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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
x x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2015
OR
oo TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission
File Number
Registrants; State of Incorporation;
Addresses; and Telephone Number
IRS Emplo yer
Identification No .
1-8962 PINNACLE WEST CAPITAL CORPORATION
(An Arizona corporation)
400 North Fifth Street, P.O. Box 53999
Phoenix, Arizona 85072-3999
(602) 250-1000
86-0512431
1-4473 ARIZONA PUBLIC SERVICE COMPANY
(An Arizona corporation)
400 North Fifth Street, P.O. Box 53999
Phoenix, Arizona 85072-3999
(602) 250-1000
86-0011170
Securities registered pursuant to Section 12(b) of the Act:
Title Of Each Cla ss Name Of Each Ex cha nge On Which Registered
PINNACLE WEST CAPITAL CORPORATION Common Stock,
No Par Value
New York Stock Exchange
ARIZONA PUBLIC SERVICE COMPANY None None
Securities registered pursuant to Section 12(g) of the Act:
ARIZONA PUBLIC SERVICE COMPANY Common Stock, Par Value $2.50 per share
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act
PINNACLE WEST CAPITAL CORPORATION Yes x No o
ARIZONA PUBLIC SERVICE COMPANY Yes x No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
PINNACLE WEST CAPITAL CORPORATION Yes o No x
ARIZONA PUBLIC SERVICE COMPANY Yes o No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
PINNACLE WEST CAPITAL CORPORATION Yes x No o
ARIZONA PUBLIC SERVICE COMPANY Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-
T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
PINNACLE WEST CAPITAL CORPORATION Yes x No o
ARIZONA PUBLIC SERVICE COMPANY Yes x No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or in any amendment to this Form 10-K.x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and
“smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
PINNACLE WEST CAPITAL CORPORATION
Large accelerated filer xAccelerated filer o
Non-accelerated filer oSmaller reporting company o
(Do not check if a smaller reporting company)
ARIZONA PUBLIC SERVICE COMPANY
Large accelerated filer oAccelerated filer o
Non-accelerated filer xSmaller reporting company o
(Do not check if a smaller reporting company)
Indicate by check mark whether each registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x

Table of contents

  • Page 1
    ...and posted pursuant to Rule 405 of Regulation ST during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). PINNACLE WEST CAPITAL CORPORATION ARIZONA PUBLIC SERVICE COMPANY Yes x No o Yes x No o Indicate by check mark if disclosure of...

  • Page 2
    ... last sold, or the average bid and asked price of such common equity, as of the last business day of each registrant's most recently completed second fiscal quarter: PINNACLE WEST CAPITAL CORPORATION ARIZONA PUBLIC SERVICE COMPANY The number of shares outstanding of each registrant's common stock as...

  • Page 3
    ... Statements Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information Directors, Executive Officers and Corporate Governance of Pinnacle West Executive Compensation Security Ownership of Certain Beneficial Owners and Management...

  • Page 4
    ... Allowance for Funds Used During Construction Arizona Nuclear Power Project, also known as Palo Verde Arizona Public Service Company, a subsidiary of the Company Asset retirement obligations Best available retrofit technology The portion of APS's retail base rates attributable to fuel and purchased...

  • Page 5
    ... risks inherent in the operation of nuclear facilities, including spent fuel disposal uncertainty; current and future economic conditions in Arizona, including in real estate markets; the development of new technologies which may affect electric sales or delivery; the cost of debt and equity capital...

  • Page 6
    ... distribution. BUSINESS OF ARIZONA PUBLIC SERVICE COMPANY APS currently provides electric service to approximately 1.2 million customers. We own or lease 6,186 MW of regulated generation capacity and we hold a mix of both long-term and short-term purchased power agreements for additional capacity...

  • Page 7
    Table of Contents The following map shows APS's retail service territory, including the locations of its generating facilities and principal transmission lines. 4

  • Page 8
    ...type used to supply energy to Native Load customers during 2015 were as follows: Generation Facilities APS has ownership interests in or leases the coal, nuclear, gas, oil and solar generating facilities described below. For additional information regarding these facilities, see Item 2. Coal-Fueled...

  • Page 9
    ... energy projects. BHP Billiton will be retained by NTEC under contract as the mine manager and operator until July 2016. Also occurring concurrently with the closing, the Four Corners' co-owners executed a long-term agreement for the supply of coal to Four Corners from July 2016, when the current...

  • Page 10
    ... Verde Nuclear Generating Station - Palo Verde is a 3-unit nuclear power plant located approximately 50 miles west of Phoenix, Arizona. APS operates the plant and owns 29.1% of Palo Verde Units 1 and 3 and approximately 17% of Unit 2. In addition, APS leases approximately 12.1% of Unit 2, resulting...

  • Page 11
    ...% of its share of Palo Verde Unit 2 and certain common facilities. The leaseback was originally scheduled to expire at the end of 2015 and contained options to renew the leases or to purchase the leased property for fair market value at the end of the lease terms. On July 7, 2014, APS exercised the...

  • Page 12
    ... of Contents costs incurred by Palo Verde during the period January 1, 2007 through June 30, 2011. APS's share of this amount is $16.7 million. APS's first claim made pursuant to the terms of the August 18, 2014 settlement agreement, which was for the period July 1, 2011 through June 30, 2014, was...

  • Page 13
    ... Palo Verde Units 1, 2 and 3 are currently included in APS's ACC jurisdictional rates. Decommissioning costs are recoverable through a nonbypassable system benefits charge (paid by all retail customers taking service from the APS system). Based on current nuclear decommissioning trust asset balances...

  • Page 14
    ... work to perform in 2016. Palo Verde has spent approximately $125 million on capital enhancements as of December 31, 2015 (APS's share is 29.1%). Natural Gas and Oil Fueled Generating Facilities APS has six natural gas power plants located throughout Arizona, consisting of Redhawk, located near Palo...

  • Page 15
    ...the Community Power Project in Flagstaff, Arizona. The Community Power Project, approved by the ACC on April 1, 2010, is a pilot program through which APS owns, operates and receives energy from approximately 1 MW of solar photovoltaic distributed energy systems located within a certain test area in...

  • Page 16
    ... technologies. The renewable energy requirement is 6% of retail electric sales in 2016 and increases annually until it reaches 15% in 2025. In APS's 2009 retail rate case settlement agreement (the "2009 Settlement Agreement"), APS committed to have 1,700 GWh of new renewable resources in service...

  • Page 17
    ... currently in operation and 50 MW are under contract for development or are under construction. Renewable resources in operation include 189 MW of facilities owned by APS, 629 MW of long-term purchased power agreements, and an estimated 427 MW of customer-sited, third-party owned distributed energy...

  • Page 18
    ... conditions, including successful siting, permitting and interconnection of the projects to the electric grid. Actual/ Target Commercial Operation Date Net Capacity In Operation (MW AC) Net Capacity Planned/Under Development (MW AC) Location Term (Years) APS Owned Solar: AZ Sun Program: Paloma...

  • Page 19
    ... create jobs. In 2015, APS completed its work on a $3 million financial award for a high penetration photovoltaic generation study related to the Community Power Project in Flagstaff, Arizona. Competitive Environment and Regulatory Oversight Retail The ACC regulates APS's retail electric rates and...

  • Page 20
    ...for information regarding APS's transmission rates.) During 2015, approximately 5.2% of APS's electric operating revenues resulted from such sales and services. APS's wholesale activity primarily consists of managing fuel and purchased power supplies to serve retail customer energy requirements. APS...

  • Page 21
    ... plants. On June 2, 2014, EPA issued two proposed rules to regulate GHG emissions from modified and reconstructed electric generating units ("EGUs") pursuant to Section 111(b) of the Clean Air Act and existing fossil fuel-fired power plants pursuant to Clean Air Act Section 111(d). On August 3, 2015...

  • Page 22
    ... able to comply with the Clean Power Plan for our Arizona generating units in a manner that will not have material financial or operational impacts to the Company. On the other hand, if ADEQ selects a mass-based approach to compliance with the Clean Power Plan, our annual cost of compliance could be...

  • Page 23
    ... energy in our resource portfolio to increase over the coming years. APS prepares an inventory of GHG emissions from its operations. This inventory is reported to EPA under the EPA GHG Reporting Program and is voluntarily communicated to the public in Pinnacle West's annual Corporate Responsibility...

  • Page 24
    ...of the Navajo Plant units. APS estimates that its share of costs for upgrades at the Navajo Plant, based on EPA's FIP, could be up to approximately $200 million. In October 2014, a coalition of environmental groups, an Indian tribe, and others filed petitions for review in the United States Court of...

  • Page 25
    Table of Contents on October 1, 2015). No additional equipment is needed for Four Corners Units 4 and 5 to comply with these rules. SRP, the operating agent for the Navajo Plant, estimates that APS's share of costs for equipment necessary to comply with the rules is approximately $1 million. The ...

  • Page 26
    ... environmental mitigation projects to benefit the Navajo Nation. APS is responsible for 15 percent of these costs based on its ownership interest in the units at the time of the alleged violations, which does not result in a material impact on our financial position, results of operations or cash...

  • Page 27
    ...it or its corporate predecessors were at one time sites of, or sites associated with, manufactured gas plants. APS is taking action to voluntarily remediate these sites. APS does not expect these matters to have a material adverse effect on its financial position, results of operations or cash flows...

