A hot debate ensues in Arizona as power company APS pushes for a substantial rate increase, striking small businesses harder compared to large companies and residential clients. According to a recent report by 12News, APS has put forth a proposal that would lead small businesses to face an average increase of 13.5%, whereas extra-large businesses would only see an increase of 7.2%, and residential customers 11.3%. This disproportionate rate proposal has stoked concerns among members of the small business community who are already wrestling with tight margins.
The proposed increment in the rates stems from what APS described as a "rigorous process," aimed at calculating future costs to serve varying customer types, Jill Hanks, an APS spokesperson, detailed in a written statement. However, as told 12News, Rick Murray of the Arizona Small Business Association highlighted the unfair pressure small businesses would face if the recommended rates are implemented, considering their thin profit margins and limited ability to absorb additional costs. Despite acknowledging that larger businesses consume more energy and bear a greater share of the overall cost, Murray pointed out the stark disproportionality in the proposed rate hikes.
On the flip side, Danny Seiden, President of the Arizona Chamber of Commerce, backed APS's rate structure claiming it to be in the long-term interest of Arizona's energy reliability, according to a September letter to the Commission. In a subsequent interview, Seiden expressed that his support for the proposal comes out of a concern for the state's future, citing potential risks of falling behind in infrastructure investment and the dangers of power outages.
Nevertheless, suspicions have been cast over the motivations behind Seiden's endorsement. A former board member of his own organization, Murray has suggested that large donations from APS to the Chamber might have a part to play in the advocacy efforts. Seiden, who declined to disclose the amount APS contributes, insisted in his statement obtained by 12News that the Chamber's support goes beyond financial ties and is centered on future-thinking for the state.
The rate hike comes on the heels of a prior increase that saw APS customers paying an average of 12% more per kWh this summer as opposed to last, based on APS's financial reports. This prior bump was the result of the Arizona Corporation Commission allowing APS to recover higher fuel costs, which, among other things, are pushing the utility to seek further increases to secure a strong financial position for future investments in the face of growing demand.
Bracing for the decision by the five elected corporation commissioners this December, consumer advocates have voiced their contention, notably Abhay Padgaonkar who slammed the hike as a move to "pad APS's guaranteed profits," as reported by 12News. Padgaonkar's assertion reflects the stark contrast between APS's aspiration for an increased Return on Equity (ROE) of 10.25%, and the more modest $85 million revenue increase recommended by RUCO, the consumer advocacy agency.
