|
|
|
|
|
☒
|
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 May 1, 2020:
|
112,493,458
|
|
ARIZONA PUBLIC SERVICE COMPANY
|
Number of shares of common stock, $2.50 par value, outstanding as of May 1, 2020:
|
71,264,947
|
|
|
|
Page
|
|
|
|
|
|
|
|
|
|||
|
|
|
||
|
|
|||
|
|
|
||
|
|
|
||
|
|
|||
|
|
|||
|
|
|||
|
|
|
|
|
|
|
|
||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|
||
|
•
|
the potential effects of the continued Coronavirus ("COVID-19") pandemic, including, but not limited to, those described in Part II, Item 1A "Risk Factors" herein;
|
|
•
|
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 or social conditions, 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
March 31, |
||||||
|
|
|
2020
|
|
2019
|
||||
|
|
|
|
|
|
||||
|
OPERATING REVENUES (NOTE 2)
|
|
$
|
661,930
|
|
|
$
|
740,530
|
|
|
|
|
|
|
|
||||
|
OPERATING EXPENSES
|
|
|
|
|
|
|
||
|
Fuel and purchased power
|
|
188,521
|
|
|
230,588
|
|
||
|
Operations and maintenance
|
|
221,318
|
|
|
245,634
|
|
||
|
Depreciation and amortization
|
|
154,079
|
|
|
148,707
|
|
||
|
Taxes other than income taxes
|
|
56,768
|
|
|
55,090
|
|
||
|
Other expenses
|
|
822
|
|
|
427
|
|
||
|
Total
|
|
621,508
|
|
|
680,446
|
|
||
|
OPERATING INCOME
|
|
40,422
|
|
|
60,084
|
|
||
|
OTHER INCOME (DEDUCTIONS)
|
|
|
|
|
|
|
||
|
Allowance for equity funds used during construction
|
|
7,697
|
|
|
11,188
|
|
||
|
Pension and other postretirement non-service credits - net
|
|
13,911
|
|
|
5,114
|
|
||
|
Other income (Note 9)
|
|
12,569
|
|
|
7,169
|
|
||
|
Other expense (Note 9)
|
|
(4,784
|
)
|
|
(4,358
|
)
|
||
|
Total
|
|
29,393
|
|
|
19,113
|
|
||
|
INTEREST EXPENSE
|
|
|
|
|
|
|
||
|
Interest charges
|
|
59,234
|
|
|
60,653
|
|
||
|
Allowance for borrowed funds used during construction
|
|
(4,076
|
)
|
|
(6,665
|
)
|
||
|
Total
|
|
55,158
|
|
|
53,988
|
|
||
|
INCOME BEFORE INCOME TAXES
|
|
14,657
|
|
|
25,209
|
|
||
|
INCOME TAXES
|
|
(20,209
|
)
|
|
2,418
|
|
||
|
NET INCOME
|
|
34,866
|
|
|
22,791
|
|
||
|
Less: Net income attributable to noncontrolling interests (Note 6)
|
|
4,873
|
|
|
4,873
|
|
||
|
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS
|
|
$
|
29,993
|
|
|
$
|
17,918
|
|
|
|
|
|
|
|
||||
|
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING — BASIC
|
|
112,594
|
|
|
112,337
|
|
||
|
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING — DILUTED
|
|
112,862
|
|
|
112,735
|
|
||
|
|
|
|
|
|
||||
|
EARNINGS PER WEIGHTED-AVERAGE COMMON SHARE OUTSTANDING
|
|
|
|
|
|
|
||
|
Net income attributable to common shareholders — basic
|
|
$
|
0.27
|
|
|
$
|
0.16
|
|
|
Net income attributable to common shareholders — diluted
|
|
$
|
0.27
|
|
|
$
|
0.16
|
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2020
|
|
2019
|
||||
|
|
|
|
|
||||
|
NET INCOME
|
$
|
34,866
|
|
|
$
|
22,791
|
|
|
|
|
|
|
||||
|
OTHER COMPREHENSIVE INCOME, NET OF TAX
|
|
|
|
|
|
||
|
Derivative instruments:
|
|
|
|
|
|
||
|
Net unrealized gain, net of tax expense of $292 and $0
|
292
|
|
|
—
|
|
||
|
Reclassification of net realized loss, net of tax benefit of $394 and $108
|
20
|
|
|
328
|
|
||
|
Pension and other postretirement benefits activity, net of tax expense of $245 and $288
|
1,205
|
|
|
879
|
|
||
|
Total other comprehensive income
|
1,517
|
|
|
1,207
|
|
||
|
|
|
|
|
||||
|
COMPREHENSIVE INCOME
|
36,383
|
|
|
23,998
|
|
||
|
Less: Comprehensive income attributable to noncontrolling interests
|
4,873
|
|
|
4,873
|
|
||
|
|
|
|
|
||||
|
COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS
|
$
|
31,510
|
|
|
$
|
19,125
|
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
|
ASSETS
|
|
|
|
|
|
||
|
|
|
|
|
||||
|
CURRENT ASSETS
|
|
|
|
|
|
||
|
Cash and cash equivalents
|
$
|
63,139
|
|
|
$
|
10,283
|
|
|
Customer and other receivables
|
258,874
|
|
|
266,426
|
|
||
|
Accrued unbilled revenues
|
93,434
|
|
|
128,165
|
|
||
|
Allowance for doubtful accounts
|
(8,366
|
)
|
|
(8,171
|
)
|
||
|
Materials and supplies (at average cost)
|
323,545
|
|
|
331,091
|
|
||
|
Fossil fuel (at average cost)
|
16,930
|
|
|
14,829
|
|
||
|
Income tax receivable
|
20,599
|
|
|
21,727
|
|
||
|
Assets from risk management activities (Note 7)
|
2,108
|
|
|
515
|
|
||
|
Deferred fuel and purchased power regulatory asset (Note 4)
|
77,730
|
|
|
70,137
|
|
||
|
Other regulatory assets (Note 4)
|
147,741
|
|
|
133,070
|
|
||
|
Other current assets
|
82,573
|
|
|
61,958
|
|
||
|
Total current assets
|
1,078,307
|
|
|
1,030,030
|
|
||
|
INVESTMENTS AND OTHER ASSETS
|
|
|
|
|
|
||
|
Nuclear decommissioning trust (Notes 11 and 12)
|
920,426
|
|
|
1,010,775
|
|
||
|
Other special use funds (Notes 11 and 12)
|
252,723
|
|
|
245,095
|
|
||
|
Other assets
|
97,822
|
|
|
96,953
|
|
||
|
Total investments and other assets
|
1,270,971
|
|
|
1,352,823
|
|
||
|
PROPERTY, PLANT AND EQUIPMENT
|
|
|
|
|
|
||
|
Plant in service and held for future use
|
19,930,983
|
|
|
19,836,292
|
|
||
|
Accumulated depreciation and amortization
|
(6,784,467
|
)
|
|
(6,637,857
|
)
|
||
|
Net
|
13,146,516
|
|
|
13,198,435
|
|
||
|
Construction work in progress
|
942,258
|
|
|
808,133
|
|
||
|
Palo Verde sale leaseback, net of accumulated depreciation (Note 6)
|
100,938
|
|
|
101,906
|
|
||
|
Intangible assets, net of accumulated amortization
|
279,238
|
|
|
290,564
|
|
||
|
Nuclear fuel, net of accumulated amortization
|
168,457
|
|
|
123,500
|
|
||
|
Total property, plant and equipment
|
14,637,407
|
|
|
14,522,538
|
|
||
|
DEFERRED DEBITS
|
|
|
|
|
|
||
|
Regulatory assets (Note 4)
|
1,302,448
|
|
|
1,304,073
|
|
||
|
Operating lease right-of-use assets
|
144,380
|
|
|
145,813
|
|
||
|
Assets for other postretirement benefits (Note 5)
|
96,243
|
|
|
90,570
|
|
||
|
Other
|
32,004
|
|
|
33,400
|
|
||
|
Total deferred debits
|
1,575,075
|
|
|
1,573,856
|
|
||
|
|
|
|
|
||||
|
TOTAL ASSETS
|
$
|
18,561,760
|
|
|
$
|
18,479,247
|
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2020
|
|
2019
|
||||
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
||
|
Net income
|
$
|
34,866
|
|
|
$
|
22,791
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||
|
Depreciation and amortization including nuclear fuel
|
173,168
|
|
|
167,801
|
|
||
|
Deferred fuel and purchased power
|
(5,785
|
)
|
|
16,709
|
|
||
|
Deferred fuel and purchased power amortization
|
(1,808
|
)
|
|
12,872
|
|
||
|
Allowance for equity funds used during construction
|
(7,697
|
)
|
|
(11,188
|
)
|
||
|
Deferred income taxes
|
(18,086
|
)
|
|
3,620
|
|
||
|
Deferred investment tax credit
|
(465
|
)
|
|
(353
|
)
|
||
|
Stock compensation
|
6,282
|
|
|
12,074
|
|
||
|
Changes in current assets and liabilities:
|
|
|
|
|
|
||
|
Customer and other receivables
|
25,575
|
|
|
15,476
|
|
||
|
Accrued unbilled revenues
|
34,731
|
|
|
23,093
|
|
||
|
Materials, supplies and fossil fuel
|
5,445
|
|
|
(13,057
|
)
|
||
|
Income tax receivable
|
1,128
|
|
|
—
|
|
||
|
Other current assets
|
(20,202
|
)
|
|
(10,115
|
)
|
||
|
Accounts payable
|
(5,192
|
)
|
|
26,593
|
|
||
|
Accrued taxes
|
49,833
|
|
|
45,130
|
|
||
|
Other current liabilities
|
(63,096
|
)
|
|
(86,250
|
)
|
||
|
Change in other long-term assets
|
81,143
|
|
|
(65,470
|
)
|
||
|
Change in other long-term liabilities
|
(106,212
|
)
|
|
13,706
|
|
||
|
Net cash flow provided by operating activities
|
183,628
|
|
|
173,432
|
|
||
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|||
|
Capital expenditures
|
(340,014
|
)
|
|
(259,792
|
)
|
||
|
Contributions in aid of construction
|
3,152
|
|
|
7,938
|
|
||
|
Allowance for borrowed funds used during construction
|
(4,076
|
)
|
|
(6,665
|
)
|
||
|
Proceeds from nuclear decommissioning trust sales and other special use funds
|
195,087
|
|
|
179,048
|
|
||
|
Investment in nuclear decommissioning trust and other special use funds
|
(195,658
|
)
|
|
(179,618
|
)
|
||
|
Other
|
349
|
|
|
4,576
|
|
||
|
Net cash flow used for investing activities
|
(341,160
|
)
|
|
(254,513
|
)
|
||
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
||
|
Issuance of long-term debt
|
—
|
|
|
497,324
|
|
||
|
Short-term borrowing and payments — net
|
(76,675
|
)
|
|
172,650
|
|
||
|
Short-term debt borrowings
|
751,690
|
|
|
—
|
|
||
|
Short-term debt repayments
|
(226,690
|
)
|
|
(5,000
|
)
|
||
|
Dividends paid on common stock
|
(86,257
|
)
|
|
(80,897
|
)
|
||
|
Repayment of long-term debt
|
(150,000
|
)
|
|
(500,000
|
)
|
||
|
Common stock equity issuance - net of purchases
|
(1,680
|
)
|
|
(2,653
|
)
|
||
|
Net cash flow provided by financing activities
|
210,388
|
|
|
81,424
|
|
||
|
NET INCREASE IN CASH AND CASH EQUIVALENTS
|
52,856
|
|
|
343
|
|
||
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
10,283
|
|
|
5,766
|
|
||
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
63,139
|
|
|
$
|
6,109
|
|
|
|
Three Months Ended March 31, 2020
|
||||||||||||||||||||||||||||
|
|
Common Stock
|
|
Treasury Stock
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Noncontrolling Interests
|
|
Total
|
||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Balance, January 1, 2020
|
112,540,126
|
|
|
$
|
2,659,561
|
|
|
(103,546
|
)
|
|
$
|
(9,427
|
)
|
|
$
|
2,837,610
|
|
|
$
|
(57,096
|
)
|
|
$
|
122,540
|
|
|
$
|
5,553,188
|
|
|
Net income
|
|
|
—
|
|
|
|
|
—
|
|
|
29,993
|
|
|
—
|
|
|
4,873
|
|
|
34,866
|
|
||||||||
|
Other comprehensive income
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
1,517
|
|
|
—
|
|
|
1,517
|
|
||||||||
|
Dividends on common stock
|
|
|
—
|
|
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
8
|
|
||||||||
|
Issuance of common stock
|
23,484
|
|
|
4,826
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,826
|
|
|||||||
|
Purchase of treasury stock (a)
|
|
|
—
|
|
|
(20,724
|
)
|
|
(2,086
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,086
|
)
|
|||||||
|
Reissuance of treasury stock for stock-based compensation and other
|
|
|
—
|
|
|
51,968
|
|
|
4,513
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,513
|
|
|||||||
|
Other
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
1
|
|
|
—
|
|
|||||||
|
Balance, March 31, 2020
|
112,563,610
|
|
|
$
|
2,664,387
|
|
|
(72,302
|
)
|
|
$
|
(7,000
|
)
|
|
$
|
2,867,610
|
|
|
$
|
(55,579
|
)
|
|
$
|
127,414
|
|
|
$
|
5,596,832
|
|
|
|
Three Months Ended March 31, 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
|
|
|
—
|
|
|
|
|
—
|
|
|
17,918
|
|
|
—
|
|
|
4,873
|
|
|
22,791
|
|
||||||||
|
Other comprehensive income
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
1,207
|
|
|
—
|
|
|
1,207
|
|
||||||||
|
Dividends on common stock
|
|
|
—
|
|
|
|
|
—
|
|
|
(15
|
)
|
|
—
|
|
|
—
|
|
|
(15
|
)
|
||||||||
|
Issuance of common stock
|
180,426
|
|
|
9,798
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,798
|
|
|||||||
|
Purchase of treasury stock (a)
|
|
|
—
|
|
|
(75,791
|
)
|
|
(6,882
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,882
|
)
|
|||||||
|
Reissuance of treasury stock for stock-based compensation and other
|
|
|
—
|
|
|
70,655
|
|
|
6,121
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,121
|
|
|||||||
|
Balance, March 31, 2019
|
112,340,322
|
|
|
$
|
2,644,063
|
|
|
(63,271
|
)
|
|
$
|
(5,586
|
)
|
|
$
|
2,659,086
|
|
|
$
|
(46,501
|
)
|
|
$
|
130,663
|
|
|
$
|
5,381,725
|
|
|
(a)
|
Primarily represents shares of common stock withheld from certain stock awards for tax purposes.
