Aps Wants Rate Hike


Don Robinson, president and chief operating officer of APS, uses grand gestures to emphasize a point during a recent roundtable of community leaders gathered at the Rim Club to discuss the future of energy in Arizona and the role APS will play in the years ahead.

Don Robinson, president and chief operating officer of APS, uses grand gestures to emphasize a point during a recent roundtable of community leaders gathered at the Rim Club to discuss the future of energy in Arizona and the role APS will play in the years ahead. |

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Arizona Public Service customers should expect to see nearly a one percent increase in their rates by the year’s end. APS President and Chief Operating Officer Donald Robinson said the increase was needed for the company to keep up with rising fuel costs and capital improvement projects. The state’s largest utility supplier hopes the Arizona Corporation Commission (ACC), which sets rates for public utilities, will approve an increase in the company’s base rate of $265.5 million. This translates to a .9 percent increase per user. If it passes, customers could see an increase by December.

The commission last authorized a rate increase was in June 2007.

In a roundtable discussion at the Rim Club Wednesday, Brandt said the increase was desperately needed because the company’s increase in demand has exceeded customer and sales growth.

Corporation Commission (ACC), which sets rates for public utilities, will approve an increase in the company’s base rate of $265.5 million. This translates to a .9 percent increase per user. If it passes, customers could see an increase by December.

The commission last authorized a rate increase was in June 2007.

In a roundtable discussion at the Rim Club Wednesday, Robinson said the increase was desperately needed because the company’s increase in demand has exceeded customer and sales growth.

“As it has been for the past several years, APS is in serious financial jeopardy,” Don Brandt, APS chief executive officer said in documents given to the Arizona Corporation Commission in March of 2008.

A combination of growth and regulated rates has degraded both the company’s earnings and Pinnacle West’s stock performance, he added. APS is a subsidiary of Pinnacle West Capital Corp.

Currently, APS’s credit rating hovers just above the non-investment “junk” grade.

Robinson explained that Arizona has consistently been growing at a three to five percent growth rate year after year, until this year. Like all business, APS has felt the effects of the recession and growth has virtually stopped. Next year, APS is planning for a mediocre .6 percent increase in growth.

However, even with a slowdown, the company still spends on average, $3 billion each year to serve its existing and growing customer demand. This includes a billion in new capital, a billion in fuel and $800 million for operations and maintenance.

And Robinson expects growth to to see a 2.5 percent growth rate between 2011 and 2020. With this in mind, APS will gain at least a half million new customers.

How will APS provide reliable service to all these new customers by 2022? Robinson said it must increase its energy efficiency and renewable resources and possibly build a nuclear power plant.

To tap renewable energy sources, the company is already importing some geothermal energy from California and working to build solar power plants and install solar panels on homes.

By 2013, the company plans to build Solana, a 280-megawatt concentrating solar plant near Gila Bend. The plant would use energy captured from the sun to convert water into steam to turn turbines. The plant would store electricity four to six hours after the sun went down.

However, APS’s plans to build another solar plant in the Harquahala Valley were stopped earlier this month when the construction firm Lockheed Martin pulled out.

“We are spending $50 million to expand our energy efficiency,” he said.

In Flagstaff, APS plans to install solar panel’s on 200 to 300 homes and see how high concentrations of panels work. Earlier this month, APS received a $3.3 million grant from the American Recovery and Reinvestment Act to fund part of the project.

“If it works well, we will expand it,” he said.

While solar is a great resource, Robinson said at this time the company only has two options when it comes to building a plant that can run 24 hours a day, seven days a week — nuclear or coal.

“We are keeping the option open of building another nuclear plant,” he said.

APS is not considering building another coal-fired plant at this time, he added, unless new technologies came along to improve it.

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