UNS Energy Corporation (NYSE: UNS) today reported second quarter 2012 net income of $26.3 million, or $0.64 per share of common stock on a fully-diluted basis, compared with net income of $28.6 million, or $0.71 per diluted share in the same period last year. TEP reported net income of $21.9 million for the second quarter of 2012, 13 percent below net income of $25.2 million in the second quarter of 2011.
“Through the first half of the year, our financial results are tracking closely with our forecast,” said Paul Bonavia, UNS Energy’s Chairman and Chief Executive Officer. “We knew that 2012 would be a challenging year as TEP’s current electric rates are based on costs and infrastructure investments from 2006. Despite this challenge, our operating performance is strong. We remain committed to containing costs while serving our customers safely and reliably.”
TEP is in the final year of a base rate freeze that was approved in November 2008 by the Arizona Corporation Commission (ACC) as part of a settlement agreement. The settlement precluded TEP from filing a rate case application for new rates prior to June 30, 2012. On July 2, 2012, TEP submitted a rate application with the ACC requesting an increase in non-fuel base rates of $127.8 million or 15 percent over adjusted test year 2011 revenues. TEP requested that new rates be in place no later than August 1, 2013. This is consistent with the agreement among the parties to the 2008 settlement to use best efforts to implement new rates no later than 13 months from the date TEP files a rate application.
“The rate proposal filed by TEP earlier this month is designed to align customer rates with our current cost structure. Our application also contains proposals to reform rates in order to balance the ACC’s renewable energy and energy efficiency requirements with TEP’s opportunity to earn a fair return on investment,” Bonavia said.