APS customers want redo on $95 million power rate increase

Customers frustrated by last year’s rate hike from Arizona Public Service Co. kicked off a three-day hearing Tuesday with passionate pleas for a judge to order a reconsideration of the rates they said push people deeper into poverty.

APS officials coolly responded that the $95 million rate hike imposed on the company’s 1.1 million customers is exactly what regulators intended and the case should be dismissed.

The case is unusual in that the utility’s rates are being challenged by a citizen activist who raised money for her lawyer online, starting with a petition on Change.org.

Now the state’s biggest utility — and a political heavyweight — is being forced to defend its prices as well as the profits of its parent company, Pinnacle West Capital Corp, against a groundswell of opposition from everyday customers.

APS described the rate increase last year as a 4.5 percent hike that would add an average of $6 a month to residential customer bills. But thousands of customers have signed the petition started by Stacey Champion of Phoenix, saying their bills are notably higher than that.

Patricia Bassi of Camp Verde was among several customers who shared public comment with Administrative Law Judge Jane Rodda on Tuesday.

Bassi said she previously qualified for a large discount on her APS bills because she is a low-income customer.

Low-income customers who used very little electricity previously could get as much as a 65 percent bill discount. But the rate changes last year gave a flat 25-percent discount to all customers in that rate class.

“This disenfranchised the (low-income) customers,” Bassi said, adding that her bills have increased 22 percent.

APS did provide $1.25 million for crisis bill assistance as part of the changes, with the money helping pay what is owed for certain qualifying customers. But Bassi said it was not as useful as the old discounts.

“I don’t know if the commissioners or you, Ms. Rodda, understand, but you can only ask for help once a year,” Bassi said. “You have really endangered a lot of low-income seniors. I can pay it. But I don’t like to pay it because I feel like I got missiled.”

APS customer Helen Pierce said she is a widow living in the house where she and her husband raised their children, so she knows the energy use and utility bills well.

She said that from 2015, the year used as a base level for the rate hike, to this year, she has seen her bills increase 40 percent to 60 percent.

“I can pay, but I’m here to advocate for those who are having the kinds of challenges you are hearing today,” Pierce said.

As part of last year’s rate hike, APS was supposed to increase its “base” rates and reduce its “adjustor” rates that account for various expenses such as power-plant fuel.

The case now features dueling experts, with Champion’s side saying APS did not reduce those adjustors as promised, leading to higher rates.

APS officials said they did lower those surcharges but they have subsequently, and legally, been increased, and that Champion’s expert does not understand how utility rates work.

On July 31, Champion filed testimony from Phoenix management consultant Abhay Padgaonkar, president of Innovative Solutions Consulting.

Padgaonkar does not have experience in utility rate making, but he said that matters little because the calculations are straightforward.

Working with customer data provided by APS, Padgaonkar calculated customer bills increased an average of $16.59 a month when the new, actual rates were applied to their 2015 bills. The average bill increased to $162.70 from $146.11,or 11 percent, he said.

Padgaonkar said that the increase is an even larger 12.6 percent if he calculates it to show the increase from 2015 base rates only, excluding rate adjustors such as fuel surcharges.

The rate increase is larger than APS described it because the company didn’t lower those adjustors as expected, he said.