Arizona residents served by utility giant APS could see their electric bills spike if the state's regulators approve a proposed rate increase this week. The Arizona Corporation Commission, which governs utility rates, is posed to vote on February 22, and the decision could lead to an average hike of 11% for APS customers, as detailed in reports by ABC15. Alaura Skiff, a Phoenix homeowner, expressed trepidation at the potential rise in costs, stating her bill could near "$500 a month" – a dramatic leap that would follow an already substantial increase from last year.
The push for increased rates comes after APS's parent company, Pinnacle West Capital Corp., reported a third-quarter profit surge of 22% from last year's record heatwave, which led to higher energy demands. APS claims that the rate hike is crucial to maintain a dependable energy supply "even when it's 120º outside," according to APS’ manager of public affairs, Ashley Kelly. Critics, however, like "accidental consumer advocate" Abhay Padgaonkar, are skeptical of the need for such steep increases, citing a 12% rate jump in just the third quarter of last year, primarily due to climbing power supply adjustments and a new court resolution surcharge. "So the money comes out of your left pocket, and it comes out of your right pocket," Padgaonkar told ABC15.
This proposed rate proposal, however, is contested. The Residential Utility Consumer Office (RUCO), a state agency representing residential utility customers, suggests that APS's ask is "overstated" and "not fairly balanced to the ratepayer," advocating for a more modest increase of $84 million. APS aims for a much higher increase in revenue requirement at $376 million. As part of this complex proceeding, APS is also arguing for a rate disparity, with the proposal affecting small businesses, schools, and residential customers differently, which has raised concerns among various parties, including labor unions and public schools.
A recent development further muddies the water. Administrative Judge Sarah Harpring, overseeing the APS case, has recommended a Return on Equity of 9.55%, as reported by 12News. While this recommendation to establish a profit margin is lower than what APS desires, it is still over a point higher than RUCO's recommendation. Every fraction of a percent translates to tens of millions of dollars in potential profit for the utility company, underscoring the high stakes of the upcoming decision by the Arizona Corporation Commission.
In the backdrop of this proposed increase are prior decisions by the current commission – a mix of four Republicans and one Democrat – that have already led to rate and energy policy changes impacting Arizona's largest electric utilities. According to 12News, RUCO has generally opposed all six major decisions rendered by the commission last year. If the Commission follows through on approving or adjusting the recommended rate hike, APS customers can expect their bills to reflect the new rates in the near future.
