APS 2013 Annual Report Download - page 102

Table of Contents
PINNACLE WEST CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
· the PSA rate includes (a) a “Forward Component,” under which APS recovers or refunds differences between expected fuel and purchased
power costs for the upcoming calendar year and those embedded in the Base Fuel Rate; (b) a “Historical Component,” under which
differences between actual fuel and purchased power costs and those recovered through the combination of the Base Fuel Rate and the
Forward Component are recovered during the next PSA Year; and (c) a “Transition Component,” under which APS may seek mid-year
PSA changes due to large variances between actual fuel and purchased power costs and the combination of the Base Fuel Rate and the
Forward Component; and
· the PSA rate may not be increased or decreased more than $0.004 per kWh in a year without permission of the ACC.
The following table shows the changes in the deferred fuel and purchased power regulatory asset for 2013 and 2012 (dollars in millions):
Twelve Months Ended
December 31,
2013 2012
Beginning balance $73 $ 28
Deferred fuel and purchased power costs - current period (21)(72)
Amounts (charged) credited to customers (31)117
Ending balance $ 21 $ 73
The PSA rate for the PSA year beginning February 1, 2014 is $0.001557 per kWh, as compared to $0.001329 per kWh for the prior year. This
represents a $0.000228 per kWh increase over the 2013 PSA charge. This new rate is comprised of a forward component of $0.001277 per kWh and a
historical component of $0.000280 per kWh. Any uncollected (overcollected) deferrals during the 2014 PSA year will be included in the calculation of the PSA
rate for the PSA year beginning February 1, 2015.
Transmission Rates, Transmission Cost Adjustor and Other Transmission Matters . In July 2008, FERC approved an Open Access
Transmission Tariff for APS to move from fixed rates to a formula rate-setting methodology in order to more accurately reflect and recover the costs that APS
incurs in providing transmission services. A large portion of the rate represents charges for transmission services to serve APS’s retail customers (“Retail
Transmission Charges”). In order to recover the Retail Transmission Charges, APS was previously required to file an application with, and obtain approval
from, the ACC to reflect changes in Retail Transmission Charges through the TCA. Under the terms of the 2012 Settlement Agreement (discussed above),
however, an adjustment to rates to recover the Retail Transmission Charges will be made annually each June 1 and will go into effect automatically unless
suspended by the ACC.
The formula rate is updated each year effective June 1 on the basis of APS’s actual cost of service, as disclosed in APS’s FERC Form 1 report for the
previous fiscal year. Items to be updated include actual capital expenditures made as compared with previous projections, transmission revenue credits and
other items. The resolution of proposed adjustments can result in significant volatility in the revenues to be collected. APS reviews the proposed formula rate
filing amounts with the ACC staff. Any items or adjustments which are not agreed to by APS and the ACC staff can remain in dispute until
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