $ | (64,138 | ) | $ | (104,457 | ) | $ | (49,592 | ) | $ | (64,416 | ) | $ | (114,008 | ) | ||
Other comprehensive loss before reclassifications | (145 | ) | — | (145 | ) | (247 | ) | (1,635 | ) | (1,882 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive loss | 14,310 | (a) | 957 | (b) | 15,267 | 23,685 | (a) | 2,870 | (b) | 26,555 | ||||||||||
Net current period other comprehensive income | 14,165 | 957 | 15,122 | 23,438 | 1,235 | 24,673 | ||||||||||||||
Ending balance | $ | (26,154 | ) | $ | (63,181 | ) | $ | (89,335 | ) | $ | (26,154 | ) | $ | (63,181 | ) | $ | (89,335 | ) | ||
(a) 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 7. | ||||||||||||||||||||
(b) These amounts primarily represent amortization of actuarial loss, and are included in the computation of net periodic pension cost. See Note 4. | ||||||||||||||||||||
ARIZONA PUBLIC SERVICE COMPANY | ||||||||||||||||||||
Changes in Accumulated Other Comprehensive Loss | ARIZONA PUBLIC SERVICE COMPANY | |||||||||||||||||||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | ||||||||||||||||||||
S-3. Changes in Accumulated Other Comprehensive Loss | ||||||||||||||||||||
The following table shows the changes in accumulated other comprehensive loss, including reclassification adjustments, net of tax, by component for the three and nine months ended September 30, 2013 (dollars in thousands): | ||||||||||||||||||||
Three Months Ended September 30, 2013 | Nine Months Ended September 30, 2013 | |||||||||||||||||||
Derivative | Pension and | Total | Derivative | Pension and | Total | |||||||||||||||
Instruments | Other | Instruments | Other | |||||||||||||||||
Postretirement | Postretirement | |||||||||||||||||||
Benefits | Benefits | |||||||||||||||||||
Beginning balance | $ | (40,320 | ) | $ | (39,232 | ) | $ | (79,552 | ) | $ | (49,592 | ) | $ | (39,503 | ) | $ | (89,095 | ) | ||
Other comprehensive loss before reclassifications | (145 | ) | — | (145 | ) | (247 | ) | (1,630 | ) | (1,877 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive loss | 14,310 | (a) | 951 | (b) | 15,261 | 23,684 | (a) | 2,852 | (b) | 26,536 | ||||||||||
Net current period other comprehensive income | 14,165 | 951 | 15,116 | 23,437 | 1,222 | 24,659 | ||||||||||||||
Ending balance | $ | (26,155 | ) | $ | (38,281 | ) | $ | (64,436 | ) | $ | (26,155 | ) | $ | (38,281 | ) | $ | (64,436 | ) | ||
(a) 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 7. | ||||||||||||||||||||
(b) These amounts primarily represent amortization of actuarial loss, and are included in the computation of net periodic pension cost. See Note 4. | ||||||||||||||||||||
Changes_in_Equity_APSC_Tables
Changes in Equity (APSC) (Tables) | 9 Months Ended | |||||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||||
Changes in equity | ||||||||||||||||||||
Schedule of changes in shareholders' equity and changes in equity of noncontrolling interests | The following tables show Pinnacle West’s changes in shareholders’ equity and changes in equity of noncontrolling interests for the three and nine months ended September 30, 2013 and 2012 (dollars in thousands): | |||||||||||||||||||
Three Months Ended September 30, 2013 | Three Months Ended September 30, 2012 | |||||||||||||||||||
