APS facing major backlash over rate hike

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Arizona Public Service Co.’s scheduled rate increase went into effect last August, but customers are reporting much higher bills than what the power company promised.

When state utility regulators approved the rate increase, APS projected an average increase of $6 to their customer’s electric bill. However, customers are now reporting increases as high as $50, and are looking for a way to reverse the rate increase.

Arizona Republic reporter Ryan Randazzo, who has been following the rate increase since it was initially proposed, says it is possible for citizens to petition the Corporation Commission a rehearing, but unlikely that the request will be granted.

Ted Simons: Up next on "Arizona Horizon," Concerns over the latest APS rate-hike.

Ted Simons: APS customers are noticing the effect of the utility's latest rate hike, an increase approved in August by the State Corporation Commission. The Increase was supposed to average out to about 6 dollars per month, but some are saying that's not happening. Here to fill us in is Ryan Randazzo, he's covering the story for the Arizona Republic. What exactly did the Corporation Commission approve?

Ryan Randazzo: They approved about a hundred million dollar rate increase for Arizona Public Service, that’s the biggest utility in the state, it has about a million customers. APS said the increase would average 6 dollars a month on average customer. It came at the most painful time in the summer when it's hot. The first full bill people got was for the month of September. Many people are seeing, 20, 30 dollar increases, some as much as 50 because it impacts different classes of customers differently.

Ted Simons: There’s an E-3 plan for the low income folks. They used to get a 65 percent discount. Does that exist anymore?

Ryan Randazzo: They still get a discount but it's substantially smaller than before. You are talking about the very smallest apartment customers who use the least amount of electricity and they’re low-income so they got a substantial 65 percent discount on their bill. That was lowered to a 25 percent discount. That had a dramatic impact, again, on the smallest users of electricity.

Ted Simons: People who could use a $6 a month average increase if it has to be as much. What are you hearing from people out there? It sounds like from you’re reporting that it's not just low income folks. A lot of people are saying, where is this coming from?

Ryan Randazzo: People complaining about their utility bills is nothing new. People complain about rate increases, they complain about the prices, but the consistent complaint I’m hearing is this is far more than what was advertised. I hear that from the low-income people, I’m hearing that from the middle-income people, I’m hearing that from the large houses in the Cave Creek area. They are seeing increases that are not 4.5 percent as advertised and certainly not $6.

Ted Simons: What are you hearing from the APS as a response?

Ryan Randazzo: It was hot.

Ted Simons: That’s about it, huh?

Ryan Randazzo: Mmhmm. It was a very hot summer.

Ted Simons: Did they still say the new plan’s going to lower bills or at least ease things off as the weather eases?

Ryan Randazzo: Well, that’s the tricky part. People have already seen their bills go up. Now, they’re going to have to select a new rate plan because not only did they increase prices, but they changed the way they’re going to bill people and customers are getting letters in the mail this month telling them, your old rate plan is going away, here’s your new choices. Those choices include new time-of-use hours that people are going to have to adjust to, they can include demand rates, and they, if you don’t want to manage your electricity usage and watch when you’re running the thermostat, you’re going to have a higher basic service fee, dramatically higher for people.

Ted Simons: So we’ve got all of that going on, but there are still folks upset about that rate hike in August. State law says that a rehearing of that increase is possible. A, is it possible? B, is it likely?

Ryan Randazzo: It’s possible that consumers could petition the Corporation Commission for a rehearing. I think it's unlikely they would grant a rehearing. Three sitting commissioners not only voted for this rate increase, but they were proud of it. They issued a press release after telling consumers what a great thing this rate hike was for people. The chairman Tom Forese said it makes Arizona better for families and businesses.

Ted Simons: How many people need to sign this petition? 25 you say?

Ryan Randazzo: 25 people, just to trigger the consideration of a rehearing.

Ted Simons: If you have 25 people saying, it's killing us here, do you think it would still hit a dead end?

I do, but that’s not to say it wouldn’t be worth trying for people. It could at least trigger a rehearing and we could audit the figures to see if this increase really averages 6 dollars a month on people or is it hitting harder because of the way they’ve changed the time of use hours?

