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Regulatory Matters (Tables) | 9 Months Ended
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Sep. 30, 2025
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 |  | 47.65 | % |  | 4.26 | %
Common stock equity |  | 52.35 | % |  | 10.70 | %
Weighted-average cost of capital |  |  |  | 7.63 | %
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 (dollars in thousands):
| Nine Months Ended September 30,
| 2025 |  | 2024
Balance at beginning of period | $ | 287,597 |  |  | $ | 463,195 |
Deferred fuel and purchased power costs | 276,327 |  |  | 244,109 |
Amounts charged to customers | (358,871) |  |  | (340,030) |
Balance at end of period | $ | 205,053 |  |  | $ | 367,274 |
Schedule of Regulatory Assets | The detail of regulatory assets is as follows (dollars in thousands):
| Amortization Through |  | September 30, 2025 |  | December 31, 2024
Pension | (a) |  | $ | 722,942 |  |  | $ | 750,976 |
Deferred fuel and purchased power (b) (c) | 2026 |  | 205,053 |  |  | 287,597 |
Income taxes — allowance for funds used during construction equity | 2054 |  | 204,422 |  |  | 192,936 |
Palo Verde sale leaseback noncontrolling interests acquisition (Note 8) (d) | 2046 |  | 151,506 |  |  | — |
Ocotillo deferral | 2034 |  | 103,642 |  |  | 114,775 |
Lease incentives | (e) |  | 91,192 |  |  | 70,541 |
SCR deferral (f) | 2038 |  | 78,670 |  |  | 83,123 |
Retired power plant costs | 2033 |  | 57,799 |  |  | 68,380 |
FERC Transmission true up | 2027 |  | 39,095 |  |  | 35,159 |
Income taxes — investment tax credit basis adjustment | 2056 |  | 33,327 |  |  | 34,834 |
Deferred compensation | 2036 |  | 32,789 |  |  | 33,108 |
Deferred fuel and purchased power — mark-to-market (Note 9) | 2026 |  | 26,651 |  |  | 42,275 |
Deferred property taxes | 2027 |  | 17,491 |  |  | 23,918 |
Mead-Phoenix transmission line — contributions in aid of construction ("CIAC") | 2050 |  | 8,135 |  |  | 8,384 |
Palo Verde VIEs (Note 8) | 2046 |  | 8,095 |  |  | 20,611 |
Loss on reacquired debt | 2038 |  | 5,910 |  |  | 6,682 |
Power supply adjustor - interest | 2026 |  | 4,836 |  |  | 11,525 |
Active union medical trust | (g) |  | 4,352 |  |  | 9,673 |
Tax expense adjustor mechanism (b) | 2031 |  | 4,043 |  |  | 4,534 |
Navajo Coal reclamation | 2026 |  | 3,593 |  |  | 7,905 |
Other | Various |  | 3,392 |  |  | 3,522 |
Total regulatory assets (h) |  |  | $ | 1,806,935 |  |  | $ | 1,810,458 |
Less: current regulatory assets |  |  | $ | 335,625 |  |  | $ | 420,969 |
Total non-current regulatory assets |  |  | $ | 1,471,310 |  |  | $ | 1,389,489 |
(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 other comprehensive income/loss and result in lower future revenues. The 2022 Rate Case decision allows for the full return on the pension asset in rate base. See Note 7 for further discussion. (b)See “Cost Recovery Mechanisms” discussion above. (c)Subject to a carrying charge. (d)This asset relates to the acquisition of previously leased interest in Palo Verde Unit 2. See Note 8. (e)Amortization periods vary based on specific terms of lease contract. (f)See “Cost Recovery Mechanisms” discussion above. (g)Collected in retail rates. (h)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, TCA and Other Transmission Matters.”
Schedule of Regulatory Liabilities | The detail of regulatory liabilities is as follows (dollars in thousands):
| Amortization Through |  | September 30, 2025 |  | December 31, 2024
Excess deferred income taxes - ACC — Tax Cuts and Jobs Act (a) | 2046 |  | $ | 849,886 |  |  | $ | 888,896 |
Excess deferred income taxes - FERC — Tax Cuts and Jobs Act (a) | 2058 |  | 200,567 |  |  | 207,400 |
Asset retirement obligations and removal costs | (b) |  | 314,510 |  |  | 358,403 |
Other postretirement benefits | (c) |  | 226,043 |  |  | 238,113 |
Four Corners coal reclamation | 2038 |  | 97,857 |  |  | 77,532 |
Income taxes — deferred investment tax credit | 2056 |  | 63,663 |  |  | 66,327 |
Income taxes — change in rates | 2053 |  | 56,421 |  |  | 59,133 |
Renewable energy standard (d) | 2026 |  | 43,190 |  |  | 68,523 |
Demand side management (d) | 2025 |  | 30,591 |  |  | 23,927 |
Sundance maintenance | 2031 |  | 25,408 |  |  | 23,086 |
Spent nuclear fuel | 2027 |  | 22,357 |  |  | 26,818 |
Deferred fuel and purchased power — mark-to-market (Note 9) | 2028 |  | 15,600 |  |  | — |
TCA Balancing Account (d) | 2027 |  | 10,413 |  |  | 14,834 |
Tax expense adjustor mechanism (d) | 2032 |  | 3,889 |  |  | 4,343 |
Property tax deferral | 2027 |  | 3,143 |  |  | 4,785 |
Other | Various |  | 456 |  |  | 113 |
Total regulatory liabilities |  |  | $ | 1,963,994 |  |  | $ | 2,062,233 |
Less: current regulatory liabilities |  |  | $ | 194,094 |  |  | $ | 206,955 |
Total non-current regulatory liabilities |  |  | $ | 1,769,900 |  |  | $ | 1,855,278 |
(a)For purposes of presentation on the Statements 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)In accordance with regulatory accounting, APS accrues removal costs for its regulated assets, even if there is no legal obligation for removal. (c)See Note 7. (d)See “Cost Recovery Mechanisms” discussion above.

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