PHOENIX — The Arizona Corporation Commission voted Tuesday to approve a controversial new way to calculate utility rates that could mean annual increases on utility bills.
For decades, the commission has required state-regulated utilities to use a prior year of expenses and file a request for a rate increase. This lengthy process can take a couple of years.
Instead, the commission will now give utilities the option of seeking updated rates every year.
It’s a major change to how state regulators have historically approached rate cases.
The five-member Corporation Commission regulates and sets rates for many public utilities, including Arizona Public Service, Southwest Gas and Tucson Electric Power.
Consumer groups oppose the change, saying it will make proposed rate increases harder to challenge. They say it will also give customers less say.
“This is an issue of great magnitude,” Diane Brown, executive director of Arizona Public Interest Research Group Education Fund, told the commission during its Tuesday meeting.
The change was also opposed by the Residential Utility Consumer Office (RUCO), a state agency that represents residential ratepayers. That group also questioned whether the commission’s vote was even legal. Many speakers at Tuesday’s meeting urged the commission to delay the vote. They said such a decision should have instead gone through formal rulemaking, which is a lengthy process that would give more opportunity for public input.
But Commission Chairman Jim O’Connor fought back against that characterization.
"I've been advised legally we do not need a rulemaking and a dozen of you spoke to rulemaking. We do not need it to proceed,” he said.
Commissioner Nick Myers, who spearheaded the change, said there has been ample opportunity for people to weigh in since he first opened a public document to explore the idea in January 2023. He said the change will promote gradual rate increases.
“Customers want this,” he said. “They don’t want to have a massive jump in their rates every three to five years.”
He said the commission will continue to review and vote on every rate proposal.
“None of the checks and balances are being taken away,” he said.
The commission vote was 3-2 with commissioners Anna Tovar and Lea Marquez Peterson voting against the change
Marquez Peterson said she wasn’t opposed to the concept but believed the decision was being made hastily without proper vetting.
Email ABC15 Investigator Anne Ryman at anne.ryman@abc15.com, or connect on X, formerly known as Twitter and Facebook.
