A Tucson nonprofit has filed a lawsuit to challenge a decision by utility regulators that could allow Tucson Electric Power to bypass city rules requiring new power lines to be built underground.
On Sept. 5, the Arizona Corporation Commission unanimously approved a certificate of environmental compatibility to allow Tucson Electric Power to construct a substation and about 9 miles of transmission lines to replace aging infrastructure in the midtown area near the University of Arizona.
The vote affirmed an earlier decision by the commission's Line Siting Committee, which found the utility could bypass city regulations banning aboveground power lines in certain protected “gateway” zones.
Tucson Electric Power told the commission that building the new line underground would be cost-prohibitive, claiming it would cost a total of $87 million – $67 million more than the company estimated it would cost to build the line above ground.
The Line Siting Committee found that, under state law, that cost increase could justify the utility’s desire to build the lines above ground.
The committee concluded that “any local ordinance or plan that requires TEP to incur an incremental cost to construct the Project below ground ‘is unreasonably restrictive and compliance therewith is not feasible in view of technology available,” if the city and utility cannot come to an agreement that would shift the burden of paying for the underground project away from TEP’s ratepayers or investors.
The Corporation Commission also cited cost concerns when it supported issuing the certificate.
“I can't in my role as a commissioner expect the ratepayers across TEP's service territory to pay the exuberant cost for undergrounding because of beautification,” Republican Commissioner Kevin Thompson said. “If this were a health and safety issue, I think it would be a different matter.”
Commissioner Anna Tovar, the commission’s lone Democrat, added, “My understanding is the [certificate] as written – it will not cost ratepayers an increase.”
But some community members have accused the company of intentionally inflating its costs.
Underground Arizona, a Tucson nonprofit that advocates for undergrounding utility lines, cited a previous estimate commissioned by TEP in 2021 that found it would cost $10 million to $15 million per mile to construct the roughly 2-mile underground line versus $2 million to $2.8 million to construct the lines above ground – a substantial increase but a far cry from the $67 million increase cited by the utility in its hearing before the Corporation Commission.
Daniel Dempsey, a member of Underground Arizona, also claimed the Line Siting Committee exceeded its authority when it included those cost considerations in its analysis.
“The courts have repeatedly found that utilities are required to follow local laws that require undergrounding,” Dempsey told the commission.
Underground Arizona filed a request with the Corporation Commission to rehear the case on Sept. 30. The commission didn’t respond to that request within 20 days – a de facto denial – and the organization has since filed a challenge in Maricopa County Superior Court.
It is asking the court to find that the committee and commission improperly tangled the line-siting process – determining where power lines can go – with the commission’s separate authority to keep utility costs in check on behalf of ratepayers.
“APS, SRP, and TEP have thousands of miles of underground distribution and transmission infrastructure that has been recovered in full or in part from ratepayers for decades without issue,” according to the lawsuit. “Yet, here … the Line Siting Committee and Commission seek to preempt the ability of a utility to even get to the ratemaking process to make its case for undergrounding.”
A Tucson Electric Power spokeswoman declined to comment on the case or the allegations that the company inflated the cost to underground electric lines.
Tucson, like Underground Arizona, filed its own request for a rehearing on Oct. 3, arguing the Line Siting Committee erred in its application of state law.
The city acknowledged that the law governing certificates of environmental compatibility requires that utilities abide by local laws unless those laws are “not feasible in view of technology available.”
But it argued the additional costs to underground utilities does not satisfy that exception.
“This amounts to a de facto ban on undergrounding requirements within Tucson rights-of-way based solely on any additional cost to the Applicant or to ratepayers, regardless of how small or appropriate,” Assistant City Attorney Roi Lusk wrote.
A city spokesperson did not respond to a request to comment on the Underground Arizona lawsuit or whether it plans to file its own suit.
On Oct. 22, the City Council discussed the situation behind closed doors but took a public vote to direct the city attorney to “continue to compel TEP to comply with all of the city’s ordinances, regulations, conditions, public notice requirements and processes, including the city’s special exception requirements.”
According to TEP’s website, it has applied for exemptions from the city to build overhead lines in the three protected gateway zones at the center of the controversy.
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