APS 2011 Annual Report Download - page 133

PINNACLE WEST CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
108
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.
6. Long-Term Debt and Liquidity Matters
All of Pinnacle West’s and APS’s debt is unsecured. The following table presents the
components of long-term debt on the Consolidated Balance Sheets outstanding at December 31, 2011
and 2010 (dollars in thousands):