|
|
|
|
Three Months Ended
March 31, |
||||||
|
|
|
2020
|
|
2019
|
||||
|
|
|
|
|
|
||||
|
OPERATING REVENUES (NOTE 2)
|
|
$
|
661,930
|
|
|
$
|
740,530
|
|
|
|
|
|
|
|
||||
|
OPERATING EXPENSES
|
|
|
|
|
|
|
||
|
Fuel and purchased power
|
|
188,521
|
|
|
230,588
|
|
||
|
Operations and maintenance
|
|
218,265
|
|
|
240,375
|
|
||
|
Depreciation and amortization
|
|
154,058
|
|
|
148,685
|
|
||
|
Taxes other than income taxes
|
|
56,758
|
|
|
55,078
|
|
||
|
Other expenses
|
|
822
|
|
|
427
|
|
||
|
Total
|
|
618,424
|
|
|
675,153
|
|
||
|
OPERATING INCOME
|
|
43,506
|
|
|
65,377
|
|
||
|
OTHER INCOME (DEDUCTIONS)
|
|
|
|
|
|
|
||
|
Allowance for equity funds used during construction
|
|
7,697
|
|
|
11,188
|
|
||
|
Pension and other postretirement non-service credits - net
|
|
14,262
|
|
|
5,499
|
|
||
|
Other income (Note 9)
|
|
11,633
|
|
|
6,416
|
|
||
|
Other expense (Note 9)
|
|
(4,668
|
)
|
|
(3,878
|
)
|
||
|
Total
|
|
28,924
|
|
|
19,225
|
|
||
|
INTEREST EXPENSE
|
|
|
|
|
|
|
||
|
Interest charges
|
|
55,736
|
|
|
56,665
|
|
||
|
Allowance for borrowed funds used during construction
|
|
(4,076
|
)
|
|
(6,665
|
)
|
||
|
Total
|
|
51,660
|
|
|
50,000
|
|
||
|
INCOME BEFORE INCOME TAXES
|
|
20,770
|
|
|
34,602
|
|
||
|
INCOME TAXES
|
|
(19,448
|
)
|
|
1,453
|
|
||
|
NET INCOME
|
|
40,218
|
|
|
33,149
|
|
||
|
Less: Net income attributable to noncontrolling interests (Note 6)
|
|
4,873
|
|
|
4,873
|
|
||
|
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDER
|
|
$
|
35,345
|
|
|
$
|
28,276
|
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2020
|
|
2019
|
||||
|
|
|
|
|
||||
|
NET INCOME
|
$
|
40,218
|
|
|
$
|
33,149
|
|
|
|
|
|
|
||||
|
OTHER COMPREHENSIVE INCOME, NET OF TAX
|
|
|
|
|
|
||
|
Derivative instruments:
|
|
|
|
|
|
||
|
Net unrealized gain, net of tax expense of $292 and $0
|
292
|
|
|
—
|
|
||
|
Reclassification of net realized loss, net of tax benefit of $394 and $108
|
20
|
|
|
328
|
|
||
|
Pension and other postretirement benefits activity, net of tax expense of $237 and $247
|
1,013
|
|
|
752
|
|
||
|
Total other comprehensive income
|
1,325
|
|
|
1,080
|
|
||
|
|
|
|
|
||||
|
COMPREHENSIVE INCOME
|
41,543
|
|
|
34,229
|
|
||
|
Less: Comprehensive income attributable to noncontrolling interests
|
4,873
|
|
|
4,873
|
|
||
|
|
|
|
|
||||
|
COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDER
|
$
|
36,670
|
|
|
$
|
29,356
|
|
|
|
March 31,
2020 |
|
December 31,
2019 |
||||
|
ASSETS
|
|
|
|
|
|
||
|
|
|
|
|
||||
|
PROPERTY, PLANT AND EQUIPMENT
|
|
|
|
|
|
||
|
Plant in service and held for future use
|
$
|
19,927,522
|
|
|
$
|
19,832,805
|
|
|
Accumulated depreciation and amortization
|
(6,781,228
|
)
|
|
(6,634,597
|
)
|
||
|
Net
|
13,146,294
|
|
|
13,198,208
|
|
||
|
|
|
|
|
||||
|
Construction work in progress
|
942,258
|
|
|
808,133
|
|
||
|
Palo Verde sale leaseback, net of accumulated depreciation (Note 6)
|
100,938
|
|
|
101,906
|
|
||
|
Intangible assets, net of accumulated amortization
|
279,082
|
|
|
290,409
|
|
||
|
Nuclear fuel, net of accumulated amortization
|
168,457
|
|
|
123,500
|
|
||
|
Total property, plant and equipment
|
14,637,029
|
|
|
14,522,156
|
|
||
|
|
|
|
|
||||
|
INVESTMENTS AND OTHER ASSETS
|
|
|
|
|
|
||
|
Nuclear decommissioning trust (Notes 11 and 12)
|
920,426
|
|
|
1,010,775
|
|
||
|
Other special use funds (Notes 11 and 12)
|
252,723
|
|
|
245,095
|
|
||
|
Other assets
|
44,681
|
|
|
43,781
|
|
||
|
Total investments and other assets
|
1,217,830
|
|
|
1,299,651
|
|
||
|
|
|
|
|
||||
|
CURRENT ASSETS
|
|
|
|
|
|
||
|
Cash and cash equivalents
|
53,351
|
|
|
10,169
|
|
||
|
Customer and other receivables
|
258,457
|
|
|
255,479
|
|
||
|
Accrued unbilled revenues
|
93,434
|
|
|
128,165
|
|
||
|
Allowance for doubtful accounts
|
(8,366
|
)
|
|
(8,171
|
)
|
||
|
Materials and supplies (at average cost)
|
323,545
|
|
|
331,091
|
|
||
|
Fossil fuel (at average cost)
|
16,930
|
|
|
14,829
|
|
||
|
Income tax receivable
|
8,724
|
|
|
7,313
|
|
||
|
Assets from risk management activities (Note 7)
|
2,108
|
|
|
515
|
|
||
|
Deferred fuel and purchased power regulatory asset (Note 4)
|
77,730
|
|
|
70,137
|
|
||
|
Other regulatory assets (Note 4)
|
147,741
|
|
|
133,070
|
|
||
|
Other current assets
|
57,471
|
|
|
38,895
|
|
||
|
Total current assets
|
1,031,125
|
|
|
981,492
|
|
||
|
|
|
|
|
||||
|
DEFERRED DEBITS
|
|
|
|
|
|
||
|
Regulatory assets (Note 4)
|
1,302,448
|
|
|
1,304,073
|
|
||
|
Operating lease right-of-use assets
|
142,647
|
|
|
144,024
|
|
||
|
Assets for other postretirement benefits (Note 5)
|
92,391
|
|
|
86,736
|
|
||
|
Other
|
31,282
|
|
|
32,591
|
|
||
|
Total deferred debits
|
1,568,768
|
|
|
1,567,424
|
|
||
|
|
|
|
|
||||
|
TOTAL ASSETS
|
$
|
18,454,752
|
|
|
$
|
18,370,723
|
|
|
|
March 31,
2020 |
|
December 31,
2019 |
||||
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
||
|
|
|
|
|
||||
|
CAPITALIZATION
|
|
|
|
|
|
||
|
Common stock
|
$
|
178,162
|
|
|
$
|
178,162
|
|
|
Additional paid-in capital
|
2,721,696
|
|
|
2,721,696
|
|
||
|
Retained earnings
|
3,047,269
|
|
|
3,011,927
|
|
||
|
Accumulated other comprehensive loss
|
(34,197
|
)
|
|
(35,522
|
)
|
||
|
Total shareholder equity
|
5,912,930
|
|
|
5,876,263
|
|
||
|
Noncontrolling interests (Note 6)
|
127,414
|
|
|
122,540
|
|
||
|
Total equity
|
6,040,344
|
|
|
5,998,803
|
|
||
|
Long-term debt less current maturities (Note 3)
|
4,833,743
|
|
|
4,833,133
|
|
||
|
Total capitalization
|
10,874,087
|
|
|
10,831,936
|
|
||
|
CURRENT LIABILITIES
|
|
|
|
|
|
||
|
Short-term borrowings (Note 3)
|
430,000
|
|
|
—
|
|
||
|
Current maturities of long-term debt (Note 3)
|
200,000
|
|
|
350,000
|
|
||
|
Accounts payable
|
294,037
|
|
|
338,006
|
|
||
|
Accrued taxes
|
190,571
|
|
|
136,328
|
|
||
|
Accrued interest
|
51,042
|
|
|
52,619
|
|
||
|
Common dividends payable
|
—
|
|
|
88,000
|
|
||
|
Customer deposits
|
54,965
|
|
|
64,908
|
|
||
|
Liabilities from risk management activities (Note 7)
|
54,784
|
|
|
38,946
|
|
||
|
Liabilities for asset retirements
|
10,095
|
|
|
11,025
|
|
||
|
Operating lease liabilities
|
12,224
|
|
|
12,549
|
|
||
|
Regulatory liabilities (Note 4)
|
279,105
|
|
|
234,912
|
|
||
|
Other current liabilities
|
133,497
|
|
|
164,736
|
|
||
|
Total current liabilities
|
1,710,320
|
|
|
1,492,029
|
|
||
|
DEFERRED CREDITS AND OTHER
|
|
|
|
|
|
||
|
Deferred income taxes
|
2,057,824
|
|
|
2,033,096
|
|
||
|
Regulatory liabilities (Note 4)
|
2,067,801
|
|
|
2,267,835
|
|
||
|
Liabilities for asset retirements
|
649,226
|
|
|
646,193
|
|
||
|
Liabilities for pension benefits (Note 5)
|
255,749
|
|
|
262,243
|
|
||
|
Liabilities from risk management activities (Note 7)
|
32,577
|
|
|
33,186
|
|
||
|
Customer advances
|
212,545
|
|
|
215,330
|
|
||
|
Coal mine reclamation
|
166,796
|
|
|
165,695
|
|
||
|
Deferred investment tax credit
|
196,002
|
|
|
196,468
|
|
||
|
Unrecognized tax benefits
|
40,399
|
|
|
40,188
|
|
||
|
Operating lease liabilities
|
49,442
|
|
|
50,092
|
|
||
|
Other
|
141,984
|
|
|
136,432
|
|
||
|
Total deferred credits and other
|
5,870,345
|
|
|
6,046,758
|
|
||
|
COMMITMENTS AND CONTINGENCIES (SEE NOTE 8)
|
|
|
|
|
|
||
|
TOTAL LIABILITIES AND EQUITY
|
$
|
18,454,752
|
|
|
$
|
18,370,723
|
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2020
|
|
2019
|
||||
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
||
|
Net income
|
$
|
40,218
|
|
|
$
|
33,149
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||
|
Depreciation and amortization including nuclear fuel
|
173,147
|
|
|
167,779
|
|
||
|
Deferred fuel and purchased power
|
(5,785
|
)
|
|
16,709
|
|
||
|
Deferred fuel and purchased power amortization
|
(1,808
|
)
|
|
12,872
|
|
||
|
Allowance for equity funds used during construction
|
(7,697
|
)
|
|
(11,188
|
)
|
||
|
Deferred income taxes
|
(17,782
|
)
|
|
(1,205
|
)
|
||
|
Deferred investment tax credit
|
(465
|
)
|
|
(353
|
)
|
||
|
Changes in current assets and liabilities:
|
|
|
|
|
|
||
|
Customer and other receivables
|
15,045
|
|
|
16,541
|
|
||
|
Accrued unbilled revenues
|
34,731
|
|
|
23,093
|
|
||
|
Materials, supplies and fossil fuel
|
5,445
|
|
|
(13,057
|
)
|
||
|
Income tax receivable
|
(1,411
|
)
|
|
—
|
|
||
|
Other current assets
|
(18,164
|
)
|
|
(9,598
|
)
|
||
|
Accounts payable
|
(4,038
|
)
|
|
30,774
|
|
||
|
Accrued taxes
|
54,243
|
|
|
54,234
|
|
||
|
Other current liabilities
|
(49,149
|
)
|
|
(81,627
|
)
|
||
|
Change in other long-term assets
|
82,178
|
|
|
(64,516
|
)
|
||
|
Change in other long-term liabilities
|
(105,117
|
)
|
|
14,525
|
|
||
|
Net cash flow provided by operating activities
|
193,591
|
|
|
188,132
|
|
||
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
||
|
Capital expenditures
|
(340,014
|
)
|
|
(259,446
|
)
|
||
|
Contributions in aid of construction
|
3,152
|
|
|
7,938
|
|
||
|
Allowance for borrowed funds used during construction
|
(4,076
|
)
|
|
(6,665
|
)
