Tucson Electric Power Is Proposing Another Rate Increase: What Tucson Homeowners Need to Know

Electricity costs are once again a major topic for homeowners in Southern Arizona. Tucson Electric Power (TEP) has asked the Arizona Corporation Commission (ACC) to approve new electric rates that could increase residential electricity bills before the end of 2026.

For Tucson homeowners already dealing with high summer electric bills, the proposed increase raises an important question: How much more could electricity cost, and what can homeowners do to reduce their exposure to future utility rate increases?

TEP's proposal is still undergoing regulatory review, so the final rates have not yet been determined. But the latest numbers provide Tucson homeowners with a good idea of what could be coming.

How Much Is TEP Proposing to Raise Residential Electric Bills?

TEP originally filed its current rate case in June 2025 and requested new rates that it hoped would take effect in September 2026. The proposal has been revised several times as it moves through the Arizona Corporation Commission's regulatory process.

According to TEP's latest published estimate, updated in July 2026, the proposed rates would increase the average monthly bill for a residential customer on TEP's Basic pricing plan using a median 638 kilowatt-hours (kWh) per month by approximately 11.6%.

For that customer, TEP estimates the increase at approximately $12.92 per month. During the summer, TEP projects an increase of approximately $14.14 for median usage of 823 kWh. Actual increases will vary depending on how much electricity a household uses and its specific rate plan.

That means homeowners with larger homes, swimming pools, multiple air-conditioning systems, electric vehicles or other significant electrical loads could see a larger dollar increase than the example provided by TEP.

And in Tucson, where air conditioning can represent a significant portion of a home's summer electricity consumption, even relatively modest increases in electricity rates can become noticeable during the hottest months of the year.

Why Does Tucson Electric Power Say It Needs Higher Rates?

TEP says the requested increase is necessary to recover higher operating costs and investments made in its electrical system since 2021, the year used to establish its current rates.

According to TEP, the utility has invested approximately $1.7 billion since 2021 in upgrades and improvements to its electrical system and facilities. Those investments include new substations, upgrades to the local power grid, information technology and security improvements, and new energy-storage resources such as the 200-megawatt Roadrunner Reserve battery storage system.

TEP also points to Tucson's growing electricity demand, higher temperatures, inflation and the need to maintain reliable electric service as reasons for requesting additional revenue.

The Arizona Corporation Commission does not simply approve the amount requested by a utility. The rate-case process involves review of the utility's expenses, investments and requested rate of return, along with testimony from Commission staff and other participating organizations. Ultimately, the five-member Commission determines what rates it considers just and reasonable.

Not Everyone Agrees With TEP's Proposed Increase

The amount of the requested increase has been contested during the regulatory process.

Arizona Attorney General Kris Mayes' office submitted expert testimony arguing that a substantially smaller increase would be sufficient. In February 2026, the Attorney General's office argued that approximately a 4% increase, rather than the roughly 14% residential increase being discussed at that stage of the proceeding, could adequately support TEP's operations while maintaining reliable service and its financial position.

TEP subsequently revised its proposal. The utility's current published estimate is an 11.6% average bill increase for the median-use Basic-plan residential customer described above.

The disagreement is important because it demonstrates that the numbers being discussed are proposals, not final approved rates.

The Arizona Corporation Commission will ultimately decide how much of TEP's requested increase is justified.

Why Tucson Homeowners Should Pay Attention to More Than This Rate Increase

For homeowners, the bigger issue isn't necessarily one individual rate case.

It's the long-term cost of buying electricity from the utility.

Electricity rates can change over the decades that a homeowner owns a property. Utilities must continually maintain and expand the electrical grid, replace aging infrastructure, add generation and storage resources, respond to population growth and recover increasing operating costs.

TEP's current proposal illustrates this process.

The utility says its existing rates are based on costs from 2021. Now, several years later, TEP is seeking higher rates to recover more recent costs and investments.

For homeowners planning to remain in their homes for many years, that makes the future cost of electricity an important part of the decision when evaluating solar.

How Solar Can Reduce Your Exposure to Rising Electricity Rates

A properly designed residential solar system allows a homeowner to generate a portion of the electricity the home consumes rather than purchasing all of that electricity from the utility.

That distinction becomes increasingly important when utility electricity becomes more expensive.

Imagine a home that currently purchases thousands of kilowatt-hours of electricity from TEP every year. If the price of that electricity increases, the homeowner pays the new applicable utility rates on the electricity purchased from the grid.

With solar, a portion of the home's electricity can instead be produced directly on the property.

Solar does not necessarily eliminate a TEP bill. Solar customers remain connected to the electrical grid and can still be responsible for applicable service charges, rate-plan charges and electricity purchased from TEP when the home requires more power than the solar system is producing.

But reducing the amount of electricity that must be purchased from the utility can reduce a homeowner's exposure to future increases in usage-based electricity costs.

What About Solar With Battery Storage?

Battery storage gives Tucson homeowners another option.

A solar-plus-battery system can store some of the electricity generated by solar panels during the day and make that energy available later when the home needs it.

Depending on the system design, equipment and homeowner's objectives, batteries can also provide backup power during outages and give homeowners greater control over when solar energy is used.

Battery storage can be particularly useful when combined with utility rate structures that charge different amounts for electricity depending on when it is consumed.

The right solution isn't identical for every home. A homeowner's electricity usage, roof orientation, available roof space, rate plan, budget and long-term goals should all be considered before designing a solar or battery system.

Does a TEP Rate Increase Automatically Make Solar a Good Investment?

No—and homeowners should be cautious about any solar company that suggests otherwise.

Whether solar makes financial sense depends on the individual property.

At Desert Solar Energy, we believe the correct way to evaluate solar is to look at the homeowner's actual electricity consumption, current utility rate plan, available solar exposure and expected system production.

From there, homeowners can compare what they are currently spending on electricity with the projected cost and production of a solar system.

A proposed utility rate increase can be part of that analysis, but it shouldn't be the only reason someone purchases solar.

What Happens Next With the TEP Rate Increase?

The rate case is being reviewed by the Arizona Corporation Commission under Docket No. E-01933A-25-0103.

TEP initially requested that its new rates take effect in September 2026, although its current rate-case information states that new rates could take effect before the end of 2026. As of September 2026, the proposal remains under review and the final residential rate increase has not been determined.

Tucson residents who want to follow the case can monitor filings through the Arizona Corporation Commission's eDocket system. The ACC also allows members of the public to submit comments on ongoing utility cases.

Thinking About Solar Before Electricity Rates Increase?

Whether TEP's final approved increase is 4%, 8%, 11% or another amount, Tucson homeowners should understand one fundamental reality: electricity rates are not guaranteed to remain where they are today.

For homeowners considering solar, the current TEP rate case is a good opportunity to look closely at how much electricity your home actually uses, how much you're paying for it and how much of that electricity could potentially be generated by your own solar system.

Desert Solar Energy is a local Tucson solar company serving homeowners throughout Southern Arizona. We can analyze your actual TEP electricity usage and design a solar and battery system based on your home's energy needs—not an arbitrary one-size-fits-all system.

If you're considering solar panels or battery storage in Tucson, contact Desert Solar Energy for a personalized solar evaluation. We'll show you the numbers so you can decide whether solar makes sense for your home.

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