|
|
|
|
|
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
Commission File
Number
|
|
Exact Name of Each Registrant as specified in its
charter; State of Incorporation; Address; and
Telephone Number
|
|
IRS Employer
Identification No.
|
|||
|
1-8962
|
|
PINNACLE WEST CAPITAL CORPORATION
|
|
86-0512431
|
|||
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|
(an Arizona corporation)
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400 North Fifth Street, P.O. Box 53999
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|||
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Phoenix
|
Arizona
|
85072-3999
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(602)
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250-1000
|
|
|
|
|
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1-4473
|
|
ARIZONA PUBLIC SERVICE COMPANY
|
|
86-0011170
|
|||
|
|
|
(an Arizona corporation)
|
|
|
|||
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400 North Fifth Street, P.O. Box 53999
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|
|||
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Phoenix
|
Arizona
|
85072-3999
|
|
|
|
|
|
|
(602)
|
250-1000
|
|
|
|
|
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
|
Common Stock
|
PNW
|
The New York Stock Exchange
|
|
PINNACLE WEST CAPITAL CORPORATION
|
Yes
|
☒
|
|
No
|
☐
|
|
ARIZONA PUBLIC SERVICE COMPANY
|
Yes
|
☒
|
|
No
|
☐
|
|
PINNACLE WEST CAPITAL CORPORATION
|
Yes
|
☒
|
|
No
|
☐
|
|
ARIZONA PUBLIC SERVICE COMPANY
|
Yes
|
☒
|
|
No
|
☐
|
|
Large accelerated filer
|
☒
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
Smaller reporting company
|
☐
|
|
|
|
|
|
|
|
|
|
|
Emerging growth company
|
☐
|
|
|
|
|
|
|
|
Large accelerated filer
|
☐
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☒
|
Smaller reporting company
|
☐
|
|
|
|
|
|
|
|
|
|
|
Emerging growth company
|
☐
|
|
|
|
|
|
|
|
PINNACLE WEST CAPITAL CORPORATION
|
Yes
|
☐
|
|
No
|
☒
|
|
ARIZONA PUBLIC SERVICE COMPANY
|
Yes
|
☐
|
|
No
|
☒
|
|
PINNACLE WEST CAPITAL CORPORATION
|
Number of shares of common stock, no par value, outstanding as of August 1, 2019:
|
112,303,854
|
|
ARIZONA PUBLIC SERVICE COMPANY
|
Number of shares of common stock, $2.50 par value, outstanding as of August 1, 2019:
|
71,264,947
|
|
|
|
Page
|
|
|
|
|
|
|
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|
|||
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|
||
|
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|||
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|
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||
|
|
|||
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|
|||
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|
|||
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|
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|
|
|
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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;
|
|
•
|
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;
|
|
•
|
power plant and transmission system performance and outages;
|
|
•
|
competition in retail and wholesale power markets;
|
|
•
|
regulatory and judicial decisions, developments and proceedings;
|
|
•
|
new legislation, ballot initiatives and regulation, including those relating to environmental requirements, regulatory policy, nuclear plant operations and potential deregulation of retail electric markets;
|
|
•
|
fuel and water supply availability;
|
|
•
|
our ability to achieve timely and adequate rate recovery of our costs, including returns on and of debt and equity capital investment;
|
|
•
|
our ability to meet renewable energy and energy efficiency mandates and recover related costs;
|
|
•
|
risks inherent in the operation of nuclear facilities, including spent fuel disposal uncertainty;
|
|
•
|
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;
|
|
•
|
the development of new technologies which may affect electric sales or delivery;
|
|
•
|
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
|
|
•
|
restrictions on dividends or other provisions in our credit agreements and Arizona Corporation Commission ("ACC") orders.
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
NET INCOME
|
$
|
149,019
|
|
|
$
|
171,612
|
|
|
$
|
171,810
|
|
|
$
|
179,706
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
OTHER COMPREHENSIVE INCOME, NET OF TAX
|
|
|
|
|
|
|
|
|
|
||||||
|
Derivative instruments:
|
|
|
|
|
|
|
|
|
|
||||||
|
Net unrealized loss, net of tax expense of $0, $0, $0 and $96 for the respective periods
|
—
|
|
|
—
|
|
|
—
|
|
|
(96
|
)
|
||||
|
Reclassification of net realized loss, net of tax benefit of $134, $150, $242 and $232 for the respective periods
|
404
|
|
|
456
|
|
|
732
|
|
|
865
|
|
||||
|
Pension and other postretirement benefits activity, net of tax benefit of $506, $1,558, $218 and $1,115 for the respective periods
|
(1,539
|
)
|
|
(4,739
|
)
|
|
(660
|
)
|
|
(3,839
|
)
|
||||
|
Total other comprehensive income (loss)
|
(1,135
|
)
|
|
(4,283
|
)
|
|
72
|
|
|
(3,070
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
COMPREHENSIVE INCOME
|
147,884
|
|
|
167,329
|
|
|
171,882
|
|
|
176,636
|
|
||||
|
Less: Comprehensive income attributable to noncontrolling interests
|
4,874
|
|
|
4,874
|
|
|
9,747
|
|
|
9,747
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS
|
$
|
143,010
|
|
|
$
|
162,455
|
|
|
$
|
162,135
|
|
|
$
|
166,889
|
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
|
ASSETS
|
|
|
|
|
|
||
|
|
|
|
|
||||
|
CURRENT ASSETS
|
|
|
|
|
|
||
|
Cash and cash equivalents
|
$
|
1,648
|
|
|
$
|
5,766
|
|
|
Customer and other receivables
|
263,836
|
|
|
267,887
|
|
||
|
Accrued unbilled revenues
|
193,657
|
|
|
137,170
|
|
||
|
Allowance for doubtful accounts
|
(3,095
|
)
|
|
(4,069
|
)
|
||
|
Materials and supplies (at average cost)
|
289,928
|
|
|
269,065
|
|
||
|
Fossil fuel (at average cost)
|
25,453
|
|
|
25,029
|
|
||
|
Assets from risk management activities (Note 7)
|
459
|
|
|
1,113
|
|
||
|
Deferred fuel and purchased power regulatory asset (Note 4)
|
30,559
|
|
|
37,164
|
|
||
|
Other regulatory assets (Note 4)
|
153,900
|
|
|
129,738
|
|
||
|
Other current assets
|
72,222
|
|
|
56,128
|
|
||
|
Total current assets
|
1,028,567
|
|
|
924,991
|
|
||
|
INVESTMENTS AND OTHER ASSETS
|
|
|
|
|
|
||
|
Nuclear decommissioning trust (Notes 11 and 12)
|
950,448
|
|
|
851,134
|
|
||
|
Other special use funds (Notes 11 and 12)
|
241,558
|
|
|
236,101
|
|
||
|
Other assets
|
97,322
|
|
|
103,247
|
|
||
|
Total investments and other assets
|
1,289,328
|
|
|
1,190,482
|
|
||
|
PROPERTY, PLANT AND EQUIPMENT
|
|
|
|
|
|
||
|
Plant in service and held for future use
|
19,630,407
|
|
|
18,736,628
|
|
||
|
Accumulated depreciation and amortization
|
(6,470,935
|
)
|
|
(6,366,014
|
)
|
||
|
Net
|
13,159,472
|
|
|
12,370,614
|
|
||
|
Construction work in progress
|
568,890
|
|
|
1,170,062
|
|
||
|
Palo Verde sale leaseback, net of accumulated depreciation (Note 6)
|
103,841
|
|
|
105,775
|
|
||
|
Intangible assets, net of accumulated amortization
|
261,584
|
|
|
262,902
|
|
||
|
Nuclear fuel, net of accumulated amortization
|
159,633
|
|
|
120,217
|
|
||
|
Total property, plant and equipment
|
14,253,420
|
|
|
14,029,570
|
|
||
|
DEFERRED DEBITS
|
|
|
|
|
|
||
|
Regulatory assets (Note 4)
|
1,321,431
|
|
|
1,342,941
|
|
||
|
Operating lease right-of-use assets (Note 16)
|
176,219
|
|
|
—
|
|
||
|
Assets for other postretirement benefits (Note 5)
|
56,336
|
|
|
46,906
|
|
||
|
Other
|
40,365
|
|
|
129,312
|
|
||
|
Total deferred debits
|
1,594,351
|
|
|
1,519,159
|
|
||
|
|
|
|
|
||||
|
TOTAL ASSETS
|
$
|
18,165,666
|
|
|
$
|
17,664,202
|
|
|
|
Six Months Ended
June 30, |
||||||
|
|
2019
|
|
2018
|
||||
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
||
|
Net income
|
$
|
171,810
|
|
|
$
|
179,706
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||
|
Depreciation and amortization including nuclear fuel
|
332,185
|
|
|
325,550
|
|
||
|
Deferred fuel and purchased power
|
(16,702
|
)
|
|
(50,112
|
)
|
||
|
Deferred fuel and purchased power amortization
|
23,307
|
|
|
50,851
|
|
||
|
Allowance for equity funds used during construction
|
(18,760
|
)
|
|
(27,152
|
)
|
||
|
Deferred income taxes
|
4,326
|
|
|
33,711
|
|
||
|
Deferred investment tax credit
|
(2,656
|
)
|
|
(2,778
|
)
|
||
|
Stock compensation
|
13,725
|
|
|
13,189
|
|
||
|
Changes in current assets and liabilities:
|
|
|
|
|
|
||
|
Customer and other receivables
|
3,543
|
|
|
(18,672
|
)
|
||
|
Accrued unbilled revenues
|
(56,487
|
)
|
|
(95,453
|
)
|
||
|
Materials, supplies and fossil fuel
|
(21,287
|
)
|
|
(22,970
|
)
|
||
|
Other current assets
|
(16,121
|
)
|
|
11,069
|
|
||
|
Accounts payable
|
65,874
|
|
|
36,614
|
|
||
|
Accrued taxes
|
4,102
|
|
|
8,140
|
|
||
|
Other current liabilities
|
(61,270
|
)
|
|
9,410
|
|
||
|
Change in other long-term assets
|
(82,850
|
)
|
|
23,927
|
|
||
|
Change in other long-term liabilities
|
3,195
|
|
|
(79,228
|
)
|
||
|
Net cash flow provided by operating activities
|
345,934
|
|
|
395,802
|
|
||
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
||
|
Capital expenditures
|
(541,401
|
)
|
|
(679,949
|
)
|
||
|
Contributions in aid of construction
|
18,909
|
|
|
19,339
|
|
||
|
Allowance for borrowed funds used during construction
|
(11,159
|
)
|
|
(13,046
|
)
|
||
|
Proceeds from nuclear decommissioning trust sales and other special use funds
|
309,354
|
|
|
258,401
|
|
||
|
Investment in nuclear decommissioning trust and other special use funds
|
(310,494
|
)
|
|
(259,542
|
)
|
||
|
Other
|
7,153
|
|
|
(4,299
|
)
|
||
|
Net cash flow used for investing activities
|
(527,638
|
)
|
|
(679,096
|
)
|
||
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
||
|
Issuance of long-term debt
|
497,324
|
|
|
—
|
|
||
|
Short-term borrowing and payments — net
|
363,973
|
|
|
500,849
|
|
||
|
Short-term debt borrowings
|
49,000
|
|
|
45,000
|
|
||
|
Short-term debt repayments
|
(57,000
|
)
|
|
(25,000
|
)
|
||
|
Dividends paid on common stock
|
(161,979
|
)
|
|
(151,942
|
)
|
||
|
Repayment of long-term debt
|
(500,000
|
)
|
|
(82,000
|
)
|
||
|
Common stock equity issuance - net of purchases
|
(2,360
|
)
|
|
(2,294
|
)
|
||
|
Distributions to noncontrolling interests
|
(11,372
|
)
|
|
(11,372
|
)
|
||
|
Net cash flow provided by financing activities
|
177,586
|
|
|
273,241
|
|
||
|
NET DECREASE IN CASH AND CASH EQUIVALENTS
