SAN FRANCISCO (Standard&Poor's) April 24, 2008--Standard&Poor's Ratings Services said today that Tucson Electric Power's (TEP; BB/Stable/--) announcement late yesterday that it has reached a tentative settlement agreement with Arizona Corporation Commission (ACC) staff in its general rate case is a favorable step forward. But because a formal settlement has yet to be signed and other parties have not yet joined the tentative settlement, the prospects for the settlement advancing and ultimately receiving ACC approval are uncertain. Components of the settlement include a 6% increase in retail electric rates, and a fuel and purchased power adjustment mechanism, which we view as an important component that could allow TEP to improve upon its credit profile.
