Over the last several years, thousands of people have ridden the shuttle's at Sabino Canyon, which are powered by diesel.
Tucson Electric Power communications specialist, Sherri Cadeaux, says the plan is to install all-electric shuttles.
"We're all about promoting sustainability and clean energy efficiency."
TEP is contributing $2.5 million. $1.5 will be given to help the new operator with startup costs and another million dollars will be given interest free, on a 10-year loan.
Regional Partnering Center is the new operator that was chosen by the US Forest Service and are managed by the Pima Association of governments, which coordinates regional planning.
The forest service has given RPC a five year permit to work on the canyon.
TEP says the funds were gathered from corporate resources and not customers' rates.
RPC will also be responsible for operations and maintenance of the shuttle system.