Tucson Electric Power 8-K Unisource Energy Reports Third Quarter 2009 Earnings Maintains 2009 Earnings Guidance

Exhibit 99.2

Supplemental Earnings Information

3^rdQuarter and Year-to-Date Sept. 30, 2009

October 28, 2009

UniSource Energy Corporation
Supplemental Earnings Information
October 28, 2009

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 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.

YEAR OVER YEAR EARNINGS VARIANCE EXPLANATION

	3rd Quarter						Year-to-Date Sept. 30
$ in millions	Pre-Tax			After Tax			Pre-Tax			After Tax
2008 UniSource Energy Net Loss					($11.0	)					($8.9	)
TEP2009 vs. 2008
Change in Revenues
Higher retail revenues (excluding REST and DSM revenues) due to hot summer weather and TEP’s new rate structure.		32.7			20.1			38.2			23.5
Lower long-term wholesale electric and transmission revenues due to lower sales volumes.		(4.3	)		(2.6	)		(9.0	)		(5.6	)
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.		50.1			30.8			73.8			45.5
Change in TEP Utility Gross Margin	$	78.5		$	48.3		$	102.9		$	63.5
Change in Other Expenses and Income
Higher base O&M due to an increase in pension expense. YTD base O&M also impacted by higher generating plant maintenance expense.		(0.4	)		(0.2	)		(20.1	)		(12.4	)
Higher depreciation and amortization due to: additions to plant in service; new depreciation rates for generation assets; and amortization of regulatory assets resulting from the 2008 TEP Rate Order. YTD also impacted by an adjustment related to an investment in lease equity made in 2006.		(6.5	)		(4.0	)		(21.3	)		(13.2	)
Higher Other Income		2.7			1.7			7.8			4.8
Lower interest expense due to: lower rates on variable rate debt; and lower balances of capital lease obligations. YTD also impacted by an adjustment related to an investment in lease equity made in 2006.		2.3			1.4			9.7			6.0
Other Changes		3.8			2.3			9.3			5.7
Change in TEP’s Other Expenses and Income	$	1.9		$	1.1			($14.7	)		($9.1	)
Change in Regulatory Refunds and Amortization of TRA
Deferral of Revenues after TRA amortized in May 2008		29.5			18.1			44.4			27.4
TRA amortization expense in 2008		0.0			0.0			23.9			14.7
Total TEP Change 2009 vs. 2008	$	109.9		$	67.5		$	156.5		$	96.6
Other Changes 2009 vs. 2008
UNS Gas Change in Net Income					0.0						(1.7	)
UNS Electric Change in Net Income					1.1						2.2
Rate increase in June 2008, hot summer weather and a new mining customer.
Other					0.0						5.6
YTD results include an after-tax gain at Millennium from the sale of Sabinas ($3.6 million). Q3 and YTD results include results of UED and consolidating adjustments.
Total Change in UNS Net Income					68.6						102.7
2009 UniSource Energy Net Income				$	57.6					$	93.8

1

TEP UTILITY GROSS MARGIN

	Q3			Q3			YTD Sep. 30			YTD Sep. 30
(millions)	2009			2008			2009			2008
Retail Electric Revenues* (Excluding DSM & REST)	$	292.6		$	259.9		$	665.3		$	627.1
Long-Term Wholesale Electric Sales		10.4			14.5			34.6			43.2
Wholesale Transmission Revenues		4.1			4.3			12.4			12.8
Total	$	307.1		$	278.7		$	712.3		$	683.2
Less Fuel, Purchased Power and Transmission Expense
Fuel		92.3			108.4			208.8			251.6
Reimbursed Fuel		(1.1	)		(1.3	)		(3.3	)		(4.2	)
Purchased Power		53.0			100.4			112.4			211.2
Increase (Decrease) to Reflect PPFAC Recovery		(12.9	)		0.0			(16.9	)		0.0
Transmission		0.6			5.1			2.4			9.6
Short-Term Wholesale Electric Sales		(23.5	)		(54.1	)		(60.7	)		(151.7	)
Fuel, Purchased Power and Transmission Expense Net of Short-Term Wholesale Revenues		108.4			158.5			242.7			316.4
Utility Gross Margin (non-GAAP)	$	198.7		$	120.2		$	469.6		$	366.8
Reconciling Line Items to Operating Income
CTC Revenue Subject to Refund		0.0			(29.5	)		0.0			(44.4	)
Other Revenue		21.7			19.4			59.1			54.7
REST & DSM Revenues		4.8			0.6			9.9			0.8
Other Operating Expenses (Income):
Reimbursed Fuel		1.1			1.3			3.3			4.2
Other Operations & Maintenance		69.2			63.8			213.1			183.9
Depreciation & Amortization		37.7			31.2			114.5			93.2
Amortization of Transition Recovery Asset		0.0			0.0			0.0			23.9
Taxes Other Than Income Taxes		9.1			8.1			29.4			29.1
Operating Income (GAAP)	$	108.1		$	6.3		$	178.2		$	43.5

