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TUCSON, Ariz., July 2, 2003 -- The Arizona Corporation Commission voted 4-0 Tuesday to approve UniSource Energy Corp.'s purchase of Arizona gas and electric system assets from Citizens Communications.
The ACC also approved a 22 percent increase in electric rates and a 20.9 percent increase in gas rates for customers served by those systems. The new electric rates are a result of rising fuel and purchase power costs, while the new gas rates result from significant system improvements and increased gas prices. All new rates will be frozen until August 2007.
"I want to commend the commission for making a very difficult decision," said James S. Pignatelli, chairman, president and chief executive officer of UniSource Energy (NYSE: UNS - News). "It's never easy to grant double-digit rate increases, even when those increases are fully justified by economic realities. The commission weighed all of the evidence fairly and made a decision that will benefit everyone involved."
The purchase agreement between UniSource Energy and Citizens (NYSE: CZN - News) now awaits approval by the Securities and Exchange Commission (SEC) and completion of financing arrangements. The acquisition is expected to be completed by the end of July.
Under terms approved by the ACC, a new UniSource Energy subsidiary, UniSource Energy Services (UES), would operate the Citizens' gas systems that currently serve about 126,000 customers in Santa Cruz, Coconino, Navajo, Yavapai and Mohave Counties. UES would also operate the Citizens' electric systems that serve about 77,500 customers in Santa Cruz and Mohave Counties.
UniSource Energy has agreed to pursue a renegotiation of the Pinnacle West Capital Corp. (NYSE: PNW - News) contract that provides power to Citizens electric customers. If those negotiations are successful, 90 percent of any cost savings would be passed along to customers.
UniSource Energy's primary subsidiaries include Tucson Electric Power, Arizona's second largest investor-owned electric utility, and Millennium Energy Holdings, parent company of UniSource Energy's unregulated energy businesses. For more information about UniSource Energy and its subsidiaries, visit www.unisourceenergy.com.
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