Tucson Electric Power 8-K Issues Earnings Guidance for 2012

Exhibit 99.2

UniSource Energy Corporation

Supplemental Earnings & Outlook Information

February 27, 2012

	September 30,
TABLE OF CONTENTS
Safe Harbor and Non-GAAP Measures	1
Earnings Outlook & Assumptions	2-3
4thQuarter Earnings Variance	4
Year-End Earnings Variance	5
UniSource Energy and TEP O&M	6
TEP Operating Statistics	7
TEP Margin Revenues	8
UNS Electric Operating Statistics	9
UNS Gas 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, which 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.

UNISOURCE ENERGY 2012 EARNINGS OUTLOOK & ASSUMPTIONS

The table below provides key assumptions related to UniSource Energy’s estimated 2012 earnings of $2.05 to $2.35 per diluted share, as of February 27, 2012.

		Septem			Septem			Septem		Septem
	Actual			Estimated
Key Assumptions	2011			2012			2013		2014
UniSource Consolidated
Base O&M ($ millions)	$	270		$	270
Change vs. Prior Year		1.8	%		0.0	%
Effective Income Tax Rate		38.0	%		39.7	%
Avg. Basic Shares Outstanding (millions)		37.0			38.0
Avg. Diluted Shares Outstanding (millions)		41.6			41.7
TEP
Retail Sales—(GWh)		9,332			9,267
Change vs. Prior Year		0.4	%		-0.7	%		approx. 1.5%/yr
Retail Sales—Weather Normalized (GWh)		9,226	��
Retail Customers (Yr End)		404,299			406,135
Change vs. Prior Year		0.4	%		0.5	%		approx. 1%/yr
Long-Term Wholesale Sales (GWh)
Salt River Project (SRP)		779			500
Navajo Tribal Utility Authority (NTUA)		218			245
Long-Term Wholesale Sales—Pre-Tax Margin ($millions)	$	13		$	8
Other Expenses ($ millions)
Capital Lease Amortization	$	14		$	14		$	15	$	16
Capital Lease Interest Expense (Net of Interest Income on Investment in Lease Debt)	$	38		$	34		$	25	$	10
Interest Expense on Long-Term and Short-Term Debt (Excluding Capital Lease Interest Expense)	$	51		$	54

2

		September 30,			September 30,		September 30,	September 30,
	Actual			Estimated
Key Assumptions	2011			2012			2013	2014
UES
UNS Gas Retail Sales (Millions of Therms)		114			112
Avg. Change vs. Prior Year		1.9	%		-1.8	%	approx. 1.7%
UNS Electric Retail Sales (GWh)		1,853			1,766
Avg. Change vs. Prior Year		-0.2	%		-4.7	%	approx. 1%

TEP Long-Term Wholesale Sales

In 2011 and 2010, TEP’s margin on long-term wholesale sales was $13 million and $28 million, respectively. TEP’s two primary long-term wholesale contracts are with SRP and NTUA.

Salt River Project

Prior to June 1, 2011, under the terms of the SRP contract, TEP received a monthly demand charge of approximately $1.8 million, or $22 million annually, and sold the energy at a price based on TEP’s average fuel cost. From June 1, 2011 to December 31, 2011, SRP was required to purchase 73,000 MWh per month. From January 1, 2012 through the end of the contract in May 2016, SRP is required to purchase 500,000 MWh of on-peak energy per year. TEP does not receive a demand charge and the price of energy is based on a discount to the price of on-peak power on Palo Verde Market Index. As of February 21, 2012, the average around-the-clock forward price of on-peak power on the Palo Verde Market Index for the calendar year 2012 was $30.33 MWh.

Navajo Tribal Utility Authority

TEP serves the portion of NTUA’s load that is not served from NTUA’s allocation of federal hydroelectric power. Over the last three years, sales to NTUA averaged 225,000 MWh. Since 2010, the price of 50% of the MWh sales from June to September has been based on the Palo Verde Market Index. In 2011, approximately 12% of the total energy sold to NTUA was priced based on the Palo Verde Market Index. The remaining power sales occur at a fixed price under TEP’s contract with NTUA.

