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Brnovich: APS must reimburse customers $25 million

The settlement will go towards compensating certain customers "who may have relied on inadequate information from APS," the Attorney General's Office said.

ARIZONA, USA — If you're a customer using the Arizona Public Service Company (APS) as your electric utility provider, you may have a reimbursement coming your way soon.

The Arizona Attorney General’s Office announced Monday that APS did a poor job helping customers understand their options for saving the most on electricity in 2019.

The agreement means power customers who, as of March 2020, were not on their most economical plan and could have saved an estimated $120 or more per year on a different rate plan, will be reimbursed money. Some customers from 2017 may also get reimbursed money.

The reimbursement, which will be provided to around 225,000 APS customers, is coming after the utility company settled an Arizona Attorney General's Office (AGO) investigation for nearly $25 million.

The settlement includes the following consumer restitution:

  • $20.7 million to up to 210,000 APS consumers who may have not been on their most economical plan during the March 2020 billing cycle. These consumers will receive a payment of at least $98 in the form of checks.
  • $3.3 million to approximately 17,500 APS consumers who were affected by a data error present in 2017 letters. These consumers will receive restitution payments of varying amounts based on how they were affected in the form of checks.

The AGO said these payments are separate from the previous compensation APS provided consumers impacted by the company's rate tool errors.

The investigation began in 2019 after it learned of an error made by APS in its Customer Education and Outreach Program created in 2017.

The program was designed to educate APS customers on how to compare various rate plan options after the Arizona Corporation Commission approved the utility company for a rate increase.

The error affected the company's program from Feb. to Nov. in 2019 and mislead customers into choosing a rate plan that may have not been the most economical option, according to the AGO.

"Today’s historic and consequential settlement provides $24 million to more than two hundred thousand Arizonans who may have relied on inadequate information from APS," Attorney General Mark Brnovich said.

APS CEO Jeff Guldner says the company now provides customers with monthly updates on how they could save money with different plans and that customers are allowed flexibility to switch plans anytime.

“Moving all customers to new plans in the 2017 to 2018 time frame was a major undertaking and an industry first, and there are areas where we could have done better,” Guldner said.

Since August of 2017, APS has implemented a rate system approved by regulators that provides consumers with a menu of power-use options. The program was rife with confusion. Not helping the matter, APS was offering a faulty on-line tool for consumers to choose their best plan.

Public relations consultant Stacey Champion and computer analyst Abhay Padgaonkar, both APS customers, initially raised the issues that prompted the Arizona Attorney General’s Office to investigate APS for its faulty rate tool.

The citizen activists have spent hundreds of hours on a grassroots campaign that forced APS into special hearings at the Arizona Corporation Commission in 2019 and persuaded the commission to solicit an independent audit. That audit revealed APS was over-earning what it was authorized to collect from ratepayers.

This latest development represents more validation of their work, Champion said.

“All of these years we’ve been saying APS customers have been getting screwed over and ripped off is accurate,” Champion said. “It also throws so many questions into this current rate case that is only happening right now because of my complaint.”

The Commission is holding meetings to determine what kind of new rate plan APS will be allowed to implement in the future.

Padgaonkar recently filed an analysis to the Arizona Corporation Commission alleging APS has generated more than $100 million annually of surplus revenue since the 2017 rate increase.

“APS has been placing, steering and keeping hundreds of thousands of customers on more expensive plans. The $25 million settlement pales in comparison to the $300 to $350 million in surplus revenue APS has generated since the rate increase,” Padgaonkar said.

APS was also ordered to pay $200,000 to cover the state’s cost of the investigation and $550,000 to promote the AGO’s consumer and community outreach awareness and prevention programs.

Want more good news? Watch these inspiring stories of people doing good and supporting those in their communities across Arizona on our YouTube page here.