The 'BB+' corporate credit rating on Tucson Electric Power Co. (TEP) reflects the consolidated creditworthiness of parent UniSource Energy Corp. (UniSource). TEP is by far UniSource's largest holding, generating about 77% of the consolidated cash flows from operations in 2009. TEP is a small, vertically integrated electric utility in Tucson and southern Arizona. UniSource's other holdings consist primarily of regulated utilities UNS Electric and UNS Gas, which serve portions of northern and southeastern Arizona. UniSource's other holdings are small, and we do not consider them to be significant drivers of credit quality. The consolidated business risk profile is "strong," reflecting favorable factors that include TEP's fully regulated utility operations, low-cost coal-fired generation that is sufficient to meet the majority of
