APS - 2011 Rate Case Filing

Docket Number
Assigned Staff
Jodie Jerich
Dan Pozefsky
W. Rigsby
Frank W. Radigan (Hudson River Energy Group)


On Wednesday June 1, 2011, Arizona Public Service Company ("APS" or "Company), the state's largest electric provider, filed an application for a permanent rate increase(link is external) ("Application") with the Arizona Corporation Commission ("ACC" or "Commission").

In its Application, APS requested a net increase in revenues of $95.5 million or 3.30 percent to become effective on July 1, 2012.   APS stated in its Application that the increase would allow the company to recover $1.5 billion of infrastructure investments that are now or will be providing service to customers by the time new rates go into effect.  If the ACC approves APS' request, a typical APS residential customer using 1,100 kilowatt hours per month would see a bill increase of $8.36 for a total of $135.61.

On Tuesday, June 7, 2011, RUCO filed an application to intervene(link is external) in the matter.

On Friday, July 1, 2011, The ACC Utilities Division issued a letter of sufficiency(link is external) informing APS that its Application meets the sufficiency requirements of A.A.C. R-14-103.

On Monday, July 18, 2011, a procedural conference was held to discuss possible hearing and procedural dates.

On Friday, July 29, 2011, the Chief Administrative Law Judge (CALJ) of the ACC's Hearing Division issued a Procedural Order(link is external) scheduling an evidentiary hearing on the matter.

Other intervenors in the case besides RUCO include Freeport-McMoRan Copper & Gold, Inc. and Arizonans for Electric Choice and Competition (together, "AECC"), the Town of Wickenburg ("Wickenburg"), Barbara Wyllie-Pecora, Western Resource Advocates ("WRA"), Southwest Energy Efficiency Project ("SWEEP"), the Kroger Company ("Kroger"), the Arizona Association of Realtors ("AAR"), and the International Brotherhood of Electrical Workers ("IBEF").

On Friday, October 7, 2011, approximately 900 individuals attended a public comment meeting on Arizona Public Service Company's request for a permanent increase in rates. The Arizona Corporation Commission conducted the meeting at the Sundial Auditorium in Sun City with four of the five sitting Commissioners in attendance.

Direct Testimony on required revenue from ACC Staff, RUCO and other intervenors to the case was filed on Friday, November 18, 2011. 

RUCO is recommending the following:

     1. A net rate decrease of $0 million.

     2. No post-year year plant additions for fossil, nuclear or distribution plant.

     3. Allow recovery of test year AZ Sun costs and 18 months of post test year AZ Sun costs.

     4. Continuation of the Power Supply adjustment (“PSA”) with 90/10 sharing.

     5. Reject the proposal to include chemical costs in the PSA.

     6. Reject the proposal to establish an Environmental and Reliability Account.

     7. Rejection of coal mine reclamation cost adjustment which would allow a four year recovery of costs.

     8. Rejection at this time of Company’s low income adjustment.

     9. Rejection of APS’ Decoupling proposal in its entirety.

The implementation of RUCO’s recommendations result in a base rate increase of $140 million (a $98 million increase in base rate to covers costs and a $42 million from the transfer of the Az Sun program funding from the Renewable Energy Standard Rules Tariff to base rates) offset by a credit of $140 million from the Power Supply Adjustor mechanism ("PSA").

Because the PSA has a credit of $153 million, the $140 million transfer still leaves another $13 million credit in the PSA which can be used to offset future rate increases. A summary of the details of the rate change of the Company and RUCO is presented in the table below.


Rate Element           APS Position - 10/27 ($Millions)           RUCO Position ($Millions)

Base Rates                          $196                                                              $98

AZ Sun transfer                     $42                                                               $42                             to base rates

Base Fuel Change              ($153)                                                         ($140)

Net Rate Change                    $85                                                               $0


On Friday, November 18, 2011, RUCO filed a motion for extension(link is external) to file its decoupling testimony on Wednesday, November 23, 2011.

On Wednesday, November 23, 2011, RUCO filed its direct testimony on revenue decoupling.

Direct testimony on rate design was filed on December 2, 2011.

Settlement discussions by the parties to the case, including RUCO, began as scheduled on Wednesday, November, 30, 2011. 

On Friday, December 9, 2011, ACC Staff filed a preliminary term sheet(link is external) on a possible settlement agreement.

During a Special Open Meeting held on Friday, December 16, 2011, the five sitting ACC Commissioners took time to discuss the preliminary term sheet with the parties to the case.

On Friday, December 23, 2011, the CALJ granted a request from the parties to the case and issued a Procedural Order(link is external) that rescheduled the date for the evidentiary hearing on the matter  for 1:00 p.m. on Thursday, January 26, 2012 at 1200 W. Washington in Phoenix.

On Friday, January 6, 2012, APS, ACC Staff, RUCO and a number of other intervenors filed a Proposed Settlement Agreement(link is external) with the ACC.

On Monday, January 9, 2012, APS filed a bill impact analysis(link is external) that describes the effect that the Proposed Settlement Agreement would have on the Company's ratepayers.

RUCO and the other parties to the case filed testimony on the Proposed Settlement Agreement(link is external) on Wednesday, January 18, 2012.

Public comment on APS' proposed rate increase and the Proposed Settlement Agreement was heard by the five sitting ACC Commissioners and the CALJ on Thursday, January 19, 2012 at 1200 W. Washington in Phoenix.  A pre-hearing conference was conducted at the conclusion of public comment.

On Friday January 20, 2012, ACC Staff filed a Notice of Rate Case Hearing(link is external) to ensure that the parties to Docket No. E-01345A-10-0474 are aware of the pending APS rate case and the Proposed Settlement Agreement.  In its filing, ACC Staff requested that any Open Meeting Notices included with APS Hearing Notices list both Docket Nos. E-01345A-11-0224 and E-01345A-10-0474, to allow the Commission’s full consideration of the Proposed Settlement Agreement in the upcoming rate case hearing.

Responsive testimony from all the parties to the case was filed on Wednesday, January 25, 2012.

The evidentiary hearing on the Proposed Settlement Agreement began as scheduled on Thursday, January 26, 2012 and concluded on Friday, February 3, 2012 at the Arizona Corporation Commission's offices at 1200 W. Washington in Phoenix.

Opening legal briefs were filed on Wednesday, February 29, 2012. 

Reply legal briefs are scheduled to be filed on Wednesday March 14, 2012, however, based on filings made by the parties to the case since March 1, 2012, it does not appear that any reply briefs will be filed in the proceeding.

After weighing all of the evidence the CALJ issued a Recommended Opinion and Order(link is external)("ROO") adopting the Proposed Settlement Agreement on Wednesday, May 2, 2012.

On Friday, May 11, 2012, SWEEP filed exceptions to the ROO.

On Monday, May 14, 2012, the Natural Resources Defense Council filed a statement in support of SWWEP's exceptions to the ROO.

During a Special Open Meeting conducted on Tuesday, May 15, 2012, five sitting ACC Commissioners adopted an amended ROO by a vote of 4 to 1.