COMMISSION NEWS

ARIZONA CORPORATION COMMISSION
1200 W. WASHINGTON STREET
PHOENIX, AZ 85007

TO: EDITORS, NEWS DIRECTORS

DATE: November 19, 1997

FOR: IMMEDIATE RELEASE

CONTACT: Jon Poston, (602) 542-0843
Kevin Mosley, (602) 542-7269

COMMISSION APPROVES TEP HOLDING COMPANY, NEW FINANCING PACKAGE

Arizona Corporation Commissioners have approved the request of Tucson Electric Power Company (TEP) to form a holding company, UniSource Energy.

Commission Chairman Jim Irvin said "This decision allows TEP to remain a contender in an increasingly competitive environment for the electric industry. The Commission has imposed many safeguards which I believe are needed to insure that ratepayers don't bear the burden of any problems that may occur from a TEP entry into unregulated businesses".

The Commission attached a number of conditions to the holding company approval. Among them:

TEP must stay in electric energy related businesses.
Businesses related to utility operations have to stay within the TEP business structure.
TEP will not guarantee the notes of other subsidiaries without Commission approval.
Costs of non-utility businesses cannot be assigned to the electric company for payment.
Records have to be open to Commission audit.

Tucson Electric Power filed for authority to organize a holding company on April 8, 1997.

Commissioners also approved the second phase of a financing application that allows TEP to replace the credit agreement resulting from a 1991 bankruptcy court action and refinance $184 million in bonds. The Commission decision will allow TEP to resume paying stock dividends, and to sell up to one million shares of its own stock through a direct stock purchase plan.