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Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
Schedule of Unrecognized Tax Benefits Roll Forward | The following is a tabular reconciliation of the total amounts of unrecognized tax benefits, excluding interest and penalties, at the beginning and end of the year that are included in accrued taxes and unrecognized tax benefits (dollars in thousands):
| Pinnacle West Consolidated |  | APS Consolidated
| 2023 |  | 2022 |  | 2021 |  | 2023 |  | 2022 |  | 2021
Total unrecognized tax benefits, January 1 | $ | 43,097 |  |  | $ | 45,086 |  |  | $ | 45,655 |  |  | $ | 43,097 |  |  | $ | 45,086 |  |  | $ | 45,655 |
Additions for tax positions of the current year | 1,473 |  |  | 1,399 |  |  | 3,305 |  |  | 1,473 |  |  | 1,399 |  |  | 3,305 |
Additions for tax positions of prior years | 419 |  |  | 2,069 |  |  | 1,449 |  |  | 419 |  |  | 2,069 |  |  | 1,449 |
Reductions for tax positions of prior years for: |  |  |  |  |  |  |  |  |  |  |
Changes in judgment | 661 |  |  | (3,495) |  |  | (2,659) |  |  | 661 |  |  | (3,495) |  |  | (2,659) |
Settlements with taxing authorities | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Lapses of applicable statute of limitations | (1,376) |  |  | (1,962) |  |  | (2,664) |  |  | (1,376) |  |  | (1,962) |  |  | (2,664) |
Total unrecognized tax benefits, December 31 | $ | 44,274 |  |  | $ | 43,097 |  |  | $ | 45,086 |  |  | $ | 44,274 |  |  | $ | 43,097 |  |  | $ | 45,086 |
Schedule of Unrecognized Tax Benefits | Included in the balances of unrecognized tax benefits are the following tax positions that, if recognized, would decrease our effective tax rate (dollars in thousands):
| Pinnacle West Consolidated |  | APS Consolidated
| 2023 |  | 2022 |  | 2021 |  | 2023 |  | 2022 |  | 2021
Tax positions, that if recognized, would decrease our effective tax rate | $ | 28,762 |  |  | $ | 28,246 |  |  | $ | 26,300 |  |  | $ | 28,762 |  |  | $ | 28,246 |  |  | $ | 26,300 |
The amount of interest expense or benefit recognized related to unrecognized tax benefits are as follows (dollars in thousands):
| Pinnacle West Consolidated |  | APS Consolidated
| 2023 |  | 2022 |  | 2021 |  | 2023 |  | 2022 |  | 2021
Unrecognized tax benefit interest expense/(benefit) recognized | $ | 452 |  |  | $ | (139) |  |  | $ | (535) |  |  | $ | 452 |  |  | $ | (139) |  |  | $ | (535) |
Following are the total amount of accrued liabilities for interest recognized related to unrecognized benefits that could reverse and decrease our effective tax rate to the extent matters are settled favorably (dollars in thousands):
| Pinnacle West Consolidated |  | APS Consolidated
| 2023 |  | 2022 |  | 2021 |  | 2023 |  | 2022 |  | 2021
Unrecognized tax benefit interest accrued | $ | 1,633 |  |  | $ | 1,181 |  |  | $ | 1,320 |  |  | $ | 1,633 |  |  | $ | 1,181 |  |  | $ | 1,320 |
Schedule Components of Income Tax Expense | The components of income tax expense are as follows (dollars in thousands):
| Pinnacle West Consolidated |  | APS Consolidated
| Year Ended December 31, |  | Year Ended December 31,
| 2023 |  | 2022 |  | 2021 |  | 2023 |  | 2022 |  | 2021
Current: |  |  |  |  |  |  |  |  |  |  |
Federal | $ | 21,272 |  |  | $ | 35,617 |  |  | $ | (5,041) |  |  | $ | 26,405 |  |  | $ | 103,349 |  |  | $ | 1,514 |
