Tucson Electric Power 8-K Unisource Energy Reports Second Quarter 2011 Earnings, Maintains 2011 Earnings Guidance Range

Exhibit 99.2

UniSource Energy Corporation
2nd Quarter 2011 Supplemental Earnings Information
As of August 4, 2011

TABLE OF CONTENTS
Safe Harbor and Non-GAAP Measures	1
Revision to Financial Statements	2
Variance Explanations — Q2 and YTD	3-4
UniSource Energy and TEP O&M	5
TEP Operating Statistics	6
TEP Margin Revenues	7
UNS Electric Operating Statistics	8
UNS Gas Operating Statistics	9
Basic & Diluted Shares Outstanding	10

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.

REVISION OF PRIOR PERIOD FINANCIAL STATEMENTS

During the first half of 2011, we identified errors related to amounts owed to/from TEP for electricity deliveries settled or to be settled in-kind during prior years and in prior years the calculation of income tax expense. The calculation of income tax expense did not treat Allowance for Equity Funds Used During Construction (AFUDC) as a permanent book to tax difference. We assessed the materiality of these errors on prior period financial statements and concluded they were not material to any prior annual or interim periods, but the cumulative impact could be material to the annual period ended December 31, 2011 and the interim period ended June 30, 2011, if corrected in 2011. As a result, in accordance with Staff Accounting Bulletin 108, we have revised our prior period financial statements as described below to correct these errors.

The income tax adjustment impacted fiscal years 2003 through 2010 for UniSource Energy and fiscal years 2009 and 2010 for TEP. The adjustment for electricity deliveries settled or to be settled in-kind impacted fiscal years 2004 through 2010. The revision increased net income for UniSource Energy and TEP by $1 million for both the 2010 and 2009 annual periods. UniSource Energy Accumulated Earnings increased by $5 million for the periods prior to January 1, 2009 as a result of the revision. For more information, please refer to UniSource Energy’s and TEP’s 2^nd quarter SEC Form 10-Q, which is expected to be filed on or before August 9, 2011.

2

UNISOURCE ENERGY 2ND QUARTER EARNINGS VARIANCE EXPLANATION

2nd Quarter 2010 UniSource Energy Net Income $ 25.9

	2nd Quarter						Change
	2011			2010			Pre-Tax			After Tax
TEP	-millions of dollars-
Retail Margin Revenues	$	139.0		$	136.5		$	2.5		$	1.5
L-T Wholesale Margin Revenues		4.2			6.9			(2.7	)		(1.7	)
Transmission Revenues		4.4			3.7			0.7			0.4
TEP Utility Gross Margin (Non-GAAP)		147.6			147.1		$	0.5			0.3
Base O&M		56.1			55.6			0.5			0.3
Depreciation		25.9			24.9			1.0			0.6
Amortization		8.2			8.0			0.2			0.1
Operating synergies related to Springerville Units 3&4		6.4			6.0			0.4			0.2
Other Income		(0.2	)		0.4			(0.6	)		(0.4	)
Total Interest Expense		22.0			21.6			0.4			0.2
Other Line Item Changes		(1.4	)		(0.8	)		(0.6	)		(0.4	)
Income Tax Expense (Benefit)		15.1			14.7		NM				0.4
TEP Net Income (GAAP)	$	25.1		$	27.9		NM				($2.8	)

Change in TEP Net Income (2.8 )

Other Business Segments — After Tax Amounts
UNS Electric Net Income	2.9	2.1		NM	0.8
UNS Gas Net Income	0.4	0.6		NM	(0.2	)
Other Non-Reportable Segments and Consolidating Adj. (1)	0.2	(4.7	)	NM	4.9
Total Other Income and Consolidating Adjustments	3.5	(2.0	)	NM	5.5

Change in UNS Electric, UNS Gas and Other		5.5
2nd Quarter 2011 UniSource Energy Net Income	$	28.6

(1) Includes an after-tax loss of $3.3 million in the 2nd quarter of 2010 related to the impairment of a Millennium investment.

Note: Some columns and rows may not foot due to rounding.

