Leases

We lease certain vehicles, land, buildings, equipment and miscellaneous other items through operating rental agreements with varying terms, provisions and expiration dates.

Total lease expense recognized in the Consolidated Statements of Income was $18 million in 2014, $18 million in 2013, and $19 million in 2012. APS’s lease expense was $15 million in 2014, $15 million in 2013, and $16 million in 2012.

Estimated future minimum lease payments for Pinnacle West’s and APS’s operating leases, excluding purchased power agreements, are approximately as follows (dollars in millions):



Year	Pinnacle West Consolidated		APS
2015	$	18	$	15
2016	6		6
2017	5		5
2018	4		4
2019	3		3
Thereafter	63		62
Total future lease commitments	$	99	$	95

In 1986, APS entered into agreements with three separate lessor trust entities in order to sell and lease back interests in Palo Verde Unit 2 and related common facilities. These lessor trust entities have been deemed VIEs for which APS is the primary beneficiary. As the primary beneficiary, APS consolidated these lessor trust entities. The impacts of these sale leaseback transactions are excluded from our lease disclosures as lease accounting is eliminated upon consolidation. See Note 18 for a discussion of VIEs.