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MOMENTUM
2012 Annual Report
Pinnacle West Capital Corporation

Table of contents

  • Page 1
    MOMENTUM 2012 Annual Report Pinnacle West Capital Corporation

  • Page 2
    ...on construction of a new power line in the Desert Hills area of north Phoenix. Workers begin the day with a tailboard briefing to help ensure projects are completed safely. The Distribution Operations Center's new all-electronic and interactive system maps help better manage delivery of electricity...

  • Page 3
    Pinnacle West caPital corPoration combines a solid foundation... Superior reliability and operating performance across our business / Excellent customer satisfaction and deep community involvement / Affordable electricity rates / A balanced, high-performing power generation portfolio / A ...

  • Page 4
    ... power plant, produced 31.9 million megawatt-hours of clean, low-cost power in 2012, the most ever by a U.S. power plant. Contributing to this performance was the remarkable run of Palo Verde's Unit 2, which set a site record of 518 days of continuous operation before coming off-line for a planned...

  • Page 5
    DONALD E. BRANDT Chairman, President and Chief Executive Officer Our popal shareholder repurn of 10.3 percenp greaply exceeded phe induspry average of 0.1 percenp as measured by phe S&P 1500 Elecpric Upilipy Index. P. 2 / 3

  • Page 6
    ... plans for our Four Corners Power Plant, and barring any extraordinary events, base rates will remain frozen until at least July 1, 2016. At the same time, the agreement gives APS the opportunity to earn a competitive financial return when we serve customers well and manage costs. Annual adjustment...

  • Page 7
    ... on what we do best: run a very good, growing electric utility. Efficiency initiatives within several APS business units have helped keep operating and maintenance costs in line with sales growth for five consecutive years. We built on those successes in 2012 with a corporate initiative to look...

  • Page 8
    ... in the electricity grid, which is estimated to grow the APS rate base by 6 percent on average through 2015. BALANCED PORTFOLIO In each of my last two letters, I provided updates on our plan to purchase Southern California Edison's share of the APS-operated Four Corners Power Plant, invest in new...

  • Page 9
    ... the Arizona Public Service Company. We have been providing power for 25 years longer than Arizona has been a state, making us one of the oldest local businesses around. We embrace that our future is Arizona's future. This is all part of doing business the right way - for customers, the communities...

  • Page 10

  • Page 11
    Building on Momentum INGENUITY RELIABILITY FORESIGHT 10-11 12-13 14-15 MOMENTUM 2012 ANNUAL REPORT

  • Page 12

  • Page 13
    ... to business planning, we continued a necessary evolution in 2012. Our customers and the company benefit from advancements in smart grid technologies and renewable energy, as well as our new state-of-the-art operations center. Customers are also able to take advantage of innovative account options...

  • Page 14
    ...-HOURS PRODUCED BY THE PALO VERDE NUCLEAR GENERATING STATION IN 2012, THE MOST EVER BY A U.S. PLANT OF ANY KIND $494 MILLION ANNUAL TAXES PAID BY APS, ARIZONA'S LARGEST TAXPAYER 7,207MW 4% PEAK DEMAND ON AUGUST 8, 2012, APS'S HIGHEST SINCE 2009 INCREASE IN PINNACLE WEST COMMON DIVIDEND IN 2012...

  • Page 15

  • Page 16

  • Page 17
    ... EXPECTED ANNUAL AVERAGE GROWTH IN APS RATE BASE THROUGH 2015 55% PROJECTED GROWTH IN ENERGY DEMAND IN APS SERVICE TERRITORY BY 2027 6,400 MW ADDITIONAL RESOURCE CAPACITY NEEDED BY APS BY 2027 MOMENTUM 2012 ANNUAL REPORT $612 MILLION PLANNED INVESTMENT IN NEW HIGH-VOLTAGE TRANSMISSION LINES OVER...

  • Page 18
    ... joined the Board of a Pinnacle West company. Executive Director, Morrison Institute for Public Policy, Arizona State University President Emeritus, Thunderbird School of Global Management Principal, Bridgewest L.L.C. Officers PINNACLE WEST D ONALD E. BRANDT 2002 ARIZONA PUBLIC SERVICE DONALD...

  • Page 19
    Pinnacle West Highlights (DOLLARS AND SHARES IN MILLIONS, EXCEPT PER SHARE AMOUNTS) 2012 2011 2010 STOCK SUMMARY Stock price per share - year-end Market capitalization - year-end Common shares outstanding - year-end PER SHARE HIGHLIGHTS DILUTED $ $ 50.98 5,595 109.7 $ $ 48.18 5,263 109.2 $...

  • Page 20
    ... Financial Statements (DOLLARS IN MILLIONS) 2012 2011 2010 YEAR ENDED DECEMBER 31, condensed consolidated statements of income Operating revenues Fuel and purchased power Other operating expenses Operating income Net other income Interest expense Income taxes Income from continuing operations...

  • Page 21
    Pinnacle West Capital Corporation Non-GAAP Financial Information Reconciliation of Net Income Attributable to Common Shareholders (GAAP Measure) to On-going Earnings (Non-GAAP Financial Measure) (DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS) 2012 Millions Per Share 2011 Millions Per Share YEAR ...

  • Page 22
    ... 10-k 400 North 5th Street Phoenix, Arizona 85004 Mailing address: P.O. Box 53999 Phoenix, Arizona 85072-3999 Main telephone number: (602) 250-1000 corPorate Website Pinnacle West's 2012 Annual Report on Form 10-K filed with the Securities and Exchange Commission is available on our website or by...

  • Page 23
    ...ARIZONA PUBLIC SERVICE COMPANY $0 as of June 30, 2012 The number of shares outstanding of each registrant's common stock as of February 15, 2013 PINNACLE WEST CAPITAL CORPORATION 109,756,391 shares ARIZONA PUBLIC SERVICE COMPANY Common Stock, $2.50 par value, 71,264,947 shares. Pinnacle West Capital...

  • Page 24
    ... Market Risk...76 Item 8. Financial Statements and Supplementary Data ...77 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ...175 Item 9A. Controls and Procedures ...175 Item 9B. Other Information ...176 ...176 Directors, Executive Officers and Corporate...

  • Page 25
    ... APS's retail base rates attributable to fuel and purchased power costs BHP Billiton New Mexico Coal, Inc. BNP Navajo Coal Company Cholla Power Plant California Public Utility Commission Direct Current United States Department of Energy United States Department of the Interior Demand side management...

  • Page 26
    ..., the general economy, customer and sales growth (or decline), and the effects of energy conservation measures and distributed generation; power plant and transmission system performance and outages; volatile fuel and purchased power costs; fuel and water supply availability; our ability to achieve...

  • Page 27
    ..., transmission and distribution. BUSINESS OF ARIZONA PUBLIC SERVICE COMPANY APS currently provides electric service to approximately 1.1 million customers. We own or lease approximately 6,370 MW of regulated generation capacity and we hold a mix of both long-term and short-term purchased power...

  • Page 28
    The following map shows APS's retail service territory, including the locations of its generating facilities and principal transmission lines. 4

  • Page 29
    ..., gas, oil and solar generating facilities described below. For additional information regarding these facilities, see Item 2. Coal-Fueled Generating Facilities Four Corners - Four Corners is a 5-unit coal-fired power plant located in the northwestern corner of New Mexico. APS operates the plant and...

  • Page 30
    ... the current fuel contracts ensure the continued operation of Cholla for its useful life. In addition, APS has a long-term coal transportation contract. Navajo Generating Station - The Navajo Plant is a 3-unit coal-fired power plant located in northern Arizona. Salt River Project operates the plant...

  • Page 31
    ... developments impacting these coal-fueled facilities. See Note 11 for information regarding APS's coal mine reclamation obligations. Nuclear Palo Verde Nuclear Generating Station - Palo Verde is a 3-unit nuclear power plant located about 50 miles west of Phoenix, Arizona. APS operates the plant and...

  • Page 32
    ...due to DOE's failure to accept Palo Verde's spent nuclear fuel for the period beginning January 1, 2007 through June 30, 2011. The DOE had planned to meet its NWPA and Standard Contract disposal obligations by designing, licensing, constructing, and operating a permanent geologic repository at Yucca...

  • Page 33
    ...of Palo Verde Units 1, 2 and 3 are currently included in APS's ACC jurisdictional rates. Decommissioning costs are recoverable through a non-bypassable system benefits charge (paid by all retail customers taking service from the APS system). See Note 22 for additional information about APS's nuclear...

  • Page 34
    Natural Gas and Oil Fueled Generating Facilities APS has six natural gas power plants located throughout Arizona, consisting of Redhawk, located near the Palo Verde Nuclear Generating Station; Ocotillo, located in Tempe; Sundance, located in Coolidge; West Phoenix, located in southwest Phoenix; ...

  • Page 35
    ... Future Resources - Renewable Energy Standard - Renewable Energy Portfolio." Current and Future Resources Current Demand and Reserve Margin Electric power demand is generally seasonal. In Arizona, demand for power peaks during the hot summer months. APS's 2012 peak one-hour demand on its electric...