3 — Q2 Variance Explanation

UNISOURCE ENERGY YEAR-TO-DATE EARNINGS VARIANCE EXPLANATION

YTD June 30, 2010 UniSource Energy Net Income $ 46.0

	YTD June 30,						Change
	2011			2010			Pre-Tax			After Tax
TEP	-millions of dollars-
Retail Margin Revenues	$	247.8		$	245.0		$	2.8		$	1.7
L-T Wholesale Margin Revenues		11.1			14.9			(3.8	)		(2.4	)
Transmission Revenues		8.3			11.2			(2.9	)		(1.8	)
TEP Utility Gross Margin (Non-GAAP)		267.2			271.1		$	(3.9	)		(2.4	)
Loss related to the settlement of a dispute over transactions with the California Power Exchange (CPX)		0.0			(3.0	)		3.0			1.9
Base O&M		118.1			109.8			8.3			5.1
Depreciation		51.6			48.9			2.7			1.7
Amortization		16.5			15.8			0.7			0.4
Operating synergies related to Springerville Units 3&4		12.2			12.5			(0.3	)		(0.2	)
Other Income		0.7			0.8			(0.1	)		(0.1	)
Total Interest Expense		43.4			43.6			(0.2	)		(0.1	)
Other Line Item Changes		(3.1	)		(3.9	)		0.8			0.5
Income Tax Expense (1)		17.6			21.0		NM				(3.4	)
TEP Net Income (GAAP)	$	29.8		$	38.4		NM			$	(8.6	)

Change in TEP Net Income (8.6 )

Other Business Segments — After Tax Amounts
UNS Electric Net Income (2)	5.1	5.1		NM	0.0
UNS Gas Net Income	6.5	6.4		NM	0.1
Other Non-Reportable Segments and Consolidating Adj. (3)	0.6	(3.9	)	NM	4.5
Total Other Income and Consolidating Adjustments	12.2	7.6		NM	4.6

Change in UNS Electric, UNS Gas and Other		4.6
YTD June 30, 2011 UniSource Energy Net Income	$	42.0

(1)	TEP’s income tax expense for the first six months of 2011 includes a prior period adjustment that reduced income tax expense by $2.3 million.
(2)	UNS Electric’s results in the first six months of 2011 includes a prior period adjustment that reduced income tax expense by approximately $1 million. UNS Electric’s results in the first six months of 2010 includes a pre-tax gain of approximately $3 million related to the settlement of a dispute over transactions with the CPX.
(3)	Results in the first six months of 2010 includes an after-tax loss of $3.3 million related to the impairment of a Millennium investment.

Note: Some columns and rows may not foot due to rounding.

4 — YTD Variance Explanation

UNISOURCE ENERGY AND TEP O&M

	2nd Quarter						YTD June 30,
UniSource Energy	2011			2010			2011			2010
O&M Components	-millions of dollars-						-millions of dollars-
TEP Base O&M (Non-GAAP)	$	56.1		$	55.6		$	118.1		$	109.8
UNS Gas Base O&M		6.0			6.1			12.6			12.3
UNS Electric Base O&M		4.6			5.3			9.8			10.2
Consolidating Adjustments & Other		(2.1	)		(2.7	)		(4.9	)		(4.8	)
UniSource Energy Base O&M (Non-GAAP)	$	64.6		$	64.3		$	135.6		$	127.5
Reimbursed O&M Related to Springerville Units 3 and 4		16.1			13.8			32.3			26.5
O&M Related to Customer-funded Renewable Energy and DSM Programs		9.4			9.0			23.2			16.0
UniSource Energy O&M (GAAP)	$	90.1		$	87.1		$	191.1		$	170.0

	2nd Quarter						YTD June 30,
TEP	2011			2010			2011			2010
O&M Components	-millions of dollars-						-millions of dollars-
TEP Base O&M (Non-GAAP)	$	56.1		$	55.6		$	118.1		$	109.8
O&M Recorded in Other Expense		(1.8	)		(1.6	)		(3.7	)		(3.3	)
Reimbursed O&M Related to Springerville Units 3 and 4		16.1			13.8			32.3			26.5
O&M Related to Customer-funded Renewable Energy and DSM Programs		7.7			6.8			19.9			12.0
TEP O&M (GAAP)	$	78.1		$	74.6		$	166.6		$	145.0

