APS renewable energy tariff for customers hiked
Residents' monthly fee jumps 140 percent to cover incentives, acquisition of sources
19 commentsby Ryan Randazzo - Dec. 17, 2008 12:00 AM
The Arizona Republic
The Arizona Corporation Commission raised the monthly charge that Arizona Public Service Co. residential customers will pay in 2009 to
support renewable energy to $3.17 a month from $1.32 a month.
That's a 140 percent increase for the maximum tariff on people living in homes and apartments. Businesses would see their monthly
charge increase to a maximum of to $117.93 from $48.84.
Large industrial customers could see tariffs of $353.78, compared with the current cap of $146.53.
The tariffs will be worth an estimated $78.4 million to the utility, which uses the money to acquire renewable energy and pay incentives to
people who use rooftop solar and other renewables.
APS officials in October notified the Corporation Commission they would have an estimated $8 million in renewable-energy funds left over
from this year, and that the tariff on customers in 2009 could thus be reduced if that money was rolled over to the next year.
But the Corporation Commission staff did not recommend including that surplus money in the recommendation because of the
"uncertainty of the amount."
"We believe it is in the best interest of the customers to roll this forward so the amount of the adjuster they pay will be reduced," APS
lawyer Deborah Scott said.
The vote was 3-2 with Kris Mayes, Jeff Hatch-Miller and Bill Mundell in favor, and Mike Gleason and Gary Pierce opposed.
"It means Arizona will be investing in solar energy and wind energy and geothermal, and will put Arizona on a pathway to being a leader in
distributed solar energy," Mayes said.
The tariff is only part of the price increases being considered this week.
Today the Corporation Commission is scheduled to vote on a short-term base-rate increase that would raise the average household bill
$4.66 a month.
An administrative law judge recommended rejecting that increase last month, but the commissioners get the final word.
Even that increase is not the end of the rate requests. APS wants that interim increase to prop up its finances while a larger 9.4 percent
increase is considered.
That would raise the average household bill $11, based on the amount of energy most customers use, but the commissioners aren't
scheduled to decide that matter until late next year.
Judge Lyn Farmer not only rejected the need for the interim increase, but directed APS to explore cost-cutting options such as reducing
dividends to shareholders and executive bonuses.
APS officials have said they need the higher rates to keep their credit rating from falling to junk status, which would cost the company and
ratepayers millions in higher financing expenses.
APS has eliminated 500 positions this year, cut operating expenses by $50 million and reduced planned capital expenses by $720 million.
Several business groups have filed comments with the Corporation Commission supporting the rate increase to protect the utility's credit
rating.
"While none of us wants to pay more for energy costs, the alternative of having a failed utility and no ability to meet future needs is even
more disheartening," said David Roderique, president and CEO of the Downtown Phoenix Partnership.
Customers also have filed comments asking the regulators to keep rates low.
"Please, please, I am burning wood (for) heat because the gas is too much, now must I live without lights and an electric cook stove and
hot water . . . because the electricity is going up?" wrote Sharon Owen of Taylor.
Residents' monthly fee jumps 140 percent to cover incentives, acquisition of sources
19 commentsby Ryan Randazzo - Dec. 17, 2008 12:00 AM
The Arizona Republic
The Arizona Corporation Commission raised the monthly charge that Arizona Public Service Co. residential customers will pay in 2009 to
support renewable energy to $3.17 a month from $1.32 a month.
That's a 140 percent increase for the maximum tariff on people living in homes and apartments. Businesses would see their monthly
charge increase to a maximum of to $117.93 from $48.84.
Large industrial customers could see tariffs of $353.78, compared with the current cap of $146.53.
The tariffs will be worth an estimated $78.4 million to the utility, which uses the money to acquire renewable energy and pay incentives to
people who use rooftop solar and other renewables.
APS officials in October notified the Corporation Commission they would have an estimated $8 million in renewable-energy funds left over
from this year, and that the tariff on customers in 2009 could thus be reduced if that money was rolled over to the next year.
But the Corporation Commission staff did not recommend including that surplus money in the recommendation because of the
"uncertainty of the amount."
"We believe it is in the best interest of the customers to roll this forward so the amount of the adjuster they pay will be reduced," APS
lawyer Deborah Scott said.
