File No. 69-427
File No. 69-293
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U-3A-2
Statement by Holding Company Claiming Exemption Under Rule U-
3A-2 from the Provisions of the Public Utility Holding
Company Act of 1935
To be Filed Annually Prior to March 1
UNISOURCE ENERGY CORPORATION
----------------------------
hereby files with the Securities and Exchange Commission,
pursuant to Rule 2, its statement claiming exemption as a
holding company, and
TUCSON ELECTRIC POWER COMPANY
-----------------------------
hereby files with the Securities and Exchange Commission,
pursuant to Rule 2, its statement claiming exemption as a
holding company from the provisions of the Public Utility
Holding Company Act of 1935, and submits the following
information:
1. Name, State of organization, location and nature of
business of claimant[s] and every subsidiary thereof, other
than any exempt wholesale generator (EWG) or foreign utility
company in which claimant[s] directly or indirectly holds an
interest.
UniSource Energy Corporation ("UniSource Energy") was
incorporated under the laws of the State of Arizona and is a
holding company organized to acquire and hold the securities
of other corporations. On January 1, 1998, UniSource Energy
and Tucson Electric Power Company ("TEP") completed a
statutory share exchange (the "Share Exchange"), pursuant
to which the outstanding common stock of TEP was exchanged,
<PAGE>
on a share-for-share basis, for shares of UniSource Energy
common stock, no par value. As a result of the Share
Exchange, TEP became, and is now, a wholly-owned subsidiary
of UniSource Energy.
Following the Share Exchange, UniSource Energy acquired
from TEP all of the outstanding stock of Millennium Energy
Holdings, Inc. ("Millennium") (previously known as MEH
Corporation).
The information contained in this statement is furnished
taking into account the Share Exchange and such transfer of
the outstanding stock of Millennium.
UniSource Energy controls, directly or indirectly, fifty
percent (50%) or more of the "voting securities" of the
following subsidiaries:
I.TEP was incorporated under the laws of the State of
Arizona and is a wholly-owned subsidiary of UniSource
Energy. TEP was organized as an operating public utility
engaged in the generation, purchase, transmission,
distribution and sale of electricity to retail customers in
the City of Tucson, Arizona, and the surrounding area and to
wholesale customers. TEP holds the stock of Escavada
Company, San Carlos Resources Inc. ("San Carlos"), Sierrita
Resources Inc. ("SRI"), Tucson Resources Inc. ("TRI") and
Tucsonel Inc.
A. Escavada Company was incorporated under the laws
of the State of Arizona and is a wholly-owned subsidiary of
TEP engaged in the business of maintaining miscellaneous
assets and property.
B. San Carlos was incorporated under the laws of the
State of Arizona and is a wholly-owned subsidiary of TEP.
San Carlos holds the title to Unit No. 2 of the
Springerville Generating Station, a generating facility in
commercial operation located in Apache County, Arizona, and
<PAGE>
is the lessee, jointly and severally with TEP, of an
undivided one-half interest in all facilities and personal
property used in common between Unit No. 1 and Unit No. 2 of
the Springerville Generating Station. San Carlos is not the
operator of Unit No. 2 or any of such common facilities.
C. SRI was incorporated under the laws of the State of
Delaware and is a wholly-owned subsidiary of TEP. SRI was
formed primarily to invest in financial assets.
1. Santa Cruz Resources Inc. was incorporated under
the laws of the State of Delaware and is a wholly-owned
subsidiary of SRI. Santa Cruz Resources Inc. holds an
investment in a financial service company.
D. TRI was incorporated under the laws of the State
of Delaware and is a wholly-owned subsidiary of TEP. TRI
was organized primarily to invest in financial assets.
1. Sabino Investing Inc. was incorporated under the
laws of the State of Delaware and is a wholly-owned
subsidiary of TRI. Sabino Investing Inc. holds certain real
estate assets.
E. Tucsonel Inc. was incorporated under the laws of
the State of Arizona and is a wholly-owned subsidiary of
TEP. Tucsonel Inc. is presently inactive.
II. Millennium was incorporated under the laws of the
State of Arizona and, effective January 1, 1998, became a
wholly-owned subsidiary of UniSource Energy. Millennium
holds the stock of Advanced Energy Technologies, Inc., MEH
Corporation (previously known as Millennium Energy Holdings,
Inc.), Nations Energy Corporation and Southwest Energy
Solutions, Inc.
A. Advanced Energy Technologies, Inc. was
incorporated under the laws of the State of Arizona and is a
wholly-owned subsidiary of Millennium Energy Holdings, Inc.
<PAGE>
Advanced Energy Technologies, Inc. was organized to develop
certain distributed energy projects, as well as renewable
energy sources.
1. Global Solar Energy, L.L.C. was formed under the
laws of the State of Arizona and is fifty percent (50%)
owned by Advanced Energy Technologies, Inc. Global Solar
Energy, L.L.C. was organized for the purpose of engaging in
the manufacture and sale of thin film photovoltaic modules
for distributed energy applications.
