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ESG/Sustainability Performance

Tucson Electric Power Company
ESG/Sustainability Template

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Tucson Electric Power (TEP) and its parent company, UNS Energy, worked with the Edison Electric Institute (EEI), institutional investors and other member utilities to develop reporting metrics that provide guidance in assessing environmental, social, and governance (ESG) risks.

UNS Energy is a subsidiary of Fortis, Inc., a leader in the North American regulated electric and gas utility industry, and also the parent company of Tucson Electric Power and UniSource Energy Services, which  provides electric and gas service to northern and southern Arizona.

TEP, which provides electric service to approximately 425,000 customers in Southern Arizona, is providing this information for customers, investors and other stakeholders seeking information about our ESG and sustainability performance.

Environmental

A major component of TEP’s sustainability strategy is energy resource diversification. The TEP Integrated Resource Plan (IRP) demonstrates how the company is planning to build a cleaner, more flexible resource portfolio.

TEP Resource Portfolio Diversification

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.

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.

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.

In order to accomplish a shift toward renewable energy while ensuring the continued supply of affordable and reliable power, TEP is taking advantage of historically low natural gas prices and increasing ownership of natural gas generation, a cleaner, more efficient energy resource.

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.

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.

Social

TEP provides commercial customers with affordable energy, economic development discounts and energy efficiency programs. TEP’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. The company and its employees are committed to working in a manner that prevents injury through a robust workplace safety program that promotes situational awareness through information sharing.

TEP promotes public safety through advertising, customer communications and collaboration with local utilities and first responders. It runs annual “Stay Away, Stay Alive” advertising campaigns to educate electric customers about electrical safety.

TEP invests significantly in the success of the community, contributing more than $1.7 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 Tucson area.

Governance

TEP and 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.

TEP’s management team values innovation and excellent performance, and it promotes 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.

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.

TEP’s robust cybersecurity measures protect customer and employee data, while using best practices to ensure compliance with regulations designed to maintain grid security. TEP employs certified cybersecurity professionals to develop continually evolving cyber protections.

Sustainability Strategy Summary

TEP is committed to improving the quality of life in the community. The company’s commitment to sustainability is reflected in the continued expansion of its renewable energy portfolio, new customer options and 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 will continue providing reliable service to customers while investing in new, innovative technologies and expanding renewable resources.