APS rate case kicks off with hours of protest over 14% rate increase
Arizona Public Service (APS) has proposed a 14% rate increase for residential and commercial customers, including a 45% increase for large load customers like data centers, leading to protests and hearings before the Arizona Corporation Commission. Opponents are concerned about the impact on vulnerable citizens and the potential for annual rate adjustments under a new formula rate structure. The commission will decide on the request, which is expected to go into effect in early 2027.
The Arizona Corporation Commission began hearings on Arizona Public Service's (APS) proposed 14% rate increase for its 1.5 million residential and commercial customers. This marks the third rate increase request in four years for the state's largest electricity provider. Local advocacy groups and utility ratepayers protested outside the commission's downtown Phoenix building, voicing concerns over the cost-of-living crisis, rising temperatures, and the impact on vulnerable citizens. Activist Kori McClemens warned commissioners that a 'yes' vote would be a 'death sentence to many of our most vulnerable citizens,' while others heckled APS CEO Ted Geisler over his $3.7 million salary.
APS attributes its request to inflation, increasing equipment costs, and soaring electricity demand, partly driven by data center developers targeting the desert region. Crucially, APS is seeking a 45% rate increase specifically for large load customers, including data centers and manufacturing facilities, aiming to ensure these developers or end-users cover the costs of new power plants or transmission lines needed to serve them. The company also proposes a new 'formula rate structure' for annual adjustments without full rate cases, and a 10.7% return on equity for shareholders.
Opponents, including the Residential Utility Consumer Office (RUCO) and Attorney General Kris Mayes, are challenging the formula rate proposal and the return on equity. RUCO Director Cynthia Zwick expressed skepticism about formula rates reducing customer costs and advocates for a separate customer class for data centers, urging transparency regarding non-disclosure agreements. Attorney General Mayes suggests the rate increase could be reduced to 3% by lowering the return on equity. The six-week hearing process will conclude with a recommended order in November, and the commission's final vote, likely in December, will determine rates to go into effect in early 2027. Commissioners acknowledged they cannot simply reject a rate increase outright but must set 'just and reasonable rates.'