Like most things in life, the cost to provide electricity to homes and businesses continues to rise. Because of that, Arizona Public Service is requesting a rate hike for its 1.1 million customers to cover the cost of doing business.
This is the first rate increase request by APS in five years.
“The rate increase is to cover all of our costs over the last five years that we’ve spent on capital improvements, whether it be for generating plants or for the grid,” APS representative Stefanie Layton said during a Tuesday, Oct. 11, Sedona City Council meeting. “Most of our expenditures over the last five years have been on the infrastructure side while building a grid that supports more technology and in particular, a two-way flow of energy.”
The topic was discussed last month during a council meeting. The purpose of this follow-up meeting was to have APS representatives and city consultant Rick Romain continue to provide context to better understand the impact the rate case may have on rate payers including current and future solar users.
According to a city report, on June 1, APS filed a rate case with the Arizona Corporation Commission, which addresses both demand charges for residential customers and the net metering program for rooftop solar customers. They’re proposing an overall monthly billing increase of 5.74 percent for all customers. However, the residential rate would increase by 7.96 percent. So for example if your bill is $139, it would increase to $150. APS is also requesting an increase of 35 percent — or $48 million annually — in its assistance for limited-income customers.
APS is seeking approval for a new structure with three demand charge rates. The new rates would include the higher fixed charges, lower volumetric rates and the demand charge.
Under the rate plan, net metering credits for rooftop solar would fall from the retail rate — currently 14 cents per kilowatt hour — to a market rate of 3 cents per kilowatt hour. Customers who have already installed rooftop solar and those who install before July 1, 2017, would be grandfathered in and allowed to keep the retail rate credit for the full life of their solar arrays, Layton said.
The demand rates for residential customers will be averaged over an hour of the most power used in a monthly billing cycle, she said. That component of the bill would only be measured during the peak window of 3 to 8 p.m., Monday through Friday and does not include holidays. Business rates are based on the highest 15-minute period of use and will continue the same way.
“Some of our customers will see a net decrease while other customers will see a net increase,” she said in regard to the new fee structuring. “But the goal is to try and allocate costs to customers more fairly to where they’re only paying for what they use — no more and no less.”
During the September council meeting, Layton addressed concerns from some that their bills will be seeing dramatic increases with the new billing structure.
“It’s important to know it’s not in addition to what you already pay now,” she said. “The bill is the bill. Right now it’s typically carved up into two parts. This would take the same sized pie and divide it up three ways. If you have a rate that has a demand component on it, you will pay less for your energy component. The higher the demand component, the lower the energy component. There’s a balancing that goes there. It’s not an addition to what you already pay now.”
The city had originally discussed whether or not to intervene on behalf of its citizens in regard to the proposed rate hike.
A decision is expected shortly. However, the city had previously intervened in regard to the potential opt-out plan for the implementation of the APS smart-metering program two years ago.
In that intervention, several groups of APS customers, including the city of Sedona, raised concerns about the health effects of smart meters, the city report states. An opt-out tariff was approved by the ACC on Dec. 18, 2014. However, following applications for rehearing, the ACC rescinded its previous decision and deferred any final decision on the opt-out tariff until “the full spectrum of information that is included in a general rate case” could be considered.
Under the current proposal from APS to the ACC, it is requesting that those who chose to opt-out and continue to use an analog meter be charged $15 a month to cover the costs of meter reading, billing and operational costs. In all, nearly 40 percent of Sedona customers chose to opt-out.
In addition, if someone chose to opt-out after the rate structure was approved, those customers would be charged a one-time fee of $70 to replace the smart meter with an analog meter. Those who have already opted out would not be charged that $70 fee.
“That seems like an awful lot for people to have to pay,” Councilman Scott Jablow said in regard to the proposed monthly fee. “I could see $5 but $15 doesn’t really equate to a fair balance.”
Sedona resident Phil Allen agreed.
“APS no longer has to pay the salaries of hundreds of meter readers who no longer need to manually read over one million meters,” he said. “APS no longer has to pay the fuel, maintenance and repair and other costs for hundreds of vehicles they no longer need for manually reading those meters. These huge cost savings should more than offset any costs to read the few thousand analog meters that remain in service.”