Tucson Electric Power is voluntarily providing information about our sustainability initiatives for customers, investors and other stakeholders who want to learn more about our Environmental, Social and Governance (ESG) performance. Guided by goals established by our Officer team, the company actively manages our ESG strategy. As part of a family of utilities owned by Fortis Inc., a leader in the North American regulated electric and gas utility industry, TEP also contributes to Fortis’ commitment as a Task Force for Climate-Related Financial Disclosures supporter.
Below, you will learn more about how our company’s values are driving our work around environmental, social and governance measures that will drive positive change for generations to come.
About Our Company
Our values define how we work and who we are
Our journey is rooted in our vision, to be an exceptional energy provider that positively impacts the lives of our employees, customers and communities. Our values represent our fundamental beliefs, guiding our behaviors and supporting our long-term strategic ambitions.
In our commitment to drive sustainability, we:
- work to protect and preserve our environment
- promote and support prosperity, growth and wellbeing in our communities
- work efficiently, use resources responsibly and partner with customers to care for our planet.
We drive sustainability through our investments in grid technology, through the infrastructure we’re developing for electric vehicles, and through our strategic philanthropic investments and community support.
Our ESG quantitative metrics are one way to help understand our company’s focus on social, environmental and governance intentions and actions.
By the Numbers
Environmental
Energy resource diversification and carbon emissions reductions are major components of TEP’s sustainability strategy.
At Tucson Electric Power, we’re significantly increasing our use of solar and wind power and battery storage as part of a reliable, affordable and increasingly sustainable energy portfolio. Our plan calls for the elimination of coal-fired power and a transition to less carbon-intensive resources at a cost-effective pace through a thoughtful transition for our employees and their community.
In our 2023 Integrated Resource Plan (IRP), we announced a new aspirational goal: net zero direct greenhouse gas emissions by 2050.
This builds on plans TEP announced in 2020 to reduce carbon emissions 80 percent below 2005 levels by 2035. That carbon emissions reduction goal, described in the company’s 2020 IRP, represents a reduction of more than 50 million tons of carbon dioxide (CO2) emissions compared to TEP’s previous plan.
The 2020 IRP was developed through extensive analysis and comprehensive, transparent stakeholder engagement. For example, from 2019 through 2020, TEP partnered with the University of Arizona’s Institute of the Environment to identify a science-based carbon emissions goal that measured emission reductions in terms of global temperature change and considered climate change impacts to the community, cost, sustainability, reliability and risk.
We’re already making clear progress. Between 2019 and 2023, our CO2 emissions dropped 37percent due to coal plant retirements and the addition of 490 megawatts ( MW) of new wind, solar and storage projects.
TEP's Planned CO2 Emissions Reduction
TEP’s 2023 IRP also describes the company’s plans to significantly expand its wind and solar power resources and has proposed retirement of its remaining coal-fired power plants by 2032. About 90 percent of the new resource capacity will be sourced from renewable and energy storage projects.
TEP has already started expanding its cost‐effective clean energy resources. In 2021, TEP more than doubled its large community-scale renewable energy resources with three new wind and solar facilities including:
- The 250-megawatt (MW) Oso Grande Wind farm in southeast New Mexico, which generates enough power each year to serve nearly 100,000 homes. The site was chosen for its proximity to transmission lines and strong wind resources, particularly during the morning, evening and overnight hours when solar arrays produce little or no power.
- The Wilmot Energy Center (WEC) located south of Tucson, which includes a 100-MW solar array and 30-MW battery energy storage system. The batteries will be charged exclusively by 314,000 solar panels that can track the movement of the sun for increased production. Wilmot produces enough energy to serve the annual electric needs of about 26,000 homes.
- The Borderlands Wind Project, located in New Mexico, about 25 miles east of Springerville, includes 34 turbines that produce a combined 99 megawatts (MW). Over the course of a year, the wind farm will generate enough power to serve the annual electric needs of more than 26,000 homes.