B. MEH Corporation was incorporated under the laws
of the State of Arizona and is a wholly-owned subsidiary of
Millennium Energy Holdings, Inc. MEH Corporation was
organized to hold TEP's interest in New Energy Ventures,
Inc.
1. New Energy Ventures, Inc. was formed under the
laws of the State of Arizona and is fifty percent (50%)
owned by MEH Corporation. New Energy Ventures, Inc. was
organized for the purpose of acting as a buyer's agent in
procuring electric energy, performing energy services,
engaging in power marketing and trading and other energy-
related activities.
a. NEV California, L.L.C. was formed under the laws of the
State of Arizona and is a wholly-owned subsidiary of New
Energy Ventures, Inc. NEV California, L.L.C. was organized
for the purpose of acting as a buyer's agent in procuring
electric energy, performing energy services, engaging in
power marketing and trading and other energy-related
activities.
b. NEV East, L.L.C. was formed under the laws of the State
of Arizona and is a wholly-owned subsidiary of New Energy
Ventures, Inc. NEV East, L.L.C. was organized for the
purpose of acting as a buyer's agent in procuring electric
energy, performing energy services, engaging in power
marketing and trading and other energy-related activities.
c. NEV Midwest, L.L.C. was formed under the laws
of the State of Arizona and is a wholly-owned subsidiary of
New Energy Ventures, Inc. NEV Midwest, L.L.C. was organized
for the purpose of acting as a buyer's agent in procuring
electric energy, performing energy services, engaging in
power marketing and trading and other energy-related
activities.
d. NEV Technologies, L.L.C. was formed under the
laws of the State of Arizona and is a wholly-owned
subsidiary of New Energy Ventures, Inc. NEV Technologies,
L.L.C. was organized for the purpose of acting as a buyer's
agent in procuring electric energy, performing energy
services, engaging in power marketing and trading and other
energy-related activities.
(1)NEVTech Americas, L.L.C. was formed under
the laws of the State of Arizona and is fifty percent (50%)
owned by NEV Technologies, L.L.C. NEVTech Americas, L.L.C.
was organized to market energy-related products.
(2)NEVTech Pacifica, L.L.C. was formed under
the laws of the State of Arizona and is fifty percent (50%)
owned by NEV Technologies, L.L.C. NEVTech Pacifica, L.L.C.
was organized to market energy-related products.
e. NEV Texas, L.L.C. was formed under the laws
of the State of Arizona is a wholly-owned subsidiary of New
Energy Ventures, Inc. NEV Texas, L.L.C. was organized for
the purpose of acting as a buyer's agent in procuring
electric energy, performing energy services, engaging in
power marketing and trading and other energy-related
activities.
<PAGE>
2. NEV Southwest, L.L.C. was formed under the laws of
the State of Arizona and is a wholly-owned subsidiary of MEH
Corporation. NEV Southwest, L.L.C. was organized for the
purpose of acting as a buyer's agent in procuring electric
energy, performing energy services, engaging in power
marketing and trading and other energy-related activities.
C. Nations Energy Corporation was incorporated under
the laws of the State of Arizona and is a wholly-owned
subsidiary of Millennium Energy Holdings, Inc. Nations
Energy Corporation was organized to develop and invest in
independent power projects in global energy markets,
including QFs, EWGs and FUCOs, located in the United States
and abroad.
1. Nations-Colorado Energy Corporation was
incorporated under the laws of the State of Delaware and is
a wholly-owned subsidiary of Nations Energy Corporation.
Nations-Colorado Energy Corporation holds a 1% limited
partnership interest in a partnership which in turn owns and
operates an electric and thermal energy generating facility
serving Coors Brewing Company in Golden, Colorado. The
facility is a "qualifying facility" under the Public Utility
Regulatory Policies Act of 1978.
2. Nations Energy Holland Holding B.V. was formed
under the laws of the Netherlands and is a wholly-owned
subsidiary of Nations Energy Corporation. Nations Energy
Holland Holding B.V. was organized for the purpose of
investing in international independent power projects.
<PAGE>
a. Nations Kladno B.V. was formed under the laws
of the Netherlands and is 50% owned by Nations Energy
Holland Holding B.V. Nations Kladno B.V. was organized for
the purpose of holding an interest in an independent power
project in the Czech Republic.
b. Nations Kladno II B.V. was formed under the laws of the
Netherlands and is 50% owned by Nations Energy Holland
Holding B.V. Nations Kladno II B.V. was organized for the
purpose of holding an interest in an independent power
project in the Czech Republic.
3. Nations International Ltd. was incorporated under
the laws of the Cayman Islands and is a wholly-owned
subsidiary of Nations Energy Corporation. Nations
International Ltd. was organized for the purpose of
investing in international independent power projects.
a. Biomasa Generacion, S. de R.L. de C.V. was formed under
the laws of Honduras and is ninety-one percent (91%) owned
by Nations International Ltd. Biomasa Generacion, S. de
R.L. de C.V. was organized for the purpose of developing and
owning biomass-fueled non-utility generating projects in
Honduras.
b. Nations BioGen Ltd. was incorporated under the laws of
the Cayman Islands and is a wholly-owned subsidiary of
Nations International Ltd. Nations BioGen Ltd. was
organized for the purpose of investing in international
independent power projects.
c. Nations Curacao Ltd. was incorporated under the laws of
the Cayman Islands and is a wholly-owned subsidiary of
Nations International Ltd. Nations Curacao Ltd. was
organized for the purpose of investing in international
independent power projects.
