Customers of APS to see monthly bills rise by $12
Regulators OK increase to cover gas costs to run power plants
Customers of Arizona Public Service Co. will see their bills rise an average of $12 a month after state utility regulators approved an increase to cover the high gas prices the electric company has paid to fuel its power plants.
The utility has a special line item for fuel and power it buys from other utilities that can adjust up or down between the times when regulators evaluate all the other expenses at the company — like power lines, new plants and personnel — to approve rate increases.
The fuel prices are passed directly to customers with no markup.
“We’ve got bad news to deliver to ratepayers: It isn’t APS’ fault, and they’re not making a dime.”
Jim O’Connor
Arizona Corporation Commission chairman
The “power supply adjustment” normally moves up or down with little fanfare based on the prices APS has paid for power and fuel. But when APS filed for its adjustment in November, the increase was substantially larger than normal because of rising fuel prices.
The adjustments typically last for one year, and doing so would have raised bills about $19 a month on average for residential customers, and $29 a month for those customers on a so-called “demand plan” that tracks the highest one-hour use of energy in the month.
Instead, regulators voted 4-1 for the $12 per month increase over two years starting with the March billing cycle
The five members of the Arizona Corporation Commission, who set APS rates, debated whether to hit customers with a big bill increase for one year, or a smaller increase spread out over a longer time period. Either way, customers would pay the mounting natural-gas bill APS had incurred.
“Our obligation here at the commission is twofold,” Chairman Jim O’Connor said Wednesday. “We are here indeed to protect ratepayers. But we are also here to be sure we have water and power companies in our state that are profitably in business … so that they can keep the lights on and the water flowing.”
He and two fellow Republicans favored higher bills for a shorter period of time so that the problem didn’t compound, requiring additional increases later. But the group decided Wednesday to look at more options to raise rates less but for longer.
“Here’s a reality check with everybody. We’ve got bad news to deliver to ratepayers: It isn’t APS’ fault, and they’re not making a dime,” O’Connor said. “The bad news is the cost of living has gone up. … This is a ratepayer expense. It is just how and when we deliver it to them.”
APS has nearly $500 million owed for fuel
APS gets about one-fourth of its power from its own gas plants, and it buys another one-fourth of its power from other utilities.
The fuel surcharge also includes the price of renewable energy purchased from other companies, as well as coal and uranium to fuel Cholla Power Plant, Four Corners Power Plant and Palo Verde Generating Station.
But the cost of natural gas the past year drove the current increase, according to APS.
Consumer advocates said people with concerns about their ability to pay the higher rate should contact APS.
“Ratepayers are once again on the hook for volatile gas prices,” said Diane Brown, executive director of the Arizona PIRG Education Fund, a consumer group that often weighs in on utility decisions. “While the commission lessened the initial blow of the monthly bill impact, unfortunately they did not allow adequate time for consumers to prepare. Customers that struggle to pay their electric bill should reach out to the utility to see if they qualify for financial assistance.”
She and other consumer advocates suggest the regulators require APS to bear some of the risk in fuel expenses by making shareholders in the company pay some portion of fuel increases, rather than pass them all to customers. That is something the commission could address in the pending APS rate case.
The fuel surcharge also can go down if market prices for natural gas decrease. That has happened in the past, but not recently. APS reports that, as of October, it had $456 million in fuel expenses above and beyond the money it collects from customers each month earmarked for fuel.
That “undercollected” amount is expected to continue growing, APS officials said, and could approach $800 million if the fuel surcharge wasn’t significantly increased.
The increases are averages based on the median energy use by residential customers year-round. That means customers using more will see greater increases, and customers will notice it more in summer when homes use more power.
The average APS residential customer uses about 1,023 kilowatt hours of electricity a month and pays $143 for that.
Commissioner Anna Tovar, the lone Democrat on the board and the only commissioner to vote against the increase, said she was concerned that commissioners didn’t have a breakdown of how increases would affect customers on different rate plans and using different amounts of electricity.
She cited a 2017 decision by previous regulators that raised APS prices on some customers significantly more than the average increase cited in the public hearings.
“I really want to work on concrete numbers and facts,” Tovar said.
Advocates: More renewable energy would benefit customers
Clean-energy advocates took the opportunity to highlight the shortcomings of natural-gas amid the rate hike.
“The increased cost of natural gas, forecasted to continue through 2023, is an important reminder that the commission should consider all tools at its disposal to mitigate this significant proposed increase to customer utility bills,” wrote Vote Solar and the Southwest Energy Efficiency Project in a joint statement to regulators.
“Notably, greater investment in reliable, affordable energy efficiency and renewable energy are key solutions to insulate customers from this price shock and volatility.”