8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

DATE OF REPORT
(DATE OF EARLIEST EVENT REPORTED): February 24, 2010

		IRS Employer
Commission	Registrant; State of Incorporation;	Identification
File Number	Address; and Telephone Number	Number
1-13739	UNISOURCE ENERGY CORPORATION	86-0786732
	(An Arizona Corporation)
	One South Church Avenue, Suite 100
	Tucson, AZ 85701
	(520) 571-4000
1-5924	TUCSON ELECTRIC POWER COMPANY	86-0062700
	(An Arizona Corporation)
	One South Church Avenue, Suite 100
	Tucson, AZ 85701
	(520) 571-4000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

     On February 24, 2010, UniSource Energy Corporation (“UniSource Energy”) issued a press release announcing earnings for the quarter and 12 months ended December 31, 2009 for UniSource Energy and Tucson Electric Power Company. A copy of the press release is attached hereto as Exhibit 99.1. UniSource Energy also posted supplemental information accessible from a link on its website, www.uns.com. A copy of the supplemental information is attached hereto as Exhibit 99.2.

     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.

Item 9.01 Financial Statements and Exhibits

Exhibit 99.1	UniSource Energy Corporation Press Release, dated February 24, 2010.
Exhibit 99.2	Supplemental earnings information posted on UniSource Energy’s website, dated February 24, 2010.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: February 24, 2010	UNISOURCE ENERGY CORPORATION (Registrant)
	/s/ Kevin P. Larson
	Kevin P. Larson Senior Vice President and Principal Financial Officer
Date: February 24, 2010	TUCSON ELECTRIC POWER COMPANY (Registrant)
	/s/ Kevin P. Larson
	Kevin P. Larson Senior Vice President and Principal Financial Officer

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE	February 24, 2010
Media Contact: Joe Salkowski, (520) 884-3625	Page 1 of 10
Financial Analyst Contact: Jo Smith, (520) 884-3650

UNISOURCE ENERGY REPORTS 2009 EARNINGS, ISSUES EARNINGS GUIDANCE FOR 2010

• UniSource Energy’s net income for 2009 was $104.3 million, or $2.69 per diluted share of common stock, compared with net income of $14.0 million, or $0.39 per diluted share in 2008.

• Earnings include a $6 million pre-tax gain on the sale of an interest in one of UniSource Energy’s unregulated energy investments offset by reserves of $5.6 million, related primarily to wholesale sales to the California Power Exchange in 2000 and 2001.

• Improvement in 2009 earnings is due primarily to higher retail revenues, lower fuel and purchased power expenses and regulatory and accounting adjustments in 2008 that did not recur in 2009.

• Strong operating cash flows of $347.3 million compared with $277.0 million in 2008.

• UniSource Energy estimates 2010 diluted earnings per share of between $2.75 and $3.00.

Tucson, Ariz. — UniSource Energy Corporation (NYSE: UNS) today reported 2009 net income of $104.3 million, or $2.69 per diluted share of common stock, compared with $14.0 million, or $0.39 per diluted share in 2008.

For the three months that ended December 31, 2009, UniSource Energy reported net income of $10.4 million, or $0.28 per diluted share of common stock, compared with $22.9 million, or $0.60 per diluted share of common stock, in the fourth quarter of 2008. Earnings in the fourth quarter of 2008 benefited from gains resulting from reinstatement of regulatory accounting at UniSource Energy’s principal subsidiary, Tucson Electric Power (TEP).

UniSource Energy’s financial results primarily reflect those of TEP, which reported net income of $89.2 million in 2009, compared with $4.4 million in 2008. In 2008, TEP’s full-year earnings were adversely impacted by amortization of a regulatory asset and revenue deferrals that did not recur in 2009. In addition, during 2008 TEP was exposed to the power markets when average wholesale power costs were twice as high as 2009 levels.

Although the weak economy led to lower energy sales in 2009, TEP’s electric retail sales revenues increased due to higher base rates. Despite the economic slowdown, TEP’s customer base also expanded by 0.6 percent in 2009.

“While the weak economy continued to put downward pressure on our sales volumes throughout the year, we responded by tightly controlling our costs without compromising safety or reliability,” said Paul Bonavia, Chairman, President and CEO of UniSource Energy. “The success of our efforts is evidenced by our operating and maintenance costs for 2009, which were 3 percent below the level anticipated at the beginning of the year.”

UniSource Energy’s 2009 operating and maintenance expense (O&M), excluding costs directly offset by customer surcharges and third-party reimbursements, increased by $12 million compared with

1

2008. Excluding pension expense, which is primarily a function of stock market performance and interest rates, O&M increased $2.8 million over the previous year due primarily to higher generating plant maintenance costs.

UniSource Energy posted strong operating cash flows in 2009 of $347.3 million, a level more than adequate to cover the company’s capital expenditures of $287.1 million.

Outlook

“UniSource Energy’s 2009 financial performance and our outlook for earnings stability and continued strong operating performance allowed us to increase the dividend.” said Bonavia. On February 12, 2010, UniSource Energy’s board of directors increased the quarterly dividend to 39 cents per share from 29 cents per share. Bonavia continued, “Looking forward to 2010, we estimate diluted earnings per share of between $2.75 and $3.00.”

In conjunction with this earnings announcement, UniSource Energy has provided detailed information on its 2009 performance, and factors that could impact the Company’s earnings outlook for 2010 and 2011. These materials have been filed with the Securities and Exchange Commission and are also available at uns.com

Seasonality of Earnings

The net income and results of operations of UniSource Energy’s utility businesses are seasonal in nature. TEP and UNS Electric are summer-peaking utilities and historically have recorded a majority of their net income during the second and third quarters, when hot weather drives increases in energy consumption. TEP’s retail rates, which include higher charges for higher levels of energy use, shift a larger share of the company’s earnings into those periods.

Energy demand from UNS Gas customers typically peaks during the winter. Accordingly, UNS Gas records the majority of its net income during the first and fourth quarters.

Tucson Electric Power

TEP reported net income of $8.0 million in the fourth quarter of 2009, compared with $19.7 million in the same period of 2008. For the twelve months ended December 31, 2009, TEP reported net income of $89.2 million, compared with net income of $4.4 million in 2008.

Retail kWh Sales

• In the fourth quarter of 2009, TEP’s total retail kWh sales were 2.7 percent below those from the same period last year. Residential sales were up 0.2 percent; commercial sales were down 4.5 percent, industrial sales were down 5.7 percent and sales to mining customers were down 3.0 percent compared with the fourth quarter of 2008.