Common | Noncontrolling | Total | Common | Noncontrolling | Total | |||||||||||||||
Shareholders | Interests | Shareholders | Interests | |||||||||||||||||
Beginning balance, July 1 | $ | 4,032,165 | $ | 137,069 | $ | 4,169,234 | $ | 3,778,035 | $ | 121,302 | $ | 3,899,337 | ||||||||
Net income | 226,163 | 8,555 | 234,718 | 244,823 | 8,040 | 252,863 | ||||||||||||||
Other comprehensive income | 15,122 | — | 15,122 | 30,843 | — | 30,843 | ||||||||||||||
Total comprehensive income | 241,285 | 8,555 | 249,840 | 275,666 | 8,040 | 283,706 | ||||||||||||||
Issuance of capital stock | 2,331 | — | 2,331 | 2,365 | — | 2,365 | ||||||||||||||
Reissuance of treasury stock — net | 37 | — | 37 | (82 | ) | — | (82 | ) | ||||||||||||
Other (primarily stock compensation) | (22 | ) | — | (22 | ) | 258 | — | 258 | ||||||||||||
Dividends on common stock | 8 | — | 8 | — | — | — | ||||||||||||||
Ending balance, September 30 | $ | 4,275,804 | $ | 145,624 | $ | 4,421,428 | $ | 4,056,242 | $ | 129,342 | $ | 4,185,584 | ||||||||
Nine Months Ended September 30, 2013 | Nine Months Ended September 30, 2012 | |||||||||||||||||||
Common | Noncontrolling | Total | Common | Noncontrolling | Total | |||||||||||||||
Shareholders | Interests | Shareholders | Interests | |||||||||||||||||
Beginning balance, January 1 | $ | 3,972,806 | $ | 129,483 | $ | 4,102,289 | $ | 3,821,850 | $ | 108,736 | $ | 3,930,586 | ||||||||
Net income | 381,814 | 25,338 | 407,152 | 358,911 | 23,582 | 382,493 | ||||||||||||||
Other comprehensive income | 24,673 | — | 24,673 | 32,688 | — | 32,688 | ||||||||||||||
Total comprehensive income | 406,487 | 25,338 | 431,825 | 391,599 | 23,582 | 415,181 | ||||||||||||||
Issuance of capital stock | 7,268 | — | 7,268 | 7,590 | — | 7,590 | ||||||||||||||
Reissuance (purchase) of treasury stock - net | (5,868 | ) | — | (5,868 | ) | 3,277 | — | 3,277 | ||||||||||||
Other (primarily stock compensation) | 14,988 | — | 14,988 | 4,270 | — | 4,270 | ||||||||||||||
Dividends on common stock | (119,877 | ) | — | (119,877 | ) | (172,344 | ) | — | (172,344 | ) | ||||||||||
Net capital activities by noncontrolling interests | — | (9,197 | ) | (9,197 | ) | — | (2,976 | ) | (2,976 | ) | ||||||||||
Ending balance, September 30 | $ | 4,275,804 | $ | 145,624 | $ | 4,421,428 | $ | 4,056,242 | $ | 129,342 | $ | 4,185,584 | ||||||||
ARIZONA PUBLIC SERVICE COMPANY | ||||||||||||||||||||
Changes in equity | ||||||||||||||||||||
Schedule of changes in shareholders' equity and changes in equity of noncontrolling interests | The following tables show APS’s changes in shareholder equity and changes in equity of noncontrolling interests for the three and nine months ended September 30, 2013 and 2012 (dollars in thousands): | |||||||||||||||||||
Three Months Ended September 30, 2013 | Three Months Ended September 30, 2012 | |||||||||||||||||||
Shareholder | Noncontrolling | Total | Shareholder | Noncontrolling | Total | |||||||||||||||
Equity | Interests | Equity | Interests | |||||||||||||||||
Beginning balance, July 1 | $ | 4,142,726 | $ | 137,070 | $ | 4,279,796 | $ | 3,902,791 | $ | 121,302 | $ | 4,024,093 | ||||||||
Net income | 234,954 | 8,555 | 243,509 | 247,831 | 8,040 | 255,871 | ||||||||||||||
OCI | 15,116 | — | 15,116 | 30,728 | — | 30,728 | ||||||||||||||