2

TEP — RETAIL AND LONG-TERM WHOLESALE MARGINS

	YTD Sep 30		Q3
RETAIL REVENUES (CENTS / KWH)	2009		2009
Avg. Non-Fuel Rates
Residential		6.52		6.67
Commercial		8.07		8.34
Industrial		4.60		4.67
Mining		2.99		2.87
Other		5.01		5.19
Total Average Non-Fuel Rate		5.99		6.23
Avg. Base Fuel and PPFAC Rate		3.10		3.41
Avg. REST & DSM Rate		0.14		0.16
Avg. Total Retail Rate		9.22		9.80

	YTD Sep 30		Q3
RETAIL NON-FUEL REVENUES* (MILLIONS)	2009		2009
Residential	$	204.1	$	97.0
Commercial		124.6		51.6
Industrial		76.7		29.3
Mining		23.7		7.7
Other		9.4		3.5
Total	$	438.6	$	189.1
Base Fuel and PPFAC Revenues		226.7		103.6
REST & DSM Revenues		9.9		4.8
Total Electric Retail Revenues	$	675.2	$	297.4

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

	YTD Sep 30		Q3
LONG-TERM WHOLESALE GROSS MARGIN (MILLIONS)	2009		2009
Long-term Wholesale Revenues	$	34.6	$	10.4
Fuel and Purchased Power Expense		16.1		4.8
Net	$	18.5	$	5.6

3

UNISOURCE ENERGY AND TEP O&M COMPONENTS

UniSource Energy	YTD Sep 30			YTD Sep 30			Q3			Q3
O&M Components	2009			2008			2009			2008
	-millions-						-millions-
TEP Base O&M (Non-GAAP)	$	173.6		$	153.5		$	52.6		$	52.2
UNS Gas O&M		18.6			18.5			6.3			5.8
UNS Electric O&M		17.1			16.1			6.0			5.6
Consolidating Adjustments & Other		(8.5	)		(8.0	)		(3.0	)		(2.3	)
UniSource Energy Base O&M (Non-GAAP)	$	200.8		$	180.1		$	61.8		$	61.3
Reimbursed O&M Related to Springerville Units 3 and 4		29.6			26.2			11.8			9.7
Expenses Related to Customer-funded Renewable Energy and DSM Programs		13.0			5.2			5.9			2.4
UniSource Energy O&M (GAAP)	$	243.4		$	211.5		$	79.5		$	73.4

TEP	YTD Sep 30		YTD Sep 30		Q3		Q3
O&M Components	2009		2008		2009		2008
	-millions-				-millions-
Wages, A&G, Other	$	127.1	$	121.6	$	38.2	$	42.5
Generating Plant Maintenance Expense		30.3		24.1		9.1		7.1
Pension and Postretirement Benefits Expense		16.2		7.8		5.3		2.6
TEP Base O&M (Non-GAAP)	$	173.6	$	153.5	$	52.6	$	52.2
Reimbursed O&M Related to Springerville Units 3 and 4		29.6		26.2		11.8		9.7
Expenses Related to Customer-funded Renewable Energy and DSM Programs		9.9		4.2		4.8		1.9
TEP O&M (GAAP)	$	213.1	$	183.9	$	69.2	$	63.8

