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v3.20.2

Regulatory Matters (Tables) | 9 Months Ended
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Sep. 30, 2020
Regulated Operations [Abstract] |
Schedule of capital structure and cost of capital | the following proposed capital structure and costs of capital:
|  | Capital Structure |  | Cost of Capital |
Long-term debt |  | 45.3 |  | % | 4.10 |  | %
Common stock equity |  | 54.7 |  | % | 10.15 |  | %
Weighted-average cost of capital |  |  |  | 7.41 |  | %
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 2020 and 2019 (dollars in thousands):
| Nine Months Ended September 30,
| 2020 |  | 2019
Beginning balance | $ | 70,137 |  |  | $ | 37,164 |
Deferred fuel and purchased power costs — current period | 82,679 |  |  | 60,911 |
Amounts refunded/(charged) to customers | 9,295 |  |  | (38,601) |
Ending balance | $ | 162,111 |  |  | $ | 59,474 |
Schedule of regulatory assets | The detail of regulatory assets is as follows (dollars in thousands):
| Amortization Through |  | September 30, 2020 |  | December 31, 2019
|  | Current |  | Non-Current |  | Current |  | Non-Current
Pension | (a) |  | $ | — |  |  | $ | 656,092 |  |  | $ | — |  |  | $ | 660,223 |
Income taxes — allowance for funds used during construction ("AFUDC") equity | 2050 |  | 6,815 |  |  | 159,005 |  |  | 6,800 |  |  | 154,974 |
Deferred fuel and purchased power (b) (c) | 2021 |  | 162,111 |  |  | — |  |  | 70,137 |  |  | — |
Retired power plant costs | 2033 |  | 28,182 |  |  | 121,259 |  |  | 28,182 |  |  | 142,503 |
Ocotillo deferral | N/A |  | — |  |  | 80,359 |  |  | — |  |  | 38,144 |
SCR deferral | N/A |  | — |  |  | 74,576 |  |  | — |  |  | 52,644 |
Deferred property taxes | 2027 |  | 8,569 |  |  | 51,769 |  |  | 8,569 |  |  | 58,196 |
Lost fixed cost recovery (b) | 2021 |  | 37,868 |  |  | — |  |  | 26,067 |  |  | — |
Deferred compensation | 2036 |  | — |  |  | 36,481 |  |  | — |  |  | 36,464 |
Four Corners cost deferral | 2024 |  | 8,077 |  |  | 26,094 |  |  | 8,077 |  |  | 32,152 |
Income taxes — investment tax credit basis adjustment | 2048 |  | 1,097 |  |  | 23,850 |  |  | 1,098 |  |  | 24,981 |
Palo Verde VIEs (Note 6) | 2046 |  | — |  |  | 21,100 |  |  | — |  |  | 20,635 |
Coal reclamation | 2026 |  | 1,068 |  |  | 17,266 |  |  | 1,546 |  |  | 17,688 |
Loss on reacquired debt | 2038 |  | 1,637 |  |  | 10,846 |  |  | 1,637 |  |  | 12,031 |
Mead-Phoenix transmission line contributions in aid of construction ("CIAC") | 2050 |  | 332 |  |  | 9,463 |  |  | 332 |  |  | 9,712 |
Demand Side Management | 2021 |  | — |  |  | 7,259 |  |  | — |  |  | — |
Tax expense adjuster mechanism (b) (c) | 2020 |  | 6,121 |  |  | — |  |  | 1,612 |  |  | — |
Deferred fuel and purchased power — mark-to-market (Note 7) | 2024 |  | — |  |  | 5,664 |  |  | 36,887 |  |  | 33,185 |
Tax expense of Medicare subsidy | 2024 |  | 1,238 |  |  | 3,728 |  |  | 1,235 |  |  | 4,940 |
AG-1 deferral | 2022 |  | 2,787 |  |  | 626 |  |  | 2,787 |  |  | 2,716 |
TCA balancing account (b) | 2021 |  | 4,490 |  |  | — |  |  | 6,324 |  |  | 2,885 |
Other | Various |  | 2,478 |  |  | — |  |  | 1,917 |  |  | — |
Total regulatory assets (d) |  |  | $ | 272,870 |  |  | $ | 1,305,437 |  |  | $ | 203,207 |  |  | $ | 1,304,073 |
(a)This asset represents the future recovery of pension 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. See Note 5. (b)See "Cost Recovery Mechanisms" discussion above. (c)Subject to a carrying charge. (d)There are no regulatory assets for which the ACC has allowed recovery of costs, but not allowed a return by exclusion from rate base. FERC rates are set using a formula rate as described in "Transmission Rates, Transmission Cost Adjustor and Other Transmission Matters."
