City and TEP agree to 'letter of intent,' start public engagement on energy collaboration and reserve November ballot placeholder

City staff reported April 22 that the city and Tucson Electric Power (TEP) have exchanged a letter of intent laying out mutual commitments to continue good‑faith negotiations on a new franchise agreement, an energy collaboration agreement (ECA) and near‑term pilot projects including a Donna Liggins microgrid pilot and a city green tariff for municipal operations.

What the letter of intent frames - The letter of intent summarizes the parties’ intent to negotiate: (1) the franchise that governs a utility’s use of city right‑of‑way; (2) an ECA that would specify collaborative climate and resilience commitments (for example clean energy procurement, resilience projects and community benefits); (3) a pilot battery‑energy storage / microgrid project at the Donna Liggins site; and (4) a green tariff allowing the city to buy a fixed percent of renewable power for municipal needs. - Staff said TEP participated in three public town halls in April and will take part in additional engagement; city staff is preparing materials and a framework for a second engagement phase starting immediately.

Public engagement and schedule - The city hosted three town halls to solicit priorities — clean/renewable energy, resilience (microgrids and backup systems), affordability and protections for low-income customers ranked highly — and will host four additional events (English/Spanish, in-person/online). - City staff expect to craft a draft ECA for public comment after phase 2 engagement; a later phase will publish a final draft for public comment on the Climate Action Hub.

Franchise election placeholder - Because Arizona law requires six months’ notice to call non‑candidate elections, staff asked the council to place a placeholder on the November 4, 2025 ballot today to preserve the option of a franchise vote that month. Council approved the placeholder by unanimous vote but staff emphasized the action is a timing step and not a commitment to final language — community engagement and drafts of the ECA and franchise would continue before any final decision.

Donna Liggins microgrid and green tariff - Staff described an ongoing effort with TEP and the Pacific Northwest National Lab to scope and pilot a microgrid/battery energy storage system at the Donna Liggins transit/resiliency site. The pilot would support a community resilient hub and could be funded in part through grants. - A proposed green tariff would allow the city to purchase a defined percentage of renewable power for city operations; staff said a $300,000 per‑year estimate for the tariff is already included in the manager’s recommended budget.

Why it matters - The package seeks to align TEP investments with city climate and resilience goals while preserving public review. The placeholder election vote keeps the November ballot option open but does not otherwise narrow the terms or require council to finalize a franchise in November. Councilmembers emphasized the importance of community engagement and transparency before any final ballot measure.

Next steps - Staff will continue phase 2 community engagement immediately, post a draft ECA for public comment after that phase, and then return to council with final materials and options; staff tentatively plan a planning report and follow‑up in May and a later public hearing depending on progress.

Ending: city staff said the LOI reflects mutual interest in working together on decarbonization and resilience while committing to a robust public process and a future possible franchise question for voters.