How to read my bill
TEP's rates reflect the cost of providing safe, reliable electric service to our customers. They also reflect the complexity of that task, with fixed charges, usage-based charges and surcharges that can be difficult to understand. The following summary offers explanations for the terms you'll find on your monthly bill, including links to details posted elsewhere on this website.
The charges listed in this section of your bill recover the cost of delivering power to customers. These charges reflect the cost of poles, wires, transformers and other infrastructure; employees and contractors who install, operate and maintain that equipment; and other necessary business expenses.
The Arizona Corporation Commission (ACC) sets rates that divide responsibility for these costs among different types of customers — residential, small business, large business and industrial — based on their typical energy usage patterns. TEP's rates are designed to recover the appropriate portion of these costs from each customer group through a combination of fixed fees and usage-based charges.
This fixed monthly fee helps cover the cost of maintaining electric service to your address. This fee does not vary with usage. The charge covers only a small fraction of the costs TEP incurs to serve every customer, regardless of how much energy they use.
Electric usage is measured in kilowatt-hours (kWh) — the use of one kilowatt of electric power for one hour. TEP's rates include separate kWh charges for energy delivery and power supply costs.
The kWh charges for delivery services vary based on several factors.
The rate is higher in the "summer" — defined as May through September — than during the rest of the year — which, for simplicity's sake, is called "winter." The difference is due to the higher cost of serving customers during peak usage periods. Because your bill reflects usage from 30-day periods that often include parts of two months, some bills include kWh charges calculated at both summer and winter rates.
Also, this kWh rate increases as energy use rises. TEP's residential rates include four tiers: 0-500 kWh, 501-1000 kWh, 1,001-3,500 kWh and 3,501 kWh and above. The kWh charge is lowest for usage in the first tier and increases with each successive tier.
Finally, customers who have signed up for a time of use (TOU) rate pay different kWh charges at different times of the day. Charges are higher "on peak" — during periods of high electric usage — and lower "off peak."
This unit — equivalent to a kilowatt hour (kWh) — is used to measure the amount of excess energy generated by a customer's solar array or other distributed generation system. Unused output from such systems flows into TEP's local system through a net meter, generating KBH credits that offset equivalent kWh charges for the energy TEP provides.
A charge based on a customer's highest peak demand from the previous billing period, as measured in kilowatts (kW). Demand charges reflect the costs of generation, transmission and distribution for large commercial and industrial customers.
This temporary credit is applied to the Customer Charge on bills issued from October through March. The savings range from $1.07 per month for residential customers to more than $200 per month for the largest commercial and industrial customers. The credit provides customers with direct benefits from the August 2014 acquisition of TEP's parent company by Fortis.
Power Supply Charges
This section of your bill includes usage-based charges to cover the cost of generating or buying energy for customers.
All power supply costs are recovered through usage-based fees measured in kilowatt-hours (kWh) — the use of one kilowatt (kW) of electric power for one hour.
Power supply kWh charges are higher during the "summer" — from May through September — than during the rest of the year, which is referred to as "winter." The higher summer rate reflects increased energy costs during that period. Because bills often reflect usage from parts of two months, some bills include kWh charges calculated at both summer and winter rates.
Customers who have signed up for a time of use (TOU) rate pay different power supply kWh charges at different times of the day. Charges are higher "on peak" — during periods of high electric usage — and lower "off peak."
The Purchased Power and Fuel Adjustment Charge (PPFAC) is a usage-based charge or credit that reflects changes in energy costs that aren't covered by the kWh charges for power supply. The PPFAC typically is adjusted annually to reflect recent and projected power costs as well as other factors. The PPFAC does not include any profit — it simply passes along TEP's costs.
Customers who participate in the Bright Tucson Community Solar Program will see a charge in this section of their bill for the “blocks” of solar energy they’ve agreed to purchase. These blocks are billed at a fixed rate that replaces the PPFAC and power supply kWh charges for that usage. Any usage that exceeds the amount covered by the customer’s solar block will be subject to standard power supply charges. Any unused blocks will be carried over and applied to future bills.
Green Energy Charges
TEP is using more renewable power, helping customers save energy and improving the environmental profile of its generating resources. Some of the costs associated with these efforts are recovered through usage-based surcharges approved by the ACC and listed in this section of your bill.
The REST surchage helps TEP build solar arrays, purchase power from wind and solar power systems and take other steps to comply with Arizona's Renewable Energy Standard. This rule requires utilities to increase their use of renewable energy each year until it represents 15 percent of their energy in 2025.
