Retirement Plans and Other Benefits (Tables)

12 Months Ended

Dec. 31, 2019

Retirement Benefits [Abstract]

Schedule of net periodic benefit costs and the portion of these costs charged to expense (including administrative costs and excluding amounts capitalized as overhead construction, billed to electric plant participants or charged or amortized to the regulatory asset)

The following table provides details of the plans’ net periodic benefit costs and the portion of these costs charged to expense (including administrative costs and excluding amounts capitalized as overhead construction or billed to electric plant participants) (dollars in thousands):

	Pension									Other Benefits
	2019			2018			2017			2019			2018			2017
Service cost-benefits earned during the period	$	49,902		$	56,669		$	54,858		$	18,369		$	21,100		$	17,119
Interest cost on benefit obligation	136,843			124,689			129,756			29,894			28,147			29,959
Expected return on plan assets	(171,884		)	(182,853		)	(174,271		)	(38,412		)	(42,082		)	(53,401		)
Amortization of:
Prior service cost (credit)	—			—			81			(37,821		)	(37,842		)	(37,842		)
Net actuarial loss	42,584			32,082			47,900			—			—			5,118
Net periodic benefit cost (benefit)	$	57,445		$	30,587		$	58,324		$	(27,970	)	$	(30,677	)	$	(39,047	)
Portion of cost charged to expense	$	30,312		$	10,120		$	27,295		$	(19,859	)	$	(21,426	)	$	(18,274	)

Schedule of changes in the benefit obligations and funded status

The following table shows the plans’ changes in the benefit obligations and funded status for the years 2019 and 2018 (dollars in thousands):

	Pension						Other Benefits
	2019			2018			2019			2018
Change in Benefit Obligation
Benefit obligation at January 1	$	3,190,626		$	3,394,186		$	676,771		$	753,393
Service cost	49,902			56,669			18,369			21,100
Interest cost	136,843			124,689			29,894			28,147
Benefit payments	(177,882		)	(184,161		)	(32,486		)	(31,540		)
Actuarial (gain) loss	413,625			(200,757		)	54,376			(94,329		)
Benefit obligation at December 31	3,613,114			3,190,626			746,924			676,771
Change in Plan Assets
Fair value of plan assets at January 1	2,733,476			3,057,027			723,677			1,022,371
Actual return on plan assets	602,030			(201,078		)	144,095			(40,354		)
Employer contributions	150,000			50,000			—			—
Benefit payments	(167,155		)	(172,473		)	(30,278		)	(72,453		)
Transfer to active union medical account	—			—			—			(185,887		)
Fair value of plan assets at December 31	3,318,351			2,733,476			837,494			723,677
Funded Status at December 31	$	(294,763	)	$	(457,150	)	$	90,570		$	46,906

Schedule of projected benefit obligation and the accumulated benefit obligation for pension plans with an accumulated obligation in excess of plan assets

The following table shows the projected benefit obligation and the accumulated benefit obligation for pension plans with an accumulated obligation in excess of plan assets as of December 31, 2019 and 2018 (dollars in thousands):

	2019		2018
Projected benefit obligation	$	177,775	$	3,190,626
Accumulated benefit obligation	169,091		3,038,774
Fair value of plan assets	—		2,733,476

Schedule of amounts recognized on the Consolidated Balance Sheets

The following table shows the amounts recognized on the Consolidated Balance Sheets as of December 31, 2019 and 2018 (dollars in thousands):

	Pension						Other Benefits
	2019			2018			2019		2018
Noncurrent asset	$	—		$	—		$	90,570	$	46,906
Current liability	(14,578		)	(13,980		)	—		—
Noncurrent liability	(280,185		)	(443,170		)	—		—
Net amount recognized	$	(294,763	)	$	(457,150	)	$	90,570	$	46,906

Schedule of accumulated other comprehensive loss

The following table shows the details related to accumulated other comprehensive loss as of December 31, 2019 and 2018 (dollars in thousands): 

