REGULATORY MATTERS (Tables)

6 Months Ended

Jun. 30, 2023

Regulated Operations [Abstract]

Schedule of Purchased Power and Fuel Adjustment Rates

The table below summarizes the PPFAC regulatory asset (liability) balance:

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2023		2022		2023		2022
Beginning of Period	$	118	$	102	$	124	$	91
Deferred Fuel and Purchased Power Costs (1)	65		88		123		153
PPFAC and Base Power Recoveries	(90)		(87)		(154)		(141)
End of Period	$	93	$	103	$	93	$	103

(1)Includes costs eligible for recovery through the PPFAC and base power rates.

Schedule of Regulatory Assets and Liabilities

Regulatory assets and liabilities recorded on the Condensed Consolidated Balance Sheets are summarized in the table below:

($ in millions)	Remaining Recovery Period (years)	June 30, 2023		December 31, 2022
Regulatory Assets
Under Recovered Purchased Energy Costs	1	$	93	$	124
Pension and Other Postretirement Benefits (Note 8)	Various	87		90
Early Generation Retirement Costs	Various	55		58
Lost Fixed Cost Recovery	1	33		25
Property Tax Deferrals (1)	1	30		29
Final Mine Reclamation and Retiree Healthcare Costs (2)	6	11		11
Income Taxes Recoverable through Future Rates (3)	Various	6		6
Unamortized Loss on Reacquired Debt	Various	5		5
Derivatives (Note 9)	7	3		3
Other Regulatory Assets	Various	18		19
Total Regulatory Assets		341		370
Less Current Portion	1	163		185
Total Non-Current Regulatory Assets		$	178	$	185

Regulatory Liabilities
Income Taxes Payable through Future Rates (3)	Various	$	236	$	244
Renewable Energy Standard	Various	73		73
Derivatives (Note 9)	7	39		86
Net Cost of Removal (4)	Various	31		43
Demand Side Management	1	15		16
Transmission Balancing Accounts	1	9		9
Pension and Other Postretirement Benefits (Note 8)	Various	8		8
Deferred Investment Tax Credits	Various	7		7
Other Regulatory Liabilities	Various	—		3
Total Regulatory Liabilities		418		489
Less Current Portion	1	98		111
Total Non-Current Regulatory Liabilities		$	320	$	378

(1)Recorded as a regulatory asset based on historical ratemaking treatment allowing regulated utilities recovery of property taxes on a pay-as-you-go or cash basis. TEP records a liability to reflect the accrual for financial reporting purposes and an offsetting regulatory asset to reflect recovery for regulatory purposes.

(2)Represents costs associated with TEP’s jointly-owned facilities at San Juan and Four Corners. TEP recognizes these costs at future value and is permitted to fully recover these costs on a pay-as-you-go basis through the PPFAC mechanism. Final mine reclamation costs are expected to be funded by TEP through 2028. San Juan Unit 1 was retired in June 2022.

(3)Amortized over five years, 10 years, or the lives of the assets.

(4)Represents an estimate of the future cost of retirement, net of salvage value. These are amounts collected through revenue for transmission, distribution, generation, and general and intangible plant which are not yet expended.