|
(4,118
|
)
|
|
(10,053
|
)
|
||
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
5,766
|
|
|
13,892
|
|
||
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
1,648
|
|
|
$
|
3,839
|
|
|
|
Three Months Ended June 30, 2019
|
||||||||||||||||||||||||||||
|
|
Common Stock
|
|
Treasury Stock
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Noncontrolling Interests
|
|
Total
|
||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Balance, April 1, 2019
|
112,340,322
|
|
|
$
|
2,644,063
|
|
|
(63,271
|
)
|
|
$
|
(5,586
|
)
|
|
$
|
2,659,086
|
|
|
$
|
(46,501
|
)
|
|
$
|
130,663
|
|
|
$
|
5,381,725
|
|
|
Net income
|
|
|
—
|
|
|
|
|
—
|
|
|
144,145
|
|
|
—
|
|
|
4,874
|
|
|
149,019
|
|
||||||||
|
Other comprehensive loss
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
(1,135
|
)
|
|
—
|
|
|
(1,135
|
)
|
||||||||
|
Dividends on common stock ($1.48 per share)
|
|
|
—
|
|
|
|
|
—
|
|
|
(165,611
|
)
|
|
—
|
|
|
—
|
|
|
(165,611
|
)
|
||||||||
|
Issuance of common stock
|
21,273
|
|
|
4,171
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,171
|
|
|||||||
|
Reissuance of treasury stock for stock-based compensation and other
|
|
|
—
|
|
|
5,052
|
|
|
446
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
446
|
|
|||||||
|
Capital activities by noncontrolling interests
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,372
|
)
|
|
(11,372
|
)
|
||||||||
|
Balance, June 30, 2019
|
112,361,595
|
|
|
$
|
2,648,234
|
|
|
(58,219
|
)
|
|
$
|
(5,140
|
)
|
|
$
|
2,637,620
|
|
|
$
|
(47,636
|
)
|
|
$
|
124,165
|
|
|
$
|
5,357,243
|
|
|
|
Three Months Ended June 30, 2018
|
||||||||||||||||||||||||||||
|
|
Common Stock
|
|
Treasury Stock
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Noncontrolling Interests
|
|
Total
|
||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Balance, April 1, 2018
|
111,961,963
|
|
|
$
|
2,620,261
|
|
|
(29,097
|
)
|
|
$
|
(2,431
|
)
|
|
$
|
2,454,268
|
|
|
$
|
(52,341
|
)
|
|
$
|
133,914
|
|
|
$
|
5,153,671
|
|
|
Net income
|
|
|
—
|
|
|
|
|
—
|
|
|
166,738
|
|
|
—
|
|
|
4,874
|
|
|
171,612
|
|
||||||||
|
Other comprehensive loss
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
(4,283
|
)
|
|
—
|
|
|
(4,283
|
)
|
||||||||
|
Dividends on common stock ($1.39 per share)
|
|
|
—
|
|
|
|
|
—
|
|
|
(155,604
|
)
|
|
—
|
|
|
—
|
|
|
(155,604
|
)
|
||||||||
|
Issuance of common stock
|
28,259
|
|
|
4,411
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,411
|
|
|||||||
|
Reissuance of treasury stock for stock-based compensation and other
|
|
|
—
|
|
|
11,464
|
|
|
1,000
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
999
|
|
|||||||
|
Capital activities by noncontrolling interests
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,372
|
)
|
|
(11,372
|
)
|
||||||||
|
Balance, June 30, 2018
|
111,990,222
|
|
|
$
|
2,624,672
|
|
|
(17,633
|
)
|
|
$
|
(1,431
|
)
|
|
$
|
2,465,402
|
|
|
$
|
(56,624
|
)
|
|
$
|
127,415
|
|
|
$
|
5,159,434
|
|
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||||||||||||||
|
|
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
|
|
|
—
|
|
|
|
|
—
|
|
|
169,959
|
|
|
—
|
|
|
9,747
|
|
|
179,706
|
|
||||||||
|
Other comprehensive loss
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
(3,070
|
)
|
|
—
|
|
|
(3,070
|
)
|
||||||||
|
Dividends on common stock ($1.39 per share)
|
|
|
—
|
|
|
|
|
—
|
|
|
(155,620
|
)
|
|
—
|
|
|
—
|
|
|
(155,620
|
)
|
||||||||
|
Issuance of common stock
|
174,052
|
|
|
9,867
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,867
|
|
|||||||
|
Purchase of treasury stock (a)
|
|
|
—
|
|
|
(81,177
|
)
|
|
(6,277
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,277
|
)
|
|||||||
|
Reissuance of treasury stock for stock-based compensation and other
|
|
|
—
|
|
|
128,007
|
|
|
10,470
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,470
|
|
|||||||
|
Capital activities by noncontrolling interests
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,372
|
)
|
|
(11,372
|
)
|
||||||||
|
Reclassification of income tax effects related to new tax reform (b)
|
|
|
—
|
|
|
|
|
—
|
|
|
8,552
|
|
|
(8,552
|
)
|
|
—
|
|
|
—
|
|
||||||||
|
Balance, June 30, 2018
|
111,990,222
|
|
|
$
|
2,624,672
|
|
|
(17,633
|
)
|
|
$
|
(1,431
|
)
|
|
$
|
2,465,402
|
|
|
$
|
(56,624
|
)
|
|
$
|
127,415
|
|
|
$
|
5,159,434
|
|
|
(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
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
OPERATING REVENUES
|
|
$
|
869,501
|
|
|
$
|
971,963
|
|
|
$
|
1,610,031
|
|
|
$
|
1,663,969
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Fuel and purchased power
|
|
242,222
|
|
|
270,138
|
|
|
472,810
|
|
|
472,148
|
|
||||
|
Operations and maintenance
|
|
224,143
|
|
|
251,999
|
|
|
464,518
|
|
|
506,600
|
|
||||
|
Depreciation and amortization
|
|
147,354
|
|
|
144,533
|
|
|
296,039
|
|
|
288,645
|
|
||||
|
Taxes other than income taxes
|
|
55,081
|
|
|
53,269
|
|
|
110,159
|
|
|
106,511
|
|
||||
|
Other expenses
|
|
683
|
|
|
434
|
|
|
1,110
|
|
|
597
|
|
||||
|
Total
|
|
669,483
|
|
|
720,373
|
|
|
1,344,636
|
|
|
1,374,501
|
|
||||
|
OPERATING INCOME
|
|
200,018
|
|
|
251,590
|
|
|
265,395
|
|
|
289,468
|
|
||||
|
OTHER INCOME (DEDUCTIONS)
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Allowance for equity funds used during construction
|
|
7,572
|
|
|
13,073
|
|
|
18,760
|
|
|
27,152
|
|
||||
|
Pension and other postretirement non-service credits - net
|
|
6,757
|
|
|
12,389
|
|
|
12,256
|
|
|
25,586
|
|
||||
|
Other income (Note 9)
|
|
11,691
|
|
|
6,235
|
|
|
18,107
|
|
|
10,007
|
|
||||
|
Other expense (Note 9)
|
|
(3,428
|
)
|
|
(3,372
|
)
|
|
(7,306
|
)
|
|
(6,318
|
)
|
||||
|
Total
|
|
22,592
|
|
|
28,325
|
|
|
41,817
|
|
|
56,427
|
|
||||
|
INTEREST EXPENSE
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Interest charges
|
|
53,591
|
|
|
57,731
|
|
|
110,256
|
|
|
113,889
|
|
||||
|
Allowance for borrowed funds used during construction
|
|
(4,494
|
)
|
|
(6,291
|
)
|
|
(11,159
|
)
|
|
(13,046
|
)
|
||||
|
Total
|
|
49,097
|
|
|
51,440
|
|
|
99,097
|
|
|
100,843
|
|
||||
|
INCOME BEFORE INCOME TAXES
|
|
173,513
|
|
|
228,475
|
|
|
208,115
|
|
|
245,052
|
|
||||
|
INCOME TAXES
|
|
18,463
|
|
|
45,776
|
|
|
19,916
|
|
|
47,882
|
|
||||
|
NET INCOME
|
|
155,050
|
|
|
182,699
|
|
|
188,199
|
|
|
197,170
|
|
||||
|
Less: Net income attributable to noncontrolling interests (Note 6)
|
|
4,874
|
|
|
4,874
|
|
|
9,747
|
|
|
9,747
|
|
||||
|
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDER
|
|
$
|
150,176
|
|
|
$
|
177,825
|
|
|
$
|
178,452
|
|
|
$
|
187,423
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
NET INCOME
|
$
|
155,050
|
|
|
$
|
182,699
|
|
|
$
|
188,199
|
|
|
$
|
197,170
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
OTHER COMPREHENSIVE INCOME, NET OF TAX
|
|
|
|
|
|
|
|
|
|
||||||
|
Derivative instruments:
|
|
|
|
|
|
|
|
|
|
||||||
|
Net unrealized loss, net of tax expense of $0, $0, $0 and $96 for the respective periods
|
—
|
|
|
—
|
|
|
—
|
|
|
(96
|
)
|
||||
|
Reclassification of net realized loss, net of tax benefit of $134, $150, $242 and $232 for the respective periods
|
404
|
|
|
456
|
|
|
732
|
|
|
865
|
|
||||
|
Pension and other postretirement benefits activity, net of tax benefit of $544, $1,566, $297 and $1,260 for the respective periods
|
(1,653
|
)
|
|
(4,764
|
)
|
|
(901
|
)
|
|
(3,907
|
)
|
||||
|
Total other comprehensive income (loss)
|
(1,249
|
)
|
|
(4,308
|
)
|
|
(169
|
)
|
|
(3,138
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
COMPREHENSIVE INCOME
|
153,801
|
|
|
178,391
|
|
|
188,030
|
|
|
194,032
|
|
||||
|
Less: Comprehensive income attributable to noncontrolling interests
|
4,874
|
|
|
4,874
|
|
|
9,747
|
|
|
9,747
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDER
|
$
|
148,927
|
|
|
$
|
173,517
|
|
|
$
|
178,283
|
|
|
$
|
184,285
|
|
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
|
ASSETS
|
|
|
|
|
|
||
|
|
|
|
|
||||
|
PROPERTY, PLANT AND EQUIPMENT
|
|
|
|
|
|
||
|
Plant in service and held for future use
|
$
|
19,626,920
|
|
|
$
|
18,733,142
|
|
|
Accumulated depreciation and amortization
|
(6,467,684
|
)
|
|
(6,362,771
|
)
|
||
|
Net
|
13,159,236
|
|
|
12,370,371
|
|
||
|
|
|
|
|
||||
|
Construction work in progress
|
568,890
|
|
|
1,170,062
|
|
||
|
Palo Verde sale leaseback, net of accumulated depreciation (Note 6)
|
103,841
|
|
|
105,775
|
|
||
|
Intangible assets, net of accumulated amortization
|
261,429
|
|
|
262,746
|
|
||
|
Nuclear fuel, net of accumulated amortization
|
159,633
|
|
|
120,217
|
|
||
|
Total property, plant and equipment
|
14,253,029
|
|
|
14,029,171
|
|
||
|
|
|
|
|
||||
|
INVESTMENTS AND OTHER ASSETS
|
|
|
|
|
|
||
|
Nuclear decommissioning trust (Notes 11 and 12)
|
950,448
|
|
|
851,134
|
|
||
|
Other special use funds (Notes 11 and 12)
|
241,558
|
|
|
236,101
|
|
||
|
Other assets
|
46,089
|
|
|
40,817
|
|
||
|
Total investments and other assets
|
1,238,095
|
|
|
1,128,052
|
|
||
|
|
|
|
|
||||
|
CURRENT ASSETS
|
|
|
|
|
|
||
|
Cash and cash equivalents
|
1,355
|
|
|
5,707
|
|
||
|
Customer and other receivables
|
253,501
|
|
|
257,654
|
|
||
|
Accrued unbilled revenues
|
193,657
|
|
|
137,170
|
|
||
|
Allowance for doubtful accounts
|
(3,095
|
)
|
|
(4,069
|
)
|
||
|
Materials and supplies (at average cost)
|
289,928
|
|
|
269,065
|
|
||
|
Fossil fuel (at average cost)
|
25,453
|
|
|
25,029
|
|
||
|
Assets from risk management activities (Note 7)
|
459
|
|
|
1,113
|
|
||
|
Deferred fuel and purchased power regulatory asset (Note 4)
|
30,559
|
|
|
37,164
|
|
||
|
Other regulatory assets (Note 4)
|
153,900
|
|
|
129,738
|
|
||
|
Other current assets
|
49,697
|
|
|
35,111
|
|
||
|
Total current assets
|
995,414
|
|
|
893,682
|
|
||
|
|
|
|
|
||||
|
DEFERRED DEBITS
|
|
|
|
|
|
||
|
Regulatory assets (Note 4)
|
1,321,431
|
|
|
1,342,941
|
|
||
|
Operating lease right-of-use assets (Note 16)
|
174,320
|
|
|
—
|
|
||
|
Assets for other postretirement benefits (Note 5)
|
52,611
|
|
|
43,212
|
|
||
|
Other
|
39,523
|
|
|
128,265
|
|
||
|
Total deferred debits
|
1,587,885
|
|
|
1,514,418
|
|
||
|
|
|
|
|
||||
|
TOTAL ASSETS
|
$
|
18,074,423
|
|
|
$
|
17,565,323
|
|
|
|
June 30,
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
|
2,801,110
|
|
|
2,788,256
|
|
||
|
Accumulated other comprehensive loss
|
(27,276
|
)
|
|
(27,107
|
)
|
||
|
Total shareholder equity
|
5,673,692
|
|
|
5,661,007
|
|
||
|
Noncontrolling interests (Note 6)
|
124,165
