Retirement Plans and Other Benefits (Tables)

12 Months Ended

Dec. 31, 2018

Retirement Benefits [Abstract]

Schedule of net periodic benefit costs and the portion of these costs charged to expense (including administrative costs and excluding amounts capitalized as overhead construction, billed to electric plant participants or charged or amortized to the regulatory asset)

The following table provides details of the plans’ net periodic benefit costs and the portion of these costs charged to expense (including administrative costs and excluding amounts capitalized as overhead construction or billed to electric plant participants) (dollars in thousands):

	Pension									Other Benefits
	2018			2017			2016			2018			2017			2016
Service cost-benefits earned during the period	$	56,669		$	54,858		$	53,792		$	21,100		$	17,119		$	14,993
Interest cost on benefit obligation	124,689			129,756			131,647			28,147			29,959			29,721
Expected return on plan assets	(182,853		)	(174,271		)	(173,906		)	(42,082		)	(53,401		)	(36,495		)
Amortization of:
Prior service cost (credit)	—			81			527			(37,842		)	(37,842		)	(37,883		)
Net actuarial loss	32,082			47,900			40,717			—			5,118			4,589
Net periodic benefit cost (benefit)	$	30,587		$	58,324		$	52,777		$	(30,677	)	$	(39,047	)	$	(25,075	)
Portion of cost charged to expense	$	10,120		$	27,295		$	26,172		$	(21,426	)	$	(18,274	)	$	(12,435	)

Schedule of changes in the benefit obligations and funded status

The following table shows the plans’ changes in the benefit obligations and funded status for the years 2018 and 2017 (dollars in thousands):

	Pension						Other Benefits
	2018			2017			2018			2017
Change in Benefit Obligation
Benefit obligation at January 1	$	3,394,186		$	3,204,462		$	753,393		$	716,445
Service cost	56,669			54,858			21,100			17,119
Interest cost	124,689			129,756			28,147			29,959
Benefit payments	(184,161		)	(166,342		)	(31,540		)	(30,144		)
Actuarial (gain) loss	(200,757		)	171,452			(94,329		)	20,014
Benefit obligation at December 31	3,190,626			3,394,186			676,771			753,393
Change in Plan Assets
Fair value of plan assets at January 1	3,057,027			2,675,357			1,022,371			882,651
Actual return on plan assets	(201,078		)	428,374			(40,354		)	139,367
Employer contributions	50,000			100,000			—			353
Benefit payments	(172,473		)	(146,704		)	(72,453		)	—
Transfer to active union medical account	—			—			(185,887		)	—
Fair value of plan assets at December 31	2,733,476			3,057,027			723,677			1,022,371
Funded Status at December 31	$	(457,150	)	$	(337,159	)	$	46,906		$	268,978

Schedule of projected benefit obligation and the accumulated benefit obligation for pension plans with an accumulated obligation in excess of plan assets

The following table shows the projected benefit obligation and the accumulated benefit obligation for pension plans with an accumulated obligation in excess of plan assets as of December 31, 2018 and 2017 (dollars in thousands):

	2018		2017
Projected benefit obligation	$	3,190,626	$	3,394,186
Accumulated benefit obligation	3,038,774		3,227,233
Fair value of plan assets	2,733,476		3,057,027

Schedule of amounts recognized on the Consolidated Balance Sheets

The following table shows the amounts recognized on the Consolidated Balance Sheets as of December 31, 2018 and 2017 (dollars in thousands):

	Pension						Other Benefits
	2018			2017			2018		2017
Noncurrent asset	$	—		$	—		$	46,906	$	268,978
Current liability	(13,980		)	(9,859		)	—		—
Noncurrent liability	(443,170		)	(327,300		)	—		—
Net amount recognized	$	(457,150	)	$	(337,159	)	$	46,906	$	268,978

Schedule of accumulated other comprehensive loss

The following table shows the details related to accumulated other comprehensive loss as of December 31, 2018 and 2017 (dollars in thousands): 

