You might want to bookmark this edition. Tucson Electric Power execs are trying to convince the public that someday their rates might go down under a new system.
TEP is asking the Arizona Corporation Commission to sign off on letting the utility raise rates every year, instead of dragging everyone through the arduous 18-month process every three years.
And yes, the idea of TEP asking for a rate increase every year indefinitely probably sounds alarming. But utility executives say there’s a silver lining — bills theoretically could go down some years under certain conditions, too.
We’ll believe it when we see it. But at least they’re on record making that claim as they try to get public support for a new rate-approval process.
Today, we’re focusing on one part of TEP’s rate increase proposal that could quietly reshape how utility bills go up in Arizona: annual “formula rates.”
Instead of the usual system where TEP files a rate case every few years and everyone spends months arguing about it at the ACC, formula rates would create a faster process that allows rates to be adjusted every year.1
A sample of headlines since TEP announced it would seek a 14% increase last June.
TEP defends request
Chris Norman, the vice president of public policy for TEP, said the formula rates would still rely on the same basic idea used today to calculate rates — what the utility actually spends to operate the system.
Norman offered the Tucson Agenda a hypothetical for how formula rates might play out in their first year.
“If we had a very hot summer where we sold more energy than we expected, and revenues were higher than what I'll just call normal, that would get factored into the formula. And so that could be an instance where you might not have a change (in the rate) in that year because even though we may have had higher costs and some additional investments, those revenues helped offset those costs,” Norman said.
TEP expects smaller, gradual increases with formula rates, rather than the double-digit increases it is asking the ACC for now.
Officials at TEP floated under certain conditions, rates could decrease under the new system.
“If we're over-recovering costs, we give those back to customers, and if we're under-recovering costs, we're able to adjust that rate every year so as to more gradually reflect those changes on customer bills,” Norman said. “And again, it is not an automatic adjustment. It will be subject to commission approval each year.”
Annual and automatic
The technical term used by the ACC is Annual Rate Adjustment Mechanism (ARAM), which is part of a new policy statement adopted in 2024 and comes with a much shorter, 60-day public comment period.
We’ll note the ACC didn’t adopt formula rates through a formal administrative rule-making process — it signed off on a policy statement.
Autumn Johnson, an energy policy advocate in Phoenix, told us that no one asked for ARAMs.
“A policy statement is basically worth the paper it's written on. It means that they didn't bother to go through a rule-making process and they didn't bother to go through a contested litigation,” Johnson said.
Johnson, the chief executive officer of Tierra Strategy, said TEP has asked the ACC not to cap the rate increase as part of the formula-based model.
“We all just hope that customers don't get screwed. Now, of course, the thing is that this only benefits the utility,” Johnson said.
Long list of detractors
RUCO, a little-known state agency which represents Arizona consumers and advocates in regulatory matters before the ACC, believes TEP should qualify for a smaller rate increase.
Their analysis, using their own experts, puts the figure at about 9%.
As for ARAMs, RUCO (a state agency) is suing the ACC (another state agency) over the introduction of formula rates while arguing the commission bypassed its own rules.
The case has been appealed all the way up to the Arizona Supreme Court. The state’s top court refused to hear the case, sending it back to Maricopa Superior Court.
“It is terrible for residential customers because it won't allow them to escape any sort of rate increase,” said Erin Ford Faulhaber, RUCO’s deputy director. “The rates, the increases tend to go up consistently and they tend to be higher than they would be under the sort of more traditional, the rate making structure.”
RUCO has concerns that if formula rates become mainstream, then every gas, electric, water and wastewater provider in the state will want the same thing in the future.
Another subsidiary of Fortis, UNS Energy, already is using formula-based rates. They have an estimated 278,000 customers in Santa Cruz and Mohave counties.
Arizona Public Service, the largest electric utility in the state, is asking for the same thing.
Mayes has held town halls in Tucson to collect feedback on how rate increases would impact locals.
Arizona Attorney General Kris Mayes, a former member of the ACC, has also come out against TEP’s proposed rate increase.
She said it was remarkable that TEP and APS have now asked for three consecutive large rate increases in a row and now want formula rates on top of it, calling it “the cherry on top of their sundae.”
“I think formula rates are a formula for a disaster for consumers, and they were designed by utilities for a reason, and that’s to benefit the utilities, and it’s why we're opposing them,” Mayes told us.
While the filings with the ACC opposed to the rate increase were not about formula rates precisely, there is a long list of groups pushing back against TEP’s proposal.
In addition to Mayes and RUCO, the City of Tucson, Pima County and Walmart have formally gotten into the fight.
Illinois ended formula rates
While formula rates are new to Arizona, Illinois first adopted formula ratemaking back in 2011.
Ten years later, the state legislature reversed course and ended formula rates entirely. Their core argument? Privately owned utilities should not automatically profit simply because they are reinvesting in new equipment.
A final decision by the ACC is expected in a few months, with new rates taking effect in September.
The case in Maricopa Superior Court could decide whether TEP will come back next year either seeking rate increases through the new formula rates, or return to the current model of filing a major rate case every few years.
Congresswoman Adelita Grijalva is demanding the release of a DACA recipient in Tucson, Karla Toledo, who was detained by U.S. Immigration and Customs Enforcement on Monday morning.
Both Grijalva and family members said that ICE agents went to Toledo’s home and took her into custody.