Total comprehensive income | 250,070 | 8,555 | 258,625 | 278,559 | 8,040 | 286,599 | ||||||||||||||
Other | 1 | (1 | ) | — | 1 | — | 1 | |||||||||||||
Ending balance, September 30 | $ | 4,392,797 | $ | 145,624 | $ | 4,538,421 | $ | 4,181,351 | $ | 129,342 | $ | 4,310,693 | ||||||||
Nine Months Ended September 30, 2013 | Nine Months Ended September 30, 2012 | |||||||||||||||||||
Shareholder | Noncontrolling | Total | Shareholder | Noncontrolling | Total | |||||||||||||||
Equity | Interests | Equity | Interests | |||||||||||||||||
Beginning balance, January 1 | $ | 4,093,000 | $ | 129,483 | $ | 4,222,483 | $ | 3,943,007 | $ | 108,399 | $ | 4,051,406 | ||||||||
Net income | 394,945 | 25,338 | 420,283 | 368,654 | 23,573 | 392,227 | ||||||||||||||
OCI | 24,659 | — | 24,659 | 32,090 | — | 32,090 | ||||||||||||||
Total comprehensive income | 419,604 | 25,338 | 444,942 | 400,744 | 23,573 | 424,317 | ||||||||||||||
Dividends on common stock | (119,800 | ) | — | (119,800 | ) | (162,400 | ) | — | (162,400 | ) | ||||||||||
Net capital activities by noncontrolling interests | — | (9,197 | ) | (9,197 | ) | — | (2,630 | ) | (2,630 | ) | ||||||||||
Other | (7 | ) | — | (7 | ) | — | — | — | ||||||||||||
Ending balance, September 30 | $ | 4,392,797 | $ | 145,624 | $ | 4,538,421 | $ | 4,181,351 | $ | 129,342 | $ | 4,310,693 |
Other_Income_and_Other_Expense4
Other Income and Other Expense (APSC) (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
Detail of other income and other expense | The following table provides detail of other income and other expense for the three and nine months ended September 30, 2013 and 2012 (dollars in thousands): | |||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
Other income: | ||||||||||||||
Interest income | $ | 116 | $ | 307 | $ | 1,291 | $ | 1,018 | ||||||
Miscellaneous | 44 | 113 | 96 | 339 | ||||||||||
Total other income | $ | 160 | $ | 420 | $ | 1,387 | $ | 1,357 | ||||||
Other expense: | ||||||||||||||
Non-operating costs | $ | (2,028 | ) | $ | (1,645 | ) | $ | (5,951 | ) | $ | (5,885 | ) | ||
Investment losses — net | (3,435 | ) | (2,254 | ) | (3,643 | ) | (2,366 | ) | ||||||
Miscellaneous | (1,972 | ) | (1,797 | ) | (3,827 | ) | (4,182 | ) | ||||||
Total other expense | $ | (7,435 | ) | $ | (5,696 | ) | $ | (13,421 | ) | $ | (12,433 | ) | ||
ARIZONA PUBLIC SERVICE COMPANY | ||||||||||||||
Detail of other income and other expense | The following table provides detail of APS’s other income and other expense for the three and nine months ended September 30, 2013 and 2012 (dollars in thousands): | |||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
Other income: | ||||||||||||||
Interest income | $ | 2 | $ | 61 | $ | 1,061 | $ | 244 | ||||||
Miscellaneous | 719 | 754 | 1,951 | 2,099 | ||||||||||
Total other income | $ | 721 | $ | 815 | $ | 3,012 | $ | 2,343 | ||||||
Other expense: | ||||||||||||||
Non-operating costs (a) | $ | (2,263 | ) | $ | (2,007 | ) | $ | (6,868 | ) | $ | (6,690 | ) | ||
Asset dispositions | (1,203 | ) | (248 | ) | (3,864 | ) | (666 | ) | ||||||
Miscellaneous | (1,149 | ) | (1,097 | ) | (5,023 | ) | (4,613 | ) | ||||||
Total other expense | $ | (4,615 | ) | $ | (3,352 | ) | $ | (15,755 | ) | $ | (11,969 | ) | ||
(a) As defined by the FERC, includes below-the-line non-operating utility expense (items excluded from utility rate recovery). |