The Demand Side Management (DSM) surcharge funds energy efficiency programsthat are designed to help TEP comply with Arizona’s Energy Efficiency Standard. This rule calls on electric utilities to increase the kWh savings realized through customer-funded energy efficiency programs each year until the cumulative reduction in usage reaches 22 percent by 2020.
The Environmental Compliance Adjustor (ECA) covers some of the costs incurred at TEP's power plants to comply with government-mandated environmental regulations. The charge is designed to introduce such costs more gradually, reducing the scope of future rate increases.
These Lost Fixed Cost Recovery (LFCR) charges partly offset the revenue TEP loses when customers reduce their bills through energy efficiency (EE) programs and the use of distributed generation (DG) systems, including rooftop solar arrays.
Taxes and Assessments
The charges on your bill are subject to government taxes and fees. TEP forwards all of the money collected from these charges to the appropriate authorities.
This usage-based charge helps fund the Arizona Corporation Commission (ACC), a state government agency led by a five-member panel of elected commissioners who set TEP's rates and oversee many aspects of utility operations.
This usage-based charge is applied to the bills of residential customers to help fund the Residential Utility Consumer Office (RUCO), a state agency that represents the interests of residential customers in rate requests and other utility issues addressed by the ACC.
This usage-based charge helps fund the Arizona Independent Scheduling Administrator (AZISA), which oversees the application of operating protocols to ensure statewide consistency for transmission access. The charge is so small – two ten-thousandths of a cent per kWh – that it does not appear on most customers’ bills.
TEP has reached formal franchise agreements with the cities of Tucson and South Tucson that authorize its use of public rights-of-way and address other aspects of operations. These agreements, which were approved by voters in both cities, also mandate that franchise fees of 2.25 percent in the City of Tucson and 2 percent in South Tucson be added to the bills of customers in those municipalities. All proceeds of those fees are forwarded to the respective city governments.
The City of Tucson charges a Public Utility Tax equivalent to 1.75 percent for customers within the city's boundaries. Together, the tax and the franchise fee add 4 percent to the bills of TEP customers in the City of Tucson. All proceeds of this tax are forwarded to the City of Tucson.
TEP's charges are subject to Arizona state sales tax of 5.6 percent as well as any municipal sales tax levied by the city where the customer's address is located, as shown in the following table:
|South Tucson||2.5 percent|
|Oro Valley||4 percent|
All sales tax proceeds are forwarded to the respective taxing jurisdiction.
This 0.5 percent sales tax was approved by Pima County voters and is added to the bills of all customers in the county to fund road construction projects.
TEP customers will enjoy winter bill savings over five years as a result of the acquisition of TEP’s parent company by Fortis Inc., the largest investor-owned gas and electric distribution utility in Canada.
Under terms of Fortis' August 2014 acquisition of UNS Energy Corporation, customers of TEP and sister company UniSource Energy Services (UES) will receive bill credits totaling $30 million over five years. Savings totaling $10 million will be applied in year one, and $5 million will be applied annually over the next four years.
TEP will apply these credits to the monthly Customer Charge on bills issued from October through March. The resulting savings will range from $1.07 per month for residential customers to more than $200 per month for the largest commercial and industrial customers. Additional credits will be applied through temporary reductions in usage-based charges from October 2014 through March 2015; their impact will vary with consumption.
Monthly Acquisition Bill Credits for Residential Customers
|Average credit applied
to monthly Purchase
Power and Fuel
|October 2014 — March 2015||$1.07||$0.56||$1.63|
|October 2015 — March 2016||$1.07||n/a||$1.07|
|October 2016 — March 2017||$1.07||n/a||$1.07|
|October 2017 — March 2018||$1.07||n/a||$1.07|
|October 2018 — March 2019||$1.07||n/a||$1.07|
* This amount is based on average monthly usage of 700 kilowatt hours from October 1, 2014 to March 31, 2015.
These bill credits represent the only direct impact on rates that will result from the acquisition. TEP will not seek to recover any transaction-related costs in future rates. The Arizona Corporation Commission will continue to set the company rates based on the costs incurred to provide safe, reliable service.
Demand Side Management Charge
The DSM charge is a monthly, usage-based charge established by the Arizona Corporation Commission (ACC) to pay for cost-effective energy efficiency programs.
These ACC-approved programs can help residential and commercial customers use less energy and save on their monthly electric bills. Energy efficiency benefits all TEP customers by postponing or avoiding the need to build new generating resources and reducing our reliance on fossil fuels, resulting in reduced air emissions and water usage.
