Uns Energy (UNS) 8-K Narrows 2012 Earnings Guidance Range

Exhibit 99.1

FOR IMMEDIATE RELEASE	November 2, 2012
Media Contact: Joseph Barrios, (520) 884-3725	Page 1 of 8
Financial Analyst Contact: Chris Norman, (520) 884-3649

UNS ENERGY REPORTS THIRD QUARTER 2012 EARNINGS,

NARROWS 2012 EARNINGS GUIDANCE RANGE

• UNS Energy’s net income for the third quarter of 2012 was $50.7 million, or $1.21 per share of common stock on a fully-diluted basis, compared with net income of $59.7 million, or $1.46 per diluted share in the third quarter of 2011. For the nine months ended September 30, 2012, UNS Energy’s net income was $83.4 million, or $2.03 per diluted share, compared with net income of $101.8 million, or $2.53 per diluted share, in the same period last year.

• UNS Energy’s primary subsidiary, Tucson Electric Power Company (TEP), reported net income of $44.6 million in the third quarter of 2012 compared with $53.9 million in the third quarter of 2011. TEP’s results were negatively affected by: (i) a 3.6 percent decrease in retail sales volumes due in part to mild weather compared with last year; and (ii) higher depreciation and amortization expense related to an increase in utility infrastructure investments.

• Third quarter 2012 results include a $1.1 million after-tax loss related to an unplanned outage at a power plant that TEP operates on behalf of another party. Financial results in the third quarter of 2011 include a $4.5 million after-tax gain related to the settlement of a transmission dispute by TEP.

• Net income and earnings per share for the third quarter of 2012 were consistent with expectations. UNS Energy is narrowing its 2012 earnings guidance range to $2.15 to $2.30 per diluted share.

Tucson, Ariz. –UNS Energy Corporation (NYSE: UNS) today reported third quarter 2012 net income of $50.7 million, or $1.21 per diluted share of common stock, compared with net income of $59.7 million, or $1.46 per diluted share in the same period last year.

TEP reported net income of $44.6 million for the third quarter of 2012, 17 percent below net income of $53.9 million in the third quarter of 2011.

“Although earnings continue to be pressured by TEP’s retail rate freeze, our operating performance remains strong. We expect to hold full year operating and maintenance expenses at the same level as 2009 while maintaining a high level of reliability and safety,” said Paul Bonavia, UNS Energy’s Chairman and Chief Executive Officer. “Our power plants ran exceptionally well this summer and our safety record to date is outstanding.”

A 2008 settlement agreement approved by the Arizona Corporation Commission (ACC) will keep TEP’s non-fuel base retail rates unchanged until TEP’s pending rate request is finalized and approved in 2013. During this rate freeze period, TEP’s retail sales volumes have remained virtually unchanged due to general economic conditions and energy efficiency requirements passed by the ACC. In order to partially mitigate the effect of stagnant energy demand on UNS Energy’s financial performance, the company successfully aligned operating expenses with retail energy sales through the implementation of new operating efficiencies and cost containment measures.

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However, TEP faces cost pressures associated with capital investments in order to maintain safe and reliable service that are not reflected in current retail rates. In July 2012, TEP submitted an application with the ACC seeking its first non-fuel base rate increase since 2008. The filing requests a non-fuel base rate increase of approximately $128 million, or 15 percent, to be effective no later than August 1, 2013.

Tucson Electric Power

Retail kWh Sales and Revenues

TEP’s retail kWh sales decreased by 3.6 percent in the third quarter, due in part to a 12.2 percent decline in cooling degree days compared with the third quarter of 2011. The decrease in retail sales volumes led to a 4.0 percent, or $7.3 million, decrease in TEP’s retail margin revenues compared with the third quarter of 2011.

Other Operating Expenses

TEP’s base O&M expense was $1.2 million lower than the third quarter of 2011. Base O&M excludes costs directly offset by customer surcharges and third-party reimbursements. In the third quarter of 2012, depreciation and amortization expense increased by $2.3 million as a result of additional plant-in-service compared with the same period last year.

