FOR IMMEDIATE RELEASE
Nov 8 2010 12:00:00:000AM
News Media Contact: Joe Salkowski (520) 884-3625
Investor Contact: Jo Smith, (520) 884-3650

UES Expects Higher Winter Gas Bills; Assistance Programs Available

Flagstaff, Ariz. " Average winter gas bills from UniSource Energy Services (UES) are expected to be about 5 percent higher than they were last winter due to higher gas costs on customers' bills.

A temporary credit linked to lower gas prices reduced last winter's cost of service to about $1 per therm. That credit expired last month, boosting this month's cost of service to $1.07 per therm. That cost " which includes the Cost of Natural Gas and Delivery Charges " is expected to fall steadily over the winter to $1.03 per therm in April 2011.

For average residential customers, gas bills are expected to reach a seasonal peak next month of about $119, before taxes and fees. That estimate includes the monthly Customer Charge and is based on usage of 102 therms, so customers with higher consumption should expect higher bills.

An $0.08-per-therm credit was applied to UES bills from November 2009 through October 2010 to pass along gas cost reductions that weren't reflected in previous bills. Although wholesale gas prices have actually fallen a few cents per therm since last year, the expiration of that credit will result in higher gas costs on this winter's bills.

Like most utilities, UES does not operate its own natural gas wells and cannot control gas prices. The company buys gas at market prices and passes that cost along to customers without any markup along with its approved delivery rates.

The Cost of Natural Gas on customers' bills is calculated each month based on average gas prices over the previous 12 months. The formula was designed by the Arizona Corporation Commission (ACC) to cushion the impact of wholesale price fluctuations. As a result, the revenue UES recovers through this charge can exceed or lag behind its actual gas purchase costs. When the amount of over- or under-collected revenue grows large enough, UES seeks ACC approval for a temporary surcharge or credit to reduce the balance.

This winter's bills also will include a higher Customer Charge that took effect in April 2010 under new rates approved by the ACC. The change added $1.50 to the monthly charge, boosting the fee for residential customers from $8.50 to $10 per month.

Bill Payment Assistance Available

UES offers many ways to help customers make their winter gas bills more manageable.

Low-Income Assistance

Participants in the CARES low-income assistance program pay a discounted $7 monthly customer charge and receive additional discounts of up to $15 per month from November through April, when gas bills typically reach their peak.

The CARES program is available to UES customers whose household income does not exceed 150 percent of the federal poverty level " currently $2,757 per month for a family of four. For more information about CARES, visit uesaz.com or call 1-877-837-4968.

UES has joined its customers in supporting Warm Spirit , a program that provides qualified residents with emergency assistance in paying their bills. UES matches its customers' contributions to Warm Spirit dollar for dollar up to $50,000 per year to provide additional resources for needy families. Donations to the fund are tax deductable and can be added to customers' monthly bill payments.

UES also provides weatherization assistance to social service agencies that help low-income customers make their homes more energy efficient. The program provides up to $2,000 per customer for increased insulation, weather stripping, furnace replacement and other improvements.

To apply for emergency bill payment assistance or weatherization funds, customers in Coconino, Navajo and Yavapai Counties can contact the Northern Arizona Council of Governments, 119 E. Aspen Ave. in Flagstaff at (928) 774-3756. Mohave County customers can contact the Western Arizona Council of Governments, 208 N. 4th St. in Kingman at (928) 753-6247. Santa Cruz County customers can contact the Southeastern Arizona Community Action Program, 490 Chenoweth in Nogales, Ariz., at (520) 287-5066.

Budget Billing

UES's Budget Billing program eliminates seasonal swings in energy costs by charging a fixed monthly amount based on customers' estimated annual gas use. Since most people use more gas when the weather gets cold, Budget Billing typically reduces winter bills and increases summer bills by spreading out home heating costs across warm weather months.

Customers who sign up for the program now would likely be billed an amount that represents an increase over their typical summer bill and a savings off their typical winter bill. UES adjusts the amount periodically to account for changes in usage, so customers' costs will rise if they increase their year-round energy use.

Energy Efficiency

UES can help customers find ways to reduce their bills by using energy more efficiently. UES' website (uesaz.com) features a variety of energy saving tips as well as the UES Energy Advisor, an interactive guide to improving a home's energy efficiency.

UES also offers rebates of up to $325 toward the purchase of new, energy-efficient gas furnaces. Depending on the equipment it replaces, a high-efficiency furnace can reduce the energy use for home heating by up to 142 therms per year, generating savings of up to $1,960 over 15 years. The amount of the rebate depends on the size and type of equipment purchased.

For additional energy-saving tips or more information about any UES program, call 1-877-UES4YOU (1-877-837-4968) or visit uesaz.com. Customers also should look for bill inserts promoting these programs.

UniSource Energy Services, a subsidiary of UniSource Energy Corporation (NYSE: UNS), provides gas service to more than 146,000 customers in Mohave, Yavapai, Coconino, Navajo and Santa Cruz Counties. UES also provides electric service to more than 90,000 customers in Mohave and Santa Cruz Counties. To learn more, visit uesaz.com. For more information about UniSource Energy, visit uns.com.