In 2017, APS completed Project CiNERGY, a two-year project to replace our outdated customer information system with a leading browser-based system, Oracle’s Customer Care and Billing system (CC&B). This project allowed us to update and consolidate multiple systems, transforming how we conduct business and interact with our customers through more than 46 million customer transactions we handle every year. The CC&B system is secure and configurable, and is built to evolve with industry demands. The new system provides multiple benefits, including:

• Cost savings—The system helps us manage, reduce and avoid costs due to its minimal customizations
• Enhanced customer experience—The CC&B platform improves our reliability and strengthens our ability to provide additional programs and services to our customers
• Easier upgrades—The out-of-the-box technology provides a more standardized product that facilitates upgrades as the software advances and improves

Two other programs were implemented in conjunction with CC&B: the Mobile Workforce Management program which supports logistics for assigning, routing and equipping jobs in the field, and the Oracle Utilities Customer Self Service program which allows customers to interact with our customer-facing website, aps.com. These three new systems interact with each other and more than 60 other APS systems to help us take advantage of industry best practices and trends and quickly implement energy solutions for our customers.

Originally budgeted at $131 million, Project CiNERGY was delivered under budget at a final cost of $110 million in March 2017.

In August 2017, the Arizona Corporation Commission approved a comprehensive agreement to resolve our rate review. The agreement enables us to invest in a smarter, cleaner energy infrastructure, gives our customers more choice and control through new rate options, and continues Arizona’s solar leadership.

The agreement allowed for a 3.3 percent overall revenue increase, the first increase in the APS base rate in five years. The agreement also includes:

• A $10 million to $15 million per year investment in the AZ Sun II rooftop solar program, in which limited- and moderate-income customers receive a monthly credit to allow APS to install rooftop solar systems on their homes
• A $15 million refund of surplus energy efficiency program funds to customers
• Increased program funding, annual crisis bill assistance and a simplified monthly bill discount for limited-income customers
• Grandfathering for existing private solar customers
• Four new off-peak holidays, increasing the total number to 10

Resolution of the rate review allows APS to continue investing in Arizona’s future while providing safe, reliable service for our customers. This includes:

• Invest significantly over the next three years in upgrades and maintenance for the energy grid
• Reduce emissions and water use through a $500 million investment to modernize the Ocotillo Power Plant
• Reduce emissions and comply with more stringent federal environmental standards through a $400 million investment at the Four Corners Power Plant
• Fund the continued development of innovative technologies such as battery storage, microgrids and advanced solar research

Learn more about the rate review.

The new Customer and Care Billing system allows us to be more nimble and flexible in updating additional customer service technology. In 2018, we will launch a redesign of the aps.com website to be more dynamic at accommodating digital transactions, and to improve usability for mobile devices. This is based on our customers’ increasing preference for digital self-service and convenience:

• Approximately 70 percent of all aps.com traffic consists of customers interacting with their accounts from checking usage to paying bills
• About 40 percent of transactions completed are done so with a mobile or tablet device; transactions such as start or stop service and pay their bills
• Total traffic to the site was 12.4M with 2.1M completed transactions on aps.com in 2017
• By 2017 year-end, APS had 407,204 customers who opted for paperless billing ─ an adoption rate of 33.2 percent.

In its first full year since it launched in June 2017, our free mobile app has had an overwhelmingly positive response with customer downloads exceeding our expectations. The APS app provides customers with a convenient way to manage their accounts and monitor their energy use when on the go. By 2017 year-end, there were more than 100,000 app downloads and more than 400,000 payment transactions made with our app. And customers who are registered on aps.com can use the same username and password on the app.

In 2017, the mobile app was enhanced with the addition of several new functionalities, including:

• Paperless billing enrollment
• Enrollment in usage, billing and payment alerts (in addition to outage alerts)
• View and save bills
• Improved GPS support for payment locations
• Fingerprint authentication on supported devices

Learn more about customer programs and tools.

Technologies such as rooftop solar, LED lighting and smart thermostats have given customers more power to control their energy usage and reduce their costs. And as more emerging technology, such as battery storage, becomes commercially viable it will continue to change how our customers interact with us. By being proactive and working with our customers to identify and respond to their changing needs, we remain well positioned to deliver value.

With traditional energy-efficiency measures such as LED light bulbs and energy efficient appliances now commonplace, APS is pursuing the next generation of energy efficiency.

In 2017, we launched a program that rewards customers with incentives for smart thermostats and water heater timers, and provides more education on how to better manage home energy use. The new program also rewards customers for using power when Arizona’s solar resources are abundantly producing energy. In addition to helping customers save by conserving during peak demand hours, this targeted energy-efficiency approach helps us better integrate renewable resources and delay the need for future infrastructure.

In 2018, upon approval from the Arizona Corporate Commission, several new programs will offer customers options to help manage their energy and peak demand by using commercially available load management and shifting technologies.

The new rewards programs may include the following:

• Storage Rewards—Residential battery systems deployed in customer homes on specific feeders to reduce system peak and thermal loads, act as a solar sponge and manage customer peak demand charges
• Reserve Rewards—Grid-interactive water heaters installed in homes on specific feeders to provide load management benefits by shifting water heating demand outside peak periods
• Cool Rewards—Residential customers can connect smart thermostats in their homes to an APS control platform, allowing us to call demand response load reductions during system peak events
• Intermediate Feeder Energy Storage Systems—Intermediate-scale battery systems deployed on specific feeders to manage system and feeder peaks, provide congestion relief and voltage support, and act as a solar sponge

Providing customers the opportunity to manage their own energy and peak demand allows us to expand the use and understanding of load-management technologies, encourage customers to shift loads and better match solar production curves and system peak conditions.