UNISOURCE ENERGY 2012 EARNINGS ESTIMATE SENSITIVITIES

		September 30,			September 30,			September 30,
	Pre-Tax			After-Tax			Per Diluted
2012 Sensitivities	(millions)			(millions)			Share
1% Change in Total Utility Retail Sales (Based on average margin rate across all customer classes)	$	6.0		$	3.6		$	0.09
1% Change in UNS Consolidated Base O&M	$	2.7		$	1.6		$	0.04
$5 / MWh Change in Wholesale Power Prices – SRP Contract	$	2.5		$	1.5		$	0.04
1% Increase in Rate on TEP's Un-hedged Long-Term Variable Rate Debt ($215 million outstanding at 12/31/11 of which $50 million is hedged)	$	(1.7	)	$	(1.0	)	$	(0.02	)

3

UNISOURCE ENERGY 4TH QUARTER EARNINGS VARIANCE EXPLANATION

		September 30,			September 30,			September 30,			September 30,			September 30,
		4th Quarter 2010 UniSource Energy Net Income											$	11.3
	4th Quarter						Change
TEP	2011			2010			Pre-Tax			After Tax
	-millions of dollars-
Utility Gross Margin Components:
Retail Margin Revenues*	$	118.1		$	117.4		$	0.7		$	0.5
L-T Wholesale Margin Revenues*		1.4			8.0			(6.6	)		(4.4	)
Transmission Revenues		4.1			5.3			(1.2	)		(0.8	)
Total		123.6			130.7			(7.1	)		(4.8	)
Other Income Sources:
Operating synergies—Springerville Units 3&4		5.9			5.8			0.1			0.1
Expenses:
Base O&M*		63.9			65.4			(1.5	)		(1.0	)
Depreciation		26.8			25.4			1.4			0.9
Amortization		9.4			8.2			1.2			0.8
Total Other Deductions		2.6			0.3			2.3			1.5
Total Interest Expense		23.6			23.9			(0.3	)		(0.2	)
Other Line Item Changes		1.7			1.7			0.0			0.0
Income Tax Expense (Benefit)		(0.1	)		1.5			NM			(1.6	)
TEP Net Income (GAAP)	$	1.6		$	10.1			NM		$	(8.5	)
		Change in TEP Net Income												(8.5	)
Other Business Segments—After Tax Amounts
UNS Electric Net Income	$	3.3		$	3.4			NM		$	(0.1	)
UNS Gas Net Income		4.3			3.3			NM			1.0
Millennium Energy Holdings Net Income/(Loss)		0.3			(4.2	)		NM			4.5
Other and Consolidating Adj.		(1.3	)		(1.3	)		NM			0.0
Total Income (Loss) from Other Business Segments and Consolidating Adjustments	$	6.6		$	1.2			NM		$	5.4
		Change in UNS Electric, UNS Gas and Other												5.4
		4th Quarter 2011 UniSource Energy Net Income											$	8.2

* Retail Margin Revenues, Long-Term Wholesale Margin and Base O&M are all non-GAAP measures. See pages 6 and 8 for are conciliation of these non-GAAP measures.

Q4 Variance Explanation

4

UNISOURCE ENERGY YEAR OVER YEAR EARNINGS VARIANCE EXPLANATION

		September 30,			September 30,			September 30,			September 30,			September 30,
		December 31, 2010 UniSource Energy Net Income											$	113.0
	Year End						Change
TEP	2011			2010			Pre-Tax			After Tax
	-millions of dollars-
Utility Gross Margin Components:
Retail Margin Revenues*	$	550.6		$	550.6		$	0.0		$	0.0
L-T Wholesale Margin Revenues*		13.1			28.3			(15.2	)		(9.4	)
Transmission Revenues		16.4			20.9			(4.5	)		(2.8	)
Total		580.1			599.8			(19.7	)		(12.2	)
Other Income Sources:
El Paso Settlement		7.4			0.0			7.4			4.6
Operating synergies—Springerville Units 3&4		24.1			23.8			0.3			0.2
Expenses:
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*		236.5			227.8			8.7			5.4
Depreciation		104.9			99.5			5.4			3.3
Amortization		34.7			32.2			2.5			1.6
Total Other (Income) / Deductions		2.8			(1.8	)		4.6			2.9
Total Interest Expense		89.3			87.7			1.6			1.0
Other Line Item Changes		6.1			7.0			(0.9	)		(0.6	)
Income Tax Expense		52.0			59.9			NM			(7.9	)
TEP Net Income (GAAP)	$	85.3		$	108.3			NM		$	(23.0	)
					Change in TEP Net Income									(23.0	)
Other Business Segments—After Tax Amounts
UNS Electric Net Income**	$	17.7		$	15.5			NM		$	2.2
UNS Gas Net Income		10.2			8.6			NM			1.6
Millennium Energy Holdings Net Income/(Loss)		2.3			(13.5	)		NM			15.8
Other and Consolidating Adj.		(5.5	)		(5.9	)		NM			0.4
Total Other Income and Consolidating Adjustments	$	24.7		$	4.7			NM		$	20.0
		Change in UNS Electric, UNS Gas and Other												20.0
		December 31, 2011 UniSource Energy Net Income											$	110.0

