Retirement Plans and Other Benefits (Tables)

12 Months Ended

Dec. 31, 2013

Schedule of net periodic benefit costs and the portion of these costs charged to expense (including administrative costs and excluding amounts capitalized as overhead construction, billed to electric plant participants or charged or amortized to the regulatory asset)

The following table provides details of the plans’ net periodic benefit costs and the portion of these costs charged to expense (including administrative costs and excluding amounts capitalized as overhead construction, billed to electric plant participants or charged to the regulatory asset) (dollars in thousands):

	Pension									Other Benefits
	2013			2012			2011			2013			2012			2011
Service cost-benefits earned during the period	$	64,195		$	63,502		$	57,605		$	23,597		$	27,163		$	21,856
Interest cost on benefit obligation	112,392			119,586			124,727			41,536			46,467			46,807
Expected return on plan assets	(146,333		)	(140,979		)	(133,678		)	(45,717		)	(45,793		)	(41,536		)
Amortization of:
Transition obligation	—			—			—			—			452			452
Prior service cost (credit)	1,097			1,143			1,400			(179		)	(179		)	(179		)
Net actuarial loss	39,852			44,250			25,956			11,310			20,233			15,015
Net periodic benefit cost	$	71,203		$	87,502		$	76,010		$	30,547		$	48,343		$	42,415
Portion of cost charged to expense	$	38,968		$	36,333		$	29,312		$	18,469		$	19,321		$	15,208

Schedule of changes in the benefit obligations and funded status

The following table shows the plans’ changes in the benefit obligations and funded status for the years 2013 and 2012 (dollars in thousands):

	Pension						Other Benefits
	2013			2012			2013			2012
Change in Benefit Obligation
Benefit obligation at January 1	$	2,850,846		$	2,699,126		$	990,418		$	1,047,094
Service cost	64,195			63,502			23,597			27,163
Interest cost	112,392			119,586			41,536			46,467
Benefit payments	(125,269		)	(113,632		)	(26,675		)	(26,279		)
Actuarial (gain) loss	(255,634		)	82,264			(138,458		)	(104,027		)
Benefit obligation at December 31	2,646,530			2,850,846			890,418			990,418

Change in Plan Assets
Fair value of plan assets at January 1	2,079,181			1,850,550			684,221			608,663
Actual return on plan assets	150,546			259,363			76,995			83,567
Employer contributions	140,500			65,000			14,438			22,707
Benefit payments	(106,106		)	(95,732		)	(27,315		)	(30,716		)
Fair value of plan assets at December 31	2,264,121			2,079,181			748,339			684,221
Funded Status at December 31	$	(382,409	)	$	(771,665	)	$	(142,079	)	$	(306,197	)

Schedule of projected benefit obligation and the accumulated benefit obligation for pension plans with an accumulated obligation in excess of plan assets

The following table shows the projected benefit obligation and the accumulated benefit obligation for pension plans with an accumulated obligation in excess of plan assets as of December 31, 2013 and 2012 (dollars in thousands):

	2013		2012
Projected benefit obligation	$	2,646,530	$	2,850,846
Accumulated benefit obligation	2,469,889		2,646,306
Fair value of plan assets	2,264,121		2,079,181

Schedule of amounts recognized on the Consolidated Balance Sheets

The following table shows the amounts recognized on the Consolidated Balance Sheets as of December 31, 2013 and 2012 (dollars in thousands):

	Pension						Other Benefits
	2013			2012			2013			2012
Current liability	$	(10,860	)	$	(19,107	)	$	—		$	—
Noncurrent liability	(371,549		)	(752,558		)	(142,079		)	(306,197		)
Net amount recognized	$	(382,409	)	$	(771,665	)	$	(142,079	)	$	(306,197	)

Schedule of accumulated other comprehensive loss

The following table shows the details related to accumulated other comprehensive loss as of December 31, 2013 and 2012 (dollars in thousands):

	Pension						Other Benefits
	2013			2012			2013			2012
Net actuarial loss	$	344,540		$	644,239		$	57,816		$	238,862
Prior service cost (credit)	2,072			3,169			(296		)	(475		)
APS’s portion recorded as a regulatory asset	(265,107		)	(550,471		)	(49,298		)	(230,020		)
Income tax benefit	(32,204		)	(38,303		)	(2,528		)	(2,585		)
Accumulated other comprehensive loss	$	49,301		$	58,634		$	5,694		$	5,782

Schedule of estimated amounts that will be amortized from accumulated other comprehensive loss and regulatory assets into net periodic benefit cost

The following table shows the estimated amounts that will be amortized from accumulated other comprehensive loss and regulatory assets into net periodic benefit cost in 2014 (dollars in thousands):

	Pension		Other Benefits
Net actuarial loss	$	8,363	$	—
Prior service cost (credit)	874		(179		)
Total amounts estimated to be amortized from accumulated other comprehensive loss and regulatory assets in 2014	$	9,237	$	(179	)

Schedule of weighted-average assumptions used for both the pension and other benefits to determine benefit obligations and net periodic benefit costs

The following table shows the weighted-average assumptions used for both the pension and other benefits to determine benefit obligations and net periodic benefit costs:

	Benefit Obligations As of December 31,				Benefit Costs For the Years Ended December 31,
	2013		2012		2013		2012		2011
Discount rate – pension	4.88	%	4.01	%	4.01	%	4.42	%	5.31	%
Discount rate – other benefits	5.10	%	4.20	%	4.20	%	4.59	%	5.49	%
Rate of compensation increase	4.00	%	4.00	%	4.00	%	4.00	%	4.00	%
Expected long-term return on plan assets	N/A		N/A		7.00	%	7.75	%	7.75	%
Initial healthcare cost trend rate	7.50	%	7.50	%	7.50	%	7.50	%	8.00	%
Ultimate healthcare cost trend rate	5.00	%	5.00	%	5.00	%	5.00	%	5.00	%
Number of years to ultimate trend rate	4		4		4		4		4

