ESG/Sustainability Performance

UNS Energy is a subsidiary of Fortis, Inc., a leader in the North American regulated electric and gas utility industries. About 93 percent of Fortis’ assets are associated with the delivery of electricity and natural gas. Few of Fortis’s electric subsidiaries own generating resources, which account for about 7 percent of Fortis’ assets. These generating resources are primarily owned by UNS Energy subsidiaries.

UNS Energy is the Tucson, Arizona-based parent company of Tucson Electric Power (TEP) and UniSource Energy Services (UniSource). TEP provides electric service to more than 433,000 customers in Southern Arizona. UniSource, through its operating subsidiary UNS Electric (UNSE), provides electric service to approximately 98,000 customers in Mohave and Santa Cruz counties. The company also delivers natural gas through another operating subsidiary, UNS Gas, to more than 163,000 customers in northern and southern Arizona.

UNS Energy is voluntarily providing sustainability performance metrics for customers, investors and other stakeholders seeking information about our Environmental, Social and Governance (ESG) performance.

Environmental

Energy resource diversification and carbon emissions reductions are major components of UNS Energy’s sustainability strategy. The integrated resource plans (IRPs) for TEP and UNSE demonstrate how both companies are planning to build cleaner, more flexible resource portfolios.

TEP Carbon Emissions Reduction & Resource Portfolio Diversification

In 2020, TEP announced plans to reduce carbon emissions 80 percent below 2005 levels by 2035. The carbon emissions reduction goal, described in the company’s 2020 Integrated Resource Plan (IRP), was developed in partnership with the University of Arizona’s Institute of the Environment. The goal represents the company’s fair share of worldwide efforts to limit warming to align with the 2015 Paris Agreement. TEP supports global efforts to reduce climate change and the plan represents a reduction of more than 50 million tons of carbon dioxide (CO2) emissions compared to TEP’s previous plan.

TEP Direct (Scope 1) Emissions

TEP’s 2020 IRP also describes the company’s plans to provide 70 percent of its power from renewable resources by 2035. The company will significantly expand its wind and solar power resources and has proposed retirement of its remaining coal-fired power plants by 2032.

 

The portfolio energy chart above represents the future energy resource mix to serve TEP’s retail customers. TEP’s goal to deliver 70 percent renewable power to retail customers by 2035 primarily will be based on utility-scale resources and some distributed generation.

 

TEP has already started expanding its cost‐effective renewable resources. In 2021, TEP started delivering clean energy from its newest and largest wind and solar facilities including:

  • The 250-megawatt (MW) Oso Grande Wind farm in southeast New Mexico, which generates enough power each year to serve nearly 100,000 homes. The site was chosen for its proximity to transmission lines and strong wind resources, particularly during the morning, evening and overnight hours when solar arrays produce little or no power.
  • The Wilmot Energy Center (WEC) located south of Tucson, which includes a 100-MW solar array and 30-MW battery energy storage system. The batteries will be charged exclusively by 314,000 solar panels that can track the movement of the sun for increased production. Wilmot produces enough energy to serve the annual electric needs of about 26,000 homes.
  • The Borderlands Wind Project, located about 100 miles south of Gallup, New Mexico, includes 34 turbines that produce a combined 100 megawatts (MW). Over the course of a year, the wind farm will generate enough power to serve the annual electric needs of more than 26,000 homes.

These three systems more than doubled TEP’s large community-scale renewable energy resources.

The company is reducing and ultimately eliminating its reliance on coal. TEP’s 2020 IRP announced plans to ramp down and ultimately retire TEP’s two coal-fired units at the Springerville Generating Station (SGS) by 2032. From 2015, when TEP ended use of coal at the H. Wilson Sundt Generating Station in Tucson, to mid-2022, when TEP plans to end participation at the San Juan Generating Station in New Mexico, the company expects to retire 638 MW of coal capacity, a 41 percent reduction.

Ramping down reliance on coal-fired resources will help keep service affordable for TEP customers while significantly reducing air emissions and water consumption, eliminating the use of surface water for power generation and reducing groundwater use by 70 percent.

Increasingly diverse, sustainable generation will create operational challenges that require new ways of managing the intermittency and variability of renewable resources. Through a partnership with the University of Arizona, TEP is using unique and highly customized forecasting models to predict solar and wind system production.

TEP’s efficient and cost effective natural gas generation resources will support the expansion of solar and wind systems while also reducing water usage and emissions. The energy marketplace also is evolving to help utilities address intermittency and use traditional resources more efficiently. TEP is preparing to join the California Independent System Operator’s Energy Imbalance Market (EIM) in April 2022, allowing it to execute real-time energy trades in 15-minute increments to address short-term energy needs.

TEP is committed to a “green investment” strategy as the company transitions from coal-fired generation to providing more renewable and natural gas-fired power. TEP already is recognized as an industry leader in development of energy storage systems and offers an online dashboard that shows customers how much renewable power the company’s community-scale wind and solar power systems are generating in real time throughout the day.  TEP’s commitment is also evidenced by its 2021 Credit Agreement, which offers the potential for annual adjustments to interest rate spreads and fees based on TEP’s achievement of certain sustainability-linked metrics.

UNSE Plans for Cleaner, More Flexible Resource Options

UNSE’s 2020 IRP, filed with the Arizona Corporation Commission (ACC) in August 2020, continues an ongoing shift away from a dependence on purchased power to greater reliance on company-owned generating resources to serve electric customers.

