Tucson Electric Power’s new rate case proposal requires residential and small business customers with DG systems to take service under a three-part rate that features lofty demand charges. In addition, TEP would replace its existing net metering rider (for new customers) with a rider that credits all exports at a rate ($0.0584/kWh) that is significantly lower than TEP’s retail rate, effectively ending net metering. TEP would also double the monthly customer charge for all residential customers and all small commercial customers.

In describing its need to update its rate design, TEP noted that its test year retail sales are nearly 3% below the December 31, 2011 test year used in its previous rate case, adding that residential usage per customer fell nearly 7.5% between 2011 and the test year. TEP ascribed declining usage per customer and overall sales levels to several factors, including the effects of increased use of conservation, energy efficiency and DG by its customers.

TEP’s filing is similar to UniSource’s rate-case filing in Arizona in May. Both UniSource and TEP are subsidiaries of Fortis, Inc., a North American electric and gas utility conglomerate.

Note: EQ Research offers a service that tracks and summarizes GRC filings by electric utilities in the United States. For details, click here.