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APS, Commissioners debate reasons for rate increase request

APS AP photo
Posted at 9:07 PM, Oct 05, 2021

PHOENIX — Arizona Public Service (APS) spent Tuesday justifying its latest rate increase to utility regulators.

In the second of a three-day special open meeting to determine how much the company can recover and include in rates, the five members of the Arizona Corporation Commission spent the day debating dozens of amendments that each wants to be included in the final package.

Commissioners spent a lot of time on the issue of the company recovering the $400 million it spent on pollution controls for the Four Corners coal plant. The company recently announced plans to drastically reduce its capacity by fall 2023, and it will be retired by 2031, years earlier than originally planned.

In her Recommended Opinion and Order, Administrative Law Judge Sarah Harpring concluded that the upgrades were not prudent; a requirement by Arizona law for investor-owned utilities to be reimbursed through customer rates.

At least three of the Commissioners must decide whether to agree with the judge's assessments or how to adjust them.

In 2013, APS bought -and the ACC approved- a majority stake in the plant from Southern California Edison and installed the pollution controls to fulfill a settlement with the U.S. Department of Justice and Environmental Protection Agency for alleged violation of the Clean Air Act.

Conservation group Sierra Club argued that APS knew or should have known that there were cheaper alternatives prior to investing more money in the plant.

APS CEO Jeff Guldner disputed that claim saying the plant would need to have been replaced with something else and that the solar and battery storage that the group suggested was "science fiction" at the time the company was making decisions about Four Corners.

Chairwoman Lea Marquez Peterson presented an amendment that would allow additional time to address prudency through a brand-new proceeding. Commissioner Anna Tovar's amendment suggested granting partial recovery.

Also included in the discussion was how much ratepayers should be responsible for footing the bill to compensate the Navajo Nation and Hopi Tribe. Both have been impacted by decades of coal pollution and will lose hundreds of jobs with coal plant closures.

APS and the Navajo Nation struck a deal worth more than $140 million dollars in cash, job assistance, and more electrification of the reservation. In the original proposal, ratepayers would have been on the hook for $100 million over 10 years. The recommended amount was reduced to $50 million by Judge Harpring.

But on Tuesday, commissioners Marquez Peterson and Jim O'Connor expressed doubts that the Commission has jurisdiction to use ratepayer funds to pay the tribes.

Commissioner Justin Olson wants the coal transition addressed by the state legislature and U.S. Congress and said the deal is "not related to cost of service" for ratepayers.

Guldner defended the deal and pointed out that APS "customers have benefited (from coal) for decades," and that it has powered the state's growth.

Also on the table is a reduction in the peak hours used in Time of Use plans. Right now, APS' peak window when power is most expensive, is from 3 p.m. until 8 p.m. Marquez Peterson's amendment would shorten that time frame to 4 p.m. to 7 p.m.

APS maintained that changing the times would be confusing for customers and increase dissatisfaction.

"To make this change will involve some fairly extensive reprogramming of the meters, and a very deliberate rollout strategy," Guldner said. "The last rate design change we made took about a year to get the meters reprogrammed and to actually push out rate changes to customers who are impacted."

The meeting with continue into Wednesday but a final vote is not expected until at least the end of October during the Commission's regular open meeting.