Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2011

Fair Value Measurements [Abstract]

Schedule of fair value measurements of financial assets and liabilities

	UniSource Energy
	September 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)	$	33	$	—		$	—		$	33
Rabbi Trust Investments to support the Deferred
Compensation and SERP Plans (2)		—		16			—			16
Energy Contracts (4)		—		1			13			14
Total Assets		33		17			13			63
Liabilities
Energy Contracts (4)		—		(12	)		(23	)		(35	)
Interest Rate Swaps (5)		—		(12	)		—			(12	)
Total Liabilities		—		(24	)		(23	)		(47	)
Net Total Assets and (Liabilities)	$	33	$	(7	)	$	(10	)	$	16

	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
	September 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)	$	14	$	—		$	—		$	14
Rabbi Trust Investments to support the Deferred Compensation and SERP Plans (2)		—		16			—			16
Energy Contracts (4)		—		—			3			3
Total Assets		14		16			3			33
Liabilities
Energy Contracts (4)		—		(4	)		(2	)		(6	)
Interest Rate Swaps (5)		—		(12	)		—			(12	)
Total Liabilities		—		(16	)		(2	)		(18	)
Net Total Assets and (Liabilities)	$	14	$	—		$	1		$	15

	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 balance sheet.
(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. We describe the valuation techniques below. See Note 14.
(5)	We value interest rate swaps based on the 3-month or 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
	September 30, 2011
	Energy Contracts
	-Millions of Dollars-
Balance as of June 30, 2011	$	(9	)	$	1
Gains (Losses) Realized/Unrealized
Recorded to Net Regulatory Assets — Derivative Instruments		(3	)		1
Settlements		2			(1	)
Balance as of September 30, 2011	$	(10	)	$	1
Total Gains (Losses) Attributable to the Change in Unrealized Gains or Losses Relating to Assets/Liabilities Held at the End of the Period	$	(3	)	$	1

	UniSource
	Energy			TEP
	Nine Months Ended
	September 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		(6	)		2
Other Comprehensive Income		(1	)		(1	)
Settlements		7			(1	)
Balance as of September 30, 2011	$	(10	)	$	1
Total Gains (Losses) Attributable to the Change in Unrealized Gains or Losses Relating to Assets/Liabilities Held at the End of the Period	$	(6	)	$	1

	UniSource Energy								TEP
	Three Months Ended
	September 30, 2010
	Energy			Equity					Energy
	Contracts			Investments(1)		Total			Contracts
	-Millions of Dollars-
Balance as of June 30, 2010	$	(11	)	$	1	$	(10	)	$	2
Gains (Losses) Realized/Unrealized
Recorded to:
Net Regulatory Assets — Derivative Instruments		(6	)		—		(6	)		2
Other Comprehensive Income		(1	)		—		(1	)		(1	)
Settlements		4			—		4			(1	)
Balance as of September 30, 2010	$	(14	)	$	1	$	(13	)	$	2
Total Gains (Losses) Attributable to the Change in Unrealized Gains or Losses Relating to Assets/Liabilities Held at the End of the Period	$	(6	)	$	—	$	(6	)	$	1

	UniSource Energy									TEP
	Nine Months Ended
	September 30, 2010
	Energy			Equity						Energy
	Contracts			Investments(1)			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		(10	)		—			(10	)		10
Other Comprehensive Income		(3	)		—			(3	)		(3	)
Other Expense		—			(5	)		(5	)		—
Settlements		12			—			12			(1	)
Balance as of September 30, 2010	$	(14	)	$	1		$	(13	)	$	2
Total Gains (Losses) Attributable to the Change in Unrealized Gains or Losses Relating to Assets/Liabilities Held at the End of the Period	$	(7	)	$	—		$	(7	)	$	6

(1) In December 2010, Millennium reduced to zero the book value of its equity investments classified as Level 3 in the fair value hierarchy.

Balance sheets carrying value estimated fair values of financial instruments

	September 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		935		1,004		866
UniSource Energy		1,455		1,431		1,353		1,243