Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2011

Fair Value Measurements

Fair value of assets and liabilities that are measured at fair value on a recurring basis

	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (a) (Level 3)			Counterparty Netting & Other (b)			Balance at June 30, 2011
Assets
Cash Equivalents	$	33	$	—		$	—		$	—		$	33
Risk management activities:
Commodity contracts	—		60			63			(41		)	82
Nuclear decommissioning trust:
Equity securities:
U.S. commingled funds	—		178			—			—			178
Fixed income securities:
U.S. Treasury	82		—			—			—			82
Cash and cash equivalent funds (c)	—		14			—			—			14
Corporate	—		58			—			—			58
Mortgage-backed	—		84			—			—			84
Municipality	—		71			—			—			71
Other	—		18			—			(7		)	11
Total	$	115	$	483		$	63		$	(48	)	$	613
Liabilities
Risk management activities:
Commodity contracts	$	—	$	(214	)	$	(110	)	$	208		$	(116	)

(a) Primarily consists of heat rate options and long-dated electricity contracts.

(b) Risk management activities represent netting under master netting agreements, including margin and collateral (see Note 8).  Nuclear decommissioning trust represents net pending securities sales and purchases.

(c) These cash equivalents are held in a commingled short-term investment fund that invests in short-term, highly liquid, fixed income instruments.

	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (a) (Level 3)			Counterparty Netting & Other (b)			Balance at December 31, 2010
Assets
Cash equivalents	$	35		$	—		$	—		$	—		$	35
Risk management activities:
Commodity contracts	—			80			61			(28		)	113
Nuclear decommissioning trust:
Equity securities:
U.S. commingled funds	—			168			—			—			168
Fixed income securities:
U.S. Treasury	50			—			—			—			50
Cash and cash equivalent funds (c)	—			22			—			—			22
Corporate	—			60			—			—			60
Mortgage-backed	—			81			—			—			81
Municipality	—			79			—			—			79
Other	—			20			—			(10		)	10
Total	$	85		$	510		$	61		$	(38	)	$	618
Liabilities
Risk management activities:
Commodity contracts	$	(1	)	$	(280	)	$	(99	)	$	256		$	(124	)

(a) Primarily consists of heat rate options and long-dated electricity contracts.

(b) Risk management activities represent netting under master netting arrangements, including margin and collateral.  See Note 8.  Nuclear decommissioning trust represents net pending securities sales and purchases.

(c) These cash equivalents are held in a commingled short-term investment fund that invests in short-term, highly liquid, fixed income instruments.

Changes in fair value for assets and liabilities that are measured at fair value on a recurring basis using Level 3 inputs

	Three Months Ended June 30,						Six Months Ended June 30,
Commodity Contracts	2011			2010			2011			2010
Net derivative balance at beginning of period	$	(48	)	$	(31	)	$	(38	)	$	(10	)
Total net gains (losses) realized/unrealized:
Included in earnings	—			(1		)	1			(2		)
Included in OCI	(3		)	(3		)	(1		)	(9		)
Deferred as a regulatory asset or liability	1			(12		)	(6		)	(24		)
Settlements	4			3			4			3
Transfers into Level 3 from Level 2	1			8			(4		)	8
Transfers from Level 3 into Level 2	(2		)	(6		)	(3		)	(8		)
Net derivative balance at end of period	$	(47	)	$	(42	)	$	(47	)	$	(42	)
Net unrealized gains (losses) included in earnings related to instruments still held at end of period	$	—		$	—		$	1		$	(1	)

Carrying amount and estimated fair value of long-term debt, including current maturities

	As of June 30, 2011				As of December 31, 2010
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Pinnacle West	$	175	$	175	$	175	$	176
APS	3,490		3,782		3,503		3,737
Total	$	3,665	$	3,957	$	3,678	$	3,913

Fair value of APS's nuclear decommissioning trust fund assets

	Fair Value			Total Unrealized Gains		Total Unrealized Losses
June 30, 2011
Equity securities	$	178		$	51	$	(1	)
Fixed income securities	327			15		—
Net payables (a)	(7		)	—		—
Total	$	498		$	66	$	(1	)

(a)Net payables relate to pending securities sales and purchases.

	Fair Value			Total Unrealized Gains		Total Unrealized Losses
December 31, 2010
Equity securities	$	168		$	43	$	(1	)
Fixed income securities	312			12		(2		)
Net payables (a)	(10		)	—		—
Total	$	470		$	55	$	(3	)

(a) Net payables relate to pending securities sales and purchases.

Realized gains and losses and proceeds from the sale of securities by the nuclear decommissioning trust funds

	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
Realized gains	$	2		$	2		$	3		$	14
Realized losses	(1		)	(1		)	(3		)	(3		)
Proceeds from the sale of securities (a)	110			171			300			330

(a)Proceeds are reinvested in the trust.

Fair value of fixed income securities, summarized by contractual maturities

	Fair Value
Less than one year	$	18
1 year - 5 years	71
5 years - 10 years	110
Greater than 10 years	128
Total	$	327