J1_Residential_GI_461071937

The Bottom Line
APS is ensuring that residential and small- and mid-sized business customers are not paying for data center power usage. When extra-large energy users, like data centers or manufacturers, come to Arizona, APS requires them to pay for the infrastructure and power needed to serve them. Our approach has been and continues to be clear: growth pays for growth. Learn more about our Pledge for Responsible Energy Growth here.

The Facts
Recently, 12News aired a series of stories alleging that costs have shifted from data center customers to residential and small- and mid-sized customers. This is not true. The third-party analysis cited by 12News reaches false conclusions inconsistent with standard utility ratemaking, which is misleading and harmful to APS customers.

There are many ways that costs are recovered through rates. One of those ways is a Power Supply Adjustor (PSA) which covers what APS pays for fuel and purchased power. It is part of the overall cost of energy and noted as a separate line item on customer bills. Importantly, APS does not make a profit from these costs; charges are passed on to customers without markup.

The 12News analysis focuses on the PSA alone and it oversimplifies a complex issue and assumes sales growth alone caused higher fuel costs. That’s not how the PSA works, and the analysis ignores the many factors that actually drove higher fuel and power costs, many of which have nothing to do with extra-large load customer growth. Leading factors included: higher fuel and purchased-power prices, resource retirements and contract expirations, increased energy demand across the board, record summer weather and ensuring the highest reliability standards.

Moreover, despite representing only a part of the overall increase in costs, the fact is that during the period covered by the 12News analysis, extra-large customers paid more through the PSA than APS’s total increase in fuel and purchased-power costs over that same period.

Our Proactive Approach
As demand continues to grow, we are proposing to evolve our rate structures to ensure that growth continues to pay for growth. This includes:

• Changes to ensure that the cost of new power purchase agreements needed for growth among extra-large customers are directly assigned to these same customers.
• A 45% base rate increase for extra-large customers to ensure they’re paying their full costs.
• Structures that would allow costs to be reviewed and assigned more directly as growth occurs on an annual basis, ensuring that extra-large customers’ rates are being updated to reflect the costs they are causing.

These issues are being reviewed through the Arizona Corporation Commission’s public and transparent rate case process.