• For the twelve months ended December 31, 2009, TEP’s total retail kWh sales were 1.4 percent below 2008 levels. When adjusted for average weather, TEP estimates its retail sales were down 2.4 percent. Cooling degree days in 2009 were 20 percent above 2008 levels and 9 percent higher than the 10-year average. Residential sales were up 1.4 percent, commercial sales were down 2.3 percent, industrial sales were down 4.5 percent and sales to mining customers were down 2.8 percent compared with 2008.

Retail Revenues

• Retail electric revenues increased $39.8 million or 5 percent, in 2009, due to higher base rates combined with a new rate structure that incorporates higher charges for higher levels of energy use. The $39.8 million increase does not include a $20.3 million increase in customer surcharges

2

used to fund renewable energy and energy efficiency programs in 2009 and $58.1 million of non-cash revenue deferrals in 2008.

Wholesale Revenues

• Long-term wholesale revenues fell $9.3 million, or 16 percent, in 2009 due primarily to lower sales volumes. TEP’s margin on long-term wholesale sales for 2009 was $24.0 million. In the fourth quarter of 2009, TEP recorded a $4.2 million provision for possible wholesale refunds related to transactions in 2000 and 2001 with the California Power Exchange that are under dispute. Revenues from short-term wholesale sales offset the costs included in TEP’s Purchased Power and Fuel Adjustor Clause (PPFAC).

PPFAC

• TEP’s PPFAC which took effect in January 2009 and allows the company to pass through its actual fuel, purchased power and transmission costs net of short-term wholesale revenues and other offsets to its retail customers. For comparative purposes, those PPFAC related costs decreased by $30.5 million in 2009 compared with 2008. The decrease was due primarily to lower wholesale market prices for energy and natural gas.

Other

• O&M expense, excluding costs directly offset by customer surcharges for renewable energy and energy efficiency programs and third party reimbursements, increased by $10.8 million. Cost containment measures helped offset a $14.4 million increase in pension and generating plant maintenance expenses.

• Depreciation and amortization increased $26.9 million due primarily to plant additions, new depreciation rates for generating assets , amortization of regulatory assets resulting from the 2008 TEP rate order and a $4 million adjustment related to a change in accounting for TEP’s investment in Springerville Unit 1 lease equity.

• In 2008, TEP recorded $24 million of amortization related to the Transition Recovery Asset that did not recur in 2009.

• Interest expense decreased $11 million in 2009 due primarily to lower interest rates on variable rate debt, lower balances of capital lease obligations and a $2 million adjustment related to a change in accounting for TEP’s investment in Springerville Unit 1 lease equity.

UNS Gas

UNS Gas reported net income of $7.4 million in 2009, compared with $8.5 million in 2008. The decrease in net income is primarily attributed to a 4 percent reduction in therm sales resulting from the weak economy and mild winter weather.

In November 2008, UNS Gas filed a general rate case with the Arizona Corporation Commission (ACC) requesting an average base rate increase of 6 percent, or approximately $9.5 million, to cover increases in capital and operating costs. The ACC staff recommended a rate increase that would result in additional revenue of $3.4 million. A hearing before an administrative law judge (ALJ) concluded in August 2009, and the company expects the ACC to issue a final order by the end of the first quarter of 2010.

UNS Electric

UNS Electric reported net income of $5.9 million in 2009, compared with $3.8 million in 2008. The increase is due primarily to the operations of a new copper mine in UNS Electric’s service area which

3

led to a 7 percent increase in retail kWh sales. Excluding mining sales, UNS Electric’s retail kWh sales decreased by 0.8 percent compared with 2008 levels due to weak economic conditions.

In April 2009, UNS Electric filed a general rate case with the ACC requesting an average base rate increase of $13.5 million, or 7.4 percent, to cover its operating and capital costs. The ACC staff recommended a rate increase that would result in additional revenue of approximately $8 million. A hearing before an ALJ was completed in mid-February, and we expect the ACC to issue a final order in the second half of 2010.

Millennium

In June 2009, Millennium Energy Holdings (Millennium) recorded a pre-tax gain of $6 million from the sale of its equity interest in Carboelectrica Sabinas, S. de R.L. de C.V. (Sabinas), a Mexican coal supplier and owner of coal and associated gas reserves. The interest in Sabinas represented Millennium’s largest unregulated energy investment. Millennium received $5 million in cash and a $15 million three-year secured note bearing interest at 6 percent for the sale of its interest in Sabinas. At December 31, 2009, Millennium’s cash, investments and note receivable totaled approximately $32 million.

4

Net Income and Earnings Per Share Summary

	4th Quarter						YTD Dec. 31
	2009			2008			2009		2008
Net Income	-Millions-						-Millions-
Tucson Electric Power	$	8.0		$	19.7		$	89.2	$	4.4
UNS Gas		3.8			3.2			7.4		8.5
UNS Electric		0.0			0.1			5.9		3.8
Other (1)		(1.4	)		(0.1	)		1.8		(2.7	)
Net Income	$	10.4		$	22.9		$	104.3	$	14.0
Avg. Basic Shares Outstanding (millions)		35.9			35.7			35.9		35.6
Avg. Diluted Shares Outstanding (millions)		40.5			40.1			40.5		40.4

	4th Quarter					YTD Dec. 31
Earnings Per UniSource Energy Share	2009			2008		2009		2008
Tucson Electric Power	$	0.22		$	0.55	$	2.49	$	0.12
UNS Gas		0.11			0.09		0.20		0.24
UNS Electric		0.00			0.00		0.17		0.11
Other (1)		(0.04	)		0.00		0.05		(0.08	)
Net Income per Basic Share	$	0.29		$	0.64	$	2.91	$	0.39
Net Income per Diluted Share(2)	$	0.28		$	0.60	$	2.69	$	0.39

(1)	Includes UniSource Energy on a stand-alone basis and results from Millennium Energy Holdings, Inc. and UniSource Energy Development, wholly-owned subsidiaries of UniSource Energy.
(2)	For the year ended December 31, 2008, 4 million potentially dilutive shares from the conversion of convertible senior notes, and after-tax interest expense of $4 million was not included in the computation of diluted EPS because to do so would be anti-dilutive.

UniSource Energy believes the presentation of TEP, UNS Gas, UNS Electric and Other segment net income or loss on a per basic UniSource Energy share basis, which are non-GAAP financial measures, provides useful information to investors by disclosing the results of operations of its business segments on a basis consistent with UniSource Energy’s reported earnings or losses.

5

Conference Call and Webcast

The company will host a conference call on Thursday, February 25 at 12:00 noon EST to discuss the financial results and outlook. To participate in the call, please dial in five to 10 minutes prior to the start.

