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☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Commission File
Number
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Exact Name of Each Registrant as specified in its
charter; State of Incorporation; Address; and
Telephone Number
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IRS Employer
Identification No.
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1-8962
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PINNACLE WEST CAPITAL CORPORATION
(an Arizona corporation)
400 North Fifth Street, P.O. Box 53999
Phoenix, Arizona 85072-3999
(602) 250-1000
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86-0512431
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1-4473
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ARIZONA PUBLIC SERVICE COMPANY
(an Arizona corporation)
400 North Fifth Street, P.O. Box 53999
Phoenix, Arizona 85072-3999
(602) 250-1000
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86-0011170
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PINNACLE WEST CAPITAL CORPORATION
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Yes ☒ No ☐
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ARIZONA PUBLIC SERVICE COMPANY
|
Yes ☒ No ☐
|
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PINNACLE WEST CAPITAL CORPORATION
|
Yes ☒ No ☐
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ARIZONA PUBLIC SERVICE COMPANY
|
Yes ☒ No ☐
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Large accelerated filer ☒
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Accelerated filer ☐
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Non-accelerated filer ☐
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Smaller reporting company ☐
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Emerging growth company ☐
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|
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Large accelerated filer ☐
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Accelerated filer ☐
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Non-accelerated filer ☒
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Smaller reporting company ☐
|
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Emerging growth company ☐
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PINNACLE WEST CAPITAL CORPORATION
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Yes ☐ No ☒
|
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ARIZONA PUBLIC SERVICE COMPANY
|
Yes ☐ No ☒
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PINNACLE WEST CAPITAL CORPORATION
|
Number of shares of common stock, no par value, outstanding as of April 24, 2019: 112,277,359
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ARIZONA PUBLIC SERVICE COMPANY
|
Number of shares of common stock, $2.50 par value, outstanding as of April 24, 2019: 71,264,947
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Page
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•
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our ability to manage capital expenditures and operations and maintenance costs while maintaining reliability and customer service levels;
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•
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variations in demand for electricity, including those due to weather, seasonality, the general economy, customer and sales growth (or decline), and the effects of energy conservation measures and distributed generation;
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•
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power plant and transmission system performance and outages;
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•
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competition in retail and wholesale power markets;
|
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•
|
regulatory and judicial decisions, developments and proceedings;
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•
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new legislation, ballot initiatives and regulation, including those relating to environmental requirements, regulatory policy, nuclear plant operations and potential deregulation of retail electric markets;
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•
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fuel and water supply availability;
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•
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our ability to achieve timely and adequate rate recovery of our costs, including returns on and of debt and equity capital investment;
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|
•
|
our ability to meet renewable energy and energy efficiency mandates and recover related costs;
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|
•
|
risks inherent in the operation of nuclear facilities, including spent fuel disposal uncertainty;
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|
•
|
current and future economic conditions in Arizona, including in real estate markets;
|
|
•
|
the direct or indirect effect on our facilities or business from cybersecurity threats or intrusions, data security breaches, terrorist attack, physical attack, severe storms, droughts, or other catastrophic events, such as fires, explosions, pandemic health events or similar occurrences;
|
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•
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the development of new technologies which may affect electric sales or delivery;
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•
|
the cost of debt and equity capital and the ability to access capital markets when required;
|
|
•
|
environmental, economic and other concerns surrounding coal-fired generation, including regulation of greenhouse gas emissions;
|
|
•
|
volatile fuel and purchased power costs;
|
|
•
|
the investment performance of the assets of our nuclear decommissioning trust, pension, and other postretirement benefit plans and the resulting impact on future funding requirements;
|
|
•
|
the liquidity of wholesale power markets and the use of derivative contracts in our business;
|
|
•
|
potential shortfalls in insurance coverage;
|
|
•
|
new accounting requirements or new interpretations of existing requirements;
|
|
•
|
generation, transmission and distribution facility and system conditions and operating costs;
|
|
•
|
the ability to meet the anticipated future need for additional generation and associated transmission facilities in our region;
|
|
•
|
the willingness or ability of our counterparties, power plant participants and power plant land owners to meet contractual or other obligations or extend the rights for continued power plant operations; and
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•
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restrictions on dividends or other provisions in our credit agreements and Arizona Corporation Commission ("ACC") orders.
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|
Three Months Ended
March 31, |
||||||
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|
|
2019
|
|
2018
|
||||
|
|
|
|
|
|
||||
|
OPERATING REVENUES (NOTE 2)
|
|
$
|
740,530
|
|
|
$
|
692,714
|
|
|
|
|
|
|
|
||||
|
OPERATING EXPENSES
|
|
|
|
|
|
|
||
|
Fuel and purchased power
|
|
230,588
|
|
|
197,110
|
|
||
|
Operations and maintenance
|
|
245,634
|
|
|
265,682
|
|
||
|
Depreciation and amortization
|
|
148,707
|
|
|
144,825
|
|
||
|
Taxes other than income taxes
|
|
55,090
|
|
|
53,600
|
|
||
|
Other expenses
|
|
427
|
|
|
163
|
|
||
|
Total
|
|
680,446
|
|
|
661,380
|
|
||
|
OPERATING INCOME
|
|
60,084
|
|
|
31,334
|
|
||
|
OTHER INCOME (DEDUCTIONS)
|
|
|
|
|
|
|
||
|
Allowance for equity funds used during construction
|
|
11,188
|
|
|
14,079
|
|
||
|
Pension and other postretirement non-service credits - net
|
|
5,114
|
|
|
12,859
|
|
||
|
Other income (Note 9)
|
|
7,169
|
|
|
3,985
|
|
||
|
Other expense (Note 9)
|
|
(4,358
|
)
|
|
(3,229
|
)
|
||
|
Total
|
|
19,113
|
|
|
27,694
|
|
||
|
INTEREST EXPENSE
|
|
|
|
|
|
|
||
|
Interest charges
|
|
60,653
|
|
|
58,954
|
|
||
|
Allowance for borrowed funds used during construction
|
|
(6,665
|
)
|
|
(6,755
|
)
|
||
|
Total
|
|
53,988
|
|
|
52,199
|
|
||
|
INCOME BEFORE INCOME TAXES
|
|
25,209
|
|
|
6,829
|
|
||
|
INCOME TAXES
|
|
2,418
|
|
|
(1,265
|
)
|
||
|
NET INCOME
|
|
22,791
|
|
|
8,094
|
|
||
|
Less: Net income attributable to noncontrolling interests (Note 6)
|
|
4,873
|
|
|
4,873
|
|
||
|
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS
|
|
$
|
17,918
|
|
|
$
|
3,221
|
|
|
|
|
|
|
|
||||
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WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING — BASIC
|
|
112,337
|
|
|
112,017
|
|
||
|
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING — DILUTED
|
|
112,735
|
|
|
112,493
|
|
||
|
|
|
|
|
|
||||
|
EARNINGS PER WEIGHTED-AVERAGE COMMON SHARE OUTSTANDING
|
|
|
|
|
|
|
||
|
Net income attributable to common shareholders — basic
|
|
$
|
0.16
|
|
|
$
|
0.03
|
|
|
Net income attributable to common shareholders — diluted
|
|
$
|
0.16
|
|
|
$
|
0.03
|
|
|
|
|
|
|
|
||||
|
|
Three Months Ended
March 31, |
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
NET INCOME
|
$
|
22,791
|
|
|
$
|
8,094
|
|
|
|
|
|
|
||||
|
OTHER COMPREHENSIVE INCOME, NET OF TAX
|
|
|
|
|
|
||
|
Derivative instruments:
|
|
|
|
|
|
||
|
Net unrealized loss, net of tax expense of $0 and $96
|
—
|
|
|
(96
|
)
|
||
|
Reclassification of net realized loss, net of tax benefit of $108 and $82
|
328
|
|
|
409
|
|
||
|
Pension and other postretirement benefits activity, net of tax expense of $288 and $443
|
879
|
|
|
900
|
|
||
|
Total other comprehensive income
|
1,207
|
|
|
1,213
|
|
||
|
|
|
|
|
||||
|
COMPREHENSIVE INCOME
|
23,998
|
|
|
9,307
|
|
||
|
Less: Comprehensive income attributable to noncontrolling interests
|
4,873
|
|
|
4,873
|
|
||
|
|
|
|
|
||||
|
COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS
|
$
|
19,125
|
|
|
$
|
4,434
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
|
ASSETS
|
|
|
|
|
|
||
|
|
|
|
|
||||
|
CURRENT ASSETS
|
|
|
|
|
|
||
|
Cash and cash equivalents
|
$
|
6,109
|
|
|
$
|
5,766
|
|
|
Customer and other receivables
|
249,568
|
|
|
267,887
|
|
||
|
Accrued unbilled revenues
|
114,077
|
|
|
137,170
|
|
||
|
Allowance for doubtful accounts
|
(2,455
|
)
|
|
(4,069
|
)
|
||
|
Materials and supplies (at average cost)
|
280,857
|
|
|
269,065
|
|
||
|
Fossil fuel (at average cost)
|
26,294
|
|
|
25,029
|
|
||
|
Assets from risk management activities (Note 7)
|
763
|
|
|
1,113
|
|
||
|
Deferred fuel and purchased power regulatory asset (Note 4)
|
7,583
|
|
|
37,164
|
|
||
|
Other regulatory assets (Note 4)
|
127,642
|
|
|
129,738
|
|
||
|
Other current assets
|
65,951
|
|
|
56,128
|
|
||
|
Total current assets
|
876,389
|
|
|
924,991
|
|
||
|
INVESTMENTS AND OTHER ASSETS
|
|
|
|
|
|
||
|
Nuclear decommissioning trust (Notes 11 and 12)
|
919,309
|
|
|
851,134
|
|
||
|
Other special use funds (Notes 11 and 12)
|
238,207
|
|
|
236,101
|
|
||
|
Other assets
|
99,446
|
|
|
103,247
|
|
||
|
Total investments and other assets
|
1,256,962
|
|
|
1,190,482
|
|
||
|
PROPERTY, PLANT AND EQUIPMENT
|
|
|
|
|
|
||
|
Plant in service and held for future use
|
18,763,499
|
|
|
18,736,628
|
|
||
|
Accumulated depreciation and amortization
|
(6,398,512
|
)
|
|
(6,366,014
|
)
|
||
|
Net
|
12,364,987
|
|
|
12,370,614
|
|
||
|
Construction work in progress
|
1,233,018
|
|
|
1,170,062
|
|
||
|
Palo Verde sale leaseback, net of accumulated depreciation (Note 6)
|
104,808
|
|
|
105,775
|
|
||
|
Intangible assets, net of accumulated amortization
|
267,998
|
|
|
262,902
|
|
||
|
Nuclear fuel, net of accumulated amortization
|
142,610
|
|
|
120,217
|
|
||
|
Total property, plant and equipment
|
14,113,421
|
|
|
14,029,570
|
|
||
|
DEFERRED DEBITS
|
|
|
|
|
|
||
|
Regulatory assets (Note 4)
|
1,321,507
|
|
|
1,342,941
|
|
||
|
Operating lease right-of-use assets (Note 16)
|
193,897
|
|
|
—
|
|
||
|
Assets for other postretirement benefits (Note 5)
|
52,674
|
|
|
46,906
|
|
||
|
Other
|
39,257
|
|
|
129,312
|
|
||
|
Total deferred debits
|
1,607,335
|
|
|
1,519,159
|
|
||
|
|
|
|
|
||||
|
TOTAL ASSETS
|
$
|
17,854,107
|
|
|
$
|
17,664,202
|
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2019
|
|
2018
|
||||
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
||
|
Net income
|
$
|
22,791
|
|
|
$
|
8,094
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||
|
Depreciation and amortization including nuclear fuel
|
167,801
|
|
|
163,566
|
|
||
|
Deferred fuel and purchased power
|
16,709
|
|
|
(18,950
|
)
|
||
|
Deferred fuel and purchased power amortization
|
12,872
|
|
|
20,002
|
|
||
|
Allowance for equity funds used during construction
|
(11,188
|
)
|
|
(14,079
|
)
|
||
|
Deferred income taxes
|
3,620
|
|
|
(229
|
)
|
||
|
Deferred investment tax credit
|
(353
|
)
|
|
(147
|
)
|
||
|
Stock compensation
|
12,074
|
|
|
10,537
|
|
||
|
Changes in current assets and liabilities:
|
|
|
|
|
|
||
|
Customer and other receivables
|
15,476
|
|
|
89,518
|
|
||
|
Accrued unbilled revenues
|
23,093
|
|
|
(6,555
|
)
|
||
|
Materials, supplies and fossil fuel
|
(13,057
|
)
|
|
(16,607
|
)
|
||
|
Other current assets
|
(10,115
|
)
|
|
(664
|
)
|
||
|
Accounts payable
|
26,593
|
|
|
(25,738
|
)
|
||
|
Accrued taxes
|
45,130
|
|
|
45,984
|
|
||
|
Other current liabilities
|
(86,250
|
)
|
|
(12,030
|
)
|
||
|
Change in other long-term assets
|
(65,470
|
)
|
|
(3,765
|
)
|
||
|
Change in other long-term liabilities
|
13,706
|
|
|
(72,065
|
)
|
||
|
Net cash flow provided by operating activities
|
173,432
|
|
|
166,872
|
|
||
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
||
|
Capital expenditures
|
(259,792
|
)
|
|
(361,037
|
)
|
||
|
Contributions in aid of construction
|
7,938
|
|
|
8,569
|
|
||
|
Allowance for borrowed funds used during construction
|
(6,665
|
)
|
|
(6,755
|
)
|
||
|
Proceeds from nuclear decommissioning trust sales and other special use funds
|
179,048
|
|
|
130,456
|
|
||
|
Investment in nuclear decommissioning trust and other special use funds
|
(179,618
|
)
|
|
(131,027
|
)
|
||
|
Other
|
4,576
|
|
|
(1,299
|
)
|
||
|
Net cash flow used for investing activities
|
(254,513
|
)
|
|
(361,093
|
)
|
||
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
||
|
Issuance of long-term debt
|
497,324
|
|
|
—
|
|
||
|
Short-term borrowing and payments — net
|
172,650
|
|
|
263,500
|
|
||
|
Short-term debt borrowings under revolving credit facility
|
—
|
|
|
36,000
|
|
||
|
Short-term debt repayments under revolving credit facility
|
(5,000
|
)
|
|
(25,000
|
)
|
||
|
Dividends paid on common stock
|
(80,897
|
)
|
|
(75,903
|
)
|
||
|
Repayment of long-term debt
|
(500,000
|
)
|
|
—
|
|
||
|
Common stock equity issuance - net of purchases
|
(2,653
|
)
|
|
(2,828
|
)
|
||
|
Net cash flow provided by financing activities
|
81,424
|
|
|
195,769
|
|
||
|
NET INCREASE IN CASH AND CASH EQUIVALENTS
|
343
|
|
|
1,548
|
|
||
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
5,766
|
|
|
13,892
|
|
||
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
6,109
|
|
|
$
|
15,440
|
|
|
|
Common Stock
|
|
Treasury Stock
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Noncontrolling Interests
|
|
Total
|
||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Balance, January 1, 2018
|
111,816,170
|
|
|
$
|
2,614,805
|
|
|
(64,463
|
)
|
|
$
|
(5,624
|
)
|
|
$
|
2,442,511
|
|
|
$
|
(45,002
|
)
|
|
$
|
129,040
|
|
|
$
|
5,135,730
|
|
|
Net income
|
|
|
—
|
|
|
|
|
—
|
|
|
3,221
|
|
|
—
|
|
|
4,873
|
|
|
8,094
|
|
||||||||
|
Other comprehensive income
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
1,213
|
|
|
—
|
|
|
1,213
|
|
||||||||
|
Dividends on common stock
|
|
|
—
|
|
|
|
|
—
|
|
|
(16
|
)
|
|
—
|
|
|
—
|
|
|
(16
|
)
|
||||||||
|
Issuance of common stock
|
145,793
|
|
|
5,456
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,456
|
|
|||||||
|
Purchase of treasury stock (a)
|
|
|
—
|
|
|
(81,177
|
)
|
|
(6,277
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,277
|
)
|
|||||||
|
Reissuance of treasury stock for stock-based compensation and other
|
|
|
—
|
|
|
116,543
|
|
|
9,470
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
9,471
|
|
|||||||
|
Reclassification of income tax effects related to new tax reform (b)
|
|
|
—
|
|
|
|
|
—
|
|
|
8,552
|
|
|
(8,552
|
)
|
|
—
|
|
|
—
|
|
||||||||
|
Balance, March 31, 2018
|
111,961,963
|
|
|
$
|
2,620,261
|
|
|
(29,097
|
)
|
|
$
|
(2,431
|
)
|
|
$
|
2,454,268
|
|
|
$
|
(52,341
|
)
|
|
$
|
133,914
|
|
|
$
|
5,153,671
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Balance, January 1, 2019
|
112,159,896
|
|
|
$
|
2,634,265
|
|
|
(58,135
|
)
|
|
$
|
(4,825
|
)
|
|
$
|
2,641,183
|
|
|
$
|
(47,708
|
)
|
|
$
|
125,790
|
|
|
$
|
5,348,705
|
|
|
Net income
|
|
|
—
|
|
|
|
|
—
|
|
|
17,918
|
|
|
—
|
|
|
4,873
|
|
|
22,791
|
|
||||||||
|
Other comprehensive income
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
1,207
|
|
|
—
|
|
|
1,207
|
|
||||||||
|
Dividends on common stock
|
|
|
—
|
|
|
|
|
—
|
|
|
(15
|
)
|
|
—
|
|
|
—
|
|
|
(15
|
)
|
||||||||
|
Issuance of common stock
|
180,426
|
|
|
9,798
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,798
|
|
|||||||
|
Purchase of treasury stock (a)
|
|
|
—
|
|
|
(75,791
|
)
|
|
(6,882
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,882
|
)
|
|||||||
|
Reissuance of treasury stock for stock-based compensation and other
|
|
|
—
|
|
|
70,655
|
|
|
6,121
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,121
|
|
|||||||
|
Balance, March 31, 2019
|
112,340,322
|
|
|
$
|
2,644,063
|
|
|
(63,271
|
)
|
|
$
|
(5,586
|
)
|
|
$
|
2,659,086
|
|
|
$
|
(46,501
|
)
|
|
$
|
130,663
|
|
|
$
|
5,381,725
|
|
|
(a)
|
Primarily represents shares of common stock withheld from certain stock awards for tax purposes.
