Arizona Attorney General Kris Mayes has filed expert testimony with the Arizona Corporation Commission challenging Tucson Electric Power’s (TEP) proposed 14% rate increase. The testimony argues that the increase is not justified and could be reduced to 4% while still maintaining reliable service and a strong credit rating for the utility.
According to the expert analysis, TEP’s proposal would result in an unnecessary transfer of approximately $148 million per year from Tucson families to TEP shareholders. The testimony states that TEP is seeking profits above what is required to attract investment, asking customers to pay more than necessary for shareholder returns.
“TEP’s proposal is blatant corporate greed plain and simple,” said Attorney General Mayes. “Our expert analysis proves that customers are being asked to pay far more than is needed. Instead of a 14% rate hike, the expert testimony we just filed with the ACC shows that TEP can achieve the same reliability with just a 4% increase by aligning what customers pay with TEP’s actual costs.”
The expert witness found several issues with TEP’s financial models, including inflated growth rates and risk estimates, as well as assumptions that were described as economically unrealistic or impossible. When market-based assumptions are used instead, the cost of equity drops significantly.
Customers would save about $200 per year under the alternative proposal supported by the Attorney General’s office. The savings come from setting allowed returns equal to TEP’s actual cost of capital rather than reducing service quality or infrastructure spending.
“This case is fundamentally about whether Tucson families should be forced to pay more than necessary to enrich TEP’s shareholders,” said Attorney General Mayes. “At the end of the day, it’s just a transfer of wealth from Arizonans struggling to make ends meet to TEP’s shareholders.”
The testimony also points out that independent evidence from investment forecasts, stock market data, and academic research indicates utilities’ authorized returns in Arizona and across the United States are higher than what investors require.
“Arizona ratepayers can have both more affordable electricity and a financially healthy utility,” said Attorney General Mayes. “The evidence demonstrates there is no need to choose between the two. TEP can maintain its investment-grade credit rating, attract capital, and provide reliable service—all while charging customers significantly less.”
TEP’s parent company, Fortis Inc., reported net earnings of $1.6 billion in 2024.
The Arizona Attorney General’s Office serves as Arizona’s chief legal authority, providing advocacy and protection for residents statewide through services such as consumer complaint handling and civil rights support (official website). It addresses issues like elder abuse and unsolved crimes through its cold case unit and participates in federal actions supporting fair housing initiatives (official website). Kris Mayes currently serves as Arizona’s 27th attorney general and is noted as the first mother in this role (official website).
A copy of the expert testimony regarding TEP’s rate proposal has been made available by the Attorney General’s office.
