XML 66 R37.htm IDEA: XBRL DOCUMENT
v3.19.3.a.u2

Income Taxes (Tables) | 12 Months Ended
--- | ---
Dec. 31, 2019
Income Tax Disclosure [Abstract] |
Schedule of unrecognized tax benefits roll forward | The following is a tabular reconciliation of the total amounts of unrecognized tax benefits, excluding interest and penalties, at the beginning and end of the year that are included in accrued taxes and unrecognized tax benefits (dollars in thousands):
| Pinnacle West Consolidated |  | APS Consolidated
| 2019 |  | 2018 |  | 2017 |  | 2019 |  | 2018 |  | 2017
Total unrecognized tax benefits, January 1 | $ | 40,731 |  |  | $ | 41,966 |  |  | $ | 36,075 |  |  | $ | 40,731 |  |  | $ | 41,966 |  |  | $ | 36,075 |
Additions for tax positions of the current year | 3,373 |  |  | 3,436 |  |  | 2,937 |  |  | 3,373 |  |  | 3,436 |  |  | 2,937 |
Additions for tax positions of prior years | 1,843 |  |  | 2,696 |  |  | 4,783 |  |  | 1,843 |  |  | 2,696 |  |  | 4,783 |
Reductions for tax positions of prior years for: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Changes in judgment | (2,078 | ) |  | (1,764 | ) |  | (1,829 | ) |  | (2,078 | ) |  | (1,764 | ) |  | (1,829 | )
Settlements with taxing authorities | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Lapses of applicable statute of limitations | (434 | ) |  | (5,603 | ) |  | — |  |  | (434 | ) |  | (5,603 | ) |  | — |
Total unrecognized tax benefits, December 31 | $ | 43,435 |  |  | $ | 40,731 |  |  | $ | 41,966 |  |  | $ | 43,435 |  |  | $ | 40,731 |  |  | $ | 41,966 |
Summary of unrecognized tax benefits | The amount of interest expense or benefit recognized related to unrecognized tax benefits are as follows (dollars in thousands):
| Pinnacle West Consolidated |  | APS Consolidated
| 2019 |  | 2018 |  | 2017 |  | 2019 |  | 2018 |  | 2017
Unrecognized tax benefit interest expense/(benefit) recognized | $ | 459 |  |  | $ | (780 | ) |  | $ | 577 |  |  | $ | 459 |  |  | $ | (780 | ) |  | $ | 577 |
Following are the total amount of accrued liabilities for interest recognized related to unrecognized benefits that could reverse and decrease our effective tax rate to the extent matters are settled favorably (dollars in thousands):
| Pinnacle West Consolidated |  | APS Consolidated
| 2019 |  | 2018 |  | 2017 |  | 2019 |  | 2018 |  | 2017
Unrecognized tax benefit interest accrued | $ | 1,589 |  |  | $ | 1,130 |  |  | $ | 1,910 |  |  | $ | 1,589 |  |  | $ | 1,130 |  |  | $ | 1,910 |
Included in the balances of unrecognized tax benefits are the following tax positions that, if recognized, would decrease our effective tax rate (dollars in thousands):
| Pinnacle West Consolidated |  | APS Consolidated
| 2019 |  | 2018 |  | 2017 |  | 2019 |  | 2018 |  | 2017
Tax positions, that if recognized, would decrease our effective tax rate | $ | 22,813 |  |  | $ | 19,504 |  |  | $ | 16,373 |  |  | $ | 22,813 |  |  | $ | 19,504 |  |  | $ | 16,373 |
Components of income tax expense | The components of income tax expense are as follows (dollars in thousands):
| Pinnacle West Consolidated |  | APS Consolidated
| Year Ended December 31, |  | Year Ended December 31,
| 2019 |  | 2018 |  | 2017 |  | 2019 |  | 2018 |  | 2017
Current: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Federal | $ | (13,551 | ) |  | $ | 18,375 |  |  | $ | 11,624 |  |  | $ | (54,697 | ) |  | $ | 88,180 |  |  | $ | 21,512 |
State | 3,195 |  |  | 3,342 |  |  | 3,052 |  |  | 695 |  |  | 1,877 |  |  | 2,778 |
