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<TITLE>Filed by Bowne Pure Compliance</TITLE>
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<P style="font-size: 14pt" align="center"><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION<BR>
<FONT
style="font-size: 12pt">Washington, D.C. 20549 </FONT></B>

<P style="font-size: 18pt" align="center"><B>FORM 8-K</B>

<P style="font-size: 12pt" align="center"><B>CURRENT REPORT<BR>
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934</B>

<P style="font-size: 10pt" align="center"><B>Date of Report (Date of earliest event reported): October 28, 2008</B>

<P align="center">&nbsp;

<P style="font-size: 24pt" align="center"><B>UNISOURCE ENERGY CORPORATION</B><BR> <FONT style="font-size: 10pt">(Exact name of registrant as
specified in its charter) </FONT>


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  <TD width="32%">&nbsp;</TD>
  <TD width="1%">&nbsp;</TD>
  <TD width="33%">&nbsp;</TD>
  <TD width="1%">&nbsp;</TD>
  <TD width="32%">&nbsp;</TD>
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 <TR valign="bottom">
  <TD style="border-bottom: #000000 1px solid"><B>(An Arizona Corporation)</B></TD>
  <TD>&nbsp;</TD>
  <TD style="border-bottom: #000000 1px solid"><B>1-13739</B></TD>
  <TD>&nbsp;</TD>
  <TD style="border-bottom: #000000 1px solid"><B>86-0786732</B></TD>
 </TR>
 <TR valign="top">
  <TD>(State or other Jurisdiction of Incorporation)</TD>
  <TD>&nbsp;</TD>
  <TD>(Commission File Number)</TD>
  <TD>&nbsp;</TD>
  <TD>(IRS Employer Identification No.)</TD>
 </TR>

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  <TD width="49%">&nbsp;</TD>
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  <TD style="border-bottom: #000000 1px solid"><B>One South Church Avenue, Suite 100<BR>Tucson, AZ</B></TD>
  <TD>&nbsp;</TD>
  <TD style="border-bottom: #000000 1px solid"><B>85701</B></TD>
 </TR>
 <TR valign="top">
  <TD>(Address of Principal Executive Offices)</TD>
  <TD>&nbsp;</TD>
  <TD>(Zip Code)</TD>
 </TR>

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<P style="font-size: 10pt" align="center">Registrant&#8217;s telephone number, including area code: <B>(520) 571-4000</B>


<P align="center">&nbsp;

<P style="font-size: 24pt" align="center"><B>TUCSON ELECTRIC POWER COMPANY</B><BR> <FONT style="font-size: 10pt">(Exact name of registrant as
specified in its charter) </FONT>
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  <TD width="32%">&nbsp;</TD>
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  <TD style="border-bottom: #000000 1px solid"><B>(An Arizona Corporation)</B></TD>
  <TD>&nbsp;</TD>
  <TD style="border-bottom: #000000 1px solid"><B>1-5924</B></TD>
  <TD>&nbsp;</TD>
  <TD style="border-bottom: #000000 1px solid"><B>86-0062700</B></TD>
 </TR>
 <TR valign="top">
  <TD>(State or other Jurisdiction of Incorporation)</TD>
  <TD>&nbsp;</TD>
  <TD>(Commission File Number)</TD>
  <TD>&nbsp;</TD>
  <TD>(IRS Employer Identification No.)</TD>
 </TR>

</TABLE>

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  <TD width="49%">&nbsp;</TD>
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  <TD style="border-bottom: #000000 1px solid"><B>One South Church Avenue, Suite 100<BR>Tucson, AZ</B></TD>
  <TD>&nbsp;</TD>
  <TD style="border-bottom: #000000 1px solid"><B>85701</B></TD>
 </TR>
 <TR valign="top">
  <TD>(Address of Principal Executive Offices)</TD>
  <TD>&nbsp;</TD>
  <TD>(Zip Code)</TD>
 </TR>

</TABLE>


<P style="font-size: 10pt" align="center">Registrant&#8217;s telephone number, including area code: <B>(520) 571-4000</B>
<TABLE style="font-size: 10pt; text-align: center" cellspacing="0" cellpadding="0" width="30%" border="0">


