Lea Márquez Peterson
Commissioner

Thank you, Chairman. First of all, I want to thank Barbara Alexandra for her work and the Commission Staff for their time and effort.

I also want to thank the consumer advocates and customers who are on the phone today for taking time out of their day to be engaged in the Commission’s process. I don’t think we could have been here without you.

With that, I want to share my initial reaction to the consultant’s report. I was appalled; my experience with utilities in my town has been nothing like this. This was a waste of ratepayer money—more than $5 million dollars—and has created nonstop tension and distrust between the Commission, the utility, and the customers.

On January 9, 2019, the Commission directed Staff to conduct a rate review and audit of Arizona Public Service Company and an evaluation of its Customer Education & Outreach Program. 

I was not on the Commission at the time of the original rate case or investigation, but I’ve learned from the facts over the last year. The Commission required APS customers to choose new rate plans, and the Commission required APS to engage in a customer education and outreach program that was supposed to help customers save money and take control of their monthly bills. 

There are many other issues surrounding this plan, including the lack of respect for stakeholder input and involvement, the lack of clear metrics to measure success, and the lack of effort to ensure that plan dollars were being spent wisely to reach customers and complimentary energy efficiency programs were actually being offered to the customers that needed to be reached the most. 

Last June I asked APS to tell us how many of the customers it disconnected in 2018 had actually benefited from or been enrolled in programs that could have helped save them money on their monthly bills. APS’s response to my request was that, of the 110,000 customers that had been disconnected in 2018 (29,000 of which had been disconnected during the hot summer months), only 317 customers had received any energy efficiency benefits or participated in energy efficiency programs. This was just one year after APS promised hundreds of thousands of customers that they would be able to ‘shift, stagger, and save’ on APS’s new rate plans. 

Meanwhile, the company was collecting $66 million dollars’ worth of additional surcharges over the last three years from customers that were intended to help them ‘save’ on their bills, yet APS spent only half of that on programs that would actually help customers ‘save.’ ‘Savings’ is a resource that can be provided to customers, just like any other investment that utilities make in their customers. 

While the Commission forced customers to choose new rate plans, APS promised that customers would see savings on their bills and have the ability to take control of their energy usage. But that didn’t happen, and customers are still waiting for APS to uphold its end of the bargain. 

While electric utilities across the nation have found ways to deliver value to their customers by offering programs and solutions that customers want, APS appears instead to have steered customers in the direction of its most confusing peak demand rates, continued to collect surcharges on customers that the company wasn’t using, and failed to give customers the energy-saving tools they needed to understand those rates and take control of them. 

The Overland Report stated on page 19, “the new rate plans ... had names suggesting that customers would save money compared with their existing [] rate plan.” 

The Independent Evaluation noted on page 32, “the names used for these plans by APS [did] not explicitly inform customers of the time of use or demand rate structure inherent in the rate plans.” In addition, on page 5, the evaluation states, “APS … [had] not conducted any customer research on whether the ‘SAVER’ … rate names [were] understood by customers or that those names properly reflect[ed] the key attributes of the rate plan;” and “[APS’s] Plan did not include [any] specific messages or educational content to explain the demand rate plans or how the rate-specific criteria to move customers into those plans would be explained to affected customers.” Finally, on page4 and later on pages 25 and 26, “the APS Plan did not establish any objectives or goals that actually measured . . . whether customers [had] actually [‘saved’].” 

These issues are alarming and suggest why almost 150,000 APS customers saw a rate increase of over 10% after the new rate plans went into effect, for no fault of their own. Had APS followed-through with its commitment to the Commission and its customers, I do not believe we would be here today.

While we should be moving forward to figuring out how we can achieve 100% clean energy for the future of the state; and how we can reward utilities for performing up to customer expectations and making prudent investments in next-generation clean and affordable energy resources--we are instead having to take two steps back to scold a utility on matters related to basic consumer and public relations. 

Just last week I asked APS for data related to COVID-19, and APS’s response was that its parent company didn’t want to provide the information, because of shareholders. 

This just isn’t the right tone for the largest utility in the state.

With everything that has come to light since I have come to the Commission, we need to know how APS intends to prove to customers and the Commission that, going forward, it has turned a new leaf and that we can trust that it has truly adopted a customer-centric focus.

Today I will be asking a lot of questions to get to the bottom of this report and how APS can realign its performance with the Commission’s and customers’ expectations: 

• questions about how many customers actually ‘saved’;
• questions about the naming of the rate plans and why APS chose them;
• questions about stakeholder input and why APS didn’t take their recommendations into consideration;
• questions about the plan’s metrics and why APS’s didn’t include any way of measuring the plan’s success; and
• questions about proposals that have been offered and what APS thinks in the right thing to do. 

I think the Commission should also consider meaningful solutions that provide relief today, not months from now.

Yesterday, I issued a letter describing some of the solutions that I think provide immediate relief, which include reopening a standard, flat rate for customers and deploying energy saving tools like smart thermostats that can help customers with the summer heat, today. 

If our goal is to truly to align the intent of the Customer Education & Outreach Plan with the actions we take as a Commission, then I think that—of the legal solutions that are available—allowing customers to switch now from ‘time of use rates’ to a flat, easy-to-understand rates they want AND giving them the tools, such as smart thermostats, that help them save on their energy costs, provides the best and most immediate solution for APS customers. 

I look forward to the discussion. Thank you.