LOAN AGREEMENT

Exhibit 4(d)

LOAN AGREEMENT

between

COCONINO COUNTY, ARIZONA

POLLUTION CONTROL CORPORATION

and

TUCSON ELECTRIC POWER COMPANY

Dated as of October 1, 2009

Relating To

Pollution Control Revenue Bonds,
2009 Series A
(Tucson Electric Power Company Navajo Project)

TABLE OF CONTENTS ^*

LOAN AGREEMENT

THIS LOAN AGREEMENT (2009 Series A), dated as of October 1, 2009 (this “Agreement”), between COCONINO COUNTY, ARIZONA POLLUTION CONTROL CORPORATION, an Arizona nonprofit corporation and a political subdivision of the State of Arizona (hereinafter called the “Pollution Control Corporation”), and TUCSON ELECTRIC POWER COMPANY, a corporation organized and existing under the laws of the State of Arizona (hereinafter called the “Company”),

W I T N E S S E T H :

WHEREAS, the Pollution Control Corporation is authorized and empowered under Title 35, Chapter 6, Arizona Revised Statutes, as amended (the “Act”), to issue its bonds in accordance with the Act and to make secured or unsecured loans for the purpose of financing or refinancing the acquisition, construction, improvement or equipping of pollution control facilities consisting of real and personal properties, including but not limited to machinery and equipment whether or not now in existence or under construction, which are used in whole or in part to control, prevent, abate, alter, dispose or store, solid waste, thermal, noise, atmospheric or water pollutants, contaminants or products therefrom, whether such facilities serve one or more purposes or functions in addition to controlling, preventing, abating, altering, disposing or storing such pollutants, contaminants or the products therefrom, and to charge and collect interest on such loans and pledge the proceeds of loan agreements as security for the payment of the principal of and interest on bonds, or designated issues of bonds, issued by the Pollution Control Corporation and any agreements made in connection therewith, whenever the Board of Directors of the Pollution Control Corporation finds such loans to be in furtherance of the purposes of the Pollution Control Corporation;

WHEREAS, the Pollution Control Corporation has heretofore issued and sold $14,700,000 aggregate principal amount of Coconino County, Arizona Pollution Control Corporation Pollution Control Revenue Bonds, 1997 Series B (Tucson Electric Power Company Navajo Project), all of which remain outstanding (the “1997 Bonds”), the proceeds of which were loaned to Tucson Electric Power Company, an Arizona corporation (the “Company”), for the purpose of refunding $14,700,000 aggregate principal amount of Coconino County, Arizona Pollution Control Corporation Pollution Control Revenue Bonds, 1996 Series B (Tucson Electric Power Company Project);

WHEREAS, the Pollution Control Corporation proposes to issue and sell its revenue bonds (the “Bonds”) for the purpose of refinancing, by the payment or redemption of the 1997 Bonds, or provision therefor, a portion of the costs of the acquisition, construction, improvement and equipping of certain of the pollution control facilities described in Exhibit A hereto (the “Facilities”), previously refinanced with the proceeds of the 1997 Bonds; and

NOW, THEREFORE, the parties hereto, intending to be legally bound hereby and in consideration of the premises, DO HEREBY AGREE as follows:

ARTICLE I

DEFINITIONS

SECTION 1.01. Definitions . The terms defined in this Article I shall for all purposes of this Agreement have the meanings herein specified, unless the context clearly requires otherwise:

Act:

“Act” shall mean Title 35, Chapter 6, Arizona Revised Statutes, and all acts supplemental thereto or amendatory thereof.

Administration Expenses:

“Administration Expenses” shall mean the reasonable expenses incurred by the Pollution Control Corporation with respect to this Agreement, the Indenture and any transaction or event contemplated by this Agreement or the Indenture, including the compensation and reimbursement of expenses and advances payable to the Trustee, to the Paying Agent, any Co-Paying Agent and the Registrar under the Indenture.

Agreement:

“Agreement” shall mean this Loan Agreement, dated as of October 1, 2009, between the Pollution Control Corporation and the Company, and any and all modifications, alterations, amendments and supplements hereto.

Authorized Company Representative:

“Authorized Company Representative” shall mean each person at the time designated to act on behalf of the Company by written certificate furnished to the Pollution Control Corporation and the Trustee containing the specimen signature of such person and signed on behalf of the Company by its President, any Vice President or its Treasurer, together with its Secretary or any Assistant Secretary.

