Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2011

Fair Value Measurements (Tables) [Abstract]

Schedule of Fair value measurements of financial assets and liabilities


	UniSource Energy
	June 30, 2011
	Quoted Prices
	In		Significant
	Active Markets		Other			Significant
	for Identical		Observable			Unobservable
	Assets		Inputs			Inputs
	(Level 1)		(Level 2)			(Level 3)			Total
	-Millions of Dollars-
Assets
Cash Equivalents ⁽¹⁾	$	30	$	—		$	—		$	30
Rabbi Trust Investments to support the Deferred Compensation and SERP Plans ⁽²⁾		—		18			—			18
Collateral Posted ⁽³⁾		—		1			—			1
Energy Contracts ⁽⁴⁾		—		1			13			14

Total Assets		30		20			13			63


Liabilities
Energy Contracts ⁽⁴⁾		—		(12	)		(22	)		(34	)
Interest Rate Swaps ⁽⁵⁾		—		(10	)		—			(10	)

Total Liabilities		—		(22	)		(22	)		(44	)

Net Total Assets and (Liabilities)	$	30	$	(2	)	$	(9	)	$	19


	UniSource Energy
	December 31, 2010
	Quoted Prices
	In		Significant
	Active Markets		Other			Significant
	for Identical		Observable			Unobservable
	Assets		Inputs			Inputs
	(Level 1)		(Level 2)			(Level 3)			Total
	-Millions of Dollars-
Assets
Cash Equivalents ⁽¹⁾	$	38	$	—		$	—		$	38
Rabbi Trust Investments to support the Deferred Compensation and SERP Plans ⁽²⁾		—		16			—			16
Collateral Posted ⁽³⁾		—		3			—			3
Energy Contracts ⁽⁴⁾		—		—			15			15

Total Assets		38		19			15			72


Liabilities
Energy Contracts ⁽⁴⁾		—		(19	)		(25	)		(44	)
Interest Rate Swaps ⁽⁵⁾		—		(10	)		—			(10	)

Total Liabilities		—		(29	)		(25	)		(54	)

Net Total Assets and (Liabilities)	$	38	$	(10	)	$	(10	)	$	18


	TEP
	June 30, 2011
	Quoted Prices
	In		Significant
	Active Markets		Other			Significant
	for Identical		Observable			Unobservable
	Assets		Inputs			Inputs
	(Level 1)		(Level 2)			(Level 3)			Total
	-Millions of Dollars-
Assets
Cash Equivalents ⁽¹⁾	$	9	$	—		$	—		$	9
Rabbi Trust Investments to support the Deferred Compensation and SERP Plans ⁽²⁾		—		18			—			18
Collateral Posted ⁽³⁾		—		1			—			1
Energy Contracts ⁽⁴⁾		—		—			4			4

Total Assets		9		19			4			32


Liabilities
Energy Contracts ⁽⁴⁾		—		(5	)		(3	)		(8	)
Interest Rate Swaps ⁽⁵⁾		—		(10	)		—			(10	)

Total Liabilities		—		(15	)		(3	)		(18	)

Net Total Assets and (Liabilities)	$	9	$	4		$	1		$	14


	TEP
	December 31, 2010
	Quoted Prices
	In		Significant
	Active Markets		Other			Significant
	for Identical		Observable			Unobservable
	Assets		Inputs			Inputs
	(Level 1)		(Level 2)			(Level 3)			Total
	-Millions of Dollars-
Assets
Cash Equivalents ⁽¹⁾	$	21	$	—		$	—		$	21
Rabbi Trust Investments to support the Deferred Compensation and SERP Plans ⁽²⁾		—		16			—			16
Energy Contracts ⁽⁴⁾		—		—			3			3

Total Assets		21		16			3			40


Liabilities
Energy Contracts ⁽⁴⁾		—		(7	)		(2	)		(9	)
Interest Rate Swaps ⁽⁵⁾		—		(10	)		—			(10	)

Total Liabilities		—		(17	)		(2	)		(19	)

Net Total Assets and (Liabilities)	$	21	$	(1	)	$	1		$	21


(1)		Cash Equivalents are based on observable market prices and include the fair value of commercial paper, money market funds and certificates of deposit. These amounts are included in Cash and Cash Equivalents and Investments and Other Property — Other in the UniSource Energy and TEP balance sheets.

