Tucson residents may see their electric bills rise by about 11% after Administrative Law Judge Julia L. Matter issued a proposed order supporting Tucson Electric Power’s (TEP) rate request. The judge’s recommendation, filed on Oct. 20, also endorses TEP’s push for an Annual Rate Adjustment Mechanism (ARAM), a formula that would update rates each year rather than waiting for the usual multi‑year review.
Rate increase details
The judge found TEP’s proposed rate structure “scaled appropriately,” which translates to an average monthly bill increase of 11.2% for residential customers. If the Arizona Corporation Commission (ACC) adopts the order, the new rates could take effect as early as Dec. 1, 2026.
Why TEP seeks higher rates
TEP argues that inflation and rising costs for equipment, parts, and construction materials have made it harder to recover expenses. The utility points to a $1.7 billion investment since 2021, including the Roadrunner Reserve battery storage project designed to meet higher summer demand.
TEP’s annual adjustment proposal
Under the ARAM plan, rates would be adjusted annually based on documented maintenance, upgrade and improvement costs. The judge agreed that this approach would reduce regulatory lag, improve transparency, lower administrative costs and could even allow TEP to access capital at lower rates – benefits that may ultimately help customers.
“We agree that the ARAM will improve transparency and oversight, reduce administrative costs, eliminate several of TEP’s adjustor mechanisms, likely allow TEP to access capital at lower rates for the benefit of customers, potentially result in rate decreases, and promote gradualism,” the recommendation stated.
Public and official response
Several local stakeholders voiced concern during the months‑long proceeding. Pima County, the City of Tucson, the Arizona Attorney General’s Office and the Residential Utility Consumer Office all testified, warning that a double‑digit increase could strain households.
Attorney General Kris Mayes’ office suggested a 4% increase would be sufficient, arguing that “TEP can achieve the same reliability with just a 4% increase by aligning what customers pay with TEP’s actual costs.”
TEP’s corporate communications manager, Joseph Barrios, said the company appreciates the judge’s effort and emphasized that the ARAM would not automatically trigger rate hikes. “Annual adjustments would be based on filed documentation that describes the actual costs of maintenance, upgrades and other improvements for customers,” he said.
Critics and community concerns
Energy analyst Daniel Dempsey, who runs Underground Arizona, expressed disappointment, noting that the judge’s recommendation fell short of a more modest increase. “It’s disappointing,” he said, adding that the paperwork burden on the ACC is substantial.
Critics also warned that an annual increase on a growing base could lead to unsustainable price growth and limit notice for consumers. The judge rebutted the due‑process objection, stating that “due process requires notice and a meaningful opportunity to be heard, not a full evidentiary hearing in every circumstance or a specific amount of time for review.”
Low‑income assistance
The order also addresses TEP’s Lifeline low‑income program, approving a restructuring that creates two assistance categories. The judge suggested TEP work with anti‑poverty group Wildfire to expand enrollment in certain ZIP codes.
Barrios highlighted TEP’s ongoing community outreach, including extended payment arrangements and other assistance options for customers facing hardship.
Next steps
The ACC is scheduled to consider the judge’s recommendations at an open meeting on Nov. 17. The public can attend in person or join by phone (877‑309‑3457, passcode 801972877). If the commission votes to adopt the order, the new rates and ARAM framework could be implemented by the start of December.
Original reporting: Arizona Luminaria — read the source article.
