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Another APS rate hike may be in your future

Despite APS exceeding an unauthorized earning of $30 million per year, the company asks for a $184 million rate hike ultimately causing APS customers to see a 5.4% increase on their bill if passed.


Utility companies ask for rate hikes depending on expenses which is typically a year long process. The Corporation Commissioner members, the 5 individuals who set the utility rates and policies, and the utility company are battling over this request despite APS' director of rates and rate strategy, Leland Snook, calling it a "fresh start".


Other APS officials back this saying in addition to the rate hike request, they are focusing on beneficial changes for the customers.


In September, the Corporation Commissions regulators grilled CEO Don Brandt over a variety of grievances, including an FBI investigation into its political activities, policies for when customers' power is shut off for not paying bills, and ongoing confusion over the company's last rate hike in 2017.


APS last raised rates following a 4-1 approval vote from regulators in 2017. That rate hike was widely criticized by customers and formally challenged by activist Stacey Champion, who spent more than a year trying to get the hike reversed.


Corporation commissioners in July closed her case without changing the company's rates, however; they opened a rate review of APS.


As part of that review, the Corporation Commission paid a company called Overland Consulting $250,000 to analyze APS rates. That review said the company earned $28.4 million more than it was authorized in 2018 from Arizona customers, which APS disagreed with.


Even with the Overland report, which regulators did not make publicly available until pressured by multiple media outlets, the commissioners didn't take any action on APS rates. Instead, they ordered the company to file its new rate case, which was submitted Thursday.


Snook said APS officials disagree with Overland's findings, and that APS only earned a ROE of 9.6% on its business regulated by the Corporation Commission.


In the rate request filed Thursday, APS is seeking to increase its authorized ROE to 10.15%

Snook said the increase is being requested based on the "risk profile" of APS as an investment when compared with similar utilities.


Why are they asking for the rate increase?


The $184 million request is a result of two major projects: the Four Corners Power Plant in New Mexico and the Ocotillo Power Plant in Tempe.


APS bought a larger stake in the New Mexico coal plant and added environmental controls. It was seeking a rate increase just for those expenses, but that request got shut down by the Champion complaint last year.


Similarly, APS expanded the size of the Tempe gas plant and renovated it.


This time around, APS says 95% of customers are expected to see a 3% to 6% increase. Almost none of the 1.2 million customers would see a decrease, and less than 1% would see an increase of 8% or more, based on their historical usage.

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