On June 2, 2008, Arizona Public Service Company ("APS" or "Company"), the largest electric service provider in the state, filed an amended application ("Application") with the Arizona Corporation Commission ("ACC" or "Commission") requesting an increase in rates and charges. APS is seeking an increase of $448.2 million (including a $183.9 million increase in base fuel costs) over adjusted test year jurisdictional revenues of $2,732 million. In addition to the aforementioned increase of $448.2 million, APS is also proposing that it be permitted to implement a surcharge on ratepayers located in new service areas to collect up to $53 million in additional revenues per year to recover a $79.3 million revenue attrition allowance adjustment that is part of the Company-proposed non-fuel base rate increase of $264.3 million (i.e. $448.2 million overall increase less the proposed $183.9 increase in base fuel costs). APS claims that prior rate increases granted by the ACC have been unjust and unfair to the Company and will continue to be unless the increases requested in its Application are approved.
In addition to the proposed increases in revenue just noted, APS is also seeking changes to the Company's existing Demand Side Management Adjustment Clause ("DSMAC") surcharge, its existing Transmission Cost Adjustor ("TCA") surcharge and to its existing Environmental Improvement Surcharge ("EIS"). APS is also proposing approval of three new conservation and demand management rate provisions; a continuation of the Company's ability to defer certain costs related to its provision of net metering options; and changes in or cancellation of specific service and rate schedules as well as approval of Company-proposed depreciation rates. APS is further proposing several new rate programs and modifications to existing rate programs which will include a new residential time-of-use ("TOU") option that reflects a "super peak" period of 3 to 6 p.m. during the summer months of June, July and August. APS is requesting a return on common equity of 11.50 percent and an overall rate of return on invested capital of 8.86 percent.
APS is a wholly owned subsidiary of Pinnacle West Capital Corporation and is publicly traded on the New York Stock Exchange ("NYSE") under the ticker symbol PNW. During the test year ended December 31, 2007, the Company served approximately 1.1 million customers in Arizona and employed approximately 6,800 individuals.
On July 16, 2008, RUCO filed an application to intervene(link is external) on behalf of residential ratepayers that are served by APS.
On December 19, 2008, RUCO filed its direct testimony recommending no increase in rates.
On January 30, 2009, APS filed a motion to suspend the time clock on its pending application for an increase in rates. APS' request was filed seven days after it informed the ACC of its plans to engage in settlement discussions with RUCO, ACC Staff and other parties who have intervened in the case. Settlement discussions began on Friday, January 30, 2009.
After weeks of settlement negotiations, APS, ACC Staff, RUCO and a number of other intervenors announced that an agreement in principle had been reached on a revenue figure and that substantial progress had been made on other important issues in the APS rate case proceeding. The announcement was made during a procedural conference held on Tuesday, April 21, 2008, at the Arizona Corporation Commission's Phoenix offices. On Monday, May 4, 2009, the parties to the case filed a motion for a procedural order that recommended dates for the filing of written testimony and for an evidentiary hearing. Terms of the agreement were filed along with the motion.
On Wednesday, April 22, 2009, APS filed a Form 8-K(link is external) with the U.S. Securities and Exchange Commission informing the investment community of the announcement.
On Friday June 12, 2009, APS, ACC Staff, RUCO and a number of other intervenors filed a final draft of the proposed settlement agreement(link is external) (Agreement).
On Wednesday, July 1, 2009, APS, ACC Staff, RUCO and a number of other intervenors filed written direct testimony in support of the Agreement. RUCO Director Jodi Jerich and RUCO consultant Dr. Ben Johnson cited a number of reasons in their testimony at to why the Agreement benefits residential ratepayers and why the Agreement is in the public interest and should be adopted by the Commission.
Written rebuttal testimony in opposition to the Agreement was filed by parties opposed to the Agreement on Wednesday, July 22, 2009.
Supporting parties of the Agreement filed reply testimony on Thursday, August 13, 2009.
A public comment meeting on the APS proceeding was held in Flagstaff on Monday, August 3, 2009. Public comment meetings on the Agreement and the proposed rate increase were also held in Prescott on Thursday, August 6, 2009 at 6:00 p.m. at the Prescott City Hall Council Chambers located at 201 S. Cortez, and at the ACC's Phoenix offices located at 1200 W. Washington at 5:30 p.m. on Wednesday, August 12, 2009. A public comment meeting has been scheduled for 6:00 p.m. on Tuesday, September 29, 2009, at the Yuma City Council Chambers, One City Plaza, Yuma, AZ.
The evidentiary hearing on the proposed settlement agreement on Arizona Public Service Company's rate increase request concluded on Friday, September 18, 2009. Initial closing legal briefs were filed on Friday, October 9, 2009. Reply briefs (which were originally scheduled to be filed on October 16, 2009) were filed on Friday, October 23, 2009.
On Tuesday, November 17, 2009, the CALJ issued a Recommended Opinion and Order(link is external)("ROO").
From Monday, December 7, 2009 through Wednesday, December 8, 2009, the Commission held a special open meeting for the purpose of discussing the APS Settlement Agreement and to vote on a number of amendments to the ROO.
During a late session of the Regular Open Meeting held on Wednesday, December 16, 2009, the five sitting ACC Commissioners passed an amended order that adopted the APS Settlement Agreement by a vote of 4 to 1.