The 'BB' corporate credit rating on Tucson Electric Power Co. (TEP), a wholly owned subsidiary of UniSource Energy Corp. (unrated), reflects the highly leveraged financial profile and the satisfactory business profile of this regulated, vertically integrated electric utility that serves areas in and around Tucson, Ariz. TEP's business risk profile is rated '6' on Standard&Poor's Ratings Services' 10-point scale. (Business profiles are categorized from '1' [strong] to '10' [weak]). This business risk considers the consolidated operations of UniSource Energy Corp and reflects TEP's ownership of largely coal-fired generation sufficient to meet retail loads; a retail rate freeze that is in place until the end of 2008, which provides the utility with a reasonable opportunity to generate cash flows