Schedule of effects of one percentage point change in the assumed initial and ultimate health care cost trend rates

A one percentage point change in the assumed initial and ultimate healthcare cost trend rates would have the following effects (dollars in millions):

	1% Increase		1% Decrease
Effect on other postretirement benefits expense, after consideration of amounts capitalized or billed to electric plant participants	$	13	$	(10	)
Effect on service and interest cost components of net periodic other postretirement benefit costs	14		(11		)
Effect on the accumulated other postretirement benefit obligation	149		(120		)

Schedule of fair value of pension plan and other postretirement benefit plan assets, by asset category

The fair value of Pinnacle West’s pension plan and other postretirement benefit plan assets at December 31, 2013, by asset category, are as follows (dollars in thousands):

	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Other (c)		Balance at December 31, 2013
Pension Plan:
Assets:
Cash and cash equivalents	$	504	$	—	$	—		$	—	$	504
Fixed Income Securities:
Corporate	—		898,621		—			—		898,621
U.S. Treasury	231,590		—		—			—		231,590
Other (b)	—		84,011		—			—		84,011
Equities:
U.S. Companies	239,036		—		—			—		239,036
International Companies	19,429		—		—			—		19,429
Common and collective trusts:
U.S. Equities	—		116,150		—			—		116,150
International Equities	—		367,551		—			—		367,551
Fixed Income			137,520							137,520
Real estate	—		119,739		—			—		119,739
Short-term investments and other	—		41,060		8,660		(a)	250		49,970

Total Pension Plan	$	490,559	$	1,764,652	$	8,660		$	250	$	2,264,121
Other Benefits:
Assets:
Fixed Income Securities:
Corporate	$	—	$	153,888	$	—		$	—	$	153,888
U.S. Treasury	98,704		—		—			—		98,704
Other (b)	—		27,936		—			—		27,936
Equities:
U.S. Companies	252,181		—		—			—		252,181
International Companies	20,892		—		—			—		20,892
Common and collective trusts:
U.S. Equities	—		80,751		—			—		80,751
International Equities	—		92,382		—			—		92,382
Real Estate	—		10,761		—			—		10,761
Short-term investments and other	—		8,414		—			2,430		10,844

Total Other Benefits	$	371,777	$	374,132	$	—		$	2,430	$	748,339

(a) Represents investments in a partnership that invests in privately held portfolio companies.

(b) This category consists primarily of debt securities issued by municipalities.

The fair value of Pinnacle West’s pension plan and other postretirement benefit plan assets at December 31, 2012, by asset category, are as follows (dollars in thousands):

	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Other (c)			Balance at December 31, 2012
Pension Plan:
Assets:
Cash and cash equivalents	$	579	$	—	$	—		$	—		$	579
Fixed Income Securities:
Corporate	—		607,749		—			—			607,749
U.S. Treasury	232,161		—		—			—			232,161
Other (b)	—		67,992		—			—			67,992
Equities:
U.S. Companies	531,291		—		—			—			531,291
International Companies	43,848		—		—			—			43,848
Common and collective trusts:
U.S. Equities	—		176,694		—			—			176,694
International Equities	—		271,735		—			—			271,735
Real estate	—		117,854		—			—			117,854
Short-term investments and other	—		26,922		2,419		(a)	(63		)	29,278

Total Pension Plan	$	807,879	$	1,268,946	$	2,419		$	(63	)	$	2,079,181
Other Benefits:
Assets:
Cash and cash equivalents	$	60	$	—	$	—		$	—		$	60
Fixed Income Securities:
Corporate	—		163,306		—			—			163,306
U.S. Treasury	112,558		—		—			—			112,558
Other (b)	—		33,998		—			—			33,998
Equities:
U.S. Companies	205,714		—		—			—			205,714
International Companies	14,412		—		—			—			14,412
Common and collective trusts:
U.S. Equities	—		60,038		—			—			60,038
International Equities	—		76,969		—			—			76,969
Real Estate	—		9,378		—			—			9,378
Short-term investments and other	402		6,340		—			1,046			7,788

Total Other Benefits	$	333,146	$	350,029	$	—		$	1,046		$	684,221

(a) Represents investments in a partnership that invests in privately held portfolio companies.

(b) This category consists primarily of debt securities issued by municipalities.

Schedule of changes in fair value for assets that are measured at fair value on a recurring basis using significant unobservable inputs (Level 3)

The following table shows the changes in fair value for assets that are measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the year ended December 31, 2013 and 2012 (dollars in thousands):

	Pension
Short-Term Investments and Other	2013			2012
Beginning balance at January 1	$	2,419		$	—
Actual return on assets still held at December 31	(498		)	(668		)
Purchases, sales, and settlements	6,739			3,087
Transfers in and/or out of Level 3	—			—
Ending balance at December 31	$	8,660		$	2,419

Schedule of estimated future benefit payments, which reflect estimated future employee service, for the next five years and the succeeding five years thereafter

Benefit payments, which reflect estimated future employee service, for the next five years and the succeeding five years thereafter, are estimated to be as follows (dollars in thousands):

Year	Pension		Other Benefits
2014	$	129,159	$	28,664
2015	143,452		31,804
2016	149,105		34,933
2017	162,678		37,966
2018	169,064		40,972
Years 2019-2023	972,826		245,366