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 $18 million in 2017, $16 million in 2016, and $17 million in 2015. APS’s lease expense was $17 million in 2017, $15 million in 2016, and $14 million in 2015.

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
2018	$	13,412	$	13,110
2019	11,054		10,802
2020	9,641		9,392
2021	7,105		6,858
2022	4,609		4,510
Thereafter	55,940		53,605
Total future lease commitments	$	101,761	$	98,277

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.