Regulatory Matters (Tables)

3 Months Ended

Mar. 31, 2015

Regulated Operations [Abstract]

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 (liability) for 2015 and 2014 (dollars in millions):

	Three Months Ended   March 31,
	2015			2014
Beginning balance	$	7		$	21
Deferred fuel and purchased power costs — current period	(18		)	(32		)
Amounts charged to customers	(5		)	(8		)
Ending balance	$	(16	)	$	(19	)

Schedule of regulatory assets

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

	Remaining Amortization Period	March 31, 2015				December 31, 2014
		Current		Non-Current		Current		Non-Current
Pension benefits	(a)	$	—	$	479	$	—	$	485
Income taxes — allowance for funds used during construction ("AFUDC") equity	2044	5		117		5		118
Deferred fuel and purchased power — mark-to-market (Note 7)	2018	66		72		51		46
Transmission vegetation management	2016	9		2		9		5
Coal reclamation	2026	—		6		—		7
Palo Verde VIEs (Note 6)	2046	—		30		—		35
Deferred compensation	2036	—		36		—		34
Deferred fuel and purchased power (b) (c)	2015	—		—		7		—
Tax expense of Medicare subsidy	2024	2		14		2		14
Loss on reacquired debt	2034	1		16		1		16
Income taxes — investment tax credit basis adjustment	2044	2		46		2		46
Pension and other postretirement benefits deferral	2015	2		—		4		—
Four Corners cost deferral	2024	7		68		7		70
Lost fixed cost recovery (b)	2016	43		—		38		—
Retired power plant costs	2033	10		134		10		136
Deferred property taxes	(d)	—		36		—		30
Other	Various	1		12		2		12
Total regulatory assets (e)		$	148	$	1,068	$	138	$	1,054

(a) This asset represents the future recovery of pension and other postretirement 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) Subject to a carrying charge.

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

(e) 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 millions):

	Remaining Amortization Period	March 31, 2015				December 31, 2014
		Current		Non-Current		Current		Non-Current
Removal costs	(a)	$	37	$	264	$	31	$	273
Asset retirement obligations	2044	—		302		—		296
Renewable energy standard (b)	2017	25		25		25		23
Income taxes — change in rates	2043	1		71		—		72
Spent nuclear fuel	2047	5		66		5		66
Deferred gains on utility property	2019	2		8		2		8
Income taxes — deferred investment tax credit	2043	3		93		4		93
Deferred fuel and purchased power (b) (c)	2016	16		—		—		—
Demand side management (b)	2017	5		27		31		—
Other postretirement benefits	(d)	32		191		32		199
Other	Various	3		23		1		21
Total regulatory liabilities		$	129	$	1,070	$	131	$	1,051

(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.