<PAGE>
d. Suministradora de Materials Organicos, S.R.L.
de C.V. was formed under the laws of Honduras and is ninety-
one percent (91%) owned by Nations International Ltd.
Suministradora de Materials Organicos, S.R.L. de C.V. was
organized for the purpose of administering fuel supply to
biomass projects in Honduras.
e. Nations Panama Energy Corporation was
organized under the laws of the Republic of Panama and is a
wholly-owned subsidiary of Nations International, Ltd.
Nations Panama Energy Corporation was organized for the
purpose of structuring and developing projects for the
generation, transmission and commercialization of electric
power in all of its forms.
4. Nations ECK, L.L.C. was incorporated under the
laws of the State of Delaware and is a wholly-owned
subsidiary of Nations Energy Corporation. Nations ECK,
L.L.C. was formed for the purpose of being a service
company.
D. Southwest Energy Solutions, Inc. was incorporated
under the laws of the State of Arizona and is a wholly-owned
subsidiary of Millennium Energy Holdings, Inc. Southwest
Energy Solutions, Inc. was organized for the purpose of
supplying a variety of ancillary "beyond the meter" energy
products and services to retail electric customers.
1. SWPP Investment Company was incorporated under the
laws of the State of Arizona and is a wholly-owned
subsidiary of Southwest Energy Solutions, Inc. SWPP
Investment Company was organized for the purpose of
manufacturing and selling concrete utility products.
a. Sentinel Concrete Utility Poles, L.L.C. was
formed under the laws of the State of Arizona and is fifty
percent (50%) owned by SWPP Investment Company. Sentinel
Concrete Utility Poles, L.L.C. was organized for the purpose
of marketing and distributing concrete utility poles and
products.
<PAGE>
b. SWPP International Ltd. was incorporated
under the laws of the Cayman Islands and is a wholly-owned
subsidiary of SWPP Investment Company. SWPP International
Ltd. was organized to invest in a Mexican joint venture(s)
related to the manufacturing and selling of concrete utility
poles.
(1)Productos de Concreto Internacionales, S. de
R.L. de C.V. was formed under the laws of Mexico and is
fifty percent (50%) owned by SWPP International Ltd.
Productos de Concreto Internacionales, S. de R.L. de C.V.
was organized for the purpose of manufacturing and selling
concrete utility poles and products.
UniSource Energy controls, directly or indirectly, less
than ten percent (10%) of the "voting securities" of the
following companies: None.
2.A brief description of the properties of claimant[s] and
each of its subsidiary public utility companies used for
the generation, transmission and distribution of electric
energy for sale, or for the production, transmission and
distribution of natural or manufactured gas, indicating
the location of principal generating
plants, transmission lines, producing fields, gas
manufacturing plants, and electric and gas distribution
facilities, including all such properties which are
outside the State in which claimant[s] and its
subsidiaries are organized and all transmission or
pipelines which deliver or receive electric energy or gas
at the borders of such State.
<PAGE>
UniSource Energy does not directly own any property used
for the generation, transmission and distribution of
electric energy for sale, or for the production,
transmission and distribution of natural or manufactured
gas.
As of December 31, 1998, TEP owned or participated in an
overhead electric transmission and distribution system
consisting of 511 circuit-miles of 500 kV lines, 1,122
circuit-miles of 345 kV lines, 350 circuit-miles of 138 kV
lines, 440 circuit-miles of 46 kV lines and 9,643 circuit-
miles of lower voltage primary lines. The underground
electric distribution system is comprised of 5,071 cable
miles. Approximately twenty-four percent (24%) of the poles
upon which the lower voltage lines are located are not owned
by TEP. Electric substation capacity associated with the
above-described electric system consisted of 173 substations
with a total installed transformer capacity of 5,329,605
kVA. The above facilities are all located in Arizona except
for certain transmission lines consisting of 560 circuit-
miles of 345 kV in which TEP has a fractional undivided
interest and which are located in the State of New Mexico
and deliver electric energy to TEP's Arizona transmission
lines at the Arizona-New Mexico border.