  • Page 36
    ... from February 1, 2013 until April 1, 2013. The ACC's acknowledgment of APS's resource plan will consider factors such as the total cost of electric energy services, demand management, analysis of supply-side options, system reliability and risk management. Renewable Energy Standard In 2006, the...

  • Page 37
    ... to various conditions, including successful siting, permitting and interconnection of the projects to the electric grid. Actual/ Target Commercial Operation Date Net Capacity In Operation (MW AC) Net Capacity Planned/Under Development (MW AC) Location APS Owned Solar: AZ Sun Program: Paloma Cotton...

  • Page 38
    ... programs available for utilities to develop renewable resources, improve reliability and create jobs. APS has received two awards from the DOE. The first is a $3 million non-ARRA award for a high penetration photovoltaic generation study related to the Community Power Project in Flagstaff, Arizona...

  • Page 39
    ..., the ACC issued a decision holding that solar vendors that install and operate solar facilities for non-profit schools and governments pursuant to a specific type of contract that calculates payments based on the energy produced are not "public service corporations" under the Arizona Constitution...

  • Page 40
    ... may prohibit it from making emission control expenditures at the plant. (See "Energy Sources and Resource Planning - Generation Facilities - Coal-Fueled Generating Facilities - Four Corners" above for details of the pending sale of SCE's interest in Four Corners to APS.) Regulatory Initiatives. In...

  • Page 41
    ... for new units to have an impact on its current operations. EPA has indicated that the rule will not apply to modified, reconstructed, or existing electric generating units. It is unclear when, or if, EPA will propose such standards, which could affect Four Corners, Cholla, and the Navajo Plant once...

  • Page 42
    ... pollution control technologies constitute the "best available retrofit technology" ("BART") for certain older major stationary sources. EPA subsequently issued the Clean Air Visibility Rule, which provides guidelines on how to perform a BART analysis. The Four Corners and Navajo Plant participants...

  • Page 43
    ...SCR") technology on all three of the Cholla units. APS's total costs for these post-combustion NOx controls would be approximately $187 million. This amount is not included in our current estimates for environmental capital expenditures in "Management's Discussion and Analysis of Financial Condition...

  • Page 44
    ... our capital expenditure estimates). SRP, the operating agent for the Navajo Plant, is still evaluating compliance options under the MATS. Cooling Water Intake Structures. EPA issued its proposed cooling water intake structures rule on April 20, 2011, which provides national standards applicable to...

  • Page 45
    ...-year NAAQS review process. As ozone standards become more stringent, our fossil generation units may come under increasing pressure to reduce emissions of nitrogen oxides and volatile organic compounds and/or to generate emission offsets for new projects or facility expansions. At this time, APS is...

  • Page 46
    ...activities of the APS facilities within OU3. In addition, on September 23, 2009, APS agreed with EPA and one other PRP to voluntarily assist with the funding and management of the site-wide groundwater remedial investigation and feasibility study work plan. We estimate that our costs related to this...

  • Page 47
    ... Environmental Issues Four Corners and the Navajo Plant are located on the Navajo Reservation and are held under easements granted by the federal government as well as leases from the Navajo Nation. See "Energy Sources and Resource Planning - Generation Facilities - Coal-Fueled Generating Facilities...

  • Page 48
    ... Court. Palo Verde is located within the geographic area subject to the summons. APS's rights and the rights of the other Palo Verde participants to the use of groundwater and effluent at Palo Verde are potentially at issue in this action. As operating agent of Palo Verde, APS filed claims that...

  • Page 49
    ...10) -2011 (dollars in millions) $ 1 $ $ $ (2) 9 $ $ 2010 30 (10) 16 All reported as discontinued operations on Pinnacle West's Consolidated Statements of Income (see Note 21). In accordance with the tax sharing agreement, the parent company recognized tax benefits of $4 million in 2012, $1 million...

  • Page 50
    ... facility manager. Approximately 1,877 APS employees are union employees. APS entered into a three-year collective bargaining agreement with union employees in the fossil generation, energy delivery and customer service business areas that expires in April 2014. In January 2013, the Palo Verde...

  • Page 51
    ...the following risks and uncertainties apply to Pinnacle West and its subsidiaries, including APS. REGULATORY RISKS Our financial condition depends upon APS's ability to recover costs in a timely manner from customers through regulated rates and otherwise execute its business strategy. APS is subject...

  • Page 52
    ... generation facilities, including Palo Verde. As a result of the March 2011 earthquake and tsunami that caused significant damage to the Fukushima Daiichi Nuclear Power Plant in Japan, various industry organizations are working to analyze information from the Japan incident and develop action plans...

  • Page 53
    ...-related operations. APS currently disposes of fly ash waste and bottom ash in ash ponds at Four Corners. Changes required by the rule could significantly increase ash disposal costs at Four Corners. New Source Review. EPA has taken the position that many projects electric utilities have performed...

  • Page 54
    ...operating costs in the form of taxes, emissions allowances, or required equipment upgrades and could have a material adverse impact on all fossil-fuel-fired generation facilities (particularly coal-fired facilities, which constitute approximately 28% of APS's generation capacity). At the state level...

  • Page 55
    ..., the ACC issued a decision holding that solar vendors that install and operate solar facilities for non-profit schools and governments pursuant to a specific type of contract that calculates payments based on the energy produced are not "public service corporations" under the Arizona Constitution...

  • Page 56
    ...we may be unable to reach our estimated demand level and sales projections, which could have a negative impact on our financial condition, results of operations and cash flows. The operation of power generation facilities and transmission systems involves risks that could result in reduced output or...

  • Page 57
    .... The ownership and operation of power generation and transmission facilities on Indian lands could result in uncertainty related to continued leases, easements and rights-of-way, which could have a significant impact on our business. Certain APS power plants, including Four Corners, and portions of...

  • Page 58
    ... expenditures and/or increase operating costs. The use of derivative contracts in the normal course of our business could result in financial losses that negatively impact our results of operations. APS's operations include managing market risks related to commodity prices. APS is exposed to the...

  • Page 59
    ... addressing such activities could increase costs and have a material adverse impact on our financial results. These types of events could also require significant management attention and resources, and could adversely affect Pinnacle West's and APS's reputation with customers and the public...

  • Page 60
    ... or withdrawn entirely by a rating agency if, in its judgment, circumstances in the future so warrant. Any downgrade or withdrawal could adversely affect the market price of Pinnacle West's and APS's securities, limit our access to capital and increase our borrowing costs, which would diminish our...

  • Page 61
    ... costs in our utility rates would negatively impact our financial condition. We have significant pension plan and other postretirement benefits plan obligations to our employees and retirees and legal obligations to fund nuclear decommissioning trusts for Palo Verde. We hold and invest substantial...

  • Page 62
    ... Pinnacle West is structured as a holding company, all existing and future debt and other liabilities of our subsidiaries will be effectively senior in right of payment to our debt securities. The assets and cash flows of our subsidiaries will be available, in the first instance, to service their...

  • Page 63
    ... and construction claims that may be brought by property owners and potential funding obligations to local taxing districts that financed infrastructure at certain of its real estate developments. Pinnacle West has not guaranteed any of SunCor's obligations. In February 2012, SunCor filed for...

  • Page 64
    ... Peaking (a) (b) 100% unless otherwise noted. See "Business of Arizona Public Service Company - Energy Sources and Resource Planning - Generation Facilities - Nuclear" in Item 1 for details regarding leased interests in Palo Verde. The other participants are Salt River Project (17.49%), SCE 40

  • Page 65
    ... Service Company of New Mexico (13%), SCE (48%), Tucson Electric Power Company (7%) and El Paso Electric Company (7%). The plant is operated by APS. As discussed under "Business of Arizona Public Service Company - Energy Sources and Resource Planning - Generation Facilities - Coal-Fueled Generating...

  • Page 66
    ... plan, are the Delaney to Palo Verde line and the North Gila to Hassayampa line, both of which are intended to support the transmission of renewable energy to Phoenix and California. Plant and Transmission Line Leases and Rights-of-Way on Indian Lands The Navajo Plant and Four Corners are located...

  • Page 67
    ... See "Business of Arizona Public Service Company - Environmental Matters" in Item 1 with regard to pending or threatened litigation and other disputes. See Note 3 for ACC and FERC-related matters. See Note 11 for information regarding FERC proceedings on Pacific Northwest energy market issues...

  • Page 68
    ... Management Vice President, Power Marketing, Resource Planning and Acquisition Vice President, Power Marketing and Resource Planning General Manager, Strategic Planning and Resource Acquisition Director of Resource Acquisitions and Renewables Executive Vice President and Chief Nuclear Officer of APS...

  • Page 69
    ...of Public Service Enterprise Group Inc. Vice President, Energy Delivery General Manager of Rural Arizona Delivery Senior Vice President, Customers & Regulation Vice President, Rates & Regulation Executive Vice President of Pinnacle West and APS Chief Financial Officer of Pinnacle West and APS Senior...