The energy savings achieved through these programs help TEP work toward the goals in Arizona’s Energy Efficiency Standard, which calls on utilities to achieve cumulative energy savings of 22 percent by 2020
For residential customers, the current DSM rate is set at $0.002311 per kilowatt hour (kWh). For a residential customer with average monthly usage of 860 kWh, this will result in a monthly charge of about $2.
For commercial customers, the current DSM rate is 2.466 percent of the total monthly bill before other charges, assessments and taxes.
The DSM charge appears on your bill under the heading "Green Energy Charges."
Yes. Similar components are included in the electric rates of TEP's sister company, UniSource Energy Services, as well as in rates charged by Arizona Public Service and many other utilities.
Click here to learn more about home and commercial energy efficiency programs for TEP customers.
Lost Fixed Cost Recovery (LFCR) Charge
The Lost Fixed Cost Recovery (LFCR) charge, approved in 2013 by the Arizona Corporation Commission (ACC), will partly offset the revenue TEP loses when customers reduce their bills through our conservation and renewable energy programs. Without the charge, TEP would be unable to recover the full cost of system improvements that serve all customers, regardless of usage.
This surcharge, which took effect August 1, 2014, adds an estimated 62 cents to the average monthly bill of a typical residential customer. That estimate reflects average monthly usage of 800 kilowatt hours (kWh), so businesses and other customers who use more power will pay a higher LFCR fee.
Rooftop solar arrays, compact fluorescent light bulbs and efficient air conditioning systems have helped customers save money on their monthly electric bills. These savings limit TEP's ability to recover our service costs, including many 'fixed' costs that aren't reduced when customers use less power.
Examples of fixed costs include power line repairs, metering expenses and the cost of installing and maintaining the electric grid. Our system covers more than 1,100 square miles and includes more than 2,000 megawatts of generating resources, more than 9,000 miles of underground and overhead power lines and more than 100 substations.
The LFCR will help ensure that the success of our energy efficiency and renewable power programs does not compromise our ability to cover our fixed service costs.
All residential, small general service and large general service customers are subject to the LFCR. Customers on traffic signal, street lighting, lighting service, water pumping, and large light and power rate plans do not pay an LFCR charge because their rates already incorporate the recovery of fixed costs.
Two methods can be used.
Method 1: Percent of Applicable Billing Amount
Under current rates, a residential customer with monthly usage of 800 kilowatt hours (kWh) would pay $85.24 in Delivery Service and Power Supply charges.
Estimated Percentage Adjustments
Applicable billing amount
Monthly LFCR surcharge amount
0.004149 (Energy Efficiency)
0.003126 (Renewable Energy)
Total LFCR charge
- With this method, a customer with average usage of 800 kilowatt hours is expected to pay 62 cents a month.
- By default, customer bills will be calculated using this method.
- With this method, the LFCR is listed under “Green Energy Charges” on your monthly bill and separated to show the amount recovered for energy efficiency and renewable energy requirements. Click to view sample bill.
Method 2: Static Fee
|Electricity Used||Monthly charge|
|Above 2,000 kWh||$6.50|
- Residential customers will pay either $2.50 or $6.50 a month, depending on how much electricity they use during the month. These amounts will remain unchanged as long as TEP's current base rates are in place or as otherwise authorized by the ACC.
- This amount will be added to the standard Customer Charge under "Delivery Services." Click to view sample bill.
- Customers who wish to be billed using this method must contact our Customer Care department at 520-623-7711.
Yes. The LFCR will vary each month with individual usage, except for customers who select the fixed option. Additionally, the usage-based rate used to calculate the LFCR will be updated annually to reflect revised estimates of the revenue lost to energy efficiency and renewable power prog
Environmental Compliance Adjustor
The ECA is a charge that allows TEP to recover a portion of the expenses for improvements made at TEP’s power plants. These improvements are necessary to comply with environmental standards required by federal or other governmental agencies.
Typically, the Arizona Corporation Commission (ACC) conducts an annual review of the ECA, approving a rate adjustment that takes effect in May and is used to calculate customer bills for 12 months.
The rate, which is effective from May 1, 2015 through April 30, 2016, will be $0.000191 per kilowatt hour (kWh). For a residential customer with average monthly usage of 800 kWh, this will result in a charge of about 15 cents.
The charge allows for timely and more gradual recovery of certain environmental compliance costs, mitigating the larger impact that would result from leaving those costs unrecovered until the next base rate increase approved by the ACC.