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Retirement Plans and Other Postretirement Benefits (Tables) | 12 Months Ended
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Dec. 31, 2021
Retirement Benefits [Abstract] |
Schedule of net periodic benefit costs and the portion of these costs charged to expense (including administrative costs and excluding amounts capitalized as overhead construction, billed to electric plant participants or charged or amortized to the regulatory asset) | The following table provides details of the plans’ net periodic benefit costs and the portion of these costs charged to expense (including administrative costs and excluding amounts capitalized as overhead construction or billed to electric plant participants) (dollars in thousands):
| Pension Plans |  | Other Benefits Plans
| 2021 |  | 2020 |  | 2019 |  | 2021 |  | 2020 |  | 2019
Service cost-benefits earned during the period | $ | 61,236 |  |  | $ | 56,233 |  |  | $ | 49,902 |  |  | $ | 17,796 |  |  | $ | 22,236 |  |  | $ | 18,369 |
Non-service costs (credits): |  |  |  |  |  |  |  |  |  |  |
Interest cost on benefit obligation | 98,566 |  |  | 118,567 |  |  | 136,843 |  |  | 16,513 |  |  | 25,857 |  |  | 29,894 |
Expected return on plan assets | (202,628) |  |  | (187,443) |  |  | (171,884) |  |  | (41,444) |  |  | (40,077) |  |  | (38,412) |
Amortization of: |  |  |  |  |  |  |  |  |  |  |
Prior service credit | — |  |  | — |  |  | — |  |  | (37,705) |  |  | (37,575) |  |  | (37,821) |
Net actuarial (gain)/loss | 15,948 |  |  | 34,612 |  |  | 42,584 |  |  | (10,093) |  |  | — |  |  | — |
Net periodic benefit cost/(benefit) | $ | (26,878) |  |  | $ | 21,969 |  |  | $ | 57,445 |  |  | $ | (54,933) |  |  | $ | (29,559) |  |  | $ | (27,970) |
Portion of cost/(benefit) charged to expense | $ | (32,743) |  |  | $ | 3,386 |  |  | $ | 30,312 |  |  | $ | (38,657) |  |  | $ | (20,966) |  |  | $ | (19,859) |
Schedule of changes in the benefit obligations and funded status | The following table shows the plans’ changes in the benefit obligations and funded status (dollars in thousands):
| Pension Plans |  | Other Benefits Plans
| 2021 |  | 2020 |  | 2021 |  | 2020
Change in Benefit Obligation |  |  |  |  |  |  |
Benefit obligation at January 1 | $ | 3,902,867 |  |  | $ | 3,613,114 |  |  | $ | 624,034 |  |  | $ | 746,924 |
Service cost | 61,236 |  |  | 56,233 |  |  | 17,796 |  |  | 22,236 |
Interest cost | 98,566 |  |  | 118,567 |  |  | 16,513 |  |  | 25,857 |
Benefit payments | (207,928) |  |  | (191,704) |  |  | (31,280) |  |  | (31,511) |
Actuarial (gain) loss | (137,917) |  |  | 306,657 |  |  | (35,222) |  |  | (139,472) |
Benefit obligation at December 31 | 3,716,824 |  |  | 3,902,867 |  |  | 591,841 |  |  | 624,034 |
Change in Plan Assets |  |  |  |  |  |  |
Fair value of plan assets at January 1 | 3,886,544 |  |  | 3,318,351 |  |  | 961,165 |  |  | 837,494 |
Actual return on plan assets | 18,169 |  |  | 642,373 |  |  | 41,432 |  |  | 150,076 |
Employer contributions | 100,000 |  |  | 100,000 |  |  | — |  |  | — |
Benefit payments | (192,672) |  |  | (174,180) |  |  | (24,310) |  |  | (26,405) |
Transfer to active union medical account | — |  |  | — |  |  | (105,852) |  |  | — |
Fair value of plan assets at December 31 | 3,812,041 |  |  | 3,886,544 |  |  | 872,435 |  |  | 961,165 |
Funded Status at December 31 | $ | 95,217 |  |  | $ | (16,323) |  |  | $ | 280,594 |  |  | $ | 337,131 |
Schedule of projected benefit obligation and the accumulated benefit obligation for pension plans with an accumulated obligation in excess of plan assets | The following table shows information for pension plans with an accumulated obligation in excess of plan assets (dollars in thousands):