  • Page 70
    ... II ITEM 5. MARKET FOR REGISTRANTS' COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Pinnacle West's common stock is publicly held and is traded on the New York Stock Exchange. At the close of business on February 15, 2013, Pinnacle West's common stock was held of...

  • Page 71
    ... Number of Shares that May Yet Be Purchased Under the Plans or Programs ----- Period October 1 - October 31, 2012 November 1 - November 30, 2012 December 1 - December 31, 2012 Total Average Price Paid per Share $53.88 --$53.88 (1) Represents shares of common stock withheld by Pinnacle West...

  • Page 72
    ITEM 6. SELECTED FINANCIAL DATA PINNACLE WEST CAPITAL CORPORATION - CONSOLIDATED 2012 OPERATING RESULTS Operating revenues: Regulated electricity Marketing and trading Other revenues Total operating revenues Income from continuing operations Income (loss) from discontinued operations - net of income...

  • Page 73
    SELECTED FINANCIAL DATA ARIZONA PUBLIC SERVICE COMPANY - CONSOLIDATED 2012 OPERATING RESULTS Electric operating revenues Fuel and purchased power costs Other operating expenses Operating income Other income Interest expense - net of allowance for borrowed funds Net income Less: Net income ...

  • Page 74
    ... could have a significant impact on our capital expenditures and operating costs in the form of taxes, emissions allowances or required equipment upgrades for these plants. APS is closely monitoring its long-range capital management plans, understanding that any resulting regulation and legislation...

  • Page 75
    ... contract will be finalized and executed, such that closing of APS's purchase of SCE's interest in Four Corners can occur. Transmission and Delivery. APS is working closely with regulators to identify and plan for transmission needs resulting from the current focus on renewable energy. The capital...

  • Page 76
    ... for additional details of the AZ Sun Program, including the related cost recovery. APS has also entered into long-term purchased power agreements for 280 MW from solar facilities currently planned, in development or under construction, and 94 MW from distributed energy resources. Agreements for the...

  • Page 77
    ... for information on APS's FERC rates. APS has several recovery mechanisms in place that provide more timely recovery to APS of its fuel and transmission costs, and costs associated with the promotion and implementation of its demand side management and renewable energy efforts and customer programs...

  • Page 78
    ... through 2012, APS's customer growth averaged 0.7% per year. We currently expect annual customer growth to average about 2% for 2013 through 2015 based on our assessment of modestly improving economic conditions, both nationally and in Arizona. Retail electricity sales in kilowatt-hours, adjusted...

  • Page 79
    ... for purchased power and generation fuel, our power plant performance, transmission availability or constraints, prevailing market prices, new generating plants being placed in service in our market areas, changes in our generation resource allocation, our hedging program for managing such costs and...

  • Page 80
    ... service to Native Load customers) and related activities and includes electricity generation, transmission and distribution. APSES's and SunCor's operations have been classified as discontinued operations. Pinnacle West sold its investment in APSES in August 2011. In February 2012, SunCor filed...

  • Page 81
    ... 31, 2012 2011 Net Change (dollars in millions) Regulated Electricity Segment: Operating revenues less fuel and purchased power expenses (a) Operations and maintenance (a) Depreciation and amortization Taxes other than income taxes Other income (expenses), net Interest charges, net of allowance for...

  • Page 82
    Operating revenues Increase (Decrease) Fuel and purchased power expenses Net change (dollars in millions) Impacts of retail regulatory settlement effective July 1, 2012 Higher retail transmission revenues Lower fuel and purchased power costs, net of related deferrals and off-system sales Lower ...

  • Page 83
    ... charges and decreased operations and maintenance expenses. These positive factors were offset by higher depreciation and amortization due to increased plant in service, higher property taxes due to increased property tax rates and higher income taxes, including income tax benefits recognized in the...

  • Page 84
    ..., but increased both electric operating revenues and operations and maintenance expenses by $28 million. Costs related to the settlement were offset by related revenues from SCE, which leases the related transmission line from APS. Operating revenues less fuel and purchased power expenses includes...

  • Page 85
    ... Higher retail transmission charges Higher line extension revenues (Note 3) Higher usage per customer Refund of PSA deferrals Higher fuel and purchased power costs, net of off-system sales Miscellaneous items, net Total Increase (Decrease) Fuel and purchased power expenses Net change (dollars in...

  • Page 86
    ...-term debt. APS funds its capital requirements with cash from operations and, to the extent necessary, external debt financing and equity infusions from Pinnacle West. Many of APS's current capital expenditure projects qualify for bonus depreciation. The American Taxpayer Relief Act of 2012, signed...

  • Page 87
    ... cash equivalents Arizona Public Service Company Net cash flow provided by operating activities Net cash flow used for investing activities Net cash flow provided by (used for) financing activities Net decrease in cash and cash equivalents Operating Cash Flows 2012 Compared with 2011 Pinnacle West...

  • Page 88
    ... Fuel Renewables Environmental Four Corners Units 4 and 5 Other Generation Distribution Transmission Other (a) Total APS (a) 2014 2015 $ 58 190 21 $ 82 42 86 $ 83 -187 253 142 260 152 45 $ 1,121 -246 304 204 69 $ 1,033 -340 312 200 66 $ 1,188 Primarily information systems and facilities...

  • Page 89
    ... and upgrades, capital replacements, and new customer construction. Examples of the types of projects included in the forecast include power lines, substations, and line extensions to new residential and commercial developments. Capital expenditures will be funded with internally generated cash...

  • Page 90
    ... Maricopa County, Arizona Pollution Control Corporation Pollution Control Revenue Refunding Bonds (Arizona Public Service Company Palo Verde Project) 2002 Series A, due 2029. On November 29, 2012, Pinnacle West entered into a $125 million term loan that matures November 27, 2015. Pinnacle West used...

  • Page 91
    The APS facilities described above are available to support APS's $250 million commercial paper program, for bank borrowings or for issuances of letters of credit. At December 31, 2012, APS had no outstanding borrowings under its revolving credit facilities or letters of credit. In addition, APS had...

  • Page 92
    ... policies, natural gas transportation, fuel supply, and other energy-related contracts. At this time, we believe we have sufficient available liquidity resources to respond to a downward revision to our credit ratings. Moody's Pinnacle West Corporate credit rating Commercial paper Outlook APS...

  • Page 93
    ... interest: (a) APS Pinnacle West Total long-term debt payments, including interest Fuel and purchased power commitments (b) Renewable energy credits (c) Purchase obligations (d) Coal reclamation Nuclear decommissioning funding requirements Noncontrolling interests (e) Operating lease payments Total...

  • Page 94
    ... have had on the December 31, 2012 reported pension liability on the Consolidated Balance Sheets and our 2012 reported pension expense, after consideration of amounts capitalized or billed to electric plant participants, on Pinnacle West's Consolidated Statements of Income (dollars in millions): 70

  • Page 95
    ..., 2012 reported other postretirement benefit obligation on the Consolidated Balance Sheets and our 2012 reported other postretirement benefit expense, after consideration of amounts capitalized or billed to electric plant participants, on Pinnacle West's Consolidated Statements of Income (dollars in...

  • Page 96
    ... MARKET AND CREDIT RISKS Market Risks Our operations include managing market risks related to changes in interest rates, commodity prices and investments held by our nuclear decommissioning trust fund and benefit plan assets. Interest Rate and Equity Risk We have exposure to changing interest rates...

  • Page 97
    ...-term and short-term debt at the expected maturity dates as well as the fair value of those instruments on December 31, 2012 and 2011. The interest rates presented in the tables below represent the weighted-average interest rates as of December 31, 2012 and 2011 (dollars in thousands): Pinnacle West...

  • Page 98
    ... by utilizing various commodity instruments that may qualify as derivatives, including futures, forwards, options and swaps. As part of our risk management program, we use such instruments to hedge purchases and sales of electricity and fuels. The changes in market value of such contracts have...

  • Page 99
    ...(8) (8) $ (4) (4) $ (48) $ (122) The table below shows the impact that hypothetical price movements of 10% would have on the market value of our risk management assets and liabilities included on Pinnacle West's Consolidated Balance Sheets at December 31, 2012 and 2011 (dollars in millions): 75

  • Page 100
    December 31, 2012 Gain (Loss) Mark-to-market changes reported in: Earnings (a) Natural gas Regulatory asset (liability) or OCI (b) Electricity Natural gas Total (a) (b) Price Up 10% $ -Price Down 10% $ -- December 31, 2011 Gain (Loss) Price Up 10% $ 1 Price Down 10% $ (1) $ 7 25 32 $ (7) (25) (...

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  • Page 102
    ... of Changes in Equity for 2012, 2011 and 2010 ...Notes to Pinnacle West's Consolidated Financial Statements ...Management's Report on Internal Control Over Financial Reporting (Arizona Public Service Company) ...Report of Independent Registered Public Accounting Firm...APS Consolidated Statements of...

