Standard&Poor's Ratings Services affirmed its 'BB' corporate credit rating on Tucson Electric Power Co. (TEP). The outlook remains positive, reflecting the potential for ratings improvement if the settlement in TEP's rate case is approved by the Arizona Corporation Commission (ACC). The settlement, reached in late May, adopts traditional cost of service ratemaking, provides for an estimated 6% increase in retail base rates that should allow the company to stabilize cash flows at modestly stronger levels beginning in 2009, and, importantly, provides the company with a fuel and purchased power adjustment mechanism that would mitigate TEP's significant exposure to unplanned outages and escalation of fuel and purchased power costs. Under its current rate freeze, in place since 1999, the