| As of December 31,
| 2021 |  | 2020
Accumulated benefit obligation | 161,086 |  |  | 171,672 |
Fair value of plan assets | — |  |  | — |
The following table shows information for pension plans with a projected benefit obligation in excess of plan assets (dollars in thousands):
| As of December 31,
| 2021 |  | 2020
Projected benefit obligation | 169,912 |  |  | 182,184 |
Fair value of plan assets | — |  |  | — |
Schedule of amounts recognized on the Consolidated Balance Sheets | The following table shows the amounts recognized on the Consolidated Balance Sheets (dollars in thousands):
| Pension Plans |  | Other Benefits Plans
| 2021 |  | 2020 |  | 2021 |  | 2020
Noncurrent asset | $ | 265,129 |  |  | $ | 165,861 |  |  | $ | 280,594 |  |  | $ | 337,131 |
Current liability | (17,047) |  |  | (15,700) |  |  | — |  |  | — |
Noncurrent liability | (152,865) |  |  | (166,484) |  |  | — |  |  | — |
Net amount recognized (funded status) | $ | 95,217 |  |  | $ | (16,323) |  |  | $ | 280,594 |  |  | $ | 337,131 |
Schedule of accumulated other comprehensive loss | The following table shows the details related to accumulated other comprehensive loss (gain) as of December 31, 2021, and 2020 (dollars in thousands):
| Pension Plans |  | Other Benefits Plans
| 2021 |  | 2020 |  | 2021 |  | 2020
Net actuarial loss (gain) | $ | 582,895 |  |  | $ | 552,301 |  |  | $ | (262,352) |  |  | $ | (237,233) |
Prior service credit | — |  |  | — |  |  | (114,632) |  |  | (152,337) |
APS’s portion recorded as a regulatory (asset) liability | (509,751) |  |  | (469,953) |  |  | 374,816 |  |  | 387,293 |
Income tax expense (benefit) | (18,081) |  |  | (20,364) |  |  | 990 |  |  | 1,018 |
Accumulated other comprehensive loss (gain) | $ | 55,063 |  |  | $ | 61,984 |  |  | $ | (1,178) |  |  | $ | (1,259) |
Schedule of weighted-average assumptions used for both the pension and other benefits to determine benefit obligations and net periodic benefit costs | The following table shows the weighted-average assumptions used for both the pension and other benefits to determine benefit obligations and net periodic benefit costs:
| Benefit Obligations As of December 31, |  | Benefit Costs For the Years Ended December 31,
| 2021 |  | 2020 |  | 2021 |  | 2020 |  | 2019
Discount rate – pension plans | 2.92 | % |  | 2.53 | % |  | 2.53 | % |  | 3.30 | % |  | 4.34 | %
Discount rate – other benefits plans | 2.98 | % |  | 2.63 | % |  | 2.63 | % |  | 3.42 | % |  | 4.39 | %
Rate of compensation increase | 4.00 | % |  | 4.00 | % |  | 4.00 | % |  | 4.00 | % |  | 4.00 | %
Expected long-term return on plan assets - pension plans | N/A |  | N/A |  | 5.30 | % |  | 5.75 | % |  | 6.25 | %
Expected long-term return on plan assets - other benefit plans | N/A |  | N/A |  | 4.90 | % |  | 4.85 | % |  | 5.40 | %
Initial healthcare cost trend rate (pre-65 participants) | 6.00 | % |  | 6.50 | % |  | 6.50 | % |  | 7.00 | % |  | 7.00 | %
Ultimate healthcare cost trend rate (pre-65 participants) | 4.75 | % |  | 4.75 | % |  | 4.75 | % |  | 4.75 | % |  | 4.75 | %
Number of years to ultimate trend rate (pre-65 participants) | 4 |  | 5 |  | 4 |  | 5 |  | 7
Initial and ultimate healthcare cost trend rate (post-65 participants) (a) | 2.00 | % |  | 2.00 | % |  | 2.00 | % |  | 4.75 | % |  | 4.75 | %
Interest crediting rate – cash balance pension plans | 4.50 | % |  | 4.50 | % |  | 4.50 | % |  | 4.50 | % |  | 4.50 | %
(a)See discussion above relating to this assumptions impact on benefit obligations and the January 2021 asset transfer to the Active Union Employee Medical Account.