* Retail Margin Revenues, Long-Term Wholesale Margin and Base O&M are all non-GAAP measures. See pages 7 and 9 for are conciliation of these non-GAAP measures.

** UNS Electric’s results in 2010 include a after-tax gain of $1.8 million related to the settlement of a dispute over transactions with

YE Variance Explanation

5

UNISOURCE ENERGY AND TEP O&M

		September 30,			September 30,			September 30,			September 30,
UniSource Energy	4th Quarter						Year End
O&M Components	2011			2010			2011			2010
	-millions of dollars-						-millions of dollars-
TEP Base O&M (Non-GAAP)	$	63.9		$	65.4		$	236.5		$	227.8
UNS Gas Base O&M (Non-GAAP)		6.2			6.7			23.9			24.6
UNS Electric Base O&M (Non-GAAP)		5.6			5.6			20.6			21.1
Consolidating Adjustments & Other		(3.9	)		(1.9	)		(11.2	)		(8.4	)
UniSource Energy Base O&M (Non-GAAP)	$	71.8		$	75.8		$	269.8		$	265.1
Reimbursed O&M Related to Springerville Units 3 and 4		14.4			24.0			62.9			64.5
O&M Related to Customer-funded Renewable Energy and DSM Programs		11.1			11.3			46.5			40.4
UniSource Energy O&M (GAAP)	$	97.3		$	111.1		$	379.2		$	370.0
TEP	4th Quarter						Year End
O&M Components	2011			2010			2011			2010
	-millions of dollars-						-millions of dollars-
TEP Base O&M (Non-GAAP)	$	63.9		$	65.4		$	236.5		$	227.8
O&M Recorded in Other Expense		(2.8	)		(2.2	)		(8.0	)		(7.1	)
Reimbursed O&M Related to Springerville Units 3 and 4		14.4			24.0			62.9			64.5
O&M Related to Customer-funded Renewable Energy and DSM Programs		8.9			9.8			39.4			31.4
TEP O&M (GAAP)	$	84.4		$	97.0		$	330.8		$	316.6

Base O&M, a non-GAAP financial measure, should not be considered as an alternative to Other O&M, which is determined in accordance with GAAP. We believe Base O&M provides useful information to investors because it represents the fundamental level of operating and maintenance expense related to our core utility business. Base O&M excludes expenses that are directly offset by revenues collected from customers and other third parties.

