UniSource Seeks New Gas Rates to Recover Over a Decade of Investments in Reliable Service

For the first time in nearly 12 years, UniSource Energy Services has proposed new, higher base rates for natural gas service.

The new rates, which would take effect in February 2026, would cover rising costs and support ongoing improvements to ensure safe, reliable natural gas service. They also would provide greater support for low-income customers.

Current natural gas rates took effect in 2012 and are based on costs incurred in 2010. Since then, UniSource has invested more than $260 million to maintain reliable service even as the prices for equipment, parts, construction materials and other materials have increased significantly. New rates also would pass along higher costs for upgraded information technology, equipment and other necessities for serving the expanding energy needs of a customer base that has grown 14.5 percent since 2011.

For residential customers, UniSource is proposing to recover those higher costs through a $5 increase in the monthly basic service, from $10 to $15. This would help keep the bill impact from new rates as stable as possible through the entire course of the year, mitigating seasonal variation in bills. Usage costs would change only slightly to reflect a tax surcharge change and a new fee for energy efficiency programs such as low-income weatherization.

Under the proposed rates, the average monthly increase for residential customers with typical usage is projected to be $6.13. This estimate is based on annualized average usage of 45 therms per month, including peak usage of 101 therms in January – when the impact of the proposed rates would be $7.51 – and low usage of 14 therms in July, when the impact would be $5.35 per month.

“We know affordability is critical to our customers. That’s why we’ve kept a focus on managing costs and have consistently asked our employees to do more with existing resources,” said Susan Gray, UniSource’s President and CEO. “We have been able to avoid asking for higher rates for many years despite rising costs and growing service demands, but we need to start recovering on our investments in order to keep pace with the growth of our communities and maintain safe, reliable service.”

UniSource is proposing to expand its Customer Assistance Residential Energy Support (CARES) program to provide higher percentage discounts that benefit more customers. The proposed rates would expand household income eligibility to 200 percent of the federal poverty level from 150 percent. We’ve also proposed exempting low-income customers from any payment fees.

The proposed rates will be reviewed by the Arizona Corporation Commission (ACC), a five-member elected panel that regulates public service providers. The review will include public hearings and opportunities for public comment.

Customers can mitigate the impact of higher rates by managing their energy usage. UniSource also provides resources that help customers pay their bills, from payment arrangements to low-income discounts and short-term assistance for qualifying customers.

From 2012 through 2024, UniSource provided $5.6 million in discounts to qualifying low-income customers and raised $396,000 from customers to help pay energy bills for customers in need. UniSource also donated more than $2 million over that time to charitable causes in the communities where we provide gas service. Those contributions were funded by corporate resources, not customers’ rates.

The proposed rates will allow UniSource to recover its investments and will help fund future improvements, including $150 million in new business requirements and system reinforcement through 2029.

In addition to a higher monthly basic service charge, UniSource has proposed new mechanisms that will allow more gradual recovery of anticipated costs for investments in systems to serve our customers. Passing along these costs as they occur will avoid larger impacts that result from accumulations over longer periods between rate requests.

UniSource has achieved high levels of service and safety in recent years, including:

• Excellent scores on annual pipeline safety audits.
• A considerably lower rate of recordable injuries than the industry average.
• Prompt responses to nearly 390,000 calls from UniSource gas and electric customers last year when the average call was answered in about one minute.

“This is truly remarkable and reflects our commitment to operating efficiently and keeping rates affordable for our customers,” Gray said.

UniSource’s gas service territory, the largest of any gas utility operating in Arizona, covers 50 percent of the state’s geographic area, including Mohave, Yavapai, Coconino, and Navajo Counties in Northern Arizona as well as Santa Cruz County in Southern Arizona. We deliver natural gas through about 3,100 miles of distribution mains and more than 156,000 service lines.

UniSource Energy Services subsidiary UNS Gas, Inc. provides natural gas service to nearly 170,000 customers in northern and southern Arizona. Subsidiary UNS Electric, Inc. provides electric service to more than 103,000 customers in Mohave and Santa Cruz counties. Both companies provide service under the UniSource brand. For more information about UniSource, visit uesaz.com. UniSource and its parent company, UNS Energy, are subsidiaries of Fortis, Inc., a leader in the North American regulated electric and gas utility industry. For more information visit fortisinc.com.

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