|
|
|
|
|
☒
|
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
|
|||
|
|
|
(an Arizona corporation)
|
|
|
|||
|
|
|
400 North Fifth Street, P.O. Box 53999
|
|
|
|||
|
|
|
Phoenix
|
Arizona
|
85072-3999
|
|
|
|
|
|
|
(602)
|
250-1000
|
|
|
|
|
|
1-4473
|
|
ARIZONA PUBLIC SERVICE COMPANY
|
|
86-0011170
|
|||
|
|
|
(an Arizona corporation)
|
|
|
|||
|
|
|
400 North Fifth Street, P.O. Box 53999
|
|
|
|||
|
|
|
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 October 31, 2019:
|
112,410,824
|
|
ARIZONA PUBLIC SERVICE COMPANY
|
Number of shares of common stock, $2.50 par value, outstanding as of October 31, 2019:
|
71,264,947
|
|
|
|
Page
|
|
|
|
|
|
|
|
|
|||
|
|
|
||
|
|
|||
|
|
|
||
|
|
|
||
|
|
|||
|
|
|||
|
|
|||
|
|
|
|
|
|
|
|
||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|
||
|
•
|
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), the effects of energy conservation measures and distributed generation, and technological advancements;
|
|
•
|
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.
|
|
|
Page
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
NET INCOME
|
$
|
317,149
|
|
|
$
|
319,885
|
|
|
$
|
488,959
|
|
|
$
|
499,591
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
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 $71, $149, $313 and $381 for the respective periods
|
218
|
|
|
451
|
|
|
950
|
|
|
1,316
|
|
||||
|
Pension and other postretirement benefits activity, net of tax expense (benefit) of $290, $361, $72 and ($754) for the respective periods
|
880
|
|
|
1,099
|
|
|
220
|
|
|
(2,740
|
)
|
||||
|
Total other comprehensive income (loss)
|
1,098
|
|
|
1,550
|
|
|
1,170
|
|
|
(1,520
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
COMPREHENSIVE INCOME
|
318,247
|
|
|
321,435
|
|
|
490,129
|
|
|
498,071
|
|
||||
|
Less: Comprehensive income attributable to noncontrolling interests
|
4,873
|
|
|
4,873
|
|
|
14,620
|
|
|
14,620
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS
|
$
|
313,374
|
|
|
$
|
316,562
|
|
|
$
|
475,509
|
|
|
$
|
483,451
|
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
|
ASSETS
|
|
|
|
|
|
||
|
|
|
|
|
||||
|
CURRENT ASSETS
|
|
|
|
|
|
||
|
Cash and cash equivalents
|
$
|
29,852
|
|
|
$
|
5,766
|
|
|
Customer and other receivables
|
361,951
|
|
|
267,887
|
|
||
|
Accrued unbilled revenues
|
155,836
|
|
|
137,170
|
|
||
|
Allowance for doubtful accounts
|
(7,282
|
)
|
|
(4,069
|
)
|
||
|
Materials and supplies (at average cost)
|
293,899
|
|
|
269,065
|
|
||
|
Fossil fuel (at average cost)
|
18,527
|
|
|
25,029
|
|
||
|
Income tax receivable
|
14,063
|
|
|
—
|
|
||
|
Assets from risk management activities (Note 7)
|
817
|
|
|
1,113
|
|
||
|
Deferred fuel and purchased power regulatory asset (Note 4)
|
59,474
|
|
|
37,164
|
|
||
|
Other regulatory assets (Note 4)
|
138,033
|
|
|
129,738
|
|
||
|
Other current assets
|
67,985
|
|
|
56,128
|
|
||
|
Total current assets
|
1,133,155
|
|
|
924,991
|
|
||
|
INVESTMENTS AND OTHER ASSETS
|
|
|
|
|
|
||
|
Nuclear decommissioning trust (Notes 11 and 12)
|
967,673
|
|
|
851,134
|
|
||
|
Other special use funds (Notes 11 and 12)
|
243,982
|
|
|
236,101
|
|
||
|
Other assets
|
102,116
|
|
|
103,247
|
|
||
|
Total investments and other assets
|
1,313,771
|
|
|
1,190,482
|
|
||
|
PROPERTY, PLANT AND EQUIPMENT
|
|
|
|
|
|
||
|
Plant in service and held for future use
|
19,677,773
|
|
|
18,736,628
|
|
||
|
Accumulated depreciation and amortization
|
(6,552,177
|
)
|
|
(6,366,014
|
)
|
||
|
Net
|
13,125,596
|
|
|
12,370,614
|
|
||
|
Construction work in progress
|
738,492
|
|
|
1,170,062
|
|
||
|
Palo Verde sale leaseback, net of accumulated depreciation (Note 6)
|
102,873
|
|
|
105,775
|
|
||
|
Intangible assets, net of accumulated amortization
|
266,587
|
|
|
262,902
|
|
||
|
Nuclear fuel, net of accumulated amortization
|
141,903
|
|
|
120,217
|
|
||
|
Total property, plant and equipment
|
14,375,451
|
|
|
14,029,570
|
|
||
|
DEFERRED DEBITS
|
|
|
|
|
|
||
|
Regulatory assets (Note 4)
|
1,329,446
|
|
|
1,342,941
|
|
||
|
Operating lease right-of-use assets (Note 16)
|
156,050
|
|
|
—
|
|
||
|
Assets for other postretirement benefits (Note 5)
|
31,717
|
|
|
46,906
|
|
||
|
Other
|
37,976
|
|
|
129,312
|
|
||
|
Total deferred debits
|
1,555,189
|
|
|
1,519,159
|
|
||
|
|
|
|
|
||||
|
TOTAL ASSETS
|
$
|
18,377,566
|
|
|
$
|
17,664,202
|
|
|
|
Nine Months Ended
September 30, |
||||||
|
|
2019
|
|
2018
|
||||
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
||
|
Net income
|
$
|
488,959
|
|
|
$
|
499,591
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||
|
Depreciation and amortization including nuclear fuel
|
500,801
|
|
|
489,861
|
|
||
|
Deferred fuel and purchased power
|
(60,911
|
)
|
|
(82,486
|
)
|
||
|
Deferred fuel and purchased power amortization
|
38,601
|
|
|
92,397
|
|
||
|
Allowance for equity funds used during construction
|
(24,677
|
)
|
|
(39,411
|
)
|
||
|
Deferred income taxes
|
83,703
|
|
|
117,571
|
|
||
|
Deferred investment tax credit
|
(7,288
|
)
|
|
(7,397
|
)
|
||
|
Stock compensation
|
16,486
|
|
|
16,140
|
|
||
|
Changes in current assets and liabilities:
|
|
|
|
|
|
||
|
Customer and other receivables
|
(91,506
|
)
|
|
(65,203
|
)
|
||
|
Accrued unbilled revenues
|
(18,666
|
)
|
|
(83,939
|
)
|
||
|
Materials, supplies and fossil fuel
|
(18,332
|
)
|
|
(20,591
|
)
|
||
|
Income tax receivable
|
(14,063
|
)
|
|
—
|
|
||
|
Other current assets
|
(10,104
|
)
|
|
23,661
|
|
||
|
Accounts payable
|
33,899
|
|
|
(11,399
|
)
|
||
|
Accrued taxes
|
66,111
|
|
|
78,624
|
|
||
|
Other current liabilities
|
(68,927
|
)
|
|
12,852
|
|
||
|
Change in other long-term assets
|
(52,276
|
)
|
|
14,120
|
|
||
|
Change in other long-term liabilities
|
(27,049
|
)
|
|
(74,628
|
)
|
||
|
Net cash flow provided by operating activities
|
834,761
|
|
|
959,763
|
|
||
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
||
|
Capital expenditures
|
(857,883
|
)
|
|
(898,455
|
)
|
||
|
Contributions in aid of construction
|
34,121
|
|
|
22,611
|
|
||
|
Allowance for borrowed funds used during construction
|
(14,645
|
)
|
|
(18,959
|
)
|
||
|
Proceeds from nuclear decommissioning trust sales and other special use funds
|
520,996
|
|
|
443,215
|
|
||
|
Investment in nuclear decommissioning trust and other special use funds
|
(523,573
|
)
|
|
(461,777
|
)
|
||
|
Other
|
8,971
|
|
|
49
|
|
||
|
Net cash flow used for investing activities
|
(832,013
|
)
|
|
(913,316
|
)
|
||
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
||
|
Issuance of long-term debt
|
794,981
|
|
|
295,245
|
|
||
|
Short-term borrowing and payments — net
|
(6,025
|
)
|
|
19,800
|
|
||
|
Short-term debt borrowings
|
49,000
|
|
|
45,000
|
|
||
|
Short-term debt repayments
|
(62,000
|
)
|
|
(32,000
|
)
|
||
|
Dividends paid on common stock
|
(243,116
|
)
|
|
(228,037
|
)
|
||
|
Repayment of long-term debt
|
(500,000
|
)
|
|
(82,000
|
)
|
||
|
Common stock equity issuance - net of purchases
|
(130
|
)
|
|
(1,984
|
)
|
||
|
Distributions to noncontrolling interests
|
(11,372
|
)
|
|
(11,372
|
)
|
||
|
Net cash flow provided by financing activities
|
21,338
|
|
|
4,652
|
|
||
|
NET INCREASE IN CASH AND CASH EQUIVALENTS
|
24,086
|
|
|
51,099
|
|
||
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
5,766
|
|
|
13,892
|
|
||
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
29,852
|
|
|
$
|
64,991
|
|
|
|
Three Months Ended September 30, 2019
|
||||||||||||||||||||||||||||
|
|
Common Stock
|
|
Treasury Stock
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Noncontrolling Interests
|
|
Total
|
||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Balance, July 1, 2019
|
112,361,595
|
|
|
$
|
2,648,234
|
|
|
(58,219
|
)
|
|
$
|
(5,140
|
)
|
|
$
|
2,637,620
|
|
|
$
|
(47,636
|
)
|
|
$
|
124,165
|
|
|
$
|
5,357,243
|
|
|
Net income
|
|
|
—
|
|
|
|
|
—
|
|
|
312,276
|
|
|
—
|
|
|
4,873
|
|
|
317,149
|
|
||||||||
|
Other comprehensive income
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
1,098
|
|
|
—
|
|
|
1,098
|
|
||||||||
|
Dividends on common stock
|
|
|
—
|
|
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
||||||||
|
Issuance of common stock
|
42,156
|
|
|
6,196
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,196
|
|
|||||||
|
Purchase of treasury stock (a)
|
|
|
—
|
|
|
(103
|
)
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
|||||||
|
Reissuance of treasury stock for stock-based compensation and other
|
|
|
—
|
|
|
375
|
|
|
33
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
33
|
|
|||||||
|
Other
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||||||
|
Balance, September 30, 2019
|
112,403,751
|
|
|
$
|
2,654,430
|
|
|
(57,947
|
)
|
|
$
|
(5,117
|
)
|
|
$
|
2,949,891
|
|
|
$
|
(46,538
|
)
|
|
$
|
129,039
|
|
|
$
|
5,681,705
|
|
|
|
Three Months Ended September 30, 2018
|
||||||||||||||||||||||||||||
|
|
Common Stock
|
|
Treasury Stock
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Noncontrolling Interests
|
|
Total
|
||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Balance, July 1, 2018
|
111,990,222
|
|
|
$
|
2,624,672
|
|
|
(17,633
|
)
|
|
$
|
(1,431
|
)
|
|
$
|
2,465,402
|
|
|
$
|
(56,624
|
)
|
|
$
|
127,415
|
|
|
$
|
5,159,434
|
|
|
Net income
|
|
|
—
|
|
|
|
|
—
|
|
|
315,012
|
|
|
—
|
|
|
4,873
|
|
|
319,885
|
|
||||||||
|
Other comprehensive income
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
1,550
|
|
|
—
|
|
|
1,550
|
|
||||||||
|
Dividends on common stock
|
|
|
—
|
|
|
|
|
—
|
|
|
14
|
|
|
—
|
|
|
—
|
|
|
14
|
|
||||||||
|
Issuance of common stock
|
25,727
|
|
|
4,955
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,955
|
|
|||||||
|
Purchase of treasury stock (a)
|
|
|
—
|
|
|
(101
|
)
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|||||||
|
Reissuance of treasury stock for stock-based compensation and other
|
|
|
—
|
|
|
366
|
|
|
30
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30
|
|
|||||||
|
Other
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||||||
|
Balance, September 30, 2018
|
112,015,949
|
|
|
$
|
2,629,627
|
|
|
(17,368
|
)
|
|
$
|
(1,409
|
)
|
|
$
|
2,780,428
|
|
|
$
|
(55,074
|
)
|
|
$
|
132,289
|
|
|
$
|
5,485,861
|
|
|
(a)
|
Primarily represents shares of common stock withheld from certain stock awards for tax purposes.