  • Page 103
    ...CONTROL OVER FINANCIAL REPORTING (PINNACLE WEST CAPITAL CORPORATION) Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f), for Pinnacle West Capital Corporation. Management conducted...

  • Page 104
    REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Pinnacle West Capital Corporation Phoenix, Arizona We have audited the accompanying consolidated balance sheets of Pinnacle West Capital Corporation and subsidiaries (the "Company") as of December ...

  • Page 105
    ... because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Pinnacle West Capital Corporation and...

  • Page 106
    PINNACLE WEST CAPITAL CORPORATION CONSOLIDATED STATEMENTS OF INCOME (dollars and shares in thousands, except per share amounts) 2012 OPERATING REVENUES OPERATING EXPENSES Fuel and purchased power Operations and maintenance Depreciation and amortization Taxes other than income taxes Other expenses ...

  • Page 107
    PINNACLE WEST CAPITAL CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (dollars in thousands) Year Ended December 31, 2012 2011 2010 NET INCOME OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX Derivative instruments: Net unrealized loss, net of tax benefit of $14,900, $37,389 and $61,348 (...

  • Page 108
    PINNACLE WEST CAPITAL CORPORATION CONSOLIDATED BALANCE SHEETS (dollars in thousands) December 31, 2012 ASSETS CURRENT ASSETS Cash and cash equivalents Customer and other receivables Accrued unbilled revenues Allowance for doubtful accounts Materials and supplies (at average cost) Fossil fuel (at ...

  • Page 109
    ... CAPITAL CORPORATION CONSOLIDATED BALANCE SHEETS (dollars in thousands) December 31, 2012 LIABILITIES AND EQUITY CURRENT LIABILITIES Accounts payable Accrued taxes (Note 4) Accrued interest Common dividends payable Short-term borrowings (Note 5) Current maturities of long-term debt (Note 6) Customer...

  • Page 110
    PINNACLE WEST CAPITAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) 2012 CASH FLOWS FROM OPERATING ACTIVITIES Net Income Adjustments to reconcile net income to net cash provided by operating activities: Gain on sale of energy-related products and services business Gain on ...

  • Page 111
    PINNACLE WEST CAPITAL CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (dollars in thousands) Year Ended December 31, 2011 $ 2,421,372 22,875 2,444,247 (2,239) (3,720) 1,242 (4,717) 1,423,961 339,473 (228,951) 1,534,483 $ 2012 COMMON STOCK (Note 7) Balance at beginning of year Issuance of ...

  • Page 112
    ... provided energy-related projects to commercial and industrial retail customers in competitive markets in the western United States. APSES was sold in 2011 and is now reported as discontinued operations (see Note 21). El Dorado is an investment firm. Pinnacle West's Consolidated Financial Statements...

  • Page 113
    PINNACLE WEST CAPITAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Regulatory Accounting APS is regulated by the ACC and the FERC. The accompanying financial statements reflect the rate-making policies of these commissions. As a result, we capitalize certain costs that would be included ...

  • Page 114
    ... supports electric service, consisting primarily of generation, transmission and distribution facilities. We report utility plant at its original cost, which includes material and labor; contractor costs; capitalized leases; construction overhead costs (where applicable); and allowance for funds...

  • Page 115
    ... weighted-average rate was 2.71% for 2012, 2.98% for 2011, and 2.98% for 2010. Allowance for Funds Used During Construction AFUDC represents the approximate net composite interest cost of borrowed funds and an allowed return on the equity funds used for construction of regulated utility plant. Both...

  • Page 116
    ... Note 14 for additional information about fair value measurements. Derivative Accounting We are exposed to the impact of market fluctuations in the commodity price and transportation costs of electricity, natural gas, coal, emission allowances and in interest rates. We manage risks associated with...

  • Page 117
    ... charges APS $0.001 per kWh of nuclear generation. See Note 11 for information on spent nuclear fuel disposal costs. Income Taxes Income taxes are provided using the asset and liability approach prescribed by guidance relating to accounting for income taxes. We file our federal income tax return on...

  • Page 118
    ... our financial statement results. 3. Regulatory Matters Retail Rate Case Filing with the Arizona Corporation Commission On June 1, 2011, APS filed an application with the ACC for a net retail base rate increase of $95.5 million. APS requested that the increase become effective July 1, 2012. The...

  • Page 119
    ... level caused by changes to the Arizona property tax rate as follows: • Deferral of 25% in 2012, 50% in 2013 and 75% for 2014 and subsequent years if Arizona property tax rates increase; and Deferral of 100% in all years if Arizona property tax rates decrease; • • • A procedure to allow...

  • Page 120
    PINNACLE WEST CAPITAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS • Modification of the TCA to streamline the process for future transmission-related rate changes; and Implementation of various changes to rate schedules, including the adoption of an experimental "buy-through" rate ...

  • Page 121
    ... solar plants which APS will own. Under this program to date, APS has executed contracts for the development of 118 MW of new solar generation, representing an investment commitment of approximately $502 million. On June 29, 2012, APS filed its annual RES implementation plan, covering the 2013...

  • Page 122
    ...): Twelve Months Ended December 31, Beginning balance Deferred fuel and purchased power costs - current period Amounts credited to customers Ending balance 2012 $ 28 (72) 117 $ 73 2011 $ (58) (69) 155 $ 28 The PSA rate for the PSA year beginning February 1, 2013 is $0.0013 per kWh as compared...

  • Page 123
    PINNACLE WEST CAPITAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS component of $0.0023 per kWh. The Settlement Agreement allowed APS to exceed the $0.004 per kWh cap to PSA rate changes in this instance. Any uncollected (overcollected) deferrals during the 2013 PSA year will be included ...

  • Page 124
    PINNACLE WEST CAPITAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS companies will terminate an existing agreement that provides transmission capacity for SCE to transmit its portion of the output from Four Corners to California. APS expects to file a request with FERC seeking ...

  • Page 125
    ... assets is as follows (dollars in millions): Remaining Amortization Period Pension and other postretirement benefits Income taxes - AFUDC equity Deferred fuel and purchased power - mark-to-market (Note 18) Transmission vegetation management Coal reclamation Palo Verde VIEs (Note 20) Deferred...

  • Page 126
    ... 31, 2011 Current $ 22 -54 -5 2 1 4 88 Non-Current $ 349 225 -59 44 14 30 16 737 Removal costs Asset retirement obligations Renewable energy standard (b) Income taxes - change in rates Spent nuclear fuel Deferred gains on utility property Income taxes- deferred investment tax credit Other Total...

  • Page 127
    PINNACLE WEST CAPITAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The $70 million long-term income tax receivable on the Consolidated Balance Sheets represents the anticipated refunds related to an APS tax accounting method change approved by the IRS in the third quarter of 2009. This ...

  • Page 128
    PINNACLE WEST CAPITAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS We reflect interest and penalties, if any, on unrecognized tax benefits in the Consolidated Statements of Income as income tax expense. The amount of interest recognized in the Consolidated Statements of Income related to ...

  • Page 129
    ... income tax benefit Credits and favorable adjustments related to prior years resolved in current year Medicare Subsidy Part-D Allowance for equity funds used during construction (see Note 1) Palo Verde VIE noncontrolling interest (see Note 20) Other Income tax expense - continuing operations $ 229...

  • Page 130
    ... Credit and loss carryforwards Other Total deferred tax assets DEFERRED TAX LIABILITIES Plant-related Risk management activities Regulatory assets: Allowance for equity funds used during construction Deferred fuel and purchased power Deferred fuel and purchased power - mark-to-market Pension...

  • Page 131
    ... and provide credit support for their commercial paper programs. Pinnacle West At December 31, 2012, the Pinnacle West credit facility, which terminates in November 2016, was available to refinance indebtedness of the Company and for other general corporate purposes, including credit support for...

  • Page 132
    ... 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. At December 31, 2011, Pinnacle West had no outstanding borrowings under its credit facility, no letters of credit...

  • Page 133
    ... unsecured notes Palo Verde sale leaseback lessor notes Capitalized lease obligations Unamortized discount Total APS long-term debt Less current maturities Total APS long-term debt less current maturities Pinnacle West Term loan TOTAL LONG-TERM DEBT LESS CURRENT MATURITIES Interest Rates 2012 2011...

  • Page 134
    ... Pinnacle West $ 123 540 470 358 -1,840 $ 3,331 Consolidated APS $ 123 540 345 358 -1,840 $ 3,206 Year 2013 2014 2015 2016 2017 Thereafter Total Debt Fair Value Our long-term debt fair value estimates are based on quoted market prices for the same or similar issues, and are classified within level...

  • Page 135
    ... 1, 2012 APS redeemed at par all $90 million of the Maricopa County, Arizona Pollution Control Corporation Pollution Control Revenue Refunding Bonds (Arizona Public Service Company Palo Verde Project) 2002 Series A, due 2029. See Lines of Credit and Short-Term Borrowings in Note 5 and "Financial...

