In Pinal County, SCIP customers angry over higher electricity rates - The Arizona Republic

In Pinal County, SCIP customers angry over higher electricity rates

'I'm scared': In Pinal County, customers of unique power company see quick-rising bills
Sasha Hupka

Judy Ray, 68, doesn't know how she can possibly afford her electric bill this month.

Usually, it's under $250. But in July, it totaled about $380. And now, Ray is facing a bill of roughly $470 for her mobile home in Paisado, a small community south of Florence in unincorporated Pinal County.

Paying it wouldn't be a problem if Ray was rich. But she is on a fixed income, reliant on about $1,300 that she receives from the government each month.

So instead, she's joined other community members in a battle against the area's electric utility, the San Carlos Irrigation Project.

The utility's service area spans thousands of miles and includes parts of Gila, Maricopa, Pima and Pinal counties. It serves a little over 10,000 residential customers. And because it is federally owned, it is regulated differently than most other utilities in the state — a structure that allows it to change some of its rates quickly and without much notice.

In this rural corner of Pinal County, recent rate hikes have come as a shock to some residents. Cheyenne Williamson of Cactus Forest, who is also on a fixed income, needs to come up with a little under $700 this month. Debra MacGregor of Florence Gardens faces a $456 bill. Cathy Foster of Cactus Forest, who is retired, lives in a 1,400-square-foot house and runs a small cattle ranch, has an electric bill of roughly $1,200.

Some can afford to pay. Others can't. Ray said she paid her bill in full last month, but she can only afford to pay part of her current bill — maybe half at best.

With big bills accruing, she and other customers are questioning whether the utility's oversight should change. More than 300 people came to a Wednesday night community meeting in Florence about the utility's electric rates with their bills in hand, some of which totaled more than $1,000.

At the event, which was organized by a group that has come to call itself SCIP Power Outrage, many attendees signed a petition that calls for federal investment to modernize the utility's infrastructure so that it can be divested and control of the power given to the Corporation Commission. Speakers raised varying ideas for short and long-term solutions, but nearly all hit on a common theme — they can't currently afford their electric bills.

"This month I had to put my air conditioner up to 82 degrees and I normally have it set at 78 degrees," MacGregor wrote in a note to The Republic. "I have unplugged everything in my home including televisions. I'm taking cold showers. I do not use my lights in the house. ... I only did one load of laundry and hung it up to dry. I have hand-washed all my dishes. I cannot afford to live with this rate increase."

But without paying in full, community members run the risk of getting their electricity turned off.

Like every desert dweller, Ray relies on her electricity to power her air conditioning during the brutally hot days that can stretch into October in Arizona. Ray, who was diagnosed with juvenile rheumatoid arthritis when she was 5 years old, also needs electricity to charge her wheelchair.

So for Ray, her electric bill is a matter of life or death.

"I'm scared," she said. "Point blank, I'm scared."

About SCIP — the San Carlos Irrigation Project

SCIP was initially created in the 1920s to provide irrigation water and power to tribal lands and surrounding rural areas.

Unlike most other Arizona utilities such as Arizona Public Service Co., the state's largest power company, SCIP isn't regulated by the Arizona Corporation Commission. It also doesn't have an elected board that provides oversight as the Salt River Project does.

Instead, SCIP is overseen by the U.S. Bureau of Indian Affairs. Spokesperson Josh Barnett said that agency tries to keep its fees "as low as possible" for customers, but had to increase its rates recently because of the current economics of the power market.

The utility won't disconnect customers from their electric service during June, July and August, the hottest parts of the summer, he said. The rest of the year, he said, SCIP has "discretion to continue services for health and safety reasons."

Although SCIP has a similar name to the San Carlos Apache Tribe, tribal leaders say they have no involvement in the utility.

San Carlos Apache reservation residents are SCIP customers too, said Ina Salter, Seven Mile District council member, and they are also experiencing high power bills.

"We are in this together," Salter said. "We are feeling it here. So we have to stand up for our people and find a solution."

How do rate increases work for the San Carlos Irrigation Project?

Usually, Arizona power companies must get electric rate changes, siting of power plants and more approved by the elected members of the Corporation Commission.

When a rate hike is requested by a utility, hearings on the matter are held before an administrative law judge where opponents of the hike can argue their perspective. Later, that judge issues an opinion, and then the matter goes before commissioners.

The entire process is generally lengthy. APS, for instance, asked regulators to hike its rates in October 2022 and is still waiting for a final vote.

Federal regulations outline a very different process for rate increases for utilities like SCIP that are under the BIA.