Total current | (10,356 | ) |  | 21,717 |  |  | 14,676 |  |  | (54,002 | ) |  | 90,057 |  |  | 24,290 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Federal | (14,982 | ) |  | 94,721 |  |  | 223,729 |  |  | 29,321 |  |  | 32,436 |  |  | 221,078 |
State | 9,565 |  |  | 17,464 |  |  | 19,867 |  |  | 15,109 |  |  | 22,321 |  |  | 23,800 |
Total deferred | (5,417 | ) |  | 112,185 |  |  | 243,596 |  |  | 44,430 |  |  | 54,757 |  |  | 244,878 |
Income tax expense/(benefit) | $ | (15,773 | ) |  | $ | 133,902 |  |  | $ | 258,272 |  |  | $ | (9,572 | ) |  | $ | 144,814 |  |  | $ | 269,168 |
Comparison of pretax income from continuing operations at the federal income tax rate to income tax expense - continuing operations | The following chart compares pretax income at the statutory federal income tax rate of 21% in 2019 and 2018 and 35% in 2017 to income tax expense (dollars in thousands):
| Pinnacle West Consolidated |  | APS Consolidated
| Year Ended December 31, |  | Year Ended December 31,
| 2019 |  | 2018 |  | 2017 |  | 2019 |  | 2018 |  | 2017
Federal income tax expense at statutory rate | $ | 113,828 |  |  | $ | 139,533 |  |  | $ | 268,177 |  |  | $ | 120,790 |  |  | $ | 154,260 |  |  | $ | 277,540 |
Increases (reductions) in tax expense resulting from: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
State income tax net of federal income tax benefit | 18,599 |  |  | 23,115 |  |  | 21,380 |  |  | 19,267 |  |  | 24,531 |  |  | 22,329 |
State income tax credits net of federal income tax benefit | (8,519 | ) |  | (6,704 | ) |  | (6,483 | ) |  | (6,781 | ) |  | (5,440 | ) |  | (5,053 | )
Nondeductible expenditures associated with ballot initiative | — |  |  | 7,879 |  |  | — |  |  | — |  |  | — |  |  | — |
Stock compensation | (2,252 | ) |  | (1,804 | ) |  | (6,659 | ) |  | (1,054 | ) |  | (780 | ) |  | (3,489 | )
Excess deferred income taxes - Tax Cuts and Jobs Act | (124,082 | ) |  | (6,725 | ) |  | 9,348 |  |  | (124,082 | ) |  | (4,715 | ) |  | 9,431 |
Allowance for equity funds used during construction (see Note 1) | (2,476 | ) |  | (7,231 | ) |  | (12,937 | ) |  | (2,476 | ) |  | (7,231 | ) |  | (12,937 | )
Palo Verde VIE noncontrolling interest (see Note 19) | (4,094 | ) |  | (4,094 | ) |  | (6,823 | ) |  | (4,094 | ) |  | (4,094 | ) |  | (6,823 | )
Investment tax credit amortization | (6,851 | ) |  | (6,742 | ) |  | (6,715 | ) |  | (6,851 | ) |  | (6,742 | ) |  | (6,715 | )
Other | 74 |  |  | (3,325 | ) |  | (1,016 | ) |  | (4,291 | ) |  | (4,975 | ) |  | (5,115 | )
Income tax expense/(benefit) | $ | (15,773 | ) |  | $ | 133,902 |  |  | $ | 258,272 |  |  | $ | (9,572 | ) |  | $ | 144,814 |  |  | $ | 269,168 |
Components of the net deferred income tax liability | The components of the net deferred income tax liability were as follows (dollars in thousands):
| Pinnacle West Consolidated |  | APS Consolidated
| December 31, |  | December 31,
| 2019 |  | 2018 |  | 2019 |  | 2018
DEFERRED TAX ASSETS |  |  |  |  |  |  |  |  |
Risk management activities | $ | 17,552 |  |  | $ | 15,785 |  |  | $ | 17,552 |  |  | $ | 15,785 |
Regulatory liabilities: |  |  |  |  |  |  |  |  |  |
Excess deferred income taxes - Tax Cuts and Jobs Act | 335,877 |  |  | 376,869 |  |  | 335,877 |  |  | 376,869 |
Asset retirement obligation and removal costs | 143,011 |  |  | 117,201 |  |  | 143,011 |  |  | 117,201 |
Unamortized investment tax credits | 52,236 |  |  | 53,284 |  |  | 52,236 |  |  | 53,284 |
Other postretirement benefits | 43,841 |  |  | 40,532 |  |  | 43,841 |  |  | 40,532 |
Other | 52,382 |  |  | 40,380 |  |  | 52,382 |  |  | 40,380 |