Other Factors

TEP’s third quarter 2012 results include an after-tax loss of approximately $1.1 million related to an unplanned outage at Springerville Unit 3, a power plant that TEP operates on behalf of another party. Results in the third quarter of 2011 include an after-tax gain of approximately $4.5 million related to the settlement of a transmission dispute.

Year-to-Date Results

In the first nine months of 2012, TEP reported net income of $65.0 million compared with net income of $83.8 million in the same period last year. That decrease was due to: lower retail and long-term wholesale margin revenues; higher depreciation and amortization expense; a loss recorded in the first nine months of 2012 related to the operation of Springerville Unit 3, described above; and the gain recorded in the first nine months of 2011 related to the settlement of a dispute, described above.

UNS Gas and UNS Electric

UNS Gas reported a net loss of less than $1 million in the third quarters of 2012 and 2011.

UNS Electric reported net income of $6.4 million in the third quarter of 2012 compared with $7.0 million in the third quarter of 2011. The decrease was due to: lower retail kWh sales due in part to a 5.5 percent decline in cooling degree days; and higher depreciation and amortization expense related to an increase in net plant in service.

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Seasonality of Earnings

The net income and results of operations of TEP as well as of UNS Gas and UNS Electric – operating subsidiaries of UniSource Energy Services (UES) – are seasonal in nature. TEP and UNS Electric typically record the majority of their net income during the second and third quarters when hot weather contributes to higher energy consumption. TEP’s retail rates, which include higher charges for higher levels of energy use, also shift a larger share of the company’s earnings into those periods.

Energy demand from UNS Gas customers typically peaks during the winter. Accordingly, UNS Gas typically records the majority of its net income during the first and fourth quarters.

Net Income and Earnings Per Share Summary

	3rd Quarter						YTD September 30,
Net Income	2012			2011			2012			2011
	-Millions-						-Millions-
Tucson Electric Power	$	44.6		$	53.9		$	65.0		$	83.8
UNS Gas		(0.4	)		(0.7	)		5.1			5.8
UNS Electric		6.4			7.0			13.7			14.4
Other(1)		0.1			(0.5	)		(0.4	)		(2.2	)
Net Income	$	50.7		$	59.7		$	83.4		$	101.8
Avg. Basic Shares Outstanding (Millions)		41.4			37.1	��		40.0			36.9
Avg. Diluted Shares Outstanding (Millions)		41.9			41.8			41.7			41.6
	3rd Quarter						YTD September 30,
Earnings Per UNS Energy Share	2012			2011			2012			2011
Tucson Electric Power	$	1.08		$	1.45		$	1.63		$	2.27
UNS Gas		(0.01	)		(0.02	)		0.13			0.16
UNS Electric		0.15			0.19			0.34			0.39
Other(1)		0.00			(0.01	)		(0.01	)		(0.06	)
Net Income Per Basic Share	$	1.22		$	1.61		$	2.09		$	2.76
Net Income Per Diluted Share	$	1.21		$	1.46		$	2.03		$	2.53

(1) Includes UNS Energy on a stand-alone basis and results from Millennium Energy Holdings, Inc. and UniSource Energy Development, both wholly-owned subsidiaries of UNS Energy.

UNS Energy believes the presentation of TEP, UNS Gas and UNS Electric net income or loss on a per basic UNS Energy share basis (which are non-GAAP financial measures) provides useful information to investors by disclosing the results of operations of its business segments on a basis consistent with UNS Energy’s reported earnings or losses.

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Conference Call and Webcast

The company will host a conference call on Friday, November 2, 2012 at 1 p.m. ET. To participate in the call, please dial in 5 to 10 minutes prior to the start time. A reference code is not necessary to access the live call.

Dial-in number:(800) 695-3360

The conference call also can be heard live online at uns.com.

A telephone replay will be available for seven days.

Replay number: (800) 633-8284

Reference code: 21609581

In conjunction with this earnings announcement, UNS Energy provided additional information on its performance during the third quarter of 2012. These materials were filed with the Securities and Exchange Commission and are also available at uns.com.

