APS 2012 Annual Report Download - page 95

71
Increase (Decrease)
Actuarial Assumption (a)
Impact on
Pension
Liability
Impact on
Pension
Expense
Discount rate:
Increase 1%
$ (330)
$ (12)
Decrease 1%
408
15
Expected long-term rate
of return on plan assets:
Increase 1%
--
(9)
Decrease 1%
--
9
(a) Each fluctuation assumes that the other assumptions of the calculation are held constant
while the rates are changed by one percentage point.
The following chart reflects the sensitivities that a change in certain actuarial assumptions would
have had on the December 31, 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 millions):
Increase (Decrease)
Actuarial Assumption (a)
Impact on Other
Postretirement Benefit
Obligation
Impact on Other
Postretirement
Benefit Expense
Discount rate:
Increase 1%
$ (149)
$ (8)
Decrease 1%
186
10
Health care cost trend
rate (b):
Increase 1%
172
14
Decrease 1%
(136)
(11)
Expected long-term rate
of return on plan
assets – pretax:
Increase 1%
--
(3)
Decrease 1%
--
3
(a) Each fluctuation assumes that the other assumptions of the calculation are held constant
while the rates are changed by one percentage point.
(b) This assumes a 1% change in the initial and ultimate health care cost trend rate.
See Note 8 for further details about our pension and other postretirement benefit plans.
Derivative Accounting
Derivative accounting requires evaluation of rules that are complex and subject to varying
interpretations. Our evaluation of these rules, as they apply to our contracts, determines whether we use