Schedule of fair value of pension plan and other postretirement benefit plan assets, by asset category | Based on the IPS, and given the pension plan’s funded status at year-end 2021, the target and actual allocation for the pension plan at December 31, 2021, are as follows:
| Target Allocation |  | Actual Allocation
Long-term fixed income assets | 80 | % |  | 79 | %
Return-generating assets | 20 | % |  | 21 | %
Total | 100 | % |  | 100 | %
The permissible range is within +/-3% of the target allocation shown in the above table, and also considers the plan’s funded status. The following table presents the additional target allocations, as a percent of total pension plan assets, for the return-generating assets:
| Target Allocation
Equities in US and other developed markets | 12 | %
Equities in emerging markets | 4 | %
Alternative investments | 4 | %
Total | 20 | %
The following table presents the actual allocations of the investment for the other postretirement benefit plan at December 31, 2021:
| Actual Allocation
Long-term fixed income assets | 63 | %
Return-generating assets | 37 | %
Total | 100 | %
The fair value of Pinnacle West’s pension plan and other postretirement benefit plan assets at December 31, 2021, by asset category, are as follows (dollars in thousands):
| Level 1 |  | Level 2 |  | Other (a) |  | Total
Pension Plan: |  |  |  |  |  |  |
Cash and cash equivalents | $ | 821 |  |  | $ | — |  |  | $ | — |  |  | $ | 821 |
Fixed income securities: |  |  |  |  |  |  |
Corporate | — |  |  | 1,765,623 |  |  | — |  |  | 1,765,623 |
U.S. Treasury | 1,008,211 |  |  | — |  |  | — |  |  | 1,008,211 |
Other (b) | — |  |  | 165,496 |  |  | — |  |  | 165,496 |
Common stock equities (c) | 209,063 |  |  | — |  |  | — |  |  | 209,063 |
Mutual funds (d) | 132,656 |  |  | — |  |  | — |  |  | 132,656 |
Common and collective trusts: |  |  |  |  |  |  |
Equities | — |  |  | — |  |  | 255,141 |  |  | 255,141 |
Real estate | — |  |  | — |  |  | 173,197 |  |  | 173,197 |
Partnerships | — |  |  | — |  |  | 15,730 |  |  | 15,730 |
Short-term investments and other (e) | — |  |  | — |  |  | 86,103 |  |  | 86,103 |
Total | $ | 1,350,751 |  |  | $ | 1,931,119 |  |  | $ | 530,171 |  |  | $ | 3,812,041 |
Other Benefits: |  |  |  |  |  |  |
Cash and cash equivalents | $ | 121 |  |  | $ | — |  |  | $ | — |  |  | $ | 121 |
Fixed income securities: |  |  |  |  |  |  |
Corporate | — |  |  | 244,572 |  |  | — |  |  | 244,572 |
U.S. Treasury | 287,057 |  |  | — |  |  | — |  |  | 287,057 |
Other (b) | — |  |  | 9,330 |  |  | — |  |  | 9,330 |
Common stock equities (c) | 176,024 |  |  | — |  |  | — |  |  | 176,024 |
Mutual funds (d) | 26,262 |  |  | — |  |  | — |  |  | 26,262 |
Common and collective trusts: |  |  |  |  |  |  |
Equities | — |  |  | — |  |  | 96,547 |  |  | 96,547 |
Real estate | — |  |  | — |  |  | 23,851 |  |  | 23,851 |
Short-term investments and other (e) | 2,517 |  |  | — |  |  | 6,154 |  |  | 8,671 |
Total | $ | 491,981 |  |  | $ | 253,902 |  |  | $ | 126,552 |  |  | $ | 872,435 |