Hours later, Grijalva made an unannounced visit to the detention facility and met face-to-face with Toledo for approximately 10 minutes.
“ICE’s blatant disregard for the rule of law and due process is outrageous and completely out of line,” Grijalva said. “We live in a country where everyone has constitutional rights, no matter how hard ICE tries to trample on them. Karla must be released immediately, and ICE must stop terrorizing our communities.”
Congresswoman Adelita Grijalva hugs a family member after visiting with Toledo.
Talking to reporters on Monday night, Grijalva said she didn’t know where Toledo might be taken next, noting the facility on Tucson’s southside can only house individuals for short periods of time.
Please welcome the Agenda’s newest intern, George Headley. While you may only see him once in a blue moon for announcements in the newsletter (like this one), he is focused on some special projects for the election season and beyond.
His first project is to improve and automate (to the fullest degree possible) our public records request system. Plus, we've got a bunch of other ideas that he and the team will crank out through the midterm elections.
George has worked in numerous statewide and national outlets as a managing editor for the State Press, a journalism fellow for Small Wars Journal, an intern fact checker for PolitiFact in Washington D.C. and an editorial intern at KJZZ. He is an Arizona native and a keen follower of all environmental, political and business news.
George in D.C. this spring.
George recently graduated from ASU’s Walter Cronkite School of Journalism and Mass Communication with a bachelor’s degree and is spending his summer with us before he heads off to graduate school for a master’s degree in Mass Communication in August.
When he’s not in the office, you can find him pretty much where every other guy in their early 20s is at: a desk playing video games and chugging coffee from Dunkin’.
“I’m excited to share what the team over at the Arizona Agenda is preparing for its readers. I have been a long-time fan of the newsletter in my student days and can’t wait to bring my own skillset and ideas to an already accomplished team of journalists,” George quotes himself as saying.3
Wanna help George get started?
Great! You can help increase his workload by submitting your own ideas for public records requests using this form. We'll take these ideas and turn them into real inquiries the newsroom will follow up on with various agencies and institutions. All we are asking is for your creativity — we’ll handle the rest.
Don't understand what a public records request is or how any of this this works? Here's a good primer from the archives.
Click the link above, or the button below!
Troubling trend: Amid the rising costs for food, utilities and many other must-haves, the foreclosure rate in Tucson is ticking up, the Arizona Daily Star’s Gabriela Rico reports. The 62 foreclosures reported in April are higher than the 39 from April 2025, but they’re still far below the financial crisis-era 791 foreclosures in March 2011.
Not so fast: Pinal County Attorney Brad Miller officially overstepped when he struck a deal with ICE without getting approval from the Board of Supervisors first, per the Arizona Mirror’s Gloria Rebecca Gomez. A Maricopa County Superior Court judge ruled Miller has no legal authority to enter such agreements, which would effectively turn the county attorney’s investigators into immigration enforcement agents. Republican officials had hoped that a state law blocking local governments from limiting federal immigration enforcement — the same law that GOP lawmakers invoked to try to force Pima County and the City of Tucson to allow ICE agents on city or county property — would protect Miller’s gambit.
Keeping busy: State lawmakers are in the middle of a self-imposed, month-long break from legislating, but that doesn’t mean they’re all sitting at home watching Netflix or away on tropical vacations. Tucson-area Democratic Rep. Kevin Volk, for example, said lawmakers are trying not to venture too far from the Capitol, in case they get called back all of a sudden, the Capitol Times’ Jakob Thorington reports.
“It’s not like a vacation, but it’s doing work in the community. For me, knocking on doors of constituents, trying to catch up on my personal life, which I put aside doing this,” Volk said of the break. “But I think most of us would rather just get the job done.”
Rainy day coming: While the City of Tucson takes up the tentative budget this evening, the City of Nogales is in a budget crunch of its own (the city manager said “it is a fact that you are broke”). The Nogales City Council is wondering if raising water rates and dipping into the rainy day fund would be enough to fix a $1.3 million deficit in the city’s water fund, the Nogales International’s Alessandra De Zubeldia reports.
Our deficits don’t get that big, thankfully, but we still need your help to avoid finding ourselves in a financial hole.
Waiting to be found: Human remains were recovered in a wash behind an apartment complex near Craycroft and River roads that are at least 800 years old, Marissa Orr reports for KVOA. Arizona State Museum officials say the bones likely belonged to the Hohokam people, and the remains will be repatriated to the proper tribe.
During a recent public meeting, Nogales City Councilman John Doyle said UniSource would be “retarded” if it wasn’t mapping the locations of light poles.
But it’s not like he dropped such a disrespectful term willy-nilly. No, no, no. Doyle told the Nogales International that he was actually trying to draw attention to the light pole issue.
“The reason I used that word was to attract more attention,” he said. “I was hoping somebody, like the media, or somebody would question it so that I could let them know the real problems that are going on.”
We’re not sure whether Southern Arizona radio host Garret Lewis also has a clever “plan” in his back pocket, but he definitely dropped a “woketard” about Harrison Ford’s commencement speech at ASU last week.
1 TEP would still have to periodically file a traditional rate case with the ACC, where regulators would take a broader look at the utility’s finances and past increases.
2 The billion-dollar figure is for both TEP and UniSource Energy Services. For TEP alone, the figures is closer to $828 million.
3 Yeah, we made George write this whole intro in that awkward third-person voice.