Schedule of regulatory liabilities | The detail of regulatory liabilities is as follows (dollars in thousands):
| Amortization Through |  | September 30, 2020 |  | December 31, 2019
|  | Current |  | Non-Current |  | Current |  | Non-Current
Excess deferred income taxes - ACC - Tax Cuts and Jobs Act (a) | 2046 |  | $ | 113,206 |  |  | $ | 952,531 |  |  | $ | 59,918 |  |  | $ | 1,054,053 |
Excess deferred income taxes - FERC - Tax Cuts and Jobs Act (a) | 2058 |  | 7,256 |  |  | 229,753 |  |  | 6,302 |  |  | 237,357 |
Asset retirement obligations | 2057 |  | — |  |  | 442,035 |  |  | — |  |  | 418,423 |
Removal costs | (c) |  | 51,519 |  |  | 112,168 |  |  | 47,356 |  |  | 136,072 |
Other postretirement benefits | (d) |  | 37,575 |  |  | 109,035 |  |  | 37,575 |  |  | 139,634 |
Four Corners coal reclamation | 2038 |  | 5,461 |  |  | 49,151 |  |  | 1,059 |  |  | 51,704 |
Spent nuclear fuel | 2027 |  | 6,520 |  |  | 46,526 |  |  | 6,676 |  |  | 51,019 |
Income taxes — change in rates | 2050 |  | 2,802 |  |  | 48,541 |  |  | 2,797 |  |  | 68,265 |
Income taxes — deferred investment tax credit | 2048 |  | 2,199 |  |  | 47,765 |  |  | 2,202 |  |  | 50,034 |
Renewable energy standard (b) | 2021 |  | 35,813 |  |  | 1,128 |  |  | 39,287 |  |  | 10,300 |
Demand side management (b) | 2021 |  | 17,394 |  |  | — |  |  | 15,024 |  |  | 24,146 |
Sundance maintenance | 2031 |  | 2,200 |  |  | 12,303 |  |  | 5,698 |  |  | 11,319 |
Property tax deferral | N/A |  | — |  |  | 11,784 |  |  | — |  |  | 7,046 |
Deferred fuel and purchased power — mark-to-market (Note 7) | 2024 |  | 10,894 |  |  | — |  |  | — |  |  | — |
FERC transmission true up | 2022 |  | 5,965 |  |  | 4,291 |  |  | 1,045 |  |  | 2,004 |
Active union medical trust | N/A |  | — |  |  | 6,993 |  |  | — |  |  | 2,041 |
Tax expense adjustor mechanism (b) (c) | 2020 |  | 6,542 |  |  | — |  |  | 7,018 |  |  | — |
Deferred gains on utility property | 2022 |  | 2,423 |  |  | 2,379 |  |  | 2,423 |  |  | 4,163 |
TCA balancing account (b) | 2022 |  | — |  |  | 2,665 |  |  | — |  |  | — |
Other | Various |  | 250 |  |  | 275 |  |  | 532 |  |  | 255 |
Total regulatory liabilities |  |  | $ | 308,019 |  |  | $ | 2,079,323 |  |  | $ | 234,912 |  |  | $ | 2,267,835 |
(a)For purposes of presentation on the Statement of Cash Flows, amortization of the regulatory liabilities for excess deferred income taxes are reflected as "Deferred income taxes" under Cash Flows From Operating Activities. (b)See “Cost Recovery Mechanisms” discussion above. (c)In accordance with regulatory accounting guidance, APS accrues removal costs for its regulated assets, even if there is no legal obligation for removal. (d)See Note 5.

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