Pension liabilities | 73,210 |  |  | 112,019 |  |  | 67,976 |  |  | 107,009 |
Coal reclamation liabilities | 40,837 |  |  | 47,508 |  |  | 40,837 |  |  | 47,508 |
Renewable energy incentives | 28,066 |  |  | 30,779 |  |  | 28,066 |  |  | 30,779 |
Credit and loss carryforwards | 54,795 |  |  | 1,755 |  |  | 10,992 |  |  | — |
Other | 63,102 |  |  | 58,820 |  |  | 70,948 |  |  | 59,919 |
Total deferred tax assets | 904,909 |  |  | 894,932 |  |  | 863,718 |  |  | 889,266 |
DEFERRED TAX LIABILITIES |  |  |  |  |  |  |  |  |  |
Plant-related | (2,448,458 | ) |  | (2,277,724 | ) |  | (2,448,458 | ) |  | (2,277,724 | )
Risk management activities | (27 | ) |  | (237 | ) |  | (27 | ) |  | (237 | )
Other postretirement assets and other special use funds | (66,399 | ) |  | (57,697 | ) |  | (65,965 | ) |  | (57,274 | )
Regulatory assets: |  |  |  |  |  |  |  |  |  |
Allowance for equity funds used during construction | (40,023 | ) |  | (39,086 | ) |  | (40,023 | ) |  | (39,086 | )
Deferred fuel and purchased power | (35,162 | ) |  | (23,086 | ) |  | (35,162 | ) |  | (23,086 | )
Pension benefits | (163,339 | ) |  | (181,504 | ) |  | (163,339 | ) |  | (181,504 | )
Retired power plant costs (see Note 4) | (42,228 | ) |  | (48,348 | ) |  | (42,228 | ) |  | (48,348 | )
Other | (82,722 | ) |  | (72,096 | ) |  | (82,722 | ) |  | (72,096 | )
Other | (18,890 | ) |  | (2,575 | ) |  | (18,890 | ) |  | (2,575 | )
Total deferred tax liabilities | (2,897,248 | ) |  | (2,702,353 | ) |  | (2,896,814 | ) |  | (2,701,930 | )
Deferred income taxes — net | $ | (1,992,339 | ) |  | $ | (1,807,421 | ) |  | $ | (2,033,096 | ) |  | $ | (1,812,664 | )

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32639-109319 + Details
Name: | us-gaap_ScheduleOfComponentsOfIncomeTaxExpenseBenefitTableTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32537-109319 + Details
Name: | us-gaap_ScheduleOfDeferredTaxAssetsAndLiabilitiesTableTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 12 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32687-109319 + Details
Name: | us-gaap_ScheduleOfEffectiveIncomeTaxRateReconciliationTableTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition Tabular disclosure of the change in unrecognized tax benefits. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 55 -Paragraph 217 -URI http://asc.fasb.org/extlink&oid=117331294&loc=d3e36027-109320 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15A -URI http://asc.fasb.org/extlink&oid=84230637&loc=SL6600010-109319 + Details
Name: | us-gaap_ScheduleOfUnrecognizedTaxBenefitsRollForwardTableTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition Tabular disclosure for tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities and other income tax contingencies. Includes, but is not limited to, interest and penalties, reconciliation of unrecognized tax benefits, unrecognized tax benefits that would affect the effective tax rate, tax years that remain subject to examination by tax jurisdictions, and information about positions for which it is reasonably possible that amounts unrecognized will significantly change within 12 months. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15A -URI http://asc.fasb.org/extlink&oid=84230637&loc=SL6600010-109319 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32718-109319 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 19 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32840-109319 + Details
Name: | us-gaap_SummaryOfIncomeTaxContingenciesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration