8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): February 27, 2012

Commission File Number	Registrant; State of Incorporation; Address; and Telephone Number	IRS Employer Identification Number
1-13739	UNISOURCE ENERGY CORPORATION	86-0786732
	(An Arizona Corporation) One South Church Avenue, Suite 100 Tucson, AZ 85701 (520) 571-4000
1-5924	TUCSON ELECTRIC POWER COMPANY	86-0062700
	(An Arizona Corporation) One South Church Avenue, Suite 100 Tucson, AZ 85701 (520) 571-4000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

On February 27, 2012, UniSource Energy Corporation (“UniSource Energy”) issued a press release announcing earnings for the quarter and 12 months ended December 31, 2011 for UniSource Energy and Tucson Electric Power Company. A copy of the press release is attached hereto as Exhibit 99.1. UniSource Energy also posted supplemental information accessible from a link on its website, www.uns.com. A copy of the supplemental information is attached hereto as Exhibit 99.2 and Exhibit 99.3.

The Company’s press releases and other communications may include certain non-Generally Accepted Accounting Principles (GAAP) financial measures. A “non-GAAP financial measure” is defined as a numerical measure of a company’s financial performance, financial position or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP in the Company’s financial statements.

Non-GAAP financial measures utilized by the Company include presentations of revenues, operating expenses, operating income and earnings (loss) per share. The Company uses these non-GAAP measures to evaluate the operations of the Company. Certain non-GAAP financial measures utilized by the Company exclude: the impact of non-recurring items: the effect of accounting changes or adjustments; expenses that are reimbursed by third parties; and other items. The Company’s management believes that these non-GAAP financial measures provide useful information to investors by removing the effect of variances in GAAP reported results of operations that are not indicative of fundamental changes in the earnings or cash flow capacity of the Company’s operations. Management also believes that the presentation of the non-GAAP financial measures is largely consistent with its past practice, as well as industry practice in general, and will enable investors and analysts to compare current non-GAAP measures with non-GAAP measures with respect to prior periods.

Item 9.01 Financial Statements and Exhibits

Exhibit 99.1	UniSource Energy Corporation Press Release, dated February 27, 2012.
Exhibit 99.2	Supplemental earnings information posted on UniSource Energy’s website, dated February 27, 2012.
Exhibit 99.3	Conference call presentation slides posted on UniSource Energy’s website, dated February 27, 2012.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: February 27, 2012	UNISOURCE ENERGY CORPORATION
	(Registrant)
	/s/ Kevin P. Larson
	Kevin P. Larson Senior Vice President and Principal Financial Officer
Date: February 27, 2012	TUCSON ELECTRIC POWER COMPANY
	(Registrant)
	/s/ Kevin P. Larson
	Kevin P. Larson Senior Vice President and Principal Financial Officer

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE	February 27, 2012
Media Contact: Art McDonald, (520) 884-3628	Page 1 of 9
Financial Analyst Contact: Chris Norman, (520) 884-3649

UNISOURCE ENERGY REPORTS 2011 EARNINGS, INCREASES QUARTERLY DIVIDEND, AND

ISSUES EARNINGS GUIDANCE FOR 2012

• UniSource Energy’s net income for 2011 was $110 million, or $2.75 per share of common stock on a fully diluted basis, compared with net income of $113 million, or $2.86 per diluted share in 2010. Financial results in 2011 include a $4 million after-tax gain related to the settlement of a transmission dispute involving Tucson Electric Power (TEP), UniSource Energy's primary subsidiary. Results in 2010 included $13 million of after-tax charges at Millennium Energy Holdings (Millennium), a subsidiary that holds UniSource Energy's unregulated energy investments.

• The Board of Directors of UniSource Energy declared a first quarter 2012 dividend for common shareholders of 43 cents per share.

• Earnings at UniSource Energy’s primary subsidiary, Tucson Electric Power Company (TEP), were $85 million in 2011 compared with $108 million in 2010. Lower margins on long-term wholesale sales, higher scheduled generating plant maintenance expense, and an increase in depreciation and amortization expense contributed to lower earnings at TEP.

• UniSource Energy estimates its 2012 diluted earnings per share will be between $2.05 and $2.35.

Tucson, Ariz. – UniSource Energy Corporation (NYSE: UNS) today reported 2011 net income of $110 million, or $2.75 per share of common stock on a fully diluted basis, compared with $113 million, or $2.86 per diluted share in 2010.

“Our financial results in 2011 were consistent with our expectations,” said Paul Bonavia, UniSource Energy’s Chairman and CEO. “Providing safe, reliable service to our customers remains our number one priority, and we took several important steps during the year to strengthen the operational performance and improve the long-term financial position of our utility companies.”

UniSource Energy and its utility subsidiaries completed various financing activities during 2011 that strengthened the companies’ balance sheets, enhanced liquidity, and reduced exposure to variable rate debt. The companies invested in infrastructure improvements that will enhance reliability and increase operational flexibility.

“TEP is in the fourth year of a base-rate freeze,” said Bonavia. “Frozen rates and an economy in the very early stages of recovery will constrain our financial performance in 2012,” Bonavia said. “We will continue to focus on operational efficiencies to maintain tight control of our costs.”

UniSource Energy’s earnings for 2012 are estimated to be in the range of $2.05 to $2.35 per diluted share. The mid-point of the range assumes consolidated base operations and maintenance (O&M) expense of $270 million, which is the same level of base O&M expense recorded in 2011. TEP’s estimated retail kWh sales in 2012, which assume normal weather patterns, are expected to be approximately 0.7 percent below 2011 sales. Cooling degree days during 2011 were 3.7 percent above normal.

Under the terms of TEP’s last settlement agreement, approved by the Arizona Corporation Commission (ACC) in November 2008, the company can file a rate case on or after July 1, 2012. The parties to the 2008 settlement committed to using best efforts to implement new rates within 13 months of the filing date.

“We are focusing our efforts on completing TEP’s rate case application, which we intend to file with the ACC this summer. We look forward to working with the commission, its staff, and our community to reach an outcome that enhances the long-term financial and operating stability of TEP,” Bonavia said.

Common Stock Dividend

UniSource Energy’s board of directors declared a first quarter dividend for common shareholders of 43 cents per share. The dividend will be paid on March 22, 2012 to common shareholders of record as of March 12, 2012. In 2011, the company’s quarterly dividend was 42 cents per share.

The board’s long-term targeted dividend payout ratio range is 60 percent to 70 percent of UniSource Energy’s net income.

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 UniSource Energy’s operations and its financial position as well as general economic and business conditions.

Tucson Electric Power

Retail kWh Sales and Revenues

TEP’s retail kilowatt-hour (kWh) sales in 2011 increased 0.4 percent from 2010 levels. Although the weather in TEP’s service area was hotter than normal, there were 1.0 percent fewer cooling degree days than in 2010. Sales volumes to residential customers increased 0.5 percent, while kWh sales to TEP’s commercial and industrial customers increased by 0.5 percent and 0.3 percent, respectively. Sales to TEP’s mining customers increased by 0.3 percent in 2011 compared with 2010. TEP’s retail customer base grew by 0.4 percent, or approximately 1,500 customers, during 2011.

Despite the increase in retail sales volumes, TEP’s retail margin revenues did not change compared with 2010. The sluggish economy led some of TEP’s large industrial customers to alter their energy usage patterns in order to reduce the demand charge on their electric bills. Retail margin revenues do not include customer surcharges used to fund renewable energy and energy efficiency programs or charges to cover fuel and purchased power costs.

