DEBT, CREDIT FACILITY, AND CAPITAL LEASE OBLIGATIONS

There have been no significant changes to TEP's debt, credit facility, or capital lease obligations from those reported in its 2017 Annual Report on Form 10-K/A, except as noted below.

CREDIT FACILITY

TEP's unsecured credit agreement includes the following:



	Capacity		LOC Sub-Limit		Borrowed		Available		Weighted Average Interest Rate		Pricing ⁽¹⁾
($ in millions)	September 30, 2018
Credit Facility	$	250	$	50	$	15	$	235	3.24	%	LIBOR + 1.00% or ABR + 0.00%


⁽¹⁾	Interest rates and fees under the credit facility are based on a pricing grid tied to TEP's credit rating.

As of November 1, 2018, TEP had $205 million available under its revolving credit commitments and a Letter of Credit (LOC) facility.

CAPITAL LEASE OBLIGATIONS

In 2017, TEP entered into a 20-year tolling PPA with Salt River Project Agricultural Improvement and Power District (SRP) to purchase and receive all 550 megawatt (MW) of capacity, power, and ancillary services from Gila River Generating Station (Gila River) Unit 2, which includes a three-year option to purchase the unit (Tolling PPA). TEP’s obligations under the agreement were contingent upon SRP's acquisition of Gila River Units 1 and 2 from third-parties (Gila Acquisition). SRP completed the Gila Acquisition in May 2018. As a result, TEP had $164 million recorded in both Long Term Liabilities—Capital Lease Obligations and Utility Plant Under Capital Leases on the Condensed Consolidated Balance Sheets as of September 30, 2018. The amount reflects the fair value of the unit, which was determined by SRP's purchase price. TEP anticipates exercising its option to purchase Gila River Unit 2 in December 2019 for approximately $164 million. Over the expected 20-month lease term, TEP will pay a monthly demand charge consisting of: (i) a fixed capacity charge of approximately $1 million, and (ii) an operating fee to compensate SRP for the non-fuel costs of operating Gila River Unit 2. TEP recovers the monthly capacity charge and operating fee through the PPFAC.

TEP’s minimum lease payments consist of the fixed capacity charge and purchase option price. As of September 30, 2018, capital lease obligations related to the Tolling PPA mature on the following dates:



(in millions)	Capital Lease Obligations
2018	$	3
2019	176
2020	2
2021	—
2022	—
Total 2018-2022	181
Thereafter	—
Less: Imputed Interest	(17		)
Total	$	164

TEP recorded $3 million and $5 million of capital lease interest in Purchased Power on the Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2018, respectively, and $2 million of amortization in Regulatory and Other Assets—Regulatory Assets on the Condensed Consolidated Balance Sheets related to the Tolling PPA capital lease as of September 30, 2018.