Arizona Corporation Commission rejects $12.4M refund for Tucson Electric Power customers

Despite support from Arizona Corporation Commission Chairwoman Lea Márquez Peterson and Commissioner Justin Olson, the commission ultimately voted against granting a $12.4 million refund of surcharge dollars back to customers of Tucson Electric Power (TEP).

That 3-2 vote also negated moves to suspend the surcharge temporarily. On average, the refund would have given residential customers of TEP approximately $16.37 and small business customers $48.33, in addition to economic relief provided by suspension of the surcharge. While TEP envisioned the refund as economic relief for customers enduring the effects of inflation, the ACC decided to keep the funds in place as-is and continue the surcharge without alteration.

What brought this issue forward was that TEP had been unable to spend all the money it collected from customers in 2021, resulting in millions in over-collection. COVID-19 restrictions, supply chain issues, and more caused the situation, with participation in programs falling below anticipated levels for the period. As a result, TEP wanted to provide consumers with a one-time bill credit.

A similar situation arose in 2020 when the commission ultimately voted unanimously to grant refunds to utility customers in June due to the economic downturn brought about by the outbreak of COVID-19. At that time, the refund to TEP customers amounted to about $8.3 million overall, and Márquez Peterson argued that this set a precedent that should have been followed for the effects of inflation.

“Arizona families and small businesses are feeling the economic impacts of inflation today,” Márquez Peterson said.“Granting a refund would have provided immediate relief to customers that are struggling to keep up with the financial pressures of rising costs and inflation.”

Traditionally, these surcharge funds are used for rebates or incentives to subsidize the cost of energy efficiency devices and energy efficiency programs or cover the cost of administering and advertising programs at TEP. In turn, TEP is allowed to keep a portion of the funds as an extra revenue source.

While TEP has already kept approximately $1.7 million of the surcharges for revenue, Márquez Peterson added that by forcing TEP to continue spending funds, it will get to keep an additional portion of the remaining funds for itself decreasing how much will go to benefiting customers.

“I am concerned the Commission’s program has gotten bloated,” Márquez Peterson said. “I think the Commission needs to take a hard look at the way it’s spending ratepayer dollars and reevaluate how it makes decisions that impact the lives of everyday Arizonans.”