Bond Counsel:

“Bond Counsel” shall mean any firm or firms of nationally recognized bond counsel experienced in matters pertaining to the validity of, and exclusion from gross income for federal tax purposes of interest on bonds issued by states and political subdivisions, selected by the Company and acceptable to the Pollution Control Corporation.

Bond Fund:

“Bond Fund” shall mean the fund created by Section 4.01 of the Indenture.

Bonds:

“Bond” or “Bonds” shall mean Coconino County, Arizona Pollution Control Corporation Pollution Control Revenue Bonds, 2009 Series A (Tucson Electric Power Company Navajo Project).

Code:

“Code” shall mean the Internal Revenue Code of 1986, as amended, or any successor statute thereto. Each reference to a section of the Code herein shall be deemed to include the United States Treasury Regulations proposed or in effect thereunder and applicable to the Bonds or the use of the proceeds thereof, unless the context clearly requires otherwise. Reference to any particular Code section shall, in the event of a successor Code, be deemed to be a reference to the successor to such Code section.

Company:

“Company” shall mean Tucson Electric Power Company, a corporation organized and existing under the laws of the State of Arizona, its successors and their assigns, including, without limitation, any successor obligor under Section 6.01 or Section 7.01 hereof to the extent of the obligations assumed thereunder.

Facilities:

“Facilities” shall mean the real and personal properties, machinery and equipment currently existing, under construction and to be constructed which are described in Exhibit A hereto, as revised from time to time to reflect any changes therein, additions thereto, substitutions therefor and deletions therefrom permitted by the terms hereof, subject, however, to the provisions of Section 7.01 hereof.

Indenture:

“Indenture” shall mean the Indenture of Trust, dated as of October 1, 2009, between the Pollution Control Corporation and the Trustee relating to the Bonds, and any and all modifications, alterations, amendments and supplements thereto.

Loan Payments:

“Loan Payments” shall mean the payments required to be made by the Company pursuant to Section 5.01 hereof.

1954 Code:

“1954 Code” shall mean the Internal Revenue Code of 1954, as amended.

1997 Bonds:

“1997 Bonds” shall mean the $14,700,000 aggregate principal amount of Coconino County, Arizona Pollution Control Corporation Pollution Control Revenue Bonds, 1997 Series B (Tucson Electric Power Company Navajo Project).

Outstanding:

“Outstanding”, when used in reference to the Bonds, shall mean, as at any particular date, the aggregate of all Bonds authenticated and delivered under the Indenture except:

(a) those canceled by the Trustee at or prior to such date or delivered to or acquired by the Trustee at or prior to such date for cancellation;

(b) those paid pursuant to Section 2.07 of the Indenture;

(c) those deemed to be paid in accordance with Article VIII of the Indenture; and

(d) those in lieu of or in exchange or substitution for which other Bonds shall have been authenticated and delivered pursuant to the Indenture, unless proof satisfactory to the Trustee and the Company is presented that such Bonds are held by a bona fide holder in due course.

Person:

“Person” means (i) any corporation, limited liability company, partnership, joint venture, association, joint stock company, business trust or unincorporated organization, in each case formed or organized under the laws of the United States of America, any state thereof or the District of Columbia, or (ii) the United States of America or any state thereof, or any political subdivision of either thereof, or any agency, authority or other instrumentality of any of the foregoing.

Plant:

“Plant” shall mean the Navajo Generating Station, an electric power generating plant near Page, Arizona, in Coconino County, Arizona, and any additions or improvements thereto or replacements thereof.

Plant Agreements:

“Plant Agreements” shall mean all contracts relating to the ownership, construction and operation of the Plant, including the Facilities, as from time to time amended or supplemented.

Pollution Control Corporation:

“Pollution Control Corporation” shall mean Coconino County, Arizona Pollution Control Corporation, an Arizona nonprofit corporation and a political subdivision of the State of Arizona incorporated for and with the approval of the County of Coconino, Arizona, pursuant to the provisions of the Constitution of the State of Arizona and the Act, its successors and their assigns.

