Company that is buying Citizens divisions expects to begin services in July

UniSource Energy Services expects to be serving customers of Citizens Arizona Gas and Citizens Arizona Electric by July.

Dennis R.

Nelson, chief operating officer for UniSource, said during a Monday visit to Kingman that initial settlement terms have been reached with Citizens Communications and the utilities division staff of the Arizona Corporation Commission

Hearings before an ACC law judge begin May 1 on the sale and rate cases.

The ACC must approve the sale before it can be completed.

Nelson said UniSource Energy Services, a subsidiary of UniSource Energy in Tucson, would give Citizens customers a company with Arizona roots.

"We are an Arizona company that is well known by the ACC and we have a long term relationship with them," Nelson said.

"The ACC are familiar with us and our operations in Arizona."

ACC Chairman Marc Spitzer referred to Citizens gas and electric as "orphan companies" when he was in Kingman in March public hearings.

He indicated Kingman customers could benefit from ownership within Arizona but did not say how he would vote on the cases.

The sale to UniSource, parent company of Tucson Electric Co., would put current Citizens customers in a family of Arizona companies that have provided electric power generation and distribution of electricity and natural gas in Arizona for many years.

Nelson is a graduate of Williams High School, Northern Arizona University and the University of Arizona Law School.

"We understand rural, nonmetro Arizona," Nelson said.

"We have generating facilities in Springerville where we employ about 200."

As part of a purchase agreement, UniSource has said it would forego $135 million in pass-through energy costs Citizens wanted to collect for increased wholesale costs during the California power crisis in the summer of 2000.

The rate increase for retail electric customers would be 22 percent rather than the 45 percent Citizens requested.

The requested gas rate increase has been reduced from 29 percent to 23 percent after discussions with the ACC staff.

ACC spokeswoman Heather Murphy said evidence and testimony will be taken by the administrative law judge before the judge writes a ruling.

The sale, the electric rate case and the gas rate case require three separate decisions, although the cases are being moved along together, Murphy said.

Nelson said most current employees of Citizens gas and electric will be retained when the sale is completed.

"We have talked with staff and are impressed with the people working for Citizens," Nelson said.

Steve Lynn, UniSource vice president for communications and government relations, said local customers would be served by a Tucson-based company with deep roots in the state.

"We have a long history of working in the community at TEC and UniSource," Lynn said.

"We know Kingman will see that same community experience from us."

Nelson said the information about Citizens industrial electric rates in Mohave County presented during March hearings was incorrect.

Citizens Arizona Electric manager Tom Ferry said local industrial rates are 6 cents per kilowatt-hour, not 10.5 cents as reported at the hearing.

"The Department of Energy has incorrect information on their Web page and we have contacted them to correct it," Ferry said.

"Some of our customers have rates below 5 cents, a competitive rate in the Arizona market."

Although TEC generates power for its retail customers, UniSource Energy Services would be an electric distribution company, the same as Citizens, Nelson said.

The local UniSource subsidiary will purchase power on the wholesale market.

Lynn said the sale would include the current power supply contract that Citizens has with Arizona Public Service and that Mohave County customers would continue to receive electric power purchased from APS after the sale is completed.