Tri-State's New 418-MW Unit at TEP's Springerville Generating Station Begins Producing Commercial Power

Business Wire, July 28, 2006

SPRINGERVILLE, Ariz. -- A third unit at Springerville Generating Station (SGS) began commercial operation today, expanding the resources available to meet rising power demands across the West. The project was developed by Tri-State Generation and Transmission Association in conjunction with Tucson Electric Power (TEP), the owner and operator of SGS Units 1 and 2.

Although finishing work and testing will continue, the unit's 418- megawatt (MW) output has been certified for commercial use in a region where searing summer heat has produced new records in energy usage.

J.M. Shafer, Tri-State executive vice president and general manager, said, "The demand for electricity continues to grow throughout our membership and our investment in this new resource helps strengthen our ability to successfully carry out our core business -- assuring that our member co-ops continue to receive reliable and affordable power for years to come."

James S. Pignatelli, chairman, president and CEO of TEP and its parent company, UniSource Energy Corp. (NYSE:UNS), noted that the unit is coming online at a time when numerous proposals for new coal-fired generators are in the planning stages nationwide.

"Years ago, we recognized the value of the affordable, reliable power this generator would produce," Pignatelli said. "As natural gas prices remain volatile and our region's energy demands continue to rise, this unit is coming online at an opportune time."

Tri-State, a Denver-based wholesale power cooperative with member distribution systems in Colorado, New Mexico, Wyoming and Nebraska, will lease SGS Unit 3 from GE Structured Finance and will control its entire output. TEP, which operates two existing 380-megawatt generators at the eastern Arizona power plant, will run Unit 3 while purchasing 100 MW of system capacity from Tri-State for up to five years beginning Sept. 1.

Phoenix-based Salt River Project (SRP) will purchase 100 MW of output from Tri-State over a 30-year period. SRP also will develop and own SGS Unit 4, a new 400-megawatt unit that SRP expects to begin operating in late 2009. TEP will operate that unit as well.

Project contractor Bechtel Power Corp. designed and built Unit 3 under a turnkey, lump-sum contract. The unit achieved commercial operation in 33 months, five months earlier than the originally scheduled date. Bechtel didn't sacrifice safety for speed, as crews have logged more than 4.1 million hours on the project without a single lost-time accident.

Unit 3 employs best available control technologies to limit emissions, including dry scrubbers for sulfur dioxide reduction, selective catalytic reduction and low-NOx burners to control nitrogen oxides and baghouses to capture particulates.

As part of the project, the emission controls of Units 1 and 2 were upgraded with improved sulfur dioxide scrubbers and low-NOx burners. The use of this equipment ensures that total regulated emissions from all four SGS units will be significantly lower than previous emissions from the two original units.

Tucson Electric Power, a subsidiary of UniSource Energy, delivers safe, reliable power to more than 390,000 customers in southern Arizona. For more information about TEP, visit tep.com. For more information about UniSource Energy, visit uns.com.

Tri-State, a Touchstone Energy(R) cooperative, supplies power to 44 electric cooperatives and public power districts, which in turn serve approximately 1.2 million consumers across a 250,000-square-mile service territory. For more information, visit tristategt.org.