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REVENUE
 12 Months Ended
Dec. 31, 2023
Revenue from Contract with Customer [Abstract]  
REVENUE REVENUE
TEP earns most of its revenues from the sale of power to retail and wholesale customers based on regulator-approved tariff rates. Most of the Company's contracts have a single performance obligation, the delivery of power. TEP has certain contracts with variable transaction pricing that require it to estimate the expected consideration.
DISAGGREGATION OF REVENUES
The following table presents the disaggregation of TEP’s Operating Revenues on the Consolidated Statements of Income by type of service:
Years Ended December 31,
(in millions)202320222021
Retail$1,283 $1,140 $1,088 
Wholesale (1)
364 456 278 
Other Services124 104 114 
Revenues from Contracts with Customers1,771 1,700 1,480 
Alternative Revenues38 28 12 
Other66 80 101 
Total Operating Revenues$1,875 $1,808 $1,593 
(1)The decrease in 2023 was primarily due to decreases in volume and market prices.
Retail Revenues
TEP’s tariff-based sales to residential, commercial, and industrial customers are regulated by the ACC and recognized when power is delivered at the amount of consideration that the Company expects to receive in exchange. Retail revenues include an estimate for unbilled revenues from service that has been provided but not billed by the end of an accounting period. At the end of the month, amounts of power delivered since the last meter reading are estimated and the corresponding unbilled revenue is calculated using anticipated Retail Rates. Unbilled revenues are dependent upon a number of factors that require management’s judgment including estimates of retail sales, customer usage patterns, and pricing. Unbilled revenues primarily increase during spring and summer months then decrease during fall and winter months due to the seasonal fluctuations of TEP’s actual load. The timing of revenue recognition, billings, and cash collections results in billed and unbilled accounts receivable balances. See Note 5 for components of Accounts Receivable on the Consolidated Balance Sheets.
In August 2023, the ACC issued the 2023 Rate Order for new rates that took effect September 1, 2023. See Note 2 for more information regarding the 2023 Rate Order.
Wholesale Revenues
TEP’s operations include the wholesale marketing of electricity and transmission to other utilities and power marketers, which may include capacity, power, transmission, and ancillary services. When TEP promises to provide distinct services within a contract, the Company identifies one or more performance obligations. The Company recognizes revenue for wholesale and transmission sales at FERC-approved rates based on demand for capacity or the reading of meters for power. For contracts with multiple performance obligations, all deliverables are eligible for recognition in the month of production; therefore, it is not necessary to allocate the transaction price among the identified performance obligations. For purchased power and wholesale sales contracts that are settled financially, TEP nets the purchased power contracts with the sales contracts and reflects the amount in Operating Revenues on the Consolidated Statements of Income.
Other Services Revenues
Other Services Revenues primarily include fees earned as operator of Springerville Units 3 and 4, reimbursement of various operating expenses for the use of the Springerville Common Facilities and the Springerville Coal Handling Facilities by the lessee of Springerville Unit 3, and miscellaneous service-related revenues.
Alternative Revenues
Alternative revenue programs allow utilities to adjust future rates in response to past activities or completed events if certain criteria established by a regulator are met. TEP has identified its LFCR and ECA mechanisms, OATT and TCA balancing activity, and DSM performance incentive as alternative revenues. See Note 2 for additional information regarding these cost recovery mechanisms and performance incentive.
Other Revenues
Other Revenues include gains and losses on derivative contracts, asset management agreement optimization gains, common cost allocations to affiliates, and late and returned payment finance charges. See Note 6 for information regarding revenue from related parties and Note 12 for information regarding derivative instruments.