  • Page 136
    ... does not materially affect Pinnacle West's ability to meet its ongoing capital requirements. 7. Common Stock and Treasury Stock Our common stock and treasury stock activity during each of the three years 2012, 2011 and 2010 is as follows (dollars in thousands): Common Stock Shares Amount 101,527...

  • Page 137
    ..., and APS had 15,535,000 shares of various types of preferred stock authorized with $25, $50 and $100 par values, none of which was outstanding. 8. Retirement Plans and Other Benefits Pinnacle West sponsors a qualified defined benefit and account balance pension plan (The Pinnacle West Capital...

  • Page 138
    ...and excluding amounts capitalized as overhead construction, billed to electric plant participants or charged to the regulatory asset) (dollars in thousands): Pension 2012 Service cost-benefits earned during the period Interest cost on benefit obligation Expected return on plan assets Amortization of...

  • Page 139
    PINNACLE WEST CAPITAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table shows the plans' changes in the benefit obligations and funded status for the years 2012 and 2011 (dollars in thousands): Pension Change in Benefit Obligation Benefit obligation at January 1 Service ...

  • Page 140
    ...75% 7.50% 5.00% 4 4.00% 7.75% 8.00% 5.00% 4 4.00% 8.25% 8.00% 5.00% 4 Discount rate-pension Discount rate-other benefits Rate of compensation increase Expected long-term return on plan assets Initial health care cost trend rate Ultimate health care cost trend rate Number of years to ultimate trend...

  • Page 141
    PINNACLE WEST CAPITAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In selecting the pretax expected long-term rate of return on plan assets we consider past performance and economic forecasts for the types of investments held by the plan. For the year 2013, we are assuming a 7.0% long-...

  • Page 142
    PINNACLE WEST CAPITAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Based on the IPS, and given the pension plan's funded status at year-end 2012, the long-term fixed income assets and the return generating assets each had a target allocation of 50%. The returngenerating assets have ...

  • Page 143
    ...WEST CAPITAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The fair value of Pinnacle West's pension plan and other postretirement benefit plan assets at December 31, 2012, by asset category, are as follows (dollars in thousands): Quoted Prices in Active Markets for Identical Assets (Level...

  • Page 144
    ... CAPITAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (c) Represents plan receivables and payables. The fair value of Pinnacle West's pension plan and other postretirement benefit plan assets at December 31, 2011, by asset category, are as follows (dollars in thousands): Quoted Prices...

  • Page 145
    ...in 2012, $19 million in 2011, and $16 million in 2010. Estimated Future Benefit Payments 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 2013 2014 2015 2016...

  • Page 146
    PINNACLE WEST CAPITAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Employee Savings Plan Benefits Pinnacle West sponsors a defined contribution savings plan for eligible employees of Pinnacle West and its subsidiaries. In 2012, costs related to APS's employees represented 99% of the total...

  • Page 147
    PINNACLE WEST CAPITAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS proportional consolidation. The following table shows APS's interests in those jointly-owned facilities recorded on the Consolidated Balance Sheets at December 31, 2012 (dollars in thousands): Construction Work in Progress...

  • Page 148
    PINNACLE WEST CAPITAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS APS currently estimates it will incur $122 million over the current life of Palo Verde for its share of the costs related to the on-site interim storage of spent nuclear fuel. At December 31, 2012, APS had a regulatory ...

  • Page 149
    PINNACLE WEST CAPITAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table summarizes our estimated coal take-or-pay commitments (dollars in millions): Years Ended December 31, 2013 Coal take-or-pay commitments (a) (a) $ 90 2014 $ 93 2015 $ 96 2016 $ 63 2017 $ 27 Thereafter $...

  • Page 150
    ... activities of the APS facilities within OU3. In addition, on September 23, 2009, APS agreed with EPA and one other PRP to voluntarily assist with the funding and management of the sitewide groundwater remedial investigation and feasibility study work plan. We estimate that our costs related to this...

  • Page 151
    ... generation and transmission resources for the Yuma area were lost, resulting in approximately 69,700 APS customers losing service. Within the same time period that APS's Yuma customers lost service, a series of transmission and generation disruptions occurred across the systems of several utilities...

  • Page 152
    ... technology standards to regulate emissions of mercury and other hazardous air pollutants from fossil-fired plants. APS estimates that the cost for the remaining equipment necessary to meet these standards is approximately $124 million for Cholla Units 1-3. Estimated costs for Four Corners Units...

  • Page 153
    ... has issued letters of credit to support collateral obligations under certain risk management arrangements including certain natural gas tolling contracts entered into with third parties. At December 31, 2012, $65 million of such letters of credit were outstanding that will expire in 2013 and 2015...

  • Page 154
    ... FINANCIAL STATEMENTS Pinnacle West has issued parental guarantees and surety bonds for APS which were not material at December 31, 2012. 12. Asset Retirement Obligations APS has asset retirement obligations for its Palo Verde nuclear facilities and certain other generation, transmission...

  • Page 155
    PINNACLE WEST CAPITAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 13. Selected Quarterly Financial Data (Unaudited) Consolidated quarterly financial information for 2012 and 2011 is as follows (dollars in thousands, except per share amounts): 2012 Quarter Ended June 30, Sept. 30, $ 878...

  • Page 156
    ... sufficient frequency and volume to provide information on an ongoing basis. This category includes exchange-traded equities, exchangetraded derivative instruments, cash equivalents, and investments in U.S. Treasury securities. Level 2 - Utilizes quoted prices in active markets for similar assets or...

  • Page 157
    PINNACLE WEST CAPITAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Cash Equivalents Cash equivalents represent short-term investments with original maturities of three months or less in exchange traded money market funds that are valued using quoted prices in active markets. Risk ...

  • Page 158
    ... asset type, class, or issue of securities. Our trustee provides valuation of our nuclear decommissioning trust assets by using pricing services that utilize the valuation methodologies described to determine fair market value. We have internal control procedures designed to ensure this information...

  • Page 159
    PINNACLE WEST CAPITAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Quoted Prices in Active Markets for Identical Assets (Level 1) Assets Cash equivalents Risk management activities - derivative instruments: Commodity Contracts Nuclear decommissioning trust: U.S. commingled equity funds ...

  • Page 160
    ...): Quoted Prices in Active Markets for Identical Assets (Level 1) Assets Risk management activities-derivative instruments: Commodity contracts Nuclear decommissioning trust: U.S. commingled equity funds Fixed income securities: U.S. Treasury Cash and cash equivalent funds Corporate debt Mortgage...

  • Page 161
    ...higher or lower fair value measurements. The following table provides information regarding our significant unobservable inputs used to value our risk management derivative Level 3 instruments: December 31, 2012 Fair Value (millions) Commodity Contracts Electricity: Forward Contracts (a) $ Assets 57...

  • Page 162
    PINNACLE WEST CAPITAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table shows the changes in fair value for our risk management activities assets and liabilities that are measured at fair value on a recurring basis using Level 3 inputs for the years ended December 31, 2012 ...

  • Page 163
    ...market price of the common shares. Options to purchase shares of common stock that were not included in the computation of diluted earnings per share were 192,542 during 2010. 16. Stock-Based Compensation Pinnacle West grants long-term incentive awards under the 2012 long-term incentive plan ("2012...

  • Page 164
    ... of 50,617 restricted stock units to the Chairman of the Board, President, and Chief Executive Officer of Pinnacle West. The award will vest and will be paid in shares of common stock on December 31, 2016 provided that he remains employed with the Company until the vesting date. The award can be...

  • Page 165
    ... share awards are accounted for as liability awards, with compensation cost initially calculated on the date of grant using the Company's closing stock price, and remeasured at each balance sheet date. Compensation expense for retirement eligible participants is recognized immediately. Management...

  • Page 166
    ... by retirement eligibility. Retention unit awards were granted to key employees in 2006 and 2007. Each retention unit award represented the right to receive a cash payment equal to the fair market value of one share of Pinnacle West's common stock, determined on pre-established valuation dates. Each...

  • Page 167
    ... of restricted stock units and performance shares. 17. Business Segments Pinnacle West's reportable business segment is our regulated electricity segment, which consists of traditional regulated retail and wholesale electricity businesses (primarily electricity service to Native Load customers) and...

  • Page 168
    PINNACLE WEST CAPITAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Business Segments for the Year Ended December 31, 2012 Regulated Electricity All other (a) Segment Total $ 3,294 $ 8 $ 3,302 995 -995 1,047 4 1,051 1,252 4 1,256 404 -404 200 -200 (9) 5 (4) 657 238 419 (1) (1) -656 237 419...

  • Page 169
    PINNACLE WEST CAPITAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Business Segments for the Year Ended December 31, 2011 Regulated Electricity All other (a) Segment Total $ 3,237 $ 4 $ 3,241 1,009 -1,009 1,055 3 1,058 1,173 1 1,174 427 -427 224 -224 (19) 3 (16) 541 184 357 (2) (1) (1) 539...

