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U.S. Securities and Exchange Commission

SECURITIES AND EXCHANGE COMMISSION

(Release No. 35-27706; 70-10116)

UniSource Energy Corporation

UniSource Energy Services, Inc.

Order Authorizing Acquisition of Electric and Gas Utility Properties

August 1, 2003

UniSource Energy Corporation ("UniSource Energy"), Tucson, Arizona, an Arizona corporation and a public utility holding company that claims exemption from registration under section 3(a)(1) of the Public Utility Holding Company Act of 1935, as amended ("Act"), by rule 2, and UniSource Energy Services, Inc. ("UES"), a newly-formed Arizona corporation that will be a direct subsidiary of UniSource Energy (collectively "Applicants") have filed with the Securities and Exchange Commission ("Commission") an application ("Application") for an order under sections 3(a)(1), 9(a)(2) and 10 of the Act. The Commission issued a notice of the filing of the Application on May 8, 2003 (Holding Co. Act Release No. 27676).

Applicants request authority for UES to acquire all of the issued and outstanding common stock of two newly-formed Arizona corporations, UNS Electric, Inc. ("UNS Electric") and UNS Gas, Inc. ("UNS Gas," and together with UNS Electric, the "New Utility Companies"). The New Utility Companies have been formed to serve as the corporate vehicles through which UniSource Energy will acquire the operating electric and gas utility properties of Citizens Communications Company ("Citizens") that are located in Arizona (the "Transaction"). Applicants also request that the Commission issue an order under section 3(a)(1) of the Act granting both UniSource Energy and UES an exemption from registration under the Act.

I. Background

UniSource Energy owns substantially all of the issued and outstanding common stock of Tucson Electric Power Company ("TEP"), an Arizona corporation that provides electric utility service to over 360,000 customers in a 1,155 square-mile area of southeastern Arizona having a population of approximately 891,000. UniSource Energy also has two direct nonutility subsidiaries, Millennium Energy Holdings, Inc. and UniSource Energy Development Company.

In 2002, TEP accounted for approximately 94% of UniSource Energy's total consolidated assets and more than 99% of its operating revenues. TEP's retail service area includes the City of Tucson and adjoining areas of Pima County. TEP also supplies the power requirements of a military base that is located in Cochise County, to the east of Tucson, and sells electricity at wholesale to other utilities and power marketing entities in the western U.S. As of December 31, 2002, TEP owned or leased 2,002 megawatts ("MW") of net generating capability.

TEP has five direct, wholly-owned, nonutility subsidiaries, as follows: Escavada Company, which is engaged in the business of maintaining miscellaneous assets and property; San Carlos Resources, Inc., which holds legal title to Unit No. 2 of the Springerville Generating Station, and is the lessee, jointly and severally with TEP, of an undivided one-half interest in certain facilities shared in common between Unit No. 1 and Unit No. 2 of the Springerville Generating Station; Sierrita Resources, Inc., which holds investments in financial assets; Tucson Resources, Inc., which also holds investments in financial assets; and Tucsonel Inc., which holds an undivided interest in the Springerville Generating Station coal-handling facility. TEP also holds minority interests in entities that provide demand side and energy management services and engage in development activities relating to technologies that provide pricing and other related services to consumers for a wide variety of products, including utility services.

TEP is subject to regulation by the Arizona Corporation Commission ("ACC") with respect to retail electric rates, the issuance of securities, affiliate transactions, the maintenance of books and records, and other matters; and by the Federal Energy Regulatory Commission ("FERC") with respect to wholesale electric rates and electric transmission service.

For the twelve months ended December 31, 2002, UniSource Energy reported consolidated operating revenues of $856 million, more than 98% of which were derived from retail and wholesale sales of electricity and related transmission and distribution services. At December 31, 2002, UniSource Energy had $2.7 billion in total assets, including total net utility plant of $1.7 billion.