<PAGE>
Except as otherwise noted, at December 31, 1998 TEP owns
or has a leasehold interest in the following generating
stations:
Net
Generating Capabil Operati TEP's
Source Location ity ng % Share
MW Agent MW
- ------------- --------- ----- ------- ---- ---
San Juan Station #1 Farmington, NM 316 PNM 50.0 158
San Juan Station #2 Farmington, NM 312 PNM 50.0 156
Navajo Station #1 Page, AZ 750 SRP 7.5 56
Navajo Station #2 Page, AZ 750 SRP 7.5 56
Navajo Station #3 Page, AZ 750 SRP 7.5 56
Four Corners:
Station #4 Farmington, NM 784 APS 7.0 55
Four Corners
Station #5 Farmington, NM 784 APS 7.0 55
Irvington Tucson, AZ 422 TEP 100.0 422
Internal
Combustion Turbines Tucson, AZ 122 TEP 100.0 122
Springerville:
Station #1 Springerville, AZ 380 TEP 100.0 380
Station #2 Springerville, AZ 380 TEP 100.0 380
---
TOTAL 1,896
=====
The electric generating stations, TEP's general office
building, operating headquarters, the warehouse, service
center and the electric distribution and electric
transmission facilities owned by TEP are located in Arizona,
except as otherwise noted. TEP, individually and in
conjunction with Public Service Company of New Mexico in
connection with the San Juan Station, has acquired easements
and leases for transmission lines and a water diversion
facility located on the Navajo Indian Reservation. TEP has
also acquired easements for transmission facilities, related
to the San Juan and Navajo Generating Stations, across the
Zuni, Navajo and Tohono O'Odham Indian Reservations.
Various undivided interests in the common facilities at
the Irvington Generating Station which serve Unit 4 were
sold and are leased back by TEP.
The fifty percent (50%) undivided interest of San Carlos
in the common facilities at the Springerville Generating
Station were sold by San Carlos and leased back by TEP and
San Carlos, jointly and severally. The coal-handling
facilities at the Springerville Generating Station were sold
and are leased back by TEP. TEP leases Springerville Unit
1, the fuel handling facilities for Springerville, and an
undivided fifty percent (50%) interest in the facilities
common to Unit 1 and Unit 2 through sale/leaseback
arrangements. San Carlos holds title to Unit 2 of the
Springerville Generating Station.
3.The following information for the last calendar year with
respect to claimant[s] and each of its subsidiary public
utility companies:
a.Number of kWh of electric energy sold (at retail or
wholesale), and Mcf of natural or manufactured gas
distributed at retail.
Electricity Gas
----------- ----
UniSource None None
Energy
TEP 12,140,421,000 None
San Carlos None None
b. Number of kWh of electric energy and Mcf of natural or
manufactured gas distributed at retail outside the State in
which each company is organized.
None.
<PAGE>
c.Number of kWh of electric energy and Mcf of natural or
manufactured gas sold at wholesale outside the State in
which each such company is organized, or at the State line.
Electricity Gas
----------- ----
UniSource None None
Energy
TEP 3,547,689,000 None
San Carlos None None
d.Number of kWh of electric energy and Mcf of natural or
manufactured gas purchased outside the State in which each
such company is organized or at the State line.
Electricity Gas
----------- ---
UniSource None None
Energy
TEP 2,259,020,000 None
San Carlos None None
4.The following information for the reporting period with
respect to claimant[s] and each interest it holds
directly or indirectly in an EWG or a foreign utility
company, stating monetary amounts in United States
dollars:
a. Name, location, business address and description of
the facilities used by the EWG or foreign utility company
for the generation, transmission and distribution of
electric energy for sale or for the distribution at
retail of natural or manufactured gas.
Nations Energy Corporation, an Arizona corporation
("Nations Energy"), acting on behalf of ECK Generating,
s.r.o., a limited liability company organized under the laws
of the Czech Republic ("ECKG"), hereby notifies the
Commission, pursuant to Section 33(a) of the Act and Rule 57
thereunder, that ECKG is a foreign utility company within
the meaning of Section 33(a) of the Act.
<PAGE>
Name and Business Address:
-------------------------
ECK Generating, s.r.o.
272 03 Kladno
Dubska-Teplarna
Czech Republic
Description of Facilities:
-------------------------
ECKG will lease (or purchase) and operate facilities in
Kladno, Czech Republic, which are used for the generation
and associated transmission and distribution of electric
energy for sale (the "Existing Facilities"). The Existing
Facilities, which ECKG will lease (or purchase) from
Energeticke Centrum Kladno, s.r.o., provide 54 MW of
electrical generating capacity and consist of eight coal-
fired boilers, two condensing extraction steam turbine-
generator units, plus heating steam and process steam
extraction; an associated transformer and switch gears; and
facilities used to effect retail sales, including a
transformer, switch gears, and cabling. ECKG is also
developing an improvement project (the "Improvement
Project") that will increase the net electric capacity of
the Existing Facilities to approximately 344 MW by
developing a 246 MW coal-fired steam generating plant and a
70 MW gas-fired combustion turbine, plus associated
transformers and switchgear (the "Expansion Facilities").
The Expansion Facilities will also include two stub
transmission lines connecting the power station to two
different substations. One transmission line is
approximately one kilometer from the power station; the
other is a few kilometers away. In addition, the Expansion
Facilities may include another transmission line connecting
the power station to a third substation in Prague,
approximately 23 kilometers away. Finally, as part of the
Improvement Project, 26 MW of steam generation capacity is
expected to be retired from the Existing Facilities.
<PAGE>
b.Name of each system company that holds an interest in
such EWG or foreign utility company; and description of the
interest held.