  • Page 28
    ... United States have resulted in numerous court actions, which, in addition to future supply conditions, have the potential to impact APS's operations. San Juan River Adjudication. Both groundwater and surface water in areas important to APS's operations have been the subject of inquiries, claims...

  • Page 29
    ... Arizona. BCE is incorporated in Delaware. Additional information for each of these companies is provided below: Approximate Number of Employees at December 31, 2015 Principal Executive Office Address Year of Incorporation Pinnacle West APS BCE El Dorado Total 400 North Fifth Street Phoenix, AZ...

  • Page 30
    ...by contacting Pinnacle West at the following address: Pinnacle West Capital Corporation, Office of the Corporate Secretary, Mail Station 8602, P.O. Box 53999, Phoenix, Arizona 85072-3999 (telephone 602-250-4400). ITEM 1A. RISK FACTORS In addition to the factors affecting specific business operations...

  • Page 31
    ... nuclear generation facilities, including Palo Verde. As a result of the March 2011 earthquake and tsunamis that caused significant damage to the Fukushima Daiichi Nuclear Power Plant in Japan, various industry organizations analyzed information from the Japan incident and develop action plans for...

  • Page 32
    ... regulations and possibly make more fundamental changes to the NRC's system of regulation. As a result of the Fukushima event, the NRC has directed nuclear power plants to implement the first tier recommendations of the NRC's Near Term Task Force. In response to these recommendations, Palo Verde...

  • Page 33
    ... change in APS's generation portfolio could require additional capital investments and increased operating costs, and thus have a significant financial impact on the Company. See Note 10 for additional risks and uncertainties resulting from the Clean Power Plan. Physical and Operational Risks...

  • Page 34
    ...APS's financial condition, results of operations or cash flows. Effects of Energy Conservation Measures and Distributed Energy. The ACC has enacted rules regarding energy efficiency that mandate a 22% annual energy savings requirement by 2020. This will likely increase participation by APS customers...

  • Page 35
    ...a material adverse impact on APS's financial condition, results of operations and cash flows. Customer and Sales Growth. For the three years 2013 through 2015, APS's retail customer growth averaged 1.3% per year. We currently expect annual customer growth to average in the range of 2.0-3.0% for 2016...

  • Page 36
    ... or the inappropriate release of certain types of information, including confidential customer, employee, financial or system operating information, could have a material adverse impact on our financial condition, results of operations or cash flows. We operate in a highly regulated industry that...

  • Page 37
    ..., fuel supply, spent fuel disposal, regulatory and financial risks and the risk of terrorist attack. APS has an ownership interest in and operates, on behalf of a group of participants, Palo Verde, which is the largest nuclear electric generating facility in the United States. Palo Verde constitutes...

  • Page 38
    ... with union employees and potential work stoppages. These or other employee workforce factors could negatively impact our business, financial condition or results of operations. FINANCIAL RISKS Financial market disruptions or new rules or regulations may increase our financing costs or limit...

  • Page 39
    ...or withdrawal could adversely affect the market price of Pinnacle West's and APS's securities, limit our access to capital and increase our borrowing costs, which would diminish our financial results. We would be required to pay a higher interest rate for future financings, and our potential pool of...

  • Page 40
    ... most of the pension costs and other postretirement benefit costs and all of the nuclear decommissioning costs in our regulated rates. Any inability to fully recover these costs in a timely manner would have a material negative impact on our financial condition, results of operations or cash flows...

  • Page 41
    ... and, in that case, may prevent or discourage attempts to remove and replace incumbent directors. ITEM 1B. UNRESOLVED STAFF COMMENTS Neither Pinnacle West nor APS has received written comments regarding its periodic or current reports from the SEC staff that were issued 180 days or more preceding...

  • Page 42
    ...ITEM 2. PROPERTIES Generation Facilities APS's portfolio of owned and leased generating facilities is provided in the table below: No. of Units % Owned (a) Principal Fuels Used Primary Dispatch Type Owned Capacity (MW) Name Nuclear: Palo Verde (b) Total Nuclear Steam: Four Corners 4, 5 (c) Cholla...

  • Page 43
    ... Water & Power (5.7%). The plant is operated by APS. (c) The other participants are Salt River Project (10%), Public Service Company of New Mexico (13%), Tucson Electric Power Company (7%) and El Paso (7%). The plant is operated by APS. (d) Cholla Unit 2's last day of service was on October 1, 2015...

  • Page 44
    ... constructed with the capability to string a 230kV line as a second circuit. APS continues to work with regulators to identify transmission projects necessary to support renewable energy facilities. Two such projects, which are included in APS's 2015 transmission plan, are the Delaney to Palo Verde...

  • Page 45
    ... that we have paid in the past for such rights-of-way. The ultimate cost of renewal of certain of the rights-of-way for our transmission lines is therefore uncertain. ITEM 3. LEGAL PROCEEDINGS See "Business of Arizona Public Service Company - Environmental Matters" in Item 1 with regard to pending...

  • Page 46
    ...Vice President, Supply Chain Management of APS Senior Vice President, Public Policy of APS Senior Vice President, Customers and Regulation of APS Vice President, Rates and Regulation of APS Executive Vice President of Pinnacle West and APS Chief Financial Officer of Pinnacle West and APS Senior Vice...

  • Page 47
    ... is publicly held and is traded on the New York Stock Exchange. At the close of business on February 12, 2016, Pinnacle West's common stock was held of record by approximately 20,570 shareholders. QUARTERLY STOCK PRICES AND DIVIDENDS PAID PER SHARE STOCK SYMBOL: PNW Dividends 2015 High Low Close Per...

  • Page 48
    ...information about our purchases of our common stock during the fourth quarter of 2015. Total Number of Shares Purchased (1) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs Period Average...

  • Page 49
    ... Financial Statements including the related notes included in Item 8 of this Form 10-K. 2015 2014 2013 2012 2011 (dollars in thousands, except per share amounts) OPERATING RESULTS Operating revenues Income from continuing operations Income (loss) from discontinued operations - net of income taxes...

  • Page 50
    ...FINANCIAL DATA ARIZONA PUBLIC SERVICE COMPANY - CONSOLIDATED 2015 2014 2013 (dollars in thousands) 2012 2011 OPERATING RESULTS Electric operating revenues Fuel and purchased power costs Other operating expenses Operating income Other income Interest expense - net of allowance for borrowed funds Net...

  • Page 51
    ... should be read in conjunction with Pinnacle West's Consolidated Financial Statements and APS's Consolidated Financial Statements and the related Notes that appear in Item 8 of this report. For information on factors that may cause our actual future results to differ from those we currently seek or...

  • Page 52
    ... purchase price for the interest was approximately $182 million. In connection with APS's most recent retail rate case with the ACC, the ACC reserved the right to review the prudence of the Four Corners transaction for cost recovery purposes upon the closing of the transaction. On December 23, 2014...

  • Page 53
    ...matter. Natural Gas. APS has six natural gas power plants located throughout Arizona, including Ocotillo. Ocotillo is a 330 MW 4unit gas plant located in the metropolitan Phoenix area. In early 2014, APS announced a project to modernize the plant, which involves retiring two older 110 MW steam units...

  • Page 54
    ... solar program for rate making purposes shall not be made until the project is fully in service and APS requests cost recovery in a future rate case. Demand Side Management. In December 2009, Arizona regulators placed an increased focus on energy efficiency and other demand side management programs...

  • Page 55
    ..., APS filed a NOI informing the ACC that APS intends to submit a rate case application in June 2016 using an adjusted test year ending December 31, 2015. The NOI provides an overview of the key issues APS expects to address in its formal request such as rate design changes (residential, commercial...

  • Page 56
    ... $4.90 per month from a typical future rooftop solar customer to help pay for their use of the electric grid. The fixed charge does not increase APS's revenue because it is credited to the LFCR. In making its decision, the ACC determined that the current net metering program creates a cost shift...

  • Page 57
    ... can result in increases or decreases in annual net income of up to $10 million. Fuel and Purchased Power Costs. Fuel and purchased power costs included on our Consolidated Statements of Income are impacted by our electricity sales volumes, existing contracts for purchased power and generation fuel...

  • Page 58
    ... results reflect an increase of approximately $34 million for the regulated electricity segment primarily due to the Four Corners-related rate change, lower operations and maintenance expenses, and higher retail sales due to customer growth and changes in customer usage patterns and related pricing...

  • Page 59
    ... Corners-related rate change Higher retail sales due to customer growth and changes in customer usage patterns and related pricing Lost fixed cost recovery Effects of weather Changes in net fuel and purchased power costs, including off-system sales margins and related deferrals Changes in long-term...

  • Page 60
    ... energy and similar regulatory programs, which is partially offset in operating revenues and purchased power; An increase of $9 million related to higher nuclear generation costs; An increase of $6 million in customer service costs including costs related to a new customer information system...

  • Page 61
    ... 31, 2014 Regulated Electricity Segment: Operating revenues less fuel and purchased power expenses Operations and maintenance Depreciation and amortization Taxes other than income taxes All other income and expenses, net Interest charges, net of allowance for borrowed funds used during construction...

