APS average monthly bill to rise by $10.59 after rate hike approved
The average monthly bill for Arizona Public Service Co. residential customers will rise by roughly 8%, in the range of $10 to $12 a month, after a rate increase approved by the Arizona Corporation Commission.
The new rates will take effect on or after March 8.
An average bill-increase figure of $10.59 was cited when the commissioners voted 4-1 in favor of the increase late Thursday night. Roughly two hours after the vote, APS said it was still trying to determine the exact increase. The commissioners also voted to approve a controversial amendment that adds a monthly charge of $2.50 to $3 for residential customers with rooftop solar systems.
The utility regulators’ vote came after 11 hours of an open hearing in which about 45 residential customers, businesses and representatives of special interest groups spoke. The commission also received more than 2,000 written comments over a 20-month process.
The increase provides Arizona’s largest electric utility, which serves 1.4 million customers in 11 of the state’s 15 counties, with a return on equity, a profitability measure, of 9.55%.
APS President Ted Geisler argued that a return of at least that much was needed to reassure the creditors and lenders on whom APS relies. With the rate increase, he said, the utility is largely receiving revenue to recoup expenses it incurred in prior years to expand infrastructure.
“We need immediate and sufficient rate relief,” Geisler said. “We must continue to rely on lenders to fund the grid investments necessary.” He said APS’ credit rating and profitability have faltered and the stock price of parent Pinnacle West Capital has underperformed.
Commissioner Anna Tovar, the sole Democrat on the panel, cast the lone dissenting vote on the rate increase, explaining she couldn’t “support something that costs customers more.”
Commissioner Lea Marquez-Peterson also expressed hesitation but voted in favor of the rate plan, saying it was critical for APS to be able to make the necessary infrastructure investments.
The commission approved the solar amendment on the same 4-1 vote, with Tovar dissenting.
APS contends solar customers don’t pay the full costs of service provided to them, with those costs overwhelmingly focused on transmission lines, generating stations and other infrastructure, not the actual energy produced. An even larger solar surcharge was adopted about a half-dozen years ago by a prior commission but was revoked in 2021.
Rooftop-solar proponents aren’t happy.
“It is truly outrageous that the ACC would come up with a new charge targeting only solar customers that (neither) APS nor any other party to this rate case has asked for,” wrote Michael O’Donnell, a vice president at Sunsolar Solutions in Peoria, in a note to The Republic.
He said customers who might have invested, say, $30,000 to generate their own electricity have been paying about $80 per month on average to be connected to the grid. He estimated the same customer might be paying $120 a month for the same service after the rate increases.
Opponents of the rate increase spoke up before and after the vote.
“The Commission gave APS the ability to further pick the pockets of ratepayers and line the pockets of shareholders, essentially handed APS a blank check for a new charge that could cost consumers tens of millions of dollars and failed to ensure the company had skin in the game for volatile gas prices,” said Diane E. Brown, executive director of the Arizona Public Interest Research Group Education Fund, in a post-vote statement.
“APS shareholders will significantly benefit, while ratepayers will face adverse financial implications, both in the short and the long term.”
Kristin Nelson, a real estate broker and housewife, said she favored a rate increase roughly half the size of what APS received. “They need to raise rates, but it should be minimal,” Nelson said. The Phoenix resident also questioned APS’ claims of financial challenges.
But Steven Macias of Pivot Manufacturing in Phoenix praised what he called APS’ excellent service and said he supported a rate increase sufficient to maintain power reliability.