100122--2/26/2010--TUCSON_ELECTRIC_POWER

related topics

{operation, natural, condition}

{cost, regulation, environmental}

{debt, indebtedness, cash}

{competitive, industry, competition}

{condition, economic, financial}

{cost, operation, labor}

{capital, credit, financial}

{tax, income, asset}

TEP s base rates are frozen through December 31, 2012, which could limit our ability to cope with the impact of risks and uncertainties and negatively affect TEP s results of operations, net income and cash flows. New technological developments and increasing use of more energy efficient products may have a significant impact on retail sales, which could negatively impact UniSource Energy s results of operations, net income and cash flows. The revenues, results of operations and cash flows of TEP, UNS Gas and UNS Electric are seasonal, and are subject to weather conditions and customer usage patterns, beyond the companies control. TEP, UNS Gas and UNS Electric are subject to regulation by the ACC, which sets the companies retail rates and oversees many aspects of their business in ways that could negatively affect the companies results of operations, net income and cash flows. Changes in federal energy regulation may negatively affect TEP, UNS Gas and UNS Electric s results of operations, net income and cash flows. Financial market disruptions and volatility may increase our financing costs, limit our access to the credit markets and increase our pension funding obligations, which may adversely affect our liquidity and our ability to carry out our financial strategy. Financial market disruptions and volatility may increase our financing costs and adversely affect our ability to refinance debt obligations and credit agreements totaling $671 million that expire or come due in 2011 at UniSource Energy, TEP, UNS Gas and UNS Electric. Regulatory rules and other restrictions limit the ability of TEP, UNS Gas and UNS Electric to make distributions to UniSource Energy. Economic conditions could adversely impact our ability to comply with financial covenants in the UniSource Energy and TEP Credit Agreements. UniSource Energy s net income and cash flows can be adversely affected by rising interest rates. TEP, UNS Gas and UNS Electric may be required to post margin under their power and fuel supply agreements which could negatively impact their liquidity. UniSource Energy and its subsidiaries have substantial debt which could adversely affect their business and results of operations. The cost of renewing leases or purchasing TEP s leased assets, or the cost of procuring alternate sources of generation or purchased power, could adversely affect TEP s results of operations, net income and cash flows. UniSource Energy s utility subsidiaries are subject to numerous environmental laws and regulations that may increase their cost of operations or expose them to environmentally-related litigation and liabilities. New federal regulations to limit greenhouse gas emissions could increase TEP s cost of operations and result in a change in the composition of TEP s coal-dominated generating fleet. UniSource Energy could be subject to physical risks associated with climate change. The operation of electric generating stations involves risks that could result in unplanned outages or reduced generating capability that could adversely affect TEP s results of operations, net income and cash flows. The operation of electric transmission and distribution systems involves a risk of significant unplanned outages that could adversely affect TEP and UNS Electric s businesses, results of operations, net income and cash flows.

Full 10-K form ▸

100122--2/26/2010--TUCSON_ELECTRIC_POWER_CO