By Ethan Faverino |

State Representatives David Marshall (R-LD7) and Ralph Heap (R-LD10) introduced House Bill 2269, a measure to eliminate the state sales tax on electric and gas utility bills for Arizona residents and businesses.

The proposed legislation would suspend the state’s 5.6% sales tax on electricity and natural gas utilities until either $2.3 billion in cumulative tax relief has been provided to Arizonans or December 31, 2046—whichever comes first.

Once the $2.3 billion threshold is reached, the Legislature would then decide whether to extend, modify, or reinstate the exemption.

“People are getting crushed by rising costs, making it harder to live and do business in our state,” said Representative Marshall. “Almost everyone pays a local utility for electricity or gas. Eliminating the tax on this expense represents one of the most immediate and direct ways we can help working families keep costs affordable.”

The 5.6% tax on electricity and gas quietly adds up on monthly bills, leaving the average household paying more than $100 a year in utility tax—funds that could instead support necessities like groceries, housing, and childcare.

Representative Marshall highlighted a structural concern with the current system: “Taxing electric and gas utilities creates a perverse incentive for the government to support increased rate hikes. If rates go up, the state gets more money. That leads some to view rate increases as a source of potential funds for their liberal pet projects. That’s not right; it’s time to put the people of Arizona first.”

“While we’re unsure of any legal way to get ratepayers’ money back, there are things we can do to help reduce costs today,” Marshall continued. “In my opinion, the next best thing we can do is try to provide justice by eliminating taxes on electric and gas utilities moving forward. That’s why, over the next 20 years, we are proposing no state tax on utilities until every penny of the $2.3 billion that was wrongfully extracted from the Arizona ratepayer is metaphorically ‘paid back’ to hardworking families.”

He added, “This bill will save most residents between $100 and $120 per year, on average. Once the $2.3 billion threshold has been met, then the state can determine what it wants to do with the exemption from there, including whether to reassess the tax or extend the exemption even further.”

Representative Heap pointed to actions taken by the Arizona Corporation Commission as the basis for the bill’s $2.3 billion figure: “In 2006, Arizona Corporation Commissioner Kris Mayes catered to outside special interests and adopted expensive renewable energy surcharges that cost ratepayers more than $2.3 billion over the last 20 years. This special interest slush fund also led to foreign-owned boondoggles like the Solana Generating Station, which Kris Mayes personally supported, and which cost ratepayers more than three times the above-market rate of power.”

“While repealing these mandates may help to prevent new costs,” Heap added, “it will do nothing to compensate customers for the unjust surcharges that Kris Mayes forced ratepayers to pay over the last 20 years.”

Ethan Faverino is a reporter for AZ Free News. You can send him news tips using this link.