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,
Amendment No. 1 to 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") 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 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, on a share-for-share basis, for shares of UniSource common
stock, no par value. As a result of the Share Exchange, TEP became, and is
now, a wholly-owned subsidiary of UniSource.
Following the Share Exchange, UniSource acquired from TEP all of the
outstanding stock of MEH Corporation.
The information contained in this statement is furnished taking into
account the Share Exchange and such transfer of the outstanding stock of MEH
Corporation.
UniSource 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. 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 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. MEH Corporation was incorporated under the laws of the State of Arizona
and effective January 1, 1998 became a wholly-owned subsidiary of UniSource.
MEH Corporation was organized to hold the stock of Advanced Energy
Technologies, Inc., Millennium Energy Holdings, Inc., Nations Energy
Corporation and Southwest Energy Solutions, Inc.
A. Advanced Energy Technologies, Inc. (formerly known as TEP Solar
Energy Corporation) was incorporated under the laws of the State of Arizona
and is a wholly-owned subsidiary of MEH Corporation. 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. Millennium Energy Holdings, Inc. was incorporated under the laws of
the State of Arizona and is a wholly-owned subsidiary of MEH Corporation.
Millennium Energy Holdings, Inc. was organized to hold TEP's interest in New
Energy Ventures, L.L.C in 1997. As of January 1, 1998, MEH Corporation was
transferred to UniSource.
1. New Energy Ventures, L.L.C. was formed under the laws of the
State of Arizona and is fifty percent (50%) owned by Millennium Energy
Holdings, Inc. New Energy Ventures, 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.
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, L.L.C. 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, L.L.C. 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, L.L.C. 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,
L.L.C. NEV Technologies, L.L.C. was organized to market, own and operate
distributed generation systems. NEV Technologies, L.L.C. does not currently
own or operate any distributed generation systems.
C. Nations Energy Corporation was incorporated under the laws of the
State of Arizona and is a wholly-owned subsidiary of MEH Corporation.
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 general and
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.
a. Nations Kladno B.V. was formed under the laws of the
Netherlands and is a wholly-owned subsidiary of 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 a wholly-owned subsidiary of 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. At the appropriate time, Biomasa Generacion, S. de R.L. de C.V.
anticipates filing an EWG or foreign utility company application for any such
projects that are constructed 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.
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.
D. Southwest Energy Solutions, Inc. was incorporated under the laws of
the State of Arizona and is a wholly-owned subsidiary of MEH Corporation.
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.
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 of concrete
utility poles and products.
UniSource 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.
UniSource 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, 1997, 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.
Except as otherwise noted, TEP owns or has a leasehold interest in the
following generating stations:
<TABLE>
<CAPTION>
Net
Generating Capability Operating TEP's Share
Source Location MW Agent % MW
------- ------- ----- ----- ---- ----
<S> <C> <C> <C> <C> <C>
San Juan Station Farmington, NM 316 PNM 50.0 158
#1
San Juan Station Farmington, NM 312 PNM 50.0 156
#2
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 Station Tucson, AZ 422 TEP 100.0 422
Internal
Combustion Tucson, AZ 218 TEP 100.0 218
Turbines
Springerville
Generating
Station #1 Springerville, 380 TEP 100.0 380
AZ
Springerville
Generating
Station #2 1 Springerville, 380 TEP 100.0 380
AZ ----
TOTAL 1,992
<FN>
1 Title to Springerville #2 is held by San Carlos.
</TABLE>
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. Effective December 15, 1992, TEP assumed the obligation
of Century Power Corporation as Lessee under a sale and leaseback of
Springerville Unit 1 and an undivided fifty percent (50%) interest in the
facilities common to Unit 1 and Unit 2. 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
TEP 10,899,869,000 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.
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
TEP 2,189,832,000 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
TEP 1,157,025,000 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.
Inapplicable.
b. Name of each system company that holds an interest in such EWG or
foreign utility company; and description of the interest held.
Inapplicable.
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.
Inapplicable.
d. Capitalization and earnings of the EWG or foreign utility company during
the reporting period.
Inapplicable.
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.
EXHIBIT A
Consolidating statements of income and surplus 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 26th day of February, 1998.
