Regulatory Matters (Tables)

12 Months Ended

Dec. 31, 2023

Schedule Of Capital Structure And Cost Of Capital, Regulatory Matter

the following proposed capital structure and costs of capital:


	Capital Structure		Cost of Capital
Long-term debt	48.07	%	3.85	%
Common stock equity	51.93	%	10.25	%
Weighted-average cost of capital			7.17	%

Schedule of changes in the Deferred Fuel and Purchased Power Regulatory Asset

The following table shows the changes in the deferred fuel and purchased power regulatory asset for 2023 and 2022 (dollars in thousands):


	Twelve Months Ended December 31,
	2023		2022
Beginning balance	$	460,561	$	388,148
Deferred fuel and purchased power costs — current period	549,877		291,992
Amounts charged to customers	(547,243)		(219,579)
Ending balance	$	463,195	$	460,561

Schedule of Regulatory Assets

The detail of regulatory assets is as follows (dollars in thousands):


S		December 31,
	Amortization Through	2023		2022
Pension	(a)	$	696,476	$	637,656
Deferred fuel and purchased power (b) (c)	2024	463,195		460,561
Income taxes — AFUDC equity	2053	189,058		179,631
Ocotillo deferral	2031	128,636		138,143
Deferred fuel and purchased power — mark-to-market (Note 16)	2026	120,214		—
SCR deferral (e)	2038	89,477		97,624
Retired power plant costs	2033	83,536		98,692
Lease incentives (Note 8)	(g)	46,615		—
Income taxes — investment tax credit basis adjustment	2056	34,230		23,977
Deferred compensation	2036	33,972		33,660
Deferred property taxes	2027	32,488		41,057
Palo Verde VIEs (Note 17)	2046	20,772		20,933
Power supply adjustor-interest	2024	19,416		1,541
Active union medical trust	(f)	12,747		18,226
Navajo coal reclamation	2026	10,883		13,862
Mead-Phoenix transmission line — contributions in aid of construction	2050	8,716		9,048
Loss on reacquired debt	2038	7,965		9,468
Four Corners cost deferral	2024	7,922		15,999
Tax expense adjustor mechanism (b)	2031	5,190		5,845
Lost fixed cost recovery (b)	2023	—		9,547
Other	Various	4,528		6,630
Total regulatory assets (d)		$	2,016,036	$	1,822,100
Less: current regulatory assets		$	625,757	$	538,879
Total non-current regulatory assets		$	1,390,279	$	1,283,221

(a)This asset represents the future recovery of pension benefit obligations and expense through retail rates. If these costs are disallowed by the ACC, this regulatory asset would be charged to OCI and result in lower future revenues. As a result of the 2019 Rate Case Decision, the amount authorized for inclusion in rate base was determined using an averaging methodology, which resulted in a reduced return in retail rates. The approved 2022 Rate Case ROO, as amended, allows for the full return on the pension asset in rate base. See Note 7 for further discussion.

(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.”

(e)See “Four Corners SCR Cost Recovery” discussion above.

(f)Collected in retail rates.

(g)Amortization periods vary based on specific terms of lease contract. See Note 8.

Schedule of Regulatory Liabilities

The detail of regulatory liabilities is as follows (dollars in thousands):


		December 31,
	Amortization Through	2023		2022
Excess deferred income taxes - ACC — Tax Cuts and Jobs Act (a)	2046	$	930,344	$	971,545
Excess deferred income taxes - FERC — Tax Cuts and Jobs Act (a)	2058	214,667		221,877
Asset retirement obligations	2057	392,383		354,002
Other postretirement benefits	(d)	226,726		270,604
Removal costs	(c)	94,368		106,889
Income taxes — deferred investment tax credit	2056	68,521		48,035
Income taxes — change in rates	2051	60,667		64,806
Four Corners coal reclamation	2038	55,917		52,592
Renewable energy standard (b)	2024	43,251		35,720
Spent nuclear fuel	2027	33,154		39,217
Sundance maintenance	2031	19,989		16,893
Demand side management (b)	2023	14,374		8,461
Property tax deferral (e)	2024	10,850		15,521
Tax expense adjustor mechanism (b)	2031	4,835		4,835
FERC transmission true up (b)	2025	1,869		22,895
Deferred fuel and purchased power — mark-to-market (Note 15)	2026	—		96,367
Other	Various	3,873		3,092
Total regulatory liabilities		$	2,175,788	$	2,333,351
Less: current regulatory liabilities		$	209,923	$	271,575
Total non-current regulatory liabilities		$	1,965,865	$	2,061,776

(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, APS accrues removal costs for its regulated assets, even if there is no legal obligation for removal.

(d)See Note 7.