Attached files
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| 8-K - FORM 8-K - TUCSON ELECTRIC POWER CO | c07438e8vk.htm |
Exhibit 99.1
| UniSource Energy Corporation NYSE: UNS EEI Financial Conference November 2010 |
| 2 Contact Information & Safe Harbor Paul J. Bonavia, Chairman, President and CEOKevin P. Larson, SVP, CFO and TreasurerInvestor Relations Contact Information M. Jo Smith, Director Chris Norman, Lead Analyst (520) 884.3650 (520) 884.3649 josmith@uns.com cnorman@uns.com Investor Information http://ir.uns.comSafe Harbor and Non-GAAP MeasuresThis document contains forward-looking information that involves risks and uncertainties, that include, but are not limited to: state and federal regulatory and legislative decisions and actions; regional economic and market conditions which could affect customer growth and energy usage; weather variations affecting energy usage; the cost of debt and equity capital and access to capital markets; the performance of the stock market and changing interest rate environment, which affect the value of the company's pension and other postretirement benefit plan assets and the related contribution requirements and expense; unexpected increases in O&M expense; resolution of pending litigation matters; changes in accounting standards; changes in critical accounting estimates; the ongoing restructuring of the electric industry; changes to long-term contracts; the cost of fuel and power supplies; performance of TEP's generating plants; and other factors listed in UniSource Energy's Form 10-K and 10-Q filings with the Securities and Exchange Commission. The preceding factors may cause future results to differ materially from historical results or from outcomes currently expected by UniSource Energy.The Company's press releases and other communications may include certain non-Generally Accepted Accounting Principles (GAAP) financial measures. A "non-GAAP financial measure" is defined as a numerical measure of a company's financial performance, financial position or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP in the Company's financial statements. Non-GAAP financial measures utilized by the Company include presentations of revenues, operating expenses, operating income and earnings (loss) per share. The Company uses these non-GAAP measures to evaluate the operations of the Company. Certain non-GAAP financial measures utilized by the Company exclude: the impact of non-recurring items: the effect of accounting changes or adjustments; expenses that are reimbursed by third parties; and other items. The Company's management believes that these non-GAAP financial measures provide useful information to investors by removing the effect of variances in GAAP reported results of operations that are not indicative of fundamental changes in the earnings or cash flow capacity of the Company's operations. Management also believes that the presentation of the non-GAAP financial measures is largely consistent with its past practice, as well as industry practice in general, and will enable investors and analysts to compare current non-GAAP measures with non-GAAP measures with respect to prior periods. |
| 3rd Quarter Overview 3 |
| 3rd Quarter 2010 Highlights Current 2010 earnings guidance range of $2.75 - $2.90 per diluted shareLowered top end of range due to losses at MillenniumExcluding Millennium activity, Q3 2010 earnings ahead of Q3 2009TEP's 3rd quarter retail kWh sales 0.3% below the 3rd quarter of 2009TEP's retail kWh sales for the first nine months of 2010 were 1.0% below last year (down 0.7% on a weather normalized basis)Expect full year 2010 TEP retail sales of 9,290 GWh (0.9% below 2009 retail sales of 9,370 GWh)Lowered 2010 UNS Base O&M estimate by $5 million2010 full year UNS consolidated Base