Tucson Electric Power Co. has reached a settlement with state regulators and other parties on how much additional revenue it will get as part of its pending rate case.
But the pact sidesteps contentious issues of rate reform, including treatment of customers with rooftop solar.
TEP filed for a rate increase in November, seeking a $109.5 million or 12 percent increase in non-fuel revenues, along with changes in rate design including doubling the basic monthly service charge to $20 and imposing charges and cutting energy credits for new solar customers.
The proposed settlement with the Corporation Commissionβs utility staff, the Residential Utility Consumer Office and other intervenors would allow TEP to increase its base rate revenue by $81.5 million, but of that only about $66 million would be additional revenue, compared to the test year that ended June 30, 2015.
About $15 million of the proposed overall revenue increase already is being collected under a separate surcharge. Under the settlement, that would instead be included in the utility's base rates, contingent on TEP completing its planned purchase of a 50.5 percent interest in Unit 1 of theΒ Springerville Generating Station.
The proposal also would set TEPβs allowed return on equity at 9.75 percent and adjust depreciation and amortization rates for the Springerville acquisition and other plans.
The proposed settlement does not address specific billing charges or issues of rate design.
An administrative law judge will examine the settlement along with other evidence during upcoming hearings before making a recommendation to the full Corporation Commission this fall. TEP has asked that new rates be put into effect Jan. 1.
Besides TEP, the commission staff and RUCO, signatories to the proposed settlement are Freeport Minerals Corp., Arizonans for Electric Choice and Competition, the Arizona Investment Council, Western Resource Advocates, Walmart, Noble Americas Energy Solutions, the Kroger Co. and the Sierra Club.
