Charges being added to APS electricity bills
Arizona Public Service will soon start collecting more money from customers in order to cover fixed costs as sales drop while customers conserve energy.
Yumans and others from across the state who get their electricity from APS have opened their latest bills in recent days to find that the utility will soon be adding charges from 14 cents to $6.50 per month to cover costs for power delivery infrastructure like poles and wires. The charge takes effect in March.
“The average charge for a typical APS customer is 38 cents per month, and that's to fund those fixed costs,” said APS spokesman Damon Gross.
Customers can take one of two options with the charge: the Lost Fixed Cost Recovery (LFCR), which is a percentage of the bill, and a flat charge. Both vary with how much power customers use, although the flat charge rates will remain the same for four years, while the LFCR is subject to annual adjustments. Currently, it is set for .29 percent.
The LFCR is the default mechanism. APS came to the 38 cents estimate based on the average user consuming 1,110 kilowatt-hours (kWh) per month. The flat charge for somebody using 1,100 kWh per month is $2.75.
Gross said the sole purpose is to offset fixed costs. “This is a charge that will be directly applied to those fixed costs.”
According to an insert stuffed into bills, “(b)ecause more customers are installing renewable energy systems such as solar and wind, and energy efficient measures such as compact fluorescent light bulbs and refrigerator recycling, APS is selling less electricity, but fixed costs remain. APS is allowed to implement a new charge to recover a portion of the fixed costs.”
Gross agreed to the idea that there are two buckets: one with the charge to help recover fixed costs and one with the charge for energy consumption. One is going up, while the other is dropping. If customers' energy consumption habits save them more than 38 cents per month, then there is still a net savings, he said.
In 2010, the Arizona Corporation Commission approved rules requiring utilities to cut their customers' annual energy use by at least 22 percent by 2020. Utilities showed concern then about the ability to cover fixed costs with the drops in energy use and thus, dollars collected from customers.
“It's counter intuitive for a business to go to its customers and say, ‘Please use less of my product,'” Gross said.
But utilities have gone ahead with the mandate. Last May, the ACC approved the soon-to-appear surcharge.
“Although it may not eliminate the incentive for APS to increase sales volumes to increase earnings, it does reduce the disincentive for APS to not invest in (energy efficiency) and (distributed generation) due to reduced sales,” reads a decision agreed upon by four of the five ACC commissioners at the time.
“Because the Settlement Agreement requires that the annual lost fixed costs APS proposes to recover from its ratepayer must be documented and verified, customers will have confidence that the funds they pay for (energy efficiency) and (distributed generation) are being appropriately and well spent. The LFCR allows residential customers a choice as to how they pay the lost fixed costs and will give them some experience to help them understand how energy efficiency savings affect a utility.”
For more information or to request the flat charge option, call APS at 1-877-371-6820 or visit www.aps.com/lfcr learn more about the charges.
Hillary Davis can be reached at firstname.lastname@example.org or 539-6857. Find her on Facebook at Facebook.com/YSHillaryDavis or on Twitter at @YSHillaryDavis.