Regulatory Matters (Tables)

12 Months Ended

Dec. 31, 2013

Regulatory Matters

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 2013 and 2012 (dollars in millions):

	Twelve Months Ended December 31,
	2013			2012
Beginning balance	$	73		$	28
Deferred fuel and purchased power costs - current period	(21		)	(72		)
Amounts (charged) credited to customers	(31		)	117
Ending balance	$	21		$	73

Schedule of regulatory assets

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

	Remaining Amortization		December 31, 2013				December 31, 2012
	Period		Current		Non-Current		Current		Non-Current
Pension and other postretirement benefits	(a	)	$	—	$	314	$	—	$	780
Income taxes — AFUDC equity	2043		4		105		4		92
Deferred fuel and purchased power — mark-to-market (Note 17)	2016		5		29		19		21
Transmission vegetation management	2016		9		14		9		23
Coal reclamation	2038		8		18		8		24
Palo Verde VIEs (Note 19)	2046		—		41		—		38
Deferred compensation	2036		—		34		—		34
Deferred fuel and purchased power (b) (c)	2014		21		—		73		—
Tax expense of Medicare subsidy	2023		2		15		2		17
Loss on reacquired debt	2034		1		17		2		18
Income taxes — investment tax credit basis adjustment	2043		1		39		1		26
Pension and other postretirement benefits deferral	2015		8		4		8		13
Four Corners cost deferral	2024		—		37		—		—
Lost fixed cost recovery	2014		25		—		7		—
Transmission cost adjustor	2015		8		2		10		—
Retired power plant costs	2020		3		18		—		—
Other	Various		2		25		1		14
Total regulatory assets (d)			$	97	$	712	$	144	$	1,100

(a) This asset represents the future recovery of under-funded pension and other postretirement benefit obligations 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.  See Note 8 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 and Transmission Cost Adjustor.”

Schedule of regulatory liabilities

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

	Remaining Amortization		December 31, 2013				December 31, 2012
	Period		Current		Non-Current		Current		Non-Current
Removal costs	(a	)	$	28	$	303	$	27	$	321
Asset retirement obligations	(a	)	—		266		—		256
Renewable energy standard (b)	2015		33		15		43		—
Income taxes — change in rates	2043		—		74		—		66
Spent nuclear fuel	2047		6		36		10		36
Deferred gains on utility property	2019		2		10		2		12
Income taxes — deferred investment tax credit	2043		3		79		2		52
Demand side management (b)	2014		27		—		4		—
Other	Various		—		18		—		16
Total regulatory liabilities			$	99	$	801	$	88	$	759

(a) In accordance with regulatory accounting guidance, APS accrues for removal costs for its regulated assets, even if there is no legal obligation for removal (see Note 12).

(b) See “Cost Recovery Mechanisms” discussion above.