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REST Surcharge

Funding for Renewable Energy

The Renewable Energy Standard Tariff (REST) funds Tucson Electric Power's investments in renewable energy.

Proceeds of 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 4.5 percent of its power from renewable resources in 2014.

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

What is the current REST charge?

The Arizona Corporation Commission has approved a REST surcharge of eight-tenths of a cent per kilowatt-hour (kWh) for 2014. The commission also approved caps that limit the amount customers pay each month for this usage-based fee.

For residential customers, the monthly cap rose is $3.83. 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 is $100. For large commercial customers (with loads between 200 kW and 3 megawatts (MW)), the monthly cap is $1,015. For industrial customers (with loads greater than 3 MW), the monthly cap rose is $8,000.

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.

Are incentives available for solar photovoltaic systems?

Currently, TEP does not offer financial incentives to customers who install solar electric PV systems at their home or business. However customers may qualify for federal and state tax credits to reduce the cost of the system. Talk with a tax professional about current tax credits available to you for a renewable energy system. You can also view federal and state tax credits at

Are incentives available for solar water heating systems?

Limited 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 a $60,000 annual budget, so their availability may be limited if there is strong interest in solar water heating systems.

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.