Long-Term Wholesale and Transmission Revenues

In 2011, the margin on long-term wholesale sales of electricity was $13 million compared with $28 million in 2010. The decrease reflects a pricing change in TEP’s largest wholesale contract that took effect in June 2011. Wholesale revenues from the sale of transmission services were $16 million in 2011 compared with $21 million in 2010. The decrease is related to the sale of short-term transmission services in 2010 that did not recur in 2011.

Other Operating Expenses

TEP’s 2011 base O&M expense of $237 million increased by $9 million compared with 2010. Base O&M excludes costs directly offset by customer surcharges and third-party reimbursements. The increase reflects the impact of higher planned generation maintenance outage expense.

2

Depreciation and amortization expense increased by $8 million primarily due to new plant additions.

Other Items

TEP’s 2011 results include a $4 million after-tax gain related to the settlement of a transmission dispute.

Results in 2010 include a $2 million after-tax loss related to the settlement of a dispute over transactions with the California Power Exchange.

UNS Gas

UNS Gas reported net income of $10 million in 2011 compared with $9 million in 2010. The increase resulted from colder winter weather in 2011 as well as the full-year impact of a 2 percent non-fuel base-rate increase that took effect in April 2010.

Hearings before an ACC administrative law judge regarding UNS Gas’ pending rate case concluded in February 2012. UNS Gas supports the ACC staff’s proposal, which includes a base-rate increase of $2.7 million and a fixed-cost recovery rate mechanism designed to mitigate the erosion of revenues resulting from the ACC’s energy efficiency rules. UNS Gas expects the ACC to issue a final ruling on this case in the second quarter of this year.

UNS Electric

UNS Electric reported net income of $18 million in 2011 compared with $16 million in 2010. The increase is due primarily to the full-year impact of a 4 percent non-fuel base-rate increase that took effect October 1, 2010.

UNS Electric’s 2010 results include a $2 million after-tax gain related to a settlement with Arizona Public Service related to transactions with the California Power Exchange.

Millennium

Millennium recorded net income of approximately $2 million due in part to interest on a note receivable. In 2010, Millennium recorded a $13 million net loss related to the write-off of deferred tax assets and impairment losses related to its investments.

Seasonality of Earnings

The net income and results of operations of TEP as well as of UNS Gas and UNS Electric – operating subsidiaries of UniSource Energy Services (UES) – are seasonal in nature. TEP and UNS Electric typically record the majority of their net income during the second and third quarters when hot weather contributes to higher energy consumption. TEP’s retail prices, which include higher rates for higher levels of energy use, also shift a larger share of the company’s earnings into those periods.

Energy demand from UNS Gas customers typically peaks during the winter. Accordingly, UNS Gas records the majority of its net income during the first and fourth quarters.

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Net Income and Earnings Per Share Summary

		September 30,			September 30,			September 30,			September 30,
	4th Quarter						Full Year
Net Income	2011			2010			2011			2010
	-Millions-						-Millions-
Tucson Electric Power	$	1.6		$	10.1		$	85.3		$	108.3
UNS Gas		4.3			3.3			10.2			8.6
UNS Electric		3.3			3.4			17.7			15.5
Other Non-Reportable Segments and Adjustments (1)		(1.0	)		(5.5	)		(3.2	)		(19.4	)
Net Income	$	8.2		$	11.3		$	110.0		$	113.0
Avg. Basic Shares Outstanding (millions)		37.1			36.7			37.0			36.4
Avg. Diluted Shares Outstanding (millions)		37.4			41.4			41.6			41.0
	4th Quarter						Full Year
Earnings Per UniSource Energy Share	2011			2010			2011			2010
Tucson Electric Power	$	0.04		$	0.28		$	2.31		$	2.97
UNS Gas		0.12			0.09			0.27			0.24
UNS Electric		0.09			0.09			0.48			0.43
Other Non-Reportable Segments and Adjustments (1)		(0.03	)		(0.15	)		(0.08	)		(0.54	)
Net Income per Basic Share	$	0.22		$	0.31		$	2.98		$	3.10
Net Income per Diluted Share	$	0.22		$	0.30		$	2.75		$	2.86

(1) Includes: UniSource Energy on a stand-alone basis; consolidating adjustments; and results from Millennium and UniSource Energy Development.

UniSource Energy believes the presentation of TEP, UNS Gas, UNS Electric, and Millennium net income or loss on a per basic UniSource Energy share basis (which are non-GAAP financial measures) provides useful information to investors by disclosing the results of operations of its business segments on a basis consistent with UniSource Energy's reported earnings or losses.

Conference Call and Webcast

The company will host a conference call on Monday, February 27 at 11 am EST to discuss the financial results and outlook. To participate in the call, please dial in 5 to 10 minutes prior to the start time.

Dial-in number: (877) 582-0446

Reference code: 55207232

The conference call can be heard live on UniSource Energy’s website. The webcast can be accessed at uns.com and will be available for replay for seven days.

Replay number: (800) 642-1687

Reference code: 55207232

In conjunction with this earnings announcement, UniSource Energy has provided detailed information on its performance during 2011 and outlook for 2012. These materials have been filed with the Securities and Exchange Commission and are also available at uns.com.

4

UniSource Energy is a Tucson, Arizona-based company with consolidated assets of approximately $4.0 billion. UniSource Energy's primary subsidiaries include Tucson Electric Power, which serves

more than 404,000 customers in southern Arizona; and UniSource Energy Services, provider of natural gas and electric service for about 239,000 customers in northern and southern Arizona. For more information about UniSource Energy and its subsidiaries, visit uns.com.

This release contains forward-looking information that involves risks and uncertainties, including factors that could affect UniSource Energy's ability to reach 2012 earnings guidance. These factors include: state and federal regulatory and legislative decisions and actions, including environmental legislation and renewable energy requirements; regional economic and market conditions that could affect customer growth and energy usage; weather variations affecting energy usage; the cost of debt and equity capital and access to capital markets; the performance of the stock market and changing interest rate environment, which affect the value of the company’s pension and other postretirement benefit plan assets and the related contribution requirements and expense; unexpected increases in O&M expense; resolution of pending litigation matters; changes in accounting standards; changes in critical accounting estimates; changes to long-term contracts; the cost of fuel and energy supplies; performance of TEP's generating plants; and other factors listed in UniSource Energy's Form 10-K and 10-Q filings with the Securities and Exchange Commission. The preceding factors may cause future results to differ materially from outcomes currently expected by UniSource Energy.

5

UNISOURCE ENERGY 2011 RESULTS

UniSource Energy Corporation

Consolidated Statements of Income

(in thousands of dollars, except per share amounts)

		September 30,			September 30,			September 30,			September 30,
	Years Ended
	December 31,						Increase / (Decrease)
(UNAUDITED)	2011			2010			Amount			Percent
Operating Revenues
Electric Retail Sales	$	1,085,822		$	1,051,002		$	34,820			3.3
Electric Wholesale Sales		163,159			151,962			11,197			7.4
California Power Exchange (CPX) Provision for Wholesale Refunds		—			(2,970	)		2,970			N/M
Gas Revenue		145,053			141,036			4,017			2.8
Other Revenues		115,481			112,936			2,545			2.3
Total Operating Revenues		1,509,515			1,453,966			55,549			3.8
Operating Expenses
Fuel		324,520			295,652			28,868			9.8
Purchased Energy		307,423			307,288			135			0.0
Transmission		7,334			10,945			(3,611	)		(33.0	)
Decrease to Reflect PPFAC/PGA Recovery Treatment		(4,932	)		(29,622	)		24,690			83.4
Total Fuel and Purchased Energy		634,345			584,263			50,082			8.6
Other Operations and Maintenance		379,220			370,037			9,183			2.5
Depreciation		133,832			128,215			5,617			4.4
Amortization		30,983			28,094			2,889			10.3
Taxes Other Than Income Taxes		49,463			46,243			3,220			7.0
Total Operating Expenses		1,227,843			1,156,852			70,991			6.1
Operating Income		281,672			297,114			(15,442	)		(5.2	)
Other Income (Deductions)
Interest Income		4,568			7,779			(3,211	)		(41.3	)
Other Income		8,293			11,038			(2,745	)		(24.9	)
Other Expense		(5,249	)		(15,202	)		9,953			65.5
Total Other Income (Deductions)		7,612			3,615			3,997			N/M
Interest Expense
Long-Term Debt		73,217			65,020			8,197			12.6
Capital Leases		40,359			46,740			(6,381	)		(13.7	)
Other Interest Expense		2,535			1,651			884			53.5
Interest Capitalized		(3,753	)		(2,587	)		(1,166	)		(45.1	)
Total Interest Expense		112,358			110,824			1,534			1.4
Income Before Income Taxes		176,926			189,905			(12,979	)		(6.8	)
Income Tax Expense		66,951			76,921			(9,970	)		(13.0	)
Net Income	$	109,975		$	112,984		$	(3,009	)		(2.7	)
Weighted-Average Shares of Common Stock Outstanding (000)
Basic		36,962			36,415			547			1.5
Diluted		41,609			41,041			568			1.4
Earnings per Share
Basic	$	2.98		$	3.10		$	(0.12	)		(3.9	)
Diluted	$	2.75		$	2.86		$	(0.11	)		(3.8	)
Dividends Declared per Share	$	1.68		$	1.56		$	0.12			7.7

N/M—Not Meaningful

Reclassifications have been made to prior periods to conform to the current period’s presentation.

6

UNISOURCE ENERGY 2011 RESULTS

UniSource Energy Corporation

Consolidated Statements of Income

(in thousands of dollars, except per share amounts)

		September 30,			September 30,			September 30,			September 30,
	Three Months Ended
	December 31,						Increase / (Decrease)
(UNAUDITED)	2011			2010			Amount			Percent
Operating Revenues
Electric Retail Sales	$	229,606		$	226,288		$	3,318			1.5
Electric Wholesale Sales		41,653			49,565			(7,912	)		(16.0	)
Gas Revenue		46,012			44,438			1,574			3.5
Other Revenues		26,857			36,882			(10,025	)		(27.2	)
Total Operating Revenues		344,128			357,173			(13,045	)		(3.7	)
Operating Expenses
Fuel		72,417			76,460			(4,043	)		(5.3	)
Purchased Energy		74,079			64,003			10,076			15.7
Transmission		2,722			2,257			465			20.6
Increase to Reflect PPFAC/PGA Recovery Treatment		242			4,638			(4,396	)		(94.8	)
Total Fuel and Purchased Energy		149,460			147,358			2,102			1.4
Other Operations and Maintenance		97,332			111,058			(13,726	)		(12.4	)
Depreciation		34,179			32,442			1,737			5.4
Amortization		8,470			7,297			1,173			16.1
Taxes Other Than Income Taxes		12,884			10,684			2,200			20.6
Total Operating Expenses		302,325			308,839			(6,514	)		(2.1	)
Operating Income		41,803			48,334			(6,531	)		(13.5	)
Other Income (Deductions)
Interest Income		829			1,888			(1,059	)		(56.1	)
Other Income		1,138			1,704			(566	)		(33.2	)
Other Expense		(2,420	)		(5,842	)		3,422			58.6
Total Other Income (Deductions)		(453	)		(2,250	)		1,797			79.9
Interest Expense
Long-Term Debt		18,977			18,036			941			5.2
Capital Leases		10,251			11,616			(1,365	)		(11.8	)
Other Interest Expense		607			1,281			(674	)		(52.6	)
Interest Capitalized		(707	)		(1,004	)		297			29.6
Total Interest Expense		29,128			29,929			(801	)		(2.7	)
Income Before Income Taxes		12,222			16,155			(3,933	)		(24.3	)
Income Tax Expense		4,035			4,903			(868	)		(17.7	)
Net Income	$	8,187		$	11,252		$	(3,065	)		(27.2	)
Weighted-Average Shares of Common Stock Outstanding (000)
Basic		37,055			36,696			359			1.0
Diluted		37,381			41,396			307			0.7
Earnings per Share
Basic	$	0.22		$	0.31		$	(0.09	)		(29.0	)
Diluted	$	0.22		$	0.30		$	(0.08	)		(26.7	)
Dividends Declared per Share	$	0.42		$	0.39		$	0.03			7.7

N/M—Not Meaningful

Reclassifications have been made to prior periods to conform to the current period's presentation.

7

TUCSON ELECTRIC POWER COMPANY 2011 RESULTS

TUCSON ELECTRIC POWER COMPANY

Consolidated Statements of Income

(in thousands of dollars)

		September 30,			September 30,			September 30,			September 30,
	Years Ended
	December 31,						Increase / (Decrease)
(UNAUDITED)	2011			2010			Amount			Percent
Operating Revenues
Electric Retail Sales	$	903,930		$	868,188		$	35,742			4.1
Electric Wholesale Sales		129,861			141,103			(11,242	)		(8.0	)
California Power Exchange (CPX) Provision for Wholesale Refunds		—			(2,970	)		2,970			N/M
Other Revenues		122,595			118,946			3,649			3.1
Total Operating Revenues		1,156,386			1,125,267			31,119			2.8
Operating Expenses
Fuel		318,268			284,744			33,524			11.8
Purchased Power		105,766			118,716			(12,950	)		(10.9	)
Transmission		(1,435	)		3,254			(4,689	)		N/M
Decrease to Reflect PPFAC Recovery Treatment		(6,165	)		(21,541	)		15,376			71.4
Total Fuel and Purchased Energy		416,434			385,173			31,261			8.1
Other Operations and Maintenance		330,801			316,625			14,176			4.5
Depreciation		104,894			99,510			5,384			5.4
Amortization		34,650			32,196			2,454			7.6
Taxes Other Than Income Taxes		40,226			37,732			2,494			6.6
Total Operating Expenses		927,005			871,236			55,769			6.4
Operating Income		229,381			254,031			(24,650	)		(9.7	)
Other Income (Deductions)
Interest Income		3,567			6,707			(3,140	)		(46.8	)
Other Income		5,693			6,629			(936	)		(14.1	)
Other Expense		(12,037	)		(11,506	)		(531	)		(4.6	)
Total Other Income (Deductions)		(2,777	)		1,830			(4,607	)		N/M
Interest Expense
Long-Term Debt		49,858			42,378			7,480			17.7
Capital Leases		40,358			46,734			(6,376	)		(13.6	)
Other Interest Expense		1,127			433			694			N/M
Interest Capitalized		(2,073	)		(1,880	)		(193	)		(10.3	)
Total Interest Expense		89,270			87,665			1,605			1.8
Income Before Income Taxes		137,334			168,196			(30,862	)		(18.3	)
Income Tax Expense		52,000			59,936			(7,936	)		(13.2	)
Net Income	$	85,334		$	108,260		$	(22,926	)		(21.2	)
Electric MWh Sales:
Retail Sales		9,332,107			9,291,788			40,319			0.4
Long-Term Wholesale Sales		902,139			987,957			(85,818	)		(8.7	)

N/M—Not Meaningful

Reclassifications have been made to prior periods to conform to the current period's presentation.

