Tucson Electric Power customers will see their monthly bills go up an average of about $1.50 per month starting in June, after state regulators approved an increase in a surcharge that pays for fuel and purchased power.
The usage-based surcharge, which is reset annually to balance out what TEP pays for fuel like coal and natural gas and wholesale power, will also increase next year as TEP is allowed to recover $27 million in uncollected costs.
That includes about $7 million for an increase that was deferred last year, a $12.5 million settlement with the owner of a coal mine that supplied the now-closed Navajo Generating Station, and $7 million related to the impacts of COVID-19 and severe weather last year.
The Arizona Corporation Commission on Wednesday unanimously approved a plan to delay implementation of the surcharge until June and to shift half of the cost recovery to 2022.
Under the decision, TEP residential customers with average monthly power usage of 844 kilowatt hours will see a monthly bill increase of $1.48 starting June 1, followed by an increase of $1.51 when the surcharge is reset next year.
The surcharge, known as the purchased power and fuel adjustment charge, appears on TEP bills under "power supply charges" and is sometimes a credit when costs are lower than expected. It is a straight pass-through of costs and TEP does not collect a profit from the proceeds.
TEP said the Navajo power plant settlement was among similar pacts several utility owners of the plant reached with Peabody Energy over final reclamation costs for a closed coal mine that served Navajo.
TEP had a 7.5% ownership stake in Navajo, which closed along with Peabody's Kayenta mine in 2019. The Salt River Project, which owned 22% of Navajo and operated the plant, settled with Peabody for $21 million.
