Arizona Public Service Customers Rally to Protest Proposed Rate Hike

Inside the air-conditioned confines of the Hyatt Regency in downtown Phoenix earlier today, Arizona Public Service was hosting the second annual Residential Demand Charges for Utilities Summit.

Outside, about 50 protesters braved the heat to speak out against a pending proposal by the state's largest utility to change the way it bills customers for the energy they use in their homes.

Carrying signs reading "We demand fair charges" and "APS – hands off my wallet," demonstrators criticized the plan, calling it a scheme to make money off the backs of average people.

Under the current billing structure, customers are charged for the total amount of energy they use in a given month. The plan APS submitted last week to the Arizona Corporation Commission seeks to lower the rate it charges per kilowatt-hour used and add a "demand charge," a fee based on a consumer's single highest spike in energy consumption during the billing period.

As one protester at today's rally put it, "It's like taking the worst gas-mileage rate your car gets in a month, and then charging you a fee based on that."

Said another: "As APS customers, we want to maintain predictability. The proposed demand charge creates the most unpredictable rate structure there is."

According to the utility's calculations, the proposed demand charge will cost the average consumer $11 per month. The new billing method is expected to net APS $166 million annually.

APS contends that the plan will promote energy conservation by creating an incentive for people to monitor their energy use — to the point where conscientious customer could actually save money. 

Sandy Bahr, director of the Arizona Chapter of the Sierra Club, begs to differ.

"Residential customers can't measure their demand changes easily," Bahr says.

She has a point: Without the aid of a special device to keep tabs on energy consumption in real time, it's difficult to know exactly how much electricity you're using.

And people make mistakes, Bahr notes. It isn't hard to imagine a scenario in which someone accidentally leaves the refrigerator door open overnight, or blasts the AC on a hot afternoon, forgetting to shut a bedroom window.

And for those on low or fixed incomes, paying an extra fee – which, as intrepid business reporter Ryan Randazzo of the Arizona Republic found out, could reach as high as $200 a month — is a serious concern.

The APS proposal includes an option for customers to choose a higher flat-rate plan rather than pay the monthly demand charge, but critics say that will put a burden on those with fixed incomes.

Many of the protesters said they are specifically concerned about how the rate structure changes would disproportionately affect those who can least afford it. 

"APS is saying that demand prices will force us to consume less, but we don't need APS to do that," said Richard Castañón of the environmental group Chispa Arizona. Castañón suggested other, more equitable ways to reduce energy consumption: subsidizes for installing energy-efficient windows and appliances, for instance, or teaching conservation practices in schools.

In a statement e-mailed to New Times, an APS spokesperson writes, "Today's protest took place outside of a conference where leading national experts were discussing energy policy and rate design. That discussion, based on facts, data and reason (like our Rate Review Filing) is far more important and beneficial to APS customers than the rhetoric on the sidewalks."

Tom Chabin, a former state legislator who is running for a seat on the five-member Corporation Commission, attended today's protest.

"We need to remind APS customers that every time they pay their bill, a little bit of money goes into a 'dark-money' account so [APS] can get the Corporation Commission it wants," Chabin told New Times.

Chabin has openly criticized the Corporation Commission for bending to the will of APS and other industry interests.

(The utility's use of dark money to influence the Corporation Commission has been well documented.)

Asked whether he thinks the current commissioners will approve APS's request, Chabin said it depends on "whether there's a revolt at the grassroots."

"I think we need to look at the big picture here," adds Bill Mundell, a former Corporation Commission member who served from 1999 to 2008 and is running for a seat on the commission again this year. "Demand charges have never been put on residents anywhere in the U.S., meaning approval in Arizona would be unprecedented."

APS serves 1.2 million people in 11 counties across Arizona.

Said protester Monique Pico: "It's time for APS to take their customers into consideration more than their pockets."
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Miriam is a staff writer at Phoenix New Times.
Contact: Miriam Wasser