Tax Agreement:

“Tax Agreement” shall mean that tax certificate and agreement, dated the date of the initial authentication and delivery of the Bonds, between the Pollution Control Corporation and the Company, relating to the requirements of the 1954 Code, Title XIII of the Tax Reform Act of 1986, and any and all modifications, alterations, amendments and supplements thereto.

Trustee:

“Trustee” shall mean U.S. Bank Trust National Association, as trustee under the Indenture, its successors in trust and their assigns.

SECTION 1.02. Incorporation of Certain Definitions by Reference . Each capitalized term used herein and not otherwise defined herein shall have the meaning set forth in the Indenture.

ARTICLE II

REPRESENTATIONS AND WARRANTIES

SECTION 2.01. Representations and Warranties of the Pollution Control Corporation . The Pollution Control Corporation makes the following representations and warranties as the basis for the undertakings on the part of the Company contained herein:

(a) The Pollution Control Corporation is an Arizona nonprofit corporation and a political subdivision of the State of Arizona created and existing under the Constitution and laws of the State of Arizona;

(b) The Pollution Control Corporation has the power to enter into this Agreement and the Indenture and to perform and observe the agreements and covenants on its part contained herein and therein, including without limitation the power to issue and sell the Bonds as contemplated herein and in the Indenture, and by proper action has duly authorized the execution and delivery hereof and thereof;

(c) The execution and delivery of this Agreement and the Indenture by the Pollution Control Corporation do not, and consummation of the transactions contemplated hereby and fulfillment of the terms hereof and thereof by the Pollution Control Corporation will not, result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust or other agreement or instrument to which the Pollution Control Corporation is now a party or by which it is now bound, or any order, rule or regulation applicable to the Pollution Control Corporation of any court or of any regulatory body or administrative agency or other governmental body having jurisdiction over the Pollution Control Corporation or over any of its properties, or the Constitution or laws of the State of Arizona;

(d) With the exception of the approval of the Coconino County Board of Supervisors obtained on April 15, 2008, no consent, approval, authorization or other order of any regulatory body or administrative agency or other governmental body is legally required for the Pollution Control Corporation’s participation in the transactions contemplated by this Agreement, except such as may have been obtained or may be required under the securities laws of any jurisdiction; and

(e) The Pollution Control Corporation has found and determined that all requirements of the Act with respect to the issuance of the Bonds and the execution and delivery of the Indenture and this Agreement have been complied with and that the entering into of the Indenture and this Agreement will be in furtherance of the purposes of the Act.

SECTION 2.02. Representations and Warranties of the Company . The Company makes the following representations and warranties as the basis for the undertakings on the part of the Pollution Control Corporation contained herein:

(a) The Company is a corporation duly organized and existing in good standing under the laws of the State of Arizona and duly qualified as a foreign corporation in the State of New Mexico;

(b) The Company has power to enter into this Agreement and to perform and observe the agreements and covenants on its part contained herein and by proper corporate action has duly authorized the execution and delivery hereof;

(c) The execution and delivery of this Agreement by the Company do not, and consummation of transactions contemplated hereby and fulfillment of the terms hereof by the Company will not, result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust or other agreement or instrument to which the Company is a party or by which it is now bound, or the Restated Articles of Incorporation or bylaws of the Company, or any order, rule or regulation applicable to the Company of any court or of any regulatory body or administrative agency or other governmental body having jurisdiction over the Company or over any of its properties, or any statute of any jurisdiction applicable to the Company;

(d) The Arizona Corporation Commission has approved all matters relating to the Company’s participation in the transactions contemplated by this Agreement which require said approval, and no other consent, approval, authorization or other order of any regulatory body or administrative agency or other governmental body is legally required for the Company’s participation therein, except such as may have been obtained or may be required under the securities laws of any jurisdiction;

(e) The Facilities to be refinanced constitute “pollution control facilities” as such term is defined in the Act; and

(f) All of the proceeds of the Bonds will be expended to refinance the Facilities through the payment or redemption of the 1997 Bonds, or provisions therefor.

ARTICLE III

THE FACILITIES

SECTION 3.01. Facilities; Property of the Company . An undivided interest in the Facilities shall be the property of the Company and the Pollution Control Corporation shall have no right, title or interest in the Facilities.