Citizens, a Delaware corporation, operates as an electric and gas utility in Arizona through two operating divisions. Through its Arizona Electric Division, Citizens provides electric service to approximately 77,500 customers in most of Mohave County in northwest Arizona and in all of Santa Cruz County in southeast Arizona between TEP's service area and the U.S.-Mexico border. Citizens has owned and operated both the Santa Cruz and Mohave electric properties since 1936 and portions of its gas properties for several decades. Through its Arizona Gas Division, Citizens provides natural gas service to approximately 125,000 customers in most of northern Arizona, including portions of Mohave, Yavapai, Coconino, Navajo, Greenlee, and Apache Counties, as well as Santa Cruz County in southeast Arizona. Citizens' electric and gas operations in Mohave County and Santa Cruz Counties, respectively, almost completely overlap. Citizens owns generating units in Arizona having a total capacity of about 47 MW. Citizens' Arizona electric transmission and distribution system consists of approximately 56 circuit-miles of 115 kilovolts ("kV") transmission lines, 229 circuit-miles of 69 kV transmission lines, and 3,116 circuit-miles of underground and overhead distribution lines. Citizens also owns 38 substations having a total installed transformer capacity of 1,077,300 kilovoltameperes. Citizens' Arizona gas transmission and distribution system consists of approximately 168 miles of steel transmission mains, 2,459 miles of steel and plastic distribution mains, and 127,015 customer service lines.

Citizens is subject to regulation in Arizona by the ACC with respect to retail electric and gas rates, the issuance of securities, affiliate transactions, the maintenance of books and records, and other matters and by the FERC with respect to wholesale power sales and interstate transmission service.

II. Description of the Transaction

Citizens and UniSource Energy have entered into separate Asset Purchase Agreements, each dated October 29, 2002, relating to the purchase of Citizens' electric and gas utility businesses in Arizona. Under the terms of the Asset Purchase Agreement relating to Citizens' electric utility business, Citizens has agreed to sell and UniSource Energy (through UNS Electric) has agreed to purchase all of the assets (subject to certain stated exclusions) used by Citizens in connection with, or otherwise necessary for, the

conduct of its electric utility business in Arizona.1 These assets include, but are not limited to, real property and real property leases, accounts receivable, machinery and other equipment, certain assigned agreements, Citizen's certificates to provide electric service and other transferable permits, and certain other assets related to its Arizona electric utility business (the "Electric Assets"). Under the terms of the Asset Purchase Agreement relating to Citizens' gas utility business, Citizens has agreed to sell and UniSource Energy (through UNS Gas) has agreed to purchase all of the assets (subject to certain stated exclusions) used by Citizens in connection with or otherwise necessary for the conduct of its gas utility business in Arizona.2 These assets include, but are not limited to, real property and real property leases, accounts receivable, machinery and other equipment, certain assigned agreements, Citizen's certificates to provide gas service and other transferable permits and certain other assets related to its gas utility business in Arizona (the "Gas Assets").

UniSource Energy has agreed to pay Citizens $92 million in cash for the Electric Assets and $138 million in cash for the Gas Assets, subject in each case to adjustment based on the date on which the Transaction closes and on the amount of certain assets and liabilities associated with the Assets at the time of closing. The purchase price for the Electric Assets and Gas Assets represents 48% and 58%, respectively of the net book value of those assets as of December 31, 2002. In addition, the base price for the Electric Assets and the Gas Assets will be reduced by $10 million in the aggregate if the Transaction closes not later than August 11, 2003. However, whether or not the Transaction closes by August 11, 2003, UniSource Energy has agreed to reduce the rate base for the Gas Assets by $10 million. UniSource Energy will not assume Citizens' obligations under existing industrial development revenue bonds that were issued to finance portions of the purchased assets. Citizens will remain liable on these obligations.

Under the Asset Purchase Agreements, UniSource Energy and Citizens also agreed to coordinate the overall development of the positions to be taken and the regulatory actions to be requested regarding the two utility rate cases that Citizens has pending before the ACC. As part of the Joint Application of Citizens Communications Company and UniSource Energy Corporation to the ACC ("Joint Application"), UniSource Energy requested approval for a reduced level of rate increases to reflect the fact that the purchase price for the acquired assets represents a significant discount to the net book value of those assets. On April 1, 2003, UniSource Energy, Citizens, TEP and the staff of the Utilities Division of the ACC entered into a Settlement Agreement ("Settlement"), which sets forth the agreement and understanding of the parties with respect to the settlement of all issues arising under the Joint Application. Under the Settlement, as approved by the ACC, UNS Gas has been granted a rate increase of approximately 20.9%, versus the 28.9% increase requested by Citizens. In addition, UNS Electric will forfeit its right to seek recovery of the under-collected balance under Citizens' electric purchase power and fuel adjuster clause (estimated to be at least $135 million as of July 28, 2003). As a result, electric rates of UNS Electric will increase by 22%, rather than the 45% increase proposed by Citizens. The Settlement, with minor changes, was approved by the ACC on July 3, 2003. Applicants state that under the Settlement, Citizens' electric and gas customers will save a total of about $29 million per year as compared to the amount of rate increases proposed in Citizens' pending rate applications.