In 2022, we brought our efficient 12.5 megawatt (MW) Raptor Ridge system online to generate clean energy for homeowners and renters participating in our TEP GoSolar Home program. The array, which features more than 35,000 photovoltaic modules that track the sun to produce more clean energy than fixed arrays, is designed to produce enough power to meet the annual electric needs of about 2,500 homes.
Construction is underway on TEP’s Roadrunner Reserve, a 200 MW grid-tied battery energy storage system in southeast Tucson designed to help satisfy customers’ everyday energy needs with abundant, low-cost solar energy. In addition, TEP has signed agreements to purchase the output from Babacomari Solar North, a 160 MW solar facility in Cochise County located about 3 miles east of Ft Huachuca, and Winchester Solar, an 80-MW solar and 80-MW battery energy storage facility in Cochise expected to come online in 2027.
The company is reducing and ultimately eliminating its reliance on coal. TEP’s 2023 IRP carries forward the 2020 IRP plans to ramp down and ultimately retire TEP’s two coal-fired units at the Springerville Generating Station (SGS) by 2032. From 2015, when TEP ended use of coal at the H. Wilson Sundt Generating Station in Tucson, to mid-2022, when TEP ended participation at the San Juan Generating Station in New Mexico, the company has retired 638 MW of coal capacity, a 41 percent reduction.
Ramping down reliance on coal-fired resources will help keep service affordable for TEP customers while significantly reducing air emissions and water consumption, eliminating the use of surface water for power generation and contributing to a reduction in groundwater use by 70 percent.
In December 2023, TEP issued an all-source request for proposals (RFP) to . An all-source RFP provides an open and competitive process that allows us to gather information on the cost and availability of different resource types to determine how they can best fit into our comprehensive plan and complement our existing portfolio of resources. The company is seeking resources that can commence service as soon as May 1, 2026 but no later than May 1, 2027.
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.
TEP’s efficient and cost-effective natural gas generation resources will support the expansion of solar and wind systems while also reducing water usage and air emissions. The energy marketplace also is evolving to help utilities address intermittency and use traditional resources more efficiently. TEP joined the California Independent System Operator’s Energy Imbalance Market (EIM) in May 2022, allowing it to execute real-time energy trades in 15-minute increments to address short-term energy needs.
TEP is driving adoption of electric vehicles (EVs), which are transforming the transportation sector and providing multiple benefits in the process, from cleaner air to expanded customer choice and affordable electric rates. TEP offers pricing plans and incentives to customers who invest in EVs, and is accelerating the development of charging infrastructure to support these zero-emission vehicles. TEP participated in the development of a statewide plan, submitted to the Arizona Corporation Commission, with a goal of placing over 1 million EVs on the road by 2030.
TEP is committed to a “greener investment” strategy as the company transitions from coal-fired generation to providing more renewable and natural gas-fired power. TEP 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. TEP’s commitment is also evidenced by its 2021 Credit Agreement, which offers the potential for annual adjustments to interest rate spreads and fees based on TEP’s achievement of certain sustainability-linked metrics.
0
Megawatts of new utility-scale wind, solar plus storage projects commissioned in 2021 and 20220%
of our community’s power came energy delivered today comes from wind and solar in 20230%
of new power resources will come from renewable and energy storage projects over the next 15 years0%
lower carbon emissions from 2005 levels by 2035
Social
Our dedication to service extends beyond providing safe, reliable energy services. We are committed to improving the quality of life in the communities we serve.
TEP is dedicated to being a good neighbor and providing assistance to our most vulnerable residents, helping to address complex issues such as homelessness and poverty, social inequities, hunger, domestic violence and other areas of need.
By working to address these needs, we’re giving individuals and families new opportunities for a better life, and supporting our business community in efforts to create a stronger, healthier and more vibrant community.
TEP’s dedication to service extends beyond providing safe, reliable power. For nearly 130 years, we’ve remained true to our vision of improving the quality of life in the communities we serve.
