Hearing - E-01345A-25-0105 - Arizona Public Service Company - May 22, 2026

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Arizona Corporation Commission 6h 47m 8 agenda items transcribed 1 day ago official recording ↗

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Transcript generated automatically by AI and may contain errors.

What is the opening discussion about the cross‑examination and APS’s recommended ROE?

Unknown 0:00

With that, let's go ahead and go back on the record. And where we left off on Wednesday, uh I think uh Mr. Pazewski you were still in the middle of your cross examination. I was, Your Honor. Uh thank you. I will pick up. Good morning, Mr Geisler.

Aaron Geisler 0:15

Good morning, sir.

Unknown 0:16

Let's continue our little dance here. Um Wanna talk to you? I already have. I was in the middle of the other day discussing issues of affordability. Uh like to proceed a few more Air is there. In this case, Mr. Geisler, the company is recommending a ten point seven ROE and a point nine percent return on the fair uh value increment. Which I understand according to your Costa Capital witness is a conservative request. Is that correct?

Aaron Geisler 0:51

I recall our uh expert witness, Mr. Coyne, identifying that uh the ten point seven ROE is uh slightly below the median of the peer benchmark that he had identified.

Unknown 1:00

Okay, and ultimately the company's ROE recommendation is subject to your approval. Is that fair?

Aaron Geisler 1:09

Uh I review and provide input uh to our ROE recommendation. Uh we do uh heavily rely on the expertise of Mr. Coyne, uh given his uh pretty extensive credentials in the subject matter.

Unknown 1:23

Okay. But you're certainly aware of the recommendation, right? Sure. Okay. And uh Диаба Бурю в руко трис.

Unknown 1:53

Yes, sir. You could open up that to page one.

Aaron Geisler 2:02

Okay.

Unknown 2:02

And and I'm not gonna ask you to verify this. All I wanna ask you is um uh you will note that uh Mm-hmm. Over to the uh far right corner at the farthest point you'll see a bundled ROE number of eleven point nine four oh, correct?

Aaron Geisler 2:22

I see that value. Okay.

Unknown 2:27

Do you know and and you understand what a bundled ROE is, right?

Aaron Geisler 2:32

Uh no, I do not uh understand that definition as it relates to this.

Unknown 2:36

This case. Okay. Well then let's explore that a little, if if I may. Uh I refer you to Copy's last rate case. Decision number seven nine two nine three, Ruco fifteen.

Unknown 3:07

Okay. Uh let me know when you're there. I'm there, sir. If you would, mister Geisler, please turn to page four twenty nine.

Aaron Geisler 3:34

Okay, I'm there, sir.

Unknown 3:36

You see at the top where it says we conclude that APS's cost of equity should be established at nine point five five percent, correct? Sorry, can you tell me the line item? Yeah, it's page four twenty nine, uh Line one and two. Okay. Yes, sir. Okay, gonna cut right to the chase on this with you. Uh let's move to page four thirty-five.

Aaron Geisler 4:13

Okay.

Unknown 4:14

If you go down to line four. You'll note there it says the commission concludes that it is appropriate to grant APS a return on the fair value increase of point two five percent, correct? Yes. Now You've said numerous times uh that your current ROE is nine point eight percent.

Aaron Geisler 4:43

I believe I said that the uh full allowed RE inclusive of the fair value increment is uh nine point eight percent.

Unknown 4:51

Okay. So you don't have any reason to disagree then. uh and again I'm not asking you to uh validate it. The eleven point nine four percent that I showed you in RUCO thirty six is at least Ruco's calculation of what the full ROE would be in this case that you're recommending.

Aaron Geisler 5:18

Sorry, I I can't verify that, sir. I don't I don't know nor understand the math that would contribute to that number. Uh maybe one of our other witnesses, Mr. Coyne Um Mr. Moe or Ms. Havick would be better suited to be able to verify that?

Unknown 5:32

Really? Uh okay. So you don't know if the company made that calculation?

Aaron Geisler 5:38

I I'm not familiar with it, sir.

Unknown 5:42

Okay. Did you factor in rate affordability when you approved your cost of capital recommendation in this case?

Aaron Geisler 5:58

Well, rate affordability is something that we factor in in everyday decision. It's it's gets back to what I was describing earlier in terms of all the decisions we make every day in terms of how we serve customers to balance reliable service at the lowest cost, finding efficiencies, ways to save. That that is how We find the most effective way to achieve affordability for our customers it's those day to day decisions. When we look to begin recovering a revenue deficiency The revenue deficiency is calculated based on the actual difference between the cost of service for the test year versus what is currently in rates.