UNS Energy has worked with the Edison Electric Institute (EEI), the American Gas Association (AGA), institutional investors and other member utilities to develop reporting metrics that provide guidance in assessing Environmental, Social, and Governance (ESG) risks for each reporting utility. UNS Energy is providing this information for customers, investors and other stakeholders seeking information about our ESG and sustainability performance.
UNS Energy is a subsidiary of Fortis, Inc., a leader in the North American regulated electric and gas utility industry. Fortis primarily provides transmission and distribution services, and few of its subsidiaries own generating resources. Fortis’ transmission, distribution, and other energy assets represent 92 percent of its total assets, with the remaining 8 percent associated with generation primarily owned by UNS Energy subsidiaries. As a result, UNS Energy produces approximately 93 percent of Fortis’ fossil-based generation and associated air emissions.
UNS Energy is the Tucson, Arizona-based parent company of Tucson Electric Power (TEP) and UniSource Energy Services. TEP provides electric service to nearly 424,000 customers in Southern Arizona. UniSource, through its operating subsidiary UNS Electric, provides electric service to approximately 96,000 customers in Mohave and Santa Cruz counties. The company also delivers natural gas through another operating subsidiary, UNS Gas, to approximately 156,000 customers in northern and southern Arizona.
A major component of UNS Energy’s sustainability strategy is energy resource diversification. The TEP Integrated Resource Plan and UniSource Integrated Resource Plan demonstrate how both companies are planning to build cleaner, more flexible resource portfolios.
TEP is reducing its reliance on coal and expects to retire 619 megawatts of coal-fired resources by 2032. This reduction in coal resources will result in cost savings for TEP customers and meaningful reductions in air emissions and water consumption.
TEP is diversifying its generating resources by expanding cost‐effective renewable resources, particularly solar. Its goal is to deliver at least 30 percent of its power to customers from renewable resources by 2030 – twice the level TEP must achieve by 2025 under Arizona's Renewable Energy Standard.
TEP Resource Portfolio Diversification
The portfolio energy charts shown above represents the energy resource mix to serve TEP’s retail customers. Wholesale market sales are excluded from these results. By 2030, TEP’s retail customers will be served from 30 percent renewables. This is based on a combination of utility-scale and distributed generation resources.
Meanwhile, UniSource is expanding its renewable portfolio while also working to secure new transmission resources that will help improve service reliability for customers while lowering transmission costs.
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.
While increasing its reliance on renewable resources, TEP has reduced its coal-fired power capacity by nearly 20 percent over the last four years. In order to accomplish this shift while ensuring the continued supply of affordable and reliable power, TEP and UniSource have increased ownership of natural gas generation, a cleaner, more efficient energy resource.
UNS Energy subsidiaries are taking advantage of historically low natural gas prices. TEP is preparing to install cost-effective natural gas generation and transmission resources that will support the expansion of solar and wind systems, replace aging technology and result in lower water usage and lower emissions. UniSource also expects to invest in fast-responding reciprocating internal combustion engines that can run efficiently at varying loads without regard to frequent starts and cycling operations. Such resources help to manage the intermittency and variability of an expanding renewable energy portfolio.
TEP, the only UNS Energy subsidiary with coal-fired generation, has realized a 14 percent reduction in total carbon dioxide (CO2) emissions through diversification efforts from 2005 baseline year to 2017. The company is targeting an approximate 50 percent reduction in CO2emissions from coal generation by 2032. Through the expansion of renewable resources and energy efficiency programs, UNS Energy has avoided 2.4 million metric tons of greenhouse gas emissions over the last four years.
UNS Energy 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.
UNS Gas also has worked to improve the level of service delivered to customers. The company recently completed a 1-mile system improvement project in Sedona, Ariz. that more than doubled the capacity of a line delivering natural gas to local customers. Over the last five years, the company has invested more than $84 million to upgrade infrastructure and make other improvements. UniSource expected to invest more than $20 million in natural gas facilities and other resources in 2018.
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 are designed to attract new employers and encourage existing businesses to expand their operations.
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 also promote public safety through advertising, customer communications and collaboration with local utilities and first responders. TEP and UniSource 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 detecting gas leaks, proper equipment maintenance to avoid carbon monoxide poisoning and how to avoid damaging underground lines. UNS Energy’s subsidiaries invest significantly in the success of the communities they serve. TEP and UniSource contribute approximately $2 million to charitable causes annually with funds from corporate resources, not customers’ rates. Employees also contribute thousands of volunteer hours each year to hundreds of nonprofit groups throughout the state.
UNS Energy’s commitment to sustainable growth and responsible governance enhances the value the company provides to customers and other stakeholders. This commitment guides the decisions of executives, directors and supervisors at all levels and in all areas of the company.
UNS Energy’s 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 and the creation of opportunities for the company and all of its employees.
The management teams for TEP and UES value innovation and excellent performance, and they promote an unwavering culture of compliance, safety and a commitment to customers. With strong leadership skills and thorough knowledge of company operations, our leaders are focused on improving efficiencies and generating value for a diverse set of stakeholders.
Arizona’s regulatory environment continues to adapt to new technologies and emerging energy options. In 2016 and 2017, the Arizona Corporation Commission (ACC) approved updated retail electric rates for TEP and UniSource. These pricing plans offer more control, new savings opportunities and additional support for the sustainability of the local electric infrastructure.
The ACC also continues to review a proposal to revise rates and rules for new users of private solar power systems.
Sustainability Strategy Summary
UNS Energy and its subsidiaries are committed to improving the quality of life in the communities they serve throughout Arizona. UNS Energy’s robust commitment to sustainability is reflected in the innovations of its subsidiaries, TEP and UniSource. Both companies are expanding their renewable energy portfolio, exploring new customer options and providing new pricing plans that satisfy customers’ evolving energy needs. All employees and customers and a majority of the companies’ operations are located in Arizona, one of the nation’s sunniest and fastest growing states.
As the state’s communities continue to grow and change, TEP and UniSource will continue providing reliable service to customers while investing in new, innovative technologies and expanding renewable resources.