Dial-in number: (877) 582-0446
Reference code: 58320982

The conference call also can be heard live on UniSource Energy’s Web site. The webcast can be accessed at uns.com and will be available for replay for seven days.

Replay number: (800) 642-1687
Reference code: 58320982

UniSource Energy is a Tucson, Arizona-based company with consolidated assets of approximately $3.5 billion. UniSource Energy’s primary subsidiaries include Tucson Electric Power Company, which serves more than 400,000 customers in southern Arizona, and UniSource Energy Services, provider of natural gas and electric service for about 235,000 customers in northern and southern Arizona.

For more information about UniSource Energy and its subsidiaries, visit uns.com.

This release contains forward-looking information that involves risks and uncertainties, including factors that could affect UniSource Energy’s ability to reach the 2010 earnings guidance. These risks and uncertainties 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 outcomes currently expected by UniSource Energy.

6

UNISOURCE ENERGY 2009 RESULTS
UniSource Energy Corporation
Comparative Condensed Consolidated Statements of Income

	Three Months Ended
(in thousands of dollars, except per share amounts)	December 31,						Increase / (Decrease)
(UNAUDITED)	2009			2008			Amount			Percent
Operating Revenues
Electric Retail Sales	$	230,129		$	218,628		$	11,501			5.3
Provision for Rate Refunds — CTC Revenue		—			(13,677	)		13,677			N/M
Net Electric Retail Sales		230,129			204,951			25,178			12.3
Electric Wholesale Sales		36,596			47,289			(10,693	)		(22.6	)
California Power Exchange (CPX) Provision for Wholesale Refunds		(4,172	)		—			(4,172	)		N/M
Gas Revenue		45,420			48,975			(3,555	)		(7.3	)
Other Revenues		22,571			17,989			4,582			25.5
Total Operating Revenues		330,544			319,204			11,340			3.6
Operating Expenses
Fuel		74,897			42,393			32,504			76.7
Purchased Energy		77,463			75,565			1,898			2.5
Transmission		2,574			2,479			95			3.8
Increase (Decrease) to reflect PPFAC/PGA Recovery Treatment		(12,008	)		2,099			(14,107	)		N/M
Total Fuel and Purchased Energy		142,926			122,536			20,390			16.6
Other Operations and Maintenance		90,455			84,134			6,321			7.5
Depreciation and Amortization		44,137			38,493			5,644			14.7
Taxes Other Than Income Taxes		9,941			4,141			5,800			N/M
Total Operating Expenses		287,459			249,304			38,155			15.3
Operating Income		43,085			69,900			(26,815	)		(38.4	)
Other Income (Deductions)
Interest Income		2,542			2,287			255			11.1
Other Income		1,779			1,571			208			13.2
Other Expense		(3,252	)		(3,567	)		315			8.8
Total Other Income (Deductions)		1,069			291			778			N/M
Interest Expense
Long-Term Debt		14,454			16,625			(2,171	)		(13.1	)
Interest on Capital Leases		12,508			13,180			(672	)		(5.1	)
Other Interest Expense		1,057			463			594			N/M
Interest Capitalized		(522	)		(1,086	)		564			51.9
Total Interest Expense		27,497			29,182			(1,685	)		(5.8	)
Income Before Income Taxes		16,657			41,009			(24,352	)		(59.4	)
Income Tax Expense		6,239			18,082			(11,843	)		(65.5	)
Net Income	$	10,418		$	22,927		$	(12,509	)		(54.6	)
Weighted-average Shares of Common Stock Outstanding (000)		35,948			35,681			267			0.7
Basic Earnings per Share	$	0.29		$	0.64		$	(0.35	)		(54.7	)
Diluted Earnings per Share	$	0.28		$	0.60		$	(0.32	)		(53.3	)
Dividends Declared per Share	$	0.29		$	0.24		$	0.05			20.8

	Three Months Ended
Tucson Electric Power	December 31,				Increase / (Decrease)
Electric MWh Sales:	2009		2008		Amount			Percent
Retail Sales		2,049,142		2,106,483		(57,341	)		(2.7	)
Long-Term Wholesale Sales		266,582		272,912		(6,330	)		(2.3	)

N/M	- Not Meaningful
Reclassifications have been made to prior periods to conform to the current period’s presentation.

UNISOURCE ENERGY 2009 RESULTS
UniSource Energy Corporation
Comparative Condensed Consolidated Statements of Income

	Years Ended
(in thousands of dollars, except per share amounts)	December 31,						Increase / (Decrease)
(UNAUDITED)	2009			2008			Amount			Percent
Operating Revenues
Electric Retail Sales	$	1,047,619		$	988,612		$	59,007			6.0
Provision for Rate Refunds — CTC Revenue		—			(58,092	)		58,092			N/M
Net Electric Retail Sales		1,047,619			930,520			117,099			12.6
Electric Wholesale Sales		128,627			236,300			(107,673	)		(45.6	)
California Power Exchange (CPX) Provision for Wholesale Refunds		(4,172	)		—			(4,172	)		N/M
Gas Revenue		144,609			163,977			(19,368	)		(11.8	)
Other Revenues		77,741			66,714			11,027			16.5
Total Operating Revenues		1,394,424			1,397,511			(3,087	)		(0.2	)
Operating Expenses
Fuel		298,655			299,987			(1,332	)		(0.4	)
Purchased Energy		294,584			442,210			(147,626	)		(33.4	)
Transmission		10,181			19,214			(9,033	)		(47.0	)
Increase (Decrease) to reflect PPFAC/PGA Recovery Treatment		(17,091	)		(10,975	)		(6,116	)		(55.7	)
Total Fuel and Purchased Energy		586,329			750,436			(164,107	)		(21.9	)
Other Operations and Maintenance		333,887			295,658			38,229			12.9
Depreciation and Amortization		176,018			147,690			28,328			19.2
Amortization of Transition Recovery Asset		—			23,945			(23,945	)		N/M
Taxes Other Than Income Taxes		45,857			39,339			6,518			16.6
Total Operating Expenses		1,142,091			1,257,068			(114,977	)		(9.1	)
Operating Income		252,333			140,443			111,890			79.7
Other Income (Deductions)
Interest Income		12,072			11,011			1,061			9.6
Other Income		18,063			7,838			10,225			N/M
Other Expense		(5,292	)		(9,286	)		3,994			43.0
Total Other Income (Deductions)		24,843			9,563			15,280			N/M
Interest Expense
Long-Term Debt		58,134			70,227			(12,093	)		(17.2	)
Interest on Capital Leases		49,270			52,511			(3,241	)		(6.2	)
Other Interest Expense		3,468			1,837			1,631			88.8
Interest Capitalized		(2,302	)		(5,565	)		3,263			58.6
Total Interest Expense		108,570			119,010			(10,440	)		(8.8	)
Income Before Income Taxes		168,606			30,996			137,610			N/M
Income Tax Expense		64,348			16,975			47,373			N/M
Net Income	$	104,258		$	14,021		$	90,237			N/M
Weighted-average Shares of Common Stock Outstanding (000)		35,858			35,632			226			0.6
Basic Earnings per Share	$	2.91		$	0.39		$	2.52			N/M
Diluted Earnings per Share	$	2.69		$	0.39		$	2.30			N/M
Dividends Declared per Share	$	1.16		$	0.96		$	0.20			20.8