8

TUCSON ELECTRIC POWER COMPANY 2011 RESULTS

TUCSON ELECTRIC POWER COMPANY

Consolidated Statements of Income

(in thousands of dollars)

		September 30,			September 30,			September 30,			September 30,
	Three Months Ended
	December 31,						Increase / (Decrease)
(UNAUDITED)	2011			2010			Amount			Percent
Operating Revenues
Electric Retail Sales	$	189,652		$	182,866		$	6,786			3.7
Electric Wholesale Sales		33,238			44,106			(10,868	)		(24.6	)
Other Revenues		28,829			37,880			(9,051	)		(23.9	)
Total Operating Revenues		251,719			264,852			(13,133	)		(5.0	)
Operating Expenses
Fuel		71,705			74,901			(3,196	)		(4.3	)
Purchased Power		21,577			12,816			8,761			68.4
Transmission		904			436			468			N/M
Increase (Decrease) to Reflect PPFAC Recovery Treatment		(1,019	)		1,482			(2,501	)		N/M
Total Fuel and Purchased Energy		93,167			89,635			3,532			3.9
Other Operations and Maintenance		84,378			96,961			(12,583	)		(13.0	)
Depreciation		26,770			25,367			1,403			5.5
Amortization		9,368			8,233			1,135			13.8
Taxes Other Than Income Taxes		10,423			8,829			1,594			18.1
Total Operating Expenses		224,106			229,025			(4,919	)		(2.1	)
Operating Income		27,613			35,827			(8,214	)		(22.9	)
Other Income (Deductions)
Interest Income		584			1,596			(1,012	)		(63.4	)
Other Income		1,096			2,278			(1,182	)		(51.9	)
Other Expense		(4,285	)		(4,154	)		(131	)		(3.2	)
Total Other Income (Deductions)		(2,605	)		(280	)		(2,325	)		N/M
Interest Expense
Long-Term Debt		13,365			12,123			1,242			10.2
Capital Leases		10,251			11,616			(1,365	)		(11.8	)
Other Interest Expense		381			867			(486	)		(56.1	)
Interest Capitalized		(446	)		(673	)		227			33.7
Total Interest Expense		23,551			23,933			(382	)		(1.6	)
Income Before Income Taxes		1,457			11,614			(10,157	)		(87.5	)
Income Tax Expense (Benefit)		(104	)		1,489			(1,593	)		N/M
Net Income	$	1,561		$	10,125		$	(8,564	)		(84.6	)
Electric MWh Sales:
Retail Sales		2,060,016			2,042,740			17,276			0.8
Long-Term Wholesale Sales		233,144			260,487			(27,343	)		(10.5	)

N/M—Not Meaningful

Reclassifications have been made to prior periods to conform to the current period's presentation.

9

EX-99.2

Exhibit 99.2

UniSource Energy Corporation

Supplemental Earnings & Outlook Information

February 27, 2012

	September 30,
TABLE OF CONTENTS
Safe Harbor and Non-GAAP Measures	1
Earnings Outlook & Assumptions	2-3
4th Quarter Earnings Variance	4
Year-End Earnings Variance	5
UniSource Energy and TEP O&M	6
TEP Operating Statistics	7
TEP Margin Revenues	8
UNS Electric Operating Statistics	9
UNS Gas Operating Statistics	10
Basic & Diluted Shares Outstanding	11

SAFE HARBOR AND NON-GAAP MEASURES

This document contains forward-looking information that involves risks and uncertainties, which include, but are not limited to: state and federal regulatory and legislative decisions and actions; regional economic and market conditions which could affect customer growth and energy usage; weather variations affecting energy usage; the cost of debt and equity capital and access to capital markets; the performance of the stock market and changing interest rate environment, which affect the value of the company’s pension and other postretirement benefit plan assets and the related contribution requirements and expense; unexpected increases in O&M expense; resolution of pending litigation matters; changes in accounting standards; changes in critical accounting estimates; the ongoing restructuring of the electric industry; changes to long-term contracts; the cost of fuel and power supplies; performance of TEP’s generating plants; and other factors listed in UniSource Energy’s Form 10-K and 10-Q filings with the Securities and Exchange Commission. The preceding factors may cause future results to differ materially from historical results or from outcomes currently expected by UniSource Energy. The forecast assumptions and estimates below are not intended to be a full list of factors which could cause UniSource Energy’s future results to differ from current expectations. Please refer to UniSource Energy’s SEC filings for more information regarding risks and other uncertainties that could cause current expectations to differ from future results.

The Company’s press releases and other communications may include certain non-Generally Accepted Accounting Principles (GAAP) financial measures. A “non-GAAP financial measure” is defined as a numerical measure of a company's financial performance, financial position or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP in the Company's financial statements.

Non-GAAP financial measures utilized by the Company include presentations of revenues, operating expenses, operating income and earnings (loss) per share. The Company uses these non-GAAP measures to evaluate the operations of the Company. Certain non-GAAP financial measures utilized by the Company exclude: the impact of non-recurring items: the effect of accounting changes or adjustments; expenses that are reimbursed by third parties; and other items. The Company's management believes that these non-GAAP financial measures provide useful information to investors by removing the effect of variances in GAAP reported results of operations that are not indicative of fundamental changes in the earnings or cash flow capacity of the Company's operations. Management also believes that the presentation of the non-GAAP financial measures is largely consistent with its past practice, as well as industry practice in general, and will enable investors and analysts to compare current non-GAAP measures with non-GAAP measures with respect to prior periods.

UNISOURCE ENERGY 2012 EARNINGS OUTLOOK & ASSUMPTIONS

The table below provides key assumptions related to UniSource Energy’s estimated 2012 earnings of $2.05 to $2.35 per diluted share, as of February 27, 2012.

		Septem			Septem			Septem		Septem
	Actual			Estimated
Key Assumptions	2011			2012			2013		2014
UniSource Consolidated
Base O&M ($ millions)	$	270		$	270
Change vs. Prior Year		1.8	%		0.0	%
Effective Income Tax Rate		38.0	%		39.7	%
Avg. Basic Shares Outstanding (millions)		37.0			38.0
Avg. Diluted Shares Outstanding (millions)		41.6			41.7
TEP
Retail Sales—(GWh)		9,332			9,267
Change vs. Prior Year		0.4	%		-0.7	%		approx. 1.5%/yr
Retail Sales—Weather Normalized (GWh)		9,226
Retail Customers (Yr End)		404,299			406,135
Change vs. Prior Year		0.4	%		0.5	%		approx. 1%/yr
Long-Term Wholesale Sales (GWh)
Salt River Project (SRP)		779			500
Navajo Tribal Utility Authority (NTUA)		218			245
Long-Term Wholesale Sales—Pre-Tax Margin ($millions)	$	13		$	8
Other Expenses ($ millions)
Capital Lease Amortization	$	14		$	14		$	15	$	16
Capital Lease Interest Expense (Net of Interest Income on Investment in Lease Debt)	$	38		$	34		$	25	$	10
Interest Expense on Long-Term and Short-Term Debt (Excluding Capital Lease Interest Expense)	$	51		$	54

2

		September 30,			September 30,		September 30,	September 30,
	Actual			Estimated
Key Assumptions	2011			2012			2013	2014
UES
UNS Gas Retail Sales (Millions of Therms)		114			112
Avg. Change vs. Prior Year		1.9	%		-1.8	%	approx. 1.7%
UNS Electric Retail Sales (GWh)		1,853			1,766
Avg. Change vs. Prior Year		-0.2	%		-4.7	%	approx. 1%

TEP Long-Term Wholesale Sales

In 2011 and 2010, TEP’s margin on long-term wholesale sales was $13 million and $28 million, respectively. TEP’s two primary long-term wholesale contracts are with SRP and NTUA.