O&M

6

TEP - OPERATING STATISTICS

		xxxxxx			xxxxxx			xxxxxx			xxxxxx			xxxxxx			xxxxxx			xxxxxx			xxxxxx
	Three Months Ended December 31,												Year End
	2011			2010			Incr (Decr)			% Change			2011			2010			Incr (Decr)			% Change
AVG. ELECTRIC CUSTOMERS
Residential		367,083			366,174			909			0.2	%		366,582			365,768			814			0.2	%
Commercial		36,174			35,885			289			0.8	%		36,058			35,860			198			0.6	%
Industrial		636			637			(1	)		-0.2	%		636			633			3			0.5	%
Mining		3			3			—			0.0	%		2			2			—			0.0	%
Other		62			62			—			0.0	%		62			62			—			0.0	%
																						��
Total		403,958			402,761			1,197			0.3	%		403,340			402,325			1,015			0.3	%
RETAIL SALES—MWH
Residential		779,550			760,533			19,017			2.5	%		3,888,011			3,869,540			18,471			0.5	%
Commercial		455,688			447,568			8,120			1.8	%		1,972,526			1,963,469			9,057			0.5	%
Industrial		491,555			499,249			(7,694	)		-1.5	%		2,145,163			2,138,749			6,414			0.3	%
Mining		272,138			272,755			(617	)		-0.2	%		1,083,071			1,079,327			3,744			0.3	%
Other		61,086			62,635			(1,549	)		-2.5	%		243,337			240,703			2,634			1.1	%
Total		2,060,017			2,042,740			17,277			0.8	%		9,332,108			9,291,788			40,320			0.4	%
RETAIL USAGE—KWH/CUSTOMER
Residential		2,124			2,077			47			2.3	%		10,606			10,579			27			0.3	%
Commercial		12,597			12,472			125			1.0	%		54,704			54,754			(50	)		-0.1	%
Industrial		772,885			783,750			(10,865	)		-1.4	%		3,372,898			3,378,750			(5,852	)		-0.2	%
Mining		90,712,667			90,918,333			(205,666	)		-0.2	%		541,535,500			539,663,500			1,872,000			0.3	%
Other		985,258			1,010,242			(24,984	)		-2.5	%		3,924,790			3,882,306			42,484			1.1	%
																							��
Total		5,100			5,072			28			0.6	%		23,137			23,095			42			0.2	%
WEATHER -COOLING DEGREE DAYS
Actual		49			53			(4	)		-7.5	%		1,528			1,543			(15	)		-1.0	%
10-Year Average		38			36									1,473			1,468
% Change Actual vs. 10-Year Avg.		28.9	%		47.2	%								3.7	%		5.1	%
WEATHER—HEATING DEGREE DAYS
Actual		694			500			194			38.8	%		1,597			1,469			128			8.7	%
10-Year Average		566			559									1,417			1,430
% Change Actual vs. 10-Year Avg.		22.6	%		-10.6	%								12.7	%		2.7	%
ENERGY MARKET INDICATORS
Avg. Wholesale Power Prices
Palo Verde Index—$/MWh
On Peak	$	33.28		$	34.49		$	(1.21	)		-3.5	%	$	36.23		$	38.93		$	(2.70	)		-6.9	%
Off Peak	$	24.55		$	26.21		$	(1.66	)		-6.3	%	$	21.60		$	28.00		$	(6.40	)		-22.9	%
Avg. Natural Gas Prices
Permian Index—$/MMBtu	$	3.43		$	3.58		$	(0.15	)		-4.2	%	$	3.89		$	4.18		$	(0.29	)		-6.9	%

