Standard&Poor's Ratings Services affirmed its 'BB' corporate credit rating on TEP. The outlook is stable. While the company has made steady progress in improving debt-to-total capitalization and achieved in 2006 modest improvements in cash flow metrics, its pending rate proceeding before the ACC introduces substantial uncertainties about not only the level of future rate relief but also whether all or some of its generation assets will remain regulated. As a result, the current ratings and outlook are expected to prevail until the case is concluded, in late 2008 or early 2009. TEP is a vertically integrated, investor-owned utility in Arizona, serving more than 394,000 within Tucson and southeastern Arizona. The company is a wholly owned subsidiary of UniSource.
