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The proposed rates will increase the Lifeline discount from $18 to $20 per month for customers whose household income does not exceed 200 percent of the federal poverty level. Allowing these costs to be passed along as they occur will mitigate the larger impacts that result from accumulations over longer periods between rate requests. This proposal would support the development of wind farms, solar arrays, battery storage systems and other investments that help reduce our community’s carbon footprint. TEP also is proposing more gradual recovery of anticipated costs related to its transition to cleaner energy.
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Those steps will help TEP end its use of coal and achieve an 80 percent reduction in carbon dioxide emissions by 2035, key objectives articulated in its 2020 Integrated Resource Plan, which the ACC acknowledged as being in the public interest. They also support the company’s plan to ramp down and ultimately retire its two units at the coal-fired Springerville Generating Station in eastern Arizona in 20. TEP’s proposed rates support investments that will help the company manage long-term energy costs through increased use of wind and solar power systems that will generate 70 percent of its power by 2035. The cost of fuel and wholesale energy also has increased significantly in recent years, driving up expenses that, like O&M costs, are passed along to customers without any markup. Peak energy demand on TEP’s local energy grid has increased by 5.7% since 2019, driven by record heat events and the addition of more than 14,000 new homes and businesses to its customer base over the past three years.
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“Our proposed rates are needed to support systems and infrastructure that protect and upgrade our grid, expand our use of cleaner energy and help us serve the expanding energy needs of our growing community.” “The cost of providing safe, reliable service is increasing rapidly as inflation exacerbates the impacts of supply chain challenges, regional energy capacity constraints and extreme weather events,” said Susan Gray, TEP’s president and CEO. The company’s operations and maintenance (O&M) costs increased just 2.4 percent annually, on average, from 2018 through 2021 despite average annual inflation of 3.6 percent during that period. TEP has effectively managed its costs amid rising prices for equipment, parts, construction materials and other necessities since 2018, the year upon which current rates are based. That change would vary with usage, and customers will be able to mitigate the impact through energy efficiency and Time-of-Use pricing plans that offer lower rates during off-peak periods. TEP’s request, filed with with the Arizona Corporation Commission (ACC), would increase the average monthly bills of typical residential customers by 11.7%, or $14.22, over current levels starting in September 2023.
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