	Pension						Other Benefits
	2019			2018			2019			2018
Net actuarial loss	$	735,186		$	794,292		$	12,238		$	63,544
Prior service credit	—			—			(189,912		)	(227,733		)
APS’s portion recorded as a regulatory (asset) liability	(660,223		)	(733,351		)	177,209			163,767
Income tax expense (benefit)	(18,546		)	(15,083		)	570			561
Accumulated other comprehensive loss	$	56,417		$	45,858		$	105		$	139

Schedule of estimated amounts that will be amortized from accumulated other comprehensive loss and regulatory assets into net periodic benefit cost

The following table shows the estimated amounts that will be amortized from accumulated other comprehensive loss and regulatory assets and liabilities into net periodic benefit cost in 2020 (dollars in thousands):

	Pension		Other Benefits
Net actuarial loss	$	33,642	$	—
Prior service credit	—		(37,575		)
Total amounts estimated to be amortized from accumulated other comprehensive loss (gain) and regulatory assets (liabilities) in 2020	$	33,642	$	(37,575	)

Schedule of weighted-average assumptions used for both the pension and other benefits to determine benefit obligations and net periodic benefit costs

The following table shows the weighted-average assumptions used for both the pension and other benefits to determine benefit obligations and net periodic benefit costs:

	Benefit Obligations As of December 31,				Benefit Costs For the Years Ended December 31,
	2019		2018		2019		2018		2017
Discount rate – pension	3.30	%	4.34	%	4.34	%	3.65	%	4.08	%
Discount rate – other benefits	3.42	%	4.39	%	4.39	%	3.71	%	4.17	%
Rate of compensation increase	4.00	%	4.00	%	4.00	%	4.00	%	4.00	%
Expected long-term return on plan assets - pension	N/A		N/A		6.25	%	6.05	%	6.55	%
Expected long-term return on plan assets - other benefits	N/A		N/A		5.40	%	5.40	%	6.05	%
Initial healthcare cost trend rate (pre-65 participants)	7.00	%	7.00	%	7.00	%	7.00	%	7.00	%
Initial healthcare cost trend rate (post-65 participants)	4.75	%	4.75	%	4.75	%	4.75	%	5.00	%
Ultimate healthcare cost trend rate	4.75	%	4.75	%	4.75	%	4.75	%	5.00	%
Number of years to ultimate trend rate (pre-65 participants)	6		7		7		8		4

Schedule of effects of one percentage point change in the assumed initial and ultimate health care cost trend rates

A one percentage point change in the assumed initial and ultimate healthcare cost trend rates would have the following effects on our December 31, 2019 amounts (dollars in thousands): 

	1% Increase		1% Decrease
Effect on other postretirement benefits expense, after consideration of amounts capitalized or billed to electric plant participants	$	9,299	$	(3,827	)
Effect on service and interest cost components of net periodic other postretirement benefit costs	9,434		(7,257		)
Effect on the accumulated other postretirement benefit obligation	124,073		(97,710		)

Schedule of fair value of pension plan and other postretirement benefit plan assets, by asset category

The fair value of Pinnacle West’s pension plan and other postretirement benefit plan assets at December 31, 2019, by asset category, are as follows (dollars in thousands):

 

	Level 1		Level 2		Other (a)		Total
Pension Plan:
Cash and cash equivalents	$	9,370	$	—	$	—	$	9,370
Fixed income securities:
Corporate	—		1,541,729		—		1,541,729
U.S. Treasury	406,112		—		—		406,112
Other (b)	—		92,240		—		92,240
Common stock equities (c)	250,829		—		—		250,829
Mutual funds (d)	185,928		—		—		185,928
Common and collective trusts:
Equities	—		—		392,403		392,403
Real estate	—		—		171,645		171,645
Fixed Income	—		—		98,065		98,065
Partnerships	—		—		103,796		103,796
Short-term investments and other (e)	—		—		66,234		66,234
Total	$	852,239	$	1,633,969	$	832,143	$	3,318,351
Other Benefits:
Cash and cash equivalents	$	2,184	$	—	$	—	$	2,184
Fixed income securities:
Corporate	—		202,640		—		202,640
U.S. Treasury	353,650		—		—		353,650
Other (b)	—		7,999		—		7,999
Common stock equities (c)	146,316		—		—		146,316
Mutual funds (d)	14,351		—		—		14,351
Common and collective trusts:
Equities	—		—		83,648		83,648
Real estate	—		—		19,806		19,806
Short-term investments and other (e)	2,881		—		4,019		6,900
Total	$	519,382	$	210,639	$	107,473	$	837,494

