The following is the opinion and analysis of the writer:
Re: the May 12 article “TEP bill increase approved by ACC.”
Proposition 412 makes no sense, is irresponsible and violates Tucson Fairness-Equity and Climate Emergency initiatives. It is understandable that TEP would want to rush adoption of this agreement as it provides them with more profit, but all should question Tucson Council’s motives for supporting an agreement that provides no binding value to the City, ratepayers and taxpayers, and because they did not include comprehensive public discussions and recommendations.
Why does the City of Tucson believe that captive over-charged ratepayers should pay TEP 3% of the cost of electricity to enable TEP access to taxpayer-funded rights-of-way to increase TEP shareholder profits while TEP continues to create many other damages and costs to our community, especially when there are much better alternatives available?
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TEP, and perhaps the Arizona Corporation Commission (ACC), not CAPTIVE ratepayers, should pay for all suboptimal decisions, avoidable damages and stranded capital asset purchases.
In addition to fuel costs, there are many other mismanaged and avoidable TEP costs and profits that the ACC allows TEP to recover from captive ratepayers.
Per David Wichner’s excellent article, the ACC, after recognizing that ratepayers lack the capacity to pay additional costs, decided to allow TEP to recover $128 Million of avoidable fuel cost increases from ratepayers. Commissioner Myers stated that the increase was “... in line with recent increases approved by the commission”. It is noteworthy to recognize that TEP’s initial request of $148M was found to be overstated (as usual) and that the approved fuel charges follow a $4 increase in fuel surcharges enacted one-year ago (April 2022).
And with ACC approval, TEP actively created these fuel costs and other damages via their purchase of the Gila River 550MW natural gas-fired power plant from Salt River Project (SRP), another AZ utility not regulated by the ACC, who determined it would be too expensive to operate, just five years ago. All responsible parties should have been aware that the cost of fossil fuels would increase significantly and will continue.
And the ACC is now considering TEP’s request to increase base rates by 12% later this summer after approving a 9.7% increase in 2021.
Compounded, these avoidable increases in the cost of non-discretionary electricity and the damages TEP is creating result in an enormous economic burden on our Communities.
Per Wichner, the current fuel surcharge increase is about 2 cents/kilowatt-hour. Those funds could/should have been used to establish fixed/lower cost utility scale Arizona solar facilities. Power Purchase Agreements for Utility Scale solar electric facilities have been established by several western USA utilities at 2c/kWh. Fuel (sunshine) is free, they use minimal amounts of water and operating/maintenance, emit no heat-trapping greenhouse gases that create higher temperatures and increased electric-water usage, increased healthcare costs, do not create catastrophic weather events, wildfires, and can be located in close proximity to ratepayers to minimize vulnerable and expensive transmission infrastructure that loses 8% of the electricity during transmission, additional expenses.
The ACC should charge well-compensated TEP management/shareholders, not ratepayers, for all avoidable costs that are consequent to TEP decisions regarding which resources they choose to use to satisfy their obligations. And the ACC needs to change its resource planning and compensation practices to consider ALL alternatives, not just those proposed by the for-profit utility, costs, and benefits for the lifetime of the proposed asset. Have the utilities earn profit, and return on rates, via the sharing of cost/rate REDUCTIONS, not increases, with ratepayers.
Please vote NO on Prop 412, then contact and ask the ACC (www.azcc.gov) to act to perform their constitutional responsibilities to earn THEIR compensation by providing tangible positive value to captive ratepayers.
Terry has been a resident of Tucson area since 1956, is a retired Corporate Director, established the first 1 megawatt utility scale solar system in Southern AZ (2010) and has frequently provided testimony/comment to the ACC.