The Arizona Corporation Commission could decide on whether or not to raise APS utility rates after deliberating over potential impacts during a special three-day session.
The commission started the session Monday and met again on Wednesday, Oct. 6, to determine if APS rates will rise in the near future. The state’s largest utility is requesting an increase of 4.99% for the average residential consumer’s bill, with an estimate that the vast majority of its customers would see their bills increase between 3% and 6%, according to the filing.
The hearing is “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 are using the meeting to sift through 39 different proposed amendments.
Typically, rate cases involve efforts to raise rates to cover operating costs, Debus said.
An administrative law judge for the ACC issued a recommended opinion and
order where other entities had the opportunity to submit reasons for or against the opinion. That opinion recommended an average rate of return at 4.9%, lower than APS’s initial request.
The commission can accept and reject different portions of the proposed changes.
“We are spending (Tuesday and Wednesday) discussing and potentially voting on all of these amendments,” Debus said.
There was plenty to discuss as the rate case has numerous issues from a change in time of use plans to questions about how residential solar customers should be charged for access to the power grid in order to sell excess power back to the utility.
Debus said the commission wants to take time to review exactly how residential utility bills would be impacted and how APS revenue would be affected.
The commission could accept all the amendments, disapprove of all amendments or pick and choose which amendments get passed. The case also includes various groups potentially impacted by any APS rate change.
Debus said there isn’t an exact timeline on when any changes could get done. He said a final decision is expected sometime before the end of the year.
“Any combination changes what ultimately happens here,” Debus said.
The rate making process is complex.
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 residential utility customers on rate cases — recommended a rate decrease in the matter.
The office disagreed with the administrative law judge’s opinion and order that said APS’s 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.
“Based on our analysis... we thought (APS was) overearning and that’s why we made the recommendation,” said Malcolm Hightower, director at RUCO.
Sherine Zaya, spokeswoman for APS, said it’s important for the utility to recoup some money already invested in infrastructure and facilities.
“The ability to recoup these expenditures is really the crux of the rate case,” Zaya said.
Hightower said it’s difficult for anyone to know the extent of the impact to utility bills of residents until the process is nearly complete.
“No one knows the bill impact until the very end, which is part of the problem,” Hightower said.
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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