UNS Energy is a Tucson, Arizona-based company with consolidated assets of approximately $4 billion. UNS Energy’s primary subsidiaries include Tucson Electric Power, which serves more than 405,000 customers in southern Arizona, and UniSource Energy Services, provider of natural gas and electric service for about 240,000 customers in northern and southern Arizona.

Visit uns.com for more information about UNS Energy and its subsidiaries.

This release contains forward-looking information that involves risks and uncertainties, including factors that could affect UNS Energy’s ability to reach the 2012 earnings guidance. These risks and uncertainties 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; changes to long-term contracts; the cost of fuel and power supplies; performance of TEP’s generating plants; and other factors listed in UNS 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 outcomes currently expected by UNS Energy.

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UNS ENERGY 2012 RESULTS

Condensed Consolidated Statements of Income	Three Months Ended
(in Thousands of Dollars, Except Per Share Amounts)	September 30,						Increase / (Decrease)
(UNAUDITED)	2012			2011			Amount			Percent
Operating Revenues
Electric Retail Sales	$	353,473		$	363,385		$	(9,912	)		(2.7	)
Electric Wholesale Sales		32,494			41,847			(9,353	)		(22.4	)
Gas Revenue		15,407			16,831			(1,424	)		(8.5	)
Other Revenues		35,887			28,884			7,003			24.2
Total Operating Revenues		437,261			450,947			(13,686	)		(3.0	)
Operating Expenses
Fuel		92,873			98,962			(6,089	)		(6.2	)
Purchased Energy		60,238			88,734			(28,496	)		(32.1	)
Transmission		4,500			(1,354	)		5,854			N/M
Increase (Decrease) to Reflect PPFAC/PGA Recovery Treatment		18,076			(3,576	)		21,652			N/M
Total Fuel and Purchased Energy		175,687			182,766			(7,079	)		(3.9	)
Other Operations and Maintenance		98,346			90,781			7,565			8.3
Depreciation		35,145			33,553			1,592			4.7
Amortization		9,069			7,882			1,187			15.1
Taxes Other Than Income Taxes		12,605			12,205			400			3.3
Total Operating Expenses		330,852			327,187			3,665			1.1
Operating Income		106,409			123,760			(17,351	)		(14.0	)
Other Income (Deductions)
Interest Income		340			1,919			(1,579	)		(82.3	)
Other Income		1,726			1,678			48			2.9
Other Expense		(886	)		(1,412	)		526			37.3
Total Other Income (Deductions)		1,180			2,185			(1,005	)		(46.0	)
Interest Expense
Long-Term Debt		17,074			17,945			(871	)		(4.9	)
Capital Leases		8,507			10,248			(1,741	)		(17.0	)
Other Interest Expense, Net of Interest Capitalized		233			(88	)		321			N/M
Total Interest Expense		25,814			28,105			(2,291	)		(8.2	)
Income Before Income Taxes		81,775			97,840			(16,065	)		(16.4	)
Income Tax Expense		31,111			38,128			(7,017	)		(18.4	)
Net Income	$	50,664		$	59,712		$	(9,048	)		(15.2	)
Weighted-Average Shares of Common Stock Outstanding (000)		41,446			37,053			4,393			11.9
Basic Earnings per Share	$	1.22		$	1.61		$	(0.39	)		(24.2	)
Diluted Earnings per Share	$	1.21		$	1.46		$	(0.25	)		(17.1	)
Dividends Declared per Share	$	0.43		$	0.42		$	0.01			2.4

N/M—Not Meaningful

Reclassifications have been made to prior periods to conform to the current period’s presentation.

