TEP files rate settlement agreement.

TUCSON, Ariz.--(BUSINESS WIRE)--March 8, 1996--Tucson Electric Power Co. (NYSE:TEP) Friday filed a motion with the Arizona Corporation Commission (ACC) for consideration of a rate settlement agreement which requests an $8.4 million "across-the-board" increase in rates, and proposes to implement a five-year rate moratorium.

The following intervenors are signatories to the settlement: ACC Staff, Residential Utility Consumer Office (RUCO), the Arizona Community Action Agency, Jobs for Southern Arizona, LAW Fund Energy Project, Department of Defense, City of Tucson, Greater Arizona Manufactured Housing Association, Jay Donnovan and Billy Burtnett. Additionally, Salt River Project and Southwest Gas have indicated they do not oppose the settlement.

The settlement agreement contains all of the provisions of a rate settlement agreement filed in November 1995, including a commitment not to seek an increase in base rates before Jan. 1, 2000. Revisions to the initial settlement include:

-- An amendment to reduce the rate increase by $2 million, lowering the proposed rate increase to $8.4 million, or 1.62 percent;

-- An increase in the Low-Income Fund for Emergencies (LIFE) from $4 million to $4.5 million;

-- A simplification of the proposed Residential Time-of-Use Rate No. 70, which will result in additional savings to customers;

-- Changes to the proposed Pricing Flexibility Tariff to increase ACC and RUCO participation and oversight.

The rate changes are intended primarily to recover in retail rates the operating and capital costs of the remaining 37.5 percent of Unit 2 of the Springerville Generating Station which currently is not being recovered. The unit has been in operation since 1990.

The proposed across-the-board increase is expected to be implemented on or about March 31, 1996, and would result in an average increase of $1.14 in monthly residential bills, from $70.47 to $71.61 for residential customers using an average of 750 kilowatt-hours per month.

"The evidence presented at the hearing for the Initial Settlement clearly demonstrates that the adoption of this settlement is in the public interest and would provide the company with the opportunity to earn a fair return," TEP said in its motion for consideration. "It will also provide the company with increased flexibility to respond to the competitive forces without abandoning appropriate Commission oversight."

No hearing date has been set for the motion.

CONTACT: Tucson Electric Power Co., Tucson

Jay Gonzales, 520/884-3742