News Release

Arizona Corporation Commission November Open Meeting Highlights

PHOENIX – The Arizona Corporation Commission met for its November Open Meeting on November 2, 2021 to discuss and vote on various utilities matters. Below are highlights from the meeting:

Commission Approves Arizona Public Service Company Rate Case

The Arizona Corporation Commission on a 3-2 vote approved a rate application from Arizona Public Service Company (APS) at its November Open Meeting. This decision comes over two years after APS initially filed its rate application requesting a $184 million dollar revenue increase. Commissioners offered over 40 amendments to the original Recommended Opinion and Order (ROO) issued by Administrative Law Judge Sarah Harpring. Over six days of discussion and debate at three separate open meetings, Commissioners voted to approve the amended ROO. Overall, the Commission approved a revenue decrease to APS’s base rates of approximately $119 million dollars per year. However, this reduction to base revenues does not reflect all adjustors and other mechanisms not contemplated within this rate case, meaning that APS customers could see bill increases.

Myriad amendments were adopted over the course of this proceeding that pertain to solar customers, electric vehicles, Selective Catalytic Reduction (SCRs) equipment installed on the Four Corners Power Plant, coal impacted communities, and battery storage, among others, which will be discussed further below.

Chairwoman Lea Márquez Peterson had two amendments adopted dealing with Time of Use (TOU) on-peak hours. The first reduces on-peak times from five hours to three hours, changing on-peak hours to 4 p.m. to 7 p.m. from 3 p.m. to 8 p.m. Her other TOU amendment directs APS to propose for Commission approval a new tariff for APS general service commercial and government customers to allow light duty passenger electric vehicles (EVs), and medium and heavy-duty fleet EVs to take advantage of low-cost off-peak solar energy production during the day through sub metered Level-1 and Level-2 EV charging stations located at the commercial and governmental customers’ property. This program is intended to work in tandem with APS’s existing Take Charge AZ Program to encourage private companies and state and local governments to install sub metered Level-1 and Level-2 EV charging stations, which will benefit their employees and patrons, and will additionally benefit the grid, ratepayers, and renewable energy developers.

Commissioner Sandra D. Kennedy had several amendments adopted, one removes the current Grid Access Charge (GAC) on TOU-E for residential solar customers, which will allow for more access to solar for those wishing to install it without having to pay an additional fee to APS; currently the fee is approximately $0.93 cents per kilowatt of solar installed, totaling between $5 and $10 per month for the typical residential solar customer. Another amendment will create uniformity between APS and Tucson Electric Power Company service territories for the sizing of non-residential distributed generation systems. Further, Commissioner Kennedy advanced amendments that will unfreeze access to a TOU rate schedule for religious houses of worship that was established in 1996 but frozen to additional customers in 2013; an amendment that disallows 75% of cash incentives paid to APS executives and certain employees because APS’s goals primarily benefit shareholders, not ratepayers; an amendment that corrects flaws within the current design of the commercial battery storage pilot rate which to-date has led to zero participation in the program; and an amendment that focuses on low-income bill assistance by requiring APS to work with stakeholders to develop a low-income assistance program to provide greater bill assistance to customers whose energy burden is above 5% through a new tiered rate structure for consideration in a future APS rate case.

A joint amendment from Commissioners Kennedy and Anna Tovar expands upon the Solar Communities program established in the last APS rate case. This will allow greater access to the benefits of solar for low and moderate-income customers who may not otherwise be able to obtain solar panels by allowing APS to install and own the systems, lease the customers’ rooftop space, and recover capital expenses in future proceedings at the Commission; this amendment increases the annual budget for the program to $20 million, with a maximum of $30 million, and increases the customer bill credit to $50 from $30.

Commissioner Justin Olson’s amendment adopts the Residential Utility Consumer Office’s (RUCO’s) recommendation of a Return on Equity (ROE) of 8.7%, a significant reduction from APS’s initial request of 10.15%. This results in an overall reduction in revenue of approximately $145.9 million dollars from APS’s adjusted test year revenues annually.