TEP contributed about $1.5 million to charitable causes in 2023 with funds from corporate resources, not customers’ rates. Our employees contributed more than 8,500 hours to 216 nonprofit groups serving our community.
We also work to serve as our customers’ trusted energy partner, helping commercial and residential customers meet their own energy goals. Just a few of those efforts have included:
- supporting the University of Arizona’s ambitious plan for greater sustainability, powering its Tucson campus with new wind and solar resources
- helping Roche Tissue diagnostics meet its own renewable energy goals through the purchase of “shares” in community-scale solar programs
- supporting bus fleet electrification efforts by Sun Tran to reduce carbon emissions
- helping K-12 schools and college campuses to become more energy efficient
- supporting Arizona communities impacted by the transition away from coal-fired power plants located in/near those communities
Protecting wildlife and preserving the environment is also a focus of our community investment work with community partners and through our employee volunteers.
We do this by directing resources and funding to support a variety of nonprofit organizations whose projects and programs protect and preserve our natural resources, including land, water, air and wildlife. From buffelgrass pulls that protect the desert, to cactus relocation and raptor protection, our environmental stewardship is part of our commitment to sustainability in everything that we do.
In addition to support for established funding initiatives including low-income assistance, education and environmental protection, Tucson Electric Power invests in efforts that promote diversity and social justice while supporting local nonprofit organizations that .
The company also sponsors employee activities and other initiatives that promote unity and inclusion among employees as a means of strengthening the community we serve. Since 2017, our employee-led Women in Energy group – one of six business resource groups - has supported the development of leadership qualities in women, fostered camaraderie and connections among employees of all genders and encouraged more young women to pursue careers in traditionally male-dominated industries, such as energy.
TEP provides commercial customers with reliable energy, economic development discounts and energy efficiency programs.
Our rates are designed to attract new employers and encourage existing businesses to expand their operations. With support from TEP and local partners, four significant employers committed in 2023 to establishing new businesses in our community.
That resulted in the creation of 430 jobs in Southern Arizona, advancing our efforts to promote local economic development. Since 2016, TEP has worked directly with businesses that have created nearly 22,000 local jobs.
Governance
TEP’s commitment to sustainable growth and responsible governance enhances the value the company provides to customers, the community and other stakeholders.
TEP's commitment to sustainability guides the decisions of the board of directors, executives, managers and supervisors at all levels and in all areas of the company.
The TEP Board of Directors draws on the expertise and strong business acumen of trusted business leaders with experience from the fields of utilities, defense, science, mining and medicine. Its members value integrity, accountability, collaboration, sustainability and the creation of opportunities for the company and all of its employees.
The Board of Directors also established an Environmental, Safety and Security (ESS) Committee. The ESS Committee advises and assists with Board oversight of environmental matters, sustainability objectives and the safety and security of employees, customers and members of the public.
TEP's management team values innovation and excellent performance, and 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.
Several Officers from the management team sit on TEP’s ESG Officer Strategy Team. The ESG Officer Strategy Team is a cross-functional team led by executives and supported by a diverse group of directors, managers and subject matter experts. The ESG Officer Strategy Team is responsible for holding sustainability central to TEP’s business strategy.
Championed by the management team, TEP maintains Employees Creating Opportunities for Sustainability (ECOS), an employee-led ‘green team’ that identifies and implements our company's sustainability initiatives and raises sustainability awareness among coworkers and in the community. The group has already revamped our recycling program, donated reusable water bottles to schools, hosted sustainability ‘lunch and learn’ meetings and other initiatives since its inception in 2020.
In April 2024, ECOS volunteers supported the fifth Tucson Zero Waste Collection Event. TEP employee volunteers supported the drive-through event by helping with traffic flow and various collection booths. Participants donated medication, small furniture and housewares, E-waste, books, and clothing to be recycled.
Safety is our highest priority, which is why we start our meetings with a safety share.
