APS serves 1.5 million homes and businesses in 11 of Arizona’s 15 counties and is a leader in safely delivering reliable, affordable electricity in the Southwest. APS maintains a diverse range of energy resources, including nuclear from the Palo Verde Generating Station, natural gas, coal, solar, wind and energy storage – a mix that is about 58% clean. With 140 years of experience serving Arizona, APS is the main subsidiary of Pinnacle West Capital Corp. (NYSE: PNW).
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APS Rate Case Hearing Concludes; Process Moves to Next Phase
The evidentiary hearing in the Arizona Public Service (APS) rate case has concluded, marking an important milestone in the Arizona Corporation Commission's (ACC) review of APS's application to update rates. Similar to what you might picture in a court case or trial, during the months-long hearing, APS and other parties presented testimony, introduced evidence and responded to questions on the record regarding APS’s proposal and the investments made to continue providing reliable electric service for customers.
Even though the hearing has ended, the rate case is not finished, and customer rates are not changing now. The process includes several more steps before the Arizona Corporation Commission reaches a final decision.
What Happens Next?
Now that the hearing is over, the ACC's Administrative Law Judge (ALJ) will review the testimony, evidence and legal arguments submitted during the case and develop a recommendation for the Commission to consider. That recommendation is called a Recommended Opinion and Order, or ROO. It may take months for the ROO to be issued. After the ROO is issued:
- APS and other parties to the case will have an opportunity to respond and suggest changes to the ROO.
- The Arizona Corporation Commission will review the ROO and consider whether any changes, or amendments, are needed.
- The Commission will hold a public meeting, discuss the recommendation and vote on a final decision.
Understanding the Rate Case Process
It is important to understand that APS does not simply ask for a rate change and receive automatic approval. A rate case is a detailed public review process that takes well over a year. APS filed this case more than a year ago, and a final decision is expected later this year.
This process is designed to ensure a thorough, transparent and fact-based review of APS's rate adjustment application to give the Commission a complete picture before it decides whether to approve the request. A final decision from the ACC is expected later this year.
Why is APS requesting a rate increase?
Current APS rates are based on costs from five years ago. Inflation and rising expenses mean those rates no longer cover what it takes to operate and strengthen the electric grid today. By updating rates to reflect current costs, APS can continue to provide customers with the top-tier reliability they need and expect, especially during Arizona’s long, hot summers.
As a regulated utility, APS must look backward to adjust its rates based on the actual costs it paid to serve customers in 2024 and 2025. This ensures rates more accurately match the true costs of providing electric service to customers. For context, over the past five years, APS has experienced rapidly rising costs of equipment needed to deliver power to customers. One example is transformer costs which are, on average, 49-90% higher now than when our rates were last set. (See graphic on below.)
How does the rate proposal protect affordability and reliability for APS customers?
In addition to ensuring a reliable energy grid and upgrading equipment, the rate case introduces measures to further support customers. Amid rising costs for infrastructure, equipment and materials, APS is anticipating unprecedented growth within its service territory. To protect residential and small business customers, APS is making sure new large energy users, like data centers, continue to pay their full cost of service.
The plan proposes a rate increase of more than 45% increase for data centers and updated cost allocation for system investments, like power plants, so growth-related costs are assigned to the customer classes driving expansion. APS’s application also outlines a formula rate, under which future costs (e.g., infrastructure, fuel, etc.) are reviewed annually and allocated to the customer group responsible for those costs, such as data centers.
What about summer electric bills?
With the arrival of hotter weather, most customers naturally use more energy as air conditioners work harder to keep homes cool. That higher energy usage in the summer drives higher bills for most customers. APS’s rate proposal will have zero impact on customer bills this summer.
It’s important for customers to know they have options to manage their bills and lower their costs. For example, customers can compare rate plans by using APS’s rate comparison tool at aps.com/compare. Customers can visit aps.com/save for tips to save energy.
Customer Support and Resources
APS helps connect customers facing financial hardship to programs and resources that can make a difference. The Crisis Bill Assistance program provides up to $1,000 for those in need. Eligible customers can also receive monthly discounts of up to 25% or 60% through the APS Energy Support program. Learn more at aps.com/assistance or by calling the 24/7 Customer Care Center. APS advisors are available in English and Spanish at 602-371-7171 or 800-253-9405.
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