O&M estimate of $270 millionCapital markets supportive of refinancing effortsMargin on TEP LOC facility and revolver expected to be 1.875% vs. current margin of 0.45%Expect to complete refinancing of all credit facilities by end of 2010Positive outcome in UNS Electric rate case$7.4 million base rate increase; authorized purchase of Black Mountain Generating Station; and approved investments in solar energy projectsACC Chairman issued draft policy statement regarding decouplingStatement addresses the need to adopt decoupling or another mechanism to make Arizona's proposed Electric Energy Efficiency Standards viable(CHART) 4 |
| TEP Retail Sales Volumes 5 (CHART) (CHART) (CHART) 2010 Estimates |
| Key Earnings Drivers and Rule of Thumb Sensitivities Driver - Full Year Pre-Tax Amount Potential Change in Diluted EPS 1% change in TEP retail sales across all customer classes(2010 estimated TEP total retail sales = 9,290 GWh; Avg. non-fuel rate approx. 6 cents / kWh) $5.6 million +/- $0.08 100 bps increase in rates on un-hedged TEP Variable Rate Debt ($279 million outstanding at 9/30/2010)* $2.8 million ($0.04) Estimated price increase on TEP $341 million LOC Facility(margin rate of 1.875% vs. current 0.45%) $4.9 million ($0.07) 1% change in UNS Base O&M (based on 2010 estimate) $2.7 million +/- $0.04 *Current average rate on underlying debt was less than 0.30% as of Oct. 27, 2010 6 Agreement Current Size UNS Revolver $70 million TEP Revolver $150 million TEP LOC Facility $341 million UES Joint Revolver $60 million Note: All facilities expire in Aug. 2011. Expect to complete refinancing of all facilities by end of 2010. of 2010. of 2010. of 2010. (CHART) 2010 Estimates |
| Company Overview 7 |
| Regulated Electric and Gas Utility Businesses UNS' Largest Subsidiary~ 80% of Operating Revenues~ 81% of Total AssetsVertically Integrated Electric Utility~ 402,000 Electric Customers Gas & Electric T&D Businesses~ 146,000 Gas Customers~ 90,000 Electric Customers 8 |
| Utility Service Areas Navajo Sundt Moenkopi Peacock Marketplace Kayenta Tucson Generating StationCoal MineInterconnection With Other UtilitySubstationSolar Station TEP 402,000 customersUNS Gas 146,000 customersUNS Gas & ElectricUNS Electric 90,000 customers Service Areas / Customers High Voltage Transmission Lines San Juan Ship Rock Four Corners San JuanMine Navajo McKinley McKinleyMine Coronado Springerville Luna Hidalgo Greenlee South Vail Valencia Nogales Davis Mead Black Mountain Kingman Kingman Black Mountain Griffith Griffith N. Havasu Lake Havasu City Parker Parker Saguaro West Wing Liberty Palo Verde Phoenix Pinal West Cholla Flagstaff Lee Ranch Yavapai Prescott MEXICO NEVADA UTAH COLORADO CALIFORNIA NEW MEXICO Lake Havasu City PinnaclePeak 9 |
| Compelling Long-Term Value Proposition Compelling Long-Term Value Proposition 10 |
| Attractive Dividend Yield & Growth Potential In Feb. 2010, the Board indicated its intent to reach a 60% payout level over the next few yearsPayout is calculated using net income or basic earnings per share; not diluted earnings per shareSignals confidence in UNS' long-term financial strength and stability *Indicated annual dividend (CHART) Notes:-Dividend Yield as of Oct. 26, 2010-UNS payout as of LTM 9/30/10; Industry avg. as of LTM 6/30/10. (CHART) (CHART) 17% Avg. Annual Growth Rate 11 |