|
|
(b)
|
In 2018, the Company adopted new accounting guidance and elected to reclassify income tax effects of the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) on items within accumulated other comprehensive income to retained earnings.
|
|
|
|
Three Months Ended
March 31, |
||||||
|
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
|
||||
|
OPERATING REVENUES
|
|
$
|
740,530
|
|
|
$
|
692,006
|
|
|
|
|
|
|
|
||||
|
OPERATING EXPENSES
|
|
|
|
|
|
|
||
|
Fuel and purchased power
|
|
230,588
|
|
|
202,010
|
|
||
|
Operations and maintenance
|
|
240,375
|
|
|
254,601
|
|
||
|
Depreciation and amortization
|
|
148,685
|
|
|
144,112
|
|
||
|
Taxes other than income taxes
|
|
55,078
|
|
|
53,242
|
|
||
|
Other expenses
|
|
427
|
|
|
163
|
|
||
|
Total
|
|
675,153
|
|
|
654,128
|
|
||
|
OPERATING INCOME
|
|
65,377
|
|
|
37,878
|
|
||
|
OTHER INCOME (DEDUCTIONS)
|
|
|
|
|
|
|
||
|
Allowance for equity funds used during construction
|
|
11,188
|
|
|
14,079
|
|
||
|
Pension and other postretirement non-service credits - net
|
|
5,499
|
|
|
13,197
|
|
||
|
Other income (Note 9)
|
|
6,416
|
|
|
3,772
|
|
||
|
Other expense (Note 9)
|
|
(3,878
|
)
|
|
(2,945
|
)
|
||
|
Total
|
|
19,225
|
|
|
28,103
|
|
||
|
INTEREST EXPENSE
|
|
|
|
|
|
|
||
|
Interest charges
|
|
56,665
|
|
|
56,158
|
|
||
|
Allowance for borrowed funds used during construction
|
|
(6,665
|
)
|
|
(6,755
|
)
|
||
|
Total
|
|
50,000
|
|
|
49,403
|
|
||
|
INCOME BEFORE INCOME TAXES
|
|
34,602
|
|
|
16,578
|
|
||
|
INCOME TAXES
|
|
1,453
|
|
|
2,106
|
|
||
|
NET INCOME
|
|
33,149
|
|
|
14,472
|
|
||
|
Less: Net income attributable to noncontrolling interests (Note 6)
|
|
4,873
|
|
|
4,873
|
|
||
|
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDER
|
|
$
|
28,276
|
|
|
$
|
9,599
|
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
NET INCOME
|
$
|
33,149
|
|
|
$
|
14,472
|
|
|
|
|
|
|
||||
|
OTHER COMPREHENSIVE INCOME, NET OF TAX
|
|
|
|
|
|
||
|
Derivative instruments:
|
|
|
|
|
|
||
|
Net unrealized loss, net of tax expense of $0 and $96
|
—
|
|
|
(96
|
)
|
||
|
Reclassification of net realized loss, net of tax benefit of $108 and $82
|
328
|
|
|
409
|
|
||
|
Pension and other postretirement benefits activity, net of tax expense of $247 and $306
|
752
|
|
|
857
|
|
||
|
Total other comprehensive income
|
1,080
|
|
|
1,170
|
|
||
|
|
|
|
|
||||
|
COMPREHENSIVE INCOME
|
34,229
|
|
|
15,642
|
|
||
|
Less: Comprehensive income attributable to noncontrolling interests
|
4,873
|
|
|
4,873
|
|
||
|
|
|
|
|
||||
|
COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDER
|
$
|
29,356
|
|
|
$
|
10,769
|
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
|
ASSETS
|
|
|
|
|
|
||
|
|
|
|
|
||||
|
PROPERTY, PLANT AND EQUIPMENT
|
|
|
|
|
|
||
|
Plant in service and held for future use
|
$
|
18,760,012
|
|
|
$
|
18,733,142
|
|
|
Accumulated depreciation and amortization
|
(6,395,265
|
)
|
|
(6,362,771
|
)
|
||
|
Net
|
12,364,747
|
|
|
12,370,371
|
|
||
|
|
|
|
|
||||
|
Construction work in progress
|
1,233,018
|
|
|
1,170,062
|
|
||
|
Palo Verde sale leaseback, net of accumulated depreciation (Note 6)
|
104,808
|
|
|
105,775
|
|
||
|
Intangible assets, net of accumulated amortization
|
267,842
|
|
|
262,746
|
|
||
|
Nuclear fuel, net of accumulated amortization
|
142,610
|
|
|
120,217
|
|
||
|
Total property, plant and equipment
|
14,113,025
|
|
|
14,029,171
|
|
||
|
|
|
|
|
||||
|
INVESTMENTS AND OTHER ASSETS
|
|
|
|
|
|
||
|
Nuclear decommissioning trust (Notes 11 and 12)
|
919,309
|
|
|
851,134
|
|
||
|
Other special use funds (Notes 11 and 12)
|
238,207
|
|
|
236,101
|
|
||
|
Other assets
|
42,090
|
|
|
40,817
|
|
||
|
Total investments and other assets
|
1,199,606
|
|
|
1,128,052
|
|
||
|
|
|
|
|
||||
|
CURRENT ASSETS
|
|
|
|
|
|
||
|
Cash and cash equivalents
|
6,080
|
|
|
5,707
|
|
||
|
Customer and other receivables
|
238,270
|
|
|
257,654
|
|
||
|
Accrued unbilled revenues
|
114,077
|
|
|
137,170
|
|
||
|
Allowance for doubtful accounts
|
(2,455
|
)
|
|
(4,069
|
)
|
||
|
Materials and supplies (at average cost)
|
280,857
|
|
|
269,065
|
|
||
|
Fossil fuel (at average cost)
|
26,294
|
|
|
25,029
|
|
||
|
Assets from risk management activities (Note 7)
|
763
|
|
|
1,113
|
|
||
|
Deferred fuel and purchased power regulatory asset (Note 4)
|
7,583
|
|
|
37,164
|
|
||
|
Other regulatory assets (Note 4)
|
127,642
|
|
|
129,738
|
|
||
|
Other current assets
|
44,417
|
|
|
35,111
|
|
||
|
Total current assets
|
843,528
|
|
|
893,682
|
|
||
|
|
|
|
|
||||
|
DEFERRED DEBITS
|
|
|
|
|
|
||
|
Regulatory assets (Note 4)
|
1,321,507
|
|
|
1,342,941
|
|
||
|
Operating lease right-of-use assets (Note 16)
|
191,957
|
|
|
—
|
|
||
|
Assets for other postretirement benefits (Note 5)
|
48,961
|
|
|
43,212
|
|
||
|
Other
|
38,299
|
|
|
128,265
|
|
||
|
Total deferred debits
|
1,600,724
|
|
|
1,514,418
|
|
||
|
|
|
|
|
||||
|
TOTAL ASSETS
|
$
|
17,756,883
|
|
|
$
|
17,565,323
|
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
||
|
|
|
|
|
||||
|
CAPITALIZATION
|
|
|
|
|
|
||
|
Common stock
|
$
|
178,162
|
|
|
$
|
178,162
|
|
|
Additional paid-in capital
|
2,721,696
|
|
|
2,721,696
|
|
||
|
Retained earnings
|
2,816,532
|
|
|
2,788,256
|
|
||
|
Accumulated other comprehensive loss
|
(26,027
|
)
|
|
(27,107
|
)
|
||
|
Total shareholder equity
|
5,690,363
|
|
|
5,661,007
|
|
||
|
Noncontrolling interests (Note 6)
|
130,663
|
|
|
125,790
|
|
||
|
Total equity
|
5,821,026
|
|
|
5,786,797
|
|
||
|
Long-term debt less current maturities (Note 3)
|
4,437,155
|
|
|
4,189,436
|
|
||
|
Total capitalization
|
10,258,181
|
|
|
9,976,233
|
|
||
|
CURRENT LIABILITIES
|
|
|
|
|
|
||
|
Short-term borrowings (Note 3)
|
157,500
|
|
|
—
|
|
||
|
Current maturities of long-term debt (Note 3)
|
250,000
|
|
|
500,000
|
|
||
|
Accounts payable
|
257,124
|
|
|
266,277
|
|
||
|
Accrued taxes
|
230,591
|
|
|
176,357
|
|
||
|
Accrued interest
|
47,585
|
|
|
60,228
|
|
||
|
Common dividends payable
|
—
|
|
|
82,700
|
|
||
|
Customer deposits
|
87,263
|
|
|
91,174
|
|
||
|
Liabilities from risk management activities (Note 7)
|
33,289
|
|
|
35,506
|
|
||
|
Liabilities for asset retirements
|
22,823
|
|
|
19,842
|
|
||
|
Operating lease liabilities (Note 16)
|
65,267
|
|
|
—
|
|
||
|
Regulatory liabilities (Note 4)
|
260,404
|
|
|
165,876
|
|
||
|
Other current liabilities
|
114,665
|
|
|
178,137
|
|
||
|
Total current liabilities
|
1,526,511
|
|
|
1,576,097
|
|
||
|
DEFERRED CREDITS AND OTHER
|
|
|
|
|
|
||
|
Deferred income taxes
|
1,815,368
|
|
|
1,812,664
|
|
||
|
Regulatory liabilities (Note 4)
|
2,272,082
|
|
|
2,325,976
|
|
||
|
Liabilities for asset retirements
|
712,885
|
|
|
706,703
|
|
||
|
Liabilities for pension benefits (Note 5)
|
367,296
|
|
|
425,404
|
|
||
|
Liabilities from risk management activities (Note 7)
|
14,844
|
|
|
24,531
|
|
||
|
Customer advances
|
155,894
|
|
|
137,153
|
|
||
|
Coal mine reclamation
|
214,037
|
|
|
212,785
|
|
||
|
Deferred investment tax credit
|
200,052
|
|
|
200,405
|
|
||
|
Unrecognized tax benefits
|
42,084
|
|
|
41,861
|
|
||
|
Operating lease liabilities (Note 16)
|
51,805
|
|
|
—
|
|
||
|
Other
|
125,844
|
|
|
125,511
|
|
||
|
Total deferred credits and other
|
5,972,191
|
|
|
6,012,993
|
|
||
|
COMMITMENTS AND CONTINGENCIES (SEE NOTE 8)
|
|
|
|
|
|
||
|
TOTAL LIABILITIES AND EQUITY
|
$
|
17,756,883
|
|
|
$
|
17,565,323
|
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2019
|
|
2018
|
||||
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
||
|
Net income
|
$
|
33,149
|
|
|
$
|
14,472
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||
|
Depreciation and amortization including nuclear fuel
|
167,779
|
|
|
162,853
|
|
||
|
Deferred fuel and purchased power
|
16,709
|
|
|
(18,950
|
)
|
||
|
Deferred fuel and purchased power amortization
|
12,872
|
|
|
20,002
|
|
||
|
Allowance for equity funds used during construction
|
(11,188
|
)
|
|
(14,079
|
)
|
||
|
Deferred income taxes
|
(1,205
|
)
|
|
533
|
|
||
|
Deferred investment tax credit
|
(353
|
)
|
|
(147
|
)
|
||
|
Changes in current assets and liabilities:
|
|
|
|
|
|
||
|
Customer and other receivables
|
16,541
|
|
|
90,647
|
|
||
|
Accrued unbilled revenues
|
23,093
|
|
|
(6,555
|
)
|
||
|
Materials, supplies and fossil fuel
|
(13,057
|
)
|
|
(16,747
|
)
|
||
|
Other current assets
|
(9,598
|
)
|
|
(1,237
|
)
|
||
|
Accounts payable
|
30,774
|
|
|
(24,592
|
)
|
||
|
Accrued taxes
|
54,234
|
|
|
54,106
|
|
||
|
Other current liabilities
|
(81,627
|
)
|
|
(15,771
|
)
|
||
|
Change in other long-term assets
|
(64,516
|
)
|
|
3,722
|
|
||
|
Change in other long-term liabilities
|
14,525
|
|
|
(70,928
|
)
|
||
|
Net cash flow provided by operating activities
|
188,132
|
|
|
177,329
|
|
||
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
||
|
Capital expenditures
|
(259,446
|
)
|
|
(355,039
|
)
|
||
|
Contributions in aid of construction
|
7,938
|
|
|
8,569
|
|
||
|
Allowance for borrowed funds used during construction
|
(6,665
|
)
|
|
(6,755
|
)
|
||
|
Proceeds from nuclear decommissioning trust sales and other special use funds
|
179,048
|
|
|
130,456
|
|
||
|
Investment in nuclear decommissioning trust and other special use funds
|
(179,618
|
)
|
|
(131,027
|
)
|
||
|
Other
|
(1,140
|
)
|
|
(1,183
|
)
|
||
|
Net cash flow used for investing activities
|
(259,883
|
)
|
|
(354,979
|
)
|
||
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
||
|
Issuance of long-term debt
|
497,324
|
|
|
—
|
|
||
|
Short-term borrowings and payments — net
|
157,500
|
|
|
255,500
|
|
||
|
Short-term debt borrowings under revolving credit facility
|
—
|
|
|
25,000
|
|
||
|
Short-term debt repayments under revolving credit facility
|
—
|
|
|
(25,000
|
)
|
||
|
Repayment of long-term debt
|
(500,000
|
)
|
|
—
|
|
||
|
Dividends paid on common stock
|
(82,700
|
)
|
|
(77,700
|
)
|
||
|
Net cash flow provided by financing activities
|
72,124
|
|
|
177,800
|
|
||
|
NET INCREASE IN CASH AND CASH EQUIVALENTS
|
373
|
|
|
150
|
|
||
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
5,707
|
|
|
13,851
|
|
||
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
6,080
|
|
|
$
|
14,001
|
|
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Noncontrolling Interests
|
|
Total
|
|||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Balance, January 1, 2018
|
71,264,947
|
|
|
$
|
178,162
|
|
|
$
|
2,571,696
|
|
|
$
|
2,533,954
|
|
|
$
|
(26,983
|
)
|
|
$
|
129,040
|
|
|
$
|
5,385,869
|
|
|
Net income
|
|
|
—
|
|
|
—
|
|
|
9,599
|
|
|
—
|
|
|
4,873
|
|
|
14,472
|
|
|||||||
|
Other comprehensive income
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,170
|
|
|
—
|
|
|
1,170
|
|
|||||||
|
Other
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|||||||
|
Reclassification of income tax effects related to new tax reform (a)
|
|
|
—
|
|
|
—
|
|
|
5,038
|
|
|
(5,038
|
)
|
|
—
|
|
|
—
|
|
|||||||
|
Balance, March 31, 2018
|
71,264,947
|
|
|
$
|
178,162
|
|
|
$
|
2,571,696
|
|
|
$
|
2,548,591
|
|
|
$
|
(30,851
|
)
|
|
$
|
133,914
|
|
|
$
|
5,401,512
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Balance, January 1, 2019
|
71,264,947
|
|
|
$
|
178,162
|
|
|
$
|
2,721,696
|
|
|
$
|
2,788,256
|
|
|
$
|
(27,107
|
)
|
|
$
|
125,790
|
|
|
$
|
5,786,797
|
|
|
Net income
|
|
|
—
|
|
|
—
|
|
|
28,276
|
|
|
—
|
|
|
4,873
|
|
|
33,149
|
|
|||||||
|
Other comprehensive income
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,080
|
|
|
—
|
|
|
1,080
|
|
|||||||
|
Balance, March 31, 2019
|
71,264,947
|
|
|
$
|
178,162
|
|
|
$
|
2,721,696
|
|
|
$
|
2,816,532
|
|
|
$
|
(26,027
|
)
|
|
$
|
130,663
|
|
|
$
|
5,821,026
|
|
|
(a)
|
In 2018, the Company adopted new accounting guidance and elected to reclassify income tax effects of the Tax Act on items within accumulated other comprehensive income to retained earnings.
