Exhibit 99.1

FOR IMMEDIATE RELEASE		August 3, 2010
Media Contact: Joe Salkowski, (520) 884-3625		Page 1 of 9
Financial Analyst Contact: Jo Smith, (520) 884-3650

UNISOURCE ENERGY REPORTS SECOND QUARTER 2010 EARNINGS,
MAINTAINS 2010 EARNINGS GUIDANCE RANGE

•

UniSource Energy’s net income for the second quarter of 2010 was $28.7 million, or $0.73 per diluted share of common stock, compared with net income of $31.3 million, or $0.80 per diluted share, in the second quarter of 2009. Earnings for the second-quarter of 2009 reflect an after-tax gain of $3.6 million, or $0.09 per diluted share, on the sale of its equity interest in one of UniSource Energy’s unregulated energy investments.

•

Lower base operations and maintenance (O&M) expense, lower depreciation and amortization expense, benefits from the operations of Unit 4 at Tucson Electric Power’s Springerville Generating Station and higher long-term wholesale sales offset lower retail energy sales at TEP.

•

UniSource Energy maintains its 2010 earnings estimate range of $2.75 — $3.00 per diluted share.

Tucson, Ariz. — UniSource Energy Corporation (NYSE: UNS) today reported second quarter 2010 net income of $28.7 million, or $0.73 per diluted share of common stock, compared with $31.3 million, or $0.80 per diluted share, in the same period last year. For the six months ended June 30, 2010, UniSource Energy’s net income was $48.7 million, or $1.25 per diluted share of common stock, compared with net income of $36.2 million, or $0.95 per diluted share, in the first six months of 2009.

UniSource Energy’s financial results primarily reflect those of its principal subsidiary, Tucson Electric Power (TEP), which reported income of $27.6 million in the second quarter of 2010, compared with net income of $26.5 million in the same period last year.

Overall kilowatt-hour (kWh) sales to TEP’s retail customers were down 2.6 percent compared with the second quarter of 2009. Mild weather and weak economic conditions contributed to the sales decline. For the first six months of the year, TEP’s total retail kWh sales were down 1.5 percent compared with the same period in 2009.

Sales to TEP’s mining customers increased 2.3 percent compared with the second quarter of 2009 as rising demand for copper has led to increased mining operations.

“Although TEP’s customer base continues to grow at a modest pace, the decline in sales to TEP’s commercial and industrial customers signals that our local economy has not yet turned the corner,” said Paul Bonavia, Chairman, President and CEO of UniSource Energy. “We’re controlling our costs, realizing operating efficiencies and managing our business in a way that will help us achieve sustainable success under current conditions.”

Energy sales to TEP’s long-term wholesale customers rose 31 percent, contributing to an increase in pre-tax margin revenues of $2 million, compared with the second quarter of 2009.

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 a 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.

Tucson Electric Power

Retail kWh Sales

TEP’s retail kWh sales declined 2.6 percent in the second quarter of 2010 compared with the same period last year. Weather was mild, resulting in a 13 percent drop in the number of cooling degree days compared with the 10-year average for the period and 5 percent below last year’s levels. Commercial and industrial sales were down 2.4 percent and 2.5 percent, respectively, while sales to mining customers were up 2.3 percent compared with the second quarter of 2009.

Retail Revenues

Retail margin revenues decreased $5 million, or 3.6 percent, in the second quarter of 2010 compared with the second quarter of 2009. These revenues do not include a $7 million increase in customer surcharges used to fund renewable energy and energy efficiency programs or a $5 million decrease in charges to cover fuel and purchased power costs.

Long-Term Wholesale Revenues

Long-term wholesale kWh sales increased 31 percent in the second quarter of 2010 compared with the same period last year due to an increase in sales to the Navajo Tribal Utility Authority. Margin on long-term wholesale sales increased $2 million compared with the second quarter of 2009.

Transmission Revenues

Revenues from the wholesale transmission of electricity were $4 million in the second quarters of 2010 and 2009.

