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Arizona utilities trying to dramatically change, increase charges

Arizona’s largest utility companies, including Tucson Electric Power and Arizona Public Service, are trying to dramatically change how they charge small business and residential customers for electricity.

The plan they are proposing to the Arizona Corporation Commission is confusing and means more money for them, less money for small businesses and consumers. The utilities are hoping to implement it without anyone complaining.

We hope otherwise.

The first utility to propose changes is UniSource Electric. UniSource serves about 86,000 residential customers in northwestern and southern Arizona.

diane e. brown headshot

Diane E. Brown

Deep into the hundreds of pages of UniSource’s rate case proposal is information about a “basic service charge” – a charge that the utility company wants to increase by 50 percent, to $15 each month from $10 – making it one of the highest in the country.

Here’s why this is a big deal: “basic service charge” is a euphemism for “mandatory fee.” It is something that customers pay every month, no matter what. Utilities like high mandatory fees because they typically make them lots of money.

This is terrible policy, especially for seniors, poor people, and people on fixed incomes. Why? Because there’s nothing a consumer can do to reduce that fee.

Even if you turn off all your lights, minimize your electricity use, or leave town for the month, you still have to pay this large fee.

While increasing this charge is troubling, it is just the beginning of a much larger proposal designed to increase their profit.

The next part involves another new mandatory charge called a “demand charge” – a charge that no other utility company in the country requires residential customers to pay. Instead of charging how much energy is used in total, this mandatory demand charge costs consumers for the maximum amount used at a given time.

For example, if an individual turns on his washing machine and dishwasher at the same time as his air conditioner and electric water heater, then his demand charge will be very high and will be set for the entire month based on electricity use in just this one hour.

This pricing scheme isn’t practical or logical for most people with busy lives or more important things to worry about.

Here’s why you should be concerned: These new fees could be making their way onto the electric bill of most Arizonans soon. In fact, Arizona’s largest utility – APS – is betting on it. The company’s executives are quietly trying to fix the outcome of the UniSource case.

In an extremely unusual move, APS is pouring resources into the UniSource case, paying for expert witnesses to testify and participating in hearings so they can cross-examine consumer organizations.

So why is APS spending time and money on a case for customers that aren’t even theirs?

There’s a clear reason: If fees are increased for this small utility, they can use that precedent when they try to raise their rates. The ultimate result – utilities benefit, but small businesses and residential customers don’t.

Contact the members of the Arizona Corporation Commission and let them know you oppose these bad proposals.

Diane E. Brown is executive director of the Arizona Public Interest Research Group. Additional signers to this guest commentary: Cynthia Zwick, executive director, Arizona Community Action Association; Brian Babiars, executive director, Western Arizona Council of Governments; Kelly Griffith, executive director, Southwest Center for Economic Integrity; Barbara Warren, M.D., MPH, Physicians for Social Responsibility.

 

2 comments

  1. This is what people get for tolerating “smart” meters — demand charges. Can’t do demand charges with analog meters.

    These rip-off mandatory “demand charges” are actually also being advocated by the head of the Arizona Corporation Commission’s Utilities Division.

    I expect the utilities to do everything they can to boost their bottom lines. I certainly do NOT expect their supposed regulator, the Arizona Corporation Commission, to be encouraging the utilities in that greedy endeavor.

  2. I’m not defending this rate increase proposal but I’ve been on a peak demand rate with APS for more than a decade, there’s nothing ground-breaking about it. It has nothing to do with smart meters, I was on this rate plan long before they were introduced. Lots of people on demand rates use load controllers, devices that control electrical power to your various appliances to ensure you don’t exceed the peak threshold you set for yourself. I don’t use a load controller but it takes very little effort to do just one big power consuming activity at a time, if you worry about such things. The utilities like demand rates because high mid-day summer demand is hard to meet while night time hours require much less electrical production.

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