The ownership of ECKG is as follows:
(1) Matra Powerplant Holdings B.V. ("Matra") holds an
89% equity interest in ECKG. Nations Kladno B.V. holds a
30% equity interest in Matra and is a wholly-owned
subsidiary of Nations Energy Holland Holding B.V., which is
a wholly-owned subsidiary of Nations Energy. Nations Energy
is a wholly-owned subsidiary of Millennium, a intermediary
holding company for the unregulated business of UniSource
Energy which is subject to retail rate regulation by the
Arizona Corporation Commission. Nations Energy is primarily
engaged in developing independent power projects.
(2) Kladno Power (No. 2) B.V., a wholly-owned
subsidiary of NRG Energy, Inc., a Delaware corporation
("NRG"), holds a 50% equity interest in Matra. NRG is an
indirect, wholly-owned subsidiary of Northern States Power
Company (Minnesota) ("NSP"), an electric utility company
which is subject to retail rate regulation by the Minnesota
Public Utilities Commission, the North Dakota Public Service
Commission, and the South Dakota Public Utilities Commission
and whose wholly-owned subsidiary, Northern States Power
Company (Wisconsin) ("NSPW"), is also an electric utility
company subject to retail rate regulation by the Wisconsin
Public Service Commission and the Michigan Public Service
Commission.
(3) El Paso Kladno, B.V., a wholly-owned subsidiary of
El Paso Electric International Company, a Delaware
corporation, holds a 20% equity interest in Matra.
(4) Stredoceska Energeticke, a.s., a Czech joint-stock
company, which is one of the eight Czech Republic government-
owned regional electricity distribution companies and which
operates in the Central Bohemia region of the Czech
Republic, holds an 11% equity interest in ECKG.
<PAGE>
c.Type and amount of capital invested, directly or
indirectly, by the holding company claiming exemption; any
direct or indirect guarantee of the security of the EWG or
foreign utility company by the holding company claiming
exemption; and any debt or other financial obligation for
which there is recourse, directly or indirectly, to the
holding company claiming exemption or another system
company, other than the EWG or foreign utility company.
No portion of the purchase price for ECKG was paid by
UniSource Energy or TEP.
d.Capitalization and earnings of the EWG or foreign
utility company during the reporting period.
The ECKG Project was capitalized at $401 million. No
earnings were reported since the Project is under
construction.
e.Identify any service, sales or construction contract(s)
between the EWG or foreign utility company and a system
company, and describe the services to be rendered or goods
sold and fees or revenues under such agreement(s).
Inapplicable.
<PAGE>
EXHIBIT A
Consolidating statements of income of the claimants and
their subsidiary companies for the last calendar year,
together with the consolidating balance sheets of claimants
and their subsidiary companies as of the close of such
calendar year.
This statement is being filed by TEP to claim exemption
in the event that San Carlos Resources Inc. is an "electric
utility company" under the Act. However, the filing of this
statement is not an acknowledgment by TEP that San Carlos
Resources Inc. is an "electric utility company."
The above-named claimants have caused this statement to
be duly executed on their behalf by its authorized officer
on this 25th day of February, 1999.
UNISOURCE ENERGY CORPORATION
By: Karen G. Kissinger
Karen G. Kissinger
Vice President, Controller and
Principal Accounting Officer
TUCSON ELECTRIC POWER COMPANY
By: Karen G. Kissinger
Karen G. Kissinger
Vice President, Controller and
Chief
Information Officer
(Corporate Seal)
Attest:
_________________________
Name, title and address of officer to whom notices and
correspondence concerning this statement should be
addressed: Dennis R. Nelson, Vice President, General Counsel
and Corporate Secretary, UniSource Energy Corporation, 220
West Sixth Street, Tucson, Arizona 85701
<PAGE>
<TABLE>
UNISOURCE ENERGY CORPORATION EXHIBIT A
CONSOLIDATING BALANCE SHEETS
DECEMBER 31, 1998
(in thousands)
<CAPTION>
UNISOURCE TUCSON MILLENNIUM
ENERGY ELECTRIC ENERGY CONSOL. 1998
CORP. POWER CO.* HOLDINGS** ADJUST. CONSOL.