  • Page 170
    ... reportable business segment. 18. Derivative Accounting We are exposed to the impact of market fluctuations in the commodity price and transportation costs of electricity, natural gas, coal, emissions allowances and in interest rates. We manage risks associated with market volatility by utilizing...

  • Page 171
    PINNACLE WEST CAPITAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS believe the economic hedges mitigate exposure to fluctuations in commodity prices, these instruments have not been designated as accounting hedges. Contracts that have the same terms (quantities, delivery points and ...

  • Page 172
    PINNACLE WEST CAPITAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2012, we had the following outstanding gross notional volume of derivatives, which represent both purchases and sales (does not reflect net position): Commodity Power Gas (a) "Bcf" is Billion Cubic Feet. ...

  • Page 173
    ... Financial Statement Location 2012 2011 2010 Operating revenues $ 103 $ (27) $ 1,436 Fuel and purchased power $ (2,747) (2,644) $ (52,113) (52,140) (107,690) $ (106,254) Fair Values of Derivative Instruments in the Consolidated Balance Sheets The following table provides information...

  • Page 174
    ... approximately 86% of Pinnacle West's $62 million of risk management assets as of December 31, 2012. This exposure relates to long-term traditional wholesale contracts with counterparties that have high credit quality. Our risk management process assesses and monitors the financial exposure of all...

  • Page 175
    ... order to sell and lease back interests in Palo Verde Unit 2 and related common facilities. APS will pay approximately $49 million per year for the years 2013 to 2015 related to these leases. The lease agreements include fixed rate renewal periods which give APS the ability to utilize the asset for...

  • Page 176
    PINNACLE WEST CAPITAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS the end of 2015. If APS elects to extend the leases, we will be required to make payments beginning in 2016 of approximately $23 million annually. The length of the lease extensions is unknown at this time as it must be ...

  • Page 177
    ... WEST CAPITAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS APSES - On August 19, 2011, Pinnacle West sold its investment in APSES. The sale resulted in an after-tax gain from discontinued operations of approximately $10 million. In June 2010, APSES sold its district cooling business...

  • Page 178
    .... The costs of securities sold are determined on the basis of specific identification. The following table sets forth approximate gains and losses and proceeds from the sale of securities by the nuclear decommissioning trust funds (dollars in millions): Year Ended December 31, 2012 2011 Realized...

  • Page 179
    ... CONTROL OVER FINANCIAL REPORTING (ARIZONA PUBLIC SERVICE COMPANY) Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f), for Arizona Public Service Company. Management conducted an...

  • Page 180
    ... statements and financial statement schedule and an opinion on the Company's internal control over financial reporting based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan...

  • Page 181
    ... because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Arizona Public Service Company and...

  • Page 182
    ARIZONA PUBLIC SERVICE COMPANY CONSOLIDATED STATEMENTS OF INCOME (dollars in thousands) Year Ended December 31, 2011 $ 3,237,241 $ 2012 ELECTRIC OPERATING REVENUES OPERATING EXPENSES Fuel and purchased power Operations and maintenance Depreciation and amortization Income taxes (Notes 4 and S-1) ...

  • Page 183
    ARIZONA PUBLIC SERVICE COMPANY CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (dollars in thousands) Year Ended December 31, 2012 2011 2010 NET INCOME OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX Derivative instruments: Net unrealized loss, net of tax benefit of $14,888, $37,397 and $61,358 (Note ...

  • Page 184
    ARIZONA PUBLIC SERVICE COMPANY CONSOLIDATED BALANCE SHEETS (dollars in thousands) December 31, 2012 ASSETS PROPERTY, PLANT AND EQUIPMENT (Notes 1, 6 and 10) Plant in service and held for future use Accumulated depreciation and amortization Net Construction work in progress Palo Verde sale leaseback,...

  • Page 185
    ARIZONA PUBLIC SERVICE COMPANY CONSOLIDATED BALANCE SHEETS (dollars in thousands) December 31, 2012 LIABILITIES AND EQUITY CAPITALIZATION Common stock Additional paid-in capital Retained earnings Accumulated other comprehensive (loss): Pension and other postretirement benefits (Note 8) Derivative ...

  • Page 186
    ...and amortization including nuclear fuel Deferred fuel and purchased power Deferred fuel and purchased power amortization Allowance for equity funds used during construction Deferred income taxes Change in derivative instruments fair value Changes in current assets and liabilities: Customer and other...

  • Page 187
    ARIZONA PUBLIC SERVICE COMPANY CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (dollars in thousands) Year Ended December 31, 2011 $ 178,162 $ 2012 COMMON STOCK ADDITIONAL PAID-IN CAPITAL Balance at beginning of year Equity infusion Balance at end of year RETAINED EARNINGS Balance at beginning of year...

  • Page 188
    ...---- Summary of Significant Accounting Policies New Accounting Standards Regulatory Matters Income Taxes Lines of Credit and Short-Term Borrowings Long-Term Debt and Liquidity Matters Common Stock and Treasury Stock Retirement Plans and Other Benefits Leases Jointly-Owned Facilities Commitments and...

  • Page 189
    ... the allowance for equity funds used during construction and pension and other postretirement benefits. The regulatory liabilities primarily relate to deferred taxes resulting from ITCs and the change in income tax rates. In accordance with regulatory requirements, APS investment tax credits are...

  • Page 190
    ARIZONA PUBLIC SERVICE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Total unrecognized tax benefits, January 1 Additions for tax positions of the current year Reductions for tax positions of prior years for: Changes in judgment Settlements with taxing authorities Lapses of applicable statute ...

  • Page 191
    ARIZONA PUBLIC SERVICE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2012 Current: Federal State Total current Deferred: Federal State Total deferred Total income tax expense $ Year Ended December 31, 2011 2010 $ 4,633 19,104 23,737 $ (71,036) 17,406 (53,630) (11,650) 12,308 658 216,367 ...

  • Page 192
    ARIZONA PUBLIC SERVICE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Year Ended December 31, 2012 2011 2010 Federal income tax expense at 35% statutory rate Increases (reductions) in tax expense resulting from: State income tax net of federal income tax benefit Credits and favorable ...

  • Page 193
    ... Credit and loss carryforwards Other Total deferred tax assets DEFERRED TAX LIABILITIES Plant-related Risk management activities Regulatory assets: Allowance for equity funds used during construction Deferred fuel and purchased power Deferred fuel and purchased power - mark-to-market Pension...

  • Page 194
    ARIZONA PUBLIC SERVICE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS S-2. Selected Quarterly Financial Data (Unaudited) Quarterly financial information for 2012 and 2011 is as follows (dollars in thousands): March 31, 2012 Quarter Ended, June 30, September 30, $ 877,587 213,746 176,821 124,...

  • Page 195
    PINNACLE WEST CAPITAL CORPORATION HOLDING COMPANY SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (in thousands) Year Ended December 31, 2011 $ 1,034 8,811 (7,777) $ 2012 Operating revenues Operating expenses Operating loss Other Equity in ...

  • Page 196
    PINNACLE WEST CAPITAL CORPORATION HOLDING COMPANY SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT CONDENSED BALANCE SHEETS (in thousands) December 31, 2012 ASSETS Current assets Cash and cash equivalents Customer and other receivables Current deferred income taxes Income tax receivable ...

  • Page 197
    PINNACLE WEST CAPITAL CORPORATION HOLDING COMPANY SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT CONDENSED STATEMENTS OF CASH FLOWS (in thousands) Year Ended December 31, 2011 2012 Cash flows from operating activities Net income Adjustments to reconcile net income to net cash provided ...

  • Page 198
    PINNACLE WEST CAPITAL CORPORATION SCHEDULE II - RESERVE FOR UNCOLLECTIBLES (dollars in thousands) Column A Column B Column C Additions Balance at beginning of period Charged to cost and expenses Charged to other accounts Balance at end of period Column D Column E Description Reserve for ...

  • Page 199
    ARIZONA PUBLIC SERVICE COMPANY SCHEDULE II - RESERVE FOR UNCOLLECTIBLES (dollars in thousands) Column A Column B Column C Additions Balance at beginning of period Charged to cost and expenses Charged to other accounts Balance at end of period Column D Column E Description Reserve for uncollectibles...

  • Page 200
    ... Control Over Financial Reporting (Pinnacle West Capital Corporation)" on page 78 of this report and "Management's Report on Internal Control Over Financial Reporting (Arizona Public Service Company)" on page 154 of this report. (c) Attestation Reports of the Registered Public Accounting Firm...

  • Page 201
    ... made to "Shares of Pinnacle West Stock Owned by Management and Large Shareholders" in the 2013 Proxy Statement. Securities Authorized for Issuance Under Equity Compensation Plans The following table sets forth information as of December 31, 2012 with respect to the 2012 Plan, the 2007 Plan and the...

  • Page 202
    Equity Compensation Plan Information Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) Weightedaverage exercise price of outstanding options, warrants and rights (b) Number of securities remaining available for future issuance under equity ...

