S&P lifts Tucson Electric Power from junk

Standard & Poor's said it raised the corporate credit rating on Tucson Electric Power Co. to BBB from BB+. The outlook is stable.

S&P also raised the rating on Tucson Electric's senior unsecured notes to BBB from BBB- and withdrew the 2 recovery rating on the notes because the corporate credit rating is now investment grade.

"We view the consolidated business risk profile as 'strong' under our criteria, reflecting Tucson Electric's regulated utility operations and a predominantly coal-fired generation fleet that has been sufficient to meet the majority of its retail loads," said S&P credit analyst Michael Ferguson in a news release.

Weaknesses underlying the business risk profile include concentrated customer markets with few significant growth prospects in a region that was deeply affected by the recession and a high coal concentration, which might require higher environmental spending.

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