APS 2015 Annual Report Download - page 112

Table of Contents
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(c) Subject to a carrying charge.
(d) Per the provision of the 2012 Settlement Agreement.
(e) There are no regulatory assets for which the ACC has allowed recovery of costs, but not allowed a return by exclusion from
rate base. FERC rates are set using a formula rate as described in “Transmission Rates, Transmission Cost Adjustor and
Other Transmission Matters.”
The detail of regulatory liabilities is as follows (dollars in thousands):
Amortization
Through
December 31, 2015
December 31, 2014
Current
Non-Current
Current
Non-Current
Asset retirement obligations 2057
$ —
$ 277,554
$ —
$ 295,546
Removal costs (a)
39,746
240,367
31,033
272,825
Other postretirement benefits (d)
34,100
179,521
32,317
198,599
Income taxes — deferred investment tax credit 2045
3,604
97,175
3,505
92,727
Income taxes - change in rates 2045
1,113
72,454
371
72,423
Spent nuclear fuel 2047
3,051
67,437
4,396
65,594
Renewable energy standard (b) 2017
43,773
4,365
24,596
22,677
Demand side management (b) 2017
6,079
19,115
31,335
—
Sundance maintenance 2030
—
13,678
—
12,069
Deferred fuel and purchased power (b) (c) 2016
9,688
—
—
—
Deferred gains on utility property 2019
2,062
6,001
2,062
8,001
Four Corners coal reclamation 2031
—
8,920
—
1,200
Other Various
2,550
7,565
934
9,535
Total regulatory liabilities
$ 145,766
$ 994,152
$ 130,549
$ 1,051,196
(a) In accordance with regulatory accounting guidance, APS accrues for removal costs for its regulated assets, even if
there is no legal obligation for removal (see Note 11).
(b) See “Cost Recovery Mechanisms” discussion above.
(c) Subject to a carrying charge.
(d) See Note 7.
4. Income Taxes
Certain assets and liabilities are reported differently for income tax purposes than they are for financial statement purposes. The
tax effect of these differences is recorded as deferred taxes. We calculate deferred taxes using currently enacted income tax rates.
APS has recorded regulatory assets and regulatory liabilities related to income taxes on its Balance Sheets in accordance with
accounting guidance for regulated operations. The regulatory assets are for certain temporary differences, primarily the allowance for
equity funds used during construction, investment tax credit basis adjustment and tax expense of Medicare subsidy. The regulatory
liabilities primarily relate to deferred taxes resulting from investment tax credits (“ITC”) and the change in income tax rates.
In accordance with regulatory requirements, APS ITCs are deferred and are amortized over the life of the related property with
such amortization applied as a credit to reduce current income tax expense in the statement of income.
107