(a) These investments primarily represent assets valued using NAV as a practical expedient, and have not been classified in the fair value hierarchy.

(b) This category consists primarily of debt securities issued by municipalities.

(c) This category primarily consists of U.S. common stock equities.

(d) These funds invest in international common stock equities.

(e) This category includes plan receivables and payables.

The following table presents the actual allocations of the investment for the other postretirement benefit plan at December 31, 2019:

	Other Benefits
	Actual Allocation
Long-term fixed income assets	68	%
Return-generating assets	32	%
Total	100	%

The fair value of Pinnacle West’s pension plan and other postretirement benefit plan assets at December 31, 2018, by asset category, are as follows (dollars in thousands):

	Level 1		Level 2		Other (a)		Total
Pension Plan:
Cash and cash equivalents	$	451	$	—	$	—	$	451
Fixed income securities:
Corporate	—		1,237,744		—		1,237,744
U.S. Treasury	372,649		—		—		372,649
Other (b)	—		78,902		—		78,902
Common stock equities (c)	196,661		—		—		196,661
Mutual funds (d)	120,976		—		—		120,976
Common and collective trusts:
Equities	—		—		272,926		272,926
Real estate	—		—		165,123		165,123
Fixed Income	—		—		86,483		86,483
Partnerships	—		—		125,217		125,217
Short-term investments and other (e)	—		—		76,344		76,344
Total	$	690,737	$	1,316,646	$	726,093	$	2,733,476
Other Benefits:
Cash and cash equivalents	$	93	$	—	$	—	$	93
Fixed income securities:
Corporate	—		163,286		—		163,286
U.S. Treasury	318,017		—		—		318,017
Other (b)	—		7,531		—		7,531
Common stock equities (c)	129,199		—		—		129,199
Mutual funds (d)	10,963		—		—		10,963
Common and collective trusts:
Equities	—		—		65,720		65,720
Real estate	—		—		19,054		19,054
Short-term investments and other (e)	3,633		—		6,181		9,814
Total	$	461,905	$	170,817	$	90,955	$	723,677

(a) These investments primarily represent assets valued using NAV as a practical expedient, and have not been classified in the fair value hierarchy.

(b) This category consists primarily of debt securities issued by municipalities.

(c) This category primarily consists of U.S. common stock equities.

(d) These funds invest in U.S. and international common stock equities.

(e)

This category includes plan receivables and payables.

Based on the IPS, and given the pension plan's funded status at year-end 2019, the target and actual allocation for the pension plan at December 31, 2019 are as follows:

	Pension
	Target Allocation		Actual Allocation
Long-term fixed income assets	62	%	63	%
Return-generating assets	38	%	37	%
Total	100	%	100	%

The permissible range is within +/- 3% of the target allocation shown in the above table, and also considers the plan's funded status.

The following table presents the additional target allocations, as a percent of total pension plan assets, for the return-generating assets:

Asset Class	Target Allocation
Equities in US and other developed markets	18	%
Equities in emerging markets	6	%
Alternative investments	14	%
Total	38	%

Schedule of estimated future benefit payments, which reflect estimated future employee service, for the next five years and the succeeding five years thereafter

Benefit payments, which reflect estimated future employee service, for the next five years and the succeeding five years thereafter, are estimated to be as follows (dollars in thousands):

Year	Pension		Other Benefits
2020	$	199,395	$	31,531
2021	201,597		32,777
2022	206,618		33,566
2023	213,208		34,415
2024	218,150		34,468
Years 2025-2029	1,111,171		174,607