|
|
|
125,790
|
|
||
|
Total equity
|
5,797,857
|
|
|
5,786,797
|
|
||
|
Long-term debt less current maturities (Note 3)
|
4,437,768
|
|
|
4,189,436
|
|
||
|
Total capitalization
|
10,235,625
|
|
|
9,976,233
|
|
||
|
CURRENT LIABILITIES
|
|
|
|
|
|
||
|
Short-term borrowings (Note 3)
|
376,873
|
|
|
—
|
|
||
|
Current maturities of long-term debt (Note 3)
|
250,000
|
|
|
500,000
|
|
||
|
Accounts payable
|
319,435
|
|
|
266,277
|
|
||
|
Accrued taxes
|
175,922
|
|
|
176,357
|
|
||
|
Accrued interest
|
49,703
|
|
|
60,228
|
|
||
|
Common dividends payable
|
82,800
|
|
|
82,700
|
|
||
|
Customer deposits
|
84,177
|
|
|
91,174
|
|
||
|
Liabilities from risk management activities (Note 7)
|
58,834
|
|
|
35,506
|
|
||
|
Liabilities for asset retirements
|
21,950
|
|
|
19,842
|
|
||
|
Operating lease liabilities (Note 16)
|
60,395
|
|
|
—
|
|
||
|
Regulatory liabilities (Note 4)
|
231,857
|
|
|
165,876
|
|
||
|
Other current liabilities
|
138,423
|
|
|
178,137
|
|
||
|
Total current liabilities
|
1,850,369
|
|
|
1,576,097
|
|
||
|
DEFERRED CREDITS AND OTHER
|
|
|
|
|
|
||
|
Deferred income taxes
|
1,831,660
|
|
|
1,812,664
|
|
||
|
Regulatory liabilities (Note 4)
|
2,287,892
|
|
|
2,325,976
|
|
||
|
Liabilities for asset retirements
|
723,005
|
|
|
706,703
|
|
||
|
Liabilities for pension benefits (Note 5)
|
340,154
|
|
|
425,404
|
|
||
|
Liabilities from risk management activities (Note 7)
|
21,592
|
|
|
24,531
|
|
||
|
Customer advances
|
174,411
|
|
|
137,153
|
|
||
|
Coal mine reclamation
|
197,443
|
|
|
212,785
|
|
||
|
Deferred investment tax credit
|
197,749
|
|
|
200,405
|
|
||
|
Unrecognized tax benefits
|
42,313
|
|
|
41,861
|
|
||
|
Operating lease liabilities (Note 16)
|
51,158
|
|
|
—
|
|
||
|
Other
|
121,052
|
|
|
125,511
|
|
||
|
Total deferred credits and other
|
5,988,429
|
|
|
6,012,993
|
|
||
|
COMMITMENTS AND CONTINGENCIES (SEE NOTE 8)
|
|
|
|
|
|
||
|
TOTAL LIABILITIES AND EQUITY
|
$
|
18,074,423
|
|
|
$
|
17,565,323
|
|
|
|
Six Months Ended
June 30, |
||||||
|
|
2019
|
|
2018
|
||||
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
||
|
Net income
|
$
|
188,199
|
|
|
$
|
197,170
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||
|
Depreciation and amortization including nuclear fuel
|
332,143
|
|
|
323,934
|
|
||
|
Deferred fuel and purchased power
|
(16,702
|
)
|
|
(50,112
|
)
|
||
|
Deferred fuel and purchased power amortization
|
23,307
|
|
|
50,851
|
|
||
|
Allowance for equity funds used during construction
|
(18,760
|
)
|
|
(27,152
|
)
|
||
|
Deferred income taxes
|
(10,625
|
)
|
|
10,372
|
|
||
|
Deferred investment tax credit
|
(2,656
|
)
|
|
(2,778
|
)
|
||
|
Changes in current assets and liabilities:
|
|
|
|
|
|
||
|
Customer and other receivables
|
3,645
|
|
|
(9,254
|
)
|
||
|
Accrued unbilled revenues
|
(56,487
|
)
|
|
(95,453
|
)
|
||
|
Materials, supplies and fossil fuel
|
(21,287
|
)
|
|
(23,073
|
)
|
||
|
Other current assets
|
(14,613
|
)
|
|
7,552
|
|
||
|
Accounts payable
|
68,399
|
|
|
39,573
|
|
||
|
Accrued taxes
|
(435
|
)
|
|
26,412
|
|
||
|
Other current liabilities
|
(57,709
|
)
|
|
7,395
|
|
||
|
Change in other long-term assets
|
(84,946
|
)
|
|
34,947
|
|
||
|
Change in other long-term liabilities
|
3,253
|
|
|
(84,643
|
)
|
||
|
Net cash flow provided by operating activities
|
334,726
|
|
|
405,741
|
|
||
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
||
|
Capital expenditures
|
(541,401
|
)
|
|
(670,841
|
)
|
||
|
Contributions in aid of construction
|
18,909
|
|
|
19,339
|
|
||
|
Allowance for borrowed funds used during construction
|
(11,159
|
)
|
|
(13,046
|
)
|
||
|
Proceeds from nuclear decommissioning trust sales and other special use funds
|
309,354
|
|
|
258,227
|
|
||
|
Investment in nuclear decommissioning trust and other special use funds
|
(310,494
|
)
|
|
(259,367
|
)
|
||
|
Other
|
(1,612
|
)
|
|
(1,221
|
)
|
||
|
Net cash flow used for investing activities
|
(536,403
|
)
|
|
(666,909
|
)
|
||
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
||
|
Issuance of long-term debt
|
497,324
|
|
|
—
|
|
||
|
Short-term borrowings and payments — net
|
376,873
|
|
|
499,949
|
|
||
|
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
|
)
|
|
(82,000
|
)
|
||
|
Dividends paid on common stock
|
(165,500
|
)
|
|
(155,500
|
)
|
||
|
Distributions to noncontrolling interests
|
(11,372
|
)
|
|
(11,372
|
)
|
||
|
Net cash flow provided by financing activities
|
197,325
|
|
|
251,077
|
|
||
|
NET DECREASE IN CASH AND CASH EQUIVALENTS
|
(4,352
|
)
|
|
(10,091
|
)
|
||
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
5,707
|
|
|
13,851
|
|
||
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
1,355
|
|
|
$
|
3,760
|
|
|
|
Three Months Ended June 30, 2019
|
|||||||||||||||||||||||||
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Noncontrolling Interests
|
|
Total
|
|||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Balance, April 1, 2019
|
71,264,947
|
|
|
$
|
178,162
|
|
|
$
|
2,721,696
|
|
|
$
|
2,816,532
|
|
|
$
|
(26,027
|
)
|
|
$
|
130,663
|
|
|
$
|
5,821,026
|
|
|
Net Income
|
|
|
—
|
|
|
—
|
|
|
150,176
|
|
|
—
|
|
|
4,874
|
|
|
155,050
|
|
|||||||
|
Other comprehensive loss
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,249
|
)
|
|
—
|
|
|
(1,249
|
)
|
|||||||
|
Dividends on common stock
|
|
|
—
|
|
|
—
|
|
|
(165,598
|
)
|
|
—
|
|
|
—
|
|
|
(165,598
|
)
|
|||||||
|
Net capital activities by noncontrolling interests
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,372
|
)
|
|
(11,372
|
)
|
|||||||
|
Balance, June 30, 2019
|
71,264,947
|
|
|
$
|
178,162
|
|
|
$
|
2,721,696
|
|
|
$
|
2,801,110
|
|
|
$
|
(27,276
|
)
|
|
$
|
124,165
|
|
|
$
|
5,797,857
|
|
|
|
Three Months Ended June 30, 2018
|
|||||||||||||||||||||||||
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Noncontrolling Interests
|
|
Total
|
|||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Balance, April 1, 2018
|
71,264,947
|
|
|
$
|
178,162
|
|
|
$
|
2,571,696
|
|
|
$
|
2,548,591
|
|
|
$
|
(30,851
|
)
|
|
$
|
133,914
|
|
|
$
|
5,401,512
|
|
|
Net Income
|
|
|
—
|
|
|
—
|
|
|
177,825
|
|
|
—
|
|
|
4,874
|
|
|
182,699
|
|
|||||||
|
Other comprehensive loss
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,308
|
)
|
|
—
|
|
|
(4,308
|
)
|
|||||||
|
Other
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|||||||
|
Dividends on common stock
|
|
|
—
|
|
|
—
|
|
|
(155,600
|
)
|
|
—
|
|
|
—
|
|
|
(155,600
|
)
|
|||||||
|
Net capital activities by noncontrolling interests
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,372
|
)
|
|
(11,372
|
)
|
|||||||
|
Balance, June 30, 2018
|
71,264,947
|
|
|
$
|
178,162
|
|
|
$
|
2,571,696
|
|
|
$
|
2,570,816
|
|
|
$
|
(35,159
|
)
|
|
$
|
127,415
|
|
|
$
|
5,412,930
|
|
|
|
Six Months Ended June 30, 2019
|
|||||||||||||||||||||||||
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Noncontrolling Interests
|
|
Total
|
|||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Balance, January 1, 2019
|
71,264,947
|
|
|
$
|
178,162
|
|
|
$
|
2,721,696
|
|
|
$
|
2,788,256
|
|
|
$
|
(27,107
|
)
|
|
$
|
125,790
|
|
|
$
|
5,786,797
|
|
|
Net income
|
|
|
—
|
|
|
—
|
|
|
178,452
|
|
|
—
|
|
|
9,747
|
|
|
188,199
|
|
|||||||
|
Other comprehensive loss
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(169
|
)
|
|
—
|
|
|
(169
|
)
|
|||||||
|
Dividends on common stock
|
|
|
—
|
|
|
—
|
|
|
(165,598
|
)
|
|
—
|
|
|
—
|
|
|
(165,598
|
)
|
|||||||
|
Net capital activities by noncontrolling interests
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,372
|
)
|
|
(11,372
|
)
|
|||||||
|
Balance, June 30, 2019
|
71,264,947
|
|
|
$
|
178,162
|
|
|
$
|
2,721,696
|
|
|
$
|
2,801,110
|
|
|
$
|
(27,276
|
)
|
|
$
|
124,165
|
|
|
$
|
5,797,857
|
|
|
|
Six Months Ended June 30, 2018
|
|||||||||||||||||||||||||
|
|
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
|
|
|
—
|
|
|
—
|
|
|
187,423
|
|
|
—
|
|
|
9,747
|
|
|
197,170
|
|
|||||||
|
Other comprehensive loss
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,138
|
)
|
|
—
|
|
|
(3,138
|
)
|
|||||||
|
Dividends on common stock
|
|
|
—
|
|
|
—
|
|
|
(155,599
|
)
|
|
—
|
|
|
—
|
|
|
(155,599
|
)
|
|||||||
|
Reclassification of income tax effects related to new tax reform (a)
|
|
|
—
|
|
|
—
|
|
|
5,038
|
|
|
(5,038
|
)
|
|
—
|
|
|
—
|
|
|||||||
|
Net capital activities by noncontrolling interests
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,372
|
)
|
|
(11,372
|
)
|
|||||||
|
Balance, June 30, 2018
|
71,264,947
|
|
|
$
|
178,162
|
|
|
$
|
2,571,696
|
|
|
$
|
2,570,816
|
|
|
$
|
(35,159
|
)
|
|
$
|
127,415
|
|
|
$
|
5,412,930
|
|
|
(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
|
|
|
Six Months Ended
June 30, |
||||||
|
|
2019
|
|
2018
|
||||
|
Cash paid during the period for:
|
|
|
|
||||
|
Income taxes, net of refunds
|
$
|
10,788
|
|
|
$
|
10,032
|
|
|
Interest, net of amounts capitalized
|
114,717
|
|
|
104,249
|
|
||
|
Significant non-cash investing and financing activities:
|
|
|
|
||||
|
Accrued capital expenditures
|
$
|
108,056
|
|
|
$
|
65,995
|
|
|
Right-of-use operating lease assets obtained in exchange for operating lease liabilities
|
4,562
|
|
|
—
|
|
||
|
Dividends accrued but not yet paid
|
82,824
|
|
|
77,821
|
|
||
|
|
Six Months Ended
June 30, |
||||||
|
|
2019
|
|
2018
|
||||
|
Cash paid during the period for:
|
|
|
|
||||
|
Income taxes, net of refunds
|
$
|
35,573
|
|
|
$
|
24,689
|
|
|
Interest, net of amounts capitalized
|
107,169
|
|
|
98,478
|
|
||
|
Significant non-cash investing and financing activities:
|
|
|
|
||||
|
Accrued capital expenditures
|
$
|
108,056
|
|
|
$
|
65,995
|
|
|
Right-of-use operating lease assets obtained in exchange for operating lease liabilities
|
4,562
|
|
|
—
|
|
||
|
Dividends accrued but not yet paid
|
82,800
|
|
|
77,800
|
|
||
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||
|
|
|
2019
|
2018
|
|
2019
|
2018
|
||||||||
|
Retail residential electric service
|
|
$
|
432,568
|
|
$
|
500,247
|
|
|
$
|
784,134
|
|
$
|
816,922
|
|
|
Retail non-residential electric service
|
|
395,929
|
|
435,500
|
|
|
728,597
|
|
778,689
|
|
||||
|
Wholesale energy sales
|
|
21,991
|
|
15,392
|
|
|
58,443
|
|
27,481
|
|
||||
|
Transmission services for others
|
|
15,157
|
|
15,489
|
|
|
30,406
|
|
30,334
|
|
||||
|
Other sources
|
|
3,856
|
|
7,495
|
|
|
8,451
|
|
13,411
|
|
||||
|
Total operating revenues
|
|
$
|
869,501
|
|
$
|
974,123
|
|
|
$
|
1,610,031
|
|
$
|
1,666,837
|
|
|
3.
