LEASES (Tables)

12 Months Ended

Dec. 31, 2019

Leases [Abstract]

Assets And Liabilities, Lessee

TEP’s leases are included in the balance sheet as follows:

(in millions)	Lease Type	December 31, 2019
Lease Assets
Utility Plant Under Finance Leases	Finance	$	151
Accumulated Amortization of Finance Lease Assets	Finance	(77		)
Regulatory and Other Assets, Other	Operating	8
Lease Liabilities
Current Liabilities, Finance Lease Obligations	Finance	17
Finance Lease Obligations	Finance	67
Current Liabilities, Other	Operating	1
Regulatory and Other Liabilities, Other	Operating	6

Lease, Cost

The following table presents TEP's cash flow information related to its leases:

	Year Ended
(in millions)	December 31, 2019
Cash Paid for Amounts Included in the Measurement of Lease Liabilities
Operating Cash Flows used for Finance Leases	$	13
Operating Cash Flows used for Operating Leases	1
Financing Cash Flows used for Finance Leases	11
Investing Cash Flows used for Finance Leases	164

The following table presents the components of TEP’s lease cost:

	Year Ended
(in millions)	December 31, 2019
Finance
Amortization of Leased Assets (1)	$	13
Interest on Lease Liabilities (2)	13
Operating	1
Variable	16
Short Term	1
Total Lease Cost	$	44

⁽¹⁾  TEP deferred $6 million in amortization related to Gila River Unit 2 in Regulatory and Other Assets—Regulatory Assets based on PPFAC recovery of TEP's fixed capacity payment.

⁽²⁾ 

Finance lease interest expense is recorded in Interest Expense on the Consolidated Statements of Income. In 2018, lease interest expense related to Gila River Unit 2 was recorded in Purchased Power on the Consolidated Statements of Income. Finance lease interest expense related to Gila River Unit 2 was $12 million for the year ended December 31, 2019. TEP purchased Gila River Unit 2 in December 2019.

Lessee, Operating Lease, Liability, Maturity

As of December 31, 2019, TEP had the following future minimum lease payments, excluding payments to lessors for variable costs:

(in millions)	Finance Leases		Operating Leases		Total
2020	$	18	$	1	$	19
2021	68		1		69
2022	—		1		1
2023	—		1		1
2024	—		1		1
Thereafter	—		4		4
Total Lease Payments	86		9		95
Less Imputed Interest	2		2		4
Total Lease Obligations	84		7		91
Less Current Portion	17		1		18
Total Non-Current Lease Obligations	$	67	$	6	$	73

Finance Lease, Liability, Maturity

As of December 31, 2019, TEP had the following future minimum lease payments, excluding payments to lessors for variable costs:

(in millions)	Finance Leases		Operating Leases		Total
2020	$	18	$	1	$	19
2021	68		1		69
2022	—		1		1
2023	—		1		1
2024	—		1		1
Thereafter	—		4		4
Total Lease Payments	86		9		95
Less Imputed Interest	2		2		4
Total Lease Obligations	84		7		91
Less Current Portion	17		1		18
Total Non-Current Lease Obligations	$	67	$	6	$	73

Schedule of Lease Term and Discount Rate

The following table presents TEP's lease terms and discount rate related to its leases:

	December 31, 2019
Weighted-Average Remaining Lease Term (years)
Finance Leases	1
Operating Leases	12
Weighted-Average Discount Rate
Finance Leases	2.2	%
Operating Leases	4.1	%

Schedule of Future Minimum Rental Payments for Operating Leases

As of December 31, 2018, future minimum lease payments were as follows:

(in millions)	Capital Leases		Operating Leases
2019	$	187	$	1
2020	20		1
2021	—		1
2022	—		1
2023	—		1
Thereafter	—		5
Total Lease Payments	207		$	10
Less: Imputed Interest	14
Total Lease Obligations	193
Less: Current Portion	173
Total Non-Current Lease Obligations	$	20

Schedule of Future Minimum Lease Payments for Capital Leases

As of December 31, 2018, future minimum lease payments were as follows:

(in millions)	Capital Leases		Operating Leases
2019	$	187	$	1
2020	20		1
2021	—		1
2022	—		1
2023	—		1
Thereafter	—		5
Total Lease Payments	207		$	10
Less: Imputed Interest	14
Total Lease Obligations	193
Less: Current Portion	173
Total Non-Current Lease Obligations	$	20