APS CEO explains why utility wants to raise rates by 14% next year

PHOENIX — The state’s largest electric utility, Arizona Public Service, hopes to raise rates for power customers next year.

APS filed an application with the Arizona Corporation Commission (ACC) last week to raise the rates by 14%. If it’s approved, the typical residential customer would pay an extra $20 on monthly electric bills by the second half of 2026.

What are the reasons for proposed APS rate hike?

APS CEO Ted Geisler said the increase is to support the $2 billion the utility spends supporting Arizona’s energy grid each year.

“Current rates have not kept up with what it actually costs to operate the grid to ensure its reliability,” Geisler told KTAR News 92.3 FM’s The Mike Broomhead Show on Monday.

APS, which is owned by publicly traded Pinnacle West Capital Corp., provides electricity for about 1.4 million customers statewide. The utility company’s service area includes a portion of Phoenix along with Valley suburbs to the west and north.

Geisler said current rates are based on costs from three to four years ago.

“This rate application that we just filed … likely wouldn’t take effect until the latter part of 2026,” he explained. “By the time you do that, that’s about a five-year spread between the costs that are currently in customer rates and when new rates would go into effect.”

If APS rate hike is approved, how will it support state’s energy grid?

The CEO also said the rate increase will help pay for infrastructure that APS has already installed to help serve customers.

“An important part of this rate case proposal is also proposing to redesign the way we recover costs in the future,” Geisler said. “One of the key elements of that is if we look at where a lot of the future infrastructure need is — power plants, transmission lines, etc. — a lot of it is being driven by large customers such as data centers.”

He hopes the rate case will hold data centers accountable for covering the full cost of the electricity infrastructure needed to serve them, rather than shifting those costs onto residential and small business customers.

APS CEO assures customers ‘we want to be there for them’

He also said he wanted to assure customers that APS wants to be there for them.

“We want to make sure that all our customers recognize that we are doing our part to try to keep costs manageable and affordable,” Geisler said. “We also have choices to help them align their rate plan with their budget and ways to save, such as discount programs, crisis bill assistance, interest-free payment arrangements and other options.”

APS is seeking another rate hike a little over a year since its last one was implemented. The ACC approved an 8% increase — $10-$12 more per month for the typical customer — in early 2024, slightly lower than what APS sought.

“We owe it to our customers within Arizona to be as transparent as possible and to ensure that customers feel informed about how we plan on securing a reliable grid and what it’s going to cost to get there,” Geisler said. “On occasion, we’re going to need to pass some of these costs on, and that’s what this process is about.”

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