Regulatory Matters (Tables)

12 Months Ended

Dec. 31, 2018

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 2018 and 2017 (dollars in thousands):



	Twelve Months Ended December 31,
	2018			2017
Beginning balance	$	75,637		$	12,465
Deferred fuel and purchased power costs — current period	78,277			48,405
Amounts refunded/(charged) to customers	(116,750		)	14,767
Ending balance	$	37,164		$	75,637

Schedule of regulatory assets

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



S		December 31, 2018				December 31, 2017
	Amortization Through	Current		Non-Current		Current		Non-Current
Pension	(a)	$	—	$	733,351	$	—	$	576,188
Retired power plant costs	2033	28,182		167,164		27,402		188,843
Income taxes - AFUDC equity	2048	6,457		151,467		3,828		142,852
Deferred fuel and purchased power — mark-to-market (Note 16)	2023	31,728		23,768		52,100		34,845
Deferred fuel and purchased power (b) (c)	2019	37,164		—		75,637		—
Four Corners cost deferral	2024	8,077		40,228		8,077		48,305
Income taxes — investment tax credit basis adjustment	2047	1,079		25,522		1,066		26,218
Lost fixed cost recovery (b)	2019	32,435		—		59,844		—
Palo Verde VIEs (Note 18)	2046	—		20,015		—		19,395
Deferred compensation	2036	—		36,523		—		36,413
Deferred property taxes	2027	8,569		66,356		8,569		74,926
Loss on reacquired debt	2038	1,637		13,668		1,637		15,305
Tax expense of Medicare subsidy	2024	1,235		6,176		1,236		7,415
TCA balancing account (b)	2020	3,860		772		1,220		—
AG-1 deferral	2022	2,654		5,819		2,654		8,472
Mead-Phoenix transmission line CIAC	2050	332		10,044		332		10,376
Coal reclamation	2026	1,546		15,607		1,068		12,396
SCR deferral	N/A	—		23,276		—		353
Other	Various	1,947		3,185		3,418		—
Total regulatory assets (d)		$	166,902	$	1,342,941	$	248,088	$	1,202,302


(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 7 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, 2018				December 31, 2017
	Amortization Through	Current		Non-Current		Current		Non-Current
Excess deferred income taxes - ACC - Tax Cuts and Jobs Act	(a)	$	—	$	1,272,709	$	—	$	1,266,104
Excess deferred income taxes - FERC - Tax Cuts and Jobs Act	2058	6,302		243,691		—		254,170
Asset retirement obligations	2057	—		278,585		—		332,171
Removal costs	(b)	39,866		177,533		18,238		209,191
Other post retirement benefits	(c)	37,864		125,903		37,642		151,985
Income taxes - deferred investment tax credit	2047	2,164		51,120		2,164		52,497
Income taxes - change in rates	2048	2,769		70,069		2,573		70,537
Spent nuclear fuel	2027	6,503		57,002		6,924		62,132
Renewable energy standard (d)	2020	44,966		20		23,155		—
Demand side management (d)	2020	14,604		4,123		3,066		4,921
Sundance maintenance	2030	1,278		17,228		—		16,897
Deferred gains on utility property	2022	4,423		6,581		4,423		10,988
Four Corners coal reclamation	2038	1,858		17,871		1,858		18,921
Tax expense adjustor mechanism (d)	2019	3,237		—		—		—
Other	Various	42		3,541		43		2,022
Total regulatory liabilities		$	165,876	$	2,325,976	$	100,086	$	2,452,536

(a)

While the majority of the excess deferred tax balance shown is subject to special amortization rules under federal income tax laws, which require amortization of the balance over the remaining regulatory life of the related property, treatment of a portion of the liability, and the month in which pass-through of the excess deferred tax balance will begin is subject to regulatory approval. This approval will be sought through the Company's TEAM adjustor mechanism. As a result, the Company cannot estimate the amount of this regulatory liability which is expected to reverse within the next 12 months. See Note 4.


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


(c)	See Note 7.


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