Agency OKs APS Surcharge
But Panel Undecided on Emergency Rate Hike

Arizona Republic
Ken Alltucker
April 6, 2006

The Arizona Corporation Commission on Wednesday approved Arizona Public Service Co.'s request to levy a $15.3 million surcharge on customers to recover fuel costs.

The surcharge means that the typical residential customer's monthly bill will increase 64 cents, to $107.51, based on 1,162 kilowatt-hours of electricity use, according to APS.

But the surcharge will not kick in until the Corporation Commission decides another case: APS' emergency request to hike residential bills 11 percent to raise about $230 million. A hearing on that case concluded last week, and a final decision could come before the end of April.

The surcharge and emergency-rate case are among a handful of bill-increase requests the Phoenix-based utility has asked state regulators to approve.

APS said its mounting fuel bills have created a financial strain, and a Wall Street ratings agency has threatened to lower the company's corporate bond rating to junk status. Such a move could raise the utility's borrowing costs significantly.

In January, the commission approved an "adjustor" that raised the typical residential bill 5 percent.

APS' pending bill-hike requests include:

- A general-rate case that would increase electricity bills 21.3 percent and raise more than $400 million. Any bill increase approved through the emergency-rate case would be subtracted from the general-rate case.

- Another surcharge that would raise $44.6 million to pay for electricity and fuel the utility had to buy as a result of last year's outages at the Palo Verde Nuclear Generating Station. The Corporation Commission has hired an expert to review the Palo Verde outages and determine whether those costs were prudently incurred.