Applicants state that the Transaction is subject to, among other conditions precedent, receipt by the parties of required approvals by the ACC, the FERC and this Commission, and filing of pre-merger notification statements under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended ("HSR Act"), and expiration or early termination of the statutory waiting period. The FERC approved the Transaction in an order dated May 21, 2003. The ACC issued an order approving the Transaction, related financing and rate proposals in an order dated July 3, 2003. Under the HSR Act, and the rules promulgated under the HSR Act by the Federal Trade Commission ("FTC"), the Transaction may not be consummated until UniSource Energy and Citizens file notifications and provide certain information to the FTC and the Department of Justice and specified waiting period requirements are satisfied. The HSR Act notifications were filed on March 26, 2003, and the waiting period was terminated on April 16, 2003. The boards of directors of UniSource Energy and Citizens have each approved the proposed Transaction. The Transaction does not require shareholder approval by either company.

UniSource Energy will fund the equity portion of the purchase price, by a capital contribution to UES (approximately $90 million in total), using approximately $40 million of available cash and approximately $50 million of unsecured borrowings from third parties in the form of a bridge loan.3 The debt portion of the purchase price, transaction costs and working capital (approximately $160 million in total) will be financed by the New Utility Companies through the issuance of senior unsecured notes, which will be guaranteed as to principal and interest by UES.

Applicants assert that after completion of the Transaction there will be modest operating and administrative savings. Applicants state that the acquisition will allow for more efficient utilization of fleet equipment, training facilities, transformer maintenance equipment, meter repair facilities, automated mapping facilities and substation testing equipment. Applicants also argue that operational synergies will also be enhanced by the flexibility to dispatch electric trouble crews during certain emergency situations when not otherwise required for TEP operations.4 In addition, Citizens' Arizona customers will realize significant rate savings and other benefits as a result of being part of a much larger enterprise.

III. Discussion

The indirect acquisition of the common stock of the New Utility Companies by UniSource Energy through UES requires prior Commission approval under sections 9(a)(2) and 10 of the Act. The Commission has reviewed the proposed acquisition and finds that the requirements of the Act are satisfied. The Commission wishes to address in particular the application of the integration requirements of section 10(c)(1) of the Act to the Transaction. The Commission will also address the exemption request under section 3(a)(1) of the Act.

A. Integration

Under section 10(c)(1), the Commission may not approve an acquisition that "would be detrimental to the carrying out of the provisions of section 11." Section 11(b)(1) of the Act, with the exception discussed below, confines a registered holding company to ownership of a single integrated public utility system, as defined in section

2(a)(29) of the Act.5 In view of the separate definitions and their differing criteria, the Commission has long held that gas and electric properties do not together constitute an integrated system.6

Section 11(b)(1) permits a registered holding company to own one or more additional integrated public utility systems if the requirements of section 11(b)(1)(A) - (C) (the "ABC clauses") are satisfied. By its terms, however, section 11(b)(1) applies only to registered holding companies. The Commission has previously determined that a holding company may acquire utility assets that will not, when combined with its existing utility assets make up an integrated system or comply fully with the ABC clauses, provided there is de facto integration of utility properties and the holding company will be exempt from registration under section 3 of the Act following the Transaction.7 The Commission has found de facto integration of separate utility systems when: service territories are overlapping or otherwise contiguous; the separate systems are coordinated administratively; the combination of the separate systems would not give rise to abuses such as ownership of scattered utility properties, inefficient operations, lack of local management or evasion of state regulation; and there is no effect upon the ability of state ratemaking authorities to carry out their statutory duties.8 In addition to the other criteria noted above, the Commission more recently determined that de facto integration of separate utility systems existed where the service territories of the primary and additional system, though not contiguous, were in close proximity to one another and both within the same state.9

