APS Rate Increase in 2023: The Energy Monopoly Strikes Again

Community & News
Written By Joshua Hudson

A Comprehensive Guide To 2023 APS Rate Increases

An Overview of the 2023 APS Rate Increase

Understanding the intricacies of energy rate changes is crucial for every Arizona resident, especially when it involves a significant player like the Arizona Public Service (APS). The proposed APS rate increase for 2023 is not just another news headline; it's a development that could directly impact the monthly budgets of households and businesses across the state.

APS, the largest electric utility in Arizona, has filed for a substantial rate increase that could potentially affect more than a million customers. This move, while not unprecedented, is significant in its scale and the implications it carries for the future of energy consumption in the state.

The rate increase is not a simple, linear change. It's a complex issue, intertwined with aspects of regulatory compliance, infrastructure upgrades, customer service improvements, and the broader transition towards renewable energy. The proposed increase is also set against the backdrop of a changing climate, with extreme weather events putting additional strain on the state's energy grid.

In the following sections, we will delve deeper into the specifics of the APS rate increase, exploring its potential impacts, the regulatory processes involved, and the possible alternatives for consumers. We aim to provide a comprehensive, coherent, and contextually relevant analysis of this important issue, with a healthy mix of complex insights and straightforward explanations. So, whether you're an energy expert or a concerned citizen, we invite you to join us on this journey of understanding the APS rate increase in 2023.

Key Takeaways:

  1. APS Rate Increase: APS has proposed a significant rate increase for 2023, which could result in an average monthly bill increase of approximately $18 for residential customers. The increase is driven by the need for reliability, resilience, and grid strengthening.

  2. Impact on Different Plans: The proposed rate increase will affect customers differently depending on their plan. For instance, customers on the "Time-of-Use 4 PM to 7 PM Weekdays" plan and the "Fixed Energy Charge Plan" could see substantial increases in their basic service charge and energy charge per kWh.

  3. Implications for Customers: The proposed rate increase could have far-reaching implications for APS customers, particularly those on lower incomes. However, APS has proposed customer-focused programs and discounts to mitigate the impact.

  4. Potential for Higher Bills in Summer: Given Arizona's hot summers and the increased use of air conditioning, the rate increase could lead to even higher bills during these months, potentially causing discomfort or health risks for some families.

  5. Solar as an Alternative: Solar panels and home batteries offer a sustainable and potentially cost-effective alternative to traditional electricity. With incentives like the Inflation Reduction Act, solar power could be a financially viable option for many households. Arizona Solar Consulting offers free consultations for those interested in exploring these alternatives.

 

Background of APS

Arizona Public Service Co. (APS), a name synonymous with electricity in Arizona, has a rich history that dates back over a century. As the largest and longest-serving electric company in the state, APS has been powering Arizona's growth, quite literally, since its establishment in 1886. From powering the state's first electric streetlights to managing a diverse energy mix today, APS's journey mirrors the evolution of the energy sector itself.

APS's history is marked by numerous rate increases, each with its unique context and implications. For instance, in 2017, APS implemented a controversial rate hike that led to an average increase of $6 per month for residential customers. This move, while aimed at supporting infrastructure investments and renewable energy initiatives, sparked widespread debate about the transparency of APS's rate-setting process and the affordability of electricity in the state.

Then, in 2022, APS proposed another significant rate increase, seeking an additional $184 million in annual revenue. This proposal, which translated to an average monthly bill increase of $5.40 for residential customers, was justified by APS as necessary for covering the costs of clean energy transitions and grid modernization efforts.

Each rate increase has had its ripple effects, impacting not just the monthly bills of customers, but also the broader discourse around energy pricing, regulatory oversight, and consumer rights in Arizona. These rate hikes have also underscored the growing need for alternative energy solutions and more equitable rate structures, themes that continue to resonate in the current discussion around the APS rate increase in 2023.

As we delve into the specifics of the proposed rate increase for 2023, it's important to keep this historical context in mind. The past rate increases, and the public responses they elicited, offer valuable lessons and perspectives that can help us better understand and navigate the complexities of the current proposal. So, let's turn the pages of history and step into the present, as we explore the intricacies of the APS rate increase 2023.

The APS Rate Increase Proposal

APS has requested a $460 million annual revenue increase. This proposal is driven by the need for reliability, resilience, and grid strengthening.

Reliability involves consistent electricity availability, requiring infrastructure upgrades and advanced grid technologies. Resilience is about preparing for unexpected disruptions, including extreme weather events and cyberattacks. Strengthening the grid enhances its capacity to handle Arizona's evolving energy needs, such as integrating renewable energy sources and managing peak demand periods.

The proposed rate increase would result in an estimated $18 more per month for the average residential customer, though the actual impact would vary depending on specific usage patterns and rate plans.

