RELATED PARTY TRANSACTIONS (Tables)

3 Months Ended

Mar. 31, 2024

Related Party Transactions [Abstract]

Schedule of Related Party Balances and Transactions

The following table presents the components of related party balances included in Accounts Receivable and Accounts Payable on the Condensed Consolidated Balance Sheets:

(in millions)	March 31, 2024		December 31, 2023
Receivables from Related Parties
UNS Energy	$	6	$	—
UNS Electric	5		5
UNS Gas	2		2
Total Due from Related Parties	$	13	$	7
Payables to Related Parties
UNS Energy	$	5	$	1
UNS Electric	1		1
UNS Gas	—		1
Total Due to Related Parties	$	6	$	3

The following table presents the components of related party transactions included in the Condensed Consolidated Statements of Income:

	Three Months Ended March 31,
(in millions)	2024		2023
Goods and Services Provided by TEP to Affiliates
Common Costs, UNS Energy Affiliates (1)	$	6	$	6
Transmission Revenues, UNS Electric (2)	2		2
Wholesale Revenues, UNS Electric (2)	2		7
Goods and Services Provided by Affiliates to TEP
Corporate Services, UNS Energy (3)	$	3	$	3
Capacity Charges, UNS Gas (4)	1		1
Purchased Power, UNS Electric (2)	—		1

(1)Common costs (information systems, facilities, etc.) are allocated on a cost-causative basis and recorded as revenue by TEP. The method of allocation is deemed reasonable by management and is reviewed by the ACC as part of the rate case process.

(2)TEP and UNS Electric sell power and transmission services to each other. Wholesale power is sold at prevailing market prices, while transmission services are sold at FERC-approved rates through the applicable OATT.

(3)Costs for corporate services at UNS Energy are allocated to its subsidiaries using the Massachusetts Formula, an industry-accepted method of allocating common costs to affiliated entities. TEP's allocation is approximately 85% of UNS Energy's allocated costs. Corporate Services, UNS Energy includes legal, audit, and Fortis' management fees. TEP's share of Fortis' management fees was $2 million in each of the three months ended March 31, 2024 and 2023.

(4)UNS Gas charges TEP for natural gas capacity used to supply one of TEP's generation facilities.