  • Page 62
    ... related to costs for demand-side management, renewable energy and similar regulatory programs, which were partially offset in operating revenues and purchased power; A decrease of $20 million related to lower employee benefit costs; An increase of $33 million in generation costs, primarily related...

  • Page 63
    ... equivalents Arizona Public Service Company 2015 Net cash flow provided by operating activities Net cash flow used for investing activities Net cash flow used for financing activities Net increase in cash and cash equivalents Operating Cash Flows 2015 Compared with 2014. Pinnacle West's consolidated...

  • Page 64
    ... benefit plans. Investing Cash Flows 2015 Compared with 2014. Pinnacle West's consolidated net cash used for investing activities was $1,066 million in 2015, compared to $923 million in 2014, an increase of $143 million in net cash used primarily related to increased capital expenditures. 2014...

  • Page 65
    ... the Year Ended December 31, 2016 APS Generation: Nuclear Fuel Renewables Environmental New Gas Generation Other Generation Distribution Transmission Other (a) Total APS (a) Primarily information systems and facilities projects. Generation capital expenditures are comprised of various improvements...

  • Page 66
    ... On December 16, 2015, the Pinnacle West Board of Directors declared a quarterly dividend of $0.625 per share of common stock, payable on March 1, 2016, to shareholders of record on February 1, 2015. During 2015, Pinnacle West increased its indicated annual dividend from $2.38 per share to $2.50 per...

  • Page 67
    ... of long-term debt on our Consolidated Balance Sheets at December 31, 2014. On November 17, 2015, APS canceled all $32 million of the Navajo County, Arizona Pollution Control Corporation Revenue Refunding Bonds (Arizona Public Service Company Cholla Project), 2009 Series B, purchased in connection...

  • Page 68
    ... natural gas transportation, fuel supply, and other energy-related contracts. At this time, we believe we have sufficient available liquidity resources to respond to a downward revision to our credit ratings. Moody's Pinnacle West Corporate credit rating Commercial paper Outlook APS Corporate credit...

  • Page 69
    ... dates through 2045 and bears interest principally at fixed rates. Interest on variablerate long-term debt is determined by using average rates at December 31, 2015 (see Note 6). Our fuel and purchased power commitments include purchases of coal, electricity, natural gas, renewable energy, nuclear...

  • Page 70
    ... December 31, 2015 reported pension liability on the Consolidated Balance Sheets and our 2015 reported pension 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...

  • Page 71
    ...and ultimate healthcare cost trend rate. See Note 7 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...

  • Page 72
    ... 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...

  • Page 73
    ... balances of APS's long-term debt at the expected maturity dates, as well as the fair value of those instruments on December 31, 2015 and 2014. The interest rates presented in the tables below represent the weighted-average interest rates as of December 31, 2015 and 2014 (dollars in millions): APS...

  • Page 74
    ... as derivatives, including futures, forwards, options and swaps. As part of our risk management program, we use such instruments to hedge purchases and sales of electricity and fuels. The changes in market value of such contracts have a high correlation to price changes in the hedged commodities...

  • Page 75
    ...our risk management assets and liabilities included on Pinnacle West's Consolidated Balance Sheets at December 31, 2015 and 2014 (dollars in millions): December 31, 2015 Gain (Loss) Price Up 10% Mark-to-market changes reported in: Regulatory asset (liability) or OCI (a) Electricity Natural gas Total...

  • Page 76
    ... 2013 Pinnacle West Consolidated Statements of Changes in Equity for 2015, 2014 and 2013 Management's Report on Internal Control over Financial Reporting (Arizona Public Service Company) Report of Independent Registered Public Accounting Firm APS Consolidated Statements of Income for 2015, 2014 and...

  • Page 77
    ... internal control over financial reporting as of December 31, 2015 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report which is included herein and also relates to the Company's consolidated financial statements. February 19, 2016 74

  • Page 78
    ... REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Pinnacle West Capital Corporation Phoenix, Arizona We have audited the accompanying consolidated balance sheets of Pinnacle West Capital Corporation and subsidiaries (the "Company") as of December 31, 2015 and 2014, and...

  • Page 79
    ... with the policies or procedures may deteriorate. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Pinnacle West Capital Corporation and subsidiaries as of December 31, 2015 and 2014, and the results of their...

  • Page 80
    ... PINNACLE WEST CAPITAL CORPORATION CONSOLIDATED STATEMENTS OF INCOME (dollars and shares in thousands, except per share amounts) Year Ended December 31, 2015 2014 2013 OPERATING REVENUES OPERATING EXPENSES Fuel and purchased power Operations and maintenance Depreciation and amortization Taxes...

  • Page 81
    ...PINNACLE WEST CAPITAL CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (dollars in thousands) Year Ended December 31, 2015 2014 2013 NET INCOME OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX Derivative instruments: Net unrealized loss, net of tax benefit...of the financial statements. $ ...

  • Page 82
    ... PINNACLE WEST CAPITAL CORPORATION CONSOLIDATED BALANCE SHEETS (dollars in thousands) December 31, 2015 2014 ASSETS CURRENT ASSETS Cash and cash equivalents Customer and other receivables Accrued unbilled revenues Allowance for doubtful accounts Materials and supplies (at average cost) Fossil fuel...

  • Page 83
    ... of Contents PINNACLE WEST CAPITAL CORPORATION CONSOLIDATED BALANCE SHEETS (dollars in thousands) December 31, 2015 2014 LIABILITIES AND EQUITY CURRENT LIABILITIES Accounts payable Accrued taxes (Note 4) Accrued interest Common dividends payable Short-term borrowings (Note 5) Current maturities of...

  • Page 84
    ... nuclear fuel Deferred fuel and purchased power Deferred fuel and purchased power amortization Allowance for equity funds used during construction Deferred income taxes Deferred investment tax credit Change in derivative instruments fair value Changes in current assets and liabilities: Customer...

  • Page 85
    81

  • Page 86
    ... of Contents PINNACLE WEST CAPITAL CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (dollars in thousands, except per share amounts) Retained Earnings Accumulated Other Comprehensive Income (Loss) Noncontrolling Interests Common Stock Treasury Stock Total Shares Balance, December 31...

  • Page 87
    ... ON INTERNAL CONTROL OVER FINANCIAL REPORTING (ARIZONA PUBLIC SERVICE COMPANY) Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f), for APS. Management conducted an evaluation of...

  • Page 88
    ...control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable...

  • Page 89
    ... the policies or procedures may deteriorate. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Arizona Public Service Company and subsidiary as of December 31, 2015 and 2014, and the results of their operations...

  • Page 90
    ...Contents ARIZONA PUBLIC SERVICE COMPANY CONSOLIDATED STATEMENTS OF INCOME (dollars in thousands) Year Ended December 31, 2015 2014 2013 ELECTRIC OPERATING REVENUES OPERATING EXPENSES Fuel and purchased power Operations and maintenance Depreciation and amortization Income taxes (Note 4) Taxes other...

  • Page 91
    ...ARIZONA PUBLIC SERVICE COMPANY CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (dollars in thousands) Year Ended December 31, 2015 2014 2013 NET INCOME OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX Derivative instruments: Net unrealized loss, net of tax benefit... of the financial statements. $ 469...

  • Page 92
    ... CURRENT ASSETS Cash and cash equivalents Customer and other receivables Accrued unbilled revenues Allowance for doubtful accounts Materials and supplies (at average cost) Fossil fuel (at average cost) Assets from risk management activities (Note 16) Deferred fuel and purchased power regulatory...

  • Page 93
    ... for pension benefits (Note 7) Liabilities from risk management activities (Note 16) Customer advances Coal mine reclamation Deferred investment tax credit Unrecognized tax benefits (Note 4) Other Total deferred credits and other COMMITMENTS AND CONTINGENCIES (SEE NOTES) TOTAL LIABILITIES AND EQUITY...

  • Page 94
    ... nuclear fuel Deferred fuel and purchased power Deferred fuel and purchased power amortization Allowance for equity funds used during construction Deferred income taxes Deferred investment tax credit Change in derivative instruments fair value Changes in current assets and liabilities: Customer...

  • Page 95
    Dividends declared but not paid Liabilities assumed related to acquisition of SCE's Four Corners' interest 69,400 - 65,800 - 62,500 145,609 The accompanying notes are an integral part of the financial statements. 90

  • Page 96
    ...Contents ARIZONA PUBLIC SERVICE COMPANY CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (dollars in thousands) Additional Paid-In Capital $ 2,379,696 Retained Earnings $ 1,624,237 Accumulated Other Comprehensive Income (Loss) $ (89,095) $ Noncontrolling Interests 129,483 $ Common Stock Shares Balance...

  • Page 97
    ...formed in 2014 that focuses on growth opportunities that leverage the Company's core expertise in the electric energy industry. BCE is currently pursuing transmission opportunities through a joint venture arrangement. Pinnacle West's Consolidated Financial Statements include the accounts of Pinnacle...

  • Page 98
    ... taxes. Revenues from our Native Load customers and non-derivative instruments are reported on a gross basis on Pinnacle West's Consolidated Statements of Income. In the electricity business, some contracts to purchase energy are netted against other contracts to sell energy. This is called a "book...