Following the completion of the Transaction, the UniSource Energy system will consist of (1) an integrated electric utility system comprised of TEP's generation, transmission and distribution properties in and around the City of Tucson and its generating facilities and associated transmission lines located in other parts of Arizona and New Mexico, which are used primarily to supply its retail load (the "Primary System"), (2) an additional electric utility transmission and distribution system operating in Santa Cruz County which, although contiguous to and soon to be interconnected directly with the service territory of the Primary System,10 will not, for the foreseeable future, be operated with the Primary System as "a single interconnected and coordinated system,"11 (3) an additional electric utility transmission and distribution system operating in Mohave County in northwest Arizona, and (4) an integrated gas utility system serving most of northern Arizona (including Mohave County) and Santa Cruz County south of Tucson, with the portion of the service territory of the integrated gas utility system located in Santa Cruz County being contiguous to the service territory of the Primary System. The systems described in (2), (3) and (4) directly above are being referred to collectively as the "Additional Systems."

Although Citizens' gas utility operations in Arizona are conducted through two divisions - the Northern Arizona Division and the Santa Cruz Division - Citizens derives most of its gas supplies for its Arizona operations from a common source (the San Juan Basin in the Four Corners region). In addition, management of gas supply, engineering services and other administrative functions for the two gas divisions have historically been performed by Citizens, and will continue to be performed under UniSource Energy's ownership, on a centralized and coordinated basis. Finally, Citizens' gas system, which serves approximately 125,000 customers in mostly rural areas of Arizona, is relatively small. The largest gas utility in Arizona, Southwest Gas Corporation, serves approximately 812,000 customers in central and southern Arizona. Thus, Citizen's gas utility operations constitute an gas integrated utility system as defined in section 2(a)(29)(B) of the Act.12

In this case, there will be de facto integration of the separate gas and electric systems. The service territories of the Primary System and Citizens' electric utility system in Santa Cruz County are contiguous, as are the service territories of the Primary System and the portion of Citizens' integrated gas utility system located in Santa Cruz County. Moreover, the service territory of the additional electric system located in Mohave County is in close proximity to the Primary System. Further, the service territories of the Primary System and each of the Additional Systems are located entirely within Arizona.

At the completion of the Transaction will achieve both operational and administrative synergy savings. TEP has a substantial physical presence in parts of northern Arizona that are served by Citizens, and once the Transaction is completed TEP and Citizens will be coordinated administratively. In addition to the operational benefits noted above, Applicants state that certain support service functions such as legal, regulatory, human resources, auditing, environmental services and risk management will be more effectively utilized among the UniSource Energy operating subsidiaries given the commonality of federal, state and local agency regulation. It is expected that synergies will be obtained by spreading the utilization of information systems over an expanded customer base with respect to materials management, financial accounting, billing systems, call center operations, payroll services and employee records. The New Utility Companies will be locally managed. Finally, Applicants state that natural gas procurement will benefit through the combination of purchases for both retail consumption and electric generation.

The Transaction will not give rise to any of the abuses such as ownership of scattered utility properties, inefficient operations, lack of local management or evasion of state regulation, that the Act, including section 11(b)(1), was intended to prevent. The Transaction will have no effect upon the ability of state ratemaking authorities' ability to carry out their statutory duties. As mentioned above, the ACC has issued an order approving of the Transaction. Under the Settlement, Citizens' electric and gas customers will save a total of about $29 million per year, as compared to the amount of rate increases proposed in Citizens' pending rate applications. Accordingly, the Commission does not find that the Transaction would be detrimental to the carrying out of section 11, so that section 10(c)(1) of the Act is satisfied.

B. Section 3(a)(1) Exemption

Section 3(a)(1) of the Act directs the Commission, "unless and except insofar as it finds the exemption detrimental to the public interest or the interest of investors or consumers," to exempt from registration any holding company, and every subsidiary thereof as such if

such holding company, and every subsidiary company thereof which is a public-utility company from which such holding company derives, directly or indirectly, any material part of its income, are predominantly intrastate in character and carry on their business substantially in a single State in which such holding company and every such subsidiary company thereof are organized . . . .

