v3.26.3
REGULATORY MATTERS (Tables)
 9 Months Ended
Sep. 30, 2026
Regulated Operations [Abstract]  
Schedule of PPFAC Regulatory Asset Balance
The table below summarizes the PPFAC regulatory asset (liability) balance:
Three Months Ended September 30,Nine Months Ended September 30,
(in millions)2026202520262025
Beginning of Period$(25)$(49)$(32)$(49)
Deferred Fuel and Purchased Power Costs (1)
99 110 235 243 
PPFAC and Base Power Recoveries(105)(106)(234)(239)
End of Period$(31)$(45)$(31)$(45)
(1)Includes costs eligible for recovery through the PPFAC and base power rates.
Schedule of PPFAC Regulatory Liability Balance
The table below summarizes the PPFAC regulatory asset (liability) balance:
Three Months Ended September 30,Nine Months Ended September 30,
(in millions)2026202520262025
Beginning of Period$(25)$(49)$(32)$(49)
Deferred Fuel and Purchased Power Costs (1)
99 110 235 243 
PPFAC and Base Power Recoveries(105)(106)(234)(239)
End of Period$(31)$(45)$(31)$(45)
(1)Includes costs eligible for recovery through the PPFAC and base power rates.
Schedule of Regulatory Assets and Liabilities
Regulatory assets and liabilities recorded on the Condensed Consolidated Balance Sheets are summarized in the table below:
($ in millions)Remaining Recovery Period
(years)		September 30, 2026December 31, 2025
Regulatory Assets
Pension and Other Postretirement Benefits (Note 8)
Various$88 $91 
Roadrunner Reserve I Accounting Order (1)
Various44 16 
Lost Fixed Cost Recovery141 33 
Early Generation Retirement CostsVarious35 36 
Property Tax Deferrals (2)
133 32 
Transmission Revenue Requirement Balancing Account220 32 
Derivatives (Note 9)
315 23 
Transportation Electrification and Electric Vehicle InfrastructureVarious10 8 
Self-Insured Medical & Short-Term Disability17 7 
Income Taxes Recoverable through Future Rates (3)
Various4 4 
Other Regulatory AssetsVarious8 12 
Total Regulatory Assets305 294 
Less Current Portion1115 127 
Total Noncurrent Regulatory Assets$190 $167 
Regulatory Liabilities
Income Taxes Payable through Future Rates (3)
Various$197 $199 
Deferred Investment Tax Credits (4)
Various193 94 
Renewable Energy StandardVarious115 102 
Net Cost of Removal (5)
Various53 75 
Pension and Other Postretirement Benefits (Note 8)
Various31 32 
Over-Recovered Fuel and Purchased Energy Costs131 32 
Demand Side Management119 9 
Derivatives (Note 9)
314 20 
Other Regulatory LiabilitiesVarious1 — 
Total Regulatory Liabilities654 563 
Less Current Portion1167 144 
Total Noncurrent Regulatory Liabilities$487 $419 
(1)In April 2025, the ACC issued an accounting order allowing TEP to defer for future recovery in the 2025 Rate Case certain incurred costs associated with owning, operating, and maintaining Roadrunner Reserve I, including depreciation and amortization, property taxes, operations and maintenance expense, interest expense, and ITC transaction costs. These costs will be partially offset by benefits associated with ITCs.
(2)Recorded as a regulatory asset based on historical ratemaking treatment allowing regulated utilities recovery of property taxes on a pay-as-you-go or cash basis. TEP records a liability to reflect the accrual for financial reporting purposes and an offsetting regulatory asset to reflect recovery for regulatory purposes.
(3)Amortized over 10 years or the lives of the assets.
(4)As federal ITCs are deferred, TEP records a regulatory liability to be refunded to customers. The ITCs associated with Roadrunner Reserve I were deferred pursuant to a deferral order and are expected to be amortized beginning on the effective date of new rates established in the 2025 Rate Case. Roadrunner Reserve II was not subject to a deferral order; therefore, amortization of the ITCs
related to it began upon commercial operation. The ITCs associated with both facilities are amortized over five years and recorded as a reduction of income tax expense.
(5)Represents an estimate of the future cost of retirement, net of salvage value. The reserve is funded through ACC‑approved depreciation rates for transmission, distribution, generation, and general plant assets. These amounts are billed to customers but will not be spent until the assets are retired.