TEP to Offer Demand, TOU Pricing Plans in March

Tucson Electric Power‘s 417,000 customers in southern Arizona will be able to choose from several new pricing plans under revised rates approved (Docket No. E-019933A-15-0322) on February 8 by the Arizona Corporation Commission (ACC).

A typical residential customer’s average monthly bills are expected to increase by about $8.50.

In its filing, the utility said that the increase would cover the cost of new energy resources, upgraded distribution networks, and other necessary upgrades to secure and expand TEP’s energy grid.

When the changes take effect on or before March 1, residential and small commercial customers will be able to choose new Time-of-Use (TOU), Peak Demand and Demand TOU plans as alternatives to a Basic plan.

Time-of-Use plans offer lower rates most of the time but higher rates during on-peak hours. Demand plans combine even lower energy charges with a fee based on customers’ highest hourly energy use.

The new TOU, Peak Demand and Demand TOU plans will feature a reduced basic service charge of $10, compared to $13 for the Basic plan. The new plans allow customers to reduce their bills by limiting their electric use during periods when customers typically use the most energy.

The new TEP rate plan also will move many business customers from a small general service rate class to a new medium general service rate class.

“Our new rates include a new suite of pricing plan options for customers that offer new savings opportunities and contribute to the long-term sustainability of our local energy grid,” commented TEP CEO David G. Hutchens in a formal company statement. “These new rates also support our ongoing investments in cost-effective energy resources that help us provide safe, reliable service.”

Residential and small commercial customers with new private solar arrays will pay a new monthly fee to cover the costs of the second electric meter used to measure solar output. That fee will be $2.05 for residential customers and 35 cents for small commercial customers. Customers with existing systems have been grandfathered to exempt them from the new fee.

In addition, according to a February 8 report by the Arizona Daily Star, the rate decision requires TEP to propose a new demand-reduction or load management program that would boost residential energy-storage for customers who generate their own power, with time-of-use rates to encourage peak-demand reductions.

The utility would have to come up with a plan in about four months and expect to spend about $1.4 million on such a program.

The commission passed on a proposal backed by some commissioners to allow large TEP customers such as copper mine Freeport to buy some power on the open wholesale market, citing uncertainty and potential cost shifts to customers.

The ACC is expected to consider other proposed changes for new users of private solar power systems later this year, including revised rates and compensation for any excess energy they produce.