The Trump Administration’s Actions Are Increasing Utility Bills in Arizona

Despite President Donald Trump’s campaign promise to lower electricity prices, they have continued to rise since he took office and have even outpaced wage growth, meaning household electric bills are rising faster than paychecks. With rising energy demand, an aging grid in need of modernization, and increasingly severe weather threats, millions of customers across the country are either already paying more for their electricity or will see higher prices in 2026 and beyond. Working-class Americans are concerned about being able to afford their utility bills, and the Trump administration is not helping them; in fact, in states such as Arizona, the administration’s actions are resulting in increased costs for Americans.

Arizona households are projected to pay an additional $140 per year on their energy bills by 2030 due to the One Big Beautiful Bill Act (OBBBA) that congressional Republicans passed and President Trump signed into law last summer. The OBBBA reduces new energy capacity additions at a time of rising energy demand compared with the trajectory before the law was enacted. In addition, Arizona Public Service (APS) and Tucson Electric Power (TEP)—which together serve about 1.85 million people, or 52 percent of the state’s electric utility customers—are seeking approval for annual rate increases that would further increase electric bills in the coming year. APS’ request would yield $608.7 million in additional revenue and, if approved, is likely to go into effect in early 2027, while TEP’s request would yield $135 million in additional revenue and would likely go into effect by December 1, 2026.

According to Center for American Progress research and calculations, if the requests are approved, APS and TEP customers would together pay an additional $1.50 billion across all sectors through 2028 and an additional $240 and $186 per year, respectively, on average residential electricity bills.*

In general, more investment in the power system is a good thing. The country needs to replace aging grid infrastructure, increase generating capacity to meet growing demands for electricity, and prepare for climate change. However, those needed investments are now coming at a higher cost as both companies request rate increases. In their applications, APS and TEP cited current federal policies and administrative actions that contribute to higher costs for both the companies and their customers.

Uncertain economic conditions increase costs for utilities

Utilities are a capital-intensive industry sensitive to changing market conditions, including high inflation and interest rates. In testimonies before the Arizona Corporation Commission, representatives for both APS and TEP warned that Trump administration policies could potentially lead to higher inflation and interest rates.

APS witness testimony cited changes in U.S. trade policy, such as the implementation of the current administration’s tariffs, as likely to drive up inflation and interest rates, consequently concluding that these policies would increase the cost of debt and equity for APS. Despite the U.S. Supreme Court’s reversal of some of the tariffs in February 2026, APS’ witness testified during an April hearing that the ruling itself was a new source of economic uncertainty. Similarly, a TEP witness testified that significant policy changes—particularly the tariffs—would lead to higher inflation and unemployment rates, resulting in higher cost of debt and equity.

Now, both the utilities have requested higher returns on equity, which is the rate of shareholder profit that investor-owned utilities are allowed to collect from customer bills—meant to reflect the cost of capital. APS requested a return on equity of 10.7 percent, up 0.45 percentage points from its prior rate case request, while TEP requested a return on equity of 9.75 percent, the same return on equity TEP requested in its prior rate case but up 0.20 percentage points from what was ultimately adopted.

Energy generation and grid investments are being restricted or lost

Cuts to federal funding are also taking a toll. On January 7, 2025, APS also received a conditional commitment for a loan guarantee of up to $1.81 billion through the Inflation Reduction Act’s Energy Infrastructure Reinvestment program to help finance the utility’s investments in transmission projects, renewable generation, and energy storage systems. APS’ first investment supported by the loan was the construction of a four-hour 150-megawatt battery storage facility sited next to an existing solar facility. However, in January 2026, the U.S. Department of Energy confirmed that the loan commitment for APS was canceled. While it has not been confirmed who initiated the cancellation of the loan, Arizonans will lose out on approximately $250 million in total savings for customers over the life of the loan guarantee.

APS also confirmed that potential changes to the tax benefits received through the Inflation Reduction Act tax credits could directly affect customer rates. APS witness testimony revealed that the IRS notified the company of the intent to examine its federal tax returns. The witness mentioned that the examination would likely be on the company’s 2023 and 2024 general business tax credits—including investment tax credits for a battery storage facility and nuclear production tax credits—and could potentially result in adjusted tax benefits. Further APS testimony also stated that the company is awaiting federal guidance on eligibility and phase-out requirements before passing on benefits from nuclear production tax credits.

Conclusion

Arizonans, particularly those who are customers of APS and TEP, will likely pay more on their electricity bills in the coming years. Despite President Trump’s promises on the campaign trail to lower costs, the administration’s actions will ensure that electricity prices continue to rise in Arizona and beyond.

* Authors’ note: These estimates are based on the methodology used for CAP’s “Electric and Natural Gas Utility Rate Hikes Tracker,” last updated on August 5, 2026. The tracker is not comprehensive and does not include every utility that is currently seeking an increase in utility rates. Please also note that both APS and TEP have revised their requests since the last “Electric and Natural Gas Utility Rate Hikes Tracker,” which this column has accounted for in its calculations as of September 17, 2026.