The 'BB+' corporate credit rating on Tucson Electric Power Co. (TEP) reflects the consolidated creditworthiness of unrated parent UniSource Energy Corp. (UniSource). TEP is by far UniSource's largest holding, generating about 87% of the consolidated cash flows from operations and 95% of net income in 2010. TEP is a small, regulated integrated electric utility company serving 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. These holdings are small and we do not consider them to be significant drivers of credit quality. The consolidated business risk profile is strong, reflecting TEP's steady regulated utility operations, a predominantly coal-fired generation fleet that is sufficient to
