New Electric Rates Needed in 2024 to Cover Higher Cost of Reliable Service

We’ve upgraded our local energy grid to provide more power to more customers since 2014, the last year reflected in our current rates. Our system serves more than 167,000 electric customers and spans more than 8,000 square miles.  It requires ongoing maintenance and upgrades to more than 325 miles of transmission lines, more than 3,600 miles of overhead and underground distribution lines, and more than 40 substations.

UniSource has invested more than $330 million since 2014 to upgrade and reinforce our system and facilities. Some of those investments include:

• $234 million for upgrades to UniSource’s transmission and distribution systems in Mohave and Santa Cruz Counties, Including new substations, substation upgrades and other improvements.
• $42 million in generation investments to accommodate new customer demands
• $9 million for solar photovoltaic projects.
• New IT systems that facilitate smart grid operations and participation in regional energy markets .

These improvements help our system withstand extreme heat and powerful thunderstorms and stand up to the stress caused by increasing peak energy demands.

Learn more about our infrastructure investments here.

Our electric infrastructure is under growing stress. Warmer summer weather and the addition of more than 8,000 households and businesses over the last seven years have increased peak usage by about 16 percent between 2015 and 2021. Just as your vehicles and home need regular repairs, our grid must be well-maintained to support reliable service under increasingly challenging conditions. We’re also bringing cleaner, more efficient and flexible resources online to serve customers.

Thanks to these efforts, UniSource has provided record reliability during a global pandemic and punishing heat. We continue to rank in the top quartile of all electric utilities across the country for service reliability.

UniSource works hard to manage its operations and maintenance (O&M) costs through continuous improvement efforts and consistent scrutiny of expenses. The success of these efforts is reflected in the fact that UniSource’s O&M increased just 2.01 percent annually, on average, between 2015 and 2021 despite average annual inflation of 2.5 percent during that period.

The proposed rates would add a new surcharge to help recover some costs related to the development of new energy resources.

The proposed System Reliability Benefit (SRB) mechanism would support the development of new energy resources needed to serve our customers' growing energy needs. It would only be used to recover the cost of investments of $25 million or more in systems selected through competitive all-source requests for proposals. If no such investments are made, the charge would not be applied to customers' bills.

Allowing these costs to be passed along more gradually as they occur will mitigate the larger impacts that result from accumulations over longer periods between rate requests. The proposed mechanism includes an efficiency credit to ensure that customers realize quantifiable savings through investments facilitated by the SRB.

Our CARES program would provide an increased monthly discount of $18 – up from $16 – to qualifying residential electric customers whose gross household income does not exceed 200 percent of the federal poverty level. We also:

• help low-income families make energy efficiency improvements to their homes through our weatherization program
• work with community partners to provide emergency bill payment assistance to qualifying customers.

UniSource’s request, filed today with the Arizona Corporation Commission (ACC), would increase the average monthly bills of typical residential customers by $21.80 when new rates take effect in 2024. This amount is an annualized average, so customers should expect that the impact will be higher in hotter months and lower when the weather is cooler. Customers who use more energy, on average, should expect a larger average increase.

For typical residential customers using other pricing plans, the proposed rates would increase average monthly bills by the following amounts:

• Time of Use (TOU): $19.82
• Demand: $20.83
• Demand TOU: $21.51

These estimates are based on the average residential usage detailed above, so customers who use more power would experience larger increases, particularly those who are not successful in reducing usage during on-peak periods.

These forecasted impacts would vary with usage, and the estimates do not account for changes in surcharges or taxes that will occur before new rates take effect.

All of the projected impacts described below would vary significantly with usage and the customer’s chosen pricing plan.

The average bill for a typical Small General Service customer on our Basic pricing plan would increase by $16.73 per month, under the proposed rates.

The average bill for a typical Medium General Service customer would increase by $330 per month.

The average bills of larger businesses that use UniSource’s Large General Service pricing plans would increase by $4,768 per month, though this figure will vary widely depending on usage.

All of these forecasts are based on average usage within each customer class. The potential impact for individual customers would vary depending on their electric usage, and customers with above-average usage should expect higher bills.