UNISOURCE ENERGY CORPORATION
By:
Karen G. Kissinger
----------------------------------------
Karen G. Kissinger
Vice President, Controller and
Principal Accounting Officer
TUCSON ELECTRIC POWER COMPANY
By:
Karen G. Kissigner
----------------------------------------
Karen G. Kissinger
Vice President and Controller
(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
<TABLE>
UNISOURCE ENERGY CORPORATION *** AMENDMENT 1 - EXHIBIT A
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997
(in thousands)
<CAPTION>
UNISOURCE TUCSON
ENERGY ELECTRIC MEH INVESTMENT CONSOL. 1997
CORP. POWER CO. CORP.* SUBS ** ADJUST. CONSOL.
----------- ----------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Utility Plant
Plant in Service $ $ 2,194,150 $ $ $ $2,194,150
Utility Plant Under Capital Leases 893,064 893,064
Construction Work in Progress 72,404 72,404
----------- ---------- ---------- ----------- -----------
Total Utility Plant 3,159,618 3,159,618
Less Accumulated Depreciation and
Amortization (982,621) (982,621)
Less Accumulated Amortization of
Capital Leases (73,728) (73,728)
Less Springerville Unit 1 Allowance (167,756) (167,756)
----------- ---------- ---------- ----------- -----------
Total Utility Plant - Net 1,935,513 1,935,513
----------- ---------- ---------- ----------- -----------
Investments and Other Property 216,878 123,800 21,098 9,648 (292,652) 78,772
----------- ----------- ---------- ---------- ----------- -----------
Current Assets
Cash and Cash Equivalents 96,075 45,412 4,769 146,256
Note Receivable from Subsidiary 3,600 (3,600) -
Accounts Receivable 76,748 910 5,195 (11,628) 71,225
Materials and Fuel 33,965 40 34,005
Deferred Income Taxes - Current 14,910 14,910
Other 22,469 1,184 23,653
----------- ---------- ---------- ----------- -----------
Total Current Assets 247,767 47,546 9,964 (15,228) 290,049
----------- ---------- ---------- ----------- -----------
Deferred Debits - Regulatory Assets
Income Taxes Recoverable Through
Future Rates 170,034 170,034
Deferred Common Facility Costs 58,222 58,222
Contract Termination Fee 48,077 48,077
Deferred Springerville Unit 2 Costs 11,590 11,590
Deferred Lease Expense 11,571 11,571
Other Deferred Regulatory Assets 11,089 11,089
Deferred Debits - Other 16,006 3,486 19,492
----------- ---------- ---------- ----------- -----------
Total Deferred Debits 326,589 3,486 330,075
----------- ----------- ---------- ---------- ----------- -----------
Total Assets $216,878 $2,633,669 $ 68,644 $ 23,098 $ (307,880) $2,634,409
=========== =========== ========== ========== =========== ===========
<FN>
* MEH Corporation is the parent company of Advanced Energy Technologies, Inc. Millennium Energy Holdings, Inc.,
Nations Energy Corporation, and Southwest Energy Solutions, Inc.
** Investment Subs include TRI, SRI and Escapade. These subsidiaries are wholly-owned by Tucson Electric Power Company.
*** UniSource's consolidated financial statements presented herein include the financial results of operations of
UniSource and its wholly-owned subsidiaries as if the current holding company structure had existed in all periods
shown. For the periods presented UniSource's operations and those of TEP are substantially the same.
</TABLE>
<TABLE>
UNISOURCE ENERGY CORPORATION AMENDMENT 1 - EXHIBIT A
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997
(in thousands)
<CAPTION>
UNISOURCE TUCSON
ENERGY ELECTRIC MEH INVESTMENT CONSOL. 1997
CORP. POWER CO. CORP. SUBS ADJUST. CONSOL.
