APS, Diverse Group Reach Consensus Rate Review Agreement

03/01/2017

Customers to benefit from continued investment in reliability, clean energy, innovation

PHOENIX – Arizona Public Service and a broad, diverse group of stakeholders reached agreement today on a far-reaching resolution of the company’s first rate review in five years. The agreement must now go before the Arizona Corporation Commission for review, a public hearing and a vote by Commissioners later this summer.

If approved, the agreement will pave the way for:

  • Investment in a smarter, cleaner energy infrastructure
  • More choice and control through new rate options for customers
  • Continued solar leadership for Arizona

“This agreement demonstrates what can be accomplished when people come together with a willingness to compromise and resolve complex policy issues. Consumer advocates, environmental advocates, business customers, solar industry representatives and more have agreed on a path for Arizona’s energy future. The winners are Arizona electricity customers,” said Don Brandt, APS Chairman, President and CEO. “What we have is a blueprint that will bring about more solar, a smarter energy infrastructure, a cleaner energy mix and more options for customers.”

APS would be allowed an overall revenue increase of 3.3 percent. The typical monthly bill for residential customers, pending approval from the ACC, would increase 4.5 percent, or about $6 per month. APS originally had requested a revenue increase of 5.74 percent, which would have raised the typical monthly bill for residential customers by 7.96 percent, or about $11 per month. The agreement includes optional demand rates that will provide more ways for customers to save money. In addition, under the agreement APS would refund to customers $15 million of surplus energy efficiency program funds over the first year that new rates are in effect.

Limited-income customers would benefit from increased program funding from the current $35 million to $48 million, a simplified monthly bill discount and a $1.25 million annual emergency bill assistance fund.

Under the agreement, APS would not begin another request for a comprehensive review of its rates before June 1, 2019, meaning three years between rate reviews.

Investment in a Smarter, Cleaner Energy Infrastructure

If approved, the agreement would enable APS to:

  • Continue to 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
  • Continue industry-leading performance at the Palo Verde Nuclear Generating Station, which produces 80 percent of Arizona’s carbon-free electricity

Continuing Arizona’s Solar Leadership the Right Way

APS agreed to invest $10 million to $15 million per year in an AZ Sun rooftop program in which customers would receive a monthly credit to allow the company to install rooftop solar systems on their homes. This innovative program would expand access to solar for limited- and moderate-income customers throughout the APS service area.

The agreement builds on the ACC’s decision in December to ensure private rooftop solar customers are fairly compensated when they produce excess electricity, while reducing the generous subsidies previously paid for by customers without rooftop solar.

If approved, the settlement would:

  • Grandfather existing private solar customers
  • Compensate future private solar customers for their excess electricity at a credit starting at 12.9 cents/kilowatt-hour
  • Allow future private rooftop solar customers to choose from updated rate options that include a time-of use rate plan that incorporates a grid access charge, or a demand-based rate plan without a grid access charge

 “This agreement continues Arizona’s solar leadership with smart policies that enable the continued growth of solar and other new consumer technologies while protecting non-solar customers,” said Brandt.

Through a separate agreement, APS, industry representatives and solar advocates commit to stand by the settlement agreement and refrain from seeking to undermine it through ballot initiatives, legislation or advocacy at the ACC.

New Rate Options for All Customers

If approved, the agreement includes changes in the rate options APS offers its customers, including incentives for more efficient use of energy and additional opportunities to save money. Among the choices:

  • An advanced time-of-use rate that will become the standard rate for future customers
  • Two optional demand rates, plus a pilot demand rate for customers with certain types of technology at their homes, all of which would provide even more opportunities to save
  • Additional savings for customers with two more off-peak hours on weekdays (3 p.m. to 8 p.m. instead of noon to 7 p.m.) and four more off-peak holidays
  • A plan that includes a super off-peak period of 10 a.m. to 3 p.m. weekdays in winter to encourage customers to use more electricity at midday when solar production is abundant and demand is low

The agreement preserves the company’s proposal to offer four new “off-peak” holidays, increasing the total number to 10.

For business customers, the agreement would:

  • Establish a special discount rate for schools
  • Offer a new economic development rate option to encourage businesses to relocate or expand, along with a rural municipal economic development rate
  • Create a new rate to attract highly efficient customers, such as data centers, that need affordable, highly reliable electricity
  • Provide an aggregation rate that lowers energy costs for chain accounts such as grocery stores
  • Improve time-of-use options to work better with the operating schedules of many businesses

“This agreement allows us to continue investing in Arizona’s future. Our work on advanced technology and grid innovations over the coming years will create jobs and opportunities for suppliers and others,” said Brandt.

Thirty of 40 stakeholders in the rate review process support the agreement, including ACC Staff, the Residential Utility Consumer Office, merchant generators, unions, seniors, business customers, industry groups, environmental groups, limited-income advocates, rural municipalities, schools, federal agencies and several private rooftop solar organizations (Arizona Solar Deployment Alliance, Arizona Solar Energy Industries Association, Solar Energy Industries Association, Vote Solar and Energy Freedom Coalition of America).

APS serves about 2.7 million people in 11 of Arizona’s 15 counties, and is the Southwest’s foremost producer of clean safe and reliable electricity. Using a balanced energy mix that is nearly 50 percent carbon-free, APS has one of the country’s most substantial renewable energy portfolios, and owns and operates the Palo Verde Nuclear Generating Station, the country’s top power producer and largest producer of carbon-free energy. The company is also a proven leader in introducing technology and services that offer customers choice and control over their energy consumption. With headquarters in Phoenix, APS is the principal subsidiary of Pinnacle West Capital Corp. (NYSE: PNW).

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Media Contacts:
Anna Stewart     (602) 250-2104
Jim McDonald    (602) 321-3738

Investor Contact:
Ted Geisler         (602) 250-3200