New Report Examining APS’s Massive Gas Buildout Demonstrates How Ratepayers Could Be on the Hook for Decades

If you get power from Arizona Public Service (APS), your bill could be heading up. The utility is asking regulators to approve a 14% rate hike, adding roughly $240 a year to the average residential bill. That would mark the third rate increase for APS customers in five years. APS also wants to switch to "formula rates," a system that would let it raise prices annually with less public input and less regulatory review than the current process allows.

A new report from the Sierra Club and Synapse Energy Economics looks at why bills keep climbing: APS is building more natural gas power plants than any other utility in the state, including the Desert Sun Power Plant and an expansion of the Redhawk plant in Maricopa County. The report estimates this gas buildout could add more than $112 a year to residential bills on top of the rate hike. Because of how APS's fuel costs are currently structured, customers absorb 100% of the difference if gas prices rise above what the utility projected, leaving ratepayers exposed to price swings largely outside their control.

The report's authors argue that requiring APS to share some of that fuel-cost risk, rather than passing it all to customers, would give the utility more incentive to rely on cheaper, more stable resources instead of gas. For now, no such requirement is in place, and the rate case and formula-rate proposal are still pending before regulators.