This is scary, and I think the Utility commision is listening

The problem is that the current rate structure, which has been in place since the early 1900s, was created long before energy conservation became an important national priority. It is a relic of the days when electric utilities operated appliance stores and advertised the benefits of using more electricity. The solution is a mechanism called “decoupling.”

With decoupling, we are proposing to give up the ability to earn more revenue when individual energy consumption increases. In return, we are asking the ACC to make sure we are not punished financially when our energy efficiency programs work. Ultimately, that would jeopardize our ability to maintain the electricity system. Without this change, Arizona will not be able to achieve its goals for energy efficiency.

Q. WHAT CHANGES IS THE COMPANY PROPOSING FOR THE
EXISTING RESIDENTIAL DEMAND RESPONSE RATES?
A. APS is proposing to increase Rate Schedules ECT-2, ECT-1R, ET-2, ET-1, and
ET-SP by approximately 4.0%. The Company also proposes to modestly reduce
the ratio of peak to off-peak prices in Rate Schedules ET-1 and ET-2 to better
reflect the current cost differences in on-peak and off-peak periods. For example,
currently for Rate Schedule ET-2, the on-peak price in the summer months is 4.0
times the off-peak price, while the proposed on-peak summer price is 3.0 times
the off-peak price. Likewise for Rate Schedule ET-1, the on-peak summer price
is being reduced from 3.0 times to 2.5 times the off-peak price.

This proposed pricing structure will still have a higher ratio of on-peak to off peak
prices compared with current generation power costs. For example, current
projections of on-peak wholesale prices in the APS region are typically only
about 1.6 times the off-peak prices for the third quarter 2011, which represents
core summer months. While the wholesale pricing structure has more on-peak
hours than APS’s time-of-use rates, the comparative price ratio for wholesale
market prices is nevertheless still likely to be below APS’s proposed time-of-use
price ratios. Even so, APS proposes this price structure to maintain an aggressive
price signal to incent customers to shift usage to the off-peak hours.
In addition, the basic service charge will be increased consistent with cost of
service for unbundled revenue cycle services such as metering and billing. The
proposed basic service charge also includes a portion of the customer’s
distribution transformer cost to provide better cost recovery and reflects the lower
meter reading costs due to the continued roll out of Advanced Metering
Infrastructure (“AMI”) metering technology.

Q. HOW MUCH DOES THE COMPANY PROPOSE TO INCREASE THE
BASIC SERVICE CHARGE FOR RESIDENTIAL RATES?
A. The current bundled basic service charge for residential customers varies by rate
schedule from $0.285 to $0.556 per day, which on average is about $8.67 per
month for rate E-12 and $16.91 per month for the other residential rates. APS
proposes to increase the bundled basic service charge for rate E-12 to $0.390 per
day and $0.579 for the other residential rates. This results in average monthly
basic service charges of $11.86 and $17.61 respectively.

Q. HAS THE INCREASED USAGE OF AMI METERS IMPACTED ANY OF
THE BASIC SERVICE CHARGE COSTS?
A. Yes. The increased use of AMI has significantly reduced the cost of meter
reading over the last few years. As a result, the Company is proposing to reduce
the daily unbundled charge for meter reading from $0.062 for residential
customers and $0.068 for general service customers to $0.038 for all customers.
That’s an average savings of over 40% for this charge.