QUOTE AND NEWS
TheStreet.com  Jun 7  Comment 
One of the newest entrants to this year's Fortune 500 list didn't even exist two years ago and is one of the few companies run by a female CEO. Veritiv , with $8.7-billion in revenue, was ranked 323 on the list of America's largest companies....
DailyFinance  Aug 15  Comment 
Fortis Inc. (TSX:FTS) completed its acquisition of UNS Energy Corporation (NYSE: UNS) today, adding UNS Energy subsidiaries Tucson Electric Power (TEP) and UniSource Energy Services (UES) to its growing international family of...
DailyFinance  Aug 12  Comment 
ST. JOHN'S, NEWFOUNDLAND AND LABRADOR -- (Marketwired) -- 08/12/14 -- Fortis Inc. ("Fortis" or the "Corporation") (TSX:FTS) and UNS Energy Corporation ("UNS Energy") (NYSE:UNS) announced today the issuance of the final written approval by the...
DailyFinance  Jul 30  Comment 
ST. JOHN'S, NEWFOUNDLAND AND LABRADOR -- (Marketwired) -- 07/30/14 -- Fortis Inc. ("Fortis" or the "Corporation") (TSX:FTS) announces that the recent recommended opinion and order (the "Recommended Order") of the administrative law judge assigned...
DailyFinance  Jun 23  Comment 
MIAMI, FL -- (Marketwired) -- 06/23/14 -- Unisource Corporate Corporation (OTCBB: USRC) has completed the acquisition of Top Flight Concepts, LLC (TFC). The transaction brings a significant portfolio of unique Intellectual Property into Unisource...
DailyFinance  Jun 13  Comment 
ST. JOHN'S, NEWFOUNDLAND AND LABRADOR -- (Marketwired) -- 06/13/14 -- Fortis Inc. ("Fortis" or the "Corporation") (TSX:FTS) and UNS Energy Corporation ("UNS Energy") (NYSE:UNS) today announced the receipt of early termination of the waiting period...
DailyFinance  May 21  Comment 
ST. JOHN'S, NEWFOUNDLAND AND LABRADOR -- (Marketwired) -- 05/21/14 -- Fortis Inc. ("Fortis") (TSX: FTS) and UNS Energy Corporation ("UNS Energy") (NYSE: UNS) have been advised that the Committee on Foreign Investment in the United States...
StreetInsider.com  May 19  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Corporate+News/UNS+Energy+%28UNS%29%2C+Fortis+Enter+Settlement+with+ACC/9500101.html for the full story.
DailyFinance  Apr 2  Comment 
ST. JOHN'S, NEWFOUNDLAND AND LABRADOR -- (Marketwired) -- 04/02/14 -- The Federal Energy Regulatory Commission ("FERC") has approved the acquisition of UNS Energy Corporation ("UNS Energy") (NYSE:UNS) by Fortis Inc. ("Fortis" or the "Corporation")...
DailyFinance  Mar 26  Comment 
ST. JOHN'S, NEWFOUNDLAND AND LABRADOR -- (Marketwired) -- 03/26/14 -- The Fortis Inc. ("Fortis" or the "Corporation") (TSX: FTS) acquisition of UNS Energy Corporation ("UNS Energy") (NYSE: UNS), announced in December 2013, has been approved by...




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UniSource Energy Corporation (NYSE: UNS) is a holding entity that primarily operates in electricity and gas in Arizona. Operations are conducted by UniSource Energy’s subsidiaries, each of which is a separate legal entity with its own assets and liabilities.[1] The company makes money through long-term and short-term sales to a diverse base of customers. As both gas and electricity share similar inputs, UNS is highly dependent upon pricing schemes of certain key commodities.

Business Growth

UNS conducts business in four primary business segments — TEP, UNS Gas, UNS Electric, and Millennium. TEP is an electric utility that provides electric service to the community of Tucson, Arizona. UES, through its two subsidiaries, UNS Gas and UNS Electric, provides gas and electric service to 30 communities in northern and southern Arizona.[2] Finally, Millennium provides supplemental labor and meter reading services to TEP, UNS Gas and UNS Electric. The majority of UNS' growth, about 42% of total revenues, come from the residential sector as its customer base.

Recently, the company has been expanding heavily into Renewable Energy, sensing that the government support and public interest in cleaner energy provides better brand reputation. For example, UNS's subsidiary TEP ranked sixth in the nation last year for per-capita additions to its solar energy portfolio, according to a report released this month by the Solar Electric Power Association (SEPA).[3] It was through SOLON Corp, a provider of turnkey solar power plants and manufacturer of crystalline silicon solar modules, that has signed an agreement with UNS to supply these modules for a proposed 1.22MW solar project.[4]

Furthermore, TEP is finding more innovative ways for residential and small business customers to participate in a new no-cost pilot program that can help them to reduce energy consumption and lower their electric bills. By receiving a free thermostat that allows users to adjust temperature remotely, TEP system operators may cycle off an air condition to adjust the thermostat during peak periods of electric demand - a win-win situation for both parties.[5]

With revenues recovering at sales growth of 4.1% though in FY2010 compared to roughly -0.9% growth in FY2009, and margins holding up at around 30%, it is apparent that the company has been able to counter with decreasing revenues in lieu with managing its own costs. Going forward, a strong economy recovering will help boost up energy utilization rates.[6]

Trends and Forces

Heavily Dependent Upon the Residential Sector, UNS's Profitability is Impacted by Discretionary Spending

As a large part of UNS's business is centered in electricity generation for Tuscon, Arizona, customer growth and unemployment rates influence the amount of demand required tor those regions. A lower level of economic activity that changes discretionary spending thereby increases conservation efforts by customers and results in a decline in energy consumption. When customers are affected by increased unemployment, the ensuing customer bankruptcies or inability to pay on a timely basis poses as risks to UNS.

Gas and Electricity Segments Smooth UNS's Income

Typically, a largely dry region like Arizona experiences more extreme temperatures than coastal regions. As such, air conditioning is heavily used in the summer time (requiring electricity), and heating is heavily used in the winter (requiring natural gas). Because UNS is heavily invested in both natural gas and electricity as a utilities company, the combination of two operating segments tend to smooth out earnings better than companies that focus solely on one or the other. Regardless, both sources are heavily dependent upon several key inputs such as Natural Gas, Coal and Oil. The price at which UNS may acquire these inputs determine how much the company may charge to its customers.

Competition

Energy saving appliances and general implementation of EE Standards will reduce energy consumption for TEP's retail customers. Because TEP represents such a significant chunk of UNS's business, the ability for TEP customers to install alternative energy technologies and even conventional generation units reduce their reliance on TEP's services. The suppliers of these technologies include:

  • First Solar (FSLR) is engaged in the manufacture and sale of solar modules with an advanced thin film semiconductor technology, and it designs, constructs and sells photovoltaic (PV) solar power systems.[7]
  • SunPower (SPWRA) is a vertically integrated solar products and services company that designs, manufactures and delivers solar electric systems worldwide for residential, commercial and utility-scale power plant customers.[8]



References

  1. UNS FY2010 Form 10-K, Pg K-1
  2. UNS FY2010 Form 10-K, Pg K-2
  3. TEP Ranks among Nation’s Top Utilities for Expanding Solar Energy
  4. SOLON to supply modules for solar PV project in US
  5. TEP Customers Can Reduce Energy Bills Through New Pilot Program
  6. UniSource Energy to Release First Quarter 2011 Financial Results
  7. Form 10-K, FSLR Business Description
  8. Form 10-K SPWRA Business Description
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