On June 5, 2008, Standard&Poor's Ratings Services revised the rating outlook on Tucson Electric Power Co. (TEP) to positive from stable. Ratings on the company, including the 'BB' corporate credit rating, were affirmed. The outlook revision reflects the potential for ratings improvement if the settlement in TEP's rate case is approved by the Arizona Corporation Commission (ACC). The proposed settlement resolves how TEP's retail rates are regulated going forward; provides for a rate increase that should allow the company to stabilize cash flows at modestly stronger levels beginning in 2009; and, importantly, eliminates TEP's significant exposure to unplanned outages and escalation of fuel and purchased power costs, neither of which the Tucson-based utility can currently recover in rates,
