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Regulatory Matters (Tables) | 6 Months Ended
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Jun. 30, 2024
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 |  | 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 2024 and 2023 (dollars in thousands):
| Six Months Ended June 30,
| 2024 |  | 2023
Beginning balance | $ | 463,195 |  |  | $ | 460,561 |
Deferred fuel and purchased power costs — current period | 64,220 |  |  | 191,304 |
Amounts charged to customers | (204,748) |  |  | (218,586) |
Ending balance | $ | 322,667 |  |  | $ | 433,279 |
Schedule of Regulatory Assets | The detail of regulatory assets is as follows (dollars in thousands):
| Amortization Through |  | June 30, 2024 | December 31, 2023
Pension | (a) |  | $ | 687,741 |  |  | $ | 696,476 |
Deferred fuel and purchased power (b) (c) | 2025 |  | 322,667 |  |  | 463,195 |
Income taxes — allowance for funds used during construction (“AFUDC”) equity | 2054 |  | 190,884 |  |  | 189,058 |
Ocotillo deferral | 2034 |  | 122,197 |  |  | 128,636 |
Deferred fuel and purchased power — mark-to-market (Note 7) | 2026 |  | 122,147 |  |  | 120,214 |
SCR deferral (e) | 2038 |  | 86,092 |  |  | 89,477 |
Retired power plant costs | 2033 |  | 75,958 |  |  | 83,536 |
Lease incentives | (g) |  | 57,542 |  |  | 46,615 |
Income taxes — investment tax credit basis adjustment | 2056 |  | 35,450 |  |  | 34,230 |
Deferred compensation | 2036 |  | 33,923 |  |  | 33,972 |
Deferred property taxes | 2027 |  | 28,203 |  |  | 32,488 |
Palo Verde VIEs (Note 6) | 2046 |  | 20,692 |  |  | 20,772 |
Active Union Medical Trust | (f) |  | 13,061 |  |  | 12,747 |
FERC Transmission true up | 2026 |  | 10,073 |  |  | 616 |
Navajo coal reclamation | 2026 |  | 9,394 |  |  | 10,883 |
Mead-Phoenix transmission line contributions in aid of construction (“CIAC”) | 2050 |  | 8,550 |  |  | 8,716 |
Loss on reacquired debt | 2038 |  | 7,324 |  |  | 7,965 |
Power supply adjustor - interest | 2025 |  | 5,848 |  |  | 19,416 |
Tax expense adjustor mechanism (b) | 2031 |  | 4,862 |  |  | 5,190 |
Four Corners cost deferral | 2024 |  | 3,884 |  |  | 7,922 |
Other | Various |  | 4,419 |  |  | 3,912 |
Total regulatory assets (d) |  |  | $ | 1,850,911 |  |  | $ | 2,016,036 |
Less: current regulatory assets |  |  | $ | 491,933 |  |  | $ | 625,757 |
Total non-current regulatory assets |  |  | $ | 1,358,978 |  |  | $ | 1,390,279 |
(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. The 2022 Rate Case decision allows for the full return on the pension asset in rate base. 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)See “Four Corners SCR Cost Recovery” discussion above. (f)Collected in retail rates. (g)Amortization periods vary based on specific terms of lease contract.
Schedule of Regulatory Liabilities | The detail of regulatory liabilities is as follows (dollars in thousands):
| Amortization Through |  | June 30, 2024 | December 31, 2023
Excess deferred income taxes - ACC — Tax Cuts and Jobs Act (a) | 2046 |  | $ | 914,436 |  |  | $ | 930,344 |
Excess deferred income taxes - FERC — Tax Cuts and Jobs Act (a) | 2058 |  | 211,881 |  |  | 214,667 |
Asset retirement obligations | 2057 |  | 303,303 |  |  | 392,383 |
Other postretirement benefits | (c) |  | 205,107 |  |  | 226,726 |
Removal costs | (d) |  | 82,823 |  |  | 94,368 |
Income taxes — deferred investment tax credit | 2056 |  | 67,435 |  |  | 68,521 |
Income taxes — change in rates | 2053 |  | 59,578 |  |  | 60,667 |
Four Corners coal reclamation | 2038 |  | 57,493 |  |  | 55,917 |
Renewable energy standard (b) | 2024 |  | 48,327 |  |  | 43,251 |
Spent nuclear fuel | 2027 |  | 29,415 |  |  | 33,154 |
Demand side management (b) | 2024 |  | 26,333 |  |  | 14,374 |
Sundance maintenance | 2031 |  | 21,537 |  |  | 19,989 |
Property tax deferral | 2027 |  | 7,826 |  |  | 10,850 |
Tax expense adjustor mechanism (b) | 2032 |  | 4,645 |  |  | 4,835 |
FERC transmission true up (b) | 2026 |  | — |  |  | 1,869 |
Other | Various |  | 1,642 |  |  | 3,873 |
Total regulatory liabilities |  |  | $ | 2,041,781 |  |  | $ | 2,175,788 |
Less: current regulatory liabilities |  |  | $ | 230,551 |  |  | $ | 209,923 |
Total non-current regulatory liabilities |  |  | $ | 1,811,230 |  |  | $ | 1,965,865 |
(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)See Note 5. (d)In accordance with regulatory accounting, APS accrues removal costs for its regulated assets, even if there is no legal obligation for removal.

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