Tucson Electric bills heading higher

A TEP rate increase approved by the Arizona Corporation Commission went into effect July 1 and is expected to raise the average residential ratepayer's bill by an average of less than $4 a month.

But TEP acknowledges that some customers will see substantially larger increase because of a consolidation of rate classes. And new surcharges scheduled to kick in next year will raise bills even higher.

TEP spokesman Joe Barrios said the utility still believes the estimated average monthly residential bill increase will be less than $4, but some bills may be higher.

For starters, the roughly $4 average increase takes into account the entire year, meaning the current, summer bills will likely reflect a larger increase, Barrios said.

And the overall average means that some customers will see less of an increase and some will pay more, depending on usage.

No customers are escaping an increase in the basic service charge, a fact decried by some consumer advocates during rate proceedings. Most residential customers will see their basic charge rise $3 to $10 monthly, and even those on low-income rate plans will see a $2 increase.

Customers on TEP's standard residential rate can still save money by conserving power under a tiered rate structure that results in higher charges per kilowatt-hour of usage as customers pass certain thresholds.

But many customers will see higher bills as the result of TEP's first new rate-plan restructuring in years.

As part of the recent rate decision, TEP has consolidated 53 primary rate plans into 33 rates, dropping about 20 old, legacy rates including many that were "frozen" and no longer offered to new customers.

"Some of these rates have been frozen for 10 or 15 years," Barrios said. "It's likely they're going to see a greater increase than the standard residential customer."

Several old time-of-use rates - which allow customers to save money by shifting usage to off-peak, evening hours - were wrapped into one rate, known as R80.

For example, Barrios said, TEP estimates that about 2,300 customers on one older time-of-use rate will see average monthly increases of about $6 to $7, not including special surcharges.

TEP also simplified time-of-use plan hours, eliminating so-called "shoulder" periods between peak and off-peak rate periods, while cutting the higher-cost summer period by one month, to May through September.

The summer on-peak period is now 2 p.m. to 8 p.m. weekdays excluding major holidays; the winter on-peak periods are 6 a.m. to 10 a.m. and 5 p.m to 9 p.m. weekdays. All other hours are off-peak, which cost about a third less than on-peak rates.

TEP hopes the simpler new time-of-use rates will entice more people to switch to them, Barrios said.

Now, only about 3 percent of TEP residential customers are on time-of-use rates, Barrios said.

In contrast, more than a quarter of residential customers of the Phoenix-area Salt River Project are on time-of-use plans. SRP was an early adopter of so-called "smart" electronic meters, which are necessary for time-of-use customers.

"By consolidating the rates, by simplifying them and reducing the number of choices, the idea is that it's easier to understand," Barrios said.

For many customers, he said, "There is the opportunity through a time-of-use rate to have a lower bill than a standard rate."

Customers on several old time-of-use rates were automatically switched to the consolidated rate, and they should see similar opportunities for savings compared with the standard home rate, Barrios said.

TEP recommends that customers stay on a new rate for at least a year to fully realize any savings, but customers can switch rates at any time.

Time-of-use complications

Time-of-use rates are great for customers and families who are out of the home during the day.

But they're not an attractive option for people who may be home most of the daylight hours, including seniors and the disabled, said Cynthia Zwick, executive director of the nonprofit Arizona Community Action Association.

"If an individual or a family - particularly a senior person - is faced with having to take their medication, having to keep their air conditioning running during a summer day, or eating, they're going to make difficult choices" when juggling expenses, Zwick said. "They often turn the AC (thermostat) way up so it's not running very often."

While TEP ratepayers on special "Lifeline" rates for low-income households and seniors have been shielded from the brunt of most rate increases in the past several rate cases, they will see higher bills from the latest case.

Zwick, who formally intervened in the TEP rate case, said TEP's original plan would have increased costs by 60 percent for some customers as older lifeline rates were consolidated. Lifeline rates are available to customers with incomes below 150 percent of the federal poverty level.

Zwick was able to negotiate to keep the old lifeline rates, which won't be offered to new customers and still may be consolidated in future rate cases.

Customers on Lifeline will see higher percentage increases partly due to consolidation of older rates, but they will still pay less than standard rates, TEP says.

Barrios said about 12,400 people on the main Lifeline rate will see an average rate increase estimated at $2.65 per month.

Another product of the rate decision was a change in how TEP supports emergency-assistance programs for low-income ratepayers.

TEP has $4.5 million in a fund that generated earnings to help fund bill-payment assistance, but it wasn't generating much in today's low-interest-rate markets.

Instead, TEP will contribute $150,000 annually to the Arizona Community Action Association for bill assistance. But the community need typically exceeds available funding, Zwick said.

More changes coming

Meanwhile, additional new charges are due to hit TEP bills in the near future.

Starting around July 2014, TEP customers will begin paying a "lost fixed cost recovery" charge, intended to allow the utility to recoup fixed costs the company would otherwise have to absorb as new, state-mandated energy-efficiency programs cut into new power demand.

TEP's energy-efficiency plan has been held up by the Arizona Corporation Commission amid concerns over TEP's cost recovery. Further hearings will be held to approve new energy-efficiency programs and set the cost-recovery mechanism.

The commission also approved a special surcharge, known as the Environmental Compliance Adjuster, to compensate TEP for the cost of retrofitting its coal power plants with new pollution-control technology.

TEP has not yet been forced to install the new controls, but it estimates impending federal rules on coal-plant emissions could cost some $300 million. The surcharge must be justified and is capped at 0.25 percent of total TEP retail revenues.