| UNS Consolidated - Positive Free Cash Flows Free cash flow provides flexibilityHistorically, UniSource Energy's operating cash flows have exceeded capital expendituresAnnual dividend increases since 2000Operating cash used to reduce debt and capital lease obligations by approx. $300 million over the last 10 yearsInvested $85 million of equity to help fund purchase of UESPositive free cash flow trend expected to continueManageable level of capital expendituresReduced actual and planned capital expenditures for 2008-2013 by $280 million due to weak economyRate base growth in 2010 without regulatory lagPurchased Sundt Unit 4 in 2010 for $52 million$14 million of renewable energy investments in 2010 with cost recovery through the renewable energy surcharge (REST) (REST) (REST) (REST) (REST) (REST) (REST) (REST) (REST) (REST) (REST) (REST) (REST) (REST) (REST) (REST) (REST) (REST) (REST) (REST) (REST) (REST) (REST) Note: Capital expenditure estimates for 2011-2014 from 2009 10-K; 2011-2014 excludes proposed investments in solar projects (up to $28 million per year for TEP and $5 million per year for UNS Electric, beginning in 2011). See p. 18 for further detail. 12 |
| TEP - Diverse Retail Customer Base TEP - Diverse Retail Customer Base TEP - Diverse Retail Customer Base 2009 Retail kWh Sales Mix University of Arizona Davis Monthan Air Force Base Freeport -McMoRan (CHART) Customer Sector Freeport McMoRan Copper Mining Asarco Copper Mining University of Arizona Education Fort Huachuca, US Army Intelligence Center Military Raytheon Defense IBM Technology Davis Monthan Air Force Base Military Arizona Portland Cement Construction Liquid Air Manufacturing Largest Retail Customers 13 2009 Retail Margin RevenuesTotal = $556MM (CHART) |
| TEP - Retail Customers TEP customer base continues to grow at a modest paceLong-term outlook positive with a customer growth rate of more than 1.5% in 2014Expect local economy to gradually improvePositive indicators in home sales and inventoriesUniversity of Arizona Economic and Business Research Center indicates that the recession in Arizona has ended and expects growth to gradually resumeTucson unemployment rate 8.7% (as of Aug. 2010) vs. national average of 9.6% (as of Sept. 2010) Retail Customer Growth (CHART) 14 Possible addition of Rosemont Copper mine in late 2012 or 2013 with usage of ~ 100MWSupport from local business organizations; opposition from local government and environmental groupsRequires a U.S. Forest Service Record of DecisionProcess includes issuance of Environmental Impact Statement [EIS]Draft EIS expected by year-end 2010 |
| Long-Term Economic Outlook Remains Strong *According to University of Arizona Economic and Business Research Center as of July 2010 (CHART) (CHART) 15 |
| TEP - Energy Resources Provide Optionality 2009 Resource Mix - GWh Generating Capacity - 2,229 MW Owned Coal - 1,061 MW(incl. 14% of Springerville Unit 1) Luna Combined Cycle Gas Turbine Purchased Power Simple Cycle Gas Units Gas CCCT190 MW - 9% Coal/Gas156 MW - 7% Simple Cycle Gas484 MW - 22% Solar5 MW - 0.2% Leased Coal - 86% of 387 MW Springerville Unit 1 Coal / Gas - Sundt Unit 4 Leased Coal334 MW - 15% 334 MW - 15% 334 MW - 15% Solar (CHART) Owned Coal1,061 MW - 47% Leased and duel fuel plants provide optionalitySpringerville Unit 1 lease (expires Jan. 2015) has fair market value purchase and lease renewal optionsNo near-term new base load generation requirementsSubstation and transmission line additions are expanding access to the Palo Verde hub Limited commodity price exposure for retail fuel & purchased power costsLong-term coal contracts provide price and supply stability PPFAC allows for full recovery PPFAC allows for full recoveryProtection against carbon-related costsCarbon costs are a fuel-related cost and can be recovered through the PPFACTEP's 2008 Rate Order provisions allow for base rate and adjustor mechanism change in emergency conditions, subject to ACC approval 16 |
