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Investments in Nuclear Decommissioning Trusts and Other Special Use Funds | 6 Months Ended
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Jun. 30, 2018
Investments, Debt and Equity Securities [Abstract] |
Investments in Nuclear Decommissioning Trusts and Other Special Use Funds | Investments in Nuclear Decommissioning Trusts and Other Special Use Funds We have investments in debt and equity securities held in Nuclear Decommissioning Trusts, Coal Reclamation Escrow Accounts, and an Active Union Employee Medical Trust. Investments in debt securities are classified as available-for-sale securities. We record both debt and equity security investments at their fair value on our Condensed Consolidated Balance Sheets. See Note 11 for a discussion of how fair value is determined and the classification of the investments within the fair value hierarchy. The investments in each trust or escrow account are restricted for use and are intended to fund specified costs and activities as further described for each fund below. Nuclear Decommissioning Trusts - To fund the future 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 stated investment guidelines. The trust funds are invested in fixed income securities and equity securities. Earnings and proceeds from sales and maturities of securities are reinvested in the trusts. Because of the ability of APS to recover decommissioning costs in rates, and in accordance with the regulatory treatment, APS has deferred realized and unrealized gains and losses (including other-than-temporary impairments) in other regulatory liabilities. Coal Reclamation Escrow Accounts - APS and 4CA have investments restricted for the future coal mine reclamation funding related to Four Corners. These escrow accounts are primarily invested in fixed income securities. Earnings and proceeds from sales of securities are reinvested in the escrow accounts. Because of the ability of APS to recover coal reclamation costs in rates, and in accordance with the regulatory treatment, APS has deferred realized and unrealized gains and losses (including other-than-temporary impairments) in other regulatory liabilities. Activities relating to APS coal reclamation escrow account investments are included within the other special use funds in the table below. Active Union Employee Medical Trust - APS has investments restricted for paying active union employee medical costs. These investments were transferred from APS other postretirement benefit trust assets into the active union employee medical trust in January 2018 (see Note 7 in the 2017 Form 10-K). These investments may be used to pay active union employee medical costs incurred in the current period and in future periods. The trust fund is invested primarily in fixed income securities. In accordance with the ratemaking treatment, APS has deferred the unrealized gains and losses (including other-than-temporary impairments) in other regulatory assets. Activities relating to active union employee medical trust investments are included within the other special use funds in the table below. APS The following tables present the unrealized gains and losses based on the original cost of the investment and summarizes the fair value of APS's nuclear decommissioning trust and other special use fund assets at June 30, 2018 and December 31, 2017 (dollars in thousands):
| June 30, 2018
| Fair Value |  | Total Unrealized Gains |  | Total Unrealized Losses
Investment Type: | Nuclear Decommissioning Trusts |  | Other Special Use Funds |  | Total |  |
Equity securities | $ | 432,615 |  |  | $ | 14,109 |  |  | $ | 446,724 |  |  | $ | 254,342 |  |  | $ | (1 | )
Available for sale-fixed income securities | 440,403 |  |  | 200,997 |  |  | 641,400 |  | (a) | 6,896 |  |  | (9,804 | )
Other | 625 |  |  | 1,232 |  |  | 1,857 |  | (b) | — |  |  | — |
Total | $ | 873,643 |  |  | $ | 216,338 |  |  | $ | 1,089,981 |  |  | $ | 261,238 |  |  | $ | (9,805 | )
(a) | As of June 30, 2018, the amortized cost basis of these available-for-sale investments is $639 million.
