Most APS customers should see their electricity bill decrease after the Arizona Corporation Commission voted to slash APS revenue by about $119.8 million.
In October, the commission started a three-day session to determine if APS rates would rise in the near future. The state’s largest utility requested an increase of 4.99% for the average residential consumer’s bill, with an estimate that the majority of its customers would see their bills increase between 3% and 6%, according to the filing.
APS, the lone subsidiary of Phoenix-based Pinnacle West Capital Corp., is Arizona’s largest utility company and serves much of the Valley, including the Sun Cities and Surprise.
The hearing was “to determine the fair value of the utility property of the company for ratemaking purposes, to fix a just and reasonable rate of return thereon, to approve rate schedules designed to develop such return,” according to the ACC website.
APS filed the rate case application in October 2019, the website said.
Nick Debus, an ACC spokesman, said commissioners used the meeting to sift through 39 different proposed amendments.
While the lower rates may be good news to customers, the utility was not pleased with the results. APS officials said they planned to file a lawsuit in an effort to get the ACC decision reversed.
Sherine Zaya, spokeswoman for APS, said no timetable has been set on when the company would move forward with litigation.
In the past, Zaya said APS was attempting to recoup previous expenditures on infrastructure and facilities.
“Our most important responsibility is to our customers, who depend on APS for the energy infrastructure that will power Arizona’s prosperity far into the future,” APS said in an Nov. 2 statement. “(The Nov. 2) short-sighted decision by the Arizona Corporation Commission ignores that crucial responsibility. Though customers will see some nearterm benefits, the overall outcome will raise costs for customers in the long run and put our state’s economic future at risk – leaving us no choice but to take legal action.”
Customers will be affected differently, depending on their rate plan, the utility said.
“Overall, most residential customers — more than 70% — will see their bills stay flat or decrease slightly,” according to the website. “For the large majority of customers who will see a change, it is typically no more than 2% up or down. That translates to an average monthly bill of $100 now being between $98 and $102 (based only on the effects of the price change and not the other bill factors).”
Chairwoman Lea Márquez Peterson filed an amendment to the rate case on Oct. 21 that proposed the company reduce costs and achieve average retail rates of 9 cents per kilowatt-hour by 2030 via a plan that would span multiple years and multiple rate cases. APS’ current average retail rate is 11.72 cents per kilowatt-hour, according to a press release.
The press release said the last rate decrease for APS was in 1996, “which was a part of a comprehensive, multi-year, multi-rate case plan beginning in 1991 to rein in the company’s operating expenses and achieve operational excellence in the midst of impending retail electric competition” in Arizona.
Márquez Peterson said with another APS rate case potentially coming next summer, pushing through with this adjustment was the best approach.
“Under Arizona’s constitution, the Commission serves as the substitute for market competition,” said Márquez Peterson. “When we’re dealing with captive customers and monopoly utilities, effective rate regulation is the solution.”
Groups such as AARP Arizona were pleased with the ruling.
“AARP Arizona is thrilled the Arizona Corporation Commission adopted our recommendations in the APS rate case order issued (on Nov. 2),” said Dana Kennedy, state director for AARP Arizona in a press release. “AARP Arizona has been focused on the issues surrounding the previous rate case, which was issued in 2017.
“AARP Arizona felt strongly enough during those proceedings to be one of only two groups to refuse to sign on to the settlement agreement. With today’s decision, AARP has been vindicated in our decision, and glad to know that then and now we will always fight for the 50 (plus),” Kennedy said.
Rates — approved by the ACC — can be changed if the utility company initiates a request by filing an initial application to the ACC.
The application is based on a “test year” of “actual expenses and investments during a recent” 12-month period.
The process allows the utility to charge rates to “recover expenditures that are appropriate and prudently incurred, and
also provides an opportunity to earn a fair return” on the utility’s capital investment.
The Residential Utility Consumer Office — a state entity that advocates for residential utility customers on rate cases — recommended a rate decrease in the matter.
The office disagreed with an administrative law judge’s opinion and order that said APS’ rate of return would be 9.16% from revenue the company hauls in. Instead, the consumer office said the commission should adopt a rate of 8.7% for APS’s “inferior customer service” history, a “well-known” issue to the commission, the consumer office said.
For several years, APS had been dogged by customer issues, from reports of its website leading customers to choose the higher-cost rate plans because of incorrect data to cutting off power to customers in summer that potentially resulted in three deaths, including that of a Sun City West woman, Stephanie Pullman, in 2018.
Last month, Malcolm Hightower, director at RUCO, said his office thought APS was “overearning” and made that recommendation to ACC members.
Several changes are slated to come down the pike at APS.
According to the APS website, the on-peak window for time-of-use plans will shift from five hours to three hours. Customers will receive communications about this change before it occurs, the website said. Instead of 3 p.m. — 8 p.m., the time will shift to 4 p.m. to 7 p.m.
The website said customers will have more time to pay each month — now due in 21 days rather than 14. For more information, please visit https://www.aps.com/updates.
Brent Ruffner Lead News Reporter | Phoenix @AzNewsmedia
Brent Ruffner joined Independent Newsmedia, Inc., USA, in 2021 where he writes about developments at TSMC and Maricopa County issues, including election topics.
He's written about stories that range from accusations that a Mesa monkey breeding facility is unsafe to what to do if you encounter a rattlesnake in the desert.
Community: He is a supporter of the American Cancer Society.
Education: Bachelor's degree in Journalism and Mass Communication, Arizona State University, May 2007.
Random Fact: He met former San Francisco Giants outfielder Willie Mays at a Phoenix Firebird game after winning a contest for an autographed baseball.
Hobbies: Hiking in the woods and collecting sports memorabilia.
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