The vote was 3-2 with Kris Mayes, Jeff Hatch-Miller and Bill Mundell in favor, and Mike Gleason and Gary Pierce opposed.
"It means Arizona will be investing in solar energy and wind energy and geothermal, and will put Arizona on a pathway to being a leader in
distributed solar energy," Mayes said.
The tariff is only part of the price increases being considered this week.
Today the Corporation Commission is scheduled to vote on a short-term base-rate increase that would raise the average household bill
$4.66 a month.
An administrative law judge recommended rejecting that increase last month, but the commissioners get the final word.
Even that increase is not the end of the rate requests. APS wants that interim increase to prop up its finances while a larger 9.4 percent
increase is considered.
That would raise the average household bill $11, based on the amount of energy most customers use, but the commissioners aren't
scheduled to decide that matter until late next year.
Judge Lyn Farmer not only rejected the need for the interim increase, but directed APS to explore cost-cutting options such as reducing
dividends to shareholders and executive bonuses.
APS officials have said they need the higher rates to keep their credit rating from falling to junk status, which would cost the company and
ratepayers millions in higher financing expenses.
APS has eliminated 500 positions this year, cut operating expenses by $50 million and reduced planned capital expenses by $720 million.
Several business groups have filed comments with the Corporation Commission supporting the rate increase to protect the utility's credit
rating.
"While none of us wants to pay more for energy costs, the alternative of having a failed utility and no ability to meet future needs is even
more disheartening," said David Roderique, president and CEO of the Downtown Phoenix Partnership.
Customers also have filed comments asking the regulators to keep rates low.
"Please, please, I am burning wood (for) heat because the gas is too much, now must I live without lights and an electric cook stove and
hot water . . . because the electricity is going up?" wrote Sharon Owen of Taylor.
APS asks regulators for emergency rate hike
3 commentsby Ryan Randazzo - Dec. 18, 2008 12:00 AM
The Arizona Republic
Arizona Public Service Co.'s president faced tough questions from utility regulators Wednesday as he asked for an emergency rate
increase to keep the company from losing its credit rating.
The Arizona Corporation Commission listened to the president and several local business leaders who favor the rate increase for seven
hours, but put off a decision on the rate increase until today.
APS asked for $115 million by adding an average $4.66 to residential bills each month, based on the average amount of electricity used by
people in homes and apartments. Businesses also would see an increase.
The utility asked for the boost to tide it over while a larger permanent rate hike is considered, which would raise monthly household bills 9.4
percent, or about $11. That should be decided next year.
After a motion Tuesday that will raise customer bills $1.85 a month to give APS more money to support renewable energy, the regulators
appeared hesitant to raise rates more if APS didn't cut expenses.
"I don't want this commission to look like the lottery redemption center," Commissioner Jeff Hatch-Miller said to APS President Don Brandt.
Two commissioners have suggested giving APS a partial rate increase, worth $65.2 million, that would have a smaller effect on customer
bills.
Brandt said that partial increase would be meaningful.
"Our rates need to reflect our cost of doing business," he said. "APS needs a real opportunity to earn our allowed rate of return."
3 commentsby Ryan Randazzo - Dec. 18, 2008 12:00 AM
The Arizona Republic
Arizona Public Service Co.'s president faced tough questions from utility regulators Wednesday as he asked for an emergency rate
increase to keep the company from losing its credit rating.
The Arizona Corporation Commission listened to the president and several local business leaders who favor the rate increase for seven
hours, but put off a decision on the rate increase until today.
APS asked for $115 million by adding an average $4.66 to residential bills each month, based on the average amount of electricity used by
people in homes and apartments. Businesses also would see an increase.
The utility asked for the boost to tide it over while a larger permanent rate hike is considered, which would raise monthly household bills 9.4
percent, or about $11. That should be decided next year.
After a motion Tuesday that will raise customer bills $1.85 a month to give APS more money to support renewable energy, the regulators
appeared hesitant to raise rates more if APS didn't cut expenses.
"I don't want this commission to look like the lottery redemption center," Commissioner Jeff Hatch-Miller said to APS President Don Brandt.