|
||
|
Proceeds from nuclear decommissioning trust sales and other special use funds
|
195,087
|
|
|
179,048
|
|
||
|
Investment in nuclear decommissioning trust and other special use funds
|
(195,658
|
)
|
|
(179,618
|
)
|
||
|
Other
|
(900
|
)
|
|
(1,140
|
)
|
||
|
Net cash flow used for investing activities
|
(342,409
|
)
|
|
(259,883
|
)
|
||
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
||
|
Issuance of long-term debt
|
—
|
|
|
497,324
|
|
||
|
Short-term borrowings and payments — net
|
—
|
|
|
157,500
|
|
||
|
Short-term debt borrowings under revolving credit facility
|
540,000
|
|
|
—
|
|
||
|
Short-term debt repayments under revolving credit facility
|
(110,000
|
)
|
|
—
|
|
||
|
Repayment of long-term debt
|
(150,000
|
)
|
|
(500,000
|
)
|
||
|
Dividends paid on common stock
|
(88,000
|
)
|
|
(82,700
|
)
|
||
|
Net cash flow provided by financing activities
|
192,000
|
|
|
72,124
|
|
||
|
NET INCREASE IN CASH AND CASH EQUIVALENTS
|
43,182
|
|
|
373
|
|
||
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
10,169
|
|
|
5,707
|
|
||
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
53,351
|
|
|
$
|
6,080
|
|
|
|
Three Months Ended March 31, 2020
|
|||||||||||||||||||||||||
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Noncontrolling Interests
|
|
Total
|
|||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Balance, January 1, 2020
|
71,264,947
|
|
|
$
|
178,162
|
|
|
$
|
2,721,696
|
|
|
$
|
3,011,927
|
|
|
$
|
(35,522
|
)
|
|
$
|
122,540
|
|
|
$
|
5,998,803
|
|
|
Net Income
|
|
|
—
|
|
|
—
|
|
|
35,345
|
|
|
—
|
|
|
4,873
|
|
|
40,218
|
|
|||||||
|
Other comprehensive income
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,325
|
|
|
—
|
|
|
1,325
|
|
|||||||
|
Other
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
1
|
|
|
(2
|
)
|
|||||||
|
Balance, March 31, 2020
|
71,264,947
|
|
|
$
|
178,162
|
|
|
$
|
2,721,696
|
|
|
$
|
3,047,269
|
|
|
$
|
(34,197
|
)
|
|
$
|
127,414
|
|
|
$
|
6,040,344
|
|
|
|
Three Months Ended March 31, 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
|
|
|
—
|
|
|
—
|
|
|
28,276
|
|
|
—
|
|
|
4,873
|
|
|
33,149
|
|
|||||||
|
Other comprehensive income
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,080
|
|
|
—
|
|
|
1,080
|
|
|||||||
|
Balance, March 31, 2019
|
71,264,947
|
|
|
$
|
178,162
|
|
|
$
|
2,721,696
|
|
|
$
|
2,816,532
|
|
|
$
|
(26,027
|
)
|
|
$
|
130,663
|
|
|
$
|
5,821,026
|
|
|
1.
|
Consolidation and Nature of Operations
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2020
|
|
2019
|
||||
|
Cash paid during the period for:
|
|
|
|
||||
|
Income taxes, net of refunds
|
$
|
(3,002
|
)
|
|
$
|
1
|
|
|
Interest, net of amounts capitalized
|
53,723
|
|
|
63,764
|
|
||
|
Significant non-cash investing and financing activities:
|
|
|
|
||||
|
Accrued capital expenditures
|
$
|
100,868
|
|
|
$
|
95,879
|
|
|
Right-of-use operating lease assets obtained in exchange for operating lease liabilities
|
2,311
|
|
|
2,293
|
|
||
|
|
Three Months Ended
March 31, |
||||||
|
|
2020
|
|
2019
|
||||
|
Cash paid during the period for:
|
|
|
|
||||
|
Income taxes, net of refunds
|
$
|
—
|
|
|
$
|
—
|
|
|
Interest, net of amounts capitalized
|
52,034
|
|
|
61,387
|
|
||
|
Significant non-cash investing and financing activities:
|
|
|
|
||||
|
Accrued capital expenditures
|
$
|
100,868
|
|
|
$
|
95,879
|
|
|
Right-of-use operating lease assets obtained in exchange for operating lease liabilities
|
2,311
|
|
|
2,293
|
|
||
|
|
|
Three Months Ended March 31,
|
|||||
|
|
|
2020
|
2019
|
||||
|
Retail Electric Revenue
|
|
|
|
||||
|
Residential
|
|
$
|
325,073
|
|
$
|
351,566
|
|
|
Non-Residential
|
|
303,351
|
|
332,668
|
|
||
|
Wholesale energy sales
|
|
14,668
|
|
36,452
|
|
||
|
Transmission services for others
|
|
15,927
|
|
15,249
|
|
||
|
Other sources
|
|
2,911
|
|
4,595
|
|
||
|
Total operating revenues
|
|
$
|
661,930
|
|
$
|
740,530
|
|
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
|
Allowance for doubtful accounts, balance at beginning of period
|
|
$
|
8,171
|
|
|
$
|
4,069
|
|
|
Bad debt expense
|
|
3,122
|
|
|
11,819
|
|
||
|
Actual write-offs
|
|
(2,927
|
)
|
|
(7,717
|
)
|
||
|
Allowance for doubtful accounts, balance at end of period
|
|
$
|
8,366
|
|
|
$
|
8,171
|
|
|
3.
|
Long-Term Debt and Liquidity Matters
|
|
|
As of March 31, 2020
|
|
As of December 31, 2019
|
||||||||||||
|
|
Carrying
Amount
|
|
Fair Value
|
|
Carrying
Amount
|
|
Fair Value
|
||||||||
|
Pinnacle West
|
$
|
449,581
|
|
|
$
|
448,449
|
|
|
$
|
449,425
|
|
|
$
|
450,822
|
|
|
APS
|
5,033,743
|
|
|
5,634,265
|
|
|
5,183,133
|
|
|
5,743,570
|
|
||||
|
Total
|
$
|
5,483,324
|
|
|
$
|
6,082,714
|
|
|
$
|
5,632,558
|
|
|
$
|
6,194,392
|
|
|
•
|
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 APS's 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 discussion below 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 in capital costs, and not more than $15 million per year in capital costs;
|
|
•
|
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.
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2020
|
|
2019
|
||||
|
Beginning balance
|
$
|
70,137
|
|
|
$
|
37,164
|
|
|
Deferred fuel and purchased power costs — current period
|
5,785
|
|
|
(16,709
|
)
|
||
|
Amounts charged to customers
|
1,808
|
|
|
(12,872
|
)
|
||
|
Ending balance
|
$
|
77,730
|
|
|
$
|
7,583
|
|
|
•
|
Customers who have interconnected a DG system or submitted an application for interconnection for DG systems prior to September 1, 2017, based on APS's 2017 Rate Case Decision, will be grandfathered for a period of 20 years from the date the customer’s interconnection application was accepted by the utility;
|
|
•
|
Customers with DG solar systems are to be considered a separate class of customers for ratemaking purposes; and
|
|
•
|
Once an export price is set for APS, no netting or banking of retail credits will be available for new DG customers, and the then-applicable export price will be guaranteed for new customers for a period of 10 years.
|
|
|
Amortization Through
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||||
|
|
|
Current
|
|
Non-Current
|
|
Current
|
|
Non-Current
|
|||||||||
|
Pension
|
(a)
|
|
$
|
—
|
|
|
$
|
652,691
|
|
|
$
|
—
|
|
|
$
|
660,223
|
|
|
Retired power plant costs
|
2033
|
|
28,182
|
|
|
135,349
|
|
|
28,182
|
|
|
142,503
|
|
||||
|
Income taxes — allowance for funds used during construction ("AFUDC") equity
|
2050
|
|
6,815
|
|
|
155,369
|
|
|
6,800
|
|
|
154,974
|
|
||||
|
Deferred fuel and purchased power — mark-to-market (Note 7)
|
2024
|
|
51,954
|
|
|
32,576
|
|
|
36,887
|
|
|
33,185
|
|
||||
|
Deferred fuel and purchased power (b) (c)
|
2021
|
|
77,730
|
|
|
—
|
|
|
70,137
|
|
|
—
|
|
||||
|
Deferred property taxes
|
2027
|
|
8,569
|
|
|
56,053
|
|
|
8,569
|
|
|
58,196
|
|
||||
|
SCR deferral
|
N/A
|
|
—
|
|
|
58,258
|
|
|
—
|
|
|
52,644
|
|
||||
|
Ocotillo deferral
|
N/A
|
|
—
|
|
|
51,767
|
|
|
—
|
|
|
38,144
|
|
||||
|
Four Corners cost deferral
|
2024
|
|
8,077
|
|
|
30,133
|
|
|
8,077
|
|
|
32,152
|
|
||||
|
Deferred compensation
|
2036
|
|
—
|
|
|
37,550
|
|
|
—
|
|
|
36,464
|
|
||||
|
Lost fixed cost recovery (b)
|
2021
|
|
28,885
|
|
|
—
|
|
|
26,067
|
|
|
—
|
|
||||
|
Income taxes — investment tax credit basis adjustment
|
2048
|
|
1,098
|
|
|
24,920
|
|
|
1,098
|
|
|
24,981
|
|
||||
|
Palo Verde VIEs (Note 6)
|
2046
|
|
—
|
|
|
20,790
|
|
|
—
|
|
|
20,635
|
|
||||
|
Coal reclamation
|
2026
|
|
1,068
|
|
|
17,800
|
|
|
1,546
|
|
|
17,688
|
|
||||
|
Loss on reacquired debt
|
2038
|
|
1,637
|
|
|
11,636
|
|
|
1,637
|
|
|
12,031
|
|
||||
|
Mead-Phoenix transmission line contributions in aid of construction ("CIAC")
|
2050
|
|
332
|
|
|
9,629
|
|
|
332
|
|
|
9,712
|
|
||||
|
TCA balancing account (b)
|
2021
|
|
6,048
|
|
|
1,027
|
|
|
6,324
|
|
|
2,885
|
|
||||
|
Tax expense of Medicare subsidy
|
2024
|
|
1,238
|
|
|
4,881
|
|
|
1,235
|
|
|
4,940
|
|
||||
|
AG-1 deferral
|
2022
|
|
2,787
|
|
|
2,019
|
|
|
2,787
|
|
|
2,716
|
|
||||
|
Tax expense adjuster mechanism (b)
|
2020
|
|
942
|
|
|
—
|
|
|
1,612
|
|
|
—
|
|
||||
|
Other
|
Various
|
|
109
|
|
|
—
|
|
|
1,917
|
|
|
—
|
|
||||
|
Total regulatory assets (d)
|
|
|
$
|
225,471
|
|
|
$
|
1,302,448
|
|
|
$
|
203,207
|
|
|
$
|
1,304,073
|
|
|
(a)
|
This asset represents the future recovery of pension benefit obligations through retail rates. If these costs are disallowed by the ACC, this regulatory asset would be charged to other comprehensive income ("OCI") and result in lower future revenues.
|
|
(b)
|
See "Cost Recovery Mechanisms" discussion above.
|
|
(c)
|
Subject to a carrying charge.
|
|
(d)
|
There are no regulatory assets for which the ACC has allowed recovery of costs, but not allowed a return by exclusion from rate base. FERC rates are set using a formula rate as described in "Transmission Rates, Transmission Cost Adjustor and Other Transmission Matters."
