Asset Retirement Obligations

9 Months Ended

Sep. 30, 2025

Asset Retirement Obligation Disclosure [Abstract]

During the nine months ended September 30, 2025, the Company revised its cost estimates for existing asset retirement obligations (“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 $48 million, primarily due to increased cost estimates associated with the CCR Rule.

•Four Corners coal-fired power plant, which resulted in a decrease of approximately $5 million.

•Navajo, a decommissioned coal-fired power plant, which resulted in a decrease of approximately $4 million.

APS has also recorded the initial investigation and assessment costs related to the newly signed EPA rule for legacy CCR surface 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 ARO. 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.

See additional details in Notes 6 and 10.

The following table shows the change in our ARO’s for the nine months ended September 30, 2025 (dollars in thousands):


	2025
Asset retirement obligations at January 1, 2025	$	1,146,586
Changes attributable to:
Accretion expense	48,051
Settlements	(14,779)
Estimated cash flow revisions	38,921

Asset retirement obligations at September 30, 2025	$	1,218,779

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 6 for detail of regulatory liabilities.