|
|
|
Nine Months Ended September 30, 2019
|
||||||||||||||||||||||||||||
|
|
Common Stock
|
|
Treasury Stock
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Noncontrolling Interests
|
|
Total
|
||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Balance, January 1, 2019
|
112,159,896
|
|
|
$
|
2,634,265
|
|
|
(58,135
|
)
|
|
$
|
(4,825
|
)
|
|
$
|
2,641,183
|
|
|
$
|
(47,708
|
)
|
|
$
|
125,790
|
|
|
$
|
5,348,705
|
|
|
Net income
|
|
|
—
|
|
|
|
|
—
|
|
|
474,339
|
|
|
—
|
|
|
14,620
|
|
|
488,959
|
|
||||||||
|
Other comprehensive income
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
1,170
|
|
|
—
|
|
|
1,170
|
|
||||||||
|
Dividends on common stock ($1.48 per share)
|
|
|
—
|
|
|
|
|
—
|
|
|
(165,631
|
)
|
|
—
|
|
|
—
|
|
|
(165,631
|
)
|
||||||||
|
Issuance of common stock
|
243,855
|
|
|
20,165
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,165
|
|
|||||||
|
Purchase of treasury stock (a)
|
|
|
—
|
|
|
(75,894
|
)
|
|
(6,892
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,892
|
)
|
|||||||
|
Reissuance of treasury stock for stock-based compensation and other
|
|
|
—
|
|
|
76,082
|
|
|
6,600
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,600
|
|
|||||||
|
Capital activities by noncontrolling interests
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,372
|
)
|
|
(11,372
|
)
|
||||||||
|
Other
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||||||
|
Balance, September 30, 2019
|
112,403,751
|
|
|
$
|
2,654,430
|
|
|
(57,947
|
)
|
|
$
|
(5,117
|
)
|
|
$
|
2,949,891
|
|
|
$
|
(46,538
|
)
|
|
$
|
129,039
|
|
|
$
|
5,681,705
|
|
|
|
Nine Months Ended September 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
|
|
|
—
|
|
|
|
|
—
|
|
|
484,971
|
|
|
—
|
|
|
14,620
|
|
|
499,591
|
|
||||||||
|
Other comprehensive loss
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
(1,520
|
)
|
|
—
|
|
|
(1,520
|
)
|
||||||||
|
Dividends on common stock ($1.39 per share)
|
|
|
—
|
|
|
|
|
—
|
|
|
(155,607
|
)
|
|
—
|
|
|
—
|
|
|
(155,607
|
)
|
||||||||
|
Issuance of common stock
|
199,779
|
|
|
14,822
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,822
|
|
|||||||
|
Purchase of treasury stock (a)
|
|
|
—
|
|
|
(81,278
|
)
|
|
(6,285
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,285
|
)
|
|||||||
|
Reissuance of treasury stock for stock-based compensation and other
|
|
|
—
|
|
|
128,373
|
|
|
10,500
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
10,501
|
|
|||||||
|
Capital activities by noncontrolling interests
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,372
|
)
|
|
(11,372
|
)
|
||||||||
|
Reclassification of income tax effects related to new tax reform (b)
|
|
|
—
|
|
|
|
|
—
|
|
|
8,552
|
|
|
(8,552
|
)
|
|
—
|
|
|
—
|
|
||||||||
|
Other
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||||||
|
Balance, September 30, 2018
|
112,015,949
|
|
|
$
|
2,629,627
|
|
|
(17,368
|
)
|
|
$
|
(1,409
|
)
|
|
$
|
2,780,428
|
|
|
$
|
(55,074
|
)
|
|
$
|
132,289
|
|
|
$
|
5,485,861
|
|
|
(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
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
OPERATING REVENUES
|
|
$
|
1,190,787
|
|
|
$
|
1,267,997
|
|
|
$
|
2,800,818
|
|
|
$
|
2,931,966
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Fuel and purchased power
|
|
344,862
|
|
|
389,889
|
|
|
817,672
|
|
|
862,037
|
|
||||
|
Operations and maintenance
|
|
235,440
|
|
|
226,346
|
|
|
699,958
|
|
|
732,946
|
|
||||
|
Depreciation and amortization
|
|
149,428
|
|
|
145,949
|
|
|
445,467
|
|
|
434,594
|
|
||||
|
Taxes other than income taxes
|
|
53,798
|
|
|
51,366
|
|
|
163,957
|
|
|
157,877
|
|
||||
|
Other expenses
|
|
794
|
|
|
900
|
|
|
1,904
|
|
|
1,497
|
|
||||
|
Total
|
|
784,322
|
|
|
814,450
|
|
|
2,128,958
|
|
|
2,188,951
|
|
||||
|
OPERATING INCOME
|
|
406,465
|
|
|
453,547
|
|
|
671,860
|
|
|
743,015
|
|
||||
|
OTHER INCOME (DEDUCTIONS)
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Allowance for equity funds used during construction
|
|
5,917
|
|
|
12,259
|
|
|
24,677
|
|
|
39,411
|
|
||||
|
Pension and other postretirement non-service credits - net
|
|
6,133
|
|
|
12,812
|
|
|
18,389
|
|
|
38,398
|
|
||||
|
Other income (Note 9)
|
|
14,534
|
|
|
6,153
|
|
|
32,641
|
|
|
16,160
|
|
||||
|
Other expense (Note 9)
|
|
(2,826
|
)
|
|
(3,361
|
)
|
|
(10,132
|
)
|
|
(9,679
|
)
|
||||
|
Total
|
|
23,758
|
|
|
27,863
|
|
|
65,575
|
|
|
84,290
|
|
||||
|
INTEREST EXPENSE
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Interest charges
|
|
53,812
|
|
|
58,551
|
|
|
164,068
|
|
|
172,440
|
|
||||
|
Allowance for borrowed funds used during construction
|
|
(3,486
|
)
|
|
(5,913
|
)
|
|
(14,645
|
)
|
|
(18,959
|
)
|
||||
|
Total
|
|
50,326
|
|
|
52,638
|
|
|
149,423
|
|
|
153,481
|
|
||||
|
INCOME BEFORE INCOME TAXES
|
|
379,897
|
|
|
428,772
|
|
|
588,012
|
|
|
673,824
|
|
||||
|
INCOME TAXES
|
|
56,154
|
|
|
85,533
|
|
|
76,070
|
|
|
133,415
|
|
||||
|
NET INCOME
|
|
323,743
|
|
|
343,239
|
|
|
511,942
|
|
|
540,409
|
|
||||
|
Less: Net income attributable to noncontrolling interests (Note 6)
|
|
4,873
|
|
|
4,873
|
|
|
14,620
|
|
|
14,620
|
|
||||
|
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDER
|
|
$
|
318,870
|
|
|
$
|
338,366
|
|
|
$
|
497,322
|
|
|
$
|
525,789
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
NET INCOME
|
$
|
323,743
|
|
|
$
|
343,239
|
|
|
$
|
511,942
|
|
|
$
|
540,409
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
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 $71, $149, $313 and $381 for the respective periods
|
218
|
|
|
451
|
|
|
950
|
|
|
1,316
|
|
||||
|
Pension and other postretirement benefits activity, net of tax expense (benefit) of $249, $313, ($48) and ($947) for the respective periods
|
755
|
|
|
952
|
|
|
(146
|
)
|
|
(2,955
|
)
|
||||
|
Total other comprehensive income (loss)
|
973
|
|
|
1,403
|
|
|
804
|
|
|
(1,735
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
COMPREHENSIVE INCOME
|
324,716
|
|
|
344,642
|
|
|
512,746
|
|
|
538,674
|
|
||||
|
Less: Comprehensive income attributable to noncontrolling interests
|
4,873
|
|
|
4,873
|
|
|
14,620
|
|
|
14,620
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDER
|
$
|
319,843
|
|
|
$
|
339,769
|
|
|
$
|
498,126
|
|
|
$
|
524,054
|
|
|
|
September 30,
2019 |
|
December 31,
2018 |
||||
|
ASSETS
|
|
|
|
|
|
||
|
|
|
|
|
||||
|
PROPERTY, PLANT AND EQUIPMENT
|
|
|
|
|
|
||
|
Plant in service and held for future use
|
$
|
19,674,286
|
|
|
$
|
18,733,142
|
|
|
Accumulated depreciation and amortization
|
(6,548,921
|
)
|
|
(6,362,771
|
)
|
||
|
Net
|
13,125,365
|
|
|
12,370,371
|
|
||
|
|
|
|
|
||||
|
Construction work in progress
|
738,493
|
|
|
1,170,062
|
|
||
|
Palo Verde sale leaseback, net of accumulated depreciation (Note 6)
|
102,873
|
|
|
105,775
|
|
||
|
Intangible assets, net of accumulated amortization
|
266,432
|
|
|
262,746
|
|
||
|
Nuclear fuel, net of accumulated amortization
|
141,903
|
|
|
120,217
|
|
||
|
Total property, plant and equipment
|
14,375,066
|
|
|
14,029,171
|
|
||
|
|
|
|
|
||||
|
INVESTMENTS AND OTHER ASSETS
|
|
|
|
|
|
||
|
Nuclear decommissioning trust (Notes 11 and 12)
|
967,673
|
|
|
851,134
|
|
||
|
Other special use funds (Notes 11 and 12)
|
243,982
|
|
|
236,101
|
|
||
|
Other assets
|
55,846
|
|
|
40,817
|
|
||
|
Total investments and other assets
|
1,267,501
|
|
|
1,128,052
|
|
||
|
|
|
|
|
||||
|
CURRENT ASSETS
|
|
|
|
|
|
||
|
Cash and cash equivalents
|
29,542
|
|
|
5,707
|
|
||
|
Customer and other receivables
|
351,029
|
|
|
257,654
|
|
||
|
Accrued unbilled revenues
|
155,836
|
|
|
137,170
|
|
||
|
Allowance for doubtful accounts
|
(7,282
|
)
|
|
(4,069
|
)
|
||
|
Materials and supplies (at average cost)
|
293,899
|
|
|
269,065
|
|
||
|
Fossil fuel (at average cost)
|
18,527
|
|
|
25,029
|
|
||
|
Income tax receivable
|
15,982
|
|
|
—
|
|
||
|
Assets from risk management activities (Note 7)
|
817
|
|
|
1,113
|
|
||
|
Deferred fuel and purchased power regulatory asset (Note 4)
|
59,474
|
|
|
37,164
|
|
||
|
Other regulatory assets (Note 4)
|
138,033
|
|
|
129,738
|
|
||
|
Other current assets
|
45,506
|
|
|
35,111
|
|
||
|
Total current assets
|
1,101,363
|
|
|
893,682
|
|
||
|
|
|
|
|
||||
|
DEFERRED DEBITS
|
|
|
|
|
|
||
|
Regulatory assets (Note 4)
|
1,329,446
|
|
|
1,342,941
|
|
||
|
Operating lease right-of-use assets (Note 16)
|
154,205
|
|
|
—
|
|
||
|
Assets for other postretirement benefits (Note 5)
|
28,071
|
|
|
43,212
|
|
||
|
Other
|
37,080
|
|
|
128,265
|
|
||
|
Total deferred debits
|
1,548,802
|
|
|
1,514,418
|
|
||
|
|
|
|
|
||||
|
TOTAL ASSETS
|
$
|
18,292,732
|
|
|
$
|
17,565,323
|
|
|
|
September 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
|
3,119,977
|
|
|
2,788,256
|
|
||
|
Accumulated other comprehensive loss
|
(26,303
|
)
|
|
(27,107
|
)
|
||
|
Total shareholder equity
|
5,993,532
|
|
|
5,661,007
|
|
||
|
Noncontrolling interests (Note 6)
|
129,039
|
|
|
125,790
|
|
||
|
Total equity
|
6,122,571
|
|
|
5,786,797
|
|
||
|
Long-term debt less current maturities (Note 3)
|
4,535,728
|
|
|
4,189,436
|
|
||
|
Total capitalization
|
10,658,299
|
|
|
9,976,233
|
|
||
|
CURRENT LIABILITIES
|
|
|
|
|
|
||
|
Short-term borrowings (Note 3)
|
2,900
|
|
|
—
|
|
||
|
Current maturities of long-term debt (Note 3)
|
450,000
