APS 2013 Annual Report Download - page 74

Table of Contents
(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 healthcare cost trend rate.
See Note 8 for further details about our pension and other postretirement benefit plans.
Fair Value Measurements
We account for derivative instruments, investments held in our nuclear decommissioning trust fund, certain cash equivalents and plan assets held in
our retirement and other benefit plans at fair value on a recurring basis. Fair value is the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date. We use inputs, or assumptions that market participants would use, to
determine fair market value. The significance of a particular input determines how the instrument is classified in a fair value hierarchy. We utilize valuation
techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. The determination of fair value sometimes requires
subjective and complex judgment. Our assessment of the inputs and the significance of a particular input to fair value measurement may affect the valuation
of the instruments and their placement within a fair value hierarchy. Actual results could differ from our estimates of fair value. See Note 1 for a discussion
on accounting policies and Note 14 for further fair value measurement discussion.
OTHER ACCOUNTING MATTERS
During 2013, we adopted new accounting guidance relating to balance sheet offsetting disclosures, and disclosures of amounts reclassified from
accumulated OCI. During the first quarter of 2014 we are required to adopt new accounting guidance related to balance sheet presentation of certain
unrecognized tax benefits. See Note 2.
MARKET AND CREDIT RISKS
Market Risks
Our operations include managing market risks related to changes in interest rates, commodity prices and investments held by our nuclear
decommissioning trust fund and benefit plan assets.
Interest Rate and Equity Risk
We have exposure to changing interest rates. Changing interest rates will affect interest paid on variable-rate debt and the market value of fixed
income securities held by our nuclear decommissioning trust fund (see Note 14 and Note 20) and benefit plan assets. The nuclear decommissioning trust
fund and benefit plan assets also have risks associated with the changing market value of their equity and other non-fixed income investments. Nuclear
decommissioning and benefit plan costs are recovered in regulated electricity prices.
The tables below present contractual balances of our consolidated long-term and short-term debt at the expected maturity dates, as well as the fair
value of those instruments on December 31, 2013 and
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