Ted Simons: I’m sure APS is saying, we still don’t know. We’ve got the high summer months. We need the lower winter months before we average out to perhaps 6. Commissioner Bob Burns against the rate hike, he’s just against basically everything going on there. He's the lone wolf. Everyone else is kind of in tandem against him. He's saying there was not enough scrutiny in the initial hearing in August. Does he have a point?

Ryan Randazzo: I’ll tell you honestly. The day that hearing took place, I told my family I wouldn't make it home for dinner. I told my editor to save space in the paper. They surprised me quite a bit. They voted by 2:30 in the afternoon. Historically these APS rate hikes would go to 5:00 in the evening, past 6:00 in the evening, to 8:00 PM in the evening, sometimes they would span two to four days. This was done in about six hours. The commissioners had almost no difficult questions at all for the utility. They had lots of questions for the people who were opposed to the rate hike. From my perspective, it didn't get the scrutiny from the commissioners that APS usually does. Usually it's a boxing match making them prove it's needed.

Ted Simons: I was going to say, in years past these things went on forever and you had a relatively divided commission. It’s divided 4-1 right now, isn't it?

Ryan Randazzo: Yes and often the commissioners would still vote for the rate increase but make the utility prove it was needed and also offer amendments to make the utility cut costs. At one point they ordered APS to cut 30 million dollars in its expenses if it got the rate increase. That didn't happen this time. The commissioners offered no amendments that hit or benefited consumers.

Ted Simons: Was that the amendment that Boyd Dunn put in there? It was shot down and from what you were saying it sounds like he apologized for bringing it up in the first place.

Ryan Randazzo: It was actually surreal for me. He was proposing to mitigate the increase on the low income customers and push some of that on to high income customers. APS came out opposed to that. The chairman said it would be difficult to do. They could upset the settlement, and both of them acted very apologetic to the utility. That is a complete change in tone from days prior where former commissioners would get into it with the utility and force them to prove that a rate hike was needed before doing that to consumers.

Ted Simons: Commissioner Burns said back in August that the increase didn't need to be this high. Could you get a rehearing to go down that avenue?

Ryan Randazzo: All of the parties including the Corporation Commission staff signed on to a settlement agreement. Initially, the Corporation Commission staff, their army of lawyers said, APS doesn't need an increase. That was their initial evaluation. Then they went into settlement talks. They got some things that they wanted and APS got a hundred million dollar increase. The commission staff changed their tone. They have to support the settlement now that it's in place.

Ted Simons: Is that why the August hearing was so quick? Because there was a settlement beforehand and they didn't figure there was any reason to rehash things again?

Ryan Randazzo: Well there have been settlements in the past where commissioners still took liberties and made amendments that affected consumers, that forced the utility to either cut its expenses or to change how the rate hike would affect different classes of consumers, particularly those low-income consumers.

Ted Simons: This tier business, these two phases, this idea of having to pick a- Are customers aware of this? I’m guessing not many are.

Ryan Randazzo: No. They are going to become aware of it starting this month and I bet that’s going to trigger some confusion. APS had a calculator on its website where you could plug in your usage and it would track it for you and it would tell you which of these new rate plans was best for you. The website had a problem and they had to take it down. APS couldn't figure out for its customers which the most cost effective rate plan would be. It doesn't give you confidence that they'll figure it out on their own.

Ted Simons: Last question, the impact of all this on the Corporation Commission, the image of the Corporation Commission as basically an ally of APS.

Ryan Randazzo: They are definitely trying to mitigate that. You do have a former chairman under indictment for being accused of accepting bribes from a utility. You have another chairperson that stepped down. They definitely had some negative attention and they are trying to mitigate that with public relations. That's why you saw a press release after the rate increase telling people what a great thing they did approving this thing, but consumers are getting a bill in the mail, and it will be hard to wipe that away with positive press releases.

Ted Simons: Great reporting on this, I’m sure you will stay on it. Thank you for joining us.

Ryan Randazzo: Thank you.

Ryan Randazzo: Reporter, Arizona Republic

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