Tucson Electric Power is seeking a rate increase of 9.8%.
If approved, the average residential customer’s monthly bill would go up by about $13.50.
The amended rate change comes after the administrative law judge overseeing the rate case, Julia L. Matter, filed recommended bill impacts of about $12.93 a month, or an estimated 9.4% rate increase.
Matter is also supporting the utility’s request for an Annual Rate Adjustment Mechanism, or ARAM, which would update rates every year according to a recommendation filed with the Arizona Corporation Commission – the state’s utility regulator – earlier this month.
“It’s very likely in our opinion, that there will be an increase in 12 months and every year thereafter,” said Cynthia Zwick, director of the Residential Utility Consumer Office.
RUCO is a state agency that advocates on behalf of residential utility customers and an intervenor in TEP’s rate case.
“There was a lot of evidence that was presented that spoke to the viability of lower percentage increases, and primarily, I think among those arguments was the affordability concern,” Zwick said.
Joe Barrios, spokesman for TEP, has told AZPM in the past that the utility would still have to file data with the ACC to support its request for a rate adjustment.
RUCO is challenging those recommendations, according to comments filed on Friday.
Zwick said the agency is concerned about the return on equity, or the rate of profit that regulatory commissions allow an investor-owned utility to earn on its capital investments in addition to the percentage increase and authorization of the ARAM.
RUCO had recommended a ROE of 9.2% or 9.0% if the ARAM was authorized.
Zwick told AZPM that the higher return on equity, the higher impact on rates.
The electric utility requested an 11.2% bill increase in July, before the judge’s recommended opinion was filed last month. Several months prior, TEP lowered its proposed rate increase to a little more than 12.5%. Last year, TEP applied for a 14% rate increase with the ACC.
“We (also) have some concerns about the rate case expense that they’re being authorized to charge,” Zwick said.
TEP requested more than $1 million for its rate case expense, which is what it costs the company to essentially prepare for and try the rate case.
“We think that’s excessive, so we’ll be suggesting that that gets lessened,” Zwick.
“The expenses associated with a rate case include legal fees, transcripts, filing public notice, expert consultants testifying on our behalf and performing necessary studies to adequately represent TEP, and presenting information to the ACC,” Wallace said.
The rate case expense is built into the rate that the utility is requesting.
On Nov. 17, regulators will hold an open meeting to discuss the judge’s recommendations.