|
|
|
500,000
|
|
||
|
Accounts payable
|
268,163
|
|
|
266,277
|
|
||
|
Accrued taxes
|
215,320
|
|
|
176,357
|
|
||
|
Accrued interest
|
48,374
|
|
|
60,228
|
|
||
|
Common dividends payable
|
—
|
|
|
82,700
|
|
||
|
Customer deposits
|
78,173
|
|
|
91,174
|
|
||
|
Liabilities from risk management activities (Note 7)
|
44,349
|
|
|
35,506
|
|
||
|
Liabilities for asset retirements
|
12,850
|
|
|
19,842
|
|
||
|
Operating lease liabilities (Note 16)
|
26,028
|
|
|
—
|
|
||
|
Regulatory liabilities (Note 4)
|
208,022
|
|
|
165,876
|
|
||
|
Other current liabilities
|
159,992
|
|
|
178,137
|
|
||
|
Total current liabilities
|
1,514,171
|
|
|
1,576,097
|
|
||
|
DEFERRED CREDITS AND OTHER
|
|
|
|
|
|
||
|
Deferred income taxes
|
1,976,662
|
|
|
1,812,664
|
|
||
|
Regulatory liabilities (Note 4)
|
2,310,131
|
|
|
2,325,976
|
|
||
|
Liabilities for asset retirements
|
736,079
|
|
|
706,703
|
|
||
|
Liabilities for pension benefits (Note 5)
|
281,605
|
|
|
425,404
|
|
||
|
Liabilities from risk management activities (Note 7)
|
27,305
|
|
|
24,531
|
|
||
|
Customer advances
|
192,374
|
|
|
137,153
|
|
||
|
Coal mine reclamation
|
165,695
|
|
|
212,785
|
|
||
|
Deferred investment tax credit
|
193,118
|
|
|
200,405
|
|
||
|
Unrecognized tax benefits
|
43,434
|
|
|
41,861
|
|
||
|
Operating lease liabilities (Note 16)
|
50,669
|
|
|
—
|
|
||
|
Other
|
143,190
|
|
|
125,511
|
|
||
|
Total deferred credits and other
|
6,120,262
|
|
|
6,012,993
|
|
||
|
COMMITMENTS AND CONTINGENCIES (SEE NOTE 8)
|
|
|
|
|
|
||
|
TOTAL LIABILITIES AND EQUITY
|
$
|
18,292,732
|
|
|
$
|
17,565,323
|
|
|
|
Nine Months Ended
September 30, |
||||||
|
|
2019
|
|
2018
|
||||
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
||
|
Net income
|
$
|
511,942
|
|
|
$
|
540,409
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||
|
Depreciation and amortization including nuclear fuel
|
500,737
|
|
|
488,223
|
|
||
|
Deferred fuel and purchased power
|
(60,911
|
)
|
|
(82,486
|
)
|
||
|
Deferred fuel and purchased power amortization
|
38,601
|
|
|
92,397
|
|
||
|
Allowance for equity funds used during construction
|
(24,677
|
)
|
|
(39,411
|
)
|
||
|
Deferred income taxes
|
97,002
|
|
|
86,319
|
|
||
|
Deferred investment tax credit
|
(7,288
|
)
|
|
(7,397
|
)
|
||
|
Changes in current assets and liabilities:
|
|
|
|
|
|
||
|
Customer and other receivables
|
(90,817
|
)
|
|
(56,874
|
)
|
||
|
Accrued unbilled revenues
|
(18,666
|
)
|
|
(83,939
|
)
|
||
|
Materials, supplies and fossil fuel
|
(18,332
|
)
|
|
(20,694
|
)
|
||
|
Income tax receivable
|
(15,982
|
)
|
|
—
|
|
||
|
Other current assets
|
(8,642
|
)
|
|
20,258
|
|
||
|
Accounts payable
|
37,004
|
|
|
(8,857
|
)
|
||
|
Accrued taxes
|
38,963
|
|
|
106,172
|
|
||
|
Other current liabilities
|
(66,368
|
)
|
|
9,289
|
|
||
|
Change in other long-term assets
|
(54,872
|
)
|
|
25,405
|
|
||
|
Change in other long-term liabilities
|
(27,521
|
)
|
|
(80,895
|
)
|
||
|
Net cash flow provided by operating activities
|
830,173
|
|
|
987,919
|
|
||
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
||
|
Capital expenditures
|
(857,883
|
)
|
|
(889,347
|
)
|
||
|
Contributions in aid of construction
|
34,121
|
|
|
22,611
|
|
||
|
Allowance for borrowed funds used during construction
|
(14,645
|
)
|
|
(18,959
|
)
|
||
|
Proceeds from nuclear decommissioning trust sales and other special use funds
|
520,996
|
|
|
443,040
|
|
||
|
Investment in nuclear decommissioning trust and other special use funds
|
(523,573
|
)
|
|
(461,602
|
)
|
||
|
Other
|
(3,563
|
)
|
|
(1,261
|
)
|
||
|
Net cash flow used for investing activities
|
(844,547
|
)
|
|
(905,518
|
)
|
||
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
||
|
Issuance of long-term debt
|
794,981
|
|
|
295,245
|
|
||
|
Short-term borrowings and payments — net
|
2,900
|
|
|
—
|
|
||
|
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
|
(248,300
|
)
|
|
(233,300
|
)
|
||
|
Distributions to noncontrolling interests
|
(11,372
|
)
|
|
(11,372
|
)
|
||
|
Net cash flow provided by (used for) financing activities
|
38,209
|
|
|
(31,427
|
)
|
||
|
NET INCREASE IN CASH AND CASH EQUIVALENTS
|
23,835
|
|
|
50,974
|
|
||
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
5,707
|
|
|
13,851
|
|
||
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
29,542
|
|
|
$
|
64,825
|
|
|
|
Three Months Ended September 30, 2019
|
|||||||||||||||||||||||||
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Noncontrolling Interests
|
|
Total
|
|||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Balance, July 1, 2019
|
71,264,947
|
|
|
$
|
178,162
|
|
|
$
|
2,721,696
|
|
|
$
|
2,801,110
|
|
|
$
|
(27,276
|
)
|
|
$
|
124,165
|
|
|
$
|
5,797,857
|
|
|
Net Income
|
|
|
—
|
|
|
—
|
|
|
318,870
|
|
|
—
|
|
|
4,873
|
|
|
323,743
|
|
|||||||
|
Other comprehensive income
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
973
|
|
|
—
|
|
|
973
|
|
|||||||
|
Other
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
1
|
|
|
(2
|
)
|
|||||||
|
Balance, September 30, 2019
|
71,264,947
|
|
|
$
|
178,162
|
|
|
$
|
2,721,696
|
|
|
$
|
3,119,977
|
|
|
$
|
(26,303
|
)
|
|
$
|
129,039
|
|
|
$
|
6,122,571
|
|
|
|
Three Months Ended September 30, 2018
|
|||||||||||||||||||||||||
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Noncontrolling Interests
|
|
Total
|
|||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Balance, July 1, 2018
|
71,264,947
|
|
|
$
|
178,162
|
|
|
$
|
2,571,696
|
|
|
$
|
2,570,816
|
|
|
$
|
(35,159
|
)
|
|
$
|
127,415
|
|
|
$
|
5,412,930
|
|
|
Net Income
|
|
|
—
|
|
|
—
|
|
|
338,366
|
|
|
—
|
|
|
4,873
|
|
|
343,239
|
|
|||||||
|
Other comprehensive income
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,403
|
|
|
—
|
|
|
1,403
|
|
|||||||
|
Other
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
1
|
|
|
(1
|
)
|
|||||||
|
Balance, September 30, 2018
|
71,264,947
|
|
|
$
|
178,162
|
|
|
$
|
2,571,696
|
|
|
$
|
2,909,180
|
|
|
$
|
(33,756
|
)
|
|
$
|
132,289
|
|
|
$
|
5,757,571
|
|
|
|
Nine Months Ended September 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
|
|
|
—
|
|
|
—
|
|
|
497,322
|
|
|
—
|
|
|
14,620
|
|
|
511,942
|
|
|||||||
|
Other comprehensive income
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
804
|
|
|
—
|
|
|
804
|
|
|||||||
|
Dividends on common stock
|
|
|
—
|
|
|
—
|
|
|
(165,600
|
)
|
|
—
|
|
|
—
|
|
|
(165,600
|
)
|
|||||||
|
Net capital activities by noncontrolling interests
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,372
|
)
|
|
(11,372
|
)
|
|||||||
|
Other
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
1
|
|
|
—
|
|
|||||||
|
Balance, September 30, 2019
|
71,264,947
|
|
|
$
|
178,162
|
|
|
$
|
2,721,696
|
|
|
$
|
3,119,977
|
|
|
$
|
(26,303
|
)
|
|
$
|
129,039
|
|
|
$
|
6,122,571
|
|
|
|
Nine Months Ended September 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
|
|
|
—
|
|
|
—
|
|
|
525,789
|
|
|
—
|
|
|
14,620
|
|
|
540,409
|
|
|||||||
|
Other comprehensive loss
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,735
|
)
|
|
—
|
|
|
(1,735
|
)
|
|||||||
|
Dividends on common stock
|
|
|
—
|
|
|
—
|
|
|
(155,601
|
)
|
|
—
|
|
|
—
|
|
|
(155,601
|
)
|
|||||||
|
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
|
)
|
|||||||
|
Other
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|||||||
|
Balance, September 30, 2018
|
71,264,947
|
|
|
$
|
178,162
|
|
|
$
|
2,571,696
|
|
|
$
|
2,909,180
|
|
|
$
|
(33,756
|
)
|
|
$
|
132,289
|
|
|
$
|
5,757,571
|
|
|
(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
|
|
|
Nine Months Ended
September 30, |
||||||
|
|
2019
|
|
2018
|
||||
|
Cash paid during the period for:
|
|
|
|
||||
|
Income taxes, net of refunds
|
$
|
12,488
|
|
|
$
|
10,091
|
|
|
Interest, net of amounts capitalized
|
166,907
|
|
|
161,875
|
|
||
|
Significant non-cash investing and financing activities:
|
|
|
|
||||
|
Accrued capital expenditures
|
$
|
85,099
|
|
|
$
|
99,405
|
|
|
Right-of-use operating lease assets obtained in exchange for operating lease liabilities
|
8,759
|
|
|
—
|
|
||
|
Sale of 4CA's 7% interest in Four Corners
|
—
|
|
|
68,907
|
|
||
|
|
Nine Months Ended
September 30, |
||||||
|
|
2019
|
|
2018
|
||||
|
Cash paid during the period for:
|
|
|
|
||||
|
Income taxes, net of refunds
|
$
|
35,573
|
|
|
$
|
24,746
|
|
|
Interest, net of amounts capitalized
|
157,593
|
|
|
154,788
|
|
||
|
Significant non-cash investing and financing activities:
|
|
|
|
||||
|
Accrued capital expenditures
|
$
|
85,099
|
|
|
$
|
99,405
|
|
|
Right-of-use operating lease assets obtained in exchange for operating lease liabilities
|
8,759
|
|
|
—
|
|
||
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||
|
|
|
2019
|
2018
|
|
2019
|
2018
|
||||||||
|
Retail Electric Revenue
|
|
|
|
|
|
|
||||||||
|
Residential
|
|
$
|
668,467
|
|
$
|
695,480
|
|
|
$
|
1,452,601
|
|
$
|
1,512,402
|
|
|
Non-Residential
|
|
465,602
|
|
496,809
|
|
|
1,194,199
|
|
1,275,498
|
|
||||
|
Wholesale energy sales
|
|
36,775
|
|
53,501
|
|
|
95,218
|
|
80,982
|
|
||||
|
Transmission services for others
|
|
15,841
|
|
15,902
|
|
|
46,247
|
|
46,235
|
|
||||
|
Other sources
|
|
4,102
|
|
6,342
|
|
|
12,553
|
|
19,754
|
|
||||
|
Total operating revenues
|
|
$
|
1,190,787
|
|
$
|
1,268,034
|
|
|
$
|
2,800,818
|
|
$
|
2,934,871
|
|
|
3.