|
Long-Term Debt and Liquidity Matters
|
|
|
As of June 30, 2019
|
|
As of December 31, 2018
|
||||||||||||
|
|
Carrying
Amount
|
|
Fair Value
|
|
Carrying
Amount
|
|
Fair Value
|
||||||||
|
Pinnacle West
|
$
|
449,111
|
|
|
$
|
449,124
|
|
|
$
|
448,796
|
|
|
$
|
443,955
|
|
|
APS
|
4,687,768
|
|
|
5,119,091
|
|
|
4,689,436
|
|
|
4,789,608
|
|
||||
|
Total
|
$
|
5,136,879
|
|
|
$
|
5,568,215
|
|
|
$
|
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.
|
|
•
|
APS must file a rate case no later than October 31, 2019, using a June 30, 2019 test-year;
|
|
•
|
until the conclusion of the rate case being filed no later than October 31, 2019, APS must provide information on customer bills that shows how much a customer would pay on their most economical rate given their actual usage during each month;
|
|
•
|
APS customers can switch rate plans during an open enrollment period of six months;
|
|
•
|
APS must identify customers whose bills have increased by more than 9% and that are not on the most economical rate and provide such customers with targeted education materials and an opportunity to switch rate plans;
|
|
•
|
APS must provide grandfathered net metering customers on legacy demand rates an opportunity to switch to another legacy rate to enable such customers to fully benefit from legacy net metering rates;
|
|
•
|
APS must fund and implement a supplemental customer education and outreach program to be developed with and administered by ACC Staff and a third-party consultant; and
|
|
•
|
APS must fund and organize, along with the third-party consultant, a stakeholder group to suggest better ways to communicate the impact of changes to adjustor cost recovery mechanisms (see below for discussion on cost recovery mechanisms), including more effective ways to educate customers on rate plans and to reduce energy usage.
|
|
|
Six Months Ended
June 30, |
||||||
|
|
2019
|
|
2018
|
||||
|
Beginning balance
|
$
|
37,164
|
|
|
$
|
75,637
|
|
|
Deferred fuel and purchased power costs — current period
|
16,702
|
|
|
50,112
|
|
||
|
Amounts charged to customers
|
(23,307
|
)
|
|
(50,851
|
)
|
||
|
Ending balance
|
$
|
30,559
|
|
|
$
|
74,898
|
|
|
•
|
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
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||
|
|
|
Current
|
|
Non-Current
|
|
Current
|
|
Non-Current
|
|||||||||
|
Pension
|
(a)
|
|
$
|
—
|
|
|
$
|
712,907
|
|
|
$
|
—
|
|
|
$
|
733,351
|
|
|
Retired power plant costs
|
2033
|
|
28,182
|
|
|
153,122
|
|
|
28,182
|
|
|
167,164
|
|
||||
|
Income taxes — allowance for funds used during construction ("AFUDC") equity
|
2049
|
|
6,457
|
|
|
152,388
|
|
|
6,457
|
|
|
151,467
|
|
||||
|
Deferred fuel and purchased power — mark-to-market (Note 7)
|
2023
|
|
55,729
|
|
|
21,516
|
|
|
31,728
|
|
|
23,768
|
|
||||
|
Deferred fuel and purchased power (b) (c)
|
2020
|
|
30,559
|
|
|
—
|
|
|
37,164
|
|
|
—
|
|
||||
|
Four Corners cost deferral
|
2024
|
|
8,077
|
|
|
36,190
|
|
|
8,077
|
|
|
40,228
|
|
||||
|
Income taxes — investment tax credit basis adjustment
|
2047
|
|
1,079
|
|
|
25,170
|
|
|
1,079
|
|
|
25,522
|
|
||||
|
Lost fixed cost recovery (b)
|
2020
|
|
25,746
|
|
|
—
|
|
|
32,435
|
|
|
—
|
|
||||
|
Palo Verde VIEs (Note 6)
|
2046
|
|
—
|
|
|
20,325
|
|
|
—
|
|
|
20,015
|
|
||||
|
Deferred compensation
|
2036
|
|
—
|
|
|
37,572
|
|
|
—
|
|
|
36,523
|
|
||||
|
Deferred property taxes
|
2027
|
|
8,569
|
|
|
62,072
|
|
|
8,569
|
|
|
66,356
|
|
||||
|
Loss on reacquired debt
|
2038
|
|
1,637
|
|
|
12,850
|
|
|
1,637
|
|
|
13,668
|
|
||||
|
Tax expense of Medicare subsidy
|
2024
|
|
1,235
|
|
|
5,772
|
|
|
1,235
|
|
|
6,176
|
|
||||
|
TCA balancing account (b)
|
2021
|
|
5,381
|
|
|
3,895
|
|
|
3,860
|
|
|
772
|
|
||||
|
AG-1 deferral
|
2022
|
|
2,787
|
|
|
4,110
|
|
|
2,654
|
|
|
5,819
|
|
||||
|
Mead-Phoenix transmission line CIAC
|
2050
|
|
332
|
|
|
9,878
|
|
|
332
|
|
|
10,044
|
|
||||
|
Coal reclamation
|
2026
|
|
1,546
|
|
|
16,250
|
|
|
1,546
|
|
|
15,607
|
|
||||
|
SCR deferral
|
N/A
|
|
—
|
|
|
37,919
|
|
|
—
|
|
|
23,276
|
|
||||
|
Tax expense adjuster mechanism (b)
|
2019
|
|
3,149
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
Ocotillo deferral
|
N/A
|
|
—
|
|
|
9,495
|
|
|
—
|
|
|
—
|
|
||||
|
Other
|
Various
|
|
3,994
|
|
|
—
|
|
|
1,947
|
|
|
3,185
|
|
||||
|
Total regulatory assets (d)
|
|
|
$
|
184,459
|
|
|
$
|
1,321,431
|
|
|
$
|
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
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||
|
|
|
Current
|
|
Non-Current
|
|
Current
|
|
Non-Current
|
|||||||||
|
Excess deferred income taxes - ACC - Tax Cuts and Jobs Act (a)
|
(b)
|
|
$
|
68,651
|
|
|
$
|
1,178,216
|
|
|
$
|
—
|
|
|
$
|
1,272,709
|
|
|
Excess deferred income taxes - FERC - Tax Cuts and Jobs Act (a)
|
2058
|
|
6,302
|
|
|
241,633
|
|
|
6,302
|
|
|
243,691
|
|
||||
|
Asset retirement obligations
|
2057
|
|
—
|
|
|
359,912
|
|
|
—
|
|
|
278,585
|
|
||||
|
Removal costs
|
(c)
|
|
50,701
|
|
|
153,847
|
|
|
39,866
|
|
|
177,533
|
|
||||
|
Other postretirement benefits
|
(d)
|
|
37,821
|
|
|
105,214
|
|
|
37,864
|
|
|
125,903
|
|
||||
|
Income taxes — deferred investment tax credit
|
2047
|
|
2,164
|
|
|
50,414
|
|
|
2,164
|
|
|
51,120
|
|
||||
|
Income taxes — change in rates
|
2048
|
|
2,764
|
|
|
69,171
|
|
|
2,769
|
|
|
70,069
|
|
||||
|
Spent nuclear fuel
|
2027
|
|
6,578
|
|
|
53,769
|
|
|
6,503
|
|
|
57,002
|
|
||||
|
Renewable energy standard (b)
|
2021
|
|
40,639
|
|
|
4,950
|
|
|
44,966
|
|
|
20
|
|
||||
|
Demand side management (b)
|
2021
|
|
7,191
|
|
|
24,146
|
|
|
14,604
|
|
|
4,123
|
|
||||
|
Sundance maintenance
|
2030
|
|
1,641
|
|
|
15,495
|
|
|
1,278
|
|
|
17,228
|
|
||||
|
Deferred gains on utility property
|
2022
|
|
3,423
|
|
|
5,372
|
|
|
4,423
|
|
|
6,581
|
|
||||
|
Four Corners coal reclamation
|
2038
|
|
1,858
|
|
|
17,540
|
|
|
1,858
|
|
|
17,871
|
|
||||
|
Tax expense adjustor mechanism (b)
|
2020
|
|
1,663
|
|
|
—
|
|
|
3,237
|
|
|
—
|
|
||||
|
Other
|
Various
|
|
461
|
|
|
8,213
|
|
|
42
|
|
|
3,541
|
|
||||
|
Total regulatory liabilities
|
|
|
$
|
231,857
|
|
|
$
|
2,287,892
|
|
|
$
|
165,876
|
|
|
$
|
2,325,976
|
|
|
(a)
|
For purposes of presentation on the Statement of Cash Flows, amortization of the regulatory liabilities for excess deferred income taxes are reflected as "Deferred income taxes" under Cash Flows From Operating Activities.
