Tucson Electric Power home customers would see their power bills soar by an average of nearly 12% next year, under a proposed rate increase the utility filed Friday with state regulators.
TEP’s request, filed Friday with the Arizona Corporation Commission, would increase the average monthly bills of typical residential customers by 11.7% percent, or $14.22, over current levels starting in September 2023.
Discounts to low-income customers would increase, the rate change would vary with usage, and customers will be able to mitigate the impact through energy efficiency and time-of-use pricing plans that offer lower rates during off-peak periods, TEP said.
TEP, which serves about 400,000 customers in the Tucson metro area, says it needs the increase to recoup its costs for new infrastructure, new renewable-energy plants, to cover higher fuel costs and to recover more fixed costs from usage-based rates as each customer uses less energy.
“The cost of providing safe, reliable service is increasing rapidly as inflation exacerbates the impacts of supply chain challenges, regional energy capacity constraints and extreme weather events,” said Susan Gray, TEP president and CEO. “Our proposed rates are needed to support systems and infrastructure that protect and upgrade our grid, expand our use of cleaner energy and help us serve the expanding energy needs of our growing community.”
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TEP says peak energy demand on its local energy grid has increased by 5.7% since 2019, driven by record heat events and the addition of more than 14,000 new homes and businesses to its customer base over the past three years.
The cost of fuel and wholesale energy also has increased significantly in recent years, driving up expenses that, like operating and maintenance costs, are passed along to customers without any markup, the company said.
The proposed rates will increase the Lifeline discount from $18 to $20 per month for customers whose household income does not exceed 200% of the federal poverty level.
TEP’s proposal would eliminate TEP transaction fees for most credit-card payments from residential and small business customers as well as for cash payments made at third-party payment processors.
Like the last rate case decided in 2020, TEP is seeking to shift more costs to residential customers to further reduce a longtime subsidy of home power rates by business-class customers.
The last increase boosted the average monthly bill for TEP residential customers on its most-popular basic rate plan by about $5.20 per month over the year, after TEP sought an increase of up to $7, while lowering rates for business customers.
Under the new proposal, business customers on TEP’s small and medium general service rate would see average increase of more than 11%, while TEP’s large general service customers would see an increase of about 6.7%
TEP also is seeking to eliminate some monthly surcharges that now pay for renewable-energy and energy efficiency programs and environmental compliance and shift them to its main rate base, which along with an allowed profit is used to calculate electric rates.
To support its ongoing transition from coal to cleaner power generation, TEP is seeking to recoup through base rates its investment in the 250-megawatt Oso Grande wind project in New Mexico, which went online in 2021 and is TEP’s largest single renewable-energy resource to date.
The utility is also seeking an accounting reduction in the “useful lives” of Springerville Generating Station Units 1 and 2, in recognition of TEP’s plan to retire those coal-fired units in 2027 and 2032, respectively.
TEP also wants to replace a monthly surcharge known as the Environmental Compliance Adjustor with a new surcharge designed to recover certain costs and investments related to TEP’s transition to cleaner energy resources.
TEP’s rate request will be subject to evidentiary hearings and public comment sessions before an administrative law judge in Tucson.
The judge will file a recommended opinion and order with the Corporation Commission, which after further public hearings can accept, reject or amend the proposed order.
Learn more about the rate hike request at tep.com/rate-proposal.