APS 2013 Annual Report Download - page 129

Table of Contents
PINNACLE WEST CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Of the various fuel and purchased power contracts mentioned above, some of those contracts for coal supply include take-or-pay provisions. The
current coal contracts with take-or-pay provisions have terms that expire in 2031.
The following table summarizes our estimated coal take-or-pay commitments (dollars in millions):
Years Ended December 31,
2014 2015 2016 2017 2018 Thereafter
Coal take-or-pay commitments (a) $152 $157 $166 $180 $175 $2,539
(a) Total take-or-pay commitments are approximately $3.4 billion. The total net present value of these commitments is approximately $2.2
billion.
APS spends more to meet its actual fuel requirements than the minimum purchase obligations in our coal take-or-pay contracts. The following table
summarizes the actual amounts purchased under the coal contracts which include take-or-pay provisions for each of the last three years (dollars in millions):
Year Ended December 31,
2013 2012 2011
Total purchases $ 188 $ 196 $191
Renewable Energy Credits
APS has entered into contracts to purchase renewable energy credits to comply with the RES. APS estimates the contract requirements to be
approximately $48 million in 2014; $42 million in 2015; $42 million in 2016; $42 million in 2017; $42 million in 2018; and $453 million thereafter. These
amounts do not include purchases of renewable energy credits that are bundled with energy. Also, these amounts do not include purchases of renewable energy
credits that are associated with purchased power contracts.
Coal Mine Reclamation Obligations
APS must reimburse certain coal providers for amounts incurred for final and contemporaneous coal mine reclamation. We account for
contemporaneous reclamation costs as part of the cost of the delivered coal. We utilize site-specific studies of costs expected to be incurred in the future to
estimate our final reclamation obligation. These studies utilize various assumptions to estimate the future costs. Based on the most recent reclamation studies,
APS recorded a final coal mine reclamation obligation of approximately $207 million at December 31, 2013 and $119 million at December 31, 2012. Under
our current coal supply agreements, we expect to make payments to certain coal providers for the final mine reclamation as follows: $1 million in 2014; $1
million in 2015; $8 million in 2016; $14 million in 2017; $14 million in 2018; and $170 million thereafter. Any amendments to current coal supply
agreements may change the timing of the reimbursement.
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