|
|
|
Amortization Through
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||||
|
|
|
Current
|
|
Non-Current
|
|
Current
|
|
Non-Current
|
|||||||||
|
Excess deferred income taxes - ACC - Tax Cuts and Jobs Act (a)
|
2046
|
|
$
|
113,142
|
|
|
$
|
976,018
|
|
|
$
|
59,918
|
|
|
$
|
1,054,053
|
|
|
Excess deferred income taxes - FERC - Tax Cuts and Jobs Act (a)
|
2058
|
|
6,315
|
|
|
237,508
|
|
|
6,302
|
|
|
237,357
|
|
||||
|
Asset retirement obligations
|
2057
|
|
—
|
|
|
311,517
|
|
|
—
|
|
|
418,423
|
|
||||
|
Removal costs
|
(c)
|
|
44,586
|
|
|
135,450
|
|
|
47,356
|
|
|
136,072
|
|
||||
|
Other postretirement benefits
|
(d)
|
|
37,575
|
|
|
130,270
|
|
|
37,575
|
|
|
139,634
|
|
||||
|
Spent nuclear fuel
|
2027
|
|
6,638
|
|
|
49,234
|
|
|
6,676
|
|
|
51,019
|
|
||||
|
Income taxes — change in rates
|
2050
|
|
2,802
|
|
|
51,152
|
|
|
2,797
|
|
|
68,265
|
|
||||
|
Four Corners coal reclamation
|
2038
|
|
5,461
|
|
|
48,405
|
|
|
1,059
|
|
|
51,704
|
|
||||
|
Income taxes — deferred investment tax credit
|
2048
|
|
2,202
|
|
|
49,910
|
|
|
2,202
|
|
|
50,034
|
|
||||
|
Renewable energy standard (b)
|
2021
|
|
45,872
|
|
|
115
|
|
|
39,287
|
|
|
10,300
|
|
||||
|
Demand side management (b)
|
2021
|
|
1,702
|
|
|
43,423
|
|
|
15,024
|
|
|
24,146
|
|
||||
|
Sundance maintenance
|
2031
|
|
184
|
|
|
13,515
|
|
|
5,698
|
|
|
11,319
|
|
||||
|
Active union medical trust
|
N/A
|
|
—
|
|
|
7,986
|
|
|
—
|
|
|
2,041
|
|
||||
|
Property tax deferral
|
N/A
|
|
—
|
|
|
7,968
|
|
|
—
|
|
|
7,046
|
|
||||
|
Tax expense adjustor mechanism (b)
|
2020
|
|
6,615
|
|
|
—
|
|
|
7,018
|
|
|
—
|
|
||||
|
Deferred gains on utility property
|
2022
|
|
2,423
|
|
|
3,577
|
|
|
2,423
|
|
|
4,163
|
|
||||
|
FERC transmission true up
|
2022
|
|
3,304
|
|
|
1,621
|
|
|
1,045
|
|
|
2,004
|
|
||||
|
Other
|
Various
|
|
284
|
|
|
132
|
|
|
532
|
|
|
255
|
|
||||
|
Total regulatory liabilities
|
|
|
$
|
279,105
|
|
|
$
|
2,067,801
|
|
|
$
|
234,912
|
|
|
$
|
2,267,835
|
|
|
(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
March 31, |
|
Three Months Ended
March 31, |
||||||||||||
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
Service cost — benefits earned during the period
|
$
|
14,257
|
|
|
$
|
12,543
|
|
|
$
|
5,717
|
|
|
$
|
4,714
|
|
|
Non-service costs (credits):
|
|
|
|
|
|
|
|
||||||||
|
Interest cost on benefit obligation
|
29,761
|
|
|
34,352
|
|
|
6,512
|
|
|
7,526
|
|
||||
|
Expected return on plan assets
|
(46,806
|
)
|
|
(42,893
|
)
|
|
(10,019
|
)
|
|
(9,603
|
)
|
||||
|
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Prior service credit
|
—
|
|
|
—
|
|
|
(9,394
|
)
|
|
(9,455
|
)
|
||||
|
Net actuarial loss
|
9,011
|
|
|
11,239
|
|
|
—
|
|
|
—
|
|
||||
|
Net periodic benefit cost (credit)
|
$
|
6,223
|
|
|
$
|
15,241
|
|
|
$
|
(7,184
|
)
|
|
$
|
(6,818
|
)
|
|
Portion of cost (credit) charged to expense
|
$
|
1,342
|
|
|
$
|
8,244
|
|
|
$
|
(5,456
|
)
|
|
$
|
(4,817
|
)
|
|
6.
|
Palo Verde Sale Leaseback Variable Interest Entities
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
|
Palo Verde sale leaseback property plant and equipment, net of accumulated depreciation
|
$
|
100,938
|
|
|
$
|
101,906
|
|
|
Equity — Noncontrolling interests
|
127,414
|
|
|
122,540
|
|
||
|
|
|
|
Quantity
|
||||
|
Commodity
|
|
Unit of Measure
|
March 31, 2020
|
|
December 31, 2019
|
||
|
Power
|
|
GWh
|
477
|
|
|
193
|
|
|
Gas
|
|
Billion cubic feet
|
263
|
|
|
257
|
|
|
|
|
Financial Statement Location
|
|
Three Months Ended
March 31, |
||||||
|
Commodity Contracts
|
|
|
2020
|
|
2019
|
|||||
|
Loss Reclassified from Accumulated OCI into Income (Effective Portion Realized) (a)
|
|
Fuel and purchased power (b)
|
|
$
|
(414
|
)
|
|
$
|
(436
|
)
|
|
(a)
|
During the three months ended March 31, 2020 and 2019, we had no gains or losses reclassified from accumulated OCI to earnings related to discontinued cash flow hedges.
|
|
(b)
|
Amounts are before the effect of PSA deferrals.
|
|
|
|
Financial Statement Location
|
|
Three Months Ended
March 31, |
||||||
|
Commodity Contracts
|
|
|
2020
|
|
2019
|
|||||
|
Net Gain (Loss) Recognized in Income
|
|
Fuel and purchased power (a)
|
|
$
|
(30,078
|
)
|
|
$
|
8,170
|
|
|
(a)
|
Amounts are before the effect of PSA deferrals.
|
|
As of March 31, 2020:
(dollars in thousands) |
|
Gross
Recognized
Derivatives
(a)
|
|
Amounts
Offset
(b)
|
|
Net
Recognized
Derivatives
|
|
Other
(c)
|
|
Amount Reported on Balance Sheets
|
||||||||||
|
Current assets
|
|
$
|
2,778
|
|
|
$
|
(1,482
|
)
|
|
$
|
1,296
|
|
|
$
|
812
|
|
|
$
|
2,108
|
|
|
Investments and other assets
|
|
50
|
|
|
(50
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
Total assets
|
|
2,828
|
|
|
(1,532
|
)
|
|
1,296
|
|
|
812
|
|
|
2,108
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Current liabilities
|
|
(55,081
|
)
|
|
1,482
|
|
|
(53,599
|
)
|
|
(1,185
|
)
|
|
(54,784
|
)
|
|||||
|
Deferred credits and other
|
|
(32,627
|
)
|
|
50
|
|
|
(32,577
|
)
|
|
—
|
|
|
(32,577
|
)
|
|||||
|
Total liabilities
|
|
(87,708
|
)
|
|
1,532
|
|
|
(86,176
|
)
|
|
(1,185
|
)
|
|
(87,361
|
)
|
|||||
|
Total
|
|
$
|
(84,880
|
)
|
|
$
|
—
|
|
|
$
|
(84,880
|
)
|
|
$
|
(373
|
)
|
|
$
|
(85,253
|
)
|
|
(a)
|
All of our gross recognized derivative instruments were subject to master netting arrangements.
|
|
(b)
|
No cash collateral has been provided to counterparties, or received from counterparties, that is subject to offsetting.
|
|
(c)
|
Represents cash collateral and cash margin that is not subject to offsetting. Amounts relate to non-derivative instruments, derivatives qualifying for scope exceptions, or collateral and margin posted in excess of the recognized derivative instrument. Includes cash collateral received from counterparties of $1,185 and cash margin provided to counterparties of $812.
|
|
As of December 31, 2019:
(dollars in thousands) |
|
Gross
Recognized
Derivatives
(a)
|
|
Amounts
Offset
(b)
|
|
Net
Recognized
Derivatives
|
|
Other
(c)
|
|
Amount
Reported on
Balance Sheets
|
||||||||||
|
Current assets
|
|
$
|
584
|
|
|
$
|
(474
|
)
|
|
$
|
110
|
|
|
$
|
405
|
|
|
$
|
515
|
|
|
Total assets
|
|
584
|
|
|
(474
|
)
|
|
110
|
|
|
405
|
|
|
515
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Current liabilities
|
|
(38,235
|
)
|
|
474
|
|
|
(37,761
|
)
|
|
(1,185
|
)
|
|
(38,946
|
)
|
|||||
|
Deferred credits and other
|
|
(33,186
|
)
|
|
—
|
|
|
(33,186
|
)
|
|
—
|
|
|
(33,186
|
)
|
|||||
|
Total liabilities
|
|
(71,421
|
)
|
|
474
|
|
|
(70,947
|
)
|
|
(1,185
|
)
|
|
(72,132
|
)
|
|||||
|
Total
|
|
$
|
(70,837
|
)
|
|
$
|
—
|
|
|
$
|
(70,837
|
)
|
|
$
|
(780
|
)
|
|
$
|
(71,617
|
)
|
|
(a)
|
All of our gross recognized derivative instruments were subject to master netting arrangements.
|
|
(b)
|
No cash collateral has been provided to counterparties, or received from counterparties, that is subject to offsetting.
|
|
(c)
|
Represents cash collateral and cash margin that is not subject to offsetting. Amounts relate to non-derivative instruments, derivatives qualifying for scope exceptions, or collateral and margin posted in excess of the recognized derivative instrument. Includes cash collateral received from counterparties of $1,185 and cash margin provided to counterparties of $405.
|
|
|
March 31, 2020
|
||
|
Aggregate fair value of derivative instruments in a net liability position
|
$
|
86,955
|
|
|
Cash collateral posted
|
—
|
|
|
|
Additional cash collateral in the event credit-risk-related contingent features were fully triggered (a)
|
81,719
|
|
|
|
(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
|
|
•
|
Following the passage of the Water Infrastructure Improvements for the Nation Act in 2016, EPA possesses authority to either authorize states to develop their own permit programs for CCR management or issue federal permits governing CCR disposal both in states without their own permit programs and on tribal lands. Although ADEQ has taken steps to develop a CCR permitting program, it is not clear when that program will be put into effect. On December 19, 2019, EPA proposed its own set of regulations governing the issuance of CCR management permits.
|
|
•
|
On March 1, 2018, as a result of a settlement with certain environmental groups, EPA proposed adding boron to the list of constituents that trigger corrective action requirements to remediate groundwater impacted by CCR disposal activities. Apart from a subsequent proposal issued on August 14, 2019 to add a specific, health-based groundwater protection standard for boron, EPA has yet to take action on this proposal.
|
|
•
|
Based on an August 21, 2018 D.C. Circuit decision, which vacated and remanded those provisions of the EPA CCR regulations that allow for the operation of unlined CCR surface impoundments, EPA recently proposed corresponding changes to federal CCR regulations. On November 4, 2019, EPA proposed that all unlined CCR surface impoundments, regardless of their impact (or lack thereof) upon surrounding groundwater, must cease operation and initiate closure by August 31, 2020 (with an optional three-month extension as needed for the completion of alternative disposal capacity).
|
|
•
|
On November 4, 2019, EPA also proposed to change the manner by which facilities that have committed to cease burning coal in the near-term may qualify for alternative closure. Such qualification would allow CCR disposal units at these plants to continue operating, even though they would otherwise be subject to forced closure under the federal CCR regulations. EPA’s proposal regarding alternative closure would require express EPA authorization for such facilities to continue operating their CCR disposal units under alternative closure.
|
|
9.
|
Other Income and Other Expense
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2020
|
|
2019
|
||||
|
Other income:
|
|
|
|
|
|
||
|
Interest income
|
$
|
3,277
|
|
|
$
|
2,302
|
|
|
Debt return on Four Corners SCR deferrals (Note 4)
|
3,140
|
|
|
4,844
|
|
||
|
Debt return on Ocotillo modernization project (Note 4)
|
6,144
|
|
|
—
|
|
||
|
Miscellaneous
|
8
|
|
|
23
|
|
||
|
Total other income
|
$
|
12,569
|
|
|
$
|
7,169
|
|
|
Other expense:
|
|
|
|
|
|
||
|
Non-operating costs
|
$
|
(2,658
|
)
|
|
$
|
(2,704
|
)
|
|
Investment gains — net
|
60
|
|
|
(238
|
)
|
||
|
Miscellaneous
|
(2,186
|
)
|
|
(1,416
|
)
|
||
|
Total other expense
|
$
|
(4,784
|
)
|
|
$
|
(4,358
|
)
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2020
|
|
2019
|
||||
|
Other income:
|
|
|
|
|
|
||
|
Interest income
|
$
|
2,341
|
|
|
$
|
1,550
|
|
|
Debt return on Four Corners SCR deferrals (Note 4)
|
3,140
|
|
|
4,844
|
|
||
|
Debt return on Ocotillo modernization project (Note 4)
|
6,144
|
|
|
—
|
|
||
|
Miscellaneous
|
8
|
|
|
22
|
|
||
|
Total other income
|
$
|
11,633
|
|
|
$
|
6,416
|
|
|
Other expense:
|
|
|
|
|
|
||
|
Non-operating costs
|
$
|
(2,482
|
)
|
|
$
|
(2,467
|
)
|
|
Miscellaneous
|
(2,186
|
)
|
|
(1,411
|
)
|
||
|
Total other expense
|
$
|
(4,668
|
)
|
|
$
|
(3,878
|
)
|
|
10.
