Local Opinion: Does TEP owe Tucson citizens $300,000,000?

I’m no lawyer or accountant, but it may well be that Tucson Citizens, and not TEP, have been paying TEP’s franchise fee since the current franchise agreement began in 2001. Does that matter? It does if you’d like TEP to pay their contractual debts with their own money and not yours!

The 2001 Franchise Agreement requires TEP to pay the City a franchise fee of 2.25% of revenues. Check your TEP bill and you will see that YOU are being billed for the Franchise Fee. It sure looks like TEP Customers are paying that fee. Apparently, TEP is allowed to collect this money through their billing, then take the money and turn it back to the City, saying “Voila, We just paid Our required Franchise Fee.”

If you look at the current Franchise Agreement Tucson voters approved in 2001 it obligates TEP to pay the City of Tucson a Franchise Fee in exchange for permission to run poles and electric lines on right-of-ways owned by Tucsonans. Look in your backyard and you will likely see TEP’s poles and wires strung along your back alley. That alley is a City established right-of-way that allows the City to have access and provide you with City Services such as City Water, City Trash removal, etc. for which you pay a monthly bill to the City. Or maybe poles and wires run in front of your house. The streets and sidewalks are also City right-of-ways. These are publicly owned right-of-ways. Those are the right-of-ways TEP uses to distribute their electricity through the neighborhood, and to your house.

So why should TEP make YOU pay for the privilege the franchise agreement requires THEM to pay? The cost of poles, wires and maintenance are already folded into the rate base which you pay on your TEP bill under “Delivery Services”. I know of no other costs to TEP associated with the “permission” the franchise agreement gives them.

“Permission” to access and use Tucson’s property is what was given when citizens voted for the existing Franchise Agreement. And you, Tucson, should be compensated for that. Why should TEP customers automatically underwrite TEP’s 10.2% profit-taking?

At 2.25%, TEP’s required Franchise Fee amounted to approximately $14 million this past year. For the sake of argument, let’s say TEP’s franchise fees would have generated an average of $10 million per year over the past 22 years. The franchise fee over that time period would then have totaled $220 million. If $220 million had not been taken out of the productive pockets of Tucsonans, they might have generated additional value and interest. If we only adjust for inflation, it totals $300,000,000!

The Mayor and Council struggle every year to make the best use of taxpayer funds. This year’s competing programs, whether for water, police and fire services, transportation, parks and recreation or a myriad of social services all continue to be monetarily stressed. Even the urgently needed Climate Action Plan suffers a lack of upfront funding. The missing $300,000,000 from TEP could go a long way to better fund these needs. Or maybe return the funds to those who paid their bills, not knowing the ruse.

Again, I am no lawyer or accountant, so I hope the Mayor and Council have a good answer as to why Tucsonan’s are apparently paying TEP’s required franchise fee. And if there is no good reason for putting this fee on the backs of Tucsonans it obviously needs correction. And if it is only there because the current franchise agreement allows that to happen, I suggest Mayor and Council adjust priorities to better reflect the interests of the Citizens of Tucson in the next franchise agreement now being crafted for implementation prior to 2026.