| UniSource Energy Services UNS GasT&D retail gas businessMore than 146,000 retail customers2009 retail sales - 110 million therms$215 million net plant in-service at 12/31/09Rate Case Activity Base rate increase of $3.5 million effective April 1, 2010UNS ElectricT&D retail electric businessMore than 90,000 retail customers2009 retail sales - 1,780 GWh$238 million net plant in-service at 12/31/09Rate Case Activity Base rate increase of $7.4 million effective October 1, 2010 (UNS Electric requested increase of $13.5 million)Rate increase includes acquisition of Black Mountain Generating Station $4 $4 $8 $5 $5 $4 $ - $ 2 $ 4 $ 6 $ 8 $10 $12 $14 2006 2007 2008 UES Net Income($ millions) UNS Gas UNS Electric Estimated Capital Expenditures($ millions) $7 $6 2009 Note: -Capital expenditure estimates for 2010-2014 from 2009 10-K -UNS Electric excludes renewable energy investments of up to $5 million per year beginning in 2011. See p. 18 for further details. (CHART) 17 |
| Renewable Energy Leadership Arizona Renewable Energy Standard and Tariff REST requires 15% of all retail energy needs from renewable resources by 2025Customer surcharge funds above market cost renewable energyProposals to invest $146 million in solar photovoltaic projects over next 5 yearsTEPACC approved two new solar photovoltaic projects totaling 3.4 MWCapital cost of projects ~$14 millionEstimated completion by end of 2010Cost recovery, including ROI, through REST surchargeACC approval pending for annual investments of up to $28 million for ~ 7 MW from 2011- 2014UNS ElectricACC approved annual investments of up to $5 million for ~1.25 MW from 2011-2014Purchase Options Included in Solar PPAs136 MW of TEP's solar Purchased Power Agreements (PPA) include purchase options that can be exercised after the 5th year(CHART) (CHART) 18 |
| TEP & UNSE Renewable Contracts and Projects Resource/ Counterparty Resource/ Counterparty Technology Location Operator Completion Date Term (Years) Purchase Option Capacity MW Solar Solar Amonix Concentrating PV Tucson, AZ Amonix 2011 20 On or after yr. 6 at FMV 1.5 Swan Solar Concentrating PV Tucson, AZ Amonix 2011 20 12 Avalon Solar Fixed PV Marana, AZ Avalon 2012 20 35 First Light Fixed PV Tucson, AZ CTC 2011 20 5 Emcore Solar Concentrating PV Tucson, AZ Emcore 2012 20 1.5 FSP Solar One Single-Axis Tracking PV Tucson, AZ Foresight Solar 2012 20 4 FSP Solar Two Single-Axis Tracking PV Tucson, AZ Foresight Solar 2012 20 12 NRG Solar Fixed PV Tucson, AZ NRG Solar 2011 20 25 FRV Tucson Solar Single-Axis Tracking PV Tucson, AZ Renewable Ventures 2011-2012 20 20 Renewable Fuel Solar Thermal Tucson, AZ Bell IPC 2012-2013 20 5.5 Wind Wind Western Wind Energy US Corp Wind Kingman, AZ Western Wind 2011 20 None 7-11 Macho Springs Wind Deming, NM Torch Energy 2011 20 None 50 Landfill Gas Landfill Gas Sexton Energy Landfill Gas Tucson, AZ Sexton Energy 2012-2013 15 None 2.2 Total 184.7 PPAs Fuel/ Plant Fuel/ Plant Technology Status Completion Date Net Capacity MW Solar Solar Springerville Solar Station Fixed PV Complete 2002 4.6 Springerville Solar Station Expansion Fixed PV In Progress Year End, 2010 1.8 Tucson Airport Project Single-Axis Tracking PV In Progress Year End, 2010 1.6 Total 8.0 Owned / Under Construction 19 |
| TEP - Long-Term Wholesale Sales Margin on long-term wholesale sales benefits shareholdersGross margin on 2009 sales was $24 millionSalt River Project (SRP) 100MW Annual demand charge $22 million; energy charge @ TEP's average generation costContract modifications effective June 2011No demand charge; energy charge based on slight discount to Palo Verde IndexSRP annual purchase requirement of 876 GWhContract expires May 2016Navajo Tribal Utility Authority (NTUA)No demand charge; energy priced in mid - $50 per MWh rangeNo minimum purchase requirementContract modifications effective 2010Energy charge for 50% of sales (June-Sept) based on Palo Verde Index (~30 GWhs)Contract expires December 2015 (CHART) 20 (CHART) |
| Regulatory Overview 21 |