	Pension						Other Benefits
	2018			2017			2018			2017
Net actuarial loss	$	794,292		$	643,199		$	63,544		$	75,439
Prior service credit	—			—			(227,733		)	(265,575		)
APS’s portion recorded as a regulatory (asset) liability	(733,351		)	(576,188		)	163,767			189,627
Income tax expense (benefit)	(15,083		)	(24,915		)	561			853
Accumulated other comprehensive loss	$	45,858		$	42,096		$	139		$	344

Schedule of estimated amounts that will be amortized from accumulated other comprehensive loss and regulatory assets into net periodic benefit cost

The following table shows the estimated amounts that will be amortized from accumulated other comprehensive loss and regulatory assets and liabilities into net periodic benefit cost in 2019 (dollars in thousands):

	Pension		Other Benefits
Net actuarial loss	$	43,248	$	—
Prior service credit	—		(37,821		)
Total amounts estimated to be amortized from accumulated other comprehensive loss (gain) and regulatory assets (liabilities) in 2019	$	43,248	$	(37,821	)

Schedule of weighted-average assumptions used for both the pension and other benefits to determine benefit obligations and net periodic benefit costs

The following table shows the weighted-average assumptions used for both the pension and other benefits to determine benefit obligations and net periodic benefit costs:

	Benefit Obligations As of December 31,				Benefit Costs For the Years Ended December 31,
	2018		2017		2018		2017		2016
Discount rate – pension	4.34	%	3.65	%	3.65	%	4.08	%	4.37	%
Discount rate – other benefits	4.39	%	3.71	%	3.71	%	4.17	%	4.52	%
Rate of compensation increase	4.00	%	4.00	%	4.00	%	4.00	%	4.00	%
Expected long-term return on plan assets - pension	N/A		N/A		6.05	%	6.55	%	6.90	%
Expected long-term return on plan assets - other benefits	N/A		N/A		5.40	%	6.05	%	4.45	%
Initial healthcare cost trend rate (pre-65 participants)	7.00	%	7.00	%	7.00	%	7.00	%	7.00	%
Initial healthcare cost trend rate (post-65 participants)	4.75	%	4.75	%	4.75	%	5.00	%	5.00	%
Ultimate healthcare cost trend rate	4.75	%	4.75	%	4.75	%	5.00	%	5.00	%
Number of years to ultimate trend rate (pre-65 participants)	7		8		8		4		4

Schedule of effects of one percentage point change in the assumed initial and ultimate health care cost trend rates

A one percentage point change in the assumed initial and ultimate healthcare cost trend rates would have the following effects on our December 31, 2018 amounts (dollars in thousands): 

	1% Increase		1% Decrease
Effect on other postretirement benefits expense, after consideration of amounts capitalized or billed to electric plant participants	$	10,235	$	(4,322	)
Effect on service and interest cost components of net periodic other postretirement benefit costs	11,223		(8,479		)
Effect on the accumulated other postretirement benefit obligation	101,224		(81,144		)

Schedule of fair value of pension plan and other postretirement benefit plan assets, by asset category

The fair value of Pinnacle West’s pension plan and other postretirement benefit plan assets at December 31, 2018, by asset category, are as follows (dollars in thousands):

 

	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Other (a)		Balance at December 31, 2018
Pension Plan:
Cash and cash equivalents	$	451	$	—	$	—	$	451
Fixed income securities:
Corporate	—		1,237,744		—		1,237,744
U.S. Treasury	372,649		—		—		372,649
Other (b)	—		78,902		—		78,902
Common stock equities (c)	196,661		—		—		196,661
Mutual funds (d)	120,976		—		—		120,976
Common and collective trusts:
Equities	—		—		272,926		272,926
Real estate	—		—		165,123		165,123
Fixed Income	—		—		86,483		86,483
Partnerships	—		—		125,217		125,217
Short-term investments and other (e)	—		—		76,344		76,344
Total	$	690,737	$	1,316,646	$	726,093	$	2,733,476
Other Benefits:
Cash and cash equivalents	$	93	$	—	$	—	$	93
Fixed income securities:
Corporate	—		163,286		—		163,286
U.S. Treasury	318,017		—		—		318,017
Other (b)	—		7,531		—		7,531
Common stock equities (c)	129,199		—		—		129,199
Mutual funds (d)	10,963		—		—		10,963
Common and collective trusts:
Equities	—		—		65,720		65,720
Real estate	—		—		19,054		19,054
Short-term investments and other (e)	3,633		—		6,181		9,814
Total	$	461,905	$	170,817	$	90,955	$	723,677

(a) These investments primarily represent assets valued using net asset value as a practical expedient, and have not been classified in the fair value hierarchy.