	Years Ended
Tucson Electric Power	December 31,				Increase / (Decrease)
Electric MWh Sales:	2009		2008		Amount			Percent
Retail Sales		9,370,743		9,502,644		(131,901	)		(1.4	)
Long-Term Wholesale Sales		832,847		1,096,092		(263,245	)		(24.0	)

N/M	— Not Meaningful
Reclassifications have been made to prior periods to conform to the current period’s presentation.

TUCSON ELECTRIC POWER COMPANY 2009 RESULTS

TUCSON ELECTRIC POWER COMPANY
Comparative Condensed Consolidated Statements of Income

	Three Months Ended
(in thousands of dollars)	December 31,						Increase / (Decrease)
(UNAUDITED)	2009			2008			Amount			Percent
Operating Revenues
Electric Retail Sales	$	192,326		$	177,564		$	14,762			8.3
Provision for Rate Refunds — CTC Revenue		—			(13,677	)		13,677			N/M
Net Electric Retail Sales		192,326			163,887			28,439			17.4
Electric Wholesale Sales		42,917			50,157			(7,240	)		(14.4	)
California Power Exchange (CPX) Provision for Wholesale Refunds		(4,172	)		—			(4,172	)		N/M
Other Revenues		23,633			19,154			4,479			23.4
Total Operating Revenues		254,704			233,198			21,506			9.2
Operating Expenses
Fuel		72,902			38,419			34,483			89.8
Purchased Energy		29,836			26,829			3,007			11.2
Transmission		627			948			(321	)		(33.9	)
Increase (Decrease) to reflect PPFAC Recovery Treatment		(3,826	)		—			(3,826	)		N/M
Total Fuel and Purchased Energy		99,539			66,196			33,343			50.4
Other Operations and Maintenance		76,696			72,683			4,013			5.5
Depreciation and Amortization		38,362			32,842			5,520			16.8
Taxes Other Than Income Taxes		8,205			2,507			5,698			N/M
Total Operating Expenses		222,802			174,228			48,574			27.9
Operating Income		31,902			58,970			(27,068	)		(45.9	)
Other Income (Deductions)
Interest Income		2,295			2,196			99			4.5
Other Income		1,320			732			588			80.3
Other Expense		(1,288	)		(2,961	)		1,673			56.5
Total Other Income (Deductions)		2,327			(33	)		2,360			N/M
Interest Expense
Long-Term Debt		8,994			10,803			(1,809	)		(16.7	)
Interest on Capital Leases		12,505			13,176			(671	)		(5.1	)
Other Interest Expense		467			355			112			31.5
Interest Capitalized		(359	)		(1,043	)		684			65.6
Total Interest Expense		21,607			23,291			(1,684	)		(7.2	)
Income Before Income Taxes		12,622			35,646			(23,024	)		(64.6	)
Income Tax Expense		4,603			15,950			(11,347	)		(71.1	)
Net Income	$	8,019		$	19,696		$	(11,677	)		(59.3	)

N/M — Not Meaningful

Reclassifications have been made to prior periods to conform to the current period’s presentation.

TUCSON ELECTRIC POWER COMPANY 2009 RESULTS

TUCSON ELECTRIC POWER COMPANY
Comparative Condensed Consolidated Statements of Income

	Years ended
(in thousands of dollars)	December 31,						Increase / (Decrease)
(UNAUDITED)	2009			2008			Amount			Percent
Operating Revenues
Electric Retail Sales	$	867,516		$	805,528		$	61,988			7.7
Provision for Rate Refunds — CTC Revenue		—			(58,092	)		58,092			N/M
Net Electric Retail Sales		867,516			747,436			120,080			16.1
Electric Wholesale Sales		150,679			259,855			(109,176	)		(42.0	)
California Power Exchange (CPX) Provision for Wholesale Refunds		(4,172	)		—			(4,172	)		N/M
Other Revenues		82,688			71,962			10,726			14.9
Total Operating Revenues		1,096,711			1,079,253			17,458			1.6
Operating Expenses
Fuel		281,710			289,985			(8,275	)		(2.9	)
Purchased Energy		142,252			238,024			(95,772	)		(40.2	)
Transmission		3,066			10,515			(7,449	)		(70.8	)
Increase (Decrease) to reflect PPFAC Recovery Treatment		(20,724	)		—			(20,724	)		N/M
Total Fuel and Purchased Energy		406,304			538,524			(132,220	)		(24.6	)
Other Operations and Maintenance		289,765			256,584			33,181			12.9
Depreciation and Amortization		152,901			126,040			26,861			21.3
Amortization of Transition Recovery Asset		—			23,945			(23,945	)		N/M
Taxes Other Than Income Taxes		37,618			31,650			5,968			18.9
Total Operating Expenses		886,588			976,743			(90,155	)		(9.2	)
Operating Income		210,123			102,510			107,613			N/M
Other Income (Deductions)
Interest Income		11,471			9,900			1,571			15.9
Other Income		10,991			5,708			5,283			92.6
Other Expense		(2,904	)		(6,249	)		3,345			53.5
Total Other Income (Deductions)		19,558			9,359			10,199			N/M
Interest Expense
Long-Term Debt		36,226			47,456			(11,230	)		(23.7	)
Interest on Capital Leases		49,258			52,491			(3,233	)		(6.2	)
Other Interest Expense		1,571			1,367			204			14.9
Interest Capitalized		(1,752	)		(4,675	)		2,923			62.5
Total Interest Expense		85,303			96,639			(11,336	)		(11.7	)
Income Before Income Taxes		144,378			15,230			129,148			N/M
Income Tax Expense		55,130			10,867			44,263			N/M
Net Income	$	89,248		$	4,363		$	84,885			N/M

N/M — Not Meaningful

Reclassifications have been made to prior periods to conform to the current period’s presentation.

