Revenue

3 Months Ended

Mar. 31, 2019

Revenue from Contract with Customer [Abstract]

Sources of Revenue

We derive our revenues from contracts with customers primarily from sales of electricity to our regulated retail customers. Our retail electric services and tariff rates are regulated by the ACC. Revenues from wholesale energy sales and transmission services for others represent energy and transmission sales to wholesale customers. Our wholesale activities and tariff rates are regulated by the United States Federal Energy Regulatory Commission ("FERC").

The following table provides detail of Pinnacle West's consolidated revenue disaggregated by revenue sources (dollars in thousands):



	Three Months Ended March 31,
	2019		2018
Retail residential electric service	$	351,566	$	316,675
Retail non-residential electric service	332,668		343,189
Wholesale energy sales	36,452		12,089
Transmission services for others	15,249		14,845
Other sources	4,595		5,916
Total operating revenues	$	740,530	$	692,714

Revenue Activities

Our revenues are primarily derived from activities that are classified as revenues from contracts with customers. This includes sales of electricity to our regulated retail customers and wholesale and transmission activities. Our revenues from contracts with customers for the three months ended March 31, 2019 and 2018 were $721 million and $683 million, respectively.

We have certain revenues that do not meet the specific accounting criteria to be classified as revenues from contracts with customers. For the three months ended March 31, 2019 and 2018, our revenues that do not qualify as revenue from contracts with customers were $20 million and $10 million, respectively. This relates primarily to certain regulatory cost recovery mechanisms that are considered alternative revenue programs. We recognize revenue associated with alternative revenue programs when specific events permitting recognition are completed. Certain amounts associated with alternative revenue programs will subsequently be billed to customers; however, we do not reclassify billed amounts into revenue from contracts with customers. See Note 4 for a discussion of our regulatory cost recovery mechanisms.

Contract Assets and Liabilities from Contracts with Customers

There were no material contract assets, contract liabilities, or deferred contract costs recorded on the Condensed Consolidated Balance Sheets as of March 31, 2019 or December 31, 2018.