Over 2,000 people submitted comments to the Arizona Corporation Commission (ACC) throughout Arizona Public Services’ (APS) rate case application, with many expressing frustration and anger with the utility’s proposed $460 millionrate hike. But at least 16 groups that hold ties to APS, the state’s largest investor-owned electric utility — including charitable contributions from the utility, board positions, and memberships — submitted comments in support of the rate hike, according to an EPI review of the comments.
Hundreds of Arizonans asked the ACC to deny the rate hike. The ACC had already voted in 2023 to increase residential customers’ monthly bills by $12 on average to accommodate high methane gas prices, and customers continue to be impacted by other high costs. One customer wrote, “I am against the significant rate increase that APS is proposing. I have lived in Arizona for over fifty years and APS has raised its rates numerous times over those years … I feel APS is NOT suffering financial hardship and constant rate increases are hurting consumers, especially in these inflationary times.” Another said, “Electricity is a basic need and such an increase further hampers daily living[.] Please do NOT allow this to happen[.] I am retired and on a fixed income.”
Yet organizations with ties to APS, including chambers of commerce and non-profits that work to help underserved communities, defended the utility’s application.
The ACC ultimately decided to approve much of the increase for APS last month – approximately $253 million, resulting in customers seeing an 8% increase to their monthly bills. Arizona’s consumer advocate, the Residential Utility Consumer Office (RUCO), recommended a much smaller $84 million increase for APS. RUCO said that ACC staff and APS’s recommendations were overstated and not balanced, writing “the Company continues to push the bounds of traditional ratemaking seeking extraordinary, utility-friendly, ratemaking mechanisms which shortchange the protections and safeguards afforded ratepayers in traditional ratemaking.”
Rooftop solar customers will also see an additional charge on top of the rate hike to their bills, and Commissioner Nick Myers – who has prioritized eliminating programs using customer money toward renewable energy projects – approved an amendment to halt new participation in APS’ low-income targeted “solar communities” program.
Commissioner Anna Tovar cast the only dissenting vote, stating, “We have to balance between the company and the customer and with this rule as amended I do feel that balance is leaning a lot more towards the company rather than the customer.” Last year, Tovar questioned Arizona utilities – including APS– on charitable contributions and lobbying expenditures, following an investigation by former Commissioner Sandra Kennedy into APS’ political spending. Kennedy’s investigation revealed how APS and the APS Foundation made $72,365,649 “corporate giving” donations to 501(c)(3) and 501(c)(4) charities between 2013 and 2021. Many of the groups disclosed in that investigation filed letters supporting the utility’s most recent rate hike.
Groups in support of APS rate increase received contributions from the utility
The Society of St. Vincent de Paul was the recipient of some of APS’ largest contributions, receiving $500,000 from APS in 2021 and $56,500 in 2019. The letter of support for the rate hike submitted by St. Vincent’s to the ACC mentions APS’ long support of the organization, including through its bill pay assistance programs, ignoring the financial burden imposed on customers facing increased bills from the utility’s rate increase.
FIBCO Family Services, Inc. (FIBCO), an organization dedicated to providing food, clothing, affordable housing, and healthcare to the Phoenix community, also cited APS’ support “through creative programs” offering bill assistance in its letter supporting the rate request to the ACC. FIBCO received contributions from APS of $58,000 in 2021 and $41,000 in 2020.
The United Way of Yuma County’s letter in support of APS stated that utility representatives are “active members of various councils, boards and committees.” The organization received contributions of $17,862 in 2021, $20,303 in 2020, and $16,671 in 2019.
Other groups that submitted letters in support of APS’ rate increase and received charitable donations from the utility over multiple years included Amberly’s Place Family Advocacy Center, which received $7,500 in 2020 and $8,500 in 2019, and Mary’s Food Bank, which received $16,000 in 2021, $16,000 in 2020, and $22,000 in 2019.
EPI’s 2019 report, Strings Attached: How utilities use charitable giving to influence politics and increase investor profits, examined how investor-owned utilities like APS use charitable giving to manipulate politics, policies and regulation in ways designed to increase shareholder profits, often at the expense of low-income communities. A 2018 academic study cross-referenced the charitable giving of Fortune 500 companies against public comments submitted to federal agencies on proposed regulations and found recipients of corporate philanthropy are more likely to help the companies that give them money try to get favorable regulation.
Chambers of Commerce supportive of APS rate increase affiliated with the utility through board positions, memberships and sponsorships
Many organizations that filed letters supporting APS’ rate increase hold affiliations with the utility beyond charitable giving. The Prescott Chamber of Commerce, which received $52,500 in 2019 from the utility, also has APS Northern Division Director Frank Sanderson on its Board of Directors. APS is listed as a “Lead Partner” on the Chamber’s website, the highest level of sponsorship, costing $15,000 per year.
The Arizona Chamber of Commerce and Industry’s letter of support referred to APS as an “indispensable partner in the development and progress” of Arizona. This partnership includes listing APS as a “Champion Level” member of the Chamber, the highest corporate membership level, costing the company $100,000 or more annually. APS President Ted Geisler is the Chamber’s Board of Directors Chair-elect, and Pinnacle West – APS’ parent company – included the Chamber in its 2015 lobbying expense report.
The Greater Phoenix Chamber of Commerce, also included in Pinnacle West’s 2015 lobbying expense report, received $25,000 from the utility in 2020, and has APS Vice President of External Affairs Stacy Derstine as a member of its Board; APS is a “Premier Member” of the Greater Phoenix Chamber.
The Globe Miami Regional Chamber of Commerce’s letter to the ACC specifically addresses the donations APS provides the organization, and Bryan Goslin, an APS project manager, is a board member at the Chamber.
Organizations affiliated with APS support rate increase at the ACC
Many other groups affiliated with APS filed letters supporting the utility’s request to increase rates at the ACC. Gregory’s Fresh Market, which provides fresh food to underserved seniors and veterans, commented in support of the rate case and also previously joined with APS to oppose a 2018 ballot campaign that would have increased the state’s clean energy standard. Bunney’s Inc., a construction and maintenance company that works on APS power plants and also features a photo on its website’s “About Us” page with an APS backdrop, also submitted a comment.
The Arizona Sustainability Alliance, a recipient of $78,000 from APS in 2021, also has Nicholas McDonal, a business systems consultant for APS, as its Board of Directors’ Secretary. The group claims to empower Arizona citizens to work toward “verdant, equitable, and sustainable communities.” Their letter of support for APS makes no mention of the consequences of how a $460 million increase will impact APS customers’ monthly bills, nor of the new penalty against rooftop solar customers. In a publication on the group’s website, staff member Allison Boley boasts about the Arizona Sustainability Alliance Renewable Energy Priority and its partnership with Solar United Neighbors to create a solar co-op in the state. Boley states the co-op will educate Arizonans “while ensuring they are getting the best possible deal with regard to expenses and rate-plans through APS.”
Customer victory in APS rate case on trade association dues
The outcome of the rate case will increase financial burdens for APS customers. However, the Administrative Law Judge (ALJ) presiding over the case included a recommendation to disallow APS’ recovery of membership dues to the electric utility trade association, the Edison Electric Institute (EEI). EEI has a storied history of using ratepayer money to fund its political activities to block clean energy development and climate action. In a previous APS rate case, RUCO staff stated that EEI and other groups “represent the interest of electric generators…donations and membership is purely voluntary, many of which are political in nature, and may not be necessary for the provision of utility services.”
The ACC approved the ALJ’s recommendation, marking a potential turning point in regulatory policy allowing cost recovery of political spending for utilities.