| Regulatory Framework Commissioner Term ExpiresKristin Mayes (R) Jan 2011*Sandra Kennedy (D) Jan 2013Paul Newman (D) Jan 2013Gary Pierce (R) Jan 2011Bob Stump (R) Jan 2013* Unable to run for re-election - two term limit Arizona Corporation CommissionConstitutionally created branch of Arizona governmentFive commissioners elected state-wideLimited to serve two consecutive four year terms Two ACC seats are up for election in November 2010 ACC Candidates Experience Gary Pierce (R)Mesa Incumbent Brenda Burns (R) Scottsdale Lobbyist, former State Legislator David Bradley (D)Tucson Director of Social Services, State Legislator Federal Energy Regulatory Commission Transmission rates Long-term wholesale transactions 22 |
| Good Regulatory Foundation 23 |
| Energy Efficiency Standards and Decoupling 24 ACC approved Electric Energy Efficiency Standards (EE Standards) in July 2010Must be certified by the Arizona Attorney General before taking effectDesigned to require affected utilities to implement cost effective demand side management programsTarget total kWh savings in 2011 of 1.25% of 2010 salesTargeted kWh savings increase annually up to the targeted cumulative annual reduction in retail kWh sales of 22% by 2020Draft Policy Statement on decoupling issued in October 2010ACC Chairman Mayes circulated for comment a draft policy statement regarding the need to adopt decoupling or another mechanism to make Arizona's proposed EE Standards viableDesigned to encourage energy conservation by restructuring utility rates to separate the recovery of fixed costs from the level of energy consumedDraft policy indicates that revenue per customer decoupling may be well suited for Arizona as it responds to customer growth 24 |
| 2008 TEP Rate Order Key Provisions Methodology Cost-of-service Test year 12/31/2006 Rate base $1.02 billion 2006 Retail Sales (GWh) 9,320 Allowed ROE 10.25% Capital Structure 42.5% equity / 57.5% debt (Actual capital structure was 40% equity, excluding capital leases, and 60% debt) Non-fuel base rate increase 6% (approx. $47 million). Effective Dec. 1, 2008. Purchased Power and Fuel Adjustment Clause (PPFAC) Effective Jan. 1, 2009Forward lookingEnergy, capacity and transmission Springerville Unit 1 - 387 MW coal-fired plant leased by TEP. Lease expires Jan. 1, 2015. Non-fuel recovery of $25.67 per kW per month or approx. $117 millionApproximates levelized cost through the remainder of the term of the lease Average base retail rate 8.9 cents / kWh (base non-fuel rate of 6.0 cents) Rate case moratorium Cannot file new case before 6/30/2012 with a test year no earlier than 12/31/11 25 |
| 2008 TEP Rate Order - Rate Base $1.02 billion ACC jurisdictional rate base as of 12/31/2006Excludes FERC-regulated assetsHigh voltage transmission assets of $205 millionGeneration assets dedicated to long-term wholesale sales of approximately $63 millionExcludes adjustments of $134 million for deferred income taxes, working capital and other items other items other items other items other items other items other items other items other items other items other items other items 26 (CHART) *Excludes assets under capital leases (CHART) TEP Net Plant in Service*(millions) 12/31/06 12/31/09 (CHART) Note: Capital expenditure estimates for 2011-2014 from 2009 10-K; 2011-2014 excludes proposed investments in solar projects of up to $28 million per year for TEP. See p. 18 for further details. |
| TEP Rate Case & Springerville Unit 1 Timeline 2008 2009 2010 2011 2012 2013 2014 2015 12/1/2008Effective date of 2008 TEP Rate Order 12/31/2011Earliest test year 6/30/2012Earliest filing date 1/1/2013Earliest effective date of rate case 1/1/2015Expiration of Springerville Unit 1 Lease 27 9/1/2013Notify lessor of intent to purchase or renew Springerville Unit 1 Lease |
