Feb. 25--Higher rates at Tucson Electric Power Co. helped parent UNS Energy Corp. post an 80 percent increase in fourth-quarter profit and a 40 percent increase in net income for all of 2013.
UNS, which has agreed to be acquired by Canada-based utility operator Fortis Inc., on Tuesday reported 2013 net income of $127 million, or $3.04 per share, compared with net income of $91 million, or $2.20 per share, in 2012.
For the fourth quarter, UNS posted net income of $13.5 million, or 32 cents per share, compared with $7.5 million and 18 cents per share in fourth-quarter 2012.
UNS Energy's fourth-quarter revenues rose to $350 million from $348 million in the same quarter in 2012. Annual operating revenue rose 1.6 percent to $1.48 billion.
The results, reported before financial markets opened, fell shy of analysts' average expectations of 33 cents per share in fourth-quarter earnings and $356.8 million in quarterly revenues, according to Thomson Financial.
UNS shares closed Tuesday at $60.46, up 7 cents, in trading on the New York Stock Exchange. Since the Fortis deal was announced in December, UNS shares have hovered just above Fortis' cash offer of $60.25 per share.
UNS Energy's board declared a first quarter 2014 dividend for common shareholders of 48 cents per share.
TEP's net income rose 55 percent to $101 million in 2013, boosted by a base rate increase effective July 1 and a decrease in capital lease interest expense. That was partially offset by higher plant maintenance costs and expenses related to the pending merger with Fortis, the company said.
At UNS' rural power and gas subsidiary, UniSource Energy Services, net income on the electric side fell 29 percent $12 million partly due to lower industrial and mining sales. Net income from the gas business rose 22 percent to $11 million thanks to a rate increase and colder weather.
The parent company's 2013 profit included an $11 million reduction to income-tax expense and a $3 million pre-tax charge to fuel expenses related to a credit to retail customers. The 2012 results included a $1.8 million pre-tax loss related to an unplanned power plant outage.
UNS Energy Chairman and CEO Paul Bonavia cited several significant milestones in 2013, including a new TEP rate structure; a move away from coal dependence with the planned addition of a modern, natural gas-fired power plant and reduction in commitments to buy coal-based power; and approval of the merger agreement with Fortis.
The transaction is still subject to the approval of regulators, including the Arizona Corporation Commission and Federal Energy Regulatory Commission, clearance under federal antitrust laws and usual closing conditions.
UNS Energy shareholders will vote on the proposed merger, which the company expects to be completed by year's end, at a special meeting set for March 26.
UNS has filed for approval of the merger by the Corporation Commission, which has set initial hearings on the deal in early June.
(c)2014 The Arizona Daily Star (Tucson, Ariz.)
Visit The Arizona Daily Star (Tucson, Ariz.) at www.azstarnet.com
Distributed by MCT Information Services