Other Operating Expenses

Lower pension, wages and administrative and general expense contributed to a $2 million reduction in TEP’s base O&M expense compared with the second quarter of 2009. Base O&M excludes costs directly offset by customer surcharges and third-party reimbursements.

In the second quarter of 2009, adjustments related to a change in accounting for TEP’s investment in Springerville Unit 1 lease equity, that netted $0.6 million of pre-tax income, were made to depreciation, amortization, other income and expense, and interest on capital leases.

Excluding those accounting adjustments, depreciation expense decreased $2 million due primarily to new, lower depreciation rates for transmission assets and lower depreciation on Unit 4 at TEP’s H. Wilson Sundt Generating Station. Those savings were partially offset by depreciation related to new plant additions.

Excluding the 2009 accounting adjustment, amortization expense decreased $3 million due to lower capital lease amortization.

Benefits of SGS Units 3 and 4

The December 2009 completion of Unit 4 at TEP’s Springerville Generating Station (SGS) contributed to a $3 million increase in second-quarter rents and fees for the operations of SGS Units 3 and 4, which totaled $6 million for the quarter. Salt River Project (SRP) owns the new unit, while Tri-State Generation and Transmission Association owns Unit 3. TEP operates all four units at the plant.

UNS Gas

UNS Gas reported net income of $0.6 million in the second quarter of 2010, compared with no earnings in the second quarter of 2009. UNS Gas’ earnings are seasonal in nature with peak usage occurring in the winter months. The change is due primarily to a 10-percent increase in retail therm sales linked to colder weather. Higher therm sales led to a $1 million increase in retail margin revenues compared with the second quarter of 2009.

In March 2010, the Arizona Corporation Commission (ACC) approved a base rate increase for UNS Gas of $3 million, or 2 percent, to cover increased capital and operating costs. The new rates took effect on April 1, 2010.

UNS Electric

UNS Electric reported net income of $2 million in the second quarter of 2010 compared with $1.5 million in the second quarter of 2009. UNS Electric’s retail kWh sales and retail margin revenues were essentially flat with the second quarter of 2009. Sales to mining customers were up 29.3 percent, while mild weather and weak economic conditions led to decreases in sales to residential and commercial customers of 4.5 percent, and 1.5 percent, respectively.

In April 2009, UNS Electric filed a general rate case with the ACC requesting an average base rate increase of $13.5 million, or 7.4 percent, to cover its operating and capital costs. The ACC staff recommended a rate increase that would result in additional revenue of approximately $8 million. A hearing before an administrative law judge was completed in mid-February, and the ACC is expected to issue a final order in the next several months.

Net Income and Earnings Per Share Summary

		2nd Quarter								YTD June 30,
Net Income		2010				2009				2010				2009
		-Millions-								-Millions-
Tucson Electric Power		$	27.6			$	26.5			$	38.0			$	26.0
UNS Gas			0.6				—				6.4				4.9
UNS Electric			2.0				1.5				5.0				2.3
Other (1)			(1.5	)			3.3				(0.7	)			3.0
Net Income		$	28.7			$	31.3			$	48.7			$	36.2
Avg. Basic Shares Outstanding (millions)			36.3				35.7				36.2				35.7
Avg. Diluted Shares Outstanding (millions)			40.9				40.2				40.8				40.2

		2nd Quarter								YTD June 30,
Earnings Per UniSource Energy Share		2010				2009				2010				2009
Tucson Electric Power		$	0.76			$	0.74			$	1.05			$	0.73
UNS Gas			0.02				0.00				0.18				0.14
UNS Electric			0.06				0.04				0.14				0.06
Other (1)			(0.05	)			0.10				(0.03	)			0.08
Net Income per Basic Share		$	0.79			$	0.88			$	1.34			$	1.01
Net Income per Diluted Share (2)		$	0.73			$	0.80			$	1.25			$	0.95

UniSource Energy believes the presentation of TEP, UNS Gas, UNS Electric and Other segment 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 Tuesday, August 3 at 2:00 p.m. EDT to discuss the financial results and outlook. To participate in the call, please dial in five to 10 minutes prior to the start.

