TEP Rate Increase 2026: Judge Recommends 11.2% for Homes

A judge at the Arizona Corporation Commission (ACC) has recommended a Tucson Electric Power (TEP) rate increase that would raise average residential bills about 11.2%, according to AZ Luminaria and Consumer Reports. Consumer Reports puts it at an average of about $186 next year for residential customers, roughly $15.50 a month. It is a recommendation, not an approved rate. The commission may vote at an open meeting tentatively set for Nov. 17, 2026, and new rates could start as soon as Dec. 1.

The case is docket E-01933A-25-0103, filed June 17, 2025, and covers TEP’s more than 452,000 customers in the Tucson area. For APS’s pending case and how rooftop solar is credited statewide, see our guide to Arizona electric rates and solar.

The Case at a Glance

We could not open the judge’s Recommended Opinion and Order on the ACC docket. The 11.2% figure and the recommendation details below come from two separate reports of it.

What TEP Asked For

TEP’s legal notice for the case says it requested “an overall increase in retail revenues of $172 million, or approximately 13%.” Non-fuel revenue would rise $220 million, and the notice uses a test year ending December 31, 2024. TEP asked for a 10.50% return on equity and proposed raising the monthly Basic Service Charge for residential and small business customers by $5.00.

For a typical residential customer using 805 kWh a month, the notice estimated the bill would rise from $141.60 to $161.03, an increase of $19.43, or 13.7%.

TEP has also cited lower figures based on a smaller “median” customer. In June 2025 it said its proposal “would add about $16 per month, on average” for households using 638 kWh a month. TEP’s news page says an updated April 2026 filing lowered that to about $14 a month, or about 13%, for median-usage customers on its Basic plan. Arizona Public Media reported that the amended request was $162 million, down from $172 million. The Attorney General’s office told the outlet that at 805 kWh the increase was “closer to 14.6% for most residential customers.”

Why the numbers differ. A percentage depends on which household you pick. Because TEP also proposed raising the fixed Basic Service Charge by $5.00, the percentage change differs between a smaller median customer and a home using 805 kWh. Check your own kWh on your bill before applying any of these figures.

What the Judge Recommended

According to AZ Luminaria, Administrative Law Judge Julia L. Matter issued her recommendation on Oct. 20, 2026. AZ Luminaria reports that it:

• Raises average residential bills 11.2%. Consumer Reports, which opposes the increase, puts that at an average of about $186 next year.
• Accepts TEP’s Annual Rate Adjustment Mechanism (ARAM). TEP’s notice describes it as a formula that would update rates “each year based on historical changes in its revenue requirement.” AZ Luminaria quotes the recommendation as saying the ARAM “will improve transparency and oversight, reduce administrative costs.” TEP told the outlet annual adjustments would not automatically raise rates and would still need ACC approval.
• Restructures TEP’s Lifeline discount. Customers at or below 100% of the federal poverty level would get a 50% discount, and customers between 101% and 200% a 20% discount.

The Attorney General’s office had argued that “TEP can achieve the same reliability with just a 4% increase,” AZ Luminaria reports, and Pima County, the City of Tucson and the Residential Utility Consumer Office also opposed a double-digit increase. In an Oct. 6 letter to the commission, Consumer Reports asked regulators to reduce TEP’s return on equity rather than raise it.

Our estimate. If 11.2% is applied to the $141.60 current bill in TEP’s notice for 805 kWh, the increase would be about $15.86 a month (0.112 × $141.60). That is our illustration, not a figure from the order. Your result depends on your usage, rate plan and current bill.

What Happens Next

• Tentatively Nov. 17, 2026: the ACC’s five commissioners discuss the recommendation at an open meeting and may vote. They can adopt it, amend it or reject it.
• As soon as Dec. 1, 2026: new rates could take effect if approved, AZ Luminaria reports.
• Later years: if the ARAM is approved, rates would be updated annually under the formula, subject to commission review.

The evidentiary hearing was scheduled to begin April 22, 2026, according to the ACC. Until the commission votes and new rates take effect, TEP’s current rates apply.

What It Means for Your Bill and for Solar

For a typical home: if the commission adopts the recommendation, a home using 805 kWh a month would pay about $16 more a month by our estimate (Consumer Reports puts the average at about $15.50). Under TEP’s original request, that home would pay $19.43 more. Smaller users will see less in dollars, and heavy summer users more. If you are on TEP’s Lifeline program or might qualify, the proposed discount changes could matter more than the base increase.

For rooftop solar owners: A 2016 ACC decision replaced net metering with net billing for new solar customers. Solar you use at home offsets electricity at the full retail price, while exported power earns TEP’s lower export rate, about 5 to 6 cents per kWh as of our Oct. 5 check. A retail increase makes self-consumed solar worth more. The coverage we reviewed did not report any change to the export rate in this case. If you are getting quotes, run them through our solar payback calculator at both today’s rates and roughly 11% higher.

If you’re considering a battery: shifting solar output to the evening is worth more as the gap between retail rates and export credits widens. Our guide to time-of-use rates and solar explains how that math works.

How to Comment

You can submit a public comment to the ACC through its website. Reference docket E-01933A-25-0103 so it is filed in this case.

Limitations

We could not open the judge’s Recommended Opinion and Order or the ACC docket, which require access we did not have. The recommendation’s figures, the open meeting date and the possible Dec. 1 start come from AZ Luminaria and Consumer Reports, and we mark them Qualified. We did not find the recommended return on equity, revenue amount or Basic Service Charge. Consumer Reports and the Attorney General’s office are parties opposing the increase. Salt River Project (SRP) customers are not affected by this case.

Sources and verification

Checked October 28, 2026. Figures are requests or a recommendation, not approved rates.