| 2008 TEP Rate Order - Key Provisions 28 ACC Decision No. 70628II. Rate increase2.2 TEP's rates, including generation, will be determined using a cost-of-service methodology. ...TEP shall withdraw its proposed market and hybrid rate methodologies. Original cost rate base: $1.02B (net of $134M of adjustments, including deferred income taxes of $119M)Average base rate increase of 6% (avg. base retail rate of 8.9 cents/kWh)Includes base cost of fuel & purchased power of 2.8896 cents/kWhRevenue increase of $47.1MIII. Ratemaking treatment of generation assets 3.1 For ratemaking purposes, SGS Unit 1 and Luna shall be included in TEP's rate base at their respective original costs. All other generation assets acquired by TEP after December 31, 2006, but before December 31, 2012, shall be included in TEP's rate base at their respective original costs, subject to the Commission's subsequent regulatory and ratemaking review and approval. 3.2 Recovery of SGS Unit 1 non-fuel costs shall reflect a cost of $25.67 per KW per month which approximates the levelized cost of SGS Unit 1 through the remainder of the primary lease term for this generating facility. In addition, SGS Unit 1 leasehold improvements shall be included in TEP's original cost rate base at net book value as of December 31, 2006.3.3 Luna shall be included in TEP's original cost rate base at net book value as of December 31, 2006. 28 |
| 2008 TEP Rate Order - Key Provisions 29 X. Rate case moratorium10.1 TEP's base rates shall remain frozen through December 31, 2012.10.2 TEP shall not submit a rate application sooner than June 30, 2012. ...test year ending no earlier than December 31, 2011.10.2 Signatories agree to use their best efforts to have post-moratorium rates in place no later than thirteen months after TEP's rate application is filed with the Commission.XI. Emergency Clause11.1 ...TEP shall not be prevented from requesting a change to its base rates, or necessary changes to the PPFAC mechanism, the DSM or REST, that would take effect prior to January 1, 2013, in the event of conditions or circumstances that constitute an emergency. ...emergency is limited to an extraordinary event that is beyond TEP's control and that, in the Commission's judgment, requires rate relief in order to protect the public interest. This provision is not intended to preclude TEP from seeing rate relief pursuant to this paragraph in the event of the imposition of a federal carbon tax or related federal cap and trade system. 29 |
| Supplemental Information Appendix TEP Operating Plant Performance 31 TEP Generation Portfolio 32 Historic Utility Retail Sales 33 Credit Ratings and Liquidity 34 TEP Long-Term Debt Summary 35 30 |
| Strong Coal Plant Operating Performance Average Equivalent Availability Factor Baghouse- Low NOx Environmental Equipment Operator TEP's Share (MW) Coal Delivery In Service Dates TEP's Share (%) TEP 156 MW rail 1967 100% TEP 770 MW rail Unit 1 - 1985 Unit 2 - 1990 100% Arizona Public Service 110 MW mine mouth Unit 4 - 1969 Unit 5 - 1970 7% Salt River Project 168 MW mine mouth Unit 1 - 1974 Unit 2 - 1975 Unit 3 - 1976 7.5% Public Serviceof New Mexico 322 MW mine mouth Unit 1 - 1976 Unit 2 - 1973 50% Coal Supplier Contract Term Peabody 2020 BHP Billiton 2016 Peabody 2011 San Juan Coal 2017 Rio TintoChevron Mining 2009 Annual Expected Coal Usage 350 k tons 3.2 mil. tons 400k tons 500k tons 1.3 mil. tons BaghouseScrubbersLow NOx BaghouseScrubbers- PrecipitatorsScrubbers- BaghouseScrubbersLowNOxMercury removal Sundt Unit 4 coal/gas Navajo Units 1,2&3 coal Industry Avg. coal Four Corners Units 4&5 coal San Juan Units 1&2 coal Springerville Units 1&2 coal (CHART) 93% 87% 87% 83% 05 06 07 08 09 90.9% (CHART) 89.4% (CHART) 84.4% (CHART) 89.5% (CHART) 83.8% (CHART) 85.0% 05 06 07 08 09 05 06 07 08 09 05 06 07 08 09 05 06 07 08 09 05 06 07 08 09 31 |
