Scrutiny of Tucson Electric Power Co.’s recent request to raise rates has just begun, but a proposal to double the basic monthly service charge is raising concerns among community groups and consumer advocates.
In a rate case filed Nov. 5, TEP is asking state regulators for a 7 percent increase in revenues in a rate plan that would boost the average home customer’s bill by about $12 a month by 2017, to cover increased costs.
The proposals would increase a variety of charges, including imposing higher costs on customers with rooftop solar systems — but TEP’s request to raise the fixed monthly charge all customers pay from $10 to $20 is attracting early, vocal criticism.
No formal comments have yet been filed in the case before the Arizona Corporation Commission, which won’t even reach the public-hearing stage until next year.
“We think it punishes low-income customers,” Cynthia Zwick, executive director of the Phoenix-based Arizona Community Action Association, said of the basic-charge increase.
“On average, low-income customers use less power, so it will cost them more percentage-wise.”
A TEP spokesman said the utility must be able to cover its costs, and feels it’s proven its case in its filing.
“With any request, we don’t file them lightly, and we have to show our costs were incurred prudently,” TEP’s Joe Barrios said.
Barrios said the company is sensitive to concerns over the rate plan’s impact on poorer customers, citing discount rates, weatherization and other programs to help low-income customers cut usage and save money on their bills.
groups say proposal is “regressive”
Groups including the Sierra Club, the Interdenominational Ministerial Alliance Community Action Team, Tierra Y Libertad Organization and Physicians for Social Responsibility also raised concerns about the basic-charge increase and higher costs to solar customers.
In a news release issued by the groups the day after TEP filed its case, Tierra Y Libertad organizer Oscar Medina called the increases proposed by TEP “regressive,” “an attack on working-class families” and “environmental injustice.”
“We encourage TEP to come up with safer and more creative ways to cover its rising costs,” said the Rev. Amos L. Lewis, senior pastor at Rising Star Missionary Baptist Church and a member of the ministers alliance.
Dan Millis, an organizer for the Sierra Club Grand Canyon Chapter, said the proposal would hit low-income families especially hard while “attacking” customers who go solar.
“This rate case proposes raising rates in the most regressive way possible — by doubling the basic service charge that every customer pays, which will impact low-income families most of all,” Millis said.
He noted that TEP has partnered with the Tucson Urban League on Energy Ease, a TEP program that funds home energy-efficiency improvements including weatherization, efficient lighting and home heating and air-conditioner upgrades.
The rate plan would have a lesser impact on customers who are on one of TEP’s “Lifeline” discount rates for low-income households, Barrios noted.
“Not all low-income customers pay the full basic service charge,” he said.
But none will escape an increase to their basic monthly charges.
Customers on one of several different TEP low-income rates now pay a basic monthly charge ranging from $5 to the full $10, while under the rate request, they would pay from $12 to $20, Barrios said.
The basic monthly service charge was raised to the current $10 from $7 under a settlement of TEP’s last rate case in 2013.
Besides the increased charges, Zwick said she’s also concerned about a proposal to set up a “pre-paid” or “pay-as-you-go” electric service, where customers would have to pay for energy in advance.
TEP says such a plan would reduce the need for deposits and late-payment and disconnect fees and encourage conservation. The state’s biggest investor-owned utility, Arizona Public Service Co., and the self-governed Salt River Project offer prepaid service plans.
But Zwick said studies of such prepaid plans in other areas show that much of the energy savings attributed to such programs come not from incremental conservation gains, but because many customers simply run out of money to buy more power.
“It’s a better deal for the company than for customers,” she said.
Zwick says she’s also concerned about a TEP proposal to make it easier for the utility to require delinquent customers to post account deposits.
Rooftop solar fees also spark criticism
TEP says the increases — which also affect business customers — are needed to cover higher costs, and solar customers should pay more because, by buying less power from the grid, they aren’t paying their fair share of fixed costs for things like transmission and distribution.
The solar industry has attacked the higher charges on rooftop solar customers since TEP originally proposed the plan, without the demand charge, as a standalone request earlier this year.
Millis and other solar supporters say TEP and other utilities are ignoring the benefits of renewable energy.
The rate proposal would raise costs for TEP customers who filed or will file to connect new rooftop solar arrays to the power grid after June 1 of this year.
About 8,500 existing TEP solar customers would be exempt and keep their current rates.
For the new solar customers, TEP wants to impose a new monthly “demand charge” based on a customer’s peak power usage, and cut the rate at which TEP credits solar customers of excess power production.
Under TEP’s proposal, including demand charges, the average new rooftop solar customer using about 900 kilowatt-hours of power monthly would save about $56 per month, compared with the $97 that the average solar customer saves now.
Katharine Kent of The Solar Store, a longtime local solar installer, said public utility regulators in Nevada and Colorado have determined that “the benefits of rooftop solar to the grid easily outweigh any financial losses to utilities.”
TEP says it is a longtime and continuing supporter of renewable energy, citing its current plan to replace about a third of its coal-based generation in the next few years with solar and cleaner-burning natural gas.
But large utility-scale solar systems are much cheaper than rooftop systems, and rooftop solar users should pay more to offset their cost to the system or other customers will subsidize that cost, the company says.
The head of the Residential Utility Consumer Office, a state agency that advocates for consumers in rate cases, said TEP’s proposed basic-service increase will get a thorough examination.
“Anytime anyone wants to get into doubling the basic charge, it gets people’s attention, and we’ll certainly be looking at that,” RUCO Director David Tenney said, reserving further comment until he and his staff have gone through TEP’s filing in detail.
Utilities rarely get all they want in rates from the Corporation Commission.
TEP last filed for new rates in July 2012, with a proposal that would have raised the average home bill by about $13 a month — later estimated at $11 — but the approved rates raised bills an average of less than $4 a month.
A growing number of utilities nationwide are seeking to increase fixed charges in response to flat or declining energy demand and growing rooftop solar installations, according to the American Council on Energy Efficiency, which pushes for energy-efficiency programs whose benefits are eroded by high fixed charges.
Wisconsin regulators approved increases in fixed basic charges for three utilities last fall, and a regulators in at least a dozen other states have faced such proposals int he past year, the Sierra Club says.