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS
Utility Plant
Plant in Service $ $ 2,263,871 $ $ $ 2,263,871
Utility Plant Under Capital Leases 886,902 886,902
Construction Work in Progress 74,050 74,050
----------- ----------- ----------- ----------- -----------
Total Utility Plant 3,224,823 3,224,823
Less Accumulated Depreciation and
Amortization (1,051,994) (1,051,994)
Less Accumulated Amortization of
Capital Leases (85,826) (85,826)
Less Springerville Unit 1 Allowance (171,413) (171,413)
----------- ----------- ----------- ----------- -----------
Total Utility Plant - Net 1,915,590 1,915,590
----------- ----------- ----------- ----------- -----------
Investments and Other Property 332,131 62,978 47,340 (332,131) 110,318
----------- ----------- ----------- ----------- -----------
Note Receivable from UniSource Energy 79,462 (79,462) -
----------- ----------- ----------- ----------- -----------
Current Assets
Cash and Cash Equivalents 15,070 118,236 11,861 145,167
Accounts Receivable 4,226 72,239 4,683 (8,381) 72,767
Materials and Fuel 36,995 45 37,040
Deferred Income Taxes - Current 14,820 14,820
Other 14,735 10,215 24,950
----------- ----------- ----------- ----------- -----------
Total Current Assets 19,296 257,025 26,804 (8,381) 294,744
----------- ----------- ----------- ----------- -----------
Deferred Debits - Regulatory Assets
Income Taxes Recoverable Through
Future Rates 152,111 152,111
Deferred Springerville Generation Costs 102,211 102,211
Deferred Lease Expense 9,877 9,877
Other Regulatory Assets 18,886 18,886
Deferred Debits - Other 30,443 30,443
----------- ----------- ----------- ----------- -----------
Total Deferred Debits 313,528 313,528
----------- ----------- ----------- ----------- -----------
Total Assets $ 351,427 $ 2,628,583 $ 74,144 $ (419,974) $ 2,634,180
=========== =========== =========== =========== ===========
* Tucson Electric Power Company holds the stock of Escavada Company; San Carlos Resources Inc.; Sierrita
Resources Inc.; Tucson Resources Inc.; and Tucsonel Inc. See 1.I. for information regarding subsidiaries
held by Sierrita Resources Inc. and Tucson Resources Inc.
** Millennium Energy Holdings, Inc. is the parent company of Advanced Energy Technologies, Inc.; MEH
Corporation; Nations Energy Corporation; and Southwest Energy Solutions, Inc.
- Advanced Energy Technologies, Inc. owns 50% of Global Solar Energy, L.L.C.
- MEH Corporation owns 50% of New Energy Ventures, Inc. See 1.II.B.1. for information regarding subsidiaries
held by New Energy Ventures, Inc.
- Nations Energy Corporation holds the stock of Nations Energy Holland Holding B.V., Nations Colorado Energy
Corporation, and Nations International Ltd. See 1.II.C. for information regarding the subsidiaries held by
Nations Energy Corporation's subsidiaries.
- Southwest Energy Solutions, Inc. owns SWPP Investment Company. See 1.II.D.1. for information regarding the
subsidiaries held by SWPP Investment Company.
</TABLE>
<PAGE>
<TABLE>
UNISOURCE ENERGY CORPORATION EXHIBIT A
CONSOLIDATING BALANCE SHEETS
DECEMBER 31, 1998
(in thousands)
<CAPTION>
UNISOURCE TUCSON MILLENNIUM
ENERGY ELECTRIC ENERGY CONSOL. 1998
CORP. POWER CO. HOLDINGS ADJUST. CONSOL.
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
CAPITALIZATION AND OTHER LIABILITIES
Capitalization
Common Stock $ 640,640 $ 640,211 $ $ (640,211) $ 640,640
Additional Paid-In Capital 94,148 (94,148) -
Accumulated Deficit (393,994) (410,350) (17,139) 427,489 (393,994)
----------- ----------- ----------- ----------- -----------
Common Stock Equity 246,646 229,861 77,009 (306,870) 246,646
Capital Lease Obligations 889,543 889,543
Long-Term Debt 104,723 1,184,423 (104,723) 1,184,423
----------- ----------- ----------- ----------- -----------
Total Capitalization 351,369 2,303,827 77,009 (411,593) 2,320,612
----------- ----------- ----------- ----------- -----------
Current Liabilities
Current Obligations Under Capital Leases 11,647 11,647
Current Maturities of Long-Term Debt 1,725 1,725
Accounts Payable 2,414 37,256 2,756 (8,308) 34,118
Interest Accrued 70,771 70,771
Taxes Accrued 27,082 85 27,167
Accrued Employee Expenses 14,897 310 15,207
Other 6,705 6,705
----------- ----------- ----------- ----------- -----------
Total Current Liabilities 2,414 170,083 3,151 (8,308) 167,340
----------- ----------- ----------- ----------- -----------
Deferred Credits and Other Liabilities
Deferred Income Taxes - Noncurrent (2,356) 70,504 (6,120) 62,028
Deferred Investment Tax Credits Regulatory
Liability 10,436 10,436
Emission Allowance Gain Regulatory Liability 31,335 31,335
Other 42,398 104 (73) 42,429
----------- ----------- ----------- ----------- -----------
Total Deferred Credits and Other Liabilities (2,356) 154,673 (6,016) (73) 146,228
----------- ----------- ----------- ----------- -----------
Total Capitalization and Other Liabilities $ 351,427 $ 2,628,583 $ 74,144 $ (419,974) $ 2,634,180
=========== =========== =========== =========== ===========
</TABLE>
<PAGE>
<TABLE>
UNISOURCE ENERGY CORPORATION EXHIBIT A
CONSOLIDATING STATEMENTS OF INCOME
TWELVE MONTHS ENDED DECEMBER 31, 1998
(in thousands except for per share amounts)
<CAPTION>
UNISOURCE TUCSON MILLENNIUM
ENERGY ELECTRIC ENERGY CONSOL. 1998
CORP. POWER CO. HOLDINGS ADJUST. CONSOL.