TEP Operating Stats

7

TEP - RETAIL AND WHOLESALE MARGIN REVENUES

		September 30,		September 30,		September 30,			September 30,			September 30,		September 30,		September 30,			September 30,
	Three Months Ended December 31,										Year End
	2011		2010		Incr (Decr)			% Change			2011		2010		Incr (Decr)			% Change
RETAIL REVENUES—$ MILLIONS
Margin Revenues:
Residential	$	49.3	$	48.1	$	1.2			2.5	%	$	251.9	$	251.5	$	0.4			0.2	%
Commercial		36.4		35.7		0.7			2.0	%		160.0		159.1		0.9			0.6	%
Industrial		21.6		22.7		(1.1	)		-4.8	%		94.8		96.8		(2.0	)		-2.1	%
Mining		7.7		7.8		(0.1	)		-1.3	%		31.6		31.0		0.6			1.9	%
Other		3.1		3.1		—			0.0	%		12.3		12.2		0.1			0.8	%
Total	$	118.1	$	117.4	$	0.7			0.6	%	$	550.6	$	550.6		—			0.0	%
DSM / REST		10.5		8.0		2.5			31.3	%		46.6		37.8		8.8			23.3	%
Fuel Revenues:
Recovered from Customers		61.1		57.5		3.6			6.3	%		306.7		279.8		26.9			9.6	%
Total Retail Revenues	$	189.7	$	182.9	$	6.8			3.7	%	$	903.9	$	868.2	$	35.7			4.1	%
RETAIL REVENUES—CENTS / KWH
Margin Revenues:
Residential		6.32		6.32		—			0.0	%		6.48		6.50		(0.02	)		-0.3	%
Commercial		7.99		7.98		0.01			0.1	%		8.11		8.10		0.01			0.1	%
Industrial		4.39		4.55		(0.16	)		-3.5	%		4.42		4.53		(0.11	)		-2.4	%
Mining		2.83		2.86		(0.03	)		-1.0	%		2.92		2.87		0.05			1.7	%
Other		5.07		4.95		0.12			2.4	%		5.05		5.07		(0.02	)		-0.4	%
Total		5.73		5.75		(0.02	)		-0.3	%		5.90		5.93		(0.03	)		-0.5	%
DSM / REST		0.51		0.39		0.12			30.8	%		0.50		0.41		0.09			22.0	%
Fuel Revenues:
Recovered from Customers		2.97		2.81		0.16			5.7	%		3.29		3.01		0.28			9.3	%
Total Retail Revenues		9.21		8.95		0.26			2.9	%		9.69		9.34		0.35			3.7	%
LONG-TERM WHOLESALE MARGIN (Non-GAAP)—$ MILLIONS
Long-Term Wholesale Margin Revenues (Non-GAAP)	$	1.4	$	8.0	$	(6.6	)		-82.5	%	$	13.1	$	28.3	$	(15.2	)		-53.7	%
Fuel and Purchased Power Expense Allocated to Long-
Term Wholesale Revenues		6.8		5.9		0.9			15.3	%		28.0		27.4		0.6			2.2	%
Long-Term Wholesale Revenues	$	8.2	$	13.9	$	(5.7	)		-41.0	%	$	41.1	$	55.7	$	(14.6	)		-26.2	%
Wholesale Transmission Revenues		4.1		5.3		(1.2	)		-22.6	%		16.4		20.9		(4.5	)		-21.5	%
Short-term Wholesale Revenues		20.9		24.9		(4.0	)		-16.1	%		72.4		64.5		7.9			12.2	%
Electric Wholesale Sales (GAAP)	$	33.2	$	44.1	$	(10.9	)		-24.7	%	$	129.9	$	141.1	$	(11.2	)		-7.9	%

Retail Margin Revenues, a non-GAAP financial measure, should not be considered as an alternative to Net Electric Retail Sales, which is determined in accordance with GAAP. Retail Margin Revenues excludes: (i) revenues collected from retail customers that are directly offset by expenses recorded in other line items; and (ii) revenues collected from third parties that are unrelated to kWh sales to retail customers. We believe the change in Retail Margin Revenues between periods provides useful information to investors because it demonstrates the underlying revenue trend and performance of our core utility business. Retail Margin Revenues represents the portion of retail operating revenues available to cover the operating expenses of our core utility business.

Long-Term Wholesale Margin Revenues, a non-GAAP financial measure, should not be considered as an alternative to Electric Wholesale Sales, which is determined in accordance with GAAP. We believe the change in Long-Term Wholesale Margin Revenues between periods provides useful information to investors because it demonstrates the underlying profitability of TEP’s long-term wholesale sales contracts. Long-Term Wholesale Margin Revenues represents the portion of long-term wholesale revenues available to cover the operating expenses of our core utility business.

