Providing reliable electricity around the clock in our hot desert climate is a real challenge. But Tucson Electric Power’s success has apparently made it seem easy enough that some activists believe our city government could do it.
Trust me: this would be a disaster. Our overloaded public officials already have their hands full trying to protect public safety, address homelessness, maintain an aging municipal water system and fix our roads. Why in the world would they want to put our community billions in debt to take over a service that’s actually working great?
As a member of the Board of Directors of UNS Energy, TEP’s parent company, I can tell you from personal experience that our local energy grid is in good hands. The company is well-run by local leaders who have devoted decades in service to this community. Its rates are set by elected regulators who limit TEP’s returns, oversee its operations and ensure that the company is investing adequately in the reliability of our service.
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None of this would be possible if the city took over our local grid. While advocates argue that public power has been successful elsewhere, those systems were set up decades ago, often with federal subsidies and access to affordable hydroelectric power. It would take the City of Tucson many years and billions of dollars to seize TEP’s assets and build an organization to run them, guaranteeing that rates would be much higher than TEP customers pay.
A preliminary study that suggested a municipal utility might be feasible was deeply flawed. It assumed the city could force the sale of TEP’s system, hire a workforce, physically separate the city from the remaining utility grid, secure an energy supply, and begin selling energy in January 2028 — less than two and a half years from now! That’s not feasible — it’s fantastical.
The truth is that a government takeover would take a lot longer, including many years of costly litigation to determine an acquisition price. It also would require voter approval, both for the takeover itself and the billions of dollars of debt the city would need to incur. I think we know how that would turn out. Voters in Maine, Boulder, and El Paso have overwhelmingly rejected similar takeovers, and the recent defeat of Prop. 414 showed that City of Tucson voters are skeptical of costly proposals to expand local government at taxpayers’ expense.
TEP operates more efficiently than a potential municipal utility because it serves our entire region. It also has the resources to maintain and upgrade its local energy grid while investing in new resources to serve expanding energy needs. TEP is adding far more wind, solar and energy storage resources than a debt-ridden municipal utility could ever hope to build.
These investments are funded by regulated rates that must be based on TEP’s actual, historic costs. When TEP requests an increase, as it did recently, its proposal is subjected to significant scrutiny by regulatory staff and customer advocates in a public process. A municipal utility, by contrast, could charge whatever rates city officials wanted to approve, for any reason. While this could result in higher rates to subsidize free transit or other city services, it also might allow angry crowds of activists to shout down even necessary increases, leading to lower investment and reduced reliability.
TEP has strong customer satisfaction and provides top-tier reliability for an affordable price. A city-run utility would struggle to match that performance while sinking our community deeper in debt. While some of the issues addressed on this op-ed page are worth a robust debate, the city’s choice in this case should be obvious.
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Lisa Lovallo is a retired Vice President & System Manager at Cox Enterprises and a member of UNS Energy’s Board of Directors.
