EX-99.2 3 ex9926302013.htm EXHIBIT-99.2 Ex 99.2 6.30.2013


Exhibit 99.2
UNS Energy Corporation
2nd Quarter 2013 Supplemental Earnings Information
As of July 30, 2013
 
TABLE OF CONTENTS
 
Safe Harbor and Non-GAAP Measures
1

Variance Explanation
2

UNS Energy and TEP O&M
4

TEP Operating Statistics
5

TEP Margin Revenues
7

UNS Electric Operating Statistics
9

UNS Gas Operating Statistics
11

Basic & Diluted Shares Outstanding
13

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 retiree 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 UNS 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 UNS Energy. The forecast assumptions and estimates below are not intended to be a full list of factors which could cause UNS Energy’s future results to differ from current expectations. Please refer to UNS 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.

1



UNS ENERGY 2ND QUARTER EARNINGS VARIANCE EXPLANATION
 
2nd Quarter 2012 UNS Energy Net Income
 
 
 
$
26.3

 
 
2nd Quarter
 
Change
 
 
TEP
 
2013
 
2012
 
Pre-Tax
 
After Tax
 
 
 
 
Millions of Dollars
 
 
Utility Gross Margin Components:
 
 
 
 
 
 
 
 
 
 
Retail Margin Revenues(1)
 
$
145.2

 
$
146.3

 
$
(1.1
)
 
(0.7
)
 
 
L-T Wholesale Margin Revenues(1)
 
1.3

 

 
1.3

 
0.8

 
 
Transmission Revenues
 
3.7

 
3.9

 
(0.2
)
 
(0.1
)
 
 
Total
 
150.2

 
150.2

 

 

 
 
Other Income Sources:
 
 
 
 
 
 
 
 
 
 
Operating synergies—Springerville Units 3&4
 
5.5

 
5.8

 
(0.3
)
 
(0.2
)
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
Base O&M(1)
 
61.2

 
59.5

 
1.7

 
1.0

 
 
Depreciation
 
28.9

 
27.5

 
1.4

 
0.9

 
 
Amortization
 
9.1

 
10.0

 
(0.9
)
 
(0.6
)
 
 
PPFAC Adjustment(2)
 
3.0

 

 
3.0

 
1.8

 
 
Total Other Deductions (Income)
 
1.1

 
0.7

 
0.4

 
0.2

 
 
Total Interest Expense
 
19.9

 
21.3

 
(1.4
)
 
(0.9
)
 
 
Other Line Item Changes
 

 
0.9

 
(0.9
)
 
(0.6
)
 
 
Income Tax Expense(3)
 
1.7

 
14.2

 
NM

 
(12.5
)
 
 
TEP Net Income (GAAP)
 
$
30.8

 
$
21.9

 
NM

 
$
8.9

 
 
Change in TEP Net Income
 
 
 
8.9

Other Business Segments—After Tax Amounts
 
 
 
 
 
 
 
 
 
 
UNS Electric Net Income
 
$
3.8

 
$
4.5

 
NM

 
$
(0.7
)
 
 
UNS Gas Net Income
 
0.3

 

 
NM

 
0.3

 
 
Millennium Energy Holdings Net Income
 
0.1

 
0.4

 
NM

 
(0.3
)
 
 
Other and Consolidating Adjustments
 
(0.4
)
 
(0.5
)
 
NM

 
0.1

 
 
Total Net Income from Other Business Segments and Consolidating Adjustments
 
$
3.8

 
$
4.4

 
NM

 
$
(0.6
)
 
 
Change in UNS Electric, UNS Gas, Millennium Energy Holdings and Other Net Income
 
(0.6
)
2nd Quarter 2013 UNS Energy Net Income
 
$
34.6

(1) Retail Margin Revenues, Long-Term Wholesale Margin and Base O&M are all non-GAAP measures. See the following pages for a reconciliation of these non-GAAP measures.
(2) A one-time credit to retail customers that was approved in TEP's recently completed rate case, recorded to fuel expense during the second quarter of 2013.
(3) A reduction to income tax expense related to a regulatory asset that was recorded during the second quarter of 2013 for deferred tax expenses that will be recovered in future periods.


