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City of Tucson voters will vote in a May 16 special election on a new, 25-year franchise agreement with Tucson Electric Power. The question is presented as Proposition 412.

Proposition 412 would renew the City’s grant of permission to TEP to build and operate its local electric grid in the City’s rights of way, similar to agreements in place with other municipalities. It would replace TEP’s current voter-approved franchise agreement with the City of Tucson, which expires in April 2026.

If approved, the updated agreement would add a 0.75-percent “Community Resilience Fee” to monthly electric bills of TEP customers within the city. The franchise fee would remain at 2.25%. Customers within the city also pay a 2.25% city utility tax that would remain unchanged.

The revenue generated by that new 0.75% fee could be used to cover the additional cost of building certain electric infrastructure underground, with the approval of both the city and TEP. It also could be used to fund efforts that support the city’s Climate Action Plan, including new clean energy resources, electric vehicle infrastructure and heat mitigation efforts.

The proposed change would add less than $1 per month to the average monthly electric bills of residential customers with typical usage within the City of Tucson. That impact would vary with usage. Customers living outside the City of Tucson would not pay this fee.

The Tucson Mayor and Council voted unanimously on Jan. 25 to call a special election on May 16 that will allow city voters to approve or reject the new franchise, which will appear on the ballot as Proposition 412.

Frequently Asked Questions

The following questions and answers offer more details about the proposed franchise agreement.

What is a “franchise agreement?”

A franchise agreement establishes terms for a private utility company’s use of public spaces, including streets and public rights of way, for the purpose of providing utility services for the benefit of local residents. Municipal franchises give utilities permission to build, operate and maintain facilities along city streets and other public rights of way, usually in exchange for a fee equal to a percentage of the revenue earned through sales within the city. These fees are paid by customers within those cities.

Does TEP already have a franchise agreement with the City of Tucson?

Yes. TEP has had franchise agreements in place with the city for nearly 100 years. The current 25-year franchise agreement is set to expire in April 2026, and under state law voter approval is required for any new franchise. Proposition 412 gives City of Tucson voters an opportunity to approve or reject a new 25-year franchise with TEP.

How does the new franchise agreement differ from the current agreement?

The new franchise would retain the 2.25-percent fee from the current agreement while adding a 0.75-percent Community Resilience Fee. The fee would raise an estimated $5 million annually to cover the additional cost of installing certain TEP facilities underground and for projects that support the City of Tucson’s Climate Action and Adaptation Plan.

How would Proposition 412 affect customers’ electric bills?

The new franchise agreement is expected to increase the average monthly bills of typical residential customers within the City of Tucson by less than $1. The expected impact for a typical small business is less than $3 per month. The actual impact will depend on usage, and customers who use more energy will see a larger increase.

Will all TEP customers pay this new fee?

No. Only customers within the City of Tucson pay the city’s franchise fees and utility tax as part of their monthly electric bills. Customers living elsewhere may pay a franchise fee or utility tax charged by a different municipality.

What types of climate action projects could be funded from the Community Resilience Fee?

The Community Resilience Fee in the new franchise agreement could be used to fund projects that support the City of Tucson’s Climate Action and Adaptation Plan, including efforts to:

  • decarbonize city-owned and operated buildings and facilities;
  • promote distributed energy resources such as rooftop solar to provide local renewable energy and enhance energy resilience;
  • pursue additional local sources of renewable energy, including resource recovery and heat exchange;
  • promote electric vehicles via charging infrastructure expansion;
  • transition public agency fleets to zero-emission and net-zero-emission vehicles;
  • establish accessible resilience hubs across all City Wards to provide information and resources related to climate preparedness and response;
  • bolster City-owned and community-wide heat mitigation resources to reduce urban heat island effect and protect vulnerable individuals and communities;
  • deploy and maintain equitable nature-based solutions that reduce or sequester emissions, improve ecosystem health, and bolster climate resilience; and
  • bolster community and regional networks to improve community-wide emergency response and resource-sharing.

How would new funding raised by Proposition 412 be managed?

Proceeds of the new Community Resilience Fee would be managed by a committee that includes equal representation from TEP and the City of Tucson, as outlined in the proposed franchise agreement. Recovering the cost of underground infrastructure would be prioritized during the first 10 years of the agreement, though 10 percent of revenues collected during that period would be used for climate resiliency efforts.

How would the remaining funds raised through the new franchise agreement be used?

Proceeds from the 2.25-percent franchise fee would be forwarded to the City of Tucson, as they are today under the existing agreement. The updated agreement under Proposition 412 provides that at least one-ninth of those revenues would be used to install electric facilities underground, to provide energy bill payment assistance or for efforts that support the city’s climate action plan.

The new franchise agreement would not affect projected revenues for the city, as remittances for both the city’s franchise fee and utility tax would reflect the same percentages of electric sales as they do currently.

When will City of Tucson voters have an opportunity to vote on this proposal?

A special election will be held May 16. Only registered voters living in the City of Tucson can participate in this election. Details about participating in this election are available on the Tucson City Clerk’s website at https://www.tucsonaz.gov/clerks/elections.

Who is responsible for the costs of this Special Election?

As provided by Tucson’s City Charter, TEP is required to pay for the costs of this election.

What happens if voters reject the proposal?

TEP would continue operations under its existing City of Tucson franchise, which will remain in force through April 2026.

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