Tucson voters to decide whether to renew Tucson Electric Power franchise agreement

Tucson voters will decide Nov. 3 whether Tucson Electric Power should continue operating under a city franchise agreement for another 25 years, a decision that could affect how quickly crews repair outages, how the city funds neighborhood improvements and whether Tucson keeps pursuing its current private utility model. Proposition 421 combines the franchise renewal with a new agreement requiring TEP to contribute at least $2 million annually toward shade, trees, heat resilience and energy assistance for low income households. The city expects those payments to total about $64 million over the life of the agreement.

The existing agreement expires in April 2027. The Tucson City Council voted unanimously April 7 to place the revised proposal on the ballot after considering earlier versions. A franchise agreement governs how TEP uses public property, including city streets, alleys and other rights of way, to maintain equipment and expand the electric system. TEP has provided electricity to Tucson for more than a century, and the utility says renewing the agreement would let crews continue working under a coordinated permitting process instead of seeking individual approval for each project.

TEP representatives argue that Proposition 421 would preserve reliable service without directly increasing electric rates. They say rejecting it could require the city to review projects one at a time, delaying routine upgrades, repairs and outage response. The utility also warns that additional permitting costs and delays could make future projects more expensive, with those costs potentially appearing in later rate cases. TEP spokesman JD Wallace said the agreement would allow workers to begin repairs and complete the necessary paperwork without waiting for an inspector before every phase of work. Another utility statement described the arrangement as a practical way to coordinate work in city streets and alleys.

The proposal includes a new Energy Collaboration Agreement, described as the first arrangement of its kind in Arizona. TEP would provide $2 million per year from corporate resources, rather than customer payments, with the amount increasing by 2% annually. The money could support bill assistance, energy efficiency improvements in low income homes, tree planting, shade projects, heat resilient infrastructure and electric vehicle charging stations. Supporters, including Mayor Regina Romero and Pima County Supervisor Jen Allen, have said the funds could help Tucson prepare for worsening heat, reduce carbon emissions and protect residents who depend on reliable electricity during emergencies. Romero has also pointed to the importance of power for public health and local businesses.

The renewal would keep the existing 2.25% franchise fee on customer bills, which sends roughly $3 from an average bill to the city. That revenue supports projects such as undergrounding power lines, assistance for low income residents and renewable energy incentives. A separate 2.75% public utility tax, generally about $4 on an average bill, would remain as well. Together, the charges total 5%, and TEP says voters will pay that combined amount whether Proposition 421 passes or fails. The measure itself does not set electric rates, although the outcome is unfolding as customers face a separate rate dispute.

TEP requested a 14% rate increase from the Arizona Corporation Commission last year. A judge overseeing that case recently recommended an 11.2% increase and backed the utility’s request for an Annual Rate Adjustment Mechanism, which would allow rates to be updated each year. The utility says it has been investing more in the grid than customer revenue alone covers. According to TEP’s 2025 annual report filed with the Securities and Exchange Commission, the company spent $828 million maintaining and expanding infrastructure and replacing aging equipment. TEP says customers financed $539 million of that total while investors covered $289 million, and that the company paid no dividends in 2025 while reinvesting its earnings.

Opposition is being led in part by Public Power for Tucson, a coalition that wants the city to pursue a publicly owned electric utility. Organizers canvassing in Armory Park say a 25 year commitment is too long and could make Tucson financially dependent on TEP, reducing the city’s willingness to consider public power later. They also question whether the climate and affordability payments are large enough to offset rising costs for residents. The coalition has raised concerns about TEP’s support for data centers, potential effects on electric bills and water demand, as well as the utility’s gas plants and broader climate impacts. Its organizers describe the vote as a judgment on how TEP conducts business in Tucson, even while acknowledging that Proposition 421 does not directly determine rates.

Other opponents have made similar arguments about corporate control. The Party for Socialism and Liberation says the proposal would strengthen TEP’s influence over city government and infrastructure while leaving the utility accountable primarily to shareholders. Its ballot argument says a yes vote would give up the city’s leverage for a generation. Public Power for Tucson organizers have also argued that the annual payment is small compared with the profits of TEP’s Canadian parent company, Fortis, which reported $1.2 billion in profit last year. Voters such as Lauren Breckenridge say the proposed climate spending is appealing but remain uncertain whether the commitments will be delivered and which side deserves their trust.

The campaign has generated an unusually large amount of supportive material in the official voter pamphlet. Of 70 arguments backing Proposition 421, 59 were paid for by TEP’s political action committee, TEP for Tucson, at a total filing cost of $14,160. Those submissions came from employees, residents, business leaders and elected officials. Mayor Romero, Vice Mayor Lane Santa Cruz, City Council members Kevin Dahl and Selina Barajas, and Supervisors Allen and Andres Cano have supported the measure, with some paying the $240 filing fee themselves. Campaign filings show TEP put $4.3 million into its PAC, which also reserved nearly $1.5 million in television advertising. Pima County voters can register, verify their status or request a mail ballot through the county recorder before the Nov. 3 general election.