----------- ----------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
CAPITALIZATION AND OTHER LIABILITIES
Capitalization
Common Stock $ 638,904 $ 638,904 $ $ 3 $ (638,907) $ 638,904
Premium on Capital Stock 78,906 276,731 (355,637) -
Accumulated Deficit (422,026) (429,577) (8,773) (271,093) 709,443 (422,026)
----------- ----------- --------- ---------- ----------- -----------
Common Stock Equity 216,878 209,327 70,133 5,641 (285,101) 216,878
Capital Lease Obligations 890,257 890,257
Long-Term Debt 1,215,120 1,215,120
----------- ----------- --------- ---------- ----------- -----------
Total Capitalization 216,878 2,314,704 70,133 5,641 (285,101) 2,322,255
----------- ----------- --------- ---------- ----------- -----------
Current Liabilities
Note Payable to Parent 3,600 (3,600) -
Current Obligations Under Capital Leases 14,552 14,552
Current Maturities of Long-Term Debt 500 500
Accounts Payable 40,266 718 5,553 (11,628) 34,909
Interest Accrued 64,812 64,812
Taxes Accrued 24,373 32 (8) 24,397
Contract Termination Fee Payable 10,000 10,000
Other 18,612 264 175 19,051
----------- --------- ---------- ----------- -----------
Total Current Liabilities 173,115 1,014 9,320 (15,228) 168,221
----------- --------- ---------- ----------- -----------
Deferred Credits and Other Liabilities
Deferred Income Taxes - Noncurrent 79,552 (2,532) 586 77,606
Accumulated Deferred Investment Tax Credits
Regulatory Liability 11,905 11,905
Other Regulatory Liabilities 17,591 17,591
Other 36,802 29 8,137 (8,137) 36,831
----------- --------- ---------- ----------- -----------
Total Deferred Credits and Other Liabilities 145,850 (2,503) 8,137 (7,551) 143,933
------------ ----------- --------- ---------- ----------- -----------
Total Capitalization and Other Liabilities $216,878 $2,633,669 $ 68,644 $ 23,098 $ (307,880) $2,634,409
============ =========== ========= ========== =========== ===========
</TABLE>
<TABLE>
UNISOURCE ENERGY CORPORATION AMENDMENT 1 - EXHIBIT A
CONSOLIDATED STATEMENTS OF INCOME
TWELVE MONTHS ENDED DECEMBER 31, 1997
(in thousands except for per share amounts)
<CAPTION>
UNISOURCE TUCSON
ENERGY ELECTRIC MEH INVESTMENT CONSOL. 1997
CORP. POWER CO. CORP. SUBS ADJUST. CONSOL.
----------- --------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
UTILITY OPERATIONS
Operating Revenues
Retail Customers $ $624,361 $ $ $ (140) $ 624,221
Amortization of MSR Option Gain
Regulatory Liability 8,105 8,105
Sales for Resale 97,567 97,567
--------- --------- ---------- --------- ----------
Total Operating Revenues 730,033 (140) 729,893
--------- --------- ---------- --------- ----------
Operating Expenses
Fuel and Purchased Power 216,163 216,163
Capital Lease Expense 103,914 103,914
Amortization of Springerville
Unit 1 Allowance (28,037) (28,037)
Other Operations 107,199 107,199
Maintenance and Repairs 36,657 36,657
Depreciation and Amortization 86,405 86,405
Taxes Other Than Income Taxes 51,339 51,339
Voluntary Severance Plan Expense - Net 2,933 2,933
Income Taxes 19,297 19,297
--------- --------- ---------- ---------- ----------
Total Operating Expenses 595,870 - - - 595,870
--------- --------- ---------- ---------- ----------
Utility Operating Income 134,163 - - (140) 134,023
--------- --------- ---------- ---------- ----------
Other Income (Deductions)
Income Taxes 38,563 2,838 41,401
Reversal of Loss Provision - 10,154 10,154
Interest Income 8,023 426 384 (268) 8,565
Other Income (Deductions) 7,053 (8,608) (1,002) (3,813) (6,370)
UNS - Earnings of Subsidiaries 83,572 (83,572) -
----------- --------- --------- ---------- ---------- ----------
Total Other Income (Deductions) 83,572 53,639 (5,344) 9,536 (87,653) 53,750
----------- --------- --------- ---------- ---------- ----------
Income (Loss) before Interest Expense 83,572 187,802 (5,344) 9,536 (87,793) 187,773
----------- --------- --------- ---------- ---------- ----------
Interest Expense
Long-Term Debt - Net 63,573 63,573
Interest Imputed on Losses Recorded
at Present Value 32,657 32,657
Short-Term Debt 39 47 182 (268) -
Other Interest Expense 7,961 10 7,971
--------- --------- ---------- --------- ----------
Total Interest Expense 104,230 47 192 (268) 104,201
--------- --------- --------- ---------- ---------- ----------
Net Income (Loss) $83,572 $ 83,572 $ (5,391) $ 9,344 $(87,525) $ 83,572
========= ========= ========= ========== ========== ==========
Average Shares of
Common Stock Outstanding 32,136
Basic Earnings Per Share 2.60
==========
Diluted Earnings Per Share 2.59
==========
</TABLE>
<TABLE>
TUCSON ELECTRIC POWER COMPANY EXHIBIT A
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997
(in thousands)
<CAPTION>
TUCSON
ELECTRIC MEH INVESTMENT CONSOL. 1997
POWER CO. CORP.* SUBS ** ADJUST. CONSOL.
