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Push On To Control Utility Costs

Christine Bedell,

AARP

Getty Images

AARP Arizona is fighting a proposal to change how Arizona Public Service sets electricity rates and is urging customers to tell state regulators how higher bills would affect them.

AARP opposes APS’s bid to adopt a formula rate plan, which would allow the utility to seek annual rate adjustments in between more comprehensive rate cases.

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APS, which serves about 1.5 million customers in 11 counties, is also seeking a 14 percent residential rate increase that would add about $20 a month to the average household bill.

APS spokeswoman Ann Porter says formula rates would better align rates with the actual cost of providing electricity and give customers more timely and predictable adjustments. She notes a full, traditional rate case would still be required at least every five years.

But Aimee Cvancara, associate state director for outreach and advocacy for AARP Arizona, argues the change would allow APS to raise rates more frequently and with less scrutiny. “We think it’s really important that rate cases are brought forward in their entirety—that we get a holistic picture of what the utility is doing and where they’re going and what their expenses are,” she says.

Paul Alvarez, president of the Wired Group, a consulting firm that assists consumer advocates, testified on behalf of AARP that formula rates shift financial risk from shareholders to customers by reducing utilities’ incentive to control spending.

Under the current system, utilities generally cannot raise rates until regulators approve another rate case. That gives them an incentive to keep costs down between cases, reducing the need for future rate increases, he says.

Porter counters that APS would remain responsible for managing costs efficiently and notes the utility offers customers bill assistance and energy management programs.

“APS is committed to balancing affordability with the continued investments needed to safely and reliably serve our 1.5 million customers,” she says.

An administrative law judge heard testimony in the case from May to July and will recommend a course of action to the Arizona Corporation Commission, a state agency that is expected to rule on the issue by the end of the year.

AARP encourages customers to submit comments at azcc.gov by selecting Meetings & Cases and then Make a Public Comment in a Docket.