4

TUCSON ELECTRIC POWER — RETAIL OPERATING STATISTICS

	3 Months Ended Sep. 30												Year-to-Date Sep. 30
	2009			2008			Incr (Decr)			% Change			2009			2008			Incr (Decr)			% Change
AVG. ELECTRIC CUSTOMERS
Residential		364,461			362,687			1,774			0.5	%		364,724			362,520			2,204			0.6	%
Commercial		35,747			35,248			499			1.4	%		35,631			35,061			570			1.6	%
Industrial		627			633			(6	)		-0.9	%		630			637			(7	)		-1.1	%
Mining		2			2			—			0.0	%		2			2			—			0.0	%
Other		61			61			—			0.0	%		61			61			—			0.0	%
Total		400,898			398,631			2,267			0.6	%		401,048			398,281			2,767			0.7	%
RETAIL SALES — MWH
Residential		1,453,143			1,360,945			92,198			6.8	%		3,129,160			3,077,958			51,202			1.7	%
Commercial		618,955			612,664			6,291			1.0	%		1,544,514			1,569,798			(25,284	)		-1.6	%
Industrial		627,940			655,399			(27,459	)		-4.2	%		1,666,778			1,739,661			(72,883	)		-4.2	%
Mining		269,172			271,751			(2,579	)		-0.9	%		792,791			815,631			(22,840	)		-2.8	%
Other		66,744			65,288			1,456			2.2	%		188,359			193,113			(4,754	)		-2.5	%
Total		3,035,954			2,966,047			69,907			2.4	%		7,321,602			7,396,161			(74,559	)		-1.0	%
RETAIL USAGE — KWH/ CUSTOMER
Residential		3,987			3,752			235			6.3	%		8,580			8,490			89			1.0	%
Commercial		17,315			17,382			(67	)		-0.4	%		43,347			44,773			(1,426	)		-3.2	%
Industrial		1,001,499			1,035,385			(33,886	)		-3.3	%		2,645,679			2,731,022			(85,343	)		-3.1	%
Mining		134,586,000			135,875,500			(1,289,500	)		-0.9	%		396,395,500			407,815,500			(11,420,000	)		-2.8	%
Other		1,094,164			1,070,295			23,869			2.2	%		3,087,852			3,165,787			(77,934	)		-2.5	%
Total		7,573			7,441			132			1.8	%		18,256			18,570			(314	)		-1.7	%
RETAIL REVENUES — MILLIONS
Residential	$	147.7		$	128.1		$	19.6			15.3	%	$	305.5		$	281.2		$	24.4			8.7	%
Commercial		72.1			64.3			7.9			12.2	%		171.7			163.2			8.6			5.3	%
Industrial		50.4			48.7			1.7			3.5	%		127.1			126.9			0.2			0.1	%
Mining		16.8			13.9			3.0			21.4	%		45.9			41.4			4.5			10.8	%
Other		5.6			5.0			0.6			12.7	%		15.0			14.5			0.6			3.8	%
Total	$	292.6		$	259.9		$	32.7			12.6	%	$	665.3		$	627.1		$	38.1			6.1	%
DSM / REST		4.8			0.6			4.1			N/M			9.9			0.8			9.1			N/M
Total Retail Revenues	$	297.4		$	260.6		$	36.9			14.1	%	$	675.2		$	628.0		$	47.2			7.5	%
WEATHER — COOLING DEGREE DAYS
Actual		1,155			875			280			32.0	%		1,571			1,295			276			21.3	%
10-Year Average		970			935									1,434			1,392
% Change Actual vs. 10-Year Avg.		19.1	%		-6.4	%								9.6	%		-7.0	%
ENERGY MARKET INDICATORS
Avg. Wholesale Power Prices
Palo Verde Index — $/MWh
On Peak	$	35.22		$	81.32			($46.10	)		-56.7	%	$	33.14		$	81.12			($47.98	)		-59.1	%
Off Peak	$	21.95		$	54.27			($32.32	)		-59.6	%	$	22.30		$	59.35			($37.05	)		-62.4	%
Avg. Natural Gas Prices
Permian Index — $/MMBtu	$	2.98		$	8.68			($5.70	)		-65.7	%	$	3.10		$	8.47			($5.37	)		-63.4	%

