v3.24.0.1
FAIR VALUE MEASUREMENTS AND DERIVATIVE INSTRUMENTS (Tables)
 12 Months Ended
Dec. 31, 2023
Fair Value Disclosures [Abstract]  
Financial Instruments Measured at Fair Value on Recurring Basis
The following tables present, by level within the fair value hierarchy, TEP’s assets and liabilities accounted for at fair value through net income on a recurring basis classified in their entirety based on the lowest level of input that is significant to the fair value measurement:
Level 1Level 2Total
(in millions)December 31, 2023
Assets
Restricted Cash (1)
$34 $— $34 
Energy Derivative Contracts, Regulatory Recovery (2)
— 32 32 
Energy Derivative Contracts, No Regulatory Recovery (2)
— 3 3 
Total Assets34 35 69 
Liabilities
Energy Derivative Contracts, Regulatory Recovery (2)
— (30)(30)
Total Liabilities— (30)(30)
Total Assets (Liabilities), Net$34 $5 $39 
(in millions)December 31, 2022
Assets
Restricted Cash (1)
$35 $— $35 
Energy Derivative Contracts, Regulatory Recovery (2)
— 100 100 
Energy Derivative Contracts, No Regulatory Recovery (2)
— 4 4 
Total Assets35 104 139 
Liabilities
Energy Derivative Contracts, Regulatory Recovery (2)
— (18)(18)
Total Liabilities— (18)(18)
Total Assets (Liabilities), Net$35 $86 $121 
(1)Restricted Cash represents amounts held in money market funds, which approximate fair market value. Restricted Cash is included in Investments and Other Property and in Current Assets—Other on the Consolidated Balance Sheets.
(2)Energy Derivative Contracts include gas swap agreements and forward power purchase and sale contracts entered into to reduce exposure to energy price risk. These contracts are included in Derivative Instruments on the Consolidated Balance Sheets.
Potential Offset of Assets by Counterparty Netting and Cash Collateral The tables below present the potential offset of counterparty netting and cash collateral:
Gross Amount Recognized in the Balance SheetsGross Amount Not Offset in the Balance SheetsNet Amount
Counterparty Netting of Energy Contracts
Cash Collateral Received/Posted (1)
(in millions)December 31, 2023
Derivative Assets
Energy Derivative Contracts$35 $15 $— $20 
Derivative Liabilities
Energy Derivative Contracts(30)(15)— (15)
(in millions)December 31, 2022
Derivative Assets
Energy Derivative Contracts$104 $14 $14 $76 
Derivative Liabilities
Energy Derivative Contracts(18)(14)— (4)
(1)TEP records cash collateral received related to energy derivative contracts in Current Liabilities—Other on the Consolidated Balance Sheets. As of February 8, 2024, TEP held no cash received as collateral to provide credit enhancement.
Potential Offset of Liabilities by Counterparty Netting and Cash Collateral The tables below present the potential offset of counterparty netting and cash collateral:
Gross Amount Recognized in the Balance SheetsGross Amount Not Offset in the Balance SheetsNet Amount
Counterparty Netting of Energy Contracts
Cash Collateral Received/Posted (1)
(in millions)December 31, 2023
Derivative Assets
Energy Derivative Contracts$35 $15 $— $20 
Derivative Liabilities
Energy Derivative Contracts(30)(15)— (15)
(in millions)December 31, 2022
Derivative Assets
Energy Derivative Contracts$104 $14 $14 $76 
Derivative Liabilities
Energy Derivative Contracts(18)(14)— (4)
(1)TEP records cash collateral received related to energy derivative contracts in Current Liabilities—Other on the Consolidated Balance Sheets. As of February 8, 2024, TEP held no cash received as collateral to provide credit enhancement.
Financial Impact of Energy Contracts The table below presents the unrealized gains and losses recorded to a regulatory asset or liability in the balance sheet:
Years Ended December 31,
(in millions)202320222021
Unrealized Net Gain (Loss) (1)
$(81)$72 $62 
(1)For the year ended December 31, 2023, unrealized net loss on regulatory recoverable derivative contracts was primarily due to decreases in forward market prices of natural gas. For the years ended December 31, 2022 and 2021, unrealized net gain on regulatory recoverable derivative contracts was primarily due to increases in forward market prices of natural gas.
The table below presents amounts recorded in Operating Revenues on the Consolidated Statements of Income:
Years Ended December 31,
(in millions)202320222021
Operating Revenues$18 $11 $7 
Derivative Volumes The following table presents volumes associated with the energy contracts:
December 31,
20232022
Power Contracts GWh1,449 1,979 
Gas Contracts BBtu89,105 96,755 
Face Value and Estimated Fair Value of Long-Term Debt The following table includes the net carrying value and estimated fair value of TEP's long-term debt:
Net Carrying ValueFair Value
Fair Value HierarchyDecember 31,
(in millions)2023202220232022
Liabilities
Long-Term Debt, including Current MaturitiesLevel 2$2,397 $2,265 $2,127 $1,901