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12/7/2012 6:01:00 AM
Electric rate increase sought by UniSource
Higher price for electricity about a year away

Ahron Sherman
Miner Staff Reporter


KINGMAN - Just when you thought you were out of the rate-increase jungle, UniSource Energy Services filed a notice of intent with the Arizona Corporation Commission to submit a rate case application by Dec. 31 for the "establishment of just and reasonable rates."

The process, which is in its infancy, will only affect UniSource's approximately 91,000 electric customers. It's so early in the process that representatives of UNS Electric do not know how much of a rate increase they plan to apply for.

The current rates - not including any surcharges - includes an $8 fixed charge for all residential customers and two different fees that are based on usage. For the first 400 kilowatt-hours used it's $0.086815 per kilowatt-hour. After the first 400, it's $0.104050 per kilowatt-hour.

The average residential customer uses a little more than 856 kilowatt-hours a month. Based on these charges, the average residential bill is roughly $90 a month.

Representatives do have a target date for implementation. UNS Electric's proposal has the new rates going into effect no later than Jan. 1, 2014.

"This is a proposal," said UNS spokesman Joseph Barrios. "The timing of the ultimate increase is subject to change based on what the Commission has to say."

The last time UNS Electric raised its rates was 2010. Overall, it was a 4.5 percent increase for most residential customers.

The Residential Utility Consumer Office is set up by state statute to represent Arizona ratepayers.

"We're aware of the filing," said Bill Rigsby, RUCO's chief of accounting and rates. "It's highly likely we intervene in the case."

He said RUCO nearly always gets involved with the filings of major utilites. But as of right now, RUCO has no opinion on the case because it hasn't actually been filed, he said.

Once the process starts, it's a drawn out, back-and-forth discussion between the parties involved in front of one of the ACC's administrative law judges. Once the judge issues an opinion, it becomes an action item for the five ACC commissioners to vote on.

"These utilities are regulated monopolies," Rigsby said. "They're granted monopoly territory and in exchange they must provide acceptable service."

That includes charging a fair price, he said.

In its filed notice of intent, UNS Electric outlines three reasons for the proposal. First, UNS Electric wants to ensure its ability to provide safe and reliable service to its customers. Second, it wants to recover its full cost of service, including an appropriate return on invested capital. Lastly, it wants to maintain or improve its credit rating.

The company expects to raise several key issues when it submits its rate filing, according to the notice of intent.



Lost Fixed Cost Recovery Mechanism

As UNS Electric customers jump on board with programs derived from renewable energy standard regulations and electric energy efficiency rules, they use less electricity, Barrios said.

"That reduces the opportunity (for UNS Electric) to recover fixed costs," Barrios said. "Which has an impact on revenues."

This mechanism would help cover some of those costs, but it won't be based on all savings, Barrios said. It will be narrowly tailored to measurable programs that have been approved by the ACC, such as the compact fluorescent light bulb buy-down program.

Savings brought on by people turning down their thermostats, closing their shades in the summer and opening them in the winter cannot be measured for this mechanism.



Energy Efficiency Resource Plan

Currently, customers pay a surcharge for energy efficiency programs, Barrios said. The energy efficiency resource plan would propose changing the way these programs are funded.

The company is considering a proposal that treats the programs, which are based on energy efficiency rules and regulations, as a resource and a long-term investment and try to recover costs over time.

"It's just a different way to ultimately fund the programs," Barrios said.

Transmission Cost Adjustment Mechanism

The company's electric base rates include an energy transmission charge, which must be approved by the Federal Energy Regulatory Commission. The commission recalculates acceptable rates every year, but UNS Electric doesn't request ACC-approved rate changes annually.

This proposed mechanism would allow UNS Electric to more closely align its rates with those set annually by FERC without having to go through the formal rate case application process.

"(We'll be) asking the Commission to give us the OK in advance," Barrios said of adjusting transmission rates.



Proposed Capital Structure

When utility companies seek ACC approval to establish new rates, they use what is known as a test year to look at all the costs incurred during a given period. The data is then used to establish a proposed rate, Barrios said. The whole process must be reviewed and approved by the ACC.

For instance, UNS Electric's current rates went into effect in October 2010, but they're based on a test year that ended in December 2008, according to the notice of intent.

For the proposal going out at the end of this month, UNS Electric plans to use a test year that ended June 30 because it will include a year's worth of data that includes the Black Mountain Generating Station in Golden Valley, which the company officially acquired on July 1, 2011.



Fair Value Rate of Return

This is basically a statement of how UNS Electric proposes to calculate what the new rate should be, Barrios said. Like every other portion of the rate case, it's subject to review and approval by the ACC.

"They can ask us for basically anything they would like," he said.



Modifications of the Purchased Power and Fuel Adjustment Clause

As fuel prices fluctuate and the company purchases power to disperse, UNS Electric is allowed to pass the costs or savings on to the customer. It is not allowed to make a profit in this area, Barrios said.

UNS Electric captures a portion of those costs through the rate base and the other part through the Purchased Power and Fuel Adjustment Clause.

The company plans to propose that all those costs be captured through the clause rather than the rate base, Barrios said.

Each proposal leaves everything up to the ACC, Barrios said.

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• UniSource seeking higher electricity rates


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Reader Comments

Posted: Sunday, December 30, 2012
Article comment by: omg Nice try

Our AZ Corp commission will approve the request... that's how I see our elected and appointed officials behaving. Believe me unisource would be ok no matter what happens.

Posted: Friday, December 21, 2012
Article comment by: Kingman Resident

I just read in yesterday's (12/20) Las Vegas Review that Nevada Power was LOWERING their rates!! I really now question if UniSources rate increase is really justified? The statements in this article is just a bunch of words to confuse the public in this matter.

