INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2023

Schedule Of Income Tax Expense Differs From The Amount Of Income Tax Determined By Applying The United States Statutory Federal Income Tax Rate

Income tax expense differs from the amount of income tax determined by applying the United States statutory federal income tax rate of 21% to pre-tax income due to the following:


	Years Ended December 31,
(in millions)	2023		2022		2021
Federal Income Tax Expense at Statutory Rate	$	65	$	52	$	49
State Income Tax Expense, Net of Federal Deduction	12		10		9
Federal/State Tax Credits (1)	(17)		(22)		(10)
Allowance for Equity Funds Used During Construction	(3)		(1)		(3)

Excess Deferred Income Taxes	(8)		(10)		(14)

Other	—		3		1
Total Income Tax Expense	$	49	$	32	$	32

(1) TEP realized PTC benefits of $15 million in 2023, $19 million in 2022, and $7 million in 2021, related to Oso Grande being placed in service in May 2021.

Schedule Of Income Tax Reconciliation

Income Tax Expense included on the Consolidated Statements of Income consists of the following:


	Years Ended December 31,
(in millions)	2023		2022		2021
Current Income Tax Expense
Federal	$	7	$	(1)	$	(2)
State	1		—		—
Total Current Income Tax Expense	8		(1)		(2)
Deferred Income Tax Expense
Federal	31		26		27
Federal Investment Tax Credits	(2)		(1)		(1)
State	12		8		8
Total Deferred Income Tax Expense	41		33		34
Total Income Tax Expense	$	49	$	32	$	32

Schedule Of Components Of Deferred Income Tax Assets And Liabilities

The significant components of deferred income tax assets and liabilities consist of the following:


	December 31,
(in millions)	2023		2022
Gross Deferred Income Tax Assets


Customer Advances and Contributions in Aid of Construction	$	22	$	22



Federal General Business Credits (1)	55		61
Income Taxes Payable Through Future Rates	57		60
Other	95		103
Total Gross Deferred Income Tax Assets	229		246

Gross Deferred Income Tax Liabilities
Plant, Net	(793)		(735)
PPFAC	(14)		(31)
Plant Abandonments	(11)		(14)
Pensions	(21)		(20)
Income Taxes Recoverable Through Future Rates	(1)		(1)
Other	(37)		(36)
Total Gross Deferred Income Tax Liabilities	(877)		(837)
Deferred Income Taxes, Net	$	(648)	$	(591)

(1) Includes ITC and PTC carryovers.

Schedule of TEP Tax Carryforward Amounts

As of December 31, 2023, TEP had the following carryforward amounts:


($ in millions)	Amount		Expiring Year


State Credits	$	9	2024 - 29

Federal Investment Tax Credits	12		2037 - 43
Federal Production Tax Credits	42		2041 - 43
Other Federal Credits	1		2037 - 43