Salt River Project

Prior to June 1, 2011, under the terms of the SRP contract, TEP received a monthly demand charge of approximately $1.8 million, or $22 million annually, and sold the energy at a price based on TEP’s average fuel cost. From June 1, 2011 to December 31, 2011, SRP was required to purchase 73,000 MWh per month. From January 1, 2012 through the end of the contract in May 2016, SRP is required to purchase 500,000 MWh of on-peak energy per year. TEP does not receive a demand charge and the price of energy is based on a discount to the price of on-peak power on Palo Verde Market Index. As of February 21, 2012, the average around-the-clock forward price of on-peak power on the Palo Verde Market Index for the calendar year 2012 was $30.33 MWh.

Navajo Tribal Utility Authority

TEP serves the portion of NTUA’s load that is not served from NTUA’s allocation of federal hydroelectric power. Over the last three years, sales to NTUA averaged 225,000 MWh. Since 2010, the price of 50% of the MWh sales from June to September has been based on the Palo Verde Market Index. In 2011, approximately 12% of the total energy sold to NTUA was priced based on the Palo Verde Market Index. The remaining power sales occur at a fixed price under TEP’s contract with NTUA.

UNISOURCE ENERGY 2012 EARNINGS ESTIMATE SENSITIVITIES

		September 30,			September 30,			September 30,
	Pre-Tax			After-Tax			Per Diluted
2012 Sensitivities	(millions)			(millions)			Share
1% Change in Total Utility Retail Sales (Based on average margin rate across all customer classes)	$	6.0		$	3.6		$	0.09
1% Change in UNS Consolidated Base O&M	$	2.7		$	1.6		$	0.04
$5 / MWh Change in Wholesale Power Prices – SRP Contract	$	2.5		$	1.5		$	0.04
1% Increase in Rate on TEP's Un-hedged Long-Term Variable Rate Debt ($215 million outstanding at 12/31/11 of which $50 million is hedged)	$	(1.7	)	$	(1.0	)	$	(0.02	)

3

UNISOURCE ENERGY 4TH QUARTER EARNINGS VARIANCE EXPLANATION

		September 30,			September 30,			September 30,			September 30,			September 30,
		4th Quarter 2010 UniSource Energy Net Income											$	11.3
	4th Quarter						Change
TEP	2011			2010			Pre-Tax			After Tax
	-millions of dollars-
Utility Gross Margin Components:
Retail Margin Revenues*	$	118.1		$	117.4		$	0.7		$	0.5
L-T Wholesale Margin Revenues*		1.4			8.0			(6.6	)		(4.4	)
Transmission Revenues		4.1			5.3			(1.2	)		(0.8	)
Total		123.6			130.7			(7.1	)		(4.8	)
Other Income Sources:
Operating synergies—Springerville Units 3&4		5.9			5.8			0.1			0.1
Expenses:
Base O&M*		63.9			65.4			(1.5	)		(1.0	)
Depreciation		26.8			25.4			1.4			0.9
Amortization		9.4			8.2			1.2			0.8
Total Other Deductions		2.6			0.3			2.3			1.5
Total Interest Expense		23.6			23.9			(0.3	)		(0.2	)
Other Line Item Changes		1.7			1.7			0.0			0.0
Income Tax Expense (Benefit)		(0.1	)		1.5			NM			(1.6	)
TEP Net Income (GAAP)	$	1.6		$	10.1			NM		$	(8.5	)
		Change in TEP Net Income												(8.5	)
Other Business Segments—After Tax Amounts
UNS Electric Net Income	$	3.3		$	3.4			NM		$	(0.1	)
UNS Gas Net Income		4.3			3.3			NM			1.0
Millennium Energy Holdings Net Income/(Loss)		0.3			(4.2	)		NM			4.5
Other and Consolidating Adj.		(1.3	)		(1.3	)		NM			0.0
Total Income (Loss) from Other Business Segments and Consolidating Adjustments	$	6.6		$	1.2			NM		$	5.4
		Change in UNS Electric, UNS Gas and Other												5.4
		4th Quarter 2011 UniSource Energy Net Income											$	8.2

* Retail Margin Revenues, Long-Term Wholesale Margin and Base O&M are all non-GAAP measures. See pages 6 and 8 for are conciliation of these non-GAAP measures.

Q4 Variance Explanation

4

UNISOURCE ENERGY YEAR OVER YEAR EARNINGS VARIANCE EXPLANATION

		September 30,			September 30,			September 30,			September 30,			September 30,
		December 31, 2010 UniSource Energy Net Income											$	113.0
	Year End						Change
TEP	2011			2010			Pre-Tax			After Tax
	-millions of dollars-
Utility Gross Margin Components:
Retail Margin Revenues*	$	550.6		$	550.6		$	0.0		$	0.0
L-T Wholesale Margin Revenues*		13.1			28.3			(15.2	)		(9.4	)
Transmission Revenues		16.4			20.9			(4.5	)		(2.8	)
Total		580.1			599.8			(19.7	)		(12.2	)
Other Income Sources:
El Paso Settlement		7.4			0.0			7.4			4.6
Operating synergies—Springerville Units 3&4		24.1			23.8			0.3			0.2
Expenses:
Loss related to the settlement of a dispute over transactions with the California Power Exchange (CPX)		0.0			3.0			(3.0	)		(1.9	)
Base O&M*		236.5			227.8			8.7			5.4
Depreciation		104.9			99.5			5.4			3.3
Amortization		34.7			32.2			2.5			1.6
Total Other (Income) / Deductions		2.8			(1.8	)		4.6			2.9
Total Interest Expense		89.3			87.7			1.6			1.0
Other Line Item Changes		6.1			7.0			(0.9	)		(0.6	)
Income Tax Expense		52.0			59.9			NM			(7.9	)
TEP Net Income (GAAP)	$	85.3		$	108.3			NM		$	(23.0	)
					Change in TEP Net Income									(23.0	)
Other Business Segments—After Tax Amounts
UNS Electric Net Income**	$	17.7		$	15.5			NM		$	2.2
UNS Gas Net Income		10.2			8.6			NM			1.6
Millennium Energy Holdings Net Income/(Loss)		2.3			(13.5	)		NM			15.8
Other and Consolidating Adj.		(5.5	)		(5.9	)		NM			0.4
Total Other Income and Consolidating Adjustments	$	24.7		$	4.7			NM		$	20.0
		Change in UNS Electric, UNS Gas and Other												20.0
		December 31, 2011 UniSource Energy Net Income											$	110.0

* Retail Margin Revenues, Long-Term Wholesale Margin and Base O&M are all non-GAAP measures. See pages 7 and 9 for are conciliation of these non-GAAP measures.