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  <TD width="100%">&nbsp;</TD>
 </TR>
 <TR>
  <TD style="border-bottom: #000000 1px solid" nowrap><B>&nbsp;</B></TD>
 </TR>
 <TR>
  <TD nowrap>(Former name or former address if changed since last report.)</TD>
 </TR>

</TABLE>


<P style="font-size: 10pt" align="left">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:

<P style="font-size: 10pt" align="left"><FONT face="Wingdings">o</FONT> Written communications pursuant to Rule 425
under the Securities Act (17 CFR 230.425)<BR>
<BR>
<FONT face="Wingdings">o</FONT> Soliciting material pursuant to Rule
14a-12 under the Exchange Act (17 CFR 240.14a-12)<BR>
<BR>
<FONT face="Wingdings">o</FONT> Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))<BR>
<BR>
<FONT
face="Wingdings">o</FONT> Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))<BR>


<P>&nbsp;
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<P style="font-size: 10pt" align="left"><U><B>Item&nbsp;8.01 &#8212; Other Events. </B></U>

<P style="font-size: 10pt" align="left"><B>TEP Rate Case Proceeding</B>

<P style="font-size: 10pt" align="left">As previously reported, Tucson Electric Power Company (TEP)&nbsp;has a
proceeding underway before the Arizona Corporation Commission (ACC)&nbsp;to establish new retail rates. On May&nbsp;29,
2008, a settlement agreement (2008 Proposed Settlement Agreement) in TEP&#8217;s rate proceeding was filed with the
ACC. Hearings before an ACC administrative law judge (ALJ) concluded in July&nbsp;2008. On October&nbsp;28, 2008, the
ALJ issued a recommended opinion and order.

<P style="font-size: 10pt" align="left">The ALJ recommended that the ACC adopt the 2008 Proposed Settlement Agreement,
which includes a base retail rate increase of approximately 6% and a Purchased Power and Fuel Adjustment Clause (PPFAC).
TEP estimates that, based on current market prices, the PPFAC could increase average residential customers&#8217; bills
by another 3 to 4%.

<P style="font-size: 10pt" align="left">The ALJ made recommendations on two issues not addressed by the 2008 Proposed
Settlement Agreement &#8212; the effective date of the rate increase
and the amount or treatment of true-up revenues.
The ALJ recommended that the new rates become effective December&nbsp;1, 2008 and that TEP be required to credit any
true-up revenues (estimated to be approximately $59 million from May&nbsp;2008 to November&nbsp;30, 2008) to customers
through the PPFAC.

<P style="font-size: 10pt" align="left">The deadline for parties to the proceeding to file exceptions to the
ALJ&#8217;s recommended opinion and order is November&nbsp;6, 2008.

<P style="font-size: 10pt" align="left">The ALJ&#8217;s recommended opinion and order is subject to approval by the
ACC. A special open meeting has been scheduled for November 25, 2008,
at which time the ACC will deliberate and vote on the ALJ&#146;s
recommended opinion and order. TEP cannot predict the outcome of the ACC
proceeding.

<P style="font-size: 10pt" align="left">The ALJ&#8217;s recommended opinion and order is posted on UniSource
Energy&#8217;s website at www.UNS.com.

<P style="font-size: 10pt" align="left"><B>The Terms of the 2008 Proposed Settlement Agreement include:</B>

<P style="font-size: 10pt" align="left"><U>Base Rate Increase</U>

<P style="font-size: 10pt" align="left">A base rate increase of approximately 6% over TEP&#8217;s current retail rate
of 8.4 cents per kilowatt-hour (kWh). The proposed increase is based on an increase in test year revenues of
approximately $47&nbsp;million, which would increase TEP&#8217;s 2006 test year retail base revenues from approximately
$781&nbsp;million to $828&nbsp;million. The average cost of fuel and purchased power embedded in base rates would be
approximately 2.9 cents per kWh.

<P style="font-size: 10pt" align="left"><U>Purchased Power and Fuel Adjustment Clause</U>

<P style="font-size: 10pt" align="left">The PPFAC will be effective starting January&nbsp;1, 2009. The PPFAC allows
recovery of fuel and purchased power costs, including demand charges and the prudent costs of contracts for hedging
fuel and purchased power costs. The PPFAC will consist of a forward component and a true-up component.

