APS 2012 Annual Report Download - page 126

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PINNACLE WEST CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
101
(b) See “Cost Recovery Mechanisms” discussion above.
(c) Subject to a carrying charge.
(d) There are no regulatory assets for which the ACC has allowed recovery of costs but not
allowed a return by exclusion from rate base. FERC rates are set using a formula rate as
described in “Transmission Rates and Transmission Cost Adjustor.”
The detail of regulatory liabilities is as follows (dollars in millions):
Remaining
Amortization
Period
December 31, 2012
December 31, 2011
Current
Non-Current
Current
Non-Current
Removal costs
(a)
$ 27
$ 321
$ 22
$ 349
Asset retirement obligations
(a)
--
256
--
225
Renewable energy standard (b)
2013
43
--
54
--
Income taxes – change in rates
2042
--
66
--
59
Spent nuclear fuel
2047
10
36
5
44
Deferred gains on utility
property
2019
2
12
2
14
Income taxes- deferred
investment tax credit
2042
2
52
1
30
Other
Various
4
16
4
16
Total regulatory liabilities
$ 88
$ 759
$ 88
$ 737
(a) In accordance with regulatory accounting guidance, APS accrues for removal costs for
its regulated assets, even if there is no legal obligation for removal (see Note 12).
(b) See “Cost Recovery Mechanisms” discussion above.
4. Income Taxes
Certain assets and liabilities are reported differently for income tax purposes than they are for
financial statements purposes. The tax effect of these differences is recorded as deferred taxes. We
calculate deferred taxes using the currently enacted income tax rates.
APS has recorded regulatory assets and regulatory liabilities related to income taxes on its
Balance Sheets in accordance with accounting guidance for regulated operations. The regulatory assets
are for certain temporary differences, primarily the allowance for equity funds used during construction
and pension and other postretirement benefits. The regulatory liabilities primarily relate to deferred
taxes resulting from investment tax credits (“ITC”) and the change in income tax rates.
In accordance with regulatory requirements, APS investment tax credits are deferred and are
amortized over the life of the related property with such amortization applied as a credit to reduce
current income tax expense in the statement of income.