|
|
1.
|
Consolidation and Nature of Operations
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2019
|
|
2018
|
||||
|
Cash paid during the period for:
|
|
|
|
||||
|
Income taxes, net of refunds
|
$
|
1
|
|
|
$
|
—
|
|
|
Interest, net of amounts capitalized
|
63,764
|
|
|
56,026
|
|
||
|
Significant non-cash investing and financing activities:
|
|
|
|
||||
|
Accrued capital expenditures
|
$
|
95,879
|
|
|
$
|
86,991
|
|
|
Right-of-use operating lease assets obtained in exchange for operating lease liabilities
|
2,293
|
|
|
—
|
|
||
|
|
Three Months Ended
March 31, |
||||||
|
|
2019
|
|
2018
|
||||
|
Cash paid during the period for:
|
|
|
|
||||
|
Income taxes, net of refunds
|
$
|
—
|
|
|
$
|
—
|
|
|
Interest, net of amounts capitalized
|
61,387
|
|
|
54,873
|
|
||
|
Significant non-cash investing and financing activities:
|
|
|
|
||||
|
Accrued capital expenditures
|
$
|
95,879
|
|
|
$
|
86,944
|
|
|
Right-of-use operating lease assets obtained in exchange for operating lease liabilities
|
2,293
|
|
|
—
|
|
||
|
|
|
Three Months Ended March 31,
|
||||||
|
|
|
2019
|
|
2018
|
||||
|
Retail residential electric service
|
|
$
|
351,566
|
|
|
$
|
316,675
|
|
|
Retail non-residential electric service
|
|
332,668
|
|
|
343,189
|
|
||
|
Wholesale energy sales
|
|
36,452
|
|
|
12,089
|
|
||
|
Transmission services for others
|
|
15,249
|
|
|
14,845
|
|
||
|
Other sources
|
|
4,595
|
|
|
5,916
|
|
||
|
Total operating revenues
|
|
$
|
740,530
|
|
|
$
|
692,714
|
|
|
3.
|
Long-Term Debt and Liquidity Matters
|
|
|
As of March 31, 2019
|
|
As of December 31, 2018
|
||||||||||||
|
|
Carrying
Amount
|
|
Fair Value
|
|
Carrying
Amount
|
|
Fair Value
|
||||||||
|
Pinnacle West
|
$
|
448,953
|
|
|
$
|
446,835
|
|
|
$
|
448,796
|
|
|
$
|
443,955
|
|
|
APS
|
4,687,155
|
|
|
4,942,057
|
|
|
4,689,436
|
|
|
4,789,608
|
|
||||
|
Total
|
$
|
5,136,108
|
|
|
$
|
5,388,892
|
|
|
$
|
5,138,232
|
|
|
$
|
5,233,563
|
|
|
4.
|
Regulatory Matters
|
|
•
|
an agreement by APS not to file another general retail rate case application before June 1, 2019;
|
|
•
|
an authorized return on common equity of 10.0%;
|
|
•
|
a capital structure comprised of 44.2% debt and 55.8% common equity;
|
|
•
|
a cost deferral order for potential future recovery in APS’s next general retail rate case for the construction and operating costs APS incurs for its Ocotillo modernization project;
|
|
•
|
a cost deferral and procedure to allow APS to request rate adjustments prior to its next general retail rate case related to its share of the construction costs associated with installing selective catalytic reduction ("SCR") equipment at the Four Corners Power Plant ("Four Corners");
|
|
•
|
a deferral for future recovery (or credit to customers) of the Arizona property tax expense above or below a specified test year level caused by changes to the applicable Arizona property tax rate;
|
|
•
|
an expansion of the Power Supply Adjustor (“PSA”) to include certain environmental chemical costs and third-party battery storage costs;
|
|
•
|
a new AZ Sun II program (now known as "APS Solar Communities") for utility-owned solar distributed generation with the purpose of expanding access to rooftop solar for low and moderate income Arizonans, recoverable through the Arizona Renewable Energy Standard and Tariff ("RES"), to be no less than $10 million per year, and not more than $15 million per year;
|
|
•
|
an increase to the per kWh cap for the environmental improvement surcharge from $0.00016 to $0.00050 and the addition of a balancing account;
|
|
•
|
rate design changes, including:
|
|
▪
|
a change in the on-peak time of use period from noon - 7 p.m. to 3 p.m. - 8 p.m. Monday through Friday, excluding holidays;
|
|
▪
|
non-grandfathered distributed generation ("DG") customers would be required to select a rate option that has time of use rates and either a new grid access charge or demand component;
|
|
▪
|
a Resource Comparison Proxy (“RCP”) for exported energy of 12.9 cents per kWh in year one; and
|
|
•
|
an agreement by APS not to pursue any new self-build generation (with certain exceptions) having an in-service date prior to January 1, 2022 (extended to December 31, 2027 for combined-cycle generating units), unless expressly authorized by the ACC.
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2019
|
|
2018
|
||||
|
Beginning balance
|
$
|
37,164
|
|
|
$
|
75,637
|
|
|
Deferred fuel and purchased power costs — current period
|
(16,709
|
)
|
|
18,950
|
|
||
|
Amounts charged to customers
|
(12,872
|
)
|
|
(20,002
|
)
|
||
|
Ending balance
|
$
|
7,583
|
|
|
$
|
74,585
|
|
|
•
|
Customers who have interconnected a DG system or submitted an application for interconnection for DG systems prior to September 1, 2017, based on APS's 2017 Rate Case Decision, will be grandfathered for a period of 20 years from the date the customer’s interconnection application was accepted by the utility;
|
|
•
|
Customers with DG solar systems are to be considered a separate class of customers for ratemaking purposes; and
|
|
•
|
Once an export price is set for APS, no netting or banking of retail credits will be available for new DG customers, and the then-applicable export price will be guaranteed for new customers for a period of 10 years.
|
|
|
Amortization Through
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||||||
|
|
|
Current
|
|
Non-Current
|
|
Current
|
|
Non-Current
|
|||||||||
|
Pension
|
(a)
|
|
$
|
—
|
|
|
$
|
723,307
|
|
|
$
|
—
|
|
|
$
|
733,351
|
|
|
Retired power plant costs
|
2033
|
|
28,182
|
|
|
160,167
|
|
|
28,182
|
|
|
167,164
|
|
||||
|
Income taxes — allowance for funds used during construction ("AFUDC") equity
|
2049
|
|
6,457
|
|
|
151,541
|
|
|
6,457
|
|
|
151,467
|
|
||||
|
Deferred fuel and purchased power — mark-to-market (Note 7)
|
2023
|
|
29,340
|
|
|
14,360
|
|
|
31,728
|
|
|
23,768
|
|
||||
|
Deferred fuel and purchased power (b) (c)
|
2020
|
|
7,583
|
|
|
—
|
|
|
37,164
|
|
|
—
|
|
||||
|
Four Corners cost deferral
|
2024
|
|
8,077
|
|
|
38,209
|
|
|
8,077
|
|
|
40,228
|
|
||||
|
Income taxes — investment tax credit basis adjustment
|
2047
|
|
1,079
|
|
|
25,475
|
|
|
1,079
|
|
|
25,522
|
|
||||
|
Lost fixed cost recovery (b)
|
2020
|
|
29,698
|
|
|
—
|
|
|
32,435
|
|
|
—
|
|
||||
|
Palo Verde VIEs (Note 6)
|
2046
|
|
—
|
|
|
20,170
|
|
|
—
|
|
|
20,015
|
|
||||
|
Deferred compensation
|
2036
|
|
—
|
|
|
37,581
|
|
|
—
|
|
|
36,523
|
|
||||
|
Deferred property taxes
|
2027
|
|
8,569
|
|
|
64,214
|
|
|
8,569
|
|
|
66,356
|
|
||||
|
Loss on reacquired debt
|
2038
|
|
1,637
|
|
|
13,259
|
|
|
1,637
|
|
|
13,668
|
|
||||
|
Tax expense of Medicare subsidy
|
2024
|
|
1,235
|
|
|
6,122
|
|
|
1,235
|
|
|
6,176
|
|
||||
|
TCA balancing account (b)
|
2020
|
|
306
|
|
|
—
|
|
|
3,860
|
|
|
772
|
|
||||
|
AG-1 deferral
|
2022
|
|
2,654
|
|
|
5,155
|
|
|
2,654
|
|
|
5,819
|
|
||||
|
Mead-Phoenix transmission line CIAC
|
2050
|
|
332
|
|
|
9,961
|
|
|
332
|
|
|
10,044
|
|
||||
|
Coal reclamation
|
2026
|
|
1,546
|
|
|
17,392
|
|
|
1,546
|
|
|
15,607
|
|
||||
|
SCR deferral
|
N/A
|
|
—
|
|
|
30,581
|
|
|
—
|
|
|
23,276
|
|
||||
|
Tax expense adjuster mechanism (c)
|
2019
|
|
5,451
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
Other
|
Various
|
|
3,079
|
|
|
4,013
|
|
|
1,947
|
|
|
3,185
|
|
||||
|
Total regulatory assets (d)
|
|
|
$
|
135,225
|
|
|
$
|
1,321,507
|
|
|
$
|
166,902
|
|
|
$
|
1,342,941
|
|
|
(a)
|
This asset represents the future recovery of pension benefit obligations through retail rates. If these costs are disallowed by the ACC, this regulatory asset would be charged to other comprehensive income ("OCI") and result in lower future revenues.
|
|
(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."
|
|
|
Amortization Through
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||||||
|
|
|
Current
|
|
Non-Current
|
|
Current
|
|
Non-Current
|
|||||||||
|
Excess deferred income taxes - ACC - Tax Cuts and Jobs Act
|
(a)
|
|
$
|
91,401
|
|
|
$
|
1,178,216
|
|
|
$
|
—
|
|
|
$
|
1,272,709
|
|
|
Excess deferred income taxes - FERC - Tax Cuts and Jobs Act
|
2058
|
|
6,302
|
|
|
243,418
|
|
|
6,302
|
|
|
243,691
|
|
||||
|
Asset retirement obligations
|
2057
|
|
—
|
|
|
337,844
|
|
|
—
|
|
|
278,585
|
|
||||
|
Removal costs
|
(b)
|
|
50,701
|
|
|
156,578
|
|
|
39,866
|
|
|
177,533
|
|
||||
|
Other postretirement benefits
|
(c)
|
|
37,864
|
|
|
116,478
|
|
|
37,864
|
|
|
125,903
|
|
||||
|
Income taxes — deferred investment tax credit
|
2047
|
|
2,164
|
|
|
51,027
|
|
|
2,164
|
|
|
51,120
|
|
||||
|
Income taxes — change in rates
|
2048
|
|
2,764
|
|
|
69,954
|
|
|
2,769
|
|
|
70,069
|
|
||||
|
Spent nuclear fuel
|
2027
|
|
7,190
|
|
|
54,866
|
|
|
6,503
|
|
|
57,002
|
|
||||
|
Renewable energy standard (a)
|
2020
|
|
47,943
|
|
|
—
|
|
|
44,966
|
|
|
20
|
|
||||
|
Demand side management (a)
|
2020
|
|
1,581
|
|
|
24,146
|
|
|
14,604
|
|
|
4,123
|
|
||||
|
Sundance maintenance
|
2030
|
|
6,657
|
|
|
11,637
|
|
|
1,278
|
|
|
17,228
|
|
||||
|
Deferred gains on utility property
|
2022
|
|
3,923
|
|
|
5,975
|
|
|
4,423
|
|
|
6,581
|
|
||||
|
Four Corners coal reclamation
|
2038
|
|
1,858
|
|
|
17,690
|
|
|
1,858
|
|
|
17,871
|
|
||||
|
Tax expense adjustor mechanism (a)
|
2020
|
|
14
|
|
|
—
|
|
|
3,237
|
|
|
—
|
|
||||
|
Other
|
Various
|
|
42
|
|
|
4,253
|
|
|
42
|
|
|
3,541
|
|
||||
|
Total regulatory liabilities
|
|
|
$
|
260,404
|
|
|
$
|
2,272,082
|
|
|
$
|
165,876
|
|
|
$
|
2,325,976
|
|
|
(a)
|
See “Cost Recovery Mechanisms” discussion above.
|
|
(b)
|
In accordance with regulatory accounting guidance, APS accrues removal costs for its regulated assets, even if there is no legal obligation for removal.
|
|
(c)
|
See Note 5.
|
|
5.
|
Retirement Plans and Other Postretirement Benefits
|
|
|
Pension Benefits
|
Other Benefits
|
|||||||||||||
|
|
Three Months Ended
March 31, |
|
Three Months Ended
March 31, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
Service cost — benefits earned during the period
|
$
|
12,543
|
|
|
$
|
14,213
|
|
|
$
|
4,714
|
|
|
$
|
5,105
|
|
|
Non-service costs (credits):
|
|
|
|
|
|
|
|
||||||||
|
Interest cost on benefit obligation
|
34,352
|
|
|
31,007
|
|
|
7,526
|
|
|
7,101
|
|
||||
|
Expected return on plan assets
|
(42,893
|
)
|
|
(45,667
|
)
|
|
(9,603
|
)
|
|
(10,520
|
)
|
||||
|
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Prior service cost (credit)
|
—
|
|
|
—
|
|
|
(9,455
|
)
|
|
(9,461
|
)
|
||||
|
Net actuarial loss
|
11,239
|
|
|
7,782
|
|
|
—
|
|
|
—
|
|
||||
|
Net periodic benefit cost (credit)
|
$
|
15,241
|
|
|
$
|
7,335
|
|
|
$
|
(6,818
|
)
|
|
$
|
(7,775
|
)
|
|
Portion of cost (credit) charged to expense
|
$
|
8,244
|
|
|
$
|
2,242
|
|
|
$
|
(4,817
|
)
|
|
$
|
(5,605
|
)
|
|
6.
|
Palo Verde Sale Leaseback Variable Interest Entities
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
|
Palo Verde sale leaseback property plant and equipment, net of accumulated depreciation
|
$
|
104,808
|
|
|
$
|
105,775
|
|
|
Equity — Noncontrolling interests
|
130,663
|
|
|
125,790
|
|
||
|
|
|
|
Quantity
|
||||
|
Commodity
|
|
Unit of Measure
|
March 31, 2019
|
|
December 31, 2018
|
||
|
Power
|
|
GWh
|
1,146
|
|
|
250
|
|
|
Gas
|
|
Billion cubic feet
|
233
|
|
|
218
|
|
|
|
|
Financial Statement Location
|
|
Three Months Ended
March 31, |
||||||
|
Commodity Contracts
|
|
|
2019
|
|
2018
|
|||||
|
Loss Reclassified from Accumulated OCI into Income (Effective Portion Realized) (a)
|
|
Fuel and purchased power (b)
|
|
$
|
(436
|
)
|
|
$
|
(491
|
)
|
|
(a)
|
During the three months ended March 31, 2019 and 2018, we had no gains or losses reclassified from accumulated OCI to earnings related to discontinued cash flow hedges.
|
|
(b)
|
Amounts are before the effect of PSA deferrals.
