APS 2012 Annual Report Download - page 162

PINNACLE WEST CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
137
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 and 2011 (dollars in millions):
Commodity Contracts
Year Ended
December 31,
2012
2011
Net derivative balance at beginning of period
$ (51)
$ (38)
Total net gains (losses) realized/unrealized:
Included in earnings
2
2
Included in OCI
(3)
(5)
Deferred as a regulatory asset or liability
7
(10)
Settlements
(5)
11
Transfers into Level 3 from Level 2
(2)
(4)
Transfers from Level 3 into Level 2
4
(7)
Net derivative balance at end of period
$ (48)
$ (51)
Net unrealized gains included in earnings related to
instruments still held at end of period
$ --
$ 1
Amounts included in earnings are recorded in either operating revenues or fuel and purchased
power depending on the nature of the underlying contract.
Transfers reflect the fair market value at the beginning of the period and are triggered by a
change in the lowest significant input as of the end of the period. We had no significant Level 1
transfers to or from any other hierarchy level. Transfers in or out of Level 3 are typically related to
our heat rate options and long-dated energy transactions that extend beyond available quoted periods.
Financial Instruments Not Carried at Fair Value
The carrying value of our net accounts receivable, accounts payable and short-term
borrowings approximate fair value. Our short-term borrowings are classified within Level 2 of the
fair value hierarchy. For our long-term debt fair values see Note 6.