2



UNS ENERGY YEAR TO DATE EARNINGS VARIANCE EXPLANATION
YTD June 30, 2012 UNS Energy Net Income
 
 
 
$
32.7

 
 
YTD June 30,
 
Change
 
 
TEP
 
2013
 
2012
 
Pre-Tax
 
After Tax
 
 
 
 
Millions of Dollars
 
 
Utility Gross Margin Components:
 
 
 
 
 
 
 
 
 
 
Retail Margin Revenues(1)
 
$
255.1

 
$
251.7

 
$
3.4

 
2.1

 
 
L-T Wholesale Margin Revenues(1)
 
3.6

 
1.9

 
1.7

 
1.0

 
 
Transmission Revenues
 
7.6

 
7.8

 
(0.2
)
 
(0.1
)
 
 
Total
 
266.3

 
261.4

 
4.9

 
3.0

 
 
Other Income Sources:
 
 
 
 
 
 
 
 
 
 
Operating synergies—Springerville Units 3&4
 
10.9

 
11.5

 
(0.6
)
 
(0.4
)
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
Base O&M(1)
 
121.7

 
119.9

 
1.8

 
1.1

 
 
Depreciation
 
57.4

 
55.0

 
2.4

 
1.5

 
 
Amortization
 
18.3

 
19.6

 
(1.3
)
 
(0.8
)
 
 
PPFAC Adjustment(2)
 
3.0

 

 
3.0

 
1.8

 
 
Total Other Deductions (Income)
 
1.1

 
(0.3
)
 
1.4

 
0.9

 
 
Total Interest Expense
 
39.9

 
43.6

 
(3.7
)
 
(2.3
)
 
 
Other Line Item Changes
 
0.6

 
2.4

 
(1.8
)
 
(1.1
)
 
 
Income Tax Expense(3)
 
2.9

 
12.3

 
NM

 
(9.4
)
 
 
TEP Net Income (GAAP)
 
$
32.3

 
$
20.4

 
NM

 
$
11.9

 
 
Change in TEP Net Income
 
 
 
11.9

Other Business Segments—After Tax Amounts
 
 
 
 
 
 
 
 
 
 
UNS Electric Net Income
 
$
6.1

 
$
7.3

 
NM

 
$
(1.2
)
 
 
UNS Gas Net Income
 
7.6

 
5.4

 
NM

 
2.2

 
 
Millennium Energy Holdings Net Income
 
0.4

 
1.2

 
NM

 
(0.8
)
 
 
Other and Consolidating Adjustments
 
(0.4
)
 
(1.6
)
 
NM

 
1.2

 
 
Total Net Income from Other Business Segments and Consolidating Adjustments
 
$
13.7

 
$
12.3

 
NM

 
$
1.4

 
 
Change in UNS Electric, UNS Gas, Millennium Energy Holdings and Other Net Income
 
1.4

YTD June 30, 2013 UNS Energy Net Income
 
$
46.0

(1) Retail Margin Revenues, Long-Term Wholesale Margin and Base O&M are all non-GAAP measures. See the following pages for a reconciliation of these non-GAAP measures.
(2) A one-time credit to retail customers that was approved in TEP's recently completed rate case, recorded to fuel expense during the second quarter of 2013.
(3) A reduction to income tax expense related to a regulatory asset that was recorded during the second quarter of 2013 for deferred tax expenses that will be recovered in future periods.


3



UNS ENERGY AND TEP O&M
 
UNS Energy
Quarter Ended June 30,
 
YTD June 30,
O&M Components
2013
 
2012
 
2013
 
2012
 
Millions of Dollars
 
Millions of Dollars
UNS Energy Base O&M (Non-GAAP) (1)
71.1

 
68.1

 
$
140.4

 
$
137.0

Reimbursed O&M Related to Springerville Units 3 and 4
16.5

 
13.3

 
30.3

 
26.6

O&M Related to Customer-funded Renewable Energy and DSM Programs
7.5

 
9.5

 
14.3

 
21.6

UNS Energy O&M (GAAP)
$
95.1

 
$
90.9

 
$
185.0

 
$
185.2


TEP
Quarter Ended June 30,
 
YTD June 30,
O&M Components
2013
 
2012
 
2013
 
2012
 
Millions of Dollars
 
Millions of Dollars
TEP Base O&M (Non-GAAP) (1)
$
61.2

 
$
59.5

 
$
121.7

 
$
119.9

O&M Included in Other Expense
(1.7
)
 
(1.2
)
 
(3.5
)
 
(2.1
)
Reimbursed O&M Related to Springerville Units 3 and 4
16.5

 
13.3

 
30.3

 
26.6

O&M Related to Customer-funded Renewable Energy and DSM Programs
6.0

 
7.1

 
11.3

 
16.7

TEP O&M (GAAP)
$
82.0

 
$
78.7

 
$
159.8

 
$
161.1


(1) 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.