Two commissioners have suggested giving APS a partial rate increase, worth $65.2 million, that would have a smaller effect on customer
bills.
Brandt said that partial increase would be meaningful.
"Our rates need to reflect our cost of doing business," he said. "APS needs a real opportunity to earn our allowed rate of return."
For the second time in three days, utility regulators voted to raise the amount customers pay on their Arizona Public
Service Co. bills.
The combined increases add about $4.53 a month to the average electric bill for a residential customer.
An emergency rate increase was granted Thursday after company executives argued APS was facing a financial emergency and its credit
rating could be downgraded. A downgrade ultimately could lead to even higher rates for customers, because the utility would have to pay
higher interest rates for financing to build power plants and fund other projects, company officials argued.
Regulators said they wanted to act before the utility faced a greater emergency. The increase was approved 4-1 by the Arizona Corporation
Commission after a two-day hearing in which APS' expenses came under scrutiny. In return for the raise, APS has promised to target $20
million in expense cuts, which would come on top of an estimated $50 million in cuts already made in recent months.
Commissioners Gary Pierce, Kris Mayes, Jeff Hatch-Miller and Bill Mundell supported the raise, while Chairman Mike Gleason opposed.
He and others speaking out against the increase cited the economy.
"People are hurting, and this is not the time to give them a Christmas present of another rate increase," Gleason said. "APS is not going to
quit (providing power). That is a scare tactic."
Last month, an administrative law judge rejected the need for the APS emergency increase, but the commission went against the
recommendation.
The panel wrestled with the concept of raising rates, fearing what ratings agencies such as Moody's and Standard and Poor's might do to
APS' credit rating.
"I'm not willing to play Russian roulette with Arizona's energy future," Mayes said. "I'm a little more risk-averse than that. I'm willing to bet
(consumers) are willing to pay . . . to ensure it."
Other commissioners agreed.
"We can't afford for this company to have a financial disaster," Hatch-Miller said.
The rate increase would be in effect until a final decision could be made on the company's formal rate-increase request. APS is asking for
a hike that would boost household bills 9.4 percent, or about $11.
Three of the commissioners, Mundell, Pierce and Hatch-Miller, will not be in office for that decision because new commissioners elected in
November take office in January.
During the hearing, Pierce read APS President Don Brandt comments from APS customers who have pleaded with the commission to hold
rates down.
"Some folks will have the perception that gas prices are going down, why can't APS back off?" he asked.
Brandt said asking for higher rates always is difficult.
"If they are willing to work with us, our business is not to cut customers off," Brandt said, adding that customer-service employees are
trained to help the poorest customers find help paying their bills.
"We will bend over backwards," Brandt said. Brandt didn't get everything he and APS requested. APS asked for an increase that would have
brought the utility $115 million and added $4.66 to residential bills, based on the average amount of electricity used in homes and
apartments.
The increase allows APS to charge about $2.68 more a month to an average residential customer.
Brandt said the $65 million increase was a "constructive step for this commission to take in ensuring APS' financial strength."
The commissioners also asked the utility to make cuts of $20 million in expenses, considering it was given a base-rate increase just last
year, and other utility fees are rising.
They also ordered the company to consider cutting lobbying and advertising, cutting management compensation, including Brandt's, and
freezing increases in its dividend payments to stockholders.
"We are telling APS that it has got to tighten its belt if it expects ratepayers to pick up the increase," Mayes said.
Brandt promised to exceed $20 million in cuts and said it could be done without layoffs.
Dan Pozefsky, a lawyer for the Residential Utility Consumer Office, a state department created by the Legislature to represent the public at
such rate hearings, argued against even a partial increase.
"The current economy has not just hit the utility, but its customers," Pozefsky said. "The economy is not unique to APS."
He argued that APS has not proved that its credit rating will fall if it doesn't get the increase.
APS customers also may have to adjust for other increases to their bills, which include energy surcharges and renewable-energy tariffs.
On Tuesday, the commission approved a separate $1.85 raise in the monthly charge that APS uses to buy renewable energy and pay
customers incentives for efforts, such as putting solar panels on their roofs.