|
Earnings Per Share
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
|
Net income attributable to common shareholders
|
$
|
29,993
|
|
|
$
|
17,918
|
|
|
Weighted average common shares outstanding — basic
|
112,594
|
|
|
112,337
|
|
||
|
Net effect of dilutive securities:
|
|
|
|
||||
|
Contingently issuable performance shares and restricted stock units
|
268
|
|
|
398
|
|
||
|
Weighted average common shares outstanding — diluted
|
112,862
|
|
|
112,735
|
|
||
|
Earnings per weighted-average common share outstanding
|
|
|
|
||||
|
Net income attributable to common shareholders — basic
|
$
|
0.27
|
|
|
$
|
0.16
|
|
|
Net income attributable to common shareholders — diluted
|
$
|
0.27
|
|
|
$
|
0.16
|
|
|
11.
|
Fair Value Measurements
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Other
|
|
|
|
Total
|
||||||||||
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Cash equivalents
|
$
|
26,130
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
26,130
|
|
|
Risk management activities — derivative instruments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Commodity contracts
|
—
|
|
|
2,325
|
|
|
502
|
|
|
(719
|
)
|
|
(a)
|
|
2,108
|
|
|||||
|
Nuclear decommissioning trust:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Equity securities
|
11,452
|
|
|
—
|
|
|
—
|
|
|
2,090
|
|
|
(b)
|
|
13,542
|
|
|||||
|
U.S. commingled equity funds
|
—
|
|
|
—
|
|
|
—
|
|
|
416,463
|
|
|
(c)
|
|
416,463
|
|
|||||
|
U.S. Treasury debt
|
152,951
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
152,951
|
|
|||||
|
Corporate debt
|
—
|
|
|
112,667
|
|
|
—
|
|
|
—
|
|
|
|
|
112,667
|
|
|||||
|
Mortgage-backed securities
|
—
|
|
|
115,790
|
|
|
—
|
|
|
—
|
|
|
|
|
115,790
|
|
|||||
|
Municipal bonds
|
—
|
|
|
98,605
|
|
|
—
|
|
|
—
|
|
|
|
|
98,605
|
|
|||||
|
Other fixed income
|
—
|
|
|
10,408
|
|
|
—
|
|
|
—
|
|
|
|
|
10,408
|
|
|||||
|
Subtotal nuclear decommissioning trust
|
164,403
|
|
|
337,470
|
|
|
—
|
|
|
418,553
|
|
|
|
|
920,426
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Other special use funds:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Equity securities
|
6,752
|
|
|
—
|
|
|
—
|
|
|
1,331
|
|
|
(b)
|
|
8,083
|
|
|||||
|
U.S. Treasury debt
|
238,637
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
238,637
|
|
|||||
|
Municipal bonds
|
—
|
|
|
6,003
|
|
|
—
|
|
|
—
|
|
|
|
|
6,003
|
|
|||||
|
Subtotal other special use funds
|
245,389
|
|
|
6,003
|
|
|
—
|
|
|
1,331
|
|
|
|
|
252,723
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Total assets
|
$
|
435,922
|
|
|
$
|
345,798
|
|
|
$
|
502
|
|
|
$
|
419,165
|
|
|
|
|
$
|
1,201,387
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Risk management activities — derivative instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Commodity contracts
|
$
|
—
|
|
|
$
|
(79,583
|
)
|
|
$
|
(8,124
|
)
|
|
$
|
346
|
|
|
(a)
|
|
$
|
(87,361
|
)
|
|
(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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Risk management activities — derivative instruments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Commodity contracts
|
$
|
—
|
|
|
$
|
551
|
|
|
$
|
33
|
|
|
$
|
(69
|
)
|
|
(a)
|
|
$
|
515
|
|
|
Nuclear decommissioning trust:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Equity securities
|
10,872
|
|
|
—
|
|
|
—
|
|
|
2,401
|
|
|
(b)
|
|
13,273
|
|
|||||
|
U.S. commingled equity funds
|
—
|
|
|
—
|
|
|
—
|
|
|
518,844
|
|
|
(c)
|
|
518,844
|
|
|||||
|
U.S. Treasury debt
|
160,607
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
160,607
|
|
|||||
|
Corporate debt
|
—
|
|
|
115,869
|
|
|
—
|
|
|
—
|
|
|
|
|
115,869
|
|
|||||
|
Mortgage-backed securities
|
—
|
|
|
118,795
|
|
|
—
|
|
|
—
|
|
|
|
|
118,795
|
|
|||||
|
Municipal bonds
|
—
|
|
|
73,040
|
|
|
—
|
|
|
—
|
|
|
|
|
73,040
|
|
|||||
|
Other fixed income
|
—
|
|
|
10,347
|
|
|
—
|
|
|
—
|
|
|
|
|
10,347
|
|
|||||
|
Subtotal nuclear decommissioning trust
|
171,479
|
|
|
318,051
|
|
|
—
|
|
|
521,245
|
|
|
|
|
1,010,775
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Other special use funds:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Equity securities
|
7,142
|
|
|
—
|
|
|
—
|
|
|
474
|
|
|
(b)
|
|
7,616
|
|
|||||
|
U.S. Treasury debt
|
232,848
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
232,848
|
|
|||||
|
Municipal bonds
|
—
|
|
|
4,631
|
|
|
—
|
|
|
—
|
|
|
|
|
4,631
|
|
|||||
|
Subtotal other special use funds
|
239,990
|
|
|
4,631
|
|
|
—
|
|
|
474
|
|
|
|
|
245,095
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Total assets
|
$
|
411,469
|
|
|
$
|
323,233
|
|
|
$
|
33
|
|
|
$
|
521,650
|
|
|
|
|
$
|
1,256,385
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Risk management activities — derivative instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Commodity contracts
|
$
|
—
|
|
|
$
|
(67,992
|
)
|
|
$
|
(3,429
|
)
|
|
$
|
(711
|
)
|
|
(a)
|
|
$
|
(72,132
|
)
|
|
(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.
|
|
12.
|
Investments in Nuclear Decommissioning Trust and Other Special Use Funds
|
|
|
March 31, 2020
|
||||||||||||||||||
|
|
Fair Value
|
|
Total
Unrealized
Gains
|
|
Total
Unrealized
Losses
|
||||||||||||||
|
Investment Type:
|
Nuclear Decommissioning Trusts
|
|
Other Special Use Funds
|
|
Total
|
|
|
||||||||||||
|
Equity securities
|
$
|
427,915
|
|
|
$
|
6,752
|
|
|
$
|
434,667
|
|
|
$
|
234,695
|
|
|
$
|
(1,201
|
)
|
|
Available for sale-fixed income securities
|
490,421
|
|
|
244,640
|
|
|
735,061
|
|
(a)
|
41,455
|
|
|
(3,527
|
)
|
|||||
|
Other
|
2,090
|
|
|
1,331
|
|
|
3,421
|
|
(b)
|
—
|
|
|
—
|
|
|||||
|
Total
|
$
|
920,426
|
|
|
$
|
252,723
|
|
|
$
|
1,173,149
|
|
|
$
|
276,150
|
|
|
$
|
(4,728
|
)
|
|
(a)
|
As of March 31, 2020, the amortized cost basis of these available-for-sale investments is $697 million.
|
|
(b)
|
Represents net pending securities sales and purchases.
|
|
|
December 31, 2019
|
||||||||||||||||||
|
|
Fair Value
|
|
Total
Unrealized
Gains
|
|
Total
Unrealized
Losses
|
||||||||||||||
|
Investment Type:
|
Nuclear Decommissioning Trusts
|
|
Other Special Use Funds
|
|
Total
|
|
|
||||||||||||
|
Equity securities
|
$
|
529,716
|
|
|
$
|
7,142
|
|
|
$
|
536,858
|
|
|
$
|
337,681
|
|
|
$
|
—
|
|
|
Available for sale-fixed income securities
|
478,658
|
|
|
237,479
|
|
|
716,137
|
|
(a)
|
25,795
|
|
|
(669
|
)
|
|||||
|
Other
|
2,401
|
|
|
474
|
|
|
2,875
|
|
(b)
|
—
|
|
|
—
|
|
|||||
|
Total
|
$
|
1,010,775
|
|
|
$
|
245,095
|
|
|
$
|
1,255,870
|
|
|
$
|
363,476
|
|
|
$
|
(669
|
)
|
|
(a)
|
As of December 31, 2019, the amortized cost basis of these available-for-sale investments is $691 million.
|
|
(b)
|
Represents net pending securities sales and purchases.
|
|
|
Three Months Ended March 31,
|
||||||||||
|
|
Nuclear Decommissioning Trusts
|
|
Other Special Use Funds
|
|
Total
|
||||||
|
2020
|
|
|
|
|
|
||||||
|
Realized gains
|
$
|
3,313
|
|
|
$
|
—
|
|
|
$
|
3,313
|
|
|
Realized losses
|
(2,227
|
)
|
|
—
|
|
|
(2,227
|
)
|
|||
|
Proceeds from the sale of securities (a)
|
178,196
|
|
|
16,891
|
|
|
195,087
|
|
|||
|
2019
|
|
|
|
|
|
||||||
|
Realized gains
|
$
|
1,103
|
|
|
$
|
—
|
|
|
$
|
1,103
|
|
|
Realized losses
|
(1,405
|
)
|
|
—
|
|
|
(1,405
|
)
|
|||
|
Proceeds from the sale of securities (a)
|
122,593
|
|
|
56,455
|
|
|
179,048
|
|
|||
|
(a)
|
Proceeds are reinvested in the Nuclear Decommissioning Trusts and other special use funds, excluding amounts reimbursed to the Company for active union employee medical claims from the active union employee medical account.
|
|
|
Nuclear Decommissioning Trust
|
|
Coal Mine Reclamation Escrow Account
|
|
Active Union Employee Medical Account
|
|
Total
|
||||||||
|
Less than one year
|
$
|
11,911
|
|
|
$
|
37,498
|
|
|
$
|
40,872
|
|
|
$
|
90,281
|
|
|
1 year – 5 years
|
137,509
|
|
|
18,487
|
|
|
143,565
|
|
|
299,561
|
|
||||
|
5 years – 10 years
|
112,834
|
|
|
—
|
|
|
—
|
|
|
112,834
|
|
||||
|
Greater than 10 years
|
228,167
|
|
|
4,218
|
|
|
—
|
|
|
232,385
|
|
||||
|
Total
|
$
|
490,421
|
|
|
$
|
60,203
|
|
|
$
|
184,437
|
|
|
$
|
735,061
|
|
|
|
Pension and Other Postretirement Benefits
|
|
|
|
Derivative Instruments
|
|
|
|
Total
|
||||||
|
Balance December 31, 2019
|
$
|
(56,522
|
)
|
|
|
|
$
|
(574
|
)
|
|
|
|
$
|
(57,096
|
)
|
|
OCI (loss) before reclassifications
|
—
|
|
|
|
|
292
|
|
|
|
|
292
|
|
|||
|
Amounts reclassified from accumulated other comprehensive loss
|
1,205
|
|
|
(a)
|
|
20
|
|
|
(b)
|
|
1,225
|
|
|||
|
Balance March 31, 2020
|
$
|
(55,317
|
)
|
|
|
|
$
|
(262
|
)
|
|
|
|
$
|
(55,579
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Balance December 31, 2018
|
$
|
(45,997
|
)
|
|
|
|
$
|
(1,711
|
)
|
|
|
|
$
|
(47,708
|
)
|
|
Amounts reclassified from accumulated other comprehensive loss
|
879
|
|
|
(a)
|
|
328
|
|
|
(b)
|
|
1,207
|
|
|||
|
Balance March 31, 2019
|
$
|
(45,118
|
)
|
|
|
|
$
|
(1,383
|
)
|
|
|
|
$
|
(46,501
|
)
|
|
(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.