|
|
(b)
|
See “Cost Recovery Mechanisms” discussion above.
|
|
(c)
|
In accordance with regulatory accounting guidance, APS accrues removal costs for its regulated assets, even if there is no legal obligation for removal.
|
|
(d)
|
See Note 5.
|
|
5.
|
Retirement Plans and Other Postretirement Benefits
|
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||||||||||||||||||||||
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||||||
|
Service cost — benefits earned during the period
|
$
|
12,408
|
|
|
$
|
14,121
|
|
|
$
|
24,951
|
|
|
$
|
28,334
|
|
|
$
|
4,470
|
|
|
$
|
5,445
|
|
|
$
|
9,184
|
|
|
$
|
10,550
|
|
|
Non-service costs (credits):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Interest cost on benefit obligation
|
34,069
|
|
|
31,338
|
|
|
68,421
|
|
|
62,345
|
|
|
7,421
|
|
|
6,973
|
|
|
14,947
|
|
|
14,074
|
|
||||||||
|
Expected return on plan assets
|
(43,049
|
)
|
|
(45,759
|
)
|
|
(85,942
|
)
|
|
(91,426
|
)
|
|
(9,603
|
)
|
|
(10,520
|
)
|
|
(19,206
|
)
|
|
(21,041
|
)
|
||||||||
|
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Prior service credit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,455
|
)
|
|
(9,461
|
)
|
|
(18,910
|
)
|
|
(18,921
|
)
|
||||||||
|
Net actuarial loss
|
10,053
|
|
|
8,259
|
|
|
21,292
|
|
|
16,041
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
|
Net periodic benefit
cost (credit)
|
$
|
13,481
|
|
|
$
|
7,959
|
|
|
$
|
28,722
|
|
|
$
|
15,294
|
|
|
$
|
(7,167
|
)
|
|
$
|
(7,563
|
)
|
|
$
|
(13,985
|
)
|
|
$
|
(15,338
|
)
|
|
Portion of cost (credit) charged to expense
|
$
|
7,000
|
|
|
$
|
2,769
|
|
|
$
|
15,244
|
|
|
$
|
5,011
|
|
|
$
|
(5,063
|
)
|
|
$
|
(5,119
|
)
|
|
$
|
(9,880
|
)
|
|
$
|
(10,724
|
)
|
|
6.
|
Palo Verde Sale Leaseback Variable Interest Entities
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
|
Palo Verde sale leaseback property plant and equipment, net of accumulated depreciation
|
$
|
103,841
|
|
|
$
|
105,775
|
|
|
Equity — Noncontrolling interests
|
124,165
|
|
|
125,790
|
|
||
|
|
|
|
Quantity
|
||||
|
Commodity
|
|
Unit of Measure
|
June 30, 2019
|
|
December 31, 2018
|
||
|
Power
|
|
GWh
|
1,000
|
|
|
250
|
|
|
Gas
|
|
Billion cubic feet
|
218
|
|
|
218
|
|
|
|
|
Financial Statement Location
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
Commodity Contracts
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|||||||||
|
Loss Reclassified from Accumulated OCI into Income (Effective Portion Realized) (a)
|
|
Fuel and purchased power (b)
|
|
$
|
(538
|
)
|
|
$
|
(606
|
)
|
|
$
|
(974
|
)
|
|
$
|
(1,097
|
)
|
|
(a)
|
During the three and six months ended June 30, 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
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
Commodity Contracts
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|||||||||
|
Net Loss Recognized in Income
|
|
Operating revenues
|
|
$
|
—
|
|
|
$
|
(341
|
)
|
|
$
|
—
|
|
|
$
|
(1,560
|
)
|
|
Net Gain (Loss) Recognized in Income
|
|
Fuel and purchased power (a)
|
|
(49,686
|
)
|
|
3,384
|
|
|
(41,516
|
)
|
|
(30,705
|
)
|
||||
|
Total
|
|
|
|
$
|
(49,686
|
)
|
|
$
|
3,043
|
|
|
$
|
(41,516
|
)
|
|
$
|
(32,265
|
)
|
|
(a)
|
Amounts are before the effect of PSA deferrals.
|
|
As of June 30, 2019:
(dollars in thousands) |
|
Gross
Recognized
Derivatives
(a)
|
|
Amounts
Offset
(b)
|
|
Net
Recognized
Derivatives
|
|
Other
(c)
|
|
Amount Reported on Balance Sheets
|
||||||||||
|
Current assets
|
|
$
|
3,558
|
|
|
$
|
(2,939
|
)
|
|
$
|
619
|
|
|
$
|
(160
|
)
|
|
$
|
459
|
|
|
Investments and other assets
|
|
76
|
|
|
—
|
|
|
76
|
|
|
—
|
|
|
76
|
|
|||||
|
Total assets
|
|
3,634
|
|
|
(2,939
|
)
|
|
695
|
|
|
(160
|
)
|
|
535
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Current liabilities
|
|
(60,588
|
)
|
|
2,939
|
|
|
(57,649
|
)
|
|
(1,185
|
)
|
|
(58,834
|
)
|
|||||
|
Deferred credits and other
|
|
(21,592
|
)
|
|
—
|
|
|
(21,592
|
)
|
|
—
|
|
|
(21,592
|
)
|
|||||
|
Total liabilities
|
|
(82,180
|
)
|
|
2,939
|
|
|
(79,241
|
)
|
|
(1,185
|
)
|
|
(80,426
|
)
|
|||||
|
Total
|
|
$
|
(78,546
|
)
|
|
$
|
—
|
|
|
$
|
(78,546
|
)
|
|
$
|
(1,345
|
)
|
|
$
|
(79,891
|
)
|
|
(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 $1,185 and cash margin provided to counterparties of ($160).
|
|
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.
|
|
|
June 30, 2019
|
||
|
Aggregate fair value of derivative instruments in a net liability position
|
$
|
82,064
|
|
|
Cash collateral posted
|
—
|
|
|
|
Additional cash collateral in the event credit-risk-related contingent features were fully triggered (a)
|
80,804
|
|
|
|
(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
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
Other income:
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Interest income
|
$
|
2,699
|
|
|
$
|
2,408
|
|
|
$
|
5,001
|
|
|
$
|
4,299
|
|
|
Debt return on Four Corners SCR (Note 4)
|
4,887
|
|
|
4,188
|
|
|
9,731
|
|
|
6,280
|
|
||||
|
Debt return on Ocotillo modernization project (Note 4)
|
5,294
|
|
|
—
|
|
|
5,294
|
|
|
—
|
|
||||
|
Miscellaneous
|
5
|
|
|
2
|
|
|
28
|
|
|
4
|
|
||||
|
Total other income
|
$
|
12,885
|
|
|
$
|
6,598
|
|
|
$
|
20,054
|
|
|
$
|
10,583
|
|
|
Other expense:
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Non-operating costs
|
$
|
(3,481
|
)
|
|
$
|
(3,278
|
)
|
|
$
|
(6,185
|
)
|
|
$
|
(4,924
|
)
|
|
Investment losses — net
|
(491
|
)
|
|
(174
|
)
|
|
(729
|
)
|
|
(350
|
)
|
||||
|
Miscellaneous
|
(378
|
)
|
|
(319
|
)
|
|
(1,794
|
)
|
|
(1,726
|
)
|
||||
|
Total other expense
|
$
|
(4,350
|
)
|
|
$
|
(3,771
|
)
|
|
$
|
(8,708
|
)
|
|
$
|
(7,000
|
)
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
Other income:
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Interest income
|
$
|
1,504
|
|
|
$
|
2,046
|
|
|
$
|
3,054
|
|
|
$
|
3,724
|
|
|
Debt return on Four Corners SCR (Note 4)
|
4,887
|
|
|
4,188
|
|
|
9,731
|
|
|
6,280
|
|
||||
|
Debt return on Ocotillo modernization project (Note 4)
|
5,294
|
|
|
—
|
|
|
5,294
|
|
|
—
|
|
||||
|
Miscellaneous
|
6
|
|
|
1
|
|
|
28
|
|
|
3
|
|
||||
|
Total other income
|
$
|
11,691
|
|
|
$
|
6,235
|
|
|
$
|
18,107
|
|
|
$
|
10,007
|
|
|
Other expense:
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Non-operating costs
|
$
|
(3,049
|
)
|
|
$
|
(3,057
|
)
|
|
$
|
(5,517
|
)
|
|
$
|
(4,596
|
)
|
|
Miscellaneous
|
(379
|
)
|
|
(315
|
)
|
|
(1,789
|
)
|
|
(1,722
|
)
|
||||
|
Total other expense
|
$
|
(3,428
|
)
|
|
$
|
(3,372
|
)
|
|
$
|
(7,306
|
)
|
|
$
|
(6,318
|
)
|
|
10.
|
Earnings Per Share
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
Net income attributable to common shareholders
|
$
|
144,145
|
|
|
$
|
166,738
|
|
|
$
|
162,063
|
|
|
$
|
169,959
|
|
|
Weighted average common shares outstanding — basic
|
112,337
|
|
|
112,115
|
|
|
112,381
|
|
|
112,067
|
|
||||
|
Net effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||||
|
Contingently issuable performance shares and restricted stock units
|
314
|
|
|
356
|
|
|
353
|
|
|
415
|
|
||||
|
Weighted average common shares outstanding — diluted
|
112,651
|
|
|
112,471
|
|
|
112,734
|
|
|
112,482
|
|
||||
|
Earnings per weighted-average common share outstanding
|
|
|
|
|
|
|
|
||||||||
|
Net income attributable to common shareholders — basic
|
$
|
1.28
|
|
|
$
|
1.49
|
|
|
$
|
1.44
|
|
|
$
|
1.52
|
|
|
Net income attributable to common shareholders — diluted
|
$
|
1.28
|
|
|
$
|
1.48
|
|
|
$
|
1.44
|
|
|
$
|
1.51
|
|
|
11.
|
Fair Value Measurements
|
|
|
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Other
|
|
|
|
Balance at June 30, 2019
|
||||||||||
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Risk management activities — derivative instruments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Commodity contracts
|
$
|
—
|
|
|
$
|
3,198
|
|
|
$
|
436
|
|
|
$
|
(3,099
|
)
|
|
(a)
|
|
$
|
535
|
|
|
Nuclear decommissioning trust:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Equity securities
|
5,319
|
|
|
—
|
|
|
—
|
|
|
6,665
|
|
|
(b)
|
|
11,984
|
|
|||||
|
U.S. commingled equity funds
|
—
|
|
|
—
|
|
|
—
|
|
|
469,375
|
|
|
(c)
|
|
469,375
|
|
|||||
|
U.S. Treasury debt
|
162,044
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
162,044
|
|
|||||
|
Corporate debt
|
—
|
|
|
115,674
|
|
|
—
|
|
|
—
|
|
|
|
|
115,674
|
|
|||||
|
Mortgage-backed securities
|
—
|
|
|
113,179
|
|
|
—
|
|
|
—
|
|
|
|
|
113,179
|
|
|||||
|
Municipal bonds
|
—
|
|
|
67,158
|
|
|
—
|
|
|
—
|
|
|
|
|
67,158
|
|
|||||
|
Other fixed income
|
—
|
|
|
11,034
|
|
|
—
|
|
|
—
|
|
|
|
|
11,034
|
|
|||||
|
Subtotal nuclear decommissioning trust
|
167,363
|
|
|
307,045
|
|
|
—
|
|
|
476,040
|
|
|
|
|
950,448
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Other special use funds:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Equity securities
|
13,200
|
|
|
—
|
|
|
—
|
|
|
997
|
|
|
(b)
|
|
14,197
|
|
|||||
|
U.S. Treasury debt
|
214,712
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
214,712
|
|
|||||
|
Municipal bonds
|
—
|
|
|
12,649
|
|
|
—
|
|
|
—
|
|
|
|
|
12,649
|
|
|||||
|
Subtotal other special use funds
|
227,912
|
|
|
12,649
|
|
|
—
|
|
|
997
|
|
|
|
|
241,558
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Total assets
|
$
|
395,275
|
|
|
$
|
322,892
|
|
|
$
|
436
|
|
|
$
|
473,938
|
|
|
|
|
$
|
1,192,541
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Risk management activities — derivative instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Commodity contracts
|
$
|
—
|
|
|
$
|
(68,992
|
)
|
|
$
|
(13,189
|
)
|
|
$
|
1,755
|
|
|
(a)
|
|
$
|
(80,426
|
)
|
|
(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
(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 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.
