February 25, 2014
UNS Energy Corporation (NYSE:UNS) reported 2013 net income of $127 million, or $3.04 per diluted share of common stock, compared with net income of $91 million, or $2.20 per diluted share in 2012.
"I am very proud of the company's accomplishments during 2013," said Paul Bonavia, UNS Energy's Chairman and Chief Executive Officer. "We reached several significant milestones while achieving financial results that were consistent with our expectations."
Bonavia continued, "In 2013, we implemented a new rate structure at TEP with adjustor mechanisms designed to smooth out future customer bill impacts. We also executed two key phases of our integrated resource strategy with the expected addition of a modern, natural gas-fired generating facility, while blending down the future amount of coal-based resources in TEP's generating portfolio. And late last year, our Board of Directors unanimously approved a merger agreement that, if finalized, will provide our company with new financial strength, ensuring our ability to maintain safe, reliable and affordable service for our utility customers."
As previously disclosed, on December 11, 2013, UNS Energy's Board of Directors approved a definitive merger agreement with Fortis, Inc. (Fortis), Canada's largest investor-owned gas and electric distribution utility.
"Fortis shares our deep commitment to customer service and community support. They have pledged to maintain or expand our charitable giving, philanthropic partnerships and low-income assistance programs," said David Hutchens, UNS Energy's President and Chief Operating Officer.
The merger agreement calls for Fortis to acquire all of the outstanding common stock of UNS Energy for $60.25 per share in cash. The transaction is subject to the approval of regulators, including the Arizona Corporation Commission (ACC) and Federal Energy Regulatory Commission; the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; and the satisfaction of customary closing conditions. UNS Energy shareholders will vote on the proposed merger at a special meeting scheduled for March 26, 2014. UNS Energy anticipates the transaction will be finalized by the end of 2014.
Tucson Electric Power
Retail kWh Sales and Revenues
TEP's retail kWh sales increased by 0.2 percent in 2013, due in part to a 4.8 percent increase in cooling degree days when compared with 2012. The implementation of new base rates on July 1, 2013 as well as higher sales volumes, led to a $41 million, or 7.7 percent, increase in TEP's retail margin revenues compared with 2012.
TEP's Base Operations and Maintenance (Base O&M) expense was $246 million in 2013 compared with $234 million in 2012. The increase was due in part to scheduled and unscheduled maintenance at generating plants operated by TEP and others, as well as $6 million of expenses related to the proposed merger transaction. Base O&M excludes costs directly offset by customer surcharges and third-party reimbursements.
TEP's total interest expense declined by $9 million in 2013 primarily due to the reduction in the balance of capital lease obligations compared with the same period last year.
TEP's 2013 results include: an $11.0 million reduction to income tax expense related to a regulatory asset that was recorded during the second quarter for deferred tax expenses that will be recovered in future periods; and a $3.0 million pre-tax ($1.8 million after-tax) charge to fuel expense related to a credit to retail customers that was approved in TEP's recently completed rate case. Results in 2012 include a $1.8 million pre-tax loss ($1.1 million after-tax) related to an unplanned outage at a power plant that TEP operates on behalf of another party.
UNS Electric reported net income of $12 million in 2013 compared with $17 million in 2012. The decrease in net income was due in part to the loss of an industrial customer and lower mining kWh sales.
UNS Gas reported net income of $11 million in 2013 compared with $9 million in 2012. The increase in net income is due to a non-fuel base rate increase that was effective in May 2012 and colder weather in 2013 than in 2012.
Common Stock Dividend
UNS Energy's Board of Directors declared a first quarter dividend of 48 cents per share. The dividend will be paid on March 25, 2014, to common shareholders of record as of March 13, 2014.
The declaration of dividend payments is at the board's sole discretion and is subject to numerous factors that ordinarily affect dividend policy, including the results of UNS Energy's operations and its financial position as well as general economic and business conditions.
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For more information:
UNS Energy Corporation
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Contact person: Joseph Barrios, Media Contact
UNS Energy Corporation
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Contact person: Chris Norman
Financial Analyst Contact
Tel: (520) 884-3649