The following tables summarize regulatory assets and liabilities:



	December 31, 2013
	TEP			UNS Electric			UNS Gas			UNS Energy
	Millions of Dollars
Regulatory Assets—Current
Property Tax Deferrals ⁽¹⁾	$	20		$	—		$	—		$	20
Derivative Instruments (Note 15)	1			—			—			1
San Juan Mine Fire Cost Deferral ⁽²⁾	10			—			—			10
PPFAC ⁽²⁾	4			10			—			14
DSM and LFCR ⁽²⁾	3			—			—			3
Other Current Regulatory Assets ⁽³⁾	5			—			—			5
Total Regulatory Assets—Current	43			10			—			53
Regulatory Assets—Noncurrent
Pension and Other Retiree Benefits (Note 10)	75			3			2			80
Income Taxes Recoverable through Future Revenues ⁽⁴⁾	22			3			—			25
PPFAC—Final Mine Reclamation and Retiree Health Care Costs ⁽⁵⁾	25			—			—			25
Discontinued Nogales Transmission Project ⁽⁶⁾	5			—			—			5
Other Regulatory Assets ⁽³⁾	14			2			—			16
Total Regulatory Assets—Noncurrent	141			8			2			151
Regulatory Liabilities—Current
PGA ⁽²⁾	—			—			(15		)	(15		)
RES ⁽²⁾	(22		)	(9		)	—			(31		)
Other Current Regulatory Liabilities	(2		)	(6		)	—			(8		)
Total Regulatory Liabilities—Current	(24		)	(15		)	(15		)	(54		)
Regulatory Liabilities—Noncurrent
Net Cost of Removal for Interim Retirements ⁽⁷⁾	(254		)	(12		)	(26		)	(292		)
Income Taxes Payable through Future Rates	(5		)	—			(1		)	(6		)
Deferred Investment Tax Credit ⁽⁸⁾	(4		)	—			—			(4		)
Total Regulatory Liabilities—Noncurrent	(263		)	(12		)	(27		)	(302		)
Total Net Regulatory Assets (Liabilities)	$	(103	)	$	(9	)	$	(40	)	$	(152	)



	December 31, 2012
	TEP			UNS Electric			UNS Gas			UNS Energy
	Millions of Dollars
Regulatory Assets—Current
Property Tax Deferrals ⁽¹⁾	$	18		$	—		$	—		$	18
Derivative Instruments (Note 15)	2			6			3			11
PPFAC ⁽²⁾	7			8			—			15
DSM ⁽²⁾	5			—			—			5
Other Current Regulatory Assets ⁽³⁾	2			—			1			3
Total Regulatory Assets—Current	34			14			4			52
Regulatory Assets—Noncurrent
Pension and Other Retiree Benefits (Note 10)	130			5			4			139
Income Taxes Recoverable through Future Revenues ⁽⁴⁾	8			2			—			10
PPFAC—Final Mine Reclamation and Retiree Health Care Costs ⁽⁵⁾	22			—			—			22
Discontinued Nogales Transmission Project ⁽⁶⁾	5			—			—			5
Other Regulatory Assets ⁽³⁾	13			1			1			15
Total Regulatory Assets—Noncurrent	178			8			5			191
Regulatory Liabilities—Current
PGA ⁽²⁾	—			—			(17		)	(17		)
RES ⁽²⁾	(19		)	(4		)	—			(23		)
Other Current Regulatory Liabilities	(2		)	(1		)	(1		)	(4		)
Total Regulatory Liabilities—Current	(21		)	(5		)	(18		)	(44		)
Regulatory Liabilities—Noncurrent
Net Cost of Removal for Interim Retirements ⁽⁷⁾	(231		)	(11		)	(25		)	(267		)
Income Taxes Payable through Future Rates	(5		)	—			(1		)	(6		)
Deferred Investment Tax Credit ⁽⁸⁾	(5		)	—			—			(5		)
Other Regulatory Liabilities	—			(1		)	—			(1		)
Total Regulatory Liabilities—Noncurrent	(241		)	(12		)	(26		)	(279		)
Total Net Regulatory Assets (Liabilities)	$	(50	)	$	5		$	(35	)	$	(80	)

Regulatory assets are either being collected in Retail Rates or are expected to be collected through Retail Rates in a future period. We describe regulatory assets below. With the exception of interest earned on under-recovered PPFAC costs, we do not earn a return on regulatory assets.


⁽¹⁾	Property Tax is recovered over approximately a six-month period as costs are paid, rather than as costs are accrued.


⁽²⁾	See Cost Recovery Mechanisms discussion above.


⁽³⁾	TEP’s other regulatory assets include unamortized loss on reacquired debt (recovery through 2032), coal contract amendment (recovery through 2017), rate case costs (recovery over three years), environmental compliance costs, Springerville Unit 1 lease deferrals and other assets (recovery through 2014).


⁽⁴⁾	Income Taxes Recoverable through Future Revenues are amortized over the life of the assets.

⁽⁵⁾

Final Mine Reclamation and Retiree Health Care Costs stem from TEP’s jointly-owned facilities at the San Juan Generating Station, the Four Corners Generating Station, and the Navajo Generating Station. TEP is required to recognize the present value of its liability associated with final mine reclamation and retiree health care obligations over the life of the coal supply agreements. TEP recorded a regulatory asset because TEP is permitted to fully recover these costs through the PPFAC when the costs are invoiced by the miners. TEP expects to recover these costs over the remaining life of the mines, which is estimated to be between 14 and 20 years.


⁽⁶⁾	TEP and UNS Electric will request recovery from FERC for the prudent costs incurred to develop a high-voltage transmission line from Tucson to Nogales. TEP and UNS Electric are not going to proceed with the project. See Note 7.

Regulatory liabilities represent items that we either expect to pay to customers through billing reductions in future periods or plan to use for the purpose for which they were collected from customers, as described below:


⁽⁷⁾	Net Cost of Removal for Interim Retirements represents amounts recovered through depreciation rates associated with asset retirement costs expected to be incurred in the future.


⁽⁸⁾	The Deferred Investment Tax Credit relates to federal energy credits generated in 2012 and is amortized over the tax life of the underlying asset.