v3.24.0.1
EMPLOYEE BENEFITS PLANS (Tables)
 12 Months Ended
Dec. 31, 2023
Retirement Benefits [Abstract]  
Schedule Of Pension And Other Postretirement Benefit Amounts
The following table presents pension and other postretirement benefit amounts (excluding tax balances) included in the balance sheet:
Pension BenefitsOther Postretirement Benefits
December 31,
(in millions)2023202220232022
Regulatory Assets$107 $90 $— $— 
Regulatory Liabilities— — (4)(8)
Regulatory and Other Assets—Other— 8 — — 
Accrued Employee Expenses(1)(1)(3)(2)
Pension and Other Postretirement Benefits(28)(20)(53)(49)
Accumulated Other Comprehensive Loss5 4 — — 
Net Amount Recognized$83 $81 $(60)$(59)
Schedule Of Changes In Funded Status The table below presents the status of all TEP pension and other postretirement benefit plans.
Pension BenefitsOther Postretirement Benefits
Years Ended December 31,
(in millions)2023202220232022
Change in Benefit Obligation
Beginning of Period$411 $600 $74 $90 
Actuarial Loss (Gain)39 (176)6 (17)
Interest Cost22 16 4 2 
Service Cost12 21 4 5 
Benefits Paid(23)(35)(5)(6)
Plan Amendments (1)
— 1 — — 
Settlements (2)
— (16)— — 
End of Period (3)
461 411 83 74 
Change in Fair Value of Plan Assets
Beginning of Period398 538 23 28 
Actual Return on Plan Assets44 (101)4 (4)
Benefits Paid(22)(34)(2)(3)
Employer Contributions (4)
12 11 2 2 
Settlements (2)
— (16)— — 
End of Period (5)
432 398 27 23 
Funded Status at End of Period$(29)$(13)$(56)$(51)
(1)Employees promoted to officer become eligible for SERP benefits based in part on their service prior to officer promotion. These prior service costs are accounted for in this table as a plan amendment.
(2)Represents the aggregate lump-sum benefit payments for plans that exceeded the threshold of service plus interest costs. The change is due to a decrease in retiring employees opting to receive their benefits as a lump-sum.
(3)The increase in pension and other postretirement benefit obligations was primarily due to a decrease in the discount rate.
(4)TEP expects to contribute $11 million to the pension plans and $2 million to the VEBA trust in 2024.
(5)The increase in pension and other postretirement benefit plan assets was primarily due to positive equity and fixed income returns.
Schedule Of Information For The Pension Plans With Accumulated Benefit Obligations In Excess Of Pension Plan Assets The following table includes information for the pension plan with an accumulated benefit obligation in excess of pension plan assets:
December 31,
(in millions)20232022
Accumulated Benefit Obligation $20 $19 
Fair Value of Plan Assets — — 
Schedule Of Net Periodic Benefit Cost Not Yet Recognized
The following table provides the components of TEP’s regulatory assets, regulatory liabilities, and AOCL that have not been recognized as components of net periodic benefit cost as of the dates presented:
Pension BenefitsOther Postretirement Benefits
December 31,
(in millions)2023202220232022
Net Loss (Gain)$111 $93 $(3)$(7)
Prior Service Cost (Benefit)1 1 (1)(1)
Components Of Net Periodic Benefit Plan Cost Net periodic benefit plan cost includes the following components:
Pension BenefitsOther Postretirement Benefits
Years Ended December 31,
(in millions)202320222021202320222021
Service Cost$12 $21 $20 $4 $5 $6 
Non-Service Cost
Interest Cost22 16 14 4 2 2 
Expected Return on Plan Assets(29)(37)(34)(2)(1)(2)
Prior Service Benefit Amortization— — — — (1)— 
Amortization of Net Loss 5 7 9 — — 1 
Effect of Settlement— 3 — — — — 
Net Periodic Benefit Cost$10 $10 $9 $6 $5 $7 
Schedule Of The Changes In Plan Assets And Benefit Obligations Recognized As Regulatory Assets Or In AOCL
The changes in plan assets and benefit obligations recognized as regulatory assets, regulatory liabilities, or in AOCL were as follows:
Pension BenefitsOther Postretirement Benefits
Regulatory AssetAOCLRegulatory Asset/Liability
(in millions)202320222021202320222021202320222021
Current Year Actuarial Loss (Gain)$22 $(27)$(16)$1 $(9)$— $4 $(11)$(13)
Prior Service Benefit Amortization— — — — — — — 1 — 
Amortization of Net Loss(5)(6)(8)— (1)(1)— — (1)
Prior Service Cost— — — — 1 — — — — 
Effect of Settlement— (3)— — — — — — — 
Total Recognized Loss (Gain)$17 $(36)$(24)$1 $(9)$(1)$4 $(10)$(14)
Schedule of Defined Benefit Plan, Assumptions
The following table includes the weighted average assumptions used to determine benefit obligations:
Pension BenefitsOther Postretirement Benefits