EX-99.2

Exhibit 99.2

UniSource Energy Corporation
Supplemental Earnings & Outlook Information
February 24, 2010

TABLE OF CONTENTS

Safe Harbor and Non-GAAP Measures	1
Earnings Outlook & Assumptions	2-4
Year-over-Year Earnings Variance	5
TEP Utility Gross Margin	6
TEP Retail & Long-Term Wholesale Gross Margins	7
Operations & Maintenance Components	8
TEP Operating Statistics	9
UES Operating Statistics	10
Basic & Diluted Shares Outstanding	11

SAFE HARBOR AND NON-GAAP MEASURES

This 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 forecast assumptions and estimates below are not intended to be a full list of factors which could cause UniSource Energy’s future results to differ from current expectations. Please refer to UniSource Energy’s SEC filings for more information regarding risks and other uncertainties that could cause current expectations to differ from future results.

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.

1

UniSource Energy 2010 diluted earnings per share estimate: $2.75 — $3.00 per share

	Actual			Estimated
Key Assumptions	2009			2010E			2011E		2012E
	-$ in millions-
UniSource Consolidated
Base Utility O&M (TEP + UES)	$	277		$	281
Less: Consolidating Adj. & Other Segment O&M		(7	)		(6	)
Base Consolidated O&M	$	270		$	275
Change vs. Prior Year					1.9	%	See next page
Effective Income Tax Rate		38.2	%		40	%
TEP
Retail Sales — Actual (GWh)		9,370			9,330
Change vs. Prior Year		-1.4	%		-0.4	%	1% - 2% / year
Retail Sales — Weather Normalized (GWh)		9,284
Retail Customers		401,608
Change vs. Prior Year		0.4	%		0.3	%	1% - 1.5% / year
Pre-Tax Benefits Related to the Operation of Springerville Unit 4	$	0		$	8		$	8	$	8
Capital Lease Amortization	$	26		$	15		$	13	$	13
Capital Lease Interest Expense [1]	$	40		$	40		$	39	$	34
Interest on Short-Term and L-T Debt (excl. cap. lease int. expense)	$	38		$	40-45
UES
UNS Gas Retail Customers		146,275
Change vs. Prior Year		0.4	%	0-1% / year
UNS Electric Retail Customers		90,267
Change vs. Prior Year		0.6	%	0-1% / year
UNS Electric Retail Sales (GWh)		1,784
Avg. Change vs. Prior Year		7.3	%	0.5% - 3.5% / year
UNS Gas Retail Sales (Millions of Therms)		107.9
Avg. Change vs. Prior Year		-3.6	%	1.5% - 3.0% / year

[1]  Net of interest income on investment in lease debt

2

2010 KEY ASSUMPTIONS

Depreciation on TEP’s Transmission Assets

In January 2010, TEP completed an updated depreciation study which indicated that its transmission assets' depreciable lives should be extended. As a result, TEP adopted new transmission depreciation rates effective January 2010 which will have the effect of reducing depreciation expense for transmission assets by approximately $14 million in 2010.

Impact of Purchase of Sundt Unit 4 — Assumed to Close by March 31, 2010

We expect net benefits of purchasing Sundt Unit 4 - excluding the cost of capital - to be about $12 million in 2010, compared with 2009. This includes: a $6 million reduction in depreciation expense ($9 million decrease related to extending the depreciation on leasehold improvements made to the unit partially offset by a $3 million increase in depreciation expense on the facility); and a $6 million decrease in capital lease amortization.

Other Assumptions

4	UNS Gas rate case resolution in March 2010
4	UNS Electric rate case resolution in 2nd half of 2010
4	Avg. shares outstanding: 40 million fully diluted; 36 million basic

• Fully diluted EPS calculation incorporates $4.4 million of after-tax interest savings as if the $150 million of convertible notes were converted to common stock

2010 FORECAST SENSITIVITIES

	Pre-Tax		After-Tax		Per Diluted
2010 Sensitivities	(millions)		(millions)		Share
1% Change
UNS Base O&M	$	2.8	$	1.6	$	0.04
TEP Retail kWh Sales	$	6.0	$	3.6	$	0.08
Rate on Un-hedged TEP Var. Rate Debt	$	3.1	$	1.9	$	0.05

2011-2012 OUTLOOK

UNS Consolidated Base O&M

4	Long-term average base O&M growth of 4% per year
4	The frequency and duration of planned generating outages varies from year to year, which causes variability in O&M growth
4	Current O&M estimate for 2011 includes an approximate $5 million increase in planned outage O&M compared with 2010

3

TEP

4 Modifications to terms of 100 MW long-term wholesale sales contract with Salt River Project

• Beginning in June 2011, price of energy based on a slight discount to Palo Verde Index

• Minimum annual energy purchase of 876 GWhs

4 Financing Activity

• TEP $341 million letter of credit (LOC) facility expires in August 2011

4	2009 average all-in cost of LOC was approximately 0.70%
4	If refinanced under current market conditions, the avg. all-in cost of LOC would be approximately 2.25% to 2.75%
4	A 1% change in estimated pricing would increase annual interest expense by $3.4 million pre-tax or $0.05 per diluted share

• TEP $150 million revolving credit facility matures in August 2011

4	Current pricing is LIBOR + 0.45%
4	If refinanced under current market conditions, the rate would be approximately LIBOR plus a margin of approximately 2.00% to 2.50%

Potential New Customer

Rosemont Copper Mine

In 2007, Augusta Resources Corporation (Augusta) filed a plan of operations with the United States Forest Service (USFS) for the proposed Rosemont Copper Mine near Tucson, Arizona. Augusta is waiting for an environmental impact statement from the USFS before it can begin construction and operation of the mine. If the Rosemont Copper Mine begins full production, it would become TEP’s largest retail customer, with an estimated annual load of up to 110 MW. TEP cannot predict if or when the mine will commence operations. TEP’s assumptions for estimated retail kWh sales growth do not include the potential sales related to this mine.

