Hearing - E-01345A-25-0105 - Arizona Public Service Company - May 19, 2026

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Arizona Corporation Commission 5h 57m 7 agenda items transcribed 1 day ago official recording ↗

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What procedural matters are being addressed before the opening statements resume?

Unknown 0:00

All right. Let's go ahead and go back on the record. Oh, I should check. People online, you can hear me okay? Just nod.

John Kaufman 0:08

Yes, Your Honor.

Unknown 0:09

Okay. Perfect. Thank you. All right. So before we get back to where we left off, I'll just quickly check. Are there any procedural matters we need to take up before we resume the opening statements? Nope. Your Honor. Oh, okay.

Antonia Langowski 0:24

Yes, Mr.

Unknown 0:25

Allman. Yes, thank you. Just one brief matter. And again, we can hold this until before the first witness is called, or we can deal with it now. It's up to you. It has to do with exhibits and other documents that witnesses are going to be asked about in the proceeding. Again, we're happy to wait until we get through opening statements.

Antonia Langowski 0:48

Okay. Well,

Unknown 0:49

if it's about the exhibits, we can hold off until we get started. Okay.

Antonia Langowski 0:52

Thank

Unknown 0:52

you. In that case, then, all right, where we left off, I believe, was Sierra Club. Okay. And so I'll ask Mr. Woolsey

Patrick Woolsey 1:04

or who we got. Good morning, Your Honor. Patrick Woolsey on behalf of Sierra Club.

Unknown 1:11

Morning.

Patrick Woolsey 1:13

Shall I go ahead? Whenever you're ready. Good morning. Good morning. Patrick Woolsey representing Sierra Club. Sierra Club has more than 12,000 members in the state of Arizona, over 4,500 of whom are APS customers. Sierra Club advocates for affordable, clean, renewable energy sources and energy efficiency measures that result in lower utility bills for customers. Over the last several years, Arizona's electric system has experienced significant challenges, including data center growth, rising energy costs, and growing concerns about affordability. In this case, APS is not only asking the Commission to approve a 14% rate increase, APS is asking the Commission to approve a formula rate adjustment mechanism, a new rate-making structure that would radically transform the way APS is regulated by allowing the company to obtain rate increases every year via an accelerated and condensed process.

Patrick Woolsey 2:11

Abundant evidence in this proceeding will show that the formula rate proposal is not in the interest of APS ratepayers. The formula rate mechanism would undermine oversight of the company's spending and increase the risk of continuous rate increases at a time when ratepayers are already struggling with the burden of high electricity bills. Sierra Club retained an expert witness, Melissa Whitehead of Synapse Energy Economics, to evaluate APS's formula rate proposal. In her testimony, Ms. Whitehead concludes that the proposed formula rate mechanism would shift risk from shareholders to rate payers and reduce regulatory scrutiny compared to traditional rate making. Ms. Whitehead finds that the formula rate mechanism's compressed timeline, lack of supporting testimony, and constraints on discovery and challenges would make it more difficult for stakeholders and the Commission to review APS spending.

Patrick Woolsey 3:04

Under the formula rate proposal, stakeholders would not have enough time or sufficient information to effectively understand and scrutinize the prudence of the company's spending. Ms. Whitehead concludes that by accelerating cost recovery and reducing regulatory lag, the formula rate mechanism would weaken APS's incentive to contain costs and increase the risk that the company's spending and customer rates will grow faster over time. She also discusses examples from several other states that have adopted formula rates and have experienced consistent year-over-year rate increases and reduced regulatory scrutiny.

How does the Sierra Club present its objections to APS’s rate increase and formula rate proposal?

Patrick Woolsey 3:40

In light of these conclusions, Ms. Whitehead recommends that the Commission reject APS's formula rate proposal. Several other expert witnesses, as we've heard, representing a diverse variety of other intervening parties, have reached the same conclusions about the formula rate mechanism's undermining of regulatory oversight and the proposal's substantial risk to customers. In rebuttal and rejoinder testimony, APS has proposed various changes to the formula rate mechanism, including changes to the procedural timeline. But these changes do not remedy the formula rate proposal's fundamental problems. The revised proposal would still shift risk from shareholders to rate payers,