Arizona utilities seek rate increases and decoupling approval

Tell us what you think about this move to increase rates and decouple rates and sales? How will utilities cover costs if they don’t do this?

Arizona Republic articles are describing how Arizona utilities are seeking rate increases to pay for renewable projects and conservations measures.

Arizona Public Service Co. benefited in 2010 from higher rates, and it’s preparing to file its next rate request in June, which could bring another rate hike in 2012.

In addition to higher rates, the request will include a proposal to allow for rate increases that compensate for the effects of energy-efficiency measures such as low-watt light bulbs that cut into sales and a new way to fund power-line extensions to new homes.

Another article notes that utilities are also seeking to “decouple” energy prices from the volume of sales.

If approved by the five-member Arizona Corporation Commission, decoupling would allow APS to collect a certain amount of revenue per customer regardless of how much energy was sold.

Utilities, quite reasonably, argue that decoupling is necessary, given the strict energy conservation mandates that are being imposed at the state and federal levels.
Bizjournal.com describes the arguments for rate increases and decoupling further, noting that they are based primarily in the call for increased renewable generation and conservation programs.
Decoupling refers to the process that ties utility revenue to their physical infrastructure, not how much electricity customers use. Growth in APS’ Arizona service territory has slowed to a crawl, and the ACC (Arizona Corporation Commission) has mandated more renewable energy be installed and an energy efficiency standard that requires utilities to cut 22 percent of their energy use by 2020. That will provide a further reduction of the power people will use and, consequently, the money APS will collect from rates. […]

APS is moving some of its new solar projects under its AZ Sun program into base rates. Those projects originally were paid for by a renewable energy standard tariff approved by the ACC. The move is to show that renewables such as solar have the same impact on APS as other forms of energy production, Guldner said.

“As renewable energy becomes an increasing part of our portfolio, it’s important to reflect that just as we do with nuclear, gas or coal in our base rates,” he said.

As we have repeatedly noted, without substantial tax incentives, the cost of renewables will necessarily cause electricity rates to rise dramatically. This latest call for increased electricity rates is just one more example of the real-world costs associated with the campaign against coal-fueled generation.

Tell us what you think about this move to increase rates and decouple rates and sales? How will utilities cover costs if they don’t do this?

02. June 2011 by Jason Hayes
Categories: Energy, Environment, Marketplace Information, Policy, Power Generation, Utilities | Tags: , , , , , , , | 1 comment