Business Segments (Tables)

9 Months Ended

Sep. 30, 2011

Reconciling adjustments of Income Statement items in consolidation


	Reportable Segments													UniSource
			UNS			UNS					Reconciling			Energy
	TEP		Gas			Electric		Other			Adjustments			Consolidated
	-Millions of Dollars-
Income Statement
Three Months Ended September 30, 2011:
Operating Revenues — External	$	366	$	17		$	68	$	—		$	—		$	451
Operating Revenues — Intersegment		4		1			—		4			(9	)		—
Income (Loss) Before Income Taxes		88		(1	)		11		—			—			98
Net Income (Loss)		54		(1	)		7		—			—			60

Three Months Ended September 30, 2010:
Operating Revenues — External	$	350	$	17		$	72	$	—		$	—		$	439
Operating Revenues — Intersegment		5		2			1		8			(16	)		—
Income (Loss) Before Income Taxes		97		(2	)		7		(1	)		(2	)		99
Net Income (Loss)		60		(1	)		5		(6	)		(2	)		56

Nine Months Ended September 30, 2011:
Operating Revenues — External	$	894	$	101		$	169	$	1		$	—		$	1,165
Operating Revenues — Intersegment		11		2			2		19			(34	)		—
Income Before Income Taxes		136		10			23		—			(4	)		165
Net Income		84		6			14		—			(2	)		102

Nine Months Ended September 30, 2010:
Operating Revenues — External	$	837	$	99		$	160	$	1		$	—		$	1,097
Operating Revenues — Intersegment		23		4			2		21			(50	)		—
Income (Loss) Before Income Taxes		157		9			20		(6	)		(6	)		174
Net Income (Loss)		98		5			12		(9	)		(4	)		102

Reconciling adjustments of intersegment revenues in consolidation


	Reportable Segments
			UNS		UNS
	TEP		Gas		Electric		Other
	-Millions of Dollars-
Intersegment Revenue
Three Months Ended September 30, 2011:
Wholesale Sales — TEP to UNS Electric ⁽⁴⁾	$	1	$	—	$	—	$	—
Gas Revenue — UNS Gas to UNS Electric ⁽⁵⁾		—		1		—		—
Other Revenue — TEP to Affiliates ⁽¹⁾		2		—		—		—
Other Revenue — Millennium to TEP, UNS Gas & UNS Electric ⁽²⁾		—		—		—		4
Other Revenue — TEP to UNS Electric ⁽³⁾		1		—		—		—

Total Intersegment Revenue	$	4	$	1	$	—	$	4


	Reportable Segments
			UNS		UNS
	TEP		Gas		Electric		Other
	-Millions of Dollars-
Three Months Ended September 30, 2010:
Wholesale Sales — TEP to UNS Electric ⁽⁴⁾	$	2	$	—	$	—	$	—
Wholesale Sales — UNS Electric to TEP ⁽⁴⁾		—		—		1		—
Wholesale Sales — UED to UNS Electric ⁽⁵⁾		—		—		—		3
Gas Revenue — UNS Gas to UNS Electric ⁽⁵⁾		—		2		—		—
Other Revenue — TEP to Affiliates ⁽¹⁾		2		—		—		—
Other Revenue — Millennium to TEP, UNS Gas & UNS Electric ⁽²⁾		—		—		—		5
Other Revenue — TEP to UNS Electric ⁽³⁾		1		—		—		—

Total Intersegment Revenue	$	5	$	2	$	1	$	8


Nine Months Ended September 30, 2011:
Wholesale Sales — TEP to UNS Electric ⁽⁴⁾	$	2	$	—	$	—	$	—
Wholesale Sales — UNS Electric to TEP ⁽⁴⁾		—		—		2		—
Wholesale Sales — UED to UNS Electric ⁽⁵⁾		—		—		—		6
Gas Revenue — UNS Gas to UNS Electric ⁽⁵⁾		—		2		—		—
Other Revenue — TEP to Affiliates ⁽¹⁾		7		—		—		—
Other Revenue — Millennium to TEP, UNS Gas & UNS Electric ⁽²⁾		—		—		—		13
Other Revenue — TEP to UNS Electric ⁽³⁾		2		—		—		—

Total Intersegment Revenue	$	11	$	2	$	2	$	19


Nine Months Ended September 30, 2010:
Wholesale Sales — TEP to UNS Electric ⁽⁴⁾	$	15	$	—	$	—	$	—
Wholesale Sales — UNS Electric to TEP ⁽⁴⁾		—		—		2		—
Wholesale Sales — UED to UNS Electric ⁽⁵⁾		—		—		—		8
Gas Revenue — UNS Gas to UNS Electric ⁽⁵⁾		—		4		—		—
Other Revenue — TEP to Affiliates ⁽¹⁾		6		—		—		—
Other Revenue — Millennium to TEP, UNS Gas & UNS Electric ⁽²⁾		—		—		—		13
Other Revenue — TEP to UNS Electric ⁽³⁾		2		—		—		—

Total Intersegment Revenue	$	23	$	4	$	2	$	21


⁽¹⁾		Common costs (systems, facilities, etc.) are allocated on a cost-causative basis and recorded as revenue by TEP. Management believes this method of allocation is reasonable.

⁽²⁾		Millennium provides a supplemental workforce and meter-reading services to TEP, UNS Gas and UNS Electric. Millennium bases the charges on the costs of services performed. Management believes the charges are reasonable for the services rendered.

⁽³⁾		TEP charges UNS Electric for control area services based on a FERC-approved tariff.

⁽⁴⁾		TEP and UNS Electric sell power to each other at prices based on the Dow Jones Four Corners Daily Index.

⁽⁵⁾		Transactions between non-registrant wholly-owned subsidiaries that eliminate in consolidation.