TEP Margin Revenues

8

UNS ELECTRIC - OPERATING STATISTICS

	Three Months Ended December 31,												Year End
	2011			2010			Incr (Decr)			% Change			2011			2010			Incr (Decr)			% Change
AVG. ELECTRIC CUSTOMERS
Residential		80,596			80,224			372			0.5	%		80,576			80,168			408			0.5	%
Commercial		10,406			10,343			63			0.6	%		10,387			10,345			42			0.4	%
Industrial		21			22			(1	)		-4.5	%		22			23			(1	)		-4.3	%
Mining		2			2			—			0.0	%		2			2			—			0.0	%
Other		325			258			67			26.0	%		268			264			4			1.5	%
Total		91,350			90,849			501			0.6	%		91,255			90,802			453			0.5	%
RETAIL SALES — MWH
Residential		175,800			167,895			7,905			4.7	%		827,795			820,352			7,443			0.9	%
Commercial		139,126			136,381			2,745			2.0	%		601,871			606,241			(4,370	)		-0.7	%
Industrial		53,498			53,770			(272	)		-0.5	%		220,930			219,241			1,689			0.8	%
Mining		28,146			60,054			(31,908	)		-53.1	%		200,619			209,307			(8,688	)		-4.2	%
Other		506			498			8			1.6	%		1,689			2,018			(329	)		-16.3	%
Total		397,076			418,598			(21,522	)		-5.1	%		1,852,904			1,857,159			(4,255	)		-0.2	%
RETAIL USAGE — KWH/CUSTOMER
Residential		2,181			2,093			88			4.2	%		10,273			10,233			40			0.4	%
Commercial		13,370			13,186			184			1.4	%		57,945			58,602			(657	)		-1.1	%
Industrial		2,547,524			2,444,091			103,433			4.2	%		10,042,273			9,532,217			510,056			5.4	%
Mining		NM			NM			NM			N/M			NM			NM			NM			N/M
Other		1,557			1,930			(373	)		-19.3	%		6,302			7,644			(1,342	)		-17.6	%
Total		4,347			4,608			(261	)		-5.7	%		20,305			20,453			(148	)		-0.7	%
RETAIL REVENUES — MILLIONS
Margin Revenues:
Residential	$	6.8		$	6.4		$	0.4			6.2	%	$	31.2		$	27.4		$	3.8			13.9	%
Commercial		6.9			7.0			(0.1	)		-1.4	%		28.9			27.3			1.6			5.9	%
Industrial		2.3			2.3			—			0.0	%		9.0			8.6			0.4			4.7	%
Mining		1.7			1.6			0.1			6.2	%		6.6			5.4			1.2			22.2	%
Other		0.1			—			0.1			N/M			0.3			0.4			(0.1	)		-25.0	%
Total Margin Revenues	$	17.8		$	17.3		$	0.5			2.9	%	$	76.0		$	69.1		$	6.9			10.0	%
DSM / REST		2.2			1.7			0.5			29.4	%		6.6			8.5			(1.9	)		-22.4	%
Fuel Revenues:
Recovered from Customers		20.0			24.4			(4.4	)		-18.0	%		99.3			105.2			(5.9	)		-5.6	%
Total Retail Revenues	$	40.0		$	43.4		$	(3.4	)		-7.8	%	$	181.9		$	182.8		$	(0.9	)		-0.5	%
WEATHER — COOLING DEGREE DAYS
Actual		579			587			(8	)		-1.4	%		9,092			8,821			271			3.1	%
10-Year Average		560			569									8,994			9,031
% Change Actual vs. 10-Year Avg.		3.4	%		3.2	%								1.1	%		-2.3	%
WEATHER — HEATING DEGREE DAYS
Actual		2,801			2,410			391			16.2	%		6,794			6,629			165			2.5	%
10-Year Average		2,559			2,532									6,399			6,418
% Change Actual vs. 10-Year Avg.		9.5	%		-4.8	%								6.2	%		3.3	%

Retail Margin Revenues, a non-GAAP financial measure, should not be considered as an alternative to Total Retail Revenues, which is determined in accordance with GAAP. Retail Margin Revenues exclude revenues collected from retail customers that are directly offset by expenses recorded in other line items. We believe the change in Retail Margin Revenues between periods provides useful information to investors because it demonstrates the underlying revenue trend and performance of our core utility business. Retail Margin Revenues represents the portion of retail operating revenues available to cover the operating expenses of our core utility business.