Rates and fees are reviewed by bureaucrats on an annual basis, per the regulations. Those reviews determine the utility's financial status.

If SCIP wants to raise its electric power rate, BIA must hold a public meeting with at least 15 days' notice. The meeting must be publicized, the agency must provide customers with a description of the proposed rate adjustment and give customers information about how to submit comments.

Then, the agency makes a final determination on the proposed electric power rate adjustment after reviewing comments and publishes the proposed adjustment and final rate in the Federal Register.

But there is another charge that SCIP customers may see on their bills called a power cost adjustment. That fee is designed to reflect unforeseen increases in the cost of purchased power. The utility can put these increases into effect immediately after the fee is published in a local newspaper and posted at the utility's office.

Ultimately, the BIA's Western Region director — currently Jessie Durham — makes the call on when the power cost adjustment needs to change, Barnett said.

Why are the bills so high?

SCIP used to generate its own electricity from the Coolidge Dam, but flood damage in the 1980s made the dam's hydroelectric generation equipment inoperable.

Since then, it has purchased some electricity from the Western Area Power Administration, which markets low-cost hydropower generated by more than 50 dams owned by the federal government. However, SCIP buys most of its power at market rates, according to a statement on its website.

SCIP publicized its proposed electric power rate increases in the Federal Register last year, following all of the electric power rate adjustment requirements in federal regulations. The utility hadn't raised its rates since 2007 and proposed a hike taking effect in June 2022 and another slight adjustment at the start of 2023.

Before the changes, customers paid a minimum of $10 for their first 50 kilowatt hours, 12 cents for each additional kilowatt hour up to 100 kilowatt hours and nine cents for every kilowatt hour thereafter. Under the new adjustments, the minimum charge for the first 50 kilowatt hours went up to $14.08. The cost of every additional kilowatt hour increased to nearly 14 cents with no tiered system for people using more electricity.

Initially, the utility anticipated that the power cost adjustment for 2023 would drop to zero. For the first few months of the year, customers say it did.

But the nature of that charge means that it can be implemented quickly when energy starts getting pricey. With record-breaking summer heat and increasing demand for energy, the power market is currently flying high. So, in April, SCIP raised the rate to a little over two cents per kilowatt hour. And recently, the utility more than doubled it to a little over five cents per kilowatt hour, sparking high bills and customer outrage.

"Because purchased power costs are in part determined by market rates that are not under our control, we need to immediately implement the PCA to meet our financial and statutory requirements," the utility said in a notice on its website. "We will continue to monitor energy rates and adjust the PCA as needed."

Later, SCIP told its customers that it would issue an adjustment to customers' September bills following the backlash, delaying the implementation of the new power cost adjustment by a month.

Barnett said the rate adjustment "reflects the current cost to operate and supply the power" and is still ultimately necessary "to ensure that the BIA can continue to provide safe and reliable services into the future."

Customers seek solutions

At Wednesday's meeting, customers said the one-month delay doesn't do much to help.

They questioned why the company hadn't been implementing incremental increases to prevent bills from suddenly skyrocketing and why it doesn't provide time-of-use rates, prepaid power plans and other options to help customers keep their bills in check.

"They're not even trying," said Debra Kempton of Valley Farms, a small community located between Coolidge and Florence.

Others raised additional issues. Joseph Alexander, a retired Army veteran who lives in Florence Gardens, said the utility applied a past-due balance to his bill this month, even though he paid last month's bill in full.

Outside the meeting, the Corporation Commission has gotten a few calls about the utility in recent weeks, according to spokesperson JP Martin. Several customers requested that the commission help them switch their electric service from SCIP to APS, Martin said, even though that isn't possible.

In tense discussions at the meeting, customers largely focused on two ideas. First, they hope to create enough public outcry and political pressure to force the utility to place a moratorium on its power cost adjustment increase. Second, they want to try to force the divestment of the company so that their electric utility is regulated by the Corporation Commission.

"The idea is to get this petition into the hands of people who can create change," said Brad Miller, a local attorney assisting SCIP Power Outrage.

Most customers left the meeting with a plan for how to fight the rate increases, but uncertainty over what financial impacts future electric bills might bring.

For Ray, the woman who needs electricity to charge her wheelchair, that translates into uncertainty about her future well-being.

"I still don't understand how they can get away with this," she said.

Sasha Hupka covers Maricopa County, Pinal County and regional issues for The Arizona Republic. Do you have a tip about your community? Reach her at sasha.hupka@arizonarepublic.com. Follow her on X, formerly Twitter: @SashaHupka. Follow her on Instagram or Threads: @sashahupkasnaps.