<P>
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 <TR style="font-size: 10pt; background: none transparent scroll repeat 0% 0%; color: #000000" valign="top">
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  <TD nowrap align="left" width="3%">&#8226;</TD>
  <TD width="1%">&nbsp;</TD>
  <TD>The forward component will be updated on April 1 of each year, starting in 2009. The forward component will be
the forecasted fuel and purchased power costs for the 12-month period from April 1 to March&nbsp;31, less the base cost
of fuel and purchased power of 2.9 cents per kWh, which is embedded in base rates. TEP will have the ability to request
an adjustment to the forward component should an extraordinary event occur that causes a drastic change in forecasted
fuel and purchased power costs.</TD>
 </TR>

</TABLE>


<P>
<TABLE style="font-size: 10pt" cellspacing="0" cellpadding="0" width="100%" border="0">

 <TR style="font-size: 10pt; background: none transparent scroll repeat 0% 0%; color: #000000" valign="top">
  <TD style="background: none transparent scroll repeat 0% 0%" width="2%">&nbsp;</TD>
  <TD nowrap align="left" width="3%">&#8226;</TD>
  <TD width="1%">&nbsp;</TD>
  <TD>The true-up component will reconcile any over/under collected amounts from the preceding 12&nbsp;month period and
will be credited to or recovered from customers in the subsequent year.</TD>
 </TR>

</TABLE>


<P style="font-size: 10pt" align="left">TEP will credit the following against the PPFAC: 100% of short-term wholesale
revenues and 50% of the revenues from the sales of sulfur dioxide (SO2) emission allowances.

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<P style="font-size: 10pt" align="left"><U>Ratemaking Methodology for Generation Assets</U>

<P style="font-size: 10pt" align="left">Rates for generation service, including Springerville Unit 1 (SGS 1) and the
Luna Energy Facility (Luna), will be based on a cost-of-service methodology. For any rates in effect after 2012, all
generation assets acquired by TEP after December&nbsp;31, 2006 but before December&nbsp;31, 2012 shall be included in
TEP&#8217;s rate base at their respective original depreciated cost, subject to subsequent review and approval by the
ACC in future rate cases or other regulatory proceedings.

<P style="font-size: 10pt" align="left">SGS 1 non-fuel costs will be recovered at $25.67 per kilowatt (kW) per month.
Luna will be included in TEP&#8217;s original cost rate base at its net book value of $48&nbsp;million as of
December&nbsp;31, 2006.

<P style="font-size: 10pt" align="left"><U>Cost of Capital</U>

<P style="font-size: 10pt" align="left">TEP&#8217;s capital structure for ratemaking purposes will be comprised of
57.5% debt and 42.5% common equity. TEP&#8217;s allowed return on equity will be 10.25% and the embedded cost of debt
will be 6.38% for ratemaking purposes.

<P style="font-size: 10pt" align="left"><U>Depreciation and Net Negative Salvage</U>

<P style="font-size: 10pt" align="left">Upon the effective date of an ACC order approving the 2008 Proposed Settlement
Agreement, TEP will implement new depreciation rates that include a component for net negative salvage value for all
generation assets except Luna and new depreciation rates for distribution and general plant assets that will extend
the depreciable lives of these assets. The new depreciation rates will result in an increase in depreciation expense of
approximately $11&nbsp;million per year, based on a December&nbsp;31, 2006 test year.

<P style="font-size: 10pt" align="left"><U>Implementation Cost Recovery Asset and Coal Costs</U>

<P style="font-size: 10pt" align="left">TEP&#8217;s original cost rate base will include an Implementation Cost
Recovery Asset (ICRA)&nbsp;of $14&nbsp;million to reflect costs incurred by TEP to transition to competition under
TEP&#8217;s Settlement Agreement approved by the ACC in November&nbsp;1999 (1999 Settlement Agreement). For ratemaking
purposes, the ICRA will be amortized over a four-year period.

<P style="font-size: 10pt" align="left">The 2008 Proposed Settlement Agreement will also allow TEP to recover, over a
nine-year period, approximately $9 million of costs related to the buy down in 2000 of a coal contract for the San Juan
Generating Station.