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UNS ENERGY 2012 RESULTS

Condensed Consolidated Statements of Income	Nine Months Ended
(in Thousands of Dollars, Except Per Share Amounts)	September 30,						Increase / (Decrease)
(UNAUDITED)	2012			2011			Amount			Percent
Operating Revenues
Electric Retail Sales	$	850,975		$	856,216		$	(5,241	)		(0.6	)
Electric Wholesale Sales		98,282			121,506			(23,224	)		(19.1	)
Gas Revenue		85,621			99,041			(13,420	)		(13.5	)
Other Revenues		88,427			88,624			(197	)		(0.2	)
Total Operating Revenues		1,123,305			1,165,387			(42,082	)		(3.6	)
Operating Expenses
Fuel		245,933			252,103			(6,170	)		(2.4	)
Purchased Energy		174,891			233,344			(58,453	)		(25.1	)
Transmission		10,738			4,612			6,126			N/M
Decrease to Reflect PPFAC/PGA Recovery Treatment		29,730			(5,174	)		34,904			N/M
Total Fuel and Purchased Energy		461,292			484,885			(23,593	)		(4.9	)
Other Operations and Maintenance		283,587			281,888			1,699			0.6
Depreciation		105,319			99,653			5,666			5.7
Amortization		26,845			22,513			4,332			19.2
Taxes Other Than Income Taxes		37,385			36,579			806			2.2
Total Operating Expenses		914,428			925,518			(11,090	)		(1.2	)
Operating Income		208,877			239,869			(30,992	)		(12.9	)
Other Income (Deductions)
Interest Income		981			3,739			(2,758	)		(73.8	)
Other Income		5,729			7,155			(1,426	)		(19.9	)
Other Expense		(1,761	)		(2,830	)		1,069			37.8
Total Other Income (Deductions)		4,949			8,064			(3,115	)		(38.6	)
Interest Expense
Long-Term Debt		53,811			54,240			(429	)		(0.8	)
Capital Leases		25,105			30,108			(5,003	)		(16.6	)
Other Interest Expense, Net of Interest Capitalized		66			(1,118	)		1,184			N/M
Total Interest Expense		78,982			83,230			(4,248	)		(5.1	)
Income Before Income Taxes		134,844			164,703			(29,859	)		(18.1	)
Income Tax Expense		51,430			62,916			(11,486	)		(18.3	)
Net Income	$	83,414		$	101,787		$	(18,373	)		(18.1	)
Weighted-Average Shares of Common Stock Outstanding (000)		39,983			36,930			3,053			8.3
Basic Earnings Per Share	$	2.09		$	2.76		$	(0.67	)		(24.3	)
Diluted Earnings Per Share	$	2.03		$	2.53		$	(0.50	)		(19.8	)
Dividends Declared Per Share	$	1.29		$	1.26		$	0.03			2.4

N/M—Not Meaningful

Reclassifications have been made to prior periods to conform to the current period’s presentation.

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TUCSON ELECTRIC POWER COMPANY 2012 RESULTS

Condensed Consolidated Statements of Income	Three Months Ended
(in Thousands of Dollars)	September 30,						Increase / (Decrease)
(UNAUDITED)	2012			2011			Amount			Percent
Operating Revenues
Electric Retail Sales	$	302,893		$	308,924		$	(6,031	)		(2.0	)
Electric Wholesale Sales		25,448			29,608			(4,160	)		(14.1	)
Other Revenues		38,569			31,313			7,256			23.2
Total Operating Revenues		366,910			369,845			(2,935	)		(0.8	)
Operating Expenses
Fuel		88,402			95,977			(7,575	)		(7.9	)
Purchased Power		27,576			40,509			(12,933	)		(31.9	)
Transmission		1,914			(4,266	)		6,180			N/M
Increase (Decrease) to Reflect PPFAC Recovery Treatment		20,025			1,115			18,910			N/M
Total Fuel and Purchased Energy		137,917			133,335			4,582			3.4
Other Operations and Maintenance		86,942			79,837			7,105			8.9
Depreciation		27,644			26,541			1,103			4.2
Amortization		10,001			8,798			1,203			13.7
Taxes Other Than Income Taxes		10,327			9,855			472			4.8
Total Operating Expenses		272,831			258,366			14,465			5.6
Operating Income		94,079			111,479			(17,400	)		(15.6	)
Other Income (Deductions)
Interest Income		28			1,666			(1,638	)		(98.3	)
Other Income		1,553			229			1,324			N/M
Other Expense		(1,965	)		(2,754	)		789			28.6
Total Other Income (Deductions)		(384	)		(859	)		475			55.3
Interest Expense
Long-Term Debt		13,268			12,081			1,187			9.8
Capital Leases		8,507			10,248			(1,741	)		(17.0	)
Other Interest Expense, Net of Interest Capitalized		201			(44	)		245			N/M
Total Interest Expense		21,976			22,285			(309	)		(1.4	)
Income Before Income Taxes		71,719			88,335			(16,616	)		(18.8	)
Income Tax Expense		27,150			34,423			(7,273	)		(21.1	)
Net Income	$	44,569		$	53,912		$	(9,343	)		(17.3	)

