APS 2015 Annual Report Download - page 99

Table of Contents
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Pinnacle West’s property, plant and equipment included in the December 31, 2015 and 2014 consolidated balance sheets is
composed of the following (dollars in thousands):
Property, Plant and Equipment: 2015
2014
Generation $ 7,336,902
$ 7,158,729
Transmission 2,494,744
2,247,309
Distribution 5,543,561
5,339,322
General plant 847,025
797,703
Plant in service and held for future use 16,222,232
15,543,063
Accumulated depreciation and amortization (5,594,094)
(5,397,751)
Net 10,628,138
10,145,312
Construction work in progress 816,307
682,807
Palo Verde sale leaseback, net of accumulated depreciation 117,385
121,255
Intangible assets, net of accumulated amortization 123,975
119,755
Nuclear fuel, net of accumulated amortization 123,139
125,201
Total property, plant and equipment $ 11,808,944
$ 11,194,330
Property, plant and equipment balances and classes for APS are not materially different than Pinnacle West.
We expense the costs of plant outages, major maintenance and routine maintenance as incurred. We charge retired utility plant
to accumulated depreciation. Liabilities associated with the retirement of tangible long-lived assets are recognized at fair value as
incurred and capitalized as part of the related tangible long-lived assets. Accretion of the liability due to the passage of time is an
operating expense, and the capitalized cost is depreciated over the useful life of the long-lived asset. See Note 11.
APS records a regulatory liability for the difference between the amount that has been recovered in regulated rates and the
amount calculated in accordance with guidance on accounting for asset retirement obligations. APS believes it can recover in regulated
rates the costs calculated in accordance with this accounting guidance.
We record depreciation on utility plant on a straight-line basis over the remaining useful life of the related assets. The
approximate remaining average useful lives of our utility property at December 31, 2015 were as follows:
• Fossil plant — 19 years;
• Nuclear plant — 28 years;
• Other generation — 25 years;
• Transmission — 39 years;
• Distribution — 33 years; and
• Other — 7 years.
Pursuant to an ACC order, we deferred operating costs in 2013 and 2014 related to APS's acquisition of additional interests in
Units 4 and 5 and the related closure of Units 1-3 of Four Corners. See Note 3 for further discussion. These costs were deferred and are
now being amortized on the depreciation line of the Consolidated Statements of Income.
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