|
|
|
|
Financial Statement Location
|
|
Three Months Ended
March 31, |
||||||
|
Commodity Contracts
|
|
|
2019
|
|
2018
|
|||||
|
Net Loss Recognized in Income
|
|
Operating revenues
|
|
$
|
—
|
|
|
$
|
(1,219
|
)
|
|
Net Gain (Loss) Recognized in Income
|
|
Fuel and purchased power (a)
|
|
8,170
|
|
|
(34,089
|
)
|
||
|
Total
|
|
|
|
$
|
8,170
|
|
|
$
|
(35,308
|
)
|
|
(a)
|
Amounts are before the effect of PSA deferrals.
|
|
As of March 31, 2019:
(dollars in thousands) |
|
Gross
Recognized
Derivatives
(a)
|
|
Amounts
Offset
(b)
|
|
Net
Recognized
Derivatives
|
|
Other
(c)
|
|
Amount Reported on Balance Sheets
|
||||||||||
|
Current assets
|
|
$
|
3,658
|
|
|
$
|
(2,857
|
)
|
|
$
|
801
|
|
|
$
|
(38
|
)
|
|
$
|
763
|
|
|
Investments and other assets
|
|
1,016
|
|
|
(881
|
)
|
|
135
|
|
|
—
|
|
|
135
|
|
|||||
|
Total assets
|
|
4,674
|
|
|
(3,738
|
)
|
|
936
|
|
|
(38
|
)
|
|
898
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Current liabilities
|
|
(34,487
|
)
|
|
2,857
|
|
|
(31,630
|
)
|
|
(1,659
|
)
|
|
(33,289
|
)
|
|||||
|
Deferred credits and other
|
|
(15,725
|
)
|
|
881
|
|
|
(14,844
|
)
|
|
—
|
|
|
(14,844
|
)
|
|||||
|
Total liabilities
|
|
(50,212
|
)
|
|
3,738
|
|
|
(46,474
|
)
|
|
(1,659
|
)
|
|
(48,133
|
)
|
|||||
|
Total
|
|
$
|
(45,538
|
)
|
|
$
|
—
|
|
|
$
|
(45,538
|
)
|
|
$
|
(1,697
|
)
|
|
$
|
(47,235
|
)
|
|
(a)
|
All of our gross recognized derivative instruments were subject to master netting arrangements.
|
|
(b)
|
No cash collateral has been provided to counterparties, or received from counterparties, that is subject to offsetting.
|
|
(c)
|
Represents cash collateral and cash margin that is not subject to offsetting. Amounts relate to non-derivative instruments, derivatives qualifying for scope exceptions, or collateral and margin posted in excess of the recognized derivative instrument. Includes cash collateral received from counterparties of $1,659 and cash margin provided to counterparties of ($38).
|
|
As of December 31, 2018:
(dollars in thousands) |
|
Gross
Recognized
Derivatives
(a)
|
|
Amounts
Offset
(b)
|
|
Net
Recognized
Derivatives
|
|
Other
(c)
|
|
Amount
Reported on
Balance Sheets
|
||||||||||
|
Current assets
|
|
$
|
3,106
|
|
|
$
|
(2,149
|
)
|
|
$
|
957
|
|
|
$
|
156
|
|
|
$
|
1,113
|
|
|
Investments and other assets
|
|
36
|
|
|
(36
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
Total assets
|
|
3,142
|
|
|
(2,185
|
)
|
|
957
|
|
|
156
|
|
|
1,113
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Current liabilities
|
|
(36,345
|
)
|
|
2,149
|
|
|
(34,196
|
)
|
|
(1,310
|
)
|
|
(35,506
|
)
|
|||||
|
Deferred credits and other
|
|
(24,567
|
)
|
|
36
|
|
|
(24,531
|
)
|
|
—
|
|
|
(24,531
|
)
|
|||||
|
Total liabilities
|
|
(60,912
|
)
|
|
2,185
|
|
|
(58,727
|
)
|
|
(1,310
|
)
|
|
(60,037
|
)
|
|||||
|
Total
|
|
$
|
(57,770
|
)
|
|
$
|
—
|
|
|
$
|
(57,770
|
)
|
|
$
|
(1,154
|
)
|
|
$
|
(58,924
|
)
|
|
(a)
|
All of our gross recognized derivative instruments were subject to master netting arrangements.
|
|
(b)
|
No cash collateral has been provided to counterparties, or received from counterparties, that is subject to offsetting.
|
|
(c)
|
Represents cash collateral and cash margin that is not subject to offsetting. Amounts relate to non-derivative instruments, derivatives qualifying for scope exceptions, or collateral and margin posted in excess of the recognized derivative instrument. Includes cash collateral received from counterparties of $1,310 and cash margin provided to counterparties of $156.
|
|
|
March 31, 2019
|
||
|
Aggregate fair value of derivative instruments in a net liability position
|
$
|
50,212
|
|
|
Cash collateral posted
|
—
|
|
|
|
Additional cash collateral in the event credit-risk-related contingent features were fully triggered (a)
|
47,874
|
|
|
|
(a)
|
This amount is after counterparty netting and includes those contracts which qualify for scope exceptions, which are excluded from the derivative details above.
|
|
8.
|
Commitments and Contingencies
|
|
9.
|
Other Income and Other Expense
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2019
|
|
2018
|
||||
|
Other income:
|
|
|
|
|
|
||
|
Interest income
|
$
|
2,302
|
|
|
$
|
1,891
|
|
|
Debt return on Four Corners SCR (Note 4)
|
4,844
|
|
|
2,092
|
|
||
|
Miscellaneous
|
23
|
|
|
2
|
|
||
|
Total other income
|
$
|
7,169
|
|
|
$
|
3,985
|
|
|
Other expense:
|
|
|
|
|
|
||
|
Non-operating costs
|
$
|
(2,704
|
)
|
|
$
|
(1,646
|
)
|
|
Investment losses — net
|
(238
|
)
|
|
(176
|
)
|
||
|
Miscellaneous
|
(1,416
|
)
|
|
(1,407
|
)
|
||
|
Total other expense
|
$
|
(4,358
|
)
|
|
$
|
(3,229
|
)
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2019
|
|
2018
|
||||
|
Other income:
|
|
|
|
|
|
||
|
Interest income
|
$
|
1,550
|
|
|
$
|
1,678
|
|
|
Debt return on Four Corners SCR (Note 4)
|
4,844
|
|
|
2,092
|
|
||
|
Miscellaneous
|
22
|
|
|
2
|
|
||
|
Total other income
|
$
|
6,416
|
|
|
$
|
3,772
|
|
|
Other expense:
|
|
|
|
|
|
||
|
Non-operating costs
|
$
|
(2,467
|
)
|
|
$
|
(1,539
|
)
|
|
Miscellaneous
|
(1,411
|
)
|
|
(1,406
|
)
|
||
|
Total other expense
|
$
|
(3,878
|
)
|
|
$
|
(2,945
|
)
|
|
10.
|
Earnings Per Share
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2019
|
|
2018
|
||||
|
Net income attributable to common shareholders
|
$
|
17,918
|
|
|
$
|
3,221
|
|
|
Weighted average common shares outstanding — basic
|
112,337
|
|
|
112,017
|
|
||
|
Net effect of dilutive securities:
|
|
|
|
||||
|
Contingently issuable performance shares and restricted stock units
|
398
|
|
|
476
|
|
||
|
Weighted average common shares outstanding — diluted
|
112,735
|
|
|
112,493
|
|
||
|
Earnings per weighted-average common share outstanding
|
|
|
|
||||
|
Net income attributable to common shareholders — basic
|
$
|
0.16
|
|
|
$
|
0.03
|
|
|
Net income attributable to common shareholders — diluted
|
$
|
0.16
|
|
|
$
|
0.03
|
|
|
11.
|
Fair Value Measurements
|
|
|
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs (a)
(Level 3)
|
|
Other
|
|
|
|
Balance at March 31, 2019
|
||||||||||
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Risk management activities — derivative instruments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Commodity contracts
|
$
|
—
|
|
|
$
|
3,598
|
|
|
$
|
1,076
|
|
|
$
|
(3,776
|
)
|
|
(a)
|
|
$
|
898
|
|
|
Nuclear decommissioning trust:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Equity securities
|
7,547
|
|
|
—
|
|
|
—
|
|
|
2,630
|
|
|
(b)
|
|
10,177
|
|
|||||
|
U.S. commingled equity funds
|
—
|
|
|
—
|
|
|
—
|
|
|
451,229
|
|
|
(c)
|
|
451,229
|
|
|||||
|
U.S. Treasury debt
|
155,231
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
155,231
|
|
|||||
|
Corporate debt
|
—
|
|
|
108,509
|
|
|
—
|
|
|
—
|
|
|
|
|
108,509
|
|
|||||
|
Mortgage-backed debt securities
|
—
|
|
|
113,002
|
|
|
—
|
|
|
—
|
|
|
|
|
113,002
|
|
|||||
|
Municipal bonds
|
—
|
|
|
70,375
|
|
|
—
|
|
|
—
|
|
|
|
|
70,375
|
|
|||||
|
Other fixed income
|
—
|
|
|
10,786
|
|
|
—
|
|
|
—
|
|
|
|
|
10,786
|
|
|||||
|
Subtotal nuclear decommissioning trust
|
162,778
|
|
|
302,672
|
|
|
—
|
|
|
453,859
|
|
|
|
|
919,309
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Other special use funds:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Equity securities
|
11,471
|
|
|
—
|
|
|
—
|
|
|
1,563
|
|
|
(b)
|
|
13,034
|
|
|||||
|
U.S. Treasury debt
|
208,945
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
208,945
|
|
|||||
|
Municipal bonds
|
—
|
|
|
16,228
|
|
|
—
|
|
|
—
|
|
|
|
|
16,228
|
|
|||||
|
Subtotal other special use funds
|
220,416
|
|
|
16,228
|
|
|
—
|
|
|
1,563
|
|
|
|
|
238,207
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Total Assets
|
$
|
383,194
|
|
|
$
|
322,498
|
|
|
$
|
1,076
|
|
|
$
|
451,646
|
|
|
|
|
$
|
1,158,414
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Risk management activities — derivative instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Commodity contracts
|
$
|
—
|
|
|
$
|
(43,524
|
)
|
|
$
|
(6,688
|
)
|
|
$
|
2,079
|
|
|
(a)
|
|
$
|
(48,133
|
)
|
|
(a)
|
Represents counterparty netting, margin, and collateral. See Note 7.
|
|
(b)
|
Represents net pending securities sales and purchases.
|
|
(c)
|
Valued using NAV as a practical expedient and, therefore, are not classified in the fair value hierarchy.
|
|
|
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs (a)
(Level 3)
|
|
Other
|
|
|
|
Balance at December 31, 2018
|
||||||||||
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Cash equivalents
|
$
|
1,200
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
1,200
|
|
|
Risk management activities — derivative instruments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Commodity contracts
|
—
|
|
|
3,140
|
|
|
2
|
|
|
(2,029
|
)
|
|
(a)
|
|
1,113
|
|
|||||
|
Nuclear decommissioning trust:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Equity securities
|
5,203
|
|
|
—
|
|
|
—
|
|
|
2,148
|
|
|
(b)
|
|
7,351
|
|
|||||
|
U.S. commingled equity funds
|
—
|
|
|
—
|
|
|
—
|
|
|
396,805
|
|
|
(c)
|
|
396,805
|
|
|||||
|
U.S. Treasury debt
|
148,173
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
148,173
|
|
|||||
|
Corporate debt
|
—
|
|
|
96,656
|
|
|
—
|
|
|
—
|
|
|
|
|
96,656
|
|
|||||
|
Mortgage-backed debt securities
|
—
|
|
|
113,115
|
|
|
—
|
|
|
—
|
|
|
|
|
113,115
|
|
|||||
|
Municipal bonds
|
—
|
|
|
79,073
|
|
|
—
|
|
|
—
|
|
|
|
|
79,073
|
|
|||||
|
Other fixed income
|
—
|
|
|
9,961
|
|
|
—
|
|
|
—
|
|
|
|
|
9,961
|
|
|||||
|
Subtotal nuclear decommissioning trust
|
153,376
|
|
|
298,805
|
|
|
—
|
|
|
398,953
|
|
|
|
|
851,134
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Other special use funds:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Equity securities
|
45,130
|
|
|
—
|
|
|
—
|
|
|
593
|
|
|
(b)
|
|
45,723
|
|
|||||
|
U.S. Treasury debt
|
173,310
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
173,310
|
|
|||||
|
Municipal bonds
|
—
|
|
|
17,068
|
|
|
—
|
|
|
—
|
|
|
|
|
17,068
|
|
|||||
|
Subtotal other special use funds
|
218,440
|
|
|
17,068
|
|
|
—
|
|
|
593
|
|
|
|
|
236,101
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Total Assets
|
$
|
373,016
|
|
|
$
|
319,013
|
|
|
$
|
2
|
|
|
$
|
397,517
|
|
|
|
|
$
|
1,089,548
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Risk management activities — derivative instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Commodity contracts
|
$
|
—
|
|
|
$
|
(52,696
|
)
|
|
$
|
(8,216
|
)
|
|
$
|
875
|
|
|
(a)
|
|
$
|
(60,037
|
)
|
|
(a)
|
Represents counterparty netting, margin, and collateral. See Note 7.
|
|
(b)
|
Represents net pending securities sales and purchases.
|
|
(c)
|
Valued using NAV as a practical expedient and, therefore, are not classified in the fair value hierarchy.
|
|
|
March 31, 2019
Fair Value (thousands) |
|
Valuation Technique
|
|
Significant Unobservable Input
|
|
|
|
Weighted-Average
|
||||||||
|
Commodity Contracts
|
Assets
|
|
Liabilities
|
|
|
|
Range
|
|
|||||||||
|
Electricity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Forward Contracts (a)
|
$
|
382
|
|
|
$
|
5,206
|
|
|
Discounted cash flows
|
|
Electricity forward price (per MWh)
|
|
$19.77 - $67.40
|
|
$
|
50.50
|
|
|
Natural Gas:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Forward Contracts (a)
|
694
|
|
|
1,482
|
|
|
Discounted cash flows
|
|
Natural gas forward price (per MMBtu)
|
|
$1.90 - $2.97
|
|
$
|
2.46
|
|
||
|
Total
|
$
|
1,076
|
|
|
$
|
6,688
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Includes swaps and physical and financial contracts.
|
|
|
December 31, 2018
Fair Value (thousands) |
|
Valuation Technique
|
|
Significant Unobservable Input
|
|
|
|
Weighted-Average
|
||||||||
|
Commodity Contracts
|
Assets
|
|
Liabilities
|
|
|
|
Range
|
|
|||||||||
|
Electricity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Forward Contracts (a)
|
$
|
—
|
|
|
$
|
2,456
|
|
|
Discounted cash flows
|
|
Electricity forward price (per MWh)
|
|
$17.88 - $37.03
|
|
$
|
26.10
|
|
|
Natural Gas:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Forward Contracts (a)
|
2
|
|
|
5,760
|
|
|
Discounted cash flows
|
|
Natural gas forward price (per MMBtu)
|
|
$1.79 - $2.92
|
|
$
|
2.48
|
|
||
|
Total
|
$
|
2
|
|
|
$
|
8,216
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Includes swaps and physical and financial contracts.
|
|
|
|
Three Months Ended
March 31, |
|
||||||
|
Commodity Contracts
|
|
2019
|
|
2018
|
|
||||
|
Net derivative balance at beginning of period
|
|
$
|
(8,214
|
)
|
|
$
|
(18,256
|
)
|
|
|
Total net gains (losses) realized/unrealized:
|
|
|
|
|
|
|
|
||
|
Deferred as a regulatory asset or liability
|
|
(1,579
|
)
|
|
(2,322
|
)
|
|
||
|
Settlements
|
|
518
|
|
|
782
|
|
|
||
|
Transfers into Level 3 from Level 2
|
|
(2
|
)
|
|
(2,445
|
)
|
|
||
|
Transfers from Level 3 into Level 2
|
|
3,665
|
|
|
2,487
|
|
|
||
|
Net derivative balance at end of period
|
|
$
|
(5,612
|
)
|
|
$
|
(19,754
|
)
|
|
|
|
|
|
|
|
|
||||
|
Net unrealized gains included in earnings related to instruments still held at end of period
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
12.
