TEP rate hike: what changes for Tucson solar homes?

Short answer: On October 20, 2026, an Arizona Corporation Commission judge recommended that Tucson Electric Power get rates that raise the average residential bill about 11.2%, plus a new yearly rate-update process. Commissioners are set to vote as soon as November 17, and new rates could start December 1. For a Tucson home with solar, a bigger bill makes self-used solar power worth more, while the credit for exported power stays at whatever rate the system locked in.

What did the judge recommend for TEP?

Administrative Law Judge Julia Matter's 278-page recommended order backs most of TEP's request, according to Arizona Luminaria. That includes an average residential bill increase of about 11.2%.

TEP's request started near 14% in 2025. In March 2026 it trimmed the ask to about $162 million, or 12.6%, and said a typical customer on its Basic plan would pay about $14 more a month. The Arizona Attorney General's office argued for about 4%.

Consumer Reports, which opposed the increase, estimates the recommendation adds about $186 a year to the average bill.

Nothing is final yet. The five commissioners can accept, change or reject the judge's recommendation.

What is TEP's yearly rate adjustment?

The judge also backed TEP's Annual Rate Adjustment Mechanism, a formula rate that updates rates every year instead of waiting for a full rate case. TEP says yearly updates don't automatically mean higher rates and would still need Commission approval.

Critics, including the state's Residential Utility Consumer Office, opposed the formula rate. For a homeowner, the practical change is simple: expect your rates to be revisited every year, not every few years.

Think of it as moving from an annual physical to a weigh-in every January. Same scale. More often.

Does the rate case change the credit for solar exports?

No, not for existing systems. TEP pays solar homes for exported power through its Resource Comparison Proxy (RCP) export rate, which is separate from the rate case.

The current RCP rate is 4.62 cents per kWh, in effect from October 1, 2026 through September 30, 2027, according to TEP. The rate is updated every October 1 and can't drop more than 10% in a year.

Here's the part that matters at a home sale. Each system keeps the RCP rate it started with for 10 years. TEP's tariff says a customer who moves into a home already on the RCP rider keeps that same rate for the rest of the original 10-year period.

So a buyer of a 2023 solar home doesn't get 4.62 cents. They get whatever rate that system locked in, for the years left on its clock.

TEP also pays out leftover export credits once a year. Under the tariff, any RCP credit balance over $10 is paid on the October bill.

Why does a higher bill change what solar is worth?

Every kWh your panels make and your house uses right away is a kWh you don't buy from TEP. When TEP's price goes up, those self-used kWh are worth more.

Exported kWh don't get that bump. They're credited at the locked RCP rate no matter what happens in the rate case.

Timing makes a difference too. On TEP's time-of-use plan, the summer on-peak window runs 3 to 7 p.m. on weekdays, May through September. Winter on-peak is 6 to 9 a.m. and 6 to 9 p.m. on weekdays. Panels produce most at midday, so a lot of solar output lands outside those windows.

That's why the same system can show very different savings in two homes. A household that runs the AC hard at 2 p.m. uses more of its own solar than one that's empty all day. The panels don't know your work schedule. Your bill does.

Arizona's other big utility is going through the same process. Our post on the APS rate case covers Phoenix-area homes.

What can sellers and buyers check before closing?

A rate case changes the "what does solar save" math. The contract decides what's owed. Both belong in the file.

Sellers can pull together:

• The signed solar contract. Every page, including the payment schedule and transfer section.
• The TEP interconnection approval date. It shows which RCP rate the system locked in and how many lock years are left.
• Twelve months of TEP bills. They show actual usage, exports and credits.
• Monitoring data. Production by month tells the buyer what the system makes.

Buyers and their agents can ask:

• Is the system owned, leased, on a PPA or financed with a loan?
• What's the monthly solar payment today, and in the final year?
• Which RCP rate does the system have, and when does the 10-year lock end?
• What plan is the home on now: Basic, time-of-use or a demand plan?

TEP's current basic service charges are $15 a month on the Basic plan and $12 on its time-of-use and demand plans. Those charges come with the house no matter how big the solar system is. An experienced agent who has closed solar homes before will usually ask for these documents early, while there's still time to sort out surprises.

How can RateMySolar help with a TEP solar home?

Upload the solar contract and we read the payments, terms and transfer rules and lay them out next to published local data. The report covers five areas, from contract terms to financial value; How we grade describes what each one looks at. You also get the payment schedule through the end of the term, what's left to pay, transfer facts and the paths sellers and buyers usually take. You can add TEP bills as well.

Your first upload is free and gives you a locked preview of the report. The full graded report is $49.99 per contract and includes the MLS solar fields and remarks.

Our reports are AI-assisted and only partly reliable, so check them against the contract and have the contract reviewed before closing. A report is information, not legal or financial advice.

How does this work in other states?

Rate cases raise the price of power everywhere. What differs is how each state credits exported solar and whether that credit stays with the house.

Older systems in many states keep earlier terms. To find your state's rules, see our solar laws by state page, or go straight to Arizona, California, Nevada or Utah. Southern Nevada homes face their own change in 2027; see NV Energy's daily demand charge.

Frequently asked questions

How much will TEP rates go up?

An Arizona Corporation Commission judge recommended on October 20, 2026 that TEP's average residential bill rise about 11.2%. Commissioners are set to vote as soon as November 17, 2026, and new rates could start December 1.

Does the TEP rate case lower my solar export credit?

No. TEP's export credit comes from the separate Resource Comparison Proxy rate, and each system keeps the RCP rate it started with for 10 years. The rate for new systems is 4.62 cents per kWh from October 1, 2026.

If I buy a home with solar in Tucson, do I keep the seller's export rate?

Under TEP's RCP tariff, a customer who moves to a site already on the rider keeps the same rate for the rest of the original 10-year period. Ask the seller for the interconnection date to see how many years are left.

What is TEP's Annual Rate Adjustment Mechanism?

It's a formula rate that updates TEP's rates every year instead of through a full rate case every few years. The judge recommended approving it; the Commission votes next.

What is TEP's monthly basic service charge?

TEP's current residential basic service charge is $15 a month on the Basic plan and $12 a month on time-of-use and demand plans. The rate case could change these amounts.

Sources

• Arizona Luminaria — TEP rate case: Judge backs 11% bill increase, yearly updates (Oct. 22, 2026)
• Consumer Reports — Press release on the TEP recommended order (Oct. 23, 2026)
• AZPM — TEP quietly amends rate change, AG's office disagrees (June 5, 2026)
• Tucson Electric Power — RCP export rate, RCP Rider 14 tariff, rates and time-of-use tariff TRREST
• Utah Public Service Commission — Rocky Mountain Power Schedule 137 filing (Jan. 26, 2026)