Arizona Corporation Commission approves APS rate hike, electric company will collect $95 million

PHOENIX — Regulators agreed Tuesday to allow Arizona Public Service, the state’s largest electric company, to collect another $95 million a year from its customers.

The nearly 3.9 percent overall rate increase is effective Saturday. For residential customers, the increase is closer to 4.5 percent, which APS says will mean an average $6-a-month increase for its more than 1 million residential customers. APS serves primarily the Phoenix area and central Arizona but also portions of Southern Arizona including Ajo, Bisbee and Douglas.

The 4-1 vote by the Arizona Corporation Commission came after the majority rejected a bid by Bob Burns to delay the rate case until his lawsuit against APS and his fellow commissioners is resolved. Burns contends he was denied what he believes is his constitutional right as a commissioner to subpoena utility executives over how they’ve spent ratepayers’ money in the past, including whether they were the source of money spent anonymously on campaigns in the 2014 election.

Burns had no better luck with a proposal to allow the rate hike to take effect but require APS to post a bond equal to the new dollars in case a judge ultimately sides with him. If courts conclude the rate case was not handled properly, consumers will be entitled to refunds, Burns argued.

APS legal counsel Thomas Loquvam declined to comment on the possibility of refunds because of the pending lawsuit.

Regulators voting with the majority said the rate increase worked out by APS, commission staff and the Residential Utility Consumer Office was a good deal. Commissioner Andy Tobin pointed out that groups representing low-income residents were in support. And Boyd Dunn said his support was based on the relevant facts and not personal attacks he called “unfortunate.”

Within the rate increase, there also are some significant changes in how bills will be computed.

People who are currently paying a flat rate will find their basic charges — what they pay no matter how much or little energy they use — going up sharply. For basic customers, the figure is going from less than $9 a month to $15; for large-use customers, meaning homeowners using more than 1,000 kilowatts a month, the base rate will be $20.

Much of that is designed to encourage customers to switch to alternate rate structures. One is a time-of-use rate, where the charge per kilowatt hour is higher during peak periods but lower at off-peak times. APS currently has such a program, with higher rates from noon until 7 p.m. The new rate structure sets the peak hours from 3 to 8 p.m.

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That drew concern from some consumer advocates who noted the higher overall rates and said it will be difficult for customers to use less power during that early evening hour.

Any new APS customer will be automatically put into a time-of-day rate for at least 90 days. Only after that would they be able to decide that a flat per kilowatt hour makes more financial sense.

Burns attempted to insert a provision to guarantee a refund for new customers who pay more under a time-of-use rate than they would have under a flat rate. APS opposed the move, a position that Steve Jennings of AARP said shows what this is really about: corporate profits.

“I think you can see by the company’s position on this that they’re admitting that they’re going to charge people more than people need to pay for the power,” Jennings told regulators. “People should only have to pay what it costs for them to get the power, not one penny more.”

But APS Vice President Barbara Lockwood said all this is part of the company’s need to move to “more modern rates” that reflect the cost and availability of electricity.

Lockwood said promising customers a refund if a flat rate would have cost them less undermines the goal of getting customers to “work with the rates” to see if they can save money by adjusting their energy use.

“If it’s a flat guarantee, then there’s really no purpose or reason for customers to actually experience the rates,” she said.

In hammering out a deal, APS made some concessions.

For example, one provision provides a special discount rate for schools, a move that brought on the Arizona School Boards Association. There also is a new rate to attract data centers and customers with multiple locations, like grocery chains, will be able to have a single aggregate rate with lower costs.