The plan, informed by input from customers and other local stakeholders, calls for a robust mix of resources that includes an expanding portfolio of cost-effective wind and solar power systems combined with efficient natural gas generation. The plan also supports efforts to help customers use energy more efficiently and manage the company’s peak energy demands.

Social

Community Investment

As providers of critical services, TEP and UniSource have remained vigilant about supporting public health and ensuring the continued availability of safe, reliable energy during the coronavirus pandemic.

Both companies have taken proactive steps to limit unnecessary risks of exposure for employees and the public. Both companies also stand ready to help customers affected by the pandemic with payment extensions or enrollment in short-term assistance and bill discount programs. Both TEP and UniSource voluntarily suspended electric and gas service disconnections beginning in March 2020 through early 2021 to provide additional flexibility for customers facing financial hardship during the coronavirus pandemic.

TEP and UniSource also donated a combined $1 million to bill payment assistance and other coronavirus relief efforts in the communities they serve across Arizona. Follow these links to learn more about the pandemic response plans of both TEP and UniSource.

UNS Energy’s subsidiaries invest significantly in the success of the community, contributing more than $4 million to charitable causes annually with funds from corporate resources, not customers’ rates, and employees who contribute thousands of volunteer hours each year to hundreds of nonprofit groups throughout the state.

In addition to support for established funding initiatives including low-income assistance, education and environmental protection, both companies invest in efforts that promote diversity and social justice while supporting local nonprofit organizations that work effectively to strengthen equity and inclusion in our communities.

The companies also sponsor employee activities and other initiatives that promote unity and inclusion among employees and in the communities they serve. Since 2017, UNS Energy’s employee-led Women in Energy group has supported the development of leadership qualities in women, fostered camaraderie and connections among employees of all genders and encouraged more young women to pursue careers in traditionally male-dominated industries, such as energy.

UNS Energy’s subsidiaries provide commercial customers with affordable energy, economic development discounts and energy efficiency programs. TEP’s and UniSource’s economic development rates for electric customers are designed to attract new employers and encourage existing businesses to expand their operations.

TEP is driving adoption of electric vehicles (EVs), which are transforming the transportation sector and providing multiple benefits in the process, from cleaner air to expanded customer choice and affordable electric rates. TEP is developing new pricing plans and incentives for customers who invest in EVs, and is accelerating the development of charging infrastructure to support these zero-emission vehicles. TEP participated in the development of a statewide plan, submitted to the Arizona Corporation Commission, with a goal of placing over 1 million EVs on the road by 2030.

Safety

Safety is the highest priority for TEP and UniSource. Both companies are committed to working in a manner that prevents injury through a robust workplace safety program that promotes situational awareness through information sharing among all Fortis subsidiaries.

TEP and UniSource promote public safety through advertising, customer communications and collaboration with local utilities and first responders. Both companies run annual “Stay Away, Stay Alive” advertising campaigns to educate electric customers about electrical safety.

As a gas distribution company, UniSource also runs multiple safety campaigns throughout the year. Topics include gas leak detection, proper equipment maintenance to avoid carbon monoxide poisoning, and how to avoid damaging underground lines.

Reliability

As providers of safe, dependable energy services, reliability performance is key.  TEP and UniSource consistently benchmarked in the top quartile among our peers for reliability performance over the last several years, and achieved performance records in 2020. Both are committed to doing even better. According to TEP’s System Average Interruption Duration Index (SAIDI) scores, the average outage duration in 2020 was just 48 minutes — three minutes better than its previous record. SAIDI describes, in minutes, the sum of all customer interruption durations divided by the total number of customers served.

The same is true for UniSource’s electric service. Despite record heat that placed constant stress on infrastructure and equipment, UniSource achieved a SAIDI of 43 minutes in 2020 —three minutes better than its previous record.

Governance

UNS Energy’s commitment to sustainable growth and responsible governance enhances the value the company provides to customers, the community and other stakeholders. This commitment guides the decisions of the board of directors, executives, managers and supervisors at all levels and in all areas of the company.

The UNS Energy Board of Directors draws on the expertise and strong business acumen of trusted business leaders with experience from the fields of utilities, defense, science, mining and medicine. Its members value integrity, accountability, collaboration, sustainability and the creation of opportunities for the company and all of its employees.

The management teams for TEP and UniSource value innovation and excellent performance, and promote an unwavering culture of compliance, safety and a commitment to customers. With strong leadership skills and thorough knowledge of company operations, our leaders focus on improving efficiencies and generating value for a diverse set of stakeholders.

Cybersecurity

UNS’ robust cybersecurity measures protect customer and employee data, while using best practices to ensure compliance with regulations designed to maintain grid security. The company employs certified cybersecurity professionals to develop continually evolving cyber protections.

Sustainability Strategy Summary

UNS Energy and its subsidiaries are committed to improving the quality of life in the communities they serve throughout Arizona. TEP and UNSE are expanding their renewable energy portfolios, exploring new customer options and providing pricing plans that address customers’ evolving energy needs. As Arizona continues to grow and change, TEP and UniSource will continue providing reliable service to customers while investing in new, innovative technologies and cleaner energy resources.

UNS Energy Corporation
ESG/Sustainability Template

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Tucson Electric Power

UniSource Energy Services