Regulatory Matters (Tables)

6 Months Ended

Jun. 30, 2016

the following proposed capital structure and costs of capital:



	Capital Structure		Cost of Capital
Long-term debt	44.2	%	5.13	%
Common stock equity	55.8	%	10.50	%
Weighted-average cost of capital			8.13	%

The following table shows the changes in the deferred fuel and purchased power regulatory asset (liability) for 2016 and 2015 (dollars in thousands):



	Six Months Ended June 30,
	2016			2015
Beginning balance	$	(9,688	)	$	6,925
Deferred fuel and purchased power costs — current period	21,027			(11,710		)
Amounts charged to customers	(13,778		)	(11,424		)
Ending balance	$	(2,439	)	$	(16,209	)

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



	Amortization Through	June 30, 2016				December 31, 2015
	Amortization Through	Current		Non-Current		Current		Non-Current
Pension	(a)	$	—	$	617,283	$	—	$	619,223
Retired power plant costs	2033	9,913		122,554		9,913		127,518
Income taxes — allowance for funds used during construction ("AFUDC") equity	2046	5,419		137,611		5,495		133,712
Deferred fuel and purchased power — mark-to-market (Note 6)	2019	30,986		40,573		71,852		69,697
Four Corners cost deferral	2024	6,689		60,238		6,689		63,582
Income taxes — investment tax credit basis adjustment	2045	1,851		47,826		1,766		48,462
Lost fixed cost recovery (b)	2017	49,852		—		45,507		—
Palo Verde VIEs (Note 5)	2046	—		18,465		—		18,143
Deferred compensation	2036	—		35,701		—		34,751
Deferred property taxes	(c)	—		62,726		—		50,453
Loss on reacquired debt	2034	1,592		16,919		1,515		16,375
Tax expense of Medicare subsidy	2024	1,512		11,647		1,520		12,163
Transmission vegetation management	2016	—		—		4,543		—
Mead-Phoenix transmission line CIAC	2050	332		10,874		332		11,040
Transmission cost adjustor (b)	2018	—		2,814		—		2,942
Coal reclamation	2026	418		5,391		418		6,085
Other	Various	32		—		5		—
Total regulatory assets (d)		$	108,596	$	1,190,622	$	149,555	$	1,214,146


(a)	This asset represents the future recovery of pension benefit obligations through retail rates. If these costs are disallowed by the ACC, this regulatory asset would be charged to Other Comprehensive Income ("OCI") and result in lower future revenues. See Note 4 for further discussion.


(b)	See "Cost Recovery Mechanisms" discussion above.


(c)	Per the provision of the 2012 Settlement Agreement.


(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, Transmission Cost Adjustor and Other Transmission Matters."

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



	Amortization Through	June 30, 2016				December 31, 2015
	Amortization Through	Current		Non-Current		Current		Non-Current
Asset retirement obligations	2057	$	—	$	299,713	$	—	$	277,554
Removal costs	(a)	26,373		245,777		39,746		240,367
Other postretirement benefits	(d)	33,294		155,279		34,100		179,521
Income taxes — deferred investment tax credit	2045	3,774		95,877		3,604		97,175
Income taxes — change in rates	2046	1,771		71,257		1,113		72,454
Spent nuclear fuel	2047	31		71,342		3,051		67,437
Renewable energy standard (b)	2017	35,882		2,182		43,773		4,365
Demand side management (b)	2017	4,957		21,864		6,079		19,115
Sundance maintenance	2030	—		14,483		—		13,678
Deferred fuel and purchased power (b) (c)	2017	2,439		—		9,688		—
Deferred gains on utility property	2019	2,062		9,535		2,062		6,001
Transmission cost adjustor (b)	2017	5,545		—		—		—
Four Corners coal reclamation	2031	—		15,969		—		8,920
Other	Various	44		7,543		2,550		7,565
Total regulatory liabilities		$	116,172	$	1,010,821	$	145,766	$	994,152


(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.


(b)	See "Cost Recovery Mechanisms" discussion above.


(c)	Subject to a carrying charge.


(d)	See Note 4.