Uns Energy (UNS) 8-K Unisource Energy Reports First Quarter 2011 Earnings, Maintains 2011 Earnings Guidance Range

Exhibit 99.2

UniSource Energy Corporation
1st Quarter 2011 Supplemental Earnings Information
As of May 2, 2011

TABLE OF CONTENTS

Safe Harbor and Non-GAAP Measures	1
Variance Explanation	2
UniSource Energy and TEP O&M	3
TEP Operating Statistics	4
TEP Margin Revenues	5
UNS Electric Operating Statistics	6
UNS Gas Operating Statistics	7
Basic & Diluted Shares Outstanding	8

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.

QUARTER OVER QUARTER EARNINGS VARIANCE EXPLANATION

1st Quarter 2010 UniSource Energy Net Income													$	20.0
	1st Quarter						Change
TEP	2011			2010			Pre-Tax			After Tax
	-millions of dollars-
Retail Margin Revenues	$	108.7		$	108.4		$	0.3		$	0.2
L-T Wholesale Margin Revenues		7.0			8.1			(1.1	)		(0.7	)
Transmission Revenues		3.9			7.5			(3.6	)		(2.2	)
TEP Utility Gross Margin (Non-GAAP)		119.6			124.0			(4.4	)		(2.7	)
Loss related to the settlement of a dispute over tranactions with the California Power Exchange		0.0			(3.0	)		3.0			1.9
Base O&M		62.0			54.4			7.6			4.7
Depreciation		25.7			24.1			1.6			1.0
Amortization		8.3			7.8			0.5			0.3
Operating synergies related to Springerville Unit 3&4		5.8			6.5			(0.7	)		(0.4	)
Other Line Item Changes		(1.7	)		(3.0	)		1.3			0.8
TEP Operating Income (GAAP)		27.7			38.2			(10.5	)		(6.5	)
Other Income		0.9			0.4			0.5			0.3
Total Interest Expense		21.4			21.9			(0.5	)		(0.3	)
Income Tax Expense (1)		0.2			6.4			(6.2	)	NM
TEP Net Income (Loss)	$	7.0		$	10.3			($3.3	)	NM
Change in TEP Net Income														(3.3	)
Other Business Segments
UNS Electric Net Income (2)		3.1			2.9		NM				0.2
UNS Gas Net Income		6.4			5.8		NM				0.6
Other (3)		0.5			1.0		NM				(0.5	)
Total Other Income and Consolidating Adjustments	$	10.0		$	9.7		NM			$	0.3
Change in UNS Electric, UNS Gas and Other														0.3
1st Quarter 2011 UniSource Energy Net Income													$	17.0

(1)	TEP’s Q1 2011 income tax expense includes a prior period adjustment that reduced income tax expense by $2.3 million.
(2)	UNS Electric’s net income in Q1 2011 includes a prior period tax adjustment that reduced income tax expense by $0.9 million. UNS Electric’s net income in Q1 2010 includes a pre-tax gain of approximately $3 million related to the settlement of a dispute over transactions with the California Power Exchange.
(3)	Includes UniSource Energy on a stand-alone basis and results from Millennium Energy Holdings, Inc. and UniSource Energy Development, wholly-owned subsidiaries of UniSource Energy.
Note: Some columns and rows may not foot due to rounding.

2 - Variance Explanation

UNISOURCE ENERGY AND TEP O&M

UniSource Energy	1st Quarter
O&M Components	2011			2010
	-millions of dollars-
TEP Base O&M (Non-GAAP)	$	62.0		$	54.4
UNS Gas Base O&M (Non-GAAP)		6.5			6.2
UNS Electric Base O&M (Non-GAAP)		5.0			4.8
Consolidating Adjustments & Other		(2.5	)		(2.2	)
UniSource Energy Base O&M (Non-GAAP)	$	71.0		$	63.2
Reimbursed O&M Related to Springerville Units 3 and 4		16.2			12.7
O&M Related to Customer-funded Renewable Energy and DSM Programs		13.8			7.0
UniSource Energy O&M (GAAP)	$	101.0		$	82.9

TEP	1st Quarter
O&M Components	2011			2010
	-millions of dollars-
Wages, A&G, Other	$	39.1		$	34.9
Generating Plant Maintenance Expense		19.0			16.0
Pension and Postretirement Benefits Expense		3.9			3.5
TEP Base O&M (Non-GAAP)	$	62.0		$	54.4
O&M Included in Other Expense		(1.9	)		(1.9	)
Reimbursed O&M Related to Springerville Units 3 and 4		16.2			12.7
O&M Related to Customer-funded Renewable Energy and DSM Programs		12.2			5.2
TEP O&M (GAAP)	$	88.5		$	70.4

