The LFCR recovers a portion of unrecovered fixed cost resulting from energy efficiency and distributed generation programs.
The LFCR is the result of the 2012 settlement of the APS rate case that was approved by the Arizona Corporation Commission (ACC). Arizona has one of the most aggressive energy efficiency standards in the nation at 22% savings by 2020. These goals cannot by achieved without the LFCR or some other similar mechanism.
The LFCR allows APS to continue providing programs and services that help customers manage their monthly energy use, while also allowing APS to fund the operation and maintenance of the electric grid.
Whether a customer uses 1 or 1,000 kilowatt hours a month, reliable service requires a certain amount of infrastructure (wires, transformers and substations) built and maintained. However, a majority of the charges on a monthly electric bill are based on the amount of kilowatt hours a customer consumes and not on the infrastructure required to provide the service.
who is impacted by the lfcr?
All residential and small business customers are subject to lost fixed cost recovery. Large commercial and industrial customers have current rate structures which already include the recovery of fixed costs.