5 — O&M

TEP — OPERATING STATISTICS

	Three Months Ended June 30,												Six Months Ended June 30,
	2011			2010			Incr (Decr)			% Change			2011			2010			Incr (Decr)			% Change
AVG. ELECTRIC CUSTOMERS
Residential		366,297			365,687			610			0.2	%		366,302			365,657			645			0.2	%
Commercial		36,021			35,861			160			0.4	%		35,969			35,838			131			0.4	%
Industrial		635			632			3			0.5	%		635			632			(6	)		-0.9	%
Mining		3			3			—			0.0	%		2			2			—			0.0	%
Other		62			62			—			0.0	%		62			62			—			0.0	%
Total		403,018			402,245			773			0.2	%		402,970			402,191			779			0.2	%
RETAIL SALES — MWH
Residential		943,138			909,808			33,330			3.7	%		1,692,117			1,664,546			27,571			1.7	%
Commercial		517,712			508,991			8,721			1.7	%		918,846			903,598			15,248			1.7	%
Industrial		531,746			535,880			(4,134	)		-0.8	%		1,021,516			1,009,651			11,865			1.2	%
Mining		271,914			271,114			800			0.3	%		536,904			532,151			4,753			0.9	%
Other		67,053			68,211			(1,158	)		-1.7	%		116,916			112,870			4,046			3.6	%
Total		2,331,563			2,294,004			37,559			1.6	%		4,286,299			4,222,816			63,483			1.5	%
RETAIL USAGE — KWH/CUSTOMER
Residential		2,575			2,488			87			3.5	%		4,619			4,552			67			1.5	%
Commercial		14,373			14,193			179			1.3	%		25,545			24,740			806			3.3	%
Industrial		837,395			847,911			(10,516	)		-1.2	%		1,608,687			1,597,549			11,138			0.7	%
Mining		90,638,000			90,371,333			266,667			0.3	%		268,452,000			266,075,500			2,376,500			0.9	%
Other		1,081,500			1,100,177			(18,677	)		-1.7	%		1,885,742			1,820,484			65,258			3.6	%
Total		5,785			5,703			82			1.4	%		10,637			10,500			137			1.3	%
WEATHER — COOLING DEGREE DAYS
Actual		390			395			(5	)		-1.3	%		390			395			(5	)		-1.3	%
10-Year Average		444			455									445			456
% Change Actual vs. 10-Year Avg.		-12.2	%		-13.2	%								-12.4	%		-13.4	%
ENERGY MARKET INDICATORS
Avg. Wholesale Power Prices
Palo Verde Index — $/MWh
On Peak	$	36.39		$	35.65		$	0.74			2.1	%	$	34.50		$	40.42		$	(5.92	)		-14.6	%
Off Peak	$	14.88		$	24.01		$	(9.13	)		-38.0	%	$	18.15		$	29.39		$	(11.24	)		-38.2	%
		��
Avg. Natural Gas Prices
Permian Index — $/MMBtu	$	4.11		$	3.85		$	0.26			6.8	%	$	4.02		$	4.55		$	(0.53	)		-11.6	%

* Totals and percent changes calculated on un-rounded data; may not correspond to data shown in table

6 — TEP Operating State

TEP — RETAIL AND WHOLESALE MARGIN REVENUES

	Three Months Ended June 30,										Six Months Ended June 30,
	2011		2010		Incr (Decr)			% Change			2011		2010		Incr (Decr)			% Change
RETAIL REVENUES — $ MILLIONS
Margin Revenues:
Residential	$	61.3	$	59.3		2.0			3.4	%	$	108.3		106.6		1.7			1.6	%
Commercial		42.5		41.7		0.8			1.9	%		73.5		72.3		1.2			1.7	%
Industrial		23.9		24.3		(0.4	)		-1.6	%		44.5		45.3		(0.8	)		-1.8	%
Mining		7.9		7.8		0.1			1.3	%		15.6		15.1		0.5			3.3	%
Other		3.4		3.4		—			0.0	%		5.9		5.7		0.2			3.5	%
Total	$	139.0	$	136.5	$	2.5			1.8	%	$	247.8	$	245.0	$	2.8			1.1	%
DSM / REST		9.1		10.0		(0.9	)		-9.0	%		24.1		17.9		6.2			34.6	%
Fuel Revenues:
Recovered from Customers		83.6		71.1		12.5			17.6	%		133.5		122.1		11.4			9.3	%
Total Retail Revenues	$	231.7	$	217.6	$	14.1			6.5	%	$	405.4	$	385.0	$	20.4			5.3	%
RETAIL REVENUES — CENTS / KWH
Margin Revenues:
Residential		6.50		6.52		(0.02	)		-0.3	%		6.40		6.40		(0.00	)		-0.1	%
Commercial		8.21		8.19		0.02			0.2	%		8.00		8.00		(0.00	)		0.0	%
Industrial		4.49		4.53		(0.04	)		-0.9	%		4.36		4.49		(0.13	)		-2.9	%
Mining		2.91		2.88		0.03			1.0	%		2.91		2.84		0.07			2.4	%
Other		5.07		4.98		0.09			1.7	%		5.05		5.05		(0.00	)		-0.1	%
Total		5.96		5.95		0.01			0.2	%		5.78		5.80		(0.02	)		-0.4	%
DSM / REST		0.39		0.44		(0.05	)		-10.5	%		0.56		0.42		0.14			32.6	%
Fuel Revenues:
Recovered from Customers		3.59		3.10		0.49			15.7	%		3.11		2.89		0.22			7.7	%
Total Retail Revenues		9.94		9.49		0.45			4.8	%		9.46		9.12		0.34			3.7	%
LONG-TERM WHOLESALE MARGIN — $ MILLIONS
Long-term Wholesale Revenues	$	10.4	$	13.0		(2.6	)		-20.0	%	$	23.9	$	27.9		(4.0	)		-14.3	%
Fuel and Purchased Power Expense		6.2		6.1		0.1			1.6	%		12.8		13.0		(0.2	)		-1.3	%
Net	$	4.2	$	6.9		(2.7	)		-39.1	%	$	11.1	$	14.9		(3.8	)		-25.7	%

