AG Mayes moves to block TEP’s plan to hike electric rates

Arizona Attorney General Kris Mayes said Thursday she will challenge Tucson Electric Power’s request to increase residential utility bills by about 14 percent, after her request to intervene was cleared by the Arizona Corporation Commission.

In June, TEP filed a request with the Arizona Corporation Commission, asking the utility regulator to approve an increase in electricity rates. The company, which serves around 455,000 customers in Pima County, as well as Ft. Huachuca, said they need higher rates to cover rising
costs and investments.

If approved by the ACC, the new rates would
take effect in September 2026.

The request immediately drew a crowd of challengers—ranging from the Defense Department to Kroger Inc. The city of Tucson, Pima County, as well as advocacy groups such as the Arizona Public Interest Research Group Education Fund also sought to intervene in the rate change.

Mayes filed a request to intervene on Sept. 11, and the ACC agreed on Thursday, allowing the state of Arizona as well as Walmart, and several organizations to challenge the rate change.

“This is blatant corporate greed. TEP’s parent company reported $1.6 billion in net earnings last year,” Mayes said. “This is a billion-dollar company that wants to increase the average Tucson consumer’s monthly bill by 14 percent following back-to-back rate hikes over the past five years. It’s time to say ‘enough.'”

Mayes, who herself served as an elected Republican former corporation commissioner from 2003 to 2011, said she has already worked to “vigorously oppose” a similar proposed rate hike from Arizona Public Service, or APS.

“We’re watching a monopoly utility try to abuse the system,” Mayes said. “Tucson consumers cannot choose a different electric service provider unless they sell their house and move. We cannot keep letting our monopoly utilities take advantage of ratepayers, who are already facing spiraling electricity bills and a cost-of-living crisis.”

TEP officials said the proposed rates would increase customer bills by about 14 percent, but this was below the rate of inflation since 2021, the last time TEP sought a rate hike.

The company said the new rate would reflect costs from 2021, and said rates have been reduced in 2024 and 2025 as TEP has attempted to “pass along energy cost savings.” 

“In late 2026, we will need to
start recovering $1.7 billion of recent investments in our local energy
grid and passing along the higher costs we’ve been paying to reliably
serve our community’s expanding energy needs,” the company said. 

“Inflammatory rhetoric about a public, evidence-based regulatory proceeding is not constructive, particularly in this divisive political climate,” Erik Bakken, TEP’s senior vice president and chief administrative officer said in a statement to the Tucson Sentinel on Thursday afternoon.

“Our employees are proud of the strong reliability and responsive service we provide, and we welcome thoughtful scrutiny of the investments we’ve made that are already supporting safe, reliable service for our community,” Bakken said.

TEP said the proposal would increase costs for consumers by about $16 per month on average, though “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 company said the change would help the company to recoup  $948 million invested since 2021 in the grid, including “critical infrastructure, communications equipment and other technologies.”

This includes the Roadrunner Reserve, a 200-megawatt battery system under construction designed to store solar energy. At full capacity, the facility will be able to provide power for around 42,000 homes for four hours, largely during hot summer afternoons and evenings.

The statewide Corporation Commission must approve any rate changes by regulated utilities before they can take effect. That five-member elected body is presently composed entirely of Republicans.

TEP coincidentally submitted their rate-hike request on the same day the Pima County Board of Supervisors agreed to sell public land for Project Blue — a server farm under development for Amazon Web Services — leading many to believe the rate increase was linked to the massive data center rather than previous infrastructure spending.

Under Mayes’ estimate, Tucson consumers would pay an extra $19.43 for electricity under the new rate. She also noted TEP has increased rates twice since 2021—including a 6 percent rate increase that year, and a 10 percent increase in 2023.

“In fact, for TEP, residential rates have risen almost as fast, percentage-wise, in the three years through 2023 as they did in the 22 years from 1998 through 2020,” Mayes said, quoting an Arizona Daily Star article.

Mayes said the rate hike would increase TEP’s revenue by $172 million annually, “on the backs of
Tucson households and businesses.” 

“TEP claims that their rate hike
request is in response to rising costs, but Fortis Inc., the utility’s
parent company, reported net earnings of $1.6 billion in 2024,” Mayes said.

The TEP rate hike also faces opposition from Tucson city officials after the mayor and Council voted unanimously on Tuesday to intervene.

“Tucson ratepayers and businesses are already grappling with higher energy costs,” said city officials, including a 10 percent rate hike in 2023. “Further hikes will strain families and small businesses and slow the transition to clean, affordable energy.” 

Tucson’s elected officials said consumers are already facing rising energy costs because of President Trump’s so-called “One Big Beautiful Bill” passed by Congress over summer.

A study by Princeton University said the bill, championed by the White House and congressional Republicans—including U.S. Rep. Juan Ciscomani—would increase energy costs for household and businesses by $28 billion per year by 2030, increasing to $50 billion per year by 2035.

The study estimated the average household would spend an extra $165 annually by 2030, and over $280 annually by 2035 on electricity. 

This is largely driven by reduced investments in electricity and clean fuels production, including a dramatic decrease in new solar and wind. The study estimated the U.S. would lose more than 820 terawatt hours of new energy—equivalent to the current contribution of nuclear or coal to the electricity supply. The Trump measure will also increase U.S. greenhouse emissions by 190 million metric tons per year in 2030, rising to 470 million tons by 2035.

“By voting to intervene, mayor and Council are taking a stand for affordability and fairness,” said Mayor Regina Romero and the other members of the Council. “We believe that monopoly utilities must not be allowed to exploit customers. Our action sends a clear message: this mayor and Council will protect our community from unreasonable rate hikes and will work to ensure that energy remains reliable, affordable and aligned with our climate and equity goals.”