APS 2012 Annual Report Download - page 91

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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 commercial paper borrowings of $92 million at December 31, 2012.
See “Financial Assurances” in Note 11 for a discussion of APS’s separate outstanding letters of
credit.
Other Financing Matters See Note 3 for information regarding the PSA approved by the
ACC.
See Note 3 for information regarding the settlement related to the 2008 retail rate case, which
includes ACC authorization and requirements of equity infusions into APS of at least $700 million by
December 31, 2014 ($253 million of which was infused into APS from proceeds of a Pinnacle West
equity issuance in 2010).
See Note 18 for information related to the change in our margin and collateral accounts.
Debt Provisions
Pinnacle West’s and APS’s debt covenants related to their respective bank financing
arrangements include maximum debt to capitalization ratios. Pinnacle West and APS comply with this
covenant. For both Pinnacle West and APS, this covenant requires that the ratio of consolidated debt to
total consolidated capitalization not exceed 65%. At December 31, 2012, the ratio was approximately
46% for Pinnacle West and 45% for APS. Failure to comply with such covenant levels would result in
an event of default which, generally speaking, would require the immediate repayment of the debt
subject to the covenants and could cross-default other debt. See further discussion of “cross-default”
provisions below.
Neither Pinnacle West’s nor APS’s financing agreements contain “rating triggers” that would
result in an acceleration of the required interest and principal payments in the event of a rating
downgrade. However, our bank credit agreements contain a pricing grid in which the interest rates we
pay for borrowings thereunder are determined by our current credit ratings.
All of Pinnacle West’s loan agreements contain “cross-default” provisions that would result in
defaults and the potential acceleration of payment under these loan agreements if Pinnacle West or APS
were to default under certain other material agreements. All of APS’s bank agreements contain cross-
default provisions that would result in defaults and the potential acceleration of payment under these
bank agreements if APS were to default under certain other material agreements. Pinnacle West and
APS do not have a material adverse change restriction for credit facility borrowings.
See Note 6 for further discussions of liquidity matters.
Credit Ratings
The ratings of securities of Pinnacle West and APS as of February 15, 2013 are shown below.
We are disclosing these credit ratings to enhance understanding of our cost of short-term and long-term
capital and our ability to access the markets for liquidity and long-term debt. The ratings reflect the
respective views of the rating agencies, from which an explanation of the significance of their ratings