Commissioner Anna Tovar’s first amendment will create a new residential EV charging rate tariff with a year-round super off-peak period at night, from 11 p.m. to 5 a.m., to incentivize residential EV owners to charge their cars when system utilization is lowest. Another amendment from Commissioner Tovar will conform the GS-Schools TOU periods with APS’s other TOU periods, eliminating the overly complicated shoulder periods and pricing currently in place. This means that there will now only be on-peak and off-peak periods and pricing for GS-Schools TOU plans.

Commissioners Tovar and Jim O’Connor advanced a joint amendment making changes to APS’s recovery for the SCRs investments and just transition for coal-impacted communities. This amendment allows in rate base APS’s SCRs investments, SCRs deferral, and SCRs debt deferral, with the exception of $215.5 million due to planning imprudence. The amendment further requires APS to depreciate/amortize the SCRS, SCRs deferral, and SCRs debt deferral based on an end of life of July 2031. The joint amendment also provides immediate assistance for the Hopi Tribe ($1 million) and Navajo County Communities ($0.5 million), provides $10 million over 3 years in assistance for the Navajo Nation, authorizes APS to spend up to an additional $2.5 million total in electrification of buildings located in the Navajo Nation and on the and Hopi Reservation, and provides additional non-cash assistance.

Commissioner Jim O’Connor had two additional amendments advance. The first denies APS any recovery of monies expended for Directors & Officers insurance. As a result, APS’s test year operating expenses will be reduced by $720,860, and the working capital component of its rate base will be reduced by $290,000. Commissioner O’Connor’s additional amendment will allow recovery of only 50% of APS’s industry association dues, as recommended by RUCO. APS will now only be entitled to recover $1.1791 million through rates, rather than $3.582 million.

The new rates will become effective on December 1, 2021. However, it will take APS 10 months to implement the new on-peak TOU schedules.

All documents related to this agenda item can be found in the Corporation Commission’s online docket at https://edocket.azcc.gov and entering docket number E-01345A-19-0236.

Final Package of Termination of Service Rules Approved

Commissioners on a 3-2 vote approved the final package of rules regarding utility disconnections during extreme weather conditions. The final approval comes after two years of workshops, stakeholder engagement, public comment sessions, and Commissioner discussion and debate at open meetings to determine the appropriate thresholds for when a utility may and may not disconnect a customer’s service during periods of extreme heat and cold. During the rulemaking process, many amendments were offered and adopted resulting in Commission approval of the rule language at its April 2021 Open Meeting for publication and commencement of the formal rulemaking process.

The rules allow electric utilities to choose between two disconnection options during periods of extreme weather: if the forecasted temperature is above 95°F or below 32°F, or they can choose to continue utilizing the June 1 through October 15 disconnection moratorium period.

Further, the final rules add additional reporting requirements for reporting bill arrearages, including reporting arrearages of $100 or more. Customers on a payment plan who miss one payment or only make a partial payment within a 12-month period will not have their payment plan terminated resulting in the outstanding balance to be due immediately. The bill arrearage threshold for disconnection has been increased from $100 to $300 for electric utilities, and from $75 to $100 for gas utilities. At the November Open Meeting, Commissioner Olson offered an amendment to the Recommended Opinion and Order which exempts gas and electric cooperatives from quarterly reporting requirements.

The final package of rules will now be sent to the Arizona Attorney General’s Office for certification.

All documents related to this agenda item can be found in the Corporation Commission’s online docket at https://edocket.azcc.gov and entering docket number RU-00000A-19-0132.

Commission Approves 480 Area Code Relief Plan

The Arizona Corporation Commission approved a plan to remedy the exhaustion of available new phone numbers in the 480-area code. On June 8, 2021 the North American Numbering Plan Administrator (NANPA) filed an application with the Commission on behalf of the Arizona telecommunications industry for approval of a Numbering Plan Area (NPA) Boundary Elimination Overlay as the plan for relief for the pending exhaust of numbering resources for the 480 NPA area code.

A Boundary Elimination Overlay is a form of NPA relief in which the boundary between existing non-exhausting NPAs and the exhausting NPA is eliminated such that all area codes serve the same geographic area. The Boundary Overlay will eliminate geographical boundaries between the three area codes, 480, 602, and 623, that currently serve the greater Phoenix metropolitan area. This change will require 10-digit dialing within and between the affected area codes.

All documents related to this agenda item can be found in the Corporation Commission’s online docket at https://edocket.azcc.gov and entering docket number T-00000A-21-0187.

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