The Arizona Corporation Commission has greenlit a rate increase for Arizona Public Service Company (APS) following a special open meeting last Thursday.
APS had initially requested a Return on Equity (ROE) of 10.25%, but the commission opted for a lower figure, settling on a ROE of 9.55%, along with a return on the fair value increment (FVI) of 0.25%. The decision came after the recommendation of Assistant Chief Administrative Law Judge Sarah Harpring for that ROE. It passed on a 4-1 decision.
Effective March 1, the estimated bill impact is around 8%. This means a typical residential customer will see their monthly bill increase by $10 to $12.
To address subsidization among APS’s residential customers, the commission approved a revenue allocation plan. This includes an extra fee for residential customers with solar systems connected to the grid, ranging between $2.29 and $2.56 per month for a 10KW system, depending on the rate plan.
Chairman Jim O’Connor reflected on the decision’s significance, emphasizing the commission’s duty to all ratepayers and the grid’s reliability. “Our constitutional obligation is to protect the interest of all ratepayers and ensure the grid is reliable. I believe today’s decision fulfills our duties. It means that rates are equitable and fair among customers. Arizona’s population and economy is growing at a rapid pace, and that means utilities must expand their infrastructure and service as well. While Thursday’s decision was not easy, it is a necessary one to make sure utilities continue to meet the demand of our growing economy and maintain reliable service,” O’Connor stated.
The push for a rate adjustment by APS, lasting over a year, culminated with this approval, marking a critical step in the utility’s ongoing efforts.
During the hearing last week, the commission heard from various parties about the rate change’s potential impacts. The president of APS Ted Geisler, outlined the need for increased revenue to ensure the reliability of future power, including the need for investment for grid infrastructure but emphasized that this increased revenue is actually to pay for infrastructure that APS has already paid for and is currently supplying power to residents.
In addition to the rate increase, the meeting also touched upon the topic of the Coal Community Transition (CCT) funding. Commissioner Anna Tovar, who was the lone dissenting vote against the rate increase, proposed an amendment aimed at directing additional funds to assist communities transitioning away from coal-based economies. The amendment highlighted the urgent need for support in regions like the Navajo Nation and the Hopi Tribe, which have been significantly impacted by the closures of coal-fired power plants. The amendment highlights the community sacrifice present in economies dominated by coal-based energy production and suggests that APS is responsible to compensate for those sacrifices. Although the amendment did not pass, Commissioner Tovar’s efforts shed light on the importance of balancing energy transition with the economic and social well-being of affected communities. The discussion around CCT funding underscores the complex challenges and responsibilities facing Arizona as it navigates towards a sustainable and equitable energy future.