4



TEP—OPERATING STATISTICS
 
 
 
Three Months Ended June 30,
 
 
2013
 
2012
 
Incr (Decr)
 
% Change
AVG. ELECTRIC CUSTOMERS
 
 
 
 
 
 
 
 
Residential
 
370,406

 
367,824

 
2,582

 
0.7
 %
Commercial
 
36,258

 
36,226

 
32

 
0.1
 %
Industrial
 
620

 
633

 
(13
)
 
(2.1
)%
Mining
 
2

 
2

 

 
 %
Other
 
62

 
62

 

 
 %
Total
 
407,348

 
404,747

 
2,601

 
0.6
 %
RETAIL SALES—MWH
 
 
 
 
 
 
 
 
Residential
 
1,001,793

 
1,022,359

 
(20,566
)
 
(2.0
)%
Commercial
 
536,754

 
538,608

 
(1,854
)
 
(0.3
)%
Industrial
 
542,602

 
543,750

 
(1,148
)
 
(0.2
)%
Mining
 
258,495

 
269,814

 
(11,319
)
 
(4.2
)%
Other
 
69,797

 
65,449

 
4,348

 
6.6
 %
Total
 
2,409,441

 
2,439,980

 
(30,539
)
 
(1.3
)%
RETAIL USAGE—KWH/CUSTOMER
 
 
 
 
 
 
 
 
Residential
 
2,705

 
2,779

 
(74
)
 
(2.7
)%
Commercial
 
14,804

 
14,868

 
(64
)
 
(0.4
)%
Industrial
 
875,165

 
859,005

 
16,160

 
1.9
 %
Mining
 
129,247,500

 
134,907,000

 
(5,659,500
)
 
(4.2
)%
Other
 
1,125,758

 
1,055,629

 
70,129

 
6.6
 %
Total
 
5,915

 
6,028

 
(113
)
 
(1.9
)%
WEATHER—COOLING DEGREE DAYS
 
 
 
 
 
 
 
 
Actual
 
577

 
566

 
11

 
1.9
 %
10-Year Average
 
463

 
452

 
 
 
 
% Change Actual vs. 10-Year Avg.
 
24.6
%
 
25.2
%
 
 
 
 
ENERGY MARKET INDICATORS
 
 
 
 
 
 
 
 
Avg. Wholesale Power Prices
 
 
 
 
 
 
 
 
Palo Verde Index—$/MWh
 
 
 
 
 
 
 
 
On Peak
 
$
37.70

 
$
25.62

 
$
12.08

 
47.2
 %
Off Peak
 
$
27.36

 
$
16.35

 
$
11.01

 
67.3
 %
Avg. Natural Gas Prices
 
 
 
 
 
 
 
 
Permian Index—$/MMBtu
 
$
3.84

 
$
2.19

 
$
1.65

 
75.3
 %
Note: Some items above are calculated on un-rounded data and may not precisely correspond to data shown in table.

















5



TEP—OPERATING STATISTICS
 
 
 
Six Months Ended June 30,
 
 
2013
 
2012
 
Incr (Decr)
 
% Change
AVG. ELECTRIC CUSTOMERS
 
 
 
 
 
 
 
 
Residential
 
370,096

 
367,615

 
2,481

 
0.7
 %
Commercial
 
36,235

 
36,212

 
23

 
0.1
 %
Industrial
 
624

 
633

 
(9
)
 
(1.4
)%
Mining
 
2

 
2

 

 
 %
Other
 
62

 
62

 

 
 %
Total
 
407,019

 
404,524

 
2,495

 
0.6
 %
RETAIL SALES—MWH
 
 
 
 
 
 
 
 
Residential
 
1,794,774

 
1,752,698

 
42,076

 
2.4
 %
Commercial
 
939,423

 
934,179

 
5,244

 
0.6
 %
Industrial
 
1,016,051

 
1,012,703

 
3,348

 
0.3
 %
Mining
 
528,154

 
542,794

 
(14,640
)
 
(2.7
)%
Other
 
126,509

 
115,649

 
10,860

 
9.4
 %
Total
 
4,404,911

 
4,358,023

 
46,888

 
1.1
 %
RETAIL USAGE—KWH/CUSTOMER
 
 
 
 
 
 
 
 
Residential
 
4,849

 
4,768

 
81

 
1.7
 %
Commercial
 
25,926

 
25,797

 
129

 
0.5
 %
Industrial
 
1,628,287

 
1,599,847

 
28,440

 
1.8
 %
Mining
 
264,077,000

 
271,397,000

 
(7,320,000
)
 
(2.7
)%
Other
 
2,040,468

 
1,865,306

 
175,162

 
9.4
 %
Total
 
10,822

 
10,773

 
49

 
0.5
 %
WEATHER—COOLING DEGREE DAYS
 
 
 
 
 
 
 
 
Actual
 
577

 
566

 
11

 
1.9
 %
10-Year Average
 
464

 
453

 
 
 
 
% Change Actual vs. 10-Year Avg.
 
