Local opinion: Why Tucson needs a publicly owned electric utility

Like any monopoly, Tucson Electric Power (TEP) has a built-in conflict of interest: higher profits for investors vs. lower electric bills for ratepayers, and no competition to force them to keep rates down. That's what the Arizona Corporation Commission (ACC) is supposed to do.

The ACC is supposed to make sure that monopoly utilities like TEP do not exploit its ratepayers. However, as many Arizona residents have said, instead of acting as the public's watchdog, the ACC has become a corporate lapdog, letting TEP greatly increase its profits every year at our expense.

TEP is owned by Fortis, a huge Canadian utility. Profits of both TEP and Fortis have steadily increased year after year at the expense of ratepayers. In 2024 alone, Fortis' profits were $1.6 billion, while TEP's part in that was $288 million.

Now TEP wants yet another 14% rate hike, even though the percentage increase in its residential rates has risen almost as fast in the three years through 2023 as they did in the 22 years from 1998 through 2020. So, it's getting worse with every passing year.

TEP has now signed a contract to supply a data center (previously known as Project Blue) with a massive amount of electricity, which would make it TEP's largest customer (larger than all of Tucson).

Although the Mayor and Council of Tucson rejected building the data center here in Tucson, or supplying them with water through Tucson Water, the Pima County Board of Supervisors has signed a contract selling County land to the data center. What’s more, the ACC just approved the service agreement required for TEP to provide electricity to the data center wherever it's built.

Almost 90% of electricity that TEP supplies to Tucson is generated by burning fossil fuels. They claim to be moving toward more renewables (sun and wind), but so far, that's been mostly lip service, with exceedingly slow addition of any renewables, esp. solar, the very one we have in spades.

TEP calls the new Roadrunner project a big step forward in alternative energy, but it's not a solar plant. It's only a set of batteries to store electricity from various sources for peak usage needs.

Meanwhile, TEP is building yet another fossil-fuel generator to burn methane (natural gas) piped in from Texas. The entire cost of building it will be passed on to TEP ratepayers. TEP also gets to pass on to ratepayers an additional cost ... a profit for TEP. And guess what? Their 9.55% profit is calculated based on the cost of building the infrastructure. So, the more costly the infrastructure, the higher their profits and the higher our bills.

In addition to all this, TEP has its own wells directly into our aquifer, allowing it to use our drinking water to cool its fossil-fuel generators (which require massive amounts of water). Having its own wells means it doesn't have to buy it from Tucson Water, so it gets our water for free.

So, what can we do? Well, we can take control. How? By replacing TEP with a city-owned electric utility. Here are some of the ways a city-owned utility would be much better:

Since all residents of Tucson would be both the owners and the customers: (1) there would be no conflict of interest, and any savings in operations would simply lower everyone's electric bills instead of being sent to some foreign investor. (2) We would not be under the authority of the ACC, since it exists only to "watchdog" investor-owned for-profit utilities, not city-owned utilities. (3) We would get to decide on our sources of energy, and how quickly we want to switch to renewable energy, which has far lower operating costs, does not need water for cooling, and will definitely help slow the climate crisis, as well as protect the most precious resource in any desert ... our water.

In April, the City released an independent study showing a city-owned electric utility is feasible here. It's been done in many other places and has significantly lowered electric rates. Don't Tucsonans deserve the same?