APS ordered to pay $24 million

Brnovich: Settlement awarded to customers put on pricier plans due to rate hike

Arizona’s largest electric company will pay $24 million for not explaining its rates properly and erroneously directing thousands of customers away from its cheapest plans, Attorney General Mark Brnovich announced Monday.

Arizona Public Service Co. raised rates and changed the way customers are billed on some plans in 2017, with approval from regulators at the Arizona Corporation Commission. Then, the company moved customers to new rate plans if they didn’t choose one for themselves.

Explaining the new rates proved challenging even for company employees.

Among other problems, the utility misdirected customers on its website in 2019 with a rate-comparison tool that was meant to show customers which of the new plans would be cheapest for them. That tool in

“Somebody has got to stand up for the little guy . ... I was concerned consumers were not getting adequate information.” Mark Brnovich Arizona attorney general

stead directed many people to something other than the cheapest plan.

Problems with the rate-comparison tool, first reported by The Arizona Republic in 2019, caused thousands of customers to choose plans that were not the cheapest.

In some cases, customers were directed to plans that would cost them hundreds of dollars more per year than the plan that best fit the amount of electricity they used and the time of day they used it.

Brnovich told The Republic on Monday he launched the investigation “because somebody has got to stand up for the little guy.”

“I read the newspaper,” he said. “You see local reports about people’s utility rates climbing and the information they are getting. I was concerned consumers were not getting adequate information.”

Brnovich said the settlement was at times contentious.

“During the course of that we butted heads with APS and they came to see things from our perspective, legally,” he said.

The new settlement will be split among about 225,000 customers. Ratepayers will not fund the settlement, APS told regulators in a letter.

“Throughout my time as attorney general, I have consistently said businesses large and small need to make sure consumers have adequate information about products and services,” Brnovich said in a prepared statement, calling the deal “historic and consequential.”

His office began the investigation following The Republic’s reporting on problems with the rate tool, which were discovered by a customer in Surprise, and confirmation of the problem by APS.

APS said the online rate comparison provided erroneous advice to customers from February to November 2019.

The people who will get the settlement cash are those who remained on something other than its cheapest plan as of March 2020 and could have saved $120 or more per year if they were on a better plan, according to the Attorney General’s Office.

APS already has sent two rounds of refunds to thousands of customers who used the website and were not on its cheapest rate plan.

APS paid customers twice in 2020 for the difference between what they paid on bills dating back to February 2019 and what they would have paid on its cheapest plan, plus $25 for their inconvenience.

Not including the $25 inconvenience payments, the average refund paid in January 2020 was $38, APS officials said at the time, although hundreds of customers overpaid by more than $100. One unlucky customer had overpaid by $991.

The settlement announced Monday is in addition to that money.

The attorney general’s investigation also cited letters APS sent to customers in 2017 that provided poor guidance regarding which rate plan they should choose.

Jeff Guldner, the CEO of the utility, said APS is striving to communicate more clearly with customers.

“Moving all customers to new plans in the 2017-2018 time frame was a major undertaking and an industry first, and there are areas where we could have done better,” Guldner said in a prepared statement Monday. “This agreement acknowledges that and recognizes our commitment to inform customers of their service plan options and to provide effective tools and resources for choosing the one that’s right for them.”

The restitution breaks down as follows:

As many as 210,000 customers will get at least $98 for not being on its cheapest plan as of March 2020.

17,500 other customers will receive varying payments based on the data error in the letters.

The payments need approval from the Maricopa County Superior Court and come either in checks or bill credits, according to the Attorney General’s Office.

APS also will pay $770,000 to cover the state’s expenses for the investigation and to support the state’s consumer awareness programs, according to Brnovich’s office.