(b) | Represents net pending securities sales and purchases.
| December 31, 2017
| Fair Value |  | Total Unrealized Gains |  | Total Unrealized Losses
Investment Type: | Nuclear Decommissioning Trusts |  | Other Special Use Funds |  | Total |  |
Equity securities | $ | 424,614 |  |  | $ | 430 |  |  | $ | 425,044 |  |  | $ | 248,623 |  |  | $ | — |
Available for sale-fixed income securities | 446,277 |  |  | 29,439 |  |  | 475,716 |  | (a) | 11,537 |  |  | (2,996 | )
Other | 109 |  |  | 489 |  |  | 598 |  | (b) | — |  |  | — |
Total | $ | 871,000 |  |  | $ | 30,358 |  |  | $ | 901,358 |  |  | $ | 260,160 |  |  | $ | (2,996 | )
(a) | As of December 31, 2017, the amortized cost basis of these available-for-sale investments is $467 million.
(b) | Represents net pending securities sales and purchases.
The following table sets forth APS's realized gains and losses relating to the sale and maturity of available-for-sale debt securities and equity securities, and the proceeds from the sale and maturity of these investment securities for the three and six months ended June 30, 2018 and June 30, 2017 (dollars in thousands):
| Three Months Ended June 30, 2018 |  | Three Months Ended June 30, 2017
| Nuclear Decommissioning Trusts |  | Other Special Use Funds |  | Total |  | Nuclear Decommissioning Trusts |  | Other Special Use Funds |  | Total
Realized gains | $ | 1,484 |  |  | $ | — |  |  | $ | 1,484 |  |  | $ | 939 |  |  | $ | 17 |  |  | $ | 956 |
Realized losses | (2,978 | ) |  | — |  |  | (2,978 | ) |  | (1,159 | ) |  | (8 | ) |  | (1,167 | )
Proceeds from the sale of securities (a) | 122,790 |  |  | 2,426 |  |  | 125,216 |  |  | 124,238 |  |  | 1,572 |  |  | 125,810 |
(a) Proceeds are reinvested in the trust or escrow accounts.
| Six Months Ended June 30, 2018 |  | Six Months Ended June 30, 2017
| Nuclear Decommissioning Trusts |  | Other Special Use Funds |  | Total |  | Nuclear Decommissioning Trusts |  | Other Special Use Funds |  | Total
Realized gains | $ | 2,298 |  |  | $ | 1 |  |  | $ | 2,299 |  |  | $ | 3,306 |  |  | $ | 17 |  |  | $ | 3,323 |
Realized losses | (5,025 | ) |  | — |  |  | (5,025 | ) |  | (3,612 | ) |  | (9 | ) |  | (3,621 | )
Proceeds from the sale of securities (a) | 253,246 |  |  | 4,981 |  |  | 258,227 |  |  | 275,364 |  |  | 4,093 |  |  | 279,457 |
(a) Proceeds are reinvested in the trust or escrow accounts. The fair value of APS's fixed income securities, summarized by contractual maturities, at June 30, 2018, is as follows (dollars in thousands):
| Nuclear Decommissioning Trusts (a) |  | Coal Reclamation Escrow Accounts |  | Active Union Medical Trust |  | Total
Less than one year | $ | 18,415 |  |  | $ | — |  |  | $ | 30,441 |  |  | $ | 48,856 |
1 year – 5 years | 105,470 |  |  | 11,706 |  |  | 143,197 |  |  | 260,373 |
5 years – 10 years | 127,599 |  |  | 2,715 |  |  | — |  |  | 130,314 |
Greater than 10 years | 188,919 |  |  | 12,938 |  |  | — |  |  | 201,857 |
Total | $ | 440,403 |  |  | $ | 27,359 |  |  | $ | 173,638 |  |  | $ | 641,400 |
(a) | Includes certain fixed income investments that are not due at a single maturity date. These investments have been allocated within the table based on the final payment date of the instrument.
4CA The fair value of 4CA coal reclamation escrow account investments were $2 million as of June 30, 2018 and $2 million as of December 31, 2017. The unrealized gains and losses, and realized activities for these investments were immaterial. In June 2018, the 4CA escrow account balance was moved from Other Special Use funds to Assets Held For Sale on the Condensed Consolidated Balance Sheet. See Note 8 for more information on the 4CA Matter.

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