| TEP Generation Portfolio Fuel/ Plant Fuel/ Plant Unit No. Location Date In Service Operator TEP's Share % TEP Share Net Capacity MW Coal Coal Springerville Station 1 Springerville, AZ 1985 TEP 100 387 Springerville Station 2 Springerville, AZ 1990 TEP 100 390 San Juan Station 1 Farmington, NM 1976 PNM 50 170 San Juan Station 2 Farmington, NM 1973 PNM 50 170 Navajo Station 1 Page, AZ 1974 SRP 7.5 56 Navajo Station 2 Page, AZ 1975 SRP 7.5 56 Navajo Station 3 Page, AZ 1976 SRP 7.5 56 Four Corners Station 4 Farmington, NM 1969 APS 7 55 Four Corners Station 5 Farmington, NM 1970 APS 7 55 Gas Gas Luna Energy Facility 1 Deming, NM 2006 PNM 33.3 190 North Loop Tucson, AZ 2001 TEP 100 95 Gas/Oil Gas/Oil Sundt Station 1 Tucson, AZ 1958 TEP 100 81 Sundt Station 2 Tucson, AZ 1960 TEP 100 81 Sundt Station 3 Tucson, AZ 1962 TEP 100 104 DeMoss Petrie Tucson, AZ 1972 TEP 100 122 Coal/Gas Coal/Gas Sundt Station 4 Tucson, AZ 1967 TEP 100 156 Springerville Solar Station Springerville Solar Station Springerville, AZ 2001 TEP 100 5 Total 2,229 32 |
| Historic Utility Retail Sales (CHART) (CHART) (CHART) 33 |
| Credit Ratings Sufficient lines of creditTEP - $150 million; UES - $ 60 million; UNS - $ 70 million; mature in Aug. 2011Expect to complete refinancing of all three lines by end of 2010Credit ratingsTEP received one notch upgrade from Fitch in Sept. 2010 TEP Fitch Secured BBB Unsecured BBB- Issuer BB+ Outlook S&P BBB+ BBB- BB+ Stable Moody's Baa1 Baa3 Baa3 Stable Stable UniSource Energy Moody's Ba1 Stable Secured Credit Facility Outlook UNS Electric Moody's Baa3 Stable Sr. Unsecured Notes(guaranteed) Outlook UNS Gas Moody's Baa3 Stable Sr. Unsecured Notes(guaranteed) Outlook 34 |
| Long-Term Debt Summary Balances as of 9/30/10 (Pro Forma for Oct. 2010 TEP $100 million bond issuance and repayment of $30 million TEP term loan)Rates as of 10/27/10 Interest Curr. Balance Issue Maturity Current Facilities Debt Issue Rate (in millions) Date Date Call Price Security Financed TEP Unsec. Ind. Dev. Bonds 2009 Pima A 4.950% 80 Oct-09 Oct-20 N/C Unsecured San Juan PC 1997 Coconino A 7.125% 37 Apr-97 Oct-32 100% Navajo PC 2009 Coconino A 5.125% 15 Oct-09 Oct-32 N/C 10 Navajo PC 1997 Pima A 6.100% 22 Sep-97 Sep-25 100% Local T&D 1998 Apache A 5.850% 84 Mar-98 Mar-28 100% SGS 1 PC 1998 Apache B 5.875% 100 Mar-98 Mar-33 100% SGS 2 PC 1998 Apache C 5.850% 16 Mar-98 Mar-26 100% Local T&D Subtotal $ 675 Var. Rate Tax-Exempt Bonds 1982 Pima A - Irvington 0.27% 39 Oct-82 Oct-22 100% Local T&D / Irvington 1982 Pima A 0.29% 40 Dec-82 Dec-22 100% Local T&D / 4 Corners PC 1983 Apache A 0.29% 100 Dec-83 Dec-18 100% SGS 2 1983 Apache B (Tranche A) 0.28% 80 Dec-83 Dec-18 100% SGS 2 1983 Apache C (Tranche A) 0.26% 50 Dec-83 Dec-18 100% SGS 2 1985 Apache A 0.26% 20 Dec-85 Dec-20 100% SGS 2 Subtotal $ 329* TEP TOTAL $ 1,004 2008 Pima A 6.375% 91 Mar-08 Sep-29 N/C 5 Local T&D UES UNS Gas Unsecured Notes 6.230% 50 Aug-03 Aug-11 MW + 50 Unsecured General Purpose UNS Gas Unsecured Notes 6.230% 50 Aug-03 Aug-15 MW + 50 General Purpose UNS Electric Unsecured Notes 6.500% 50 Aug-08 Aug-15 MW + 50 General Purpose UES TOTAL $ 200 UniSource Stand-Alone Sr. Unsec. Convertible Notes 4.500% 150 Mar-05 Mar-35 Par Unsecured General Purpose Term Loan LIBOR + 1.25% 4 Aug-06 Aug-11 Par Unsecured General Purpose UNISOURCE STAND-ALONE TOTAL $ 154 UNISOURCE CONSOLIDATED TOTAL $1,320 UNS Gas / UNS Elec. Revolver LIBOR + 1% 0 Aug-06 Aug-11 N/A General Purpose 2008 Pima B 5.750% 130 Jun-08 Sep-29 N/C 5 Local T&D UNS Electric Unsecured Notes 7.100% 50 Aug-08 Aug-23 MW + 50 General Purpose var. rate Secured UED Term Loan LIBOR + 3% 32 Feb-10 Mar-12 Par Black Mountain Mortgage Bonds *Supported by $341 million LOC facility which expires in Aug. 2011. Expect to complete refinancing in mid November 2010. 35 Unsecured 2010 Pima A (Tax-Exempt) 5.250% $ 100 Oct-10 Oct-40 N/C 10 Local T&D |