Posted: Monday, December 10, 2012
Article comment by: an idea

Send the increase to the White House......... they seem to have our additional funds to go on many vacations, so it would seem that they have our funds to cover these increases.

Posted: Monday, December 10, 2012
Article comment by: Monday comment

Yes your electric is going up its not like people didnt know or they are just blind to what has been said the past 4 years. EPA said they were going to raise all the utilities.And unisource being part of that .Hello. Let me say this, the Government DOES NOT CARE ABOUT YOU ALL THEY WANT IS YOUR MONEY.

Posted: Monday, December 10, 2012
Article comment by: Just Wondering

No good deed goes unpunished. It seems like every time people try to be conservative it costs them more money. I am surprised that none of the liberals that frequent the Miner have voiced an opinion on this matter.

Posted: Sunday, December 9, 2012
Article comment by: Donald Hiney

O K so we get solar panels and they work fine and most of the months we have an overage.Now comes October, and we can no longer carry over any accumulated Killowatts., but will recieve a credit toward future bills at 2.9 cent per KWH ! What a rip off those thieves!

Posted: Sunday, December 9, 2012
Article comment by: Answers Everywhere

In Japan some homeowners have taken to using their vehicles to supply energy for their homes. Most of a gasoline engine is wasted as heat. If a heat exchanger is added behind the radiator with copper tubing running down the side of the exhaust manifold after the heat exchanger, the temperature can become quite high. Lines from vehicle to home can go to a hot water heater, also an electric inverter can take electrical power from the battery(s) to interior batteries for power storage. Solar is another great potential, start small with just a solar heat exchanger to bring hot water in for hot water tank, excess heated water can be pumped to a large underground insulated tank and then pumped up to radiators when needed to warm the house.

Posted: Sunday, December 9, 2012
Article comment by: Joyce Stutzman

Hmmm, lets see here, a 1.7% increase in social security nets me $3.00 per month increase after considering the deduction for increased medical....and here comes a proposed 4.5% proposed increase in utility costs. The writing is on the wall. In order to be comfortable, I guess we are still more fortunate...we have a fireplace with a built in blower so I will continue to build a fire in the cold mornings and it will heat half of the house till the day warms up.

Posted: Saturday, December 8, 2012
Article comment by: State Regulators

Liberal consumer protectionists thought that regulating the utilities would help out the consumer. All it did was put in place a guaranteed 15% profit for the utilities. I worked for one and saw how they spent money. They buy the biggest and best and spend money on PR to look good. Then when their costs go up so do their rates to maintain their 15% profit. Thank the liberals and regulation.

Posted: Saturday, December 8, 2012
Article comment by: BS UNS

Total BS. You want us to pay MORE? For WHAT? Those damn windmills you put up WE have to pay for,only because you wanted to kiss bamas butt. Between you and our "leaders" here,there will not be a Kingman as everyone will be someplace else. If WE did something like that,we would be in prison.

Posted: Friday, December 7, 2012
Article comment by: No Name

I wonder how many other companies are going to have to shutter their doors because they can no longer afford the costs of utilities in this county? I am also appalled that for those who are making the EFFORT to save on energy usage, Unisource finds it necessary to pillage the "losses" from the rest of us. Are you kidding me? They actually approve this kind of thing? I would love to sit in on a rate increase hearing to see just how this process works and see the faces of those who would put their hands in the already empty pockets of those it "serves" with no shame whatsoever.

Posted: Friday, December 7, 2012
Article comment by: Must Stop

They build a power plant and a solar field to satisfy the goverment which ends up costing us more, this stuff must stop.

Posted: Friday, December 7, 2012
Article comment by: L Smith

Wait didn't they just add $10 for some off the wall charge. Yes they did .

Posted: Friday, December 7, 2012
Article comment by: cheryl wolfe

Its bad enough now, that seniors have to go without heat/electricity, because we are on a fixed income. I guess we'll have to go back to wood burning stoves and candles. And, we don't have a choice on who we use for gas/electric....Shame on you.

Posted: Friday, December 7, 2012
Article comment by: Just Sayin

All I can say is wow, but not surprised.

/e in my best Oliver Twist voice, "Thank you sir may I have another?"


Posted: Friday, December 7, 2012
Article comment by: EX GUARDIAN EMPLOYEE

This is why 100 people just lost our jobs. and Guardian relocating to Washinton. The overall cost of utilitys in this county is to high, compared to Moses Lake Washinton. Mohave county the Airport Authority really needs to make more of an effort to retain employers.

Posted: Friday, December 7, 2012
Article comment by: justanobody sr

So...... $8 million a month isn't enough? as that's what they currently are receiving !
Greed has no limits, Oh sure, they have every excuse under the sun as to why they "need" the increase.
my opinion...... they see the oil companies raping us and feel "If they can do it, so can I"


Posted: Friday, December 7, 2012
Article comment by: bend over

We the customers of Unisource are powerless. Whatever our lord and master of energy wants it shall have.

I guess letting us know to pay more is their way of saying thank you.

Must be great to have the only game in town.


Posted: Friday, December 7, 2012
Article comment by: No Name

I want to make sure I read this right As UNS Electric customers jump on board with programs derived from renewable energy standard regulations and electric energy efficiency rules, they use less electricity, So becasue we do what we are asked to keep our energy use down they now want to recover the cost of what they used to make and charge us. Now this makes a lot of sense. Save energy and do it wisely, but beware that if you really do it we are going to have to charge you what we are losing in the process of you doing what we are telling you. Sounds like just the thing the government will jump on board with.



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