Please Read: Important News about the Power Supply Adjustor (PSA)

To deal with the rapid changes in fuel and purchased power costs, APS received permission in April of 2005 from the Arizona Corporation Commission (ACC) to pass on fuel (primarily natural gas) and purchased power costs beyond those included in base rates through a Power Supply Adjustor (PSA). The PSA mechanism was then put in place to allow APS to collect additional monies for fuel and purchased power costs incurred to serve our customers. APS pays for fuel and purchased power before they are collected from the customers and the amount it collects is fixed. APS must receive ACC approval to increase the amount it can collect from customers for fuel and purchased power costs.

The PSA approved by the ACC on June 28, 2007 addresses the method in which costs over or under the fixed amount are collected. This decision maintained the application of a PSA but modified the provisions that have been in existence since 2005. The PSA rate is subject to adjustment annually and goes into effect each February. All PSA charges continue to be subject to the review and approval of the ACC. The filings and subsequent charges described below are the result of this process. The ACC conducted a rigorous analysis of each of the company's requests described below before it rendered a final decision.

None of the PSA charges apply to the company's customers who are on either of the APS Energy Support (E-3 or E-4) programs or E-36 (Station Use Service rate), or Solar-2 rates.

Current PSA Charges

2011 PSA Rate

The current PSA mechanism was approved by the ACC on June 28, 2007 and was initially set to zero. This rate is adjusted annually each February based on a projection of fuel and purchased power costs.  This rate is comprised of the following two components:

• Forward Component Rate of  -$0.0030164/kWh 
• Historical Component Rate of -$0.002642/kWh.

Q) How does the Power Supply Adjustor work?

A) A base cost of fuel and purchased power of $.037571/kWh is included in APS base rates. The PSA is an adjustment mechanism that collects or refunds the annual fuel and purchased power costs that differ from the base year level.

The difference between what we are collecting from our customers through our base rates and what we are paying for fuel and purchased power is accrued in a tracking account for recovery or refund to customers, which is also known as the Historical Component.

The Forward Component, the second part of the Adjustor rate, projects the costs of fuel for the upcoming PSA year (January 2011 - February 2012). The difference between the projected fuel rate and the actual fuel rate will become the Forward Component of the PSA.

In December of each year, the Forward and Historical Components to be applied in the next PSA year are reported to the ACC. The combination of the Components is limited to a $.00400/kWh annual increase.

Revised February 1, 2011