24.4
%
 
24.9
%
 
 
 
 
ENERGY MARKET INDICATORS
 
 
 
 
 
 
 
 
Avg. Wholesale Power Prices
 
 
 
 
 
 
 
 
Palo Verde Index—$/MWh
 
 
 
 
 
 
 
 
On Peak
 
$
34.85

 
$
25.31

 
$
9.54

 
37.7
 %
Off Peak
 
$
26.97

 
$
17.78

 
$
9.19

 
51.7
 %
Avg. Natural Gas Prices
 
 
 
 
 
 
 
 
Permian Index—$/MMBtu
 
$
3.63

 
$
2.29

 
$
1.34

 
58.5
 %
Note: Some items above are calculated on un-rounded data and may not precisely correspond to data shown in table.

















6



TEP—RETAIL AND WHOLESALE MARGIN REVENUES
 
 
 
Three Months Ended June 30,
 
 
2013
 
2012
 
Incr (Decr)
 
% Change
RETAIL REVENUES—$ MILLIONS
 
 
 
 
 
 
 
 
Retail Margin Revenues:(1)
 
 
 
 
 
 
 
 
Residential
 
$
65.5

 
$
66.9

 
(1.4
)
 
(2.1
)%
Commercial
 
44.0

 
44.2

 
(0.2
)
 
(0.5
)%
Industrial
 
24.1

 
23.9

 
0.2

 
0.8
 %
Mining
 
8.0

 
8.0

 

 
 %
Other
 
3.6

 
3.3

 
0.3

 
9.1
 %
Total
 
$
145.2

 
$
146.3

 
$
(1.1
)
 
(0.8
)%
RES & DSM Revenues
 
11.8

 
9.6

 
2.2

 
22.9
 %
Fuel and Purchased Power Revenues:
 
 
 
 
 
 
 
 
Recovered from Customers
 
86.6

 
91.9

 
(5.3
)
 
(5.8
)%
Total Retail Revenues
 
$
243.6

 
$
247.8

 
$
(4.2
)
 
(1.7
)%
RETAIL REVENUES—CENTS / KWH
 
 
 
 
 
 
 
 
Average Retail Margin Rate (Cents/kWh):
 
 
 
 
 
 
 
 
Residential
 
6.54

 
6.54

 

 
 %
Commercial
 
8.20

 
8.21

 
(0.01
)
 
(0.1
)%
Industrial
 
4.44

 
4.40

 
0.04

 
0.9
 %
Mining
 
3.09

 
2.97

 
0.12

 
4.0
 %
Other
 
5.16

 
5.04

 
0.12

 
2.4
 %
Average Retail Margin Revenue
 
6.03

 
6.00

 
0.03

 
0.5
 %
Average RES & DSM Revenue
 
0.49

 
0.39

 
0.10

 
25.6
 %
Average Fuel and Purchased Power Revenue
 
 
 
 
 
 
 
 
Recovered from Customers
 
3.59

 
3.77

 
(0.18
)
 
(4.8
)%
Total Average Retail Revenue
 
10.11

 
10.16

 
(0.05
)
 
(0.5
)%
LONG-TERM WHOLESALE MARGIN (Non-GAAP)—$ MILLIONS(2)
 
 
 
 
 
 
 
 
Long-Term Wholesale Margin Revenues (Non-GAAP)
 
$
1.3

 
$

 
$
1.3

 
N/M

Fuel and Purchased Power Expense Allocated to Long-Term Wholesale Revenues
 
4.0

 
4.9

 
(0.9
)
 
(18.4
)%
Long-Term Wholesale Revenues
 
$
5.3

 
$
4.9

 
$
0.4

 
8.2
 %
Wholesale Transmission Revenues
 
3.7

 
3.9

 
(0.2
)
 
(5.1
)%
Short-term Wholesale Revenues
 
20.5

 
13.5

 
7.0

 
51.9
 %
Electric Wholesale Sales (GAAP)
 
$
29.5

 
$
22.3

 
$
7.2

 
32.3
 %
(1) 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.
(2) 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.
 
