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Draft TEP ‘Energy Collaboration Agreement’ would dedicate $2M/year to Tucson climate and resilience projects, tied to franchise vote
Summary
City staff and TEP have negotiated a draft Energy Collaboration Agreement that would provide $2 million in TEP shareholder funds annually (with a 2% escalator) over the franchise term to community‑prioritized climate and resilience projects. The ECA is tied to a franchise agreement subject to voter approval and drew community requests for stronger governance, clearer implementation plans and protection for future public‑power options.
City staff presented a draft Energy Collaboration Agreement (ECA) negotiated with Tucson Electric Power that would direct shareholder funds—separate from ratepayer revenue—to projects prioritized by the community and aligned with the city’s Tucson Resilient Together climate plan.
Chief Resilience Officer Fatima Maluna said the draft would provide $2 million in shareholder funding each year with a 2% escalation every other year, roughly totaling $56 million over a 25‑year franchise term. Staff said the funds would be used for five broad categories: greenhouse‑gas reductions (solar, storage, electrification), resilience infrastructure (resilience hubs, cooling centers), programs targeted to vulnerable communities (build assistance and access programs), workforce development and partnerships to improve system reliability and affordability.
“The funds will support community‑prioritized projects aligned with Tucson Resilient Together,” Maluna said.
The ECA is structured to take effect only if voters approve a companion franchise agreement. Staff and the city attorney emphasized the legal limits of what an ECA can require for utility generation and rates: Arizona Corporation Commission (ACC) jurisdiction constrains direct city mandates on utility resource decisions and cost recovery. The city attorney said the ECA and franchise are legally linked so that termination of the ECA by either party would also terminate the franchise arrangement.
Community input and concerns
City staff held a recent series of town halls and consolidated public comments. The most frequent themes were: - Funding and governance: several residents said $2 million per year felt insufficient and requested clearer, independent governance, transparency and measurable outcomes for funds. - Specificity and implementation: requests for defined eligibility, timelines and reporting metrics; staff said specific spending rules will be developed in an implementation plan if the agreement proceeds. - Climate and definitions: community members asked for clearer climate commitments, more aggressive targets and precise definitions (for example, what counts as renewable energy). - Public power and termination language: some residents worried that ECA termination clauses could chill future consideration of public‑power or municipalization options; staff reiterated that the ACC and state law delimit some options and that ECA/franchise termination provisions are explicit.
Next steps
Staff said the ECA will be finalized alongside a franchise agreement and brought back for council review; the franchise would be placed on the ballot for voter approval before the ECA becomes effective. Staff also said the city will continue community engagement and publish the full drafts and comment summaries.
Why it matters: The draft ECA offers a new funding avenue for local climate and resilience investments, directing shareholder funds rather than ratepayer dollars. The proposal and its linkage to a franchise vote have generated close public scrutiny: residents called for stronger governance, measurable targets and clarity about how the agreement interacts with broader utility regulation and the city's future options.
