Play with TEP's Capital Structure

Learn what mis-allocated capital costs you.

A regulated utility earns a return on its rate base — and that return flows straight into your bill. The return rate (ROR) is the Weighted Average Cost of Capital (WACC) — a blend of cheap debt and pricier equity (ROE) — plus a small return on the fair-value increment. Move the four levers — capital structure, ROE, cost of debt, and the contested fair-value-increment (FVI) return — to see how the money flowing to lenders, to taxes, and up to the parent company (Fortis) reshapes. This is only the return-on-capital slice of your bill (plus the income taxes it triggers) — not fuel, O&M, or other costs. Anchored to Tucson Electric Power’s 2025 rate case

ROE
10.50%
high
low
Equity (ROE) Income taxes Debt interest
TEP Fortis Shareholders Lenders Government Equity → Fortis (→ shareholders + its lenders); debt → lenders; income tax → government. Band heights = annual dollars.
Capital structure — drag toward debt or equity 44.5% debt / 55.5% equity
0% debt (all equity)100% debt (all leverage)
Cost of debt — weighted cost of long-term debt 4.28%
3.0%4.28% — TEP embedded7.0%
Return on fair-value increment (FVI) — contested add-on return 0.20%
0% — AG & recent ACC0.20% — TEP ask1.0%
Annual change on the avg. residential bill*
—
vs. TEP’s ask
—
vs. today
7.73%
ROR — return on rate base (incl. FVI)
0% today   ask 12%
To shareholders (ROE + fair value)
To income taxes
To lenders (interest)
Total / year (this slice)
* This return-on-capital + taxes slice only — not your whole bill. Fuel, O&M and other costs (which parties like RUCO also fight to cut) are separate.
Jump to a party’s position in the case — details & sources below:
Each position in the TEP 2025 Rate Case (ACC Docket E-01933A-25-0103). Links open the filing PDF on the ACC docket at the cited page.
PartyEquity / DebtROEFVIWACCSource
Current / authorized54.32% / 45.68%9.55%0%6.93%2022 Dec. 79065, p. 46
TEP (company)55.48% / 44.52%10.50%0.20%7.73%p. 125
ACC Staff55.48% / 44.52%9.75%0.20%7.31%p. 125
RUCO55.48% / 44.52%9.20%0%7.00%p. 58
AZLCG43% / 57%~8.6%0%6.14%p. 19
AG / State of Arizona56.8% / 43.2%6.07%0%5.29%p. 29
Public power†0% / 100%none—~3.8%SRP FY25
† Public power is an illustrative public/municipal model (not a docket party): ~100% tax-exempt debt, no ROE, no income tax; debt cost benchmarked to SRP’s ~3.8% (FY25, Aa1/AA+). Common inputs: OCRB rate base $4.315B; cost of debt 4.28% (2025 embedded) for all 2025 positions, 3.82% for current/authorized.

Transparent assumptions

Nothing hidden — every number below is editable, and the defaults come straight from TEP’s 2025 rate-case filings.