As of December 31, 2023, TEP had the following commitments:


(in millions)	2024		2025		2026		2027		2028		Thereafter		Total
Minimum Purchase Commitments
Fuel, Including Transportation	$	68	$	67	$	63	$	63	$	54	$	226	$	541
Purchased Power	26		4		—		—		—		—		30
Transmission	28		26		9		1		1		2		67
Purchase Commitments
Renewable Power Purchase Agreements and Other	84		84		79		79		79		689		1,094
RES Performance-Based Incentives	7		5		5		4		4		15		40
Total Commitments	$	213	$	186	$	156	$	147	$	138	$	932	$	1,772

Costs for Purchased Power, Transmission, and Fuel, Including Transportation, are recoverable from customers through the PPFAC mechanism. A portion of the costs of renewable PPAs are recoverable through the PPFAC, with the balance of costs recoverable through the RES tariff. PBI costs are recoverable through the RES tariff. See Note 2 for information on ACC approved cost recovery mechanisms.

TEP has long-term agreements for the purchase and delivery of coal with various expiration dates through 2031. In 2023, TEP entered into a coal transportation agreement for Springerville Unit 1 and Unit 2 through 2031. Amounts paid under these contracts depend on actual quantities purchased and delivered. Some of these agreements include price adjustment components that will affect future costs.

TEP has firm natural gas transportation agreements with capacity sufficient to meet its load requirements. These agreements expire in various years between 2024 and 2048. In 2023, TEP amended and extended an agreement for gas transportation to Gila River through 2029 and amended and extended an agreement for gas transportation to Sundt through 2048.

TEP has contracts for purchased power to: (i) meet system load and energy requirements; (ii) replace generation from company-owned units under maintenance and during outages; and (iii) meet operating reserve obligations. In general, these contracts provide for capacity and energy payments based on actual power taken under the contracts with various expiration dates through the third quarter of 2025. Certain of these contracts are at a fixed price per MWh and others are indexed to market prices. The commitment amounts included in the table above are based on projected market prices as of December 31, 2023.

TEP has long-term firm point-to-point contracts to purchase transmission services over lines that are part of the Western Interconnection, a regional grid in the United States. These agreements expire in various years between 2024 and 2030.

TEP enters into long-term renewable PPAs, which require TEP to purchase 100% of certain renewable energy generation facilities' output and RECs associated with the output delivered once commercial operation status is achieved. While TEP is not required to make payments under the agreements if power is not delivered, estimated future payments are included in the table above. These agreements expire in various years between 2027 and 2051.

TEP has entered into REC purchase agreements to purchase the environmental attributes from retail customers with solar installations. Payments for the RECs are termed PBIs and are paid in contractually agreed-upon intervals (usually quarterly) based on metered renewable energy production. These agreements expire in various years between 2024 and 2034.

In September 2023, TEP entered into an EPC agreement to develop Roadrunner Reserve I at a cost of $294 million. TEP will own and operate the facility, which will be located in southeast Tucson and have a nominal capacity rating of 200 MW and storage capacity of 800 MWh. Roadrunner Reserve I is expected to be placed in service in the second half of 2025. As of December 31, 2023, TEP has made payments of $90 million in connection with the construction and development of Roadrunner Reserve I.

TEP is party to a variety of legal actions arising out of the normal course of business. Plaintiffs occasionally seek punitive or exemplary damages. TEP believes such normal and routine litigation will not have a material impact on its operations or consolidated financial results.

TEP pays ongoing mine reclamation costs related to coal mines that supply generation facilities in which TEP has an ownership interest but does not operate. Amounts recorded for final mine reclamation are subject to various assumptions, such as estimations of reclamation costs, timing of when final reclamation will occur, and the expected inflation rate. As these assumptions change, TEP prospectively adjusts the expense amounts for final reclamation over the remaining term of the respective coal supply agreement. TEP’s PPFAC allows the pass-through of final mine reclamation costs to retail customers as a component of fuel costs. Therefore, TEP defers these expenses until recovered from customers by recording a regulatory asset and the reclamation liability over the remaining life of the respective coal supply agreements. TEP recovers the regulatory asset through the PPFAC as final mine reclamation costs are funded. After expiration of the related coal supply agreement, TEP will record its share of any change in the estimate of its final mine reclamation liability to its regulatory asset and reclamation liability.

TEP is liable for a portion of final mine reclamation costs for the mines at San Juan and Four Corners. TEP's share of final mine reclamation costs at Four Corners is $6 million upon the expiration of the Four Corners coal supply agreement in 2031. TEP ceased operations at San Juan upon expiration of the coal supply agreement in 2022. As of December 31, 2023, TEP's remaining final mine reclamation liability at San Juan was $25 million. TEP established a trust to fund its share of estimated final mine reclamation costs at San Juan, which will remain in effect through the completion of final mine reclamation activities currently projected to be 2039. For additional information see Note 1, Restricted Cash, and Note 3, Plant in Service. TEP's aggregate liability balance related to San Juan and Four Corners final mine reclamation totaled $29 million and $37 million as of December 31, 2023 and 2022, respectively, and was recorded in Other on the Consolidated Balance Sheets.

TEP has joint generation participation agreements with participants at Four Corners and Luna, which expire in 2041 and 2046, respectively. The participants at Four Corners and Luna, including TEP, have guaranteed certain performance obligations. Specifically, in the event of payment default, each non-defaulting participant has agreed to bear its proportionate share of expenses otherwise payable by the defaulting participant. In exchange, the non-defaulting participants are entitled to receive their proportionate share of the generation capacity of the defaulting participant. There is no maximum potential amount of future payments TEP could be required to make under the Luna guarantee. The maximum potential amount of future payments on the non-defaulting parties is $250 million at Four Corners. As of December 31, 2023, there have been no such payment defaults under either of the participation agreements.

The Navajo and San Juan participation agreements expired in 2019 and 2022, respectively, but certain performance obligations continue through the decommissioning of both generation facilities. In the case of a default under either participation agreement, the non-defaulting participants would seek financial recovery directly from the defaulting party.

TEP is subject to federal, state, and local environmental laws and regulations regarding air and water quality, renewable portfolio standards, emissions performance standards, climate change, coal combustion byproduct disposal, hazardous and solid waste disposal, protected species, and other environmental matters that have the potential to impact TEP's current and future operations. Environmental laws and regulations are subject to a range of interpretations, which may ultimately be resolved by the courts. Because these laws and regulations continue to evolve, TEP is unable to predict the impact of the changing laws and regulations on its operations and consolidated financial results. TEP expects to recover the cost of environmental compliance from its customers. TEP believes it is in compliance with applicable environmental laws and regulations in all material respects.