State | 2,854 |  |  | 1,950 |  |  | 2,458 |  |  | 1,027 |  |  | 161 |  |  | (11) |
Total current | 24,126 |  |  | 37,567 |  |  | (2,583) |  |  | 27,432 |  |  | 103,510 |  |  | 1,503 |
Deferred: |  |  |  |  |  |  |  |  |  |  |
Federal | 37,273 |  |  | 23,693 |  |  | 95,327 |  |  | 44,922 |  |  | (31,860) |  |  | 101,175 |
State | 15,513 |  |  | 13,567 |  |  | 17,342 |  |  | 21,830 |  |  | 19,150 |  |  | 22,875 |
Total deferred | 52,786 |  |  | 37,260 |  |  | 112,669 |  |  | 66,752 |  |  | (12,710) |  |  | 124,050 |
Income tax expense/(benefit) | $ | 76,912 |  |  | $ | 74,827 |  |  | $ | 110,086 |  |  | $ | 94,184 |  |  | $ | 90,800 |  |  | $ | 125,553 |
Schedule Comparison of Pretax Income from Continuing Operations at the Federal Income Tax Rate to Income Tax Expense - Continuing Operations | The following chart compares pretax income at the 21% statutory federal income tax rate to income tax expense (dollars in thousands):
| Pinnacle West Consolidated |  | APS Consolidated
| Year Ended December 31, |  | Year Ended December 31,
| 2023 |  | 2022 |  | 2021 |  | 2023 |  | 2022 |  | 2021
Federal income tax expense at statutory rate | $ | 125,095 |  |  | $ | 120,887 |  |  | $ | 156,666 |  |  | $ | 138,337 |  |  | $ | 132,920 |  |  | $ | 162,762 |
Increases (reductions) in tax expense resulting from: |  |  |  |  |  |  |  |  |  |  |
State income tax net of federal income tax benefit | 18,024 |  |  | 17,740 |  |  | 22,656 |  |  | 19,832 |  |  | 19,000 |  |  | 23,339 |
State income tax credits net of federal income tax benefit | (3,513) |  |  | (5,482) |  |  | (7,015) |  |  | (1,775) |  |  | (3,744) |  |  | (5,277) |
Net operating loss carryback tax benefit | — |  |  | — |  |  | (5,915) |  |  | — |  |  | — |  |  | — |
Excess deferred income taxes — Tax Cuts and Jobs Act | (36,558) |  |  | (36,241) |  |  | (36,558) |  |  | (36,558) |  |  | (36,241) |  |  | (36,558) |
Allowance for equity funds used during construction (Note 1) | (5,964) |  |  | (4,629) |  |  | (4,180) |  |  | (5,964) |  |  | (4,629) |  |  | (4,180) |
Palo Verde VIE noncontrolling interest (Note 17) | (3,617) |  |  | (3,617) |  |  | (3,617) |  |  | (3,617) |  |  | (3,617) |  |  | (3,617) |
Investment tax credit amortization | (9,495) |  |  | (5,608) |  |  | (7,620) |  |  | (9,495) |  |  | (5,608) |  |  | (7,620) |
Federal production tax credit | (8,441) |  |  | (3,146) |  |  | (3,064) |  |  | (5,460) |  |  | — |  |  | — |
Other federal income tax credits | (3,453) |  |  | (7,721) |  |  | (3,912) |  |  | (2,803) |  |  | (7,721) |  |  | (3,912) |
Other | 4,834 |  |  | 2,644 |  |  | 2,645 |  |  | 1,687 |  |  | 440 |  |  | 616 |
Income tax expense/(benefit) | $ | 76,912 |  |  | $ | 74,827 |  |  | $ | 110,086 |  |  | $ | 94,184 |  |  | $ | 90,800 |  |  | $ | 125,553 |
Schedule Components of the Net Deferred Income Tax Liability | The components of the net deferred income tax liability were as follows (dollars in thousands):
| Pinnacle West Consolidated |  | APS Consolidated
| December 31, |  | December 31,
| 2023 |  | 2022 |  | 2023 |  | 2022
DEFERRED TAX ASSETS |  |  |  |  |  |  |
Risk management activities | $ | 31,411 |  |  | $ | 8,826 |  |  | $ | 31,411 |  |  | $ | 8,826 |
Regulatory liabilities: |  |  |  |  |  |  |
Excess deferred income taxes — Tax Cuts and Jobs Act | 283,161 |  |  | 295,014 |  |  | 283,161 |  |  | 295,014 |