3 - O&M

TEP — OPERATING STATISTICS

	3 Months Ended Mar. 31
	2011			2010			Incr (Decr)			% Change
AVG. ELECTRIC CUSTOMERS
Residential		366,308			365,627			681			0.2	%
Commercial		35,917			35,814			103			0.3	%
Industrial		634			632			2			0.3	%
Mining		2			2			—			0.0	%
Other		62			61			1			1.6	%
Total		402,923			402,136			787			0.2	%
RETAIL SALES — MWH
Residential		748,979			754,738			(5,759	)		-0.8	%
Commercial		401,133			394,607			6,526			1.7	%
Industrial		489,770			473,771			15,999			3.4	%
Mining		264,991			261,037			3,954			1.5	%
Other		49,863			44,659			5,204			11.7	%
Total		1,954,736			1,928,812			25,924			1.3	%
RETAIL USAGE — KWH/CUSTOMER
Residential		2,045			2,064			(20	)		-0.9	%
Commercial		11,168			11,018			150			1.4	%
Industrial		772,508			749,638			22,870			3.1	%
Mining		132,495,500			130,518,500			1,977,000			1.5	%
Other		804,242			732,115			72,127			9.9	%
Total		4,851			4,796			55			1.1	%
WEATHER — HEATING DEGREE DAYS
Actual		856			881			(25	)		-2.8	%
10-Year Average		806			805
% Change Actual vs. 10-Year Avg.		6.2	%		9.4	%
ENERGY MARKET INDICATORS
Avg. Wholesale Power Prices
Palo Verde Index — $/MWh
On Peak	$	32.61		$	45.19		$	(12.58	)		-27.8	%
Off Peak	$	21.41		$	34.77		$	(13.36	)		-38.4	%
Avg. Natural Gas Prices
Permian Index — $/MMBtu	$	3.92		$	5.26		$	(1.34	)		-25.5	%

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

4 - TEP Operating Stats

TEP — RETAIL AND WHOLESALE MARGIN REVENUES

	3 Months Ended Mar. 31
	2011			2010			Incr (Decr)			% Change
RETAIL REVENUES — $ MILLIONS
Margin Revenues:
Residential	$	46.9		$	47.3			(0.4	)		-0.8	%
Commercial		31.1			30.6			0.5			1.6	%
Industrial		20.6			21.0			(0.4	)		-1.9	%
Mining		7.6			7.3			0.3			4.1	%
Other		2.5			2.2			0.3			13.6	%
Total	$	108.7		$	108.4		$	0.3			0.3	%
DSM / REST		15.0			8.0			7.0			87.8	%
Fuel Revenues:
Recovered from Customers		50.0			51.0			(1.0	)		-2.0	%
Total Retail Revenues	$	173.7		$	167.4		$	6.3			3.8	%
RETAIL REVENUES — CENTS / KWH
Margin Revenues:
Residential		6.26			6.27			(0.01	)		-0.1	%
Commercial		7.75			7.75			(0.00	)		0.0	%
Industrial		4.21			4.43			(0.23	)		-5.1	%
Mining		2.87			2.80			0.07			2.6	%
Other		5.01			4.93			0.09			1.8	%
Total		5.56			5.62			(0.06	)		-1.1	%
DSM / REST		0.77			0.41			0.35			85.3	%
Fuel Revenues:
Recovered from Customers		2.56			2.64			(0.09	)		-3.3	%
Total Retail Revenues		8.89			8.68			0.21			2.4	%
LONG-TERM WHOLESALE MARGIN — $ MILLIONS
Long-term Wholesale Revenues	$	13.5		$	14.9			(1.4	)		-9.4	%
Fuel and Purchased Power Expense		(6.5	)		(6.8	)		0.3			-4.4	%
Net	$	7.0		$	8.1			(1.1	)		-13.6	%