Changes_in_Accumulated_Other_C4
Changes in Accumulated Other Comprehensive Loss (APSC) (Tables) | 9 Months Ended | |||||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||||
Schedule of changes in accumulated other comprehensive loss including reclassification adjustments, by component | The following table shows the changes in accumulated other comprehensive loss, including reclassification adjustments, net of tax, by component for the three and nine months ended September 30, 2013 (dollars in thousands): | |||||||||||||||||||
Three Months Ended September 30, 2013 | Nine Months Ended September 30, 2013 | |||||||||||||||||||
Derivative | Pension and | Total | Derivative | Pension and | Total | |||||||||||||||
Instruments | Other | Instruments | Other | |||||||||||||||||
Postretirement | Postretirement | |||||||||||||||||||
Benefits | Benefits | |||||||||||||||||||
Beginning balance | $ | (40,319 | ) | $ | (64,138 | ) | $ | (104,457 | ) | $ | (49,592 | ) | $ | (64,416 | ) | $ | (114,008 | ) | ||
Other comprehensive loss before reclassifications | (145 | ) | — | (145 | ) | (247 | ) | (1,635 | ) | (1,882 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive loss | 14,310 | (a) | 957 | (b) | 15,267 | 23,685 | (a) | 2,870 | (b) | 26,555 | ||||||||||
Net current period other comprehensive income | 14,165 | 957 | 15,122 | 23,438 | 1,235 | 24,673 | ||||||||||||||
Ending balance | $ | (26,154 | ) | $ | (63,181 | ) | $ | (89,335 | ) | $ | (26,154 | ) | $ | (63,181 | ) | $ | (89,335 | ) | ||
(a) 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 7. | ||||||||||||||||||||
(b) These amounts primarily represent amortization of actuarial loss, and are included in the computation of net periodic pension cost. See Note 4. | ||||||||||||||||||||
ARIZONA PUBLIC SERVICE COMPANY | ||||||||||||||||||||
Schedule of changes in accumulated other comprehensive loss including reclassification adjustments, by component | The following table shows the changes in accumulated other comprehensive loss, including reclassification adjustments, net of tax, by component for the three and nine months ended September 30, 2013 (dollars in thousands): | |||||||||||||||||||
Three Months Ended September 30, 2013 | Nine Months Ended September 30, 2013 | |||||||||||||||||||
Derivative | Pension and | Total | Derivative | Pension and | Total | |||||||||||||||
Instruments | Other | Instruments | Other | |||||||||||||||||
Postretirement | Postretirement | |||||||||||||||||||
Benefits | Benefits | |||||||||||||||||||
Beginning balance | $ | (40,320 | ) | $ | (39,232 | ) | $ | (79,552 | ) | $ | (49,592 | ) | $ | (39,503 | ) | $ | (89,095 | ) | ||
Other comprehensive loss before reclassifications | (145 | ) | — | (145 | ) | (247 | ) | (1,630 | ) | (1,877 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive loss | 14,310 | (a) | 951 | (b) | 15,261 | 23,684 | (a) | 2,852 | (b) | 26,536 | ||||||||||
Net current period other comprehensive income | 14,165 | 951 | 15,116 | 23,437 | 1,222 | 24,659 | ||||||||||||||
Ending balance | $ | (26,155 | ) | $ | (38,281 | ) | $ | (64,436 | ) | $ | (26,155 | ) | $ | (38,281 | ) | $ | (64,436 | ) | ||
(a) 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 7. | ||||||||||||||||||||