5

UNS GAS — OPERATING STATISTICS

	3 Months Ended Sep. 30												Year-to-Date Sep. 30
	2009			2008			Incr (Decr)			% Change			2009			2008			Incr (Decr)			% Change
AVG. GAS CUSTOMERS
Residential		132,192			131,890			302			0.2	%		132,606			132,538			68			0.1	%
Commercial		11,225			11,293			(68	)		-0.6	%		11,374			11,453			(79	)		-0.7	%
All Other		1,109			1,106			3			0.3	%		1,109			1,105			4			0.4	%
Total		144,526			144,289			237			0.2	%		145,089			145,096			(7	)		0.0	%
RETAIL SALES — THOUSANDS OF THERMS
Residential		5,186			5,178			8			0.2	%		44,553			49,906			(5,353	)		-10.7	%
Commercial		3,888			4,093			(205	)		-5.0	%		19,604			21,680			(2,076	)		-9.6	%
All Other		700			627			73			11.7	%		5,503			6,050			(547	)		-9.0	%
Total		9,774			9,898			(124	)		-1.3	%		69,660			77,637			(7,976	)		-10.3	%
RETAIL USAGE — THERMS/ CUSTOMER
Residential		39.2			39.3			(0	)		-0.1	%		336			377			(41	)		-10.8	%
Commercial		346.3			362.4			(16	)		-4.4	%		1,724			1,893			(169	)		-8.9	%
RETAIL REVENUES — MILLIONS Non-Fuel Revenues:
Residential	$	5.0		$	5.1			(0.0	)		-0.7	%	$	24.5		$	26.4			(1.9	)		-7.3	%
Commercial		1.5			1.5			(0.1	)		-4.3	%		6.5			7.1			(0.6	)		-8.4	%
All Other		0.2			0.2			(0.0	)		-3.3	%		1.3			1.4			(0.1	)		-10.4	%
Total	$	6.7		$	6.8			($0.1	)		-1.6	%	$	32.3		$	35.0			($2.7	)		-7.6	%
DSM Revenues		0.2			0.1			0.1			50.5	%		0.4			0.2			0.2			73.6	%
Transport/NSP Revenues		3.7			7.3			(3.7	)		-50.1	%		12.1			22.1			(10.0	)		-45.3	%
Fuel Revenues:
Recovered from Customers		7.5			8.8			(1.2	)		-14.2	%		58.2			63.1			(4.9	)		-7.7	%
Total Gas Revenues	$	18.1		$	23.0			($5.0	)		-21.6	%	$	103.0		$	120.3			($17.3	)		-14.4	%
WEATHER — HEATING DEGREE DAYS
Actual		301			229			72			31.4	%		11,879			13,589			(1,710	)		-12.6	%
10-Year Average		346			363									12,527			12,662
% Change Actual vs. 10-Year Avg.		-13.0	%		-36.9	%								-5.2	%		7.3	%