(b) This category consists primarily of debt securities issued by municipalities.

(c) This category primarily consists of U.S. common stock equities.

(d) These funds invest in international common stock equities.

(e) This category includes plan receivables and payables.

Based on the IPS, and given the pension plan's funded status at year-end 2018, the target and actual allocation for the pension plan at December 31, 2018 are as follows:

	Pension
	Target Allocation		Actual Allocation
Long-term fixed income assets	62	%	64	%
Return-generating assets	38	%	36	%
Total	100	%	100	%

The permissible range is within +/- 3% of the target allocation shown in the above table, and also considers the Plan's funded status.

The following table presents the additional target allocations, as a percent of total pension plan assets, for the return-generating assets:

Asset Class	Target Allocation
Equities in US and other developed markets	18	%
Equities in emerging markets	6	%
Alternative investments	14	%
Total	38	%

The following table presents the actual allocations of the investment for the other postretirement benefit plan at December 31, 2018:

	Other Benefits
	Actual Allocation
Long-term fixed income assets	69	%
Return-generating assets	31	%
Total	100	%

The fair value of Pinnacle West’s pension plan and other postretirement benefit plan assets at December 31, 2017, by asset category, are as follows (dollars in thousands):

	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Other (a)		Balance at December 31, 2017
Pension Plan:
Cash and cash equivalents	$	3,830	$	—	$	—	$	3,830
Fixed income securities:
Corporate	—		1,365,194		—		1,365,194
U.S. Treasury	221,291		—		—		221,291
Other (b)	—		100,599		—		100,599
Common stock equities (c)	228,088		—		—		228,088
Mutual funds (d)	233,732		—		—		233,732
Common and collective trusts:
Equities	—		—		408,763		408,763
Real estate	—		—		171,569		171,569
Fixed Income	—		—		90,869		90,869
Partnerships	—		—		133,379		133,379
Short-term investments and other (e)	—		1,208		98,505		99,713
Total	$	686,941	$	1,467,001	$	903,085	$	3,057,027
Other Benefits:
Cash and cash equivalents	$	143	$	—	$	—	$	143
Fixed income securities:
Corporate	—		306,008		—		306,008
U.S. Treasury	336,963		—		—		336,963
Other (b)	—		32,508		—		32,508
Common stock equities (c)	196,153		—		—		196,153
Mutual funds (d)	39,269		—		—		39,269
Common and collective trusts:
Equities	—		—		75,310		75,310
Real estate	—		—		15,422		15,422
Short-term investments and other (e)	11,268		149		9,178		20,595
Total	$	583,796	$	338,665	$	99,910	$	1,022,371

(a) These investments primarily represent assets valued using net asset value as a practical expedient, and have not been classified in the fair value hierarchy.

(b) This category consists primarily of debt securities issued by municipalities.

(c) This category primarily consists of U.S. common stock equities.

(d) These funds invest in U.S. and international common stock equities.

(e)

This category includes plan receivables and payables.

Schedule of estimated future benefit payments, which reflect estimated future employee service, for the next five years and the succeeding five years thereafter

Benefit payments, which reflect estimated future employee service, for the next five years and the succeeding five years thereafter, are estimated to be as follows (dollars in thousands):

Year	Pension		Other Benefits
2019	$	188,492	$	32,622
2020	193,087		34,199
2021	198,471		35,551
2022	204,399		36,673
2023	211,346		37,405
Years 2024-2028	1,093,319		187,023