|
|
|
June 30, 2019
Fair Value (thousands) |
|
Valuation Technique
|
|
Significant Unobservable Input
|
|
|
|
Weighted-Average
|
||||||||
|
Commodity Contracts
|
Assets
|
|
Liabilities
|
|
|
|
Range
|
|
|||||||||
|
Electricity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Forward Contracts (a)
|
$
|
294
|
|
|
$
|
11,675
|
|
|
Discounted cash flows
|
|
Electricity forward price (per MWh)
|
|
$18.27 - $30.11
|
|
$
|
26.78
|
|
|
Natural Gas:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Forward Contracts (a)
|
142
|
|
|
1,514
|
|
|
Discounted cash flows
|
|
Natural gas forward price (per MMBtu)
|
|
$0.05 - $2.88
|
|
$
|
2.41
|
|
||
|
Total
|
$
|
436
|
|
|
$
|
13,189
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
Commodity Contracts
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
Net derivative balance at beginning of period
|
|
$
|
(5,612
|
)
|
|
$
|
(19,754
|
)
|
|
$
|
(8,214
|
)
|
|
$
|
(18,256
|
)
|
|
Total net gains (losses) realized/unrealized:
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Deferred as a regulatory asset or liability
|
|
(8,731
|
)
|
|
(989
|
)
|
|
(10,310
|
)
|
|
(3,311
|
)
|
||||
|
Settlements
|
|
2,431
|
|
|
494
|
|
|
2,949
|
|
|
1,276
|
|
||||
|
Transfers into Level 3 from Level 2
|
|
(3,096
|
)
|
|
(2,534
|
)
|
|
(3,098
|
)
|
|
(4,979
|
)
|
||||
|
Transfers from Level 3 into Level 2
|
|
2,255
|
|
|
13,425
|
|
|
5,920
|
|
|
15,912
|
|
||||
|
Net derivative balance at end of period
|
|
$
|
(12,753
|
)
|
|
$
|
(9,358
|
)
|
|
$
|
(12,753
|
)
|
|
$
|
(9,358
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Net unrealized gains included in earnings related to instruments still held at end of period
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
12.
|
Investments in Nuclear Decommissioning Trust and Other Special Use Funds
|
|
|
June 30, 2019
|
||||||||||||||||||
|
|
Fair Value
|
|
Total
Unrealized
Gains
|
|
Total
Unrealized
Losses
|
||||||||||||||
|
Investment Type:
|
Nuclear Decommissioning Trust
|
|
Other Special Use Funds
|
|
Total
|
|
|
||||||||||||
|
Equity securities
|
$
|
474,694
|
|
|
$
|
13,200
|
|
|
$
|
487,894
|
|
|
$
|
291,295
|
|
|
$
|
—
|
|
|
Available for sale-fixed income securities
|
469,089
|
|
|
227,361
|
|
|
696,450
|
|
(a)
|
24,638
|
|
|
(696
|
)
|
|||||
|
Other
|
6,665
|
|
|
997
|
|
|
7,662
|
|
(b)
|
—
|
|
|
—
|
|
|||||
|
Total
|
$
|
950,448
|
|
|
$
|
241,558
|
|
|
$
|
1,192,006
|
|
|
$
|
315,933
|
|
|
$
|
(696
|
)
|
|
(a)
|
As of June 30, 2019, the amortized cost basis of these available-for-sale investments is $672 million.
|
|
(b)
|
Represents net pending securities sales and purchases.
|
|
|
December 31, 2018
|
||||||||||||||||||
|
|
Fair Value
|
|
Total
Unrealized
Gains
|
|
Total
Unrealized
Losses
|
||||||||||||||
|
Investment Type:
|
Nuclear Decommissioning Trust
|
|
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 June 30,
|
||||||||||
|
|
Nuclear Decommissioning Trust
|
|
Other Special Use Funds
|
|
Total
|
||||||
|
2019
|
|
|
|
|
|
||||||
|
Realized gains
|
$
|
2,643
|
|
|
$
|
—
|
|
|
$
|
2,643
|
|
|
Realized losses
|
(1,700
|
)
|
|
—
|
|
|
(1,700
|
)
|
|||
|
Proceeds from the sale of securities (a)
|
93,559
|
|
|
36,747
|
|
|
130,306
|
|
|||
|
2018
|
|
|
|
|
|
||||||
|
Realized gains
|
$
|
1,484
|
|
|
$
|
—
|
|
|
$
|
1,484
|
|
|
Realized losses
|
(2,978
|
)
|
|
—
|
|
|
(2,978
|
)
|
|||
|
Proceeds from the sale of securities (a)
|
122,790
|
|
|
2,426
|
|
|
125,216
|
|
|||
|
(a)
|
Proceeds are reinvested in the nuclear decommissioning trust and coal reclamation escrow account.
|
|
|
Six Months Ended June 30,
|
||||||||||
|
|
Nuclear Decommissioning Trust
|
|
Other Special Use Funds
|
|
Total
|
||||||
|
2019
|
|
|
|
|
|
||||||
|
Realized gains
|
$
|
3,746
|
|
|
$
|
—
|
|
|
$
|
3,746
|
|
|
Realized losses
|
(3,105
|
)
|
|
—
|
|
|
(3,105
|
)
|
|||
|
Proceeds from the sale of securities (a)
|
216,152
|
|
|
93,202
|
|
|
309,354
|
|
|||
|
2018
|
|
|
|
|
|
||||||
|
Realized gains
|
$
|
2,298
|
|
|
$
|
1
|
|
|
$
|
2,299
|
|
|
Realized losses
|
(5,025
|
)
|
|
—
|
|
|
(5,025
|
)
|
|||
|
Proceeds from the sale of securities (a)
|
253,246
|
|
|
4,981
|
|
|
258,227
|
|
|||
|
(a)
|
Proceeds are reinvested in the nuclear decommissioning trust and coal reclamation escrow account.
|
|
|
Nuclear Decommissioning Trust (a)
|
|
Coal Reclamation Escrow Account
|
|
Active Union Medical Trust
|
|
Total
|
||||||||
|
Less than one year
|
$
|
37,373
|
|
|
$
|
22,253
|
|
|
$
|
40,219
|
|
|
$
|
99,845
|
|
|
1 year – 5 years
|
126,745
|
|
|
17,449
|
|
|
140,569
|
|
|
284,763
|
|
||||
|
5 years – 10 years
|
113,989
|
|
|
1,807
|
|
|
—
|
|
|
115,796
|
|
||||
|
Greater than 10 years
|
190,982
|
|
|
5,064
|
|
|
—
|
|
|
196,046
|
|
||||
|
Total
|
$
|
469,089
|
|
|
$
|
46,573
|
|
|
$
|
180,788
|
|
|
$
|
696,450
|
|
|
(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
|
||||||
|
Three Months Ended June 30
|
|
|
|
|
|
|
|
|
|
||||||
|
Balance March 31, 2019
|
$
|
(45,118
|
)
|
|
|
|
$
|
(1,383
|
)
|
|
|
|
$
|
(46,501
|
)
|
|
OCI (loss) before reclassifications
|
(2,422
|
)
|
|
|
|
—
|
|
|
|
|
(2,422
|
)
|
|||
|
Amounts reclassified from accumulated other comprehensive loss
|
883
|
|
|
(a)
|
|
404
|
|
|
(b)
|
|
1,287
|
|
|||
|
Balance June 30, 2019
|
$
|
(46,657
|
)
|
|
|
|
$
|
(979
|
)
|
|
|
|
$
|
(47,636
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Balance March 31, 2018
|
$
|
(49,494
|
)
|
|
|
|
$
|
(2,847
|
)
|
|
|
|
$
|
(52,341
|
)
|
|
OCI (loss) before reclassifications
|
(5,928
|
)
|
|
|
|
—
|
|
|
|
|
(5,928
|
)
|
|||
|
Amounts reclassified from accumulated other comprehensive loss
|
1,189
|
|
|
(a)
|
|
456
|
|
|
(b)
|
|
1,645
|
|
|||
|
Balance June 30, 2018
|
$
|
(54,233
|
)
|
|
|
|
$
|
(2,391
|
)
|
|
|
|
$
|
(56,624
|
)
|
|
|
Pension and Other Postretirement Benefits
|
|
|
|
Derivative Instruments
|
|
|
|
Total
|
||||||
|
Six Months Ended June 30
|
|
|
|
|
|
|
|
|
|
||||||
|
Balance December 31, 2018
|
$
|
(45,997
|
)
|
|
|
|
$
|
(1,711
|
)
|
|
|
|
$
|
(47,708
|
)
|
|
OCI (loss) before reclassifications
|
(2,422
|
)
|
|
|
|
—
|
|
|
|
|
(2,422
|
)
|
|||
|
Amounts reclassified from accumulated other comprehensive loss
|
1,762
|
|
|
(a)
|
|
732
|
|
|
(b)
|
|
2,494
|
|
|||
|
Balance June 30, 2019
|
$
|
(46,657
|
)
|
|
|
|
$
|
(979
|
)
|
|
|
|
$
|
(47,636
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Balance December 31, 2017
|
$
|
(42,440
|
)
|
|
|
|
$
|
(2,562
|
)
|
|
|
|
$
|
(45,002
|
)
|
|
OCI (loss) before reclassifications
|
(5,928
|
)
|
|
|
|
(96
|
)
|
|
|
|
(6,024
|
)
|
|||
|
Amounts reclassified from accumulated other comprehensive loss
|
2,089
|
|
|
(a)
|
|
865
|
|
|
(b)
|
|
2,954
|
|
|||
|
Reclassification of income tax effect related to tax reform
|
(7,954
|
)
|
|
(c)
|
|
(598
|
)
|
|
(c)
|
|
(8,552
|
)
|
|||
|
Balance June 30, 2018
|
$
|
(54,233
|
)
|
|
|
|
$
|
(2,391
|
)
|
|
|
|
$
|
(56,624
|
)
|
|
(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
|
||||||
|
Three Months Ended June 30
|
|
|
|
|
|
|
|
|
|
||||||
|
Balance March 31, 2019
|
$
|
(24,644
|
)
|
|
|
|
$
|
(1,383
|
)
|
|
|
|
$
|
(26,027
|
)
|
|
OCI (loss) before reclassifications
|
(2,414
|
)
|
|
|
|
—
|
|
|
|
|
(2,414
|
)
|
|||
|
Amounts reclassified from accumulated other comprehensive loss
|
761
|
|
|
(a)
|
|
404
|
|
|
(b)
|
|
1,165
|
|
|||
|
Balance June 30, 2019
|
$
|
(26,297
|
)
|
|
|
|
$
|
(979
|
)
|
|
|
|
$
|
(27,276
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Balance March 31, 2018
|
$
|
(28,004
|
)
|
|
|
|
$
|
(2,847
|
)
|
|
|
|
$
|
(30,851
|
)
|
|
OCI (loss) before reclassifications
|
(5,790
|
)
|
|
|
|
—
|
|
|
|
|
(5,790
|
)
|
|||
|
Amounts reclassified from accumulated other comprehensive loss
|
1,026
|
|
|
(a)
|
|
456
|
|
|
(b)
|
|
1,482
|
|
|||
|
Balance June 30, 2018
|
$
|
(32,768
|
)
|
|
|
|
$
|
(2,391
|
)
|
|
|
|
$
|
(35,159
|
)
|
|
|
Pension and Other Postretirement Benefits
|
|
|
|
Derivative Instruments
|
|
|
|
Total
|
||||||
|
Six Months Ended June 30
|
|
|
|
|
|
|
|
|
|
||||||
|
Balance December 31, 2018
|
$
|
(25,396
|
)
|
|
|
|
$
|
(1,711
|
)
|
|
|
|
$
|
(27,107
|
)
|
|
OCI (loss) before reclassifications
|
(2,414
|
)
|
|
|
|
—
|
|
|
|
|
(2,414
|
)
|
|||
|
Amounts reclassified from accumulated other comprehensive loss
|
1,513
|
|
|
(a)
|
|
732
|
|
|
(b)
|
|
2,245
|
|
|||
|
Balance June 30, 2019
|
$
|
(26,297
|
)
|
|
|
|
$
|
(979
|
)
|
|
|
|
$
|
(27,276
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Balance December 31, 2017
|
$
|
(24,421
|
)
|
|
|
|
$
|
(2,562
|
)
|
|
|
|
$
|
(26,983
|
)
|
|
OCI (loss) before reclassifications
|
(5,790
|
)
|
|
|
|
(96
|
)
|
|
|
|
(5,886
|
)
|
|||
|
Amounts reclassified from accumulated other comprehensive loss
|
1,883
|
|
|
(a)
|
|
865
|
|
|
(b)
|
|
2,748
|
|
|||
|
Reclassification of income tax effect related to tax reform
|
(4,440
|
)
|
|
(c)
|
|
(598
|
)
|
|
(c)
|
|
(5,038
|
)
|
|||
|
Balance June 30, 2018
|
$
|
(32,768
|
)
|
|
|
|
$
|
(2,391
|
)
|
|
|
|
$
|
(35,159
|
)
|
|
(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
June 30, 2019 |
||||||||||
|
|
|
Purchased Power Lease Contracts
|
|
Land, Property & Equipment Leases
|
|
Total
|
||||||
|
Operating lease cost
|
|
$
|
14,063
|
|
|
$
|
4,414
|
|
|
$
|
18,477
|
|
|
Variable lease cost
|
|
41,529
|