Note: Some items above are calculated on un-rounded data and may not precisely correspond to data shown in table.


7



TEP—RETAIL AND WHOLESALE MARGIN REVENUES
 
 
Six Months Ended June 30,
 
 
2013
 
2012
 
Incr (Decr)
 
% Change
RETAIL REVENUES—$ MILLIONS
 
 
 
 
 
 
 
 
Retail Margin Revenues:(1)
 
 
 
 
 
 
 
 
Residential
 
$
115.5

 
$
113.0

 
2.5

 
2.2
 %
Commercial
 
75.3

 
74.9

 
0.4

 
0.5
 %
Industrial
 
43.5

 
43.5

 

 
 %
Mining
 
14.5

 
14.5

 

 
 %
Other
 
6.3

 
5.8

 
0.5

 
8.6
 %
Total
 
$
255.1

 
$
251.7

 
$
3.4

 
1.4
 %
RES & DSM Revenues
 
22.6

 
21.4

 
1.2

 
5.6
 %
Fuel and Purchased Power Revenues
 
 
 
 
 
 
 
 
Recovered from Customers
 
150.8

 
141.0

 
9.8

 
7.0
 %
Total Retail Revenues
 
$
428.5

 
$
414.1

 
$
14.4

 
3.5
 %
RETAIL REVENUES—CENTS / KWH
 
 
 
 
 
 
 
 
Average Retail Margin Rate (Cents/kWh):
 
 
 
 
 
 
 
 
Residential
 
6.44

 
6.45

 
(0.01
)
 
(0.2
)%
Commercial
 
8.02

 
8.02

 

 
 %
Industrial
 
4.28

 
4.30

 
(0.02
)
 
(0.5
)%
Mining
 
2.75

 
2.67

 
0.08

 
3.0
 %
Other
 
4.98

 
5.02

 
(0.04
)
 
(0.8
)%
Average Retail Margin Revenue
 
5.79

 
5.78

 
0.01

 
0.2
 %
Average RES & DSM Revenue
 
0.51

 
0.49

 
0.02

 
4.1
 %
Average Fuel and Purchased Power Revenue
 
 
 
 
 
 
 
 
Recovered from Customers
 
3.42

 
3.24

 
0.18

 
5.6
 %
Total Average Retail Revenue
 
9.72

 
9.51

 
0.21

 
2.2
 %
LONG-TERM WHOLESALE MARGIN (Non-GAAP)—$ MILLIONS(2)
 
 
 
 
 
 
 
 
Long-Term Wholesale Margin Revenues (Non-GAAP)
 
$
3.6

 
$
1.9

 
$
1.7

 
89.5
 %
Fuel and Purchased Power Expense Allocated to Long-Term Wholesale Revenues
 
9.5

 
9.7

 
(0.2
)
 
(2.1
)%
Long-Term Wholesale Revenues
 
$
13.1

 
$
11.6

 
$
1.5

 
12.9
 %
Wholesale Transmission Revenues
 
7.6

 
7.8

 
(0.2
)
 
(2.6
)%
Short-term Wholesale Revenues
 
43.2

 
32.6

 
10.6

 
32.5
 %
Electric Wholesale Sales (GAAP)
 
$
63.9

 
$
52.0

 
$
11.9

 
22.9
 %
(1) 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.
(2) 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.
 
Note: Some items above are calculated on un-rounded data and may not precisely correspond to data shown in table.


8



UNS ELECTRIC—OPERATING STATISTICS
 
 
 
Three Months Ended June 30,
 
 
2013
 
2012
 
Incr (Decr)
 
% Change
AVG. ELECTRIC CUSTOMERS
 
 
 
 
 
 
 
 
Residential
 
81,338

 
80,795

 
543

 
0.7
 %
Commercial
 
10,562

 
10,448

 
114

 
1.1
 %
Industrial
 
18

 
21

 
(3
)
 
(14.3
)%
Mining
 
2

 
2

 

 
 %
Other
 
533

 
475

 
58

 
12.2
 %
Total
 
92,453

 
91,741

 
712

 
0.8
 %
RETAIL SALES—MWH
 
 
 
 
 
 
 
 
Residential
 
201,169

 
204,528

 
(3,359
)
 