|
Long-Term Debt and Liquidity Matters
|
|
|
As of September 30, 2019
|
|
As of December 31, 2018
|
||||||||||||
|
|
Carrying
Amount
|
|
Fair Value
|
|
Carrying
Amount
|
|
Fair Value
|
||||||||
|
Pinnacle West
|
$
|
449,268
|
|
|
$
|
449,670
|
|
|
$
|
448,796
|
|
|
$
|
443,955
|
|
|
APS
|
4,985,728
|
|
|
5,617,727
|
|
|
4,689,436
|
|
|
4,789,608
|
|
||||
|
Total
|
$
|
5,434,996
|
|
|
$
|
6,067,397
|
|
|
$
|
5,138,232
|
|
|
$
|
5,233,563
|
|
|
4.
|
Regulatory Matters
|
|
•
|
a test year comprised of twelve months ended June 30, 2019, adjusted as described below;
|
|
•
|
an original cost rate base of $8.87 billion, which approximates the ACC-jurisdictional portion of the book value of utility assets, net of accumulated depreciation and other credits;
|
|
•
|
the following proposed capital structure and costs of capital:
|
|
|
|
Capital Structure
|
|
Cost of Capital
|
|
|
|
Long-term debt
|
|
45.3
|
%
|
4.10
|
%
|
|
|
Common stock equity
|
|
54.7
|
%
|
10.15
|
%
|
|
|
Weighted-average cost of capital
|
|
|
|
7.41
|
%
|
|
|
•
|
a 1% return on the increment of fair value rate base above APS’s original cost rate base, as provided for by Arizona law;
|
|
•
|
authorization to defer until APS's next general rate case the increase or decrease in its Arizona property taxes attributable to tax rate changes after the date the rate application is adjudicated;
|
|
•
|
a number of proposed rate and program changes for residential customers, including:
|
|
▪
|
a super off-peak period during the winter months for APS’s time-of-use with demand rates;
|
|
▪
|
additional $1.25 million in funding for limited-income crisis bill program; and
|
|
▪
|
a flat bill/subscription rate pilot program;
|
|
•
|
proposed rate design changes for commercial customers, including an experimental program designed to provide access to market pricing for up to 200 MW of medium and large commercial customers;
|
|
•
|
recovery of the deferral and rate base effects of the construction and operating costs of the Ocotillo modernization project (see below discussion of the 2017 Settlement Agreement); and
|
|
•
|
continued recovery of the remaining investment and other costs related to the retirement and closure of the Navajo Generating Station (the "Navajo Plant") (see "Navajo Plant" below).
|
|
•
|
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 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 energy 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.
|
|
|
Nine Months Ended
September 30, |
||||||
|
|
2019
|
|
2018
|
||||
|
Beginning balance
|
$
|
37,164
|
|
|
$
|
75,637
|
|
|
Deferred fuel and purchased power costs — current period
|
60,911
|
|
|
82,486
|
|
||
|
Amounts charged to customers
|
(38,601
|
)
|
|
(92,397
|
)
|
||
|
Ending balance
|
$
|
59,474
|
|
|
$
|
65,726
|
|
|
•
|
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
|
|
September 30, 2019
|
|
December 31, 2018
|
||||||||||||
|
|
|
Current
|
|
Non-Current
|
|
Current
|
|
Non-Current
|
|||||||||
|
Pension
|
(a)
|
|
$
|
—
|
|
|
$
|
703,460
|
|
|
$
|
—
|
|
|
$
|
733,351
|
|
|
Retired power plant costs
|
2033
|
|
28,182
|
|
|
146,076
|
|
|
28,182
|
|
|
167,164
|
|
||||
|
Income taxes — allowance for funds used during construction ("AFUDC") equity
|
2049
|
|
6,457
|
|
|
154,269
|
|
|
6,457
|
|
|
151,467
|
|
||||
|
Deferred fuel and purchased power — mark-to-market (Note 7)
|
2023
|
|
41,643
|
|
|
27,305
|
|
|
31,728
|
|
|
23,768
|
|
||||
|
Deferred property taxes
|
2027
|
|
8,569
|
|
|
60,338
|
|
|
8,569
|
|
|
66,356
|
|
||||
|
Deferred fuel and purchased power (b) (c)
|
2020
|
|
59,474
|
|
|
—
|
|
|
37,164
|
|
|
—
|
|
||||
|
SCR deferral
|
N/A
|
|
—
|
|
|
45,296
|
|
|
—
|
|
|
23,276
|
|
||||
|
Four Corners cost deferral
|
2024
|
|
8,077
|
|
|
34,171
|
|
|
8,077
|
|
|
40,228
|
|
||||
|
Deferred compensation
|
2036
|
|
—
|
|
|
37,589
|
|
|
—
|
|
|
36,523
|
|
||||
|
Lost fixed cost recovery (b)
|
2020
|
|
25,775
|
|
|
—
|
|
|
32,435
|
|
|
—
|
|
||||
|
Income taxes — investment tax credit basis adjustment
|
2047
|
|
1,079
|
|
|
24,555
|
|
|
1,079
|
|
|
25,522
|
|
||||
|
Ocotillo deferral
|
N/A
|
|
—
|
|
|
23,643
|
|
|
—
|
|
|
—
|
|
||||
|
Palo Verde VIEs (Note 6)
|
2046
|
|
—
|
|
|
20,480
|
|
|
—
|
|
|
20,015
|
|
||||
|
Coal reclamation
|
2026
|
|
1,546
|
|
|
18,821
|
|
|
1,546
|
|
|
15,607
|
|
||||
|
Loss on reacquired debt
|
2038
|
|
1,637
|
|
|
12,441
|
|
|
1,637
|
|
|
13,668
|
|
||||
|
Mead-Phoenix transmission line CIAC
|
2050
|
|
332
|
|
|
9,795
|
|
|
332
|
|
|
10,044
|
|
||||
|
TCA balancing account (b)
|
2021
|
|
5,016
|
|
|
2,721
|
|
|
3,860
|
|
|
772
|
|
||||
|
Tax expense of Medicare subsidy
|
2024
|
|
1,235
|
|
|
5,073
|
|
|
1,235
|
|
|
6,176
|
|
||||
|
AG-1 deferral
|
2022
|
|
2,787
|
|
|
3,413
|
|
|
2,654
|
|
|
5,819
|
|
||||
|
Tax expense adjuster mechanism (b)
|
2019
|
|
2,916
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
Other
|
Various
|
|
2,782
|
|
|
—
|
|
|
1,947
|
|
|
3,185
|
|
||||
|
Total regulatory assets (d)
|
|
|
$
|
197,507
|
|
|
$
|
1,329,446
|
|
|
$
|
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
|
|
September 30, 2019
|
|
December 31, 2018
|
||||||||||||
|
|
|
Current
|
|
Non-Current
|
|
Current
|
|
Non-Current
|
|||||||||
|
Excess deferred income taxes - ACC - Tax Cuts and Jobs Act (a)
|
(b)
|
|
$
|
38,529
|
|
|
$
|
1,178,216
|
|
|
$
|
—
|
|
|
$
|
1,272,709
|
|
|
Excess deferred income taxes - FERC - Tax Cuts and Jobs Act (a)
|
2058
|
|
6,302
|
|
|
238,064
|
|
|
6,302
|
|
|
243,691
|
|
||||
|
Asset retirement obligations
|
2057
|
|
—
|
|
|
367,930
|
|
|
—
|
|
|
278,585
|
|
||||
|
Removal costs
|
(c)
|
|
47,459
|
|
|
151,535
|
|
|
39,866
|
|
|
177,533
|
|
||||
|
Other postretirement benefits
|
(d)
|
|
37,821
|
|
|
95,789
|
|
|
37,864
|
|
|
125,903
|
|
||||
|
Income taxes — change in rates
|
2048
|
|
2,764
|
|
|
67,605
|
|
|
2,769
|
|
|
70,069
|
|
||||
|
Spent nuclear fuel
|
2027
|
|
5,746
|
|
|
53,229
|
|
|
6,503
|
|
|
57,002
|
|
||||
|
Income taxes — deferred investment tax credit
|
2047
|
|
2,164
|
|
|
49,182
|
|
|
2,164
|
|
|
51,120
|
|
||||
|
Four Corners coal reclamation
|
2038
|
|
1,858
|
|
|
49,194
|
|
|
1,858
|
|
|
17,871
|
|
||||
|
Renewable energy standard (b)
|
2021
|
|
42,146
|
|
|
5,675
|
|
|
44,966
|
|
|
20
|
|
||||
|
Demand side management (b)
|
2021
|
|
14,300
|
|
|
24,146
|
|
|
14,604
|
|
|
4,123
|
|
||||
|
Sundance maintenance
|
2031
|
|
4,640
|
|
|
13,393
|
|
|
1,278
|
|
|
17,228
|
|
||||
|
Deferred gains on utility property
|
2022
|
|
2,923
|
|
|
4,766
|
|
|
4,423
|
|
|
6,581
|
|
||||
|
Property tax deferral
|
N/A
|
|
—
|
|
|
6,288
|
|
|
—
|
|
|
2,611
|
|
||||
|
FERC transmission true up
|
2021
|
|
—
|
|
|
2,586
|
|
|
—
|
|
|
—
|
|
||||
|
Other
|
Various
|
|
1,370
|
|
|
2,533
|
|
|
3,279
|
|
|
930
|
|
||||
|
Total regulatory liabilities
|
|
|
$
|
208,022
|
|
|
$
|
2,310,131
|
|
|
$
|
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
September 30, |
|
Nine Months Ended
September 30, |
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||||||
|
Service cost — benefits earned during the period
|
$
|
12,476
|
|
|
$
|
14,167
|
|
|
$
|
37,427
|
|
|
$
|
42,501
|
|
|
$
|
4,593
|
|
|
$
|
5,275
|
|
|
$
|
13,777
|
|
|
$
|
15,825
|
|
|
Non-service costs (credits):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Interest cost on benefit obligation
|
34,211
|
|
|
31,172
|
|
|
102,632
|
|
|
93,517
|
|
|
7,473
|
|
|
7,037
|
|
|
22,420
|
|
|
21,111
|
|
||||||||
|
Expected return on plan assets
|
(42,971
|
)
|
|
(45,713
|
)
|
|
(128,913
|
)
|
|
(137,140
|
)
|
|
(9,603
|
)
|
|
(10,520
|
)
|
|
(28,809
|
)
|
|
(31,561
|
)
|
||||||||
|
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Prior service credit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,456
|
)
|
|
(9,461
|
)
|
|
(28,366
|
)
|
|
(28,382
|
)
|
||||||||
|
Net actuarial loss
|
10,646
|
|
|
8,021
|
|
|
31,938
|
|
|
24,062
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
|
Net periodic benefit
cost (credit)
|
$
|
14,362
|
|
|
$
|
7,647
|
|
|
$
|
43,084
|
|
|
$
|
22,940
|
|
|
$
|
(6,993
|
)
|
|
$
|
(7,669
|
)
|
|
$
|
(20,978
|
)
|
|
$
|
(23,007
|
)
|
|
Portion of cost (credit) charged to expense
|
$
|
7,593
|
|
|
$
|
2,524
|
|
|
$
|
22,837
|
|
|
$
|
7,535
|
|
|
$
|
(4,966
|
)
|
|
$
|
(5,359
|
)
|
|
$
|
(14,846
|
)
|
|
$
|
(16,083
|
)
|
|
6.
