ACC Approves TEP's Request to Charge Customers for Fossil Fuel Expenditures

Tucson, AZ -- Last night, the Arizona Corporation Commission (ACC) voted 3-2 to approve a rate increase for Tucson Electric Power (TEP) to reimburse the utility for the high cost to operate gas and coal-fired power plants. Starting on January 1, 2021, TEP customers will see their electric bills increase -- at a time when people are already struggling to afford essential services due to the impacts of COVID-19. According to TEP, average monthly bills of residential customers with typical usage on TEP’s Basic pricing plan will increase approximately $5.20, compared to 2020 bills. 

Despite proposals from Commissioner Sandra Kennedy to remove the costs for expensive fossil fuel plants from customer rates, the increased charges will cover the purchase of part of the Gila River Gas Plant, construction of 10 new gas units at the Sundt facility, and continued operation of the coal-fired Springerville and Four Corners power plants (operated by Arizona Public Service). A 2019 study by Strategen found that retiring the Springerville and Four Corners coal plants by as early as 2023, and switching to solar and battery storage, would save TEP customers more than $777 million. Similarly, a study by Rocky Mountain Institute, found that renewables will be out-pricing gas in a few years, leaving customers with additional expenses associated with costly fracked gas.   

Also last night, the Commissioners voted in favor of a positive amendment to establish a just and equitable transition process for communities living in the shadows of coal plants powering Arizona. On Monday, Tucsonans and Navajo activists held a press conference to highlight the importance of just transition planning and negative impacts of a TEP rate increase. Speakers called on TEP to commit to a timely and fair transition away from coal for communities suffering most from coal pollution and the changing energy economy. The 25-minute recording can be viewed here. 

“TEP could save customers money by switching to clean energy, but is instead making them  pay more for costly fossil fuels. COVID-19 has shone a light on disproportionate energy burdens on marginalized communities in Arizona, the same communities who are on the front lines of pollution and climate impacts from fossil fuels,” said Catalina Ross, Energy Program Coordinator at the Sierra Club’s Grand Canyon Chapter. “Our elected Commissioners owe all Arizonans action on the climate crisis and should require utilities like TEP to commit to making essential services, like cooling and light, affordable and accessible to everyone.” 

COVID-19 is already straining household budgets for Arizonans. As of September, enrollment in TEP’s low-income assistance programs increased by 10 percent, compared to last year. The fossil fuel plants that customers will now have to pay more for also release air pollutants that increase chances of COVID-19 mortality, as found in the Harvard study earlier this year. 

“Arizona residents are already experiencing devastating economic strains due to the COVID-19 crisis, and increasing electricity rates right now is unconscionable. As TEP continues operating its coal and gas plants, more and more communities will get stuck with high electricity bills and increased pollution. Cleaning up our energy sources not only protects our wallets, but it also protects our climate and our health,” said Dr. Eve Shapiro, MD, MPH, and board chairperson of Physicians for Social Responsibility Arizona. 

In response to pressure from Indigenous communities and grassroots activists, a new requirement from Commissioners Sandra Kennedy, Lea Márquez Peterson, and Boyd Dunn will require TEP to engage in a new proceeding at the ACC to create a just and equitable plan to support coal-impacted communities. Last month, Arizona Public Service (APS) announced it would commit $144 to tribes and communities who are impacted by coal plant closures, pending Commission approval. The Hopi Tribe and Navajo Nation are among the communities who will receive transition funding from APS to address impacts by the future retirement of Four Corners and last year’s closure of the Navajo Generating Station, both of which are also co-owned by TEP.

“Navajo communities have sacrificed their land and resources to power Arizona while corporate polluters like TEP make a profit. For decades we have waited for the time for coal to pass so we can reclaim our land and resources,” said Nicole Horseherder, Executive Director of Tó Nizhóní Ání. “It is time to move away from coal and ensure that a transition to clean energy is just and equitable. Utilities and Arizona leaders must address the harm to coal-impacted communities.” 

"The climate crisis is exacerbated by continual dependence on the fossil fuel industry. This in turn damages Arizona's marginalized communities and risks the future of young people across the globe,” said Kyle Jacob Kline, of Arizona Youth Climate Coalition and Students for Sustainability at University of Arizona. "We are deeply disappointed by the actions of the ACC and TEP. These decisions will affect Arizona now and for decades to come. Both entities must listen to the voices of Black, Indigenous, and People of Color (BIPOC) and youth activists; the time for change is now."