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APS has prepared a detailed technical report, or “whitepaper,” assessing extra-large load customer generation costs and revenues from 2022 through 2025. 

As detailed in the whitepaper, APS’s analysis found that residential customers did not subsidize extra-large load customer growth during the period examined – demonstrating that the third-party analysis cited in recent media reports reaches false conclusions by using methodology that is fundamentally flawed and misleading. 

Key Takeaways 

• APS’s cost and revenue analysis shows that extra-large load customers paid more than the estimated generation costs attributable to their growth. Their base fuel and PSA revenues exceeded the estimated incremental capacity and energy costs, helping to reduce the historic PSA balance for the benefit of all customers.
• The third-party analysis does not reflect the full cost picture. It fails to 1) distinguish between systemwide power purchases and resources acquired specifically for extra-large load growth; 2) incorrectly uses annual electricity consumption growth as a measure of new purchased-power needs; and 3) treats APS’s proposed future rate changes as evidence of historical subsidies. It also overlooks historic fuel and purchased-power under-collections, which reflect costs incurred in prior periods that extra-large load customers helped recover.
• The third-party analysis relies solely on retail sales growth. APS’s analysis details how extra-large load customers accounted for less than half (~42%) of measured peak-demand growth during the period, while the third-party analysis falsely attributes 96.5% of retail-sales growth to them. Residential customers produced the largest increase in peak demand (~546 MW) compared with extra-large load customers (~509 MW) and other general service customers (~152 MW). 
• APS is taking steps to ensure future growth pays for growth. While extra-large load customers' revenues have exceeded the estimated incremental generation costs attributable to their growth, that margin has narrowed as capacity costs have increased. APS has proposed prospective measures in its pending 2025 rate case intended to ensure growth continues to pay for growth into the future. These include a substantial rate increase for extra-large energy users and annual cost-of-service updates to better allocate future growth-related costs. As of the date of the whitepaper’s publication, the Arizona Corporation Commission had not yet issued its final decision on these proposals. 

The facts are clear: From 2022-2025, residential customers did not subsidize the generation costs associated with extra-large load growth. Instead, extra-large load customers paid fuel and purchased-power revenues exceeding the estimated incremental generation costs attributable to their growth. 

When extra-large energy users expand in or come to Arizona, APS requires them to pay for the infrastructure and power needed to serve them, while protecting existing customers from any cost shifts and ensuring high levels of energy reliability and capacity for all customers and communities. 

View the whitepaper here.