  • Page 99
    ...: Generation Transmission Distribution General plant Plant in service and held for future use Accumulated depreciation and amortization Net Construction work in progress Palo Verde sale leaseback, net of accumulated depreciation Intangible assets, net of accumulated amortization Nuclear fuel, net of...

  • Page 100
    ...-average depreciation rate was 2.74% in 2015, 2.77% in 2014, and 3.00% in 2013. Allowance for Funds Used During Construction AFUDC represents the approximate net composite interest cost of borrowed funds and an allowed return on the equity funds used for construction of regulated utility plant...

  • Page 101
    ... CONSOLIDATED FINANCIAL STATEMENTS See Note 13 for additional information about fair value measurements. Derivative Accounting We are exposed to the impact of market fluctuations in the commodity price and transportation costs of electricity, natural gas, coal and in interest rates. We manage risks...

  • Page 102
    ... of Contents COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS an offsetting regulatory liability through the settlement period ending December of 2016. See Note 10 for information on spent nuclear fuel disposal costs. Income Taxes Income taxes are provided using the asset and liability approach...

  • Page 103
    ... FINANCIAL STATEMENTS Our investments in the nuclear decommissioning trust fund are accounted for in accordance with guidance on accounting for certain investments in debt and equity securities. See Note 13 and Note 19 for more information on these investments. Business Segments Pinnacle West...

  • Page 104
    ...not impact our results of operations or cash flows. Debt issuance costs continue to be amortized as interest expense. See Note 6. 3. Regulatory Matters Retail Rate Case Filings with the Arizona Corporation Commission Upcoming Rate Case Filing On January 29, 2016, APS filed a NOI informing the ACC...

  • Page 105
    ...the ACC must supply an increasing percentage of their retail electric energy sales from eligible renewable resources, including solar, wind, biomass, biogas and geothermal technologies. In order to achieve these requirements, the ACC allows APS to include a RES surcharge as part of customer bills to...

  • Page 106
    ...that verified energy savings from APS's resource savings projects could be counted toward compliance with the Electric Energy Efficiency Standard, however, the ACC ruled that APS was not allowed to count savings from systems savings projects toward determination of its achievement tier level for its...

  • Page 107
    ... Contents COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS On June 1, 2015, APS filed its 2016 DSM Plan requesting a budget of $68.9 million and minor modifications to its DSM portfolio to increase energy savings and cost effectiveness of the programs. The DSM Plan also proposed a reduction in...

  • Page 108
    ... applied prospectively, may be calculated to account for previously over- or under-collected amounts. Effective June 1, 2014, APS's annual wholesale transmission rates for all users of its transmission system increased by approximately $5.9 million for the twelve-month period beginning June 1, 2014...

  • Page 109
    ... $4.90 per month from a typical future rooftop solar customer to help pay for their use of the electric grid. The fixed charge does not increase APS's revenue because it is credited to the LFCR. In making its decision, the ACC determined that the current net metering program creates a cost shift...

  • Page 110
    ...of Units 1-3 of Four Corners. APS made its filing under this provision on December 30, 2013. On December 23, 2014, the ACC approved rate adjustments resulting in a revenue increase of $57.1 million on an annual basis. This includes the deferral for future recovery of all non-fuel operating costs for...

  • Page 111
    ... Current Non-Current December 31, 2014 Current Non-Current Pension Retired power plant costs Income taxes - AFUDC equity Deferred fuel and purchased power - mark-to-market (Note 16) Four Corners cost deferral Income taxes - investment tax credit basis adjustment Lost fixed cost recovery Palo Verde...

  • Page 112
    ...2014 Current Non-Current Asset retirement obligations Removal costs Other postretirement benefits Income taxes - deferred investment tax credit Income taxes - change in rates Spent nuclear fuel Renewable energy standard (b) Demand side management (b) Sundance maintenance Deferred fuel and purchased...

  • Page 113
    ... NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Net income associated with the Palo Verde sale leaseback VIEs is not subject to tax (see Note 18). As a result, there is no income tax expense associated with the VIEs recorded on the Pinnacle West Consolidated and APS Consolidated Statements of Income...

  • Page 114
    ... we have filed, or will file, with the IRS. The components of income tax expense are as follows (dollars in thousands): Pinnacle West Consolidated Year Ended December 31, 2015 2014 2013 2015 APS Consolidated Year Ended December 31, 2014 2013 Current: Federal State Total current Deferred: Federal...

  • Page 115
    ... rate Increases (reductions) in tax expense resulting from: State income tax net of federal income tax benefit Credits and favorable adjustments related to prior years resolved in current year Medicare Subsidy Part-D Allowance for equity funds used during construction (see Note 1) Palo Verde...

  • Page 116
    ... DEFERRED TAX LIABILITIES Plant-related Risk management activities Other postretirement assets Regulatory assets: Allowance for equity funds used during construction Deferred fuel and purchased power Deferred fuel and purchased power - mark-to-market Pension benefits Retired power plant costs (see...

  • Page 117
    ... FINANCIAL STATEMENTS 5. Lines of Credit and Short-Term Borrowings Pinnacle West and APS maintain committed revolving credit facilities in order to enhance liquidity and provide credit support for their commercial paper programs, to refinance indebtedness, and for other general corporate...

  • Page 118
    ...Maturity Dates (a) Interest Rates 2015 December 31, 2014 APS Pollution control bonds: Variable Fixed Total pollution control bonds Senior unsecured notes Palo Verde sale leaseback lessor notes Term loan Unamortized discount Unamortized premium Unamortized debt issuance cost Total APS long-term debt...

  • Page 119
    ... classified as current maturities of long-term debt on our Consolidated Balance Sheets at December 31, 2014. On June 26, 2015, APS entered into a $50 million term loan facility that matures June 26, 2018. Interest rates are based on APS's senior unsecured debt credit ratings. APS used the proceeds...

  • Page 120
    ...30, 2014. On December 8, 2015, APS redeemed at par and canceled all $32 million of the Navajo County, Arizona Pollution Control Corporation Revenue Refunding Bonds (Arizona Public Service Company Cholla Project), 2009 Series C. See "Lines of Credit and Short-Term Borrowings" in Note 5 and "Financial...

  • Page 121
    ... compensated employees designated for participation by the Board of Directors. Our employees do not contribute to the plans. We calculate the benefits based on age, years of service and pay. Pinnacle West also sponsors an other postretirement benefit plan (Pinnacle West Capital Corporation Group...

  • Page 122
    ...' net periodic benefit costs and the portion of these costs charged to expense (including administrative costs and excluding amounts capitalized as overhead construction, billed to electric plant participants or charged to the regulatory asset or liability) (dollars in thousands): Pension 2015 2014...

  • Page 123
    ... FINANCIAL STATEMENTS The following table shows the plans' changes in the benefit obligations and funded status for the years 2015 and 2014 (dollars in thousands): Pension 2015 2014 2015 Other Benefits 2014 Change in Benefit Obligation Benefit obligation at January 1 Service cost Interest cost...

  • Page 124
    ... and net periodic benefit costs: Benefit Obligations As of December 31, 2015 2014 2015 January September Benefit Costs For the Years Ended December 31, 2014 October December 2013 Discount rate - pension Discount rate - other benefits Rate of compensation increase Expected long-term return on plan...

  • Page 125
    ... of investments in Pinnacle West securities. The overall strategy of the pension plan's IPS is to achieve an adequate level of trust assets relative to the benefit obligations. To achieve this objective, the plan's investment policy provides for mixes of investments including long-term fixed...

  • Page 126
    ...CONSOLIDATED FINANCIAL STATEMENTS provide for a specific mix of long-term fixed income assets, but does expect the average credit quality of such assets to be investment grade. As of December 31, 2015, long-term fixed income assets represented 60% of total pension plan assets, and return-generating...

  • Page 127
    ... FINANCIAL STATEMENTS transactions, assessing hierarchy classifications, comparing investment returns with benchmarks, and obtaining and reviewing independent audit reports on the trustee's internal operating controls and valuation processes. The fair value of Pinnacle West's pension plan...

  • Page 128
    ... NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The fair value of Pinnacle West's pension plan and other postretirement benefit plan assets at December 31, 2014, by asset category, are as follows (dollars in thousands): Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other...

  • Page 129
    ... Pinnacle West and its subsidiaries. In 2015, costs related to APS's employees represented 99% of the total cost of this plan. In a defined contribution savings plan, the benefits a participant receives result from regular contributions participants make to their own individual account, the Company...

  • Page 130
    ...17 million in 2015, $18 million in 2014, and $18 million in 2013. APS's lease expense was $14 million in 2015, $15 million in 2014, and $15 million in 2013. Estimated future minimum lease payments for Pinnacle West's and APS's operating leases, excluding purchased power agreements, are approximately...

  • Page 131
    ...31, 2015 (dollars in thousands): Construction Work in Progress Percent Owned Plant in Service Accumulated Depreciation Generating facilities: Palo Verde Units 1 and 3 Palo Verde Unit 2 (a) Palo Verde Common Palo Verde Sale Leaseback Four Corners Generating Station Navajo Generating Station Units...

  • Page 132
    ... and had no impact on the amount of current reported net income. APS's second claim made pursuant to the terms of the August 18, 2014 settlement agreement, which was for the period July 1, 2014 through June 30, 2015, was filed for $12.0 million (APS's share of this amount would be $3.6 million), and...

