ESG/Sustainability Performance

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.  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 93 percent of its total assets, with the remaining 7 percent associated with generation 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 nearly 425,000 customers in Southern Arizona. UniSource, through its operating subsidiary UNS Electric (UNSE), provides electric service to approximately 97,000 customers in Mohave and Santa Cruz counties. The company also delivers natural gas through another operating subsidiary, UNS Gas, to approximately 157,000 customers in northern and southern Arizona.

Environmental

A major component of UNS Energy’s sustainability strategy is energy resource diversification. The TEP Integrated Resource Plan (IRP) and UNSE Integrated Resource Plan demonstrate how both companies are planning to build cleaner, more flexible resource portfolios.

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 utilityscale and distributed generation resources.

TEP is diversifying its generating resources by expanding cost‐effective renewable resources, particularly solar and wind. 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 is making significant progress toward that goal and expects to provide more than 28 percent of its power from renewable resources in 2021 with the addition of three new, large wind, solar and storage systems.

TEP is reducing 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. This reduction in coal resources will result in cost savings for TEP customers and meaningful reductions in air emissions and water consumption.

TEP also is working with world-class scientists and climate experts from the University of Arizona Institute of the Environment to develop measurable, science-based greenhouse gas emissions reduction targets. The new carbon emissions reduction goals, to be outlined in TEP’s 2020 IRP, will be informed by the global temperature level limits outlined in the 2015 Paris Agreement on climate change.

TEP already has realized a significant reduction in total carbon dioxide (CO2) emissions through diversification efforts from 2005 baseline year to 2018.

The portfolio energy charts shown above represents the energy resource mix to serve TEP’s retail customers. These results exclude wholesale market sales. TEP’s goal to deliver 30 percent renewable power to retail customers by 2030 will be based on a combination of utility-scale and distributed generation resources.

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.

UNS Energy subsidiaries are taking advantage of historically low natural gas prices. TEP is installing 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. These resources, along with participation in organized energy markets, will help to manage the intermittency and variability of an expanding renewable energy portfolio. TEP, for example, plans to begin participation in the California Independent System Operator’s Energy Imbalance Market (EIM) in April 2022.

UNS Energy subsidiaries are 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.

Meanwhile, UNSE 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.

Social

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. As an example, 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.

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.

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.

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.

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.

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. These pricing plans offer more control, new savings opportunities and additional support for the sustainability of the local electric infrastructure.

The ACC also recently approved new rules for new users of private solar power systems and a new energy export rate to compensate residential and small commercial customers for excess power produced by new private rooftop solar systems. The new rate will be updated annually to reflect market prices for solar power.

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 commitment to sustainability is reflected in the innovations of its subsidiaries, TEP and UniSource. Both companies are expanding their renewable energy portfolios, 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 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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