Retirement Plans and Other Postretirement Benefits

3 Months Ended

Mar. 31, 2016

Compensation and Retirement Disclosure [Abstract]

Retirement Plans and Other Postretirement Benefits

Retirement Plans and Other Postretirement Benefits

Pinnacle West sponsors a qualified defined benefit and account balance pension plan, a non-qualified supplemental excess benefit retirement plan, and an other postretirement benefit plan for the employees of Pinnacle West and our subsidiaries.  Pinnacle West uses a December 31 measurement date for its pension and other postretirement benefit plans.  The market-related value of our plan assets is their fair value at the measurement dates. On September 30, 2014, Pinnacle West announced plan design changes to the other postretirement benefit plan. Because of the plan changes, the Company is currently in the process of seeking Internal Revenue Service ("IRS") and regulatory approval to move approximately $140 million of the other postretirement benefit trust assets into a new trust account to pay for active union employee medical costs.

Certain pension and other postretirement benefit costs in excess of amounts recovered in electric retail rates were deferred in 2011 and 2012 as a regulatory asset for future recovery, pursuant to APS’s 2009 retail rate case settlement.  Pursuant to this order, we began amortizing the regulatory asset over three years beginning in July 2012.  We completed amortizing these costs as of June 30, 2015. We amortized approximately $2 million for the three months ended March 31, 2015.

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 or amortized to the regulatory asset) (dollars in thousands):

	Pension Benefits						Other Benefits
	Three Months Ended   March 31,						Three Months Ended   March 31,
	2016			2015			2016			2015
Service cost — benefits earned during the period	$	14,266		$	15,824		$	3,937		$	4,346
Interest cost on benefit obligation	32,945			31,189			7,341			7,184
Expected return on plan assets	(43,792		)	(45,149		)	(9,122		)	(9,147		)
Amortization of:
Prior service cost	132			149			(9,471		)	(9,492		)
Net actuarial loss	9,731			7,761			946			1,561
Net periodic benefit cost	$	13,282		$	9,774		$	(6,369	)	$	(5,548	)
Portion of cost charged to expense	$	6,519		$	5,987		$	(3,126	)	$	(1,788	)

Contributions

We made voluntary contributions of $60 million to our pension plan year-to-date in 2016. The minimum required contributions for the pension plan are zero for the next three years. We expect to make voluntary contributions up to a total of $300 million during the 2016-2018 period. We expect to make contributions of approximately $1 million in each of the next three years to our other postretirement benefit plans.