Recent discussions about energy prices raise valid concerns, but also some misleading claims. It’s time to set the record straight.
Tucson Electric Power (TEP) has actually reduced overall rates in each of the past two years. These reductions, made possible through lower energy costs in the market, the addition of renewable energy and battery storage, and smart operational choices, came just in time for summer and helped customers manage their household budgets during a period of economic uncertainty.
We understand that everyone feels the strain of higher prices. Whether you’re renting or buying a home, shopping for groceries, or trying to afford a reliable vehicle, rising costs are a daily challenge. Inflation has touched nearly every aspect of life, and energy is no exception. It affects every aspect of TEP’s operations, including the materials, labor, and equipment we need to maintain a reliable grid. We’ve been absorbing those increases without raising rates, but that can’t go on forever. Since 2021, TEP has invested more than $1.7 billion to upgrade the grid, improve resiliency, and expand our use of clean energy resources. We need higher rates beginning in fall 2026 to begin recovering those costs.
Many people take electric service for granted. But it’s not easy to maintain 99.9 percent reliability in our hot desert climate, and TEP does it at a competitive price. On a year-round basis, our average monthly residential electric bills are about $146 – much less than the national average of about $190, according to J.D. Power. We’ve also held rates relatively steady, with an average annual increase of just 2.1 percent over the past 25 years.
TEP’s electric service remains one of the best values in your household budget. In 2024, our average daily cost of service for residential customers was just $4.91. The median cost was even lower, at just $4.09. That’s comparable to what many people spend on coffee, and it powers everything from your phone and Wi-Fi to your refrigerator, lighting, and air conditioning. You can review your own average daily cost on your monthly TEP bill — and compare it to other everyday purchases to see just how far your energy dollar goes.
Our rates are set by the Arizona Corporation Commission, a panel of five elected officials with a strong record of preserving affordability. The proof is in the pricing: From May 2024 through May 2025, a period when average residential electric rates in the U.S. rose by 6.5%, Arizona’s average rate rose just 1.7%, according to the U.S. Energy Information Administration.
It’s misguided to suggest that a municipal utility could improve on TEP’s strong record of reliability and affordability. A government takeover of our electric service would require a massive financial outlay and years of otherwise unnecessary work to divide our local energy grid into two separate systems. Those costs and complications would mean higher rates for families and businesses, along with greater risk to reliability. In addition, a municipal utility would lack the economies of scale and operational efficiencies that customers already benefit from today.
TEP’s regulated, investor-owned operations ensure transparency, oversight, and cost-effective service. Our earnings fund new investments at lower debt levels that keep our service reliable and affordable, and our rates are set in a transparent public process by a panel of publicly elected regulators.
Our community demands reliable electric service. In our dangerous desert heat, TEP provides power we can count on at a price that’s lower than any available alternative. We also provide tools, rebates, and pricing plans that help all customers manage their energy use and control costs.
We stand ready to help any customer who needs it. We offer payment plans, bill payment assistance and Lifeline discounts for income-qualified customers. Our proposed rates also include an expanded Lifeline program with deeper discounts for the most vulnerable customers.
TEP remains our community’s best option for safe, reliable, and affordable energy. We welcome the ongoing conversation about our service — and we’re proud to share the facts.
Jason Rademacher is Vice President of Finance & Rates for Tucson Electric Power.
