Overview Key strengths Key risks Our rating on the company is tied to our rating on its parent, Fortis Inc., which provides one notch of uplift. The company is exposed to energy transition risk with legacy coal-fired generation assets. Relatively low-risk, vertically integrated electric utility operations regulated by the Arizona Corp. Commission (ACC) and the Federal Energy Regulatory Commission (FERC). The company lacks geographic and regulatory diversity, which renders it mostly dependent on the ACC to sustain its credit quality. Limited commodity exposure with ability to pass on costs to its ratepayers. The company?s service territory is vulnerable to physical risks including wildfires. TEP operates as a vertically integrated utility serving about 447,000 customers mostly in southern Arizona. The pervasiveness
