TEP’s “hostile takeover”?

Power provider fights powers that be … New rules in border game … And one step forward, two steps back.

The conversation about creating a city-owned utility in Tucson is no longer one-sided.

For the past year, advocates for municipal power have peppered the Tucson City Council with requests to take the next step.

While there has been some pushback from Council members urging the public to manage expectations, the Council has largely responded to demands from progressive residents seeking lower rates and a stronger voice in addressing climate change.

That included the Council agreeing to hire a consulting firm last fall to evaluate its options, spending $300,000 on a study conducted by GDS Associates.

Now that a draft version of the study is public, Tucson Electric Power — which has been mostly silent in recent months — is coming out swinging. They’re calling the proposal a “hostile takeover” of an essential service that a million people in southern Arizona rely on to survive.

Even under a municipal utility, TEP won’t be completely out of the picture.

TEP says the study “relies on faulty assumptions that produce inaccurate results and conclusions, misleading city leaders about the prospects for a city takeover of TEP’s local energy grid.”

The politics are more complex than simply moving forward with a municipal utility.

A 25-year franchise agreement is set to expire next year, and a proposed extension is tentatively scheduled to go before voters in November.

TEP has provided electricity to Tucson for over a century. But in 2014, the company was acquired by Fortis, a Canadian energy conglomerate.

City officials maintain that pursuing a municipally owned electric utility does not preclude them from renewing the franchise agreement — though they acknowledge the process could be messy, even under the best of circumstances.

Currently, the city is hosting several virtual town halls — including sessions for Spanish speakers scheduled next week — to collect public feedback on both the franchise agreement and the proposal for a municipally owned electric utility.

We’ve attended two of these events so far. Feedback has been largely dominated by those who want the city to wrest control away from TEP, believing it would ultimately lead to cheaper, renewable energy for Tucson residents.

Roughly 44 percent of TEP’s customers are residential.

But the devil is in the details.

Forcing TEP to sell a large portion of its assets would require voter approval to finance the deal, and any legal battles could drag on for more than a decade — if similar takeovers in other cities are any indication.

GDS Associates believes a city-run utility could begin operations as early as January 2028, pending voter approval.

Susan Gray, president and CEO of Tucson Electric Power, says that’s unrealistic, particularly since TEP views any attempt to form a municipally owned utility as a “hostile takeover” of its core assets.

“The city has not received the sound advice it sought regarding the cost and consequences of a hostile takeover of the systems we all depend on for safe, reliable energy,” Gray said. She went on to say “the study seems intent on driving a wedge between the City of Tucson and TEP at a time when we should be working together to address our city’s long-term needs.”

Several weeks ago, we did a back-of-the-napkin estimate about the cost of such a takeover — suggesting it could run at least $1 billion.

Turns out, our estimate was pretty far off. GDS Associates now puts the hypothetical price tag for TEP’s assets between $1.9 billion and $3.7 billion.

TEP argues even that is a lowball estimate, claiming the consultant’s math is flawed and that it deeply underestimates many operational and long-term costs, as well as the fair market value of its assets.

“This highly unrealistic premise and other mistaken assumptions result in artificially low projections for the purchase and operating costs that are then used as the basis for claiming that a city-run utility could charge lower rates than TEP,” a TEP spokesperson said in a prepared statement.

During an online town hall on Monday, a GDS Associates official argued that TEP’s pushback is typical of privately owned utilities with a financial interest in keeping the utility privately owned.

While the report remains in draft form, GDS told attendees it stands by its modeling.

Earth Day Rally for Public Power outside of TEP headquarters. Photo credit: Cameron Capara

More than 4,200 Tucsonans have already signed a petition — organized by the Tucson chapter of the Democratic Socialists of America — calling for the city to sever ties with TEP and form a public utility.

In a public statement, DSA said the time to act is now.

“For months we have argued that turning our electricity needs over to the city is the right thing to do for Tucson residents. Tucsonans are fed up with high rates, frequent outages, and non-renewable for-profit energy. To ignore their concerns, after experts hired by the city show the economic sense of the public power cause, would be a dereliction of the Mayor and Council’s fiduciary duty to the city and its voters,” the statement read.

The Tucson City Council is expected to discuss both the GDS Associates report and the franchise agreement in about three weeks.

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Here we go: In a sign of what could happen soon in Arizona, about a half-dozen migrants are being charged with breaching a national defense area in New Mexico, the Associated Press reported. Those charges were the result of the Trump administration’s decision to designate a 60-foot-wide strip of land that runs along the U.S.-Mexico border as a military installation. That installation is run out of Fort Huachuca and represents a “dangerous erosion of the constitutional principle that the military should not be policing civilians,” an ACLU attorney argued.

Border corruption: In other border-related criminal justice news, a jury in Tucson found a Border Patrol agent guilty of a conspiracy charge for helping smugglers move drugs through the Interstate 19 checkpoint last summer, the Tucson Sentinel’s Paul Ingram reports. The agent would text smugglers to let them know which lane he was working, as well as giving them a heads-up when drug-sniffing dogs were searching vehicles. His cut of the enterprise was $400 for every kilogram of drugs that got through the checkpoint.

Halcyon days: Plans to expand the Fox Tucson Theatre just got a big financial boost from a guy who fondly remembers watching Disney shorts at the theater as a kid in the 1950s, the Arizona Daily Star’s Cathalena Burch reports.

“I kept going back to the Fox as I got older and went to shows and this and that,” said Chandler Warden, who this week pledged $1.6 million to the Fox’s expansion project and $400,000 to its operating expenses.

Still unclear: Cuts to the U.S. Department of Veterans Affairs are likely on their way, but the details of those cuts haven’t been decided yet, VA Secretary Doug Collins said during a visit to the Tucson VA Medical Center this week, per the Star’s Henry Brean. During his visit, Collins complained that he spends half his time “fighting back against innuendo and rumor” about possible cuts. The goal is to cut 15% of the department’s staff.

The saga of whether the Regional Transportation Authority Board and the Pima Association of Governments Regional Council will fire Executive Director Farhad Moghimi took a step backwards on Wednesday.

The chair of the RTA Board, Oro Valley Mayor Joe Winfield, has been the holdout on scheduling a meeting that would decide the executive director’s fate. Now he wants to hold a meeting.

But not to discuss Moghimi’s future.

Instead, Winfield wants to have a meeting to discuss spending up to $50,000 to contract with a law firm on a temporary basis. And he wants Moghimi to be part of the process in selecting the firm.

In a letter to his colleagues on the RTA Board, Winfield outlined a proposal he worked out in consultation with Moghimi and offered two options:

1.) Hold a meeting with the leadership of both groups and Moghimi to pick out a firm

2.) Allow Moghimi to select a firm and notify the respective leadership teams

“To initiate the selection of legal counsel, (Moghimi) recommends that fewer than a quorum of Board members collaborate with him in the development of a Request for Proposals (RFP). He proposes that this group consist of the Chairs and Vice Chairs of both the PAG and RTA,” Winfield wrote.

That group would consist of Tucson Mayor and PAG Chair Regina Romero, Marana Mayor and PAG Vice Chair John Post, Winfield, as well as Sahuarita Mayor and RTA Vice Chair Tom Murphy.

Once a firm has been hired, then the board can schedule a meeting to discuss whether to fire Moghimi.