|
|
|
Pension and Other Postretirement Benefits
|
|
|
|
Derivative Instruments
|
|
|
|
Total
|
||||||
|
Balance December 31, 2019
|
$
|
(34,948
|
)
|
|
|
|
$
|
(574
|
)
|
|
|
|
$
|
(35,522
|
)
|
|
OCI (loss) before reclassifications
|
—
|
|
|
|
|
292
|
|
|
|
|
292
|
|
|||
|
Amounts reclassified from accumulated other comprehensive loss
|
1,013
|
|
|
(a)
|
|
20
|
|
|
(b)
|
|
1,033
|
|
|||
|
Balance March 31, 2020
|
$
|
(33,935
|
)
|
|
|
|
$
|
(262
|
)
|
|
|
|
$
|
(34,197
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Balance December 31, 2018
|
$
|
(25,396
|
)
|
|
|
|
$
|
(1,711
|
)
|
|
|
|
$
|
(27,107
|
)
|
|
Amounts reclassified from accumulated other comprehensive loss
|
752
|
|
|
(a)
|
|
328
|
|
|
(b)
|
|
1,080
|
|
|||
|
Balance March 31, 2019
|
$
|
(24,644
|
)
|
|
|
|
$
|
(1,383
|
)
|
|
|
|
$
|
(26,027
|
)
|
|
(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.
|
|
15.
|
Income Taxes
|
|
16.
|
Asset Retirement Obligations
|
|
|
2020
|
||
|
Asset retirement obligations at January 1, 2020
|
$
|
657,218
|
|
|
Changes attributable to:
|
|
|
|
|
Accretion expense
|
10,219
|
|
|
|
Settlements
|
(2,295
|
)
|
|
|
Estimated cash flow revisions
|
(5,821
|
)
|
|
|
Asset retirement obligations at March 31, 2020
|
$
|
659,321
|
|
|
•
|
A 2030 target of achieving a resource mix that is 65% clean energy, with 45% of the generation portfolio coming from renewable energy; and
|
|
|
Net Capacity in Operation
(MW)
|
|
Net Capacity Planned / Under
Development (MW)
|
|
||
|
Total APS Owned: Solar
|
243
|
|
|
—
|
|
|
|
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)
|
995
|
|
|
37
|
|
(b)
|
|
Total Renewable Portfolio
|
1,864
|
|
|
87
|
|
|
|
(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 APS's 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).
|
|
|
Three Months Ended
March 31, |
|
|
||||||||
|
|
2020
|
|
2019
|
|
Net Change
|
||||||
|
|
(dollars in millions)
|
||||||||||
|
Regulated Electricity Segment:
|
|
|
|
|
|
|
|
|
|||
|
Operating revenues less fuel and purchased power expenses
|
$
|
472
|
|
|
$
|
509
|
|
|
$
|
(37
|
)
|
|
Operations and maintenance
|
(221
|
)
|
|
(245
|
)
|
|
24
|
|
|||
|
Depreciation and amortization
|
(154
|
)
|
|
(149
|
)
|
|
(5
|
)
|
|||
|
Taxes other than income taxes
|
(57
|
)
|
|
(55
|
)
|
|
(2
|
)
|
|||
|
Pension and other postretirement non-service credits - net
|
14
|
|
|
5
|
|
|
9
|
|
|||
|
All other income and expenses, net
|
16
|
|
|
14
|
|
|
2
|
|
|||
|
Interest charges, net of allowance for borrowed funds used during construction
|
(55
|
)
|
|
(54
|
)
|
|
(1
|
)
|
|||
|
Income taxes
|
20
|
|
|
(2
|
)
|
|
22
|
|
|||
|
Less income related to noncontrolling interests (Note 6)
|
(5
|
)
|
|
(5
|
)
|
|
—
|
|
|||
|
Regulated electricity segment income
|
30
|
|
|
18
|
|
|
12
|
|
|||
|
All other
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
Net Income Attributable to Common Shareholders
|
$
|
30
|
|
|
$
|
18
|
|
|
$
|
12
|
|
|
|
Increase (Decrease)
|
||||||||||
|
|
Operating
revenues
|
|
Fuel and
purchased
power expenses
|
|
Net change
|
||||||
|
|
(dollars in millions)
|
||||||||||
|
Amortization of excess deferred taxes (Note 4)
|
$
|
(23
|
)
|
|
$
|
—
|
|
|
$
|
(23
|
)
|
|
Effects of weather
|
(17
|
)
|
|
(5
|
)
|
|
(12
|
)
|
|||
|
Lower renewable energy regulatory surcharges, partially offset by operations and maintenance costs
|
(4
|
)
|
|
1
|
|
|
(5
|
)
|
|||
|
Changes in net fuel and purchased power costs, including off-system sales margins and related deferrals
|
(35
|
)
|
|
(38
|
)
|
|
3
|
|
|||
|
Higher retail revenue due to higher customer growth, offset by the impacts of energy efficiency, distributed generation and changes in customer usage patterns
|
2
|
|
|
2
|
|
|
—
|
|
|||
|
Miscellaneous items, net
|
(2
|
)
|
|
(2
|
)
|
|
—
|
|
|||
|
Total
|
$
|
(79
|
)
|
|
$
|
(42
|
)
|
|
$
|
(37
|
)
|
|
•
|
A decrease of $10 million in fossil generation costs primarily due to lower planned outages and lower operating costs due to the Navajo plant closure (see Note 4);
|
|
•
|
A decrease of $6 million primarily related to costs for renewable energy and similar regulatory programs, which are partially offset in operating revenues and purchased power;
|
|
•
|
A decrease of $3 million in nuclear generation costs;
|
|
•
|
A decrease of $3 million related to employee benefit costs; and
|
|
•
|
A decrease of $2 million for other miscellaneous factors.
|
|
|
Three Months Ended
March 31, |
|
Net
|
||||||||
|
|
2020
|
|
2019
|
|
Change
|
||||||
|
Net cash flow provided by operating activities
|
$
|
184
|
|
|
$
|
173
|
|
|
$
|
11
|
|
|
Net cash flow used for investing activities
|
(341
|
)
|
|
(254
|
)
|
|
(87
|
)
|
|||
|
Net cash flow provided by financing activities
|
210
|
|
|
81
|
|
|
129
|
|
|||
|
Net change in cash and cash equivalents
|
$
|
53
|
|
|
$
|
—
|
|
|
$
|
53
|
|
|
|
Three Months Ended
March 31, |
|
Net
|
||||||||
|
|
2020
|
|
2019
|
|
Change
|
||||||
|
Net cash flow provided by operating activities
|
$
|
194
|
|
|
$
|
188
|
|
|
$
|
6
|
|
|
Net cash flow used for investing activities
|
(343
|
)
|
|
(260
|
)
|
|
(83
|
)
|
|||
|
Net cash flow provided by financing activities
|
192
|
|
|
72
|
|
|
120
|
|
|||
|
Net change in cash and cash equivalents
|
$
|
43
|
|
|
$
|
—
|
|
|
$
|
43
|
|
|
|
Estimated for the Year Ended
December 31,
|
||||||||||
|
|
2020
|
|
2021
|
|
2022
|
||||||
|
APS
|
|
|
|
|
|
|
|
|
|||
|
Generation:
|
|
|
|
|
|
|
|
|
|||
|
Clean:
|
|
|
|
|
|
||||||
|
Nuclear Generation
|
$
|
129
|
|
|
$
|
123
|
|
|
$
|
123
|
|
|
Renewables and Energy Storage Systems ("ESS") (a)
|
121
|
|
|
490
|
|
|
671
|
|
|||
|
Environmental
|
45
|
|
|
53
|
|
|
44
|
|
|||
|
Other Generation
|
141
|
|
|
154
|
|
|
121
|
|
|||
|
Distribution
|
556
|
|
|
444
|
|
|
446
|
|
|||
|
Transmission
|
181
|
|
|
201
|
|
|
205
|
|
|||
|
Other (b)
|
158
|
|
|
185
|
|
|
115
|
|
|||
|
Total APS
|
$
|
1,331
|
|
|
$
|
1,650
|
|
|
$
|
1,725
|
|
|
(a)
|
APS Solar Communities program, energy storage, renewable projects, and other clean energy projects
|
|
(b)
|
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
|
Negative
|
|
Stable
|
|
Negative
|
|
|
|
|
|
|
|
|
APS
|
|
|
|
|
|
|
Corporate credit rating
|
A2
|
|
A-
|
|
A-
|
|
Senior unsecured
|
A2
|
|
A-
|
|
A
|
|
Commercial paper
|
P-1
|
|
A-2
|
|
F2
|
|
Outlook
|
Negative
|
|
Stable
|
|
Negative
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2020
|
|
2019
|
||||
|
Mark-to-market of net positions at beginning of period
|
$
|
(71
|
)
|
|
$
|
(58
|
)
|
|
Decrease (Increase) in regulatory asset
|
(14
|
)
|
|
12
|
|
||
|
Recognized in OCI:
|
|
|
|
||||
|
Mark-to-market losses realized during the period
|
—
|
|
|
—
|
|
||
|
Change in valuation techniques
|
—
|
|
|
—
|
|
||
|
Mark-to-market of net positions at end of period
|
$
|
(85
|
)
|
|
$
|
(46
|
)
|
|
Source of Fair Value
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Total
Fair
Value
|
||||||||||||
|
Observable prices provided by other external sources
|
|
$
|
(46
|
)
|
|
$
|
(13
|
)
|
|
$
|
(12
|
)
|
|
$
|
(6
|
)
|
|
$
|
—
|
|
|
$
|
(77
|
)
|
|
Prices based on unobservable inputs
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
(8
|
)
|
||||||
|
Total by maturity
|
|
$
|
(51
|
)
|
|
$
|
(13
|
)
|
|
$
|
(12
|
)
|
|
$
|
(6
|
)
|
|
$
|
(3
|
)
|
|
$
|
(85
|
)
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||||
|
|
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
|
53
|
|
|
(53
|
)
|
|
55
|
|
|
(55
|
)
|
||||
|
Total
|
$
|
54
|
|
|
$
|
(54
|
)
|
|
$
|
55
|
|
|
$
|
(55
|
)
|
|
(a)
|
These contracts are economic hedges of our forecasted purchases of natural gas and electricity. The impact of these hypothetical price movements would substantially offset the impact that these same price movements would have on the physical exposures being hedged. To the extent the amounts are eligible for inclusion in the PSA, the amounts are recorded as either a regulatory asset or liability.
|
|
Exhibit No.
|
|
Registrant(s)
|
|
Description
|
|
10.1
|
|
Pinnacle West
|
|
|
|
|
|
|
|
|
|
10.2
|
|
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 25, 2020 Form 8-K Report, File Nos. 1-8962 and 1-4473
|
|
2/25/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.2
|
|
|
Pinnacle West
|
|
|
3.1 to Pinnacle West/APS June 30, 2008 Form 10-Q Report, File Nos. 1-8962 and 1-4473
|
|
8/7/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.3
|
|
|
APS
|
|
Articles of Incorporation, restated as of May 25, 1988
|
|
4.2 to APS’s Form S-3 Registration Nos. 33-33910 and 33-55248 by means of September 24, 1993 Form 8-K Report, File No. 1-4473
|
|
9/29/1993
|
|
|
|
|
|
|
|
|
|
|
|
|
3.4
|
|
|
APS
|
|
|
3.1 to Pinnacle West/APS May 22, 2012 Form 8-K Report, File Nos. 1-8962 and 1-4473
|
|
5/22/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.5
|
|
|
APS
|
|
|
3.4 to Pinnacle West/APS December 31, 2008 Form 10-K, File Nos. 1-8962 and 1-4473
|
|
2/20/2009
|
|
|
|
|
|
PINNACLE WEST CAPITAL CORPORATION
|
|
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dated:
|
May 8, 2020
|
|
By:
|
/s/ Theodore N. Geisler
|
|
|
|
|
|
Theodore N. Geisler
|
|
|
|
|
|
Senior Vice President and
|
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
|
(Principal Financial Officer and
|
|
|
|
|
|
Officer Duly Authorized to sign this Report)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ARIZONA PUBLIC SERVICE COMPANY
|
|
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dated:
|
May 8, 2020
|
|
By:
|
/s/ Theodore N. Geisler
|
|
|
|
|
|
Theodore N. Geisler
|
|
|
|
|
|
Senior Vice President and
|
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
|
(Principal Financial Officer and
|
|
|
|
|
|
Officer Duly Authorized to sign this Report)
|
|
A.
|
The Board of Directors of the Company (the “Board of Directors”) has adopted, and the Company’s shareholders have approved, the Pinnacle West Capital Corporation 2012 Long-Term Incentive Plan (the “Plan”), pursuant to which Performance Share Awards and Dividend Equivalent Awards may be granted to employees of the Company and its subsidiaries.
|
|
B.
|
The Company desires to grant to Employee Performance Shares and Dividend Equivalents under the terms of the Plan.
|
|
C.
|
Pursuant to the Plan, the Company and Employee agree as follows:
|
|
1.
|
Grant of Award. Pursuant to action of the Committee, which was taken on the Date of Grant, the Company grants to Employee ____________ (____) Performance Shares and related Dividend Equivalents. The Performance Shares granted under this Section 1 are referred to in this Award Agreement as the “Base Grant.”
|
|
2.
|
Award Subject to Plan. This Performance Share Award and the related Dividend Equivalent Award are granted under and are expressly subject to all of the terms and provisions of the Plan, which terms are incorporated herein by reference, and this Award Agreement. In the event of any conflict between the terms and conditions of this Award Agreement and the Plan, the provisions of the Plan shall control.
