The state’s largest electric utility wants to move its residential customers to demand rates, a controversial mechanism that critics say would mean higher bills for many ratepayers.
Arizona Public Service has previously indicated its support for demand rates through a case involving another electric company, UniSource Energy Services.
APS confirmed today that it intends to ask the Arizona Corporation Commission to approve demand rates for its customers when it files a rate case on June 1.
The proposed change in rate design would move all residential customers into a three-part rate instead of today’s standard two-part rate. The three-part rate would add a demand charge, under which customers’ electricity bills would depend on their use of power during peak times.
Typically, customers pay for energy based on their total monthly power consumption.
Opponents have called demand rates confusing and punitive.
“This pricing scheme isn’t practical or logical for most people with busy lives or more important things to worry about,” the Arizona Public Interest Research Group said in an opinion piece.
In APS’s case, the utility would assess a demand charge based on the highest usage during any one-hour period throughout the month, APS vice president of regulation Barbara Lockwood explained to the Arizona Capitol Times.
“It is a fairly forgiving period… It’s not an instantaneous measure, which is another myth that’s being propagated out there,” Lockwood said.
UniSource earlier abandoned its plan to seek demand rates for all customers after intense scrutiny from solar advocacy groups, AARP, and customers. Several hundred customers showed up at hearings organized by the Arizona Corporation Commission across the state to express their opposition to demand rates.
UniSource said instead, it will ask the commission for demand rates for solar customers only and provide optional demand rates for non-solar customers.
Lockwood said APS doesn’t have any trepidation about pursuing demand rates after UniSource’s withdrawal. She noted that APS already has about 120,000 customers on demand rates.
“We have a lot of experience. We are in a much better position… We believe that we will make our case and that we’ll make it effectively,” she said.
APS has started running advertisements showing how customers could adjust their power use to save money on demand rates. In one ad, the company shows appliances, like a dryer and oven, being used at the same time, and then how shifting to using one major appliance per hour could lead to savings.
Standard residential customers wouldn’t need any new technology to adjust to the proposed demand rates, Lockwood said. Instead, simple techniques like shifting to off-peak hours or staggering the use of appliances would help save money, she said.
“The majority of customers will see a very similar bill in moving to demand rates, even if they change nothing. But it gives you the opportunity, if you want to, to spread out your usage and lower your bill,” Lockwood said.