July 30--UNS Energy Corp., the parent of Tucson Electric Power Co., posted sharply higher second-quarter profits mainly due to higher rates approved in mid-2013.
The company, which is awaiting final regulatory approval of a buyout by Canadian utility giant Fortis Inc., reported net income of $42 million, or $1.01 per share, compared with net income of $35 million, or 83 cents per share, in the second quarter of 2013.
TEP's retail power sales fell by 0.9 percent in the second quarter compared with the same period last year, due in part to milder June weather compared to 2013, the company said Tuesday in a news release. But TEP had net income of $39 million, up from $31 million in second-quarter 2013, due to higher base rates and cost-recovery surcharges that went into effect in July 2013, the company said.
UNS Energy's second quarter 2013 net income included an $11 million reduction to income tax expense and a $3 million pre-tax charge for a fuel-cost credit to retail customers, both resulting from last year's rate case.
Fortis has proposed buying UNS in a deal worth about $4.3 billion, including the assumption of $1.8 billion in debt. The acquisition has been approved by shareholders and federal regulators, and must still be approved by the Arizona Corporation Commission.
A pending settlement agreement with regulators and consumer groups would require UNS to remain under local management and provide $30 million in billing credits to customers.
Hearings on the deal and proposed settlement were held in June before a Corporation Commission administrative law judge in Tucson. The judge will issue a recommended order on the matter for final consideration by the full Corporation Commission.
The settlement agreement asks the five-member panel to approve the merger by Sept. 18.
Stock in UNS, the only Tucson-based company traded on the New York Stock Exchange, has been trading at just above Fortis' offering price of $60.25 per share since the deal was announced last December. The shares closed Tuesday at $60.44, up 5 cents.
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