APS 2012 Annual Report Download - page 146

PINNACLE WEST CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
121
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 cost
of this plan. In a defined contribution savings plan, the benefits a participant receives result from
regular contributions participants make to their own individual account, the Company’s matching
contributions and earnings or losses on their investments. Under this plan, the Company matches a
percentage of the participants’ contributions in cash which is then invested in the same investment mix
as participants elect to invest their own future contributions. Pinnacle West recorded expenses for this
plan of approximately $8 million for 2012, $8 million for 2011 and $9 million for 2010.
9. Leases
We lease certain vehicles, land, buildings, equipment and miscellaneous other items through
operating rental agreements with varying terms, provisions and expiration dates.
Total lease expense recognized in the Consolidated Statements of Income was $19 million in
2012, $21 million in 2011, and $23 million in 2010. APS’s lease expense was $16 million in 2012, $18
million in 2011, and $19 million in 2010.
Estimated future minimum lease payments for Pinnacle West’s and APS’s operating leases,
excluding purchased power agreements, are approximately as follows (dollars in millions):
Year
Pinnacle West
Consolidated APS
2013
$ 21
$ 18
2014
17
15
2015
15
12
2016
4
4
2017
3
3
Thereafter
41
40
Total future lease
commitments
$ 101 $ 92
In 1986, APS entered into agreements with three separate lessor trust entities in order to sell and
lease back interests in Palo Verde Unit 2 and related common facilities. These lessor trust entities have
been deemed variable interest entities for which APS is the primary beneficiary. As the primary
beneficiary APS consolidated these lessor trust entities. The above lease disclosures exclude the
impacts of these sale leaseback transactions, as lease accounting for these agreements is eliminated upon
consolidation. See Note 20 for a discussion of VIEs.
10. Jointly-Owned Facilities
APS shares ownership of some of its generating and transmission facilities with other
companies. We are responsible for our share of operating costs, as well as providing our own financing.
Our share of operating expenses and utility plant costs related to these facilities is accounted for using