|
Palo Verde Sale Leaseback Variable Interest Entities
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
|
Palo Verde sale leaseback property plant and equipment, net of accumulated depreciation
|
$
|
102,873
|
|
|
$
|
105,775
|
|
|
Equity — Noncontrolling interests
|
129,039
|
|
|
125,790
|
|
||
|
|
|
|
Quantity
|
||||
|
Commodity
|
|
Unit of Measure
|
September 30, 2019
|
|
December 31, 2018
|
||
|
Power
|
|
GWh
|
232
|
|
|
250
|
|
|
Gas
|
|
Billion cubic feet
|
187
|
|
|
218
|
|
|
|
|
Financial Statement Location
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
Commodity Contracts
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|||||||||
|
Loss Reclassified from Accumulated OCI into Income (Effective Portion Realized) (a)
|
|
Fuel and purchased power (b)
|
|
$
|
(289
|
)
|
|
$
|
(600
|
)
|
|
$
|
(1,263
|
)
|
|
$
|
(1,697
|
)
|
|
(a)
|
During the three and nine months ended September 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
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
Commodity Contracts
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|||||||||
|
Net Loss Recognized in Income
|
|
Operating revenues
|
|
$
|
—
|
|
|
$
|
(1,029
|
)
|
|
$
|
—
|
|
|
$
|
(2,590
|
)
|
|
Net Gain (Loss) Recognized in Income
|
|
Fuel and purchased power (a)
|
|
(28,249
|
)
|
|
4,263
|
|
|
(69,765
|
)
|
|
(26,442
|
)
|
||||
|
Total
|
|
|
|
$
|
(28,249
|
)
|
|
$
|
3,234
|
|
|
$
|
(69,765
|
)
|
|
$
|
(29,032
|
)
|
|
(a)
|
Amounts are before the effect of PSA deferrals.
|
|
As of September 30, 2019:
(dollars in thousands) |
|
Gross
Recognized
Derivatives
(a)
|
|
Amounts
Offset
(b)
|
|
Net
Recognized
Derivatives
|
|
Other
(c)
|
|
Amount Reported on Balance Sheets
|
||||||||||
|
Current assets
|
|
$
|
1,776
|
|
|
$
|
(1,266
|
)
|
|
$
|
510
|
|
|
$
|
307
|
|
|
$
|
817
|
|
|
Total assets
|
|
1,776
|
|
|
(1,266
|
)
|
|
510
|
|
|
307
|
|
|
817
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Current liabilities
|
|
(44,429
|
)
|
|
1,266
|
|
|
(43,163
|
)
|
|
(1,186
|
)
|
|
(44,349
|
)
|
|||||
|
Deferred credits and other
|
|
(27,305
|
)
|
|
—
|
|
|
(27,305
|
)
|
|
—
|
|
|
(27,305
|
)
|
|||||
|
Total liabilities
|
|
(71,734
|
)
|
|
1,266
|
|
|
(70,468
|
)
|
|
(1,186
|
)
|
|
(71,654
|
)
|
|||||
|
Total
|
|
$
|
(69,958
|
)
|
|
$
|
—
|
|
|
$
|
(69,958
|
)
|
|
$
|
(879
|
)
|
|
$
|
(70,837
|
)
|
|
(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 $1,186 and cash margin provided to counterparties of $307.
|
|
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.
|
|
|
September 30, 2019
|
||
|
Aggregate fair value of derivative instruments in a net liability position
|
$
|
71,503
|
|
|
Cash collateral posted
|
—
|
|
|
|
Additional cash collateral in the event credit-risk-related contingent features were fully triggered (a)
|
70,230
|
|
|
|
(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
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
Other income:
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Interest income
|
$
|
2,694
|
|
|
$
|
1,957
|
|
|
$
|
7,695
|
|
|
$
|
6,256
|
|
|
Debt return on Four Corners SCR (Note 4)
|
4,920
|
|
|
4,910
|
|
|
14,651
|
|
|
11,190
|
|
||||
|
Debt return on Ocotillo modernization project (Note 4)
|
7,555
|
|
|
—
|
|
|
12,849
|
|
|
—
|
|
||||
|
Miscellaneous
|
22
|
|
|
91
|
|
|
50
|
|
|
95
|
|
||||
|
Total other income
|
$
|
15,191
|
|
|
$
|
6,958
|
|
|
$
|
35,245
|
|
|
$
|
17,541
|
|
|
Other expense:
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Non-operating costs
|
$
|
(2,647
|
)
|
|
$
|
(2,480
|
)
|
|
$
|
(8,832
|
)
|
|
$
|
(7,404
|
)
|
|
Investment losses — net
|
(716
|
)
|
|
—
|
|
|
(1,445
|
)
|
|
(268
|
)
|
||||
|
Miscellaneous
|
(2,377
|
)
|
|
(2,583
|
)
|
|
(4,171
|
)
|
|
(4,391
|
)
|
||||
|
Total other expense
|
$
|
(5,740
|
)
|
|
$
|
(5,063
|
)
|
|
$
|
(14,448
|
)
|
|
$
|
(12,063
|
)
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
Other income:
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Interest income
|
$
|
2,037
|
|
|
$
|
1,151
|
|
|
$
|
5,091
|
|
|
$
|
4,874
|
|
|
Debt return on Four Corners SCR (Note 4)
|
4,920
|
|
|
4,910
|
|
|
14,651
|
|
|
11,190
|
|
||||
|
Debt return on Ocotillo modernization project (Note 4)
|
7,555
|
|
|
—
|
|
|
12,849
|
|
|
—
|
|
||||
|
Miscellaneous
|
22
|
|
|
92
|
|
|
50
|
|
|
96
|
|
||||
|
Total other income
|
$
|
14,534
|
|
|
$
|
6,153
|
|
|
$
|
32,641
|
|
|
$
|
16,160
|
|
|
Other expense:
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Non-operating costs
|
$
|
(2,448
|
)
|
|
$
|
(2,334
|
)
|
|
$
|
(7,965
|
)
|
|
$
|
(6,931
|
)
|
|
Miscellaneous
|
(378
|
)
|
|
(1,027
|
)
|
|
(2,167
|
)
|
|
(2,748
|
)
|
||||
|
Total other expense
|
$
|
(2,826
|
)
|
|
$
|
(3,361
|
)
|
|
$
|
(10,132
|
)
|
|
$
|
(9,679
|
)
|
|
10.
|
Earnings Per Share
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
Net income attributable to common shareholders
|
$
|
312,276
|
|
|
$
|
315,012
|
|
|
$
|
474,339
|
|
|
$
|
484,971
|
|
|
Weighted average common shares outstanding — basic
|
112,463
|
|
|
112,148
|
|
|
112,408
|
|
|
112,094
|
|
||||
|
Net effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||||
|
Contingently issuable performance shares and restricted stock units
|
283
|
|
|
385
|
|
|
331
|
|
|
405
|
|
||||
|
Weighted average common shares outstanding — diluted
|
112,746
|
|
|
112,533
|
|
|
112,739
|
|
|
112,499
|
|
||||
|
Earnings per weighted-average common share outstanding
|
|
|
|
|
|
|
|
||||||||
|
Net income attributable to common shareholders — basic
|
$
|
2.78
|
|
|
$
|
2.81
|
|
|
$
|
4.22
|
|
|
$
|
4.33
|
|
|
Net income attributable to common shareholders — diluted
|
$
|
2.77
|
|
|
$
|
2.80
|
|
|
$
|
4.21
|
|
|
$
|
4.31
|
|
|
11.
|
Fair Value Measurements
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Other
|
|
|
|
Total
|
||||||||||
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Risk management activities — derivative instruments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Commodity contracts
|
$
|
—
|
|
|
$
|
1,388
|
|
|
$
|
388
|
|
|
$
|
(959
|
)
|
|
(a)
|
|
$
|
817
|
|
|
Nuclear decommissioning trust:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Equity securities
|
8,774
|
|
|
—
|
|
|
—
|
|
|
(1,322
|
)
|
|
(b)
|
|
7,452
|
|
|||||
|
U.S. commingled equity funds
|
—
|
|
|
—
|
|
|
—
|
|
|
476,693
|
|
|
(c)
|
|
476,693
|
|
|||||
|
U.S. Treasury debt
|
162,092
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
162,092
|
|
|||||
|
Corporate debt
|
—
|
|
|
124,026
|
|
|
—
|
|
|
—
|
|
|
|
|
124,026
|
|
|||||
|
Mortgage-backed securities
|
—
|
|
|
112,704
|
|
|
—
|
|
|
—
|
|
|
|
|
112,704
|
|
|||||
|
Municipal bonds
|
—
|
|
|
74,202
|
|
|
—
|
|
|
—
|
|
|
|
|
74,202
|
|
|||||
|
Other fixed income
|
—
|
|
|
10,504
|
|
|
—
|
|
|
—
|
|
|
|
|
10,504
|
|
|||||
|
Subtotal nuclear decommissioning trust
|
170,866
|
|
|
321,436
|
|
|
—
|
|
|
475,371
|
|
|
|
|
967,673
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Other special use funds:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Equity securities
|
1,982
|
|
|
—
|
|
|
—
|
|
|
1,418
|
|
|
(b)
|
|
3,400
|
|
|||||
|
U.S. Treasury debt
|
232,165
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
232,165
|
|
|||||
|
Municipal bonds
|
—
|
|
|
8,417
|
|
|
—
|
|
|
—
|
|
|
|
|
8,417
|
|
|||||
|
Subtotal other special use funds
|
234,147
|
|
|
8,417
|
|
|
—
|
|
|
1,418
|
|
|
|
|
243,982
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Total assets
|
$
|
405,013
|
|
|
$
|
331,241
|
|
|
$
|
388
|
|
|
$
|
475,830
|
|
|
|
|
$
|
1,212,472
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Risk management activities — derivative instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Commodity contracts
|
$
|
—
|
|
|
$
|
(69,752
|
)
|
|
$
|
(1,982
|
)
|
|
$
|
80
|
|
|
(a)
|
|
$
|
(71,654
|
)
|
|
(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.
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Other
|
|
|
|
Total
|
||||||||||
|
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.
|
|
|
September 30, 2019
Fair Value (thousands) |
|
Valuation Technique
|
|
Significant Unobservable Input
|
|
|
|
Weighted-Average
|
||||||||
|
Commodity Contracts
|
Assets
|
|
Liabilities
|
|
|
|
Range
|
|
|||||||||
|
Electricity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Forward Contracts (a)
|
$
|
388
|
|
|
$
|
489
|
|
|
Discounted cash flows
|
|
Electricity forward price (per MWh)
|
|
$17.79 - $17.79
|
|
$
|
17.79
|
|
|
Natural Gas:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Forward Contracts (a)
|
—
|
|
|
1,493
|
|
|
Discounted cash flows
|
|
Natural gas forward price (per MMBtu)
|
|
$2.53 - $2.79
|
|
$
|
2.64
|
|
||
|
Total
|
$
|
388
|
|
|
$
|
1,982
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
Commodity Contracts
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
Net derivative balance at beginning of period
|
|
$
|
(12,753
|
)
|
|
$
|
(9,358
|
)
|
|
$
|
(8,214
|
)
|
|
$
|
(18,256
|
)
|
|
Total net gains (losses) realized/unrealized:
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Deferred as a regulatory asset or liability
|
|
(2,324
|
)
|
|
1,244
|
|
|
(12,634
|
)
|
|
(2,067
|
)
|
||||
|
Settlements
|
|
8,980
|
|
|
(2,332
|
)
|
|
11,929
|
|
|
(1,056
|
)
|
||||
|
Transfers into Level 3 from Level 2
|
|
(613
|
)
|
|
(2,246
|
)
|
|
(3,711
|
)
|
|
(7,225
|
)
|
||||
|
Transfers from Level 3 into Level 2
|
|
5,116
|
|
|
2,829
|
|
|
11,036
|
|
|
18,741
|
|
||||
|
Net derivative balance at end of period
|
|
$
|
(1,594
|
)
|
|
$
|
(9,863
|
)
|
|
$
|
(1,594
|
)
|
|
$
|
(9,863
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
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
|
|
|
September 30, 2019
|
||||||||||||||||||
|
|
Fair Value
|
|
Total
Unrealized
Gains
|
|
Total
Unrealized
Losses
|
||||||||||||||
|
Investment Type:
|
Nuclear Decommissioning Trust
|
|
Other Special Use Funds
|
|
Total
|
|
|
||||||||||||
|
Equity securities
|
$
|
485,467
|
|
|
$
|
1,982
|
|
|
$
|
487,449
|
|
|
$
|
297,032
|
|
|
$
|
—
|
|
|
Available for sale-fixed income securities
|
483,528
|
|
|
240,582
|
|
|
724,110
|
|
(a)
|
28,750
|
|
|
(476
|
)
|
|||||
|
Other
|
(1,322
|
)
|
|
1,418
|
|
|
96
|
|
(b)
|
—
|
|
|
—
|
|
|||||
|
Total
|
$
|
967,673
|
|
|
$
|
243,982
|
|
|
$
|
1,211,655
|
|
|
$
|
325,782
|
|
|
$
|
(476
|
)
|
|
(a)
|
As of September 30, 2019, the amortized cost basis of these available-for-sale investments is $696 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 September 30,
|
||||||||||
|
|
Nuclear Decommissioning Trust
|
|
Other Special Use Funds
|
|
Total
|
||||||
|
2019
|
|
|
|
|
|
||||||
|
Realized gains
|
$
|
4,732
|
|
|
$
|
4
|
|
|
$
|
4,736
|
|
|
Realized losses
|
(2,360
|
)
|
|
—
|
|
|
(2,360
|
)
|
|||
|
Proceeds from the sale of securities (a)
|
155,386
|
|
|
56,255
|
|
|
211,641
|
|
|||
|
2018
|
|
|
|
|
|
||||||
|
Realized gains
|
$
|
653
|
|
|
$
|
—
|
|
|
$
|
653
|
|
|
Realized losses
|
(1,965
|
)
|
|
—
|
|
|
(1,965
|
)
|
|||
|
Proceeds from the sale of securities (a)
|
148,150
|
|
|
25,127
|
|
|
173,277
|
|
|||
|
(a)
|
Proceeds are reinvested in the nuclear decommissioning trust and coal reclamation escrow account.