|
Investments in Nuclear Decommissioning Trusts and Other Special Use Funds
|
|
|
March 31, 2019
|
||||||||||||||||||
|
|
Fair Value
|
|
Total
Unrealized
Gains
|
|
Total
Unrealized
Losses
|
||||||||||||||
|
Investment Type:
|
Nuclear Decommissioning Trusts
|
|
Other Special Use Funds
|
|
Total
|
|
|
||||||||||||
|
Equity securities
|
$
|
458,776
|
|
|
$
|
11,471
|
|
|
$
|
470,247
|
|
|
$
|
273,817
|
|
|
$
|
(4
|
)
|
|
Available for sale-fixed income securities
|
457,903
|
|
|
225,173
|
|
|
683,076
|
|
(a)
|
15,306
|
|
|
(2,250
|
)
|
|||||
|
Other
|
2,630
|
|
|
1,563
|
|
|
4,193
|
|
(b)
|
—
|
|
|
—
|
|
|||||
|
Total
|
$
|
919,309
|
|
|
$
|
238,207
|
|
|
$
|
1,157,516
|
|
|
$
|
289,123
|
|
|
$
|
(2,254
|
)
|
|
(a)
|
As of March 31, 2019, the amortized cost basis of these available-for-sale investments is $670 million.
|
|
(b)
|
Represents net pending securities sales and purchases.
|
|
|
December 31, 2018
|
||||||||||||||||||
|
|
Fair Value
|
|
Total
Unrealized
Gains
|
|
Total
Unrealized
Losses
|
||||||||||||||
|
Investment Type:
|
Nuclear Decommissioning Trusts
|
|
Other Special Use Funds
|
|
Total
|
|
|
||||||||||||
|
Equity securities
|
$
|
402,008
|
|
|
$
|
45,130
|
|
|
$
|
447,138
|
|
|
$
|
222,147
|
|
|
$
|
(459
|
)
|
|
Available for sale-fixed income securities
|
446,978
|
|
|
190,378
|
|
|
637,356
|
|
(a)
|
8,634
|
|
|
(6,778
|
)
|
|||||
|
Other
|
2,148
|
|
|
593
|
|
|
2,741
|
|
(b)
|
—
|
|
|
—
|
|
|||||
|
Total
|
$
|
851,134
|
|
|
$
|
236,101
|
|
|
$
|
1,087,235
|
|
|
$
|
230,781
|
|
|
$
|
(7,237
|
)
|
|
(a)
|
As of December 31, 2018, the amortized cost basis of these available-for-sale investments is $635 million.
|
|
(b)
|
Represents net pending securities sales and purchases.
|
|
|
Three Months Ended March 31,
|
||||||||||
|
|
Nuclear Decommissioning Trusts
|
|
Other Special Use Funds
|
|
Total
|
||||||
|
2019
|
|
|
|
|
|
||||||
|
Realized gains
|
$
|
1,103
|
|
|
$
|
—
|
|
|
$
|
1,103
|
|
|
Realized losses
|
(1,405
|
)
|
|
—
|
|
|
(1,405
|
)
|
|||
|
Proceeds from the sale of securities (a)
|
122,593
|
|
|
56,455
|
|
|
179,048
|
|
|||
|
2018
|
|
|
|
|
|
||||||
|
Realized gains
|
$
|
814
|
|
|
$
|
1
|
|
|
$
|
815
|
|
|
Realized losses
|
(2,047
|
)
|
|
—
|
|
|
(2,047
|
)
|
|||
|
Proceeds from the sale of securities (a)
|
130,456
|
|
|
2,555
|
|
|
133,011
|
|
|||
|
(a)
|
Proceeds are reinvested in the nuclear decommissioning trusts or other special use funds.
|
|
|
Nuclear Decommissioning Trusts (a)
|
|
Coal Reclamation Escrow Accounts
|
|
Active Union Medical Trust
|
|
Total
|
||||||||
|
Less than one year
|
$
|
26,100
|
|
|
$
|
20,085
|
|
|
$
|
40,099
|
|
|
$
|
86,284
|
|
|
1 year – 5 years
|
120,511
|
|
|
15,960
|
|
|
138,627
|
|
|
275,098
|
|
||||
|
5 years – 10 years
|
120,342
|
|
|
3,581
|
|
|
—
|
|
|
123,923
|
|
||||
|
Greater than 10 years
|
190,950
|
|
|
6,821
|
|
|
—
|
|
|
197,771
|
|
||||
|
Total
|
$
|
457,903
|
|
|
$
|
46,447
|
|
|
$
|
178,726
|
|
|
$
|
683,076
|
|
|
(a)
|
Includes certain fixed income investments that are not due at a single maturity date. These investments have been allocated within the table based on the final payment date of the instrument.
|
|
|
Pension and Other Postretirement Benefits
|
|
|
|
Derivative Instruments
|
|
|
|
Total
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Balance December 31, 2018
|
$
|
(45,997
|
)
|
|
|
|
$
|
(1,711
|
)
|
|
|
|
$
|
(47,708
|
)
|
|
Amounts reclassified from accumulated other comprehensive loss
|
879
|
|
|
(a)
|
|
328
|
|
|
(b)
|
|
1,207
|
|
|||
|
Balance March 31, 2019
|
$
|
(45,118
|
)
|
|
|
|
$
|
(1,383
|
)
|
|
|
|
$
|
(46,501
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Balance December 31, 2017
|
$
|
(42,440
|
)
|
|
|
|
$
|
(2,562
|
)
|
|
|
|
$
|
(45,002
|
)
|
|
OCI (loss) before reclassifications
|
—
|
|
|
|
|
(96
|
)
|
|
|
|
(96
|
)
|
|||
|
Amounts reclassified from accumulated other comprehensive loss
|
900
|
|
|
(a)
|
|
409
|
|
|
(b)
|
|
1,309
|
|
|||
|
Reclassification of income tax effect related to tax reform
|
(7,954
|
)
|
|
(c)
|
|
(598
|
)
|
|
(c)
|
|
(8,552
|
)
|
|||
|
Balance March 31, 2018
|
$
|
(49,494
|
)
|
|
|
|
$
|
(2,847
|
)
|
|
|
|
$
|
(52,341
|
)
|
|
(a)
|
These amounts primarily represent amortization of actuarial loss and are included in the computation of net periodic pension cost. See Note 5.
|
|
(b)
|
These amounts represent realized gains and losses and are included in the computation of fuel and purchased power costs and are subject to the PSA. See Note 7.
|
|
(c)
|
In 2018, the company adopted new accounting guidance and elected to reclassify income tax effects of the Tax Act on items within accumulated other comprehensive income to retained earnings.
|
|
|
Pension and Other Postretirement Benefits
|
|
|
|
Derivative Instruments
|
|
|
|
Total
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Balance December 31, 2018
|
$
|
(25,396
|
)
|
|
|
|
$
|
(1,711
|
)
|
|
|
|
$
|
(27,107
|
)
|
|
Amounts reclassified from accumulated other comprehensive loss
|
752
|
|
|
(a)
|
|
328
|
|
|
(b)
|
|
1,080
|
|
|||
|
Balance March 31, 2019
|
$
|
(24,644
|
)
|
|
|
|
$
|
(1,383
|
)
|
|
|
|
$
|
(26,027
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Balance December 31, 2017
|
$
|
(24,421
|
)
|
|
|
|
$
|
(2,562
|
)
|
|
|
|
$
|
(26,983
|
)
|
|
OCI (loss) before reclassifications
|
—
|
|
|
|
|
(96
|
)
|
|
|
|
(96
|
)
|
|||
|
Amounts reclassified from accumulated other comprehensive loss
|
857
|
|
|
(a)
|
|
409
|
|
|
(b)
|
|
1,266
|
|
|||
|
Reclassification of income tax effect related to tax reform
|
(4,440
|
)
|
|
(c)
|
|
(598
|
)
|
|
(c)
|
|
(5,038
|
)
|
|||
|
Balance March 31, 2018
|
$
|
(28,004
|
)
|
|
|
|
$
|
(2,847
|
)
|
|
|
|
$
|
(30,851
|
)
|
|
(a)
|
These amounts primarily represent amortization of actuarial loss and are included in the computation of net periodic pension cost. See Note 5.
|
|
(b)
|
These amounts represent realized gains and losses and are included in the computation of fuel and purchased power costs and are subject to the PSA. See Note 7.
|
|
(c)
|
In 2018, the company adopted new accounting guidance and elected to reclassify income tax effects of the Tax Act on items within accumulated other comprehensive income to retained earnings.
|
|
15.
|
Income Taxes
|
|
16.
|
Leases
|
|
|
|
Three Months Ended
March 31, 2019 |
||||||||||
|
|
|
Purchased Power Lease Contracts
|
|
Land, Property & Equipment Leases
|
|
Total
|
||||||
|
Operating lease cost
|
|
$
|
—
|
|
|
$
|
4,348
|
|
|
$
|
4,348
|
|
|
Variable lease cost
|
|
17,290
|
|
|
—
|
|
|
17,290
|
|
|||
|
Total lease cost
|
|
$
|
17,290
|
|
|
$
|
4,348
|
|
|
$
|
21,638
|
|
|
|
|
March 31, 2019
|
||||||||||
|
Year
|
|
Purchased Power Lease Contracts
|
|
Land, Property & Equipment Leases
|
|
Total
|
||||||
|
2019 (remaining nine months of 2019)
|
|
$
|
54,499
|
|
|
$
|
10,539
|
|
|
$
|
65,038
|
|
|
2020
|
|
—
|
|
|
12,424
|
|
|
12,424
|
|
|||
|
2021
|
|
—
|
|
|
9,585
|
|
|
9,585
|
|
|||
|
2022
|
|
—
|
|
|
6,621
|
|
|
6,621
|
|
|||
|
2023
|
|
—
|
|
|
5,496
|
|
|
5,496
|
|
|||
|
Thereafter
|
|
—
|
|
|
41,618
|
|
|
41,618
|
|
|||
|
Total lease commitments
|
|
54,499
|
|
|
86,283
|
|
|
140,782
|
|
|||
|
Less imputed interest
|
|
814
|
|
|
20,829
|
|
|
21,643
|
|
|||
|
Total lease liabilities
|
|
$
|
53,685
|
|
|
$
|
65,454
|
|
|
$
|
119,139
|
|
|
|
|
December 31, 2018
|
||||||||||
|
Year
|
|
Purchased Power Lease Contracts
|
|
Land, Property & Equipment Leases
|
|
Total
|
||||||
|
2019
|
|
$
|
54,499
|
|
|
$
|
13,747
|
|
|
$
|
68,246
|
|
|
2020
|
|
—
|
|
|
12,428
|
|
|
12,428
|
|
|||
|
2021
|
|
—
|
|
|
9,478
|
|
|
9,478
|
|
|||
|
2022
|
|
—
|
|
|
6,513
|
|
|
6,513
|
|
|||
|
2023
|
|
—
|
|
|
5,359
|
|
|
5,359
|
|
|||
|
Thereafter
|
|
—
|
|
|
42,236
|
|
|
42,236
|
|
|||
|
Total future lease commitments
|
|
$
|
54,499
|
|
|
$
|
89,761
|
|
|
$
|
144,260
|
|
|
|
March 31, 2019
|
||
|
Weighted average remaining lease term
|
8 years
|
|
|
|
Weighted average discount rate
|
3.86
|
%
|
|
|
|
|
||
|
|
Three Months Ended March 31, 2019
|
||
|
Cash paid for amounts included in the measurement of lease liabilities - operating cash flows (dollars in thousands):
|
$
|
3,087
|
|
|
|
|
||
|
|
Net Capacity in Operation
(MW)
|
|
Net Capacity Planned / Under
Development (MW)
|
|
||
|
Total APS Owned: Solar
|
238
|
|
|
—
|
|
|
|
Purchased Power Agreements:
|
|
|
|
|
|
|
|
Solar
|
310
|
|
|
—
|
|
|
|
Solar + Energy Storage
|
—
|
|
|
50
|
|
|
|
Wind
|
289
|
|
|
—
|
|
|
|
Geothermal
|
10
|
|
|
—
|
|
|
|
Biomass
|
14
|
|
|
—
|
|
|
|
Biogas
|
6
|
|
|
—
|
|
|
|
Total Purchased Power Agreements
|
629
|
|
|
50
|
|
|
|
Total Distributed Energy: Solar (a)
|
878
|
|
|
30
|
|
(b)
|
|
Total Renewable Portfolio
|
1,745
|
|
|
80
|
|
|
|
(b)
|
Applications received by APS that are not yet installed and online.
|
|
|
Three Months Ended
March 31, |
|
|
||||||||
|
|
2019
|
|
2018
|
|
Net Change
|
||||||
|
|
(dollars in millions)
|
||||||||||
|
Regulated Electricity Segment:
|
|
|
|
|
|
|
|
|
|||
|
Operating revenues less fuel and purchased power expenses
|
$
|
509
|
|
|
$
|
489
|
|
|
$
|
20
|
|
|
Operations and maintenance
|
(245
|
)
|
|
(260
|
)
|
|
15
|
|
|||
|
Depreciation and amortization
|
(149
|
)
|
|
(144
|
)
|
|
(5
|
)
|
|||
|
Taxes other than income taxes
|
(55
|
)
|
|
(53
|
)
|
|
(2
|
)
|
|||
|
Pension and other postretirement non-service credits - net
|
5
|
|
|
13
|
|
|
(8
|
)
|
|||
|
All other income and expenses, net
|
14
|
|
|
15
|
|
|
(1
|
)
|
|||
|
Interest charges, net of allowance for borrowed funds used during construction
|
(54
|
)
|
|
(52
|
)
|
|
(2
|
)
|
|||
|
Income taxes
|
(2
|
)
|
|
2
|
|
|
(4
|
)
|
|||
|
Less income related to noncontrolling interests (Note 6)
|
(5
|
)
|
|
(5
|
)
|
|
—
|
|
|||
|
Regulated electricity segment income
|
18
|
|
|
5
|
|
|
13
|
|
|||
|
All other
|
—
|
|
|
(2
|
)
|
|
2
|
|
|||
|
Net Income Attributable to Common Shareholders
|
$
|
18
|
|
|
$
|
3
|
|
|
$
|
15
|
|
|
|
Increase (Decrease)
|
||||||||||
|
|
Operating
revenues
|
|
Fuel and
purchased
power expenses
|
|
Net change
|
||||||
|
|
(dollars in millions)
|
||||||||||
|
Effects of weather
|
$
|
28
|
|
|
$
|
7
|
|
|
$
|
21
|
|
|
Change in residential rate design and seasonal rates (a)
|
13
|
|
|
—
|
|
|
13
|
|
|||
|
Lower transmission revenues (Note 4)
|
(8
|
)
|
|
—
|
|
|
(8
|
)
|
|||
|
Refunds due to lower Federal corporate income tax rate (Note 4)
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
|||
|
Lower renewable energy regulatory surcharges and higher purchased power, partially offset by operations and maintenance costs
|
(5
|
)
|
|
1
|
|
|
(6
|
)
|
|||
|
Changes in net fuel and purchased power costs, including off-system sales margins and related deferrals
|
17
|
|
|
18
|
|
|
(1
|
)
|
|||
|
Higher retail revenue due to higher customer growth and changes in customer usage patterns, partially offset by the impacts of energy efficiency and distributed generation
|
4
|
|
|
2
|
|
|
2
|
|
|||
|
Miscellaneous items, net
|
4
|
|
|
1
|
|
|
3
|
|
|||
|
Total
|
$
|
49
|
|
|
$
|
29
|
|
|
$
|
20
|
|
|
•
|
A decrease of $8 million in fossil generation primarily due to lower planned outages; and
|
|
•
|
A decrease of $7 million related to costs for renewable energy and similar regulatory programs, which is partially offset by operating revenues and purchased power.
