New Report Examining APS’s Massive Gas Buildout Demonstrates How Ratepayers Could Be on the Hook for Decades

Support CleanTechnica’s work through a Substack subscription, on Patreon, or on Stripe. Help us produce all of the high-quality, original content we publish week after week despite the challenges of content-scraping AI, antisocial media, inflation, and other hurdles.

Phoenix, Arizona — Today the Sierra Club, in partnership with Synapse Energy Economics, published a new report, Passing the Buck: How APS’s Gas Rush Risks Ratepayer Dollars, that provides analysis on how the utility’s reliance on gas resources has changed over time, the impacts all of the added gas will have on customers’ utility bills, and how a fuel cost sharing mechanism can address some of these concerns.

The report comes as Arizona Public Service (APS) is requesting a 14% rate hike that would increase the average residential customer’s utility bill by roughly $240 per year. If approved, it would be the third rate increase imposed on customers in the last 5 years. APS is also proposing “formula rates,” which would allow the utility to increase prices every year with less oversight and less public input. At the same time, APS is walking back its clean energy targets, abandoning zero-carbon commitments, and reneging on its commitment to retire the Four Corners coal plant by 2031.

APS has the most planned gas out of all of the state’s utilities, with notable projects including the planned Desert Sun Power Plant and the Redhawk Expansion Project, which includes constructing eight new methane gas-fired generating turbines in Maricopa County — a County that is consistently ranked as having some of the worst air quality according to the American Lung Association’s State of the Air Report.

As APS expands its fossil gas operations, Arizonans will be left paying the decades-long price reflected in higher utility bills, worsening climate impacts, increased air pollution, and public health harms. APS should prioritize ratepayers by investing in clean, renewable resources and adopting a fuel cost-sharing mechanism that insulates ratepayers from increased fuel costs.

Key findings from the Report: 

• APS’s plan to expand methane gas generation would expose ratepayers to higher utility bills, and could raise annual residential customer bills by over $112
• Under APS’s Power Supply Adjuster, if gas prices rise beyond APS’s projected customer rates, ratepayers cover 100% of the difference
• Meeting electricity demand with methane gas exposes ratepayers to price volatility

“Building significant amounts of additional gas generation is just not in the public interest,” said Sandy Bahr, Director of the Sierra Club’s Grand Canyon Chapter. “High and volatile gas prices and the availability of lower-cost alternatives demonstrate that it is increasingly uneconomical to lock in fossil gas that degrades the environment by polluting the air and worsening climate impacts. The price is simply too high. Passing the Buck makes clear that ratepayers will remain on the hook unless the utility is required to protect its customers.”

“As it stands, APS has no real incentive to manage its fuel cost risks, enabling it to pass 100% of its fuel and purchased-power costs through to its customers,” said Elspeth McGarvey, Principal Associate for Synapse Energy Economics, and Passing the Buck Report Author. “If the utility were simply required to share a portion of those fuel costs, it would encourage the utility to reduce reliance on fuel-dependent power plants, and encourage a transition to renewable energy.”

“As a student and APS ratepayer, to learn that the utility isn’t making choices that set us up for a clean energy transition is frustrating,” said Shaela Patel, an Organizer representing Arizona AANHPI Advocates. “The future, both preparing and planning for it occupies almost every aspect of my mind. Imagining one that features a prolonged dependence on fossil fuels is unsettling, especially as we consider what rising rates will look like. I’ll still be covering the cost of APS’s added gas decades down the line.”