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Investments in Nuclear Decommissioning Trusts and Other Special Use Funds | 3 Months Ended
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Mar. 31, 2022
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 Account, and an Active Union Employee Medical Account. 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 account are restricted for use and are intended to fund specified costs and activities as further described for each fund below. Nuclear Decommissioning Trusts — APS established external decommissioning trusts in accordance with NRC regulations to fund the future costs APS expects to incur to decommission Palo Verde. 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 credit losses) in other regulatory liabilities. Coal Reclamation Escrow Account — APS has investments restricted for the future coal mine reclamation funding related to Four Corners. This escrow account is primarily invested in fixed income securities. Earnings and proceeds from sales of securities are reinvested in the escrow account. 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 credit losses) in other regulatory liabilities. Activities relating to APS coal mine reclamation escrow account investments are included within the other special use funds in the table below. Active Union Employee Medical Account — APS has investments restricted for paying active union employee medical costs. These investments may be used to pay active union employee medical costs incurred in the current and future periods. In 2021, APS was reimbursed $15 million for prior year active union employee medical claims from the active union employee medical account. The account is invested primarily in fixed income securities. In accordance with the ratemaking treatment, APS has deferred the unrealized gains and losses (including credit losses) in other regulatory liabilities. Activities relating to active union employee medical account 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 trusts and other special use fund assets (dollars in thousands):
| March 31, 2022
| Fair Value |  | Total Unrealized Gains |  | Total Unrealized Losses
Investment Type: | Nuclear Decommissioning Trusts |  | Other Special Use Funds |  | Total |  |
Equity securities | $ | 584,737 |  |  | $ | 27,068 |  |  | $ | 611,805 |  |  | $ | 422,497 |  |  | $ | (37) |
Available for sale-fixed income securities | 642,250 |  |  | 320,862 |  |  | 963,112 |  | (a) | 8,653 |  |  | (36,962) |
Other | 478 |  |  | 1,112 |  |  | 1,590 |  | (b) | — |  |  | — |
Total | $ | 1,227,465 |  |  | $ | 349,042 |  |  | $ | 1,576,507 |  |  | $ | 431,150 |  |  | $ | (36,999) |
(a)As of March 31, 2022, the amortized cost basis of these available-for-sale investments is $991 million. (b)Represents net pending securities sales and purchases.
| December 31, 2021
| Fair Value |  | Total Unrealized Gains |  | Total Unrealized Losses
Investment Type: | Nuclear Decommissioning Trusts |  | Other Special Use Funds |  | Total |  |
Equity securities | $ | 640,312 |  |  | $ | 47,570 |  |  | $ | 687,882 |  |  | $ | 451,387 |  |  | $ | — |
Available for sale-fixed income securities | 682,227 |  |  | 309,904 |  |  | 992,131 |  | (a) | 24,283 |  |  | (4,063) |
Other | (27,782) |  |  | 936 |  |  | (26,846) |  | (b) | — |  |  | — |
Total | $ | 1,294,757 |  |  | $ | 358,410 |  |  | $ | 1,653,167 |  |  | $ | 475,670 |  |  | $ | (4,063) |
(a)As of December 31, 2021, the amortized cost basis of these available-for-sale investments is $972 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 (dollars in thousands):
| Three Months Ended March 31,
| Nuclear Decommissioning Trusts |  | Other Special Use Funds |  | Total
2022 |  |  |  |  |
Realized gains | $ | 1,023 |  |  | $ | — |  |  | $ | 1,023 |
Realized losses | (7,235) |  |  | — |  |  | (7,235) |
Proceeds from the sale of securities (a) | 319,693 |  |  | 41,545 |  |  | 361,238 |
2021 |  |  |  |  |
Realized gains | $ | 2,968 |  |  | $ | — |  |  | $ | 2,968 |
Realized losses | (4,148) |  |  | — |  |  | (4,148) |
Proceeds from the sale of securities (a) | 234,728 |  |  | 145,250 |  |  | 379,978 |
(a) Proceeds are reinvested in the nuclear decommissioning trusts and other special use funds, excluding amounts reimbursed to the Company for active union employee medical claims from the active union employee medical account. Fixed Income Securities Contractual Maturities The fair value of APS’s fixed income securities, summarized by contractual maturities, at March 31, 2022, is as follows (dollars in thousands):
| Nuclear Decommissioning Trusts |  | Coal Reclamation Escrow Account |  | Active Union Employee Medical Account |  | Total
Less than one year | $ | 18,119 |  |  | $ | 41,906 |  |  | $ | 40,463 |  |  | $ | 100,488 |
1 year – 5 years | 198,233 |  |  | 35,749 |  |  | 151,838 |  |  | 385,820 |
5 years – 10 years | 139,957 |  |  | 1,749 |  |  | 44,205 |  |  | 185,911 |
Greater than 10 years | 285,941 |  |  | 4,952 |  |  | — |  |  | 290,893 |
Total | $ | 642,250 |  |  | $ | 84,356 |  |  | $ | 236,506 |  |  | $ | 963,112 |

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- Definition The entire disclosure for investments in certain debt and equity securities. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 320 -URI http://asc.fasb.org/subtopic&trid=2209399 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 946 -SubTopic 320 -URI http://asc.fasb.org/subtopic&trid=2324412 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -URI http://asc.fasb.org/topic&trid=2196928 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 940 -SubTopic 320 -URI http://asc.fasb.org/subtopic&trid=2176304 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher SEC -Name Regulation S-K (SK) -Number 229 -Section 1403 -Paragraph (b) + Details
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