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Arizona Public Services rate hike hearings begin Monday

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Posted at 8:22 PM, Oct 04, 2021

PHOENIX — The three-day hearing about Arizona Public Services' request for a $169 million revenue increase began on Monday morning.

If approved the company said the change will increase customer's monthly bills by about 5%.

But the increase is just one of several issues in the rate case before the five-member Arizona Corporation Commission.

One of the main points of contention is the prudency--or ability to recover costs--of APS' upgrades to its Four Corners Coal Power Plant. The company bought a majority share in the plant and in 2015 settled with the US Department of Justice over violations of the Clean Air Act by installing $400 million dollars in pollution controls in 2018.

The company announced earlier this year that it would significantly reduce operations to seasonal by fall 2023. The entire plant is scheduled to be retired by 2031.

Administrative Law Judge Sarah Harpring concluded that the prudency of the upgrades "had not been demonstrated" and that their costs should not be allowed to be charged to ratepayers.

During Monday's hearing, APS maintained that the improvements were necessary to maintain reliability and that Commissioners repeatedly approved plans related to the pollution controls.

Another issue to be decided is how to compensate coal-impacted Indigenous tribes. APS and Navajo Nation struck a deal worth more than $140 million dollars in funds, technical training, and remediation for communities that have been impacted by coal mining, the resulting pollution from coal-fired plants and the loss of jobs when the plant shut down. It also included negotiations for the Hopi Tribe.

The agreement proposes that $100 million would be paid out over 10-years and funded through customer rates. The rest would come directly from APS shareholders.

Judge Harpring recommended that the amount be cut to $50 million over 10 years. On Monday members of the tribes demonstrated in front of the ACC demanding that the agreement be passed as is.

"You can see the nice green lawns and the all the running water and the manmade lakes and the golf courses here," said Nicole Horseherder, Navajo activist and executive director of Tó Nizhóní Ání. "So what we're saying is that what people don't see is they don't see the environmental, the health and economic impacts from both the operation of the coal-fired power plants and the coal mines, but also the closure."

APS was ordered to open the rate case in 2019 after customer Stacey Champion forced a hearing due to higher than expected bills following the company's rate increase and redesign that went into effect in 2017. Several subsequent reviews concluded that APS was earning higher than expected revenues.

The current hearings are scheduled to continue through Wednesday.