UNS Electric Op. Stats

9

UNS GAS - OPERATING STATISTICS

	Three Months Ended December 31												Year End
	2011			2010			Incr (Decr)			% Change			2011			2010			Incr (Decr)			% Change
AVG. GAS CUSTOMERS
Residential		134,673			133,729			944			0.7	%		134,227			133,337			890			0.7	%
Commercial		11,282			11,178			104			0.9	%		11,243			11,231			12			0.1	%
Industrial		22			22			—			0.0	%		22			23			(1	)		-4.3	%
Other		1,122			1,105			17			1.5	%		1,117			1,095			22			2.0	%
Total		147,099			146,034			1,065			0.7	%		146,609			145,686			923			0.6	%
RETAIL SALES—THOUSANDS OF THERMS
Residential		25,830			23,434			2,396			10.2	%		73,925			73,083			842			1.2	%
Commercial		10,208			9,273			935			10.1	%		31,091			30,209			882			2.9	%
Industrial		719			575			144			25.0	%		2,374			1,932			442			22.9	%
Other		2,349			2,163			186			8.6	%		6,614			6,628			(14	)		-0.2	%
Total		39,106			35,445			3,661			10.3	%		114,004			111,852			2,152			1.9	%
RETAIL USAGE—THERMS/CUSTOMER
Residential		192			175			17			9.7	%		551			548			3			0.5	%
Commercial		905			830			75			9.0	%		2,765			2,690			75			2.8	%
Industrial		32,682			26,136			6,546			25.0	%		107,909			84,000			23,909			28.5	%
Other		2,094			1,957			137			7.0	%		5,921			6,053			(132	)		-2.2	%
Total		266			243			23			9.5	%		778			768			10			1.3	%
RETAIL REVENUES—MILLIONS
Margin Revenues:
Residential	$	12.3		$	11.4		$	0.9			7.9	%	$	39.7		$	38.7		$	1.0			2.6	%
Commercial		3.4			3.1			0.3			9.7	%		10.7			10.2			0.5			4.9	%
Other		0.7			0.7			—			0.0	%		2.2			2.1			0.1			4.8	%
Total Margin Revenues	$	16.4		$	15.2		$	1.2			7.9	%	$	52.6		$	51.0		$	1.6			3.1	%
DSM Revenues		0.3			0.3			—			0.0	%		1.1			1.0			0.1			10.0	%
Transport/NSP Revenues		4.0			4.2			(0.2	)		-4.8	%		16.6			17.4			(0.8	)		-4.6	%
Fuel Revenues:
Recovered from Customers		25.8			25.4			0.4			1.6	%		77.3			76.5			0.8			1.0	%
Total Gas Revenues	$	46.5		$	45.1		$	1.4			3.1	%	$	147.6		$	145.9		$	1.7			1.2	%
WEATHER—HEATING DEGREE DAYS
Actual		10,080			9,138			942			10.3	%		25,794			25,457			337			1.3	%
10-Year Average		9,622			9,545									24,894			24,828
% Change Actual vs. 10-Year Avg.		4.8	%		-4.3	%								3.6	%		2.5	%

Retail Margin Revenues, a non-GAAP financial measure, should not be considered as an alternative to Total Gas Revenues, which is determined in accordance with GAAP. Retail Margin Revenues excludes revenues collected from retail customers that are directly offset by expenses recorded in other line items. We believe the change in Retail Margin Revenues between periods provides useful information to investors because it demonstrates the underlying revenue trend and performance of our core utility business. Retail Margin Revenues represents the portion of retail operating revenues available to cover the operating expenses of our core utility

UNS Gas Op. Stats

10

BASIC AND DILUTED SHARES OUTSTANDING

		September 30,		September 30,		September 30,
	Years Ended December 31,
	2011		2010		2009
	-In Thousands-
Numerator:
Net Income	$	109,975	$	112,984	$	105,901
Income from Assumed Conversion of Convertible Senior Notes		4,390		4,390		4,390
Adjusted Numerator	$	114,365	$	117,374	$	110,291
Denominator:
Weighted-average Shares of Common Stock Outstanding
Common Shares Issued		36,780		36,200		35,653
Participating Securities		53		92		100
Fully Vested Deferred Stock Units		129		123		105
Total Weighted-average Shares of Common Stock Outstanding and Participating Securities—Basic		36,962		36,415		35,858
Effect of Diluted Securities
Convertible Senior Notes		4,281		4,178		4,093
Options and Stock Issuable under Employee Benefit Plans and the Directors’ Plan		366		448		499
Total Shares		41,609		41,041		40,450

The following table shows the number of stock options excluded from the diluted EPS computation because the stock option’s exercise price was greater than the average market price of the Common Stock:

		September 30,		September 30,		September 30,
	Years Ended December 31,
	2011		2010		2009
	-In Thousands-
Stock Options Excluded from the Diluted EPS Computation		153		212		395

Diluted Share Count

11