Rate could get rehearing after customers see bills
Moves are being made in pursuit of a rehearing
Some Arizona Public Service customers say their bills have increased more than anticipated after a recent rate hike took effect. APS had projected the average residential bill would increase about $6 a month, or 4.5 percent, yet some customers report bills that are significantly higher. Some people are requesting a rehearing on the rate increase.
Arizona Public Service Co. customers are reporting much higher bills than expected after the state’s utility regulators allowed the company to raise rates in mid-August.
APS had projected that the average residential bill would increase approximately $6 a month, or 4.5 percent. But some customers are saying their bills increased significantly more than $6.
“This is literally taking food directly out of my mouth,” Phoenix customer Ron Geddling wrote to the regulators after getting his first new bill. “This is absolutely the worst robbery of my money I have ever seen … I will now be going hungry in order to make APS a little richer.”
Geddling said his September bill was $50 more than August, even though he used less electricity. That jump nearly doubled his monthly expense, he said.
Geddling is on the E-3 rate plan for low-income customers, where qualified residents can get a 25 percent discount on their bill. Before the rate increase, customers on that plan could qualify for as much as a 65 percent discount if they used very little electricity.
An APS representative says the higher bills likely are the result of higher temperatures over the summer, expressing confidence in the utility’s projections on the impact on customers. And the company’s new rate plans may help lower bills once customers switch over, officials said.
But a provision in state law could allow those who think the hike is inappropriate to ask the commission for a rehearing on the increase.
One Arizona Corporation Commission member and one intervenor to the APS case already have asked for a rehearing because they opposed the price hike, and customers can do the same.
The debate over higher bills renews questions about the rate-approval, which was completed in a hearing in which regulators did not challenge the company’s core financial assumptions or demand meaningful changes before approving it on a 4-1 vote.
Robert Burns, the only Corporation Commissioner to oppose the increase, asked for the rehearing. He also continues to battle APS in court over the company’s spending on political issues.
Burns said the most recent vote didn’t get enough scrutiny and that the commissioners could have reduced the increase or made other changes had they wanted to stand up to APS.
For many customers, their bill received in early October for September usage was the first full month under the new prices.
APS’ estimate for a $6 increase is based on the average monthly bill for all residential customers across all rate plans and includes large homes and apartments. It also is averaged over the year. APS says the average residential customers use about 1,100 kilowatthours of electricity a month.
So a big house that uses more than the average amount of electricity will see a larger increase, and the increase in summer months will be even more still when compared with winter.
Beth McFall, a consumer advocate for APS, said that despite complaints that the increase is more than advertised, the average increase across the more than 1 million customers should be $6 a month. Until the rates have been in place a year, it is not possible to determine whether the average is true to that figure.
“We are very confident of those numbers,” McFall said.
She said the company has gotten a large number of high-bill complaints going back to June before the rates changed because the summer was so hot.
“Hotter weather has caused higher bills,” she said. “I would say for really the entire summer, before the rates going into effect, we received more calls than typical.”
She said that customers might believe they are not using more electricity because, for example, they might keep their thermostat set at 83, as usual. But if the weather is hotter, it requires more work from their air-conditioner to maintain that 83 degrees indoors.
Cave Creek APS customer Réal Bernier was able to reduce his electricity usage this September compared with last year. But the more than $400 bill he got Oct. 4 was a shock nonetheless.
His cost per day for electricity was $14.94 compared with $12.40 a year ago, despite APS reporting the average temperature was 83 in both months and despite his lower usage.
Bernier is frustrated the increase is more than the $6 APS advertised and is also upset the Corporation Commission did not do more to mitigate the rate hike.
“Weren’t they supposed to represent the citizens?” he said. “This is no longer a commission. This is a gang.”
APS is implementing the new rates in two steps. First, the current rate plans increased in price Aug. 19. Next, customers need to choose a new rate plan, as all current choices are being replaced. The new plans have significant changes in the basic service fee and the cost of each kilowatt-hour of electricity.
Customers who choose time-of-use plans or plans with demand rates get a break on their basic service fees as a way to encourage them to sign up for one of those plans. The higher rates charged during peak hours on those time-sensitive plans then encourages customers to reduce demand on the power grid during the peak, APS officials said.
APS will move existing customers to the new plans in phases through May, or they can call and choose to get on one of the new plans before that.
