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v3.22.1

Regulatory Matters (Tables) | 3 Months Ended
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Mar. 31, 2022
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 2022 and 2021 (dollars in thousands):
| Three Months Ended March 31,
| 2022 |  | 2021
Beginning balance | $ | 388,148 |  |  | $ | 175,835 |
Deferred fuel and purchased power costs — current period | 6,110 |  |  | 52,210 |
Amounts (charged) refunded to customers | (39,442) |  |  | 564 |
Ending balance | $ | 354,816 |  |  | $ | 228,609 |
Schedule of regulatory assets | The detail of regulatory assets is as follows (dollars in thousands):
| Amortization Through |  | March 31, 2022 |  | December 31, 2021
|  | Current |  | Non-Current |  | Current |  | Non-Current
Pension | (a) |  | $ | — |  |  | $ | 506,280 |  |  | $ | — |  |  | $ | 509,751 |
Deferred fuel and purchased power (b) (c) | 2023 |  | 354,816 |  |  | — |  |  | 388,148 |  |  | — |
Income taxes — allowance for funds used during construction (“AFUDC”) equity | 2052 |  | 7,625 |  |  | 165,071 |  |  | 7,625 |  |  | 164,768 |
Ocotillo deferral (e) | 2031 |  | 9,507 |  |  | 135,766 |  |  | 9,507 |  |  | 138,143 |
Retired power plant costs | 2033 |  | 15,455 |  |  | 94,902 |  |  | 15,160 |  |  | 99,681 |
SCR deferral (e)(f) | 2031 |  | 8,147 |  |  | 95,588 |  |  | 8,147 |  |  | 97,624 |
Lost fixed cost recovery (b) | 2023 |  | 57,808 |  |  | — |  |  | 63,889 |  |  | — |
Deferred property taxes | 2027 |  | 8,569 |  |  | 38,915 |  |  | 8,569 |  |  | 41,057 |
Deferred compensation | 2036 |  | — |  |  | 35,355 |  |  | — |  |  | 33,997 |
Income taxes — investment tax credit basis adjustment | 2056 |  | 826 |  |  | 23,899 |  |  | 1,129 |  |  | 23,639 |
Four Corners cost deferral | 2024 |  | 8,077 |  |  | 13,979 |  |  | 8,077 |  |  | 15,998 |
Palo Verde VIEs (Note 6) | 2046 |  | — |  |  | 21,053 |  |  | — |  |  | 21,094 |
Coal reclamation | 2026 |  | 2,978 |  |  | 13,118 |  |  | 2,978 |  |  | 13,862 |
Loss on reacquired debt | 2038 |  | 1,648 |  |  | 8,976 |  |  | 1,648 |  |  | 9,372 |
Active Union Medical Trust | (g) |  | — |  |  | 10,453 |  |  | — |  |  | 1,175 |
TCA balancing account (b) | 2023 |  | 8,205 |  |  | 2,038 |  |  | 170 |  |  | 3,663 |
Mead-Phoenix transmission line contributions in aid of construction (“CIAC”) | 2050 |  | 332 |  |  | 8,965 |  |  | 332 |  |  | 9,048 |
Tax expense adjustor mechanism (b) | 2031 |  | 656 |  |  | 5,681 |  |  | 656 |  |  | 5,845 |
Tax expense of Medicare subsidy | 2024 |  | 1,235 |  |  | 2,406 |  |  | 1,235 |  |  | 2,469 |
Other | Various |  | 376 |  |  | 1,801 |  |  | 1,254 |  |  | 1,801 |
Total regulatory assets (d) |  |  | $ | 486,260 |  |  | $ | 1,184,246 |  |  | $ | 518,524 |  |  | $ | 1,192,987 |
(a)This asset represents the future recovery of pension benefit obligations and expense through retail rates. If these costs are disallowed by the ACC, this regulatory asset would be charged to OCI and result in lower future revenues. As a result of the 2019 Rate Case decision, the amount authorized for inclusion in rate base was determined using an averaging methodology, which resulted in a reduced return in retail rates. See Note 5 for further discussion. (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.” (e)Balance includes amounts for future regulatory consideration and amortization period determination. (f)See “Four Corners SCR Cost Recovery” discussion above. (g)Collected in retail rates.
Schedule of regulatory liabilities | The detail of regulatory liabilities is as follows (dollars in thousands):
| Amortization Through |  | March 31, 2022 |  | December 31, 2021
|  | Current |  | Non-Current |  | Current |  | Non-Current
Excess deferred income taxes — ACC - Tax Act (a) | 2046 |  | $ | 40,903 |  |  | $ | 969,459 |  |  | $ | 40,903 |  |  | $ | 971,545 |
Excess deferred income taxes — FERC - Tax Act (a) | 2058 |  | 7,239 |  |  | 221,508 |  |  | 7,239 |  |  | 221,877 |
Asset retirement obligations | 2057 |  | — |  |  | 537,720 |  |  | — |  |  | 614,683 |
Other postretirement benefits | (d) |  | 37,789 |  |  | 324,697 |  |  | 37,789 |  |  | 337,027 |
Deferred fuel and purchased power — mark-to-market (Note 7) | 2024 |  | 214,571 |  |  | 91,521 |  |  | 60,693 |  |  | 46,908 |
Removal costs | (c) |  | 69,054 |  |  | 48,302 |  |  | 69,476 |  |  | 50,104 |
Income taxes — change in rates | 2051 |  | 2,876 |  |  | 64,655 |  |  | 2,876 |  |  | 64,802 |
Four Corners coal reclamation | 2038 |  | 2,316 |  |  | 51,629 |  |  | 2,316 |  |  | 53,076 |
Income taxes — deferred investment tax credit | 2056 |  | 2,264 |  |  | 47,253 |  |  | 2,264 |  |  | 47,337 |
Spent nuclear fuel | 2027 |  | 6,631 |  |  | 37,136 |  |  | 6,701 |  |  | 38,581 |
Renewable energy standard (b) | 2023 |  | 30,729 |  |  | 452 |  |  | 38,453 |  |  | 187 |
FERC transmission true up (b) | 2024 |  | 27,595 |  |  | 375 |  |  | 21,379 |  |  | 12,924 |
Property tax deferral (e) | 2024 |  | 4,671 |  |  | 14,353 |  |  | 4,671 |  |  | 15,521 |
Sundance maintenance | 2031 |  | — |  |  | 14,571 |  |  | — |  |  | 13,797 |
Demand side management (b) | 2023 |  | 1,111 |  |  | 9,216 |  |  | — |  |  | 5,417 |
Tax expense adjustor mechanism (b) (e) | N/A |  | — |  |  | 4,835 |  |  | — |  |  | 4,835 |
Other | Various |  | 1,029 |  |  | 990 |  |  | 1,511 |  |  | 592 |
Total regulatory liabilities |  |  | $ | 448,778 |  |  | $ | 2,438,672 |  |  | $ | 296,271 |  |  | $ | 2,499,213 |
(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. (e)Balance includes amounts for future regulatory consideration and amortization period determination.

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