APS utility rate hikes by about 8% - The Arizona Republic

APS utility rate hikes by about 8%

APS got what it wanted. Now you're getting zapped with higher utility bills. Here's why
Russ Wiles

Arizona regulators this week approved an electricity rate hike for Arizona Public Service utilities, boosting the average residential bill by about 8%.

The 4-1 vote came after a marathon, 11-hour session Feb. 22, during which the Arizona Corporation Commission heard oral comments from roughly 45 speakers after having received more than 2,000 written comments before that. Here are answers to some key questions on this issue:

How much will electricity rates increase?

APS officials were still crunching the numbers well after the vote, but they later estimated residential bills would rise around 8% to a range of $10 to $12 more per month or an additional $10.50 extra on average.

Given the confusion around the actual numbers during the session, Diane Brown of the Arizona Public Interest Research Group Education Fund asked the Commission to reconvene so that APS could explain the data. "APS ratepayers deserve to know what increases they are paying for and approximately how much more they can expect to pay each month," she wrote in a letter.

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When will the rate increases start?

On or around March 8, 2024.

APS also announced some other minor adjustments, including two more off-peak holidays.

What arguments did APS cite in requesting the rate increase?

There were many, but the utility made it clear that the added revenue will help recover expenses that it already has incurred to maintain and improve the company's power grid, which serves 1.4 million residential and business customers in 11 Arizona counties. The company borrows money, largely by issuing bonds, and awaits rate increases to recoup those costs.

“We need immediate and sufficient rate relief,” APS President Ted Geisler told the Commission. “We must continue to rely on lenders to fund the grid investments necessary.”

Does APS continue to expand its electricity grid or system?

Yes. Geisler noted that APS’ customer base is increasing, which requires new investments. The company estimates demand growth will rise by 40% over the next eight or so years.

As an example, Taiwan Semiconductor Manufacturing Co. is building a massive complex in north Phoenix, in APS’ service territory. The Taiwan company had no Arizona presence just a few years ago but eventually will probably become APS' largest customer.

Does the Commission set rates for the Salt River Project?

No. SRP, a quasi-governmental entity and Arizona's second-biggest electricity provider, isn’t regulated by the Commission.

How did the Commission address rooftop-solar customers?

In one notable action, it adopted an amendment that will impose a charge of around $2 to $3 a month on customers who have installed their own systems to generate solar power. Industry advocates and affected homeowners have decried this as a discriminatory fee that non-solar customers don’t have to pay.

APS contends solar customers don’t pay the full costs to service them, with those costs overwhelmingly focused on poles, transmission lines, generating stations and other infrastructure, not the actual energy produced. That surcharge was also approved on a 4-1 vote.

Did the Commission vote along party lines?

It did on the solar surcharge and in the overall rate case. In both of those instances, Anna Tovar, the sole Democrat, cast the lone dissenting vote.

Earlier this year, Tovar announced that she would not seek re-election after her term ends in January.

Did the Commission make any unusual decisions?

There were many moving parts to this complex rate case.

Before the Commission's hearing and vote, Sarah Harpring, an assistant chief administrative law judge, issued a report discussing the issues in detail and providing numerous recommendations. Her analysis ran nearly 500 pages.

In one contentious move, the Commission voted against providing ratepayer funding to support Native American communities in northeast Arizona that have been hurt by the premature closing of coal-fired power plants in that region. APS had proposed nearly $150 million in ratepayer-funded assistance for groups in that area contingent on Commission approval, which didn’t happen.

APS has supplied roughly $11 million in what is called "coal community transition support," with more than $3 million of that provided by APS shareholders.

“It’s extremely disappointing that we finally have a utility stepping up to support communities where it is closing down coal plants, and now politicians are getting in the way and forcing these communities to endure even more economic hardship,” said Nicole Horseherder, executive director of the Navajo community group Tó Nizhóní Ání, in a statement following the vote.

In another move, the Commission approved more than $12 million to bolster APS’ pension plan, even though it is already fully funded, with the Commissioners deciding to stick with the funding process on an issue that they have followed for decades.

Reach the writer at russ.wiles@arizonarepublic.com.