	Three Months Ended
Tucson Electric Power	September 30,				Increase / (Decrease)
Electric MWh Sales:	2012		2011		Amount			Percent
Retail Sales		2,877,504		2,985,792		(108,288	)		(3.6	)
Long-Term Wholesale Sales		165,589		230,611		(65,022	)		(28.2	)

N/M—Not Meaningful

Reclassifications have been made to prior periods to conform to the current period’s presentation.

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TUCSON ELECTRIC POWER COMPANY 2012 RESULTS

Condensed Consolidated Statements of Income	Nine Months Ended
(in Thousands of Dollars)	September 30,						Increase / (Decrease)
(UNAUDITED)	2012			2011			Amount			Percent
Operating Revenues
Electric Retail Sales	$	716,993		$	714,278		$	2,715			0.4
Electric Wholesale Sales		77,488			96,623			(19,135	)		(19.8	)
Other Revenues		95,826			93,765			2,061			2.2
Total Operating Revenues		890,307			904,666			(14,359	)		(1.6	)
Operating Expenses
Fuel		237,930			246,563			(8,633	)		(3.5	)
Purchased Power		62,064			84,189			(22,125	)		(26.3	)
Transmission		4,277			(2,339	)		6,616			N/M
Decrease to Reflect PPFAC Recovery Treatment		25,150			(5,146	)		30,296			N/M
Total Fuel and Purchased Energy		329,421			323,267			6,154			1.9
Other Operations and Maintenance		248,092			246,423			1,669			0.7
Depreciation		82,656			78,124			4,532			5.8
Amortization		29,621			25,282			4,339			17.2
Taxes Other Than Income Taxes		30,325			29,803			522			1.8
Total Operating Expenses		720,115			702,899			17,216			2.4
Operating Income		170,192			201,767			(31,575	)		(15.6	)
Other Income (Deductions)
Interest Income		97			2,983			(2,886	)		(96.7	)
Other Income		4,860			4,597			263			5.7
Other Expense		(5,084	)		(7,751	)		2,667			34.4
Total Other Income (Deductions)		(127	)		(171	)		44			25.7
Interest Expense
Long-Term Debt		40,562			36,493			4,069			11.2
Capital Leases		25,105			30,107			(5,002	)		(16.6	)
Other Interest Expense, Net of Interest Capitalized		(43	)		(881	)		838			95.1
Total Interest Expense		65,624			65,719			(95	)		(0.1	)
Income Before Income Taxes		104,441			135,877			(31,436	)		(23.1	)
Income Tax Expense		39,423			52,104			(12,681	)		(24.3	)
Net Income	$	65,018		$	83,773		$	(18,755	)		(22.4	)
	Nine Months Ended
Tucson Electric Power	September 30,						Increase / (Decrease)
Electric MWh Sales:	2012			2011			Amount			Percent
Retail Sales		7,235,527			7,272,091			(36,564	)		(0.5	)
Long-Term Wholesale Sales		492,446			668,995			(176,549	)		(26.4	)

N/M—Not Meaningful

Reclassifications have been made to prior periods to conform to the current period’s presentation.

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