2023202220232022
Discount Rate5.4%5.7%5.2%5.6%
Rate of Compensation Increase3.2%2.9%N/AN/A
The following table includes the weighted average assumptions used to determine net periodic benefit costs:
Pension BenefitsOther Postretirement Benefits
202320222021202320222021
Discount Rate, Service Cost5.9%3.4%3.3%5.7%3.2%2.9%
Discount Rate, Interest Cost5.6%2.7%2.3%5.5%2.5%1.9%
Rate of Compensation Increase2.9%2.8%2.8%N/AN/AN/A
Expected Return on Plan Assets7.5%7.0%6.8%7.5%7.0%7.0%
Schedule Of Healthcare Cost Trend Rates
Healthcare cost trend rates are assumed to decrease gradually from next year to the year the ultimate rate is reached:
December 31,
20232022
Next Year (Pre-65)7.3%7.0%
Next Year (Post-65)5.8%6.0%
Ultimate Rate Assumed (Pre-65 and Post-65)4.5%4.5%
Year Ultimate Rate is Reached (Pre-65)20342032
Year Ultimate Rate is Reached (Post-65)20282028
Schedule Of Asset Allocations, By Asset Category, On The Measurement Date Asset allocations, by asset category, on the measurement date were as follows:
PensionOther Postretirement Benefits
2023202220232022
Asset Category
Equity Securities53 %53 %60 %61 %
Fixed Income Securities40 %39 %38 %38 %
Real Estate6 %7 %— %— %
Other1 %1 %2 %1 %
Total100 %100 %100 %100 %
Schedule Of Fair Value Measurements Of Pension Plan Assets By Level
The following tables present the fair value measurements of pension plan assets by level within the fair value hierarchy:
Level 1Level 2Level 3Total
(in millions)December 31, 2023
Asset Category
Cash Equivalents$3 $— $— $3 
Equity Securities:
United States Large Cap— 68 — 68 
United States Small Cap— 26 — 26 
Non-United States— 68 — 68 
Global— 67 — 67 
Fixed Income— 171 — 171 
Real Estate— — 27 27 
Private Equity— — 2 2 
Total$3 $400 $29 $432 
(in millions)December 31, 2022
Asset Category
Equity Securities:
United States Large Cap$— $61 $— $61 
United States Small Cap— 23 — 23 
Non-United States— 66 — 66 
Global— 61 — 61 
Fixed Income— 154 — 154 
Real Estate— — 30 30 
Private Equity— — 3 3 
Total$— $365 $33 $398 
•Level 1 cash equivalents are based on observable market prices and are comprised of the fair value of commercial paper, money market funds, and certificates of deposit.
•Level 2 investments comprise amounts held in commingled equity funds, United States bond funds, and real estate funds. Valuations are based on active market quoted prices for assets held by each respective fund.
•Level 3 real estate investments values are generally determined by appraisals conducted in accordance with accepted appraisal guidelines, including consideration of projected income and expenses of the property as well as recent sales of comparable properties.
•Level 3 private equity funds are classified as funds-of-funds. They are valued based on individual fund manager valuation models.
Schedule Of Reconciliation Of Changes In The Fair Value Of Pension Plan Assets Classified As Level 3 In The Fair Value Hierarchy
The following table presents a reconciliation of changes in the fair value of pension plan assets classified as Level 3 in the fair value hierarchy. There were no transfers in or out of Level 3.
(in millions)Private EquityReal EstateTotal
Balance as of December 31, 2021$4 $26 $30 
Actual Return on Plan Assets:
Assets Held at Reporting Date— 4 4 
Purchases, Sales, and Settlements(1)— (1)
Balance as of December 31, 20223 30 33 
Actual Return on Plan Assets:
Assets Held at Reporting Date(1)(3)(4)
Purchases, Sales, and Settlements— — — 
Balance as of December 31, 2023$2 $27 $29 
Schedule Of Target Allocation Percentages For The Major Asset Categories Of The Plan
The current target allocation percentages for the major asset categories of the plan follow. Each plan allows a variance of +/- 2% from targets before funds are automatically rebalanced:
PensionOther Postretirement Benefits
December 31, 2023
Cash/Treasury Bills2%1%
Equity Securities:
United States Large Cap16%25%
United States Mid Cap—%8%
United States Small Cap6%4%
Non-United States Developed—%15%
Non-United States Emerging—%8%
Global Equity28%—%
Global Infrastructure3%—%
Fixed Income38%39%
Real Estate6%—%
Private Equity1%—%
Total100%100%
Schedule Of Expected Benefit Payments
TEP expects the following benefit payments to be made by the plans, which reflect future service, as appropriate:
(in millions)202420252026202720282029-2033
Pension Benefits$26 $27 $27 $28 $29 $159 
Other Postretirement Benefits6 6 6 6 6 31