  • Page 203
    ... the financial statements that are not included in Audit Fees reported above, which primarily consist of fees for employee benefit plan audits performed in 2012 and 2011. Pinnacle West's Audit Committee pre-approves each audit service and non-audit service to be provided by APS's registered public...

  • Page 204
    ... APS's Form 18 Registration Nos. 33-33910 and 33-55248 by means of September 24, 1993 Form 8-K Report, File No. 1-4473 3.1 to Pinnacle West/APS May 22, 2012 Form 8-K Report, File Nos. 1-8962 and 14473 9-29-93 3.3.1 APS Amendment to the Articles of Incorporation of Arizona Public Service Company...

  • Page 205
    ... Pinnacle West June 28, 2011 Form 8-K Report, File No. 1-8962 Date Filed 6-28-11 Pinnacle West Specimen Certificate of Pinnacle West Capital Corporation Common Stock, no par value Pinnacle West Indenture dated as of APS January 1, 1995 among APS and The Bank of New York Mellon, as Trustee Pinnacle...

  • Page 206
    ... as Exhibit: a 4.1 to Pinnacle West's Registration Statement No. 333-52476 Date Filed 12-21-00 Pinnacle West Indenture dated as of December 1, 2000 between the Company and The Bank of New York, as Trustee, relating to Senior Unsecured Debt Securities Pinnacle West Indenture dated as of December...

  • Page 207
    ... 4.1 to Pinnacle West/APS August 22, 2011 Form 8-K Report, File Nos. 1-8962 and 14473 4.1 to Pinnacle West/APS January 10, 2012 Form 8-K Report, File Nos. 1-8962 and 14473 4.4 to Pinnacle West's June 23, 2004 Form 8-K Report, File No. 1-8962 Date Filed 6-28-04 Pinnacle West Eighth Supplemental APS...

  • Page 208
    ... West Capital Corporation Investors Advantage Plan dated as of November 25, 2008 Pinnacle West Agreement, dated March 29, 1988, relating to the filing of instruments defining the rights of holders of longterm debt not in excess of 10% of the Company's total assets Pinnacle West Agreement, dated APS...

  • Page 209
    ...No. 10.1.1b Registrant(s) Description Previously Filed as Exhibit: a 10.2 to APS's 1994 Form 10-K Report, File No. 1-4473 Date Filed 3-30-95 Pinnacle West Amendment No. 1 to APS Decommissioning Trust Agreement (PVNGS Unit 3), dated as of December 1, 1994 Pinnacle West Amendment No. 2 to APS APS...

  • Page 210
    ... two separate Facility Leases, each relating to an undivided interest in PVNGS Unit 2 Pinnacle West First Amendment to APS Amended and Restated Decommissioning Trust Agreement (PVNGS Unit 2), dated as of November 1, 1992 10.1.1j 10.2 to Pinnacle West/APS March 31, 2007 Form 10-Q Report, File Nos...

  • Page 211
    ...10.1.2b Registrant(s) Description Previously Filed as Exhibit: a 10.3 to APS's 1994 Form 10-K Report, File No. 1-4473 Date Filed 3-30-95 Pinnacle West Amendment No. 2 to APS Amended and Restated Decommissioning Trust Agreement (PVNGS Unit 2), dated as of November 1, 1994 Pinnacle West Amendment...

  • Page 212
    ... to the Arizona Public Service Company Deferred Compensation Plan effective as of May 1, 1993 Previously Filed as Exhibit: a 10.1.2h to Pinnacle West's 2007 Form 10-K Report, File No. 1-8962 Date Filed 2-27-08 10.2.1b Pinnacle West APS 10.4 to APS's 1988 Form 10-K Report, File No. 1-4473...

  • Page 213
    ...Date Filed 3-14-01 10.2.2b Pinnacle West Arizona Public Service 10.1 to APS's June 30, 1986 APS Company Directors' Form 10-Q Report, File No. 1Deferred Compensation 4473 Plan, as restated, effective January 1, 1986 Pinnacle West Second Amendment to APS the Arizona Public Service Company Directors...

  • Page 214
    ... Plans Pinnacle West Capital Corporation, Arizona Public Service Company, SunCor Development Company and El Dorado Investment Company Deferred Compensation Plan as amended and restated effective January 1, 1996 Previously Filed as Exhibit: a 10.14A to Pinnacle West's 1999 Form 10-K Report, File...

  • Page 215
    ...to the Pinnacle West Capital Corporation, Arizona Public Service Company, SunCor Development Company and El Dorado Investment Company Deferred Compensation Plan, effective as of January 1, 2002 Previously Filed as Exhibit: a 10.7A to Pinnacle West's 1999 Form 10-K Report, File No. 18962 Date Filed...

  • Page 216
    ... to Pinnacle West/APS 2005 Form 10-K Report, File Nos. 1-8962 and 1-4473 Date Filed 3-13-06 Pinnacle West Fourth Amendment to APS the Pinnacle West Capital Corporation, Arizona Public Service Company, SunCor Development Company and El Dorado Investment Company Deferred Compensation Plan, effective...

  • Page 217
    ... Filed 3-13-06 Pinnacle West Capital 10.48b to Pinnacle West/APS Corporation 2005 Form 10-K Report, File Supplemental Excess Nos. 1-8962 and 1-4473 Benefit Retirement Plan, as amended and restated, dated December 18, 2003 Pinnacle West Capital Corporation Supplemental Excess Benefit Retirement Plan...

  • Page 218
    ... West Description Letter Agreement dated May 21, 2009, between Pinnacle West Capital Corporation and David P. Falck Supplemental Agreement dated June 19, 2012 between APS and Randall K. Edington Description of 2013 Palo Verde Specific Compensation Opportunity for Randall K. Edington Key Executive...

  • Page 219
    ... Stock Option Agreement under Pinnacle West Capital Corporation 2002 LongTerm Incentive Plan 10.5.3 to Pinnacle West/APS 2009 Form 10-K Report, File Nos. 1-8962 and 1-4473 2-19-10 10.5.4 bd Pinnacle West APS 10.6.1b Pinnacle West APS Pinnacle West APS 10.5A to Pinnacle West's 2002 Form...

  • Page 220
    ...West/APS 2005 Form 10-K Report, File Nos. 1-8962 and 1-4473 Date Filed 3-13-06 10.6.2b Pinnacle West Pinnacle West Capital Corporation 2007 LongTerm Incentive Plan Appendix B to the Proxy Statement for Pinnacle West's 2007 Annual Meeting of Shareholders, File No. 1-8962 10.2 to Pinnacle West/APS...

  • Page 221
    ...Pinnacle West Description of Restricted Stock Unit Grant to Donald E. Brandt Pinnacle West Pinnacle West Capital APS Corporation 2012 LongTerm Incentive Plan Pinnacle West/APS December 24, 2012 Form 8-K Report, File No. 1-8962 Appendix A to the Proxy Statement for Pinnacle West's 2012 Annual Meeting...

  • Page 222
    ... Filed as Exhibit: a 10.1 to Pinnacle West/APS March 31, 2012 Form 10-Q Report, File Nos. 1-8962 and 14473 Date Filed 5-3-12 Pinnacle West Form of Performance Share Award Agreement under the Pinnacle West Capital Corporation 2012 Long-Term Incentive Plan Pinnacle West Form of Restricted Stock Unit...

  • Page 223
    ...-party 8-B, File No. 1-8962 rights-of-way and easements, Four Corners Power Plant Site dated April 25, 1985 Pinnacle West Application and Grant of APS Arizona Public Service Company rights- of-way and easements, Four Corners Plant Site 5.05 to APS's Form S-7 Registration Statement, File No. 2-59644...

  • Page 224
    ... Pinnacle West's Registration Statement on Form 8-B, File No. 1-8962 Date Filed 7-25-85 Pinnacle West Application and APS Amendment No. 1 to Grant of Arizona Public Service Company rightsof-way and easements, Four Corners Power Plant Site dated April 25, 1985 Pinnacle West Four Corners Project APS...

  • Page 225
    ... Committee Agreement No. 1 dated as of September 30, 1971 Previously Filed as Exhibit: a 10.107 to Pinnacle West/APS 2005 Form 10-K Report, File Nos. 1-8962 and 1-4473 Date Filed 3-13-06 10.8.5 Pinnacle West APS 10.108 to Pinnacle West/APS 2005 Form 10-K Report, File Nos. 1-8962 and 1-4473...

  • Page 226
    ... Form 10-K Report, File No. 1-4473 Date Filed 3-8-89 Pinnacle West Arizona Nuclear Power APS Project Participation Agreement, dated August 23, 1973, among APS Salt River Project Agricultural Improvement and Power District, Southern California Edison Company, Public Service Company of New Mexico...

  • Page 227
    ... and Power District, Southern California Edison Company, Public Service Company of New Mexico, El Paso Electric Company, Southern California Public Power Authority, and Department of Water and Power of the City of Los Angeles 10.9.1c 10.9.1c to Pinnacle West/APS 2010 Form 10-K Report, File Nos...

