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REST Surcharge

Funding for Renewable Energy

The Arizona Corporation Commission (ACC) has approved a Renewable Energy Standard Tariff (REST) to fund Tucson Electric Power's investments in renewable energy in 2013.

Funds collected through the REST surcharge are used to help TEP comply with Arizona's Renewable Energy Standard (RES), which requires utilities to increase their use of renewable energy each year until it represents 15 percent of their power in 2025. The RES calls on TEP to produce 4 percent of its power from renewable resources in 2013.

The following questions and answers provide more information about the REST.

What is the REST charge for 2013?

The ACC has approved a REST surcharge of eight-tenths of a cent per kilowatt-hour (kWh) for 2013. The commission also approved caps that limit the amount customers pay each month for this usage-based fee.

How will the REST affect customers' bills?

For residential customers, the monthly cap rose to $3.80 in 2013 from $3.15 in 2012. A residential customer with typical usage is expected to pay that maximum amount each month.

For small businesses (with loads that do not exceed 200 kilowatts (kW)), the monthly cap rose to $130 in 2013 from $150 in 2012. For large commercial customers (with loads between 200 kW and 3 megawatts (MW)), the monthly cap rose to $1,050 in 2013 from $810 in 2012. For industrial customers (with loads greater than 3 MW), the monthly cap rose to $7,700 in 2013 from $5,500 in 2012.

How is the REST calculated for customers with renewable power systems?

REST surcharge calculations are based on usage. Customers who installed renewable power systems before 2012 pay REST surcharges based on their billed electric usage. Customers who installed renewable power systems in 2012 and thereafter pay REST surcharges based on their total electric usage, including the power generated by their installed systems.

How will TEP use the resources raised by the REST?

TEP will use its $35 million REST budget in 2013 to expand its renewable energy resources. TEP will spend $23 million to buy renewable power from other providers while devoting $5.9 million to help fund its own systems. Up to $8.5 million is available to fund incentives for customers who install photovoltaic (PV) panels, solar water heaters or other renewable energy systems at their homes or businesses. The rest of the budget will cover labor, administration, materials and other necessary costs.

What incentives are available for residential photovoltaic systems?

The ACC has approved a $745,000 budget for residential solar power installations in 2013. Up-front incentives for PV installations will be funded from that budget at levels of $0.10 per watt.

Are incentives available for solar water heating systems?

Incentives for residential solar water heating systems are available at $0.40 per kWh of estimated annual output, up to $1,750 per system. These incentives will be funded out of the $745,000 residential incentive budget, so their availability may be limited if there is strong interest in residential PV systems.

Are incentives available for commercial photovoltaic systems?

TEP's business customers already have installed enough solar generating capacity to satisfy the RES goal for such systems in 2013. As a result, no commercial incentives are available in 2013 for new projects .

Can customers purchase renewable energy directly from TEP?

Yes. The Bright Tucson Community Solar Program offers TEP customers an easy and affordable way to satisfy some or all of their electric needs with locally generated solar power. Customers can purchase 150 kWh “blocks” of solar power, replacing an equivalent amount of conventionally generated power at a rate that adds about $3 apiece to their monthly bill. For more information, click here.

Why does TEP need extra money to pay for renewable energy?

TEP's rates do not cover the cost of renewable energy, which remains more expensive than conventional power despite recent price reductions. Arizona also has a relative scarcity of hydroelectric, geothermal, wind and other renewable resources compared to many other states. Solar energy is abundant, of course, but solar power systems carry a significant up-front cost.