Leases

We lease certain vehicles, land, buildings, equipment and miscellaneous other items through operating rental agreements with varying terms, provisions and expiration dates. See Note 2 for a discussion of the new lease accounting standard.

Total lease expense recognized in the Consolidated Statements of Income was $16 million in 2016, $17 million in 2015, and $18 million in 2014. APS’s lease expense was $15 million in 2016, $14 million in 2015, and $15 million in 2014.

Estimated future minimum lease payments for Pinnacle West’s and APS’s operating leases, excluding purchased power agreements, are approximately as follows (dollars in thousands):



Year	Pinnacle West Consolidated		APS
2017	$	12,330	$	11,919
2018	10,987		10,690
2019	9,019		8,767
2020	7,688		7,439
2021	5,266		5,020
Thereafter	59,647		57,207
Total future lease commitments	$	104,937	$	101,042

In 1986, APS entered into agreements with three separate lessor trust entities in order to sell and lease back interests in Palo Verde Unit 2 and related common facilities. These lessor trust entities have been deemed VIEs for which APS is the primary beneficiary. As the primary beneficiary, APS consolidated these lessor trust entities. The impacts of these sale leaseback transactions are excluded from our lease disclosures as lease accounting is eliminated upon consolidation. See Note 18 for a discussion of VIEs.