We are committed to working in a manner that prevents injury through a robust workplace safety program that promotes situational awareness through information sharing with industry leaders and fellow utilities. In 2023, our Corporate Safety team hosted the 10th annual Operations Safety Summit in Tucson. Leaders throughout the organization reflected on last year’s safety performance and considered the importance of relationships, trust and accountability in positively influencing safety culture. A new safety classification and learning model is designed to help guide employees by focusing more deeply on the hazards that are most likely to cause the most serious incidents.
We also promote public safety through advertising, customer communications and collaboration with local utilities and first responders.
We run an annual “Stay Away, Stay Alive” advertising campaign to educate electric customers about electrical safety during our summer storm season. We routinely share safe practices around electricity with our residential and business partners and help our customers protect our crews’ lives with increased awareness around work zones.
We also know safety starts early. We offer SafetyLand, an in-classroom program that teaches second graders about electrical safety through a fun, interactive board game.
As a provider of safe, dependable energy services, reliability performance is key.
TEP consistently benchmarks in the top quartile among our peers for reliability performance, and achieved performance records in 2020, as measured by Edison Electric Institute.
Investment in our system helps drive reliability, since TEP maintains a massive modern electrical grid that spans 1,155 square miles and includes approximately 5,100 miles of transmission and distribution lines, more than 4,300 cable-miles of underground distribution lines and more than 100 substations. It’s a complex system that requires ongoing maintenance and upgrades to honor our commitment to provide industry-leading reliability.
Over the last five years (2019-2023), TEP invested more than $2 billion to expand and upgrade our energy systems to reliably serve our growing community’s energy needs with increasingly clean energy. These improvements are designed to withstand extreme heat and powerful thunderstorms as well as the stress caused by increasing energy demands.
TEP works year-round to reduce the risk of its transmission systems causing or exacerbating wildfires that can destroy property and lead to power outages. In addition to these active measures, TEP is expanding its wildfire risk mitigation practices. Utility industry practices in the West are evolving and TEP continues to monitor and learn from other utilities to evaluate and adopt practices that make our systems more climate resilient, while ensuring safe, reliable and affordable power is available to our customers. New practices under consideration include the potential development of a public safety power shut-off (PSPS) plan, enhanced weather monitoring, smoke detection and other technological solutions for our facilities to mitigate fire risk.
Our highly trained workforce is critical in ensuring safe, reliable service. We support their growth and expertise through continuous training, emergency preparedness, employee support and employee development.
TEP’s robust cybersecurity measures protect customer and employee data, while using best practices to ensure compliance with regulations designed to maintain grid security.
The company employs certified cybersecurity professionals to develop continually evolving cyber protections and we have invested in safer, more secure facilities that provide enhanced protection against increasing physical- and cyber-security threats and support efficient operations.
Championed by the Officer Team, TEP finalized a larger company DEI vision in 2021 and established a DEI strategic roadmap in four key pathways:
- Building awareness and understanding
- Expanding capacity and capabilities
- Taking action and accountability
- Fostering assessment and reflection
Teams have been working within their areas to refresh processes that support momentum on the company’s DEI goals. Storytelling and DEI learning opportunities, including micro-learnings, are some of the key ways we’re promoting cultural awareness and fostering a workplace where employees have the opportunity to thrive.
A DEI maturity assessment, conducted in 2023, established a baseline in building effectiveness across several areas, including driving culture change, creating strong governance, driving leadership accountability and executing on our DEI strategy.
The employee experience has also been a focus area to ensure everyone has the opportunity to feel connected to their work, recognized for their contributions and is comfortable being themselves.
The company engages employees for help in identifying local nonprofit organizations that are working effectively to strengthen diversity, equity and inclusion in our communities, particularly since our philanthropy efforts have been continuously informed by what matters to our employees.
TEP is committed to improving the quality of life in our community.
TEP is expanding its renewable energy portfolios, exploring new customer options and providing pricing plans that address customers’ evolving energy needs. As Arizona continues to grow and change, TEP will continue providing reliable service to customers while investing in new, innovative technologies and cleaner energy resources.