  • Page 228
    ... and APS dated April 5, 1995 Pinnacle West Contract among APS PacifiCorp, APS and United States Department of Energy Western Area Power Administration, Salt Lake Area Integrated Projects for Firm Transmission Service dated May 5, 1995 10.10.2 10.2 to APS's June 30, 1991 Form 10-Q Report, File No...

  • Page 229
    ....5 Registrant(s) Description Previously Filed as Exhibit: a 10.6 to APS's 1995 Form 10-K Report, File No. 1-4473 Date Filed 3-29-96 Pinnacle West Reciprocal Transmission APS Service Agreement between APS and PacifiCorp dated as of March 2, 1994 Pinnacle West APS Five-Year Credit Agreement dated...

  • Page 230
    ..., Credit Suisse AG, Cayman Islands Branch, as Issuing Bank, Bank of America, N.A. and Wells Fargo Bank, National Association, as Co-Documentation Agents and the other parties thereto Previously Filed as Exhibit: a 10.11.4 to Pinnacle West/APS 2010 Form 10-K Report, File Nos. 1-8962 and 1-4473 Date...

  • Page 231
    ... and Trust Company, as successor to The First National Bank of Boston, in its capacity as Owner Trustee, as Lessor, and APS, as Lessee 10.11.6a 10.11.6a to Pinnacle West/APS 2011 Form 10-K Report, File Nos. 1-8962 and 1-4473 2-24-12 10.12.1c 4.3 to APS's Form 18 Registration Statement, File No...

  • Page 232
    ....1ac Registrant(s) Description Previously Filed as Exhibit: a 10.5 to APS's September 30, 1986 Form 10-Q Report by means of Amendment No. 1 on December 3, 1986 Form 8, File No. 1-4473 Date Filed 12-4-86 Pinnacle West Amendment No. 1, dated APS as of November 1, 1986, to Facility Lease, dated as...

  • Page 233
    ....2a 4.13 to APS's Form 18 Registration Statement No. 339480 by means of August 1, 1987 Form 8-K Report, File No. 1-4473 8-24-87 10.12.2b Pinnacle West Amendment No. 2, dated 10.4 to APS's 1992 Form APS as of March 17, 1993, to 10-K Report, File No. 1-4473 Facility Lease, dated as of December 15...

  • Page 234
    Exhibit No. 10.13.1 Registrant(s) Pinnacle West APS Description Agreement between Pinnacle West Energy Corporation and Arizona Public Service Company for Transportation and Treatment of Effluent by and between Pinnacle West Energy Corporation and APS dated as of the 10th day of April, 2001 ...

  • Page 235
    ... between City of Phoenix, City of Mesa, City of Tempe, City of Scottsdale, City of Glendale, APS and Salt River Project Agricultural Improvement and Power District Contract, dated July 21, 1984, with DOE providing for the disposal of nuclear fuel and/or high-level radioactive waste, ANPP Territorial...

  • Page 236
    ... No. 10.16 Registrant(s) Pinnacle West APS Description Purchase and Sale Agreement dated November 8, 2010 by and between Southern California Edison Company and APS Proposed Settlement Agreement dated January 6, 2012 by and among APS and certain parties to its retail rate case (approved by ACC...

  • Page 237
    ... as amended Certification of Chief Executive Officer and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Previously Filed as Exhibit: a Date Filed 31.2 Pinnacle West 31.3 APS 31.4 APS 32.1e Pinnacle West 212

  • Page 238
    ... Indenture among PVNGS II Funding Corp., Inc., APS and Chemical Bank, as Trustee Previously Filed as Exhibit: a Date Filed 99.1 Pinnacle West APS 4.2 to APS's 1992 Form 10-K Report, File No. 1-4473 3-30-93 99.1a Pinnacle West APS 4.3 to APS's 1992 Form 10-K Report, File No. 1-4473 3-30-93...

  • Page 239
    ... Exhibit: a Date Filed 99.2c Pinnacle West APS Participation Agreement, 28.1 to APS's September 30, dated as of August 1, 1992 Form 10-Q Report, File 1986, among PVNGS No. 1-4473 Funding Corp., Inc., Bank of America National Trust and Savings Association, State Street Bank and Trust Company, as...

  • Page 240
    ...Date Filed 12-4-86 99.2bc Pinnacle West APS Amendment No. 2, dated 28.4 to APS's 1992 Form as of March 17, 1993, to 10-K Report, File No. 1-4473 Participation Agreement, dated as of August 1, 1986, among PVNGS Funding Corp., Inc., PVNGS II Funding Corp., Inc., State Street Bank and Trust Company...

  • Page 241
    ...Bank, as Indenture Trustee Previously Filed as Exhibit: a 4.5 to APS's Form 18 Registration Statement, File No. 33-9480 Date Filed 10-24-86 99.3ac Pinnacle West APS 10.6 to APS's September 30, 1986 Form 10-Q Report by means of Amendment No. 1 on December 3, 1986 Form 8, File No. 1-4473 12-4-86...

  • Page 242
    Exhibit No. 99.3bc Registrant(s) Pinnacle West APS Description Previously Filed as Exhibit: a Date Filed 3-30-93 Supplemental Indenture 4.4 to APS's 1992 Form No. 2 to Trust Indenture, 10-K Report, File No. 1-4473 Mortgage, Security Agreement and Assignment of Facility Lease, dated as of August...

  • Page 243
    Exhibit No. 99.4bc Registrant(s) Pinnacle West APS Description Previously Filed as Exhibit: a Date Filed 3-30-93 Amendment No. 2, dated 28.6 to APS's 1992 Form as of March 17, 1993, to 10-K Report, File No. 1-4473 Assignment, Assumption and Further Agreement, dated as of August 1, 1986, between...

  • Page 244
    ... Owner Participant named therein Previously Filed as Exhibit: a 28.20 to APS's Form 18 Registration Statement No. 339480 by means of a November 6, 1986 Form 8-K Report, File No. 1-4473 Date Filed 8-10-87 99.5b Pinnacle West APS Amendment No. 2, dated 28.5 to APS's 1992 Form as of March 17, 1993...

  • Page 245
    ... Bank, as Indenture Trustee Previously Filed as Exhibit: a 10.2 to APS's November 18, 1986 Form 10-K Report, File No. 1-4473 Date Filed 1-20-87 99.6a Pinnacle West APS 4.13 to APS's Form 18 Registration Statement No. 339480 by means of August 1, 1987 Form 8-K Report, File No. 1-4473 8-24-87...

  • Page 246
    ... No. 99.6b Registrant(s) Pinnacle West APS Description Previously Filed as Exhibit: a Date Filed 3-30-93 Supplemental Indenture 4.5 to APS's 1992 Form 10-K No. 2 to Trust Indenture Report, File No. 1-4473 Mortgage, Security Agreement and Assignment of Facility Lease, dated as of December 15...

  • Page 247
    ...and among Pinnacle West Energy Corporation and GenWest, L.L.C. and Nevada Power Company, dated June 21, 2005 XBRL Instance Document Previously Filed as Exhibit: a 28.3 to APS's 1992 Form 10-K Report, File No. 1-4473 Date Filed 3-30-93 99.9 28.20 to APS's Form 18 Registration Statement No. 339480...

  • Page 248
    ...: a Date Filed 101.PREe 101.DEFe _____ Reports filed under File No. 1-4473 and 1-8962 were filed in the office of the Securities and Exchange Commission located in Washington, D.C. Management contract or compensatory plan or arrangement to be filed as an exhibit pursuant to Item 15(b) of Form 10...

  • Page 249
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  • Page 250
    ... caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PINNACLE WEST CAPITAL CORPORATION (Registrant) Date: February 22, 2013 /s/ Donald E. Brandt (Donald E. Brandt, Chairman of the Board of Directors, President and Chief Executive Officer) Power of Attorney...

  • Page 251
    ...Edward N. Basha, Jr.) Director February 22, 2013 /s/ Susan Clark-Johnson (Susan Clark-Johnson) Director February 22, 2013 /s/ Denis A. Cortese (Denis A. Cortese) Director February 22, 2013 /s/ Michael L. Gallagher (Michael L. Gallagher) Director February 22, 2013 /s/ Roy A. Herberger, Jr...

  • Page 252
    ... the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ARIZONA PUBLIC SERVICE COMPANY (Registrant) Date: February 22, 2013 /s/ Donald E. Brandt (Donald E. Brandt, Chairman of the Board of Directors and Chief Executive Officer) Power of...

  • Page 253
    ...Edward N. Basha, Jr.) Director February 22, 2013 /s/ Susan Clark-Johnson (Susan Clark-Johnson) Director February 22, 2013 /s/ Denis A. Cortese (Denis A. Cortese) Director February 22, 2013 /s/ Michael L. Gallagher (Michael L. Gallagher) Director February 22, 2013 /s/ Roy A. Herberger, Jr...

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