Utility regulators to vote on APS rate hike Tuesday

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Regulators will decide on a $6 a month rate hike for more than 1 million APS customers

Arizona's elected utility regulators plan to spend no more than one day Tuesday discussing and voting on a $6-a-month rate hike for more than 1 million Arizona Public Service Co. customers.

APS filed its rate request more than a year ago, and a judge has mostly approved a settlement with several major stakeholders reached earlier this year.

While some parties, such as AARP, remain opposed to the rate increase, the regulators won't hear much dissent from major solar companies, their own staff, the state consumer advocate, low-income assistance groups or others who commonly fight such increases.

Those parties mostly signed onto the settlement and have agreed on big-picture elements, such as how much more money APS should collect annually ($95 million), how much APS will compensate solar customers (less) and whether major projects such as the Ocotillo gas plant in Tempe are justified (its full costs won't be passed on immediately).

Commissioners can propose amendments ahead of or during the meeting. As of Friday at noon, none had been filed.

Commission Chairman Tom Forese sent a letter Aug. 4 to parties and fellow commissioners telling them a decision needs to be made by Aug. 19 to comply with state administrative codes regarding rate decisions.

"I ask that commissioners and parties be prompt and prepared in order to assure that the meeting is conducted in an orderly fashion," he wrote.

 

Administrative Law Judge Teena Jibilian recently recommended the five commissioners, who are elected to oversee utilities, approve the settlement, making it effective Sept. 1.

The deal faces dissent from AARP, the Southwest Energy Efficiency Project conservation group and several customers and groups that did not officially intervene in the rate case, such as the Arizona PIRG Education Fund.

But the disagreements are mostly on smaller details, such as what the basic service charge should be each month and which hours should be included in time-of-use rate plans.

Jibilian recommends sticking to the settlement on those matters, including:

Time-of-use hours

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APS' Distribution Operations Center in Phoenix keeps power flowing to all APS electric customers in Arizona, especially during the hot summer months. (Photo: Tom Tingle/The Republic)

Time-of-use plans, which are popular among Arizona customers, charge higher rates for electricity used during certain hours of peak demand.

APS proposes changing the peak hours of these programs to 3-8 p.m. weekdays.

Current rate plans charge peak rates from noon to 7 p.m. or 3-6 p.m. in summer.

SWEEP, AARP and some electrical and irrigation districts intervening in the case oppose the change, mostly because they contend 8 p.m. is late enough to inconvenience customers.

Jibilian sides with APS, the commission staff and others.

"The arguments advanced by SWEEP and AARP in favor of rejecting the proposed settlement agreement on-peak TOU hours are not convincing on this important point," she wrote.

Basic-service fees

The basic-service charge for residential customers is about $8 a month and, under the settlement, it will increase to $10 for "extra-small" households, $15 for basic-rate plan customers, and $20 for large homes.

AARP and SWEEP oppose the increase because customers have no opportunity to reduce this portion of their bill through conservation.

Other stakeholders support the increases because customers who opt for a time-of-use rate plan or demand-rate plan will see a reduction in their basic-service charge from $17 a month to $13 a month.

Demand rates base a large portion of the monthly bill on the highest one-hour of use during a peak hour in the month. Most businesses are on demand rates. They are less popular for residential customers than time-of-use rates.

The judge agrees with the settlement regarding changes in the basic-service charges.

Trial period for new customers

The settlement says that after May 1, most new customers or those who move within APS territory will either have to use a time-of-use rate or a demand rate plan for 90 days before being allowed to choose a basic plan.

AARP and SWEEP oppose this and want customers to be able to choose any rate plan when they become APS customers.

The judge supports the settlement and a provision that customers be told at the time of their second billing that they will have the option to change plans after their third month.

Unspent money

The settlement calls for refunding $15 million in money that was collected from customers and intended for energy-efficiency projects but was not spent.

The average residential customer would save about 55 cents a month for a year if the money is refunded as proposed.

SWEEP opposes this measure, but the judge says to refund it.

Smart meters

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"Smart" meters can tell the utilities exactly how much electricity a home uses, without a trip by meter readers. (Photo: The Republic)

Nearly all APS customers now have a "smart" meter that sends their usage via wireless signal to the utility, avoiding the need for meter readers to visit homes.

Some people oppose the meters for privacy and safety reasons.

APS wants to charge $50 to exchange a smart meter for one that needs to be read manually and $5 a month to read it.

The judge wrote that those matters will be "bifurcated" into a later decision, with no further explanation.

The move is curious because commissioners in 2014 approved smart-meter fees for APS in a decision outside of a rate case. They rescinded them in 2015 amid legal concerns that they should be set in a rate case.

Tuesday's hearing will begin at 8 a.m. and be streamed live at azcc.gov.

 

 

 

 

 

 

 

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