SECTION 3.02. Maintenance of Facilities; Remodeling . The Company shall at all times exercise all of its rights, powers, elections and options under the Plant Agreements to cause the Facilities, and every element and unit thereof, to be maintained, preserved and kept in thorough repair, working order and condition and to cause all needful and proper repairs and renewals thereto to be made; provided, however, that the Company may exercise all of its rights, powers, elections and options under the Plant Agreements to cause the operation of the Facilities, or any element or unit thereof, to be discontinued if, in the judgment of the Company, it is no longer advisable to operate the same, or if the Company intends to sell or dispose of the same and within a reasonable time shall endeavor to effectuate such sale or disposition.

The Company may, subject to the provisions of Section 6.05 hereof, at its own expense consent to the remodeling of the Facilities or to the making of such substitutions, modifications and improvements to the Facilities from time to time as it, in its discretion, may deem to be desirable for its uses and purposes, which remodeling, substitutions, modifications and improvements shall be included under the terms of this Agreement as part of the Facilities.

SECTION 3.03. Insurance . The Company shall exercise all of its rights, powers, elections and options under the Plant Agreements to keep the Facilities insured against fire and other risks to the extent usually insured against by companies owning and operating similar property, by reputable insurance companies or, at the Company’s election, with respect to all or any element or unit of the Facilities, by means of an adequate insurance fund set aside and maintained by it out of its own earnings or in conjunction with other companies through an insurance fund, trust or other agreement or, by means of unfunded self insurance as may be reasonable and customary by companies owning and operating similar property. All proceeds of such insurance shall be for the account of the Company.

SECTION 3.04. Condemnation . The Company shall be entitled to the entire proceeds of any condemnation award or portion thereof made for damages to or takings of the Facilities or other property of the Company.

ARTICLE IV

ISSUANCE OF THE BONDS; THE LOANS; DISPOSITION OF PROCEEDS OF THE BONDS

SECTION 4.01. Issuance of the Bonds . The Pollution Control Corporation shall issue the Bonds under and in accordance with the Indenture, subject to the provisions of the bond purchase agreement among the Pollution Control Corporation, the initial purchaser or purchasers of the Bonds and the Company. The Company hereby approves the issuance of the Bonds and all terms and conditions thereof.

SECTION 4.02. Issuance of Other Obligations . The Pollution Control Corporation and the Company expressly reserve the right to enter into, to the extent permitted by law, but shall not be obligated to enter into, an agreement or agreements other than this Agreement with respect to the issuance by the Pollution Control Corporation, under an indenture or indentures other than the Indenture, of obligations to provide additional funds to pay the cost of construction of the Facilities or obligations to refund all or any principal amount of the Bonds, or any combination thereof.

SECTION 4.03. The Loan; Disposition of Bond Proceeds . The Pollution Control Corporation shall cause the proceeds of the Bonds to be deposited with the trustee for the 1997 Bonds to be applied to the payment of the 1997 Bonds upon the redemption thereof.

The Pollution Control Corporation shall establish the Bond Fund with the Trustee in accordance with Section 4.01 of the Indenture.

SECTION 4.04. Investment of Moneys in Funds and Accounts . The Company and the Pollution Control Corporation agree that any moneys held in any fund or account created by the Indenture shall be invested as provided in the Indenture.

ARTICLE V

LOAN PAYMENTS; OTHER OBLIGATIONS

SECTION 5.01. Loan Payments . In consideration of the issuance of the Bonds and the disposition of the proceeds thereof as contemplated in Section 4.03 hereof, the Company shall pay, or cause to be paid, to the Trustee for the account of the Pollution Control Corporation an amount equal to the aggregate principal amount of the Bonds from time to time Outstanding and, as interest on its obligation to pay such amount, an amount equal to premium, if any, and interest on such Bonds, such amounts to be paid in installments due on the dates, in the amounts and in the manner provided in the Indenture for the Pollution Control Corporation to cause amounts to be deposited in the Bond Fund for the payment of the principal of and premium, if any, and interest on the Bonds whether at stated maturity, upon redemption or acceleration or otherwise; provided, however, that the obligation of the Company to make any such payment hereunder shall be reduced by the amount of any reduction under the Indenture of the amount of the corresponding payment required to be made by the Pollution Control Corporation thereunder.