|
|
3.
|
Performance Period. The Performance Period for this Award begins January 1, ____, and ends December 31, ____.
|
|
4.
|
Payment and Vesting.
|
|
(a)
|
Performance Shares Payable In Stock. As soon as practicable in the fiscal year immediately following the end of the Performance Period, the Company will determine (i) the Company’s Total Shareholder Return (as defined herein) as compared to the Total Shareholder Return of the companies in the S&P 1500 Super Composite Electric Utility Index (the “Growth Index”) over the Performance Period and (ii) the Company’s Average Performance with respect to the Performance Metrics (as defined herein). The Company then will deliver to Employee one (1) share of the Company’s Stock for each then-outstanding Performance Share under this Award Agreement, subject to adjustment pursuant to Section 5 below. The Company anticipates that the Stock payout, if any, related to the Company’s Total Shareholder Return will be made by __________. The Company anticipates that the Stock payout, if any, related to the Performance Metrics will be made by __________ and in no event will such Stock payout be made later than __________.
|
|
(b)
|
Normal or Early Retirement, Death or Disability; Late Career Recipient.
|
|
(c)
|
Termination Without Cause. In the event Employee’s employment is terminated by the Company without cause, the Chief Executive Officer (“CEO”) of the Company may determine in his discretion if, to what extent, and when any unvested portion of the Performance Shares granted under this Agreement should vest; provided, however, that (i) any vesting of unvested Performance Shares granted under this Agreement pursuant to this Section 4(c) shall be approved by the Committee, and (ii) nothing herein shall obligate the CEO to exercise his discretion to cause any unvested Performance Shares to vest.
|
|
(d)
|
Termination For Cause. Notwithstanding any other provision in this Section 4, in the event Employee is terminated for Cause, then regardless of Employee’s retirement, Early Retirement, Normal Retirement, death or Disability, Employee shall forfeit the right to receive any Stock hereunder that Employee would otherwise be entitled to receive following his or her date of termination. For purposes only of this Section 4(d), “Cause” means (A) embezzlement, theft, fraud, deceit and/or dishonesty by the Employee involving the property, business or affairs of the Company or any of its subsidiaries, or (B) an act of moral turpitude which in the sole judgment of the CEO reflects adversely on the business or reputation of the Company or any of its subsidiaries or negatively affects any of the Company’s or any of its subsidiaries’ employees or customers.
|
|
(e)
|
Disability. “Disability” has the meaning set forth for such term in the Retirement Plan.
|
|
(f)
|
Dividend Equivalents. In satisfaction of the Dividend Equivalents Award made pursuant to Section 1, at the time of the Company’s delivery of Stock to Employee pursuant to this Section 4, the Company also will deliver to Employee fully transferrable shares of Stock equal in value to the amount of dividends, if any, that Employee would have received if Employee had directly owned the Stock to which the Performance Shares relate from the Date of Grant to the date of the Stock payout, plus interest on such amount at the rate of 5 percent compounded quarterly, as determined pursuant to the Plan. The number of shares of Stock distributed to Employee will be determined by dividing the amount of the Dividend Equivalents and interest by the Fair Market Value of one share of Stock as of the applicable date of the Stock payout. No fractional Stock
|
|
(g)
|
Impact on Retirement Plans. The value of the shares of Stock distributed upon payment for the Performance Shares and Dividend Equivalents will be disregarded for purposes of calculating the amount of Employee’s benefit under any Company retirement plans.
|
|
5.
|
Performance Criteria and Adjustments. Fifty percent (50%) of the Performance Shares awarded under this Award Agreement will be determined pursuant to Section 5(a) and fifty percent (50%) of the Performance Shares awarded under this Award Agreement will be determined pursuant to Section 5(b). In no event will Employee be entitled to receive a number of Performance Shares pursuant to this Award Agreement greater than 2.0 times the Base Grant.
|
|
(a)
|
Adjustment of Base Grant for Total Shareholder Return. Fifty percent (50%) of the Base Grant will increase or decrease based upon the Company’s “Total Shareholder Return” as compared to the Total Shareholder Return of the companies in the Growth Index during the Performance Period, as follows:
|
|
If the Company’s Total Shareholder Return Over The Performance Period As Compared to the Total Shareholder Return of the Companies in the Growth Index is:
|
The Number of Performance Shares will be:
|
|
90th Percentile or greater
75th Percentile
|
1.0 X Base Grant
.75 X Base Grant
|
|
55th Percentile
|
0.5 X Base Grant
|
|
25th Percentile
|
0.25 X Base Grant
|
|
Less than 25th Percentile
|
None
|
|
(b)
|
Adjustment of Base Grant for Performance Metrics. Fifty percent (50%) of the Base Grant will increase or decrease based upon the Company’s “Average Performance” with respect to the “Performance Metrics,” as follows:
|
|
If the Company’s Average Performance is:
|
The Number of Performance Shares will be:
|
|
90th Percentile or greater
75th Percentile
|
1.0 X Base Grant
.75 X Base Grant
|
|
50th Percentile
|
0.5 X Base Grant
|
|
25th Percentile
|
0.25 X Base Grant
|
|
Less than 25th Percentile
|
None
|
|
6.
|
Definitions.
|
|
(a)
|
Performance Metrics. The “Performance Metrics” for the Performance Period are: (i) the System Average Interruption Frequency Index (Major Events Excluded) (“SAIFI”); (ii) Arizona Public Service Company’s customer to employee improvement ratio; (iii) the OSHA rate (All Incident Injury Rate); (iv) nuclear capacity factor; and (v) coal capacity factor.
|
|
(1)
|
With respect to the Performance Metric described in clause (i) of this Subsection 6(a), the Edison Electric Institute (“EEI”) will provide data on an annual basis regarding the SAIFI result of the participating companies; the Company will calculate its SAIFI result for the year in question and determine its percentile ranking based on the information provided by EEI.
|
|
(2)
|
With respect to the Performance Metric described in clause (ii) of this Subsection 6(a), S&P Global Market Intelligence (“Market Intelligence”), an independent third party data system, will provide data on an annual basis regarding the customer and employee counts; the Company will use its customer and employee counts for the year in question and determine its percentile ranking based on the information provided by Market Intelligence. Only those companies whose customers and employees were included in the data provided by Market Intelligence in each of the years of the Performance Period will be considered.
|
|
(3)
|
With respect to the Performance Metric described in clause (iii) of this Subsection 6(a), EEI will provide data on an annual basis regarding the OSHA rate of the participating companies; the Company will calculate its OSHA rate for the year in question and determine its percentile ranking based on the information provided by EEI.
|
|
(4)
|
With respect to the Performance Metric described in clause (iv) of this Subsection 6(a), Market Intelligence will provide data on an annual basis regarding the nuclear capacity factors of the participating nuclear plants; the Company will calculate its nuclear capacity factor for the year in question and determine its percentile ranking based on the information provided by Market Intelligence. Only those plants that were included in the data provided by Market Intelligence in each of the years of the Performance Period will be considered.
|
|
(5)
|
With respect to the Performance Metric described in clause (v) of this Subsection 6(a), Market Intelligence will provide data on an annual basis regarding the coal capacity factors of the participating coal plants; the Company will calculate its coal capacity factor for the year in question and determine its percentile ranking based on the information provided by Market Intelligence. Only those plants that were included in the data provided by Market Intelligence in each of the years of the Performance Period will be considered.
|
|
(6)
|
The Company’s percentile ranking during the Performance Period for each Performance Metric will be the average of the Company’s percentile ranking for each Performance Metric during each of the three years of the Performance Period (each, an “Average Performance Metric”); provided, however, that if the third year of a Performance Metric is not calculable by December 15 of the following year, the Performance Metric shall consist of the three most recent years for which such Performance Metric is calculable. The Company’s “Average Performance,” for purposes of determining any Base Grant adjustments pursuant to Subsection 5(b) above will be the average of the Average Performance Metrics. If only quartile, rather than percentile, rankings are available for a particular Performance Metric, the Average Performance Metric for any such Performance Metric shall be expressed as a percentile. For example, if the Performance Metric was in the top quartile for two Performance Periods and in the lowest quartile in the other
|
|
(7)
|
If either EEI or Market Intelligence discontinues providing the data specified above, the Committee shall select a data source that, in the Committee’s judgment, will provide data most comparable to the data provided by EEI or Market Intelligence, as the case may be.
|
|
(b)
|
Total Shareholder Return. “Total Shareholder Return” for the Performance Period is the measure of a company’s stock price appreciation plus any dividends paid during the Performance Period. Only those companies that were included in the Growth Index in each of the years of the Performance Period will be considered. Total Shareholder Return for the Company and the companies in the Growth Index will be determined using the Daily Comparative Return as calculated by Bloomberg (or other independent third party data system). If the Growth Index is discontinued, the Committee shall select the most comparable index then in use for the sector comparison. In addition, if the sector comparison is no longer representative of the Company’s industry or business, the Committee shall replace the Growth Index with the most representative index then in use. Once the Total Shareholder Returns of the Company and all relevant companies in the Growth Index have been determined, the member companies will be ranked from greatest to least. Percentiles will be calculated (interpolated from 0% to 100%) based on a company’s relative ranking. Percentiles will be carried out to one (1) decimal place. If the Company is not in the Growth Index, then its percentile will be interpolated between the companies listed in the relative ranking. These calculations will be verified by the Company’s internal auditors.
|
|
7.
|
Termination of Award. This Award Agreement will terminate and be of no further force or effect on the date that Employee is no longer employed by the Company or any of its subsidiaries, whether due to voluntary or involuntary termination, death, retirement, Disability, or otherwise, except as specifically set forth in Section 4 above or in Article 15 of the Plan. Employee will, however, be entitled to receive any Stock and Dividend Equivalents payable under Section 4 of this Award Agreement if Employee’s employment terminates after the end of the Performance Period but before Employee’s receipt of such Stock and Dividend Equivalents.
|
|
8.
|
Section 409A Compliance. If the Company concludes, in the exercise of its discretion, that this Award is subject to Section 409A of the Code, the Plan and this Award Agreement shall be administered in compliance with Section 409A and each provision of this Award Agreement and the Plan shall be interpreted to comply with Section 409A. If the Company concludes, in the exercise of its discretion, that this Award is not subject to Section 409A, but, instead, is eligible for the short-term deferral exception to the requirements of Section 409A, the Plan and this Award Agreement shall be administered to comply with the requirements of the short-term deferral exception to the requirements of Section 409A and each provision of this Award Agreement and the Plan shall be interpreted to comply with the requirements of such exception. In either event, Employee does not have any right to make any election regarding the time or form of any payment due under this Award Agreement.
|
|
9.
|
Tax Withholding. Employee is responsible for any and all federal, state, and local income, payroll or other tax obligations or withholdings (collectively, the “Taxes”) arising out of this Award. Employee shall pay any and all Taxes due in connection with a payout of Stock hereunder by having the Company withhold shares of Stock from such payout.
|
|
10.
|
Continued Employment. Nothing in the Plan or this Award Agreement shall be interpreted to interfere with or limit in any way the right of the Company or its subsidiaries to terminate Employee’s employment or services at any time. In addition, nothing in the Plan or this Award Agreement shall be interpreted to confer upon Employee the right to continue in the employ or service of the Company or its subsidiaries.
|
|
11.
|
Confidentiality. During Employee’s employment and after termination thereof, for any reason, Employee agrees that Employee will not, directly or indirectly, in one or a series of transactions, disclose to any person, or use or otherwise exploit for Employee’s own benefit or for the benefit of anyone other than the Company or any of its Affiliates any Confidential Information (as hereinafter defined), whether prepared by Employee or not; provided, however, that during the term of Employee’s employment, any Confidential Information may be disclosed (i) to officers, representatives, employees and agents of the Company and its Affiliates who need to know such Confidential Information in order to perform the services or conduct the operations required or expected of them in the business, and (ii) in good faith by Employee in connection with the performance of Employee’s job duties to persons who are authorized to receive such information by the Company or its Affiliates. Employee shall have no obligation to keep confidential any Confidential Information, if and to the extent disclosure of any such information is specifically required by law; provided, however, that in the event disclosure is required by applicable law, Employee shall provide the Company with prompt notice of such requirement, prior to making any disclosure, so that it may seek an appropriate protective order.
|
|
12.
|
Restrictive Covenants.
|
|
(a)
|
Non-Competition. Employee agrees that for a period of 12 months following any Termination of Employment voluntarily by Employee (other than due to Disability), Employee shall not, without the prior written consent of the Company’s General Counsel, participate, whether as a consultant, employee, contractor, partner, owner (ownership of less than 5% of the outstanding stock of a publicly traded company will not be considered ownership under this provision), co-owner, or otherwise, with any business, corporation, group, entity or individual that is or intends to be engaged in the business activity of supplying electricity in any area of Arizona for which the Company or its Affiliates is authorized to supply electricity.