|
|
|
Nine Months Ended September 30,
|
||||||||||
|
|
Nuclear Decommissioning Trust
|
|
Other Special Use Funds
|
|
Total
|
||||||
|
2019
|
|
|
|
|
|
||||||
|
Realized gains
|
$
|
8,478
|
|
|
$
|
4
|
|
|
$
|
8,482
|
|
|
Realized losses
|
(5,465
|
)
|
|
—
|
|
|
(5,465
|
)
|
|||
|
Proceeds from the sale of securities (a)
|
371,538
|
|
|
149,458
|
|
|
520,996
|
|
|||
|
2018
|
|
|
|
|
|
||||||
|
Realized gains
|
$
|
2,951
|
|
|
$
|
1
|
|
|
$
|
2,952
|
|
|
Realized losses
|
(6,990
|
)
|
|
—
|
|
|
(6,990
|
)
|
|||
|
Proceeds from the sale of securities (a)
|
401,396
|
|
|
41,644
|
|
|
443,040
|
|
|||
|
(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
|
$
|
40,309
|
|
|
$
|
32,628
|
|
|
$
|
37,013
|
|
|
$
|
109,950
|
|
|
1 year – 5 years
|
133,488
|
|
|
25,928
|
|
|
140,895
|
|
|
300,311
|
|
||||
|
5 years – 10 years
|
103,973
|
|
|
720
|
|
|
—
|
|
|
104,693
|
|
||||
|
Greater than 10 years
|
205,758
|
|
|
3,398
|
|
|
—
|
|
|
209,156
|
|
||||
|
Total
|
$
|
483,528
|
|
|
$
|
62,674
|
|
|
$
|
177,908
|
|
|
$
|
724,110
|
|
|
(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 September 30
|
|
|
|
|
|
|
|
|
|
||||||
|
Balance June 30, 2019
|
$
|
(46,657
|
)
|
|
|
|
$
|
(979
|
)
|
|
|
|
$
|
(47,636
|
)
|
|
Amounts reclassified from accumulated other comprehensive loss
|
880
|
|
|
(a)
|
|
218
|
|
|
(b)
|
|
1,098
|
|
|||
|
Balance September 30, 2019
|
$
|
(45,777
|
)
|
|
|
|
$
|
(761
|
)
|
|
|
|
$
|
(46,538
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Balance June 30, 2018
|
$
|
(54,233
|
)
|
|
|
|
$
|
(2,391
|
)
|
|
|
|
$
|
(56,624
|
)
|
|
Amounts reclassified from accumulated other comprehensive loss
|
1,099
|
|
|
(a)
|
|
451
|
|
|
(b)
|
|
1,550
|
|
|||
|
Balance September 30, 2018
|
$
|
(53,134
|
)
|
|
|
|
$
|
(1,940
|
)
|
|
|
|
$
|
(55,074
|
)
|
|
|
Pension and Other Postretirement Benefits
|
|
|
|
Derivative Instruments
|
|
|
|
Total
|
||||||
|
Nine Months Ended September 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
|
2,642
|
|
|
(a)
|
|
950
|
|
|
(b)
|
|
3,592
|
|
|||
|
Balance September 30, 2019
|
$
|
(45,777
|
)
|
|
|
|
$
|
(761
|
)
|
|
|
|
$
|
(46,538
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
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
|
3,188
|
|
|
(a)
|
|
1,316
|
|
|
(b)
|
|
4,504
|
|
|||
|
Reclassification of income tax effect related to tax reform
|
(7,954
|
)
|
|
(c)
|
|
(598
|
)
|
|
(c)
|
|
(8,552
|
)
|
|||
|
Balance September 30, 2018
|
$
|
(53,134
|
)
|
|
|
|
$
|
(1,940
|
)
|
|
|
|
$
|
(55,074
|
)
|
|
(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 September 30
|
|
|
|
|
|
|
|
|
|
||||||
|
Balance June 30, 2019
|
$
|
(26,297
|
)
|
|
|
|
$
|
(979
|
)
|
|
|
|
$
|
(27,276
|
)
|
|
Amounts reclassified from accumulated other comprehensive loss
|
755
|
|
|
(a)
|
|
218
|
|
|
(b)
|
|
973
|
|
|||
|
Balance September 30, 2019
|
$
|
(25,542
|
)
|
|
|
|
$
|
(761
|
)
|
|
|
|
$
|
(26,303
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Balance June 30, 2018
|
$
|
(32,768
|
)
|
|
|
|
$
|
(2,391
|
)
|
|
|
|
$
|
(35,159
|
)
|
|
Amounts reclassified from accumulated other comprehensive loss
|
952
|
|
|
(a)
|
|
451
|
|
|
(b)
|
|
1,403
|
|
|||
|
Balance September 30, 2018
|
$
|
(31,816
|
)
|
|
|
|
$
|
(1,940
|
)
|
|
|
|
$
|
(33,756
|
)
|
|
|
Pension and Other Postretirement Benefits
|
|
|
|
Derivative Instruments
|
|
|
|
Total
|
||||||
|
Nine Months Ended September 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
|
2,268
|
|
|
(a)
|
|
950
|
|
|
(b)
|
|
3,218
|
|
|||
|
Balance September 30, 2019
|
$
|
(25,542
|
)
|
|
|
|
$
|
(761
|
)
|
|
|
|
$
|
(26,303
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Balance December 31, 2017
|
$
|
(24,421
|
)
|
|
|
|
$
|
(2,562
|
)
|
|
|
|
$
|
(26,983
|
)
|
|
OCI (loss) before reclassifications
|
(5,791
|
)
|
|
|
|
(96
|
)
|
|
|
|
(5,887
|
)
|
|||
|
Amounts reclassified from accumulated other comprehensive loss
|
2,836
|
|
|
(a)
|
|
1,316
|
|
|
(b)
|
|
4,152
|
|
|||
|
Reclassification of income tax effect related to tax reform
|
(4,440
|
)
|
|
(c)
|
|
(598
|
)
|
|
(c)
|
|
(5,038
|
)
|
|||
|
Balance September 30, 2018
|
$
|
(31,816
|
)
|
|
|
|
$
|
(1,940
|
)
|
|
|
|
$
|
(33,756
|
)
|
|
(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
September 30, 2019 |
||||||||||
|
|
|
Purchased Power Lease Contracts
|
|
Land, Property & Equipment Leases
|
|
Total
|
||||||
|
Operating lease cost
|
|
$
|
21,095
|
|
|
$
|
4,581
|
|
|
$
|
25,676
|
|
|
Variable lease cost
|
|
36,917
|
|
|
183
|
|
|
37,100
|
|
|||
|
Short-term lease cost
|
|
—
|
|
|
812
|
|
|
812
|
|
|||
|
Total lease cost
|
|
$
|
58,012
|
|
|
$
|
5,576
|
|
|
$
|
63,588
|
|
|
|
|
Nine Months Ended
September 30, 2019 |
||||||||||
|
|
|
Purchased Power Lease Contracts
|
|
Land, Property & Equipment Leases
|
|
Total
|
||||||
|
Operating lease cost
|
|
$
|
35,159
|
|
|
$
|
13,343
|
|
|
$
|
48,502
|
|
|
Variable lease cost
|
|
95,736
|
|
|
543
|
|
|
96,279
|
|
|||
|
Short-term lease cost
|
|
—
|
|
|
3,477
|
|
|
3,477
|
|
|||
|
Total lease cost
|
|
$
|
130,895
|
|
|
$
|
17,363
|
|
|
$
|
148,258
|
|
|
|
|
September 30, 2019
|
||||||||||
|
Year
|
|
Purchased Power Lease Contracts
|
|
Land, Property & Equipment Leases
|
|
Total
|
||||||
|
2019 (remaining three months of 2019)
|
|
$
|
13,625
|
|
|
$
|
3,352
|
|
|
$
|
16,977
|
|
|
2020
|
|
—
|
|
|
14,083
|
|
|
14,083
|
|
|||
|
2021
|
|
—
|
|
|
11,244
|
|
|
11,244
|
|
|||
|
2022
|
|
—
|
|
|
7,727
|
|
|
7,727
|
|
|||
|
2023
|
|
—
|
|
|
6,101
|
|
|
6,101
|
|
|||
|
2024
|
|
—
|
|
|
3,915
|
|
|
3,915
|
|
|||
|
Thereafter
|
|
—
|
|
|
38,697
|
|
|
38,697
|
|
|||
|
Total lease commitments
|
|
13,625
|
|
|
85,119
|
|
|
98,744
|
|
|||
|
Less imputed interest
|
|
19
|
|
|
20,032
|
|
|
20,051
|
|
|||
|
Total lease liabilities
|
|
$
|
13,606
|
|
|
$
|
65,087
|
|
|
$
|
78,693
|
|
|
|
|
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
|
|
|
|
September 30, 2019
|
|
|
Weighted average remaining lease term
|
12 years
|
|
|
Weighted average discount rate (a)
|
3.73
|
%
|
|
|
Nine Months Ended
September 30, 2019 |
||
|
Cash paid for amounts included in the measurement of lease liabilities - operating cash flows (dollars in thousands):
|
$
|
51,980
|
|
|
|
Net Capacity in Operation
(MW)
|
|
Net Capacity Planned / Under
Development (MW)
|
|
||
|
Total APS Owned: Solar
|
239
|
|
|
—
|
|
|
|
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)
|
930
|
|
|
54
|
|
(b)
|
|
Total Renewable Portfolio
|
1,795
|
|
|
104
|
|
|
|
(b)
|
Applications received by APS that are not yet installed and online.
|
|
•
|
a test year comprised of twelve months ended June 30, 2019, adjusted as described below;
|
|
•
|
an original cost rate base of $8.87 billion, which approximates the ACC-jurisdictional portion of the book value of utility assets, net of accumulated depreciation and other credits;
|
|
•
|
the following proposed capital structure and costs of capital:
|
|
|
|
Capital Structure
|
|
Cost of Capital
|
|
|
|
Long-term debt
|
|
45.3
|
%
|
4.10
|
%
|
|
|
Common stock equity
|
|
54.7
|
%
|
10.15
|
%
|
|
|
Weighted-average cost of capital
|
|
|
|
7.41
|
%
|
|
|
•
|
a 1% return on the increment of fair value rate base above APS’s original cost rate base, as provided for by Arizona law;
|
|
•
|
authorization to defer until APS's next general rate case the increase or decrease in its Arizona property taxes attributable to tax rate changes after the date the rate application is adjudicated;
|
|
•
|
a number of proposed rate and program changes for residential customers, including:
|
|
▪
|
a super off-peak period during the winter months for APS’s time-of-use with demand rates;
|
|
▪
|
additional $1.25 million in funding for limited-income crisis bill program; and
|
|
▪
|
a flat bill/subscription rate pilot program;
|
|
•
|
proposed rate design changes for commercial customers, including an experimental program designed to provide access to market pricing for up to 200 MW of medium and large commercial customers;
|
|
•
|
recovery of the deferral and rate base effects of the construction and operating costs of the Ocotillo modernization project (see Note 4 discussion of the 2017 Settlement Agreement); and
|
|
•
|
continued recovery of the remaining investment and other costs related to the retirement and closure of the Navajo Plant (see Note 4 for details related to the resulting regulatory asset).