As mentioned above, Applicants request that the Commission find that after the Transaction is complete, UniSource Energy and the intermediate holding company, UES, will each be exempt, under section 3(a)(1) of the Act, from all provisions of the Act, except section 9(a)(2). To qualify for the exemption, an applicant holding company must establish that: (1) it is incorporated in the same State as each of its material public utility company subsidiaries; and (2) it and each of its material public utility company subsidiaries is "predominantly intrastate in character and carries on its utility businesses substantially in a single State" (the "Predominantly/Substantially Test"). The highest percentage of interstate sales that the Commission deemed to satisfy the Predominantly/Substantially Test was in NIPSCO . In NIPSCO, the Commission determined that a utility generating an average of 13.2% of net operating revenues from out of state over a three-year period satisfied the Predominantly/Substantially Test.13

First, it must be determined which of UniSource Energy's public utility subsidiaries would be "material" after the Transaction is completed. UniSource Energy, TEP, UES, and the New Utility Companies are all incorporated under the laws of Arizona. UniSource Energy derives a "material part" of its income from TEP; further, Applicants assert that for the purposes of the requested exemption UNS Electric and UNS Gas will also contribute a "material part" of UniSource Energy's income. TEP's public utility operations are confined substantially to Arizona, and the public utility operations of UNS Electric and UNS Gas will be confined entirely to Arizona.

The Commission has evaluated a number of quantifiable factors to compare a company's out-of-state presence with its in-state presence. Some of the most common indicia have included gross operating revenues, utility operating income, net utility income, and net utility plant.14 The Commission has generally assigned the most weight to a comparison of gross utility operating revenues as a measure of the relative size of in-state and out-of-state utility operations.15 Except for wholesale sales of energy from the San Juan and Four Corners Generating Stations to wholesale customers in New Mexico, all of TEP's retail and wholesale sales of electric energy occur in Arizona or at the Arizona border. On average, in the three-year period 2000 through 2002, approximately 3.2% of TEP's gross operating revenues and 4.5% of net operating revenues (gross revenues less cost of fuel) were derived from wholesale sales outside of Arizona.16 Further, as of December 31, 2002, TEP's investment in two generating units located in New Mexico and transmission lines located outside of Arizona represented approximately 7% of its net utility plant. The total gross and net operating revenues and net utility plant percentages fall within in the parameters approved in NIPSCO. The Predominantly/Substantially Test is also satisfied on a holding company system basis. Because the Transaction involves the purchase of assets, three-year historical sales data have not been prepared for Citizens' Arizona utility properties on a stand-alone corporate basis. However, because all of the retail and wholesale sales of electric energy and retail sales of gas by Citizens' Arizona utility division over the three-year period occurred in Arizona or at the Arizona border, the Transaction will necessarily have the effect of reducing the out-of-state utility operations of UniSource Energy.

It further appears that the requested exemptions would not be detrimental to the public interest or the interests of investors and consumers. The ACC as well as relevant federal approvals have been obtained. UNS Electric will also be subject to the ongoing regulation by the FERC.

Fees and expenses to be incurred in connection with the Transaction are estimated to be $5.6 million. Applicants maintain that no other state or federal commission, other than this Commission, the ACC and the relevant federal agencies noted above have jurisdiction over the Transaction.

Due notice of the filing of the Application has been given in the manner prescribed by rule 23 under the Act, and no hearing has been requested of or ordered by the Commission. Based on the facts in the record, the Commission finds that the applicable standards of the Act are satisfied and that no adverse findings are necessary.

IT IS ORDERED, under the applicable provisions of the Act and rules under the Act, that the Application be granted immediately, subject to the terms and conditions prescribed in rule 24 under the Act.

IT IS FURTHER ORDERED, that UniSource and UES each be granted an exemption under section 3(a)(1) from all provisions of the Act, except section 9(a)(2).

For the Commission, by the Division of Investment Management, pursuant delegated authority.

Margaret H. McFarland
Deputy Secretary

 


1 The excluded assets include software and software licenses, certain agreements, communications circuits, and specified parcels of land, buildings, improvements, equipment, furniture and easements that will continue to be used by Citizens in its communications business in Arizona; certain cash accounts; corporate, business and personnel records; certain claims, judgments, and awards against third parties; and rights to refunds of certain taxes.

2 As is the case under the Asset Purchase Agreement for the Electric Assets, the excluded assets under the Asset Purchase Agreement for Citizens' gas properties include software and software licenses, certain agreements, communications circuits, and specified parcels of land, buildings, improvements, equipment, furniture and easements that will continue to be used by Citizens in its communications business in Arizona; certain cash accounts; corporate, business and personnel records; certain claims, judgments, and awards against third parties; and rights to refunds of certain taxes.

