Asset Retirement Obligations

12 Months Ended

Dec. 31, 2024

Asset Retirement Obligation Disclosure [Abstract]

In 2024, the Company revised its cost estimates for existing AROs for the following:

•Cholla coal-fired power plant related to the closure of ponds and facilities, which resulted in an increase to the ARO of approximately $63 million, primarily due to cost estimates associated with the CCR Rule.

•Four Corners coal-fired power plant, which resulted in an increase of approximately $82 million, primarily due to cost estimates associated with the CCR Rule.

•Navajo, a decommissioned coal-fired power plant, which resulted in an increase of approximately $8 million.

•Palo Verde nuclear plant, which resulted in an increase of approximately $1 million.

•Solar, which resulted in a decrease to the ARO of approximately $11 million, primarily due to the reduced cost of solar panel disposal.

APS has also recorded the initial investigation and assessment costs related to the newly signed EPA rule for Legacy Impoundments and CCRMUs. At this time, APS is still estimating the financial impacts of this final regulation on its business, with initial CCRMU site surveys due to be completed by February 2026 and final site investigation reports to be finalized by February 2027. Based on the information available to APS at this time, APS cannot reasonably estimate the fair value of the entire CCRMU asset retirement obligation. Depending on the outcome of those evaluations and site investigations, the costs associated with APS’s management of CCR could materially increase, which could affect our financial condition, results of operations, or cash flows.

In 2023, the Company revised its cost estimates for existing ARO for the following:

•Cholla coal-fired power plant related to the closure of ponds and facilities, which resulted in an increase to the ARO of approximately $71 million, primarily due to changes in the planned pond closure methodology and increased corrective action cost estimates associated with the CCR Rule.

•Four Corners coal-fired power plant, which resulted in a decrease of approximately $7 million.

•Navajo coal-fired plant, a decommissioned coal-fired power plant, which resulted in an increase of approximately $8 million.

•Palo Verde received a new decommissioning study, which resulted in an increase to the ARO in the amount of $63 million, an increase in the plant in service of $59 million and a decrease in the regulatory liability of $4 million.

See additional details in Notes 3 and 10.

The following table shows the change in our asset retirement obligations (dollars in thousands):


	2024		2023
Asset retirement obligations at the beginning of year	$	966,001	$	797,762
Changes attributable to:
Accretion expense	56,143		44,269
Settlements	(18,379)		(14,039)
Estimated cash flow revisions	142,821		135,323
Newly incurred obligation	—		2,686
Asset retirement obligations at the end of year	$	1,146,586	$	966,001

In accordance with regulatory accounting, APS accrues removal costs for its regulated utility assets, even if there is no legal obligation for removal. See Note 3 for detail of regulatory liabilities.