News Summary
Arizona Public Service (APS) has filed a proposal for a significant rate increase of $579.5 million, which would raise electric bills by approximately $20 monthly for typical customers. This comes after three previous increases in the past decade. APS argues the hike is necessary for upgrades to its electrical system amid rising power demand, while the Arizona Attorney General opposes the increase, citing economic pressures on consumers. The proposal could set a precedent for future rate changes in Arizona amid ongoing scrutiny of utility companies’ financial practices.
Arizona – Arizona Public Service (APS) has filed a proposal seeking a significant net customer rate increase of $579.5 million with state regulators. If approved, this increase would translate to an approximate rise of $20 on the monthly electric bills for typical customers who use 1,000 kilowatt-hours of electricity.
This proposed rate hike comes at a time when APS has already implemented three rate increases within the past decade. Specifically, customers experienced an 8% increase in 2024, an 8% increase in 2023, and a 4.5% increase in 2017.
APS justifies the need for this rate increase by citing the necessity to fund essential upgrades within its electrical system, highlighting a rising power demand across its service territory. The improvements that the proposed rates would support include:
- Upgrading substations and grid technology.
- Implementing vegetation management programs.
- Installing smart grid technology.
- Enhancing the Palo Verde Generating Station and Redhawk Power Plant.
- Expanding battery storage resources.
- Increasing investments in physical security and cybersecurity measures.
Despite these claims, the rate proposal raises concerns regarding APS’s financial practices. The utility’s parent company, Pinnacle West, reported a profit exceeding $609 million in the past year, fostering skepticism about the rationale for this new rate increase.
Arizona Attorney General Kris Mayes has been granted intervenor status to formally oppose the proposed rate hike, citing concerns that it would place additional financial burden on Arizona consumers already facing economic pressures. The Attorney General argues that in the current climate of rising living costs and inflation, another rate increase is unwarranted, and she plans to explore avenues to challenge the increase and potentially lower the proposed rates.
Furthermore, APS has suggested a return on equity of 10.7% in its rate case—a figure that has drawn criticism from watchdog organizations. The Executive Director of a consumer advocacy group has labeled this proposed return as “unjust and unreasonable.” For comparison, a recent report from S&P Global indicated that U.S. electric utilities averaged a return on equity of 9.6% for rate cases decided in 2023, underscoring that APS’s proposal exceeds industry norms.
Additionally, APS’s proposal includes a formula rate that would permit annual adjustments based on the approved return on equity. Attorney General Mayes has expressed opposition to this formula, citing concerns about inadequate consumer protections and a lack of regulatory checks and balances. The rate case will undergo a rigorous review process, involving public hearings and comment sessions overseen by a judge, culminating in a decision from the Arizona Corporation Commission (ACC).
As of now, APS provides electric service to approximately 1.4 million homes and businesses in 11 of Arizona’s 15 counties, affecting a large portion of the state’s population. The scrutiny surrounding this proposed rate increase highlights the ongoing tension between utility companies’ profit margins and consumers’ financial challenges.
The outcome of this proposal and the subsequent review process may set a significant precedent for future rate increases in Arizona, as state residents watch closely how APS’s request is handled amid prevailing economic conditions.
Deeper Dive: News & Info About This Topic
- Utility Dive
- Wikipedia: Electricity Rate
- AZ Central
- Google Search: Arizona Public Service rate hike
- KVOA
- Encyclopedia Britannica: Utility Regulation
- Hoodline
- Google News: Arizona APS rate hike
- KTAR
Author: STAFF HERE PHOENIX WRITER
PHOENIX STAFF WRITER The PHOENIX STAFF WRITER represents the experienced team at HEREPhoenix.com, your go-to source for actionable local news and information in Phoenix, Maricopa County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as the Waste Management Phoenix Open, Cactus League Spring Training, and Arizona State Fair. Our coverage extends to key organizations like the Greater Phoenix Chamber of Commerce and Visit Phoenix, plus leading businesses in technology and healthcare that power the local economy such as Intel and Banner Health. As part of the broader HERE network, including HERETucson.com, we provide comprehensive, credible insights into Arizona's dynamic landscape.
