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 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 430,000 customers in Southern Arizona. UniSource, through its operating subsidiary UNS Electric (UNSE), 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 more than 160,000 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 well below 2 degrees Celsius under the 2015 Paris Agreement. The plan supports global efforts to reduce climate change and represents a reduction of more than 50 million tons of carbon dioxide (CO2) emissions compared to TEP’s previous plan.

 

TEP - Direct CO2 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 over the next 12 years

 

The portfolio energy charts above represent the 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. The addition of two large New Mexico wind farms and a solar-plus-storage system in Tucson will more than double the company’s community-scale clean energy capacity by 2021, allowing it to provide more than 28 percent of its power from renewable resources.

The company also is reducing and ultimately eliminating its reliance on coal. 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 megawatts (MW) of coal capacity, a 41 percent reduction. TEP’s 2020 IRP also announced plans to ramp down and ultimately retire TEP’s two coal-fired units at the Springerville Generating Station (SGS) by 2032.

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 reduce 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.

The company also has invested in additional natural gas generation, a cleaner, more efficient and cost-effective energy resource. TEP’s natural gas generation resources will support the expansion of solar and wind systems while 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.

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.

Strategies described in both the TEP IRP and UNSE IRP are expected to comply with the ACC’s proposed energy rules.

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 this 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 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 $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.

In addition to support for established funding initiatives including low-income assistance, education and environmental protection, both companies plan to invest in efforts that promote diversity, inclusion and social justice. The companies will sponsor employee activities and other initiatives that promote unity and inclusion among employees and in the communities they serve.

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.

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.

Governance

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 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 plan options 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 expanding renewable resources.

UNS Energy Corporation
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