Arizona Supreme Court Issues Stay Delaying ACC Settlement Hearings.

TUCSON, Ariz.--(BUSINESS WIRE)--Dec. 1, 1998--The Arizona Supreme Court granted today a motion by the State Attorney General's Office to delay hearings on a proposed settlement agreement between the Arizona Corporation Commission (ACC) staff and Tucson Electric Power Company (TEP).

The agreement would have provided for approval of TEP's plan to divest generation. In addition, the agreement would have supported the formation of a TEP-owned transmission company and the acquisition by TEP of specific transmission assets owned by Arizona Public Service.

The Court's decision to issue an immediate stay effectively postpones an ACC procedural order which set a hearing date of Dec. 3, 1998, to address the settlement agreement. The Court agreed with the Attorney General and other petitioners that standards of due process were not met with the time frame provided for intervenors to study the agreement in preparation for the Dec. 3 hearing.

The Court set a hearing date of Jan. 14, 1999, on the Attorney General's Motion for Oral Argument and Expedited Consideration.

TEP is concerned that this ruling will delay the implementation of electric retail competition in Arizona.

"We are extremely disappointed in the Attorney General's Office and with the Supreme Court's decision. These issues have been under considerable deliberation for more than 2 years, and the parties have had more than adequate time for review and discussion," said James Pignatelli, TEP chairman, president and CEO.

"We still believe this settlement is in the best interests of TEP's customers and shareholders, and we are hopeful, that upon reasonable consideration of the issues, the settlement agreement will be implemented.

Tucson Electric Power Company, a wholly-owned subsidiary of UniSource Energy Corporation (NYSE:UNS), is a Tucson-based utility engaged in the generation, purchase, transmission, distribution and sale of electric energy to retail and wholesale customers.

UniSource Energy's other principal subsidiaries include New Energy Ventures, LLC, one of the nation's leading representatives for energy buyers; Nations Energy Corporation, an independent power developer; Advanced Energy Technologies, Inc., a developer of renewable energy and distributed generation technologies; Southwest Energy Solutions, and SWPP Investment Co.