  • Page 133
    ... estimate the future costs. Based on the most recent reclamation studies, APS recorded an obligation for the coal mine final reclamation of approximately $202 million at December 31, 2015 and $198 million at December 31, 2014. Under our current coal supply agreements, we expect to make payments for...

  • Page 134
    ... and sales as a result of interruption of electrical service. APS and Pinnacle West filed a motion to dismiss, which the court granted on December 9, 2013. On January 13, 2014, the plaintiffs appealed the lower court's decision. The appeal is now fully briefed and pending before the United States...

  • Page 135
    ... and future operations, including air emissions, water quality, wastewater discharges, solid waste, hazardous waste, and CCRs. These laws and regulations can change from time to time, imposing new obligations on APS resulting in increased capital, operating, and other costs. Associated capital...

  • Page 136
    ...million for Cholla (excludes costs related to Cholla Unit 2 which was closed on October 1, 2015). No additional equipment is needed for Four Corners Units 4 and 5 to comply with these rules. SRP, the operating agent for the Navajo Plant, estimates that APS's share of costs for equipment necessary to...

  • Page 137
    ... able to comply with the Clean Power Plan for our Arizona generating units in a manner that will not have material financial or operational impacts to the Company. On the other hand, if ADEQ selects a mass-based approach to compliance with the Clean Power Plan, our annual cost of compliance could be...

  • Page 138
    ..., the Navajo Nation, and water supplies for our power plants. The financial impact of complying with current and future environmental rules could jeopardize the economic viability of our coal plants or the willingness or ability of power plant participants to fund any required equipment upgrades or...

  • Page 139
    ... of the DOI's review process necessary to allow for the effectiveness of lease amendments and related rights-of-way renewals for Four Corners. We are monitoring this matter and will intervene if a lawsuit is filed. We cannot predict the timing or outcome of this matter. New Mexico Tax Matter On May...

  • Page 140
    ... Corners Units 1-3 coal-fired power plant decommissioning study was finalized, which resulted in an increase to the ARO of $24 million. In addition, Four Corners spent $30 million in actual decommissioning costs. Finally, in 2014 APS also recognized an ARO related to a new solar facility on leased...

  • Page 141
    .... Selected Quarterly Financial Data (Unaudited) Consolidated quarterly financial information for 2015 and 2014 is provided in the tables below (dollars in thousands, except per share amounts). Weather conditions cause significant seasonal fluctuations in our revenues; therefore, results for interim...

  • Page 142
    ... Selected Quarterly Financial Data (Unaudited) - APS APS's quarterly financial information for 2015 and 2014 is as follows (dollars in thousands): 2015 Quarter Ended, March 31, June 30, September 30, December 31, 2015 Total Operating revenues Operations and maintenance Operating income Net income...

  • Page 143
    ... of plan assets held in our retirement and other benefit plans. Cash Equivalents Cash equivalents represent short-term investments with original maturities of three months or less in exchange traded money market funds that are valued using quoted prices in active markets. Risk Management Activities...

  • Page 144
    ...traded in an active market. Cash equivalents reported within Level 1 represent investments held in a short-term investment exchange-traded mutual fund, which invests in certificates of deposit, variable rate notes, time deposit accounts, U.S. Treasury and Agency obligations, U.S. Treasury repurchase...

  • Page 145
    ... Inputs (a) (Level 3) Other Balance at December 31, 2015 Assets Risk management activities - derivative instruments: Commodity contracts Nuclear decommissioning trust: U.S. commingled equity funds Fixed income securities: Cash and cash equivalent funds U.S. Treasury Corporate debt Mortgage-backed...

  • Page 146
    ... Inputs (a) (Level 3) Other Balance at December 31, 2014 Assets Risk management activities - derivative instruments: Commodity contracts Nuclear decommissioning trust: U.S. commingled equity funds Fixed income securities: U.S. Treasury Cash and cash equivalent funds Corporate debt Mortgage-backed...

  • Page 147
    ... FINANCIAL STATEMENTS Our option contracts classified as Level 3 primarily relate to purchase heat rate options. The significant unobservable inputs at December 31, 2015 for these instruments include electricity prices, and volatilities. The significant unobservable inputs at December 31, 2014...

  • Page 148
    ... and physical and financial contracts. Electricity and natural gas price volatilities are estimated based on historical forward price movements due to lack of market quotes for implied volatilities. The following table shows the changes in fair value for our risk management activities' assets and...

  • Page 149
    ... to officers, key-employees, and non-officer members of the Board of Directors. Awards granted under the 2012 Long-Term Incentive Plan ("2012 Plan") may be in the form of stock grants, restricted stock units, stock units, performance shares, restricted stock, dividend equivalents, performance share...

  • Page 150
    ...the number of shares from the target level to the estimated actual payout level is included in the increase for performance factor amounts in the year the award vests. Share-based liabilities paid relating to restricted stock unit awards was $10 million, $9 million and $10 million in 2015, 2014 and...

  • Page 151
    ... to the Chairman of the Board, President, and Chief Executive Officer of Pinnacle West. This award will vest and will be paid in shares of common stock on December 31, 2016, provided that he remains employed with the Company until the vesting date. The award can be increased up to an additional 33...

  • Page 152
    ... in the commodity price and transportation costs of electricity, natural gas, coal, emissions allowances and in interest rates. We manage risks associated with market volatility by utilizing various physical and financial derivative instruments, including futures, forwards, options and swaps. As...

  • Page 153
    ... provides information about gains and losses from derivative instruments in designated cash flow accounting hedging relationships during the years ended December 31, 2015, 2014 and 2013 (dollars in thousands): Year Ended December 31, 2015 2014 2013 Financial Statement Commodity Contracts Location...

  • Page 154
    ... and 2013 (dollars in thousands): Year Ended December 31, 2015 2014 2013 Financial Statement Commodity Contracts Location Net Gain Recognized in Income Net Loss Recognized in Income Total Operating revenues Fuel and purchased power (a) $ 574 (108,973) $ 324 (66,367) $ 289 (10,449) $ (108...

  • Page 155
    ... NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following tables provide information about the fair value of our risk management activities reported on a gross basis, and the impacts of offsetting as of December 31, 2015 and 2014. These amounts relate to commodity contracts and are located in the...

  • Page 156
    ... our counterparties is based upon a number of factors, including credit ratings and our evaluation of their financial condition. To manage credit risk, we employ collateral requirements and standardized agreements that allow for the netting of positive and negative exposures associated with a single...

  • Page 157
    ... in order to sell and lease back interests in Palo Verde Unit 2 and related common facilities. The original lease was scheduled to end on December 31, 2015; however, the lease agreements include fixed rate renewal options which APS exercised on July 7, 2014. As a result, APS will retain the assets...

  • Page 158
    ... following amounts relating to the VIEs (dollars in thousands): December 31, 2015 December 31, 2014 Palo Verde sale leaseback property, plant and equipment, net of accumulated depreciation Current maturities of long-term debt Equity-Noncontrolling interests $ 117,385 - 135,540 $ 121,255 13,420...

  • Page 159
    ... COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 19. Nuclear Decommissioning Trusts To fund the costs APS expects to incur to decommission Palo Verde, APS established external decommissioning trusts in accordance with NRC regulations. Third-party investment managers are authorized to buy...

  • Page 160
    ... following table shows the changes in Pinnacle West's consolidated accumulated other comprehensive loss, including reclassification adjustments, net of tax, by component for the years ended December 31, 2015 and 2014 (dollars in thousands): Year Ended December 31, 2015 Balance at beginning of period...

  • Page 161
    ...TO CONSOLIDATED FINANCIAL STATEMENTS Changes in Accumulated Other Comprehensive Loss - APS The following table shows the changes in APS's accumulated other comprehensive loss, including reclassification adjustments, net of tax, by component for the years ended December 31, 2015 and 2014 (dollars in...

  • Page 162
    ... of Contents PINNACLE WEST CAPITAL CORPORATION HOLDING COMPANY SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (dollars in thousands) Year Ended December 31, 2015 2014 2013 Operating revenues Operating expenses Operating loss Other Equity in...

  • Page 163
    ... Contents PINNACLE WEST CAPITAL CORPORATION HOLDING COMPANY SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT CONDENSED BALANCE SHEETS (dollars in thousands) December 31, 2015 2014 ASSETS Current assets Cash and cash equivalents Accounts receivable Current deferred income taxes Income tax...

  • Page 164
    ... PINNACLE WEST CAPITAL CORPORATION HOLDING COMPANY SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT CONDENSED STATEMENTS OF CASH FLOWS (dollars in thousands) Year Ended December 31, 2015 2014 2013 Cash flows from operating activities Net income Adjustments to reconcile net income to net...

  • Page 165
    Table of Contents PINNACLE WEST CAPITAL CORPORATION SCHEDULE II - RESERVE FOR UNCOLLECTIBLES (dollars in thousands) Column A Column B Balance at beginning of period Charged to cost and expenses Column C Additions Charged to other accounts Balance at end of period Column D Column E Description ...

  • Page 166
    Table of Contents ARIZONA PUBLIC SERVICE COMPANY SCHEDULE II - RESERVE FOR UNCOLLECTIBLES (dollars in thousands) Column A Column B Balance at beginning of period Charged to cost and expenses Column C Additions Charged to other accounts Balance at end of period Column D Column E Description ...

