Consultants say municipal takeover, community choice both financially feasible; council accepts energy‑sourcing study

Consultants presented a multi‑path analysis of Tucson’s options for buying and delivering electricity, concluding that municipal ownership and community choice aggregation (CCA) are financially feasible under different assumptions and that hybrid approaches and tariffs also play a role.

GDS presented a 20‑year financial model that compared projected power‑supply costs under both a municipalization scenario and a community choice aggregation program against projected TEP revenues for city customers. The consultants said municipalization could generate bill savings for ratepayers under some acquisition‑cost assumptions but that upfront acquisition costs — with a wide cost range in the study — are a major driver of financial results. GDS noted that using the utility’s original (book) value in modeling yields higher savings for customers than using a full replacement‑cost basis.

For community choice, the consultants told council members a CCA would be primarily a power‑supply organization that purchases generation while TEP would continue to operate distribution; GDS said a CCA’s startup costs are much lower than municipalization and that a properly structured CCA could meet sizable renewable targets (such as 100% carbon‑free for municipal consumption) on a multi‑year timetable.

GDS also reviewed options to continue and expand the city’s municipal actions: joining a green tariff, pursuing virtual power purchase agreements, and pursuing microgrids for resiliency. Consultants said microgrids can be financially feasible and technically valuable where reliability needs are high and where projects can provide services to critical local load and the grid; they noted interconnection and collaboration with TEP would be required.

During the study session, council members asked about next steps and whether franchise or collaboration agreements with TEP would preclude a future municipalization option. City legal staff said the franchise and other agreements do not eliminate the city’s legal options, and the manager said staff would continue negotiating a draft energy collaboration agreement with TEP and present materials to the public for comment. Council members accepted the study for the city’s files; the council vote was recorded as affirmative.

Ending: The council accepted the GDS energy‑sourcing study and directed staff to continue collaboration discussions with TEP, pursue near‑term actions such as a green tariff for municipal consumption and keep options for CCA and municipalization on the table.