UniSource bills to jump $11, Tucson Electric increase nears OK

Customers of UniSource Energy Services, which serves Santa Cruz and Mohave counties, will see an average $11 increase in their monthly home bills after state regulators boosted a surcharge to cover spiraling costs for fuel and wholesale power.

But customers of UES’ bigger sister utility, Tucson Electric Power Co., will have to wait until next week to find out how much more they’ll have to pay to reimburse TEP for similar costs, as the Arizona Corporation Commission delayed that decision after hours of debate over a potentially larger increase.

The commission voted unanimously to approve UES’ request for an increase in a usage-based surcharge known as the Purchased Power and Fuel Adjustor Clause, to allow the utility to recover unreimbursed costs totaling about $104 million at the end of March.

The undercollected amount represents money already spent on fuel and power, which are passed along directly to ratepayers with no profit to the utility, though they are entitled to interest on the outstanding undercollections.

UES, which serves 19,000 electric customers in Santa Cruz County and 80,000 in Mohave County, presented the commission with several options to make up the shortfall through a higher surcharge over time periods ranging from 12 months — which would have resulted in an average monthly bill increase of nearly $54 — up to 33 months.

The commission’s Utilities Division staff recommended a surcharge based on a 27-month repayment schedule that would increase the average residential customer’s monthly bill by $17.57 per month until the undercollected balance reaches zero.

But the chief counsel for the Residential Utility Consumer Office, a state agency representing residential ratepayers, urged the commission to consider extending the cost recovery over 33 months, dropping the average monthly increase to $11.15.

“It certainly would be a lot easier on the ratepayer, and it shouldn’t cause too much pain as far as moving the ball for the company to collect,” RUCO’s Daniel Pozefsky said.

Diane Brown, executive director of the Arizona Public Interest Research Group Education Fund, said many consumers, out of necessity, will opt for smaller payments even if it means paying more in the long run, preferring the longer surcharge to avoid “rate shock.”

Commission members Kevin Thompson and Lea Marquez Peterson also said they wanted to soften the impact on consumers, and Peterson offered an amendment to stretch out the recovery period to 33 months.

Commissioner Nick Myers said he couldn’t support a longer payback period because of the extra interest cost ratepayers will ultimately pay.

“That $17 a month is working one extra hour at In-N-Out (Burger), with the minimum wage as high as it is — that’s the economy we’re living in,” Myers said.

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Myers and Commission Chairman Jim O’Connor voted against lengthening the period of the increased surcharge to 33 months, but the amendment passed on a 3-2 vote, and the commission unanimously approved the amended measure.

The commission discussed TEP’s request to increase its fuel and purchased power surcharge at length before deciding to hold the item for a vote at a contingency open meeting next week.

TEP’s new requested surcharge would boost the average home bill by $13 per month over the course of a year, to allow the utility to recover $148 million in costs for wholesale power and natural gas that have jumped about about 300% since 2019.

Proceeds of the new surcharge would reimburse TEP for about $44 million in previously unrecovered costs and $104 million for a “forward component” that tracks more recent spending, though newer figures stand to lower that number.

The commission’s staff recommended a 12-month surcharge increase that would result in an average monthly bill increase of $12.07 monthly over the year, on top of the current average home surcharge of $6.36 monthly.

The staff’s recommendation would impose a higher surcharge during the winter months when bills are typically lower, and a lower surcharge during high-use summer months, keeping the average total monthly surcharge at around an estimated $18.43 per month year-round.

TEP’s summer season runs from May through September, and its winter season runs from October through April.

TEP’s request for the higher surcharge comes after the ACC approved an average $4 increase in the surcharge a little over a year ago and as regulators review TEP’s pending request for a 12% general rate increase.

Consumer advocates, including RUCO and Wildfire, an anti-poverty group, said TEP’s proposed $13 monthly bill increase is too much for ratepayers already struggling amid high inflation and facing another general rate increase this year.

Marquez Peterson said she balked at approving a surcharge recovering all of the money in 12 months, and other commissioners said they were open to extending the recovery period.

To give TEP and the commission staff time to generate new bill-impact estimates, the commissioners agreed to delay a vote until a contingency open meeting on Thursday, May 11.