  • Page 167
    ... it files or submits under the Exchange Act is accumulated and communicated to a company's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Pinnacle West...

  • Page 168
    ... for Financial Executives that applies to financial executives including Pinnacle West's Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, Controller, Treasurer, and General Counsel, the President and Chief Operating Officer of APS and other persons designated as financial...

  • Page 169
    .... See Note 15 of the Notes to Consolidated Financial Statements for additional information regarding these plans. Equity Compensation Plans Not Approved by Security Holders The Company does not have any equity compensation plans under which shares can be issued that have not been approved by...

  • Page 170
    ... and tax planning. (4) The aggregate fees billed for advice relating to the development of a statement of work for the Company's system integrator for its new Customer Information System. Pinnacle West's Audit Committee pre-approves each audit service and non-audit service to be provided by APS...

  • Page 171
    ...amended Form 8-K Report, File Nos. 1-8962 and 1May 16, 2012 4473 Arizona Public Service Company Bylaws, amended as of December 16, 2008 Specimen Certificate of Pinnacle West Capital Corporation Common Stock, no par value Indenture dated as of January 1, 1995 among APS and The Bank of New York Mellon...

  • Page 172
    ...20/2015 2/20/2015 2/20/2015 2/20/2015 Thirteenth Supplemental Indenture dated as of 4.6g to Pinnacle West/APS 2014 Form 10-K January 13, 2012 Report, File Nos. 1-8962 and 1-4473 Fourteenth Supplemental Indenture dated as of January 10, 2014 4.6h to Pinnacle West/APS 2014 Form 10-K Report, File Nos...

  • Page 173
    ... the rights of holders of long-term debt not in excess of 10% of the Company's total assets 4.6i to Pinnacle West/APS 2014 Form 10-K Report, File Nos. 1-8962 and 1-4473 4.6j to Pinnacle West/APS 2014 Form 10-K Report, File Nos. 1-8962 and 1-4473 4.1 to Pinnacle West/APS May 14, 2015 Form 8-K Report...

  • Page 174
    ... No. Registrant(s) Description Previously Filed as Exhibit: a Date Filed 10.1.1e Pinnacle West APS Pinnacle West APS Pinnacle West APS Pinnacle West APS Pinnacle West APS Pinnacle West APS Pinnacle West APS Amendment No. 3 to the Decommissioning Trust Agreement (PVNGS Unit 1), dated as of...

  • Page 175
    ... Arizona Public Service Company Directors Deferred Compensation Plan, effective as of January 1, 1999 10.1 to Pinnacle West's March 31, 2002 Form 10-Q Report, File No. 1-8962 10.3 to Pinnacle West's March 31, 2002 Form 10-Q Report, File No. 1-8962 10.4 to Pinnacle West's 2003 Form 10-K Report, File...

  • Page 176
    Table of Contents Exhibit No. Registrant(s) Description Previously Filed as Exhibit: a Date Filed 10.2.3 b Pinnacle West APS Trust for the Pinnacle West Capital Corporation, Arizona Public Service Company and SunCor Development Company Deferred Compensation Plans dated August 1, 1996 First ...

  • Page 177
    Table of Contents Exhibit No. Registrant(s) Description Previously Filed as Exhibit: a Date Filed 10.3.1ab Pinnacle West APS 10.48b to Pinnacle West/APS 2005 Form 10-K Pinnacle West Capital Corporation Supplemental Excess Benefit Retirement Plan, Report, File Nos. 1-8962 and 1-4473 as ...

  • Page 178
    ... to NonEmployee Directors Description of Annual Stock Grants to NonEmployee Directors Summary of 2016 CEO Variable Incentive Plan and Officer Variable Incentive Plan Description of Restricted Stock Unit Grant to Donald E. Brandt 10.5.3 to Pinnacle West/APS 2009 Form 10-K Report, File Nos. 1-8962...

  • Page 179
    ...Registrant(s) Description Previously Filed as Exhibit: a Date Filed 10.6.6 b Pinnacle West APS Pinnacle West Pinnacle West Capital Corporation 2012 Long-Term Incentive Plan Form of Performance Share Award Agreement under the Pinnacle West Capital Corporation 2012 Long-Term Incentive Plan Form...

  • Page 180
    ... Agreement 10.3 to Pinnacle West/APS March 31, 2014 Amendment No. 7, dated December 30, 2013, Form 10-Q Report, File Nos. 1-8962 and 1among APS, El Paso Electric Company, Public 4473 Service Company of New Mexico, SRP, SCE, and Tucson Electric Power Company Indenture of Lease, Navajo Units 1, 2, and...

  • Page 181
    ... Participation Agreement, dated August 23, 1973, among APS, SRP, SCE, Public Service Company of New Mexico, El Paso, Southern California Public Power Authority, and Department of Water and Power of the City of Los Angeles 10.2 to Pinnacle West/APS March 31, 2014 Form 10-Q Report, File Nos. 1-8962...

  • Page 182
    ....6a to Pinnacle West/APS 2011 Form 10K Report, File Nos. 1-8962 and 1-4473 5/6/2010 10.11.5a Pinnacle West APS 2/24/2012 10.11.6 APS Five-Year Credit Agreement dated as of 10.1 to Pinnacle West/APS September 30, September 2, 2015 among APS, as Borrower, 2015 Form 10-Q Report, File Nos. 1-8962...

  • Page 183
    ... APS, as Lessee 10.1 to Pinnacle West/APS June 30, 2015 Form 10-Q Report, File Nos. 1-8962 and 14473 7/30/2015 10.12.1 c Pinnacle West APS 4.3 to APS's Form 18 Registration Statement, File No. 33-9480 10/24/1986 10.12.1ac Pinnacle West APS 10.5 to APS's September 30, 1986 Form 10-Q Report...

  • Page 184
    ... West Energy Corporation and APS dated as of the 10 th day of April, 2001 Agreement for the Transfer and Use of Wastewater and Effluent by and between APS, SRP and PWE dated June 1, 2001 10.102 to Pinnacle West/APS 2004 Form 10-K Report, File Nos. 1-8962 and 1-4473 7/31/2014 10.13.1 Pinnacle West...

  • Page 185
    ... of Contents Exhibit No. Registrant(s) Description Previously Filed as Exhibit: a Date Filed 10.13.3 Pinnacle West APS Agreement for the Sale and Purchase of Wastewater Effluent dated November 13, 2000, by and between the City of Tolleson, Arizona, APS and SRP Operating Agreement for the Co...

  • Page 186
    ... West APS 99.1a 3/30/1993 99.2 c Pinnacle West APS Participation Agreement, dated as of August 1, 28.1 to APS's September 30, 1992 Form 10-Q 1986, among PVNGS Funding Corp., Inc., Report, File No. 1-4473 Bank of America National Trust and Savings Association, State Street Bank and Trust Company...

  • Page 187
    ...Street Bank and Trust Company, as successor to The First National Bank of Boston, as Owner Trustee 4.5 to APS's Form 18 Registration Statement, File No. 33-9480 3/30/1993 99.3 c Pinnacle West APS 10/24/1986 99.3ac Pinnacle West APS 10.6 to APS's September 30, 1986 Form 10-Q Report by means of...

  • Page 188
    ... 99.6a Pinnacle West APS Supplemental Indenture No. 1, dated as of 4.13 to APS's Form 18 Registration Statement August 1, 1987, to Trust Indenture, Mortgage, No. 33-9480 by means of August 1, 1987 Security Agreement and Assignment of Form 8-K Report, File No. 1-4473 Facility Lease, dated as of...

  • Page 189
    ... Bank November 6, 1986 Form 8-K Report, File No. 1-4473 ACC Order, Decision No. 61969, dated September 29, 1999, including the Retail Electric Competition Rules Purchase Agreement by and among Pinnacle West Energy Corporation and GenWest, L.L.C. and Nevada Power Company, dated June 21, 2005 XBRL...

  • Page 190
    Table of Contents b Management contract or compensatory plan or arrangement to be filed as an exhibit pursuant to Item 15(b) of Form 10-K. cAn additional document, substantially identical in all material respects to this Exhibit, has been entered into, relating to an additional Equity Participant...

  • Page 191
    .... PINNACLE WEST CAPITAL CORPORATION (Registrant) Date: February 19, 2016 /s/ Donald E. Brandt (Donald E. Brandt, Chairman of the Board of Directors, President and Chief Executive Officer) Power of Attorney We, the undersigned directors and executive officers of Pinnacle West Capital Corporation...

  • Page 192
    ... 19, 2016 /s/ Humberto S. Lopez (Humberto S. Lopez) Director February 19, 2016 /s/ Kathryn L. Munro (Kathryn L. Munro) Director February 19, 2016 /s/ Bruce J. Nordstrom (Bruce J. Nordstrom) Director February 19, 2016 /s/ David P. Wagener (David P. Wagener) Director February 19, 2016 187

  • Page 193
    ... caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ARIZONA PUBLIC SERVICE COMPANY (Registrant) Date: February 19, 2016 /s/ Donald E. Brandt (Donald E. Brandt, Chairman of the Board of Directors, President and Chief Executive Officer) Power of Attorney...