<P style="font-size: 10pt" align="left">The approval of the Proposed
2008 Settlement Agreement will cause TEP to be subject to the
accounting provisions of FAS 71 for its generation operations, which
among other things, would cause TEP to record additional assets and
recognize income of $11 million related to the ICRA and the San Juan
coal costs. As TEP applies the provisions of FAS 71, other
adjustments may be required.

<P style="font-size: 10pt" align="left"><U>Renewable Energy and Demand-Side Management Adjustors</U>

<P style="font-size: 10pt" align="left">TEP will also collect two surchages from retail customers to fund energy
efficiency and renewable energy programs.

<P style="font-size: 10pt" align="left">The Renewable Energy Standard Tariff (REST)&nbsp;adjustor mechanism was
approved by the ACC in April&nbsp;2008.

<P style="font-size: 10pt" align="left">A demand-side management (DSM)&nbsp;adjustor mechanism will provide initial
funding of $6&nbsp;million for DSM programs. TEP will file for ACC approval to reset the DSM adjustor rate by April 1
of each year.

<P style="font-size: 10pt" align="left"><U>Base Rate Increase Moratorium</U>

<P style="font-size: 10pt" align="left">TEP&#8217;s base rates will be frozen through December&nbsp;31, 2012. TEP will
be prohibited from submitting a base rate application before June&nbsp;30, 2012. The test year to be used in
TEP&#8217;s next base rate application must be no earlier than December&nbsp;31, 2011.

<P style="font-size: 10pt" align="left">Notwithstanding the rate increase moratorium, base rates and adjustor
mechanisms may be changed in emergency conditions which are beyond TEP&#8217;s control if the ACC concludes such
changes are required to protect the public interest. The moratorium does not preclude TEP from seeking rate relief in
the event of the imposition of a federal carbon tax or related federal carbon regulations.

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<P style="font-size: 10pt" align="left"><U>1999 Settlement Agreement</U>

<P style="font-size: 10pt" align="left">Upon the ACC&#8217;s issuance of a final, non-appealable order approving the
2008 Proposed Settlement Agreement, TEP and all the parties to the 2008 Proposed Settlement Agreement shall forego all
claims related to the 1999 Settlement Agreement and the ACC order adopting the 1999 Settlement Agreement.

<P style="font-size: 10pt" align="left"><B>True-up Revenues</B> <BR>
According to a May&nbsp;2007 ACC order,
TEP&#8217;s current retail rates shall remain in effect, including the collection of an amount equal to the Fixed
Competitive Transition Charge (CTC), until the effective date of a final order in the rate case proceeding. The
incremental revenues (true-up revenues) collected as a result of continuing to collect an amount equal to the Fixed CTC
after May&nbsp;2008 when it would otherwise terminate under the 1999 Settlement Agreement, shall accrue interest and
shall be subject to refund or credit or other such mechanism to protect customers, as determined by the ACC. The
true-up revenues will not be recorded on TEP&#8217;s income statement and will be deferred until the ACC issues a final
order in the rate case proceeding.

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<P style="font-size: 10pt" align="center"><B>SIGNATURES</B>

<P style="font-size: 10pt" align="left">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.

<P style="font-size: 10pt" align="left">Date: October&nbsp;30, 2008

<P style="margin-top: -11pt; font-size: 10pt; margin-left: 46%" align="left"><U><B>UNISOURCE ENERGY CORPORATION</B></U><BR>
(Registrant)

<P style="font-size: 10pt; margin-left: 46%" align="left"><U>/s/ Kevin P.
Larson&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
<BR>
Senior Vice President and Chief Financial Officer

<P style="font-size: 10pt" align="left">Date: October&nbsp;30, 2008

<P style="margin-top: -11pt; font-size: 10pt; margin-left: 46%" align="left"><U><B>TUCSON ELECTRIC POWER COMPANY</B></U><BR>
(Registrant)

<P style="font-size: 10pt; margin-left: 46%" align="left"><U>/s/ Kevin P.
Larson&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
<BR>
Senior Vice President and Chief Financial Officer

