The Tucson Electric Power Company and the staff of the Arizona Corporation Commission have agreed to a settlement that will increase the utility's base rates by approximately 6%, beginning no later than January 1, 2009.
The settlement agreement, which must be approved by the Arizona Corporation Commission (ACC), is expected to increase Tucson Electric Power’s (TEP) rates for the first time in more than a decade. Under the agreement, the new base rates will be frozen until at least 2013.
Under the new rates, a typical residential customer’s bills would be expected to increase by an average of approximately 6% or $5.06 per month, over the course of a year. The impact would vary based on usage, and changing energy prices could further affect bills through a new purchased power and fuel adjustment charge (PPFAC) included in the proposed rates.
The PPFAC would pass along changes in fuel and purchased power costs to customers without any markup, ensuring that TEP’s rates reflect those fluctuations. Similar components are included in the electric rates of TEP’s sister company, UniSource Energy Services, as well as in those charged by Arizona Public Service and many other electric utilities.
The new rates have been designed to encourage energy conservation by discounting the first 500kWh per month, while charging a higher rate for monthly usage in excess of 3,500kWh.
James Pignatelli, chairman and CEO of TEP and its parent company, UniSource Energy, said: The proposed rates would help us cover our rising service costs while providing our customers with a greater degree of certainty about their future energy expenses.