|
|
360
|
|
|
41,889
|
|
|||
|
Short-term lease cost
|
|
—
|
|
|
1,812
|
|
|
1,812
|
|
|||
|
Total lease cost
|
|
$
|
55,592
|
|
|
$
|
6,586
|
|
|
$
|
62,178
|
|
|
|
|
Six Months Ended
June 30, 2019 |
||||||||||
|
|
|
Purchased Power Lease Contracts
|
|
Land, Property & Equipment Leases
|
|
Total
|
||||||
|
Operating lease cost
|
|
$
|
14,063
|
|
|
$
|
8,762
|
|
|
$
|
22,825
|
|
|
Variable lease cost
|
|
58,820
|
|
|
360
|
|
|
59,180
|
|
|||
|
Short-term lease cost
|
|
—
|
|
|
2,665
|
|
|
2,665
|
|
|||
|
Total lease cost
|
|
$
|
72,883
|
|
|
$
|
11,787
|
|
|
$
|
84,670
|
|
|
|
|
June 30, 2019
|
||||||||||
|
Year
|
|
Purchased Power Lease Contracts
|
|
Land, Property & Equipment Leases
|
|
Total
|
||||||
|
2019 (remaining six months of 2019)
|
|
$
|
49,051
|
|
|
$
|
7,335
|
|
|
$
|
56,386
|
|
|
2020
|
|
—
|
|
|
12,868
|
|
|
12,868
|
|
|||
|
2021
|
|
—
|
|
|
10,029
|
|
|
10,029
|
|
|||
|
2022
|
|
—
|
|
|
6,988
|
|
|
6,988
|
|
|||
|
2023
|
|
—
|
|
|
5,838
|
|
|
5,838
|
|
|||
|
2024
|
|
—
|
|
|
3,691
|
|
|
3,691
|
|
|||
|
Thereafter
|
|
—
|
|
|
38,506
|
|
|
38,506
|
|
|||
|
Total lease commitments
|
|
49,051
|
|
|
85,255
|
|
|
134,306
|
|
|||
|
Less imputed interest
|
|
294
|
|
|
20,411
|
|
|
20,705
|
|
|||
|
Total lease liabilities
|
|
$
|
48,757
|
|
|
$
|
64,844
|
|
|
$
|
113,601
|
|
|
|
|
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
|
|
|
|
June 30, 2019
|
|
|
Weighted average remaining lease term
|
8 years
|
|
|
Weighted average discount rate (a)
|
3.84
|
%
|
|
|
Six Months Ended
June 30, 2019 |
||
|
Cash paid for amounts included in the measurement of lease liabilities - operating cash flows (dollars in thousands):
|
$
|
11,987
|
|
|
|
Net Capacity in Operation
(MW)
|
|
Net Capacity Planned / Under
Development (MW)
|
|
||
|
Total APS Owned: Solar
|
240
|
|
|
—
|
|
|
|
Purchased Power Agreements:
|
|
|
|
|
|
|
|
Solar
|
310
|
|
|
—
|
|
|
|
Solar + Energy Storage
|
—
|
|
|
50
|
|
|
|
Wind
|
289
|
|
|
—
|
|
|
|
Geothermal
|
10
|
|
|
—
|
|
|
|
Biomass
|
14
|
|
|
—
|
|
|
|
Biogas
|
3
|
|
|
—
|
|
|
|
Total Purchased Power Agreements
|
626
|
|
|
50
|
|
|
|
Total Distributed Energy: Solar (a)
|
902
|
|
|
36
|
|
(b)
|
|
Total Renewable Portfolio
|
1,768
|
|
|
86
|
|
|
|
(b)
|
Applications received by APS that are not yet installed and online.
|
|
•
|
APS must file a rate case no later than October 31, 2019, using a June 30, 2019 test-year;
|
|
•
|
until the conclusion of the rate case being filed no later than October 31, 2019, APS must provide information on customer bills that shows how much a customer would pay on their most economical rate given their actual usage during each month;
|
|
•
|
APS customers can switch rate plans during an open enrollment period of six months;
|
|
•
|
APS must identify customers whose bills have increased by more than 9% and that are not on the most economical rate and provide such customers with targeted education materials and an opportunity to switch rate plans;
|
|
•
|
APS must provide grandfathered net metering customers on legacy demand rates an opportunity to switch to another legacy rate to enable such customers to fully benefit from legacy net metering rates;
|
|
•
|
APS must fund and implement a supplemental customer education and outreach program to be developed with and administered by ACC Staff and a third-party consultant; and
|
|
•
|
APS must fund and organize, along with the third-party consultant, a stakeholder group to suggest better ways to communicate the impact of changes to adjustor cost recovery mechanisms (see Note 4 on cost recovery mechanisms), including more effective ways to educate customers on rate plans and to reduce energy usage.
|
|
|
Three Months Ended
June 30, |
|
|
||||||||
|
|
2019
|
|
2018
|
|
Net Change
|
||||||
|
|
(dollars in millions)
|
||||||||||
|
Regulated Electricity Segment:
|
|
|
|
|
|
|
|
|
|||
|
Operating revenues less fuel and purchased power expenses
|
$
|
626
|
|
|
$
|
701
|
|
|
$
|
(75
|
)
|
|
Operations and maintenance
|
(227
|
)
|
|
(263
|
)
|
|
36
|
|
|||
|
Depreciation and amortization
|
(147
|
)
|
|
(145
|
)
|
|
(2
|
)
|
|||
|
Taxes other than income taxes
|
(55
|
)
|
|
(53
|
)
|
|
(2
|
)
|
|||
|
Pension and other postretirement non-service credits - net
|
6
|
|
|
12
|
|
|
(6
|
)
|
|||
|
All other income and expenses, net
|
16
|
|
|
16
|
|
|
—
|
|
|||
|
Interest charges, net of allowance for borrowed funds used during construction
|
(53
|
)
|
|
(54
|
)
|
|
1
|
|
|||
|
Income taxes
|
(17
|
)
|
|
(45
|
)
|
|
28
|
|
|||
|
Less income related to noncontrolling interests (Note 6)
|
(5
|
)
|
|
(5
|
)
|
|
—
|
|
|||
|
Regulated electricity segment income
|
144
|
|
|
164
|
|
|
(20
|
)
|
|||
|
All other
|
—
|
|
|
3
|
|
|
(3
|
)
|
|||
|
Net Income Attributable to Common Shareholders
|
$
|
144
|
|
|
$
|
167
|
|
|
$
|
(23
|
)
|
|
|
Increase (Decrease)
|
||||||||||
|
|
Operating
revenues
|
|
Fuel and
purchased
power expenses
|
|
Net change
|
||||||
|
|
(dollars in millions)
|
||||||||||
|
Effects of weather
|
$
|
(61
|
)
|
|
$
|
(15
|
)
|
|
$
|
(46
|
)
|
|
Refunds due to lower Federal corporate income tax rate (Note 4)
|
(28
|
)
|
|
—
|
|
|
(28
|
)
|
|||
|
Lower renewable energy regulatory surcharges, partially offset by operations and maintenance costs
|
(10
|
)
|
|
—
|
|
|
(10
|
)
|
|||
|
Higher transmission revenues (Note 4)
|
5
|
|
|
—
|
|
|
5
|
|
|||
|
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
|
2
|
|
|
(1
|
)
|
|
3
|
|
|||
|
Changes in net fuel and purchased power costs, including off-system sales margins and related deferrals
|
(12
|
)
|
|
(14
|
)
|
|
2
|
|
|||
|
Miscellaneous items, net
|
1
|
|
|
2
|
|
|
(1
|
)
|
|||
|
Total
|
$
|
(103
|
)
|
|
$
|
(28
|
)
|
|
$
|
(75
|
)
|
|
•
|
A decrease of $10 million in fossil generation primarily due to lower planned outages and other operating costs;
|
|
•
|
A decrease of $10 million related to costs for renewable energy and similar regulatory programs, which is partially offset by operating revenues and purchased power;
|
|
•
|
A decrease of $9 million related to public outreach costs at the parent company primarily associated with the ballot initiative in 2018;
|
|
•
|
A decrease of $7 million related to employee benefit costs;
|
|
•
|
An increase of $4 million for costs related to information technology; and
|
|
•
|
A decrease of $4 million for other miscellaneous factors.
|
|
|
Six Months Ended
June 30, |
|
|
||||||||
|
|
2019
|
|
2018
|
|
Net Change
|
||||||
|
|
(dollars in millions)
|
||||||||||
|
Regulated Electricity Segment:
|
|
|
|
|
|
|
|
|
|||
|
Operating revenues less fuel and purchased power expenses
|
$
|
1,135
|
|
|
$
|
1,190
|
|
|
$
|
(55
|
)
|
|
Operations and maintenance
|
(472
|
)
|
|
(524
|
)
|
|
52
|
|
|||
|
Depreciation and amortization
|
(296
|
)
|
|
(289
|
)
|
|
(7
|
)
|
|||
|
Taxes other than income taxes
|
(110
|
)
|
|
(106
|
)
|
|
(4
|
)
|
|||
|
Pension and other postretirement non-service credits - net
|
11
|
|
|
25
|
|
|
(14
|
)
|
|||
|
All other income and expenses, net
|
30
|
|
|
33
|
|
|
(3
|
)
|
|||
|
Interest charges, net of allowance for borrowed funds used during construction
|
(107
|
)
|
|
(107
|
)
|
|
—
|
|
|||
|
Income taxes
|
(19
|
)
|
|
(43
|
)
|
|
24
|
|
|||
|
Less income related to noncontrolling interests (Note 6)
|
(10
|
)
|
|
(10
|
)
|
|
—
|
|
|||
|
Regulated electricity segment income
|
162
|
|
|
169
|
|
|
(7
|
)
|
|||
|
All other
|
—
|
|
|
1
|
|
|
(1
|
)
|
|||
|
Net Income Attributable to Common Shareholders
|
$
|
162
|
|
|
$
|
170
|
|
|
$
|
(8
|
)
|
|
|
Increase (Decrease)
|
||||||||||
|
|
Operating
revenues
|
|
Fuel and
purchased
power expenses
|
|
Net change
|
||||||
|
|
(dollars in millions)
|
||||||||||
|
Refunds due to lower Federal corporate income tax rate (Note 4)
|
$
|
(32
|
)
|
|
$
|
—
|
|
|
$
|
(32
|
)
|
|
Effects of weather
|
(33
|
)
|
|
(8
|
)
|
|
(25
|
)
|
|||
|
Lower renewable energy regulatory surcharges and higher purchased power, partially offset by operations and maintenance costs
|
(15
|
)
|
|
1
|
|
|
(16
|
)
|
|||
|
Lower transmission revenues (Note 4)
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|||
|
Change in residential rate design and seasonal rates (a)
|
13
|
|
|
—
|
|
|
13
|
|
|||
|
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
|
6
|
|
|
1
|
|
|
5
|
|
|||
|
Changes in net fuel and purchased power costs, including off-system sales margins and related deferrals
|
4
|
|
|
4
|
|
|
—
|
|
|||
|
Miscellaneous items, net
|
6
|
|
|
3
|
|
|
3
|
|
|||
|
Total
|
$
|
(54
|
)
|
|
$
|
1
|
|
|
$
|
(55
|
)
|
|
•
|
A decrease of $18 million in fossil generation primarily due to lower planned outages and other operating costs;
|
|
•
|
A decrease of $17 million related to costs for renewable energy and similar regulatory programs, which is partially offset by operating revenues and purchased power;
|
|
•
|
A decrease of $11 million related to public outreach costs at the parent company primarily associated with the ballot initiative in 2018;
|
|
•
|
A decrease of $8 million in transmission, distribution and customer service costs;
|
|
•
|
An increase of $6 million for costs related to information technology; and
|
|
•
|
A decrease of $4 million for other miscellaneous factors.