----------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS
Utility Plant
Plant in Service $ 2,194,150 $ $ $ $2,194,150
Utility Plant Under Capital Leases 893,064 893,064
Construction Work in Progress 72,404 72,404
----------- ---------- ---------- ----------- -----------
Total Utility Plant 3,159,618 3,159,618
Less Accumulated Depreciation and
Amortization (982,621) (982,621)
Less Accumulated Amortization of
Capital Leases (73,728) (73,728)
Less Springerville Unit 1 Allowance (167,756) (167,756)
----------- ---------- ---------- ----------- -----------
Total Utility Plant - Net 1,935,513 1,935,513
----------- ---------- ---------- ----------- -----------
Investments and Other Property 123,800 21,098 9,648 (75,774) 78,772
----------- ---------- ---------- ----------- -----------
Current Assets
Cash and Cash Equivalents 96,075 45,412 4,769 146,256
Note Receivable from Subsidiary 3,600 (3,600) -
Accounts Receivable 76,748 910 5,195 (11,628) 71,225
Materials and Fuel 33,965 40 34,005
Deferred Income Taxes - Current 14,910 14,910
Other 22,469 1,184 23,653
----------- ---------- ---------- ----------- -----------
Total Current Assets 247,767 47,546 9,964 (15,228) 290,049
----------- ---------- ---------- ----------- -----------
Deferred Debits - Regulatory Assets
Income Taxes Recoverable Through
Future Rates 170,034 170,034
Deferred Common Facility Costs 58,222 58,222
Contract Termination Fee 48,077 48,077
Deferred Springerville Unit 2 Costs 11,590 11,590 8
Deferred Lease Expense 11,571 11,571
Other Deferred Regulatory Assets 11,089 11,089
Deferred Debits - Other 16,006 3,486 19,492
----------- ---------- ---------- ----------- -----------
Total Deferred Debits 326,589 3,486 330,075
----------- ---------- ---------- ----------- -----------
Total Assets $2,633,669 $ 68,644 $ 23,098 $ (91,002) $2,634,409
=========== ========== ========== =========== ===========
<FN>
* MEH Corporation is the parent company of Advanced Energy Technologies, Inc. Millennium Energy Holdings, Inc.,
Nations Energy Corporation, and Southwest Energy Solutions, Inc.
** Investment Subs include TRI, SRI and Escavada.
</TABLE>
<TABLE>
TUCSON ELECTRIC POWER COMPANY EXHIBIT A
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997
(in thousands)
<CAPTION>
TUCSON
ELECTRIC MEH INVESTMENT CONSOL. 1997
POWER CO. CORP. SUBS ADJUST. CONSOL.
