Settlement Agreement Filed on Deregulation


PHOENIX ‚ APS officials today announced that the company has filed a comprehensive settlement agreement with the Arizona Corporation Commission that will reduce prices for consumers and open the door to a competitive electric utility market in Arizona.

The settlement agreement, which is subject to public hearings and approval by the Corporation Commission, is signed by APS, the Residential Utility Consumer Office, Arizona Community Action Association, and Arizonans for Electric Choice and Competition, a broad based coalition representing small and large business customers and several associations. The parties believe that approval of this agreement will enable deregulation to begin in Arizona sooner than previously expected.

"Today's announcement marks an important milestone on the road to competition - a road that has had some unexpected twists and turns," said Jack Davis, APS President of Energy Delivery and Sales. "The hard work is far from over, but this agreement enables us to move forward into a marketplace where consumers will have choice, shareholders will be treated fairly, and businesses will be able to compete."

 Under the agreement, APS will reduce its prices for customers. For residential and small business customers, prices will be reduced by a total of 7.5 percent from 1999 to 2003 (1.5 percent per year). This means the average residential customer, under terms of the agreement, will save $101 a year when all of the proposed price reductions are implemented.

Settlement 1-1-1

For larger customers who use 3 megawatts or more, price reductions will total 5 percent from 1999 to 2002 (1.5 percent in '99 and '00, 1.25 percent in '01, and .75 percent in '02). These contemplated price reductions, combined with the reductions APS customers have already received since 1994, will bring total reductions for residential and small business customers to approximately 16 percent over a 10-year period.

In earlier Commission filings, APS calculated that it had $533 million in stranded costs. The proposed settlement calls for a regulatory disallowance of $234 million pre-tax which will be recorded as a net reduction of regulatory assets. The company will have the opportunity to recover these costs through a competitive transition charge, in place through Dec. 31, 2004.

In addition, the agreement also provides that APS will maintain its low-income assistance programs and act as a continuing full service supplier for customers who do not wish to participate in the competitive market.

Upon receipt of a final order from the Commission approving this agreement that is no longer subject to judicial review, the parties have agreed to withdraw their various court appeals of the Commission¼s competition orders.

APS, Arizona's largest and longest-serving electric utility, serves approximately 800,000 customers in 11 of the state's 15 counties. APS, with headquarters in Phoenix, is the largest subsidiary of Pinnacle West Capital Corporation (NYSE:PNW).


This press release contains forward-looking statements that involve risks and uncertainties, which include, but are not limited to, the ongoing restructuring of the electric industry; the outcome of the regulatory proceedings relating to the restructuring; regional economic and market conditions, which could affect customer growth and the cost of power supplies; the cost of debt and equity capital; weather variations affecting customer usage; and the strength of the real estate market. These factors and the other matters discussed above may cause future results to differ materially from historical results, or from results or outcomes currently expected or sought by the Company.

Email Alerts


Enter the code shown above.