|
|
•
|
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
September 30, |
|
|
||||||||
|
|
2019
|
|
2018
|
|
Net Change
|
||||||
|
|
(dollars in millions)
|
||||||||||
|
Regulated Electricity Segment:
|
|
|
|
|
|
|
|
|
|||
|
Operating revenues less fuel and purchased power expenses
|
$
|
845
|
|
|
$
|
877
|
|
|
$
|
(32
|
)
|
|
Operations and maintenance
|
(238
|
)
|
|
(246
|
)
|
|
8
|
|
|||
|
Depreciation and amortization
|
(149
|
)
|
|
(146
|
)
|
|
(3
|
)
|
|||
|
Taxes other than income taxes
|
(53
|
)
|
|
(51
|
)
|
|
(2
|
)
|
|||
|
Pension and other postretirement non-service credits - net
|
6
|
|
|
12
|
|
|
(6
|
)
|
|||
|
All other income and expenses, net
|
14
|
|
|
14
|
|
|
—
|
|
|||
|
Interest charges, net of allowance for borrowed funds used during construction
|
(54
|
)
|
|
(56
|
)
|
|
2
|
|
|||
|
Income taxes
|
(53
|
)
|
|
(85
|
)
|
|
32
|
|
|||
|
Less income related to noncontrolling interests (Note 6)
|
(5
|
)
|
|
(5
|
)
|
|
—
|
|
|||
|
Regulated electricity segment income
|
313
|
|
|
314
|
|
|
(1
|
)
|
|||
|
All other
|
(1
|
)
|
|
1
|
|
|
(2
|
)
|
|||
|
Net Income Attributable to Common Shareholders
|
$
|
312
|
|
|
$
|
315
|
|
|
$
|
(3
|
)
|
|
|
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)
|
$
|
(27
|
)
|
|
$
|
—
|
|
|
$
|
(27
|
)
|
|
Effects of weather
|
(9
|
)
|
|
(2
|
)
|
|
(7
|
)
|
|||
|
Lower transmission revenues (Note 4)
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
|||
|
Changes in net fuel and purchased power costs, including off-system sales margins and related deferrals
|
(48
|
)
|
|
(51
|
)
|
|
3
|
|
|||
|
Higher retail revenue due to higher customer growth, partially offset by the impacts of energy efficiency, distributed generation and changes in customer usage patterns
|
4
|
|
|
2
|
|
|
2
|
|
|||
|
Miscellaneous items, net
|
8
|
|
|
6
|
|
|
2
|
|
|||
|
Total
|
$
|
(77
|
)
|
|
$
|
(45
|
)
|
|
$
|
(32
|
)
|
|
•
|
A decrease of $16 million related to public outreach costs at the parent company primarily associated with the ballot initiative in 2018;
|
|
•
|
An increase of $5 million related to consulting costs; and
|
|
•
|
An increase of $3 million for other miscellaneous factors.
|
|
|
Nine Months Ended
September 30, |
|
|
||||||||
|
|
2019
|
|
2018
|
|
Net Change
|
||||||
|
|
(dollars in millions)
|
||||||||||
|
Regulated Electricity Segment:
|
|
|
|
|
|
|
|
|
|||
|
Operating revenues less fuel and purchased power expenses
|
$
|
1,980
|
|
|
$
|
2,067
|
|
|
$
|
(87
|
)
|
|
Operations and maintenance
|
(710
|
)
|
|
(769
|
)
|
|
59
|
|
|||
|
Depreciation and amortization
|
(446
|
)
|
|
(435
|
)
|
|
(11
|
)
|
|||
|
Taxes other than income taxes
|
(164
|
)
|
|
(158
|
)
|
|
(6
|
)
|
|||
|
Pension and other postretirement non-service credits - net
|
17
|
|
|
37
|
|
|
(20
|
)
|
|||
|
All other income and expenses, net
|
46
|
|
|
46
|
|
|
—
|
|
|||
|
Interest charges, net of allowance for borrowed funds used during construction
|
(161
|
)
|
|
(162
|
)
|
|
1
|
|
|||
|
Income taxes
|
(72
|
)
|
|
(127
|
)
|
|
55
|
|
|||
|
Less income related to noncontrolling interests (Note 6)
|
(15
|
)
|
|
(15
|
)
|
|
—
|
|
|||
|
Regulated electricity segment income
|
475
|
|
|
484
|
|
|
(9
|
)
|
|||
|
All other
|
(1
|
)
|
|
1
|
|
|
(2
|
)
|
|||
|
Net Income Attributable to Common Shareholders
|
$
|
474
|
|
|
$
|
485
|
|
|
$
|
(11
|
)
|
|
|
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)
|
$
|
(59
|
)
|
|
$
|
—
|
|
|
$
|
(59
|
)
|
|
Effects of weather
|
(42
|
)
|
|
(10
|
)
|
|
(32
|
)
|
|||
|
Lower renewable energy regulatory surcharges and higher purchased power, partially offset by operations and maintenance costs
|
(15
|
)
|
|
1
|
|
|
(16
|
)
|
|||
|
Lower transmission revenues (Note 4)
|
(8
|
)
|
|
—
|
|
|
(8
|
)
|
|||
|
Change in residential rate design and seasonal rates (a)
|
13
|
|
|
—
|
|
|
13
|
|
|||
|
Lost fixed cost recovery
|
8
|
|
|
—
|
|
|
8
|
|
|||
|
Higher retail revenue due to higher customer growth, partially offset by the impacts of energy efficiency, distributed generation and changes in customer usage patterns
|
11
|
|
|
4
|
|
|
7
|
|
|||
|
Changes in net fuel and purchased power costs, including off-system sales margins and related deferrals
|
(43
|
)
|
|
(46
|
)
|
|
3
|
|
|||
|
Miscellaneous items, net
|
4
|
|
|
7
|
|
|
(3
|
)
|
|||
|
Total
|
$
|
(131
|
)
|
|
$
|
(44
|
)
|
|
$
|
(87
|
)
|
|
•
|
A decrease of $26 million related to public outreach costs at the parent company primarily associated with the ballot initiative in 2018;
|
|
•
|
A decrease of $19 million related to costs for renewable energy and similar regulatory programs, which is partially offset by operating revenues and purchased power;
|
|
•
|
A decrease of $16 million in fossil generation primarily due to lower planned outages and other operating costs;
|
|
•
|
A decrease of $7 million related to transmission, distribution and customer service costs;
|
|
•
|
A decrease of $6 million related to employee benefit costs;
|
|
•
|
An increase of $9 million for costs related to information technology;
|
|
•
|
An increase of $7 million related to consulting costs; and
|
|
•
|
A decrease of $1 million for other miscellaneous factors.
|
|
|
Nine Months Ended
September 30, |
|
Net
|
||||||||
|
|
2019
|
|
2018
|
|
Change
|
||||||
|
Net cash flow provided by operating activities
|
$
|
835
|
|
|
$
|
960
|
|
|
$
|
(125
|
)
|
|
Net cash flow used for investing activities
|
(832
|
)
|
|
(913
|
)
|
|
81
|
|
|||
|
Net cash flow provided by financing activities
|
21
|
|
|
4
|
|
|
17
|
|
|||
|
Net change in cash and cash equivalents
|
$
|
24
|
|
|
$
|
51
|
|
|
$
|
(27
|
)
|
|
|
Nine Months Ended
September 30, |
|
Net
|
||||||||
|
|
2019
|
|
2018
|
|
Change
|
||||||
|
Net cash flow provided by operating activities
|
$
|
830
|
|
|
$
|
988
|
|
|
$
|
(158
|
)
|
|
Net cash flow used for investing activities
|
(844
|
)
|
|
(906
|
)
|
|
62
|
|
|||
|
Net cash flow provided by (used for) financing activities
|
38
|
|
|
(31
|
)
|
|
69
|
|
|||
|
Net change in cash and cash equivalents
|
$
|
24
|
|
|
$
|
51
|
|
|
$
|
(27
|
)
|
|
|
Estimated for the Year Ended
December 31,
|
||||||||||
|
|
2019
|
|
2020
|
|
2021
|
||||||
|
APS
|
|
|
|
|
|
|
|
|
|||
|
Generation:
|
|
|
|
|
|
|
|
|
|||
|
Clean:
|
|
|
|
|
|
||||||
|
Nuclear Fuel
|
$
|
71
|
|
|
$
|
63
|
|
|
$
|
64
|
|
|
Nuclear Generation
|
70
|
|
|
68
|
|
|
67
|
|
|||
|
Renewables (a)
|
23
|
|
|
18
|
|
|
3
|
|
|||
|
New Resources (b)
|
3
|
|
|
118
|
|
|
387
|
|
|||
|
Environmental
|
29
|
|
|
47
|
|
|
53
|
|
|||
|
New Gas Generation
|
16
|
|
|
—
|
|
|
—
|
|
|||
|
Other Generation
|
156
|
|
|
137
|
|
|
118
|
|
|||
|
Distribution
|
515
|
|
|
530
|
|
|
402
|
|
|||
|
Transmission
|
205
|
|
|
190
|
|
|
236
|
|
|||
|
Other (c)
|
149
|
|
|
160
|
|
|
142
|
|
|||
|
Total APS
|
$
|
1,237
|
|
|
$
|
1,331
|
|
|
$
|
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
|
|
|
Nine Months Ended
September 30, |
||||||
|
|
2019
|
|
2018
|
||||
|
Mark-to-market of net positions at beginning of period
|
$
|
(59
|
)
|
|
$
|
(91
|
)
|
|
Decrease (Increase) in regulatory asset
|
(13
|
)
|
|
12
|
|
||
|
Recognized in OCI:
|
|
|
|
||||
|
Mark-to-market losses realized during the period
|
1
|
|
|
2
|
|
||
|
Change in valuation techniques
|
—
|
|
|
—
|
|
||
|
Mark-to-market of net positions at end of period
|
$
|
(71
|
)
|
|
$
|
(77
|
)
|
|
Source of Fair Value
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Total
Fair
Value
|
||||||||||||
|
Observable prices provided by other external sources
|
|
$
|
(15
|
)
|
|
$
|
(30
|
)
|
|
$
|
(16
|
)
|
|
$
|
(7
|
)
|
|
$
|
—
|
|
|
$
|
(68
|
)
|
|
Prices based on unobservable inputs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
||||||
|
Total by maturity
|
|
$
|
(15
|
)
|
|
$
|
(30
|
)
|
|
$
|
(16
|
)
|
|
$
|
(7
|
)
|
|
$
|
(2
|
)
|
|
$
|
(70
|
)
|
|
|
September 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 (a)
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Electricity
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
(1
|
)
|
|
Natural gas
|
39
|
|
|
(39
|
)
|
|
44
|
|
|
(44
|
)
|
||||
|
Total
|
$
|
39
|
|
|
$
|
(39
|
)
|
|
$
|
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.