|
|
|
Three Months Ended
March 31, |
|
Net
|
||||||||
|
|
2019
|
|
2018
|
|
Change
|
||||||
|
Net cash flow provided by operating activities
|
$
|
173
|
|
|
$
|
167
|
|
|
$
|
6
|
|
|
Net cash flow used for investing activities
|
(254
|
)
|
|
(361
|
)
|
|
107
|
|
|||
|
Net cash flow provided by financing activities
|
81
|
|
|
196
|
|
|
(115
|
)
|
|||
|
Net change in cash and cash equivalents
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
(2
|
)
|
|
|
Three Months Ended
March 31, |
|
Net
|
||||||||
|
|
2019
|
|
2018
|
|
Change
|
||||||
|
Net cash flow provided by operating activities
|
$
|
188
|
|
|
$
|
177
|
|
|
$
|
11
|
|
|
Net cash flow used for investing activities
|
(260
|
)
|
|
(355
|
)
|
|
95
|
|
|||
|
Net cash flow provided by financing activities
|
72
|
|
|
178
|
|
|
(106
|
)
|
|||
|
Net change in cash and cash equivalents
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Estimated for the Year Ended
December 31,
|
||||||||||
|
|
2019
|
|
2020
|
|
2021
|
||||||
|
APS
|
|
|
|
|
|
|
|
|
|||
|
Generation:
|
|
|
|
|
|
|
|
|
|||
|
Clean:
|
|
|
|
|
|
||||||
|
Nuclear Fuel
|
$
|
71
|
|
|
$
|
64
|
|
|
$
|
64
|
|
|
Nuclear Generation
|
70
|
|
|
68
|
|
|
67
|
|
|||
|
Renewables (a)
|
16
|
|
|
18
|
|
|
3
|
|
|||
|
New Resources (b)
|
90
|
|
|
182
|
|
|
291
|
|
|||
|
Environmental
|
31
|
|
|
41
|
|
|
71
|
|
|||
|
New Gas Generation
|
16
|
|
|
—
|
|
|
—
|
|
|||
|
Other Generation
|
119
|
|
|
117
|
|
|
105
|
|
|||
|
Distribution
|
500
|
|
|
455
|
|
|
546
|
|
|||
|
Transmission
|
199
|
|
|
171
|
|
|
197
|
|
|||
|
Other (c)
|
125
|
|
|
150
|
|
|
128
|
|
|||
|
Total APS
|
$
|
1,237
|
|
|
$
|
1,266
|
|
|
$
|
1,472
|
|
|
(a)
|
Primarily APS Solar Communities program
|
|
(b)
|
Projected future generation resources, which may include energy storage, renewable projects, and other clean energy projects
|
|
(c)
|
Primarily information systems and facilities projects
|
|
|
Moody’s
|
|
Standard & Poor’s
|
|
Fitch
|
|
Pinnacle West
|
|
|
|
|
|
|
Corporate credit rating
|
A3
|
|
A-
|
|
A-
|
|
Senior unsecured
|
A3
|
|
BBB+
|
|
A-
|
|
Commercial paper
|
P-2
|
|
A-2
|
|
F2
|
|
Outlook
|
Stable
|
|
Stable
|
|
Stable
|
|
|
|
|
|
|
|
|
APS
|
|
|
|
|
|
|
Corporate credit rating
|
A2
|
|
A-
|
|
A-
|
|
Senior unsecured
|
A2
|
|
A-
|
|
A
|
|
Commercial paper
|
P-1
|
|
A-2
|
|
F2
|
|
Outlook
|
Stable
|
|
Stable
|
|
Stable
|
|
•
|
ASU 2016-13: Financial Instruments, Measurement of Credit Losses
|
|
•
|
ASU 2018-15: Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2019
|
|
2018
|
||||
|
Mark-to-market of net positions at beginning of period
|
$
|
(58
|
)
|
|
$
|
(91
|
)
|
|
Decrease (Increase) in regulatory asset/liability
|
12
|
|
|
(21
|
)
|
||
|
Recognized in OCI:
|
|
|
|
||||
|
Mark-to-market losses realized during the period
|
—
|
|
|
—
|
|
||
|
Change in valuation techniques
|
—
|
|
|
—
|
|
||
|
Mark-to-market of net positions at end of period
|
$
|
(46
|
)
|
|
$
|
(112
|
)
|
|
Source of Fair Value
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Total
fair
value
|
||||||||||||
|
Observable prices provided by other external sources
|
|
$
|
(23
|
)
|
|
$
|
(8
|
)
|
|
$
|
(6
|
)
|
|
$
|
(3
|
)
|
|
$
|
—
|
|
|
$
|
(40
|
)
|
|
Prices based on unobservable inputs
|
|
(4
|
)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
||||||
|
Total by maturity
|
|
$
|
(27
|
)
|
|
$
|
(10
|
)
|
|
$
|
(6
|
)
|
|
$
|
(3
|
)
|
|
$
|
—
|
|
|
$
|
(46
|
)
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||||||
|
|
Gain (Loss)
|
|
Gain (Loss)
|
||||||||||||
|
|
Price Up 10%
|
|
Price Down 10%
|
|
Price Up 10%
|
|
Price Down 10%
|
||||||||
|
Mark-to-market changes reported in:
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Regulatory asset (liability) (a)
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Electricity
|
$
|
5
|
|
|
$
|
(5
|
)
|
|
$
|
1
|
|
|
$
|
(1
|
)
|
|
Natural gas
|
45
|
|
|
(45
|
)
|
|
44
|
|
|
(44
|
)
|
||||
|
Total
|
$
|
50
|
|
|
$
|
(50
|
)
|
|
$
|
45
|
|
|
$
|
(45
|
)
|
|
(a)
|
These contracts are economic hedges of our forecasted purchases of natural gas and electricity. The impact of these hypothetical price movements would substantially offset the impact that these same price movements would have on the physical exposures being hedged. To the extent the amounts are eligible for inclusion in the PSA, the amounts are recorded as either a regulatory asset or liability.
|
|
Exhibit No.
|
|
Registrant(s)
|
|
Description
|
|
|
|
|
|
|
|
10.1
|
|
Pinnacle West APS
|
|
|
|
|
|
|
|
|
|
10.2
|
|
Pinnacle West
|
|
|
|
|
|
|
|
|
|
10.3
|
|
Pinnacle West
|
|
|
|
|
|
|
|
|
|
31.1
|
|
Pinnacle West
|
|
|
|
|
|
|
|
|
|
31.2
|
|
Pinnacle West
|
|
|
|
|
|
|
|
|
|
31.3
|
|
APS
|
|
|
|
|
|
|
|
|
|
31.4
|
|
APS
|
|
|
|
|
|
|
|
|
|
32.1*
|
|
Pinnacle West
|
|
|
|
|
|
|
|
|
|
32.2*
|
|
APS
|
|
|
|
|
|
|
|
|
|
101.INS
|
|
Pinnacle West
APS
|
|
XBRL Instance Document - the instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
|
|
|
|
|
|
|
|
101.SCH
|
|
Pinnacle West
APS
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
|
|
101.CAL
|
|
Pinnacle West
APS
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
|
101.LAB
|
|
Pinnacle West
APS
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
|
|
|
101.PRE
|
|
Pinnacle West
APS
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
|
101.DEF
|
|
Pinnacle West
APS
|
|
XBRL Taxonomy Definition Linkbase Document
|
|
Exhibit No.
|
|
Registrant(s)
|
|
Description
|
|
Previously Filed as Exhibit(1)
|
|
Date Filed
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.1
|
|
|
Pinnacle West
|
|
|
3.1 to Pinnacle West/APS February 28, 2017 Form 8-K Report, File Nos. 1-8962 and 1-4473
|
|
2/28/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.2
|
|
|
Pinnacle West
|
|
|
3.1 to Pinnacle West/APS June 30, 2008 Form 10-Q Report, File Nos. 1-8962 and 1-4473
|
|
8/7/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.3
|
|
|
APS
|
|
Articles of Incorporation, restated as of May 25, 1988
|
|
4.2 to APS’s Form S-3 Registration Nos. 33-33910 and 33-55248 by means of September 24, 1993 Form 8-K Report, File No. 1-4473
|
|
9/29/1993
|
|
|
|
|
|
|
|
|
|
|
|
|
3.4
|
|
|
APS
|
|
|
3.1 to Pinnacle West/APS May 22, 2012 Form 8-K Report, File Nos. 1-8962 and 1-4473
|
|
5/22/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.5
|
|
|
APS
|
|
|
3.4 to Pinnacle West/APS December 31, 2008 Form 10-K, File Nos. 1-8962 and 1-4473
|
|
2/20/2009
|
|
|
|
|
PINNACLE WEST CAPITAL CORPORATION
|
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
|
|
|
|
|
Dated:
|
May 1, 2019
|
By:
|
/s/ James R. Hatfield
|
|
|
|
|
James R. Hatfield
|
|
|
|
|
Executive Vice President and
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
(Principal Financial Officer and
|
|
|
|
|
Officer Duly Authorized to sign this Report)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ARIZONA PUBLIC SERVICE COMPANY
|
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
|
|
|
|
|
Dated:
|
May 1, 2019
|
By:
|
/s/ James R. Hatfield
|
|
|
|
|
James R. Hatfield
|
|
|
|
|
Executive Vice President and
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
(Principal Financial Officer and
|
|
|
|
|
Officer Duly Authorized to sign this Report)
|
|
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
|
1
|
|
Section 1.01
|
Certain Defined Terms 1
|
|
Section 1.02
|
Other Interpretive Provisions 18
|
|
Section 1.03
|
Accounting Terms 19
|
|
Section 1.04
|
Rounding 20
|
|
Section 1.05
|
Times of Day 20
|
|
ARTICLE II AMOUNTS AND TERMS OF THE LOANS
|
20
|
|
Section 2.01
|
The Loans 20
|
|
Section 2.02
|
Making the Loans 20
|
|
Section 2.03
|
Fees 22
|
|
Section 2.04
|
Repayment of Loans 22
|
|
Section 2.05
|
Interest on Loans 22
|
|
Section 2.06
|
Interest Rate Determination 23
|
|
Section 2.07
|
Optional Conversion of Loans 24
|
|
Section 2.08
|
Prepayments of Loans 25
|
|
Section 2.09
|
Increased Costs 25
|
|
Section 2.10
|
Illegality 27
|
|
Section 2.11
|
Payments and Computations 27
|
|
Section 2.12
|
Taxes 28
|
|
Section 2.13
|
Sharing of Payments, Etc 32
|
|
Section 2.14
|
Evidence of Debt 33
|
|
Section 2.15
|
Use of Proceeds 34
|
|
Section 2.16
|
Affected Lenders 34
|
|
Section 2.17
|
Replacement of Lenders 34
|
|
ARTICLE III CONDITIONS PRECEDENT
|
35
|
|
Section 3.01
|
Conditions Precedent to Effectiveness 35
|
|
Section 3.02
|
Determinations Under Section 3.01 37
|
|
ARTICLE IV REPRESENTATIONS AND WARRANTIES
|
37
|
|
Section 4.01
|
Representations and Warranties of the Borrower 37
|
|
ARTICLE V COVENANTS OF THE BORROWER
|
41
|
|
Section 5.01
|
Affirmative Covenants 41
|
|
Section 5.02
|
Negative Covenants 45
|
|
Section 5.03
|
Financial Covenant 47
|
|
ARTICLE VI EVENTS OF DEFAULT
|
47
|
|
Section 6.01
|
Events of Default 47
|
|
ARTICLE VII THE AGENT
|
49
|
|
Section 7.01
|
Appointment and Authority 49
|
|
Section 7.02
|
Rights as a Lender 50
|
|
Section 7.03
|
Exculpatory Provisions 50
|
|
Section 7.04
|
Reliance by Agent 51
|
|
Section 7.05
|
Delegation of Duties 51
|
|
Section 7.06
|
Resignation of Agent 51
|
|
Section 7.07
|
Non-Reliance on Agent and Other Lenders 52
|
|
Section 7.08
|
No Other Duties, Etc 52
|
|
Section 7.09
|
Certain ERISA Matters. 52
|
|
ARTICLE VIII MISCELLANEOUS
|
54
|
|
Section 8.01
|
Amendments, Etc 54
|
|
Section 8.02
|
Notices, Etc. 55
|
|
Section 8.03
|
No Waiver; Cumulative Remedies; Enforcement 57
|
|
Section 8.04
|
Costs and Expenses; Indemnity; Damage Waiver 58
|
|
Section 8.05
|
Right of Set-off 59
|
|
Section 8.06
|
Effectiveness; Binding Effect 60
|
|
Section 8.07
|
Successors and Assigns 60
|
|
Section 8.08
|
Confidentiality 64
|
|
Section 8.09
|
Governing Law 64
|
|
Section 8.10
|
Counterparts; Integration 64
|
|
Section 8.11
|
Jurisdiction, Etc. 64
|
|
Section 8.12
|
Payments Set Aside 65
|
|
Section 8.13
|
Patriot Act and Beneficial Ownership Regulation 65
|
|
Section 8.14
|
Waiver of Jury Trial 65
|
|
Section 8.15
|
No Advisory or Fiduciary Responsibility 65
|
|
Section 8.16
|
Survival of Representations and Warranties 66
|
|
Section 8.17
|
Severability 66
|
|
Section 8.18
|
Acknowledgement and Consent to Bail-In of EEA Financial Institutions 67
|
|
|
ARIZONA PUBLIC SERVICE COMPANY
|
|
|
|
|
|
By: /s/ Lee R. Nickloy
|
|
|
Name: Lee R. Nickloy
|
|
|
Title: Vice President and Treasurer
|
|
|
|
|
ADMINISTRATIVE AGENT:
|
SUNTRUST BANK, as Agent and a Lender
|
|
|
|
|
|
By: /s/ Arize Agumadu
|
|
|
Name: Arize Agumadu
|
|
|
Title: Vice President
|
|
|
|
|
LENDERS:
|
TD BANK, N.A., as a Lender
|
|
|
|
|
|
By: /s/ Vijay Prasad
|
|
|
Name: Vijay Prasad
|
|
|
Title: Senior Vice President
|
|
|
|
|
|
U.S. BANK NATIONAL ASSOCIATION, as a Lender
|
|
|
|
|
|
By: /s/ Michael E. Temnick
|
|
|
Name: Michael E. Temnick
|
|
|
Title: Vice President
|
|
|
|
|
|
THE BANK OF NOVA SCOTIA, as a Lender
|
|
|
|
|
|
By: /s/ David Dewar
|
|
|
Name: David Dewar
|
|
|
Title: Director
|
|
|
|
|
Lender
|
Commitment
|
Ratable Share
|
|
SunTrust Bank
|
$50,000,000
|
25.00%
|
|
TD Bank, N.A.
|
$50,000,000
|
25.00%
|
|
U.S. Bank National Association
|
$50,000,000
|
25.00%
|
|
The Bank of Nova Scotia
|
$50,000,000
|
25.00%
|
|
TOTAL
|
$200,000,000
|
100%
|
|
|
|
|
|
1.
|
Bixco, Inc.
|
|
2.
|
Axiom Power Solutions, Inc.
|
|
3.
|
PWE Newco, Inc.
|
|
$________
|
February 26, 2019
|
|
ARIZONA PUBLIC SERVICE COMPANY
|
|
By:_________________________________
Name: Title: |
|
Date
|
Amount of Loan
|
Amount of Principal Paid or Prepaid
|
Unpaid Principal Balance
|
Notation
Made By |
|
|
|
|
|
|
|
(i)
|
The Business Day of the Initial Borrowing is February 26, 2019.
|
|
(ii)
|
The Type of Loans comprising the Initial Borrowing is [Base Rate Loans] [Eurodollar Rate Loans].
|
|
(iii)
|
The aggregate amount of the Initial Borrowing is $200,000,000.
|
|
[(iv)
|
The initial Interest Period for each Eurodollar Rate Loan made as part of the Initial Borrowing is [one week][[__] month[s]].]
|
|
1.
|
This Notice of Initial Borrowing is irrevocable.
|
|
2.
|
The Borrower shall indemnify each Lender against any loss (excluding loss of anticipated profits), cost or expense incurred by such Lender as a result of any failure by the Borrower (a) to execute and deliver the Term Loan Agreement on or before February 26, 2019, (b) to fulfill the applicable conditions set forth in Article III of the Term Loan Agreement on February 26, 2019 or (c) to otherwise borrow the Eurodollar Rate Loans requested by the Borrower in this Notice of Initial Borrowing on February 26, 2019, in each case in accordance with Section 8.04(e) of the Term Loan Agreement (the terms of which Section are hereby incorporated by reference into this Notice of Initial Borrowing to the same extent and with the same force as if fully set forth herein).
|
|
3.
|
The terms of paragraphs 1 and 2 above are not conditioned upon the execution and delivery by the Borrower, the Agent or the Lenders of the Term Loan Agreement.]
|
|
1.
|
Assignor: ________________________________
|
|
2.
|
Assignee: ________________________________
|
|
3.
|
Borrower: Arizona Public Service Company
|
|
4.
|
Agent: SunTrust Bank, as the agent under the Term Loan Agreement
|
|
5.
|
Term Loan Agreement: Term Loan Agreement dated as of February 26, 2019, by and among the Borrower, the Lenders party thereto, the Agent and the other agents party thereto.
|
|
6.
