UTILITY PLANT AND JOINTLY-OWNED FACILITIES (Tables)

12 Months Ended

Dec. 31, 2013

Public Utility Property, Plant, and Equipment

The following table shows Utility Plant in Service by major class:



	UNS Energy				TEP
	December 31,				December 31,
	2013		2012		2013		2012
	Millions of Dollars
Plant in Service:
Electric Generation Plant	$	1,974	$	1,932	$	1,889	$	1,847
Electric Transmission Plant	912		842		825		796
Electric Distribution Plant	1,529		1,495		1,298		1,271
Gas Distribution Plant	252		240		—		—
Gas Transmission Plant	18		18		—		—
General Plant	356		347		312		309
Intangible Plant - Software Costs ^{(1) (2)}	142		124		141		123
Intangible Plant - Other	5		5		—		—
Electric Plant Held for Future Use	4		3		3		2
Total Plant in Service	$	5,192	$	5,006	$	4,468	$	4,348

Utility Plant under Capital Leases⁽³⁾	$	638	$	583	$	638	$	583


⁽¹⁾	Unamortized computer software costs were $40 million for UNS Energy and $39 million for TEP as of December 31, 2013, and $36 million for UNS Energy and $35 million for TEP as of December 31, 2012.


⁽²⁾	The amortization of computer software costs in UNS Energy’s and TEP's income statements was $14 million in 2013, $13 million in 2012, and $10 million in 2011.


⁽³⁾	In 2013, TEP entered into agreements to purchase certain Springerville Unit 1 leased interests. See Note 6.

Amount Of Lease Expense Incurred Related Capital Leases

The following table shows the amount of lease expense incurred for TEP’s generation-related capital leases:



	Years Ended December 31,
	2013		2012		2011
	Millions of Dollars
Lease Expense:
Interest Expense – Included in:
Capital Leases	25		$	34	$	40
Operating Expenses – Fuel	2		3		4
Other Expense	—		—		1
Amortization of Capital Lease Assets – Included in:
Operating Expenses – Fuel	5		4		3
Operating Expenses – Amortization	15		14		14
Total Lease Expense	$	47	$	55	$	62

Depreciable Lives Of Utility Plant In Service

Utility plant depreciation rates and approximate average remaining service lives based on the most recent depreciation studies available at December 31, 2013, were as follows:



	TEP
	December 31, 2013
	Annual Depreciation Rate ⁽⁵⁾	Average Remaining Life in Years
Major Class of Utility Plant in Service:
Electric Generation Plant ⁽¹⁾	3.31%	22
Electric Transmission Plant	1.48%	32
Electric Distribution Plant ⁽¹⁾	2.08%	35
General Plant ⁽¹⁾	5.48%	11
Intangible Plant ⁽²⁾	Various	Various



	UNS Electric
	December 31, 2013
	Annual Depreciation Rate ⁽⁵⁾	Average Remaining Life in Years
Major Class of Utility Plant in Service:
Electric Generation Plant	2.56%	36
Electric Transmission Plant	3.36%	19
Electric Distribution Plant	3.97%	15
General Plant	8.01%	7
Intangible Plant ⁽³⁾	Various	Various



	UNS Gas
	December 31, 2013
	Annual Depreciation Rate ⁽⁵⁾	Average Remaining Life in Years
Major Class of Utility Plant in Service:
Gas Generation Plant	2.37%	41
Gas Transmission Plant	1.54%	54
General Plant	4.38%	7
Intangible Plant ⁽⁴⁾	Various	Various


⁽¹⁾	In June 2013, the ACC issued the 2013 TEP Rate Order that approved a change in depreciation rates which reflects changes in the remaining average useful lives for our generation, distribution, and general plant assets. See Note 3.


⁽²⁾	The majority of TEP's investment in intangible plant represents computer software, which is being amortized over its expected useful life based on either the average lives of 3 to 5 years for smaller application software or remaining lives ranging from 5 to 19 years for large enterprise software.


⁽³⁾	UNS Electric's intangible plant primarily represents capitalized interconnection costs, which are amortized based on either an average life of 23 years or a remaining life of 35 years.


⁽⁴⁾	UNS Gas' intangible plant consists of miscellaneous intangible assets, which are amortized over an average life of either 15 or 25 years.


⁽⁵⁾	The depreciation rates represent a composite of the depreciation rates of assets within each major class of utility plant.

Schedule of Jointly Owned Utility Plants

At December 31, 2013, TEP’s interests in jointly-owned generating stations and transmission systems were as follows:



	Ownership Percentage	Plant in Service		Construction Work in Progress		Accumulated Depreciation		Net Book Value
		Millions of Dollars
San Juan Units 1 and 2	50.0%	$	448	$	6	$	230	$	224
Navajo Units 1, 2, and 3	7.5%	152		1		110		43
Four Corners Units 4 and 5	7.0%	101		2		75		28
Luna Energy Facility	33.3%	53		—		2		51
Transmission Facilities	Various	330		43		190		183
Total		$	1,084	$	52	$	607	$	529

Schedule of Asset Retirement Obligations

The following table reconciles the beginning and ending aggregate carrying amounts of ARO accruals on the balance sheets:



	UNS Energy
	December 31,
	2013		2012
	Millions of Dollars
Beginning Balance	$	14	$	13
Liabilities Incurred	1		—
Accretion Expense or Regulatory Deferral	1		1
Revisions to the Present Value of Estimated Cash Flows ⁽¹⁾	7		—
Ending Balance	$	23	$	14


⁽¹⁾	Primarily related to changes in expected retirement dates of generating facilities.

The table above primarily reflects TEP's ARO obligations. UNS Electric's ARO obligations were less than $1 million at December 31, 2013 and 2012.

- Definition

Tabular disclosure of proportionate interests in jointly owned utility plants. Includes the amount of plants in service, the accumulated provision for depreciation (if available), the amount of plants under construction, and the proportionate share. The amounts presented may be further subdivided to show amounts applicable to plant subcategories (for example, production, transmission, distribution). Includes statements that the amounts represent the utility's share in each joint plant and that it must provide its own financing. Information concerning two or more generating plants on the same site may be combined. States that the utility's share of direct expenses of the joint plants is included in the corresponding operating expenses on its income statement (for example, fuel, maintenance of plant, other operating expense). If the share of direct expenses is charged to purchased power, then disclose the amount so charged and the proportionate amounts charged to specific operating expenses on the records maintained for the joint plants.

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