4

YEAR OVER YEAR EARNINGS VARIANCE EXPLANATION

$ in millions	Pre-Tax			After Tax
2008 UniSource Energy Net Income				$	14.0
TEP 2009 vs. 2008
Change in Revenues
Higher retail revenues (excluding REST and DSM revenues) due to TEP’s new rate stucture and hot summer weather during the 3rd quarter.		39.8			24.6
Lower long-term wholesale electric and transmission revenues due to lower sales volumes.		(7.5	)		(4.6	)
Change in PPFAC-Related Expenses
Lower fuel and purchased power expense (net of short-term wholesale revenues) resulting primarily from a decline in the wholesale market price for power and natural gas.		61.9			38.3
Change in TEP Utility Gross Margin	$	94.2		$	58.2
Change in Other Expenses and Income
Higher base O&M due to an increase in pension expense and higher generating plant maintenance expense.		(10.8	)		(6.7	)
Higher depreciation and amortization due to: additions to plant in service; new depreciation rates for generation assets; amortization of regulatory assets resulting from the 2008 TEP Rate Order; and an adjustment related to an investment in lease equity made in 2006.		(26.9	)		(16.6	)
Higher Other Income due in part to: an adjustment related to an investment in lease equity made in 2006; and interest income related to an income tax refund and a company owned life insurance policy.		10.2			6.3
Lower interest expense due primarily to lower rates on variable rate debt and lower balances of capital lease obligations.		11.3			7.0
Other Changes		1.1			0.7
Change in TEP’s Other Expenses and Income		($15.1	)		($9.4	)
Other Changes
Deferral of Revenues after TRA amortized in May 2008		58.1			35.9
TRA amortization expense in 2008		23.9			14.8
Gain Recorded in Fuel Expense Related to Reinstatement of Regulatory Accounting		(32.0	)		(19.8	)
Reimbursed Fuel and Purchased Power, and Provision for Wholesale Sales Refund		8.3			5.1
Total TEP Change 2009 vs. 2008	$	137.4		$	84.9
Other Changes 2009 vs. 2008
UNS Gas Change in Net Income					(1.2	)
Lower retail therm sales resulting from weakened economic conditions
UNS Electric Change in Net Income					2.2
Rate increase in June 2008, hot summer weather and a new mining customer.
Other
Results include an after-tax gain at Millennium from the sale of Sabinas ($3.6 million). Results also include UED and consolidating adjustments.					4.4
Total Change in UNS Net Income					90.3
2009 UniSource Energy Net Income				$	104.3

5-Variance Explanation

TEP UTILITY GROSS MARGIN

	Year End						4th Quarter
(millions)	2009			2008			2009			2008
Retail Electric Revenues (Excluding DSM & REST)	$	842.1		$	802.3		$	176.8		$	175.2
Long-Term Wholesale Electric Sales		48.2			57.5			13.6			14.3
Wholesale Transmission Revenues		19.0			17.2			6.5			4.3
Total	$	909.3		$	877.0		$	196.9		$	193.8
Less Fuel, Purchased Power and Transmission Expense
Fuel		281.7			290.0			72.9			38.4
Reimbursed Fuel		(5.0	)		(5.1	)		(1.7	)		(0.9	)
Gain Recorded in Fuel Expense Related to Reinstatement of Regulatory Accounting		0.0			24.0			0.0			24.0
Purchased Power		142.2			238.0			29.8			26.8
Increase (Decrease) to Reflect PPFAC Recovery		(20.7	)		0.0			(3.8	)		0.0
REST Included in PPFAC		(7.5	)		0.0			(7.4	)		0.0
Transmission		3.1			10.5			0.6			0.9
Short-Term Wholesale Electric Sales		(83.5	)		(185.2	)		(22.8	)		(33.4	)
Fuel, Purchased Power and Transmission Expense Net of Short-Term Wholesale Revenues		310.3			372.2			67.6			55.8
Utility Gross Margin (non-GAAP)	$	599.0		$	504.8		$	129.3		$	138.0
Reconciling Line Items to Operating Income
CTC Revenue Subject to Refund		0.0			(58.1	)		0.0			(13.7	)
Provision for Wholesale Sales Refunds		(4.2	)		0.0			(4.2	)		0.0
Other Revenue		82.7			71.9			23.6			17.2
REST & DSM Revenues		25.4			3.2			15.5			2.4
Gain Recorded in Fuel Expense Related to Reinstatement of Regulatory Accounting		0.0			24.0			0.0			24.0
Other Operating Expenses (Income):
Reimbursed Fuel		5.0			5.1			1.7			0.9
REST Expense Included in PPFAC		7.5			0.0			7.4			0.0
Other Operations & Maintenance		289.8			256.6			76.7			72.7
Depreciation & Amortization		152.9			126.0			38.3			32.8
Amortization of Transition Recovery Asset		0.0			23.9			0.0			0.0
Taxes Other Than Income Taxes		37.6			31.7			8.2			2.5
Operating Income (GAAP)	$	210.1		$	102.5		$	31.9		$	59.0

6-TEP Gross Margin

TEP — RETAIL AND LONG-TERM WHOLESALE MARGIN

	Year-End		Q4
RETAIL REVENUES (CENTS / KWH)	2009		2009
Avg. Non-Fuel Rates
Residential		6.48		6.33
Commercial		8.04		7.95
Industrial		4.59		4.53
Mining		2.93		2.77
Other		5.00		4.96
Total Average Non-Fuel Rate		5.93		5.73
Avg. Base Fuel and PPFAC Rate		3.05		2.90
Avg. REST & DSM Rate		0.27		0.76
Avg. Total Retail Rate		9.26		9.39

	Year-End		Q4
RETAIL NON-FUEL REVENUES* (MILLIONS)	2009		2009
Residential	$	253.3	$	49.2
Commercial		159.9		35.3
Industrial		99.1		22.4
Mining		31.2		7.5
Other		12.5		3.1
Total Retail Non-Fuel Revenues	$	556.0	$	117.5
Base Fuel and PPFAC Revenues		286.1		59.4
REST & DSM Revenues		25.4		15.5
Total Electric Retail Revenues	$	867.5	$	192.3

* Retail non-fuel revenues exclude fuel, PPFAC, REST/DSM charges

	Year-End		Q4
LONG-TERM WHOLESALE GROSS MARGIN (MILLIONS)	2009		2009
Long-term Wholesale Revenues	$	48.2	$	13.6
Fuel and Purchased Power Expense		24.2		8.2
Net	$	24.0	$	5.4

7-Margin Revenues

UNISOURCE ENERGY AND TEP O&M

UniSource Energy	Year-End						4th Quarter
O&M Components	2009			2008			2009			2008
	-millions-						-millions-
TEP Base O&M (Non-GAAP)	$	231.0		$	220.2		$	57.5		$	62.3
UNS Gas O&M		24.7			25.0			6.4			6.6
UNS Electric O&M		20.8			20.8			6.5			5.5
Total Base Utility O&M		276.5			266.0			70.4			74.4
Consolidating Adjustments & Other		(7.0	)		(8.5	)		(1.5	)		(2.6	)
UniSource Energy Base O&M (Non-GAAP)	$	269.5		$	257.5		$	68.9		$	71.8
Reimbursed O&M Related to Springerville Units 3 and 4		40.9			35.2			11.2			9.0
O&M Related to Customer-funded Renewable Energy and DSM Programs		23.5			5.0			10.4			3.3
Reinstatement of regulatory accounting		0.0			(1.0	)		0.0			(1.0	)
Gain on the Sale of SO2 Emissions Allowances		0.0			(1.0	)		0.0			0.0
UniSource Energy O&M (GAAP)	$	333.9		$	295.7		$	90.5		$	84.1