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Operating Revenues
Retail Customers $ $ 625,721 $ $ (314) $ 625,407
Sales for Resale 143,269 143,269
----------- ----------- ----------- ----------- -----------
Total Operating Revenues - 768,990 - (314) 768,676
----------- ----------- ----------- ----------- -----------
Operating Expenses
Fuel and Purchased Power 255,527 255,527
Capital Lease Expense 104,045 104,045
Amortization of Springerville
Unit 1 Allowance (30,522) (30,522)
Other Operations 109,170 109,170
Maintenance and Repairs 36,143 36,143
Depreciation and Amortization 90,358 90,358
Taxes Other Than Income Taxes 50,395 50,395
Income Taxes 18,372 18,372
----------- ----------- ----------- ----------- -----------
Total Operating Expenses - 633,488 - - 633,488
----------- ----------- ----------- ----------- -----------
Operating Income - 135,502 - (314) 135,188
----------- ----------- ----------- ----------- -----------
Other Income (Deductions)
Income Taxes 3,743 794 4,537
Interest Income 66 10,800 10,866
Interest Income - Note Receivable from
UniSource Energy 9,329 (9,329) -
Unregulated Energy Businesses - Net 8,123) 14 (8,109)
Other Income (Deductions) 33,552 2,851 (33,253) 3,150
----------- ----------- ----------- ----------- -----------
Total Other Income (Deductions) 37,361 23,774 (8,123) (42,568) 10,444
----------- ----------- ----------- ----------- -----------
Interest Expense
Long-Term Debt 9,329 72,672 (9,329) 72,672
Interest Imputed on Losses Recorded
at Present Value 34,179 34,179
Other Interest Expense 10,749 10,749
----------- ----------- ----------- ----------- -----------
Total Interest Expense 9,329 117,600 - (9,329) 117,600
----------- ----------- ----------- ----------- -----------
Net Income (Loss) $ 28,032 $ 41,676 $ (8,123) (33,553) $ 28,032
=========== =========== =========== =========== ===========
Average Shares of
Common Stock Outstanding 32,178
Basic and Diluted Earnings per Share
$ 0.87
===========
<PAGE>
</TABLE>
UNISOURCE ENERGY CORPORATION
FINANCIAL DATA SCHEDULE
EXHIBIT B
DECEMBER 31, 1998
(in thousands)
Total Assets $ 2,634,180
===========
Total Operating Revenues $ 768,676
===========
Net Income $ 28,032
===========
<PAGE>
<TABLE>
TUCSON ELECTRIC POWER COMPANY EXHIBIT A
CONSOLIDATING BALANCE SHEETS
DECEMBER 31, 1998
(in thousands)
<CAPTION>
TUCSON
ELECTRIC INVESTMENT CONSOL. 1998
POWER CO. SUBS * ADJUST. CONSOL.
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Utility Plant
Plant in Service $ 2,263,871 $ $ $ 2,263,871
Utility Plant Under Capital Leases 886,902 886,902
Construction Work in Progress 74,050 74,050
----------- ----------- ----------- -----------
Total Utility Plant 3,224,823 3,224,823
Less Accumulated Depreciation and
Amortization (1,051,994) (1,051,994)
Less Accumulated Amortization of
Capital Leases (85,826) (85,826)
Less Springerville Unit 1 Allowance (171,413) (171,413)
----------- ----------- ----------- -----------
Total Utility Plant - Net 1,915,590 1,915,590
----------- ----------- ----------- -----------
Investments and Other Property 61,271 6,211 (4,504) 62,978
----------- ----------- ----------- -----------
Note Receivable from UniSource Energy 79,462 79,462
----------- ----------- ----------- -----------
Current Assets
Cash and Cash Equivalents 116,490 1,746 118,236
Accounts Receivable 76,357 5,456 (9,574) 72,239
Materials and Fuel 36,995 36,995
Deferred Income Taxes - Current 14,820 14,820
Other 14,735 14,735
----------- ----------- ----------- -----------
Total Current Assets 259,397 7,202 (9,574) 257,025
----------- ----------- ----------- -----------
Deferred Debits - Regulatory Assets
Income Taxes Recoverable Through
Future Rates 152,111 152,111
Deferred Springerville Generation Costs 102,211 102,211
Deferred Lease Expense 9,877 9,877
Other Regulatory Assets 18,886 18,886
Deferred Debits - Other 27,109 3,334 30,443
----------- ----------- ----------- -----------
Total Deferred Debits 310,194 3,334 313,528
----------- ----------- ----------- -----------
Total Assets $ 2,625,914 $ 16,747 $ (14,078) $ 2,628,583
=========== =========== =========== ===========
* Tucson Electric Power Company holds the stock of Escavada Company; San Carlos Resources Inc.; Sierrita
Resources Inc.; Tucson Resources Inc.; and Tucsonel Inc. See 1.I. for information regarding subsidiaries
held by Sierrita Resources Inc. and Tucson Resources Inc.