Impact on Average Residential Customers

The proposed APS rate increase is anticipated to significantly affect residential customers. For instance, those on the "Time-of-Use 4PM to 7PM Weekdays" plan could see a 25% increase in their basic service charge, around a 24% rise in on-peak energy charges per kWh for both summer and winter, about a 22.4% hike in off-peak energy charges per kWh, and a 16.1% increase in super off-peak energy charge per kWh.

Similarly, customers on the "Fixed Energy Charge Plan" could experience an increase in their basic service charge by 24.4–25% (depending on tier) and an increase in energy charge per kWh of 22.6–22.7% (depending on tier).

                Let's break down how an average customer's $180/month bill would be affected under each of the two plans:

1. Time-of-Use 4PM to 7PM Weekdays Plan

Let's assume that the basic service charge is $40, on-peak energy charges are $70, off-peak energy charges are $50, and super off-peak energy charges are $20. This totals to $180.

With the proposed increases, the new charges would be:

    • Basic service charge: $40 + 25% of $40 = $50

    • On-peak energy charges: $70 + 24% of $70 = $86.80

    • Off-peak energy charges: $50 + 22.4% of $50 = $61.20

    • Super off-peak energy charges: $20 + 16.1% of $20 = $23.22

The new total monthly bill would be $50 + $86.80 + $61.20 + $23.22 = $221.22, an increase of $41.22.

2. Fixed Energy Charge Plan

Let's assume that the basic service charge is $50 and the energy charge is $130. This totals to $180.

With the proposed increases, the new charges would be:

    • Basic service charge: $50 + 25% of $50 = $62.50 (assuming the higher tier)

    • Energy charge: $130 + 22.7% of $130 = $159.51 (assuming the higher tier)

The new total monthly bill would be $62.50 + $159.51 = $222.01, an increase of $42.01.

These examples illustrate how the proposed rate increases could significantly impact a customer's monthly bill, with increases of over $40 per month under both plans.

Comparison with SRP Rate Increase

Salt River Project (SRP), another major utility in Arizona, also proposed a rate increase. SRP's increase, however, is less than APS's proposal. SRP's residential customers could see an average increase of $3.9 per month, or about 3.9%, starting in November 2023.

Comparing the two, APS's proposed increase is significantly higher. APS residential customers could see an average increase of over $40 per month, or about 25%. This difference could make APS's electricity more expensive for many customers compared to SRP.

The combined impact of these rate increases could be substantial for customers who use both APS and SRP services. The higher costs could strain household budgets and make energy affordability a key concern for many Arizona residents.

 The Role of the Arizona Corporation Commission (ACC)

The Arizona Corporation Commission (ACC) plays a crucial role in rate increase approvals. As a regulatory body, the ACC reviews and approves or denies rate increase proposals from utilities like APS and SRP.

The ACC's role involves ensuring that the proposed rates are fair, just, and reasonable. It evaluates the necessity of the rate increase, the utility's cost of service, and the potential impact on customers. The ACC also ensures transparency and public participation in the process. It conducts public hearings where utilities present their case for the rate increase, and customers can voice their concerns or objections.

In essence, the ACC serves as a gatekeeper, balancing the needs of the utilities with the interests of the customers. Its decisions on rate increase proposals can significantly impact the cost of electricity for Arizona residents.

Process of Approval

The approval process for a rate increase involves several steps. First, the utility company, such as APS, submits a detailed rate case to the ACC. This case includes the proposed new rates and the justification for the increase.

The ACC then reviews the case in detail. This review includes a thorough examination of the utility's costs, financial health, and the potential impact of the proposed rates on customers. Next, the ACC schedules public hearings. These hearings provide an opportunity for the utility to present its case and for customers and other stakeholders to voice their opinions. The ACC considers all these inputs when making its decision. The ACC also opens a period for public comments. During this time, any member of the public can submit written comments about the proposed rate increase. These comments become part of the official record and are considered in the ACC's decision-making process.

Finally, the ACC votes on the proposed rate increase. If approved, the new rates go into effect on a date specified by the ACC. If denied, the utility may revise its proposal and start the process again.

Implications for APS Customers

The proposed APS rate increase carries significant implications for its customers. The expected monthly bill increase varies depending on the customer's plan and usage.

For customers on the "Time-of-Use 4 PM to 7 PM Weekdays" plan, the basic service charge could increase by 25%. On-peak energy charges per kWh could rise by approximately 24% for both summer and winter. Off-peak energy charges per kWh could see a hike of about 22.4%, and super off-peak energy charges per kWh could increase by 16.1%.

Customers on the "Fixed Energy Charge Plan" could experience an increase in their basic service charge by 24.4–25% and an increase in energy charge per kWh of 22.6–22.7%, depending on their tier.

On average, residential customers could see their monthly bill rise by approximately $40. This increase, over a year, would add up to an additional $480, posing a significant financial impact on many households.