TEP O&M Components	2009		2008			2009		2008
	-millions-					-millions-
Wages, A&G, Other	$	149.6	$	153.2		$	34.3	$	47.1
Generating Plant Maintenance Expense		64.2		58.7			19.2		13.1
Pension and Postretirement Benefits Expense		17.3		8.3			4.1		2.1
TEP Base O&M (Non-GAAP)	$	231.0	$	220.2		$	57.5	$	62.3
Reimbursed O&M Related to Springerville Units 3 and 4		40.9		35.2			11.2		9.0
O&M Related to Customer-funded Renewable Energy and DSM Programs		17.9		3.2			8.0		2.4
Reinstatement of regulatory accounting		0.0		(1.0	)		0.0		(1.0	)
Gain on the Sale of SO2 Emissions Allowances		0.0		(1.0	)		0.0		0.0
TEP O&M (GAAP)	$	289.8	$	256.6		$	76.7	$	72.7

8 — O&M

TEP — RETAIL OPERATING STATISTICS

	3 Months Ended Dec. 31												Year-End
	2009			2008			Incr (Decr)			% Change			2009			2008			Incr (Decr)			% Change
AVG. ELECTRIC CUSTOMERS
Residential		364,847			363,367			1,480			0.4	%		364,755			362,732			2,023			0.6	%
Commercial		35,746			35,390			356			1.0	%		35,660			35,143			517			1.5	%
Industrial		629			633			(4	)		-0.6	%		630			635			(6	)		-0.9	%
Mining		3			3			—			0.0	%		2			2			—			0.0	%
Other		61			61			—			0.0	%		61			61			—			0.0	%
Total		401,286			399,454			1,832			0.5	%		401,108			398,573			2,535			0.6	%
RETAIL SALES — MWH
Residential		776,536			774,749			1,787			0.2	%		3,905,696			3,852,707			52,989			1.4	%
Commercial		443,842			464,655			(20,813	)		-4.5	%		1,988,356			2,034,453			(46,097	)		-2.3	%
Industrial		494,167			524,044			(29,877	)		-5.7	%		2,160,946			2,263,706			(102,760	)		-4.5	%
Mining		272,039			280,331			(8,292	)		-3.0	%		1,064,830			1,095,962			(31,132	)		-2.8	%
Other		62,556			62,704			(148	)		-0.2	%		250,915			255,817			(4,902	)		-1.9	%
Total		2,049,140			2,106,483			(57,343	)		-2.7	%		9,370,743			9,502,645			(131,902	)		-1.4	%
RETAIL USAGE — KWH/CUSTOMER
Residential		2,128			2,132			(4	)		-0.2	%		10,708			10,621			87			0.8	%
Commercial		12,417			13,130			(713	)		-5.4	%		55,759			57,891			(2,132	)		-3.7	%
Industrial		785,639			827,874			(42,235	)		-5.1	%		3,430,073			3,564,891			(134,818	)		-3.8	%
Mining		90,679,667			93,443,667			(2,764,000	)		-3.0	%		532,415,000			547,981,000			(15,566,000	)		-2.8	%
Other		1,025,508			1,027,934			(2,426	)		-0.2	%		4,113,361			4,193,721			(80,361	)		-1.9	%
Total		5,106			5,273			(167	)		-3.2	%		23,362			23,842			(480	)		-2.0	%
RETAIL REVENUES — MILLIONS
Residential	$	72.2		$	69.9		$	2.3			3.3	%	$	377.8		$	351.1		$	26.7			7.6	%
Commercial		48.0			48.5			(0.5	)		-1.1	%		219.7			211.6			8.1			3.8	%
Industrial		36.6			37.9			(1.3	)		-3.4	%		163.7			164.8			(1.1	)		-0.7	%
Mining		15.2			14.2			1.0			7.1	%		61.0			55.6			5.4			9.7	%
Other		4.9			4.7			0.2			3.5	%		19.9			19.1			0.7			3.8	%
Total	$	176.9		$	175.2		$	1.7			1.0	%	$	842.1		$	802.3		$	39.8			5.0	%
DSM / REST		15.5			2.4			13.1			N/M			25.4			3.2			22.2			N/M
Total Retail Revenues	$	192.3		$	177.6		$	14.7			8.3	%	$	867.5		$	805.5		$	62.0			7.7	%
WEATHER — COOLING DEGREE DAYS
Actual		NM			NM									1,599			1,336			263			19.7	%
10-Year Average		NM			NM									1,469			1,431
% Change Actual vs. 10-Year Avg.		.												8.8	%		-6.6	%
WEATHER — HEATING DEGREE DAYS
Actual		578			480			98			20.4	%		1,287			1,367			(80	)		-5.9	%
10-Year Average		585			578									1,434			1,444
% Change Actual vs. 10-Year Avg.		. -1.2	%		-17.0	%								-10.3	%		-5.3	%
ENERGY MARKET INDICATORS
Avg. Wholesale Power Prices Palo Verde Index — $/MWh
On Peak	$	40.13		$	45.07			($4.94	)		-11.0	%	$	34.89		$	72.11			($37.22	)		-51.6	%
Off Peak	$	30.49		$	33.90			($3.41	)		-10.1	%	$	24.35		$	52.99			($28.64	)		-54.0	%
Avg. Natural Gas Prices Permian Index — $/MMBtu	$	4.03		$	4.24			($0.21	)		-5.0	%	$	3.34		$	7.41			($4.07	)		-54.9	%