Forward-Looking Information
This report contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Tucson Electric Power Company (“TEP”, “we”, “us” or “our") is including the following cautionary statements to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for any forward-looking statements made by us in this report. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events, future economic conditions, future operational or financial performance and underlying assumptions, and other statements that are not statements of historical facts. Forward-looking statements may be identified by the use of words such as anticipates, believes, estimates, expects, intends, aspires, may, plans, predicts, potential, projects, would, and similar expressions. We disclaim any obligation to update any forward-looking statements to reflect new information, future events or circumstances, except as may otherwise be required by the federal securities laws.
Forward-looking statements involve risks and uncertainties which could cause actual results or outcomes to differ materially from those expressed herein. We express our estimates, expectations, beliefs, and projections in good faith and believe them to have a reasonable basis. However, we make no assurances that the estimates, expectations, beliefs, or projections set forth in this report will be achieved or accomplished. We have identified the following important factors that could cause actual results to differ materially from those discussed in our forward-looking statements. These may be in addition to other factors and matters discussed under Risk Factors in TEP’s Annual Report on Form 10-K for the year ended December 31, 2023, and in TEP’s other filings with the Securities and Exchange Commission and elsewhere in this report. These factors include: voter initiatives and state and federal regulatory and legislative decisions and actions, including changes in tax policies, inclusive of the Inflation Reduction Act of 2022 and evolving interpretive guidance related thereto, and energy policies and the adoption of new regulations regarding electric service disconnections and any change in the structure of utility service in Arizona resulting from the Arizona Corporation Commission's or state legislature's examination of the state's energy policies; changes in, and compliance with, environmental laws and regulatory decisions and policies that could increase operating and capital costs, reduce generation facility output, or accelerate generation facility retirements; unfavorable rulings, penalties, or findings by the Federal Energy Regulatory Commission; regional economic and market conditions that could affect customer growth and electricity usage; potential changes in the benefits of participation in the Energy Imbalance Market; changes in electricity consumption by retail customers; risks related to climate change, including shifts in weather seasonality and extreme weather events affecting electricity usage of our customers, operational performance, and operating and capital costs to ensure system reliability; our forecasts of peak demand and whether existing generation capacity and purchase power agreements are sufficient to meet the expected demand plus reserve margin requirements; the cost of debt and equity capital and access to capital markets and bank markets, which may affect our ability to raise additional capital and use the proceeds from any capital raised as originally intended; the performance of the stock market and a changing interest rate environment, which affect the value of our pension and other postretirement benefit plan assets and our related contribution requirements and expenses; our ability to manage timelines and budgets related to capital projects, including engineering, procurement and construction agreements to develop standalone battery energy storage facilities, and/or to obtain the anticipated performance or other benefits of such capital projects; the potential inability to make additions to our existing high voltage transmission system; unexpected increases in operations and maintenance expense, including inflationary effects, heightened geopolitical instability, and/or global supply chain challenges; resolution of pending litigation matters; changes in accounting standards; changes in our critical accounting estimates; the ongoing impact of mandated energy efficiency and distributed generation initiatives; our ability to effectively implement plans to meet our goals related to reducing carbon emissions by 2035 and 2050, and the potential impact on our financial condition; changes to long-term contracts; the cost of fuel and power supplies; fluctuations or increases in commodity prices; the ability to obtain coal or natural gas from our suppliers; the timing and cost of generation facility decommissioning and mine reclamation activities; cyber-attacks, data breaches, or other cyberspace attacks to our information security and our operations and technology infrastructure, including attacks that may arise from heightened geopolitical instability; physical attacks to our electric generation, transmission and distribution assets; the performance of TEP’s generation facilities, including renewable generation resources; the extent of the impact of a global health crisis on our business and operations, and the economic and societal disruptions resulting therefrom and from the government actions taken in response thereto; and the ongoing implementation of TEP’s 2023 IRP.