(a)These investments primarily represent assets valued using NAV as a practical expedient and have not been classified in the fair value hierarchy. (b)This category consists primarily of debt securities issued by municipalities and asset backed securities. (c)This category primarily consists of U.S. common stock equities. (d)These funds invest in international common stock equities. (e)This category includes plan receivables and payables. The fair value of Pinnacle West’s pension plan and other postretirement benefit plan assets at December 31, 2020, by asset category, are as follows (dollars in thousands):
| Level 1 |  | Level 2 |  | Other (a) |  | Total
Pension Plan: |  |  |  |  |  |  |
Cash and cash equivalents | $ | 9,911 |  |  | $ | — |  |  | $ | — |  |  | $ | 9,911 |
Fixed income securities: |  |  |  |  |  |  |
Corporate | — |  |  | 1,684,782 |  |  | — |  |  | 1,684,782 |
U.S. Treasury | 794,571 |  |  | — |  |  | — |  |  | 794,571 |
Other (b) | — |  |  | 112,224 |  |  | — |  |  | 112,224 |
Common stock equities (c) | 331,058 |  |  | — |  |  | — |  |  | 331,058 |
Mutual funds (d) | 262,765 |  |  | — |  |  | — |  |  | 262,765 |
Common and collective trusts: |  |  |  |  |  |  |
Equities | — |  |  | — |  |  | 407,522 |  |  | 407,522 |
Real estate | — |  |  | — |  |  | 191,595 |  |  | 191,595 |
Partnerships | — |  |  | — |  |  | 22,420 |  |  | 22,420 |
Short-term investments and other (e) | — |  |  | — |  |  | 69,696 |  |  | 69,696 |
Total | $ | 1,398,305 |  |  | $ | 1,797,006 |  |  | $ | 691,233 |  |  | $ | 3,886,544 |
Other Benefits: |  |  |  |  |  |  |
Cash and cash equivalents | $ | 1,909 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,909 |
Fixed income securities: |  |  |  |  |  |  |
Corporate | — |  |  | 221,488 |  |  | — |  |  | 221,488 |
U.S. Treasury | 258,102 |  |  | — |  |  | — |  |  | 258,102 |
Other (b) | — |  |  | 8,316 |  |  | — |  |  | 8,316 |
Common stock equities (c) | 175,605 |  |  | — |  |  | — |  |  | 175,605 |
Mutual funds (d) | 34,310 |  |  | — |  |  | — |  |  | 34,310 |
Common and collective trusts: |  |  |  |  |  |  |
Equities | — |  |  | — |  |  | 94,674 |  |  | 94,674 |
Real estate | — |  |  | — |  |  | 19,778 |  |  | 19,778 |
Short-term investments and other (e) | 142,995 |  |  | — |  |  | 3,988 |  |  | 146,983 |
Total | $ | 612,921 |  |  | $ | 229,804 |  |  | $ | 118,440 |  |  | $ | 961,165 |
(a)These investments primarily represent assets valued using NAV as a practical expedient and have not been classified in the fair value hierarchy. (b)This category consists primarily of debt securities issued by municipalities. (c)This category primarily consists of U.S. common stock equities. (d)These funds invest in U.S. and international common stock equities. (e)This category includes plan receivables and payables.
Schedule of estimated future benefit payments, which reflect estimated future employee service, for the next five years and the succeeding five years thereafter | Benefit payments, which reflect estimated future employee service, for the next five years and the succeeding five years thereafter, are estimated to be as follows (dollars in thousands):
Year |  | Pension Plans |  | Other Benefits Plans
2022 |  | $ | 220,549 |  |  | $ | 31,244 |
2023 |  | 219,132 |  |  | 31,658 |
2024 |  | 221,724 |  |  | 31,486 |
2025 |  | 222,356 |  |  | 30,988 |
2026 |  | 221,709 |  |  | 30,780 |
Years 2027-2031 |  | 1,121,557 |  |  | 151,194 |

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