|
|
•
|
Mr. Guldner’s base salary increases to $1,100,000 (“CEO Base Salary”);
|
|
•
|
Equity awards are expected to be granted in February 2020 with a grant date fair value of $3,250,000, under the regular long-term incentive program applicable to the Chief Executive Officer and Executive Vice Presidents, and, subject to the normal approval process by the HRC;
|
|
•
|
The award opportunities for Mr. Guldner under the APS 2019 Annual Incentive Award Plan (the “APS Plan”) will continue to be tied to his services as President of APS and Executive Vice President Public Policy of Pinnacle West from January 1, 2019 until November 15, 2019. From November 15, 2019 until December 31, 2019, Mr. Guldner will continue to participate in the APS Plan but the award opportunities will be based 50% on the achievement of specified 2019 Pinnacle West earnings levels and 50% on the achievement of performance goals established for business units of APS in the functional areas of customer service, transmission and distribution, fossil generation, corporate resources and the Palo Verde Generating Station and Mr. Guldner’s target award opportunity under the APS Plan will be 110% of his CEO Base Salary. Mr. Guldner may earn less or more than the target amount, up to a maximum award opportunity of 200% of target, depending on the achievement of the earnings and business unit performance goals separately or in combination.
|
|
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
|
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
|
|
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:
|
November 7, 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:
|
November 7, 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)
|
|
1.
|
Consultant Responsibilities. Consultant agrees, at the specific request of the Company made from time to time during the Retention Period, to consult and advise with respect to such matters as may be specifically requested from time to time by the Company through the Lead Director of its Board of Directors (“Lead Director”), including without limitation assisting the Company and its Board of Directors in the transition of the responsibilities of the Chief Executive Officer of the Company to Consultant’s successor (“Services”).
|
|
2.
|
Consultant Status as Independent Contractor. The parties acknowledge that Consultant will perform the Services hereunder as an independent contractor and not as the agent, employee, joint venturer, partner or servant of the Company for any purpose whatsoever. Consistent with the foregoing, Consultant acknowledges that the Company shall not deduct withholding taxes, social security taxes or any other taxes required to be deducted by an employer from amounts paid to Consultant, and neither the Company nor its officers, directors or employees shall have any obligation or liability to Consultant for any such taxes, unemployment compensation, minimum wages, or similar charges, taxes or assessments applicable to an employment relationship. Consultant shall be responsible for maintaining his own books and records and shall make all withholdings and contributions for taxes, and shall pay all taxes, assessments, penalties, and fines related to Consultant’s activities. Consultant shall not be entitled by virtue of this Agreement to any fringe benefits, workers’ compensation, medical coverage, disability, pensions, holiday or vacation pay or any other benefits provided to the Company’s employees. The parties further acknowledge that:
|
|
•
|
the Company shall not control the manner or means by which the Consultant performs the Services, including but not limited to the time and place the Consultant performs the Services.
|
|
•
|
the Company shall not provide Consultant with any registrations or licenses required to perform the Services, all of which it shall be the responsibility of Consultant to obtain and maintain.
|
|
•
|
the Company shall not provide any accommodations or equipment to Consultant other than temporary office space when Consultant is performing Services on-site.
|
|
•
|
the Company shall pay Consultant in the name that appears on this Agreement.
|
|
•
|
the parties shall not combine business operations and shall instead maintain separate business operations.
|
|
3.
|
Term and Termination. The term of this Agreement shall be for the Retention Period unless sooner terminated as hereinafter provided. This Agreement may be terminated with or without Cause by either the Company or Consultant upon 30 days’ written notice to the other party. If the Agreement is terminated prior to the end of the Retention Period, the Consultant shall be entitled to the payments set forth in Section 6.
|
|
4.
|
Compensation and Expenses. If Consultant satisfies the terms and conditions of this Agreement during the Retention Period, the Consultant will receive payments totaling $1,750,000, which shall be paid as follows: (1) $25,000 per month for the first 11 months in the Retention Period (the “Monthly Fee”) and (2) a final payment of $1,475,000 (the “Final Fee”), subject to the terms of Section 5. The parties reasonably anticipate that the level of bona fide consulting services will be required for less than eight hours per week, which is less than 20% of the average level of services the Consultant provided to the Company and its affiliates as an employee during the immediately preceding 36-month period prior to the Retirement Date. Consultant shall be responsible for all expenses incurred by Consultant in the performance of his duties, except for travel expenses incurred for out-of-town travel undertaken by Consultant at the request of the Company, for which Consultant shall be promptly reimbursed upon submission of receipts.
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5.
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Payment of Monthly Fee and Final Fee. The Company shall remit the Monthly Fee to Consultant no later than the last day of each month during the Retention Period, commencing with November, 2019. Within 60 days following the end of the Retention Period, the Company’s Human Resources Committee and Corporate Governance Committee (the “Committees”) shall determine if the Consultant performed the Services required by the Agreement. If the Committees determine that the Consultant performed the Services required by the Agreement, the Consultant shall receive the Final Fee, paid in a single lump sum no later than 60 days following the end of the Retention Period.
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6.
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Termination Prior to End of Retention Period. If the Company or Consultant terminates this Agreement on or prior to the last day of the Retention Period for any reason set forth in this Section 6 other than death or Disability, the parties shall provide prior notice as required in Section 3 of this Agreement.
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6.1
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Termination by Consultant. If this Agreement is terminated by the Consultant for any reason other than due to death or Disability prior to the end of the Retention Period, the Consultant will receive the Monthly Fee for the month in which the
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6.2
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Termination by Company for Cause or Violation of Section 7. If this Agreement is terminated by the Board of Directors for Cause or for a violation of Section 7 prior to the end of the Retention Period, the Consultant will receive the Monthly Fee for the month in which the Agreement is terminated. The Consultant will not receive the Monthly Fee for any month following the month in which the Agreement is terminated, nor will the Consultant be entitled to receive the Final Fee. For purposes of this Agreement, “Cause” means (A) embezzlement, theft, fraud, deceit and/or dishonesty by the Consultant involving the property, business or affairs of the Company or any of its subsidiaries, or (B) an act of moral turpitude which in the sole judgment of the Board of Directors reflects adversely on the business or reputation of the Company or any of its subsidiaries or negatively affects any of the Company’s or any of its subsidiaries’ employees or customers.
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6.3
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Termination due to Death or Disability. If this Agreement is terminated prior to the end of the Retention Period due to the Consultant’s death or Disability, the Consultant or his estate, as appropriate, will receive all of the unpaid Monthly Fees for the remainder of the Retention Period and the Final Fee in a single lump sum within 30 days following the date on which the Agreement is terminated.
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6.4
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Other Company Terminations. If the Board of Directors terminates this Agreement on or prior to the last day of the Retention Period for any reason other than those set forth in Section 6.2, including without limitation as a result of a Change of Control (as defined in the Company’s 2012 Long-Term Incentive Plan), the Consultant will receive all of the unpaid Monthly Fees for the remainder of the Retention Period and the Final Fee in a single lump sum within 30 days following the date on which the Agreement is terminated.
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7.
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Non-Disclosure and Other Restrictions.
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7.1
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Confidentiality. While serving as a Consultant to the Company, Consultant agrees that Consultant will not, directly or indirectly, in one or a series of transactions, disclose to any person, or use or otherwise exploit for Consultant’s own benefit or for the benefit of anyone other than the Company or any of its affiliates any Confidential Information (as hereinafter defined), whether prepared by Consultant or not; provided, however, that during the term of this Agreement, any Confidential Information may be disclosed (i) to officers, representatives, employees and agents of the Company and its affiliates who need to know such Confidential Information in order to perform the services or conduct the operations required or expected of them in the business, and (ii) in good faith by Consultant in connection with the performance of Consultant’s job duties to persons who are authorized to receive such
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7.2
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Non-Competition. Consultant agrees during the term of this Agreement and for a period of 12 months following the termination or expiration of this Agreement, Consultant shall not, without the prior written consent of the Company’s General Counsel, participate, whether as a consultant, employee, contractor, partner, owner (ownership of less than 5% of the outstanding stock of a publicly traded company will not be considered ownership under this provision), co-owner, or otherwise, with any business, corporation, group, entity or individual that is or intends to be engaged in the business activity of supplying electricity in any area for which the Company or its affiliates is authorized to do business as of the date of this Agreement. Upon the approval, which will not be unreasonably withheld, of the Company’s Lead Director, the Consultant may serve on the board of directors of another company.
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7.3
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Non-Solicitation. Consultant agrees during the term of this Agreement and for a period of 12 months following the termination or expiration of this Agreement, Consultant shall not, without the prior written consent of the Company’s General Counsel, encourage, induce, or otherwise solicit, or actively assist any other person or organization to encourage, induce or otherwise solicit, directly or indirectly, any employee of the Company or any of its affiliates to terminate his or her employment with the Company or its affiliates, or otherwise interfere with the advantageous business relationship of the Company and its affiliates with their employees.
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7.4
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Remedies. If either party to this agreement fails to comply with Section 7 of this Agreement in a material respect, the other party may pursue any rights and remedies it or he may have pursuant to this Agreement at law or in equity including, specifically, injunctive relief.
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8.
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Intellectual Property. Consultant agrees that all inventions, data, works, discoveries, designs, technology and improvements, (whether or not protectable by a patent or a copyright) (“Work Product”) related to the business of the Company, which are conceived of, made, reduced to practice, created, written, designed or developed, authored or made by principals or employees of Consultant, alone or in combination with others, in the course of the performance of services under this Agreement, shall be the sole and exclusive property of the Company. The Work Product are to be promptly reported to the Company but otherwise maintained in confidence by Consultant. All works authored by principals or employees of Consultant under this Agreement shall be deemed “works made for hire” to the extent permitted by the copyright law.
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9.
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Notices. All notices, demands and communications required by this Agreement shall be in writing and shall be deemed to have been given for all purposes when sent to the respective addresses set forth below: (a) upon personal delivery; (b) one (1) day after being sent, when sent by overnight courier service; (c) five (5) days after posting when sent by registered, certified or regular mail, or (d) on the day of transmission when sent by electronic mail or facsimile.
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10.
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Interpretation.
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10.1
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Construction. Titles, captions or headings to this Agreement are for convenience and reference only and shall not be deemed part of this Agreement.
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10.2
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No Waiver. No requirement hereof nor default hereunder shall be deemed waived by either party except by a writing to that effect signed by the waiving party and then only to the extent specifically set forth in the writing. A waiver with reference to one event shall not be construed as continuing or as a bar to or waiver of any right or remedy as to a subsequent event.
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10.3
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Modification. This Agreement may be amended, modified, superseded or canceled only by a written instrument executed by the Company and Consultant.
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10.4
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Integration. This Agreement constitutes the complete and final agreement of the parties and supersedes any and all prior negotiations and agreements, written or oral, of the parties with respect to its subject matter.
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10.5
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Governing Law. This Agreement shall be interpreted, construed, governed by and enforced in accordance with the internal laws of the State of Arizona without regard to its conflict of law rules.
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10.6
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Severability. If any provision of this Agreement is held to be invalid or unenforceable, then the court making such determination shall modify the provision deemed invalid or unenforceable to the least possible extent needed so as to make it valid and enforceable, but if that cannot be done, the provision shall be severed and the remaining provisions shall then be interpreted in a manner allowing maximum enforcement of the Agreement.
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10.7
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Assignment. Consultant shall not assign this Agreement or any rights or obligations hereunder without the Company's express written consent.
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10.8
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Section 409A. This Agreement shall be administered in compliance with Section 409A of the Internal Revenue Code and each provision of this Agreement shall be interpreted to comply with Section 409A of the Internal Revenue Code or an exception thereto. For purposes of Section 409A, the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments under Treasury Regulation Section 1.409A-2(b)(2)(iii).
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PINNACLE WEST CAPITAL CORPORATION
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By:/s/ Robert E. Smith
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Robert E. Smith, Senior Vice President and General Counsel
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/s/ Donald E. Brandt
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Donald E. Brandt, Consultant
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Pinnacle West Capital Corporation;
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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.
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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/ Donald E. Brandt
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Donald E. Brandt
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Chairman, President and Chief Executive Officer
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Pinnacle West Capital Corporation;
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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.
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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.
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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/ Donald E. Brandt
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Donald E. Brandt
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Chairman and Chief Executive 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.
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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)
|
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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/s/ Donald E. Brandt
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Donald E. Brandt
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Chairman, President and
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Chief Executive Officer
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/s/ James R. Hatfield
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James R. Hatfield
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Executive Vice President and
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Chief Financial Officer
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/s/ Donald E. Brandt
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Donald E. Brandt
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Chairman and Chief Executive Officer
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/s/ James R. Hatfield
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James R. Hatfield
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Executive Vice President and
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Chief Financial Officer
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