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ACC Approves Settlement Agreement for TEP
yaquinto.jpgACC Approves Settlement Agreement for TEP

In a unanimous vote at a Special Open Meeting on November 25, the five members of the ACC approved the settlement agreement reached in April 2008 between TEP, ACC staff, AIC and other parties.  The action authorizes TEP to increase its rates by an average 6 percent, effective December 1, 2008—although many TEP customers will see rate increases smaller than that average.  The ACC’s action completes a roughly 18-month process at the ACC to adjust TEP’s rates. Approval of the Settlement Agreement means that TEP’s rates will continue to be regulated on a cost-of-service basis.  Approval also avoids potential litigation concerning a previous settlement reached in 1999, and provides several other benefits to TEP, its shareholders and customers.  TEP has also been authorized to implement its first Purchased Power and Fuel Adjustor Clause since 1989.  TEP will be required to credit against its newly authorized adjustor approximately $60 million related to “fixed CTC True-up Revenues.” 

For TEP customers, this increase is their first rate increase since 1994.

The ACC’s approval of the TEP Settlement Agreement is an important achievement for both TEP and the Commission itself.  For TEP, it puts to rest numerous unresolved issues related to the ACC’s reconsideration of competitive electricity markets and provides much needed rate relief.  For the Commission, it confirms that such settlement agreements reached among many, diverse parties can produce outcomes that are indeed in the public interest.

Gary Yaquinto, AIC President