|
|
|
Six Months Ended
June 30, |
|
Net
|
||||||||
|
|
2019
|
|
2018
|
|
Change
|
||||||
|
Net cash flow provided by operating activities
|
$
|
346
|
|
|
$
|
396
|
|
|
$
|
(50
|
)
|
|
Net cash flow used for investing activities
|
(528
|
)
|
|
(679
|
)
|
|
151
|
|
|||
|
Net cash flow provided by financing activities
|
178
|
|
|
273
|
|
|
(95
|
)
|
|||
|
Net change in cash and cash equivalents
|
$
|
(4
|
)
|
|
$
|
(10
|
)
|
|
$
|
6
|
|
|
|
Six Months Ended
June 30, |
|
Net
|
||||||||
|
|
2019
|
|
2018
|
|
Change
|
||||||
|
Net cash flow provided by operating activities
|
$
|
335
|
|
|
$
|
406
|
|
|
$
|
(71
|
)
|
|
Net cash flow used for investing activities
|
(536
|
)
|
|
(667
|
)
|
|
131
|
|
|||
|
Net cash flow provided by financing activities
|
197
|
|
|
251
|
|
|
(54
|
)
|
|||
|
Net change in cash and cash equivalents
|
$
|
(4
|
)
|
|
$
|
(10
|
)
|
|
$
|
6
|
|
|
|
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)
|
20
|
|
|
21
|
|
|
3
|
|
|||
|
New Resources (b)
|
3
|
|
|
93
|
|
|
371
|
|
|||
|
Environmental
|
26
|
|
|
57
|
|
|
53
|
|
|||
|
New Gas Generation
|
16
|
|
|
—
|
|
|
—
|
|
|||
|
Other Generation
|
172
|
|
|
142
|
|
|
114
|
|
|||
|
Distribution
|
535
|
|
|
455
|
|
|
443
|
|
|||
|
Transmission
|
189
|
|
|
198
|
|
|
206
|
|
|||
|
Other (c)
|
135
|
|
|
168
|
|
|
151
|
|
|||
|
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
|
|
Negative
|
|
|
|
|
|
|
|
|
APS
|
|
|
|
|
|
|
Corporate credit rating
|
A2
|
|
A-
|
|
A-
|
|
Senior unsecured
|
A2
|
|
A-
|
|
A
|
|
Commercial paper
|
P-1
|
|
A-2
|
|
F2
|
|
Outlook
|
Stable
|
|
Stable
|
|
Negative
|
|
|
Six Months Ended
June 30, |
||||||
|
|
2019
|
|
2018
|
||||
|
Mark-to-market of net positions at beginning of period
|
$
|
(59
|
)
|
|
$
|
(91
|
)
|
|
Increase in regulatory asset/liability
|
(22
|
)
|
|
(1
|
)
|
||
|
Recognized in OCI:
|
|
|
|
||||
|
Mark-to-market losses realized during the period
|
1
|
|
|
1
|
|
||
|
Change in valuation techniques
|
—
|
|
|
—
|
|
||
|
Mark-to-market of net positions at end of period
|
$
|
(80
|
)
|
|
$
|
(91
|
)
|
|
Source of Fair Value
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Total
Fair
Value
|
||||||||||||
|
Observable prices provided by other external sources
|
|
$
|
(33
|
)
|
|
$
|
(19
|
)
|
|
$
|
(9
|
)
|
|
$
|
(5
|
)
|
|
$
|
—
|
|
|
$
|
(66
|
)
|
|
Prices based on unobservable inputs
|
|
(10
|
)
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(14
|
)
|
||||||
|
Total by maturity
|
|
$
|
(43
|
)
|
|
$
|
(22
|
)
|
|
$
|
(9
|
)
|
|
$
|
(5
|
)
|
|
$
|
(1
|
)
|
|
$
|
(80
|
)
|
|
|
June 30, 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
|
$
|
4
|
|
|
$
|
(4
|
)
|
|
$
|
1
|
|
|
$
|
(1
|
)
|
|
Natural gas
|
41
|
|
|
(41
|
)
|
|
44
|
|
|
(44
|
)
|
||||
|
Total
|
$
|
45
|
|
|
$
|
(45
|
)
|
|
$
|
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
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
104
|
|
Pinnacle West
APS
|
|
The cover page from this Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, formatted in Inline XBRL
|
|
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:
|
August 8, 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:
|
August 8, 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 15
|
|
Section 1.03
|
Accounting Terms 16
|
|
Section 1.04
|
Rounding 16
|
|
Section 1.05
|
Times of Day 16
|
|
ARTICLE II AMOUNTS AND TERMS OF THE LOANS
|
17
|
|
Section 2.01
|
The Loans 17
|
|
Section 2.02
|
Making the Loans 17
|
|
Section 2.03
|
Fees 18
|
|
Section 2.04
|
Repayment of Loans 18
|
|
Section 2.05
|
Interest on Loans 18
|
|
Section 2.06
|
Interest Rate Determination. 20
|
|
Section 2.07
|
Optional Conversion of Loans 21
|
|
Section 2.08
|
Prepayments of Loans 22
|
|
Section 2.09
|
Increased Costs. 22
|
|
Section 2.10
|
Illegality 24
|
|
Section 2.11
|
Payments and Computations 24
|
|
Section 2.12
|
Taxes 25
|
|
Section 2.13
|
Sharing of Payments, Etc. 29
|
|
Section 2.14
|
Evidence of Debt 30
|
|
Section 2.15
|
Use of Proceeds 31
|
|
Section 2.16
|
Affected Lenders 31
|
|
Section 2.17
|
Replacement of Lenders 31
|
|
ARTICLE III CONDITIONS PRECEDENT
|
32
|
|
Section 3.01
|
Conditions Precedent to Effectiveness 32
|
|
Section 3.02
|
Determinations Under Section 3.01 33
|
|
ARTICLE IV REPRESENTATIONS AND WARRANTIES
|
34
|
|
Section 4.01
|
Representations and Warranties of the Borrower 34
|
|
ARTICLE V COVENANTS OF THE BORROWER
|
38
|
|
Section 5.01
|
Affirmative Covenants 38
|
|
Section 5.02
|
Negative Covenants 42
|
|
Section 5.03
|
Financial Covenant 43
|
|
ARTICLE VI EVENTS OF DEFAULT
|
43
|
|
Section 6.01
|
Events of Default 43
|
|
ARTICLE VII THE AGENT
|
45
|
|
Section 7.01
|
Appointment and Authority 45
|
|
Section 7.02
|
Rights as a Lender 45
|
|
Section 7.03
|
Exculpatory Provisions 46
|
|
Section 7.04
|
Reliance by Agent 46
|
|
Section 7.05
|
Delegation of Duties 47
|
|
Section 7.06
|
Resignation of Agent 47
|
|
Section 7.07
|
Non-Reliance on Agent and Other Lenders 48
|
|
Section 7.08
|
No Other Duties, Etc. 48
|
|
Section 7.09
|
Certain ERISA Matters 48
|
|
ARTICLE VIII MISCELLANEOUS
|
50
|
|
Section 8.01
|
Amendments, Etc. 50
|
|
Section 8.02
|
Notices, Etc. 51
|
|
Section 8.03
|
No Waiver; Cumulative Remedies; Enforcement 53
|
|
Section 8.04
|
Costs and Expenses; Indemnity; Damage Waiver 53
|
|
Section 8.05
|
Right of Set-off 55
|
|
Section 8.06
|
Effectiveness; Binding Effect 56
|
|
Section 8.07
|
Successors and Assigns 56
|
|
Section 8.08
|
Confidentiality 59
|
|
Section 8.09
|
Governing Law 60
|
|
Section 8.10
|
Counterparts; Integration 60
|
|
Section 8.11
|
Jurisdiction, Etc. 60
|
|
Section 8.12
|
Payments Set Aside 61
|
|
Section 8.13
|
Patriot Act and Beneficial Ownership Regulation 61
|
|
Section 8.14
|
Waiver of Jury Trial 61
|
|
Section 8.15
|
No Advisory or Fiduciary Responsibility 61
|
|
Section 8.16
|
Survival of Representations and Warranties 62
|
|
Section 8.17
|
Severability 62
|
|
Section 8.18
|
Acknowledgement and Consent to Bail-In of EEA Financial Institutions 62
|
|
|
PINNACLE WEST CAPITAL CORPORATION
|
|
|
|
|
|
By: /s/ Lee R. Nickloy_____________________
|
|
|
Name: Lee R. Nickloy
|
|
|
Title: Vice President and Treasurer
|
|
ADMINISTRATIVE AGENT:
|
PNC BANK, NATIONAL ASSOCIATION, as
|
|
|
Agent and a Lender
|
|
|
|
|
|
By: /s/ Gabriel Martin
|
|
|
Name: Gabriel Martín
|
|
|
Title: Managing Director
|
|
LENDERS:
|
CITIBANK, N.A., as a Lender
|
|
|
|
|
|
By: /s/ Hans Lin
|
|
|
Name: Hans Lin
|
|
|
Title: Senior Vice President
|
|
Lender
|
Commitment
|
Ratable Share
|
||
|
PNC Bank, National Association
|
|
$25,000,000
|
|
50.00%
|
|
Citibank, N.A.
|
|
$25,000,000
|
|
50.00%
|
|
TOTAL
|
|
$50,000,000
|
|
100%
|
|
|
|
|
||
|
$________
|
May 9, 2019
|
|
PINNACLE WEST CAPITAL CORPORATION
|
|
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 May 9, 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 $49,000,000.
|
|
[(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 May 9, 2019, (b) to fulfill the applicable conditions set forth in Article III of the Term Loan Agreement on May 9, 2019 or (c) to otherwise borrow the Eurodollar Rate Loans requested by the Borrower in this Notice of Initial Borrowing on May 9, 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: Pinnacle West Capital Corporation
|
|
4.
|
Agent: PNC Bank, National Association, as the agent under the Term Loan Agreement
|
|
5.
|
Term Loan Agreement: 364-Day Term Loan Agreement dated as of May 9, 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
|
|
|
|
|
|
|
$____________
|
$____________
|
___________%
|
|
|
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;
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4.
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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:
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a)
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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;
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b)
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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;
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c)
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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
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d)
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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
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5.
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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):
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a)
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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
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b)
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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.
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/s/ James R. Hatfield
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James R. Hatfield
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Executive Vice President and Chief Financial Officer
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Arizona Public Service Company;
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2.
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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;
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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
|