UniSource seeking higher electricity rates

KINGMAN - UniSource Energy Services delivered on the promise it made about two months ago by submitting an application to raise its electric rates to the Arizona Corporation Commission Monday.

As a whole, the proposal asks for a roughly $3.60 increase to "typical residential customers' average monthly bills," according to a company release. The increase would bump the electric bills of UniSource's 91,000 customers in Mohave and Santa Cruz counties up by about 4.4 percent.

"Our current rates don't reflect the investments we've made and expenses incurred over three and a half years to improve upon the high level of service customers have come to expect from UES," said UES Chair and CEO Paul Bonavia in a company release. "We've reinforced and expanded our system infrastructure while investing in renewable energy and energy efficiency. Our proposed rates reflect the added value of these improvements, which have resulted in safer, cleaner and more reliable service for customers."

The current rate structure is based on the money the company spent to operate in 2008. In the last four years, operating costs have increased and sales have remained flat, said Joseph Barrios, a spokesman for the company.

In its application, the company is proposing the use of a test year that ended June 30, 2012 because it has a full year of financial data that includes the Black Mountain Generating Station in Golden Valley, which the company officially purchased in 2011.

Bill Rigsby, who's with the Residential Utility Consumer Office, said his organization has filed the paperwork to gain intervener status in the case.

RUCO, which was set up by statute to represent Arizona ratepayers, most always intervenes when it comes to major utility companies asking the ACC for permission to raise their rates.

During a cursory review of the UniSource application, Rigsby said one aspect immediately stood out as a potential point of contention - the Purchased Power and Fuel Adjustment Charge.

Known as the PPFAC, the mechanism allows utility companies to pass the costs or savings of purchased power on to their customers.

For UniSource, some of those costs are captured through the rate base while the rest is captured through the PPFAC, Barrios explained.

In the company's application to raise rates, a request was made to allow UniSource to capture all of those costs through the PPFAC.

If UniSource is allowed to pass all of its fuel and power purchasing costs on to the customer, there's no incentive for the company to make prudent decisions, he said.

Now that the application has been filed, it will go through a 30-day sufficiency review. If the ACC finds the application to be complete, the clock starts ticking.

The parties involved will go back and forth in front of one of the ACC's administrative law judges, and at some point the judge will issue an opinion. Rigsby said he expects the parties involved to file direct testimony in late June.

After the judge has issued an opinion, the application becomes an action item for the five ACC commissioners to vote on.

The process typically takes about a year, and UniSource hopes to have the rates - should they be approved - in place in early 2014, Barrios said.

Additional details, including frequently asked questions and a copy of the application, are available at uesaz.com.