TO: EDITORS, NEWS DIRECTORS

DATE: August 19, 1998

FOR: IMMEDIATE RELEASE

CONTACT: Perry Baker (602) 542-0844

ACC STAFF AGREEMENT CLEARS WAY FOR LARGER TEP RATE DECREASE

The Arizona Corporation Commission announced today that an agreement has been reached with Tucson Electric Power that paves the way for a rate decrease of 3.1% for TEP residential customers. The agreement will remain in place through 2001, when electric competition will begin for all residential consumers. The new agreement, up from the original 1.1% that had been proposed by TEP, calls for a retroactive decrease back to July, 1998 of 1.1%, with additional decreases of 1% taking effect each July first for the next two years. All consumers who have not joined the competition pilot program would receive the decreases.

According to ACC Commissioner-Chairman Jim Irvin, "By taking the extra time to investigate and negotiate this request, the Commission has managed to guarantee additional rate reductions, almost $16 million more for the rate payers in Tucson and southern Arizona." He noted that the new numbers also reflect the ACC's desire to see all electric utilities provide rate decreases during the phase-in schedule for electric competition, lasting up to January 2001. "This is money we are putting back into people's pockets, and was well worth the extra time it took to negotiate the agreement", he said.

The ACC plan will return an estimated $46.5 million to consumers over the life of the reduction. In addition, the plan calls for TEP to continue its commitment to low-income assistance programs and lifeline rates. The plan will be voted upon by the three-member commission on August 25, beginning with an open hearing at 10:00am, in the ACC Hearing Room, 1200 W. Washington, Phoenix. The proceedings may also be heard over the ACC "Listen Line", (602) 542-0222.