Dial-in number: (877) 582-0446
Reference code: 89575998

The conference call also 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: 89575998

In conjunction with this earnings announcement, UniSource Energy has provided detailed information on its performance during the second quarter of 2010. These materials have been filed with the Securities and Exchange Commission and are also available at uns.com.

UniSource Energy is a Tucson, Arizona-based company with consolidated assets of approximately $3.6 billion. UniSource Energy’s primary subsidiaries include Tucson Electric Power, which serves more than 400,000 customers in southern Arizona, and UniSource Energy Services, provider of natural gas and electric service for about 236,000 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 the 2010 earnings guidance. These risks and uncertainties 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 outcomes currently expected by UniSource Energy.

UNISOURCE ENERGY 2010 RESULTS

UniSource Energy Corporation
Comparative Condensed Consolidated Statements of Income

		Three Months Ended
(in thousands of dollars, except per share amounts)		June 30,								Increase / (Decrease)
(UNAUDITED)		2010				2009				Amount				Percent
Operating Revenues
Electric Retail Sales		$	259,940			$	267,200			$	(7,260	)			(2.7	)
Electric Wholesale Sales			27,174				27,950				(776	)			(2.8	)
Gas Revenue			24,677				24,661				16				0.1
Other Revenues			26,030				17,973				8,057				44.8
Total Operating Revenues			337,821				337,784				37				0.0
Operating Expenses
Fuel			69,246				69,047				199				0.3
Purchased Energy			65,376				64,219				1,157				1.8
Transmission			2,878				2,991				(113	)			(3.8	)
Increase (Decrease) to Reflect PPFAC/PGA Recovery Treatment			(10,330	)			3,618				(13,948	)			N/M
Total Fuel and Purchased Energy			127,170				139,875				(12,705	)			(9.1	)
Other Operations and Maintenance			87,134				78,929				8,205				10.4
Depreciation			32,223				40,752				(8,529	)			(20.9	)
Amortization			7,048				6,775				273				4.0
Taxes Other Than Income Taxes			11,952				12,363				(411	)			(3.3	)
Total Operating Expenses			265,527				278,694				(13,167	)			(4.7	)
Operating Income			72,294				59,090				13,204				22.3
Other Income (Deductions)
Interest Income			1,953				4,823				(2,870	)			(59.5	)
Other Income			1,158				13,878				(12,720	)			(91.7	)
Other Expense			(1,253	)			(695	)			(558	)			(80.3	)
Total Other Income (Deductions)			1,858				18,006				(16,148	)			(89.7	)
Interest Expense
Long-Term Debt			15,816				14,719				1,097				7.5
Capital Leases			11,425				11,450				(25	)			(0.2	)
Other Interest Expense Net of Interest Capitalized			186				342				(156	)			(45.6	)
Total Interest Expense			27,427				26,511				916				3.5
Income Before Income Taxes			46,725				50,585				(3,860	)			(7.6	)
Income Tax Expense			18,010				19,310				(1,300	)			(6.7	)
Net Income		$	28,715			$	31,275			$	(2,560	)			(8.2	)
Weighted-Average Shares of Common Stock Outstanding (000)			36,322				35,687				635				1.8
Basic Earnings per Share		$	0.79			$	0.88			$	(0.09	)			(10.2	)
Diluted Earnings per Share		$	0.73			$	0.80			$	(0.07	)			(8.8	)
Dividends Declared per Share		$	0.39			$	0.29			$	0.10				34.5

		Three Months Ended
Tucson Electric Power		June 30,								Increase / (Decrease)
Electric MWh Sales:		2010				2009				Amount				Percent
Retail Sales			2,294,004				2,356,390				(62,386	)			(2.6	)
Long-Term Wholesale Sales			216,000				165,000				51,000				30.9