(b) These amounts primarily represent amortization of actuarial loss, and are included in the computation of net periodic pension cost. See Note 4. | ||||||||||||||||||||
Changes_in_Equity_APSC_Details
Changes in Equity (APSC) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Changes in equity | ||||
Balance | $4,169,234 | $3,899,337 | $4,102,289 | $3,930,586 |
Net income | 234,718 | 252,863 | 407,152 | 382,493 |
Other comprehensive income | 15,122 | 30,843 | 24,673 | 32,688 |
COMPREHENSIVE INCOME | 249,840 | 283,706 | 431,825 | 415,181 |
Dividends on common stock | 8 | -119,877 | -172,344 | |
Net capital activities by noncontrolling interests | -9,197 | -2,976 | ||
Other | 22 | -258 | -14,988 | -4,270 |
Balance | 4,421,428 | 4,185,584 | 4,421,428 | 4,185,584 |
Shareholder equity | ||||
Changes in equity | ||||
Balance | 4,032,165 | 3,778,035 | 3,972,806 | 3,821,850 |
Net income | 226,163 | 244,823 | 381,814 | 358,911 |
Other comprehensive income | 15,122 | 30,843 | 24,673 | 32,688 |
COMPREHENSIVE INCOME | 241,285 | 275,666 | 406,487 | 391,599 |
Dividends on common stock | 8 | -119,877 | -172,344 | |
Other | 22 | -258 | -14,988 | -4,270 |
Balance | 4,275,804 | 4,056,242 | 4,275,804 | 4,056,242 |
Noncontrolling Interests | ||||
Changes in equity | ||||
Balance | 137,069 | 121,302 | 129,483 | 108,736 |
Net income | 8,555 | 8,040 | 25,338 | 23,582 |
COMPREHENSIVE INCOME | 8,555 | 8,040 | 25,338 | 23,582 |
Net capital activities by noncontrolling interests | -9,197 | -2,976 | ||
Balance | 145,624 | 129,342 | 145,624 | 129,342 |
ARIZONA PUBLIC SERVICE COMPANY | ||||
Changes in equity | ||||
Balance | 4,279,796 | 4,024,093 | 4,222,483 | 4,051,406 |
Net income | 243,509 | 255,871 | 420,283 | 392,227 |
Other comprehensive income | 15,116 | 30,728 | 24,659 | 32,090 |
COMPREHENSIVE INCOME | 258,625 | 286,599 | 444,942 | 424,317 |
Dividends on common stock | -119,800 | -162,400 | ||
Net capital activities by noncontrolling interests | -9,197 | -2,630 | ||
Other | 1 | -7 | ||
Balance | 4,538,421 | 4,310,693 | 4,538,421 | 4,310,693 |
ARIZONA PUBLIC SERVICE COMPANY | Shareholder equity | ||||
Changes in equity | ||||
Balance | 4,142,726 | 3,902,791 | 4,093,000 | 3,943,007 |
Net income | 234,954 | 247,831 | 394,945 | 368,654 |
Other comprehensive income | 15,116 | 30,728 | 24,659 | 32,090 |
COMPREHENSIVE INCOME | 250,070 | 278,559 | 419,604 | 400,744 |
Dividends on common stock | -119,800 | -162,400 | ||
Other | 1 | 1 | -7 | |
Balance | 4,392,797 | 4,181,351 | 4,392,797 | 4,181,351 |
ARIZONA PUBLIC SERVICE COMPANY | Noncontrolling Interests | ||||
Changes in equity | ||||
Balance | 137,070 | 121,302 | 129,483 | 108,399 |
Net income | 8,555 | 8,040 | 25,338 | 23,573 |
COMPREHENSIVE INCOME | 8,555 | 8,040 | 25,338 | 23,573 |
Net capital activities by noncontrolling interests | -9,197 | -2,630 | ||
Other | -1 | |||
Balance | $145,624 | $129,342 | $145,624 | $129,342 |
Other_Income_and_Other_Expense5
Other Income and Other Expense (APSC) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Other income: | ||||
Interest income | $116 | $307 | $1,291 | $1,018 |
Miscellaneous | 44 | 113 | 96 | 339 |
Total other income | 160 | 420 | 1,387 | 1,357 |
Other expense: | ||||
Non-operating costs | -2,028 | -1,645 | -5,951 | -5,885 |
