affordable-rates

Remarkably Affordable Rates

Tucson Electric Power’s service has remained remarkably affordable, costing less on an inflation-adjusted basis than it did 25 years ago.

TEP’s residential electric rates have increased 1.9 percent per year, on average, over the past 25 years. The average annual inflation rate over that time was 2.5 percent. So while our rates are higher than they used to be, they haven’t risen as much as other prices. This year, they’re even being reduced – just in time for summer.

That’s all the more significant when you consider how much TEP has done over the past 25 years to maintain top-tier reliability while supporting our community’s growth and transitioning to cleaner energy resources.

We have updated our operations and our local grid to satisfy energy needs that are both increasing and evolving. We’ve expanded our energy resources, enhanced our security against emerging threats, enriched our program and pricing options for customers, and reduced greenhouse gas emissions – all without losing our focus on affordability.

25-year

20-year
15-year
10-year
5-year

*2023 reflects the rate increase that took effect Sept. 1

In return for reasonable rates, TEP provides an essential service that drives our modern lives and powers our economy. We’re always working to deliver cleaner, reliable energy at the best price for our customers. Just consider some of the changes we’ve navigated over the last 25 years:

  • Community growth: In 1998, we served 325,000 customers, compared to 447,000 today – a nearly 40 percent increase. Back then, our service territory included about 810,000 residents. Today, we serve 1.2 million people. It takes significant investments to keep pace with that kind of growth. In 2023 alone, TEP invested more than $258 million in electric transmission and distribution facilities and other resources that help deliver service to customers.
  • Higher demand: In 1998, TEP served a retail peak demand of 1,786 megawatts (MW) with a total generating capacity of 1,896 MW. Today, our resources can generate 3,101 MW, not including purchased power, helping us serve demand that has reached as high as 2,446 MW in June 2021. We’re hardening our system to increase its resiliency in the face of extreme heat and more intense storms in a changing climate. We’re also positioning ourselves to accommodate increased growth from electric vehicles and technology demands in the commercial sector, along with other needs.
  • Cleaner energy: We relied exclusively on fossil fuels in 1998, with natural gas and coal-fired resources in New Mexico and Arizona, including here in Tucson. We ended the use of coal in Tucson in 2015 and plan to retire our remaining coal-fired units by 2032 as we expand our renewable energy resources. We’re in alignment with broader industry change, with carbon emissions from the U.S. electric power sector today as low as they were nearly 50 years ago, while electricity use has more than doubled. In all, we’ve invested more than $1.1 billion in renewable energy systems since 2010, including our largest clean energy resource: Oso Grande Wind, which came online in 2021.
  • Energy programs: In 1998, our energy efficiency programs were largely focused on air conditioning as part of limited energy programs for residential and commercial customers. Thanks to our robust programs, our customers have helped us save more than 22.8 million tons of carbon emissions since 2011. We also offer customers more choice in how they use energy, from leveraging their smart thermostats to earn rewards, to purchasing energy-saving products on our Marketplace, to exploring electric vehicles or signing up for free rebate assessments for more efficient home energy usage. Check out our programs and rebates.

The following tables show TEP’s historic rates for residential and business customers and how much they increased over the past 10, 12, 15, 20 and 25 years. The figures reflect the average number of cents per kilowatt-hour (kWh) that different types of customers paid each year.

Our rates are updated periodically to reflect changing energy prices and other factors reflected in surcharges approved by the Arizona Corporation Commission (ACC).  In some years, the ACC also approves rate increases that allow TEP to recover the cost of system upgrades and other investments that support safe, reliable service. Because new rates often cover costs incurred over several years, they often result in increases that exceed the rate of inflation for that year. But those impacts are mitigated over time by the many years when our rates aren't updated.

Thinking About Solar?

TEP’s historic rate stability should be an important consideration for customers who are thinking about buying or leasing a solar power system to their home or business.

To calculate potential energy cost savings from a new photovoltaic (PV) array, sales representatives from solar energy providers usually assume that TEP’s rates will increase a certain amount each year. If these assumptions are wrong, the estimated savings will not materialize.

Nobody knows for sure what electric service will cost in the future.  But anyone considering a long-term investment in a solar power system should closely examine any assumptions about future increases against TEP’s long history of stable electric rates.

If you need to review the benefits and approximate costs of a private solar system compared to benefits and costs of participating in TEP’s community-solar programs, take a look at our Solar Analysis tool.