Lines of Credit and Short-Term Borrowings

12 Months Ended

Dec. 31, 2011

Lines of Credit and Short-Term Borrowings

Lines of Credit and Short-Term Borrowings

5.Lines of Credit and Short-Term Borrowings

The table below presents the consolidated credit facilities and the amounts available and outstanding as of December 31, 2011 (dollars in millions):

Credit Facility	Expiration	Amount Committed		Unused Amount		Commitment Fees
Pinnacle West Revolving Credit Facility	November 2016	$	200	$	200	0.275	%
APS Revolving Credit Facility	November 2016	500		500		0.225	%
APS Revolving Credit Facility	February 2015	500		500		0.250	%
Total		$	1,200	$	1,200

Pinnacle West and APS maintain committed revolving credit facilities in order to enhance liquidity and provide credit support for their commercial paper programs.  During the first quarter of 2011, APS refinanced an existing revolving credit facility (as discussed below) that would have otherwise matured in September 2011.   During the fourth quarter of 2011, APS and Pinnacle West refinanced the existing credit facilities (as discussed below) that would have otherwise matured in February 2013.

Pinnacle West

On November 4, 2011, Pinnacle West refinanced its $200 million revolving credit facility that would have matured in February 2013, with a new $200 million facility.  The new revolving credit facility terminates in November 2016.  Interest rates are based on Pinnacle West senior unsecured debt credit ratings.

At December 31, 2011, the Pinnacle West credit facility was available to refinance indebtedness of the Company and for other general corporate purposes, including credit support for its $200 million commercial paper program.  Pinnacle West has the option to increase the amount of the facility up to a maximum of $300 million upon the satisfaction of certain conditions and with the consent of the lenders. At December 31, 2011, Pinnacle West had no outstanding borrowings under its credit facility, no letters of credit and no commercial paper borrowings.

APS

On February 14, 2011, APS refinanced its $489 million revolving credit facility that would have matured in September 2011, and increased the size of the facility to $500 million.  The new revolving credit facility terminates in February 2015.  APS may increase the amount of the facility up to a maximum of $700 million upon the satisfaction of certain conditions and with the consent of the lenders.  APS will use the facility to refinance indebtedness and for other general corporate purposes.  Interest rates are based on APS’s senior unsecured debt credit ratings.

On November 4, 2011, APS refinanced its $500 million revolving credit facility that would have matured in February 2013, with a new $500 million facility.  The new revolving credit facility terminates in November 2016.  APS may increase the amount of the facility up to a maximum of $700 million upon the satisfaction of certain conditions and with the consent of the lenders.  APS will use the facility to refinance indebtedness and for other general corporate purposes.  Interest rates are based on APS’s senior unsecured debt credit ratings.

The facilities described above are available to support its $250 million commercial paper program, for bank borrowings or for issuances of letters of credit.  At December 31, 2011, APS had no borrowings outstanding under any of its credit facilities and no outstanding commercial paper.

See “Financial Assurances” in Note 11 for discussion of APS’s other letters of credit.

The table below presents the consolidated credit facilities and amounts available and outstanding and other short-term borrowings as of December 31, 2010 (dollars in millions):

Credit Facility	Expiration	Amount Committed		Letters of Credit Used		Short-Term Borrowings		Unused Amount		Weighted Average Interest Rate		Commitment Fees
Pinnacle West Revolving Credit Facility	February 2013	$	200	$	—	$	—	$	183	—		0.625	%
Pinnacle West Commercial Paper	January 2011	—		—		17		—		0.840	%	—
APS Revolving Credit Facility	February  2013	500		—		—		500		—		0.500	%
APS Revolving Credit Facility	September 2011	489		20		—		469		—		0.100	%
Total		$	1,189	$	20	$	17	$	1,152

Pinnacle West

On February 12, 2010, Pinnacle West refinanced its $283 million revolving credit facility that would have matured in December 2010, and decreased the size of the facility to $200 million.  This facility was refinanced on November 4, 2011.

APS

On February 12, 2010, APS refinanced its $377 million credit facility that would have matured in December 2010, and increased the size of the facility to $500 million.  This facility was refinanced on November 4, 2011.

Debt Provisions

Although provisions in APS’s articles of incorporation and ACC financing orders establish maximum amounts of preferred stock and debt that APS may issue, APS does not expect any of these provisions to limit its ability to meet its capital requirements. On October 30, 2007, the ACC issued a financing order in which it approved APS’s request, subject to specified parameters and procedures, to increase (a) APS’s short-term debt authorization from 7% of APS’s capitalization to (i) 7% of APS’s capitalization plus (ii) $500 million (which is required to be used for purchases of natural gas and power) and (b) APS’s long-term debt authorization from approximately $3.2 billion to $4.2 billion in light of the projected growth of APS and its customer base and the resulting projected financing needs. This financing order expires December 31, 2012; however, all debt previously authorized and outstanding on December 31, 2012 will remain authorized and valid obligations of APS.

On November 22, 2011, APS filed a financing application with the ACC requesting an increase in APS’s long-term debt authorization (approximately $4.2 billion) to approximately $5.5 billion in light of the projected financing needed to fund APS’s capital expenditure and maintenance program and other cash requirements.  In addition, APS requested authorization to (i) allow for other types of securities providing long-term capital financing, including preferred stock, trust preferred securities or other forms of hybrid securities, and (ii) manage interest rate risks and exposure associated with any long-term or short-term indebtedness authorized by the ACC.