Time-of-use rate plans, which charge higher rates for on-peak usage, now will have new peak hours, 3 p.m. to 8 p.m. during summer.
That is fewer hours than the noon to 7 p.m. peak hours on the old plans but also could compel customers to delay tasks such as laundry later in the evening.
APS officials said that once on the new plans, customers who have seen a big rate increase since October might see their bills go down as they adjust to the new offerings and peak hours.
“I believe customers can see a savings by switching over to a new rate plan,” McFall said.
“We have had some existing customers change over to the new rates,” she said. “The new rates are giving customers the ultimate control over their energy usage.”
But most customers are not yet on the new rate schedules, except people who are new APS customers since Aug. 19.
APS officials report that while all business customers are now on the new rates, more than 1 million residential customers still need to choose a new rate plan. The company has been advertising the new plans broadly and will send customers a personalized letter this month explaining the choice for them.
McFall suggested customers log onto their accounts at APS.com and review what suggestions the utility has for saving on bills.
“It is so critical for them to educate themselves on how they use energy,” McFall said. “It really is an asset to them if they understand how they use energy.”
Burns was the only Corporation Commissioner to oppose the increase, and he continues to battle APS in court over the company’s spending on political issues, which Burns said should be disclosed to customers.
He filed for a rehearing in the rate case as well. So did Sedona resident Warren Woodward, a vocal critic of the commission who has forced changes in APS’ fees for certain customers in the past.
“Some of the letters I’ve seen, they say the usage has gone down in addition to rates going up,” Burns said. “So that wouldn’t go with the weather argument (from APS).”
A provision in state law could force the commissioners to at least consider whether a rehearing is appropriate.
Arizona Revised Statute 40-246 allows customers to petition the Corporation Commission if they believe a utility is violating a commission order. If at least 25 utility customers sign on to a complaint, it would automatically trigger legal proceedings at the commission in which APS would be required to respond to the complaint and an administrative-law judge would be assigned to the case.
That hasn’t happened yet, though. Customers who have written the commission have only complained about the prices, not asked for a rehearing or accused APS of violating the order by charging more than what commissioners approved.
“A collection of written grievances filed in the docket by ratepayers does not usually qualify as a complaint under ARS 40-246 — nor would that trigger an automatic rehearing,” Commission Communication Director Holly Ward said.
“The rule contemplates a formal pleading filed with the Commission naming the public service corporation and setting forth the specific allegations. And with that pleading, the filer would have to attach the 25 signatures.”
It’s unlikely the commissioners who approved the rate hike would come to different conclusions even if they reheard the case. Commission Chairman Tom Forese and those who voted with him on the increase, Andy Tobin, Boyd Dunn and now-departed commissioner Doug Little, issued a news release praising the agreement after they approved it.
The commissioners’ decisions on the rate case “will contribute to making Arizona a great place to raise a family and do business,” Forese said in the news release.
Burns questioned the settlement. APS first asked for a hike averaging $11 a month on residential customers, and the commission staff and state consumer advocate at the Residential Utility Consumer Office initially said the company shouldn’t get any increase.
Then APS met with the commission staff, RUCO and dozens of other parties in the case, including consumer advocates, renewable-energy interests and AARP. About 30 of the 40 parties in the case settled on the $6 a month hike that was presented to the commissioners and approved.
Burns said it appears APS intentionally asks for more than it needs to begin settlement negotiations from an artificially high level of increase.
Other than Burns, the commissioners had few questions when they approved the deal during a meeting Aug. 15.
Commissioners had no questions for APS that day regarding how customer bills would be affected in different seasons or on different rate plans.
Forese did question some of those who attended the meeting opposing the rate increase, including Doug Bland, a pastor at Community Christian Church in Tempe. Forese wanted to know if Bland was familiar with efforts to assist places of worship.
Bland said he was, and he complained that demand charges from APS always cost the church most during its events for homeless people. Forese moved on.
The commissioners only made minor amendments to the rate increase not related to the impact on customer bills. They targeted issues such as the effective date of the hike and programs they would like to see in the future, such as bioenergy and battery storage.
When Dunn proposed an amendment to lower basic-service fees on small homes and transfer that bill impact to larger homes, APS protested and the commissioners backed off making any changes.
“This agreement has 29 corners and we don’t pull a corner without having it impact the other points, which is fine,” Forese said to Dunn before the latter withdrew his amendment apologetically.