SECTION 5.02. Payments Assigned; Obligation Absolute . It is understood and agreed that all Loan Payments are, pursuant to the Indenture, to be pledged by the Pollution Control Corporation to the Trustee, and that all rights and interest of the Pollution Control Corporation hereunder (except for the Pollution Control Corporation’s rights under Sections 5.03, 5.04, 6.03 and 8.05 hereof and any rights of the Pollution Control Corporation to receive notices, certificates, requests, requisitions and other communications hereunder) are to be pledged and assigned to the Trustee. The Company assents to such pledge and assignment and agrees that the obligation of the Company to make the Loan Payments shall be absolute, irrevocable and unconditional and shall not be subject to cancellation, termination or abatement, or to any defense other than payment or to any right of set off, counterclaim or recoupment arising out of any breach by the Pollution Control Corporation or the Trustee or any other party under this Agreement, the Indenture or otherwise, or out of any obligation or liability at any time owing to the Company by the Pollution Control Corporation, the Trustee or any other party, and, further, that the Loan Payments and the other payments due hereunder shall continue to be payable at the times and in the amounts herein and therein specified, whether or not the Facilities, or any portion thereof, shall have been completed or shall have been destroyed by fire or other casualty, or title thereto, or the use thereof, shall have been taken by the exercise of the power of eminent domain, and that there shall be no abatement of or diminution in any such payments by reason thereof, whether or not the Facilities shall be used or useful, whether or not any applicable laws, regulations or standards shall prevent or prohibit the use of the Facilities, or for any other reason, all of the foregoing being subject, however, to the provisions of Sections 6.01 and 7.01 hereof.

SECTION 5.03. Payment of Expenses . The Company shall pay all Administration Expenses, including, without limitation, Administration Expenses incurred at and subsequent to the time the Bonds are deemed to have been paid in accordance with Article VIII of the Indenture. The payment of the compensation and the reimbursement of expenses and advances of the Trustee, of the Paying Agent, any Co-Paying Agent and the Registrar under the Indenture shall be made directly to such entities.

SECTION 5.04. Indemnification . The Company releases the Pollution Control Corporation, the Trustee and the Coconino County, Arizona and their directors, officers, employees and agents from, agrees that the Pollution Control Corporation and the Trustee shall not be liable for, and agrees to indemnify and hold the Pollution Control Corporation, the Trustee and any predecessor Trustee and their directors, officers, employees and agents free and harmless from, any liability (including, without limitation, attorneys’ and other agents’ fees and expenses) for any loss or damage to property or any injury to or death of any person that may be occasioned by any cause whatsoever pertaining to the Facilities, except in any case as a result of the negligence or bad faith or willful misconduct of the party otherwise to be indemnified.

The Company will indemnify and hold the Pollution Control Corporation, the Trustee and any predecessor Trustee, free and harmless from any loss, claim, damage, tax, penalty, liability, disbursement, litigation expenses, attorneys’ and other agents’ fees and expenses or court costs arising out of, or in any way relating to, the execution or performance of this Agreement, the issuance or sale of the Bonds, actions taken under the Indenture or any other cause whatsoever pertaining to the Facilities, except in any case as a result of the negligence or bad faith or willful misconduct of the party otherwise to be indemnified.

The Company will indemnify and hold the Pollution Control Corporation and its directors, officers, employees and agents free and harmless from any loss, claim, damage, tax, penalty, liability, disbursement, litigation expenses, attorney’s fees and expenses or court costs arising out of or in any way relating to any untrue statement or alleged untrue statement of any material fact or omission or alleged omission to state a material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading in any official statement or other offering material utilized in connection with the sale of any Bonds.

SECTION 5.05. Payment of Taxes; Discharge of Liens . The Company shall: (a) pay, or make provision for payment of, all lawful taxes and assessments, including income, profits, property or excise taxes, if any, or other municipal or governmental charges, levied or assessed by any federal, state or municipal government or political body upon the Facilities or any part thereof or upon the Pollution Control Corporation with respect to the Loan Payments, when the same shall become due; and (b) pay or cause to be satisfied and discharged or make adequate provision to satisfy and discharge, within sixty (60) days after the same shall accrue, any lien or charge upon the Loan Payments, and all lawful claims or demands for labor, materials, supplies or other charges which, if unpaid, might be or become a lien upon such amounts; provided, that, if the Company shall first notify the Pollution Control Corporation and the Trustee of its intention so to do, the Company may in good faith contest any such lien or charge or claims or demands in appropriate l