N/M — Not Meaningful

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

UNISOURCE ENERGY 2010 RESULTS

UniSource Energy Corporation
Comparative Condensed Consolidated Statements of Income

		Six Months Ended
(in thousands of dollars, except per share amounts)		June 30,								Increase / (Decrease)
(UNAUDITED)		2010				2009				Amount				Percent
Operating Revenues
Electric Retail Sales		$	464,686			$	468,552			$	(3,866	)			(0.8	)
Electric Wholesale Sales			63,319				63,246				73				0.1
California Power Exchange (CPX) Provision for Wholesale Refunds			(2,970	)			—				(2,970	)			N/M
Gas Revenue			80,458				82,963				(2,505	)			(3.0	)
Other Revenues			50,230				34,880				15,350				44.0
Total Operating Revenues			655,723				649,641				6,082				0.9
Operating Expenses
Fuel			129,694				123,864				5,830				4.7
Purchased Energy			147,261				140,914				6,347				4.5
Transmission			5,308				5,251				57				1.1
Increase (Decrease) to Reflect PPFAC/PGA Recovery Treatment			(22,962	)			10,320				(33,282	)			N/M
Total Fuel and Purchased Energy			259,301				280,349				(21,048	)			(7.5	)
Other Operations and Maintenance			170,042				163,882				6,160				3.8
Depreciation			63,322				74,354				(11,032	)			(14.8	)
Amortization			13,620				13,848				(228	)			(1.6	)
Taxes Other Than Income Taxes			24,225				24,818				(593	)			(2.4	)
Total Operating Expenses			530,510				557,251				(26,741	)			(4.8	)
Operating Income			125,213				92,390				32,823				35.5
Other Income (Deductions)
Interest Income			3,880				6,921				(3,041	)			(43.9	)
Other Income			7,137				14,385				(7,248	)			(50.4	)
Other Expense			(2,018	)			(1,228	)			(790	)			(64.3	)
Total Other Income (Deductions)			8,999				20,078				(11,079	)			(55.2	)
Interest Expense
Long-Term Debt			31,056				29,363				1,693				5.8
Capital Leases			23,509				24,258				(749	)			(3.1	)
Other Interest Expense Net of Interest Capitalized			514				87				427				N/M
Total Interest Expense			55,079				53,708				1,371				2.6
Income Before Income Taxes			79,133				58,760				20,373				34.7
Income Tax Expense			30,445				22,566				7,879				34.9
Net Income		$	48,688			$	36,194			$	12,494				34.5
Weighted-Average Shares of Common Stock Outstanding (000)			36,215				35,676				539				1.5
Basic Earnings per Share		$	1.34			$	1.01			$	0.33				32.7
Diluted Earnings per Share		$	1.25			$	0.95			$	0.30				31.6
Dividends Declared per Share		$	0.78			$	0.58			$	0.20				34.5

		Six Months Ended
Tucson Electric Power		June 30,								Increase / (Decrease)
Electric MWh Sales:		2010				2009				Amount				Percent
Retail Sales			4,222,816				4,285,649				(62,833	)			(1.5	)
Long-Term Wholesale Sales			504,000				440,000				64,000				14.5

N/M — Not Meaningful

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

TUCSON ELECTRIC POWER COMPANY 2010 RESULTS

TUCSON ELECTRIC POWER COMPANY
Comparative Condensed Consolidated Statements of Income