(1.6
)%
Commercial
 
169,498

 
167,466

 
2,032

 
1.2
 %
Industrial
 
49,030

 
55,202

 
(6,172
)
 
(11.2
)%
Mining
 
16,032

 
27,584

 
(11,552
)
 
(41.9
)%
Other
 
372

 
378

 
(6
)
 
(1.6
)%
Total
 
436,101

 
455,158

 
(19,057
)
 
(4.2
)%
RETAIL USAGE—KWH/CUSTOMER
 
 
 
 
 
 
 
 
Residential
 
2,473

 
2,531

 
(58
)
 
(2.3
)%
Commercial
 
16,048

 
16,029

 
19

 
0.1
 %
Industrial
 
2,723,889

 
2,628,667

 
95,222

 
3.6
 %
Mining
 
8,016,000

 
13,792,000

 
(5,776,000
)
 
(41.9
)%
Other
 
698

 
796

 
(98
)
 
(12.3
)%
Total
 
4,717

 
4,961

 
(244
)
 
(4.9
)%
RETAIL REVENUES—MILLIONS
 
 
 
 
 
 
 
 
Retail Margin Revenues:
 
 
 
 
 
 
 
 
Residential
 
$
7.8

 
$
7.9

 
$
(0.1
)
 
(1.3
)%
Commercial
 
7.7

 
7.8

 
(0.1
)
 
(1.3
)%
Industrial
 
2.0

 
2.3

 
(0.3
)
 
(13.0
)%
Mining
 
1.0

 
1.7

 
(0.7
)
 
(41.2
)%
Other
 
0.1

 
0.1

 

 
 %
Total Retail Margin Revenues (Non-GAAP)(1)
 
$
18.6

 
$
19.8

 
$
(1.2
)
 
(6.1
)%
RES & DSM Revenues
 
2.0

 
2.7

 
(0.7
)
 
(25.9
)%
Fuel and Purchased Power Revenues
 
21.2

 
21.8

 
(0.6
)
 
(2.8
)%
Total Retail Revenues
 
$
41.8

 
$
44.3

 
$
(2.5
)
 
(5.6
)%
WEATHER—COOLING DEGREE DAYS
 
 
 
 
 
 
 
 
Actual
 
1,221

 
1,227

 
(6
)
 
(0.5
)%
10-Year Average
 
1,029

 
1,056

 
 
 
 
% Change Actual vs. 10-Year Avg.
 
18.7
%
 
16.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)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.
 
Note: Some items above are calculated on un-rounded data and may not precisely correspond to data shown in table.




9



UNS ELECTRIC—OPERATING STATISTICS

 
 
Six Months Ended June 30,
 
 
2013
 
2012
 
Incr (Decr)
 
% Change
AVG. ELECTRIC CUSTOMERS
 
 
 
 
 
 
 
 
Residential
 
81,339

 
80,792

 
547

 
0.7
 %
Commercial
 
10,547

 
10,433

 
114

 
1.1
 %
Industrial
 
19

 
21

 
(2
)
 
(9.5
)%
Mining
 
2

 
2

 

 
 %
Other
 
532

 
455

 
77

 
16.9
 %
Total
 
92,439

 
91,703

 
736

 
0.8
 %
RETAIL SALES—MWH
 
 
 
 
 
 
 
 
Residential
 
391,381

 
375,226

 
16,155

 
4.3
 %
Commercial
 
297,123

 
298,526

 
(1,403
)
 
(0.5
)%
Industrial
 
91,379

 
108,445

 
(17,066
)
 
(15.7
)%
Mining
 
29,232

 
55,185

 
(25,953
)
 
(47.0
)%
Other
 
927

 
808

 
119

 
14.7
 %
Total
 
810,042

 
838,190

 
(28,148
)
 
(3.4
)%
RETAIL USAGE—KWH/CUSTOMER
 
 
 
 
 
 
 
 
Residential
 
4,812

 
4,644

 
168

 
3.6
 %
Commercial
 
28,171

 
28,614

 
(443
)
 
(1.5
)%
Industrial
 
4,809,421

 
5,164,048

 
(354,627
)
 
(6.9
)%
Mining
 
14,616,000

 
27,592,500

 
(12,976,500
)
 
(47.0
)%
Other
 
1,742

 
1,776

 
(34
)
 
(1.9
)%
Total
 
8,763

 
9,140

 
(377
)
 
(4.1
)%
RETAIL REVENUES—MILLIONS
 
 
 
 
 
 
 
 
Retail Margin Revenues:
 
 
 