3 As part of its approval of the Transaction, the ACC also authorized TEP to make a loan to UniSource Energy of up to $50 million for the purpose of enabling UniSource Energy to fund a portion of its equity investment in UES. As approved, the loan would have a maturity not to exceed four years, would be secured by a pledge of 100% of the common stock of UES, and would bear interest at 383 basis points above the yield-to-maturity of an equivalent four-year U.S. Treasury security as determined on the date of the loan. However, UniSource Energy does not intend to utilize this intercompany loan facility.

4 Under the Settlement, TEP is obligated to provide a feasibility study and written plan to consolidate or, in the alternative, coordinate the operations of the new electric utility company's operations in Santa Cruz County with the operations of TEP at the time TEP files its next rate case. The study shall explore means to improve operations, efficiency and service for the Santa Cruz County customers.

5 Section 2(a)(29)(A) defines an integrated electric public utility system to mean:

a system consisting of one or more units of generating plants and/or transmission lines and/or distributing facilities, whose utility assets, whether owned by one or more electric utility companies, are physically interconnected or capable of physical interconnection and which under normal conditions may be economically operated as a single interconnected and coordinated system confined in its operations to a single area or region, in one or more States, not so large as to impair . . . the advantages of localized management, efficient operations, and the effectiveness of regulation . . . .

Section 2(a)(29)(B) defines an integrated gas public utility system to mean:

a system consisting of one or more gas utility companies which are so located and related that substantial economies may be effectuated by being operated as a single coordinated system confined in its operations to a single area or region, in one or more States, not so large as to impair . . . the advantages of localized management, efficient operations, and the effectiveness of regulation; Provided, [t]hat gas utility companies deriving natural gas from a common source of supply may be deemed to be included in a single area or region.

6 See, e.g., SEC v. New England Electric System, 384 U.S. 176, 178 n. 7 and the cases therein cited (1965), rev'g and remanding 346 F.2d 399 (1st Cir. 1966), rev'g New England Electric System, 41 S.E.C. 888, 892-93 (1964), on remand, 376 F.2d 107 (1st Cir. 1967), rev'g, 390 U.S. 207 (1968).

7 Sierra Pacific Resources, et al., Holding Co. Act Release No. 27054 (July 26, 1999); WPS Resources, Holding Co. Act Release No. 26922 (Sept. 28, 1998); BL Holding Corp., Holding Co. Act Release No. 26875 (May 15, 1998); TUC Holding Co., Holding Co. Act Release No. 26749 (Aug. 1, 1997).

8 BL Holding Corp., supra note 7.

9 Sierra Pacific Resources, et al., supra note 7.

10 TEP and the Santa Cruz properties will be physically interconnected upon completion of a new transmission line that is under development. Specifically, in January 2001, TEP and Citizens entered into a project development agreement for the joint construction of a new 62-mile 345 kV transmission line extending from Tucson to Nogales, in Santa Cruz County, which is served by Citizens. The ACC has approved the location and construction of the line and TEP is currently seeking a special use permit from the U.S. Forest Service. Shortly after approval by the U.S. Forest Service, construction will commence, with completion expected within eight months of that date.

11 In order to preserve substantial benefits associated with certain so-called "two-county" financing arrangements that both TEP and Citizens have entered into, UniSource Energy must observe restrictions on the physical operations of the combined electric utility properties.

12 NIPSCO Industries, Inc., Holding Co. Act Release No. 26957 (Feb. 10, 1999) ("NIPSCO").

13 NIPSCO, supra note 12.

14 See id.

15 Id.; C&T Enterprises, Inc., et al., Holding Co. Act Release No. 27590 (October 31, 2002). The Commission explained in NIPSCO that it was necessary to use an average net operating revenue figure, rather than gross operating revenue, because of NIPSCO's status as a combination gas and electric utility and the inherent difficulty of comparing the relative size of gas and electric operations based on gross revenues figures. TEP, in contrast, is an electric utility only. There is no need, therefore, to look beyond gross operating revenues to measure the relative size of its in-state and out-of-state utility business based on net operating revenues. Nevertheless, the relevant percentages are approximately the same and in each case well within the limits established in NIPSCO on a net operating revenue basis.

16 Out-of-state sales represented 5.5%, 3.0% and less than 1% of TEP's gross operating revenues and 4.0%, 6.7% and 1.1% of TEP's net operating revenues in the three-year period 2000 to 2002.

 

http://www.sec.gov/divisions/investment/opur/filing/35-27706.htm


Modified: 08/08/2003