Tucson Electric Power seeks nearly 10% rate hike

For Tucson households already deciding how to manage rent, groceries and summer cooling costs, Tucson Electric Power’s proposed rate increase could add another recurring expense. TEP’s latest filing with the Arizona Corporation Commission seeks an increase of about 9.8%, which the utility says would raise an average customer’s monthly bill by approximately $13.50. The commission is scheduled to consider the case Nov. 17, and if the increase is approved, the new rates would take effect Dec. 1.

The proposal is the latest version of a case that began in May 2025, when TEP initially sought a 14% increase. The utility later revised its request to 11.2%. Administrative law judge Julia L. Matter recommended a lower return on equity, the amount TEP is permitted to earn for shareholders, along with a reduction in the overall amount the company could recover through customer rates. TEP spokesman JD Wallace said Matter’s recommendation would produce an overall bill increase of about 9.4%, but TEP filed an amendment seeking the slightly higher 9.8% figure.

For a household using 805 kilowatt hours per month, Matter’s recommendation would mean an increase of $12.93, bringing the average monthly bill to $150.52. Average summer use rises to 1,045 kilowatt hours, according to the filing, producing an estimated monthly bill of $190.76 under the judge’s recommendation. The exact outcome remains uncertain because the five member commission can approve, reject or modify the recommendation.

The case has drawn opposition from several major organizations, including the city of Tucson, Pima County, the Department of Defense, Walmart and Kroger. The city called Matter’s recommendation problematic, particularly her support for the Annual Rate Adjustment Mechanism, known as ARAM. The mechanism would allow TEP to adjust rates annually according to a formula approved by the commission. TEP describes it as a way to make cost changes more gradual, while opponents say it could make increases more automatic and reduce meaningful oversight.

The Residential Utility Consumer Office, a state agency representing utility customers, and Arizona Attorney General Kris Mayes are challenging the legality of ARAM. Mayes has argued that the mechanism effectively guarantees annual rate increases without enough review. TEP disputes that characterization, saying ARAM does not guarantee that rates will rise. Wallace said the commission would still make the final decision each year and that the process would continue to allow public comment. TEP argues that spreading adjustments over time could be easier for customers to manage.

Affordability concerns are especially pronounced in Tucson, where residents rely on air conditioning during periods of extreme heat. Cassandra Becerra, a Tucson based advocate, mother and grandmother with Mountain Mamas, wrote that utility costs are becoming increasingly difficult for Arizona families to absorb. She pointed to more than 160,000 Arizona households that are behind on utility bills and described the choices facing families with limited income, including whether to keep the air conditioning running, fall behind on payments or reduce spending on food and other essentials.

Becerra also connected the rate case to the financial pressures facing young adults. She cited Tucson’s average rent of more than $1,500, gasoline prices approaching $5 per gallon and rising grocery costs. Students leaving high school for college, apartments or the workforce may have to take on utility bills while already confronting higher housing and daily living expenses. In her view, the issue is not simply whether electricity costs more, but whether families can keep their homes safe and livable as dangerous heat becomes more common.

The Public Power Tucson Coalition, a grassroots organization that regularly urges the Tucson City Council to consider replacing TEP with a publicly owned utility, also called the proposed increases unreasonable. The group said high electric bills can place lives at risk when cooling is necessary for survival. Becerra argued that commissioners should prioritize energy efficiency, home weatherization and renewable energy, while ensuring that large industrial customers, including data centers, do not shift infrastructure costs onto residential customers. She also urged voters to pay attention to the Arizona Corporation Commission, which regulates investor owned utilities, approves rates and oversees long term energy planning.

TEP says the increase is needed to recover the cost of investments in the electric grid and to account for inflation. The company said its request has remained below the rate of inflation over the period covered by the case and pointed to assistance programs for customers struggling with their bills. TEP urged customers who need help to contact the utility. The commission’s Nov. 17 meeting will be the next major step in the case, with the decision determining whether Tucson customers see higher bills beginning Dec. 1 and whether the annual adjustment mechanism becomes part of TEP’s future rate structure.