Read the proposed plan.

For the 11th consecutive year, APS in 2017 earned the U.S. Environmental Protection Agency’s prestigious ENERGY STAR^® Partner of the Year award. This elite award recognizes organizations that have made outstanding contributions to protecting the environment through energy efficiency programs. Additionally, 2017 marked the eighth year in a row that the EPA awarded APS with its highest honor—the ENERGY STAR Sustained Excellence Award—for continued leadership in protecting the environment through energy efficiency.

APS continues to meet the energy efficiency standard set by the Arizona Corporation Commission, which is one of the most aggressive standards in the nation. The policy requires APS by 2020 to achieve cumulative savings equivalent to 22 percent of prior year retail sales. Our current portfolio of energy efficiency programs provided 628,539 MWh of energy savings in 2017. That is enough energy to power more than 45,000 typical Arizona households for an entire year. Since 2005, the lifetime energy savings from APS energy efficiency programs have avoided approximately 19 million metric tons of carbon emissions.

Learn more about 2018 proposed programs.

Our Solar Innovation Study is a state-of-the-art initiative that integrates Distributed Energy Resources (DER), such as rooftop solar, energy storage, home energy management systems, smart thermostats and multi-stage, variable speed HVAC systems, and couples them with demand-based rates. The study of 75 single-family homes in the Phoenix metro area tests ways our customers can employ behind-the-meter DER technologies to manage their energy use. It also employs price signals that encourage customers to shift their energy use away from peak demand times. Data from the study will be used to expand industry-wide knowledge and enable the efficient use of available and emerging DER technologies. The Solar Innovation Study moves APS closer to a future in which modernized rate structures and realistic pricing signals drive market innovation and unlock new technologies. This initiative will give our customers greater control over their energy use and increase our flexibility to integrate new energy solutions into the grid.

The Solar Partner Program was awarded Renewable Integration Project of the Year at DistribuTECH 2017. The program is also the focus of a new Electric Power Research Institute (EPRI) report showing that smart inverters can help grid operators better manage distributed energy resources on the power grid.

The report outlines key research findings from the deployment of 1,598 smart inverters on rooftops as part of the APS Solar Partner Program, an initiative that is assessing the impact of using advanced inverters to incorporate solar photovoltaic and battery energy storage on the utility’s distribution system.

In 2017, we expanded our limited-income discount program to a total of $48 million (an increase of $26 million). Approximately 46,000 customers currently receive the limited-income rate discount, and we are working to expand the program to reach more eligible customers. APS also provides funding for limited-income home weatherization in partnership with community action agencies throughout Arizona. This weatherization program enables qualified customers to make their homes more energy efficient. In 2017, we allocated more than $2.4 million to help with limited-income weatherization projects around the state.

APS customers can join us in giving back to our communities by making tax-deductible contributions when they pay their energy bill. Through Project SHARE, customers can authorize a donation to be added to their monthly bill, which we match dollar-for-dollar. This limited-income assistance fund is administered by the Salvation Army. In 2017, customers and APS donated close to $780,000 through Project SHARE.

Learn more about limited income programs.

Partnering with other utilities to share generation resources in the California Independent System Operator (CAISO) Energy Imbalance Market (EIM) provides APS with greater operational efficiency and flexibility. The EIM, which is the only five-minute energy market in the western United States, enables us to more quickly take advantage of favorable pricing opportunities in wholesale energy markets, more effectively integrate all generation resources and pass the savings on to our customers.

APS customers benefitted from more than $30 million in savings in the company’s first year in the western regional Energy Imbalance Market (EIM). According to a report released by the California Independent System Operator, APS saved more than $11 million from July through September 2017, which puts the first-year savings total at $30.5 million.

Learn more about APS participation in EIM.

As cybersecurity attacks become more frequent and more sophisticated across numerous industries, safeguarding the data and technology that delivers power to APS customers becomes increasingly important. Our comprehensive cybersecurity program is designed to prepare our people, programs and technologies for emerging threats.

All APS employees are required to take cybersecurity training and learn techniques to identify suspicious cyber activity and better sensitive customer information. Quarterly security bootcamps and other outreach activities help raise employee awareness about emerging threats and risks to the company. We also hold workshops to educate employees on critical issues, such as creating secure passwords, recognizing potential attacks, securing personally identifiable information and ensuring safe file storage. Quarterly awareness testing assesses our employees’ susceptibility to certain cyber threats, such as phishing.

APS monitors for emerging cybersecurity threats 24 hours a day, seven days a week. Our Cyber Defense Center detects, alerts, contains and mitigates attacks in real-time. To enhance our capabilities and provide improved threat intelligence, we maintain relationships with federal, state and local government partners, as well as fellow utilities and private sector information sharing organizations. We ensure that cybersecurity awareness is strong at all levels of APS, including briefings to the company’s Board of Directors, presentations to senior management and updates at staff meetings companywide.

In addition to our cybersecurity efforts, APS takes even more measures to fiercely protect data privacy, reflecting our commitment to keep customers’ sensitive information safe and secure. From internal audits and reviews to using Generally Accepted Privacy Principles, we have strengthened internal controls and systems to ensure safe handling of customer data.