  • Page 194
    ... 19, 2016 /s/ Humberto S. Lopez (Humberto S. Lopez) Director February 19, 2016 /s/ Kathryn L. Munro (Kathryn L. Munro) Director February 19, 2016 /s/ Bruce J. Nordstrom (Bruce J. Nordstrom) Director February 19, 2016 /s/ David P. Wagener (David P. Wagener) Director February 19, 2016 189

  • Page 195
    Exhibit 10.2.5 DEFERRED COMPENSATION PLAN OF 2005 FOR EMPLOYEES OF PINNACLE WEST CAPITAL CORPORATION AND AFFILIATES (as amended and restated effective January 1, 2016)

  • Page 196
    ... of Deferral Amounts...7 Interest Crediting Prior to Distribution...7 Change in Time and Form of Payment...7 Installment Distribution...8 FICA Taxes...8 Discretionary Credits...8 ARTICLE 4 Short-Term Payout and Unforeseeable Financial Emergencies...9 4.1 Short-Term Payout...9 4.2Withdrawal Payout...

  • Page 197
    ... Beneficiary Designation...12 ...Information...14 ARTICLE 11 Other Benefits and Agreements...14 11.1 Coordination with Other Benefits...14 ARTICLE 12 Claims Procedures...14 12.1 Claims...14 ARTICLE 13 Miscellaneous...14 13.1 13.2 13.3 13.4 13.5 13.6 13.7 13.8 Unsecured General Creditor; Top Hat Plan...

  • Page 198
    Table of Contents (Continued) 13.9 Validity...15 13.10 Notice...15 13.11 Successors...16 13.12 Spouse's Interest...16 13.13 Incompetent...16 13.14 Underpayment or Overpayment of Benefits...16 13.15 Section 409A...16 iii

  • Page 199
    ... West Capital Corporation and Affiliates ("2005 Plan") for the purpose of providing specified benefits to a select group of management, highly compensated employees and Directors who contribute materially to the continued growth, development and future business success of the Company, Arizona Public...

  • Page 200
    ... appointed to manage and administer the Plan in accordance with its provisions pursuant to Article 10. 1.10 "Company" shall mean Pinnacle West Capital Corporation, an Arizona corporation. 1.11 "Deferral" shall mean the sum of all of a Participant's Annual Deferrals. 1.12 "Director" shall mean...

  • Page 201
    ...who signs an Election Form and a Beneficiary Designation Form. 1.22 "Plan" shall mean this Deferred Compensation Plan of 2005 for Employees of Pinnacle West Capital Corporation and Affiliates, which shall be evidenced by this amended and restated instrument, as it may be further amended from time to...

  • Page 202
    ... Capital Corporation 2007 Long-Term Incentive Plan, as amended, the Pinnacle West Capital Corporation 2012 Long-Term Incentive Plan, as amended, or any similar plan adopted by the Company in the future. 1.26 "Retirement" and "Retires" shall mean, with respect to an employee, Separation from Service...

  • Page 203
    ... employees shall be credited with ten (10) hours of service for each working day during which they are employed by the Employer and Participants who are Directors shall be credited with ten (10) hours of service for each day (other than weekend days) during which they serve as a Director, provided...

  • Page 204
    ... execute and return to the Company an Election Form and a Beneficiary Designation Form. To the extent permitted by the Committee, a selected employee or Director may enroll in the Plan and make elections by electronic means. In addition, the Committee, in its sole discretion, may establish from time...

  • Page 205
    ... months in advance of the earliest date at which the forfeiture condition with respect to the Restricted Stock Units could lapse. If no Election Form is delivered and accepted for a Plan Year, no Annual Deferral will be withheld for that Plan Year. Any such Election Form shall designate the time and...

  • Page 206
    ... with rules established by the Company. The rate of interest for crediting shall be the Plan Rate. If a Short-Term Payout is made, for purposes of crediting interest, the Account Balance shall be reduced as of the first day of the Plan Year in which the ShortTerm Payout is made. 3.6 Change in Time...

  • Page 207
    ...'s share of FICA taxes. 3.9 Discretionary Credits. With the approval of the Human Resources Committee of the Company's Board of Directors, an Employer may award Discretionary Credits to a Participant at any time during a Plan Year in such amounts and subject to such terms and conditions (including...

  • Page 208
    ... credited at the Plan Rate, and it shall be paid in January of the Plan Year that is five (5) years after the first day of the Plan Year in which the Annual Deferral is actually deferred, provided, however, that if the Participant Separates from Service or dies before the Plan Year in which a Short...

  • Page 209
    ... from Service, his or her Account Balance, as determined pursuant to Section 5.1, and the Participant's Discretionary Credit Account, if any, when added to his or her Retirement Account Balance Benefit under the Pinnacle West Capital Corporation Supplemental Excess Benefit Retirement Plan of...

  • Page 210
    ... Participant's Separation from Service. Payment of the Discretionary Credit Account shall not be made or commence prior to the date which is six (6) months after the date of a Participant's Separation from Service in the case of a Participant who is determined to be a Specified Employee. Unless the...

  • Page 211
    ... by completing, signing and otherwise complying with the terms of the Beneficiary Designation Form and the Committee's rules and procedures, as in effect from time to time. If the Participant names, with respect to more than fifty percent (50%) of his or her benefit under this Plan, someone other...

  • Page 212
    ... consist of persons approved by the Human Resources Committee of the Company's Board of Directors. Members of the Committee may be Participants under this Plan. The Committee shall also have the discretion and authority to make, amend, interpret, and enforce all appropriate rules and regulations for...

  • Page 213
    ...Participant or Beneficiary ("Claimant") claiming benefits, eligibility, participation or any other right or interest under this Plan may file a written claim setting forth the basis of the claim under the procedures set forth in the Pinnacle West Capital Corporation Savings Plan, as amended. ARTICLE...

  • Page 214
    ... in the future and Participants and their Beneficiaries shall be unsecured creditors of the Participant's Employer. This Plan is intended to provide an unfunded deferred compensation benefit to a select group of management, highly compensated employees and Directors of the Employers and, as a result...

  • Page 215
    ... is Pinnacle West Capital Corporation or one of its subsidiaries, then to: Pinnacle West Capital Corporation 400 North 5th Street P.O. Box 53999 Phoenix, Arizona 85072-3999 Attn: Manager of Benefit Services Station 8460 Such notice shall be deemed given as of the date of delivery or, if delivery is...

  • Page 216
    ... is six (6) months following the date of a Participant's Separation from Service. (c) Distributions Treated as Made Upon a Designated Event. If the Company fails to make any payment in accordance with Article 5, either intentionally or unintentionally, but the payment is made within the time period...

  • Page 217
    ... of Section 409A. IN WITNESS WHEREOF the Company has caused this Plan to be executed by its duly authorized officers this 29th day of December 2015. PINNACLE WEST CAPITAL CORPORATION By:/s/ Donald E. Brandt Name: Donald E. Brandt Its: Chairman of the Board, President and Chief Executive Officer 19

  • Page 218
    Exhibit 10.3.2 PINNACLE WEST CAPITAL CORPORATION SUPPLEMENTAL EXCESS BENEFIT RETIREMENT PLAN OF 2005 (as amended and restated effective January 1, 2016)

  • Page 219
    ... Account Balance Benefits Described in Section 4(b)...11 Change in Time and Form of Payment...13 Cash-Out Provisions...13 Reemployment...14 PAYMENT OF BENEFITS BEFORE JANUARY 1, 2009...14 SECTION 409A COMPLIANCE...14 FUNDING...15 ADMINISTRATION...15 ARTICLE 10 AMENDMENT AND TERMINATION OF THE PLAN...

  • Page 220
    ...31, 2004. Only the benefits of such participants are provided under the terms of the Prior Plan. On December 19, 2008, the Company adopted the Pinnacle West Capital Corporation Supplemental Excess Benefit Retirement Plan of 2005 (the "Plan") which applies to the entire benefit of any participant who...

  • Page 221
    ... designated as Plan participants by the Human Resources Committee of the Board of Directors of the Company ("Committee"), in its discretion, shall be eligible to participate in the Plan, and such designated individuals shall be considered "Eligible Employees." (a) Officers. Except as provided...

  • Page 222
    ...in the Plan shall cease but his or her benefit under this Plan as of the date of his or her change of status shall not be canceled or distributed, but shall be determined upon his or her separation from service with the Company or an Affiliate and distributed at the time or times and in the form set...

  • Page 223
    ... set forth in the Retirement Plan based on the participant's Monthly Compensation for the month but using the following chart; provided that, except for a Group C Participant, a participant shall not receive a Monthly Retirement Account Balance Credit after the last day of the calendar year in...

  • Page 224
    ... of this Plan, Monthly Retirement Account Balance Credits shall be determined under the general methodology set forth in the Retirement Plan based on the participant's Monthly Compensation for the month but using the following chart: Percent of Monthly Compensation Contribution Rate 8% 9% 10% 12...

  • Page 225
    ... Compensation with respect to benefits described in Sections 4(a)(1) or 4(a)(2)(i), no more than two other year-end bonus or incentive payments will be taken into account in determining such Average Monthly Compensation. The Company's President or Chief Executive Officer shall have the sole and...