(2)		Rabbi Trust Investments include amounts held in mutual and money market funds related to deferred compensation and SERP benefits. The valuation is based on quoted prices traded in active markets. These investments are included in Investments and Other Property — Other in the UniSource Energy and TEP balance sheets.

(3)		Collateral provided for energy contracts with counterparties to reduce credit risk exposure. Collateral posted is included in Current Assets — Other in the UniSource Energy and TEP balance sheets.

(4)		Energy Contracts include gas swap agreements (Level 2), forward power purchase and sales contracts (Level 3), and forward power purchase contracts indexed to gas (Level 3), entered into to reduce exposure to energy price risk. These contracts are included in Derivative Instruments in the UniSource Energy and TEP balance sheets. The valuation techniques are described below. See Note 14.

(5)		Interest Rate Swaps are valued based on the 6-month LIBOR index or the Securities Industry and Financial Markets Association (SIFMA) Municipal Swap index. These interest rate swaps are included in Derivative Instruments in the UniSource Energy and TEP balance sheets.

Schedule of reconciliation of changes in the fair value of assets and liabilities


	UniSource
	Energy			TEP
	Three Months Ended
	June 30, 2011
	Energy Contracts
	-Millions of Dollars-
Balance as of March 31, 2011	$	(11	)	$	1
Gains (Losses) Realized/Unrealized
Recorded to:
Net Regulatory Assets — Derivative Instruments		(1	)		—
Settlements		3			—

Balance as of June 30, 2011	$	(9	)	$	1

Total gains (losses) attributable to the change in unrealized gains or losses relating to assets/liabilities still held at the end of the period	$	(1	)	$	—


	UniSource
	Energy			TEP
	Six Months Ended
	June 30, 2011
	Energy Contracts
	-Millions of Dollars-
Balance as of December 31, 2010	$	(10	)	$	1
Gains (Losses) Realized/Unrealized
Recorded to:
Net Regulatory Assets — Derivative Instruments		(3	)		1
Other Comprehensive Income		(1	)		(1	)
Settlements		5			—

Balance as of June 30, 2011	$	(9	)	$	1

Total gains (losses) attributable to the change in unrealized gains or losses relating to assets/liabilities still held at the end of the period	$	(3	)	$	—


	UniSource Energy									TEP
				Three Months Ended
				June 30, 2010
	Energy			Equity						Energy
	Contracts			Investments			Total			Contracts
	-Millions of Dollars-
Balance as of March 31, 2010	$	(16	)	$	6		$	(10	)	$	(2	)
Gains (Losses) Realized/Unrealized
Recorded to:
Net Regulatory Assets — Derivative Instruments		1			—			1			4
Other Expense		—			(5	)		(5	)		—
Settlements		4			—			4			—

Balance as of June 30, 2010	$	(11	)	$	1		$	(10	)	$	2

Total gains (losses) attributable to the change in unrealized gains or losses relating to assets/liabilities still held at the end of the period	$	—		$	—		$	—		$	4


	UniSource Energy									TEP
				Six Months Ended
				June 30, 2010
	Energy			Equity						Energy
	Contracts			Investments			Total			Contracts
	-Millions of Dollars-
Balance as of December 31, 2009	$	(13	)	$	6		$	(7	)	$	(4	)
Gains (Losses) Realized/Unrealized
Recorded to:
Net Regulatory Assets — Derivative Instruments		(4	)		—			(4	)		7
Other Comprehensive Income		(1	)		—			(1	)		(1	)
Other Expense		—			(5	)		(5	)		—
Settlements		7			—			7			—

Balance as of June 30, 2010	$	(11	)	$	1		$	(10	)	$	2

Total gains (losses) attributable to the change in unrealized gains or losses relating to assets/liabilities still held at the end of the period	$	(4	)	$	—		$	(4	)	$	6

Balance sheets carrying value estimated fair values of financial instruments


	June 30, 2011				December 31, 2010
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
	-Millions of Dollars-
Assets:
TEP Investments in Lease Debt and Equity	$	66	$	75	$	105	$	112
Liabilities:
Long-Term Debt
TEP		1,004		917		1,004		866
UniSource Energy		1,371		1,315		1,353		1,243

- Definition

This item represents certain of the disclosures concerning the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments, assets, and liabilities. Such certain disclosures about the financial instruments, assets, and liabilities include: (1) the fair value of the required items together with their carrying amounts (as appropriate) and (2) the methodology and assumptions used in developing such estimates of fair value.

+ References+ Details