SRP customers, board cry foul over April rate hike
The Salt River Project bills landing in mailboxes this month reflect a $3 increase in the basic service charge for residential customers, even though the utility said that fee would be “phased in” $1.50 at a time over the next year.
Board members, customers and those who follow SRP’s rate proceedings voiced confusion about the hike, and some are asking for a $1.50 credit for the month.
SRP board members on Feb. 26 approved a 3.9 percent rate increase. Part of the overall rate package was a $3 increase in the monthly basic service charge, to $20 from $17.
Facing criticism over the increase, SRP General Manager Mark Bonsall said the phase-in would reduce the impact on customers.
“In a very brief description of what we’re suggesting is that we phase in, basically, the monthly service charge for residential customers in two steps,” Bonsall said Feb. 26 before the board voted. “Instead of going to $3 from the get-go, we would go to a dollar and a half. At the inception of this summer, it would remain a dollar and a half, and when next winter commences, it would go up to the full $3.”
So some board members and customers were surprised when bills this month reflected the full $3 increase.
Aidan McSheffrey, SRP’s chief financial executive, said it’s not a mistake.
He said SRP officials intended to increase the basic service charge by $3 in the April bill, then drop it by $1.50 for summer, then raise it by another $1.50 to $20 in November. He said he doesn’t count the immediate $3 increase for the current bills as a step.
“I don’t want to parse words,” he said Friday after learning customers, board members and other observers were questioning why the increase was showing up on bills already.
He said the managers wanted to give customers a break of $1.50 a month only for summer months, which SRP defines as May to October.
Bonsall was not available for comment.
SRP’s 14 board members, president and vice president are elected to oversee managers such as Bonsall and McSheffrey, similar to the way a city council oversees a city manager. Some board members this week said they did not expect customers’ basic service charges to increase by $3 in April bills.
“To me, that doesn’t sound like a phase-in,” board member Fred Ash said. “It sounds like they hit them with it all at once.”
Multiplied by SRP’s nearly 1 million customers, the early phase-in of the increase brought the company $1.5 million in revenue, though the true figure is actually higher than that because the phase-in hit business customers a month earlier than expected, too.
Ash said it might be legal for SRP to implement the higher charge for a month before lowering it by $1.50 for summer, but it doesn’t make sense.
“I don’t know that it’s going to win them any friends, and we already had enough negative publicity with this rate increase and the perks management gets with tuition (reimbursement for children) and stuff,” he said. “It gives people a bad taste in their mouth.”
Other board members had similar statements.
“That was not the bill of goods sold to the board of directors,” board member Keith Woods said. “I’m still flummoxed by it. The issue is not resolved just because management said this is what they really meant.”
Asked if he thought managers presented the rate hike clearly to the board, McSheffrey said the proposal given to the board is exactly what was implemented. “I thought we did,” McSheffrey said. “The rate schedules were clear.”
Managers gave the paperwork to the board on the day of the long, contentious meeting when the rate hike was approved, a day when many solar advocates showed up to oppose SRP’s changes on their rates.
SRP customer Steve Neil was one of those customers, and he said he was surprised when his April bill reflected the full $3 increase in the basic service charge.
“I’d love to see them actually feel that they need to do what they said, phase in the $3 rise, and credit the $1.50 back to all those customers so affected,” Neil said. McSheffrey said that’s not happening. Vice President John Hoopes said the issue was not communicated well.
“I understand it is not the model of clarity,” Hoopes said.
He said he and President David Rousseau will not be asking SRP’s managers to credit customers back the $1.50. “The answer, as of today, is no,” he said.
Diane Brown, executive director of the Arizona PIRG Education Fund, said SRP’s $17 basic service charge was too high already. Arizona Public Service Co., for example, has a monthly customer service charge that ranges from about $8.50 for its standard rate plan to about $16.50 for other rate plans.
Low-income customers in particular are harmed by high basic service fees, Brown said, because they can’t conserve power and mitigate the fee. She said phasing the increase in early, coupled with reductions in energy-efficiency programs that help customers save money, harms consumers.
“During the recent rate-hike process, SRP tried to put consumers front and center in the spotlight,” Brown said. “However, it is now clear that behind the scenes, management was choreographing more ways to increase customer bills.”