SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): June 14, 1995
TUCSON ELECTRIC POWER COMPANY
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(Exact name of registrant as specified in its charter)
Arizona 1-5924 86-0062700
(State of Incorporation) (Commission File Number) (IRS Employer
Identification No.)
220 West Sixth Street, Tucson, Arizona 85701
(Address of principal executive office) (Zip Code)
(520) 622-6661
(Registrant's telephone number, including area code)
Item 5.
Application for Rate Increase Filed
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On June 14, 1995, the Company filed an application with the Arizona
Corporation Commission (ACC), requesting an overall 4.9% increase in retail
rates (approximately $28.4 million in annual revenues). The Company's request
is based on original cost rate base of approximately $1.17 billion, a rate of
return on original cost rate base of 8.2%, and a rate of return on common
equity of 11.5% applied to a capital structure of 60% debt and 40% equity.
The proposed rate structure is a continuation of the Company's effort to
insure that the various retail customer classes pay their share of the cost of
providing service. The Company is proposing increases of 7.5% for residential
customers, 3.6% for commercial customers, and 5.0% for industrial customers.
The proposed increase would result in an increase of $5.37 in the average
monthly residential bill, from $70.92 (9.46 cents per kWh) to $76.29 (10.17
cents per kWh) for residential customers using an average 750 kilowatt-hours
per month.
The request seeks recovery of the costs associated with providing service
to retail customers including the full operating and capital costs of the
portion of Springerville Generating Station Unit 2 (Springerville 2) that had
previously been excluded from the Company's rate base. The Company's request
contains elements of traditional cost of service/rate of return ratemaking as
well as several innovative proposals designed to keep the Company competitive
in fast-changing markets.
The application requests recovery of the costs associated with the
remaining 37.5% (135 MW) of Springerville 2, that the Company believes is "used
and useful" in accordance with ACC methodologies. In 1994, the Company's
system peak demand was 139 MW over the demand upon which current rates are
based; therefore, the entire capacity of Springerville 2 was utilized to meet
retail requirements. Total additions to rate base due to the inclusion of the
remaining 37.5% of Springerville 2, including related deferrals of previously
incurred costs, amounted to approximately $191 million.
The innovative proposals referred above include flexibility to enter into
special contracts at prices below the tariffs' levels to be approved by the
ACC; allocation of savings resulting from improved operating efficiencies
between the Company and its customers; allocation of the benefits of the
SCECorp litigation settlement by allocating the net proceeds of the $40
million cash settlement (approximately $27.5 million after litigation costs)
to the Company and the benefits of the 110 MW added generating capacity
related to the SCE power exchange to the retail customers; jurisdictional
allocation of costs of wholesale sales based on marginal costs of a wholesale
transaction rather than the Company's average costs; Time-of-Use rates for
small commercial customers and customers on the low-income Lifeline and Senior
Lifeline rates as well as revisions in the peak periods and/or charges for
existing Time-of-Use rates; establishing Residential Lifeline/Medical
Life-Support Discount Rate for low-income customers whose medical conditions
necessitate the use of electrical equipment; and creating Low Income Fund for
Emergencies (LIFE) by setting aside $4.0 million so that the interest earned
on those funds can be used for payment by low income customers on their
billed electric services.
Finally, if the ACC approves the Company's request as well as the
Company's complementary proposals as filed, the Company proposed not to file
another rate case until the year 2000, absent any emergencies.
The ACC has a self-imposed time schedule for receipt of orders in major
rate cases that would lead to an order being issued in the second quarter of
1996. The ACC has not yet set a date for hearings on the Company's request.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TUCSON ELECTRIC POWER COMPANY
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(Registrant)
Date: July 3, 1995 Ira R. Adler
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Ira R. Adler
Senior Vice President and Principal
Financial Officer
