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v3.23.1

Regulatory Matters (Tables) | 3 Months Ended
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Mar. 31, 2023
Regulated Operations [Abstract] |
Schedule of Capital Structure and Cost of Capital | he following proposed capital structure and costs of capital:
|  | Capital Structure |  | Cost of Capital |
Long-term debt |  | 48.07 |  | % | 3.85 |  | %
Common stock equity |  | 51.93 |  | % | 10.25 |  | %
Weighted-average cost of capital |  |  |  | 7.17 |  | %
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 2023 and 2022 (dollars in thousands):
| Three Months Ended March 31,
| 2023 |  | 2022
Beginning balance | $ | 460,561 |  |  | $ | 388,148 |
Deferred fuel and purchased power costs — current period | 90,305 |  |  | 6,110 |
Amounts charged to customers | (80,904) |  |  | (39,442) |
Ending balance | $ | 469,962 |  |  | $ | 354,816 |
Schedule of Regulatory Assets | The detail of regulatory assets is as follows (dollars in thousands):
| Amortization Through |  | March 31, 2023 | December 31, 2022
Pension | (a) |  | $ | 628,727 |  |  | $ | 637,656 |
Deferred fuel and purchased power (b) (c) | 2024 |  | 469,962 |  |  | 460,561 |
Income taxes — allowance for funds used during construction (“AFUDC”) equity | 2053 |  | 179,818 |  |  | 179,631 |
Ocotillo deferral (e) | 2031 |  | 135,766 |  |  | 138,143 |
SCR deferral (e)(f) | 2031 |  | 95,588 |  |  | 97,624 |
Retired power plant costs | 2033 |  | 94,903 |  |  | 98,692 |
Deferred fuel and purchased power — mark-to-market (Note 7) | 2025 |  | 61,858 |  |  | — |
Deferred property taxes | 2027 |  | 38,915 |  |  | 41,057 |
Deferred compensation | 2036 |  | 34,492 |  |  | 33,660 |
Income taxes — investment tax credit basis adjustment | 2056 |  | 24,095 |  |  | 23,977 |
Palo Verde VIEs (Note 6) | 2046 |  | 20,893 |  |  | 20,933 |
Active Union Medical Trust | (g) |  | 15,010 |  |  | 18,226 |
Four Corners cost deferral | 2024 |  | 13,979 |  |  | 15,999 |
Navajo coal reclamation | 2026 |  | 13,117 |  |  | 13,862 |
Loss on reacquired debt | 2038 |  | 9,238 |  |  | 9,468 |
Mead-Phoenix transmission line contributions in aid of construction (“CIAC”) | 2050 |  | 8,965 |  |  | 9,048 |
Tax expense adjustor mechanism (b) | 2031 |  | 5,681 |  |  | 5,845 |
Lost fixed cost recovery (b) | 2023 |  | — |  |  | 9,547 |
Other | Various |  | 8,458 |  |  | 8,171 |
Total regulatory assets (d) |  |  | $ | 1,859,465 |  |  | $ | 1,822,100 |
Less: current regulatory assets |  |  | $ | 600,802 |  |  | $ | 538,879 |
Total non-current regulatory assets |  |  | $ | 1,258,663 |  |  | $ | 1,283,221 |
(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, 2023 | December 31, 2022
Excess deferred income taxes — ACC - Tax Act (a) | 2046 |  | $ | 970,578 |  |  | $ | 971,545 |
Excess deferred income taxes — FERC - Tax Act (a) | 2058 |  | 221,708 |  |  | 221,877 |
Asset retirement obligations | 2057 |  | 396,107 |  |  | 354,002 |
Other postretirement benefits | (d) |  | 258,955 |  |  | 270,604 |
Removal costs | (c) |  | 106,102 |  |  | 106,889 |
Income taxes — change in rates | 2051 |  | 64,739 |  |  | 64,806 |
Four Corners coal reclamation | 2038 |  | 53,348 |  |  | 52,592 |
Income taxes — deferred investment tax credit | 2056 |  | 49,031 |  |  | 48,035 |
Spent nuclear fuel | 2027 |  | 37,313 |  |  | 39,217 |
Renewable energy standard (b) | 2024 |  | 30,188 |  |  | 35,720 |
Sundance maintenance | 2031 |  | 17,667 |  |  | 16,893 |
Property tax deferral (e) | 2024 |  | 14,353 |  |  | 15,521 |
Demand side management (b) | 2023 |  | 14,207 |  |  | 8,461 |
FERC transmission true up (b) | 2025 |  | 12,597 |  |  | 22,895 |
Tax expense adjustor mechanism (b) (e) | N/A |  | 4,835 |  |  | 4,835 |
Deferred fuel and purchased power — mark-to-market (Note 7) | 2025 |  | 3,396 |  |  | 96,367 |
Other | Various |  | 7,415 |  |  | 3,092 |
Total regulatory liabilities |  |  | $ | 2,262,539 |  |  | $ | 2,333,351 |
Less: current regulatory liabilities |  |  | $ | 202,266 |  |  | $ | 271,575 |
Total non-current regulatory liabilities |  |  | $ | 2,060,273 |  |  | $ | 2,061,776 |
(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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