Base-rate increases for the utility have been approved in 2005 and 2007. Rates had fallen for years before that, with a total decrease of 16
percent from 1992 to 2005
Service Co. bills.
The combined increases add about $4.53 a month to the average electric bill for a residential customer.
An emergency rate increase was granted Thursday after company executives argued APS was facing a financial emergency and its credit
rating could be downgraded. A downgrade ultimately could lead to even higher rates for customers, because the utility would have to pay
higher interest rates for financing to build power plants and fund other projects, company officials argued.
Regulators said they wanted to act before the utility faced a greater emergency. The increase was approved 4-1 by the Arizona Corporation
Commission after a two-day hearing in which APS' expenses came under scrutiny. In return for the raise, APS has promised to target $20
million in expense cuts, which would come on top of an estimated $50 million in cuts already made in recent months.
Commissioners Gary Pierce, Kris Mayes, Jeff Hatch-Miller and Bill Mundell supported the raise, while Chairman Mike Gleason opposed.
He and others speaking out against the increase cited the economy.
"People are hurting, and this is not the time to give them a Christmas present of another rate increase," Gleason said. "APS is not going to
quit (providing power). That is a scare tactic."
Last month, an administrative law judge rejected the need for the APS emergency increase, but the commission went against the
recommendation.
The panel wrestled with the concept of raising rates, fearing what ratings agencies such as Moody's and Standard and Poor's might do to
APS' credit rating.
"I'm not willing to play Russian roulette with Arizona's energy future," Mayes said. "I'm a little more risk-averse than that. I'm willing to bet
(consumers) are willing to pay . . . to ensure it."
Other commissioners agreed.
"We can't afford for this company to have a financial disaster," Hatch-Miller said.
The rate increase would be in effect until a final decision could be made on the company's formal rate-increase request. APS is asking for
a hike that would boost household bills 9.4 percent, or about $11.
Three of the commissioners, Mundell, Pierce and Hatch-Miller, will not be in office for that decision because new commissioners elected in
November take office in January.
During the hearing, Pierce read APS President Don Brandt comments from APS customers who have pleaded with the commission to hold
rates down.
"Some folks will have the perception that gas prices are going down, why can't APS back off?" he asked.
Brandt said asking for higher rates always is difficult.
"If they are willing to work with us, our business is not to cut customers off," Brandt said, adding that customer-service employees are
trained to help the poorest customers find help paying their bills.
"We will bend over backwards," Brandt said. Brandt didn't get everything he and APS requested. APS asked for an increase that would have
brought the utility $115 million and added $4.66 to residential bills, based on the average amount of electricity used in homes and
apartments.
The increase allows APS to charge about $2.68 more a month to an average residential customer.
Brandt said the $65 million increase was a "constructive step for this commission to take in ensuring APS' financial strength."
The commissioners also asked the utility to make cuts of $20 million in expenses, considering it was given a base-rate increase just last
year, and other utility fees are rising.
They also ordered the company to consider cutting lobbying and advertising, cutting management compensation, including Brandt's, and
freezing increases in its dividend payments to stockholders.
"We are telling APS that it has got to tighten its belt if it expects ratepayers to pick up the increase," Mayes said.
Brandt promised to exceed $20 million in cuts and said it could be done without layoffs.
Dan Pozefsky, a lawyer for the Residential Utility Consumer Office, a state department created by the Legislature to represent the public at
such rate hearings, argued against even a partial increase.
"The current economy has not just hit the utility, but its customers," Pozefsky said. "The economy is not unique to APS."
He argued that APS has not proved that its credit rating will fall if it doesn't get the increase.
APS customers also may have to adjust for other increases to their bills, which include energy surcharges and renewable-energy tariffs.
On Tuesday, the commission approved a separate $1.85 raise in the monthly charge that APS uses to buy renewable energy and pay
customers incentives for efforts, such as putting solar panels on their roofs.
Base-rate increases for the utility have been approved in 2005 and 2007. Rates had fallen for years before that, with a total decrease of 16
percent from 1992 to 2005
by Ryan Randazzo - Dec. 19, 2008 12:00 AM
The Arizona Republic
The Arizona Republic
Green News. Current articles and information on Solar & renewables |
Updated 2/13/09
1 2
1 2