9 — TEP Operating Stats

UNS GAS — OPERATING STATISTICS

	3 Months Ended Dec. 31											Year-End
	2009			2008		Incr (Decr)			% Change			2009			2008		Incr (Decr)			% Change
AVG. GAS CUSTOMERS
Residential		133,285			132,700		585			0.4	%		132,776			132,579		197			0.1	%
Commercial		11,364			11,430		(66	)		-0.6	%		11,372			11,447		(75	)		-0.7	%
All Other		1,115			1,106		9			0.8	%		1,111			1,106		5			0.5	%
Total		145,764			145,236		528			0.4	%		145,259			145,132		127			0.1	%
RETAIL SALES — THOUSANDS OF THERMS
Residential		25,088			22,188		2,900			13.1	%		69,641			72,093		(2,453	)		-3.4	%
Commercial		10,018			9,309		708			7.6	%		29,622			30,990		(1,368	)		-4.4	%
All Other		3,123			2,836		287			10.1	%		8,626			8,886		(260	)		-2.9	%
Total		38,228			34,333		3,895			11.3	%		107,888			111,970		(4,081	)		-3.6	%
RETAIL USAGE — THERMS/CUSTOMER
Residential		188.2			167.2		21			12.6	%		524			544		(19	)		-3.5	%
Commercial		881.5			814.5		67			8.2	%		2,605			2,707		(102	)		-3.8	%
RETAIL REVENUES — MILLIONS
Non-Fuel Revenues:
Residential	$	11.5		$	10.6		0.9			8.5	%	$	36.0		$	37.0		(1.0	)		-2.7	%
Commercial		3.1			2.9		0.2			6.2	%		9.6			10.0		(0.4	)		-4.2	%
All Other		0.7			0.7		0.0			6.4	%		2.0			2.1		(0.1	)		-5.0	%
Total	$	15.3		$	14.2	$	1.1			7.9	%	$	47.6		$	49.1		($1.5	)		-3.1	%
DSM Revenues		0.3			0.2		0.1			50.0	%		0.7			0.4		0.3			62.8	%
Transport/NSP Revenues		4.0			6.7		(2.7	)		-40.5	%		16.3			28.8		(12.5	)		-43.3	%
Fuel Revenues:
Recovered from Customers		26.6			30.5		(3.9	)		-12.8	%		84.8			93.6		(8.8	)		-9.4	%
Total Gas Revenues	$	46.1		$	51.5		($5.4	)		-10.5	%	$	149.4		$	171.9		($22.5	)		-13.1	%
WEATHER — HEATING DEGREE DAYS
Actual		8,592			7,413		1,179			15.9	%		20,470			21,003		(533	)		-2.5	%
10-Year Average		8,092											20,900
% Change Actual vs. 10-Year Avg.		6.2	%										-2.1	%

UNS ELECTRIC — OPERATING STATISTICS

	3 Months Ended Dec. 31											Year-End
	2009			2008		Incr (Decr)			% Change			2009			2008		Incr (Decr)			% Change
AVG. ELECTRIC CUSTOMERS
Residential		79,553			79,154		399			0.5	%		79,483			79,378		105			0.1	%
Commercial		10,328			10,349		(21	)		-0.2	%		10,330			10,334		(4	)		0.0	%
All Other		291			279		12			4.3	%		287			275		12			4.4	%
Total		90,172			89,782		390			0.4	%		90,100			89,987		113			0.1	%
RETAIL SALES — MWH
Residential		162,218			155,732		6,486			4.2	%		813,796			822,497		(8,701	)		-1.1	%
Commercial		129,300			134,123		(4,823	)		-3.6	%		607,928			619,581		(11,653	)		-1.9	%
Industrial		52,712			44,391		8,321			18.7	%		196,985			189,082		7,903			4.2	%
Mining		46,831			12,097		34,734			NM			163,474			29,921		133,553			NM
Other		634			565		69			12.2	%		2,220			2,237		(17	)		-0.8	%
Total		391,695			346,908		44,787			12.9	%		1,784,403			1,663,318		121,085			7.3	%
RETAIL USAGE — KWH/CUSTOMER
Residential		2,039			1,967		72			3.6	%		10,239			10,362		(123	)		-1.2	%
Commercial		12,519			12,960		(441	)		-3.4	%		58,851			59,956		(1,105	)		-1.8	%
RETAIL REVENUES — MILLIONS
Non-Fuel Revenues:
Residential	$	4.3		$	4.1		0.2			4.9	%	$	20.5		$	22.3		(1.8	)		-8.1	%
Commercial		4.2			5.0		(0.8	)		-16.0	%		21.4			21.3		0.1			0.5	%
Industrial		1.7			0.6		1.1			183.3	%		6.9			2.3		4.6			NM
Mining		0.9			1.2		(0.3	)		-25.0	%		2.9			2.2		0.7			NM
Other		0.1			0.1		0.0			13.6	%		0.3			0.3		0.0			2.0	%
Total	$	11.2		$	11.0	$	0.2			1.9	%	$	51.9		$	48.4	$	3.6			7.4	%
DSM / REST		3.4			0.7		2.7			NM			6.3			1.4		4.8			NM
Fuel Revenues:
Recovered from Customers		23.2			29.4		(6.2	)		-21.1	%		121.9			133.3		(11.4	)		-8.6	%
Total Retail Revenues	$	37.8		$	41.1		($3.3	)		-8.1	%	$	180.1		$	183.1		($3.0	)		-1.7	%
WEATHER — COOLING DEGREE DAYS
Actual		474			652		(178	)		-27.3	%		8,777			8,795		(18	)		-0.2	%
10-Year Average		556											8,847
% Change Actual vs. 10-Year Avg.		-14.7	%										-0.8	%
WEATHER — HEATING DEGREE DAYS
Actual		2,746			2,345		401			17.1	%		6,289			6,581		(292	)		-4.4	%
10-Year Average		2,549											6,392
% Change Actual vs. 10-Year Avg.		7.7	%										-1.6	%

10 — UES Operating Stats

BASIC AND DILUTED SHARES OUTSTANDING

	Years Ended December 31,
	2009		2008		2007
	-In Thousands-
Numerator:
Net Income	$	104,258	$	14,021	$	58,373
Income from Assumed Conversion of Convertible Senior Notes		4,390				4,390
Adjusted Numerator	$	108,648	$	14,021	$	62,763
Denominator:
Weighted-average Shares of Common Stock Outstanding
Common Shares Issued		35,653		35,415		35,264
Participating Securities		100		260		222
Fully Vested Deferred Stock Units		105		217		274
Total Weighted-average Shares of Common Stock Outstanding and Participating Securities — Basic		35,858		35,892		35,760
Effect of Diluted Securities
Convertible Senior Notes		4,093				4,000
Options and Stock Issuable under Employee Benefit Plans and the Directors’ Plan		499		476		502
Total Shares		40,450		36,368		40,262

For the year ended December 31, 2008, 4 million potentially dilutive shares from the conversion of convertible senior notes, and after-tax interest expense of $4 million was not included in the computation of diluted EPS because to do so would be anti-dilutive.

Stock options to purchase an average of 395,000, 312,000 and 169,000 shares of Common Stock were outstanding during 2009, 2008 and 2007, respectively, but were not included in the computation of EPS because the stock option’s exercise price was greater than the average market price of the Common Stock at year end.

11 — Diluted Share Count