With rising energy costs looming over Arizona residents, the latest proposal by Arizona Public Service (APS) has sparked significant concern. At a recent Arizona Corporation Commission meeting, Edward Van Ness, president of the Sun City Homeowners Association, voiced the anxieties of many retirees in his community. For these individuals, living on fixed incomes, the prospect of increased energy bills is daunting.
The public comment session was the final opportunity for residents to express their concerns before the APS rate case hearing, scheduled for May. APS, the state’s largest energy provider, aims to revamp its pricing structure, potentially raising residential bills by 16%, or approximately $20 per month, as part of a plan to increase revenue by $579.2 million.
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Van Ness remarked on the difficult choices many residents face, highlighting the stark reality, “well, do I pay my bills, or do I buy food?” For some, the $20 hike is not sustainable. He articulated the despair felt by many, saying, “it’s got to be pretty demeaning to your aspect of life.”
Beyond the immediate financial strain, APS’s proposal includes a shift to formula rates, which may reduce regulatory oversight. This system would permit APS to adjust rates annually based on current costs without undergoing a traditional rate case for five years. Anne Carlton, APS’s regulatory compliance manager, explained that existing rates are aligned with expenditures from 2021 and 2022, but rising costs necessitate change.
“With the economy changing so dynamically since then and everything becoming so much more expensive, you can imagine that every piece and part that we use to maintain the grid has become more expensive, up to 70% higher, even above 100% higher,” Carlton noted.
The formula rate system, already in use for transmission lines connecting to other states, would allow APS to conduct annual cost studies for each customer class, adjusting rates as needed. This approach, according to Carlton, would enable more responsive pricing.
Diane Brown, executive director of Arizona PIRG, cautioned that formula rates might lead to less scrutiny of APS’s financial decisions. “Typically, a company comes in every few years, seeking cost recovery for major capital expenditures,” she said, but with this new system, increases could occur annually with less oversight.
Intervenors, including major retailers and the Attorney General, have filed to participate in the rate case, underscoring the widespread concern. Brown added, “We’ve consistently heard that $20 more a month on average would greatly impact their lives and that of their household.”
The rate changes would vary across customer classes, with residential customers facing a 16% increase, while businesses and data centers could see hikes ranging from 6% to 45%. Additionally, APS plans to double the Grid Access Charge for solar customers, a move criticized by some as a “solar tax.”
Peoria resident Donna Levy, who has invested in solar panels, expressed frustration. Levy mentioned that APS’s compensation for her solar-generated electricity is insufficient, deterring others from adopting solar technology.
The upcoming hearing in May will allow APS and intervenors to present their cases before a judge and the commission. The commission’s decision on the rate increase will precede the November elections, where two commission seats are contested.
Van Ness emphasized the essential nature of electricity, stating, “You can’t live without power…it’s just a disheartening thing for me to know the people who are having to make dire choices that will affect them in the future, in today.”
This article first appeared on Cronkite News and is republished here under a Creative Commons Attribution-NoDerivatives 4.0 International License.
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