7 — TEP Margin Revenues

UNS ELECTRIC — OPERATING STATISTICS

	Three Months Ended June 30,												Six Months Ended June 30,
	2011			2010			Incr (Decr)			% Change			2011			2010			Incr (Decr)			% Change
AVG. ELECTRIC CUSTOMERS
Residential		80,555			80,209			346			0.4	%		80,551			80,116			435			0.5	%
Commercial		10,384			10,352			32			0.3	%		10,376			10,344			32			0.3	%
Industrial		22			25			(3	)		-12.0	%		22			24			(2	)		-8.3	%
Mining		2			1			1			100.0	%		2			1			1			100.0	%
Other		249			266			(17	)		-6.4	%		249			266			(17	)		-6.4	%
Total		91,212			90,853			359			0.4	%		91,200			90,751			449			0.5	%
RETAIL SALES — MWH
Residential		173,265			175,921			(2,656	)		-1.5	%		353,431			351,266			2,165			0.6	%
Commercial		158,792			157,277			1,515			1.0	%		289,854			288,585			1,269			0.4	%
Industrial		54,140			51,547			2,593			5.0	%		105,891			103,381			2,510			2.4	%
Mining		63,942			51,287			12,655			24.7	%		122,672			98,139			24,533			25.0	%
Other		373			474			(101	)		-21.3	%		848			1,040			(192	)		-18.5	%
Total		450,512			436,506			14,006			3.2	%		872,696			842,411			30,285			3.6	%
RETAIL USAGE — KWH/CUSTOMER
Residential		2,151			2,193			(42	)		-1.9	%		4,388			4,384			3			0.1	%
Commercial		15,292			15,193			99			0.7	%		27,935			27,899			36			0.1	%
Industrial		2,460,909			2,061,880			399,029			19.4	%		4,813,227			4,217,125			596,102			14.1	%
Mining		31,971,000			51,287,000			(19,316,000	)		-37.7	%		61,336,000			98,139,000			(36,803,000	)		-37.5	%
Other		1,498			1,782			(284	)		-15.9	%		3,406			3,910			(504	)		-12.9	%
Total		4,939			4,805			135			2.8	%		9,569			9,259			310			3.4	%
RETAIL REVENUES — MILLIONS
Margin Revenues:
Residential	$	5.4		$	6.0			(0.6	)		-10.0	%	$	11.0		$	10.5			0.5			4.8	%
Commercial		6.6			5.8			0.8			13.8	%		12.2			10.8			1.4			13.2	%
Industrial		1.8			1.7			0.1			5.9	%		3.7			3.5			0.2			5.7	%
Mining		1.4			1.1			0.3			27.3	%		2.7			2.0			0.7			35.0	%
Other		0.2			0.2			—			0.0	%		0.3			0.3			—			0.0	%
Total Margin Revenues	$	15.4		$	14.8		$	0.6			4.1	%	$	29.9		$	27.1		$	2.8			10.4	%
DSM / REST		1.5			2.0			(0.5	)		-25.0	%		2.9			3.6			(0.7	)		-19.8	%
Fuel Revenues:
Recovered from Customers		27.1			25.6			1.5			5.9	%		54.7			49.0			5.7			11.6	%
Total Retail Revenues	$	44.0		$	42.4		$	1.6			3.8	%	$	87.5		$	79.7		$	7.8			9.7	%
WEATHER — COOLING DEGREE DAYS
Actual		2,644			2,437			207			8.5	%		2,746			2,477			269			10.9	%
10-Year Average		2,854			2,918									2,965			3,029
% Change Actual vs. 10-Year Avg.		-7.4	%		-16.5	%								-7.4	%		-18.2	%

* Totals and percent changes calculated on un-rounded data; may not correspond to data shown in table