|
Assigned Interest:
|
|
Aggregate Principal Amount
of Loans of all Lenders |
Principal Amount of Loans Assigned
|
Percentage Assigned of Aggregate Principal Amount of Loans Outstanding
|
CUSIP Number
|
|
|
|
|
|
|
$____________
|
$____________
|
___________%
|
|
|
ARIZONA PUBLIC SERVICE COMPANY
|
|
|
|
|
|
|
|
|
By ______________________________
|
|
|
|
Name:
|
|
|
Title:
|
|
A.
|
The Board of Directors of the Company (the “Board of Directors”) has adopted, and the shareholders of the Company have approved, the Pinnacle West Capital Corporation 2012 Long-Term Incentive Plan (the “Plan”), pursuant to which Restricted Stock Units and Dividend Equivalents may be granted to employees of the Company and its subsidiaries.
|
|
B.
|
The Company desires to grant to Employee Restricted Stock Units and Dividend Equivalents under the terms of the Plan.
|
|
C.
|
Pursuant to the Plan, the Company and Employee agree as follows:
|
|
1.
|
Grant of Award. Pursuant to action of the Committee which was taken on the Date of Grant, the Company grants to Employee ___________ ( ) Restricted Stock Units and related Dividend Equivalents.
|
|
2.
|
Award Subject to Plan. This Restricted Stock Unit Award and the related Dividend Equivalent Award are granted under and are expressly subject to all of the terms and provisions of the Plan, which terms are incorporated herein by reference, and this Award Agreement. In the event of any conflict between the terms and conditions of this Award Agreement and the Plan, the provisions of the Plan shall control.
|
|
3.
|
Vesting of Restricted Stock Units.
|
|
(a)
|
Regular Vesting. The Restricted Stock Units granted pursuant to Section 1 will vest and no longer be subject to the restrictions of and forfeiture under this Award Agreement on the following dates (each a “Vesting Date”) and as otherwise set forth in this Section 3:
|
|
i.
|
____ Restricted Stock Units will vest on _______________;
|
|
ii.
|
____ Restricted Stock Units will vest on _______________;
|
|
iii.
|
____ Restricted Stock Units will vest on _______________; and
|
|
iv.
|
The remaining ____ Restricted Stock Units will vest on _______________.
|
|
(b)
|
Normal or Early Retirement, Death or Disability.
|
|
i.
|
Provided that Employee either qualifies for “Early Retirement” or “Normal Retirement”, as defined in the Pinnacle West Capital Corporation
|
|
ii.
|
The Restricted Stock Units will fully vest and no longer be subject to the restrictions of and forfeiture under this Award Agreement upon Employee’s Termination of Employment which constitutes an Early Retirement or a Normal Retirement.
|
|
(c)
|
Late Career Recipient. If, at the time of Employee’s death, Disability or retirement, Employee has reached sixty (60) years of age and has been credited with at least five (5) Years of Service, as defined under the Retirement Plan, and does not otherwise meet the criteria for Early Retirement or Normal Retirement under the Retirement Plan, Employee shall be treated for purposes of this Agreement as a “Late Career Recipient.” Upon the date of a Late Career Recipient’s retirement (the “Effective Date”), a portion of Employee’s unvested Restricted Stock Units that would have vested on the next Vesting Date will vest on a straight pro-rata basis based on the number of days elapsed between the last Vesting Date (or, if a Vesting Date has not yet occurred, the Date of Grant) and the Effective Date. Payment will be made on the next Vesting Date following the Effective Date in accordance with Section 4(a). No fractional Stock shall be issued. If the Stock payout results in a fractional share of one-half or greater, such fraction will be increased to provide for the issuance of a full share of Stock.
|
|
(d)
|
Termination Without Cause. In the event Employee’s employment is terminated by the Company without cause, the Chief Executive Officer of the Company (the “CEO”) may determine in his discretion if, to what extent, and when, any unvested portion of the Restricted Stock Units granted pursuant to this Award should vest; provided, however, that (i) any vesting of unvested Restricted Stock Units pursuant to this Section 3(d) shall be approved by the Chair of the Committee, and (ii) nothing herein shall obligate the CEO to exercise his discretion to cause any unvested Restricted Stock Units to vest.
|
|
(e)
|
Termination For Cause. Notwithstanding any other provision in this Section 3, in the event Employee’s employment is terminated for Cause, then regardless of Employee’s retirement, Early Retirement, Normal Retirement, death or Disability, Employee shall forfeit the right to receive any cash payment or Stock hereunder that Employee would otherwise be entitled to receive following his or her date of termination. For purposes only of this Section 3(e), “Cause” means (A) embezzlement, theft, fraud, deceit and/or dishonesty by the Employee involving the property, business or affairs of the Company or any of its subsidiaries, or (B) an act of moral turpitude which in the sole judgment of the CEO reflects adversely on the business or reputation of the Company or any of its subsidiaries or negatively affects any of the Company’s or any of its subsidiaries’ employees or customers.
|
|
(f)
|
Disability. “Disability” has the meaning set forth for such term in the Retirement Plan.
|
|
4.
|
Payment.
|
|
(a)
|
Time and Form of Payment. When a Restricted Stock Unit vests in accordance with Section 3 above, Employee (or his or her estate) shall receive in exchange
|
|
(b)
|
Election of Form of Payment. No later than ___________, Employee must elect to receive payment for Employee’s vested Restricted Stock Units and Dividend Equivalents in (i) fully transferable shares of Stock, (ii) 50% in cash and 50% in fully transferrable shares of Stock or (iii) 100% in cash by completing and returning to the Company the election form attached to this Agreement. In the absence of a timely election by Employee, Employee will receive payment for the vested Restricted Stock Units and Dividend Equivalents in fully transferable shares of Stock.
|
|
(c)
|
Dividend Equivalents. In satisfaction of the Dividend Equivalents Award made pursuant to Section 1, at the time of the Company’s delivery of payment pursuant to Section 3 or Section 4(a), the Company also will deliver to Employee a payment equal to the amount of dividends, if any, that Employee would have received if Employee had directly owned the Stock to which the Restricted Stock Units relate from the Date of Grant to the applicable Vesting Date, plus interest on such amount at the rate of 5 percent compounded quarterly. Pursuant to the election filed by the Employee pursuant to Section 4(b), payment for the Dividend Equivalents and interest will be made in (i) fully transferrable shares of Stock, (ii) 50% in cash and 50% in fully transferrable shares of Stock or (iii) 100% in cash. The number of shares of Stock distributed to Employee will be determined by dividing the amount of the Dividend Equivalents and interest by the Fair Market Value of one share of Stock as of the applicable Vesting Date. No fractional Stock shall be issued. If the Stock payout results in a fractional share of one-half or greater, such fraction will be increased to provide for the issuance of a full share of Stock.
|
|
(d)
|
Impact on Retirement Plans. The value of the shares of Stock distributed upon payment for the Restricted Stock Units and Dividend Equivalents will be disregarded for purposes of calculating the amount of Employee’s benefit under any Company retirement plans.
|
|
5.
|
Termination of Award. Except as otherwise provided in Section 3 above or in Article 15 of the Plan, in the event of the termination of Employee’s employment with the Company or any of its subsidiaries, whether due to voluntary or involuntary termination, retirement, death, Disability or otherwise, Employee’s right to vest in any additional Restricted Stock
|
|
6.
|
Section 409A Compliance. If the Company concludes, in the exercise of its discretion, that this Award is subject to Section 409A of the Code, the Plan and this Award Agreement shall be administered in compliance with Section 409A and each provision of this Award Agreement and the Plan shall be interpreted to comply with Section 409A. If the Company concludes, in the exercise of its discretion, that this Award is not subject to Section 409A, but, instead, is eligible for the short-term deferral exception to the requirements of Section 409A, the Plan and this Award Agreement shall be administered to comply with the requirements of the short-term deferral exception to the requirements of Section 409A and each provision of this Award Agreement and the Plan shall be interpreted to comply with the requirements of such exception. In either event, Employee does not have any right to make any election regarding the time or form of any payment due under this Award Agreement other than the election described in Section 4(b).
|
|
7.
|
Tax Withholding. Employee is responsible for any and all federal, state, and local income, payroll or other tax obligations or withholdings (collectively, the “Taxes”) arising out of this Award. Employee shall pay any and all Taxes due in connection with a payout of Stock or cash hereunder by having the Company withhold cash or shares of Stock from such payout.
|
|
8.
|
Continued Employment. Nothing in the Plan or this Award Agreement shall be interpreted to interfere with or limit in any way the right of the Company or its subsidiaries to terminate Employee’s employment or services at any time. In addition, nothing in the Plan or this Award Agreement shall be interpreted to confer upon Employee the right to continue in the employ or service of the Company or its subsidiaries.
|
|
9.
|
Confidentiality. During Employee’s employment and after termination thereof for any reason, Employee agrees that Employee will not, directly or indirectly, in one or a series of transactions, disclose to any person, or use or otherwise exploit for Employee’s own benefit or for the benefit of anyone other than the Company or any of its Affiliates any Confidential Information (as hereinafter defined), whether prepared by Employee or not; provided, however, that during the term of Employee’s employment, any Confidential Information may be disclosed (i) to officers, representatives, employees and agents of the Company and its Affiliates who need to know such Confidential Information in order to perform the services or conduct the operations required or expected of them in the business, and (ii) in good faith by Employee in connection with the performance of Employee’s job duties to persons who are authorized to receive such information by the Company or its Affiliates. Employee shall have no obligation to keep confidential any Confidential Information, if and to the extent disclosure of any such information is specifically required by law; provided, however, that in the event disclosure is required by applicable law, Employee shall provide the Company with prompt notice of such requirement, prior to making any disclosure, so that it may seek an appropriate protective order.
|
|
10.
|
Restrictive Covenants.
|
|
(a)
|
Non-Competition. Employee agrees that for a period of 12 months following any Termination of Employment voluntarily by Employee (other than due to Disability), Employee shall not, without the prior written consent of the Company’s General Counsel, participate, whether as a consultant, employee, contractor, partner, owner (ownership of less than 5% of the outstanding stock of a publicly traded company will not be considered ownership under this provision), co-owner, or otherwise, with any business, corporation, group, entity or individual that is or intends to be engaged in the business activity of supplying electricity in any area of Arizona for which the Company or its Affiliates is authorized to supply electricity.
|
|
(b)
|
Employee Non-Solicitation. Employee agrees that for a period of 12 months following Employee’s Termination of Employment for any reason, Employee will not encourage, induce, or otherwise solicit, or actively assist any other person or organization to encourage, induce or otherwise solicit, directly or indirectly, any employee of the Company or any of its Affiliates to terminate his or her employment with the Company or its Affiliates, or otherwise interfere with the advantageous business relationship of the Company and its Affiliates with their employees.
|
|
(c)
|
[No Pledging or Hedging. Employee agrees that during his or her term of employment and for a period of 90 days thereafter, Employee will not pledge, margin, hypothecate, hedge, or otherwise grant an economic interest in any shares of Company stock received by Employee pursuant to this Award (net of shares sold or surrendered to meet tax withholding or exercise requirements). This restriction shall extend to the purchase or creation of any short sales, zero-cost collars, forward sales contracts, puts, calls, options or other derivative securities in respect of any shares of Company stock.]
|
|
(d)
|
Remedies. If Employee fails to comply with Sections 9, 10(a), [or] 10(b) [or] [10(c)] in a material respect, the Company may (i) cause any of Employee’s unvested Restricted Stock Units and related Dividend Equivalents to be cancelled and forfeited, (ii) refuse to deliver shares of Stock or cash in exchange for vested Restricted Stock Units or Dividend Equivalents, and/or (iii) pursue any other rights and remedies the Company may have pursuant to this Award Agreement or the Plan at law or in equity including, specifically, injunctive relief.
|
|
11.
|
Cooperation with Government Agencies. Employee shall have no obligation to keep confidential any Confidential Information, if and to the extent disclosure of any such information is specifically permitted by law, because Employee is providing information to government investigatory or enforcement agencies, such as the Nuclear Regulatory Commission, Department of Labor, Equal Employment Opportunity Commission (or its state equivalent), National Labor Relations Board, the Occupational Safety and Health
|
|
12.
|
Non‑Transferability. Neither this Award nor any rights under this Award Agreement may be assigned, transferred, or in any manner encumbered except as provided in the Plan.
|
|
13.
|
Definitions: Copy of Plan and Plan Prospectus. To the extent not specifically defined in this Award Agreement, all capitalized terms used in this Award Agreement will have the same meanings ascribed to them in the Plan. By signing this Award Agreement, Employee acknowledges receipt of a copy of the Plan and the related Plan prospectus.
|
|
14.
|
Amendment. Except as provided below, any amendments to this Award Agreement must be made by a written agreement executed by the Company and Employee. The Company may amend this Award Agreement unilaterally, without the consent of Employee, if the change (i) is required by law or regulation, (ii) does not adversely affect in any material way the rights of Employee, or (iii) is required to cause the benefits under the Plan to qualify for favorable tax treatment either for the Company or Employee or to comply with the provisions of Section 409A of the Code and applicable regulations or other interpretive authority. Additional rules relating to amendments to the Plan or any Award Agreement to assure compliance with Section 409A of the Code are set forth in Section 17.15 of the Plan
|
|
INFORMATION ABOUT YOU
|
||||||||
|
Last
|
First
|
Middle Initial
|
Employee ID#
|
|||||
|
|
In accordance with the terms of the Pinnacle West Capital Corporation 2012 Long-Term Incentive Plan and pursuant to Section 4(b) of the Award Agreement, I hereby elect to receive payment for the Restricted Stock Units and Dividend Equivalents that vest on the dates set forth below in the following form (place an “X” in the “100% Stock” column, in the “50% Cash/50% Stock” column or in the “100% Cash” column for each of the years and types of Awards set forth below):
|
|||||||
|
|
|
Restricted Stock Units and Dividend Equivalents
|
||||||
|
|
Vesting Date
|
100% Stock
|
50% Cash/
50% Stock |
100% Cash
|
||||
|
|
__/__/_____
|
¨
¨
¨
¨
|
¨
¨
¨
¨
|
¨
¨
¨
¨
|
||||
|
|
__/__/_____
|
|||||||
|
|
__/__/_____
|
|||||||
|
|
__/__/_____
|
|||||||
|
|
__________________________________________
PARTICIPANT NAME (PLEASE PRINT)
__________________________________________
PARTICIPANT SIGNATURE
|
______________________
DATE
|
||||||
|
A.
|
The Board of Directors of the Company (the “Board of Directors”) has adopted, and the Company’s shareholders have approved, the Pinnacle West Capital Corporation 2012 Long-Term Incentive Plan (the “Plan”), pursuant to which Performance Share Awards and Dividend Equivalent Awards may be granted to employees of the Company and its subsidiaries.
|
|
B.
|
The Company desires to grant to Employee Performance Shares and Dividend Equivalents under the terms of the Plan.
|
|
C.
|
Pursuant to the Plan, the Company and Employee agree as follows:
|
|
1.
|
Grant of Award. Pursuant to action of the Committee, which was taken on the Date of Grant, the Company grants to Employee ____________ (____) Performance Shares and related Dividend Equivalents. The Performance Shares granted under this Section 1 are referred to in this Award Agreement as the “Base Grant.”
|
|
2.
|
Award Subject to Plan. This Performance Share Award and the related Dividend Equivalent Award are granted under and are expressly subject to all of the terms and provisions of the Plan, which terms are incorporated herein by reference, and this Award Agreement. In the event of any conflict between the terms and conditions of this Award Agreement and the Plan, the provisions of the Plan shall control.
|
|
3.
|
Performance Period. The Performance Period for this Award begins January 1, _____, and ends December 31, _____.
|
|
4.
|
Payment and Vesting.
|
|
(a)
|
Performance Shares Payable In Stock. As soon as practicable in the fiscal year immediately following the end of the Performance Period, the Company will determine (i) the Company’s Total Shareholder Return (as defined herein) as compared to the Total Shareholder Return of the companies in the S&P 1500 Super Composite Electric Utility Index (the “Growth Index”) over the Performance Period and (ii) the Company’s Average Performance with respect to the Performance Metrics (as defined herein). The Company then will deliver to Employee one (1) share of the Company’s Stock for each then-outstanding Performance Share under this Award Agreement, subject to adjustment pursuant to Section 5 below. The Company anticipates that the Stock payout, if any, related to the Company’s Total Shareholder Return will be made by _________. The Company anticipates that the Stock payout, if any, related to the Performance Metrics will be made by __________ and in no event will such Stock payout be made later than ___________.
|
|
(b)
|
Normal or Early Retirement, Death or Disability; Late Career Recipient.
