TEP Requests Rate Review to Support Safe, Resilient, Reliable Service

Tucson Electric Power (TEP) has requested regulatory review of new, higher rates that would take effect in September 2026.

TEP’s proposal would increase typical residential bills by about 14 percent. That would add about $16 per month, on average, for households with median usage of 638 kilowatt-hours (kWh) per month. The month by month impact would be higher in the summer and lower in the winter, and customers who use more energy would see higher impacts.

The proposed rates would recover increased costs and necessary investments since 2021, the last year reflected in current rates. TEP has invested about $1.7 billion since then to maintain reliability, improve resiliency and serve customers’ expanding energy needs.

Key investments:

• Energy grid upgrades and technology improvements: TEP operates a large, complex system that serves more than 452,000 customers and spans 1,155 square miles. Maintaining reliability requires ongoing maintenance and upgrades to approximately 5,100 miles of transmission and distribution lines, more than 4,300 miles of underground distribution lines, more than 107,000 poles and transmission structures, and more than 120 substations. Our proposed rates reflect more than $900 million invested since 2021 in critical infrastructure, communications equipment and other technologies that have helped TEP achieve top-tier reliability metrics for 12 years straight.
• Reliability reserve: TEP’s new Roadrunner Reserve battery energy storage system will begin commercial operations this month, helping us provide reliable, affordable energy during peak usage periods. This 200-megawatt, 800 megawatt-hour system in southeast Tucson will allow expanded use of clean, affordable solar energy while helping to protect customers from fuel price volatility, keeping rates more stable over time. The proposed rates would recover about $350 million invested in this critical new energy resource.
• A more secure system. The proposed rates reflect recent investments in new IT systems and upgrades that support smart grid operations and TEP’s expanded participation in regional energy markets. They also support safer, more secure facilities to protect against increasing physical- and cyber-security threats.

Inflation Impact

Consumer prices have increased 15 percent since 2021, impacting all aspects of our business, including labor, services, materials and equipment. TEP has sought to mitigate that impact by leveraging strong relationships with suppliers and working more efficiently whenever possible.

“Keeping our commitment to safe, reliable service has required us to continue reinforcing and modernizing our infrastructure to meet our customers’ needs, even as we have been confronted by escalating prices, rising interest rates, strained supply chains and other economic challenges,” Gray said.

More Support for Our Most Vulnerable Customers

We’ve proposed updating TEP’s Lifeline program, which provides a flat discount to qualifying residential customers, with a tiered structure that offers much larger discounts to the most vulnerable customers.

Customers with incomes between 101 percent and 200 percent of the federal poverty level would receive a discount of about 20 percent, or about $25 per month on average. Customers with lower household incomes would receive a 50 percent discount, or about $63 on average.

More Gradual Changes

TEP’s proposed rates include an Annual Rate Adjustment Mechanism that would allow more gradual rate changes in the future.

This formula rate mechanism would allow for the elimination of certain other surcharges on TEP’s bills. All costs would remain subject to ACC oversight to ensure that only necessary, cost-effective investments and prudently incurred expenses are recovered.

Next Steps

Today’s filing begins an extensive public review process. The Arizona Corporation Commission will set hearing dates and provide other opportunities for public input prior to a decision.

More detailed information on our review request, including a video, answers to frequently asked questions, and an infographic of our investments, is available on our website at tep.com/2026-rates.

TEP provides safe, reliable electric service to about 452,000 customers in Southern Arizona. For more information, visit tep.com. TEP and its parent company, UNS Energy, are subsidiaries of Fortis Inc., a leader in the North American regulated electric and gas utility industry. For more information visit fortisinc.com.

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