 
 
 
 
 
Residential
 
$
15.1

 
$
14.5

 
$
0.6

 
4.1
 %
Commercial
 
14.0

 
14.1

 
(0.1
)
 
(0.7
)%
Industrial
 
3.9

 
4.6

 
(0.7
)
 
(15.2
)%
Mining
 
2.5

 
3.4

 
(0.9
)
 
(26.5
)%
Other
 
0.1

 
0.1

 

 
 %
Total Retail Margin Revenues (Non-GAAP)(1)
 
$
35.6

 
$
36.7

 
$
(1.1
)
 
(3.0
)%
RES & DSM Revenues
 
3.7

 
5.6

 
(1.9
)
 
(33.9
)%
Fuel and Purchased Power Revenues
 
38.5

 
41.1

 
(2.6
)
 
(6.3
)%
Total Retail Revenues
 
$
77.8

 
$
83.4

 
$
(5.6
)
 
(6.7
)%
WEATHER—COOLING DEGREE DAYS
 
 
 
 
 
 
 
 
Actual
 
1,304

 
1,274

 
30

 
2.4
 %
10-Year Average
 
1,074

 
1,101

 
 
 
 
% Change Actual vs. 10-Year Avg.
 
21.4
%
 
15.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)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.
 
Note: Some items above are calculated on un-rounded data and may not precisely correspond to data shown in table.



10



UNS GAS —OPERATING STATISTICS
 
 
 
Three Months Ended June 30,
 
 
2013
 
2012
 
Incr (Decr)
 
% Change
AVG. GAS CUSTOMERS
 
 
 
 
 
 
 
 
Residential
 
136,028

 
134,618

 
1,410

 
1.0
 %
Commercial
 
11,368

 
11,287

 
81

 
0.7
 %
Industrial
 
22

 
22

 

 
 %
All Other
 
1,105

 
1,123

 
(18
)
 
(1.6
)%
Total
 
148,523

 
147,050

 
1,473

 
1.0
 %
RETAIL SALES—THOUSANDS OF THERMS
 
 
 
 
 
 
 
 
Residential
 
8,815

 
8,621

 
194

 
2.3
 %
Commercial
 
5,141

 
5,015

 
126

 
2.5
 %
Industrial
 
554

 
462

 
92

 
19.9
 %
All Other
 
715

 
652

 
63

 
9.7
 %
Total
 
15,225

 
14,750

 
475

 
3.2
 %
RETAIL USAGE—THERMS/CUSTOMER
 
 
 
 
 
 
 
 
Residential
 
65

 
64

 
1

 
1.6
 %
Commercial
 
452

 
444

 
8

 
1.8
 %
Industrial
 
25,182

 
21,000

 
4,182

 
19.9
 %
All Other
 
647

 
581

 
66

 
11.4
 %
Total
 
103

 
100

 
3

 
3.0
 %
RETAIL REVENUES—MILLIONS
 
 
 
 
 
 
 
 
Retail Margin Revenues:
 
 
 
 
 
 
 
 
Residential
 
$
7.1

 
$
6.9

 
$
0.2

 
2.9
 %
Commercial
 
2.1

 
2.1

 

 
 %
All Other
 
0.4

 
0.3

 
0.1

 
33.3
 %
Total Retail Margin Revenues (Non-GAAP)(1)
 
$
9.6

 
$
9.3

 
$
0.3

 
3.2
 %
DSM Revenues
 
0.2

 
0.2

 

 
 %
Transport/NSP Revenues
 
4.4

 
3.8

 
0.6

 
15.8
 %
Fuel Revenues:
 
 
 
 
 
 
 
 
Recovered from Customers
 
7.6

 
8.2

 
(0.6
)
 
(7.3
)%
Total Gas Revenues
 
$
21.8

 
$
21.5

 
$
0.3

 
1.4
 %
WEATHER—HEATING DEGREE DAYS
 
 
 
 
 
 
 
 
Actual
 
480

 
437

 
43

 
9.8
 %
10-Year Average
 
560

 
551

 
 
 
 
% Change Actual vs. 10-Year Avg.
 
(14.3
)%
 
(20.7
)%
 
 
 
 
(1)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.
 
Note: Some items above are calculated on un-rounded data and may not precisely correspond to data shown in table.








