Commission Shields Tucson Ratepayers from Rising Underground Power Line Expenses

By Kevin Thompson |

The Arizona Corporation Commission recently voted unanimously in favor of Tucson Electric Power’s (TEP) Midtown Reliability Project, aimed at modernizing Tucson’s aging electrical infrastructure. This project will upgrade the city’s outdated 46kV sub-transmission system to a more robust 138kV system, particularly in regions surrounding the University of Arizona and Banner University Medical Center. The initiative also includes the replacement of aging 4kV distribution lines in Midtown neighborhoods, many of which are over five decades old and struggling to meet current demands.

The upgrades include replacing fragile wooden poles with more durable metal poles and enhancing transmission lines. This initiative will eliminate up to eight existing substations and 19 miles of 46kV lines, resulting in fewer overhead lines in the area. Improved transmission lines are expected to enhance system redundancy and resiliency, ensuring a more reliable power supply for all TEP customers. During discussions, the Commission dismissed calls from Tucson leaders and community groups advocating for underground power lines, citing cost concerns.

A recent vote by Tucson residents rejected Prop 412, which was backed by both the mayor and TEP. This proposition sought to extend TEP’s franchise agreement with the city and proposed fees to facilitate the undergrounding of the Midtown project, alongside setting up a “Climate Action Fund.” With the proposition’s defeat, TEP was required to pursue alternative plans to complete overdue improvements, despite continuous calls from city officials for underground installations.

Critics of above-ground installations argued that the historical and aesthetic value of the area warranted undergrounding. However, proponents of the project highlighted that the area currently relies on above-ground lines and that the planned upgrades would actually decrease the total number of transmission lines. The financial implications of transitioning to an underground system are significant, with estimates showing an additional $64 million cost borne by TEP ratepayers, many of whom are not directly benefiting from these improvements.

The Corporation Commission has previously adopted a policy limiting underground installations to cases of reliability or safety, rather than community preference alone. Cities and neighborhood groups can still seek funding alternatives for undergrounding projects through methods like forming improvement districts.

While utility rate design often involves subsidization of costs across a broad customer base, the Commission is tasked with ensuring that projects primarily benefiting a small group do not unfairly burden the larger ratepayer community. The Commission aims to prevent “luxury beliefs” from dictating resource allocation, recognizing that these beliefs can lead to increased costs for a less affluent constituency.

During the hearings, advocates for underground lines argued that the costs, when distributed among the entire customer base, were manageable. Yet, the challenges in justifying equal treatment across diverse neighborhoods remain. With their recent decision, the Commission has aligned with the preferences of Tucson voters while safeguarding the financial interests of TEP ratepayers and enhancing the long-term reliability of the region’s electrical system.

Kevin Thompson was elected as a member of the Arizona Corporation Commission in 2022 and previously served on the Mesa City Council for eight years.