UNS ELECTRIC — OPERATING STATISTICS

	3 Months Ended Sep. 30												Year-to-Date Sep. 30
	2009			2008			Incr (Decr)			% Change			2009			2008			Incr (Decr)			% Change
AVG. ELECTRIC CUSTOMERS
Residential		79,476			79,421			55			0.1	%		79,460			79,453			7			0.0	%
Commercial		10,308			10,347			(39	)		-0.4	%		10,331			10,329			2			0.0	%
All Other		288			275			13			4.7	%		285			273			12			4.4	%
Total		90,072			90,043			29			0.0	%		90,076			90,055			21			0.0	%
RETAIL SALES — MWH
Residential		300,881			299,767			1,114			0.4	%		651,577			666,765			(15,188	)		-2.3	%
Commercial		185,393			183,430			1,963			1.1	%		478,628			485,458			(6,830	)		-1.4	%
Industrial		56,438			52,116			4,322			8.3	%		144,273			144,691			(418	)		-0.3	%
Mining		43,036			6,073			36,963		NM				116,643			17,824			98,819		NM
Other		499			492			7			1.4	%		1,586			1,671			(85	)		-5.1	%
Total		586,247			541,878			44,369			8.2	%		1,392,707			1,316,409			76,298			5.8	%
RETAIL USAGE — KWH/ CUSTOMER
Residential		3,786			3,774			11			0.3	%		8,200			8,392			(192	)		-2.3	%
Commercial		17,985			17,728			258			1.5	%		46,329			47,000			(670	)		-1.4	%
RETAIL REVENUES — MILLIONS
Non-Fuel Revenues:
Residential	$	7.2		$	7.1			0.1			1.2	%	$	16.2		$	18.2			(2.0	)		-11.0	%
Commercial		6.4			6.2			0.2			2.8	%		17.2			16.3			0.9			5.6	%
Industrial		1.7			0.9			0.8			86.1	%		5.2			1.7			3.5		NM
Mining		0.8			0.5			0.3			57.5	%		2.0			1.0			1.0		NM
Other		0.1			0.1			(0.0	)		-3.3	%		0.2			0.2			(0.0	)		-4.1	%
Total	$	16.1		$	14.8		$	1.4			9.2	%	$	40.7		$	37.4		$	3.3			9.0	%
DSM / REST		1.2			0.5			0.7		NM				2.9			0.7			2.1		NM
Fuel Revenues:
Recovered from Customers		34.2			46.9			(12.7	)		-27.1	%		98.7			103.9			(5.2	)		-5.0	%
Total Retail Revenues	$	51.5		$	62.1			($10.6	)		-17.1	%	$	142.3		$	142.0		$	0.3			0.2	%
WEATHER — COOLING DEGREE DAYS
Actual		5,666			5,339			327			6.1	%		8,710			8,143			567			7.0	%
10-Year Average		5,367			5,293									8,501			8,383
% Change Actual vs. 10-Year Avg.		5.6	%		0.9	%								2.5	%		-2.9	%
WEATHER — HEATING DEGREE DAYS
Actual														3,538			4,235			(697	)		-16.5	%
10-Year Average														3,787			3,795
% Change Actual vs. 10-Year Avg.														-6.6	%		11.6	%

6

BASIC AND DILUTED SHARES OUTSTANDING

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2009		2008			2009		2008
			-Thousands of Dollars-
Numerator:
Net Income	$	57,646		($11,039	)	$	93,839		($8,906	)
Income from Assumed Conversion of Convertible Senior Notes		1,097		—			3,292		—
Adjusted Numerator	$	58,743		($11,039	)	$	97,131		($8,906	)
Denominator:	- Thousands of Shares -
Weighted-average Shares of Common Stock Outstanding:
Common Shares Issued		35,722		35,453			35,623		35,398
Participating Securities		100					102
Fully Vested Deferred Stock Units		106		224			104		218
Total Weighted-average Shares of Common Stock Outstanding and Participating Securities — Basic		35,928		35,677			35,829		35,616
Effect of Dilutive Securities:
Convertible Senior Notes		4,101		—			4,086		—
Options and Stock Issuable under Employee Benefit Plans and the Directors’ Plan		507		—			491		—
Total Shares — Diluted		40,536		36,677			40,406		36,616

For the three and nine months ended September 30, 2008, 4 million potentially dilutive shares from the conversion of convertible senior notes, and after-tax interest expense of $1 million and $3 million, respectively, were not included in the computation of diluted EPS because to do so would have been anti-dilutive.  The following table shows the number of stock options to purchase shares of Common Stock excluded from the computation of diluted EPS because the stock option’s exercise price was greater than the average market price of the Common Stock.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2009		2008		2009		2008
			- In Thousands -
Stock Options Excluded from the Diluted EPS Computation		395		234		395		288

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