PHOENIX — You might need to budget more to keep your lights on if you’re an Arizona Public Service (APS) customer.
You could pay an average of 11% more than you do now if the utility's proposed rate hike is approved by the Arizona Corporation Commission. And that’s after your current rates already went up last year, according to utility experts and consumer advocates.
Alaura Skiff couldn’t believe her August bill when she opened it.
“It was a shocker,” she said.
She does everything she can think of to keep basic costs down. She has solar panels on the roof of her 2,100-square-foot Phoenix home. She sets the thermostat at 77º in the summer and closes the window blinds. She avoids using the oven during the hottest months, opting to eat cold salads instead.
Even so, her August bill was more than $400 for the first time – about $160 more than the same month the year prior. She’s lived in the house since 2018 and said she’s never had a bill that high.
Skiff worries that if the Arizona Corporation Commission approves APS’s 11% proposed increase, that could hike her bill to nearly $500 a month.
She's not alone.
Last year, Arizona's record-breaking heat helped drive a 22% increase in third-quarter profit for Pinnacle West Capital Corp., the publicly traded company that owns APS.
In a third-quarter earnings call, Jeff Guldner, president and CEO of Pinnacle West Capital, said APS set five new peak energy demand records during July.
As a result, customers used more energy to cool their homes and businesses, leading to stronger financial results for the company.
But the record heat was not the only reason for higher bills.
A line-item on APS bills, called the power supply adjustment, has gone up a lot. Ashley Kelly, APS’ manager of public affairs, said the increase is because the price of natural gas has gone up. These line-items, known as adjustors, allow the utility to pass the added costs onto customers each month.
"There's been a variety of different global events: the war in Ukraine, winter storms in Texas, that have driven costs up for natural gas, as well as just general resource scarcity in the western United States,” Kelly said.
Power demand has increased across the Southwest, she said, "and we need more generation in order to supply that. And so as generation resources become scarcer, prices go up,” she said.
On Skiff’s bill, the power supply adjustment was $20 in August of 2022. It was nearly $60 for August 2023.
"It definitely hurts,” she said.
As of July 2023, customers were also paying a new line-item charge called a court resolution surcharge. This surcharge is because of a court settlement the Arizona Corporation signed in a previous rate case with APS.
That settlement added $5 to Skiff’s bill.
One person not surprised by the increases last year was Abhay Padgaonkar, a self-described accidental consumer advocate. He’s kept close tabs on APS for the past six years.
His calculations show APS ratepayers already paid 12% higher rates in the third quarter of last year than in the same quarter in 2022, mainly because of the increases in the power supply adjustment and the new court resolutions surcharge.
“So the money comes out of your left pocket, and it comes out of your right pocket,” he said.
In response, APS said that line-items like the power supply adjustor and the court surcharge added 8.7% to bills last year. The changes reflect actual costs incurred to provide reliable service to customers, APS said.
As for the proposed increase this year, Kelly said, “Ultimately, this rate case is necessary to ensure that we can continue to support Arizona with a reliable energy system, even when it's 120º outside."
Homeowners, like Skiff, worry about what they'll have to give up if their bills increase a lot more.
"We're just expecting to get hotter and hotter, which means our ACs are gonna have to be running more and more. So if they continue to increase the rates, what's that going to do to us consumers?"
About APS’s proposed rate hike:
How soon could an increase happen?
APS’ request to increase rates is expected to go before the Arizona Corporation Commission for a vote on Feb. 22, 2024.
What would this mean for residential rates?
APS estimates the average residential monthly bill would increase by 11% on average. APS says the typical residential customer uses 1,050 kilowatt-hours in a month, which under the proposed increase would amount to about $15 more per month. Individual bills will vary based on how much energy is used and the type of service plan.
What does APS want?
APS wants an increase of $376 million, or 11%, to its revenue requirement. APS says the increase is necessary to “ensure a reliable and resilient energy grid” that will enable the company to “safely generate and deliver electricity to its over 1.3 million customers.”
However, the state’s Residential Utility Consumer Office (RUCO) is recommending an $84 million increase, or 2.5% more. The state agency was established to represent the interests of residential utility customers. It says APS’ requests are “overstated” and “not fairly balanced to the ratepayer,” according to documents filed with the Arizona Corporation Commission. Arizona Corporation Commission staff is recommending a $281 million increase, or 8%.
Who decides the rates?
The five members of the Arizona Corporation Commission, who are elected by voters. More information is available on the commission’s website. The docket number for the case is: E-01345A-22-0144.
Email ABC15 Investigator Anne Ryman at anne.ryman@abc15.com, call her at 602-685-6345, or connect on X, formerly known as Twitter, and Facebook.
