Local opinion: TEP's investor profits vs. affordable clean electricity

and analysis of the writer:

In 2006, the Arizona Corporation Commission (ACC) adopted the Renewable Energy Standard & Tariff (REST), requiring electric utilities to generate at least 15% of their electricity from renewable sources by 2025.

Now the ACC has voted to start the process of repealing REST after TEP’s false claim that renewables comprised about 29% of its 2024 energy portfolio. But data in TEP’s 10-K report to the Securities & Exchange Commission dated Dec. 31, 2024, reveals that TEP used a novel way of determining that percentage. Simple calculations show TEP’s percentage of renewables was 13.8%, of which only 6.5% was from TEP-owned facilities. They purchased the rest from sources using fossil fuels (coal 24.3% and gas 69.1%).

The ACC is supposed to ensure the “optimal” energy mix to deliver the highest quality, dependable service at a “just and reasonable” cost to ratepayers. But the ACC has done no studies to determine or define the “optimal” mix of energy sources. Nor has it defined “just and reasonable” rates, or proposed any method for establishing a definition.

This vagueness lets investor-owned for-profit utilities like TEP choose fossil fuel generation over less expensive renewable energy, like solar panels with battery energy storage systems (Solar-BESS). Here’s how:

Utilities are allowed to charge rates that recover their costs for building, buying, and operating power plants, plus a guaranteed 10% profit, which means that the higher the cost, the bigger their profits! So, Instead of investing in cheaper, cleaner renewables, utilities prefer costly gas plants and transmission projects loaded with hidden expenses — like 8% power losses on long lines and “peaker” plants that sit idle most of the year, without considering the financial, environmental, and health costs, especially to people living near plants (like the Navajo and Tohono O’odham Nations). Profits over people!

TEP’s latest scheme? A new methane “natural gas” plant. Methane traps 84–87 times more heat than CO₂ over a 20-year span, and construction costs are simply passed along to ratepayers while profits flow to TEP’s Canadian parent company, Fortis.

Today, Solar-BESS generates the cheapest power available (about 3-5 cents/kWh). Solar-BESS incurs no fuel or water costs, and keeps Arizona dollars in Arizona instead of being used to purchase out-of-state energy.

Per the Energy Information Administration, our ACC-regulated electric utilities (including TEP) charge more than 38 of the 48 contiguous states. In 2023, AZ had the 11th-highest cost per kWh. Last year, Arizona had the 14th-highest rates for residential customers, substantially higher than those in Utah, Nevada, and New Mexico. And both TEP and APS are seeking rate increases AGAIN! In 2020, TEP increased rates by 8%, and in 2023 by another 10%, and has just applied for another 14% increase. That’s a compounded rate of more than 35% over the last five years, increasing by a larger percentage each time.

Adding insult to injury, TEP doesn’t purchase its water. It has its own well that draws water from the same aquifer that Tucsonans are replenishing by paying to pump reclaimed water uphill from the Santa Cruz Facility on the west side to Houghton Road reservoir on the east side. TEP also consumes close to half a billion gallons of water to generate its total yearly electricity sales.

Solar generation of electricity uses almost no water and is cheaper than burning fossil fuels, so the ACC should be forcing TEP to increase its solar electric generation to 50% of total sales by 2035.

The ACC needs to change its approval process for a utility’s Integrated Resource Plan (IRP) by prioritizing keeping down ALL COSTS (including externalities) to Tucsonans before approving one. Technologies are available for calculating these costs instead of continuing to hold lengthy, biased hearings controlled by powerful utilities and corporate consultants.

In short, we need a Municipally owned electric utility “Muni,” which the Arizona Constitution allows, and which the ACC has no authority over, so we’ll no longer have to generate profits for foreign investors, and we’ll have total control of energy sources, water usage, and far lower costs. In the meantime, urge the ACC to stop the REST repeal.