Have you ever had luck recovering the cost of a major state-sanctioned company for the sake of that state? Arizona is testing their luck. Arizona Public Service is actually asking their Court of Appeals to reverse the Arizona Corporation Commission to reverse the cost of their recovery disallowance. By doing this, the decision could also potentially vacate the return on equity decision. In addition, this reversal involves a 20-basis point penalty for regulators to impose for customer service issues.
When did this all start?
In 2020, there was a staff consultant from the ACC reporting how utility had been resisting conformity to best practices. In response, their call center performance had been below average. APS was asking the Arizona Court of Appeals for a reversal of the ACC’s cost recovery disallowance to vacate a return upon equity decision, as well as other such actions.
What is the verdict, according to the judge?
According to the judge, it was made crystal clear by the utility that if November’s decision could stand, it woild therefore ”drive up costs of capital and debt for Arizona and their PSC investments, which would be critical for statewide economic growth; increase utility prices for every citizen and business in Arizona; and threaten the future reliability of the state’s electric grid, natural gas and water delivery, and other utility services.”
Arizona Public Service isn’t interested in a little bit. They’re interested in all 0.15% of it’s fair value increment. They really want the ACC to reverse their decision on the amount by which the value pf APS’s assets exceed the original cost.
This is all a blatant crime against Public Services that Arizona could be freely enjoying right now. All because tye ACC doesn’t quite respect the hierarchy.
“Collecting reasonable rates that yield a constitutionally sufficient return on its investments” is no reason to ruin people’s lives.
APS themselves are looking for a 5% increase in the latest rate case, but ended up getting screwed big time by having their revenues slashed by $172 million on an annual basis.
Public Services are designed to challenge regulators to deny any recovery of environmental controls from the Four Corners plant.
Utility had made a claim that Arizona Public Service would not be able to meet electric services with no power generation that “pollution controls” created in the first place.
What’s more, the utility believed that the public benefitted substantially, by “preserving the reliability of Arizona’s electrical grid while California suffered rolling blackouts.”
For the return on equity, Arizona Public Service let the court know how Arizona regulators were setting one that was unparalleled. By which they mean “the lowest in the nation for investor-owned utilities.”
Usually, return on equity for utilities lands around 9-9.5%. But this is just too far removed. There must be a better balance for taxpayers than this demoting disregard.
