UniSource asks for 2016 rate increase

Company says it needs to pay for upgrades

KINGMAN - UniSource Energy Services filed an application last week with the Arizona Corporation Commission for an electric rate increase that would add about $2 a month to the average customer's bill starting on May 1, 2016.

The proposed increase would help pay for upgrades made to the company's equipment and other changes that reflect the cost of providing service, UniSource President and Chief Executive Officer David Hutchens said.

One year later, when a proposed temporary bill credit expires, average residential bills would increase another $7.87 a month.

The revised rates would match customer charges to the costs of operating and improving UniSource's electric system, including investments in a natural gas-fired power plant, a new large-scale solar array and other recent upgrades, Hutchens said.

"We have invested in a modern, efficient system that will reliably serve our customers for decades to come," Hutchens said in a statement. "Now we need updated rates that are equally responsive to our customers' evolving use of our local electric system."

Current rates are based on costs incurred through June 2012. Since then, the company has invested about $170 million to acquire new power production resources, upgrade its transmission and distribution systems, and make other improvements.

UniSource also faces higher costs to operate, maintain and repair its systems. In 2014, crews rebuilt a Lake Havasu City transmission line that sustained serious damage in two summer storms.

The company's most significant investment was $55 million to purchase a 25 percent share of the natural gas-fired Gila River Power Station in December.

"While this investment will be reflected in our rates, its cost will be largely offset by lower purchased power costs, and it will provide the added benefit of reducing our customers' exposure to volatile market energy prices," Hutchens said.

Other recent investments include:

• Upgrades to transmission lines and substations in Mohave County.

• A new 7-megawatt solar array in Rio Rico.

• New automated options for the company's customer service line.

UniSource also proposed a new optional rate that combines basic service charges and lower kilowatt-hour charges with a third fee based on a customer's highest level of energy usage.

Another proposal calls for a new net metering plan to compensate customers for excess solar energy. The company filed the plan with the ACC earlier this year, but now is seeking its approval as part of its request for new rates.

If the proposal is approved, customers with existing solar arrays or those whose requests to connect to UniSource's system are submitted by June 1 would not be subject to the new net metering plan or mandatory use of the new three-part rate.