Tucson Electric Power and the City of Tucson are proposing an investment agreement to Tucson residents that would fund projects that support Tucson’s climate action goals.
Joe Salkowski, director of communications for TEP says the energy collaboration would be a 25-year agreement.
“$2 million of shareholder funding for every year, for 25 years, total of $56 million over that time to be invested in projects that the city of Tucson has prioritized,” he said.
The agreement is contingent upon whether or not Tucson voters choose to renew a franchise agreement or rules for the utility’s use of public property.
“It eases the process for us when we have to perform work in the city’s right of way,” spokesperson for TEP Joe Barrios, said.
The current franchise agreement is set to expire in April of this year, but TEP officials say the franchise agreement will continue for another year, whether or not Tucson voters choose to renew the agreement.
But some Tucson residents like Ron Proctor, are concerned about the larger agreement that the investments are tied to.
“I’ve been focusing on the franchise agreement portion of it and in particular the franchise fee,” he said. “Because it just goes on to Tucson Electric Power’s customers for them to pay TEP’s obligation that came out of that franchise agreement in 2001.”
In November 2000, Tucson voters passed the current franchise agreement with TEP establishing a 2.25% franchise fee onto TEP customers’ bills.
“Just as a retailer passes sales tax along to customers on their bill, utilities pass franchise and other taxes along on our bills,” Salkowski said.”Those revenues as we recover them, are remitted directly to the city of Tucson. We don’t profit from them or keep them at all.”
The Tucson Mayor and Council and TEP will discuss the investment agreement known as the Energy Collaboration Agreement and proposed franchise agreement at a study session next week on March 17.
If Tucson officials choose to put the franchise renewal on the upcoming November ballot, Tucson voters will ultimately have the final say.
In 2023, Tucson voters rejected Proposition 412 in a special election which would’ve renewed the city’s agreement and added an additional 0.75% fee on top of the existing 2.25% fee, to put midtown power lines underground.
Tuesday’s presentation##
On Tuesday, TEP and Tucson officials hosted an in-person community meeting during working hours, to about a dozen residents.
Fatima Luna, chief resiliency officer with the city said that the investment agreement was influenced by community-input gathered at seven town halls that were hosted last year.
“[The] community wanted support for low-income programs that would help them reduce their energy bills, including retrofits, weatherization, solar panels, workforce development and most importantly, they wanted these programs to be covered by shareholder funds,” Luna said.
Luna also said that the agreement was informed by suggestions made to the Mayor and Council after Prop. 412 was rejected.
During a presentation about the agreement, Salkowski said that the agreement could be modified or cancelled at any time by either TEP or Tucson officials.
Salkowski took on questions from the audience during the presentation about how even though residents may vote to approve the agreement, the city and utility retain the authority to amend or terminate the agreement without additional voter approval as well as questions about causes of climate change and the rationale to fund climate adaptation projects, before three protesters stood up in the audience.
The three chanted, “Public Power Now!” for more than 10 minutes, as well as asking about TEP’s collaboration with data center developers in Pima County.
Some also suggested that TEP should award the total $56 million to the city as a lump sum payment to address community needs sooner.
Others voiced their support for municipalization of the electric grid – an affordability solution that has gained traction among Tucson residents.
TEP held two more virtual public comment periods on Wednesday, March 11.
Tucson residents have the opportunity to submit feedback on the Energy Collaboration Agreement through Sunday, March 15.