  • Page 226
    ... the event that the Company or an Affiliate enters into a separate agreement with an Eligible Employee which provides that the payment of benefits under the Plan shall be modified as provided in such agreement, the Plan shall be deemed to have been amended to reflect the terms of any such agreement...

  • Page 227
    ... or the day before the Committee designates the individual as a participant in this Plan. If a participant has not elected the five-year installment form of benefit as provided in the preceding sentence, then the participant may elect an annuity form of payment at any time up until the date payments...

  • Page 228
    ... adjustments as provided under the Retirement Plan. Prior to January 1, 2016, the fiveâ€'year installment form shall be actuarially equivalent to the life annuity, but using a discount rate assumption of 6.25% and the mortality table used by the Company for year-end financial reporting purposes for...

  • Page 229
    ... in a lump sum upon separation from service. (2) Actuarial Adjustments - General Rule . The life annuity form of benefit shall be actuarially equivalent to the participant's Retirement Account Balance, using the actuarial factors set forth in the Retirement Plan. The joint and 50% survivor annuity...

  • Page 230
    ...set forth in the Retirement Plan. Prior to January 1, 2016, the fiveâ€'year installment form shall be actuarially equivalent to the lump sum benefit, but using a discount rate assumption of 6.25% and the mortality table used by the Company for yearâ€'end financial reporting purposes for the calendar...

  • Page 231
    ...may be changed to another actuarially equivalent annuity form available under the Retirement Plan at any time on or before annuity payments are scheduled to commence. In the absence of an election, his or her Retirement Account Balance Benefit shall be paid in a lump sum upon separation from service...

  • Page 232
    ...Compensation Plan of 2005 for Employees of Pinnacle West Capital Corporation and Affiliates is less than the limit described in Code Section 402(g) upon the participant's retirement, death, or other separation from service which occurs after 2008, such vested Retirement Account Balance Benefit shall...

  • Page 233
    ...been paid at the crediting rate in effect under the Retirement Plan. The terms "separation from service" and "specified employee" shall have the meaning set forth in Section 409A of the Code, the regulations thereunder, and the resolution issued by the Board of Directors of the Company defining such...

  • Page 234
    ... The Plan may be amended in whole or in part, prospectively or retroactively, by action of the Company's Board of Directors, and may be terminated at any time by action of the Board of Directors in accordance with the requirements of Code Section 409A and the regulations issued thereunder; provided...

  • Page 235
    ... any payments provided for under this Plan, any payments provided for under the Retirement Plan or under The Pinnacle West Capital Corporation Savings Plan, or which would otherwise be payable or distributable to him or her, his or her surviving spouse or beneficiary under any plan or policy of the...

  • Page 236
    ...and personal representatives. IN WITNESS WHEREOF, the Company has caused this Pinnacle West Capital Corporation Supplemental Excess Benefit Retirement Plan, as amended and restated herein, to be executed by its duly authorized officer this 29th day of December 2015. PINNACLE WEST CAPITAL CORPORATION...

  • Page 237
    ... Chief Executive Officer of Pinnacle West and the Chairman of the Board, President and Chief Executive Officer of Arizona Public Service Company ("APS"). On December 16, 2015, the Board, acting on the recommendation of the Committee, approved the APS 2016 Annual Incentive Award Plan (the "APS Plan...

  • Page 238
    ...portion of the Palo Verde Plan unless Palo Verde achieves specified business unit performance goals and APS achieves a target threshold earnings level. The business unit performance indicators for Mr. Edington under the Palo Verde Plan are in the functional areas of employees, operational excellence...

  • Page 239
    ...("Employee"). BACKGROUND A. The Board of Directors of the Company (the "Board of Directors") has adopted, and the Company's shareholders have approved, the Pinnacle West Capital Corporation 2012 Long-Term Incentive Plan (the "Plan"), pursuant to which Performance Share Awards and Dividend Equivalent...

  • Page 240
    ... for such term in the Retirement Plan. Dividend Equivalents. In satisfaction of the Dividend Equivalents Award made pursuant to Section 1, at the time of the Company's delivery of Stock to Employee pursuant to this Section 4, the Company also will deliver to Employee fully transferrable shares of...

  • Page 241
    ... be increased to provide for the issuance of a full share of Stock. (g) Impact on Retirement Plans. The value of the shares of Stock distributed upon payment for the Performance Shares and Dividend Equivalents will be disregarded for purposes of calculating the amount of Employee's benefit under...

  • Page 242
    ... for investor-owned utilities; (ii) the System Average Interruption Frequency Index (Major Events Excluded) ("SAIFI"); (iii) Arizona Public Service Company's customer to employee improvement ratio; (iv) the OSHA rate (All Incident Injury Rate); (v) nuclear capacity factor; and (vi) coal capacity...

  • Page 243
    ...effect on the date that Employee is no longer employed by the Company or any of its subsidiaries, whether due to voluntary or involuntary termination, death, retirement, Disability, or otherwise, except as specifically set forth in Section 4 above or in Article 15 of the Plan. Employee will, however...

  • Page 244
    ... known to the public, including, but not limited to, information concerning the Company's or its Affiliates' assets and valuations, business plans, methods of operation, management, information systems, procedures, processes, practices, policies, plans, programs, personnel and/or reports or other...

  • Page 245
    ...any shares of Company stock received by Employee pursuant to this Award (net of shares sold or surrendered to meet tax withholding or exercise requirements). This restriction shall extend to the purchase or creation of any short sales, zero-cost collars, forward sales contracts, puts, calls, options...

  • Page 246
    ... claims a related tax deduction. IN WITNESS WHEREOF, the Company has caused this Award Agreement to be executed, as of the Date of Grant, by an authorized representative of the Company and this Award Agreement has been executed by Employee. PINNACLE WEST CAPITAL CORPORATION By: Its: Date: EMPLOYEE...

  • Page 247
    Pinnacle West Capital Corporation PERFORMANCE SHARE AWARD ELECTION FORM (applies to Award Agreement dated __/__/____) INFORMATION ABOUT YOU Last First Middle Initial Employee ID# TAX WITHHOLDING ELECTION I hereby elect to satisfy any tax withholding obligation associated with my receipt of Stock ...

  • Page 248
    Exhibit 12.1 PINNACLE WEST CAPITAL CORPORATION RATIO OF EARNINGS TO FIXED CHARGES (dollars in thousands) 2015 2014 2013 2012 2011 Earnings: Income from continuing operations attributable to common shareholders Income taxes Fixed charges Total earnings Fixed Charges: Interest expense Estimated ...

  • Page 249
    Exhibit 12.2 ARIZONA PUBLIC SERVICE COMPANY RATIO OF EARNINGS TO FIXED CHARGES (dollars in thousands) 2015 2014 2013 2012 2011 Earnings: Income from continuing operations attributable to common shareholders Income taxes Fixed charges Total earnings $ 450,274 245,841 199,458 895,573 $ 421,219 ...

  • Page 250
    Exhibit 12.3 PINNACLE WEST CAPITAL CORPORATION RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDEND REQUIREMENTS (dollars in thousands) 2015 2014 2013 2012 2011 Earnings: Income from continuing operations attributable to common shareholders Income taxes Fixed charges Total ...

  • Page 251
    ... 21.1 SUBSIDIARIES LIST Arizona Public Service Company *All other subsidiaries of Pinnacle West Capital Corporation and all subsidiaries of Arizona Public Service Company have been omitted as they do not constitute significant subsidiaries within the meaning of Rule 1-02(w) of Regulation S-X.

  • Page 252
    ... Corporation, and the effectiveness of Pinnacle West Capital Corporation's internal control over financial reporting, appearing in this Annual Report on Form 10-K of Pinnacle West Capital Corporation for the year ended December 31, 2015. /s/ Deloitte & Touche LLP Phoenix, Arizona February 19, 2016

  • Page 253
    ...of our report dated February 19, 2016, relating to the consolidated financial statements and financial statement schedule of Arizona Public hervice Company, and the effectiveness of Arizona Public hervice Company's internal control over financial reporting, appearing in this Annual Report on Form 10...

  • Page 254
    ... financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; The registrant's other certifying officer and...

  • Page 255
    ... information; and any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. b) Date: February 19, 2016 /s/ Donald E. Brandt Donald E. Brandt Chairman, President and Chief Executive...

  • Page 256
    ... financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; The registrant's other certifying officer and...

  • Page 257
    ... report financial information; and any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. b) Date: February 19, 2016 /s/ James R. Hatfield James R. Hatfield Executive Vice President...

  • Page 258
    ... financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; The registrant's other certifying officer and...

  • Page 259
    ... information; and any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. b) Date: February 19, 2016 /s/ Donald E. Brandt Donald E. Brandt Chairman, President and Chief Executive...

  • Page 260
    ... financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; The registrant's other certifying officer and...

  • Page 261
    ... report financial information; and any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. b) Date: February 19, 2016 /s/ James R. Hatfield James R. Hatfield Executive Vice President...

  • Page 262
    ... and that information contained in such Annual Report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of Pinnacle West Capital Corporation. Date: February 19, 2016 /s/ James R. Hatfield James R. Hatfield Executive Vice President and Chief...

  • Page 263
    ... 1934 and that information contained in such Annual Report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of Arizona Public Service Company. Date: February 19, 2016 /s/ James R. Hatfield James R. Hatfield Executive Vice President and Chief...

  • Page 264