UTILITY PLANT AND JOINTLY-OWNED FACILITIES (Tables)

12 Months Ended

Dec. 31, 2017

Public Utility Property, Plant, and Equipment

The following table shows Plant in Service on the Consolidated Balance Sheets by major class:



	Annual Depreciation Rate ⁽⁴⁾	Average Remaining Life in Years ⁽⁴⁾	December 31,
($ in millions)	Annual Depreciation Rate ⁽⁴⁾	Average Remaining Life in Years ⁽⁴⁾	2017		2016
Plant in Service
Generation Plant	3.19%	25	$	2,548	$	2,866
Transmission Plant	1.48%	32	1,001		1,024
Distribution Plant	1.56%	36	1,632		1,512
General Plant	5.89%	12	389		381
Intangible Plant, Software Costs, and Other ⁽¹⁾	Various	Various	207		185
Plant Held for Future Use	—	—	4		7
Total Plant in Service ⁽²⁾			$	5,781	$	5,975

Utility Plant Under Capital Leases ⁽³⁾			$	85	$	167

⁽¹⁾

Primarily represents computer software. Unamortized computer software costs were $59 million and $52 million as of December 31, 2017 and 2016, respectively. The amortization of computer software costs was $19 million in 2017, $17 million in 2016, and $14 million in 2015. Computer software is being amortized over its expected useful life ranging from three to five years for smaller application software and average remaining life of three years for large enterprise software.


⁽²⁾	Includes plant acquisition adjustments of $(134) million and $(139) million as of December 31, 2017 and 2016, respectively.


⁽³⁾	In December 2017, TEP completed the purchase of an undivided ownership interest in the Springerville Common Facilities. See Note 6 for additional information regarding the Springerville leases.


⁽⁴⁾	Represents a composite of the depreciation rates of assets within each major class of utility plant and is based on the 2015 depreciation study available for the major classes of Plant in Service. TEP implemented new depreciation rates effective March 1, 2017, as approved in the 2017 Rate Order.

Amount Of Lease Expense Incurred Related Capital Leases

The following table shows the amount of lease expense incurred for capital leases:



	Years Ended December 31,
(in millions)	2017		2016		2015
Lease Expense
Interest Expense included in:
Interest Expense, Capital Leases	$	3	$	3	$	4
Amortization of Capital Lease Assets included in:
Operating Expenses, Fuel	—		—		2
Operating Expenses, Amortization	6		5		6
Total Lease Expense	$	9	$	8	$	12

Schedule of Jointly Owned Utility Plants

As of December 31, 2017, TEP was a participant in the following jointly-owned generation facilities and transmission systems:



(in millions)	Ownership Percentage	Plant in Service		Construction Work in Progress		Accumulated Depreciation		Net Book Value
San Juan Unit 1	50.0%	$	274	$	6	$	83	$	197
Four Corners Units 4 and 5	7.0%	113		54		79		88
Luna	33.3%	55		—		3		52
Gila River Unit 3	75.0%	203		3		60		146
Gila River Common Facilities	18.8%	25		—		8		17
Springerville Coal Handling Facilities	83.0%	202		—		81		121
Transmission Facilities	Various	483		5		247		241
Total		$	1,355	$	68	$	561	$	862

Schedule of Asset Retirement Obligations

The following table reconciles the beginning and ending aggregate carrying amounts of ARO accruals on the Consolidated Balance Sheets:



	December 31,
(in millions)	2017			2016
Beginning of Period	$	33		$	32
Liabilities Incurred	3			—
Liabilities Settled	(1		)	—
Regulatory Deferral/Accretion Expense	2			2
Revisions to the Present Value of Estimated Cash Flows ⁽¹⁾	9			(1		)
End of Period	$	46		$	33


⁽¹⁾	Primarily related to changes in expected cost estimates and the acceleration of asset retirement dates of certain generation facilities.