|
|
(b)
|
Employee Non-Solicitation. Employee agrees that for a period of 12 months following Employee’s Termination of Employment for any reason, Employee will not encourage, induce, or otherwise solicit, or actively assist any other person or organization to encourage, induce or otherwise solicit, directly or indirectly, any employee of the Company or any of its Affiliates to terminate his or her employment with the Company or its Affiliates, or otherwise interfere with the advantageous business relationship of the Company and its Affiliates with their employees.
|
|
(c)
|
Remedies. If Employee fails to comply with Sections 11, 12(a), or 12(b) in a material respect, the Company may (i) cause any of Employee’s unvested Performance Shares and related Dividend Equivalents to be cancelled and forfeited, (ii) refuse to deliver shares of Stock or cash in exchange for vested Performance Shares or Dividend Equivalents, and/or (iii) pursue any other rights and remedies the Company may have pursuant to this Award Agreement or the Plan at law or in equity including, specifically, injunctive relief.
|
|
13.
|
Cooperation with Government Agencies. Employee shall have no obligation to keep confidential any Confidential Information, if and to the extent disclosure of any such information is specifically permitted by
|
|
14.
|
Clawback. The portion of this Award, if any, that is earned based on the Company’s Total Shareholder Return will be subject to potential forfeiture or recovery to the extent called for by the Company’s Clawback Policy. The Clawback Policy may include such provisions as the Human Resources Committee of the Board of Directors determines to be necessary or appropriate either to comply with any applicable law or listing standard or in light of Company ethics or other policies and practices. Specific requirements of the Clawback Policy may be adopted and amended at such times as the Human Resources Committee of the Board of Directors determines in its discretion. By accepting this Award, Employee consents and agrees to abide by such Clawback Policy.
|
|
15.
|
Non-Transferability. Neither this Award nor any rights under this Award Agreement may be assigned, transferred, or in any manner encumbered except as provided in the Plan.
|
|
16.
|
Definitions: Copy of Plan and Plan Prospectus. To the extent not specifically defined in this Award Agreement, all capitalized terms used in this Award Agreement will have the same meanings ascribed to them in the Plan. By signing this Award Agreement, Employee acknowledges receipt of a copy of the Plan and the related Plan prospectus.
|
|
17.
|
Amendment. Except as provided below, any amendments to this Award Agreement must be made by a written agreement executed by the Company and Employee. The Company may amend this Award Agreement unilaterally, without the consent of Employee, if the change (i) is required by law or regulation, (ii) does not adversely affect in any material way the rights of Employee, or (iii) is required to cause the benefits under the Plan to qualify for favorable tax treatment either for the Company or Employee or to comply with the provisions of Section 409A of the Code and applicable regulations or other interpretive authority. Additional rules relating to amendments to the Plan or any Award Agreement to assure compliance with Section 409A of the Code are set forth in Section 17.15 of the Plan.
|
|
|
PINNACLE WEST CAPITAL CORPORATION
|
|
|
|
|
|
By:________________________________________________
|
|
|
Its: ________________________________________________
|
|
|
Date: ______________________________________________
|
|
|
|
|
|
EMPLOYEE
|
|
|
|
|
|
By:________________________________________________
|
|
|
Date: ______________________________________________
|
|
|
|
|
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
|
1
|
|
Section 1.01
|
Certain Defined Terms 1
|
|
Section 1.02
|
Other Interpretive Provisions 19
|
|
Section 1.03
|
Accounting Terms 20
|
|
Section 1.04
|
Rounding 20
|
|
Section 1.05
|
Times of Day 21
|
|
Section 1.06
|
Interest Rates; LIBOR Notification 21
|
|
ARTICLE II AMOUNTS AND TERMS OF THE LOANS
|
21
|
|
Section 2.01
|
The Loans. 21
|
|
Section 2.02
|
Making the Loans. 22
|
|
Section 2.03
|
Fees 23
|
|
Section 2.04
|
Repayment of Loans 23
|
|
Section 2.05
|
Interest on Loans. 23
|
|
Section 2.06
|
Interest Rate Determination. 24
|
|
Section 2.07
|
Optional Conversion of Loans 26
|
|
Section 2.08
|
Prepayments of Loans. 26
|
|
Section 2.09
|
Increased Costs. 27
|
|
Section 2.10
|
Illegality 28
|
|
Section 2.11
|
Payments and Computations. 29
|
|
Section 2.12
|
Taxes. 30
|
|
Section 2.13
|
Sharing of Payments, Etc. 34
|
|
Section 2.14
|
Evidence of Debt. 34
|
|
Section 2.15
|
Use of Proceeds. 35
|
|
Section 2.16
|
Affected Lenders 35
|
|
Section 2.17
|
Replacement of Lenders 36
|
|
ARTICLE III CONDITIONS PRECEDENT
|
36
|
|
Section 3.01
|
Conditions Precedent to Effectiveness 36
|
|
Section 3.02
|
Determinations Under Section 3.01 38
|
|
ARTICLE IV REPRESENTATIONS AND WARRANTIES
|
38
|
|
Section 4.01
|
Representations and Warranties of the Borrower 38
|
|
ARTICLE V COVENANTS OF THE BORROWER
|
43
|
|
Section 5.01
|
Affirmative Covenants 43
|
|
Section 5.02
|
Negative Covenants 47
|
|
Section 5.03
|
Financial Covenant 48
|
|
ARTICLE VI EVENTS OF DEFAULT
|
48
|
|
Section 6.01
|
Events of Default 48
|
|
ARTICLE VII THE AGENT
|
50
|
|
Section 7.01
|
Appointment and Authority 50
|
|
Section 7.02
|
Rights as a Lender 50
|
|
Section 7.03
|
Exculpatory Provisions 50
|
|
Section 7.04
|
Reliance by Agent 51
|
|
Section 7.05
|
Delegation of Duties 52
|
|
Section 7.06
|
Resignation of Agent 52
|
|
Section 7.07
|
Non-Reliance on Agent and Other Lenders 52
|
|
Section 7.08
|
[Reserved]. 53
|
|
Section 7.09
|
Certain ERISA Matters. 53
|
|
ARTICLE VIII MISCELLANEOUS
|
54
|
|
Section 8.01
|
Amendments, Etc. 54
|
|
Section 8.02
|
Notices, Etc. 55
|
|
Section 8.03
|
No Waiver; Cumulative Remedies; Enforcement 57
|
|
Section 8.04
|
Costs and Expenses; Indemnity; Damage Waiver. 57
|
|
Section 8.05
|
Right of Set-off 59
|
|
Section 8.06
|
Effectiveness; Binding Effect 60
|
|
Section 8.07
|
Successors and Assigns. 60
|
|
Section 8.08
|
Confidentiality 63
|
|
Section 8.09
|
Governing Law 64
|
|
Section 8.10
|
Counterparts; Integration 64
|
|
Section 8.11
|
Jurisdiction, Etc. 64
|
|
Section 8.12
|
Payments Set Aside 65
|
|
Section 8.13
|
Patriot Act and Beneficial Ownership Regulation 65
|
|
Section 8.14
|
Waiver of Jury Trial 65
|
|
Section 8.15
|
No Advisory or Fiduciary Responsibility 65
|
|
Section 8.16
|
Survival of Representations and Warranties 66
|
|
Section 8.17
|
Severability 66
|
|
Section 8.18
|
Acknowledgement and Consent to Bail-In of Affected Financial Institutions 66
|
|
|
PINNACLE WEST CAPITAL CORPORATION
|
|
|
|
|
|
By:_/s/ James R. Hatfield
|
|
|
Name: James R. Hatfield
|
|
|
Title: Executive Vice President, Chief
|
|
|
Administrative Officer and Treasurer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADMINISTRATIVE AGENT:
|
PNC BANK, NATIONAL ASSOCIATION,
|
|
|
as Agent and a Lender
|
|
|
|
|
|
By: /s/ Gabriel Martín
|
|
|
Name: Gabriel Martín
|
|
|
Title: Managing Director
|
|
|
|
|
Lender
|
Commitment
|
Ratable Share
|
||
|
PNC Bank, National Association
|
|
$31,000,000
|
|
100.00%
|
|
TOTAL
|
|
$31,000,000
|
|
100.00%
|
|
|
|
|
||
|
1.
|
Commercial Paper borrowings
|
|
2.
|
Borrowings under the Five-Year Credit Agreement dated as of July 12, 2018, among the Borrower, Barclays Bank PLC, as Agent and Issuing Bank, and the lenders and other parties thereto
|
|
|
PINNACLE WEST CAPITAL CORPORATION
|
|
|
|
|
|
By:_______________________________________
|
|
|
Name:
|
|
|
Title:
|
|
|
|
|
Date
|
Amount of Loan
|
Amount of Principal Paid or Prepaid
|
Unpaid Principal Balance
|
Notation
Made By |
|
|
|
|
|
|
|
(ii)
|
The Type of Loans comprising the Initial Borrowing is [Base Rate Loans] [Eurodollar Rate Loans].
|
|
[(iv)
|
The initial Interest Period for each Eurodollar Rate Loan made as part of the Initial Borrowing is [one week][[__] month[s]].]
|
|
(A)
|
the representations and warranties contained in Section 4.01 of the Term Loan Agreement are true and correct, both before and after giving effect to the Initial Borrowing and to the application of the proceeds thereof, as though made on and as of such date (excluding that the Initial Borrowing is not listed on Schedule 4.01(k) thereto);
|
|
(B)
|
no event has occurred and is continuing, or would result from the Initial Borrowing or from the application of the proceeds therefrom, that constitutes a Default; and
|
|
(C)
|
before and after giving effect to the Initial Borrowing and to the application of the proceeds therefrom, as though made on and as of such date, the Indebtedness of the Borrower does not exceed that permitted by (i) applicable resolutions of the Board of Directors of the Borrower or (ii) applicable Laws of any Governmental Authority.
|
|
1.
|
This Notice of Initial Borrowing is irrevocable.
|
|
2.
|
The Borrower shall indemnify each Lender against any loss (excluding loss of anticipated profits), cost or expense incurred by such Lender as a result of any failure by the Borrower (a) to execute and deliver the Term Loan Agreement on or before May 5, 2020, (b) to fulfill the applicable conditions set forth in Article III of the Term Loan Agreement on May 5, 2020 or (c) to otherwise borrow the Eurodollar Rate Loans requested by the Borrower in this Notice of Initial Borrowing on May 5, 2020, in each case in accordance with Section 8.04(e) of the Term Loan Agreement (the terms of which Section are hereby incorporated by reference into this Notice of Initial Borrowing to the same extent and with the same force as if fully set forth herein).
|
|
3.
|
The terms of paragraphs 1 and 2 above are not conditioned upon the execution and delivery by the Borrower, the Agent or the Lenders of the Term Loan Agreement.]
|
|
|
Very truly yours,
|
|
|
|
|
|
PINNACLE WEST CAPITAL CORPORATION
|
|
|
|
|
|
By:_______________________________________
|
|
|
Name:
|
|
|
Title:
|
|
|
|
|
5.
|
Term Loan Agreement: 364-Day Term Loan Agreement dated as of May 5, 2020, by and among the Borrower, the Lenders party thereto, the Agent and the other agents party thereto.
|
|
Aggregate Principal Amount of Loans of all Lenders
|
Principal Amount of Loans Assigned
|
Percentage Assigned of Aggregate Principal Amount of Loans Outstanding
|
CUSIP Number
|
|
$_________________
|
$______________
|
______________%
|
|
|
|
Very truly yours,
|
|
|
|
|
|
PINNACLE WEST CAPITAL CORPORATION
|
|
|
|
|
|
By:_____________________________________
|
|
|
Name:
|
|
|
Title:
|
|
|
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Pinnacle West Capital Corporation;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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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/ Jeffrey B. Guldner
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Jeffrey B. Guldner
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Chairman of the Board, President and Chief Executive Officer
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1.
|
I have reviewed this Quarterly Report on Form 10-Q of Pinnacle West Capital Corporation;
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2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
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b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
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5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
/s/ Theodore N. Geisler
|
|
|
Theodore N. Geisler
|
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|
Senior Vice President and Chief Financial Officer
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Arizona Public Service Company;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
/s/ Jeffrey B. Guldner
|
|
|
Jeffrey B. Guldner
|
|
|
Chairman of the Board and Chief Executive Officer
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Arizona Public Service Company;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
/s/ Theodore N. Geisler
|
|
|
Theodore N. Geisler
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
/s/ Jeffrey B. Guldner
|
|
|
Jeffrey B. Guldner
|
|
|
Chairman of the Board, President and
|
|
|
Chief Executive Officer
|
|
|
/s/ Theodore N. Geisler
|
|
|
Theodore N. Geisler
|
|
|
Senior Vice President and
|
|
|
Chief Financial Officer
|
|
|
/s/ Jeffrey B. Guldner
|
|
|
Jeffrey B. Guldner
|
|
|
Chairman of the Board and Chief Executive Officer
|
|
|
|
|
|
/s/ Theodore N. Geisler
|
|
|
Theodore N. Geisler
|
|
|
Senior Vice President and
|
|
|
Chief Financial Officer
|