City of Tucson voters will be asked in November to approve an important agreement that supports efficient, reliable electric service.
Tucson Electric Power’s new franchise agreement with the City of Tucson would extend longstanding rules that govern how TEP uses public rights of way to deliver reliable electric service while promoting continued collaboration in serving city residents.
Franchise agreements set the terms under which utilities can install, maintain, and upgrade infrastructure located along city streets, alleys, and other public property. These agreements are common in communities across the country and are designed to support efficient coordination between utilities and local governments.
The terms of TEP’s current franchise agreement with the city are set to expire in April 2027. If approved by voters, the new agreement, added to the Nov. 3 ballot by the Tucson Mayor and City Council earlier this month, would go into effect and replace the current franchise agreement on December 1, 2026. The new agreement would largely extend those terms another 25 years while continuing to provide clarity around access to public property and shared responsibilities.
Why the Franchise Matters
Although the term “franchise” can sound like a license to operate, TEP is required to serve customers within its state‑approved service territory regardless of whether a franchise is in place. The franchise instead focuses on how the utility and the city work together.
A franchise agreement helps streamline coordination on projects, establish clear expectations, and reduce delays tied to permitting and access. This can be especially important when crews need to respond quickly to power outages or complete routine maintenance that helps prevent larger problems.
Without a franchise, TEP’s use of the city’s rights of way would be governed by the city’s standard permitting processes. This could add cost, complexity, and time to new construction, infrastructure upgrades, and service restoration in the event of an outage.
“A franchise simply allows more efficient operations, reducing permitting costs and work timelines for both TEP and the city,” said Jay Rademacher, Vice President of Finance and Rates.
“Without a franchise, job-by-job permitting processes are slower, more fragmented and more expensive. This would lead to higher bills while delaying routine maintenance and slow outage restoration, especially during extreme weather or emergencies,” he said. “It also could slow down timelines and increase costs for extending service to new businesses and residents.”
No impact on bills
The proposed franchise agreement would continue the same usage‑based franchise fee that exists today: a 2.25‑percent fee paid by customers within the City of Tucson and remitted to the city. The fee doesn’t impact bills because it is credited against the city’s utility tax of 5 percent. If the franchise were to expire, customers would simply pay the full 5 percent utility tax, but without the benefits of a franchise.
The proposed franchise is also supported by a companion Energy Collaboration Agreement between TEP and the city that will promote progress on shared energy‑related goals.
“TEP values its partnership with the City of Tucson and our shared commitment to serving the community,” Rademacher said. “The franchise agreement helps us work together to deliver dependable electric service that customers can count on.”