** UNS Electric’s results in 2010 include a after-tax gain of $1.8 million related to the settlement of a dispute over transactions with

YE Variance Explanation

5

UNISOURCE ENERGY AND TEP O&M

		September 30,			September 30,			September 30,			September 30,
UniSource Energy	4th Quarter						Year End
O&M Components	2011			2010			2011			2010
	-millions of dollars-						-millions of dollars-
TEP Base O&M (Non-GAAP)	$	63.9		$	65.4		$	236.5		$	227.8
UNS Gas Base O&M (Non-GAAP)		6.2			6.7			23.9			24.6
UNS Electric Base O&M (Non-GAAP)		5.6			5.6			20.6			21.1
Consolidating Adjustments & Other		(3.9	)		(1.9	)		(11.2	)		(8.4	)
UniSource Energy Base O&M (Non-GAAP)	$	71.8		$	75.8		$	269.8		$	265.1
Reimbursed O&M Related to Springerville Units 3 and 4		14.4			24.0			62.9			64.5
O&M Related to Customer-funded Renewable Energy and DSM Programs		11.1			11.3			46.5			40.4
UniSource Energy O&M (GAAP)	$	97.3		$	111.1		$	379.2		$	370.0
TEP	4th Quarter						Year End
O&M Components	2011			2010			2011			2010
	-millions of dollars-						-millions of dollars-
TEP Base O&M (Non-GAAP)	$	63.9		$	65.4		$	236.5		$	227.8
O&M Recorded in Other Expense		(2.8	)		(2.2	)		(8.0	)		(7.1	)
Reimbursed O&M Related to Springerville Units 3 and 4		14.4			24.0			62.9			64.5
O&M Related to Customer-funded Renewable Energy and DSM Programs		8.9			9.8			39.4			31.4
TEP O&M (GAAP)	$	84.4		$	97.0		$	330.8		$	316.6

Base O&M, a non-GAAP financial measure, should not be considered as an alternative to Other O&M, which is determined in accordance with GAAP. We believe Base O&M provides useful information to investors because it represents the fundamental level of operating and maintenance expense related to our core utility business. Base O&M excludes expenses that are directly offset by revenues collected from customers and other third parties.

O&M

6

TEP - OPERATING STATISTICS

		xxxxxx			xxxxxx			xxxxxx			xxxxxx			xxxxxx			xxxxxx			xxxxxx			xxxxxx
	Three Months Ended December 31,												Year End
	2011			2010			Incr (Decr)			% Change			2011			2010			Incr (Decr)			% Change
AVG. ELECTRIC CUSTOMERS
Residential		367,083			366,174			909			0.2	%		366,582			365,768			814			0.2	%
Commercial		36,174			35,885			289			0.8	%		36,058			35,860			198			0.6	%
Industrial		636			637			(1	)		-0.2	%		636			633			3			0.5	%
Mining		3			3			—			0.0	%		2			2			—			0.0	%
Other		62			62			—			0.0	%		62			62			—			0.0	%
Total		403,958			402,761			1,197			0.3	%		403,340			402,325			1,015			0.3	%
RETAIL SALES—MWH
Residential		779,550			760,533			19,017			2.5	%		3,888,011			3,869,540			18,471			0.5	%
Commercial		455,688			447,568			8,120			1.8	%		1,972,526			1,963,469			9,057			0.5	%
Industrial		491,555			499,249			(7,694	)		-1.5	%		2,145,163			2,138,749			6,414			0.3	%
Mining		272,138			272,755			(617	)		-0.2	%		1,083,071			1,079,327			3,744			0.3	%
Other		61,086			62,635			(1,549	)		-2.5	%		243,337			240,703			2,634			1.1	%
Total		2,060,017			2,042,740			17,277			0.8	%		9,332,108			9,291,788			40,320			0.4	%
RETAIL USAGE—KWH/CUSTOMER
Residential		2,124			2,077			47			2.3	%		10,606			10,579			27			0.3	%
Commercial		12,597			12,472			125			1.0	%		54,704			54,754			(50	)		-0.1	%
Industrial		772,885			783,750			(10,865	)		-1.4	%		3,372,898			3,378,750			(5,852	)		-0.2	%
Mining		90,712,667			90,918,333			(205,666	)		-0.2	%		541,535,500			539,663,500			1,872,000			0.3	%
Other		985,258			1,010,242			(24,984	)		-2.5	%		3,924,790			3,882,306			42,484			1.1	%
Total		5,100			5,072			28			0.6	%		23,137			23,095			42			0.2	%
WEATHER -COOLING DEGREE DAYS
Actual		49			53			(4	)		-7.5	%		1,528			1,543			(15	)		-1.0	%
10-Year Average		38			36									1,473			1,468
% Change Actual vs. 10-Year Avg.		28.9	%		47.2	%								3.7	%		5.1	%
WEATHER—HEATING DEGREE DAYS
Actual		694			500			194			38.8	%		1,597			1,469			128			8.7	%
10-Year Average		566			559									1,417			1,430
% Change Actual vs. 10-Year Avg.		22.6	%		-10.6	%								12.7	%		2.7	%
ENERGY MARKET INDICATORS
Avg. Wholesale Power Prices
Palo Verde Index—$/MWh
On Peak	$	33.28		$	34.49		$	(1.21	)		-3.5	%	$	36.23		$	38.93		$	(2.70	)		-6.9	%
Off Peak	$	24.55		$	26.21		$	(1.66	)		-6.3	%	$	21.60		$	28.00		$	(6.40	)		-22.9	%
Avg. Natural Gas Prices
Permian Index—$/MMBtu	$	3.43		$	3.58		$	(0.15	)		-4.2	%	$	3.89		$	4.18		$	(0.29	)		-6.9	%

