TEP customers may be hit with small fee increase

State regulators are planning to vote on an increase in fees to Tucson Electric Power Co. customers that would allow the utility to collect $13.2 million for fixed costs it says it can’t recover through regular rates.

The change, which the Arizona Corporation Commission is slated to consider at an open meeting in Phoenix on Tuesday, would cost the typical TEP residential customer an additional 45 cents monthly starting July 1, the utility says.

The so-called “lost fixed cost recovery mechanism” is intended to reimburse TEP for estimated sales losses from energy-efficiency measures and customer-owned distributed generation like rooftop solar systems.

The mechanism, approved by the Arizona Corporation Commission in 2013, is a surcharge based on a percentage of the delivery service and power supply charges each customer pays, reset annually.

TEP has proposed raising the lost fixed cost surcharge to 1.2068 percent to offset energy efficiency and 0.4406 percent for distributed generation. With the increase, the typical TEP customer will pay a monthly average of about a dollar a month for the charge.

Customers on traffic signal, street lighting, lighting service, water pumping and large light and power rate plans do not pay the surcharges because their rates already incorporate the recovery of fixed costs, TEP says.

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TEP residential customers can opt to pay a fixed charge instead of the variable lost fixed cost recovery charge; those using up to 2,000 kilowatt-hours of power monthly would pay a fixed charge of $2.50 monthly.

In April, the Corporation Commission lowered a separate TEP surcharge that reimburses the utility for some fuel and purchased-power costs. That change, also part of a mandatory reset, reduced the average TEP residential bill by about $4 starting in May.

Consideration of the billing surcharges is separate from TEP’s overall rate case, which is still pending.

Also on Tuesday, the Corporation Commission is expected to consider a similar request for an increase in the lost fixed cost recovery charge by UNS Electric, a sister company to TEP that serves Mohave and Santa Cruz counties.

The UNS request would increase bills for its typical residential ratepayer by 29 cents monthly, according to regulatory filings.