8 — UNS Electric Op. Stats

UNS GAS — OPERATING STATISTICS

	Three Months Ended June 30,												Six Months Ended June 30,
	2011			2010			Incr (Decr)			% Change			2011			2010			Incr (Decr)			% Change
AVG. GAS CUSTOMERS
Residential		134,008			133,135			873			0.7	%		134,217			133,425			792			0.6	%
Commercial		11,226			11,260			(34	)		-0.3	%		11,266			11,332			(66	)		-0.6	%
Industrial		22			23			(1	)		-4.3	%		22			23			(1	)		-4.3	%
All Other		1,120			1,092			28			2.6	%		1,113			1,090			23			2.1	%
Total		146,376			145,510			866			0.6	%		146,618			145,870			748			0.5	%
RETAIL SALES — THOUSANDS OF THERMS
Residential		10,211			11,151			(940	)		-8.4	%		42,981			44,553			(1,572	)		-3.5	%
Commercial		5,386			5,576			(190	)		-3.4	%		16,845			17,021			(177	)		-1.0	%
Industrial		496			360			136			37.8	%		1,236			1,052			184			17.5	%
All Other		902			978			(76	)		-7.8	%		3,963			4,113			(150	)		-3.6	%
Total		16,996			18,065			(1,070	)		-5.9	%		65,025			66,739			(1,714	)		-2.6	%
RETAIL USAGE — THERMS/CUSTOMER
Residential		76			84			(8	)		-9.0	%		320			334			(14	)		-4.1	%
Commercial		480			495			(15	)		-3.1	%		1,495			1,502			(7	)		-0.5	%
Industrial		22,525			15,640			6,885			44.0	%		56,186			45,742			10,443			22.8	%
All Other		806			881			(76	)		-8.6	%		3,561			3,712			(151	)		-4.1	%
Total		116			124			(8	)		-6.5	%		444			457			(14	)		-3.1	%
RETAIL REVENUES — MILLIONS
Margin Revenues:
Residential	$	7.3		$	7.7			(0.4	)		-4.9	%	$	21.7		$	21.8			(0.0	)		0.0	%
Commercial		2.0			2.1			(0.1	)		-3.6	%		5.7			5.5			0.2			3.4	%
All Other		0.3			0.3			0.0			11.3	%		1.3			1.2			0.1			7.4	%
Total Margin Revenues	$	9.7		$	10.1		$	(0.4	)		-4.2	%	$	28.8		$	28.5		$	0.3			0.9	%
DSM Revenues		0.3			0.2			0.1			71.0	%		0.6			0.4		$	0.2			47.0	%
Transport/NSP Revenues		4.3			3.2			1.1			33.2	%		9.0			8.4		$	0.6			7.5	%
Fuel Revenues:
Recovered from Customers		11.4			11.9			(0.5	)		-4.2	%		44.8			44.8			(0.0	)		-0.1	%
Total Gas Revenues	$	25.7		$	25.4		$	0.3			1.0	%	$	83.1		$	82.1		$	1.0			1.3	%
WEATHER — HEATING DEGREE DAYS
Actual		2,728			3,040			(312	)		-10.3	%		12,840			13,396			(556	)		-4.2	%
10-Year Average		2,760			2,433									12,862			12,408
% Change Actual vs. 10-Year Avg.		-1.2	%		24.9	%								-0.2	%		8.0	%

* Totals and percent changes calculated on un-rounded data; may not correspond to data shown in table

9 — UNS Gas Op. Stats

BASIC AND DILUTED SHARES OUTSTANDING

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2011		2010		2011		2010
	-Thousands of Dollars-				-Thousands of Dollars-
Numerator:
Net Income	$	28,574	$	25,886	$	41,990	$	46,032
Income from Assumed Conversion of Convertible Senior Notes		1,097		1,097		2,195		2,195
Adjusted Numerator	$	29,671	$	26,983	$	44,185	$	48,227

Denominator:	-Thousands of Shares-			-Thousands of Shares-
Weighted-average Shares of Common Stock Outstanding:
Common Shares Issued		36,757	36,106		36,676	36,006
Fully Vested Deferred Stock Units		127	121		122	114
Participating Securities		66	95		71	95
Total Weighted-average Shares of Common Stock Outstanding — Basic		36,950	36,322		36,869	36,215
Effect of Dilutive Securities:
Convertible Senior Notes		4,267	4,166		4,254	4,153
Options and Stock Issuable Under Employee Benefit Plans and the Directors’ Plans		338	412		354	446
Total Shares — Diluted		41,555	40,900		41,477	40,814

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				Six Months Ended
	June 30,				June 30,
	2011		2010		2011		2010
	-Thousands of Shares				-Thousands of Shares-
Stock Options Excluded from the Diluted EPS Computation		158		229		163		232

10 — Diluted Share Count