Regulatory Matters (Tables)

12 Months Ended

Dec. 31, 2020

Schedule Of Capital Structure and Cost Of Capital

the following proposed capital structure and costs of capital:


	Capital Structure		Cost of Capital
Long-term debt	45.3	%	4.10	%
Common stock equity	54.7	%	10.15	%
Weighted-average cost of capital			7.41	%

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 2020 and 2019 (dollars in thousands):


	Twelve Months Ended December 31,
	2020		2019
Beginning balance	$	70,137	$	37,164
Deferred fuel and purchased power costs — current period	93,651		82,481
Amounts refunded/(charged) to customers	12,047		(49,508)
Ending balance	$	175,835	$	70,137

Schedule of regulatory assets

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


S		December 31, 2020				December 31, 2019
	Amortization Through	Current		Non-Current		Current		Non-Current
Pension	(a)	$	—	$	469,953	$	—	$	660,223
Deferred fuel and purchased power (b) (c)	2021	175,835		—		70,137		—
Income taxes — AFUDC equity	2050	7,169		158,776		6,800		154,974
Retired power plant costs	2033	28,181		114,214		28,182		142,503
Ocotillo deferral	N/A	—		95,723		—		38,144
SCR deferral	N/A	—		81,307		—		52,644
Deferred property taxes	2027	8,569		49,626		8,569		58,196
Lost fixed cost recovery (b)	2021	41,807		—		26,067		—
Deferred compensation	2036	—		36,195		—		36,464
Four Corners cost deferral	2024	8,077		24,075		8,077		32,152
Income taxes — investment tax credit basis adjustment	2049	1,113		24,291		1,098		24,981
Palo Verde VIEs (Note 18)	2046	—		21,255		—		20,635
Coal reclamation	2026	1,068		16,999		1,546		17,688
Deferred fuel and purchased power — mark-to-market (Note 16)	2024	3,341		9,244		36,887		33,185
Loss on reacquired debt	2038	1,689		10,877		1,637		12,031
Mead-Phoenix transmission line — contributions in aid of construction	2050	332		9,380		332		9,712
Demand side management (b)	2022	—		7,268		—		—
Tax expense adjustor mechanism (b)	2021	6,226		—		1,612		—
Tax expense of Medicare subsidy	2024	1,235		3,704		1,235		4,940
PSA interest	2021	4,355		—		1,917		—
TCA balancing account (b)	2021	—		—		6,324		2,885
Other	Various	2,716		1,100		2,787		2,716
Total regulatory assets (d)		$	291,713	$	1,133,987	$	203,207	$	1,304,073

(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 OCI and result in lower future revenues. (See Note 8 for further discussion.)

(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):


		December 31, 2020				December 31, 2019
	Amortization Through	Current		Non-Current		Current		Non-Current
Excess deferred income taxes - ACC — Tax Cuts and Jobs Act (a)	2046	$	41,330	$	1,012,583	$	59,918	$	1,054,053
Excess deferred income taxes - FERC — Tax Cuts and Jobs Act (a)	2058	7,240		229,147		6,302		237,357
Asset retirement obligations	2057	—		506,049		—		418,423
Other postretirement benefits	(d)	37,705		349,588		37,575		139,634
Removal costs	(c)	52,844		103,008		47,356		136,072
Income taxes — change in rates	2050	2,839		66,553		2,797		68,265
Four Corners coal reclamation	2038	5,460		49,435		1,059		51,704
Spent nuclear fuel	2027	6,768		44,221		6,676		51,019
Income taxes — deferred investment tax credit	2049	2,231		48,648		2,202		50,034
Renewable energy standard (b)	2021	39,442		103		39,287		10,300
Sundance maintenance	2031	2,989		11,508		5,698		11,319
Property tax deferral	N/A	—		13,856		—		7,046
Demand side management (b)	2021	10,819		—		15,024		24,146
FERC transmission true up	2022	6,598		3,008		1,045		2,004
TCA balancing account (b)	2022	2,902		4,672		—		—
Tax expense adjustor mechanism (b) (e)	2021	7,089		—		7,018		—
Active union medical trust	N/A	—		6,057		—		2,041
Deferred gains on utility property	2022	2,423		1,544		2,423		4,163
Other	Various	409		189		532		255
Total regulatory liabilities		$	229,088	$	2,450,169	$	234,912	$	2,267,835

(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, APS accrues removal costs for its regulated assets, even if there is no legal obligation for removal.

(d)See Note 8.

(e)Pursuant to Decision 77852, the ACC has authorized APS to return to customers up to $7 million of liability recorded to the TEAM balancing account through December 31, 2021. Should new base rates become effective prior to December 31, 2021, any remaining unreturned balance is anticipated to be included in the new base rates.