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

5 - TEP Margin Revenues

UNS ELECTRIC — OPERATING STATISTICS

	Three Months Ended March 31,
	2011			2010			Incr (Decr)			% Change
AVG. ELECTRIC CUSTOMERS
Residential		80,547			80,023			524			0.7	%
Commercial		10,368			10,336			32			0.3	%
Industrial		22			24			(2	)		-8.3	%
Mining		2			1			1			100.0	%
Other		249			266			(17	)		-6.4	%
Total		91,188			90,650			538			0.6	%
RETAIL SALES — MWH
Residential		180,166			175,345			4,821			2.7	%
Commercial		131,062			131,308			(246	)		-0.2	%
Industrial		51,751			51,834			(83	)		-0.2	%
Mining		58,730			46,852			11,878			25.4	%
Other		475			566			(91	)		-16.1	%
Total		422,184			405,905			16,279			4.0	%
RETAIL USAGE — KWH/CUSTOMER
Residential		2,237			2,191			46			2.1	%
Commercial		12,641			12,704			(63	)		-0.5	%
Industrial		2,352,318			2,159,750			192,568			8.9	%
Mining		29,365,000			46,852,000			(17,487,000	)		-37.3	%
Other		1,908			2,128			(220	)		-10.3	%
Total		4,630			4,478			152			3.4	%
RETAIL REVENUES — MILLIONS
Margin Revenues:
Residential	$	5.5		$	4.5		$	1.0			21.9	%
Commercial		5.6			5.0			0.6			12.4	%
Industrial		1.9			1.7			0.2			8.9	%
Mining		1.3			1.0			0.3			34.7	%
Other		0.1			0.1			0.0			72.4	%
Total Margin Revenues	$	14.4		$	12.3		$	2.1			17.4	%
DSM / REST		1.4			1.6			(0.2	)		-13.4	%
Fuel Revenues:
Recovered from Customers		27.7			23.4			4.3			18.1	%
Total Retail Revenues	$	43.5		$	37.3		$	6.2			16.5	%
WEATHER — HEATING DEGREE DAYS
Actual		3,522			3,570			(48	)		-1.3	%
10-Year Average		3,402			3,389			13			0.4	%
% Change Actual vs. 10-Year Avg.		3.5	%		5.3	%

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

6 - UNS Electric

UNS GAS — OPERATING STATISTICS

	Three Months Ended March 31,
	2011			2010			Incr (Decr)			% Change
AVG. GAS CUSTOMERS
Residential		134,426			133,715			711			0.5	%
Commercial		11,307			11,405			(98	)		-0.9	%
Industrial		22			23			(1	)		-4.3	%
All Other		1,127			1,107			20			1.8	%
Total		146,882			146,250			632			0.4	%
RETAIL SALES — THOUSANDS OF THERMS
Residential		32,770			33,401			(632	)		-1.9	%
Commercial		11,458			11,445			13			0.1	%
Industrial		741			692			48			7.0	%
All Other		9,963			10,411			(447	)		-4.3	%
Total		54,932			55,950			(1,018	)		-1.8	%
RETAIL USAGE — THERMS/CUSTOMER
Residential		244			250			(6	)		-2.4	%
Commercial		1,013			1,004			10			1.0	%
Industrial		33,661			30,103			3,558			11.8	%
All Other		8,840			9,404			(564	)		-6.0	%
Total		374			383			(9	)		-2.2	%
RETAIL REVENUES — MILLIONS
Margin Revenues:
Residential	$	14.4		$	14.1		$	0.4			2.6	%
Commercial		3.7			3.4			0.3			7.7	%
All Other		0.9			0.9			0.1			6.1	%
Total Margin Revenues	$	19.1		$	18.4		$	0.7			3.7	%
DSM Revenues		0.3			0.2			0.1			30.4	%
Transport/NSP Revenues		4.6			5.1			(0.5	)		-10.5	%
Fuel Revenues:
Recovered from Customers		33.5			32.9			0.5			1.6	%
Total Gas Revenues	$	57.5		$	56.7		$	0.8			1.3	%
WEATHER — HEATING DEGREE DAYS
Actual		10,111			10,356			(245	)		-2.4	%
10-Year Average		9,929			9,885
% Change Actual vs. 10-Year Avg.		1.8	%		4.8	%

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

7 - UNS Gas

BASIC AND DILUTED SHARES OUTSTANDING

	Three Months Ended
	March 31,
	2011		2010
	-Thousands of Dollars-
Numerator:
Net Income	$	16,992	$	19,972
Income from Assumed Conversion of Convertible Senior Notes		1,097		1,097
Adjusted Numerator	$	18,089	$	21,069
Denominator:
Weighted-average Shares of Common Stock Outstanding:
Common Shares Issued		36,596		35,850
Participating Securities		76		95
Fully Vested Deferred Stock Units		117		107
Total Weighted-average Shares of Common Stock Outstanding and Participating Securities — Basic		36,789		36,052
Effect of Dilutive Securities:
Convertible Senior Notes		4,242		4,140
Options and Stock Issuable Under Employee Benefit Plans and the Directors’ Plans		374		481
Total Shares — Diluted		41,405		40,673

Stock options to purchase 168,000 and 234,000 shares of Common Stock were outstanding during the three months ended March 31, 2011 and 2010, respectively, but were not included in the computation of diluted EPS because the stock options’ exercise prices were greater than the average market price of the Common Stock.

8 - Diluted Share Count