Miscellaneous | -1,972 | -1,797 | -3,827 | -4,182 |
Total other expense | -7,435 | -5,696 | -13,421 | -12,433 |
ARIZONA PUBLIC SERVICE COMPANY | ||||
Other income: | ||||
Interest income | 2 | 61 | 1,061 | 244 |
Miscellaneous | 719 | 754 | 1,951 | 2,099 |
Total other income | 721 | 815 | 3,012 | 2,343 |
Other expense: | ||||
Non-operating costs | -2,263 | -2,007 | -6,868 | -6,690 |
Asset dispositions | -1,203 | -248 | -3,864 | -666 |
Miscellaneous | -1,149 | -1,097 | -5,023 | -4,613 |
Total other expense | ($4,615) | ($3,352) | ($15,755) | ($11,969) |
Changes_in_Accumulated_Other_C5
Changes in Accumulated Other Comprehensive Loss (APSC) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Changes in accumulated other comprehensive income (loss) by component | ||||
Beginning balance | ($104,457) | ($114,008) | ||
Other comprehensive loss before reclassifications | -145 | -1,882 | ||
Amounts reclassified from accumulated other comprehensive loss | 15,267 | 26,555 | ||
Net current period other comprehensive income | 15,122 | 30,843 | 24,673 | 32,688 |
Ending balance | -89,335 | -89,335 | ||
Derivative Instruments | ||||
Changes in accumulated other comprehensive income (loss) by component | ||||
Beginning balance | -40,319 | -49,592 | ||
Other comprehensive loss before reclassifications | -145 | -247 | ||
Amounts reclassified from accumulated other comprehensive loss | 14,310 | 23,685 | ||
Net current period other comprehensive income | 14,165 | 23,438 | ||
Ending balance | -26,154 | -26,154 | ||
Pension and other postretirement benefits | ||||
Changes in accumulated other comprehensive income (loss) by component | ||||
Beginning balance | -64,138 | -64,416 | ||
Other comprehensive loss before reclassifications | -1,635 | |||
Amounts reclassified from accumulated other comprehensive loss | 957 | 2,870 | ||
Net current period other comprehensive income | 957 | 1,235 | ||
Ending balance | -63,181 | -63,181 | ||
ARIZONA PUBLIC SERVICE COMPANY | ||||
Changes in accumulated other comprehensive income (loss) by component | ||||
Beginning balance | -79,552 | -89,095 | ||
Other comprehensive loss before reclassifications | -145 | -1,877 | ||
Amounts reclassified from accumulated other comprehensive loss | 15,261 | 26,536 | ||
Net current period other comprehensive income | 15,116 | 30,728 | 24,659 | 32,090 |
Ending balance | -64,436 | -64,436 | ||
ARIZONA PUBLIC SERVICE COMPANY | Derivative Instruments | ||||
Changes in accumulated other comprehensive income (loss) by component | ||||
Beginning balance | -40,320 | -49,592 | ||
Other comprehensive loss before reclassifications | -145 | -247 | ||
Amounts reclassified from accumulated other comprehensive loss | 14,310 | 23,684 | ||
Net current period other comprehensive income | 14,165 | 23,437 | ||
Ending balance | -26,155 | -26,155 | ||
ARIZONA PUBLIC SERVICE COMPANY | Pension and other postretirement benefits | ||||
Changes in accumulated other comprehensive income (loss) by component | ||||
Beginning balance | -39,232 | -39,503 | ||
Other comprehensive loss before reclassifications | -1,630 | |||
Amounts reclassified from accumulated other comprehensive loss | 951 | 2,852 | ||
Net current period other comprehensive income | 951 | 1,222 | ||
Ending balance | ($38,281) | ($38,281) |