Tucson Electric Power Co. has for now stopped offering rebates to commercial customers under its state-mandated energy-efficiency programs, after running out of money for the incentive programs.
The programs are mandated by the Arizona Corporation Commission as part of its energy-efficiency goals designed to help customers save money and, over the long term, reduce the need for new power generation.
But facing a shortfall in 2017 program funds, TEP recently decided to halt the program for commercial customers, including apartment customers — who can reap big cost savings by using rebates for such things as replacing existing lighting with low-use LEDs — until new funding is available next year.
Instead, TEP had decided to allocate the remaining 2017 funds to residential rebate programs.
The issue surfaced after TEP realized its current collections under a customer-paid surcharge would fall short of the program’s overall $23 million budget for this year.
The program and its budget were carried over as the same as 2016, but collections have fallen since TEP reduced the surcharge rate in 2016 to avoid overcollections that occurred in previous years.
In March, TEP petitioned the Corporation Commission to increase its energy-efficiency surcharge, estimating that collections for 2017 would total no more than about $17 million.
But TEP later reconsidered and withdrew the filing, reasoning that the potential increase of about $2 in the monthly “demand-side management” surcharge that pays for the efficiency programs would be too much for customers to bear after a general rate increase added about $8 to the average TEP home bill.
“We didn’t want to add to customers’ bills so soon after the rate increase,” TEP spokesman Joe Barrios said.
For now, TEP is not accepting any new applications for commercial or multi-housing energy-efficiency incentives, though applications already accepted will be honored.
TEP has no plans to ask for more incentive money for this year’s program, Barrios said. TEP is to file for Corporation Commission approval of its 2018 energy-efficiency plan by Aug. 1.
TEP will continue to offer residential energy-efficiency rebates for such things as discounted LED light bulbs and efficient pool pumps, through the end of the year or until those funds run out, Barrios said.
But TEP commercial customers will have to wait until next year to apply for incentives for lighting and other improvements like upgrades to heating and air conditioning and motor drives.
That doesn’t sit well with the Southwest Energy Efficiency project, or SWEEP, which has championed the efficiency programs.
“Customers who have been paying into the program for years are not able to get service now, so there’s a problem there,” said Jeff Schlegel, Arizona representative for SWEEP.
There’s little doubt demand is there — TEP in its message to customers said the suspension of the commercial programs was “due to strong customer interest.”
“This is a sign that the programs are essential and effective,” Schlegel said.
Schlegel said contractors have contacted his group, reporting that suspension of the commercial program has left some customers in the lurch with planned energy-efficiency projects.
SWEEP plans to file a request with the Corporation Commission, seeking additional funding for the TEP energy-efficiency programs, Schlegel said, saying TEP’s action has the effect of a 26 percent program cut.
Barrios said TEP doesn’t see it that way.
“If this was a home budget, you could say it was en effort to live within our means,” Barrios said.
Contact senior reporter David Wichner at email@example.com or 573-4181. On Twitter: @dwichner