TEP Operating Stats

7

TEP - RETAIL AND WHOLESALE MARGIN REVENUES

		September 30,		September 30,		September 30,			September 30,			September 30,		September 30,		September 30,			September 30,
	Three Months Ended December 31,										Year End
	2011		2010		Incr (Decr)			% Change			2011		2010		Incr (Decr)			% Change
RETAIL REVENUES—$ MILLIONS
Margin Revenues:
Residential	$	49.3	$	48.1	$	1.2			2.5	%	$	251.9	$	251.5	$	0.4			0.2	%
Commercial		36.4		35.7		0.7			2.0	%		160.0		159.1		0.9			0.6	%
Industrial		21.6		22.7		(1.1	)		-4.8	%		94.8		96.8		(2.0	)		-2.1	%
Mining		7.7		7.8		(0.1	)		-1.3	%		31.6		31.0		0.6			1.9	%
Other		3.1		3.1		—			0.0	%		12.3		12.2		0.1			0.8	%
Total	$	118.1	$	117.4	$	0.7			0.6	%	$	550.6	$	550.6		—			0.0	%
DSM / REST		10.5		8.0		2.5			31.3	%		46.6		37.8		8.8			23.3	%
Fuel Revenues:
Recovered from Customers		61.1		57.5		3.6			6.3	%		306.7		279.8		26.9			9.6	%
Total Retail Revenues	$	189.7	$	182.9	$	6.8			3.7	%	$	903.9	$	868.2	$	35.7			4.1	%
RETAIL REVENUES—CENTS / KWH
Margin Revenues:
Residential		6.32		6.32		—			0.0	%		6.48		6.50		(0.02	)		-0.3	%
Commercial		7.99		7.98		0.01			0.1	%		8.11		8.10		0.01			0.1	%
Industrial		4.39		4.55		(0.16	)		-3.5	%		4.42		4.53		(0.11	)		-2.4	%
Mining		2.83		2.86		(0.03	)		-1.0	%		2.92		2.87		0.05			1.7	%
Other		5.07		4.95		0.12			2.4	%		5.05		5.07		(0.02	)		-0.4	%
Total		5.73		5.75		(0.02	)		-0.3	%		5.90		5.93		(0.03	)		-0.5	%
DSM / REST		0.51		0.39		0.12			30.8	%		0.50		0.41		0.09			22.0	%
Fuel Revenues:
Recovered from Customers		2.97		2.81		0.16			5.7	%		3.29		3.01		0.28			9.3	%
Total Retail Revenues		9.21		8.95		0.26			2.9	%		9.69		9.34		0.35			3.7	%
LONG-TERM WHOLESALE MARGIN (Non-GAAP)—$ MILLIONS
Long-Term Wholesale Margin Revenues (Non-GAAP)	$	1.4	$	8.0	$	(6.6	)		-82.5	%	$	13.1	$	28.3	$	(15.2	)		-53.7	%
Fuel and Purchased Power Expense Allocated to Long-
Term Wholesale Revenues		6.8		5.9		0.9			15.3	%		28.0		27.4		0.6			2.2	%
Long-Term Wholesale Revenues	$	8.2	$	13.9	$	(5.7	)		-41.0	%	$	41.1	$	55.7	$	(14.6	)		-26.2	%
Wholesale Transmission Revenues		4.1		5.3		(1.2	)		-22.6	%		16.4		20.9		(4.5	)		-21.5	%
Short-term Wholesale Revenues		20.9		24.9		(4.0	)		-16.1	%		72.4		64.5		7.9			12.2	%
Electric Wholesale Sales (GAAP)	$	33.2	$	44.1	$	(10.9	)		-24.7	%	$	129.9	$	141.1	$	(11.2	)		-7.9	%

Retail Margin Revenues, a non-GAAP financial measure, should not be considered as an alternative to Net Electric Retail Sales, which is determined in accordance with GAAP. Retail Margin Revenues excludes: (i) revenues collected from retail customers that are directly offset by expenses recorded in other line items; and (ii) revenues collected from third parties that are unrelated to kWh sales to retail customers. We believe the change in Retail Margin Revenues between periods provides useful information to investors because it demonstrates the underlying revenue trend and performance of our core utility business. Retail Margin Revenues represents the portion of retail operating revenues available to cover the operating expenses of our core utility business.

Long-Term Wholesale Margin Revenues, a non-GAAP financial measure, should not be considered as an alternative to Electric Wholesale Sales, which is determined in accordance with GAAP. We believe the change in Long-Term Wholesale Margin Revenues between periods provides useful information to investors because it demonstrates the underlying profitability of TEP’s long-term wholesale sales contracts. Long-Term Wholesale Margin Revenues represents the portion of long-term wholesale revenues available to cover the operating expenses of our core utility business.

TEP Margin Revenues

8

UNS ELECTRIC - OPERATING STATISTICS

	Three Months Ended December 31,												Year End
	2011			2010			Incr (Decr)			% Change			2011			2010			Incr (Decr)			% Change
AVG. ELECTRIC CUSTOMERS
Residential		80,596			80,224			372			0.5	%		80,576			80,168			408			0.5	%
Commercial		10,406			10,343			63			0.6	%		10,387			10,345			42			0.4	%
Industrial		21			22			(1	)		-4.5	%		22			23			(1	)		-4.3	%
Mining		2			2			—			0.0	%		2			2			—			0.0	%
Other		325			258			67			26.0	%		268			264			4			1.5	%
Total		91,350			90,849			501			0.6	%		91,255			90,802			453			0.5	%
RETAIL SALES — MWH
Residential		175,800			167,895			7,905			4.7	%		827,795			820,352			7,443			0.9	%
Commercial		139,126			136,381			2,745			2.0	%		601,871			606,241			(4,370	)		-0.7	%
Industrial		53,498			53,770			(272	)		-0.5	%		220,930			219,241			1,689			0.8	%
Mining		28,146			60,054			(31,908	)		-53.1	%		200,619			209,307			(8,688	)		-4.2	%
Other		506			498			8			1.6	%		1,689			2,018			(329	)		-16.3	%
Total		397,076			418,598			(21,522	)		-5.1	%		1,852,904			1,857,159			(4,255	)		-0.2	%
RETAIL USAGE — KWH/CUSTOMER
Residential		2,181			2,093			88			4.2	%		10,273			10,233			40			0.4	%
Commercial		13,370			13,186			184			1.4	%		57,945			58,602			(657	)		-1.1	%
Industrial		2,547,524			2,444,091			103,433			4.2	%		10,042,273			9,532,217			510,056			5.4	%
Mining		NM			NM			NM			N/M			NM			NM			NM			N/M
Other		1,557			1,930			(373	)		-19.3	%		6,302			7,644			(1,342	)		-17.6	%
Total		4,347			4,608			(261	)		-5.7	%		20,305			20,453			(148	)		-0.7	%
RETAIL REVENUES — MILLIONS
Margin Revenues:
Residential	$	6.8		$	6.4		$	0.4			6.2	%	$	31.2		$	27.4		$	3.8			13.9	%
Commercial		6.9			7.0			(0.1	)		-1.4	%		28.9			27.3			1.6			5.9	%
Industrial		2.3			2.3			—			0.0	%		9.0			8.6			0.4			4.7	%
Mining		1.7			1.6			0.1			6.2	%		6.6			5.4			1.2			22.2	%
Other		0.1			—			0.1			N/M			0.3			0.4			(0.1	)		-25.0	%
Total Margin Revenues	$	17.8		$	17.3		$	0.5			2.9	%	$	76.0		$	69.1		$	6.9			10.0	%
DSM / REST		2.2			1.7			0.5			29.4	%		6.6			8.5			(1.9	)		-22.4	%
Fuel Revenues:
Recovered from Customers		20.0			24.4			(4.4	)		-18.0	%		99.3			105.2			(5.9	)		-5.6	%
Total Retail Revenues	$	40.0		$	43.4		$	(3.4	)		-7.8	%	$	181.9		$	182.8		$	(0.9	)		-0.5	%
WEATHER — COOLING DEGREE DAYS
Actual		579			587			(8	)		-1.4	%		9,092			8,821			271			3.1	%
10-Year Average		560			569									8,994			9,031
% Change Actual vs. 10-Year Avg.		3.4	%		3.2	%								1.1	%		-2.3	%
WEATHER — HEATING DEGREE DAYS
Actual		2,801			2,410			391			16.2	%		6,794			6,629			165			2.5	%
10-Year Average		2,559			2,532									6,399			6,418
% Change Actual vs. 10-Year Avg.		9.5	%		-4.8	%								6.2	%		3.3	%

Retail Margin Revenues, a non-GAAP financial measure, should not be considered as an alternative to Total Retail Revenues, which is determined in accordance with GAAP. Retail Margin Revenues exclude revenues collected from retail customers that are directly offset by expenses recorded in other line items. We believe the change in Retail Margin Revenues between periods provides useful information to investors because it demonstrates the underlying revenue trend and performance of our core utility business. Retail Margin Revenues represents the portion of retail operating revenues available to cover the operating expenses of our core utility business.