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Filed by Bowne Pure Compliance
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): October 28, 2008
UNISOURCE ENERGY CORPORATION
(Exact name of registrant as
specified in its charter)
(An Arizona Corporation)
1-13739
86-0786732
(State or other Jurisdiction of Incorporation)
(Commission File Number)
(IRS Employer Identification No.)
One South Church Avenue, Suite 100
Tucson, AZ
85701
(Address of Principal Executive Offices)
(Zip Code)
Registrant's telephone number, including area code:
(520) 571-4000
TUCSON ELECTRIC POWER COMPANY
(Exact name of registrant as
specified in its charter)
(An Arizona Corporation)
1-5924
86-0062700
(State or other Jurisdiction of Incorporation)
(Commission File Number)
(IRS Employer Identification No.)
One South Church Avenue, Suite 100
Tucson, AZ
85701
(Address of Principal Executive Offices)
(Zip Code)
Registrant's telephone number, including area code:
(520) 571-4000
(Former name or former address if changed since last report.)
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:
o
Written communications pursuant to Rule 425
under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule
14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item 8.01 — Other Events.
TEP Rate Case Proceeding
As previously reported, Tucson Electric Power Company (TEP) has a
proceeding underway before the Arizona Corporation Commission (ACC) to establish new retail rates. On May 29,
2008, a settlement agreement (2008 Proposed Settlement Agreement) in TEP's rate proceeding was filed with the
ACC. Hearings before an ACC administrative law judge (ALJ) concluded in July 2008. On October 28, 2008, the
ALJ issued a recommended opinion and order.
The ALJ recommended that the ACC adopt the 2008 Proposed Settlement Agreement,
which includes a base retail rate increase of approximately 6% and a Purchased Power and Fuel Adjustment Clause (PPFAC).
TEP estimates that, based on current market prices, the PPFAC could increase average residential customers' bills
by another 3 to 4%.
The ALJ made recommendations on two issues not addressed by the 2008 Proposed
Settlement Agreement — the effective date of the rate increase
and the amount or treatment of true-up revenues.
The ALJ recommended that the new rates become effective December 1, 2008 and that TEP be required to credit any
true-up revenues (estimated to be approximately $59 million from May 2008 to November 30, 2008) to customers
through the PPFAC.
The deadline for parties to the proceeding to file exceptions to the
ALJ's recommended opinion and order is November 6, 2008.
The ALJ's recommended opinion and order is subject to approval by the
ACC. A special open meeting has been scheduled for November 25, 2008,
at which time the ACC will deliberate and vote on the ALJ's
recommended opinion and order. TEP cannot predict the outcome of the ACC
proceeding.
The ALJ's recommended opinion and order is posted on UniSource
Energy's website at www.UNS.com.
The Terms of the 2008 Proposed Settlement Agreement include:
Base Rate Increase
A base rate increase of approximately 6% over TEP's current retail rate
of 8.4 cents per kilowatt-hour (kWh). The proposed increase is based on an increase in test year revenues of
approximately $47 million, which would increase TEP's 2006 test year retail base revenues from approximately
$781 million to $828 million. The average cost of fuel and purchased power embedded in base rates would be
approximately 2.9 cents per kWh.
Purchased Power and Fuel Adjustment Clause
The PPFAC will be effective starting January 1, 2009. The PPFAC allows
recovery of fuel and purchased power costs, including demand charges and the prudent costs of contracts for hedging
fuel and purchased power costs. The PPFAC will consist of a forward component and a true-up component.
•
The forward component will be updated on April 1 of each year, starting in 2009. The forward component will be
the forecasted fuel and purchased power costs for the 12-month period from April 1 to March 31, less the base cost
of fuel and purchased power of 2.9 cents per kWh, which is embedded in base rates. TEP will have the ability to request
an adjustment to the forward component should an extraordinary event occur that causes a drastic change in forecasted
fuel and purchased power costs.
•
The true-up component will reconcile any over/under collected amounts from the preceding 12 month period and
will be credited to or recovered from customers in the subsequent year.
TEP will credit the following against the PPFAC: 100% of short-term wholesale
revenues and 50% of the revenues from the sales of sulfur dioxide (SO2) emission allowances.
Ratemaking Methodology for Generation Assets
Rates for generation service, including Springerville Unit 1 (SGS 1) and the