Potential Impact on Lower-Income Customers and Proposed Programs

The proposed APS rate increase could disproportionately affect lower-income customers. These households often spend a larger portion of their income on utility bills, making any increase a significant burden.

To mitigate this, APS has proposed customer-focused programs and discounts. These include the addition of two off-peak holidays, the elimination of payment transaction fees, and tiered discounts for lower-income customers. These measures could provide some relief, but the overall financial impact of the rate increase could still be substantial for many lower-income households.

In this context, alternative energy solutions like solar power could offer a viable way to manage energy costs. Solar panels can significantly reduce electricity bills, and with various financing options and incentives available, even lower-income families could potentially benefit. By generating their own power, households can gain more control over their energy costs, making them less vulnerable to rate increases.

APS Investments and Upgrades

APS plans to use the additional revenue from the rate increase for investments in renewables and power plant upgrades. These investments aim to enhance service reliability, accommodate growing energy demand, and support Arizona's transition to a cleaner energy future.

Investments in renewables, such as solar and wind power, can reduce dependence on fossil fuels, lower greenhouse gas emissions, and contribute to climate change mitigation. For customers, this could mean more sustainable energy options and potentially lower energy costs in the long run.

Power plant upgrades can improve efficiency, reduce maintenance costs, and extend the lifespan of these facilities. These upgrades can enhance the reliability of the electricity supply, reducing the risk of outages and service disruptions.

While these investments require significant upfront costs, they can deliver long-term benefits for customers and the environment. They represent a strategic move towards a more sustainable and resilient energy system, aligning with global trends and local needs.

The Broader Context

The rise of electric vehicles and the increasing demand for electricity are reshaping the economic landscape. Electric vehicles, replacing traditional gasoline-powered vehicles, are driving up electricity demand. This shift has significant economic implications, from the potential decline of gas stations to the growth of industries related to electric vehicle production and charging infrastructure.

Reliable and affordable electricity is a cornerstone of Arizona's economy. It powers businesses, fuels growth, and supports the quality of life for residents. With the state's growing population and the increasing adoption of electric vehicles, the demand for electricity is expected to rise.

The proposed APS rate increase is part of this broader economic context. It's a response to the growing demand for electricity and the need for investments in infrastructure and renewable energy. While the rate increase poses a financial challenge for many customers, it's tied to the broader economic trends and the evolving needs of Arizona's electricity sector.

Alternatives to Traditional Electricity

Solar panels and home batteries are becoming increasingly popular in Arizona. These technologies offer a sustainable and potentially cost-effective alternative to traditional electricity. Solar panels generate electricity from sunlight, a resource that Arizona has in abundance. Home batteries store this electricity for use when the sun isn't shining.

These technologies can help households reduce their reliance on the grid, lower their electricity bills, and contribute to a cleaner environment. They represent a viable solution for those concerned about rising electricity rates and the environmental impact of traditional energy sources.

Arizona Solar Consulting offers free consultations for those interested in exploring these alternatives. By scheduling a consultation, you can learn more about the potential benefits of solar panels and home batteries for your specific situation. Click the button and follow the instructions to schedule your free consultation today. Explore the possibilities of solar energy and take control of your energy future.

Solar panels and home batteries offer several benefits. They can reduce electricity bills, provide a degree of energy independence, and contribute to environmental sustainability. However, they also present challenges. The upfront costs can be high, and the effectiveness can vary based on factors like location and weather.

Incentives like the Inflation Reduction Act can make solar more affordable. This Act, along with other federal and state incentives, can significantly reduce the cost of installing solar panels and home batteries. These incentives, combined with the potential savings on electricity bills, can make solar a financially viable option for many households.

Arizona Solar Consulting can help you navigate these benefits, challenges, and incentives. Schedule a free consultation to explore how solar could work for you.


Final Thoughts On This New APS Rate Increase

The proposed APS rate increase is a significant development for Arizona's electricity sector. It reflects the growing costs of providing reliable, sustainable electricity in a changing economic and technological landscape. The increase could significantly impact APS customers, particularly those on lower incomes.

The future of electricity rates in Arizona will likely be shaped by several factors. These include the ongoing transition to renewable energy, the rise of electric vehicles, and the impacts of climate change. While these changes present challenges, they also open up opportunities for alternative energy solutions like solar power.

For APS customers facing higher electricity bills, solar panels and home batteries could be a viable option. Incentives like the Inflation Reduction Act can make these technologies more affordable. Arizona Solar Consulting offers free consultations to help you explore these options.

In the face of rising electricity rates, taking control of your energy future could be a wise move. Whether that involves reducing your energy use, switching to a different rate plan, or investing in solar power, the choice is yours. Make an informed decision that suits your needs and circumstances.

References And Additional Reading:

  1. Arizona Public Service Co. (2023). APS Rate Increase Proposal.

  2. Arizona Corporation Commission. (2023).

  3. 10 Crucial Questions to Ask Before Going Solar

Joshua Hudson
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