11



UNS GAS —OPERATING STATISTICS

 
 
Six Months Ended June 30,
 
 
2013
 
2012
 
Incr (Decr)
 
% Change
AVG. GAS CUSTOMERS
 
 
 
 
 
 
 
 
Residential
 
136,233

 
134,852

 
1,381

 
1.0
 %
Commercial
 
11,426

 
11,327

 
99

 
0.9
 %
Industrial
 
22

 
22

 

 
 %
All Other
 
1,111

 
1,122

 
(11
)
 
(1.0
)%
Total
 
148,792

 
147,323

 
1,469

 
1.0
 %
RETAIL SALES—THOUSANDS OF THERMS
 
 
 
 
 
 
 
 
Residential
 
43,701

 
39,378

 
4,323

 
11.0
 %
Commercial
 
16,891

 
15,818

 
1,073

 
6.8
 %
Industrial
 
1,284

 
1,075

 
209

 
19.4
 %
All Other
 
3,859

 
3,505

 
354

 
10.1
 %
Total
 
65,735

 
59,776

 
5,959

 
10.0
 %
RETAIL USAGE—THERMS/CUSTOMER
 
 
 
 
 
 
 
 
Residential
 
321

 
292

 
29

 
9.9
 %
Commercial
 
1,478

 
1,396

 
82

 
5.9
 %
Industrial
 
58,364

 
48,864

 
9,500

 
19.4
 %
All Other
 
3,473

 
3,124

 
349

 
11.2
 %
Total
 
442

 
406

 
36

 
8.9
 %
RETAIL REVENUES—MILLIONS
 
 
 
 
 
 
 
 
Retail Margin Revenues:
 
 
 
 
 
 
 
 
Residential
 
$
22.9

 
$
20.8

 
$
2.1

 
10.1
 %
Commercial
 
6.1

 
5.6

 
0.5

 
8.9
 %
All Other
 
1.4

 
1.2

 
0.2

 
16.7
 %
Total Retail Margin Revenues (Non-GAAP)(1)
 
$
30.4

 
$
27.6

 
$
2.8

 
10.1
 %
DSM Revenues
 
0.5

 
0.4

 
0.1

 
25.0
 %
Transport/NSP Revenues
 
8.7

 
7.4

 
1.3

 
17.6
 %
Fuel Revenues:
 
 
 
 
 
 
 
 
Recovered from Customers
 
33.8

 
36.7

 
(2.9
)
 
(7.9
)%
Total Gas Revenues
 
$
73.4

 
$
72.1

 
$
1.3

 
1.8
 %
WEATHER—HEATING DEGREE DAYS
 
 
 
 
 
 
 
 
Actual
 
2,668

 
2,450

 
218

 
8.9
 %
10-Year Average
 
2,643

 
2,654

 
 
 
 
% Change Actual vs. 10-Year Avg.
 
0.9
%
 
(7.7
)%
 
 
 
 
(1)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 business.
 
Note: Some items above are calculated on un-rounded data and may not precisely correspond to data shown in table.



12



BASIC AND DILUTED SHARES OUTSTANDING
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2013
 
2012
 
2013
 
2012
 
Thousands of Dollars
Numerator:
 
 
 
 
 
 
 
Net Income
$
34,618

 
$
26,273

 
$
45,963

 
$
32,749

Income from Assumed Conversion of Convertible Senior Notes (1)

 
237

 

 
1,100

Adjusted Net Income Available for Diluted Common Stock Outstanding
$
34,618

 
$
26,510

 
$
45,963

 
$
33,849

 
 
 
 
 
 
 
 
 
Thousands of Shares
Denominator:
 
 
 
 
 
 
 
Weighted Average Shares of Common Stock Outstanding:
 
 
 
 
 
 
 
Common Shares Issued
41,427

 
40,322

 
41,404

 
39,107

Fully Vested Deferred Stock Units
171

 
149

 
165

 
144

Total Weighted Average Common Stock Outstanding – Basic
41,598

 
40,471

 
41,569

 
39,251

Effect of Dilutive Securities:
 
 
 
 
 
 
 
Convertible Senior Notes (1)

 
909

 

 
2,125

Options and Stock Issuable Under Share-Based Compensation Plans
323

 
250

 
329

 
270

Total Weighted Average Common Stock Outstanding – Diluted
41,921

 
41,630

 
41,898

 
41,646


(1) In 2012, the Convertible Senior Notes were converted to Common Stock or redeemed for cash.

We excluded the following outstanding stock options, with an exercise price above market, from our diluted EPS computation as their effect would be anti-dilutive:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2013
 
2012
 
2013
 
2012
 
Thousands of Shares
Stock Options

 
101

 

 
101



13