Luna Energy Facility (Luna), will be based on a cost-of-service methodology. For any rates in effect after 2012, all
generation assets acquired by TEP after December 31, 2006 but before December 31, 2012 shall be included in
TEP's rate base at their respective original depreciated cost, subject to subsequent review and approval by the
ACC in future rate cases or other regulatory proceedings.
SGS 1 non-fuel costs will be recovered at $25.67 per kilowatt (kW) per month.
Luna will be included in TEP's original cost rate base at its net book value of $48 million as of
December 31, 2006.
Cost of Capital
TEP's capital structure for ratemaking purposes will be comprised of
57.5% debt and 42.5% common equity. TEP's allowed return on equity will be 10.25% and the embedded cost of debt
will be 6.38% for ratemaking purposes.
Depreciation and Net Negative Salvage
Upon the effective date of an ACC order approving the 2008 Proposed Settlement
Agreement, TEP will implement new depreciation rates that include a component for net negative salvage value for all
generation assets except Luna and new depreciation rates for distribution and general plant assets that will extend
the depreciable lives of these assets. The new depreciation rates will result in an increase in depreciation expense of
approximately $11 million per year, based on a December 31, 2006 test year.
Implementation Cost Recovery Asset and Coal Costs
TEP's original cost rate base will include an Implementation Cost
Recovery Asset (ICRA) of $14 million to reflect costs incurred by TEP to transition to competition under
TEP's Settlement Agreement approved by the ACC in November 1999 (1999 Settlement Agreement). For ratemaking
purposes, the ICRA will be amortized over a four-year period.
The 2008 Proposed Settlement Agreement will also allow TEP to recover, over a
nine-year period, approximately $9 million of costs related to the buy down in 2000 of a coal contract for the San Juan
Generating Station.
The approval of the Proposed
2008 Settlement Agreement will cause TEP to be subject to the
accounting provisions of FAS 71 for its generation operations, which
among other things, would cause TEP to record additional assets and
recognize income of $11 million related to the ICRA and the San Juan
coal costs. As TEP applies the provisions of FAS 71, other
adjustments may be required.
Renewable Energy and Demand-Side Management Adjustors
TEP will also collect two surchages from retail customers to fund energy
efficiency and renewable energy programs.
The Renewable Energy Standard Tariff (REST) adjustor mechanism was
approved by the ACC in April 2008.
A demand-side management (DSM) adjustor mechanism will provide initial
funding of $6 million for DSM programs. TEP will file for ACC approval to reset the DSM adjustor rate by April 1
of each year.
Base Rate Increase Moratorium
TEP's base rates will be frozen through December 31, 2012. TEP will
be prohibited from submitting a base rate application before June 30, 2012. The test year to be used in
TEP's next base rate application must be no earlier than December 31, 2011.
Notwithstanding the rate increase moratorium, base rates and adjustor
mechanisms may be changed in emergency conditions which are beyond TEP's control if the ACC concludes such
changes are required to protect the public interest. The moratorium does not preclude TEP from seeking rate relief in
the event of the imposition of a federal carbon tax or related federal carbon regulations.
1999 Settlement Agreement
Upon the ACC's issuance of a final, non-appealable order approving the
2008 Proposed Settlement Agreement, TEP and all the parties to the 2008 Proposed Settlement Agreement shall forego all
claims related to the 1999 Settlement Agreement and the ACC order adopting the 1999 Settlement Agreement.
True-up Revenues
According to a May 2007 ACC order,
TEP's current retail rates shall remain in effect, including the collection of an amount equal to the Fixed
Competitive Transition Charge (CTC), until the effective date of a final order in the rate case proceeding. The
incremental revenues (true-up revenues) collected as a result of continuing to collect an amount equal to the Fixed CTC
after May 2008 when it would otherwise terminate under the 1999 Settlement Agreement, shall accrue interest and
shall be subject to refund or credit or other such mechanism to protect customers, as determined by the ACC. The
true-up revenues will not be recorded on TEP's income statement and will be deferred until the ACC issues a final
order in the rate case proceeding.
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: October 30, 2008
UNISOURCE ENERGY CORPORATION
(Registrant)
/s/ Kevin P.
Larson
Senior Vice President and Chief Financial Officer
Date: October 30, 2008
TUCSON ELECTRIC POWER COMPANY
(Registrant)
/s/ Kevin P.
Larson
Senior Vice President and Chief Financial Officer