PHOENIX — UPDATE: Since this story was published on Thursday afternoon, APS has submitted an updated bin analysis to the Arizona Corporation Commission. It shows 74% of residential customers are projected to see a bill hike between 7% and 9%. The average bill increase is expected to be $10.50. Further, 10% of customers are expected to see bill hikes between 9% and 11%. The remaining customers are projected to see bill increases outside of those estimates.
In 2021, former Arizona Corporation Commissioner Justin Olson warned regulators not to vote on a rate increase without reading the fine print. It was a message of “buyer beware.”
“It is imperative that we do not repeat the error of the previous Commission that failed to obtain this comprehensive bill impact evaluation,” Olson wrote to colleagues in an August 2021 letter. Olson’s letter refers to a chart – known as a bin analysis - detailing how a proposed rate plan would impact customers based on their historical power usage.
When the Arizona Corporation Commission voted last Thursday on a new rate hike for APS, they had a bin analysis that did not reflect changes made to the proposal.
Judge orders APS to provide updated bin analysis and other details
By Friday morning, Commission Chair Jim O’Connor was assuring the public they would get an updated analysis. Customer advocacy groups filed requests for APS to produce the analysis as well. In response, the administrative law judge overseeing the case responded by ordering APS to produce a new bin analysis, along with other details of the rate plan, by March 4.
Olson, no longer on the commission, tells 12News the bin analysis allows commissioners to know why some ratepayers will see larger or smaller changes on the average bill.
“The bin analysis was particularly important when a rate case included substantial changes to the rate design as these changes could lead to a large variety of individual ratepayer impacts,” Olson told 12News on Thursday.
APS has stated the new rate hike - set to go into effect in March - will have an average impact of 8% on residential customers, or about $10.50 per month. Rates vary for many reasons. They are impacted by individual plans, weather, the number of days in a billing period, and whether a customer is a business, a rooftop solar owner, or a school.
What is the impact of adjustors and for how long?
A key factor that impacts the actual impact of customer bills is “adjustors.” They are fees on the bill that can change. For example, one adjustor pays for fuel costs (which fluctuate) that are shouldered by APS and must be recouped from customers.
Judge Sarah Harpring’s estimate of the new rate plan shows a “base revenue requirement” increase of 14.56%. However, APS said after adjustors are factored into the equation, the actual bill impact will be 8%.
Critics allege adjustors have the potential to distort the actual bill impact on consumers. They want APS to provide more specific projections about how they will impact bills not just on “Day 1” but into the future. Harpring’s order requires APS to specify the impact on bills, with and without adjustors.
12News has also asked APS to specify the impact of adjustors and to explain how long customers are guaranteed the average impact to be 8%. APS did not respond to the request.
PIRG: “failed to ask questions,” Thompson: “greater transparency”
The director of the PIRG Education Fund alleged the commission “failed to ask the questions necessary to ensure they had adequate and complete data before voting on the entire rate plan” and a prominent consumer advocate said he is worried the advertised 8% increase “may be temporary or may be lowballed to avoid negative publicity.”
Commissioner Kevin Thompson said in a statement the APS case was the toughest, most time-consuming to date.
“We adopted amendments that provide greater ratepayer transparency and accountability for the utility,” Thompson said.
Defending the timing of the vote, Commission Chair Jim O’Connor told 12News Friday he believed the commission had sufficient, though not exact, calculations in order to vote on the rate plan. Asked if he would request APS to provide additional details that include the impact of the new rate hike on customer bills six months or a year from now (as opposed to only on Day 1), O’Connor said he is waiting for APS to provide information.
*Editor's Note: This story has been updated to clarify that commissioners voted without having an updated bin analysis.*
>> Download the 12News app for the latest local breaking news straight to your phone.
12News on YouTube
Catch up on the latest news and stories on the 12News YouTube channel. Subscribe today.