The five-member Arizona Corporation Commission voted 4-1 on Wednesday, Jan. 17, to approve a revised fee request that includes a $2 increase in the fixed monthly base residential service fee.

UniSource will then be able to begin recouping some of the costs of its new system investment based on a controversial new surcharge approved as part of the lawsuit.

When the new rates go into effect on February 1, the average monthly bill for a typical residential customer will increase by $13.68, or 11.9%.

This increase is an annual average, so customers should expect a greater impact during hot weather and a smaller impact when the weather is cooler.

Arizona regulators in recent years have directed utilities to adjust their revenue allocations to reduce business subsidies to residential ratepayers, so residential customers pay a much larger share of their bills than business customers. Price increases are expected.

Under the new UniSource rates, the average bill for a typical business customer on the utility's small and medium-sized general service rates will increase by 5.8%, and the average bill for large general service rate plans will increase by 7%.

The interest rate request was approved by the ACC's Republican majority, Chairman Jim O'Connor and Nick Myers, Kevin Thompson, and Leah Marquez Peterson, and by Anna Tovar, the committee's only Democrat. The only negative vote was cast.

Unisource, a sister company of Tucson Electric Power that serves approximately 19,000 electric customers in Santa Cruz County and 80,000 in Mojave County, reduces customers' average monthly residential bills by approximately 14% based on base rates. They were demanding new fees to be raised. or $18.52.

Unisource said the higher fees are needed to recoup the millions of dollars in system investment and higher operating costs since the last pricing in 2015.

The company did not oppose the rate hike recommended by the administrative law judge, resulting in an average monthly increase of $13.71 in residential rates, and accepted a reduction in allowable return on equity, a key profit metric, to reduce the impact on rates. Slightly reduced.

The monthly fixed base rate increases by $2 to $17 for individual customers on base rate plans and $14 for time-of-use or demand rate rates.

Unisource's low-income customers will receive no relief under the new rates.

Unisource had proposed increasing the flat-rate discount on low-income rate plans by $2 to $18, but later revised the discount to be consistent with what regulators approved for TEP last year. I agreed to increase the amount by $4.

The move was supported by Wildfire, an Arizona nonprofit that supports low-income communities, but the commission also said it would create tiered discounts based on income levels to better support the poorest households. The group rejected the group's proposal for a 25% discount on overall fees.

However, committee member Nick Myers, a Queen Creek Republican, was able to introduce an amendment that would keep the low-income discount at $16 per month, and committee member Jim O'Connor and committee members Kevin Thompson agreed.

The move was opposed by Tovar and Tucson Republican Marquez Peterson, who argued that more relief is needed for low-income customers.

“We cannot continue to introduce double-digit interest rate hikes without also adjusting programs for low-income people,” Tovar said, echoing Peterson.

“I think we still need relief for low-income families. Things are certainly tougher for people than they were during the last rate case,” Peterson said.

UniSource's Customer Assisted Housing Energy Support (CARES) program provides discounts to customers with household incomes up to 200% of the federal poverty level, or $5,000 per month for a household of four.

The company said in a filing that the $2 discount increase would mean monthly costs for other customers would be about 10 to 15 cents. About 10% of the utility's customers qualify for discounted rates and must reapply each year.

The ACC also approved UES's request for a new “System Reliability Benefit” (SRB), allowing utilities to collect special premium rates to begin recovering major system improvement costs between rate cases. did.

The company said it needed the new surcharge, which would apply to new generation projects costing at least $25 million, to add new generation assets and reduce its current 40% dependence on wholesale power purchases. .

Unisource believes that SRBs reduce the impact of high tariffs on projects by avoiding cost buildup until the next prevailing tariff, and in the long run improve customers by reducing exposure to high wholesale power costs. He said it will help reduce costs.

The company cited a similar mechanism approved by the ACC several years ago to help small water companies replace aging infrastructure, and also to avoid the high costs of general rate applications. There is.

The commission's Utilities Division staff and an administrative law judge recommended approval of the new rate, which includes an “efficiency credit” of 5% of the system investment cost, which would be applied to each project until it is incorporated into the next project. This will reduce the amount of revenue required for fee case.

UniSource must still seek ACC approval for each SRB, but this is limited to once per year and five times in total between rate cases.

But the state agency that represents residential ratepayers in rate lawsuits, the Department of Housing, Utilities and Consumer Affairs, said the ACC ruled in its rate decision last August that further investigation and stakeholder consultation was needed. The company opposes this charge, pointing out that TEP has rejected a similar charge.

Daniel Poszewski, RUCO's chief legal counsel, said the new SRB would allow Unisource to avoid the kind of scrutiny the commission does for large plant investments in general interest litigation, while at the expense of customers. He said it would accelerate cost recovery.

Tovar said he appreciates the company's economic claims but is skeptical that it will result in cost savings.

“What set the gears off for me with SRB is the fact that the company cannot unequivocally say this will save customers money when compared to the current approach to (cost) recovery,” she said.

Mr Tobar, along with Mr O'Connor, voted in favor of an amendment to remove the SRB from the final rate order, but it was rejected by a 2-3 vote.

Marques Peterson said: “UNSE (UniSource) believes that it is in a unique position and this SRB provides a tool that will help reduce reliance on the wholesale market. “It is in our best interest,” he said in an explanation. Support vote.

Unisource was seeking to renew and expand its offering of an energy efficiency program that hadn't been renewed in eight years, as well as to increase a small surcharge used to pay for programs such as rebates for things like high-efficiency heating and cooling systems and swimming pools. pump and lighting.

Such programs have been shown to reduce long-term energy costs by reducing demand, while saving individual customers money. The state's energy efficiency regulations, first adopted in 2010 and updated in 2020, require state-regulated utilities to take sufficient energy efficiency measures to cover 35% of 2020 peak demand by 2030. is required to be implemented.

The company proposes to increase the rate surcharge that funds these programs from $0.0015 (one-tenth and five-hundredths) of 1 cent per kilowatt-hour of electricity used to just over $0.0025 per kWh. As a result, the average household bill would increase by about 96 cents per month. He proposed a total budget of approximately $14 million over three years.

However, the plan, recommended by ACC staff and an administrative law judge, successfully defeated Thompson's proposed amendments that would have kept the levy as is and shortened the approved program period to one year.

Officials at a nonprofit organization that advocates for energy efficiency policies noted that UniSource's surcharge was last established in 2013, and that the program falls far short of need and demand.

“Current customer demand for these programs will continue to far exceed the amount the company is able to collect from customers to serve customers in providing this relief,” the Southwest Energy Efficiency Project said. Arizona Representative Caryn Potter told the committee. .