Regulatory Matters (Tables)

6 Months Ended

Jun. 30, 2019

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 2019 and 2018 (dollars in thousands):



	Six Months Ended June 30,
	2019			2018
Beginning balance	$	37,164		$	75,637
Deferred fuel and purchased power costs — current period	16,702			50,112
Amounts charged to customers	(23,307		)	(50,851		)
Ending balance	$	30,559		$	74,898

Schedule of regulatory assets

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



	Amortization Through	June 30, 2019				December 31, 2018
	Amortization Through	Current		Non-Current		Current		Non-Current
Pension	(a)	$	—	$	712,907	$	—	$	733,351
Retired power plant costs	2033	28,182		153,122		28,182		167,164
Income taxes — allowance for funds used during construction ("AFUDC") equity	2049	6,457		152,388		6,457		151,467
Deferred fuel and purchased power — mark-to-market (Note 7)	2023	55,729		21,516		31,728		23,768
Deferred fuel and purchased power (b) (c)	2020	30,559		—		37,164		—
Four Corners cost deferral	2024	8,077		36,190		8,077		40,228
Income taxes — investment tax credit basis adjustment	2047	1,079		25,170		1,079		25,522
Lost fixed cost recovery (b)	2020	25,746		—		32,435		—
Palo Verde VIEs (Note 6)	2046	—		20,325		—		20,015
Deferred compensation	2036	—		37,572		—		36,523
Deferred property taxes	2027	8,569		62,072		8,569		66,356
Loss on reacquired debt	2038	1,637		12,850		1,637		13,668
Tax expense of Medicare subsidy	2024	1,235		5,772		1,235		6,176
TCA balancing account (b)	2021	5,381		3,895		3,860		772
AG-1 deferral	2022	2,787		4,110		2,654		5,819
Mead-Phoenix transmission line CIAC	2050	332		9,878		332		10,044
Coal reclamation	2026	1,546		16,250		1,546		15,607
SCR deferral	N/A	—		37,919		—		23,276
Tax expense adjuster mechanism (b)	2019	3,149		—		—		—
Ocotillo deferral	N/A	—		9,495		—		—
Other	Various	3,994		—		1,947		3,185
Total regulatory assets (d)		$	184,459	$	1,321,431	$	166,902	$	1,342,941


(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.


(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, Transmission Cost Adjustor and Other Transmission Matters."

Schedule of regulatory liabilities

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



	Amortization Through	June 30, 2019				December 31, 2018
	Amortization Through	Current		Non-Current		Current		Non-Current
Excess deferred income taxes - ACC - Tax Cuts and Jobs Act (a)	(b)	$	68,651	$	1,178,216	$	—	$	1,272,709
Excess deferred income taxes - FERC - Tax Cuts and Jobs Act (a)	2058	6,302		241,633		6,302		243,691
Asset retirement obligations	2057	—		359,912		—		278,585
Removal costs	(c)	50,701		153,847		39,866		177,533
Other postretirement benefits	(d)	37,821		105,214		37,864		125,903
Income taxes — deferred investment tax credit	2047	2,164		50,414		2,164		51,120
Income taxes — change in rates	2048	2,764		69,171		2,769		70,069
Spent nuclear fuel	2027	6,578		53,769		6,503		57,002
Renewable energy standard (b)	2021	40,639		4,950		44,966		20
Demand side management (b)	2021	7,191		24,146		14,604		4,123
Sundance maintenance	2030	1,641		15,495		1,278		17,228
Deferred gains on utility property	2022	3,423		5,372		4,423		6,581
Four Corners coal reclamation	2038	1,858		17,540		1,858		17,871
Tax expense adjustor mechanism (b)	2020	1,663		—		3,237		—
Other	Various	461		8,213		42		3,541
Total regulatory liabilities		$	231,857	$	2,287,892	$	165,876	$	2,325,976


(a)	For purposes of presentation on the Statement of Cash Flows, amortization of the regulatory liabilities for excess deferred income taxes are reflected as "Deferred income taxes" under Cash Flows From Operating Activities.


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


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

(d)

See Note 5.