Arizona Corporation Commission Urged to Scrutinize APS Cost Shifts
Concerns over potential cost misallocation by Arizona Public Service (APS) have prompted Arizona Attorney General Kris Mayes to call for an investigation by the Arizona Corporation Commission. The allegations suggest that APS might have transferred millions in costs, associated with serving large industrial clients, to other customers. Mayes emphasizes that not examining these claims could damage the reputations of the commission and APS.
According to data analyst Abhay Padgaonkar, the increased demand on APS’s system is largely driven by around 100 data centers and other major industrial users. To meet this demand, APS has reportedly been purchasing additional power from external suppliers and distributing these costs across its entire rate base. Padgaonkar’s analysis, submitted to the commission on October 2, indicates that these large users might have underpaid by $600 million for their energy consumption over recent years, resulting in other customers bearing the costs.
In an October 9 letter to the commission, Mayes highlighted Padgaonkar’s findings and urged regulators to scrutinize APS’s claims that “growth is paying for growth.”
APS addressed these claims and media reports with a post on X, stating, “With misleading claims circulating about whether data center growth is affecting energy bills, we know our customers want clear, accurate information. The simple fact is: APS is ensuring that residential and small-business customers are not paying for data center power usage.”
Mayes has challenged APS to validate its stance and demonstrate, using relevant records and calculations, why Padgaonkar’s assertions are flawed. “If that is the case, APS should show how the Commission and its ratepayers, using the underlying records and calculations, why Mr. Padgaonkar is incorrect,” Mayes stated.
On the evening of October 9, a spokesperson for the commission communicated via email that they disagree with Padgaonkar’s analysis. “The author, Mr. Abhay Padgoankar, as APS customer has the opportunity to intervene in the APS rate cases and participate in the creation of a thorough evidentiary record. He did not choose to participate in the current APS rate case as an intervenor,” the spokesperson mentioned.
The spokesperson further noted that APS’s expenditures and purchases are under audit by staff and 23 other intervenors in the ongoing rate case. Due to the ongoing nature of the case, commissioners are unable to comment on the evidence within the rate case record.