TEP bill dissected

Here's a rundown of each of the line items on a Tucson Electric Power Co. residential standard-rate bill, based on summer rates that went into effect July 1.

NOTE: This example is based on a relatively high monthly power usage of 3,010 kilowatt hours (kWh) in order to illustrate costs through all rate tiers. The average monthly usage for TEP residential customers is about 800 KWh.

Your rate

• You can find your rate class just above the summary of charges on your monthly bill. The example below is for R-01-Residential Service, the rate most TEP home customers use.

Delivery services

• Pays for power transmission and distribution.

• Customer charge: $10; basic service charge all residential customers pay regardless of their power usage (increased from $7 on July 1).

• Summer - first 500 kWh: $0.0562 (about 5.6 cents) per KWh (or $28.10 for customers reaching or surpassing this tier)

• Summer - 501 to 1,000 kWh: $0.0672 per kWh (or $33.60 for customers reaching this tier).

• Summer - 1,001 to 3,500 kWh: $0.0798 per kWh (or $160.40 for 2,010 kWh usage in this tier).

Power supply charges

• Pays for generation or purchase of power.

• Summer - $0.035111 per kWh (or $105.68 for 3,010 kWh).

• PPFAC - Purchased Power and Fuel Adjustment Clause: A usage-based charge or credit that reflects changes in costs for wholesale power purchased by TEP and fuel, adjusted up or down based on actual costs. (TEP makes no profit from this charge.)

The PPFAC will show up as a credit until next April, under a temporary resetting approved as part of the recent rate decision.

The current PPFAC rate of $-0.001388 for 3,010 kWh of usage results in a monthly credit of $4.18.

Green energy charges

• Renewable Energy Standard Tariff: Funds incentives for installation of solar and other renewable-energy projects in TEP area); $0.008 per kWh, capped at $3.80 per month.

• DSM (Demand-Side Management) Surcharge: Funds programs to conserve energy, such as weatherization; may be reset to fund new energy-efficiency programs to meet a state mandate. Billed at $0.002232 per kWh ($6.72 for 3,010 kWh usage).

Taxes and assessments

(Based on 3,010 kWh monthly usage example, where applicable).

• AZISA (Arizona Independent Scheduling Administrator Association) assessment: Pays for statewide transmission administration; monthly charge for example is 2 cents.

• ACC (Arizona Corporation Commission): Funds state utility regulatory agency; assessment for example is 69 cents.

• RUCO (Residential Utility Consumers Office) Assessment: Funds state agency that represents utility consumers in rate cases; monthly assessment is 11 cents.

• City franchise fee: $7.76.

• State sales tax: $20.08.

• County sales tax: $1.79.

• City sales tax: $6.89.

• City public utility tax: $6.03.

Total example bill: $387.49.

More information

For details on other rate plans, including time-of-use and commercial rates, go to www.tep.com/customer/ rates/newrates/

'Smart' meter or not?

How "smart" is your electric meter?

As utilities including Tucson Electric Power Co. install more electronic meters that transmit usage data, concerns over privacy and exposure to radio transmissions have created a backlash among some ratepayers and consumer groups.

But TEP doesn't consider its new Automated Meter Reading (AMR) meters to be true "smart" meters, because they simply transmit data to the utility.

In contrast, the "smartest" meters - so-called Advanced Metering Infrastructure (AMI) meters - feature two-way communications for such tasks as sharing time-of-use pricing information; for so-called demand-response actions such as targeted service reductions; or for remote service disconnections.

TEP's automated-read meters are required for customers on time-of-use rates; TEP is methodically changing out all of its customer meters to electronic ones (at no direct customer cost) partly because old mechanical meters are becoming unavailable.

TEP customers can opt out of getting AMR meters, but they must pay $10 monthly for meter reading, or $5 if they read their meters themselves and submit the data to TEP.

Saving on your bill

Energy-saving tips from Tucson Electric Power Co.:

• Use ceiling or oscillating fans to keep air moving.

• Dry laundry loads right after each other so your dryer doesn't have to reheat for each load, dry during cooler periods and clean the lint tray after each load.

• Turning the thermostat up will save you money in the summer, and the opposite is true during the winter.

• Caulking around door frames and installing weather stripping around door openings are inexpensive and highly effective means of saving energy.

• Replace traditional incandescent light bulbs with compact fluorescent lights (CFLs) that carry the Energy Star label, which use about 75 percent less energy than standard incandescent bulbs and last up to 10 times longer.

• Deciduous trees with high, spreading leaves and branches can be planted to the south of your home to provide maximum summertime roof shading.

• Cutting a 15-minute shower in half can save substantially on yearly hot-water costs.

• In summer, use shades, blinds or curtains to keep sunlight out, especially during the afternoon in rooms facing west.

• Don't block vents or ducts inside the house, which can limit the efficiency of heating and cooling systems.

• About 80 to 85 percent of the energy involved in washing clothes is used to heat the water, so using less water at lower temperatures can save power.

Getting help

If you're having trouble paying your electric bill:

• Contact Tucson Electric Power Co. at 623-7711 to make payment arrangements or to apply for low-income discounts.

• For payment assistance, low-income residents may apply through the Tucson Urban League, 791-9522, or Salvation Army Family Services, 792-1111. Pima County residents outside of the Tucson area should contact the Pima County Community Action Agency at 243-6688.

Note: Assistance funding is limited and agencies may suspend the application process pending new funding.

Contact Assistant Business Editor David Wichner at dwichner@azstarnet.com or 573-4181.