		Three Months Ended
(in thousands of dollars)		June 30,								Increase / (Decrease)
(UNAUDITED)		2010				2009				Amount				Percent
Operating Revenues
Electric Retail Sales		$	217,555			$	220,007			$	(2,452	)			(1.1	)
Electric Wholesale Sales			27,983				31,985				(4,002	)			(12.5	)
Other Revenues			27,864				19,552				8,312				42.5
Total Operating Revenues			273,402				271,544				1,858				0.7
Operating Expenses
Fuel			66,694				65,038				1,656				2.5
Purchased Energy			32,122				36,375				(4,253	)			(11.7	)
Transmission			1,049				1,259				(210	)			(16.7	)
Decrease to Reflect PPFAC Recovery Treatment			(7,618	)			(3,634	)			(3,984	)			N/M
Total Fuel and Purchased Energy			92,247				99,038				(6,791	)			(6.9	)
Other Operations and Maintenance			76,143				69,103				7,040				10.2
Depreciation			24,893				33,775				(8,882	)			(26.3	)
Amortization			8,024				7,994				30				0.4
Taxes Other Than Income Taxes			9,779				10,040				(261	)			(2.6	)
Total Operating Expenses			211,086				219,950				(8,864	)			(4.0	)
Operating Income			62,316				51,594				10,722				20.8
Other Income (Deductions)
Interest Income			1,696				4,740				(3,044	)			(64.2	)
Other Income			1,115				7,389				(6,274	)			(84.9	)
Other Expense			(818	)			(521	)			(297	)			(57.0	)
Total Other Income (Deductions)			1,993				11,608				(9,615	)			(82.8	)
Interest Expense
Long-Term Debt			10,154				9,213				941				10.2
Capital Leases			11,423				11,446				(23	)			(0.2	)
Other Interest Expense Net of Interest Capitalized			68				(163	)			231				N/M
Total Interest Expense			21,645				20,496				1,149				5.6
Income Before Income Taxes			42,664				42,706				(42	)			(0.1	)
Income Tax Expense			15,028				16,199				(1,171	)			(7.2	)
Net Income		$	27,636			$	26,507			$	1,129				4.3

N/M — Not Meaningful

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

TUCSON ELECTRIC POWER COMPANY 2010 RESULTS

TUCSON ELECTRIC POWER COMPANY
Comparative Condensed Consolidated Statements of Income

		Six Months Ended
(in thousands of dollars)		June 30,								Increase / (Decrease)
(UNAUDITED)		2010				2009				Amount				Percent
Operating Revenues
Electric Retail Sales		$	384,974			$	377,771			$	7,203				1.9
Electric Wholesale Sales			68,025				69,743				(1,718	)			(2.5	)
California Power Exchange (CPX) Provision for Wholesale Refunds			(2,970	)			—				(2,970	)			N/M
Other Revenues			53,507				37,303				16,204				43.4
Total Operating Revenues			503,536				484,817				18,719				3.9
Operating Expenses
Fuel			125,045				116,478				8,567				7.4
Purchased Energy			55,857				59,417				(3,560	)			(6.0	)
Transmission			1,845				1,807				38				2.1
Decrease to Reflect PPFAC Recovery Treatment			(10,736	)			(4,003	)			(6,733	)			N/M
Total Fuel and Purchased Energy			172,011				173,699				(1,688	)			(1.0	)
Other Operations and Maintenance			148,165				143,837				4,328				3.0
Depreciation			48,953				60,532				(11,579	)			(19.1	)
Amortization			15,810				16,288				(478	)			(2.9	)
Taxes Other Than Income Taxes			19,778				20,295				(517	)			(2.5	)
Total Operating Expenses			404,717				414,651				(9,934	)			(2.4	)
Operating Income			98,819				70,166				28,653				40.8
Other Income (Deductions)
Interest Income			3,386				6,809				(3,423	)			(50.3	)
Other Income			2,333				7,977				(5,644	)			(70.8	)
Other Expense			(1,598	)			(906	)			(692	)			(76.4	)
Total Other Income (Deductions)			4,121				13,880				(9,759	)			(70.3	)
Interest Expense
Long-Term Debt			20,032				18,404				1,628				8.8
Capital Leases			23,504				24,251				(747	)			(3.1	)
Other Interest Expense Net of Interest Capitalized			42				(449	)			491				N/M
Total Interest Expense			43,578				42,206				1,372				3.3
Income Before Income Taxes			59,362				41,840				17,522				41.9
Income Tax Expense			21,376				15,887				5,489				34.6
Net Income		$	37,986			$	25,953			$	12,033				46.4

N/M — Not Meaningful

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