----------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
CAPITALIZATION AND OTHER LIABILITIES
Capitalization
Common Stock $ 645,261 $ $ 3 $ (3) $ 645,261
Premium on Capital Stock 78,906 276,731 (355,637) -
Capital Stock Expense (6,357) (6,357)
Accumulated Deficit (429,577) (8,773) (271,093) 287,417 (422,026)
----------- --------- ---------- ----------- -----------
Common Stock Equity 209,327 70,133 5,641 (68,223) 216,878
Capital Lease Obligations 890,257 890,257
Long-Term Debt 1,215,120 1,215,120
----------- --------- ---------- ----------- -----------
Total Capitalization 2,314,704 70,133 5,641 (68,223) 2,322,255
----------- --------- ---------- ----------- -----------
Current Liabilities
Note Payable to Parent 3,600 (3,600) -
Current Obligations Under Capital Leases 14,552 14,552
Current Maturities of Long-Term Debt 500 500
Accounts Payable 40,266 718 5,553 (11,628) 34,909
Interest Accrued 64,812 64,812
Taxes Accrued 24,373 32 (8) 24,397
Contract Termination Fee Payable 10,000 10,000
Other 18,612 264 175 19,051
----------- --------- ---------- ----------- -----------
Total Current Liabilities 173,115 1,014 9,320 (15,228) 168,221
----------- --------- ---------- ----------- -----------
Deferred Credits and Other Liabilities
Deferred Income Taxes - Noncurrent 79,552 (2,532) 586 77,606
Accumulated Deferred Investment Tax Credits
Regulatory Liability 11,905 11,905
Other Regulatory Liabilities 17,591 17,591
Other 36,802 29 8,137 (8,137) 36,831
----------- --------- ---------- ----------- -----------
Total Deferred Credits and Other Liabilities 145,850 (2,503) 8,137 (7,551) 143,933
----------- --------- ---------- ----------- -----------
Total Capitalization and Other Liabilities $2,633,669 $ 68,644 $ 23,098 $ (91,002) $2,634,409
=========== ========= ========== =========== ===========
</TABLE>
<TABLE>
TUCSON ELECTRIC POWER COMPANY EXHIBIT A
CONSOLIDATED STATEMENTS OF INCOME
TWELVE MONTHS ENDED DECEMBER 31, 1997
(in thousands except for per share amounts)
<CAPTION>
TUCSON
ELECTRIC MEH INVESTMENT CONSOL. 1997
POWER CO. CORP. SUBS ADJUST. CONSOL.
--------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
UTILITY OPERATIONS
Operating Revenues
Retail Customers $624,361 $ $ $ (140) $ 624,221
Amortization of MSR Option Gain
Regulatory Liability 8,105 8,105
Sales for Resale 97,567 97,567
--------- --------- ---------- --------- ----------
Total Operating Revenues 730,033 (140) 729,893
--------- --------- ---------- --------- ----------
Operating Expenses
Fuel and Purchased Power 216,163 216,163
Capital Lease Expense 103,914 103,914
Amortization of Springerville
Unit 1 Allowance (28,037) (28,037)
Other Operations 107,199 107,199
Maintenance and Repairs 36,657 36,657
Depreciation and Amortization 86,405 86,405
Taxes Other Than Income Taxes 51,339 51,339
Voluntary Severance Plan Expense - Net 2,933 2,933
Income Taxes 19,297 19,297
--------- --------- ---------- ---------- ----------
Total Operating Expenses 595,870 - - - 595,870
--------- --------- ---------- ---------- ----------
Utility Operating Income 134,163 - - (140) 134,023
--------- --------- ---------- ---------- ----------
Other Income (Deductions)
Income Taxes 38,563 2,838 41,401
Reversal of Loss Provision - 10,154 10,154
Interest Income 8,023 426 384 (268) 8,565
Other Income (Deductions) 7,053 (8,608) (1,002) (3,813) (6,370)
--------- --------- ---------- ---------- ----------
Total Other Income (Deductions) 53,639 (5,344) 9,536 (4,081) 53,750
--------- --------- ---------- ---------- ----------
Income (Loss) before Interest Expense 187,802 (5,344) 9,536 (4,221) 187,773
--------- --------- ---------- ---------- ----------
Interest Expense
Long-Term Debt - Net 63,573 63,573
Interest Imputed on Losses Recorded
at Present Value 32,657 32,657
Short-Term Debt 39 47 182 (268) -
Other Interest Expense 7,961 10 7,971
--------- --------- ---------- --------- ----------
Total Interest Expense 104,230 47 192 (268) 104,201
--------- --------- ---------- ---------- ----------
Net Income (Loss) $ 83,572 $ (5,391) $ 9,344 $ (3,953) $ 83,572
========= ========= ========== ========== ==========
</TABLE>
UNISOURCE ENERGY CORPORATION
FINANCIAL DATA SCHEDULE
AMENDMENT 1 - EXHIBIT B
DECEMBER 31, 1997
(in thousands)
Total Assets $2,634,409
===========
Total Operating Revenues $ 729,893
===========
Net Income $ 83,572
===========
TUCSON ELECTRIC POWER COMPANY
FINANCIAL DATA SCHEDULE
EXHIBIT B
DECEMBER 31, 1997
(in thousands)
Total Assets $2,634,409
===========
Total Operating Revenues $ 729,893
===========
Net Income $ 83,572
===========
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.
