Proposed City of Tucson Franchise Agreement
Tucson Electric Power provides service with facilities installed along local streets, alleys, and other rights‑of‑way. In Tucson, this beneficial use of the city’s public space is managed through a “franchise agreement” with the City of Tucson.
With approval from the Tucson Mayor and City Council, city voters could be asked to approve a new franchise agreement that would set mutually agreeable terms for TEP’s continued use of the City’s rights-of-way.
The new 25-year agreement would extend many of the terms of our current franchise, which expires this year but will remain in effect until April 2027. It is supported by a companion Energy Collaboration Agreement that promotes partnerships between TEP and the City in support of our shared energy-related objectives.
What is a Franchise Agreement?
Although the term “franchise” sounds like a license to operate, it is not. TEP can and must serve customers within its state-approved service territory with or without a franchise. TEP also can install, maintain, operate and upgrade its facilities on City of Tucson property without a franchise, as we do in some other local jurisdictions.
So, what does our franchise agreement do? It promotes more efficient collaboration between TEP and the City by setting terms for our use of public property, establishing clear expectations and responsibilities for joint projects, and reducing permitting delays and other holdups.
Franchise agreements are common, practical, and essential. They ensure safe, efficient access to our critical facilities, helping TEP maintain reliable power while resolving any outages without unnecessary delays.
Supporting Reliability and Safety
A franchise agreement allows crews to respond quickly to outages and supports routine maintenance that prevents larger problems. It also reduces delays caused by fragmented or unclear access rules.
Without a current franchise in place, restoring power and maintaining infrastructure could become more complicated, slower, and more expensive under the City’s standard permitting processes, resulting in higher costs and longer outages.
No New Fees
As consideration for TEP’s use of public rights of way, the proposed franchise would include the same usage-based Franchise Fee as the current agreement. That 2.25-percent fee is part of the TEP bills paid by customers within the City of Tucson, and those funds are remitted to the City.
The Franchise Fee does not increase customer bills because those payments are counted toward the city’s utility tax. The Tucson Mayor and City Council increased that tax to 5 percent effective March 1, 2026, but franchise fee payments reduce its effective impact on monthly bills to 2.75 percent. Without a franchise in place, customers in the City of Tucson would pay the full 5-percent utility tax.
TEP and the City of Tucson have worked well together under successive franchise agreements for many decades. Like our past agreements, the proposed franchise would help ensure:
- reliable electric service for homes and businesses,
- coordination between the City and TEP crews
- predictable rules that support economic development and public safety.
Proposed Agreement
Frequently Asked Questions
What is a franchise agreement?
A franchise agreement is authorized by State law and permits a utility to use public streets and rights‑of‑way to build, operate, and maintain infrastructure that serves the community and sets certain requirements for doing so.
Why does TEP want a franchise agreement?
TEP relies on access to public rights‑of‑way to restore outages, perform routine maintenance, and upgrade equipment. A franchise agreement helps to ensure that work can be done safely, efficiently, and without unnecessary delays. It also recognizes TEP’s ongoing, long-term commitment to work in partnership with the City of Tucson.
Does this change who provides my electric service?
No. TEP will continue to provide electric service in Tucson, just as it does today, regardless of whether city voters approve a new franchise agreement with the company.
Would a new franchise agreement affect my electric bills?
No. The new franchise includes the same 2.25 percent fee as the current agreement, and customers would continue paying the same amount to the City of Tucson through utility taxes if a new franchise is not approved by voters. Moreover, TEP’s rates are set by the Arizona Corporation Commission and are not affected by franchise agreements.
What happens if voters approve the agreement?
TEP will continue operating under a clear, voter‑approved framework that supports reliable service, efficient maintenance, and rapid outage restoration.
What happens if voters reject the agreement?
Without a new franchise, TEP’s access to public rights‑of‑way could be subject to new requirements and/or delays, reducing the efficiency of our operations and potentially leading to longer power outages.
How is this different from the Energy Collaboration Agreement?
They are separate agreements with different purposes. The franchise agreement addresses utility access and operations. The Energy Collaboration Agreement focuses on broader coordination and shared community goals and will not impact customer bills.