FAIR VALUE MEASUREMENTS AND DERIVATIVE INSTRUMENTS (Tables)

12 Months Ended

Dec. 31, 2021

Fair Value Disclosures [Abstract]

Financial instruments measured at fair value on a recurring basis

The following tables present, by level within the fair value hierarchy, TEP’s assets and liabilities accounted for at fair value through net income on a recurring basis classified in their entirety based on the lowest level of input that is significant to the fair value measurement:

	Level 1		Level 2		Total
(in millions)	December 31, 2021
Assets
Restricted Cash (1)	$	23	$	—	$	23
Energy Derivative Contracts, Regulatory Recovery (2)	—		30		30
Energy Derivative Contracts, No Regulatory Recovery (2)	—		4		4
Total Assets	23		34		57
Liabilities
Energy Derivative Contracts, Regulatory Recovery (2)	—		(20)		(20)
Total Liabilities	—		(20)		(20)
Total Assets (Liabilities), Net	$	23	$	14	$	37

(in millions)	December 31, 2020
Assets
Restricted Cash (1)	$	21	$	—	$	21
Energy Derivative Contracts, Regulatory Recovery (2)	—		14		14
Energy Derivative Contracts, No Regulatory Recovery (2)	—		3		3
Total Assets	21		17		38
Liabilities
Energy Derivative Contracts, Regulatory Recovery (2)	—		(66)		(66)
Total Liabilities	—		(66)		(66)
Total Assets (Liabilities), Net	$	21	$	(49)	$	(28)

(1)Restricted Cash represents amounts held in money market funds, which approximates fair market value. Restricted Cash is included in Investments and Other Property and in Current Assets—Other on the Consolidated Balance Sheets.

(2)Energy Derivative Contracts include gas swap agreements and forward power purchase and sale contracts entered into to reduce exposure to energy price risk. These contracts are included in Derivative Instruments on the Consolidated Balance Sheets.

Potential offset of assets by counterparty netting and cash collateral

The tables below present the potential offset of counterparty netting and cash collateral:

	Gross Amount Recognized in the Balance Sheets		Gross Amount Not Offset in the Balance Sheets				Net Amount
			Counterparty Netting of Energy Contracts		Cash Collateral Received/Posted
(in millions)	December 31, 2021
Derivative Assets
Energy Derivative Contracts	$	34	$	14	$	—	$	20
Derivative Liabilities
Energy Derivative Contracts	(20)		(14)		—		(6)

(in millions)	December 31, 2020
Derivative Assets
Energy Derivative Contracts	$	17	$	14	$	—	$	3
Derivative Liabilities
Energy Derivative Contracts	(66)		(14)		(7)		(45)

Potential offset of liabilities by counterparty netting and cash collateral

The tables below present the potential offset of counterparty netting and cash collateral:

	Gross Amount Recognized in the Balance Sheets		Gross Amount Not Offset in the Balance Sheets				Net Amount
			Counterparty Netting of Energy Contracts		Cash Collateral Received/Posted
(in millions)	December 31, 2021
Derivative Assets
Energy Derivative Contracts	$	34	$	14	$	—	$	20
Derivative Liabilities
Energy Derivative Contracts	(20)		(14)		—		(6)

(in millions)	December 31, 2020
Derivative Assets
Energy Derivative Contracts	$	17	$	14	$	—	$	3
Derivative Liabilities
Energy Derivative Contracts	(66)		(14)		(7)		(45)

Financial impact of energy contracts

The table below presents the unrealized gains and losses recorded to a regulatory asset or a regulatory liability on the balance sheet:

	Years Ended December 31,
(in millions)	2021		2020		2019
Unrealized Net Gain (Loss) (1)	$	62	$	21	$	(45)

(1)Increase in unrealized net gain on regulatory recoverable derivative contracts is primarily due to increases in forward market prices of natural gas. The table below presents amounts recorded in Operating Revenues on the Consolidated Statements of Income:

	Years Ended December 31,
(in millions)	2021		2020		2019
Operating Revenues	$	7	$	5	$	6

Derivative volumes

The following table presents volumes associated with the energy contracts:

	December 31,
	2021	2020
Power Contracts GWh	2,617	4,143
Gas Contracts BBtu	112,316	111,585

Schedule of different estimation methods and/or market assumptions may yield different estimated fair value amounts

The following table includes the net carrying value and estimated fair value of TEP's long-term debt:

		Net Carrying Value				Fair Value
	Fair Value Hierarchy	December 31,
(in millions)		2021		2020		2021		2020
Liabilities
Long-Term Debt, including Current Maturities	Level 2	$	2,135	$	2,064	$	2,357	$	2,363