</TABLE>
<PAGE>
<TABLE>
TUCSON ELECTRIC POWER COMPANY EXHIBIT A
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998
(in thousands)
<CAPTION>
TUCSON
ELECTRIC INVESTMENT CONSOL. 1998
POWER CO. SUBS * ADJUST. CONSOL.
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CAPITALIZATION AND OTHER LIABILITIES
Capitalization
Common Stock $ 646,568 $ 3 $ (3) $ 646,568
Premium on Capital Stock 265,967 (265,967) -
Capital Stock Expense (6,357) (6,357)
Accumulated Deficit (417,901) (261,466) 269,017 (410,350)
----------- ----------- ----------- -----------
Common Stock Equity 222,310 4,504 3,047 229,861
Capital Lease Obligations 889,543 889,543
Long-Term Debt 1,184,423 1,184,423
----------- ----------- ----------- -----------
Total Capitalization 2,296,276 4,504 3,047 2,303,827
----------- ----------- ----------- -----------
Current Liabilities
Note Payable to Parent - 3,600 (3,600) -
Current Obligations Under Capital Leases 11,647 11,647
Current Maturities of Long-Term Debt 1,725 1,725
Accounts Payable 42,716 514 (5,974) 37,256
Interest Accrued 70,771 70,771
Taxes Accrued 27,090 (8) 27,082
Accrued Employee Expenses 14,897 14,897
Other 6,705 6,705
----------- ----------- ----------- -----------
Total Current Liabilities 175,551 4,106 (9,574) 170,083
----------- ----------- ----------- -----------
Deferred Credits and Other Liabilities
Deferred Income Taxes - Noncurrent 69,918 586 70,504
Deferred Investment Tax Credits
Regulatory Liability 10,436 10,436
Emission Allowance Gain Regulatory Liability 31,335 31,335
Other 42,398 8,137 (8,137) 42,398
----------- ----------- ----------- -----------
Total Deferred Credits and Other Liabilities 154,087 8,137 (7,551) 154,673
----------- ----------- ----------- -----------
Total Capitalization and Other Liabilities $ 2,625,914 $ 16,747 $ (14,078) $ 2,628,583
=========== =========== =========== ===========
</TABLE>
<PAGE>
<TABLE>
TUCSON ELECTRIC POWER COMPANY EXHIBIT A
CONSOLIDATING STATEMENTS OF INCOME
TWELVE MONTHS ENDED DECEMBER 31, 1998
(in thousands)
<CAPTION>
TUCSON
ELECTRIC INVESTMENT CONSOL. 1998
POWER CO. SUBS ADJUST. CONSOL.
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Operating Revenues
Retail Customers $ 625,728 $ $ (7) $ 625,721
Sales for Resale 143,269 143,269
----------- ----------- ---------- ----------
Total Operating Revenues 768,997 (7) 768,990
----------- ----------- ---------- ----------
Operating Expenses
Fuel and Purchased Power 255,527 255,527
Capital Lease Expense 104,045 104,045
Amortization of Springerville
Unit 1 Allowance (30,522) (30,522)
Other Operations 109,170 109,170
Maintenance and Repairs 36,143 36,143
Depreciation and Amortization 90,358 90,358
Taxes Other Than Income Taxes 50,395 50,395
Income Taxes 18,372 18,372
----------- ----------- ----------- -----------
Total Operating Expenses 633,488 - - 633,488
----------- ----------- ----------- -----------
Operating Income 135,509 - (7) 135,502
----------- ----------- ----------- -----------
Other Income (Deductions)
Income Taxes 795 (1) 794
Interest Income 10,763 37 10,800
Interest Income - Note Receivable from
UniSource Energy 9,329 9,329
Other Income (Deductions) 2,934 1,530 (1,613) 2,851
----------- ----------- ----------- -----------
Total Other Income (Deductions) 23,821 1,566 (1,613) 23,774
----------- ----------- ----------- -----------
Interest Expense
Long-Term Debt 72,672 72,672
Interest Imputed on Losses Recorded
at Present Value 34,179 34,179
Short-Term Debt 54 189 (243) -
Other Interest Expense 10,749 10,749
----------- ----------- ----------- -----------
Total Interest Expense 117,654 189 (243) 117,600
----------- ----------- ----------- -----------
Net Income $ 41,676 $ 1,377 $ (1,377) $ 41,676
=========== =========== =========== ===========
<PAGE>
</TABLE>
TUCSON ELECTRIC POWER COMPANY
FINANCIAL DATA SCHEDULE
EXHIBIT B
DECEMBER 31, 1998
(in thousands)
Total Assets $ 2,628,583
===========
Total Operating Revenues $ 768,990
===========
Net Income $ 41,676
===========
<PAGE>
EXHIBIT C
An organizational chart showing the relationship of each
EWG or foreign utility company to associate companies in the
holding company system.
Not applicable.
_______________________________
1 Title to Springerville #2 is held by San Carlos.