UNS Electric Op. Stats

9

UNS GAS - OPERATING STATISTICS

	Three Months Ended December 31												Year End
	2011			2010			Incr (Decr)			% Change			2011			2010			Incr (Decr)			% Change
AVG. GAS CUSTOMERS
Residential		134,673			133,729			944			0.7	%		134,227			133,337			890			0.7	%
Commercial		11,282			11,178			104			0.9	%		11,243			11,231			12			0.1	%
Industrial		22			22			—			0.0	%		22			23			(1	)		-4.3	%
Other		1,122			1,105			17			1.5	%		1,117			1,095			22			2.0	%
Total		147,099			146,034			1,065			0.7	%		146,609			145,686			923			0.6	%
RETAIL SALES—THOUSANDS OF THERMS
Residential		25,830			23,434			2,396			10.2	%		73,925			73,083			842			1.2	%
Commercial		10,208			9,273			935			10.1	%		31,091			30,209			882			2.9	%
Industrial		719			575			144			25.0	%		2,374			1,932			442			22.9	%
Other		2,349			2,163			186			8.6	%		6,614			6,628			(14	)		-0.2	%
Total		39,106			35,445			3,661			10.3	%		114,004			111,852			2,152			1.9	%
RETAIL USAGE—THERMS/CUSTOMER
Residential		192			175			17			9.7	%		551			548			3			0.5	%
Commercial		905			830			75			9.0	%		2,765			2,690			75			2.8	%
Industrial		32,682			26,136			6,546			25.0	%		107,909			84,000			23,909			28.5	%
Other		2,094			1,957			137			7.0	%		5,921			6,053			(132	)		-2.2	%
Total		266			243			23			9.5	%		778			768			10			1.3	%
RETAIL REVENUES—MILLIONS
Margin Revenues:
Residential	$	12.3		$	11.4		$	0.9			7.9	%	$	39.7		$	38.7		$	1.0			2.6	%
Commercial		3.4			3.1			0.3			9.7	%		10.7			10.2			0.5			4.9	%
Other		0.7			0.7			—			0.0	%		2.2			2.1			0.1			4.8	%
Total Margin Revenues	$	16.4		$	15.2		$	1.2			7.9	%	$	52.6		$	51.0		$	1.6			3.1	%
DSM Revenues		0.3			0.3			—			0.0	%		1.1			1.0			0.1			10.0	%
Transport/NSP Revenues		4.0			4.2			(0.2	)		-4.8	%		16.6			17.4			(0.8	)		-4.6	%
Fuel Revenues:
Recovered from Customers		25.8			25.4			0.4			1.6	%		77.3			76.5			0.8			1.0	%
Total Gas Revenues	$	46.5		$	45.1		$	1.4			3.1	%	$	147.6		$	145.9		$	1.7			1.2	%
WEATHER—HEATING DEGREE DAYS
Actual		10,080			9,138			942			10.3	%		25,794			25,457			337			1.3	%
10-Year Average		9,622			9,545									24,894			24,828
% Change Actual vs. 10-Year Avg.		4.8	%		-4.3	%								3.6	%		2.5	%

Retail Margin Revenues, a non-GAAP financial measure, should not be considered as an alternative to Total Gas Revenues, which is determined in accordance with GAAP. Retail Margin Revenues excludes revenues collected from retail customers that are directly offset by expenses recorded in other line items. We believe the change in Retail Margin Revenues between periods provides useful information to investors because it demonstrates the underlying revenue trend and performance of our core utility business. Retail Margin Revenues represents the portion of retail operating revenues available to cover the operating expenses of our core utility

UNS Gas Op. Stats

10

BASIC AND DILUTED SHARES OUTSTANDING

		September 30,		September 30,		September 30,
	Years Ended December 31,
	2011		2010		2009
	-In Thousands-
Numerator:
Net Income	$	109,975	$	112,984	$	105,901
Income from Assumed Conversion of Convertible Senior Notes		4,390		4,390		4,390
Adjusted Numerator	$	114,365	$	117,374	$	110,291
Denominator:
Weighted-average Shares of Common Stock Outstanding
Common Shares Issued		36,780		36,200		35,653
Participating Securities		53		92		100
Fully Vested Deferred Stock Units		129		123		105
Total Weighted-average Shares of Common Stock Outstanding and Participating Securities—Basic		36,962		36,415		35,858
Effect of Diluted Securities
Convertible Senior Notes		4,281		4,178		4,093
Options and Stock Issuable under Employee Benefit Plans and the Directors’ Plan		366		448		499
Total Shares		41,609		41,041		40,450

The following table shows the number of stock options excluded from the diluted EPS computation because the stock option’s exercise price was greater than the average market price of the Common Stock:

		September 30,		September 30,		September 30,
	Years Ended December 31,
	2011		2010		2009
	-In Thousands-
Stock Options Excluded from the Diluted EPS Computation		153		212		395

Diluted Share Count

11

EX-99.3

Exhibit 99.3

2011 Year-End Earnings Call Feb. 27, 2012

UniSource Energy Safe Harbor Safe Harbor and Non-GAAP Measures This document contains forward-looking information that involves risks and uncertainties, that include, but are not limited to: state and federal regulatory and legislative decisions and actions; regional economic and market conditions which could affect customer growth and energy usage; weather variations affecting energy usage; the cost of debt and equity capital and access to capital markets; the performance of the stock market and changing interest rate environment, which affect the value of the company's pension and other postretirement benefit plan assets and the related contribution requirements and expense; unexpected increases in O&M expense; resolution of pending litigation matters; changes in accounting standards; changes in critical accounting estimates; the ongoing restructuring of the electric industry; changes to long-term contracts; the cost of fuel and power supplies; performance of TEP's generating plants; and other factors listed in UniSource Energy's Form 10-K and 10-Q filings with the Securities and Exchange Commission. The preceding factors may cause future results to differ materially from historical results or from outcomes currently expected by UniSource Energy. The Company's press releases and other communications may include certain non-Generally Accepted Accounting Principles (GAAP) financial measures. A "non-GAAP financial measure" is defined as a numerical measure of a company's financial performance, financial position or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP in the Company's financial statements. Non-GAAP financial measures utilized by the Company include presentations of revenues, operating expenses, operating income and earnings (loss) per share. The Company uses these non-GAAP measures to evaluate the operations of the Company. Certain non- GAAP financial measures utilized by the Company exclude: the impact of non-recurring items: the effect of accounting changes or adjustments; expenses that are reimbursed by third parties; and other items. The Company's management believes that these non- GAAP financial measures provide useful information to investors by removing the effect of variances in GAAP reported results of operations that are not indicative of fundamental changes in the earnings or cash flow capacity of the Company's operations. Management also believes that the presentation of the non-GAAP financial measures is largely consistent with its past practice, as well as industry practice in general, and will enable investors and analysts to compare current non-GAAP measures with non-GAAP measures with respect to prior periods. Please refer to Exhibit 99.2 of the 8-K filed on February 27, 2012, for a reconciliation of non-GAAP measures with the most comparable GAAP measure. 1

(CHART) UniSource Energy Earnings Walk 2010 Reported Diluted EPS 2011 Reported Diluted EPS TEP L-T Wholesale Margin UNS Base O&M Millennium Losses (2010) UES Retail Margin UNS D&A El Paso Settlement (2011) Other TEP Wholesale Transm. UNS Interest Expense UNS Property Taxes 2

2012 Earnings Guidance and Sensitivities 2012 Earnings Guidance and Sensitivities 3 2012 Earnings Guidance Range: $2.05 - $2.35 per diluted share