Asset retirement obligation and removal costs | 113,312 |  |  | 107,104 |  |  | 113,312 |  |  | 107,104 |
Unamortized investment tax credits | 68,521 |  |  | 48,035 |  |  | 68,521 |  |  | 48,035 |
Other postretirement benefits | 56,070 |  |  | 66,893 |  |  | 56,070 |  |  | 66,893 |
Other | 39,857 |  |  | 62,915 |  |  | 39,857 |  |  | 62,915 |
Operating lease liabilities | 316,067 |  |  | 184,030 |  |  | 315,670 |  |  | 182,663 |
Pension liabilities | 33,294 |  |  | 33,674 |  |  | 29,918 |  |  | 30,436 |
Coal reclamation liabilities | 45,505 |  |  | 44,312 |  |  | 45,505 |  |  | 44,312 |
Renewable energy incentives | 17,261 |  |  | 19,948 |  |  | 17,261 |  |  | 19,948 |
Credit and loss carryforwards | 43,940 |  |  | 37,647 |  |  | 3,031 |  |  | 13,654 |
Other | 77,865 |  |  | 72,605 |  |  | 77,865 |  |  | 72,605 |
Total deferred tax assets | 1,126,264 |  |  | 981,003 |  |  | 1,081,582 |  |  | 952,405 |
DEFERRED TAX LIABILITIES |  |  |  |  |  |  |
Plant-related | (2,572,495) |  |  | (2,518,164) |  |  | (2,572,495) |  |  | (2,518,164) |
Risk management activities | (1,682) |  |  | (32,648) |  |  | (1,682) |  |  | (32,648) |
Pension and other postretirement assets | (78,853) |  |  | (96,845) |  |  | (78,297) |  |  | (96,196) |
Other special use funds | (56,550) |  |  | (57,572) |  |  | (56,550) |  |  | (57,572) |
Operating lease right-of-use assets | (316,067) |  |  | (184,030) |  |  | (315,670) |  |  | (182,663) |
Regulatory assets: |  |  |  |  |  |  |
Allowance for equity funds used during construction | (46,754) |  |  | (44,405) |  |  | (46,754) |  |  | (44,405) |
Deferred fuel and purchased power | (149,078) |  |  | (114,232) |  |  | (149,078) |  |  | (114,232) |
Pension benefits | (172,239) |  |  | (157,629) |  |  | (172,239) |  |  | (157,629) |
Retired power plant costs | (20,659) |  |  | (24,397) |  |  | (20,659) |  |  | (24,397) |
Other | (92,260) |  |  | (103,023) |  |  | (92,260) |  |  | (103,023) |
Other | (36,107) |  |  | (32,479) |  |  | (7,595) |  |  | (7,123) |
Total deferred tax liabilities | (3,542,744) |  |  | (3,365,424) |  |  | (3,513,279) |  |  | (3,338,052) |
Deferred income taxes — net | $ | (2,416,480) |  |  | $ | (2,384,421) |  |  | $ | (2,431,697) |  |  | $ | (2,385,647) |

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- Definition Tabular disclosure for tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities and other income tax contingencies. Includes, but is not limited to, interest and penalties, reconciliation of unrecognized tax benefits, unrecognized tax benefits that would affect the effective tax rate, tax years that remain subject to examination by tax jurisdictions, and information about positions for which it is reasonably possible that amounts unrecognized will significantly change within 12 months. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 15 -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-15 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 15A -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-15A Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Section 50 -Paragraph 19 -SubTopic 10 -Topic 740 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-19 + Details
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