|
|
(c)
|
Termination Without Cause. In the event Employee’s employment is terminated by the Company without cause, the Chief Executive Officer (“CEO”) of the Company may determine in his discretion if, to what extent, and when any unvested portion of the Performance Shares granted under this Agreement should vest; provided, however, that (i) any vesting of unvested Performance Shares granted under this Agreement pursuant to this Section 4(c) shall be approved by the Committee, and (ii) nothing herein shall obligate the CEO to exercise his discretion to cause any unvested Performance Shares to vest.
|
|
(d)
|
Termination For Cause. Notwithstanding any other provision in this Section 4, in the event Employee is terminated for Cause, then regardless of Employee’s retirement, Early Retirement, Normal Retirement, death or Disability, Employee shall forfeit the right to receive any Stock hereunder that Employee would otherwise be entitled to receive following his or her date of termination. For purposes only of this Section 4(d), “Cause” means (A) embezzlement, theft, fraud, deceit and/or dishonesty by the Employee involving the property, business or affairs of the Company or any of its subsidiaries, or (B) an act of moral turpitude which in the sole judgment of the CEO reflects adversely on the business or reputation of the Company or any of its subsidiaries or negatively affects any of the Company’s or any of its subsidiaries’ employees or customers.
|
|
(e)
|
Disability. “Disability” has the meaning set forth for such term in the Retirement Plan.
|
|
(f)
|
Dividend Equivalents. In satisfaction of the Dividend Equivalents Award made pursuant to Section 1, at the time of the Company’s delivery of Stock to Employee pursuant to this Section 4, the Company also will deliver to Employee fully transferrable shares of Stock equal in value to the amount of dividends, if any, that Employee would have received if Employee had directly owned the Stock to which the Performance Shares relate from the Date of Grant to the date of the Stock payout, plus interest on such amount at the rate of 5 percent compounded quarterly, as determined pursuant to the Plan. The number of shares of Stock distributed to Employee will be determined by dividing the amount of the Dividend Equivalents and interest by the Fair Market Value of one share of Stock as of the applicable date of the Stock payout. No fractional Stock shall be issued. If the Stock payout results in
|
|
(g)
|
Impact on Retirement Plans. The value of the shares of Stock distributed upon payment for the Performance Shares and Dividend Equivalents will be disregarded for purposes of calculating the amount of Employee’s benefit under any Company retirement plans.
|
|
5.
|
Performance Criteria and Adjustments. Fifty percent (50%) of the Performance Shares awarded under this Award Agreement will be determined pursuant to Section 5(a) and fifty percent (50%) of the Performance Shares awarded under this Award Agreement will be determined pursuant to Section 5(b). In no event will Employee be entitled to receive a number of Performance Shares pursuant to this Award Agreement greater than 2.0 times the Base Grant.
|
|
(a)
|
Adjustment of Base Grant for Total Shareholder Return. Fifty percent (50%) of the Base Grant will increase or decrease based upon the Company’s “Total Shareholder Return” as compared to the Total Shareholder Return of the companies in the Growth Index during the Performance Period, as follows:
|
|
If the Company’s Total Shareholder Return Over The Performance Period As Compared to the Total Shareholder Return of the Companies in the Growth Index is:
|
The Number of Performance Shares will be:
|
|
90th Percentile or greater
|
1.0 X Base Grant
|
|
75th Percentile
|
.75 X Base Grant
|
|
50th Percentile
|
0.5 X Base Grant
|
|
25th Percentile
|
0.25 X Base Grant
|
|
Less than 25th Percentile
|
None
|
|
(b)
|
Adjustment of Base Grant for Performance Metrics. Fifty percent (50%) of the Base Grant will increase or decrease based upon the Company’s “Average Performance” with respect to the “Performance Metrics,” as follows:
|
|
If the Company’s Average Performance is:
|
The Number of Performance Shares will be:
|
|
90th Percentile or greater
|
1.0 X Base Grant
|
|
75th Percentile
|
.75 X Base Grant
|
|
50th Percentile
|
0.5 X Base Grant
|
|
25th Percentile
|
0.25 X Base Grant
|
|
Less than 25th Percentile
|
None
|
|
6.
|
Definitions.
|
|
(a)
|
Performance Metrics. The “Performance Metrics” for the Performance Period are: (i) the System Average Interruption Frequency Index (Major Events Excluded) (“SAIFI”); (ii) Arizona Public Service Company’s customer to employee improvement ratio; (iii) the OSHA rate (All Incident Injury Rate); (iv) nuclear capacity factor; and (v) coal capacity factor.
|
|
(1)
|
With respect to the Performance Metric described in clause (i) of this Subsection 6(a), the Edison Electric Institute (“EEI”) will provide data on an annual basis regarding the SAIFI result of the participating companies; the Company will calculate its SAIFI result for the year in question and determine its percentile ranking based on the information provided by EEI.
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|
(2)
|
With respect to the Performance Metric described in clause (ii) of this Subsection 6(a), S&P Global Market Intelligence (“Market Intelligence”), an independent third party data system, will provide data on an annual basis regarding the customer and employee counts; the Company will use its customer and employee counts for the year in question and determine its percentile ranking based on the information provided by Market Intelligence. Only those companies whose customers and employees were included in the data provided by Market Intelligence in each of the years of the Performance Period will be considered.
|
|
(3)
|
With respect to the Performance Metric described in clause (iii) of this Subsection 6(a), EEI will provide data on an annual basis regarding the OSHA rate of the participating companies; the Company will calculate its OSHA rate for the year in question and determine its percentile ranking based on the information provided by EEI.
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|
(4)
|
With respect to the Performance Metric described in clause (iv) of this Subsection 6(a), Market Intelligence will provide data on an annual basis regarding the nuclear capacity factors of the participating nuclear plants; the Company will calculate its nuclear capacity factor for the year in question and determine its percentile ranking based on the information provided by Market Intelligence. Only those plants that were included in the data provided by Market Intelligence in each of the years of the Performance Period will be considered.
|
|
(5)
|
With respect to the Performance Metric described in clause (v) of this Subsection 6(a), Market Intelligence will provide data on an annual basis regarding the coal capacity factors of the participating coal plants; the Company will calculate its coal capacity factor for the year in question and determine its percentile ranking based on the information provided by Market Intelligence. Only those plants that were included in the data provided by Market Intelligence in each of the years of the Performance Period will be considered.
|
|
(6)
|
The Company’s percentile ranking during the Performance Period for each Performance Metric will be the average of the Company’s percentile ranking for each Performance Metric during each of the three years of the Performance Period (each,
|
|
(7)
|
If either EEI or Market Intelligence discontinues providing the data specified above, the Committee shall select a data source that, in the Committee’s judgment, will provide data most comparable to the data provided by EEI or Market Intelligence, as the case may be.
|
|
(b)
|
Total Shareholder Return. “Total Shareholder Return” for the Performance Period is the measure of a company’s stock price appreciation plus any dividends paid during the Performance Period. Only those companies that were included in the Growth Index in each of the years of the Performance Period will be considered. Total Shareholder Return for the Company and the companies in the Growth Index will be determined using the Daily Comparative Return as calculated by Bloomberg (or other independent third party data system). If the Growth Index is discontinued, the Committee shall select the most comparable index then in use for the sector comparison. In addition, if the sector comparison is no longer representative of the Company’s industry or business, the Committee shall replace the Growth Index with the most representative index then in use. Once the Total Shareholder Returns of the Company and all relevant companies in the Growth Index have been determined, the member companies will be ranked from greatest to least. Percentiles will be calculated (interpolated from 0% to 100%) based on a company’s relative ranking. Percentiles will be carried out to one (1) decimal place. If the Company is not in the Growth Index, then its percentile will be interpolated between the companies listed in the relative ranking. These calculations will be verified by the Company’s internal auditors.
|
|
7.
|
Termination of Award. This Award Agreement will terminate and be of no further force or effect on the date that Employee is no longer employed by the Company or any of its subsidiaries, whether due to voluntary or involuntary termination, death, retirement, Disability, or otherwise, except as specifically set forth in Section 4 above or in Article 15 of the Plan. Employee will, however, be entitled to receive any Stock and Dividend Equivalents payable under Section 4 of this Award Agreement if Employee’s employment terminates after the end of the Performance Period but before Employee’s receipt of such Stock and Dividend Equivalents.
|
|
8.
|
Section 409A Compliance. If the Company concludes, in the exercise of its discretion, that this Award is subject to Section 409A of the Code, the Plan and this Award Agreement shall be administered in compliance with Section 409A and each provision of this Award Agreement and the Plan shall be interpreted to comply with Section 409A. If the Company concludes, in the exercise of its discretion, that this Award is not subject to Section 409A, but, instead, is eligible for the short-term deferral exception to the requirements of Section 409A, the Plan and this Award Agreement shall be administered to comply with the requirements of the short-term deferral exception to the requirements of Section 409A and each provision of this Award Agreement and the Plan shall be interpreted to comply with the requirements of such exception. In either event, Employee does not have any right to make any election regarding the time or form of any payment due under this Award Agreement.
|
|
9.
|
Tax Withholding. Employee is responsible for any and all federal, state, and local income, payroll or other tax obligations or withholdings (collectively, the “Taxes”) arising out of this Award. Employee shall pay any and all Taxes due in connection with a payout of Stock hereunder by having the Company withhold shares of Stock from such payout.
|
|
10.
|
Continued Employment. Nothing in the Plan or this Award Agreement shall be interpreted to interfere with or limit in any way the right of the Company or its subsidiaries to terminate Employee’s employment or services at any time. In addition, nothing in the Plan or this Award Agreement shall be interpreted to confer upon Employee the right to continue in the employ or service of the Company or its subsidiaries.
|
|
11.
|
Confidentiality. During Employee’s employment and after termination thereof, for any reason, Employee agrees that Employee will not, directly or indirectly, in one or a series of transactions, disclose to any person, or use or otherwise exploit for Employee’s own benefit or for the benefit of anyone other than the Company or any of its Affiliates any Confidential Information (as hereinafter defined), whether prepared by Employee or not; provided, however, that during the term of Employee’s employment, any Confidential Information may be disclosed (i) to officers, representatives, employees and agents of the Company and its Affiliates who need to know such Confidential Information in order to perform the services or conduct the operations required or expected of them in the business, and (ii) in good faith by Employee in connection with the performance of Employee’s job duties to persons who are authorized to receive such information by the Company or its Affiliates. Employee shall have no obligation to keep confidential any Confidential Information, if and to the extent disclosure of any such information is specifically required by law; provided, however, that in the event disclosure is required by applicable law, Employee shall provide the Company with prompt notice of such requirement, prior to making any disclosure, so that it may seek an appropriate protective order.
|
|
12.
|
Restrictive Covenants.
|
|
(a)
|
Non-Competition. Employee agrees that for a period of 12 months following any Termination of Employment voluntarily by Employee (other than due to Disability), Employee shall not, without the prior written consent of the Company’s General Counsel,
|
|
(b)
|
Employee Non-Solicitation. Employee agrees that for a period of 12 months following Employee’s Termination of Employment for any reason, Employee will not encourage, induce, or otherwise solicit, or actively assist any other person or organization to encourage, induce or otherwise solicit, directly or indirectly, any employee of the Company or any of its Affiliates to terminate his or her employment with the Company or its Affiliates, or otherwise interfere with the advantageous business relationship of the Company and its Affiliates with their employees.
|
|
(c)
|
[No Pledging or Hedging. Employee agrees that during his or her term of employment, Employee will not pledge, margin, hypothecate, hedge, or otherwise grant an economic interest in any shares of Company stock received by Employee pursuant to this Award (net of shares sold or surrendered to meet tax withholding or exercise requirements). This restriction shall extend to the purchase or creation of any short sales, zero-cost collars, forward sales contracts, puts, calls, options or other derivative securities in respect of any shares of Company stock.]
|
|
(d)
|
Remedies. If Employee fails to comply with Sections 11, 12(a), [or] 12(b), [or 12(c)] in a material respect, the Company may (i) cause any of Employee’s unvested Performance Shares and related Dividend Equivalents to be cancelled and forfeited, (ii) refuse to deliver shares of Stock or cash in exchange for vested Performance Shares or Dividend Equivalents, and/or (iii) pursue any other rights and remedies the Company may have pursuant to this Award Agreement or the Plan at law or in equity including, specifically, injunctive relief.
|
|
13.
|
Cooperation with Government Agencies. Employee shall have no obligation to keep confidential any Confidential Information, if and to the extent disclosure of any such information is specifically permitted by law, because Employee is providing information to government investigatory or enforcement agencies, such as the Nuclear Regulatory Commission, Department of Labor, Equal Employment Opportunity Commission (or its state equivalent), National Labor Relations Board, the Occupational Safety and Health Administration (or its state equivalent) or the Securities and Exchange Commission. This Award Agreement also does not limit Employee’s ability to communicate with any government agency regarding matters within the agency’s jurisdiction or otherwise participate in any investigation or proceedings that may be conducted by such agency, including providing documents or other information without notice to the Company. Nothing in this Award Agreement shall prevent Employee from the disclosure of Confidential Information or trade secrets that: (i) is made: (a) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney; and (b) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is permitted to be made, and is made, under seal. In the event that Employee files a lawsuit alleging retaliation by Company for reporting a suspected violation of law, Employee may disclose Confidential Information or trade secrets related to the suspected violation of law or alleged retaliation to Employee’s attorney and use the Confidential Information or trade secrets in the court proceeding if Employee or Employee’s attorney: (i) files any document containing Confidential Information or trade secrets, under seal if permitted; and (ii) does not disclose the Confidential Information or trade secrets, except pursuant to or in accordance with a court order. The Company provides this notice in compliance with federal law, including the Defend Trade Secrets Act of 2016.
|
|
14.
|
Clawback. The portion of this Award, if any, that is earned based on the Company’s Total Shareholder Return will be subject to potential forfeiture or recovery to the extent called for by the Company’s Clawback Policy. The Clawback Policy may include such provisions as the Human Resources Committee of the Board of Directors determines to be necessary or appropriate either to comply with any applicable law or listing standard or in light of Company ethics or other policies and practices. Specific requirements of the Clawback Policy may be adopted and amended at such times as the Human Resources Committee of the Board of Directors determines in its discretion. By accepting this Award, Employee consents and agrees to abide by such Clawback Policy.
|
|
15.
|
Non-Transferability. Neither this Award nor any rights under this Award Agreement may be assigned, transferred, or in any manner encumbered except as provided in the Plan.
|
|
16.
|
Definitions: Copy of Plan and Plan Prospectus. To the extent not specifically defined in this Award Agreement, all capitalized terms used in this Award Agreement will have the same meanings ascribed to them in the Plan. By signing this Award Agreement, Employee acknowledges receipt of a copy of the Plan and the related Plan prospectus.
|
|
17.
|
Amendment. Except as provided below, any amendments to this Award Agreement must be made by a written agreement executed by the Company and Employee. The Company may amend this Award Agreement unilaterally, without the consent of Employee, if the change (i) is required by law or regulation, (ii) does not adversely affect in any material way the rights of Employee, or (iii) is required to cause the benefits under the Plan to qualify for favorable tax treatment either for the Company or Employee or to comply with the provisions of Section 409A of the Code and applicable regulations or other interpretive authority. Additional rules relating to amendments to the Plan or any Award Agreement to assure compliance with Section 409A of the Code are set forth in Section 17.15 of the Plan.
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Pinnacle West Capital Corporation;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
/s/ Donald E. Brandt
|
|
|
Donald E. Brandt
|
|
|
Chairman, President and Chief Executive Officer
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Pinnacle West Capital Corporation;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
/s/ James R. Hatfield
|
|
|
James R. Hatfield
|
|
|
Executive Vice President and Chief Financial Officer
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Arizona Public Service Company;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
/s/ Donald E. Brandt
|
|
|
Donald E. Brandt
|
|
|
Chairman and Chief Executive Officer
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Arizona Public Service Company;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
/s/ James R. Hatfield
|
|
|
James R. Hatfield
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
/s/ Donald E. Brandt
|
|
|
Donald E. Brandt
|
|
|
Chairman, President and
|
|
|
Chief Executive Officer
|
|
|
/s/ James R. Hatfield
|
|
|
James R. Hatfield
|
|
|
Executive Vice President and
|
|
|
Chief Financial Officer
|
|
|
/s/ Donald E. Brandt
|
|
|
Donald E. Brandt
|
|
|
Chairman and Chief Executive Officer
|
|
|
|
|
|
/s/ James R. Hatfield
|
|
|
James R. Hatfield
|
|
|
Executive Vice President and
|
|
|
Chief Financial Officer
|